civ pro 1-10 cases

CIVIL PROCEDURE FULL TEXT CASES LLB II-A 2014 BULSU 1-10

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[G.R. No. 149634. July 6, 2004]

LORETA TORRES, MARILYN TANGTANG, ARMELA FIGURACION, RAQUEL BERNARTE, ESTRELLA TITO, RHEA ELLORDA, ROSITA FUENTES, ANITA LAPORRE, JOCELYN RIN, MATODIA DEREPAS, FELICISIMA ALEGRE, LEA MARTILLANA, EVANGELINE RAFON, ALICIA EMPILLO, AMY TORRES, EDNA JIMENEZ, EVELYN DOLOM, HAMILI UYVICO, CRISELINA ANQUILO, NILDA ALCAIDE, ROSARIO MABANA, ESTELA MANGUBAT, ROSIE BALDOVE, CARMELITA RUIZ and LUCILA JUSTARES, petitioners, vs. SPECIALIZED PACKAGING DEVELOPMENT CORPORATION and/or ALFREDO GAO (President) and PETER CHUA (General Manager); EUSEBIO CAMACHO GENERAL SERVICES and/or EUSEBIO CAMACHO (President/General Manager); MPL SERVICES and/or MIGUELITO LAURIANO (President/General Manager), respondents.

D E C I S I O N

PANGANIBAN, J.:

The Court may give due course to a petition, even if the accompanying certificate against forum shopping has not been signed by all the petitioners, provided it is shown that, as in this case, there is a justifiable cause for such failure; and the outright dismissal of the petition would seriously impair the orderly administration of justice. In the interest of substantial justice, strict observance of procedural rules may be dispensed with for compelling reasons.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to nullify the January 15, 2001[2] and the August 28, 2001[3] Resolutions of the Court of Appeals (CA) in CA-GR SP No. 62530. The first Resolution disposed as follows:

“ACCORDINGLY, and to strictly enforce the aforesaid circulars to attain their

objectives (Carrara Marble Phil., Inc. vs. Court of Appeals, G.R. No. 127059,

January 22, 1997; Far Eastern Shipping Co. vs. Court of Appeals, 297 SCRA 30),

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the Court [r]esolved to DISMISS the petition for a defective or insufficient

verification and certification thereof.”[4]

The second assailed Resolution, on the other hand, denied petitioners’ Motion for Reconsideration.

The Antecedents

Petitioners claim to be employees of the Specialized Packaging Development Corporation (SPDC), a business entity engaged in the repackaging of cosmetic products. In three separate Complaints, they charged SPDC and alleged labor recruiters Eusebio Camacho General Services (ECGS) and MPL Services with illegal dismissal; and with nonpayment of overtime, premium and 13

th month pays, and night

differential.

The cases were later consolidated and assigned to Labor Arbiter (LA) Salimathar Nambi. On June 30, 1995, the LA issued his Decision in favor of petitioners, because SPDC and MPL Services had failed to submit their position papers on or before the deadline. SPDC was ordered to reinstate all petitioners to their former positions and to pay them back wages, premium pay for holidays and rest days, service incentive leave pay and 13

th month pay.

The LA’s Decision was appealed by SPDC to the National Labor Relations Commission (NLRC), which set aside the ruling and ordered the case remanded to LA Nambi for further proceedings.

The case was then set again for hearings. Respondents SPDC and ECGS submitted their position papers five months after the case had been considered submitted for decision.

On December 14, 1999, LA Nambi issued a second Decision finding petitioners’ employment to have been illegally terminated by SPDC. The NLRC, however, again reversed and set aside this new Decision on June 9, 2000.

On January 29, 2001, petitioners appealed to the CA.

Ruling of the CA

The Petition was dismissed by the CA, which found the verification and the certification against forum shopping to be either defective or insufficient. It justified its ruling thus:



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“x x x [I]t appears that there are twenty-five (25) principal parties-petitioners who

were former workers of private respondent Corporation and complainants in

NLRC NCR Case Nos. 00-04-03325-94, 00-05-03727-94 and 00-05-03971-94 as a

result of their being laid-off from employment. Perusing the verification and

certification[,] however, it also appears that it was executed and signed by only two

(2) petitioners, namely, Evelyn Dolom and Criselina Anquilo, among the said

twenty-five (25) principal petitioners. The duty to verify and certify under oath is

strictly addressed to all the twenty-five (25) principal petitioners. To allow only

two (2) of them to execute the required verification and certification, without the

proper authorization of the others, would render Revised Circular No. 28-91 and

Administrative Circular No. 04-94 (now Sec. 5, Rule 7 of the 1997 Rules of Civil

Procedure) inutile in avoiding the practice of non-forum shopping because the

other principal petitioners, who did not execute and sign the same, much less

execute the proper power of attorney, would not be bound by the certification

executed by only two (2) of them. Any one of the twenty-three (23) remaining

principal petitioners may just obtain the services of another lawyer to institute

practically the same case in a different for[um].”[5]

Denying petitioners’ Motion for Reconsideration, the appellate court pointed out that disregarding the rules could not be rationalized by invoking a liberal construction thereof. Furthermore, it found no satisfactory explanation why the 25 principal petitioners, who resided in different provinces, had not executed a special power of attorney in favor of either of the two petitioners or their counsel.

Hence, this Petition.[6]

Issues

Petitioners submit the following issues for our consideration:

“A.

Whether or not petitioners are employees of the Respondent Specialized Packaging

Development Corporation (SPDC).

“B.

Whether or not petitioners were illegally dismissed by Respondent SPDC.

“C.

Whether or not petitioners are entitled to their money claims.”[7]





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The Court’s Ruling

The Petition is meritorious.

Preliminary Issue: Propriety of the Petition

At the outset we note that the present Petition is anchored on Rule 45, and that it assails the two CA Resolutions dismissing petitioners’ earlier Petition for Certiorari. In accordance with Section 1 of Rule 45,[8] the herein Petition alleges reversible errors based on the supposedly defective verification and certification against forum shopping.

The above-quoted issues raised in the Memorandum of petitioners, however, were not the same ones raised in the Petition. Because these three substantive issues were sprung by the former only in their own Memorandum, respondents were not able to traverse these directly in their Comment[9] or Memorandum.[10] Hence, save for perfunctory references to the NLRC Decision, the latter were not given the opportunity to defend themselves on these questions.

Elementary due process -- which means giving the opposite party the opportunity to be heard, and the assailed court to consider every argument presented[11] -- bars this Court from taking up these three issues in this Decision, even if doing so would speed up the final resolution of the case. Basic is the rule that issues not presented below cannot for the first time be taken up on appeal.[12]

Review of NLRC Decisions

The proper procedure for seeking a review of the final dispositions of the NLRC was laid down in 1998 in St. Martin Funeral Homes v. NLRC.[13] That case heralded two very important rules: 1) decisions and final resolutions of the NLRC may be reviewed only via a special civil action for certiorari under Rule 65 of the Rules of Court; and 2) such petition must be filed with the CA in strict observance of the doctrine of the hierarchy of courts.

Thus, after St. Martin became final, special civil actions challenging NLRC rulings have been referred by this Court to the CA for proper disposition. Exceptions to this rule were those instances when -- prior to the finality of St. Martin -- both parties had already filed their respective memoranda with this Court, and it then opted to take final cognizance of








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the case.[14] Under AM No. 99-2-01-SC, however, all new cases erroneously filed with this Court after June 1, 1999, were dismissed forthwith.

Main Issue: Propriety of the CA’s Dismissal of the Petition

In their present Petition, petitioners plead a liberal construction of the rules. They argue that the verification and the certification against forum shopping executed by only two of the 25 petitioners have already satisfied the requirements under Sections 4[15] and 5[16] of Rule 7. On the other hand, the CA ruled that all 25 petitioners should have signed the verification and the certification of non-forum shopping. We clarify.

Actually, two separate rules are involved in the present controversy – one, on verification; and the other, on the certification against forum shopping.

Two Signatures Sufficient for Verification

The verification requirement is provided under Section 4 of Rule 7 of the Rules of Court, as follows:

“SEC. 4. Verification. – Except when otherwise specifically required by law or

rule,[17] pleadings need not be under oath, verified or accompanied by affidavit.

“A pleading is verified by an affidavit that the affiant has read the pleading and

that the allegations therein are true and correct of his knowledge and belief.

“A pleading required to be verified which contains a verification based on

‘information and belief,’ or upon ‘knowledge, information and belief,’ or lacks a

proper verification, shall be treated as an unsigned pleading.” (Italics supplied)

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.[18] This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does not necessarily render it fatally defective.[19] Indeed, verification is only a formal, not a jurisdictional, requirement.[20]

In the present case, the problem is not the lack of a verification, but the adequacy of one executed by only two of the 25 petitioners. These two signatories are unquestionably real parties in interest, who undoubtedly









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have sufficient knowledge and belief to swear to the truth of the allegations in the Petition. This verification is enough assurance that the matters alleged therein have been made in good faith or are true and correct, not merely speculative. The requirement of verification has thus been substantially complied with.

Certification Against Forum Shopping Substantially Complied With

For petitions for certiorari, on the other hand, a certification against forum shopping is required under Section 3 of Rule 46[21] of the Rules of Court, as follows:

“SEC. 3. Contents and filing of petition; effect of non-compliance with

requirements. - x x x

x x x x x x x x x

“The petitioner shall also submit together with the petition a sworn certification

that he has not theretofore commenced any other action involving the same issues

in the Supreme Court, the Court of Appeals or different divisions thereof, or any

other tribunal or agency; if there is such other action or proceeding, he must state

the status of the same; and if he should thereafter learn that a similar action or

proceeding has been filed or is pending before the Supreme Court, the Court of

Appeals, or different divisions thereof, or any other tribunal or agency, he

undertakes to promptly inform the aforesaid courts and other tribunal or agency

thereof within five (5) days therefrom.

x x x x x x x x x

“The failure of the petitioner to comply with any of the foregoing requirements

shall be sufficient ground for the dismissal of the petition.”

The certification requirement is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora, as this practice is detrimental to an orderly judicial procedure.[22] The lack of a certification against forum shopping, unlike that of verification, is generally not cured by its submission after the filing of the petition.[23]

The submission of a certificate against forum shopping is thus deemed obligatory, though not jurisdictional.[24] (Jurisdiction over the subject or nature of the action is conferred by law.) Not being jurisdictional, the requirement has been relaxed under justifiable circumstances[25] under the rule of substantial compliance.







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In fact, the Court has allowed the belated filing of the certification against forum shopping because of compelling reasons.[26] In Uy v. Land Bank,[27] it even reinstated a petition it had already dismissed for lack of verification and certification against forum shopping, after petitioner had justified the reinstatement. Similarly, in Roadway Express v. CA,[28] the Court considered as substantial compliance the filing of the certification 14 days prior to the dismissal of the petition.

The rule of substantial compliance has likewise been availed of with respect to the contents of the certification.[29] Gabionza v. Court of Appeals accepted, as sufficient compliance therewith, petitioner’s certification to the effect that “there is no similar petition [with] the same subject matter previously filed, pending, withdrawn or dismissed in the Supreme Court, in this Honorable Court [of Appeals] or different divisions thereof, or any other tribunal or agency.”[30] It stressed that while Circular 28-91[31] required strict compliance, it did not thereby prevent substantial compliance under justifiable circumstances.[32]

In the present case, petitioners aver that the signatures of only two of them suffice as substantial compliance with the attestation requirement for a certificate against forum shopping. In effect, they are asking this Court to disregard a defect[33] in their Petition.

In previous rulings, we have held that a certificate against forum shopping should be signed by all the petitioners, because a lone signatory cannot be presumed to have personal knowledge of the matters required to be stated in the attestation.[34] The ruling is not without exception, however. In Spouses Ortiz v. Court of Appeals[35] and similar rulings, the following has always been pointed out:

“x x x. The attestation contained in the certification on non-forum shopping

requires personal knowledge by the party who executed the same. To merit the

Court’s consideration, petitioners here must show reasonable cause for failure to

personally sign the certification. The petitioners must convince the court that the

outright dismissal of the petition would defeat the administration of justice. x x x”

(Italics supplied)

Petitioners need only show, therefore, that there was reasonable cause for the failure of some of them to sign the certification against forum shopping, and that the outright dismissal of the Petition would defeat the administration of justice.

We find their reasons meritorious. First, as pointed out in the Motion for Reconsideration filed with the CA, the case dragged for an undeniably long time, because its remand to the labor arbiter forced many of the petitioners to go back to the provinces to await the final outcome, while those who remained in Metro Manila were forced out of temporary quarters every so












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often.[36] Under these circumstances, it was extremely difficult to secure all the required signatures.

Second, it is safe to assume that the matters alleged in the certificate against forum shopping have been complied with by the non-signing petitioners. Twenty-one of the petitioners executed in favor of their counsel, a “Natatanging Gawad ng Kapangyarihan,”[37] which gives him authority to represent them in all matters connected with the case. As it has not been revoked or superseded, the possibility of any of them filing another action or claim through another counsel is effectively foreclosed.

Third, the apparent merits of the substantive aspects of the case, as in Uy, should be deemed as a “special circumstance” or “compelling reason” for allowing the Petition. Pertinent thereto, the Court notes that the conflicting findings of the NLRC and of the labor arbiter -- who ruled twice in favor of petitioners -- provide ample justification for the CA’s review of the merits. The outright dismissal of the Petition was therefore prejudicial to the substantial rights of the parties.

Indeed, rules of procedure are established to secure substantial justice.[38] Being instruments for the speedy and efficient administration of justice, they must be used to achieve such end, not to derail it.[39] Technical requirements may thus be dispensed with in meritorious appeals.[40]

It has been our consistent holding that the ends of justice are better served when cases are determined on the merits -- after all parties are given full opportunity to ventilate their causes and defenses -- rather than on technicality or some procedural imperfections. [41]

Consequently, the case should be remanded to the CA for a proper determination of the substantive issues. Time-honored is the principle that when the law entrusts the review of factual and substantive issues to a lower court or to a quasi-judicial tribunal, that court or agency must be given the opportunity to pass upon those issues.[42] Only thereafter may the parties resort to this Court.[43]

WHEREFORE, this Petition is GRANTED. The assailed Resolutions of the Court of Appeals are SET ASIDE, and the case is remanded to the CA for a proper determination of the substantive issues. No costs.

SO ORDERED.










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[G.R. No. 157195. April 22, 2005]

VICAR INTERNATIONAL CONSTRUCTION, INC., and CARMELITA V. LIM, petitioners, vs. FEB LEASING AND FINANCE CORPORATION (now BPI LEASING CORPORATION), respondent.

D E C I S I O N

PANGANIBAN, J.:

Once more, the Court stresses that procedural rules must be used to promote, not obstruct, substantial justice. The failure to attach the Resolution authorizing herein individual petitioner to represent herein corporate petitioner is, under the circumstances, excusable. The immediate correction of the defect should have been deemed sufficient compliance with the rules.

The Case

Before us is a Petition for Review on Certiorari[1] pursuant to Rule 45 of the Rules of Court, seeking to reverse and set aside two Resolutions[2] of the Court of Appeals (CA) dated October 23, 2002[3] and February 7, 2003,[4] in CA-GR SP No. 73117. The earlier Resolution reads:

“The instant petition for certiorari is hereby DISMISSED for lack of proper

verification and certification against forum shopping as the same was executed by

Carmelita V. Lim, one of the petitioners, without showing any authority from

petitioner corporation to sign for and on its behalf.”[5]

The second assailed Resolution denied petitioners’ “Omnibus Motion for Reconsideration and for Admission of the Attached Secretary’s Certificate.”

The Facts

This controversy originated from a Complaint[6] for unjust enrichment and damages, filed in the Regional Trial Court of Makati by herein petitioner, Vicar International Construction, Inc. (Vicar), against Respondent FEB Leasing and Finance Corporation (now BPI Leasing Corporation) and the Far East Bank and Trust Company. In turn, FEB

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Leasing and Finance Corporation filed a Complaint[7] against Vicar, Carmelita Chaneco Lim and one John Doe, for a sum of money, damages and replevin.

These Complaints stemmed from loans obtained from FEB by Vicar, a corporation engaged in the construction business, for the purchase of certain heavy equipment. In obtaining the loans, Deeds of Absolute Sale with a “lease-back” provision were executed by the parties. In those Deeds, Vicar appears to have sold to FEB the equipment purchased with the loan proceeds and, at the same time, leased them back.[8] For the total loan of P30,315,494, Vicar claims to have paid FEB an aggregate amount of P19,042,908 in monthly amortizations.

Nevertheless, FEB maintains that Vicar still had an outstanding balance of about P22,000,000, despite the extrajudicial foreclosure of sixty-three (63) subdivision lots. These lots, comprising an aggregate area of 20,300 square meters in Calamba, Laguna, were used by the corporation as additional collateral. As a consequence, the auction sale produced P17,000,000 which, Vicar claims, should have been applied to its loans.

In the course of the second (replevin) case, the trial court issued several Orders pertaining to the possession/custody of eight (8) units of the subject equipment. In an Order dated August 2, 2002, the regional trial court (RTC) quashed the property counterbond filed by Vicar and denied the latter’s Motion to Dismiss the Complaint, which was grounded on forum shopping. In an Order dated September 30, 2002, the RTC denied the corporation’s Motion for Reconsideration and Motion for Voluntary Inhibition of the trial judge.

On October 3, 2002, Vicar filed a Petition for Certiorari before the Court of Appeals, to stop the implementation of the Writ of Replevin issued against the subject equipment.

Ruling of the Court of Appeals

The Petition was, however, instantly dismissed by the CA in its herein assailed Resolution dated October 23, 2002, because the Verification and the Certification against forum shopping had been executed by Petitioner Carmelita V. Lim without any showing that she had the authority to sign for and on behalf of petitioner-corporation.

On November 23, 2003, the day after receiving its copy of the Resolution, Vicar filed an “Omnibus Motion for Reconsideration and for Admission of the Attached Secretary’s Certificate.” Nevertheless, the CA denied the Omnibus Motion in this wise:




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“The belated filing by the petitioners of the Certification of their Corporate

Secretary, to the effect that petitioner Carmelita Lim has been duly authorized by

petitioner corporation to file the subject petition for certiorari, did not cure the

defect of said petition. Absent any compelling reason for petitioners’ failure to

comply at the first instance with the required certification, we cannot, therefore,

accept their subsequent compliance.”[9]


The Issues

Petitioners raise the following issues for our consideration:

“A.

Whether compelling reasons exist which warrant the liberal construction of the

Petition for Certiorari.

“B.

Whether petitioners’ subsequent submission of the secretary’s certificate is a

sufficient compliance with the requirement of the law.

“C.

Whether the policy of the law is to afford a party the fullest opportunity to

establish the merits of his case.”[11]

In short, the principal issue is whether the Court of Appeals erred in summarily dismissing the Petition for Certiorari.


The present Petition for Review is meritorious.

Main Issue: Propriety of Summary Dismissal

Petitioners assert that Carmelita V. Lim was duly authorized to execute, for and on behalf of Vicar, the Verification and Certification against forum shopping. Attached to the Petition and signed by Petitioner Lim was the





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Verification/Certification, in which was explicitly stated the authorization and affirmation, as follows:

“x x x. I am likewise duly authorized to execute this Verification/Certification in

behalf of petitioner Vicar International Construction, Inc. x x x.”

This statement was supported by Vicar’s board of directors, who unanimously approved a Resolution dated October 2, 2002, which reads thus:

“NOW THEREFORE, BE IT RESOLVED, as it is hereby resolved, that the

Corporation be authorized to file a Petition for Certiorari before the Court of

Appeals for the purpose of annulling or setting aside the Orders dated 2 August

2002 and 30 September 2002 rendered by Branch 150 of the Regional Trial Court

of Makati in connection with Civil Case No. 02-357 entitled ‘FEB Leasing &

Finance Corporation, Plaintiff vs. Vicar International Construction, Inc. et al.,

Defendants.’

“RESOLVED further, that the President/General Manager Carmelita V. Lim is

hereby authorized to execute and sign any and all documents necessary for filing of

the Petition for Certiorari, including the verification and certification against

forum shopping.’”[12]

Petitioners candidly admit that they inadvertently failed to attach the above Resolution to their CA Petition. In preparing the Petition, their counsel supposedly worked overnight without sleep. She wanted to file it immediately to avoid the trial court’s quashal of their counterbond and, thus, the immediate seizure of their equipment -- their only means of livelihood.

Their counsel allegedly believed in good faith that the secretary’s Certificate was attached to the Petition. When they received a copy of the October 23, 2002 CA Resolution on November 11, 2002, they lost no time in filing the following day their “Omnibus Motion for Reconsideration and for Admission of the Attached Secretary’s Certificate.”

Petitioners submit that the foregoing circumstances constitute compelling reasons to justify setting aside the procedural defect, pursuant to Ramos v. Court of Appeals.[13]

Further, citing Yap v. Baldado,[14] they contend that their posthaste submission of the secretary’s Certificate, albeit after the filing of their Petition, constitutes substantial compliance with the requirements of the law. Finally, they aver that pursuant to the policy of the law to afford parties the fullest opportunity to establish the merits of their case, the CA should have given due course to their Petition.



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On the other hand, Respondent FEB asserts that the CA’s dismissal of the Petition -- arising from petitioners’ failure to attach a duly executed verification and certification against forum shopping -- is well within the appellate court’s authority, pursuant to Sections 3 and 5 of Rule 46 of the Revised Rules of Civil Procedure.[15] Respondent also claims that petitioners’ present action before this Court seeks to correct a perceived erroneous application by the CA of a procedural rule that is not correctible by certiorari.

Finally, respondent alleges that the instant Petition, being based on the ground of excusable negligence, is actually a motion for new trial. As such, the Petition must allegedly fail, because petitioners did not execute and attach an affidavit of merits.

The issue before us is not novel; neither are the factual circumstances that gave rise to it.

In Shipside Incorporated v. Court of Appeals,[16] the petitioner had not attached any proof that its resident manager was authorized to sign the Verification and the non-forum shopping Certification, as a consequence of which the Petition was dismissed by the Court of Appeals. Subsequent to the dismissal, however, the petitioner filed a motion for reconsideration, to which was already attached a Certificate issued by its board secretary who stated that, prior to the filing of the Petition, the resident manager had been authorized by the board of directors to file the Petition.

Citing several cases[17] excusing noncompliance with the requirement of a certificate of non-forum shopping, the Court held that “with more reason should x x x the instant petition [be allowed,] since petitioner herein did submit a certification on non-forum shopping, failing only to show proof that the signatory was authorized to do so.” The Court further said that the subsequent submission of the Secretary’s Certificate, attesting that the signatory to the certification was authorized to file the action on behalf of petitioner, mitigated the oversight.

Similarly, in General Milling Corporation v. NLRC,[18] the Court of Appeals dismissed the Petition, which was not accompanied by any board resolution or certification by the corporate secretary showing that the person who had signed the Certification of Non-Forum Shopping was duly authorized to represent the petitioner-corporation in the case. In the Motion for Reconsideration, however, the petitioner attached a board Resolution stating that the signatory of the Certification had been duly authorized to do so.

