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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 70987 September 29, 1988
GREGORIO Y. LIMPIN, and ROGELIO M. SARMIENTO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and GUILLERMO PONCE, respondents.
Danilo A. Basa for petitioner Gregorio Y. Limpin, Jr.
Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitioner Rogelio Sarmiento.
Sycip, Salazar, Hernandez & Gatmaitan Law Offices and Eugenio C. Lindo for respondent Guillermo Ponce.
NARVASA, J.:
Once again the parties are before this Court; this time, for a determination of whether or not the equity of redemption recognized in favor of
petitioner Rogelio M. Sarmiento in this Court's judgment promulgated on January 30, 1987, still subsists and may be exercised, more than a
year after that judgment had become final and executory.
The proceedings concern two (2) lots, then covered by TCTs Nos. 92836 and 92837, which, together with two (2) others, were originally
mortgaged in 1973 to herein private respondent Ponce by their former owners, the Spouses Jose and Marcelina Aquino. These two lots were
afterwards sold in 1978 by the same Aquino Spouses to Butuan Bay Wood Export Corporation. Against this corporation herein petitioner Limpin
obtained a money judgment in 1979; and to satisfy the judgment, the two lots were levied on and sold at public auction in 1980, Limpin being
the highest bidder. Limpin later sold the lots to his co-petitioner, Sarmiento.
Earlier however or a day before levy was made on the two lots in execution of the judgment against Butuan Bay Wood Export Corporation.
Ponce had initiated judicial proceedings for the foreclosure of the mortgage over said two (2) lots (together with the two (2) others mortgaged
to him Judgment was rendered in his favor and became final; and at the ensuing foreclosure sale, the lots were acquired by Ponce himself as
highest bidder. Ponce then moved for confirmation of the foreclosure sale, but the Court confirmed the sale of only two lots, refusing to do so
as regards the two which had been subject of the execution sale in Limpin's favor (i.e., those covered TCTs Nos. 92836 and 92837).
It was to resolve the resulting dispute that Ponce instituted a special civil action in the Intermediate Appellate Court, impleading Limpin and
Sarmiento a indispensable parties respondents. That Court rendered judgment on February 28, 1985 in Ponce's favor; Limpin and Sarmiento
appealed; this Court denied their appeal.
The judgment of this Court of January 30, 1987 dismissed Sarmiento's and Limpin's petition for review on certiorari of the Appellate Court's
decision of February 28, 1985. It in effect affirmed the latter's decision which inter aliaordered the Trial Court "to confirm the sale (of the lots
formerly covered by TCT Nos. 92836 and 92837) and issue a writ of possession to ... (Guillermo Ponce) with respect to the aforesaid
lots, subject to the equity of redemption of the respondent Rogelio V. Sarmiento 1 Applying the doctrine laid down in Santiago v. Dionisio, a
1953 decision of this Court 2 the Intermediate Appellate Court's decision declared that "the sale to Ponce, as the highest bidder in the
foreclosure sale of the two lots in question should have been confirmed, subject to Limpin's (and now Sarmiento's) equity of redemption."
This Court's aforesaid judgment also clearly and categorically sustained the exercise by the Appellate Court ofjurisdiction over the persons of
Rogelio M. Sarmiento and Gregorio Limpin. 3 There can thus be no question that the petitoners herein, said Rogelio Sarmiento and Gregorio
Limpin, were affected and are bound by the decision of the Intermediate Appellate Court, and that of this Court affirming it.
Rogelio M. Sarmiento, particularly, was aware that the Trial Court had the ministerial duty to execute the Appellate Court's decision, i.e., to
confirm the sale and issue a writ of possession as regards the aforesaid lots, subject to the equity of redemption explicitly recognized in his
favor in the decisions mentioned. He knew that he had theprerogative to exercise his equity of redemption, if not from the moment that the
judgment of this Court became final and executory, 4 at least until the Court a quo, presided over by Hon. Antonio Solano, subsequently
confirmed the sale and issued a writ of possession in favor of Guillermo Ponce in June, 1987. 5
He did not try to exercise that right before, at or about the time of the confirmation of the foreclosure sale by Judge Solano. Instead, he
instituted no less than two (2) actions in the same Regional Trial Court which were assigned to another branch, presided over by Hon. Teodoro
Beltran- attempting to relitigate precisely the same issues which this Court and the Intermediate Appellate Court had already passed upon and
resolved adversely to him. For doing so for trifling with and abusing the processes of the courts, and thus unwarrantedly delaying execution of
the final and executory judgment against him he and his counsel were both found guilty of contempt and correspondingly punished by this
Court, by Resolution dated May 5, 1988. The same resolution also decreed the dismissal of the complaints in both cases and the nullification
and setting aside of the restraining or injunctive orders of Judge Beltran.
It was not until March 11, 1988-nine months or so after entry of the judgment recognizing his equity of redemption as successor-in-interest of
the original mortgagors that Sarmiento finally be stirred himself to attempt to exercise his unforeclosed equity of redemption. On that day he
filed a motion with the Court presided over by Hon. Judge Antonio Solano, manifesting that he would exercise the right and asked the Court to
fix the redemption price. 6 The Court opined that "this should be the subject of the agreement between Ponce and Sarmiento. 7
Sarmiento then wrote to Ponce on March 23, 1988 offering "P 2.6 million as redemption price for the two lots originally covered by TCTs Nos.
92836 and 92837, now 307100 and 307124. 8 Ponce's answer, dated March 25, 1988, rejected the offer said averred "that the period within
which ... (Sarmiento) could have exercised such right ... (had) lapsed. 9 Sarmiento reacted by filing a motion with the Solano Court, dated
March 29, 1988, asking it to "fix the redemption price ... and that the implementation of the writ of possession be provisionally deferred. 10 An
opposition was promptly filed by Ponce under date of May 4, 1988 11 in which he argued that "Sarmiento's right to exercise his equity of
redemption over those lots had long expired," the opportunity to exercise it having presented itself but not availed of "(i) after ... default in the
performance of the conditions of the mortgage and (ii) before the Sheriffs sale of the property and the judicial confirmation thereof." According
to Ponce, "from October 17, 1982, ... (when) Sarmiento's predecessors-in-interest defaulted in their obligations over the mortgaged properties,
up to June 17, 1987, when this ... (Trial) Court confirmed the auction sale of those properties, Sarmiento could (and should) have exercised his
'equity of redemption.'" Judge Solano did not share this view, and ruled accordingly. 12

The issue has been brought to this Court for resolution by Ponce's "Motion for Clarification" dated May 27, 1988 and "Supplemental Motion ..."
dated June 13, 1988, as to which Sarmiento has submitted a Comment dated June 17,1988. To the comment a reply has been presented by
Ponce under date of August 3, 1988.
Ponce states 13 that the term, equity of redemption, means "the right of the mortgagor to redeem the mortgaged property after his default in
the performance of the conditions of the mortgage but before the sale of the property or the judicial) confirmation of the (Sheriffs) sale,"
citing Top Rate International Services, Inc. v. IAC 142 SCRA 473 [1976], or "the right to redeem mortgaged property by paying the amount
ordered by the court within a period of ninety days, or, even thereafter but before the confirmation of the sale, invoking Sun Life Assurance Co.
of Canada v. Diez, 52 Phil. 275 [1928]. 14 On this premise, he postulates that "from October 17, 1982, the date Sarmiento's predecessors-ininterest defaulted in their obligations over the mortgaged properties, up to June 17, 1987, when the lower court confirmed the auction sale of
those properties, Sarmiento could have exercised his 'equity of redemption."' Not having done so within that time, his equity of redemption
had been extinguished; indeed, by opting to file "new suits against Ponce ... seeking to annul Ponce's titles over those properties" instead of
redeeming the same, he had "waived his equity of redemption (assuming such right existed at the time the suits were commenced)."
It is Sarmiento's position, on the other hand, 15 that the "17 June 1987 confirmation of the sale of the two lots could not have cut off ... (his)
equity of redemption;" in fact, "Ponce himself, in his 'Urgent Motion' dated 1 June 1987, precisely prayed for the issuance of a writ of
possession 'subject to the equity of redemption of Rogelio M. Sarmiento' thereby recognizing Sarmiento's equity of redemption beyond
confirmation date," 16 He also argues that he had not been informed of the time when his right of redemption would be cut-off, 17 because he
"never received a copy of any Motion for Confirmation, much less notice of hearing thereon in violation of his right to due process;" that to
hold otherwise would "render nugatory the decision of the Court of Appeals and this ... Court on the issue;" and that he is entitled to a
reasonable time, e.g., a year, for the exercise of his equity of redemption. 18
The equity of redemption is, to be sure, different from and should not be confused with the right of redemption. 19
The right of redemption in relation to a mortgage-understood in the sense of a prerogative to re-acquire mortgaged property after registration
of the foreclosure sale- exists only in the case of the extrajudicial foreclosure of the mortgage. No such right is recognized in
a judicial foreclosure except only where the mortgagee is the Philippine National Bank or a bank or banking institution.
Where a mortgage is foreclosed extra-judicially, Act 3135 grants to the mortgagor the right of redemption within one (1) year from the
registration of the sheriffs certificate of foreclosure sale. 20
Where the foreclosure is judicially effected, however, no equivalent right of redemption exists. The law 21 declares that a judicial foreclosure
sale, "when confirmed by an order of the court, ... shall operate to divest the rights of all the parties to the action and to vest their rights in the
purchaser, subject to such rights of redemption as may be allowed by law. 22 Such rights exceptionally "allowed by law" (i.e., even after
confirmation by an order of the court) are those granted by the charter of the Philippine National Bank (Acts No. 2747 and 2938), and the
General Banking Act (R.A. 337). 23 These laws confer on the mortgagor, his successors in interest or any judgment creditor of the mortgagor,
the right to redeem the property sold on foreclosure-after confirmation by the court of the foreclosure sale-which right may be exercised within
a period of one (1) year, counted from the date of registration of the certificate of sale in the Registry of Property.
But, to repeat, no such right of redemption exists in case of judicial foreclosure of a mortgage if the mortgagee is not the PNB or a bank or
banking institution. In such a case, the foreclosure sale, "when confirmed by an order of the court. ... shall operate to divest the rights of all
the parties to the action and to vest their rights in the purchaser." There then exists only what is known as the equity of redemption. This is
simply the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt
within the 90-day period after the judgment becomes final, in accordance with Rule 68, or even after the foreclosure sale but prior to its
confirmation. Section 2, Rule 68 provides that
... If upon the trial ... the court shag find the facts set forth in the complaint to be true, it shall ascertain the amount due to
the plaintiff upon the mortgage debt or obligation, including interest and costs, and shall render judgment for the sum so
found due and order the same to be paid into court within a period of not less than ninety (90) days from the date of the
service of such order, and that in default of such payment the property be sold to realize the mortgage debt and Costs. 24
This is the mortgagor's equity (not right) of redemption which, as above stated, may be exercised by him even beyond the 90-day period "from
the date of service of the order,' and even after the foreclosure sale itself, provided it be before the order of confirmation of the sale. 25 After
such order of confirmation, no redemption can be effected any longer.
It is this same equity of redemption that is conferred by law on the mortgagor's successors-in-interest, or third persons acquiring rights over
the mortgaged property subsequent, and therefore subordinate, to the mortgagee's lien. 26 If these subsequent or junior lienholders be not
joined in the foreclosure action, the judgment in the mortgagor's favor is ineffective as to them, of course. In that case, they retain what is
known as the "unforeclosed equity of redemption," and a separate foreclosure proceeding should be brought to require them to redeem from
the first mortgagee, or the party acquiring title to the mortgaged property at the foreclosure sale, within 90 days, 27 under penalty of losing
that prerogative to redeem. In the case at bar, however, there is no occasion to speak of any "unforeclosed equity of redemption' in
Sarmiento's favor since he was properly impleaded in the judicial proceeding where his and Ponce's rights over the mortgaged property were
ventilated and specifically adjudicated.
Under the circumstances obtaining in this case, the plain intendment of the Intermediate Appellate Court was to give to Sarmiento, not the
unforeclosed equity of redemption pertaining to a stranger to the foreclosure suit, but the same equity of redemption possessed by the
mortgagor himself. The judgment cannot be construed as contemplating or requiring the institution of a separate suit by Ponce to compel
Sarmiento to exercise his unforeclosed equity of redemption, or as granting Sarmiento the option to redeem at any time that he pleases,
subject only to prescription. This would give rise to that multiplicity of proceedings which the law eschews. The judgment plainly intended that
Sarmiento exercise his option to redeem, as successor of the mortgagor.
Upon the facts on record, Sarmiento cannot be heard to complain of denial of due process for alleged lack of notice of any motion or hearing
for confirmation of sale. The Decision of the Intermediate Appellate Court which he and his predecessor, Limpin, had appealed to this
Court specifically ordered the Trial Court to confirm 28 the judicial foreclosure sale in favor of Ponce over the two lots, in these terms. 29
WHEREFORE, the orders dated October 16,1983 and December 19,1983 of the respondent court, so far as they deny the
confirmation of the sale of the lots formerly covered by TCT Nos. 92836 and 92837, are SET ASIDE, and the respondent
court is hereby ORDERED to confirm the sale and issue a writ of possession to the petitioner with respect to the aforesaid
lots, subject to the equity of redemption of the respondent Rogelio V. Sarmiento. Without costs.
Given the fact that said appealed orders of the Trial Court had been issued upon motion for confirmation earlier made by Ponce-which was duly
served and heard-the aforecited Decision of the Intermediate Appellate Court can be construed in no wise than as a peremptory command to
the Trial Court to confirm the sale as directed, motu proprio, and without the need of any further motion or other action on the part of Ponce.
The rejection by this Court of Sarmiento's and Limpin's appeal in its own Decision of January 30, 1987, which imported nothing less than a total

affirmance of the Decision of the Appellate Court, should therefore have sufficiently alerted Sarmiento that confirmation could come at any
time after this Court's Decision became final, with or without any action from Ponce. He cannot, in the circumstances, claim unfair surprise. He
should, upon being notified of this Court's Decision, have taken steps to redeem the properties in question or, at the very least, served the
Trial Court and Ponce with notice of his intention to exercise his equity of redemption. There was certainly time enough to do this the order
confirming the foreclosure sale issuing only on June 17, 1987had he not occupied himself with the fruitless maneuverings to re-litigate the
issues already recounted. Indeed, had he made an attempt to redeem, even belatedly but within a reasonable period of time after learning of
the order of confirmation (the record shows he did learn of it within three [3) days after its issuance), 30 he might perhaps have given the Court
some reason to consider his bid on equitable grounds. He did not. He let nine (9) months pass, to repeat, in carrying out improper (and
contumacious stratagems to negate the judgments against him, before making any such move.
Neither can Sarmiento acceptably claim that Ponce, by moving for a writ of possession subject to his (Sarmiento's) equity of redemption,
recognized the existence and enforceability of that prerogative beyond the prescribed cut-off date of confirmation of the sale. Such an
interpretation of the motion is totally unwarranted, given the fact that said motion was made at a time (June 1, 1987) when there was as yet
no order confirming the sale and, since Sarmiento's equity of redemption then still unquestionably existed, there was hardly occasion or for
that matter, any reason as far as Ponce was concerned, to provide against its lapsing. Moreover, assuming for the sake of argument that a
resolutory period fixed by law may be extended by act of the party in whose favor its expiration would operate, that act must bespeak a clear
and unequivocal intent to grant such an extension. No such clear grant can be inferred from the terms of Ponce's motion, which can, and in
fact should be, read as a mere affirmation that there existed at the time an equity of redemption in Sarmiento's favor.
WHEREFORE, the Court hereby rules that the equity of redemption claimed and invoked by Rogelio M. Sarmiento over the properties originally
covered by Transfer Certificates of Title Nos. 92836 and 92837 (now by TCTs Numbered 307100 and 307124), Registry of Deeds of Quezon
City, subject of this case, lapsed and ceased to exist without having been properly exercised, on June 17, 1987, with the issuance by the Trial
Court of the Order confirming the sheriffs sale (on judicial foreclosure) of said properties in favor of Guillermo Ponce.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. NO. 156542

June 26, 2007

CANDELARIA Q. DAYOT, Petitioner,


vs.
SHELL CHEMICAL COMPANY, (PHILS.), INC., Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in the Petition for Review on Certiorari before the Court is the July 30, 2002 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP. No.
70696 nullifying the January 8, 2002 Amended Order, 2 January 10, 2002 Alias Writ of Possession, 3 January 10, 2002 Notice to Vacate 4 and April
12, 2002 Order,5 which were all issued by the Regional Trial Court (RTC) of Iloilo, Branch 29; and the CA December 23, 2002
Resolution6 denying herein petitioner's Motion for Reconsideration.
The facts of the case are as follows:
On April 20, 1982, Panay Railways, Inc. (PRI) executed a real estate mortgage contract over six parcels of land located in Lapuz District, Iloilo
City in favor of Traders Royal Bank (TRB) for purposes of securing its loan obligations to TRB. 7 The subject properties are denominated as
follows: Lot No. 3834, covered by Transfer Certificate of Title (TCT) No. T-45727; Lot No. 1-A, covered by TCT No. T-45728; and Lot Nos.
6153, 6156, 6158 and 6159, all covered by TCT No. T-58200. PRI failed to pay its loan. As a consequence, the mortgaged properties were
foreclosed and sold at public auction to TRB as the highest bidder. PRI failed to redeem the foreclosed properties. Hence, TRB consolidated its
ownership over the subject parcels of land and, thereafter, certificates of title were issued in its name, to wit: TCT No. T-84233, which canceled
TCT No. T-45728; TCT No. T-84234, which canceled TCT No. T-45727; and TCT Nos. T-84235, T-84236, T-84237 and T-84238, all of which
canceled TCT No. T-58200.
Thereafter, TRB filed a Petition for Writ of Possession with the RTC of Iloilo City, docketed as LRC CAD. REC. NO. 1 ILOILO CITY and LRC CAD.
REC. NO. 9616 ILOILO CITY.8 In its Order dated October 22, 1990, the trial court granted the petition and ordered the issuance of a writ of
possession in favor of TRB.9 However, the writ was not fully implemented.
On November 20, 1990, TRB sold to spouses Edmundo and Candelaria Dayot (Spouses Dayot), by virtue of a Deed of Absolute Sale, five
parcels of land which are portions of Lots 3834, 1-A and 6153.
Subsequently, on February 5, 1991, Candelaria Dayot (petitioner) filed a Supplemental Pleading before the RTC of Iloilo City, praying that she,
being the transferee of all the rights and interests of TRB over the parcels of land subject of the Petition for Writ of Possession filed by the
latter, be substituted as the new petitioner in LRC CAD. REC. NOS. 1 and 9616, and that an alias writ of possession be issued in her favor. The
trial court granted petitioner's prayer in its Order dated March 12, 1991. 10 On April 1, 1991, the RTC issued an Alias Writ of Possession in favor
of herein petitioner.11
On August 24, 1994, the spouses Dayot filed with the RTC of Iloilo City, a complaint for Recovery of Ownership and Possession, Annulment of
Documents, Cancellation of Titles, Reconveyance and Damages against TRB, Petron Corporation (Petron) and herein respondent Shell
Chemical Company (Phil.), Inc. (Shell), praying that Shell be directed to vacate the portion of Lot No. 6153 which it actually possesses and for
both Petron and Shell to surrender ownership and possession of portions of parcels of lands covered separately by TCT Nos. T-47484 and T94116. The case was docketed as Civil Case No. 21957. 12
On August 21, 1997, while Civil Case No. 21957 was pending resolution, herein petitioner filed in LRC CAD. REC. NOS. 1 and 9616 an Amended
Supplemental Motion for the Issuance of Writ of Possession, praying that Shell be ejected from the portion of Lot 6153 which it actually
possesses.
Shell lodged an Opposition to petitioner's Amended Supplemental Motion arguing, among others, that petitioner is guilty of forum shopping as
it seeks the same relief being sought in Civil Case No. 21957 and that the parcels of land sold to petitioner do not include the portion of Lot
6153 being possessed by Shell.13
On May 7, 1999, the RTC of Iloilo, Branch 30 issued an Order denying herein petitioner's Motion for the Issuance of a Writ of Possession, insofar
as Shell is concerned.14
Despite the issuance of the above-mentioned Order, petitioner filed two successive motions praying for the issuance of an alias writ of
possession. Shell opposed these motions.
Subsequently, the petition for the issuance of a writ of possession was re-raffled to Branch 29 of the RTC of Iloilo, as the presiding judge of
Branch 30 inhibited himself from hearing the case.
On January 8, 2002, Branch 29 promulgated an Amended Order, the dispositive portion of which reads:
Wherefore, let an Alias Writ of Possession issue on the affected portions of Lots 3834, 1-A and 6153, all situated in the City of Iloilo, with a total
land area of 14,940 sq. meters occupied by Shell and 17,000 sq. meters occupied by Petron and to place and install petitioner Candelaria
Dayot in possession thereof.
Mr. Redentor Rodriguez, Sheriff IV of this Court is hereby directed to implement this order.
SO ORDERED.15
On January 10, 2002, the Branch Clerk of Court of RTC Iloilo, Branch 29, issued an Alias Writ of Possession.
On even date, the Sheriff served upon Shell a Notice to Vacate.
Thereafter, Shell and Petron moved for the reconsideration of the January 8, 2002 Order of the RTC but the trial court denied it via its Order
dated April 12, 2002.

Shell then filed a petition for certiorari and prohibition with the CA praying for the nullification of the January 8, 2002 and April 12, 2002 Orders
of RTC Iloilo, Branch 29, as well as the Alias Writ of Possession and Notice to Vacate both dated January 10, 2002. The petition also sought to
permanently enjoin the RTC from enforcing the assailed orders and processes and from acting and conducting further proceedings in the
subject case.
On July 30, 2002, the CA promulgated its presently assailed Decision, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the Petition is GRANTED and the questioned four (4) rulings of the court a quo are hereby declared NULL
and VOID. No costs.
SO ORDERED.16
Petitioner's Motion for Reconsideration was denied by the CA in its Resolution dated December 23, 2002.
Hence, herein petition for review on certiorari, anchored on the following grounds:
1. THAT RESPONDENT IS BARRED FROM FILING THE PETITION FOR CERTIORARI WITH THE COURT OF APPEALS, ASSAILING THE AMENDED
ORDER DATED JANUARY 8, 2002 OF HON. RENE B. HONRADO, PRESIDING JUDGE, REGIONAL TRIAL COURT, ILOILO CITY, BRANCH 29, AFTER
RESPONDENT LOST ITS RIGHT TO APPEAL BECAUSE A SPECIAL CIVIL ACTION FOR CERTIORARI IS NOT AND CANNOT BE A SUBSTITUTE FOR A
LOST OR EXPIRED APPEAL THUS, THE DECISION PROMULGATED JULY 30, 2002 AND THE RESOLUTION PROMULGATED DECEMBER 23, 2002 OF
THE HONORABLE COURT OF APPEALS WERE ISSUED CONTRARY TO PREVAILING JURISPRUDENCE AND THAT SAID COURT DECIDED A QUESTION
OF SUBSTANCE NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE SUPREME COURT AND THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS.
2. THAT PETITIONER IS ENTITLED TO THE POSSESSION OF THE ENTIRE LOTS 3834, 1-A, 6153, 6156, 6158 AND 6159 INCLUDING THE AREA OF
14,940 SQ. METERS OCCUPIED BY RESPONDENT WHICH AREAS ARE PORTIONS OF LOTS 6153, 3834 AND 1-A, OCCUPATION THEREOF BY
RESPONDENT BEING THAT OF MERE INTRUDER OR TRESSPASSER.17
In her first assigned error, petitioner argues that respondent should have been barred from filing a special civil action for certiorari before the
CA because this recourse is available only when there is no speedy and adequate remedy in the course of law. Petitioner further argues that
respondent should have appealed the Amended Order of the RTC dated April 12, 2002, but it did not. Petitioner avers that respondent can no
longer resort to the filing of a petition for certiorari because this remedy is not a substitute for a lost appeal.
Anent the second assigned error, petitioner claims that she is not guilty of forum shopping, as Civil Case No. 21957 involves the issue of
ownership while the present case is for the recovery of possession; and that the subject matter of the present case is different from that of
Civil Case No. 21957. Even granting that the same parcels of land are involved in these cases, petitioner argues that a writ of possession can
still be validly issued and implemented in consonance with the rule that proceedings incident to extra-judicial foreclosure of mortgages to
resolve the possession of third-party claimants may proceed independently of the action which said claimants may bring to enforce or protect
their claim of ownership over the property.
Lastly, petitioner asserts that respondent's TCT No. T-47484 refers to a lot which is different from those being contested in the instant case.
In its Comment, respondent contends that it did not err in resorting to the remedy of filing a petition for certiorariwith the CA. It argues that
even when appeal is available as a proper remedy, the Supreme Court will allow a writ ofcertiorari if the petition appears to be genuinely
meritorious or if filed on the basis of a patent, capricious and whimsical exercise of discretion by a trial judge, or when an appeal will not
promptly relieve petitioner from the injurious effects of the disputed orders; that the Amended Order of the RTC dated January 8, 2002
collaterally attacked respondent's title over the disputed property; that petitioner is not a buyer in good faith; that, as a transferee, petitioner
merely acquired the rights and interests that TRB had by reason of the foreclosure of the mortgage made in its favor; that the contested Alias
Writ of Execution is barred by res judicata and litis pendentia; and that respondent has the right to possess the disputed property as it has
satisfactorily shown that it is the registered owner of and has title over the subject property.
The Court finds the petition bereft of merit.
It bears to emphasize at the outset that the present petition for review arose by reason of the special civil action forcertiorari filed by
respondent Shell with the CA questioning the January 8, 2002 Amended Order, Alias Writ of Possession, Notice to Vacate and the April 12, 2002
Order issued by the RTC of Iloilo, Branch 29. Accordingly, any discussions on the issues raised as well as rulings by this Court in the present
petition apply only insofar as the claim of respondent Shell is concerned.
As to the first assigned error, it is true that as a rule while certiorari as a remedy may not be used as a substitute for an appeal, especially for a
lost appeal, this rule should not be strictly enforced if the petition is genuinely meritorious. 18 It has been held that where the rigid application
of the rules would frustrate substantial justice, or bar the vindication of a legitimate grievance, the courts are justified in exempting a
particular case from the operation of the rules. 19 The Court has given due course to petitions for certiorari although appeal is the proper
remedy where the equities of the case warranted such action, mindful that dismissals based on technicalities are looked upon with disfavor. 20
In the present case, the Court finds no error on the part of the CA in giving due course to the petition for certiorarifiled by respondent as its
case is genuinely meritorious for reasons that will be discussed forthwith.
As to the second assigned error, the Court agrees with petitioner that she is not guilty of forum shopping.
There is forum shopping when a party avails himself of several judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues
either pending in or already resolved adversely by some other courts. 21
The test to determine whether a party violated the rule against forum shopping is whether the elements of litis pendentia are present, or
whether a final judgment in one case will amount to res judicata in another. 22 In other words, when litis pendentia or res judicata does not
exist, neither can forum shopping exist. 23
The requisites of litis pendentia are: (a) the identity of parties, or at least such as representing the same interests in both actions; (b) the
identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases such that
judgment in one, regardless of which party is successful, would amount to res judicata in the other. 24
On the other hand, the elements of res judicata, also known as "bar by prior judgment," are: (1) the former judgment must be final; (b) the
court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must
be, between the first and second actions, identity of parties, subject matter, and causes of action. 25
It bears to note that the proceedings conducted subsequent to the filing of a petition for the issuance of a writ of possession are ex parte and
summary in nature. The order for the issuance of the writ is simply an incident in the transfer of title in the name of the petitioner. 26 Hence,

such order cannot be said to be a judgment on the merits,i.e., one rendered after a consideration of the evidence or stipulations submitted by
the parties at the trial of the case. Thus, in the present case, any order or decision of the RTC in LRC CAD. REC. NOS. 1 and 9616 cannot be
considered as determinative of the merits of Civil Case No. 21957.
Moreover, the aforementioned cases cannot be said to be identical as the basic issue in LRC CAD. REC. NOS. 1 and 9616 is possession while in
Civil Case No. 21957 the issue raised is essentially that of ownership of the disputed lots.
Based on the foregoing, there can be no litis pendentia or res judicata. Since neither litis pendentia nor res judicataexists in the instant case,
petitioner may not be held guilty of forum shopping.
Nonetheless, the Court finds that under applicable laws and jurisprudence, respondent cannot be ejected from the property by means of an
ex-parte writ of possession.
Article 433 of the Civil Code states:
Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The true owner must resort to judicial
process for the recovery of the property.
Under the aforequoted provision, one who claims to be the owner of a property possessed by another must bring the appropriate judicial
action for its physical recovery. The term "judicial process" could mean no less than an ejectment suit or reivindicatory action, in which the
ownership claims of the contending parties may be properly heard and adjudicated. 27 In the present case, petitioner had already complied with
this procedure by filing Civil Case No. 21957.
The ex-parte petition for issuance of a possessory writ filed by petitioner's predecessor, TRB, in LRC CAD. REC. NOS. 1 and 9616, strictly
speaking, is not the kind of "judicial process" contemplated above. Even if the same may be considered a judicial proceeding for the
enforcement of ones right of possession as purchaser in a foreclosure sale, it is not an ordinary suit filed in court, by which one party "sues
another for the enforcement or protection of a right, or the prevention or redress of a wrong." 28
The second paragraph of Section 33, Rule 39, of the Rules of Court relating to the right of possession of a purchaser of property in an extrajudicial foreclosure sale provides:
Sec. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given.
xxx
Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest
and claim of the judgment obligor to the property at the time of levy. The possession of the property shall be given to the purchaser or last
redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. (emphasis
supplied)
Thus, in Barican v. Intermediate Appellate Court, 29 this Court held that the obligation of a court to issue a writ of possession in favor of the
purchaser in an extra-judicial foreclosure sale of a mortgaged property ceases to be ministerial once it is shown that there is a third party in
possession of the property who is claiming a right adverse to that of the mortgagor and that such third party is a stranger to the foreclosure
proceedings in which the ex-partewrit of possession was applied for.
It bears emphasis that an ex-parte petition for issuance of a writ of possession is a non-litigious proceeding authorized in an extra-judicial
foreclosure of mortgage pursuant to Act 3135, as amended. 30 It is brought for the benefit of one party only, and without notice to, or consent
by any person adversely interested.31
Furthermore, unlike a judicial foreclosure of real estate mortgage under Rule 68 of the Rules of Court where an action for foreclosure is brought
before the RTC where the mortgaged property or any part thereof is situated, any property brought within the ambit of Act 3135 is foreclosed
by the filing of a petition, not with any court of justice, but with the office of the sheriff of the province where the sale is to be made. As such,
a third person in possession of an extra-judicially foreclosed property, who claims a right superior to that of the original
mortgagor, is thus given no opportunity to be heard in his claim. 32 It stands to reason, therefore, that such third person may not be
dispossessed on the strength of a mere ex-parte possessory writ, since to do so would be tantamount to his summary ejectment, in violation
of the basic tenets of due process. 33
Besides, as earlier stressed, Article 433 of the Civil Code, cited above, requires nothing less than ejectment or reivindicatory action to be
brought even by the true owner. After all, the actual possessor of a property enjoys a legal presumption of just title in his favor, which must be
overcome by the party claiming otherwise.
In the case at bar, it is not disputed that herein respondent had been in possession of the subject lots since 1975 and that it has in its
premises bulk plant and fuel storage facilities for the purpose of conducting its business. In this respect, the Court agrees with the findings of
the CA that petitioner had knowledge of respondent's prior possession of the disputed properties. Yet, instead of pursuing Civil Action No.
21957 where respondent will be given a chance to substantiate its claim of ownership, petitioner still insists on obtaining a writ of possession
pursuant to its alleged right as purchaser of the properties which had been extra-judicially foreclosed. The Court cannot sanction this
procedural shortcut. To enforce the writ against herein respondent, an unwitting third party possessor who took no part in the foreclosure
proceedings, would be tantamount to the taking of real property without the benefit of proper judicial intervention.
Hence, it was not a ministerial duty of the trial court under Act No. 3135 to issue a writ of possession for the ouster of respondent from the lot
subject of this instant case, particularly in light of the latter's opposition and claim of ownership and rightful possession of the disputed
properties.
Moreover, the trial court was without authority to grant the ex-parte writ, since petitioner's right of possession under said Act could be
rightfully enforced only against PRI as the original mortgagor and its successors-in-interest, 34 but not against respondent which possesses the
property subject of execution under a claim of ownership, having bought the same from the Development Bank of the Philippines (DBP).
In the present case, the questioned Amended Order of the RTC Iloilo, Branch 29 dated January 8, 2002 was issued on the strength of the Writ
of Possession issued by the RTC of Iloilo, Branch 30 dated October 24, 1990. It is clear from the said writ that the sheriff is directed to eject PRI
or any person claiming interest under it from Lot Nos. 3834, 1-A, 6153, 6156, 6158 and 6159 and to place TRB in possession thereof. However,
respondent is not a successor-in-interest of PRI. Instead, respondent claims ownership over the subject lot by virtue of a Deed of Absolute Sale
dated June 30, 1975, wherein the property was sold to it by the DBP. As a consequence of such sale, respondent obtained TCT No. 47484 on
July 28, 1977. Clearly, respondent's right of possession is adverse to that of PRI or TRB.
Furthermore, registration of the lots in petitioners name does not automatically entitle the latter to possession thereof. 35 As discussed earlier,
petitioner must resort to the appropriate judicial process for recovery of the properties and cannot simply invoke its title in an ex-parte

proceeding to justify the ouster of respondent,36especially in view of the fact that the latter also has in its possession a Transfer Certificate of
Title over the subject properties. The court cannot just ignore the claim of herein respondent, who is in actual possession of the subject
properties, that it has been the owner thereof since 1975 and, therefore, has the better right to possess them. Neither can the RTC rely on the
Surveyor's Report dated August 3, 1997 because respondent was not given the opportunity to refute it, the same being submitted in the exparte proceedings for the issuance of a writ of possession in favor of Dayot. Due process dictates that herein respondent cannot simply be
ejected on the strength of the subject Surveyor's Report without giving it (respondent) the opportunity to present its own evidence. All of these
issues must be ventilated and resolved on the merits after a proper hearing. In the instant case, the proper forum is Civil Case No. 21957.
Finally, it is expressly stipulated in the Additional Stipulations of Real Estate Mortgage executed by PRI in favor of TRB that it "excludes those
areas already sold to Shell Co., Inc. with total area of 14,920 sq. meters, known as Lot No. 6153-B and portion of Lot No. 5." 37
Petitioner insists that respondent's TCT No. T-47484 refers to a different parcel of land. Whether respondent's title refers to the same property
subject of the present case and whether the parcels of land sold to herein petitioner are the same properties foreclosed by TRB are issues
which should properly be resolved in Civil Case No. 21957. This is not the proper forum to determine who between the parties is entitled to
ownership of the disputed lands, as the issue in the present case is merely limited to the propriety of the issuance of a writ of possession
relating to foreclosure of mortgage.
WHEREFORE, the instant petition is DISMISSED. The Decision and Resolution of the Court of Appeals dated July 30, 2002 and December 23,
2002 in CA-G.R. SP. No. 70696 are AFFIRMED insofar as respondent Shell Chemical Company (Phils.), Inc. is concerned. Costs against
petitioners. SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 119247 February 17, 1997
CESAR SULIT, petitioner,
vs.
COURT OF APPEALS and ILUMINADA CAYCO, respondents.
REGALADO, J.:
The primary issue posed before the Court, in this appeal by certiorari from a decision 1 of the Court of Appeals, is whether or not the mortgagee
or purchaser in an extrajudicial foreclosure sale is entitled to the issuance of a writ of possession over the mortgaged property despite his
failure to pay the surplus proceeds of the sale to the mortgagor or the person entitled thereto. Secondarily, it calls for a resolution of the
further consequences of such non-payment of the full amount for which the property was sold to him pursuant to his bid.
The material facts, as found by respondent court, are not disputed:
It appears from the record that on 9 June 1992 petitioner (herein private respondent) Iluminada Cayco executed a Real
Estate Mortgage (REM) over Lot 2630 which is located in Caloocan City and covered by TCT No. (23211) 11591 in favor of
private respondent (herein petitioner) Cesar Sulit, to secure a loan of P4 Million. Upon petitioner's failure to pay said loan
within the stipulated period, private respondent resorted to extrajudicial foreclosure of the mortgage as authorized in the
contract. Hence, in a public auction conducted by Notary Public Felizardo M. Mercado on 28 September 1993 the lot was
sold to the mortgagee, herein private respondent, who submitted a winning bid of P7 Million. As stated in the Certificate of
Sale executed by the notary public (Annex B, petition), the mortgaged property was sold at public auction to satisfy the
mortgage indebtedness of P4 Million. The Certificate further states as follows:
IT IS FURTHER CERTIFIED, that the aforementioned highest bidder/buyer, CESAR SULIT, being the
petitioner/mortgagee thereupon did not pay to the undersigned Notary Public of Kalookan City the said
sum of SEVEN MILLION PESOS (P7,000,000.00), Philippine Currency, the sale price of the abovedescribed real estate property together with all improvements existing thereon, which amount was
properly credited to the PARTIAL satisfaction of the mortgage debt mentioned in the said real estate
mortgage, plus interests, attorney's fees and all other incidental expenses of foreclosure and sale (par.
2, Annex B, petition).
On 13 December 1993 private respondent petitioned the Regional Trial Court of Kalookan City for the issuance of a writ of
possession in his favor. The petition was docketed as LRC Case No. C-3462 and assigned to Branch 131, presided over by
public respondent.
On 17 January 1994 respondent Judge issued a decision (should have been denominated as order), the dispositive part of
which reads:
WHEREFORE, finding the subject petition to be meritorious, the same is hereby GRANTED. As prayed for,
let a Writ of Possession be issued in favor of herein petitioner, Cesar Sulit, upon his posting of an
indemnity bond in the amount of One Hundred Twenty Thousand (P120,000.00) Pesos (Annex C,
petition).
On 28 March 1994 petitioner filed a Motion to have the auction sale of the mortgaged property set aside and to defer the
issuance of the writ of possession. She invited the attention of the court a quoto some procedural infirmities in the said
proceeding and further questioned the sufficiency of the amount of bond. In the same Motion petitioner prayed as an
alternative relief that private respondent be directed to pay the sum of P3 Million which represents the balance of his
winning bid of P7 Million less the mortgage indebtedness of P4 Million (Annex D, petition). This Motion was opposed by
private respondent who contended that the issuance of a writ of possession upon his filing of a bond was a ministerial duty
on the part of respondent Judge (Annex E), to which Opposition petitioner submitted a Reply (Annex F, petition).
On 11 May 1994 respondent Judge denied petitioner's Motion and directed the issuance of a writ of possession and its
immediate enforcement by deputy sheriff Danilo Norberte (Annex G, petition)." 2(Emphasis words supplied for clarity).
From the aforesaid orders of the court a quo, herein private respondent Iluminada Cayco filed on May 26, 1994 a petition for certiorari with
preliminary injunction and/or temporary restraining order before respondent Court of Appeals, which immediately issued a status quo order
restraining the respondent judge therein from implementing his order of January 17, 1994 and the writ of possession issued pursuant thereto.
Subsequently, respondent court rendered judgment on November 11, 1994, as follows:
IN JUDGMENT, We grant the writ of certiorari and the disputed order of 17 January 1994 which precipitately directed the
issuance of a writ of possession in favor of private respondent and the subsequent order of 11 May 1994 which denied
petitioner's Motion for Reconsideration are hereby SET ASIDE.
Accordingly, private respondent is ordered to pay unto petitioner, through the notary public, the balance or excess of his
bid of P7 Million after deducting therefrom the sum of P4,365,280 which represents the mortgage debt and interest up to
the date of the auction sale (September 23, 1993), as well as expenses of foreclosure based on receipts which must be
presented to the notary public.
In the event that private respondent fails or refuses to pay such excess or balance, then the auction sale of 28 September
1993 is deemed CANCELLED and private respondent may foreclose the mortgage anew either in a judicial or extrajudicial
proceeding as stipulated in the mortgage contract.

