The 76 individual respondents were part of the workforce of Hacienda Bino consisting
SECOND DIVISION
[G.R. No. 150478. April 15, 2005]
HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L.
STARKE, petitioners, vs. CANDIDO CUENCA, FRANCISCO ACULIT,
ANGELINA ALMONIA, DONALD ALPUERTO, NIDA BANGALISAN, ROGELIO
CHAVEZ, ELMO DULINGGIS, MERCEDES EMPERADO, TORIBIO EMPERADO,
JULIANA ENCARNADO, REYNALDO ENCARNADO, GENE FERNANDO, JOVEN
FERNANDO, HERNANI FERNANDO, TERESITA FERNANDO, BONIFACIO
GADON, JOSE GALLADA, RAMONITO KILAYKO, ROLANDO KILAYKO,
ALFREDO LASTIMOSO, ANTONIO LOMBO, ELIAS LOMBO, EMMA LOMBO,
LAURENCIA LOMBO, LUCIA LOMBO, JOEL MALACAPAY, ADELA MOJELLO,
ERNESTO MOJELLO, FRUCTOSO MOJELLO, JESSICA MOJELLO, JOSE
MOJELLO, MARITESS MOJELLO, MERLITA MOJELLO, ROMEO MOJELLO,
RONALDO MOJELLO, VALERIANA MOJELLO, JAIME NEMENZO, RODOLFO
NAPABLE, SEGUNDIA OCDEN, JARDIOLINA PABALINAS, LAURO
PABALINAS, NOLI PABALINAS, RUBEN PABALINAS, ZALDY PABALINAS,
ALFREDO PANOLINO, JOAQUIN PEDUHAN, JOHN PEDUHAN, REYNALDO
PEDUHAN, ROGELIO PEDUHAN, JOSEPHINE PEDUHAN, ANTONIO PORRAS,
JR., LORNA PORRAS, JIMMY REYES, ALICIA ROBERTO, MARCOS ROBERTO,
JR., MARIA SANGGA, RODRIGO SANGGA, ARGENE SERON, SAMUEL
SERON, SR., ANGELINO SENELONG, ARMANDO SENELONG, DIOLITO
SENELONG, REYNALDO SENELONG, VICENTE SENELONG, FEDERICO STA.
ANA, ROGELIO SUASIM, EDNA TADLAS, ARTURO TITONG, JR., JOSE
TITONG, JR., NANCY VINGNO, ALMA YANSON, JIMMY YANSON, MYRNA
VILLANUEVA BELENARIO, SALVADOR MALACAPAY, and RAMELO
TIONGCO, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review of the Decision [1] of the Court of Appeals (CA), dated
July 31, 2001, and the Resolution dated September 24, 2001 denying the petitioners motion
for reconsideration. The assailed decision modified the decision of the National Labor
Relations Commission (NLRC) in NLRC Case No. V-000099-98.
Hacienda Bino is a 236-hectare sugar plantation located at Barangay Orong,
Kabankalan City, Negros Occidental, and represented in this case by Hortencia L. Starke,
owner and operator of the said hacienda.
of 220 workers, performing various works, such as cultivation, planting of cane points,
fertilization, watering, weeding, harvesting, and loading of harvested sugarcanes to cargo
trucks.[2]
On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or
Notice which stated, thus:
To all Hacienda Employees:
Please bear in mind that all those who signed in favor of CARP are expressing their desire
to get out of employment on their own volition.
Wherefore, beginning today, July 18, only those who did not sign for CARP will be given
employment by Hda. Bino.
(
Sgd.) Hortencia Starke[3]
The respondents regarded such notice as a termination of their employment. As a
consequence, they filed a complaint for illegal dismissal, wage differentials, 13 th month pay,
holiday pay and premium pay for holiday, service incentive leave pay, and moral and
exemplary damages with the NLRC, Regional Arbitration Branch No. VI, Bacolod City, on
September 17, 1996.[4]
In their Joint Sworn Statement, the respondents as complainants alleged inter alia that
they are regular and permanent workers of the hacienda and that they were dismissed
without just and lawful cause. They further alleged that they were dismissed because they
applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over
the land owned by petitioner Starke.[5]
For her part, petitioner Starke recounted that the companys Board of Directors petitioned
the Sangguniang Bayan of Kabankalan for authority to re-classify, from agricultural to
industrial, commercial and residential, the whole of Hacienda Bino, except the portion
earmarked for the CARP. She asserted that half of the workers supported the re-classification
but the others, which included the herein respondents, opted to become beneficiaries of the
land under the CARP. Petitioner Starke alleged that in July 1996, there was little work in the
plantation as it was off-season; and so, on account of the seasonal nature of the work, she
issued the order giving preference to those who supported the re-classification. She pointed
out that when the milling season began in October 1996, the work was plentiful again and
she issued notices to all workers, including the respondents, informing them of the availability
of work. However, the respondents refused to report back to work. With respect to the
respondents money claims, petitioner Starke submitted payrolls evidencing payment thereof.
On October 6, 1997, Labor Arbiter Ray Allan T. Drilon rendered a Decision,[6] finding
that petitioner Starkes notice dated July 18, 1996 was tantamount to a termination of the
respondents services, and holding that the petitioner company was guilty of illegal dismissal.
The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal
of the complainants illegal and ordering respondent Hortencia L. Starke, Inc. represented by
Hortencia L. Starke, as President, to:
1. Reinstate the complainants to their former position without loss of seniority
rights immediately upon receipt of this decision;
2. PAY the backwages and wage differentials of the complainants, to wit:
in the total amount of Four Hundred Ninety-Five Thousand Eight Hundred
Fifty-Two and 72/100 (P495,852.72) Pesos; and
3. TO PAY the complainants attorney's fee in the amount of Forty-Nine
Thousand Five Hundred Eighty-Five and 27/100 (P49,585.27) Pesos.
Respondents are further directed to deposit to this Office the total judgment award of FIVE
HUNDRED FORTY-FIVE THOUSAND AND FOUR HUNDRED THIRTY-SEVEN AND
99/100 (P545,437.99) PESOS within ten (10) days from receipt of this decision.
All other claims are hereby DISMISSED for lack of merit.
SO ORDERED.[7]
Both the petitioners and the respondents appealed the case to the NLRC. On July 24,
1998, the NLRC affirmed with modification the decision of the Labor Arbiter. The dispositive
part of its decision reads:
WHEREFORE, premises considered, the Decision of the Labor Arbiter is AFFIRMED WITH
MODIFICATIONS. Respondent is further ordered to pay the complainants listed in the
Holiday Pay Payroll the amounts due them.
SO ORDERED.[8]
A motion for reconsideration of the said decision was denied by the
NLRC.[9] Dissatisfied, the respondents appealed the case to the CA where the following
issues were raised:
A. THE HONORABLE COMMISSION GRAVELY ABUSED ITS DISCRETION AND
POWER BY VIOLATING THE DOCTRINE OF STARE DECISIS LAID DOWN
BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE
STATUS OF THE SUGAR WORKERS.
B. THE HONORABLE COMMISSION COMMITTED SERIOUS ERRORS BY
ADMITTING THE MOTION TO DISMISS AND/OR ANSWER TO
PETITIONERS APPEAL MEMORANDUM DATED MARCH 26, 1998 FILED BY
COUNSEL FOR THE HEREIN RESPONDENTS INSPITE OF THE FACT THAT
IT WAS FILED WAY BEYOND THE REGLEMENTARY PERIOD.
C. THE HONORABLE COMMISSION COMMITTED GRAVE ERROR IN GIVING
CREDENCE TO THE SWEEPING ALLEGATIONS OF THE COMPLAINANTS
AS TO THE AWARD OF BACKWAGES AND HOLIDAY PAY WITHOUT ANY
BASIS.[10]
On July 31, 2001, the CA rendered a Decision,[11] the dispositive portion of which reads:
WHEREFORE, the decision of the National Labor Relations Commission is
hereby MODIFIED by deleting the award for holiday pay and premium pay for holidays. The
rest of the Decision is hereby AFFIRMED.
SO ORDERED.[12]
The CA ruled that the concept of stare decisis is not relevant to the present case. It held
that the ruling in Mercado, Sr. v. NLRC[13] does not operate to abandon the settled doctrine
that sugar workers are considered regular and permanent farm workers of a sugar plantation
owner, considering that there are facts peculiar in that case which are not present in the case
at bar. In the Mercado case, the farm laborers worked only for a definite period for a farm
owner since the area of the land was comparatively small, after which they offer their services
to other farm owners. In this case, the area of the hacienda, which is 236 hectares, simply
does not allow for the respondents to work for a definite period only.
The CA also held that the petitioners reliance on Bacolod-Murcia Milling Co. Inc. v.
NLRC[14] was misplaced, as it in fact, bolstered the respondents' posture that they are regular
employees. In that case, the Court held that a sugar worker may be considered as in regular
employment even during those years when he is merely a seasonal worker where the issues
concern the determination of an employer-employee relationship and security of tenure.
Further, the CA held that the respondents appeal to the NLRC was not perfected since
they failed to accompany their notice of appeal with a memorandum of appeal, or to timely
file a memorandum of appeal. Thus, as to them, the decision of the Labor Arbiter became
final and executory. The NLRC, therefore, gravely abused its discretion when it modified the
decision of the Labor Arbiter and awarded to the respondents holiday pay and premium for
holiday pay. Finally, the CA affirmed the award of backwages, finding no circumstance that
would warrant a reversal of the findings of the Labor Arbiter and NLRC on this point. [15]
 On September 24, 2001, the CA denied the motion for reconsideration filed by the
petitioners due to their failure to indicate the date of the receipt of the decision to determine
the timeliness of the motion.[16]
Hence, this petition for review.
The petitioners submit the following issues:
A. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY
ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE
OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE
APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS.
B. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN DISMISSING THE MOTION FOR RECONSIDERATION FOR
FAILURE TO STATE THE DATE OF THE RECEIPT OF THE DECISION IN
THE MOTION FOR RECONSIDERATION.[17]
Petitioner Starke contends that the established doctrine that seasonal employees are
regular employees had been overturned and abandoned by Mercado, Sr. v. NLRC.[18] She
stresses that in that case, the Court held that petitioners therein who were sugar workers,
are seasonal employees and their employment legally ends upon completion of the project
or the season. Petitioner Starke argues that the CA violated the doctrine of stare decisis in
not applying the said ruling. She asserts that the respondents, who are also sugar workers,
are seasonal employees; hence, their employment can be terminated at the end of the
season and such termination cannot be considered an illegal dismissal. Petitioner Starke
maintains that the determination of whether the workers are regular or seasonal employees
is not dependent on the number of hectares operated upon by them, or the number of
workers, or the capitalization involved, but rather, in the nature of the work. She asserts that
the respondents also made their services available to the neighboring haciendas. To buttress
her contention that the respondents are seasonal employees, petitioner Starke cites Rep. Act
6982, An Act Strengthening the Social Amelioration Program in the Sugar Industry, Providing
the Mechanics for its Implementation, and for other Purposes, which recognizes the seasonal
nature of the work in the sugar industry.[19]
Petitioner Starke also takes exception to the denial of her motion for reconsideration
due to failure to state the date of the receipt of the decision. She asserts that a denial of a
motion for reconsideration due to such cause is merely directory and not mandatory on the
part of the CA. Considering that the amount involved in this case and the fact that the motion
was filed within the reglementary period, the CA should have considered the motion for
reconsideration despite such procedural lapse.[20]
On the other hand, the respondents aver that the petitioners erroneously invoke the
doctrine of stare decisis since the factual backdrop of this case and the Mercado case is not
similar. The respondents posit that the Mercado case ruled on the status of employment of
farm laborers who work only for a definite period of time for a farm owner, after which they
offer their services to other farm owners. Contrarily, the respondents contend that they do
not work for a definite period but throughout the whole year, and do not make their services
available to other farm owners. Moreover, the land involved in the Mercado case is
comparatively smaller than the sugar land involved in this case. The respondents insist that
the vastness of the land involved in this case requires the workers to work on a year-round
basis, and not on an on-and-off basis like the farm workers in the Mercado case.
Finally, the respondents maintain that the requirement that the date of receipt of the
decision should be indicated in the motion for reconsideration is mandatory and jurisdictional
and, if not complied with, the court must deny the motion outright.[21]
The petition is without merit.
On the substantial issue of whether the respondents are regular or seasonal employees,
the petitioners contend that the CA violated the doctrine of stare decisis by not applying the
ruling in the Mercado case that sugar workers are seasonal employees. We hold otherwise.
Under the doctrine of stare decisis, when a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle and apply it to all future
cases in which the facts are substantially the same.[22] Where the facts are essentially
different, however, stare decisisdoes not apply, for a perfectly sound principle as applied to
one set of facts might be entirely inappropriate when a factual variance is introduced. [23]
The CA correctly found that the facts involved in this case are different from
the Mercado case; therefore, the ruling in that case cannot be applied to the case at bar,
thus:
We do not find the concept of stare decisis relevant in the case at bench. For although in the
Mercado case, the Supreme Court held the petitioners who were sugar workers not to be
regular but seasonal workers, nevertheless, the same does not operate to abandon the
settled doctrine of the High Court that sugar workers are considered regular and permanent
farm workers of a sugar plantation owner, the reason being that there are facts present that
are peculiar to the Mercado case. The disparity in facts between the Mercado case and the
instant case is best exemplified by the fact that the former decision ruled on the status of
employment of farm laborers, who, as found by the labor arbiter, work only for a definite
period for a farm worker, after which they offer their services to other farm owners,
considering the area in question being comparatively small, comprising of seventeen and a
half (17) hectares of land, such that the planting of rice and sugar cane thereon could not
possibly entail a whole year operation. The herein case presents a different factual condition
as the enormity of the size of the sugar hacienda of petitioner, with an area of two hundred
thirty-six (236) hectares, simply do not allow for private respondents to render work only for
a definite period.
Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in
the Mercado case. In Abasolo v. NLRC,[24] and earlier, in Philippine Tobacco Flue-Curing &
Redrying Corporation v. NLRC,[25] the Court made the following observations:
In Mercado, although respondent constantly availed herself of the petitioners services from
year to year, it was clear from the facts therein that they were not in her regular employ.
Petitioners therein performed different phases of agricultural work in a given year. However,
during that period, they were free to work for other farm owners, and in fact they did. In other
words, they worked for respondent, but were nevertheless free to contract their services with
other farm owners. The Court was thus emphatic when it ruled that petitioners were mere
project employees, who could be hired by other farm owners.[26]

