G.R. No.

152496 July 30, 2009 A Supplemental Motion to Dismiss and Reply to the Comment on the
Motion to Dismiss10 dated November 13, 2000 was filed by respondents,
SPOUSES GERMAN ANUNCIACION and ANA FERMA alleging an additional ground that petitioners failed to pay the required
ANUNCIACION and GAVINO G. CONEJOS, Petitioners, filing fee. The petitioners filed, on November 27, 2000, their Opposition
vs. to the Supplemental Motion to Dismiss and Comment to the Reply to the
PERPETUA M. BOCANEGRA and GEORGE M. Comment on the Motion to Dismiss.11
BOCANEGRA, Respondents.
Thereafter, respondents filed a Second Supplemental Motion to Dismiss
DECISION and Manifestation dated November 27, 2000,12 citing the following
grounds:
LEONARDO-DE CASTRO, J.:
1.) That the court has no jurisdiction over the person of the
defending party.
This is a petition for review on certiorari, assailing the Decision,1 dated
November 19, 2001, and the Resolution,2dated March 31, 2002 of the
Court of Appeals (CA) in CA-G.R. SP No. 65516. The CA decision 2.) That the court has no jurisdiction over the subject matter of
affirmed the Orders dated February 19, 2001 3 and May 16, 20014 of the the claim.
Regional Trial Court (RTC) of Manila, Branch 40 in Civil Case No. 00-
98813 which dismissed the complaint5 for Quieting of Title and 3.) That the pleading asserting the claim states no cause of
Cancellation of TCT No. 122452 of petitioner spouses German action.
Anunciacion and Ana Ferma Anunciacion and their co-petitioner, Gavino
G. Conejos. Petitioners then filed their Additional Comment on the Motion to
Dismiss, Supplemental Motion to Dismiss and Comment on the Second
The facts of the case are as follows: Supplemental Motion to Dismiss.13

On September 29, 2000, petitioners filed before the RTC, Manila, a
complaint for Quieting of Title and Cancellation of TCT No. 122452,
docketed as Civil Case No. 00-98813. The complaint averred that
defendants (respondents) may be served with summons and legal
processes through Atty. Rogelio G. Pizarro, Jr., with office address at
2830 Juan Luna St., Tondo, Manila.6 The summons, together with the
copies of the complaint, were then served on Atty. Pizarro. The record
shows that before the filing of the said complaint, Atty. Pizarro wrote a
demand letter7 on behalf of respondents and addressed to petitioner
German Anunciacion, among others, demanding that they vacate the land
owned by his clients (respondents), who needed the same for their own
use. The said demand letter reads:
2830 Juan Luna St.Tondo, Manila
August 19, 2000
Mr. German Anunciacion, Mesdames
Liwayway Nava, Evangeline Pineda,
and Ana Ferma
2982 Rizal Ave. Ext.
Sta. Cruz, Manila
Dear Sir and Mesdames:
I write in behalf of my clients, MS. PERPETUA M. BOCANEGRA and
MR. GEORGE M. BOCANEGRA, the registered owners of the parcel of
land known as Lot 1-B (LRC) PSD-230517 located at 2982 Rizal Ave.
Ext., Sta. Cruz, Manila, and duly covered by Transfer Certificate of Title
No. 122452, which you are presently occupying.
I would like to inform you that your occupation and possession of the
said land is based on mere tolerance of the owners, and without any
payment on your part of any rental. Now, the owners need the subject
property for their own use.
In view thereof, I hereby demand that you vacate the said land within a
period of fifteen (15) days from receipt of this letter. Otherwise, much to
our regret, I shall be constrained to institute the proper criminal and/or
civil action against you.
Trusting that you will give this matter your most serious and preferential
attention.
Very truly yours,
ATTY. ROGELIO G. PIZARRO, JR.
On October 27, 2000, respondents, through their counsel, Atty. Norby C.
Caparas, Jr., filed a Motion to Dismiss8 on the ground that the complaint
stated no cause of action. Petitioners filed their Comment on the Motion
to Dismiss9on November 6, 2000.
In its order of February 19, 2001, the trial court sustained the respondents
and dismissed the complaint for lack of jurisdiction over the persons of
respondents as defendants.lavvph!l The trial court ruled as follows:
However, the Court finds for the defendants on the Second Supplemental
Motion.
In point is Section 3, Rule 3 of the same Rules, which reads –
"Where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the beneficiary
shall be included in the title of the case and shall be deemed to be the real
party in interest. A representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party authorized by law or
these Rules. x x x x"
In the case at bar Atty. Pizarro, Jr., has not been shown to be a trustee of
an express trust, a guardian, or any of the above for the action to be
allowed to be defended by a representative.
The fact that Atty. Pizarro, Jr., was the lawyer of the defendants in the
demand letters do not per se make him their representative for purposes
of the present action. To this effect, service on lawyer of defendant is an
invalid service of summons. (Cordova v. Provincial Sheriff of Iloilo, 89
SCRA 59)
Going to the other raised issue, Section 20, Rule 14 of the 1997 Rules of
Civil Procedure provides –
"The defendant’s voluntary appearance in the action shall be equivalent
to service of summons. The inclusion in a motion to dismiss of other
grounds aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance."
The presentation of all objections then available as was done by the
movants subserves the omnibus motion rule and the concomitant policy
against multiplicity of suits.1awphi1
WHEREFORE, premises considered, on the ground that the Court has no
jurisdiction over the persons of the defendants, the case is hereby
DISMISSED.
The motion for reconsideration filed by the petitioners was denied for
lack of merit.
Aggrieved, petitioners filed before the CA a Petition for Certiorari,
seeking the nullification of the RTC Orders dated February 19, 2001 and
May 16, 2001, on the ground that the said orders were issued with grave
abuse of discretion.
On November 19, 2001, the CA dismissed the petition upon finding that
there was no waiver of the ground of lack of jurisdiction on the part of
respondents in the form of voluntary appearance. Applying Section 20,

