Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 175507

October 8, 2014

RAMON CHING AND POWING PROPERTIES, INC., Petitioners,

vs.
JOSEPH CHENG, JAIME CHENG, MERCEDES IGNE1 AND LUCINA
SANTOS, Respondents.
DECISION
LEONEN, J.:
Rule 17 of the Rules of Civil Procedure governs dismissals of actions at the
instance of the plaintiff. Hence, the "two-dismissal rule" under Rule 17,
Section 1 of the Rules of Civil Procedure will not apply if the prior dismissal
was done at the instance of the defendant.
This is a petition for review on certiorari assailing the decision2 and
resolution3 of the Court of Appeals in CA-G.R. SP. No. 86818, which upheld
the (1) order4 dated November 22, 2002 dismissing Civil Case No. 02-103319
without prejudice, and (2) the omnibus order5 dated July 30, 2004, which
denied petitioners motion for reconsideration. Both orders were issued by
the Regional Trial Court of Manila, Branch 6.6
The issues before this court are procedural. However, the factual
antecedents in this case, which stemmed from a complicated family feud,
must be stated to give context to its procedural development.
It is alleged that Antonio Ching owned several businesses and properties,
among which was Po Wing Properties, Incorporated (Po Wing Properties).7 His
total assets are alleged to have been worth more than 380 million.8 It is also
alleged that while he was unmarried, he had children from two women.9
Ramon Ching alleged that he was the only child of Antonio Ching with his
common-law wife, Lucina Santos.10 She, however, disputed this. She
maintains that even if Ramon Chings birth certificate indicates that he was

Antonio Chings illegitimate child, she and Antonio Ching merely adopted him
and treated him like their own.11
Joseph Cheng and Jaime Cheng, on the other hand, claim to be Antonio
Chings illegitimate children with his housemaid, Mercedes Igne. 12 While
Ramon Ching disputed this,13 both Mercedes and Lucina have not.14
Lucina Santos alleged that when Antonio Ching fell ill sometime in 1996, he
entrusted her with the distribution of his estate to his heirs if something were
to happen to him. She alleged that she handed all the property titles and
business documents to Ramon Ching for safekeeping.15 Fortunately, Antonio
Ching recovered from illness and allegedly demanded that Ramon Ching
return all the titles to the properties and business documents.16
On July 18, 1996, Antonio Ching was murdered.17 Ramon Ching allegedly
induced Mercedes Igne and her children, Joseph Cheng and Jaime Cheng, to
sign an agreement and waiver18 to Antonio Chings estate in consideration
of P22.5 million. Mercedes Ignes children alleged that Ramon Ching never
paid them.19 On October 29, 1996, Ramon Ching allegedly executed an
affidavit of settlement of estate,20 naming himself as the sole heir and
adjudicating upon himself the entirety of Antonio Chings estate.21
Ramon Ching denied these allegationsand insisted that when Antonio Ching
died, the Ching family association, headed by Vicente Cheng, unduly
influenced him to give Mercedes Igne and her children financial aid
considering that they served Antonio Ching for years. It was for this reason
that an agreement and waiver in consideration of 22.5 million was made. He
also alleged that hewas summoned by the family association to execute an
affidavit of settlement of estate declaring him to be Antonio Chings sole
heir.22
After a year of investigating Antonio Chings death, the police found Ramon
Ching to be its primary suspect.23Information24 was filed against him, and a
warrant of arrest25 was issued.
On October 7, 1998, Joseph Cheng, Jaime Cheng, and Mercedes Igne (the
Chengs) filed a complaint for declaration of nullity of titles against Ramon
Ching before the Regional Trial Court of Manila. This case was docketed as
Civil Case No. 98-91046 (the first case).26

On March 22, 1999, the complaint was amended, with leave of court, to
implead additional defendants, including Po Wing Properties, of which Ramon
Ching was a primary stockholder.The amended complaint was for
"Annulment of Agreement, Waiver, Extra-Judicial Settlement of Estate and
the Certificates of Title Issued by Virtue of Said Documents with Prayer for
Temporary Restraining Order and Writ of Preliminary Injunction."27 Sometime
after, Lucina Santos filed a motion for intervention and was allowed to
intervene.28
After the responsive pleadings had been filed, Po Wing Properties filed a
motion to dismiss on the ground of lack of jurisdiction of the subject matter. 29
On November 13, 2001, the Regional Trial Court of Manila, Branch 6, granted
the motion to dismiss on the ground of lack of jurisdiction over the subject
matter.30 Upon motion of the Chengs counsel, however, the Chengs and
Lucina Santos were given fifteen (15) days to file the appropriate pleading.
They did not do so.31
On April 19, 2002, the Chengs and Lucina Santos filed a complaint for
"Annulment of Agreement, Waiver, Extra-Judicial Settlement of Estate and
the Certificates of Title Issued by Virtue of Said Documents with Prayer for
Temporary Restraining Order and Writ of Preliminary Injunction" against
Ramon Ching and Po Wing Properties.32This case was docketed as Civil Case
No. 02-103319 (the second case) and raffled to Branch 20 of the Regional
Trial Court of Manila.33 When Branch 20 was made aware of the first case, it
issued an order transferring the case to Branch 6, considering that the case
before it involved substantially the same parties and causes of action.34
On November 11, 2002, the Chengs and Lucina Santos filed a motion to
dismiss their complaint in the second case, praying that it be dismissed
without prejudice.35
On November 22, 2002, Branch 6 issued an order granting the motion to
dismiss on the basis that the summons had not yet been served on Ramon
Ching and Po Wing Properties, and they had not yet filed any responsive
pleading. The dismissal of the second case was made without prejudice. 36
On December 9, 2002, Ramon Ching and Po Wing Properties filed a motion
for reconsideration of the order dated November 22, 2002. They argue that
the dismissal should have been with prejudice under the "two dismissal rule"

of Rule 17, Section 1 of the 1997 Rules of Civil Procedure, in view of the
previous dismissal of the first case.37
During the pendency of the motion for reconsideration, the Chengs and
Lucina Santos filed a complaint for "Disinheritance and Declaration of Nullity
of Agreement and Waiver, Affidavit of Extra judicial Agreement, Deed of
Absolute Sale, and Transfer Certificates of Title with Prayer for TRO and Writ
of Preliminary Injunction" against Ramon Ching and Po Wing Properties. This
case was docketed as Civil Case No. 02-105251(the third case) and was
eventually raffled to Branch 6.38
On December 10, 2002, Ramon Ching and Po Wing Properties filed their
comment/opposition to the application for temporary restraining order in the
third case. They also filed a motion to dismiss on the ground of res judicata,
litis pendencia, forum-shopping, and failure of the complaint to state a cause
of action. A series of responsive pleadings were filed by both parties.39
On July 30, 2004, Branch 6 issued an omnibus order40 resolving both the
motion for reconsideration in the second case and the motion to dismiss in
the third case. The trial court denied the motion for reconsideration and the
motion to dismiss, holding that the dismissal of the second case was without
prejudice and, hence, would not bar the filing of the third case.41 On October
8, 2004, while their motion for reconsideration in the third case was pending,
Ramon Ching and Po Wing Properties filed a petition for certiorari (the first
certiorari case) with the Court of Appeals, assailing the order dated
November 22,2002 and the portion of the omnibus order dated July 30, 2004,
which upheld the dismissal of the second case.42
On December 28, 2004, the trial court issued an order denying the motion
for reconsideration in the third case. The denial prompted Ramon Ching and
Po Wing Properties to file a petition for certiorari and prohibition with
application for a writ of preliminary injunction or the issuance of a temporary
restraining order (the second certiorari case) with the Court of Appeals. 43
On March 23, 2006, the Court of Appeals rendered the decision44 in the first
certiorari case dismissing the petition. The appellate court ruled that Ramon
Ching and Po Wing Properties reliance on the "two-dismissal rule" was
misplaced since the rule involves two motions for dismissals filed by the
plaintiff only. In this case, it found that the dismissal of the first case was
upon the motion of the defendants, while the dismissal of the second case
was at the instance of the plaintiffs.45

Upon the denial of their motion for reconsideration,46 Ramon Ching and Po
Wing Properties filed this present petition for review47 under Rule 45 of the
Rules of Civil Procedure.
Ramon Ching and Po Wing Properties argue that the dismissal of the second
case was with prejudice since the non-filing of an amended complaint in the
first case operated as a dismissal on the merits.48 They also argue that the
second case should be dismissed on the ground of res judicata since there
was a previous final judgment of the first case involving the same parties,
subject matter, and cause of action.49
Lucina Santos was able to file a comment50 on the petition within the period
required.51 The Chengs, however, did not comply.52 Upon the issuance by this
court of a show cause order on September 24, 2007,53 they eventually filed a
comment with substantially the same allegations and arguments as that of
Lucina Santos.54
In their comment, respondents allege that when the trial court granted the
motion to dismiss, Ramon Chings counsel was notified in open court that the
dismissal was without prejudice. They argue that the trial courts order
became final and executory whenhe failed to file his motion for
reconsideration within the reglementary period.55
Respondents argue that the petition for review should be dismissed on the
ground of forum shopping and litis pendencia since Ramon Ching and Po
Wing Properties are seeking relief simultaneously in two forums by filing the
two petitions for certiorari, which involved the same omnibus order by the
trial court.56 They also argue that the "two-dismissal rule" and res judicata
did not apply since (1) the failure to amend a complaint is not a dismissal,
and (2) they only moved for dismissal once in the second case.57
In their reply,58 petitioners argue that they did not commit forum shopping
since the actions they commenced against respondents stemmed from the
complaints filed against them in the trial courts.59 They reiterate that their
petition for review is only about the second case; it just so happened that the
assailed omnibus order resolved both the second and third cases.60
Upon the filing of the parties respective memoranda,61 the case was
submitted for decision.62
For this courts resolution are the following issues:

I. Whether the trial courts dismissal of the second case operated as a

bar to the filing of a third case, asper the "two-dismissal rule"; and
II. Whether respondents committed forum shopping when they filed the
third case while the motion for reconsideration of the second case was
still pending.
The petition is denied.
The "two-dismissal rule" vis--vis
the Rules of Civil Procedure
Dismissals of actions are governed by Rule 17 of the 1997 Rules of Civil
Procedure. The pertinent provisions state:
RULE 17
DISMISSAL OF ACTIONS
SEC. 1. Dismissal upon notice by plaintiff. A complaint may be dismissed
by the plaintiff by filing a notice of dismissal at any time before service of the
answer or of a motion for summary judgment. Upon such notice being filed,
the court shall issue an order confirming the dismissal. Unless otherwise
stated in the notice, the dismissal is without prejudice, except that a notice
operates as an adjudication upon the merits when filed by a plaintiff who has
once dismissed in a competent court an action based on or including the
same claim.
SEC. 2. Dismissal upon motion of plaintiff. Except as provided in the
preceding section, a complaint shall not be dismissed at the plaintiff's
instance save upon approval of the court and upon such terms and
conditions as the court deems proper. If a counterclaim has been pleaded by
a defendant prior to the service upon him of the plaintiffs motion for
dismissal, the dismissal shall be limited to the complaint. The dismissal shall
be without prejudice to the right of the defendant to prosecute his
counterclaim in a separate action unless within fifteen (15) days from notice
of the motion he manifests his preference to have his counterclaim resolved
in the same action. Unless otherwise specified in the order, a dismissal under
this paragraph shall be without prejudice. A class suit shall not be dismissed
or compromised without the approval of the court.

SEC. 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the
plaintiff fails to appear on the date of the presentation of his evidence in
chief on the complaint, or to prosecute his action for an unreasonable length
of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon motion of the defendant or upon the
court's own motion, without prejudice to the right of the defendant to
prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless
otherwise declared by the court. (Emphasis supplied)
The first section of the rule contemplates a situation where a plaintiff
requests the dismissal of the case beforeany responsive pleadings have been
filed by the defendant. It is donethrough notice by the plaintiff and
confirmation by the court. The dismissal is without prejudice unless
otherwise declared by the court.
The second section of the rule contemplates a situation where a
counterclaim has been pleaded by the defendant before the service on him
or her of the plaintiffs motion to dismiss. It requires leave of court, and the
dismissal is generally without prejudice unless otherwise declared by the
court.
The third section contemplates dismissals due to the fault of the plaintiff
such as the failure to prosecute. The case is dismissed either upon motion of
the defendant or by the court motu propio. Generally, the dismissal is with
prejudice unless otherwise declared by the court.
In all instances, Rule 17 governs dismissals at the instance of the plaintiff,
not of the defendant. Dismissals upon the instance of the defendant are
generally governed by Rule 16, which covers motions to dismiss.63
In Insular Veneer, Inc. v. Hon. Plan,64 Consolidated Logging and Lumber Mills
filed a complaint against Insular Veneer to recover some logs the former had
delivered to the latter. It also filed ex partea motion for issuance of a
restraining order. The complaint and motion were filed in a trial court in
Isabela.65
The trial court granted the motion and treated the restraining order as a writ
of preliminary injunction. When Consolidated Logging recovered the logs, it
filed a notice of dismissal under Rule 17, Section 1 of the 1964 Rules of Civil
Procedure.66

While the action on its notice for dismissal was pending, Consolidated
Logging filed the same complaint against Insular Veneer, this time in a trial
court in Manila. It did not mention any previous action pending in the Isabela
court.67
The Manila court eventually dismissed the complaint due to the
nonappearance of Consolidated Loggings counsel during pre-trial.
Consolidated Logging subsequently returned to the Isabela court to revive
the same complaint. The Isabela court apparently treated the filing of the
amended complaint as a withdrawal of its notice of dismissal.68
Insular Veneer also filed in the Isabela court a motion to dismiss, arguing that
the dismissal by the Manila court constituted res judicataover the case. The
Isabela court, presided over by Judge Plan, denied the motion to dismiss. The
dismissal was the subject of the petition for certiorari and mandamus with
this court.69
This court stated that:
In resolving that issue, we are confronted with the unarguable fact that
Consolidated Logging on its volition dismissed its action for damages and
injunction in the Isabela court and refiled substantially the same action in the
Manila court. Then, when the Manila court dismissed its action for failure to
prosecute, it went hack [sic] to the Isabela court and revived its old action by
means of an amended complaint.
Consolidated Logging would liketo forget the Manila case, consign it to
oblivion as if it were a bad dream, and prosecute its amended complaint in
the Isabela court as if nothing had transpired in the Manila court. We hold
that it cannot elude the effects of its conduct in junking the Isabela case and
in giving that case a reincarnation in the Manila court.
Consolidated Logging [sic] filed a new case in Manila at its own risk. Its
lawyer at his peril failed toappear at the pre-trial.70
This court ruled that the filing of the amended complaint in the Isabela court
was barred by the prior dismissal of the Manila court, stating that:
The provision in section 1(e), Rule 16 of the Rules of Court that an action
may be dismissed because "there is another action pending between the
same parties for the same cause" presupposes that two similar actions are

simultaneously pending in two different Courts of First Instance. Lis

pendensas a ground for a motion to dismiss has the same requisites as the
plea of res judicata.
On the other hand, when a pleading is amended, the original pleading is
deemed abandoned. The original ceases to perform any further function as a
pleading. The case stands for trial on the amended pleading only. So, when
Consolidated Logging filed its amended complaint dated March 16, 1970 in
Civil Case No. 2158, the prior dismissal order dated January 5, 1970 in the
Manila case could he [sic] interposed in the Isabela court to support the
defense of res judicata.71
As a general rule, dismissals under Section 1 of Rule 17 are without prejudice
except when it is the second time that the plaintiff caused its dismissal.
Accordingly, for a dismissal to operate as an adjudication upon the merits,
i.e, with prejudice to the re-filing of the same claim, the following requisites
must be present:
(1) There was a previous case that was dismissed by a competent
court;
(2) Both cases were based on or include the same claim;
(3) Both notices for dismissal werefiled by the plaintiff; and
(4) When the motion to dismiss filed by the plaintiff was consented to
by the defendant on the ground that the latter paid and satisfied all the
claims of the former.72
The purpose of the "two-dismissal rule" is "to avoid vexatious
litigation."73 When a complaint is dismissed a second time, the plaintiff is
now barred from seeking relief on the same claim.
The dismissal of the second case was without prejudice in view of the "twodismissal rule"
Here, the first case was filed as an ordinary civil action. It was later amended
to include not only new defendants but new causes of action that should
have been adjudicated in a special proceeding. A motion to dismiss was
inevitably filed by the defendants onthe ground of lack of jurisdiction.

The trial court granted that motion to dismiss, stating that:

A careful perusal of the allegations of the Amended Complaint dated
February 10, 1999, filed by Plaintiff Joseph Cheng, show that additional
causes of action were incorporated i.e. extra-judicial settlement of the
intestate estate of Antonio Ching and receivership, subject matters, which
should be threshed out in a special proceedings case. This is a clear
departure from the main cause of action in the original complaint which is for
declaration of nullity of certificate of titles with damages. And the rules of
procedure which govern special proceedings case are different and distinct
from the rules of procedure applicable in an ordinary civil action.
In view of the afore-going, the court finds the Motion to Dismiss filed by Atty.
Maria Lina Nieva S. Casals to be meritorious and the Court is left with no
alternative but to dismiss as it hereby dismisses the Amended Complaint.
However, on motion of Atty. Mirardo Arroyo Obias, counsel for the plaintiffs,
he is given a period of fifteen (15) days from today, within which to file an
appropriate pleading, copy furnished to all the parties concerned.
....
SO ORDERED.74
Petitioners are of the view that when Atty. Mirardo Arroyo Obias failed to file
the appropriate pleading within fifteen (15) days, he violated the order of the
court. This, they argue, made the original dismissal an adjudication upon the
merits, in accordance with Rule 17, Section 3, i.e., a dismissal through the
default of the plaintiff. Hence, they argue that when respondents filed the
second case and then caused its dismissal, the dismissal should have been
with prejudice according to Rule 17, Section 1, i.e., two dismissals caused by
the plaintiff on the same claim. Unfortunately, petitioners theory is
erroneous.
The trial court dismissed the first case by granting the motion to dismiss filed
by the defendants. When it allowed Atty. Mirardo Arroyo Obias a period of
fifteen (15) days tofile an appropriate pleading, it was merely acquiescing to
a request made bythe plaintiffs counsel that had no bearing on the dismissal
of the case.

Under Rule 17, Section 3, a defendant may move to dismiss the case if the
plaintiff defaults; it does not contemplate a situation where the dismissal was
due to lack of jurisdiction. Since there was already a dismissal prior to
plaintiffs default, the trial courts instruction to file the appropriate pleading
will not reverse the dismissal. If the plaintiff fails to file the appropriate
pleading, the trial court does not dismiss the case anew; the order dismissing
the case still stands.
The dismissal of the first case was done at the instance of the defendant
under Rule 16, Section 1(b) of the Rules of Civil Procedure, which states:
SECTION 1. Grounds. Within the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion to dismiss may be made
on any of the following grounds:
....
(b) That the court has no jurisdiction over the subject matter of the claim;
....
Under Section 5 of the same rule,75 a party may re-file the same action or
claim subject to certain exceptions.
Thus, when respondents filed the second case, they were merely refiling the
same claim that had been previously dismissed on the basis of lack of
jurisdiction. When they moved to dismiss the second case, the motion to
dismiss can be considered as the first dismissal at the plaintiffs instance.
Petitioners do not deny that the second dismissal was requested by
respondents before the service of any responsive pleadings. Accordingly, the
dismissal at this instance is a matter of right that is not subject to the trial
courts discretion. In O.B. Jovenir Construction and Development Corporation
v. Macamir Realty and Development Corporation:76
[T]he trial court has no discretion or option to deny the motion, since
dismissal by the plaintiff under Section 1, Rule 17 is guaranteed as a matter
of right to the plaintiffs. Even if the motion cites the most ridiculous of
grounds for dismissal, the trial court has no choice but to consider the
complaint as dismissed, since the plaintiff may opt for such dismissal as a
matter of right, regardless of ground.77 (Emphasis supplied)

For this reason, the trial court issued its order dated November 22, 2002
dismissing the case, without prejudice. The order states:
When this Motion was called for hearing, all the plaintiffs namely, Joseph
Cheng, Jaime Cheng, Mercedes Igne and Lucina Santos appeared without
their counsels. That they verbally affirmed the execution of the Motion to
Dismiss, as shown by their signatures over their respective names reflected
thereat. Similarly, none of the defendants appeared, except the counsel for
defendant, Ramon Chang [sic], who manifested that they have not yet filed
their Answer as there was a defect in the address of Ramon Cheng [sic] and
the latter has not yet been served with summons.
Under the circumstances, and further considering that the defendants herein
have not yet filed their Answers nor any pleading, the plaintiffs has [sic] the
right to out rightly [sic] cause the dismissal of the Complaint pursuant to
Section 2, Rule 17 of the 1997 Rules of Civil Procedure without prejudice.
Thereby, and as prayed for, this case is hereby ordered DISMISSED without
prejudice.
SO ORDERED.78 (Emphasis supplied)
When respondents filed the third case on substantially the same claim, there
was already one prior dismissal at the instance of the plaintiffs and one prior
dismissal at the instance of the defendants. While it is true that there were
two previous dismissals on the same claim, it does not necessarily follow that
the re-filing of the claim was barred by Rule 17, Section 1 of the Rules of Civil
Procedure. The circumstances surrounding each dismissal must first be
examined to determine before the rule may apply, as in this case.
Even assuming for the sake of argument that the failure of Atty. Mirardo
Arroyo Obias to file the appropriate pleading in the first case came under the
purview of Rule 17, Section 3 of the Rules of Civil Procedure, the dismissal in
the second case is still considered as one without prejudice. In Gomez v.
Alcantara:79
The dismissal of a case for failure to prosecute has the effect of adjudication
on the merits, and is necessarily understood to be with prejudice to the filing
of another action, unless otherwise provided in the order of dismissal. Stated
differently, the general rule is that dismissal of a case for failure to prosecute
is to be regarded as an adjudication on the merits and with prejudice to the
filing of another action, and the only exception is when the order of dismissal

expressly contains a qualification that the dismissal is without

prejudice.80 (Emphasis supplied)
In granting the dismissal of the second case, the trial court specifically orders
the dismissal to be without prejudice. It is only when the trial courts order
either is silent on the matter, or states otherwise, that the dismissal will be
considered an adjudication on the merits.
However, while the dismissal of the second case was without prejudice,
respondents act of filing the third case while petitioners motion for
reconsideration was still pending constituted forum shopping.
The rule against forum shopping and the "twin-dismissal rule"
In Yap v. Chua:81
Forum shopping is the institution of two or more actions or proceedings
involving the same parties for the same cause of action, either
simultaneously or successively, on the supposition that one or the other
court would make a favorable disposition. Forum shopping may be resorted
to by any party against whom an adverse judgment or order has been issued
in one forum, in an attempt to seek a favorable opinion in another, other
than by appeal or a special civil action for certiorari. Forum shopping trifles
with the courts, abuses their processes, degrades the administration of
justice and congest court dockets. What iscritical is the vexation brought
upon the courts and the litigants by a party who asks different courts to rule
on the same or related causes and grant the same or substantially the same
reliefs and in the process creates the possibility of conflicting decisions being
renderedby the different fora upon the same issues. Willful and deliberate
violation of the rule against forum shopping is a ground for summary
dismissal of the case; it may also constitute direct contempt.
To determine whether a party violated the rule against forum shopping, the
most important factor toask is whether the elements of litis pendentiaare
present, or whether a final judgment in one case will amount to res judicatain
another; otherwise stated, the test for determining forum shopping is
whether in the two (or more) cases pending, there is identity of parties,
rights or causes of action, and reliefs sought.82 (Emphasis supplied)
When respondents filed the third case, petitioners motion for
reconsideration of the dismissal of the second case was still pending. Clearly,

the order of dismissal was not yet final since it could still be overturned upon
reconsideration, or even on appeal to a higher court.
Moreover, petitioners were not prohibited from filing the motion for
reconsideration. This court has already stated in Narciso v. Garcia83 that a
defendant has the right to file a motion for reconsideration of a trial courts
order denying the motion to dismiss since "[n]o rule prohibits the filing of
such a motion for reconsideration."84 The second case, therefore, was still
pending when the third case was filed.
The prudent thing that respondents could have done was to wait until the
final disposition of the second case before filing the third case. As it stands,
the dismissal of the second case was without prejudice to the re-filing of the
same claim, in accordance with the Rules of Civil Procedure. In their haste to
file the third case, however, they unfortunately transgressed certain
procedural safeguards, among which are the rules on litis pendentiaand res
judicata.

In Yap:
Litis pendentiaas a ground for the dismissal of a civil action refers to that
situation wherein another action is pending between the same parties for the
same cause of action, such that the second action becomes unnecessary and
vexatious. The underlying principle of litis pendentia is the theory that a
party is not allowed to vex another more than once regarding the same
subject matter and for the same cause of action. This theory is founded on
the public policy that the same subject matter should not be the subject of
controversy incourts more than once, in order that possible conflicting
judgments may be avoided for the sake of the stability of the rights and
status of persons.
The requisites of litis pendentiaare: (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
ofwhich party is successful, would amount to res judicatain the
other.85 (Emphasis supplied)

There is no question that there was an identity of parties, rights, and reliefs
in the second and third cases. While it may be true that the trial court
already dismissed the second case when the third case was filed, it failed to
take into account that a motion for reconsideration was filed in the second
case and, thus, was still pending. Considering that the dismissal of the
second case was the subject of the first certiorari case and this present
petition for review, it can be reasonably concluded that the second case, to
this day, remains pending.
Hence, when respondents filed the third case, they engaged in forum
shopping. Any judgment by this court on the propriety of the dismissal of the
second case will inevitably affect the disposition of the third case.
This, in fact, is the reason why there were two different petitions for certiorari
before the appellate court. The omnibus order dated July 30, 2004 denied
two pending motions by petitioners: (1) the motion for reconsideration in the
second case and (2) the motion to dismiss in the third case. Since petitioners
are barred from filing a second motion for reconsideration of the second
case, the first certiorari case was filed before the appellate court and is now
the subject of this review. The denial of petitioners motion for
reconsideration in the third case, however, could still be the subject of a
separate petition for certiorari. That petition would be based now on the third
case, and not on the second case.
This multiplicity of suits is the veryevil sought to be avoided by the rule on
forum shopping. In Dy v. Mandy Commodities Co., Inc.,86 the rule is that:
Once there is a finding of forum shopping, the penalty is summary dismissal
not only of the petition pending before this Court, but also of the other case
that is pending in a lower court. This is so because twin dismissal is a
punitive measure to those who trifle with the orderly administration of
justice.87 (Emphasis supplied)
The rule originated from the 1986 case of Buan v. Lopez, Jr.88 In Buan,
petitioners filed a petition for prohibition with this court while another
petition for prohibition with preliminary injunction was pending before the
Regional Trial Court of Manila involving the same parties and based on the
same set of facts. This court, in dismissing both actions, stated:
Indeed, the petitioners in both actions . . . have incurred not only the
sanction of dismissal oftheir case before this Court in accordance with Rule

16 of the Rules of Court, but also the punitive measure of dismissal of both
their actions, that in this Court and that in the Regional Trial Court as well.
Quite recently, upon substantially identical factual premises, the Court en
banchad occasion to condemn and penalize the act of litigants of filing the
same suit in different courts, aptly described as "forum shopping[.]" 89
The rule essentially penalizes the forum shopper by dismissing all pending
actions on the same claim filed in any court. Accordingly, the grant of this
petition would inevitably result in the summary dismissal of the third case.
Any action, therefore, which originates from the third case pending with any
court would be barred by res judicata.
Because of the severity of the penalty of the rule, an examination must first
be made on the purpose of the rule. Parties resort to forum shopping when
they file several actions of the same claim in different forums in the hope of
obtaining a favorable result. It is prohibited by the courts as it "trifle[s] with
the orderly administration of justice."90
In this case, however, the dismissal of the first case became final and
executory upon the failure of respondentscounsel to file the appropriate
pleading. They filed the correct pleading the second time around but
eventually sought its dismissal as they"[suspected] that their counsel is not
amply protecting their interests as the case is not moving for almost three
(3) years."91 The filing of the third case, therefore, was not precisely for the
purpose of obtaining a favorable result butonly to get the case moving, in an
attempt to protect their rights.
It appears that the resolution on the merits of the original controversy
between the parties has long beenmired in numerous procedural
entanglements. While it might be more judicially expedient to apply the
"twin-dismissal rule" and disallow the proceedings in the third case to
continue, it would not serve the ends of substantial justice. Courts of justice
must always endeavor to resolve cases on their merits, rather than
summarily dismiss these on technicalities: [C]ases should be determined on
the merits, after all parties have been given full opportunity to ventilate their
causes and defenses, rather than on technicalities or procedural
imperfections. In that way, the ends of justice would be served better. Rules
of procedure are mere tools designed to expedite the decision or resolution
of cases and other matters pending in court. A strict and rigid application of
rules, resulting in technicalities that tend to frustrate rather than promote

substantial justice, must be avoided. In fact, Section 6 of Rule 1 states that

the Rules [on Civil Procedure] shall be liberally construed in order to promote
their objective of ensuring the just, speedy and inexpensive disposition of
every action and proceeding.92 (Emphasis supplied)
The rule on forum shopping will not strictly apply when it can be shown that
(1) the original case has been dismissed upon request of the plaintiff for valid
procedural reasons; (2) the only pending matter is a motion for
reconsideration; and (3) there are valid procedural reasons that serve the
goal of substantial justice for the fresh new case to proceed.
The motion for reconsideration filed in the second case has since been
dismissed and is now the subject of a petition for certiorari. The third case
filed apparently contains the better cause of action for the plaintiffs and is
now being prosecuted by a counsel they are more comfortable with.
Substantial justice will be better served if respondents do not fall victim to
the labyrinth in the procedures that their travails led them. It is for this
reason that we deny the petition. WHEREFORE, the petition is DENIED. The
Regional Trial Court of Manila, Branch 6 is ordered to proceed with Civil Case
No. 02-105251 with due and deliberate dispatch.
SO ORDERED.

G.R. No. 199990, February 04, 2015

SPOUSES ROLANDO AND HERMINIA
SALVADOR, Petitioners, v. SPOUSES ROGELIO AND ELIZABETH RABAJA
AND ROSARIO GONZALES, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the
August 22, 2011 Decision1 and the January 5, 2012 Resolution2 of the Court
of Appeals (CA) in CA-G.R. CV No. 90296 which affirmed with modification the
March 29, 2007 Decision of the Regional Trial Court Branch 214 (RTC-Branch
214), Mandaluyong City in Civil Case No. MC-03-2175, for rescission of a
contract (rescission case).
The Facts
This case stemmed from a dispute involving the sellers, petitioner spouses
Rolando and Herminia Salvador (Spouses Salvador); the sellers agent,
Rosario Gonzales (Gonzales); and the buyers, respondent Spouses Rogelio
and Elizabeth Rabaja (Spouses Rabaja), over a parcel of land situated at No.
25, Merryland Village, 375 Jose Rizal Street, Mandaluyong City (subject
property), covered by Transfer Certificate of Title (TCT) No. 13426 and
registered in the names of Spouses Salvador. From 1994 until 2002, Spouses
Rabaja were leasing an apartment in the subject lot.
Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were
looking for a buyer of the subject property. Petitioner Herminia Salvador
(Herminia) personally introduced Gonzales to them as the administrator of
the said property. Spouses Salvador even handed to Gonzales the owners
duplicate certificate of title over the subject property. On July, 3, 1998,
Spouses Rabaja made an initial payment of P48,000.00 to Gonzales in the
presence of Herminia. Gonzales then presented the Special Power of

Attorney3 (SPA), executed by Rolando Salvador (Rolando) and dated July 24,
1998. On the same day, the parties executed the Contract to Sell4 which
stipulated that for a consideration of P5,000,000.00, Spouses Salvador sold,
transferred and conveyed in favor of Spouses Rabaja the subject property.
Spouses Rabaja made several payments totalling P950,000.00, which were
received by Gonzales pursuant to the SPA provided earlier as evidenced by
the check vouchers signed by Gonzales and the improvised receipts signed
by Herminia.
Sometime in June 1999, however, Spouses Salvador complained to Spouses
Rabaja that they did not receive any payment from Gonzales. This prompted
Spouses Rabaja to suspend further payment of the purchase price; and as a
consequence, they received a notice to vacate the subject property from
Spouses Salvador for non-payment of rentals.
Thereafter, Spouses Salvador instituted an action for ejectment against
Spouses Rabaja. In turn, Spouses Rabaja filed an action for rescission of
contract against Spouses Salvador and Gonzales, the subject matter of the
present petition.
In the action for ejectment, the complaint was filed before the Metropolitan
Trial Court of Mandaluyong City, Branch 60 (MeTC), where it was docketed as
Civil Case No. 17344. In its August 14, 2002 Decision,5 the MeTC ruled in
favor of Spouses Salvador finding that valid grounds existed for the eviction
of Spouses Rabaja from the subject property and ordering them to pay back
rentals. Spouses Salvador were able to garnish the amount of
P593,400.006 from Spouses Rabajas time deposit account pursuant to a writ
of execution issued by the MeTC.7 Spouses Rabaja appealed to the Regional
Trial Court, Branch 212, Mandaluyong City (RTC-Br. 212) which reversed the
MeTC ruling in its March 1, 2005 decision.8 The RTC-Br. 212 found that no
lease agreement existed between the parties. Thereafter, Spouses Salvador
filed an appeal with the CA which was docketed as CA-G.R. SP No. 89259.
On March 31, 2006, the CA ruled in favor of Spouses Salvador
and reinstated the MeTC ruling ejecting Spouses Rabaja.9 Not having been
appealed, the CA decision in CA-G.R. SP No. 89259 became final and
executory on May 12, 2006.10chanroblesvirtuallawlibrary
Meanwhile, the rescission case filed by Spouses Rabaja against Spouses
Salvador and Gonzales and docketed as Civil Case No. MC No. 03-2175 was
also raffled to RTC-Br. 212. In their complaint,11dated July 7, 2003, Spouses
Rabaja demanded the rescission of the contract to sell praying that the
amount of P950,000.00 they previously paid to Spouses Salvador be returned
to them. They likewise prayed that damages be awarded due to the
contractual breach committed by Spouses Salvador.
Spouses Salvador filed their answer with counterclaim and cross-

claim12 contending that there was no meeting of the minds between the
parties and that the SPA in favor of Gonzales was falsified. In fact, they filed
a case for falsification against Gonzales, but it was dismissed because the
original of the alleged falsified SPA could not be produced. They further
averred that they did not receive any payment from Spouses Rabaja through
Gonzales. In her defense, Gonzales filed her answer13 stating that the SPA
was not falsified and that the payments of Spouses Rabaja amounting to
P950,000.00 were all handed over to Spouses Salvador.
The pre-trial conference began but attempts to amicably settle the case were
unsuccessful. It was formally reset to February 4, 2005, but Spouses Salvador
and their counsel failed to attend. Consequently, the RTC issued the pre-trial
order14declaring Spouses Salvador in default and allowing Spouses Rabaja to
present their evidence ex parte against Spouses Salvador and Gonzales to
present evidence in her favor.
A motion for reconsideration,15 dated March 28, 2005, was filed by Spouses
Salvador on the said pre-trial order beseeching the liberality of the court. The
rescission case was then re-raffled to RTC-Br. 214 after the Presiding Judge of
RTC-Br. 212 inhibited herself. In the Order,16 dated October 24, 2005, the RTCBr. 214 denied the motion for reconsideration because Spouses Salvador
provided a flimsy excuse for their non-appearance in the pre-trial conference.
Thereafter, trial proceeded and Spouses Rabaja and Gonzales presented their
respective testimonial and documentary evidence.
RTC Ruling
On March 29, 2007, the RTC-Br. 214 rendered a decision17 in favor of Spouses
Rabaja. It held that the signature of Spouses Salvador affixed in the contract
to sell appeared to be authentic. It also held that the contract, although
denominated as contract to sell, was actually a contract of sale because
Spouses Salvador, as vendors, did not reserve their title to the property until
the vendees had fully paid the purchase price. Since the contract entered
into was a reciprocal contract, it could be validly rescinded by Spouses
Rabaja, and in the process, they could recover the amount of P950,000.00
jointly and severally from Spouses Salvador and Gonzales. The RTC stated
that Gonzales was undoubtedly the attorney-in-fact of Spouses Salvador
absent any taint of irregularity. Spouses Rabaja could not be faulted in
dealing with Gonzales who was duly equipped with the SPA from Spouses
Salvador.
The RTC-Br. 214 then ruled that the amount of P593,400.00 garnished from
the time deposit account of Spouses Rabaja, representing the award of rental
arrearages in the separate ejectment suit, should be returned by Spouses
Salvador.18 The court viewed that such amount was part of the purchase

price of the subject property which must be returned. It also awarded moral
and exemplary damages in favor of Spouses Rabaja and attorneys fees in
favor of Gonzales. The dispositive portion of the said decision reads:
WHEREFORE, this court renders judgment as follows:
a. Ordering the Contract to Sell entered into by the plaintiff and
defendant spouses Rolando and Herminia Salvador on July 24, 1998 as
RESCINDED;
b. Ordering defendant spouses Rolando and Herminia Salvador and
defendant Rosario S. Gonzales jointly and severally liable to pay
plaintiffs:
1. the amount of NINE HUNDRED FIFTY THOUSAND PESOS
(P950,000.00), representing the payments made by the latter for
the purchase of subject property;
2. the amount of TWENTY THOUSAND PESOS (P20,000.00), as
moral damages;
3. the amount of TWENTY THOUSAND PESOS (P20,000.00), as
exemplary damages;
4. the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00),
as attorneys fees;
5. the cost of suit.

c. Ordering defendant Spouses Rolando and Herminia Salvador to pay

plaintiffs the amount of FIVE HUNDRED NINETY THREE THOUSAND
PESOS (P593,000.00) (sic), representing the amount garnished from
the Metrobank deposit of plaintiffs as payment for their alleged back
rentals;
d. Ordering the defendant Spouses Rolando and Herminia Salvador to pay
defendant Rosario Gonzales on her cross-claim in the amount of ONE
HUNDRED THOUSAND PESOS (P100,000.00);
e. Dismissing the counterclaims of the defendants against the plaintiff.
SO ORDERED.19
Gonzales filed a motion for partial reconsideration, but it was denied by the
RTC-Br. 114 in its Order,20 dated September 12, 2007. Undaunted, Spouses
Salvador and Gonzales filed an appeal before the CA.