Recently, the Court reiterated the same observations in Hacienda Fatima v. National
Federation of Sugarcane Workers-Food and General Trade[27] and added that the petitioners
in the Mercado case were not hired regularly and repeatedly for the same phase/s of
agricultural work, but on and off for any single phase thereof.
In this case, there is no evidence on record that the same particulars are present. The
petitioners did not present any evidence that the respondents were required to perform
certain phases of agricultural work for a definite period of time. Although the petitioners assert
that the respondents made their services available to the neighboring haciendas, the records
do not, however, support such assertion.
The primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or
business of the employer.[28] There is no doubt that the respondents were performing work
necessary and desirable in the usual trade or business of an employer. Hence, they can
properly be classified as regular employees.
For respondents to be excluded from those classified as regular employees, it is not
enough that they perform work or services that are seasonal in nature. They must have been
employed only for the duration of one season.[29] While the records sufficiently show that the
respondents work in the hacienda was seasonal in nature, there was, however, no proof that
they were hired for the duration of one season only. In fact, the payrolls, [30] submitted in
evidence by the petitioners, show that they availed the services of the respondents since
1991. Absent any proof to the contrary, the general rule of regular employment should,
therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness
of his employees dismissal.[31]
On the procedural issue, petitioner Starke avers that the CA should not have denied
outright her motion for reconsideration, considering its timely filing and the huge amount
involved. This contention is already moot. Petitioner Starke has already aired in this petition
the arguments in her motion for reconsideration of the CA decision, which have been
adequately addressed by this Court. Assuming arguendo that the CA indeed failed to
consider the motion for reconsideration, petitioner Starke was not left without any other
recourse.[32]
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the
Court of Appeals, dated July 31, 2001, and its Resolution dated September 24, 2001 are
hereby AFFIRMED.
SO ORDERED.
FIRST DIVISION
(PEPSICO) on 22 December 1992, before the Regional Trial Court (RTC) of Pasig City,
PEPSI-COLA PRODUCTS PHILIPPINES, G. R. No. 167866 Branch 163, for Sum of Money and Damages.
INCORPORATED, and PEPSICO,
INCORPORATED,
Petitioners, Present:
The facts are beyond dispute. As culled from the records of the case, they are as
PANGANIBAN, C.J., follows:
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
CHICO-NAZARIO, JJ. Petitioners PCPPI and PEPSICO launched a Department of Trade and Industry (DTI)

PEPE B. PAGDANGANAN, and PEPITO approved and supervised under-the-crown promotional campaign entitled Number Fever
A. LUMAJAN, Promulgated:
Respondents. sometime in 1992. With said marketing strategy, it undertook to give away cash prizes to
October 12, 2006
holders of specially marked crowns and resealable caps of PEPSI-COLA softdrink
x--------------------------------------------------x
products, i.e., Pepsi, 7-Up, Mirinda and Mountain Dew. Specially marked crowns and
DECISION resealable caps were said to contain a) a three-digit number, b) a seven-digit alpha-numeric

security code, and c) the amount of the cash prize in any of the following
CHICO-NAZARIO, J.:
denominations P1,000.00; P10,000.00; P50,000.00; P100,000.00; and P1,000,000.00.
The Case

Petitioners PCPPI and PEPSICO engaged the services of D.G. Consultores, a

For review under Rule 45 of the Rules of Court, as amended, is the 13 February
2004 Decision[1] and 26 June 2005 Resolution[2] of the Court of Appeals in CA-G.R. CV No. Mexican consultancy firm with experience in handling similar promotion in other countries, to

68290, reversing and setting aside the 3 August 2000 [3] Decision and 23 August randomly pre-select 60 winning three-digit numbers with their matching security codes out of
2000[4] Order of the Regional Trial Court of Pasig City, Branch 163,[5] in Civil Case No. 1000 three-digit numbers seeded in the market, as well as the corresponding artworks
62726.
appearing on a winning crown and/or resealable cap.

The Facts
The mechanics of the Number Fever promo was simple From Monday to Friday,

This case stemmed from a Complaint[6] filed by herein respondents Pepe B. starting 17 February 1992 to 8 May 1992, petitioners PCPPI and PEPSICO will announce,

Pagdanganan (Pagdanganan) and Pepito A. Lumahan (Lumahan) against herein petitioners on national and local broadcast and print media, a randomly pre-selected[7] winning three-
Pepsi-Cola Products Philippines, Incorporated (PCPPI) and PEPSICO, Incorporated

digit number. All holders of specially marked crowns bearing the winning three-digit number
will win the corresponding amount printed on said crowns and/or resealable caps.
On account of the success of the promotional campaign, petitioners PCPPI and
DEAR VALUED CUSTOMERS
xxxx
Some 349 crowns have winning security codes as per the list held
in a bank vault by the Department of Trade and Industry and will be
redeemed at full value like all other authenticated winning crowns.