Corollary to the principal issue earlier stated, petitioner asserts that respondent Court of Appeals gravely erred when it failed to appreciate and
consider the supposed legal significance of the bouncing checks which private respondent issued and delivered to petitioner as payment for
the agreed or stipulated interest on the mortgage obligation. He likewise avers that a motion for reconsideration or an appeal, and
not certiorari, is the proper remedy available to herein private respondent from an order denying her motion to defer issuance of the writ of
possession. Moreover, it is claimed that any question regarding the propriety of the sale and the issuance of the writ of possession must be
threshed out in a summary proceeding provided for in Section 8 of Act 3135.
There is no merit in petitioner's contention that the dishonored checks amounting to a total of P1,250,000.00, allegedly representing interest
of 5% per month from June 9, 1992 to December 9, 1992, were correctly considered by the trial court as the written agreement between the
parties. Instead, we find the explanation of respondent court in rejecting such postulate, on the basis of Article 1956 of the Civil Code, 3 to be
more logical and plausible, to wit:
It is noteworthy that the Deed of Real Estate Mortgage executed by the parties on 9 June 1992 (Annex A, Petition) does not
contain any stipulation for payment of interest. Private respondent who maintains that he had an agreement with petitioner
for the payment of 5% monthly interest did not produce any other writing or instrument embodying such a stipulation on
interest. It appears then that if any such agreement was reached by the parties, it was merely a verbal one which does not
conform to the aforequoted statutory provision. Certainly, the dishonored checks claimed to have been issued by petitioner
in payment of interest could not have been the written stipulation contemplated in Article 1956 of the Code. Consequently,
in the absence of a written stipulation for the imposition of interest on the loan obtained by petitioner, private respondent's
assessment thereof has no legal basis. 4
It is elementary that in the absence of a stipulation as to interest, the loan due will now earn interest at the legal rate of 12% per
annum 5 which, according to respondent court, is equivalent to P365,280.000.00 computed from December 10, 1992, after private
respondent's obligation became due, until September 23, 1993, the date of the auction sale. It is this amount which should further be
deducted from the purchase price of P7,000,000.00, together with any other expenses incurred in connection with the sale, such as the
posting and publication of notices, notarial and documentary fees, and assessments or taxes due on the disputed property.
It baffles this Court, therefore, why petitioner has continually failed up to the present to submit documentary evidence of the alleged expenses
of the foreclosure sale, and this in spite of the express requirement therefor in the certificate of sale 6 issued by the notary public for the
purpose of computing the actual amount payable by the mortgagor or redemptioner in the event of redemption. It may thus be safely
presumed that such evidence having been willfully suppressed, it would be adverse if produced. 7
Coming now to the main issue in this case, petitioner argues that it is ministerial upon the court to issue a writ of possession after the
foreclosure sale and during the period of redemption, invoking in support thereof Sections 7 and 8 of Act 3135 which conjointly provide:
Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the
province or place where the property or any part thereof is situated, to give him possession thereof during the redemption
period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the
debtor in case it be shown that the sale was made without violating the mortgage or without complying with the
requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration
or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the
Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property
encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and
in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of
section one hundred and fourteen of Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval
of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated,
who shall execute said order immediately.
Sec. 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the
purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the
damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the
provisions hereof, and the Court shall take cognizance of this petition in accordance with the summary procedure provided
for in section one hundred and twelve of Act Number Four hundred and ninety-six; and if it finds the complaint of the debtor
justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of
the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and
ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.
The governing law thus explicitly authorizes the purchaser in a foreclosure sale to apply for a writ of possession during the redemption period
by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property with
Torrens title. Upon the filing of such motion and the approval of the corresponding bond, the law also in express terms directs the court to
issue the order for a writ of possession.
No discretion appears to be left to the court. Any question regarding the regularity and validity of the sale, as well as the consequent
cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8, and it cannot be raised as a justification for
opposing the issuance of the writ of possession since, under the Act, the proceeding for this is ex parte. 8 Such recourse is available to a
mortgagee, who effects the extrajudicial foreclosure of the mortgage, even before the expiration of the period of redemption provided by law
and the Rules of Court. 9
The rule is, however, not without exception. Under Section 35, Rule 39 of the Rules of Court, which is made applicable to the extrajudicial
foreclosure of real estate mortgages by Section 6 of Act 3135, the possession of the mortgaged property may be awarded to a purchaser in
the extrajudicial foreclosure "unless a third party is actually holding the property adversely to the judgment debtor." 10
Thus, in the case of Barican, et al. vs. Intermediate Appellate Court,
et al., 11 this Court took into account the circumstances that long before the mortgagee bank had sold the disputed property to the respondent
therein, it was no longer the judgment debtor who was in possession but the petitioner spouses who had assumed the mortgage, and that
there was a pending civil case involving the rights of third parties. Hence, it was ruled therein that under the circumstances, the obligation of a
court to issue a writ of possession in favor of the purchaser in a foreclosure of mortgage case ceases to be ministerial.
Now, in forced sales low prices are generally offered and the mere inadequacy of the price obtained at the sheriff's sale, unless shocking to the
conscience, has been held insufficient to set aside a sale. This is because no disadvantage is caused to the mortgagor. On the contrary, a
mortgagor stands to gain with a reduced price because he possesses the right of redemption. When there is the right to redeem, inadequacy
of price becomes immaterial since the judgment debtor may reacquire the property or sell his right to redeem, and thus recover the loss he
claims to have suffered by reason of the price obtained at the auction sale. 12

However, also by way of an exception, in Cometa, et al. vs. Intermediate Appellate Court, et al. 13 where the properties in question were found
to have been sold at an unusually lower price than their true value, that is, properties worth at least P500,000.00 were sold for only
P57,396.85, this Court, taking into consideration the factual milieu obtaining therein as well as the peculiar circumstances attendant thereto,
decided to withhold the issuance of the writ of possession on the ground that it could work injustice because the petitioner might not be
entitled to the same.
The case at bar is quite the reverse, in the sense that instead of an inadequacy in price, there is due in favor of private respondent, as
mortgagor, a surplus from the proceeds of the sale equivalent to approximately 40% of the total mortgage debt, which excess is indisputably a
substantial amount. Nevertheless, it is our considered opinion, and we so hold, that equitable considerations demand that a writ of possession
should also not issue in this case.
Rule 68 of the Rules of Court provides:
Sec. 4. Disposition of proceeds of sale. The money realized from the sale of mortgaged property under the regulations
hereinbefore prescribed shall, after deducting the costs of the sale, be paid to the person foreclosing the mortgage, and
when there shall be any balance or residue, after paying off such mortgage or other incumbrances, the same shall be paid
to the junior incumbrancers in the order of their priority, to be ascertained by the court, or if there be no such
incumbrancers or there be a balance or residue after payment of such incumbrancers, then to the mortgagor or his agent,
or to the person entitled to it.
The application of the proceeds from the sale of the mortgaged property to the mortgagor's obligation is an act of payment, not payment by
dation; hence, it is the mortgagee's duty to return any surplus in the selling price to the
mortgagor. 14 Perforce, a mortgagee who exercises the power of sale contained in a mortgage is considered a custodian of the fund, and, being
bound to apply it properly, is liable to the persons entitled thereto if he fails to do so. And even though the mortgagee is not strictly considered
a trustee in a purely equitable sense, but as far as concerns the unconsumed balance, the mortgagee is deemed a trustee for the mortgagor
or owner of the equity of redemption. 15
Commenting on the theory that a mortgagee, when he sells under a power, cannot be considered otherwise than as a trustee, the vicechancellor in Robertson vs. Norris (1 Giff . 421) observed: "That expression is to be understood in this sense: that with the power being given to
enable him to recover the mortgage money, the court requires that he shall exercise the power of sale in a provident way, with a due regard to
the rights and interests of the mortgagor in the surplus money to be produced by the sale." 16
The general rule that mere inadequacy of price is not sufficient to set aside a foreclosure sale is based on the theory that the lesser the price
the easier it will be for the owner to effect the redemption. 17 The same thing cannot be said where the amount of the bid is in excess of the
total mortgage debt. The reason is that in case the mortgagor decides to exercise his right of redemption, Section 30 of Rule 39 provides that
the redemption price should be equivalent to the amount of the purchase price, plus one per cent monthly interest up to the time of the
redemption, 18 together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest
on such last-named amount at the same rate. 19
Applying this provision to the present case would be highly iniquitous if the amount required for redemption is based on P7,000.000.00,
because that would mean exacting payment at a price unjustifiably higher than the real amount of the mortgage obligation. We need not
elucidate on the obvious. Simply put, such a construction will undeniably be prejudicial to the substantive rights of private respondent and it
could even effectively prevent her from exercising the right of redemption.
Where the redemptioner chooses to exercise his right of redemption, it is the policy of the law to aid rather than to defeat his right. It stands to
reason, therefore, that redemption should be looked upon with favor and where no injury will follow, a liberal construction will be given to our
redemption laws, specifically on the exercise of the right to redeem. Conformably hereto, and taking into consideration the facts obtaining in
this case, it is more in keeping with the spirit of the rules, particularly Section 30 of Rule 39, that we adopt such interpretation as may be
favorable to the private respondent.
Admittedly, no payment was made by herein petitioner, as the highest bidder, to the notary public who conducted the extrajudicial foreclosure
sale. We are not unmindful of the rule that it is not necessary for the mortgagee to pay cash to the sheriff or, in this case, the notary public
who conducted the sale. It would obviously serve no purpose for the sheriff or the notary public to go through the idle ceremony of receiving
the money and paying it back to the creditor, under the truism that the lawmaking body did not contemplate such a pointless application of
the law in requiring that the creditor must bid under the same conditions as any other bidder. 20 It bears stressing that the rule holds true only
where the amount of the bid represents the total amount of the mortgage debt.
In case of a surplus in the purchase price, however, there is jurisprudence to the effect that while the mortgagee ordinarily is liable only for
such surplus as actually comes into his hands, but he sells on credit instead of for cash, he must still account for the proceeds as if the price
were paid in cash, and in an action against the mortgagee to recover the surplus, the latter cannot raise the defense that no actual cash was
received. 21
We cannot simply ignore the importance of surplus proceeds because by their very nature, surplus money arising from a sale of land under a
decree of foreclosure stands in the place of the land itself with respect to liens thereon or vested rights therein. They are constructively, at
least, real property and belong to the mortgagor or his assigns. 22 Inevitably, the right of a mortgagor to the surplus proceeds is a substantial
right which must prevail over rules of technicality.
Surplus money, in case of a foreclosure sale, gains much significance where there are junior encumbrancers on the mortgaged property.
Jurisprudence has it that when there are several liens upon the premises, the surplus money must be applied to their discharge in the order of
their priority. 23 A junior mortgagee may have his rights protected by an appropriate decree as to the application of the surplus, if there be any,
after satisfying the prior mortgage. His lien on the land is transferred to the surplus fund. 24 And a senior mortgagee, realizing more than the
amount of his debt on a foreclosure sale, is regarded as a trustee for the benefit of junior encumbrancers. 25
Upon the strength of the foregoing considerations, we cannot countenance the apparent paltriness that petitioner persistently accords the
right of private respondent over the surplus proceeds. It must be emphasized that petitioner failed to present the receipts or any other proof of
the alleged costs or expenses incurred by him in the foreclosure sale. Even the trial court failed or refused to resolve this issue,
notwithstanding the fact that this was one of the grounds raised in the motion filed by private respondent before it to set aside the sale. Since
it has never been denied that the bid price greatly exceeded the mortgage debt, petitioner cannot be allowed to unjustly enrich himself at the
expense of private respondent.
As regards the issue concerning the alleged defect in the publication of the notice of the sale, suffice it to state for purposes of this discussion
that a question of non-compliance with the notice and publication requirements of an extrajudicial foreclosure sale is a factual issue and the
resolution thereof by the lower courts is binding and conclusive upon this Court, 26 absent any showing of grave abuse of discretion. In the case

at bar, both the trial court and respondent Court of Appeals have found that the sale was conducted in accordance with law. No compelling
reason exists in this case to justify a rejection of their findings or a reversal of their conclusions.
There is likewise no merit in the argument that if private respondent had wanted to question the validity of the sale, she should have filed a
petition to set the same aside and to cancel the writ of possession. These, it is argued, should have been disposed of in accordance with the
summary procedure laid down in Section 112 of the Land Registration Act, provided the petition is filed not later than thirty days after the
purchaser was given possession of the land. Considering, however, that private respondent has filed a motion to set aside the sale and to
defer the issuance of a writ of possession before the court where the ex parte petition for issuance of such writ was then pending, we deem
the same to be substantial compliance with the statutory prescription.
We, however, take exception to and reject the last paragraph in the dispositive portion of the questioned decision of respondent court, which
we repeat:
In the event that private respondent fails or refuses to pay such excess or balance, then the auction sale of 28 September
1993 is deemed CANCELLED and private respondent (petitioner herein) may foreclose the mortgage anew either in a
judicial or extrajudicial proceeding as stipulated in the mortgage contract.
for lack of statutory and jurisprudential bases. The quoted phrase "as stipulated in the mortgage contract" does not, of course,
envision such contingency or warrant the suggested alternative procedure.
Section 4 of Rule 64, hereinbefore quoted, merely provides that where there is a balance or residue after payment of the mortgage, the same
shall be paid to the mortgagor. While the expedient course desired by respondent court is commendable, there is nothing in the cited provision
from which it can be inferred that a violation thereof will have the effect of nullifying the sale. The better rule is that if the mortgagee is
retaining more of the proceeds of the sale than he is entitled to, this fact alone will not affect the validity of the sale but simply gives the
mortgagor a cause of action to recover such surplus. 27 This is likewise in harmony with the decisional rule that in suing for the return of the
surplus proceeds, the mortgagor is deemed to have affirmed the validity of the sale since nothing is due if no valid sale has been made. 28
In the early case of Caparas vs. Yatco, etc., et al., 29 it was also held that where the mortgagee has been ordered by the court to return the
surplus to the mortgagor or the person entitled thereto, and the former fails to do so and flagrantly disobeys the order, the court can cite the
mortgagee for contempt and mete out the corresponding penalty under Section 3(b) of the former Rule 64 (now Rule 71) of the Rules of Court.
WHEREFORE, the questioned decision of the Court of Appeals is MODIFIED by deleting the last paragraph of itsfallo, but its disposition of this
case in all other respects is hereby AFFIRMED.
SO ORDERED.
Romero, Puno, Mendoza and Torres, Jr., JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 159882

November 23, 2007

SPOUSES RUBEN and VIOLETA SAGUAN, Petitioners,


vs.
PHILIPPINE BANK OF COMMUNICATIONS and COURT OF APPEALS (Second Division), Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari1 of the Decision2 dated January 24, 2003 and of the Resolution 3 dated August 21, 2003 of the Court of
Appeals (CA) in CA-G.R. SP No. 71775. The Decision affirmed the Orders 4 of the Regional Trial Court (RTC) of Branch 31, Tagum City, Davao: (1)
dated November 5, 2001 admitting respondent Philippine Bank of Communications Exhibits "A" to "P"; (2) dated March 19, 2002 denying
petitioners, spouses Ruben and Violeta Saguans, Motion to Present Evidence, and granting private respondents petition for issuance of a writ
of possession; and (3) dated May 6, 2002 denying petitioners Motion for Reconsideration of the second order.
The facts, as found by the CA, are not in dispute:
[Petitioners] spouses Ruben Saguan and Violeta Saguan obtained a loan of P3 Million from [respondent] Philippine Bank of Communications. To
secure the obligation, they mortgaged five parcels of land covered by TCT Nos. 24274, 38894, 37455, 66339 and 19365, all of the Register of
Deeds of the Province of Davao, and improvements therein.
Because [petitioners] defaulted in the payment of their mortgage indebtedness, [respondent] extra-judicially foreclosed the mortgage. In the
auction sale on 05 January 1998, [respondent] was the only and highest bidder for P6,008,026.74. Sheriffs certificate of sale dated 12 January
1998 was executed and annotated at the back of [petitioners] titles on 18 February 1998. As [petitioners] failed to redeem the properties
within the one-year period ending on 18 February 1999, TCT Nos. T-154065, T-154066, T-154067, T-154068 and T-154069 were issued in the
name of [respondent] in lieu of the old ones. Thus, [respondent] consolidated ownership of the properties in its favor. Since the parcels of land
were in physical possession of [petitioners] and other persons [co-petitioners in the petition before the CA], [respondent], after due demand,
filed a petition for writ of possession with Branch 31, Regional Trial Court, Tagum City. x x x. 5
Petitioners filed an Opposition6 to the petition for writ of possession to which respondent filed a Comment. 7Petitioners likewise filed a Reply8 to
the Comment.
In their Opposition and Reply, petitioners argued that a writ of possession should not issue considering respondents failure to return the
excess or surplus proceeds9 of the extrajudicial foreclosure sale based on our ruling in Sulit v. Court of Appeals. 10 In refutation, respondent
points to petitioners remaining unsecured obligations with the former to which the excess or surplus proceeds were applied.
After the hearing on respondents evidence, the RTC issued two (2) separate orders requiring respondent to file a Formal Offer of Evidence.
Respondent failed to comply with the aforesaid orders within the time frame prescribed, thus prompting petitioners to file a motion to dismiss
grounded on Section 3,11 Rule 17 of the Rules of Court.
Thereafter, respondent belatedly filed its Formal Offer of Evidence. Consequently, the RTC issued the first assailed Order 12 admitting
respondents offer of exhibits thereby rendering petitioners motion to dismiss moot and academic. The RTC then issued the Order 13 denying
petitioners Motion to Present Evidence and granted the petition for writ of possession. The last Order 14 of the RTC denied petitioners Motion for
Reconsideration.
Upon petition for certiorari and mandamus, the CA rejected petitioners allegations of grave abuse of discretion in the lower courts issuance of
the foregoing Orders. The CA affirmed respondents entitlement to a writ of possession as a matter of right, the latter having consolidated its
ownership over the parcels of land upon expiration of the redemption period. It emphasized that the issue on the failure to return the excess or
surplus proceeds of the auction sale had been squarely met by the respondent, and therefore, the case was distinguishable from Sulit v. Court
of Appeals. In all, the CA upheld the general rule that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale
becomes merely a ministerial function of the court.
Hence, this recourse.
In this appeal, the issues for our resolution are:
1. Whether the RTC should have issued a writ of possession considering respondents failure to remit the excess or surplus proceeds
of the extrajudicial foreclosure sale.
2. Corollary thereto, whether respondent may unilaterally apply the excess or surplus proceeds of the extrajudicial foreclosure sale to
petitioners remaining unsecured obligations.
3. Whether the RTC should have granted petitioners motion to dismiss the petition for writ of possession based on respondents
failure to comply with the RTCs Orders on the filing of a formal offer of evidence.
A writ of possession is an order enforcing a judgment to allow a persons recovery of possession of real or personal property. An instance when
a writ of possession may issue is under Act No. 3135, 15 as amended by Act No. 4118, on extrajudicial foreclosure of real estate
mortgage.16 Sections 6 and 7 provide, to wit:
Section 6. Redemption. In all cases in which an extrajudicial sale is made under the special power herein before referred to, the debtor, his
successors-in-interest or any judicial creditor or judgment creditor of said debtor or any person having a lien on the property subsequent to the
mortgage or deed of trust under which the property is sold, may redeem the same at anytime within the term of one year from and after the
date of the sale; and such redemption shall be governed by the provisions of section four hundred and sixty-four to four hundred and sixty-six,
inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.
Section 7. Possession during redemption period. In any sale made under the provisions of this Act, the purchaser may petition the Court of
First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption
period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be

shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be
made under oath and filed in [the] form of an ex-parte motion in the registration or cadastral proceedings if the property is registered, or in
special proceedings in case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative
Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any
existing law, and in each case the clerk of court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section
one hundred and fourteen of Act Number Four hundred and ninety-six, and the court shall, upon approval of the bond, order that a writ of
possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.
From the foregoing provisions, a writ of possession may be issued either (1) within the one-year redemption period, upon the filing of a bond,
or (2) after the lapse of the redemption period, without need of a bond. 17
Within the redemption period the purchaser in a foreclosure sale may apply for a writ of possession by filing for that purpose an ex-parte
motion under oath, in the corresponding registration or cadastral proceeding in the case of property covered by a Torrens title. Upon the filing
of an ex-parte motion and the approval of the corresponding bond, the court is expressly directed to issue the order for a writ of possession. 18
On the other hand, after the lapse of the redemption period, a writ of possession may be issued in favor of the purchaser in a foreclosure sale
as the mortgagor is now considered to have lost interest over the foreclosed property. 19 Consequently, the purchaser, who has a right to
possession after the expiration of the redemption period, becomes the absolute owner of the property when no redemption is made. 20 In this
regard, the bond is no longer needed. The purchaser can demand possession at any time following the consolidation of ownership in his name
and the issuance to him of a new TCT. After consolidation of title in the purchasers name for failure of the mortgagor to redeem the property,
the purchasers right to possession ripens into the absolute right of a confirmed owner. At that point, the issuance of a writ of possession, upon
proper application and proof of title, to a purchaser in an extrajudicial foreclosure sale becomes merely a ministerial function. 21 Effectively, the
court cannot exercise its discretion.
Therefore, the issuance by the RTC of a writ of possession in favor of the respondent in this case is proper. We have consistently held that the
duty of the trial court to grant a writ of possession in such instances is ministerial, and the court may not exercise discretion or
judgment.22 The propriety of the issuance of the writ was heightened in this case where the respondents right to possession of the properties
extended after the expiration of the redemption period, and became absolute upon the petitioners failure to redeem the mortgaged
properties.
Notwithstanding the foregoing, the petitioners insist that respondents failure to return the excess or surplus proceeds of the extrajudicial
foreclosure sale converted the issuance of a writ of possession from a ministerial to a discretionary function of the trial court pursuant to our
holding in Sulit v. Court of Appeals.23
We are not persuaded.
A careful reading of Sulit will readily show that it was decided under a different factual milieu. In Sulit, the plea for a writ of possession was
made during the redemption period and title to the property had not, as yet, been consolidated in favor of the purchaser in the foreclosure
sale. In stark contrast, the herein petitioners failed to exercise their right of redemption within the one-year reglementary period provided
under Section 6 of Act No. 3135, as amended, and ownership over the properties was consolidated in, and corresponding titles issued in favor
of, the respondent.
We emphasize that the proceeding in a petition for a writ of possession is ex-parte and summary in nature. It is a judicial proceeding brought
for the benefit of one party only and without need of notice to any person claiming an adverse interest. It is a proceeding wherein relief is
granted even without giving the person against whom the relief is sought an opportunity to be heard. 24 By its very nature, an ex-parte petition
for issuance of a writ of possession is a non-litigious proceeding authorized under Act No. 3135, as amended.
Be that as it may, the debtor or mortgagor is not without recourse. Section 8 of Act No. 3135, as amended, provides:
Section 8. Setting aside of sale and writ of possession. The debtor may, in the proceedings in which possession was requested, but not later
than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying
the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and
the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of
Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the
bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with
section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the
appeal.
Thus, a party may file a petition to set aside the foreclosure sale and to cancel the writ of possession in the same proceedings where the writ
of possession was requested. However, in this case, petitioners do not challenge the validity of the foreclosure nor do they wish to set aside
the foreclosure sale. It appears that the only remaining bone of contention is the disposition of the excess or surplus proceeds of the
foreclosure sale. In short, petitioners do not question the consolidation of ownership in favor of the respondent, but simply demand the
payment of the sum of money supposedly still owing them from the latter.
Article 427,25 in relation to Article 428,26 of the Civil Code provides that ownership may be exercised over things or rights, and grants the owner
of property a right of action for recovery against the holder and possessor thereof.
Thus, even as we rule that the writ of possession was properly issued in favor of respondent as a consequence of its confirmed ownership, we
are not unmindful of the fact that the issue of the excess or surplus proceeds of the foreclosure sale remains unsettled.
Respondents stance, as sustained by the CA, is that petitioners have remaining unsecured obligations with respondent and the excess or
surplus proceeds of the foreclosure sale were validly, albeit unilaterally, applied thereto.
This argument is unacceptable.
We have elucidated on the import of surplus proceeds in the case of Sulit, viz.:
In case of a surplus in the purchase price, however, there is jurisprudence to the effect that while the mortgagee ordinarily is liable only for
such surplus as actually comes into his hands, but he sells on credit instead of for cash, he must still account for the proceeds as if the price
were paid in cash, and in an action against the mortgagee to recover the surplus, the latter cannot raise the defense that no actual cash was
received.
We cannot simply ignore the importance of surplus proceeds because by their very nature, surplus money arising from a sale of land under a
decree of foreclosure stands in the place of the land itself with respect to liens thereon or vested rights therein. They are constructively, at
least, real property and belong to the mortgagor or his assigns. Inevitably, the right of a mortgagor to the surplus proceeds is a substantial
right which must prevail over rules of technicality.

Surplus money, in case of a foreclosure sale, gains much significance where there are junior encumbrancers on the mortgaged property.
Jurisprudence has it that when there are several liens upon the premises, the surplus money must be applied to their discharge in the order of
their priority. A junior mortgagee may have his rights protected by an appropriate decree as to the application of the surplus, if there be any,
after satisfying the prior mortgage. His lien on the land is transferred to the surplus fund. And a senior mortgagee, realizing more than the
amount of his debt on a foreclosure sale, is regarded as a trustee for the benefit of junior encumbrancers. 27
Given the foregoing pronouncement in Sulit, we cannot countenance respondents cavalier attitude towards petitioners right to the surplus
proceeds. To begin with, the foreclosure of petitioners properties was meant to answer only the obligation secured by the mortgage. Article
2126 of the Civil Code unequivocally states:
Art. 2126. The mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted.
We need not expound on the obvious. Simply put, even if petitioners have remaining obligations with respondent, these obligations, as
conceded by respondent itself, were not collateralized by the foreclosed properties.1avvphi1
Furthermore, under Section 128 of Act No. 3135 as amended, the special power of attorney authorizing the extrajudicial foreclosure of the real
estate mortgage must be either (1) inserted or stated in the mortgage deed itself; or (2) the authority is attached thereto. Thus, petitioners
supposed remaining obligations which were not secured by the mortgage cannot be made subject, or even susceptible, to the extrajudicial
foreclosure of mortgage.
However, petitioners remedy lies in a separate civil action for collection of a sum of money. 29 We have previously held that where the
mortgagee retains more of the proceeds of the sale than he is entitled to, this fact alone will not affect the validity of the sale but simply give
the mortgagor a cause of action to recover such surplus. 30 In the same case, both parties can establish their respective rights and obligations
to one another, after a proper liquidation of the expenses of the foreclosure sale, and other interests and claims chargeable to the purchase
price of the foreclosed property. The court can then determine the proper application of compensation with respect to respondents claim on
petitioners remaining unsecured obligations.31 In this regard, respondent is not precluded from itself filing a case to collect on petitioners
remaining debt.
Anent the third issue, we agree with the CA that there was no grave abuse of discretion in the trial courts liberality in giving ample time and
opportunity for respondent to complete the presentation of its evidence. It was a liberality that carried no taint of partiality. Despite the exparte nature of the proceedings, the RTC also allowed petitioners to file pleadings to oppose the petition for the issuance of the writ of
possession. Clearly, petitioners were not denied due process, and the trial judge acted accordingly in admitting respondents uncontroverted
evidence.
Finally, we note petitioners incorrect remedy of certiorari before the CA, which the latter and both parties have apparently overlooked. A
special civil action for certiorari may be availed of only if the lower tribunal has acted without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction, and if there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law. 321wphi1
Ineluctably, the RTC issued the writ of possession in compliance with the express provisions of Act No. 3135. It cannot, therefore, be charged
with grave abuse of discretion as there is no showing that, in the exercise of its judgment, it acted in a capricious, whimsical, arbitrary or
despotic manner tantamount to lack of jurisdiction. Absent grave abuse of discretion, petitioners should have filed an ordinary appeal instead
of a petition for certiorari. The soundness of the order granting the writ of possession is a matter of judgment with respect to which the
remedy of the party aggrieved is ordinary appeal. An error of judgment committed by a court in the exercise of its legitimate jurisdiction is not
the same as "grave abuse of discretion." Errors of judgment are correctible by appeal, while those of jurisdiction are reviewable by certiorari. 33
Nonetheless, we have allowed this procedural lapse to pass without incident, and have resolved the issues raised.
WHEREFORE, the Petition is DENIED. The writ of possession in favor of respondent Philippine Bank of Communications is hereby AFFIRMED
without prejudice to petitioners separate remedy for recovery of the excess or surplus proceeds of the extrajudicial foreclosure sale. Costs
against the petitioner. SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
TERESITA MONZON,
Petitioner,
- versus SPS. JAMES & MARIA ROSA NIEVES RELOVA and SPS. BIENVENIDO & EUFRACIA PEREZ,
Respondents.
- versus ADDIO PROPERTIES, INC.,
Intervenor.
Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and

G.R. No. 171827

REYES, JJ.
Promulgated:
September 17, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari assailing the Decision 1 of the Court of Appeals dated 27 September 2005 and its
Resolution dated 7 March 2006 in CA-G.R. CV No. 83507 affirming the Decision of the Regional Trial Court (RTC) of Tagaytay
City, Branch 18.
The factual and procedural antecedents of this case are as follows:
On 18 October 2000, the spouses James and Maria Rosa Nieves Relova and the spouses Bienvenido and Eufracia Perez,
respondents before this Court, filed against Atty. Ana Liza Luna, Clerk of Court of Branch 18 of the RTC of Tagaytay City, and
herein petitioner Teresita Monzon an initiatory pleading captioned as a Petition for Injunction. The case, which was filed before
the same Branch 18 of the RTC of Tagaytay City, was docketed as Civil Case No. TG-2069.
In their Petition for Injunction, respondents alleged that on 28 December 1998, Monzon executed a promissory note in favor of
the spouses Perez for the amount ofP600,000.00, with interest of five percent per month, payable on or before 28 December
1999. This was secured by a 300-square meter lot in Barangay Kaybagal, Tagaytay City. Denominated as Lot No. 2A, this lot is a
portion of Psu-232001, covered by Tax Declaration No. 98-008-1793. On 31 December 1998, Monzon executed a Deed of
Absolute Sale over the said parcel of land in favor of the spouses Perez.
Respondents also claim in their Petition for Injunction that on 29 March 1999, Monzon executed another promissory note, this
time in favor of the spouses Relova for the amount of P200,000.00 with interest of five percent per month payable on or before
31 December 1999. This loan was secured by a 200 square meter lot, denominated as Lot No. 2B, another portion of the
aforementioned Psu-232001 covered by Tax Declaration No. 98-008-1793. On 27 December 1999, Monzon executed a Deed of
Conditional Sale over said parcel of land in favor of the spouses Relova.
On 23 October 1999, the Coastal Lending Corporation extrajudicially foreclosed the entire 9,967-square meter property covered
by Psu-232001, including the portions mortgaged and subsequently sold to respondents. According to the Petition for
Injunction, Monzon was indebted to the Coastal Lending Corporation in the total amount of P3,398,832.35. The winning bidder
in the extrajudicial foreclosure, Addio Properties Inc., paid the amount of P5,001,127.00, thus leaving aP1,602,393.65 residue.
According to respondents, this residue amount, which is in the custody of Atty. Luna as Branch Clerk of Court, should be turned
over to them pursuant to Section 4, Rule 68 of the Revised Rules of Civil Procedure. Thus, respondents pray in their Petition for
Injunction for a judgment (1) finding Monzon liable to the spouses Perez in the amount of P1,215,000.00 and to the spouses
Relova in the amount of P385,000.00; (2) ordering Atty. Luna to deliver said amounts to respondents; and (3) restraining Atty.
Luna from delivering any amount to Monzon pending such delivery in number (2).
Monzon, in her Answer, claimed that the Petition for Injunction should be dismissed for failure to state a cause of action.
Monzon likewise claimed that respondents could no longer ask for the enforcement of the two promissory notes because she
had already performed her obligation to them by dacion en pago as evidenced by the Deed of Conditional Sale and the Deed of
Absolute Sale. She claimed that petitioners could still claim the portions sold to them if they would only file the proper civil
cases. As regards the fund in the custody of Atty. Luna, respondents cannot acquire the same without a writ of preliminary
attachment or a writ of garnishment in accordance with the provisions of Rule 57 and Section 9(c), Rule 39 of the Revised Rules
of Civil Procedure.
On 5 December 2001, the RTC, citing the absence of petitioner and her counsel on said hearing date despite due notice,
granted an oral Motion by the respondents by issuing an Order allowing the ex parte presentation of evidence by respondents. 2
On 1 April 2002, the RTC rendered a Decision in favor of respondents. The pertinent portions of the Decision are as follows:
That [petitioner] Teresita Monzon owes [herein respondents] certain sums of money is indisputable. Even [Monzon] have
admitted to this in her Answer. [Respondents] therefore are given every right to get back and collect whatever amount they
gave [Monzon] together with the stipulated rate of interest.
Likewise, it has been established that [petitioner] Teresita Monzon has the amount of P1,602,393.65 in the possession of the
Clerk of Court, Atty. Ana Liza M. Luna. This amount, as is heretofore stated, represented the balance of the foreclosure sale of
[Monzons] properties.
By way of this petition, [respondents] would want to get said amount so that the same can be applied as full payment of
[petitioners] obligation. That the amount should be divided between the [respondents] in the amount they have agreed
between themselves; [respondent] spouses Relova to receive the amount ofP400.00.00, while the spouses Perez shall get the
rest.
WHEREFORE, judgment is hereby rendered ordering the x x x Clerk of Court, Atty. Ana Liza M. Luna, to deliver unto [herein
respondents] the amount ofP1,602,393.65 plus whatever interest she may received if and when the said amount has been
deposited in any banking institution.3
The Decision also mentioned that the Order allowing the ex parte presentation of evidence by respondents was due to the
continuous and incessant absences of petitioner and counsel. 4
On 25 April 2002, Monzon filed a Notice of Appeal, which was approved by the trial court. Monzon claims that the RTC gravely
erred in rendering its Decision immediately after respondents presented their evidence ex parte without giving her a chance to
present her evidence, thereby violating her right to due process of law.
On 14 June 2002, Addio Properties, Inc. filed before the trial court a Motion for Intervention, which was granted by the same
court on 12 July 2002.

On 27 September 2005, the Court of Appeals rendered the assailed Decision dismissing the appeal. According to the Court of
Appeals, Monzon showed tepid interest in having the case resolved with dispatch. She, thus, cannot now complain that she was
denied due process when she was given ample opportunity to defend and assert her interests in the case. The Court of Appeals
reminded Monzon that the essence of due process is reasonable opportunity to be heard and submit evidence in support of
ones defense. What the law proscribes is lack of opportunity to be heard. Monzons Motion for Reconsideration was denied in a
Resolution dated 7 March 2006.
On 27 March 2006, Monzon filed the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court.
Monzon claims anew that it was a violation of her right to due process of law for the RTC to render its Decision immediately
after respondents presented their evidence ex parte without giving her a chance to present her evidence. Monzon stresses that
she was never declared in default by the trial court. The trial court should have, thus, set the case for hearing for the reception
of the evidence of the defense. She claims that she never waived her right to present evidence.
Monzon argues that had she been given the opportunity to present her evidence, she would have proven that (1) respondents
Exhibit A (mortgage of land to the spouses Relova) had been novated by respondents Exhibit B (sale of the mortgage land to
the spouses Relova); (2) respondents Exhibit C (mortgage of land to the spouses Perez) had been novated by respondents
Exhibit B (sale of the mortgage land to the spouses Perez); and (3) having executed Exhibits "B" and "D," Monzon no longer had
any obligation towards respondents.
The Order by the trial court which allowed respondents to present their evidence ex parte states:
In view of the absence of [Monzon] as well as her counsel despite due notice, as prayed for by counsel for by [respondents
herein], let the reception of [respondents] evidence in this case be held ex-parte before a commissioner who is the clerk of
court of this Court, with orders upon her to submit her report immediately upon completion thereof. 5
It can be seen that despite the fact that Monzon was not declared in default by the RTC, the RTC nevertheless applied the
effects of a default order upon petitioner under Section 3, Rule 9 of the Rules of Court:
SEC. 3. Default; declaration of.Ifthe defending party fails to answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in
default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant,
unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the
clerk of court.
(a) Effect of order of default.Aparty in default shall be entitled to notice of subsequent proceedings but not to take part in the
trial.
In his book on remedial law, former Justice Florenz D. Regalado writes that failure to appear in hearings is not a ground for the
declaration of a defendant in default:
Failure to file a responsive pleading within the reglementary period, and not failure to appear at the hearing, is the sole ground
for an order of default (Rosario, et al. vs. Alonzo, et al., L-17320, June 29, 1963), except the failure to appear at a pre-trial
conference wherein the effects of a default on the part of the defendant are followed, that is, the plaintiff shall be allowed to
present evidence ex parte and a judgment based thereon may be rendered against the defendant (Section 5, Rule 18). 6 Also, a
default judgment may be rendered, even if the defendant had filed his answer, under the circumstance in Sec. 3(c), Rule 29. 7
Hence, according to Justice Regalado, the effects of default are followed only in three instances: (1) when there is an actual
default for failure to file a responsive pleading; (2) failure to appear in the pre-trial conference; and (3) refusal to comply with
modes of discovery under the circumstance in Sec. 3(c), Rule 29.
In Philippine National Bank v. De Leon,8 we held:
We have in the past admonished trial judges against issuing precipitate orders of default as these have the effect of denying a
litigant the chance to be heard, and increase the burden of needless litigations in the appellate courts where time is needed for
more important or complicated cases. While there are instances when a party may be properly defaulted, these should be the
exception rather than the rule, and should be allowed only in clear cases of obstinate refusal or inordinate neglect to comply
with the orders of the court (Leyte vs. Cusi, Jr., 152 SCRA 496; Tropical Homes, Inc. vs. Hon. Villaluz, et al., G.R. No. L-40628,
February 24, 1989).
It is even worse when the court issues an order not denominated as an order of default, but provides for the application of
effects of default. Such amounts to the circumvention of the rigid requirements of a default order, to wit: (1) the court must
have validly acquired jurisdiction over the person of the defendant either by service of summons or voluntary appearance; (2)
the defendant failed to file his answer within the time allowed therefor; and (3) there must be a motion to declare the
defendant in default with notice to the latter. 9 In the case at bar, petitioner had not failed to file her answer. Neither was notice
sent to petitioner that she would be defaulted, or that the effects of default shall be imposed upon her. "Mere non-appearance
of defendants at an ordinary hearing and to adduce evidence does not constitute default, when they have already filed their
answer to the complaint within the reglementary period. It is error to default a defendant after the answer had already been
filed. It should be borne in mind that the policy of the law is to have every litigants case tried on the merits as much as
possible; it is for this reason that judgments by default are frowned upon." 10
Does this mean that defendants can get away with failing to attend hearings despite due notice? No, it will not. We agree with
petitioner that such failure to attend, when committed during hearing dates for the presentation of the complainants evidence,
would amount to the waiver of such defendants right to object to the evidence presented during such hearing, and to crossexamine the witnesses presented therein. However, it would not amount to a waiver of the defendants right to present
evidence during the trial dates scheduled for the reception of evidence for the defense. It would be an entirely different issue if
the failure to attend of the defendant was on a hearing date set for the presentation of the evidence of the defense, but such
did not occur in the case at bar.
In view of the foregoing, we are, therefore, inclined to remand the case to the trial court for reception of evidence for the
defense. Before we do so, however, we need to point out that the trial court had committed another error which we should
address to put the remand in its proper perspective. We refer to Monzons argument as early as the Answer stage that
respondents Petition for Injunction had failed to state a cause of action.

