Rule 17 (dismissal of Action)

1. G.R. No. L-58986 April 17, 1989

DANTE Y. GO, petitioner, vs.HON. FERNANDO CRUZ, Judge, etc., CITY SHERIFF OF CALOOCAN CITY, and CALIFORNIA MANUFACTURING CO., INC., respondents.

The dismissal of civil actions is always addressed to the sound judgment and discretion of the court; this, whether the dismissal is sought after a trial has been completed or otherwise, 1 or whether it is prayed for by a defending party 2 or by a plaintiff or claimant. 3 There is one instance however where the dismissal of an action rests exclusively on the will of a plaintiff or claimant, to prevent which the defending party and even the court itself is powerless, requiring in fact no action whatever on the part of the court except the acceptance and recording of the causative document. This is dealt with in Section 1, Rule 17 of the Rules of Court, which reads as follows:

SECTION 1. Dismissal by the plaintiff. — An action may be dismissed by the plaintiff without order of court by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on or including the same claim. A class suit shall not be dismissed or compromised without approval of the court.

It is this provision with which the proceedings at bar are chiefly concerned.

On October 26, 1981, California Manufacturing Co., Inc. (hereinafter, simply, California) brought an action in the Court of First Instance of Manila against Dante Go, accusing him of unfair competition. 4 The gravamen of California's complaint was that Dante Go, doing business under the name and style of "Sugarland International Products," and engaged like California in the manufacture of spaghetti, macaroni, and other pasta was selling his products in the open market under the brand name, "Great Italian," in packages which were in colorable and deceitful limitation of California's containers bearing its own brand, "Royal." Its complaint contained an application for preliminary injunction commanding Dante Go to immediately cease and desist from the further manufacture, sale and distribution of said products, and to retrieve those already being offered for sale. 5

About two weeks later, however, or on November 12, 1981, California filed a notice of dismissal with the Court reading as follows: 6

COMES NOW the plaintiff in the above-entitled case, through undersigned counsel, and unto this Honorable Court most respectfully gives notice of dismissal without prejudice pursuant to Sec. 1, Rule 17 of the Rules of Court.

WHEREFORE, it is respectfully prayed that the above-entitled case be considered

dismissed without prejudice conformably with Sec. 1, Rule 17 of the Rules of Court.

Four days afterwards, or on November 16, 1981, California received by registered mail a copy of Dante Go's answer with counterclaim dated November 6, 1981, which had been filed with the Court on November 9, 1981. 7

On November 19, 1981 a fire broke out at the Manila City Hall destroying among others the sala of Judge Tengco and the records of cases therein kept, including that filed by California against Dante Go. 8

On December 1, 1981, California filed another complaint asserting the same cause of action against Dante Go, this time with the Court of First Instance at Caloocan City. 9 This second suit was docketed as Civil Case No. C-9702 and was assigned to the branch presided over by Judge Fernando A. Cruz.

On December 3, 1981, Judge Cruz issued an ex parte restraining order directing "the defendant ... to immediately cease and desist from the further manufacture, sale, promotion and distribution of spaghetti, macaroni and other pasta products contained in packaging boxes and labels under the name 'GREAT ITALIAN,' which are similar to or copies of those of the plaintiff, and ... recall ... all his spaghetti, macaroni and other pasta products using the brand, 'GREAT ITALIAN.'" 10

On the day following the rendition of the restraining order, Dante Go filed the present petition for certiorari, etc. with this Court praying for its nullification and perpetual inhibition. On December 11, 1981, this Court, in turn issued a writ of preliminary injunction restraining California, Judge Cruz and the City Sheriff from enforcing or implementing the restraining order of December 3, 1981, and from continuing with the hearing on the application for preliminary injunction in said Civil Case No. C-9702. The scope of the injunction was subsequently enlarged by this Court's Resolution of April 14,1982 to include the City Fiscal of Manila, who was thereby restrained from proceeding with the case of unfair competition filed in his office by California against Dante Go. 11

Dante Go's thesis is that the case filed against him by California in the Manila Court remained pending despite California's notice of dismissal. According to him, since he had already filed his answer to the complaint before California sought dismissal of the action three (3) days afterwards, such dismissal was no longer a matter of right and could no longer be effected by mere notice in accordance with Section 1, Rule 17 of the Rules of Court, but only on plaintiff s motion, and by order of the Court; hence, the Caloocan Court acted without jurisdiction over the second action based on the same cause. He also accused California of forum shopping, of selecting a sympathetic court for a relief which it had failed to obtain from another. 12

The petitioner is in error. What marks the loss by a plaintiff of the right to cause dismissal of the action by mere notice is not the filing of the defendant's answer with the Court (either personally or by mail) but the service on the plaintiff of said answer or of a motion for summary judgment. This is the plain and explicit message of the Rules. 13"The filing of pleadings, appearances, motions, notices, orders and other papers with the court," according to Section 1, Rule 13 of the Rules of Court, means the delivery thereof to the clerk of the court either personally or by registered mail. Service, on the other hand, signifies delivery of the pleading or other paper to the

parties affected thereby through their counsel of record, unless delivery to the party himself is ordered by the court, 14 by any of the modes set forth in the Rules, i.e., by personal service, 15 service by mail, 16 or substituted service. 17

Here, California filed its notice of dismissal of its action in the Manila Court after the filing of Dante Go's answer butbefore service thereof. Thus having acted well within the letter and contemplation of the afore-quoted Section 1 of Rule 17 of the Rules of Court, its notice ipso facto brought about the dismissal of the action then pending in the Manila Court, without need of any order or other action by the Presiding Judge. The dismissal was effected without regard to whatever reasons or motives California might have had for bringing it about, and was, as the same Section 1, Rule 17 points out, "without prejudice," the contrary not being otherwise "stated in the notice" and it being the first time the action was being so dismissed.

There was therefore no legal obstacle to the institution of the second action in the Caloocan Court of First Instance based on the same claim. The filing of the complaint invested it with jurisdiction of the subject matter or nature of the action. In truth, and contrary to what petitioner Dante Go obviously believes, even if the first action were still pending in the Manila Court, this circumstance would not affect the jurisdiction of the Caloocan Court over the second suit. The pendency of the first action would merely give the defendant the right to move to dismiss the second action on the ground of auter action pendant or litis pendentia. 18

WHEREFORE, the petition is DISMISSED, with costs against petitioner. The temporary restraining order of December 11, 1981, and the amendatory Resolution of April 14, 1982 are SET ASIDE.

2. G.R. No. L-35989 October 28, 1977

FERMIN JALOVER, petitioner, vs.PORFERIO YTORIAGA, CONSOLACION LOPEZ and HON. VENICIO ESCOLIN, in his capacity as Presiding Judge, Branch V, Court of First Instance of Iloilo, respondents.

This is an original action for certiorari, with prayer for a writ of preliminary injunction, asking this Court to declare null and void the Orders dated August 24, 1972 and November 10, 1972, issued by the respondent Judge in civil case No. 5429 of the Court of First Instance of Iloilo, Branch V. On December 27, 1972, a temporary restraining order was issued by this Court.

Sometime in April, 1960, private respondents Porferio Ytoriaga and Consolacion Lopez filed against Ana Hedriana and petitioner Fermin Jalover a complaint dated April 6, 1960, in the Court of First Instance of Iloilo (Civil Case No. 5429), alleging, inter alia, that they are owners pro indiviso of Lot No. 2255 of the Cadastral Survey of Jaro, covered by TCT No. 6738 and containing an area 8,153 square meters; that the said parcel of land is bounded oil the southwest by the Salog River; that as of January, 1958, by virtue of the effects of the currant of the river, there was a increase on its southwestern portion of around 900 square meters; that since before the war, the plaintiffs have been in continuos possession of the increased portion of the land, which, under the principle of alluvion, automatically belongs to them; that sometime in January, 1958, the defendants had the land increase surveyed, placed concrete monuments thereon and took possession ,

without the knowledge and consent of the plaintiff and that the defendants, who destroyed plants standing on the land in question which belong to the plaintiffs, have remained in ion of the in spite of repeated demands made by the latter for them to return the said possession. The plaintiffs prayed that they be declared the owners of the increased portion of the land, and that the defendants be ordered to vacate the premises and restore their possession to the plaintiffs, to pay the plaintiffs the sum of P147.00 as actual damages, the sum of P300.00 as attorney's fees, and the sum of P200.00 annually from the time the plaintiffs were deprived of ion up to the time the said ion shall have been costs restored, and to pay the of suit.

In his answer dated April 21, 1960, petitioner Fermin Jalover, as a defendant, alleged, inter alia, that his mother and co-defendant, Ana Hedriana, died on July 21, 1959; that the land in question was formerly a river bed, which, less than 10 years before, was abandoned the natural change in the course of the waters; that the said land rightfully belongs to the defendant as sole heir of his mother, who owned the land pursuant to Article 461 of the Civil Code of the Philippines; that it is not true that the plaintiffs were ever in possession of the land, or that they had made demands upon the defendant to vacate the land; that the plaintiffs had filed an ejectment suit against the defendant with the Municipal Court of Iloilo City on March 12, 1958, and the same was decided against the plaintiffs: and that by virtue of the malicious firing of the complaint, the defendant suffered damages and had to hire the services of counsel. The defendant prayed the court to dismiss the complaint with costs against the plaintiffs and to order the plaintiffs to pay the defendant the sum of P1,000.00 as damages and the sum of P1,000,00 by way of attorney's fees.

Issues having been joined, the case was set for trial. On September 4, 1963, private respondents, as plaintiffs, formally offered documentary evidence, and upon the admission thereof, they rested their case; whereupon, continuation of trial was ordered transferred until further assignment. Trial was postponed many times stretching to a period of more than 6 years, until January 26, 1970, when the case was called for trial, and then Presiding Judge Ramon Blanco dismissed the case, for failure of private respondents to appear in court, in an order which reads: ñé+.£ªwph!1

The complaint was filed on April 6, 1960 up to the present the trial of' the case has not been finished. The counsel of record for the plaintiff is Atty. Amado Atol who since several years ago has been appointed Chief of the Secret Service of the Iloilo City Police Department. Plaintiff did not take the necessary steps to engage the service of another lawyer in lieu of Atty. Atol.

WHEREFORE, for failure to prosecute this case is dismissed it without pronouncement as to costs .

Two years later, or on January 17, 1972, private respondents' lawyer, Atty. Amado B. Atol, filed a motion for reconsideration of the order dated January 26, 1970 dismissing the case, alleging that the said respondents did not fail to prosecute because, during the times that the case was set for hearing, at least one of said respondents was always present, and the record would show that the transfers of hearing were all made at the instance of petitioner or his counsel; and, moreover, private respondents had already finished presenting their evidence. Petitioner opposed the motion on the ground that the order of dismissal issued two years before was an adjudication on the merits and had long become final. On June 23, 1972,

respondent Judge Venicio Escolin, who succeeded Judge Blanco in Branch V, issued an order denying the motion for reconsideration on the ground that the order of dismissal had become final long ago and was beyond the court's power to amend or change.

Private respondents then filed a Petition for Relief from Judgment dated July 10, 1972, claiming that the order of dismissal dated January 26, 1970 was void because of lack of due process and for having been obtained thru fraud, for the petitioner had misrepresented to the court the status of the case by making Judge Blanco - who was not the Presiding Judge when private respondents presented their evidence and rested their case in 1963 - believe that trial had not even begun. Petitioner opposed the petition for relief contending that private respondents were served a copy of the order of dismissal on February 5, 1970, and, therefore, pursuant to Section 3, Rule 38 of the Revised Rules of Court, the petition for relief should have been filed within 60 days from February 5, 1970, and within 6 months from January 26, 1970, when the order was issued; hence, the filing of the petition was beyond the reglementary period.

The petition for relief was given due course, and on August 24, 1972, respondent Judge issued an order setting aside the orders dated January 26, 1970 and June 23, 1972, and setting the continuation of the trial for September 15, 1972. The reasons stated by respondent Judge in support are: (1) the shows that while respondent Porferio Ytoriaga was furnished with a copy of the dismissal order dated January 26, 1970, his counsel, Atty. Atol, was never served with a copy thereof, hence, pursuant to the settled rule that where a party appears by attorney, a notice to the client and not to his attorney is not a notice of law, the said order of dismissal never became final; and (2) the order dated January 26, 1970 was without legal basis, considering that private respondents had already presented their evidence and rested their caw on September 4, 1963, and the hearing scheduled for January 26, 1970 was for reception of petitioner's evidence; consequently, the non-appearance of private respondents and their counsel at the said hearing could not mean failure to prosecute on their part, but may at worst only be construed as a waiver on private respondents' part of the right to cross-examine the witnesses whom petitioner might present and to object to the admissibility of petitioner's evidence. Petitioner, in a motion dated October 16, 1972, moved for a reconsideration of the order dated August 24, 1972, on the grounds that the court had full authority to issue the order of dismissal, and that the said order, which had long become final, was beyond the court's power to reconsider. On November 10, 1972, respondent Judge issued an order denying the motion for reconsideration and setting the continuation of trial for December 12, 1972.

Hence, the present recourse by petitioner.

The main thrust of the petition is that respondent Judge acted without or in excess of jurisdiction or with grave abuse of discretion in setting aside the orders dated January 26, 1970 and June 23, 1972, because the said orders have long become final and executory, hence, may no longer be disturbed.

It is uncontroverted that the order of January 26, 1970, dismissing the case for private respondents' "failure to Prosecute," was served upon private respondents themselves, and not upon their as attorney of record, Atty. Amado B. Atol, and that there was no court order directing that the court's processes, particularly the order of January 26, 1970, should

be served directly upon private respondents. It is settled that when a party is represented by counsel, notice should be made upon the counsel, and notice upon the party himself is not considered notice in law unless service upon the party is ordered by the court. 1 The term "every written notice" used in Section 2 of Rule 13 includes notice of decisions or orders. 2 Private respondents' counsel of record not having been served with notice of the order dismissing the case, the said order did not become final.

Petitioner argues that since private respondents' counsel of record, Atty. Atol, had been appointed Chief of the Secret Service of the Iloilo City Police Department, he was not anymore allowed to practice law, hence, private respondents being no longer represented by counsel, notice to them should be deemed legally effective. The argument is not valid, for it fails to consider the need of observing a legal formality before a counsel of record may be considered relieved of his responsibility as such counsel on account of withdrawal. A lawyer's withdrawal as counsel must be made in a formal petition filed in the case, and where no such petition has been accomplished, notice of judgment rendered in the case served on the counsel of record is, for all legal purposes, notice to the client, the date of receipt of which is considered the starting point from which the period of appeal prescribed by law shall begin to run 3 Not having withdrawn formally as counsel in the case, nor having been substituted by his clients with another lawyer, or dismissed as such counsel, Atty. Atol was, for all legal purposes, private respondents' attorney upon whom the Courts processes should have been served.

It will also be noted that, as found by respondent Judge, private respondents, as plaintiffs, adduced their evidence and rested their case on September 4, 1963, or more than six years before the dismissal of the case on January 26, 1970. It was, therefore, the turn of petitioner, as defendant, to present his evidence. In the premises, private respondents court not possibly have failed to prosecute they were already past the stage where they could still be charged with such failure. As correctly held by respondent Judge, private respondents' absence at the hearing scheduled on January 6, 1970 "can only be construed as a waiver on their part to cross-examine the witnesses that defendants might present at the continuation of trial and to object to the admissibility of the latter's evidence." The right to cross-examine petitioner's witnesses and/or object to his evidence is a right that belongs to private respondents which they can certainly waive. Such waiver could be nothing more than the "intentional relinquishment of a known right," 4 and. as such, should not have beer taken against private respondents.

To dismiss the case after private respondents had submitted their evidence and rested their case, would not only be to hold said respondents accountable for waiving a right, but also to deny them one of the cardinal primary rights of a litigant, which is, corollary to the right to adduce evidence, the right to have the said evidence considered by the court. 5 The dismissal of the case for failure to prosecute, when in truth private respondents had already presented their evidence and rested their case, and, therefore, had duly ,prosecuted their case, would in effect mean a total disregard by the court of evidence presented by a party in the regular course of trial and now forming part of the record. The ends of justice would be better served if, in its deliberative function. the court would consider the said evidence together with the evidence to be adduced by petitioner.

However, we are of the view that relief from judgment under Rule 38 of the Revised Rules of Court is not the appropriate remedy. A petition for relief is available only if the judgment or order complained of has already become final and executory; 6 but here, as earlier noted, the order of January 26, 1970 never attained finality for the reason that notice thereof was not served upon private respondents' counsel of record. The petition for relief may nevertheless be considered as a second motion for reconsideration or a motion for new trial based on fraud and lack of procedural due process.

Under the circumstances of the case, the issuance of the orders now complained of cannot be said to have been characterized with abuse of discretion.

ACCORDINGLY the instant petition is denied. The temporary restraining order issued by this Court on December 27, 1972 is hereby dissolved. No costs.

3. G.R. No. L-17828             August 31, 1963

LIGAYA MINA, JAIME MINA, SILVINA MINA, FAUSTA MINA, PABLO MINA and MIGUEL MINA, the minors represented by PILAR LAZO as guardian-ad-litem, plaintiffs-appellants, vs.ANTONIA PACSON, CRISPINO MEDINA and CRESENCIA MINA, defendants-appellees.

This is an appeal from an order of the Court of First Instance of Nueva Ecija, Hon. Felix Makasiar, presiding, in its Civil Case No. 3296, entitled "Ligaya Mina, et al., plaintiffs vs. Crispino Medina, et al., defendants," dismissing the complaint filed in this case. The appellant also appeals against the order denying the motion for reconsideration of the order of dismissal.

The facts necessary to understand the nature of the issues presented in this appeal, as gleaned from the pleadings, may be briefly stated as follows: Plaintiffs Ligaya, Jaime, Silvina, Fausta, Pablo and Miguel, all surnamed Mina, are alleged to be the illegitimate children of the deceased Joaquin Mina with plaintiff Pilar Lazo from 1933-1958, while married to Antonia Pacson. Joaquin Mina died in August, 1958, leaving no descendants norascendants except his widow, the defendant herein Antonia Pacson. On April 9, 1958, Joaquin Mina, then still living, executed a deed of absolute sale (Annex "B" to Complaint) of three parcels of land situated in the municipality of Muñoz, Nueva Ecija, in favor of the defendants Crispino Medina and Cresencia Mina for the sum of P12,000. On April 15, 1958 again he executed another deed of sale (Annex "C" to Complaint) of 13 parcels of land covered by 12 transfer certificates of title to the same spouses Crispino Medina and Cresencia Mina. Both deeds of sale bear the conformity of his wife Antonia Pacson.

In the complaint filed in the Court of First Instance of Nueva Ecija in the case which originated this appeal, it is alleged that plaintiffs are illegitimate children of the deceased Joaquin Mina begotten by him with Pilar Lazo during the period from 1933 to 1958 while Joaquin Mina was lawfully married to Antonia Pacson; that the plaintiff Pablo Mina is a recognized illegitimate child of the deceased Joaquin Mina; that Joaquin Mina died intestate leaving no ascendants or descendants, except his widow Antonia Pacson; that he left various parcels of land enumerated in the complaint but that on April 9, 1950 the defendants connived and secured from Joaquin Mina, who was ill and did not know what he was doing, the execution of the two deeds of sale without consideration, fictitiously and fraudulently, transferring his propertiesto the spouses Crispino Medina and Cresencia Mina; and that by reason of said acts, defendants have caused moral anguish, anxiety and embarrassment to plaintiffs, causing them damages amounting to P10,000; that plaintiffs pray that they be declared recognized illegitimate children of the deceased Joaquin Mina, entitled to share in the properties left by him as such illegitimate children; that the deeds of sale, Annexes "B" and "C" be declared fictitious, fraudulent and therefore, null and void; and that defendants be required to deliver to plaintiffs' possession one-fourth of said properties together with P10,000 for moral damages.

Upon the filing of the complaint the defendants presented a motion to dismiss the complaint on the ground of res judicata, alleging that a similar action had previously been presented as Civil Case No. 3015 in the same court, and by the same parties against Crispino Medina and Cresencia Mina, in which the same allegations of plaintiffs' status and fraudulent conveyance of the properties to defendants are alleged, together with a prayer for moral damages in the sum of P20,000. It appears, however, that in the complaint filed in said Civil Case No. 3015, no prayer is made for the declaration of the filiation of the plaintiffs in relation or with respect to the deceased Joaquin Mina.

The motion to dismiss also copied an order of the court issued in said Civil Case No. 3015 which reads as follows:

Acting on the Motion filed by the defendants on December 22, 1958 for the reconsideration of the order dated December 8, 1958, and considering that the present action is not only for annulment of deeds of sale but also for partition (paragraphs 8 and 11 of the complaint and paragraph 4 of the prayer thereof); that to avoid multiplicity of suits, the complex action to establish filiation andfor partition or for recovery of inheritance may be

brought in the same case (Lopez v. Lopez, 68 Phil. 227; Escoval vs. Escoval, 48 O.G. 615; Edades vs. Edades, L-8964, July 31, 1956); and that Antonia Pacson, the surviving widow and the other intestate heirs of the deceased Joaquin Mina, or necessary parties are not made a party in this case (Briz v. Briz, 43 Phil. 763), the plaintiffs are hereby directed to amend their complaint within fifteen (15) days from receipt hereof by including as party defendant the surviving widow of the deceased Joaquin Mina and other necessary parties.

Should the plaintiffs fail to comply with this order, this case will be dismissed.

Lastly, another order of the same court dated February 9, 1959 was quoted, the dispositive part of which reads:

The fifteen-day period granted to the plaintiffs having elapsed without said order having been complied with, the Court hereby dismisses this case, without pronouncement aa to costs.

Opposition to the motion to dismiss was presented on behalf of the plaintiffs by their attorney to which a reply was filed on behalf of the defendants. A rejoinder was also filed after which Judge Genaro Tan Torres, then presiding over the court, sustained the motion to dismiss in an order which reads as follows:

After a careful consideration of the joint motion to dismiss of defendants Antonia Pacson and the spouses Crispino Medina and Cresencia Mina, dated November 11, 1959, the opposition thereto dated November 24, 1959, and the reply of the defendants to the opposition, dated December 7, 1959, the Court is of the opinion that said motion to dismiss is well taken; hence this case is hereby dismissed without costs.

Plaintiffs' motion for time to submit rejoinder, dated December 10, 1959, is hereby denied because it will only unnecessarily delay the termination of this case.

So ordered.

Cabanatuan City, December 18, 1959.

A motion for the reconsideration of the order of the court dismissing the action having been denied, the plaintiffs in the present case prosecuted this appeal directly to this Court.1äwphï1.ñët

As shown above the question to be resolved is whether or not the order dismissing the previous Civil Case No. 3015 bars the present civil action No. 3296 of the Court of First Instance of Nueva Ecija.

In the first error assigned by the appellants in their brief it is argued that the dismissal of the complaint in the previous action was in fact "at the indirect instance of the plaintiffs through inaction or omission." We do not find this claim justified by the facts of the case. The order of the court dismissing the complaint in the first case contains the following warning: "Should the plaintiffs fail to comply with this order, this case will be dismissed." In the face of this express warning given in the court's order the dismissal can not be said to have been "at the indirect instance of the plaintiffs; it was in fact caused by plaintiffs' refusal to comply with the express mandate contained in the order of dismissal. The dismissal, therefore, was justified under Rule 30, Section 3 of the Rules of Court, which reads:

SEC. 3. Failure to prosecute. — When plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules of any order of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by court.

The above provision of the Rules was invoked in the case, of Garchitorena, et al. vs. De los Santos, et al., G.R. No. L-17045, June 30, 1962, wherein this Court held:

To order an amendment to a complaint within a certain period in order to implead as party plaintiff or defendant one who is not a party to the case lies within the discretion of the Court. And where it appears that the person to be impleaded is an indispensable party, the party to whom such order is directed has no other choice but to comply with it. His refusal or failure to comply with the order is a ground for the dismissal of his complaint pursuant to Section 3, Rule, 30, of the Rules of Court. . . .

