G.R. No. 180291               July 27, 2010

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and WINSTON F. GARCIA, in his capacity as PRESIDENT and GENERAL MANAGER of the GSIS, Petitioners, vs.DINNAH VILLAVIZA, ELIZABETH DUQUE, ADRONICO A. ECHAVEZ, RODEL RUBIO, ROWENA THERESE B. GRACIA, PILAR LAYCO, and ANTONIO JOSE LEGARDA, Respondents.

D E C I S I O N

MENDOZA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the August 31, 2007 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 98952, dismissing the petition for certiorari of Government Service Insurance System (GSIS) assailing the Civil Service Commission's Resolution No. 062177.

THE FACTS:

Petitioner Winston Garcia (PGM Garcia), as President and General Manager of the GSIS, filed separate formal charges against respondents Dinnah Villaviza, Elizabeth Duque, Adronico A. Echavez, Rodel Rubio, Rowena Therese B. Gracia, Pilar Layco, and Antonio Jose Legarda for Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service pursuant to the Rules of Procedure in Administrative Investigation (RPAI) of GSIS Employees and Officials, III, D, (1, c, f) in relation to Section 52A (3), (20), Rule IV, of the Uniform Rules on Administrative Cases in the Civil Service (URACCS), in accordance with Book V of the Administrative Code of 1987, committed as follows:

That on 27 May 2005, respondent, wearing red shirt together with some employees, marched to or appeared simultaneously at or just outside the office of the Investigation Unit in a mass demonstration/rally of protest and support for Messrs. Mario Molina and Albert Velasco, the latter having surreptitiously entered the GSIS premises;

x x x           x x x          x x x

That some of these employees badmouthed the security guards and the GSIS management and defiantly raised clenched fists led by Atty. Velasco who was barred by Hearing Officer Marvin R. Gatpayat in an Order dated 24 May 2005 from appearing as counsel for Atty. Molina pursuant to Section 7 (b) (2) of R.A. 6713 otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees;

That respondent, together with other employees in utter contempt of CSC Resolution No. 021316, dated 11 October 2002, otherwise known as Omnibus Rules on Prohibited Concerted Mass Actions in the Public Sector caused alarm and heightened some employees and disrupted the work at the Investigation Unit during office hours.2

This episode was earlier reported to PGM Garcia, through an office memorandum dated May 31, 2005, by the Manager of the GSIS Security Department (GSIS-SD), Dennis Nagtalon. On the same day, the Manager of the GSIS Investigation Unit (GSIS-IU), Atty. Lutgardo Barbo, issued a memorandum to each of the seven (7) respondents requiring them to explain in writing and under oath within three (3) days why they should not be administratively dealt with.3

Respondents Duque, Echavez, Rubio, Gracia, Layco, and Legarda, together with two others, submitted a letter-explanation to Atty. Barbo dated June 6, 2005. Denying that there was a planned mass action, the respondents explained that their act of going to the office of the GSIS-IU was a spontaneous reaction after learning that their former union president was there. Aside from some of them wanting to show their support, they were interested in that hearing as it might also affect them. For her part, respondent Villaviza submitted a separate letter explaining that she had a scheduled pre-hearing at the GSIS-IU that day and that she had informed her immediate supervisor about it, attaching a copy of the order of pre-hearing. These letters were not under oath.4

PGM Garcia then filed the above-mentioned formal charges for Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service against each of the respondents, all dated June 4, 2005. Respondents were again directed to submit their written answers under oath within three (3) days from receipt thereof.5 None was filed.

On June 29, 2005, PGM Garcia issued separate but similarly worded decisions finding all seven (7) respondents guilty of the charges and meting out the penalty of one (1) year suspension plus the accessory penalties appurtenant thereto.

On appeal, the Civil Service Commission (CSC) found the respondents guilty of the lesser offense of Violation of Reasonable Office Rules and Regulations and reduced the penalty to reprimand. The CSC ruled that respondents were not denied their right to due process but there was no substantial evidence to hold them guilty of Conduct Prejudicial to the Best Interest of the Service. Instead,

x x x. The actuation of the appellants in going to the IU, wearing red shirts, to witness a public hearing cannot be considered as constitutive of such offense. Appellants' (respondents herein) assembly at the said office to express support to Velasco, their Union President, who pledged to defend them against any oppression by the GSIS management, can be considered as an exercise of their freedom of expression, a constitutionally guaranteed right.6 x x x

PGM Garcia sought reconsideration but was denied. Thus, PGM Garcia went to the Court of Appeals via a Petition for Review under Rule 43 of the Rules on Civil Procedure.7 The CA upheld the CSC in this wise:

The Civil Service Commission is correct when it found that the act sought to be punished hardly falls within the definition of a prohibited concerted activity or mass action. The petitioners failed to prove that the supposed concerted activity of the respondents resulted in work stoppage and caused prejudice to the public service. Only about twenty (20) out of more than a hundred employees at the main office, joined the activity sought to be punished. These employees, now respondents in this case, were assigned at different offices of the petitioner GSIS. Hence, despite the belated claim of the petitioners that the act complained of had created substantial disturbance inside the petitioner GSIS' premises during office hours, there is nothing in the record that could support the claim that the operational

capacity of petitioner GSIS was affected or reduced to substantial percentage when respondents gathered at the Investigation Unit. Despite the hazy claim of the petitioners that the gathering was intended to force the Investigation Unit and petitioner GSIS to be lenient in the handling of Atty. Molina's case and allow Atty. Velasco to represent Atty. Molina in his administrative case before petitioner GSIS, there is likewise no concrete and convincing evidence to prove that the gathering was made to demand or force concessions, economic or otherwise from the GSIS management or from the government. In fact, in the separate formal charges filed against the respondents, petitioners clearly alleged that respondents "marched to or appeared simultaneously at or just outside the office of the Investigation Unit in a mass demonstration/rally of protest and support for Mssrs. Mario Molina and Albert Velasco, the latter surreptitiously entered the GSIS premises." Thus, petitioners are aware at the outset that the only apparent intention of the respondents in going to the IU was to show support to Atty. Mario Molina and Albert Velasco, their union officers. The belated assertion that the intention of the respondents in going to the IU was to disrupt the operation and pressure the GSIS administration to be lenient with Atty. Mario Molina and Albert Velasco, is only an afterthought.8

Not in conformity, PGM Garcia is now before us via this Petition for Review presenting the following:

STATEMENT OF THE ISSUES

I

WHETHER AN ADMINISTRATIVE TRIBUNAL MAY APPLY SUPPLETORILY THE PROVISIONS OF THE RULES OF COURT ON THE EFFECT OF FAILURE TO DENY THE ALLEGATIONS IN THE COMPLAINT AND FAILURE TO FILE ANSWER, WHERE THE RESPONDENTS IN THE ADMINISTRATIVE PROCEEDINGS DID NOT FILE ANY RESPONSIVE PLEADING TO THE FORMAL CHARGES AGAINST THEM.

II

WHETHER THE RULE THAT ADMINISTRATIVE DUE PROCESS CANNOT BE EQUATED WITH DUE PROCESS IN JUDICIAL SENSE AUTHORIZES AN ADMINISTRATIVE TRIBUNAL TO CONSIDER IN EVIDENCE AND GIVE FULL PROBATIVE VALUE TO UNNOTARIZED LETTERS THAT DID NOT FORM PART OF THE CASE RECORD.

III

WHETHER A DECISION THAT MAKES CONCLUSIONS OF FACTS BASED ON EVIDENCE ON RECORD BUT MAKES A CONCLUSION OF LAW BASED ON THE ALLEGATIONS OF A DOCUMENT THAT NEVER FORMED PART OF THE CASE RECORDS IS VALID.

IV

WHETHER FURTHER PROOF OF SUSBTANTIAL REDUCTION OF THE OPERATIONAL CAPACITY OF AN AGENCY, DUE TO UNRULY MASS GATHERING OF GOVERNMENT EMPLOYEES INSIDE OFFICE PREMISES AND WITHIN OFFICE HOURS, IS REQUIRED TO HOLD THE SAID EMPLOYEES LIABLE FOR CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE PURSUANT TO CSC RESOLUTION NO. 021316.

V

WHETHER AN UNRULY MASS GATHERING OF TWENTY EMPLOYEES, LASTING FOR MORE THAN AN HOUR DURING OFFICE HOURS, INSIDE OFFICE PREMISES AND WITHIN A UNIT TASKED TO HEAR AN ADMINISTRATIVE CASE, TO PROTEST THE PROHIBITION AGAINST THE APPEARANCE OF THEIR LEADER AS COUNSEL IN THE SAID ADMINISTRATIVE CASE, FALLS WITHIN THE PURVIEW OF THE CONSTITUTIONAL GUARANTEE TO FREEDOM OF EXPRESSION AND PEACEFUL ASSEMBLY.

VI

WHETHER THE CONCERTED ABANDONMENT OF EMPLOYEES OF THEIR POSTS FOR MORE THAN AN HOUR TO HOLD AN UNRULY PROTEST INSIDE OFFICE PREMISES ONLY CONSTITUTES THE ADMINISTRATIVE OFFENSE OF VIOLATION OF REASONABLE OFFICE RULES AND REGULATIONS.9

The Court finds no merit in the petition.

Petitioners primarily question the probative value accorded to respondents' letters of explanation in response to the memorandum of the GSIS-IU Manager. The respondents never filed their answers to the formal charges. The petitioners argue that there being no answers, the allegations in the formal charges that they filed should have been deemed admitted pursuant to Section 11, Rule 8 of the Rules of Court which provides:

SECTION 11. Allegations not specifically denied deemed admitted.- Material averment in the complaint, other than those as to the amount of liquidated damages, shall be deemed admitted when not specifically denied. Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied specifically and under oath.

According to the petitioners, this rule is applicable to the case at bench pursuant to Rule 1, Section 4 of the Rules of Court which reads:

SECTION 4. In what cases not applicable. - These Rules shall not apply to election cases, land registration, cadastral, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenient. (underscoring supplied)

The Court does not subscribe to the argument of the petitioners. Petitioners' own rules, Rule XI, Section 4 of the GSIS' Amended Policy and Procedural Guidelines No. 178-04, specifically provides:

If the respondent fails to file his Answer within five (5) working days from receipt of the Formal Charge for the supporting evidence, when requested, he shall be considered to have waived his right to file an answer and the PGM or the Board of Trustees, in proper cases, shall render judgment, as may be warranted by the facts and evidence submitted by the prosecution.

A perusal of said section readily discloses that the failure of a respondent to file an answer merely translates to a waiver of "his right to file an answer." There is nothing in the rule that says that the charges are deemed admitted. It has not done away with the burden of the complainant to prove the charges with clear and convincing evidence.

It is true that Section 4 of the Rules of Court provides that the rules can be applied in a "suppletory character." Suppletory is defined as "supplying deficiencies."10 It means that the provisions in the Rules of Court will be made to apply only where there is an insufficiency in the applicable rule. There is, however, no such deficiency as the rules of the GSIS are explicit in case of failure to file the required answer. What is clearly stated there is that GSIS may "render judgment as may be warranted by the facts and evidence submitted by the prosecution."

Even granting that Rule 8, Section 11 of the Rules of Court finds application in this case, petitioners must remember that there remain averments that are not deemed admitted by the failure to deny the same. Among them are immaterial allegations and incorrect conclusions drawn from facts set out in the complaint.11 Thus, even if respondents failed to file their answer, it does not mean that all averments found in the complaint will be considered as true and correct in their entirety, and that the forthcoming decision will be rendered in favor of the petitioners. We must not forget that even in administrative proceedings, it is still the complainant, or in this case the petitioners, who have the burden of proving, with substantial evidence, the allegations in the complaint or in the formal charges.12

A perusal of the decisions of the CA and of the CSC will reveal that the case was resolved against petitioners based, not on the absence of respondents' evidence, but on the weakness of that of the petitioners. Thus, the CA wrote:

Petitioners correctly submitted the administrative cases for resolution without the respondents' respective answer to the separate formal charges in accordance with Section 4, Rule XI of the RPAI. Being in full control of the administrative proceeding and having effectively prevented respondents from further submitting their responsive answer and evidence for the defense, petitioners were in the most advantageous position to prove the merit of their allegations in the formal charges. When petitioner Winston Garcia issued those similarly worded decisions in the administrative cases against the respondents, it is presumed that all evidence in their favor were duly submitted and justly considered independent of the weakness of respondent's evidence in view of the principle that ''the burden of proof belongs to the one who alleges and not the one who denies."13

On the merits, what needs to be resolved in the case at bench is the question of whether or not there was a violation of Section 5 of CSC Resolution No. 02-1316. Stated differently, whether or not respondents' actions on May 27, 2005 amounted to a "prohibited concerted activity or mass action." Pertinently, the said provision states:

Section 5. As used in this Omnibus Rules, the phrase ''prohibited concerted activity or mass action'' shall be understood to refer to any collective activity undertaken by government employees, by themselves or through their employees organizations, with intent of effecting work stoppage or service disruption in order to realize their demands of force concession, economic or otherwise, from their respective agencies or the government. It shall include mass leaves, walkouts, pickets and acts of similar nature. (underscoring supplied)

In this case, CSC found that the acts of respondents in going to the GSIS-IU office wearing red shirts to witness a public hearing do not amount to a concerted activity or mass action proscribed above. CSC even added that their actuations can be deemed an exercise of their constitutional right to freedom of expression. The CA found no cogent reason to deviate therefrom.

As defined in Section 5 of CSC Resolution No. 02-1316 which serves to regulate the political rights of those in the government service, the concerted activity or mass action proscribed must be coupled with the "intent of effecting work stoppage or service disruption in order to realize their demands of force concession." Wearing similarly colored shirts, attending a public hearing at the GSIS-IU office, bringing with them recording gadgets, clenching their fists, some even badmouthing the guards and PGM Garcia, are acts not constitutive of an (i) intent to effect work stoppage or service disruption and (ii) for the purpose of realizing their demands of force concession.

Precisely, the limitations or qualifications found in Section 5 of CSC Resolution No. 02-1316 are there to temper and focus the application of such prohibition. Not all collective activity or mass undertaking of government employees is prohibited. Otherwise, we would be totally depriving our brothers and sisters in the government service of their constitutional right to freedom of expression.

Government workers, whatever their ranks, have as much right as any person in the land to voice out their protests against what they believe to be a violation of their rights and interests. Civil Service does not deprive them of their freedom of expression. It would be unfair to hold that by joining the government service, the members thereof have renounced or waived this basic liberty. This freedom can be reasonably regulated only but can never be taken away.

A review of PGM Garcia's formal charges against the respondents reveals that he himself was not even certain whether the respondents and the rest of the twenty or so GSIS employees who were at the GSIS-IU office that fateful day marched there or just simply appeared there simultaneously.14 Thus, the petitioners were not even sure if the spontaneous act of each of the twenty or so GSIS employees on May 27, 2005 was a concerted one. The report of Manager Nagtalon of the GSIS-SD which was the basis for PGM Garcia's formal charges reflected such uncertainty. Thus,

Of these red shirt protesters, only Mr. Molina has official business at the Investigation Unit during this time. The rest abandoned their post and duties for the duration of this incident which lasted until 10:55 A.M. It was also observed that the protesters, some of whom raised their clenched left fists, carefully planned this illegal action as evident in their behavior of arrogance, defiance and provocation, the presence of various recording gadgets such as VCRs, voice recorders and digital cameras, the bad mouthing of the security guards and the PGM, the uniformity in their attire and the collusion regarding the anomalous entry of Mr. Albert Velasco to the premises as reported earlier.15

The said report of Nagtalon contained only bare facts. It did not show respondents' unified intent to effect disruption or stoppage in their work. It also failed to show that their purpose was to demand a force concession.

In the recent case of GSIS v. Kapisanan ng mga Manggagawa sa GSIS,16 the Court upheld the position of petitioner GSIS because its employees, numbering between 300 and 800 each day, staged a walkout and participated in a mass protest or demonstration outside the GSIS for four straight days. We cannot say the same for the 20 or so employees in this case. To equate their wearing of red shirts and going to the GSIS-IU office for just over an hour with that four-day mass action in Kapisanan ng mga Manggagawa sa GSIS case and to punish them in the same manner would most certainly be unfair and unjust.

Recent analogous decisions in the United States, while recognizing the government's right as an employer to lay down certain standards of conduct, tend to lean towards a broad definition of "public concern speech" which is protected by their First Amendment. One such case is that of Scott v. Meters.17 In said case, the New York Transit Authority (NYTA), responsible for operation of New York City's mass transit service, issued a rule prohibiting employees from wearing badges or buttons on their uniforms. A number of union members wore union buttons promoting their opposition to a collective bargaining agreement. Consequently, the NYTA tried to enforce its rule and threatened to subject these union members to discipline. The court, though recognizing the government's right to impose reasonable restrictions, held that the NYTA's rule was "unconstitutionally overboard."

In another case, Communication Workers of America v. Ector County Hospital District,18 it was held that,

A county hospital employee's wearing of a "Union Yes" lapel pin during a union organization drive constituted speech on a matter of public concern, and the county's proffered interest in enforcing the anti-adornment provision of its dress code was outweighed by the employee's interest in exercising his First Amendment speech and associational rights by wearing a pro-union lapel button.19

Thus, respondents' freedom of speech and of expression remains intact, and CSC's Resolution No. 02-1316 defining what a prohibited concerted activity or mass action has only tempered or regulated these rights. Measured against that definition, respondents' actuations did not amount to a prohibited concerted activity or mass action. The CSC and the CA were both correct in arriving at said conclusion.

WHEREFORE, the assailed August 31, 2007 Decision of the Court of Appeals as well as its October 16, 2007 Resolution in CA G.R. SP No. 98952 are hereby AFFIRMED.

SO ORDERED.

JOSE CATRAL MENDOZAAssociate Justice

G.R. No. 172841               December 15, 2010

RENATO REYES, represented by RAMON REYES, Petitioner, vs.LEOPOLDO BARRIOS, substituted by LUCIA MANALUS-BARRIOS, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This petition for review1 assails the 8 February 2006 Decision2 and the 29 May 2006 Resolution3 of the Court of Appeals in CA-G.R. SP No. 90212. The Court of Appeals affirmed the 29 June 1998 Decision and the 7 December 2004 Resolution of the Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No. 5504, declaring Leopoldo Barrios as bona fide tenant of the subject landholding. The DARAB reversed the 31 October 1996 Decision of the Provincial Agrarian Reform Board (PARAD) of San Fernando, Pampanga.

The Facts

On 26 September 1995, petitioner Renato Reyes (petitioner) filed before the Department of Agrarian Reform, Region III, PARAD of San Fernando, Pampanga, a complaint for ejectment against respondent Leopoldo Barrios (respondent). The case was docketed as DARAB CASE No. 1089-P’95.

The case involves a parcel of land measuring approximately 3.6 hectares (landholding)4 which forms part of the property with an aggregate area of 527,695 square meters (property)5 located at Mapaniqui, Candaba, Pampanga covered by Transfer Certificate of Title (TCT) No. 14488.6 The property was co-owned by petitioner and his four sisters.7 Petitioner claimed that the property became subject of the Operation Land Transfer under Presidential Decree No. 27 (PD 27), except the 3.6‒hectare landholding which was allegedly retained. In his Memorandum8 dated 18 September 2007, petitioner averred that he and his sister Leticia V. Reyes are the co-owners of the landholding. Petitioner hired respondent as the overseer of the farm and piggery on the landholding. However, petitioner contended that respondent never remitted the proceeds from the piggery business and the fruits from the landholding.9

On the other hand, respondent alleged that he was a tenant of the landholding since 1972 and he even built his house on the subject landholding. Respondent also acted as the caretaker of the piggery business on the landholding. Contrary to petitioner’s allegations, respondent stated that petitioner’s wife took all the proceeds from the piggery business, which later ceased operation due to an epidemic.

When respondent failed to appear during the scheduled hearings, petitioner moved to submit the case for decision on the basis of the evidence presented. Respondent alleged that his failure to attend the scheduled hearings was because he received the Notice for the 29 February 1996 hearing only on 6 March 1996. Respondent moved for the postponement of the hearing because he was bedridden due to hypertension and heart ailment.10 However, the PARAD again heard the case ex-parte on 28 March 1996, of which respondent alleged that he was still not notified.

On 31 October 1996, the PARAD rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, this Office renders judgment declaring that herein plaintiff [Renato Reyes] is entitled to recover the possession of the property subject of this present litigation; ordering the defendant [Leopoldo Barrios] or anyone claiming any right or authority under him to vacate the premises in question and surrender possession thereof to the plaintiff; and ordering the defendant to pay the sum of P3,000.00 to the plaintiff as attorney’s fees.

No pronouncement as to cost.

SO ORDERED.11

Respondent appealed to the DARAB. Meanwhile, respondent passed away on 13 February 199712 and was substituted by his spouse Lucia Manalus-Barrios.13

On 29 June 1998, the DARAB reversed the PARAD decision and held that respondent is a bona fide tenant of the landholding and that he cannot be ejected from the landholding absent any justifiable cause. The DARAB held:

It appears that Respondent-Appellant is listed as farmer-beneficiary of the land transfer program, as evidenced by the Certification issued by the Officer-in-charge of Arayat-Sta. Ana-Candaba Agrarian Reform Team. The fact of tenancy is buttressed by the joint statement dated March 5, 1989 of residents of neighboring lots who attest to Respondent-Appellant’s cultivation of subject lot. As tenant thereon, Respondent-Appellant, therefore, cannot just be ejected. The causes for extinguishment of Leasehold Relation pursuant to Section 36, Republic Act No. 6657 are:

1. Abandonment of the landholding without the knowledge of the lessor;

2. Voluntary surrender of the landholding by the lessee, written notice of which shall be served three (3) months in advance;

3. Absence of successor or qualified heir, in case of death or permanent incapacity of the lessee;

4. Judicial ejectment of the lessee for causes provided under Sec. 36 of the Code;

5. Acquisition by the lessee of the landholding;

6. Termination of the leasehold under Sec. 38;

7. Mutual consent of the parties; and

8. Conversion of the landholding for non-agricultural purposes subject to the conditions required by law.

The records are bereft of evidence showing the existence of any of the above-quoted circumstances to justify ejectment of Respondent-Appellant from said landholding.

Under the prevailing circumstances, we hold that Respondent-Appellant Barrios is a bona fide tenant of the landholding.

WHEREFORE, premises considered, the appealed decision is SET ASIDE, and a new one entered:

1. Declaring Respondent-Appellant Leopoldo Barrios a bona fide tenant of the subject landholding. However, due to his death during the pendency of this case, the surviving spouse, if qualified, shall succeed; if not, the eldest descendant will succeed or the descending descendant in the order of their age;

2. Directing the plaintiff-landowner Renato Reyes to reinstate the qualified heir of Respondent-Appellant and to maintain him in peaceful possession as cultivator thereof; and

3. Directing the DAR Regional Office, through its Municipal Agrarian Reform Officer (MARO) to issue Certificate of Agricultural Lease (CAL) after fixing the lease rental therefor.

SO ORDERED.14

Petitioner filed a Motion for Reconsideration, asking for the reversal of the DARAB decision and the reinstatement of the PARAD decision. Respondent, substituted by his spouse Lucia Manalus-Barrios, also filed a Motion for Partial Reconsideration, asking for the modification of the decision by declaring respondent as a beneficiary under PD 27 and to issue an Emancipation Patent in favor of respondent’s surviving spouse Lucia Manalus-Barrios.

In its 7 December 2004 Resolution, the DARAB denied petitioner’s Motion for Reconsideration for lack of merit and granted respondent’s Motion for Partial Reconsideration, thus:

In the Motion for Partial Reconsideration, Movant alleged that this Board in its decision has declared that the deceased Defendant-Appellant Leopoldo Barrios is a bona fide tenant on the subject landholding. Moreover, Plaintiff-Appellee maintains that page three (3) of the decision rendered by this Board finds and provides that "Operation Land Transfer (OLT) or Presidential Decree No. 27 was signed into law decreeing the emancipation of tenants from the bondage of the soil, transferring to them the ownership of the land they till and providing the instruments and mechanisms therefore." Hence, movant prayed that an Emancipation Patent be issued in lieu of the Certificate of Agricultural Lease in consonance with the findings of this Board and DAR Administrative Order No. 13, Series of 1988.

Acting on said motion, this Board finds that the appealed decision shows substantial appreciation that deceased Defendant-Appellant was a bona fide tenant on the subject landholding. Likewise, this Board, in the assailed decision sustained the provisions of Presidential Decree No. 27, providing "the emancipation of tenants from the bondage of the soil . . ."

From the foregoing findings, the pronouncement of this Board specifically paragraph three (3) of the decision seeks modification. In finding that deceased Defendant-Appellant was a bona fide tenant of the subject landholding and declaring the emancipation of tenants from the bondage of the soil, the subsequent issuance of a Certificate of Agricultural Lease as provided in the assailed decision is not in consonance with the findings of the Board. Hence, this Board is constrained to modify or apply the correct conclusions drawn from the facts of the case.

WHEREFORE, premises considered, the herein Motion for Reconsideration dated September 30, 1995 is hereby DENIED for lack of merit. Whereas, the Motion for Partial Reconsideration dated October 5, 1998 is GRANTED and a new judgment is rendered, as follows:

1. Paragraph three (3) of the decision dated June 29, 1998 is hereby modified;

2. Directing the DAR Regional Director, through the Municipal Agrarian Reform Officer (MARO), to issue Emancipation Patent in favor of Defendant-Appellant or his heir, herein substitute Defendant-Appellant Lucia Manalus-Barrios;

3. Directing Plaintiff-Appellee’s successors, co-owners, and the alleged former tenants and all those persons acting on their behalf to vacate the subject landholding and to immediately reinstate the substitute Defendant-Appellant thereto and to maintain her in peaceful possession thereof;

4. Declaring the landholding fully paid by the defendant-appellant;

5. Directing the Plaintiff-Appellee’s successors and co-owners to reimburse 75% of palay harvest, of its cash equivalent, on the remaining 12½ croppings to the Defendant-Appellant and deducting therefrom the amount of the expenses incurred by the Plaintiff-Appellee’s successors and co-owners in the present planting season.

Let records of this case be remanded to the Sala of the Honorable Provincial Adjudicator of Pampanga for the immediate issuance of a writ of execution.

SO ORDERED.15

Petitioner filed another Motion for Reconsideration, which the DARAB denied in its Resolution dated 5 May 2005.16 Petitioner then appealed to the Court of Appeals, which denied the petition for review in its 8 February 2006 Decision. The Court of Appeals likewise denied petitioner’s motion for reconsideration in its 29 May 2006 Resolution.

Hence, this petition for review.

The Ruling of the Court of Appeals

The Court of Appeals concurred with the findings of the DARAB, thus:

But the petitioner insists that public respondent decided the case at bench against him in defiance of the evidence on record. We do not agree. The DARAB based its findings on the certification dated December 7, 1982 of then Ministry of Agrarian Reform (now Department of Agrarian Reform) of Sta. Ana, Pampanga finding Leopoldo Barrios as legitimate farmer-beneficiary over a four (4) hectare unirrigated land owned by Renato Reyes, located at Mapaniqui, Candaba, Pampanga; on the certification issued by the Officer-in-charge of Arayat-Sta. Ana-Candaba Agrarian Reform Team listing respondent-appellant as farmer-beneficiary; and on the joint statement dated March 5, 1989 of residents of neighboring lots who attested to respondent-appellant’s cultivation and occupation of the subject lot.

It bears stressing that in administrative proceedings, as in the case at bench, the quantum of evidence required to sustain a judgment is only substantial evidence. It is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine differently. Thus, findings of fact of quasi-judicial agencies are generally accorded respect, and even finality, by the appellate tribunal, if supported by substantial evidence, this in recognition of their expertise on the specific matters under their consideration.17

The Issues

In his petition, petitioner submits that:

1. THE COURT OF APPEALS BY RULING IN ITS QUESTIONED DECISION (ANNEX "A") THAT THE DARAB WAS CORRECT IN DECIDING THE CASE AGAINST HIM AS THIS IS SUPPORTED BY THE CERTIFICATIONS ISSUED BY THE MINISTRY OF AGRARIAN REFORM AND THE OFFICER-IN-CHARGE OF THE AGRARIAN REFORM TEAM OF ARAYAT-STA. ANA-CANDABA, PAMPANGA DENIED PETITIONER HIS RIGHT TO DUE PROCESS OF LAW AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION BECAUSE THE RECORD SHOWS THAT NOT ONLY ARE THE EVIDENCE OF BARRIOS IRRELEVANT BUT THEY [ARE] ALSO MERE MACHINE COPIES WHICH WERE NEVER PRESENTED IN A PROPER HEARING WHERE THE PETITIONER CAN SCRUTINIZE THEM AND CROSS-EXAMINE PRIVATE RESPONDENT ON THEM.

2. THE COURT OF APPEALS COMMITTED GRIEVOUS LEGAL ERROR AND/OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION BY FAILING TO CORRECT THE DARAB IN NOT RECOGNIZING PETITIONER’S RIGHT OVER HIS RETAINED AREA WHICH HAD ALREADY BEEN THE SUBJECT OF AN AWARD IN CLAIM 83-144 OF LAND BANK OF THE PHILIPPINES.18

The Ruling of the Court

We partially grant the petition. We hold that respondent is a bona fide tenant of the subject landholding, as stated in the 29 June 1998 DARAB Decision in DARAB Case No. 5504. However, the 7 December 2004 DARAB Resolution, modifying the 29 June 1998 DARAB Decision and directing the DAR Regional Director to issue Emancipation Patent in favor of respondent or his heirs, should be set aside.

In this case, the DARAB ruling that respondent is a bona fide tenant is supported by evidence submitted by respondent, which included: (1) certification dated 7 December 1982 of the Arayat-Sta. Ana-Candaba Agrarian Reform Team, Ministry of Agrarian Reform, Region III, Pampanga District, stating that respondent is a bona fide farmer-beneficiary under the Operation Land Transfer of the four (4)-hectare farmholding owned by petitioner;19(2) joint statement ("Salaysay") dated 5 March 1989 of the former farmworkers of the neighboring farmlots attesting to respondent’s occupation and cultivation of the subject landholding;20 (3) pictures of the subject landholding which was planted with palay crops;21 and (4) picture of respondent’s house constructed on the subject landholding.221avvphi1

Furthermore, in compliance with the Order23 dated 30 September 2002 of the DARAB, the Provincial Agrarian Reform Officer (PARO) of Pampanga forwarded to the DARAB the status report on the subject landholding,24which states:

Republic of the PhilippinesDEPARTMENT OF AGRARIAN REFORM

Region IIIMunicipal Agrarian Reform Office

Candaba, Pampanga

Engr. Rodolfo S. PangilinanOIC-PARODARPO-Del Pilar,City of San Fernando Pampanga

Sir:

This refers to the Order dated September 30, 2002 issued by DARCO Appeal Board with the instruction to submit status report of the subject landholding owned by Renato Reyes located at Mapanique, Candaba, Pampanga.

That the undersigned conducted ocular inspection/verification and reveal the following finding to wit:

1. That Renato Reyes the landowner and Leopoldo Barrios tenant are both deceased.

2. That the subject landholding was taken over by Renato Reyes since 1996 and it is being administered by Antonio Manalus.

3. That at present the land in question is planted to palay by the administrator Antonio Manalus with the used (sic) of farm labor and 30 mango tree[s] are existing of the subject landholding.

4. That the house of Lucia Vda. De Barrios was constructed to the subject landholdingwith an area of 450 square meters more or less.

5. That the qualified tenant beneficiaries [are] among the surviving heirs of Leopoldo Barrios is the wife of (sic) Lucia Vda. M. Barrios.

In view of the foregoing facts and base[d] on the Order dated September 30, 2002[,] [t]he undersigned schedule[d] mediation conference on November 18, 2002 in preparation of the Certificate of Agricultural Leasehold.

Very truly yours,

(signed)SALVADOR S. TOTAANM.A.R.O.25

Under Section 3, Rule I of the 1994 DARAB New Rules of Procedure (now Section 3, Rule I of the 2009 DARAB Rules of Procedure26), the Board and its Regional and Provincial Adjudicators are not bound by technical rules of procedure and evidence, thus:

SECTION 3. Technical Rules Not Applicable. The Board and its Regional and Provincial Adjudicators shall not be bound by technical rules of procedure and evidence as prescribed in the Rules of Court, but shall proceed to hear and decide all agrarian cases, disputes or controversies in a most expeditious manner, employing all reasonable means to ascertain the facts of every case in accordance with justice and equity.

x x x

c) The provisions of the Rules of Court shall not apply even in suppletory character unless adopted herein or by resolution of the Board. However, due process of law shall be observed and followed in all instances.

Section 1, Rule VIII of the 1994 DARAB New Rules of Procedure (now Section 1, Rule X of the 2009 DARAB Rules of Procedure27) reiterates the non-applicability of technical rules regarding the admission and sufficiency of evidence, thus:

SECTION 1. Nature of Proceedings. The proceedings before the Board or its Adjudicators shall be non-litigious in nature. Subject to the essential requirements of due process, the technicalities of law and procedures and the rules governing the admissibility and sufficiency of evidence obtained in the courts of law shall not apply. x x x

Thus, in Reyes v. Court of Appeals,28 the Court held:

Finally, we rule that the trial court did not err when it favorably considered the affidavits of Eufrocina and Efren Tecson (Annexes "B" and "C") although the affiants were not presented and subjected to cross-examination. Section 16 of P.D. No. 946 provides that ‘Rules of Court shall not be applicable in agrarian cases even in a suppletory character.’ The same provision states that ‘In the hearing, investigation and determination of any question or controversy, affidavits and counter-affidavits may be allowed and are admissible in evidence.’29

Besides, the DARAB Rules should be liberally construed to carry out the objectives of agrarian reform and to promote just, expeditious, and inexpensive adjudication and settlement of agrarian cases, disputes or controversies.30

Although we affirm the ruling of the DARAB that respondent is a bona fide tenant, we disagree with its order for the issuance of an Emancipation Patent in favor of respondent’s heir, as provided in its Resolution dated 7 December 2004. The records show that when the property was placed under the Operation Land Transfer, respondent was not included in the list of tenant beneficiaries who were issued Emancipation Patents, as noted on the title of the property, TCT No. 14488, which was partially canceled in view of the issuance of the new TCTs in favor of the tenant beneficiaries.31

The Primer on Agrarian Reform32 enumerates the steps in transferring the land to the tenant-tiller, thus:

a. First step: the identification of tenants, landowners, and the land covered by OLT.

b. Second step: land survey and sketching of the actual cultivation of the tenant to determine parcel size, boundaries, and possible land use;

c. Third step: the issuance of the Certificate of Land Transfer (CLT). To ensure accuracy and safeguard against falsification, these certificates are processed at the National Computer Center (NCC) at Camp Aguinaldo;

d. Fourth step: valuation of the land covered for amortization computation;

e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year period; and

f. Sixth step: the issuance of the Emancipation Patent.33

Thus, there are several steps to be undertaken before an Emancipation Patent can be issued. As regards respondent, the records are bereft of evidence indicating that this procedure has been followed.