Section 4, Rule 68 of the Rules of Court, which is the basis of respondents alleged cause of action entitling them to the residue
of the amount paid in the foreclosure sale, provides as follows:
SEC. 4. Disposition of proceeds of sale.Theamount realized from the foreclosure sale of the mortgaged property shall, after
deducting the costs of the sale, be paid to the person foreclosing the mortgage, and when there shall be any balance or
residue, after paying off the mortgage debt due, the same shall be paid to junior encumbrancers in the order of their priority, to
be ascertained by the court, or if there be no such encumbrancers or there be a balance or residue after payment to them,
then to the mortgagor or his duly authorized agent, or to the person entitled to it.
However, Rule 68 governs the judicial foreclosure of mortgages. Extra-judicial foreclosure of mortgages, which was what
transpired in the case at bar, is governed by Act No. 3135, 11 as amended by Act No. 4118,12 Section 6 of Republic Act No. 7353,
Section 18 of Republic Act No. 7906, and Section 47 of Republic Act No. 8791. A.M. No. 99-10-05-0, issued on 14 December
1999, provides for the procedure to be observed in the conduct of an extrajudicial foreclosure sale. Thus, we clarified the
different types of sales in Supena v. Dela Rosa, 13 to wit:
Any judge, worthy of the robe he dons, or any lawyer, for that matter, worth his salt, ought to know that different laws apply to
different kinds of sales under our jurisdiction. We have three different types of sales, namely: an ordinary execution sale, a
judicial foreclosure sale, and an extrajudicial foreclosure sale. An ordinary execution sale is governed by the pertinent
provisions of Rule 39 of the Rules of Court on Execution, Satisfaction and Effect of Judgments. Rule 68 of the Rules, captioned
Foreclosure of Mortgage, governs judicial foreclosure sales. On the other hand, Act No. 3135, as amended by Act No. 4118,
otherwise known as "An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages," applies in cases of extrajudicial foreclosure sales of real estate mortgages.
Unlike Rule 68, which governs judicial foreclosure sales, neither Act No. 3135 as amended, nor A.M. No. 99-10-05-0 grants to
junior encumbrancers the right to receive the balance of the purchase price. The only right given to second mortgagees in said
issuances is the right to redeem the foreclosed property pursuant to Section 6 of Act No. 3135, as amended by Act No. 4118,
which provides:
Sec. 6. Redemption. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the
debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the
property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time
within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of
sections four hundred and sixty-four to four hundred and sixty- six, 14 inclusive, of the Code of Civil Procedure, in so far as these
are not inconsistent with this Act.
Even if, for the sake of argument, Rule 68 is to be applied to extrajudicial foreclosure of mortgages, such right can only be
given to second mortgagees who are made parties to the (judicial) foreclosure. While a second mortgagee is a proper and in a
sense even a necessary party to a proceeding to foreclose a first mortgage on real property, he is not an indispensable party,
because a valid decree may be made, as between the mortgagor and the first mortgagee, without regard to the second
mortgage; but the consequence of a failure to make the second mortgagee a party to the proceeding is that the lien of the
second mortgagee on the equity of redemption is not affected by the decree of foreclosure. 15
A cause of action is the act or omission by which a party violates the right of another. 16 A cause of action exists if the following
elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2)
an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part
of such defendant violative of the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for
which the latter may maintain an action for recovery of damages. 17 In view of the foregoing discussions, we find that
respondents do not have a cause of action against Atty. Ana Liza Luna for the delivery of the subject amounts on the basis of
Section 4, Rule 68 of the Rules of Court, for the reason that the foregoing Rule does not apply to extrajudicial foreclosure of
mortgages.
In Katon v. Palanca, Jr.,18 we held that where prescription, lack of jurisdiction or failure to state a cause of action clearly appears
from the complaint filed with the trial court, the action may be dismissed motu proprio, even if the case has been elevated for
review on different grounds. However, while the case should indeed be dismissed insofar as Atty. Luna is concerned, the same
is not necessarily true with respect to Monzon. Other than respondents prayer that the amount due to respondents be
delivered by Atty. Luna to them, they also pray for a judgment declaring Monzon liable for such amounts. Said prayer, as
argued by Monzon herself, may constitute a cause of action for collection of sum of money against Monzon.
The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead, an ordinary action to
recover the indebtedness with the right to execute a judgment thereon on all the properties of the debtor including the subject
matter of the mortgage, subject to the qualification that if he fails in the remedy elected by him, he cannot pursue further the
remedy he has waived.19
However, due to the fact that construing respondents Petition for Injunction to be one for a collection of sum of money would
entail a waiver by the respondents of the mortgage executed over the subject properties, we should proceed with caution
before making such construction. We, therefore, resolve that upon the remand of this case to the trial court, respondents
should be ordered to manifest whether the Petition for Injunction should be treated as a complaint for the collection of a sum of
money.
If respondents answer in the affirmative, then the case shall proceed with the presentation of the evidence for the defense. If
Monzon would be successful in proving her defense of dacion en pago, there would, in effect, be a double sale of the
mortgaged properties: the same properties were sold to both respondents and to herein intervenor Addio Properties, Inc. If,
pursuant to the rules on double sales, respondents are entitled to the properties, their remedy is to file the proper action to
recover possession. If, pursuant to said rules, Addio Properties, Inc. is entitled to the properties, respondents remedy is to file
an action for damages against Monzon.
If respondents answer in the negative, the case shall be dismissed, without prejudice to the exercise of respondents rights as
mortgage creditors. If respondents mortgage contract was executed before the execution of the mortgage contract with Addio
Properties, Inc., respondents would be the first mortgagors. Pursuant to Article 2126 20 of the Civil Code, they would be entitled
to foreclose the property as against any subsequent possessor thereof. If respondents mortgage contract was executed after
the execution of the mortgage contract with Addio Properties, Inc., respondents would be the second mortgagors. As such, they

are entitled to a right of redemption pursuant to Section 6 of Act No. 3135, as amended by Act No. 4118.
WHEREFORE, the Decision of the Court of Appeals dated 27 September 2005 and its Resolution dated 7 March 2006 are
REVERSED and SET ASIDE. The Petition for Injunction in Civil Case No. TG-2069 is hereby ordered DISMISSED insofar as Atty.
Ana Liza Luna is concerned. The Petition for Injunction in Civil Case No. TG-2069, insofar as petitioner Teresita Monzon is
concerned, is ordered REMANDED to the Regional Trial Court of Tagaytay City for further proceedings. Upon such remand, the
Regional Trial Court of Tagaytay City shall issue an Order to respondents, the spouses James and Maria Rosa Nieves Relova and
the spouses Bienvenido and Eufracia Perez, to manifest whether the Petition for Injunction should be treated as a complaint for
the collection of a sum of money.
If respondents answer in the affirmative, the Regional Trial Court shall set the case for hearing for the presentation of the
evidence for the defense. If respondents answer in the negative, the case shall be dismissed, without prejudice to the exercise
of respondents rights as mortgage creditors. No costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 133366

August 5, 1999

UNIONBANK OF THE PHILIPPINES, petitioner,


vs.
THE COURT OF APPEALS and FERMINA S. DARIO and REYNALDO S. DARIO, respondents.
DAVIDE, JR., CJ.:
Unionbank of the Philippines (hereafter UNIONBANK) appeals, by way of certiorari, the Decision1 of the Court of Appeals (CA) of 26 June 1997
and its Resolution of 7 April 19982. The CA nullified the Regional Trial Court's (RTC) Order 3 of 7 August 1995 denying private respondents'
application for preliminary injunction as UNIONBANK's consolidation of ownership divested private respondents of their property without due
process of law. It also ordered the register of deeds to cancel UNIONBANK's title and the trial court to hear private respondents prayer for
injunctive relief.1wphi1.nt
This case stemmed from a real estate mortgage executed on 17 December 1991 by spouses Leopoldo and Jessica Dario (hereafter
mortgagors) in favor of UNIONBANK to secure a P3 million loan, including interest and other charges. The mortgage covered a Quezon City
property with Transfer Certificate of Title (TCT) No. 41828 in Leopoldo Dario's name and was annotated on the title on 18 December 1991. For
non-payment of the principal obligation, UNIONBANK extrajudicially foreclosed the property mortgaged on 12 August 1993 and sold the same
at public auction, with itself posting the highest bid.
On 4 October 1994, one week before the one-year redemption period expired, private respondents filed a complaint with the RTC of Quezon
City against the mortgagors, UNIONBANK, the Register of Deeds and the City Sheriff of Quezon City. Docketed as Civil Case No. Q-94-21830,
the complaint was for annulment of sale and real estate mortgage reconveyance and prayer for restraining notice of lis pendens was
annotated on the title.
On 10 October 1994, RTC, Branch 81, through Presiding Judge (later CA Justice) Celia Lipana-Reyes, issued a temporary restraining order (TRO)
enjoining the redemption of property within the statutory period and its consolidation under UNIONBANK's name. At a hearing four days later,
UNIONBANK's counsel orally moved for dismissal of the complaint alleging that a certification of non-forum shopping-is prescribed by SCCircular 4-944was not attached thereto. Judge Lipana-Reyes settled the motion in favor of UNIONBANK and dismissed 5 the complaint on 17
October 1994.
Aggrieved, private respondents filed a motion for reconsideration 6 of the dismissal on 20 October 1994 and prayed that they be permitted to
amend their verified complaint to comply with the requisites of Circular 4-94. Upon the appointment of Judge Lipana-Reyes to the CA, pairing
Judge Agustin S. Dizon took over the case and on 15 November 1994 allowed private respondents to incorporate the mandatory formal
requirements of SC Administrative Circular 4-94 to their complaint.
In the meantime, without notifying private respondents, UNIONBANK consolidated its title over the foreclosed property on 24 October 1994,
TCT No. 41828 was cancelled and TCT No. 120929 in UNIONBANK's name was issued in its stead.
Private respondents filed an amended complaint7 on 9 December 1994, alleging that they, not the mortgagors, are the true owners of the
property mortgaged and insisting on the invalidity of both the mortgage and its subsequent extrajudicial foreclosure. They claimed that the
original title, TCT No. 61571, was entrusted to a certain Atty. Reynaldo Singson preparatory to its administrative reconstitution after a fire
gutted the Quezon City Hall building. Mortgagor Leopoldo, private respondent Fermina's son, obtained the property from Atty. Singson, had the
title reconstituted under his name without private respondents' knowledge, executed an ante-dated deed of sale in his favor and mortgaged
the property to UNIONBANK.
On 19 December 1994, Judge Ignacio M. Capulong to whom this case was assigned admitted the aforementioned amended complaint and set
the application for writ of preliminary injunction for hearing. After UNIONBANK's motion for reconsideration of said Order was denied on 17
January 1995, it filed a petition forcertiorari with the CA questioning the admission of the amended complaint. The CA upheld Judge Capulong's
order admitting the amended complaint on 24 April 1995, UNIONBANK thereafter elevated its cause to this Court.
Meanwhile, on 9 February 1995 UNIONBANK filed its answer ad cautelam asserting its status as an innocent mortgagee for value whose right
or lien upon the property mortgaged must be respected even if, the mortgagor obtained his title through fraud. It also averred that the action
had become "moot and academic by the consolidation of the foreclosed property on 24 October 1994" in its name, resulting to the issuance of
TCT No. 120929 by the Register of Deeds of Quezon City. In reaction to UNIONBANK's revelation, private respondents moved to declare
UNIONBANK's counsel in indirect contempt attacking his disobedience to the TRO.
On 19 May 1995, private respondents moved to declare the other defendants in default for their non-filing of responsive pleadings within the
mandatory period and to set the application for preliminary injunction and indirect contempt for pre-trial and trial.
On 14 June 1995 the second division of this Court denied the petition for certiorari, which it considered as a petition for review under Rule 45,
"for failure to show that the CA had committed any reversible error" in judgment.
In its 19 August 1995 Order, the RTC held the mortgagors and the City Sheriff of Quezon City in default and sustained UNIONBANK's contention
that the act sought to be enjoined had been enforced, negating the need of hearing the application for preliminary injunction. Private
respondents filed a lengthy motion for reconsideration to this Order.
The annulment case was re-raffled to Branch 227 under Presiding Judge Vicente Q. Roxas upon the creation of new salas. Judge Roxas, on 25
March 1996, denied the motion to reconsider the 19 August 1995 Order but suggested that private respondents amend their application from
prohibitory to mandatory injunction.
As private respondents were unable to amend their application, the RTC denied the motion for reconsideration and their motion for indirect
contempt, "in the interest of free speech and tolerance" on 9 July 1996. Asserting grave abuse of discretion, private respondents brought the
denial of their motion for reconsideration with the Court of Appeals on 6 September 1996.
After considering the arguments presented by the parties, the CA ruled that despite its knowledge that the ownership of the property was
being questioned, UNIONBANK took advantage of private respondents' procedural error by consolidating title to the property, which

"smack[ed] of bad faith" and "evince[d] a reprobate disposition of the part of its counsel to advance his client's cause by fair means or foul."
As a result thereof the transfer of title was vitiated by non-adherence to procedural due process. 8
On 26 June 1997, CA nullified the consolidation of ownership, ordered the Register of Deeds to cancel the certificate of title in UNIONBANK's
name and to reinstate TCT No. 41828 with the notice of lis pendens annotated at the back. The CA also set aside the portion of the assailed
RTC Orders that declared private respondents' prayer for writ of preliminary injunction as moot and academic. UNIONBANK's motion for
reconsideration of the above-mentioned decision was likewise rejected for lack of merit on 7 April 1998.
Hence, UNIONBANK came to this Court claiming to be a mortgagee in good faith and for value with a right to consolidate ownership over the
foreclosed property with the redemption period having expired and there having been no redemptioners. UNIONBANK contends that the TRO
which provisionally enjoined the tolling of the redemption period was automatically dissolved upon dismissal of the complaint on 17 October
1994. Conformably, consolidation of title in its name and the issuance of TCT No. 120929 rendered further proceedings on the application for
injunction academic. Moreover, the alleged fraudulent mortgage was facilitated through private respondents' negligence so they must bear
the loss. It also contends that since private respondents had filed several pleadings, due process, being an opportunity to be heard either
through pleadings or oral arguments, was observed.
Private respondents maintain that UNIONBANK's consolidation of the title in its name was in bad faith, vitiated a standing court order, is
against the law, thus void ab initio. The application for preliminary injunction was not rendered moot and academic by consolidation, which
took place during the lifetime of the TRO, and did not follow the proper legal procedure due to the surreptitious manner it was accomplished.
By treating the application for preliminary injunction as moot and academic and denying the motion for indirect contempt without hearing, the
RTC order ran afoul with the requirements of due process.
Two main issues can be gleaned from the posturing and claims of the parties, to wit, was the consolidation of title in UNIONBANK's name
proper, and was the dismissal of the application for preliminary prohibitory injunction valid.
The issues must be answered in the affirmative.
UNIONBANK's consolidation of title over the property on 24 October 1994 was proper, though precipitate. Contrary to private respondents'
allegation UNIONBANK violated no standing court order. The only bar to consolidation was the temporary restraining order issued by Justice
Lipana-Reyes on 10 October 1994 which effectively halted the tolling of the redemption period 7 days short of its expiration. When private
respondents' original complaint was dismissed on 17 October 1994 for failure to append a certification of non-forum shopping, the TRO, as an
ancillary order that cannot stand independent of the main proceeding, became functus officio. Thus the tolling of the 12-month redemption
period, interrupted by the filing of the complaint and the TRO, recommenced and eventually expired 7 days thereafter or on 24 October 1994,
the date of the disputed consolidation.
The motion for reconsideration and to amend complaint filed by private respondent on 20 October 1994 was of no moment, this Court
recognizing that "a dismissal, discontinuance or non-suit of an action in which a restraining order or temporary injunction has been granted
operates as a dissolution of the restraining order or temporary injunction," 9 regardless of whether the period for filing a motion for
reconsideration of the order dismissing the case or appeal therefrom has expired. 10 The rationale therefor is that even in cases where an
appeal is taken from a judgment dismissing an action on the merits, the appeal does not suspend the judgment, hence the general rule
applies that a temporary injunction terminates automatically on the dismissal of the action. 11
We disagree with the appellate court's observation that consolidation deprived private respondents of their property without due process. It is
settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of
one year after the registration of the sale. 12Consolidation took place as a matter of right since there was no redemption of the foreclosed
property and the TRO expired upon dismissal of the complaint. UNIONBANK need not have informed private respondent that it was
consolidaint its title over the property, upon the expiration of the redemption period, without the judgment debtor having made use of his right
of redemption, the ownership of the property sold becomes consolidated in the purchaser. 13 Notice to the mortgagors and with more reason, to
private respondents who are not even parties to the mortgage contract nor to the extra judicial sale is not necessary.
In real estate mortgage, when the principal obligation is not paid when due, the mortgage has the right to foreclose the mortgage and to have
the property seized and sold with a view to applying the proceeds to the payment of the principal obligation. 14 Foreclosure may be effected
either judicially or extrajudicially.
In a public bidding during extra-judicial foreclosure, the creditor mortgagee, trustee, or other person authorized to act for the creditor may
participate and purchase the mortgaged property as any other bidder. Thereafter the mortgagor has one year within which to redeem the
property from and after registration of sale with the Register of Deeds. 15 In case of non-redemption, the purchaser at foreclosure sale shall file
with the Register of Deeds, either a final deed of sale executed by the person authorized by virtue of the power of attorney embodied in the
deed or mortgage, or his sworn statement attesting to the fact of non-redemption; whereupon, the Register of Deeds Shall issue a new
certificate of title in favor of the purchaser after the owner's duplicate of the certificate has been previously delivered and canceled. 16 Thus,
upon failure to redeem foreclosed realty, consolidation of title becomes a matter of right on the part of the auction buyer, 17 and the issuance of
a certificate of title in favor of the purchaser becomes ministerial upon the Register of Deeds.
There is, moreover, nothing erroneous with the denial of private respondents' application for preliminary prohibitory injunction. The acts
complained of have already been consummated. It is impossible to restrain the performance of consummated acts through the issuance of
prohibitory injunction. When the act sought to be prevented had long been consummated, the remedy of injunction could no longer be
entertained,18 hearing the application for preliminary injunction would just be an exercise in futility.
In addition, to be entitled to the injunctive writ, movant must show that there exists a right to be protected which is directly threatened by an
act sought to be enjoined. Furthermore, there must be a showing that the invasion of the right is material and substantial and that there is an
urgent and paramount necessity for the writ to prevent a serious damage. 19 The injunctive remedy prevents a threatened or continuous
irremediable injury to some of the parties before their claim can be thoroughly investigated and advisedly adjudicated; it is resorted to only
when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard compensation. 20
In the case at bar, the consolidation of ownership over the mortgaged property in favor of UNIONBANK and the issuance of a new title in its
name during the pendency of an action for annulment and reconveyance will not cause irreparable injury to private respondents who are
plaintiffs in the said preliminary injunction. This is because .as purchaser at a public auction, UNIONBANK is only substituted to and acquires
the right, title, interest and claim of the judgment debtors or mortgagors to the property at the time of levy. 21 Perforce, the judgment in the
main action for reconveyance will not be rendered ineffectual by the consolidation of ownership and the issuance of title in the name of
UNIONBANK.
More importantly, with the main action for reconveyance pending before the RTC, the notice of lis pendens, which despite consolidation
remains annotated on UNIONBANK's transfer certificate of title subject to the outcome of the litigation, sufficiently protects private
respondents interest over the property. A transferee pendente lite stands exactly in the shoes of the transferor and is bound by any judgment

or decree which may be rendered for or against the transferor. Once a notice of lis pendens has been duly registered, any cancellation or
issuance of the title of the land involved as well as any subsequent transaction affecting the same, would have to be subject to the outcome of
the litigation. In other words, upon the termination of the litigation there can be no risk of losing the property or any part thereof as a result of
any conveyance of the land or any encumbrance that may be made thereon posterior to the filing of the notice of lis pendens.22
Finally, as to the issue of who between private respondents and UNIONBANK is negligent and hence must bear the loss, the same is not the
proper subject of the present petition and can only be resolved by the trial court after the trial on the merit of the main case.
WHEREFORE, the assailed Decision of the Court of Appeals of 26 June 1997 nullifying the consolidation of ownership and ordering the Register
of Deeds of Quezon City to cancel TCT No. 120929 and reinstate TCT No. 41828 is hereby REVERSED and SET ASIDE. The order of the trial
court dated 7 August 1999, declaring UNIONBANK's prayer for writ of preliminary injunction moot and academic, is hereby REINSTATED. Let
this case be remanded to the Regional Trial Court for trial on the merits.
No pronouncement as to costs.1wphi1.nt
SO ORDERED.
Puno, Kapunan, Pardo and Santiago, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 148448

August 17, 2004

RUSTICO A. ARDIENTE and ASUNCION PALOMARDIENTE, petitioners,


vs.
PROVINCIAL SHERIFF, REGISTER OF DEEDS OF QUEZON and PENINSULA DEVELOPMENT BANK,respondents.

DECISION

CARPIO MORALES, J.:


In mid-November 1979, the spouses Rustico Ardiente and Asuncion Paloma, together with their son Angel P. Ardiente and the latters wife
Gliceria Ardiente, obtained a loan in the amount of P100,000.00 from the Peninsula Development Bank (the bank) at its main office at Lucena
City, to be amortized in six years, on account of which they executed a November 15, 1979 Promissory Note 1 in the same amount.
To secure the payment of the loan, the Ardientes executed in favor of the bank a Real Estate Mortgage 2 on November 14, 1979 over a parcel of
land situated at Mabutag, Cawa, Buenavista, Quezon and covered by Transfer Certificate of Title (TCT) No. 29478, and three (3) parcels of land
situated at Cadlit, Guinayangan, Quezon and covered by Original Certificate of Title (OCT) No. 0-5961.
Out of the proceeds of the loan, the Ardientes purchased a mini bus costing P81,875.00.
After the bus was in operation for several months, it met an accident in August 1980 as result of which it sustained heavy damages and
rendered the Ardientes unable to meet their obligation to the bank. As the Ardientes were later granted by the bank an additional loan
of P46,000 for which they executed an October 29, 1981 Promissory Note, 3 the Real Estate Mortgage was amended.
Demands for the payment of their obligation to the bank notwithstanding, the Ardientes failed to settle the same.
The bank thus extra-judicially foreclosed the mortgage and the parcels of land covered thereby were sold at public auction to the bank which
was the highest bidder.
The bank later notified the Ardientes by letter of February 24, 1984 4 that they had one (1) year from November 11, 1983 or up to November
11, 1984 to redeem the foreclosed mortgage.
Two days before the period to redeem the foreclosed mortgage expired or on November 9, 1984, the spouses Rustico and Suncion Ardiente
filed before the Regional Trial Court (RTC) of Quezon at Gumaca a complaint, denominated as Petition, 5 against the bank, the provincial Sheriff
of Quezon, and the Register of deeds of Quezon, for Annulment of Auction Sale with Preliminary Injunction and Damages, anchored to two
grounds as reflected in paragraph 16 of the Complaint:
16. On two (2) legal grounds, therefore, namely, (a) that it was the defendant, not herein petitioners, who had violated the Real
Estate Mortgage and Amended Real Estate Mortgage, and (b) that the requisite of notifying the mortgagors of the intended
extra-judicial foreclosure sale was not duly complied with the FORECLOSURE SALE should be annulled, which had
supposedly taken place on November 11, 1983 in the Office of the Provincial Sheriff situated in the courthouse building, National Trial
Court, Lucena City wherein the alleged highest bidder was the defendant for the satisfaction of petitioners alleged indebtedness
of P247,279.14;6 (Underscoring in the original; emphasis supplied)
As the following allegation in paragraph 15 of the Complaint shows, the Ardiente spouses capitalized on the alleged lack of notice to them of
the "judicial foreclosure auction sale."
15. And, the unkindest cut of all came up when, without first having been duly notified of an intended extra-judicial foreclosure
auction sale, petitioners received a letter from the defendant, under date of February 24, 1984, informing them that "the one (1)
year period within which to exercise their right to redeem the foreclosed properties commenced to run on November 11, 1983 to
November 11, 1984" (a Xerox copy of which is hereto attached as Annex "A" and made an integral part hereof). 7 (Underscoring
supplied)
On the above-quoted allegations in paragraphs 15 and 16 of the Complaint, the bank, in its Answer with Counterclaim, alleged:
xxx
15) Answering respondent admits the allegations contained in paragraph 15 of the petition, with the explanations and qualifications,
that petitioners were duly notified of the extra-judicial foreclosure and public auction sale. There was sufficient notice and publication
served to all concern[ed] of said public auction sale of the properties offered as collaterals. 8 (Underscoring supplied)
(16) Answering respondent specifically denies the allegations contained in paragraph [16] of the petition. The truth of the matter is
that the petitioners have violated the terms and conditions of Real Estate Mortgage, Amended Real Estate Mortgage and
that respondent has complied with the requisites of Art. 3135 as amended in relation to the application [for] extra-judicial proceeding
of collaterals."9 (Underscoring supplied)
To the Answer the spouses Ardiente filed a Reply and Answer to Counterclaim. 10
The Complaint was later amended11 whereby the spouses Ardiente alleged that, among other things, the purchase price of the mortgaged
parcels of land was so "grossly and greatly inadequate," hence, the foreclosure sale should be annulled; by reason of the unlawful foreclosure
of the real estate mortgage, they suffered damages; and to protect their interests, they filed a formal request with the Register of Deeds to
cause a notice oflis pendens.

In compliance with the directive of Branch 61 of the Gumaca RTC, the parties submitted their respective memoranda.
In their memorandum, the defendants bank et al. proffered the following pertinent argument on the Ardiente spouses claim that they were
not previously notified of the foreclosure:
[I]t is maintained that there was notice, coupled with a publication of Notice of Public Auction Sale in a newspaper of general
circulations (sic) supported by publishers affidavit attached to the record in the Office of the Provincial Sheriff of Quezon at
Calauag, Quezon. Personal notice was sent to the plaintiffs. However, said requirements in the extra-judicial foreclosure is dispensed
with, in accordance with the decision of the Supreme Court in the case of --BONNEVIE V. COURT OF APPEALS, 125 SCRA 122 (1983)
In extra-judicial foreclosure, Act No. 3135 personal notice on the mortgagor is not necessary. Section 3 thereof reads:
Sec. 3 Notice shall be given by posting notices of the sale for not less than twenty (20) days in at least three (3) public
places of the municipality or city where the property is situated, and if such property is worth more than P400.00, such
notice shall also be published once a week for at least 3 consecutive weeks in a newspaper of general circulation in the
municipality or city.
Such phrase "once a week for at least 3 consecutive weeks", as interpreted in "BASA vs. MERCADO" (61 Phil. 632) does not mean
that the notice should be published for 3 full weeks. 12 (Emphasis and underscoring supplied)
By Decision of August 12, 1994,13 the trial court, noting the absence of documentary evidence showing strict compliance with the statutory
requirements on publication of notice of extra-judicial foreclosure of mortgage, declared the extra-judicial foreclosure and the sale of the
mortgaged properties null and void. Thus, the trial court discoursed:
Respondent Bank maintained that it filed an extra-judicial foreclosure with the Provincial Sheriff of Quezon. After due notice and
publication, these properties were sold at Public Auction Sale where a corresponding Certificate of Sale (Exh. 5) was issued in its
name dated November 11, 1983, as the sole bidder (Memorandum for the Defendants, p.4). On page 7 of said Memorandum, it
contended that there was notice, coupled with a publication of Notice of Public Auction Sale in a newspaper of general circulation
supported by publishers affidavit attached to the record in the Office of the Provincial Sheriff of Quezon at Calauag, Quezon.
Personal notice was sent to petitioners. (Record, pp. 358 & 361, Memorandum For the Defendants, pages 4 & 7). Despite these
allegations on record, no documentary exhibits of such publication of notice of public auction sale in a newspaper of
general circulations supported by publishers affidavit were ever submitted by respondent Bank. Considering that
petitioners are clearly attacking the validity of the public auction sale for which respondent Bank was the sole bidder, said
documentary exhibits should have been presented in court and not merely alleged to be attached to the record in the
Office of the Provincial Sheriff of Quezon at Calauag, Quezon. The clear fact remains that these documents were not
submitted to form part of the records of this case. No such proof of publication exists in the records. In the case of Tambunting
vs. Court of Appeals (167 SCRA 17), the Hon. Supreme Court stressed that "failure to present proof of posting and publication
rebuts the presumption of compliance with official duty". To show compliance, the published notices and certificate of posting by the
sheriff of the notice of sale on November 11, 1983 should have been presented.
Therefore, in the absence of convincing proof that the statutory provisions governing publication of notice of mortgage
foreclosure sales have been strictly complied with, this Court has no other recourse except to declare as null and void
the sale in favor of judgment creditor, made by respondent Sheriff on November 12, 1983, awarding the properties in question to
respondent Bank, and for which, the titles in the name of petitioner-spouses were already cancelled and registered in its name. This
Court also finds that petitioners are entitled to and deserving the reliefs prayed for. 14 (Emphasis and underscoring supplied),
Accordingly, the trial court disposed as follows:
WHEREFORE, judgment is hereby rendered, in favor of petitioners, and against the respondents, as follows:
(1) Declaring as null and void the extrajudicial foreclosure and sale conducted by respondent Provincial Sheriff of Quezon;
(2) Declaring as null and void all transactions/proceedings held subsequent thereto such as the execution of the final deed of sale
and issuance of title to and in the name of respondent Bank;
(3) Ordering the respondent Register of Deeds of Quezon to re-issue a new Transfer Certificate of Title to and in the name of
petitioners in lieu of the former titles which had been deemed cancelled by virtue of the issuance of the titles which had been
deemed cancelled by virtue of the issuance of the titles which had been issued in favor of respondent Corporation; and
(4) Ordering all respondents, jointly and severally, to pay unto herein petitioners, the sum of P15,000, for attorneys fees and
litigation expenses of P10,000.
Costs against defendants.
SO ORDERED.15
The Defendants bank et al. thus appealed to the Court of Appeals upon the following assigned errors:
[I.]
THE LOWER COURT ERRED IN FINDING AND CONCLUDING THAT THERE WAS ABSENCE OF CONVINCING PROOF THAT THE STATUTORY
PROVISIONS GOVERNING PUBLICATION OF NOTICE OF MORTGAGE FORECLOSURE SALE HAVE BEEN STRICTLY COMPLIED WITH.
[II.]
THE COURT A QUO ERRED IN DECLARING NULLAND VOID THE EXTRAJUDICIAL FORECLOSURE AND SALE CONDUCTED BY
RESPONDENT PROVINCIAL SHERIFF OF QUEZON, AND ALL TRANSACTIONS/PROCEEDINGS HELD SUBSEQUENT THERETO SUCH AS THE
EXECUTION OF THE FINAL DEED OF SALE AND ISSUANCE OF TITLE TO AND IN THE NAME OF RESPONDENT BANK.
[III.]
THE LOWER COURT ERRED IN ORDERING THE RRESPONDENT REGISTER OF DEEDS OF QUEZON TO REISSUE A NEW TRANSFER
CERTIFICATE OF TITLE TO AND IN THE NAME OF PETITIONERS IN LIEU OF THE FORMER TITLES WHICH HAD BEEN DEEMED CANCELLED
BY VIRTUE OF THE ISSUANCE OF THE TITLES WHICH HAD BEEN ISSUED IN FAVOR OF RESPONDENT CORPORATION.
[IV.]

THE TRIAL COURT ERRED IN AWARDING TO PLAINTIFFS-APPELLEES ATTORNEYS FEES ABD LITIGATION EXPENSES.16 (Underscoring
supplied)
By Decision of January 29, 2001,17 the Court of Appeals reversed the decision of the trial court after finding the argument of the defendantappellants bank et al. that the lack of required notice and publication of the extra-judicial foreclosure of mortgage was not averred in the
complaint, hence, cannot be the basis of an adverse judgment. Explaining its reversal of the decision, the Court of Appeals held:
It is axiomatic that the complaint should inform the defendant of all the material facts on which the plaintiff relies to support his
demand; it should state the theory of a cause of action which forms the bases of the plaintiffs claim of liability. The office, purpose or
function of the complaint is to inform the defendant clearly and definitely of the claims made against him so that he may be
prepared to meet the issues at the trial. Otherwise stated, if the wrong or omission of the defendant is not alleged in the complaint,
then the defendant would be precluded from presenting evidence to refute the imputation of such wrong or present justification for
the alleged omission. In this case, even perfunctory reading of the Petition and the Amended Petition, readily reveals the absence of
any averment relating to the required posting and publication of the notice of foreclosure sale. Understandably then, the
defendant-appellant Bank saw no need to present the Sheriffs Certification of Posting and the newspaper where the notice was
published as well as the publishers affidavit. Clearly, the presumption that the Provincial Sheriff of Quezon has discharged his official
duty in a regular manner and that the defendant-appellant Bank complied with the requirements under the law will suffice. And
while it may be true that the Supreme Court said, in the case ofTambunting v. Court of Appeals and relied upon by the
trial court, that the presumption of compliance with official duty is rebutted by the failure to present proof of posting
and publication of the notice of sale, such may be applied only when these omissions are alleged and raised by the
party in the complaint.
The result would have been different if evidence of these issues were raised during the trial of the case with the acquiescence of the
parties. Then, the rule on the amendment of the petition to conform to or authorize presentation of evidence may be applied, thus:
Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised in the pleadings are tried with the
express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made
upon motion of any party at any time, even after judgments but failure to amend does not affect the result of the trial of these
issues. x x x
As earlier stated however, the issue of lack of posting and publication was not even discussed nor even touched in the testimony of
plaintiff-appellee Rustico Ardiente. His testimony is limited only to his receipt of a letter from the bank that their properties have
been foreclosed and that they have one year to redeem the same. The plaintiffs-appellees only imputed to the defendant-appellant
Bank its omission to give them personal notice of the foreclosure sale. However, it is jurisprudentially settled that personal notice to
the mortgagor in extrajudicial foreclosure proceedings is not necessary. Hence, lack of personal notice to the mortgagors is not a
ground to set aside the foreclosure sale. Ergo, the trial court erred in declaring the foreclosure null and void based on a ground not
raised in the pleadings nor tried before it.18 (Underscoring in the original; emphasis supplied)
Hence, the present petition for review filed by the Ardiente spouses proferring the following:
REASONS WARRANTING REVIEW
I.
RESPON[ENT] COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT SINCE THE PETITIONERS IN THEIR PETITION AND IN THEIR
AMENDED PETITION DID NOT MENTION THE ABSENCE OF THE REQUIRED POSTING AND PUBLICATION OF THE NOTICE OF
FORECLOSURE SALE, THERE IS NO NEED FOR THE DEFENDANT APPELLANT BANK TO PRESENT THE SHERIFF CERTIFICATION OF
POSTING AND THE NEWSPAPER WHERE THE NOTICE WAS PUBLISHED AS WELL AS THE PUBLISHERS AFFIDAVIT TO PROVE THE
VALIDITY OF THE FORECLOSURE SALE.
II.
RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE TRIAL COURTS DECISION AND DISMISSING PETITIONERS
COMPLAINT.
III.
RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT AWARDING ATTORNEYS FEES AND LITIGATION EXPENSES TO THE
PLAINTIFFS-APPELLEES.19
The spouses Ardientes (hereinafter referred to as petitioners) argue that paragraph 15 of their Complaint and paragraph 16 of the Amended
Complaint show that they were "attacking the validity of the extra-judicial sale"; that the impleading of the sheriff demonstrates that they are
"questioning the validity and legality of his performance of officially duty"; that the bank was sufficiently informed of their "cause of action,
theory of their case and relief being sought" as shown by the banks allegations in paragraphs 15 and 16 of its Answer; and that in fact in the
banks Special and Affirmative Defenses, particularly paragraph 25 thereof which reads:
25) That answering respondent as well as the Office of Provincial Sheriff fully compl[ied] [with] the requirements of law under Act
3135 as amended, more specifically with regards to notices of the public auction sale as well as the extra-judicial foreclosure
application in accordance with the law.20,
an issue was tendered, the nature of which affirmative defense-answer called for the presentation of evidence, they citing Benavides v.
Alabastro,21 but the bank did not present "proof of proper compliance with Act 3135, "AN ACT TO REGULATE THE SALE OF PROPERTY UNDER
SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL ESTATE MORTAGES,: as to posting and publication of notices of public auction sale.
The Court is not persuaded.
With respect to petitioners paragraphs 15 and 16 allegations in their Complaint, clearly, they were questioning the validity of the extra-judicial
foreclosure of the mortgage on the basis of lack of notice to them as mortgagors.
It is settled that personal notice to the mortgagor in extra-judicial foreclosure proceedings is not necessary, hence, not a ground to set aside
the foreclosure sale.22
With respect to petitioners argument that the bank, in paragraph 25 of its Answer, in fact put in issue its compliance with the requirements of
Act 3135, "more specifically with regards to the notices of the public auction sale as well as the extra-judicial application in accordance with
law," to thus call for the presentation of evidence, they citing again Benavides,23 the same fails.