Under the second assignment of error it is argued that the dismissal of the previous case was brought about by the negligence, gross or criminal, of plaintiffs' lawyer for which the plaintiffs-appellants should not be made to suffer. The argument is not true to fact. The failure to amend was a result not of the neglect of the lawyer alone but also of the plaintiffs-appellants themselves. Had the plaintiffs taken even an ordinary

interest in the result of the action that they had filed, they would have been able to secure information from their lawyer that the case had been dismissed for failure to amend. Upon receipt of such information, plaintiffs could have applied to the court for relief under Rule 38 of the Rules of Court and could have had the complaint amended as directed in the order of dismissal. It is not alone negligence of their counsel, therefore, but of themselves also that the required amendment was not made. But assuming for the sake of argument that the failure was due to the lawyer alone, such failure would not relieve them of the responsibility resulting from the neglect of their lawyer, for the client is bound by the action of his counsel. (Isaac v. Mendoza, G. R. No. L-2830, June 21, 1951; Vivero v. Santos, et al., G. R. No. L-8105, Feb. 28, 1956; Fernandez v. Tan Tiong Tick, G.R. No. L-15877, April 28, 1961; Gordulan v. Gordulan, G.R. No. L-17722, Oct. 9, 1962; Valerio v. Sec. of Agriculture, G.R. No. L-18587, April 23, 1963.)

In the third assigiament of error it is claimed that there is no complete identity between the parties in the first case and those in the case at bar. The statement is true because in the previous case Antonia Pacson was not included as party-defendlant. As a matter of fact the order decided that Pacson was to be included as party-defendant. As to the latter, therefore, the previous order of dismissal does not bar the present complaint, not only because she was not made a party but also because the issue of filiation of the parties-plaintiffs was not raised in the previous case, although such issue was necessary for the plaintiffs to be able to maintain their right of action. In view of this fact, the present action should be considered barred in respect to the action for the annulment of the deeds of sale and as regards the defendants spouses Crispino Medina and Cresencia Mina; but as to the case for the declaration of the plaintiffs as illegitimate children and heirs of the deceased Joaquin Mina this latter case is not barred by the previous action as above explained and may still be prosecuted.

WHEREFORE, the order of dismissal is hereby modified in the sense that the action for the recognition of the filiation of the plaintiffs should be allowed to continue against the defendant Antonia Pacson; but the dismissal of the action for the annulment of the deeds of sale is affirmed. Without costs.

4. G.R. No. L-18707             February 28, 1967

AGUSTIN O. CASEÑAS, plaintiff-appellant, vs.CONCEPCION SANCHEZ VDA. DE ROSALES (Substituted by her heirs), ROMEO S. ROSALES, ET AL.,defendants-appellees.

Juan L. Pastrana for plaintiff-appellant.Francisco Ro. Cupin and Wenceslao B. Resales for defendants-appellees.

REGALA, J.:

This is an appeal from the order of dismissal entered by the Court of First Instance of Agusan in Civil Case No. 780, entitled Agustin Caseñas vs. Concepcion Sanchez Vda. de Rosales, et al.

On August 21, 1952, Rodolfo Arañas and Agustin O. Caseñas filed with the Court of First Instance of Agusan, under Civil Case No. 261, a complaint for specific performance and enforcement of their alleged right under a certain deed of sale, and damages against the spouses Jose A. Rosales and Concepcion Sanchez. They alleged that sometime in 1939, Agustin O. Caseñas acquired from Rodolfo Arañas under a deed of assignment, the latter's rights and interest over a parcel of land covering an area of more or less than 2,273 square meters and designated as Lot No. 445-A of the Butuan Cadastre No. 84 (Psd. 4943); that Rodolfo Arañas in turn, acquired the said property from the spouses Jose A. Rosales and Concepcion Sanchez under a deed of sale executed on March 18, 1939 under the terms of which, however, the actual transfer of the aforesaid land unto the vendee would be made only on or before February 18, 1941; and that despite the above documented transactions, and despite the arrival of the stipulated period for the execution of the final deed of transfer, the vendors spouses refused to fulfill their obligation to effect such transfer of the said lot to the vendee, Rodolfo Arañas or his assignee, the herein appellant, Agustin O. Caseñas. Thus, the principal relief prayed for in the above complaint was for an order directing the defendants-spouses to "execute a deed of absolute sale of the property described in the complaint in favor of the assignee, plaintiff Agustin O. Caseñas.

After the defendants-spouses had filed their answer to the above complaint, but before trial, the counsel for the plaintiffs gave notice to the trial court that plaintiff Rodolfo Arañas and defendant Jose A. Rosales had both died. In view of the said manifestation, the lower court, in an order dated April 27, 1956, directed, the surviving plaintiff, Agustin O. Caseñas, to amend the complaint to effect the necessary substitution of parties thereon. The said surviving plaintiff, however, failed altogether to comply with the aforementioned order of April 27, 1956 to the end that on July 18, 1957, the lower court issued the following order:

Until this date no amended complaint was filed by the attorney for the plaintiffs. This shows abandonment and lack of interest on

the part of the plaintiffs. This being an old case, for failure on the part of the counsel for the plaintiffs to comply with the order of this Court the same is hereby dismissed without pronouncement as to costs.

As no appeal was taken from the above order of dismissal, the same, in due time, became final.

On April 18, 1960, Agustin O. Caseñas, the same plaintiff Caseñas in civil Case No. 261, filed with the same Court of First Instance of Agusan, under Civil Case No. 780, another complaint against the widow and heirs of the late Jose A. Rosales "to quiet, and for reconveyance of, title to real property, with damages." This suit referred itself to the very same property litigated under Civil Case No. 261 and asserted exactly the same allegations as those made in the former complaint, to wit: "that the plaintiff (Agustin O. Caseñas) has acquired the above-described property by purchase from its previous owner, Rodolfo Arañas now deceased, ...; and said Rodolfo Aranas had in turn acquired the same property by virtue of another deed of sale executed by Jose A. Rosales, now also deceased;" (Par. 3, Complaint) "that under the terms and stipulations of paragraph 2 of the deed of sale (between Rosales and Arañas) ... Jose A. Rosales was to hold title to the land in question in favor of Rodolfo Arañas or the latter's signs and successors in interest for a period of (5) years from February 19, 1936, at the expiration of which said Jose A. Rosales was to execute a document conveying absolutely the title to the land in question in favor of the aforementioned Rodolfo Arañas or his assigns and successors in interest" (Par. 9, Complaint) ; "despite which obligation the defendants refused, even after the expiration of the stipulated period to "convey title to the land in question and to execute the corresponding document covering the same." (Par. 12, Complaint) In the premises, the plaintiff prayed for judgment "quieting the title of the plaintiff to the land in question and ordering the defendants to execute a deed of conveyance of the same in favor of the said plaintiff" plus costs and damages.

To the above complaint, the defendants filed a motion to dismiss on several grounds, namely: res judicata, prescription, lack of cause of action, failure to include indispensable parties, and that the contract subject of the complaint was void ab initio. After the plaintiff had filed his opposition to the above motion, the lower court issued the order under appeal dismissing the complaint. Of the above grounds, though, the lower court relied alone on the defendants' plea of res judicata, lack of cause of action and prescription. The material portion of this order of dismissal reads:

The Court, however, believes that this action is barred by prior judgment. The order of dismissal in Civil Case No. 261 was already final and has the effect of an adjudication upon the merits. The parties in Civil Case No. 261 and in this case are substantially the same; the subject matter is the same and there is identity of cause of action. All the elements of res judicata are therefore present.1äwphï1.ñët

Moreover, the complaint states no cause of action if its purpose is to quiet title, because the plaintiff has as yet no title to the land in question. Precisely, this action is brought in order to acquire or secure title by compelling the defendants to execute a deed of sale in favor of the plaintiff. However, this action for specific performance cannot also prosper because being based upon an agreement in writing it is already barred by prescription as the period of ten years has long expired when the present complaint was filed.

The appeal at bar assails the above determination that Civil Case No. 780 is barred by a prior judgment and by prescription and that the same states no cause of action. It is on these issues, therefore, that this Court shall dispose of this appeal.

We find for the appellant.

When certain of the parties to Civil Case No. 261 died and due notice thereof was given to the trial court, it devolved on the said court to order, not the amendment of the complaint, but the appearance of the legal representatives of the deceased in accordance with the procedure and manner outlined in Rule 3, Section 17 of the Rules of Court, which provides:

SEC. 17. Death of Party. — After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased

may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem  for the minor heirs.

In the case of Barrameda vs. Barbara, 90 Phil. 718, this court held that an order to amend the complaint, before the proper substitution of parties as directed by the aforequoted rule has been effected, is void and imposes upon the plaintiff no duty to comply therewith to the end that an order dismissing the said complaint, for such non-compliance, would similarly be void. In a subsequent case, Ferriera et al. vs. Gonzalez, et al., G.R. No. L-11567, July 17, 1958, this court affirmed a similar conclusion on the determination that the continuance of a proceedings during the pendency of which a party thereto dies, without such party having been validly substituted in accordance with the rules, amounts to a "lack of jurisdiction."

The facts of this case fit four squares into the Barrameda case abovecited, save for the minor variance that in the former two of the litigants died while only one predeceased the case in Barrameda. Here, as in Barrameda, during the pendency of civil case, notice was given to the trial court of the deaths of one of the plaintiffs and one of the defendants in it. Instead of ordering the substitution of the deceased's legal representatives in accordance with Rule 3, section 17 of the Rules of Court, the trial court directed the surviving plaintiff to amend the complaint and when the latter failed to comply therewith, the said court dismissed the complaint for such non-compliance. We must hold, therefore, as We did in Barrameda that inasmuch as there was no obligation on the part of the plaintiff-appellant herein to amend his complaint in Civil Case No. 261, any such imposition being void, his failure to comply with such an order did not justify the dismissal of his complaint. Grounded as it was upon a void order, the dismissal was itself void.

Consequently, as the dismissal of Civil Case No. 261 was void, it clearly may not be asserted to bar the subsequent prosecution of the same or identical claim.

Finally, We find ourselves unable to share the appellees' view that the appellant's complaint under Civil Case No. 780 failed to state a sufficient cause of action. A cause of action is an act or omission of one party in violation of the legal right or rights of the other (Ma-ao Sugar Central vs. Barrios, 79 Phil. 666) and both these elements were clearly alleged in the aforesaid complaint.

Insofar as the issue of prescription is concerned, this Court is of the view that it should defer resolution on it until after Civil Case No. 780 shall have been tried on the merits, considering that one of the defenses set up by the appellant against the said issue is the existence of a trust relationship over the property in dispute.

In view of all the foregoing, the order dated January 20, 1961 dismissing Civil Case No. 780 is hereby set aside and the said case is ordered remanded to the court of origin for trial on the merits. Costs against the appellees.

5. RPB vs Molina

6. G.R. No. L-15814             February 28, 1962

IN THE MATTER OF THE ESTATE OF CANDELARIA BENGUAN, deceased. SUSANA ABAY DE ARROYO, petitioner-appellant, vs.FRANCISCO ABAY, CONRADO ABAY, JR., JOSE ABAY and NORMA ABAY, opponents-appellees.

PADILLA, J.:

On 5 January 1956 Susana Abay de Arroyo filed in the Court of First Instance of Negros Occidental a petition for the probate of the will of her deceased first-degree cousin Candelaria Benguan (special proceedings No. 3883). On 28 May, the Court ordered that the petition be published once a week for three consecutive weeks in Civismo, a newspaper of general circulation in Negros Occidental, setting the date of hearing thereof for the 23rd day of June 1956. On the date and time set for the hearing of the petition attorney Rolando Medalla, representing some of the heirs hereinafter referred to as opponents, moved for the postponement of the hearing to give him time and opportunity to file a written objection to the petition. Whereupon, the hearing was postponed to 30 June 1956. On 28 June, the opponents filed a motion to dismiss on the ground that a petition for the probate of the same last will and testament had been dismissed by the same Court in a previous special proceedings No. 3628 and constitutes a bar to the present proceedings (No. 3883). On 7 July, the petitioner answered the motion to dismiss. By an order entered on 14 July, the Court dismissed the petition. After considering the motion for reconsideration filed by the petitioner on 31 July 1956 and the answer thereto filed by the opponents on 3 August 1956, the Court denied the motion for reconsideration. The petitioner appealed to the Court of Appeals which certified the appeal to this Court for only questions of law are raised. .1äwphï1.ñët

The previous proceedings invoked by the opponents to bar the present is special proceedings No. 3623 filed in the Court of First Instance of Negros Occidental on 27 September 1955 by one Felix Abay, a brother of Susana Abay de Arroyo, the herein petitioner and appellant. The last will and testament involved therein is the same involved herein. However, upon failure of Felix Abay and his counsel Pio B. Japitana to appear at the hearing on 5 November 1955, despite due notice, the Court there dismissed the petition, without stating that it was a dismissal with prejudice. Two motions for reconsideration were filed, the first on 15 November 1955 and the second on 28 November 1955, but both were denied, the last for lack of merit. .

The issue now hinges on whether or not the petition for the probate of a will filed in this special proceedings is barred by a previous special proceedings No. 3628, the petition of which was dismissed for failure of the petitioner and his counsel to appear on the date set for the hearing thereof. .

The appellant contends that the dismissal of the petition in the previous case (spec. proc. No. 3628) does not bar the present (spec. proc. No. 3883), both for the probate of the same last will and testament of the late Candelaria Benguan, because the dismissal for failure of the petitioner and his counsel to appear at the hearing set by the Court was not an adjudication on the merits of the case and is not  res judicata, because the parties in the previous and present proceedings are not the same. .

The appellant's contention that the dismissal of the petition for probate in the previous special proceedings due to failure of the then petitioner and his counsel to appear on the date and time set for the hearing thereof is not an adjudication on the merits must be upheld. In arriving at this conclusion the Court has not overlooked the provisions of sections 3 and 4, Rule 30, and section 2, Rule 73, of the Rules of Court. The probate of a will may be the concern of one person or several persons as usually is the case. The fault of one such person may be imputed to him alone who must suffer the consequences of his act. Such fault cannot be imputed to other persons. Hence, the failure of Felix Abay and his counsel to appear on the date and time set for the hearing of the petition for the probate of a will claimed to have been executed by the late Candelaria Benguan during her lifetime which brought about the dismissal of the petition filed in that special proceedings (No. 3628) cannot prejudice the right of Susana Abay de Arroyo, the petitioner, in a subsequent petition filed for the probate of the same will and last testament. So the provisions of the Rules cited and invoked by the opponents-appellees cannot be made to apply to proceedings for the probate of wills, because as

already stated other parties interested in the probate of a will for transmission of property rights to them should not be prejudiced by the act or fault of another and because it is the policy of the State to have such last wills and testaments submitted to Court for their probate or legalization, as shown or indicated or evidenced by or in the punishment provided for persons who are in possession of last wills and testaments of deceased persons and fail or neglect to deliver or present them to Court for probate or to deliver them to the executor named in the will within twenty days after they know of the death of the testators or within the same period of time after they know that they were named executors of the will (sections 2 to 5, Rule 76). The underlying reason for the rule that a dismissal of an action or complaint in a civil case may be a bar to a subsequent action unless the dismissal is without prejudice is lack of interest or inaction of the one who brought the action in court by his complaint and for such lack of interest or inaction he should be made to suffer. .

The order of dismissal appealed from is set aside and the petition for probate of a will filed in special proceedings No. 3883 remanded to the Court of First Instance of Negros Occidental for further proceedings as provided for in the Rules of Court, without special pronouncement as to costs.

Rule 18 (Pre-trial)

1. G.R. No. L-40307 April 15, 1988

FILOIL MARKETING CORPORATION (now Petrophil Corporation), plaintiff/appellee, vs.DY PAC & CO., INC., defendant/appellant.

Meneses, Magno, Leynes, Gamboa & Cabusora Law Offices for plaintiff-appellee.

Semaco P. Sacmar for defendant-appellant.

 

FELICIANO, J.:

This case was certified to us by the Court of Appeals in its Resolution dated 20 February 1975, as one raising only questions of law.

On 19 March 1969, an action for collection of a sum of money with interest was commenced by plaintiff Filoil Marketing Corporation (now Petrophil Corporation) in the City Court of Manila against defendant Dy Pac & Co., Inc., alleging that from 1961 to 1965, plaintiff had sold and delivered on credit

petroleum products to defendant, who became indebted to it in the total amount of P 2,123.69; that notwithstanding repeated demands, defendant refused to pay.

In its Answer with Counterclaim, defendant Dy Pac & Co., Inc., admitted the credit transactions alleged by plaintiff but denied indebtedness, alleging lack of cause of action, payment and prescription.

At the hearing set on 17 June 1969, neither defendant nor his counsel appeared; plaintiff was allowed to present its evidence ex parte, and accordingly, the City Court of Manila, Branch 3, rendered a decision on the same date ordering defendant to pay plaintiff the sum of P2,123.69 plus 6% interest thereon, attorney's fees and costs.

Upon denial of its motion for reconsideration, defendant appealled to the Court of First Instance of Manila, which appeal was subsequently assigned to Branch 19 thereof.

By 30 January 1973, the lower court, in accordance with Republic Act No. 6031, 1 immediately set the case for pre-trial, with a warning that no further postponements would be granted.

On 23 March 1973, the lower court issued a pre-trial order, the fun text of which follows:

When this case was called for pre-trial, the parties were duly represented by their respective counsel. Filoil Marketing was represented also by Mr. Rodolfo Bondoc, Accountant. Counsel for defendant manifested that he is duly authorized to enter into this pre-trial and promises to submit said authority within three (3) days from today, as required by the Rules, otherwise, the Court will not recognize his authority for pre-trial. The plaintiff duly adopted his exhibits already marked in the lower court and also adopted the markings in said court. In addition, he asked that the decision in the City Court, found on page 17 of the records, be marked as Exhibits "F" and that the letter addressed to the defendant dated February 7, 1968 be marked as Exhibit "G" to "G-". These were all admitted by the defendant.

Defendant presented as its exhibits, Exhibit "1", a cash voucher dated February 16,1965, which was admitted by the plaintiff, Exhibits "2"

and "3" letters of defendant Filoil Marketing Corporation, both of which were also admitted by the plaintiff.

The Court finds that this is just a matter of adjustment of accounts by the plaintiff and the defendant, who are hereby ordered to prepare a stipulation of facts based on their exhibits already marked and submit the same to the Court within thirty (30) days from today. It is also ordered that in the stipulation of facts, the parties define the issues to be resolved by the Court and if they are submitting the case for decision on the basis of their exhibits. The parties are warned that if they cannot submit the stipulation off acts, the Court will dismiss the appeal, the case having been filed on August 14, 1969 and up to the present no trial has been conducted. 2 (Emphasis supplied)

In a subsequent Order dated 24 May 1973, the trial court dismissed defendant's appeal for failure of the parties to submit the required stipulation of facts and ordered the immediate return of the records to the City Court for execution.

A subsequent motion to reconsider the order of dismissal having been denied, defendant-appellant took this appeal to the Court of Appeals, which, as already noted, certified the case to us as involving only questions of law. This case, without an appellee's brief, was submitted for decision on 17 March 1975.

Appellant claimed, in its brief, that it was deprived of its day in court and urged that the trial court erred (a) in dismissing its appeal on the ground that the parties failed to submit a stipulation of facts and (b) in finding that defendant's counsel had not filed his authority to appear during pre- trial. 3

We find merit in this appeal.

There is no law which compulsorily requires litigants to stipulate at pre-trial on the facts and issues that may possibly crop up in a particular case, upon pain of dismissal of such case. The process of securing admissions whether of facts or evidence is essentially voluntary, since stipulations of facts, like contracts, bind the parties thereto who are not allowed to controvert statements made therein. The trial court may, of course, advise and indeed urge the parties during the pre-trial conference to try to arrive at a stipulation of facts principally for their own convenience and to simplify subsequent proceedings

by Identifying those facts which are not really controverted and do not need to be proved. Courts, however, cannot compel the parties to enter into an agreement upon the facts. Where the parties are unable to arrive at a stipulation of agreed facts and do not reach an amicable settlement of their controversy, the court must close the pre-trial proceedings and go forward with the trial of the case. The court a quo, therefore, committed serious or reversible error in dismissing appellant's appeal from the then City Court of Manila solely upon the ground that the parties had failed to comply with the court's Order to submit a stipulation of facts. The trial court's desire speedily to dispose of the case which had been pending for almost four (4) years in that sala is understandable and praiseworthy; but it cannot justify the Order of dismissal. Defendant's appeal from the decision of the City Court of Manila was entitled to a regular trial; under Section 45 of Republic Act No. 296 (the Judiciary Act of 1948) as amended by Republic Act No. 6031, the defendant-appellant was entitled to have its affirmative defenses and counterclaim passed upon by the Court of First Instance in a trial de novo. It is perhaps noteworthy that defendant-appellant had never been afforded the benefit of a trial, even by the City Court which had rendered its judgment on the evidence of the plaintiff submitted ex parte. We hold that the trial court's Order of 24 May 1973 in effect denied defendant-appellant its right to due process and must hence be set aside.

Under Section 33 (1) of B.P. Blg. 129, a suit for the collection of a sum of money not exceeding P20,000.00 would fall within the exclusive original jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and the Municipal Circuit Trial Courts. This case, however, was pending before the Court of First Instance of Manila on 14 February 1983, while this appeal remained before this Court where it has been since 17 March 1975.

Applying the Resolution of this Court en banc dated 14 February 1983, which established guidelines for the distribution of cases pending upon implementation of B.P. Blg. 129 and which provided in pertinent part as follows:

I. PENDING CASES AS OF FEBRUARY 14, 1983:

General Rule. — All pending cases as of February 14,1983 shall be distributed, by raffle, among all branches in a multiple sala seat with incumbent judges except as herein provided:

xxx xxx xxx

3. All pending cases in the Regional Trial Courts (under the former Judiciary Act, the Courts of First Instance, Circuit Criminal Courts, Juvenile and Domestic Relations Court and Court of Agrarian Relations) shall remain with the Regional Trial Courts even though there may have been a change of jurisdiction provided in Batas Pambansa Blg. 129.

By way of example:

a. Cases in the Regional Trial Courts where the amount involved is above P10,000.00 up to P20,000.00 exclusive of interest and costs shall remain therein even though the jurisdiction of the Metropolitan Trial Courts, the Municipal Trial Courts, and Municipal Circuit Trial Court has been increased to P20,000.00;

xxx xxx xxx (Emphasis supplied)

this case should remain with and be remanded to the Court of First Instance of Manila.

ACCORDINGLY, the Order dated 24 May 1973 of the Court of First Instance of Manila, dismissing the appeal of defendant-appellant, is hereby SET ASIDE. This case is REMANDED to the Regional Trial Court of Manila for trial on the merits. No pronouncement as to costs.

SO ORDERED.

2. G.R No. 164375             October 12, 2006

RODOLFO PAREDES, TITO ALAGO AND AGRIPINO BAYBAY, SR., petitioners, vs.ERNESTO VERANO and COSME HINUNANGAN, respondent.

The central issue in this case is whether the absence of the counsel for defendants at the pre-trial, with all defendants themselves present, is a ground to declare defendants in default and to authorize plaintiffs to present evidence ex parte.

The relevant facts are uncomplicated.

The protracted legal battle between the parties began with a complaint for the establishment of a right of way filed by petitioners herein as plaintiffs against

respondents as defendants.1 The complaint, docketed as Civil Case No. 2767 of the Regional Trial Court (RTC) of Maasin City, Southern Leyte, Branch 24, culminated in a judgment by compromise dated 26 April 1994.2 In the Compromise Agreement, respondent Cosme Hinunangan granted a two (2) meter-wide right of way in favor of petitioners in consideration of the amount of P6,000.00 which petitioners agreed to pay.3

Alleging that petitioners had blocked the passage way in violation of the Compromise Agreement, on 28 September 1999, respondents filed a complaint for specific performance with damages against petitioners. It was docketed as Civil Case No. R-3111 also of the RTC of Maasin City, Southern Leyte, Branch 24.4

In their answer, petitioners denied having violated the Compromise Agreement. They alleged that like them, respondents were not actual residents of Barangay Tagnipa where the "road right of way" was established and that respondent Cosme Hinunangan had already sold his only remaining lot in the vicinity to petitioner Rodolfo Paderes.5

Subsequent to the answer, petitioners filed a motion to dismiss on the ground of lack of cause of action.6 The trial court, presided by Judge Bethany G. Kapili, denied the motion to dismiss.7 Petitioners elevated the order of denial to the Court of Appeals and thereafter to this Court, both to no avail.8

Petitioners asked Judge Kapili to inhibit himself from the case. The judge denied the motion.9

Pre-trial was initially set for 24 April 2003, but this was reset to 3 June 2003 on motion of respondents' counsel. But the pre-trial set on 3 June 2003 did not push through either because none of the parties appeared.