Furthermore, there are several supporting documents which a tenant-farmer must submit before he can receive the Emancipation Patent, such as:

a. Application for issuance of Emancipation Patent;

b. Applicant’s (owner’s) copy of Certificate of Land Transfer.

c. Certification of the landowner and the Land Bank of the Philippines that the applicant has tendered full payment of the parcel of land as described in the application and as actually tilled by him;

d. Certification by the President of the Samahang Nayon or by the head of farmers’ cooperative duly confirmed by the municipal district officer (MDO) of the Ministry of Local Government and Community Development (MLGCD) that the applicant is a full-fledged member of a duly registered farmers’ cooperative or a certification to these effect;

e. Copy of the technical (graphical) description of the land parcel applied for prepared by the Bureau of Land Sketching Team (BLST) and approved by the regional director of the Bureau of Lands;

f. Clearance from the MAR field team (MARFT)or the MAR District Office (MARDO) legal officer or trial attorney; or in their absence, a clearance by the MARFT leader to the effect that the land parcel applied for is not subject of adverse claim, duly confirmed by the legal officer or trial attorney of the MAR Regional Office or, in their absence, by the regional director;

g. Xerox copy of Official Receipts or certification by the municipal treasurer showing that the applicant has fully paid or has effected up-to-date payment of the realty taxes due on the land parcel applied for; and

h. Certification by the MARFT leader whether applicant has acquired farm machineries from the MAR and/or from other government agencies.34

Majority of these supporting documents are lacking in this case. Hence, it was improper for the DARAB to order the issuance of the Emancipation Patent in favor of respondent without the required supporting documents and without following the requisite procedure before an Emancipation Patent may be validly issued.

Moreover, there was no sufficient evidence to prove that respondent has fully paid the value of the subject landholding. As held in Mago v. Barbin,35 the laws mandate full payment of just compensation for the lands acquired under PD 27 prior to the issuance of Emancipation Patents, thus:

In the first place, the Emancipation Patents and the Transfer Certificates of Title should not have been issued to petitioners without full payment of the just compensation. Under Section 2 of Presidential Decree No. 266, the DAR will issue the Emancipation Patents only after the tenant-farmers have fully complied with the requirements for a grant of title under PD 27. Although PD 27 states that the tenant-farmers are already deemed owners of the land they till, it is understood that full payment of the just compensation has to be made first before title is transferred to them. Thus, Section 6 of EO 228 provides that ownership of lands acquired under PD 27 may be transferred only after the agrarian reform beneficiary has fully paid the amortizations.36

Clearly, respondent is not entitled to be issued an Emancipation Patent considering that he has not fully complied with the requirements for a grant of title under PD 27.37

On the issue of petitioner’s claim that the subject landholding forms part of the retained area awarded to him and his sisters, the Court notes that there was no sufficient evidence to substantiate petitioner’s claim. Furthermore, as held by the Court of Appeals, only the Office of the Secretary of the Department of Agrarian Reform (DAR) has the exclusive jurisdiction to resolve the issue of whether petitioner is entitled to a retention area.38 Indeed, under Section 3 (3.5), Rule II of the DARAB 2003 Rules of Procedure, the exercise of the right of retention by the landowner is under the exclusive prerogative of and cognizable by the Office of the Secretary of the DAR. Besides, even if the subject landholding forms part of petitioner’s retained area, petitioner landowner may still not eject respondent tenant absent any of the causes provided under the law. The landowner cannot just terminate the leasehold relationship without valid cause.

WHEREFORE, we PARTIALLY GRANT the petition. We SET ASIDE the 8 February 2006 Decision and the 29 May 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 90212. We REINSTATE the 29 June 1998 Decision of the Department of Agrarian Reform Adjudication Board in DARAB Case No. 5504.

SO ORDERED.

ANTONIO T. CARPIOAssociate Justice

G.R. No. 169466             May 9, 2007

DEPARTMENT OF BUDGET AND MANAGEMENT, represented by SECRETARY ROMULO L. NERI, PHILIPPINE NATIONAL POLICE, represented by POLICE DIRECTOR GENERAL ARTURO L. LOMIBAO, NATIONAL POLICE COMMISSION, represented by CHAIRMAN ANGELO T. REYES, AND CIVIL SERVICE COMMISSION, represented by CHAIRPERSON KARINA C. DAVID, Petitioners, vs.MANILA’S FINEST RETIREES ASSOCIATION, INC., represented by P/COL. FELICISIMO G. LAZARO (RET.), AND ALL THE OTHER INP RETIREES, Respondents.

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. CV No. 78203, to wit:

1. Decision1 dated July 7, 2005 which affirmed in toto the decision of the Regional Trial Court of Manila, Branch 32, in Civil Case No. 02-103702, a suit for declaratory relief, declaring the herein respondents entitled to the same retirement benefits accorded upon retirees of the Philippine National Police (PNP) under Republic Act (R.A.) No. 6975, as amended by R.A. No. 8551, and ordering the herein petitioners to implement the proper adjustments on respondents’ retirement benefits; and

2. Resolution2 dated August 24, 2005 which denied the petitioners’ motion for reconsideration.

The antecedent facts:

In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the Integrated National Police (INP) to be composed of the Philippine Constabulary (PC) as the nucleus and the integrated police forces as components thereof. Complementing P.D. No. 765 was P.D. No. 11843 dated August 26, 1977 (INP Law, hereinafter) issued to professionalize the INP and promote career development therein.

On December 13, 1990, Republic Act (R.A.) No. 6975, entitled "AN ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES," hereinafter referred to as PNP Law, was enacted. Under Section 23 of said law, the Philippine National Police (PNP) would initially consist of the members of the INP, created under P.D. No. 765, as well as the officers and enlisted personnel of the PC. In part, Section 23 reads:

SEC. 23. Composition. – Subject to the limitation provided for in this Act, the Philippine National Police, hereinafter referred to as the PNP, is hereby established, initially consisting of the members of the police forces who were integrated into the Integrated National Police (INP) pursuant to Presidential Decree No. 765, and the officers and enlisted personnel of the Philippine Constabulary (PC).

A little less than eight (8) years later, or on February 25, 1998, R.A. No. 6975 was amended by R.A. No. 8551, otherwise known as the "PHILIPPINE NATIONAL POLICE REFORM AND REORGANIZATION ACT OF 1998." Among other things, the amendatory law reengineered the retirement scheme in the police organization. Relevantly, PNP personnel, under the new law, stood to collect more retirement benefits than what INP members of equivalent rank, who had retired under the INP Law, received.

The INP retirees illustrated the resulting disparity in the retirement benefits between them and the PNP retirees as follows:4

Retirement Rank Monthly Pension Difference

INP PNP INP PNP  

Corporal SPO3 P 3,225.00 P 11,310.00 P 8,095.00

Captain P. Sr. Insp. P 5,248.00 P 15,976.00 P10,628.00

Brig. Gen. P. Chief Supt. P 10,054.24 P 18,088.00 P 8,033.76

Hence, on June 3, 2002, in the Regional Trial Court (RTC) of Manila, all INP retirees, spearheaded by the Manila’s Finest Retirees Association, Inc., or the MFRAI (hereinafter collectively referred to as the INP Retirees), filed a petition for declaratory relief,5 thereunder impleading, as respondents, the Department of Budget and Management (DBM), the PNP, the National Police Commission (NAPOLCOM), the Civil Service Commission (CSC) and the Government Service Insurance System (GSIS). Docketed in the RTC as Civil Case No. 02-103702, which was raffled to Branch 22 thereof, the petition alleged in gist that INP retirees were equally situated as the PNP retirees but whose retirement benefits prior to the enactment of R.A. No. 6975, as amended by R.A. No. 8551, were unconscionably and arbitrarily excepted from the higher rates and adjusted benefits accorded to the PNP retirees. Accordingly, in their petition, the petitioning INP retirees pray that a –

DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that they, as INP-retirees, are truly absorbed and equally considered as PNP-retirees and thus, entitled to enjoy the SAME or IDENTICAL retirement benefits being bestowed to PNP-retirees by virtue of said PNP Law or Republic Act No. 6975, as amended by Republic Act 8551, with the corollary mandate for the respondents-government agencies to effect the immediate adjustment on their previously received disparate retirement benefits, retroactive to its effectivity, and with due payment thereof.

The GSIS moved to dismiss the petition on grounds of lack of jurisdiction and cause of action. On the other hand, the CSC, DBM, NAPOLCOM and PNP, in their respective answers, asserted that the petitioners could not claim the more generous retirement benefits

under R.A. No. 6975 because at no time did they become PNP members, having retired prior to the enactment of said law. DBM, NAPOLCOM and PNP afterwards filed their respective pre-trial briefs.

The ensuing legal skirmish is not relevant to the disposition of the instant case. The bottom line is that, on March 21, 2003, the RTC came out with its decision6 holding that R.A. No. 6975, as amended, did not abolish the INP but merely provided for the absorption of its police functions by the PNP, and accordingly rendered judgment for the INP retirees, to wit:

WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP Retirees entitled to the same or identical retirement benefits and such other benefits being granted, accorded and bestowed upon the PNP Retirees under the PNP Law (RA No. 6975, as amended).

The respondents Government Departments and Agencies shall IMMEDIATELY EFFECT and IMPLEMENT the proper adjustments on the INP Retirees’ retirement and such other benefits, RETROACTIVE to its date of effectivity, and RELEASE and PAY to the INP Retirees the due payments of the amounts.

SO ORDERED.

On April 2, 2003, the trial court issued what it denominated as Supplement to the Decision whereunder it granted the GSIS’ motion to dismiss and thus considered the basic petition as withdrawn with respect to the latter.

From the adverse decision of the trial court, the remaining respondents, namely, DBM, PNP, NAPOLCOM and CSC, interposed an appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 78203.

As stated at the threshold hereof, the CA, in its decision of July 7, 2005,7 affirmed that of the trial court upholding the entitlement of the INP retirees to the same or identical retirement benefits accorded upon PNP retirees under R.A. No. 6975, as amended.

Their motion for reconsideration having been denied by the CA in` its equally assailed resolution of August 24, 2005,8 herein petitioners are now with this Court via the instant recourse on their singular submission that -

THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN AFFIRMING THE DECISION OF THE TRIAL COURT NOTWITHSTANDING THAT IT IS CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.

We DENY.

In the main, it is petitioners’ posture that R.A. No. 6975 clearly abolished the INP and created in its stead a new police force, the PNP. Prescinding therefrom, petitioners contend that since the PNP is an organization entirely different from the INP, it follows that INP retirees never became PNP members. Ergo, they cannot avail themselves of the retirement benefits accorded to PNP members under R.A. No. 6975 and its amendatory law, R.A. No. 8551.

A flashback at history is proper.

As may be recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or just about four (4) years after the 1986 Edsa Revolution toppled down the dictatorship regime. Egged on by the current sentiment of the times generated by the long period of martial rule during which the police force, the PC-INP, had a military character, being then a major service of the Armed Forces of the Philippines, and invariably moved by a fresh constitutional mandate for the establishment of one police force which should be national in scope and, most importantly, purely civilian in character,9 Congress enacted R.A. No. 6975 establishing the PNP and placing it under the Department of Interior and Local Government. To underscore the civilian character of the PNP, R.A. No. 6975 made it emphatically clear in its declaration of policy the following:

Section 2. Declaration of policy - It is hereby declared to be the policy of the State to promote peace and order, ensure public safety and further strengthen local government capability aimed towards the effective delivery of the basic services to the citizenry through the establishment of a highly efficient and competent police force that is national in scope and civilian in character. xxx.

The police force shall be organized, trained and equipped primarily for the performance of police functions. Its national scope and civilian character shall be paramount. No element of the police force shall be military nor shall any position thereof be occupied by active members of the [AFP]. (Emphasis and word in bracket supplied.)

Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially consisted of the members of the police forces who were integrated into the INP by virtue of P.D. No. 765, while Section 8610 of the same law provides for the assumption by the PNP of the police functions of the INP and its absorption by the former, including its appropriations, funds, records, equipment, etc., as well as its personnel.11 And to govern the statute’s implementation, Section 85 of the Act spelled out the following absorption phases:

Phase I – Exercise of option by the uniformed members of the [PC], the PC elements assigned with the Narcotics Command, CIS, and the personnel of the technical services of the AFP assigned with the PC to include the regular CIS investigating agents and the operatives and agents of the NAPOLCOM Inspection. Investigation and Intelligence Branch, and the personnel of the absorbed National Action Committee on Anti-Hijacking (NACAH) of the Department of National Defense to be completed within six (6) months from the date of the effectivity of this Act. At the end of this phase, all personnel from the INP, PC, AFP Technical Services, NACAH, and NAPOLCOM Inspection, Investigation and Intelligence Branch shall have been covered by official orders assigning them to the PNP, Fire and Jail Forces by their respective units.

Phase II – Approval of the table of organization and equipment of all bureaus and offices created under this Act, preparation and filling up of their staffing pattern, transfer of assets to the [DILG] and organization of the Commission, to be completed within twelve (12) months from the effectivity date hereof. At the end of this phase, all personnel to be absorbed by the [DILG] shall have been issued appointment papers, and the organized Commission and the PNP shall be fully operational.

The PC officers and enlisted personnel who have not opted to join the PNP shall be reassigned to the Army, Navy or Air Force, or shall be allowed to retire under existing AFP rules and regulations. Any PC-INP officer or enlisted personnel may, within the twelve-month period from the effectivity of this Act, retire and be paid retirement benefits corresponding to a position two (2) ranks higher than his present grade, subject to the conditions that at the time he applies for retirement, he has rendered at least twenty (20) years of service and still has, at most, twenty-four (24) months of service remaining before the compulsory retirement age as provided by existing law for his office.

Phase III – Adjustment of ranks and establishment of one (1) lineal roster of officers and another for non-officers, and the rationalization of compensation and retirement systems; taking into consideration the existing compensation schemes and retirement and separation benefit systems of the different components of the PNP, to ensure that no member of the PNP shall suffer any diminution in basic longevity and incentive pays, allowances and retirement benefits due them before the creations of the PNP, to be completed within eighteen (18) months from the effectivity of this Act. xxx.

Upon the effectivity of this Act, the [DILG] Secretary shall exercise administrative supervision as well as operational control over the transferred, merged and/or absorbed AFP and INP units. The incumbent Director General of the PC-INP shall continue to act as Director General of the PNP until … replaced …. (Emphasis and words in brackets supplied.)

From the foregoing, it appears clear to us that the INP was never, as posited by the petitioners, abolished or terminated out of existence by R.A. No. 6975. For sure, nowhere in R.A. No. 6975 does the words "abolish" or "terminate" appear in reference to the INP. Instead, what the law provides is for the "absorption," "transfer," and/or "merger" of the INP, as well as the other offices comprising the PC-INP, with the PNP. To "abolish" is to do away with, to annul, abrogate or destroy completely;12 to "absorb" is to assimilate, incorporate or to take in.13"Merge" means to cause to combine or unite to become legally absorbed or extinguished by merger14 while "transfer" denotes movement from one position to another. Clearly, "abolition" cannot be equated with "absorption."

True it is that Section 9015 of R.A. No. 6975 speaks of the INP "[ceasing] to exist" upon the effectivity of the law. It ought to be stressed, however, that such cessation is but the logical consequence of the INP being absorbed by the PNP.1a\^/phi1.net

Far from being abolished then, the INP, at the most, was merely transformed to become the PNP, minus of course its military character and complexion.

Even the petitioners’ effort at disclosing the legislative intent behind the enactment of R.A. No. 6975 cannot support their theory of abolition. Rather, the Senate and House deliberations on the bill that eventually became R.A. No. 6975 reveal what has correctly been held by the CA in its assailed decision: that the PNP was precisely created to erase the stigma spawned by the militarization of the police force under the PC-INP structure. The rationale behind the passage of R.A. No. 6975 was adequately articulated by no less than the sponsor16 of the corresponding House bill in his sponsorship speech, thus:

By removing the police force from under the control and supervision of military officers, the bill seeks to restore and underscore the civilian character of police work - an otherwise universal concept that was muddled up by the martial law years.

Indeed, were the legislative intent was for the INP’s abolition such that nothing would be left of it, the word "abolish" or what passes for it could have easily found its way into the very text of the law itself, what with the abundant use of the word during the legislative deliberations. But as can be gleaned from said deliberations, the lawmakers’ concern centered on the fact that if the entire PC-INP corps join the PNP, then the PC-INP will necessarily be abolished, for who then would be its members? Of more consequence, the lawmakers were one in saying that there should never be two national police agencies at the same time.

With the conclusion herein reached that the INP was not in fact abolished but was merely transformed to become the PNP, members of the INP which include the herein respondents are, therefore, not excluded from availing themselves of the retirement benefits accorded to PNP retirees under Sections 7417 and 7518 of R.A. No. 6975, as amended by R.A. No. 8551. It may be that respondents were no longer in the government service at the time of the enactment of R.A. No. 6975. This fact, however, without more, would not pose as an impediment to the respondents’ entitlement to the new retirement scheme set forth under the aforecited sections. As correctly ratiocinated by the CA to which we are in full accord:

For sure, R.A. No. 6975 was not a retroactive statute since it did not impose a new obligation to pay the INP retirees the difference between what they received when they retired and what would now be due to them after R.A. No. 6975 was enacted. Even so, that did not render the RTC’s interpretation of R.A. No. 6975 any less valid. The [respondents’] retirement prior to the passage of R.A. No. 6975 did not exclude them from the benefits provided by R.A. No. 6975, as amended by R.A. No. 8551, since their membership in the INP was an antecedent fact that nonetheless allowed them to avail themselves of the benefits of the subsequent laws. R.A. No. 6975 considered them as PNP members, always referring to their membership and service in the INP in providing for their retirement benefits. 19

Petitioners maintain, however, that NAPOLCOM Resolution No. 8,20 particularly Section 1121 thereof, bars the payment of any differential in retirement pay to officers and non-officers who are already retired prior to the effectivity of R.A. No. 6975.

The contention does not commend itself for concurrence.

Under the amendatory law (R.A. No. 8551), the application of rationalized retirement benefits to PNP members who have meanwhile retired before its (R.A. No. 8551) enactment was not prohibited. In fact, its Section 3822explicitly states that the rationalized retirement benefits schedule and program "shall have retroactive effect in favor of PNP members and officers retired or separated from the time specified in the law." To us, the aforesaid provision should be made applicable to INP members who had retired prior to the effectivity of R.A. No. 6975. For, as afore-held, the INP was, in effect, merely absorbed by the PNP and not abolished.

Indeed, to bar payment of retirement pay differential to INP members who were already retired before R.A. No. 6975 became effective would even run counter to the purpose of NAPOLCOM Resolution No. 8 itself, as expressed in its preambulatory clause, which is to rationalize the retirement system of the PNP taking into consideration existing retirement and benefit systems (including R.A. No. 6975 and P.D. No. 1184) of the different components thereof "to ensure that no member of the PNP shall suffer any diminution in the retirement benefits due them before the creation of the PNP."23

Most importantly, the perceived restriction could not plausibly preclude the respondents from asserting their entitlement to retirement benefits adjusted to the level when R.A. No. 6975 took effect. Such adjustment hews with the constitutional warrant that "the State shall, from time to time, review to upgrade the pensions and other benefits due to retirees of both the government and private sectors,"24 and the implementing mandate under the Senior Citizen’s Law25 that "to the extent practicable and feasible, retirement benefits xxx shall be upgraded to be at par with the current scale enjoyed by those in actual service."1awphi1.nét

Certainly going for the respondents in their bid to enjoy the same retirement benefits granted to PNP retirees, either under R.A. No. 6975 or R.A. No. 8551, is Section 34 of the latter law which amended Section 75 of R.A. No. 6975 by adding thereto the following proviso:

Section 75. Retirement benefits. x x x: Provided, finally, That retirement pay of the officers/non-officers of the PNP shall be subject to adjustments based on the prevailing scale of base pay of police personnel in the active service.

Then, too, is the all familiar rule that:

Retirement laws should be liberally construed in favor of the retiree because their intention is to provide for his sustenance and hopefully, even comfort, when he no longer has the stamina to continue earning his livelihood. The liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security and well-being of government employees may be enhanced.26

The petitioners parlay the notion of prospective application of statutes, noting in this regard that R.A. No. 6975, as amended, cannot be applied retroactively, there being no provision to that effect.

We are not persuaded.

As correctly found by the appellate court, R.A. No. 6975 itself contextually provides for its retroactive application to cover those who had retired prior to its effectivity. In this regard, we invite attention to the three (3) phases of implementation under Section 85 for the absorption and continuation in the service of, among others, the INP members under the newly-established PNP.

In a further bid to scuttle respondents’ entitlement to the desired retirement benefits, the petitioners fault the trial court for ordering the immediate adjustments of the respondents’ retirement benefits when the basic petition filed before it was one for declaratory relief. To the petitioners, such petition does not essentially entail an executory process, the only relief proper under that setting being a declaration of the parties’ rights and duties.

Petitioners’ above posture is valid to a point. However, the execution of judgments in a petition for declaratory relief is not necessarily indefensible. In Philippine Deposit Insurance Corporation[PDIC] v. Court of Appeals,27wherein the Court affirmed the order for the petitioners therein to pay the balance of the deposit insurance to the therein respondents, we categorically ruled:

Now, there is nothing in the nature of a special civil action for declaratory relief that proscribes the filing of a counterclaim based on the same transaction, deed or contract subject of the complaint. A special civil action is after all not essentially different from an ordinary civil action, which is generally governed by Rules 1 to 56 of the Rules of Court, except that the former deals with a special subject matter which makes necessary some special regulation. But the identity between their fundamental nature is such that the same rules governing ordinary civil suits may and do apply to special civil actions if not inconsistent with or if they may serve to supplement the provisions of the peculiar rules governing special civil actions.28

Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur:29 the Court upheld the lower court’s order for a party to refund the amounts paid by the adverse party under the municipal ordinance therein questioned, stating:

x x x Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into an ordinary action and the parties allowed to file such pleadings as may be necessary or proper, if before the final termination of the case "a breach or violation of an … ordinance, should take place." In the present case, no breach or violation of the ordinance occurred. The petitioner decided to pay "under protest" the fees imposed by the ordinance. Such payment did not affect the case; the declaratory relief action was still proper because the applicability of the ordinance to future transactions still remained to be resolved, although the matter could also be threshed out in an ordinary suit for the recovery of taxes paid …. In its petition for declaratory relief, petitioner-appellee alleged that by reason of the enforcement of the municipal ordinance by respondents it was forced to pay under protest the fees imposed pursuant to the said ordinance, and accordingly, one of the reliefs prayed for by the petitioner was that the respondents be ordered to refund all the amounts it paid to respondent Municipal Treasurer during the pendency of the case. The inclusion of said allegation and prayer in the petition was not objected to by the respondents in their answer. During the trial, evidence of the

payments made by the petitioner was introduced. Respondents were thus fully aware of the petitioner's claim for refund and of what would happen if the ordinance were to be declared invalid by the court.

The Court sees no reason for treating this case differently from PDIC and Matalin.1awphi1.nét This disposition becomes all the more appropriate considering that the respondents, as petitioners in the RTC, pleaded for the immediate adjustment of their retirement benefits which, significantly, the herein petitioners, as respondents in the same court, did not object to. Being aware of said prayer, the petitioners then already knew the logical consequence if, as it turned out, a declaratory judgment is rendered in the respondents’ favor.

At bottom then, the trial court’s judgment forestalled multiplicity of suits which, needless to stress, would only entail a long and arduous process. Considering their obvious advanced years, the respondents can hardly afford another protracted proceedings. It is thus for this Court to already write finis to this case.

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the CA, respectively dated July 7, 2005 and August 24, 2005, are AFFIRMED.

No costs.

SO ORDERED.

G.R. No. 79981 April 2, 1991

ENGRACIA BACATE AMBERTI, petitioner, vs.HONORABLE COURT OF APPEALS, HONORABLE EFICIO B. ACOSTA, Presiding Judge of Branch CLV, Regional Trial Court, Pasig, Metro Manila, and MARIA TERESA AMBERTI TALAG, represented by her husband/attorney-in-fact WILFREDO M. TALAG, respondents.

Jose Oliver Cortes for petitioner.

Benjamin Quitoriano collaborating counsel for petitioner.

Nicolas M. De Guzman for private respondent.

 

FERNAN, C.J.:p

For review is the decision dated September 16, 1987 of the Court of Appeals which dismissed Engracia Bacate Amberti's petition for annulment of the orders of the Regional Trial Court, Branch 155 (Pasig) dated January 10, 1986 and November 4, 1986, respectively in CA-G.R. SP No. 10991.

The case at bar is another lamentable instance of a mother and her only daughter clashing with each other in bitter controversy over inheritance.

Pietro (Piero) Amberti, an Italian citizen, married petitioner Engracia V. Bacate on September 16, 1965. They have one child, herein private respondent Maria Teresa Amberti, now married to Wilfredo M. Talag. In June, 1970, Pietro, then a resident of Antipolo, Rizal, died in Torino, Italy, leaving behind considerable properties in the Philippines and a holographic will designating Maria Teresa as his universal heir in accordance with the laws of Italy. The will was subsequently admitted to probate in the Philippines on August 2, 1971 and the widow Engracia was named the executrix, only to be removed after eight (8) years by the same probate court for maladministration of the Amberti estate, failure to submit an inventory or render an accounting for more than eight (8) years and to account for the money received by the estate totalling more than P7,000,000.00. She was ordered replaced by her daughter, Maria Teresa, upon the latter's motion. 1

Petitioner then filed a petition for certiorari, prohibition and mandamus in the Appellate Court to protest her removal and replacement. 2 In its decision dated April 10, 1980, the Appellate Court noted the various anomalies and irregularities committed by petitioner in her administration of her husband's estate particularly her failure to render an accounting thereof for eight (8) years. Finding thus the probate court to have acted properly, it dismissed the petition for lack of merit.

After payment of the estate and inheritance taxes due, private respondent Maria Teresa, as the new administratrix, filed a motion with the probate court to terminate the administration proceedings and to declare her as the universal heir of the deceased Pietro Amberti and the absolute owner of all the real and personal properties of his estate. In compliance with the court's order of November 29, 1985, she submitted an inventory listing of all the real and personal properties of the subject estate which disclosed, among others, that petitioner had already sold one-half (1/2) of the 975-square meter West Avenue (Quezon City) property and had disposed of the various mining equipment used in the once thriving marble business of the deceased in the reported total amount of P687,500.00. 3

On January 10, 1986, the lower court rendered judgment in Special Proceedings No. 5958 awarding ownership of the residue of the entire Amberti estate consisting of real and personal properties to the decedent's universal heir, private respondent Maria Teresa. 4

On April 14, 1986, petitioner moved for a reconsideration of the January 10, 1986 decision, questioning for the first time the provisions of the holographic will and asserting her alleged right of usufruct over one-half (1/2) of the estate. The trial court denied said motion on November 4, 1986 for having been filed long after the judgment of January 10, 1986 had acquired finality. 5

Petitioner again sought recourse in the Court of Appeals, 6 this time to seek the annulment of the orders of January 10, 1986 and November 4, 1986 on the ground that the notice of the January 10, 1986 order sent by registered mail was not "actually" received by her counsel of record resulting in "deprivation of due process." 7 But before private respondent could comment on the petition, petitioner filed a motion to withdraw CA-G.R. SP No. 10786 stating that she was no longer interested in pursuing her action. Consequently, the Appellate Court dismissed CA-G.R. SP No. 10786 in its resolution of January 9, 1987 which read:

The petition is dismissed, petitioner having expressed that she is no longer pursuing it to judgment. 8

However, it would appear that petitioner had a change of heart for on January 12, 1987 she instituted another action before the Court of Appeals 9 to annul and reverse the orders dated January 10, 1986 and November 4, 1986 of the Regional Trial Court, the very same orders subject of CA-G.R. SP No. 10786. Petitioner claimed that the act of private respondent in furnishing petitioner with a copy of the motion to terminate the administration proceedings through her former counsel (Atty. Rogelio Velarde) and not through her new counsel of record (Atty. Antonio P. Coronel) constituted extrinsic fraud calculated to deprive her of her day in court. She likewise sought the invalidation of the inventory submitted by her daughter on the ground that said inventory included properties allegedly belonging to her exclusively or to the conjugal partnership with the deceased Pietro Amberti.

On March 24, 1987, the Appellate Court issued another resolution declaring as final the dismissal of the petition in CA-G.R. SP No. 10786:

Considering that the resolution dismissing the appeal dated January 9, 1987 has become final as of January 31, 1987, the Court Resolved: Let the corresponding entry of judgment issue and the case remanded to the court of origin for execution of judgment. 10

Finally, on September 16, 1987, the Court of Appeals rendered in CA-G.R. SP No. 10991 the decision under review which reads in the main:

Significantly, and as the Comment filed by private respondent cited, the petition filed omitted to mention the fact that on December 8, 1986, the same petitioner filed certiorari proceedings with prayer for preliminary injunction in this Court, docketed as CA-G.R. SP No. 10786 against same respondents herein, to annul the judgment of January 10, 1986 and the order of denial of November 4, 1986 on grounds of alleged lack of due process, or abuse of discretion. . . .

xxx xxx xxx

Although in the dismissal of CA-G.R. SP No. 10786, there was no opportunity for this Court to go over the merits of the grounds alleged, since the petitioner filed a motion to withdraw before private respondents can file their comment to the petition, the dismissal of the same is binding on the petitioner. Certainly, she is now estopped from disputing the order of dismissal by bringing another action and pretending that it is different from the other which was earlier dismissed upon her instance. Indeed, such dismissal is with prejudice. To hold otherwise is to allow petitioner to trifle with this Court and waste its precious time which could be utilized to decide cases brought by other litigants who are more earnest and serious with their cases.

Certainly, the question of whether or not the decision of January 10, 1986 has been served on petitioner's counsel of record can no longer be raised since by her withdrawal of CA-G.R. SP No. 10786, petitioner is deemed to have waived any right to raise the issue.

xxx xxx xxx

WHEREFORE, the instant petition should be, as it is hereby DISMISSED. . . 11

The ultimate issue raised in this petition for review is whether or not the dismissal of CA-G.R. SP No. 10786 by respondent Appellate Court amounts to a dismissal with prejudice such that petitioner is now precluded from bringing a second action (CA-G.R SP No. 10991) based on the same subject matter.

A careful scrutiny of the records shows that CA-G.R. SP No. 10786 is a special civil action for certiorari with prayer for preliminary injunction under Rule 65 of the Revised Rules of Court which petitioner filed on December 8, 1986 to annul the judgment of the trial court of January 10, 1986 and the order of denial of petitioner's motion for reconsideration of November 4, 1986 on the grounds of lack of due process and grave abuse of discretion. 12 As above related, before respondents could submit their comment, petitioner filed a motion to withdraw the petition stating that she was no longer interested in pursuing the case. The motion was granted by the Appellate Court in its resolution of January 9, 1987. On March 24, 1987, said resolution having become final, entry of judgment was issued and the case was remanded to the court of origin for execution of judgment.

Section 1, Rule 62 of the Rules of Court under the heading SPECIAL CIVIL ACTIONS provides as follows:

Sec. 1. Preceding rules applicable in special civil actions. — The provisions of the preceding rules shall apply in special actions for interpleader, declaratory relief and similar remedies, certiorari, prohibition, mandamus, quo warranto, eminent domain, foreclosure of mortgage, partition, forcible entry and detainer, and contempt, which are not inconsistent with or may serve to supplement the provisions of the rules relating to such special civil actions.

From the foregoing, it is clearly stated that in special civil actions the preceding rules are applicable in a supplementary manner. More specifically, under Sections 2 and 4, Rule 50 of Rules of Court, relating to DISMISSAL OF APPEAL in the Court of Appeals, the following are provided:

Sec. 2. Effect of dismissal. — Fifteen (15) days after the dismissal of an appeal the clerk shall return to the court below the record on appeal with a certificate under the seal of the court showing that the appeal has been dismissed. Upon the receipt of such certificate in the lower court the case shall stand there as though no appeal had ever been taken, and the judgment of the said court may be enforced with the additional costs allowed by the appellate court upon dismissing the appeal.

Sec. 4. Withdrawal of appeal. — An appeal may be withdrawn as of right at any time before the filing of appellee's brief. After the brief is filed the withdrawal may be allowed by the court in its discretion. The withdrawal of an appeal shall have the same effect as that of a dismissal in accordance with Section 2 of this rule

Applying the foregoing rules in a supplementary manner, upon the withdrawal of a petition in a special civil action before the answer or comment thereto has been filed, the case shall stand as though no appeal has been taken, so that the judgment or order of the lower court being questioned becomes immediately final and executory. Thus, a resolution granting the withdrawal of such a petition is with prejudice and petitioner is precluded from bringing a second action based on the same subject matter.

The subsequent petition in CA-G.R. SP No. 10991 is an original action for annulment of judgment filed by petitioner in the Court of Appeals in accordance with Section 9 of the Judiciary Reorganization Act of 1980 (B.P. Blg. 129) which vests upon the Intermediate Appellate Court (now Court of Appeals) the original exclusive jurisdiction over actions for annulment of judgments of the Regional Trial Courts. No doubt that second petition is barred by res judicata, as the dismissal of the earlier petition for certiorari in C.A. G.R. SP No. 10786 was with prejudice and on the merits. It has not escaped this Court's attention that these two petitions are based on the same ground of the alleged deprivation of due process and sought the same reliefs, i.e., the annulment or setting aside of the January 10, 1986 judgment and November 4, 1986 order of the trial court. A party cannot evade the effects of res judicata by varying the form of his action or adopting a different method of presenting his case as petitioner attempted to do in instituting an original action for annulment of judgment to obtain the same relief sought in the petition for certiorari earlier withdrawn from the Court of Appeals. 13

This should now put an end to the travails of a daughter whose mother, after having dissipated so much of the estate of her late husband, still proposes to share in what little is left of the inheritance of their daughter.

WHEREFORE, the petition is dismissed, with costs against petitioner. This decision is immediately executory.

SO ORDERED.

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

G. R. No. 76431 October 16, 1989

FORTUNE MOTORS, (PHILS.) INC., petitioner, vs.THE HONORABLE COURT OF APPEALS, METROPOLITAN BANK and TRUST COMPANY, respondents.

Quirante & Associates Law Office for petitioner.

Bautista, Cruz & Associates Law Offices for private respondent.