CA Ruling
On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114 with
modifications. It ruled that the contract to sell was indeed a contract of
sale and that Gonzales was armed with an SPA and was, in fact, introduced
to Spouses Rabaja by Spouses Salvador as the administrator of the property.
Spouses Rabaja could not be blamed if they had transacted with Gonzales.
The CA then held that Spouses Salvador should return the amount of
P593,400.00 pursuant to a separate ejectment case, reasoning that Spouses
Salvador misled the court because an examination of CA-G.R. SP No.
89260 showed that Spouses Rabaja were not involved in that case. CA-G.R.
SP No. 59260 was an action between Spouses Salvador and Gonzales only
and involved a completely different residential apartment located at 302-C
Jupiter Street, Dreamland Subdivision, Mandaluyong City.
The CA, however, ruled that Gonzales was not solidarily liable with Spouses
Salvador. The agent must expressly bind himself or exceed the limit of his
authority in order to be solidarily liable. It was not shown that Gonzales as
agent of Spouses Salvador exceeded her authority or expressly bound herself
to be solidarily liable. The decretal portion of the CA decision reads:
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision dated
March 29, 2007 and the Order dated September 12, 2007, of the Regional
Trial Court, Branch 214, Mandaluyong City, in Civil Case No. MC-03-2175, are
AFFIRMED with MODIFICATION in that Rosario Gonzalez is not jointly and
severally liable to pay Spouses Rabaja the amounts enumerated in
paragraph (b) of the Decision dated March 29, 2007.
SO ORDERED.21
Spouses Salvador filed a motion for reconsideration but it was denied by the
CA in its January 5, 2012 Resolution.
Hence, this petition.
ASSIGNMENT OF ERRORS
I
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER
COURT GRAVELY ABUSED ITS DISCRETION IN DECLARING
PETITIONERS IN DEFAULT AND IN DEPRIVING THEM OF THE
OPPORTUNITY TO CROSS-EXAMINE RESPONDENTS SPS. RABAJA AS
WELL AS TO PRESENT EVIDENCE FOR AND IN THEIR BEHALF, GIVEN
THE MERITORIOUS DEFENSES RAISED IN THEIR ANSWER THAT
CATEGORICALLY AND DIRECTLY DISPUTE RESPONDENTS SPS.
RABAJAS CAUSE OF ACTION.

II
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL
COURT GRAVELY ERRED IN GIVING CREDENCE TO THE TESTIMONY OF
RESPONDENT GONZALES THAT PAYMENTS WERE INDEED REMITTED
TO AND RECEIVED BY PETITIONER HERMINIA SALVADOR EVEN AS THE
IMPROVISED RECEIPTS WERE EVIDENTLY MADE UP AND FALSIFIED BY
RESPONDENT GONZALES.
III
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL
COURT GRAVELY ERRED IN RESCINDING THE CONTRACT TO SELL
WHEN THERE IS NOTHING TO RESCIND AS NO VALID CONTRACT TO
SELL WAS ENTERED INTO, AND IN DIRECTING THE REFUND OF THE
AMOUNT OF P950,000.00 WHEN THE EVIDENCE CLEARLY SHOWS
THAT SAID AMOUNT WAS PAID TO AND RECEIVED BY RESPONDENT
GONZALES ALONE WHO MISAPPROPRIATED THE SAME.
IV
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS
DECISION FOR PETITIONERS TO RETURN THE AMOUNT OF
P543,400.00 REPRESENTING RENTALS IN ARREARS GARNISHED OR
WITHDRAWN BY VIRTUE OF A WRIT OF EXECUTION ISSUED IN AN
EJECTMENT CASE WHICH WAS TRIED AND DECIDED BY ANOTHER
COURT.
V
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER
COURT GRAVELY ERRED IN AWARDING DAMAGES TO RESPONDENTS
SPS. RABAJA, THERE BEING NO FACTUAL AND LEGAL BASES FOR
SUCH AWARD.
VI
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE TRIAL
COURT GRAVELY ERRED IN AWARDING P100,000.00 TO RESPONDENT
GONZALES AS ATTORNEYS FEES WHEN RESPONDENT GONZALES, IN
FACT, COMMITTED FORGERY AND FALSIFICATION IN DEALING WITH
THE PROPERTY OF PETITIONERS AND MISAPPROPRIATED THE
MONIES PAID TO HER BY RESPONDENTS SPS. RABAJA, THUS GIVING
PREMIUM TO HER FRAUDULENT ACTS.22
The foregoing can be synthesized into three main issues. First, Spouses
Salvador contend that the order of default must be lifted because reasonable
grounds exist to justify their failure to attend the pre-trial conference on

February 4, 2005. Second, Spouses Salvador raise in issue the veracity of the
receipts given by Gonzales, the SPA and the validity of the contract to sell.
They claim that the improvised receipts should not be given credence
because these were crude and suspicious, measuring only by 2 x 2 inches
which showed that Gonzales misappropriated the payments of Spouses
Rabaja for herself and did not remit the amount of P950,000.00 to them. As
there was no consideration, then no valid contract to sell existed. Third,
Spouses Salvador argue that the ejectment case, from which the amount of
P593,400.00 was garnished, already became final and executory and could
not anymore be disturbed. Lastly, the award of damages in favor of Spouses
Rabaja and Gonzales was improper absent any legal and factual bases.
On January 21, 2013, Spouses Salvador filed their supplemental
petition23 informing the Court that RTC-Br. 213 had rendered a decision in
Civil Case No. MC00-1082, an action for rescission of the SPA. The said
decision held that Spouses Salvador properly revoked the SPA in favor of
Gonzales due to loss of trust and confidence. On September 11, 2013,
Gonzales filed her comment to the supplemental petition,24 contending that
the RTC-Branch 213 decision had no bearing because it had not yet attained
finality. On even date, Spouses Rabaja filed their Comment,25 asserting that
the present petition is a mere rehash of the previous arguments of Spouses
Salvador before the CA. On November 15, 2013, Spouses Salvador replied
that they merely wanted to show that the findings by the RTC-Br. 213 should
be given weight as a full-blown trial was conducted
therein.26chanroblesvirtuallawlibrary
The Courts Ruling
As a general rule, the Courts jurisdiction in a Rule 45 petition is limited to
the review of pure questions of law. A question of law arises when the doubt
or difference exists as to what the law is on a certain state of facts.
Negatively put, Rule 45 does not allow the review of questions of fact. A
question of fact exists when the doubt or difference arises as to the truth or
falsity of the allegations.27chanroblesvirtuallawlibrary
The present petition presents questions of fact because it requires the Court
to examine the veracity of the evidence presented during the trial, such as
the improvised receipts, the SPA given to Gonzales and the contract to sell.
Even the petitioner spouses themselves concede and ask the Court to
consider questions of fact,28 but the Court finds no reason to disturb the
findings of fact of the lower courts absent any compelling reason to the
contrary.
The failure of Spouses Salvador to attend pre-trial conference warrants the
presentation of evidence ex parte by Spouses Rabaja

On the procedural aspect, the Court reiterates the rule that the failure to
attend the pre-trial conference does not result in the default of an absent
party. Under the 1997 Rules of Civil Procedure, a defendant is only declared
in default if he fails to file his Answer within the reglementary period.29On the
other hand, if a defendant fails to attend the pre-trial conference, the plaintiff
can present his evidence ex parte. Sections 4 and 5, Rule 18 of the Rules of
Court provide:
Sec. 4. Appearance of parties.
It shall be the duty of the parties and their counsel to appear at the pre-trial.
The non-appearance of a party may be excused only if a valid cause is shown
therefor or if a representative shall appear in his behalf fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes
of dispute resolution, and to enter into stipulations or admissions of facts and
of documents.
Sec. 5. Effect of failure to appear.
The failure of the plaintiff to appear when so required pursuant to the next
preceding section shall be cause for dismissal of the action. The dismissal
shall be with prejudice, unless otherwise ordered by the court. A similar
failure on the part of the defendant shall be cause to allow the
plaintiff to present his evidence ex parte and the court to render
judgment on the basis thereof.
[Emphasis supplied]
The case of Philippine American Life & General Insurance Company v. Joseph
Enario30 discussed the difference between the non-appearance of a
defendant in a pre-trial conference and the declaration of a defendant in
default in the present Rules of Civil Procedure. The decision instructs:
Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default"
was initially included in Rule 20 of the old rules, and which read as follows:
Sec. 2. A party who fails to appear at a pre-trial conference may be nonsuited or considered as in default.
It was, however, amended in the 1997 Revised Rules of Civil Procedure.
Justice Regalado, in his book, REMEDIAL LAW COMPENDIUM, explained the
rationale for the deletion of the phrase "as in default" in the amended
provision, to wit:
1. This is a substantial reproduction of Section 2 of the former Rule 20 with
the change that, instead of defendant being declared "as in default" by
reason of his non-appearance, this section now spells out that the procedure
will be to allow the ex parte presentation of plaintiffs evidence and the
rendition of judgment on the basis thereof. While actually the procedure
remains the same, the purpose is one of semantical propriety or
terminological accuracy as there were criticisms on the use of the word

"default" in the former provision since that term is identified with the failure
to file a required answer, not appearance in court.
Still, in the same book, Justice Regalado clarified that while the order of
default no longer obtained, its effects were retained, thus:
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,
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 defendant.
From the foregoing, the failure of a party to appear at the pre-trial has indeed
adverse consequences. If the absent party is the plaintiff, then his case shall
be dismissed. If it is the defendant who fails to appear, then the plaintiff is
allowed to present his evidence ex parte and the court shall render judgment
based on the evidence presented. Thus, the plaintiff is given the privilege to
present his evidence without objection from the defendant, the likelihood
being that the court will decide in favor of the plaintiff, the defendant having
forfeited the opportunity to rebut or present its own evidence.31 The stringent
application of the rules on pre-trial is necessitated from the significant role of
the pre-trial stage in the litigation process. Pre-trial is an answer to the
clarion call for the speedy disposition of cases. Although it was discretionary
under the 1940 Rules of Court, it was made mandatory under the 1964 Rules
and the subsequent amendments in 1997.32 The importance of pre-trial in
civil actions cannot be overemphasized.33
There is no dispute that Spouses Salvador and their counsel failed to attend
the pre-trial conference set on February 4, 2005 despite proper notice.
Spouses Salvador aver that their non-attendance was due to the fault of their
counsel as he forgot to update his calendar.34 This excuse smacks of
carelessness, and indifference to the pre-trial stage. It simply cannot be
considered as a justifiable excuse by the Court. As a result of their
inattentiveness, Spouses Salvador could no longer present any evidence in
their favor. Spouses Rabaja, as plaintiffs, were properly allowed by the RTC to
present evidence ex parte against Spouses Salvador as defendants.
Considering that Gonzales as co-defendant was able to attend the pre-trial
conference, she was allowed to present her evidence. The RTC could only
render judgment based on the evidence presented during the trial.
Gonzales, as agent of Spouses Salvador, could validly receive the payments
of Spouses Rabaja
Even on the substantial aspect, the petition does not warrant consideration.
The Court agrees with the courts below in finding that the contract entered
into by the parties was essentially a contract of sale which could be validly
rescinded. Spouses Salvador insist that they did not receive the payments
made by Spouses Rabaja from Gonzales which totalled P950,000.00 and that

Gonzales was not their duly authorized agent. These contentions, however,
must fail in light of the applicable provisions of the New Civil Code which
state:chanRoblesvirtualLawlibrary
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent's authority, if such act is
within the terms of the power of attorney, as written, even if the agent has in
fact exceeded the limits of his authority according to an understanding
between the principal and the agent.
xxxx
Art. 1902. A third person with whom the agent wishes to contract on behalf
of the principal may require the presentation of the power of attorney, or the
instructions as regards the agency. Private or secret orders and instructions
of the principal do not prejudice third persons who have relied upon the
power of attorney or instructions shown them.
xxxx
Art. 1910. The principal must comply with all the obligations which the agent
may have contracted within the scope of his authority.
Persons dealing with an agent must ascertain not only the fact of agency, but
also the nature and extent of the agents authority. A third person with whom
the agent wishes to contract on behalf of the principal may require the
presentation of the power of attorney, or the instructions as regards the
agency. The basis for agency is representation and a person dealing with an
agent is put upon inquiry and must discover on his own peril the authority of
the agent.35chanroblesvirtuallawlibrary
According to Article 1990 of the New Civil Code, insofar as third persons are
concerned, an act is deemed to have been performed within the scope of the
agent's authority, if such act is within the terms of the power of attorney, as
written. In this case, Spouses Rabaja did not recklessly enter into a contract
to sell with Gonzales. They required her presentation of the power of
attorney before they transacted with her principal. And when Gonzales
presented the SPA to Spouses Rabaja, the latter had no reason not to rely on
it.
The law mandates an agent to act within the scope of his authority which
what appears in the written terms of the power of attorney granted upon
him.36 The Court holds that, indeed, Gonzales acted within the scope of her
authority. The SPA precisely stated that she could administer the property,
negotiate the sale and collect any document and all payments related to the
subject property.37 As the agent acted within the scope of his authority, the
principal must comply with all the obligations.38As correctly held by the CA,
considering that it was not shown that Gonzales exceeded her authority or

that she expressly bound herself to be liable, then she could not be
considered personally and solidarily liable with the principal, Spouses
Salvador.39chanroblesvirtuallawlibrary
Perhaps the most significant point which defeats the petition would be the
fact that it was Herminia herself who personally introduced Gonzalez to
Spouses Rabaja as the administrator of the subject property. By their own
ostensible acts, Spouses Salvador made third persons believe that Gonzales
was duly authorized to administer, negotiate and sell the subject property.
This fact was even affirmed by Spouses Salvador themselves in their petition
where they stated that they had authorized Gonzales to look for a buyer of
their property.40 It is already too late in the day for Spouses Salvador to
retract the representation to unjustifiably escape their principal obligation.
As correctly held by the CA and the RTC, considering that there was a valid
SPA, then Spouses Rabaja properly made payments to Gonzales, as agent of
Spouses Salvador; and it was as if they paid to Spouses Salvador. It is of no
moment, insofar as Spouses Rabaja are concerned, whether or not the
payments were actually remitted to Spouses Salvador. Any internal matter,
arrangement, grievance or strife between the principal and the agent is
theirs alone and should not affect third persons. If Spouses Salvador did not
receive the payments or they wish to specifically revoke the SPA, then their
recourse is to institute a separate action against Gonzales. Such action,
however, is not any more covered by the present proceeding.
The amount of P593,400.00 should not be returned by Spouses Salvador
Nevertheless, the assailed decision of the CA must be modified with respect
to the amount of P593,400.00 garnished by Spouses Salvador and ordered
returned to Spouses Rabaja. The RTC ordered the return of the amount
garnished holding that it constituted a part of the purchase price. The CA
ruled that Spouses Salvador misled the Court when they improperly cited CAG.R. SP No. 89260 to prove their entitlement to the said amount. Both courts
erred in their ruling.
First, the garnishment of the amount of P593,400.00 against Spouses Rabaja
was pursuant to the CA decision in CA-G.R. SP No. 89259, an entirely
different case involving an action for ejectment, and it does not concern the
rescission case which is on appeal before this Court. Moreover, the decision
on the ejectment case is final and executory and an entry of judgment has
already been made.41 Nothing is more settled in law than that when a final
judgment is executory, it thereby becomes immutable and unalterable. The
judgment may no longer be modified in any respect, even if the modification
is meant to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be made by
the court which rendered it or by the highest Court of the land. The doctrine

is founded on consideration of public policy and sound practice that, at the

risk of occasional errors, judgments must become final at some definite point
in time.42chanroblesvirtuallawlibrary
The March 31, 2006 CA decision43in CA-G.R. SP No. 89259 has long been
final and executory and cannot any more be disturbed by the Court. Public
policy dictates that once a judgment becomes final, executory and
unappealable, the prevailing party should not be denied the fruits of his
victory by some subterfuge devised by the losing party. Unjustified delay in
the enforcement of a judgment sets at naught the role and purpose of the
courts to resolve justiciable controversies with
finality.44chanroblesvirtuallawlibrary
Meanwhile, in ruling that the garnishment was improper and thus ordering
the return of the garnished amount, the CA referred to its decision in CA-G.R.
SP No. 89260. Spouses Salvador, however, clarified in its motion for
reconsideration45 before the CA and in the present petition46 that the
garnishment was pursuant to CA-G.R. SP No. 89259, and not CA-G.R. SP No.
89260, another ejectment case involving another property. A perusal of the
records reveals that indeed the garnishment was pursuant to the ejectment
case in the MeTC, docketed as Civil Case No. 17344,47where Spouses Rabaja
were the defendants. The MeTC decision was then reinstated by the CA in
CA-G.R. SP No. 89259, not CA-G.R. SP No. 89260. There, a writ of
execution48 and notice of pay49 were issued against Spouses Rabaja in the
amount of P591,900.00.
Second, Spouses Rabajas appeal with the RTC never sought relief in
returning the garnished amount.50 Such issue simply emerged in the RTC
decision. This is highly improper because the courts grant of relief is limited
only to what has been prayed for in the complaint or related thereto,
supported by evidence, and covered by the partys cause of
action.51chanroblesvirtuallawlibrary
If Spouses Rabaja would have any objection on the manner and propriety of
the execution, then they must institute their opposition to the execution
proceeding a separate case. Spouses Rabaja can invoke the Civil Code
provisions on legal compensation or set-off under Articles 1278, 1279 and
1270.52 The two obligations appear to have respectively offset each other,
compensation having taken effect by operation of law pursuant to the said
provisions of the Civil Code, since all the requisites provided in Art. 1279 of
the said Code for automatic compensation are duly present.
No award of actual, moral and exemplary damages
The award of damages to Spouses Rabaja cannot be sustained by this Court.
The filing alone of a civil action should not be a ground for an award of moral

damages in the same way that a clearly unfounded civil action is not among
the grounds for moral damages.53 Article 2220 of the New Civil Code provides
that to award moral damages in a breach of contract, the defendant must act
fraudulently or in bad faith. In this case, Spouses Rabaja failed to sufficiently
show that Spouses Salvador acted in a fraudulent manner or with bad faith
when it breached the contract of sale. Thus, the award of moral damages
cannot be warranted.
As to the award of exemplary damages, Article 2229 of the New Civil Code
provides that exemplary damages may be imposed by way of example or
correction for the public good, in addition to the moral, temperate, liquidated
or compensatory damages.54 The claimant must first establish his right to
moral, temperate, liquidated or compensatory damages. In this case,
considering that Spouses Rabaja failed to prove moral or compensatory
damages, then there could be no award of exemplary damages.
With regard to attorneys fees, neither Spouses Rabaja nor Gonzales is
entitled to the award. The settled rule is that no premium should be placed
on the right to litigate and that not every winning party is entitled to an
automatic grant of attorneys fees.55 The RTC reasoned that Gonzales was
forced to litigate due to the acts of Spouses Salvador. The Court does not
agree. Gonzales, as agent of Spouses Salvador, should have expected that
she would be called to litigation in connection with her fiduciary duties to the
principal.
In view of all the foregoing, the CA decision should be affirmed with the
following modifications:
1. The order requiring defendant Spouses Rolando and Herminia Salvador
to pay plaintiffs the amount of Five Hundred Ninety Three Thousand
(P593,000.00) Pesos, representing the amount garnished from the
Metrobank deposit of plaintiffs as for their back rentals should be
deleted;
2. The award of moral damages in the amount of Twenty Thousand
(P20,000.00) Pesos; exemplary damages in the amount of Twenty
Thousand (P20,000.00) Pesos, and attorneys fees in the amount of
One Hundred Thousand (P100,000.00) Pesos in favor of Spouses
Rabaja should be deleted; and
3. The award of attorneys fees in amount of One Hundred Thousand
(P100,000.00) Pesos in favor of Gonzales should be deleted.
The other amounts awarded are subject to interest at the legal rate of 6%
per annum, to be reckoned from the date of finality of this judgment until
fully paid.

WHEREFORE, the petition is PARTLY GRANTED. The March 29, 2007

Decision of the Regional Trial Court, Branch 214, Mandaluyong City, in Civil
Case No. MC-03-2175, is MODIFIED to read as
follows:chanRoblesvirtualLawlibrary
WHEREFORE, this Court renders judgment as follows:
a. Ordering the Contract to Sell entered into by Spouses Rogelio and
Elizabeth Rabaja and Spouses Rolando and Herminia Salvador on July
24, 1998 as RESCINDED;
b. Ordering Spouses Rolando and Herminia Salvador to pay Spouses
Rogelio and Elizabeth Rabaja:chanRoblesvirtualLawlibrary
1. The amount of Nine Hundred Fifty Thousand (P950,000.00)
Pesos, representing the payments made by the latter for the
purchase of the subject property; and
2. The cost of suit;
c. Dismissing the counterclaims of Spouses Rolando and Herminia
Salvador and Rosario Gonzales against Spouses Rogelio and Elizabeth
Rabaja
The amounts awarded are subject to interest at the legal rate of 6% per
annum to be reckoned from the date of finality of this judgment until fully
paid.
As aforestated, this is without prejudice to the invocation by either party of
the Civil Code provisions on legal compensation or set-off under Articles
1278, 1279 and 1270.
SO ORDERED.
Carpio, (Chairperson), Velasco, Jr.,*Del Castillo, and Leonen, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 157583

September 10, 2014

FRUMENCIO E. PULGAR, Petitioner,

vs.
THE REGIONAL TRIAL COURT OF MAUBAN, QUEZON, BRANCH 64,
QUEZON POWER (PHILIPPINES) LIMITED, CO., PROVINCE OF QUEZON,
and DEPARTMENT OF FINANCE, Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court via a petition for review on
Certiorari1 assailing the Orders dated December 2, 20022 and March 13,
20033 issued by the Regional Trial Court of Mauban, Quezon, Branch 64 (RTC)
which dismissed Civil Case No. 0587-M on jurisdictional grounds and,
concomitantly, petitioner Frumencio E. Pulgar's (Pulgar) motion for
intervention therein.
The Facts4
Sometime in 1999, the Municipal Assessor of Mauban, Quezon issued 34 tax
declarations on the buildings and machinery comprising the Mauban Plant
a coal-fired electric generation facility owned and operated by respondent
Quezon Power (Philippines) Limited, Co. (QPL) and thereby assessed it with
a total market value of 29,626,578,291.00 and, hence, 500 Million, more or
less, in realty taxes per annum. The Municipal Assessor maintained that the
Mauban Plant was completed and already operational in October
1999.Subsequently, or on May 18, 2000, QPL filed with the Municipal
Assessor a sworn statement declaring that the said properties had a value
ofonly P15,055,951,378.00.5
On March 16 and 23, 2001, QPL tendered to the Municipal Assessor the
amount of P60,223,805.51 as first quarter installment of the realty taxes on
the plant, which the latter rejected.6 Hence, QPL filed a Complaint for
Consignation and Damages7 before the RTC against the Province of Quezon,
the Municipal Assessor and Municipal Treasurer of Mauban, Quezon, and the
Provincial Assessor and Provincial Treasurer of Quezon (defendants),
docketed as Civil Case No. 0587-M, depositing to the RTC the above-stated
amount in payment of the first quarter realty tax for 2001.8 Albeit classified
as a consignation and damages case, QPL essentially protested the Municipal
Assessors assessment for,among others, its lack of legal authority to make

such assessment and its supposed non-compliance with the prescribed

valuation process.9
For their part,10 defendants averred, among others, that QPL was estopped
from denying the authority of the Municipal Assessor since it previously paid
realty taxes for its properties for the year 2001 based on the assessment of
the latter.
On January 28, 2002, Pulgar filed a Motion for Leave to Admit Answer-inIntervention11 and Answer-in-Intervention12 (motion for intervention),
alleging, among others, that as a resident and taxpayer of Quezon Province,
he has an interest inthe aggressive collection of realty taxes against QPL. By
way of counterclaim, he prayed for the award of moral damages and
attorneys fees, anchoring the same on the "mindless disturbance of the
forest and marineenvironment whereon the power plant of [QPL]
stands."13 Pulgars motion was initiallygranted and his Answer-inIntervention
was admitted.14
Sometime in June 2002, QPL and the Province of Quezon agreed to submit
their dispute before the Secretary of Finance, which resulted in a
Resolution15 dated August 30, 2002 where the basic issues between the
principal parties were passed upon.
The RTC Ruling
In an Order16 dated December 2, 2002, the RTC dismissed Civil Case No.
0587-M for lack of jurisdiction in the absence of a payment of the tax
assessed under protest, which requirement QPL attempted to skirt by
alleging in its complaint that it is the very authority of the Municipal Assessor
to impose the assessment and the treasurer to collect the tax that it was
questioning. Declaring that QPLs complaint essentially challenged the
amount of the taxes assessed, the RTC ruled that it is the Local Board of
Assessment Appeals that had jurisdiction over the complaint. Consequently,
it also dismissed Pulgars motion for intervention since with the dismissal of
the main case, the same had no leg to stand on.17
Aggrieved, Pulgar filed a motion for reconsideration which was, however,
denied in an Order18 dated March 13, 2003, hence, this petition.
The Issue Before The Court

The issue advanced before the Court is whether or not the RTC erred in
dismissing Pulgars motion for intervention as a consequence of the dismissal
of the main case. While acknowledging the RTCs lack of jurisdiction, Pulgar
nonetheless prays that the Court pass upon the correctness of the Municipal
Assessors assessment of QPLs realty taxes, among others.
The Courts Ruling
The petition lacks merit.
Jurisdiction over an intervention is governed by jurisdiction over the main
action.19 Accordingly, an intervention presupposes the pendency of a suit in a
court of competent jurisdiction.20
In this case, Pulgar does not contest the RTC's dismissal of Civil Case No.
0587-M for lack of jurisdiction, but oddly maintains his intervention by asking
in this appeal a review of the correctness of the subject realty tax
assessment. This recourse, the Court, however, finds to be improper since
the RTC's lack of jurisdiction over the main case necessarily resulted in the
dismissal of his intervention.1wphi1 In other words, the cessatiori of the
principal litigation - on jurisdictional grounds at that - means that Pulgar had,
as a matter of course, lost his right to intervene. Verily, it must be borne in
mind that:
[I]ntervention is never an independent action, but is ancillary and
supplemental to the existing litigation. Its purpose is not to obstruct nor x x x
unnecessarily delay the placid operation of the machinery of trial, but merely
to afford one not an original party, yet having a certain right or interest in
the pending case, the opportunity to appear and be joined so he could assert
or protect such right or interests.
Otherwise stated, the right of an intervenor should only be in aid of the right
of the original party. Where the right of the latter has ceased to exist, there is
nothing to aid or fight for; hence, the right of intervention ceases.21
WHEREFORE, the petition is DENIED.
SO ORDERED.

G.R. No. 201427, March 18, 2015

TEOFILO B. ADOLFO, Petitioner, v. FE. T. ADOLFO, Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 seeks to set aside: 1) the October 6,
2009 Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 01783
reversing the October 2, 2006 Order3 of the Regional Trial Court, 7th Judicial
Region, Mandaue City (RTC Mandaue), Branch 55 in Civil Case No. MAN-4821;
as well as 2) the CAs March 2, 2012 Resolution4 denying petitioners Motion
for Reconsideration5 and Supplement6 thereto.
Civil Case No. MAN-4821
On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a
Petition7 for judicial separation of property against his estranged wife,
respondent Fe Adolfo, nee Tudtud. Docketed as Civil Case No. MAN-4821 and
assigned to Branch 55, the petition alleged that the parties were married on
November 26, 1966; that the union bore one child; that during the marriage,
they acquired through conjugal funds Lot 1087-A-2-E, a 3,652-square meter
property in Brgy. Cabancalan, Mandaue City, Cebu (the subject property)
covered by Transfer Certificate of Title No. (TCT) 18368; that later on, the

parties separated due to irreconcilable differences; that since reunion was no

longer feasible, petitioner suggested a separation of the conjugal property,
but respondent adamantly refused; that respondent denied petitioners coownership of the subject property, claiming the same as her paraphernal
property; that several earnest efforts to amicably settle the matter between
them proved unavailing; and that a judicial separation of property is proper
under the circumstances and pursuant to Article 135(6) of the Family Code.8
Petitioner thus prayed that judgment be rendered decreeing a separation of
the conjugal property and the subdivision or sale thereof, to the end of
dividing the same or the proceeds thereof; and ordering respondent to pay
petitioner P50,000.00 as attorneys fees, appearance fees (P2,000.00 per
hearing), and P20,000.00 litigation costs.
In her Answer9 with counterclaim, respondent contended that while she
remained married to petitioner, she is the sole owner of the subject property,
the same being her paraphernal property which she inherited from her
mother; that petitioner is a lazy bum, gambler, drunkard, wife abuser, and
neglectful father; that respondent found all means to support the family even
as petitioner neglected it; that respondent bought on installment a tricycle
for the petitioners use in business, but he kept the proceeds thereof to
himself and used the same in his gambling and drinking sprees; that
respondent alone took the initiative to support the family and found ways to
take care of the daily needs of her child; that she caused to be built on a
portion of her mothers land a house even while petitioner was bumming
around; that one day, petitioner destroyed the roof of the house that was
then being built; that petitioner subsequently abandoned her and their child
in 1968, and transferred to Davao City where he took a mistress and begot
four children by her; that in 1986, petitioner returned to Cebu City seeking
reconciliation with respondent; that respondent took petitioner back, but in
1987 they once more separated; that thereafter, respondent never again saw
or heard from petitioner.
Respondent claimed in her Answer that the subject property was a portion of
a bigger lot (mother lot) owned by her mother Petronila Tudtud which was
covered by TCT T-15941. On October 11, 1967, her mother executed a
quitclaim deed transferring a portion of the mother lot the subject property
to respondent. The mother title TCT T-15941 was then cancelled and a new
one, TCT (17216)-5415, was issued in respondents name. Respondent then
sold the subject property to her brother on January 19, 1968, and a new TCT
(17833)-5515 was issued in her brothers name. Her brother then
mortgaged the property to Development Bank of the Philippines (DBP), which
foreclosed on the same. TCT 18231 was issued in DBPs name. DBP then
sold the property to the spouses Antonio and Lucy Garcia (the Garcias), and
TCT 18266 was in turn issued in their name. Finally, on May 25, 1983, the
Garcias sold back the subject property to respondent, and a new title TCT
1836810 was then issued in the name of respondent FE M. TUDTUD, x x x

married to Teofilo Adolfo.

Respondent argued that she is the sole owner of the subject property, the
same being her paraphernal property which she alone redeemed from the
Garcias; that the inclusion of petitioners name in TCT 18368 does not make
him a co-owner of the property, but was merely necessary to describe
respondents civil status; and that under Article 13511 of the Civil Code, all
property brought by the wife to the marriage as well as all property she
acquires during the marriage in accordance with Article 14812 of the same
Code constitutes paraphernal property.
Respondent thus prayed that the petition be dismissed. By way of
counterclaim, she sought the payment of moral, exemplary, and nominal
damages, attorneys fees, and litigation expenses.
Civil Case No. MAN-2683
In 1996, respondents sister Florencia Tudtud and her husband Juanito
Gingoyon (the Gingoyons) filed a case for partition with damages against
respondent. The case was docketed as Civil Case No. MAN-2683 and raffled
to Branch 55 of the RTC Mandaue. The Complaint13 therein alleged that in
1988, respondent executed a deed of sale in favor of the Gingoyons over a
300-square meter portion of the subject property, but that respondent
refused to partition/subdivide the same even after the Gingoyons paid the
taxes, fees and expenses of the sale. For her defense, respondent claimed in
her Answer14 that when the sale to the Gingoyons was made, the subject
property constituted conjugal property of her marriage with petitioner; that
as early as 1983, or when the Garcias executed the deed of sale in her favor,
the subject property became a conjugal asset; since petitioner did not sign
the deed of sale in favor of the Gingoyons as he was in Davao at the time
and knew nothing about the sale, the sale was null and void.
On May 15, 2002, the trial court rendered its Decision15 in Civil Case No.
MAN-2683, declaring that the subject property constituted conjugal property
of the marriage. It thus nullified the 1988 deed of sale executed by
respondent in favor of the Gingoyons for lack of consent on the part of
petitioner, citing Article 124 of the Family Code.16 The trial court likewise
awarded moral and exemplary damages, attorney's fees and litigation
expenses in favor of the respondent in the total amount of P107,000.00.
The Gingoyons filed an appeal with the CA, which was docketed as CA-G.R.
CV No. 78971.
Motion for Judgment Based on the Pleadings in Civil Case No. MAN4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821,

petitioner submitted as part of his evidence and for marking certified true
copies of the Gingoyons Complaint in Civil Case No. MAN-2683, respondents
Answer thereto, and the trial courts May 15, 2002 Decision in said case.
On August 1, 2005, petitioner filed a Request for Admission17 of 1) the
genuineness of the duly marked certified true copies of the Complaint,
Answer, and Decision in Civil Case No. MAN-2683 (Exhibits F, G and H,
respectively); 2) respondents declaration in said Answer that the subject
property constituted conjugal property of the marriage; and 3) the trial
courts pronouncement in said case that the subject property forms part of
the conjugal estate.
Respondent failed to file her answer or response to the request for
admission.
On September 5, 2005, petitioner filed a Motion for Judgment Based on the
Pleadings,18 stating that since respondent failed to answer his request for
admission, the matters contained in the request are deemed admitted
pursuant to Rule 26, Section 2 of the 1997 Rules of Civil Procedure19 (1997
Rules); that as a consequence of the application of the rule, respondent is in
effect considered to have admitted that the subject property is a conjugal
asset of their subsisting marriage which may thus be the subject of his
petition for judicial separation of property; and that on account of said
admission, a hearing on the merits becomes unnecessary and, instead, Rule
3420 of the 1997 Rules on judgments on the pleadings should apply.
Petitioner thus prayed that the trial court render judgment in his favor based
on the pleadings.
Respondent filed an Opposition.21 In her Opposition to Plaintiffs
Memorandum,22 respondent argued among others that the request for
admission was premature considering that the decision in Civil Case No.
MAN-2683 was the subject of an appeal, and thus not yet final.
In an October 11, 2005 Order,23 the trial court directed the transfer of Civil
Case No. MAN-4821 to Branch 55 of the RTC Mandaue, since it is said court
which decided the closely related Civil Case No. MAN-2683.
On October 2, 2006, Branch 55 issued an Order24 granting petitioners motion
for judgment on the pleadings. It held as follows:
This court has painstakingly exerted effort in going over the record and took
serious note of all the pleadings, documents and others on file. After serious
consideration, the court believes and so holds that there is basis in rendering
judgment. The Motion for Judgment Based on the Pleadings though
denominated as such but [sic] shall be treated as a move to seek summary

judgment. x x x
xxxx
The court in arriving at this resolution was guided by the following
pronouncements by the Supreme Court in the case of Diman vs. Alumbres,
G.R. No. 131466, November 27, 1998, 299 SCRA 459 x x x:
xxxx
In the same case, it was held
It is also the law which determines when a summary judgment is proper. It
declares that although the pleadings on their face appear to raise issues of
fact e.g., there are denials of, or a conflict in, factual allegations if it is
shown by admissions, depositions or affidavits, that those issues are sham,
fictitious, or not genuine, or, in the language of the Rules, that except as to
the amount of damages, there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law, the
Court shall render a summary judgment for the plaintiff or the defendant, as
the case may be. (Italics and underscoring supplied)
On the other hand, in the case of a summary judgment[,] issues apparently
exist i.e.. facts are asserted in the complaint regarding which there is as yet
no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer but the issues thus arising from
the pleadings are sham, fictitious, not genuine, as shown by [affidavits],
depositions or admissions. In other words, as a noted authority remarks, a
judgment on the pleadings is a judgment on the facts as pleaded, while a
summary judgment is a judgment on the facts as summarily proven by
affidavits, depositions or admissions. (Italics and underscoring supplied)
xxxx
Defendant25 did not file any verified answer or a pleading denying under oath
the genuineness and authenticity of the documents attached to the Request
for Admission and of the other matters therein set forth. This failure has far
reaching implications in that the following are deemed admitted: a) the
genuineness of Exhibits F, G and H, all attached to the Request for
Admission; b) that she admitted in paragraph 10 in her Answer to Civil Case
No. MAN-2683 that Lot 1087-A-2-E was no longer paraphernal property but
rather a conjugal property of Spouses Teofilo and Fe Adolfo and; c) that RTC,
Branch 55, Mandaue City, sustained and/or held the view of defendant (Fe
Tudtud) that Lot 1087-A-2-E is a conjugal property of Spouses Teofilo and Fe
Adolfo, thus, dismissed Civil Case No. MAN-2683 and awarded damages to
the defendant.

Judicial admissions may be made in (a) the pleadings filed by the parties, (b)
in the course of the trial either by verbal or written manifestations or
stipulations, or (c) in other stages of the judicial proceeding, as in the pretrial of the case. Admissions obtained through depositions, written
interrogatories or requests for admission are also considered judicial
admissions. Page 686, Remedial Law Compendium, Vol. II, 9thRev. Ed.,
Regalado
With the admission that Lot 1087-A-2-E is a conjugal property, it follows as its
necessary and logical consequence, that plaintiff26 is entitled to the relief
demanded.
xxxx
A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC,
Branch 55, on the 15th day of May 2002 with the court finding that Lot 1087A-2-E is a conjugal property x x x
xxxx
For reason[s] of expediency and convenience, the court may even take
judicial notice of its earlier decision finding Lot 1087-A-2-E as a conjugal
property.27cralawred
xxxx
Under the circumstances, judicial separation of property is proper. Aware
that the separation has the effect of a dissolution of the conjugal partnership
property regime, the presumptive legitime of Nilo Adolfo (the only common
child of the spouses) has to be delivered in accordance with Article 51 in
relation to paragraph (8) Article 127 and Article 137 of the Family Code of the
Philippines.
WHEREFORE, premises considered, judgment is hereby rendered directing
the partition of Lot 1087-A-2-E between the plaintiff and the defendant in
equal share of what remains after allocating to Nilo Adolfo a portion of Nine
hundred thirteen (913) square meters representing his presumptive legitime.
The plaintiff is directed to submit to this court the proposed subdivision plan
for its consideration before submitting the same for approval to the Bureau
of Lands.
In case of disagreement as to their respective location, the same shall be
done through raffle to be conducted by the sheriff who shall see to it that
judgment in this case shall be fully implemented.