So, pre-trial was reset to 11 November 2003. Petitioner Baybay's counsel moved to reset it to another date on account of a conflicting hearing. However, petitioner Baybay, who is the father of the counsel for petitioners, was present in court along with the other defendants, when the case was called on 11 November 2003. The RTC was informed then of a proposed settlement between the parties, although respondent Baybay qualified his reaction by telling the court

that he would first have to inform his lawyer and the co-defendants of the said proposal. The RTC then commented unfavorably on the absence of petitioners' counsel, expressing disappointment towards his attitude, even making note of the fact that not once

had the counsel appeared before the RTC, even though the case had already reached the Supreme Court over the denial of the motion to dismiss.10 At the same time, the RTC acceded and reset the pre-trial for 23 January 2004.11

Shortly before the new pre-trial date, counsel for petitioners filed a Manifestation of Willingness to Settle With Request for Cancellation dated 5 January 2004.12 Apart from manifesting his willingness to settle the complaint, petitioners' counsel through the Manifestation suggested to the opposing counsel that he be informed of the terms of the proposed settlement. Correspondingly, petitioners' counsel requested the cancellation of the 23 January 2004 hearing.

However, the hearing did push through on 23 January 2004. The private respondents and their counsel were present. So were petitioners Baybay and Paderes, and co-defendant Alago, but not their counsel.

An order of even date formalized what had transpired during the hearing. The RTC allowed respondents to present their evidence ex parte, "for failure of the defendants['] counsel to appear before [the RTC]".13 Petitioners filed a motion for reconsideration, but this was denied by the RTC.14

Thus, petitioners filed a petition for certiorari with the Court of Appeals, assailing the orders of the RTC. However, on 28 April 2004, the Court of Appeals dismissed the petition outright,15 for failure to attach duplicate original copies of the annexes to the petition other than the RTC Orders dated 23 January 2004 and 17 February 2004 (attaching photocopies instead), as well as for failure to submit such other pleadings relevant and pertinent to the petition. Petitioners filed a Motion for Reconsideration with Motion to Admit Additional Exhibits, adverting to the documents previously missing from the petition but attached to the motion.

On 13 July 2004, the Court of Appeals issued a Resolution denying the motion for reconsideration. In doing so, the Court of Appeals resolved the petition on its merits, as it ruled that "even with the submission by petitioners of the required pleadings and documents, the instant petition must nevertheless fail."16 The appellate court quoted extensively from the transcripts of the hearings of 11 November 2003 and 23 January 2004. It conceded that under Section 5, Rule 18 of the 1997 Rules of Civil Procedure, it is the failure of the defendant, and not defendant's counsel, to appear at the pre-trial that would serve cause to allow plaintiff to present evidence ex parte. Nevertheless, the Court of Appeals noted that petitioner Baybay had made it clear that he would

never enter into any amicable settlement without the advice of his counsel. Thus, the Court of Appeals concluded that Judge Kapili's "hands were tied," explaining, thus: "He was held hostage by the blatant display of arrogance exhibited by petitioner's counsel in assiduously failing to appear before the trial court. Were he to close his eyes to the reprehensible scheme of Atty. Baybay in delaying the disposition of the main case, the resulting impassé would only strain further the meager resources of the court and prejudice the rights of private respondents."17

The Court of Appeals then cited Sps. Ampeloquio, Sr. v. Court of Appeals,18 wherein the Court held that if every error committed by the trial court were to be a proper object of review by certiorari, then trial would never come to an end and the appellate court dockets would be clogged with petitions challenging every interlocutory order of the trial court. It concluded that the acts of Judge Kapili did not constitute grave abuse of discretion equivalent to lack of jurisdiction.

Finally, the trial court admonished petitioners' counsel to "bear in mind that as an officer of the court, he is tasked to observe the rules of procedure, not to unduly delay a case and defeat the ends of justice but to promote respect for the law and legal processes."19

We reverse the trial court and the Court of Appeals.

A preliminary observation. The Court of Appeals had initially dismissed the petition lodged by petitioners on account of their failure to attach several relevant pleadings, citing Section 3, Rule 46 of the 1997 Rules of Civil Procedure. Before this Court, petitioners devote some effort in arguing that the Court of Appeals erred in dismissing the petition on that procedural ground, while respondents in their comment similarly undertook to defend the appellate court's action on that point. We do not doubt that under Section 3, Rule 46 of the 1997 Rules of Civil Procedure, the Court of Appeals has sufficient discretion to dismiss the petition for failure of petitioner to comply with the requirements enumerated in the section, including "such material portions of the record as are referred to [in the petition], and other documents relevant or pertinent thereto."20 At the same time, "[d]ismissal of appeals purely on technical grounds is frowned upon and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice, and thereby defeat their very aims."21 Thus, the Court has not hesitated to view Section 3 of Rule 46 with a liberal outlook, ruling for example that it was not necessary to attach certified true copies of such material portions of the record as referred to therein.22

The situation in this case bears similarity to that which transpired in Cortez-Estrada v. Heirs of Samut.23 Therein, the petitioner had failed to attach material documents to her petition before the Court of Appeals. The Court of Appeals held the petition was dismissible for such procedural infirmities, yet it nonetheless proceeded to rule against the petitioner on the merits. The Supreme Court agreed with the appellate court that the petition was procedurally infirm, yet found partial merit in its arguments and consequently granted partial relief in favor of the petitioner. In this case, the Court of Appeals, in resolving the motion for reconsideration, proceeded to make a judgment on the merits. Similarly, this Court finds ample basis to review the decision of the trial court as affirmed by the appellate court, notwithstanding the procedural flaw that originally accompanied the petition—a flaw which petitioners did seek to remedy when they belatedly attached the relevant documents to their motion for reconsideration.

Ultimately, there are important reasons to consider the case on the merits. This case affords the Court the opportunity to clarify the authority granted to a trial judge in relation to pre-trial proceedings.

The order of the RTC allowing respondents to present evidence ex parte was undoubtedly to the detriment of petitioners. Since the RTC would only consider the evidence presented by respondents, and not that of petitioners, the order strikes at the heart of the case, disallowing as it does any meaningful defense petitioners could have posed. A judgment of default against a defendant who failed to attend pre-trial, or even any defendant who failed to file an answer, implies a waiver only of their right to be heard and to present evidence to support their allegations but not all their other rights.24

The Constitution guarantees that no person shall be deprived of property without due process of law. One manner by which due process is assured is through the faithful adherence to the procedural rules that govern the behavior of the party-litigants. The Rules of Court do sanction, on several instances, penalties for violation of the Rules that causes the termination of an action without a ruling on the merits, or bars one party from litigating the same while permitting the other to do so. We noted earlier that Section 3, Rule 46 authorizes the dismissal of an original petition before the Court of Appeals for failure to append material portions of the record. Pursuant to Section 5, Rule 17, the failure of the plaintiff to appear on the date of the presentation of his/her evidence in chief on the complaint is ground for the court to dismiss the complaint, without prejudice to the right of the defendant to prosecute the counterclaim in the same or in a separate action. And under Section 5, Rule 18,

the failure of the plaintiff or defendant to appear during pre-trial authorizes the court to either dismiss the complaint, if the plaintiff were absent; or to allow the plaintiff to present evidence ex parte, if the defendant were absent.

The operation of the above-cited provisions may defeat the cause of action or the defense of the party who violated the procedural rule. Yet it could not be said that any resultant adverse judgment would contravene the due process clause, as the parties are presumed to have known the governing rules and the consequences for the violation of such rules. In contrast, the same presumption could not attach if a party were condemned to the same outcome even if the party did not violate a prescribed rule of procedure. Any ruling that disposes of an action or precludes a party from presenting evidence in support or against thereof must have basis in law,25 and any ruling so intentioned without legal basis is deemed as issued with grave abuse of discretion.26 In the end, a person who is condemned to suffer loss of property without justifying legal basis is denied due process of law.

Simply put, nothing in the Rules of Court authorizes a trial judge to allow the plaintiff to present evidence ex parteon account of the absence during pre-trial of the counsel for defendant.

Sections 4 and 5 of Rule 18 warrant examination:

SEC. 4. Appearance of Parties. – It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents.

SEC. 5. Effect of failure to appear. – The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to render judgment on the basis thereof.

Section 4 imposes the duty on litigating parties and their respective counsel during pre-trial. The provision also provides for the instances where the non-appearance of a party may be excused. Nothing,

however, in Section 4 provides for a sanction should the parties or their respective counsel be absent during pre-trial. Instead, the penalty is provided for in Section 5. Notably, what Section 5 penalizes is the failure to appear of either the plaintiff or the defendant, and not their respective counsel.

Indeed, the Court has not hesitated to affirm the dismissals of complaints or the allowance of plaintiffs to present evidence ex parte on account of the absence of a party during pre-trial. In United Coconut Planters Bank v. Magpayo,27 the complaint was dismissed because although the counsel for complainant was present during the pre-trial hearing, the Court affirmed such dismissal on account of said counsel's failure to present any special power of attorney authorizing him to represent the complainant during pre-trial.28 In Jonathan Landoil International Co. v. Mangudadatu,29 the defendant and its counsel failed to appear during pre-trial, and the complainants were allowed to present evidence ex parte. After an adverse decision was rendered against the defendant, it filed a motion for new trial in which it cited the illness of defendant's counsel as the reason for his non-appearance during pre-trial. While the Court acknowledged that such argument was not a proper ground for a motion for new trial, it also noted that the appearance of the defendant during pre-trial was also mandatory, and that the defendant failed to justify its own absence during pre-trial.30

There are two cases which, at first blush, may seem to affirm the action of the RTC. In the disbarment case of Miwa v. Medina,31 a lawyer was suspended from the practice for one (1) month for, among others, failing to appear during pre-trial, thus leading to the declaration of his client, the defendant, in default. At the same time, the Court inMiwa did take the defendant herself to task for also failing to appear during pre-trial, observing that "the failure of a party to appear at pre-trial, given its mandatory character, may cause her to be non-suited or considered as in default."32

In Social Security System v. Chaves,33 the Social Security System (SSS) itself was named as the defendant in a complaint filed with the RTC of Cagayan de Oro City. The pre-trial brief was filed by the acting assistant branch manager of the SSS in Cagayan de Oro City, who happened to be a lawyer and who also entered his appearance as counsel for the SSS. However, said lawyer was not present during pre-trial, and the SSS was declared in default and the complainants allowed to present their evidence ex parte. The Court affirmed such order of default, noting other procedural violations on the part of SSS, such as the fact that the motion for reconsideration to lift the order of default lacked verification, notice of hearing and affidavit of merit.

Notwithstanding, the Court is not convinced that SSS is ample precedent to affirm an order of default where even though the defendant was present during pre-trial, defendant's counsel failed to appear for the same hearing. The Court in SSS did not make any categorical declaration to this effect. Moreover, it can be observed that in SSS, the counsel himself, the acting assistant branch manager of the SSS, would have been in addition, the representative of the SSS itself, a juridical person which can only make an appearance during pre-trial through a natural person as its duly authorized representative. The Court of Appeals decision upheld in SSS, cited extensively in our decision therein, expressly affirmed the order of default on the ground that "it is the discretion of the trial judge to declare a party-defendant as in default for failure to appear at a pre-trial conference." However, in SSS, neither the Court of Appeals nor this Court expressly laid relevance to the fact that the counsel himself, as opposed to the defendant, had not attended the pre-trial.

Upon the other hand, Africa v. Intermediate Appellate Court34 illuminates the proper standard within which to view the instant petition. It appeared therein that on the day of the pre-trial, counsel for the defendant (therein petitioner) had arrived ten minutes after the case was called. Within that ten-minute span, the trial court had issued an order in open court declaring the defendant in default and authorizing the plaintiff to present its evidence ex parte. A mere two days later, the trial court rendered judgment in favor of plaintiff. The Court reversed the trial court, holding that the order of default was issued with grave abuse of discretion. The reasoning of the Court was grounded primarily on the doctrinal rule that frowned against "the injudicious and often impetuous issuance of default orders,"35 which led in that case to "a deni[al of the defendant's] basic right to be heard, even after his counsel had promptly explained the reason for his tardiness at the pre-trial."36

Still, it would not be proper to consider Africa as the governing precedent herein, influential as it may be to our disposition. It was not clear from the narration in Africa whether the defendant himself was absent during the pre-trial, a circumstance which is determinative to this petition. Moreover, the Court's tone in Africa indicated that it was animated by a liberal philosophy towards the procedural rule, implying that the trial court's reversed action was nonetheless adherent to the strict letter of the rule. Whether or not the trial court in Africa acted conformably with the rules depends upon the presence or absence of the defendant therein during pre-trial. It can no longer be discerned whether the Court so ruled in Africa notwithstanding the presence or absence of the defendant therein. It would be disingenuous though to assume, as a means of

applying that case as precedent herein, that the defendant was actually present during the pre-trial in Africa.

Hence, we pronounce that the absence of counsel for defendants at pre-trial does not ipso facto authorize the judge to declare the defendant as in default and order the presentation of evidence ex parte. It bears stressing that nothing in the Rules of Court sanctions the presentation of evidence ex parte upon instances when counsel for defendant is absent during pre-trial. The Rules do not countenance stringent construction at the expense of justice and equity.37 As the Court has previously enunciated:

We cannot look with favor on a course of action which would place the administration of justice in a straightjacket for then the result would be a poor kind of justice if there would be justice at all. Verily, judicial orders, such as the one subject of this petition, are issued to be obeyed, nonetheless a non-compliance is to be dealt with as the circumstances attending the case may warrant. What should guide judicial action is the principle that 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 or properties on technicalities.38

Due process dictates that petitioners be deprived of their right to be heard and to present evidence to support their allegations if, and only if, there exists sufficient basis in fact and in law to do so.39 There being a manifest lack of such basis in this case, petitioners would be unjustly denied of the opportunity to fully defend themselves should the Court affirm the questioned orders which were evidently issued by the RTC with grave abuse of discretion. The better and certainly more prudent course of action in every judicial proceeding is to hear both sides and decide on the merits rather than dispose of a case on technicalities.40

While counsel is somewhat to blame for his non-attendance at pre-trial, incidentally the operative act which gave birth to the controversy at bar, it would be most unfair to penalize petitioners for what may be the deficiency of their lawyer when the consequent penalty has no basis in law. Particularly mitigating in the instant case is the fact that the counsel for private respondents intimated, at an earlier hearing, a possibility of an amicable settlement to the case. Then, counsel for petitioners submitted a manifestation41 requesting therein that the parties be given ample time to respectively discuss their proposals and counter-proposals and that the hearing

for 23 January 2004 be moved to a later date as may be agreed upon by the parties for submission of their possible compromise agreement. It may well have been that counsel for petitioners labored under the false understanding that a compromise agreement was an imminent possibility. The Court nonetheless notes that counsel was remiss in assuming that his motion to reset the scheduled hearing would necessarily be granted by the court a quo.

Be that as it may, there is no clear demonstration that the acts of the counsel of petitioners were intended to perpetuate delay in the litigation of the case. Assuming arguendo that the trial court correctly construed the actions of the counsel of petitioners to be dilatory, it cannot be said that the court was powerless and virtually without recourse but to order the ex parte presentation of evidence by therein plaintiffs. We are in some sympathy with the judge who was obviously aggrieved that the case was dragging on for an undue length of time. But even so, there were other remedies available to the court.

Among the inherent powers of the courts expressly recognized by the Rules include the authority to enforce order in proceedings before it,42 to compel obedience to its judgments, orders and processes,43 and to amend and control its process and orders so as to make them conformable to law and justice.44 Moreover, the Code of Judicial Conduct empowers the courts to judiciously take or initiate disciplinary measures against lawyers for unprofessional conduct.45 A show cause order to counsel would have been the more cautious and reasonable course of action to take under the circumstances then prevailing. In failing to do so, the trial court impetuously deprived petitioners of the opportunity to meaningfully present an effective defense and to adequately adduce evidence in support of their contentions.

WHEREFORE, the instant petition is hereby GRANTED and the resolutions of the Court of Appeals affirming the Orders of the Regional Trial Court in Civil Case No. R-3111 dated 23 January 2004 and 17 February 2004 are REVERSED. No costs.

SO ORDERED.

Rule 19 (Intervention)

1. G.R. No. 94005. April 6, 1993.

LUISA LYON NUÑAL, herein represented by ALBERT NUÑAL, and ANITA NUÑAL HORMIGOS, petitioners, vs.

THE COURT OF APPEALS and EMMA LYON DE LEON in her behalf and as guardian ad litem of the minors HELEN SABARRE and KENNY SABARRE, EDUARDO GUZMAN, MERCEDEZ LYON TAUPAN, WILFREDO GUZMAN, MALLY LYON ENCARNACION and DORA LYON DELAS PEÑAS, respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; ONCE IT BECOMES FINAL, MAY NO LONGER BE MODIFIED IN ANY RESPECT; EXCEPTIONS. — In the case of Manning International Corporation v. NLRC, (195 SCRA 155, 161 [1991]) We held that ". . ., nothing is more settled in the law than that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court rendering it or by the highest Court of land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where the judgment is void." Furthermore, "(a)ny amendment or alteration which substantially affects a final and executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that purpose."

2. ID.; ID.; ID.; ID.; REMEDY OF AGGRIEVED PARTY. — In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case. Consequently, any modification that he would make, as in this case, the inclusion of Mary Lyon Martin would be in excess of his authority. The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all other heirs for her share in the subject property, in order that all the parties in interest can prove their respective claims.

D E C I S I O N

CAMPOS, JR., J p:

This is a petition for review on certiorari of the decision ** dated February 22, 1990 of the Court of Appeals in CA-G.R. CV No. 14889 entitled "Emma Lyon de Leon, et al., plaintiffs-appellees versus Luisa Lyon Nuñal, now deceased herein represented by Albert Nuñal, et al., defendants appellants," dismissing petitioners' appeal and affirming the trial court's order *** dated January 9, 1987 for the

inclusion of Mary Lyon Martin as one of the heirs who shall benefit from the partition.

The facts as culled from the records of the case are as follows.

This case originated from a suit docketed as Civil Case No. 872 filed by Emma Lyon de Leon in her behalf and as guardian ad litem of the minors Helen Sabarre and Kenny Sabarre, Eduardo Guzman, Mercedes Lyon Taupan, Wilfredo Guzman, Mally Lyon Encarnacion and Dona Lyon de las Peñas, (herein private respondents) against Luisa Lyon Nuñal, now deceased and herein represented by her heirs, Albert Nuñal and Anita Nuñal Hormigos (herein petitioners), for partition and accounting of a parcel of land located in Isabela, Basilan City. Subject parcel of land was formerly owned by Frank C. Lyon and May Ekstrom Lyon, deceased parents of Helen, Dona, Luisa, Mary, Frank and William James. Private respondents claimed that said parcel of land, formerly covered by Transfer Certificate of Title No. 3141 in the name of Frank C. Lyon, has been in possession of petitioner Luisa Lyon Nuñal since 1946 and that she made no accounting of the income derived therefrom, despite demands made by private respondents for the partition and delivery of their shares.

On December 17, 1974, after trial and hearing, the then Court of First Instance (now Regional Trial court) rendered its judgment in favor of private respondents and ordered the partition of the property but dismissing private respondents' complaint for accounting. The dispositive portion of the judgment reads as follows:

"WHEREFORE, judgment is hereby rendered ordering the partition of the land covered by Transfer Certificate of Title No. 3141 among the plaintiffs and defendant. The parties shall make partition among themselves by proper instruments of conveyance, subject to the Court's confirmation, should the parties be unable to agree on the partition, the court shall appoint commissioners to make the partition, commanding them to set off to such party in interest such part and proportion of the property as the Court shall direct. Defendant is further ordered to pay plaintiffs attorney's fees in the sum of P2,000.00." 1

On July 30, 1982, the order of partition was affirmed in toto by the Court of Appeals in CA-G.R. No. 57265-R. The case was remanded to the court of origin for the ordered partition. 2

On May 17, 1984, an order for the issuance of the writ of execution was issued by the court a quo. 3

On July 17, 1984, Mary Lyon Martin, daughter of the late Frank C. Lyon and Mary Ekstrom Lyon, assisted by her counsel filed a motion to quash the order of execution with preliminary injunction. In her motion, she contends that not being a party to the above-entitled case her rights, interests, ownership and participation over the land should not be affected by a judgment in the said case; that the order of execution is unenforceable insofar as her share, right, ownership and participation is concerned, said share not having been brought within the Jurisdiction of the court a quo. She further invokes Section 12, Rule 69 of the Rules of Court. 4

On June 26, 1985, the trial court issued an order revoking the appointment of the three commissioners and in lieu thereof, ordered the issuance of a writ of execution. 5

On February 4, 1986, the said court issued an order appointing a Board of Commissioners to effect the partition of the contested property. 6

On May 28, 1986, the trial court dismissed the motion to quash order of execution with preliminary injunction filed by Mary Lyon Martin and directed the partition of the property among the original party plaintiffs and defendants. 7

On September 24, 1986, the Commissioners manifested to the trial court that in view of the fact that the name of Mary Lyon Martin also appears in the Transfer Certificate of Title, she could therefore be construed as one of the heirs. A ruling from the trial court was then sought. 8

On September 29, 1986, the lower court issued an order directing the counsel of Emma Lyon de Leon to furnish the court within five days from receipt thereof all the names the of heirs entitled to share in the partition of the subject property. 9

On October 1, 1986, the petitioners filed a manifestation praying that the court issue an order directing the partition of the property in consonance the decision dated December 17, 1974 of the trial court the order of said court dated May 28, 1986. 10

Without ruling on the manifestation, the lower court issued an order directing the Board of Commissioners to immediately partition the said property. 11

On January 3, 1987, the private respondents filed motion for clarification as to whether the partition of property is to be confined merely among the party plaintiffs and defendants, to the exclusion of Mary Lyon Martin. 12

On January 9, 1987, the lower court issued the assailed order directing the inclusion of Mary Lyon Martin as co-owner with a share in the partition of the property, to wit:

"After a perusal of the decision of the Court of Appeals CA-G.R. No. 57265-R, where this case was appealed by the unsatisfied parties, there is a finding that Mary now Mary Lyon Martin is one of the legitimate children of Frank C. Lyon and Mary Ekstrom. (Page 3 of the decision).

In view of this finding, it would be unfair and unjust if she would be left out in the partition of this property now undertaking (sic) by the said court appointed commissioners.

WHEREFORE, premises considered, the court appointed commissioners is hereby directed to include Mary Lyon Martin as co-owner in the said property subject of partition with the corresponding shares adjudicated to her.

SO ORDERED." 13

Petitioners' motion for reconsideration 14 of the aforesaid order was denied by the trial court. 15

On February 22, 1990 the Court of Appeals rendered its decision dismissing petitioners' appeal, the dispositive portion of which reads as follows:

"WHEREFORE, premises considered, there being no legal impediment to the inclusion of Mary Lyon Martin by the court-appointed Board of Commissioners as one of the heirs who shall benefit from the partition, the instant appeal is DISMISSED for lack of merit.

NO COSTS.

SO ORDERED." 16

Petitioners' motion for reconsideration was denied on June 6, 1990. 17

Petitioners filed this petition for review alleging that the Court of Appeals has decided questions of substance contrary to law and the applicable decisions of this Court, for the following reasons:

"1.) BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT DIRECTING THE COURT APPOINTED BOARD OF COMMISSIONERS TO INCLUDE MARY L. MARTIN TO SHARE IN THE PARTITION OF THE PROPERTY IN LITIGATION DESPITE THE FACT, OVER WHICH THERE IS NO DISPUTE, THAT SHE HAS NOT LITIGATED EITHER

AS A PARTY PLAINTIFF OR DEFENDANT IN CIVIL CASE NO. 872, IT HAS REFUSED TO RECOGNIZE THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION TO AMEND OR MODIFY THE JUDGMENT IN CIVIL CASE NO. 872 AND THE REGIONAL TRIAL COURT'S ORDER DATED 28 MAY 1986 WHICH HAS BECOME FINAL AND EXECUTORY.