Under those circumstances, the Court held that “there was at least substantial compliance with, and that there was no attempt to ignore, the prescribed procedural requirements,” except that the petition “was not


http://sc.judiciary.gov.ph/jurisprudence/2001/feb2001/143377.htm



http://sc.judiciary.gov.ph/jurisprudence/2002/dec2002/153199.htm



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accompanied by a board resolution or a secretary’s certificate that the person who signed it was duly authorized by petitioner to represent it in the case.”[19]

Also, in BA Savings Bank v. Sia,[20] the Court of Appeals denied due course to a Petition for certiorari filed by BA Savings Bank. The CA’s action was grounded on the fact that the Certification on anti-forum shopping incorporated in the Petition had been signed merely by the bank’s counsel, not by a duly authorized representative, as required under Supreme Court Circular No. 28-91. Subsequently filed by the petitioner was a Motion for Reconsideration, to which was attached a Certificate issued by the corporate secretary. The Certificate showed that the Resolution promulgated by the board of directors had authorized the lawyers of petitioner “to represent it in any action or proceeding before any court, tribunal or agency; and to sign, execute and deliver the certificate of non-forum shopping,” among others. Nevertheless, the Court of Appeals denied the Motion on the ground that Supreme Court Revised Circular No. 28-91 “requires that it is the petitioner, not the counsel, who must certify under oath to all of the facts and undertakings required therein.”

The Court again reversed the appellate court and ruled thus:

“Circular 28-91 was prescribed by the Supreme Court to prohibit and penalize the

evils of forum shopping. We see no circumvention of this rationale if the

certificate was signed by the corporation’s specifically authorized counsel, who

had personal knowledge of the matters required in the Circular. InBernardo v.

NLRC,[21] we explained that a literal interpretation of the Circular should be

avoided if doing so would subvert its very rationale. Said the Court:

‘x x x. Indeed, while the requirement as to certificate of non-forum shopping is

mandatory, nonetheless the requirements must not be interpreted too literally and

thus defeat the objective of preventing the undesirable practice of forum-

shopping.’”[22]

Guided by the above pronouncements, the Court deems it proper and justifiable to grant the present Petition. Clearly, petitioners did not deliberately ignore SC Circular 28-91. In fact, a “Verification/Certification,” stating the information required under the Circular, was attached to the Petition for Certiorari filed before the CA. In that Verification/Certification signed by Petitioner Lim, she attested as follows:

“1. x x x I am likewise duly authorized to execute this Verification/Certification in

behalf of petitioner Vicar International Construction, Inc.








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“2. In my personal capacity and as a duly authorized representative of Vicar

International Construction, Inc., I caused the preparation of the foregoing Petition

for Certiorari.”

x x x x x x x x x

Petitioners merely missed attaching to their Petition a concrete proof of Lim’s authority from Vicar to execute the said Verification/Certification on its behalf. The latter, however, lost no time in submitting its corporate secretary’s Certificate attesting to the fact that, indeed, Petitioner Vicar’s board of directors had unanimously approved a Resolution on October 2, 2002, authorizing its president and general manager, Carmelita V. Lim, to file the Petition and “to execute and sign x x x the verification and certification against forum shopping.”

The Certificate was submitted to the CA on the day right after it had denied the Petition. Such swiftness of action indicates that the Resolution -- authorizing Petitioner Lim to file the Petition and execute the Verification and the Certification against forum shopping on behalf of Petitioner Vicar -- did exist at the time the Petition was filed. Such fact also lends credence to the assertion of petitioners that it was only due to inadvertence and oversight that they failed to attach the Secretary’s Certificate to their Petition for Certiorari.

In closing, the Court stresses once more that technical rules of procedure should be used to promote, not frustrate, justice. While the swift unclogging of court dockets is a laudable objective, the granting of substantial justice is an even more urgent ideal.[23] Rules of procedure are but tools designed to facilitate, not obstruct, the attainment of justice.

WHEREFORE, the Petition is GRANTED, and the appealed Resolutions are REVERSED and SET ASIDE. The case is REMANDED to the Court of Appeals, which is directed to continue the proceedings in CA-GR SP No. 73117 with deliberate speed. No costs.

SO ORDERED.

Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur. Garcia, J., No part. Had taken part in assailed Resolutions.



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G.R. No. 89070 May 18, 1992

BENGUET ELECTRlC COOPERATIVE, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER COSALAN and BOARD OF DIRECTORS OF BENGUET ELECTRIC COOPERATIVE, INC., * respondents.

Raymundo W. Celino for respondent Peter Cosalan.

Reenan Orate for respondent Board of Directors of BENECO.

FELICIANO, J.:

Private respondent Peter Cosalan was the General Manager of Petitioner Benguet Electric Cooperative, Inc. ("Beneco"), having been elected as such by the Board of Directors of Beneco, with the approval of the National Electrification Administrator, Mr. Pedro Dumol, effective 16 October 1982.

On 3 November 1982, respondent Cosalan received Audit Memorandum No. 1 issued by the Commission on Audit ("COA"). This Memorandum noted that cash advances received by officers and employees of petitioner Beneco in the amount of P129,618.48 had been virtually written off in the books of Beneco. In the Audit Memorandum, the COA directed petitioner Beneco to secure the approval of the National Electrification Administration ("NEA") before writing off or condoning those cash advances, and recommended the adoption of remedial measures.

On 12 November 1982, COA issued another Memorandum — Audit Memorandum No. 2 –– addressed to respondent Peter Cosalan, inviting attention to the fact that the audit of per diems and allowances received by officials and members of the Board of Directors of Beneco showed substantial inconsistencies with the directives of the NEA. The Audit Memorandum once again directed the taking of immediate action in conformity with existing NEA regulations.

On 19 May 1983, petitioner Beneco received the COA Audit Report on the financial status and operations of Beneco for the eight (8) month period


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ended 30 September 1982. This Audit Report noted and enumerated irregularities in the utilization of funds amounting to P37 Million released by NEA to Beneco, and recommended that appropriate remedial action be taken.

Having been made aware of the serious financial condition of Beneco and what appeared to be mismanagement, respondent Cosalan initiated implementation of the remedial measures recommended by the COA. The respondent members of the Board of Beneco reacted by adopting a series of resolutions during the period from 23 June to 24 July 1984. These Board Resolutions abolished the housing allowance of respondent Cosalan; reduced his salary and his representation and commutable allowances; directed him to hold in abeyance all pending personnel disciplinary actions; and struck his name out as a principal signatory to transactions of petitioner Beneco.

During the period from 28 July to 25 September 1984, the respondent Beneco Board members adopted another series of resolutions which resulted in the ouster of respondent Cosalan as General Manager of Beneco and his exclusion from performance of his regular duties as such, as well as the withholding of his salary and allowances. These resolutions were as follows:

1. Resolution No. 91-4 dated 28 July 1984:

. . . that the services of Peter M. Cosalan as General Manager of BENECO is terminated upon approval of the National Electrification Administration;

2. Resolution No. 151-84 dated September 15, 1984;

. . . that Peter M. Cosalan is hereby suspended from his position as General Manager of the Benguet Electric Cooperative, Inc. (BENECO) effective as of the start of the office hours on September 24, 1984, until a final decision has been reached by the NEA on his dismissal;

. . . that GM Cosalan's suspension from office shall remain in full force and effect until such suspension is sooner lifted, revoked or rescinded by the Board of Directors; that all monies due him are withheld until cleared;


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3. Resolution No. 176-84 dated September 25, 1984;

. . . that Resolution No. 151-84, dated September 15, 1984 stands as preventive suspension for GM Peter M. Cosalan.

1

Respondent Cosalan nevertheless continued to work as General Manager of Beneco, in the belief that he could be suspended or removed only by duly authorized officials of NEA, in accordance with provisions of P.D. No, 269, as amended by P.D. No. 1645 (the statute creating the NEA, providing for its capitalization, powers and functions and organization), the loan agreement between NEA and petitioner Beneco

2 and the NEA

Memorandum of 2 July 1980. 3Accordingly, on 5 October and 10 November

1984, respondent Cosalan requested petitioner Beneco to release the compensation due him. Beneco, acting through respondent Board members, denied the written request of respondent Cosalan.

Respondent Cosalan then filed a complaint with the National Labor Relations Commission ("NLRC") on 5 December 1984 against respondent members of the Beneco Board, challenging the legality of the Board resolutions which ordered his suspension and termination from the service and demanding payment of his salaries and allowances. On 18 February 1985, Cosalan amended his complaint to implead petitioner Beneco and respondent Board members, the latter in their respective dual capacities as Directors and as private individuals.

In the course of the proceedings before the Labor Arbiter, Cosalan filed a motion for reinstatement which, although opposed by petitioner Beneco, was granted on 23 October 1987 by Labor Arbiter Amado T. Adquilen. Petitioner Beneco complied with the Labor Arbiter's order on 28 October 1987 through Resolution No. 10-90.

On 5 April 1988, the Labor Arbiter rendered a decision (a) confirming Cosalan's reinstatement; (b) ordering payment to Cosalan of his backwages and allowances by petitioner Beneco and respondent Board members, jointly and severally, for a period of three (3) years without deduction or qualification, amounting to P344,000.00; and (3) ordering the individual Board members to pay, jointly and severally, to Cosalan moral damages of P50,000.00 plus attorney's fees of ten percent (10%) of the wages and allowances awarded him.

Respondent Board members appealed to the NLRC, and there filed a Memorandum on Appeal. Petitioner Beneco did not appeal, but moved to dismiss the appeal filed by respondent Board members and for execution of judgment. By this time, petitioner Beneco had a new set of directors.


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In a decision dated 21 November 1988, public respondent NLRC modified the award rendered by the Labor Arbiter by declaring that petitioner Beneco alone, and not respondent Board members, was liable for respondent Cosalan's backwages and allowances, and by ruling that there was no legal basis for the award of moral damages and attorney's fees made by the Labor Arbiter.

Beneco, through its new set of directors, moved for reconsideration of the NLRC decision, but without success.

In the present Petition for Certiorari, Beneco's principal contentions are two-fold: first, that the NLRC had acted with grave abuse of discretion in accepting and giving due course to respondent Board members' appeal although such appeal had been filed out of time; and second, that the NLRC had acted with grave abuse of discretion amounting to lack of jurisdiction in holding petitioner alone liable for payment of the backwages and allowances due to Cosalan and releasing respondent Board members from liability therefor.

We consider that petitioner's first contention is meritorious. There is no dispute about the fact that the respondent Beneco Board members received the decision of the labor Arbiter on 21 April 1988. Accordingly, and because 1 May 1988 was a legal holiday, they had only up to 2 May 1988 within which to perfect their appeal by filing their memorandum on appeal. It is also not disputed that the respondent Board members' memorandum on appeal was posted by registered mail on 3 May 1988 and received by the NLRC the following day.

4 Clearly, the memorandum on appeal was

filed out of time.

Respondent Board members, however, insist that their Memorandum on Appeal was filed on time because it was delivered for mailing on 1 May 1988 to the Garcia Communications Company, a licensed private letter carrier. The Board members in effect contend that the date of delivery to Garcia Communications was the date of filing of their appeal memorandum.

Respondent Board member's contention runs counter to the established rule that transmission through a private carrier or letter-forwarder –– instead of the Philippine Post Office –– is not a recognized mode of filing pleadings.

5The established rule is that the date of delivery of pleadings to

a private letter-forwarding agency is not to be considered as the date of filing thereof in court, and that in such cases, the date of actual receipt by the court, and not the date of delivery to the private carrier, is deemed the date of filing of that pleading.

6


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There, was, therefore, no reason grounded upon substantial justice and the prevention of serious miscarriage of justice that might have justified the NLRC in disregarding the ten-day reglementary period for perfection of an appeal by the respondent Board members. Accordingly, the applicable rule was that the ten-day reglementary period to perfect an appeal is mandatory and jurisdictional in nature, that failure to file an appeal within the reglementary period renders the assailed decision final and executory and no longer subject to review.

7 The respondent Board members had thus

lost their right to appeal from the decision of the Labor Arbiter and the NLRC should have forthwith dismissed their appeal memorandum.

There is another and more compelling reason why the respondent Board members' appeal should have been dismissed forthwith: that appeal was quite bereft of merit. Both the Labor Arbiter and the NLRC had found that the indefinite suspension and termination of services imposed by the respondent Board members upon petitioner Cosalan was illegal. That illegality flowed, firstly, from the fact that the suspension of Cosalan was continued long after expiration of the period of thirty (30) days, which is the maximum period of preventive suspension that could be lawfully imposed under Section 4, Rule XIV of the Omnibus Rules Implementing the Labor Code. Secondly, Cosalan had been deprived of procedural due process by the respondent Board members. He was never informed of the charges raised against him and was given no opportunity to meet those charges and present his side of whatever dispute existed; he was kept totally in the dark as to the reason or reasons why he had been suspended and effectively dismissed from the service of Beneco Thirdly, respondent Board members failed to adduce any cause which could reasonably be regarded as lawful cause for the suspension and dismissal of respondent Cosalan from his position as General Manager of Beneco. Cosalan was, in other words, denied due process both procedural and substantive. Fourthly, respondent Board members failed to obtain the prior approval of the NEA of their suspension now dismissal of Cosalan, which prior approval was required, inter alia, under the subsisting loan agreement between the NEA and Beneco. The requisite NEA approval was subsequently sought by the respondent Board members; no NEA approval was granted.

In reversing the decision of the Labor Arbiter declaring petitioner Beneco and respondent Board members solidarily liable for the salary, allowances, damages and attorney's fees awarded to respondent Cosalan, the NLRC said:

. . . A perusal of the records show that the members of the Board never acted in their individual capacities. They were acting as a Board passing resolutions affecting their general manager. If these resolutions and resultant acts transgressed


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the law, to then BENECO for which the Board was acting in behalf should bear responsibility. The records do not disclose that the individual Board members were motivated by malice or bad faith, rather, it reveals an intramural power play gone awry and misapprehension of its own rules and regulations. For this reason, the decision holding the individual board members jointly and severally liable with BENECO for Cosalan's backwages is untenable. The same goes for the award of damages which does not have the proverbial leg to stand on.

The Labor Arbiter below should have heeded his own observation in his decision —

Respondent BENECO as an artificial person could not have, by itself, done anything to prevent it. But because the former have acted while in office and in the course of their official functions as directors of BENECO, . . .

Thus, the decision of the Labor Arbiter should be modified conformably with all the foregoing holding BENECO solely liable for backwages and releasing the appellant board members from any individual liabilities. 8 (Emphasis supplied)

The applicable general rule is clear enough. The Board members and officers of a corporation who purport to act for and in behalf of the corporation, keep within the lawful scope of their authority in so acting, and act in good faith, donot become liable, whether civilly or otherwise, for the consequences of their acts, Those acts, when they are such a nature and are done under such circumstances, are properly attributed to the corporation alone and no personal liability is incurred by such officers and Board members.

9

The major difficulty with the conclusion reached by the NLRC is that the NLRC clearly overlooked or disregarded the circumstances under which respondent Board members had in fact acted in the instant case. As noted earlier, the respondent Board members responded to the efforts of Cosalan to take seriously and implement the Audit Memoranda issued by the COA explicitly addressed to the petitioner Beneco, first by stripping Cosalan of the privileges and perquisites attached to his position as General Manager, then by suspending indefinitely and finally dismissing Cosalan from such position. As also noted earlier, respondent Board members offered no suggestion at all of any just or lawful cause that could sustain the suspension and dismissal of Cosalan. They obviously wanted to get rid of Cosalan and so acted, in the words of the NLRC itself, "with indecent


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haste" in removing him from his position and denying him substantive and procedural due process. Thus, the record showed strong indications that respondent Board members had illegally suspended and dismissed Cosalan precisely because he was trying to remedy the financial irregularities and violations of NEA regulations which the COA had brought to the attention of Beneco. The conclusion reached by the NLRC that "the records do not disclose that the individual Board members were motivated by malice or bad faith" flew in the face of the evidence of record. At the very least, a strong presumption had arisen, which it was incumbent upon respondent Board members to disprove, that they had acted in reprisal against respondent Cosalan and in an effort to suppress knowledge about and remedial measures against the financial irregularities the COA Audits had unearthed. That burden respondent Board members did not discharge.

The Solicitor General has urged that respondent Board members may be held liable for damages under the foregoing circumstance under Section 31 of the Corporation Code which reads as follows:

Sec. 31. Liability of directors, trustees or officers. — Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be jointly liable and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons . . . (Emphasis supplied)

We agree with the Solicitor General, firstly, that Section 31 of the Corporation Code is applicable in respect of Beneco and other electric cooperatives similarly situated. Section 4 of the Corporation Code renders the provisions of that Code applicable in a supplementary manner to all corporations, including those with special or individual charters so long as those provisions are not inconsistent with such charters. We find no provision in P.D. No. 269, as amended, that would exclude expressly or by necessary implication the applicability of Section 31 of the Corporation Code in respect of members of the boards of directors of electric cooperatives. Indeed, P.D. No. 269 expressly describes these cooperatives as "corporations:"

Sec. 15. Organization and Purpose. — Cooperative non-stock, non-profit membership corporationsmay be organized, and electric cooperative corporations heretofore formed or registered under the Philippine non-Agricultural Co-operative Act may as hereinafter provided be converted, under this


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Decree for the purpose of supplying, and of promoting and encouraging-the fullest use of, service on an area coverage basis at the lowest cost consistent with sound economy and the prudent management of the business of such corporations.

10 (Emphasis supplied)

We agree with the Solicitor General, secondly, that respondent Board members were guilty of "gross negligence or bad faith in directing the affairs of the corporation" in enacting the series of resolutions noted earlier indefinitely suspending and dismissing respondent Cosalan from the position of General Manager of Beneco. Respondent Board members, in doing so, acted belong the scope of their authority as such Board members. The dismissal of an officer or employee in bad faith, without lawful cause and without procedural due process, is an act that is contra legem. It cannot be supposed that members of boards of directors derive any authority to violate the express mandates of law or the clear legal rights of their officers and employees by simply purporting to act for the corporation they control.

We believe and so hold, further, that not only are Beneco and respondent Board members properly held solidarily liable for the awards made by the Labor Arbiter, but also that petitioner Beneco which was controlled by and which could act only through respondent Board members, has a right to be reimbursed for any amounts that Beneco may be compelled to pay to respondent Cosalan. Such right of reimbursement is essential if the innocent members of Beneco are not to be penalized for the acts of respondent Board members which were both done in bad faith andultra vires. The liability-generating acts here are the personal and individual acts of respondent Board members, and are not properly attributed to Beneco itself.

WHEREFORE, the Petition for Certiorari is GIVEN DUE COURSE, the comment filed by respondent Board members is TREATED as their answer, and the decision of the National Labor Relations Commission dated 21 November 1988 in NLRC Case No. RAB-1-0313-84 is hereby SET ASIDE and the decision dated 5 April 1988 of Labor Arbiter Amado T. Adquilen hereby REINSTATED in toto. In addition, respondent Board members are hereby ORDERED to reimburse petitioner Beneco any amounts that it may be compelled to pay to respondent Cosalan by virtue of the decision of Labor Arbiter Amado T. Adquilen. No pronouncement as to costs.

SO ORDERED.


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G.R. No. 147369. October 23, 2003]

Spouses PATRICK JOSE and RAFAELA JOSE, petitioners, vs. Spouses HELEN BOYON and ROMEO BOYON,respondents.

D E C I S I O N

PANGANIBAN, J.:

In general, substituted service can be availed of only after a clear showing that personal service of summons was not legally possible. Also, service by publication is applicable in actions in rem and quasi in rem, but not in personal suits such as the present one which is for specific performance.

The Case

Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, assailing the February 26, 2001 Decision[2]of the Court of Appeals (CA) in CA-GR SP No. 60888. The dispositive portion of the CA Decision is worded as follows:

“WHEREFORE, on the basis of what prescinds, the assailed resolution and orders

issued by the public respondent are perforce ANNULLED and SET ASIDE. This

pronouncement is nonetheless rendered without prejudice to the refiling of the

same case by the private respondents with the court a quo.”[3]

The Facts

The factual antecedents of the case are narrated by the CA in this wise:

http://sc.judiciary.gov.ph/jurisprudence/2003/oct2003/147369.htm#_ftn1




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“On July 2, 1998, [petitioners] Patrick and Rafaela Jose lodged a complaint for

specific performance against [respondents] Helen and Romeo Boyon to compel

them to facilitate the transfer of ownership of a parcel of land subject of

a controverted sale. The action was lodged before the Regional Trial Court

of Muntinlupa which is presided by herein public respondent Judge

N.C. Perello. On July 21, 1998, respondent judge, through the acting Branch Clerk

of Court of Branch 276 of the RTC of Muntinlupa City, issued summons to the

[respondents]. As per return of the summons, substituted service was resorted to

by the process server allegedly because efforts to serve the summons personally to

the [respondents] failed. On December 9, 1998, [petitioners] filed before the trial

court an Ex-parte Motion for Leave of Court to Effect Summons by

Publication. On December 28, 1998, public respondent issued an Order granting

the Ex-parte Motion for Leave of Court to Effect Summons by

Publication. On July 30, 1999, the respondent judge, sans a written motion, issued

an Order declaring herein [respondents] in default for failure to file their respective

answers. As a consequence of the declaration of default, [petitioners] were

allowed to submit their evidence ex-parte. Ultimately, on December 7, 1999,

respondent judge issued the assailed resolution, the dispositive portion of which

reads as follows:

‘x x x Therefore, Spouses Helen and Romeo Boyon are directed to execute the

necessary document with the effect of withdrawing the Affidavit of Loss they filed

and annotated with the Register of Deeds of Makati City so that title ‘to the parcel

of land subject of the Deed of Absolute Sale in favor of the Plaintiffs be transferred

in their names. Thereafter the Register of Deeds of Makati City

or Muntinlupa City may cancel Transfer of Certificate of Title No. 149635 of the

Defendants and issue another to Plaintiff under the deed of sale, clean and free of

any reported encumbrance.

‘Defendants are also directed to pay Plaintiffs actual expenses in the amount

of P20,000 and attorney’s fees of P20,000 including costs of this suit.’

x x x x x x x x x

“On January 5, 2000, [respondent] Helen Boyon, who was then residing in

the United States of America, was surprised to learn from her sister

ElizabethBoyon, of the resolution issued by the respondent court. On January 18,

2000, [respondents] filed an Ad Cautelam motion questioning, among others, the

validity of the service of summons effected by the court a quo. On March 17,

2000, the public respondent issued an Order denying the said motion on the basis

of the defaulted [respondents’] supposed loss of standing in court. On March 29,

2000, the [respondents] once again raised the issue of jurisdiction of the trial court

via a motion for reconsideration. On June 22, 2000, however, an Order was issued

by the public respondent denying the said motion. The [petitioners] moved for the


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execution of the controverted judgment which the respondent judge ultimately

granted.”[4]

Thereafter, respondents filed before the CA a Petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure, questioning the jurisdiction of the regional trial court (RTC).