1
Rule 14 of the 1997 Rules of Civil Procedure, the CA held that although
the grounds alleged in the two (2) earlier Motion to Dismiss and
Supplemental Motion to Dismiss were lack of cause of action and failure
to pay the required filing fee, the filing of the said motions did not
constitute a waiver of the ground of lack of jurisdiction on their persons
as defendants. The CA then concluded that there was no voluntary
appearance on the part of respondents/defendants despite the filing of the
aforesaid motions. The CA also rejected petitioners’ contention that the
service made to Atty. Rogelio Pizarro, Jr. was deemed service upon
respondents/defendants, thus:
First of all, Atty. Rogelio Pizarro cannot be considered as counsel of
record wherein We could apply the jurisprudential rule that notice to
counsel is notice to client. Atty. Pizarro cannot be deemed counsel on
record since Defendants were not the one’s (sic) who instituted the action,
like plaintiffs who did the same thru counsel and therefore, obviously the
one who signed the pleadings is the counsel on record. Sadly, the Motion
to Dismiss filed by Private Respondents were signed not by Atty. Pizarro
but by someone else. How then could Petitioners claim that Atty. Pizarro
represents Private Respondents?
Secondly, the fact that Atty. Pizarro was the one who wrote and signed
the August 19, 2000 letter, on behalf of Private Respondents, demanding
that Petitioners vacate the premises of the former’s land does not fall
under the substituted service rule. To be sure, Section 7 of Rule 14 of the
1997 Rules, provide thus:
Sec. 7. Substituted Services – If, for justifiable causes the defendant
cannot be served within a reasonable time as provided in the preceding
section; service maybe reflected (a) by leaving copies of the summons at
the defendants’ residence with some person of suitable age and discretion
then residing therein or (b) by leaving the copies at defendant (sic) office
or regular place of business with some competent person in charge
thereof.
In the case at bench, service upon Atty. Pizarro did not fall under the
aforequoted rule and therefore cannot qualify as substituted service.
Since the service made by Petitioners was defective, the Public
Respondent court never did acquire jurisdiction over the persons of
defendants and therefore correctly ordered the dismissal of the
complaint.14
Petitioners moved for a reconsideration of the decision but it, too, was
denied by the CA in its Resolution of March 31, 2002.
Hence, the instant petition which raises the following assignment of
errors:
1. THAT THE HONORABLE COURT OF APPEALS ERRED ACTED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT
DID NOT CONSIDER THAT THE FILING OF THE MOTION TO
DISMISS AND THE SUPPLEMENTAL MOTION TO DISMISS BY
RESPONDENTS AMOUNTS TO VOLUNTARY APPEARANCE
BEFORE THE REGIONAL TRIAL COURT AND THEREFORE
CONFERS JURISDICTION OF THE REGIONAL TRIAL COURT ON
THE PERSON OF RESPONDENTS.
2. THAT THE HONORABLE COURT OF APPEALS ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT DID
NOT CONSIDER THAT THE SECOND SUPPLEMENTAL MOTION
ALLEGING THAT THE HONORABLE TRIAL COURT HAD NO
JURISDICTION OF THE PERSONS OF THE DEFENDANTS IS
ALREADY LATE FOR THE FIRST MOTIONS, NAMELY, THE
"MOTION TO DISMISS" AND THE "SUPPLEMENTAL MOTION
TO DISMISS AND REPLY TO THE COMMENT TO THE MOTION
TO DISMISS", WHICH HAD BEEN OPPOSSED, ONE AFTER THE
OTHER, BY PETITIONERS, HAD ALREADY CONFERRED
JURISDICTION OF THE HONORABLE TRIAL COURT ON THE
PERSONS OF DEFENDANTS.
3. THAT THE HONORABLE COURT OF APPEALS ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT CONSIDERED THAT THESE
3 MOTIONS OF RESPONDENTS ARE BEING TREATED AS
OMNIBUS MOTION AND ARE COVERED BY SECTION 20 RULE
14 OF THE 1997 RULES ON CIVIL PROCEDURE.
4. THAT THE HONORABLE COURT OF APPEALS ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT DID NOT CONSIDER ATTY. ROGELIO
PIZARRO, JR., AS THE AUTHORIZED REPRESENTATIVE OF
RESPONDENT TO RECEIVE THE SUMMONS AND COMPLAINT.
In the Resolution dated July 14, 2003, the Court gave due course to the
petition and required the parties to submit their respective memoranda.
In compliance, the respondents filed their Memorandum on September 8,
2003,15while the petitioners filed their Memorandum on September 24,
2003.16
We find merit in the petition.
While it is a settled doctrine that findings of fact of the CA are binding
and not to be disturbed, they are subject to certain exceptions for very
compelling reasons, such as when: (1) the conclusion is a finding
grounded entirely on speculation, surmise and conjecture; (2) the
inference made is manifestly mistaken; (3) there is grave abuse of
discretion; (4) the judgment is based on a misapprehension of facts; (5)
the findings of fact of the CA are contrary to those of the trial court; (6)
said findings of fact are conclusions without citation of specific evidence
on which they are based; and (7) the findings of fact of the CA are
premised on the supposed absence of evidence and contradicted by the
evidence on record.17 The Court finds here cogent reason to take
exception from the general rule.
Respondents, through counsel, filed a motion to dismiss dated October
25, 2000,18 with only one ground, i.e., that the pleading asserting the
claim "states no cause of action." Under this ground, respondents raised
the issues quoted hereunder:
I. Defendants19 anchored their complaint on a WRONG Decree
of Registration;
II. The Government of the Republic of the Philippines has
recognized the authenticity of TCT No. 122452; and
III. Plaintiffs do NOT have the legal personality to ‘quiet the
title’ of the subject property.
Section 20, Rule 14 of the 1997 Rules of Civil Procedure (the Rules)
states:
Sec. 20. Voluntary Appearance – The defendant’s voluntary appearance
in the action shall be equivalent to service of summons. The inclusion in
a motion to dismiss of other grounds aside from lack of jurisdiction over
the person of the defendant shall not be deemed a voluntary appearance.
(Underscoring ours)
The filing of the above-mentioned Motion to Dismiss, without invoking
the lack of jurisdiction over the person of the respondents, is deemed a
voluntary appearance on the part of the respondents under the
aforequoted provision of the Rules. The same conclusion can be drawn
from the filing of the Supplemental Motion to Dismiss and Reply to the
Comment on the Motion to Dismiss dated November 13, 2000 which
alleged, as an additional ground for the dismissal of petitioners’
complaint, the failure of plaintiffs to pay the required filing fee again but
failed to raise the alleged lack of jurisdiction of the court over the person
of the respondents.
It was only in respondents’ Second Supplemental Motion to Dismiss
dated November 27, 2000 that respondents for the first time raised the
court’s lack of jurisdiction over their person as defendants on the ground
that summons were allegedly not properly served upon them. The filing
of the said Second Supplemental Motion to Dismiss did not divest the
court of its jurisdiction over the person of the respondents who had earlier
voluntarily appeared before the trial court by filing their motion to
dismiss and the supplemental motion to dismiss.lavvph!l The dismissal
of the complaint on the ground of lack of jurisdiction over the person of
the respondents after they had voluntarily appeared before the trial court
clearly constitutes grave abuse of discretion amounting to lack of
jurisdiction or in excess of jurisdiction on the part of the RTC.
Quite apart from their voluntary appearance, respondents’ Supplemental
Motion to Dismiss and Second Supplemental Motion to Dismiss were
clearly in violation of Rule 15, Section 8 in relation to Rule 9, Section 1
of the Rules.
2
Rule 15, Section 8 of the Rules provides:
Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule
9, a motion attacking a pleading, order, judgment, or proceeding shall
include all objections then available, and all objections not so included
shall be deemed waived. (emphasis ours)
Rule 9, Section 1, in turn, states:
Sec. 1. Defenses and objections not pleaded. – Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed
waived. However, when it appears from the pleadings or the evidence on
record that the court has no jurisdiction over the subject matter, that there
is another action pending between the same parties for the same cause, or
that the action is barred by prior judgment or by statute of limitations, the
court shall dismiss the claim. (emphasis ours)
Applying the foregoing rules, respondents’ failure to raise the alleged
lack of jurisdiction over their persons in their very first motion to dismiss
was fatal to their cause. They are already deemed to have waived that
particular ground for dismissal of the complaint. The trial court plainly
abused its discretion when it dismissed the complaint on the ground of
lack of jurisdiction over the person of the defendants. Under the Rules,
the only grounds the court could take cognizance of, even if not pleaded
in the motion to dismiss or answer, are: (a) lack of jurisdiction over the
subject matter; (b) existence of another action pending between the same
parties for the same cause; and (c) bar by prior judgment or by statute of
limitations.
We likewise cannot approve the trial court’s act of entertaining
supplemental motions to dismiss which raise grounds that are already
deemed waived. To do so would encourage lawyers and litigants to file
piecemeal objections to a complaint in order to delay or frustrate the
prosecution of the plaintiff’s cause of action.
Although the CA correctly observed that Atty. Pizarro, as the lawyer of
the respondents in the demand letters, does not per se make him their
representative for purposes of the present action, a scrutiny of the record
shows that the address of Atty. Pizarro and Atty. Norby Caparas, Jr., (the
counsel who eventually entered his appearance for respondents) is the
same. This circumstance leads us to believe that respondents’ belated
reliance on the purported improper service of summons is a mere
afterthought, if not a bad faith ploy to avoid answering the
complaint.1avvphi1
At this point, we find it appropriate to cite Philippine American Life &
General Insurance Company v. Breva,20 where this Court held that:
The trial court did not commit grave abuse of discretion when it denied
the motion to dismiss filed by the petitioner due to lack of jurisdiction
over its person. In denying the motion to dismiss, the CA correctly relied
on the ruling in Lingner & Fisher GMBH vs. Intermediate Appellate
Court, thus:
A case should not be dismissed simply because an original summons was
wrongfully served. It should be difficult to conceive, for example, that
when a defendant personally appears before a Court complaining that he
had not been validly summoned, that the case filed against him should be
dismissed. An alias summons can be actually served on said defendant
In the recent case of Teh vs. Court of Appeals, the petitioner therein also
filed a motion to dismiss before filing his answer as defendant in the trial
court on the ground of failure to serve the summons on him. In that case,
the Court agreed with the appellate court's ruling that there was no abuse
of discretion on the part of the trial court when the latter denied the
petitioner's motion to dismiss the complaint and ordered the issuance of
an alias summons.
To be sure, a trial court should be cautious before dismissing complaints
on the sole ground of improper service of summons considering that it is
well within its discretion to order the issuance and service of alias
summons on the correct person in the interest of substantial justice.
Accordingly, the Court finds that the CA erred in dismissing the petition
and affirming the challenged orders of the RTC which dismissed the
complaint on the ground of lack of jurisdiction over the person of the
respondents who were the defendants.
WHEREFORE, the petition is hereby GRANTED. The CA’s Decision
dated November 19, 2001 and the Resolution dated March 31, 2002 in
CA-G.R. SP No. 65516 affirming the Orders dated February 19, 2001
and May 16, 2001 of the RTC in Civil Case No. 00-98813 are reversed
and set aside. Consequently, Civil Case No. 00-98813 is hereby ordered
REINSTATED. Let the records of this case be remanded to the court of
origin for further proceedings.
SO ORDERED.
G.R. No. 160895 October 30, 2006
JOSE R. MARTINEZ, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
TINGA, J.:
The central issue presented in this Petition for Review is whether an order
of general default issued by a trial court in a land registration case bars
the Republic of the Philippines, through the Office of the Solicitor
General, from interposing an appeal from the trial court’s subsequent
decision in favor of the applicant.
The antecedent facts follow.
On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a
petition for the registration in his name of three (3) parcels of land
included in the Cortes, Surigao del Sur Cadastre. The lots, individually
identified as Lot No. 464-A, Lot No. 464-B, and Lot No. 370, Cad No.
597, collectively comprised around 3,700 square meters. Martinez
alleged that he had purchased lots in 1952 from his uncle, whose
predecessors-in-interest were traceable up to the 1870s. It was claimed
that Martinez had remained in continuous possession of the lots; that the
lots had remained unencumbered; and that they became private property
through prescription pursuant to Section 48(b) of Commonwealth Act
No. 141. Martinez further claimed that he had been constrained to initiate
the proceedings because the Director of the Land Management Services
had failed to do so despite the completion of the cadastral survey of
Cortes, Surigao del Sur.1
The case was docketed as Land Registration Case No. N-30 and raffled
to the Regional Trial Court (RTC) of Surigao del Sur, Branch 27. The
Office of the Solicitor General (OSG) was furnished a copy of the
petition. The trial court set the case for hearing and directed the
publication of the corresponding Notice of Hearing in the Official
Gazette. On 30 September 1999, the OSG, in behalf of the Republic of
the Philippines, opposed the petition on the grounds that appellee’s
possession was not in accordance with Section 48(b) of Commonwealth
Act No. 141; that his muniments of title were insufficient to prove bona-
fide acquisition and possession of the subject parcels; and that the
properties formed part of the public domain and thus not susceptible to
private appropriation.2
Despite the opposition filed by the OSG, the RTC issued an order of
general default, even against the Republic of the Philippines, on 29 March
2000. This ensued when during the hearing of even date, no party
appeared before the Court to oppose Martinez’s petition.3
Afterwards, the trial court proceeded to receive Martinez’s oral and
documentary evidence in support of his petition. On 1 August 2000, the
RTC rendered a Decision4 concluding that Martinez and his
predecessors-in-interest had been for over 100 years in possession
characterized as continuous, open, public, and in the concept of an owner.
The RTC thus decreed the registration of the three (3) lots in the name of
Martinez.
From this Decision, the OSG filed a Notice of Appeal dated 28 August
2000,5 which was approved by the RTC. However, after the records had
been transmitted to the Court of Appeals, the RTC received a letter dated
3
21 February 20016 from the Land Registration Authority (LRA) stating
that only Lot Nos. 464-A and 464-B were referred to in the Notice of
Hearing published in the Official Gazette; and that Lot No. 370, Cad No.
597 had been deliberately omitted due to the lack of an approved survey
plan for that property. Accordingly, the LRA manifested that this lot
should not have been adjudicated to Martinez for lack of jurisdiction.
This letter was referred by the RTC to the Court of Appeals for
appropriate action.7
On 10 October 2003, the Court of Appeals promulgated the assailed
Decision,8 reversing the RTC and instead ordering the dismissal of the
petition for registration. In light of the opposition filed by the OSG, the
appellate court found the evidence presented by Martinez as insufficient
to support the registration of the subject lots. The Court of Appeals
concluded that the oral evidence presented by Martinez merely consisted
of general declarations of ownership, without alluding to specific acts of
ownership performed by him or his predecessors-in-interest. It likewise
debunked the documentary evidence presented by Martinez, adjudging
the same as either inadmissible or ineffective to establish proof of
ownership.
No motion for reconsideration appears to have been filed with the Court
of Appeals by Martinez, who instead directly assailed its Decision before
this Court through the present petition.
We cannot help but observe that the petition, eight (8) pages in all, was
apparently prepared with all deliberate effort to attain nothing more but
the perfunctory. The arguments raised center almost exclusively on the
claim that the OSG no longer had personality to oppose the petition, or
appeal its allowance by the RTC, following the order of general default.
Starkly put, "the [OSG] has no personality to raise any issue at all under
the circumstances pointed out hereinabove."9 Otherwise, it is content in
alleging that "[Martinez] presented sufficient and persuasive proof to
substantiate the fact that his title to Lot Nos. 464-A and 464-B is worth
the confirmation he seeks to be done in this registration case"; 10 and that
the RTC had since issued a new Order dated 1 September 2003,
confirming Martinez’s title over Lot No. 370.
In its Comment dated 24 May 2004,11 the OSG raises several substantial
points, including the fact that it had duly opposed Martinez’s application
for registration before the RTC; that jurisprudence and the Rules of Court
acknowledge that a party in default is not precluded from appealing the
unfavorable judgment; that the RTC had no jurisdiction over Lot No. 370
since its technical description was not published in the Official Gazette;
and that as found by the Court of Appeals the evidence presented by
Martinez is insufficient for registering the lots in his name.12 Despite an
order from the Court requiring him to file a Reply to the Comment,
counsel for Martinez declined to do so, explaining, among others, that
"he felt he would only be taxing the collective patience of this [Court] if
he merely repeats x x x what petitioner had succinctly stated x x x on
pages four (4) to seven (7) of his said petition." Counsel for petitioner
was accordingly fined by the Court.13
The Court’s patience is taxed less by redundant pleadings than by
insubstantial arguments. The inability of Martinez to offer an effective
rebuttal to the arguments of the OSG further debilitates what is an already
weak petition.
The central question, as posed by Martinez, is whether the OSG could
have still appealed the RTC decision after it had been declared in default.
The OSG argues that a party in default is not precluded from filing an
appeal, citing Metropolitan Bank & Trust Co. v. Court of Appeals,14 and
asserts that "[t]he Rules of Court expressly provides that a party who has
been declared in default may appeal from the judgment rendered against
him."15
There is error in that latter, unequivocal averment, though one which does
not deter from the ultimate correctness of the general postulate that a
party declared in default is allowed to pose an appeal. Elaboration is in
order.
We note at the onset that the OSG does not impute before this Court that
the RTC acted improperly in declaring public respondent in default, even
though an opposition had been filed to Martinez’s petition. Under Section
26 of Presidential Decree No. 1529, as amended, the order of default may
be issued "[i]f no person appears and answers within the time allowed."
The RTC appears to have issued the order of general default simply on
the premise that no oppositor appeared before it on the hearing of 29
March 2000. But it cannot be denied that the OSG had already duly filed
its Opposition to Martinez’s petition long before the said hearing. As we
held in Director of Lands v. Santiago:16
[The] opposition or answer, which is based on substantial
grounds, having been formally filed, it was improper for the
respondent Judge taking cognizance of such registration case
to declare the oppositor in default simply because he failed to
appear on the day set for the initial healing. The pertinent
provision of law which states: "If no person appears and
answers within the time allowed, the court may at once upon
motion of the applicant, no reason to the contrary appearing,
order a general default to be recorded . . . ," cannot be
interpreted to mean that the court can just disregard the answer
before it, which has long been filed, for such an interpretation
would be nothing less than illogical, unwarranted, and unjust.
Had the law intended that failure of the oppositor to appear on
the date of the initial hearing would be a ground for default
despite his having filed an answer, it would have been so stated
in unmistakable terms, considering the serious consequences of
an order of default. Especially in this case where the greater
public interest is involved as the land sought to be registered is
alleged to be public land, the respondent Judge should have
received the applicant's evidence and set another date for the
reception of the oppositor's evidence. The oppositor in the
Court below and petitioner herein should have been accorded
ample opportunity to establish the government's claim.17
Strangely, the OSG did not challenge the propriety of the default order,
whether in its appeal before the Court of Appeals or in its petition before
this Court. It would thus be improper for the Court to make a
pronouncement on the validity of the default order since the same has not
been put into issue. Nonetheless, we can, with comfort, proceed from
same apparent premise of the OSG that the default order was proper or
regular.
The juridical utility of a declaration of default cannot be disputed. By
forgoing the need for adversarial proceedings, it affords the opportunity
for the speedy resolution of cases even as it penalizes parties who fail to
give regard or obedience to the judicial processes.
The extent to which a party in default loses standing in court has been the
subject of considerable jurisprudential debate. Way back in 1920,
in Velez v. Ramas,18 we declared that the defaulting defendant "loses his
standing in court, he not being entitled to the service of notices in the
case, nor to appear in the suit in any way. He cannot adduce evidence;
nor can he be heard at the final hearing."19 These restrictions were
controversially expanded in Lim Toco v. Go Fay,20 decided in 1948,
where a divided Court pronounced that a defendant in default had no right
to appeal the judgment rendered by the trial court, except where a motion
to set aside the order of default had been filed. This, despite the point
raised by Justice Perfecto in dissent that there was no provision in the
then Rules of Court or any law "depriving a defaulted defendant of the
right to be heard on appeal."21
The enactment of the 1964 Rules of Court incontestably countermanded
the Lim Toco ruling. Section 2, Rule 41 therein expressly stated that "[a]
party who has been declared in default may likewise appeal from the
judgment rendered against him as contrary to the evidence or to the law,
even if no petition for relief to set aside the order of default has been
presented by him in accordance with Rule 38."22 By clearly specifying
that the right to appeal was available even if no petition for relief to set
aside the order of default had been filed, the then fresh Rules clearly
rendered the Lim Toco ruling as moot.
Another provision in the 1964 Rules concerning the effect of an order of
default acknowledged that "a party declared in default shall not be
entitled to notice of subsequent proceedings, nor to take part in the
trial."23 Though it might be argued that appellate proceedings fall part of
"the trial" since there is no final termination of the case as of then, the
clear intent of the 1964 Rules was to nonetheless allow the defaulted
defendant to file an appeal from the trial court decision. Indeed,
jurisprudence applying the 1964 Rules was unhesitant to affirm a
defaulted defendant’s right to appeal, as guaranteed under Section 2 of
Rule 41, even as Lim Toco was not explicitly abandoned.
In the 1965 case of Antonio, et al. v. Jacinto,24 the Court acknowledged
that the prior necessity of a ruling setting aside the order of default
"however, was changed by the Revised Rules of Court. Under Rule 41,
section 2, paragraph 3, a party who has been declared in default may
likewise appeal from the judgment rendered against him as contrary to
the evidence or to the law, even if no petition for relief to set aside the
4
order of default has been presented by him in accordance with Rule
38."25 It was further qualified in Matute v. Court of Appeals26 that the
new availability of a defaulted defendant’s right to appeal did not
preclude "a defendant who has been illegally declared in default from
pursuing a more speedy and efficacious remedy, like a petition for
certiorari to have the judgment by default set aside as a nullity."27
In Tanhu v. Ramolete,28 the Court cited with approval the commentaries
of Chief Justice Moran, expressing the reformulated doctrine that
following Lim Toco, a defaulted defendant "cannot adduce evidence; nor
can he be heard at the final hearing, although [under Section 2, Rule 41,]
he may appeal the judgment rendered against him on the merits."29
Thus, for around thirty-odd years, there was no cause to doubt that a
defaulted defendant had the right to appeal the adverse decision of the
trial court even without seeking to set aside the order of default. Then, in
1997, the Rules of Civil Procedure were amended, providing for a new
Section 2, Rule 41. The new provision reads:
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 or 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.
Evidently, the prior warrant that a defaulted defendant had the right to
appeal was removed from Section 2, Rule 41. On the other hand, Section
3 of Rule 9 of the 1997 Rules incorporated the particular effects on the
parties of an order of default:
Sec. 3. Default; declaration of.—If the defending party fails to
answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party,
and proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting
the claimant such relief as his pleading may warrant, unless the
court in its discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the clerk of
court.
(a) Effect of order of default.—A party in default shall be
entitled to notice of subsequent proceedings but shall not take
part in the trial.
(b) Relief from order of default.—A party declared in default
may any time after notice thereof and before judgment file a
motion under oath to set aside the order of default upon proper
showing that his failure to answer was due to fraud, accident,
mistake or excusable negligence and that he has a meritorious
defense. In such case, the order of default may be set aside on
such terms and conditions as the judge may impose in the
interest of justice.
(c) Effect of partial default.—When a pleading asserting a
claim states a common cause of action against several
defending parties, some of whom answer and the others fail to
do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.
(d) Extent of relief to be awarded.—A judgment rendered
against a party in default shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated
damages.
xxx
It cannot be escaped that the old provision expressly guaranteeing the
right of a defendant declared in default to appeal the adverse decision was
not replicated in the 1997 Rules of Civil Procedure. Should this be taken
as a sign that under the 1997 Rules a defaulted defendant no longer has
the right to appeal the trial court decision, or that the Lim Toco doctrine
has been reinstated?
If post-1997 jurisprudence and the published commentaries to the 1997
Rules were taken as an indication, the answer should be in the negative.
The right of a defaulted defendant to appeal remains extant.
By 1997, the doctrinal rule concerning the remedies of a party declared
in default had evolved into a fairly comprehensive restatement as offered
in Lina v. Court of Appeals:30
a) The defendant in default may, at any time after discovery
thereof and before judgment, file a motion, under oath, to set
aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable
neglect, and that he has meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when the
defendant discovered the default, but before the same has
become final and executory, he may file a motion for new trial
under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the judgment
has become final and executory, he may file a petition for relief
under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him
as contrary to the evidence or to the law, even if no petition to
set aside the order of default has been presented by him. (Sec.
2, Rule 41)31
The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of
the 1964 Rules. Yet even after that provision’s deletion under the 1997
Rules, the Court did not hesitate to expressly rely again on
the Lina doctrine, including the pronouncement that a defaulted
defendant may appeal from the judgment rendered against him. This can
be seen in the cases of Indiana Aerospace University v. Commission on
Higher Education,32 Tan v. Dumarpa,33and Crisologo v. Globe Telecom,
Inc.34
Annotated textbooks on the 1997 Rules of Civil Procedure similarly
acknowledge that even under the new rules, a defaulted defendant retains
the right to appeal as previously confirmed under the old Section 2, Rule
41. In his textbook on Civil Procedure, Justice Francisco answers the
question "What are the remedies available to a defending party in
default?" with a reiteration of the Lina doctrine, including the remedy
that a defaulted defendant "may also appeal from the judgment rendered
against him as contrary to the evidence or to the law, even if no petition
to set aside the order of default has been presented by him."35 Justice
Regalado also restates the Lina rule in his textbook on Civil Procedure,
opining that the remedies enumerated therein, even if under the former
Rules of Procedure, "would hold true under the present amended
Rules."36 Former Court of Appeals Justice Herrerra likewise reiterates
the Lina doctrine, though with the caveat that an appeal from an order
denying a petition for relief from judgment was no longer appealable
under Section 1, Rule 41 of the 1997 Rules.37 Herrera further adds:
5
 Section 2, paragraph [2] of the former Rule 41, which allows
an appeal from a denial of a petition for relief, was deleted from
the present Rule, and confined appeals to cases from a final
judgment or final order that completely disposes of the case, or
of a particular matter therein, when declared by these rules to
be appealable. A judgment by default may be considered as
one that completely disposes of the case.38
We are hard-pressed to find a published view that the enactment of the
1997 Rules of Civil Procedure accordingly withdrew the right, previously
granted under the 1964 Rules, of a defaulted defendant to appeal the
judgment by default against him. Neither is there any provision under the
1997 Rules which expressly denies the defaulted defendant such a right.
If it is perplexing why the 1997 Rules deleted the previous authorization
under the old Section 2, Rule 41 (on subject of appeal), it is perhaps worth
noting that its counterpart provision in the 1997 Rules, now Section 1,
Rule 41, is different in orientation even as it also covers "subject of
appeal." Unlike in the old provision, the bulk of the new provision is
devoted to enumerating the various rulings from which no appeal may
be taken, and nowhere therein is a judgment by default included. A
declaration therein that a defaulted defendant may still appeal the
judgment by default would have seemed out of place.
Yet even if it were to assume the doubtful proposition that this contested
right of appeal finds no anchor in the 1997 Rules, the doctrine still exists,
applying the principle of stare decisis. Jurisprudence applying the 1997
Rules has continued to acknowledge the Lina doctrine which embodies
this right to appeal as among the remedies of a defendant, and no
argument in this petition persuades the Court to rule otherwise.
In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,39 the
Court, through Justice Callejo, Sr., again provided a comprehensive
restatement of the remedies of the defending party declared in default,
which we adopt for purposes of this decision:
It bears stressing that a defending party declared in default
loses his standing in court and his right to adduce evidence and
to present his defense. He, however, has the right to appeal
from the judgment by default and assail said judgment on the
ground, inter alia, that the amount of the judgment is excessive
or is different in kind from that prayed for, or that the plaintiff
failed to prove the material allegations of his complaint, or that
the decision is contrary to law. Such party declared in default
is proscribed from seeking a modification or reversal of the
assailed decision on the basis of the evidence submitted by him
in the Court of Appeals, for if it were otherwise, he would
thereby be allowed to regain his right to adduce evidence, a
right which he lost in the trial court when he was declared in
default, and which he failed to have vacated. In this case, the
petitioner sought the modification of the decision of the trial
court based on the evidence submitted by it only in the Court
of Appeals.40
If it cannot be made any clearer, we hold that a defendant party declared
in default retains the right to appeal from the judgment by default on the
ground that the plaintiff failed to prove the material allegations of the
complaint, or that the decision is contrary to law, even without need of
the prior filing of a motion to set aside the order of default. We reaffirm
that the Lim Toco doctrine, denying such right to appeal unless the order
of default has been set aside, was no longer controlling in this jurisdiction
upon the effectivity of the 1964 Rules of Court, and up to this day.
Turning to the other issues, we affirm the conclusion of the Court of
Appeals that Martinez failed to adduce the evidence needed to secure the
registration of the subject lots in his name.
It should be noted that the OSG, in appealing the case to the Court of
Appeals, did not introduce any new evidence, but simply pointed to the
insufficiency of the evidence presented by Martinez before the trial court.
The Court of Appeals was careful to point out that the case against
Martinez was established not by the OSG’s evidence, but by petitioner’s
own insufficient evidence. We adopt with approval the following
findings arrived at by the Court of Appeals, thus:
The burden of proof in land registration cases is incumbent on
the applicant who must show that he is the real and absolute
owner in fee simple of the land applied for. Unless the applicant
succeeds in showing by clear and convincing evidence that the
property involved was acquired by him or his ancestors by any
of the means provided for the proper acquisition of public
lands, the rule is settled that the property must be held to be a
part of the public domain. The applicant must, therefore,
present competent and persuasive proof to substantiate his
claim. He may not rely on general statements, or mere
conclusions of law other than factual evidence of possession
and title.
Considered in the light of the opposition filed by the Office of
the Solicitor General, we find the evidence adduced by
appellee, on the whole, insufficient to support the registration
of the subject parcels in his name. To prove the provenance of
the land, for one, all that appellee proffered by way of oral
evidence is the following cursory testimony during his direct
examination, viz:
xxxx
Q You mentioned that you are the owner of these three (3)
parcels of land. How did you begin the ownership of the same?
A I bought it from my uncles Julian Martinez and Juan
Martinez.
xxxx
Q x x x x Who took possession of these parcels of land from
then on?