2.) WHEN THE COURT OF APPEALS HAS CATEGORICALLY STATED THAT MARY L. MARTIN "NEVER LITIGATED AS ONE OF THE PLAINTIFFS IN SAID CASE," AND HER ONLY PARTICIPATION THEREIN WAS SIMPLY CONFINED "AS A WITNESS FOR DEFENDANT-SISTER LUISA LY ON NUÑAL," AND TO ALLOW HER TO SHARE IN THE PARTITION THIS LATE WITHOUT REQUIRING A PROCEEDING WHERE THE PARTIES COULD PROVE THEIR RESPECTIVE CLAIMS, IS TANTAMOUNT TO DENYING THE NUÑALS OF THEIR RIGHT TO DUE PROCESS. 18

The crux of this case is whether of not the trial court may order the inclusion of Mary L. Martin as co-heir entitled to participate in the partition of the property considering that she was neither a party plaintiff nor a party defendant in Civil Case No. 872 for partition and accounting of the aforesaid property and that the decision rendered in said case has long become final and executory.

Petitioners contend that the trial court's decision dated December 14, 1974 in Civil Case No. 872 ordering the partition of the parcel of land covered by Transfer Certificate of Title No. 3141 among plaintiffs and defendants has long become final and executory. Hence the trial court has no jurisdiction to issue the questioned Order dated January 9, 1987 ordering the Board of Commissioners to include Mary Lyon Martin to share in the partition of said property despite the fact that she was not a party to the said case. Said Order, therefore, resulted in an amendment or modification of its decision rendered in Civil Case No. 872.

We find merit in the instant petition.

In the ease of Manning International Corporation v. NLRC, 19 We held that ". . ., nothing is more settled in the law than that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court rendering it or by the highest Court of land. The only recognized exceptions are the correction of clerical

errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where the judgment is void."

Furthermore, "(a)ny amendment. or alteration which substantially affects a final and executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that purpose." 20

In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case. Consequently, any modification that he would make, as in this case, the inclusion of Mary Lyon Martin would be in excess of his authority.

The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all other heirs for her share in the subject property, in order that all the parties in interest can prove their respective claims.

WHEREFORE, the petition is GRANTED. The Order dated January 9, 1987 of the trial Court as affirmed by the Court of Appeals is hereby REVERSED and SET ASIDE. The decision of the trial court dated December 17, 1974 in Civil Case No. 872 is hereby REINSTATED.

SO ORDERED.

2. Union Bank vs Concepcion             In this petition for review under Rule 45 of the Rules of Court, petitioner Union Bank of the Philippines (Union Bank) assails and seeks the setting aside of the Decision[1] dated July 22, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 75355, as effectively reiterated  in  its Resolution[2] of November 7, 2003 denying the petitioner’s motion for reconsideration.           The  records,  which include a copy of this Court’s Decision dated May 19, 1998 in G.R. No. 131729 entitled “Union Bank of the Philippines v. Court of

Appeals et al., respondents,”[3]  yield the following material facts:           On September 16, 1997, the EYCO Group of Companies[4] (EYCO or EYCO Group) filed  with the Securities and Exchange Commission (SEC) a PETITION[5]   for the declaration of suspension of payment, appointment of a rehabilitation receiver/committee and approval of rehabilitation plan with an alternative prayer for liquidation and dissolution of corporations (Petition for Suspension of Payment, hereinafter). In it, EYCO depicted the Group’s composite corporations as having a combined assets that are more than enough to pay off all their debts, but nonetheless unable to pay them as they fall due. Joining EYCO as co-petitioners were Eulogio Yutingco and two other individuals holding controlling interests in the composite corporations (collectively, the Yutingcos).           Finding the petition, docketed as SEC Case No. 09-97-5764, to be sufficient in form and substance, the SEC Hearing Panel, by an order of September 19, 1997, directed the suspension of all actions, claims and proceedings against EYCO, et al. pending before any court, tribunal, board or office[6] (the Suspension Order). At the same time, the Panel set  the petition for hearing.           Meanwhile, a consortium of private banks which had granted credit facilities to EYCO, among them, Union Bank, convened to map out their collective

collection options. The formation of a management committee (ManCom) to represent the creditor banks was agreed upon in that meeting.            Subsequently, Union Bank decided to break away from the consortium and, without notifying its members, filed a slew of civil cases against EYCO, et al. Of relevance is the first, a complaint for a sum of money instituted on September 23, 1997 before the Regional Trial Court (RTC) of Makati City, against four (4) members of the EYCO Group and spouses Eulogio and Bee Kuan Yutingco, as sureties of the corporate obligations, with application for preliminary attachment. This complaint,[7] docketed as Civil Case No. 97-2184, eventually ended up in Branch 148 of the court. The next day, the Makati RTC issued the desired writ of preliminary attachment,[8] pursuant to which levy on attachment was annotated on the titles, i.e., TCT Nos. V-48192[9]  and V-48193[10] of the Registry of Deeds of Valenzuela City, of two parcels of land under the name of Nikon Plaza, Inc. and EYCO Properties, Inc., respectively. Also attached, per herein respondent Danilo L. Concepcion (Concepcion, for brevity), without denial from the petitioner, is a parcel of land covered by TCT No. V-49678 of the same registry allegedly held by the Yutingcos in trust for Nikon Industrial Corporation.[11]             On October 22, 1997, Union Bank moved, on jurisdictional ground, for the dismissal of SEC Case No. 09-97-5764.

On the same date, EYCO submitted its rehabilitation plan.           In January 1998, the SEC Hearing Panel appointed the regular members of the newly created ManCom for EYCO.           Meanwhile, Union Bank, without awaiting for the SEC’s ruling on its motion to dismiss SEC Case No. 09-97-5764, filed with the CA a petition forcertiorari to nullify what it tagged as the precipitate September 19, 1997 SEC suspension order[12] and its creation of the ManCom. In the same petition, docketed as CA-G.R. SP No. 45774, Union Bank alleged that the jurisdiction over the basic petition for declaration of suspension of payment pertains to the RTC under Act No. 1956, as amended, or the Insolvency Law.           On December 22, 1997, in CA-G.R. SP No. 45774, the CA rendered judgment declaring Union Bank guilty of forum shopping and accordingly dismissed its petition for certiorari. This Court, in its Decision[13] dated May 19, 1998 in G.R. No. 131729, in turn affirmed that of the CA, but proceeded further to declare the SEC as possessed of jurisdiction over EYCO’s petition for suspension of payments filed pursuant to Section 5(d) of Presidential Decree (P.D.) No. 902-A, but not insofar as the Yutingcos’ petition was concerned. With respect to the Yutingcos, the Court held that the SEC’s jurisdiction on matters of suspension of payments is confined only to those initiated by corporate entities, as the aforecited section does not allow an individual to

file, or join in, the corresponding petition. In line with the rule on misjoinder of parties, the Court directed the SEC to drop the individual petitioners from the petition for suspension of payment.                Conformably with this Court’s Decision aforementioned, the Makati RTC issued, in Civil Case No. 97-2184, an Order[14] dated August 17, 1998 thereunder indefinitely suspending the proceedings in that collection suit until further orders. The fallo of the RTC’s order reads:                         WHEREFORE, …

the complaint filed by the plaintiff [Union Bank] against defendant-corporation [EYCO 4] … is hereby INDEFINITELY SUSPENDED until further Orders from this Court in view of the existing petition for Suspension of Payment before the [SEC]. On the other hand, the defendant’s motion to dismiss complaint against the individual-defendants, namely: Spouses Eulogio and Bee Kuan Yutingco, is hereby DENIED for lack of merit.

 

                        Consequently, in order to give defendant-Spouses [Yutingcos] ample time to prepare for whatever defense they may raise, they are hereby given a new fifteen (15) days period from receipt of this Order within which to file their answer to the complaint against them.

                         SO ORDERED.  (Words in brackets and emphasis supplied.)              In a related development, the SEC Hearing Panel, over the objection of the consortium of EYCO’s creditor banks, approved, on December 18, 1998, the rehabilitation plan prepared by the Strategies and Alliance Corporation for EYCO.  The  consortium  lost  no  time  in  appealing  to  the SEC en banc  the Hearing  Panel’s approval  order  and  prayed  for  the  liquidation and dissolution of EYCO, the appellate recourse docketed as SEC AC No. 649.           On September 14, 1999, the SEC en banc issued in SEC AC No. 649 an order finding for the consortium, disposing as follows:

              WHEREFORE, … the appeal is, as it is hereby granted and the Order dated 18 December 1998 is set aside. The Petition to be Declared in State of Suspension of Payment is hereby disapproved and the SAC Plan terminated. Consequently, all committees, conservator/receivers created pursuant to said Order are dissolved. xxx              The Commission, likewise, orders the

liquidation and dissolution of the [EYCO Group]. The case is hereby remanded to the hearing panel below for that purpose. xxx (Words in brackets and emphasis supplied.)  

             Another en banc order[15] of March 31, 2001 followed, with the SEC this time appointing respondent Concepcion to act, vice the dissolved Liquidation Committee, as EYCO Liquidator. Among Concepcion’s first act as such liquidator was to file, on March 8, 2002, in Civil Case No. 97-2184, a Motion to Intervene and To Admit Motion to Set Aside Order of Attachment[16] (Motion to Intervene, for brevity). Three days later, Concepcion submitted before theSEC  a Liquidation Plan[17] for the EYCO Group.                              After due proceedings, the SEC approved, on April 11, 2002, the Concepcion-submitted Liquidation Plan.[18] Concepcion’s motion to intervene, however, met a different fate.  For, by Order[19] of August 8, 2002, the Makati RTC denied Concepcion’s motion to intervene in Civil Case No. 97-2184 on the ground of lack of standing to intervene, his appointment as Liquidator being, according to the court, of doubtful validity. The order, in addition, granted Union Bank’s earlier motion to declare EYCO in default, and set a date for the ex-parte reception of Union Bank’s evidence.

            Concepcion then moved for reconsideration questioning the basis of the denial of his motion to intervene.  Questioned, too, was the default aspect of the order, Concepcion arguing in this regard that the collection proceedings were suspended “until further Orders from this Court” [20] and the RTC of Makati has yet to issue the suspension-lifting order. The Makati RTC denied the motion on December 16, 2002.           Earlier,  however, Union Bank presented evidence ex parte, on the basis of  which the Makati RTC rendered, on December 27, 2002, partial judgment[21]ordering  EYCO  to pay  the bank P400 million plus interests and attorney’s fees.           Via a petition for certiorari and prohibition before the CA, Concepcion challenged the RTC’s partial judgment aforementioned and its earlier order denying the motion to intervene. His recourse was docketed as CA-G.R. SP No. 75355.                      The appellate court eventually issued the herein assailed Decision[22] reversing the Makati RTC’s impugned issuances and allowing Concepcion to intervene, thus: 

         WHEREFORE, foregoing premises considered, the petition is GRANTED. The assailed orders and partial judgment are

hereby ANNULLED and SET ASIDE. Public respondent [RTC Judge Oscar Pimentel, Branch 148, Makati City] is ordered to allow petitioner [Concepcion] to intervene in Civil Case No. 97-2184.

 

                        SO ORDERED.          Following the denial of its motion for reconsideration,[23] Union Bank has interposed this petition ascribing to the CA the following errors:

          1. In ruling in favor of respondent  Concepcion’s right to intervene in Civil Case No. 97-2184 pending in the lower court despite his lack of legal interest in the matter in litigation.

            2. In ruling in favor of respondent Concepcion’s right to intervene in said Civil Case No. 97-2184 despite his lack of legal personality, his appointment by the SEC as liquidator of EYCO being null and void for lack of jurisdiction; and

             3. In giving due course to respondent Concepcion’s petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure despite its being the improper remedy.  

            We DENY. 

          As the Court distinctly notes, the petitioner does not assail the CA’s judgment

insofar as it nullified the RTC’s partial judgment or its default order. As thus couched, the petition particularly sets its sight on that part of the appellate court’s ruling allowing  respondent Concepcion to intervene in Civil Case No. 97-2184. Of the three errors assigned, the more critical relates to the challenged validity of the respondent’s appointment by the SEC as liquidator of the EYCO Group, his right to intervene predicated as it is on his being such liquidator.           It is the petitioner’s posture, following the Makati RTC’s line,  that the respondent’s appointment as liquidator of EYCO was invalid for lack of jurisdiction on the part of SEC to preside, in first place, over EYCO’s liquidation and dissolution. Pressing on, the petitioner states that EYCO is already insolvent and insolvency proceedings fall under the jurisdiction of regular courts under the Insolvency Law (Act No. 1956, as amended) in relation to the pertinent provision of R.A. No. 8799, otherwise known as  the  Securities Regulation Code.          We are not persuaded.           As it were, the underlying petition[24] EYCO filed with and over which  the SEC assumed jurisdiction was one for declaration of suspension of payment, appointment of a rehabilitation receiver/committee, approval of rehabilitation plan with alternative prayer for liquidation and dissolution. That the SEC, along the way, ordained EYCO’s liquidation and dissolution did not, without more, strip the SEC of jurisdiction over the liquidation process.

Albeit jurisdiction over a petition to declare a corporation in a state of insolvency strictly lies with regular courts, the SEC possessed, during the period material, ample power under P.D. No. 902-A,[25] as amended, to declare a corporation insolvent as an incident of and in continuation of its already acquired jurisdiction over the petition to be declared in the state of suspension of payments in the two instances provided in Section 5(d) thereof.[26] Said Section 5(d)[27] vests the SEC with exclusive and original jurisdiction   over petitions for suspension of payments which may either be: (a) a simple petition for suspension of payments based on the provisions of the Insolvency Law,  i.e.,  the petitioning corporation has sufficient assets to cover all its debts, but foresees the impossibility of meeting the obligations as they fall due, or (b) a similar petition filed by an insolvent corporation accompanied by a prayer for the creation of a management committee and/or rehabilitation receiver based on the provisions of P.D. No. 902-A, as amended by P.D. No. 1758.[28]

           In the case at bench,  EYCO’s  petition for suspension of payment was, at bottom, a mix of both situations adverted to above. For, while EYCO,  in the said petition, alleged being solvent but illiquid, it nonetheless pleaded for the constitution of a  rehabilitation receiver/committee, with an alternative prayer for liquidation, if warranted. Clearly then, the SEC has, from the start, jurisdiction over EYCO’s petition for suspension of payment, such jurisdiction,  followingChing,[29] continuing

for purposes of liquidation after it (SEC) declared EYCO insolvent. The SEC appeared to be aware of the continuity angle as it even ordered the  remand to the SEC Hearing Panel of SEC Case No. 09-97-5764 for purposes of liquidating and dissolving the EYCO Group.                 If the SEC contextually retained jurisdiction over the liquidation of EYCO, is it not but logical then that it has competence to appoint the respondent – or any qualified individual for that matter – as liquidator?                                            And lest it be overlooked, the Court had, in G.R. No. 131729, already rejected the petitioner’s thesis about the SEC’s purported lack of jurisdiction over EYCO’s suspension of payment case owing to its supervening insolvency. Therein, the Court stated: 

         We are of course aware of the argument [of] … petitioner [Union Bank] that the petition of [EYCO] should be entirely dismissed and taken out of the SEC’s jurisdiction on account of the alleged insolvency of  [the latter]. In this regard, petitioner theorizes that [EYCO has] already become insolvent when [the composite corporations] allegedly disposed of a substantial portion of their properties … hence suspension of payments with the SEC is not the proper remedy.            Such argument does not persuade us. Petitioner’s allegations of … [EYCO’s] … supposed insolvency … are

hardly of any consequence to the assumption of jurisdiction by the SEC over the nature or subject matter of the petition for suspension of payments. Aside from the fact that these allegations are evidentiary in nature …, we have likewise consistently ruled that what determines the nature of an action, as well as which court or body has jurisdiction over it, are the allegations of the complaint, or a petition as in this case, and the character of the relief sought. That the merits of the case after due proceedings are later found to veer away from the claims asserted by EYCO in its petition, as when it is shown later that it is actually insolvent and may not be entitled to suspension of payments, does not divest the SEC at all of its jurisdiction already acquired as its inception …. (Words in brackets and emphasis added.)      

          The Court is certainly aware of the transfer, effected by R.A. No. 8799, to the RTC of the SEC’s jurisdiction defined under Section 5(d) of P.D. No. 902-A.[30]  Such transfer, however, did not, as the petitioner and the RTC posit, divest the SEC of its jurisdiction over SEC Case No. 09-97-5764, given that it had already issued, as early as September 19, 1998,  the suspension order after it found the petition for suspension filed on September 16, 1998 to be sufficient in form and substance. Subsection 5.2 of R.A. No. 8799 prescribing

the jurisdiction transfer and the rules on transition provides as follows: 

         5.2. The [Securities and Exchange] Commission’s jurisdiction over all cases enumerated under Section 5 of [P.D.] No. 902-A is hereby transferred to the appropriate [RTC]: Provided that the Supreme Court … may designate the [RTC] branches that shall exercise jurisdiction over these cases. xxx The Commission shallretain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Words in bracket and emphasis added.)  

             EYCO’s petition for suspension for payment was, for all intents and purposes, still pending with the SEC as of June 30, 2000. Accordingly, the SEC’s jurisdiction thereon, by the express terms of R.A. No. 8999, still subsists “until [the suspension of payment case and its incidents are] finally disposed.” In the words of the CA: 

         As held by this Court … Section 5.2 of RA 8799 specifically provided that the SEC shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of June 30, 2000 until finally disposed.

The records are clear that the suspension of payment was filed on September 7, 1998. As such, the petition is still pending with the SEC as of the cut-off date set in the rules. xxx[31]

            When the law speaks of “until finally disposed,” the reference should include the final disposition of the liquidation and dissolution processes since it is within the power of the SEC by law,[32] or as incident of or in continuation of its already acquired jurisdiction over the petition for suspension of payment,[33] to order the dissolution/liquidation of a corporation and accordingly appoint a liquidator. In fine, the continuing exercise of jurisdiction by the SEC over the liquidation and dissolution of the EYCO Group is warranted.  Once jurisdiction attaches, the court cannot be ousted from the case by any subsequent events, such as a new legislation placing such proceedings under the jurisdiction of another body. The only recognized exceptions to the rule, which find no sway in the present case, arise when the statute expressly so provides or when the statute is clearly intended to apply to actions pending before its enactment.[34]

           Given the above perspective, the Court is at a loss to understand petitioner’s challenge against the right of the respondent to intervene in Civil Case No. 97-2184, on the postulate that the latter lacks legal interest in the matter in litigation.

           Intervention is a procedure by which a third person, not originally party to the suit, but claiming an interest in the subject matter, comes into the case, in order to protect his right or interpose his claim.[35] Its main purpose is to settle in one action and by a single judgment all conflicting claims of or the whole controversy among the persons involved.[36] To warrant intervention under Rule 19, Section 1 of the Rules of Court,[37] two requisites must concur: (a) the movant has a legal interest in the matter in litigation, and (b) intervention must not unduly delay or prejudice  the adjudication of the rights of the parties, nor should the claim of the intervenor be capable of being properly decided in  a separate proceeding.  The interest, which entitles one to intervene, must involve the matter in litigation and of such direct and immediate character[38] that the intervenor will either gain or lose by the direct legal operation and effect of the judgment.[39]

            Just like the CA, the Court has no doubt about the respondent, as the duly-appointed liquidator of EYCO’s remaining assets, having a legal interest in the matter litigated in Civil Case No. 97-2184. This is particularly true with respect to the parcels of land covered by the writ of attachment which, in the implementation of the SEC-approved Liquidation Plan for EYCO, had been conveyed to the respondent[40] in trust for the benefit of creditors, EYCO’s stockholders and other persons in interest. At the very least, the respondent, as

liquidator-trustee, is so situated as to be affected by the distribution or disposition of the attached properties which were under threat of being levied on execution and sold at public auction.  Respondent would be unfaithful to his trust if he does take a bona fide effort to intervene in Civil Case No. 97-2184 to thwart the attempt of the petitioner to collect unpaid loans ahead of other legitimate creditors similarly situated. Under the SEC Rules of Procedure on Corporate Recovery pursuant to which the SEC appointed the respondent to liquidate the remaining assets of EYCO, the liquidator is empowered and duty bound to “[R]epresent the debtor … in any case filed by or against the debtor in any tribunal” and  “[B]ring any action on behalf of the debtor to collect, recover or preserve any of    its assets, or to resist or defend against any claim.”[41]

           Any suggestion that allowing intervention would unduly delay the  final closure of the collection case cannot be accepted. Far from unnecessarily prolonging or complicating the case, the desired intervention, if allowed, would possibly enable the court in one single action and judgment to protect the collective interests of the creditors of the EYCO Group that are seriously threatened by the imminent exclusion of certain properties from the pool of assets that should legally, if not ideally, be equitably distributed among them. Disallowing intervention would pave the way for the petitioner to seize the proceedings before the Makati RTC to

work entirely in its favor. Such course of action trifles with the entire liquidation process. And any decision rendered therein would unlikely be left undisturbed by other legitimate but unpaid creditors whose interest in the attached properties can hardly be disputed.           Moreover, the claim of the respondent over the attached properties could not possibly be better threshed out in a separate but subsequent proceedingsgiven that he had already secured titles over them.            The third and last issue turns on the propriety of certiorari as a recourse to the denial of a motion for intervention. The correct remedy, according to the petitioner, is an appeal under Rule 45 of the Rules of Court, an order denying intervention being final in character, not merely interlocutory. Petitioner thus faults the CA for allowing respondent Concepcion’s petition for certiorari under Rule 65 of the Rules as a vehicle to impugn the denial of his motion for intervention. It stresses that the availability of appeal proscribes recourse to the special civil action of certiorari.              We are not convinced. 

          Petitioner’s statement of the rule on the availability of the extraordinary writ of certiorari under the premises is impeccable. So too is its citation of supporting jurisprudence. Petitioner conveniently forgot, however, to include in its formulation settled exceptions to

and qualifications of the rule, even as it glossed over another holding that intervention is merely accessory to the principal action and, as such, is an interlocutory proceeding dependent on the case between the original parties.[42]

           It is true that certiorari may not be resorted to when appeal is available as a remedy. However, it is also true that the Court has allowed the issuance of a writ of certiorari when appeal does not afford a speedy and adequate remedy in the ordinary course of law. As in the past, the Court has ruled that the availability of an appeal does not foreclose recourse to the ordinary remedies or certiorari or prohibition where appeal is not adequate, equally beneficial, expeditious and sufficient.[43] Stated a bit differently, certiorari may be availed of where an appeal would be slow, inadequate and insufficient. The determination as to what exactly constitutes plain, speedy and adequate remedy rests on judicial discretion and depends on the particular circumstances of each case.           In the case at bar, the CA did not commit any reversible error in allowing the petition for certiorari filed by the respondent. As it were, the respondent was able to convince the CA of the urgency of his cause and that an appeal from the denial of the motion for intervention would not constitute  speedy and adequate remedy, thus necessitating the resort to the extraordinary remedy of certiorari. And in an instance

justifying the invocation of the remedy ofcertiorari, it would appear too that the CA found the RTC to have exercised its judicial authority in an oppressive manner,[44]  so much so that the CA stated the apt observation that: “In the first place, it [RTC] should not have taken cognizance of the case when it was notified of the pending petition [for suspension of payments] before the SEC at the time the complaint was filed.”[45]

            Certainly not lost on the Court is an obvious reality: the Makati RTC virtually interfered with and invalidated the appointment made by the SEC when it has no jurisdiction over the latter.           WHEREFORE, the instant petition is DENIED and the impugned Decision and Resolution of the Court of Appeals dated July 22, 2003 and November 7, 2003, respectively, are AFFIRMED.           Costs against the petitioner.           SO ORDERED.

 

3.Virra Mall Tenants vs Virra Mall

Greenhills

Before us is a Petition for Review of the 21

May 2007 Decision[1] and 14 May 2008

Resolution[2] of the Court of Appeals (CA)

dismissing the Complaint-in-Intervention

and denying the Motion for Reconsideration

both filed by petitioner. 

Ortigas & Company, Limited

Partnership (Ortigas) is the owner of the

Greenhills Shopping Center (GSC). On 5

November 1975, Ortigas and Virra Realty

Development Corporation (Virra Realty)

entered into a Contract of Lease (First

Contract of Lease) over a portion of the GSC.