Benavides bears on the rendition of judgment on the pleadings. It holds that where the defendants answer tenders an issue, as where it does
not only deny the material allegations of the complaint but also sets up certain special and affirmative defenses, the nature of such answer
calls for presentation of evidence, hence, it is error torender a judgment on the pleadings thereon without such evidence.
No doubt, it is a well-settled rule that statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly
complied with, and that even slight deviations therefrom will invalidate the notice and the sale at least voidable. 24
Despite petitioners non-allegation of lack of publication of notice of foreclosure in their Complaint, the bank pleaded in its Answer (1) "that
petitioners were duly notified of the extrajudicial foreclosure and public auction sale" and "[t]here was sufficient notice and publication served
to all concern[ed] of said public auction sale," and (2) that it and the Office of the provincial Sheriff "fully compl[ied] with the requirements of
law under Act 3135, more specifically with regard to notices of the public auction as well as the extra-judicial foreclosure in accordance with
law."
Yet petitioners never refuted in their Reply and Answer to Counterclaim such defense of the bank nor presented evidence before the trial court
to disprove the same.
In fact, in its Comment on petitioners Formal Offer of Evidence before the trial court, the bank, passing on Exhibit "D" its letter to petitioners
advising them that they had one year from November 11, 1993 to exercise their right of redemption, stated that said exhibit was admitted
"with the qualification as to the purpose to the effect that said extra-judicial foreclosure was filed in accordance with law and that all
requirements of said law were complied with and that plaintiffs were duly notified of said proceedings." 25
Despite the banks repeated claim that the statutory requirements governing extra-judicial foreclosure had been complied with, the banks
plea of lack of publication of notice of foreclosure was not raised by petitioners either in the Amended Complaint or in the Reply and Answer to
Counterclaim. It was not also raised during the trial as the entire transcripts of the stenographic notes of the proceedings before the trial court
show. Nor even in their memorandum filed before the trial court, petitioners having merely assailed the lack of "personal" notification to them
of any "intended" extrajudicial foreclosure and the "grossly and greatly inadequate" purchase price of the lands.
As the appellate court thus held, the issue of lack of publication of notice cannot be raised for the first time on appeal.
In the Tambunting case cited by petitioners to support their thesis that failure to strictly comply with statutory requirements governing
publication of notice of mortgage foreclosure sales renders the sale at least voidable, the therein mortgagors, in their complaint for annulment
of mortgage and damages, sought to enjoin the extra-judicial foreclosure of mortgage. During the pendency of the case, the extra-judicial
foreclosure pushed thru just the same. The mortgaged property was sold at public auction to the mortgagees, and the property was eventually
sold to the Tambunting Realty. The mortgagors thereupon filed a Supplemental Complaint impleading the realty firm, the provincial sheriff as
the officer responsible for holding the foreclosure, and the Register of Deeds for the subsequent transfer of the property "despite alleged noncompliance with the requirements of Act 3135, Sec. 3 (as amended by Act 4118) on posting and publication of the notice of foreclosure sale."
In other words, the lack of publication was raised in issue by the mortgagors in their Supplemental Complaint.
In the case of Go v. Court of Appeals,26 as in the present case, despite the fact that the mortgagees pleaded as a defense in their Answer the
"receipt of the notice of the sale which was published in a newspaper of general circulation, the issue of lack of publication of the notice of
foreclosure was never raised in issue by the mortgagors.
In disposing of the issue of lack of publication of the notice of foreclosure of mortgage which was raised for the first time on appeal, this Court
in Go held:
Indeed, as correctly held by the respondent Court, the issue of lack of publication of the notice of foreclosure of the mortgage was
raised only on appeal. Petitioner does not represent that he directly attacked in his complaint in Civil Case No. 8920 the validity of
the foreclosure because of such lack of notice. His ownStatement of the Facts and of the Case in the instant petition makes no
reference to such lack o notice as one, or even just as a basis for any, of his causes of action in the complaint. He sought the
cancellation of the contract of mortgage because he allegedly never received the amounts indicated in the promissory notes. Of
course, nullity of the mortgage due to absence of consideration is leagues apart form the nullity of the foreclosure of a mortgage
because of non-publication of the notice of foreclosure.
Additionally, petitioner presented no evidence before the trial court to prove the absence of publication of the notice despite the fact
that private respondents, in their Answer, squarely pleaded as a defense the foreclosure sale and petitioners receipt of
the "notice of the sale which was published in a newspaper of general circulation." That the lack of publication of the
notice of foreclosure was never raised in issue by petitioner and that it is not within the issues framed by the parties in the trial court
are then too obvious. (Emphasis and underscoring supplied) 27
WHEREFORE, there being no reversible error in the assailed decision, the petition is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.
Panganiban, (Chairman), and Corona, JJ., concur.
Sandoval-Gutierrez, J., on leave.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 141974

August 9, 2004

BPI FAMILY SAVINGS BANK, INC., petitioner,


vs.
SPS. JANUARIO ANTONIO VELOSO AND NATIVIDAD VELOSO, respondents.
DECISION
CORONA, J.:
Before us is a petition for review of the decision1 dated February 14, 2000 of the Court of Appeals affirming the decision of the
Regional Trial Court, Branch 94, Quezon City,2 which upheld the validity of the extra-judicial foreclosure proceedings initiated by
Family Bank and Trust Company (Family Bank) on the mortgaged properties of respondent spouses Januario Antonio Veloso and
Natividad Veloso but allowed the latter to redeem the same properties.
On January 8, 1983, respondent spouses obtained a loan of P1,300,000 from petitioners predecessor-in-interest Family Bank and
Trust Company. To secure payment of the loan, respondent spouses executed in favor of the bank a deed of mortgage over three
parcels of land, with improvements, registered in their names under TCT Nos. 272227, 272228 and 272229 of the Registry of Deeds of
Quezon City.
On February 9, 1983, respondents, for value received, executed a promissory note for P1,300,000. Subsequently, however,
respondents defaulted in the monthly installments due on their loan. When efforts to update the account failed, Family Bank
instituted extra-judicial foreclosure proceedings on the respondents mortgaged properties.
On July 1, 1985, the properties were sold at public auction with Family Bank as the highest bidder forP2,782,554.66.
On August 5, 1985, Family Bank assigned all its rights and interests in the foreclosed properties to petitioner BPI Family Bank, Inc.
(BPI).
On August 28, 1985, the sheriffs certificate of sale was registered with the Registry of Deeds of Quezon City.
On July 24, 1986, respondents, through counsel, wrote BPI offering to redeem the foreclosed properties forP1,872,935. This was,
however, rejected by petitioner.
On August 27, 1986, respondents filed in the RTC of Quezon City, Branch 94, a complaint for annulment of foreclosure, with
consignation and prayer for damages. On motion of respondents, the trial court, in an order dated August 27, 1986, allowed
respondents to deposit with the clerk of court the sum of P1,500,000 representing the redemption price. Thereafter, trial on the
merits ensued.
Meanwhile, in Branch 76 of the Regional Trial Court of Quezon City, BPI was able to secure a writ of possession over the foreclosed
properties. This prompted respondents to file with the Court of Appeals a petition for certiorari with preliminary injunction docketed as
CA-G.R. SP No. 22681. On October 8, 1990, the Court of Appeals resolved to grant respondents motion for preliminary mandatory
injunction.
Eventually, however, in a decision promulgated on May 31, 1991, the Court of Appeals, in CA-G.R. SP No. 22681, resolved the issue of
possession in favor of BPI and accordingly lifted the preliminary mandatory injunction it had earlier issued, denying altogether
respondents petition. From this decision, respondents came to this Court via a petition for review which was, however, denied in a
resolution dated January 13, 1992. The resolution affirmed, in effect, petitioners right to the possession of the subject properties.
On December 16, 1992, upon motion of respondents and despite the opposition of petitioner, Branch 94 ordered the release
of P1,400,000 of the consigned amount to respondents, with the balance of P100,000 to take the place of the injunction bond to
answer for whatever damages petitioner might suffer because of the issuance of the preliminary injunction (previously issued and
later lifted) in favor of respondents.
Finally, on August 18, 1995, after almost a decade of protracted litigation, the trial court rendered a decision declaring the validity of
the extra-judicial foreclosure of the mortgaged properties of respondents but allowed the redemption of the same at a redemption
price of P2,140,000.
BPI elevated the matter to the Court of Appeals which affirmed the trial courts decision, with modification:
WHEREFORE, subject to the modification declaring P2,678,639.80 as the redemption price due the appellant, the decision
appealed from is hereby AFFIRMED in all other respects. 3
Hence, the instant petition based on the following assigned errors:
I
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND THE
APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT AFFIRMED THE DECISION OF THE TRIAL COURT AND ALLOWED
THE RESPONDENTS TO REDEEM THE FORECLOSED PROPERTY.
II
ASSUMING FOR THE SAKE OF ARGUMENT, BUT WITHOUT ADMITTING, THAT THE HONORABLE COURT OF APPEALS DID NOT
ERR IN AFFIRMING THE DECISION OF THE TRIAL COURT, NEVERTHELESS IT DECIDED A QUESTION OF SUBSTANCE IN A WAY

NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT FIXED THE REDEMPTION
PRICE TO BE PAID BY RESPONDENTS TO PETITIONER AT ONLY P2,678,639.80 AND SHALL ONLY EARN 1% PER MONTH UNDER
SECTION 28, RULE 39 OF THE 1997 RULES OF CIVIL PROCEDURE.
The fact is that, at the time of the foreclosure sale on July 1, 1985, respondent spouses Veloso had already defaulted on their loan to
petitioners predecessor-in-interest family bank. In a real estate mortgage, when the principal obligation is not paid when due, the
mortgagee has the right to foreclose on the mortgage and to have the property seized and sold, and to apply the proceeds to the
obligation.4 foreclosure is proper if the debtor is in default in the payment of his obligation. 5 and in this case, the validity of the extrajudicial foreclosure on July 1, 1985 was confirmed by both the trial court and the court of appeals. We find no reason to question it.
The sole question therefore that remains to be resolved is: did respondent spouses comply with all the requirements for the
redemption of the subject properties?
We answer in the negative.
The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement
of intention must be accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to
repurchase.6
In several cases7 decided by the Court where the right to repurchase was held to have been properly exercised, there was an
unequivocal tender of payment for the full amount of the repurchase price. Otherwise, the offer to redeem is ineffectual. 8 Bona
fide redemption necessarily implies a reasonable and valid tender of the entire repurchase price, otherwise the rule on the
redemption period fixed by law can easily be circumvented. As explained by this Court in Basbas vs. Entena:9
x x x the existence of the right of redemption operates to depress the market value of the land until the period expires, and
to render that period indefinite by permitting the tenant to file a suit for redemption, with either party unable to foresee
when final judgment will terminate the action, would render nugatory the period of two years fixed by the statute for making
the redemption and virtually paralyze any efforts of the landowner to realize the value of his land. No buyer can be expected
to acquire it without any certainty as to the amount for which it may be redeemed, so that he can recover at least his
investment in case of redemption. In the meantime, the landowners needs and obligations cannot be met. It is doubtful if
any such result was intended by the statute, absent clear wording to that effect.
Consequently, in this case, the offer by respondents on July 24, 1986 to redeem the foreclosed properties forP1,872,935 and the
subsequent consignation in court of P1,500,000 on August 27, 1986, while made within the period 10 of redemption, was ineffective
since the amount offered and actually consigned not only did not include the interest but was in fact also way below
the P2,782,554.66 paid by the highest bidder/purchaser of the properties during the auction sale.
In Bodiongan vs. Court of Appeals,11 we held:
In order to effect a redemption, the judgment debtor must pay the purchaser the redemption price composed of the
following: (1) the price which the purchaser paid for the property; (2) interest of 1% per month on the purchase price; (3) the
amount of any assessments or taxes which the purchaser may have paid on the property after the purchase; and (4) interest
of 1% per month on such assessments and taxes x x x.
Furthermore, Article 1616 of the Civil Code of the Philippines provides:
The vendor cannot avail himself of the right to repurchase without returning to the vendee the price of the sale x x x.
It is not difficult to understand why the redemption price should either be fully offered in legal tender or else validly consigned in
court. Only by such means can the auction winner be assured that the offer to redeem is being made in good faith.
The sum of P1,400,000 consigned by respondents in Branch 94 was subsequently withdrawn by them, leaving only P100,000 to take
the place of the injunction bond. This would have been tantamount to requiring petitioner to accept payment by installments as there
would have necessarily been an indefinite extension of the redemption period. 12 If a partial payment can bind the winning bidder or
purchaser in an auction sale, by what rule can the payment of the balance be determined? Petitioner could not be expected to
entertain an offer of redemption without any assurance that respondents could pay the repurchase price immediately. A contrary rule
would leave the buyers at foreclosure sales open to harassment by expectedly angry debtors and cause unnecessary prolongation of
the redemption period, contrary to the policy of the law.
Whether or not respondents were diligent in asserting their willingness to pay is irrelevant. Redemption within the period allowed by
law is not a matter of intent but a question of payment or valid tender of the full redemption price within said period.
The disposition of the instant case in the trial court unnecessarily dragged for almost a decade. Now, it is on its 18 th year and still
respondents have not tendered the full redemption price. Nor have they consigned the full amount, if only to prove their willingness
and ability to pay. This would have evidenced their good faith.
The law granted respondents the right of redemption. But in so granting that right, the law intended that their offer to redeem be
valid and effective, accompanied by an actual tender of the redemption price. Fixing a definite term within which the property should
be redeemed is meant to avoid prolonged economic uncertainty over the ownership of the thing sold. In the case at bar, the offer was
not a legal and effective exercise of the right of redemption contemplated by law, hence, refusal of the offer by petitioner was
completely justified.
Finally, respondents cannot argue that the law on equity should prevail. Equity applies only in the absence of, and never against,
statutory law or judicial rules of procedure. 13
WHEREFORE, the appealed decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The complaint filed by
respondents, the spouses Veloso, is hereby dismissed.
SO ORDERED.
Panganiban, (Chairman), and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on leave.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 154322 August 22, 2006
EMILIA FIGURACION-GERILLA, Petitioner,
vs.
CAROLINA VDA. DE FIGURACION,* ELENA FIGURACION-ANCHETA,* HILARIA A. FIGURACION, FELIPA FIGURACION-MANUEL,
QUINTIN FIGURACION and MARY FIGURACION-GINEZ, Respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari,1 petitioner Emilia Figuracion-Gerilla challenges the decision 2 and resolution3of the Court of Appeals (CA)
affirming the decision of the Regional Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 49, which dismissed her complaint for partition.
The properties involved are two parcels of land which belonged to her late father, Leandro Figuracion.
The facts of the case follow.4
Spouses Leandro and respondent Carolina Figuracion (now both deceased) had six children: petitioner and respondents Elena FiguracionAncheta (now deceased), Hilaria Figuracion, Felipa Figuracion-Manuel, Quintin Figuracion and Mary Figuracion-Ginez.
On August 23, 1955, Leandro executed a deed of quitclaim over his real properties in favor of his six children. When he died in 1958, he left
behind two parcels of land: (1) Lot 2299 of the Cadastral Survey of Urdaneta consisting of 7,547 square meters with Transfer Certificate of Title
(TCT) No. 4221-P in the name of "Leandro Figuracion, married to Carolina Adviento" and (2) Lot 705 of the Cadastral Survey of Urdaneta with
an area of 2,900 sq. m. with TCT No. 4220-P also in the name of "Leandro Figuracion, married to Carolina Adviento." Leandro had inherited
both lots from his deceased parents,5 as evidenced by Original Certificate of Title (OCT) Nos. 16731 and 16610, respectively, issued by the
Register of Deeds of the Province of Pangasinan.
Leandro sold a portion of Lot 2299 to Lazaro Adviento, as a result of which TCT No. 4221-P was cancelled and TCT No. 101331 was issued to
"Lazaro Adviento, married to Rosenda Sagueped" as owner of the 162 sq. m. and "Leandro Figuracion, married to Carolina Adviento" as owner
of 7,385 sq. m. This lot continued to be in the name of Leandro in Tax Declaration No. 616 for the year 1985.
What gave rise to the complaint for partition, however, was a dispute between petitioner and her sister, respondent Mary, over the eastern
half of Lot 707 of the Cadastral Survey of Urdaneta with an area of 3,164 sq. m.
Lot 707 belonged to Eulalio Adviento, as evidenced by OCT No. 15867 issued on February 9, 1916. When Adviento died, his two daughters,
Agripina Adviento (his daughter by his first wife) and respondent Carolina (his daughter by his second wife), succeeded him to it. On November
28, 1961, Agripina executed a quitclaim in favor of petitioner over the one-half eastern portion of Lot 707. Agripina died on July 28, 1963,
single and without any issue. Before her half-sisters death, however, respondent Carolina adjudicated unto herself, via affidavit under Rule 74
of the Rules of Court, the entire Lot 707 which she later sold to respondents Felipa and Hilaria. The latter two immediately had OCT No. 15867
cancelled, on December 11, 1962. A new title, TCT No. 42244, was then issued in the names of Felipa and Hilaria for Lot 707.
In February 1971, petitioner and her family went to the United States where they stayed for ten years. Returning in 1981, 6 she built a house
made of strong materials on the eastern half-portion of Lot 707. She continued paying her share of the realty taxes thereon.
It was sometime later that this dispute erupted. Petitioner sought the extrajudicial partition of all properties held in common by her and
respondents. On May 23, 1994, petitioner filed a complaint in the RTC of Urdaneta City, Branch 49, for partition, annulment of documents,
reconveyance, quieting of title and damages against respondents, praying, among others, for: (1) the partition of Lots 2299 and 705; (2) the
nullification of the affidavit of self-adjudication executed by respondent Carolina over Lot 707, the deed of absolute sale in favor of
respondents Felipa and Hilaria, and TCT No. 42244; (3) a declaration that petitioner was the owner of one-half of Lot 707 and (4) damages. The
case was docketed as Civil Case No. U-5826.
On the other hand, respondents took the position that Leandros estate should first undergo settlement proceedings before partition among
the heirs could take place. And they claimed that an accounting of expenses chargeable to the estate was necessary for such settlement.
On June 26, 1997,7 the RTC8 rendered judgment nullifying Carolinas affidavit of self-adjudication and deed of absolute sale of Lot 707. It also
declared Lots 2299 and 705 as exclusive properties of Leandro Figuracion and therefore part of his estate. The RTC, however, dismissed the
complaint for partition, reconveyance and damages on the ground that it could not grant the reliefs prayed for by petitioner without any (prior)
settlement proceedings wherein the transfer of title of the properties should first be effected.
On appeal, the CA upheld the dismissal of petitioners action for partition for being premature. The CA reversed the decision, however, with
respect to the nullification of the self-adjudication and the deed of sale. Upholding the validity of the affidavit of self-adjudication and deed of
sale as to Carolinas one-half pro-indiviso share, it instead partitioned Lot 707. Dissatisfied, respondents elevated the CA decision to this Court
in G.R. No. 151334, entitledCarolina vda. de Figuracion, et al. v. Emilia Figuracion-Gerilla. 9
The issue for our consideration is whether or not there needs to be a prior settlement of Leandros intestate estate (that is, an accounting of
the income of Lots 2299 and 705, the payment of expenses, liabilities and taxes, plus compliance with other legal requirements, etc.) before
the properties can be partitioned or distributed.
Respondents claim that: (1) the properties constituting Leandros estate cannot be partitioned before his estate is settled and (2) there should
be an accounting before anything else, considering that they (respondents) had to spend for the maintenance of the deceased Leandro
Figuracion and his wife in their final years, which support was supposed to come from the income of the properties. Among other things,
respondents apparently wanted petitioner to share in the expenses incurred for the care of their parents during the ten years she stayed in the
United States, before she could get her part of the estate while petitioner apparently wanted her gross share, without first contributing to the
expenses.
In any event, there appears to be a complication with respect to the partition of Lot 705. The records refer to a case entitled Figuracion, et al.
v. Alejo currently pending in the CA. The records, however, give no clue or information regarding what exactly this case is all about. Whatever
the issues may be, suffice it to say that partition is premature when ownership of the lot is still in dispute. 10

Petitioner faces a different problem with respect to Lot 2299. Section 1, Rule 69 of the Rules of Court provides:
SECTION 1. Complaint in action for partition of real estate. A person having the right to compel the partition of real estate may do so as
provided in this Rule, setting forth in his complaint the nature and extent of his title and an adequate description of the real estate of which
partition is demanded and joining as defendants all other persons interested in the property.
The right to an inheritance is transmitted immediately to the heirs by operation of law, at the moment of death of the decedent. There is no
doubt that, as one of the heirs of Leandro Figuracion, petitioner has a legal interest in Lot 2299. But can she compel partition at this stage?
There are two ways by which partition can take place under Rule 69: by agreement under Section 2 11 and through commissioners when such
agreement cannot be reached, under Sections 3 to 6. 12
Neither method specifies a procedure for determining expenses chargeable to the decedents estate. While Section 8 of Rule 69 provides that
there shall be an accounting of the real propertys income (rentals and profits) in the course of an action for partition, 13 there is no provision for
the accounting of expenses for which property belonging to the decedents estate may be answerable, such as funeral expenses, inheritance
taxes and similar expenses enumerated under Section 1, Rule 90 of the Rules of Court.
In a situation where there remains an issue as to the expenses chargeable to the estate, partition is inappropriate. While petitioner points out
that the estate is allegedly without any debt and she and respondents are Leandro Figuracions only legal heirs, she does not dispute the
finding of the CA that "certain expenses" including those related to her fathers final illness and burial have not been properly settled. 14 Thus,
the heirs (petitioner and respondents) have to submit their fathers estate to settlement because the determination of these expenses cannot
be done in an action for partition.
In estate settlement proceedings, there is a proper procedure for the accounting of all expenses for which the estate must answer. If it is any
consolation at all to petitioner, the heirs or distributees of the properties may take possession thereof even before the settlement of accounts,
as long as they first file a bond conditioned on the payment of the estates obligations.15
WHEREFORE, the petition is hereby DENIED. The Court of Appeals decision and resolution in CA-G.R. CV No. 58290 are AFFIRMED in so far
as the issue of the partition of Lots 2299 and 705 is concerned.
But with respect to Lot 707, we make no ruling on the validity of Carolina vda. de Figuracions affidavit of self-adjudication and deed of sale in
favor of Felipa and Hilaria Figuracion in view of the fact that Carolina vda. de Figuracion, et al. v. Emilia Figuracion-Gerilla (G.R. No. 151334) is
still pending in this Division.
Costs against petitioner.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 152195

January 31, 2005

PEDRO SEPULVEDA, SR., substituted by SOCORRO S. LAWAS, Administratrix of His Estate, petitioner,
vs.
ATTY. PACIFICO S. PELAEZ, respondent.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, of the Decision 1 of the Court of Appeals (CA) in CA-G.R. CV
No. 43758 affirming the decision of the Regional Trial Court (RTC) of Danao City, Branch 25, in Civil Case No. SF-175.
On December 6, 1972, private respondent Atty. Pacifico Pelaez filed a complaint against his granduncle, Pedro Sepulveda, Sr., with the then
Court of First Instance (CFI) of Cebu, for the recovery of possession and ownership of his one-half (1/2) undivided share of several parcels of
land covered by Tax Declaration (T.D.) Nos. 28199, 18197, 18193 and 28316; his undivided one-third (1/3) share in several other lots covered
by T.D. Nos. 28304, 35090, 18228, 28310, 26308, 28714, 28311, 28312 and 28299 (all located in Danao, Cebu); and for the partition thereof
among the co-owners. The case was docketed as Civil Case No. SF-175.
The eleven (11) lots were among the twenty-five (25) parcels of land which the private respondents mother, Dulce Sepulveda, inherited from
her grandmother, Dionisia Sepulveda under the Project of Partition 2 dated April 16, 1937 submitted by Pedro Sepulveda, Sr. as the
administrator of the formers estate, duly approved by the then CFI of Cebu in Special Proceeding No. 778-0. Under the said deed, Pedro
Sepulveda, Sr. appeared to be the owner of an undivided portion of Lot No. 28199, while his brother and Dulces uncle Santiago Sepulveda,
was the undivided owner of one-half (1/2) of the parcels of land covered by T.D. Nos. 18197, 18193 and 28316. Dulce and her uncles, Pedro
and Santiago, were likewise indicated therein as the co-owners of the eleven other parcels of land, each with an undivided one-third (1/3)
share thereof.
In his complaint, the private respondent alleged that his mother Dulce died intestate on March 2, 1944, and aside from himself, was survived
by her husband Rodolfo Pelaez and her mother Carlota Sepulveda. Dulces grandfather Vicente Sepulveda died intestate on October 25,
1920,3 and Dulce was then only about four years old. According to the private respondent, his grandmother Carlota repeatedly demanded the
delivery of her mothers share in the eleven (11) parcels of land, but Pedro Sepulveda, Sr. who by then was the Municipal Mayor of Tudela,
refused to do so. Dulce, likewise, later demanded the delivery of her share in the eleven parcels of land, but Pedro Sepulveda, Sr. still refused,
claiming that he needed to continue to possess the property to reap the produce therefrom which he used for the payment of the realty taxes
on the subject properties. The private respondent alleged that he himself demanded the delivery of his mothers share in the subject
properties on so many occasions, the last of which was in 1972, to no avail.
The private respondent further narrated that his granduncle executed an affidavit 4 on November 28, 1961, stating that he was the sole heir of
Dionisia when she died intestate on June 5, 1921, when, in fact, the latter was survived by her three sons, Santiago, Pedro and Vicente. Pedro
Sepulveda, Sr. also executed a Deed of Absolute Sale5 on July 24, 1968 over the property covered by T.D. No. 19804 (T.D. No. 35090) in favor
of the City of Danao forP7,492.00. According to the private respondent, his granduncle received this amount without his (private respondents)
knowledge.
The private respondent prayed that, after due hearing, judgment be rendered in his favor, thus:
ON THE FIRST CAUSE OF ACTION:
1. Declaring the plaintiff the absolute owner of ONE-HALF (1/2) portion of the TWO (2) parcels of land described in paragraph 2 of the
complaint;
2. Declaring the plaintiff the absolute owner of the ONE-THIRD (1/3) portion of the NINE (9) parcels of land described in paragraph 3
of the complaint;
3. Ordering the defendant to deliver to the plaintiff the latters ONE-THIRD (1/3) share of the SEVEN THOUSAND FOUR HUNDRED
NINETY-TWO PESOS (P7,492.00) representing the purchase price of the parcel of land described in paragraph 3(a) of the complaint
with interest thereon until the amount is fully paid;
ON THE SECOND CAUSE OF ACTION:
1. Ordering the partition and segregation of the ONE-HALF (1/2) portion belonging to the plaintiff of the TWO (2) parcels of land
described in paragraph 2 of the complaint;
2. Ordering the partition and segregation of the ONE-THIRD (1/3) portion belonging to the plaintiff of the remaining EIGHT (8) parcels
of land described in paragraph 3 of the complaint;
COMMON TO THE FIRST AND SECOND CAUSES OF ACTION:
1. Ordering the defendant to pay the plaintiff the amount of FIFTY THOUSAND PESOS (P50,000.00) as moral damages;
2. Ordering the defendant to pay the plaintiff exemplary damages the amount of which is left to the discretion of this Honorable
Court;
3. Ordering the defendant to deliver to the plaintiff the latters share of the fruits of the ELEVEN (11) parcels of land subject-matter of
this complaint, the value of which will be proven during the trial;
4. Ordering the defendant to pay the plaintiff actual litigation expenses, the value of which will be proven during the trial;
5. Ordering the defendant to pay attorneys fee in the amount of TWELVE THOUSAND PESOS (P12,000.00);
6. Granting to the plaintiff such other reliefs and remedies as he may be entitled to in accordance with law and equity. 6

In his answer to the complaint, Pedro Sepulveda, Sr. admitted having executed a deed of sale over the parcel of land covered by T.D. No.
19804 in favor of Danao City, but averred that the latter failed to pay the purchase price thereof; besides, the private respondent had no right
to share in the proceeds of the said sale. He likewise denied having received any demand for the delivery of Dulces share of the subject
properties from the latters mother Carlota, or from the private respondent.
During the trial, Pedro Sepulveda, Sr. died intestate. A petition for the settlement of his estate was filed on May 8, 1975 with the RTC of Cebu,
docketed as Special Proceeding No. SF-37. His daughter, petitioner Socorro Sepulveda Lawas, was appointed administratrix of his estate in July
1976. In compliance with the decision of this Court in Lawas v. Court of Appeals,7 docketed as G.R. No. L-45809 and promulgated on December
12, 1986, the deceased was substituted by the petitioner.
To prove the delivery of Dulces share under the project of partition, the petitioner presented the Affidavit of Consolidation she executed in
October 1940 covering thirteen (13) of the twenty-five (25) parcels of land which were deeded to her under the Project of Partition, 8 as well as
the Order9 dated March 24, 1962 of the then CFI in Special Proceeding No. 778-R, denying Carlotas motion for the reconstitution of the records
of the said case, and for the delivery of Dulces share in the eleven parcels of land. The court likewise declared therein that Dulce, through her
grandchildren and her mother, Carlota, had already received her share of the estate from Pedro Sepulveda, Sr. as early as January 10, 1938.
According to the petitioner, Dulce and Pedro Sepulveda, Sr. had a verbal agreement wherein the eleven parcels of land covered by the
complaint would serve as the latters compensation for his services as administrator of Dionisias estate. Thus, upon the termination of Special
Proceeding No. 778-0, and subsequent to the distribution of the shares of Dionisias heirs, Pedro Sepulveda, Sr. then became the sole owner of
Dulces shares.
The petitioner likewise adduced evidence that Santiago Sepulveda died intestate and was survived by his wife, Paz Velez Sepulveda and their
then minor children.10 It was pointed out that the private respondent failed to implead Paz Sepulveda and her minor children as partiesdefendants in the complaint.
It was further claimed that Pedro Sepulveda, Sr. declared the property covered by T.D. No. 18199 11 under his name for taxation purposes since
the beginning of 1948.12 It was likewise alleged that the eleven (11) parcels of land deeded to Dulce under the Project of Partition had been
declared for taxation purposes under the name of Pedro Sepulveda since 1974, and that he and his heirs paid the realty taxes thereon. 13
On June 7, 1993, the trial court rendered judgment14 in favor of the private respondent. The fallo of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against the defendant by declaring that the plaintiff is
legally and rightfully entitled to the one half (1/2) portion of the two (2) parcels of land described in paragraph 2 of the Complaint and to the
one third (1/3) portion of the nine (9) parcels of land described in paragraph 3 of the complaint as co-owner thereof, and ordering the partition
and segregation of the said one half (1/2) portion of the said two (2) parcels of land and of the said one third (1/3) portion of the nine (9)
parcels of land, and in the partition thereof, the mechanics of partition outlined in Rule 69 of the Revised Rules of Court must be followed
(Magallon vs. Montejo, 146 SCRA 282); ordering the defendant Socorro Lawas, as administratrix of the Estate of Pedro Sepulveda, Sr., to
deliver to plaintiff the latters one third (1/3) share of theP7,492.00 representing the purchase price of the parcel of land sold to Danao City
with interest of twelve [per] centum (12%) per annum (Reformina vs. Tomol, 139 SCRA 260) from the date of filing of the Complaint until the
amount due to plaintiff is fully paid, to pay attorneys fees to plaintiffs attorney in the sum of P10,000.00, and to pay the costs. The
counterclaim is hereby dismissed.
SO ORDERED.15
The trial court ruled that the private respondents action for reconveyance based on constructive trust had not yet prescribed when the
complaint was filed; that he was entitled to a share in the proceeds of the sale of the property to Danao City; and that the partition of the
subject property among the adjudicatees thereof was in order.
The petitioner appealed the decision to the CA, which rendered judgment on January 31, 2002, affirming the appealed decision with
modification.
The petitioner now comes to the Court via a petition for review on certiorari, contending that the appellate court erred as follows:
1. THE COURT OF APPEALS ERRED IN THE INCORRECT APPLICATION OF ART. 494 OF THE CIVIL CODE AND IN UPHOLDING THE REGIONAL TRIAL
COURTS FINDING THAT A TRUST RELATIONSHIP WAS CREATED BETWEEN HEREIN RESPONDENT AND PEDRO SEPULVEDA [SR.].
2. THE COURT OF APPEALS ERRED IN NOT APPLYING THE LAWS ON PRESCRIPTION AND LACHES TO THE FACTS AS PROVEN IN THE CASE
AGAINST HEREIN RESPONDENT.
3. THE COURT OF APPEALS ERRED IN UPHOLDING THE FINDING OF THE REGIONAL TRIAL COURT, BRANCH 25 IN DANAO CITY THAT PAYMENT
WAS MADE BY DANAO CITY FOR ONE (1) OF THE ELEVEN (11) PARCELS INVOLVED IN THE CASE AND OF WHICH HEREIN RESPONDENT SHOULD
BE PAID BY PETITIONER ONE THIRD (1/3) OF THE PURCHASE PRICE.
4. THE COURT OF APPEALS ERRED IN AWARDING MORAL AND EXEMPLARY DAMAGES AND A SHARE IN THE RENTS AND PROFITS OF THE
ELEVEN (11) PARCELS TO HEREIN RESPONDENT.
5. THE COURT OF APPEALS ERRED IN UPHOLDING THE REGIONAL TRIAL COURTS FINDING THAT ATTORNEYS FEES ARE TO BE AWARDED AND
EVEN INCREASING THE AMOUNT THEREOF. 16
The petition is granted for the sole reason that the respondent failed to implead as parties, all the indispensable parties in his complaint.
As gleaned from the material averments of the complaint and the reliefs prayed for therein, the private respondent, as plaintiff therein, sought
the recovery of the ownership and possession of the ten (10) parcels of land and the partition thereof; and for the payment of his share in the
proceeds of the sale of the property which Pedro Sepulveda, Sr. sold to Danao City amounting to P7,492.00, which Pedro Sepulveda, Sr.
claimed was left unpaid. It appears that when the private respondent filed the complaint, his father, Rodolfo Pelaez, was still alive. Thus, when
his mother Dulce Pelaez died intestate on March 2, 1944, she was survived by her husband Rodolfo and their son, the private respondent.
Under Article 996 of the New Civil Code,17 Rodolfo Pelaez, as surviving spouse, is entitled to a portion in usufruct equal to that corresponding
by way of legitime to each of the legitimate children who has not received any betterment. The rights of the usufructuary are provided in
Articles 471 to 490 of the old Civil Code.18 In Gamis v. Court of Appeals,19 we held that:
Under articles 807 and 834 of the old Civil Code the surviving spouse is a forced heir and entitled to a share in usufruct in the estate of the
deceased spouse equal to that which by way of legitime corresponds or belongs to each of the legitimate children or descendants who have
not been bettered or have not received any share in the one-third share destined for betterment. The right of the surviving spouse to have a
share in usufruct in the estate of the deceased spouse is provided by law of which such spouse cannot be deprived and which cannot be
ignored. Of course, the spouse may waive it but the waiver must be express.

Section 1, Rule 69 of the Rules of Court provides that in an action for partition, all persons interested in the property shall be joined as
defendants.
Section 1. Complaint in action for partition of real estate.- A person having the right to compel the partition of real estate may do so as in this
rule prescribed, setting forth in his complaint the nature and extent of his title and an adequate description of the real estate of which partition
is demanded and joining as defendants all the other persons interested in the property.
Thus, all the co-heirs and persons having an interest in the property are indispensable parties; as such, an action for partition will not lie
without the joinder of the said parties. 20 The mere fact that Pedro Sepulveda, Sr. has repudiated the co-ownership between him and the
respondent does not deprive the trial court of jurisdiction to take cognizance of the action for partition, for, in a complaint for partition, the
plaintiff seeks, first, a declaration that he is a co-owner of the subject property; and, second, the conveyance of his lawful shares. 21 As the
Court ruled in De Mesa v. Court of Appeals:22
The first stage of an action for judicial partition and/or accounting is concerned with the determination of whether or not a co-ownership in fact
exists and a partition is proper, that is, it is not otherwise legally proscribed and may be made by voluntary agreement of all the parties
interested in the property. This phase may end in a declaration that plaintiff is not entitled to the desired partition either because a coownership does not exist or a partition is legally prohibited. It may also end, on the other hand, with an adjudgment that a co-ownership does
in truth exist, that partition is proper in the premises, and that an accounting of rents and profits received by the defendant from the real
estate in question is in order. In the latter case, "the parties may, if they are able to agree, make partition among themselves by proper
instruments of conveyance, and the court shall confirm the partition so agreed upon by all the parties." In either case, whether the action is
dismissed or partition and/or accounting is decreed, the order is a final one and may be appealed by any party aggrieved thereby.
The second stage commences when the parties are unable to agree upon the partition ordered by the court. In that event, partition shall be
effected for the parties by the court with the assistance of not more than three (3) commissioners. This second phase may also deal with the
rendition of the accounting itself and its approval by the Court after the parties have been accorded the opportunity to be heard thereon, and
an award for the recovery by the party or parties thereto entitled of their just shares in the rents and profits of the real estate in question.23
In the present action, the private respondent, as the plaintiff in the trial court, failed to implead the following indispensable parties: his father,
Rodolfo Pelaez; the heirs of Santiago Sepulveda, namely, Paz Sepulveda and their children; and the City of Danao which purchased the
property covered by T.D. 19804 (T.D. No. 35090) from Pedro Sepulveda, Sr. and maintained that it had failed to pay for the purchase price of
the property.
Rodolfo Pelaez is an indispensable party he being entitled to a share in usufruct, equal to the share of the respondent in the subject properties.
There is no showing that Rodolfo Pelaez had waived his right to usufruct.
Section 7, Rule 3 of the Rules of Court reads:
SEC. 7. Compulsory joinder of indispensable parties. Parties in interest without whom no final determination can be had of an action shall be
joined either as plaintiffs or defendants.
Indeed, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power. It is precisely when an
indispensable party is not before the court that the action should be dismissed. Thus, the plaintiff is mandated to implead all the indispensable
parties, considering that the absence of one such party renders all subsequent actions of the court null and void for want of authority to act,
not only as to the absent parties but even as to those present. 24 One who is a party to a case is not bound by any decision of the court,
otherwise, he will be deprived of his right to due process. Without the presence of all the other heirs as plaintiffs, the trial court could not
validly render judgment and grant relief in favor of the private respondent. The failure of the private respondent to implead the other heirs as
parties-plaintiffs constituted a legal obstacle to the trial court and the appellate courts exercise of judicial power over the said case, and
rendered any orders or judgments rendered therein a nullity. 25
To reiterate, the absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not
only as to the absent parties but even as to those present. 26 Hence, the trial court should have ordered the dismissal of the complaint. 27
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of Appeals in CA-G.R. CV No. 43758 and of the
Regional Trial Court are SET ASIDE. The Regional Trial Court is ORDERED to dismiss the complaint without prejudice. No pronouncement as to
costs. SO ORDERED.
Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 129704 September 30, 2005
ULPIANO BALO, LYDIA BALO-LUMPAS, EUGENIO BALO, ULPIANO BALO, JR., NIDA BALO-MORALETA, NORA BALO-CATANO, ZAIDA
BALO, JUDITH BALO-MANDREZA, DANILO BALO and RONILO BALO,Petitioners,
vs.
vs.
THE HON. COURT OF APPEALS, HON. JUDGE ENRIQUE ASIS and JOSEFINA GARRIDO, Respondent.
DECISION
CHICO-NAZARIO, J.:
A complaint for Judicial Partition of Real Properties and Accounting with Damages, docketed as Civil Case No. 279, was filed by private
respondent Josefina Garrido against petitioners Ulpiano Balo, Lydia Balo-Lumpas, Eugenio Balo, Ulpiano Balo, Jr., Nida Balo-Moraleta, Nora
Balo-Catano, Zaida Balo, Judith Balo-Mandreza, Danilo Balo and Ronilo Balo, before the Regional Trial Court (RTC) of Abuyog, Leyte, Branch 10,
alleging that she (private respondent) and petitioners are the co-owners of undivided parcels of land located at Mayorga, Leyte. According to
her, these lands were originally owned by the spouses Eugenio Balo, Sr. and Ma. Pasagui-Balo, who, at the time of the filing of the complaint,
were already deceased. The Balo spouses were survived by their two (2) children, Ulpiano, Sr. and Maximino, the latter likewise deceased.
Private respondent is the daughter of Maximino Balo and Salvacion Sabulao. Petitioner Ulpiano Balo is the son of Eugenio Balo, Sr., while the
other petitioners, the children of Ulpiano, are Eugenios grandchildren.
Private respondent further alleged in her complaint that immediately upon the death of her grandfather, Eugenio Sr., the petitioners took
possession of the said real properties without her knowledge and consent. The petitioners being her uncle and cousins, private respondent

earnestly requested them that they come up with a fair and equal partition of the properties left by her grandparents. The petitioners having
outrightly refused her proposal, private respondent filed the complaint. 1
In lieu of an Answer, petitioners filed a Motion to Dismiss 2 on the following grounds:
1. Failure to state a cause of action - plaintiff, though she claims to be a daughter of Maximino who died sometime in 1946, failed to allege
whether or not she is a legitimate child. Plaintiffs failure to allege legitimacy is fatal considering the provision of Article 992 of the Civil
Code.3 To allow Plaintiff to inherit from the estate of the spouses Eugenio and Maria Balo in representation of her father Maximino Balo would
be to permit intestate succession by an illegitimate child from the legitimate parent of his father, assuming that she is the child of Maximino
Balo.
2. The complaint does not show that the estate of the spouses Eugenio and Maria Balo have been settled and its obligations have been paid.
3. The properties enumerated in the Complaint were proceeded against by way of execution to satisfy a judgment against Eugenio and Maria
Balo. Subsequently, defendant Ulpiano repurchased the said properties and has been, together with his children, openly, exclusively and
adversely in possession of the real estate properties in question.
Private respondent filed her comment/opposition to the motion to dismiss. 4
In an Order dated 12 September 1996, the RTC denied the motion to dismiss for lack of merit. 5 The trial court held:
The complaint clearly states that the late Eugenio Balo, Sr., and Maria Pasagui Balo had two (2) children, namely: Ulpiano, Sr. and Maximino.
The plaintiff is the daughter of the late Maximino Balo and Salvacion Sabulao; while the defendants are children of the late Ulpiano Balo, Sr.
and Felicidad Superio.
The complaint enumerates/annexes 13 tax declarations in the name of Eugenio Balo, Sr. marked as Annexes "A" to "M." The plaintiff as an heir
prays that these parcels of land be partitioned in accordance with Article 982 of the Civil Code which states:
"The grandchildren and other descendants shall inherit by right of representation, and if any one of them should have died, leaving several
heirs, the portion pertaining to him shall be divided among the latter in equal portions."
No evidence may be alleged or considered to test the sufficiency of the complaint except the very facts pleaded therein. It would be improper
to inject into the allegation, facts not alleged and use them as basis for the decision on the motion.
The Court is not permitted to go beyond and outside of the allegations in the complaint for data or facts.
Therefore, the allegation of illegitimacy and claim of absolute ownership are modifications and unreasonable inferences. If there is doubt to the
truth of the facts averred in the complaint, the Court does not dismiss the complaint but requires an answer and proceeds to hear the case on
the merit.6
Petitioners filed a Motion for Reconsideration 7 which the RTC denied in its Order8 dated 07 November 1996.
Petitioners filed a Petition for Certiorari9 before the Court of Appeals. After the filing of Comment and other pleadings, the case was deemed
submitted for decision. In a resolution dated 16 April 1997, the Court of Appeals denied due course to the petition and accordingly dismissed
the same. The Court of Appeals justified the dismissal in the following manner:
It is an established rule that an order denying a motion to dismiss is basically interlocutory in character and cannot be the proper subject of a
petition for certiorari. When a motion to dismiss is denied, the proper procedure is to proceed with the trial and if the decision be adverse to
the movant, the remedy is to take an appeal from said decision, assigning as one of the errors therefore the denial of the motion to dismiss. 10
Petitioners filed a Motion for Reconsideration 11 which the Court of Appeals denied in a resolution dated 30 June 1997. 12 Hence this petition for
review13 under Rule 45 of the Rules of Court.
Petitioners cite the following grounds for the allowance of their petition, to wit:
I
WHETHER OR NOT THE FAILURE TO ALLEGE THE NATURE AND EXTENT OF PLAINTIFFS TITLE IN A PETITION FOR PARTITION IS FATAL TO ITS
CAUSE OF ACTION.
II
WHETHER OR NOT THE ACTION FOR JUDICIAL PARTITION AND ACCOUNTING HAS PRESCRIBED, WAS WAIVED, OR WAS OTHERWISE
14
ABANDONED.
At the threshold of the instant petition for review is the correctness of the appellate courts dismissal of the petition for certiorari filed by the
petitioners.
In resolving to deny the petition, the Court of Appeals relied on the long established jurisprudence that an order denying a motion to dismiss is
interlocutory and cannot be the proper subject of a petition forcertiorari.
The general rule regarding denial of a motion to dismiss as a basis of a resort to the extraordinary writ ofcertiorari is that:
. . . [A]n order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case as it leaves
something to be done by the court before the case is finally decided on the merits. As such, the general rule is that the denial of a motion to
dismiss cannot be questioned in a special civil action for certiorari which is a remedy designed to correct errors of jurisdiction and not errors of
judgment.
To justify the grant of the extraordinary remedy of certiorari, therefore, the denial of the motion to dismiss must have been tainted with grave
abuse of discretion. By "grave abuse of discretion" is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act all in contemplation of law. 15
Specific instances whereby the rule admits certain exceptions are provided as follows:
. . . Under certain situations, recourse to certiorari or mandamus is considered appropriate, i.e., (a) when the trial court issued the order without
or in excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or (c) appeal would not prove to be a speedy
and adequate remedy as when an appeal would not promptly relieve a defendant from the injurious effects of the patently mistaken order
maintaining the plaintiffs baseless action and compelling the defendant needlessly to go through a protracted trial and clogging the court
dockets by another futile case. 16