SO ORDERED.28
Respondent instituted an appeal with the CA, which was docketed as CA-G.R.
CV No. 01783.
Court of Appeals Decision in CA-G.R. CV No. 78971
Meanwhile, on May 30, 2007, the CA rendered its Decision29 in CA-G.R. CV
No. 78971. It reversed the May 15, 2002 Decision of the trial court in Civil
Case No. MAN-2683. It declared, among others, that the subject property
was respondents paraphernal property. Thus, it held:
Proceeding from the foregoing consideration, the finding that Lot No. 1087-A2-E is a conjugal property does not have any basis, hence, does not have any
merit at all. On the contrary, plaintiffs-appellants30 sufficiently proved that
the aforesaid lot was defendant-appellees31 paraphernal property as the
latter even admitted that she inherited the same from her mother although
she claimed it as a conjugal property based on the TCTs attached to her
answer. Another strong indication that Lot No. 1087-A-2-E is solely owned by
defendant-appellee is the fact that in another case (Civil Case No. MAN-2008)
involving the same property and the same parties but for a different issue
(road right of way), defendant-appellee alone signed the compromise
agreement ceding a portion of the subject lot as a right of way perpetually
open and unobstructed for the benefit of plaintiffs-appellants, defendantappellee, their respective heirs, assigns and transferees and guests. The
same compromise agreement which became the decision of the case
attained finality without defendant-appellee questioning the absence of her
husbands signature.
xxxx
WHEREFORE, prescinding from the foregoing premises, the appeal is hereby
GRANTED and the Decision of the Regional Trial Court of Mandaue City,
Branch 55, dated 15 May 2002, in Civil Case No. MAN-2683 is REVERSED and
SET ASIDE.
Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters
bought by plaintiffs-appellants from defendant-appellee be done in
accordance to [sic] the sketch plan executed for that purpose.
SO ORDERED.32
cralawlawlibrary
On June 23, 2007, the above CA decision became final and
executory.33cralawred

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellants Brief, 34 where she
argued that the trial court erred in issuing its October 2, 2006 Order directing
the partition or sale of the subject property; that it was error for the trial
court to take judicial notice of its own judgment in Civil Case No. MAN-2683
and thus declare that the subject property is conjugal, since the issue of
whether it constitutes conjugal or paraphernal property was still pending in
the appeal in CA-G.R. CV No. 78971; that since the proceedings in Civil Case
No. MAN-2683 have not been terminated and the issue regarding the
character of the subject property has not been resolved with finality, then
petitioners resort to a request for admission and motion for judgment on the
pleadings was premature; and that with the May 30, 2007 Decision in CAG.R. CV No. 78971, petitioner and the trial court should submit to the finding
therein that the subject property is her paraphernal property.
In his Appellees Brief,35 petitioner insisted that the trial court did not err in
treating his motion for judgment on the pleadings as one for summary
judgment; that respondents Answer in Civil Case No. MAN-2683 constituted
a judicial admission that the subject property was a conjugal asset, which
required no further proof; that respondents failure to reply to his written
request for admission also resulted in the acknowledgment that the subject
property is a conjugal asset; that the trial court correctly took judicial notice
of the proceedings in Civil Case No. MAN-2683, as they were relevant and
material to the resolution of Civil Case No. MAN-4821; that since it was not
respondent who appealed the May 15, 2002 decision in Civil Case No. MAN2683, then the finding therein that the subject property is conjugal should
bind her; and that the CAs eventual finding in CA-G.R. CV No. 78971 that the
subject lot was respondents paraphernal property cannot bind him because
he was not a party to Civil Case No. MAN-2683.
On October 6, 2009, the CA issued the assailed Decision containing the
following decretal portion:
WHEREFORE, based from the foregoing premises, the Order of the Regional
Trial Court, Branch 55, Mandaue City, in Civil Case No. MAN-4821, is hereby
REVERSED and SET ASIDE and the records of this case are remanded to RTC
(Branch 55), Mandaue City, for further proceedings.
SO ORDERED.36
In arriving at the above conclusion, the CA held that the trial court cannot
treat petitioners motion for judgment on the pleadings as one for summary
judgment. It stated that in a proper case for judgment on the pleadings,
there are no ostensible issues at all on account of the defending partys

failure to raise an issue in his answer, while in a proper case for summary
judgment, such issues exist, although they are sham, fictitious, or not
genuine as shown by affidavits, depositions or admissions. In other words, a
judgment on the pleadings is a judgment on the facts as pleaded, while a
summary judgment is a judgment on the facts as summarily proved by
affidavits, depositions, or admissions.37 It added that respondents Answer
appeared on its face to tender an issue; it disputed petitioners claim that the
subject property is their conjugal property. The next thing to be determined
is whether this issue is fictitious or sham as to justify a summary judgment.
The CA added that although respondent was bound by the resulting
admission prompted by her failure to reply to petitioners request for
admission, her claims and documentary exhibits clearly contradict what
petitioner sought to be admitted in his request; that the trial court
disregarded the fact that the issue of whether the subject property is
conjugal was still unresolved as CA-G.R. CV No. 78971 was still pending; and
that finally, the trial court should have been guided by the principles that
trial courts have but limited authority to render summary judgments and that
summary judgments should not be rendered hastily.38cralawred
Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was
rebuffed. Hence, the present Petition was filed on April 30, 2012.
In a March 20, 2013 Resolution,39 the Court resolved to give due course to
the instant Petition.
Issue
Petitioner now claims that the Court of Appeals erred in deciding the case on
a question of substance not in accord with law, Rule 26 of the 1997 Rules,
and applicable jurisprudence.40cralawred
Petitioners Arguments
In his Petition seeking to reverse and set aside the assailed CA dispositions
and thus reinstate the October 2, 2006 Order of the trial court, petitioner
insists that respondents failure to reply to his written request for admission
resulted in her admitting that the subject property is a conjugal asset,
applying Rule 26, Section 2 of the 1997 Rules; that the CA grossly erred in
disregarding the rule; that with the resulting admission, there remains no
genuine issue to be resolved in Civil Case No. MAN-4821, such that judgment
based on the pleadings is proper. Finally, petitioner adds that respondents
trifling with the law and rules of procedure by conveniently claiming in one
case that the subject property is conjugal, and then in another that it is
paraphernal should not be countenanced; she should be held to her original
declaration that the subject property is conjugal.

Respondents Arguments
In her Comment,41 respondent counters that, as correctly ruled by the CA,
petitioner elected the wrong remedy in filing a motion for judgment on the
pleadings when he should have moved for summary judgment; that in a
motion for judgment on the pleadings, the movant is deemed to admit the
truth of all of the opposing partys material and relevant allegations, and rest
his motion on those allegations taken together with that of his own as are
admitted in the pleadings;42 that the effect of this is that petitioner is
deemed to have admitted that the subject property is paraphernal, as
claimed in her Answer; that with the final and executory May 30, 2007
Decision of the CA in CA-G.R. CV No. 78971, the subject property should now
be considered as her paraphernal property, and petitioners case for partition
on the claim that the subject property is conjugal should be dismissed for
being moot and academic.
Our Ruling
The Court denies the Petition.
Judgment on the pleadings is proper where an answer fails to tender an
issue, or otherwise admits the material allegations of the adverse partys
pleading.43 Summary judgment, on the other hand, will be granted if the
pleadings, supporting affidavits, depositions, and admissions on file, show
that, except as to the amount of damages, there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a
matter of law.44cralawred
We have elaborated on the basic distinction between summary judgment
and judgment on the pleadings, thus:
The existence or appearance of ostensible issues in the pleadings, on the
one hand, and their sham or fictitious character, on the other, are what
distinguish a proper case for summary judgment from one for a judgment on
the pleadings. In a proper case for judgment on the pleadings, there is no
ostensible issue at all because of the failure of the defending partys answer
to raise an issue. On the other hand, in the case of a summary judgment,
issues apparently exist ? i.e. facts are asserted in the complaint regarding
which there is as yet no admission, disavowal or qualification; or specific
denials or affirmative defenses are in truth set out in the answer?but the
issues thus arising from the pleadings are sham, fictitious or not genuine, as
shown by affidavits, depositions, or admissions.45
An answer would fail to tender an issue if it does not deny the material
allegations in the complaint or admits said material allegations of the

adverse partys pleadings by confessing the truthfulness thereof and/or

omitting to deal with them at all. Now, if an answer does in fact specifically
deny the material averments of the complaint and/or asserts affirmative
defenses (allegations of new matter which, while admitting the material
allegations of the complaint expressly or impliedly, would nevertheless
prevent or bar recovery by the plaintiff), a judgment on the pleadings would
naturally be improper.46
On the other hand, whether x x x the issues raised by the Answer are
genuine is not the crux of inquiry in a motion for judgment on the pleadings.
It is so only in a motion for summary judgment. In a case for judgment on
the pleadings, the Answer is such that no issue is raised at all. The essential
question in such a case is whether there are issues generated by the
pleadings.47 A genuine issue is an issue of fact which requires the
presentation of evidence as distinguished from a sham, fictitious, contrived
or false claim. When the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine issue or question as to the facts,
and summary judgment is called for.48
In rendering summary judgment, the trial court relied on respondents failure
to reply to petitioners request for admission, her admission in Civil Case No.
MAN-2683, as well as its May 15, 2002 Decision declaring that the subject
property is a conjugal asset. It took judicial notice of the proceedings in said
case. While there is nothing irregular with this as courts may take judicial
notice of a decision or the facts prevailing in another case sitting in the same
court if (1) the parties present them in evidence, absent any opposition from
the other party; or (2) the court, in its discretion, resolves to do so49 the
trial court however disregarded the fact that its decision was then the
subject of a pending appeal in CA-G.R. CV No. 78971. It should have known
that until the appeal is resolved by the appellate court, it would be
premature to render judgment on petitioners motion for judgment on the
pleadings; that it would be presumptuous to assume that its own decision
would be affirmed on appeal. One of the issues raised in the appeal is
precisely whether the subject property is conjugal, or a paraphernal asset of
the respondent. Thus, instead of resolving petitioners motion for judgment
on the pleadings, the trial court should have denied it or held it in abeyance.
It should have guided petitioner to this end, instead of aiding in the hasty
resolution of his case. In the first place, Civil Case No. MAN-4821 was
transferred to it from Branch 56 precisely for the reason that it was the court
which tried the closely related Civil Case No. MAN-2683.
Even if respondent is deemed to have admitted the matters contained in
petitioners request for admission by her failure to reply thereto, the trial
court should have considered the pending appeal in CA-G.R. CV No. 78971.
It cannot take judicial notice solely of the proceedings in Civil Case No. MAN2683, and ignore the appeal in CA-G.R. CV No. 78971. After all, CA-G.R. CV

No. 78971 is merely a continuation of Civil Case No. MAN-2683; an appeal is

deemed a continuation of the same case commenced in the lower
court.50cralawred
On the part of petitioner, it must be said that he could not have validly
resorted to a motion for judgment on the pleadings or summary judgment.
While it may appear that under Rules 34 and 35 of the 1997 Rules, he may
file a motion for judgment on the pleadings or summary judgment as a result
of the consequent admission by respondent that the subject property is
conjugal, this is not actually the case. Quite the contrary, by invoking the
proceedings and decision in Civil Case No. MAN-2683, petitioner is precluded
from obtaining judgment while the appeal in said case is pending, because
the result thereof determines whether the subject property is indeed
conjugal or paraphernal. He may not preempt the appeal in CA-G.R. CV No.
78971.
While it is true that a judgment cannot bind persons who are not parties to
the action,51 petitioner cannot, after invoking the proceedings in Civil Case
No. MAN-2683 to secure affirmative relief against respondent and thereafter
failing to obtain such relief, be allowed to repudiate or question the CAs
ruling in CA-G.R. CV No. 78971. The principle of estoppel bars him from
denying the resultant pronouncement by the appellate court, which became
final and executory, that the subject property is respondents paraphernal
property. In estoppel, a person, who by his deed or conduct has induced
another to act in a particular manner, is barred from adopting an inconsistent
position, attitude or course of conduct that thereby causes loss or injury to
another. It further bars him from denying the truth of a fact which has, in the
contemplation of law, become settled by the acts and proceeding of judicial
or legislative officers or by the act of the party himself, either by
conventional writing or by representations, express or implied or in
pais.52cralawred
Finally, the Court notes that the appellate court overlooked the May 30, 2007
Decision in CA-G.R. CV No. 78971, which became final and executory on June
23, 2007. The respondent included this development in her appellees brief,
but the CA did not take it into account. As an unfortunate consequence, the
case was not appreciated and resolved completely.
Thus, with the development in Civil Case No. MAN-2683 brought upon by the
final and executory decision in CA-G.R. CV No. 78971, petitioners case is left
with no leg to stand on. There being no conjugal property to be divided
between the parties, Civil Case No. MAN-4821 must be dismissed.
WHEREFORE, the Petition is DENIED. The October 6, 2009 Decision and
March 2, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 01783
are AFFIRMED WITH MODIFICATION in that Civil Case No. MAN-4821 is

ordered DISMISSED.
SO ORDERED.
Carpio, (Acting Chief Justice),* Velasco, Jr.,** Mendoza, and Leonen, JJ., concur.

G.R. No. 202989, March 25, 2015

COMGLASCO CORPORATION/AGUILA GLASS, Petitioner, v. SANTOS CAR
CHECK CENTER CORPORATION, Respondent.
DECISION
REYES, J.:
On August 16, 2000, respondent Santos Car Check Center Corporation
(Santos), owner of a showroom located at 75 Delgado Street, in Iloilo City,

leased out the said space to petitioner Comglasco Corporation (Comglasco),

an entity engaged in the sale, replacement and repair of automobile
windshields, for a period of five years at a monthly rental of P60,000.00 for
the first year, P66,000.00 on the second year, and P72,600.00 on the third
through fifth years.1
On October 4, 2001, Comglasco advised Santos through a letter2 that it was
pre-terminating their lease contract effective December 1, 2001. Santos
refused to accede to the pre-termination, reminding Comglasco that their
contract was for five years. On January 15, 2002, Comglasco vacated the
leased premises and stopped paying any further rentals. Santos sent several
demand letters, which Comglasco completely ignored. On September 15,
2003, Santos sent its final demand letter,3 which Comglasco again ignored.
On October 20, 2003, Santos filed suit for breach of contract.4
Summons and a copy of the complaint, along with the annexes, were served
on Comglasco on January 21, 2004, but it moved to dismiss the complaint for
improper service. The Regional Trial Court (RTC) of Iloilo City, Branch 37,
dismissed the motion and ordered the summons served anew. On June 28,
2004, Comglasco filed its Answer.5 Santos moved for a judgment on the
pleadings, which the RTC granted. On August 18, 2004, the trial court
rendered its judgment,6 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of [Santos] and against
[Comglasco]:
1. Ordering [Comglasco] to faithfully comply with [its] obligation under the
Contract of Lease and pay its unpaid rentals starting January 16, 2002 to
August 15, 2003 in the total amount of Php1,333,200.00, plus 12% interest
per annum until fully paid;
2. To pay [Santos]:
a) Php200,000.00 as attorneys fees;
b) [Php]50,000.00 as litigation expenses;
c) [Php]400,000.00 as exemplary damages.
3. Costs of the suit.
SO ORDERED.7
On February 14, 2005, Santos moved for execution pending Comglascos
appeal, which the trial court granted on May 12, 2005. In its appeal,
Comglasco interposed the following issues for resolution:
1. Whether or not judgment on the pleadings was properly invoked by the
trial court as basis for rendering its decision;

2. Whether or not material issues were raised in [Comglascos] Answer;

3. Whether or not damages may be granted by the trial court without
proof and legal basis.8
In its Decision9 dated August 10, 2011, the Court of Appeals (CA) affirmed
the judgment of the RTC but reduced the award of attorneys fees to
P100,000.00 and deleted the award of litigation expenses and exemplary
damages.
Petition for Review to the Supreme Court
In this petition, Comglasco raises the following issues:
1. Whether or not judgment on the pleadings was properly invoked by the
trial court as basis for rendering its decision?
2. Whether or not material issues were raised in [Comglascos] answer?
3. Whether or not summary judgment or judgment on the pleadings is the
proper remedy for [Santos] under the circumstances of the present
case?
4. Whether or not the amount deposited for advance rental and deposit
should be credited to [Comglascos] account?
5. Whether or not attorneys fees may be granted by the trial court
without proof and legal basis?10
Paragraph 15 of the parties lease contract11 permits pre-termination with
cause in the first three years and without cause after the third year. Citing
business reverses which it ascribed to the 1997 Asian financial crisis,
Comglasco insists that under Article 1267 of the Civil Code it is exempted
from its obligation under the contract, because its business setback is the
cause contemplated in their lease which authorized it to pre-terminate the
same. Article 1267 provides:
Art. 1267. When the service has become so difficult as to be manifestly
beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part.
Comglasco argues that it cannot be said to have admitted in its Answer the
material allegations of the complaint precisely because it invoked therein a
valid cause for its decision to pre-terminate the lease before the lapse of

three years; that therefore, in view of its pleaded cause for reneging on its
rentals (the 1997 Asian financial crisis), the RTC should have ordered the
reception of evidence for this purpose, after which a summary judgment
would then have been proper, not a judgment on the pleadings. After all,
Santos has claimed in its Motion for Summary Judgment that Comglascos
cited cause for pre-termination was fictitious or a sham, whereas in truth
the prevailing business climate which ensued after the 1997 currency crisis
resulted in great difficulty on its part to comply with the terms of the lease
as to be manifestly beyond the contemplation of the parties; thus,
Comglasco should be deemed released from the lease.
Next, Comglasco insists that its advance rentals and deposit totaling
P309,000.00 should be deducted from any sum awarded to Santos while it
also insists that there is no factual and legal basis for the award of damages.
Ruling of the Court
The petition is denied.
The first three issues being related will be discussed together.
Comglasco maintains that the RTC was wrong to rule that its answer to
Santos complaint tendered no issue, or admitted the material allegations
therein; that the court should have heard it out on the reason it invoked to
justify its action to pre-terminate the parties lease; that therefore a
summary judgment would have been the proper recourse, after a hearing.
In Philippine National Construction Corporation v. CA12 (PNCC), which also
involves the termination of a lease of property by the lessee due to
financial, as well as technical, difficulties,13 the Court ruled:
The obligation to pay rentals or deliver the thing in a contract of lease falls
within the prestation to give; hence, it is not covered within the scope of
Article 1266. At any rate, the unforeseen event and causes mentioned by
petitioner are not the legal or physical impossibilities contemplated in said
article. Besides, petitioner failed to state specifically the circumstances
brought about by the abrupt change in the political climate in the country
except the alleged prevailing uncertainties in government policies on
infrastructure projects.
The principle of rebus sic stantibus neither fits in with the facts of the case.
Under this theory, the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist, the contract also
ceases to exist. This theory is said to be the basis of Article 1267 of the Civil
Code, which provides:

Art. 1267. When the service has become so difficult as to be manifestly

beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part.
This article, which enunciates the doctrine of unforeseen events, is not,
however, an absolute application of the principle of rebus sic stantibus,
which would endanger the security of contractual relations. The parties to
the contract must be presumed to have assumed the risks of unfavorable
developments. It is therefore only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor.
In this case, petitioner wants this Court to believe that the abrupt change in
the political climate of the country after the EDSA Revolution and its poor
financial condition rendered the performance of the lease contract
impractical and inimical to the corporate survival of the petitioner.
This Court cannot subscribe to this argument. As pointed out by private
respondents:
xxxx
Anent petitioners alleged poor financial condition, the same will neither
release petitioner from the binding effect of the contract of lease. As held
in Central Bank v. Court of Appeals, cited by private respondents, mere
pecuniary inability to fulfill an engagement does not discharge a contractual
obligation, nor does it constitute a defense to an action for specific
performance.14
Relying on Article 1267 of the Civil Code to justify its decision to preterminate its lease with Santos, Comglasco invokes the 1997 Asian currency
crisis as causing it much difficulty in meeting its obligations. But
in PNCC,15 the Court held that the payment of lease rentals does not involve
a prestation to do envisaged in Articles 1266 and 1267 which has been
rendered legally or physically impossible without the fault of the
obligor-lessor. Article 1267 speaks of a prestation involving service which
has been rendered so difficult by unforeseen subsequent events as to be
manifestly beyond the contemplation of the parties. To be sure, the Asian
currency crisis befell the region from July 1997 and for sometime thereafter,
but Comglasco cannot be permitted to blame its difficulties on the said
regional economic phenomenon because it entered into the subject lease
only on August 16, 2000, more than three years after it began, and by then
Comglasco had known what business risks it assumed when it opened a new
shop in Iloilo City.
This situation is no different from the Courts finding in PNCC wherein PNCC
cited the assassination of Senator Benigno Aquino Jr. (Senator Aquino) on
August 21, 1983 and the ensuing national political and economic crises as

putting it in such a difficult business climate that it should be deemed

released from its lease contract. The Court held that the political upheavals,
turmoils, almost daily mass demonstrations, unprecedented inflation, and
peace and order deterioration which followed Senator Aquinos death were a
matter of judicial notice, yet despite this business climate, PNCC knowingly
entered into a lease with therein respondents on November 18, 1985, doing
so with open eyes of the deteriorating conditions of the country. The Court
rules now, as in PNCC, that there are no absolutely exceptional changes of
circumstances that equity demands assistance for the debtor.16
As found by the CA, Comglascos Answer admitted the material allegations in
the complaint, to wit: a) that Santos holds absolute title to a showroom
space; b) that Comglasco leased the said showroom from Santos; c) that
after a little over a year, Comglasco pre-terminated the lease; d) that,
disregarding Santos rejection of the pre-termination of their lease,
Comglasco vacated the leased premises on January 15, 2002; e) that
Comglasco never denied the existence and validity of the parties lease
contract. Specifically, the CA noted that Paragraph 2 of the Answer admitted
the allegations in Paragraphs 2, 3 and 4 of the complaint that the lease was
for five years, starting on August 16, 2000 and to expire on August 15, 2005,
at a monthly rental of P60,000.00 on the first year, P66,000.00 on the second
year, and P72,600.00 on the third up to the fifth year.
The RTC acted correctly in resorting to Section 1 of Rule 34, on Judgment on
the Pleadings, to cut short a needless trial. This Court agrees with the CA
that Comglasco cannot cite Article 1267 of the Civil Code, and that it must be
deemed to have admitted the material allegations in the complaint. Section
1, Rule 34 reads:
Sec. 1. Judgment on the pleadings. - Where an answer fails to tender an
issue, or otherwise admits the material allegations of the adverse partys
pleading, the court may, on motion of that party, direct judgment on such
pleading. However, in actions for declaration of nullity or annulment of
marriage or for legal separation, the material facts alleged in the complaint
shall always be proved.
A judgment on the pleadings is a judgment on the facts as pleaded,17 and is
based exclusively upon the allegations appearing in the pleadings of the
parties and the accompanying annexes.18 It is settled that the trial court has
the discretion to grant a motion for judgment on the pleadings filed by a
party if there is no controverted matter in the case after the answer is
filed.19 A genuine issue of fact is that which requires the presentation of
evidence, as distinguished from a sham, fictitious, contrived or false issue.20
Come to think of it, under Rule 35, on Summary Judgments, Comglasco had
recourse to move for summary judgment, wherein it could have adduced

supporting evidence to justify its action on the parties lease, but it did not
do so. Section 2 of Rule 35 provides:
Sec. 2. Summary judgment for defending party. - A party against whom a
claim, counterclaim, or cross-claim is asserted or a declaratory relief is
sought may, at any time, move with supporting affidavits, depositions or
admissions for a summary judgment in his favor as to all or any part thereof.
Concerning, now, whether Comglascos alleged rental deposit and advance
rentals of P309,000.00 should be credited to Comglascos account, let it
suffice to state that it never raised this matter in its answer to the complaint,
nor in its appeal to the CA. Certainly, it cannot do so now.
Finally, as to whether attorneys fees may be recovered by Santos, Article
2208(2) of the Civil Code justifies the award thereof, in the absence of
stipulation, where the defendants act or omission has compelled the plaintiff
to incur expenses to protect his interest. The pre-termination of the lease by
Comglasco was not due to any fault of Santos, and Comglasco completely
ignored all four demands of Santos to pay the rentals due from January 16,
2002 to August 15, 2003, thereby compelling Santos to sue to obtain relief.
It is true that the policy of the Court is that no premium should be placed on
the right to litigate,21 but it is also true that attorneys fees are in the nature
of actual damages, the reason being that litigation costs money.22 But the
Court agrees with the CA that the lesser amount of P100,000.00 it awarded
to Santos instead of P200,000.00 adjudged by the RTC, is more reasonable.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
Velasco, Jr., (Chairperson), Peralta, Villarama, Jr., and Jardeleza, JJ., concur.

G.R. No. 200759, March 25, 2015

FAJ CONSTRUCTION & DEVELOPMENT
CORPORATION, Petitioner, v. SUSAN M. SAULOG,Respondent.
DECISION
DEL CASTILLO, J.:
This case illustrates the oft-quoted principle that the Supreme Court is not a
trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during trial.
This Petition for Review on Certiorari1 seeks to set aside the November 29,
2011 Decision2 and February 24, 2012 Resolution3 of the Court of Appeals
(CA) in CA-G.R. CV No. 88385 affirming with modification the January 30,
2006 Decision4 of the Regional Trial Court (RTC) of Quezon City, Branch 220
in Civil Case No. Q-02-45865 and denying petitioners Partial Motion for
Reconsideration,5respectively.
Factual Antecedents
On June 15, 1999, petitioner FAJ Construction and Development Corporation
and respondent Susan M. Saulog entered into an Agreement6 (construction
agreement) for the construction of a residential building in San Lorenzo
Village, Makati City for a contract price of P12,500,000.00. Payment to
petitioner contractor shall be on a progress billing basis, after inspection of
the work by respondent.

Construction of the building commenced, and respondent made a

corresponding total payment to petitioner in the amount of P10,592,194.80.
However, for the October 31 and November 6, 2000 progress billing
statements sent by petitioner in the total amount of P851,601.58,
respondent refused to pay. After performing additional work, petitioner made
another request for payment, but respondent again refused to pay,
prompting petitioner to terminate the construction contract pursuant to
Article 27(b) of the Uniform General Conditions of Contract for Private
Construction (or Document 102) of the Construction Industry Authority of the
Philippines, Department of Trade and Industry.7
Petitioner then sent demand letters to respondent on November 24, 2000
and September 28, 2001. In reply, respondent claimed that petitioners work
was defective, and that it should instead be made liable thereon.
Petitioner thus filed with the RTC of Quezon City a civil case for collection of a
sum of money with damages against respondent. Docketed as Civil Case No.
Q-02-45865 and assigned to Branch 220, the Complaint8 alleged that despite
faithful compliance with the construction agreement, respondent refused to
pay the outstanding balance of P851,601.58, which prompted it to stop
construction of the building. Petitioner thus prayed that respondent be
ordered to pay the amounts of P851,601.58 representing the unpaid billings;
P625,000.00 representing the retention amount; P50,000.00 for litigation
expenses; 20% attorneys fees and appearance fees, or P170,000.00; and
costs of suit.
In her Answer with Compulsory Counterclaim,9 respondent claimed that while
she religiously paid petitioner pursuant to their construction agreement,
petitioners work was defective and delayed; that petitioner failed to remedy
said defects; that as a result, rainwater seeped through the building and
caused extensive damage to the unfinished building; and that she had to
incur additional substantial expenses for the repair of the building, to remedy
the defects caused by petitioner, and to finish construction of the building.
By way of counterclaim, respondent prayed for an award of actual damages
in the amount of P3,213,575.91; lost rentals amounting to P5,391,456.00;
additional consequential damages of P1,600,000.00 because she could not
devote herself to her work; additional costs of ongoing repair; P5,000,000.00
moral damages; P5,000,000.00 exemplary damages; P1,387,500.00 as
penalties for delay; attorneys fees and P4,000.00 appearance fees per
hearing; interest; and costs of suit.
After pre-trial, the case was set for trial on the merits.
Petitioner presented its first witness on March 11, 2003. However, the
presentation of the witnesss testimony was not concluded as petitioners
counsel did not have the required documentary evidence. 10 Thus, petitioner

moved for a continuance.

After several opportunities for the presentation of its first witness, petitioner
failed to proceed with trial. Its counsel moved and asked for several
postponements of trial, which the trial court granted despite respondents
opposition. However, petitioners counsel and witness failed to appear
during the scheduled April 29, 2003 hearing, prompting the trial court, upon
respondents motion, to dismiss the case for failure to prosecute.11
Petitioner filed an unverified motion for reconsideration12 of the April 29,
2003 dismissal order, claiming that its counsel was unable to attend the
scheduled hearing because he suffered arthritis of the knee; however, the
motion was not accompanied by an affidavit or certification to the effect that
the character of petitioners counsels illness is such as to render his nonattendance excusable. Respondent opposed the motion.13 In a June 23,
2003 Order,14 the trial court granted petitioners motion for reconsideration,
thus recalling its April 29, 2003 dismissal order and setting the case for
hearing on July 29, 2003 for the continuation of the presentation of
petitioners evidence.
On July 29, 2003, both petitioner and its counsel again failed to appear. The
trial court reset the hearing to September 4, 2003, with a warning that
further postponement will not be tolerated.15
Petitioner once more moved for the postponement of the September 4, 2003
hearing, citing conflict of schedule.16 Respondent opposed the motion,
claiming that there was a pattern on petitioners part to delay the disposition
of the case despite the trial courts admonition that no further postponement
will be allowed.
On September 4, 2003, petitioner and counsel again failed to appear for the
continuation of trial. The trial court, noting respondents manifestation,
issued another Order dismissing the case for failure to prosecute, ordering
that the direct testimony of petitioners witness be stricken off the record,
and setting the case for hearing on respondents counterclaim.17
Petitioner again filed a motion for reconsideration18 of the above September
4, 2003 dismissal order, which respondent opposed,19 and which the trial
court denied in a December 16, 2003 Order.20 Petitioner filed a second
motion for reconsideration,21 but the same was denied in a January 14, 2004
Order.22
Petitioner filed a petition for certiorari23 with the CA questioning the above
December 16, 2003 and January 14, 2004 Orders of the trial court, claiming
that they were issued with grave abuse of discretion; that the trial court
erred in denying a postponement of trial, in striking off the testimony of its

witness, and in declaring that petitioner had the propensity to delay the
case. The Petition was docketed as CA-G.R. SP No. 82239.
On September 30, 2004, the CA issued its Decision24 in CA-G.R. SP No. 82239
dismissing the petition for certiorari and affirming the trial courts action,
declaring that petitioner adopted a pattern of delay and was guilty of
employing dilatory maneuvers, trifling with respondents right to a speedy
dispensation of justice, abusing the patience of the trial court and wasting its
time, squandering the peoples money, and impeding the administration of
justice. It held further that the trial court acted rightly in its resolution of the
case, treating petitioner with liberality despite its trifling with the expeditious
administration of justice; that petitioners complaint was correctly dismissed
for failure to prosecute after it was given all the opportunity to present its
evidence; that said dismissal operates as an adjudication on the merits; that
petitioners right to due process was not violated; and that petitioners
second motion for reconsideration is not allowed under Section 5, Rule 37 of
the 1997 Rules of Civil Procedure.25 In addition, the appellate court
admonished petitioners counsel, reminding the latter not to delay his case,
but rather to observe the rules of procedure and not misuse them to defeat
the ends of justice.
Petitioner took the matter to this Court, via a petition for review
on certiorari docketed as G.R. No. 166336. However, in a March 7, 2005
Resolution,26 the Petition was denied for failure to submit a verified
statement of material date of filing the motion for reconsideration of the
assailed CA judgment, and for failure to show that the appellate court
committed any reversible error. In several other Resolutions27 of this Court,
petitioners motions for reconsideration and to refer the case to the Court en
banc were denied on the ground, among others, that it failed to sufficiently
show that the CA committed any reversible error.
On January 17, 2006, an Entry of Judgment28 was issued by the Court stating
that on August 16, 2005, its March 7, 2005 Resolution in G.R. No. 166336
became final and executory.
Ruling of the Regional Trial Court
In Civil Case No. Q-02-45865, respondent was allowed to present her
evidence on the counterclaim. As found by the CA, respondents evidence is
as follows:
x x x. She presented the testimony of Rhodora Calinawan, the architect who
conducted a complete inspection of the project first in September 2000, and,
second, in November 2000, after typhoon Seniang. Rhodora Calinawan
narrated her findings and identified the photographs submitted as proofs of
appellants29 substandard work. Among the defects she pointed out were the

sloppily done flooring, the unaligned electrical outlet and switch, dried
cement and paint stained flooring, incorrect colored cement used to fill the
gap between the tiles, need to repair door jamb, sloppily done grouting of
tiles, incorrect luggage compartment doors, bubbles in the varnishing works,
unaligned sanding of parquet flooring, poor termination of shower and
enclosure and bull nose wood moulding, dirty window sill, lack of screws and
rubber on the window, damaged roof panels, need for plashing and
installation of drift edges, and improper installation of asphalt shingles on the
roof. After the typhoon, appellee30 also requested her to make a second
inspection. She prepared another report which listed the following additional
defects: the second floor parquet flooring was wet due to the typhoon
because the windows were not properly sealed, lacked sealant and rubber
protector.
Susan Saulog took the stand on February 15, 2005. She testified on
appellants defective work and the damage caused by typhoon Seniang to
the unfinished work, notwithstanding the fact that she had already paid a
total of P10,592,194.80. She refused to pay appellant the amount of
P851,601.58 because the latter already collected advance payment but had
a lot of unfinished work before it abandoned the project. She made a
counter-demand for P4,600,000.00 that excluded the lost revenue for
unearned rentals, exemplary and moral damages. She was supposed to earn
P160,000.00 per month from rentals starting July 2000. After appellant
abandoned the project, she still spent P3,820,796.21 to rectify and complete
the same. The accounts chargeable to appellant were listed in Exhibit 21, to
wit:
ITEM NO.
A
B
C
D
E
F
G
H

PARTICULARS
Bestbuilt Steel Builders
Sub-Contractor: Fizcon Enterprises
Labor Contracts & Quotations
Cash Advances for Materials by FAJ
Professional Fees
Rectification of Major Defective Works
Other Charges
Other Additional Construction Expenses for
Rectification & Repair Works
GRAND TOTAL AMOUNT

AMOUNT
785,299.12
375,166.17
243,461.40
186,236.62
631,666.46
422,563.77
647,629.71
528,772.96
3,820,796.2
1

The penalty for delay is P12,500.00 per day. From July 30, 2000 up to
November 17, 2000, the total penalty amounted to P1,387,500.00. She
suffered sleepless nights because she started to experience frozen shoulder
and trigger finger that necessitated the services of Dr. Alberto Lu, an
acupuncturist. Exhibits 30-34 comprised five receipts issued by Alberto M.
Lou, evidencing payment of P400 for services rendered. She claimed

reimbursement for the amounts she paid to her counsel: P20,000.00 as

acceptance fees; P4,000.00 per appearance and cost of suit which totaled
P100,000.00. She spent P60,000.00 and P7,000.00, respectively, for the
services of Architect Calinauan and an accountant to put the records in
order. She claimed moral damages of P5,000,000.00.31
On January 30, 2006, the trial court rendered its Decision on respondents
counterclaim, declaring as follows:
After carefully studying all the above evidence, this court resolves that
defendant32 has proven her following allegations and counterclaims, to wit:
(1) That, in fact, the construction work of plaintiff33 was not only delayed, but
defective; and that plaintiff abandoned the construction work, incomplete
and with many defects. The evidence on record is overwhelming and in
addition to the testimonies of Arch. Rhodora Calinawan and the defendant
herself; the same is proven by Exhs. 1 1-B-4; 2 2-A; 3; 4 4-H-2; 5 5-G2; 6 6-G-2; 7 7-E-2; 8 8-C; 9 9-M; 9-N 9-EE; 15 15-A2; 15-B 15-B-5;
15-B2 15-Z.
(2) That defendant paid plaintiff the total amount of P10,592,194.80 before
plaintiff abandoned the work (Exhs. 16 16-Q).
(3) That defendant had to finish the work abandoned by plaintiff, incurring
substantial additional expenses therefor. This is also supported not only by
her testimony, but by documentary evidence presented by her (Exhs. 21; 20
20-A; 21 21-F; 22 22-CCC; 23 23-M; 24 24-JJJ; 25 25-S; 26 26-QQ;
28 28-AAAA-130; 29 29-JJJ).
(4) As to the claim of defendant for moral damages, the Court finds that she
is entitled to moral damages, but not for the amount she is claiming. The
testimony given by defendant on how the problems created by plaintiff
affected her personally is believable; and furthermore, it is supported by
official receipts of an Acupuncture Consultant (Exhs. 30-34). This is one of
the cases wherein moral damages are allowed by Article 2220 of the New
Civil Code. Breach of Contract where the defendant acted fraudulently or in
bad faith.
(5) With respect to exemplary damages, the Court perceives that same
should be granted, but moderates the same. Plaintiff being in the
construction business to the public, should be deterred from doing to others,
what it did to defendant. This is one of the situations envisioned by Article
2229 of the New Civil Code, for exemplary damages.
(6) The Court is convinced that attorneys fees should also be adjudicated,
considering the work that counsel for defendant undertook. Attorneys fees

should be adjudicated, in accordance with Article 2208 of the New Civil Code.
(7) The Court is also persuaded to grant penalties for delay, as provided for
in the agreement between the parties (Exhs. 11-B-1 and 11-B-2).
(8) The Court, however, is not inclined to grant additional consequential
damages of P1,600,000.00, because this court finds that this claim has not
been properly supported.
(9) Finally, the Court is inclined to grant defendants claim, for lost rentals,
which is properly supported by the testimony of defendant and very
plausible under the circumstances, because one of the duplex apartments
was constructed for rental income purposes and its completion and rental
was very much delayed, because of the fault of plaintiff.
IN VIEW OF ALL THE FOREGOING, plaintiff FAJ Construction & Development
Corporation is hereby ordered to pay defendant Susan Saulog, the following
amounts:
(1)
(2)
(3)
(4)
(5)
(6)

P3,213,575.91 as actual damages;