PEPSICO extended or stretched out the duration of the Number Fever for another five weeks Some other 349 crowns which have security codes L-2560-FQ and
L-3560-FQ are not winning crowns.
or until 12 June 1992.
However, as an act of goodwill to our customers, we will redeem the
non-winning 349 crowns for P500.00 each until June 12, 1992 at all Pepsi
plants & warehouses.
For the extended period, petitioners PCPPI and PEPSICO again sought the services
xxxx
of D.G. Consultores to pre-select 25 winning three-digit numbers with their matching security

codes as well as the corresponding artworks to appear on a winning crown and/or resealable
Sincerely,
cap.
ROD SALAZAR
President
PEPSI-COLA PRODUCTS PHILS., INC.
On 25 May 1992, petitioners PCPPI and PEPSICO announced the notorious three-

digit combination 349 as the winning number for the next day, 26 May 1992. On the same

night of the announcement, however, petitioners PCPPI and PEPSICO learned of reports
Despite the foregoing announcement, on 9 July 1992, respondent Pagdanganan
that numerous people were trying to redeem 349 bearing crowns and/or resealable caps with
demanded from petitioners PCPPI and PEPSICO and the DTI the payment of the
incorrect security codes L-2560-FQ and L-3560-FQ. Upon verification from the list of the 25
corresponding cash prize of each of his 349 bearing crown, specifically, four 7-Up[9]crowns
pre-selected[8] winning three-digit numbers, petitioners PCPPI and PEPSICO and the DTI
and two Mirinda[10] crowns, each displaying the cash prize of P1,000,000.00 in addition to
learned that the three-digit combination 349 was indeed the winning combination for 26 May
one 7-Up[11] crown showing the cash prize of P100,000.00. Notably, all seven crowns bore
1992 but the security codes L-2560-FQ and L-3560-FQ do not correspond to that assigned
the security code L-2560-FQ.
to the winning number 349.

For his part, respondent Lumahan similarly insisted that petitioners PCPPI and
Subsequently, petitioners PCPPI and PEPSICO issued a statement stating in part
PEPSICO pay him the cash value of his two winning crowns, that is, two 7-Up crowns with
that:
one exhibiting the cash value of P1,000,000.00 and the other the amount of P100,000.00.

Petitioners PCPPI and PEPSICO refused to take heed of the aforementioned
demands.
Affronted by the seeming injustice, respondents Pagdanganan and Lumahan filed a
collective complaint[12] for Sum of Moneyand Damages before the RTC of Pasig City, Branch
163, against petitioners PCPPI and PEPSICO.
After trial on the merits, the RTC rendered its decision on 3 August 2000, the
dispositive part of which states that:
WHEREFORE, for failure of the plaintiffs to establish a cause of
action against defendants, the instant case is hereby DISMISSED.
The defendants are hereby ordered to pay plaintiffs Pagdanganan
and Lumahan the amounts of P3,500.00 and P1,000.00, respectively.
Without costs.
SO ORDERED.
In dismissing the complaint, the RTC ratiocinated that:
The preponderance of evidence now on record does not appear to
support the assertion of the plaintiffs that number 349 with security code
number L-2560-FQ won the Pepsicos sales promotion game for May 26,
1992. While it is true that number 349 was used both as a winning and non-
winning number, still the winning 349 must tally with the corresponding
security code contained in the master list of winning crowns.
xxxx
x x x [a]mong the 349s enumerated in the list of winning crowns
(citation omitted) as winning numbers were 349 V-2421-JC; 349 A-7963-IS;
349 B-4860-IG; 349 C-3984-RP; 349 D-5863-CO; 349 E-3800-EL; 349 U-
3501-MN (sic) and 349 U-3246-NP. Nowhere to be found were nos. 349 L-
2560-FQ and L-3560-FQ. This means that it was not possible for both
defendants to have won during the entire extended period of the sales
promotion of Pepsi Cola because the number did not appear in the master
list. It was made clear in the advertisements and posters put up by
defendants that to win, the 3-digit number must be matched with the proper
security code. The Department of Trade and Industry had been duly
informed of the mechanics of the Pepsi Cola sales promotion for the
protection of the interest of the public.
Anent the award of P3,500.00 and P1,000.00 to respondents Pagdanganan and
Lumahan, respectively, the RTC justified such grant, by stating to wit:
x x x since the defendants have voluntarily announced their desire
to pay holders of caps or crowns of their products bearing non-winning
number 349 as a sign of goodwill, the Court feels that this privilege should
also be extended to the plaintiffs despite the institution of the instant case.
Their Partial Motion for Reconsideration[13] having been denied in
an Order[14] dated 23 August 2000, respondents Pagdanganan and Lumahan
appealed their case to the Court of Appeals.
In a Decision[15] promulgated on 13 February 2004, the Court of Appeals reversed
and set aside the decision of the RTC, the fallo of which reads:
WHEREFORE, the appeal is hereby GRANTED. The decision of the
Regional Trial Court of Pasig, Branch 163, in Civil Case No. 62726 is
REVERSED. Defendants-appellants are hereby ORDERED to pay plaintiffs-
appellants Pepe Pagdanganan the sum of P5 million and Pepito Lumahan
the sum of P1.2 million.
In a Resolution dated 26 April 2005, the Court of Appeals denied petitioners PCPPI
and PEPSICOs Motion for Reconsideration.