Applying the foregoing, the Court of Appeals should not have dismissed the petition outright as the same alleges grave abuse of discretion.
Instead, it should have proceeded to determine whether or not the trial court did commit grave abuse of discretion as alleged by the
petitioners. The Court of Appeals having failed in this regard, it behooves upon this Court to discuss the merits of the petition to put to rest the
issues raised by the petitioners.
Contrary to petitioners contention, allegations sufficient to support a cause of action for partition may be found in private respondents
complaint.17
Nothing is more settled than the rule that in a motion to dismiss for failure to state a cause of action, the inquiry is into the sufficiency, not the
veracity, of the material allegations.18 Moreover, the inquiry is confined to the four corners of the complaint, and no other. 19
In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court for determination is the sufficiency of
the allegations made in the complaint to constitute a cause of action and not whether those allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint.
The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts alleged, the court could render a valid
judgment upon the same in accordance with the prayer of the complaint. (Garcon vs. Redemptorist Fathers, 17 SCRA 341)
If the allegations of the complaint are sufficient in form and substance but their veracity and correctness are assailed, it is incumbent upon the
court to deny the motion to dismiss and require the defendant to answer and go to trial to prove his defense. The veracity of the assertions of
the parties can be ascertained at the trial of the case on the merits. (Galeon vs. Galeon, 49 SCRA 516-521) 20
Section 1, Rule 8 of the 1997 Rules of Civil Procedure provides that the complaint needs only to allege the ultimate facts upon which private
respondent bases her claim.
The rules of procedure require that the complaint must make a concise statement of the ultimate facts or the essential facts constituting the
plaintiffs cause of action. A fact is essential if it cannot be stricken out without leaving the statement of the cause of action inadequate. A
complaint states a cause of action only when it has its three indispensable elements, namely: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such defendant violate of the right of plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. 21
In her Complaint, the private respondent made the following assertions:
. . . That the afore-described parcels of lands were originally owned by Eugenio Balo, Sr. and Ma. Pasagui-Balo, who are now both deceased
and after their death, were inherited into two (2) equal shares by their two (2) children, namely: Ulpiano, Sr. and Maximino, both surnamed
Balo, the later (sic) being already dead.
That plaintiff is the daughter of the late Maximino Balo and Salvacion Sabulao, who after her fathers death, had inherited her fathers share of
the inheritance.
That defendant Ulpiano Balo, Sr. aside from being the son of Eugenio Balo, Sr., is married to Felicidad Superio, and is the father of all the other
defendants in this case.
The defendants took possession of the above-described real properties immediately after the death of plaintiffs grandfather Eugenio Balo, Sr.
without her knowledge and consent.
That plaintiff is desirous that the above-described real properties be partitioned between her and defendants.
That plaintiff has proposed to the defendants that the above-described real properties be amicably partitioned between them by mutual
agreement in a very fair and practical division of the same, but said defendants refused and continue to do so without any justifiable cause or
reason to accede to the partition of the said properties. 22
The foregoing allegations show substantial compliance with the formal and substantial requirements of a Complaint for Partition as required
under Section 1, Rule 69 of the 1997 Rules of Civil Procedure. 23
On the insistence of petitioners that private respondent first prove her legitimacy before an action for partition may be maintained, this Court,
in the case of Briz v. Briz,24 pronounced that proof of legal acknowledgment is not a prerequisite before an action for partition may be filed. We
said:25
. . . In other words, there is no absolute necessity requiring that the action to compel acknowledgment should have been instituted and
prosecuted to a successful conclusion prior to the action in which that same plaintiff seeks additional relief in the character of heir. Certainly,
there is nothing so peculiar to the action to compel acknowledgment as to require that a rule should be here applied different from that
generally applicable in other cases. For instance, if the plaintiff had in this action impleaded all of the persons who would be necessary parties
defendant to an action to compel acknowledgement, and had asked for relief of that character, it would have been permissible for the court to
make the judicial pronouncement declaring that the plaintiff is entitled to be recognized as the natural child of Maximo Briz, and at the same
time to grant the additional relief sought in this case against the present defendants; that is, a decree compelling them to surrender to the
plaintiff the parcel of land sued for and to pay her the damages awarded in the appealed decision.
The conclusion above stated, though not heretofore explicitly formulated by this court, is undoubtedly to some extent supported by our prior
decisions. Thus, we have held in numerous cases, and the doctrine must be considered well settled, that a natural child having a right to
compel acknowledgment, but who has not been in fact legally acknowledged, may maintain partition (proceedings for the division of the
inheritance against his coheirs (Siguiong vs. Siguiong, 8 Phil. 5; Tiamson vs. Tiamson, 32 Phil 62); and the same person may intervene in
proceedings for the distribution of the estate of his deceased natural father, or mother (Capistrano vs. Fabella, 8 Phil. 135; Conde vs. Abaya,
13 Phil. 249; Ramirez vs. Gmur, 42 Phil 855). In neither of these situations has it been thought necessary for the plaintiff to show a prior
decree compelling acknowledgment. The obvious reason is that in partition suits and distribution proceedings the other persons who might
take by inheritance are before the court; and the declaration of heirship is appropriate to such proceedings.
To further reiterate that in partition proceedings, dismissal prior to answer is premature, this Court has held:
In a complaint for partition, the plaintiff seeks, first, a declaration that he is a co-owner of the subject properties; and second, the conveyance
of his lawful shares. As the Court of Appeals correctly held, an action for partition is at once an action for declaration of co-ownership and for
segregation and conveyance of a determine portion of the properties involved. If the defendant asserts exclusive title over the property, the
action for partition should not be dismissed. Rather, the court should resolve the case and if the plaintiff is unable to sustain his claimed status
as a co-owner, the court should dismiss the action, not because the wrong remedy was availed of, but because no basis exists for requiring the

defendant to submit to partition. If, on the other hand, the court after trial should find the existence of co-ownership among the parties, the
court may and should order the partition of the properties in the same action. 26
The case of Vda. De Daffon v. Court of Appeals27 is almost most appropriate. In said case, the action for partition filed by the plaintiffs was met
by a motion to dismiss filed by the defendants based on the grounds of failure of the complaint to state a cause of action, waiver,
abandonment and extinguishment of the obligation. The trial court denied the motion to dismiss and the denial was affirmed by the appellate
court and by this Court. We held there that the trial court and the Court of Appeals were correct in dismissing the petition for certiorari absent
a clear showing of grave abuse of discretion amounting to lack or excess of jurisdiction. We further expressed our dismay over the delay in the
resolution of the said case due to the fact that the issue of the denial of the Motion to Dismiss was elevated to this Court by petitioner and
counsel instead of just filing an Answer and meeting the issues head-on.
On the matter of prescription cited by the petitioners as a ground for the dismissal of the complaint, it is noteworthy that the motion to dismiss
filed by the petitioners did not ipso facto establish prescription. An allegation of prescription can effectively be used in a motion to
dismiss only when the complaint on its face shows that indeed the action has already prescribed; 28 otherwise, the issue of prescription is one
involving evidentiary matters requiring a full-blown trial on the merits and cannot be determined in a mere motion to dismiss. 29
Wherefore, premises considered, the instant Petition is DENIED and the decision of the Court of Appeals in CA-G.R. SP No. 42803, affirming the
Order of the Regional Trial Court dated 12 September 1996, is affirmed. This case is ordered remanded to the court of origin which is directed
to resolve the case with dispatch. Costs against petitioners.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 109963 October 13, 1999
HEIRS OF JOAQUIN TEVES: RICARDO TEVES, ARCADIA TEVES, TOMAS ZAMORA, FELICIA TEVES, HELEN TEVES, ALFREDO
OSMEA, ROBERTO TEVES, JOAQUIN TEVES, III, PETER TEVES, MILDRED TEVES, WILSON MABILOG, LEONILO PATIGAYON,
EDUARDO PATIGAYON, ALEXANDER PATIGAYON, ALDRIN PATIGAYON, NOEL PATIGAYON, VICTOR PATIGAYON, MA. TEVES PATERNO
OCHOTORENA, EXEQUILA TEVES, EMILIO JO, EMILIANA TEVES, MILAGROS TEVES, EDSEL PINILI, VICENTE TEVES, EMILIANA ISO,
ALBERTO TEVES, ERLINDA TEVES, DIOSDADO TEVES, VICTORIA TEVES AND VIVENCIO NARCISO,petitioners,
vs.
COURT OF APPEALS, HEIRS OF ASUNCION IT-IT NAMELY: ELISA IT-IT, SUSANA IT-IT, NORBERTO IT-IT, ISA-AC IT-IT, JR., JAIME IT-IT,
FELICITAS IT-IT, TERESITA IT-IT, ANTONIO NODADO, CORAZON IT-IT, JIMMY LERO, DANILO IT-IT, EDITA GAMORA, PACITA
VAILOCES, CRIS VAILOCES, CECILIA CIMAFRANCA and CECILIA FLOR CIMAFRANCA, respondents.
GONZAGA-REYES, J.:
Before us is a petition for review on certiorari assailing the decision 1 of the Court of Appeals which was promulgated on August 18, 1992
affirming the July 11, 1991 decision 2 of Branch 38 of the Regional Trial Court of Negros Oriental in favor of defendants-appellees.
The facts, as culled from the pleadings of the parties herein and the decision of the lower courts, are as follows:
Marcelina Cimafranca and Joaquin Teves had nine children, namely Teotimo, Felicia, Pedro, Andres, Asuncion, Gorgonio, Cresenciano, Arcadia
and Maria. Andres, however, predeceased both his parents and died without issue. After Marcelina Cimafranca and Joaquin Teves died,
intestate and without debts, in 1943 and 1953, respectively, their children executed extrajudicial settlements purporting to adjudicate unto
themselves the ownership over two parcels of land belonging to their deceased parents and to alienate their shares thereto in favor of their
sister Asuncion Teves. The validity of these settlements executed pursuant to section 1 of Rule 74 of the Rules of Court is the primary issue in
the present case.1wphi1.nt
On May 9, 1984, plaintiffs-appellants Ricardo and Arcadia Teves filed a complaint with the Regional Trial Court of Negros Oriental for the
partition and reconveyance of two parcels of land located in Dumaguete, designated as Lots 769-A and 6409, against the heirs of Asuncion
Teves. The complaint was subsequently amended to include Maria Teves and the heirs of Teotimo, Felicia, Pedro, and Gorgonio Teves as
plaintiffs and the spouses Lucresio Baylosis and Pacita Nocete, and Cecilia Cimafranca-Gamos and Cecilia Flor Cimafranca as
defendants. 3 Plaintiffs-appellants alleged that defendants-appellees, without any justifiable reason, refused to partition the said parcels of land
and to convey to plaintiffs their rightful shares. 4
Lot 769, covered by Original Certificate of Title (OCT) No. 4682-A, 5 is registered in the names of Urbana Cimafranca, one-fourth (1/4) share,
Marcelina Cimafranca, the wife of Joaquin Teves, one-fourth (1/4) share, Domingo Villahermosa, one-eighth (1/8) share, Antero Villahermosa,
one-eighth (1/8) share, Cecilia Cimafranca, one-eighth (1/8) share and Julio Cimafranca, one-eighth (1/8) share. The present controversy
involves only Marcelina Cimafranca's one-fourth (1/4) share in the land, designated as Lot 769-A.
On June 13, 1956, Teotimo, Felicia, Pedro, Asuncion, Gorgonio and Arcadia Teves executed a document entitled "Settlement of Estate and
Sale," 6 adjudicating unto themselves, in equal shares, Lot 769-A and conveying their shares, interests and participations over the same in
favor of Asuncion Teves for the consideration of P425.00. A similar deed denominated "Extrajudicial Settlement and Sale" 7 was signed by
Maria Teves on April 21, 1959. Under such deed, Maria conveys her own share over Lot 769-A in favor of Asuncion Teves for the consideration
of P80.00. The two settlements were denounced by the plaintiffs as spurious. The trial court summarized the claims of the plaintiffs, viz
. . . Maria Teves Ochotorena herself, denied having executed this Extrajudicial Settlement and Sale over
her share or interest in Lot 769 claiming that her signature in said document is a forgery. She disowns
her signature declaring that as a married woman she always signs a document in her husband's family
name. Further, she declared that on the date she purportedly signed said document in Dumaguete City
before the notary public, she was in her home in Katipunan, Zamboanga del Norte.
On Exhibit "G" which is likewise offered as Exhibit "3" for the defendants, plaintiffs hold that said
document is spurious claiming that the signatures of Pedro Teves, Felicia Teves and Gorgonio Teves are
all forgeries. To support this allegation, Helen T. Osmena, daughter of Felicia Teves and Erlinda Teves,
daughter of Gorgonio Teves were presented as witnesses. Being allegedly familiar with the style and
character of the handwriting of their parents these witnesses declared unequivocally that the signatures
of their parents appearing on the document are forgeries.
In sum, plaintiffs argue that these fraudulent documents which defendants rely in claiming ownership to
the disputed properties are all nullities and have no force in law and could not be used as basis for any
legal title. Consequently, in their view, they are entitled to the reliefs demanded particularly, to their
respective shares of the disputed properties. 8
The other property in dispute is Lot 6409 which was originally covered by OCT No. 9091 9 and was registered in the name of Joaquin Teves and
his two sisters, Matea and Candida Teves. However, Matea and Candida died without issue, causing the entire property to pass to Joaquin
Teves. On December 14, 1971, Lot 6409 was adjudicated and divided in equal shares in a "Deed of Extrajudicial Settlement & Sale" 10 executed
by Joaquin Teves' children Asuncion, Teotimo, Felisia, Gorgonio, Arcadia and Maria Teves. In the same deed, the shares of these same heirs
in Lot 6409 were sold to Asuncion Teves for P100.00. Asuncion Teves took possession of the land and acquired title 11 over the same on March
22, 1972. After her death in 1981, her children, defendants-appellees It-it herein, extrajudicially settled Asuncion Teves' property, adjudicating
unto themselves Lot 6409. 12 On July 20, 1983 a new transfer certificate of title 13 was issued in the names of Asuncion Teves' children, namely
Elisa, Susana, Norberto, Isaac, Jaime, Felicitas, Teresita, Corazon, and Danilo, all surnamed It-it. On July 2, 1984, the It-its sold Lot 6409 to
defendants-appellees Lucrecio Baylosis, Sr. and Pacita Nocete-Baylosis for P20,000.00 14 and a transfer certificate of title 15 was issued in the
name of the Baylosis couple.
Plaintiffs-appellants claim that the Deed of Extrajudicial Settlement & Sale covering Lot 6409 is also spurious. Their arguments were discussed
in the trial court's decision as follows

Presented as Exhibit "D" and "1" for both the plaintiffs and defendants respectively, is a document denominated as
"Extrajudicial Settlement and Sale" executed on December 4, 1971 by and among the heirs of Joaquin Teves and Marcelina
Cimafranca. This document which gave birth to TCT No. 5761 over Lot 6409 registered in the name of Asuncion Teves It-it is
questioned by the plaintiffs as spurious for the following reasons:
1. Erasure of the word "quitclaim" is superimposed with the word "sale" in handwriting.
2. The consideration of "One peso" stated in document is intercalated with the word "hundred" in
handwriting.
3. The signature of Maria Teves Ochotorena, Pedro Teves and Felicia Teves are forgeries.
4. The thumbmark imposed on the name of Gorgonio Teves does not actually belong to Gorgonio Teves
who was an educated man and skilled in writing according to his daughter.
Aside from these defects which would make said document null and void, Arcadia Teves who is one of the living sisters of
the mother of the principal defendants although confirming the authenticity of her signature averred that in reality no
consideration was ever given to her and that her impression of the said document was that she was only giving her consent
to sell her share of the land.
Plaintiffs likewise contend that as regards the share of Ricardo Teves, son of Crescenciano Teves who predeceased Joaquin
and Marcelina, it was not at all affected in that extrajudicial settlement and sale since neither Crescenciano Teves nor his
son Ricardo Teves participated in its execution.
xxx xxx xxx
Likewise, plaintiffs offered TCT No. 5761 for Lot 6409 registered in the name of Asuncion Teves It-it as Exhibit "B" as proof
that said property was later titled in trust for all the heirs of Joaquin Teves and which was used later as basis in effecting a
deed of sale in favor of co-defendant Lucresio Baylosis. In this light, the plaintiffs argue that the sale of said property is a
nullity for it was not only attended with bad faith on the part of both the vendor and the vendee but primarily the vendor
had no right at all to part with said property which is legally owned by others. 16
In answer to plaintiffs-appellants' charges of fraud, defendants-appellees maintained that the assailed documents were executed with all the
formalities required by law and are therefore binding and legally effective as bases for acquiring ownership or legal title over the lots in
question. Furthermore, it is contended that plaintiffs-appellants have slept on their rights and should now be deemed to have abandoned such
rights. 17
The trial court ruled in favor of defendants-appellees and rendered judgment dismissing the complaint with costs against plaintiffs-appellants.
As regards Lot 6409, the court declared that the Extrajudicial Settlement and Sale executed by the heirs of Joaquin Teves and Marcelina
Cimafranca was duly executed with all the formalities required by law, thus, validly conveying Lot 6409 in favor of Asuncion Teves. Moreover, it
stated that, even granting the truth of the imputed infirmities in the deed, the right of plaintiffs-appellants to bring an action for partition and
reconveyance was already barred by prescription. An action for the annulment of a partition must be brought within four years from the
discovery of the fraud, while an action for the reconveyance of land based upon an implied or constructive trust prescribes after ten years
from the registration of the deed or from the issuance of the title. The complaint in this case was filed on May 9, 1984, exactly 12 years, 1
month and 17 days after the issuance of the transfer certificate of title in the name of Asuncion Teves on March 22, 1972. Thus, ownership
over Lot 6409 rightfully belonged to defendants-appellees It-it.
Moreover, the trial court held that the extrajudicial settlements over both Lots 6409 and 769, having been prepared and acknowledged before
a notary public, are public documents, vested with public interest, the sanctity of which deserves to be upheld unless overwhelmed by clear
and convincing evidence. The evidence presented by the plaintiffs to support their charges of forgery was considered by the court insufficient
to rebut the legal presumption of validity accorded to such documents. 18
The Court of Appeals upheld the trial court's decision affirming the validity of the extrajudicial statements, with a slight modification. It
disposed of the case, thus
WHEREFORE, premises considered, the decision appealed from is AFFIRMED with the modification in that herein defendantappellees are hereby ORDERED to partition Lot 769-A and deliver to plaintiff-appellant Ricardo Teves one-eight (sic) (1/8)
portion thereof corresponding to the share of his deceased father Cresenciano Teves. No costs.
The appellate court said that plaintiffs-appellants' biased and interested testimonial evidence consisting of mere denials of their signatures in
the disputed instruments is insufficient to prove the alleged forgery and to overcome the evidentiary force of the notarial documents. It also
ruled that the plaintiffs-appellants' claim over Lot 6409 was barred by prescription after the lapse of ten years from the issuance of title in
favor of Asuncion Teves, while their claim over Lot 769-A is barred by laches since more than 25 years has intervened between the sale to
Asuncion Teves and the filing of the present case in 1984.
The appellate court noted that the conveyance of Lot 769-A in favor of Asuncion Teves did not affect the share of Cresenciano Teves as he was
not a signatory to the settlements. It also found that Ricardo Teves, Cresenciano's heir, is in possession of a portion of Lot 769-A and that
defendants-appellees do no not claim ownership over such portion. Thus, the defendants-appellees It-it were ordered to partition and convey
to Ricardo Teves his one-eighth share over Lot 769-A.1wphi1.nt
As regards the extrajudicial settlement involving Lot 6409, although it was found by the appellate court that Cresenciano Teves was also not a
signatory thereto, it held that it could not order the reconveyance of the latter's share in such land in favor of his heir Ricardo Teves because
Cresenciano had predeceased Joaqin Teves. Moreover, Ricardo Teves, by a deed simply denominated as "Agreement" executed on September
13, 1955 wherein he was represented by his mother, authorized the heirs of Joaquin Teves to sell his share in Lot 6409. 19
Plaintiffs-appellants assailed the appellate court's decision upon the following grounds
I. IN CONSIDERING RICARDO TEVES AS BOUND BY THE SIGNATURE OF HIS MOTHER, INSPITE OF DEATH OF CRESENCIANO
TEVES IN 1944; AND UNDER THE OLD CIVIL CODE THE SPOUSE CANNOT INHERIT EXCEPT THE USUFRUCT;
II. IN UPHOLDING SWEEPINGLY THE PRESUMPTION OF REGULARITY OF NOTARIZED DEED, DESPITE CLEAR, CONVINCING,
SUBSTANTIAL AND SUFFICIENT EVIDENCE THAT MARIA OCHOTORENA WAS IN MINDANAO; THE NOTARY PULIC DID NOT
KNOW MARIA OCHOTORENA AND THE SIGNATURES OF THE OTHER HEIRS IN THE QUESTIONED DOCUMENT ARE BELIED BY
COMPARISON WITH THE GENUINE SIGNATURE IN EXH. "E";

III. IN VALIDATING THE ONE PESO CONSIDERATION, INSPITE OF NO OTHER VALUABLE CONSIDERATION, THE SUPERIMPOSED
P100 WAS UNILATERALLY INSERTED, SHOWING FICTITIOUS AND SIMULATED CONSIDERATION; AND
IV. PRESCRIPTION DOES NOT START FROM A VOID CONTRACT. 20
We affirm that the extrajudicial settlements executed by the heirs of Joaquin Teves and Marcelina Cimafranca are legally valid and binding.
The extrajudicial settlement of a decedent's estate is authorized by section 1 of Rule 74 of the Rules of Court, which provides in pertinent part
that
If the decedent left no will and no debts and the heirs are all of age, or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may, without securing letters of administration, divide the
estate among themselves as they see fit by means of a public instrument filed in the office of the register of deeds, . . .
xxx xxx xxx
Thus, for a partition pursuant to section 1 of Rule 74 to be valid, the following conditions must concur: (1) the decedent left no will;
(2) the decedent left no debts, or if there were debts left, all had been paid; (3) the heirs are all of age, or if they are minors, the
latter are represented by their judicial guardian or legal representatives; (4) the partition was made by means of a public instrument
or affidavit duly filed with the Register of Deeds. 21
We uphold, finding no cogent reason to reverse, the trial and appellate courts' factual finding that the evidence presented by plaintiffsappellants is insufficient to overcome the evidentiary value of the extrajudicial settlements. The deeds are public documents and it has been
held by this Court that a public document executed with all the legal formalities is entitled to a presumption of truth as to the recitals
contained therein. 22 In order to overthrow a certificate of a notary public to the effect that the grantor executed a certain document and
acknowledged the fact of its execution before him, mere preponderance of evidence will not suffice. Rather, the evidence must be so clear,
strong and convincing as to exclude all reasonable dispute as to the falsity of the certificate. When the evidence is conflicting, the certificate
will be upheld. 23 The appellate court's ruling that the evidence presented by plaintiffs-appellants does not constitute the clear, strong, and
convincing evidence necessary to overcome the positive value of the extrajudicial settlements executed by the parties, all of which are public
documents, being essentially a finding of fact, is entitled to great respect by the appellate court and should not be disturbed on appeal. 24
It is noted that the Deed of Extrajudicial Settlement & Sale covering Lot 6409 purports to divide Joaquin Teves' estate among only six of his
heirs, namely Asuncion, Teotimo, Felisia, Gorgonio, Arcadia and Maria Teves. 25 It does not mention nor bear the signatures of either Pedro or
Cresenciano Teves although they are both intestate heirs of Joaquin Teves and as such, are entitled to a proportionate share of the decedent's
estate. Contrary to the ruling of the appellate court, the fact that Cresenciano predeceased Joaquin Teves does not mean that he or, more
accurately, his heirs, lose the right to share in the partition of the property for this is a proper case for representation, wherein the
representative is raised to the place and degree of the person represented and acquires the rights which the latter would have if he were
living. 26
However, notwithstanding their non-inclusion in the settlement, the action which Pedro and Cresenciano might have brought for the
reconveyance of their shares in the property has already prescribed. An action for reconveyance based upon an implied trust pursuant to
article 1456 of the Civil Code prescribes in ten years from the registration of the deed or from the issuance of the title. 27 Asuncion Teves
acquired title over Lot 6409 in 1972, but the present case was only filed by plaintiffs-appellants in 1984, which is more than 10 years from the
issuance of title. 28
The division of Lot 769-A, on the other hand, was embodied in two deeds. The first extrajudicial settlement was entered into by Teotimo,
Felicia, Pedro, Gorgonio, Arcadia and Asuncion Teves in 1956 29, while the second deed was executed in 1959 by Maria Teves. 30 Cresenciano
was not a signatory to either settlement. However, in contrast to the extrajudicial settlement covering Lot 6409, the two extrajudicial
settlements involving Lot 769-A do not purport to exclude Cresenciano from his participation in Lot 769-A or to cede his share therein in favor
of Asuncion. The settlement clearly adjudicated the property in equal shares in favor of the eight heirs of Marcelina Cimafranca. Moreover, the
deeds were intended to convey to Asuncion Teves only the shares of those heirs who affixed their signatures in the two documents. The
pertinent portions of the extrajudicial settlement executed in 1956, of which substantively identical provisions are included in the 1959 deed,
provide
xxx xxx xxx
5. That by virtue of the right of succession the eight heirs above mentioned inherit and adjudicate unto themselves in equal
shares Lot No. 769-A and our title thereto is evidenced by the O.C. of Title No. 4682-A of the Land Records of Negros
Oriental.
THAT FOR AND IN CONSIDERATION of the sum of FOUR HUNDRED TWENTY-FIVE (P425.00) PESOS, Philippine Currency which
we have received from ASUNCION TEVES; WE, Teotimo, Felicia, Pedro, Gorgonio and Arcadia, all surnamed Teves, do hereby
sell, transfer and convey unto Asuncion Teves, married to Isaac Itit, Filipino, of legal age and resident of and with postal
address in the City of Dumaguete, all our shares, interests and participations over Lot 769-A of the subdivision plan, Psd,
being a portion of Lot No. 769 of the Cadastral Survey of Dumaguete, her heirs, successors and assigns, together with all
the improvements thereon.
xxx xxx xxx
It has even been admitted by both parties that Ricardo Teves is in possession of an undetermined portion of Lot 769-A and
defendants-appellees It-it do not claim ownership over his share in the land. 31 Thus, contrary to the appellate court's ruling, there is
no basis for an action for reconveyance of Ricardo Teves' share since, in the first place, there has been no conveyance. Ricardo Teves
is entitled to the ownership and possession of one-eighth of Lot 769-A.
Neither does Ricardo Teves have a right to demand partition of Lot 769-A because the two extajudicial settlements have already effectively
partitioned such property. Every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a
partition, although it should purport to be a sale, an exchange, a compromise, or any other transaction. 32 The extrajudicial settlements
executed in 1956 and 1959 adjudicated Lot 769-A in equal shares unto the eight heirs of Marcelina Cimafranca. Such a partition, which was
legally made, confers upon each heir the exclusive ownership of the property adjudicated to him. 33 Although Cresenciano, Ricardo's
predecessor-in-interest, was not a signatory to the extrajudicial settlements, the partition of Lot 769-A among the heirs was made in
accordance with their intestate shares under the law. 34
With regards to the requisite of registration of extrajudicial settlements, it is noted that the extrajudicial settlements covering Lot 769-A were
never registered. However, in the case of Vda. de Reyes vs. CA, 35 the Court, interpreting section 1 of Rule 74 of the Rules of Court, upheld the

validity of an oral partition of the decedent's estate and declared that the non-registration of an extrajudicial settlement does not affect its
intrinsic validity. It was held in this case that
[t]he requirement that a partition be put in a public document and registered has for its purpose the protection of creditors
and at the same time the protection of the heirs themselves against tardy claims. The object of registration is to serve as
constructive notice to others. It follows then that the intrinsic validity of partition not executed with the prescribed
formalities does not come into play when there are no creditors or the rights of creditors are not affected. Where no such
rights are involved, it is competent for the heirs of an estate to enter into an agreement for distribution in a manner and
upon a plan different from those provided by law.
Thus, despite its non-registration, the extrajudicial settlements involving Lot 769-A are legally effective and binding among the heirs
of Marcelina Cimafranca since their mother had no creditors at the time of her death.
Except for the portion of Lot 769-A occupied by Ricardo Teves, both parcels of land have been and continue to be in the possession of Asuncion
Teves and her successors-in-interest. 36 Despite this, no explanation was offered by plaintiffs-appellants as to why they instituted the present
action questioning the extrajudicial settlements only in 1984, which is more than 25 years after the assailed conveyance of Lot 769-A and
more than 10 years after the issuance of a transfer certificate of title over Lot 6409, both in favor of Asuncion Teves. Such tardiness
indubitably constitutes laches, which is the negligence or omission to assert a right within a reasonable time, warranting a presumption that
the party entitled to assert it either has abandoned it or declined to assert
it. 37 Thus, even assuming that plaintiffs-appellants had a defensible cause of action, they are barred from pursuing the same by reason of their
long and inexcusable inaction.
An extrajudicial settlement is a contract and it is a well-entrenched doctrine that the law does not relieve a party from the effects of a
contract, entered into with all the required formalities and with full awareness of what he was doing, simply because the contract turned out to
be a foolish or unwise investment. 38 Therefore, although plaintiffs-appellants may regret having alienated their hereditary shares in favor of
their sister Asuncion, they must now be considered bound by their own contractual acts.1wphi1.nt
WHEREFORE, the August 18, 1992 decision of the Court of Appeals is hereby AFFIRMED. No pronouncements as to costs.
SO ORDERED.
Melo, Vitug, Panganiban and Purisima, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G..R. No. 132424

May 2, 2006

SPOUSES BONIFACIO R. VALDEZ, JR. and VENIDA M. VALDEZ, Petitioners,


vs.
HON. COURT OF APPEALS, SPOUSES GABRIEL FABELLA and FRANCISCA FABELLA, Respondents.
DECISION
CHICO-NAZARIO, J.:
This petition for review under Rule 45 of the Rules of Court, filed by petitioners spouses Bonifacio R. Valdez, Jr. and Venida M. Valdez, seeks to
nullify and set aside the 22 April 1997 decision 1 and 30 January 1998 resolution of the Court of Appeals in CA-G.R. SP No. 43492, which
reversed the judgment, dated 8 January 1997, of the Regional Trial Court of Antipolo, Rizal, Branch 74, in Civil Case No. 3607, which, in turn,
affirmed in toto the decision rendered by the Municipal Trial Court of Antipolo, Rizal, Branch II, in Civil Case No. 2547.
This case originated from a complaint for unlawful detainer filed by petitioners Bonifacio and Venida Valdez against private respondents
Gabriel and Francisca Fabella before the Municipal Trial Court of Antipolo, Rizal. The complaint alleges these material facts:
2. That plaintiffs are the registered owner[s] of a piece of residential lot denominated as Lot [N]o. 3 Blk 19 located at Carolina
Executive Village, Brgy. Sta. Cruz, Antipolo, Rizal which [they] acquired from Carolina Realty, Inc. Sometime [i]n November 1992 by
virtue of Sales Contract, xerox copy of which is hereto attached marked as Annex "A" and the xerox copy of the Torrens Certificate of
Title in her name marked as Annex "B";
3. That defendants, without any color of title whatsoever occupie[d] the said lot by building their house in the said lot thereby
depriving the herein plaintiffs rightful possession thereof;
4. That for several times, plaintiffs orally asked the herein defendants to peacefully surrender the premises to them, but the latter
stubbornly refused to vacate the lot they unlawfully occupied;
5. That despite plaintiffs referral of the matter to the Barangay, defendants still refused to heed the plea of the former to surrender
the lot peacefully;
6. That because of the unfounded refusal of the herein defendants to settle the case amicably, the Barangay Captain was forced to
issue the necessary Certification to File Action in favor of the herein plaintiffs in order that the necessary cause of action be taken
before the proper court, xerox copy of which is hereto attached marked as Annex "C";
7. That by reason of the deliberate, malicious and unfounded refusal of the defendants to vacate/surrender the premises in question,
the herein plaintiffs were constrained to engage the professional services of counsel thus incurring expenses amounting to TEN
THOUSAND PESOS (P10,000.00) representing acceptance fee and additional ONE THOUSAND PESOS (P1,000.00) per appearance,
who on July 12, 1994 sent a formal demand was likewise ignored, (sic) copy of which is hereto attached as Annex "D";
8. That likewise by virtue of the adamant refusal of the defendants to vacate/surrender the said premises in question, plaintiff[s]
suffered serious anxiety, sleepless nights, mental torture and moral erosion; x x x 2
In their answer, private respondents contended that the complaint failed to state that petitioners had prior physical possession of the property
or that they were the lessors of the former. In the alternative, private respondents claimed ownership over the land on the ground that they
had been in open, continuous, and adverse possession thereof for more than thirty years, as attested by an ocular inspection report from the
Department of Environment and Natural Resources. They also stressed that the complaint failed to comply with Supreme Court Circular No.
28-91 regarding affidavits against non-forum shopping.
The Municipal Trial Court (MTC) rendered a decision in favor of the petitioners, ordering private respondents to vacate the property and to pay
rent for the use and occupation of the same plus attorneys fees.
Private respondents appealed the MTCs decision to the Regional Trial Court (RTC). The RTC, in a decision dated 8 January 1997, affirmed in toto
the decision of the MTC.
Undeterred, the private respondents filed a petition for review with the Court of Appeals on 10 March 1997 questioning the decision of the RTC.
In a decision dated 22 April 1997, the Court of Appeals reversed and set aside the decision of the RTC. It held that petitioners failed to make a
case for unlawful detainer because they failed to show that they had given the private respondents the right to occupy the premises or that
they had tolerated private respondents possession of the same, which is a requirement in unlawful detainer cases. It added that the
allegations in petitioners complaint lack jurisdictional elements for forcible entry which requires an allegation of prior material possession. The
Court of Appeals ratiocinated thus:
An examination of the complaint reveals that key jurisdictional allegations that will support an action for ejectment are conspicuously lacking.
In particular, an allegation of prior material possession is mandatory in forcible entry, xxx and the complaint is deficient in this respect. On the
other hand, neither does there appear to be a case of unlawful detainer, since the private respondents failed to show that they had given the
petitioners the right to occupy the premises, which right has now [been] extinguished.
xxx
In light of the foregoing, the conclusion is inevitable that the Municipal Trial Court before which the action for ejectment was filed had no
jurisdiction over the case. Consequently, the dismissal thereof is in order.
WHEREFORE, the Petition is hereby GIVEN DUE COURSE, and GRANTED. The decision dated 08 January 1997 rendered by the respondent court
is hereby REVERSED and SET ASIDE, and judgment is hereby rendered DISMISSING the complaint in Civil Case No. 2547 of the Municipal Trial
Court of Antipolo, Rizal for lack of jurisdiction. 3
Petitioners filed a motion for reconsideration which was denied in a resolution dated 30 January 1998. 4

Hence, the instant petition.