The 25-year lease was to expire on 15

November 2000. Pursuant thereto, Virra

Realty constructed a commercial building,

the Virra Mall Shopping Center (Virra Mall),

which was divided into either units for lease

or units whose leasehold rights were sold.[3]

Thereafter, Virra Realty organized

respondent Virra Mall Greenhills

Association (VMGA), an association of all

the tenants and leasehold right holders, who

managed and operated Virra Mall. In the

First Contract of Lease, VMGA assumed

and was subrogated to all the rights,

obligations and liabilities of Virra Realty.[4]

On 22 November 2000, VMGA,

through its president, William Uy (Uy),

requested from Ortigas the renewal of the

First Contract of Lease.[5]

VGMA secured two insurance

policies to protect Virra Mall against

damage by fire and other causes. However,

these insurance coverages expired

simultaneously with the First Contract of

Lease on 15 November 2000.[6] Subsequently, on 13 March 2001, VGMA

acquired new sets of insurance policies

effective 10 January 2001 to 31 December

2001.[7]

On 5 May 2001, Virra Mall was

gutted by fire, requiring substantial repair

and restoration. VMGA thus filed an

insurance claim through the insurance

broker, respondent Winternitz Associates

Insurance Company, Inc. (Winternitz).

Thereafter, the proceeds of the insurance

were released to VMGA.[8]

On 3 September 2001, Ortigas entered

into a Contract of Lease (Second Contract of

Lease) with Uy effective 2 November 2001

to 31 December 2004. On 11 September

2001, the latter assigned and transferred to

petitioner Virra Mall Tenants Association

(VMTA) all his rights and interests over the

property.[9]

On 7 February 2003, Ortigas filed a

Complaint for Specific Performance with

Damages and Prayer for Issuance of a Writ of

Preliminary Attachment against several

defendants, including herein respondents. It

accused them of fraud, misappropriation and

conversion of substantial portions of the

insurance proceeds for their own personal use

unrelated to the repair and restoration of Virra

Mall. To secure the subject insurance

proceeds, Ortigas also sought the issuance of

a writ of preliminary attachment against

herein respondents. The case was docketed as

Civil Case No. 69312, and raffled to the

Regional Trial Court, National Capital

Judicial Region, Pasig City, Branch 67 (RTC

Br. 67), which issued a Writ of Preliminary

Attachment on 12 February 2003.[10]

On 17 February 2003, VMTA filed a

Complaint-in-Intervention.[11] It claimed that

as the assignee or transferee of the rights and

obligations of Uy in the Second Contract of

Lease, and upon the order of Ortigas, it had

engaged the services of various contractors.

These contractors undertook the restoration

of the damaged area of Virra Mall

amounting to P18,902,497.75. Thus, VMTA

sought the reimbursement of the expenses it

had incurred in relation thereto.[12] RTC Br.

67 admitted the Complaint-in-Intervention

in its Order dated 8 January 2004.[13]

On 5 March 2004, herein respondents

moved for the dismissal of the Complaint-

in-Intervention on the ground that it stated

no cause of action.[14] In its Omnibus Order

dated 2 August 2005, RTC Br. 67 denied

this Motion to Dismiss.[15] The trial court

based its Decision on the grounds that (a) by

filing the said motion, herein respondents

hypothetically admitted the truth of the facts

alleged in the Complaint-in-Intervention,

and (b) the test of sufficiency of the facts

alleged was whether or not the court could

render a valid judgment as prayed for,

accepting as true the exclusive facts set forth

in the Complaint.[16] Thus, RTC Br. 67 held

that if there are doubts as to the truth of the

facts averred, then the court must not

dismiss the Complaint, but instead require

an answer and proceed to trial on the merits.[17]

          On a Rule 65 Petition for Certiorari

alleging grave abuse of discretion, the CA

reversed the ruling of RTC Br. 67 and

dismissed the Complaint-in-Intervention on

the following grounds: (a) VMTA failed to

state a cause of action; (b) VMTA has no

legal interest in the matter in litigation; and

(c) the Complaint-in-Intervention would

cause a delay in the trial of the action, make

the issues more complicated, prejudice the

adjudication of the rights of the parties,

stretch the issues, and increase the breadth

of the remedies and relief.[18] The relevant

portions of the Decision read:

Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a party violates the right of another. Its essential elements are as follows:

 1.                  A

right in favor of the plaintiff by whatever means and under whatever law it arises or is created;

2.                  An obligation on the part of the named defendant to respect or not to violate such right; and

3.                  Act or omission on the part of such

defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other appropriate relief. It is, thus, only upon the

occurrence of the last element that a cause of action arises, giving the plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief. (Swagman Hotels and Travel, Inc. v. Court of Appeals, G.R. No. 161135, April 8, 2005, 455 SCRA 175, 183). If these elements are absent, the complaint is dismissible on the ground of failure to state a cause of action.

What VMTA actually seeks in filing a complaint-in-intervention is the reimbursement of the cost of the restoration and rehabilitation of the burned area of the Virra Mall building. And VMTA believes that such reimbursement must be made from the fire insurance proceeds released to VMGA. Such position cannot be sustained.…                                …                     

           … Firstly, We find that the

complaint-in-intervention fails to state a cause of action against the petitioners. The material averments of the complaint-in-intervention belie any correlative obligation on the part of herein petitioners vis-à-vis the legal right of VMTA for reimbursement. The petitioners are not the proper parties against whom the subject action for reimbursement must be directed to. On the contrary, since “x x x plaintiff Ortigas, as

owner of the building, has ordered intervenor VMTA to undertake with dispatch the restoration and rehabilitation of the burned area or section of the Virra Mall buiding x x x” (par. 7 of Complaint-in-Intervention), VMTA’s recourse would be to file and direct its claim against ORTIGAS who has the obligation to pay for the same. The complaint-in-intervention is not the proper action for VMTA to enforce its right of reimbursement. At any rate, VMTA’s rights, if any, can be ventilated and protected in a separate action. The complaint-in-intervention is therefore dismissible for failure to state a cause of action against the petitioners.

 Secondly, VMTA has no

legal interest in the matter in litigation. It is not privy to the Contract of Lease between ORTIGAS and VMGA. It came into the picture only after the expiration of the said contract.

 Finally, Section 1, Rule 19 of

the 1997 Rules of Civil Procedure provides:

 Section 1.

Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of the property in the custody of the court or of an offices thereof may, with leave of court, be allowed to intervene in the action. The

court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor’s rights may be fully protected in a separate proceeding. As a general guide in

determining whether a party may intervene, the court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor’s rights may be fully protected in a separate proceeding (Sec. 2(b), Rule 12; Balane, et al. vs. De Guzman, et al., 20 SCRA 177 [1967]).

 The complaint below is

primarily on the issue of specific performance. The relief being sought by the VMTA in its complaint-in-intervention is the reimbursement of expenses incurred by it for the repair/restoration of the Virra Mall Building. VMTA’s cause of action has a standpoint which is unique to itself. New, unrelated, and conflicting issues would be raised which do not concern the petitioners herein, or VMTA as intervenor. Inevitably, the allowance of the intervention will not only cause delay in the trial of the action, make the issues even more complicated, and stretch the issues in the action as well as amplify the breadth of the remedies and relief.

 

Thereafter, VMTA filed a Motion for

Reconsideration, which the CA denied in the

assailed Resolution dated 14 May 2008.[19] Hence, the instant Petition raising the

following issues:

I.                     With due respect, the Honorable Court of Appeals committed grave error in declaring that the complaint in intervention failed to state a cause of action against private respondents when it declared that the complaint in intervention belies any correlative obligation on the part of private respondents vis-à-vis the legal right of petitioner for reimbursement. 

II.                  With due respect, the Honorable Court of Appeals committed grave error in holding that private respondents are not the proper parties against whom the subject action for reimbursement must be directed to but recourse would be for petitioner VMTA to file and direct its claim against OCLP who has the obligation to pay petitioner VMTA since it was OCLP who has (sic) ordered to undertake the restoration and rehabilitation of the burned area or section of the Virra Mall Building. 

III.                With due respect, the Honorable Court of Appeals similarly committed grave error when it ruled that the complaint-in-intervention is not the proper action to enforce its right in the controversy between OCLP and private respondents since the proper remedy is for petitioner VMTA to ventilate and protect its right in a separate action.[20]

The determination of whether the CA

committed reversible error in dismissing the

Complaint-in-Intervention filed by VMTA

boils down to the sole issue of the propriety

of this remedy in enforcing the latter’s

rights.

According to VMTA, it has a legal

interest in Civil Case No. 69312, which is

rooted in the alleged failure of VMGA to

turn over the insurance proceeds for the

restoration and rehabilitation of Virra Mall,

in breach of the latter’s contractual

obligation to Ortigas. However, the CA

ruled against this position taken by VMTA

not only because, in the CA’s view,

VMTA’s Complaint-in-Intervention failed

to state a cause of action, but also because it

has no legal interest in the matter in

litigation. We rule in favor of VMTA.

Section 1, Rule 19 of the Rules of

Court provides:Who may intervene. – A

person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor’s rights may be fully protected in a separate proceeding.            

In Executive Secretary v. Northeast

Freight,[21] this Court explained intervention

in this wise:

Intervention is not a matter of absolute right but may be permitted by the court when the applicant shows facts which satisfy the requirements of the statute authorizing intervention. Under our Rules of Court, what qualifies a person to intervene is his possession of a legal interest in the matter in litigation or in the success of either of the parties, or an interest against both; or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or an officer thereof. As regards the legal interest as qualifying factor, this Court has ruled that such interest must be of a direct and immediate character so that the intervenor will either gain or lose by the direct legal operation of the judgment. The interest must be actual and material, a concern which is more than mere curiosity, or academic or sentimental desire; it must not be indirect and contingent, indirect and remote, conjectural, consequential or collateral. However, notwithstanding the presence of a legal interest, permission to intervene is subject to the sound discretion of the court, the exercise of which is limited by considering “whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor’s rights may be fully protected in a separate proceeding.”[22](Emphasis supplied.)

 

Applying the foregoing points to the

case at bar, VMTA may be allowed to

intervene, and the ruling of RTC Br. 67

allowing intervention was wrongly reversed

by the CA because such a ruling does not

constitute grave abuse of discretion.

VMTA has a cause of action

A cause of action is defined as “the

act or omission by which a party violates a

right of another.”[23] In Shell Philippines v.

Jalos,[24] this Court expounded on what

constitutes a cause of action, to wit:

A cause of action is the wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff. Its elements consist of: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiff’s right, and (3) an act or omission of the defendant in violation of such right. To sustain a motion to dismiss for lack of cause of action, however, the complaint must show that the claim for relief does not exist and not only that the claim was defectively stated or is ambiguous, indefinite or uncertain.[25]

 

In the case at bar, VMTA, in its

Complaint-in-Intervention, explicitly laid

down its cause of action as follows:[26]

Pursuant to and by virtue of such claim, defendant VMGA and defendant VMGA Board Members, impleaded as party defendants herein, received, at various times, from their insurance broker, and it is in their custody, the insurance proceeds arising out of such claim which, as of January 8, 2003, aggregated P48.6-Million. Having failed to deliver the said proceeds to the real beneficiary inspite of due

notice and demand, plaintiff Ortigas herein instituted the present action against all the defendants to compel delivery of the said insurance proceeds which are being unlawfully and illegally withheld by all the defendant VMGA and defendant VMGA Board Members inspite of written demands made therefor. Worse, a portion of said insurance proceeds, aggregating P8.6-Million had already been disbursed and misappropriated in breach of trust and fiduciary duty. (Emphasis supplied.)

 

It is clear from the foregoing

allegations that VMTA’s purported right is

rooted in its claim that it is the real

beneficiary of the insurance proceeds, on the

grounds that it had (a) facilitated the repair

and restoration of the insured infrastructure

upon the orders of Ortigas, and (b) advanced

the costs thereof. Corollarily, respondents

have a duty to reimburse it for its expenses

since the insurance proceeds had already

been issued in favor of respondent VMGA,

even if the latter was not rightfully entitled

thereto. Finally, the imputed act or omission

on the part of respondents that supposedly

violated the right of VMTA was respondent

VMGA’s refusal, despite demand, to release

the insurance proceeds it received to

reimburse the former for the expenses it had

incurred in relation to the restoration and

repair of Virra Mall. Clearly, then, VMTA

was able to establish its cause of action.  

VMTA has a legal interest in the matter in litigation

 

VMTA was also able to show its legal

interest in the matter in litigation —

VMGA’s insurance proceeds — considering

that it had already advanced the substantial

amount of P18,902,497.75 for the repair and

restoration of Virra Mall. That VMTA seeks

reimbursement from Ortigas is precisely the

reason why intervention is proper. The main

issue in Civil Case No. 69312 is whether

Ortigas has a contractual right to the

insurance proceeds received by VMGA.

Thus, the recoupment by VMTA of the

expenses it incurred in the repair of Virra

Mall depends on the success of either party

in the main case. VMTA therefore has an

undeniable stake in Civil Case No. 69312

that would warrant its intervention therein.

Further, the issuance to Ortigas of a

Writ of Preliminary Attachment against

VMGA puts VMTA in a situation in which

it will be adversely affected by a distribution

or other disposition of the property in the

custody of the court, pursuant to the said

writ. The prospect of any distribution or

disposition of the attached property will

likewise affect VMTA’s claim for

reimbursement.

VMTA’s intervention in Civil Case No. 69312 will avoid a multiplicity of suits

 

Lastly, allowing VMTA to intervene

in Civil Case No. 69312 finds support

in Heirs of Medrano v. De Vera,[27] to wit:The purpose of intervention is

to enable a stranger to an action to become a party in order for him to protect his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than on due process considerations.[28]

 

Thus, although the CA was correct in

stating that VMTA could always file a

separate case against Ortigas, allowing

VMTA to intervene will facilitate the orderly

administration of justice and avoid a

multiplicity of suits. We do not see how delay

will be inordinately occasioned by the

intervention of VMTA, contrary to the fear of

the CA.

WHEREFORE, the instant petition

is GRANTED. The Decision dated 21 May

2007 and Resolution dated 14 May 2008 of

the CA are hereby REVERSED and SET

ASIDE insofar as the dismissal of the

Complaint-in-Intervention filed by VMTA is

concerned. The Complaint-in-Intervention of

VMTA in Civil Case No. 69312 is allowed to

proceed before RTC Br. 67.

          SO ORDERED.

Modes of Discovery

1. G.R. No. L-7424             August 31, 1954

LOURDES CAMUS DE LOPEZ, on her behalf and as guardian ad litem of the minors, SALVADOR C. LOPEZ, JR., and LUIS CARLOS LOPEZ, petitioners, vs.HON. CIRILO G. MACEREN, Judge of the Court of First Instance of Davao, MARIA N. VDA. DE LOPEZ, ENRIQUE LOPEZ, SALVADOR LOPEZ, JR., LEOPOLDO LOPEZ, RODOLFO LOPEZ and the guardian ad litem for the minor FLORDELIZ LOPEZ, respondents.

Soriano, Inton and Peña for petitioners.Abella, Cavestany, Syyap and Estrellado for respondents.

CONCEPCION, J.:

Petitioner Lourdes Camus de Lopez, on her behalf and as guardian ad litem of her minor children, Salvador C. Lopez, Jr., and Luis Carlos Lopez, is the plaintiff in Civil Case No. 1035 of the Court of First Instance of Davao. Respondents Maria N. Vda. de Lopez, Enrique Lopez, Salvador Lopez, Jr., Leopoldo Lopez, Rodolfo Lopez and Flordeliz Lopez are the defendants in said case No. 1035, the purpose of which is to secure delivery of some property of the deceased Salvador Lopez, Sr., as alleged share of the petitioner, who claims to be his widow. She contends that, although his previous marriage with respondent Maria N. de Lopez, which was unknown to petitioner, had not been dissolved and was still subsisting, and acting in bad faith, and without advising petitioner of such first marriage, Salvador Lopez, Sr., wedded the latter in 1938, and, thereafter, lived as husband and wife with her; and that, as a consequence of said union, Salvador C. Lopez, Jr., and Luis Carlos Lopez were born in Manila on December 6, 1939, and November 25, 1940, respectively, and then christened as legitimate children of Salvador Lopez, Sr. and the petitioner, as set forth in their respective birth and baptismal certificates. After the filing of the answer of said respondents, as defendants in said Civil Case No. 1035, or on December 8, 1953, petitioner herein through her counsel filed a "notice for the taking" of her deposition and that of one Pilar Cristobal, at Room 202 of the Vasquez Building, 1865 Azcarraga Street, Manila, on January 16, 1954, at 2:00 p.m. Acting, however, upon an urgent motion of the

defendants in said Civil Case No. 1035, respondent Hon. Cirilo C. Maceren, as Judge of First Instance of Davao, issued an order, dated January 11, 1954, prohibiting the taking of said deposition. Accordingly, petitioner instituted the present case for the purpose of annulling said order of January 11, 1954, and of having no restraint to the taking of the aforementioned deposition.

Petitioner maintains that respondent Judge committed a grave abuse of discretion in forbidding the taking of said deposition, she being entitled thereto as a matter of right, without leave of court, after the filing of the answer of the defendants in said Civil Case No. 1035, for section 1 of Rule 18 of the Rules of Court provides:

Deposition pending action, when may be taken. — By leave of court after jurisdiction has been obtained over any defendant or over property which is the subject of the action, or without such leave after an answer has been served, the testimony of any person, whether a party or not, may be taken, at the instance of any party, by deposition upon oral examination or written interrogatories. The attendance of witnesses may be compelled by the use of subpoena as provided in Rule 29. Deposition shall be taken only in accordance with these rules. The deposition of a person confined in prison may be taken only by leave of court on such terms as the court prescribes.

Under the other hand, respondents invoke, in their favor, section 16 of the same rule, reading:

Orders for the protection of parties and deponents. — After notice is served for taking a deposition by oral examination, upon motion seasonably made by any party or by the person to be examined and upon notice and for good cause shown, the court in which the action is pending may make an order that the deposition shall not be taken, or that it may be taken at some designated place other than that stated in the notice, or that it may be taken only on written interrogatories, or that certain matters shall not be inquired into, or that the scope of the examination shall be limited to certain matters, or that the examination shall be held with no one present except the parties to the action and their officers or counsel, or that after being sealed the deposition shall be opened only by order of the court, or that secret processes, developments or research need not be disclosed, or that the parties shall simultaneously file specified documents or

information enclosed in sealed envelopes to be opened as directed by the court; or the court may make any other order which justice requires to protect the party or witness from annoyance, embarrassment, or oppression.

This provision explicitly vests in the court the power to "order that the deposition shall not be taken" and, this grant connotes the authority to exercise discretion in connection therewith (National Bondholders Corp. vs. McClintic, 1 Fed. Rules Service, 388, 99 F. [2d] 595). It is well-settled, however, that the discretion conferred by law is not unlimited; that it must be exercised, not arbitrarily, capriciously or oppressively, but in a reasonable manner and in consonance with the spirit of the law, to the end that its purpose may be attained. Referring to the objective of section 16 of Rule 18 of the Rules of Court, former Chief Justice Moran has the following to say:

The advisory committee of the United States Supreme Court said that this provision is intended to be one of the safeguards for the protection of the parties and deponents on account of the unrestricted right to discovery given by section 1 and 2 of this Rule. A party may taken the deposition of a witness who knows nothing about the case, with the only purpose of annoying him or wasting the time of the other parties. In such case, the court may, on motion, order that the deposition shall not be taken. Or, a party may designate a distinct place for the taking of a deposition, and the adverse party may not have sufficient means to reach that place, because of poverty or otherwise, in which case the court, on motion, may order that the deposition be taken at another place, or that it be taken by written interrogatories. The party serving the notice may wish to inquire into matters the disclosure of which may oppressive or embarrassing to the deponent, especially if the disclosure is to be made in the presence of third persons, or, the party serving the notice may attempt to inquire into matters which are absolutely private of the deponent, the disclosure of which may affect his interests and is not absolutely essential to the determination of the issues involved in the case. Under such circumstances, the court, on motion, may order "that certain matter shall not be inquired into or that the scope of the examination shall be limited to certain matters, or that the examination shall be held with no one present except the parties to the action and their officers or counsel, or that after being sealed the deposition shall be opened only by order of the court, or that secret processes, developments, or research need

not be disclosed, or that the parties shall simultaneously filed specific documents or informations enclosed in sealed envelopes to be opened as directed by the court." In other words, this provision affords the adverse party, as well as the deponent, sufficient protection against abuses that may be committed by a party in the exercise of his unlimited right to discovery. As a writer said: "Any discovery involves a prying into another person's affairs — a prying that is quite justified if it is to be a legitimate aid to litigation, but not justified if it is not to be such an aid." For this reason, courts are given ample powers to forbid discovery which is intended not as an aid to litigation, but merely to annoy, embarrass or oppress either the deponent or the adverse party, or both. (Comments on the Rules of Court by Moran, Vol. I, pp. 435-6, 1952 ed.)

It is not claimed that the order complained of sought to avert any of the evils which said section 16 was meant to prevent or arrest. Moreover, petitioner was permitted to institute and maintain Civil Case No. 1035 as a pauper. As such, she can ill afford to meet the expenses to make, with her witnesses, the trip or trips from Manila to Davao, and to stay in said province for the time necessary for the hearing of the case, which might not take place on the first date set therefor. Hence, the order in question tended, in effect, to deprive her, not only of her right, under section 1 of Rule 18, to take the deposition in question, but also, of the opportunity to prove her claim and, consequently, of the due process guaranteed by the Constitution. Upon the other hand, the records indicate that the defendants in Civil case No. 1035 — who are the widow of Salvador Lopez, Sr. and their legitimate children — must be well-off financially, for the estate of the deceased Salvador Lopez, Sr., which has already been partitioned among them, appears to be worth approximately half a million pesos. The main reason given in support of the contested order is that, if the deposition were taken, the court could not observe the behaviour of the deponents. The insufficiency of this circumstance to justify the interdiction of the taking of a deposition becomes apparent when we consider that, otherwise, no deposition could ever be taken, said objection or handicap being common to all depositions alike. In other words, the order of respondent Judge cannot be sustained without nullifying the right to take depositions, and, therefore, without, in effect repealing section 1 of Rule 18 of the Rules of Court, which, clearly, was not intended by the framers of section 16 of the same rule.

It is, consequently, clear that a grave abuse of discretion was committed by respondent Judge in

issuing the aforesaid order of January 11, 1954, for which reason the same should be, as it is hereby annulled and set aside, with cost against the respondents, except the Hon. Cirilo C. Maceren.

So ordered.

2. G.R. No. L-41154 January 29, 1988

SILVERIO VERAN, LUIS VERAN, CRISTINA VERAN, LEON VERAN, GREGORIO SALAMERA, and GENEROSA SALAMERA, petitioners, vs.The HON. COURT OF APPEALS and PRIMITIVA VILLAREAL, respondents.

 

CORTES, J.:

This is a petition for review on certiorari of a decision of the Court of Appeals in CA-G.R. No. 46367-R, entitledSilverio Veran, et. al. v. Primitiva Villareal, reversing the trial court's decision declaring petitioners the owners pro-indiviso of the property subject of the litigation.

As found by the Court of Appeals in its Decision promulgated on May 27, 1975:

Plaintiffs brought this action to recover possession of a parcel of land located in Atimonan, Quezon and registered in the name of a Aleja Glodoveza, mother and grandmother of said plaintiffs, against the defendant Primitiva Villareal, who died during the pendency of this action and was subsitituted accordingly.