The Issues
Hence, this petition for review on certiorari under Rule 45 of the Rules of Court, as
amended, predicated on the following issues:[16]
I.
WHETHER OR NOT PETITIONERS ARE ESTOPPED FROM RAISING STARE
DECISIS;
II.
WHETHER OR NOT RODRIGO, MENDOZA, PATAN AND DE MESA ARE
BINDING ALTHOUGH RESPONDENTS WERE NOT PARTIES THEREIN;
III.
WHETHER OR NOT THE RESPONDENTS RAISE ANY ISSUE THAT HAS NOT
BEEN PREVIOUSLY RESOLVED IN RODRIGO, MENDOZA, PATAN OR
DE MESA;
IV.
WHETHER OR NOT THE SENATE AND DTI TASK FORCE REPORTS ARE EVEN
RELEVANT, OR CONTROLLING; and
V.
WHETHER OR NOT RESPONDENTS MAY SEEK AFFIRMATIVE RELIEF
WITHOUT HAVING APPEALED.
In essence, the present petition raises as fundamental issue for resolution by the
Court the question of whether or not the instant case is already barred by our rulings in the
cases of Rodrigo,[17] Mendoza,[18] Patan[19] and, the most recent, De Mesa. [20]
The Courts Ruling
In ordering petitioners PCPPI and PEPSICO to pay respondents Pagdanganan and
Lumahan the amounts of P5,000,000.00 and P1,200,000.00, the appellate court articulated
that:
x x x [w]e fully agree with the contention of plaintiffs-appellants that such
deviation or additional requirement, that is the winning crown must have a
corresponding winning security code, imposed by PEPSI was a deviation
from the rules approved by DTI.
xxxx
x x x [i]t appeared that the matching winning security with code is
not an express requirement in order to win. Taken together with printed
promo mechanics, this means that one is a winner as long as he has in his
possession the crown with the winning number. The matching winning
security code is not required.
With the promo mechanics as the guide, it is undisputable that
plaintiffs-appellants are very well entitled to the cash prizes indicated on their
crowns. To deny their claim despite their compliance with the unequivocal
requirements of the promotion is contrary to the principle of good faith.
xxxx
It is highly inequitable for PEPSI to impose an additional requirement
in order to win as a way to evade the unusually large number of 349 winner-
claimants. x x x.
Petitioners PCPPI and PEPSICO fault the appellate court for disregarding this Courts
pronouncements in four other Pepsi/349 cases i.e., Mendoza, Rodrigo, Patan and De
Mesa that the 349 bearing crowns and/or resealable caps with security codes L-2560-FQ
and L-3560-FQ, like those held by respondents Pagdanganan and Lumahan, are non-
winning crowns under the terms of the Number Fever promo. They reckon that, by virtue of
the principle of stare decisis, the aforementioned cases have already settled the issue of
whether or not petitioners PCPPI and PEPSICO are liable to holders of non-winning 349
bearing crowns and/or resealable caps. Simply put, the principle of stare decisis should have
been determinative of the outcome of the case at bar. Rodrigo, Mendoza, Patanand De
Mesa cases having ruled on the very same issues raised in the case at bar, they constitute
binding judicial precedents on how Pepsi/"349" litigations must be disposed of.
On the other hand, respondents Pagdanganan and Lumahan justify the non-
application of the principle of stare decisis by stating that it is required that the legal rights
and relations of the parties, and the facts, and the applicable laws, the issue and evidence
are exactly the same, (sic) as those decided in the cases of Rodrigo, Mendoza and later
the de Mesa x x x.[21] They contend, however, that a comparison of the subject cases show
that they are not the same nor identical x x x as evident in the different questions of law, the
findings of facts and evidence and issues involved in said cases x x x. [22] In fact, respondents
Pagdanganan and Lumahan particularly argue that the basis of their action is Breach of
Contract while that of the Rodrigo and Mendoza cases involved complaints for Specific
Performance.
The petition is meritorious.
There is no question that the cases of Mendoza, Rodrigo, Patan and De Mesa,
including the case at bar, arose from the same set of facts concerning the Number Fever
promo debacle of petitioners PCPPI and PEPSICO. Mendoza, Rodrigo, Patan, De Mesa,
Pagdanganan and Lumahan are among those holding supposedly winning 349 Pepsi/7-
Up/Mirinda/Mountain Dew soft drink crowns and/or resealable caps. Said crowns and/or
resealable caps were not honored or allowed to be cashed in by petitioners PCPPI and
PEPSICO for failing to contain the correct security code assigned to such winning
combination. As a result, the rejected crown and/or resealable cap holders filed separate
complaints for specific performance/ sum of money/ breach of contract, with damages,
all against petitioners PCPPI and PEPSICO.
A survey of said cases is imperative in order to determine whether or not the principle
of stare decisis will, indeed, bar the relitigation of the instant case.
In 2001, in the case of Mendoza v. Pepsi-Cola Products Phils., Inc. and Pepsico,
Inc.,[23] the RTC dismissed the complaint for specific performance and damages against
herein petitioners PCPPI and PEPSICO. On appeal[24] with the Court of Appeals, the latter
dismissed the appeal for lack of merit and affirmed the dismissal of the complaint. It
rationalized that:
The mechanics for the Number Fever promo, both in the original period and
for the extension period, was duly approved by the DTI. Television, radio
and print advertisements for the promo passed through and were by the DTI.
Posters explaining the promo mechanics were posted all over the country
and warning ads in newspapers highlighted the importance of the security
code. Plaintiff-appellant admitted to have read and understood the
mechanics of the promo. His different interpretation of the security codes
function should not mean that PEPSI was grossly negligent. The mechanics
were clear. A winning number had its own unique, matching security code
which must be authenticated by PEPSI against its official list. The
importance of a matching security code had been adequately emphasized
in the Warning Ads (citation omitted) and in the new campaign posters
(citation omitted) during the extension period both of which were duly
approved by DTI.
xxxx
The function of the security code is not limited to the determination of
whether or not a crown is tampered with or fake. It also serves to
authenticate the winning number combination whether it had the correct
alpha-numeric security code uniquely assigned to each crown as appearing
in PEPSIs official list. The campaign posters for the promo period February
 17, 1992 to May 10, 1992 as well as for the extension period from May 11,
1992 to June 12, 1992 uniformly enumerated three (3) essential elements of
a participating winning crown, to wit: (1) 3-digit winning number; (2) prize
denomination; and (3) 7-digit alpha-numeric security code. x x x The promo
mechanics stressed that the 3-digit winning number combination must have
an authenticated security code, which security code was unique to every
crown. Thus, plaintiff-appellants 349 crown must also be measured against
the essential elements of a winning participating crown pursuant to the
promos mechanics.
xxxx
Thus, PEPSIs obligation to redeem plaintiff-appellants 349 crown did not
arise as his crown did not bear the correct security code, a condition
precedent to winning the proffered prize.
A Petition for Review on Certiorari was then filed with this Court. In a Resolution dated 24
July 2002, we denied Mendozas petition for review for failing to show that the Court of
Appeals committed reversible error.[25]
Similarly, in 2002, in Rodrigo v. Pepsi Cola Products (Phils.), Inc. and Pepsico, Inc.,
the RTC therein dismissed the complaint for Specific Performance and Damages filed against
herein petitioners PCPPI and PEPSICO. The Court of Appeals then affirmed the dismissal of
the complaint, stating that:
To resolve the pivotal issue of whether the appellants are the real
winners of the promo, the various advertisements must be read together to
give effect to all. From the start of the promotion, Pepsi had highlighted the
security code as a major component of each and every crown. In subsequent
posters, the companies clarified its role as a measure against tampering or
faking crowns. (sic), and emphasized the important role of the security code
in identifying and verifying the real winning crown. In its Warning Cheaters
posters, the third paragraph succinctly provides that:
Thus if a supposed winning crown is presented to
us where the security code does not match the real security
code of the winning number as verified with our master list
(known only to authorized personnel of Pepsi and DTI), then
we know that the Crown is either fake or tampered with.
(Citation omitted.)
Also (sic) the companies published that:
Every crown/cap with a winning number and
Authenticated security wins the amount printed on the
crown/cap. (Citation omitted.)
Given said advertisements, the impression an ordinary consumer
gets is that the security code distinguishes the real or genuine from the fake
winning crown, especially considering the conditions surrounding their
issuance i.e., that as early as March 1992, various complaints of tampered
crowns had reached the DTI. This construction is bolstered by the
subsequent release of the NUMBER FEVER MORE CHANCES TO WIN
posters during the extension period wherein the security code is defined as
a measure against tampering or faking of crowns (citation omitted) and in
the subsequent advertisements which warned the consuming public that the
appellee companies would not honor under any circumstances any fake or
tampered crown. (Citation omitted.)
The inescapable conclusion is that the crowns held by the appellants
are not winning crowns. x x x .
Undaunted, Rodrigo went to this Court via a Petition for Review on Certiorari but we
subsequently denied his petition, in a Resolution dated 1 October 2001, for failure to show
that a reversible error was committed by the Court of Appeals, hence the aforequoted
disquisition was affirmed.
Promulgated in 2003, in Pepsi Cola Products (Phils.) vs. Patan, Jr., the RTC therein
dismissed two consolidated complaints for specific performance and damages against herein
petitioners PCPPI and PEPSICO for lack of cause of action. The Court of Appeals
substantially affirmed the findings of the trial court that therein respondents did not win in the
petitioners Number Fever promotional campaign as their crowns were not the winning
crowns. The appellate court, however, awarded therein respondents P500 each in the
interest of justice. When the case came to the Court by means of a Petition for Review on
Certiorari, the finding that the correct security code is an indispensable requirement to be
entitled to the cash prize is concerned, was affirmed. The award of P500 though was deleted
as it was our stance that the offer of P500 for every non-winning 349 crown had long expired
on 12 June 1992.
And, in the 2005 case of De Mesa v. Pepsi Cola Products Phils., Inc., the RTC
dismissed the case under the principle of stare decisis. It elucidated that the instant case, as
well as the 2001 Mendoza case, not only are the legal rights and relations of the parties
substantially the same as those passed upon in the 2002 Rodrigo case, but the facts, the
applicable laws, the causes of action, the issues, and the testimonial and documentary
evidence are identical such that a ruling in one case, under the principle of stare decisis,is a
bar to any attempt to relitigate the same issue. Subsequently, De Mesa et al., filed a Petition
for Review on Certiorari before us challenging the application of the principle of stare
decisis to said case. In a Decision promulgated 19 August 2005, we denied their recourse to
this court and affirmed the dismissal of the complaint. We held that:
In the instant case, the legal rights and relations of the parties, the
facts, the applicable laws, the causes of action, the issues, and the evidence
are exactly the same as those in the decided cases
of Mendoza and Rodrigo, supra. Hence, nothing is left to be argued. The
issue has been settled and this Courts final decision in the said cases must
be respected. This Courts hands are now tied by the finality of the said
judgments. We have no recourse but to deny the instant petition.
The principle of stare decisis et non quieta movere (to adhere to precedents and not
to unsettle things which are established) is well entrenched in Article 8 of the Civil Code, to
wit:[26]
ART. 8. Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the Philippines.
With the above provision of law, in tandem with the foregoing judicial
pronouncements, it is quite evident that the appellate court committed reversible error in
failing to take heed of our final, and executory decisions those decisions considered to have
attained the status of judicial precedents in so far as the Pepsi/349 cases are concerned. For
it is the better practice that when a court has laid down a principle of law as applicable to a
certain state of facts, it will adhere to that principle and apply it to all future cases where the
facts are substantially the same.[27] In the case at bar, therefore, we have no alternative but
to uphold the ruling that the correct security code is an essential, nay, critical, requirement in
order to become entitled to the amount printed on a 349 bearing crown and/or resealable
cap.
Likewise, the same principle of judicial precedent will prevent respondents
Pagdanganan and Lumahan from receiving the amounts of P3,500.00 and P1,000.00,
respectively, as goodwill compensation. As we have stated on the case of Patan:
Neither is the award of P500 to respondent Patan, Jr. in the interest
of justice and equity warranted. Respondent Patan, jr. had consistently
refused the petitioners offer of P500 for his non-winning 349 crown. Unlike
the other holders of the non-winning 349 crowns, x x x who availed
themselves of the goodwill money offered by the petitioner, respondent
Patan, Jr. rejected the same.
xxxx
In this case, the petitioners offer of P500 for every non-winning 349
crown had long expired on June 12, 1992. The petitioner cannot now be
compelled to pay respondent Patan, Jr. P500 as a goodwill gesture, since
he had already rejected the same.
The doctrine of stare decisis embodies the legal maxim that a principle or rule of law
which has been established by the decision of a court of controlling jurisdiction will be
followed in other cases involving a similar situation. It is founded on the necessity for securing
certainty and stability in the law and does not require identity of or privity of parties. [28] This is
unmistakable from the wordings of Article 8 of the Civil Code. It is even said that such
decisions assume the same authority as the statute itself and, until authoritatively
abandoned, necessarily become, to the extent that they are applicable, the criteria which
must control the actuations not only of those called upon to decide thereby but also of those
in duty bound to enforce obedience thereto.[29]Abandonment thereof must be based only on
strong and compelling reasons, otherwise, the becoming virtue of predictability which is
expected from this Court would be immeasurably affected and the publics confidence in the
stability of the solemn pronouncements diminished.

To reiterate, there is naught that is left to be brought to court. Those things which
have been so often adjudged ought to rest in peace.[30]

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed

13 February 2004 Decision and 26 April 2005 Resolution both of the Court of Appeals in CA-
G.R. CV No. 68290, are hereby REVERSED and SET ASIDE. The Decision of
the Regional Trial Court of Pasig City, Branch 163, in Civil Case No. 62726 dismissing the
complaint for Sum of Money and Damages is REINSTATED. Further, respondents Pepe B.
Pagdanganan and Pepito A. Lumahan, are not entitled to the award of P3,500.00
and P1,000.00, respectively, as goodwill compensation.