Ruling of the Court of Appeals

The CA held that the trial court had no authority to issue the questioned Resolution and Orders. According to the appellate court, the RTC never acquired jurisdiction over respondents because of the invalid service of summons upon them. First, the sheriff failed to comply with the requirements of substituted service of summons, because he did not specify in the Return of Summons the prior efforts he had made to locate them and the impossibility of promptly serving the summons upon them by personal service. Second, the subsequent summons by publication was equally infirm, because the Complaint was a suit for specific performance and therefore an action inpersonam. Consequently, the Resolution and the Orders were null and void, since the RTC had never acquired jurisdiction over respondents.


Issues

In their Memorandum, petitioners raise the following issues for our consideration:

“A. The Honorable Court of Appeals erred in not holding that the assailed

Resolution dated December 7, 1999 was already final and executory

“B. The Honorable Court of Appeals erred in giving due course to the Petition for

Certiorari of private respondents despite the pendency of an appeal earlier filed

“C. The Honorable Court erred in not holding that the Petition for Certiorari was

time barred

“D. The Honorable Court of Appeals erred in holding that the proceedings in the

lower court are null and void due to invalid and defective service of summons and

the court did not acquire jurisdiction over the person of the respondents.”[6]





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In sum, the main issue revolves around the validity of the service of summons on respondents.


The Petition has no merit.

Main Issue: Validity of the Service of Summons

Petitioners aver that the CA erred in ruling that the service of summons on respondents was invalid. They submit that although the case filed before the trial court was denominated as an action for specific performance, it was actually an action quasi in rem, because it involved a piece of real property located in the Philippines. They further argue that in actions quasi in rem involving ownership of a parcel of land, it is sufficient that the trial court acquire jurisdiction over the res. Thus, the summons by publication, which they effected subsequent to the substituted service of summons, was allegedly sufficient.

On the other hand, respondents maintain that the proceedings in the trial court were null and void because of the invalid and defective service of summons. According to them, the Return of Summons issued by the process server of the RTC failed to state that he had exerted earnest efforts to effect the service of summons. He allegedly tried to serve it personally on them on July 22, 1998 at No. 32 ArizaDrive, Camella Homes, Alabang. He, however, resorted to substituted service on that same day, supposedly because he could not find respondents in the above address. They further allege that the person to whom he gave the summons was not even a resident of that address.

Respondents contend that when summons is served by substituted service, the return must show that it was impossible to serve the summons personally, and that efforts had been exerted toward that end. They add that noncompliance with the rule on substituted service renders invalid all proceedings relative thereto.

As to the summons by publication subsequently effected by petitioners, respondents argue that the case filed before the trial court was an action for specific performance and, therefore, an action in personam. As such, the summons by publication was insufficient to enable the trial court to acquire jurisdiction over the persons of respondents.


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Respondents conclude that even granting that the service of summons by publication was permissible under the circumstances, it would still be defective and invalid because of the failure of petitioners to observe the requirements of law, like an Affidavit attesting that the latter deposited in the post office a copy of the summons and of the order of publication, paid the postage, and sent the documents by registered mail to the former’s last known address.

We agree with respondents. In general, trial courts acquire jurisdiction over the person of the defendant by the service of summons. Where the action is in personam and the defendant is in the Philippines, such service may be done by personal or substituted service, following the procedures laid out in Sections 6 and 7 of Rule 14 of the Revised Rules of Court, which read:

“Section 6. Service in person on defendant. - Whenever practicable, the summons

shall be served by handing a copy thereof to the defendant in person, or, if he

refuses to receive and sign for it, by tendering it to him.

“Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be

served within a reasonable time as provided in the preceding section, service may

be effected (a) by leaving copies of the summons at the defendant's residence with

some person of suitable age and discretion then residing therein, or (b) by leaving

the copies at defendant’s office or regular place of business with some competent

person in charge thereof.”

As can be gleaned from the above-quoted Sections, personal service of summons is preferred to substituted service. Only if the former cannot be made promptly can the process server resort to the latter. Moreover, the proof of service of summons must (a) indicate the impossibility of service of summons within a reasonable time; (b) specify the efforts exerted to locate the defendant; and (c) state that the summons was served upon a person of sufficient age and discretion who is residing in the address, or who is in charge of the office or regular place of business, of the defendant.[7] It is likewise required that the pertinent facts proving these circumstances be stated in the proof of service or in the officer’s return. The failure to comply faithfully, strictly and fully with all the foregoing requirements of substituted service renders the service of summons ineffective.[8]

Defective Personal Service of Summons

In the instant case, it appears that the process server hastily and capriciously resorted to substituted service of summons without actually




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exerting any genuine effort to locate respondents. A review of the records[9] reveals that the only effort he exerted was to go to No. 32 Ariza Drive, Camella Homes, Alabang on July 22, 1998, to try to serve the summons personally on respondents. While the Return of Summons states that efforts to do so were ineffectual and unavailing because Helen Boyon was in the United States and Romeo Boyonwas in Bicol, it did not mention exactly what efforts -- if any -- were undertaken to find respondents. Furthermore, it did not specify where or from whom the process server obtained the information on their whereabouts. The pertinent portion of the Return of Summons is reproduced as follows:

“That efforts to serve the said Summons personally upon defendants Sps. Helen

and Romeo Boyon were made but the same were ineffectual and unavailing for the

reason that defendant Helen Boyon is somewhere in the United States of America

and defendant Romeo Boyon is in Bicol thus substituted service was made in

accordance with Section 7, Rule 14, of the Revised Rules of Court.”[10]

The Return of Summons shows that no effort was actually exerted and no positive step taken by either the process server or petitioners to locate and serve the summons personally on respondents. At best, the Return merely states the alleged whereabouts of respondents without indicating that such information was verified from a person who had knowledge thereof. Certainly, without specifying the details of the attendant circumstances or of the efforts exerted to serve the summons, a general statement that such efforts were made will not suffice for purposes of complying with the rules of substituted service of summons.

The necessity of stating in the process server’s Return or Proof of Service the material facts and circumstances sustaining the validity of substituted service was explained by this Court in Hamilton v. Levy,[11] from which we quote:

“x x x The pertinent facts and circumstances attendant to the service of summons

must be stated in the proof of service or Officer’s Return; otherwise, any

substituted service made in lieu of personal service cannot be upheld. This is

necessary because substituted service is in derogation of the usual method of

service. It is a method extraordinary in character and hence may be used only as

prescribed and in the circumstances authorized by statute. Here, no such

explanation was made. Failure to faithfully, strictly, and fully comply with the

requirements of substituted service renders said service ineffective.”[12]

Moreover, the requirements of substituted service of summons and the effect of noncompliance with the subsequent proceedingstherefor were discussed in Madrigal v. Court of Appeals[13] as follows:



http://sc.judiciary.gov.ph/jurisprudence/2000/nov2000/139283.htm






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“In a long line of cases, this Court held that the impossibility of personal service

justifying availment of substituted service should be explained in the proof of

service; why efforts exerted towards personal service failed. The pertinent facts

and circumstances attendant to the service of summons must be stated in the proof

of service or Officer’s Return; otherwise, the substituted service cannot be

upheld. It bears stressing that since service of summons, especially for

actions in personam, is essential for the acquisition of jurisdiction over the person

of the defendant, the resort to a substituted service must be duly justified. Failure

to do so would invalidate all subsequent proceedings on jurisdictional grounds.”[14]

Summons by Publication Improper

It must be noted that extraterritorial service of summons or summons by publication applies only when the action is in rem or quasi inrem. The first is an action against the thing itself instead of against the defendant’s person; in the latter, an individual is named as defendant, and the purpose is to subject that individual’s interest in a piece of property to the obligation or loan burdening it.[15]

In the instant case, what was filed before the trial court was an action for specific performance directed against respondents. While the suit incidentally involved a piece of land, the ownership or possession thereof was not put in issue, since they did not assert any interest or right over it. Moreover, this Court has consistently declared that an action for specific performance is an action in personam.[16]

Having failed to serve the summons on respondents properly, the RTC did not validly acquire jurisdiction over their persons. Consequently, due process demands that all the proceedings conducted subsequent thereto should be deemed null and void.[17]

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.






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G.R. No. 108229 August 24, 1993

DASMARIÑAS GARMENTS, INC., petitioner, vs. HON. RUBEN T. REYES, Judge, Regional Trial Court, Manila, Branch 50, and AMERICAN PRESIDENT LINES, LTD., respondents.

Sobreviñas, Diaz, Haudini & Bodegon Law Offices for petitioner.

Tan, Manzano & Velez Law Offices for private respondent.

R E S O L U T I O N

NARVASA, C.J.:

Sometime in September, 1987, in the Regional Trial Court of Manila, the American President Lines, Ltd. sued Dasmariñas Garments, Inc. to recover the sum of US $53,228.45 as well as an amount equivalent to twenty-five percent (25%) thereof as attorney's fees and litigation expenses.

In its answer dated December 1, 1987, Dasmariñas Garments, Inc. (hereafter, simply Dasmariñas) specifically denied any liability to the plaintiff (hereafter simply APL), and set up compulsory counterclaims against it.

The case was in due course scheduled for trial on April 27, 1988. On that date APL presented its first witness whose testimony was completed on


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November 12, 1988. The case was reset to May 3, 1989 for reception of the testimony of two (2) more witnesses in APL's behalf.

At the hearing of May 3, 1989, instead of presenting its witnesses, APL filed a motion praying that it intended to take the depositions of H. Lee and Yeong Fang Yeh in Taipei, Taiwan and prayed that for this purpose, a "commission or letters rogatory be issued addressed to the consul, vice-consul or consular agent of the Republic of the Philippines in Taipei . . . " Five (5) days later APL filed an amended motion stating that since the Philippine Government has no consulate office in Taiwan in view of its "one China policy," there being in lieu thereof an office set up by the President "presently occupied by Director Joaquin Roces which is the Asia Exchange Center, Inc.," it was necessary — and it therefore prayed — "that commission or letters rogatory be issued addressed to Director Joaquin Roces, Executive Director, Asian Executive Exchange Center, Inc., Room 901, 112 Chunghsiao, E. Road, Section 1, Taipe, Republic of China, to hear and take the oral deposition of the aforenamed persons . . . ."

The motion was opposed by Dasmariñas. It contended that (a) the motion was "fatally defective in that it does not seek . . . that a foreign court examine a person within its jurisdiction;" (b) issuance of letters rogatory was unnecessary because the witnesses "can be examined before the Philippine Court;" and (c) the Rules of Court "expressly require that the testimony of a witness must be taken orally in open court and not by deposition."

Extensive argument on the matter thereafter followed, through various pleadings filed by the parties, in the course of which APL submitted to the Trial Court (a) the letter received by its counsel from Director Joaquin R. Roces of the Asian Exchange Center, Inc., dated November 20, 1989, advising that "this Office can only take deposition upon previous authority from the Department of Foreign Affairs," this being "in consonance with the Supreme Court Administrative Order requiring courts or judicial bodies to course their requests through the Department of Foreign Affairs;" and (b) a letter sent by "fax" to the same counsel by a law firm in Taipei, Lin & Associates Maritime Law Office, transmitting information inter alia of the mode by which, under the "ROC Civil Procedure Code," "a copy or an abridged copy" of documents on file with a Taiwan Court may be obtained.

By Order dated March 15, 1991, the Trial Court resolved the incident in favor of APL, disposing as follows:

ACCORDINGLY, the motion to take testimonies of plaintiff's Taiwanese witnesses, Kenneth H. Lee and Yeong Fah Yeh, by deposition (upon written interrogatories) is hereby GRANTED.


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The Asian Exchange Center, Inc. thru Director Joaquin R. Roces is hereby COMMISSIONED to take down the deposition. Compliance with the Rules on the taking of testimony by deposition upon written interrogatories under Sections 25-29 of Rule 24, Rules of Court is enjoined.

Let this Order be coursed through the Department of Foreign Affairs, Manila, pursuant to Supreme Court Administrative Circular No. 4 dated April 6, 1987.

The Court opined that "the Asian Exchange Center, Inc. being the authorized Philippine representative in Taiwan, may take the testimonies of plaintiff's witnesses residing there by deposition, but only upon written interrogatories so as to give defendant the opportunity to cross-examine the witnesses by serving cross-examination."

Dasmariñas sought reconsideration by motion filed June 25, 1991 on the following grounds: (1) authority of the Asian Exchange Center, Inc. (AECI) to take depositions has not been established, it not being one of those so authorized by the Rules of Court to take depositions in a foreign state; (2) AECI's articles of incorporation show that it is not vested with any such authority; (3) to permit deposition-taking by commission without the authority of the foreign state in which deposition is taken constitutes infringement of judicial sovereignty; and (4) depositions by written interrogatories have inherent limitations and are not suitable to matters dependent on the credibility of witnesses; oral testimony in open court remains the "most satisfactory method of investigation of facts'" and "'affords the greatest protection to the rights and liberties of citizens."

By Order dated July 5, 1991, the motion for reconsideration was denied because "filed out of time" and being a mere rehash of arguments already passed upon. In the same Order, APL was directed "to take the necessary steps to implement the order authorizing the . . . (deposition-taking) of its witnesses not later than the end of this month, otherwise the Court will consider inaction or lack of interest as waiver to adduce additional evidence by deposition."

Dasmariñas instituted a special civil action of certiorari in the Court of Appeals to nullify the orders of the Trial Court just described. Said Appellate Court restrained enforcement of the orders of March 15, 1991 and July 5, 1991 "in order to maintain the status quo and to prevent the infliction of irreparable damage and injury upon the petitioner."

After due proceedings, the Court of Appeals (Third Division) rendered judgment on September 23, 1992 denying Dasmariñas petition


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for certiorari and upholding the challenged orders of the Trial Court. Once again, Dasmariñas sought reconsideration of an adverse disposition, and once again, was rebuffed. Its motion for reconsideration was denied in a Resolution of the Court of Appeals dated December 11, 1992.

Once again Dasmariñas has availed of the remedy of appeal. It has come to this Court and prays for the reversal of the Appellate Court's Decision of September 23, 1992 and Resolution dated December 11, 1992. Once again, it will fail.

Dasmariñas ascribes to the Court of Appeals the following errors, to wit:

1) "in holding that a party could, during the trial of the case, present its evidence by taking the deposition of its witnesses in a foreign jurisdiction before a private entity not authorized by law to take depositions in lieu of their oral examination in open Court considering that:

a) the taking of deposition is a mode of pretrial discovery to be availed of before the action comes to trial;

b) no urgent or compelling reason has been shown to justify the departure from the accepted and usual judicial proceedings of examining witnesses in open court where their demeanor could be observed by the trial judge;"

2) "in disregarding the inherently unfair situation in allowing private respondent, a foreign entity suing in the Philippines, to present its evidence by mere deposition of its witnesses away from the 'penetrating scrutiny' of the trial Judge while petitioner is obligated to bring and present its witnesses in open court subject to the prying eyes and probing questions of the Judge;" and

3) "in sanctioning the deposition taking of . . . (APL's) witnesses in Taipei, Taiwan, a foreign jurisdiction not recognized by the Philippines in view of its 'one-China policy,' before the AECI, a private entity not authorized by law to take depositions."

Depositions are chiefly a mode of discovery. They are intended as a means to compel disclosure of facts resting in the knowledge of a party or other person which are relevant in some suit or proceeding in court. Depositions, and the other modes of discovery (interrogatories to parties; requests for


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admission by adverse party; production or inspection of documents or things; physical and mental examination of persons) are meant to enable a party to learn all the material and relevant facts, not only known to him and his witnesses but also those known to the adverse party and the latter's own witnesses. In fine, the object of discovery is to make it possible for all the parties to a case to learn all the material and relevant facts, from whoever may have knowledge thereof, to the end that their pleadings or motions may not suffer from inadequacy of factual foundation, and all the relevant facts may be clearly and completely laid before the Court, without omission or suppression.

Depositions are principally made available by law to the parties as a means of informing themselves of all the relevant facts; they are not therefore generally meant to be a substitute for the actual testimony in open court of a party or witness. The deponent must as a rule be presented for oral examination in open court at the trial or hearing. This is a requirement of the rules of evidence. Section 1, Rule 132 of the Rules of Court provides:

Sec. 1. Examination to be done in open court. — The examination of witnesses presented in a trial or hearing shall be done in open court, and under oath or affirmation. Unless the witness is incapacitated to speak, or the question calls for a different mode of answer, the answers of the witness shall be given orally.

Indeed, any deposition offered to prove the facts therein set out during a trial or hearing, in lieu of the actual oral testimony of the deponent in open court, may be opposed and excluded on the ground that it is hearsay; the party against whom it is offered has no opportunity to cross-examine the deponent at the time that his testimony is offered. It matters not that that opportunity for cross-examination was afforded during the taking of the deposition; for normally, the opportunity for cross-examination must be accorded a party at the time that the testimonial evidence is actually presented against him during the trial or hearing.

However, depositions may be used without the deponent being actually called to the witness stand by the proponent, under certain conditions and for certain limited purposes. These exceptional situations are governed by Section 4, Rule 24 of the Rules of Court.

Sec. 4. Use of depositions. — At the trial or upon the hearing of a motion of an interlocutory proceeding, any part or all of a deposition, so far as admissible under the rules of evidence, may be used against any party who was present or represented at the taking of the deposition or who had due


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notice thereof, in accordance with any of the following provisions:

(a) Any deposition may be used by any party for the purpose of contradicting or impeaching the testimony of deponent as a witness;

(b) The deposition of a party or of any one who at the time of taking the deposition was an officer, director, or managing agent of a public or private corporation, partnership, or association which is a party may be used by an adverse party for any purpose;

(c) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: (1) that the witness is dead; or (2) that the witness if out of the province and at a greater distance than fifty (50) kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was procured by the party offering the deposition; or (3) that the witness is unable to attend to testify because of age, sickness, infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to procure the attendance of the witness by subpoena; or (5) upon application and notice, that such exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open court, to allow the deposition to be used;

(d) If only part of a deposition is offered in evidence by a party, the adverse party may require him to introduce all of it which is relevant to the part introduced, and any party may introduce any other parts.

The principle conceding admissibility to a deposition when the deponent is dead, out of the Philippines, or otherwise unable to come to court to testify, is consistent with another rule of evidence, found in Section 47, Rule 132 of the Rules of Court.

Sec. 47. Testimony or deposition at a former proceeding. — The testimony or deposition of a witness deceased or unable to testify, given in a former case or proceeding, judicial or administrative, involving the same parties and subject matter, may be given in evidence against the adverse party who had the opportunity to cross-examine him.


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It is apparent then that the deposition of any person may be taken wherever he may be, in the Philippines or abroad. If the party or witness is in the Philippines, his deposition "shall be taken before any judge, municipal or notary public" (Sec. 10, Rule 24, Rules of Court). If in a foreign state or country, the deposition "shall be taken: (a) on notice before a secretary or embassy or legation, consul general, consul, vice-consul, or consular agent of the Republic of the Philippines, or (b) before such person or officer as may be appointed by commission or under letters rogatory" (Sec. 11, Rule 24).

Leave of court is not necessary where the deposition is to be taken before "a secretary or embassy or legation, consul general, consul, vice-consul, or consular agent of the Republic of the Philippines," and the defendant's answer has already been served (Sec. 1 Rule 24). After answer, whether the deposition-taking is to be accomplished within the Philippines or outside, the law does not authorize or contemplate any intervention by the court in the process, all that is required being that "reasonable notice" be given "in writing to every other party to the action . . . (stating) the time and place for taking the deposition and the name and address of each person to be examined, if known, and if the name is not known, a general description sufficient to identify him or the particular class or group to which he belongs. . . . " (Sec. 15, Rule 24). The court intervenes in the process only if a party moves (1) to "enlarge or shorten the time" stated in the notice (id.), or (2) "upon notice and for good cause shown," to prevent the deposition-taking, or impose conditions therefor, e.g., that "certain matters shall not be inquired into" or that the taking be "held with no one present except the parties to the action and their officers or counsel," etc. (Sec. 16, Rule 24), or (3) to terminate the process on motion and upon a showing that "it is being conducted in bad faith or in such manner as unreasonably to annoy, embarrass, or oppress the deponent or party" (Sec 18, Rule 24).

Where the deposition is to be taken in a foreign country where the Philippines has no "secretary or embassy or legation, consul general, consul, vice-consul, or consular agent," then obviously it may be taken only "before such person or officer as may be appointed by commission or under letters rogatory. Section 12, Rule 24 provides as follows:

Sec. 12. Commission or letters rogatory. — A commission or letters rogatory shall be issued only when necessary or convenient, on application and notice, and on such terms and with such directions as are just and appropriate. Officers may be designated in notices or commissions either by name or descriptive title and letters rogatory may be addressed "To the Appropriate Judicial Authority in (here name the country)."


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A commission may be defined as "(a)n instrument issued by a court of justice, or other competent tribunal, to authorize a person to take depositions, or do any other act by authority of such court or tribunal" (Feria, J., Civil Procedure, 1969 ed., p. 415, citing Cyclopedic Law Dictionary, p. 200). Letters rogatory, on the other hand, may be defined as "(a)n instrument sent in the name and by the authority of a judge or court to another, requesting the latter to cause to be examined, upon interrogatories filed in a cause pending before the former, a witness who is within the jurisdiction of the judge or court to whom such letters are addressed" (Feria, J., op. cit., citing Cyclopedic Law Dictionary, p. 653). Section 12, Rule 24 just quoted states that a commission is addressed to "officers . . . designated . . . either by name or descriptive title," while letters rogatory are addressed to some "appropriate judicial authority in the foreign state." Noteworthy in this connection is the indication in the Rules that letters rogatory may be applied for and issued only after a commission has been "returned unexecuted" as is apparent from Form 21 of the "Judicial Standard Forms" appended to the Rules of Court, which requires the inclusion in a "petition for letters rogatory" of the following paragraph, viz.:

xxx xxx xxx

3. A commission issued by this Court on the ______ day of ______, 19__, to take the testimony of (here name the witness or witnesses) in (here name the foreign country in which the testimony is to be taken), before _________________ (name of officer), was returned unexecuted by __________________ on the ground that ____________, all of which more fully appears from the certificate of said __________ to said commission and made a part hereof by attaching it hereto (or state other facts to show commission is inadequate or cannot be executed) (emphasis supplied).

In the case at bar, the Regional Trial Court has issued a commission to the "Asian Exchange Center, Inc. thru Director Joaquin R. Roces" "to take the testimonies of . . . Kenneth H. Lee and Yeong Fah Yeh, by deposition (upon written interrogatories) . . . ." It appears that said Center may, "upon request and authority of the Ministry (now Department) of Foreign Affairs, Republic of the Philippines" issue a "Certificate of Authentications" attesting to the identity and authority of Notaries Public and other public officers of the Republic of China, Taiwan (eg., the Section Chief, Department of Consular Affairs of the latter's Ministry of Foreign Affairs) (Annex B of Annex N of the petition for review on certiorari) — a prima facie showing not rebutted by petitioner.