 

PARAS, J.:

This is a petition for review on certiorari seeking the reversal of: (a) the July 30, 1986 decision of the Court of Appeals in AC-G.R. SP No. 09255 entitled "Metropolitan Bank & Trust Co. v. Hon. Herminio C. Mariano, et al."dismissing Civil Case No. 8533218 entitled "Fortune Motors (Phils.) Inc. v. Metropolitan Bank & Trust Co." filed in the Regional Trial Court of Manila, Branch IV for improper venue and (b) the resolution dated October 30, 1986 denying petitioner's motion for reconsideration.

The undisputed facts of the case are as follows:

On March 29,1982 up to January 6,1984, private respondent Metropolitan Bank extended various loans to petitioner Fortune Motors in the total sum of P32,500,000.00 (according to the borrower; or P34,150,000.00 according to the Bank) which loan was secured by a real estate mortgage on the Fortune building and lot in Makati, Rizal. (Rollo, pp. 60-62)

Due to financial difficulties and the onslaught of economic recession, the petitioner was not able to pay the loan which became due. (Rollo, p. 62)

For failure of the petitioner to pay the loans, the respondent bank initiated extrajudicial foreclosure proceedings. After notices were served, posted, and published, the mortgaged property was sold at public auction for the price of P47,899,264.91 to mortgagee Bank as the highest bidder. (Rollo, p. 11)

The sheriff's certificate of sale was registered on October 24, 1984 with the one-year redemption period to expire on October 24,1985. (Rollo, p. 12)

On October 21, 1985, three days before the expiration of the redemption period, petitioner Fortune Motors filed a complaint for annulment of the extrajudicial foreclosure sale alleging that the foreclosure was premature because its obligation to the Bank was not yet due, the publication of the notice of sale was incomplete, there was no public auction, and the price for which the property was sold was "shockingly low". (Rollo, pp. 60-68)

Before summons could be served private respondent Bank filed a motion to dismiss the complaint on the ground that the venue of the action was improperly laid in Manila for the realty covered by the real estate mortgage is situated in Makati, therefore the action to annul the foreclosure sale should be filed in the Regional Trial Court of Makati. (Rollo, pp. 67-71-A )

The motion was opposed by petitioner Fortune Motors alleging that its action "is a personal action" and that "the issue is the validity of the extrajudicial foreclosure proceedings" so that it may have a new one year period to redeem. (Rollo, pp. 72-73)

On January 8, 1986 an order was issued by the lower court reserving the resolution of the Bank's motion to dismiss until after the trial on the merits as the grounds relied upon by the defendant were not clear and indubitable. (Rollo, p. 81)

The Bank filed a motion for reconsideration of the order dated January 8, 1986 but it was denied by the lower court in its order dated May 28, 1986. (Rollo, Annex "L" pp. 93-96; Annex "N" p. 99)

On June 11, 1986 the respondent Bank filed a petition for certiorari and prohibition in the Court of Appeals. (Rollo, Annex "O" pp. 100-115)

And on July 30, 1986, a decision was issued by the Court of Appeals, the dispositive part of which reads as follows:

WHEREFORE, the petition for certiorari and prohibition is granted. The complaint in the Civil Case No. 85-33218 is dismissed without prejudice to its being filed in the proper venue. Costs against the private respondent.

SO ORDERED. (Rollo, p. 15)

A motion for reconsideration was filed on August 11, 1986 on the said decision and on October 30, 1986 a resolution was issued denying such motion for reconsideration. (Rollo, Annex "O" pp. 121-123; Annex "S" p. 129)

Hence, the petition for review on certiorari.

On June 10, 1987 the Court gave due course to the petition, required the parties to file their respective memoranda within twenty (20) days from the notice hereof, and pay deposit for costs in the amount of P80.40.

Both parties have filed their respective memoranda, and the case was submitted for Court's resolution in the resolution dated December 14, 1987. (Rollo,Metrobank's Memorandum pp. 45-59; petitioner's memorandum pp.130-136; Res. p. 138)

The only issue in this case is whether petitioner's action for annulment of the real estate mortgage extrajudicial foreclosure sale of Fortune Building is a personal action or a real action for venue purposes.

In a real action, the plaintiff seeks the recovery of real property, or as indicated in Sec. 2 (a) of Rule 4, a real action is an action affecting title to real property, or for the recovery of possession, or for the partition or condemnation of, or foreclosure of a mortgage on real property. (Comments on the Rules of Court by Moran, Vol. 1, p. 122)

Real actions or actions affecting title to, or for the recovery of possession, or for the partition or condemnation of, or foreclosure of mortgage on real property, must be instituted in the Court of First Instance of the province where the property or any part thereof lies. (Enriquez v. Macadaeg, 84 Phil. 674,1949; Garchitorena v. Register of Deeds, 101 Phil. 1207, 1957)

Personal actions upon the other hand, may be instituted in the Court of First Instance where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff (Sec. 1, Rule 4, Revised Rules of Court).

A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)

An action for the annulment or rescission of a sale of real property is a real action. Its prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760,1954)

An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. (Munoz v. Llamas, 87 Phil. 737,1950)

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Sec. 2, Rule 4) which was timely raised (Sec. 1, Rule 16). (Punzalan, Jr. v. Vda. de Lacsamana, 121 SCRA 336, [1983]).

Thus, as aptly decided by the Court of Appeals in a decision penned by then Court of Appeals Associate Justice now Associate Justice of the Supreme Court Carolina C. Griño-Aquino, the pertinent portion reads: "Since an extrajudicial foreclosure of real property results in a conveyance of the title of the property sold to the highest bidder at the sale, an action to annul the foreclosure sale is necessarily an action affecting the title of the property sold. It is therefore a real action which should be commenced and tried in the province where the property or part thereof lies."

PREMISES CONSIDERED, the instant petition is DENIED for lack of merit and the assailed decision of the respondent Court of Appeals is AFFIRMED.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

G.R. No. 152808 September 30, 2005

ANTONIO T. CHUA, Petitioners, vs.TOTAL OFFICE PRODUCTS AND SERVICES (TOPROS), INC., Respondent.

D E C I S I O N

QUISUMBING, J.:

For review on certiorari is the decision1 dated November 28, 2001 of the Court of Appeals and its resolution2 of April 1, 2002 in CA-G.R. SP No. 62592. The assailed decision and resolution dismissed the special civil action forcertiorari against the orders of August 9, 20003 and October 6, 20004 issued by Judge Lorifel Lacap Pahimna in Civil Case No. 67736.

The pertinent facts, based on the records, are as follows:

On December 28, 1999, respondent Total Office Products and Services, Inc., (TOPROS) lodged a complaint for annulment of contracts of loan and real estate mortgage against herein petitioner Antonio T. Chua before the Regional Trial Court of Pasig City. The case was docketed as Civil Case No. 67736 and was raffled to the sala of Judge Lorifel Lacap Pahimna.

The said suit sought to annul a loan contract allegedly extended by petitioner to respondent TOPROS in the amount of ten million four hundred thousand pesos (P10,400,000) and the accessory real estate mortgage contract covering two parcels of land situated in Quezon City as collateral.

It appeared on the face of the subject contracts that TOPROS was represented by its president John Charles Chang, Jr. However, TOPROS alleged that the purported loan and real estate mortgage contracts were fictitious, since it never authorized anybody, not even its president, to enter into said transaction.

On February 28, 2000, petitioner filed a motion to dismiss on the ground of improper venue. He contended that the action filed by TOPROS affects title to or possession of the parcels of land subject of the real estate mortgage. He argued that it should thus have been filed in the Regional Trial Court of Quezon City where the encumbered real properties are located, instead of Pasig City where the parties reside.

On August 9, 2000, Judge Pahimna issued an order denying the motion to dismiss. She reasoned that the action to annul the loan and mortgage contracts is a personal action and thus, the venue was properly laid in the RTC of Pasig City where the parties reside.

Petitioner moved for a reconsideration of the said order, which Judge Pahimna denied in its order of October 6, 2000. Hence, petitioner filed with the Court of Appeals a special civil action for certiorari alleging:

THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN DISREGARDING THE RULING OF THE SUPREME COURT IN PASCUAL VS. PASCUAL REGARDING THE RULE ON PROPER VENUE, AND CONSEQUENTLY ADJUDGING TO BE A PERSONAL ACTION A CIVIL COMPLAINT FOR THE ANNULMENT OF AN ALLEGEDLY FICTITIOUS CONTRACT.5

The Court of Appeals dismissed said petition in its decision dated November 28, 2001. It held that the authorities relied upon by petitioner, namely Pascual v. Pascual6 and Banco Español-Filipino v. Palanca,7 are inapplicable in the instant case. The appellate court instead applied Hernandez v. Rural Bank of Lucena,  Inc.8 wherein we ruled that an action for the cancellation of a real estate mortgage is a personal action if the mortgagee has not foreclosed the mortgage and the mortgagor is in possession of the premises, as neither the mortgagor’s title to nor possession of the property is disputed.

Dissatisfied, petitioner filed a motion for reconsideration, which the Court of Appeals denied for lack of merit in its resolution of April 1, 2002.

Undeterred, petitioner now comes to us on a petition for review raising the following issues:

WHETHER AN ACTION TO ANNUL A LOAN AND MORTGAGE CONTRACT DULY ALLEGED AS ‘FICTITIOUS’FOR BEING WITH ABSOLUTELY NO CONSIDERATION IS A PERSONAL ACTION OR REAL ACTION?

WHETHER IN AN ACTION TO ANNUL A LOAN AND MORTGAGE CONTRACT DULY ALLEGED AS ‘FICTITIOUS’FOR BEING WITH ABSOLUTELY NO CONSIDERATION, THE PERSON ALLEGED TO HAVE ‘[LACKED] AUTHORITY’ TO ENTER INTO SAID CONTRACTS IS AN INDISPENSABLE PARTY?9

Petitioner contends that Hernandez should not be applied here because in the said case: (1) venue was improperly laid at the outset; (2) the complaint recognized the validity of the principal contract involved; and (3) the plaintiff sought to compel acceptance by the defendant of plaintiff’s payment of the latter’s mortgage debt. He insists that the Pascual case should be applied instead. He invokes our pronouncement in Pascual, to wit:

… It appearing, however, that the sale is alleged to be fictitious, with absolutely no consideration, it should be regarded as a non-existent, not merely null, contract…. And there being no contract between the deceased and the defendants, there is in truth nothing to annul by action. The action brought cannot thus be for annulment of contract, but is one for recovery of a fishpond, a real action that should be, as it has been, brought in Pampanga, where the property is located….10

Petitioner likewise cites the Banco Español-Filipino case, thus:

Where the defendant in a mortgage foreclosure lives out of the Islands and refuses to appear or otherwise submit himself to the authority of the court, the jurisdiction of the latter is limited to the mortgaged property, with respect to which the jurisdiction of the court is based upon the fact that the property is located within the district and that the court, under the provisions of law applicable in such cases, is vested with the power to subject the property to the obligation created by the mortgage. In such case personal jurisdiction over the nonresident defendant is nonessential and in fact cannot be acquired.11

Petitioner also alleges that John Charles Chang, Jr., the president of TOPROS, who allegedly entered into the questioned loan and real estate mortgage contracts, is an indispensable party who has not been properly impleaded.

TOPROS, however, maintains that the appellate court correctly sustained the lower court’s finding that the instant complaint for annulment of loan and real estate mortgage contracts is a personal action. TOPROS points out that a complaint for the declaration of nullity of a loan contract for lack of consent and consideration remains a personal action even if the said action will necessarily affect the accessory real estate mortgage.

TOPROS argues that Pascual is inapplicable because the subject contract therein was a contract of sale of a parcel of land where title and possession were already transferred to the defendant. TOPROS further contends that Banco Español-Filipino is also inapplicable since the personal action filed therein was one which affected the personal status of a nonresident defendant.

Considering the facts and the submission of the parties, we find the petition bereft of merit.

Well-settled is the rule that an action to annul a contract of loan and its accessory real estate mortgage is a personal action. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages.12 In contrast, in a real action, the plaintiff seeks the recovery of real property, or, as indicated in Section 2 (a), Rule 4 of the then Rules of Court, a real action is an action affecting title to real property or for the recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property.13

In the Pascual case, relied upon by petitioner, the contract of sale of the fishpond was assailed as fictitious for lack of consideration. We held that there being no contract to begin with, there is nothing to annul. Hence, we deemed the action for annulment of the said fictitious contract therein as one constituting a real action for the recovery of the fishpond subject thereof.

We cannot, however, apply the foregoing doctrine to the instant case. Note that in Pascual, title to and possession of the subject fishpond had already passed to the vendee. There was, therefore, a need to recover the said fishpond. But in the instant case, ownership of the parcels of land subject of the questioned real estate mortgage was never transferred to petitioner, but remained with TOPROS. Thus, no real action for the recovery of real property is involved. This being the case, TOPROS’ action for annulment of the contracts of loan and real estate mortgage remains a personal action.

Petitioner’s reliance on the Banco Español-Filipino case is likewise misplaced. That case involved a foreclosure of real estate mortgage against a nonresident. We held therein that jurisdiction is determined by the place where the real property is located and that personal jurisdiction over the nonresident defendant is nonessential and, in fact, cannot be acquired.

Needless to stress, the instant case bears no resemblance to the Banco Español-Filipino case. In the first place, this is not an action involving foreclosure of real estate mortgage. In the second place, none of the parties here is a nonresident. We find no reason to apply here our ruling in Banco Español-Filipino.

The Court of Appeals finds that Hernandez v. Rural Bank of Lucena, Inc. provides the proper precedent in this case. In Hernandez, appellants contended that the action of the Hernandez spouses for the cancellation of the mortgage on their lots was a real action affecting title to real property, which should have been filed in the place where the mortgaged lots were situated. Rule 4, Section 2 (a), of the then Rules of Court, was applied, to wit:

SEC. 2. Venue in Courts of First Instance. – (a) Real actions. – Actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the province where the property or any part thereof lies.

The Court pointed out in the Hernandez case that with respect to mortgage, the rule on real actions only mentions an action for foreclosure of a real estate mortgage.  It does not include an action for the cancellation of a real estate mortgage. Exclusio unios est inclusio alterius. The latter thus falls under the catch-all provision on personal actions under paragraph (b) of the above-cited section, to wit:

SEC. 2 (b) Personal actions. – All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.

In the same vein, the action for annulment of a real estate mortgage in the present case must fall under Section 2 of Rule 4, to wit:

SEC. 2. Venue of personal actions. – All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.14

Thus, Pasig City, where the parties reside, is the proper venue of the action to nullify the subject loan and real estate mortgage contracts. The Court of Appeals committed no reversible error in upholding the orders of the Regional Trial Court denying petitioner’s motion to dismiss the case on the ground of improper venue.

Anent the second issue, Section 7, Rule 3 of the Revised Rules of Court provides:

SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. (Emphasis ours)

The presence of indispensable parties is necessary to vest the court with jurisdiction. The absence of an indispensable party renders all subsequent actuations of the court null and void, because of that court’s want of authority to act, not only as to the absent parties but even as to those present.15 Thus, whenever it appears to the court in the course of a proceeding that an indispensable party has not been joined, it is the duty of the court to stop the trial and order the inclusion of such party.16

A person is not an indispensable party, however, if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them.17

Is John Charles Chang, Jr., the president of TOPROS who allegedly entered into the disputed contracts of loan and real estate mortgage, an indispensable party in this case?

We note that although it is Chang’s signature that appears on the assailed real estate mortgage contract, his participation is limited to being a representative of TOPROS, allegedly without authority. The document18 which constitutes as the contract of real estate mortgage clearly points to petitioner and TOPROS as the sole parties-in-interest to the agreement as mortgagee and mortgagor therein, respectively. Any rights or liabilities arising from the said contract would therefore bind only the petitioner and TOPROS as principal parties. Chang, acting as mere representative of TOPROS, acquires no rights whatsoever, nor does he incur any liabilities, arising from the said contract between petitioner and TOPROS. Certainly, in our view, the only indispensable parties to the mortgage contract are petitioner and TOPROS alone.

We thus hold that John Charles Chang, Jr., is not an indispensable party in Civil Case No. 67736. This is without prejudice to any separate action TOPROS may institute against Chang, Jr., in a proper proceeding.

WHEREFORE, the petition is DENIED. The assailed decision dated November 28, 2001 and resolution dated April 1, 2002 of the Court of Appeals upholding the Orders of Judge Lorifel Lacap Pahimna are AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. L-49475 September 28, 1993

JORGE C. PADERANGA, petitioner, vs.Hon. DIMALANES B. BUISSAN, Presiding Judge, Court of First Instance of Zamboanga del Norte, Branch III and ELUMBA INDUSTRIES COMPANY, represented by its General Manager, JOSE J. ELUMBA,respondents.

A.E. Dacanay for petitioner.

Uldarico Mejorada & Associates for private respondent.

 

BELLOSILLO, J.:

We are called upon in this case to determine the proper venue of an action to fix the period of a contract of lease which, in the main, also prays for damages.

Sometime in 1973, petitioner JORGE C. PADERANGA and private respondent ELUMBA INDUSTRIES COMPANY, a partnership represented by its General Manager JOSE J. ELUMBA, entered into an oral contract of lease for the use of a commercial space within a building owned by petition in Ozamiz City. 1 The lease was for an indefinite period although the rent of P150.00 per month was paid on a month-to-month basis. ELUMBA INDUSTRIES COMPANY utilized the area under lease as the Sales Office of Allied Air Freight in Ozamiz City.

On 4 April 1977, PADERANGA subdivided the leased premises into two (2) by constructing a partition wall in between. He then took possession of the other half, which repossession was said to have been undertaken with the acquiescence of the local manager of ELUMBA, 2 although private respondent maintains that this is not the case. 3At any rate, the validity of the repossession is not here in issue.

On 18 July 1977, private respondent instituted an action for damages 4 which, at the same time, prayed for the fixing of the period of lease at five (5) years, before the then court of First Instance of Zamboanga del Norte based in Dipolog City.5 Petitioner, a resident of Ozamiz City, moved for its dismissal contending that the action was a real action which should have been filed with the Court of First Instance of Misamis Occidental stationed in Ozamiz City where the property in question was situated.

On 6 November 1978, respondent Judge Dimalanes B. Buissan denied the Motion to Dismiss and held that Civil Case No. 2901 merely involved the enforcement of the contract of lease, and while affecting a portion of real property, there was no question of ownership raised. 6 Hence, venue was properly laid.

Petitioner pleaded for reconsideration of the order denying his Motion to Dismiss. He contended that while the action did not involve a question of ownership, it was nevertheless seeking recovery of possession; thus, it was a real action which, consequently, must be filed in Ozamiz City. 7

On 4 December 1978, respondent judge denied reconsideration. 8 While admitting that Civil Case No. 2901 did pray for recovery of possession, he nonetheless ruled that this matter was not the main issue at hand; neither was the question of ownership raised. Not satisfied, petitioner instituted the present recourse.

PADERANGA argues that inasmuch as ELUMBA seeks to recover possession of the portion surrendered to him by the local manager of private respondent, as well as to fix the period of lease at five (5) years, Dipolog City could not be the proper venue of the action. it being a real action, venue is laid in the court having jurisdiction over the territory in which the property lies.

ELUMBA counters that the present action is chiefly for damages arising from an alleged breach in the lease contract; hence, the issue of recovery of possession is merely incidental. ELUMBA further argues that the action is one in personam and not in rem. Therefore venue may be laid in the place where plaintiff or defendant resides at the option of plaintiff.

Private respondent appears to be confused over the difference between personal and real actions vis-a-visactions in personam and in rem. The former determines venue; the latter, the binding effect of a decision the court may render over the party, whether impleaded or not.

In the case before us, it is indubitable that the action instituted by private respondent against petitioner affects the parties alone, not the whole world. Hence, it is an action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded. 9 However, this does not automatically mean that the action for damages and to fix the period of the lease contract is also a personal action. For, a personal action may not at the same time be an action in rem. In Hernandez v. Rural Bank of Lucena, Inc., 10 we held thus —

In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property, or, as indicated in section 2(a) of Rule 4, a real action is an action affecting title to real property or for the recovery of possession, or for partition or condemnation of, or foreclosure of a mortgage on, real property.

An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person. Hence, a real action may at the same time be an action in personam and not necessarily an action in rem.

Consequently, the distinction between an action in personam and an action in rem for purposes of determining venue is irrelevant. Instead, it is imperative to find out if the action filed is a personal action or real action. After all, personal actions may be instituted in the

Regional Trial Court (then Court of First Instance) where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. 11 On the other hand, real actions should be brought before the Regional Trial Court having jurisdiction over the territory in which the subject property or part thereof lies. 12

While the instant action is for damages arising from alleged breach of the lease contract, it likewise prays for the fixing of the period of lease at five (5) years. If found meritorious, private respondent will be entitled to remain not only as lessee for another five (5) years but also to the recovery of the portion earlier taken from him as well. This is because the leased premises under the original contract was the whole commercial space itself and not just the subdivided portion thereof.

While it may be that the instant complaint does not explicitly pray for recovery of possession, such is the necessary consequence thereof. 13 The instant action therefore does not operate to efface the fundamental and prime objective of the nature of the case which is to recover the one-half portion repossessed by the lessor, herein petitioner. 14Indeed, where the ultimate purpose of an action involves title to or seeks recovery of possession, partition or condemnation of, or foreclosure of mortgage on, real property, 15 such an action must be deemed a real action and must perforce be commenced and tried in the province where the property or any part thereof lies.

Respondent judge, therefore, in denying petitioner's Motion to Dismiss gravely abused his discretion amounting to lack or excess of jurisdiction.

WHEREFORE, the Petition for Prohibition is GRANTED. The Orders of 6 November 1978 and 4 December 1978 of respondent Judge Dimalanes B. Buissan are SET ASIDE. The branch of the Regional Trial Court of Dipolog City where Civil Case No. 2901 may be presently assigned is DIRECTED to DISMISS the case for improper venue. This decision is immediately executory.

Costs against private respondent ELUMBA INDUSTRIES COMPANY.

SO ORDERED.

Cruz, Davide, Jr. and Quiason, JJ., concur.

Griño-Aquino, J., is on leave.

G.R. No. 172172               February 24, 2009

SPS. ERNESTO V. YU and ELSIE ONG YU, Petitioners, vs.BALTAZAR N. PACLEB, (Substituted by ANTONIETA S PACLEB, LORNA PACLEB-GUERRERO, FLORENCIO C. PACLEB, and MYRLA C. PACLEB), Respondents.

D E C I S I O N

PUNO, C.J.:

Before the Court is a Petition filed under Rule 45 of the Rules of Court assailing: (i) the Decision1 dated August 31, 2005 of the Court of Appeals in CA-G.R. CV No. 78629 setting aside the Decision2 dated December 27, 2002 of the Regional Trial Court in Civil Case No. 1325-96; and (ii) the Resolution3 dated April 3, 2006 of the Court of Appeals denying reconsideration of the said decision.

The facts are well established.

Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the registered owners of an 18,000-square meter parcel of land in Barrio Langcaan, Dasmariñas, Cavite, covered by Transfer Certificate of Title (TCT) No. T-1183754 (Langcaan Property).

In 1992, the Langcaan Property became the subject of three (3) documents purporting to transfer its ownership. On February 27, 1992, a Deed of Absolute Sale5 was entered into between Spouses Baltazar N. Pacleb and Angelita Chan and Rebecca Del Rosario. On May 7, 1992, a Deed of Absolute Sale6 was entered into between Rebecca Del Rosario and Ruperto L. Javier (Javier). On November 10, 1992, a Contract to Sell7 was entered into between Javier and petitioner spouses Ernesto V. Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu agreed to pay Javier a total consideration of P900,000. Six hundred thousand pesos (P600,000) (consisting ofP200,000 as previous payment and P400,000 to be paid upon execution of the contract) was acknowledged as received by Javier and P300,000 remained as balance. Javier undertook to deliver possession of the Langcaan Property and to sign a deed of absolute sale within thirty (30) days from execution of the contract.

All the aforementioned sales were not registered.

On April 23, 1993, petitioner spouses Yu filed with the Regional Trial Court of Imus, Cavite, a Complaint8 for specific performance and damages against Javier, docketed as Civil Case No. 741-93, to compel the latter to deliver to them ownership and possession, as well as title to the Langcaan Property. In their Complaint, they alleged that Javier represented to them that the Langcaan Property was not tenanted. However, after they already paid P200,000 as initial payment and entered into an Agreement dated September 11, 1992 for the sale of the Langcaan Property, they discovered it was tenanted by Ramon C. Pacleb (Ramon).9 Petitioner spouses demanded the cancellation of their agreement and the return of their initial payment. Thereafter, petitioner spouses and Javier verified from Ramon if he was willing to vacate the property and the latter was agreeable. Javier then promised to make arrangements with Ramon to vacate the property and to pay the latter his disturbance compensation. Hence, they proceeded to enter into a Contract to Sell canceling the Agreement mentioned. However, Javier failed to comply with his obligations.

Javier did not appear in the proceedings and was declared in default. On September 8, 1994, the trial court rendered a Decision,10 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant based on the sale of subject parcel of land to the former who is entitled thereby to the ownership and possession thereof from the said defendant who is further directed to pay damages of Thirty Thousand Pesos (P30,000.00) including attorney’s fees and expenses incurred by the plaintiff in this case as a consequence.

The defendant is further directed to deliver the certificate of title of the land to the plaintiff who is entitled to it as transferee and new owner thereof upon payment by the plaintiff of his balance of the purchase price in the sum of Three Hundred Thousand Pesos (P300,000.00) with legal interest from date.

SO ORDERED.

The said Decision and its Certificate of Finality11 were annotated on TCT No. T-118375 as Entry No. 2676-7512and Entry No. 2677-75,13 respectively.

On March 10, 1995, petitioner spouses and Ramon and the latter’s wife, Corazon Bodino, executed a "Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan."14 Under the said agreement, petitioner spouses paid Ramon the amount of P500,000 in exchange for the waiver of his tenancy rights over the Langcaan Property.

On October 12, 1995, respondent filed a Complaint15 for annulment of deed of sale and other documents arising from it, docketed as Civil Case No. 1199-95. He alleged that the deed of sale purportedly executed between him and his late first wife and Rebecca Del Rosario was spurious as their signatures thereon were forgeries. Respondent moved to have summons served upon Rebecca Del Rosario by publication since the latter’s address could not be found. The trial court, however, denied his motion.16 Respondent then moved to dismiss the case, and the trial court granted the motion in its Order17 dated April 11, 1996, dismissing the case without prejudice.

Meanwhile, on November 23, 1995, petitioner spouses filed an action for forcible entry against respondent with the Municipal Trial Court (MTC). They alleged that they had prior physical possession of the Langcaan Property through their trustee, Ramon, until the latter was ousted by respondent in September 1995. The MTC ruled in favor of petitioner spouses, which decision was affirmed by the Regional Trial Court.18 However, the Court of Appeals set aside the decisions of the lower courts and found that it was respondent who had prior physical possession of the property as shown by his payment of real estate taxes thereon.19

On May 29, 1996, respondent filed the instant case for removal of cloud from title with damages to cancel Entry No. 2676-75 and Entry No. 2677-75, the annotated Decision in Civil Case No. 741-93 and its Certificate of Finality, from the title of the Langcaan Property.20 Respondent alleged that the deed of sale between him and his late first wife and Rebecca Del Rosario, who is not known to them, could not have been possibly executed on February 27, 1992, the date appearing thereon. He alleged that on said date, he was residing in the United States21 and his late first wife, Angelita Chan, died twenty (20) years ago.221avvphi1

On May 28, 1997, during the pendency of the instant case before the trial court, respondent died without having testified on the merits of his case. Hence, he was substituted by his surviving spouse, Antonieta S. Pacleb, and Lorna Pacleb-Guerrero, Florencio C. Pacleb and Myrla C. Pacleb representing the children with the first wife.23

On December 27, 2002, the trial court dismissed respondent’s case and held that petitioner spouses are purchasers in good faith.24 The trial court ratiocinated that the dismissal of respondent’s complaint for annulment of the successive sales at his instance "sealed the regularity of the purchase"25 by petitioner spouses and that he "in effect admits that the said sale…was valid and in order."26 Further, the trial court held that the Decision in Civil Case No. 741-93 on petitioner spouses’ action for specific performance against Javier is already final and can no longer be altered. Accordingly, the trial court ordered the cancellation of TCT No. T-118375 in the name of respondent and the issuance of a new title in the name of petitioner spouses. The trial court also ordered the heirs of respondent and all persons claiming under them to surrender possession of the Langcaan Property to petitioner spouses.

On appeal by respondent, the Court of Appeals reversed and set aside the decision of the trial court.27 The Court of Appeals ruled that petitioner spouses are not purchasers in good faith and that the Decision in Civil Case No. 741-93 did not transfer ownership of the Langcaan Property to them. Accordingly, the appellate court ordered the cancellation of the annotation of the Decision in Civil Case No. 741-93 on the title of the Langcaan Property. The Court of Appeals denied reconsideration of said decision.28

Hence, this Petition.

Two issues are involved in the instant petition. The first is whether petitioner spouses are innocent purchasers for value and in good faith. The second is whether ownership over the Langcaan Property was properly vested in petitioner spouses by virtue of the Decision in Civil Case No. 741-93.

Petitioner spouses argue that they are purchasers in good faith. Further, they contend that the Court of Appeals erred in finding that: "Ramon told him [Ernesto V. Yu] that the property is owned by his father, Baltazar, and that he is the mere caretaker thereof"29 since Ramon clarified that his father was the former owner of the Langcaan Property. In support of their stance, they cite the following testimony of petitioner Ernesto V. Yu:

Atty. Abalos: Mr. Witness, you testified during the direct that you acquired the subject property from one Ruperto Javier, when for the first time have you come to know Mr. Ruperto Javier?

A: I first came to know him in the year 1992 when he was accompanied by Mr. Kalagayan. He showed me some papers to the office.

Q: Do you know the exact date Mr. Witness?

A: I forgot the exact date, ma’am.

Q: More or less can you estimate what month?

A: Sometime in February or March 1992.

Q: When you said that the subject property was offered to you for sale, what did you do Mr. Witness, in preparation for a transaction?

A: I asked my lawyer Atty. Florencio Paredes to check and verify the Deed of Sale.

Q: And after Atty. Florencio Paredes verified the document you decided to buy the property?

A: No, ma’am. We visited the place.

Q: When was that?

A: I could not remember the exact date but I visited the place and I met the son, Ramon Pacleb. I went there in order to verify if the property is existing. When I verified that the property is existing Mr. Javier visited me again to follow-up what decision I have but I told him that I will wait for my lawyer’s advi[c]e.

Q: Mr. Witness, what particular instruction did you give to your lawyer?

A: To verify the title and the documents.

Court: Documents for the title?

A: Yes, Your Honor.

Atty. Abalos: When you were able to get the title in whose name the title was registered?

A: It was registered in the name of the older Pacleb.

Court: By the way Mr. Witness, when you said you met Ramon Pacleb the son of the owner of the property, was he residing there or he was (sic) just went there? When you visited the property did you find him to be residing in that property?

A: No, Your Honor.

Atty. Abalos: You mean to say Mr. Witness, you just met Mr. Ramon Pacleb in the place at the time you went there?

A: No, ma’am. He went to my office with Mr. Kalagayan. He was introduced to me at the Kelly Hardware. I do not know Mr. Ruperto Javier. He told me that there is a property that [is] tenanted and occupied by the son Ramon Pacleb after that I went with them to visit the place. On (sic) there he introduced me [to] Mr. Ramon Pacleb the caretaker of the property and I told them that I will still look at the property and he gave me some documents and that (sic) documents I gave it to my lawyer for verification.

Q: You said that Mr. Ruperto Javier went to your office with Mr. Kalagayan, so the first time you visited the property you did not see Mr. Ramon Pacleb there?

A: No, ma’am. When I went there I met Ramon Pacleb the caretaker and he was the one who showed the place to us.

Q: Mr. Witness, since you visited the place you were able to see the allege[d] caretaker Mr. Ramon Pacleb, did you ask him regarding the property or the whereabouts of the registered owner, did you ask him?

A: When Ruperto introduced me to Mr. Ramon Pacleb he told me that he is the son of the owner and he is the caretaker and his father is in the States. He showed me the place, I verified and I saw the monuments and I told him I will come back to check the papers and if it is okay I will bring with me the surveyor.

Q: Could you estimate Mr. Witness, more or less what was the month when you were able to talk to Mr. Ramon Pacleb?

A: I am not sure but it was morning of February.

Q: So it was in February, Mr. Witness?

A: I am not sure if February or March.

Q: But definitely…

A: Before I purchased the property I checked the property.

Q: But that was definitely after Mr. Ruperto offered to you for sale the subject property?

x x x

Atty. Abalos: Okay, Mr. Witness, you said that you talked to Mr. Ramon Pacleb and he told you that his father is the owner of the property?

A: He told me that property is their former property and it was owned by them. Now, he is the tenant of the property.30 (Emphasis ours)

Petitioner spouses conclude that based on their personal inspection of the property and the representations of the registered tenant thereon, they had no reason to doubt the validity of the deeds of absolute sale since these were duly notarized. Consequently, the alleged forgery of Angelita Chan’s signature is of no moment since they had no notice of any claim or interest of some other person in the property despite their diligent inquiry.

We find petitioner spouses’ contentions without merit.

At the outset, we note that in petitioner Ernesto V. Yu’s testimony, he stated that he inspected the Langcaan Property and talked with the tenant, Ramon, before he purchased the same. However, in his Complaint for specific performance and damages which he filed against Javier, he alleged that it was only after he had entered into an Agreement for the sale of the property and his initial payment of P200,000 that he discovered that the property was indeed being tenanted by Ramon who lives in the said farm, viz.:

8. Sometime on September 11, 1992, defendant came again to the Office of plaintiff reiterating his offer to sell said Lot No. 6853-D, containing an area of 18,000 square meters, at P75.00 per square meters (sic). Defendant manifested to the plaintiff that if his offer is acceptable to the plaintiff, he binds and obligates himself to pay the capital gains of previous transactions with the BIR and register subject Lot No. 6853-D in his name (defendant). On these conditions, plaintiff accepted the offer and made [the] initial payment of Two Hundred Thousand Pesos (P200,000.00) to defendant by issuance and delivery of plaintiff’s personal check.

9. Sometime on September 11, 1992, plaintiff and defendant signed an AGREEMENT on the sale of Lot No. 6853-D of the subdivision plan (LRC) Psd-282604, containing an area of 18,000 square meters, more or less, located at Bo. Langcaan, Municipality of Dasmarinas, Province of Cavite, at a selling price of P75.00 per square meter. A xerox copy of this AGREEMENT signed by the parties thereto is hereto attached and marked as ANNEX "D" of this complaint.

10. Thereafter, however, plaintiff and defendant, with their surveyor discovered that subject Lot No. 6853-D offered for sale to the plaintiff is indeed being tenanted by one RAMON PACLEB who lives in the said farm.