SO ORDERED.
THIRD DIVISION
[G.R. No. 121075. July 24, 1997]
DELTA MOTORS CORPORATION, petitioner, vs. COURT OF APPEALS, HON.
ROBERTO M. LAGMAN, and STATE INVESTMENT HOUSE, INC., respondents.
DECISION
DAVIDE, JR., J.:
This is a Petition for Certiorari[1] under Rule 65 of the Revised Rules of Court seeking
the reversal of the Resolutions of the Court of Appeals in CA-G.R. SP No. 29147 dated 5
January 1995[2] and 14 July 1995.[3] The former denied the Omnibus Motion filed by petitioner
Delta Motors Corporation (hereinafter DELTA), while the latter amended the earlier
Resolution.
The pleadings and annexes in the record of CA-G.R. SP No. 29147 disclose the
following material operative facts:
Private respondent State Investment House, Inc. (hereinafter, SIHI) brought an action for a
sum of money against DELTA in the Regional Trial Court (RTC) of Manila, Branch VI. The
case was docketed as Civil Case No. 84-23019. DELTA was declared in default, and on 5
December 1984, the RTC, per Judge Ernesto Tengco, rendered a decision [4] the dispositive
portion of which reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered
ordering the defendant to pay unto plaintiff the amount of P20,061,898.97 as its total
outstanding obligation and to pay 25% of the total obligation as and for attorney's fees, plus
cost of suit.
The decision could not be served on DELTA, either personally or by registered mail, due
to its earlier dissolution. However, Delta had been taken over by the Philippine National Bank
(PNB) in the meantime. This notwithstanding, SIHI moved, on 4 November 1986, for service
of the decision by way of publication, which the trial court allowed in its order of 6 December
1986. The decision was published in the Thunderer, a weekly newspaper published in
Manila. After publication, SIHI moved for execution of the judgment, which the trial court
granted in its order of 11 March 1987 on the ground that no appeal had been taken by DELTA
despite publication of the decision. The writ of execution was issued and pursuant thereto
certain properties of DELTA in Iloilo and Bacolod City were levied upon and sold. The sheriff
likewise levied on some other properties of DELTA.
DELTA then commenced a special civil action for certiorari with the Court of Appeals,
which was docketed as CA-G.R. SP No. 23068, wherein DELTA insisted that: (a) the trial
court did not acquire jurisdiction over the person of the defendant (DELTA) since there was
no valid/proper service of summons, thus rendering the decision null and void; and (b) the
void decision never became final and executory.
In its decision of 22 January 1991[5] the Court of Appeals ruled against DELTA on the
first ground, but found that the record before it "is bereft of any showing that a copy of the
assailed judgment had been properly served on P.N.B. which assumed DELTA's operation
upon the latter's dissolution." Accordingly the Court of Appeals ruled that:
[T]he [decision] did not become executory (Vda. de Espiritu v. CFI, L-30486, Oct.
31, 1972; Tuazon v. Molina, L-55697, Feb. 26, 1981).
It further opined that service by publication did not cure the fatal defect and thus decreed as
follows:
WHEREFORE, while the assailed decision was validly rendered by the respondent
court, nonetheless it has not attained finality pending service of a copy thereof on
petitioner DELTA, which may appeal therefore within the reglementary period. [6]
In a motion for reconsideration, DELTA insisted that there was no valid service of
summons and the decision of the RTC was not in accordance with the Rules, hence,
void.[7] SIHI also filed a motion for reconsideration claiming that DELTA was not dissolved,
and even if it were, its corporate personality to receive service of processes subsisted;
moreover, its right to appeal had been lost.[8] These motions were denied by the Court of
Appeals in its resolution of 27 May 1991.[9] Unsatisfied, DELTA filed with this Court a petition
for review on certiorari(G.R. No. 100366) which was denied in the resolution of 16 September
1991 for non-compliance with Circular No. 1-88. A motion for reconsideration was denied in
the resolution of 9 October 1991, a copy of which was received by DELTA on 31 October
1991.[10]
On 12 November 1991, DELTA filed a Notice of Appeal[11] with the RTC in Civil Case
No. 84-23019, indicating therein that it was appealing from the 5 December 1984 decision,
and prayed as follows:
WHEREFORE, it is most respectfully prayed of this Honorable Court that this Notice
of Appeal be noted and the records of this case be elevated to the Court of Appeals.
SIHI filed on 2 December 1991 a motion to dismiss DELTA's appeal [12] on the ground
that it was filed out of time, since DELTA obtained a certified true copy of the decision from
the RTC on 21 September 1990, hence it had only fifteen days therefrom within which to
appeal from the decision. Despite DELTA's opposition,[13] the trial court dismissed the Notice
of Appeal.[14] DELTA moved to reconsider,[15] which SIHI opposed.[16] In its order[17] of 14
September 1992 the trial court denied Deltas motion.
DELTA then filed with the Court of Appeals a petition for certiorari under Rule 65 of the
Rules of Court. The case was docketed as CA-G.R. SP NO. 29147.[18] In its petition, Delta
prayed for the: (a) annulment of the order of the trial court dated 3 June 1992 dismissing the
Notice of Appeal dated 6 November 1991; (b) annulment of the order of the trial court dated
14 September 1992 denying the motion for reconsideration of the former; and (c) elevation
of the original records of Civil Case No. 84-23019 to the Court of Appeals.
On 30 October 1992 the Court of Appeals issued in CA-G.R. SP No. 29147 a restraining
order enjoining respondents and any and all other persons acting on their behalf "from
enforcing or directing the enforcement of the Decision, subject of the petition."[19] Thereafter,
in its resolution promulgated on 22 December 1992,[20] the Court of Appeals gave due course
to the petition in said case, considered the comments of private respondents therein as its
answer and required the parties to submit their respective memoranda.
On 17 June 1993 the Court of Appeals promulgated its decision [21] in CA-G.R. SP No.
29147, the dispositive portion providing:
WHEREFORE, the questioned order of the respondent court dated June 3, 1992, dismissing
the notice of appeal dated November 6, 1991; and the order dated September 14, 1992 of
the same court denying the motion for reconsideration filed by the petitioner, through counsel,
are hereby SET ASIDE; and respondent court hereby ordered to ELEVATE the records of
the case to the Court of Appeals, on appeal.
On 18 January 1993, the RTC elevated the record of Civil Case No. 84-23019 to the Court
of Appeals.
SIHI appealed to this Court from the decision by way of a petition for review.[22]
It
contended that DELTA had lost the right to appeal in view of the lapse of more than 15 days
from DELTAs receipt of a certified true copy of the RTC decision in Civil Case No. 84-
23019. This petition for review was docketed as G.R. No. 110677.[23]
While SIHI's petition in G.R. No. 110677 was pending before this Court, DELTA filed on
14 February 1994, in CA G.R. SP No. 29147 of the Court of Appeals, an Omnibus
Motion[24] to:
1) DECLARE AS NULL AND VOID AB INITIO AND WITHOUT ANY FORCE AND
EFFECT THE ORDER OF RESPONDENT COURT DATED MARCH 11, 1987
ORDERING THE ISSUANCE OF THE WRIT OF EXECUTION;
2) DECLARE AS NULL AND VOID AB INITIO AND WITHOUT ANY FORCE AND
EFFECT THE WRIT OF EXECUTION ISSUED PURSUANT TO THE ORDER
DATED MARCH 11, 1987;
3) ALL OTHER PROCEEDINGS HELD, CONDUCTED AND EXECUTED BY
RESPONDENT SHERIFF IMPLEMENTING THE AFORESAID WRIT OF
EXECUTION.
SIHI opposed the motion[25] on grounds that: a) there was a pending appeal
by certiorari with this Court, thus the Court of Appeals was without jurisdiction to entertain
the Omnibus Motion; b) the Omnibus Motion was barred by res judicata; and c) the filing of
the Omnibus Motion was a clear act of forum-shopping and should then be denied outright.
In its resolution of 7 June 1994, the Court of Appeals merely noted the Omnibus Motion
and stated:
It appearing that there is a pending petition for review with the Supreme Court of
this Court's Decision dated June 17, 1993, it would be improper for this Court to act
on the Omnibus Motion filed by petitioner Delta Motor Corporation x x x.[26]
On 18 July 1994 this Courts Second Division issued a resolution [27] in G.R. No. 110677
denying the petition therein for failure to sufficiently show that the Court of Appeals committed
reversible error in the questioned judgment. SIHI's motion for reconsideration was denied in
the resolution of this Court of 21 September 1994.[28]
On 26 October 1994 DELTA filed a manifestation and motion [29] to resolve its Omnibus
Motion of February 10, 1994.
In its resolution of 5 January 1995,[30] the Court of Appeals denied DELTA's Omnibus
Motion, holding:
[T]he matters prayed for in the Omnibus Motion of petitioner Delta Motor
Corporation dated February 10, 1994 and abovequoted are matters which were not
raised as issues by petitioner in the instant petition and, therefore, not within the
jurisdiction and power of this Court in the instant petition to decide.[31]
On 27 January 1995 DELTA filed a motion for reconsideration and/or
clarification[32] wherein it alleged that: (a) while it was true that the matters prayed for in the
Omnibus Motion of petitioner were not raised in the instant petition, they were, nevertheless,
included in the general prayer in the petition for such other reliefs and remedies just and
equitable in the premises; (b) it could not file the Omnibus Motion with the RTC since the
records of Civil Case No. 84-23019 had already been elevated to the Court of Appeals and