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It further appears that the commission is to be coursed through the Department of Foreign Affairs conformably with Circular No. 4 issued by Chief Justice Claudio Teehankee on April 6, 1987, pursuant to the suggestion of the Department of Foreign Affairs — directing "ALL JUDGES OF THE REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS AND MUNICIPAL CIRCUIT TRIAL COURTS" "to course all requests for the taking of deposition of witnesses residing abroad through the Department of Foreign Affairs" to enable it and "the Philippine Foreign Service establishments to act on the matter in a judicious and expeditious manner;" this, "in the interest of justice," and to avoid delay in the deposition-taking.

Petitioner would however prevent the carrying out of the commission on various grounds.

The first is that the deposition-taking will take place in "a foreign jurisdiction not recognized by the Philippines in view of its 'one-China policy.'" This is inconsequential. What matters is that the deposition is taken before a Philippine official acting by authority of the Philippine Department of Foreign Affairs and in virtue of a commission duly issued by the Philippine Court in which the action is pending, and in accordance, moreover, with the provisions of the Philippine Rules of Court pursuant to which opportunity for cross-examination of the deponent will be fully accorded to the adverse party.

Dasmariñas also contends that the "taking of deposition is a mode of pretrial discovery to be availed of before the action comes to trial." Not so. Depositions may be taken at any time after the institution of any action, whenever necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-trial or before it; no prohibition against the taking of depositions after pre-trial. Indeed, the law authorizes the taking of depositions of witnesses before or after an appeal is taken from the judgment of a Regional Trial Court "to perpetuate their testimony for use in the event of further proceedings in the said court" (Rule 134, Rules of Court), and even during the process of execution of a final and executory judgment (East Asiatic Co. v. C.I.R., 40 SCRA 521, 544).

Dasmariñas further claims that the taking of deposition under the circumstances is a "departure from the accepted and usual judicial proceedings of examining witnesses in open court where the demeanor could be observed by the trial judge;" that it is "inherently unfair" to allow APL, "a foreign entity suing in the Philippines, to present its evidence by mere deposition of its witnesses away from the 'penetrating scrutiny' of the trial Judge while petitioner is obligated to bring and present its witnesses in open court subject to the prying eyes and probing questions of the Judge."


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Of course the deposition-taking in the case at bar is a "departure from the accepted and usual judicial proceedings of examining witnesses in open court where their demeanor could be observed by the trial judge;" but the procedure is not on that account rendered illegal nor is the deposition thereby taken, inadmissible. It precisely falls within one of the exceptions where the law permits such a situation, i.e., the use of deposition in lieu of the actual appearance and testimony of the deponent in open court and without being "subject to the prying eyes and probing questions of the Judge." This is allowed provided the deposition is taken in accordance with the applicable provisions of the Rules of Court and the existence of any of the exceptions for its admissibility — e.g., "that the witness if out of the province and at a greater distance than fifty (50) kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was procured by the party offering the deposition; or . . . that the witness is unable to attend to testify because of age, sickness, infirmity, or imprisonment, etc." (Sec. 4 Rule 24,supra, emphasis supplied) — is first satisfactorily established (See Lopez v. Maceren, 95 Phil. 754).

The Regional Trial Court saw fit to permit the taking of the depositions of the witnesses in question only by written interrogatories, removing the proponent's option to take them by oral examination, i.e., by going to Taipei and actually questioning the witnesses verbally with the questions and answers and observations of the parties being recorded stenographically. The imposition of such a limitation, and the determination of the cause thereof, are to be sure within the Court's discretion. The ostensible reason given by the Trial Court for the condition — that the deposition be taken "only upon written interrogatories" — is "so as to give defendant (Dasmariñas) the opportunity to cross-examine the witnesses by serving cross-interrogatories." The statement implies that opportunity to cross-examine will not be accorded the defendant if the depositions were to be taken upon oral examination, which, of course, is not true. For even if the depositions were to be taken on oral examination in Taipei, the adverse party is still accorded full right to cross-examine the deponents by the law, either by proceeding to Taipei and there conducting the cross-examination orally, or opting to conduct said cross-examination merely by serving cross-interrogatories.

One other word. In its Order of July 5, 1991 — denying Dasmariñas motion for reconsideration of the earlier order dated March 15, 1991 (allowing the taking of deposition by commission) — one of the reasons adduced by the Regional Trial Court for the denial was that the motion had been "filed out of time." Evidently, the Trial Court reached this conclusion because, as the record discloses, the motion for reconsideration was filed by Dasmariñas on June 25, 1991, twenty-five (25) days after notice (on May 20, 1991) of


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the Order of March 15, 1991 sought to be reconsidered. Denial of the motion on such a ground is incorrect. In the first place, it appears that there was a motion for extension of time to file a motion for reconsideration, ending on June 25, 1991 which was however not acted on or granted by the Court. More importantly, the order sought to be reconsidered is an interlocutory order, in respect of which there is no provision of law fixing the time within which reconsideration thereof should be sought.

PREMISES CONSIDERED, the Court Resolved to DISMISS the petition for review on certiorari. Costs against petitioner.

SO ORDERED.

JOWEL SALES, Petitioner,

- versus -

CYRIL A. SABINO, Respondent.

G.R. No. 133154

Present:

PANGANIBAN, J., Chairman

SANDOVAL-GUTIERREZ, CORONA, CARPIO MORALES, and

GARCIA, JJ. Promulgated: December 9, 2005

x-----------------------------------------------------------------------------------x

D E C I S I O N

GARCIA, J.:

Assailed and sought to be set aside in this petition for review

on certiorari under Rule 45 of the Rules of Court are the following

issuances of the Court of Appeals (CA) in CA-G.R. SP No. 44078, to wit:


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1. Decision[1] dated January 20, 1998, affirming an earlier order of

the Regional Trial Court, Branch 152, National Capital Judicial

Region, which admitted the deposition of one Buaneres Corral

as part of respondent’s evidence in an action for damages; and

2. Resolution[2] dated March 22, 1998, denying petitioner’s motion

for reconsideration.

Briefly, the facts may be stated as follows:

On February 20, 1995, in the Regional Trial Court (RTC)

at Pasig City, Metro Manila, herein respondent Cyril A. Sabino filed an

amended complaint[3] for damages against, among others, herein

petitioner Jowel Sales, driver of the vehicle involved in the accident

which ultimately caused the death of respondent’s son, Elbert.

Before any responsive pleading could be filed, respondent, as

plaintiff a quo, notified the defendants that he will take the deposition of

one Buaneres Corral before the Clerk of Court, RTC- Pasig City.

On December 27, 1995 and resumed on January 3, 1996, the

deposition on oral examination of Buaneres Corral was taken before the

Clerk of Court of Pasig, in the presence and with the active participation

of petitioner’s counsel, Atty. Roldan Villacorta, who even lengthily cross-

examined the deponent. In the course of trial, respondent had the

deposition of Buaneres Corral marked as her Exhibits “DD”[4] and

“EE”[5], with submarkings.

Upon conclusion of her evidentiary presentation, respondent made

a Formal Offer of Exhibits,[6] among which are Exhibits “DD” and “EE”.

Likewise offered in evidence as Exhibit “BB”[7] is a certification from the

Bureau of Immigration attesting to the May 28, 1996 departure for

abroad of Buaneres Corral via Flight No. PR 658.

Petitioner opposed the admission of Exhs. “DD” and “EE” and

even asked that they be expunged from the records on the ground that

the jurisdictional requirements for their admission under Section 4, Rule

23 of the Rules of Court, infra, were not complied with. He also

http://sc.judiciary.gov.ph/jurisprudence/2005/dec2005/133154.htm#_ftn1








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downplayed the evidentiary value of Exhibit “BB” for reasons he would

repeat in this petition.

In its order of February 3, 1997,[8] the trial court admitted, among

other evidence, respondent’s Exhibits “DD”, “EE” and “BB”. With his

motion for reconsideration[9] having been denied by the court in its

subsequent order of March 25, 1997,[10] petitioner went on certiorari to

the Court of Appeals in CA-G.R. SP No. 44078, imputing grave abuse of

discretion on the part of the trial court in admitting in evidence the

deposition in question (Exhibits “DD” and “EE”).

As stated at the threshold hereof, the appellate court, in the herein

assailed decision dated January 20, 1998,[11]upheld the trial court and

effectively denied due course to and dismissed petitioner’s recourse,

explaining, inter alia, that petitioner’s active participation, through

counsel, during the taking of subject deposition and adopting it as his

own exhibits, has thereby estopped him from assailing the admissibility

thereof as part of respondent’s evidence. His motion for reconsideration

having been denied by the appellate court in its equally assailed

resolution of March 22, 1998, petitioner is now with us via the instant

petition, raising the following issues of his own formulation: 1. Whether or not the requirements of Section 4, Rule 24 (now

Section 3) of the Revised Rules of Court were satisfied by the

respondent when it presented a certification attesting to the fact that

deponent has left the country but silent as to whether or not at the

time his deposition was offered in evidence is in the Philippines

2. Whether or not the petitioner in cross-examining the

deponent during the taking of his deposition waived any and all

objections in connection therewith.[12]

The petition lacks merit.

Section 4, Rule 23[13] of the Rules of Court, upon which petitioner

mounts his challenge to the admission in evidence of the subject

deposition, pertinently reads:

SEC. 4. Use of depositions.- At the trial . . . any part or all of a

deposition, so far as admissible under the rules of evidence, may be

used against any party who was present or represented at the taking of








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the deposition or who had due notice thereof, in accordance with any

of the following provisions:

xxx xxx xxx (c) The deposition of a witness, whether or not a party, may be

used by any party for any purpose if the court finds: (1) that the

witness is dead; or (2) that the witness resides at a distance more

than one hundred (100) kilometers from the place of trial or

hearing, or is out of the Philippines, unless it appears that his

absence was procured by the party offering the deposition; or (3)

that the witness is unable to attend or testify because of age,

sickness, infirmity, or imprisonment; or (4) that the party

offering the deposition has been unable to procure the attendance

of the witness by subpoena; or (5) upon application and notice,

that such exception circumstances exist and with due regard to

the importance of presenting the testimony of witnesses orally in open court, to allow the deposition to be used. (Emphasis

supplied).

It is petitioner’s posture that none of the above conditions exists in

this case to justify the admission in evidence of respondent’s Exhibits

“DD” and “EE”. Hence, it was error for the appellate court to have

upheld the admission thereof by the trial court. Discounting the

probative value of the certification from the Bureau of Immigration (Exh.

“BB”) that deponent Buaneres Corral departed for abroad on May 28,

1996, petitioner argues that said certification merely proves the fact of

Corral having left the country on the date therein mentioned. It does

not, however, establish that he has not returned since then and is

unavailable to be present in court to personally testify.

While depositions may be used as evidence in court proceedings,

they are generally not meant to be a substitute for the actual testimony

in open court of a party or witness. Stated a bit differently, a deposition

is not to be used when the deponent is at hand.[14] Indeed, any

deposition offered during a trial to prove the facts therein set out, in lieu

of the actual oral testimony of the deponent in open court, may be

opposed and excluded on the ground of hearsay. However, depositions

may be used without the deponent being called to the witness stand by

the proponent, provided the existence of certain conditions is first

satisfactorily established. Five (5) exceptions for the admissibility of a



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deposition are listed in Section 4, Rule 23, supra, of the Rules of Court.

Among these is when the witness is out of thePhilippines.

The trial court had determined that deponent Bueneres Corral was

abroad when the offer of his deposition was made. This factual finding

of absence or unavailability of witness to testify deserves respect, having

been adequately substantiated. As it were, the certification by the

Bureau of Immigration – Exh. “BB”- provides that evidentiary support.

Accordingly, the attribution of grave abuse of discretion on the part of

the trial court must be struck down. It has been said to be customary

for courts to accept statements of parties as to the unavailability of a

witness as a predicate to the use of depositions.[15] Had deponent

Buaneres Corral indeed returned to the Philippines subsequent to his

departurevia Flight No. PR 658, petitioner could have presented

evidence to show that such was the case. As it is, however, the

petitioner does not even assert the return as a fact, only offering it as a

possibility since no contrary proof had been adduced.

Given the foregoing perspective, the second issue of whether or

not petitioner is estopped from objecting to the use of Corral’s

deposition as part of respondent’s evidence is really no longer

determinative of the outcome of this case, and need not detain us long.

Suffice it to state that, as a rule, the inadmissibility of testimony taken

by deposition is anchored on the ground that such testimony is

hearsay, i.e., the party against whom it is offered has no opportunity to

cross-examine the deponent at the time his testimony is offered. But as

jurisprudence teaches, it matters not that opportunity for cross-

examination was afforded during the taking of the deposition; for

normally, the opportunity for cross-examination must be accorded a

party at the time the testimonial evidence is actually presented against

him during the trial or hearing.[16] In fine, the act of cross-examining

the deponent during the taking of the deposition cannot, without more,

be considered a waiver of the right to object to its admissibility as

evidence in the trial proper. In participating, therefore, in the taking of

the deposition, but objecting to its admissibility in court as evidence,

petitioner did not assume inconsistent positions. He is not, thus,

estopped from challenging the admissibility of the deposition just

because he participated in the taking thereof.




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Lest it be overlooked, Section 29, Rule 23 of the Rules of Court, no

less, lends support to the conclusion just made. In gist, it provides that,

while errors and irregularities in depositions as to notice, qualifications

of the officer conducting the deposition, and manner of taking the

deposition are deemed waived if not objected to before or during the

taking of the deposition, objections to the competency of a witness or

the competency, relevancy, or materiality of testimony may be made for

the first time at the trial and need not be made at the time of the taking

of the deposition, unless they could be obviated at that point.[17]

While perhaps a bit anti-climactic to state at this

point, certiorari will not lie against an order admitting or rejecting a

deposition in evidence, the remedy being an appeal from the final

judgment.[18] For this singular reason alone, the appellate court could

have had already dismissed herein petitioner’s invocation of

its certiorari jurisdiction.

WHEREFORE, the instant petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.




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HEIRS OF PANFILO F. ABALOS,[1]

G.R. No. 156224

Petitioners,

Present:

PUNO, C.J., Chairperson,

- versus - SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

LEONARDO-DE CASTRO, JJ.

AURORA A. BUCAL, DEMETRIO

BUCAL, ARTEMIO F. ABALOS,

LIGAYA U. ABALOS, ROMULO

F. ABALOS, JESUSA O. ABALOS,

MAURO F. ABALOS and

LUZVIMINDA R. ABALOS, Promulgated: Respondents.

February 19, 2008

X --------------------------------------------------------------------------------------- X

DECISION

AZCUNA, J.:

This petition for review on certiorari under Rule 45 of the Rules on Civil

Procedure assails the August 31, 2001 Decision[2]

and November 20, 2002

Resolution[3]

of the Court of Appeals (CA) in CA-G.R. CV No. 39138, which

http://sc.judiciary.gov.ph/jurisprudence/2008/feb2008/156224.htm#_ftn1




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affirmed with modification the May 25, 1992 Decision[4]

of the Regional Trial

Court (RTC) of Lingayen, Pangasinan, Branch 39, in Civil Case No. 16289.

Prologue

On October 30, 1978, petitioners’ father, Panfilo Abalos, filed before the

RTC of Lingayen, Pangasinan, a complaint[5]

docketed as Civil Case No.

15465 for Partition, Annulment of Certain Documents, Accounting and

Damages against Faustino Abalos, his brother, and Danilo Abalos, his nephew

and the only surviving heir of his brother Pedro Abalos. In the amended

complaint,[6]

Panfilo alleged that their father/grandfather, Francisco Abalos,

died intestate and was survived by his wife, Teodorica, and their children,

namely: Maria, Faustino, Pedro, Roman and Panfilo; that at the time of his

death, Francisco left the following real properties:

xxx xxx xxx

a.) A parcel of residential land situated in Linoc, Binmaley,

Pangasinan, containing an area of 1,020 sq. meters, bounded on

the North by Leoncio Dalmacio; On the East by Dimas Perez;

On the South by Callejon; And on the West by Magno

Dalmacio; declared under Tax Declaration No. 121 in the name

of Francisco Abalos and assessed at P255.50; [n]ot registered

under Act 496 [or] under the Spanish [M]ortgaged Law[;]

b.) A parcel of unirrigated riceland situated in Linoc, Binmaley,

Pangasinan, containing an area of 841 sq. meters, bounded on

the North by Callejon; On the South by Roberto Aquino; On the

East by Eulalio Javier; And on the West by Hipolito Perez. It is

originally covered by Tax Declaration in the name of Francisco

Abalos now covered by Tax Declaration No. 14457 in the name

of Faustino Abalos and assessed at P20.00[;] [n]ot registered

under Act 496 [or] under the Spanish [M]ortgaged Law;

c.) A parcel of unirrigated riceland situated in Linoc, Binmaley,


the North by Callejon; On the East by Estanislao Ferrer; On the

South by Saturnino Aquino; And on the West by Hipolito

Perez[.] It is originally declared in the name of Francisco Abalos

and now covered by Tax Declaration No. 14458 in the name of

Faustino Abalos and assessed at P30.00;





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d.) A parcel of fishpond situated in Linoc, Binmaley, Pangasinan,

containing an area of 1,158 sq. meters, bounded on the North by

Doyao River; On the East by Hipolito Perez; On the South by

Leoncio Dalmacio; And on the West by Teodoro Abalos. It is

originally declared in the [name] of Francisco Abalos and now

covered by Tax Declaration No. 21592 in the name of Faustino

Abalos and assessed at P370.00;

e.) A parcel of fishpond situated in Linoc, Binmaley, Pangasinan,

containing an area of 1,158 sq. meters, bounded on the North by

Leoncio Dalmacio; On the East by Teodoro Abalos; On the

South by Leoncio Dalmacio; And on the West by Evaristo

Dalmacio. It is originally declared in the name of Francisco

Abalos and now covered by Tax Declaration No. 21591 in the

name of Faustino Abalos and assessed at P370.00;

f.) A parcel of unirrigated riceland situated in Linoc, Binmaley,

Pangasinan, containing an area of 950 sq. meters[,] bounded on

the North by Liberato Gonzalo; On the East by Severina

Catalan; On the South by Severina Catalan; And on the West by

Barrio Road of Linoc[;] [d]eclared under Tax Declaration No.

124 in the [name] of Francisco Abalos and [a]ssessed at P20.00;

g.) A parcel of fishpond situated in Canaoalan, Binmaley,


the North by Francisco Deogracias; On the East by a Path; On

the South by Ponciano Cayabyab; And on the West by Ponciano

Cayabyab[;] [d]eclared under Tax Declaration No. 122 in the

name of Francisco Abalos and assessed at P70.00;

h.) A parcel of fishpond situated in Canaoalan, Binmaley,


the North by Adriano Gonzalo; On the East by Florencio Perez;

On the South by Pioquinto Ferrer; And on the West by Pator

Terrado[;] [d]eclared under Tax Declaration No. 123 in the name

of Francisco Abalos and assessed at P60.00;

i.) A parcel of little fishpond adjoining and North of the land

described in paragraph 4 sub-paragraph (a) of this complaint

whose Tax Declaration could not be produced by the plaintiff;[7]

xxx xxx xxx



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that said properties were administered by Teodorica; that following their

mother’s death, there was a verbal agreement among Faustino, Pedro and

Panfilo that Faustino would administer all the properties left by their parents

except those given by Teodorica to each of the siblings as their partial advance

inheritance; that taking undue advantage of his position and in clear breach of

the trust and confidence reposed on him, Faustino, by means of fraud and

machination, took possession of the properties given to Maria and Roman upon

their death and transferred some of the administered properties in his name

and/or in the name of his heirs or disposed of them in favor of third parties; that

since his administration of the properties, Faustino has not made any accounting

of the produce, appropriating them almost to himself; and that Panfilo

repeatedly demanded the partition of the properties but Faustino refused to do

so despite earnest efforts towards amicable settlement.

After Panfilo rested his case and following the postponements at the

instance of defendants, the trial court, upon motion, declared that Faustino and

Danilo were deemed to have waived their right to present

evidence.[8]

On February 21, 1984, RTC Branch 37 of Lingayen, Pangasinan,

rendered its Decision,[9]

the dispositive portion of which stated:

WHEREFORE, judgment is hereby rendered ordering:

i. the partition of the intestate estate of the deceased

Francisco Abalos in the following manner

a. to the plaintiff, Panfilo Abalos, is the fishpond,

Parcel D referred to as “Duyao”; and ½ of fishpond,

Parcel H referred to as “Pinirat” plus his advance

inheritance, Parcel F referred to as “Manga”;

b. to defendant, Faustino Abalos, is the residential land

where his house stands and parcels A to I, plus his

advance inheritance, Parcels [B] and C;

c. to defendant, Danilo Abalos, is that fishpond, parcel

E referred to as “Emong,” and the ½ portion of the

fishpond, Parcel H referred to as “Pinirat” and his

advance inheritance of his father Pedro Abalos,

Parcel G.




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ii. the defendant Faustino Abalos to reimburse to plaintiff the

total amount of P19,580.00, Philippine Currency, as plaintiff’s

lawful share from 1944;

iii. the annulment of all documents and/or instruments which

transferred said properties and are considered inconsistent with

the above partition;

iv. the dismissal of defendants’ counterclaim;

v. the defendants to pay the costs of the suit.

SO ORDERED.[10]

Despite the filing of a notice of appeal beyond the reglementary period,

the trial court still gave due course to the appeal of Faustino and Danilo; thus,

Panfilo filed a petition for certiorari before this Court, which subsequently

referred the case to the Intermediate Appellate Court (IAC, now the Court of

Appeals).[11]

The IAC granted the petition and denied the motion for

reconsideration.[12]

On October 30, 1985, this Court affirmed the

Decision.[13]

Upon the issuance of an entry of judgment onNovember 4, 1985,

the IAC ordered the remand of the case to the RTC.[14]

Thereafter,

on December 11, 1985, the trial court issued a writ of execution in favor of

Panfilo.[15]

The Case

The instant case arose when petitioners’ father, Panfilo, began to execute

the Decision in Civil Case No. 15465. In opposition, respondents, who are

children and in-laws of the now deceased Faustino, filed on January 8, 1986 a

case for Quieting of Title, Possession, Annulment of Document and Damages

with Preliminary Injunction.[16]

Docketed as Civil Case No. 16289, the

complaint alleged, among others, that:

xxx xxx xxx

III

Plaintiffs are the absolute owners and in actual possession of

the following parcels of land more particularly described, to wit:









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(a.) A parcel of land (fishpond) with an approximate area of

289.5 square meters, more or less, located at Linoc, Binmaley,

Pangasinan. Bounded on the North by the Duyao River; on the East

by Faustino Abalos before, now Romulo Abalos; on the South by

Leoncio Dalmacio; and on the West by Romulo Abalos. Declared in

the name of Aurora A. Bucal under Tax [Dec.] No. 1568 of the

current land records of Binmaley, Pangasinan; assessed value –

P150.00;

(b.) A parcel of riceland located at Linoc, Binmaley,

Pangasinan, containing an area of 1,196 square meters, more or less.

Bounded on the North by Callejon; on the East by Estanislao Ferrer;

on the South by Saturnino Aquino; and on the West by Hipolito

Ferrer. Declared in the names of Artemio F. Abalos and Mauro F.