It is alleged in the complaint that plaintiffs only allowed the afore-named defendant, being a cousin, to erect her house on a portion of the and in dispute, which they inherited from Aleja Glodoveza, who in turn received it as her share from her mother's estate. Said defendant, however, refused to vacate the lot when demanded to do so repeatedly, claiming co-ownership also by inheritance from their common ancestor, the mother of Aleja Glodoveza. Thus, in the amended answer, defendant interposed the following special defenses:

a. That the land particularly described in paragraph No. 5 of the Complaint was originally owned pro-indiviso and in common by the late Leocadia Glodoveza, defendant's mother, the deceased Aleja Glodoveza, plaintiffs' predecessor, and the late Ladislawa Glodoveza, all children of Cornelio Glodoveza and Filomena Padilla, after whose death their children above-mentioned orally partitioned said land, by virtue of which the portion occupied by the defendant was given and received by her from her predecessor, and the other portion by the plaintiffs and other co-heirs over said realty.

a.1. That in the said oral extrajudicial partition,the above-indicated Lot No. 1744 was adjudicated to the three children of the late spouses Cornelio Glodoveza and Filomena Padilla above-named, for a special purpose, i.e., to enable each of them to own a land by the roadside suited for residential purpose.

a.2. That of all the real properties, left by the aforenamed spouses, the plaintiffs' mother Aleja Glodoveza received as her share in the extrajudicial partition of Lot No. 1742 a portion of Lot No. 1744, consisting of residential and rice land; and a part of Lot No. 1832, all of the

Atimonan Cadastre; whereas, the defendant's mother Leocadia Glodoveza received only two parcels of land.

b. That even if the plaintiffs have registered the said land in whole as described in paragraph No. 5 of the cited Complaint, yet it is also a fact that said registration was secured thru fraud, deceit, representation and by illegal means to great damage of herein defendant and the heirs of Ladislawa Glodoveza, and she and the latter have filed their protest to the Director of Lands after they learned that the plaintiffs through fraud, deceit, misrepresentation, by illegal means and irregularly obtained their free patent, as evidenced by the aforedsaid protest together with the two affidavits supporting it to be presented at the trial of this case.

Because of the pendency of the administrative case as mentioned in the answer, the trial of the case was suspended indefinitely on petition of both parties. However, when the plaintiffs changed their counsel, the latter moved for the setting of the case for trial after almost four years from Dec. 5, 1955 when the complaint was filed, the motion was granted, but for failure of the defendants to appear on the date set for hearing, plaintiffs were allowed to present their evidence ex-parte, after which decision was rendered on Dec. 15, 1959 in favor of the plaintiff and against the defendant. Upon a motion for reconsideration, the decision was set aside in order to allow the defendant to present her

evidence, after filing an amended answer, on the advice of the trial court itself, so as to include a prayer for the reconveyance of the disputed portion of the lot, said lot, described as Lot 1744, having been already registered in the name of Aleja Glodoveza, the predecessor of plaintiffs.

Defendant offered as part of her evidence the deposition of Apolonia Glodoveza, but it was denied admission by the trial court on the ground that no proof was submitted to show that the witness was so old and infirm as not to be able to come to court to testify, as contended by plaintiffs in their opposition to the deposition-taking.

After trial, judgment was rendered the dispositive portion reading as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant, declaring the former owners pro indiviso of Lot No. 1744, covered by Original Certificate of Title No. P. 1589 of the Register of Deeds of Quezon, and ordering the latter to vacate the portion of the land occupied by her house, to pay the plaintiff the sum of P300.00 as damages, P200.00 as attorney's fees and the costs of this suit. (pp. 1-4, Decision.)

On appeal, the Court of Appeals reversed the decision of the trial court:

WHEREFORE, the judgment appealed from should be as it is hereby reversed, and the complaint is accordingly dismissed. On the counterclaim, judgment is hereby rendered ordering the appellees to reconvey the portion of Lot No. 1744, designated in the subdivision survey plan as Lot No. 1744-B to the

appellant, as substituted by her heirs. Costs against appellees in both instances. (p. 11, Decision).

As respondent court also denied petitioners' motion for reconsideration, the case was elevated to this Court. After petitioner filed her comment, this Court, on November 5, 1975, resolved to give the petition due course.

After petitioner and respondent filed their respective briefs, the case was submitted for decision.

Petitioners assign as errors the following.

I

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE REJECTION BY THE COURT A QUO OF WITNESS APOLONIA GLODOVEZA'S DEPOSITION AS ERRONEOUS, DESPITE THE FACT THAT THE COURTA QUO'S CONCLUSION UNDER THE PREMISES WAS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE RULES OF COURT,

II

THE HONORABLE COURT OF APPEALS ERRED IN GIVING UNDUE APPRECIATION TO THE MATTERS RELATED IN THE IRREGULARLY-ACCEPTED DEPOSITION OF WITNESS APOLONIA GLODOVEZA WHEN THE SAME MATTERS — STANDING ALONE — ARE HARDLY ADEQUATE TO BELIE THE CONTRARY EVIDENCE PRESENTED BY PETITIONERS.

III

THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LETTER DATED FEBRUARY 25, 1921 OF FEDERICO VERAN, HUSBAND OF PETITIONER'S PREDECESSOR-IN-INTEREST, ADDRESSED TO PRIVATE RESPONDENT, SEEKING A P1.00 YEARLY CONTRIBUTION FOR TAXES COULD GIVE RISE TO ANY PRESUMPTION THAT PRIVATE RESPONDENT HAD BEEN IN POSSESSION OF THE DISPUTED PORTION OF THE LAND IN QUESTION SINCE 1921.

IV

THE HONORABLE COURT OF APPEALS ERRED IN ATTACHING MISPLACED SIGNIFICANCE ON EXHIBIT "4" — A SUBDIVISION SURVEY PLAN OF THE LOT IN QUESTION-WHEN WHATEVER

PROBATIVE VALUE EXHIBIT "4" MAY HAVE ON THE MATTER IN ISSUE IS RENDERED PRACTICALLY USELESS SINCE IT WAS PREPARED ALMOST ONE (1) YEAR AFTER ALEJA GLODOVEZA — THE PETITIONERS' PREDECESSOR-IN-INTEREST — HAD OBTAINED AN ORIGINAL CERTIFICATE OF TITLE (NO. P-1589) WHICH ACTUALLY LAID TO REST ANY DOUBT AS TO THE OWNERSHIP OF THE DISPUTED PORTION OF THE LOT IN QUESTION.

V

THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT "NO EVIDENTIARY WORTH CAN, THEREFORE, BE ATTACHED TO WHAT TRANSPIRED IN THE SAID ADMINISTRATIVE PROCEEDINGS (BEFORE THE BUREAU OF LANDS)" WHEN SAID ADMINISTRATIVE PROCEEDINGS HAD PRECISELY BEEN DESIGNED TO LAY AT REST WHATEVER CONFLICTING CLAIMS THE CONTENDING PARTIES HAD OVER THE PROPERTY IN QUESTION.

VI

THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE COURT A QUO. (pp. 1-3, Brief for Petitioners).

Save for the first and second, which are closely interrelated, the errors assigned by petitioners shall be discussed separately.

1. The deposition of Apolonia Glodoveza was taken on January 21, 1961. At that time the applicable rules of procedure were provided in the (old) Rules of Court, Section I of Rule 18 of which states:

Section 1. Deposition pending action, when may be taken.-By leave of court after jurisdiction has been obtained over any defendant or over property which is the subject of the action, or without such leave after an answer has been served, the testimony of any person, whether a party or not, may be taken, at the instance of any party, by deposition upon oral examination or written interrogatories. ...

Considering that the deposition was taken long after the answer had been filed and served, there was therefore no need to seek the approval of the trial court for the taking of the deposition, notice of such taking being sufficient. In the instant case, it is not disputed that notice of the deposition-taking was

received by petitioners well before the intended date and that although petitioners filed an opposition, this was not acted upon by the trial court before the taking of the deposition.

Leave of court for taking depositions should, however, be distinguished from the approval of the court for the use of the deposition Under Section 4 of Rule 24 of the Revised Rules of Court, which was already in force and effect when the deposition was offered in evidence:

xxx xxx xxx

(c) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds:

xxx xxx xxx

(3) that the witness is unable to attend or testify because of age, sickness, infirmity, or imprisonment;

xxx xxx xxx

Thus, with regard to the use of a deposition, there is occasion for the court to exercise its discretion, the proper time being when the deposition is formally offered in evidence.

In the instant case, the trial court did not admit the deposition when it was formally offered, on the ground that petitioners were denied their right to cross-examine the deponent. However, the Court of Appeals, in deciding to admit the deposition, observed:

The rejection of said deposition is assigned as one of the errors of the trial court. From the facts sufficiently disclosed by the records, We find no irregularity in its execution. The reason for the taking was disclosed not only in the notice, but also in the deposition itself. To reject such a deposition on the ground considered by the trial court smacks of a technicality which does not serve the ends of substantial justice. The counsel of the plaintiffs was notified sufficiently in advance of the deposition-taking, and his opposition was not acted upon favorably before the day set for the taking of the

deposition. If he failed to appear on that day, as he could have done if he exerted diligent efforts, he did so at his own risk. (p. 7, Decision).

The findings of fact supporting this conclusion of the Court of Appeals not being disputed, We agree that, under the circumstance, petitioners' contention that they were denied their right to cross-examine the deponent is unfounded.

Further, as pointed out by respondent, before the deposition was formally offered, respondent had already testified as to the age of deponent.

ATTY. BALDEO:

Q Do you know Apolonia Glodoveza?

A Yes, sir.

Q Where is she now, do you know?

A She is in Atimonan.

Q Do you know how old she is now?

A She is very old, more or less, ninety years, (tsn, pp. 13-14, May 30, 1963).

Apparently, this was overlooked by the trial court when it denied admission of the deposition.

In view of the foregoing, it cannot be argued that the Court of Appeals committed a reversible error when it decided to admit the deposition of Apolonia Glodoveza.

As correctly observed by respondent court:

With the admission of the deposition, a very significant fact gets into the records which is that the assignment of the lot in question was to the three sisters, not to Aleja alone, and the segregation or apportionment thereof among the said sisters was made by their eldest sister, Ruperta Glodoveza in 1905. (p. 7, Decision).

As found by the Court of Appeals, this conclusion is buttressed by the testimony of Enrique Glodoveza (p.

6, Decision) and documentary evidence (p. 8, Decision).

This disposes then of petitioners' first two assignments of error.

2. Petitioners argue that respondent court erred in concluding that the letter (Exhibit 2) dated February 25, 1921 of Francisco Veran addressed to private respondent, seeking a P1.00 yearly contribution for taxes gave rise to the presumption that private respondent had been in possession of the disputed portion of the lot since 1921.

The pertinent portion of Exhibit 2 reads as follows:

At ang ikalawa, ay ang isang bagay na bakasakaling hindi na itagubilin ng inyong ina bago siya yumaon. Ang bagay na ito ay natutukol sa kabuwisan ng kapirasong lupa na kalakip sa declaracion sa aking pangalan, kaparis din ng sa ina mong Lawa (Ladislawa). Ang lugar na ito ay alam ninyo sapagkat kayo ang naglinis at nag halaman doon.

At dahil dito ay gosto kong inyong ipagpatuloy ang pagambag sa ka buwisan nito sa halagang peso (P1.00) sa taon-taon paris din ng pagambag ng yumaon ninyong ina.

At once it will be noticed that the letter does not specify which parcel of land is referred to. Respondent claims that it referred to the disputed lot and this view was sustained by the Court of Appeals. Petitioners contend that the letter refers to a different lot owned by Francisco Veran. As the facts relative to this matter are not quite clear, this Court is inclined to respect the findings of the Court of Appeals:

Thus Exhibit 2 would seem to prove that as early as Feb. 25, 1921, appellants were already in possession of the disputed portion of Lot No. 1744, as by said exhibit, it is shown that on the date aforementioned, appellees' father, Francisco Veran, was asking Mr. and Mrs. Celso Villacruel (nee Primitive Villareal) for a contribution of Pl.00 for payment of yearly tax on the property in question. This document gives credence to Enrique Glodoveza's testimony that it was since 1910 that appellant has occupied the lot in dispute not only

since 1950 as claimed by appellees. (p. 8, Decision).

3. Contrary to petitioners' contention, the expiration of the one-year period from the issuance of an Original Certificate of Title covering the disputed lot in favor of the heirs of Aleja Glodoveza will not bar private respondent's action for reconveyance. Private respondent's counterclaim for reconveyance was made in her amended answer filed on March 4, 1961, some seven and a half years after the issuance of the title in the name of the heirs of Aleja Glodoveza on December 3, 1953, but well within the ten-year prescriptive period for bringing an action for reconveyance based on an implied or constructive trust resulting from fraud in securing title (Diaz v. Gorricho, 103 Phil. 261 [1958]; J.M. Tuazon & Co., Inc. v. Magdangal, G.R. No. L-15539, January 30, l962, 4 SCRA 84; Alzona v. Capunitan, G.R. No. L-10228, February 28, 1962, 4 SCRA 450). Thus, in Gonzales v. Jimenez, G.R. No. L-19073, January 30, l965, 13 SCRA 80, the Court said:

Since it appears that the land in question was obtained by defendants thru fraudulent representations by means of which a patent and a title were issued in their name, they are deemed to hold it in trust for the benefit of the person prejudiced by it. Here this person is the plaintiff. There being an implied trust in this transaction, the action to recover the property prescribes after the lapse of ten years. Here this period has not yet elapsed.

Further, no error was committed by the Court of Appeals in appreciating the significance of the subdivision survey plan of the disputed lot (Exhibit 4). The fact that it was prepared a year after the title was issued in the name of the heirs of Aleja Glodoveza does not per se render misplaced respondent court's reliance upon it. The division in the subdivision survey plan of the disputed lot into three portions assigned to Leocadia, Aleja and Ladislawa respectively, merely served to corroborate testimony as to the lot's apportionment among the three sisters.

4. Neither do We find error in respondent court's conclusion that no evidentiary worth can be attached to what transpired in the administrative case pending before the Bureau of Lands, considering that the decision rendered by said bureau was still pending appeal before the Department of agriculture at the time the decision of the trial court was rendered. Further, it is not disputed that the decision of the Bureau of Lands was never offered in evidence, but

was merely attached to petitioners' "Urgent Ex-parte Petition to Render the Much Awaited and Long Overdue Judgment." Section 35 of Rule 132 of the Revised Rules of Court is quite clear that "the court shall consider no evidence which has not been formally offered."

5. To conclude, no reversible error was committed by the Court of Appeals when it reversed the decision of the lower court.

WHEREFORE, the instant petition is DISMISSED for lack of merit.

3. G.R. No. 108119 January 19, 1994

FORTUNE CORPORATION, petitioner, vs.HON. COURT OF APPEALS AND INTER-MERCHANTS CORPORATION, respondents.

Antonio L. Azores for petitioner.

Estella and Virtudazo Law Firm for private respondent.

 

REGALADO, J.:

This petition impugns and seeks the review on certiorari of the decision 1 of respondent Court of Appeals, dated September 23, 1992, which affirmed the order of the Regional Trial Court of San Pablo City disallowing the taking of the oral deposition of Juanito S. Teope, Chairman of the Board of Directors of herein private respondent Inter-Merchants Corporation.

An action for breach of contract was filed by petitioner Fortune Corporation against respondent Inter-Merchants Corporation, docketed as Civil Case No. SP-3469, before the Regional Trial Court of San Pablo City, Branch 30. After respondent corporation had filed its Answer, petitioner served the former with written interrogatories pursuant to Rule 25 of the Rules of Court. The interrogatories were answered by respondent corporation through its board chairman, Juanito A. Teope.

The pre-trial conference was thereafter scheduled for January 9, February 12 and April 22, 1992.

On March 26, 1992, however, petitioner served upon private respondent a Notice to Take Deposition Upon Oral Examination 2 dated March 26, 1992, notifying the latter that on April 7, 1992, at San Pablo City, herein petitioner would take the deposition of said Juanito A. Teope, in accordance with Section 15, Rule 24.

Private respondent filed an Urgent Motion Not To Take Deposition/Vehement Opposition to Plaintiff's Notice to Take Deposition Upon Oral Examination, 3 dated March 27, 1992, alleging inter alia that : (a) herein petitioner has previously availed of one mode of discovery, that is, the written interrogatories which practically covered all the claims, counterclaims and defenses in the case; (b) there is absolutely no sound reason or justification advanced for the taking of the oral deposition; (c) such taking would cause annoyance, embarrassment and oppression upon the prospective deponent, Juanito A. Teope; (d) Mr. Teope has no intention of leaving the country; and (e) the intended deponent is available to testify in open court if required during the trial on the merits.

The trial court thereafter issued on April 3, 1992 an order 4 that the requested deposition shall not be taken for the following reasons:

. . . , the Court opines that the deposition of Juanito A. Teope set on April 7, 1992, appears unwarranted since the proposed deponent had earlier responded to the written interrogatories of the plaintiff and has signified his availability to testify in court.

To allow the deposition will deprive the Court of the opportunity to ask clarificatory questions, if any, on the proposed deponent who appears to be a vital witness.

Its motion for reconsideration having been denied, petitioner filed an original action for certiorari before the Supreme Court which was docketed as G.R. No. 101526. However, in a resolution dated May 20, 1992, this Court referred the case to the Court of Appeals for consideration and adjudication on the merits.

As earlier stated, respondent Court of Appeals promulgated a decision on September 23, 1992, dismissing the petition and holding that:

It cannot be gainsaid that the respondent court has jurisdiction to direct, in its discretion, that a deposition shall not be taken, if there are valid reasons for so ruling. This is provided for in Sections 16 and 18, Rule 24 of the Rules of Court. Said sections imply that the right of a party to take depositions as means of discovery is not absolute. Thus, as held in the case of Caguiat vs. Torres, 30 SCRA 106, 110:

. . . sections 16 and 18 of Rule 24, (which) are precisely designed to protect parties and their witnesses, whenever in the opinion of the trial court, the move to take their depositions under the guise of discovery is actually intended to only annoy, embarrass or oppress them. In such instances, these provisions expressly authorize the court to either prevent the taking of a deposition or stop one that is already being taken.

Moreover, the respondent court, in its assailed Order, has indicated at least three (3) valid reasons for it not to order the deposition taken: First, that the proposed deponent had earlier responded to the written Interrogatories; Second, that the proposed deponent had signified his availability to testify in court; and Third, that to allow the deposition would deprive the trial court of the opportunity to ask clarificatory questions, if any, on the proposed deponent who appears to be a vital witness.

Finally, anent private respondent's contention that certiorari does not lie in this case, it should be recalled that certiorari presupposes either lack or excess of jurisdiction or grave abuse of discretion. In the instant case, no question of jurisdiction is possible simply because the respondent court undoubtly had jurisdiction over petitioner's case. On the question of abuse of discretion, appeal and not certiorariis the proper remedy for the correction of any error as to the admission or rejection of a deposition being offered as evidence since such a situation would involve an error of law constituting a violation of rules of evidence. Hence, as held in the case of Dearing vs. Fredwilson (sic) & Co., Inc., 98 SCRA 758, 764:

. . . . Thus, the jurisprudential rule is that the admission or rejection of certain interrogatories in the course of discovery procedure could be an error of law but not an abuse of discretion, much less a grave one. . . .

With the denial of petitioner's motion for reconsideration, the instant petition was filed, submitting the following issues for resolution:

1. Whether or not the conclusion of the Honorable Court of Appeals, based on a gross misapprehension of facts, constitutes reversible error;

2. Whether or not the said order, based on the three reasons stated therein, is arbitrary or whimsical because it is contrary to reason, logic or equity;

3. Whether or not mere allegation, without proof, that the examination sought by petitioner was intended merely to annoy, embarrass or oppress the proposed deponent is, as a matter of law, "good cause" within the purview of Rule 24, Section 16, Rules of Court; and

4. Whether or not, absent the requisite element of "good cause" as mandated by Section 16 of Rule 24, Rules of Court, a trial court has unbridled discretion to forbid the taking of deposition upon oral examination as authorized under Rule 24, Section 15, Rules of Court.

Rule 24 of the Rules of Court provides:

Sec. 1. Depositions pending action, when may be taken. — By leave of court after jurisdiction has been obtained over any defendant or property which is the subject of the action, or without such leave after an answer has been served, the testimony of any person, whether a party or not, may be taken, at the instance of any party, by deposition

upon oral examination or written interrogatories. The attendance of witnesses may be compelled by the use of a subpoena as provided in Rule 23. Depositions shall be taken only in accordance with these rules. The deposition of a person confined in prison may be taken only by leave of court on such terms as the court prescribes.

The seeming unreceptive and negative attitude of lawyers and the courts towards discovery procedures has heretofore been observed and discommended by the Court in this wise:

. . . Now, it appears to the Court that among far too many lawyers (and not a few judges), there is, if not a regrettable unfamiliarity and even outright ignorance about the nature, purposes and operations of the modes of discovery, at least a strong yet unreasoned and unreasonable disinclination to resort to them — which is a great pity for the intelligent and adequate use of the deposition-discovery mechanism, coupled with pre-trial procedure, could, as the experience of other jurisdictions convincingly demonstrates, effectively shorten the period of litigation and speed up adjudication. . . . . 5

It would do well, therefore, to point out the finer attributes of these rules of discovery, the availment of which, we are convinced, would contribute immensely to the attainment of the judiciary's primordial goal of expediting the disposition of cases.

The rules providing for pre-trial discovery of testimony, pre-trial inspection of documentary evidence and other tangible things, and the examination of property and person, were an important innovation in the rules of procedure. The promulgation of this group of rules satisfied the long-felt need for a legal machinery in the courts to supplement the pleadings, for the purpose of disclosing the real points of dispute between the parties and of affording an adequate factual basis in preparation for trial. The rules are not grounded on the supposition that the pleadings are the only or chief basis of preparation for trial. On the contrary, the limitations of the pleadings in this respect are recognized. In most cases under the rules the function of the pleadings extends hardly beyond notification to the opposing parties of the general nature of a party's claim or defense. It is recognized

that pleadings have not been successful as fact-sifting mechanisms and that attempts to force them to serve that purpose have resulted only in making the pleadings increasingly complicated and technical, without any corresponding disclosure of the issues which it will be necessary to prove at the trial. Thus the rules provide for simplicity and brevity in pleadings, which in most cases will terminate with the answer; and at the same time adapt the old and familiar deposition procedure to serve as a device for ascertaining before trial what facts are really in dispute and need to be tried. Experience had shown that the most effective legal machinery for reducing and clarifying the issues was a preliminary examination, as broad in scope as the trial itself, of the evidence of both parties. 6

Stated otherwise, the rules seek to make a trial less a game of blind man's buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent. 7

The elemental purpose of the discovery procedure was pithily explained by the Court, speaking through now Chief Justice Andres R. Narvasa, in the recent case of Republic vs. Sandiganbayan, 8 which opinion, we feel, should be reiterated through an extended reproduction, to wit:

The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is accomplished by  first, the ascertainment of all the material and relevant facts from the pleadings and from the evidence adduced by the parties, andsecond, after that determination of the facts has been completed, by the application of the law thereto to the end that the controversy may be settled authoritatively, definitely and finally.

It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with assuring that all the facts are indeed presented to the Court; for obviously, to the extent that adjudication is made on the basis of incomplete facts, to that extent there is faultiness in the approximation of objective justice. It is thus the obligation of lawyers no less than of judges to see that this objective is attained; that is to say, that there be no suppression, obscuration, misrepresentation or distortion of the facts; and that no

party be unaware of any fact material and relevant to the action, or surprised by any factual detail suddenly brought to his attention during the trial.

Seventy-one years ago, in Alonzo vs. Villamor, this Court described the nature and object of litigation and in the process laid down the standards by which judicial contests are to be conducted in this jurisdiction. It said:

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is, rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done on the merits. Lawsuits, unlike duels, are not be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested right in technicalities. . . . .

The message is plain. It is the duty of each contending party to lay before the court the facts in issue — fully and fairly; i.e., to present to the court all the material and relevant facts known to him, suppressing or concealing nothing, nor preventing another party, by clever and adroit manipulation of the technical rules of pleading and evidence, from also presenting all the facts within his knowledge.

Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by the parties; but that, only in a very general way. Only "ultimate facts" are set forth in the pleadings; hence, only the barest outline of the factual basis of a party's claims or defenses is limned in his pleadings. The law says that every pleading "shall contain in a methodical and logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere evidentiary facts.

Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not averred with sufficient definiteness or particularly to enable . . . (an adverse party) properly to prepare his responsive pleading or to prepare for trial," a bill of particulars seeking a "more definite statement" may be ordered by the court on motion of a party. The office of a bill of particulars is, however, limited to making more particular or definite the ultimate facts in a pleading. It is not its office to supply evidentiary matters. And the common perception is that said evidentiary details are made known to the parties and the court only during the trial, when proof is adduced on the issues of fact arising from the pleadings.