11. In view of the foregoing developments, plaintiff informed defendant that he wanted the Agreement be cancelled and for the defendant to return the sum of TWO HUNDRED THOUSAND PESOS (P200,000.00).31(Emphasis supplied)

This inconsistency casts grave doubt as to whether petitioner spouses personally inspected the property before purchasing it.

More importantly, however, several facts should have put petitioner spouses on inquiry as to the alleged rights of their vendor, Javier, over the Langcaan Property.

First, it should be noted that the property remains to be registered in the name of respondent despite the two (2) Deeds of Absolute Sale32 purporting to transfer the Langcaan Property from respondent and his late first wife, Angelita Chan, to Rebecca Del Rosario then from the latter to Javier. Both deeds were not even annotated in the title of the Langcaan Property.

Second, a perusal of the two deeds of absolute sale reveals that they were executed only about two (2) months apart and that they contain identical provisions.

Third, it is undisputed that the Langcaan Property is in the possession of Ramon, the son of the registered owner. Regardless of the representations given by the latter, this bare fact alone should have made petitioner spouses suspicious as to the veracity of the alleged title of their vendor. Moreover, as noted by the Court of Appeals, petitioner spouses could have easily verified the true status of the Langcaan Property from Ramon’s wife, since the latter is their relative, as averred in paragraph 13 of their Answer in Civil Case No. 1199-95.33 The case law is well settled, viz.:

The law protects to a greater degree a purchaser who buys from the registered owner himself. Corollarily, it requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. While one who buys from the registered owner does not need to look behind the certificate of title, one who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land.

This Court has consistently applied the stricter rule when it comes to deciding the issue of good faith of one who buys from one who is not the registered owner, but who exhibits a certificate of title.34 (Emphasis supplied)

Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil Case No. 1199-95 (the action to annul the successive sales of the property) cannot serve to validate the sale to petitioner spouses since the dismissal was ordered because Rebecca Del Rosario and Javier could no longer be found. Indeed, the dismissal was without prejudice.

Based on the foregoing, therefore, petitioner spouses cannot be considered as innocent purchasers in good faith.

We now go to the second issue.

Petitioner spouses argue that the decision of the Regional Trial Court in Civil Case No. 741-93 as to the rightful owner of the Langcaan Property is conclusive and binding upon respondent even if the latter was not a party thereto since it involved the question of possession and ownership of real property, and is thus not merely an action in personam but an action quasi in rem.

In Domagas v. Jensen,35 we distinguished between actions in personam and actions quasi in rem.

The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one which has for its object a judgment against the person, as distinguished from a judgment against the propriety (sic) to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person.

x x x

On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the property of such persons to the discharge of the claims assailed. In an action quasi in rem, an individual is named as defendant and the purpose of the proceeding is to subject his interests therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status, ownership or liability of a particular property but which are intended to operate on these questions only as between the particular parties to the proceedings and not to ascertain or cut off the rights or interests of all possible claimants. The judgments therein are binding only upon the parties who joined in the action.

Civil Case No. 741-93 is an action for specific performance and damages filed by petitioner spouses against Javier to compel performance of the latter’s undertakings under their Contract to Sell. As correctly held by the Court of Appeals, its object is to compel Javier to accept the full payment of the purchase price, and to execute a deed of absolute sale over the Langcaan Property in their favor. The obligations of Javier under the contract to sell attach to him alone, and do not burden the Langcaan Property.36

We have held in an unbroken string of cases that an action for specific performance is an action in personam.37In Cabutihan v. Landcenter Construction and Development Corporation,38 we ruled that an action for specific performance praying for the execution of a deed of sale in connection with an undertaking in a contract, such as the contract to sell, in this instance, is an action in personam.

Being a judgment in personam, Civil Case No. 741-93 is binding only upon the parties properly impleaded therein and duly heard or given an opportunity to be heard.39 Therefore, it cannot bind respondent since he was not a party therein. Neither can respondent be considered as privy thereto since his signature and that of his late first wife, Angelita Chan, were forged in the deed of sale.

All told, we affirm the ruling of the Court of Appeals finding that, as between respondent and petitioner spouses, respondent has a better right over the Langcaan Property as the true owner thereof.

IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is affirmed. Costs against petitioners. SO ORDERED.

G.R. No. 127692             March 10, 2004

FORTUNATO GOMEZ and AURORA GOMEZ, petitioners, vs.COURT OF APPEALS, ADOLFO TROCINO and MARIANO TROCINO, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision1 of the Court of Appeals dated September 30, 1996, in CA-G.R. SP No. 40067, nullifying the decision and orders of the Regional Trial Court of Cebu City (Branch 10) in Civil Case No. CEB-11103, for want of jurisdiction.

Civil Case No. CEB-11103 is an action for specific performance and/or rescission filed by herein petitioners, spouses Fortunato and Aurora Gomez, against the heirs of Jesus J. Trocino, Sr., which include herein respondents and their mother Caridad Trocino.2

Filed on December 16, 1991, the complaint alleges: Some time in 1975, the spouses Jesus and Caridad Trocino mortgaged two parcels of land covered by TCT Nos. 10616 and 31856 to Dr. Clarence Yujuico. The mortgage was subsequently foreclosed and the properties sold at public auction on July 11, 1988, and before the expiry of the redemption period, the spouses Trocino sold the property to petitioners on December 12, 1989, who in turn, redeemed the same from Dr. Yujuico. The spouses Trocino, however, refused to convey ownership of the properties to petitioners, hence, the complaint.

On January 10, 1992, the trial court’s Process Server served summons on respondents, in the manner described in his "Return of Service," to wit:

Respectfully returned to the Branch Clerk of Court, Regional Trial Court of Cebu, Branch 10, the herein attached original summons issued in the above-entitled case with the information that on January 8, 1992 summons and copies of the complaint were served to the defendants Jacob, Jesus Jr., Adolfo, Mariano, Consolacion, Alice, Racheal thru defendant Caridad Trocino at their given address at Maria Cristina Extension (besides Sacred Heart School for Girls), Cebu City, evidence by her signature found at the lower portion of the original summons.3

WHEREFORE I, respectfully return the original summons duly served to the court of origin.

Cebu City, Philippines, January 10, 1992.

(signed)

DELFIN D. BARNIDORTC Process Server

On January 27, 1992, the defendants, through their counsel Atty. Expedito P. Bugarin, filed their Answer. Defendant Caridad A. Trocino, respondents’ mother, verified said pleading.4

After trial on the merits, the RTC rendered its decision on March 1993, with the following disposition:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants.

The latter are hereby ordered to jointly and severally execute a Deed of Sale in favor of the plaintiffs and to deliver the owner’s duplicate copies of TCT Nos. 10616 and 31856, covering the properties sold, to the plaintiffs within ten (10) days from the finality of the judgment, after which plaintiffs shall pay in turn to the defendants the balance of P2,000,000.00. Otherwise, the sale is rescinded and revoked and the defendants are directed to return to the plaintiffs the amount of P500,000.00, with interest of 12% per annum computed from December 6, 1989, until the full amount is paid.

In addition thereto, defendants are to pay jointly and severally to the plaintiffs, the amount of P50,000.00 as moral damages; P20,000.00 as exemplary damages; P40,000.00 by way of attorney’s fees; and P10,000.00 as litigation expenses.

SO ORDERED.5

Due to the defendants’ failure to deliver the owner’s duplicate of TCT Nos. 10616 and 31856, the RTC issued an order on August 29, 1995 declaring said titles null and void, and ordering the Register of Deeds of Cebu City to issue new titles in the name of herein petitioners.6

Thereafter, or on March 13, 1996, respondents Adolfo and Mariano Trocino filed with the Court of Appeals, a petition for the annulment of the judgment rendered by the RTC-Cebu (Branch 10) in Civil Case No. CEB-11103. Private respondents alleged that the trial court’s decision is null and void on the ground that it did not acquire jurisdiction over their persons as they were not validly served with a copy of the summons and the complaint. According to them, at the time summons was served on them, Adolfo Trocino was already in Ohio, U.S.A., and has been residing there for 25 years, while Mariano Trocino was in Talibon, Bohol, and has been residing there since 1986. They also refuted the receipt of the summons by Caridad A. Trocino, and the representation made by Atty. Bugarin in their behalf. Respondents also contended that they have a meritorious defense.7 Petitioners filed their Comment/Answer to the petition.8

On September 30, 1996, the Court of Appeals issued the assailed Decision granting the petition and annulling the decision of the RTC-Cebu (Branch 10). The decretal portion of the decision reads:

WHEREFORE, the decision of the Regional Trial Court of Cebu City, Branch 10, in Civil Case No. CEB-11103 as well as all Orders issued to implement the same are hereby ANNULLED AND SET ASIDE. The Register of Deeds of Cebu City is hereby ENJOINED from cancelling Transfer Certificates of Title Nos. 10616 and 31856. No pronouncement as to costs.

SO ORDERED.9

Their motion for reconsideration having been denied by the Court of Appeals, petitioners filed the present petition, setting forth the following assignment of errors:

I. THE COURT OF APPEALS ERRED IN FINDING LACK OF PRIOR KNOWLEDGE ON THE PART OF RESPONDENTS TROCINO, REGARDING THE PROCEEDINGS BEFORE THE RTC OF CEBU CITY AND IN NOT DISMISSING THE PETITION FOR VIOLATION OF SUPREME COURT CIRCULAR 04-94.

II. THE COURT OF APPEALS ERRED IN DECLARING THE NEED FOR PERSONAL AND/OR EXTRATERRITORIAL SERVICE OF SUMMONS, DESPITE THE NATURE OF THE CAUSE OF ACTION BEING ONE IN REM.

III. THE COURT OF APPEALS ERRED IN ANNULLING THE JUDGMENT, CAUSING FURTHER USELESS LITIGATION AND UNNECESSARY EXPENSE ON PETITIONERS AND RESPONDENTS, ESPECIALLY SINCE RESPONDENTS HAVE NOT SHOWN ANY VALID DEFENSE AS GROUND FOR REVERSAL OF JUDGMENT OF THE RTC.

IV. THE COURT OF APPEALS ERRED IN RULING THAT ITS JUDGMENT IS APPLICABLE IN FAVOR OF CARIDAD TROCINO.10

Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court acquires jurisdiction over his person.11 Any judgment without such service in the absence of a valid waiver is null and void.12

The resolution of the present petition hinges on the issue of whether or not summons was effectively served on respondents. If in the affirmative, the trial court had validly acquired jurisdiction over their persons and therefore its judgment is valid.

To resolve whether there was valid service of summons on respondents, the nature of the action filed against them must first be determined. As the Court explained in Asiavest Limited vs. Court of Appeals, it will be helpful to determine first whether the action is in personam, in rem, or quasi in rem because the rules on service of summons under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action.13

In actions in personam, summons on the defendant must be served by handing a copy thereof to the defendant in person, or, if he refuses to receive it, by tendering it to him. This is specifically provided in Section 7, Rule 14 of the Rules of Court,14 which states:

SEC. 7. Personal service of summons.-- The summons shall be served by handing a copy thereof to the defendant in person or, if he refuses to receive it, by tendering it to him.

If efforts to find defendant personally makes prompt service impossible, substituted service may be effected by leaving copies of the summons at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein, or by leaving the copies at the defendant's office or regular place of business with some competent person in charge thereof.15 In substituted service, it is mandated that the fact of impossibility of personal service should be explained in the proof of service.16

When the defendant in an action in personam is a non-resident who does not voluntarily submit himself to the authority of the court, personal service of summons within the State is essential to the acquisition of jurisdiction over his person. This cannot be done if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him.17 An exception was accorded in Gemperle vs. Schenker wherein service of summons through the non-resident’s wife, who was a resident of the Philippines, was held valid, as the latter was his representative and attorney-in-fact in a prior civil case filed by the non-resident, and the second case was merely an offshoot of the first case.18

Meanwhile, in actions in rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res, although summons must be served upon the defendant in order to satisfy the due process requirements.19 Thus, where the defendant is a non-resident who is not found in the Philippines, and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject matter of which is property in the Philippines in which the defendant has or claims a lien or interest; (3) the action seeks the exclusion of the defendant from any interest in the property located in the Philippines; or (4) the property of the defendant has been attached in the Philippines, summons may be served extraterritorially by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner the court may deem sufficient.20

In the present case, petitioners’ cause of action in Civil Case No. CEB-11103 is anchored on the claim that the spouses Jesus and Caridad Trocino reneged on their obligation to convey ownership of the two parcels of land subject of their sale. Thus, petitioners pray in their complaint that the spouses Trocino be ordered to execute the appropriate deed of sale and that the titles be delivered to them (petitioners); or in the alternative, that the sale be revoked and rescinded; and spouses Trocino ordered to return to petitioners their down payment in the amount of P500,000.00 plus interests. The action instituted by petitioners affect the parties alone, not the whole world. Hence, it is an action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded.21

Contrary to petitioners’ belief, the complaint they filed for specific performance and/or rescission is not an action in rem. While it is a real action because it affects title to or possession of the two parcels of land covered by TCT Nos. 10616 and 31856, it does not automatically follow that the action is already one in rem. In Hernandez vs. Rural Bank of Lucena, Inc., the Court made the following distinction:

In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property, or, as indicated in section 2(a) of Rule 4, a real action is an action affecting title to real property or for the recovery of possession, or for partition or condemnation of, or foreclosure of a mortgage on, real property.

An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person. Hence, a real action may at the same time be an action in personam and not necessarily an action in rem.22

The objective sought in petitioners’ complaint was to establish a claim against respondents for their alleged refusal to convey to them the title to the two parcels of land that they inherited from their father, Jesus Trocino, who was one of the sellers of the properties to petitioners. Hence, to repeat, Civil Case No. CEB-11103 is an action in personam because it is an action against persons, namely, herein respondents, on the basis of their personal liability. As such, personal service of summons upon the defendants is essential in order for the court to acquire of jurisdiction over their persons.23

A distinction, however, must be made with regard to service of summons on respondents Adolfo Trocino and Mariano Trocino. Adolfo Trocino, as records show, is already a resident of Ohio, U.S.A. for 25 years. Being a non-resident, the court cannot acquire jurisdiction over his person and validly try and decide the case against him.

On the other hand, Mariano Trocino has been in Talibon, Bohol since 1986. To validly acquire jurisdiction over his person, summons must be served on him personally, or through substituted service, upon showing of impossibility of personal service. Such impossibility, and why efforts exerted towards personal service failed, should be explained in the proof of service. The pertinent facts and circumstances attendant to the service of summons must be stated in the proof of service or Officer’s Return. Failure to do so would invalidate all subsequent proceedings on jurisdictional grounds.24

In the present case, the process server served the summons and copies of the complaint on respondents Jacob, Jesus, Jr., Adolfo, Mariano, Consolacion, Alice and Racheal,25 through their mother, Caridad Trocino.26 The return did not contain any particulars as to the impossibility of personal service on Mariano Trocino within a reasonable time. Such improper service renders the same ineffective.

Due process of law requires personal service to support a personal judgment, and, when the proceeding is strictly in personam brought to determine the personal rights and obligations of the parties, personal service within the state or a voluntary appearance in the case is essential to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process.27

Moreover, inasmuch as the sheriff’s return failed to state the facts and circumstances showing the impossibility of personal service of summons upon respondents within a reasonable time, petitioners should have sought the issuance of an alias summons. Under Section 5, Rule 14 of the Rules of Court, alias summons may be issued when the original summons is returned without being served on any or all of the defendants.28 Petitioners, however, did not do so, and they should now bear the consequences of their lack of diligence.

The fact that Atty. Expedito Bugarin represented all the respondents without any exception does not transform the ineffective service of summons into a valid one. It does not constitute a valid waiver or even a voluntary submission to the trial court’s jurisdiction. There was not even the slightest proof showing that respondents authorized Atty. Bugarin’s appearance for and in their behalf. As found by the Court of Appeals:

While Caridad Trocino may have engaged the services of Atty. Bugarin, it did not necessarily mean that Atty. Bugarin also had the authority to represent the defendant heirs. The records show that in all the pleadings which required verification, only Caridad Trocino signed the same. There was never a single instance where defendant heirs signed the pleading. The fact that a pleading is signed by one defendant does not necessarily mean that it is binding on a co-defendant. Furthermore, Caridad Trocino represented herself as the principal defendant in her Motion to Withdraw Appeal. (Rollo, p. 80)

Since the defendant heirs are co-defendants, the trial court should have verified the extent of Atty. Bugarin’s authority when petitioners failed to appear as early as the pre-trial stage, where the parties are required to appear. The absence of the defendant heirs should have prompted the trial court to inquire from the lawyer whether he was also representing the other petitioners. As co-defendant and co-heirs over the disputed properties, the defendant heirs had every right to be present during the trial. Only Caridad Trocino appeared and testified on her own behalf. All the defenses raised were her own, not the defendant heirs.29

Consequently, the judgment sought to be executed against respondents were rendered without jurisdiction as there was neither a proper service of summons nor was there any waiver or voluntary submission to the trial court’s jurisdiction. Hence, the same is void, with regard to private respondents except Caridad Trocino.

It must be pointed out that while it was the spouses Jesus and Caridad Trocino who sold the properties to petitioners, their right to proceed against Jesus Trocino when he died was passed on to his heirs, which includes respondents and Caridad Trocino. Such transmission of right occurred by operation of law, more particularly by succession, which is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance of a person are transmitted.30 When the process server personally served the summons on Caridad Trocino, the trial court validly acquired jurisdiction over her person alone. Hence, the trial court’s decision is valid and binding with regard to her, but only in proportion to Caridad Trocino’s share. As aptly stated by the Court of Appeals:

This Court’s decision is therefore applicable to all the defendant heirs with the exception of defendant Caridad Trocino considering that it was the latter who entered into the alleged sale without the consent of her husband. She is therefore estopped from questioning her own authority to enter into the questioned sale. Moreover, Caridad Trocino was validly served with summons and was accorded due process.31

WHEREFORE, the petition for review is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 40067 is AFFIRMED.

Costs against petitioners.

SO ORDERED.

Quisumbing, (Acting Chairman), Callejo, Sr., and Tinga, JJ., concur.Puno, (Chairman), J., on leave.

G.R. No. 128803 September 25, 1998

ASIAVEST LIMITED, petitioner, vs.THE COURT OF APPEALS and ANTONIO HERAS, respondents.

 

DAVIDE, JR., J.:

In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are summarized in the 24 August 1990 Decision 1 of Branch 107 of the Regional Trial Court of Quezon City in Civil Case No. Q-52452; thus:

The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant Antonio Heras praying that said defendant be ordered to pay to the plaintiff the amounts awarded by the Hong Kong Court Judgment dated December 28, 1984 and amended on April 13, 1987, to wit:

1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of payment with legal interest from December 28, 1984 until fully paid;

2) interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to December 28, 1984; and

3) HK$905.00 at fixed cost in the action; and

4) at least $80,000.00 representing attorney's fees, litigation expenses and cost, with interest thereon from the date of the judgment until fully paid.

On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could resolve the said motion, a fire which partially razed the Quezon City Hall Building on June 11, 1988 totally destroyed the office of this Court, together with all its records, equipment and properties. On July 26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution of Case Records. The Court, after allowing the defendant to react thereto, granted the said Motion and admitted the annexes attached thereto as the reconstituted records of this case per Order dated September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of which had been deferred; was denied by the Court in its Order of October 4, 1988.

On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial conference. At the conference, the parties could not arrive at any settlement. However, they agreed on the following stipulations of facts:

1. The defendant admits the existence of the judgment dated December 28, 1984 as well as its amendment dated April 13, 1987, but not necessarily the authenticity or validity thereof;

2. The plaintiff is not doing business and is not licensed to do business in the Philippines;

3. The residence of defendant, Antonio Heras, is New Manila, Quezon City.

The only issue for this Court to determine is, whether or not the judgment of the Hong Kong Court has been repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact, such as to overcome the presumption established in Section 50, Rule 39 of the Rules of Court in favor of foreign judgments.

In view of the admission by the defendant of the existence of the aforementioned judgment (Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of January 18, 1989), as well as the legal presumption in favor of the plaintiff as provided for in paragraph (b); Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show rendition, existence, and authentication of such judgment by the proper officials concerned (Pls. See Exhibits "A" thru "B", with their submarkings). In addition, the plaintiff presented testimonial and documentary evidence to show its entitlement to attorney's fees and other expenses of litigation. . . . .

On the other hand, the defendant presented two witnesses, namely. Fortunata dela Vega and Russel Warren Lousich.

The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of a statement of claim of Asiavest Limited was ever served in the office of the Navegante Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of summons was either served on the defendant at his residence in New Manila, Quezon City. Her knowledge is based on the fact that she was the personal secretary of Mr. Heras during his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping business in Hong Kong; that she was in-charge of all his letters and correspondence, business commitments, undertakings, conferences and appointments, until October 1984 when Mr. Heras left Hong Kong for good; that she was also the Officer-in-Charge or Office Manager of Navegante Shipping Agency LTD, a Hong Kong registered and based company acting as ships agent, up to and until the company closed shop sometime in the first quarter of 1985, when shipping business collapsed worldwide; that the said company held office at 34-35 Connaught Road, Central Hong Kong and later transferred to Carton House at Duddel Street, Hong Kong, until the company closed shop in 1985; and that she was certain of such facts because she held office at Caxton House up to the first quarter of 1985.

Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of the law office of the defendant's counsel who made a verification of the record of the case filed by the plaintiff in Hong Kong against the defendant, as well as the procedure in serving Court processes in Hong Kong.

In his affidavit (Exh. "2") which constitutes his direct testimony, the said witness stated that:

The defendant was sued on the basis of his personal guarantee of the obligations of Compania Hermanos de Navegacion S.A. There is no record that a writ of summons was served on the person of the defendant in Hong Kong, or that any such attempt at service was made. Likewise, there is no record that a copy of the judgment of the High Court was furnished or served on the defendant; anyway, it is not a legal requirement to do so under Hong Kong laws;

a) The writ of summons or claim can be served by the solicitor (lawyer) of the claimant or plaintiff. In Hong Kong there are no Court personnel who serve writs of summons and/or most other processes.

b) If the writ of summons or claim (or complaint) is not contested, the claimant or the plaintiff is not required to present proof of his claim or complaint nor present evidence under oath of the claim in order to obtain a Judgment.

c) There is no legal requirement that such a Judgment or decision rendered by the Court in Hong Kong [to] make a recitation of the facts or the law upon which the claim is based.

d) There is no necessity to furnish the defendant with a copy of the Judgment or decision rendered against him.

e) In an action based on a guarantee, there is no established legal requirement or obligation under Hong Kong laws that the creditor must first bring proceedings against the principal debtor. The creditor can immediately go against the guarantor.

On cross examination, Mr. Lousich stated that before he was commissioned by the law firm of the defendant's counsel as an expert witness and to verify the records of the Hong Kong case, he had been acting as counsel for the defendant in a number of commercial matters; that there was an application for service of summons upon the defendant outside the jurisdiction of Hong Kong; that there was an order of the Court authorizing service upon Heras outside of Hong Kong, particularly in Manila or any other place in the Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of service of summons, otherwise the Hong Kong Court will refuse to render judgment (p. 10,  ibid); that the mere fact that the Hong Kong Court rendered judgment, it can be presumed that there was service of summons; that in this case, it is not just a presumption because there was an affidavit stating that service was effected in [sic] a particular man here in Manila; that such affidavit was filed by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of December 1984, and stated in essence that "on Friday, the 23rd of November 1984 he served the 4th defendant at No. 6 First Street, Quezon City by leaving it at that address with Mr. Dionisio Lopez, the son-in-law of the 4th defendant the copy of the writ and Mr. Lopez informed me and I barely believed that he would bring the said writ to the attention of the 4th defendant" (pp. 11-12,  ibid.); that upon filing of that affidavit, the Court was asked and granted judgment against the 4th defendant; and that if the summons or claim is not contested, the claimant of the plaintiff is not required to present proof of his claim or complaint or present evidence under oath of the claim in order to obtain judgment; and that such judgment can be enforced in the same manner as a judgment rendered after full hearing.

The trial court held that since the Hong Kong court judgment had been duly proved, it is a presumptive evidence of a right as between the parties; hence, the party impugning it had the burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden. He did not testify to state categorically and under oath that he never received summons. Even his own witness Lousich admitted that HERAS was served with summons in his Quezon City residence. As to De la Vega's testimony regarding non-service of summons, the same was hearsay and had no probative value.

As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the procedural laws of the Philippines because it contained no statements of the facts and the law on which it was based, the trial court ruled that since the issue relate to procedural matters, the law of the forum,  i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich, such legalities were not required under Hong Kong laws. The trial Court also debunked HERAS' contention that the principle of excussion under Article 2058 of the Civil Code of the Philippines was violated. It declared that matters of substance are subject to the law of the place where the transaction occurred; in this case, Hong Kong laws must govern.

The trial court concluded that the Hong Kong court judgment should be recognized and given effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the foreign judgment. It then decreed; thus:

WHEREFORE, judgment is hereby rendered ordering defendant to pay to the plaintiff the following sums or their equivalents in Philippine currency at the time of payment: US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate amount from December 28, 1984, and to pay attorney's fees in the sum of P80,000.00.

ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs and an increase in attorney's fees in the amount of US$19,346.45 with interest until full payment of the said obligations. On the other hand, HERAS no longer opposed the motion and instead appealed the decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV No. 29513.

In its order 2 of 2 November 1990, the trial court granted ASIAVEST's motion for reconsideration by increasing the award of attorney's fees to "US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS SUIT," provided that

ASIAVEST would pay the corresponding filing fees for the increase. ASIAVEST appealed the order requiring prior payment of filing fees. However, it later withdrew its appeal and paid the additional filing fees.

On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the trial court and dismissing ASIAVEST's complaint without prejudice. It underscored the fact that a foreign judgment does not of itself have any extraterritorial application. For it to be given effect, the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If such tribunal has not acquired jurisdiction, its judgment is void.

The Court of Appeals agreed with the trial court that matters of remedy and procedure, such as those relating to service of summons upon the defendant are governed by the  lex fori, which was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousich's testimony that under the Hong Kong law, the substituted service of summons upon HERAS effected in the Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would be valid provided that it was done in accordance with Philippine laws. It then stressed that where the action is  in personam and the defendant is in the Philippines, the summons should be personally served on the defendant pursuant to Section 7, Rule 14 of the Rules of Court. 4 Substituted service may only be availed of where the defendant cannot be promptly served in person, the fact of impossibility of personal service should be explained in the proof of service. It also found as persuasive HERAS' argument that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge of the court issuing the summons, ASIAVEST should have asked for leave of the local courts to have the foreign summons served by the sheriff or other court officer of the place where service was to be made, or for special reasons by any person authorized by the judge.

The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is unavailing to give jurisdiction in an action against him personally for money recovery." Summons should have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did not acquire jurisdiction over HERAS. Nonetheless it did not totally foreclose the claim of ASIAVEST; thus:

While We are not fully convinced that [HERAS] has a meritorious defense against [ASIAVEST's] claims or that [HERAS] ought to be absolved of any liability, nevertheless, in view of the foregoing discussion, there is a need to deviate front the findings of the lower court in the interest of justice and fair play. This, however, is without prejudice to whatever action [ASIAVEST] might deem proper in order to enforce its claims against [HERAS].

Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence supporting the validity of the foreign judgment be submitted, and that our courts are not bound to give effect to foreign judgments which contravene our laws and the principle of sound morality and public policy.

ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling that

I.

. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE "SUPPORTING THE VALIDITY OF THE JUDGMENT";

II.

. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINES LAW;

III.

. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG;

IV.

. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF PHILIPPINE COURTS;

V.

. . . THE FOREIGN JUDGMENT "CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.

Being interrelated, we shall take up together the assigned errors.

Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the governing law at the time this case was decided by the trial court and respondent Court of Appeals, a foreign judgment against a person rendered by a court having jurisdiction to pronounce the judgment is presumptive evidence of a right as between the parties and their successors in interest by the subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to the contrary, a court, or judge acting as such, whether in the Philippines or elsewhere, is presumed to have acted in the lawful exercise of jurisdiction.

Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party challenging the foreign judgment — HERAS in this case.

At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the other hand, ASIAVEST presented evidence to prove rendition, existence, and authentication of the judgment by the proper officials. The judgment is thus presumed to be valid and binding in the country from which it comes, until the contrary is shown. 6 Consequently, the first ground relied upon by

ASIAVEST has merit. The presumption of validity accorded foreign judgment would be rendered meaningless were the party seeking to enforce it be required to first establish its validity.

The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme Court did not acquire jurisdiction over the person of HERAS. This involves the issue of whether summons was properly and validly served on HERAS. It is settled that matters of remedy and procedure such as those relating to the service of process upon the defendant are governed by the  lex fori or the law of the forum, 7  i.e., the law of Hong Kong in this case. HERAS insisted that according to his witness Mr. Lousich, who was presented as an expert on Hong Kong laws, there was no valid service of summons on him.

In his counter-affidavit, 8 which served as his direct testimony per agreement of the parties, 9 Lousich declared that the record of the Hong Kong case failed to show that a writ of summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither did the record show that a copy of the judgment of the court was served on HERAS. He stated further that under Hong Kong laws (a) a writ of summons could be served by the solicitor of the claimant or plaintiff; and (b) where the said writ or claim was not contested, the claimant or plaintiff was not required to present proof under oath in order to obtain judgment.

On cross-examination by counsel for ASIAVEST, Lousich' testified that the Hong Kong court authorized service of summons on HERAS outside of its jurisdiction, particularly in the Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERAS's son-in-law Dionisio Lopez. 10 On redirect examination, Lousich declared that such service of summons would be valid under Hong Kong laws provided that it was in accordance with Philippine laws. 11

We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of public documents of a sovereign authority, tribunal, official body, or public officer may be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal custody thereof, which must be accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. The certificate may be issued by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent, or any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office. The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and must be under the official seal of the attesting officer.

Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An authority 12 on private international law thus noted:

Although it is desirable that foreign law be proved in accordance with the above rule, however, the Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the presentation of other competent evidence to prove the existence of a foreign law. In that case, the Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco, California, who quoted verbatim a section of California Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the existence of said law. Accordingly, in line with this view, the Supreme Court in theCollector of Internal Revenue v. Fisher et al., 14 upheld the Tax Court in considering the pertinent law of California as proved by the respondents' witness. In that case, the counsel for respondent "testified that as an active member of the California Bar since 1951, he is familiar with the revenue and taxation laws of the State of California. When asked by the lower court to state the pertinent California law as regards exemption of intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derring's California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited section was offered in evidence by respondents." Likewise, in several naturalization cases, it was held by the Court that evidence of the law of a foreign country on reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and used as basis for favorable action, if, in the light of all the circumstances, the Court is "satisfied of the authenticity of the written proof offered." 15 Thus, in, a number of decisions, mere authentication of the Chinese Naturalization Law by the Chinese Consulate General of Manila was held to be competent proof of that law. 16

There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong Kong in respect of service of summons either in actions  in rem or  in personam, and where the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-called processual presumption shall come into play. It will thus be presumed that the Hong Kong law on the matter is similar to the Philippine law. 17

As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to determine first whether the action is  in personam,  in rem, or quasi in rem because the rules on service of summons under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action.

An action  in personam  is an action against a person on the basis of his personal liability. An action  in rem  is an action against the thing itself instead of against the person. 19 An action quasi in rem is one wherein an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. 20

In an action  in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. Jurisdiction over the person of a  resident defendant who does not voluntarily appear in court can be acquired by personal service of summons as provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a reasonable time, substituted service may be made in accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following modes of service may be resorted to: (1) substituted service set forth in Section 8; 21 (2) personal service outside the country, with leave of court; (3) service by publication, also with leave of court; 22 or (4) any other manner the court may deem sufficient. 23

However, in an action  in personam wherein the defendant is a non-resident who does not voluntarily submit himself to the authority of the court, personal service of summons within the state is essential to the acquisition of jurisdiction over her person. 24 This method of service is possible if such defendant is physically present in the country. If he is not found therein, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him. 25 An exception was laid down in Gemperle v. Schenker 26 wherein a non-resident was served with summons through his wife, who was a resident of the Philippines and who was his representatives and attorney-in-fact in a prior civil case filed by him; moreover, the second case was a mere offshoot of the first case.

On the other hand, in a proceeding  in rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the  res. Nonetheless summons must be served upon the defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying the due process requirements. 27 Thus, where the defendant is a non-resident who is not found in the Philippines and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject matter of which is property in the Philippines in which the defendant has or claims a lien or interest; (3) the action seeks the exclusion of the defendant from any interest in the property located in the Philippines; or (4) the property of the defendant has been attached in the Philippines — service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court, or (c) any other manner the court may deem sufficient. 28

In the case at bar, the action filed in Hong Kong against HERAS was  in personam, since it was based on his personal guarantee of the obligation of the principal debtor. Before we can apply the foregoing rules, we must determine first whether HERAS was a resident of Hong Kong.

Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972 until 1985, 29 testified that HERAS was the President and part owner of a shipping company in Hong Kong during all those times that she served as his secretary. He had in his employ a staff of twelve. 30 He had "business commitments, undertakings, conferences, and appointments until October 1984 when [he] left Hong Kong for good," 31 HERAS's other witness, Russel Warren Lousich, testified that he had acted as counsel for HERAS "for a number of commercial matters." 32 ASIAVEST then infers that HERAS was a resident of Hong Kong because he maintained a business there.

It must be noted that in his Motion to Dismiss, 33 as well as in hisAnswer 34 to ASIAVEST's complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that the Hong Kong court did not have jurisdiction over him because the fundamental rule is that jurisdiction in personam over non-resident defendants, so as to sustain a money judgment, must be based upon personal service of summons within the state which renders the judgment. 35

For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36 contended: "The question of Hong Kong court's 'want of jurisdiction' is therefore a triable issue if it is to be pleaded by the defendant to 'repel' the foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong Kong suit was  in personam, that defendant was not a resident of Hong Kong when the suit was filed or that he did not voluntarily submit to the Hong Kong court's jurisdiction) should be alleged and proved by the defendant." 37

In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that the lack of jurisdiction over his person was corroborated by ASIAVEST's allegation in the complaint that he "has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines." He then concluded that such judicial admission amounted to evidence that he was and is not a resident of Hong Kong.

Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among which was that "the residence of defendant, Antonio Heras, is New Manila, Quezon City." 39

We note that the residence of HERAS insofar as the action for the enforcement of the Hong Kong court judgment is concerned, was never in issue. He never challenged the service of summons on him through a security guard in his Quezon City residence and through a lawyer in his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the Philippine court over his person on the ground of invalid service of summons. What was in issue was his residence as far as the Hong Kong suit was concerned. We therefore conclude that the stipulated fact that HERAS "is a resident of New Manila, Quezon City, Philippines" refers to his residence at the time jurisdiction over his person was being sought by the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS was a resident of Hong Kong at the time.