upon the perfection of the appeal, the trial court lost jurisdiction over the case; and (c) the
matters raised in the Omnibus Motion were incidental to and included in the appellate
jurisdiction of the Court of Appeals.
On the other hand, on 2 February 1995, SIHI filed a motion for clarification[33] wherein it
asked for the deletion, for being mere obiter dictum, the following paragraph in the Resolution
of 5 January 1995, to wit:
While it is true that as a necessary consequence the decision of the Court of
Appeals dated January 22, 1991 ruling that the decision in Civil Case No. 84-23019
"has not attained finality pending service of a copy thereof on petitioner Delta, which
may appeal therefrom within the reglementary period", all proceedings and/or
orders arising from the trial court's decision in Civil Case No. 84-23019 are null and
void x x x .
SIHI argued that this paragraph was not necessary to the decision of the case before
it[34] and cannot be considered binding for the purpose of establishing precedent; [35] likewise,
the Resolution itself did not decide the incident on its merits or consider and dispose of the
issues, nor determine the respective rights of the parties concerned.
 In its resolution of 14 July 1995,[36] the Court of Appeals granted SIHI's motion for
clarification and denied DELTA's motion for reconsideration. As to the latter, it ruled that:
[P]etitioner DELTA is not without remedy, especially considering the ruling of the
Court of Appeals in the first petition for certiorari (CA-G.R. SP No. 23068) which
ruled thus:
"WHEREFORE, while the assailed decision was validly rendered by the
respondent court, nonetheless it has not attained finality pending service
of a copy thereof on petitioner DELTA, which may appeal therefrom within
the reglementary period."
Clearly, the only issue in this petition (CA-G.R. SP No. 29147) is as to the validity
of the questioned orders of respondent court dated June 3, 1992 (dismissing the
notice of appeal dated November 6, 1991) and the Order dated September 14, 1992
of the same court (denying the motion for reconsideration filed by the petitioner
through counsel).[37]
It then decreed to amend its Resolution of 5 January 1995 by deleting the assailed paragraph.
DELTA then filed the instant petition, insisting that the matters raised in the Omnibus
Motion were incidental to and included in the appellate jurisdiction of the Court of Appeals;
hence, it had jurisdiction to rule on said motion. As regards the grant of SIHI's motion to strike
out a paragraph in the resolution of 5 January 1995 for being obiter dictum, DELTA submitted
that the latter contained a finding or affirmation of fact, thus could not have constituted obiter
dictum.
After SIHI filed its comment, we gave due course to the petition and required the parties
to submit their respective memoranda. DELTA and SIHI did so on 16 April 1996 and on 13
May 1996, respectively.
After a painstaking review of the record in CA-G.R. SP No. 29147, we are more than
convinced that respondent Court of Appeals committed no reversible error in denying
DELTAs Omnibus Motion. The decision of the Court of Appeals of 17 June 1993 in CA-G.R.
SP No. 29147 had long become final insofar as DELTA was concerned, and it very well knew
that the only issues raised therein concerned the trial courts orders of 3 June 1992 and 14
September 1992. As a matter of fact, at the time Delta filed the petition in CA-G.R. SP No.
29147, the orders sought to be declared null and void in the Omnibus Motion had already
been issued, they having been so issued at the commencement of CA-G.R. SP No. 23068. In
short, if DELTA intended such orders to be challenged in CA-G.R. SP No. 29147, it could
have explicitly alleged them as sources of additional causes of action and prayed for the
corresponding affirmative relief therefrom, and if this course of action initially proved
unavailing then DELTA could and should have moved for reconsideration on that
aspect. After the finality of the decision in said case, any attempt to introduce or revive the
issue had become procedurally impermissible. Plainly, the issues raised in the Omnibus
Motion could have been allowed during the pendency of said case by way of amendments to
the petition.
Moreover, the Court of Appeals correctly denied petitioner's Omnibus Motion in keeping
with jurisprudence[38] concerning Section 7 of Rule 51 of the Rules of Court on the Procedure
in the Court of Appeals, which mandates that:
Sec. 7. Questions that may be decided. -- No error which does not affect the
jurisdiction over the subject matter will be considered unless stated in the
assignment of errors and properly argued in the brief, save as the court, at its option,
may notice plain errors not specified, and also clerical errors.
Clearly then, the Court of Appeals could only consider errors raised by petitioner in CA-
G.R. SP No. 29147, which were limited to the trial court's orders of 3 June 1992 and 14
September 1992. These were the only errors Delta argued extensively in its brief. To allow
DELTA's Omnibus Motion which it filed more than eight months from promulgation of the
decision in CA-G.R. SP No. 29147, or long after finality of said case, would result in
abandonment of sound judicial process.
In light of the dispositive portions of the Court of Appeals decisions of 22 January 1991
in CA-G.R. SP No. 23068, and of 17 June 1993 in CA-G.R. SP No. 29147, we cannot agree
with SIHI that DELTA is barred by res judicata. This conclusion is further fortified by the
unequivocal statements of the Court of Appeals in its challenged resolution of 14 July 1995
that:
[P]etitioner DELTA is not without remedy, especially considering the ruling of the
Court of Appeals in the first petition for certiorari (CA-G.R. SP No. 23068) ...
xxx
Clearly, the only issue in this petition (CA-G.R. SP No. 29147) is as to the validity
of the questioned orders of respondent court dated June 3, 1992 (dismissing the
notice of appeal dated November 6, 1991) and the Order dated September 14, 1992
of the same court (denying the motion for reconsideration filed by the petitioner
through counsel).
The Court of Appeals likewise did not commit reversible error in deleting the phrase SIHI
protested as obiter dictum.
An obiter dictum has been defined as an opinion expressed by a court upon some
question of law which is not necessary to the decision of the case before it. [39] It is a remark
made, or opinion expressed, by a judge, in his decision upon a cause, "by the way," that is,
incidentally or collaterally, and not directly upon the question before him, or upon a point not
necessarily involved in the determination of the cause, or introduced by way of illustration, or
analogy or argument. Such are not binding as precedent.[40]
The assailed phrase was indeed obiter dictum as it touched upon a matter not raised by
petitioner expressly in its petition assailing the dismissal of its notice of appeal. It was not a
prerequisite in disposing of the aforementioned issue. The body of the resolution did not
contain any discussion on such matter nor mention any principle of law to support such
statement.
 WHEREFORE, the instant petition is DISMISSED and the challenged resolutions of 5
January 1995 and 14 July 1995 in C.A. G.R.-SP. NO. 29147 are AFFIRMED.
Costs against petitioner.
SO ORDERED.
SECOND DIVISION
[G.R. No. 150798. March 31, 2005]
RUDECON MANAGEMENT CORPORATION, petitioner, vs. SISENANDO S.
SINGSON, respondent.
DECISION
CALLEJO, SR., J.:
In this petition for review under Rule 45 of the Revised Rules of Court, petitioner
Rudecon Management Corporation seeks the reversal of the two (2) Resolutions [1] of the
Court of Appeals in CA-G.R. CV No. 64281. The first resolution denied petitioners omnibus
motion to dismiss CA-G.R. CV No. 64281, while the second denied the petitioner's motion
for reconsideration thereof.
The Antecedents
The spouses Pablo and Ma. Theresa P. Tolentino were the owners of a condominium
unit (Room 302) in the Tempus Place I Condominium located at Matalino St., Diliman,
Quezon City, covered by Condominium Certificate of Title (CCT) No. 8876. In 1993, Rudecon
Management Corporation (RMC) executed a Deed of Absolute Sale[2] in favor of the spouses
Tolentino over its condominium unit, Room 404, at the same Tempus Place I Condominium
covered by CCT No. 3295 for P600,000.00. Sisenando S. Singson, on the other hand, was
the owner of two condominium units in the Tempus Place II Condominium, Unit A covered
by CCT No. 5013, and Unit B covered by CCT No. 5014.
On April 18, 1997, the spouses Tolentino and Sisenando Singson executed a Deed of
Exchange[3] in which the latter deeded his condominium units (Units A and B) to the spouses
Tolentino in exchange for Rooms 302 and 404, which the spouses Tolentino deeded to
Singson.
On or about September 15, 1987, RMC filed a complaint against Ramon Veluz for
unlawful detainer with the Metropolitan Trial Court of Quezon City (MeTC), Branch 41. RMC
sought the eviction of Ramon Veluz from Room 404, which the latter leased from Singson on
August 7, 1995. The complaint was docketed as Civil Case No. 18436.
The decision of the MeTC was appealed to the Regional Trial Court (RTC), docketed as
Civil Case No. 35326.
On September 3, 1998, Singson filed a complaint against the RMC for the reconveyance
of Room 404 covered by Condominium Certificate of Title (CCT) No. 3295 with damages.
Singson alleged, inter alia, that Pablo Tolentino acquired ownership over the unit based on
the deed of absolute sale executed by RMC covering the said unit; he acquired ownership
over the same based on the unit-swapping arrangement between him and the spouses
Tolentino; he later leased the unit to Veluz; despite its knowledge of his ownership over the
unit and that he had leased the same to Veluz, RMC, nevertheless, filed a complaint for