Lost rentals of P5,391,456.00;
Moral damages of P500,000.00;
Exemplary damages of P500,000.00;
Penalties for delay amounting to P1,387,500.00;
Attorneys fees of P20,000.00, plus appearance fee of P4,000.00 per
appearance, payable to Atty. Alberto B. Guevara, Jr.;
(7) This court also grants 6% interest, on all the above amounts,
commencing from the date of the filing of the complaint, January 2, 2002.
This Court, however, dismisses the claim of Susan Saulog for additional
consequential damages amounting to P1,600,000.00, which has not been
proven.
SO ORDERED.34
Ruling of the Court of Appeals
Petitioner filed an appeal with the CA. Docketed as CA-G.R. CV No. 88385,
the appeal essentially argued that the trial court erred in holding petitioner
liable to the respondent for the amounts stated in the decretal portion of the
trial courts decision. In addition, petitioner contended that it was erroneous
for the trial court to have dismissed its complaint for failure to prosecute, as
it should not be penalized for the negligence of its counsel in the handling of
Civil Case No. Q-02-45865, which is the sole reason for the dismissal thereof.
On November 29, 2011, the CA rendered the assailed Decision affirming with

modification the January 30, 2006 Decision of the trial court, pronouncing
thus:
Appellant35 now questions anew the propriety of the dismissal of the
complaint on ground of failure to prosecute. Appellant argues that it should
not be made to suffer the consequences of the negligence or mistakes of its
counsel.
This Court finds that any disquisition on this issue is improper for being
barred by res judicata. x x x
More, appellants case was dismissed for failure to prosecute because of the
numerous delays caused by its counsel. Appellant cannot be excused from
the actions of its counsel since it is likewise a settled rule that mistake[s] of
counsel binds the client. It is only in case of gross or palpable negligence of
counsel when courts must step in and accord relief to a client who suffered
thereby. x x x
The next issue is: did appellee36 adequately prove her right to actual
damages for rectification of appellants defective work? Article 1715 of the
Civil Code provides:
Article 1715. The contractor shall execute the work in such a manner that it
has the qualities agreed upon and has no defects which destroy or lessen its
value or fitness for its ordinary or stipulated use. Should the work be not of
such quality, the employer may require that the contractor remove the
defect or execute another work. If the contractor fails or refuses to comply
with this obligation, the employer may have the defect removed or another
work executed, at the contractors cost.
Evidently, Article 1715 gives the employer the options to require the removal
of the work, to rectify the flaws in their work, or to have the work done at the
expense of the contractor.
Here, the defective workmanship was amply proven by Architect Rhodora
Calinawans testimony and documentary evidence i.e., photographs,
receipts, and list of the expenses needed to rectify appellants poorly crafted
work. Hence, We sustain the award of actual damages based on these
testimonial and documentary evidence.
Regarding the penalty for delay in the amount of One Million Three Hundred
Eighty Seven Thousand Five Hundred Pesos (P1,387,500.00), the same
should also be sustained. A contract is the law between the parties, and
they are bound by its stipulations so long as they are not contrary to law,
customs, public policy and public morals. The penalty for delay is agreed
upon by the parties themselves. The fact that appellant was already delayed

in the completion of the duplex is undisputed. In fact, record shows that on

January 24, 2000, appellee approved the extension requested by appellant.
This request for extension, by itself, is already proof of delay. Thus, at the
time appellant abandoned the project, it already incurred delay. Verily, it is
only proper that appellant be made to pay the penalty for delay after
appellee no longer agreed to any further extension.
We now go to the issue of damages.
Moral damages are recoverable for breach of contract where the breach was
wanton, reckless, malicious or in bad faith, oppressive or abusive. However,
moral damages are improperly awarded, absent a specific finding and
pronouncement from the trial court that a party acted in such manner. Here,
the only basis of the trial court in granting moral damages of P500,000.00
was appellees gratuitous claim that she suffered sleepless nights for her
frozen shoulder and trigger finger, supposedly evidenced by 5 official
receipts issued by her acupuncturist whom she paid P400.00 per receipt. No
evidence, however, was adduced showing that her frozen shoulder and
trigger finger were the direct result of the delayed project. The basis for
such award is too shallow and evidently untenable, hence, the same must be
deleted.
As a consequence, the award of exemplary damages should also be vacated.
xxx
Also, appellee does not dispute the fact that the total contract price was
P12,500,000.00. After paying more than P10,500,000.00, appellee made
several demands for the parts that did not meet the agreed specifications.
On the other hand, appellant was of the firm belief that it had the right to
work stoppage, as authorized under the contractors manual. Both parties
honestly believed that their respective actions were justified, hence, no bad
faith can be attributed to either party to merit the award of damages.
Too, this Court finds that the trial court erred in holding appellant liable for
lost rentals in the amount of Five Million Three Hundred Ninety One Thousand
Four Hundred Fifty Six Pesos (P5,391,456.00). Unrealized profits fall under
the category of actual or compensatory damages. If there exists a basis for
reasonable expectation of profits had there been no breach of contract,
indemnification for damages based on such expected profits is proper. Here,
appellee did not present any evidence to show that there was already a
potential lessee to one of the units of the duplex. Even assuming that
appellee may have presented evidence to show the existence of a future
lessee, she should have presented a contract of lease showing the contract
price. She should have also shown that the rental rate, at that time and in
that area was, similar or at least approximately close to the amount of
P160,000.00 per month. Without any of these evidence, damages based on

lost rental is purely speculative. In the same way that one could speculate
that the unit will be rented out, a person cannot be precluded from
speculating that the other unit may be occupied by a close relative for free.
The court must rely on competent evidence and must avoid any speculation
or give premium to self-serving allegations. As stated, the award of
P5,391,456.00 is in the nature of actual damages. To be recoverable, actual
damages must not only be capable of proof, but must actually be proved
with a reasonable degree of certainty. Courts cannot simply rely on
speculation, conjecture, or guesswork in determining the fact and amount of
damages. To justify an award of actual damages, there must be competent
proof of the actual amount of loss. Credence can be given only to claims
which are duly supported by receipts x x x. These are not present in the
case at bar.
As for attorneys fees, it is well settled that the law allows judicial discretion
to determine whether or not attorneys fees are appropriate. The surrounding
circumstances of each case are to be considered. Here, We resolve to delete
the award of attorneys fees since the trial court did not make any particular
finding that any of the instances enumerated in Art. 2208 of the Civil Code
exists. More, it is settled that the award of attorneys fees is the exception
rather than the general rule. Counsels fees are not awarded every time a
party prevails in a suit because of the policy that no premium should be
placed on the right to litigate.
The trial court correctly imposed 6% interest on all awarded amounts
commencing from the date of the filing of the complaint. When an
obligation, not constituting a loan or forbearance of money, is breached,
interest on the amount of damages awarded may be imposed at the
discretion of the court at 6% per annum.
ACCORDINGLY, the appealed decision is AFFIRMED WITH MODIFICATION,
deleting the award of lost rentals, moral damages, exemplary damages, and
attorneys fees, including appearance fee.
SO ORDERED.37
Petitioner filed a Partial Motion for Reconsideration, but in a February 24,
2012 Resolution, the CA denied the same. Hence, the present Petition.
Issues
In a January 28, 2013 Resolution,38 this Court resolved to give due course to
the Petition, which raises the following assignment of errors:
I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT CONCLUDED

THAT RES JUDICATA APPLIES IN THE INSTANT CASE.
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT CONCLUDED
THAT PETITIONER IS LIABLE FOR ACTUAL DAMAGES, AND IN IMPOSING THE
PENALTY FOR DELAY AND AWARDING INTEREST ON ALL AMOUNTS DUE. 39
Petitioners Arguments
In its Petition and Reply40 seeking to reverse and set aside the assailed CA
dispositions and praying that judgment be rendered absolving it from the
adjudged pecuniary liabilities or, in the alternative, that a new trial of its case
be held, petitioner argues that res judicata cannot be made as basis to deny
it the opportunity to question the dismissal of its case and to present its
evidence because the dismissal of its Petition in G.R. No. 166336 was not an
adjudication of the case on its merits; that the dismissal of Civil Case No. Q02-45865 was not due to its fault, but solely the gross negligence of its
counsel; that the case should not have been dismissed as it was not guilty of
lack of diligence in failing to continue with trial with reasonable
promptitude;41 that it should not be made liable for the adjudged liabilities as
they are bereft of factual and legal basis; that respondents witness, architect
Rhodora Calinawan (Calinawan), was not competent to testify, nor was she
an objective, reliable, or trustworthy witness; that the supposed actual
damages suffered by respondent have not been adequately proved; that
when respondent refused to pay the outstanding balance, petitioner was
justified in stopping work, and any damages suffered by respondent
thereafter may not be attributed to it but constitute damnum absque injuria;
that the adjudged penalty for its supposed delay is excessive; and that there
is no basis to award interest.
Respondents Arguments
In her Comment,42 respondent contends that the issue of whether the trial
and appellate courts correctly decided the amount of damages is a factual
issue which is beyond the jurisdiction of this Court; that with respect to the
dismissal of petitioners case in Civil Case No. Q-02-45865 for failure to
prosecute, res judicata applies; that petitioners claim that it should not be
bound by the negligence of its counsel cannot stand because it was itself
negligent in the prosecution of its case despite having been given by the trial
court all the opportunity to present evidence; that with respect to the issue
of damages, the factual findings of the trial and appellate courts may not be
disturbed; that petitioner failed to present evidence to controvert the trial
and appellate courts findings; that the pecuniary liabilities were justified as

petitioner was guilty of delay, abandonment, and defective workmanship;

that there is no ground to reduce the amount of penalties for petitioners
delay; and that the award of interest was proper.
Our Ruling
The Court denies the Petition.
Petitioners claim that res judicata cannot apply has no merit. This Court, in
G.R. No. 166336, found nothing wrong in the judgment of the CA in CA-G.R.
SP No. 82239 affirming the dismissal of petitioners Complaint in Civil Case
No. Q-02-45865 for failure to prosecute. In fact, the Court found that the
appellate court had not committed any reversible error. This finding of lack
of any reversible error is now final with the entry of judgment in G.R. No.
166336. Thus, petitioner could no longer prove its case, other than to
present controverting evidence on respondents counterclaim.
The Court has repeatedly said that minute resolutions dismissing the actions
filed before it constitute actual adjudications on the merits. They are the
result of thorough deliberation among the members of the Court. When the
Court does not find any reversible error in the decision of the CA and denies
the petition, there is no need for the Court to fully explain its denial, since it
already means that it agrees with and adopts the findings and conclusions of
the CA. The decision sought to be reviewed and set aside is correct. It would
be an exercise in redundancy for the Court to reproduce or restate in the
minute resolution denying the petition the conclusions that the CA reached. 43
Next, petitioners argument that it should not be punished for the negligence
of its counsel deserves the same treatment. Suffice it to state that we have
not seen any reason to reverse the CAs ruling on this matter; on the other
hand, the record will disclose that petitioner was itself neglectful of its duties
relative to its case, and it continued to retain the services of its counsel
which it now conveniently claims to be negligent, even after repeatedly
suffering from the latters claimed lack of care. It appears that despite
witnessing firsthand the caliber of its lawyer during the initial presentation of
its evidence in 2003, petitioner changed counsel only after the trial courts
January 30, 2006 Decision on respondents counterclaim.44 The general rule
still applies that the mistakes of counsel bind his client.
On the issue of liability, we find relying on the identical findings of the trial
and appellate courts that petitioner is guilty of violating the construction
agreement, for its defective and incomplete work, delay, and for unjustified
abandonment of the project. Indeed, we find no reason to disturb the
identical pronouncements of the trial court and the CA. The same holds true
with respect to the issue of damages raised by petitioner; it requires an
inquiry into the facts, which is no longer this Courts realm. In a case

previously decided by this ponente concerning a construction contract and

where similar allegations of abandonment, delay and defective workmanship
were advanced, it was held that
Petitioner endeavors to convince us to determine, yet again, the weight,
credence, and probative value of the evidence presented. This cannot be
done in this petition for review on certiorari under Rule 45 of the Rules of
Court where only questions of law may be raised by the parties and passed
upon by us. In Fong v. Velayo, we defined a question of law as distinguished
from a question of fact, viz:
A question of law arises when there is doubt as to what the law is on a
certain state of facts, while there is a question of fact when the doubt arises
as to the truth or falsity of the alleged facts. For a question to be one of law,
the same must not involve an examination of the probative value of the
evidence presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the
evidence presented, the [question] posed is one of fact. Thus, the test of
whether a question is one of law or of fact is not the appellation given to
such question by the party raising the same; rather, it is whether the
appellate court can determine the issue raised without reviewing or
evaluating the evidence, in which case, it is a question of law; otherwise, it is
a question of fact.
It has already been held that the determination of the existence of a breach
of contract is a factual matter not usually reviewable in a petition filed under
Rule 45. We will not review, much less reverse, the factual findings of the
Court of Appeals especially where, as in this case, such findings coincide with
those of the trial court, since we are not a trier of facts x x x.45
There is no ground either to doubt the testimony of Calinawan, who testified
on the defective quality of petitioners work and the state of construction
after the latter abandoned the project. Her testimony merely corroborates
already existing evidence such as photographs as well as the testimony
of respondent herself. All in all, these pieces of evidence collectively proved
the facts in issue. Besides, Calinawan need not be qualified as an expert
witness in order to testify on facts which are readily apparent to the eye, and
even to the layman: it does not require an expert to conclude that flooring is
sloppily done, or that the electrical outlet and switch are not aligned, or that
the flooring is stained with paint, or that incorrect colored cement was used
to fill the gap between tiles, or that a door jamb needs repair, or that
grouting of tiles is sloppily done, or that there are unwanted bubbles in the
varnishing works, or that the parquet flooring is unaligned or uneven, or that
the window sills are dirty, or that windows lacked the necessary screws and
rubber, or that the roof panels are damaged, or that the installation of
asphalt shingles on the roof was improper. Any ordinary individual building a
home would readily notice such defects.

Since respondent suffered damages as a result of petitioners defective and

delayed work and unjustified abandonment of the project, the principle
of damnum absque injuria cannot apply. The principle cannot apply when
there is an abuse of a persons right.46
Coming now to the issue of delay, we find that the trial and appellate courts
grant of P1,387,500.00 not excessive; it is, in fact, liberal. Construction
period was agreed upon at 240 days from receipt by petitioner of a notice to
proceed.47 Said notice was issued on June 18, 1999,48 thus giving petitioner
approximately eight months from said date, or roughly computed up to
February 18, 2000, to complete the project. Yet, petitioner was still working
on the project as late as on November 22, 2000, after which it stopped work
and abandoned the project; this fact is not denied by petitioner.49 Thus,
petitioner was already delayed for more than nine months that is,
beginning March 2000 and ending November of the same year or
approximately 270 days. At P12,500.00 agreed penalty imposed for each
day of delay, petitioner should be correspondingly liable to respondent for
P3,375,000.00 liquidated damages, more or less, under the construction
agreement.50 Yet, the courts below awarded a mere P1,387,500.00; this
award is certainly not excessive and should remain, accepted as it is without
question by the respondent.
Finally, the imposition of 6% interest per annum is proper. Indeed, as
correctly held by the CA, when an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate of 6% per
annum,51 from the filing of the complaint until its full satisfaction.
WHEREFORE, the Petition is DENIED. The November 29, 2011 Decision and
February 24, 2012 Resolution of the Court of Appeals in CA-G.R. CV No.
88385 are AFFIRMED.
SO ORDERED.
Brion, (Acting Chairperson),* Mendoza, Perlas-Bernabe,** and Leonen, JJ.,
concur.

G.R. No. 198223, February 18, 2015

HEIRS OF TIMBANG DAROMIMBANG DIMAAMPAO, NAMELY: CABIB D.
ALAWI, ACMAD D. ALAWI, KALIKO D. ALAWI, ABU ALI D. ALAWI,
MOKHAYMA D. ABAB, AND MARIAM ABAB, REPRESENTED BY CABIB

D. ALAWI, Petitioners, v. ATTY. ABDULLAH ALUG, HADJI BOGABONG

BALT AND HEIRS OF HADJI ALI PETE PANGARUNGAN, NAMELY: HADJA
SITTIE SALIMA PANGARUNGAN, AMINA P. ALANGADI, JAMELA P. SANI,
ANSARY S. PANGARUNGAN, RAMLA P. PANGCAT, JACKLYN P. BANTO,
ACMAD T. PANGARUNGAN, ACMELA P. MAMAROBA, AMERA P.
LALANTO, ACLI T. PANGARUNGAN, ASMIA P. BANOCAG, ABDARI T.
PANGARUNGAN, ASLIA T. PANGARUNGAN, HANIPA T. PANGARUNGAN,
CALILI T. PANGARUNGAN, AND ANSANTO T. PANGARUNGAN,
REPRESENTED BY HADJA SITTIE SALIMA PANGARUNGAN, Respondents.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari are the Decision1 dated July
2, 2010 of the Court of Appeals in CA-G.R. SP No. 02376-MIN and the
Resolution2 dated July 27, 2011 denying reconsideration thereof.
On February 15, 2005, petitioners Heirs of Timbang Daromimbang
Dimaampao represented by Cabib D. Alawi, filed with the Regional Trial Court
(RTC) of Lanao del Sur, Marawi City, a Complaint3 for declaration of deed of
sale as a nullity, quieting of title and damages against respondents Abdullah
Alug, Hadji Bogabong Balt and Heirs of Hadji Ali Pete Pangarungan,
represented by Hadja Sittie Salima Pangarungan. Petitioners alleged that
they are the owners pro indiviso and lawful possessors of a parcel of land
located at Madaya, Marawi City with an area of 157,738 square meters
covered by OCT No. RP-355 (subject lot), Homestead Patent No. 47201; that
they acquired ownership and possession of the subject land and the
improvements thereon by way of inheritance from their deceased
grandmother, Timbang Daromimbang Dimaampao (Timbang), who was the
true and exclusive owner and lawful possessor of the subject lot; that Cota
Dimaampao (Cota) and Timbang got married in accordance with the Muslim
rites and the subject lot was among the dowries given by the former to the
latter; that during the existence of their marriage, the spouses applied for
registration and titling of the land and their homestead application was
approved and was issued OCT No. RP-355 in their names; that sometime
after the issuance of the said title, Cota and Timbang were divorced from
each other, hence, Timbang and their two daughters continued possession
and ownership of the subject land, while Cota contracted another marriage;
that when Timbang died, her daughters succeeded her on the ownership
and possession of the land until their deaths and were survived by herein
petitioners.
Petitioners claimed that sometime on April 10, 1978, without their
knowledge and that of their predecessors, Cota executed a deed of sale in
favor of respondents involving the subject land; that respondents were in

bad faith since at the time of purchase, petitioners by themselves were in

actual possession of the land in the concept of owners; that the deed of sale
was invalid because Cota had no right to sell any portion of the subject land
as he was not the owner thereof; that the deed of sale cast a cloud of doubt
on petitioners' title; that despite such deed of sale, respondents have never
occupied any portion of the subject land. Petitioners stated that the subject
land was allegedly sold by Cota to deceased Sheik Pangandaman
Daromimbang (Timbang's brother) who then donated the same to his
daughter and son-in-law which deeds of sale and donation, however, were
annulled by the RTC Lanao del Sur, Branch 9, in Civil Case No. 2410; that
they were not impleaded as parties in that case even if they were in
possession of the land; that the RTC decision was affirmed by the CA and
became final which cast a cloud of doubt on their title and ownership of the
land. Petitioners prayed that the Deed of Sale dated April 10, 1978 between
Cota and respondents be declared null and void, and for them to be declared
as the rightful owners and lawful possessors of the subject land.
Respondents filed their Answer4 denying petitioners' claim of ownership and
possession of the subject land as they owned and possessed the same since
1978; that the validity of the Deed of Sale dated April 10, 1978 involving the
subject land was already upheld by the RTC Lanao del Sur, Branch 9, in Civil
Case No. 2410, entitled Cota Dimaampao, et al. v. Sheik Pangandaman
Daromimbang, et al., a case that had already attained finality. In their
Special and Affirmative Defenses, respondents claimed that petitioners have
no cause of action against them because the latter's claim of dowry or
donation by reason of marriage was belied by the issuance of OCT No. RP335 in Cota's name; that their claim of dowry or donation was not supported
by any written memorandum or agreement and now barred under the
Statute of frauds; that the action is barred by prescription or estoppel or
laches; and, that the complaint violates the rule on judicial stability or rule
on non-interference.
On March 6, 2006, the RTC issued its Order5 with the following dispositive
portion, to wit:c
The allegations contained in the Special and Affirmative Defenses are
matters of evidence that can be properly ventilated in the trial of the case.
The same is therefore denied for lack of merit. The parties are directed to
submit their pre-trial brief at least 3 days before the scheduled pre-trial
conference on April 6, 2006.
WHEREFORE, set the Pre-trial conference to April 6, at 9:00 o'clock in the
morning.
SO ORDERED.6

On May 2, 2006, respondents filed a Manifestation7 stating that they just

received the RTC Order on April 17, 2006 and moved for time to file a motion
for reconsideration and to defer the submission of pre-trial brief and the
scheduled pre-trial conference. A motion for reconsideration8 was filed on
May 17, 2006. The motion for reconsideration was denied by the RTC in its
Order9 dated February 29, 2008.
On June 6, 2008, respondents filed with the CA Cagayan de Oro City, a
petition for certiorari with prayer for issuance of a preliminary injunction.
Petitioners filed their Comment and respondents their Reply thereto.
On July 2, 2010, the CA rendered its decision, the dispositive portion of which
reads:
FOR THESE REASONS, the writ of certiorari is GRANTED. The challenged
Orders of the respondent court, dated March 6, 2006 and February 29, 2008,
respectively, areSET ASIDE, and another Resolution/Order will be entered in
Civil Case No. 2046-05 dismissing the Complaint.10
C
In so ruling, the CA found that the RTC had unduly disregarded the decision
in Civil Case No. 2410 which had already attained finality; that it was already
determined that the subject land was the very same land in Civil Case No.
2410 which was declared to be owned and lawfully possessed by Cota and to
grant petitioners' demand would result to an unending litigation of the case.
The CA found thatres judicata applied in this case. The CA also found that the
action had already prescribed as it took petitioners more than 26 years to
institute the instant case.
Hence this petition wherein petitioners raise the following issues:
1. WHETHER OR NOT THE ASSAILED DECISION AND RESOLUTION OF THE
COURT OF APPEALS, TWENTY SECOND DIVISION IS CONTRARY TO LAW AND
JURISPRUDENCE;
2. WHETHER OR NOT A MOTION FOR EXTENSION OF TIME TO FILE A MOTION
FOR RECONSIDERATION IS ALLOWED OR A PROHIBITED PLEADING;
3. WHETHER OR NOT THE SPECIAL AND AFFIRMATIVE DEFENSES OF THE
RESPONDENTS EMBODIED IN THEIR ANSWER IN CIVIL CASE NO. 2046-05 ARE
MATTERS OF EVIDENCE TO BE RESOLVED AFTER THE TRIAL OF THE CASE ON
THE MERITS.11
Petitioners claim that respondents' counsel received the RTC Order dated
March 6, 2006 denying their special and affirmative defenses on April 17,
2006, thus, they had until May 2, 2006 to file a motion for reconsideration.

Respondents, however, filed a Manifestation with motion for extension of

time to file a motion for reconsideration which is not allowed under the Rules
of Court. Hence, the RTC Order dated March 6, 2006 had already become
final and executory and could no longer be the subject of a petition
for certiorari with the CA. Consequently, the CA erred in granting the petition
and reversing the RTC Orders.
We find no merit in the arguments.
Section 1, Rule 41 of the Rules of Court provides:
Section 1. Subject of appeal. - An appeal may be taken from a judgment or
final order that completely disposes of the case, or of a particular matter
therein when declared by these Rules to be appealable.
No appeal may be taken from:
(a) An order denying a motion for new trial or reconsideration;
(b) An order denying a petition for relief or any similar motion seeking relief
from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by consent,
confession or compromise on the ground of fraud, mistake or duress, or any
other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against one or more of several parties or
in separate claims, counterclaims, cross-claims and third-party complaints,
while the main case is pending, unless the court allows an appeal therefrom;
and
(h) An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is not
appealable, the aggrieved party may file an appropriate special civil action
under Rule 65.
In Denso (Phils.), Inc. v. Intermediate Appellate Court,12 we expounded on
the differences between a final judgment and an interlocutory order, to
wit:

x x x A final judgment or order is one that finally disposes of a case, leaving

nothing more to be done by the Court in respect thereto, e.g., an
adjudication on the merits which, on the basis of the evidence presented at
the trial, declares categorically what the rights and obligations of the parties
are and which party is in the right; or a judgment or order that dismisses an
action on the ground, for instance, of res judicata or prescription. Once
rendered, the task of the Court is ended, as far as deciding the controversy
or determining the rights and liabilities of the litigants is concerned. Nothing
more remains to be done by the Court except to await the parties' next move
x x x and ultimately, of course, to cause the execution of the judgment once
it becomes final or, to use the established and more distinctive term, final
and executory.
xxxx
Conversely, an order that does not finally dispose of the case, and does not
end the Court's task of adjudicating the parties' contentions and determining
their rights and liabilities as regards each other, but obviously indicates that
other things remain to be done by the Court, is interlocutory, e.g., an order
denying a motion to dismiss under Rule 16 of the Rules x x x Unlike a
final judgment or order, which is appealable, as above pointed out, an
interlocutory order may not be questioned on appeal except only as part of
an appeal that may eventually be taken from the final judgment rendered in
the case.13
Given the differences between a final judgment and an interlocutory order,
the RTC Order dated March 6, 2006 denying respondents' special and
affirmative defenses contained in their answer is no doubt interlocutory
since it did not finally dispose of the case but will proceed for the reception
of the parties' respective evidence to determine the rights and obligations of
each other. As such, the RTC Order dated March 6, 2006 may not be
questioned on appeal except only as part of an appeal that may eventually
be taken from the final judgment rendered in the case.14cralawlawlibrary
An interlocutory order is always under the control of the court and may be
modified or rescinded upon sufficient grounds shown at any time before final
judgment.15 This prescinds from a courts inherent power to control its
process and orders so as to make them conformable to law and justice,16 and
a motion for reconsideration thereof was not subject to the limiting fifteenday period of appeal prescribed for final judgments or orders.17 We,
therefore, find no merit to petitioners claim that the Order dated March 6,
2006 had already become final and could not be the subject of a petition
for certiorari with the Court of Appeals.
The petition for certiorari was timely filed with the CA. The RTC Order dated
February 29, 2008 denying respondents' motion for reconsideration was

received by the latter on April 9, 2008. They had 60 days from receipt
thereof to file the petition for certiorari with the CA. The last day to file the
petition fell on June 8, 2008, a Sunday, while June 9 was declared a holiday,
hence, the filing of the petition on the next working day which was June 10,
2008 was still on time.
Going now on the merits, petitioners claim that they did not violate the rule
on judicial stability as the parties in the instant case and the earlier decided
Civil Case No. 2410 of the RTC Lanao del Sur, Branch 9, are entirely different
and petitioners were not parties in the latter case. There is no absolute
identity of causes of action and the issues involved are not similar. The main
issue in Civil Case No. 2410 was which of the two deeds of sale appeared to
have been executed by Cota Dimaampao, i.e., one in favor of Sheik
Pangandaman Daromimbang (Timbangs brother) and the other one in favor
of Alug, Balt and Pangarungan, now herein respondents, was really signed
and executed by him. On the other hand, the main issue in the instant case
is whether or not the subject land was given by Cota as a dowry to his exwife Timbang, if so, the land exclusively belongs to petitioners as compulsory
heirs of Timbang and the sale made by Cota to respondents was void. In the
alternative, even assuming that the subject land was not given as a dowry
but acquired by the spouses Cota and Timbang during their marriage,
petitioners contend that the subject land is a conjugal property to which
Timbang is entitled to a share thereof which Cota had no right to sell.
Petitioners insist that respondents are buyers in bad faith as they were aware
of the former's possession of the subject land at the time it was sold to them
by Cota. These issues, as petitioners claim, are factual which can only be
determined after a full blown trial.
We are not persuaded.
We find no error committed by the CA in ruling that the RTC committed a
grave abuse of discretion in not dismissing petitioners' complaint on the
ground that the issue of ownership and possession of the subject land had
already been previously decided in Civil Case No. 2410 which had attained
finality. We agree with the CA that res judicata is applicable in the instant
case.
Under the rule of res judicata, a final judgment or order on the merits,
rendered by a court having jurisdiction of the subject matter and of the
parties, is conclusive in a subsequent case between the same parties and
their successors-in-interest by title subsequent to the commencement of the
action or special proceeding litigating for the same thing and under the same
title and in the same capacity.18 To state simply, a final judgment or decree
on the merits by a court of competent jurisdiction is conclusive of the rights
of the parties or their privies in all later suits on all points and matters
determined in the former suit.19

The requisite essential of res judicata are: (1) the judgment sought to bar the
new action must be final; (2) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; (3) the
disposition of the case must be a judgment on the merits; and (4) there must
be as between the first and second action, identity of parties, subject matter,
and causes of action. Should identity of parties, subject matter, and causes
of action be shown in the two cases, then res judicata in its aspect as a bar
by prior judgment would apply. If as between the two cases, only identity of
parties can be shown, but not identical causes of action, then res judicata as
conclusiveness of judgment applies.20
It is not disputed that the RTC Lanao del Sur, Branch 9, had jurisdiction over
the subject matter and parties in Civil Case No. 2410 and its Decision dated
November 21, 2000 was a judgment on the merits, i.e., one rendered after
the presentation of the parties' evidence during the trial of the case; and that
such decision had already become final and executory and an entry of
judgment had been made.21
Petitioners, however, claim that there is no identity of parties as they were
not parties in Civil Case No. 2410. Petitioners are grandchildren of both Cota
and Timbang Dimaampao, and as heirs, they are deemed in privity with their
grandparents as to the property they would acquire by inheritance. Notably,
Cota and Timbang's two daughters had never intervened during their lifetime
to claim that the subject land was given as a dowry to their mother Timbang
and that Cota had no right to sell the same and it was only now that
petitioners as grandchildren who are claiming such. Since the decision in
Civil Case No. 2410 had already ruled that Cota was the owner of the subject
land and could validly convey the same to herein respondents, petitioners'
claim of Timbang's ownership of the subject lot is already barred.
Petitioners further allege that there is no identity of causes of action between
Civil Case No. 2410 and the instant case. One test of identity of causes of
action is whether or not the judgment sought in a subsequent case will be
inconsistent with the prior judgment. If no inconsistency will result, the prior
judgment cannot be held to be a bar.22
Petitioners, in the instant case, raise the issue of Cota's ownership and
possession of the subject land and the invalidity of respondents' deed of sale
dated April 10, 1978. Notably, these issues were already resolved by RTC
Lanao del Sur, Branch 9, in Civil Case No. 2410 where it declared that
plaintiffs, Cota and herein respondents, are the true and lawful owners of the
subject land. Such decision was affirmed by the CA on July 8, 200323 which
made the following disquisition, among others, to
wit:chanRoblesvirtualLawlibrary

Since (Cota) Dimaampao is still the owner of the subject land, he could
validly convey the same to his co-plaintiffs below (herein respondents).
Dimaampao's ownership of the land in question coupled with his right to
alienate the same necessarily renders moot and academic the issue of
whether plaintiffs-appellees Alug, Pangarungan and Balt (herein
respondents) are buyers in bad faith.
In any event, the purported bad faith of Alug, Pangarungan and Balt (herein
respondents) is negated by the diligence they exercised in ascertaining
Dimaampao's ownership of the disputed land at the time it was offered to
them for sale. As testified to by Alug, he verified OCT No. RP-355 with the
Register of Deeds and found out that the subject land is registered in the
name of Dimaampao but encumbered by way of mortgage in favor of Luna.
No other encumbrance or transfer is annotated on OCT No. RP-355. When
Alug inspected the subject parcel of land, it was being cultivated by Soliman
Bilao, the tenant of Dimaampao. Thus, he and Pangarungan and Balt
concluded the sale with Dimaampao. x x x
Finally contrary to the contention of defendants-appellants, plaintiffsappellees (herein respondents) are under no obligation to check the status of
the subject property with (Sheik) Daromimbang, it being sufficient that they
verified the title thereof with the Register of Deeds of Marawi City and
conducted an ocular inspection thereon. The investigation they had diligently
pursued to confirm the validity of Dimaampao's title effectively negates any
bad faith in their purchase of the property.24 (Emphasis supplied )
The CA decision became final with our denial of the petition for review
on certiorari in G.R. No. 161438 on February 23, 2004 and an Entry of
Judgment was made on April 22, 2004.25 Consequently, the issue of Cota's
ownership and possession of the subject land as well as the validity of the
1978 deed of sale between Cota and herein respondents are already settled
issues which could not be relitigated anew. When a right or fact has been
judicially tried and determined by a court of competent jurisdiction, so long
as it remains unreversed, it should be conclusive upon the parties and those
in privity with them in law or estate.26cralawlawlibrary
The validity of the 1978 deed of sale in respondents' favor had already been
declared with finality, and if affirmative relief is granted to petitioners in the
instant case, i.e., by the annulment of the deed of sale, then the decision will
necessarily be inconsistent with the prior judgment, substantial identity of
causes of action is present.
We also agree with the CA's finding that petitioners' action had already
prescribed. The subject land was bought by respondents from Cota as
evidenced by a Deed of Sale dated April 10, 1978. Cota executed an
Affidavit27 of adverse claim attaching thereto the deed of sale and such

affidavit was registered and annotated in OCT No. RP-335 on April 11, 1978.
Article 1144 (1) of the Civil Code provides that an action upon a written
contract must be brought within ten years from the time the right of action
accrues. Here, the period of prescription should be counted from the time of
the registration of sale which was a notice to all the world. The affidavit of
adverse claim was annotated on OCT No. RP-335 on April 11, 1978,28 thus
petitioners' complaint filed only in 2005 is indeed beyond the prescriptive
period to do so.
WHEREFORE, the petition for review is DENIED. The Decision dated July 2,
2010 and the Resolution dated July 27, 2011 issued by the Court of Appeals
in CA -G.R. SP No. 02376-MIN are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Del Castillo,* Villarama, Jr., and Reyes, JJ., concur.

G.R. No. 187836, March 10, 2015

SOCIAL JUSTICE SOCIETY (SJS) OFFICERS, NAMELY, SAMSON S.
ALCANTARA, AND VLADIMIR ALARIQUE T.
CABIGAO, Petitioners, v. ALFREDO S. LIM, IN HIS CAPACITY AS MAYOR
OF THE CITY OF MANILA, Respondent.
[G.R. No. 187916]
JOSE L. ATIENZA, JR., BIENVINIDO M. ABANTE, MA. LOURDES M. ISIPGARCIA, RAFAEL P. BORROMEO JOCELYN DAWIS-ASUNCION, MINORS
MARIAN REGINA B. TARAN, MACAILA RICCI B. TARAN, RICHARD
KENNETH B. TARAN, REPRESENTED AND JOINED BY THEIR PARENTS
RICHARD AND MARITES TARAN, MINORS CZARINA ALYSANDRA C.
RAMOS, CEZARAH ADRIANNA C. RAMOS, AND CRISTEN AIDAN C.
RAMOS REPRESENTED AND JOINED BY THEIR MOTHER DONNA C.
RAMOS, MINORS JAZMIN SYLLITA T. VILA AND ANTONIO T. CRUZ IV,
REPRESENTED AND JOINED BY THEIR MOTHER MAUREEN C.
TOLENTINO, Petitioners,v. MAYOR ALFREDO S. LIM, VICE MAYOR
FRANCISCO DOMAGOSO, COUNCILORS ARLENE W. KOA, MOISES T.
LIM, JESUS FAJARDO LOUISITO N. CHUA, VICTORIANO A. MELENDEZ,
JOHN MARVIN C. NIETO, ROLANDO M. VALERIANO, RAYMUNDO R.
YUPANGCO, EDWARD VP MACEDA, RODERICK D. VALBUENA,
JOSEFINA M. SISCAR, SALVADOR PHILLIP H. LACUNA, LUCIANO M.
VELOSO, CARLO V. LOPEZ, ERNESTO F. RIVERA,1 DANILO VICTOR H.
LACUNA, JR., ERNESTO G. ISIP, HONEY H. LACUNA-PANGAN, ERNESTO
M. DIONISO, JR. AND ERICK IAN O. NIEVA, Respondents.
CHEVRON PHILIPPINES INC., PETRON CORPORATION AND PILIPINAS
SHELL PETROLEUM CORPORATION, Intervenors.
RESOLUTION
PEREZ, J.:
In the Decision2 promulgated on 25 November 2014, this Court declared
Ordinance No. 8187UNCONSTITUTIONAL and INVALID with respect to the
continued stay of the Pandacan Oil Terminals. The following timelines were
set for the relocation and transfer of the terminals:
[T]he intervenors Chevron Philippines, Inc., Pilipinas Shell Petroleum
Corporation, and Petron Corporation shall, within a non-extendible period of
forty-five (45) days, submit to the Regional Trial Court, Branch 39, Manila an
updated comprehensive plan and relocation schedule, which relocation shall
be completed not later than six (6) months from the date the required

documents are submitted. The presiding judge of Branch 39 shall monitor the
strict enforcement of this Decision.3
Now before us are the following submissions of the intervenor oil companies,
to wit: (1) Motion for Reconsideration4 of the Decision dated 25 November
2014 filed by intervenor Pilipinas Shell Petroleum Corporation (Shell); (2)
Motion for Clarification5 filed by intervenor Chevron Philippines, Inc.
(Chevron); and (3) Manifestation of Understanding of the Dispositive Portion
of the Decision of 15 December 20146 (the correct date of promulgation is 25
November 2014) filed by intervenor Petron Corporation (Petron).
I
Shell seeks reconsideration of the Decision based on the following grounds:
1. Erroneous reliance on the factual pronouncements in G.R. No. 156052
entitled Social Justice Society v. Atienza, which, it argues, were
completely unsupported by competent evidence;
2. Adoption of imagined fears, causes, surmises and conjectures
interposed by the petitioners, which it also raises as totally
unsupported by evidence because the petitions, which involve factual
issues, were wrongfully filed with this Court;
3. Conclusion that there is no substantial difference between the
conditions in 2001 and the present setup with respect to the oil depots
operations; and
4. Failure to dismiss the petitions despite the enactment of Ordinance No.
8187, which, it maintains, has rendered the cases moot and academic. 7
The Motion for Reconsideration must be denied.
It bears stressing that these cases were called in session several times to
give the members of the Court time to study and present their respective
positions. Before the Decision was finally promulgated, the Court had
thoroughly deliberated on the arguments of the parties, including the basic
issues herein raised the rationale for upholding the position of the Court in
G.R. No. 156052, on one hand, and the safety measures adopted by the
intervenors, including the alleged imagined fears, causes, surmises and
conjectures interposed by the petitioners, on the other; the argument of
whether or not the petition should have been filed with the trial court or at
least referred to the Court of Appeals to receive evidence; and the issue on
whether or not the enactment of Ordinance No. 8283 has rendered the
instant petitions moot and academic. And for failure to reconcile diverse
views on several issues, a Concurring and Dissenting Opinion was written.