Accordingly, since HERAS was not a resident of Hong Kong and the action against him was, indisputably, one  in personam, summons should have been personally served on him in Hong Kong. The extraterritorial service in the Philippines was therefore invalid and did not confer on the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court judgment cannot be given force and effect here in the Philippines for having been rendered without jurisdiction.

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

In Brown v. Brown, 41 the defendant was previously a resident of the Philippines. Several days after a criminal action for concubinage was filed against him, he abandoned the Philippines. Later, a proceeding quasi in rem was instituted against him. Summons in the latter case was served on the defendant's attorney-in-fact at the latter's address. The Court held that under the facts of the case, it could not be said that the defendant was "still a resident of the Philippines because he ha[d] escaped to his country and [was] therefore an absentee in the Philippines." As such, he should have been "summoned in the same manner as one who does not reside and is not found in the Philippines."

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

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this case and AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513.

No costs.

SO ORDERED.

G.R. No. 102998 July 5, 1996

BA FINANCE CORPORATION, petitioner, vs.HON. COURT OF APPEALS and ROBERTO M. REYES, respondents.

 

VITUG, J.:p

The case at bar is a suit for replevin and damages. The petition for review on certiorari assails the decision of the Court of Appeals 1 in CA-G.R. CV No. 23605 affirming that of the Regional Trial Court of Manila, BranchXX, 2 which has disposed of its Civil Case No. 87-42270 in this wise:

WHEREFORE, the case against defendant-spouses (sic) Reynaldo Manahan is hereby dismissed without prejudice, for failure to prosecute. Plaintiff having failed to show the liability of defendant John Doe in the person of Roberto M. Reyes, the case against the latter should likewise be dismissed. Moreover, plaintiff is hereby directed to return the vehicle seized by virtue of the order of seizure issued by this Court with all its accessories to the said Roberto M. Reyes. 3

The decisions of both the appellate court and the court a quo are based on a like finding of the facts hereinafter briefly narrated.

The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a promissory note 4 binding themselves to pay Carmasters, Inc., the amount of P83,080.00 in thirty-six monthly installments commencing 01 July 1980. To secure payment, the Manahan spouses executed a deed of chattel mortgage 5 over a motor vehicle, a Ford Cortina 1.6 GL, with motor and serial number CUBFWE-801010. Carmasters later assigned 6 the promissory note and the chattel mortgage to petitioner BA Finance Corporation with the conformity of the Manahans. When the latter failed to pay the due installments, petitioner sent demand letters. The demands not having been heeded, petitioner, on 02 October 1987, filed a complaint for replevin with damages against the spouses, as well as against a John Doe, praying for the recovery of the vehicle with an alternative prayer for the payment of a sum of money should the vehicle not be returned. Upon petitioner's motion and the filing of a bond in the amount of P169,161.00 the lower court issued a writ of replevin. The court, however, cautioned petitioner that should summons be not served on the defendants within thirty (30) days from the writ's issuance, the case would be dismissed to failure to prosecute. 7 The warning was based on what the court perceived to be the deplorable practice of some mortgagees of "freezing (the) foreclosure or replevin cases" which they would so "conveniently utilize as a leverage for the collection of unpaid installments on mortgaged chattels." 8

The service of summons upon the spouses Manahan was caused to be served by petitioner at No. 35 Lantana St., Cubao, Quezon City. The original of the summons had the name and the signature of private respondent Roberto M. Reyes indicating that he received, on 14 October 1987, a copy of the summons and the complaint. 9Forthwith, petitioner, through its Legal Assistant, Danilo E. Solano, issued a certification to the effect that it had received from Orson R. Santiago, the deputy sheriff of the Regional Trial Court of Manila, Branch 20, the Ford Cortina seized from private respondent Roberto M. Reyes, the John Doe referred to in the complaint, 10 in Sorsogon, Sorsogon. 11 On 20 October 1987, the lower court came out with an order of seizure.

Alleging possession in good faith, private respondent filed, on 26 October 1987, a motion for an extension of time within which to file his answer and/or a motion for intervention. The court granted the motion.

A few months later, or on 18 February 1988, the court issued an order which, in part, stated:

Perusal of the record shows that an order for the seizure of personal property was issued on October 20, 1987 in pursuance to a previous order of the Court dated October 13, 1987. However, to date, there is no showing that the principal defendants were served with summons inspite of the lapse of four (4) months.

Considering, this is a replevin case and to forestall the evils that arise from this practice, plaintiff failing to heed the Order dated October 13, 1987, particularly second paragraph thereof, the above-entitled case is hereby ordered DISMISSED for failure to prosecute and further ordering the plaintiff to return the property seized with all its accessories to defendant John Doe in the person of Roberto M. Reyes.

SO ORDERED. 12

On 26 February 1988, petitioner filed a notice of dismissal of the case "without prejudice and without pronouncement as to costs, before service of Summons and Answer, under Section 1, Rule 17, of the Rules of Court." 13 It also sought in another motion the withdrawal of the replevin bond. In view of the earlier dismissal of the case (for petitioner's failure to prosecute), the court, on 02 March 1988, merely noted the notice of dismissal and denied the motion to withdraw the replevin bond considering that the writ of replevin had meanwhile been implemented. 14

On 09 March 1988, private respondent filed a motion praying that petitioner be directed to comply with the court order requiring petitioner to return the vehicle to him. In turn, petitioner filed, on 14 March 1988, a motion for the reconsideration of the orders of 18 February 1988 and 02 March 1988 contending that: (a) the dismissal of the case was tantamount to adjudication on the merits that thereby deprived it with the remedy to enforce the promissory note, the chattel mortgage and the deed of assignment, under Section 3, Rule 117, of the Rules of Court; (b) the order to return the vehicle to private respondent was a departure from jurisprudence recognizing the right of the mortgagor to foreclose the property to respond to the unpaid obligation secured by the chattel mortgage, and (c) there were no legal and factual bases for the court's view that the filing of the replevin case was "characterized (by) evil practices." 15

On 20 April 1988, the court granted petitioner's motion for reconsideration and accordingly recalled the order directing the return of the vehicle to private respondent, set aside the order dismissing the case, directed petitioner "to cause the service of summons together with a copy of the complaint on the principal defendants within five (5) days from receipt" 16 thereof at petitioner's expense, and ordered private respondent to answer the complaint.

A few months later, or on 02 August 1988, petitioner filed a motion to declare private respondent in default. The court granted the motion on that same day and declared private respondent "in default for his failure to file the . . . answer within the reglementary period." 17 The court likewise granted petitioner's motion to set the case for the presentation, ex parte, of evidence. Petitioner, thereupon, submitted the promissory note, the deed of chattel mortgage, the deed of assignment, a statement of account in the name of Florencia Manahan and two demand letters.

On 27 February 1989, the trial court rendered a decision dismissing the complaint against the Manahans for failure of petitioner to prosecute the case against them. It also dismissed the case against private respondent for failure of petitioner to show any legal basis for said respondent's liability. The court ratiocinated:

. . . . Roberto M. Reyes is merely ancillary debtor in this case. The defendant spouses Manahan being the principal debtor(s) and as there is no showing that the latter has been brought before the jurisdiction of this court, it must necessarily follow that the plaintiff has no cause of action against said Roberto M. Reyes herein before referred to as defendant John Doe. Under the circumstances, it is incumbent upon the plaintiff to return the seized vehicle unto the said Roberto M. Reyes. 18

In its appeal to the Court of Appeals, petitioner has asserted that a suit for replevin aimed at the foreclosure of the chattel is an action quasi in rem which does not necessitate the presence of the principal obligors as long as the court does not render any personal judgment against them. This argument did not persuade the appellate court, the latter holding that —

. . . . In action quasi in rem an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property, such as proceedings having for their sole object the sale or disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy (Sandejas vs. Robles, 81 Phil. 421). In the case at bar, the court cannot render any judgment binding on the defendants spouses for having allegedly violated the terms and conditions of the promissory note and the contract of chattel mortgage on the ground that the court has no jurisdiction over their persons no summons having been served on them. That judgment, it rendered, is void for having denied the defendants spouses due process of law which contemplates notice and opportunity to be heard before judgment is rendered, affecting one's person or property (Macabingkil vs. Yatco, 26 SCRA 150, 157).

It is next contended by appellant that as between appellant, as mortgagee, and John Doe, whose right to possession is dubious if not totally non-existent, it is the former which has the superior right of possession.

We cannot agree.

It is an undisputed fact that the subject motor vehicle was taken from the possession of said Roberto M. Reyes, a third person with respect to the contract of chattel mortgage between the appellant and the defendants spouses Manahan.

The Civil Code expressly provides that every possessor has a right to be respected in his possession (Art. 539, New Civil Code); that good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof (Art. 527, ibid.); and that the possession of movable property acquired in good faith is equivalent to a title; nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same (Art. 559, ibid.). Thus, it has been held that a possessor in good faith is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules otherwise (Chus Hai vs. Kapunan, 104 Phil. 110; Yu, et al. vs. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did not err in holding that the complaint does not state any cause of action against Roberto M. Reyes, and in ordering the return of the subject chattel to him. 19

The appellate court, subsequently, denied petitioner's motion for reconsideration.

In the instant appeal, petitioner insists that a mortgagee can maintain an action for replevin against any possessor of the object of a chattel mortgage even if the latter were not a party to the mortgage.

Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold it pendente lite. 20 The action is primarily possessory in nature and generally determines nothing more than the right of possession. Replevin is so usually described as a mixed action, being partly in rem and partly in personam— in rem insofar as the recovery of specific property is concerned, and in personam as regards to damages involved. As an "action in rem," the gist of the replevin action is the right of the plaintiff to obtain possession of specific personal property by reason of his being the owner or of his having a special interest therein. 21 Consequently, the person in possession of the property sought to be replevied is ordinary the proper and only necessary party defendant, and the plaintiff is not required to so join as defendants other persons claiming a right on the property but not in possession thereof. Rule 60 of the Rules of Court allows an application for the immediate possession of the property but the plaintiff must show that he has a good legal basis, i.e., a clear title thereto, for seeking such interim possession.

Where the right of the plaintiff to the possession of the specific property is so conceded or evident, the action need only be maintained against him who so possesses the property. In rem actio est per quam rem nostram quae ab alio possidetur petimus, et semper adversus eum est qui rem possidet. In Northern Motors, Inc. vs.Herrera, 22 the Court has said:

There can be no question that persons having a special right of property in the goods the recovery of which is sought; such as a chattel mortgagee, may maintain an action for replevin therefor. Where the mortgage authorizes the mortgagee to take possession of the property on default, he may maintain an action to recover possession of the mortgaged chattels from the mortgagor or from any person in whose hands he may find them. 23

In effect then, the mortgagee, upon the mortgagor's default, is constituted an attorney-in-fact of the mortgagor enabling such mortgagee to act for and in behalf of the owner. Accordingly, that the defendant is not privy to the chattel mortgage should be

inconsequential. By the fact that the object of replevin is traced to his possession, one properly can be a defendant in an action for replevin. It is here assumed that the plaintiffs right to possess the thing is not or cannot be disputed.

In case the right of possession on the part of the plaintiff, or his authority to claim such possession or that of his principal, is put to great doubt (a contending party might contest the legal bases for plaintiffs cause of action or an adverse and independent claim of ownership or right of possession is raised by that party), it could become essential to have other persons involved and accordingly impleaded for a complete determination and resolution of the controversy. For instance, in Servicewide Specialists, Inc., vs. Court of Appeals, et al., G.R. No. 103301, 08 December 1995, this Court ruled.

While, in its present petition for review on certiorari, Servicewide has raised a number of points, the crucial issue still remains, however, to be whether or not an action filed by the mortgagee for replevin to effect a foreclosure of the property covered by the chattel mortgage would require that the mortgagor be so impleaded as an indispensable party thereto.

Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of possession of personal property, to apply for a writ of replevin if it can be shown that he is the owner of the property claimed . . . or is entitled to the possession thereof.' The plaintiff need not be the owner so long as he is able to specify his right to the possession of the property and his legal basis therefor. The question then, insofar as the matter finds relation to the instant case, is whether or not the plaintiff (herein petitioner) who has predicated his right on being the mortgagee of a chattel mortgage should implead the mortgagor in his complaint that seeks to recover possession of the encumbered property in order to effect its foreclosure.

The answer has to be in the affirmative. In a suit for replevin, a clear right of possession must be established. A foreclosure under a chattel mortgage may properly be commenced only once there is default on the part of the mortgagor of his obligation secured by the mortgage. The replevin in the instant case has been sought to pave the way for the foreclosure of the object covered by the chattel mortgage. The conditions essential for that foreclosure would be to show, firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor. These requirements must be established since the validity of the plaintiffs exercise of the right of foreclosure are inevitably dependent thereon. It would thus seem, considering particularly an adverse and independent claim of ownership by private respondent that the lower court acted improvidently when it granted the dismissal of the complaint against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground that the "non-service of summons upon Ernesto Dollente (would) only delay the determination of the merits of the case, to the prejudice of the parties." In Imson v. Court of Appeals, we have explained:

. . . . An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had. The party's interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties' that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable.

Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court. He is not indispensable if his presence would merely permit complete relief between him and those already parties to the action or will simply avoid multiple litigation.

Without the presence of indispensable parties to a suit or proceeding, a judgment of a court cannot attain real finality. (Footnotes omitted.)

A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to the possession of the property unless and until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's right of possession is conditioned upon the actual fact of default which itself may be controverted, the inclusion of other parties like the debtor or the mortgagor himself, may be required in order to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the property. The burden to establish a valid justification for that action lies with the plaintiff. An adverse possessor, who is not the mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because the mortgagee brings up an action for replevin.

The appellate court, accordingly, acted well in arriving at its now questioned judgment.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED No costs.

SO ORDERED.

Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.

G.R. No. L-30738 July 30, 1982

BOARD OF LIQUIDATORS, TRUSTEE OF THE LAND SETTLEMENT AND DEVELOPMENT CORPORATION,plaintiff-appellant, vs.JOSE ZULUETA, defendant-appellee.

 

VASQUEZ, J.:

This is an appeal by petition for review from a decision of the Court of First Instance of Manila dismissing the complaint filed by plaintiff-appellant against defendant-appellee in Civil Case No. 65341.

On November 23, 1955, a decision was rendered by the Court of First Instance of Manila, Branch VII, in Civil Case No. 22237, entitled "Land Settlement and Development Corporation, Plaintiff, vs. Jose Zulueta, Defendant", based on an amicable settlement between the parties, pursuant to which defendant-appellee was ordered to pay the Land Settlement and Development Corporation the sum of P10,391.62 with interest at four (4%) per cent per annum from January 13, 1948 until the same is fully paid in the manner stated in the amicable settlement and subject to the terms thereof, without pronouncement as to costs.

On March 5, 1965, herein plaintiff-appellant, as trustee of the Land Settlement and Development Corporation, filed a complaint in the Court of First Instance of Manila against defendant-appellee, docketed as Civil Case No. 60112 to revive the judgment rendered in Civil Case No. 22237 which had not been enforced by that time. Difficulty was encountered in serving summons on defendant-appellee, thereby prompting the trial court to dismiss Civil Case No. 60112 in an order dated March 12, 1966, reading as follows:

It appearing that this case has long been pending with this Court, the same having been filed way back on March 5, 1965, and since then defendant has not yet been served with summons, and notwithstanding such fact, no further action has been taken by plaintiff; for lack of interest to prosecute, the instant case is hereby DISMISSED without prejudice, and without pronouncement as to costs.

IT IS SO ORDERED. (Rollo, p. 27.)

Plaintiff-appellant's motion for reconsideration of the order of dismissal having been denied, plaintiff-appellant filed a new complaint, docketed as Civil Case No. 65341 which is the present action and which is also for revival and enforcement of the judgment rendered in Civil Case No. 22237.

Defendant-appellee filed a motion to dismiss the complaint in Civil Case No. 65341 on the ground that plaintiff-appellant's cause of action had already prescribed. On January 12, 1967, the trial court denied the motion to dismiss for the reason that the filing of Civil Case No. 60112 on March 5, 1965 interrupted the running of the period of prescription, and it started to run again only after its dismissal on March 12, 1966; and, therefore, when Civil Case No. 65341 was filed on May 10, 1966, only 9 years, 5 months and 11 days had expired from the time that the judgment in Civil Case No. 22237 had become final and executory. Defendant-appellee's repeated attempts to secure a reconsideration of the denial of his motion to dismiss failed to achieve a favorable result. Defendant-appellee filed an answer to the complaint with a counterclaim.

On September 19, 1968, after plaintiff-appellant had presented its evidence, the trial court reset the continuation of the hearing on November 28, 1968 for the presentation of the evidence of defendant-appellee. On the last mentioned date, the defendant-appellee failed to appear and the trial court declared the case submitted for decision.

In a decision dated December 27, 1968, the trial court dismissed Civil Case No. 65341. The said dismissal was reasoned out as follows:

The plaintiff contends that the filing on March 5, 1965 of the first action for revival of judgment interrupted the period of prescription. Upon the other hand, the defendant, arguing that the dismissal of the said action for lack of prosecution did not stop the period of prescription, which is ten years from November 23, 1955, has cited the decision in Conspecto vs. Fruto, et al., 31 Phil. 144, wherein it was held that

While the commencement of the action would of course, stop the running of the statute of limitations, its dismissal or voluntary abandonment by plaintiff would leave the parties in exactly the same position as if no action had been commenced at all. Said action by reason of its dismissal or abandonment took no time out of the period of prescription.

and the decision in Oriental Commercial Co., Inc. vs. Jureidini, Inc., et al., 71 Phil. 25, to the effect that

Cuando se entabla una accion dentro del plazo de prescripcion y se desiste de ella despues, o se sobresee sin condiciones, por una razon u otra, no hace que la accion's que se entable mas tarde, pero ya fuera del periodo de prescripcion, se pueda considerar como presentada dentro de dicho periodo porque quiere contares con la accion entablada con anterioridad. La falta de de gestion de la recurrente por cuya causa de desestimaron sus demandas segunda y tercera, no puede interpretarse sino como una renuncia de su parte; y, al ejercitar su ultima accion no se ha colocado en la misma situacion en que antes se hallaba al ejercitar sus tres anteriores acciones. Este es el mismo criterio que expresamos cuando se nos presento una cuestion analoga en la causa de Conspecto contra Fruto, 31 Jur. Fil 155.

In the opinion of the Court, the stand of the defendant is well taken. It has not been intimated by the plaintiff that the authorities relied upon by the defendant had been overruled by any subsequent pronouncement of the Supreme Court. As the decision sought to be revived was rendered and became final and executory on November 23, 1955, and the present action was instituted on May 10, 1966, or more than the ten-year period provided for in Article 1144 of the Civil Code, the said action has already prescribed. As held

in Conspecto vs. Fruto, et al., cited, in Commercial Co., Inc. vs. Jureidini, Inc., et al.,  the dismissal of the action filed on March 5, 1965 left the parties in exactly the same position as if no action had been commenced at all, and took no time out of the period of prescription.

WHEREFORE, the complaint is dismissed without pronouncement as to costs.

SO ORDERED.

A motion for the reconsideration of the said decision was denied by the trial court. On August 4, 1969, plaintiff-appellant filed the present petition for review. The petition was given due course in Our Resolution of August 6, 1969 and the petitioner filed its brief as plaintiff-appellant. No brief was filed in behalf of defendant-appellee.

The only issue raised in this appeal is whether or not plaintiff-appellant's cause of action in Civil Case No. 65341 had already prescribed.

Article 1144 of the New Civil Code provides that an action based upon a judgment "must be brought within ten (10) years from the time the right of action accrues." The prescriptive period starts from the time that the judgment becomes final and executory. In the case at bar, the decision sought to be enforced, to wit, that rendered in Civil Case No. 22237, being based on a compromise agreement, the same became final and executory on the date of its rendition on November 23, 1955.

There is no question that when the first revival action, docketed as Civil Case No. 60112, was filed on March 5, 1965, only 9 years, 3 months and 12 days had elapsed from November 23, 1955. It is also a fact that when the second action to revive judgment was filed on May 10, 1965, it was already more than 10 years from the finality of the decision rendered in Civil Case No. 22237 which is sought to be revived therein. These circumstances render it necessary to determine whether the filing of Civil Case No. 60112, the first action to revive judgment tolled the running of the 10-year prescriptive period to enforce the subject judgment. In the affirmative case, it would follow that the filing of Civil Case No. 65341 on May 10, 1966 was well within the period allowed by the statute of limitations.

Article 1155 of the New Civil Code expressly provides that the "prescription of action is interrupted when they are filed before the court ..." (Sotelo vs. Dizon, 67 Phil. 537; Cabrera vs. Tianco, 8 SCRA 582.) Such interruption lasts during the pendency of the action. (Florendo vs. Organo, 9 Phil. 483.)

These principles apply to the prescription of the action to revive or enforce a judgment. (Marc Donnelly vs. Court of First Instance of Manila, 44 SCRA 381.) The facts in the last cited case are almost similar to the present action. In Marc Donnelly, a judgment was rendered by the Court of First Instance of Manila which became final on August 5, 1957. On July 8, 1967, an action was filed to revive the judgment. Due to the fact that summons could not be served on the defendant despite the exercise of due diligence by the plaintiff, the revival action was dismissed "for failure to prosecute, but the dismissal shall be without prejudice." Copy of the order of dismissal was received by the plaintiff on March 19, 1969. Twelve (12) days later or on March 31, 1969, a second action for revival was filed. The second action was dismissed by the trial court on the ground that the said revival action was instituted after the lapse of 10 years from the time that the decision sought to be revived had become final and executory.

Resolving the issue of whether or not the first action for revival of judgment interrupted the period of prescription, We reversed the dismissal of the second action to revive judgment upon the following considerations:

The sole issue to be resolved herein is whether or not prescription has set in to bar the filing by petitioner of his second action to revive the judgment in Civil Case No. 23466. An action for the revival of a judgment prescribes in ten (10) years (Art. 1144[3], Civil Code). The ten-year period is counted either from the date the judgment became final or from the date of its entry (Vda. de Decena vs. De los Angeles, etc., et al., L-29317, May 29, 1971, 39 SCRA 95, 99). The prescription of an action is interrupted, among others, by its filing before the court (Art. 1155, Civil Code).

Applying the foregoing tenets to the case at bar, we find that petitioner's filing of the first action for revival of the judgment in Civil Case No. 23466 was well within the ten-year prescriptive period. Final judgment was entered by the Court of Appeals on August 5, 1957. Petitioners filed Civil Case No. 70028 (his first action to revive the judgment) on July 8, 1967. Therefore, as of the latter date, only nine (9) years, eleven (11) months and three (3) days had elapsed. The ten-year prescriptive period was effectively suspended by the filing of Civil Case No. 70028.

Let us now consider the second complaint (Civil Case No. 76166) for revival of the same judgment in Civil Case No. 23466, in which complaint petitioner also alleged that final entry of the judgment was made on August 5, 1957. The first such action (Civil Case No. 70028) was dismissed by the court without prejudice; and copy of the dismissal order was received by petitioner on March 19, 1969. On March 31, 1969, petitioner filed the second action for revival of the judgment. When a case is ordered dismissed without prejudice, the plaintiff may file his complaint against the same defendant in a separate action, even if the order has already become final and executory (Rapadaz Vda. de Rapisura vs. Nicolas, etc., et al., L-22594, April 29, 1966, 16 SCRA 798, 801). As it is, the second case to revive the judgment was filed even before the order of dismissal in the first case could become final, for only twelve (12) days had expired between March 19, 1969, when petitioner received notice of the dismissal order, and March 31, 1969, when he filed the second motion. In any event, the dismissal of the first case being without prejudice, the filing of the second action was still within the original period of ten (10) years. At any rate, when the defendant's address cannot with due diligence be ascertained and no property of his can be found, the period of prescription is tolled under article 1108(2) of the new Civil Code. In the premises, our conclusion must necessarily be that the trial court committed a reversible error in dismissing Civil Case No. 76166 on the ground of prescription. (44 SCRA pp. 383-384.)

As may be noted from the decision dismissing Civil Case No. 65341, the trial court relied on the rulings inConspecto vs. Fruto, et al., 31 Phil. 148 and Oriental Commercial Co., Inc. vs. Jureidini, Inc., et al., 71 Phil. 25. Said reliance is misplaced, the facts in the said cases being different from those appearing in the one under consideration. In Fruto, it was held that the running of the period of limitation was not interrupted by an action filed within the said period because the said action was discontinued by "its dismissal or voluntary abandonment by the plaintiff." The decision went on to state that "the real reason for the said dismissal does not clearly appear of record."

In the case under consideration, the first action for revival, Civil Case No. 60112, was dismissed not by reason of abandonment. As in the case of Marc Donnelley, the dismissal of the first revival action as due to the inability to serve summons on the defendant-appellee. This was because, as stated in the petition for review, the defendant-appellee was so elusive that when summons was forwarded to his address at Iloilo City, the same was returned unserved because defendant-appellee was in Manila; and when it was attempted to be served in Manila, he was supposed to be in Iloilo City. (Rollo, p. 14.)

In Fruto, it is also recognized that the dismissal of an action filed within the prescriptive period does not necessarily result in the non-interruption of the period of limitation. Thus, it was declared:

Where a suit, commenced within the period of limitation, is abandoned or dismissed by reason of the death of the plaintiff, the operation of the statute is prevented if the suit is recommenced, within a reasonable time, by the representatives of the deceased (Martin vs. Archer, 3 Hill, [S.C.] 211.) (Emphasis supplied.)

The plaintiff-appellant may not be accused of having abandoned Civil Case No. 60112. They asserted due diligence in trying to serve summons on defendant-appellee but unfortunately, their efforts were thwarted due to the ability of the defendant-appellee to evade service of such court process on him. Neither may plaintiff-appellant be charged with failure to recommence its suit within a reasonable time after its dismissal. The record reveals that plaintiff-appellant received notice of the dismissal of Civil Case No. 60112 on March 21, 1966. Four (4) days later, or on March 25, 1966, plaintiff-appellant filed a motion for reconsideration of said order of dismissal. Plaintiff-appellant received the order denying the motion for reconsideration on April 26, 1966. On May 10, 1966, plaintiff-appellant filed its second action for revival, docketed as Civil Case No. 65341.

Nor may the ruling in Jureidini defeat herein plaintiff-appellant's cause of action. In Jureidini, the plaintiff filed three (3) cases within the period of prescription, all of which were dismissed, the first on motion of the plaintiff, and the other two (2) for failure to prosecute. When the fourth action was filed beyond the prescriptive period, it was held that the act of the plaintiff in failing to prosecute his first three (3) cases may not be interpreted except as a waiver on its part and did not place the plaintiff on the same situation where it was before the filing of the first of the three actions; and, following the view expressed in the analogous case of Conspecto vs. Fruto, 31 Phil. 150, the fourth action should be dismissed on the ground of prescription. It is to be noted that as in Fruto, the filing of the actions within the prescriptive period was considered as not interrupting the running of the period of limitation due to the circumstance that the plaintiff is deemed to have abandoned or waived its claim.

As already stated above, herein plaintiff-appellant may not be faulted with having abandoned its claim against the defendant-appellee which the former had asserted in filing Civil Case No. 60112. The said case was dismissed primarily due to the failure to serve summons on defendant-appellee who had somehow managed to evade being placed under the jurisdiction of the Court. Subsequent acts of plaintiff-appellant after the dismissal of Civil Case No. 60112 adequately negated any supposed intention to waive or abandon its claim against defendant-appellee.

It will be noted that the two cases relied upon by the trial court were both decided when the statute of limitations was contained in the old Code of Civil Procedure, Act No. 190. In said law, there was no specific provision, as that now contained in Article 1155 of the Civil Code, that " the prescription of actions is interrupted when they are filed in court." (Florendo vs. Organo, 90 Phil. 483.) It is accordingly extremely doubted if the rulings in Fruto andJureidini may still be availed of to uphold the view that the period of prescription is not interrupted by an action which the plaintiff shag abandon or otherwise fail to prosecute. The language of Article 1155 is unqualified and does not give room for making a distinction as to the effect of the filing of an action in court or the running of the period of prescription.

The record further reveals that plaintiff-appellant made written extra-judicial demands upon defendant-appellee by means of letters marked as Exhibits "E-2" and "F", respectively. Such written extrajudicial demand also produced the result of interrupting the period of prescription. (Art. 1155, Civil Code; Marella vs. Agoncillo, 44 Phil. 844.)

We are accordingly of the considered view that the trial court erred in dismissing Civil Case No. 65341. We do not find it necessary, however, to remand the ease to the court of origin for further proceedings. In the decision rendered by the trial court, it made a finding of the material fact upon which the plaintiff's cause of action is based. It stated the following:

It appears from the evidence presented by the plaintiff (the defendant did not present any evidence) that under date of November 23, 1965, a decision was rendered in Civil Case No. 22237 of the Court of First Instance of Manila, Land Settlement and Development Corporation vs. Jose Zulueta, based on an amicable settlement, ordering the defendant to pay to the plaintiff the sum of P10,391.62, with interest at 4% per annum from January 13, 1948 (Exhibit "A"); that the said judgment has not as yet been satisfied; that as of February 15, 1965, the outstanding obligation of the defendant is P18,501.97 (Exhibit "E"); that demands for payment were made on the defendant on January 6, 1956 (Exhibit "E-2") and on January 18, 1965 (Exhibit "F").

There can be no serious dispute that the plaintiff Board of Liquidators can prosecute this action as trustee of the abolished Land Settlement and Development Corporation, known for short as LASEDECO. The principal issue is whether or not the action has prescribed. (Decision, Rollo, pp. 79-80.)

The defendant-appellee presented no contradictory evidence, he having failed to appear for the trial of the case scheduled on November 28, 1968 despite notice, thereby prompting the trial court to consider the case submitted for decision on the basis of the evidence presented by the plaintiff. The facts found by the trial court suffice to justify the rendition of a decision on the merits which the trial court failed to do in view of its ruling that the action is barred by the statute of limitations.

WHEREFORE, the judgment appealed from is hereby REVERSED AND SET ASIDE. In lieu thereof, another one is rendered ordering defendant-appellee to pay plaintiff-appellant the sum of P10,391.62 with interest at four (4%) per cent per annum from January 13, 1948 until full payment, with costs against defendant-appellee.

SO ORDERED.

G.R. No. L-46492             April 26, 1939

RAMON SOTELO, petitioner, vs.ARSENIO P. DIZON, Judge of First Instance of Manila, L. PASICOLAN, Sheriff of the City of Manila, and HARRIE S. EVERETT, respondents.

Jose Sotelo for petitioner.Duran and Lim for respondents.

IMPERIAL, J.:

This petition for certiorari assails the legality of the order issued by the respondent judge on January 5, 1939, directing the sheriff or any of his agents to execute the order of the 3d of said month appointing R. Marino Corpus receiver, by placing him in possession of the cinematograph business established in the Savory Theatre, together with its equipment and existing funds.

On July 22, 1938, the respondent Harrie S. Everett brought civil case No. 53411 in the Court of First Instance of Manila against Lazarus Joseph, to recover the ownership and possession of the cinematograph business established in the Fox and Savory theatres, with the equipment and existing funds. The respondent asked in his complaint that a writ of preliminary injunction be issued. As the then defendant alleged that the cinematograph business had been transferred by him to the partnership Joseph Brothers, the respondent Everett amended his complaint by including as defendants the said partnership and its partners, John Joseph and George Joseph. Everett dropped out his prayer for preliminary injunction and in his amended complaint asked that R. Marino Corpus be appointed receiver to take charge of the properties in litigation during the pendency of the case. On December 16, 1938 the court appointed R. Marino Corpus receiver of the cinematograph business known as Savoy as well as all its equipment and existing funds, ordering him to take possession thereof and administer them in accordance with law after having qualified and filed a bond for P2,000. When the receiver tried to take possession of the properties entrusted to him, he was met by the petitioner's allegation that he is the owner thereof by purchase from Joseph Brothers on December 15, 1938. In view of this and of the fact that the petitioner had refused to deliver the properties, Everett filed a supplementary complaint on December 23, 1938 including the petitioner as defendant and asking that the order of December 16th appointing a receiver be confirmed. On January 3, 1939 the respondent judge issued an order allowing the supplementary complaint and at the same time reiterating the order of December 16, 1938 appointing a receiver. On the 4th of the same month the receiver looked for the petitioner to require him to give up the properties under receivership, but we unable to locate him either in his office or in his house as he was informed that the petitioner was sick in the province. On the same date, January 4, 1939, Everett filed a motion asking that the court order the sheriff or his agent to place the receiver in possession of the properties. On the 5th of the said month, the court favorably acted upon the motion, and on the following day, January 6th, the deputy sheriff went to the Savoy Theatre to make deliver thereof to the receiver, but the petitioner refused to make delivery and forthwith filed this petition. The petitioner was served wityh the supplementary complaint in the morning of January 6, 1939 and when he filed the petition for certiorari in this case he had already been duly summoned. In the same morning of January 6, 1939 and before his petition for certiorari was filed, the petitioner was likewise notified of the order of the respondent judge issued on the 5th of the said month directing the sheriff to place the properties in the receiver's possession.

The petitioner contends that the order of January 5, 1939, providing for the execution of the other order of the 3d of the same month and for the placing of the properties in the possession of the receiver, is illegal because on said date there was yet no pending action against him and bacause he was not duly served with the supplementary complaint, citing in his support sections 173 and 389 of the Code of Civil Procedure reading as follows:

SEC. 173. Receivers, who may appoint. — A judge of the Supreme Court, or a judge of the Court of First Instance in which the action is pending, may appoint one or more receivers of the property, real, personal, or mixed, which is the subject of the action, in the manner and under the conditions hereinafter provided.

SEC. 389. Commencement of actions. — Civil actions must be commenced by filing a complaint with the clerk of the court in which the action is to be instituted. The date of the filing of the complaint upon which process is issued and duly served shall be deemed to be the true time of the commencement of the action.

The first contention is not justified by the facts because it appears that the supplementary complaint had been admitted by the court on January 3, 1939, hence, when the order of the 5th of said month was issued directing the sheriff to place the receiver in possession of the properties, there was already an action in court against the petitioner.

As to the second legal question before us, the petitioner argues that he was not yet duly served with the supplementary complaint when the order of January 5, 1939 was issued, because the summons only took place on the 6th of the said month, and under section 389 no action in court was yet pending against him. We find no merit in this contention. Under section 389, a civil action is deemed legally commenced from the date of the filing and docketing of the complaingt with the clerk of the Court of First Instance, without taking into account the issuance and service of the summons. Section 389 of the Code of Civil Procedure is taken from section 405 of the California Code of Civil Procedure, and the Supreme Court of said State has so interpreted it in Tinn vs. United States District Attorney (148 Cal., 773); Dowling vs. Comerford (99 Cal., 204); Ex parte Fil Ki (79 Cal., 584); and Nash vs. El Dorado County (24 Fed. 252; 1 C. J., sec. 403, pp. 1155, 1156).