A I took possession, sir
Q As owner?
A Yes, as owner.
Q Up to the present who is in possession as owner of these
parcels of land?
A I took possession.
Q Before Julian Martinez and Juan Martinez sold these parcels
of land before you took possession who were the owners and
in possession of these?
A Hilarion Martinez, the father of my predecessors-in-interest
and also my grandfather.
xxxx
Court:
Q Of your own knowledge[,] where [sic] did your grandfather
Hilarion Martinez acquire these lands?
A According to my grandfather he bought that land from a
certain Juan Casano in the year 1870’s[,] I think.
xxxx
Q By the way[,] when did your grandfather Hilarion Martinez
die?
A Either in 1920 or 1921.
Q Since you said your immediate predecessors-in-interest
Julian Martinez and Juan Martinez inherited the same from
your grandfather. Can you say it the same that your
predecessors-in-interest were the owners and possessors of the
same since 1921 up to the time they sold the land to you in
1952?
A Yes, sir.
xxxx
6
 In the dreary tradition of most land registration cases,
appellee has apparently taken the absence of
representation for appellant at the hearing of his petition
as license to be perfunctory in the presentation of his
evidence. Actual possession of land, however, consists in the
manifestation of acts of dominion over it of such a nature
as a party would naturally exercise over his own property.
It is not enough for an applicant to declare himself or his
predecessors-in-interest the possessors and owners of the
land for which registration is sought. He must present
specific acts of ownership to substantiate the claim and
cannot just offer general statements which are mere
conclusions of law requiring evidentiary support and
substantiation.
The record shows that appellee did not fare any better with the
documentary evidence he adduced before the trial court. The
October 20, 1952 Deed of Sale by which appellee claims to
have purchased the subject parcels from his uncle, Julian
Martinez, was not translated from the vernacular in which
it was executed and, by said token, was inadmissible in
evidence. Having submitted a white print copy of the survey
plan for Lot Nos. 464-A and 464-B, appellee also submitted
the tracing cloth plan for Lot No. 370 which does not,
however, appear to be approved by the Director of
Lands. In much the same manner that the submission of the
original tracing cloth plan is a mandatory statutory requirement
which cannot be waived, the rule is settled that a survey plan
not approved by the Director of Lands is not admissible in
evidence.41
These findings of the Court of Appeals, arrived at after a sufficiently
extensive evaluation of the evidence, stand in contrast to that contained
in the RTC decision, encapsulated in a one-paragraph précis of the
factual allegations of Martinez concerning how he acquired possession
of the subject properties. The Court of Appeals, of course, is an
appropriate trier of facts, and a comparison between the findings of fact
of the Court of Appeals and that of the RTC clearly demonstrates that it
was the appellate court which reached a more thorough and considered
evaluation of the evidence.
As correctly held by the Court of Appeals, the burden of proof expected
of the petitioner in a land registration case has not been matched in this
case.
WHEREFORE, the petition is DISMISSED. Costs against petitioner.
SO ORDERE
G.R. No. 161211 July 17, 2013
SPOUSES CELSO DICO, SR. AND ANGELES DICO, Petitioners,
vs.
VIZCAYA MANAGEMENT CORPORATION, Respondent.
DECISION
BERSAMIN, J.:
The prescription of actions for the reconveyance of real property based
on implied trust is 10 years.
The Case
This appeal by petition for review on certiorari seeks to set aside the
adverse decision promulgated on September 11, 2002,1 whereby the
Court of Appeals (CA) reversed the decision rendered by the Regional
Trial Court (RTC) of Negros Occidental in favor of petitioners.
Antecedents
Celso Dico was the registered owner of Lot No. 486 of the Cadiz
Cadastre, comprising an area of 67,300 square meters and covered by
Transfer Certificate of Title (TCT) No. 22922 of the land records of
Negros Occidental. Lot No. 486 was adjacent to Lot No. 29-B and Lot
No. 1412 (formerly Lot No. 1118-B), both also of the Cadiz Cadastre.
Celso and his wife Angeles resided on Lot No. 486 since 1958. On May
30, 1964, Angeles filed in the District Office of the Bureau of Lands in
Bacolod City, her free patent application covering a portion of Lot No.
29-B. On his part, Celso also filed in the same office an application for
free patent covering Lot No. 1412. It does not appear, however, that the
Bureau of Lands acted on their applications.2
Respondent Vizcaya Management Corporation (VMC) was the
registered owner under TCT No. T-41835 of Lot No. 29-B, also of the
Cadiz Cadastre, comprising an area of 369,606 square meters, more or
less.3 VMC derived its title to Lot No. 29-B from Eduardo and Cesar,
both surnamed Lopez, the registered owners under TCT No. T-14827,
which emanated from TCT No. RT-9933 (16739) in the names of
Victoria, Eduardo and Cesar, all surnamed Lopez. TCT No. RT-9933
(16739) was a transfer from TCT No. T-14281, which had been
transferred from Original Certificate of Title (OCT) No. 21331 in the
name of Negros Philippines Lumber Company. OCT No. 21331 was
issued pursuant to Decree No. 190483 of G.L.R.O. Cadastral Record No.
196.
VMC likewise claimed to be the owner of Lot No. 1412, formerly known
as Lot No. 1118-B, also of the Cadiz Cadastre, containing an area of
85,239 square meters, more or less, and registered in its name under TCT
No. T-41834.4
Lot Nos. 1426-B, with an area of 6,635 square meters covered by TCT
No. T-24135, and 1426-C, with an area of 6,107 square meters covered
by TCT No. T-24136, appear to be registered in the names of Eduardo
Lopez and Cesar Lopez, who had earlier formed VMC.
In 1967, VMC, then newly formed, caused the consolidation and
subdivision of Lot No. 29-B, Lot No. 1412, Lot No. 1426-B, and Lot No.
1426-C. The consolidation-subdivision plan was prepared by Engr.
Ricardo Quilop and filed in the Land Registration Commission (LRC),
renamed National Land Titles and Deeds Registration Administration,
but presently known as the Land Registration Authority. The
consolidation-subdivision plan was assigned the number (LRC) PCS-
6611. On July 26, 1967, LRC Commissioner Antonio L. Noblejas
approved the consolidation-subdivision plan, resulting in Lot No. 29-B,
Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C being consolidated
and subdivided as follows: Lot No. 1 with an area of 238,518 square
meters under TCT No. T-47854; Lot No. 2 with an area of 216,176 square
meters under TCT No. T-47855; Lot No. 3 with an area of 11,496 square
meters under TCT No. T-47856; and Lot No. 4 with an area of 15,392
square meters under TCT No. T-47857.5 In all, the total landholding of
VMC after the consolidation was 481,583 square meters.
VMC proceeded to develop the Don Eusebio Subdivision project using
Lot No. 1 of the consolidation-subdivision plan under (LRC) PCS-6611.
The subdivision plan under PSD-102560 subdivided Lot No. 1 into 547
small lots. Subsequently, VMC also developed the Cristina Village
Subdivision project using Lots Nos. 2, 3, and 4 under (LRC) PCS-6611.
Under PSD-12746 of the subdivision plan for Cristina Village
Subdivision, consolidated Lots Nos. 2, 3, and 4 were subdivided into 348
small lots. Starting 1971, VMC sold lots in its Don Eusebio Subdivision
and Cristina Village Subdivision.
In 1981, VMC filed against the Dicos a complaint for unlawful detainer
in the City Court of Cadiz (Civil Case No. 649). On April 24, 1981, the
City Court of Cadiz rendered its decision in favor of VMC, ordering the
Dicos to demolish the concrete water gate or sluice gate (locally known
as trampahan) located inside Lot No. 1, Block 3 of the Cristina Village
Subdivision. Inasmuch as the Dicos did not appeal, the decision attained
finality. On July 3, 1981, the City Court of Cadiz issued a writ of
execution. On November 11, 1985, a second alias writ of execution was
issued.
On May 12, 1986, the Dicos commenced an action for the annulment and
cancellation of the titles of VMC (Civil Case No. 180-C), impleading
VMC, the National Land Titles and Deeds Registration Administration,
and the Director of the Bureau of Lands. On March 12, 1987, the Dicos
amended the complaint. They averred, among others, that they were the
registered owners of Lot No. 486 and the possessors-by-succession of Lot
No. 1412 (formerly Lot No. 1118) and Lot No. 489; that VMC had land-
grabbed a portion of their Lot No. 486 totaling 111,966 square meters
allegedly brought about by the expansion of Cristina Village Subdivision;
and that on May 30, 1964 they had filed free patent applications in the
Bureau of Lands for Lot No. 1412 and Lot No. 489. 6 They prayed that
the possession of Lot No. 486, Lot No. 1412, and Lot No. 489 be restored
to them; and that the judgment in Civil Case No. 649 be annulled.
7
Celso died during the pendency of the action, and was substituted by
Angeles and their children pursuant to the order of November 22, 1991.
Ruling of the RTC
On January 8, 1998, the RTC ruled in favor of the Dicos, viz:
WHEREFORE, IN VIEW OF THE FOREGOING, judgement is
rendered in favor of the plaintiffs and against the defendants in this wise:
1. The plaintiffs are hereby declared absolute owners of the
111,959 square meter portion of Lot 486 and the defendant
Vizcaya Management Corporation, its agent, representatives
and any persons acting in its behalf are hereby ordered to
peacefully vacate the said premises and to turn over the
possession of the 111, 959 square meters, a portion of Lot 486
Cadiz Cadastre, in favor of the plaintiffs;
2. The Certificate of Titles from RT-9933 (16739) and all other
titles derived therefrom are all hereby declared spurious and
ordered cancelled;
3. That defendant Vizcaya Management Corporation is hereby
ordered to pay plaintiffs ₱3,000.00 as monthly rental on the
111, 959 square meters, portion of Lot 486, Cadiz Cadastre,
which the defendant Vizcaya Management Corporation had
occupied from May 12, 1986 until the plaintiff’s property is
fully restored to the latter;
4. That defendant Vizcaya Management Corporation is hereby
ordered to pay the plaintiffs the sum of ₱100,000.00 by way of
attorney’s fees and ₱100,000.00 by way of moral damages and
₱50,000.00 for exemplary damages;
5. That defendant National Land Titles and Deeds
Administration is hereby ordered to make the necessary
rectification on the titles of the defendants;
6. The Solicitor General is hereby directed to look into the
possibility of reversion of Lots 29-A, 29-B and 1412, Cadiz
Cadastre in favor of the Government and initiate the Escheat
proceedings thereon;
7. The counterclaims of the defendants are ordered dismissed;
and
8. Defendants to pay the costs.
SO ORDERED.7
Ruling of the CA
On appeal, VMC assigned the following errors, to wit:
I
THE TRIAL COURT ERRED IN NOT DISMISSING PLAINTIFFS’
COMPLAINT FOR BEING BARRED BY PRESCRIPTION AND/OR
LACHES AND FOR LACK OF CAUSE OF ACTION.
II
THE TRIAL COURT ERRED IN CAPRICIOUSLY DISREGARDING
THE CONCLUSIVENESS AND INDEFEASIBILITY OF THE
SUBJECT CERTIFICATES OF TITLE AND IN IGNORING WELL-
ENTRENCHED DOCTRINES, PRINCIPLES AND PRESUMPTIONS
OF REGULARITY AND VALIDITY ATTENDANT TO THEIR
ISSUANCES.
III
THE TRIAL COURT ERRED IN HOLDING THAT IN THE
CONSOLIDATION AND SUBDIVISION OF THE LOTS
COMPRISING THE EUSEBIO AND CRISTINA SUBDIVISIONS,
VMC UNJUSTIFIABLY INCREASED THE AREA OF LOT NO. 29-B
AND ENCROACHED ON LOT 486.
IV
THE TRIAL COURT ERRED IN HOLDING THAT LOT NOS. 29-B
AND 1412 REVERTED BACK (sic) TO THE GOVERNMENT AND
IN DIRECTING THE SOLICITOR GENERAL TO INITIATE
ESCHEAT PROCEEDINGS THEREON.
V
THE TRIAL COURT ERRED IN DECLARING THAT TRANSFER
CERTIFICATE OF TITLE ("TCT") NO. RT-9933 (EXHIBIT "K") IS A
SPURIOUS TITLE AND IN ORDERING SAID TITLE, AND ALL
TITLES DERIVED THEREFROM, CANCELLED.
VI
THE TRIAL COURT ERRED IN RULING THAT THERE WAS
FRAUD IN VMC’S ACQUISITION OF LOT NOS. 29-B AND 1412.
VII
THE TRIAL COURT ERRED IN NOT FINDING THAT THE
DESIGNATION OF LOT NO. 1246-B AND 1246-C IN THE
TECHNICAL DESCRIPTIONS OF THE TITLES OF LOT NOS. 1 TO
4 IS MERELY TYPROGRAPHICAL ERROR.
VIII
THE TRIAL COURT ERRED IN ORDERING VMC TO PAY
RENTALS, DAMAGES AND COSTS TO PLAINTIFFS AND IN
DISMISSING THE COUNTERCLAIMS PLEADED BY VMC.8
As earlier mentioned, the CA reversed the RTC through its decision
promulgated on September 11, 2002,9 ruling as follows:
WHEREFORE, in view of the foregoing, and finding the appeal
impressed with merit, the same is hereby GRANTED. The Decision
dated January 8, 1998 of Branch 60 of the Regional Trial Court of Negros
Occidental in Civil Case No. 180-C is hereby REVERSED and SET
ASIDE, and a new judgment is hereby rendered as follows:
1. Civil Case No. 180-C is DISMISSED for lack of merit.
2. Defendant-appellant Vizcaya Management Corporation is
declared the absolute owner of Lot No. 29-B under TCT No.
T-41835.
3. Defendant-appellant Vizcaya Management Corporation is
declared the absolute owner of Lot No. 1412 under TCT No.
T-41834.
4. Original Certificate of Title No. 21331 and Transfer
Certificate of Title No. RT-9933 (16739) are declared valid and
genuine;
5. Plaintiffs-appellees Angeles Dico, et al. are declared the
absolute owners of Lot No. 486 under TCT No. T-22922;
6. The Decision dated April 24, 1981 of the City Court of Cadiz
in Civil Case No. 649 is hereby declared VALID and
UPHELD; and
7. No cost.
SO ORDERED.10
On October 7, 2003, the CA denied the Dicos’ motion for
reconsideration.11
Issues
Hence, this appeal, wherein the Dicos contend that the CA erred in
holding that prescription and/or laches already barred them from
asserting their right;12 in accepting the theory of VMC that the
consolidation of Lot No. 1246-B and Lot No. 1246-C had resulted from
8
a merely typographical error;13 in reversing the decision of the RTC
despite its finding that VMC had committed land grabbing;14 and in
reversing the RTC based on non-existing evidence that was contradicted
by the evidence on records.15
In its comment,16 VMC counters that the petition for review should not
be given due course because petitioners came to court with unclean
hands; that the petition was filed out of time even with the extension
given by the Court; that the petition was fatally defective in form and in
substance; and that the dismissal of the complaint was in accord with
applicable laws and jurisprudence.
In their reply,17 the Dicos reiterate that the findings and conclusions of
the RTC were supported by evidence establishing fraud, encroachment
and other anomalies perpetrated by VMC; that the rules of procedure
must not be rigidly applied to override substantial justice; and that VMC
could not validly invoke the indefeasibility of its titles to defeat their right
over the encroached land.
The decisive issue is whether prescription already barred petitioners’
cause of action. All the other issues are subsumed therein.
Ruling
We find and hold that the action of the Dicos for reconveyance was
properly dismissed.
To start with, the CA’s explanations for reversing the RTC were very
thorough, well-founded and well-reasoned, to wit:
Granting arguendo that fraud intervened in the procurement of the
Certificates of Title to Lot No. 29-B and plaintiffs-appellees had the
personality to seek the reconveyance thereof on the basis of implied or
constructive trust, their complaint filed on May 12, 1986, or about 29
years after the issuance of the certificate of title to defendant-appellant,
indeed came too late. They were deemed to have discovered the fraud as
early as September 20, 1934 when TCT No. RT-9933 (16739) of the
Lopezes was recorded or on November 10, 1956 when TCT No. T-41835
of defendant-appellant was registered. Their right to seek reconveyance
of a portion of Lot No. 29-B, if it existed at all, had already prescribed.
Plaintiffs-appellees also contend that defendant-appellant secured its
Certificate of Title to Lot No. 1412 through fraud. They contend that
Celso Dico had filed with the Bureau of Lands his Free Patent
Application (Exh. "D", pp. 733-735, Records Vol. 3) with respect to Lot
No. 1412. On the other hand, the evidence on record shows that Lot No.
1412, formerly Lot No. 1118-B, appears to have been already registered
in the name of defendant-appellant under TCT No. T-41834 (Exh. "11").
We fail to see the fraud allegedly committed by defendant-appellant in
securing its Certificate of Title to Lot No. 1412. In their vain effort to
show that Celso Dico filed a Free Patent Application for Lot No. 1412,
plaintiffs-appellees presented his alleged Free Patent Application,
Exhibit "D". Said Exhibit "D", however, is without evidentiary weight
since while the name of plaintiff-appellee Angeles Dico, as applicant
therein, appears in the Application for Free Patent, the Joint Affidavit in
support thereof, and Notice of Application for Free Patent, the signature
of one Celso Dico was only clearly super-imposed thereon to make it
appear he was the applicant. Exhibit "D" is, in fact, a forged document.
Thus, the court a quo erred when it concluded that defendant-appellant’s
title to Lot No. 1412 came from a doubtful source. There is no evidence
on record that clearly showed the fraud allegedly employed by defendant-
appellant when it secured its title to Lot No. 1412. Moreover, plaintiffs-
appellees have not established their personality to seek the reconveyance
of Lot No. 1412 as they are not the registered owners thereof.
In fine, Lots Nos. 29-B and 1412 did not revert to the government, as they
are already the private properties of defendant-appellant corporation.
Anent the issue of encroachment on Lot No. 486 by defendant-appellant,
the court a quo found that defendant-appellant encroached on Lot 486
when it consolidated and subdivided the contested lots.
The court a quo ruled, thus:
"From the evidence presented as revealed by the records of the case, this
Court is of the judicious finding that defendant Viscaya (sic) had
encroached on lot 486 considering that even if it claims it has a title over
lot 29-B, still it had exceeded its area of possession over lot 29-B.
Exhibits "J", "K" and "L" reveal that lot 29-B only contains an area of
369,606 square meters, however, when defendant Vizcaya caused the
consolidation of their lots the total area which is supposed to be 369,606
square meters was increased. Basing on defendants’ exhibits "3" to "6"
this Court finds that TCT No. 1735 (lot 1) has an area of 238,518 square
meters, TCT No. 1736 (Lot 2), 216,176 square meters, TCT No. 1737
(Lot 3) 11,496 square meters and TCT No. 1738, 15,392 square meters
which when added together will sum up to a total of 481,582 square
meters, clearly exceeding the original area of 369,606 square meters
appearing and described in
Exhibits "J":, "K" and "L".
"Likewise, this Court further finds after an exhausted (sic) examination
of the records, that defendant Vizcaya increased the area on the plan of
Cristina Village Subdivision which is Lot 2 contrary to what is contained
in TCT No. 1736 (Exhibits "P-1" and "4") containing an area of only
216,176 square meters.
"The increase in area in the title of defendant Vizcaya is 111,976 square
meters. This area was taken from the portion of Lot 486 of the plaintiffs
covered by TCT No. T-22922 (Exh. "E") and which was derived from
OCT No. 0-3146 (21337) adjacent to Lot 29-B (Exh. "J") and later
became Lot 2 covered by TCT No. (T-47855) 1736, Lot 1 covered by
TCT No. (T-47854) 1735 (Exh. "P") Lot 3 covered by TCT No. (T-
47856) 1737 (Exh. "P-2") and Lot 4 covered by TCT No. (T-47857) 1738
(Exh. "P-3"). To the mind of this Court, the intrustion (sic) of the
defendants over the area of Lot 486 is a clear and willful manipulation
hatched between defendant Vizcaya and its surveyor without regard to
the existing technical and (sic) descriptions of the adjacent lot,
particularly the lot belonging to the plaintiffs. Upon close examination of
all the evidence on record, it appears that the method and scheme
employed in order to hide and confuse the increase in the area was to
consolidate lots 29-B, 1246-B, 1246-C and 1412 and then subdivide these
lots into several parts to become lots 1, 2, 3 and 4 with its corresponding
titles, technical descriptions and already containing variable but
increased areas can no longer be ascertained or if ascertained the same
can be done with greater difficulty as the one tasked to unravel these
confusing mazes (sic) of lots will have to dig deep into the history of the
original titles. What this Court finds amusing, however, is the fact that
Lots 1246-B and 1246-C were consolidated with Lots 29-B and 1412
which former lots are located in Barangay Tinampa-an, Cadiz City while
Lots 29-B and 1412 are located in the City Proper and are non adjacent
or contigeous (sic) lots.
"The claim of the defendants that the plaintiffs cannot establish a better
right or title to real properties over and above a valid and existing title,
cannot be given credence by this Court considering that a torrens title
cannot cover fraud, and more particularly so, because Lot 486 is also
titled property registered in the name of the plaintiff Dico." (pp. 30-31,
Decision; pp. 79-80, Rollo)
We do not agree with the above findings of the court a quo. The
documentary evidence found in the records reveals that defendant-
appellant had two lots titled in its name, namely: Lot No. 29-B
comprising an area of 369,606 square meters, containing identical
technical description as appearing in plaintiffs-appellees’ Exhs. "J", "K"
and "L" and Lot No. 1412, formerly 1118-B, comprising an area of
85,239 square meters covered by TCT No. T-41834 (Exh. "11"). Further,
Eduardo and Cesar Lopez were the registered owners of Lot No. 1426-B
comprising an area of 6,635 square meters, covered by TCT No. T-21435
(Exh. "9") and Lot No. 1426-C comprising an area of 6,107 square
meters, covered by TCT No. T-21436 (Exh. "10"). As contended by
defendant-appellant, it caused the consolidation and subdivision of these
four lots following the approved consolidation-subdivision plan (Exh.
"7", p. 958, Records Vol. 4) it submitted to the then Land Registration
Commission. The said approved consolidation-subdivision plan was
assigned the number (LRC) PCS-6611. Hence, adding the land area of
the four consolidated lots, the total landholding of defendant-appellant
after the approved consolidation-subdivision plan would be 467,587
square meters only, thus:
Lot No. Area in Square Meters
Lot No. 29-B 369,606 square meters
Lot No. 1412 85,239 square meters
9
 Lot No. 1426-B 6,635 square meters
Lot No. 1426-C 6,107 square meters
Total 467,587 square meters
Defendant-appellant’s approved consolidation-subdivision plan (Exh.
"7") reveals that it was a consolidation-subdivision of Lots Nos. 29-B
(Exh. "L"; Exh. "8"), PSD-5573; 1426-B (Exh. "9") & 1426-C (Exh.
"10"), PSD-44080, and 1412 (Exh. "11"), all of Cadiz Cadastre, which
contained a total area of 481,583 square meters. However, the total land
area of the four consolidated lots as added above is only 467,587 square
meters. Clearly, there exists an excess of 13,996 square meters, which
was included in the approved consolidation-subdivision plan of
defendant-appellant. Worth noting is the fact that defendant-appellant’s
approved consolidation-subdivision plan contained a handwritten entry
which stated that the "x x x area is increased by 13996 sq.m" (Exh. "7",
p. 958, Records Vol. 4).
Thus, the court a quo erred when it concluded that there was an excess of
111,959 square meters in defendant-appellant’s landholdings. We agree
with the contention of defendant-appellant that the basis for computing
its total landholding should not be limited to the land area of Lot No. 29-
B since three (3) other individual lots were included in the consolidation-
subdivision survey. The evidence on record reveals that Lots Nos. 1412,
1426-B and 1426-C were included in the approved consolidation-
subdivision plan (Exh. "7").
Further, the Trial Court’s finding that defendant-appellant encroached by
111,959 square meters on Lot 486 belonging to plaintiffs-appellees finds
no justifiable support from the evidence on record. Lot No. 486 under
TCT No. T-22922 (Exh. "E", p. 736, Records Vol. 3) in the name of Celso
Dico contained an area of 67,300 square meters only. Following the Trial
Court’s reasoning, defendant-appellant shall return to plaintiffs-appellees
111,959 square meters it allegedly land grabbed from Lot No. 486. Thus,
Lot No. 486 would now contain an area of 179,259 square meters,
substantially increased by 111,959 square meters which is clearly beyond
what is stated in TCT No. T-22922.
As We have found earlier, the excess in defendant-appellant’s
landholding is only 13,996 square meters.
It is likewise the contention of plaintiffs-appellees that PCS-6611 does
not exist in the records of the then Land Registration Commission, as
evidenced by the Certifications (Exhs. "Q" and "R", pp. 758-758A,
Records Vol. 3) issued by the Subdivision and Consolidation Division,
Vault Section I, Land Registration Authority.
The court a quo ruled:
"x x x. Thus, the defendants failed to overcome the preponderance of
evidence presented by the plaintiffs, particularly on Certifications (Exhs.
"Q" and "R") certifying to the effect that Pcs-6611 is not existing x x x"
(p. 34, Decision).
We cannot agree with conclusion of the court a quo. The evidence on
record clearly reveals that defendant-appellant presented a copy of the
approved consolidation-subdivision plan (Exh. "7") prominently
showing the number (LRC) PCS-6611 assigned by the Land Registration
Commission, which is located at the bottom-right portion of the
document. The Certifications (Exhs. "Q" and "R") issued by the then
Land Registration Authority are not conclusive proof of the non-
existence of the original of the consolidation-subdivision plan (LRC)
PCS-6611 together with all the survey records pertaining thereto. As
correctly pointed out by defendant-appellant, the person who issued said
certifications was not presented in court to identify and affirm the
veracity of their contents. Thus, as between the approved consolidation-
subdivision plan (Exh. "7") and the certifications (Exhs. "Q" and "R"),
the former carries greater evidentiary weight.
Granting arguendo that no records pertaining to (LRC) PCS-6611 could
be found in the Vault Section of the then Land Registration Commission,
the existence of (LRC) PCS-6611 was already established with the
presentation in evidence of a copy of the said approved consolidation-
subdivision plan (Exh. "’7") prominently reflecting therein the number
(LRC) PCS-6611 assigned by the Land Registration Commission. The
authenticity and existence of (LRC) PCS-6611 within the records of the
Land Registration Commission (now Land Registration Authority) was
established by the fact that it was used as a basis for the approval of the
consolidation-subdivision plan for the Don Eusebio Subdivision under
(LRC) PSD-102560 (Exh. "14", "14-A", "14-B", pp. 983-985, Records,
Vol. 4) and Cristina Village Subdivision under (LRC) PCS-12746 (Exh.
"16", p. 982, Records, Vol. 4). In Exhibits "14" and "16", (LRC) PCS-
6611 was clearly reflected as the source of the consolidated lots.
Lastly, defendant-appellant contends that the court a quo erred in finding
that there was no typographical error committed in designating Lots Nos.
1246-B and 1246-C instead of 1426-B and 1426-C, respectively, in its
approved consolidation-subdivision plan.
The court a quo ruled:
"x x x. What this Court finds amusing, however, is the fact that Lots
1246-B and 1246-C were consolidated with Lots 29-B and 1412 which
former lots are located in Barangay Tinampa-an, Cadiz City while Lots
29-B and 1412 are located in the City Proper and are non adjacent or
contigeous (sic) lots.
"x x x x
"Granting arguendo, that the denomination of Lots 1246-B and 1246-C
are merely typographical errors of Lots 1426-B and 1426-C as claimed
by defendant Vizcaya, this Court, upon judicious evaluation of the
records cannot accept the argument relied upon by the defendants since
it is obvious from the evidence that defendant Vizcaya employs a retained
surveyor for purposes of their subdivision, and despite the technical
knowledge of its surveyor it did not bother to correct the error if indeed
it is one, on the lots subject matter of the case, but had invoked the said
ground only during the litigation proper" (pp. 30-35, Decision; pp. 179-
184, Rollo).
Defendant-appellant contends that it failed to correct this typographical
error as such fact came to its knowledge only during the trial and two
years after issuance of TCT No. T-47854-57 (Exhs. "P", "P-1" to "P-3";
Exhs. "3" to "6", pp. 750-756 Records Vol. 3), these Certificates of Title
were subsequently cancelled and new TCTs were issued. On the other
hand, plaintiffs-appellees contend that Lots Nos. 1246-B and 1246-C
could not be possibly consolidated with Lot No. 29-B because the former
lots were situated some 4 kilometers away from defendant-appellant’s
subdivision area, besides being owned by other persons.
We agree with defendant-appellant.
While we agree with plaintiffs-appellees’ assertion that consolidation of
non-contiguous and non-adjacent lots are not possible especially so when
the lots are situated considerably far from each other, the case at hand
does not fall under this scenario. As correctly explained by defendant-
appellant there was a typographical error in the technical description of
its consolidated lots in that what was stated therein as included in the
consolidation plan were Lots Nos. 1246-B and 1246-C, Psd-44080,
instead of Lots Nos. 1426-B and 1426-C, Psd-44080.
Worth noting are the technical description of the subject lots before and
after their consolidation. –
Transfer Certificate of Title No. T-24135 (Exh. "9") covering Lot No.
1426-B reads:
"A parcel of land (Lot No. 1426-B of the subdivision plan Psd-44080,
being a portion of Lot 1426 of the Cadastral Survey of Cadiz, G.L.R.O.
Cad. Record No. 196), situated in the Poblacion, Municipality of Cadiz,
Province of Negros Occidental, Bounded on the NE., by Lot 1426-A of
the subdivision plan; on the SE., by Lot No. 1423 of Cadiz, Cad.; and on
the SW., by Lot 1426-C of the subdivision plan. x x x"
Transfer Certificate of Title No. T-24136 (Exh. "10") covering Lot No.
1426-C reads.
"A parcel of land (Lot No. 1426-C of the subdivision plan Psd-44080,
being a portion of Lot 1426 of the Cadastral Survey of Cadiz, G.L.R.O.
Cad. Record No. 196), situated in the Poblacion, Municipality of Cadiz,
Province of Negros Occidental, Bounded on the NE., by Lot 1426-B of
the subdivision plan; on the SE., by Lot 1423 of Cadiz Cad., and on the
SW., by Calle Cabahug. x x x."
10
On the other hand, the technical descriptions of the properties covered by
Transfer Certificates of Title Nos. T-47854 to T-47857 pertaining to Lot
Nos. 1 to 4 (Exhs. "P", "P-1" to "P-3) read:
Transfer Certification of Title No. T-14754:
"A parcel of land (Lot 1 of the consolidation-subdivision plan (LRC) Pcs-
6611, being a portion of the consolidation of Lots 29-B, Psd-5573, 1246-
B, & 1246-C, Psd-44080 & 1412, Cadiz Cad., LRC (GLRO) Cad. Rec.
No. 196), situated in the City of Cadiz, Island of Negros x x x containing
an area of two hundred thirty-eight thousand five hundred eighteen (238,
518) square meters, more or less. x x x."
Transfer Certificate of Title No. T-14755:
"A parcel of land (Lot 2 of the consolidation-subdivision plan (LRC) Pcs-
6611, being a portion of the consolidation of Lots 29-B, Psd-5573, 1246-
B, & 1246-C, Psd-44080 & 1412, Cadiz Cad., LRC (GLRO) Cad. Rec.
No. 196, situated in the City of Cadiz, Island of Negros x x x containing
an area of TWO HUNDRED SIXTEEN THOUSAND ONE HUNDRED
SEVENTY-SIX (216,176) Square Meters, more or less. x x x."
Transfer Certificate of Title No. T-14756:
"A parcel of land (Lot 3 of the consolidation-subdivision plan (LRC) Pcs-
6611, being a portion of the consolidation of Lots 29B, Psd-5573, 1246-
B, & 1246-C, Psd-44080 & 1412, Cadiz Cad., LRC (GLRO) Cad. Rec.
No. 196), situated in the City of Cadiz, Island of Negros x x x containing
an area of eleven thousand four hundred ninety-six (11,496) square
meters, more or less. x x x."
Transfer Certificate of Title No. T-14757:
"A parcel of land (Lot 4 of the consolidation-subdivision plan (LRC) Pcs-
6611, being a portion of the consolidation of Lots 29-B, Psd-5573, 1246-
B, & 1246-C, Psd-44080 & 1412, Cadiz Cad., LRC (GLRO) Cad. Rec.
No. 196), situated in the City of Cadiz, Island of Negros. Bounded on the
NE., points 31 to 1 and 1 to 6 by Lot 1426-A, Psd-44080 x x x containing
an area of fifteen thousand three hundred ninety-two (15,932) square
meters, more or less. x x x."
As can be gleaned clearly from the foregoing, Lots Nos. 1426-B and
1426-C came from Psd-44080. In the same way that Lots Nos. 1246-B
and 1246-C came from Psd-44080. Defendant-appellant submitted a
certified copy of the Cadastral Map of Cadiz (Exh. "12", p. 986, Records
Vol. 4) showing that adjacent to Lot No. 29-B was Lot No. 1426 and
being continguous, these lots could be consolidated. Even plaintiffs-
appellees’ witness Engr. Luvimin Canoy testified on the possibility that
a typographical error might have been committed in listing the lot
numbers in the title (pp. 39-41, TSN, September 9, 1992).
There was no evidence to the effect that defendant-appellant caused the
erroneous designation of Lots Nos. 1426-B and 1426-C as Lots Nos.
1246-B and 1246-C, respectively, when it consolidated these lots. The
error indeed was only typographical as the subject lots all came from Psd-
44080. In the absence of evidence that defendant-appellant employed
fraud in consolidating these lots, a typographical error in the designation
of lot numbers in the Certificates of Title would not warrant their
cancellation. An amendment may cure the error. It has been aptly ruled
in one case that in the interest of justice and equity, the title-holder may
not be made to bear the unfavorable effect of the mistake or negligence
of the State’s agents, in the absence of proof of his complicity in a fraud
or of manifest damage to third persons (Republic vs. Court of Appeals,
301 SCRA 366).18
We have examined the factual bases of the CA in reaching its decision,
and have found that its aforequoted findings of fact and conclusions were
based on the evidence presented at the trial. In view of this, the Court
accepts the findings of fact and conclusions of the CA, not just because
we are not a trier of facts, but, more importantly, because the CA
creditably performed its main task of conducting a thorough review of
the evidence and records of the case in order to eruditely and carefully
address each of the issues raised and argued by the Dicos.
Secondly, the CA correctly pointed out that under Article 1456 of the
Civil Code, the person obtaining property through mistake or fraud is
considered by force of law a trustee of an implied trust for the benefit of
the person from whom the property comes. Under Article 1144, Civil
Code, an action upon an obligation created by law must be brought within
10 years from the time the right of action accrues. Consequently, an
action for reconveyance based on implied or constructive trust prescribes
in 10 years.
Here, the CA observed that even granting that fraud intervened in the
issuance of the transfer certificates of title, and even assuming that the
Dicos had the personality to demand the reconveyance of the affected
property on the basis of implied or constructive trust, the filing of their
complaint for that purpose only on May 12, 1986 proved too late for
them.
That observation was correct and in accord with law and
jurisprudence.1âwphi1 Verily, the reckoning point for purposes of the
Dicos’ demand of reconveyance based on fraud was their discovery of
the fraud. Such discovery was properly pegged on the date of the
registration of the transfer certificates of title in the adverse parties’
names, because registration was a constructive notice to the whole
world.19 The long period of 29 years that had meanwhile lapsed from the
issuance of the pertinent transfer certificate of title on September 30,
1934 (the date of recording of TCT No. RT-9933 (16739) in the name of
the Lopezes) or on November 10, 1956 (the date of recording of TCT No.
T-41835 in VMC’s name) was way beyond the prescriptive period of 10
years.
And, lastly, the insistence of the Dicos that prescription could not be used