The grounds relied on being mere reiterations of the issues already passed
upon by the Court, there is no need to cut and paste pertinent portions of
the Decision or re-write the ponencia in accordance with the outline of the
instant motion.
As succinctly put by then Chief Justice Andres R. Narvasa in Ortigas and Co.
Ltd. Partnership v. Judge Velasco8 on the effect and disposition of a motion
for reconsideration
The filing of a motion for reconsideration, authorized by Rule 52 of the Rules
of Court, does not impose on the Court the obligation to deal individually and
specifically with the grounds relied upon therefor, in much the same way that
the Court does in its judgment or final order as regards the issues raised and
submitted for decision. This would be a useless formality or ritual invariably
involving merely a reiteration of the reasons already set forth in the
judgment or final order for rejecting the arguments advanced by the movant;
and it would be a needless act, too, with respect to issues raised for the first
time, these being, as above stated, deemed waived because not asserted at
the first opportunity. It suffices for the Court to deal generally and summarily
with the motion for reconsideration, and merely state a legal ground for its
denial (Sec. 14, Art. VIII, Constitution); i.e., the motion contains merely a
reiteration or rehash of arguments already submitted to and pronounced
without merit by the Court in its judgment, or the basic issues have already
been passed upon, or the motion discloses no substantial argument or
cogent reason to warrant reconsideration or modification of the judgment or
final order; or the arguments in the motion are too unsubstantial to require
consideration, etc.9
II
Chevron, in its Motion for Clarification,10 manifests that it has already ceased
using the Pandacan terminals since June 2014. However, the Pandacan Depot
Services, Inc. (PDSI), an incorporated joint venture of Chevron, Petron and
Shell, and of which Chevron continues to be a shareholder, still maintains the
operations through Petron and Shell. Thus:
2. At the outset, CHEVRON respectfully manifests that it has already
completed the relocation of its depot and terminal operations from the
Pandacan area, as it ceased using the Pandacan terminals for its fuel and
lubricants operations last June 2014. CHEVRON currently has zero volume of
lubricants and fuel products for commercial use stored at the Pandacan
terminals and the supply requirements of its customers are being withdrawn
from the other supply facilities available to CHEVRON.
3. While CHEVRON has ceased using the Pandacan terminals, it continues to
be a shareholder as well as hold a governance role in Pandacan Depot
Services Inc. (PDSI), the operator of the Pandacan terminals for fuels
products operations. PDSI is an incorporated joint venture established
pursuant to the joint venture agreements between CHEVRON, Petron and

PSPC. Notwithstanding CHEVRONs ceasing to use the facility, Petron and

PSPC continue to use the Pandacan terminals for their own commercial fuel
and lubricant operation. This joint venture continues to exist until terminated
and dissolved by the mutual agreement of CHEVRON, Petron, and PSP or as
provided for in the agreements of the parties.11
With the withdrawal of its products from the Pandacan terminals yet with the
continued operation of the PDSI, Chevron now pleads that this Court review
and clarify a portion of the Decision concerning what it understands as an
unqualified statement that all oil depots, in general, even those outside of
Pandacan, have no place in any densely populated area.12 The exact
wordings in the Decision sought to be clarified
read:chanRoblesvirtualLawlibrary
Even assuming that the respondents and intervenors were correct, the very
nature of the depots where millions of liters of highly flammable and highly
volatile products [are stored], regardless of whether or not the composition
may cause explosions, has no place in a densely populated area. Surely, any
untoward incident in the oil depots, be it related to terrorism of whatever
origin or otherwise, would definitely cause not only destruction to properties
within and among the neighboring communities but certainly mass deaths
and injuries.13
Stressing that a judgment should be confined to the lis mota of the case,
Chevron posits that the paragraph sought to be clarified was a sweeping and
categorical pronouncement sans factual basis or evidence against all oil
depots inasmuch as the prevailing circumstances, types of products stored or
the safety measures in place vary from one depot to another. If such is left as
is, it claims that it would be tantamount to interference with the policy
making of the political departments of the government.
We differ.
There are overwhelming reasons stated in the Decision to support the
Courts pronouncement that the very nature of depots has no place in a
densely populated area, among others, the very history of the Pandacan
terminals where flames spread over the entire City of Manila when fuel
storage dumps were set on fire in December 194114 and the other incident of
explosion,15 which were both considered in G.R. No. 156052.
Indeed, the bases of the assailed paragraph were confined to the lis mota of
these cases, and no other depots were considered. But would the situation
be different if, given the same composition of flammable and volatile
products, the depots are placed in another densely populated area?
The answer was well explained in the Decision. Thus:
For, given that the threat sought to be prevented may strike at one point or
another, no matter how remote it is as perceived by one or some, we cannot
allow the right to life to be dependent on the unlikelihood of an event.

Statistics and theories of probability have no place in situations where the

very life of not just an individual but of residents of big neighborhoods is at
stake.16
Moreover, the Decision should be taken as a whole and considered in its
entirety. The Decision is clear it is the Citys Ordinance No. 8187 that has
been declared unconstitutional and invalid insofar as the continued stay of
the Pandacan Oil Terminals is concerned.
For the same reasons, the allegation of encroachment on the policy making
power of the political departments of the government is bereft of merit.
The prayer that the submission of an updated comprehensive plan and
relocation schedule, including the period for relocation, be deferred until
after the Motion is resolved with finality is denied. The compliance period
prescribed in the Decision shall remain.
III
In its Manifestation of Understanding of the Dispositive Portion of the
Decision of 15 December 2014,17 (the correct date of promulgation is 25
November 2014) Petron seeks to clarify whether the dispositive portion
thereof on the submission of updated comprehensive plan and relocation
schedule within forty-five (45) days is limited to the operation itself and
does not include the removal of the facilities. It ratiocinates that it is the
operation, and not the presence of the facilities, that runs contrary to
Ordinance No. 8119 (Manila Comprehensive Land Use Plan and Zoning
Ordinance of 2006).18
Petron should have cited Ordinance No. 8027, the ordinance ordered to be
enforced in G.R. No. 156052, instead of Ordinance No. 8119.
To recall, the Court, in G.R. No. 156052, ruled that Ordinance No. 8027 was
not impliedly repealed by Ordinance No. 8119. It explained:
x x x The repealing clause of Ordinance No. 8119 cannot be taken to indicate
the legislative intent to repeal all prior inconsistent laws on the subject
matter, including Ordinance No. 8027, a special enactment, since the
aforequoted minutes (an official record of the discussions in the Sanggunian)
actually indicated the clear intent to preserve the provisions of Ordinance
No. 8027.
To summarize, the conflict between the two ordinances is more apparent
than real. The two ordinances can be reconciled. Ordinance No. 8027 is
applicable to the area particularly described therein whereas Ordinance No.
8119 is applicable to the entire City of Manila.19
At first blush, the clause cease and desist appears to specifically refer only
to the operations, considering that Sec. 3 of Ordinance No. 8027 provides for

a period of six (6) months from the date of its effectivity within which to
cease and desist from the operations of businesses.20
However, in the Decision dated 7 March 2007 in G.R. No. 156052, the Court
granted the petition21which sought the enforcement of Ordinance No. 8027
and the immediate removal of the terminalsof the oil companies. By so
granting the petition, it necessarily follows that the relocation and transfer it
ordered contemplates the complete removal of the facilities.
These cases being a mere sequel to the earlier petition, we so hold that the
relocation and transfer contemplated therein include the removal of the
facilities, especially so when the city plans on building commercial
establishments to replace the Pandacan terminals and provide a source of
employment for displaced employees. Accordingly, the comprehensive plan
to be submitted within forty-five (45) days from receipt of the Decision shall
also include the removal of the facilities.
On the matter of the enforcement of the assailed Decision in these cases,
Petron further posits that its first theory, that is, that the removal of the
facilities is excluded from the comprehensive plan to be submitted to the
Regional Trial Court, would be in accord with its Manifestation dated 30
November 2010, which it emphasized, the Court noted in the Decision and
quoted as follows:
2. Without prejudice to its position in the instant case as elucidated in its
Memorandum, Petron files this Manifestation to inform this Honorable Court
that in accordance with its agreement with and to honor its commitment to
the City of Manila, Petron has decided to cease operation of its petroleum
product storage facilities in Pandacan, Manila within five (5) years or not later
than January 2016 for the following reasons, x x x.22(Emphasis in the
Manifestation of Understanding x x x)
Let Petron be reminded that the Court did not, by noting its Manifestation
dated 30 November 2010, consent to consider January 2016 as a separate
deadline for compliance with our Decision, which, to repeat, includes the
removal of facilities after cessation of operations. The timelines prescribed in
the assailed Decision shall be observed to the letter.
WHEREFORE, the Court hereby resolves to:
1. DENY Shells Motion for Reconsideration of the Decision dated 25
November 2014;chanrobleslaw
2. DENY the prayers in the Motion for Clarification of Chevron that: a) the
wordings the very nature of the depots where millions of liter[s] of highly
flammable and highly volatile products x x x [have] no place in a densely
populated area be removed from the Decision dated 25 November 2014;
and b) the submission of an updated comprehensive plan and relocation

schedule, including the period for relocation, be deferred until after the
Motion is resolved with finality;
3. CLARIFY that the relocation and transfer necessarily include the complete
removal of the facilities from the Pandacan terminals and should be made
part of the required comprehensive plan and relocation schedule; and
4. REMIND Petron that the Court did not, by noting its Manifestation dated
30 November 2010, consent to consider January 2016 as a separate deadline
for compliance with our Decision, which, to repeat, includes the removal of
facilities after cessation of operations. The timelines prescribed in the
assailed Decision shall be observed to the letter.
In anticipation of further attempts to delay the enforcement of this Courts
Decision dated 25 November 2014, the parties to these cases are
hereby REMINDED of the pronouncements in Ortigas and Co. Ltd.
Partnership v. Judge Velasco23 on the import of the denial of a motion for
reconsideration. Thus:
The denial of a motion for reconsideration signifies that the grounds relied
upon have been found, upon due deliberation, to be without merit, as not
being of sufficient weight to warrant a modification of the judgment or final
order. It means not only that the grounds relied upon are lacking in merit but
also that any other, not so raised, is deemed waived and may no longer be
set up in a subsequent motion or application to overturn the judgment; and
this is true, whatever may be the title given to such motion or application,
whether it be second motion for reconsideration or motion for
clarification or plea for due process or prayer for a second
look, or motion to defer, or set aside, entry of judgment, or x x x,
etc..24 (Emphasis supplied)
This Resolution is final. Under pain of contempt, no further pleadings,
motions or papers in the guise of the above-enumerated submissions shall,
thus, be entertained in these cases.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 173168

September 29, 2014

PHILIPPINE AMANAH BANK (NOW AL-AMANAH ISLAMIC INVESTMENT

BANK OF THE PHILIPPINES, ALSO KNOWN AS ISLAMIC
BANK), Petitioner,
vs.
EVANGELISTA CONTRERAS, Respondent.
DECISION
BRION, J.:
Before us is a petition for review on certiorari filed by petitioner Philippine
Amanah Bank (now Al-Amanah Islamic Investment Bank of the
Philippines)1 against respondent Evangelista Contreras assailing the
decision2 and resolution3 of the Court of Appeals (CA) dated May 4, 2004 and
May 26, 2006, respectively, in CA-G.R. CV No. 47053.
The Antecedents
On July 21, 1981, the respondent filed a complaint for annulment of real
estate mortgage, cancellation of original certificate of title, reconveyance,
recovery of possession and damages4 before the Regional Trial Court (RTC),
Branch 19, Cagayan de Oro City against spouses Calinico and Elnora Ilogon
and the petitioner bank, docketed as Civil Case No. 7950.
The respondent alleged that he was the owner of Cadastral Lot No. 19316-D,
a 640 square meter parcel ofland located in Cagayan de Oro City. On August
1, 1980, the respondent went to the house of his brother-in-law, Calinico
Ilogon, to seek assistance in obtaining a loan from the petitioner bank since
he (Calinico) is a friend of the banks Chief of the Loan Division. The
respondent brought with him the documents of the subject lot, and told
Calinico that he was willing to mortgage this property as securityfor the loan.
Three days later, Calinico told the respondent that the petitioner bank could
grant a loan up to P200,000.00 if the subject property would be titled.
On August 3, 1980, the respondent and Calinico, upon the suggestion of the
Chief of the petitioner banks Loan Division, entered into a Deed of
Confirmation of Sale5 under which they transferred the title of the land to
Calinico6who, in turn, mortgaged it to the petitioner bank. On October 25,
1980, Calinico and the respondent executed an Agreement7 stating, among
others, that the deed of sale they executed was for the purpose of securing a
loan with the petitioner bank.

On May 20, 1981, the respondent wrote a letter and went to the petitioner
bank directing the latters manager not to release the loan to Calinico. The
respondent handed a copy of the letter to the bank on the same day. On the
next day, the respondent again went to the petitioner bank, but was
informed that the loaned amount ofP50,000.00 had already been given to
Calinico earlier that morning. The respondent thereafter learned that the
petitioner released another P50,000.00 as loan to Calinico.
That petitioner bank subsequently extrajudicially foreclosed the mortgage
due to the Ilogon spouses failure to pay the loan. On January 9, 1989, the
Provincial Sheriff sold the mortgaged property at public auction to the
petitioner bank as the highest bidder. On October 31, 1989, the Provincial
Sheriff issued a Certificate of Sale in favor of the petitioner bank.
For the mortgagors failure to redeem the mortgaged property within the
period prescribed by law, the title to the property was consolidated in the
petitioner bank's name. Consequently, Original Certificate of Title (OCT) No.
P-20348 was cancelled and Transfer Certificate of Title (TCT) No. T-63331 9 was
issued in the petitioner bank's name.
The RTC and the CA Rulings
In its decision dated September 13, 1993, the RTC dismissed the complaint
for lack of merit. It held that the petitioner bank was not aware of the
agreement between the respondent and the Ilogon spouses, and that the
respondent failed to present any evidence as basis to annul the mortgage
contract. To quote the RTC ruling:
xxxx
Plaintiff has not presented any evidence to be a basis for the annulment of
the real estate mortgage, the banks certificate of title, as well as justification
for an order from this court to return the possession of the lot to the plaintiff.
The agreement between plaintiff and defendant Ilogon spouses about the
purpose(s) of the loan and how they would dispose of it had until the filing of
this case, been unknown to the bank. The latter has been a lender in good
faith, later a buyer in good faith.
The court finds that plaintiff has failed to prove his allegations, and that the
preponderance of evidence has been in favor of the bank. 10

xxxx
The respondent moved to reconsider this decision,11 but the RTC denied his
motion for having been filed out of time. Accordingly, the RTC declared its
September 13, 1993 decision final and executory.
The respondent filed a petition for relief from judgment12 before the RTC,
claiming that he had been prevented from moving for the timely
reconsideration of the trial courts decision or to appeal this decision on time
due to the excusable negligence arising from the death of his wife on
September 13, 1993.
He explained that his counsel, Atty. Bienvenido Valmorida, only informed him
of the trial courts adverse decision thirty-seven (37) days from his counsel's
receipt of the decision. The respondent also claimed that the petitioner bank
was not a lender in good faith since it knew that the Ilogon spouses did not
own the mortgaged property.
In its order13 dated July 1, 1994, the RTC denied the respondents petition for
relief from judgment for lack of merit.
The respondent appealed to the CAand the appeal was docketed as CA-G.R.
CV No. 47053. In its decision of May 4, 2004, the CA set aside the RTCs July
1, 1994 order,and declared the real estate mortgage null and void. It also
ordered the petitioner bank to reconvey the land covered by TCT No. T-63331
to the respondent within sixty (60) days from entry of judgment.
It further directed the petitioner bank to pay the equivalent monetary value
of the land based on the price of the property at the public auction, with 6%
interest per annum from the date of the sheriffs auction sale or the amount
of the sale of the lot by the bank to third persons plus 6% interest per
annum, in the event that the property had already been conveyed by the
petitioner bank to third persons.
The CA held that while the respondent was late in filing his motion for
reconsideration, the rules of procedure should be relaxed since the matters
he raised in his petition were meritorious.
It disagreed with the RTCs ruling that the respondent did not present any
evidence that the petitioner bank had knowledge of the defect in Calinicos
title to the mortgaged land. According to the CA, the petitioner bank knew

that there wereconflicting claimsover the land, and that the OCT of this land
carried a prohibition of any encumbrance on the lot for five (5) years. It
added that the petitioner bank failed to exercise diligence in ascertaining the
ownership of the land, and ignored the respondents representations
thatCalinicos title was defective and was only for loan purposes.
The Ilogon spouses and the petitioner bank moved to reconsider this
decision, but the CA denied their motion in its resolution dated May 26, 2006.
The Petition for Review on Certiorari
In the present petition, the petitioner bank alleged that the respondents
petition for relief from judgment is unmeritorious as it was filed only after the
lapse of ninety-one (91) days from his (respondents) notice of the adverse
judgment. The bank also claimed that the failure of the respondents counsel
to file a timely motion for reconsideration from the RTCs judgment did not
constituteexcusable negligence so as to warrant the granting of the
respondents petition.
The petitioner bank further maintained that the real estate mortgage over
the land was valid because: (1) its validity was never raised as an issue
before the trial court; and (2) the petitioner bank is exempted from the 5year prohibitoryperiod since it is a Government branch, unit or institution.
In his comment, the respondent,14 represented by his heirs, maintained that
his counsels negligence was excusable, and that the petitioner bank was a
mortgagee in bad faith.
Our Ruling
After due consideration, we resolve to grant the petition.
RTC judgment already final and executory
We note at the outset that the RTCs September 13, 1993 decision which
dismissed the respondents complaint for annulment of real estate mortgage,
cancellation of original certificate of title, reconveyance, recovery of
possession and damageshad already become final and executory due to the
failure of his counsel to file a timely motion for reconsideration. This fact was
admitted by the respondent himself in his various pleadings before the lower
and appellate courts, as well as in his comment before this Court.

Both the law and jurisprudence hold that the perfection of an appeal in the
manner and within the period prescribed by law is mandatory. Failure to
conform tothe rules on appeal renders the judgment final, executory and
unappealable. Finality means that the decision can no longer be disturbed or
reopened no matter how erroneous the ruling might have been. The decision
fully binds, and should be complied with by the parties and their successors
in interest.
The Petition for Relief was filed out of time
We sustain the trial courts denial of the respondents petition for relief from
judgment to challenge its final and executory decision.
Section 3, Rule 38 of the 1997 Rules of Civil Procedure lays down the
requirements for a petition for relief from judgment, thus:
Section 3. Time for filing petition; contents and verification. - A petition
provided for in either ofthe preceding sections of this Rule must be verified,
filed within sixty (60) days after the petitioner learns of the judgment, final
order, or other proceeding to be set aside, and not more than six (6) months
after such judgment or final order was entered, or such proceeding was
taken; and must be accompanied with affidavits showing the fraud, accident,
mistake,or excusable negligence relied upon, and the facts constituting the
petitioner's good and substantial cause of action ordefense, as the case may
be.
A party filing a petition for relieffrom judgment must strictly comply with two
(2) reglementary periods: first, the petition must be filed within sixty (60)
days from knowledge of the judgment, order or other proceeding to be set
aside; and second, within a fixed period of six (6) months from entry of such
judgment, order or other proceeding.
Strict compliance with these periods is required because a petition for relief
from judgment is a final actof liberality on the part of the State, which
remedy cannot be allowed to erode any further the fundamental principle
that a judgment, order or proceeding must, at some definite time, attain
finality in order to put an end to litigation.15
In the present case, the respondents counsel received a copy of the RTCs
decision dated September 13, 1993 on September 15, 1993. Thus, the
petition for relief from judgment should have been filed on or before

November 14, 1993. However, the records showed that the petition was filed
only on December 15,1993, or ninety-one (91) days later.
Strict compliance with the periods stated under Rule 38 stems from the
equitable characterand nature of the petition for relief. Indeed, relief is
allowed only in exceptional cases such as when there is no other available or
adequate remedy. Asa petition for relief is actually the "last chance" given by
law to litigants to question a final judgment or order, the failure to avail of
thisfinal chance within the grace period fixed by the Rules is fatal.16
The respondents cited circumstances are not the proper subject of a petition
for relief from the judgment
Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides that [w]hen a
judgment or final order is entered, or any other proceeding is thereafter
taken against a party inany court through fraud, accident, mistake, or
excusable negligence, he may file a petition in the same court and in the
same case praying that the judgment, order or proceeding be set aside.
Relief from judgment is a remedy provided by law to any person against
whom a decision or order is entered through fraud, accident, mistake, or
excusable negligence. It is a remedy, equitable in character, that is allowed
only in exceptional caseswhen there is no other available or adequate
remedy. When a party has another remedy available to him, which may
either be a motion for new trial or appeal from an adverse decision of the
trial court, and he was not prevented by fraud, accident, mistake, or
excusable negligence from filing such motion or taking such appeal, he
cannot avail of the remedy of petition for relief.17
In the present case, the respondent alleged that he had been prevented from
moving for the timely reconsideration of the trial courts decision or to
appeal this decision on time due to the death of his wife on September 13,
1993. He explained that his counsel,Atty. Valmorida, was the brother of his
deceased wife, and could not bear totell him that he had lost his case in the
RTC given the circumstances. Atty. Valmorida only informed him of the
courts adverse decision thirty-seven (37) days after his (Atty. Valmoria's)
receipt of the adverse decision. This circumstance, according to the
respondent, was a clear case of excusable negligence on the part of his
counsel, warranting relief from judgment.
We do not find this explanation persuasive.

Negligence to be excusable mustbe one that ordinary diligence and

prudence could not have guarded against. Atty. Valmoridas oversight in the
present case can hardly be characterizedas excusable, much less
unavoidable.
We point out that the one who diedwas the respondents wife, and not the
respondent; nothing prevented Atty. Valmorida from filing an appeal to
challenge the RTC ruling. That Atty. Valmorida took into account the emotions
vis--visthe medical condition of the respondent, was beside the point. As a
lawyer, he knew or ought to have known that failure to appeal the RTC
decision would render it final. To be sure, the respondent could have easily
prevented the RTC decision from becoming final and executory had he only
exerted ordinary diligence by filing a timely motion for reconsideration or
filing a notice of appeal.
It is settled that clients are bound by the mistakes, negligence and omission
of their counsel. While, exceptionally, the client may be excused from the
failure of counsel, the circumstances obtaining in the present case do not
convince this Court to recognize the exception.
We likewise emphasize that procedural rules are designed to facilitate the
adjudication of cases. Courts and litigants alike are enjoined to abide
strictlyby the rules. While in certain instances, we allow a relaxation in the
application of the rules, we never intend to forge a weapon for erring
litigants to violate the rules with impunity. The liberal interpretation and
application of the rules apply only in proper cases of demonstrable merit and
under justifiable causes and circumstances. While it is true that litigation is
not a game of technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly
and speedy administration of justice. Party litigants and their counsel are
well advised to abide by, rather than flaunt, procedural rules; these rules
illumine the path of the law and place the pursuit of justice in reasonable and
orderly basis.
In his petition for relief, the respondent also claimed that the petitioner bank
was not a lender in good faith since it knew that the mortgaged land was not
owned by the Ilogon spouses. He added that the petitioner bank and the
Ilogon spouses connived with each other to release the loan to Calinico.
We stress that the mistake contemplated by Rule 38 of the Rules of Court
pertains generally to one of fact, not of law. It does not refer to a judicial

errors that the court might have committed. Such judicial errors may be
corrected by means of an appeal. To recall, the respondent already raised
these grounds in his complaint for annulment of real estate mortgage,
cancellation of original certificate of title, reconveyance, recovery
ofpossession and damagesbefore the RTC. Indeed, relief will not be granted
toa party who seeks avoidance from the effects of the judgment when the
loss of the remedy at law was due to his own (or that of his counsels)
negligence; otherwise, the petition for relief can be used to revive the right
to appeal which had been lost through inexcusable negligence.18
At any rate, the grounds raised by the respondent are unmeritorious.
We are aware of the rule that banksare expected to exercise more care and
prudence than private individuals in their dealings, even those involving
registered lands, since their business is impressed with public interest. The
rule that persons dealing with registered lands can rely solely on the
certificate of title does not apply to banks.19Simply put, the ascertainment of
the status or condition of a property offered to it as security for a loan must
be a standard and indispensable part of a banks operations.20
In the present case, however, nothing in the documents presented by
Calinico would arouse the suspicion of the petitioner bank to prompt a more
extensive inquiry. When the Ilogon spouses applied for a loan, they
presented as collateral a parcel of land evidenced by OCT No. P-2034 issued
by the Office of the Register of Deeds of Cagayan de Oro, and registered in
the name of Calinico. This document did not contain any inscription or
annotation indicating that the respondent was the owner or that he has any
interest in the subject land. In fact, the respondent admitted that there was
no encumbrance annotated on Calinicos title at the time of the lattersloan
application. Any private arrangement between Calinico and the respondent
regarding the proceeds of the loan was not the concern of the petitioner
bank, as it was not a privy to this agreement. If Calinico violated the terms of
his agreement with the respondent on the turn-over of the proceeds of the
loan, then the latter's proper recourse was to file the appropriate criminal
action in court.
The respondent also failed to prove its allegation that the petitioner bank
knew, thru a letter sent by the formers lawyer, Atty. Crisanto Mutya, Jr., that
the sale of the subject land between him and Calinico was made only for loan
purposes, and that failure of Calinico to turn over the proceeds of the loan

will invalidate the sale. In his November 6, 1991 testimony, the respondent
admitted that it was his son who gave the letter to the manager of the
petitioner bank, thus: ATTY. REYNALDO LLEGO:
Q: Mr. Contreras, may I just show to you Exhibit C, the letter addressed to
Amanah Bank. You said that, this letter Exhibit C was received by the
Manager of the bank. May I know from you the name of the Manager at that
time?
EVANGELISTA CONTRERAS:
A: I did not know the name ofthe Manager at that time. Because it was my
son who brought this Exhibit C to the bank, and according to him it was the
personnel of the bank who received Exhibit C.
Q: And this was received on what date?
A: May 20, 1981.
Q: Directing your attention to Exhibit B which is the supposed counter
agreement. You will of course agree with me that the bank has no knowledge
of the execution of that agreement, is that correct?
A: When my lawyer wrote a letter to the bank at that time, he attached one
of the Xerox copy of this Exhibit B.
xxxx
Q: The title of the land was already in the name of the spouses Ilogon. There
was no encumbrance at the time it was offered for loan.
A: When Mr. Ilogon got the title, I did not see anymore because I trust him
already.21
(Emphasis ours)
Clearly, the respondent testified on matters not of his own personal
knowledge, hence hearsay. Corollarily, the respondents son was never
presented in court. Even assuming, for the sake of argument, that the
petitioner bank received a copy of Atty. Mutyas letter,22 it was still wellwithin its discretion to grant or deny the loan application after evaluating the

documents submitted for loan applicant. As earlier stated, OCT No. P-2034
issued in Calinicos favor was free from any encumbrances. The petitioner
bank is not anymore privy to whatever arrangements the owner entered into
regarding the proceeds of the loan.
Finally, we point out that the petitioner bank is a government owned or
controlled corporation.1wphi1 While OCT No. P-2034 (issued in favor of
Calinico by virtue of the deed of confirmation of sale) contained a prohibition
against the alienation and encumbrance of the subject land within five (5)
years from the date of the patent, the CA failed to mention that by the
express wordings of the OCT itself, the prohibition does not cover the
alienation and encumbrance "in favor of the Government or any of its
branches, units or institutions."23
WHEREFORE, in light of all the foregoing, we GRANT the present petition, and
SET ASIDE the decision and resolution of the Court of Appeals dated May 4,
2004 and May 26, 2006, respectively, in CA-G.R. CV No. 47053. Accordingly,
the decision of the Regional Trial Court, Branch 19, Cagayan de Oro City
dated September 13, 1993 is REINSTATED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 191101

October 1, 2014

SPOUSES MARIO OCAMPO and CARMELITA F. OCAMPO, Petitioners,

vs.
HEIRS OF BERNARDINO U. DIONISIO, represented by ARTEMIO SJ.
DIONISIO, Respondents.
DECISION
REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision2 dated July 2,
2009 and Resolution3 dated January 27, 2010 issued by the Court of Appeals
(CA) in CA-G.R. SP No. 106064, which affirmed the Decision 4 dated
September 3, 2008 of the Regional Trial Court (RTC) of Binangonan, Rizal,
Branch 69, in SCA Case No. 08-014.
The Facts
On August 28, 1996, Bernardino U. Dionisio (Dionisio) filed a complaint5 for
forcible entry with the Municipal Trial Court (MTC) of Cardona, Rizal, docketed
as Civil Case No. 96-0031 (forcible entry case), against Mario Ocampo (Mario)
and Felix Ocampo (Felix). Dionisio sought to recover the possession of a
portion ofhis property, covered by Original Certificate of Title (OCT) No. M4559, situated in Dalig, Cardona, Rizal, alleging that Mario and Felix built a
piggery thereon without his consent. In his answer,6 Mario denied Dionisios
allegation, claiming that the disputed parcel of land is owned by his wife,
Carmelita Ocampo (Carmelita), who inherited the same from her father.
Mario further claimed that they have been in possession of the said parcel of
land since 1969.
On September 12, 1997, the MTC rendered a decision,7 which dismissed the
complaint for forcible entry filed by Dionisio. The MTC opined that Dionisio
failed to establish his prior possession of the disputed parcel of land.
Dionisios notice of appeal was denied by the MTC in its Order8 dated January
26, 1998 for having been filed beyond the reglementary period. Dionisio died
on September 27, 1997.Consequently, on July 3, 1998, the heirs of Dionisio
(respondents), filed a complaint9 for recovery of possession with the MTC,
docketed as Civil Case No. 98-0006 (recovery of possession case), against
the spouses Mario and Carmelita (petitioners). The respondents sought to
recover the same portion of the parcel of land subject of Civil Case No. 960031.
The respondents averred that the subject property was acquired by Dionisio
on February 10, 1945 when he purchased the same from Isabelo Capistrano.
That Dionisio thereafter took possession of the subject property and was able
to obtain a free patent covering the subject property. OCT No. M-4559 was
subsequently issued in the name of Dionisio on December 22, 1987. The
respondents further claimed that sometime in 1995, Mario constructed a
piggery on a portion of the subject property without their consent.10

In their answer,11 the petitioners maintained that the subject parcel of land is
owned by Carmelita, having acquired the same through inheritance and that
they have been in possession thereof since 1969. Additionally, the
petitioners claimed that the respondents complaint for recovery of
possession of the subject property is barred by res judicatain the light of the
finality of the decision in the forcible entry case.
On February 18, 2008, the MTC rendered a decision12 dismissing the
complaint for recovery ofpossession filed by the respondents on the ground
of res judicata. Thus:
The Court has taken cognizance of the fact that the earlier case for forcible
entry docketed as Civil Case No. 96-0031 was filed by Bernardino U. Dionisio
against the same defendant Mario Ocampo before this Court on August 28,
1996, and a decision based on the merit was rendered on September 12,
1997 where this Court ruled to dismiss the complaint for failure on the part of
the plaintiff to establish their prior possession of the land and sufficient
evidence to establish cause of action by preponderance of evidence.
xxxx
Hence, the present complaint must be dismissed on ground of res judicata.
The material fact or question in issue in the forcible entry is for recovery of
possession which was conclusively settled in the decision dated September
12, 1997, such fact or question may not again be litigated in the present
action for accion publiciana, although covered by ordinary civil proceeding,
but technically has the same purpose, a suit for recovery of the right to
possess.13
On appeal, the RTC rendered a Decision14 on September 3, 2008, the decretal
portion of which reads:
WHEREFORE, premises considered, the appealed decision of Municipal Trial
Court of Cardona, Rizal, dated February 8, 2008, is hereby REVERSED and
SET ASIDE and a new one rendered in favor of the plaintiffs-appellants as
follows:
1. Declaring plaintiffs-appellants as entitled to possession for being the
lawful owners of the lands described under paragraph II of the
complaint and covered by Original Certificate of Title No. M-4559.

2. Ordering the defendants-appellees and all persons claiming rights

under them to vacate the parcel of land located at Dalig, Cardona,
Rizal with an area of 225 square meters covered by Original certificate
of Title No. M-4559 in the name of Bernardino Dionisio and more
particularly described under paragraph 2 of the complaint, to remove
the improvements thereon and deliver its possession to the plaintiffs.
3. Ordering the defendants-appellees to pay plaintiffsappellants P10,000.00 as attorneys fees and litigation expenses
of P5,000.
SO ORDERED.15
The RTC ruled that the MTC erred in dismissing the respondents complaint
for recovery of possession ofthe subject property solely on the ground of res
judicata. The RTC opined that the forcible entry case, only involves the
question of who has a better right to the possession of the subject property
while the recovery ofpossession case not only involves the right to the
possession of the subject property, but the ownership thereof as well. The
RTC stressed that a judgment rendered in a forcible entry case will not bar an
action for recovery ofpossession based on title or ownership since there is no
identity of cause of action as between the two cases.
Further, the RTC held that the respondents were able to establish that the
subject property is indeed part ofthe parcel of land covered by OCT No. M4559 registered in the name of Dionisio. Considering that OCT No. M-4559 is
registered under the name of Dionisio, the RTC opined that the respondents,
as sucessors-in-interestof Dionisio, are entitled to the possession of the
subject property as an attribute of their ownership over the same. On the
other hand, the RTC averred that the petitioners failed to adduce sufficient
evidence to support their claim that they indeed own the subject property.
Unperturbed, the petitioners filed a petition for review with the CA, alleging
that the RTC erred in setting aside the MTC Decision dated February 18,
2008. They maintained that the finality of the decision in the forcible entry
case constitutes res judicata, which would warrant the outright dismissal of
the respondents complaint for recovery of possession; that the respondents
were not able to sufficiently prove their ownership of the subject property.
The petitioners further contended that OCT No. M-4559 registered in the
name of Dionisio was irregularly issued. They likewise claimed that

respondents cause of action in the recovery of possession case is already

barred by laches.
On July 2, 2009, the CA rendered the herein assailed decision,16 which
affirmed the RTC Decision dated September 3, 2008.The CA held that the
doctrine of res judicata cannot be applied in this case since there is no
identity of cause of action as between the forcible entry case and the
recovery of possession case. The CA likewise affirmed the RTCs finding that
the respondents, as successors-in-interest of Dionisio, have sufficiently
established their ownership of the subject property and, hence, are entitled
to the possession thereof. Further, the CAheld that the respondents cause of
action is not barred by laches.
The petitioners sought a reconsideration of the Decision dated July 2, 2009,
but it was denied by the CA in its Resolution17 dated January 27, 2010.
Hence, the instant petition.
Issues
Essentially, the issues set forth bythe petitioners for this Courts resolution
are the following: (1) whether the finality of the decision in the forcible entry
case constitutes res judicata, which would warrant the dismissal of the
respondents complaint for recovery of possession; (2) whether the
respondents were able to establish their ownership of the subject property;
and (3) whether the respondents cause of action is already barred by laches.
The Ruling of the Court
The petition is denied.
First Issue: Res Judicata
The doctrine of res judicata is laid down under Section 47, Rule 39 of the
Rules of Court, which pertinently provides that:
Sec. 47. Effect of judgments or final orders. The effect of a judgment or
final order rendered by a court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as follows:
xxxx

(b) In other cases, the judgment orfinal order is, with respect to the
matter directly adjudged or as to any other matter that could have
been raised in relation thereto, conclusive between the parties and
their successors in interest by title subsequent to the commencement
of the action or special proceeding, litigating for the same thing and
under the same title and in the same capacity; and
(c) In any other litigation between the same parties of their successors
in interest, that only is deemed to have been adjudged in a former
judgment or final order which appears upon its faceto have been so
adjudged, or which was actually and necessarily included therein or
necessary thereto.
This provision comprehends two distinct concepts of res judicata: (1) bar by
former judgmentand (2) conclusiveness of judgment.18 In Judge Abelita III v.
P/Supt. Doria, et al.,19 the Court explained the two aspects of res judicata,
thus:
There is "bar by prior judgment" when, as between the first case where the
judgment was rendered and the second case that is sought to be barred,
there is identity of parties, subject matter, and causes of action. In this
instance, the judgment in the first case constitutes an absolute bar to the
second action. Otherwise put, the judgment or decree of the court of
competent jurisdiction on the merits concludes the litigation between the
parties, as well as their privies, and constitutes a bar to a new action or suit
involving the same cause of action before the same or other tribunal.
But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those
matters actually and directly controverted and determined and not as to
matters merely involved therein. This is the concept of res judicata known as
"conclusiveness of judgment." Stated differently, any right, fact or matter in
issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which judgment is rendered on the merits
is conclusivelysettled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.20
For res judicataunder the first concept, bar by prior judgment, to apply, the
following requisites must concur, viz: (a) finality of the former judgment; (b)
the court which rendered it had jurisdiction over the subject matter and the

parties; (c) it must bea judgment on the merits; and (d) there must be,
between the first and second actions, identity of parties, subject matter and
causes of action.21
The first three requisites are present in this case. The Decision dated
September 12, 1997 in the forcible entry case rendered by the MTC, a court
which has jurisdiction over the subjectproperty and the parties, had long
become final. The said MTC decision is an adjudication on the merits.
However, the fourth requisite is not present. Although there is identity of
parties and subject matter as between the forcible entry case and recovery
of possession case, there is no identity of causes of action.
As correctly found by the RTC and the CA, the forcible entry case only
involves the issue of possession over the subject property while the recovery
of possession case puts in issue the ownership of the subject property and
the concomitant right to possess the same as an attribute of ownership.
In an action for forcible entry and detainer, the only issue is possession in
fact, or physical possession of real property, independently of any claim of
ownership that either party may put forth in his pleading. If plaintiff can
prove prior physical possession in himself, he may recover such possession
even from the owner, but, on the other hand, if he cannot prove such prior
physical possession, he has no right of action for forcible entry and detainer
even if he should be the owner of the property.22
Thus, even the MTC, in its Decision dated September 12, 1997 in the forcible
entry case, stressed that its determination is only limited to the issue of who
has "actual prior possession" of the subject property regardless of the
ownership of the same.23
On the other hand, the recovery of possession case is actually an accion
reinvindicatoria or a suit to recover possession of a parcel of land as an
element of ownership. A perusal of the complaint filed by the respondents in
the recoveryof possession case shows that the respondents, as successorsin-interest of Dionisio, are asserting ownership of the subject property and
are seeking the recovery of possession thereof.
A judgment rendered in a forcible entry case will not bar an action between
the same parties respecting title or ownership because between a case for
forcible entry and an accion reinvindicatoria, there is no identity of causes of
action.24 Such determination does not bind the title or affect the ownership of

the land; neither is it conclusive of the facts therein found in a case between
the same parties upon a different cause of action involving possession.
The decision in the forcible entry case is conclusive only as to the MTCs
determination that the petitioners are not liable for forcible entry since the
respondents failed to prove their prior physical possession; it is not
conclusive as to the ownership of the subject property. Besides, Section 18,
Rule 70 of the Rules of Court expressly provides that a "judgment rendered in
an action for forcible entry or detainer shall be conclusive with respect to the
possession only and shall in no wise bind the title or affect the ownership of
the land."
Second Issue: Ownership of the Subject Property
The respondents were able to prove that they have a superior right over the
subject property as against the petitioners. It is undisputed that the subject
property is indeed covered by OCT No. M-4559, which is registered in the
name of Dionisio, the respondents predecessor-in-interest. Between the
petitioners unsubstantiated and self-serving claim that the subject property
was inherited byCarmelita from her father and OCT No. M-4559 registered in
Dionisios name, the latter must prevail. The respondents title over the
subject property is evidence of their ownership thereof. That a certificate of
title serves as evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears therein and that a
person who has a Torrens title over a land is entitled to the possession
thereof are fundamental principles observed in this jurisdiction.25
Further, 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.26 Accordingly, the petitioners may not assail the validity
of the issuance of OCT No. M-4559 in the name of Dionisio in their answer to
the complaint filed by the respondents for recovery of possession of the
subject property; it is a collateral attack to the validity of OCT No. M-4559,
which the RTC and the CA aptly disregarded.
Third Issue: Laches

Equally untenable is the petitioners claim that the respondents right to

recover the possession of the subject property is already barred by laches. As
owners of the subject property, the respondents have the right to recover the
possession thereof from any person illegally occupying their property. This
right is imprescriptible. Assuming arguendo that the petitioners indeed have
been occupying the subject property for a considerable length of time, the
respondents, as lawful owners, have the right to demand the return of their
property at any time as long as the possession was unauthorized or merely
tolerated, if at all.
Jurisprudence consistently holds that "prescription and laches can not apply
to registered land covered by the Torrens system" because "under the
Property Registration Decree, no title to registered land in derogation to that
of the registered owner shall be acquired by prescription or adverse
possession."27
WHEREFORE, in consideration of the foregoing disquisitions, the petition is
DENIED. The Decision dated July 2, 2009 and Resolution dated January 27,
2010 of the Court of Appeals in CA-G.R. SP No. 106064 are hereby AFFIRMED.
SO ORDERED.