Under the facts the respondent judge had jurisdiction to issue the orders of January 3 and 5, 1939, and he did not exceed the same or the discretion conferred upon him by law in such cases. From the same facts it follows that the preliminary injunction obtained by the petitioner in these proceedings was issued without just cause, wherefor, the petitioner is answerable for damages which he might have caused the respondent Everett. We reserve to the latter the right to claim and substantiate said damages in the Court of First Instance where the principal cause is pending, upon petition which he may present for that purpose.

For the foregoing reasons, the remedy prayed for is denied, with the cost to the petitioner. The preliminary injunction issued in this case is set aside. So ordered.

Avanceña, C. J., Villa-Real, Diaz, Laurel, Concepcion, and Moran, JJ., concur.

G.R. No. 187021               January 25, 2012

DOUGLAS F. ANAMA, Petitioner, vs.PHILIPPINE SAVINGS BANK, SPOUSES SATURNINA BARIA &TOMAS CO and THE REGISTER OF DEEDS, METRO MANILA, DISTRICT II, Respondents.

D E C I S I O N

MENDOZA, J.:

This is a petition for review under Rule 45 assailing the March 31, 2008 Decision1 of the Court of Appeals (CA)and its February 27, 2009 Resolution,2 in CA G.R. No. SP-94771, which affirmed the November 25, 2005 Order of the Regional Trial Court, Branch 167, Pasig City (RTC), granting the motion for issuance of a writ of execution of respondents.

The Facts

The factual and procedural backgrounds of this case were succinctly recited by the CA in its decision as follows:

Sometime in 1973, the Petitioner, Douglas F. Anama (Anama), and the Respondent, Philippine Savings Bank (PSB), entered into a "Contract to Buy," on installment basis, the real property owned and covered by Transfer Certificate of Title (TCT) No. 301276 in the latter’s name. However, Anama defaulted in paying his obligations thereunder, thus, PSB rescinded the said contract and title to the property remained with the latter. Subsequently, the property was sold by PSB to the Spouses Saturnina Baria and Tomas Co (Co Spouses) who, after paying the purchase price in full, caused the registration of the same in their names and were, thus, issued TCT No. 14239.

Resultantly, Anama filed before the Respondent Court a complaint for declaration of nullity of the deed of sale, cancellation of transfer certificate of title, and specific performance with damages against PSB, the Co Spouses, and the Register of Deeds of Metro Manila, District II.

On August 21, 1991 and after trial on the merits, the Respondent Court dismissed Anama’s complaint and upheld the validity of the sale between PSB and the Co Spouses. Undaunted, Anama appealed, at first, to this Court, and after failing to obtain a favorable decision, to the Supreme Court.

On January 29, 2004, the Supreme Court rendered judgment denying Anama’s petition and sustaining the validity of the sale between PSB and the Co Spouses. Its decision became final and executory on July 12, 2004. Pursuant thereto, the Co Spouses moved for execution, which was granted by the Respondent Court per its Order, dated November 25, 2005.

Aggrieved, Anama twice moved for the reconsideration of the Respondent Court’s November 25, 2005 Order arguing that the Co Spouses’ motion for execution is fatally defective. He averred that the Spouses’ motion waspro forma because it lacked the required affidavit of service and has a defective notice of hearing, hence, a mere scrap of paper. The Respondent Court, however, denied Anama’s motion(s) for reconsideration.

Dissatisfied, the petitioner questioned the RTC Order before the CA for taking judicial cognizance of the motion for execution filed by spouses Tomas Co and Saturnina Baria (Spouses Co) which was (1) not in accord with Section 4 and Section 15 of the Rules of Court because it was without a notice of hearing addressed to the parties; and (2) not in accord with Section 6, Rule 15 in conjunction with Section 13, Rule 13 of the Rules of Court because it lacks the mandatory affidavit of service.

On March 31, 2008, the CA rendered a decision dismissing the petition. It reasoned out, among others, that the issue on the validity of the deed of sale between respondents, Philippine Savings Bank (PSB) and the Spouses Co, had long been laid to rest considering that the January 29, 2004 Decision of this Court became final and executory on July 12, 2004. Hence, execution was already a matter of right on the part of the respondents and the RTC had the ministerial duty to issue a writ of execution enforcing a final and executory decision.

The CA also stated that although a notice of hearing and affidavit of service in a motion are mandatory requirements, the Spouses Co’s motion for execution of a final and executory judgment could be acted upon by the RTC ex parte, and therefore, excused from the mandatory requirements of Sections 4, 5 and 6 of Rule 15 of the Rules of Court.

The CA was of the view that petitioner was not denied due process because he was properly notified of the motion for execution of the Spouses Co. It stated that the act of the Spouses Co in resorting to personal delivery in serving their motion for execution did not render the motion pro forma. It refused to apply a rigid application of the rules because it would result in a manifest failure of justice considering that petitioner’s position was nothing but an obvious dilatory tactic designed to prevent the final disposition of Civil Case No. 44940.

Not satisfied with the CA’s unfavorable disposition, petitioner filed this petition praying for the reversal thereof presenting the following

ARGUMENTS:

THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE COURT WITH REGARD TO THE REQUISITE NOTICE OF HEARING – IT SHOULD BE ADDRESSED TO THE PARTIES NOT TO THE CLERK OF COURT, THE LATEST (THEN) BEING GARCIA V. SANDIGANBAYAN, G.R. NO. 167103, AUGUST 31, 2006, 500 SCRA 361; DE JESUS V. JUDGE DILAG, A.M. NO. RTJ-05-1921, SEPTEMBER 30, 2005, 471 SCRA 176; LAND BANK OF THE PHILIPPINES V. NATIVIDAD, G.R. NO. 127198, MAY 16, 2005, 458 SCRA 441; ATTY. JULIUS NERI V. JUDGE JESUS S. DE LA PEÑA, A.M NO. RTJ-05-1896, APRIL 29, 2005, 457 SCRA 538; AND ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA 213;

THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE COURT WITH REGARD TO THE REQUISITE AFFIDAVIT OF SERVICE – IT SHOULD BE IN THE PROPER FORM AS PRESCRIBED IN THE RULES AND IT SHOULD BE ATTACHED TO THE MOTION, THE LATEST (THEN) BEING ELLO V. COURT OF APPEALS, G.R. NO. 141255, JUNE 21, 2005, 460 SCRA 406; LOPEZ DELA ROSA DEVELOPMENT CORPORATION V. COURT OF APPEALS, G.R. NO. 148470, APRIL 29, 2005, 457 SCRA 614; ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA 213; EL REYNO HOMES, INC. V. ERNESTO ONG, 397 SCRA 563; CRUZ V. COURT OF APPEALS, 388 SCRA 72, 80-81; AND MERIS V. OFILADA, 293 SCRA 606;

THE RESPONDENT APPELLATE COURT DID NOT TAKE APPROPRIATE ACTION ON THE "FRAUD PERPETRATED UPON THE COURT" BY RESPONDENT-SPOUSES AND THEIR LEAD COUNSEL.

SINCE THE RESPONDENT APPELLATE COURT REFUSED TO TAKE INTO CONSIDERATION THE RESPONDENT BANK’S ACTION – THAT OF:

ENGAGING IN A DAGDAG-BAWAS (LEGALLY "INTERCALATION") OPERATION OF A PORTION OF THE TRANSCRIPT OF STENOGRAPHIC NOTES (TSN), OCTOBER 12, 1984, OF THE REGIONAL TRIAL COURT, BRANCH 167, PASIG CITY, IN CIVIL CASE NO. 44940, PAGES 54-55, AND

PRESENTING IT IN ITS APPELLEE’S BRIEF (IN THE OWNERSHIP CASE, CA-G.R. NO. CV-42663, LIKEWISE, BEFORE THE RESPONDENT APPELLATE COURT) BY CITING IT ON PAGE 14 OF SAID BRIEF, AS IMPLIEDLY COMING FROM THE TSN OF THE TRIAL COURT.

THINKING THAT THEIR FALSIFIED APPELLEE’S BRIEF WAS MATERIAL IN SAID CA-G.R. NO. CV-42663.

IT COULD NOT RULE THAT THE SAME HAS BROUGHT ABOUT A CRUCIAL MATERIAL CHANGE IN THE SITUATION OF THE PARTIES WHICH MAKES EXECUTION INEQUITABLE (PUNCIA V. GERONA, 252 SCRA 424, 430-431), OR, IN THE WORDS OF DEVELOPMENT BANK OF RIZAL V. CA, G.R. NO. 75964, DECEMBER 1, 1987, 156 SCRA 84, 90, "THERE EXISTS A COMPELLING REASON FOR STAYING THE EXECUTION OF JUDGMENT."

Basically, petitioner argues that the respondents failed to substantially comply with the rule on notice and hearing when they filed their motion for the issuance of a writ of execution with the RTC. He claims that the notice of hearing in the motion for execution filed by the Spouses Co was a mere scrap of paper because it was addressed to the Clerk of Court and not to the parties. Thus, the motion for execution did not contain the required proof of service to the adverse party. He adds that the Spouses Co and their counsel deliberately "misserved" the copy of their motion for execution, thus, committing fraud upon the trial court.

Additionally, he claims that PSB falsified its appellee’s brief by engaging in a "dagdag-bawas" ("intercalation") operation in pages 54 to 55 of the TSN, dated October 12, 1984.

Position of the Spouses Co

The Spouses Co counter that the petition should be dismissed outright for raising both questions of facts and law in violation of Section 1, Rule 45 of the Rules of Court. The Spouses Co aver that petitioner attempts to resurrect the issue that PSB cheated him in their transaction and that the RTC committed a "dagdag-bawas." According to the Spouses Co, these issues had long been threshed out by this Court.

At any rate, they assert that they have substantially complied with the requirements of notice and hearing provided under Sections 4 and 5 of Rule 15 and Section 13, Rule 13 of the Rules of Court. Contrary to petitioner’s allegations, a copy of the motion for the issuance of a writ of execution was given to petitioner through his principal counsel, the Quasha Law Offices. At that time, the said law office had not formally withdrawn its appearance as counsel for petitioner. Spouses Co argue that what they sought to be executed was the final judgment of the RTC duly affirmed by the CA and this Court, thus, putting the issues on the merits to rest. The issuance of a writ of execution then becomes a matter of right and the court’s duty to issue the writ becomes ministerial.

Position of respondent PSB

PSB argues that the decision rendered by the RTC in Civil Case No. 44940 entitled "Douglas F. Anama v. Philippine Savings Bank, et. al."3 had long become final and executory as shown by the Entry of Judgment made by the Court on July 12, 2004. The finality of the said decision entitles the respondents, by law, to the issuance of a writ of execution. PSB laments that petitioner relies more on technicalities to frustrate the ends of justice and to delay the enforcement of a final and executory decision.

As to the principal issue, PSB points out that the notice of hearing appended to the motion for execution filed by the Spouses Co substantially complied with the requirements of the Rules since petitioner’s then counsel of record was duly notified and furnished a copy of the questioned motion for execution. Also, the motion for execution filed by the Spouses Co was served upon and personally received by said counsel.

The Court’s Ruling

The Court agrees with the Spouses Co that petitioner’s allegations on the "dagdag-bawas operation of the Transcript of Stenographic Notes," the "fraud perpetuated upon the Court by said spouses and their lead counsel," the "ownership," and "falsification" had long been laid to rest in the case of "Douglas F. Anama v. Philippine Savings Bank, et. al."4 For said reason, the Court cannot review those final pronouncements. To do so would violate the rules as it would open a final judgment to another reconsideration which is a prohibited procedure.

On the subject procedural question, the Court finds no compelling reason to stay the execution of the judgment because the Spouses Co complied with the notice and hearing requirements under Sections 4, 5 and 6 of Rule 15. Said sections, as amended, provide:

SECTION 4. Hearing of motion. – Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice.

SECTION 5. Notice of hearing. – The notice of hearing shall be addressed to all parties concerned, and shall specify the time and date of the hearing which must not be later than ten (10) days after the filing of the motion.

SECTION 6. Proof of service necessary. – No written motion set for hearing shall be acted upon by the court without proof of service thereof.

Pertinently, Section 13 of Rule 13 of the 1997 Rules of Civil Procedure, as amended, provides:

SEC. 13. Proof of service. – Proof of personal service shall consist of a written admission of the party served, or the official return of the server, or the affidavit of the party serving, containing a full statement of the date, place, and manner of service. If the service is by ordinary mail, proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. If service is made by registered mail, proof shall be made by such affidavit and the registry receipt issued by the mailing office. The registry return card shall be filed immediately upon its receipt by the sender, or in lieu thereof the unclaimed letter together with the certified or sworn copy of the notice given by the postmaster to the addressee.

Elementary is the rule that every motion must contain the mandatory requirements of notice and hearing and that there must be proof of service thereof. The Court has consistently held that a motion that fails to comply with the above requirements is considered a worthless piece of paper which should not be acted upon. The rule, however, is not absolute. There are motions that can be acted upon by the court ex parte if these would not cause prejudice to the other party. They are not strictly covered by the rigid requirement of the rules on notice and hearing of motions.

The motion for execution of the Spouses Co is such kind of motion. It cannot be denied that the judgment sought to be executed in this case had already become final and executory. As such, the Spouses Co have every right to the issuance of a writ of execution and the RTC has the ministerial duty to enforce the same. This right on the part of the Spouses Co and duty on the part of the RTC are based on Section 1 and Section 2 of Rule 39 of the 1997 Revised Rules of Civil Procedure provides, as follows:

Section 1. Execution upon judgments or final orders. – Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected.

If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party.

The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of execution.

SEC. 2. Discretionary execution.—

(a) Execution of a judgment or final order pending appeal.— On motion of the prevailing party with notice to the adverse party   filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal.

After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court.

Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing.

(b) Execution of several, separate or partial judgments.—A several, separate or partial judgment may be executed under the same terms and conditions as execution of a judgment or final order pending appeal. (2a) [Emphases and underscoring supplied]

As can be gleaned therefrom, under Paragraph 1 of Section 1 of Rule 39 of the 1997 Revised Rules of Civil Procedure, the Spouses Co can have their motion for execution executed as a matter of right without the needed notice and hearing requirement to petitioner. This is in contrast to the provision of Paragraph 2 of Section 1 and Section 2 where there must be notice to the adverse party. In the case of Far Eastern Surety and Insurance Company, Inc. v. Virginia D. Vda. De Hernandez,5 it was written:

It is evident that Section 1 of Rule 39 of the Revised Rules of Court does not prescribe that a copy of the motion for the execution of a final and executory judgment be served on the defeated party, like litigated motions such as a motion to dismiss (Section 3, Rule 16), or motion for new trial (Section 2, Rule 37), or a motion for execution of judgment pending appeal (Section 2, Rule 39), in all of which instances a written notice thereof is required to be served by the movant on the adverse party in order to afford the latter an opportunity to resist the application.

It is not disputed that the judgment sought to be executed in the case at bar had already become final and executory. It is fundamental that the prevailing party in a litigation may, at any time within five (5) years after the entry thereof, have a writ of execution issued for its enforcement and the court not only has the power and authority to order its execution but it is its ministerial duty to do so. It has also been held that the court cannot refuse to issue a writ of execution upon a final and executory judgment, or quash it, or order its stay, for, as a general rule, the parties will not be allowed, after final judgment, to object to the execution by raising new issues of fact or of law, except when there had been a change in the situation of the parties which makes such execution inequitable or when it appears that the controversy has ever been submitted to the judgment of the court; or when it appears that the writ of execution has been improvidently issued, or that it is defective in substance, or is issued against the wrong party, or that judgment debt has been paid or otherwise satisfied; or when the writ has been issued without authority. Defendant-appellant has not shown that she falls in any of the situations afore-mentioned. Ordinarily, an order of execution of a final judgment is not appealable. Otherwise, as was said by this Court in Molina v. de la Riva, a case could never end. Once a court renders a final judgment, all the issues between or among the parties before it are deemed resolved and its judicial function as regards any matter related to the controversy litigated comes to an end. The

execution of its judgment is purely a ministerial phase of adjudication. The nature of its duty to see to it that the claim of the prevailing party is fully satisfied from the properties of the loser is generally ministerial.

In Pamintuan v. Muñoz, We ruled that once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the judgment debtor need not be given advance notice of the application for execution .

Also of the same stature is the rule that once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right and the granting of execution becomes a ministerial duty of the court. Otherwise stated, once sought by the prevailing party, execution of a final judgment will just follow as a matter of course. Hence, the judgment debtor need not be given advance notice of the application for execution nor he afforded prior hearing.

Absence of such advance notice to the judgment debtor does not constitute an infringement of the constitutional guarantee of due process.

However, the established rules of our system of jurisprudence do not require that a defendant who has been granted an opportunity to be heard and has had his day in court should, after a judgment has been rendered against him, have a further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment. Thus, in the absence of a statutory requirement, it is not essential that he be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment he must take "notice of what will follow," no further notice being "necessary to advance justice." [Emphases and underscoring supplied]

Likewise, in the case of Leonardo Lim De Mesa v. Hon. Court of Appeals,6 it was stated:

In the present case, the decision ordering partition and the rendition of accounting had already become final and executory. The execution thereof thus became a matter of right on the part of the plaintiffs, herein private respondents, and is a mandatory and ministerial duty on the part of the court. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the judgment debtor need not be given advance notice of the application for execution nor be afforded prior hearings thereon.

On the bases of the foregoing considerations, therefore, the Court of Appeals acted correctly in holding that the failure to serve a copy of the motion for execution on petitioner is not a fatal defect. In fact, there was no necessity for such service. [Emphases and underscoring supplied]

At any rate, it is not true that the petitioner was not notified of the motion for execution of the Spouses Co. The records clearly show that the motion for execution was duly served upon, and received by, petitioner’s counsel-of-record, the Quasha Ancheta Pena Nolasco Law Offices, as evidenced by a "signed stamped received mark" appearing on said pleading.7 The records are bereft of proof showing any written denial from petitioner’s counsel of its valid receipt on behalf of its client. Neither is there proof that the Quasha Ancheta Pena Nolasco Law Offices has formally withdrawn its appearance as petitioner’s counsel-of-record. Considering that there is enough proof shown on record of personal delivery in serving the subject motion for execution, there was a valid compliance with the Rules, thus, no persuasive reason to stay the execution of the subject final and executory judgment.

Moreover, this Court takes note that petitioner was particularly silent on the ruling of the CA that he was notified, through his counsel, of the motion for execution of the Spouses Co when he filed a motion for reconsideration of the RTC’s order dated June 28, 2005, holding in abeyance said motion pending the resolution of petitioner’s pleading filed before this Court. He did not dispute the ruling of the CA either that the alleged defect in the Spouses Co’s motion was cured when his new counsel was served a copy of said motion for reconsideration of the RTC’s June 28, 2005 Order.8

The three-day notice rule is not absolute. A liberal construction of the procedural rules is proper where the lapse in the literal observance of a rule of procedure has not prejudiced the adverse party and has not deprived the court of its authority. Indeed, Section 6, Rule 1 of the Rules of Court provides that the Rules should be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. Rules of procedure are tools designed to facilitate the attainment of justice, and courts must avoid their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice.

In Somera Vda. De Navarro v. Navarro, the Court held that there was substantial compliance of the rule on notice of motions even if the first notice was irregular because no prejudice was caused the adverse party since the motion was not considered and resolved until after several postponements of which the parties were duly notified.

Likewise, in Jehan Shipping Corporation v. National Food Authority, the Court held that despite the lack of notice of hearing in a Motion for Reconsideration, there was substantial compliance with the requirements of due process where the adverse party actually had the opportunity to be heard and had filed pleadings in opposition to the motion. The Court held:

This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is the requirement in a motion, which is rendered defective by failure to comply with the requirement. As a rule, a motion without a notice of hearing is considered pro forma and does not affect the reglementary period for the appeal or the filing of the requisite pleading.

As an integral component of the procedural due process, the three-day notice required by the Rules is not intended for the benefit of the movant. Rather, the requirement is for the purpose of avoiding surprises that may be sprung upon the adverse party, who must be given time to study and meet the arguments in the motion before a resolution of the court. Principles of natural justice demand that the right of a party should not be affected without giving it an opportunity to be heard.

The test is the presence of opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based.9 [Emphases and underscoring supplied]

Likewise, in the case of KKK Foundation, Inc. v. Hon. Adelina Calderon-Bargas,10 this Court stated:

Anent the second issue, we have consistently held that a motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper, which the Clerk of Court has no right to receive and the trial court has no authority to act upon. Service of a copy of a motion containing a notice of the time and the place of hearing of that motion is a mandatory requirement, and the failure of movants to comply with these requirements renders their motions fatally defective. However, there are exceptions to the strict application of this rule. These exceptions are: (1) where a rigid application will result in a manifest failure or miscarriage of justice especially if a party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein; (2) where the interest of substantial justice will be served; (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court; and (4) where the injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.

A notice of hearing is an integral component of procedural due process to afford the adverse parties a chance to be heard before a motion is resolved by the court. Through such notice, the adverse party is given time to study and answer the arguments in the motion. Records show that while Angeles’s Motion for Issuance of Writ of Execution contained a notice of hearing, it did not particularly state the date and time of the hearing. However, we still find that petitioner was not denied procedural due process. Upon receiving the Motion for Issuance of Writ of Execution, the trial court issued an Order dated September 9, 2002 giving petitioner ten (10) days to file its comment. The trial court ruled on the motion only after the reglementary period to file comment lapsed. Clearly, petitioner was given time to study and comment on the motion for which reason, the very purpose of a notice of hearing had been achieved.

The notice requirement is not a ritual to be followed blindly.1âwphi1 Procedural due process is not based solely on a mechanical and literal application that renders any deviation inexorably fatal. Instead, procedural rules are liberally construed to promote their objective and to assist in obtaining a just, speedy and inexpensive determination of any action and proceeding. [Emphases supplied]

At any rate, it is undisputed that the August 21, 1991 RTC Decision11 in Civil Case No. 44940 is already final and executory. Once a judgment becomes final and executory, all the issues between the parties are deemed resolved and laid to rest. All that remains is the execution of the decision which is a matter of right. The prevailing party is entitled to a writ of execution, the issuance of which is the trial court’s ministerial duty.12

The Court agrees with the respondents that petitioner mainly relies on mere technicalities to frustrate the ends of justice and further delay the execution process and enforcement of the RTC Decision that has been affirmed by the CA and this Court. The record shows that the case has been dragging on for almost 30 years since petitioner filed an action for annulment of sale in 1982. From the time the Spouses Co bought the house from PSB in 1978, they have yet to set foot on the subject house and lot.

To remand the case back to the lower court would further prolong the agony of the Spouses Co. The Court should not allow this to happen. The Spouses Co should not be prevented from enjoying the fruits of the final judgment in their favor. In another protracted case, the Court wrote:

As a final note, it bears to point out that this case has been dragging for more than 15 years and the execution of this Court’s judgment in PEA v. CA has been delayed for almost ten years now simply because De Leon filed a frivolous appeal against the RTC’s order of execution based on arguments that cannot hold water. As a consequence, PEA is prevented from enjoying the fruits of the final judgment in its favor. The Court agrees with the Office of the Solicitor General in its contention that every litigation must come to an end once a judgment becomes final, executory and unappealable. Just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his case by the execution and satisfaction of the judgment, which is the "life of the law." To frustrate it by dilatory schemes on the part of the losing party is to frustrate all the efforts, time and expenditure of the courts. It is in the interest of justice that this Court should write finis to this litigation.13

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 130314 September 22, 1998

ANNIE TAN, petitioner, vs.COURT OF APPEALS and BLOOMBERRY EXPORT MANUFACTURING, INC., respondents.

 

PANGANIBAN, J.:

Before a trial court, a motion for reconsideration that does not contain the requisite notice of hearing does not toll the running of the period of appeals. It is a mere scrap of paper which the trial court and the opposite party may ignore.

The Case

Petitioner seeks to set aside the August 22, 1997 Decision of the Court of Appeals 1 in CA-GR SP No. 43293, the dispositive portion of which reads: 2

WHEREFORE, [i]n view of all the foregoing considerations, the petition for certiorari and prohibition is granted. The Order dated October 4, 1996, of public respondent is hereby SET ASIDE and public respondent is ordered to desist from further proceeding with the hearing of the Motion for Reconsideration. The Decision dated July 18, 1996, of public respondent is declared final and executory.

The Facts

Petitioner Annie Tan, doing business under the name and style "AJ & T Trading," leased a portion of the ground floor of her building, more specifically described as Stall No. 623, Carvajal Street, Binondo, Manila, in favor of Bloomberry Export Manufacturing, Inc. The lease was for a period of five years starting on February 17, 1995 and ending on February 17, 2000, at a monthly rental of P20,000 for the first three years. 3 For several alleged violations of the lease contract, petitioner filed against private respondent a complaint for ejectment, docketed as Civil Case No. 148798-CV. 4 As its rental payment was refused by petitioner, private respondent instituted on July 13, 1995 a case for consignation, docketed as Civil Case No. 148814-CV. 5

The two cases were consolidated. In due course, the Metropolitan Trial Court (MTC) of Manila, Branch I, rendered on February 1, 1996 a Decision 6 which disposed as follows: 7

WHEREFORE, in Civil Case No. 148798-CV for [b]reach of [c]ontract, failure to pay rentals on time, encroachment on the adjacent premises without the consent of [petitioner], [she] failed to substantiate her case with that degree of proof required by law. For this reason, except for the costs of suit, this Court hereby orders the dismissal of the complaint of [petitioner]. The counterclaim and damages sought by [private respondent are] likewise ordered dismissed. The case for consignation in Civil Case No. 148814-CV has become moot and academic for failure of [petitioner] to appeal the decision of the Metropolitan [Trial] court, Branch 15, Manila, allowing the [private respondent] to consign rental payments to the Court of Manila. Besides, the [c]omplaint for consignation being in conformity with law, [private respondent] is allowed to continue consigning with this Court all rentals that [may be] due.

On appeal, the Regional Trial Court (RTC) of Manila, Branch 2, in its Decision dated July 18, 1996, affirmed the aforementioned MTC Decision thus:

WHEREFORE, finding no cogent reasons to disturb the joint decision dated February 1, 1996 of the Metropolitan Trial Court of Manila, Branch 1, the Court sustains and affirms in toto the said decision.

Respondent Court related the incidents that ensued, as follows: 8

. . . [F]rom the Decision of the [RTC] dated July 18, 1996, [petitioner] filed a Motion for Reconsideration of the aforesaid decision. The Motion for Reconsideration did not contain any notice of hearing as required under Section 5, Rule 15 of the Revised Rule of Court.

On August 23, 1996, [private respondent] filed an ex-parte Motion for Entry of Judgment upon the ground that said motion for reconsideration is a mere scrap of paper which should not merit the attention of the [RTC] and in support thereof, cited the case of Traders Royal Bank vs. Court of Appeals, 208 SCRA 199. [Private respondent] contends that since the Motion for Reconsideration is a mere scrap of paper aside from being pro forma, said Motion for Reconsideration did not toll the period of appeal[;] hence, the Decision dated July 18, 1996, had become final and executory.

On September 3, 1996, [petitioner] filed a Motion to Set for Hearing the Motion for Reconsideration which was vehemently opposed by [private respondent] on September 23, 1996.

On October 4, 1996, [the RTC] issued an Order granting the motion to set for hearing [petitioner's] Motion for Reconsideration and set[ting] the hearing [for] October 21, 1996, at 8:30 o'clock in the morning. On October 20, 1996, [private respondent] filed a Motion for Reconsideration of the Order dated October 4, 1996, which was set for hearing on October 25, 1996.

On November 11, 1996, [the RTC] issued an Order denying [private respondent's] Motion for Reconsideration. Hence, the Petition for Certiorari and Prohibition. . . . .

In the assailed Decision, Respondent Court of Appeals reversed the trial court's setting for hearing petitioner's Motion for Reconsideration.

The Ruling of the Court of Appeals

Respondent Court held that the trial court acted with grave abuse of discretion in setting for hearing petitioner's Motion for Reconsideration, notwithstanding the fact that said Motion contained no notice of hearing.

Citing a litany of cases, it ruled that petitioner's failure to comply with the mandatory provisions of Sections 4 and 5, Rule 15 of the Rules of Court, reduced her motion to a mere scrap of paper which did not merit the attention of the court. Respondent Court also held that those cases in which the Court allowed a motion for reconsideration that had not been set for hearing — Galvez v. Court of Appeals, 9 Tamargo v. Court of Appeals 10 and Que v. Intermediate Appellate Court 11 — were inapplicable.

Respondent Court held that the facts in Galvez drastically differ from those in the present case. Galvez involved a motion to withdraw the information — not a motion for reconsideration — that was filed ex parte before the arraignment of the accused. In that case, the Court held that there was no imperative need of notice and hearing because,  first, the withdrawal of an information rests on the discretion of the trial court; and, second, the accused was not placed in jeopardy. On the other hand, the subject of the present controversy is a motion for reconsideration directed against the Decision of the RTC; thus, the motion affects the period to perfect an appeal.

Que is not applicable either. In said case, the trial court, set the Motion for Reconsideration (MR) for hearing, which was actually attended by the counsel for the adverse party. This was not so in the case at bar; petitioner's MR was set for hearing, because she belatedly moved for it upon the filing of private respondent's Motion for Entry of Judgment. Likewise, the present case differs from Tamargo, wherein the application of the aforesaid mandatory provisions was suspended. The Court did so in order to give substantial justice to the petitioner and in view of the nature of the issues raised which were found to be highly meritorious.

Hence, this petition. 12

The Issue

In her Memorandum, 13 petitioner presents a fairly accurate statement of the main issue to be resolved: 14

Whether . . . the omission [through] inadvertence of a notice of hearing of a motion for reconsideration filed with the trial court . . . is a fatal defect which did not stop the running of the period to appeal[,] thus rendering the assailed decision final [and] executory.

The Court's Ruling

The petition is devoid of merit.

Sole Issue:Omission of Notice of Hearing Fatal

Petitioner admits the categorical and mandatory character of the directives in Sections 4 and 5 of Rule 15 of the Rules of Court, which read: 15

Sec. 4. Hearing of motion. — Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice. (4a)

Sec. 5. Notice of hearing. — The notice of hearing shall be addressed to all parties concerned, and shall specify the time and date of the hearing which must not be later than ten (10) days after the filing of the motion. (5a)

In De la Peña v. De la Peña, 16 the Court presented a resume of earlier decisions regarding the necessity of the notice of hearing in motions for reconsideration:

In Pojas v. Gozo-Dadole, 17 we had occasion to rule on the issue of whether a motion for reconsideration without any notice of hearing tolls the running of the prescriptive period. In Pojas, petitioner received copy of the decision in Civil Case No. 3430 of the Regional Trial Court of Tagbilaran on 15 April 1986. The decision being adverse to him petitioner filed a motion for reconsideration. For failing to mention the date when the motion was to be resolved as required in Sec. 5, Rule 15, of the Rules of Court, the motion for reconsideration was denied. A second motion for reconsideration met the same fate. On 2 July 1986 petitioner filed a notice of appeal but the same was denied for being filed out of time as "the motion for reconsideration which the Court ruled as pro forma did not stop the running of the 15-day period to appeal." 18

In resolving the issue of whether there was grave abuse of discretion in denying petitioner's notice of appeal, this Court ruled —

Sec. 4 of Rule 15 of the Rules of Court requires that notice of motion be served by the movant on all parties concerned at least three (3) days before its hearing. Section 5 of the same Rule provides that the notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion. A motion which does not meet the requirements of Section 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper which the clerk has no right to

receive and the court has no authority to act upon. Service of copy of a motion containing notice of the time and place of hearing of said motion is a mandatory requirement and the failure of the movant to comply with said requirements renders his motion fatally defective. 19

In New Japan Motors, Inc. v. Perucho, 20 defendant filed a motion for reconsideration which did not contain any notice of hearing. In a petition for certiorari, we affirmed the lower court in ruling that a motion for reconsideration that did not contain a notice of hearing was a useless scrap of paper. We held further —

Under Sections 4 and 5 of Rule 15 of the Rules of Court, . . . a motion is required to be accompanied by a notice of hearing which must be served by the applicant on all parties concerned at least three (3) days before the hearing thereof Section 6 of the same rule commands that "(n)o motion shall be acted upon by the Court, without proof of service of the notice thereof . . . ." It is therefore patent that the motion for reconsideration in question is fatally defective for it did not contain any notice of hearing. We have already consistently held in a number of cases that the requirements of Sections 4, 5 and 6 of Rules 15 of the Rules of Court are mandatory and that failure to comply with the same is fatal to movant's cause.

In Sembrano v. Ramirez, 22 we declared that —

(A) motion without notice of hearing is a mere scrap of paper. It does not toll the running of the period of appeal. This requirement of notice of hearing equally applies to a motion for reconsideration. Without such notice, the motion is pro forma. And a pro formamotion for reconsideration does not suspend the running of the period to appeal.

In  In re Almacen, 23 defendant lost his case in the lower court. His counsel then filed a motion for reconsideration but did not notify the adverse counsel of the time and place of hearing of said motion. The Court of Appeals dismissed the motion for the reason that "the motion for reconsideration dated July 5, 1966 does not contain a notice of time and place of hearing thereof and is, therefore a useless piece of paper which did not interrupt the running of the period to appeal, and, consequently, the appeal was perfected out of time." When the case was brought to us, we reminded counsel for the defendant that —

As a law practitioner who was admitted to the bar as far back as 1941, Atty. Almacen knew — or ought to have known — that [for] a motion for reconsideration to stay the running of the period of appeal, the movant must not only serve a copy of the motion upon the adverse party . . . but also notify the adverse party of the time and place of hearing . . . .

Also, in Manila Surety and Fidelity Co., Inc. v. Bath Construction and Company, 24 we ruled —

The written notice referred to evidently is that prescribed for motions in general by Rule 15, Sections 4 and 5 (formerly Rule 26), which provide that such notice shall state the time and place of hearing and shall be served upon all the parties concerned at least three days in advance. And according to Section 6 of the same Rule no motion shall be acted upon by the court without proof of such notice. Indeed, it has been held that in such a case the motion is nothing but a useless piece of paper. The reason is obvious; unless the movant sets the time and place of hearing the court would have no way to determine whether that party agrees to or objects to the motion, and if he objects, to hear him on his objection, since the Rules themselves do not fix any period within [which] he may file his reply or opposition. 25

In fine, the abovecited cases confirm that the requirements laid down in Sec. 5 of Rule 15 of the Rules of Court that the notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion, are mandatory. If not religiously complied with, they render the motion pro forma. As such the motion is a useless piece of paper that will not toll the running of the prescriptive period.