by the CA to bar their claim for reconveyance by virtue of VMC’s failure
to aver them m a motion to dismiss or m the answer was unwarranted.
We agree with VMC's contention to the contrary. Although defenses and
objections not pleaded in a motion to dismiss or in an answer are deemed
waived, it was really incorrect for the Dicos to insist that prescription
could not be appreciated against them for that reason. Their insistence
was contrary to Section l, Rule 9 of the Rules of Court, which provides
as follows:
Section 1. Defenses and objections not pleaded.- Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed
waived. However, when it appears from the pleadings or the evidence on
record that the court has no jurisdiction over the subject matter, that there
is another action pending between the same parties for the same cause, or
that the action is barred by a prior judgment or by statute of limitations,
the court shall dismiss the claim. (2a)
Under the rule, the defenses of lack of jurisdiction over the subject matter,
litis pendentia, res judicata, and prescription of action may be raised at
any stage of the proceedings, even for the first time on appeal, except that
the objection to the lack of jurisdiction over the subject matter may be
barred by laches.20
WHEREFORE, the Court AFFIRMS the decision of the Court of
Appeals promulgated on September II, 2002; and ORDERS the
petitioners to pay the costs of suit.
SO ORDERED.
G.R. No. 165770 August 9, 2010
HEIRS OF FRANCISCA MEDRANO, namely YOLANDA R.
MEDRANO, ALFONSO R. MEDRANO, JR., EDITA M. ALFARO,
MARITES M. PALENTINOS, and GIOVANNI MEDRANO,
represented by their legal representative, Marites Medrano-
Palentinos, Petitioners,
vs.
ESTANISLAO DE VERA, Respondent.
DECISION
DEL CASTILLO, J.:
In cases where the subject property is transferred by the defendant during
the pendency of the litigation, the interest of the transferee pendente lite
cannot be considered independent of the interest of his transferors. If the
transferee files an answer while the transferor is declared in default, the
case should be tried on the basis of the transferee’s answer and with the
participation of the transferee.
11
This Petition for Review on Certiorari1 assails the June 25, 2004
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 80053, which
contained the following dispositive portion:
WHEREFORE, premises considered, the petition is hereby GRANTED
and this Court orders that the case be remanded to the court a quo for
further trial.
SO ORDERED.3
Likewise assailed is the appellate court’s October 6, 2004
Resolution4 denying petitioners’ Motion for Reconsideration.
Factual Antecedents
This case concerns a 463-square meter parcel of land5 covered by
Transfer Certificate of Title (TCT) No. 41860 in the name of Flaviana De
Gracia (Flaviana). In 1980, Flaviana died6 intestate, leaving her half-
sisters Hilaria Martin-Paguyo (Hilaria) and Elena Martin-Alvarado
(Elena) as her compulsory heirs.
In September 1982, Hilaria and Elena, by virtue of a private document
denominated "Tapno Maamoan ti Sangalobongan,"7 waived all their
hereditary rights to Flaviana’s land in favor of Francisca Medrano
(Medrano). It stated that the waiver was done in favor of Medrano in
consideration of the expenses that she incurred for Flaviana’s medication,
hospitalization, wake and burial. In the same year, Medrano built her
concrete bungalow on the land in question without any objection from
Hilaria and Elena or from their children.
When Hilaria and Elena died, some of their children affirmed the contents
of the private document executed by their deceased mothers. To that end,
they executed separate Deeds of Confirmation of Private Document and
Renunciation of Rights in favor of Medrano.8 They likewise affirmed in
said documents that Medrano had been occupying and possessing the
subject property as owner since September 1982.
Due to the refusal of the other children9 to sign a similar renunciation,
Medrano filed a Complaint10 on April 27, 2001 for quieting of title,
reconveyance, reformation of instrument, and/or partition with damages
against Pelagia M. Paguyo-Diaz (Pelagia), Faustina Paguyo-Asumio
(Faustina), Jesus Paguyo (Jesus), Veneranda Paguyo-Abrenica, Emilio
a.k.a. Antonio Alvarado, Francisca Alvarado-Diaz (Francisca) and
Estrellita Alvarado-Cordero (Estrellita). The case was docketed as Civil
Case No. U-7316 and raffled to Branch 48 of the Regional Trial Court
(RTC) of Urdaneta, Pangasinan. Medrano then caused the annotation of
a notice of lis pendens on TCT No. 41860 11 on May 3, 2001.
Summons upon the original complaint was duly served upon Pelagia
and Estrellita .12
On August 29, 2001, Medrano filed an Amended
Complaint13 impleading the widow and children of Antonio Alvarado, in
view of the latter’s death.14 Summons upon the amended complaint was
served upon the other defendants,15 but no longer served upon Pelagia
and Estrellita.
On April 2, 2002, respondent Estanislao D. De Vera (De Vera) filed an
Answer with Counterclaim.16 De Vera presented himself as the real
party-in-interest on the ground that some of the named defendants
(Faustina, Pelagia, Francisca, Elena Kongco-Alvarado, Jesus, and
Estrellita) had executed a Deed of Renunciation of Rights17 in his favor
on March 23, 2002. He maintained that the "Tapno Maamoan ti
Sangalobongan" that was executed by the defendants’ predecessors in
favor of Medrano was null and void for want of consideration. Thus,
while some children affirmed the renunciation of their deceased mothers’
rights in the lot in favor of Medrano, the other children renounced their
hereditary rights in favor of De Vera.
Medrano filed a Motion to Expunge Answer with Counterclaim of
Estanislao D. De Vera and to Declare Defendants in Default.18 She
argued that respondent De Vera had no personality to answer the
complaint since he was not authorized by the named defendants to answer
in their behalf.
In an Order,19 dated July 30, 2002, the trial court disagreed with
Medrano’s argument and admitted De Vera’s Answer with Counterclaim.
The trial court opined that De Vera did not need a special power of
attorney from the defendants because he did not answer the complaint in
their behalf. De Vera made a voluntary appearance in the case as the
transferee of the defendants’ rights to the subject property. The trial court
further explained that when the presence of other parties is required for
granting complete relief, the court shall order them to be brought in as
defendants. While it was unsure whether De Vera was an indispensable
party to the case, the trial court opined that at the very least he was a
necessary party for granting complete relief. It thus held that the
admission of De Vera’s Answer with Counterclaim is proper in order to
avoid multiplicity of suits.20 In the same Order, the court declared the
named defendants in default for not answering the complaint despite
valid service of summons. Thus, it appears that the court a quo treated
the named defendants and De Vera as distinct and separate parties.
Medrano’s response to the aforesaid order was two-fold. With regard to
the order declaring the named defendants in default, Medrano filed on
February 13, 2003 a Motion to Set Reception of Evidence Before the
Branch Clerk of Court.21 She argued that she could present evidence ex
parte against the defaulting defendants on the ground that she presented
alternative causes of action against them in her complaint. Her cause of
action on the basis of acquisitive prescription can be raised solely against
the defaulting original defendants.22 She thus prayed to be allowed to
present evidence ex parte with respect to her claim of acquisitive
prescription against the defaulting defendants. As for the order admitting
De Vera’s Answer with Counterclaim, Medrano filed on February 21,
2003 a Motion for Reconsideration of Order dated July 30, 2002.23 She
asked the court to order De Vera to file a pleading-in-intervention so that
he could be properly named as a defendant in the case.
In an Order24 dated March 6, 2003, the trial court resolved to grant
Medrano’s Motion to Set Reception of Evidence. It ordered the conduct
of ex parte presentation of evidence on the same day and the continuation
thereof to proceed on March 10, 2003. Thus, Medrano presented her
evidence ex parte on the set dates. On March 10, 2003, the case was
submitted for resolution.25
Given the court’s standing order which admitted De Vera’s Answer with
Counterclaim, De Vera filed a Motion to Set the Case for Preliminary
Conference on March 27, 2003.26
The trial court resolved petitioners’ and De Vera’s respective pending
motions in its March 31, 2003 Order.27 The trial court granted Medrano’s
motion and set aside its Order which admitted De Vera’s Answer with
Counterclaim. Citing Rule 19 of the Rules of Court, the court ordered De
Vera to file a pleading-in-intervention so that he could be recognized as
a party-defendant. As a necessary consequence to this ruling, the trial
court denied De Vera’s motion to set the case for preliminary conference
for prematurity.
De Vera did not comply with the court’s order despite service upon his
lawyer, Atty. Simplicio M. Sevilleja, on April 2, 2003.
Ruling of the Regional Trial Court
The RTC rendered its Decision28 on April 21, 2003. It ruled that
ownership over the titled property has vested in petitioners by virtue of
good faith possession for more than 10 years; thus, it was no longer
necessary to compel the defendants - heirs of Hilaria and Elena - to
execute an instrument to confirm Medrano’s rightful ownership over the
land.
The trial court likewise held that the private document denominated as
"Tapno Maamoan Ti Sangalobongan" sufficiently conveyed to Medrano
the subject property. The court held that the conveyance was done in
consideration of the various expenses that Medrano incurred for
Flaviana’s benefit. While the court conceded that the parcel of land was
not adequately described in the "Tapno Maamoan ti Sangalobongan," its
location, metes and bounds were nonetheless confirmed by the
defendants’ siblings in their respective deeds of confirmation.
The dispositive portion of the Decision reads, in toto:
WHEREFORE, judgment is hereby rendered:
(1) Declaring [Medrano], substituted by her heirs, as the
rightful and lawful owner of the land covered by T.C.T. No.
41860;29
12
 (2) Ordering the Register of Deeds of Tayug, Pangasinan to
cancel T.C.T. No. 41860 and to issue another Transfer
Certificate of Title in the name of [Medrano];
All other claims are hereby denied for lack of merit.
SO ORDERED.30
De Vera filed a Motion for Reconsideration31 arguing that he was an
indispensable party who was not given an opportunity to present his
evidence in the case. He also maintained that Medrano was not the owner
of the property, but a mere administratrix of the land as evidenced by the
records in SP Proc. No. 137577.32
De Vera’s motion was denied33 for lack of merit on July 22, 2003. The
court noted that De Vera had no legal personality to file a motion for
reconsideration because he did not file a pleading-in-intervention. The
trial court explained it would have allowed De Vera to present his
evidence in the case had he complied with the court’s order to file a
pleading-in-intervention.
On September 10, 2003, De Vera filed a Manifestation 34 informing the
trial court of his intention to file a petition for certiorari and mandamus
before the CA, pursuant to Rule 41, Section 1, second paragraph and Rule
65 of the Rules of Court.
On October 7, 2003, petitioners filed a Motion for Entry of Judgment and
Execution35 before the trial court. They also filed a Counter-
Manifestation36 to De Vera’s Manifestation. Petitioners insisted that De
Vera, as a transferee pendente lite, was bound by the final judgment or
decree rendered against his transferors. Even assuming that De Vera had
a right to appeal, the period therefor had already lapsed on August 12,
2003.
In its Order37 dated December 10, 2003, the court a quo maintained that
De Vera was not a party to the suit, hence his appeal would not stay the
finality and execution of judgment. Thus the trial court ordered the entry
of judgment in Civil Case No. U-7316. The writ of execution was issued
on December 12, 2003.
De Vera sought reconsideration38 of the above order but the same was
denied39 on the basis that De Vera had no personality to assail any order,
resolution, or decision of the trial court in Civil Case No. U-7316.
The Register of Deeds of Tayug, Pangasinan complied with the writ by
canceling TCT No. 41860 in the name of Flaviana De Gracia and issuing
TCT No. 65635 in the names of petitioners40 on April 19, 2004.
Proceedings before the Court of Appeals
De Vera argued in his Petition for Certiorari and Mandamus41 before the
CA that the trial court erred in declaring the defendants in default and
sought a writ compelling the trial court to try the case anew. He insisted
that he stepped into the shoes of the defendants with regard to the subject
property by virtue of the quitclaim that the defendants executed in his
favor. Thus, the trial court should have considered the defendants as
properly substituted by De Vera when he filed his Answer.
The standing order of the trial court with regard to De Vera at the time
that it allowed Medrano to present her evidence was to admit De Vera’s
Answer with Counterclaim. Thus, De Vera argued that it was improper
for the trial court to have allowed Medrano to present her evidence ex
parte because it had yet to rule on whether De Vera had personality to
participate in the proceedings.
Ruling of the Court of Appeals
The appellate court agreed with De Vera. The CA noted that the ex parte
presentation of evidence took place on March 6 and 10, 2003; while the
Motion to Expunge Answer and Require Filing of Pleading-in-
Intervention was granted much later on March 31, 2003. The CA held
that the trial court gravely abused its discretion by allowing Medrano to
present her evidence ex parte while De Vera’s personality to participate
in the case still remained unresolved. The premature ex parte presentation
of evidence rendered a pleading-in-intervention moot and academic.
The CA pointed out that the trial court should have exercised its authority
to order the substitution of the original defendants instead of requiring
De Vera to file a pleading-in-intervention. This is allowed under Rule 3,
Section 19 of the Rules of Court. Since a transferee pendente lite is a
proper party42 to the case, the court can order his outright substitution for
the original defendants.
The CA further held that De Vera’s failure to file the necessary pleading-
in-intervention was a technical defect that could have been easily cured.
The trial court could have settled the controversy completely on its merits
had it admitted De Vera’s Answer with Counterclaim. Not affording De
Vera his right to adduce evidence is not only a manifest grave abuse of
discretion amounting to lack or excess of jurisdiction but also runs
counter to the avowed policy of avoiding multiplicity of suits.
The appellate court then ordered the case remanded to the trial court to
afford De Vera an opportunity to present his evidence.
Petitioners filed a Motion for Reconsideration,43 which motion was
denied44 for lack of merit on October 6, 2004.
Issues
I
Whether De Vera could participate in Civil Case No. U-7316
without filing a motion to intervene
II
Whether De Vera is bound by the judgment against his transferors
III
Whether it was proper for the CA to take cognizance of respondent’s
Petition for Certiorari and Mandamus
Our Ruling
We sustain the CA’s ruling that the trial court gravely abused its
discretion in refusing to allow De Vera to participate in the case and
requiring him to file a motion to intervene.
The trial court misjudged De Vera’s interest in Civil Case No. U-7316. It
held that De Vera’s right to participate in the case was independent of the
named defendants. Because of its ruling that De Vera had an
"independent interest," the trial court considered his interest as separate
from Medrano’s claims against the named defendants, and allowed the
latter to be tried separately. Thus, it admitted De Vera’s Answer with
Counterclaim but declared the named defendants in default and allowed
the ex parte presentation of evidence by Medrano against the named
defendants.
The trial court’s approach is seriously flawed because De Vera’s interest
is not independent of or severable from the interest of the named
defendants. De Vera is a transferee pendente lite of the named defendants
(by virtue of the Deed of Renunciation of Rights that was executed in his
favor during the pendency of Civil Case No. U-7316). His rights were
derived from the named defendants and, as transferee pendente lite, he
would be bound by any judgment against his transferors under the rules
of res judicata.45 Thus, De Vera’s interest cannot be considered and tried
separately from the interest of the named defendants.
It was therefore wrong for the trial court to have tried Medrano’s case
against the named defendants (by allowing Medrano to present evidence
ex parte against them) after it had already admitted De Vera’s answer.
What the trial court should have done is to treat De Vera (as transferee
pendente lite) as having been joined as a party-defendant, and to try the
case on the basis of the answer De Vera had filed and with De Vera’s
participation. As transferee pendente lite, De Vera may be allowed to join
the original defendants under Rule 3, Section 19:
SEC. 19. Transfer of interest. – In case of any transfer of interest, the
action may be continued by or against the original party, unless the court
upon motion directs the person to whom the interest is transferred to be
substituted in the action or joined with the original party. (Emphasis
supplied)
13
The above provision gives the trial court discretion to allow or disallow
the substitution or joinder by the transferee. Discretion is permitted
because, in general, the transferee’s interest is deemed by law as
adequately represented and protected by the participation of his
transferors in the case. There may be no need for the transferee pendente
lite to be substituted or joined in the case because, in legal contemplation,
he is not really denied protection as his interest is one and the same as his
transferors, who are already parties to the case.46
While the rule allows for discretion, the paramount consideration for the
exercise thereof should be the protection of the parties’ interests and their
rights to due process. In the instant case, the circumstances demanded
that the trial court exercise its discretion in favor of allowing De Vera to
join in the action and participate in the trial. It will be remembered that
the trial court had already admitted De Vera’s answer when it declared
the original defendants in default. As there was a transferee pendente lite
whose answer had already been admitted, the trial court should have tried
the case on the basis of that answer, based on Rule 9, Section 3(c):
Effect of partial default. – When a pleading asserting a claim states a
common cause of action against several defending parties, some of whom
answer and the others fail to do so, the court shall try the case against all
upon the answers thus filed and render judgment upon the evidence
presented.
Thus, the default of the original defendants should not result in the ex
parte presentation of evidence because De Vera (a transferee pendente
lite who may thus be joined as defendant under Rule 3, Section 19) filed
an answer. The trial court should have tried the case based on De Vera’s
answer, which answer is deemed to have been adopted by the non-
answering defendants.47
To proceed with the ex parte presentation of evidence against the named
defendants after De Vera’s answer had been admitted would not only be
a violation of Rule 9, Section 3(c), but would also be a gross disregard of
De Vera’s right to due process. This is because the ex parte presentation
of evidence would result in a default judgment which would bind not just
the defaulting defendants, but also De Vera, precisely because he is a
transferee pendente lite.48 This would result in an anomaly wherein De
Vera would be bound by a default judgment even if he had filed an
answer and expressed a desire to participate in the case.
We note that under Rule 3, Section 19, the substitution or joinder of the
transferee is "upon motion", and De Vera did not file any motion for
substitution or joinder. However, this technical flaw may be disregarded
for the fact remains that the court had already admitted his answer and
such answer was on record when the ex parte presentation of evidence
was allowed by the court. Because De Vera’s answer had already been
admitted, the court should not have allowed the ex parte presentation of
evidence.
We are not persuaded by petitioners’ insistence that De Vera could not
have participated in the case because he did not file a motion to intervene.
The purpose of intervention is to enable a stranger to an action to become
a party in order for him to protect his interest and for the court to settle
all conflicting claims. Intervention is allowed to avoid multiplicity of
suits more than on due process considerations. The intervenor can choose
not to participate in the case and he will not be bound by the judgment.
In this case, De Vera is not a stranger to the action but a transferee
pendente lite. As mentioned, a transferee pendente lite is deemed joined
in the pending action from the moment when the transfer of interest is
perfected.49His participation in the case should have been allowed by due
process considerations.50
We likewise adopt with approval the appellate court’s observation that
De Vera’s failure to file a pleading-in-intervention will not change the
long foregone violation of his right to due process. The ex parte
presentation of evidence had already been terminated when the trial court
required De Vera to file his pleading-in-intervention. Even if he complied
with the order to file a pleading-in-intervention, the damage had already
been done. The precipitate course of action taken by the trial court
rendered compliance with its order moot.
Given the Court’s finding that the ex parte presentation of evidence
constituted a violation of due process rights, the trial court’s judgment by
default cannot bind De Vera. A void judgment cannot attain finality and
its execution has no basis in law. The case should be remanded to the trial
court for trial based on De Vera’s answer and with his participation.
Certiorari petition before the CA proper
Petitioners point out that De Vera admitted receiving the trial court’s
Order denying his motion for reconsideration on July 28, 2003. Thus he
only had until August 12, 2003 to file an appeal of the decision. Having
lost his right to appeal by allowing the period therefor to lapse,
respondent has also lost his right to file a petition for certiorari before the
CA. A special civil action for certiorari is not a substitute for the lost
remedy of appeal.
Respondent argues that a Rule 65 certiorari petition before the CA is
proper because an ordinary appeal would not have been speedy and
adequate remedy to properly relieve him from the injurious effects of the
trial court’s orders.
We agree with respondent that ordinary appeal was not an adequate
remedy under the circumstances of the case. An appeal seeks to correct
errors of judgment committed by a court, which has jurisdiction over the
person and the subject matter of the dispute. In the instant case, the trial
court maintained that it had no jurisdiction over De Vera because it did
not consider him a party to the case. Its stance is that De Vera, as a non-
party to the case, could not participate therein, much less assail any of the
orders, resolutions, or judgments of the trial court. An appeal would have
been an illusory remedy in this situation because his notice of appeal
would have certainly been denied on the ground that he is not a party to
the case.
On the other hand, certiorari is an extraordinary remedy for the
correction of errors of jurisdiction. It is proper if the court acted without
or in grave abuse of discretion amounting to lack or excess of jurisdiction
and there is no appeal or any plain, speedy, and adequate remedy in law.
Given the circumstance that the final decision in Civil Case No. U-7316
prejudices De Vera’s rights despite the fact that he was not recognized as
a party thereto and was not allowed to assail any portion thereof, De
Vera’s remedy was to annul the trial court proceedings on the ground that
it was conducted with grave abuse of discretion amounting to lack of
jurisdiction. With such annulment, the trial court should hear the case
anew with De Vera fully participating therein.
WHEREFORE, the petition is DENIED. The June 25, 2004 Decision
of the Court of Appeals in CA-G.R. SP No. 80053 and its October 6, 2004
Resolution are AFFIRMED.
G.R. No. 153567 February 18, 2008
LIBRADA M. AQUINO, petitioner,
vs.
ERNEST S. AURE1, respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari2 under Rule 45
of the Revised Rules of Court filed by petitioner Librada M. Aquino
(Aquino), seeking the reversal and the setting aside of the Decision3 dated
17 October 2001 and the Resolution4 dated 8 May 2002 of the Court of
Appeals in CA-G.R. SP No. 63733. The appellate court, in its assailed
Decision and Resolution, reversed the Decision5 of the Regional Trial
Court (RTC) of Quezon City, Branch 88, affirming the Decision 6 of the
Metropolitan Trial Court (MeTC) of Quezon City, Branch 32, which
dismissed respondent Ernesto Aure’s (Aure) complaint for ejectment on
the ground, inter alia, of failure to comply with barangay conciliation
proceedings.
The subject of the present controversy is a parcel of land situated in Roxas
District, Quezon City, with an area of 449 square meters and covered by
Transfer Certificate of Title (TCT) No. 205447 registered with the
Registry of Deeds of Quezon City (subject property).7
Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a
Complaint for ejectment against Aquino before the MeTC docketed as
Civil Case No. 17450. In their Complaint, Aure and Aure Lending
alleged that they acquired the subject property from Aquino and her
husband Manuel (spouses Aquino) by virtue of a Deed of Sale8 executed
on 4 June 1996. Aure claimed that after the spouses Aquino received
substantial consideration for the sale of the subject property, they refused
to vacate the same.9
14
In her Answer,10 Aquino countered that the Complaint in Civil Case No.
17450 lacks cause of action for Aure and Aure Lending do not have any
legal right over the subject property. Aquino admitted that there was a
sale but such was governed by the Memorandum of Agreement11 (MOA)
signed by Aure. As stated in the MOA, Aure shall secure a loan from a
bank or financial institution in his own name using the subject property
as collateral and turn over the proceeds thereof to the spouses Aquino.
However, even after Aure successfully secured a loan, the spouses
Aquino did not receive the proceeds thereon or benefited therefrom.
On 20 April 1999, the MeTC rendered a Decision in Civil Case No.
17450 in favor of Aquino and dismissed the Complaint for ejectment of
Aure and Aure Lending for non-compliance with the barangay
conciliation process, among other grounds. The MeTC observed that
Aure and Aquino are residents of the same barangay but there is no
showing that any attempt has been made to settle the case amicably at
the barangay level. The MeTC further observed that Aure Lending was
improperly included as plaintiff in Civil Case No. 17450 for it did not
stand to be injured or benefited by the suit. Finally, the MeTC ruled that
since the question of ownership was put in issue, the action was converted
from a mere detainer suit to one "incapable of pecuniary estimation"
which properly rests within the original exclusive jurisdiction of the
RTC. The dispositive portion of the MeTC Decision reads:
WHEREFORE, premises considered, let this case be, as it is,
hereby ordered DISMISSED. [Aquino’s] counterclaim is
likewise dismissed.12
On appeal, the RTC affirmed the dismissal of the Complaint on the same
ground that the dispute was not brought before the Barangay Council for
conciliation before it was filed in court. In a Decision dated 14 December
2000, the RTC stressed that the barangay conciliation process is
a conditio sine qua non for the filing of an ejectment complaint involving
residents of the same barangay, and failure to comply therewith
constitutes sufficient cause for the dismissal of the action. The RTC
likewise validated the ruling of the MeTC that the main issue involved in
Civil Case No. 17450 is incapable of pecuniary estimation and
cognizable by the RTC. Hence, the RTC ruled:
WHEREFORE, finding no reversible error in the appealed
judgment, it is hereby affirmed in its entirety.13
Aure’s Motion for Reconsideration was denied by the RTC in an
Order14 dated 27 February 2001.
Undaunted, Aure appealed the adverse RTC Decision with the Court of
Appeals arguing that the lower court erred in dismissing his Complaint
for lack of cause of action. Aure asserted that misjoinder of parties was
not a proper ground for dismissal of his Complaint and that the MeTC
should have only ordered the exclusion of Aure Lending as plaintiff
without prejudice to the continuation of the proceedings in Civil Case No.
17450 until the final determination thereof. Aure further asseverated that
mere allegation of ownership should not divest the MeTC of jurisdiction
over the ejectment suit since jurisdiction over the subject matter is
conferred by law and should not depend on the defenses and objections
raised by the parties. Finally, Aure contended that the MeTC erred in
dismissing his Complaint with prejudice on the ground of non-
compliance with barangay conciliation process. He was not given the
opportunity to rectify the procedural defect by going through
the barangay mediation proceedings and, thereafter, refile the
Complaint.15
On 17 October 2001, the Court of Appeals rendered a Decision, reversing
the MeTC and RTC Decisions and remanding the case to the MeTC for
further proceedings and final determination of the substantive rights of
the parties. The appellate court declared that the failure of Aure to subject
the matter to barangay conciliation is not a jurisdictional flaw and it will
not affect the sufficiency of Aure’s Complaint since Aquino failed to
seasonably raise such issue in her Answer. The Court of Appeals further
ruled that mere allegation of ownership does not deprive the MeTC of
jurisdiction over the ejectment case for jurisdiction over the subject
matter is conferred by law and is determined by the allegations advanced
by the plaintiff in his complaint. Hence, mere assertion of ownership by
the defendant in an ejectment case will not oust the MeTC of its summary
jurisdiction over the same. The decretal part of the Court of Appeals
Decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED
- and the decisions of the trial courts below REVERSED and SET
ASIDE. Let the records be remanded back to the court a quo for further
proceedings – for an eventual decision of the substantive rights of the
disputants.16
In a Resolution dated 8 May 2002, the Court of Appeals denied the
Motion for Reconsideration interposed by Aquino for it was merely a
rehash of the arguments set forth in her previous pleadings which were
already considered and passed upon by the appellate court in its assailed
Decision.
Aquino is now before this Court via the Petition at bar raising the
following issues:
I.
WHETHER OR NOT NON-COMPLIANCE WITH THE
BARANGAY CONCILIATION PROCEEDINGS IS A
JURISDICTIONAL DEFECT THAT WARRANTS THE
DISMISSAL OF THE COMPLAINT.
II.
WHETHER OR NOT ALLEGATION OF OWNERSHIP
OUSTS THE MeTC OF ITS JURISDICTION OVER AN
EJECTMENT CASE.
The barangay justice system was established primarily as a means of
easing up the congestion of cases in the judicial courts. This could be
accomplished through a proceeding before the barangay courts which,
according to the conceptor of the system, the late Chief Justice Fred Ruiz
Castro, is essentially arbitration in character, and to make it truly
effective, it should also be compulsory. With this primary objective of
the barangay justice system in mind, it would be wholly in keeping with
the underlying philosophy of Presidential Decree No. 1508, otherwise
known as the Katarungang Pambarangay Law, and the policy behind it
would be better served if an out-of-court settlement of the case is reached
voluntarily by the parties.17
The primordial objective of Presidential Decree No. 1508 is to reduce the
number of court litigations and prevent the deterioration of the quality of
justice which has been brought by the indiscriminate filing of cases in the
courts.18 To ensure this objective, Section 6 of Presidential Decree No.
150819 requires the parties to undergo a conciliation process before
the Lupon Chairman or the Pangkat ng Tagapagkasundo as a
precondition to filing a complaint in court subject to certain
exceptions20 which are inapplicable to this case. The said section has
been declared compulsory in nature.21
Presidential Decree No. 1508 is now incorporated in Republic Act No.
7160, otherwise known as The Local Government Code, which took
effect on 1 January 1992.
The pertinent provisions of the Local Government Code making
conciliation a precondition to filing of complaints in court, read:
SEC. 412. Conciliation.- (a) Pre-condition to filing of
complaint in court. – No complaint, petition, action, or
proceeding involving any matter within the authority of the
lupon shall be filed or instituted directly in court or any other
government office for adjudication, unless there has been a
confrontation between the parties before the lupon chairman or
the pangkat, and that no conciliation or settlement has been
reached as certified by the lupon secretary or pangkat secretary
as attested to by the lupon chairman or pangkat chairman or
unless the settlement has been repudiated by the parties thereto.
(b) Where parties may go directly to court. – The parties may
go directly to court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal
liberty calling for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies such
as preliminary injunction, attachment, delivery of personal
property, and support pendente lite; and
15
 (4) Where the action may otherwise be barred by the statute of
limitations.
(c) Conciliation among members of indigenous cultural
communities. – The customs and traditions of indigenous
cultural communities shall be applied in settling disputes
between members of the cultural communities.
SEC. 408. Subject Matter for Amicable Settlement; Exception
Therein. – The lupon of each barangay shall have authority to
bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:
(a) Where one party is the government or any subdivision or
instrumentality thereof;
(b) Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1)
year or a fine exceeding Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in
different cities or municipalities unless the parties thereto agree
to submit their differences to amicable settlement by an
appropriate lupon;
(f) Disputes involving parties who actually reside in barangays
of different cities or municipalities, except where such
barangay units adjoin each other and the parties thereto agree
to submit their differences to amicable settlement by an
appropriate lupon;
(g) Such other classes of disputes which the President may
determine in the interest of justice or upon the recommendation
of the Secretary of Justice.
There is no dispute herein that the present case was never referred to the
Barangay Lupon for conciliation before Aure and Aure Lending
instituted Civil Case No. 17450. In fact, no allegation of
such barangay conciliation proceedings was made in Aure and Aure
Lending’s Complaint before the MeTC. The only issue to be resolved is
whether non-recourse to the barangay conciliation process is a
jurisdictional flaw that warrants the dismissal of the ejectment suit filed
with the MeTC.
Aquino posits that failure to resort to barangay conciliation makes the
action for ejectment premature and, hence, dismissible. She likewise
avers that this objection was timely raised during the pre-trial and even
subsequently in her Position Paper submitted to the MeTC.
We do not agree.