unlawful detainer against his lessee; and despite demands, RMC refused to turn over to him
CCT No. 3295 to enable him to register the title over the unit in his name.
Singson prayed that judgment be rendered in his favor for damages and that
the Defendant be ordered to reconvey to the Plaintiff Condominium Certificate of Title No.
3295 over the subject property issued by the Registry of Deeds of Quezon City in the name
of the Defendant in order that the Plaintiff may register the same under his name and for this
purpose, that the Defendant be ordered to execute the duly notarized deed of absolute sale
thereover in favor of Pablo C. Tolentino and/or the Plaintiff by virtue of the swapping
arrangement between the latter. [4]
The case was docketed as Civil Case No. 98-35444. Singson appended to his complaint
the Deed of Absolute Sale executed by RMC in favor of the spouses Tolentino.
Singson, thereafter, filed an amended complaint wherein he alleged the following:
3. That the Plaintiff is the actual owner of a condominium unit designated as Unit 404, with
an area of sixty point two square meters (60.2 sq. m.) in the Tempus I Condominium located
at 21 Matalino Street, Diliman, Quezon City, Metro Manila, by virtue of a unit-swapping
arrangement between the latter and one Pablo C. Tolentino; That on April 18, 1997, a deed
of exchange, hereto marked Annex A, was executed by the parties to formalize the swapping
arrangement previously entered by the parties; of which swapping arrangement, defendant
Rudecon Management Corporation, through its president Rudegelio Tacorda has full
knowledge per its letter dated March 5, 1997 advising Pablo Tolentino and Petitioner to
formalize the same, copy of which letter is marked as Annex B; That said Pablo C. Tolentino
was the owner of said Unit 404 as his share in the joint construction venture with defendant,
under an unnotarized deed of absolute sale, valid between the parties, executed by the
Defendant Rudecon Management Corporation in his favor dated February 1993, a copy of
which is attached and made an integral part hereof as Annexes C and C-1; That the subject
unit is covered by one Condominium Certificate of Title No. 3295 issued by the Registry of
Deeds of Quezon City in the name of the Defendant, a copy of which is attached hereto and
made an integral part hereof as Annex D, and that said condominium certificate of title was
never transferred by the Defendant to Pablo C. Tolentino and to this day still remains in the
name of Defendant despite the latters execution of a deed of absolute sale in favor of the
former;
8. That it likewise appears that defendant through its president Rudegelio Tacorda
maliciously and falsely claiming ownership over subject condominium unit mortgaged the
same to Allied Banking Corporation for a reported sum of not less than P2,000,000.00 as per
attached letter dated February 14, 1997 marked Annex H to the great prejudice and damage,
representing actual, moral and exemplary damages, of herein plaintiff in the sum of not less
than P2,000,000.00.[5]
Singson prayed that judgment be rendered in his favor, thus:
Upon the additional cause of action alleged in paragraph 8 of this Amended Complaint, it is
further prayed that defendant be adjudged to pay the plaintiff the sum of not less
[than] P2,000,000.00 by way of actual, moral and exemplary damages.
It is also respectfully prayed of this Honorable Court that the Defendant be ordered to
liquidate its mortgage indebtedness with the Allied Banking Corporation upon subject unit
and thereafter to reconvey to the Plaintiff Condominium Certificate of Title No. 3295 over the
subject property issued by the Registry of Deeds of Quezon City in the name of the
Defendant free from any liens or encumbrances in order that the Plaintiff may register the
same in his name and for this purpose, that the Defendant be ordered to execute the duly
notarized deed of absolute sale over subject condominium unit in favor of the Plaintiff as
transferee from the former owner Pablo Tolentino by virtue of the swapping arrangement and
deed of exchange between the parties.
Other relief as may be just and equitable under the circumstances are likewise prayed for. [6]
Singson also executed a Verification and Affidavit of Non-Forum Shopping, wherein he
stated that
That if I should thereafter learn that a similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or any other tribunal or agency, I undertake
to report such fact within five (5) days therefrom to this Honorable Court. [7]
RMC filed a motion to dismiss the amended complaint on the following grounds:
I.
PLAINTIFFS AMENDED COMPLAINT STATES NO CAUSE OF ACTION (SECTION 1[g],
RULE 16) BECAUSE, UNDER ART. 1311 OF THE NEW CIVIL CODE IN RELATION TO
SECTION 28, RULE 130, DEFENDANT IS NOT BOUND BY EITHER THE ALLEGED DEED
OF EXCHANGE (ANNEX A, COMPLAINT) OR THE ALLEGED VERBAL SWAPPING
AGREEMENT BETWEEN PLAINTIFF AND PABLO TOLENTINO CONSIDERING THAT
DEFENDANT IS NOT A PARTY OR PRIVY TO SAID DEED OR AGREEMENT AND
FURTHER CONSIDERING THAT THE DEED OF EXCHANGE IS SIMULATED AND
FORGED.
II.
PLAINTIFFS AMENDED COMPLAINT STATES NO CAUSE OF ACTION BECAUSE
PLAINTIFF, NOT BEING A REAL PARTY- IN-INTEREST, DOES NOT HAVE THE LEGAL
PERSONALITY TO SUE FOR THE PERFORMANCE OR ENFORCEMENT OF THE
UNNOTARIZED DEED OF SALE (ANNEX C, COMPLAINT) BETWEEN DEFENDANT AND
PABLO TOLENTINO TO WHICH PLAINTIFF IS ADMITTEDLY NOT A PARTY OR PRIVY.
III.
PLAINTIFFS AMENDED COMPLAINT STATES NO CAUSE OF ACTION BECAUSE
PLAINTIFF HAS ADMITTEDLY NOT TRANSFERRED OWNERSHIP OF CCT NOS. 1503
(SIC) AND 1504 (SIC) TO PABLO TOLENTINO AND INSTEAD PLAINTIFF HOLDS ON TO
SAID TITLES AND CONTINUES TO OCCUPY THE CONDOMINIUM UNITS THEREOF
THEREBY PRECLUDING AND BELYING THE DAMAGE SUPPOSEDLY SUSTAINED BY
PLAINTIFF. MOREOVER, THE AMENDED COMPLAINT IS BUT PLAINTIFFS MALICIOUS
ATTEMPT AT UNJUST ENRICHMENT AT DEFENDANTS EXPENSE.
IV.
PLAINTIFFS AMENDED COMPLAINT STATES NO CAUSE OF ACTION AS THE RELIEF
OF RECONVEYANCE SOUGHT BY HIM IS NOT A PROPER REMEDY AND CANNOT BE
GRANTED BY THIS HONORABLE COURT BECAUSE ADMITTEDLY CCT NO. 3295 IS
VALID AND GENUINE AND THERE IS NO WRONGFUL OR ERRONEOUS
REGISTRATION THEREOF IN DEFENDANTS NAME THAT WOULD WARRANT
RECONVEYANCE AS A LEGAL REMEDY.[8]
RMC averred that it was not a party to the deed of exchange executed by Singson and
the spouses Tolentino; hence, it could not be compelled to reconvey the subject unit to
Singson. And since it was not a party to the said deed of exchange, Singson had no right to
enforce the same against it. Hence, despite the deed of exchange, Singson continued to
occupy Units A and B and failed to transfer the same to the spouses Tolentino.
RMC maintained that Singson was not entitled to the reconveyance of the unit since
there was no allegation in the complaint that it had been erroneously or fraudulently
registered in the name of another person.[9]
 On April 7, 1999, the trial court issued an Order[10] granting the motion and dismissing
the complaint. Singson then filed a motion for the reconsideration of the Order and for the
inhibition of the Presiding Judge of the court. On June 30, 1999, the trial court issued an
Order[11]denying the motion for reconsideration, but granted the motion for inhibition. Hence,
Singson appealed the April 7, 1999 Order of the trial court to the CA, docketed as CA-G.R.
CV No. 64281.
In the meantime, Singson filed another complaint with the RTC of Quezon City, this time
against Allied Banking Corporation and the Sheriffs Office of Quezon City, for the annulment
of the Sheriffs Sale at Public Auction of Room 302 (covered by CCT No. 8876) in favor of the
said bank. He alleged, inter alia, that as early as June 1995, he became the owner of Room
302 and Room 404 based on his verbal agreement with the spouses Tolentino which was
contextualized via their deed of exchange. Allied Banking Corporation had been informed of
his ownership and occupancy of Room 302 as early as 1995. He then offered Unit A (covered
by CCT No. 5013) for Room 302, as substitute collateral for the payment of the loan of Pablo
Tolentino which the latter endorsed to the bank. Singson also alleged that the extrajudicial
sheriffs foreclosure of the mortgage and the subsequent sale was illegal for want of notice
and publication, including for the following reasons:
[T]he defendant bank employed deceptive and fraudulent scheme to consummate the
Sheriffs Auction Sale to the prejudice of the plaintiff.
17. Defendant bank confused and misled the plaintiff by accepting Condominium Unit No.
302 with CCT No. 8876 and allowed it to be used as a collateral to secure a loan of P2 Million
and the Bank is fully aware that said condominium unit is owned and occupied by the plaintiff
and thereafter foreclosed it without notice to the plaintiff. Defendant bank is fully aware that
plaintiff exercises rights of possession and ownership on the said property since defendant
bank was duly informed by plaintiffs about the physical possession thereof and the Deed of
Exchange.[12]
Singson prayed that judgment be rendered in his favor as follows:
ON THE ISSUANCE OF PRELIMINARY INJUNCTION
AND TEMPORARY RESTRAINING ORDER
1. A temporary restraining Order be issued ex parte restraining/preventing defendant or any
of its agents to consolidate/repossess the Real Estate property identified as Condo Unit No.
302 with CCT No. 8876 of the Register of Deeds of Quezon City and after due hearing, the
Temporary Restraining Order be made permanent.
ON THE MAIN CAUSE OF ACTION
2. An order be issued declaring the foreclosure sale and the Sheriffs sale of condominium
unit No. 302 with CCT No. 8876 as null and void.
3. An Order be issued declaring defendant bank liable for moral damages in the amount of
Two Million Pesos (P2,000,000.00), exemplary damages of Fifty Thousand Pesos