The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trail. Indeed, it is the purpose and the policy of the law that the parties — before the trial if not indeed even before the pre-trial — should discover or inform themselves of all the facts relevant to the action, not only those known to them individually, but also those known to their adversaries; in other words, thedesideratum is that civil trials should not be carried on in the dark; and the Rules of Court make this ideal possible through the deposition-discovery mechanism set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery before trial, under proper regulation, accomplished one of the

most necessary ends of modern procedure: It not only eliminates unessential issues from trial thereby shortening them considerably, but also requires parties to play the game with the cards on the table so that the possibility of fair settlement before trial is measurably increased. . . . .

As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore performed primarily by the pleadings.

The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts relative to those issues. The evident purpose is, to repeat, to enable the parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and facts before civil trials and thus prevent that said trials are carried on in the dark.

To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as when the interrogated party is called as witness to testify orally at trial. The inquiry extends to all facts which are relevant, whether they be ultimate or evidentiary, expecting only those matters which are privileged. The objective is as much to give every party the fullest possible information of all the relevant facts before the trial as to obtain evidence for use upon said trial. The principle is reflected in Sec. 2, Rule 24 (governing depositions ) which generally allows the examination of a deponent —

1) "regarding any matter, not privileged, which is relevant to the subject of the pending action, whether relating to the claim or defense of any other party,"

2) as well as:

(a) "the existence, description, nature, custody, condition and location of any books, documents, or other tangible things" and

(b) "the identity and location of persons having knowledge of relevant facts."

What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation for trial, such as the identity and location of persons having knowledge of relevant facts; those relevant facts themselves; and the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things. Hence, the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of fishing expedition serve to preclude a party from inquiring into the facts underlying his opponent's case. Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession. The deposition-discovery procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, this reducing the possibility of surprise. . . . . (Emphases in the original text.)

The other principal benefits derivable from the availability and operation of a liberal discovery procedure are the following:

1. It is of great assistance in ascertaining the truth and in checking and preventing perjury. The reasons for this are:

(a) The witness (including a party) is examined while his memory is fresh:

(b) The witness (including a party) is generally not coached

in preparation for a pre-trial oral examination with the result that his testimony is likely to be more spontaneous. Where the examination is upon written interrogatories, however, it appears that some lawyers furnish the witness with copies of the interrogatories and thereby enable him to prepare his answers in advance.

(c) A party or witness whose deposition has been taken at an early stage in the litigation cannot, at a later date, readily manufacture testimony in contradiction to his deposition;

(d) Testimony is preserved, so that if a witness unexpectedly dies or becomes unavailable at the trial, his deposition is available.

2. It is an effective means of detecting and exposing false, fraudulent, and sham claims and defenses.

3. It makes available in a simple, convenient, and often inexpensive way facts which otherwise could not have been proved, except with great difficulty and sometimes not at all.

4. It educates the parties in advance of trial as to the real value of their claims and defenses, thereby encouraging settlements out of court.

5. It expediates the disposal of litigation, saves the time of the courts, and clears the docket of many cases by settlements and dismissals which otherwise would have to be tried.

6. It safeguards against surprise at the trial, prevents delays, and narrows and simplifies the issues to be tried, thereby expediting the trial.

7. It facilitates both the preparation and trial of the cases. 9

We shall now proceed to resolve the issues raised by herein petitioner.

I. Petitioner avers that the decision of respondent court dismissing its petition on the ground that appeal and notcertiorari is the proper remedy in this case, is erroneous for the reason that such ruling is based on facts which are not obtaining in the case at bar, viz.: (a) that petitioner had already obtained a deposition, which it had not; (b) that said deposition was offered as evidence, which was not done because there was nothing yet to offer; and (c) that said offer was rejected, which did not happen because there was nothing to reject as nothing was offered.

Petitioner claims that since the very purpose of Rule 24 of the Rules of Court is to authorize the taking of a deposition in a pending action, either to make a discovery in preparation for or to be used as evidence upon the trial of such action, the taking of the deposition in the case at bar should be done and finished before trial. Hence, it would be a grave abuse of discretion to compel petitioner to proceed with the trial of the case without the proposed deposition being first undertaken. Appeal will be utterly inadequate to remedy the situation because, in that case, the court shall have rendered its decision without the petitioner having been afforded the opportunity to make use of the answers that the deponent would have otherwise given as a result of the deposition. Reversal on appeal of the said decision by the public respondent may only entail retrial in the lower court and added expense, as well as unnecessary delay in the case. By its very nature, the taking of the deposition in the case at bar should be made and completed before trial, and the remedy of appeal to determine whether or not the trial court committed grave abuse of discretion in denying the petitioner thereof is neither proper, much less adequate.

We agree with petitioner.

Under Section 1, Rule 65 of the Rules of Court, the writ of certiorari lies if the following requisites concur : (a) that it is directed against a tribunal, board or officer exercising judicial functions; (b) that such tribunal, board or officer has acted without or in excess of jurisdiction or with grave abuse of discretion; and (c) that there is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law.

Section 16 of Rule 24 provides that after notice is served for taking a deposition by oral examination, upon motion seasonably made by any party or by the person to be examined and upon notice and for good cause shown, the court in which the action is pending may, among others, make an order that the deposition shall not be taken.

This provision explicitly vests in the court the power to order that the deposition shall not be taken and this grant connotes the authority to exercise discretion in connection therewith. It is well settled, however, that the discretion conferred by law is not unlimited: that it must be exercised, not arbitrarily, capriciously, or oppressively, but in a reasonable manner and in consonance with the spirit of the law, to the end that its purpose may be attained. Referring to the objective of Section 16 of then Rule 18 (now Rule 24) of the Rules of Court, former Chief Justice Manuel V. Moran had these comments:

The advisory of the United States Supreme Court said that this provision is intended to be one of the safeguards for the protection of the parties and deponents on account of the unrestricted right to discovery given by sections 1 and 2 of this Rule. A party may take the deposition of a witness who knows nothing about the case, with the only purpose of annoying him or wasting the time of the other parties. In such case, the court may, on motion, order that the deposition shall not be taken. Or, a party may designate a distinct place for the taking of a deposition, and the adverse party may not have sufficient means to reach that place, because of poverty or otherwise, in which case the court, on motion, may order that the deposition be taken at another place, or that it be taken by written interrogatories. The party serving the notice may wish to inquire into matters the disclosure of which may be oppressive or embarrassing to the deponent, especially if the disclosure is to be made in the presence of third persons, or, the party serving the notice may attempt to inquire into matters which are absolutely private of the deponent, the disclosure of which may affect his interests and is not absolutely essential to the determination of the issues involved in the case. Under such circumstances, the court, on motion, may order "that certain matter shall not be inquired

into or that the scope of the examination shall be limited to certain matters, or that the examination shall be held with no one present except the parties to the action and their officers or counsel, or that after being sealed the deposition shall be opened only by order of the court, or that secret processes, developments, or research need not be disclosed, or that the parties shall simultaneously file specific documents or informations enclosed in sealed envelopes to be opened as directed by the court." In other words, this provision affords the adverse party, as well as the deponent, sufficient protection against abuses that may be committed by a party in the exercise of his unlimited right to discovery. As a writer said: "Any discovery involves a prying into another person's affairs, a prying that is quite justified if it is to be a legitimate aid to litigation, but not justified if it is not to be such an aid." For this reason, courts are given ample powers to forbid discovery which is intended not as an aid to litigation, but merely to annoy, embarrass or oppress either the deponent or the adverse party, or both." 10

The rule is that certiorari will generally not lie to review a discretionary action of any tribunal. Also, as a general proposition, a writ of certiorari is available only to review final judgments or decrees, and will be refused where there has been no final judgment or order and the proceeding for which the writ is sought is still pending and undetermined in the lower tribunal. Pursuant to this rule, it has been held that certiorari will not lie to review or correct discovery orders made prior to trial. 11 This is because, like other discovery orders, orders made under Section 16, Rule 24 are interlocutory and not appealable, 12 considering that they do not finally dispose of the proceeding or of any independent offshoot of it. 13

However, such rules are subject to the exception that discretionary acts will be reviewed where the lower court or tribunal has acted without or in excess of its jurisdiction, where an interlocutory order does not conform to essential requirements of law and may reasonably cause material injury throughout subsequent proceedings for which the remedy of appeal will be inadequate, or where there is a clear or serious abuse of discretion. 14

It is our considered opinion that on the bases of circumstances obtaining in the case at bar, and which will hereinavfter be discussed, certiorari may be availed of to review the questioned order of the trial court.

II. Petitioner asseverates that the trial court gravely abused its discretion in ordering that the deposition be not taken in the absence of good cause therefor. It asserts that the reasons advanced by the trial court cannot be considered "good cause" within the contemplation of the law, which reasons, to repeat, are: (a) that the proposed deponent had earlier responded to written interrogatories; (b) that the proposed deponent had signified his availability to testify in court; and (c) that to allow the deposition would deprive the trial court of the opportunity to ask clarificatory questions to the vital witness. It further claims that a mere allegation, without any proof in support thereof, that petitioner intended to annoy, harass or oppress the proposed deponent, and therefore acted in bad faith, is not sufficient justification to order that the deposition shall not be taken.

It is true that to ensure that availment of the modes of discovery would be untrammeled and efficacious, Rule 29 imposes serious sanctions on the party who refuses to comply with or respond to the modes of discovery, such as dismissing his action or proceeding or part thereof, or rendering judgment by default against the disobedient party; contempt of court, or arrest of the party or agent of the party; payment of the amount of reasonable expenses incurred in obtaining a court order to compel discovery; taking the matters inquired into as established in accordance with the claim of the party seeking discovery; refusal to allow the disobedient party to support or oppose designated claims or defenses; striking out his pleadings or parts thereof; or staying further proceedings.

But then, there are concomitant limitations to discovery, even when permitted to be undertaken without leave of court and without judicial intervention. As indicated by the Rules, limitations inevitably arise when it can be shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass, or oppress the person subject to the inquiry. Also, further limitations come into existence when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege.

In fine, as we have earlier clarified, the liberty of a party to make discovery is well-nigh unrestricted if the matters inquired into are otherwise relevant and not

privileged, and the inquiry is made in good faith and within the bounds of law.

Section 16 of Rule 24 clearly states that it is only upon notice and for good cause that the court may order that the deposition shall not be taken. The matter of good cause is to be determined by the court in the exercise of judicial discretion. Good cause means a substantial reason — one that affords a legal excuse. Whether or not substantial reasons exist is for the court to determine, as there is no hard and fast rule for determining the question as to what is meant by the term "for good cause shown." 15

The requirement, however, that good cause be shown for a protective order puts the burden on the party seeking relief to show some plainly adequate reasons for the order. A particular and specific demonstration of facts, as distinguished from conclusory statements, is required to establish good cause for the issuance of a protective order.16 What constitutes good cause furthermore depends upon the kind of protective order that is sought. 17

In light of the general philosophy of full discovery of relevant facts and the board statement of scope in Rule 24, and in view of the power of the court under Sections 16 and 18 of said Rule to control the details of time, place, scope, and financing for the protection of the deponents and parties, it is fairly rare that it will be ordered that a deposition should not be taken at all. All motions under these subparagraphs of the rule must be supported by "good cause" and a strong showing is required before a party will be denied entirely the right to take a deposition. A mere allegation, without proof, that the deposition is being taken in bad faith is not a sufficient ground for such an order. Neither is an allegation that it will subject the party to a penalty or forfeiture. The mere fact that the information sought by deposition has already been obtained through a bill of particulars, interrogatories, or other depositions will not suffice, although if it is entirely repetitious a deposition may be forbidden. The allegation that the deponent knows nothing about the matters involved does not justify prohibiting the taking of a deposition, nor that whatever the witness knows is protected by the "work product doctrine," nor that privileged information or trade secrets will be sought in the course of the examination, nor that all the transactions were either conducted or confirmed in writing.18

In the present case, private respondent failed to sufficiently establish that there is good cause to support the order of the trial court that the deposition shall not be taken, for several reasons.

1. We agree with petitioner's submission that the fact that petitioner had previously availed of the mode of discovery, which is by written interrogatories supposedly covering all claims, counterclaims and defenses in the case, cannot be considered "good cause", because: (a) the fact that information similar to that sought had been obtained by answers to interrogatories does not bar an examination before trial, and is not a valid objection to the taking of a deposition where there is no duplication and the examining party is not acting in bad faith; and (b) knowledge of the facts by the petitioner concerning which the proposed deponent is to be examined does not justify a refusal of such examination.

As a general rule, the scope of discovery is to be liberally construed so as to provide the litigants with information essential to the expenditious and proper litigation of each of the facts in dispute. Moreover, it cannot be disputed that the various methods of discovery as provided for in the Rules are clearly intended to be cumulative, as opposed to alternative or mutually exclusive. 19

The issue of whether a party who has resorted to a particular method of discovery will be barred in subsequently using other discovery devices has been definitely discussed and resolved as follows:

On the question of whether an oral deposition might be taken after service of interrogatories, the courts took a relatively liberal view. In Howard v. States Marine Corp., the first case in which this question was raised, Judge Hilbert said that:

Where it develops that examination by interrogatories has been inadequate, the court unquestionably has, and in a proper case should exercise, discretion to permit an oral examination. But it should be made to clearly appear that the relevant subject matter will not involve the interrogation of the witness with respect to those particulars upon which he was examined by interrogatories.

In Canuso v. City of Niagara Falls, the fact that a bill of particulars had previously been served and interrogatories answered was held no objection to an oral examination since no duplication was involved and bad faith had not been shown. And in Alfred Bell & Co. v. Catalda Fine Arts, Inc., oral examination was allowed, even though the individual had previously answered interrogatories, except as to matters with respect to which he had "given responsive and categorical testimony." 20

It is quite clear, therefore, and we so hold that under the present Rules the fact that a party has resorted to a particular method of discovery will not bar subsequent use of other discovery devices, as long as the party is not attempting to circumvent a ruling of the court, or to harass or oppress the other party. As a matter of practice, it will often be desirable to resort to both interrogatories and depositions in one or the other sequence. Additional lines of inquiry may come to light after the deposition has been taken, as to which written interrogatories probably would be adequate, and there is no reason why the examining party should not be entitled to obtain all the relevant information he desires if no substantial prejudice is done to the party from whom discovery is sought. On the other hand, interrogatories may well be used as a preliminary to the taking of depositions, in order to ascertain what individuals have the information sought. And, of course, if the answers to interrogatories are evasive and unsatisfactory, the interrogating party should be able to utilize the more effective method of oral examination rather than have to reframe interrogatories. Ordinarily, however, there will be no occasion for a party to use both methods at the same time, at least to obtain the same information. 21

It has long been recognized that there are far greater advantages in obtaining the facts and circumstances involved in a confronting examination than in a written one. Hence:

1. Examination by interrogatories is both more cumbersome and less efficient than oral examination before trial. Where it develops that examination by interrogatories has been inadequate, the court unquestionably has, and in a proper case should exercise, discretion to permit an oral examination. But it should be made to clearly appear that the relevant subject matter will not involve the interrogation of the witness

with respect to those particulars upon which he was examined by interrogatories. 22

2. In actual effectiveness, interrogatories are far inferior to the oral examination. Their defects are quite obvious. In the first place, they give the party to whom they are addressed more time to study their effect, which furnishes a better opportunity to frame protective answers which conceal or evade. In the next place, as a means of forcing a specific, detailed and thorough disclosure from a reluctant party, there is a tendency for the interrogatories to grow in number, complexity and variety of form so as to call for as many aspects of the proof as possible, with the result that they often become difficult to administer. . . . .

In view of these limitations upon the effectiveness of written interrogatories, it is evident that they are not well adapted for the purpose of general examination. It is only when the facts sought are few, formal and isolated, that this method can be satisfactorily employed. So long as the discovery is restricted to the case of the examiner, and he is not permitted to inquire into the case of his adversary, the facts sought by discovery will usually be few, formal and isolated, and written interrogatories will perhaps serve reasonably well. For a small task, a feeble instrument may suffice. But if discovery is to involve a thorough inquiry into the vital and highly controversial phases of the case, resort must be had to an oral examination. . . . .

. . . Where the facts to be elicited are relatively few and important, whether ultimate facts or evidentiary facts, the legal machinery of interrogatories is a very useful, expeditious and inexpensive method; but where they are very numerous, . . . they tend to become unduly burdensome, oppressive and vexatious to the adverse party and difficult for the court to administer. . . . . Furthermore, the procedure tends to be unnecessarily wasteful of judicial time. The judicial ruling upon the interrogatories themselves is not necessarily conclusive or even important in most

cases as determinative of the issues in the case. The purpose of the interrogating party is to develop information or force admission; but if the answers are not satisfactory or useful, the time spent in considering them and the objections thereto is generally wasted, because the answers do not become evidence in the case unless voluntarily introduced by the interrogator as admissions against interest on the part of the party interrogated.

. . . Where a more comprehensive examination of the adverse party is desired it should ordinarily be done by taking his deposition. 23

3. The obvious advantage of interrogatories over a deposition is that they are much less expensive. There is no significant expense for the party sending the interrogatories except for the time spent in preparing the questions. In addition, interrogatories are a much simpler device. There are none of the details that must be taken care of in arranging for a deposition, such as obtaining a court reporter and fixing the time and place for the examination.

On the other hand, depositions are preferable if a searching interrogation of the other party is desired. At a deposition, the examining party has great flexibility and can frame his questions on the basis of answers to previous questions. Moreover, the party being examined does not have the opportunity to study the questions in advance and to consult with his attorney before answering, as he does if interrogatories are used. Attempts at evasion, which might be met by a persistent oral examination, cannot be easily dealt with by interrogatories. The flexibility and the potency of oral depositions is in large part lacking in written interrogatories. It is for these reasons that depositions are . . . by far the most widely used of the discovery devices.

xxx xxx xxx

Furthermore, . . . written interrogatories are most valuable as a

device to compel admissions and the disclosure of major factual matters not concerned with details; the deposition is the best device suited to compel disclosure of detailed information. 24

2. The availability of the proposed deponent to testify in court does not constitute "good cause" to justify the court's order that his deposition shall not be taken. That the witness is unable to attend or testify is one of the grounds when the deposition of a witness may be used in court during the trial. 25 But the same reason cannot be successfully invoked to prohibit the taking of his deposition.

The right to take statements and the right to use them in court have been kept entirely distinct. The utmost freedom is allowed in taking depositions; restrictions are imposed upon their use. As a result, there is accorded the widest possible opportunity for knowledge by both parties of all the facts before the trial. Such of this testimony as may be appropriate for use as a substitute for viva voce examination may be introduced at the trial; the remainder of the testimony, having served its purpose in revealing the facts to the parties before trial, drops out of judicial picture. 26

Regardless of the development of devices for pre-trial fact investigation, our legal system is now thoroughly committed to the notion that on trial itself the adducing of facts by viva voce testimony of witnesses — whose demeanor and manner are subject to the observation of the judge — is superior to the use of written statements of the same witnesses. Preference for oral testimony has dictated most of the limitations on the use of depositions as evidence. And since their use as evidence was originally conceived as the sole function of depositions proper, the limitations on their taking dovetailed with the limitations on their use. But under the concept adopted by the new Rules, the deposition serves the double function of a method of discovery — with use on trial not necessarily contemplated — and a method of presenting testimony. Accordingly, no limitations other than relevancy and privilege have been placed on the taking of depositions, while the use at the trial is subject to circumscriptions looking toward the use of oral testimony wherever practicable. 27

3. We are also in conformity with petitioner's submission that the mere fact that the court could not thereby observe the behavior of the deponent does not justify the denial of the right to take deposition. As we have already explained:

The main reason given in support of the contested order is that, if the deposition were taken, the court could

not observe the behavior of the deponents. The insufficiency of this circumstance to justify the interdiction of the taking of the deposition becomes apparent when we consider that, otherwise, no deposition could ever be taken, said objection or handicap being common to all depositions alike. In other words, the order of respondent Judge cannot be sustained without nullifying the right to take depositions, and therefore, without, in effect repealing section 1 of Rule 18 (now Rule 24) of the Rules of Court, which, clearly, was not intended by the framers of section 16 of the same rule. 28

4. Finally, in the absence of proof, the allegation that petitioner merely intended to annoy, harass or oppress the proposed deponent cannot ably support the setting aside of a notice to take deposition.

Orders to protect the party or witness from annoyance, embarrassment or oppression may be issued if the following requirements are complied with: (a) that there is a motion made by any party or by the person to be examined; (b) that the motion has been seasonably filed; (c) that there is good cause shown; and (d) that notice of such motion has been served to the other party. 29

Once a party has requested discovery, the burden is on the party objecting to show that the discovery requested is not relevant to the issues, 30 and to establish the existence of any claimed privilege. 31 These, private respondent has failed to do so. Consequently, its objection to the taking of the deposition cannot be sustained.

Furthermore, the fact that the deposition is to be taken in San Pablo City, whereas the proposed deponent lives in Manila, is not sufficient to establish private respondent's theory that the requested deposition was intended to annoy and harass the proposed deponent.

Inconvenience to the party whose deposition is to be taken is not a valid objection to the taking of his deposition. 32No doubt, private respondent and its representative who is to be examined will be inconvenienced — as are all parties when required to submit to examination — but this is no ground for denial of the deposition-discovery process. 33 The mere fact that an officer of private respondent would be required to attend the examination and thereby absent himself from some of his usual business affairs during the taking of the deposition is utterly insufficient to justify the court in

ruling that he is being annoyed, embarrassed or oppressed, within the meaning of this language. Something far beyond this is required in this connection to grant a party relief. At any rate, petitioner has signified its willingness to select a suitable office in Manila for the taking of the deposition in order to accommodate the proposed deponent. 34

On the bases of the foregoing disquisitions, we find and so hold that the trial court committed a grave abuse of discretion in issuing an order that the deposition shall not be taken in this case, and that respondent court erred in affirming the same.

WHEREFORE, the petition is GRANTED. The questioned decision of respondent Court of Appeals is hereby REVERSED and SET ASIDE, and judgment is hereby rendered ORDERING the court a quo to allow herein petitioner to take the deposition upon oral examination of Juanito S. Teope in and for purposes of Civil Case No. SP-3469 pending before it.

SO ORDERED.

4. G.R. No. 147143             March 10, 2006

HYATT INDUSTRIAL MANUFACTURING CORP., and YU HE CHING, Petitioners, vs.LEY CONSTRUCTION AND DEVELOPMENT CORP., and PRINCETON DEVELOPMENT CORP., Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari seeking the nullification of the Decision dated May 4, 2000 of the Court of Appeals’ (CA) then Seventh Division in CA-G.R. CV No. 57119, which remanded Civil Case No. 94-1429 to the trial court and directed the latter to allow the deposition-taking without delay;1 and the CA Resolution dated February 13, 2001 which denied petitioners’ motion for reconsideration.2

The facts are as follows:

On April 8, 1994, respondent Ley Construction and Development Corporation (LCDC) filed a complaint for specific performance and damages with the Regional Trial Court of Makati, Branch 62 (RTC), docketed as Civil Case No. 94-1429, against petitioner Hyatt Industrial Manufacturing Corporation (Hyatt) claiming that Hyatt reneged in its obligation to transfer 40% of the pro indiviso share of a real property in Makati in favor of LCDC despite LCDC’s

full payment of the purchase price of P2,634,000.00; and that Hyatt failed to develop the said property in a joint venture, despite LCDC’s payment of 40% of the pre-construction cost.3 On April 12, 1994, LCDC filed an amended complaint impleading Princeton Development Corporation (Princeton) as additional defendant claiming that Hyatt sold the subject property to Princeton on March 30, 1994 in fraud of LCDC.4 On September 21, 1994, LCDC filed a second amended complaint adding as defendant, Yu He Ching (Yu), President of Hyatt, alleging that LCDC paid the purchase price of P2,634,000.00 to Hyatt through Yu.5

Responsive pleadings were filed and LCDC filed notices to take the depositions of Yu; Pacita Tan Go, Account Officer of Rizal Commercial Banking Corporation (RCBC); and Elena Sy, Finance Officer of Hyatt. Hyatt also filed notice to take deposition of Manuel Ley, President of LCDC, while Princeton filed notice to take the depositions of Manuel and Janet Ley.6

On July 17, 1996, the RTC ordered the deposition-taking to proceed.7

At the scheduled deposition of Elena Sy on September 17, 1996, Hyatt and Yu prayed that all settings for depositions be disregarded and pre-trial be set instead, contending that the taking of depositions only delay the resolution of the case. The RTC agreed and on the same day ordered all depositions cancelled and pre-trial to take place on November 14, 1996.8

LCDC moved for reconsideration9 which the RTC denied in its October 14, 1996 Order, portion of which reads:

This Court has to deny the motion, because: 1) as already pointed out by this Court in the questioned Order said depositions will only delay the early termination of this case; 2) had this Court set this case for pre-trial conference and trial thereafter, this case would have been terminated by this time; 3) after all, what the parties would like to elicit from their deponents would probably be elicited at the pre-trial conference; 4) no substantial rights of the parties would be prejudiced, if pre-trial conference is held, instead of deposition.10

On November 14, 1996, the scheduled date of the pre-trial, LCDC filed an Urgent Motion to Suspend Proceedings Due to Pendency of Petition for Certiorari in the Court of Appeals.11 The petition, which sought to annul the Orders of the RTC dated September 17, 1996 and October 14, 1996, was

docketed as CA-G.R. SP No. 4251212 and assigned to the then Twelfth Division of the CA.