It is true that the precise technical effect of failure to comply with the
requirement of Section 412 of the Local Government Code
on barangay conciliation (previously contained in Section 5 of
Presidential Decree No. 1508) is much the same effect produced by non-
exhaustion of administrative remedies -- the complaint becomes afflicted
with the vice of pre-maturity; and the controversy there alleged is not ripe
for judicial determination. The complaint becomes vulnerable to a motion
to dismiss.22 Nevertheless, the conciliation process is not a
jurisdictional requirement, so that non-compliance therewith cannot
affect the jurisdiction which the court has otherwise acquired over
the subject matter or over the person of the defendant.23
As enunciated in the landmark case of Royales v. Intermediate Appellate
Court24:
Ordinarily, non-compliance with the condition precedent
prescribed by P.D. 1508 could affect the sufficiency of the
plaintiff's cause of action and make his complaint vulnerable to
dismissal on ground of lack of cause of action or
prematurity; but the same would not prevent a court of
competent jurisdiction from exercising its power of
adjudication over the case before it, where the defendants,
as in this case, failed to object to such exercise of
jurisdiction in their answer and even during the entire
proceedings a quo.
While petitioners could have prevented the trial court from
exercising jurisdiction over the case by seasonably taking
exception thereto, they instead invoked the very same
jurisdiction by filing an answer and seeking affirmative relief
from it. What is more, they participated in the trial of the case
by cross-examining respondent Planas. Upon this premise,
petitioners cannot now be allowed belatedly to adopt an
inconsistent posture by attacking the jurisdiction of the
court to which they had submitted themselves voluntarily.x
x x (Emphasis supplied.)
In the case at bar, we similarly find that Aquino cannot be allowed to
attack the jurisdiction of the MeTC over Civil Case No. 17450 after
having submitted herself voluntarily thereto. We have scrupulously
examined Aquino’s Answer before the MeTC in Civil Case No. 17450
and there is utter lack of any objection on her part to any deficiency in
the complaint which could oust the MeTC of its jurisdcition.
We thus quote with approval the disquisition of the Court of Appeals:
Moreover, the Court takes note that the defendant [Aquino]
herself did not raise in defense the aforesaid lack of conciliation
proceedings in her answer, which raises the exclusive
affirmative defense of simulation. By this acquiescence,
defendant [Aquino] is deemed to have waived such objection.
As held in a case of similar circumstances, the failure of a
defendant [Aquino] in an ejectment suit to specifically allege
the fact that there was no compliance with the barangay
conciliation procedure constitutes a waiver of that defense. x x
x.25
By Aquino’s failure to seasonably object to the deficiency in the
Complaint, she is deemed to have already acquiesced or waived any
defect attendant thereto. Consequently, Aquino cannot thereafter move
for the dismissal of the ejectment suit for Aure and Aure Lending’s
failure to resort to the barangay conciliation process, since she is already
precluded from doing so. The fact that Aquino raised such objection
during the pre-trial and in her Position Paper is of no moment, for the
issue of non-recourse to barangay mediation proceedings should be
impleaded in her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of Civil
Procedure:
Sec. 1. Defenses and objections not pleaded. – Defenses and
objections not pleaded either in a motion to dismiss or in
the answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court has
no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same cause, or
that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim. (Emphasis
supplied.)
While the aforequoted provision applies to a pleading (specifically, an
Answer) or a motion to dismiss, a similar or identical rule is provided for
all other motions in Section 8 of Rule 15 of the same Rule which states:
Sec. 8. Omnibus Motion. - Subject to the provisions of Section
1 of Rule 9, a motion attacking a pleading, order, judgment, or
proceeding shall include all objections then available, and all
objections not so included shall be deemed waived.
The spirit that surrounds the foregoing statutory norm is to require the
party filing a pleading or motion to raise all available exceptions for relief
during the single opportunity so that single or multiple objections may be
avoided.26 It is clear and categorical in Section 1, Rule 9 of the Revised
Rules of Court that failure to raise defenses and objections in a motion to
dismiss or in an answer is deemed a waiver thereof; and basic is the rule
in statutory construction that when the law is clear and free from any
doubt or ambiguity, there is no room for construction or
interpretation.27 As has been our consistent ruling, where the law speaks
in clear and categorical language, there is no occasion for interpretation;
there is only room for application.28 Thus, although Aquino’s defense of
non-compliance with Presidential Decree No. 1508 is meritorious,
16
procedurally, such defense is no longer available for failure to plead the
same in the Answer as required by the omnibus motion rule.
Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The
1997 Rules of Civil Procedure provide only three instances when the
court may motu proprio dismiss the claim, and that is when the pleadings
or evidence on the record show that (1) the court has no jurisdiction over
the subject matter; (2) there is another cause of action pending between
the same parties for the same cause; or (3) where the action is barred by
a prior judgment or by a statute of limitations. Thus, it is clear that a court
may not motu proprio dismiss a case on the ground of failure to comply
with the requirement for barangay conciliation, this ground not being
among those mentioned for the dismissal by the trial court of a case on
its own initiative.
Aquino further argues that the issue of possession in the instant case
cannot be resolved by the MeTC without first adjudicating the question
of ownership, since the Deed of Sale vesting Aure with the legal right
over the subject property is simulated.
Again, we do not agree. Jurisdiction in ejectment cases is determined by
the allegations pleaded in the complaint. As long as these allegations
demonstrate a cause of action either for forcible entry or for unlawful
detainer, the court acquires jurisdiction over the subject matter. This
principle holds, even if the facts proved during the trial do not support
the cause of action thus alleged, in which instance the court -- after
acquiring jurisdiction -- may resolve to dismiss the action for
insufficiency of evidence.
The necessary allegations in a Complaint for ejectment are set forth in
Section 1, Rule 70 of the Rules of Court, which reads:
SECTION 1. Who may institute proceedings, and when. –
Subject to the provisions of the next succeeding section, a
person deprived of the possession of any land or building by
force, intimidation, threat, strategy, or stealth, or a lessor,
vendor, vendee, or other person against whom the possession
of any land or building is unlawfully withheld after the
expiration or termination of the right to hold possession, by
virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee,
or other person may at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person
or persons unlawfully withholding or depriving of possession,
or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.
In the case at bar, the Complaint filed by Aure and Aure Lending on 2
April 1997, alleged as follows:
2. [Aure and Aure Lending] became the owners of a house and
lot located at No. 37 Salazar Street corner Encarnacion Street,
B.F. Homes, Quezon City by virtue of a deed of absolute sale
executed by [the spouses Aquino] in favor of [Aure and Aure
Lending] although registered in the name of x x x Ernesto S.
Aure; title to the said property had already been issued in the
name of [Aure] as shown by a transfer Certificate of Title , a
copy of which is hereto attached and made an integral part
hereof as Annex A;
3. However, despite the sale thus transferring ownership of the
subject premises to [Aure and Aure Lending] as above-stated
and consequently terminating [Aquino’s] right of possession
over the subject property, [Aquino] together with her family, is
continuously occupying the subject premises notwithstanding
several demands made by [Aure and Aure Lending] against
[Aquino] and all persons claiming right under her to vacate the
subject premises and surrender possession thereof to [Aure and
Aure Lending] causing damage and prejudice to [Aure and
Aure Lending] and making [Aquino’s] occupancy together
with those actually occupying the subject premises claiming
right under her, illegal.29
It can be inferred from the foregoing that Aure, together with Aure
Lending, sought the possession of the subject property which was never
surrendered by Aquino after the perfection of the Deed of Sale, which
gives rise to a cause of action for an ejectment suit cognizable by the
MeTC. Aure’s assertion of possession over the subject property is based
on his ownership thereof as evidenced by TCT No. 156802 bearing his
name. That Aquino impugned the validity of Aure’s title over the subject
property and claimed that the Deed of Sale was simulated should not
divest the MeTC of jurisdiction over the ejectment case.30
As extensively discussed by the eminent jurist Florenz D. Regalado
in Refugia v. Court of Appeals31:
As the law on forcible entry and unlawful detainer cases now
stands, even where the defendant raises the question of
ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the
Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts nevertheless have the
undoubted competence to resolve the issue of ownership albeit
only to determine the issue of possession.
x x x. The law, as revised, now provides instead that when
the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall
be resolved only to determine the issue of possession. On its
face, the new Rule on Summary Procedure was extended to
include within the jurisdiction of the inferior courts ejectment
cases which likewise involve the issue of ownership. This does
not mean, however, that blanket authority to adjudicate the
issue of ownership in ejectment suits has been thus conferred
on the inferior courts.
At the outset, it must here be stressed that the resolution of this
particular issue concerns and applies only to forcible entry and
unlawful detainer cases where the issue of possession is
intimately intertwined with the issue of ownership. It finds no
proper application where it is otherwise, that is, where
ownership is not in issue, or where the principal and main issue
raised in the allegations of the complaint as well as the relief
prayed for make out not a case for ejectment but one for
recovery of ownership.
Apropos thereto, this Court ruled in Hilario v. Court of Appeals32:
Thus, an adjudication made therein regarding the issue of
ownership should be regarded as merely provisional and,
therefore, would not bar or prejudice an action between the
same parties involving title to the land. The foregoing doctrine
is a necessary consequence of the nature of forcible entry and
unlawful detainer cases where the only issue to be settled is the
physical or material possession over the real property, that is,
possession de facto and not possession de jure."
In other words, inferior courts are now "conditionally vested with
adjudicatory power over the issue of title or ownership raised by the
parties in an ejectment suit." These courts shall resolve the question of
ownership raised as an incident in an ejectment case where a
determination thereof is necessary for a proper and complete adjudication
of the issue of possession.33
WHEREFORE, premises considered, the instant Petition is DENIED.
The Court of Appeals Decision dated 17 October 2001 and its Resolution
dated 8 May 2002 in CA-G.R. SP No. 63733 are hereby AFFIRMED.
Costs against the petitioner.
SO ORDERED.
GEORGE PIDLIP P. PALILEO and JOSE DE LA
CRUZ, Petitioners,
vs.
PLANTERS DEVELOPMENT BANK, Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the July 28, 2009
Amended Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
01317-MIN, entitled "Planters Development Bank, Petitioner, versus
Hon. Eddie R. Roxas (in his capacity as the former Pairing Judge), Hon.
Panambulan M Mimbisa (in his capacity as the Presiding Judge of RTC,
Branch 37, General Santos City), Sheriff Marilyn P. Alano, Sheriff
Ramon A. Castillo, George Philip P. Palileo, and Jose Dela Cruz,
17
Respondents," as well as its August 23, 2010 Resolution3 denying
reconsideration of the assailed amended judgment.
Factual Antecedents
In a June 15, 2006 Decision4 rendered by the Regional Trial Court (RTC)
of General Santos City, Branch 37, in an action for specific
performance/sum of money with damages docketed as Civil Case No.
6474 and entitled "George Philip P. Palileo and Jose Dela Cruz, Plaintiffs,
versus, Planters Development Bank, Engr. Edgardo R. Torcende, Arturo
R. delos Reyes, Benjamin N. Tria, Mao Tividad and Emmanuel
Tesalonia, Defendants," it was held thus:
Before this Court is a complaint for specific performance and/or sum of
money and damages with prayer for the issuance of writs of preliminary
attachment and preliminary injunction filed by Plaintiff George Philip
Palileo and Jose L. Dela Cruz against Engr. Edgardo R. Torcende,
Planters Development Bank (defendant Bank), Arturo R. Delos Reyes,
Benjamin N. Tria, Mao Tividad, and Emmanuel Tesalonia on 22
December 1998.
After summons together with the verified Complaint and its annexes were
duly served upon defendants, the latter answered. During Pre-Trial
conference defendant Bank manifested [its] intention of settling the case
amicably and several attempts to explore the said settlement [were] made
as per records of this case. In the last pre-trial hearing dated 17 November
2000, only plaintiffs[,] George Philip Palileo and Jose L. Dela Cruz[,]
and their counsel appeared, thus, the latter move [sic] for the presentation
of evidence ex-parte, which was granted by the Court with the reservation
of verifying the return card [to determine] whether the order for the pre-
trial was indeed received by defendants. Finally, [at the] 21 November
2001 hearing, x x x defendants [again] failed to appear and their failure
to file pre-trial brief was noted; thus [plaintiffs were] allowed to present
evidence ex-parte before the Clerk of Court.
xxxx
IN LIGHT OF THE FOREGOING, defendants are hereby ORDERED to
jointly and severally PAY plaintiffs as follows:
i) Actual Damages;
a) Plaintiff George Philip Palileo[,] the amount of
Two Million Six Hundred Five Thousand Nine [sic]
Seventy Two Pesos and Ninety Two Centavos
(₱2,605,972.92), with 12% compounded interest [per
annum] reckoned from the filing of this case until full
settlement thereof;
b) Plaintiff Jose R. Dela Cruz[,] the amount of One
Million Five Hundred Twenty Nine Thousand Five
Hundred Eight Thousand [sic] and Eighty Centavos
(₱1,529,508.80), with 12% compounded interest [per
annum] reckoned from the filing of this case until full
settlement thereof;
ii) Moral damages in the amount of Five Hundred Thousand
Pesos (₱500,000.00) each;
iii) Exemplary Damages in the amount of Five Hundred
Thousand Pesos (₱500,000.00) each;
iv) Attorney’s Fees in the amount of Five Hundred Thousand
[Pesos] (₱500,000.00) each x x x and to pay the costs.
SO ORDERED.5
Respondent Planters Development Bank (PDB) received a copy of the
RTC Decision on July 17, 2006.
On July 31, 2006, PDB filed by private courier service – specifically
LBC6 – an Omnibus Motion for Reconsideration and for New
Trial,7 arguing therein that the trial court’s Decision was based on
speculation and inadmissible and selfserving pieces of evidence; that it
was declared in default after its counsel failed to attend the pre-trial
conference on account of the distance involved and difficulty in booking
a flight to General Santos City; that it had adequate and sufficient
defenses to the petitioners’ claims; that petitioners’ claims are only
against its codefendant, Engr. Edgardo R. Torcende [Torcende]; that the
award of damages and attorney’s fees had no basis; and that in the interest
of justice, it should be given the opportunity to cross-examine the
petitioners’ witnesses, and thereafter present its evidence.
Petitioners’ copy of the Omnibus Motion for Reconsideration and for
New Trial was likewise sent on July 31, 2006 by courier service through
LBC, but in their address of record – Tupi, South Cotabato – there was
no LBC service at the time.
On August 2, 2006, PDB filed with the RTC another copy of the Omnibus
Motion for Reconsideration and for New Trial via registered mail;
another copy thereof was simultaneously sent to petitioners by registered
mail as well.
Meanwhile, petitioners moved for the execution of the Decision pending
appeal.
In an August 30, 2006 Order,8 the RTC denied the Omnibus Motion for
Reconsideration and for New Trial, while it granted petitioners’ motion
for execution pending appeal, which it treated as a motion for the
execution of a final and executory judgment. The trial court held, as
follows:
Anent the first motion, records show that the Omnibus Motion for
Reconsideration and for New Trial dated 28 July 2006 was initially filed
via an LBC courier on 28 July 2006 and was actually received by the
Court on 31 July 2006, which was followed by filing of the same motion
thru registered mail on 2 August 2006. Said motion was set for hearing
by the movant on 18 August 2006 or 16 days after its filing.
The motion fails to impress. Section 5, Rule 159 of the 1997 Rules of
Civil Procedure as amended is pertinent thus:
Section 5. Notice of hearing. – The notice of hearing shall be addressed
to all parties concerned, and shall specify the time and date of the hearing
which must not be later than ten (10) days after the filing of the motion.
(Underscoring and italics supplied)
The aforesaid provision requires [that] every motion shall be addressed
to all parties concerned, and shall specify the time and date of the hearing
NOT later than ten (10) days after the filing of the motion. Being a
litigated motion, the aforesaid rule should have been complied [with]. Its
noncompliance renders it defective.
[The] Rule is settled that a motion in violation thereof is pro forma and a
mere scrap of paper. It presents no question which the court could decide
[upon]. In fact, the court has NO reason to consider it[;] neither [does]
the clerk of court [have] the right to receive the same. Palpably, the
motion is nothing but an empty formality deserving no judicial
cognizance. Hence, the motion deserves a short shrift and peremptory
denial for being procedurally defective.
As such, it does not toll the running of the reglementary period thus
making the assailed decision final and executory. This supervening
situation renders the Motion for Execution pending appeal academic but
at the same time it operates and could serve [as] well as a motion for
execution of the subject final and executory decision. Corollarily, it now
becomes the ministerial duty of this Court to issue a writ of execution
thereon.
IN LIGHT OF THE FOREGOING, the Omnibus Motion for
Reconsideration and New Trial is hereby DENIED, and the Motion for
Execution Pending Appeal (which is treated as a motion for execution of
a final and executory judgment) is also GRANTED as explained above.
Accordingly, let A WRIT OF EXECUTION be issued against herein
defendants to enforce the FINAL and EXECUTORY Decision dated 15
June 2006.
SO ORDERED.10
PDB received a copy of the above August 30, 2006 Order on September
14, 2006.11
On August 31, 2006, a Writ of Execution 12 was issued. PDB filed an
Urgent Motion to Quash Writ of Execution,13arguing that it was
prematurely issued as the June 15, 2006 Decision was not yet final and
executory; that its counsel has not received a copy of the writ; and that
18
no entry of judgment has been made with respect to the trial court’s
Decision. Later on, it filed a Supplemental Motion to Quash Writ of
Execution,14 claiming that the writ was addressed to its General Santos
branch, which had no authority to accept the writ.
On September 7, 2006, PDB filed a Notice of Appeal. 15
In an October 6, 2006 Order,16 the RTC denied the motion to quash the
writ of execution.
On October 9, 2006, the RTC issued a second Writ of Execution. 17
Ruling of the Court of Appeals
On October 11, 2006, PDB filed with the CA an original Petition for
Certiorari, which was later amended,18 assailing 1) the trial court’s
August 30, 2006 Order – which denied the omnibus motion for
reconsideration of the RTC Decision and for new trial; 2) its October 6,
2006 Order – which denied the motion to quash the writ of execution;
and 3) the August 31, 2006 and October 9, 2006 writs of execution.
On May 31, 2007, the CA issued a Decision19 dismissing PDB’s Petition
for lack of merit. It sustained the trial court’s pronouncement, that by
setting the hearing of the Omnibus Motion for Reconsideration and for
New Trial on August 18, 2006 – or 16 days after its filing on August 2,
2006 – PDB violated Section 5, Rule 15 of the Rules of Court which
categorically requires that the notice of hearing shall specify the time and
date of the hearing which must not be later than 10 days after the filing
of the motion. Citing this Court’s ruling in Bacelonia v. Court of
Appeals,20 the CA declared that the 10-day period prescribed in Section
5 is mandatory, and a motion that fails to comply therewith is pro forma
and presents no question which merits the attention and consideration of
the court.
The appellate court further characterized PDB’s actions as indicative of
a deliberate attempt to delay the proceedings, noting that it did not timely
move to reconsider the trial court’s November 17, 2000 ruling21 allowing
petitioners to present their evidence ex parte, nor did it move to be
allowed to present evidence in support of its defense. It was only after the
RTC rendered its June 15, 2006 Decision that PDB moved to be allowed
to cross-examine petitioners’ witnesses and to present its evidence on
defense.
The CA likewise held that the RTC did not err in ruling that the omnibus
motion for reconsideration did not toll the running of the prescriptive
period, which thus rendered the June 15, 2006 Decision final and
executory. It noted as well that PDB’s September 7, 2006 notice of appeal
was tardy.
The CA found no irregularity with respect to the writs of execution,
which contained the fallo of the June 15, 2006 Decision of the RTC –
thus itemizing the amount of the judgment obligation. Additionally, it
held that the fact that the judgment debtors are held solidarily liable does
not require that the writs should be served upon all of the defendants; that
it is not true that the sheriffs failed to make a demand for the satisfaction
of judgment upon PDB, as the mere presentation of the writ to it operated
as a demand to pay; and that PDB failed to attach the Sheriff’s Return to
its Petition, which thus prevents the appellate court from resolving its
claim that the writs were not validly served.
PDB filed a Motion for Reconsideration,22 arguing that Rule 15, Section
5 of the Rules of Court should be relaxed in view of the fact that judgment
against it was based on a technicality – and not on a trial on the merits;
that there was no deliberate intention on its part to delay the proceedings;
that the court acted with partiality in declaring that the Omnibus Motion
for Reconsideration and for New Trial was pro forma; that its notice of
appeal was timely; and that the writs of execution are null and void.
On July 28, 2009, the CA made a complete turnaround and issued the
assailed Amended Decision, which decreed thus:
WHEREFORE, the motion for reconsideration is GRANTED. This
Court’s May 31, 2007 Decision is SET ASIDE and a new one is rendered
GRANTING the petition for certiorari. The trial court’s Order dated
August 30, 2006 is SET ASIDE and the Writ of Execution issued by the
trial court is QUASHED. The trial court is ORDERED to hear and rule
on the merits of petitioner’s "Omnibus Motion for Reconsideration and
New Trial."
SO ORDERED.23
The CA reversed its original finding that the Omnibus Motion for
Reconsideration and for New Trial was pro forma. This time, it held just
the opposite, ruling that PDB’s "tacit argument" that the "distances
involved in the case at bench call for a relaxation of the application of
Section 5, Rule 15 of the Rules of Court" deserved consideration. It held
that Section 5 should be read together with Section 424 of the same Rule,
thus:
When a pleading is filed and served personally, there is no question that
the requirements in Sections 4 and 5 of Rule 15 of the Revised Rules of
Civil Procedure pose no problem to the party pleading. Under this mode
of service and filing of pleadings, the party pleading is able to ensure
receipt by the other party of his pleading at least three days prior to the
date of hearing while at the same time setting the hearing on a date not
later than ten days from the filing of the pleading.
When, as in the case at bench, the address of the trial court as well as that
of the opposing counsel is too distant from the office of the counsel of
the party pleading to personally effect the filing and service of the
pleading, the latter counsel faces a real predicament. In a perfect world
with the best postal service possible, it would be problematic enough to
ensure that both requisites are fully met: that opposing counsel receives
the pleading at least three days before the date of hearing and that the date
of hearing is no more than ten days after the filing (mailing) of the
pleading. But, as a matter of fact, given the state of the postal service
today – a matter the Court takes judicial notice of – the party pleading
often finds himself [locked] between the horns of a dilemma.
The case at bench presents the Court with the novel issue of whether the
same rigid application of the cited Sections-and-Rule is warranted when
the filing and service of pleadings is by mail. The Court is of the opinion
that when confronted between [sic] the demands of sufficient notice and
due process on the one hand and the requirement that the date of hearing
be set no later than ten days from filing, the stringent application of the
Rules is not warranted and a liberal posture is more in keeping with
Section 6, Rule 1 of the 1997 Rules of Civil Procedure which provides:
SECTION 6. Construction. - These Rules shall be liberally construed in
order to promote their objective of securing a just, speedy, and
inexpensive disposition of every action and proceeding. 25
The CA further sustained PDB’s argument that since judgment against it
was arrived at by mere default or technicality, it is correspondingly
entitled to a relaxation of the Rules, in line with the principles of
substantial justice. It likewise held that PDB counsel’s act of setting the
hearing of the Omnibus Motion for Reconsideration and for New Trial
16 days after its filing was an excusable lapse; that no scheme to delay
the case is evident from PDB’s actions; that more telling is the trial
court’s "blurring in cavalier fashion" the distinction between Sections 1
and 2 of Rule 39 of the Rules of Court,26 as well as its unequal treatment
of the parties from its strict application of Section 5, Rule 15 against
respondent, while it bent backward to accommodate petitioners by
converting the latter’s motion for execution pending appeal into a motion
for execution of a final and executor judgment.
Lastly, the appellate court concluded that the trial court committed grave
abuse of discretion, which thus warrants the grant of PDB’s Petition for
Certiorari.
Petitioners filed their Urgent Motion for Reconsideration,27 which the
CA denied through its assailed August 23, 2010 Resolution. Hence, the
instant Petition.
Issues
Petitioners frame the issues involved in this Petition, as follows:
Being assailed herein is the refusal of the Court of Appeals, which is a
patent error, for not giving credence to petitioners-appellants’ arguments
that the respondent-appellees’ special civil action for certiorari before it
is clearly devoid of merit as (i) the Decision dated June 15, 2006 of the
RTC, Branch 37, General Santos City had become final and executory
before the special civil action for Certiorari was filed before it which
should have been dismissed outright, and which issue of "finality" was
never ruled upon, (ii) granting arguendo that a certiorari proceeding could
still be had, the same should be filed under Rule 45 instead of Rule 65 of
the 1997 Rules of Civil Procedure, (iii) the alleged attendant abuse of
19
discretion on the part of the public respondent judges, even granting
arguendo that it exist [sic], were [sic] not grave but on the contrary were
purely errors of judgment and, (iv) the substantial and glaring defects of
the petition in the special civil action for certiorari before the Court of
Appeals were consistently and clearly called to its attention but were
unjustifiably ignored by it.28
Petitioners’ Arguments
In their Petition and Reply,29 petitioners seek to reverse the assailed CA
dispositions and to reinstate the appellate court’s original May 31, 2007
Decision, arguing that the trial court’s June 15, 2006 Decision became
final and executor on account of PDB’s failure to timely file its Omnibus
Motion for Reconsideration and for New Trial, as it properly filed the
same only on August 2, 2006 – or beyond the 15-day period allowed by
the Rules of Court.
Petitioners argue that PDB’s filing of its Omnibus Motion for
Reconsideration and for New Trial on July 31, 2006 by courier service
through LBC was improper, since there was no LBC courier service in
Tupi, South Cotabato at the time; naturally, they did not receive a copy
of the omnibus motion. This is precisely the reason why PDB re-filed its
omnibus motion on August 2, 2006 through registered mail, that is, to
cure the defective service by courier; but by then, the 15-day period
within which to move for reconsideration or new trial, or to file a notice
of appeal, had already expired, as the last day thereof fell on August 1,
2006 – counting from PDB’s receipt of the trial court’s Decision on July
17, 2006.
Petitioners add that PDB’s notice of appeal – which was filed only on
September 7, 2006 – was tardy as well; that PDB’s resort to an original
Petition for Certiorari to assail the trial court’s August 30, 2006 Order
denying the Omnibus Motion for Reconsideration and for New Trial was
improper, for as provided under Section 9, Rule 37 of the Rules of
Court,30 an order denying a motion for new trial or reconsideration is not
appealable, the remedy being an appeal from the judgment or final order;
that certiorari was resorted to only to revive PDB’s appeal, which was
already lost; and that it was merely a face-saving measure resorted to by
PDB to recover from its glaring blunders, as well as to delay the
execution of the RTC Decision. They also assert that certiorari is not an
available remedy, since PDB did not file a motion for reconsideration
with respect to the other assailed orders of the trial court.
Petitioners maintain as well that the CA erred in relaxing the application
of the Rules of Court as to PDB, a banking institution with adequate
resources to engage counsel within General Santos City and not relegate
Civil Case No. 6474 to its Manila lawyers who are thus constrained by
the distance involved.
Respondent’s Arguments
Seeking the denial of the Petition, PDB in its Comment31 maintains that
the CA did not err in declaring that its Omnibus Motion for
Reconsideration and for New Trial was not pro forma; that there are
justifiable grounds to move for reconsideration and/or new trial; that it
had no intention to delay the proceedings; that it was correct for the
appellate court to relax the application of Section 5, Rule 15; and that the
CA is correct in finding that the trial court committed grave abuse of
discretion in misapplying the Rules and in exhibiting partiality.
Our Ruling
The Court grants the Petition.
The proceedings in the instant case would have been greatly abbreviated
if the court a quo and the CA did not overlook the fact that PDB’s
Omnibus Motion for Reconsideration and for New Trial was filed one
day too late. The bank received a copy of the trial court’s June 15, 2006
Decision on July 17, 2006; thus, it had 15 days – or up to August 1, 2006
– within which to file a notice of appeal, motion for reconsideration, or a
motion for new trial, pursuant to the Rules of Court. 32 Yet, it filed the
omnibus motion for reconsideration and new trial only on August 2,
2006.
Indeed, its filing or service of a copy thereof to petitioners by courier
service cannot be trivialized.1âwphi1 Service and filing of pleadings by
courier service is a mode not provided in the Rules.33 This is not to
mention that PDB sent a copy of its omnibus motion to an address or area
which was not covered by LBC courier service at the time. Realizing its
mistake, PDB re-filed and re-sent the omnibus motion by registered mail,
which is the proper mode of service under the circumstances. By then,
however, the 15-day period had expired.
PDB’s Notice of Appeal, which was filed only on September 7, 2006,
was tardy; it had only up to August 1, 2006 within which to file the same.
The trial court therefore acted regularly in denying PDB’s notice of
appeal.
Since PDB’s Omnibus Motion for Reconsideration and for New Trial
was filed late and the 15-day period within which to appeal expired
without PDB filing the requisite notice of appeal, it follows that its right
to appeal has been foreclosed; it may no longer question the trial court’s
Decision in any other manner. "Settled is the rule that a party is barred
from assailing the correctness of a judgment not appealed from by
him."34 The "presumption that a party who did not interject an appeal is
satisfied with the adjudication made by the lower court"35 applies to it.
There being no appeal taken by PDB from the adverse judgment of the
trial court, its Decision has become final and can no longer be reviewed,
much less reversed, by this Court. "Finality of a judgment or order
becomes a fact upon the lapse of the reglementary period to appeal if no
appeal is perfected, and is conclusive as to the issues actually determined
and to every matter which the parties might have litigated and have x x x
decided as incident to or essentially connected with the subject matter of
the litigation, and every matter coming within the legitimate purview of
the original action both in respect to matters of claim and of
defense."36 And "[i]n this jurisdiction, the rule is that when a judgment
becomes final and executory, it is the ministerial duty of the court to issue
a writ of execution to enforce the judgment;"37 "execution will issue as a
matter of right x x x (a) when the judgment has become final and
executory; (b) when the judgment debtor has renounced or waived his
right of appeal; [or] (c) when the period for appeal has lapsed without an
appeal having been filed x x x."38
Neither can the Court lend a helping hand to extricate PDB from the
effects of its mistake; indeed, PDB erred more than once during the
course of the proceedings. For one, it did not attempt to set right its failure
to appear during pre-trial, which prompted the court to allow petitioners
to present evidence ex parte and obtain a favorable default judgment.
Second, assuming for the sake of argument that it timely filed its
Omnibus Motion for Reconsideration and for New Trial, it nonetheless
violated the ten-day requirement on the notice of hearing under Section
5 of Rule 15. Third, even before it could be notified of the trial court’s
resolution of its omnibus motion on September 14, 2006 – assuming it
was timely filed, it filed a notice of appeal on September 7, 2006 – which
thus implies that it abandoned its bid for reconsideration and new trial,
and instead opted to have the issues resolved by the CA through the
remedy of appeal. If so, then there is no Omnibus Motion for
Reconsideration and for New Trial that the trial court must rule upon; its
August 30, 2006 Order thus became moot and academic and irrelevant.