Abalos under Tax [Dec.] No. 1007 of the land records of Binmaley,

Pangasinan; assessed value – P260.00;

(c.) A parcel of residential land located at Linoc, Binmaley,

Pangasinan, with an area of 1,029 square meters, more or less.

Bounded on the North by Leoncio Dalmacio; on the East by Dimas

Perez; on the South by Callejon; and on the West by Magno

Dalmacio. Declared in the name of Romulo F. Abalos under Tax

[Dec.] No. 35 of the current land records of Binmaley, Pangasinan;

assessed value –P6,120.00;

(d.) A portion of fishpond located at Linoc, Binmaley,

Pangasinan, with an area of 289.5 square meters, more or less.

Bounded on the North by the Duyao River; on the East by Faustino

Abalos; on the South by Leoncio Dalmacio; and on the West by

Teodoro Abalos. Declared in the name of Romulo F. Abalos under

Tax [Dec.] No. 33 of the current land records of Binmaley,

Pangasinan; assessed value –P180.00;

(e.) A portion (eastern) of fishpond located at Linoc, Binmaley,

Pangasinan, with an area of 579 square meters, more or less. Bounded

on the North by Leoncio Dalmacio; on the East by Teodoro Abalos;

on the South by Leoncio Abalos; and on the West by Evaristo

Dalmacio. Declared in the names of Artemio F. Abalos and Mauro F.



(f.) A parcel of fishpond located at Canaoalan, Binmaley,

Pangasinan, with an area of 1,506 square meters, more or less.


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Bounded on the North by Adriano Gonzalo; on the East by Florencio

Perez; on the South by Pioquinto Ferrer; and on the West by Pastor

Terrado. Declared in the names of Romulo F. Abalos and Mauro F.



IV

Parcel (a) above-described belongs in absolute ownership to

spouses Aurora A. Bucal and Demetrio Bucal who are in actual

possession thereof as such, having acquired the same by absolute sale

from Romulo F. Abalos who in turn bought the same from Maria

Abalos; that the latter in turn acquired the same by inheritance from

her deceased parents, Francisco Abalos and Teodorica Ferrer, who

died on May 4, 1928 and June 2, 1945, respectively. A copy of the

sale from Maria Abalos to Romulo F. Abalos is hereto attached as

ANNEX “A” while the sale by Romulo F. Abalos to Aurora A. Bucal

is hereto attached as ANNEX “B”. A copy of Tax [Dec.] No. 1568

covering said land is hereto attached as ANNEX “C”;

V

Parcel (b) above-described belongs in absolute common

ownership to the spouses Artemio F. Abalos and Ligaya U. Abalos

and spouses Mauro F. Abalos and Luzviminda R. Abalos who

acquired the same by absolute sale in 1978 from Faustino Abalos as

shown by a deed a copy of which is hereto attached as ANNEX “D”;

that the latter acquired the same by absolute sale from Bernardo

Victorio in 1914, and that Faustino Abalos donated the same in

consideration of his marriage with Teodora Ferrer as shown by a deed

a copy of which is hereto attached as ANNEX “E”. A copy of Tax

[Dec.] No. 1007 is hereto attached as ANNEX “F”;

VI

Parcel (c) above-described belongs in absolute ownership to

the spouses Romulo F. Abalos and Jesusa O. Abalos and are in actual

possession as such having acquired the same by absolute sale from

Aurora A. Bucal as shown by a deed a copy of which is hereto

attached as ANNEX “G”; that Aurora A. Bucal in turn bought the

same from Maria Abalos as shown by a deed a copy of which is

hereto attached as ANNEX “H”; and that Maria Abalos inherited the

same land from her deceased parents;


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VII

Parcel (d) above-described belongs in absolute ownership to

spouses Romulo F. Abalos and Jesusa O. Abalos having acquired the

same in 1978 by means of a deed of quitclaim and renunciation of

rights a copy of which is hereto attached as ANNEX “I”; that Romulo

F. Abalos declared the same for taxation purposes as shown by Tax

[Dec.] No. 33 a copy of which is hereto attached as ANNEX “J”;

VIII

Parcel (e) above-described belongs in common absolute

ownership to the spouses Artemio F. Abalos and Ligaya U. Abalos

and spouses Mauro F. Abalos and Luzviminda R. Abalos having

acquired the same from Maria Abalos as shown by two (2) documents

copies of which are hereto attached as ANNEXES “K” and “L”; that

Faustino and Maria bought the same from Genoveva Perez as shown

by a deed a copy of which is hereto attached as ANNEX “M”; that

Genoveva Perez in turn bought the same from Teodoro Abalos as

shown by a deed a copy of which is hereto attached as ANNEX “N”;

that Mauro F. Abalos and Artemio F. Abalos have declared the land

in their names for taxation purposes as shown by Tax [Dec.] No.

1009 a copy of which is hereto attached as ANNEX “O”;

IX

Parcel (f) above-described belongs in absolute common

ownership to spouses Romulo F. Abalos and Jesusa O. Abalos and

spouses Mauro F. Abalos and Luzviminda R. Abalos and are in actual

possession as such having acquired the same by absolute sale in 1978

as shown by a deed a copy of which is hereto attached as ANNEX

“P”; that Faustino in turn inherited the same from his deceased

parents; and that the present owners have declared the same for

taxation purposes as shown by Tax [Dec.] No. 1314 a copy of which

is hereto attached as ANNEX “Q”;

X

The possession of the present owners as well as their

predecessors-in-interest have always been in good faith, peaceful,


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public, exclusive, adverse, continuous and in the concept of absolute

owners since their respective acquisition [up to] the present without

question from anyone, much less from the defendant herein. Said

owners have likewise religiously paid the taxes due on the lands [up

to] the current year;[17]

xxx xxx xxx

Respondents claimed that on two separate occasions in December 1985

Panfilo sought to execute the decision by attempting to take possession of the

lands in question through the use of force, threat, violence and intimidation. In

addition, to satisfy the damages awarded to Panfilo, the deputy sheriff also

levied upon parcels (b) and (c) above-described for the purpose of selling the

same at public auction, in regard to which they also filed their respective notice

of third-party claim. Respondents argued that to compel them to abide by the

writ of execution and notice of levy issued by the court in Civil Case No. 15465

would amount to deprivation of property without due process of law because the

decision rendered in said case is not binding upon them as they were not made

parties thereto and they became owners thereof prior to the institution of the

case.

On January 8, 1986, the trial court directed the parties to maintain

the status quo pending the resolution on the motion for the issuance of the writ

of preliminary injunction.[18][19]

In the Objection to the Issuance of Writ of Preliminary

Injunction,[20]

Answer,[21]

and Memorandum of Authorities[22]

filed by Panfilo,

he stressed that the title, right or interest of respondents with respect to the

fishponds mentioned in sub-paragraphs (a), (d), and (f) of paragraph III of the

Complaint had already been declared null and void in Civil Case No. 15465 by

a co-equal and competent court and affirmed with finality by this Court. It was

averred that respondents were never in possession of the fishponds as he was

the one peacefully placed in its possession by the deputy sheriff. For failing to

intervene in Civil Case No. 15465, Panfilo asserted that respondents are now

barred by the principles of res judicata and estoppel in pais.

On July 21, 1986, however, the trial court ordered the issuance of a writ

of preliminary injunction.[23]

Concurring with the position of respondents, it

held that the principle of res judicata does not apply since there is no identity of









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parties, subject matter, and causes of action between Civil Case No. 15465 and

the present case. In Civil Case No. 15465, the parties are Panfilo, as plaintiff,

and Faustino Abalos and Danilo Abalos, as defendants, while in the present

case, the parties are the children of Faustino Abalos and their respective

spouses, as plaintiffs, and Panfilo, as defendant; in the former, the principal

action is for partition while in the latter, the suit is for quieting of title,

possession, annulment of document and damages. The trial court opined that

while it is true that respondents Aurora, Artemio, Romulo, and Mauro are

legitimate children and compulsory heirs of Faustino Abalos, the documents

showing their acquisition of the properties in question revealed that they

became owners thereof not through their father alone but also by way of third

persons who were not parties in Civil Case No. 15465. Moreover, they acquired

their ownership prior to the institution of said case.

Assailing the aforesaid Order, Panfilo filed a petition for certiorari before

this Court. In a Resolution, the petition was referred to the CA, which later

dismissed the same for lack of merit .[24]

The CA ruled that, for not being

impleaded as parties, respondents are considered as “third persons” in Civil

Case No. 15465 since they did not in any way participate or intervene in the

partition. Neither did the trial court violate the principle that no court has the

power to interfere by injunction with the judgments or decrees of a court of

concurrent or coordinate jurisdiction having equal power. The CA viewed that

the writ of execution was issued for the specific purpose of levying upon the

properties of Faustino Abalos, not that of respondents, as the judgment debtor in

Civil Case No. 15465.

On December 16, 1987, this Court, in G.R. No. 77965 entitled “Panfilo

Abalos v. Aurora Bucal, et al. and Court of Appeals,”affirmed the CA decision,

which resolution became final and executory on August 2, 1988.[25]

Upon motion of respondents, the trial court ordered the issuance of

an alias writ of preliminary injunction on March 14, 1989.[26]

Again, Panfilo

challenged the order via petition for certiorari with prohibition before the CA

but the same was denied.[27]

When the incident was elevated to this Court, it was

dismissed on November 15, 1989. The resolution became final and executory

on February 9, 1990.[28]







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Meanwhile, in the proceedings before the trial court, Panfilo and

respondents submitted their respective pre-trial briefs.[29]

On October 23, 1989,

the trial court issued the Pre-trial Order.[30]

Taking into account the admissions

made by the parties, particularly the fact that Panfilo claimed proprietary rights

only with respect to parcels (a), (d) and (f) mentioned in the complaint, the court

delimited the issues for resolution as follows:

The factual issues are: (1) With respect to parcels A, D, and F,

whether or not the plaintiffs claiming ownership and possession over

said parcels are the lawful owners and possessors thereof by virtue of

genuine and duly executed documents of sale, quitclaim and

renunciation of rights; (2) Whether or not plaintiffs’ predecessors-in-

interest were the lawful owners and possessors of parcels A, D and F;

(3) Whether or not Faustino Abalos and his wife [Teodorica] Ferrer

were awarded the properties subject of partition proceedings in Civil

Case No. 15465; (4) Whether or not by virtue of the decision

rendered in that partition proceedings, the fishpond referred to as

Duyao which is parcel A, D and F was awarded; (5) Whether or not

pursuant to the decision of the Supreme Court in appealed case No.

713355 the defendant Panfilo Abalos was placed in possession by the

Deputy Sheriff Romulo Jimenez duly assisted by the members of the

police force of Binmaley, sometime on or about the last part of

December 1985.

The legal issues are: (1) Whether or not the decision in Civil

Case No. 15465 entitled “Panfilo Abalos versus Faustino Abalos[”] is

binding upon the plaintiffs who were not impleaded as party litigants

either as plaintiffs or defendants; (2) What is the legal basis of the

plaintiffs to file action to quiet title against the defendant?[31]

Likewise, in the course of the trial and in their respective

memoranda,[32]

the parties admitted that parcels (a) and (d) are portions of a

fishpond locally known as Duyao[33]

and are parts of parcel (d) stated in the

Complaint of Civil Case No. 15465, which was to be held in common pro-

indiviso by the heirs of Francisco Abalos.

Thus, the controversy was narrowed down to only two (2) properties,

namely: the fishpond located at Linoc, Binmaley, Pangasinan, locally known

as Duyao, and the fishpond located at Canaoalan, Binmaley, Pangasinan, locally

known as Pinirat.







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On May 25, 1992, RTC Branch 39 of Lingayen, Pangasinan, rendered its

Decision,[34]

ordering thus:

WHEREFORE, judgment is hereby rendered declaring:

1. That the plaintiffs-spouses Aurora Bucal and

Demetrio Bucal are the absolute owners of one-

fourth (¼) portion pro-indiviso of that fishpond

which is locally known as Duyao;

2. That the defendant Panfilo Abalos is the absolute

owner of three-fourth (¾) portion pro-indiviso of that

fishpond locally known as “Duyao”;

3. That the plaintiffs have no right whatsoever over the

fishpond locally known as “Pinirat” and confirming

the adjudication thereof in Civil Case No. 15465;

[and]

4. No award of damages, and no costs.

SO ORDERED.[35]

The trial court made the following factual findings: that the original

owners of the two fishponds were spouses Francisco Abalos and Teodorica

Ferrer, who died on May 4, 1928 and June 2, 1945, respectively; that the

spouses had five (5) children, namely: (a) Maria, who died single on March 20,

1972; (b) Roman, who died single on June 10, 1944; (c) Panfilo, petitioner

herein; (d) Pedro, who died on May 11, 1971 and was survived by his only

child, Danilo; and (e) Faustino, whose children Aurora, Artemio, Romulo and

Mauro are among the respondents herein; that Roman predeceased his mother,

hence, when the latter died only four of the siblings inherited the Duyao,

becoming its pro-indiviso co-owners; that on November 11, 1968, Maria sold

her ¼ share to Romulo, who, in turn, sold the same to Aurora; that in view of

the sale, the said portion of the Duyao should have been excluded from the

Decision in Civil Case No. 15465 for the reason that said case refers to the

partition of the estate only of spouses Francisco and Teodorica; that Romulo is

not the owner the other ¼ portion of the Duyao for failure to establish his

ownership thereon and also considering that it could have been the same ¼

portion that he sold to Aurora; and that the Decision in Civil Case No. 15465




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has res judicata effect with respect to the Pinirat since the deed of sale executed

by Faustino in favor of Romulo and Mauro was simulated and employed merely

to defraud the other heirs.

Both Panfilo and respondents elevated the case to the CA, assigning the

alleged errors of the trial court:

As to Panfilo –

1. THE LOWER COURT ERRED IN ADJUDICATING ONE-

FOURTH PORTION OF THE FISHPOND KNOWN AS

“DUYAO” TO PLAINTIFFS DEMETRIO BUCAL AND

AURORA ABALOS- BUCAL, NOTWITHSTANDING THAT

SAID ENTIRE FISHPOND WAS AWARDED TO

DEFENDANT PANFILO ABALOS IN CIVIL CASE NO. 15465,

ENTITLED “PANFILO ABALOS VS. FAUSTINO ABALOS &

DANILO ABALOS.”




AURORA ABALOS-BUCAL, AS ALLEGED INHERITANCE

OF MARIA ABALOS FROM HER LATE PARENTS,

NOTWITHSTANDING THAT MARIA ABALOS ALREADY

INHERITED FROM HER LATE PARENTS THE PARCEL OF

RESIDENTIAL LAND DESCRIBED AS PARCEL (C) IN

PLAINTIFF’S COMPLAINT.




AURORA ABALOS-BUCAL, NOTWITHSTANDING THAT

THE FINAL DECISION IN CIVIL CASE [15465] EXPRESSLY

ANNULLED ALL DOCUMENTS AND INSTRUMENTS

WHICH TRANSFERRED SAID PROPERTIES AND ARE

CONSIDERED INCONSISTENT WITH THE PARTITION

ORDERED IN SAID CIVIL CASE.

4. THE LOWER COURT ERRED IN NOT TREATING THE

PLAINTIFFS AS IN ESTOPPEL.

5. THE LOWER COURT HAD NO JURISDICTION OVER THE

SUBJECT MATTER OF THE PRESENT CASE.[36]



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As to respondents –

1. THE TRIAL COURT ERRED IN NOT FINDING THAT THE

LATE SPOUSES FRANCISCO ABALOS AND TEODORICA

FERRER LEFT AN INTESTATE ESTATE CONSISTING OF

FIVE PARCELS OF LAND ONLY.

2. THE TRIAL COURT ERRED IN NOT FINDING THAT ONE-

FOURTH PRO INDIVISO OF THE LAND KNOWN AS

[“DUYAO”] WAS THE SHARE OF FAUSTINO ABALOS,

WHICH HE QUITCLAIMED IN FAVOR OF HIS SON

ROMULO ABALOS, AND IN APPLYING RES JUDICATA.

3. THE TRIAL COURT ERRED IN NOT FINDING THAT THE

LAND KNOWN AS “PINIRAT” WAS THE SHARE OF

FAUSTINO ABALOS, WHICH HE SOLD TO HIS SONS, THE

PLAINTIFFS ROMULO AND MAURO ABALOS, AND IN

APPLYING RES JUDICATA.

4. THE TRIAL COURT ERRED IN VOIDING THE

INSTRUMENTS OF TRANSFER EXECUTED BY FAUSTINO

ABALOS IN FAVOR OF ROMULO ABALOS OF HIS ¼

SHARE OF THE [“DUYAO”] LOT AND IN FAVOR OF

MAURO ABALOS AND ROMULO ABALOS OF THE

“PINIRAT” LOT.

5. THE TRIAL COURT ERRED IN NOT UPHOLDING THE

CLAIM OF PLAINTIFF ROMULO ABALOS OVER ¼ OF THE

[“DUYAO”] LOT AND THE CLAIM OF PLAINTIFFS MAURO

ABALOS AND ROMULO ABALOS OVER THE

[“PINIRAT”]LOT.[37]

On August 31, 2001, the CA rendered its Decision.[38]

According to the

appellate court, the first and second assigned errors of Panfilo are unmeritorious

on the ground that the disposition of the trial court in Civil Case No. 15465

insofar as the Duyao is concerned has no factual and legal basis. It also held

untenable his third and fourth assigned errors, noting that the principles of res

judicata and estoppel are not applicable in this case since respondents were not

made parties to Civil Case No. 15465 despite their acquisition of the contested

parcels prior to the commencement of said case. Finally, Panfilo’s fifth




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assigned error was rejected, saying that this Court already settled the issue

of res judicata in G.R. No. 77965 when petitioner questioned the propriety of

the issuance of the writ of preliminary injunction.

On the other hand, the CA ruled that the first assigned error of

respondents was rendered moot and academic since it was stipulated and agreed

upon during the pre-trial of the present case that the dispute covers only parcels

(a), (d) and (f). The second assigned error, nonetheless, was affirmed,

observing that the Duyao property was co-owned pro-indiviso by the four

remaining children of spouses Francisco and Teodorica; hence, Faustino’s

transfer of his ¼ share during his lifetime in favor of his son Romulo is

perfectly legal. However, the CA denied the third assigned error as it found that

the Pinirat was Roman Abalos’ advance legitime, which, upon his death, was

inherited by his remaining siblings. Since Maria subsequently died without

transferring her share, her part of the Pinirat should be divided among Pedro

(which is transmitted to Danilo), Faustino and Panfilo. As Faustino’s share over

the Pinirat is with respect to 1/3 portion thereof, he could validly convey only

such part to Romulo and Mauro.

The CA disposed:

WHEREFORE, premises considered, the assailed Decision of

the court a quo in Civil Case No. 16289 is hereby modified, as

follows:

1. Being co-owners of Duyao Fishpond, plaintiffs-

appellants Spouses Aurora Bucal and Demetrio

Bucal, plaintiffs-appellants Spouses Romulo Abalos

and Jesusa O. Abalos, defendant-appellant Panfilo

Abalos and Danilo Abalos, in representation of his

deceased father, Pedro Abalos, should divide and

distribute the same equally;

2. One-third of the Pinirat Fishpond is co-owned by

plaintiffs-appellants Spouses Romulo Abalos and

Jesus Abalos, and Spouses Mauro Abalos and

Luzviminda R. Abalos; That defendant-appellant

Panfilo Abalos is the sole owner of another 1/3

portion of the Pinirat fishpond; While the remaining

1/3 portion is for Danilo Abalos, in representation of

his deceased father Pedro Abalos;


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3. No pronouncement as to cost.

SO ORDERED.[39]

Panfilo moved for reconsideration of the Decision but was denied.[40]

Hence this petition.

Echoing the same grounds relied upon by their father, petitioners now

claim that the CA seriously erred in failing to consider the finality of the

Decision in Civil Case No. 15465. According to them, the finding that

respondents became owners of the subject properties prior to the institution of

said case in effect modified the disposition and distribution previously ordered.

Petitioners opine that when the CA ruled that respondents have acquired

ownership of the questioned parcels prior to the commencement of Civil Case

No. 15465 it had disregarded the conclusiveness of a final judgment rendered in

said case which decreed the annulment of all documents and/or instruments

transferring said properties and were considered inconsistent with the order of

partition. They contend that sustaining the conclusion of the CA would allow

the re-opening of the factual issue of whether the documents, which were the

source of respondents’ alleged title, were valid – an issue that was dealt with in

an extensive hearing on the merits conducted in said case and supported by

testimonial and documentary evidence for the purpose. Being the prevailing

party in Civil Case No. 15465, in regard to which respondents had remained

silent and did not even care to intervene or question, petitioners assert that they

already acquired a vested right over the entire Duyao and ½ portion of

the Pinirat. They also oppose the CA’s failure to recognize that estoppel and

laches have already set in to bar respondents from further pursuing their claims.

The petition is not meritorious.

Res judicata means "a matter adjudged; a thing judicially acted upon or

decided; a thing or matter settled by judgment." Itlays the rule that an existing

final judgment or decree rendered on the merits, without fraud or collusion, by a

court of competent jurisdiction, upon any matter within its jurisdiction, is

conclusive of the rights of the parties or their privies, in all other actions or suits




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in the same or any other judicial tribunal of concurrent jurisdiction on the points

and matters in issue in the first suit.[41]

For the preclusive effect of res judicata to be enforced, however, the

following requisites must be present: (1) the judgment or order sought to bar the

new action must be final; (2) the decision must have been rendered by a court

having jurisdiction over the subject matter and the parties; (3) the disposition of

the first case must be a judgment on the merits; and (4) there must be between

the first and second action, identity of parties, subject matter and causes of

action.[42]

In the instant case, the fourth requisite, in particular the identity of

parties, is clearly wanting.

As found by the CA, this Court, through our earlier resolution in G.R. No.

77965, already settled that res judicata does not apply in this case. In G.R. No.

77965, which Panfilo instituted to challenge the propriety of the writ of

preliminary injunction issued by the trial court, this Court agreed with the CA’s

disposition that respondents are considered as third persons with respect to Civil

Case No. 15465 since they were not impleaded as defendants therein. This

Court held as in accordance with law and jurisprudence the CA’s opinion that

all those who did not in any way participate or intervene in the partition case are

considered third persons within the contemplation of Article 499 of the Civil

Code.[43]

The foregoing rule still stands.

Indeed, Panfilo, the father of petitioners, should have impleaded

respondents when he filed Civil Case No. 15465 since at that time the latter

were already claiming ownership over the subject fishponds, which were

transferred in their names prior to the commencement of the case. Petitioners

cannot shift to respondents the burden of joining the case because they are not

duty bound to intervene therein and they have every right to institute an

independent action: First, intervention is not compulsory or mandatory but

merely optional and permissive;[44]

and Second, as the persons who are in actual

possession of the fishponds they claim to own, respondents may wait until their

possession are in fact disturbed before taking steps to vindicate their

rights. Understandably, at the time of the institution and pendency of Civil






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Case No. 15465, respondents still had no definite idea as to how the very nature

of the partition case could actually affect their possession.