Petitioners submit the following issues for the Courts consideration5:
A. WHETHER OR NOT THE ALLEGATIONS OF THE COMPLAINT CLEARLY MADE OUT A CASE FOR UNLAWFUL DETAINER.
B. WHETHER OR NOT BASED ON THE ALLEGATION(S) OF THE COMPLAINT, THE MUNICIPAL TRIAL COURT OF ANTIPOLO, RIZAL, CLEARLY HAS
ORIGINAL JURISDICTION OVER THE INSTANT COMPLAINT FILED BEFORE IT.
Since the two issues are closely intertwined, they shall be discussed together.
In the main, petitioners claim that the averments of their complaint make out a case for unlawful detainer having alleged that private
respondents unlawfully withheld from them the possession of the property in question, which allegation is sufficient to establish a case for
unlawful detainer. They further contend that the summary action for ejectment is the proper remedy available to the owner if another occupies
the land at the formers tolerance or permission without any contract between the two as the latter is bound by an implied promise to vacate
the land upon demand by the owner.
The petition is not meritorious.
Under existing law and jurisprudence, there are three kinds of actions available to recover possession of real property: (a) accion interdictal;
(b) accion publiciana; and (c) accion reivindicatoria.6
Accion interdictal comprises two distinct causes of action, namely, forcible entry (detentacion) and unlawful detainer (desahuico). 7 In forcible
entry, one is deprived of physical possession of real property by means of force, intimidation, strategy, threats, or stealth whereas in unlawful
detainer, one illegally withholds possession after the expiration or termination of his right to hold possession under any contract, express or
implied.8 The two are distinguished from each other in that in forcible entry, the possession of the defendant is illegal from the beginning, and
that the issue is which party has prior de facto possession while in unlawful detainer, possession of the defendant is originally legal but
became illegal due to the expiration or termination of the right to possess. 9
The jurisdiction of these two actions, which are summary in nature, lies in the proper municipal trial court or metropolitan trial court. 10 Both
actions must be brought within one year from the date of actual entry on the land, in case of forcible entry, and from the date of last demand,
in case of unlawful detainer.11 The issue in said cases is the right to physical possession.
Accion publiciana is the plenary action to recover the right of possession which should be brought in the proper regional trial court when
dispossession has lasted for more than one year. 12 It is an ordinary civil proceeding to determine the better right of possession of realty
independently of title.13 In other words, if at the time of the filing of the complaint more than one year had elapsed since defendant had turned
plaintiff out of possession or defendants possession had become illegal, the action will be, not one of the forcible entry or illegal detainer,
butan accion publiciana. On the other hand, accion reivindicatoria is an action to recover ownership also brought in the proper regional trial
court in an ordinary civil proceeding.14
To justify an action for unlawful detainer, it is essential that the plaintiffs supposed acts of tolerance must have been present right from the
start of the possession which is later sought to be recovered. 15 Otherwise, if the possession was unlawful from the start, an action for unlawful
detainer would be an improper remedy.16 As explained in Sarona v. Villegas17:
But even where possession preceding the suit is by tolerance of the owner, still, distinction should be made.
If right at the incipiency defendants possession was with plaintiffs tolerance, we do not doubt that the latter may require him to vacate the
premises and sue before the inferior court under Section 1 of Rule 70, within one year from the date of the demand to vacate.
xxxx
A close assessment of the law and the concept of the word "tolerance" confirms our view heretofore expressed that such tolerance must be
present right from the start of possession sought to be recovered, to categorize a cause of action as one of unlawful detainer - not of
forcible entry. Indeed, to hold otherwise would espouse a dangerous doctrine. And for two reasons: First. Forcible entry into the land is an open
challenge to the right of the possessor. Violation of that right authorizes the speedy redress in the inferior court - provided for in the rules. If
one year from the forcible entry is allowed to lapse before suit is filed, then the remedy ceases to be speedy; and the possessor is deemed to
have waived his right to seek relief in the inferior court. Second, if a forcible entry action in the inferior court is allowed after the lapse of a
number of years, then the result may well be that no action of forcible entry can really prescribe. No matter how long such defendant is in
physical possession, plaintiff will merely make a demand, bring suit in the inferior court upon a plea of tolerance to prevent prescription to
set in - and summarily throw him out of the land. Such a conclusion is unreasonable. Especially if we bear in mind the postulates that
proceedings of forcible entry and unlawful detainer are summary in nature, and that the one year time-bar to suit is but in pursuance of the
summary nature of the action.18 (Underlining supplied)
It is the nature of defendants entry into the land which determines the cause of action, whether it is forcible entry or unlawful detainer. If the
entry is illegal, then the action which may be filed against the intruder is forcible entry. If, however, the entry is legal but the possession
thereafter becomes illegal, the case is unlawful detainer.
Indeed, to vest the court jurisdiction to effect the ejectment of an occupant, it is necessary that the complaint should embody such a
statement of facts as brings the party clearly within the class of cases for which the statutes provide a remedy, as these proceedings are
summary in nature.19 The complaint must show enough on its face the court jurisdiction without resort to parol testimony. 20
The jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver facts constitutive of forcible entry or
unlawful detainer, as where it does not state how entry was affected or how and when dispossession started, the remedy should either be an
accion publiciana or an accion reivindicatoria in the proper regional trial court. 21 Thus, in Go, Jr. v. Court of Appeals,22 petitioners filed an
unlawful detainer case against respondent alleging that they were the owners of the parcel of land through intestate succession which was
occupied by respondent by mere tolerance of petitioners as well as their deceased mother. Resolving the issue on whether or not petitioners
case for unlawful detainer will prosper, the court ruled 23:
Petitioners alleged in their complaint that they inherited the property registered under TCT No. C-32110 from their parents; that possession
thereof by private respondent was by tolerance of their mother, and after her death, by their own tolerance; and that they had served written
demand on December, 1994, but that private respondent refused to vacate the property. x x x
It is settled that one whose stay is merely tolerated becomes a deforciant illegally occupying the land the moment he is required to leave. It is
essential in unlawful detainer cases of this kind, that plaintiffs supposed acts of tolerance must have been present right from the start of the
possession which is later sought to be recovered. This is where petitioners cause of action fails. The appellate court, in full agreement with the
MTC made the conclusion that the alleged tolerance by their mother and after her death, by them, was unsubstantiated. x x x

The evidence revealed that the possession of defendant was illegal at the inception and not merely tolerated as alleged in the complaint,
considering that defendant started to occupy the subject lot and then built a house thereon without the permission and consent of petitioners
and before them, their mother. xxx Clearly, defendants entry into the land was effected clandestinely, without the knowledge of the owners,
consequently, it is categorized as possession by stealth which is forcible entry. As explained in Sarona vs. Villegas, cited in Muoz vs. Court
ofAppeals [224 SCRA 216 (1992)] tolerance must be present right from the start of possession sought to be recovered, to categorize a cause of
action as one of unlawful detainer not of forcible entry x x x.
And in the case of Ten Forty Realty and Development Corp. v. Cruz, 24 petitioners complaint for unlawful detainer merely contained the bare
allegations that (1) respondent immediately occupied the subject property after its sale to her, an action merely tolerated by petitioner; and
(2) her allegedly illegal occupation of the premises was by mere tolerance. The court, in finding that the alleged tolerance did not justify the
action for unlawful detainer, held:
To justify an action for unlawful detainer, the permission or tolerance must have been present at the beginning of the possession. x x x
xxxx
In this case, the Complaint and the other pleadings do not recite any averment of fact that would substantiate the claim of petitioner that it
permitted or tolerated the occupation of the property by Respondent Cruz. The complaint contains only bare allegations that 1) respondent
immediately occupied the subject property after its sale to her, an action merely tolerated by petitioner; and 2) her allegedly illegal occupation
of the premises was by mere tolerance.
These allegations contradict, rather than support, petitioners theory that its cause of action is for unlawful detainer.First, these arguments
advance the view that respondents occupation of the property was unlawful at its inception.Second, they counter the essential requirement in
unlawful detainer cases that petitioners supposed act of sufferance or tolerance must be present right from the start of a possession that is
later sought to be recovered.25
In the instant case, the allegations in the complaint do not contain any averment of fact that would substantiate petitioners claim that they
permitted or tolerated the occupation of the property by respondents. The complaint contains only bare allegations that "respondents without
any color of title whatsoever occupies the land in question by building their house in the said land thereby depriving petitioners the possession
thereof." Nothing has been said on how respondents entry was effected or how and when dispossession started. Admittedly, no express
contract existed between the parties. This failure of petitioners to allege the key jurisdictional facts constitutive of unlawful detainer is
fatal.26 Since the complaint did not satisfy the jurisdictional requirement of a valid cause for unlawful detainer, the municipal trial court had no
jurisdiction over the case.27 It is in this light that this Court finds that the Court of Appeals correctly found that the municipal trial court had no
jurisdiction over the complaint.
WHEREFORE, the petition is DENIED and the judgment of the Court of Appeals dismissing the complaint in Civil Case No. 2547 of the MTC
Antipolo, Rizal for lack of jurisdiction is hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 149912

January 29, 2004

JACINTO V. CO, Petitioner,


vs.
RIZAL MILITAR and LILIA SONES, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, assailing the decision dated June 30, 2000 1 of the Court of
Appeals which dismissed the petition for review in CA-G.R. SP No. 51344, and its Resolution dated September 10, 2001 2 which denied the
motion for reconsideration.
Petitioner Jacinto V. Co claims to be the owner of a parcel of land measuring 396 square meters covered by a Transfer Certificate of Title No.
81792.3 The land was formerly owned by Rolando Dalida, in whose name it was registered under TCT No. 192224. 4
Dalida mortgaged5 the land to petitioner to secure payment of a loan. After Dalida defaulted in the payment of his obligation, petitioner caused
the foreclosure of the mortgage. Subsequently, petitioner acquired the land at the foreclosure sale held sometime in 1982.
On June 19, 1997, petitioner filed a complaint for unlawful detainer before the Metropolitan Trial Court of Marikina City, Branch 75, against
respondents Rizal Militar and Lilia Sones, who were in possession of the land.
Petitioner alleged that he is the registered owner of the land; that as owner, he declared 6 the same for tax purposes and has been up to date
in the payments of real property taxes; and that respondents occupancy of the property was by his mere tolerance but their continued stay
became unlawful after he demanded that they vacate the premises.
In their answer, respondents claimed that they are the owners of 198 square meters each of the disputed land, having bought the same from
Burgos L. Pangilinan and Reynaldo Pangilinan who were the owners-developers of a residential subdivision project called "Immaculate
Conception Village", and whose ownership was covered by TCT No. 13774.
Respondent Militar further claimed that his occupancy of the property could not be by tolerance of petitioner for the following reasons: one, he
constructed his house way back in June 1966, long before petitioner acquired title thereto on October 10, 1983; two, he bought the one-half
portion of the property, consisting of 198 square meters, on April 20, 1966 from B.L. Pangilinan & Sons, Inc. and paid for the same in full on
October 3, 1973, or 10 years before petitioner claimed ownership of said property. 7 He also assailed the jurisdiction of the Metropolitan Trial
Court, claiming that it had no jurisdiction over the case as the proper action should have been an accion reinvidicatoria filed before the
Regional Trial Court. 8
Respondent Sones, on the other hand, alleged that she bought the other half of the property from the Spouses Burgos and Juanita Pangilinan
on April 6, 1966, and paid for the same in full on October 6, 1973. She also argued that the Metropolitan Trial Court had no jurisdiction over the
nature of the action considering that the same is founded on a property right. She also averred that petitioner registered the subject property
in bad faith inasmuch as he knew that she was in actual, peaceful, exclusive, adverse and continuous possession of the same and was
exercising dominion and ownership over it when petitioner proceeded with his registration.
After trial, the Metropolitan Trial Court rendered a decision in favor of petitioner, thus:
Wherefore, premises considered, judgment is hereby rendered in favor of plaintiff Jacinto Velasco Co and against defendants, Rizal Militar and
Lilia Sones, as follows:
a. ordering the defendants and/or all persons claiming rights under them to vacate the subject premises and peacefully surrender
possession thereof to plaintiff;
b. ordering the defendants to pay plaintiff reasonable compensation for the use of the premises in question in the amount of P500.00
for each defendant per month from June 19, 1997 the date of filing of the complaint until the premises are vacated;
c. ordering the defendants to pay plaintiff the sum of P 2,000.00 as and for attorneys fees;
d. to pay the costs of this suit.
SO ORDERED.9
Respondents appealed the decision to the Regional Trial Court, which reversed and set aside the same. 10Petitioner filed a petition for review
before the Court of Appeals, which denied due course and ordered the dismissal of the petition.
Petitioner filed a Motion for Reconsideration which was denied by the Court of Appeals. 11 Hence, the instant petition raising the following
errors:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN CONCURRING WITH THE FINDING OF THE LOWER COURT THAT THE
DOCTRINE OF OCCUPANCY BY TOLERANCE, IN AN UNLAWFUL DETAINER CASE, CANNOT BE VALIDLY INVOKED BY PETITIONER WHO
HAD NO PRIOR PHYSICAL POSSESSION OF THE PROPERTY AS HE HAD BOUGHT THE PROPERTY ONLY IN 1982 VIS--VIS THE
RESPONDENTS WHO HAD BEEN IN THE PROPERTY SIXTEEN (16) YEARS EARLIER OR AS EARLY AS 1966.
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DISPUTE OVER POSSESSION OF THE PROPERTY BY THE
PETITIONER AND RESPONDENTS BECOMES AN ISSUE AS TO WHO HAS THE BETTER RIGHT OF OWNERSHIP, THE RESPONDENTS WHO
HAD DEEDS OF SALE AND IN POSSESSION OF THE PREMISES OR THE PETITIONER WHO ACQUIRED TITLE TO THE PROPERTY IN A
FORECLOSURE SALE.

The principal issue to be resolved in the instant petition is: Who between petitioner and respondents has a better right to possess the subject
property?
We have, time and again, held that the only issue for resolution in an unlawful detainer case is physical or material possession of the property
involved, independent of any claim of ownership by any of the party litigants. Moreover, an ejectment suit is summary in nature and is not
susceptible to circumvention by the simple expedient of asserting ownership over the property. 12
In forcible entry and unlawful detainer cases, even if the defendant raises the question of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of ownership, the lower courts and the Court of Appeals, nonetheless, have the
undoubted competence to provisionally resolve the issue of ownership for the sole purpose of determining the issue of possession. 13
Such decision, however, does not bind the title or affect the ownership of the land nor is conclusive of the facts therein found in a case
between the same parties upon a different cause of action involving possession.
In the instant case, the evidence showed that as between the parties, it is the petitioner who has a Torrens Title to the property. Respondents
merely showed their unregistered deeds of sale in support of their claims. The Metropolitan Trial Court correctly relied on the transfer
certificate of title in the name of petitioner.
In Tenio-Obsequio v. Court of Appeals,14 it was held that the Torrens System was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and
recognized.
It is settled that a Torrens Certificate of title is indefeasible and binding upon the whole world unless and until it has been nullified by a court of
competent jurisdiction. Under existing statutory and decisional law, the power to pass upon the validity of such certificate of title at the first
instance properly belongs to the Regional Trial Courts in a direct proceeding for cancellation of title. 15
As the registered owner, petitioner had a right to the possession of the property, which is one of the attributes of his ownership. Respondents
argument that petitioner is not an innocent purchaser for value and was guilty of bad faith in having the subject land registered in his name is
a collateral attack on the title of petitioner, which is not allowed. A certificate of title cannot be subject to a collateral attack and can be
altered, modified or cancelled only in a direct proceeding in accordance with law. 16
WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The June 30, 2000 decision of the Court of Appeals in CA-G.R. No.
51344 which sustained the October 30, 1998 decision of the Regional Trial Court of Marikina, Branch 273, in SCA Case No. 98-200-MK is
REVERSED and SET ASIDE. The May 26, 1998 decision of the Metropolitan Trial Court of Marikina, Branch 75, in Civil Case No. 97-6521
declaring petitioner Jacinto V. Co as having a better right of possession over the subject parcel of land as against respondents Rizal Militar and
Lilia Sones is REINSTATED.
Accordingly, respondents are ordered to vacate the subject premises and peacefully surrender possession thereof to petitioner. Further,
respondents are ordered to pay petitioner reasonable compensation for the use of the premises in the amount of P500.00 per month from June
15, 1997 until the premises are vacated; P2,000.00 as attorneys fees; and costs of the suit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, and Carpio, JJ., concur.
Azcuna, J., on official leave.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 155432

June 9, 2005

CRISPINA UNIDA, married to ANTONIO MABALOT, NANCY UNIDA, married to EUGENIO UNIDA, EDWIN DAMO, ANDREW
MABALOT, RICARDO DAMO and JOCELYN DAMO, Petitioners,
vs.
HEIRS OF AMBROSIO URBAN, represented by LUCIO CABADDU, Respondent.
DECISION
CARPIO MORALES, J.:
The present petition for review on certiorari originated from a complaint for unlawful detainer filed by respondent, "Heirs of Ambrocio
Urban represented by Lucio Cabaddu," against the defendants-herein petitioners Crispina Unida et al. at the Municipal Trial Court
(MTC) of Camalaniugan, Cagayan.
Since the main issue raised is one of jurisdiction over the subject matter, a recital of the pertinent allegations of the complaint is in
order.
In its March 3, 1998 Complaint, the plaintiff-herein respondent who claims to be the owner of the property, which had been
subdivided into Lots 298, 299, and 616, subject of the case alleged that:
xxx
7. About ten (10) years ago, more or less, without the knowledge or consent of the owners, the defendants[-herein
petitioners], without any legal right whatsoever, entered the premises of the land which is the subject of this suit and cultivated the
same as their own, not giving any share to the owners;
8. Because the location of the land was then infested by the New Peoples Army at the time of the instrusion of the defendants, the
owners did nothing but to tolerate their (defendants) stay and cultivation over the land in question;
x x x1 (Underscoring supplied)
In their Answer, the defendants-herein petitioners denied, among other things, having any knowledge or information sufficient to form
a belief regarding the authority of Lucio Cabaddu to represent the plaintiff and concluded that "he has no right and/or personality to
represent the alleged [H]eirs"-plaintiff. On the merits, petitioners asserted that petitioner Crispina Unida has possessed Lots 298 and
616, and that petitioner Nancy Unida has possessed Lot 299, both in the concept of owner, personally and through their
predecessors-in-interest, since time immemorial, and that the title to the property subject of the complaint, OCT No. P-48306, was
fraudulently obtained by respondents.2
By Decision3 of June 7, 1999, the MTC, resolving in the affirmative the issues of 1) whether the plaintiff "impliedly tolerated the
defendants act of cultivating the land," and 2) whether the plaintiff is the "lawful owner of the land," accordingly rendered judgment
against the defendants-herein petitioners.
On appeal to the Regional Trial Court (RTC), the defendants-herein petitioners raised the following assignment of errors:
1. THE LOWER COURT ERRED IN NOT DISMISSING THE CASE FOR THERE IS ABSOLUTELY NO EVIDENCE ON RECORD SHOWING
THE AUTHORITY OF ALLEGED PLAINTIFF LUCIO CABADDU TO INSTITUTE THE PRESENT SUIT;
2. THE LOWER COURT ERRED IN ORDERING THE EJECTMENT OF THE DEFENDANTS ALTHOUGHTHEY ARE IN ACTUAL, OPEN,
PUBLIC AND NOTORIOUS POSSESSION OF THE LOTS IN DISPUTE UNDER BONAFIDE CLAIM OF OWNERSHIP EVEN BEFORE THE
SECOND WORLD WAR HAVING INHERITED SAID LAND FROM THEIR FATHER LUIS UNIDA. 4 (Underscoring supplied)
By Decision5 dated October 26, 1999, Branch 10 of the RTC of Cagayan reversed the MTC decision, it holding that although Lucio
Cabaddu was given a Special Power of Attorney (SPA) subsequent to the filing of the complaint, the SPA did not contain a specific
authorization for him to institute the complaint.
In any event, the RTC held that the complaint was dismissible for while in its title Lucio Cabaddu appeared as the representative of
the plaintiff-Heirs of Ambrocio Urban, paragraph 1 of the complaint alleged as follows:
1. Plaintiff[,] of legal age, married to Leticia Urban and a resident of Dugo, Camalaniugan, Cagayan, is the Authorized representative
of the heirs of Ambrocio Urban,6
thus clearly showing that he "instituted it as plaintiff in behalf of the heirs," hence, "not allowed" as he is not the real party in interest.
On the substantive issue, the RTC held that since the complaint itself asserted that petitioners entry into the property was unlawful
from the very beginning, respondents alleged "toleration" thereof cannot be considered as toleration in contemplation of law in
unlawful detainer cases, hence, the action for unlawful detainer was improper. Neither was forcible entry the proper remedy, added
the RTC, as the entry of petitioners was not by "means of force, violence, threats, intimidation, stealth or strategy." The RTC
suggested though that the remedy of the plaintiff-herein respondent was to file an accion publiciana or reivindicatoria before the
proper RTC.
On appeal of respondent to the CA, it assigned two errors of the RTC, to wit:
I. THE APPELLATE COURT ERRED IN FINDING THAT PETITIONERS REPRESENTATIVE LUCIO CABADDU LACKS THE PERSONALITY
TO SUE DESPITE HIS CONSTITUTION AS AN ATTORNEY-IN-FACT BY PETITIONERS THROUGH A VALIDLY EXECUTED SPECIAL
POWER OF ATTORNEY.

II. THE APPELLATE COURT ERRED IN REVERSING THE DECISION OF THE MUNICIPAL TRIAL COURT AND DISMISSING THE
COMPLAINT ON THE GROUND THAT THE MODE OF ACTION (UNLAWFUL DETAINER) TAKEN BY THE PETITIONER IS
INAPPROPRIATE DESPITE THE ALLEGATIONS IN THE COMPLAINT THAT RESPONDENTS POSSESSION OVER THE LAND IN
DISPUTE WAS ONLY UPON THE MERE TOLERANCE OF THE PETITIONERS.7 (Underscoring supplied)
By Decision promulgated on September 19, 2001,8 the Court of Appeals reversed the decision of the RTC and reinstated that of the
MTC.
In reversing the RTC decision, the appellate court held that the subsequent execution of an SPA in favor of Lucio Cabaddu cured the
defect in the filing of the complaint. And the appellate court "agree[d] with the Municipal Trial Court that [the plaintiff-herein
respondent] had established [its] right of possession as owners of the [property]." Furthermore, the appellate court held that "an
allegation that the defendant is unlawfully withholding possession from the plaintiff is deemed sufficient for one alleging that the
withholding of possession or the refusal to vacate is unlawful, without necessarily employing the terminology of the law."
Hence, the present Petition for Review with the following assignments of errors:
a) The Honorable Court of Appeals seriously erred in ruling that the subsequent Special Power of Attorney cures the defect in
the Complaint because such conclusion was grounded entirely on speculation, the inference made is manifestly mistaken,
and the judgment was based on misapprehension of facts.9
b) The Honorable Court of Appeals erred in not finding that the trial court has no jurisdiction over the unlawful detainer
case because the defendants Crispina Unida and husband Antonio Mabalot and Eugenio Unida married to Nancy Unida are
the owners of the land in dispute having possessed the same since pre-war time and inherited said land from their father
Luis Unida who owns seventy two (72) hectares before the Second World War. 10 (Underscoring supplied)
As stated early on, the main issue, that reflected in herein petitioners second assigned error, is one of jurisdiction over the complaint
of herein respondent.
From the earlier quoted material paragraphs-allegations of the complaint, petitioners entry into the property was, by respondents
own information, unlawful from the very beginning. Respondent, nonetheless, claimed that it merely tolerated petitioners presence in
the property. Clearly, an unlawful detainer action does not lie.
For to justify an action for unlawful detainer,
the permission or tolerance must have been present at the beginning of the possession. Otherwise, if the possession
was unlawful from the start, an action for unlawful detainer would be an improper remedy. Sarona v. Villegas elucidates thus:
"A close assessment of the law and the concept of the word 'tolerance' confirms our view heretofore expressed that such tolerance
must be present right from the start of possession sought to be recovered, to categorize a cause of action as one of unlawful detainer
not of forcible entry"11 (Emphasis and underscoring supplied)
As correctly held then by the RTC, the case cannot be considered as an unlawful detainer case, the "tolerance" claimed by
respondents not being that contemplated by law in unlawful detainer cases; neither can the case be considered as one for forcible
entry because the entry of petitioners was not alleged to have been by means of force, intimidation, threats, stealth or strategy.
Since the complaint did not satisfy the jurisdictional requirement of a valid cause for unlawful detainer or forcible entry, the MTC had
no jurisdiction over the case.12 It is in this light that this Court finds that the RTC correctly found that the MTC had no jurisdiction over
the complaint. Parenthetically, it was error for the RTC to find the complaint dismissible also on the ground that Lucio Cabaddu was
not the real party in interest. That paragraph 1 of the complaint alleged that "plaintiff [is] of legal age, married to Leticia Urban . . . is
the Authorized representative of the heirs of Ambrocio Urban" did not modify the name of the plaintiff appearing in the title of the
complaint. In other words, that the plaintiff appearing in the title was worded as "Heirs of Ambrocio Urban represented by Lucio
Cabaddu" complied with Section 3 of Rule 3 of the Rules of Court which reads:
SEC. 3. Representative as parties. Where the action is allowed to be prosecuted or defended by a representative or someone acting
in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A
representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these
Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the
principal except when the contract involves things belonging to the principal. (Underscoring supplied)
The foregoing discussion renders it unnecessary to still rule on the first issue of whether the Special Power of Attorney presented by
Lucio Cabaddu, the representative of respondent, may be validly considered, it not having been formally offered in evidence before
the MTC. Suffice it to state that, as a rule, documents presented as proof of a fact in issue must be offered in evidence before a trial
court.13
A final note. Since the RTC found that the MTC had no jurisdiction over the case, it should have followed the mandate of Sec. 8, Rule
40, which provides:
Sec. 8. Appeal from orders dismissing case without trial; lack of jurisdiction. If an appeal is taken from an order of the lower court
dismissing the case without a trial on the merits, the Regional Trial Court may affirm or reverse it, as the case may be. In case of
affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the Regional Trial Court, if it has jurisdiction
thereover, shall try the case on the merits as if the case was originally filed with it. In case of reversal, the case shall be remanded for
further proceedings.
If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial
Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance
with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the
interest of justice. (Emphasis and underscoring supplied)
WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is REVERSED and SET ASIDE.
Let the records of the case be remanded to Branch 10 of the Regional Trial Court of Cagayan which is hereby directed to take action
on it in accordance with the above-quoted provision of Sec. 8 of Rule 40 of the Rules of Court.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 158231

June 19, 2007

BABY ARLENE LARANO,* Petitioner,


vs.
SPS. ALFREDO CALENDACION and RAFAELA T. CALENDACION,** Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the Decision 1 dated May 13, 2003 of
the Court of Appeals (CA) in CA-G.R. SP No. 68272 which dismissed the complaint for unlawful detainer of Baby Arlene Larao (petitioner)
against Spouses Alfredo and Rafaela Calendacion (respondents).
The factual background of the case is as follows:
Petitioner owns a parcel of riceland situated in Barangay Daniw, Municipality of Victoria, Laguna covered by TCT No. 175241 of the Register of
Deeds of Laguna. On September 14, 1998, petitioner and respondents executed a Contract to Sell whereby the latter agreed to buy a 50,000square meter portion of petitioner's riceland forP5Million, with P500,000.00 as down payment and the balance payable in nine installments
of P500,000.00 each, until September 2001.2
Pending full payment of the purchase price, possession of the riceland was transferred to respondents under the condition that they shall
account for and deliver the harvest from said riceland to petitioner. Respondents, however, failed to pay the installments and to account for
and deliver the harvest from said riceland.3
On March 7, 2000, petitioner sent respondents a demand letter 4 to vacate the riceland within 10 days from receipt thereof, but as her demand
went unheeded, she filed on April 5, 2000 a Complaint 5 against respondents for unlawful detainer before the Municipal Trial Court (MTC),
Victoria, Laguna, docketed as Civil Case No. 826, praying that respondents be directed to vacate the riceland and to pay P400,000.00 per year
from September 1998 until they vacate, as reasonable compensation for the use of the property, P120,000.00 as attorneys fees,
andP50,000.00 as litigation expenses. 6
In their Answer7 dated April 26, 2000, respondents admit the execution of the Contract to Sell but deny that it contains all the agreements of
the parties. They allege that petitioner has no cause of action against them because the three-year period within which to pay the purchase
price has not yet lapsed; that the MTC has no jurisdiction over the case because the complaint failed to allege that a demand to pay and to
vacate the riceland was made upon them.8
On August 2, 2001, the MTC rendered a Decision,9 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering defendants, as follows:
1.) To immediately vacate the premises in question;
2.) To pay the amount of THREE HUNDRED SIXTY FIVE THOUSAND (P365,000.00) PESOS as a reasonable compensation for the use and
occupation of the property;
3.) To pay TWENTY THOUSAND (P20,000.00) PESOS for and attorney's fees; and
4.) To pay FIVE THOUSAND (P5,000.00) PESOS as litigation expenses, plus costs.
SO ORDERED.10
Respondents filed an appeal with the Regional Trial Court (RTC), Branch 26, Sta. Cruz, Laguna, docketed as Civil Case No. SC-4141. 11 On
December 3, 2001, the RTC rendered a Decision,12 the dispositive portion of which reads:
WHEREFORE, the judgment of the trial court is hereby affirmed subject to the modification that defendants are ordered to pay plaintiff the
amount of FOUR HUNDRED THOUSAND (P400,000.00), as yearly reasonable compensation for the use and occupation of said riceland
computed from 1999 until such time that defendants have actually vacated the same.
SO ORDERED.13
Undaunted, respondents filed a Petition for Review with the CA. 14 For failure to file her comment despite receipt of CA Resolution 15 dated May 8,
2002 which required her to file a comment, petitioner was deemed to have waived her right to file comment to the petition in CA Resolution
dated August 28, 2002.16
On May 13, 2003, the CA rendered a Decision 17 setting aside the Decision of the RTC and dismissing the complaint for unlawful detainer. The
CA nullified the proceedings before the MTC for want of jurisdiction. It held that the issues in the case - whether or not there was a violation of
the Contract to Sell, whether or not such violation gives the petitioner the right to terminate the contract and consequently, the right to
recover possession and the value of the harvest from the riceland - extend beyond those commonly involved in unlawful detainer suits where
only the issue of possession is involved; that the case is not a mere detainer suit but one incapable of pecuniary estimation, placing it under
the exclusive original jurisdiction of the RTC, not the MTC.
Dissatisfied, petitioner filed the present petition anchored on the following grounds:
1. The respondent Court of Appeals committed grave error in giving due course to the private respondents' petition for review notwithstanding
the fact that said petition contains no verification to the effect that the allegations therein were read and understood by the private
respondents and that they are true and correct of their own or personal knowledge or based on authentic records, as required by the rules.
2. The respondent Court of Appeals grievously erred in dismissing the case on the ground that the Municipal Trial Court has no jurisdiction over
the case for unlawful detainer, and thus the Regional Trial Court likewise has no jurisdiction on appeal to decide the case for unlawful detainer,
which allegedly involves a matter incapable of pecuniary estimation.

3. The respondent Court of Appeals erred in not affirming the decision of the Regional Trial Court dated December 3, 2001, modifying the
decision of the Municipal Trial Court dated August 2, 2000 both ordering the eviction of private respondents from the subject property and
payment of the reasonable value of the use of the subject premises. 18
Petitioner contends that the CA should have dismissed outright the petition for review filed before it since it contains no verification as
required by the Rules; and that the CA, in finding that the complaint before the MTC was not one for unlawful detainer but for specific
performance, did not limit itself to the allegations in the complaint but resorted to unrestrained references, deductions and/or conjectures,
unduly influenced by the allegations in the answer.
Respondents, on the other hand, contend that verification is just a formal requirement; that petitioner waived her right to question the defect
when she failed to submit her comment; that the CA correctly pointed out that the present case involves one that is incapable of pecuniary
estimation since the crux of the matter is the rights of the parties based on the Contract to Sell.
The petition is bereft of merit.
As to the contention of petitioner that the CA should not have taken cognizance of the petition for review because it was not verified, as
required by the Rules, this Court has held in a number of instances that such a deficiency can be excused or dispensed with in meritorious
cases, the defect being neither jurisdictional nor always fatal. 19 The requirement regarding verification of a pleading is formal. 20 Such
requirement is simply a condition affecting the form of pleading, the non-compliance with which does not necessarily render the pleading
fatally defective.21Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation, and that the pleading is filed in good faith. 22 The court may order the correction of the
pleading if verification is lacking or act on the pleading although it is not verified, if the attending circumstances are such that strict
compliance with the Rules may be dispensed with in order that the ends of justice may thereby be served. 23
Besides, petitioner did not raise the issue of lack of verification before the CA. She did not file a comment to the petition and it is too late in
the day to assail such defect, as she is deemed to have waived any objection to the formal flaws of the petition. Points of law, theories, issues
and arguments not brought to the attention of the lower court cannot be raised for the first time on appeal. 24
The main issue being raised in the present petition is whether the complaint is one for unlawful detainer.
Settled is the rule that jurisdiction in ejectment cases is determined by the allegations pleaded in the complaint. 25 It cannot be made to
depend upon the defenses set up in the answer or pleadings filed by the defendant. 26 Neither can it be made to depend on the exclusive
characterization of the case by one of the parties. 27 The test for determining the sufficiency of those allegations is whether, admitting the facts
alleged, the court can render a valid judgment in accordance with the prayer of the plaintiff. 28
The facts upon which an action for unlawful detainer can be brought are specially mentioned in Section 1, Rule 70 of the Revised Rules of
Court, which provides:
Section 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue
of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee or other person may, at any
time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs. (Emphasis supplied)
In unlawful detainer, the possession was originally lawful but became unlawful by the expiration or termination of the right to possess; hence,
the issue of rightful possession is decisive for, in such action, the defendant is in actual possession and the plaintiffs cause of action is the
termination of the defendants right to continue in possession.29
Applied to the present case, petitioner, as vendor, must comply with two requisites for the purpose of bringing an ejectment suit: (a) there
must be failure to pay the installment due or comply with the conditions of the Contract to Sell; and (b) there must be demand both to pay or
to comply and vacate within the periods specified in Section 230of Rule 70, namely: 15 days in case of land and 5 days in case of buildings. The
first requisite refers to the existence of the cause of action for unlawful detainer, while the second refers to the jurisdiction requirement of
demand in order that said cause of action may be pursued. 31
Both demands to pay installment due or adhere to the terms of the Contract to Sell and to vacate are necessary to make the vendee
deforciant in order that an ejectment suit may be filed. 32 It is the vendor's demand for the vendee to vacate the premises and the vendee's
refusal to do so which makes unlawful the withholding of the possession. 33 Such refusal violates the vendor's right of possession giving rise to
an action for unlawful detainer.34However, prior to the institution of such action, a demand from the vendor to pay the installment due or
comply with the conditions of the Contract to Sell and to vacate the premises is required under the aforequoted rule.
Thus, mere failure to pay the installment due or violation of the terms of the Contract to Sell does not automatically render a person's
possession unlawful. Furthermore, the giving of such demand must be alleged in the complaint; otherwise, the MTC cannot acquire jurisdiction
over the case.35
A review of the Complaint of petitioner discloses these pertinent allegations: petitioner owns the subject riceland; she executed a Contract to
Sell in favor of respondents; pending full payment of the purchase price, possession of subject riceland was transferred to respondents subject
to accounting and delivery of the harvest to petitioner; respondents failed to pay the installments and to account for and deliver the harvest;
petitioner asked respondents to vacate the subject riceland, but they failed to do so. Accordingly, petitioner prayed for judgment ordering
respondents to vacate the subject riceland and to pay P400,000.00 per year from September 1998 until they vacate as reasonable
compensation for the use of the property, P120,000.00 as attorney's fees, and P50,000.00 as litigation expenses.
It is clear from the foregoing that the allegations in the Complaint failed to constitute a case of unlawful detainer. What is clear is that in the
Complaint, petitioner alleged that respondents had violated the terms of the Contract to Sell. However, the Complaint failed to state that
petitioner made demands upon respondents to comply with the conditions of the contract the payment of the installments and the
accounting and delivery of the harvests from the subject riceland. The 10-day period granted respondents to vacate even fell short of the 15day period mandated by law. When the complaint does not satisfy the jurisdictional requirements of a valid cause for unlawful detainer, the
MTC does not have jurisdiction to hear the case. 36
An allegation of a violation of a contract or agreement in a detainer suit may be proved by the presentation of competent evidence, upon
which an MTC judge might make a finding to that effect, but certainly, that court cannot declare and hold that the contract is rescinded. The
rescission of contract is a power vested in the RTC. 37 The rescission of the contract is the basis of, and therefore a condition precedent for, the
illegality of a party's possession of a piece of realty. 38 Without judicial intervention and determination, even a stipulation entitling one party to

take possession of the land and building, in case the other party violates the contract, cannot confer upon the former the right to take
possession thereof, if that move is objected to. 39
Clearly, the basic issue raised in the complaint of petitioner is not of possession but interpretation, enforcement and/or rescission of the
contract, a matter that is beyond the jurisdiction of the MTC to hear and determine.
WHEREFORE, the instant petition is DENIED. The Decision dated May 13, 2003 of the Court of Appeals in CA-G.R. SP No. 68272
is AFFIRMED. Costs against petitioner.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 156829

June 8, 2004

RAMON D. MONTENEGRO, petitioner,


vs.
MA. TERESA L. MONTENEGRO, for herself and as the mother and natural guardian of the minors, ANTONIO AMELO and ANA
MARIA PIA ISABEL, both surnamed "MONTENEGRO," respondents.
DECISION
DAVIDE, JR., C.J.:
In this petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, petitioner Ramon D. Montenegro seeks the reversal
of the 8 November 2002 Order1 in Civil Case No. 94-8467 of the Regional Trial Court, Branch 41, Bacolod City, holding him guilty of indirect
contempt for his repeated failure to appear at the scheduled hearings for his examination as judgment obligor and imposing on him the
penalty of three (3) months imprisonment and a fine of twenty thousand pesos (P20,000), and of the subsequent 3 January 2003
Order2denying his motion for the reconsideration of the 8 November 2002 Order.
On 14 June 1994, respondent Ma. Teresa V. Lizares-Montenegro (hereinafter, respondent Teresa), for herself and as mother and guardian of her
two minor children Antonio Amelo and Ana Maria Pia Isabel, filed with the trial court below a complaint for support against her husband, herein
petitioner Ramon D. Montenegro. The case was docketed as Civil Case No. 94-8467. Four years after the filing of the complaint, petitioner and
respondent Teresa executed a compromise agreement which was submitted to the trial court for approval on 13 October 1998. On the same
date, the trial court rendered a Decision approving the compromise agreement and ordering the parties to comply with it. The parties did not
appeal from the Decision; hence, it became final and executory.
Under the terms of the compromise agreement, petitioner obligated himself to:
(1) Pay the respondent the amount of One Million Pesos (P1,000,000) representing her entire share in their conjugal partnership of
gains, Five Hundred Thousand (P500,000) of which is payable upon signing of the compromise agreement while the remaining
balance of Five Hundred Thousand (P500,000) must be paid within one (1) year from the execution of the compromise agreement.
(2) Establish a trust fund in the amount of Three Million Pesos (P3,000,000) in favor of his children Antonio Amelo and Ana Maria Pia
Isabel within sixty (60) days from the approval of the compromise agreement.
(3) Obtain an educational plan or an investment plan to cover tuition and other matriculation fees for the college education of Ana
Maria Pia Isabel within one (1) year from the approval of the compromise agreement.
Since petitioner failed to comply with his obligations under the compromise agreement despite the lapse of the periods provided therein,
respondent Teresa filed a motion for the execution of the judgment. The trial court granted the motion and issued a writ of execution on 15
February 1999.
A second writ of execution and a notice of garnishment, issued by the trial court on 21 May 2001 and and a notice of garnishment issued on 28
May 2001 weon 28 May 2001, respectively, were returned unsatisfied.
In several conferences3 called by the trial court, petitioner admitted his failure to comply with his obligations under the compromise agreement
but alleged that he was no longer in a position to do so as he was already insolvent. In the conference held on 6 March 2002, respondent
Teresa manifested that she would file a motion for examination of petitioner as judgment obligor. The trial court gave her 30 days within which
to file the appropriate motion and informed petitioner that he would have 30 days to file a comment or reply to the motion.
On 14 March 2002, respondent Teresa filed a motion to examine petitioner as judgment obligor under Sections 36 and 38 of Rule 39 of the
Rules of Court. In her motion, she alleged that there is an urgency for the examination to be conducted at the earliest time since petitioner
was about to migrate to Canada. Acting on the said motion, the trial court issued on 19 March 2002 an Order granting the motion for
examination of petitioner as judgment obligor and setting his examination on 22 March 2002. On the same day the motion for examination
was granted, petitioner filed with the court a Manifestation alleging that the grant of the motion for examination iwas premature because he
still would have 30 days from receipt of the motion, or until April 14, 2002, within which to file a comment or opposition thereto as agreed
upon during the conference on 6 March 2002.
Thus, oOn 22 March 2002, neither petitioner nor his counsel appeared for the scheduled hearing. On that date, the trial court issued an order
re-scheduling the hearing to 10 April 2002 and requiring the petitioner to explain why he should not be held in contempt of court for
disobeying the 19 March 2002 Order.
On 26 March 2002, petitioner filed a Compliance with Motion to Re-schedule Proceedings. He explained that he did not attend the 22 March
2002 hearing because he was under the impression that he still had 30 days from the filing of the motion to examine him as judgment obligor
within which to respond to the motion; besides, his counsel was not available on 22 March 2002 due to previously scheduled hearings.
At the hearing on 4 April 2002 of the Compliance with Motion to Re-schedule Proceedings, counsel for petitioner manifested that his client
already left for Canada on 26 March 2002 and will be unable to attend the 10 April 2002 hearing, and that petitioner would be available for
examination on the last week of July or first week of August 2002. Counsel prayed that the hearing be thus reset accordingly. The trial court
denied the motion and informed the parties that the hearing scheduled on 10 April 2002 will proceed as scheduled.
On 5 April 2002, petitioner filed a manifestation reiterating that he would be unable to attend the 10 April 2002 hearing because he was
already in Canada. Counsel for petitioner likewise manifested that he would also be unavailable on the said date because he would be in
Manila to attend to his other cases.
On 17 June 2002, the trial court issued an Order directing the petitioner to show cause why he should not held in contempt of court for failure
to appear on the 10 April 2002 at the hearing for his examination as judgment obligor. In his Compliance and Explanation filed on 28 June
2002, petitioner alleged that he was unable to attend the 10 April 2002 hearing because he was in Canada and had no intention to abscond
from his obligation.