"[W]here [an action] or issue has become moot and academic, there is no
justiciable controversy, so that a declaration thereon would be of no
practical use or value."39
Fourth, instead of properly pursuing its appeal to free itself from the
unfavorable effects of the trial court’s denial of its notice of appeal, PDB
chose with disastrous results to gamble on its Omnibus Motion for
Reconsideration and for New Trial by filing an original Petition for
Certiorari to assail the trial court’s denial thereof. Time and again, it has
been said that certiorari is not a substitute for a lost appeal, especially if
one’s own negligence or error in one’s choice of remedy occasioned such
loss.40
What remains relevant for this Court to resolve, then, is the issue relative
to the trial court’s October 6, 2006 Order – which denied the motion to
quash the writ of execution – and the August 31, 2006 and October 9,
2006 writs of execution. The Court observes that the October 6, 2006
Order and the August 31, 2006 and October 9, 2006 writs of execution
were set aside and quashed merely as a necessary consequence of the
CA’s directive in the Amended Decision for the trial court to hear and
rule on the merits of PDB’s Omnibus Motion for Reconsideration and for
New Trial. Other than this singular reason, the CA would have sustained
them, and this is clear from a reading of both its original May 31, 2007
Decision and its subsequent Amended Decision. Now, since the Court
has herein declared that PDB’s omnibus motion may not be considered
for being tardy and for having been superseded by the bank’s filing of a
notice of appeal, then the CA’s original pronouncement regarding the
October 6, 2006 Order and the August 31, 2006 and October 9, 2006 writs
of execution should necessarily be reinstated as well.
20
In light of the above conclusions, the Court finds no need to further
discuss the other issues raised by the parties. They are rendered irrelevant
by the above pronouncements.
WHEREFORE, the Petition is GRANTED. The assailed July 28, 2009
Amended Decision and August 23, 2010 Resolution of the Court of
Appeals in CA-G.R. SP No. 01317-MIN are REVERSED and SET
ASIDE. The Regional Trial Court of General Santos City, Branch 37 is
ORDERED to proceed with the execution ofits June 15, 2006 Decision
in Civil Case No. 6474.
SO ORDERED.
G.R. No. 193494
LUI ENTERPRISES, INC., Petitioners,
vs.
ZUELLIG PHARMA CORPORATION and the PHILIPPINE
BANK OF COMMUNICATIONS, Respondents.
DECISION
LEONEN, J.:
There should be no inexplicable delay in the filing of a motion to set aside
order of default. Even when a motion is filed within the required period,
excusable negligence must be properly alleged and proven.
This is a petition for review on certiorari of the Court of Appeals'
decision1 dated May 24, 2010 and resoluticm2dated August 13, 2010 in
CA- G.R. CV No. 88023. The Court of Appeals affirmed in toto the
Regional
Trial Court of Makati’s decision3 dated July 4, 2006.
The facts as established from the pleadings of the parties are as follows:
On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation
entered into a 10-year contract of lease4over a parcel of land located in
Barrio Tigatto, Buhangin, Davao City. The parcel of land was covered by
Transfer Certificate of Title No. T-166476 and was registered under Eli
L. Lui.5
On January 10, 2003, Zuellig Pharma received a letter6 from the
Philippine Bank of Communications. Claiming to be the new owner of
the leased property, the bank asked Zuellig Pharma to pay rent directly to
it. Attached to the letter was a copy of Transfer Certificate of Title No.
336962 under the name of the Philippine Bank of
Communications.7Transfer Certificate ofTitle No. 336962 was derived
fromTransfer Certificate ofTitle No.T-166476.8
Zuellig Pharma promptly informed Lui Enterprises of the Philippine
Bank of Communications’ claim. On January 28, 2003, Lui Enterprises
wrote to Zuellig Pharma and insisted on its right to collect the leased
property’srent.9
Due to the conflicting claims of Lui Enterprises and the Philippine Bank
of Communications over the rental payments, Zuellig Pharma filed a
complaint10 for interpleader with the Regional Trial Court of Makati. In
its complaint, Zuellig Pharma alleged that it already consigned in court
P604,024.35 as rental payments. Zuellig Pharma prayed that it be allowed
to consign in court its succeeding monthly rental payments and that Lui
Enterprises and the Philippine Bank of Communications be ordered to
litigate their conflicting claims.11
The Philippine Bank of Communications filed its answer12 to the
complaint. On the other hand, Lui Enterprises filed a motion to
dismiss13 on the ground that Zuellig Pharma’s alleged representative did
not have authority to file the complaint for interpleader on behalf of the
corporation. Under the secretary’s certificate14 dated May 6, 2003
attached to the complaint, Atty. Ana L.A. Peralta was only authorized to
"initiate and represent [Zuellig Pharma] in the civil proceedings for
consignation of rental payments to be filed against Lui Enterprises, Inc.
and/or [the Philippine Bank of Communications]."15
According to Lui Enterprises, an earlier filed nullification of deed of
dation in payment case pending with the Regional Trial Court of Davao
barred the filing of the interpleader case.16 Lui Enterprises filed this
nullification case against the Philippine Bank of Communications with
respect to several properties it dationed to the bank in payment of its
obligations. The property leased by Zuellig Pharma was among those
allegedly dationed to the Philippine Bank of Communications. 17
In the nullification of deed of dation in payment case, Lui Enterprises
raised the issue of which corporation had the better right over the rental
payments.18 Lui Enterprises argued that the same issue was involved in
the interpleader case. To avoid possible conflicting decisions of the
Davao trial court and the Makati trial court on the same issue, Lui
Enterprises argued that the subsequently filed interpleader case be
dismissed.
To support its argument, Lui Enterprises cited a writ of preliminary
injunction19 dated July 2, 2003 issued by the Regional Trial Court of
Davao, ordering Lui Enterprises and the Philippine Bank of
Communications "[to maintain] status quo"20 with respect to the rent. By
virtue of the writ of preliminary injunction, Lui Enterprises argued that it
should continue collecting the rental payments from its lessees until the
nullification of deed of dation in payment case was resolved. The writ of
preliminary injunction dated July 2, 2003 reads:
WHEREAS, on June 30, 2003, the Court issued an Order, a portion of
which is quoted:
WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary
Injunction issue, restraining and enjoining [the Philippine Bank of
Communications], its agents or [representative], the Office of the Clerk
of Court- Sheriff and all persons acting on their behalf, from conducting
auction sale on the properties of [Lui Enterprises] in EJF-REM Case No.
6272-03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice,
Ecoland, Davao City, until the final termination of the case, upon plaintiff
[sic] filing of a bond in the amount of P1,000,000.00 to answer for
damages that the enjoined parties may sustain by reason of the injunction
if the Court should finally decide that applicant is not entitled thereto.
WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved
by this Court.
IT IS HEREBY ORDERED by the undersigned Judge that, until further
orders, [the Philippine Bank of Communications] and all [its] attorneys,
representatives, agents and any other persons assisting [the bank], are
directed to restrain from conducting auction sale on the Properties of [Lui
Enterprises] in EJF-REM Case No. 6272-03 scheduled on July 3, 2003 at
10:00 a.m. at the Hall of Justice, Ecoland, Davao City, until the final
termination of the case.21
Zuellig Pharma filed its opposition22 to the motion to dismiss. It argued
that the motion to dismiss should be denied for having been filed late.
Under Rule 16, Section 1 of the 1997 Rules of Civil Procedure, a motion
to dismiss should be filed within the required time given to file an answer
to the complaint, which is 15 days from service of summons on the
defendant.23 Summons was served on Lui Enterprises on July 4, 2003. It
had until July 19, 2003 to file a motion to dismiss, but Lui Enterprises
filed the motion only on July23, 2003.24
As to Lui Enterprises’ claim that the interpleader case was filed without
authority, Zuellig Pharma argued that an action interpleader "is a
necessary consequence of the action for consignation."25 Zuellig Pharma
consigned its rental payments because of "the clearly conflicting claims
of [Lui Enterprises] and [the Philippine Bank of
Communications]."26 Since Atty. Ana L.A. Peralta was authorized to file
a consignation case, this authority necessarily included an authority to
file the interpleader case.
Nevertheless, Zuellig Pharma filed in court the secretary’s certificate
dated August 28, 2003,27 which expressly stated that Atty. Ana L.A.
Peralta was authorized to file a consignation and interpleader case on
behalf of Zuellig Pharma.28
With respect to the nullification of deed of dation in payment case,
Zuellig Pharma argued that its pendency did not bar the filing of the
interpleader case. It was not a party to the nullification case.29
As to the writ of preliminary injunction issued by the Regional Trial
Court of Davao, Zuellig Pharma argued that the writ only pertained to
properties owned by Lui Enterprises. Under the writ of preliminary
injunction, the Regional Trial Court of Davao enjoined the July 3, 2003
21
auction sale of Lui Enterprises’ properties, the proceeds of which were
supposed to satisfy its obligations to the Philippine Bank of
Communications. As early as April 21, 2001, however, the Philippine
Bank of Communications already owned the leased property as
evidenced by Transfer Certificate of Title No. 336962. Thus, the writ of
preliminary injunction did not apply to the leased property.30
Considering that Lui Enterprises filed its motion to dismiss beyond the
15-day period to file an answer, Zuellig Pharma moved that Lui
Enterprises be declared in default.31
In its compliance32 dated September 15, 2003, the Philippine Bank of
Communications "[joined Zuellig Pharma] in moving to declare [Lui
Enterprises] in default, and in [moving for] the denial of [Lui
Enterprises’] motion to dismiss."33
The Regional Trial Court of Makati found that Lui Enterprises failed to
file its motion to dismiss within the reglementary period. Thus, in its
order34 dated October 6, 2003, the trial court denied Lui
Enterprises’motion to dismiss and declared it in default.35
Lui Enterprises did not move for the reconsideration of the order dated
October 6, 2003. Thus, the Makati trial court heard the interpleader case
without Lui Enterprises’participation.
Despite having been declared in default, Lui Enterprises filed the
manifestation with prayer36 dated April 15, 2004. It manifested that the
Regional Trial Court of Davao allegedly issued the order37 dated April 1,
2004, ordering all of Lui Enterprises’ lessees to "observe status quo with
regard to the rental payments"38 and continue remitting their rental
payments to Lui Enterprises while the nullification of deed of dation in
payment case was being resolved. The order dated April 1, 2004 of the
Regional Trial Court of Davao reads:
ORDER
Posed for Resolution is the Motion for Amendment of Order filed by [Lui
Enterprises] on September 23, 2003 seeking for the preservation of status
quo on the payment/remittance of rentals to [it] and the
disposal/construction of the properties subject matter of this case.
xxxx
As elsewhere stated, [the Philippine Bank of Communications] did not
oppose the instant motion up to the present. In fact, during the hearing
held on March 15, 2004, [the bank’s] counsel manifested in open court
that except for the rentals due from [Zuellig Pharma] which are the
subject of a consignation suit before a Makati Court, the other rental
payments are continuously received by [Lui Enterprises].
There being no objection from [the Philippine Bank of Communications],
and in order to protect the right of [Lui Enterprises] respecting the subject
of the action during the pendency of this case, this Court, in the exercise
of its discretion hereby grants the motion.
Accordingly, consistent with the order of this Court dated June 30, 2003,
the parties are hereby directed to further observe status quo with regard
to the rental payments owing or due from the lessees of the properties
subject of the first set of deeds of dacion and that the defendants are
enjoined from disposing of the properties located at Green Heights
Village, Davao City until the case is finally resolved.
With the order dated April 1, 2004 issued by the Regional Trial Court of
Davao as basis, Lui Enterprises argued that Zuellig Pharma must remit
its rental payments to it and prayed that the interpleader case be
dismissed.
The Regional Trial Court of Makati only noted the manifestation with
prayer dated April 15, 2004.39
It was only on October 21, 2004, or one year after the issuance of the
order of default, that Lui Enterprises filed a motion to set aside order of
default40 in the Makati trial court on the ground of excusable negligence.
Lui Enterprises argued that its failure to file a motion to dismiss on time
"was caused by the negligence of [Lui Enterprises’] former
counsel."41 This negligence was allegedly excusable because "[Lui
Enterprises] was prejudiced and prevented from fairly presenting [its]
case."42
For its allegedly meritorious defense, Lui Enterprises argued that the
earlier filed nullification of deed of dation in payment case barred the
filing of the interpleader case. The two actions allegedly involved the
same parties and the same issue of which corporation had the better right
over the rental payments. To prevent "the possibility of two courts x x x
rendering conflicting rulings [on the same issue],"43 Lui Enterprises
argued that the subsequently filed interpleader case be dismissed.
Zuellig Pharma filed its opposition44 to the motion to set aside order of
default. It argued that a counsel’s failure to file a timely answer was
inexcusable negligence which bound his client.
Further, Zuellig Pharma argued that the pending case for nullification of
deed of dation in payment "[did] not preclude [Zuellig Pharma] from
seeking the relief prayed for in the [interpleader case]."45
While the motion to set aside order of default was still pending for
resolution, Lui Enterprises filed the manifestation and motion to
dismiss46 dated April 21, 2005 in the Makati trial court. It manifested that
the Davao trial court issued another order47 dated April 18, 2005 in the
nullification of deed of dation in payment case. In this order, the Davao
trial court directed the Philippine Bank of Communications to inform
Zuellig Pharma to pay rent to Lui Enterprises while the Davao trial
court’s order dated April 1, 2004 was subsisting. The order datedApril
18, 2005 of the Davao trial court reads:
ORDER
Plaintiffs move for execution or implementation of the Order dated
September 14, 2004. In substance, [Lui Enterprises] seek[s] to compel
the remittance in their favor of the rentals from [Zuellig Pharma], one of
the lessees alluded to in the September 14, 2004 Order whose rental
payments "must be remitted to and collected by [Lui Enterprises]." [The
Philippine Bank of Communications] did not submit any opposition.
It appears from the records that sometime in February 2003, after being
threatened with a lawsuit coming from [the Philippine Bank of
Communications], [Zuellig Pharma] stopped remitting its rentals to [Lui
Enterprises] and instead, has reportedly deposited the monthly rentals
before a Makati court for consignation.
As aptly raised by the plaintiffs, a possible impasse may insist should the
Makati Court’s ruling be contrary to or in conflict with the status quo
order issued by this Court. To preclude this spectacle, Zuellig Pharma
should accordingly be advised with the import of the Order dated
September 14, 2004, the salient portion of which is quoted:
x x x prior to the institution of the instant case and by agreement of the
parties, plaintiffs were given as they did exercise the right to collect,
receive and enjoy rental payments x x x.
Since the April 1, 2004 status quo order was a necessary implement of
the writ of preliminary injunction issued on June 30, 2003, it follows that
plaintiff's right to collect and receive rental payments which he enjoyed
prior to the filing of this case, must be respected and protected and
maintained until the case is resolved. As such, all rentals due from the
above-enumerated lessees must be remitted to and collectedby the
Plaintiffs.
Status quo simply means the last actual peaceable uncontested status that
preceded the actual controversy. (Searth Commodities Corp. v. Court
ofAppeals, 207 SCRA 622).
As such, the [Philippine Bank of Communications] [is] hereby directed
to forthwith inform [Zuellig Pharma] of the April 1, 2004 status quo order
and the succeeding September 14, 2004 Order, and consequently, for the
said lessee to remit all rentals due from February 23, 2003 and onwards
to [Lui Enterprises] in the meanwhile that the status quo order is
subsisting.
In its manifestation and motion to dismiss, Lui Enterprises reiterated its
prayer for the dismissal of the interpleader case to prevent "the possibility
of [the Regional Trial Court, Branch 143, Makati City] and [the Regional
Trial Court, Branch 16, Davao City] rendering conflicting rulings [on the
same issue of which corporation has the better right to the rental
payments]."48
22
Without resolving the motion to set aside order of default, the Makati trial
court denied the manifestation with motion to dismiss dated April 21,
2005 on the ground that Lui Enterprises already lost its standing in
court.49
Lui Enterprises did not file any motion for reconsideration of the denial
of the manifestation and motion to dismiss dated April 21, 2005.
In its decision50 dated July 4, 2006, the Regional Trial Court of Makati
ruled that Lui Enterprises "[was] barred from any claim in respect of the
[rental payments]"51 since it was declared in default. Thus, according to
the trial court, there was no issue as to which corporation had the better
right over the rental payments.52 The trial court awarded the total
consigned amount of P6,681,327.30 to the Philippine Bank of
Communications and ordered Lui Enterprises to pay Zuellig Pharma
P50,000.00 in attorney’s fees.53
Lui Enterprises appealed to the Court of Appeals.54
The Court of Appeals found Lui Enterprises’ appellant’s brief
insufficient. Under Rule 44, Section 13 of the 1997 Rules of Civil
Procedure, an appellant’s brief must contain a subject index, page
references to the record, table of cases, textbooks and statutes cited, and
the statement of issues, among others. However, Lui Enterprises’
appellant’s brief did not contain these requirements.55
As to the denial of Lui Enterprises’ motion to dismiss, the Court of
Appeals sustained the trial court. The Court of Appeals found that Lui
Enterprises filed its motion to dismiss four days late.56
With respect to Lui Enterprises’ motion to set aside order of default, the
Court ofAppeals found that Lui Enterprises failed to show the excusable
negligence that prevented it from filing its motion to dismiss on time. On
its allegedly meritorious defense, the Court of Appeals ruled that the
nullification of deed of dation in payment case did not bar the filing of
the interpleader case, with Zuellig Pharma not being a party to the
nullification case.57
On the award of attorney’s fees, the Court of Appeals sustained the trial
court since "Zuellig Pharma x x x was constrained to file the action for
interpleader with consignation inorder to protect its interests x x x."58
Thus, in its decision59 promulgated on May 24, 2010, the Court of
Appeals dismissed Lui Enterprises’appeal and affirmed in toto the
Regional Trial Court of Makati’s decision.
Lui Enterprises filed a motion for reconsideration.60
The Court of Appeals denied Lui Enterprises’ motion for reconsideration
in its resolution promulgated on August 13, 2010.61 Hence, this petition.
In this petition for review on certiorari,62 Lui Enterprises argued that the
Court of Appeals applied "the rules of procedure strictly"63 and dismissed
its appeal on technicalities. According to Lui Enterprises, the Court of
Appeals should have taken a liberal stance and allowed its appeal despite
the lack of subject index, page references to the record, table of cases,
textbooks and statutes cited, and the statement of issues in its appellant’s
brief.64
Lui Enterprises also claimed that the trial court should have set aside the
order of default since its failure to file a motion to dismiss on time was
due to excusable negligence.65
For its allegedly meritorious defense, Lui Enterprises argued that the
pending nullification of deed of dation in payment case barred the filing
of the interpleader case.The nullification of deed of dation in payment
case and the interpleader case allegedly involved the same issue of which
corporation had the better right to the rent. To avoid conflicting rulings
on the same issue, Lui Enterprises argued that the subsequently filed
interpleader case be dismissed.66
No attorney’s fees should have been awarded to Zuellig Pharma as argued
by Lui Enterprises. Zuellig Pharma filed the interpleader case despite its
knowledge of the nullification of deed of dation in payment case filed in
the Davao trial court where the same issue of which corporation had the
better right over the rental payments was being litigated. Thus, Zuellig
Pharma filed the interpleader case in bad faith for which it was not
entitled to attorney’s fees.67
The Philippine Bank of Communications filed its comment 68 on the
petition for review on certiorari. It argued that Lui Enterprises failed to
raise any error of law and prayed that we affirm in toto the Court of
Appeals’ decision.
For Zuellig Pharma, it manifested that it was adopting the Philippine
Bank of Communications’arguments in its comment.69
The issues for our resolution are:
I. Whether the Court of Appeals erred in dismissing Lui
Enterprises’ appeal for lack of subject index, page references
to the record, table of cases, textbooks and statutes cited, and
the statement of issues in Lui Enterprises’appellant’s brief;
II. Whether the Regional Trial Court of Makati erred in
denying Lui Enterprises’motion to set aside order of default;
III. Whether the annulment of deed of dation in payment
pending in the Regional Trial Court of Davao barred the
subsequent filing of the interpleader case in the Regional Trial
Court of Makati; and
IV. Whether Zuellig Pharma was entitled to attorney’s fees.
Lui Enterprises’ petition for review on certiorari is without merit.
However, we delete the award of attorney’s fees.
I
Lui Enterprises did not comply with the rules on the contents of the
appellant’s brief
Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil
Procedure, the Court of Appeals may, on its own motion or that of the
appellee, dismiss an appeal should the appellant’s brief lack specific
requirements under Rule 44, Section 13, paragraphs (a), (c), (d), and (f):
Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed
by the Court of Appeals, on its own motion or on that of the appellee, on
the following grounds:
xxxx
(f) Absence of specific assignment of errors in the appellant’s brief, or of
page references to the record as required in Section 13, paragraphs (a),
(c), (d), and (f) of Rule 44.
These requirements are the subject index of the matter in brief, page
references to the record, and a table of cases alphabetically arranged and
with textbooks and statutes cited:
Section 13. Contents of the appellant’s brief. – The appellant’s brief shall
contain, in the order herein indicated, the following:
(a) A subject index of the matter in brief with a digest of the arguments
and page references, and a table of cases alphabetically arranged,
textbooks and statutes cited with references to the pages where they are
cited;
xxxx
(c) Under the heading "Statement of the Case," a clear and concise
statement of the nature of the action, a summary of the proceedings, the
appealed rulings and orders of the court, the nature of the controversy,
with page references to the record;
(d) Under the heading "Statement of Facts," a clear and concise statement
in a narrative form of the facts admitted by both parties and of those in
controversy, together with the substance of the proof relating thereto in
sufficient detail to make it clearly intelligible, with page references to the
record;
xxxx
23
(f) Under the heading "Argument," the appellant’s arguments on each
assignment of error with page references to the record. The authorities
relied upon shall be cited by the page of the report at which the case
begins and the page of the report on which the citation isfound;
xxxx
Lui Enterprises’ appellant’s brief lacked a subject index, page references
to the record, and table of cases, textbooks and statutes cited. Under Rule
50, Section 1 of the 1997 Rules of Civil Procedure, the Court of Appeals
correctly dismissed Lui Enterprises’ appeal.
Except for cases provided in the Constitution,70 appeal is a "purely
statutory right."71 The right to appeal "must be exercised in the manner
prescribed by law"72 and requires strict compliance with the Rules of
Court on appeals.73Otherwise, the appeal shall be dismissed, and its
dismissal shall not be a deprivation of due process of law.
In Mendoza v. United Coconut Planters Bank, Inc.,74 this court sustained
the Court of Appeals’ dismissal of Mendoza’s appeal. Mendoza’s
appellant’s brief lacked a subject index, assignment of errors, and page
references to the record. In De Liano v. Court of Appeals,75 this court also
sustained the dismissal of De Liano’s appeal. De Liano’s appellant’s brief
lacked a subject index, a table of cases and authorities, and page
references to the record.
There are exceptions to this rule. In Philippine Coconut Authority v.
Corona International, Inc.,76 the Philippine Coconut Authority’s
appellant’s brief lacked a clear and concise statement of the nature of the
action, a summary of the proceedings, the nature of the judgment, and
page references to the record. However, this court found that the
Philippine Coconut Authority substantially complied with the Rules. Its
appellant’s brief "apprise[d] [the Court of Appeals] of the essential facts
and nature of the case as well as the issues raised and the laws necessary
[to dispose of the case]."77 This court "[deviated] from a rigid
enforcement of the rules"78 and ordered the Court of Appeals to resolve
the Philippine Coconut Authority’s appeal.
In Go v. Chaves,79 Go’s 17-page appellant’s brief lacked a subject index.
However, Go subsequently filed a subject index. This court excused Go’s
procedural lapse since the appellant’s brief "[consisted] only of 17 pages
which [the Court of Appeals] may easily peruse to apprise it of [the case]
and of the relief sought."80 This court ordered the Court of Appeals to
resolve Go’s appeal "in the interest of justice."81
In Philippine Coconut Authority and Go, the appellants substantially
complied with the rules on the contents of the appellant’s brief. Thus, this
court excused the appellants’procedural lapses.
In this case, Lui Enterprises did not substantially comply with the rules
on the contents of the appellant’s brief. It admitted that its appellant’s
brief lacked the required subject index, page references to the record, and
table of cases, textbooks, and statutes cited. However, it did not even
correct its admitted "technical omissions"82 by filing an amended
appellant’s brief with the required contents.83 Thus, this case does not
allow a relaxation of the rules. The Court of Appeals did not err in
dismissing Lui Enterprises’ appeal.
Rules on appeal "are designed for the proper and prompt disposition of
cases before the Court ofAppeals."84 With respect to the appellant’s brief,
its required contents are designed "to minimize the [Court ofAppeals’]
labor in [examining]the record uponwhich the appeal is heard and
determined."85
The subject index serves as the brief’s table of contents.86 Instead of
"[thumbing] through the [appellant’s brief]"87every time the Court of
Appeals Justice encounters an argument or citation, the Justice deciding
the case only has to refer to the subject index for the argument or citation
he or she needs.88 This saves the Court ofAppeals time in reviewing the
appealed case. Efficiency allows the justices of the appellate court to
substantially attend to this case as well as other cases.
Page references to the record guarantee that the facts stated in the
appellant’s brief are supported by the record.89Astatement of fact without
a page reference to the record creates the presumption that it is
unsupported by the record and, thus, "may be stricken or disregarded
altogether."90
As for the table of cases, textbooks, and statutes cited, this is required so
that the Court of Appeals can easily verify the authorities cited "for
accuracy and aptness."91
Lui Enterprises’ appellant’s brief lacked a subject index, page references
to the record, and a table of cases, textbooks, and statutes cited. These
requirements "were designed to assist the appellate court in the
accomplishment of its tasks, and, overall, to enhance the orderly
administration of justice."92 This court will not disregard rules on appeal
"in the guise of liberal construction."93 For this court to liberally construe
the Rules, the party must substantially comply with the Rules and correct
its procedural lapses.94 Lui Enterprises failed to remedy these errors.
All told, the Court of Appeals did not err in dismissing Lui Enterprises’
appeal. It failed to comply with Rule 44, Section 13, paragraphs (a), (c),
(d), and (f) of the 1997 Rules of Civil Procedure on the required contents
of the appellant’s brief.
II
Lui Enterprises failed to show that its failure to answer the complaint
within the required period was due to excusable negligence
When a defendant is served with summons and a copy of the complaint,
he or she is required to answer within 15 days from the day he or she was
served with summons.95 The defendant may also move to dismiss the
complaint "[w]ithin the time for but before filing the answer."96
Fifteen days is sufficient time for a defendant to answer with good
defenses against the plaintiff’s allegations in the complaint. Thus, a
defendant who fails to answer within 15 days from service of summons
either presents no defenses against the plaintiff’s allegations in the
complaint or was prevented from filing his or her answer within the
required period due to fraud, accident, mistake or excusable negligence.97
In either case, the court may declare the defendant in default on plaintiff’s
motion and notice to defendant.98 The court shall then try the case until
judgment without defendant’s participation99 and grant the plaintiff such
relief as his or her complaint may warrant.100
A defendant declared in default loses his or her standing in court. 101 He
or she is "deprived of the right to take part in the trial and forfeits his [or
her] rights as a party litigant,"102 has no right "to present evidence
[supporting his or her] allegations,"103 and has no right to "control the
proceedings [or] cross-examine witnesses."104 Moreover, he or she "has
no right to expect that [the court] would [act] upon [his or her
pleadings]"105 or that he or she "may [oppose]motions filed against him
[or her]."106
However, the defendant declared in default "does not [waive] all of [his
or her] rights."107 He or she still has the right to "receive notice of
subsequent proceedings."108 Also, the plaintiff must still present evidence
supporting his or her allegations "despite the default of [the
defendant]."109
Default, therefore, is not meant to punish the defendant but to enforce the
prompt filing of the answer to the complaint. For a defendant without
good defenses, default saves him or her "the embarrassment of openly
appearing to defend the indefensible."110 As this court explained
in Gochangco v. The Court of First Instance of Negros Occidental,
Branch
IV:111
It does make sense for a defendant without defenses, and who accepts the
correctness of the specific relief prayed for in the complaint, to forego the
filing of the answer or any sort of intervention in the action at all. For
even if he did intervene, the result would be the same: since he would be
unable to establish any good defense, having none in fact, judgment
would inevitably go against him. And this would be an acceptable result,
if not being in his power to alter or prevent it, provided that the judgment
did not go beyond or differ from the specific relief stated in the complaint.
x x x.112 (Emphasis in the original)
On the other hand, for a defendant with good defenses, "it would be
unnatural for him [or her] not to set x x x up [his or her defenses] properly
and timely."113 Thus, "it must be presumed that some insuperable cause
prevented him [or her] from [answering the complaint]."114 In which
24
case, his or her proper remedy depends on when he or she discovered the
default and whether the default judgment was already rendered by the
trial court.
After notice of the declaration of default but before the court renders the
default judgment, the defendant may file, under oath, a motion to set aside
order of default. The defendant must properly show that his or her failure
to answer was due to fraud, accident,115 mistake116 or excusable
negligence.117 The defendant must also have a meritorious defense. Rule
9, Section 3, paragraph (b) of the1997 Rules of Civil Procedure provides:
Section 3. Default; declaration of. – x x x x
(b) Relief from order of default. – A party declared in default may at any
time after notice thereof and before judgment file a motion under oath to
set aside the order of default upon proper showing that his failure to
answer was due to fraud, accident, mistake or excusable negligence and
that he has a meritorious defense. In such case, the order of default may
be set aside on such terms and conditions as the judge may impose in the
interest of justice.
If the defendant discovers his or her default after judgment but prior to
the judgment becoming final and executory, he or she may file a motion
for new trial under Rule 37, Section 1, paragraph (a) of the 1997 Rules
of Civil Procedure.118 If he or she discovers his or her default after the
judgment has become final and executory, a petition for relief from
judgment under Rule 38, Section 1 of the 1997 Rules of Civil Procedure
may be filed.119
Appeal is also available to the defendant declared in default. He or she
may appeal the judgment for being contrary to the evidence or to the law
under Rule 41, Section 2 of the 1997 Rules of Civil Procedure. 120 He or
she may do so even if he or she did not file a petition to set aside order of
default.121
A petition for certiorari may also be filed if the trial court declared the
defendant in default with grave abuse of discretion.122
The remedies of the motion to set aside order of default, motion for new
trial, and petition for relief from judgment are mutually exclusive, not
alternative or cumulative. This is to compel defendants to remedy their
default at the earliest possible opportunity. Depending on when the
default was discovered and whether a default judgment was already
rendered, a defendant declared in default may avail of onlyone of the
three remedies.
Thus, if a defendant discovers his or her default before the trial court
renders judgment, he or she shall file a motion to set aside order of
default. If this motion to set aside order of default is denied, the defendant
declared in default cannot await the rendition of judgment, and he or she
cannot file a motion for new trial before the judgment becomes final and
executory, or a petition for relief from judgment after the judgment
becomes final and executory.
Also, the remedies against default become narrower and narrower as the
trial nears judgment. The defendant enjoys the most liberality from this
court with a motion to set aside order of default, as he or she has no
default judgment to contend with, and he or she has the whole period
before judgment to remedy his or her default.