On the other hand, Panfilo had personal knowledge that respondents

acquired ownership of the properties prior to the filing of Civil Case No. 15465,

that they are in actual possession thereof, and that they have declared the lands

in their names for taxation purposes. Panfilo could not be ignorant of these

because he resided in the same locality where the properties are found.[45]

Quite

startling, however, is that he did not bother to implead respondents in the

partition case despite all these and the fact that the defendants therein raised the

point that Faustino was not the owner of some of the lands in question and that

they belong to others not parties to the case.[46]

As his successors-in-interest,

petitioners must suffer from Panfilo’s evident omission.

Even if res judicata requires not absolute but substantial identity of

parties, still there exists substantial identity only when the “additional” party

acts in the same capacity or is in privity with the parties in the former

action.[47]

In this case, while it is true that respondents are legitimate children

and relatives by affinity of Faustino it is more important to remember that, as

shown by their documents of acquisition, they became owners of the subject

fishponds not through Faustino alone but also from a third person (i.e.,

Maria Abalos). Respondents are asserting their own rights and interests which

are distinct and separate from those of Faustino’s claim as a hereditary heir of

Francisco Abalos. Hence, they cannot be considered as privies to the judgment

rendered in Civil Case No. 15465. Unfortunately for petitioners, they relied

solely on their untenable defense of res judicata instead of contesting the

genuineness and due execution of respondents’ documentary evidence.

Moreover, Panfilo erred in repeatedly believing that there was no

necessity to implead respondents as defendants in Civil Case No. 15465 since,

according to him, the necessary parties in a partition case are only the co-

owners or co-partners in the inheritance of Francisco Abalos. On the contrary,

the Rules of Court provides that in an action for partition, all other persons

interested in the property shall be joined as defendants.[48]

Not only the co-heirs

but also all persons claiming interests or rights in the property subject of

partition are indispensable parties.[49]

In the instant case, it is the responsibility

of Panfilo as plaintiff in Civil Case No. 15465 to implead all indispensable

parties, that is, not only Faustino and Danilo but also respondents in their







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capacity as vendees and donees of the subject fishponds. Without their presence

in the suit the judgment of the court cannot attain real finality against

them. Being strangers to the first case, they are not bound by the decision

rendered therein; otherwise, they would be deprived of their constitutional right

to due process.[50]

Finally, it must be stressed that in a complaint for partition, the plaintiff

seeks, first, a declaration that he is a co-owner of the subject properties;

and second, the conveyance of his lawful shares. An action for partition is at

once an action for declaration of co-ownership and for segregation and

conveyance of a determinate portion of the properties involved.[51]

Reyes-de Leon v. Del Rosario[52]

held:

The issue of ownership or co-ownership, to be more precise,

must first be resolved in order to effect a partition of properties. This

should be done in the action for partition itself. As held in the case

of Catapusan v. Court of Appeals:

‘In actions for partition, the court cannot properly issue

an order to divide the property unless it first makes a

determination as to the existence of co-ownership. The

court must initially settle the issue of ownership, the

first stage in an action for partition. Needless to state, an

action for partition will not lie if the claimant has no

rightful interest over the subject property. In fact,

Section 1 of Rule 69 requires the party filing the action

to state in his complaint the ‘nature and the extent of his

title’ to the real estate. Until and unless the issue of

ownership is definitely resolved, it would be premature

to effect a partition of the properties. x x x’ (citations

omitted)[53]

It is only properties owned in common that may be the object of an action

for partition; it will not lie if the claimant has no rightful interest over the

subject property. Thus, in this case, only the shares in the lots which are

determined to have been co-owned by Panfilo, Faustino and Danilo could be

included in the order of partition and, conversely, shares in the lots which were

validly disposed of in favor of respondents must be excluded therefrom. In this

connection, the Court sees no reason to depart from the findings of fact and the






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partition ordered by the appellate court as these are amply supported by

evidence on record. Furthermore, the rule is that factual issues are beyond our

jurisdiction to resolve since in a petition for review under Rule 45 of the 1997

Rules of Civil Procedure this Court’s power is limited only to review questions

of law – when there is doubt or difference as to what the law is on a certain state

of facts.[54]

WHEREFORE, the petition is DENIED and the August 31,

2001 Decision and November 20, 2002 Resolution of the Court of Appeals in

CA-G.R. CV No. 39138 are AFFIRMED.

No costs.

SO ORDERED.

[G.R. No. 111538. February 26, 1997]

PARAÑAQUE KINGS ENTERPRISES, INCORPORATED, petitioner, vs. COURT OF APPEALS, CATALINA L. SANTOS, represented by her attorney-in-fact, LUZ B. PROTACIO, and DAVID A. RAYMUNDO,respondents.

D E C I S I O N

PANGANIBAN, J.:

Do allegations in a complaint showing violation of a contractual right of “first option or priority to buy the properties subject of the lease” constitute a valid cause of action? Is the grantee of such right entitled to be offered the same terms and conditions as those given to a third party who eventually bought such properties? In short, is such right of first refusal enforceable by an action for specific performance?

These questions are answered in the affirmative by this Court in resolving this petition for review under Rule 45 of the Rules of Court challenging the Decision[1] of the Court of Appeals[2] promulgated on March 29, 1993, in CA-G.R. CV No. 34987 entitled “Parañaque Kings Enterprises, Inc. vs. Catalina L. Santos, et al.,” which affirmed the order[3] of September 2, 1991, of the Regional Trial Court of Makati, Branch 57,[4] dismissing Civil Case No. 91-786 for lack of a valid cause of action.


http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/111538.htm#_edn1





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Facts of the Case

On March 19, 1991, herein petitioner filed before the Regional Trial Court of Makati a complaint,[5] which is reproduced in full below:

“Plaintiff, by counsel, respectfully states that:

1. Plaintiff is a private corporation organized and existing under and by

virtue of the laws of the Philippines, with principal place of business of

(sic) Dr. A. Santos Avenue, Parañaque, Metro Manila, while defendant

Catalina L. Santos, is of legal age, widow, with residence and postal

address at 444 Plato Street, Ct., Stockton, California, USA, represented in

this action by her attorney-in-fact, Luz B. Protacio, with residence and

postal address at No, 12, San Antonio Street, Magallanes Village, Makati,

Metro Manila, by virtue of a general power of attorney. Defendant David

A. Raymundo, is of legal age, single, with residence and postal address at

1918 Kamias Street, Damariñas Village, Makati, Metro Manila, where

they (sic) may be served with summons and other court processes. Xerox

copy of the general power of attorney is hereto attached as Annex ‘A’.

2. Defendant Catalina L. Santos is the owner of eight (8) parcels of land

located at (sic) Parañaque, Metro Manila with transfer certificate of title

nos. S-19637, S-19638 and S-19643 to S-19648. Xerox copies of the said

title (sic) are hereto attached as Annexes ‘B’ to ‘I’, respectively.

3. On November 28, 1977, a certain Frederick Chua leased the above-

described property from defendant Catalina L. Santos, the said lease was

registered in the Register of Deeds. Xerox copy of the lease is hereto

attached as Annex ‘J’.

4. On February 12, 1979, Frederick Chua assigned all his rights and

interest and participation in the leased property to Lee Ching Bing, by

virtue of a deed of assignment and with the conformity of defendant

Santos, the said assignment was also registered. Xerox copy of the deed of

assignment is hereto attached as Annex ‘K’.

5. On August 6, 1979, Lee Ching Bing also assigned all his rights and

interest in the leased property to Parañaque Kings Enterprises,

Incorporated by virtue of a deed of assignment and with the conformity of

defendant Santos, the same was duly registered, Xerox copy of the deed of

assignment is hereto attached as Annex ‘L’.

6. Paragraph 9 of the assigned leased (sic) contract provides among others that:



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‘9. That in case the properties subject of the lease agreement are sold

or encumbered, Lessors shall impose as a condition that the buyer or

mortgagee thereof shall recognize and be bound by all the terms and

conditions of this lease agreement and shall respect this Contract of

Lease as if they are the LESSORS thereof and in case of sale,

LESSEE shall have the first option or priority to buy the properties

subject of the lease;’

7. On September 21, 1988, defendant Santos sold the eight parcels of land

subject of the lease to defendant David Raymundo for a consideration of

FIVE MILLION (P5,000,000.00) PESOS. The said sale was in

contravention of the contract of lease, for the first option or priority to buy

was not offered by defendant Santos to the plaintiff. Xerox copy of the

deed of sale is hereto attached as Annex ‘M’.

8. On March 5, 1989, defendant Santos wrote a letter to the plaintiff

informing the same of the sale of the properties to defendant Raymundo,

the said letter was personally handed by the attorney-in-fact of defendant

Santos, Xerox copy of the letter is hereto attached as Annex ‘N’.

9. Upon learning of this fact plaintiff’s representative wrote a letter to

defendant Santos, requesting her to rectify the error and consequently

realizing the error, she had it reconveyed to her for the same consideration

of FIVE MILLION (P5,000,000.00) PESOS. Xerox copies of the letter

and the deed of reconveyance are hereto attached as Annexes ‘O’ and ‘P’.

10. Subsequently the property was offered for sale to plaintiff by the

defendant for the sum of FIFTEEN MILLION (P15,000,000.00)

PESOS. Plaintiff was given ten (10) days to make good of the offer, but

therefore (sic) the said period expired another letter came from the counsel

of defendant Santos, containing the same tenor of (sic) the former

letter. Xerox copies of the letters are hereto attached as Annexes ‘Q’ and

‘R’.

11. On May 8, 1989, before the period given in the letter offering the

properties for sale expired, plaintiff’s counsel wrote counsel of defendant

Santos offering to buy the properties for FIVE MILLION (P5,000,000.00)

PESOS. Xerox copy of the letter is hereto attached as Annex ‘S’.

12. On May 15, 1989, before they replied to the offer to purchase, another

deed of sale was executed by defendant Santos (in favor of) defendant

Raymundo for a consideration of NINE MILLION (P9,000,000.00)

PESOS. Xerox copy of the second deed of sale is hereto attached as

Annex ‘T’.


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13. Defendant Santos violated again paragraph 9 of the contract of lease

by executing a second deed of sale to defendant Raymundo.

14. It was only on May 17, 1989, that defendant Santos replied to the letter

of the plaintiff’s offer to buy or two days after she sold her properties. In

her reply she stated among others that the period has lapsed and the

plaintiff is not a privy (sic) to the contract. Xerox copy of the letter is

hereto attached as Annex ‘U’.

15. On June 28, 1989, counsel for plaintiff informed counsel of defendant

Santos of the fact that plaintiff is the assignee of all rights and interest of

the former lessor. Xerox copy of the letter is hereto attached as Annex

‘V’.

16. On July 6, 1989, counsel for defendant Santos informed the plaintiff

that the new owner is defendant Raymundo. Xerox copy of the letter is

hereto attached as Annex ‘W’.

17. From the preceding facts it is clear that the sale was simulated and that

there was a collusion between the defendants in the sales of the leased

properties, on the ground that when plaintiff wrote a letter to defendant

Santos to rectify the error, she immediately have (sic) the property

reconveyed it (sic) to her in a matter of twelve (12) days.

18. Defendants have the same counsel who represented both of them in

their exchange of communication with plaintiff’s counsel, a fact that led to

the conclusion that a collusion exist (sic) between the defendants.

19. When the property was still registered in the name of defendant

Santos, her collector of the rental of the leased properties was her brother-

in-law David Santos and when it was transferred to defendant Raymundo

the collector was still David Santos up to the month of June, 1990. Xerox

copies of cash vouchers are hereto attached as Annexes ‘X’ to ‘HH’,

respectively.

20. The purpose of this unholy alliance between defendants Santos and

Raymundo is to mislead the plaintiff and make it appear that the price of

the leased property is much higher than its actual value of FIVE MILLION

(P5,000,000.00) PESOS, so that plaintiff would purchase the properties at

a higher price.

21. Plaintiff has made considerable investments in the said leased property

by erecting a two (2) storey, six (6) doors commercial building amounting

to THREE MILLION (P3,000,000.00) PESOS. This considerable


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improvement was made on the belief that eventually the said premises

shall be sold to the plaintiff.

22. As a consequence of this unlawful act of the defendants, plaintiff will

incurr (sic) total loss of THREE MILLION (P3,000,000.00) PESOS as the

actual cost of the building and as such defendants should be charged of the

same amount for actual damages.

23. As a consequence of the collusion, evil design and illegal acts of the

defendants, plaintiff in the process suffered mental anguish, sleepless

nights, bismirched (sic) reputation which entitles plaintiff to moral

damages in the amount of FIVE MILLION (P5,000,000.00) PESOS.

24. The defendants acted in a wanton, fraudulent, reckless, oppressive or

malevolent manner and as a deterrent to the commission of similar acts,

they should be made to answer for exemplary damages, the amount left to

the discretion of the Court.

25. Plaintiff demanded from the defendants to rectify their unlawful acts

that they committed, but defendants refused and failed to comply with

plaintiffs just and valid and (sic) demands. Xerox copies of the demand

letters are hereto attached as Annexes ‘KK’ to ‘LL’, respectively.

26. Despite repeated demands, defendants failed and refused without

justifiable cause to satisfy plaintiff’s claim, and was constrained to

engaged (sic) the services of undersigned counsel to institute this action at

a contract fee of P200,000.00, as and for attorney’s fees, exclusive of cost

and expenses of litigation.

PRAYER

WHEREFORE, it is respectfully prayed, that judgment be rendered in favor of

the plaintiff and against defendants and ordering that:

a. The Deed of Sale between defendants dated May 15, 1989, be annulled

and the leased properties be sold to the plaintiff in the amount

ofP5,000,000.00;

b. Dependants (sic) pay plaintiff the sum of P3,000,000.00 as actual

damages;

c. Defendants pay the sum of P5,000,000.00 as moral damages;

d. Defendants pay exemplary damages left to the discretion of the Court;


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e. Defendants pay the sum of not less than P200,000.00 as attorney’s fees.

Plaintiff further prays for other just and equitable reliefs plus cost of suit.”

Instead of filing their respective answers, respondents filed motions to dismiss anchored on the grounds of lack of cause of action, estoppel and laches.

On September 2, 1991, the trial court issued the order dismissing the complaint for lack of a valid cause of action. It ratiocinated thus:

“Upon the very face of the plaintiff’s Complaint itself, it therefore indubitably

appears that the defendant Santos had verily complied with paragraph 9 of the

Lease Agreement by twice offering the properties for sale to the plaintiff for P15

M. The said offers, however, were plainly rejected by the plaintiff which scorned

the said offer as “RIDICULOUS”. There was therefore a definite refusal on the

part of the plaintiff to accept the offer of defendant Santos. For in acquiring the

said properties back to her name, and in so making the offers to sell both by herself

(attorney-in-fact) and through her counsel, defendant Santos was indeed

conscientiously complying with her obligation under paragraph 9 of the Lease

Agreement. x x x

x x x x x x x x x

This is indeed one instance where a Complaint, after barely commencing to create

a cause of action, neutralized itself by its subsequent averments which erased or

extinguished its earlier allegations of an impending wrong. Consequently, absent

any actionable wrong in the very face of the Complaint itself, the plaintiff’s

subsequent protestations of collusion is bereft or devoid of any meaning or

purpose. x x x

The inescapable result of the foregoing considerations point to no other conclusion

than that the Complaint actually does not contain any valid cause of action and

should therefore be as it is hereby ordered DISMISSED. The Court finds no

further need to consider the other grounds of estoppel and laches inasmuch as this

resolution is sufficient to dispose the matter.”[6]

Petitioners appealed to the Court of Appeals which affirmed in toto the ruling of the trial court, and further reasoned that:

“x x x Appellant’s protestations that the P15 million price quoted by appellee

Santos was reduced to P9 million when she later resold the leased properties to

Raymundo has no valid legal moorings because appellant, as a prospective buyer,

cannot dictate its own price and forcibly ram it against appellee Santos, as owner,

to buy off her leased properties considering the total absence of any stipulation or



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agreement as to the price or as to how the price should be computed under

paragraph 9 of the lease contract, x x x”[7]

Petitioner moved for reconsideration but was denied in an order dated August 20, 1993.[8]

Hence this petition. Subsequently, petitioner filed an “Urgent Motion for the Issuance of Restraining Order and/or Writ of Preliminary Injunction and to Hold Respondent David A. Raymundo in Contempt of Court.”[9] The motion sought to enjoin respondent Raymundo and his counsel from pursuing the ejectment complaint filed before the barangay captain of San Isidro, Parañaque, Metro Manila; to direct the dismissal of said ejectment complaint or of any similar action that may have been filed; and to require respondent Raymundo to explain why he should not be held in contempt of court for forum-shopping. The ejectment suit initiated by respondent Raymundo against petitioner arose from the expiration of the lease contract covering the property subject of this case. The ejectment suit was decided in favor of Raymundo, and the entry of final judgment in respect thereof renders the said motion moot and academic.

Issue

The principal legal issue presented before us for resolution is whether the aforequoted complaint alleging breach of the contractual right of “first option or priority to buy” states a valid cause of action.

Petitioner contends that the trial court as well as the appellate tribunal erred in dismissing the complaint because it in fact had not just one but at least three (3) valid causes of action, to wit: (1) breach of contract, (2) its right of first refusal founded in law, and (3) damages.

Respondents Santos and Raymundo, in their separate comments, aver that the petition should be denied for not raising a question of law as the issue involved is purely factual -- whether respondent Santos complied with paragraph 9 of the lease agreement -- and for not having complied with Section 2, Rule 45 of the Rules of Court, requiring the filing of twelve (12) copies of the petitioner’s brief. Both maintain that the complaint filed by petitioner before the Regional Trial Court of Makati stated no valid cause of action and that petitioner failed to substantiate its claim that the lower courts decided the same “in a way not in accord with law and applicable decisions of the Supreme Court”; or that the Court of Appeals has “sanctioned departure by a trial court from the accepted and usual course of judicial proceedings” so as to merit the exercise by this Court of the power of review under Rule 45 of the Rules of Court. Furthermore, they reiterate estoppel and laches as grounds for dismissal, claiming that





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petitioner’s payment of rentals of the leased property to respondent Raymundo from June 15, 1989, to June 30, 1990, was an acknowledgment of the latter’s status as new owner-lessor of said property, by virtue of which petitioner is deemed to have waived or abandoned its first option to purchase.

Private respondents likewise contend that the deed of assignment of the lease agreement did not include the assignment of the option to purchase. Respondent Raymundo further avers that he was not privy to the contract of lease, being neither the lessor nor lessee adverted to therein, hence he could not be held liable for violation thereof.


Preliminary Issue: Failure to File Sufficient Copies of Brief

We first dispose of the procedural issue raised by respondents, particularly petitioner’s failure to file twelve (12) copies of its brief. We have ruled that when non-compliance with the Rules was not intended for delay or did not result in prejudice to the adverse party, dismissal of appeal on mere technicalities – in cases where appeal is a matter of right -- may be stayed, in the exercise of the court’s equity jurisdiction.[10] It does not appear that respondents were unduly prejudiced by petitioner’s nonfeasance. Neither has it been shown that such failure was intentional.

Main Issue: Validity of Cause of Action

We do not agree with respondents’ contention that the issue involved is purely factual. The principal legal question, as stated earlier, is whether the complaint filed by herein petitioner in the lower court states a valid cause of action. Since such question assumes the facts alleged in the complaint as true, it follows that the determination thereof is one of law, and not of facts. There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts, and there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts.[11]

At the outset, petitioner concedes that when the ground for a motion to dismiss is lack of cause of action, such ground must appear on the face of the complaint; that to determine the sufficiency of a cause of action, only the facts alleged in the complaint and no others should be considered; and that the test of sufficiency of the facts alleged in a petition or complaint to




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constitute a cause of action is whether, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer of the petition or complaint.

A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right, and (3) an act or omission on the part of such defendant violative of the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.[12]

In determining whether allegations of a complaint are sufficient to support a cause of action, it must be borne in mind that the complaint does not have to establish or allege facts proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits of the case. To sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.[13]

Equally important, a defendant moving to dismiss a complaint on the ground of lack of cause of action is regarded as having hypothetically admitted all the averments thereof.[14]

A careful examination of the complaint reveals that it sufficiently alleges an actionable contractual breach on the part of private respondents. Under paragraph 9 of the contract of lease between respondent Santos and petitioner, the latter was granted the “first option or priority” to purchase the leased properties in case Santos decided to sell. If Santos never decided to sell at all, there can never be a breach, much less an enforcement of such “right.” But on September 21, 1988, Santos sold said properties to Respondent Raymundo without first offering these to petitioner. Santos indeed realized her error, since she repurchased the properties after petitioner complained. Thereafter, she offered to sell the properties to petitioner for P15 million, which petitioner, however, rejected because of the “ridiculous” price. But Santos again appeared to have violated the same provision of the lease contract when she finally resold the properties to respondent Raymundo for only P9 million without first offering them to petitioner at such price. Whether there was actual breach which entitled petitioner to damages and/or other just or equitable relief, is a question which can better be resolved after trial on the merits where each party can present evidence to prove their respective allegations and defenses.[15]

The trial and appellate courts based their decision to sustain respondents’ motion to dismiss on the allegations of Parañaque Kings Enterprises that Santos had actually offered the subject properties for sale






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to it prior to the final sale in favor of Raymundo, but that the offer was rejected. According to said courts, with such offer, Santos had verily complied with her obligation to grant the right of first refusal to petitioner.

We hold, however, that in order to have full compliance with the contractual right granting petitioner the first option to purchase, the sale of the properties for the amount of P9 million, the price for which they were finally sold to respondent Raymundo, should have likewise been first offered to petitioner.

The Court has made an extensive and lengthy discourse on the concept of, and obligations under, a right of first refusal in the case of Guzman, Bocaling & Co. vs. Bonnevie.[16] In that case, under a contract of lease, the lessees (Raul and Christopher Bonnevie) were given a “right of first priority” to purchase the leased property in case the lessor (Reynoso) decided to sell. The selling price quoted to the Bonnevies was P600,000.00 to be fully paid in cash, less a mortgage lien of P100,000.00. On the other hand, the selling price offered by Reynoso to and accepted by Guzman was only P400,000.00 of which P137,500.00 was to be paid in cash while the balance was to be paid only when the property was cleared of occupants. We held that even if the Bonnevies could not buy it at the price quoted (P600,000.00), nonetheless, Reynoso could not sell it to another for a lower price and under more favorable terms and conditions without first offering said favorable terms and price to the Bonnevies as well. Only if the Bonnevies failed to exercise their right of first priority could Reynoso thereafter lawfully sell the subject property to others, and only under the same terms and conditions previously offered to the Bonnevies.

Of course, under their contract, they specifically stipulated that the Bonnevies could exercise the right of first priority, “all things and conditions being equal.” This Court interpreted this proviso to mean that there should be identity of terms and conditions to be offered to the Bonnevies and all other prospective buyers, with the Bonnevies to enjoy the right of first priority. We hold that the same rule applies even without the same proviso if the right of first refusal (or the first option to buy) is not to be rendered illusory.