For failing to attach a notice of hearing to the Motion for Reconsideration, petitioner proffers the following excuses: (1) her former counsel's messenger, due to an honest mistake, inadvertently omitted the fourth page of the motion containing the crucial Notice of Hearing; and (2) because of the pressure of work, her former counsel was unable to follow up such motion until the day said counsel requested the setting of a hearing. 26

We are not in the least convinced. First, it is unfair to place the blame for such omission on the messenger. The burden of preparing a complete pleading falls on counsel's shoulders, not on the messenger's. The counsel is ultimately responsible for the acts or omissions of his agents. Hence, the messenger's conduct can neither justify the counsel's mistake nor warrant a departure from the mandate of the aforesaid procedural rules.

Second, it is incredible that the fourth page containing the Notice of Hearing was left behind due to honest mistake. In fact, there was no such page. Petitioner's claim is belied by the following pertinent, portions of the subject Motion for Reconsideration: 27

WHEREFORE, premises considered, it is respectfully prayed that the Honorable Court cause a further REVIEW and RECONSIDERATION of its decision on the above-captioned consolidated cases.

Quezon City for Manila, August 12, 1996.

(Sgd.) ANGELINA ARANDIA-VILLANUEVA

Counsel for Plaintiff-Appellant

39-L T. Morato Avenue, Quezon City

IBP No. 407450 6-26-96

PTR No. 227013 1-5-96 Manila

Copy furnished:

Atty. Arnel Zaragoza Dolendo

Counsel for Defendant

Rm. 408, 413 First United Bldg.

Escolta, Manila

The normal practice is to note, at the end of the pleading, that a copy was furnished to the adverse party. Thus, petitioner's motion ended exactly at the bottom of the third page as evidenced by the "copy-furnished" notation. It is safe to conclude that there was no accidental or excusable neglect in not including a fourth page in this case. In other words, petitioner's counsel simply failed to include a notice of hearing.

Finally, the fact that petitioner's former counsel calendared the motion for hearing for August 23, 1996 28 belies the excuse that an alleged fourth page had been left behind. In the first place, if a notice of hearing had been included in the Motion for Reconsideration, there would have been no need for petitioner to file the Motion to set the time and date of hearing. What is clear is that said counsel filed the latter Motion, only after private respondent had submitted its Motion for Entry of Judgment 29 — with copy furnished petitioner's counsel 30 — on the ground that petitioner's Motion for Reconsideration was a mere scrap of paper that did not stop the period for appeal.

Petitioner pleads for liberal construction of the rule on notice of hearing, citing Tamargo, Galvez and Que. In rebuttal, we adopt by reference the CA's excellent disquisition, cited earlier, on why these cases are inapplicable.

Petitioner further alleges that,  first, the nonadmission of her Motion for Reconsideration would result in a miscarriage of justice, as the main case (ejectment), which was tried under summary procedure, had been unnecessarily prolonged; and, second, the tenant lessee would be occupying the premises without paying rentals. She also relies on People v. Leviste, 31 in which the Court held:

While it is true that any motion that does not comply with the requirements of Rule 15, Rules of Court should not be accepted for filing and, if filed, is not entitled to judicial cognizance, the Supreme Court has likewise held that where rigid application of the rule will result in manifest failure or miscarriage of justice, technicalities may be disregarded in order to resolve the case.

Liberal construction of this rule has been allowed by this Court in the following cases: (1) where a rigid application will result in a manifest failure or miscarriage of justice, 32 especially if a party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein; 33(2) where the interest of substantial justice will be served; 34 (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court; 35 and (4) where the injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. 36 Petitioner has failed to demonstrate that the case at bar falls under any of these exceptions.

Finally, petitioner claims that she will be deprived of property without due process, as private respondent has accumulated P348,800 in unpaid rentals and accrued interests.

We disagree. Petitioner can obtain proper payment of rentals through a motion for execution in the case below. The MTC may have dismissed her ejectment case, but it did not exculpate private respondent from its liabilities. Petitioner is, therefore, not being deprived of her property without due process.

Indeed, there is no miscarriage of justice to speak of. Having failed to observe very elementary rules of procedure which are mandatory, petitioner caused her own predicament. To exculpate her from the compulsory coverage of such rules is to undermine the stability of the judicial process, as the bench and bar will be confounded by such irritating uncertainties as when to obey and when to ignore the Rules. We have to draw the line somewhere. 37

WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. Costs against the petitioner.

SO ORDERED.

Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur.

G.R. No. 150870           December 11, 2002

DRA. HONORATA G. BAYLON, petitioner, vs.FACT-FINDING INTELLIGENCE BUREAU represented by DIRECTOR AGAPITO ROSALES and the OFFICE OF THE OMBUDSMAN, respondents.

D E C I S I O N

CARPIO-MORALES, J.:

By the present petition for review on certiorari, petitioner prays this Court to give due course to her appeal and to ultimately set aside the Office of the Ombudsman’s order for her suspension from public office.

The following facts are not disputed:

Sometime in 1993, Dr. Honorata G. Baylon (petitioner), Head of the Division of Hematology and Transfusion Medicine at the National Kidney and Transplant Institute (NKTI), was designated as Program Manager of the government’s National Voluntary Blood Donation Program (Blood Donation Program) with NKTI as the lead agency in the implementation thereof.

The Blood Donation Program later became a component of the project "STOP D.E.A.T.H (Disasters, Epidemics, and Trauma for Health): Hospitals for Philippines 2000" which was launched on February 18, 1994 by the Department of Health (DOH) headed by the then Secretary Juan M. Flavier (Flavier).1 Petitioner remained at the helm of the Blood Donation Program.2

On February 24, 1994, Flavier publicly disclosed the results of the United States Agency for International Development (USAID)-sponsored study on the safety of the country’s blood banking system which found out that the Philippines’ blood transfusion service failed to adequately meet the demand for safe blood and that the blood sourced from commercial blood banks had a contamination rate of four percent.3 Flavier thus ordered the closure of provincial retail outlets of commercial blood banks as a result of which an acute shortage of transfused blood ensued because of the blood banks’ refusal to sell blood in retaliation to the said closure order.

Flavier accordingly directed the full operation of the Blood Donation Program, which apparently served as the then only viable system from which blood could be sourced.

On March 8 and 17, 1994, the NKTI, through petitioner, issued Requisition and Issue Vouchers4 for the purpose of purchasing blood bags for immediate distribution to DOH hospitals or medical centers where the system of voluntary blood donation would then be put in place. As "Terumo" blood bags were believed to be the finest in the market, the NKTI obtained a quotation therefor dated March 16, 19945 from their exclusive distributor, the FVA EX-IM Trading, Inc. (FVA), as follows:

1. [Blood Bag], Single Capacity = P 72.29 [per piece]

2. Double Capacity = P171.00

3. Triple Capacity = P263.70

Another quotation dated March 29, 19946 was later furnished by FVA reflecting the following reduced prices:

1. Single = P 63.54

2. Double = P150.00

3. Triple = P209.09

Petitioner signified her conformity to the second quotation. The NKTI subsequently purchased "Terumo" blood bags from FVA under the following purchase orders with their corresponding dates, the respective amounts involved in each sale transaction, and the names of the approving authority:7

DatePurchaseOrder No.

Amount Approving Authority

1. April 11, 1994 94-00943 P1,270,800.00 Juan M. Flavier,Jaime Galvez-TanJuan R. Nanagas

2. May 25, 1994 94-00132 P536,025.00 Filoteo A. Alano (recommended byAileen R. Javier)

3. August 12, 1994 94-00147 P1,702,687.65 Juan M. Flavier

4. November 14, 1994 94-00172 P2,209,915.00 Juan M. Flavier

5. December 6, 1994 94-00182 P 506,585.45 Juan M. Flavier

In March 1995, the Commission on Audit (COA) disallowed in post audit the sale transactions entered into by the NKTI with FVA on the ground that the blood bags were purchased without public bidding, contrary to the applicable laws or rules, thereby allegedly resulting

to overpricing.8 The COA found that FVA sold "Terumo" blood bags to the Philippine National Red Cross (PNRC) and to blood banks Our Lady of Fatima and Mother Seaton at prices lower than those at which it sold to the NKTI, leading to a consequent total loss to the government in the amount of P1,964,304.70.

The Auditor of the NKTI accordingly ordered the suspension of purchases of blood bags from FVA and eventually disallowed the payment of blood bags amounting to P6,006,133.54.

A criminal complaint, docketed as OMB-0-97-0242, for violation of Section 3(e) and (g) of Republic Act (R. A.) No. 3019 (The Anti-Graft and Corrupt Practices Act), was thus filed by the Office of the Ombudsman against petitioner, Flavier, then DOH Undersecretaries Dr. Jaime Galvez-Tan and Dr. Juan R. Nañagas, NKTI Executive Director Dr. Filoteo A. Alano, NKTI Deputy Executive Director Dr. Aileen R. Javier, NKTI Property Division Chief Diana Jean F. Prado and NKTI Accounting Division Chief Maribel U. Estrella. At the same time, an administrativecomplaint for gross misconduct was lodged against petitioner and the same respondents except Flavier and Galvez-Tan.

The administrative complaint was docketed as OMB-ADM-0-97-0165, now the subject of the present petition.

Petitioner disclaimed administrative liability. Adopting9 her May 20, 1997 counter-affidavit10 filed in the criminal complaint, petitioner claimed that the acquisition of the blood bags via negotiated purchase came under the exceptions to public bidding as provided for by law, citing the following pertinent provision of Executive Order No. 301 (DECENTRALIZING ACTIONS ON GOVERNMENT NEGOTIATED CONTRACTS, LEASE CONTRACTS AND RECORDS DISPOSAL):

SECTION 1. Guidelines for Negotiated Contracts. – Any provision of law, decree, executive order or other issuances to the contrary notwithstanding, no contract for public services or for furnishing supplies, materials and equipment to the government or any of its branches, agencies or instrumentalities shall be renewed or entered into without public bidding, except under any of the following situations:

x x x

b. Whenever the supplies are to be used in connection with a project or activity which cannot be delayedwithout causing detriment to the public service;

c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms to the government;

x x x

e. In cases where it is apparent that the requisition of the needed supplies through negotiated purchase is most advantageous to the government to be determined by the Department Head concerned;

x x x (Underscoring supplied).

Thus she explained: firstly, the blood bags were used in the Blood Donation Program which had to be implemented immediately to address the scarcity of blood at the time; secondly, FVA was the only exclusive distributor without subdealers of "Terumo" blood bags; and thirdly, negotiated purchase of the blood bags was most advantageous to the government for the prices at which the NKTI obtained them from FVA were the lowest compared to those at which they were acquired by other government hospitals, as the following shows:11

HOSPITALSBLOOD BAGS

Single Double Triple

NKTI P63.54 P150.00 P209.00

Philippine General Hospital P78.00 P185.40 P285.00

Jose Reyes Memorial Medical Center P85.05 - - - - - - – - - - - -

Dr. Jose Fabella Memorial Hospital P85.00 P199.00 - - – – - -

Philippine Children's Medical Center P64.00 - - - - - - P209.09

Philippine Heart Center P78.00 P190.00 - - - - - -

Petitioner submitted certifications12 from various medical establishments attesting to the superior quality and features of "Terumo" blood bags which have made them the most widely used among hospitals and blood banks; the counter-affidavit filed in the same criminal complaint of FVA President Francisco V. Abalos,13 who was subsequently dropped as respondent therein upon his death on January 31, 1998; and Flavier’s December 3, 1999 sworn statement submitted also in the criminal complaint.

In his counter-affidavit, Abalos explained that the lower prices at which the FVA sold blood bags to PNRC, Mother Seaton and Our Lady of Fatima, were meant to aid these blood banks to reduce their operational costs so that they would sell at low prices to their buyers who were mostly the poor, as well as to reduce FVA’s excess inventory then.

In his December 3, 1999 sworn statement, Flavier declared that the negotiated purchase of the blood bags was justified by the conditions obtaining at the time; the NKTI’s transactions with FVA were not tainted with any irregularities; petitioner and the other NKTI officials were responsible for successfully implementing a 100% voluntary blood donation system in ten regional hospitals and medical centers; and that were it not for petitioner’s work as Program Manager of the Blood Donation Program, disastrous consequences would have befallen patients, the DOH, and the Blood Donation Program itself.

By Memorandum Review of June 13, 2000,14 Assistant Ombudsman Abelardo L. Aportadera (Aportadera) recommended the exoneration of the respondents Nañagas and Estrella. Taking note, of the Ombudsman’s finding of probable cause to criminally hale petitioner and company into court, Aportadera recommended, by the same Review Memorandum, that herein petitioner and the rest of her co-respondents be held guilty of Grave Misconduct for which they should be meted a penalty of SIX (6) MONTHS SUSPENSION.

Aportadera’s recommendation was approved by the Ombudsman on June 16, 2000. A motion for reconsideration of this June 16, 2000 – approved Memorandum Review having been denied by the Memorandum Review of July 19, 2000 which the Ombudsman approved on July 28, 2000,15 petitioner filed on October 4, 2000 a petition with this Court for certiorari and prohibition with prayer for a temporary restraining order (TRO) and/or writ of preliminary injunction, docketed as G. R. No. 145000, seeking the nullification of the Ombudsman’s above-said Memorandum Reviews.

By Resolution of October 16, 2000, this Court dismissed the petition for having been brought to the wrong forum in light of the ruling in Fabian v. Desierto16 that appeals from the decision of the Ombudsman should be made to the Court of Appeals by a petition for review under Rule 43 of the 1997 Rules of Civil Procedure. Unlike the Fabian, this Court did not order the transfer of the petition to the Court of Appeals for proper disposition pursuant to this Court’s Resolution in A. M. No. 99-2-02-SC dated February 9, 1999 declaring that any appeal filed with this Court after March 15, 1999 from a decision, resolution or order of the Ombudsman in an administrative case would no longer be referred to the Court of Appeals. Petitioner’s Motion for Reconsideration of this Court’s October 16, 2000 Resolution was denied on January 22, 2001.

Petitioner thus elevated the Ombudsman’s Memorandum Reviews to the Court of Appeals by a petition for review filed on April 18, 2001, docketed as CA-G. R. SP No. 64332. By Resolution of May 2, 2001,17 however, the Court of Appeals dismissed the petition for having been filed beyond the fifteen-day reglementary period, reckoned from petitioner’s receipt of the Ombudsman’s second Memorandum Review on August 7, 2000.

Petitioner filed a Motion for Reconsideration of the May 2, 2001 Resolution of the Court of Appeals. Pending resolution thereof or on July 6, 2001, petitioner filed a motion for leave to submit a copy of the COA Decision No. 2001-11 dated June 21 200118 which lifted the audit disallowance of the payments made for the purchases by the NKTI of the "Terumo" blood bags from FVA. In said decision, the COA held that the purchase of blood bags without public bidding was not violative of the law, was not disadvantageous to the government, and did not accord undue preference to FVA. In a Resolution of November 21, 2001,19 the Court of Appeals denied petitioner’s Motion for Reconsideration.

Hence, the present petition for review on certiorari with an application for a TRO and/or an injunctive writ which was filed on December 21, 2001. Public respondents filed their Comment,20 to which petitioner filed her Reply.21

Petitioner imputes to the Court of Appeals the commission of grave error in dismissing her petition for review on a mere technicality. She invokes considerations of substantial justice for this Court to give her petition due course and essentially prays that the Resolutions of the Court of Appeals be set aside and that the Memorandum Reviews of the Ombudsman be nullified.

During the pendency of the present petition or on March 14, 2002, petitioner filed a motion22 to grant her leave to file a Manifestation informing that this Court rendered on December 14, 2001 a decision23 in G. R. No. 142738, "Dr. Honorata Baylon v. Office of the Ombudsman and Sandiganbayan," reversing and setting aside the Ombudsman’s February 28, 2000 Resolution finding probable cause to criminally prosecute her before the Sandiganbayan arising from the same acts subject of the Ombudsman’s Memorandum Reviews finding her administratively liable, and that the said decision "be considered persuasive to the instant proceeding." At the same time, petitioner filed the Manifestation.24

By Resolution of April 10, 2002, this Court Resolved to

(a) GRANT the motion of petitioner to admit the copy of the court’s decision in G. R. No. 142738 through a manifestation as said decision of December 14, 2001 should be considered persuasive to the instant proceeding; and

(b) NOTE the said manifestation.

Petitioner submits that the dismissal by the Court of Appeals of her petition for review by mere technicality would cause a miscarriage of justice for, so she contends, she has raised meritorious arguments, adduced evidence, and presented special circumstances proving her innocence of the charge of grave misconduct.

This Court finds that the Court of Appeals correctly dismissed petitioner’s petition for review for having been filed beyond the reglementary period.

The correctness of the Court of Appeals’ dismissal of petitioner’s petition for review notwithstanding, this Court cannot write finis to the case at bar by the strict application of the rules of procedure governing appeals. For judicial cases do not come and go through the portals of a court of law by the mere mandate of technicalities.

After going over all the pleadings, evidence, and all other documents bearing on this case, this Court has resolved to spare the present petition from dismissal to which it should have been consigned as a matter of procedure.

The allowance of the filing of appeals or actions even when everything is lost due to non-compliance with rules or technicalities is not a novel phenomenon for this Court. In the case of Cortes v. Court of Appeals,25 counsel for a party in a case before the trial court failed to withdraw his appearance as such when he was appointed as judge of the Dumaguete Regional Trial Court in January 1983. Thus, after the lower court rendered a decision on February 16, 1983, the same was served on February 28, 1983 upon said counsel, who was then in his judicial station, at his Cebu City address. Having learned of the decision only on March 8, 1983, he immediately informed his client who learned of the adverse judgment a few days later after being out on official business. On March 22, 1983, the concerned party’s new counsel accordingly filed a notice of appeal which the lower court denied due course for having been filed beyond the 15-day reglementary period. This Court ruled that the seven-day delay did not warrant the outright dismissal of the appeal, taking into account the peculiar circumstances of the case and the appeal’s ostensible merit.

Likewise, in Legasto v. Court of Appeals,26 a decision in an action for ejectment was rendered against therein private respondents by the Metropolitan Trial Court and the Regional Trial Court. Appeal via a petition for review was subsequently filed with the Court of Appeals which initially dismissed the petition for having been filed two days beyond the reglementary period. On motion for reconsideration, however, the Court of Appeals gave due course to the appeal after accepting counsel’s explanation that the making of the petition was delayed by brownouts. Declaring that a delay in the filing of an appeal under exceptional circumstances may be excused on grounds of substantial justice and equity, this Court affirmed the Court of Appeals decision to give due course to the belated appeal as it raised an important legal question bearing upon many similarly situated tenants and landlords in the country.

The same failure to file an appeal on time was excused in Philippine National Bank v. Court of Appeals27 where this Court allowed an appeal filed three days late in the higher interest of justice, as barring the said appeal would be inequitable and unjust in light of certain circumstances therein.

The foregoing jurisprudence and similar other cases indeed constitute a testament to what C. Viuda de Ordoveza v. Raymundo28 described as ". . . the power of the court to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require it." Ginete v. Court of Appeals29 specifically laid down the range of reasons which may provide justifications for a court to resist a strict adherence to procedure, enumerating, thus, the following elements for an appeal to be given due course by a suspension of the enforcement of procedural rules: (1) matters of life, liberty, honor or property; (2) counsel’s negligence without any participatory negligence on the part of the client; (3) the existence of special or compelling circumstances; (4) the merits of the case; (5) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (6) a lack of any showing that the review sought is merely frivolous and dilatory; and (7) the other party will not be unjustly prejudiced thereby.

We find attendant in the case at bar transcendental considerations which outweigh rules of procedure thereby providing justification for the suspension of their application. Petitioner’s evidence and arguments in support of her claim of innocence of the charge of grave misconduct have indeed cast doubt on the veracity of the Ombudsman’s factual conclusions in the subject administrative case against her. We cannot thus simply brush aside petitioner’s protestations of lack of administrative culpability for the sake of sticking to technicalities when the merits of her cause are crying out for proper judicial determination.

The tardiness of the appeal of petitioner before the Court of Appeals undoubtedly stemmed from her counsel’s faux pas in the remedy pursued to assail the Ombudsman’s questioned Memorandum Reviews. In the normal course of things, petitioner would have been covered by the general rule that a client is bound by the negligence or mistakes of his counsel. Yet, the patent merits of petitioner’s cause for the nullification of her suspension from public office nag the Court towards the realization that to deny her the instant petition now based merely on the fiction that the counsel’s negligence binds the client is to unjustly seal petitioner’s fate without the benefit of a review of the correctness and justness of her imposed administrative liability. Hers, thus, is a case of an extremely different kind; the exception to the rule on the effects of the counsel’s mistake or negligence, for the application of the rule would result in serious injustice30 to petitioner. Especially in this case where she had nothing to do with her counsel’s mistake and negligence, thus clearly falling within the ambit of the reasons provided for by Ginete for the relaxation of the rules.

This Court takes note of special circumstances relative to the case at bar. The Decision of this Court in G. R. No. 142738 categorically declared the lack of probable cause to indict petitioner for the same acts constitutive of the administrative charge against her, hence, it ordered the Sandiganbayan to dismiss the criminal case against petitioner and her co-accused. In the same vein, the COA Decision No. 2001-11 found no irregularity in the purchases by the NKTI of the blood bags from FVA and thus it lifted its previous disallowance of the payments to said purchases. Such determinations in favor of petitioner by other fora, independent they may be from the administrative action against her, serve as added reasons to warrant the taking of a hard look at the Ombudsman’s Memorandum Reviews.

Suspension from public office is a serious incident that definitely blemishes a person’s record in government service. It is an injury to one’s reputation and honor which produces irreversible effects on one’s career and private life. If only to assure the judicial mind that no injustice is allowed to take place due to a blind adherence to rules of procedure, the dismissal on technicality of petitioner’s action, which is aimed at establishing not just her innocence but the truth, cannot stand. That the Ombudsman’s Memorandum Reviews may have attained finality due to petitioner’s belated appeal therefrom to the Court of Appeals does not preclude a modification or an alteration thereof, for if the execution of a decision becomes impossible or unjust, it may be modified or altered to harmonize it with justice and the facts.31

On the suspension of the enforcement of procedural rules to give way to matters of greater value, this Court could not have more eloquently defined its stance, thus:

In the interest of substantial justice, procedural rules of the most mandatory character in terms of compliance, may be relaxed. In other words, if strict adherence to the letter of the law would result in absurdity and manifest injustice or where the merit of a party’s cause is apparent and outweighs consideration of non-compliance with certain formal requirements, procedural rules should definitely be liberally construed. A party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on mere technicalities.32 x x x

Prescinding from the foregoing, the Court resolved to give due course to the present petition and set aside the challenged Resolutions of May 2, 2001 and November 21, 2001 of the Court of Appeals. We will not, however, remand the case to the appellate court, a remand not being necessary where, as in this case, We are in a position to resolve the dispute based on the records before it and the ends of justice would not be subserved thereby.33

While factual findings of administrative and quasi-judicial agencies are generally accorded not only respect but at times finality,34 this holds true only when they are supported by substantial evidence.

The Ombudsman’s finding in its questioned Memorandum Reviews that petitioner is guilty of grave misconduct was anchored principally on the fact that FVA sold the same "Terumo" blood bags to PNRC and the Mother Seaton and Our Lady of Fatima blood banks at lower prices. Such fact, however, cannot be regarded substantial evidence proving that petitioner is guilty of grave misconduct.

Petitioner’s countervailing evidence shows that the acquisitions of blood bags for government use were negotiated purchases which were justified by proven reasons for their lawful execution under Executive Order No. 30135 even without the required public bidding. It is an undisputed fact that the blood bags were utilized for the Blood Donation Program the immediate implementation of which program

was then necessitated by circumstances of public notice so that the urgency for the blood bags’ acquisition warranted negotiated purchase instead of by public bidding. It is undisputed that FVA was then the sole exclusive distributor of "Terumo" blood bags, thus providing another reason for the purchases to be exempted from public bidding.

Petitioner’s evidence too shows that the negotiated purchase was not disadvantageous to the government, considering, among other factors, the quality of the blood bags and the price at which they were purchased as compared to those purchased by other government hospitals, and the time element.

The Ombudsman’s conclusion that petitioner and her co-respondents did not negotiate with FVA to obtain the best possible terms and conditions of purchase finds no support in the evidence on record. On the contrary, as reflected above, the NKTI through petitioner sought two quotations from FVA for the blood bags with the second quotation offering lower prices.

In grave misconduct, the elements of corruption, clear intent to violate the law or flagrant disregard of established rule must be manifest.36 Petitioner’s actuations in the procurement of the blood bags were clearly antithetical to what constitutes grave misconduct.

What appears from the questioned Memorandum Reviews of the Ombudsman is that they merely relied on the singular circumstance that certain medical institutions were allowed to purchase the blood bags at lower prices, without taking into account petitioner’s countervailing evidence.

While substantial evidence, which is more than a mere scintilla but is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,37 suffices to hold one administratively liable, the substantial evidence rule does not authorize any finding to be made just as long as there is any evidence to support it; it does not excuse administrative agencies from taking into account countervailing evidence which fairly detracts from the evidence supporting a finding.38 The evidence in support of the Ombudsman’s findings does not amount to substantial evidence.

WHEREFORE, the petition at bar is hereby GRANTED. The assailed May 2, 2001 and November 21, 2001 Resolutions of the Court of Appeals, as well as the June 16, 2000 and July 28, 2000-approved Memorandum Reviews of the Ombudsman, are hereby SET ASIDE. The respondent is hereby ABSOLVED from any administrative liability in connection with the purchases in question.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Callejo, Sr., and Azcuna, JJ., concur.Puno, Vitug, Mendoza, Panganiban, and Quisumbing, JJ., in the result.Corona, J., on official leave.

G.R. No. 149576 August 8, 2006

REPUBLIC OF THE PHILIPPINES, represented by the Land Registration Authority, Petitioner,vs.KENRICK DEVELOPMENT CORPORATION, Respondent.

D E C I S I O N

CORONA, J.:

The Republic of the Philippines assails the May 31, 2001 decision 1 and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 in this petition for review under Rule 45 of the Rules of Court.

This case stemmed from the construction by respondent Kenrick Development Corporation of a concrete perimeter fence around some parcels of land located behind the Civil Aviation Training Center of the Air Transportation Office (ATO) in 1996. As a result, the ATO was dispossessed of some 30,228 square meters of prime land. Respondent justified its action with a claim of ownership over the property. It presented Transfer Certificate of Title (TCT) Nos. 135604, 135605 and 135606 issued in its name and which allegedly originated from TCT No. 17508 registered in the name of one Alfonso Concepcion.

ATO verified the authenticity of respondent’s titles with the Land Registration Authority (LRA). On May 17, 1996, Atty. Jose Loriega, head of the Land Title Verification Task Force of the LRA, submitted his report. The Registrar of Deeds of Pasay City had no record of TCT No. 17508 and its ascendant title, TCT No. 5450. The land allegedly covered by respondent’s titles was also found to be within Villamor Air Base (headquarters of the Philippine Air Force) in Pasay City.

By virtue of the report, the Office of the Solicitor General (OSG), on September 3, 1996, filed a complaint for revocation, annulment and cancellation of certificates of title in behalf of the Republic of the Philippines (as represented by the LRA) against respondent and Alfonso Concepcion. It was raffled to Branch 114 of the Regional Trial Court of Pasay City where it was docketed as Civil Case No. 96-1144.

On December 5, 1996, respondent filed its answer which was purportedly signed by Atty. Onofre Garlitos, Jr. as counsel for respondent.

Since Alfonso Concepcion could not be located and served with summons, the trial court ordered the issuance of an alias summons by publication against him on February 19, 1997.

The case was thereafter punctuated by various incidents relative to modes of discovery, pre-trial, postponements or continuances, motions to dismiss, motions to declare defendants in default and other procedural matters.

During the pendency of the case, the Senate Blue Ribbon Committee and Committee on Justice and Human Rights conducted a hearing in aid of legislation on the matter of land registration and titling. In particular, the legislative investigation looked into the issuance of fake titles and focused on how respondent was able to acquire TCT Nos. 135604, 135605 and 135606.

During the congressional hearing held on November 26, 1998, one of those summoned was Atty. Garlitos, respondent’s former counsel. He testified that he prepared respondent’s answer and transmitted an unsigned draft to respondent’s president, Mr. Victor Ong. The signature appearing above his name was not his. He authorized no one to sign in his behalf either. And he did not know who finally signed it.

With Atty. Garlitos’ revelation, the Republic promptly filed an urgent motion on December 3, 1998 to declare respondent in default, 2 predicated on its failure to file a valid answer. The Republic argued that, since the person who signed the answer was neither authorized by Atty. Garlitos nor even known to him, the answer was effectively an unsigned pleading. Pursuant to Section 3, Rule 7 of the Rules of Court, 3 it was a mere scrap of paper and produced no legal effect.

On February 19, 1999, the trial court issued a resolution granting the Republic’s motion. 4 It found respondent’s answer to be sham and false and intended to defeat the purpose of the rules. The trial court ordered the answer stricken from the records, declared respondent in default and allowed the Republic to present its evidence ex parte.

The Republic presented its evidence ex parte, after which it rested its case and formally offered its evidence.

Meanwhile, respondent sought reconsideration of the February 19, 1999 resolution but the trial court denied it.

Aggrieved, respondent elevated the matter to the Court of Appeals via a petition for certiorari 5 seeking to set aside the February 19, 1999 resolution of the trial court. Respondent contended that the trial court erred in declaring it in default for failure to file a valid and timely answer.

On May 31, 2001, the Court of Appeals rendered the assailed decision. It found Atty. Garlitos’ statements in the legislative hearing to be unreliable since they were not subjected to cross-examination. The appellate court also scrutinized Atty. Garlitos’ acts after the filing of the answer 6 and concluded that he assented to the signing of the answer by somebody in his stead. This supposedly cured whatever defect the answer may have had. Hence, the appellate court granted respondent’s petition for certiorari. It directed the lifting of the order of default against respondent and ordered the trial court to proceed to trial with dispatch. The Republic moved for reconsideration but it was denied. Thus, this petition.

Did the Court of Appeals err in reversing the trial court’s order which declared respondent in default for its failure to file a valid answer? Yes, it did.

A party may, by his words or conduct, voluntarily adopt or ratify another’s statement. 7 Where it appears that a party clearly and unambiguously assented to or adopted the statements of another, evidence of those statements is admissible against him. 8 This is the essence of the principle of adoptive admission.

An adoptive admission is a party’s reaction to a statement or action by another person when it is reasonable to treat the party’s reaction as an admission of something stated or implied by the other person. 9 By adoptive admission, a third person’s statement becomes the admission of the party embracing or espousing it. Adoptive admission may occur when a party:

(a) expressly agrees to or concurs in an oral statement made by another; 10

(b) hears a statement and later on essentially repeats it; 11

(c) utters an acceptance or builds upon the assertion of another; 12

(d) replies by way of rebuttal to some specific points raised by another but ignores further points which he or she has heard the other make 13 or

(e) reads and signs a written statement made by another. 14

Here, respondent accepted the pronouncements of Atty. Garlitos and built its case on them. At no instance did it ever deny or contradict its former counsel’s statements. It went to great lengths to explain Atty. Garlitos’ testimony as well as its implications, as follows:

1. While Atty. Garlitos denied signing the answer, the fact was that the answer was signed. Hence, the pleading could not be considered invalid for being an unsigned pleading. The fact that the person who signed it was neither known to Atty. Garlitos nor specifically authorized by him was immaterial. The important thing was that the answer bore a signature.

2. While the Rules of Court requires that a pleading must be signed by the party or his counsel, it does not prohibit a counsel from giving a general authority for any person to sign the answer for him which was what Atty. Garlitos did. The person who actually signed the pleading was of no moment as long as counsel knew that it would be signed by another. This was similar to addressing an authorization letter "to whom it may concern" such that any person could act on it even if he or she was not known beforehand.

3. Atty. Garlitos testified that he prepared the answer; he never disowned its contents and he resumed acting as counsel for respondent subsequent to its filing. These circumstances show that Atty. Garlitos conformed to or ratified the signing of the answer by another.

Respondent repeated these statements of Atty. Garlitos in its motion for reconsideration of the trial court’s February 19, 1999 resolution. And again in the petition it filed in the Court of Appeals as well as in the comment15 and memorandum it submitted to this Court.

Evidently, respondent completely adopted Atty. Garlitos’ statements as its own. Respondent’s adoptive admission constituted a judicial admission which was conclusive on it.

Contrary to respondent’s position, a signed pleading is one that is signed either by the party himself or his counsel. Section 3, Rule 7 is clear on this matter. It requires that a pleading must be signed by the party or counsel representing him.

Therefore, only the signature of either the party himself or his counsel operates to validly convert a pleading from one that is unsigned to one that is signed.

Counsel’s authority and duty to sign a pleading are personal to him. He may not delegate it to just any person.

The signature of counsel constitutes an assurance by him that he has read the pleading; that, to the best of his knowledge, information and belief, there is a good ground to support it; and that it is not interposed for delay. 16Under the Rules of Court, it is counsel alone, by affixing his signature, who can certify to these matters.

The preparation and signing of a pleading constitute legal work involving practice of law which is reserved exclusively for the members of the legal profession. Counsel may delegate the signing of a pleading to another lawyer 17 but cannot do so

in favor of one who is not. The Code of Professional Responsibility provides:

Rule 9.01 ― A lawyer shall not delegate to any unqualified person the performance of any task which by law may only be performed by a member of the Bar in good standing.

Moreover, a signature by agents of a lawyer amounts to signing by unqualified persons, 18 something the law strongly proscribes.

Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to just anyone was void. Any act taken pursuant to that authority was likewise void. There was no way it could have been cured or ratified by Atty. Garlitos’ subsequent acts.

Moreover, the transcript of the November 26, 1998 Senate hearing shows that Atty. Garlitos consented to the signing of the answer by another "as long as it conformed to his draft." We give no value whatsoever to such self-serving statement.

No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone to sign the answer. The trial court correctly ruled that respondent’s answer was invalid and of no legal effect as it was an unsigned pleading. Respondent was properly declared in default and the Republic was rightly allowed to present evidence ex parte.

Respondent insists on the liberal application of the rules. It maintains that even if it were true that its answer was supposedly an unsigned pleading, the defect was a mere technicality that could be set aside.

Procedural requirements which have often been disparagingly labeled as mere technicalities have their own validraison d’ etre in the orderly administration of justice. To summarily brush them aside may result in arbitrariness and injustice. 19

The Court’s pronouncement in Garbo v. Court of Appeals 20 is relevant:

Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts and litigants alike are thus [enjoined] to abide strictly by the rules. And while the Court, in some instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion for erring litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.