With a motion for new trial, the defendant must file the motion within the
period for taking an appeal123 or within 15 days from notice of the default
judgment. Although a default judgment has already been rendered, the
filing of the motion for new trial tolls the reglementary period of appeal,
and the default judgment cannot be executed against the defendant.
A petition for relief from judgment is filed after the default judgment has
become final and executory. Thus, the filing of the petition for relief from
judgment does not stay the execution of the default judgment unless a
writ of preliminary injunction is issued pending the petition’s
resolution.124
Upon the grant of a motion to set aside order of default, motion for new
trial, or a petition for relief from judgment, the defendant is given the
chance to present his or her evidence against that of plaintiff’s. With an
appeal, however, the defendant has no right to present evidence on his or
her behalf and can only appeal the judgment for being contrary to
plaintiff’s evidence or the law.
Similar to an appeal, a petition for certiorari does not allow the defendant
to present evidence on his or her behalf. The defendant can only argue
that the trial court committed grave abuse of discretion in declaring him
or her in default.
Thus, should a defendant prefer to present evidence on his or her behalf,
he or she must file either a motion to set aside order of default, motion
for new trial, or a petition for relief from judgment.
In this case, Lui Enterprises had discovered its default before the
Regional Trial Court of Makati rendered judgment. Thus, it timely filed
a motion to set aside order of default, raising the ground of excusable
negligence.
Excusable negligence is "one which ordinary diligence and prudence
could not have guarded against."125 The circumstances should be
properly alleged and proved. In this case, we find that Lui Enterprises’
failure to answer within the required period is inexcusable.
Lui Enterprises’ counsel filed its motion to dismiss four days late. It did
not immediately take steps to remedy its default and took one year from
discovery of default to file a motion to set aside order of default. In its
motion to set aside order of default, Lui Enterprises only "conveniently
blamed its x x x counsel [for the late filing of the answer]"126without
offering any excuse for the late filing. This is not excusable negligence
under Rule 9, Section 3, paragraph (b)127 of the 1997 Rules of Civil
Procedure. Thus, the Regional Trial Court of Makati did not err in
refusing to set aside the order of default.
Lui Enterprises argued that the Regional Trial Court of Makati should
have been liberal in setting aside its order of default. After it had been
declared in default, Lui Enterprises filed several manifestations
informing the Makati trial court of the earlier filed nullification of deed
of dation in payment case which barred the filing of the interpleader case.
Lui Enterprises’ president, Eli L. Lui, and counsel even flew in from
Davao to Makati to "formally [manifest that] a [similar] action between
[Lui Enterprises] and [the Philippine Bank of Communications]"128 was
already pending in the Regional Trial Court of Davao. However, the trial
court did not recognize Lui Enterprises’standing incourt.
The general rule is that courts should proceed with deciding cases on the
merits and set aside orders of default as default judgments are "frowned
upon."129 As much as possible, cases should be decided with both parties
"given every chance to fight their case fairly and in the open, without
resort to technicality."130
However, the basic requirements of Rule 9, Section 3, paragraph (b) of
the 1997 Rules of Civil Procedure must first be complied with.131 The
defendant’s motion to set aside order of default must satisfy three
conditions. First is the time element. The defendant must challenge the
default order before judgment. Second, the defendant must have been
prevented from filing his answer due to fraud, accident, mistake or
excusable negligence. Third, he must have a meritorious defense. As this
court held in SSS v. Hon. Chaves:132
Procedural rules are not to be disregarded or dismissed simply because
their non-observance may have resulted in prejudice to a party’s
substantive rights. Like all rules[,] they are to be followed, except only
when for the most persuasive of reasons they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed. x x x.133
As discussed, Lui Enterprises never explained why its counsel failed to
file the motion to dismiss on time. It just argued that courts should be
liberal in setting aside orders of default. Even assuming that it had a
meritorious defense and that its representative and counsel had to fly in
from Davao to Makati to personally appear and manifest in court its
meritorious defense, Lui Enterprises must first show that its failure to
answer was due to fraud, accident, mistake or excusable negligence. This
Lui Enterprises did not do.
Lui Enterprises argued that Zuellig Pharma filed the interpleader case to
compel Lui Enterprises and the Philippine Bank of Communications to
litigate their claims. Thus, "[d]eclaring the other claimant in default
would ironically defeat the very purpose of the suit."134 The
RegionalTrial Court of Makati should not have declared Lui Enterprises
in default.
25
Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person
may file a special civil action for interpleader if conflicting claims are
made against him or her over a subject matter in which he or she has no
interest. The action is brought against the claimants to compel them to
litigate their conflicting claims among themselves. Rule 62, Section 1 of
the 1997 Rules of Civil Procedure provides:
Section 1. When interpleader proper. – Whenever conflicting claims
upon the same subject matter are or may be made against a person who
claims no interest whatever in the subject matter, or an interest which in
whole or in part is not disputed bythe claimants, he may bring an action
against the conflicting claimants to compel them to interplead and litigate
their several claims among themselves.
An interpleader complaint may be filed by a lessee against those who
have conflicting claims over the rent due for the property leased.135 This
remedy is for the lessee to protect him or her from "double vexation in
respect of one liability."136 He or she may file the interpleader case to
extinguish his or her obligation to pay rent, remove him or her from the
adverse claimants’dispute, and compel the parties with conflicting claims
to litigate among themselves.
In this case, Zuellig Pharma filed the interpleader case to extinguish its
obligation to pay rent. Its purpose in filing the interpleader case "was not
defeated"137 when the Makati trial court declared Lui Enterprises in
default.
At any rate, an adverse claimant in an interpleader case may be declared
in default. Under Rule 62, Section 5 of the 1997 Rules of Civil Procedure,
a claimant who fails to answer within the required period may, on motion,
be declared in default. The consequence of the default is that the court
may "render judgment barring [the defaulted claimant] from any claim in
respect to the subject matter."138 The Rules would not have allowed
claimants in interpleader cases to be declared in default if it would
"ironically defeat the very purpose of the suit."139
The Regional Trial Court of Makati declared Lui Enterprises in default
when it failed to answer the complaint within the required period. Lui
Enterprises filed a motion to set aside order of default without an
acceptable excuse why its counsel failed to answer the complaint. It failed
to prove the excusable negligence. Thus, the Makati trial court did not err
in refusing to set aside the order of default.
III
The nullification of deed in dation in payment case did not bar the filing
of the interpleader case. Litis pendentia is not present in this case.
Lui Enterprises allegedly filed for nullification of deed of dation in
payment with the Regional Trial Court of Davao. It sought to nullify the
deed of dation in payment through which the Philippine Bank of
Communications acquired title over the leased property. Lui Enterprises
argued that this pending nullification case barred the Regional Trial Court
of Makati from hearing the interpleader case. Since the interpleader case
was filed subsequently to the nullification case, the interpleader case
should be dismissed.
Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil
Procedure, a motion to dismiss may be filed on the ground of litis
pendentia:
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:
xxxx
(e)That there is another action pending between the same parties for the
same cause;
xxxx
Litis pendentia is Latin for "a pending suit."140 It exists when "another
action is pending between the same parties for the same cause of actionx
x x."141 The subsequent action is "unnecessary and vexatious"142 and is
instituted to "harass the respondent [in the subsequent action]."143
The requisites of litis pendentia are:
(1)Identity of parties or at least such as represent the same
interest in both actions;
(2)Identity of rights asserted and reliefs prayed for, the reliefs
being founded on the same facts; and
(3)The identity in the two cases should be such that the
judgment that may be rendered in one would, regardless of
which party is successful, amount to res judicata in the other.144
All of the requisites must be present.145 Absent one requisite, there is
no litis pendentia.146
In this case, there is no litis pendentia since there is no identity of parties
in the nullification of deed of dation in payment case and the interpleader
case. Zuellig Pharma is not a party to the nullification case filed in the
Davao trial court.
There is also no identity of rights asserted and reliefs prayed for. Lui
Enterprises filed the first case to nullify the deed of dation in payment it
executed in favor of the Philippine Bank of Communications. Zuellig
Pharma subsequently filed the interpleader case to consign in court the
rental payments and extinguish its obligation as lessee. The interpleader
case was necessary and was not instituted to harass either Lui Enterprises
or the Philippine Bank of Communications.
Thus, the pending nullification case did not bar the filing of the
interpleader case.
Lui Enterprises cited Progressive Development Corporation, Inc. v.
Court of Appeals147 as authority to set aside the subsequently filed
interpleader case. In this cited case, petitioner Progressive Development
Corporation, Inc. entered into a lease contract with Westin Seafood
Market, Inc. The latter failed to pay rent. Thus, Progressive Development
Corporation, Inc. repossessed the leased premises, inventoried the
movable properties inside the leased premises, and scheduled the public
sale of the inventoried properties as they agreed upon in their lease
contract.
Westin Seafood Market, Inc. filed for forcible entry with damages against
Progressive Development Corporation, Inc. It subsequently filed an
action for damages against Progressive Development Corporation for its
"forcible takeover of the leased premises."148
This court ordered the subsequently filed action for damages dismissed
as the pending forcible entry with damages case barred the subsequently
filed damages case.
Progressive Development Corporation, Inc. does not apply in this case.
The action for forcible entry with damages and the subsequent action for
damages were filed by the same plaintiff against the same defendant.
There is identity of parties in both cases.
In this case, the nullification of deed of dation in payment case was filed
by Lui Enterprises against the Philippine Bank of Communications. The
interpleader case was filed by Zuellig Pharma against Lui Enterprises and
the Philippine Bank of Communications. A different plaintiff filed the
interpleader case against Lui Enterprises and the Philippine Bank of
Communications. Thus, there is no identity of parties, and the first
requisite of litis pendentia is absent.
As discussed, Lui Enterprises filed the nullification of deed of dation in
payment to recover ownership of the leased premises. Zuellig Pharma
filed the interpleader case to extinguish its obligation to pay rent.There is
no identity of reliefs prayed for, and the second requisite of litis
pendentia is absent.
Since two requisites of litis pendentia are absent, the nullification of deed
of dation in payment case did not bar the filing of the interpleader case.
Lui Enterprises alleged that the Regional Trial Court of Davao issued a
writ of preliminary injunction against the Regional Trial Court of Makati.
The Regional Trial Court of Davao allegedly enjoined the Regional Trial
Court of Makati from taking cognizance of the interpleader case. Lui
Enterprises argued that the Regional Trial Court of Makati "should have
respected the orders issued by the Regional Trial Court of Davao."149 Lui
Enterprises cited Compania General de Tabacos de Filipinas v. Court of
Appeals150 where this court allegedly held:
26
x x x [T]he issuance of the said writ by the RTC ofAgoo, La Union not
only seeks to enjoin Branch 9 of the RTC of Manila from proceeding with
the foreclosure case but also has the effect of pre-empting the latter’s
orders. x x x.151
Compania General de Tabacos de Filipinas is not an authority for the
claim that a court can issue a writ of preliminary injunction against a co-
equal court.1âwphi1 The cited sentence was taken out of context. In
Compania General de Tabacos de Filipinas, this court held that the
Regional Trial Court ofAgoo had no power to issue a writ of preliminary
injunction against the Regional Trial Court of Manila.152 Acourt cannot
enjoin the proceedings of a co-equal court.
Thus, when this court said that the Regional Trial Court of Agoo’s writ
of preliminary injunction "not only seeks to enjoin x x x [the Regional
Trial Court of Manila] from proceeding with the foreclosure case but also
has the effect of pre-empting the latter’s orders,"153 this court followed
with "[t]his we cannot countenance."154
At any rate, the Regional Trial Court of Davao’s order datedApril 18,
2005 was not a writ of preliminary injunction. It was a mere order
directing the Philippine Bank of Communications to inform Zuellig
Pharma to pay rent to Lui Enterprises while the status quo order between
Lui Enterprises and the Philippine Bank of Communications was
subsisting. The Regional Trial Court of Davao did not enjoin the
proceedings before the Regional Trial Court of Makati.The order
datedApril 18, 2005 provides:
As such, [the Philippine Bank of Communications] [is] hereby directed
to forthwith inform Zuellig Pharma Corp., of the April 1, 2004 status quo
order and the succeeding September 14, 2004 Order, and consequently,
for the said lessee to remit all rentals due from February 23, 2003 and
onwards to plaintiff Lui Enterprises, Inc., in the meanwhile that the status
quo order is subsisting.155
Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial
Court of Makati fromhearing the interpleader case.
All told, the trial court did not err in proceeding with the interpleader
case. The nullification of deed of dation in payment case pending with
the Regional Trial Court of Davao did not bar the filing of the interpleader
case with the RegionalTrial Court of Makati.
IV
The Court of Appeals erred in awarding attorney’s fees
In its ordinary sense, attorney’s fees "represent the reasonable
compensation [a client pays his or her lawyer] [for legal service
rendered]."156 In its extraordinary sense, attorney’s fees "[are] awarded x
x x as indemnity for damages [the losing party pays the
prevailingparty]."157
The award of attorney’s fees is the exception rather than the rule. 158 It is
not awarded to the prevailing party "as a matter of course."159 Under
Article 2208 of the Civil Code, attorney’s fees cannot be recovered in the
absence of stipulation, except under specific circumstances:
(1)When exemplary damages are awarded;
(2)When the defendant’s act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to
protect his interest;
(3)In criminal cases of malicious prosecution against the
plaintiff;
(4)In case of a clearly unfounded civil action or proceeding
against the plaintiff;
(5)Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff’s plainly valid, just and
demandable claim;
(6)In actions for legal support;
(7)In actions for the recovery of wages of household helpers,
laborers and skilled workers;
(8)In actions for indemnity under workmen’s compensation
and employer’s liability laws;
(9)In a separate civil action to recover civil liability arising
froma crime;
(10)When at least double judicial costs are awarded;
(11)In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should
be recovered.160
Even if a party is "compelled to litigate with third persons or to incur
expenses to protect his [or her] rights,"161attorney's fees will not be
awarded if no bad faith "could be reflected in a party's persistence in a
case."162
To award attorney's fees, the court must have "factual, legal, [and]
equitable justification."163 The court must state the award's basis in its
decision.164These rules are based on the policy that "no premium should
be placed.on the right to litigate."165
In this case, the Court of Appeals awarded attorney's fees as "[Zuellig
Pharma] was compelled to litigate with third persons or to incur expenses
to protect [its] interest[s]."166 This is not a compelling reason to award
attorney's fees. That Zuellig Pharma had to file an interpleader case to
consign its rental payments did not mean that Lui Enterprises was in bad
faith in insisting that rental payments be paid to it. Thus, the Court. of
Appeals erred in awarding attorney's fees to Zuellig Pharma.
All told, the Court of Appeals' award of P50,000.00 as attorney's fees
must be deleted.
WHEREFORE, in view of the foregoing, the petition for review on
certiorari is DENIED. The Court of Appeals' decision and resolution in
CA- G.R. CV No. 88023 are AFFIRMED with MODIFICATION. The
award of PS0,000.00 attorney's fees to Zuellig Pharma Corporation is
DELETED.
SO ORDERED.
The facts are stated in the resolution of the Court.
Pasquil, Sevilla, Magulta & Garde Law Offices for petitioner.
Emmanuel A. Gaabucayan for respondent.
REYES, J.:
Before this Court is a petition for review on certiorari under Rule 45 of
the Rules of Court seeking to annul and set aside the Decision1 dated
April 29, 2011 rendered by the Court of Appeals (CA) in CA-G.R. SP
No. 02244, which affirmed the Judgment2 dated December 28, 2007
issued by the Regional Trial Court (RTC), Cagayan de Oro City, Branch
23 in Civil Case No. 2007-90.
The Antecedent Facts
A Complaint3 for collection of sum of money and damages was filed by
Roger Tan (Tan) with the Municipal Trial Court in Cities (MTCC),
27
Cagayan de Oro City on July 28, 2005 against Roberto Otero (Otero).
Tan alleged that on several occasions from February 2000 to May 2001,
Otero purchased on credit petroleum products from his Petron outlet in
Valencia City, Bukidnon in the aggregate amount of P270,818.01. Tan
further claimed that despite several verbal demands, Otero failed to settle
his obligation.
Despite receipt of the summons and a copy of the said complaint, which
per the records of the case below were served through his wife Grace R.
Otero on August 31, 2005, Otero failed to file his answer with the MTCC.
On November 18, 2005, Tan filed a motion with the MTCC to declare
Otero in default for his failure to file his answer. Otero opposed Tan’s
motion, claiming that he did not receive a copy of the summons and a
copy of Tan’s complaint. Hearing on the said motion was set on January
25, 2006, but was later reset to March 8, 2006, Otero manifesting that he
only received the notice therefor on January 23, 2006. The hearing on
March 8, 2006 was further reset to April 26, 2006 since the presiding
judge was attending a convention. Otero failed to appear at the next
scheduled hearing, and the MTCC issued an order declaring him in
default. A copy of the said order was sent to Otero on May 9, 2006. Tan
was then allowed to present his evidence ex parte.
Tan adduced in evidence the testimonies of Rosemarie Doblado and Zita
Sara, his employees in his Petron outlet who attended Otero when the
latter made purchases of petroleum products now the subject of the action
below. He likewise presented various statements of account4 showing the
petroleum products which Otero purchased from his establishment. The
said statements of account were prepared and checked by a certain Lito
Betache (Betache), apparently likewise an employee of Tan.
The MTCC Decision
On February 14, 2007, the MTCC rendered a Decision5 directing Otero
to pay Tan his outstanding obligation in the amount of P270,818.01, as
well as attorney’s fees and litigation expenses and costs in the amounts
of P15,000.00 and P3,350.00, respectively. The MTCC opined that
Otero’s failure to file an answer despite notice is a tacit admission of
Tan’s claim.
Undeterred, Otero appealed the MTCC Decision dated February 14, 2007
to the RTC, asserting that the MTCC’s disposition is factually baseless
and that he was deprived of due process.
The RTC Decision
On December 28, 2007, the RTC rendered a Judgment6 affirming the
MTCC Decision dated February 14, 2007. The RTC held that the
statements of account that were presented by Tan before the MTCC were
overwhelming enough to prove that Otero is indeed indebted to Tan in
the amount of P270,818.01. Further, brushing aside Otero’s claim of
denial of due process, the RTC pointed out that:
As to the second assignment of error, suffice to say that as borne out by
the record of the case, defendant-appellant was given his day in Court
contrary to his claim. His wife, Grace R. Otero received a copy of the
summons together with a copy of the Complaint and its corresponding
annexes on August 31, 2005, per Return of Service made by Angelita N.
Bandoy, Process Server of OCC-MTCC of Davao City. He was furnished
with a copy of the Motion to Declare Defendant in Default on November
18, 2005, per Registry Receipt No. 2248 which was received by the
defendant. Instead of filing his answer or any pleading to set aside the
Order of default, he filed his Comment to the Motion to Declare
Defendant in Default of which plaintiff filed his Rejoinder to Defendant’s
Comment.
The case was set for hearing on January 23, 2006, but defendant through
counsel sent a telegram that he only received the notice on the day of the
hearing thereby he was unable to appear due to his previous scheduled
hearings. Still, for reasons only known to him, defendant failed to lift the
Order of Default.
The hearing on January 23, 2006 was reset on March 8, 2006 and again
reset on April 26, 2006 by agreement of counsels x x x.
It is not therefore correct when defendant said that he was deprived of
due process.7
Otero sought reconsideration of the Judgment dated December 28, 2007
but it was denied by the RTC in its Order8 dated February 20, 2008.
Otero then filed a petition for review9 with the CA asserting that both the
RTC and the MTCC erred in giving credence to the pieces of evidence
presented by Tan in support of his complaint. Otero explained that the
statements of account, which Tan adduced during the ex parte
presentation of his evidence, were prepared by a certain Betache who was
not presented as a witness by Tan. Otero avers that the genuineness and
due execution of the said statements of account, being private documents,
must first be established lest the said documents be rendered inadmissible
in evidence. Thus, Otero asserts, the MTCC and the RTC should not have
admitted in evidence the said statements of account as Tan failed to
establish the genuineness and due execution of the same.
The CA Decision
On April 29, 2011, the CA rendered the assailed Decision10 which
denied the petition for review filed by Otero. In rejecting Otero’s
allegation with regard to the genuineness and due execution of the
statements of account presented by Tan, the CA held that any defense
which Otero may have against Tan’s claim is already deemed waived due
to Otero’s failure to file his answer. Thus:
Otero never denied that his wife received the summons and a copy of the
complaint. He did not question the validity of the substituted service.
Consequently, he is charged with the knowledge of Tan’s monetary
claim. Section 1, Rule 9 of the Rules of Court explicitly provides that
defenses and objections not pleaded are deemed waived. Moreover, when
the defendant is declared in default, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant.
Due to Otero’s failure to file his Answer despite being duly served with
summons coupled with his voluntary appearance in court, he is deemed
to have waived whatever defenses he has against Tan’s claim.
Apparently, Otero is employing dilatory moves to defer the payment of
his obligation which he never denied.11 (Citation omitted)
28
Otero’s Motion for Reconsideration12 was denied by the CA in its
Resolution13 dated December 13, 2011.
Hence, the instant petition.
Issues
Essentially, the fundamental issues to be resolved by this Court are the
following: first, whether Otero, having been declared in default by the
MTCC, may, in the appellate proceedings, still raise the failure of Tan to
authenticate the statements of account which he adduced in evidence; and
second, whether Tan was able to prove the material allegations of his
complaint.
The Court’s Ruling
The petition is denied.
First Issue: Authentication of the
Statements of Account
The CA, in denying the petition for review filed by Otero, held that since
he was declared in default by the MTCC, he is already deemed to have
waived whatever defenses he has against Tan’s claim. He is, thus, already
barred from raising the alleged infirmity in the presentation of the
statements of account.
We do not agree.
A defendant who fails to file an
answer loses his standing in court.
The effect of a defendant’s failure to file an answer within the time
allowed therefor is primarily governed by Section 3, Rule 9 of the Rules
of Court, viz:
Sec. 3. Default; declaration of.―If the defending party fails to answer
within the time allowed therefor, the court shall, upon motion of the
claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court. x x x (Emphasis ours)
A defendant who fails to file an answer may, upon motion, be declared
by the court in default. Loss of standing in court, the forfeiture of one’s
right as a party litigant, contestant or legal adversary, is the consequence
of an order of default. A party in default loses his right to present his
defense, control the proceedings, and examine or cross-examine
witnesses. He has no right to expect that his pleadings would be acted
upon by the court nor may be object to or refute evidence or motions filed
against him.14
A defendant who was declared in
default may nevertheless appeal
from the judgment by default,
albeit on limited grounds.
Nonetheless, the fact that a defendant has lost his standing in court for
having been declared in default does not mean that he is left sans any
recourse whatsoever. In Lina v. CA, et al.,15 this Court enumerated the
remedies available to party who has been declared in default, to wit:
a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion, under oath, to set aside the order of
default on the ground that his failure to answer was due to fraud, accident,
mistake or excusable neglect, and that he has meritorious defenses; (Sec
3, Rule 18)
b) If the judgment has already been rendered when the defendant
discovered the default, but before the same has become final and
executory, he may file a motion for new trial under Section 1(a) of Rule
37;
c) If the defendant discovered the default after the judgment has
become final and executory, he may file a petition for relief under Section
2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as
contrary to the evidence or to the law, even if no petition to set aside the
order of default has been presented by him. (Sec. 2, Rule 41)16
(Emphasis ours)Indeed, a defending party declared in default retains the
right to appeal from the judgment by default. However, the grounds that
may be raised in such an appeal are restricted to any of the following:
first, the failure of the plaintiff to prove the material allegations of the
complaint; second, the decision is contrary to law; and third, the amount
of judgment is excessive or different in kind from that prayed for.17 In
these cases, the appellate tribunal should only consider the pieces of
evidence that were presented by the plaintiff during the ex parte
presentation of his evidence.
A defendant who has been declared in default is precluded from raising
any other ground in his appeal from the judgment by default since,
otherwise, he would then be allowed to adduce evidence in his defense,
which right he had lost after he was declared in default.18 Indeed, he is
proscribed in the appellate tribunal from adducing any evidence to bolster
his defense against the plaintiff’s claim. Thus, in Rural Bank of Sta.
Catalina, Inc. v. Land Bank of the Philippines,19 this Court explained
that:
It bears stressing that a defending party declared in default loses his
standing in court and his right to adduce evidence and to present his
defense. He, however, has the right to appeal from the judgment by
default and assail said judgment on the ground, inter alia, that the amount
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of the judgment is excessive or is different in kind from that prayed for,
or that the plaintiff failed to prove the material allegations of his
complaint, or that the decision is contrary to law. Such party declared in
default is proscribed from seeking a modification or reversal of the
assailed decision on the basis of the evidence submitted by him in the
Court of Appeals, for if it were otherwise, he would thereby be allowed
to regain his right to adduce evidence, a right which he lost in the trial
court when he was declared in default, and which he failed to have
vacated. In this case, the petitioner sought the modification of the
decision of the trial court based on the evidence submitted by it only in
the Court of Appeals.20 (Citations omitted and emphasis ours)
Here, Otero, in his appeal from the judgment by default, asserted that Tan
failed to prove the material allegations of his complaint. He contends that
the lower courts should not have given credence to the statements of
account that were presented by Tan as the same were not authenticated.
He points out that Betache, the person who appears to have prepared the
said statements of account, was not presented by Tan as a witness during
the ex parte presentation of his evidence with the MTCC to identify and
authenticate the same. Accordingly, the said statements of account are
mere hearsay and should not have been admitted by the lower tribunals
as evidence.
Thus, essentially, Otero asserts that Tan failed to prove the material
allegations of his complaint since the statements of account which he
presented are inadmissible in evidence. While the RTC and the CA, in
resolving Otero’s appeal from the default judgment of the MTCC, were
only required to examine the pieces of evidence that were presented by
Tan, the CA erred in brushing aside Otero’s arguments with respect to
the admissibility of the said statements of account on the ground that the
latter had already waived any defense or objection which he may have
against Tan’s claim.
Contrary to the CA’s disquisition, it is not accurate to state that having
been declared in default by the MTCC, Otero is already deemed to have
waived any and all defenses which he may have against Tan’s claim.
While it may be said that by defaulting, the defendant leaves himself at
the mercy of the court, the rules nevertheless see to it that any judgment
against him must be in accordance with the evidence required by law.
The evidence of the plaintiff, presented in the defendant’s absence,
cannot be admitted if it is basically incompetent. Although the defendant
would not be in a position to object, elementary justice requires that only
legal evidence should be considered against him. If the same should
prove insufficient to justify a judgment for the plaintiff, the complaint
must be dismissed. And if a favorable judgment is justifiable, it cannot
exceed in amount or be different in kind from what is prayed for in the
complaint.21
Thus, in SSS v. Hon. Chaves,22 this Court emphasized that:
We must stress, however, that a judgment of default against the petitioner
who failed to appear during pre-trial or, for that matter, any defendant
who failed to file an answer, does not imply a waiver of all of their rights,
except their right to be heard and to present evidence to support their
allegations. Otherwise, it would be meaningless to request presentation
of evidence every time the other party is declared in default. If it were so,
a decision would then automatically be rendered in favor of the non-
defaulting party and exactly to the tenor of his prayer. The law also gives
the defaulting parties some measure of protection because plaintiffs,
despite the default of defendants, are still required to substantiate their
allegations in the complaint.23 (Citations omitted and emphasis ours)
The statements of account pre-
sented by Tan were merely hear-
say as the genuineness and due
execution of the same were not
established.
Anent the admissibility of the statements of account presented by Tan,
this Court rules that the same should not have been admitted in evidence
by the lower tribunals.
Section 20, Rule 132 of the Rules of Court provides that the authenticity
and due execution of a private document, before it is received in evidence
by the court, must be established. Thus:
Sec. 20. Proof of private document.―Before any private document
offered as authentic is received in evidence, its due execution and
authenticity must be proved either:
a) By anyone who saw the document executed or written; or
b) By evidence of the genuineness of the signature or handwriting of
the maker.
Any other private document need only be identified as that which it is
claimed to be.
A private document is any other writing, deed, or instrument executed by
a private person without the intervention of a notary or other person
legally authorized by which some disposition or agreement is proved or
set forth. Lacking the official or sovereign character of a public
document, or the solemnities prescribed by law, a private document
requires authentication in the manner allowed by law or the Rules of
Court before its acceptance as evidence in court. The requirement of
authentication of a private document is excused only in four instances,
specifically: (a) when the document is an ancient one within the context
of Section 21, Rule 132 of the Rules of Court; (b) when the genuineness
and authenticity of an actionable document have not been specifically
denied under oath by the adverse party; (c) when the genuineness and
authenticity of the document have been admitted; or (d) when the
document is not being offered as genuine.24
The statements of account which Tan adduced in evidence before the
MTCC indubitably are private documents. Considering that these
documents do not fall among the aforementioned exceptions, the MTCC
could not admit the same as evidence against Otero without the required
authentication thereof pursuant to Section 20, Rule 132 of the Rules of
Court. During authentication in court, a witness positively testifies that a
document presented as evidence is genuine and has been duly executed,
or that the document is neither spurious nor counterfeit nor executed by
mistake or under duress.25
Here, Tan, during the ex parte presentation of his evidence, did not
present anyone who testified that the said statements of account were
genuine and were duly executed or that the same were neither spurious
or counterfeit or executed by mistake or under duress. Betache, the one
who prepared the said statements of account, was not presented by Tan
as a witness during the ex parte presentation of his evidence with the
MTCC.
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Considering that Tan failed to authenticate the aforesaid statements of
account, the said documents should not have been admitted in evidence
against Otero. It was thus error for the lower tribunals to have considered
the same in assessing the merits of Tan’s Complaint.