From the foregoing, the basis of the right of the first refusal* must be the current offer to sell of the seller or offer to purchase of any prospective buyer. Only after the grantee** fails to exercise its right of first priority under the same terms and within the period contemplated, could the owner validly offer to sell the property to a third person, again, under the same terms as offered to the grantee***.

This principle was reiterated in the very recent case of Equatorial Realty vs. Mayfair Theater, Inc.[17] which was decided en banc. This Court upheld







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the right of first refusal of the lessee Mayfair, and rescinded the sale of the property by the lessor Carmelo to Equatorial Realty “considering that Mayfair, which had substantial interest over the subject property, was prejudiced by its sale to Equatorial without Carmelo conferring to Mayfair every opportunity to negotiate within the 30-day stipulated period” (underscoring supplied).

In that case, two contracts of lease between Carmelo and Mayfair provided “that if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30 days exclusive option to purchase the same.” Carmelo initially offered to sell the leased property to Mayfair for six to seven million pesos. Mayfair indicated interest in purchasing the property though it invoked the 30-day period. Nothing was heard thereafter from Carmelo. Four years later, the latter sold its entire Recto Avenue property, including the leased premises, to Equatorial for P11,300,000.00 without priorly informing Mayfair. The Court held that both Carmelo and Equatorial acted in bad faith: Carmelo for knowingly violating the right of first refusal* of Mayfair, and Equatorial for purchasing the property despite being aware of the contract stipulation. In addition to rescission of the contract of sale, the Court ordered Carmelo to allow Mayfair to buy the subject property at the same price of P11,300,000.00.

No cause of action under P.D. 1517

Petitioner also invokes Presidential Decree No. 1517, or the Urban Land Reform Law, as another source of its right of first refusal. It claims to be covered under said law, being the “rightful occupant of the land and its structures” since it is the lawful lessee thereof by reason of contract. Under the lease contract, petitioner would have occupied the property for fourteen (14) years at the end of the contractual period.

Without probing into whether petitioner is rightfully a beneficiary under said law, suffice it to say that this Court has previously ruled that under Section 6[18] of P.D. 1517, “the terms and conditions of the sale in the exercise of the lessee’s right of first refusal to purchase shall be determined by the Urban Zone Expropriation and Land Management Committee. Hence, x x x certain prerequisites must be complied with by anyone who wishes to avail himself of the benefits of the decree.”[19] There being no allegation in its complaint that the prerequisites were complied with, it is clear that the complaint did fail to state a cause of action on this ground.

Deed of Assignment included the option to purchase





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Neither do we find merit in the contention of respondent Santos that the assignment of the lease contract to petitioner did not include the option to purchase. The provisions of the deeds of assignment with regard to matters assigned were very clear. Under the first assignment between Frederick Chua as assignor and Lee Ching Bing as assignee, it was expressly stated that:

“x x x the ASSIGNOR hereby CEDES, TRANSFERS and ASSIGNS to herein

ASSIGNEE, all his rights, interest and participation over said premises afore-

described, x x x”[20] (underscoring supplied)

And under the subsequent assignment executed between Lee Ching Bing as assignor and the petitioner, represented by its Vice President Vicenta Lo Chiong, as assignee, it was likewise expressly stipulated that:

“x x x the ASSIGNOR hereby sells, transfers and assigns all his rights, interest

and participation over said leased premises, x x x”[21] (underscoring supplied)

One of such rights included in the contract of lease and, therefore, in the assignments of rights was the lessee’s right of first option or priority to buy the properties subject of the lease, as provided in paragraph 9 of the assigned lease contract. The deed of assignment need not be very specific as to which rights and obligations were passed on to the assignee. It is understood in the general provision aforequoted that all specific rights and obligations contained in the contract of lease are those referred to as being assigned. Needless to state, respondent Santos gave her unqualified conformity to both assignments of rights.

Respondent Raymundo privy to the Contract of Lease

With respect to the contention of respondent Raymundo that he is not privy to the lease contract, not being the lessor nor the lessee referred to therein, he could thus not have violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the obligations of the lessor under the lease contract. Moreover, he received benefits in the form of rental payments. Furthermore, the complaint, as well as the petition, prayed for the annulment of the sale of the properties to him. Both pleadings also alleged collusion between him and respondent Santos which defeated the exercise by petitioner of its right of first refusal.

In order then to accord complete relief to petitioner, respondent Raymundo was a necessary, if not indispensable, party to the case.[22]A favorable judgment for the petitioner will necessarily affect the rights of





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respondent Raymundo as the buyer of the property over which petitioner would like to assert its right of first option to buy.

Having come to the conclusion that the complaint states a valid cause of action for breach of the right of first refusal and that the trial court should thus not have dismissed the complaint, we find no more need to pass upon the question of whether the complaint states a cause of action for damages or whether the complaint is barred by estoppel or laches. As these matters require presentation and/or determination of facts, they can be best resolved after trial on the merits.

While the lower courts erred in dismissing the complaint, private respondents, however, cannot be denied their day in court. While, in the resolution of a motion to dismiss, the truth of the facts alleged in the complaint are theoretically admitted, such admission is merely hypothetical and only for the purpose of resolving the motion. In case of denial, the movant is not to be deprived of the right to submit its own case and to submit evidence to rebut the allegations in the complaint. Neither will the grant of the motion by a trial court and the ultimate reversal thereof by an appellate court have the effect of stifling such right.[23] So too, the trial court should be given the opportunity to evaluate the evidence, apply the law and decree the proper remedy. Hence, we remand the instant case to the trial court to allow private respondents to have their day in court.

WHEREFORE, the petition is GRANTED. The assailed decisions of the trial court and Court of Appeals are hereby REVERSED andSET ASIDE. The case is REMANDED to the Regional Trial Court of Makati for further proceedings.

SO ORDERED.



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G.R. No. 74833 January 21, 1991

THOMAS C. CHEESMAN, petitioner, vs. INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA, respondents.

Estanislao L. Cesa, Jr. for petitioner.

Benjamin I. Fernandez for private respondent.

NARVASA, J.:p

This appeal concerns the attempt by an American citizen (petitioner Thomas Cheesman) to annul — for lack of consent on his part — the sale by his Filipino wife (Criselda) of a residential lot and building to Estelita Padilla, also a Filipino.


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Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been separated since February 15,1981.

1

On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed by Armando Altares conveying a parcel of unregistered land and the house thereon (at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of "Criselda P. Cheesman, of legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8, Filtration Road, Sta. Rita, Olongapo City . . ."

2 Thomas Cheesman, although aware

of the deed, did not object to the transfer being made only to his wife. 3

Thereafter—and again with the knowledge of Thomas Cheesman and also without any protest by him—tax declarations for the property purchased were issued in the name only of Criselda Cheesman and Criselda assumed exclusive management and administration of said property, leasing it to tenants.

4 On July 1, 1981, Criselda Cheesman sold the property to Estelita

M. Padilla, without the knowledge or consent of Thomas Cheesman. 5 The

deed described Criselda as being" . . . of legal age, married to an American citizen,. . ."

6

Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of First Instance at Olongapo City against his wife, Criselda, and Estelita Padilla, praying for the annulment of the sale on the ground that the transaction had been executed without his knowledge and consent.

7 An

answer was filed in the names of both defendants, alleging that (1) the property sold was paraphernal, having been purchased by Criselda with funds exclusively belonging to her ("her own separate money"); (2) Thomas Cheesman, being an American, was disqualified to have any interest or right of ownership in the land; and (3) Estelita Padilla was a buyer in good faith.

8

During the pre-trial conference, the parties agreed upon certain facts which were subsequently set out in a pre-trial Order dated October 22, 1981,

9 as

follows:

1. Both parties recognize the existence of the Deed of Sale over the residential house located at No. 7 Granada St., Gordon Heights, Olongapo City, which was acquired from Armando Altares on June 4, 1974 and sold by defendant Criselda Cheesman to Estelita Padilla on July 12, 1981; and

2. That the transaction regarding the transfer of their property took place during the existence of their marriage as the couple were married on December 4, 1970 and the questioned property was acquired sometime on June 4,1974.


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The action resulted in a judgment dated June 24, 1982, 10

declaring void ab initio the sale executed by Criselda Cheesman in favor of Estelita M. Padilla, and ordering the delivery of the property to Thomas Cheesman as administrator of the conjugal partnership property, and the payment to him of P5,000.00 as attorney's fees and expenses of litigation.

11

The judgment was however set aside as regards Estelita Padilla on a petition for relief filed by the latter, grounded on "fraud, mistake and/or excusable negligence" which had seriously impaired her right to present her case adequately.

12 "After the petition for relief from judgment was

given due course," according to petitioner, "a new judge presided over the case."

13

Estelita Padilla filed a supplemental pleading on December 20, 1982 as her own answer to the complaint, and a motion for summary judgment on May 17, 1983. Although there was initial opposition by Thomas Cheesman to the motion, the parties ultimately agreed on the rendition by the court of a summary judgment after entering into a stipulation of facts, at the hearing of the motion on June 21, 1983, the stipulation being of the following tenor:

14

(1) that the property in question was bought during the existence of the marriage between the plaintiff and the defendant Criselda P. Cheesman;

(2) that the property bought during the marriage was registered in the name of Criselda Cheesman and that the Deed of Sale and Transfer of Possessory Rights executed by the former owner-vendor Armando Altares in favor of Criselda Cheesman made no mention of the plaintiff;

(3) that the property, subject of the proceedings, was sold by defendant Criselda Cheesman in favor of the other defendant Estelita M. Padilla, without the written consent of the plaintiff.

Obviously upon the theory that no genuine issue existed any longer and there was hence no need of a trial, the parties having in fact submitted, as also stipulated, their respective memoranda each praying for a favorable verdict, the Trial Court

15 rendered a "Summary Judgment" dated August 3,

1982 declaring "the sale executed by . . . Criselda Cheesman in favor of . . . Estelita Padilla to be valid," dismissing Thomas Cheesman's complaint and ordering him "to immediately turn over the possession of the house and lot subject of . . . (the) case to . . . Estelita Padilla . . ."

16

The Trial Court found that —


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1) the evidence on record satisfactorily overcame the disputable presumption in Article 160 of the Civil Code—that all property of the marriage belongs to the conjugal partnership "unless it be proved that it pertains exclusively to the husband or to the wife"—and that the immovable in question was in truth Criselda's paraphernal property;

2) that moreover, said legal presumption in Article 160 could not apply "inasmuch as the husband-plaintiff is an American citizen and therefore disqualified under the Constitution to acquire and own real properties; and

3) that the exercise by Criselda of exclusive acts of dominion with the knowledge of her husband "had led . . . Estelita Padilla to believe that the properties were the exclusive properties of Criselda Cheesman and on the faith of such a belief she bought the properties from her and for value," and therefore, Thomas Cheesman was, under Article 1473 of the Civil Code, estopped to impugn the transfer to Estelita Padilla.

Thomas Cheesman appealed to the Intermediate Appellate Court. There he assailed the Trial Court acts (1) of granting Estelita Padilla's petition for relief, and its resolution of matters not subject of said petition; (2) of declaring valid the sale to Estelita Padilla despite the lack of consent thereto by him, and the presumption of the conjugal character of the property in question pursuant to Article 160 of the Civil Code; (3) of disregarding the judgment of June 24, 1982 which, not having been set aside as against Criselda Cheesman, continued to be binding on her; and (4) of making findings of fact not supported by evidence. All of these contentions were found to be without merit by the Appellate Tribunal which, on January 7, 1986, promulgated a decision (erroneously denominated, "Report")

17affirming the "Summary Judgment complained of," "having

found no reversible error" therein.

Once more, Thomas Cheesman availed of the remedy of appeal, this time to this Court. Here, he argues that it was reversible error for the Intermediate Appellate Court —

1) to find that the presumption that the property in question is conjugal in accordance with Article 160 had been satisfactorily overcome by Estelita Padilla;

18

2) to rule that Estelita Padilla was a purchaser of said property in good faith, it appearing:


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a) that the deed by which the property was conveyed to Criselda Cheesman described her as "married to Thomas C. Cheesman," as well as the deed by which the property was later conveyed to Estelita Padilla by Criselda Cheesman also described her as "married to an American citizen," and both said descriptions had thus "placed Estelita on knowledge of the conjugal nature of the property;" and

b) that furthermore, Estelita had admitted to stating in the deed by which she acquired the property a price much lower than that actually paid "in order to avoid payment of more obligation to the government;"

19

3) to decline to declare that the evidence did not warrant the grant of Estelita Padilla's petition for relief on the ground of "fraud, mistake and/or excusable negligence;"

20

4) to hold that Thomas Cheesman had waived his objection to Estelita's petition for relief by failing to appeal from the order granting the same;

5) to accord to Estelita Padilla a relief other than that she had specifically prayed for in her petition for relief, ie., "the restoration of the purchase price which Estelita allegedly paid to Criselda;"

21 and

6) to fail to declare that Thomas Cheesman's citizenship is not a bar to his action to recover the lot and house for the conjugal partnership.

22

Such conclusions as that (1) fraud, mistake or excusable negligence existed in the premises justifying relief to Estelita Padilla under Rule 38 of the Rules of Court, or (2) that Criselda Cheesman had used money she had brought into her marriage to Thomas Cheesman to purchase the lot and house in question, or (3) that Estelita Padilla believed in good faith that Criselda Cheesman was the exclusive owner of the property that she (Estelita) intended to and did in fact buy—derived from the evidence adduced by the parties, the facts set out in the pleadings or otherwise appearing on record—are conclusions or findings of fact. As distinguished from a question of law—which exists "when the doubt or difference arises as to what the law is on a certain state of facts" — "there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts;"

23 or when the "query necessarily invites calibration of the

whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation; to each other and to the whole and the probabilities of the situation."

24


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Now, it is axiomatic that only questions of law, distinctly set forth, may be raised in a petition for the review oncertiorari of a decision of the Court of Appeals presented to this Court.

25 As everyone knows or ought to know,

the appellate jurisdiction of this Court is limited to reviewing errors of law, accepting as conclusive the factual findings of the lower court upon its own assessment of the evidence.

26 The creation of the Court of Appeals was

precisely intended to take away from the Supreme Court the work of examining the evidence, and confine its task to the determination of questions which do not call for the reading and study of transcripts containing the testimony of witnesses.

27 The rule of conclusiveness of the

factual findings or conclusions of the Court of Appeals is, to be sure, subject to certain exceptions,

28 none of which however obtains in the case

at bar.

It is noteworthy that both the Trial Court and the Intermediate Appellate Court reached the same conclusions on the three (3) factual matters above set forth, after assessment of the evidence and determination of the probative value thereof. Both Courts found that the facts on record adequately proved fraud, mistake or excusable negligence by which Estelita Padilla's rights had been substantially impaired; that the funds used by Criselda Cheesman was money she had earned and saved prior to her marriage to Thomas Cheesman, and that Estelita Padilla did believe in good faith that Criselda Cheesman was the sole owner of the property in question. Consequently, these determinations of fact will not be here disturbed, this Court having been cited to no reason for doing so.

These considerations dispose of the first three (3) points that petitioner Cheesman seeks to make in his appeal. They also make unnecessary an extended discussion of the other issues raised by him. As to them, it should suffice to restate certain fundamental propositions.

An order of a Court of First Instance (now Regional Trial Court) granting a petition for relief under Rule 38 is interlocutory and is not appealable. Hence, the failure of the party who opposed the petition to appeal from said order, or his participation in the proceedings subsequently had, cannot be construed as a waiver of his objection to the petition for relief so as to preclude his raising the same question on appeal from the judgment on the merits of the main case. Such a party need not repeat his objections to the petition for relief, or perform any act thereafter (e.g., take formal exception) in order to preserve his right to question the same eventually, on appeal, it being sufficient for this purpose that he has made of record "the action which he desires the court to take or his objection to the action of the court and his grounds therefor."

29


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Again, the prayer in a petition for relief from judgment under Rule 38 is not necessarily the same prayer in the petitioner's complaint, answer or other basic pleading. This should be obvious. Equally obvious is that once a petition for relief is granted and the judgment subject thereof set aside, and further proceedings are thereafter had, the Court in its judgment on the merits may properly grant the relief sought in the petitioner's basic pleadings, although different from that stated in his petition for relief.

Finally, the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain."

30Petitioner Thomas Cheesman

was, of course, charged with knowledge of this prohibition. Thus, assuming that it was his intention that the lot in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; the sale as to him was null and void.

31 In any event, he had and has no capacity or

personality to question the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would permit indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord to the alien husband a not insubstantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have.

As already observed, the finding that his wife had used her own money to purchase the property cannot, and will not, at this stage of the proceedings be reviewed and overturned. But even if it were a fact that said wife had used conjugal funds to make the acquisition, the considerations just set out militate, on high constitutional grounds, against his recovering and holding the property so acquired or any part thereof. And whether in such an event, he may recover from his wife any share of the money used for the purchase or charge her with unauthorized disposition or expenditure of conjugal funds is not now inquired into; that would be, in the premises, a purely academic exercise. An equally decisive consideration is that Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate Court having found that Cheesman's own conduct had led her to believe the property to be exclusive property of the latter's wife, freely disposable by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the law in her purchase, particularly as


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against Cheesman, who would assert rights to the property denied him by both letter and spirit of the Constitution itself.

WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner.

SO ORDERED.

G.R. No. 169793 September 15, 2006

VICTORIANO M. ENCARNACION, petitioner, vs. NIEVES AMIGO, respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition for review assails the June 30, 2005 Decision1 of the Court of

Appeals in CA-G.R. SP No. 73857, ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings.

http://www.lawphil.net/judjuris/juri2006/sep2006/gr_169793_2006.html#fnt1


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The antecedent facts are as follows:

Petitioner Victoriano M. Encarnacion is the registered owner of Lot No. 2121-B-1, consisting of 100 square meters and covered by TCT No. T-256650; and Lot No. 2121-B-2 consisting of 607 square meters with TCT No. T-256651, located at District 1, National Hi-way, Cauayan, Isabela. Said two lots originally form part of Lot No. 2121, a single 707 square meter track of land owned by Rogelio Valiente who sold the same to Nicasio Mallapitan on January 18, 1982. On March 21, 1985, Mallapitan sold the land to Victoriano Magpantay. After the death of the latter in 1992, his widow, Anita N. Magpantay executed an Affidavit of Waiver

2 on April 11,

1995 waving her right over the property in favor of her son-in-law, herein petitioner, Victoriano Encarnacion. Thereafter, the latter caused the subdivision of the land into two lots

3 and the issuance of titles in his name

on July 18, 1996.4

Respondent Nieves Amigo allegedly entered the premises and took possession of a portion of the property sometime in 1985 without the permission of the then owner, Victoriano Magpantay. Said occupation by respondent continued even after TCT Nos. T-256650 and T-256651 were issue to petitioner.

Consequently, petitioner, through his lawyer sent a letter5 dated Febuary 1,

2001 demanding that the respondent vacate the subject property. As evidenced by the registry return receipt, the demand letter was delivered by registered mail to the respondent on February 12, 2001. Notwithstanding receipt of the demand letter, respondent still refused to vacate the subject property. Thereafter, on March 2, 2001, petitioner filed a complaint

6 for

ejectment, damages with injunction and prayer for restraining order with the Municipal Trial Court in Cities of Isabela which was docketed as CV-01-030. In his Answer, respondent alleged that he has been in actual possession and occupation of a portion of the subject land since 1968 and that the issuance of Free Patent and titles in the name of petitioner was tainted with irregularities.

7

On October 24, 2001, the Municipal Trial Court in Cities rendered judgment, which reads:

WHERE[FO]RE, there being a preponderance of evidence, a JUDGMENT is hereby rendered in favor of the plaintiff VICTORIANO M. ENCARNACION and against the defendant NIEVES AMIGOE (sic) as follows:








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a) ORDERING the defendant to vacate the portion of the parcels of land described in Transfer Certificates of Title Nos. T-256650 and T-256651 he is now occupying and surrender it to the plaintiff;

b) ORDERING the defendant to pay the plaintiff the sum of FIVE THOUSAND PESOS (P5,000) as attorney's fees, and

c) ORDERING the defendant to pay rentals equivalent [to] P500.00 per month from February, 2001 until the portion of the land occupied by him is surrendered to the plaintiff.

COSTS against the defendant.

SO ORDERED.8

On appeal, the Regional Trial Court of Cauayan, Isabela, Branch 20, ruled as follows:

WHEREFORE, judgment is hereby rendered dismissing the case on the ground that as the Municipal Court had no jurisdiction over the case, this Court acquired no appellate jurisdiction thereof. Costs against plaintiff-appellee.

SO ORDERED.9

Aggrieved, petitioner filed a petition for review10

under Rule 42 of the Rules of Court before the Court of Appeals which promulgated the assailed Decision remanding the case to the Regional Trial Court. The dispositive portion thereof reads:

WHEREFORE, premises considered, this case is hereby REMANDED to Branch 20, Regional Trial Court of Cauayan, Isabela for further proceedings.

No costs.

SO ORDERED.11

Hence the present petition raising the sole issue:

[WHETHER] THE COURT OF APPEALS ERRED IN HOLDING THAT THE PROPER ACTION IN THIS CASE IS ACCION PUBLICIANA AND NOT UNLAWFUL DETAINER AS DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT FILED BY PETITIONER.

12







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The petition lacks merit.

In this jurisdiction, the three kinds of actions for the recovery of possession of real property are:

1. Accion interdictal, or an ejectment proceeding which may be either that for forcible entry (detentacion) or unlawful detainer (desahucio), which is a summary action for recovery of physical possession where the dispossession has not lasted for more than one year, and should be brought in the proper inferior court;

2. Accion publiciana or the plenary action for the recovery of the real right of possession, which should be brought in the proper Regional Trial Court when the dispossession has lasted for more than one year; and

3. Accion reinvindicatoria or accion de reivindicacion, which is an action for the recovery of ownership which must be brought in the proper Regional Trial Court.

13

Based on the foregoing distinctions, the material element that determines the proper action to be filed for the recovery of the possession of the property in this case is the length of time of dispossession. Under the Rules of Court, the remedies of forcible entry and unlawful detainer are granted to a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person. These remedies afford the person deprived of the possession to file at any time within one year after such unlawful deprivation or withholding of possession, an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.

14 Thus, if

the dispossession has not lasted for more than one year, an ejectment proceeding is proper and the inferior court acquires jurisdiction. On the other hand, if the dispossession lasted for more than one year, the proper action to be filed is an accion publiciana which should be brought to the proper Regional Trial Court.

After a careful evaluation of the evidence on record of this case, we find that the Court of Appeals committed no reversible error in holding that the proper action in this case is accion publiciana; and in ordering the remand




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of the case to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings.

Well settled is the rule that jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint at the time of its filing, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted.

15 On its face,

the complaint must show enough ground for the court to assume jurisdiction without resort to parol testimony.