On 13 June 2002, the trial court issued an Order setting the case for the hearing for examination of the petitioner on 3 July 2002. A subpoena
was issued against the petitioner and served at his address of record. Respondent Teresa also caused the service of the subpoena at 8051
Estrella Avenue, San Antonio Village, Makati City where petitioner is allegedly residing.
The 3 July 2002 hearing did not push through as the petitioner filed a Motion to Quash Subpoena Ad Testificandum4 on 28 June 2002. In the
motion, petitioner admitted that 8051 Estrella Avenue, San Antonio Village, Makati City, is his present address but alleged that Makati City is
more than 100 kilometers away from Bacolod City; thus, he may not be compelled by subpoena to attend the 3 July 2002 hearing in Bacolod
City. In this motion, petitioner did not allege that he was still in Canada.
In its Order of 2 September 2002, the trial court denied the Motion to Quash Subpoena Ad Testificandum, but re-scheduled the hearing to 23
October 2002. On 22 October 2002, the day before the scheduled hearing, petitioner filed a manifestation manifestation informing the trial
court that he was still in Canada and would not be able to attend the 23 October 2002 hearing; however, he would be in Manila on the first
week of December 2002. He moved that the hearing be re-scheduled on 9 December 2002. The manifestation, however, did not contain a
notice of hearing.
On 23 October 2002, petitioner did not appear at the scheduled hearing, prompting the trial court to issue an order citing him in contempt of
court.
In its Order of 8 November 2002, the trial court declared petitioner in contempt of court under Section 38 of Rule 39 of the Rules of Court 5 and
imposed on him the penalty of imprisonment for three months and ordered him to pay a fine of P20,000. His motion for reconsideration of the
Order having been denied by the trial court in its Order of 3 January 2003, petitioner filed the petition in the case at bar.
The petition raises pure questions of law. After the issues were joined, we resolved to give due course to the petition.
Having raised only questions of law, petitioner is bound by the trial courts findings of fact.
The core issue to be determined is whether, based on the facts found by the trial court, the latter erred in holding the petitioner guilty of
indirect contempt for willfully disobeying the orders of the trial court requiring him to appear for purposes of examination as a judgment
obligor at in the hearings scheduled on 22 March 2002, 10 April 2002, and 23 October 2002.
We rule in the negative.
The totality of petitioners acts clearly indicated a deliberate, and unjustified refusal to be examined as a judgment obligor at the time the
examination was scheduled for hearing by the trial court. His Such acts tended to degrade the authority and respect for court processes and
impaired the judiciarys duty to deliver and administer justice. Petitioner tried to impose his will on the trial court.
Contempt of court involves the doing of an act, or the failure to do an act, in such a manner as to create an affront to the court and the
sovereign dignity with which it is clothed.6 It is defined as "disobedience to the court by acting in opposition to its authority, justice and
dignity."7 The power to punish contempt is inherent in all courts, because it is essential to the preservation of order in judicial proceedings, and
to the enforcement of judgments, orders and mandates of the courts; and, consequently, to the due administration of justice. 8
The Rules of Court penalizes two types of contempt, namely, direct contempt and indirect contempt. Direct contempt is committed in the
presence of or so near a court as to obstruct or interrupt the proceedings before the same, and includes disrespect toward the court, offensive
personalities toward others, or refusal to be sworn or to answer as a witness, or to subscribe an affidavit or deposition when lawfully required
to do so.9
On the other hand, Section 3 of Rule 71 of the Rules of Court enumerates particular acts which constitute indirect contempt, thus:
(a) Misbehavior of an officer of a court in the performance of his official duties or in his official transactions;
(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the act of a person who, after
being dispossessed or ejected from any real property by the judgment or process of any court of competent jurisdiction, enters or
attempts or induces another to enter into or upon such real property, for the purpose of executing acts of ownership or possession,
or in any manner disturbs the possession given to the person adjudged to be entitled thereto;
(c) Any abuse of or any unlawful interference with the processes or proceedings of a court not constituting direct contempt under
section 1 of this Rule;
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice;
(e) Assuming to be an attorney or an officer of a court, and acting as such without authority;
(f) Failure to obey a subpoena duly served;
(g) The rescue, or attempted rescue, of a person or property in the custody of an officer by virtue of an order or process of a court
held by him.
In relation to the foregoing, Section 38 of Rule 39 of the Rules of Court also provides that "a party or other person may be compelled, by an
order or subpoena, to attend before the court or commissioner to testify as provided in the two preceding sections, and upon failure to obey
such order or subpoena or to be sworn, or to answer as a witness or to subscribe his deposition, may be punished for contempt as in other
cases." This provision relates specifically to Section 3(b) of Rule 71 of the Rules of Court.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any other formal charge requiring the respondent
to show cause why he should not be punished for contempt or (2) by the filing of a verified petition, complying with the requirements for filing
initiatory pleadings.10 In the present case, the trial court initiated the proceedings for indirect contempt by issuing two orders 11 directing the
petitioner to show cause why he should not be punished for indirect contempt.
Contempt, whether direct or indirect, may be civil or criminal depending on the nature and effect of the contemptuous act. Criminal contempt
is "conduct directed against the authority and dignity of the court or a judge acting judicially; it is an act obstructing the administration of
justice which tends to bring the court into disrepute or disrespect." 12 On the other hand, civil contempt is the failure to do something ordered
to be done by a court or a judge for the benefit of the opposing party therein and is therefore, an offense against the party in whose behalf the
violated order was made.13 If the purpose is to punish, then it is criminal in nature; but if to compensate, then it is civil. 14
In the present case, the contemptuous act was the petitioners refusal to attend a hearing for his examination as judgment obligor, upon
motion by the respondent Teresa. It must be pointed out that the purpose of Section 36 of Rule 39 is to provide the judgment obligee a remedy
in case where the judgment obligor continues to fail to comply with its obligation under the judgment. Petitioners refusal to be examined,
without justifiable reason, constituted indirect contempt which is civil in nature.

Petitioners deliberate willfulness and even malice in disobeying the orders of the trial court are clearly shown in the pleadings he himself had
filed before the trial court.
In his Manifestation of 19 March 2002 petitioner insisted on his right to file a reply or comment on the Motion to Examine Defendant as
Judgment Obligor until 14 April 2002 solely on the basis of the purported agreement at the conference on 6 March 2002. Petitioner merely
brushed aside the Order of the trial court requiring him to appear on 22 March 2002 for the hearing by not appearing in court. Petitioner
cannot simply assume that his manifestation would suffice for the trial court to re-schedule the 22 March 2002 hearing. That portion of the
manifestation filed by petitioner on 19 March 2002, which reads:
3. In the meantime, we have no other option but to cancel the setting on March 22, 2002 until Respondent shall have submitted his
Reply/Comment and the issue is finally laid to rest by the issuance of a final Order for that purpose.
demonstrates beyond doubt arrogance, haughtiness and disrespect. While petitioner apparently disagrees with the 19 March 2002 Order of by
the trial court, he did not file a motion for its reconsideration. Neither did he file a motion to reset the scheduled hearing on 22 March 2002.
We have ruled that a motion for continuance or postponement is not a matter of right but is addressed to the sound discretion of the
court.15 Petitioner sought to deprive the trial court of the discretion; he took it upon himself to cancel or to order the court to cancel the 22
March 2002 scheduled hearing.
Petitioner makes a belated claim in the present petition that his failure to attend the 22 March 2002 hearing was due to the fact that he was
already on his way to Manila on 22 March 2002 in preparation for his 26 March 2002 trip to Canada. However, such explanation was not stated
in the 19 March 2002 Manifestation and 5 April 2002 Compliance and Motion to Re-schedule Proceedings. The explanation is either a delayed
afterthought or an unguarded confession of a deliberate plan to delay or even avoid his examination as a judgment obligor.
Neither can petitioner rely on the alleged irregularity in the trial courts grant of the motion to examine him as judgment obligor before he was
able to file a reply or comment. Section 36 of, Rule 39 of the Rules of Court allows, as a matter of right, the plaintiff who is a judgment obligee
to examine the defendant as judgment obligor, at any time after the return of the writ of execution is made. Section 36 reads as follows:
Sec. 36. Examination of judgment obligor when judgment unsatisfied. When the return of a writ of execution issued against
property of a judgment obligor, or any one of several obligors in the same judgment, shows that the judgment remains unsatisfied, in
whole or in part, the judgment obligee, at any time after such return is made, shall be entitled to an order from the
court which rendered the said judgment, requiring such judgment obligor to appear and be examined concerning his property and
income before such court or before a commissioner appointed by it, at a specified time and place; and proceedings may thereupon
be had for the application of the property and income of the judgment obligor towards the satisfaction of the judgment. But no
judgment obligor shall be so required to appear before a court or commissioner outside the province or city in which such obligor
resides or is found. (Emphasis supplied)
Thus, the trial court committed no abuse of discretion in scheduling the examination of petitioner on 22 March 2002. On the contrary, it acted
with utmost judiciousness to avoid a miscarriage of justice because petitioner was reported to be about to leave for Canada, a fact which
petitioner did not refute in his Manifestation of 19 March 2002.
It is noteworthy that while petitioner insisted that he still had until 14 April 2002 to file a reply or comment on the motion for examination, he
also manifested through counsel on 5 April 2002 that he already left for Canada on 26 March 2002 and will not be back until the last week of
July or the first week of August 2002. It is obvious then that petitioner wanted to gain time to avoid being examined.
With respect to the 10 April 2002 hearing, it is established that petitioner was already in Canada at the time of the scheduled hearing.
Nonetheless, it must be stressed that the re-scheduling of the hearing to 10 April 2002 was brought about by his unjustifiable failure to attend
the 22 March 2002 hearing.
Subsequently, despite petitioners 19 March 2002 and 5 April 2002 manifestations that he would return to the Philippines sometime during the
last week of July or first week of August 2002, petitioner did not attend the 23 October 2002 hearing. Again, instead of filing a motion to reset
the hearing, petitioner filed a manifestation the day before the scheduled hearing, informing the court that he will be unable to attend the
hearing and suggesting the hearing to be reset to 9 December 2002. Such manifestation to re-schedule the 23 October 2002 hearing was, for
all intents and purposes, a motion to postpone the hearing , but the pleading did not contain a notice of hearing.
It is of no moment that petitioner was eventually examined as judgment obligor on 17 December 2002, nine (9) months after the original
setting. His subsequent appearance at the hearing did not wipe out his contemptuous conduct.
We shall now take up the penalties imposed by the trial court.
Under Section 7 of Rule 71 of the Rules of Court, a person found guilty of contempt of court against a Regional Trial Court may be punished
with a fine not exceeding thirty thousand pesos or imprisonment not exceeding six (6) months, or both. The penalties ofor imprisonment for
three months and a fine of twenty thousand pesos are within the allowable penalties the trial court itit may impose. However, the penalties of
imprisonment and fine may be imposed one at a time, or together.
In the present case, the nature of the contemptuous acts committed are civil in nature. Section 7 of Rule 71 of the Rules of Court provides for
indefinite incarceration in civil contempt proceedings to compel a party to comply with the order of the court. This may be resorted to where
the attendant circumstances are such that the non-compliance with the court order is an utter disregard of the authority of the court which has
then no other recourse but to use its coercive power. 16 It has been held that "when a person or party is legally and validly required by a court
to appear before it for a certain purpose, when that requirement is disobeyed, the only remedy left for the court is to use force to bring such
person or party before it."17
The reason for indefinite incarceration in civil contempt proceedings, in proper cases, is that it is remedial, preservative, or coercive in nature.
The punishment is imposed for the benefit of a complainant or a party to a suit who has been injured. Its object is to compel performance of
the orders or decrees of the court, which the contemnor refuses to obey although able to do so. 18 In effect, it is within the power of the person
adjudged guilty of contempt to set himself free.
In the present case, however, the act which the trial court ordered the petitioner to do has already been performed, albeit belatedly and not
without delay for an unreasonable length of time. As such, the penalty of imprisonment may no longer be imposed despite the fact that its
non-implementation was due to petitioners absence in the Philippines.
We are not unmindful of the nature of the judgment from which the present controversy arose. Six years have elapsed from the time the
compromise agreement for the support of the children of petitioner and respondent was executed. We take judicial notice of the amount of
expenses which a travel outside the country, particularly to Canada, entails, much more so when the person traveling to Canada is trying to
establish himself in the said country as an immigrant. Petitioners claim for insolvency is negated by his frequent travels to Canada. We thus

exhort the parties, specifically the petitioner, to resort to all reasonable means to fully satisfy the judgment for support based on the
compromise agreement, for the paramount interests of their minor children.
WHEREFORE, the petition is hereby PARTIALLY GRANTED. The 8 November 2002 Order of the Regional Trial Court, Branch 41, Bacolod City
in with Civil Case No. 94-8467 is modified. As modified, the penalty of for imprisonment is deleted therefrom, while the penalty of fine
of P20,000 is affirmed.
No costs.
SO ORDERED.
Vitug, Panganiban, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-66371 May 15, 1985
ARMANDO ANG, petitioner,
vs.
HON. JUDGE JOSE P. CASTRO, Regional Trial Judge, Branch LXXXIV and HON. JUDGE JOSE P. ARRO, Branch CIII, both of the
Regional Trial Court of Rizal, and ASSISTANT FISCAL NARCISO T. ATIENZA of Quezon City, respondents.
Salonga, Ordonez, Yap, Corpuz and Padlan for petitioner.
RELOVA, J.:
In the supplemenal petition for certiorari, prohibition and mandamus, Armando Ang seeks to set aside the order, dated February 9, 1984, of
respondent Judge Jose P. Castro of the Regional Trial Court, Branch LXXXIV in Quezon City, denying his appeal from an order holding him in
contempt of court. Petitioner likewise asks this Court (1) to order respondent judge Castro to forward the records of Civil Case No. Q-35466 to
the Intermediate Appellate Court; (2) to enjoin him from enforcing his order for the arrest of petitioner; (3) to restrain respondent Assistant
Fiscal Narciso 'I'. Atienza of Quezon City from conducting preliminary investigation on the libel charge filed against him by respondent judge;
and, (4) to prohibit respondent Judge Jose P. Arro of the Regional Trial Court of Rizal, Branch CIII, Quezon City from proceeding and or
conducting a hearing on the criminal complaint for libel against petitioner in Criminal Case No. Q-31587.
In November 1983, petitioner, through the Office of the Presidential Assistant on Legal Affairs, lodged with this Court an administrative
complaint against respondent judge for ignorance of the law, gross inexcusable negligence, incompetence, manifest partiality, grave abuse of
discretion, grave misconduct, rendering unjust decision in Civil Case No. Q-35466 and dereliction of duties in not resolving his motion for
reconsideration of the adverse decision in said civil case.
On December 23, 1983, upon learning of the administrative case filed against him by petitioner, respondent judge ordered petitioner to
appear before him on December 29, 1983 at 8:30 in the morning, and to show cause why he should not be punished for contempt of court, for
malicious, insolent, inexcusable disrespect and contemptuous attitude towards the court and towards him.
On January 9, 1984, respondent judge found petitioner guilty of contempt of court, sentenced him to suffer five (5) days imprisonment and
ordered his arrest for his failure, despite notice, to appear on the scheduled hearing of the contempt charge against him.
On February 3, 1984, petitioner filed his notice of appeal from the judgment of conviction in the contempt charge but the same was denied by
the respondent judge in an Order, as follows:
Considering that ARMANDO ANG was found guilty of "Direct Contempt" of court, the notice of appeal filed by him thru
counsel cannot be given due course and is hereby denied, as the pronouncement of guilt in a direct contempt is not
appealable.
Meantime, in view of the fact that said Armando Ang has remained in hiding and has been eluding the officers of the law in
serving the original warrant for his arrest, let an alias warrant be issued for his arrest so that he can serve his sentence of
five (5) days imprisonment. (p. 45, Rollo)
Thereafter, respondent judge instituted before the Office of the City Fiscal of Quezon City a criminal complaint (I.S. No. 83- 22198) for libel
against herein petitioner for using malicious, insolent and contemptuous language against him in his letter- complaint filed before this Court.
Hence, instant petition.
On February 20, 1984, We issued a temporary restraining order enjoining (1) the respondent judge from carrying out the warrant of arrest
issued in Civil Case No. Q-35466, entitled: "Engson Realty Co., Inc., Plaintiff, versus Lim Eng Si, Defendant of the Regional Trial Court, Branch
LXXXIV at Quezon City; and (2) the respondent fiscal from conducting the preliminary investigation for libel lodged by respondent judge
against petitioner in I.S. No. 83-22198 of Quezon City.
Asked to comment why he proceeded with the preliminary investigation of the complaint for libel filed by respondent judge against herein
petitioner, despite the restraining order from this Court, Fiscal Narciso T. Atienza explained that long before the undersigned receive said order,
the information for libel against Armando Ang has already been filed in court." Indeed, records show that the information for libel was lodged
on February 2, 1984; whereas, the temporary restraining order was issued on February 20, 1984.
On February 29,1984, upon knowing that Criminal Case No. Q-31587 for libel was instituted against him by respondent Fiscal Atienza,
petitioner filed a supplemental petition for prohibition against respondent Judge Jose P. Arro of the Regional Trial Court, Branch CIII, in Quezon
City, who was assigned to try and hear said criminal case. Petitioner prays for a supplemental writ of preliminary injunction to enjoin Judge
Arro from proceeding with said Criminal Case No. Q-31587.
On March 5, 1984, We issued a Temporary Restraining Order enjoining respondent Judge from proceeding and/or conducting hearing on the
criminal complaint for libel.
On June 4, 1984, after considering the allegations, issues, and arguments adduced in the petition and supplemental petition petition for
certiorari, prohibition and mandamus, respondents' comments thereon as well as petitioner's reply to respondent fiscal's comment with motion
to dismiss the aforesaid petition, We resolved to give due course to the petition and required both parties to submit simultaneously their
memoranda on the issues within thirty (30) days from notice.
Despite the lapse of the period granted both parties, they failed to file their memoranda. Thus, the case is deemed submitted for decision.
Upon a careful scrutiny of the records of the case, We found that the alleged malicious imputations were not uttered in the presence or so near
respondent Judge Jose P. Castro as to obstruct or interrupt the proceedings before him; rather, they were contained in the pleadings and/or
letters-complaint filed by petitioner before the Office of the Presidential Assistant on legal Affairs and before this Court in the aforementioned
administrative case filed by petitioner against him.

Section 3, particularly paragraphs (b) and (d), Rule 71 of the New Rules of Court, provide:
SEC. 3. Indirect contempts to be punished after charge and hearing. After charge in writing has been filed, and an
opportunity given to the accused to be heard by himself or counsel, a person guilty of any of the following acts may be
punished for contempt:
xxx xxx xxx
(b) Disobedience of or resistance to a lawful writ, process, order, judgment, or command of a court, or injunction granted by
a court or judge, including the act of a person who, after being dispossessed or ejected from any real property by the
judgment or process of any court of competent jurisdiction, enters or attempts or induces another to enter into or upon
such real property, for the purpose of executing acts of ownership or possession, or in any manner disturbs the possession
given to the person adjudged to be entitled thereto
xxx xxx xxx
(d) Any improper conduct tending directly or indirectly, to impede, obstruct, or degrade the administration of justice;
Respondent Judge Castro, in his comment, argues that failure of petitioner to appear, despite notice, on the scheduled hearing of the contempt
charge for the use of derogatory language in his two letters addressed to the Office of the Presidential Assistant on Legal Affairs and to this
Court in an administrative complaint against him, constitutes direct contempt as the acts actually impeded, embarrassed and obstructed him
in the administration of justice.
We do not agree. The Rules of Court cannot be any clearer. The use of disrespectful or contemptuous language against a particular judge in
pleadings presented in another court or proceeding is indirect, not direct, contempt as it is not tantamount to a misbehavior in the presence of
or so near a court or judge as to interrupt the administration of justice. Stated differently, if the pleading containing derogatory, offensive or
malicious statements is submitted in the same court or judge in which the proceedings are pending, it is direct contempt because it is
equivalent to a misbehavior committed in the presence of or so near a court or judge as to interrupt the administration of justice. Considering
the aforecited provisions, petitioner's conduct if at all, constitutes indirect contempt and, if found guilty he may appeal pursuant to Section 10,
Rule 71 of the Rules of Court. which reads:
SEC. 10. Review of judgment or order by Court of appeals or Supreme Court; bond for stay. The judgment or order of a
Court of First Instance made in a case of contempt punished after written charge and hearing may be reviewed by the
Court of Appeals or the Supreme Court, but execution of the judgment or order shall not be suspended until a bond is filed
by the person in contempt, in an amount fixed by the Court of First Instance, conditioned that if the appeal be decided
against him he will abide by and perform the judgment or order. The appeal may be taken as in criminal cases.
Anent the ancillary action for prohibition, We find the same meritorious, considering that the basis of the libel case (Criminal Case No. Q31587) filed against petitioner before the respondent Regional Trial Court, Branch CIII, Quezon City was a communication addressed to the
Chief Justice of the Supreme Court which was coursed through the Office of the Presidential Assistant on legal Affairs, complaining against
respondent judge's ignorance of the law, gross inexcusable negligence, incompetence, disregard for the Supreme Court administrative order,
grave misconduct, rendering an unjust decision and dereliction of duty. It is manifest that as held in the case of Santiago vs. Calvo, 48 Phil.
922, "a communication made in good faith upon any subject matter in which the party making the communication has an interest or
concerning which he has a duty is privileged if made to a person having a corresponding interest or duty, although it contains incriminatory or
derogatory matter which without the privilege would be libelous and actionable ... that parties, counsel and witnesses are exempted from
liability in libel or slander for words otherwise defamatory published in the course of judicial proceedings, provided the statements are
pertinent or relevant to the case. "
Records show that the libel case had already been instituted in court when the restraining order was issued by Us. Nonetheless, considering
the privileged character of petitioner's communication to the Chief Justice barring a prosecution for libel, it is proper that the injunction against
respondent Regional Trial Court, Branch CIII, Quezon City, from proceeding with the hearing of Criminal Case No. Q-31587, be made permanent
pursuant to the restraining order and established doctrine against the use of the strong arm of the law as an instrument of arbitrary and
oppressive prosecution.
ACCORDINGLY, the petition with respect to the action against respondent Judge Jose P. Castro of the Regional Trial Court, Branch LXXXIV,
Quezon City is granted and said respondent judge is hereby ordered to elevate the records of Civil Case No. Q-35466 to the Intermediate
Appellate Court at once for disposition in accordance with the terms hereof.
Respondent trial judge is hereby ordered to dismiss the libel case (Criminal Case No. Q-31587).
The temporary restraining order issued on February 20, 1984 enjoining respondent Judge Jose P. Castro from enforcing or carrying out the
warrant of arrest issued in Civil Case No. Q-35466 is made permanent.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr., Dela Fuente and Alampay, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. Nos. 115908-09 March 29, 1995
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
DANNY GODOY, accused-appellant.
JUDGE EUSTAQUIO Z. GACOTT, JR. complainant,
vs.
MAURICIO REYNOSO, JR. and EVA P. PONCE DE LEON, respondents.
RESOLUTION
REGALADO, J.:
For separate resolution, as an incident arising from these criminal cases under automatic review by the court, is a complaint 1 filed by judge
Eustaquio Z. Gacott, Jr. of the Regional Trial Court of Palawan and Puerto Princesa City, Branch 47, to cite for indirect contempt Mauricio
Reynoso, Jr., a columnist, and Eva P. Ponce de Leon, publisher and chairman of the editorial board, respectively, of the Palawan Times. His
Honor's plaint is based on an article written by respondent Reynoso, Jr. in his column, "On the Beat," and published in the July 20, 1994 issue of
said newspaper which is of general circulation in Puerto Princesa City.
The pertinent portions of the article complained of are hereunder reproduced, with the alleged contemptuous statements italicized for ready
identification as the particulars equivalent to the innuendo in a libel charge:
Isang maalab na issues (sic) pa ay ang DEATH THREATS laban kono kay Judge Eustaquio Gacott, Jr. ng mga pamilya ng
kanyang sinentensiyahan ng Double Death Penalty. Sinabi ni Wilmar Godoy sa DWRM programa na wala silang
pagbabantang ginawa umano, at hindi nila ito kailan man isinaisip. Umaasa na lamang sila sa magiging resulta ng review
ng Korte Suprema. Ayon naman kay Gacott sa kanyang interview sa DYPR ay totoong pinagbabantaan siya ng mga
Godoy. Kaya ayon marami siyang Security na armado, in full battle gear. Kung totoo ito, bakit hindi niya kasuhan ang mga
ito? Ito rin ang katanungan ni Mr. Tony Omaga Diaz, ang station manager ng DYPR. O bale ba gumawa siya ng sariling
MULTO Pagkatapos ay takot na takot siya sa multong kanyang ginawa.
Usap-usapan pa rin ang kaso ni Godoy. Ito raw ay isang open book maging sa kanyang mga co-teachers sa Pulot na naglilive in si Godoy at ang babaing si Mia Taha. Matagal na ang kanilang ugnayan. Meron ding "balita" ewan kung totoo,
na noong si Godoy daw ay nasa Provincial Jail pa ay dinadalaw siya ni Taha At kumakain pa sila sa labas kasama ang isang
Provincial Guard. Ito rin ang dahilan kung bakit ipinagpilitan ni Judge Gacott na madala kaagad sa Muntinlupa sa National
Bilibid Prisons si Godoy kahit na ang kaso ay naka-apela pa.
xxx xxx xxx
Pero mayroon payo si Atty. Telesforo Paredes, Jr. sa mga mamamayan ng Palawan, mag-ingat kayo sa paglalakad at baka
kung hindi kayo madapa ay madulas daw kayo. Dahil ayon daw kay Judge Gacott, base sa kanyang interview sa Magandang
Gabi Bayan, "Tagilid na raw and mundo. Maraming nagpapatunay daw dito, maski sa kapitolyo." Joke lang. Pero isang
warning din sa may mga nobya, na mag-ingat sa pag-break sa inyong girlfriend, dahil baka mademanda kayo at
masentensyahan ng double death penalty, lalo na kung kay Judge Gacott, dahil alam na ninyo, tagilid and laban diyan.
The complaint avers that the article tends to impede, obstruct, belittle, downgrade and degrade the administration of justice; that the article
contains averments which are disrespectful, discourteous, insulting, offensive and derogatory; that it does not only cast aspersions on the
integrity and honesty of complainant as a judge and on his ability to administer justice objectively and impartially, but is an imputation that he
is biased and he prejudges the cases filed before him; and that the article is sub judice because it is still pending automatic review.
Respondent Mauricio Reynoso, Jr. contends in his Comment 2 that his article does not intend to impede nor obstruct the administration of
justice because the same was published after complainant had promulgated his decision in the case; that such publication will not affect or
influence the review by the Supreme Court of the criminal case, considering that the Palawan Times is circulated only in the City of Puerto
Princess and some parts of Palawan; that the comments made therein were made in good faith and in the exercise of the freedom of
expression and of the press; that while the article may contain unfavorable comments about complainant, it cannot be considered as having
the tendency to degrade or impede the administration of justice; and that the complaint, which is for contempt of a judge of a regional trial
court, was erroneously filed with the Supreme Court contrary to Section 4, Rule 71 of the rules of Court.
Respondent Eva P. Ponce de Leon, in her Comment 3 and Supplemental Comment, 4 asserts that the article is merely in reaction to the
television interview given by complainant in the show, "Magandang Gabi Bayan," last June 18, 1994 wherein the latter defended his decision in
Criminal Cases Nos. 11640-41, entitled "People vs. Godoy;" that the article is no longer sub judice as the same was published only after
complainant had rendered his decision and had already lost jurisdiction over the case; that the article cannot be considered contemptuous and
defamatory in the absence of a clear and present danger that it will tend directly or indirectly to impede, obstruct, or ridicule the
administration of justice; that it constitutes a valid exercise of the constitutionally guaranteed freedom of the press; that a reading of the
subject article in its entirety will show that the same does not constitute contempt but, at most, is merely a fair criticism which did not intend
to malign nor place him in disrepute in the performance of his functions; and that respondent Ponce de Leon cannot be held liable for
contempt because she did not have either actual knowledge of, or Personal connection with, the authorship or publication of the allegedly
contemptuous article, since she had just returned from the United States when the same was published.
On the issue of whether the specified statements complained of are contumacious in nature, we are inclined, based on an overall perusal and
objective analysis of the subject article, to hold in the negative. We have read and reread the article in its entirety and we are fully convinced
that what is involved here is a situation wherein the alleged disparaging statements have been taken out of context. If the statements claimed
to be contumelious had been read with contextual care, there would have been no reason for this contempt proceeding.

In our aforestated evaluation, we were sufficiently persuaded to favorably consider the following explanation of respondent Ponce de Leon in
her Supplemental Comment:
On the other hand, a reading of the subject article in its entirety will show that the same does not constitute contempt, but
at most, merely constitutes fair criticism.
The first portion of the article reads:
"Isang maalab na issues (sic) pa ay ang DEATH THREATS laban kono kay Judge Eustaquio Gacott, Jr. ng
mga pamilya ng kanyang sinentensiyahan ng Double Death Penalty. Sinabi ni Wilmar Godoy sa DWRM
programa na wala silang pagbabantang ginawa umano, at hindi nila ito kailan man isinaisip. Ayon
naman kay Gacott sa kanyang interview sa DYPR ay totoong pinagbabantaan siya ng mga Godoy. Kaya
ayon marami siyang Security na armado, in full battle gear. Kung totoo ito, bakit hindi niya kasuhan ang
mga ito? Ito rin ang katanungan ni Mr. Tony Omaga Diaz, ang station manager ng DYPR. O bale ba
gumawa siya ng sariling MULTO Pagkatapos ay takot na takot siya sa multong kanyang ginawa."
The foregoing does not even deal with the merits of the case, but with the public accusations being made by complainant
that he is being given death threats by the family of the accused, Danny Godoy. The article only makes a justifiable query
as to why Complainant does not file the appropriate charges if his accusations are true.
"Usap-usapan pa rin ang kaso ni Godoy. Ito raw ay isang open book maging sa kanyang mga co-teachers
sa Pulot na nagli-live in si Godoy at ang babaing si Mia Taha. Matagal na ang kanilang ugnayan. Meron
ding balita ewan kung totoo, na noong si Godoy daw ay nasa Provincial Jail pa ay dinadalaw siya ni Taha
At kumakain pa sila sa labas kasama ang isang Provincial Guard. Ito rin ang dahilan kung bakit
ipinagpilitan ni Judge Gacott na madala kaagad sa Muntinlupa sa National Bilibid Prisons si Godoy kahit
na ang kaso ay naka-apela pa." (Emphasis supplied)
The foregoing is merely a report of rumors regarding the accused Danny Godoy. They are not presented as facts by
respondent Mauricio Reynoso, Jr. In fact, he even goes to the extent of acknowledging that he himself does not know if the
rumors are true or not.
The subject article then offers the following analysis:
"Malaking epekto ang desisyon ng Korte Suprema sa dalawang tao, kay Danny Godoy at Judge Gacott.
Kung babaliktarin ng Supreme Court and decision ni Gacott, lalaya si Godoy, si Gacott naman ang
masisira, ang kanyang aspirations na maitaas sa Court of Appeals at eventually makasama sa mga
miyembro ng korte suprema ng bansa. Kung papaboran naman Gacott ay sigurado na ang kamatayan ni
Godoy, at double pa pero si Gacott maitataas pa ang puwesto. Tayo naman, hintay lamang tayo ng ano
mang magiging developments ng kaso."
The foregoing is nothing more than a fair analysis. For indeed, if the Honorable Court affirms the Decision of Complainant,
the accused Danny Godoy would be meted the death sentence. On the other hand, if the decision is reversed, this may
adversely affect the aspirations of Complainant to be promoted to the Court of Appeals, and eventually to the Honorable
Court.
Finally, the subject article reads:
"Pero mayroon payo si Atty. Telesforo Paredes, Jr. sa mga mamamayan ng Palawan, mag-ingat kayo sa
paglalakad at baka kung hindi kayo madapa ay madulas daw kayo. Dahil ayon daw kay Judge Gacott,
base sa kanyang interview sa Magandang Gabi Bayan, 'Tagilid na raw and mundo. Maraming
nagpapatunay daw dito, maski sa kapitolyo.' Joke lang. Pero isang warning din sa may mga nobya, na
mag-ingat sa pag-break sa inyong girlfriend, dahil baka mademanda kayo at masentensyahan ng double
death penalty, lalo na kung kay Judge Gacott, dahil alam na ninyo, tagilid and laban diyan."
Again, the subject article merely reports what Atty. Telesforo Paredes, Jr. allegedly said. But more importantly, the foregoing
is merely a reaction not so much to Complainant's Decision, but to the public statements made by Complainant in the
national television show "Magandang Gabi Bayan."
Snide remarks or sarcastic innuendoes do not necessarily assume that level of contumely which is actionable under Rule 71 of the Rules of
Court. Neither do we believe that the publication in question was intended to influence this Court for it could not conceivably be capable of
doing so. The article has not transcended the legal limits for editorial comment and criticism. Besides, it has not been shown that there exists
a substantive evil which is extremely serious and that the degree of its imminence is so exceptionally high as to warrant punishment for
contempt and sufficient to disregard the constitutional guaranties of free speech and press.
It has been insightfully explained and suggested that a judge will generally and wisely pass unnoticed any mere hasty and unguarded
expression of passion, or at least pass it with simply a reproof. It is so that in every case where a judge decides for one party, he decides
against another; and oftentimes both parties are beforehand equally confident and sanguine. The disappointment, therefore, is great, and it is
not in human nature that there should be other than a bitter feeling, which often reaches to the judge as the cause of the supposed wrong. A
judge, therefore, ought to be patient, and tolerate everything which appears as but the momentary outbreak of disappointment. A second
thought will generally make a party ashamed of such, outbreak, and the dignity of the court will suffer none by passing it in silence. 5
Prescinding from the foregoing adjudgment, the Court observes that there are two primary issues presented in this incident which deserve a
more extended disquisition, firstly, because of their importance and frequent involvement in contempt proceedings filed in the courts, and,
secondly, by reason of the fact that there are numerous and variant pronouncements on the subject of contempt which need to be clarified.
The principal issues are (1) whether or not there can be contempt of court in case of post-litigation statements or publications; and (2) which
court has jurisdiction over a contempt committed against the trial court while the case is pending on appeal. Other cognate and related issues
must also be discussed so as to provide judicial guidance on the present state of our statutory and case laws thereon.
Before we go into a more intensive analysis of said issues, however, it may be beneficial for purposes thereof to preliminarily revisit and
expound on the nature and implications of a special civil action for contempt or of any initiatory pleading therefor filed as an incident in the
main case. That exercise will further explain and justify our disposition of the contempt charge herein.
I
Prefatorial Considerations

The exercise of the power to punish for contempt has a dual aspect, primarily, the proper punishment of the guilty party for his disrespect to
the court, and, secondarily, his compulsory performance of some act or duty required of him by the court and which he refuses to perform.
Due perhaps to this two fold aspect of the exercise of the power to punish them, contempts are classified as civil or criminal. 6 However, the
line of demarcation between acts constituting criminal contempt, as distinguished from civil contempt, is quite indistinct. The confusion in
attempts to classify civil and criminal contempts is due to the fact that there are contempts in which both elements appear; or there are
contempts which are neither wholly civil nor altogether criminal, but partake of the characteristics of both; or it is also possible that the same
act may constitute both a civil and criminal contempt.
A. As to the Nature of the Offense
A criminal contempt is conduct that is directed against the dignity and authority of the court or a judge acting judicially; it is an act obstructing
the administration of justice which tends to bring the court into disrepute or disrespect. 7 On the other hand, civil contempt consists in failing to
do something ordered to be done by a court in a civil action for the benefit of the opposing party therein and is, therefore, an offense against
the party in whose behalf the violated order is made. 8
A criminal contempt, being directed against the dignity and authority of the court, is an offense against organized society and, in addition, is
also held to be an offense against public justice which raises an issue between the public and the accused, and the proceedings to punish it
are punitive. On the other hand, the proceedings to punish a civil contempt are remedial and for the purpose of the preservation of the right of
private persons. It has been held that civil contempt is neither a felony nor a misdemeanor, but a power of the court. 9
It has further been stated that intent is a necessary element in criminal contempt, and that no one can be punished for a criminal contempt
unless the evidence makes it clear that he intended to commit it. On the contrary, there is authority indicating that since the purpose of civil
contempt proceedings is remedial, the defendant's intent in committing the contempt is immaterial. Hence, good faith or the absence of intent
to violate the court's order is not a defense in civil contempt. 10
B. As to the Purpose for which the Power is Exercised
A major factor in determining whether a contempt is civil or criminal is the purpose for which the power is exercised. Where the primary
purpose is to preserve the courts authority and to punish for disobedience of its orders, the contempt is criminal. Where the primary purpose
is to provide a remedy for an injured suitor and to coerce compliance with an order, the contempt is civil. A criminal contempt involves no
element of personal injury. It is directed against the power and dignity of the court; private parties have little, if any, interest in the
proceedings for punishment. Conversely, if the contempt consists in the refusal of a person to do an act that the court has ordered him to do
for the benefit or advantage of a party to an action pending before the court, and the contemnor is committed until he complies with the
order, the commitment is in the nature of an execution to enforce the judgment of the court; the party in whose favor that judgment was
rendered is the real party in interest in the proceedings. Civil contempt proceedings look only to the future. And it is said that in civil contempt
proceedings, the contemnor must be in a position to purge himself. 11
C. As to the Character of the Contempt Proceeding
It has been said that the real character of the proceedings is to be determined by the relief sought, or the dominant purpose, and the
proceedings are to be regarded as criminal when the purpose is primarily punishment, and civil when the purpose is primarily compensatory or
remedial. 12
Criminal contempt proceedings are generally held to be in the nature of criminal or quasi-criminal actions. They are punitive in nature, and the
Government, the courts, and the people are interested in their prosecution. Their purpose is to preserve the power and vindicate the authority
and dignity of the court, and to punish for disobedience of its orders. Strictly speaking, however, they are not criminal proceedings or
prosecutions, even though the contemptuous act involved is also a crime. The proceeding has been characterized as sui generis, partaking of
some of the elements of both a civil and criminal proceeding, but really constituting neither. In general, criminal contempt proceedings should
be conducted in accordance with the principles and rules applicable to criminal cases, in so far as such procedure is consistent with the
summary nature of contempt proceedings. So it has been held that the strict rules that govern criminal prosecutions apply to a prosecution for
criminal contempt, that the accused is to be afforded many of the protections provided in regular criminal cases, and that proceedings under
statutes governing them are to be strictly construed. However, criminal proceedings are not required to take any particular form so long as the
substantial rights of the accused are preserved. 13
Civil contempt proceedings are generally held to be remedial and civil in their nature; that is, they are proceedings for the enforcement of
some duty, and essentially a remedy for coercing a person to do the thing required. As otherwise expressed, a proceeding for civil contempt is
one instituted to preserve and enforce the rights of a private party to an action and to compel obedience to a judgment or decree intended to
benefit such a party litigant. So a proceeding is one for civil contempt, regardless of its form, if the act charged is wholly the disobedience, by
one party to a suit, of a special order made in behalf of the other party and the disobeyed order may still be obeyed, and the purpose of the
punishment is to aid in an enforcement of obedience. The rules of procedure governing criminal contempt proceedings, or criminal
prosecutions, ordinarily are inapplicable to civil contempt proceedings. It has been held that a proceeding for contempt to enforce a remedy in
a civil action is a proceeding in that action. Accordingly, where there has been a violation of a court order in a civil action, it is not necessary to
docket an independent action in contempt or proceed in an independent prosecution to enforce the order. It has been held, however, that
while the proceeding is auxiliary to the main case in that it proceeds out of the original case, it is essentially a new and independent
proceeding in that it involves new issues and must be initiated by the issuance and service of new process. 14
In general, civil contempt proceedings should be instituted by an aggrieved party, or his successor, or someone who has a pecuniary interest
in the right to be protected. In criminal contempt proceedings, it is generally held that the State is the real prosecutor. 15
Contempt is not presumed. In proceedings for criminal contempt, the defendant is presumed innocent and the burden is on the prosecution to
prove the charges beyond reasonable doubt. In proceedings for civil contempt, there is no presumption, although the burden of proof is on the
complainant, and while the proof need not be beyond reasonable doubt, it must amount to more than a mere preponderance of evidence. It
has been said that the burden of proof in a civil contempt proceeding lies somewhere between the criminal "reasonable doubt" burden and the
civil "fair preponderance" burden. 16
On the basis of the foregoing legal principles which are now well settled, it can be safely concluded that under paragraph (d) of Section 3, Rule
71 of the Rules of Court on indirect contempt, any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice, constitutes criminal contempt.
II
Whether or not Post-Litigation Publications can be the Subject of Contempt Proceedings
A. Effect of Freedom of Speech and Press Guaranties