Second Issue: The Material Allegations of the Complaint

In view of the inadmissibility of the statements of account presented by

Tan, the remaining question that should be settled is whether the pieces
of evidence adduced by Tan during the ex parte presentation of his
evidence, excluding the said statements of account, sufficiently prove the
material allegations of his complaint against Otero.

We rule in the affirmative.

In civil cases, it is a basic rule that the party making allegations has the
burden of proving them by a preponderance of evidence. The parties must
rely on the strength of their own evidence and not upon the weakness of
the defense offered by their opponent.26 This rule holds true especially
when the latter has had no opportunity to present evidence because of a
default order. Needless to say, the extent of the relief that may be granted
can only be so much as has been alleged and proved with preponderant
evidence required under Section 1 of Rule 133.27

Notwithstanding the inadmissibility of the said statements of account,

this Court finds that Tan was still able to prove by a preponderance of
evidence the material allegations of his complaint against Otero.

First, the statements of account adduced by Tan during the ex parte

presentation of his evidence are just summaries of Otero’s unpaid
obligations, the absence of which do not necessarily disprove the latter’s
liability.

Second, aside from the statements of account, Tan likewise adduced in

evidence the testimonies of his employees in his Petron outlet who
testified that Otero, on various occasions, indeed purchased on credit
petroleum products from the former and that he failed to pay for the same.
It bears stressing that the MTCC, the RTC and the CA all gave credence
to the said testimonial evidence presented by Tan and, accordingly,
unanimously found that Otero still has unpaid outstanding obligation in
favor of Tan in the amount of P270,818.01.

Well-established is the principle that factual findings of the trial court,

when adopted and confirmed by the CA, are binding and conclusive on
this Court and will generally not be reviewed on appeal.28 The Court
sees no compelling reason to depart from the foregoing finding of fact of
the lower courts.

WHEREFORE, in consideration of the foregoing disquisitions, the

petition is DENIED. The Decision dated April 29, 2011 rendered by the
Court of Appeals in CA-G.R. SP No. 02244 is AFFIRMED.

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