16

From the allegations in the complaint, it appears that the petitioner became the owner of the property on April 11, 1995 by virtue of the waiver of rights executed by his mother-in-law. He filed the complaint for ejectment on March 2, 2001 after his February 1, 2001 letter to the respondent demanding that the latter vacate the premises remained unheeded. While it is true that the demand letter was received by the respondent on February 12, 2001, thereby making the filing of the complaint for ejectment fall within the requisite one year from last demand for complaints for unlawful detainer, it is also equally true that petitioner became the owner of the subject lot in 1995 and has been since that time deprived possession of a portion thereof. From the date of the petitioner's dispossession in 1995 up to his filing of his complaint for ejectment in 2001, almost 6 years have elapsed. The length of time that the petitioner was dispossessed of his property made his cause of action beyond the ambit of an accion interdictal and effectively made it one for accion publiciana. After the lapse of the one-year period, the suit must be commenced in the Regional Trial Court via an accion publiciana which is a suit for recovery of the right to possess. It is an ordinary civil proceeding to determine the better right of possession of realty independently of title. It also refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty.

17

Previously, we have held that if the owner of the land knew that another person was occupying his property way back in 1977 but the said owner only filed the complaint for ejectment in 1995, the proper action would be one foraccion publiciana and not one under the summary procedure on ejectment. As explained by the Court:

We agree with the Court of Appeals that if petitioners are indeed the owners of the subject lot and were unlawfully deprived of their right of possession, they should present their claim before the regional trial court in an accion publiciana or an accion reivindicatoria, and not





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before the metropolitan trial court in a summary proceeding for unlawful detainer or forcible entry. For even if one is the owner of the property, the possession thereof cannot be wrested from another who had been in physical or material possession of the same for more than one year by resorting to a summary action for ejectment.

18

Hence, we agree with the Court of Appeals when it declared that:

The respondent's actual entry on the land of the petitioner was in 1985 but it was only on March 2, 2001 or sixteen years after, when petitioner filed his ejectment case. The respondent should have filed an accion publiciana case which is under the jurisdiction of the RTC.

However, the RTC should have not dismissed the case.

Section 8, Rule 40 of the Rules of Court provides:

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. — If an appeal is taken from an order of the lower court dismissing the case without a trial on the merits, the Regional Trial Court may affirm or reverse it, as the case may be. In case of affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the Regional Trial Court, if it has jurisdiction thereover, shall try the case on the merits as if the case was originally filed with it. In case of reversal, the case shall be remanded for further proceedings.

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice.

The RTC should have taken cognizance of the case. If the case is tried on the merits by the Municipal Court without jurisdiction over the subject matter, the RTC on appeal may no longer dismiss the case if it has original jurisdiction thereof. Moreover, the RTC shall no longer try the case on the merits, but shall decide the case on the basis of the evidence presented in the lower court, without prejudice to the admission of the amended pleadings and additional evidence in the interest of justice.

19




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WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated June 30, 2005 in CA-G.R. SP No. 73857 ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings, is AFFIRMED.

No costs.

SO ORDERED.

G.R. No. 85273 March 9, 1993

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner, vs. HON. GENARO C. GINES, Judge, RTC,

La union, Br. XXVI, BENGSON COMMERCIAL BUILDING, INC. and THE COURT OF APPEALS, Respondents.

The Legal Consultant for petitioner.chanrobles v irtual law libra ry

Pacifico C. Yadao for private respondent.

CAMPOS, JR., J.:

This is a petition for certiorari and prohibition seeking to annul the January 19, 1988 decision * of the Court of Appeals in CA-G.R. CV-09361 entitled "Bengson Commercial Bldg., Inc., represented by its President Romualdo F. Bengson, Plaintiff-Appellee versus Government Service Insurance System, Defendant-Appellant" which affirmed the decision** of the Regional Trial Court, Branch XXVI, San Fernando, La Union in Civil Case No. 2794 for having been issued in excess of jurisdiction and/or with grave abuse of discretion amounting to lack of jurisdiction and to prohibit the trial court from: a) enforcing the writ of garnishment it issued for the sum of P2,760,000.00 and; b) engaging in the selective piece-meal execution of the Court of Appeals decision. chanroblesvirtualaw librarychanrobles v irtual law libra ry

The antecedent facts are as follows:chanrobles v irtual law libra ry

Private respondent Bengson Commercial Building, Inc. (BENGSON, for brevity) obtained a loan from the petitioner Government Service Insurance System (GSIS, for brevity) on August 20, 1965 for P1,250,000.00 payable in 15 years at 9%


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annual interest secured by a mortgage on a parcel of land with buildings thereon covered by Transfer Certificate of Title (TCT) No. T2767 and two other parcels of land covered by TCT No. T5778, all located in San Fernando, La Union, as well as machineries and equipment already existing and those yet to be acquired.chanroblesvirtualawlibra rychanrobles virtual law libra ry

The loan proceeds were made available to BENGSON through checks issued for partial sums on various dates, from November 8, 1965 to September 19, 1968, for a total sum of P1,123,673.09.chanroblesvirtualawlibra rychanrobles virtual law libra ry

On November 23, 1971, BENGSON executed another mortgage contract for a loan of P3,000,000.00, payable in 15 years at 12% annual interest and secured by a mortgage on the same parcels of land located at San Fernando, La Union and two other parcels of land also situated in San Fernando, La Union originally covered by Original Certificate of Title (OCT) No. 323 plus two parcels of land situated in Quezon City covered by TCT Nos. 172452 and 172453.chanroblesv irtualawlibra rychanrobles virtua l law library

The proceeds of the second loan were made available to BENGSON through checks issued for partial sums on various dates from December 17, 1971 to July 20, 1973, for a total sum of P1,441,394.43.chanroblesv irtualawlibra rychanrobles virtual law library

On May 26, 1972, BENGSON sold to GSIS nine (9) units of debenture bonds in the total amount of P900,000.00 at 14% annual interest, redeemable in twenty (20) equal quarterly installments.chanroblesvirtualawlibra rychanrobles virtual law library

For having defaulted in the payment of its amortizations, BENGSON received a letter from the GSIS dated November 13, 1974 stating that unless BENGSON settled its arrearages, the GSIS would foreclose the mortgaged properties. On March 20, 1975, the GSIS instituted extrajudicial foreclosure proceedings through the Provincial Sheriff of La Union. The notice of foreclosure was published in the April 25, May 2 and May 9, 1975 issues of the Ilocos Times and the subject of the auction sale were the parcels of land covered by TCT No. T2767, TCT No. T5778, OCT No. 323 as well as the machineries and equipment under mortgage.chanroblesvirtua lawlibra rychanrobles virtua l law libra ry


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On May 9, 1975, BENGSON paid the GSIS P100,000.00 to apply to its loan accounts. For reasons known only to the parties, the scheduled foreclosure on May 12, 1975 was postponed; and, thereafter, the foreclosure was postponed several more times. chanroblesvirtua lawlibrary chanrobles virtual law

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On June 20, 1975, BENGSON made another payment in the amount of P10,000.00.chanroblesvirtualawlibrarychanrobles virtual law libra ry

On August 18 and August 22, 1975, BENGSON addressed two separate letters to the GSIS through its General Manager; the first was a request to restructure its scheduled amortization payments and the second, an application for restructuring and additional loan.chanroblesv irtualawlibra rychanrobles virtual law libra ry

On January 13, 1976, BENGSON received a telegram from a "Garrucho GSIS BILD" (GSIS Manager, Commercial and Industrial Loans Department) which reads: "Please see Mr. Edgardo Ramirez and Mr. Juan Dangla re restructing Regent". "Regent" was the Regent Theatre Hotel Building [8-storey, 70% complete] located on the two parcels of land covered by TCT No. T5778; the other improvement also located on these two lots was the Bengson Theatre Hotel Building [6-storey, 30% complete].chanroblesvirtualawlibra rychanrobles virtua l law libra ry

Between May 9, 1975 to October 11, 1976, BENGSON paid the GSIS a total amount of P286,000.00 to apply to its loan accounts. During the interim, BENGSON and the GSIS were preparing grounds for the grant of an additional loan with or after restructuring the previous two consolidated loan accounts. chanroblesvirtualawlibra rychanrobles virtua l law libra ry

On February 10, 1977, the Provincial Sheriff of La Union enforced the foreclosure and conducted a public auction sale wherein the GSIS emerged as the highest bidder, acquiring BENGSON's mortgaged properties at P4,740,000.00. A certificate of sale covering the foreclosed properties was issued four (4) days later. Subsequently, the Register of Deeds of La Union issued to the GSIS these new transfer certificates of title over the foreclosed properties: TCT No. T-10811 cancelling TCT No. 2767, TCT No. T-10812 cancelling TCT No. T5778, and TCT No. 10813 cancelling OCT No. 323.chanroblesvirtualawlibrarychanrobles virtual law libra ry

On March 15, 1977, the GSIS filed with the then Court of First Instance (now Regional Trial Court) an ex-parte petition for the issuance of a writ of possession over the foreclosed properties


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which the court granted on June 23, 1977 and gave BENGSON ten (10) days within which to file a motion for reconsideration. The court denied the latter's motion for reconsideration on July 29, 1977.chanroblesvirtualaw librarychanrobles v irtual law l ibra ry

On June 23, 1977, BENGSON filed against the GSIS a petition for annulment of the GSIS's foreclosure of its mortgage loan, restructuring of the loan, cancellation by the La Union Register of Deeds of all sale entries affecting BENGSON's titles over the properties it had mortgaged to the GSIS as security for the loan, and recovery of damages, attorney's fees and costs of suit, docketed as Civil Case No. 2794, with the Court of First Instance (now Regional Trial Court) San Fernando, La Union, Branch XXVI. 1chanrobles virtual law l ibra ry

Under a deed of conditional sale, on April 22, 1981, the GSIS sold to Family Savings Bank BENGSON's foreclosed parcels of land situated in San Fernando, La Union. 2chanrobles virtual law libra ry

Civil Case No. 2794 was decided by the court a quo, the dispositive portion of which reads:

1. Declaring the extrajudicial foreclosure of the plaintiff's properties by defendant null and void ab initio and directing defendant to restore plaintiff possession of said properties; and the Register of Deeds of La Union to cancel the titles issued to defendant and in lieu thereof to issue new ones in the name of plaintiff;chanrobles virtual law libra ry

2. Ordering defendant to restructure the loans of plaintiff amounting to P4,250,000.00 at the legal rate of interest from finality of this judgment;chanrobles v irtual law l ibra ry

3. Ordering plaintiff to pay P900,000.00 at the legal rate of interest for the debenture bonds from finality of this judgment; chanrobles virtua l law library

4. Ordering defendant to reimburse to plaintiff the amount of P1,900,000.00 representing the accrued monthly rentals belonging to plaintiff from February, 1977 and, thereafter, the monthly rental of P20,000.00 until the properties are restore (sic) to the possession of plaintiff; andchanrobles virtual law l ibrary

5. Ordering defendant to pay costs of suit. 3chanrobles virtual law l ibra ry


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On appeal, docketed as CA-G.R. Civil Case No. 09361, the judgment appealed from was affirmed by the Court of Appeals with modification, the dispositive portion of which reads:

WHEREFORE, we affirm the appealed decision with MODIFICATION, as follows:chanrobles virtua l law libra ry

1. The foreclosure and auction sale on February 10, 1977 of BENGSON's properties covered by real estate and chattel mortgages mentioned in the notice of sale issued by the La Union provincial sheriff are set aside.chanroblesvirtua lawlibrary chanrobles virtual law l ibrary

2. The writ of possession issued to GSIS as the highest bidder by the defunct Court of First Instance, sitting as a cadastral court, as a consequence of said foreclosure sale, is annulled. chanroblesvirtualawlibra rychanrobles virtual law l ibrary

3. The Register of Deeds of La Union is ordered to cancel the present certificates of title covering those properties and issue new ones in lieu thereof in the same names and with the same annotations, terms and conditions, including the mortgage in question, as appeared (sic) in the previous certificates of title as of the date BENGSON constituted the mortgage on those properties in favor of GSIS, it being understood that all expenses to be incurred incidental to such title cancellation and issuance shall be borne by GSIS.chanroblesvirtualawlibra rychanrobles virtua l law libra ry

4. GSIS is ordered to restore to BENGSON full possession of those mortgaged properties situated in San Fernando, La Union. chanroblesvirtua lawlibrary chanrobles virtual law library

5. All properties under the mortgage in question, including those parcels of land situated in San Fernando, La Union and in Quezon City, shall remain under mortgage in favor of GSIS.chanroblesv irtualawlibra rychanrobles virtua l law libra ry

6. GSIS is ordered to restructure BENGSON's loan as promised, the restructuring to proceed from the premise that as of the foreclosure date, i.e. February 10, 1977, BENGSON had paid GSIS an aggregate amount of P286,000.00 on the subject loan.chanroblesvirtua lawlibrary chanrobles virtual law library

7. The interest rates per annum stated in the first and second mortgage loan contracts entered into between BENGSON and GSIS, as well as all other terms and conditions provided for therein - except as qualified by the subsequent agreement of the


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parties regarding the promised loan restructuring and deferment of foreclosure by reason of the arrearages incurred - shall remain as originally stipulated upon by the parties. chanroblesv irtualawlibra rychanrobles virtual law library

8. BENGSON is ordered to pay GSIS the debenture bond with an aggregate face value of P900,000.00 at the stipulated interest rate of 14% per annum, quarterly; and to pay 14% interest per annum, compounded monthly, on the interest on said debenture bond, that had become due quarterly, in accordance with the stipulations provided for therein. chanroblesvirtua lawlibrary chanrobles virtual law library

9. GSIS shall reimburse BENGSON the monthly rent of P20,000.00 representing income produced by one of the latter's mortgaged properties, i.e. the Regent Theatre building, from February 15, 1977 until GSIS shall have restored the full possession of said building, together with the land on which it stands, to BENGSON.chanroblesvirtua lawlibrary chanrobles virtual law l ibra ry

10. The entire record of this case is ordered remanded to the trial court and the latter is directed to ascertain whether such mortgaged properties as machineries, equipment, and other movie paraphernalia, etc., are in fact no longer in existence per report of the provincial sheriff, as well as to determine their replacement value if GSIS fails to return them; and, as prayed for by BENGSON, to receive evidence from the parties on the costs of suit awarded to it.chanroblesvirtualawlibra rychanrobles virtual law library

No pronouncement as to cost of this appeal. chanroblesvirtualawlibra rychanrobles virtua l law library

SO ORDERED. 4chanrobles virtual law library

The aforequoted decision of the Court of Appeals became final and executory on February 10, 1988 5 and the entire records remanded to the court a quo on March 14, 1988. 6chanrobles virtual law library

BENGSON filed an Omnibus Motion 7 on March 14, 1988 for the implementation of Items Nos. 3, 4, 9 and 10 of the Court of Appeals decision. On April 5, 1988, the GSIS filed its "Comment and Manifestation with Counter Motion" 8 praying that the Motion for Execution of BENGSON be denied in the meantime, without prejudice to the court ordering computation of the respective claims of the parties for the purpose of determining which party is


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still entitled to receive any amount, if still due and owing, or that the execution be simultaneous.chanroblesv irtualawlibra rychanrobles virtua l law library

To determine the replacement value of BENGSON's mortgaged properties, an ocular inspection was conducted on May 23-25, 1988 pursuant to the May 5, 1988 order of the court a quo. 9 In the said meeting, the GSIS was represented by Atty. Octavio del Callar, Director, Litigation Group and Atty. Arturo F. Martinez, Office of the Government Corporate Counsel. A report on the ocular inspection conducted was submitted by the Clerk of Court and the Deputy Sheriff on July 11, 1988 10 and noted by the court on July 19, 1988. 11

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Documentary evidence for the determination of the replacement value of the mortgaged properties in the amount of P37,951,878.00 was submitted by, BENGSON on June 6, 1988. 12

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On July 6, 1988, the court a quo issued a resolution/order 13 for the execution of Items 3, 4 and 9 of the Court of Appeals decision and the approval of the documentary evidence presented by BENGSON for the replacement value of the chattels, items, machineries, etc., which were no longer in existence as of May 23, 1988 in the ocular inspection.chanroblesvirtualawlibrarychanrobles virtual law libra ry

BENGSON filed a "Motion for Hearing on Costs of Suit" on July 15, 1988 together with a list of persons from whom moneys were obtained and utilized as "costs of suit". 14 GSIS filed an opposition thereto 15 on July 19, 1988 on the ground that the listing of these persons are hearsay, without probative value and cannot be considered as part of costs of suit. chanroblesvirtua lawlibrary chanrobles virtual law library

On the same date, GSIS filed its Motion for Execution 16 of Item No. 8 of the CA Decision which required BENGSON to pay the GSIS debenture bond in the sum of P900,000.00 but which was opposed by BENGSON on July 24, 1988. 17

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A writ of execution was issued on August 22, 1988 for Items Nos. 1 and 2 only of the July 6, 1988 Resolution/Order 18 in view of the motion for reconsideration against Item No. 3 of the said Resolution/Order. 19 Consequently, the certificates of title of the properties of BENGSON were cancelled and new ones were issued in the name of Bengson Commercial Building, Inc. on August 30,


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1988 20 and BENGSON was placed in full possession of the properties on August 23, 1988, as per certification of the Clerk of Court of the then CFI of San Fernando, La Union dated August 30, 1988. 21


GSIS filed its "Motion to Annul Decision" on August 29, 1988 before the Court of Appeals notwithstanding the final and executory character of said decision. 22

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On September 12, 1988, an order was issued by the court a quo denying the GSIS', Motion for Suspension of the Proceedings on the ground that the decision of the Court of Appeals has become final and executory, and that "the defendant did not lift a finger to question the legality and soundness of the decision" and has even actively participated in the proceeding by presenting evidence in court for the computation of the debenture bond executed by BENGSON in favor of the GSIS. 23


The trial court issued an order 24 on September 14, 1988 directing the Provincial Sheriff of La Union to effect immediately the notice of garnishment to the Philippine National Bank, Escolta, Manila and garnish the amount of P2.76 Million, as prayed for in the "Ex-Parte Application for Notice of Levy" 25 filed by BENGSON on September 12, 1988. Said notice was served on PNB the following day.chanroblesvirtua lawlibrary chanrobles virtual law library

An "Urgent Motion for the Issuance of Restraining Order or Injunction" 26 was filed by the GSIS before the Court of Appeals on September 22, 1988. Said motion, as well as the aforementioned Motion to Annul Decision, was noted without further action. 27

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Pursuant to the notice of garnishment, the account of GSIS with the Philippine National Bank was placed on a "hold code" 28 and the amount of P2.76 Million was released to the custody of Mr. Romualdo Bengson and/or Atty. Pacifico Yadao on October 27, 1988 in compliance with the October 4, 1988 order of the lower court. 29


On October 14, 1988, GSIS filed this petition for certiorari and prohibition with prayer for a temporary restraining order before this Court after having failed to obtain an order from the trial court to hold in abeyance the execution of the writ of


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garnishment pending resolution in the Regional Trial Court of San Fernando, La Union of the GSIS's Motion for Reconsideration and Motion to Quash Writ of Garnishment.chanroblesvirtualaw librarychanrobles virtual law libra ry

A temporary restraining order was issued by this Court on November 16, 1988 enjoining BENGSON from enforcing the decision of the Court of Appeals, 30 which unfortunately came late for the P2.76 Million has already been released to BENGSON on October 27, 1988. This Court gave due course to the petition on October 12, 1989 and further required the parties to submit their respective memoranda. 31BENGSON complied with said requirement on December 5, 1989 32 while the GSIS submitted its memorandum on January 26, 1990. 33

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The Principal issue in the case at bar is whether the January 19, 1988 decision of the Court of Appeals, which has been partially executed, can still be challenged.chanroblesvirtua lawlibrary chanrobles v irtual law l ibra ry

GSIS contends that the directives embodied in the decision are too vague and incapable of implementation, thereby voiding the entire decision. 34 The directive of the Court of Appeals for the GSIS to "restructure" the loans of BENGSON is incapable of accomplishment because there is nothing in the decision itself, nor in any of the papers submitted by the parties, which gives the parameters as to how said loans will be restructured. 35 Being a void judgment, it may be assailed or impugned at anytime.36Furthermore, the directive to restructure, without any given frame of reference, actually infringes on the constitutional right of GSIS to the non-impairment of obligations and contracts and to due process. 37

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BENGSON, on the other hand, contends that GSIS cannot invoke the remedy of certiorariafter its failure to appeal the January 19, 1988 decision. 38

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The petition must fail. chanroblesvirtualawlibra rychanrobles virtua l law libra ry

As this Court held in Estoesta, Sr. v. Court of Appeals, 39 reiterating the ruling inAgricultural and Industrial Marketing, Inc. v. Court of Appeals, 40 -


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. . . that perfection of an appeal in the manner and within the reglementary period allowed by law is not only mandatory but also jurisdictional. . . . Thus, if no appeal is perfected on time, the decision becomes final and executory by operation of law after the lapse of the reglementary period of appeal . . . . Being final and executory the decision in question can no longer be altered, modified or reversed by the trial court or by the appellate court . . . . Accordingly, the prevailing party is entitled as a matter of right, to a writ of execution the issuance of which is a ministerial duty compellable by mandamus. . . .

As aforementioned, the decision of the Court of Appeals became final and executory on February 10, 1988 as shown in the Entry of Judgment on March 10, 1988 and remanded to the court a quo on March 14, 1988. From there, neither a Motion for Reconsideration nor an appeal was taken by GSIS. As correctly observed by the trial court, the GSIS "did not lift a finger to question the legality and soundness of that decision". At the time the GSIS filed its Motion to Annul. Decision before the Court of Appeals, the judgment sought to be annulled has been partially executed for BENGSON has been placed in full possession of the properties. Furthermore, at the time this petition was filed, Items Nos. 6, 8 and 10 of the Court of Appeals decision remain to be satisfied. On top of all these, the GSIS has actively participated in the execution by filing its Motion for Execution of Item No. 8 of the decision and presenting evidence in court for the computation of the debenture bonds in the hearing conducted on August 12, 1988. These acts of participation by the GSIS negate its claim that the directives embodied in the decision are "too vague and incapable of implementation".chanroblesvirtua lawlibrary chanrobles virtual law library

To permit a party to appeal from said partially executed final judgment would make a mockery of the doctrine of finality of judgments long enshrined in this jurisdiction. 41


As regards the allegation of the GSIS that the court a quo "has embarked on a selective and piece-meal execution/enforcement of the decision of the Court of Appeals, enforcing only those portions of the decision favorable to private respondent, Bengson Commercial Building, Inc., and ignoring or disregarding those portions of the decision of the Court of Appeals favorable to the petitioner, GSIS", this Court has held that a case in which


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execution has been issued is regarded as still pending so that all proceedings in the execution are proceedings in the suit. Unquestionably, the court which rendered the judgment has a general supervisory control over its process of execution. This power carries with it the right to determine every question of fact and law which may be involved in the execution. 42


PREMISES CONSIDERED, the petition is hereby DENIED. The temporary restraining order issued on November 16, 1988 is lifted.chanroblesvirtua lawlibrary chanrobles virtual law l ibra ry

SO ORDERED.