Like all rules, procedural rules should be followed except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the prescribed procedure. 21 In this case, respondent failed to show any persuasive reason why it should be exempted from strictly abiding by the rules.

As a final note, the Court cannot close its eyes to the acts committed by Atty. Garlitos in violation of the ethics of the legal profession. Thus, he should be made to account for his possible misconduct.

WHEREFORE, the petition is hereby GRANTED. The May 31, 2001 decision and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 are REVERSED and SET ASIDE and the February 19, 1999 resolution of the Regional Trial Court of Pasay City, Branch 114 declaring respondent in default is herebyREINSTATED.

Let a copy of this decision be furnished the Commission on Bar Discipline of the Integrated Bar of the Philippines for the commencement of disbarment proceedings against Atty. Onofre Garlitos, Jr. for his possible unprofessional conduct not befitting his position as an officer of the court.

SO ORDERED.

RENATO C. CORONAAssociate Justice

G.R. No. 198357               December 10, 2012

BUILDING CARE CORPORATION / LEOPARD SECURITY & INVESTIGATION AGENCY and/or RUPERTO PROTACIO, Petitioners, vs.MYRNA MACARAEG, Respondent.

D E C I S I O N

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision1of the Court of Appeals (CA) promulgated on March 24, 2011, and its Resolution2 dated August 19, 2011, denying petitioner's Motion for Reconsideration be reversed and set aside.

Petitioners are in the business of providing security services to their clients. They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond. Conciliation and mediation proceedings failed, so the parties were ordered to submit their respective position papers.3

Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and this compelled her to file the complaint for illegal dismissal.4

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post as requested by the client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job. Petitioners allegedly directed respondent to explain why she committed such infractions, but respondent failed to heed such order. Respondent was nevertheless temporarily assigned to Bayview Park Hotel from March 9-13, 2008, but she also failed to meet said client's standards and her posting thereat was not extended.5

Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security Agencies and Guard Supervision Division on June 18, 2008, but she did not attend the conference hearings for said case. Petitioners brought to the conference hearings a new assignment order detailing respondent at the Ateneo de Manila University but, due to her absence, petitioners failed to personally serve respondent said assignment order. Petitioners then sent respondent a letter ordering her to report to headquarters for work assignment, but respondent did not comply with said order. Instead, respondent filed a complaint for illegal dismissal with the Labor Arbiter.6

On May 13, 2009, the Labor Arbiter rendered a Decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby made dismissing the charge of illegal dismissal as wanting in merit but, as explained above, ordering the Respondents Leopard Security and Investigation Agency and Rupert Protacio to pay complainant a financial assistance in the amount of P5,000.00.

Other claims are DISMISSED for lack of merit.

SO ORDERED.7

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed out of time, thereby declaring that the Labor Arbiter's Decision had become final and executory on June 16, 2009.8

Respondent elevated the case to the CA via a petition for certiorari, and on March 24, 2011, the CA promulgated its Decision, the dispositive portion of which reads as follows:

WHEREFORE, the petition for certiorari is GRANTED. The Decision dated October 23, 2009 and Resolution dated March 2, 2010 rendered by public respondent in NLRC LAC No. 07-001892-09 (NLRC Case No. NCR-09-12628-08) are REVERSED and SET ASIDE, and in lieu thereof, a new judgment is ENTERED declaring petitioner to have been illegally dismissed and DIRECTING private respondents to reinstate petitioner without loss of seniority rights, benefits and privileges; and to pay her backwages and other monetary benefits during the period of her illegal dismissal up to actual reinstatement.

Public respondent NLRC is DIRECTED to conduct further proceedings, for the sole purpose of determining the amount of private respondent's monetary liabilities in accordance with this decision.

SO ORDERED.9

Petitioners' motion for reconsideration of the aforequoted Decision was denied per Resolution dated August 19, 2011. Hence, the present petition, where the main issue for resolution is whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time.

The Court cannot sustain the CA's Decision.

It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules, must remain as the exception to the well-settled principle that rules must be complied with for the orderly administration of justice. In Marohomsalic v. Cole,10 the Court stated:

While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances. While litigation is not a game of technicalities, every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.11

The later case of Daikoku Electronics Phils., Inc. v. Raza,12 further explained that:

To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of substantial justice. x x x The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse. x x x

We must stress that the bare invocation of "the interest of substantial justice" line is not some magic want that will automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled, let alone dismissed simply because their non-observance may have resulted in prejudice to a party's substantial rights. Utter disregard of the rules cannot be justly rationalized by harping on the policy of liberal construction.13

In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are, the importance of the issue raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should be "afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities,"14 considering that the belated filing of respondent's appeal before the NLRC was the fault of respondent's former counsel. Note, however, that neither respondent nor her former counsel gave any explanation or reason citing extraordinary circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss in following up her case with said lawyer.

It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this rule would bring about never-ending suits, so long as lawyers could allege their own fault or negligence to support the client’s case and obtain remedies and reliefs already lost by the operation of law.15 The only exception would be, where the lawyer's gross negligence would result in the grave injustice of depriving his client of the due process of law.16 In this case, there was no such deprivation of due process. Respondent was able to fully present and argue her case before the Labor Arbiter. She was accorded the opportunity to be heard. Her failure to appeal the Labor Arbiter's Decision cannot, therefore, be deemed as a deprivation of her right to due process. In Heirs of Teofilo Gaudiano v. Benemerito,17 the Court ruled, thus:

The perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory. The limitation on the period of appeal is not without reason. They must be strictly followed as they are considered indispensable to forestall or avoid unreasonable delays in the administration of justice, to ensure an orderly discharge of judicial business, and to put an end to controversies. x x x

x x x x

The right to appeal is not a natural right or part of due process; it is merely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law. Thus, one who seeks to avail of the right to appeal must strictly comply with the requirements of the rules, and failure to do so leads to the loss of the right to appeal."18

In Ocampo v. Court of Appeals (Former Second Division),19 the Court declared that:

x x x we cannot condone the practice of parties who, either by their own or their counsel's inadvertence, have allowed a judgment to become final and executory and, after the same has become immutable, seek iniquitous ways to assail it. The finality of a decision is a jurisdictional event which cannot be made to depend on the convenience of the parties.20

Clearly, allowing an appeal, even if belatedly filed, should never be taken lightly.1âwphi1 The judgment attains finality by the lapse of the period for taking an appeal without such appeal or motion for reconsideration being filed.21 In Ocampo v. Court of Appeals (Former Second Division),22 the Court reiterated the basic rule that "when a party to an original action fails to question an adverse judgment or decision by not filing the proper remedy within the period prescribed by law, he loses the right to do so, and the judgment or decision, as to him, becomes final and binding."23 The Decision of the Labor Arbiter, therefore, became final and executory as to respondent when she failed to file a timely appeal therefrom. The importance of the concept of finality of judgment cannot be gainsaid. As elucidated in Pasiona, Jr. v. Court of Appeals,24 to wit:

The Court re-emphasizes the doctrine of finality of judgment. In Alcantara v. Ponce, the Court, citing its much earlier ruling in Arnedo v. Llorente, stressed the importance of said doctrine, to wit:

x x x controlling and irresistible reasons of public policy and of sound practice in the courts demand that at the risk of occasional error, judgments of courts determining controversies submitted to them should become final at some definite time fixed by law, or by a rule of practice recognized by law, so as to be thereafter beyond the control even of the court which rendered them for the purpose of correcting errors of fact or of law, into which, in the opinion of the court it may have fallen. The very purpose for which the courts are organized is to put an end to controversy, to decide the questions submitted to the litigants, and to determine the respective rights of the parties. With the full knowledge that courts are not infallible, the litigants submit their respective claims for judgment, and they have a right at some time or other to have final judgment on which they can rely as a final disposition of the issue submitted, and to know that there is an end to the litigation.

x x x x

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the case is also an essential part of public policy and the orderly administration of justice. Hence, such right is just as weighty or equally important as the right of the losing party to appeal or seek reconsideration within the prescribed period.25

When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment. They had the right to fully rely on the immutability of said Decision. In Sofio v. Valenzuela,26 it was amply stressed that:

The Court will not override the finality and immutability of a judgment based only on the negligence of a party’s counsel in timely taking all the proper recourses from the judgment. To justify an override, the counsel’s negligence must not only be gross but must also be shown to have deprived the party the right to due process.

In sum, the Court cannot countenance relaxation of the rules absent the showing of extraordinary circumstances to justify the same. In this case, no compelling reasons can be found to convince this Court that the CA acted correctly by according respondent such liberality.

IN VIEW OF THE FOREGOING, the Petition is GRANTED. The Decision of the Court of Appeals dated March 24, 2011, and its Resolution dated August 19, 2011 in CA-G.R. SP No. 114822 are hereby SET ASIDE, and the Decision of the National Labor Relations Commission in NLRC-LAC No. 07-001892-09 (NLRC Case No. NCR-09-12628-08), ruling that the Decision of the Labor Arbiter has become final and executory, is REINSTATED.

SO ORDERED.

DIOSDADO M. PERALTAAssociate Justice

G.R. No. 183965               September 18, 2009

JOANIE SURPOSA UY, Petitioner, vs.JOSE NGO CHUA, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review under Rule 45 of the Rules of Court assailing the Resolution dated 25 June 2008 of the Regional Trial Court (RTC) of Cebu City, Branch 24, which granted the demurrer to evidence of respondent Jose Ngo Chua, resulting in the dismissal of Special Proceeding No. 12562-CEB.

Petitioner Joanie Surposa Uy filed on 27 October 2003 before the RTC a Petition1 for the issuance of a decree of illegitimate filiation against respondent. The Complaint was docketed as Special Proceeding No. 12562-CEB, assigned to RTC-Branch 24.

Petitioner alleged in her Complaint that respondent, who was then married, had an illicit relationship with Irene Surposa (Irene). Respondent and Irene had two children, namely, petitioner and her brother, Allan. Respondent attended to Irene when the latter was giving birth to petitioner on 27 April 1959, and instructed that petitioner’s birth certificate be filled out with the following names: "ALFREDO F. SURPOSA" as father and "IRENE DUCAY" as mother. Actually, Alfredo F. Surposa was the name of Irene’s father, and Ducay was the maiden surname of Irene’s mother. Respondent financially supported petitioner and Allan. Respondent had consistently and regularly given petitioner allowances before she got married. He also provided her with employment. When petitioner was still in high school, respondent required her to work at the Cebu Liberty Lumber, a firm owned by his family. She was later on able to work at the Gaisano- Borromeo Branch through respondent’s efforts. Petitioner and Allan were introduced to each other and became known in the Chinese community as respondent’s illegitimate children. During petitioner’s wedding, respondent sent his brother Catalino Chua (Catalino) as his representative, and it was the latter who acted as father of the bride. Respondent’s relatives even attended the baptism of petitioner’s daughter.2

In his Answer3 to the Complaint, filed on 9 December 2003, respondent denied that he had an illicit relationship with Irene, and that petitioner was his daughter.4 Hearings then ensued during which petitioner testified that respondent was the only father she knew; that he took care of all her needs until she finished her college education; and that he came to visit her on special family occasions. She also presented documentary evidence to prove her claim of illegitimate filiation. Subsequently, on 27 March 2008, respondent filed a Demurrer to Evidence5 on the ground that the Decision dated 21 February 2000 of RTC-Branch 9 in Special Proceeding No. 8830-CEB had already been barred by res judicata in Special Proceeding No. 12562-CEB before RTC-Branch 24.

It turned out that prior to instituting Special Proceeding No. 12562-CEB on 27 October 2003, petitioner had already filed a similar Petition for the issuance of a decree of illegitimate affiliation against respondent. It was docketed as Special Proceeding No. 8830-CEB, assigned to RTC-Branch 9. Petitioner and respondent eventually entered into a Compromise Agreement in Special Proceeding No. 8830-CEB, which was approved by RTC-Branch 9 in a Decision6 dated 21 February 2000. The full contents of said Decision reads:

Under consideration is a Compromise Agreement filed by the parties on February 18, 2000, praying that judgment be rendered in accordance therewith, the terms and conditions of which follows:

"1. Petitioner JOANIE SURPOSA UY declares, admits and acknowledges that there is no blood relationship or filiation between petitioner and her brother Allan on one hand and [herein respondent] JOSE NGO CHUA on the other. This declaration, admission or acknowledgement is concurred with petitioner’s brother Allan, who although not a party to the case, hereby affixes his signature to this pleading and also abides by the declaration herein.

2. As a gesture of goodwill and by way of settling petitioner and her brother’s (Allan) civil, monetary and similar claims but without admitting any liability, [respondent] JOSE NGO CHUA hereby binds himself to pay the petitioner the sum of TWO MILLION PESOS (P2,000,000.00) and another TWO MILLION PESOS (P2,000,000.00) to her brother, ALLAN SURPOSA. Petitioner and her brother hereby acknowledge to have received in full the said compromise amount.

3. Petitioner and her brother (Allan) hereby declare that they have absolutely no more claims, causes of action or demands against [respondent] JOSE NGO CHUA, his heirs, successors and assigns and/or against the estate of Catalino Chua, his heirs, successors and assigns and/or against all corporations, companies or business enterprises including Cebu Liberty Lumber and Joe Lino Realty Investment and Development Corporation where defendant JOSE NGO CHUA or CATALINO NGO CHUA may have interest or participation.

4. [Respondent] JOSE NGO CHUA hereby waives all counterclaim or counter-demand with respect to the subject matter of the present petition.

5. Pursuant to the foregoing, petitioner hereby asks for a judgment for the permanent dismissal with prejudice of the captioned petition. [Respondent] also asks for a judgment permanently dismissing with prejudice his counterclaim."

Finding the said compromise agreement to be in order, the Court hereby approves the same. Judgment is rendered in accordance with the provisions of the compromise agreement. The parties are enjoined to comply with their respective undertakings embodied in the agreement.7

With no appeal having been filed therefrom, the 21 February 2000 Decision of RTC-Branch 9 in Special Proceeding 8830-CEB was declared final and executory.

Petitioner filed on 15 April 2008 her Opposition8 to respondent’s Demurrer to Evidence in Special Proceeding No. 12562-CEB. Thereafter, RTC-Branch 24 issued its now assailed Resolution dated 25 June 2008 in Special Proceeding No. 12562-CEB, granting respondent’s Demurrer.

RTC-Branch 24 summarized the arguments of respondent and petitioner in the Demurrer and Opposition, respectively, as follows:

This is to resolve the issues put across in the Demurrer to the Evidence submitted to this Court; the Opposition thereto; the Comment on the Opposition and the Rejoinder to the Comment.

x x x x

1. The instant case is barred by the principle of res judicata because there was a judgment entered based on the Compromise Agreement approved by this multiple-sala Court, branch 09, on the same issues and between the same parties.

2. That such decision of Branch 09, having attained finality, is beyond review, reversal or alteration by another Regional Trial Court and not even the Supreme Court, no matter how erroneous.

3. Judicial Admissions or admission in petitioner’s pleadings to the effect that there is no blood relationship between petitioner and respondent, which is a declaration against interest, are conclusive on her and she should not be permitted to falsify.

4. That the Certificate of Live Birth showing that petitioner’s father is Alfredo Surposa is a public document which is the evidence of the facts therein stated, unless corrected by judicial order.

5. After receiving the benefits and concessions pursuant to their compromise agreement, she is estopped from refuting on the effects thereof to the prejudice of the [herein respondent].

The summary of the Opposition is in this wise:

1. That the illegitimate filiation of petitioner to respondent is established by the open, and continuous possession of the status of an illegitimate child.

2. The Demurrer to the evidence cannot set up the affirmative grounds for a Motion to Dismiss.

3. The question on the civil status, future support and future legitime can not be subject to compromise.

4. The decision in the first case does not bar the filing of another action asking for the same relief against the same defendant.9

Taking into consideration the aforementioned positions of the parties, RTC-Branch 24 held that:

Looking at the issues from the viewpoint of a judge, this Court believes that its hands are tied. Unless the Court of Appeals strikes down the Compromise Judgment rendered by Branch 09 of the Regional Trial Court of Cebu City, this Court will not attempt to vacate, much more annul, that Judgment issued by a co-equal court, which had long become final and executory, and in fact executed.

This court upholds the Policy of Judicial Stability since to do otherwise would result in patent abuse of judicial discretion amounting to lack of jurisdiction. The defense of lack of jurisdiction cannot be waived. At any rate, such is brought forth in the Affirmative Defenses of the Answer.

This Court, saddled with many cases, suffers the brunt of allowing herein case involving same parties to re-litigate on the same issues already closed.10

In the end, RTC-Branch 24 decreed:

WHEREFORE, in view of the foregoing, the Demurrer to the Evidence is hereby given due course, as the herein case is hereby ordered DISMISSED.11

RTC-Branch 24 denied petitioner’s Motion for Reconsideration12 in a Resolution13 dated 29 July 2008.

Petitioner then filed the instant Petition raising the following issues for resolution of this Court:

I

Whether or not the principle of res judicata is applicable to judgments predicated upon a compromise agreement on cases enumerated in Article 2035 of the Civil Code of the Philippines;

II

Whether or not the compromise agreement entered into by the parties herein before the Regional Trial Court, Branch 09 of Cebu City effectively bars the filing of the present case.14

At the outset, the Court notes that from the RTC Resolution granting respondent’s Demurrer to Evidence, petitioner went directly to this Court for relief. This is only proper, given that petitioner is raising pure questions of law in her instant Petition.a1f

Section 1, Rule 45 of the Rules of Court provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

Clearly, a party may directly appeal to this Court from a decision or final order or resolution of the trial court on pure questions of law. A question of law lies, on one hand, when the doubt or difference arises as to what the law is on a certain set of facts; a question of fact exists, on the other hand, when the doubt or difference arises as to the truth or falsehood of the alleged facts. Here, the facts are not disputed; the controversy merely relates to the correct application of the law or jurisprudence to the undisputed facts.15

The central issue in this case is whether the Compromise Agreement entered into between petitioner and respondent, duly approved by RTC-Branch 9 in its Decision dated 21 February 2000 in Special Proceeding No. 8830-CEB, constitutes res judicata in Special Proceeding No. 12562-CEB still pending before RTC-Branch 24.1avvphi1

The doctrine of res judicata is a rule that pervades every well- regulated system of jurisprudence and is founded upon two grounds embodied in various maxims of the common law, namely: (1) public policy and necessity, which makes it in the interest of the State that there should be an end to litigation, interest reipublicae ut sit finis litium, and (2) the hardship of the individual that he should be vexed twice for the same cause, nemo debet bis vexari pro eadem causa.16

For res judicata, to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be, between the two cases, identity of parties, subject matter, and causes of action.17

It is undeniable that Special Proceeding No. 8830-CEB, previously before RTC-Branch 9, and Special Proceeding No. 12562-CEB, presently before RTC-Branch 24, were both actions for the issuance of a decree of illegitimate filiation filed by petitioner against respondent. Hence, there is apparent identity of parties, subject matter, and causes of action between the two cases. However, the question arises as to whether the other elements of res judicata exist in this case.

The court rules in the negative.

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.18 In Estate of the late Jesus S. Yujuico v. Republic,19 the Court pronounced that a judicial compromise has the effect of res judicata. A judgment based on a compromise agreement is a judgment on the merits.

It must be emphasized, though, that like any other contract, a compromise agreement must comply with the requisites in Article 1318 of the Civil Code, to wit: (a) consent of the contracting parties; (b) object certain that is the subject matter of the contract; and (c) cause of the obligation that is established. And, like any other contract, the terms and conditions of a compromise agreement must not be contrary to law, morals, good customs, public policy and public order. Any compromise agreement that is contrary to law or public policy is null and void, and vests no rights in and holds no obligation for any party. It produces no legal effect at all.20

In connection with the foregoing, the Court calls attention to Article 2035 of the Civil Code, which states:

ART. 2035. No compromise upon the following questions shall be valid:

(1) The civil status of persons;

(2) The validity of a marriage or a legal separation;

(3) Any ground for legal separation;

(4) Future support;

(5) The jurisdiction of courts;

(6) Future legitime. (Emphases ours.)

The Compromise Agreement between petitioner and respondent, executed on 18 February 2000 and approved by RTC-Branch 9 in its Decision dated 21 February 2000 in Special Proceeding No. 8830-CEB, obviously intended to settle the question of petitioner’s status and filiation, i.e., whether she is an illegitimate child of respondent. In exchange for petitioner and her brother Allan acknowledging that they are not the children of respondent, respondent would pay petitioner and Allan P2,000,000.00 each. Although unmentioned, it was a necessary consequence of said Compromise Agreement that petitioner also waived away her rights to future support and future legitime as an illegitimate child of respondent. Evidently, the Compromise Agreement dated 18 February 2000 between petitioner and respondent is covered by the prohibition under Article 2035 of the Civil Code.

Advincula v. Advincula21 has a factual background closely similar to the one at bar. Manuela Advincula (Manuela) filed, before the Court of First Instance (CFI) of Iloilo, Civil Case No. 3553 for acknowledgment and support, against Manuel Advincula (Manuel). On motion of both parties, said case was dismissed. Not very long after, Manuela again instituted, before the same court, Civil Case No. 5659 for acknowledgment and support, against Manuel. This Court declared that although Civil Case No. 3553 ended in a compromise, it did not bar the subsequent filing by Manuela of Civil Case No. 5659, asking for the same relief from Manuel. Civil Case No. 3553 was an action for acknowledgement, affecting a person’s civil status, which cannot be the subject of compromise.

It is settled, then, in law and jurisprudence, that the status and filiation of a child cannot be compromised. Public policy demands that there be no compromise on the status and filiation of a child.22 Paternity and filiation or the lack of the same, is a relationship that must be judicially established, and it is for the Court to declare its existence or absence. It cannot be left to the will or agreement of the parties.23

Being contrary to law and public policy, the Compromise Agreement dated 18 February 2000 between petitioner and respondent is void ab initio and vests no rights and creates no obligations. It produces no legal effect at all. The void agreement cannot be rendered operative even by the parties' alleged performance (partial or full) of their respective prestations.24

Neither can it be said that RTC-Branch 9, by approving the Compromise Agreement, in its Decision dated 21 February 2000 in Special Proceeding No. 8830-CEB, already made said contract valid and legal. Obviously, it would already be beyond the jurisdiction of RTC-Branch 9 to legalize what is illegal. RTC-Branch 9 had no authority to approve and give effect to a Compromise Agreement that was contrary to law and public policy, even if said contract was executed and submitted for approval by both parties. RTC-Branch 9 would not be competent, under any circumstances, to grant the approval of the said Compromise Agreement. No court can allow itself to be used as a tool to circumvent the explicit prohibition under Article 2035 of the Civil Code. The following quote in Francisco v. Zandueta25 is relevant herein:

It is a universal rule of law that parties cannot, by consent, give a court, as such, jurisdiction in a matter which is excluded by the laws of the land. In such a case the question is not whether a competent court has obtained jurisdiction of a party triable before it, but whether the court itself is competent under any circumstances to adjudicate a claim against the defendant. And where there is want of jurisdiction of the subject-matter, a judgment is void as to all persons, and consent of parties can never impart to it the vitality which a valid judgment derives from the sovereign state, the court being constituted, by express provision of law, as its agent to pronounce its decrees in controversies between its people. (7 R. C. L., 1039.)

A judgment void for want of jurisdiction is no judgment at all. It cannot be the source of any right or the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become final, and any writ of execution based on it is void. It may be said to be a lawless thing that can be treated as an outlaw and slain on sight, or ignored wherever and whenever it exhibits its head.26

In sum, Special Proceeding No. 12562-CEB before RTC-Branch 24 is not barred by res judicata, since RTC-Branch 9 had no jurisdiction to approve, in its Decision dated 21 February 2000 in Special Proceeding No. 8830-CEB, petitioner and respondent’s Compromise Agreement, which was contrary to law and public policy; and, consequently, the Decision dated 21 February 2000 in Special Proceeding No. 8830-CEB, being null and void for having been rendered by RTC-Branch 9 without jurisdiction, could not have attained finality or been considered a judgment on the merits.

Nevertheless, the Court must clarify that even though the Compromise Agreement between petitioner and respondent is void for being contrary to law and public policy, the admission petitioner made therein may still be appreciated against her in Special Proceeding No. 12562-CEB. RTC-Branch 24 is only reminded that while petitioner’s admission may have evidentiary value, it does not, by itself, conclusively establish the lack of filiation.27

Proceeding from its foregoing findings, the Court is remanding this case to the RTC-Branch 24 for the continuation of hearing on Special Proceedings No. 12562-CEB, more particularly, for respondent’s presentation of evidence.

Although respondent’s pleading was captioned a Demurrer to Evidence, it was more appropriately a Motion to Dismiss on the ground of res judicata.

Demurrer to Evidence is governed by Rule 33 of the Rules of Court, Section 1 of which is reproduced in full below:

SECTION 1. Demurrer to evidence. – After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence.

Demurrer to evidence authorizes a judgment on the merits of the case without the defendant having to submit evidence on his part, as he would ordinarily have to do, if plaintiff's evidence shows that he is not entitled to the relief sought. Demurrer, therefore, is an aid or instrument for the expeditious termination of an action, similar to a motion to dismiss, which the court or tribunal may either grant or deny.28

The Court has recently established some guidelines on when a demurrer to evidence should be granted, thus:

A demurrer to evidence may be issued when, upon the facts and the law, the plaintiff has shown no right to relief. Where the plaintiff's evidence together with such inferences and conclusions as may reasonably be drawn therefrom does not warrant recovery against the defendant, a demurrer to evidence should be sustained. A demurrer to evidence is likewise sustainable when, admitting every proven fact favorable to the plaintiff and indulging in his favor all conclusions fairly and reasonably inferable therefrom, the plaintiff has failed to make out one or more of the material elements of his case, or when there is no evidence to support an allegation necessary to his claim. It should be sustained where the plaintiff's evidence is prima facie insufficient for a recovery.29

The essential question to be resolved in a demurrer to evidence is whether petitioner has been able to show that she is entitled to her claim, and it is incumbent upon RTC-Branch 24 to make such a determination. A perusal of the Resolution dated 25 June 2008 of RTC-Branch 24 in Special Proceeding No. 12562-CEB shows that it is barren of any discussion on this matter. It did not take into consideration any of the evidence presented by petitioner. RTC-Branch 24 dismissed Special Proceedings No. 12562-CEB on the sole basis of res judicata, given the Decision dated 21 February 2000 of RTC-Branch 9 in Special Proceeding No. 8830-CEB, approving the Compromise Agreement between petitioner and respondent. Hence, the Resolution dated 25 June 2008 of RTC-Branch 24 should be deemed as having dismissed Special Proceeding No. 12562-CEB on the ground of res judicata rather than an adjudication on the merits of respondent’s demurrer to evidence. Necessarily, the last line of Section 1, Rule 33 of the Rules of Court should not apply herein and respondent should still be allowed to present evidence before RTC-Branch 24 in Special Proceedings No. 12562-CEB.

It must be kept in mind that substantial justice must prevail. When there is a strong showing that grave miscarriage of justice would result from the strict application of the Rules, this Court will not hesitate to relax the same in the interest of substantial justice. The Rules of Court were conceived and promulgated to set forth guidelines in the dispensation of justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in rendering real justice have always been, as they in fact ought to be, conscientiously guided by the norm that when on the balance, technicalities take backseat against substantive rights, and not the other way around.30

WhereforE, premises considered, the Resolution dated 25 June 2008 of the Regional Trial Court of Cebu City, Branch 24, in Special Proceeding No. 12562-CEB is REVERSED and set aside. This case is ordered REMANDED to the said trial court for further proceedings in accordance with the ruling of the Court herein. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

G.R. No. 149588               September 29, 2009

FRANCISCO R. LLAMAS and CARMELITA C. LLAMAS, Petitioners, vs.THE HONORABLE COURT OF APPEALS, BRANCH 66 OF THE REGIONAL TRIAL COURT IN MAKATI CITY and THE PEOPLE OF THE PHILIPPINES, Respondents.

D E C I S I O N

NACHURA, J.:

In this petition captioned as "Annulment of Judgment and Certiorari, with Preliminary Injunction," petitioners assail, on the ground of lack of jurisdiction, the trial court’s decision convicting them of "other form of swindling" penalized by Article 316, paragraph 2, of the Revised Penal Code (RPC).

The antecedent facts and proceedings that led to the filing of the instant petition are pertinently narrated as follows:

On August 16, 1984, petitioners were charged before the Regional Trial Court (RTC) of Makati with, as aforesaid, the crime of "other forms of swindling" in the Information,1 docketed as Criminal Case No. 11787, which reads:

That on or about the 20th day of November, 1978, in the municipality of Parañaque, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating together and mutually helping and aiding one another, well knowing that their parcel of land known as Lot No. 11, Block No. 6 of the Subdivision Plan (LRC) Psd 67036, Cadastral Survey of Parañaque, LRC Record No. N-26926, Case No. 4869, situated at Barrio San Dionisio, Municipality of Parañaque, Metro Manila, was mortgaged to the Rural Bank of Imus, did then and there willfully, unlawfully and feloniously sell said property to one Conrado P. Avila, falsely representing the same to be free from all liens and encumbrances whatsoever, and said Conrado P. Avila bought the aforementioned property for the sum of P12,895.00 which was paid to the accused, to the damage and prejudice of said Conrado P. Avila in the aforementioned amount of P12,895.00.

Contrary to law.2

After trial on the merits, the RTC rendered its Decision3 on June 30, 1994, finding petitioners guilty beyond reasonable doubt of the crime charged and sentencing them to suffer the penalty of imprisonment for two months and to pay the fine of P18,085.00 each.

On appeal, the Court of Appeals, in its February 19, 1999 Decision4 in CA-G.R. CR No. 18270, affirmed the decision of the trial court. In its December 22, 1999 Resolution,5 the appellate court further denied petitioners’ motion for reconsideration.

Assailing the aforesaid issuances of the appellate court, petitioners filed before this Court, on February 11, 2000, their petition for review, docketed as G.R. No. 141208.6 The Court, however, on March 13, 2000, denied the same for petitioners’ failure to state the material dates. Since it subsequently denied petitioners’ motion for reconsideration on June 28, 2000,7 the judgment of conviction became final and executory.

With the consequent issuance by the trial court of the April 19, 2001 Warrant of Arrest,8 the police arrested, on April 27, 2001, petitioner Carmelita C. Llamas for her to serve her 2-month jail term. The police, nevertheless, failed to arrest petitioner Francisco R. Llamas because he was nowhere to be found.9

On July 16, 2001, petitioner Francisco moved for the lifting or recall of the warrant of arrest, raising for the first time the issue that the trial court had no jurisdiction over the offense charged.10

There being no action taken by the trial court on the said motion, petitioners instituted, on September 13, 2001, the instant proceedings for the annulment of the trial and the appellate courts’ decisions.

The Court initially dismissed on technical grounds the petition in the September 24, 2001 Resolution,11 but reinstated the same, on motion for reconsideration, in the October 22, 2001 Resolution.12

After a thorough evaluation of petitioners’ arguments vis-à-vis the applicable law and jurisprudence, the Court denies the petition.

In People v. Bitanga,13 the Court explained that the remedy of annulment of judgment cannot be availed of in criminal cases, thus —

Section 1, Rule 47 of the Rules of Court, limits the scope of the remedy of annulment of judgment to the following:

Section 1. Coverage. — This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.a1f

The remedy cannot be resorted to when the RTC judgment being questioned was rendered in a criminal case. The 2000 Revised Rules of Criminal Procedure itself does not permit such recourse, for it excluded Rule 47 from the enumeration of the provisions of the 1997 Revised Rules of Civil Procedure which have suppletory application to criminal cases. Section 18, Rule 124 thereof, provides:

Sec. 18. Application of certain rules in civil procedure to criminal cases. – The provisions of Rules 42, 44 to 46 and 48 to 56 relating to procedure in the Court of Appeals and in the Supreme Court in original and appealed civil cases shall be applied to criminal cases insofar as they are applicable and not inconsistent with the provisions of this Rule.

There is no basis in law or the rules, therefore, to extend the scope of Rule 47 to criminal cases. As we explained in Macalalag v. Ombudsman, when there is no law or rule providing for this remedy, recourse to it cannot be allowed x x x.14

Here, petitioners are invoking the remedy under Rule 47 to assail a decision in a criminal case. Following Bitanga, this Court cannot allow such recourse, there being no basis in law or in the rules.

In substance, the petition must likewise fail. The trial court which rendered the assailed decision had jurisdiction over the criminal case.

Jurisdiction being a matter of substantive law, the established rule is that the statute in force at the time of the commencement of the action determines the jurisdiction of the court.15 In this case, at the time of the filing of the information, the applicable law was Batas Pambansa Bilang 129,16 approved on August 14, 1981, which pertinently provides:

Section 20. Jurisdiction in criminal cases. — Regional Trial Courts shall exercise exclusive original jurisdiction in all criminal cases not within the exclusive jurisdiction of any court, tribunal or body, except those now falling under the exclusive and concurrent jurisdiction of the Sandiganbayan which shall hereafter be exclusively taken cognizance of by the latter.

x x x x

Section 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in criminal cases. — Except in cases falling within the exclusive original jurisdiction of Regional Trial Courts and of the Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

(1) Exclusive original jurisdiction over all violations of city or municipal ordinances committed within their respective territorial jurisdiction; and

(2) Exclusive original jurisdiction over all offenses punishable with imprisonment of not exceeding four years and two months, or a fine of not more than four thousand pesos, or both such fine and imprisonment, regardless of other imposable accessory or other penalties, including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature, value, or amount thereof: Provided, however, That in offenses involving damage to property through criminal negligence they shall have exclusive original jurisdiction where the imposable fine does not exceed twenty thousand pesos.

Article 316(2) of the RPC, the provision which penalizes the crime charged in the information, provides that —

Article 316. Other forms of swindling.—The penalty of arresto mayor in its minimum and medium periods and a fine of not less than the value of the damage caused and not more than three times such value, shall be imposed upon:

x x x x

2. Any person who, knowing that real property is encumbered, shall dispose of the same, although such encumbrance be not recorded.

The penalty for the crime charged in this case is arresto mayor in its minimum and medium periods, which has a duration of 1 month and 1 day to 4 months, and a fine of not less than the value of the damage caused and not more than three times such value. Here, as alleged in the information, the value of the damage caused, or the imposable fine, is P12,895.00. Clearly, from a reading of the information, the jurisdiction over the criminal case was with the RTC and not the Metropolitan Trial Court (MeTC). The MeTC could not have acquired jurisdiction over the criminal action because at the time of the filing of the information, its jurisdiction was limited to offenses punishable with a fine of not more than P4,000.00.17

WHEREFORE, premises considered, the petition is DENIED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURAAssociate Justice