In the case of In re Sotto, 17 this Court had the opportunity to define the relation between the courts and the press, quoting there in the
statements made by Judge Holmes in U.S. vs. Sullen, 18 thus:
The administration of justice and the freedom of the press, though separate and distinct, are equally sacred, and neither
should be violated by the other. The press and the courts have correlative rights and duties and should cooperate uphold
the principles of the Constitution and laws, from which the former receives its prerogative and the latter its jurisdiction. The
right of legitimate publicity must be scrupulously recognized and care taken at all times to avoid impinging upon it. In a
clear case where it is necessary in order to dispose of judicial business unhampered by publications which reasonably tend
to impair the impartiality of verdicts, or otherwise obstruct the administration of justice, this Court will not hesitate to
exercise its undoubted power to punish for contempt. This Court must be permitted to proceed with the disposition of its
business in an orderly manner free from outside interference obstructive of its constitutional functions. This right will be
insisted upon as vital to an impartial court, and, as a last resort, as an individual exercises the right of self-defense, it will
act to preserve its existence as an unprejudiced tribunal.
Hence, a person charged with contempt of court for making certain utterances or publishing writings which are clearly opprobrious may not,
ordinarily, escape liability therefor by merely invoking the constitutional guaranties of freedom of speech and press. Liberty of speech and the
press must not be confused with an abuse of such liberties. Obstructing, by means of the spoken or written word, the administration of justice
by the courts has been described as an abuse of the liberty of speech or the press such as will subject the abuser to punishment for contempt
of court.
Guaranties of free speech and a free press, as they appear in the Constitution, are frequently couched so as to impute responsibility for any
abuse of the privilege, and it is sometimes recognized that with respect to whether an allegedly scandalous publication or utterance is to be
treated as a contempt, a line must be drawn between those speeches or writings which are protected by the privilege of free speech and a
free press and those which constitute an abuse of it.
The right of freedom of the press is only a specific instance of the general right of freedom of speech; persons engaged in the newspaper
business cannot claim any other or greater right than that possessed by persons not in that business. 19
B. Different Doctrines or Schools of Thought
In the case of In re Francisco Brillantes, 20 Justice Perfecto explained in his dissenting opinion that "as to whether contempt may be committed
for criticizing a tribunal after the same has rendered decision or taken final action on a matter which is the subject of criticism, there are two
schools of thought represented, respectively, by what we may call the English doctrine and the American doctrine, the first for the affirmative
and the last one for the negative. The question now is to determine which of the two doctrines is more conformable to reason and justice and,
therefore, should be, adopted and applied by our tribunals."
1. The English Doctrine
According to Justice Perfecto, the rule in England is that there can be contempt of court even after the case has been terminated. He then
proceeded to ramify:
In England comments upon the court's action in a concluded case, where libelous or calculated to bring the court into
disrepute, were freely punishable as contempt under the early common law. Distinction between pending and concluded
matters does not seem to have been made. Any comment impairing the dignity of the court was punishable as contempt
regardless of the time at which made.
xxx xxx xxx
The whole theory of the early common law of contempt is admirably delivered by Wilmot, J., in King vs. Almon, . . . . The
publication there complained of was a volume containing a diatribe against Lord Mansfield for allowing an amendment of
pleading as of course, and apparently from corrupt motives, in a concluded case, and further charging him with having
introduced a practice to defeat the efficacy of the writ of habeas corpus. It is there said: "The arraignment of the justice of
the judges is arraigning the King's justice; it is an impeachment of his wisdom and goodness in the choice of his judges, and
excites in the mind of the people a general dissatisfaction with all judicial determinations, and indisposes their minds to
obey them; and, whenever men's allegiance to the laws is so fundamentally shaken, it is the most fatal and most
dangerous obstruction of justice, and, in my opinion, calls for a more rapid and immediate redress than any other
obstruction whatever not for the sake of the judges as private individuals, but because they are the channels by which
the Kings' justice is conveyed to the people. To be impartial, and to be universally thought so, are both absolutely
necessary for giving justice that free, open, and uninterrupted current which it has for many ages found all over this
Kingdom, and which so eminently distinguishes and exalts it above all nations upon the earth . . . . The constitution has
provided very apt and proper remedies for correcting and rectifying the involuntary mistakes of judges, and for punishing
and removing them for any voluntary perversions of justice. But, if their authority is to be trampled upon by pamphleteers
and newswriters, and the people are to be told that the power given to the judges for their protection is prostituted to their
destruction, the court may retain its power some little time; but I am sure it will instantly lose all its authority, and the
power of the court will not long survive the authority of it: Is it possible to stab that authority more fatally than by charging
the court, and more particularly the chief justice, with having introduced a rule to subvert the constitutional liberty of the
people? A greater scandal could not be published . . . . It is conceded that an act of violence upon his person when he was
making such an order would be contempt punishable by attachment. Upon what principle? For striking a judge in walking
along the streets would not be a contempt of the court. The reason, therefore, must be, that he is in the exercise of his
office, and discharging the function of a judge of this court; and, if his person is under this protection, why should not his
character be under the same protection? It is not for the sake of the individual, but for the sake of the public, that his
person is under such protection; and, in respect of the public, the imputing of corruption and the perversion of justice to
him, in an order made by him at his chambers, is attended with much more mischievous consequences than a blow; and
therefore the reason of proceeding in this summary manner applies with equal, if not superior, force, to one case as well as
the other. There is no greater obstruction to the execution of justice from the striking a judge than from the abusing him,
because his order lies open to be enforced or discharged, whether the judge is struck or abused for making it.
2. The American Doctrine
In American jurisprudence, the general rule is that defamatory comments on the conduct of a judge with respect to past cases or matters
finally disposed of do not constitute contempt, even though libelous and reflecting on the integrity of the judge and the court. 21 It has been
said that the power to punish as a contempt a criticism concerning a case made after its termination is denied under the theory that such a
power is not necessary as a safeguard to the proper functioning of the court as a judicial tribunal. And it has been said that comments,

however stringent, relating to judicial proceedings which are past and ended are not contempt of court even though they may be a libel
against the judge or some other officer of the court. There is even the view that when a case is finished, the courts and judges are subject to
the same criticisms as other people and that no comment published in connection with a completed case, however libelous or unjust, is
punishable as contempt of court. Thus it is said that the remedies of a judge who suffers abuse at the hands of the press, not amounting to
contempt, are the same as those available to persons outside the judiciary. 22
To the same effect was the holding in People ex rel. Supreme Court vs. Albertson, 23 where it was declared that
The great weight of authority is to the effect that in so far as proceedings to punish for contempt are concerned
comment upon the behavior of the court in cases fully determined in the particular court criticized is unrestricted under our
constitutional guaranty of liberty of the press and free speech, especially in the absence of a statute of direct application to
the contrary. This view in brief is based upon the theory
that keeping our constitutional guaranties in mind libelous publications which bear upon the proceedings of a court
while they are pending may in some way affect their correct determination, and are properly the subject of contempt
proceedings. On the other hand, such publications or oral utterances of entirely retrospective bearing come within the
sphere of authorized comment unless they affect a judge personally, when he has his remedy in an action of libel or
slander, as does any other individual thus offended. He has the right to bring an action at law before a jury of his peers.
Along similar lines, in Ex Parte Mcleod, 24 the court ruled that:
The right of a court to punish, as for contempts, criticisms of its acts, or even libels upon its officers, not going to the
extent, by improper publications, of influencing a pending trial, . . . would not only be dangerous to the rights of the people,
but its exercise would drag down the dignity and moral influence of these tribunals. Such criticism is the right of the citizen,
and essential not only to the proper administration of justice, but to the public tranquility and contentment. Withdrawing
power from courts to summarily interfere with such exercise of the right of the press and freedom of speech deprives them
of no useful power.
Likewise, the State Supreme Court of Montana in State ex rel. Metcalf vs. District Court, 25 pointed out that the legal proceeding involved
therein was not pending when the alleged libelous article was published, then referred to the guaranty of freedom of speech and the press,
and eventually held that the publication involved was not punishable as contempt. It declared that so long as the published criticism does not
impede the due administration of the law, it is better to maintain the guaranty of the Constitution than to undertake to compel respect or
punish libel by the summary process of contempt.
Finally, in holding that persons who had published newspaper articles alleging that a designated judge had been intentionally partial and
corrupt in the trial of certain causes which had been decided and were not pending when the publication occurred could not be punished as for
contempt the court, in State ex rel. Attorney General vs.Circuit Court, 26 cited a number of cases supporting the view that libelous newspaper
comments upon the acts of a court in actions past and ended do not constitute contempt. It pointed out that some of such decisions took the
position that to punish such publications would constitute a serious invasion of constitutional guaranties of free speech and a free press.
It ratiocinated in this manner: "Important as it is that courts should perform their grave public duties unimpeded and unprejudiced by
illegitimate influences, there are other rights guaranteed to all citizens by our Constitution and form of government, either expressly or
impliedly, which are fully as important, and which must be guarded with an equally zealous care. These rights are the rights of free speech and
of free publication of the citizens' sentiments on all subjects. It seems clear to us that so extreme a power as to punish for contempt because
of libelous publications as to past litigation, is inconsistent with, and would materially impair, the constitutional rights of free speech and free
press."
However, even under American jurisprudence, as shall hereafter be demonstrated, the aforesaid rulings are not without exceptions. There is
ample authority that, under proper circumstances, constitutional guaranties of freedom of speech and liberty of the press do not protect
contemptuous publications relating to court proceedings even though such publications are not made until after the pendency of the litigation
in question. 27
3. The Philippine Doctrine
In the Philippine setting, as we have noted, there are conflicting views on this issue which have to be analyzed and, if possible, reconciled. On
that exordial indication, we have digressed into these aspects of the law on contempt and seized upon this incident in the criminal cases at bar
in order to essay a rapprochement of such views into what we may call the Philippine doctrine.
In the early cases decided by this Court involving contempts through newspaper publications, the rule was that contemptuous publications
were actionable only if committed with respect to pending suits. Apparently, the weight of authority then was to the effect that criticism of the
conduct of a judge or a court with regard to matters finally disposed of does not constitute contempt, even though it may be libelous.
That rule first found application in the case of In re Lozano, et al. 28 and was reiterated in the subsequent cases of In re Abistado, 29 and People
vs. Alarcon, et al, 30 where this Court, speaking through Justice Malcolm, tersely stated:
The rule is well established that newspaper publications tending to impede, obstruct, embarrass, or influence the courts in
administering justice in a pending suit proceeding constitute criminal contempt which is summarily punishable by the
courts. The rule is otherwise after the cause is ended. . . . (6 R.C.L., pp. 508-515).
It will be noted that the aforequoted conclusion was arrived at after a short discourse presented by the ponente on the existing divergence of
opinions on the matter between the English and American courts. But the learned justice, notwithstanding his preference for and application of
the American doctrine, nonetheless thereafter made the recommendatory observation that "(w)ith reference to the applicability of the above
authorities, it should be remarked first of all that this court is not bound to accept any of them absolutely and unqualifiedly. What is best for
the maintenance of the judiciary in the Philippines should be the criterion."
It seems that this view was shared by then Associate Justice Moran when he dissented from the majority opinion in the aforecited case
of People vs. Alarcon, et al., which upheld the doctrine enunciated in Lozano and Abistado, in this wise: "I know that in the United States,
publications about courts, after the conclusion of a pending case, no matter how perverse or scandalous, are in many instances brought within
the constitutional protection of the liberty of the press. But while this rule may find justification in that country, considering the American
temper and psychology and the stability of its political institutions, it is doubtful whether here a similar toleration of gross misuse of liberty of
the press would, under our circumstances, result in no untoward consequences to our structure of democracy yet in the process of healthful
development and growth."
Such perception could have probably impelled Justice Moran to deviate from the then accepted doctrine, with this rationalization:

Contempt, by reason of publications relating to courts and to court proceedings, are of two kinds. A publication which tends
to impede, obstruct, embarrass or influence the courts in administering justice in a pending suit or proceeding, constitutes
criminal contempt which is summarily punishable by courts. This is the rule announced in the cases relied upon by the
majority. A publication which tends to degrade the courts and to destroy public confidence in them or that which tends to
bring them in any way into disrepute, constitutes likewise criminal contempt, and is equally punishable by courts. In the
language of the majority, what is sought, in the language of the majority, what is sought, in the first kind of contempt, to be
shielded against the influenced of newspaper comments, is the all-important duty of the courts to administer justice in the
decision of a pending case. In the second kind of contempt, the punitive hand of justice is extended to vindicate the courts
from any act or conduct calculated to bring them into disfavor or to destroy public confidence in them. In the first, there is
no contempt where there is no action pending, as there is no decision which might in any way be influenced by the
newspaper publication. In the second, the contempt exists, with or without a pending case, as what is sought to be
protected is the court itself and its dignity. Courts would lose their utility if public confidence in them is destroyed.
That dissenting opinion was impliedly adopted in the subsequent case of In re Brillantes, 31 where the editor of the Manila Guardian was
declared in contempt of court for publishing an editorial, stating that the 1944 Bar Examinations were conducted in a farcical manner, even
after the case involving the validity of said examinations had been terminated. This was followed by In re Almacen 32 where the Court stated
categorically that the rule that bars contempt after a judicial proceeding has terminated had lost much of its validity, invoking therein the
ruling in Brillantes and quoting with approval the dissenting opinion in Alarcon.
It appears, therefore, that in the two latest cases decided by this Court, the general rule that there can be no contempt in post-litigation
publications is not necessarily all-embracing under certain situations. From the shift in judicial approach in Brillantes to the position announced
in Almacen, it can inevitably be concluded that the termination of the case is not a guaranty of immunity from a contempt charge for
publications or utterances which are defamatory or libelous, depending on the purpose and effects thereof. In other words, one may still be
cited for contempt of court even after a case has ended, where such punitive action is necessary to protect the court and its dignity and to
vindicate it from acts or conduct intended or calculated to degrade, ridicule or bring the court into disfavor and thereby erode or destroy public
confidence in that court.
This qualified distinction is not without justification and, in fact, was also foreshadowed by the concurring opinion of Justice Briones
in Brillantes wherein, after noting the conflicting views on the amenability of the contemnor during the pendency or after the termination of
the judicial proceeding in the court involved as illustrated by the English and American doctrines thereon, he advanced the proposition that
. . . esta distincion no tiene mucha importancia. Lo importante para mi es ver si la critica lanzada por el recurrido es falsa y
esta concebida en terminos tales que "tiende directamente a degradar la administracion de justicia," . . . es indiferente si
versa sobre un asunto o negociacion totalmente terminada o no; el desacato existe entonces y debe ser castigado.
. . . Se trata simplemente de la facultad inherente en los tribunales de reprimir y castigar todo acto que tiende a
ambarazarles y obstruirles en su funcion de administrar justicia, . . . .
The rationale for making a qualification to the rule generally considered as the American doctrine, which rule as herein qualified we now adopt
and refer to as the Philippine doctrine on this issue, is profoundly and eloquently explicated by Justice Moran in Alarcon, to wit:
It is true that the Constitution guarantees the freedom of speech and of the press. But license or abuse of that freedom
should not be confused with freedom in its true sense. Well-ordered liberty demands no less unrelaxing vigilance against
abuse of the sacred guaranties of the Constitution than the fullest protection of their legitimate exercise. As important as is
the maintenance of a free press and the free exercise of the rights of the citizens is the maintenance of a judiciary
unhampered in its administration of justice and secure in its continuous enjoyment of public confidence. "The
administration of justice and freedom of the press, though separate and distinct are equally sacred, and neither should be
violated by the other. The press and the courts have correlative rights and duties and should cooperate to uphold the
principles of the Constitution and the laws, from which the former receives its prerogatives and the latter its jurisdiction."
(U.S. vs. Su liens, 38 Fed., 2d., 230.) Democracy cannot long endure in a country where liberty is grossly misused any more
than where liberty is illegitimately abridged.
xxx xxx xxx
If the contemptuous publication made by the respondent herein were directed to this Court in connection with a case
already decided, the effect of the rule laid down by the majority is to deny this court the power to vindicate its dignity. The
mischievous consequences that will follow from the situation thus sought to be permitted, are both too obvious and odious
to be stated. The administration of Justice, no matter how righteous, may be identified with all sorts of fancied scandal and
corruption. Litigants, discontented for having lost their cases, will have every way to give vent to their resentment. Respect
and obedience to Law will ultimately be shattered, and, as a consequence, the utility of the courts will completely
disappear.
It may be said that respect to courts cannot be compelled and that public confidence should be a tribute to judicial worth,
virtue and intelligence. But compelling respect to courts is one thing and denying the courts the power to vindicate
themselves when outraged is another. I know of no principle of law that authorizes with impunity a discontented citizen to
unleash, by newspaper publications, the avalanche of his wrath and venom upon courts and judges. If he believes that a
judge is corrupt and that justice has somewhere been perverted, law and order require that he follow the processes
provided by the Constitution and the statutes by instituting the corresponding proceedings for impeachment or otherwise.
As Mr. Justice Palmer, in speaking of the duty of courts and court officers, has wisely said:
Would it be just to the persons who are called upon to exercise these powers to compel them to do so,
and at the same time allow them to be maltreated or libeled because they did so? How would a suitor
like a juryman trying his case who might expect he would be assaulted, beaten, his property destroyed,
or his reputation blasted, in case he decided against his opponent? Apply the same thing to judges, or
the sheriff, and how long could organized society hold together? With reference to a judge, if he has
acted corruptly, it is worse than a mere contempt. But it is apparent it would not be right that the court
of which he is a member should determine this, and consequently the law has provided a plain and easy
method of bringing him to justice by a petition to Parliament; but, while the law authorizes this, it does
not allow infamous charges to be made against him by persons, either in the newspapers or otherwise,
with reference to how he has or shall discharge the duties of his office. It must be apparent to all right
thinking men that, if such were allowed to be indulged in, it must end in the usefulness of the court itself
being destroyed, however righteous its judges may act. From what I have said it must not be supposed
that I think that the decisions of the court, or the actions of the judges, or other persons composing the

court, are not to be discussed; on the contrary, I would allow the freest criticism of all such acts if done
in a fair spirit, only stopping at what must injure or destroy the court itself and bring the administration
of the law into disrepute, or be an outrage on the persons whose acts are discussed, or when such
discussion would interfere with the right decision of the cause before the court.
We do not hesitate to hereby give our imprimatur to the aforequoted opinion which, we fully believe, conforms to basic dogmatic teachings on
judicial and professional conduct requiring respect for and the giving of due deference to the judicial system and its members ethical
standards which this Court has, time and again, been trying to inculcate in the minds of every member of the Bar and the public in general.
4. Cautela on the Balancing of Interests
On the bases of the foregoing authorities, it is evident that a line has to be drawn between those utterances or writings which are protected by
the privileges of free speech and a free press and those which constitute an abuse thereof, in determining whether an allegedly scurrilous
publication or statement is to be treated as contempt of court. But to find the line where the permissible right of free speech ends and its
reprehensible abuse begins is not always an easy task. In contempt proceedings, it was held that this line must usually be defined by the
courts themselves, and in such cases its location is to be established with special care and caution. 33
In so doing, it becomes necessary to give the subject that careful examination commensurate with its importance, mindful that, on the one
hand, the dignity and authority of the courts must be maintained, while, on the other, free speech, a free press, and the liberty of the citizen
must be preserved. Both are equally valuable rights. If the court is shorn of its power to punish for contempt in all proper cases, it cannot
preserve its authority, so that even without any constitutional or statutory guaranty this power is inherent in the court. But the Constitution
itself, in the Bill of Rights, guarantees free speech and liberty of the press. Of course, it was never intended, under the guise of these
constitutional guaranties, that the power of the court should be trenched upon. 34
How to determine whether an act or utterance is covered by the protective mantle of the constitutional guaranty of liberty of the press or
whether it is already outside or an abuse thereof, is an altogether different matter. We have perforce to draw from tenets in American
jurisprudence, although with discriminating choice, since after all our present doctrines on contempt vis-a-vis constitutional limitations trace
their roots in the main to the lessons laid down and born of the social and judicial experience in that jurisdiction.
The liberty of the press consists in the right to publish with impunity the truth, with good motives and for justifiable ends, whether it respects
governments individuals; the right freely to publish whatever the citizen may please and to be protected against any responsibility for so
doing, except in so far as such publications, from their blasphemy, obscenity, or scandalous character, may be a public offense, are as by their
falsehood and malice they may injuriously affect the standing, reputation, or pecuniary interests of individuals. The true liberty of the press is
amply secured by permitting every man to publish his opinion; but it is due to the peace and dignity of society to inquire into the motives of
such publications, and to distinguish between those which are meant for use and reformation, and with an eye solely to the public good, and
those which are intended merely to delude and defame. To the latter description, it is impossible that any good government should afford
protection and impunity.
The liberty of the press means that anyone can publish anything he pleases, but he is liable for the abuse of this liberty. If he does this by
scandalizing the courts of his country, he is liable to be punished for contempt. In other words, the abuse of the privilege consists principally in
not telling the truth. There is a right to publish the truth, but no right to publish falsehood to the injury of others with impunity. It, therefore,
does not include the right to malign the courts, to libel and slander and utter the most flagrant and indecent calumnies about the court and its
officers, nor to invade the sanctuaries of the temples. Such practices and such miscreants ought to be condemned, and the courts would
deserve condemnation and abolition if they did not vigorously and fearlessly punish such offenders. Such practices are an abuse of the liberty
of the press, and if the slander relates to the courts, it concerns the whole public and is consequently punishable summarily as a criminal
contempt. It is therefore the liberty of the press that is guaranteed, not the licentiousness. It is the right to speak the truth, not the right to
bear false witness against your neighbor. 35
This brings to fore the need to make a distinction between adverse criticism of the court's decision after the case is ended and "scandalizing
the court itself." The latter is not criticism; it is personal and scurrilous abuse of a judge as such, in which case it shall be dealt with as a case
of contempt. 36
It must be clearly understood and always borne in mind that there is a vast difference between criticism or fair comment on the one side and
defamation on the other. Where defamation commences, true criticism ends. True criticism differs from defamation in the following particulars;
(1) Criticism deals only with such things as invite public attention or call for public comment. (2) Criticism never attacks the individual but only
his work. In every case the attack is on a man's acts, or on some thing, and not upon the man himself. A true critic never indulges in
personalities. (3) True criticism never imputes or insinuates dishonorable motives, unless justice absolutely requires it, and then only on the
clearest proofs. (4) The critic never takes advantage of the occasion to gratify private malice, or to attain any other object beyond the fair
discussion of matters of public interest, and the judicious guidance of the public taste. 37
Generally, criticism of a court's rulings or decisions is not improper, and may not be restricted after a case has been finally disposed of and
has ceased to be pending. So long as critics confine their criticisms to facts and base them on the decisions of the court, they commit no
contempt no matter how severe the criticism may be; but when they pass beyond that line and charge that judicial conduct was influenced by
improper, corrupt, or selfish motives, or that such conduct was affected by political prejudice or interest, the tendency is to create distrust and
destroy the confidence of the people in their courts. 38
Moreover, it has been held that criticism of courts after a case is finally disposed of, does not constitute contempt and, to this effect, a case
may be said to be pending so long as there is still something for the court to do therein. But criticism should be distinguished from insult. A
criticism after a case has been disposed of can no longer influence the court, and on that ground it does not constitute contempt. On the other
hand, an insult hurled to the court, even after a case is decided, can under no circumstance be justified. Mere criticism or comment on the
correctness or wrongness, soundness or unsoundness of the decision of the court in a pending case made in good faith may be tolerated; but
to hurl the false charge that the Supreme Court has been committing deliberately so many blunders and injustices would tend necessarily to
undermine the confidence of the people in the honesty and integrity of its members, and consequently to lower or degrade the administration
of justice, and it constitutes contempt. 39
The Philippine rule, therefore, is that in case of a post-litigation newspaper publication, fair criticism of the court, its proceedings and its
members, are allowed. However, there may be a contempt of court, even though the case has been terminated, if the publication is attended
by either of these two circumstances: (1) where it tends to bring the court into disrespect or, in other words, to scandalize the court; 40 or (2)
where there is a clear and present danger that the administration of justice would be impeded. And this brings us to the familiar invocation of
freedom of expression usually resorted to as a defense in contempt proceedings.

On the first ground, it has been said that the right of free speech is guaranteed by the Constitution and must be sacredly guarded, but that an
abuse thereof is expressly prohibited by that instrument and must not be permitted to destroy or impair the efficiency of the courts or the
public respect therefor and the confidence therein. 41
Thus, in State vs. Morril, 42 the court said that any citizen has the right to publish the proceedings and decisions of the court, and if he deems it
necessary for the public good, to comment upon them freely, discuss their correctness, the fitness or unfitness of the judges for their stations,
and the fidelity with which they perform the important public trusts reposed in them; but he has no right to attempt, by defamatory
publications, to degrade the tribunal, destroy public confidence in it, and dispose the community to disregard and set at naught its orders,
judgments and decrees. Such publications are an abuse of the liberty of the press; and tend to sap the very foundation of good order and wellbeing in society by obstructing the course of justice. Courts possess the power to punish for contempt libelous publications regarding their
proceedings, present or past, upon the ground that they tend to degrade the tribunals, destroy public confidence and respect for their
judgments and decrees, so essentially necessary to the good order and well-being of society, and most effectually obstruct the free course of
justice.
Then, in In re Hayes, 43 it was said that publishers of newspapers have the right, but no higher right than others, to bring to public notice the
conduct of the courts, provided the publications are true and fair in spirit. The liberty of the press secures the privilege of discussing in a
decent and temperate manner the decisions and judgments of a court of justice; but the language should be that of fair and honorable
criticism, and should not go to the extent of assigning to any party or the court false or dishonest motives. There is no law to restrain or punish
the freest expressions of disapprobation that any person may entertain of what is done in or by the courts. Under the right of freedom of
speech and of the press the public has a right to know and discuss all judicial proceedings, but this does not include the right to attempt, by
wanton defamation, groundless charges of unfairness and stubborn partisanship, to degrade the tribunal and impair its efficiency.
Finally, in Weston vs. Commonwealth, 44 it was ruled that the freedom of speech may not be exercise in such a manner as to destroy respect
for the courts, the very institution which is the guardian of that right. The dignity of the courts and the duty of the citizens to respect them are
necessary adjuncts to the administration of justice. Denigrating the court by libelous attacks upon judicial conduct in an ended case, as well as
one which is pending before it, may seriously interfere with the administration of justice. While such an attack may not affect the particular
litigation which has been terminated, it may very well affect the course of justice in future litigation and impair, if not destroy, the judicial
efficiency of the court or judge subjected to the attack.
Anent the second ground, the rule in American jurisprudence is that false and libelous utterances present a clear and present danger to the
administration of justice. 45 To constitute contempt, criticism of a past action of the court must pose a clear and present danger to a fair
administration of justice, that is, the publication must have an inherent tendency to influence, intimidate, impede, embarrass, or obstruct the
court's administration of justice. 46 It is not merely a private wrong against the rights of litigants and judges, but a public wrong, a crime
against the State, to undertake by libel or slander to impair confidence in the judicial functions. 47
Elucidating on the matter, this Court, in Cabansag vs. Fernandez,
et al., 48 held as follows:
. . . The first, as interpreted in a number of cases, means that the evil consequence of the comment or utterance must be
''extremely serious and the degree of imminence extremely high" before the utterance can be punished. The danger to be
guarded against is the "substantive evil" sought to be prevented. And this evil is primarily the "disorderly and unfair
administration of justice." This test establishes a definite rule in constitutional law. It provides the criterion as to what words
may be published. Under this rule, the advocacy of ideas cannot constitutionally be abridged unless there is a clear and
present danger that such advocacy will harm the administration of Justice.
xxx xxx xxx
Thus, speaking of the extent and scope of the application of this rule, the Supreme Court of the United States said: "Clear
and present danger of substantive evils as a result of indiscriminate publications regarding judicial proceedings justifies an
impairment of the constitutional right of freedom of speech and press only if the evils are extremely serious and the degree
of imminence extremely high. . . . The possibility of engendering disrespect for the judiciary as a result of the published
criticism of a judge is not such a substantive evil as will justify impairment of the constitutional right of freedom of speech
and press." . . .
No less important is the ruling on the power of the court to punish for contempt in relation to the freedom of speech and
press. We quote: "Freedom of speech and press should not be impaired through the exercise of the power to punish for
contempt of court unless there is no doubt that the utterances in question are a serious and imminent threat to the
administration of justice. A judge may not hold in contempt one who ventures to publish anything that tends to make him
unpopular or to belittle him. The vehemence of the language used in newspaper publications concerning a judge's decision
is not alone the measure of the power to punish for contempt . The fires which it kindles must constitute an imminent, not
merely a likely, threat to the administration of justice." . . .
And in weighing the danger of possible interference with the courts by newspaper criticism against the free speech to
determine whether such may constitutionally be punished as contempt, it was ruled that "freedom of public comment
should in borderline instances weigh heavily against a possible tendency to influence pending cases." . . .
The question in every case, according to Justice Holmes, is whether the words used are used in such circumstances and are
of such a nature as to create a clear and present danger that they will bring about the substantive evils that congress has a
right to prevent. It is a question of proximity and degree. . . .
Although Cabansag involved a contempt committed during the pendency of a case, no compelling reason exists why the doctrines enunciated
therein should not be made applicable to vituperative publications made after the termination of the case. Whether a case is pending or not,
there is the constant and ever growing need to protect the courts from a substantive evil, such as invective conduct or utterances which tend
to impede or degrade the administration of justice, or which calumniate the courts and their judges. At any rate, in the case of In re
Bozorth,49 it was there expressly and categorically ruled that the clear and present danger rule equally applies to publications made after the
determination of a case, with the court declaring that a curtailment of criticism of the conduct of finally concluded litigation, to be justified,
must be in terms of some serious substantive evil which it is designed to avert.
Adverting again to what was further said in State vs. Shepherd, supra, let it here be emphasized that the protection and safety of life, liberty,
property and character, the peace of society, the proper administration of justice and even the perpetuity of our institutions and form of
government, imperatively demand that everyone lawyer, layman, citizen, stranger, newspaperman, friend or foe shall treat the courts
with proper respect and shall not attempt to degrade them, or impair the respect of the people, or destroy the faith of the people in them.

When the temples of justice become polluted or are not kept pure and clean, the foundations of free government are undermined, and the
institution itself threatened.
III
Jurisdiction in Contempt Proceedings where the Alleged Contumely is Committed Against a Lower Court while the Case is Pending in
the Appellate or Higher Court
In whatever context it may arise, contempt of court involves the doing of an act, or the failure to do an act, in such a manner as to create an
affront to the court and the sovereign dignity with which it is clothed. As a matter of practical judicial administration, jurisdiction has been felt
properly to rest in only one tribunal at a time with respect to a given controversy. Partly because of administrative considerations, and partly to
visit the full personal effect of the punishment on a contemnor, the rule has been that no other court than the one contemned will punish a
given contempt. 50
The rationale that is usually advanced for the general rule that the power to punish for contempt rests with the court contemned is that
contempt proceedings are sui generis and are triable only by the court against whose authority the contempt are charged; 51 the power to
punish for contempt exists for the purpose of enabling a court to compel due decorum and respect in its presence and due obedience to its
judgments, orders and processes: 52 and in order that a court may compel obedience to its orders, it must have the right to inquire whether
there has been any disobedience thereof, for to submit the question of disobedience to another tribunal would operate to deprive the
proceeding of half its efficiency. 53
There are, however, several jurisprudentially and statutorily recognized exceptions to the general rule, both under Philippine and American
jurisprudence, viz.:
1. Indirect contempt committed against inferior court may also be tried by the proper regional trial court, regardless of the imposable
penalty. 54
2. Indirect contempt against the Supreme Court may be caused to be investigated by a prosecuting officer and the charge may be filed in and
tried by the regional trial court, or the case may be referred to it for hearing and recommendation where the charge involves questions of
fact. 55
3. In People vs. Alarcon, et al., supra, this Court ruled that "in the interrelation of the different courts forming our integrated judicial system,
one court is not an agent or representative of another and may not, for this reason, punish contempts in vindication of the authority and
decorum which are not its own. The appeal transfers the proceedings to the appellate court , and this last court becomes thereby charged with
the authority to deal with contempts committed after the perfection of the appeal." The apparent reason is that both the moral and legal effect
of a punishment for contempt would be missed if it were regarded as the resentment of personal affronts offered to judges. Contempts are
punished as offenses against the administration of justice, and the offense of violating a judicial order is punishable by the court which is
charged with its enforcement, regardless of the court which may have made the order. 56 However, the rule presupposes a complete transfer of
jurisdiction to the appellate court, and there is authority that where the contempt does not relate
to the subject matter of the appeal, jurisdiction to punish remains in the trial court. 57
4. A court may punish contempts committed against a court or judge constituting one of its parts or agencies, as in the case of a court
composed of several coordinate branches or divisions. 58
5. The biggest factor accounting for the exceptions is where the singular jurisdiction of a given matter has been transferred from the
contemned court to another court. One of the most common reasons for a transfer of jurisdiction among courts is improper venue. The cases
involving venue deal primarily with the question whether a change of venue is available after a contempt proceeding has been begun. While
generally a change of venue is not available in a contempt proceeding, some jurisdictions allow such a change in proper circumstances. 59
6. A new court wholly replacing a prior court has jurisdiction to punish for violations of orders entered by its predecessor, although where the
successor court is created by a statute which does not extinguish jurisdiction in the predecessor, an affirmative transfer of jurisdiction before
the contempt occurs is necessary to empower the successor court to act. 60
7. Transfers of jurisdiction by appellate review have produced numerous instances where contempt against the trial court has been punished in
the appellate court, and vice versa. Some appellate courts have taken the view that a contempt committed after an appeal is taken is
particularly contemptuous of the appellate court because of the tendency of such contempts to upset the status quo or otherwise interfere
with the jurisdiction of such court. 61
8. A judge may disqualify himself, or be disqualified, on a contempt hearing or in the main case, which circumstance may require a transfer of
jurisdiction, but where a judge is disqualified only in the main case, because of matters which do not disqualify him in a contempt proceeding,
the regular judge should sit in the contempt proceeding. Likewise, where the regular judge, is absent or otherwise unavailable and an order is
entered by another judge and made returnable to the proper court, the regular judge may punish for violations of orders so entered. 62
9. Where the same act is a contempt against two or more courts, it is no bar to contempt proceedings in one of them that there is also a
contempt against the other. 63
10. While professional disciplinary proceedings have been resorted to as a punishment for contempt, the more recent view is that punishment
is of secondary importance to the need to protect the courts and the people from improper professional practice. To the substantial extent that
disciplinary action remains a punishment, disciplinary measures imposed by another court than the one contemned furnish an exception to the
rule against punishing for contempt of another court. 64
11. Some contemptuous acts are also crime, usually misdemeanors, which are often punishable in other courts than those against which the
contemptuous act was done. 65
12. Finally, a conviction for contempt against another court has been allowed to stand on the basis that the failure of the defendant to make
timely objection operated as a waiver of the right to be tried before the court actually contemned. 66
The rule, as now accepted and deemed applicable to the present incident, is that where the entire case has already been appealed,
jurisdiction to punish for contempt rests with the appellate court where the appeal completely transfers the proceedings thereto or where
there is a tendency to affect the status quo or otherwise interfere with the jurisdiction of the appellate court. Accordingly, this Court having
acquired jurisdiction over the complaint for indirect contempt against herein respondents, it has taken judicial cognizance thereof and has
accordingly resolved the same.
IV
Appropriate Remedies where the Alleged Contemptuous Statement is also Claimed to be Libelous

Under the American doctrine, to repeat, the great weight of authority is that in so far as proceedings to punish for contempt are concerned,
critical comment upon the behavior of the court in cases fully determined by it is unrestricted, under the constitutional guaranties of the
liberty of the press and freedom of speech. Thus, comments, however stringent, which have relation to judicial proceedings which are past and
ended, are not contemptuous of the authority of the court to which reference is made. Such comments may constitute a libel against the
judge, but it cannot be treated as in contempt of the court's authority.
On this score, it is said that prosecution for libel is usually the most appropriate and effective remedy. 67 The force of American public opinion
has greatly restrained the courts in the exercise of the power to punish one as in contempt for making disrespectful or injurious remarks, and it
has been said that the remedy of a judge is the same as that given to a private citizen. 68 In such a case, therefore. the remedy of a criminal
action for libel is available to a judge who has been derogated in a newspaper publication made after the termination aid a case tried by him,
since such publication can no longer be made subject of contempt proceedings.
The rule, however, is different in instances under the Philippine doctrine earlier discussed wherein there may still be a contempt of court even
after a case has been decided and terminated. In such case, the offender may be cited for contempt for uttering libelous remarks against the
court or the judge. The availability, however, of the power to punish for contempt does not and will not prevent a prosecution for libel, either
before, during, or after the institution of contempt proceedings. In other words, the fact that certain contemptuous conduct likewise
constitutes an indictable libel against the judge of the court contemned does not necessarily require him to bring a libel action, rather than
relying on contempt Proceedings. 69
The fact that an act constituting a contempt is also criminal and punishable by indictment. or other method of criminal prosecution does not
prevent the outraged Court from punishing the contempt. 70 This principle stems from the fundamental doctrine that an act may be punished
as a contempt even though it has been punished as a criminal offense. 71 The defense of having once been in jeopardy, based on a conviction
for the criminal offense, would not lie in bar of the contempt proceedings, on the proposition that a contempt may be an offense against the
dignity of a court and, at the same time, an offense against the peace and dignity of the people of the State. 72 But more importantly.
adherence to the American doctrine by insisting that a judge should instead file an action fur libel will definitely give rise to an absurd situation
and may even cause more harm than good.
Drawing also from American jurisprudence, to compel the judge to descend from the plane of his judicial office to the level of the contemnor,
pass over the matter of contempt, and instead attack him by a civil action to satisfy the judge in damages for a libel, would be a still greater
humiliation of a court. That conduct would be personal; the court is impersonal. In our jurisdiction, the judicial status is fixed to such a point
that our courts and the judges thereof should be protected from the improper consequences of their discharge of duties so much so that
judicial officers have always been shielded, on the highest considerations of the public good, from being called for questioning in civil actions
for things done in their judicial capacity.
Whenever we subject the established courts of the and to the degradation of private prosecution, we subdue their independence, and destroy
their authority. instead of being venerable before the public, they become contemptible; and we thereby embolden the licentious to trample
upon everything sacred in society, and to overturn those institutions which have hitherto been deemed the best guardians of civil liberty. 73
Hence, the suggestion that judges who are unjustly attacked have a remedy in an action for libel, has been assailed as being without rational
basis in principle. In the first place, the outrage is not directed to the judge as a private individual but to the judge as such or to the court as
an organ of the administration of justice. In the second place, public interests will gravely suffer where the judge, as such, will, from time to
time, be pulled down and disrobed of his judicial authority to face his assailant on equal grounds and prosecute cases in his behalf as a private
individual. The same reasons of public policy which exempt a judge from civil liability in the exercise of his judicial functions, most
fundamental of which is the policy to confine his time exclusively to the discharge of his public duties, applies here with equal, if not superior,
force. 74
V
Whether or not the Same Contemptuous Conduct of a Member of the Bar can be the Subject of both a Contempt Proceeding and an
Administrative Disciplinary Action
With the foregoing discussion of the appropriate remedies available to a judge, we feel that this issue with respect to proper remedies against
an erring member or the Bar should consequentially be addressed, by way of reiteration, since conflicting and erroneous remedies are
sometimes resorted to by aggrieved tribunals or parties.
The basic rule here is that the power to punish for contempt and the power to disbar are separate and distinct, and that the exercise of one
does not exclude the exercise of the other. 75 A contempt proceeding for misbehavior in court is designed to vindicate the authority of the
court; on the other hand, the object of a disciplinary proceeding is to deal with the fitness of the court's officer to continue in that office, to
preserve and protect the court and the public from the official ministrations of persons unfit or unworthy to hold such
office. 76 The principal purpose of the exercise of the power to cite for contempt is to safeguard the functions of the court and should thus be
used sparingly on a preservative and not, on the vindictive principle. 77 The principal purpose of the exercise of disciplinary authority by the
Supreme Court is to assure respect for orders of such court by attorneys who, as much as judges, are responsible for the orderly
administration of justice. 78
Moreover, it has been held that the imposition a fine as a penalty in a contempt proceeding is not considered res judicata to a subsequent
charge for unprofessional conduct. 79 In the same manner an attorney's conviction for contempt was not collaterally estopped by reason of a
subsequent disbarment proceeding in which the court found in his favor on essentially the same facts leading to conviction. 80 It has likewise
been the rule that a notice to a lawyer to show cause why he should not be punished for contempt cannot be considered as a notice to show
cause why he should not be suspended from the practice of law, considering that they have distinct objects and for each of them a different
procedure is established. Contempt of court is governed by the procedures laid down under Rule 71 of the Rules of Court, whereas disciplinary
actions in the Practice of law are governed by file 138 and 139 thereof. 81
Although apparently different in legal bases, the authority to punish for contempt and to discipline lawyers are both inherent in the Supreme
Court and are equally incidents of the court's basic power to oversee the proper administration of justice and the orderly discharge of judicial
functions. As was succinctly expounded in Zaldivar vs.Sandiganbayan, et al.: 82
There are, in other words, two (2) related powers which come into play in cases like that before us here: the Court's
inherent power to discipline attorneys and the contempt power. The disciplinary authority of the Court over members of the
Bar is broader than the power to punish for contempt. Contempt of court may be committed both by lawyers and nonlawyers, both in and out of court. Frequently, where the contemnor is a lawyer, the contumacious conduct also constitutes
professional misconduct which calls into play the disciplinary authority of the Supreme Court. Where the respondent is a
lawyer, however, the Supreme Court's disciplinary authority over lawyers may come into play whether or not the
misconduct with which the respondent is charged also constitutes contempt of court. The power to punish for contempt of

court does not exhaust the scope of disciplinary authority of the Court over lawyers. The disciplinary authority of the Court
over members of the Bar is but corollary to the court's exclusive power of admission to the bar. A lawyer is not merely a
professional but also an officer of the court and as such, he is called upon to share in the task and responsibilities of
dispensing justice and resolving disputes in society. Any act on his part which visibly tends to obstruct, pervert, or impede
and degrade the administration of justice constitutes both professional misconduct calling for the exercise of disciplinary
action against him, and contumacious conduct warranting application of the contempt power.
With this rounding out of the subordinate and principal issues in resolving the incident, we feel that the guidelines we have laid down will
provide assertive references for the lower courts in disciplinary matters arising before them. Coming back to the incident fore resolution,
arising as a spin-off from the criminal cases at bar, we reiterate what we have declared at the outset, absolving judge for the reasons therein
stated.
WHEREFORE, on the foregoing premises, the complaint for indirect contempt against herein respondents Mauricio Reynoso, Jr. and Eva P.
Ponce de Leon is hereby DISMISSED. SO ORDERED. Narvasa, C.J., Feliciano, Padilla, Bidin, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno,
Vitug, Kapunan, Mendoza and Francisco, JJ., concur.