G.R. No. 189358, October 08, 2014

CENTENNIAL GUARANTEE ASSURANCE
CORPORATION, Petitioner, v. UNIVERSAL MOTORS CORPORATION,
RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO
DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, AND PETER
YAP, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
February 25, 2009 and the Resolution3 dated August 14, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 02459-MIN which affirmed, in part, the
Order4 dated May 13, 2008 of the Regional Trial Court of Cagayan de Oro
City, Branch 39 (RTC) allowing the execution pending appeal of the
Decision5 dated October 31, 2007 (October 31, 2007 Decision) of the RTC in
Civil Case No. 2002-058, but limiting the amount of petitioner Centennial
Guarantee Assurance Corporations (CGAC) liability to only P1,000,000.00.
The Facts
The instant petition originated from a Complaint for Breach of Contract with
Damages and Prayer for Preliminary Injunction and Temporary Restraning
Order filed by Nissan Specialist Sales Corporation (NSSC) and its President
and General Manager, Reynaldo A. Orimaco (Orimaco), against herein
respondents Universal Motors Corporation (UMC), Rodrigo T. Janeo, Jr. (Janeo,
Jr.), Gerardo Gelle (Gelle), Nissan Cagayan de Oro Distributors, Inc. (NCOD),
Jefferson U. Rolida (Rolida), and Peter Yap (Yap). The case was raffled to the
RTC and docketed as Civil Case No. 2002-058.6
The temporary restraining order (TRO) prayed for was eventually
issued by the RTC upon the posting by NSSC and Orimaco of
a P1,000,000.00 injunction bond7issued by their surety, CGAC. The
TRO enjoined respondents UMC, Rolida,Gelle, Janeo, Jr., NCOD, and Yap
(respondents) from selling, dealing, and marketing all models of motor
vehicles and spare parts of Nissan, and from terminating the dealer
agreement between UMC and NSSC. It likewise restrained UMC from
supplying and doing trading transactions with NCOD, which, in turn, was
enjoined from entering and doing business on Nissan Products within the
dealership territory of NSSC as defined in the Dealer Agreement. The TRO
was converted to a writ of preliminary injunction on April 2, 2002. 8c

Respondents filed a petition for certiorari and prohibition before the CA,
docketed as CA-G.R. SP No. 70236, to assail the issuance of the aforesaid
injunctive writ. On July 24, 2002, the CA rendered a Decision holding that the
RTC committed grave abuse of discretion in issuing the writ absent a clear
legal right thereto on the part of NSSC and Orimaco. Consequently, the
April 2, 2002 Writ of Preliminary Injunction issued by the RTC was
ordered dissolved.9
On May 27, 2004, respondents filed an application for damages against the
injunction bond issued by CGAC in the amount of P1,000,000.00. 10
The RTC Ruling
On October 31, 2007, the RTC rendered a Decision11 dismissing the complaint
for breach of contract with damages for lack of merit.12
It further ruled that respondents were entitled to recover damages against
the injunction bond following the CAs pronouncement in CA-G.R. SP No.
70236, i.e., that NSSC and Orimaco had no clear legal right to justify the
issuance of the April 2, 2002 Writ of Preliminary Injunction, warranting its
dissolution.13
Accordingly, the RTC ordered NSSC, Orimaco, and CGAC to jointly and
severally pay respondents the following amounts: actual damages and lost
opportunities suffered by UMC in the amounts of P928,913.68 and
P14,271,266.00, respectively; P50,000.00 as attorneys fees and
P500,000.00 as lost income in favor of NCOD, Rolida, and Yap; and exemplary
damages of P300,000.00 for each of the respondents.14
Upon respondents motion,15 the RTC granted Execution Pending Appeal of its
October 31, 2007 Decision through an Order16dated January 16, 2008. It
ruled that there exists good reasons to justify the immediate
execution of the Decision, namely: (a) that NSSC is in imminent danger of
insolvency being admittedly in a state of rehabilitation under the supervision
of the Regional Trial Court of Misamis Oriental, Branch 40 through Special
Proceeding No. 2002-095; (b) that it has ceased its business operation as the
authorized dealer of Nissan Motor Philippines, Inc.; (c) that Orimaco, NSSCs
President and General Manager, has migrated abroad with his family; and (d)
that NSSC failed to file the necessary supersedeas bond to forestall the
immediate execution of the Decision pending appeal.17 The RTC thereupon
issued the corresponding writ.18c
CGAC assailed the RTCs January 16, 2008 Order before the CA through a
petition for certiorari,docketed as CA-G.R. SP No. 02459-MIN, questioning the
existence of good reasons to warrant the grant of execution pending appeal
and the propriety of enforcing it against one which is not the losing party in

the case but a mere bondsman whose liability is limited to the surety bond it
issued.
The CA Ruling
In a Decision19 dated February 25, 2009, the CA affirmed in part the assailed
order by allowing the execution pending appeal of the RTCs October 31,
2007 Decision but limiting the amount of CGACs liability to only
P1,000,000.00.20cralawlawlibrary
It upheld the trial courts findings that there are good reasons warranting the
execution of the latters Decision pending appeal, not only against NSSC and
Orimaco, but also against CGAC whose liability, however, was declared to be
limited only to the extent of the amount of the bond it issued in favor of its
principals, NSSC and Orimaco.21cralawlawlibrary
Aggrieved, CGAC filed a motion for reconsideration22 which was, however,
denied in a Resolution23dated August 14, 2009, hence, this petition.
The Issues Before the Court
The central issues in this case are: (a)whether or not good reasons exist to
justify execution pending appeal against CGAC which is a mere surety; and
(b) whether or not CGACs liability on the bond should be limited to
P500,000.00.
The Courts Ruling
The petition is unmeritorious.
The execution of a judgment pending appeal is an exception to the general
rule that only a final judgment may be executed; hence, under Section 2,
Rule 39 of the Rules of Court (Rules), the existence of good reasons for the
immediate execution of a judgment is an indispensable requirement as this is
what confers discretionary power on a court to issue a writ of execution
pending appeal.24 Good reasons consist of compelling circumstances
justifying immediate execution, lest judgment becomes illusory, 25 that is, the
prevailing partys chances for recovery on execution from the judgment
debtor are altogether nullified. The good reason yardstick imports a
superior circumstance demanding urgency that will outweigh injury or
damage to the adverse party26and one such good reason that has
been held to justify discretionary execution is the imminent danger
of insolvency of the defeated party.27
The factual findings that NSSC is under a state of rehabilitation and had

ceased business operations, taken together with the information that NSSC
President and General Manager Orimaco had permanently left the country
with his family, constitute such superior circumstances that demand urgency
in the execution of the October 31, 2007 Decision because respondents now
run the risk of its non-satisfaction by the time the appeal is decided with
finality. Notably, as early as April 22, 2008, the rehabilitation receiver had
manifested before the rehabilitation court the futility of rehabilitating NSSC
because of the latters insincerity in the implementation of the rehabilitation
process.28 Clearly, respondents diminishing chances of recovery
from the favorable Decision is a good reason to justify immediate
execution; hence, it would be improper to set aside the order
granting execution pending appeal.
That CGACs financial standing differs from that of NSSC does not negate the
order of execution pending appeal. As the latters surety, CGAC is considered
by law as being the same party as the debtor in relation to whatever is
adjudged touching the obligation of the latter, and their liabilities are
interwoven as to be inseparable.29 Verily,in a contract of suretyship, one
lends his credit by joining in the principal debtors obligation so as to render
himself directly and primarily responsible with him, and without reference to
the solvency of the principal.30 Thus, execution pending appeal against NSSC
means that the same course of action is warranted against its surety, CGAC.
The same reason stands for CGACs other principal, Orimaco, who was
determined to have permanently left the country with his family to evade
execution of any judgment against him.
Now, going to the second issue as above-stated, the Court resolves that
CGACs liability should as the CA correctly ruled be confined to the
amount of P1,000,000.00, and not P500,000.00 as the latter purports.
Section 4(b), Rule 58 of the Rules provides that the injunction bond is
answerable for all damages that may be occasioned by the improper
issuance of a writ of preliminary injunction.31 The Court has held
in Paramount Insurance Corp. v. CA32 that:
The bond insures with all practicable certainty that the defendant may
sustain no ultimate loss in the event that the injunction could finally be
dissolved. Consequently, the bond may obligate the bondsmen to account to
the defendant in the injunction suit for all: (1) such damages; (2) costs and
damages; (3) costs, damages and reasonable attorneys fees as shall be
incurred or sustained by the person enjoined in case it is determined that the
injunction was wrongfully issued.33
In this case, the RTC, in view of the improvident issuance of the April 2, 2002
Writ of Preliminary Injunction,adjudged CGACs principals, NSSC and
Orimaco, liable not only for damages as against NCOD, Rolida, and Yap but

also as against UMC.Asmay be gleaned from the dispositive portion of the

RTC Decision, the amount adjudged to the former group was
P500,000.00,34 while it was found this time, contained in the body of the
same decision that damages in the amount P4,199,355.00 due to loss of
sales was incurred by UMC in the year 2002,35 or the year in which the latter
was prevented from selling their products pursuant to the April 2, 2002 Writ
of Preliminary Injunction. Since CGAC is answerable jointly and severally
with NSSC and Orimaco for their liabilities to the above-mentioned parties for
all damages caused by the improvident issuance of the said injunctive writ,
and considering that the total amount of damages as above-stated evidently
exhausts the full P1,000,000.00 amount of the injunction bond, there is
perforce no reason to reverse the assailed CA Decision even on this score.
WHEREFORE, the petition is DENIED. The Decision dated February 25, 2009
and the Resolution dated August 14, 2009 of the Court of Appeals in CA-G.R.
SP No. 02459-MIN are hereby AFFIRMED.
SO ORDERED.
Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, Perez,
and Perlas-Bernabe, JJ., concur.
G.R. No. 167052, March 11, 2015
BANK OF THE PHILIPPINE ISLANDS SECURITIES
CORPORATION, Petitioner, v. EDGARDO V. GUEVARA, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review under Rule 45 of the Rules of Court
seeking the reversal and setting aside of the Decision1 dated December 19,
2003 and Resolution2 dated February 9, 2005 of the Court Appeals in CA-G.R.
CV No. 69348, affirming the Decision3 dated September 11, 2000 of the
Regional Trial Court (RTC) of Makati City, Branch 57 in Civil Case No. 921445. The RTC acted favorably on the action instituted by respondent
Edgardo V. Guevara for the enforcement of a foreign judgment, particularly,
the Order4 dated March 13, 1990 of the United States (U.S.) District Court for
the Southern District of Texas, Houston Division (U.S. District Court), in Civil
Action No. H-86-440, and ordered petitioner Bank of the Philippine Islands
(BPI) Securities Corporation to pay respondent (a) the sum of US$49,500.00
with legal interest; (b) P250,000.00 attorneys fees and litigation expenses;
and (c) costs of suit.

The facts are culled from the records of the case.

Ayala Corporation, a holding company, and its subsidiaries are engaged in a
wide array of businesses including real estate, financial services,
telecommunications, water and used water, electronics manufacturing
services, automotive dealership and distributorship, business process
outsourcing, power, renewable energy, and transport infrastructure. 5
In the 1980s, Ayala Corporation was the majority stockholder of Ayala
Investment and Development Corporation (AIDC). AIDC, in turn, wholly
owned Philsec Investment Corporation (PHILSEC), a domestic stock
brokerage firm, which was subsequently bought by petitioner; and Ayala
International Finance Limited (AIFL), a Hong Kong deposit-taking corporation,
which eventually became BPI International Finance Limited (BPI-IFL).
PHILSEC was a member of the Makati Stock Exchange and the rules of the
said organization required that a stockbroker maintain an amount of security
equal to at least 50% of a clients outstanding debt.
Respondent was hired by Ayala Corporation in 1958. Respondent later
became the Head of the Legal Department of Ayala Corporation and then the
President of PHILSEC from September 1, 1980 to December 31, 1983.
Thereafter, respondent served as Vice-President of Ayala Corporation until his
retirement on August 31, 1997.
While PHILSEC President, one of respondents obligations was to resolve the
outstanding loans of Ventura O. Ducat (Ducat), which the latter obtained
separately from PHILSEC and AIFL. Although Ducat constituted a pledge of
his stock portfolio valued at approximately US$1.4 million, Ducats loans
already amounted to US$3.1 million. Because the security for Ducats debts
fell below the 50% requirement of the Makati Stock Exchange, the trading
privileges of PHILSEC was in peril of being suspended.
Ducat proposed to settle his debts by an exchange of assets. Ducat owned
several pieces of real estate in Houston, Texas, in partnership with Drago
Daic (Daic), President of 1488, Inc., a U.S.-based corporation. Respondent
relayed Ducats proposal to Enrique Zobel (Zobel), the Chief Executive
Officer of Ayala Corporation. Zobel was amenable to Ducats proposal but
advised respondent to send Thomas Gomez (Gomez), an AIFL employee who
traveled often to the U.S., to evaluate Ducats properties.
In December of 1982, Gomez examined several parcels of real estate that
were being offered by Ducat and 1488, Inc. for the exchange. Gomez, in a
telex to respondent, recommended the acceptance of a parcel of land in
Harris County, Texas (Harris County property), which was believed to be
worth around US$2.9 million. Gomez further opined that the swap would be
fair and reasonable and that it would be better to take this opportunity

rather than pursue a prolonged legal battle with Ducat. Gomezs

recommendation was brought to Zobels attention. The property-for-debt
exchange was subsequently approved by the AIFL Board of Directors even
without a prior appraisal of the Harris County property. However, before the
exchange actually closed, an AIFL director asked respondent to obtain such
an appraisal.
William Craig (Craig), a former owner of the Harris County property,
conducted the appraisal of the market value of the said property. In his
January 1983 appraisal, Craig estimated the fair market value of the Harris
County property at US$3,365,000.
Negotiations finally culminated in an Agreement,6 executed on January 27,
1983 in Makati City, Philippines, among 1488, Inc., represented by Daic;
Ducat, represented by Precioso Perlas (Perlas); AIFL, represented by Joselito
Gallardo (Gallardo); and PHILSEC and Athona Holdings, N. V. (ATHONA), both
represented by respondent. Under the Agreement, the total amount of
Ducats debts was reduced from US$3.1 million to US$2.5 million; ATHONA, a
company wholly owned by PHILSEC and AIFL, would buy the Harris County
property from 1488, Inc. for the price of US$2,807,209.02; PHILSEC and AIFL
would grant ATHONA a loan of US$2.5 million, which ATHONA would entirely
use as initial payment for the purchase price of the Harris County property;
ATHONA would execute a promissory note in favor of 1488, Inc. in the sum of
US$307,209.02 to cover the balance of the purchase price for the Harris
County property; upon its receipt of the initial payment of US$2.5 million
from ATHONA, 1488, Inc. would then fully pay Ducats debts to PHILSEC and
AIFL in the same amount; for their part, PHILSEC and AIFL would release and
transfer possession of Ducats pledged stock portfolio to 1488, Inc.; and
1488, Inc. would become the new creditor of Ducat, subject to such other
terms as they might agree upon.
The series of transactions per the Agreement was eventually executed.
However, after acquiring the Harris County property, ATHONA had difficulty
selling the same. Despite repeated demands by 1488, Inc., ATHONA failed to
pay its promissory note for the balance of the purchase price for the Harris
County property, and PHILSEC and AIFL refused to release the remainder of
Ducats stock portfolio, claiming that they were defrauded into believing that
the said property had a fair market value higher than it actually had.
Civil Action No. H-86-440 before the
U.S. District Court of Southern District
of Texas, Houston Division
On October 17, 1985, 1488, Inc. instituted a suit against PHILSEC, AIFL, and
ATHONA for (a) misrepresenting that an active market existed for two shares
of stock included in Ducats portfolio when, in fact, said shares were to be

withdrawn from the trading list; (b) conversion of the stock portfolio; (c)
fraud, as ATHONA had never intended to abide by the provisions of its
promissory note when they signed it; and (d) acting in concert as a common
enterprise or in the alternative, that ATHONA was the alter ego of PHILSEC
and AIFL. The suit was docketed as Civil Action No. H-86-440 before the U.S.
District Court.
PHILSEC, AIFL, and ATHONA filed counterclaims against 1488, Inc., Daic,
Craig, Ducat, and respondent, for the recovery of damages and excess
payment or, in the alternative, the rescission of the sale of the Harris County
property, alleging fraud, negligence, and conspiracy on the part of counterdefendants who knew or should have known that the value of said property
was less than the appraisal value assigned to it by Craig.
Before the referral of the case to the jury for verdict, the U.S. District Court
dropped respondent as counter-defendant for lack of evidence to support the
allegations against him. Respondent then moved in open court to sanction
petitioner (formerly PHILSEC), AIFL, and ATHONA based on Rule 11 of the U.S.
Federal Rules of Civil Procedure.7
In its Order dated March 13, 1990, the U.S. District Court stated that on
February 14, 1990, after trial, the jury returned a verdict for 1488, Inc. In the
same Order, the U.S. District Court ruled favorably on respondents pending
motion for sanction, thus:
During the course of the trial, the Court was required to review plaintiffs
Exhibit No. 91 to determine whether the exhibit should be admitted. After
reviewing the exhibit and hearing the evidence, the Court concluded that the
defendants counterclaims against Edgardo V. Guevara are frivolous and
brought against him simply to humiliate and embarrass him. It is the opinion
of the Court that the defendants, Philsec Investment Corporation, A/K/A BPI
Securities, Inc., and Ayala International Finance Limited, should be
sanctioned appropriately based on Fed. R. Civ. P. 11 and the Courts inherent
powers to punish unconscionable conduct. Based upon the motion and
affidavit of Edgardo V. Guevara, the Court finds that $49,450 is reasonable
punishment.
ORDERED that defendants, Philsec Investment Corporation A/K/A BPI
Securities, Inc., and Ayala International Finance Limited, jointly and severally,
shall pay to Edgardo V. Guevara $49,450 within 30 days of the entry of this
order.8
Petitioner, AIFL, and ATHONA appealed the jury verdict, as well as the
aforementioned order of the U.S. District Court for them to pay respondent
US$49,450.00; while 1488, Inc. appealed a post-judgment decision of the
U.S. District Court to amend the amount of attorneys fees awarded. The

appeals were docketed as Case No. 90-2370 before the U.S. Court of
Appeals, Fifth Circuit.
The U.S. Court of Appeals rendered its Decision on September 3, 1991
affirming the verdict in favor of 1488, Inc. The U.S. Court of Appeals found
no basis for the allegations of fraud made by petitioner, AIFL, and ATHONA
against 1488, Inc., Daic, Craig, and Ducat:
[2] To state a cause of action for fraud under Texas law, a plaintiff must
allege sufficient facts to show:
(1)
(2)
(3)
(4)
(5)
(6)

that a material representation was made;

that it was false;
that when the speaker made it he knew that it was false or made it
recklessly without any knowledge of the truth and as a positive
assertion;
that he made it with the intention that it should be acted on by the
party;
that the party acted in reliance upon it;
that he thereby suffered injury.

Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). We agree
with the district courts decision to grant a directed verdict against the
defendants. The defendants failed to allege sufficient facts to establish the
elements necessary to demonstrate fraud. In particular, the defendants
have failed to allege any facts that would tend to show that the plaintiff or
any of the third party defendants made a false representation or a
representation with reckless disregard as to its truth.
The Houston real estate market was extremely volatile during the late 1970s
and the early 1980s. Like a stream of hot air, property values rose rapidly
as the heat and fury generated by speculation and construction plans
mounted, but, just as rapidly, the climate cooled and the high-flying market
came crashing to an all time low. The real estate transaction involved in this
case was certainly affected by this environment of capriciousness.
Moreover, a number of additional variables may have contributed to the
uncertainty of its value. For instance, the land abutted a two-lane asphalt
road that had been targeted by the state for conversion into a major multilane divided highway. Water and sewage treatment facilities were located
near the boundary lines of the property. In addition, Houstons lack of
conventional zoning ordinances meant that the value of the property could
fluctuate depending upon the use (commercial or residential) for which the
property would ultimately be used.
[3] The fact that the defendants were unable to sell the property at the price
for which it had been appraised does not demonstrate that the plaintiff or the

third party defendants knew that the value of the property was less than the
appraised value, nor does it establish that the opposing parties were guilty of
negligent misrepresentation or negligence.
[4] In support of their allegation of fraud, the defendants rely heavily on a
loan application completed by 1488 shortly before the subject property was
transferred to Athona. See Defendants Exhibit 29. At the time, 1488 still
owed approximately $300,000 to Republic of Texas Savings Association on its
original loan for the subject property. The debt had matured and 1488 was
planning to move the loan to Home Savings Association of Houston, that is,
take out a loan from Home Savings to pay off the debt to Republic. 1488 had
planned to borrow $350,000 for that purpose. A line item on the Home
Savings loan application form asked for the amount of the loan as a
percentage of the appraised value of the land. A figure of thirty-nine percent
was typed into that space, and the defendants suggest that this proves that
the plaintiff knew Craigs appraisal was erroneous. The defendants reason
that if the $350,000 loan amount was only thirty-nine percent of the lands
appraised value, then the real estate must have been worth approximately
$897,436.
Although their analysis is sound, the conclusion reached by the defendants
cannot withstand additional scrutiny. At the time that the loan application
was completed, 1488 did not request to have a new appraisal done for the
property. Instead, 1488 planned to use the numbers that had been
generated for a quasi-appraisal done in 1977. The 1977 report purported
only to supplement an earlier appraisal that had been conducted in 1974,
and the supplement described its function as estimating market value for
mortgage loan purposes only. See Defendants Trial Exhibit 4. The two page
supplement was based on such old information that even the Home Savings
Association would not accept it without additional collateral as security for
the loan. See Record on Appeal, Vol. 17 at 5-29 to 5-30. The loan, however,
was never made because the property was transferred to Athona, and the
outstanding loan to Republic was paid off as part of that transaction. In
addition, the loan application itself was never signed by anyone affiliated
with 1488. The district court was correct in dismissing this argument in
support of the defendants fraud allegations.
[5] The defendants also allege that the plaintiff and counter defendants knew
that Craigs appraisal was fraudulent because the purchasers statement
signed by their own representative, and the sellers statement, signed by the
plaintiff, as well as the title insurance policy all recited a purchase price of
$643,416.12. Robert Higgs, general counsel for 1488, explained that
because of the nature of the transaction, 1488, for tax purposes, wanted the
purchase price on the closing statement to reflect only that amount of cash
actually exchanged at the closing as well as the promissory note given at the
closing. See Record on Appeal, Vol. 17 at 5-127. Although the closing

documents recite a purchase price well under the actual sales price, nothing
indicates that any of the parties actually believed the property to be worth
less than the sales amount.
The defendants also assert that it was error for the district court to deny
them permission to designate O. Frank McPherson, a Houston appraiser, as
an expert witness after the cutoff date established by a pretrial order for
such designations. The defendants contend that the error prevented them
from presenting facts that would support their fraud allegations. Although
the defendants were allowed to present the testimony of another expert
witness on the subject of valuation, they argue that McPhersons testimony
was critical because he had performed an appraisal of the property for the
Texas Highway Department close to the time period during which Craig had
made his appraisal. McPhersons appraisal was performed as part of the
States condemnation proceedings that preceded the planned highway
expansion next to the subject property.
xxxx
[9] In their briefs, the defendants fail to provide an adequate explanation for
their failure to identify their expert witness in accordance with the district
courts pretrial order. This law suit was initiated in 1985, and the defendants
had until November of 1988 to designate their expert witnesses. The
defendants were aware of the condemnation proceedings, and they,
therefore, had approximately three years to determine the identity of any
appraiser used by the state. The defendants simply failed to make this
inquiry.
Enforcement of the district courts pretrial order did not leave the defendants
without an expert witness on the issue of valuation, and the available expert
had also conducted appraisals for the Texas Highway Department in the area
surrounding the subject property. x x x
Although the degree of prejudice suffered by the plaintiff due to the late
designation of an expert would not have been great, a district court still has
the discretion to control pretrial discovery and sanction a partys failure to
follow a scheduling order. See id. at 791. Such action is particularly
appropriate here, where the defendants have failed to provide an adequate
explanation for their failure to identify their expert within the designated
timetable.
xxxx
The defendants failed to produce enough evidence from which fraud could be
inferred to justify the submission of the issue to a jury. Conclusional
allegations or speculation regarding what the plaintiff knew or did not know

concerning the value of the subject property are insufficient to withstand a

motion for a directed verdict. The district court committed no error in
granting the motion.
xxxx
Since the defendants failed to present the district court with any facts that
would tend to show that the plaintiffs committed a fraud against them, their
claim of a conspiracy to commit fraud must also fail.9
The U.S. Court of Appeals likewise adjudged that petitioner, AIFL, and
ATHONA failed to prove negligence on the part of 1488, Inc., Daic, Craig, and
Ducat in the appraisal of the market value of the said property:
[10, 11] The defendants have likewise failed to present any facts that would
tend to support their claim of negligent misrepresentation or negligence.
The defendants rely on assumptions and unsupportable conclusions of law in
establishing their case for negligence: Assuming the Propertys true value
is less than $800,000, it is reasonable to assume that the counter defendants
failed to exercise reasonable care or competence . . . Brief for Athona at 4546 x x x. A party may not rely on assumptions of fact to carry their case
forward. The defendants have presented no facts to suggest that the
plaintiff was negligent in acquiring its appraisal. The plaintiff hired Craig, a
real estate broker, to perform the appraisal after the defendants had already
given their initial approval for the transaction. Craig had performed real
estate appraisals in the past, and Texas law permits real estate brokers to
conduct such appraisals, see Tex.Rev.Civ.Stat.Ann. art. 6573a, 2(2)(E)
(Vernon Supp. 1988) (Original version at Tex.Rev.Civ.Stat.Ann. art. 6573a,
4(1)(e) (Vernon 1969). These facts do not support a claim of negligence.
For the foregoing reasons the district court committed no error in granting a
directed verdict against the counterclaims advanced by the defendants.10
The U.S. Court of Appeals, however, vacated the award of exemplary
damages in favor of 1488, Inc. for the fraudulent misrepresentation
regarding the marketability of the two shares of stock in Ducats portfolio.
Under Texas law, a jury may not award damages unless it was determined
that the plaintiff had also sustained actual damages. The U.S. Court of
Appeals agreed with petitioner, AIFL, and ATHONA that 1488, Inc. brought its
suit alleging fraudulent misrepresentation after the two-year statute of
limitation had expired. The misrepresentation issue should never have gone
to the jury. Therefore, the jurys finding of actual damages is nullified; and
since the jury verdict is left without a specific finding of actual damages, the
award of exemplary damages must be vacated.
The U.S. Court of Appeals also vacated the award of Rule 11 sanctions in

favor of respondent and against petitioner, AIFL, and ATHONA for being
rendered without due process, and remanded the issue to the U.S. District
Court:
[18-20] The Rule 11 motion was first made by Guevara on February 14, 1990,
and the court immediately ruled on the issue without giving the defendants
an opportunity to prepare a written response. See Record on Appeal, Vol. 22
at 10-25 to 10-37. Although, the defendants were given an opportunity to
speak, we conclude that the hearing failed to comport with the requirements
of due process, which demand that the defendants be provided with
adequate notice and an opportunity to prepare a response. See Henderson
v. Department of Public Safety and Corrections, 901 F.2d 1288, 1293-94 (5th
Cir.1990). Providing specific notice and an opportunity to respond is
particularly important in cases, such as the one before us, in which the
sanctions have been imposed on the clients and not the attorneys. See
Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir.1987) (If sanctions are
proposed to be imposed on the client, due process will demand more specific
notice because the client is likely unaware of the existence of Rule 11 and
should be given the opportunity to prepare a defense.). A separate hearing
is not a prerequisite to the imposition of Rule 11 sanctions, see Donaldson,
819 F.2d at 1560 n. 12, but the defendants in this case, should have been
given more of an opportunity to respond to the motion than that provided at
the hearing in which the motion was first raised. Providing the defendant
with an opportunity to mount a defense on the spot does not comport with
due process. Given that the defendants were not provided with adequate
notice or an opportunity to be heard, we vacate the award of sanctions and
remand so that the district court can provide the defendants with an
adequate opportunity to be heard.11
Finally, the U.S. Court of Appeals similarly vacated the award of attorneys
fees and remanded the matter to the U.S. District Court for recalculation to
conform with the requirements provided in the promissory note.
In accordance with the Decision dated September 3, 1991 of the U.S. Court
of Appeals, the U.S. District Court issued an Order12 dated October 28, 1991
giving petitioner, AIFL, and ATHONA 20 days to formally respond to
respondents motion for Rule 11 sanctions. Petitioner, AIFL, and ATHONA
jointly filed before the U.S. District Court their opposition to respondents
motion for Rule 11 sanctions.13 Respondent filed his reply to the opposition,
to which petitioner, AIFL, and ATHONA, in turn, filed a reply-brief.14
In an Order15 dated December 31, 1991, the U.S. District Court still found
respondents motion for Rule 11 sanctions meritorious and reinstated its
Order dated March 13, 1990:

The basis of the Courts prior decision as well as now is the fact that the
defendants filed suit against Guevara with knowledge that the basis of the
suit was unfounded. In the defendants file was an appraisal from an
international appraisal firm, which the defendants refused to disclose during
discovery and was only discovered at a bench conference during a discussion
about appraisers. Based on the defendants own appraisers, no basis existed
for a suit by the defendants against their employee.
The previous judgment entered by this Court is REINSTATED.
The above-quoted Order of the U.S. District Court attained finality as it was
no longer appealed by petitioner, AIFL, and ATHONA.
Through a letter dated February 18, 1992, respondent demanded that
petitioner pay the amount of US$49,450.00 awarded by the U.S. District
Court in its Order dated March 13, 1990. Given the continuous failure and/or
refusal of petitioner to comply with the said Order of the U.S. District Court,
respondent instituted an action for the enforcement of the same, which was
docketed as Civil Case No. 92-1445 and raffled to the RTC of Makati City,
Branch 57.
Civil Case No. 92-1445 before
Branch 57 of the RTC of Makati City
In his Complaint for the enforcement of the Order dated March 13, 1990 of
the U.S. District Court in Civil Action No. H-86-440, respondent prayed that
petitioner be ordered to pay:
1. The sum of US$49,450.00 or its equivalent in Philippine Pesos x x x
with interest from date of demand;
2. Attorneys fees and litigation expenses in the sum of P250,000.00;
3. Exemplary damages of P200,000.00; and
4. Costs of the suit.16
In its Amended Answer Ad Cautelam,17 petitioner opposed the enforcement
of the Order dated March 13, 1990 of the U.S. District Court on the grounds
that it was rendered upon a clear mistake of law or fact and/or in violation of
its right to due process.
In the course of the pre-trial and scheduled trial proceedings, the parties
respectively manifested before the court that they were dispensing with the
presentation of their witnesses since the subject matter of their testimonies

had already been stipulated upon.18

Thereafter, the parties formally offered their respective evidence which
entirely consisted of documentary exhibits. Respondent submitted
authenticated and certified true copies of Rule 11 of the U.S. Federal Rules of
Civil Procedure;19 the Orders dated March 13, 1990, October 28, 1991, and
December 31, 1991 of the U.S. District Court in Civil Action No. H-86440;20 the Decision dated September 3, 1991 of the U.S. Court of Appeals in
Case No. 90-2370;21 and the opposition to respondents motion for Rule 11
sanctions and reply-brief filed by PHILSEC, AIFL, and ATHONA before the U.S.
District Court.22 Petitioner presented photocopies of pleadings, documents,
and transcripts of stenographic notes in Civil Action No. H-86-440 before the
U.S. District Court;23 the pleadings filed in other cases related to Civil Case
No. 92-1440;24 and a summary of lawyers fees incurred by petitioner in the
U.S.25 The RTC admitted in evidence the documentary exhibits of the parties
in its Orders dated September 21, 1998 and February 8, 1999,26 and then
deemed the case submitted for decision.
The RTC rendered a Decision on September 11, 2000 with the following
dispositive portion:
WHEREFORE, judgment is hereby rendered in favor of [respondent] Edgardo
V. Guevara ordering [petitioner] BPI Securities Corporation to pay
[respondent] the following:
1. the sum of US$49,500.00 with legal interest from the filing of this case
until fully paid;
2. the sum of P250,000.00 as attorneys fees and litigation expenses; and
3. the costs of suit.
An award of exemplary damages for P200,000.00 is denied for being
speculative.27
Petitioner appealed to the Court of Appeals, assigning the following errors on
the part of the RTC:
A. The trial court erred in not passing upon the merit or validity of
[petitioners] defenses against the enforcement of the foreign
judgment in the Philippines.
Had the trial court considered [petitioners] defenses, it would have
concluded that the foreign judgment was not enforceable because it
was made upon a clear mistake of law or fact and/or was made in
violation of the [petitioners] right to due process.