Meanwhile, pre-trial proceeded at the RTC as scheduled13 and with the refusal of LCDC to enter into pre-trial, Hyatt, Yu and Princeton moved to declare LCDC non-suited which the RTC granted in its Order dated December 3, 1996, thus:

On September 17, 1996, this Court noticing that this case was filed as early (as) April 4, 199414 and has not reached the pre-trial stage because of several depositions applied for by the parties, not to mention that the records of this case has reached two (2) volumes, to avoid delay, upon motion, ordered the cancellation of the depositions.

On September 24, 1996, plaintiff filed a motion for reconsideration, seeking to reconsider and set aside the order dated September 17, 1996, which motion for reconsideration was denied in an order dated October 14, 1996, ruling among others that "after all, what the parties would like to elicit from these deponents would probably be elicited at the pre-trial conference", and, reiterated the order setting this case for pre-trial conference on November 14, 1996.

On the scheduled pre-trial conference on November 14, 1996, a petition for certiorari was filed with the Court of Appeals, seeking to annul the Order of this Court dated September 17, 1996 and October 14, 1996, furnishing this Court with a copy on the same date.

At the scheduled pre-trial conference on November 14, 1996, plaintiff orally moved the Court to suspend pre-trial conference alleging pendency of a petition with the Court of Appeals and made it plain that it cannot proceed with the pre-trial because the issue on whether or not plaintiff may apply for depositions before the pre-trial conference is a prejudicial question. Defendants objected, alleging that even if the petition is granted, pre-trial should proceed and that plaintiff could take deposition after the pre-trial conference, insisting that defendants are ready to enter into a pre-trial conference.

This Court denied plaintiff’s motion to suspend proceedings and ordered plaintiff to enter into pre-trial conference. Plaintiff refused. Before this Court denied plaintiff’s motion to suspend, this Court gave Plaintiff two (2) options: enter into a pre-trial conference, advising plaintiff that what it would like to obtain at the deposition may be obtained at the pre-trial conference, thus expediting early termination of this case; and, terminate the pre-trial conference and apply for deposition later on. Plaintiff insisted on suspension of the pre-trial conference alleging that it

is not ready to enter into pre-trial conference in view of the petition for certiorari with the Court of Appeals. Defendants insisted that pre-trial conference proceed as scheduled, manifesting their readiness to enter into a pre-trial conference.

When plaintiff made it clear that it is not entering into the pre-trial conference, defendants prayed that plaintiff be declared non-suited. x x x

x x x x

In the light of the foregoing circumstances, this Court is compelled to dismiss plaintiff’s complaint.

WHEREFORE, for failure of plaintiff to enter into pre-trial conference without any valid reason, plaintiff’s complaint is dismissed. Defendants’ counterclaims are likewise dismissed.

SO ORDERED.15

LCDC filed a motion for reconsideration16 which was denied however by the trial court in its Order dated April 21, 1997.17 LCDC went to the CA on appeal which was docketed as CA-G.R. CV No. 57119 and assigned to the then Seventh Division of the CA.18

On July 24, 1997, the CA’s then Twelfth Division,19 in CA-G.R. SP No. 42512 denied LCDC’s petition for certiorarideclaring that the granting of the petition and setting aside of the September 17, 1996 and October 14, 1996 Orders are manifestly pointless considering that the complaint itself had already been dismissed and subject of the appeal docketed as CA-G.R. CV No. 57119; that the reversal of the said Orders would have practical effect only if the dismissal were also set aside and the complaint reinstated; and that the dismissal of the complaint rendered the petition for certiorari devoid of any practical value.20 LCDC’s motion for reconsideration of the CA-G.R. SP No. 42512 decision was denied on March 4, 1998.21 LCDC then filed with this Court, a petition for certiorari, docketed as G.R. No. 133145 which this Court dismissed on August 29, 2000.22

On May 4, 2000, the CA’s then Seventh Division issued in CA-G.R. CV No. 57119 the herein assailed decision, thefallo of which reads:

WHEREFORE, premises considered, finding the appeal meritorious, this case is remanded to the court a quo for further hearing and directing the latter to allow the deposition taking without delay.

SO ORDERED.23

The CA reasoned that: LCDC complied with Section 1, Rule 23 of the 1997 Rules of Civil Procedure which expressly sanctions depositions as a mode of discovery without leave of court after the answer has been served; to unduly restrict the modes of discovery during trial would defeat the very purpose for which it is intended which is a pre-trial device, and at the time of the trial, the issues would already be confined to matters defined during pre-trial; the alleged intention of expediting the resolution of the case is not sufficient justification to recall the order to take deposition as records show that the delay was brought about by postponement interposed by both parties and other legal antecedents that are in no way imputable to LCDC alone; deposition-taking, together with the other modes of discovery are devised by the rules as a means to attain the objective of having all the facts presented to the court; the trial court also erred in dismissing the complaint as LCDC appeared during the pre-trial conference and notified it of the filing of a petition before the CA; such is a legitimate justification to stall the pre-trial conference, as the filing of the petition was made in good faith in their belief that the court a quo erred in canceling the deposition scheduled for no apparent purpose.24

Hyatt and Princeton filed their respective motions for reconsideration which the CA denied on February 13, 2001.25

Hyatt and Yu now come before the Court via a petition for review on certiorari, on the following grounds:

I

THE COURT OF APPEALS, SEVENTH DIVISION, COMMITTED GRAVE ABUSE OF DISCRETION, ACTUALLY AMOUNTING TO LACK OF JURISDICTION, IN HOLDING IN EFFECT INVALID THE ORDERS OF THE LOWER COURT DATED SEPTEMBER 17, 1996 AND OCTOBER 14, 1996 WHICH ARE NOT RAISED OR PENDING BEFORE IT, BUT IN ANOTHER CASE (CA-G.R. SP. No. 42512) PENDING BEFORE ANOTHER DIVISION OF THE COURT OF APPEALS, TWELFTH DIVISION, AND WHICH CASE WAS DISMISSED BY THE SAID DIVISION OF THE COURT OF APPEALS AND FINALLY BY THE HONORABLE SUPREME COURT IN G.R. NO. 133145.

II

THE COURT OF APPEALS, SEVENTH DIVISION, COMMITTED GRAVE ABUSE OF DISCRETION AND SERIOUS ERRORS OF LAW IN REVERSING THE LOWER COURT’S ORDER DATED DECEMBER 3, 1996 AND APRIL 21, 1997 HOLDING

RESPONDENT NON-SUITED FOR FAILURE TO ENTER INTO PRE-TRIAL.26

Anent the first issue, petitioners claim that: the validity of the RTC Order dated September 17, 1996 which set the case for pre-trial, as well as its Order dated October 14, 1996 denying LCDC’s motion for partial reconsideration are not involved in CA-G.R. CV No. 57119 but were the subject of CA-G.R. SP No. 42512, assigned to the then Twelfth Division, which dismissed the same on July 24, 1997 and which dismissal was affirmed by this Court in G.R. No. 133145; in passing upon the validity of the Orders dated September 17, 1996 and October 14, 1996, the CA’s then Seventh Division in CA-G.R. CV No. 57119 exceeded its authority and encroached on issues taken cognizance of by another Division.27

On the second issue, petitioners claim that: the CA’s then Seventh Division should have outrightly dismissed the appeal of LCDC as the same did not involve any error of fact or law but pertains to a matter of discretion which is properly a subject of certiorari under Rule 65 of the Revised Rules of Court; conducting discovery thru deposition is not a condition sine qua non  to the holding of a pre-trial and the fact that LCDC wanted to take the deposition of certain persons is not a valid ground to suspend the holding of pre-trial and subsequently the trial on the merits; the persons whose depositions were to be taken were listed as witnesses during the trial; to take their depositions before the lower court and to present them as witnesses during the trial on the merits would result in unnecessary duplicity; the fact that LCDC has a pending petition for certiorari with the CA’s then Twelfth Division docketed as CA-G.R. SP No. 42512 is not a ground to cancel or suspend the scheduled pre-trial on November 14, 1996 as there was no restraining order issued; LCDC’s availment of the discovery procedure is causing the undue delay of the case; it is only after LCDC has filed its complaint that it started looking for evidence to support its allegations thru modes of discovery and more than two years has already passed after the filing of the complaint yet LCDC still has no documentary evidence to present before the lower court to prove its allegations in the complaint.28

Petitioners then pray that the Decision dated May 4, 2000 and the Resolution dated February 13, 2001 of the CA’s then Seventh Division in CA-G.R. CV No. 57119 be annulled and set aside and the validity of the Orders dated December 3, 1996 and April 21, 1997 of the RTC of Makati, Branch 62 in Civil Case No. 94-1429 be sustained.29

In its Comment, LCDC argues that the petitioners erred in claiming that the CA’s then Seventh Division

overstepped its authority as this Court has ruled in G.R. No. 133145 that the issue of whether LCDC has been denied its right to discovery is more appropriately addressed in the appeal before the then Seventh Division in CA-G.R. CV No. 57119 below rather than by the then Twelfth Division in the certiorari proceeding in CA-G.R. SP No. 42512; and while the appeal of the final Order of the RTC dated December 3, 1996 also questioned the Orders dated September 17, 1996 and October 14, 1996, it does not render the appeal improper as this Court in G.R. No. 133145 held that the subsequent appeal constitutes an appropriate remedy because it assails not only the Order dated December 3, 1996, but also the two earlier orders.30

On the second issue, LCDC contends that: the mere fact that a deponent will be called to the witness stand during trial is not a ground to deny LCDC the right to discovery and does not cause "unnecessary duplicity", otherwise no deposition can ever be taken; a deposition is for the purpose of "discovering" evidence while trial is for the purpose of "presenting" evidence to the court; if petitioners’ concern was the delay in the disposition of the case, the remedy is to expedite the taking of the depositions, not terminate them altogether; petitioners have nothing to fear from discovery unless they have in their possession damaging evidence; the parties should be allowed to utilize the discovery process prior to conducting pre-trial since every bit of relevant information unearthed through the discovery process will hasten settlement, simplify the issues and determine the necessity of amending the pleadings; the trial court erred in not suspending the pre-trial conference pending the petition for certiorari before the then Twelfth Division of the CA since considerations of orderly administration of justice demanded that the trial court accord due deference to the CA; not only was LCDC’s petition for certiorari filed in good faith, the CA found it meritorious, vindicating LCDC’s insistence that the pre-trial be suspended; the undue delay in the disposition of the case was not attributable to LCDC’s deposition-taking but to the flurry of pleadings filed by defendants below to block LCDC’s depositions and prevent it from gaining access to critical evidence; the critical evidence that LCDC needs to obtain through discovery is evidence that is totally within the knowledge and possession of petitioners and defendant Princeton and is not available elsewhere.31

On September 17, 2001, the Court required the parties to file their respective memoranda.32 Hyatt and Yu on the one hand and LCDC on the other filed their respective memoranda reiterating their positions.33

On January 2, 2002, Princeton filed a "Comment" which this Court considered as its Memorandum in the Resolution dated January 30, 2002.34

In said memorandum, Princeton averred that: it is not true that Princeton failed to comply with any discovery orders as all information requested of Princeton was duly furnished LCDC and there are no pending discovery orders insofar as Princeton is concerned; LCDC is seeking to dictate its procedural strategies on the RTC and the opposing parties; LCDC was not deprived due process as it was given all the opportunity to prepare for its case and to face its opponents before the court; LCDC admits to the probability of forum shopping as it filed a petition forcertiorari with the then Twelfth Division of the CA and later an appeal with the then Seventh Division of the CA; the RTC did not bar LCDC from presenting witnesses or discovering any evidence, as all it did was to transfer the venue of the testimony and discovery to the courtroom and get on with the case which LCDC did not want to do; that discovery proceedings need not take place before pre-trial conference; trial court judges are given discretion over the right of parties in the taking of depositions and may deny the same for good reasons in order to prevent abuse; the trial court did not err in not granting LCDC’s motion to suspend proceedings due to the pendency of a petition for certiorari with the CA since there was no order from said court and there was no merit in the petition forcertiorari as shown by the dismissal thereof by the then Twelfth Division; there was proper and legal ground for the trial court to declare LCDC non-suited; appearance at the pre-trial is not enough; there is no evidence to support LCDC’s claim that Hyatt surreptitiously transferred title to Princeton.35

The Court is in a quandary why Hyatt and Yu included Princeton as respondent in the present petition when Princeton was their co-defendant below and the arguments they raised herein pertain only to LCDC. With the failure of petitioners to raise any ground against Princeton in any of its pleadings before this Court, we shall treat Princeton’s inclusion as respondent in the present petition as mere inadvertence on the part of petitioners.

Now to the merits. The issues that need to be resolved in this case may be simplified as follows: (1) Whether the CA’s then Seventh Division exceeded its authority in ruling upon the validity of the Orders dated September 17, 1996 and November 14, 1996; and (2) Whether the CA erred in remanding the case to the trial court and order the deposition-taking to proceed.

We answer both questions in the negative.

Petitioners assert that the CA’s then Twelfth Division in CA-GR SP No. 42512 and this Court in G.R. No. 133145 already ruled upon the validity of the Orders

dated September 17, 1996 and November 14, 1996, thus the CA’s then Seventh Division in CA G.R. CV No. 57119 erred in ruling upon the same.

A cursory reading of the decisions in CA-GR SP No. 42512 and G.R. No. 133145, however, reveals otherwise. The CA’s then Twelfth Division in CA-G.R. SP No. 42512 was explicit in stating thus:

x x x Any decision of ours will not produce any practical legal effect. According to the petitioner, if we annul the questioned Orders, the dismissal of its Complaint by the trial [court] will have to be set aside in its pending appeal. That assumes that the division handling the appeal will agree with Our decision. On the other hand, it may not. Also other issues may be involved therein than the validity of the herein questioned orders.

We cannot pre-empt the decision that might be rendered in such appeal. The division to [which] it has been assigned should be left free to resolve the same. On the other hand, it is better that this Court speak with one voice.36

This Court in G.R. No. 133145 also clearly stated that:

x x x First, it should be stressed that the said Petition (CA-G.R. SP No. 42512) sought to set aside only the two interlocutory RTC Orders, not the December 3, 1996 Resolution dismissing the Complaint. Verily, the Petition could not have assailed the Resolution, which was issued after the filing of the former.

Under the circumstances, granting the Petition for Certiorari and setting aside the two Orders are manifestly pointless, considering that the Complaint itself had already been dismissed. Indeed, the reversal of the assailed Orders would have practical effect only if the dismissal were also set aside and the Complaint reinstated. In other words, the dismissal of the Complaint rendered the Petition for Certiorari devoid of any practical value.

Second, the Petition for Certiorari was superseded by the filing, before the Court of Appeals, of a subsequent appeal docketed as CA-G.R. CV No. 57119, questioning the Resolution and the two Orders.  In this light, there was no more reason for the CA to resolve the Petition for Certiorari.

x x x x

In this case, the subsequent appeal constitutes an adequate remedy. In fact, it is the appropriate remedy, because it assails not only the Resolution but also the two Orders.

x x x x

WHEREFORE, the Petition is DENIED and the assailed Resolutions AFFIRMED. x x x.37

With the pronouncements of the CA in CA-G.R. SP No. 42512 and by this Court in G.R. No. 133145 that the subsequent appeal via CA-G.R. CV No. 57119 constitutes as the adequate remedy to resolve the validity of the RTC Orders dated September 17, 1996 and November 14, 1996, the arguments of petitioners on this point clearly have no leg to stand on and must therefore fail.

On the second issue, the Court finds that the CA was correct in remanding the case to the RTC and ordering the deposition-taking to proceed.

A deposition should be allowed, absent any showing that taking it would prejudice any party.38 It is accorded a broad and liberal treatment and the liberty of a party to make discovery is well-nigh unrestricted if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of law.39 It is allowed as a departure from the accepted and usual judicial proceedings of examining witnesses in open court where their demeanor could be observed by the trial judge, consistent with the principle of promoting just, speedy and inexpensive disposition of every action and proceeding;40 and provided it is taken in accordance with the provisions of the Rules of Court, i.e., with leave of court if summons have been served, and without such leave if an answer has been submitted; and provided further that a circumstance for its admissibility exists (Section 4, Rule 23, Rules of Court).41 The rules on discovery should not be unduly restricted, otherwise, the advantage of a liberal discovery procedure in ascertaining the truth and expediting the disposal of litigation would be defeated.42

Indeed, the importance of discovery procedures is well recognized by the Court. It approved A.M. No. 03-1-09-SC on July 13, 2004 which provided for the guidelines to be observed by trial court judges and clerks of court in the conduct of pre-trial and use of deposition-discovery measures. Under A.M. No. 03-1-09-SC, trial courts are directed to issue orders requiring parties to avail of interrogatories to parties under Rule 45 and request for admission of adverse party under Rule 26 or at their discretion make use of depositions under Rule 23 or other measures under Rule 27 and 28 within 5 days from the filing of the answer. The parties are likewise required to submit, at least 3 days before the pre-trial, pre-trial briefs, containing among others a manifestation of the parties of their having availed or their intention to avail

themselves of discovery procedures or referral to commissioners.43

Since the pertinent incidents of the case took place prior to the effectivity of said issuance, however, the depositions sought by LCDC shall be evaluated based on the jurisprudence and rules then prevailing, particularly Sec. 1, Rule 23 of the 1997 Rules of Court which provides as follows:

SECTION 1. Depositions pending action, when may be taken.--- By leave of court after jurisdiction has been obtained over any defendant or over property which is the subject of the action, or without such leave after an answer has been served, the testimony of any person, whether a party or not, may be taken, at the instance of any party, by deposition upon oral examination or written interrogatories. The attendance of witnesses may be compelled by the use of a subpoena as provided in Rule 21. Depositions shall be taken only in accordance with these Rules. The deposition of a person confined in prison may be taken only by leave of court on such terms as the court prescribes. (Emphasis supplied).

As correctly observed by the CA, LCDC complied with the above quoted provision as it made its notice to take depositions after the answers of the defendants have been served. LCDC having complied with the rules then prevailing, the trial court erred in canceling the previously scheduled depositions.

While it is true that depositions may be disallowed by trial courts if the examination is conducted in bad faith; or in such a manner as to annoy, embarrass, or oppress the person who is the subject of the inquiry, or when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege,44 such circumstances, however are absent in the case at bar.

The RTC cites the delay in the case as reason for canceling the scheduled depositions. While speedy disposition of cases is important, such consideration however should not outweigh a thorough and comprehensive evaluation of cases, for the ends of justice are reached not only through the speedy disposal of cases but more importantly, through a meticulous and comprehensive evaluation of the merits of the case.45 Records also show that the delay of the case is not attributable to the depositions sought by LCDC but was caused by the many pleadings filed by all the parties including petitioners herein.

The argument that the taking of depositions would cause unnecessary duplicity as the intended

deponents shall also be called as witnesses during trial, is also without merit.

The case of Fortune Corp. v. Court of Appeals46 which already settled the matter, explained that:

The availability of the proposed deponent to testify in court does not constitute "good cause" to justify the court’s order that his deposition shall not be taken. That the witness is unable to attend or testify is one of the grounds when the deposition of a witness may be used in court during the trial. But the same reason cannot be successfully invoked to prohibit the taking of his deposition.

The right to take statements and the right to use them in court have been kept entirely distinct. The utmost freedom is allowed in taking depositions; restrictions are imposed upon their use. As a result, there is accorded the widest possible opportunity for knowledge by both parties of all the facts before the trial. Such of this testimony as may be appropriate for use as a substitute for viva voce examination may be introduced at the trial; the remainder of the testimony, having served its purpose in revealing the facts to the parties before trial, drops out of the judicial picture.

x x x [U]nder the concept adopted by the new Rules, the deposition serves the double function of a method of discovery - with use on trial not necessarily contemplated - and a method of presenting testimony. Accordingly, no limitations other than relevancy and privilege have been placed on the taking of depositions, while the use at the trial is subject to circumscriptions looking toward the use of oral testimony wherever practicable.47

Petitioner also argues that LCDC has no evidence to support its claims and that it was only after the filing of its Complaint that it started looking for evidence through the modes of discovery.

On this point, it is well to reiterate the Court’s pronouncement in Republic v. Sandiganbayan48:

What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation for trial, such as the identity and location of persons having knowledge of relevant facts; those relevant facts themselves; and the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things. Hence, "the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of ‘fishing expedition’ serve to preclude a party from inquiring into the facts underlying his opponent’s case. Mutual knowledge of all the relevant facts gathered by both parties is

essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession. The deposition-discovery procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility, of surprise.49

It also does not escape this Court’s attention that the trial court, before dismissing LCDC’s complaint, gave LCDC two options: (a) enter into a pre-trial conference, advising LCDC that what it would like to obtain at the deposition may be obtained at the pre-trial conference, thus expediting early termination of the case; and (b) terminate the pre-trial conference and apply for deposition later on. The trial court erred in forcing LCDC to choose only from these options and in dismissing its complaint upon LCDC’s refusal to choose either of the two.

The information LCDC seeks to obtain through the depositions of Elena Sy, the Finance Officer of Hyatt and Pacita Tan Go, an Account Officer of RCBC, may not be obtained at the pre-trial conference, as the said deponents are not parties to the pre-trial conference.

As also pointed out by the CA:

x x x To unduly restrict the modes of discovery during trial, would defeat the very purpose for which it is intended, as a pre-trial device. By then, the issues would have been confined only on matters defined during pre-trial. The importance of the modes of discovery cannot be gainsaid in this case in view of the nature of the controversy involved and the conflicting interest claimed by the parties.50

Deposition is chiefly a mode of discovery, the primary function of which is to supplement the pleadings for the purpose of disclosing the real matters of dispute between the parties and affording an adequate factual basis during the preparation for trial.51

Further, in Republic v. Sandiganbayan52 the Court explained that:

The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it is the purpose and policy of the law that the parties - before the trial if not indeed even before the pre-trial - should discover or inform themselves of all the facts relevant to the action, not only those known to them individually, but also those known to their adversaries; in other words, the desideratum is that civil trials should not be carried on in the dark; and the Rules of Court make this ideal possible through the deposition- discovery mechanism set forth in Rules 24 to 29. The

experience in other jurisdictions has been the ample discovery before trial, under proper regulation, accomplished one of the most necessary ends of modern procedure; it not only eliminates unessential issues from trials thereby shortening them considerably, but also requires parties to play the game with the cards on the table so that the possibility of fair settlement before trial is measurably increased.

As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore performed primarily by the pleadings.

The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts relative to those issues. The evident purpose is, to repeat, to enable the parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and facts before civil trials and thus prevent that said trials are carried on in the dark.53 (emphasis supplied)

In this case, the information sought to be obtained through the depositions of Elena and Pacita are necessary to fully equip LCDC in determining what issues will be defined at the pre-trial. Without such information before pre-trial, LCDC will be forced to prosecute its case in the dark --- the very situation which the rules of discovery seek to prevent. Indeed, the rules on discovery seek to make trial less a game of blind man’s bluff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent. 54

Considering the foregoing, the Court finds that the CA was correct in remanding the case to the trial court and ordering the depositions to proceed.

WHEREFORE, the petition is denied for lack of merit.

Costs against petitioner.

SO ORDERED.