B. The trial court erred in not utilizing the standard for determining the
enforceability of the foreign award that was agreed upon by the parties
to this case during the pre-trial, namely, did the defendants in the
Houston case (PHILSEC, AIFL, AND ATHONA) have reasonable grounds
to implead [respondent] in the Houston case based upon the body of
the evidence submitted therein. Thus, whether or not PHILSEC, AIFL
and ATHONA ultimately prevailed against [respondent] was immaterial
or irrelevant; the question only was whether they had reasonable
grounds to proceed against him, for if they had, then there was
admittedly no basis for the Rule 11 award against them by the Houston
Court.
xxxx
C. In the light of its ruling, the trial court failed to pass upon and resolve
the other issues and/or defenses expressly raised by [petitioner],
including the defense that PHILSEC, AIFL, and ATHONA were deprived
of their right to defend themselves against the Rule 11 sanction and
the main decision because of the prohibitive cost of legal
representation in the us and also because of the gross negligence of its
US counsel. x x x.28
In its Decision dated December 19, 2003, the Fifth Division of the Court of
Appeals decreed:
WHEREFORE, the Decision dated 11 September 2000 in Civil Case No. 921445 of the Regional Trial Court of Makati, Branch 57, is
hereby AFFIRMED in all respect with costs against [petitioner].29
In its Motion for Reconsideration,30 petitioner lamented that the Fifth Division
of the Court of Appeals failed to resolve on its own petitioners appeal as the
Decision dated December 19, 2003 of the said Division was copied
almost verbatim from respondents brief. Thus, petitioner prayed that the
Fifth Division of the Court of Appeals recuse itself from deciding petitioners
Motion for Reconsideration and that the case be re-raffled to another
division.
The Fifth Division of the Court of Appeals maintained in its Resolution dated
May 25, 2004 that the issues and contentions of the parties were all duly
passed upon and that the case was decided according to its merits. The said
Division, nonetheless, abstained from resolving petitioners Motion for
Reconsideration and directed the re-raffle of the case.31
Petitioners Motion for Reconsideration was re-raffled to and subsequently
resolved by the Tenth Division of the Court of Appeals. In its Resolution

dated February 9, 2005, the Tenth Division of the appellate court denied the
said Motion for lack of merit.32
Hence, petitioner seeks recourse from this Court via the instant Petition for
Review, insisting that the Court of Appeals erred in affirming the RTC
judgment which enforced the Order dated March 13, 1990 of the U.S. District
Court in Civil Action No. H-86-440.
Petitioner contends that it was not accorded by the Court of Appeals the right
to refute the foreign judgment pursuant to Rule 39, Section 48 of the Rules of
Court because the appellate court gave the effect of res judicata to the said
foreign judgment. The Court of Appeals copied wholesale orverbatim the
respondents brief without addressing the body of evidence adduced by
petitioner showing that it had reasonable grounds to implead respondent in
Civil Action No. H-86-440.
Petitioner asserts that the U.S. District Court committed a clear mistake of
law and fact in its issuance of the Order dated March 13, 1990, thus, said
Order is unenforceable in this jurisdiction. Petitioner discusses in detail its
evidence proving that respondent, together with 1488, Inc., Ducat, Craig,
and Daic, induced petitioner to agree to a fraudulent deal. Petitioner points
out that respondent had the duty of looking for an independent and
competent appraiser of the market value of the Harris County property; that
instead of choosing an unbiased and skilled appraiser, respondent connived
with 1488, Inc., Ducat, and Daic in selecting Craig, who turned out to be the
former owner of the Harris County property and a close associate of 1488,
Inc. and Daic; and that respondent endorsed to petitioner Craigs appraisal of
the market value of the Harris County property, which was overvalued by
more than 400%.
According to petitioner, it had reasonable grounds to implead respondent in
Civil Action No. H-86-440 so the sanction imposed upon it under Rule 11 of
the U.S. Federal Rules of Civil Procedure was unjustified. Petitioner
additionally argues that there is no basis for the U.S. District Court to impose
upon it the Rule 11 sanction as there is nothing in the said provision which
allows the imposition of sanctions for simply bringing a meritless lawsuit.
If the Rule 11 sanction was imposed upon petitioner as punishment for
impleading a party (when it had reasonable basis for doing so) and not
prevailing against said party, then, petitioner claims that such a sanction is
against Philippine public policy and should not be enforced in this
jurisdiction. Settled in this jurisdiction that there should be no premium
attached to the right to litigate, otherwise parties would be very hesitant to
assert a claim in court.
Petitioner further alleges that it was denied due process in Civil Action No H86-440 because: (1) the U.S. District Court imposed the Rule 11 sanction on

the basis of a single document, i.e., the letter dated September 26, 1983 of
Bruce C. Bossom, a partner at Jones Lang Wooton, a firm of chartered
surveyors and international real estate consultants, addressed to a Mr. Senen
L. Matoto of AIFL (marked as Exhibit 91 before the U.S. District Court), which
was never admitted into evidence; (2) in said letter, Jones Lang Wooton was
soliciting a listing agreement and in which the said firm unilaterally,
without being asked as to the value of the [Harris County] property, indicated
a value for the [same] which approximate[d] with the value given in the
Craig appraisal, hence, it cannot be used as basis to conclude that
petitioner, AIFL, and ATHONA assented to Craigs appraisal of the Harris
County property; (3) the counsel who represented petitioner, AIFL, and
ATHONA in Civil Action No. H-86-440 before the U.S. District Court was
grossly ignorant and/or negligent in the prosecution of their counterclaims
and/or in proving their defenses, such as when said counsel failed to present
an expert witness who could have testified as to the actual market value of
the Harris County property or when said counsel failed to discredit
respondents credibility despite the availability of evidence that respondent
had been previously fined by the Philippine Securities and Exchange
Commission for stock manipulation; and (4) the excessive and
unconscionable legal fees charged by their U.S. counsel effectively prevented
them from making further appeal.
The Court finds the Petition bereft of merit.
In Mijares v. Raada,33 the Court extensively discussed the underlying
principles for the recognition and enforcement of foreign judgments in
Philippine jurisdiction:
There is no obligatory rule derived from treaties or conventions that requires
the Philippines to recognize foreign judgments, or allow a procedure for the
enforcement thereof. However, generally accepted principles of international
law, by virtue of the incorporation clause of the Constitution, form part of the
laws of the land even if they do not derive from treaty obligations. The
classical formulation in international law sees those customary rules
accepted as binding result from the combination two elements: the
established, widespread, and consistent practice on the part of States; and a
psychological element known as the opinion juris sive necessitates (opinion
as to law or necessity). Implicit in the latter element is a belief that the
practice in question is rendered obligatory by the existence of a rule of law
requiring it.
While the definite conceptual parameters of the recognition and enforcement
of foreign judgments have not been authoritatively established, the Court
can assert with certainty that such an undertaking is among those generally
accepted principles of international law. As earlier demonstrated, there is a
widespread practice among states accepting in principle the need for such

recognition and enforcement, albeit subject to limitations of varying

degrees. The fact that there is no binding universal treaty governing the
practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for
recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether
statutory or jurisprudential, adopted in various foreign jurisdictions. In the
Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules of
Court which has existed in its current form since the early 1900s. Certainly,
the Philippine legal system has long ago accepted into its jurisprudence and
procedural rules the viability of an action for enforcement of foreign
judgment, as well as the requisites for such valid enforcement, as derived
from internationally accepted doctrines. Again, there may be distinctions as
to the rules adopted by each particular state, but they all prescind from the
premise that there is a rule of law obliging states to allow for, however
generally, the recognition and enforcement of a foreign judgment. The bare
principle, to our mind, has attained the status of opinio juris in international
practice.
This is a significant proposition, as it acknowledges that the procedure and
requisites outlined in Section 48, Rule 39 derive their efficacy not merely
from the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme Court, and
could very well be abrogated or revised by the high court itself. Yet the
Supreme Court is obliged, as are all State components, to obey the laws of
the land, including generally accepted principles of international law which
form part thereof, such as those ensuring the qualified recognition and
enforcement of foreign judgments. (Citations omitted.)
It is an established international legal principle that final judgments of
foreign courts of competent jurisdiction are reciprocally respected and
rendered efficacious subject to certain conditions that vary in different
countries.34 In the Philippines, a judgment or final order of a foreign tribunal
cannot be enforced simply by execution. Such judgment or order merely
creates a right of action, and its non-satisfaction is the cause of action by
which a suit can be brought upon for its enforcement.35 An action for the
enforcement of a foreign judgment or final order in this jurisdiction is
governed by Rule 39, Section 48 of the Rules of Court, which provides:
SEC. 48. Effect of foreign judgments or final orders. The effect of a
judgment or final order of a tribunal of a foreign country, having jurisdiction
to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment

or final order is conclusive upon the title to the thing; and

(b) In case of a judgment or final order against a person, the judgment or
final order is presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
The Court expounded in Mijares on the application of the aforequoted
provision:
There is an evident distinction between a foreign judgment in an action
in rem and onein personam. For an action in rem, the foreign judgment is
deemed conclusive upon the title to the thing, while in an action in
personam, the foreign judgment is presumptive, and not conclusive, of a
right as between the parties and their successors in interest by a subsequent
title. However, in both cases, the foreign judgment is susceptible to
impeachment in our local courts on the grounds of want of jurisdiction or
notice to the party, collusion, fraud, or clear mistake of law or fact. Thus, the
party aggrieved by the foreign judgment is entitled to defend against the
enforcement of such decision in the local forum. It is essential that there
should be an opportunity to challenge the foreign judgment, in order for the
court in this jurisdiction to properly determine its efficacy.
It is clear then that it is usually necessary for an action to be filed in
order to enforce a foreign judgment, even if such judgment has
conclusive effect as in the case of in rem actions, if only for the
purpose of allowing the losing party an opportunity to challenge the
foreign judgment, and in order for the court to properly determine
its efficacy. Consequently, the party attacking a foreign judgment
has the burden of overcoming the presumption of its validity.
The rules are silent as to what initiatory procedure must be undertaken in
order to enforce a foreign judgment in the Philippines. But there is no
question that the filing of a civil complaint is an appropriate measure for
such purpose. A civil action is one by which a party sues another for the
enforcement or protection of a right, and clearly an action to enforce a
foreign judgment is in essence a vindication of a right prescinding either
from a conclusive judgment upon title or the presumptive evidence of a
right. Absent perhaps a statutory grant of jurisdiction to a quasi-judicial
body, the claim for enforcement of judgment must be brought before the
regular courts.
There are distinctions, nuanced but discernible, between the cause of action

arising from the enforcement of a foreign judgment, and that arising from the
facts or allegations that occasioned the foreign judgment. They may pertain
to the same set of facts, but there is an essential difference in the right-duty
correlatives that are sought to be vindicated. For example, in a complaint for
damages against a tortfeasor, the cause of action emanates from the
violation of the right of the complainant through the act or omission of the
respondent. On the other hand, in a complaint for the enforcement of a
foreign judgment awarding damages from the same tortfeasor, for
the violation of the same right through the same manner of action,
the cause of action derives not from the tortious act but from the
foreign judgment itself.
More importantly, the matters for proof are different. Using the above
example, the complainant will have to establish before the court the tortious
act or omission committed by the tortfeasor, who in turn is allowed to rebut
these factual allegations or prove extenuating circumstances. Extensive
litigation is thus conducted on the facts, and from there the right to and
amount of damages are assessed. On the other hand,in an action to
enforce a foreign judgment, the matter left for proof is the foreign
judgment itself, and not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally
restricted to a review of jurisdiction of the foreign court, the service
of personal notice, collusion, fraud, or mistake of fact or law. The
limitations on review [are] in consonance with a strong and
pervasive policy in all legal systems to limit repetitive litigation on
claims and issues. Otherwise known as the policy of preclusion, it
seeks to protect party expectations resulting from previous
litigation, to safeguard against the harassment of defendants, to
insure that the task of courts not be increased by never-ending
litigation of the same disputes, and in a larger sense to promote
what Lord Coke in the Ferrers Case of 1599 stated to be the goal of
all law: rest and quietness. If every judgment of a foreign court
were reviewable on the merits, the plaintiff would be forced back on
his/her original cause of action, rendering immaterial the previously
concluded litigation.36 (Emphases supplied, citations omitted.)
Also relevant herein are the following pronouncements of the Court in Minoru
Fujiki v. Marinay37:
A petition to recognize a foreign judgment declaring a marriage void does
not require relitigation under a Philippine court of the case as if it were a new
petition for declaration of nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which the foreign judgment
was rendered. They cannot substitute their judgment on the status,
condition and legal capacity of the foreign citizen who is under the

jurisdiction of another state. Thus, Philippine courts can only

recognize the foreign judgment as a fact according to the rules of
evidence.
Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment
or final order against a person creates a presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title.
Moreover, Section 48 of the Rules of Court states that the judgment or final
order may be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact. Thus,
Philippine courts exercise limited review on foreign judgments.
Courts are not allowed to delve into the merits of a foreign
judgment. Once a foreign judgment is admitted and proven in a
Philippine court, it can only be repelled on grounds external to its
merits, i.e., want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact. The rule on limited
review embodies the policy of efficiency and the protection of party
expectations, as well as respecting the jurisdiction of other
states. (Emphases supplied, citations omitted.)
As the foregoing jurisprudence had established, recognition and enforcement
of a foreign judgment or final order requires only proof of fact of the said
judgment or final order. In an action in personam, as in the case at bar, the
foreign judgment or final order enjoys the disputable presumption of validity.
It is the party attacking the foreign judgment or final order that is tasked with
the burden of overcoming its presumptive validity.38 A foreign judgment or
final order may only be repelled on grounds external to its merits,
particularly, want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.
The fact of a foreign final order in this case is not disputed. It was duly
established by evidence submitted to the RTC that the U.S. District Court
issued an Order on March 13, 1990 in Civil Action No. H-86-440 ordering
petitioner, AIFL, and ATHONA, to pay respondent the sum of US$49,450.00 as
sanction for filing a frivolous suit against respondent, in violation of Rule 11
of the U.S. Federal Rules of Civil Procedure. The said Order became final
when its reinstatement in the Order dated December 31, 1991 of the U.S.
District Court was no longer appealed by petitioner, AIFL, and/or ATHONA.
The Order dated March 13, 1990 of the U.S. District Court in Civil Action No.
H-86-440 is presumptive evidence of the right of respondent to demand from
petitioner the payment of US$49,450.00 even in this jurisdiction. The next
question then is whether petitioner was able to discharge the burden of
overcoming the presumptive validity of said Order.
The Court rules in the negative.

In complete disregard of the limited review by Philippine courts of foreign

judgments or final orders, petitioner opposes the enforcement of the Order
dated March 13, 1990 of the U.S. District Court on the very same allegations,
arguments, and evidence presented before and considered by the U.S.
District Court when it rendered its verdict imposing the Rule 11 sanction
against petitioner. Petitioner attempts to convince the Court that it is
necessary to look into the merits of the Order dated March 13, 1990 because
the U.S. District Court committed clear mistake of law and fact in issuing the
same. The Court, however, is not convinced. A Philippine court will not
substitute its own interpretation of any provision of the law or rules of
procedure of another country, nor review and pronounce its own judgment
on the sufficiency of evidence presented before a competent court of
another jurisdiction. Any purported mistake petitioner attributes to the U.S.
District Court in the latters issuance of the Order dated March 13, 1990
would merely constitute an error of judgment in the exercise of its legitimate
jurisdiction, which could have been corrected by a timely appeal before the
U.S. Court of Appeals.
Petitioner cannot insist that the RTC and the Court of Appeals resolve the
issue of whether or not petitioner, AIFL, and ATHONA had reasonable grounds
to implead respondent as a counter-defendant in Civil Action No. H-86-440.
Although petitioner submitted such an issue for resolution by the RTC in its
Pre-Trial Brief, the RTC did not issue any pre-trial order actually adopting the
same. In addition, petitioner was also unable to lay the basis, whether in
U.S. or Philippine jurisdiction, for the use of the reasonable grounds
standard for determining a partys liability for or exemption from the
sanctions imposed for violations of Rule 11 of the U.S. Federal Rules of Civil
Procedure. Equally baseless is petitioners assertion that the Rule 11
sanction is contrary to public policy and in effect, puts a premium on the
right to litigate. It bears to stress that the U.S. District Court imposed the
Rule 11 sanction upon petitioner, AIFL, and ATHONA for their frivolous
counterclaims against respondent intended to simply humiliate and
embarrass respondent; and not because petitioner, AIFL, and ATHONA
impleaded but lost to respondent.
Contrary to the claims of petitioner, both the RTC and the Court of Appeals
carefully considered the allegations, arguments, and evidence presented by
petitioner to repel the Order dated March 13, 1990 of the U.S. District Court
in Civil Action No. H-86-440. Worthy of reproducing herein are the following
portions of the RTC judgment:
[Petitioners] contention that the judgment sought to be enforced herein is
violative of its right to due process and contrary to public policy because the
Houston Court relied upon Exhibit 91 (which is [petitioner BPI Securities]
Exh. 1 in this case) and the US Court disregarded the evidence on record in

the Houston Action is unavailing. Whether or not said Exhibit 91

(petitioners Exh. 1) is inadmissible or is not entitled to any
weight is a question which should have been addressed to the US of
Court of Appeals by [petitioner]. To ask a Philippine court to pass
upon the admissibility or weight of Exh. 91 is violative of our public
policy not to substitute our judgment for that of a competent court
of another jurisdiction.
[Petitioner] does not deny the fact that the judgment awarding sanctions
based on [Rule 11 of the U.S.] Federal Rules of Civil Procedure was elevated
to the United States Court of Appeals for the Fifth Circuit which remanded the
case to the District Court precisely to give [petitioner] a reasonable
opportunity to be heard. After remand, the District Court ordered [petitioner]
to file its response to the motion of [respondent] for sanctions and after the
filing of their respective briefs, the District Court reinstated the former
judgment.
Certainly, under these circumstances, the claim of violation of due process
cannot be sustained since [petitioner] was given reasonable opportunity to
present its side before the imposition of sanctions.
xxxx
[Petitioner] likewise argued that the US District Court committed a clear
mistake of law or fact and in support thereof presented Exhibits 10 to 18
to establish that the fair market value of the Houston property in January
1983 was no longer US$800,000.00 by the admissions against interest of
1488 itself, of Craig who submitted the fraudulent appraisal, and by the
previous owners of the said property and to show that [respondent]
Guevara was either directly involved in the conspiracy against the Houston
defendants in submitting to the latter a fraudulent appraisal of W. Craig (or
was at least responsible to the Houston defendants for the injury that they
suffered) and that the Houston defendants had reasonable basis to implead
him as a defendant in the Houston Case on account of his participation in the
conspiracy or his fault of responsibility for the injury suffered by them.
However, none of these documents show that [respondent] had any
participation nor knowledge in the execution, custody or other intervention
with respect to the said. Thus, said Exhibits 10 to 18 are irrelevant
and immaterial to the issue of the enforceability of a foreign
judgment. It must be emphasized that the imposition of the
sanctions under [Rule 11 of the U.S.] Federal Rules of Civil
Procedure did not flow from the merits of the civil case in the US
District Court but from the lack of even an iota of evidence against
[respondent] Guevara. To quote the US District Court:

THE COURT
xxxx
I am disturbed about that. I dont see any evidence at all in this case, after
listening to all of this evidence, that there ever was a lawsuit that could have
been brought against Guevara, and even after all of the discovery was done,
there was still no evidence of a conspiracy. There is no evidence of any
conspiracy to this good day that he could have been, but there is no proof of
it, and thats what we base these lawsuits on. Thats what the Rule 11 is
designed to do, to deal with the circumstance.
So, I brought it up to Mr. Guevara because I know the frustration, and
irrespective as to whether or not he brought it up, it would have been my
position, my own position as an officer of this Court to sanction the
defendants in this case. That is my opinion, that they are to be sanctioned
because they have brought all of the power that they have in the Philippines
to bear and put pressure on this man so that he would have to come over
10,000 miles to defend himself or to hire lawyers to defend himself against a
totally frivolous claim.39 (Emphases supplied.)
As for petitioners contention that the Fifth Division of the Court of Appeals,
in its Decision dated December 19, 2003, copied verbatim or wholesale from
respondents brief, the Court refers to its ruling in Halley v. Printwell,
Inc.,40 thus:
It is noted that the petition for review merely generally alleges that starting
from its page 5, the decision of the RTC copied verbatim the allegations of
herein Respondents in its Memorandum before the said court, as if the
Memorandum was the draft of the Decision of the Regional Trial Court of
Pasig, but fails to specify either the portions allegedly lifted verbatim from
the memorandum, or why she regards the decision as copied. The omission
renders the petition for review insufficient to support her contention,
considering that the mere similarity in language or thought between
Printwells memorandum and the trial courts decision did not necessarily
justify the conclusion that the RTC simply lifted verbatim or copied from the
memorandum.
It is to be observed in this connection that a trial or appellate judge may
occasionally view a partys memorandum or brief as worthy of due
consideration either entirely or partly. When he does so, the judge may adopt
and incorporate in his adjudication the memorandum or the parts of it he
deems suitable, and yet not be guilty of the accusation of lifting or copying
from the memorandum. This is because of the avowed objective of the
memorandum to contribute in the proper illumination and correct
determination of the controversy. Nor is there anything untoward in the

congruence of ideas and views about the legal issues between himself and
the party drafting the memorandum. The frequency of similarities in
argumentation, phraseology, expression, and citation of authorities between
the decisions of the courts and the memoranda of the parties, which may be
great or small, can be fairly attributable to the adherence by our courts of
law and the legal profession to widely know nor universally accepted
precedents set in earlier judicial actions with identical factual milieus or
posing related judicial dilemmas. (Citations omitted.)
The Court is unmoved by petitioners allegations of denial of due process
because of its U.S. counsels exorbitant fees and negligence. As aptly
pointed out by respondent in his Memorandum:
On the specific claim that petitioner has been denied legal representation in
the United States in view of the exorbitant legal fees of US counsel,
petitioner is now estopped from asserting that the costs of litigation resulted
in a denial of due process because it was petitioner which impleaded
Guevara. If petitioner cannot prosecute a case to its final stages, then it
should not have filed a counterclaim against Guevara in the first place.
Moreover, there is no showing that petitioner could not find a less expensive
counsel. Surely, petitioner could have secured the services of another
counsel whose fees were more affordable.41
Moreover, petitioner is bound by the negligence of its counsel. The
declarations of the Court inGotesco Properties, Inc. v. Moral42 is applicable to
petitioner:
The general rule is that a client is bound by the acts, even mistakes, of his
counsel in the realm of procedural technique. The basis is the tenet that an
act performed by counsel within the scope of a general or implied authority
is regarded as an act of the client. While the application of this general rule
certainly depends upon the surrounding circumstances of a given case, there
are exceptions recognized by this Court: (1) where reckless or gross
negligence of counsel deprives the client of due process of law; (2) when its
application will result in outright deprivation of the clients liberty or
property; or (3) where the interests of justice so require.
The present case does not fall under the said exceptions. In Amil v. Court of
Appeals,the Court held that to fall within the exceptional circumstance
relied upon x x x, it must be shown that the negligence of counsel must be
so gross that the client is deprived of his day in court. Thus, where a party
was given the opportunity to defend [its] interests in due course, [it] cannot
be said to have been denied due process of law, for this opportunity to be
heard is the very essence of due process. To properly claim gross
negligence on the part of the counsel, the petitioner must show that the

counsel was guilty of nothing short of a clear abandonment of the clients

cause. (Citations omitted.)
Finally, it is without question that the U.S. District Court, in its Order dated
March 13, 1990 in Civil Action No. H-86-440, ordered petitioner, AIFL, and
ATHONA to pay respondent US$49,450.00 as sanction for violating Rule 11 of
the U.S. Federal Rules of Civil Procedure. The Court noticed that throughout
its Decision dated September 11, 2000 in Civil Case No. 92-1445, the RTC
variably mentioned the amount of Rule 11 sanction imposed by the U.S.
District Court as US$49,450.00 and US$49,500.00, the latter obviously being
a typographical error. In the dispositive portion, though, the RTC ordered
petitioner to pay respondent US$49,500.00, which the Court hereby
corrects motu proprio to US$49,450.00 in conformity with the U.S. District
Court Order being enforced.
The Court notes that during the pendency of the instant Petition before this
Court, respondent passed away on August 17, 2007, and is survived and
substituted by his heirs, namely: Ofelia B. Guevara, Ma. Leticia G. Allado,
Jose Edgardo B. Guevara, Jose Emmanuel B. Guevara, and Ma. Joselina G.
Gepuela.
WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The
Decision dated December 19, 2003 and Resolution dated February 9, 2005 of
the Court Appeals in CA-G.R. CV No. 69348, affirming the Decision dated
September 11, 2000 of the Regional Trial Court of Makati City, Branch 57 in
Civil Case No. 92-1445, is hereby AFFIRMED with MODIFICATION that
petitioner BPI Securities Corporation is ordered to pay respondent Edgardo V.
Guevara the sum of US$49,450.00 or its equivalent in Philippine Peso, with
interest at six percent (6%) per annum from the filing of the case before the
trial court on May 28, 1992 until fully paid.43
SO ORDERED.

G.R. No. 213525, January 27, 2015

FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner, v. COMMISSION
ON AUDIT (COA) PROPER; COA REGIONAL OFFICE NO. VI-WESTERN
VISAYAS; AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; AND
PROVINCIAL GOVERNMENT OF ANTIQUE, Respondents.
RESOLUTION
BERSAMIN, J.:
Petitioner Fortune Life Insurance Company, Inc. seeks the reconsideration 1 of
the resolution promulgated on August 19, 2014,2 whereby the Court
dismissed its petition for certiorari under Rule 64 in relation to Rule 65 of
the Rules of Court due to its non-compliance with the provisions of Rule 64,
particularly for: (a) the late filing of the petition; (b) the non-submission of
the proof of service and verified declaration; and (c) the failure to show
grave abuse of discretion on the part of the respondents.3
Antecedents
Respondent Provincial Government of Antique (LGU) and the petitioner
executed a memorandum of agreement concerning the life insurance
coverage of qualified barangay secretaries, treasurers andtanod, the former
obligating P4,393,593.60 for the premium payment, and subsequently
submitting the corresponding disbursement voucher to COA-Antique for preaudit.4 The latter office disallowed the payment for lack of legal basis under
Republic Act No. 7160 (Local Government Code). Respondent LGU appealed
but its appeal was denied.

Consequently, the petitioner filed its petition for money claim in the COA.5 On
November 15, 2012, the COA issued its decision denying the
petition,6 holding that under Section 447 and Section 458 of theLocal
Government Code only municipal or city governments are expressly vested
with the power to secure group insurance coverage for barangay workers;
and noting the LGUs failure to comply with the requirement of publication
under Section 21 of Republic Act No. 9184 (Government Procurement
Reform Act).
The petitioner received a copy of the COA decision on December 14,
2012,7 and filed its motion for reconsideration on January 14,
2013.8 However, the COA denied the motion,9 the denial being received by
the petitioner on July 14, 2014.10
Hence, the petitioner filed the petition for certiorari on August 12, 2014, but
the petition for certiorariwas dismissed as earlier stated through the
resolution promulgated on August 19, 2014 for (a) the late filing of the
petition; (b) the non-submission of the proof of service and verified
declaration; and (c) the failure to show grave abuse of discretion on the part
of the respondents.
Issues
In its motion for reconsideration, the petitioner submits that it filed the
petition for certiorari within the reglementary period following the fresh
period rule enunciated in Neypes v. Court of Appeals;11 and that the petition
for certiorari included an affidavit of service in compliance with Section 3,
Rule 13 of the Rules of Court. It admits having overlooked the submission of
a verified declaration; and prays that the declaration attached to the motion
for reconsideration be admitted by virtue of its substantial compliance with
the Efficient Use of Paper Rule12 by previously submitting a compact disc
(CD) containing the petition for certiorari and its annexes. It disagrees with
the Court, insisting that it showed and proved grave abuse of discretion on
the part of the COA in issuing the assailed decision.
Ruling
We deny the motion for reconsideration for being without merit.
I
Petitioner did not comply with
the rule on proof of service
The petitioner claims that the affidavit of service attached to the petition
for certiorari complied with the requirement on proof of service.

The claim is unwarranted. The petitioner obviously ignores that Section 13,
Rule 13 of the Rules of Court concerns two types of proof of service, namely:
the affidavit and the registry receipt, viz:
Section 13. Proof of Service. x x x. If service is made by registered mail,
proof shall be made by such affidavit and the registry receipt issued by
the mailing office. The registry return card shall be filed immediately upon its
receipt by the sender, or in lieu thereof the unclaimed letter together with
the certified or sworn copy of the notice given by the postmaster to the
addressee.
Section 13 thus requires that if the service is done by registered mail, proof
of service shall consist of the affidavit of the person effecting the
mailing and the registry receipt, both of which must be appended to the
paper being served. A compliance with the rule is mandatory, such that
there is no proof of service if either or both are not
submitted.13chanRoblesvirtualLawlibrary
Here, the petition for certiorari only carried the affidavit of service executed
by one Marcelino T. Pascua, Jr., who declared that he had served copies of the
petition by registered mail under Registry Receipt Nos. 70449, 70453,
70458, 70498 and 70524 attached to the appropriate spaces found on pages
64-65 of the petition.14 The petition only bore, however, the cut print-outs of
what appeared to be the registry receipt numbers of the registered matters,
not the registry receipts themselves. The rule requires to be appended the
registry receipts, not their reproductions. Hence, the cut print-outs did not
substantially comply with the rule. This was the reason why the Court held in
the resolution of August 19, 2014 that the petitioner did not comply with the
requirement of proof of service.15
II
Fresh Period Rule under Neypes
did not apply to the petition for certiorari
under Rule 64 of the Rules of Court
The petitioner posits that the fresh period rule applies because its Rule 64
petition is akin to a petition for review brought under Rule 42 of the Rules of
Court; hence, conformably with the fresh period rule, the period to file a Rule
64 petition should also be reckoned from the receipt of the order denying the
motion for reconsideration or the motion for new
trial.16chanRoblesvirtualLawlibrary
The petitioners position cannot be sustained.
There is no parity between the petition for review under Rule 42 and the
petition for certiorari under Rule 64.

As to the nature of the procedures, Rule 42 governs an appeal from the

judgment or final order rendered by the Regional Trial Court in the exercise of
its appellate jurisdiction. Such appeal is on a question of fact, or of law, or of
mixed question of fact and law, and is given due course only upon a prima
facie showing that the Regional Trial Court committed an error of fact or law
warranting the reversal or modification of the challenged judgment or final
order.17 In contrast, the petition for certiorari under Rule 64 is similar to the
petition for certiorari under Rule 65, and assails a judgment or final order of
the Commission on Elections (COMELEC), or the Commission on Audit (COA).
The petition is not designed to correct only errors of jurisdiction, not errors of
judgment.18 Questions of fact cannot be raised except to determine whether
the COMELEC or the COA were guilty of grave abuse of discretion amounting
to lack or excess of jurisdiction.
The reglementary periods under Rule 42 and Rule 64 are different. In the
former, the aggrieved party is allowed 15 days to file the petition for review
from receipt of the assailed decision or final order, or from receipt of the
denial of a motion for new trial or reconsideration.19 In the latter, the petition
is filed within 30 days from notice of the judgment or final order or resolution
sought to be reviewed. The filing of a motion for new trial or reconsideration,
if allowed under the procedural rules of the Commission concerned,
interrupts the period; hence, should the motion be denied, the aggrieved
party may file the petition within the remaining period, which shall not be
less than five days in any event, reckoned from the notice of denial.20

The petitioner filed its motion for reconsideration on January 14, 2013, which
was 31 days after receiving the assailed decision of the COA on December
14, 2012.21 Pursuant to Section 3 of Rule 64, it had only five days from
receipt of the denial of its motion for reconsideration to file the petition.
Considering that it received the notice of the denial on July 14, 2014, it had
only until July 19, 2014 to file the petition. However, it filed the petition on
August 13, 2014, which was 25 days too late.
We ruled in Pates v. Commission on Elections22 that the belated filing of the
petition for certiorari under Rule 64 on the belief that the fresh period
rule should apply was fatal to the recourse. As such, the petitioner herein
should suffer the same fate for having wrongly assumed that the fresh
period rule under Neypes23 applied. Rules of procedure may be relaxed only
to relieve a litigant of an injustice that is not commensurate with the degree
of his thoughtlessness in not complying with the prescribed
procedure.24 Absent this reason for liberality, the petition cannot be allowed
to prosper.

III
Petition for certiorari further lacked merit
The petition for certiorari is also dismissible for its lack of merit.
The petitioner insists on having fully shown that the COA committed grave
abuse of discretion, to wit: (1) the challenged decision was rendered by a
divided COA proper; (2) the COA took almost a year before promulgating its
decision, and more than a year in resolving the motion for reconsideration,
in contravention of the express mandate of the Constitution; (3) the
resolution denying the motion for reconsideration was made up of only two
sentences; (4) the matter involved a novel issue that called for an
interpretation of the pertinent provisions of the Local Government Code; and
(5) in issuing the resolution, COA Commissioners Grace Pulido-Tan and Heidi
L. Mendoza made it appear that they knew the Local Government
Code better than former Senator Aquilino Pimentel who offered an opinion on
the matter.25chanRoblesvirtualLawlibrary
Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as to be equivalent to lack or excess of jurisdiction; in other words,
power is exercised in an arbitrary or despotic manner by reason of passion,
prejudice, or personal hostility; and such exercise is so patent or so gross as
to amount to an evasion of a positive duty or to a virtual refusal either to
perform the duty enjoined or to act at all in contemplation of
law.26chanRoblesvirtualLawlibrary
A close look indicates that the petition for certiorari did not sufficiently
disclose how the COA committed grave abuse of its discretion. For sure, the
bases cited by the petitioner did not approximate grave abuse of discretion.
To start with, the supposed delays taken by the COA in deciding the appeal
were neither arbitrary nor whimsical on its part. Secondly, the mere
terseness of the denial of the motion for reconsideration was not a factor in
demonstrating an abuse of discretion. And, lastly, the fact that Senator
Pimentel, even if he had been the main proponent of the Local Government
Code in the Legislature, expressed an opinion on the issues different from the
COA Commissioners own did not matter, for it was the latters adjudication
that had any value and decisiveness on the issues by virtue of their being
the Constitutionally officials entrusted with the authority for that purpose.
It is equally relevant to note that the COA denied the money claim of the
petitioner for the further reason of lack of sufficient publication as required
by the Government Procurement Act. In that light, the COA acted well within
its authority in denying the petitioners claim.
IV
Petitioner and its counsel

exhibited harshness and disrespect

towards the Court and its Members
The petitioner contends that the Court erred in appreciating the petitioners
non-compliance with the requirement of the proof of service, alleging that
even a perfunctory scrutiny of the petition forcertiorari and its annexes
could have easily shown that it had attached an affidavit of service to the
petition. It goes on to make the following statements, viz:
25. Apparently, the staff of the Justice-in-charge failed to verify the PETITION
and its annexes up to its last page, thus, the erroneous finding that there
was non-submission of the proof of service;
26. In turn, the same omission was hoisted upon the other members of this
Honorable Court who took the observation from the office of the Justice-incharge, to be the obtaining fact, when in truth and in fact, it is not;27
The petitioner and its counsel thereby exhibited their plain inability to accept
the ill consequences of their own shortcomings, and instead showed an
unabashed propensity to readily lay blame on others like the Court and its
Members. In doing so, they employed harsh and disrespectful language that
accused the Court and its Members of ignorance and recklessness in the
performance of their function of adjudication.
We do not tolerate such harsh and disrespectful language being uttered
against the Court and its Members. We consider the accusatory language
particularly offensive because it was unfounded and undeserved. As this
resolution earlier clarifies, the petition for certiorari did not contain a proper
affidavit of service. We do not need to rehash the clarification. Had the
petitioner and its counsel been humbler to accept their self-inflicted situation
and more contrite, they would have desisted from their harshness and
disrespect towards the Court and its Members. Although we are not beyond
error, we assure the petitioner and its counsel that our resolutions and
determinations are arrived at or reached with much care and caution, aware
that the lives, properties and rights of the litigants are always at stake. If
there be errors, they would be unintended, and would be the result of human
oversight. But in this instance the Court and its Members committed no error.
The petition bore only cut reproductions of the supposed registry receipts,
which even a mere perfunctory scrutiny would not pass as the original
registry receipts required by the Rules of Court.
Accordingly, the petitioner and its counsel, Atty. Eduardo S. Fortaleza, should
fully explain in writing why they should not be punished for indirect contempt
of court for their harsh and disrespectful language towards the Court and its
Members; and, in his case, Atty. Fortaleza should further show cause why he
should not be disbarred.

WHEREFORE, the Court DENIES the Motion for Reconsideration for its lack
of merit; ORDERS the petitioner and its counsel, Atty. Eduardo S. Fortaleza,
to show cause in writing within ten (10) days from notice why they should
not be punished for indirect contempt of court; and FURTHER DIRECTS Atty.
Fortaleza to show cause in the same period why he should not be disbarred.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 189850

September 22, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.

REYNALDO TORRES, JAY TORRES, BOBBY TORRES @ ROBERTO

TORRES y NAVA, and RONNIE TORRES, Accused,
BOBBY TORRES @ ROBERTO TORRES y NAVA, Accused-Appellant.
DECISION
DEL CASTILLO, J.:
This is an appeal from the July 23, 2009 Decision1 ofthe Court of Appeals (CA)
in CA-G.R. CR-H.C. No. 02925, which modified the December 5, 2006
Decision2 of the Regional Trial Court (RTC), Manila, Branch 27 in Criminal
Case No. 02-200171. The RTC found appellant Bobby Torres @Roberto Torres
y Nava (appellant) guilty beyond reasonable doubt of the crime of murder
but on appeal, the CA found appellant guilty of the special complex crime of
robbery with homicide.
Factual Antecedents
On January 28, 2004, an Amended lnformation3 was filed before the charging
siblings Reynaldo Torres (Reynaldo), Jay Torres (Jay), Ronnie Torres (Ronnie)
and appellant with the special complex crime ofrobbery withhomicide
committed against Jaime M. Espino (Espino). The Amended Information
contained the following accusatory allegations:
That on or about September 21, 2001, inthe City of Manila, Philippines, the
said accused, armed with bladed weapons, conspiring and confederating
together with one malefactor whose true name, real identity and present
whereabouts [is] still unknown and helping one another, did then and there
willfully, unlawfully and feloniously, with intent of gain and by means of
force, violence, and intimidation,to wit: while one JAIME M. ESPINO was on
board his car and travelling along C.M. Recto Avenue corner Ylaya St., Tondo ,
this City, by blocking his path and forcibly grabbing from the latter his beltbag; that on the occasion of the said robbery and by reason thereof, the
herein accused, in pursuance of their conspiracy, did thenand there willfully,
unlawfully and feloniously, with intent to kill, attack, assault, use personal
violence and abuse of superior strength upon the said JAIME M.ESPINO and
that when the latter resisted, by then and there stabbing the latter with
bladed weapons on x x x different parts of his body, thereby inflicting upon
the latter multiple stab wounds which were the direct and immediate cause
of his death thereafter, and afterwhich, divest, take, rob and carry away a
belt-bag, wallet, necklace, watch and ring of undetermined amount,
belonging to said JAIME M. ESPINO.
Contrary to law.4

Only appellant was arrested. Reynaldo, Jay and Ronnie remain at-large to
date. During arraignment, appellantentered a plea of "not guilty".5 After the
termination of the pre-trial conference, trial ensued.6
Version of the Prosecution
The prosecution presented as eyewitnesses Eduardo Umali (Umali), a
butcher, and MerlitoMacapar (Macapar), a cigarette vendor. Also presented
were Dr. Romeo T. Salen (Dr. Salen), who testified on the cause of death of
Espino. From their testimonies,7 the following facts emerged:
At around 10:00 p.m. of September 21,2001, Espino was driving his car along
C.M. Recto Avenue in Divisoria, Manila when Ronnie suddenly blocked his
path. Espino alighted from his vehicle and approached Ronnie, who tried to
grab his belt-bag. Espino resisted and struggled with Ronnie for the
possession of his belt-bag but the latters brothers, Jay, Rey, appellant, and
an unidentified companion suddenly appeared. With all of them brandishing
bladed weapons, appellant and his brothers took turns in stabbing Espino in
different parts of his body while the unidentified companion held him by the
neck. When Espino was already sprawled on the ground, they took his beltbag, wallet and jewelries and immediately fled.
Espino was rushed to the hospital butwas pronounced dead on arrival. In his
Medico-Legal Report No. W-658-2001,8 Dr. Salen concluded that Espino died
of multiple stab wounds caused by sharp bladedinstruments. The back
portion of his head bore two stab wounds while his body suffered four stab
wounds which proved fatal. Considering the number and varying
measurements of the wounds, Dr. Salen opined that there weremore than
one assailant.
To prove the civil aspect of the case, Espinos daughter, Winnie EspinoFajardo
(Winnie) testified that the pieces of jewelry stolen from her father consisted
of a necklace worth P35,000.00, bracelet worth P15,000.00, wristwatch
worth P10,000.00 and two rings worth P10,000.00 each. As for their
expenses, Winnie said that P25,000.00 was spent for the burial lot
and P37,000.00 for the funeral services. She stated further that Espino was
51 years old at the time of his death and was earning P3,000.00 a day asa
meat vendor.9
Version of the Defense
Appellant denied any participation in the crime. He testified that at around
10:00 p.m. of September 21, 2001, he was with his girlfriend, Merlita Hilario
(Merlita). They proceeded to the house oftheir friend, Marilou Garcia
(Marilou), in Villaruel, Tayuman, Manila where they had a drinking session
which lasted until they fell asleep. They did not leave their friends house

until the following morning when they went home. Thereupon, he was told
that policemen were looking for him because his brothers got involved in an
altercation that resulted in the death of someone.10 Merlita and Marilou
corroborated appellants alibi in their respective testimonies.11
From the testimony of another defense witness, Jorna Yabut-Torres (Jorna),
wife of Ronnie, the defenses version of the incidentemerged as follows:
In the evening of September 21, 2001, Jorna and Ronnie were sharing jokes
with other vendors in Divisoria when a car stopped a few meters from their
stall. The driver alighted and asked why they were laughing. Ronnie replied
that it had nothing to do with him. The driver seemed drunk since he walked
back to his vehicle in an unsteady manner. Moments later, the driver
returned and stabbed Ronnie on the wrist with a knife. Jay saw the assault on
his brother, Ronnie, and got a bolo which he used to hack the driver
repeatedly. Thereafter, Ronnie and Jay fled.12 Ditas Biescas-Mangilya, a
vegetable vendor in Divisoria, corroborated Jornas version of the incident in
her testimony.13
Ruling of the Regional Trial Court
In its December 5, 2006 Decision,14 the RTC held that appellant could not
have committed robbery. It ratiocinated, viz:
Prosecution witness Merlito D. Macapar testified that Ronnie took the belt
bag of the deceased while Bobby and the rest took his wristwatch, ring and
necklace. However, on cross-examination, witness admitted that he did not
see who took the ring, wristwatch and necklace because as soon as the
deceased fell on the ground, accused and companions surrounded him.
Merlitos testimony was contradicted by Eduardo Umali on a vital point. Thus,
Merlito testified that there was an exchange of heated words. There was no
intimation whatsoever what the altercation was about. He was ten meters
away. No such altercation, however, took place according to Eduardo who
was barely five meters away. This tainted the testimony of Merlitoand
Eduardo with suspicion. When material witnesses contradict themselves on
vital points, the element of doubt is injected and cannot be lightly
disregarded. That was not all though. Merlito testified [that] several people
witnessed the incident. The stall of the victims daughter was about ten
meters from the crime scene, which was a few meters from the stall of
Ronnie. They both had been in their respective stalls for quite sometime. The
principal prosecution witnesses are familiar with the deceased and the
accused except for the unidentified companion as they often see them at the
vicinity. Thus, in all likelihood, accused and the victim are familiar if not know
each other very well. The perpetration of robbery at the place was thus
unlikely.

Even granting that the element of taking is present, still, accused cannot be
held liable for the complex crime of robbery with homicide for the reason
that it was not indubitably shown that the mainpurpose of the accused was
to rob the victim. To the mind of the Court, this is precisely the reason why
the prosecution skipped the utterances made by the protagonist[s] during
the attack. To sustain a [conviction] for the special complex crime of robbery
with homicide, the original criminal design of the culprit must be robbery and
the homicide is perpetrated with a view to the consummation of the robbery,
or by reason or on the occasion of the robbery (People vs. Ponciano, 204
SCRA 627).
xxxx
The crime of robbery not having been indubitably established, the accused
cannot be convicted of the special complex crime of robbery with homicide. 15
The RTC thus concluded that appellant can only be liable for the killing of
Espino. It held him guilty of murder after it found the qualifying circumstance
of abuse of superior strength, which was alleged in the Information and duly
established by the prosecution. Moreover, the RTC ruled that conspiracy
among the accused attended the crime.
Anent the civil aspect of the case, the RTC granted civil indemnity, actual and
moral damages to the heirs of Espino,but denied the claim for loss of earning
capacity for lack of documentary evidence.
The dispositive portion of the RTC Decision reads:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court finds accused
Bobby Torres y Nava, "Guilty" beyond reasonable doubt of the crime of
Murder as the qualifying circumstance of abuse of superior strength attended
the commission of the crime and hereby sentences him to suffer the penalty
of Reclusion Perpetua, to indemnify the heirs of the victim the sum
of P50,000.00, the additional sum of P50,000.00 as moral damages, actual
damages in the amount of P62,000.00 and to pay the costs.
Let alias warrant of arrest issue against accused Reynaldo Torres, Jay Torres
and Ronnie Torres.
SO ORDERED.16
Appellant filed a Motion for Reconsideration17which was denied in an
Order18 dated April 10, 2007.
Hence, appellant appealed to the CA.19

Ruling of the Court of Appeals

In modifying the ruling of the RTC, i.e., finding appellant guilty of robbery
with homicide instead of murder, the CA found that the primary intention of
appellant and his co-accusedwas to rob Espino and his killing was only
incidental to the robbery. The blocking of Espinos car and the struggle for
possession of his belt-bag after he alighted are clear manifestations of the
intent to commit robbery. The dispositive portion of the July 23, 2009
Decision20 of the CA reads as follows:
WHEREFORE, in view of foregoing, the appealed decision of the RTC Manila,
Branch 27 dated December 5, 2006 is hereby MODIFIED in that appellant is
found GUILTY beyond reasonable doubt of the crime of ROBBERY with
HOMICIDE and he is hereby sentenced to suffer the penalty of reclusion
perpetua. The trial courts award to the heirs of the victim, Jaime Espino, of
civil indemnity in the amount of P50,000.00, moral damages in the amount
of P50,000.00, and actual damages in the amount of P62,000.00 as well as
its order to appellant to pay the costs of suit, are hereby AFFIRMED.
SO ORDERED.21
Hence, this present appeal.
Assignment of Errors
Appellant imputes upon the CA the following errorsin his Supplemental
Brief.22
The acquittal of the accused-appellant in the robbery charge should be left
undisturbed as being final and executory which cannot be overturned
without violating the proscription against double jeopardy.23
The appellate court exceeded its jurisdiction when it reviewed the entire case
despite the fact that the accused-appellant only appealed his conviction for
murder.24
It was an error to convict the accused-appellant of the crimes charged
considering that his guilt was notproven beyond reasonable doubt.25
Our Ruling
The appeal is unmeritorious.
In an appeal by an accused, he waives his right not to be subject to double
jeopardy.

Appellant maintains thatthe CA erred in finding him liable for robbery with
homicide as charged in the Amended Information. He argues that his appeal
to the CA was limited to his conviction for murder and excluded his acquittal
for robbery. And by appealing his conviction for murder, he does not waive
his constitutional right not to be subject to double jeopardy for the crime of
robbery. He claims that even assuming that the RTC erred in acquitting him
of the robbery charge, such error can no longer be questioned on appeal.
We cannot give credence to appellants contentions. "An appeal in [a]
criminal case opens the entire case for review on any question including one
not raised by the parties."26 "[W]hen an accused appeals from the sentence
of the trial court, he waives the constitutional safeguard against double
jeopardy and throws the whole case open to the review of the appellate
court, which is then called upon to render such judgment as law and justice
dictate, whether favorable or unfavorable to the appellant."27 In other words,
when appellant appealed the RTCs judgment of conviction for murder, he is
deemed to have abandoned his right to invoke the prohibition on double
jeopardy since it became the duty of the appellate court to correct errors as
may be found in the appealed judgment. Thus, appellant could not have
been placed twice in jeopardy when the CA modified the ruling of the RTC by
finding him guilty of robbery with homicide as charged in the Information
instead of murder.
Appellant is guilty of the crime of robbery with homicide.
"Robbery with homicide exists when a homicide is committed either by
reason, or on occasion, of the robbery. To sustain a conviction for robbery
with homicide, the prosecution must prove the following elements: (1) the
taking of personal property belonging to another; (2) with intent togain; (3)
with the use of violence or intimidation against a person; and (4) on the
occasion or by reason of the robbery, the crime of homicide, as usedin its
generic sense, was committed. A conviction requires certitude that the
robbery is the main purpose and objective of the malefactor and the killing
ismerely incidental to the robbery. The intent to rob must precede the taking
of human life but the killing may occur before, during or after the robbery."28
In this case, the prosecution adduced proof beyond reasonable doubt that
the primary intention of appellant and his companions was to rob Espino.
Umali and Macapar, the eyewitnesses presented by the prosecution, testified
that at around 10:00 p.m. of September 21, 2001, appellants brother and
co-accused, Ronnie, blocked Espinos car at the corner of C.M. Recto Avenue
and Ylaya Street. When Espino alighted from his vehicle, Ronnie attempted
to grab his beltbag. A struggle for possession of the belt-bag ensued. It was
at this juncture that appellant and the other co-accused joined the fray and
stabbed Espino several times in the head and body. When Espino fell to the

pavement from his stab wounds, appellant, Ronnie and their cohorts got hold
of the victims wallet, beltbag, wristwatch and jewelry then fled together.29
From the foregoing, it is clear that the primordial intention of appellant and
his companions was to rob Espino. Had they primarily intended to kill Espino,
they would have immediately stabbed him to death. However, the fact that
Ronnie initially wrestled with appellant for possession of the belt-bag clearly
shows that the central aim was to commit robbery against Espino.This
intention was confirmed by the accuseds taking of Espinos belt-bag, wallet,
wrist-watch and jewelries after he was stabbed to death. The killing was
therefore merely incidental, resulting by reason oron occasion of the robbery.
The testimonies of the prosecution eyewitnesses are worthy of credence.
Appellant attempts to discredit Umali and Macapar by asserting that there
are glaring contradictions in their testimonies. He calls attention to the RTCs
observation that Macapar gave conflicting testimonies on whether he
actually witnessed who among appellant and his cohorts took Espinos
valuables after he fell to the ground. Appellant asserts further that Umalis
testimony that an altercation did not precede the commission of the crime
contradicts the testimony of Macapar that a heated exchange of words
occurred prior to the incident. He also claims that it is contrary to human
nature for Espino to alight from his car at 10:00 p.m. while in possession of a
large amount of money without fear of an impending hold-up.
We are not persuaded. The inconsistencies attributed to the prosecutions
eyewitnesses involve minor details, too trivial to adversely affect their
credibility. Said inconsistencies do not depart from the fact that these
eyewitnesses saw the robbery and the fatal stabbing of Espino by appellant
and his cohorts. "[T]o the extent that inconsistencies were in fact shown,
they appear to the Court to relate to details of peripheral significance which
do not negate or dissolve the positive identification by [Umali and Macapar
of appellant] as the perpetrator of the crime."30 "Inaccuracies may in fact
suggest that the witnesses are telling the truth and have not been
rehearsed. Witnesses are not expected to remember every single detail of an
incident with perfect or total recall."31
Moreover, it is unlikely that Espino feared alighting from his vehicle at a late
hour while in possessionof a huge amount of money since he was a vendor
doing business in the vicinity where the incident occurred. He was familiar
with the people and their activities in the premises. In view of the above, the
Court finds that the CA properly lent full credence to the testimonies of Umali
and Macapar.
The weapons are not the corpus delicti.

Appellant contends that the evidence is insufficient for his conviction since
the weapons used in the stabbing of Espino were not presented. In other
words, he asserts that it was improper to convict him because the corpus
delictihad not been established.
We disagree. "[C]orpus delictirefers to the fact of the commission of the
crime charged or to the body or substance of the crime. In its legal sense, it
does not refer to the ransom money in the crime of kidnapping for ransom or
to the body of the person murdered or, in this case, [the weapons used in
the commission of robbery with homicide]. Since the corpus delictiis the fact
of the commission of the crime, this Court has ruled that even a single
witness uncorroborated testimony, if credible may suffice to prove it and
warrant a conviction therefor. Corpus delictimay even be established by
circumstantial evidence."32
In this case, the corpus delictiwas established by the evidence on record. The
prosecution eyewitnesses testified that appellant and his cohorts used knives
to perpetrate the crime. Their testimonies on the existence and use of
weapons in committing the offense was supported by the medical findings of
Dr. Salen who conducted the post-mortem examination. Dr. Salen found that
Espino sustained several stab wounds with varying measurements which
were caused by sharp bladed instruments. Appellant is therefore mistaken in
arguing that the failure to present the weapons used in killing Espino was
fatal to the cause of the prosecution.
The defenses of denial and alibi cannot prosper.
We are in complete agreement with the RTC and the CA in finding lack of
merit in appellants defenses of denialand alibi.
Appellant claims that he was in a drinking session in his friends house in
Villaruel, Tayuman,Manila, from 10:00 p.m. of September 21, 2001 until 1:00
a.m. of the following day. He alleges to have slept atthe place and went
home at around 7:00 a.m. of September 22, 2001. According to appellant, he
did not depart from his friends house from the time they started drinking
until he went home the following morning.
Appellants alibi is unworthy of credence. Appellant himself testified that
Villaruel is less than two kilometers awayfrom Divisoria and that it would only
take a few minutes to go toDivisoria from Villaruel.33 Clearly, it was not
impossible for appellant to be physicallypresent at the crime scene during its
commission. "For alibi to prosper, it muststrictly meet the requirements of
time and place. It is not enough to prove that the accused was somewhere
else when the crime was committed, but it must also be demonstrated that it
was physically impossible for him to have been at the crime scene at the
time the crime was committed."34

The fact that appellant presented witnesses to corroborate his alibi deserves
scant consideration. Their testimonies are viewed with skepticism due to the
very nature of alibi the witnesses affirm.35 Appellant can easily fabricate an
alibi and ask relatives and friends to corroborate it.36
We have always ruled that alibi and denial are inherently weak defenses and
must be brushed aside when the prosecution has sufficiently and positively
ascertained the identity of the accused. Moreover, it is only axiomatic
thatpositive testimony prevails over negative testimony.37
The evidence was sufficient to establish the presence of abuse of superior
strength.
Appellant argues that mere superiority in numbers does not indicate the
presence of abuse of superior strength. In the samemanner, appellant claims
that the number of wounds inflicted on the victim is not the criterion for the
appreciation of this circumstance.
"There is abuse of superior strength when the offenders took advantage of
their combined strength in order to consummate the offense."38 Here,
appellant and his four companions not only took advantage of their
numerical superiority, they were also armed with knives. Espino, on the other
hand, was unarmed and defenseless. While Ronnie was wrestling with
Espino, appellant and his coaccused simultaneously assaulted the latter. The
unidentified companion locked his arm around the neck of Espino while
appellant and his co-accused stabbed and hacked him several times. While
Espino was lying defenseless on the ground, they divested him of all his
valuables. Thereafter, they immediately fled the scene of the crime.39 It is
clear that they executed the criminal act by employing physical
superiorityover Espino.

The Proper Penalty

Nonetheless, the presence of abuse of superiorstrength should not result in
qualifying the offense to murder.1wphi1When abuse of superior strength
obtains in the special complex crime of robbery with homicide, it is to be
regarded as a generic circumstance, robbery withhomicide being a
composite crime with its own definition and special penalty in the Revised
Penal Code. With the penalty of reclusion perpetuato death imposed for
committing robbery with homicide,40 "[t]he generic aggravating circumstance
of[abuse of superior strength] attending the killing of the victim qualifies the
imposition of the death penalty on [appellant]."41 In view, however, of
Republic Act No. 9346, entitled "An Act Prohibiting the Imposition of the

Death Penalty in the Philippines," the penalty that must be imposed on

appellant is reclusion perpetua without eligibility for parole.42
The Civil Liabilities
In robbery with homicide, civil indemnity and moral damages are awarded
automatically without need ofallegation and evidence other than the death
of the victim owing to the commission of the crime.43 Here, the RTC and CA
granted civil indemnity and moral damages to Espinos heirs in the amount
of P50,000.00 each. These courts were correct in granting the awards, but
the awards should have been P100,000.00 each.Recent
jurisprudence44declares that when the imposable penalty is death, the
awards of civil indemnity and moral damages shall beP100,000.00 each.
In granting compensatory damages, the prosecution must "prove the actual
amount of loss with a reasonable degree of certainty, premised upon
competent proof and the best evidence obtainable to the injured
party."45"Receipts should support claims of actual damages. Thus, as
correctly held by the [RTC] and affirmed by the CA, the amount of
[P62,000.00] incurred as funeral expenses can be sustained since these are
expenditures supported by receipts."46 The existence of one aggravating
circumstance also merits the grant of exemplary damages under Article 2230
of the New Civil Code. Pursuant to prevailing jurisprudence, we
likewiseawardP100,000.00 as exemplary damages to the victims heirs.47 An
interest at the legal rate of 6% per annum on all awards of damages from the
finality of this judgment until fully paid should likewise be granted to the
heirs of Espino.48
Lastly, the RTC did not err in refusing to award indemnity for loss of earning
capacity of Espino despite the testimony of his daughter that he
earned P3,000.00 a day as a meat dealer. "Such indemnity is not awarded in
the absence of documentary evidence except where the victim was either
self-employed or was a daily wage worker earning less than the minimum
wage under current labor laws. Since it was neither alleged nor proved that
the victim was either selfemployed or was a daily wage earner, indemnity for
loss of earning capacity cannot be awarded to the heirs of the victim."49
WHEREFORE, the July 23, 2009 Decision of the Court of Appeals in CA-G.R.
CR-H.C. No. 02925 that affirmed with modifications the December 5, 2006
Decision of the Regional Trial Court of Manila, Branch 27, in Criminal Case No.
02-200171 is AFFIRMED with further MODIFICATIONS. Appellant Bobby
Torres@ Roberto Torres y Nava is ordered to pay the heirs of the victim, Jaime
M. Espino, P100,000.00 as civil indemnity; P100,000.00 as moral damages,
and Pl00,000.00 as exemplary damages. The interest rate of 6% per annum
is imposed on all damages awarded from the finality of this Decision until
fully paid.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 207443

July 23, 2014

GENATO INVESTMENTS, INC., Petitioner,

vs.
HON. JUDGE OSCAR P. BARRIE~TOS, in his capacity as the Presiding
Judge of the Regional Trial Court, of Caloocan City, Branch 123,
EMILY .p. DIZON, in her capacity as the Branch Clerk of Court of the
Regional Trial Court of Caloocan City, Branch 123, JIMMY T. SORO,
Court Process Server of the Regional Trial Court of . Caloocan,
Branch 123, EVELINA M. GARMA, City Treasurer of Caloocan City,
PHILLIP L. YAM, Officer-in-Charge, Real Property Tax Division of the
Caloocan City Treasurer's Office, ANTHONY B. PULMANO, Officer-inCharge, City Assessor of Caloocan City, and LAVERNE REALTY &
DEVELOPMENT CORPORATION, Respondents.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari1 of the Resolution2 of the Court of
Appeals (CA) dated 27 February 2013, which denied petitioner Genato
Investment, Inc.s (petitioner) Petition3 for Annulment of Judgment against
the Orders dated 31 August 20114 and 26 April 20125 of the Regional Trial
Court of Caloocan City(RTC Caloocan) in LRC-Case No. C-5748. In the said
orders, the RTC Caloocan granted private respondent Laverne Realty &
Development Corporations (private respondent) Petition6 for the cancellation
of Transfer Certificate of Title (TCT) No. 333417 of the Register of Deeds of
Caloocan City in the name of petitioner and the issuance of a new title in the
name ofprivate respondent, and directed the issuance of a Writ of
Possession8 over the subject property in favor of private respondent.
Antecedent Facts
TCT No. 33341 is registered under the name of petitioner and covers two (2)
adjacent parcels of land, Lots Nos. 1-A and 13-B-1, situated at Rizal Avenue
Extension, Caloocan City, witha combined areaof 796.80 sq.m., with Lot No.
1-A having an area of 341.00 sq.m., and Lot No. 13-B-1 having an area of
445.80 sq.m., more orless. Together, both lots have a total assessed value
of P8,697,870.00.
On 14 October 2009, due to alleged deficiency in real property taxes due on
Lot No. 13-B-1 for the years 1993 to 2008 in the amount of P2,678,439.04,

the Office of the City Treasurer of Caloocan City sold at public auction Lot No.
13-B-1, in which private respondent emerged as the highest bidder.
The Office of the City Treasurer, through the City Treasurer of Caloocan,
Evelina M. Garma (respondent Garma), issued on 15 October 2009, a
Certificate of Sale of Delinquent Property to Purchaser9 and on 21 January
2011, a Final Deed of Conveyance10 over Lot 13-B-1 in favor of private
respondent.
Petitioner was not made aware of any of the proceedings before the Office of
the City Treasurer, as the Notice of Levy11 and Warrant of Levy12 issued by the
Office of the City Treasurer, through respondent Garma, were sent to
petitioner at an inexistent office in Tondo, Manila and were, thus, returned
unserved.13
By virtue of the above-mentioned final deed of conveyance, private
respondent on 4 May 2011 filed LRC-Case No. C-5748 with the RTC Caloocan
praying for the consolidation of the ownership of the property covered by
TCT No. 33341, the cancellation of the same TCT in the name of petitioner,
and the issuance of a new titlein the name of private respondent,
notwithstanding the fact that the delinquency sale involved only Lot No. 13B-1.14
The RTC issued an Order on 13 June 2011 setting the initial hearing on the
Petition, and directing that copiesof the said order be posted at the subject
premises and furnished petitioner.However, the records of the case,
particularly the Certificate of Posting15 dated 16 July 2011 and the Process
Server's Returns dated 13 and 16 July 201116 executed by respondent Jimmy
T. Soro (respondent Soro), the Process Server of RTC Caloocan, will show that
the order was not posted at the subject premises, and that petitioner did not
receive any such copies of the Order, as respondent Soro sought to serve the
same at the inexistent offices.
On 31 August 2011, after private respondent adduced its evidence, the RTC
Caloocan issued an Order17 granting private respondent's petition. Inasmuch
as petitioner was unaware ofthe proceedings, the same order became final
and executory. Thereafter, RTC Caloocan, upon motion18 of private
respondent, issued another Order dated 26 April 2012 directing the issuance
of a Writ of Possession in favor of private respondent. The said writ, 19 signed
by the Branch Clerk of the RTC Caloocan, respondent Emily P. Dizon
(respondent Dizon), was issued on 27 April 2012.

Petitioner learned of the auction saleonly after 9 May 2012, when the Sheriff
of the RTC Caloocan, respondent Renebert B. Baloloy (respondent Baloloy),
left a Notice to Vacate20 in the subject premises. Petitioner claimed that it
was very much surprised at the auction sale of Lot 13-B-1 because it had
been religiously paying its real property taxes thereon up to 2012. In fact, it
had in its possession a Certification21 dated 19 September 2011 issued by
the Office of the City Treasurer of Caloocan, through its OIC Land Tax
Division, respondent PhillipL. Yam (respondent Yam), stating that the real
property taxes due on Lots 1-A and 13-B-1, with a combined assessed value
of P8,697,870.00, up to the 4th quarter of 2011, have been duly paid by
petitioner.
Notwithstanding the representations made by petitioner with the RTC
Caloocan22 and Office of the City Treasurer, Baloloy, proceeded to implement
the Writ of Possession on 15May 2012 over both Lots Nos. 1-A and 13-B-1
and their improvements. As a result thereof, private respondent wrested
physical possession of the entire property covered by TCT No. 33341 from
petitioner.
Feeling aggrieved, petitioner filed with the CA a Petition for Certiorari23 under
Rule 65 of the Rules ofCourt, but later withdrew24 the same, reasoning that
the withdrawal would enable it to comply with the rules on forum shopping.
The CA granted petitioners prayer to withdraw.25
On 14 January 2013, petitioner, filed with the CA a Petition for Annulment of
Judgment praying, among others, for the annulment and setting aside of the
Orders dated 31 August 2011 and 26 April 2012 and the Writ of Possession
issued by the RTC Caloocan. Petitioner likewise prayed that the CA direct
private respondentto vacate the property and surrender possession thereof
to petitioner.
Ruling of the Court of Appeals
On 27 February 2013, the CA issued a Resolution26 dismissing CA G.R. SP No.
128187 on the ground that the Petition for Annulment of Judgment that
petitioner filed is not the proper remedy, as it had other available remedies
to question the Orders of the RTC Caloocan. Citing Estate of the late
Mercedes Jacob v. Court of Appeals27 the CA, stated that where the land
subject of the case was already registered in the name of the buyer in the
auction sale, the proper remedy to annul said transfer was to file an action
for reconveyance on the ground of fraud. The CA added that the Petition for

Certioraripetitioner had earlier filed but later withdrew showed that other
remedies were available to petitioner. The CA, likewise, denied petitioner's
motion for reconsideration.28
Hence, this Petition.
Our Ruling
Petitioner questions the dismissal by the CA in CA-G.R. SP No. 128187, and
contends that:
a. Under the particular factual circumstances surrounding this case, a
petition for annulment of judgment is the only and appropriate remedy
of petitioner to question the Orders of the RTC Caloocan, which allowed
private respondent to consolidate ownership and take possession of
the property covered by TCT No. 33341; and
b. All the requisite elements for the filing of a petition for annulment of
judgment on the groundsof extrinsic fraud, lack of jurisdiction, and
want of due process, are present in this case.
We grant the Petition.
We first tackle the procedural issue. Based on the records of this case, it is
undisputed that the Order of the RTC Caloocan dated 31 August 2011
became final and executory on 11 October 2011, when the latter issued an
Entry of Judgment for the same. The general rule isthat a final and executory
judgment can no longer be disturbed, altered, or modified in any respect,
and that nothing further can be done but to execute it. A final and executory
decision may, however, be invalidated via a Petition for Relief or a Petition to
Annul the same under Rules 38 or 47, respectively, of the Rules of Court.29
Under Rule 38, when a judgment or final order is entered, or any other
proceeding is thereafter taken against a party in any court through fraud,
accident, mistake, or excusable negligence, he may file a petition in such
court and in the same case praying thatthe judgment, order or proceeding be
set aside. The verified petition must be filed within sixty (60) days after the
petitioner learns of the judgment, final order, or other proceeding to be set
aside, and not more than six (6) months after such judgment or final order
was entered. However, it is uncontested that petitioner learned about the
proceedings in LRC-Case No. C-5748 more than six (6) months after the

Order dated 31 August 2011 had become final and executory on 11 October
2011. Thus, this remedy under Rule 38 of the Rules of Court was clearly
unavailing.
Thus, the only remedy leftto petitioner in this case is a petition for annulment
of judgment under Rule 47, which it, in fact, filed.
The principle we laid down in Estate of the late Mercedes Jacob v. Court of
Appeals is not applicable. We disagree with the reasoning of the CA and
respondents that petitioner in this particular case should have filed either an
action for reconveyance or annulment of the auction sale, because to do so
would have required the court hearing the action to modify or interfere with
the judgment or order of another co-equal court, especially in this case
where the said judgment ororder had attained finality. Wellentrenched in our
jurisdiction is the doctrine that a court has no power to do so, as that action
may lead to confusion and seriously hinder the administration of justice.30
We have repeatedly ruled that a Petition for Annulment of Judgment under
Rule 47 of the Rules of Court is a remedy granted only under exceptional
circumstances where a party,without fault on his part, has failed to avail of
the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies. The same petition is not available as a substitute for a
remedy which was lost due to the partys own neglect in promptly availing of
the same.31 There is here no attempted substitution; annulment of judgment
is the only remedy available to petitioner.
Regarding the previous filing of a Petition for Certiorariunder Rule 65 such is
of no moment as petitioner timely withdrew the same before any relief could
be afforded by the CA.
We now proceed to the substantive and more pressing issue.1wphi1 We
agree with the position of petitioner thatall the requisite elements for the
filing of a petition for annulment of judgment on the grounds of extrinsic
fraud, lack of jurisdiction, and want of due process, are present in this case.
It should be stressed that petitioner instituted the case before the CA
precisely to seek relief from the declaration of nullity of TCT No. 33341,
which had been issued without first giving petitioner an opportunity to be
heard.

In Castigador v. Nicolas,32 we had the occasion to state that: The petition

filed with the CA contained the following allegations, among others: (1) the
auction sale of the land is null and void for lack of actual and personal notice
to herein petitioner; (2) the RTC did not comply with the procedure
prescribed in Section 71, Presidential Decree No. 1529 requiring notice by
the Register of Deeds to the registered owner as to the issuance of a
certificate of sale; and (3) petitioner was not afforded due process when she
was not notified ofthe proceedings instituted by respondent for the
cancellation of her title. The petition need not categorically state the exact
words extrinsic fraud; rather, the allegations in the petition should be so
crafted to easily point out the ground on which it was based. The allegations
in the petition filed with the CA sufficiently identify the ground upon which
the petition was based - extrinsic fraud. Fraud is extrinsic where it prevents a
party from having a trial or from presenting his entire case to the court, or
where it operates upon matters pertaining not to the judgment itself but to
the manner in which it is procured. The overriding consideration when
extrinsic fraud is alleged is that the fraudulent schemeof the prevailing
litigant prevented a party from having his day in court. The allegations
clearly charged the RTC and respondent with depriving petitioner of the
opportunity to oppose the auction sale and the cancellation of her title and
ventilate her side. This allegation, if true, constitutes extrinsic fraud.
Petitioner not only puts in question the complete lack of due process in the
conduct of the auction sale and the proceedings before the RTC Caloocan,
but the absolute lack of basis for the declaration by the Office of the City
Treasurer that it had been delinquent in the payment of real property taxes
due on its property, particularly Lot 13-B-1.
Technicalities aside, we are particularly alarmed by the material allegations
and serious charges brought up by petitioner in its pleadings, which go into
the very core of the action for annulment of judgment and, more importantly,
which noneof the respondents dispute.
Petitioner fully paid its real estate taxes due on Lot 13-B-1.
Petitioner confronts respondents with copies of its Real Property Tax
Receipts33 issued by the Office of the City Treasurer of the City of Caloocan
spanning the period from 2000 to 2012,as well as the Payment History34 from
1995 to 2011 evidencing full payment ofreal property taxes due on its land,
whose assessed value was adjusted in 2005 to P8,697,870.00.

Petitioner likewise confronts respondents with the Certification35 dated 19

September 2011 issued by the Office of the City Treasurer of Caloocan,
through its OIC Land Tax Division, respondent Yam, certifying that the real
property taxes due on Lots 1-A and 13-B-1, with an assessed value
of P8,697,870.00, up to the 4th quarter of 2011, and previous years, have
been duly paid by petitioner.
We note that respondents, particularly respondents Garma and Yam, the City
Treasurer and the OIC Land Tax Division, have been inexplicably silent as
regards all that petitioner presented for our consideration.
Multiple Tax Declarations refer to one and the same property.
Petitioner alleges and brings to our attention the matter that it religiously
paid in full itsreal property taxes due on its land, Lots Nos. 1-A and 13-B-1,
with an assessed value ofP8,697,870.00, under a single tax declaration
issued by the Office ofthe City Assessor of Caloocan,36 no. D12-109-00012-C
under Property Index No. 113-12-109-01-013, as certified by the OIC City
Assessor, respondent Anthony L. Pulmano (respondent Pulmano).37
The alleged delinquency of petitioner in its real property taxes and the basis
for the auction sale stemmed from the supposed non-payment of real
property taxes due on Lot 13-B-1, with an assessed value of P4,866,350.00
covered by another tax declaration,38 D12-109-00013-C under Property Index
No. 113-12-109-01-014.
Shortly before private respondent took over the property of petitioner in
2012, the Office of the City Assessor, through respondent Pulmano, issued
yet another tax declaration, no. 12-109-00153-12-C under Property Index No.
113-12-109-01-013, this time covering only Lot No. 1-A, with an assessed
value of P3,831,520.00. Thisnew issuance cancelled petitioners originalTax
Declaration No. D12-109-00012-C under Property Index No. 113-12-109-01013, which previously covered both Lots Nos. 1-A and 13-B-1.
As petitioner duly points out,39 a simple mathematical application would
show that if the assessed values in the 2nd and 3rd tax declarations were
added, P4,866,350.00 and P3,831,520.00, the same would amount
toP8,697,870.00, the assessed value of the property as indicated in the
original tax declaration.

Therefore, if all the tax declarations issued by respondent Pulmano refer to

one and the same property of petitioner, and the latter fully paid all its realty
taxes due on the same, thenit would follow that the finding of delinquency
did not have any basis.
We note that respondent Pulmano, much like respondents Garma and Yam,
has been inexplicably silent as regards the foregoing.
Private respondent took possession ofboth Lots Nos. 1-A and 13-B-1.
Notwithstanding the foregoing serious anomalies attending the delinquency
sale, petitioner, again, confronts respondents, particularly public respondents
Judge Oscar P. Barrientos,Dizon and Baloloy, as well as private respondent,
with the charge thatthe latter, with the assistance of respondent Baloloy,
forcibly ejected petitioner from the whole property, even if it was only Lot 13B-1 that was the subject of the writ of possession.
Again, none of the respondents contested this claim.
It certainly is unallowable that petitioner be deprived of his property, or a
portion thereof, without any lawful court order or process. We take into
consideration the previous actions ofprivate respondent, which as again
pointed out by petitioner, appear to indicate that it was the intention of
private respondent all along to gain possession over both lots covered by
TCT No. 33341. We are called upon to read the foregoing act of deprivation in
totality with the other actions of respondents,which none of them deny,
despite being given ample opportunity to do so. It would have beena simple
matter for respondents to refute the allegations of petitioner and aver that
the evidence presented by petitioner to prove full payment of real property
taxes do not refer to the same property subject of the auction sale; or that
the tax declarations refer to different properties owned by petitioner, and not
those subject of this case; or that respondent Baloloy neither implemented
the writ of possession over, nor did private respondent take possession of Lot
No. 1-A. Instead, respondents Garma and Yam, in their Comment, 40 make no
factual declarations and curiously limit their allegations to a purely
procedural standpoint that petitioner should have pursued an action for
reconveyance of the property, a point wehave already resolved. Respondent
Pulmano, for his part, alleged in his Manifestation41 that he chose not to file
any comment to the Petition, despite ourexpress directive in Our Resolution
dated 24 July 2013 requiring all the respondents to comment in the petition.
Respondent Pulmano went so far as toimpose his own condition on us, that

he shall file his Comment in the event that we give due course to the
petition.
Indeed, it is evident that respondents have chosen, by their complete and
palpable silence on the substantive matter, to merely rely on the
presumption of regularity in the performance of official duties.42
As a general rule, we have time and again stated that we are not a trier of
facts. However, such rule is subject to several recognized exceptions:43
(1) When the findings are grounded entirely on speculation, surmises
and conjectures;
(2) When the inference made is manifestly mistaken, absurd or
impossible;
(3) When there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When in making its findings the Court of Appeals went beyond the
issues of the case, or its findings are contrary to the admissions of both
appellant and appellee;
(7) When the findings are contraryto those of the trial court;
(8) When the findings of fact are conclusions without citation of specific
evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence
on record.
(11) When the Court ofAppeals manifestly overlooked certain relevant
facts not disputed by the parties,which, if properly considered, would
justify a different conclusion. (Emphasis and underscoring supplied)

In this case, we stress that the factual allegations in the petition, showing
that petitioner fully paid its real property taxes on Lot No. 13-B-1 until 2011,
were not refuted by any of the respondents. Further, petitioner presented
more than sufficient evidence to support the said factual allegations. This
failure of respondents to refute such claim affords us the opportunity to go
over the factual antecedents to aid us in the resolution of this case. In the
face of overwhelming evidence, respondents reliance on the presumption of
regularity in the performance by publicrespondents of their official duties
must fail. The presumption of regularity is a disputable presumption under
Rule 131 of the Rules of Court, which may be rebutted by affirmative
evidence.44
As mentioned above, the Notice of Levy and Warrant of Levy, were sent to an
inexistent office of petitioner at Tondo, Manila and were, thus, returned
unserved. Further, the Order dated 13 June 2011, setting the initial hearing
on the petition, was neither posted nor properly served upon petitioner.
Clearly, petitioner was deprived of its property without due process of law.
Inasmuch as it had sufficiently shown that it fully paid its real estate taxes up
to 2011, there was no basis to collect any tax liability, and no obligation
arose on the part of petitioner to pay the amount of real property taxes
sought to be collected. Consequently, petitioner should not have been
declared delinquent in the payment of the said taxes to Caloocan City, and
the latter did not acquire any right to sell Lot 13-B-1 in a public auction.
Besides, it appears that private respondent acted hastily in filing LRC-Case
No. C-5748 by failing to ascertain the actual principal office of petitioner to
enable the RTC Caloocan to properly acquire jurisdiction over the person of
petitioner.
Considering the foregoing, private respon~ent did not acquire any valid right
to petition the RTC Caloocan for the cancellation of TCT No. 33341 and, more
importantly, take possession of Lot 13-B-1, much less Lot 1-A. We reiterate
the principle that strict adherence to the statutes governing tax sales is
imperative, not only for the protection of the taxpayers, but also to allay any
possible suspicion of collusion between the buyer and the public officials
called upon to enforce the laws.45
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of
Appeals dated 27 February 2013 and 30 May 2013 in CA-G.R. SP No. 128187
are SET ASIDE. Necessarily, the Orders dated 31 August 2011, 26 April 2012

and 19 November 2012, and the Writ of Possession dated 27 April 2012 in
LRC Case No. C-5748, are all vacated.
SO ORDERED.