(P50,000.00) and ordering the defendant bank to pay the attorneys fees in the amount of
Three Hundred Thousand Pesos (P300,000.00) and appearance fee of Five Thousand
Pesos (P5,000.00) per hearing.
4. Plus cost of suit.
Other reliefs just and equitable in the premises are likewise prayed for. [13]
Singson signed his Affidavit of Non-Forum Shopping in this manner:
VERIFICATION AND AFFIDAVIT OF
NON-FORUM SHOPPING
I, SISENANDO S. SINGSON, subscribing under oath do hereby depose and say that:
1. I am the plaintiff in the above-entitled case;
2. I caused the preparation of the foregoing Complaint For Annulment of Sheriffs
Foreclosure/Certificate of Sale and Damages with Prayer for Issuance of Preliminary
Injunction/Temporary Restraining Order;
3. Pursuant to Supreme Court Administrative Circular No. 04-94, I hereby certify that plaintiff
has not therefore commenced any other action or proceeding involving the same issues in
the Supreme Court, the Court of Appeals, or any other tribunal or agency, and to the best of
my knowledge, no such action or proceeding is pending in the Supreme Court, the Court of
Appeals or any other tribunal or agency, and if I should thereafter learn that a similar action
or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals
or any other tribunal or agency, I undertake to report that fact within five (5) days therefrom;
4. I have read and understood the contents thereof and the allegations contained therein are
true and correct of my own personal knowledge.
(Sgd.)
SISENANDO SINGSON
AFFIANT[14]
The case was docketed as Civil Case No. Q-00-39794.
Meanwhile, RMC filed an Omnibus Motion in CA-G.R. CV No. 64281 praying for the
dismissal of Singsons appeal in Civil Case No. Q-98-35444 on the ground of forum shopping.
They also prayed that Singson and his counsel be cited for indirect contempt for their failure
to comply with the undertaking in the Verification and Affidavit of Non-Forum Shopping
embodied in his amended complaint in Civil Case No. Q-00-39794, that is, to inform the trial
court of the filing of the complaint within fifteen (15) days thereof. RMC averred that as
gleaned from the averments of the amended complaint in Civil Case No. Q-98-35444, and
the allegations in the complaint in Civil Case No. Q-00-39794, the two cases involved the
same issues. RMC averred that Singson had also submitted a false certificate of non-forum
shopping in Civil Case No. Q-00-39794, where he stated that he had not commenced any
action or proceeding involving the same issue.
On July 31, 2001, the CA issued a Resolution denying the Omnibus Motion of RMC on
the ground that:
1. There is no identity of parties and cause of action between Civil Cases Nos.
Q-98-35444 and Q-00-39794;
2. The subject matter in the former is CCT No. 3295, whereas that of the latter is
CCT No. 8876;
3. The reliefs sought in the two actions are vastly different.[15]
Upon the appellate courts denial of its motion for reconsideration of the said resolution,
RMC filed the present petition for review on certiorari under Rule 45 of the Rules of Court,
contending that:
I.
WHETHER OR NOT THE COURT OF APPEALS, IN DENYING PETITIONERS OMNIBUS
MOTION (ANNEX K HEREOF), RESOLVED SAID OMNIBUS MOTION NOT IN ACCORD
WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE SUPREME COURT
WHEN IT RULED THAT THERE IS NO FORUM SHOPPING HEREIN BECAUSE THE
ELEMENTS OF RES JUDICATA ARE NOT PRESENT IN PATENT ARBITRARY
DISREGARD OF, AND DESPITE, THE FACT THAT PETITIONER NEVER INVOKED SAID
SPECIE OF FORUM SHOPPING GROUNDED ON RES JUDICATA AND HAS INSTEAD
SPECIFICALLY INVOKED IN SAID OMNIBUS MOTION TWO (2) OTHER SPECIES OR
FORMS OF FORUM SHOPPING, NAMELY, (a.) RESPONDENTS DELIBERATE NON-
COMPLIANCE WITH HIS UNDERTAKING TO REPORT THE PENDENCY OF ANOTHER
SIMILAR ACTION INVOLVING THE SAME ISSUES; AND (b.) RESPONDENTS [WILLFUL]
SUBMISSION OF FALSE CERTIFICATION ON NON-FORUM SHOPPING AS PENALIZED
UNDER PARAGRAPH 2, SC ADM. CIRCULAR NO. 04-94.
II.
COROLLARY TO THE ABOVE, WHETHER OR NOT THE ANTECEDENT ISSUES OF
VALIDITY AND ENFORCEABILITY OF HEREIN DEED OF EXCHANGE (ANNEX D
HEREOF) EXPRESSLY RAISED BY RESPONDENT IN CIVIL CASE NO. Q-98-35444 (CA-
G.R. CV NO. 64281) AND ALSO IMPLICITLY POSITED BY RESPONDENT IN CIVIL CASE
NO. Q-00-39794 CAN BE CONSIDERED AS SIMILAR ISSUES AS CONTEMPLATED IN
PARAGRAPH 1, SC ADM. CIRCULAR NO. 04-94 THEREBY OBLIGATING RESPONDENT:
(a.) TO STRICTLY COMPLY WITH HIS UNDERTAKING TO REPORT IN CIVIL CASE NO.
Q-98-35444 (CA-G.R. CV NO. 64281) THE PENDENCY OF CIVIL CASE NO. Q-00-39794,
AND VICE-VERSA AND (b.) TO DISCLOSE IN HIS CERTIFICATIONS ON NON-FORUM
SHOPPING IN BOTH THE ORIGINAL AND AMENDED COMPLAINTS IN THE LATTER
CASE THE PENDENCY OF THE FORMER CASE SUCH THAT THE FAILURE OF
RESPONDENT AND ATTY. CAMACHO TO SO REPORT AND DISCLOSE ARE
CONSTITUTIVE OF FORUM SHOPPING UNDER SC ADM. CIRCULAR NO. 04-94.
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED AND DEPARTED
FROM APPLICABLE LAWS AND SUPREME COURT DECISIONS WHEN IT RULED THAT
THERE IS NO IDENTITY OF CAUSES OF ACTION BETWEEN CIVIL CASE NO. Q-98-
35444 AND CIVIL CASE NO. Q-00-39794 IN COMPLETE DISREGARD OF, AND DESPITE,
THE FACT THAT THERE IS SUCH IDENTITY OF CAUSES OF ACTION BECAUSE BOTH
AFORESAID CASES, EVEN IF DIFFERENT IN FORMS OR NATURE, INVOLVED THE
SAME ANTECEDENT FACTS AND CIRCUMSTANCES, THE SAME EVIDENCE AND
ACTIONABLE DOCUMENT, NAMELY, THE DEED OF EXCHANGE DATED APRIL 18,
1997 (ANNEX D HEREOF) WHOSE VALIDITY AND ENFORCEABILITY
MUST PRIORLY BE RESOLVED AS THE RESOLUTION THEREOF
IS DETERMINATIVE OF ANY FURTHER ADJUDICATIONS IN SAID TWO (2) CASES
(MANGOMA VS. COURT OF APPEALS, 241 SCRA 25; VDA. DE CRUZO VS. CARRIAGA,
174 SCRA 330; BANGKO SILANGAN DEVELOPMENT BANK VS. COURT OF APPEALS,
ET. AL., G.R. NO. 1140480 [SIC], JUNE 29, 2001)
IV.
COROLLARY TO ALL THE FOREGOING, WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED (a.) IN NOT DISMISSING CA-G.R. CV NO. 62481 GROUNDED ON THE
DELIBERATE AND WILFUL (SIC) COMMISSION BY RESPONDENT SINGSON AND
ATTY. MANUEL N. CAMACHO OF THE AFORESAID TWO (2) SPECIES OF FORUM
SHOPPING; AND (b.) IN NOT HOLDING THAT RESPONDENT SINGSON AND ATTY.
MANUEL CAMACHO ARE GUILTY OF MULTIPLE AND DELIBERATE FORUM SHOPPING
AND SHOULD THEREFORE BE CITED IN CONTEMPT UNDER SUPREME COURT ADM.
CIRCULAR NO. 04-94 AND APPLICABLE JURISPRUDENCE (BUAN VS. LOPEZ, 145
SCRA 34).[16]
In his comment on the petition, the respondent asserts that the petitioners procedural
recourse to this Court under Rule 45 of the Revised Rules of Court is flawed. He argues that
the resolutions of the CA subject of this petition for review are interlocutory; hence, not
appealable under Section 1, Rule 45. He also argues that the Court may not even treat the
present recourse as a petition for certiorari under Rule 65 since there is nary an allegation or
proof that the CA committed grave abuse of discretion.
 In its reply, the petitioner adamantly insists that the questioned resolutions of the CA are
final in character and, therefore, appealable. It argues that a violation SC Adm. Cir. No. 04-
94 is unlike those grounds under Rule 16 of the Revised Rules of Court, where when a motion
to dismiss is denied, the proper procedure to be followed by the dissatisfied movant is not to
appeal from the order of denial but to answer, go to trial, and if the decision is adverse,
reiterate the issue on appeal from the final judgment.
We agree with respondent that the mode of appeal resorted to by the petitioner is
improper.
Indubitably, the Resolution of the CA dated July 31, 2001 denying the petitioners
omnibus motion is interlocutory in nature. The word interlocutory refers to something
intervening between the commencement and the end of a suit which decides some point or
matter but is not a final decision of the whole controversy. [17] The Court distinguished a final
order or resolution from an interlocutory one in Investments, Inc. v. Court of Appeals[18] as
follows:
A final judgment or order is one that finally disposes of a case, leaving nothing more to be
done by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis
of the evidence presented at the trial, declares categorically what the rights and obligations
of the parties are and which party is in the right; or a judgment or order that dismisses an
action on the ground, for instance, of res adjudicata or prescription. Once rendered, the task
of the Court is ended, as far as deciding the controversy or determining the rights and
liabilities of the litigants is concerned. Nothing more remains to be done by the Court except
to await the parties next move (which among others, may consist of the filing of a motion for
new trial or reconsideration, or the taking of an appeal) and ultimately, of course, to cause
the execution of the judgment once it becomes final or, to use the established and more
distinctive term, final and executory.
Conversely, an order that does not finally dispose of the case, and does not end the Court's
task of adjudicating the parties contentions and determining their rights and liabilities as
regards each other, but obviously indicates that other things remain to be done by the Court,
is interlocutory, e.g., an order denying a motion to dismiss under Rule 16 of the Rules, or
granting a motion for extension of time to file a pleading, or authorizing amendment thereof,
or granting or denying applications for postponement, or production or inspection of
documents or things, etc. Unlike a final judgment or order, which is appealable, as above
pointed out, an interlocutory order may not be questioned on appeal except only as part of
an appeal that may eventually be taken from the final judgment rendered in the case.
The rule is founded on considerations of orderly procedure, to forestall useless appeals
and avoid undue inconvenience to the appealing party by having to assail orders as they are
promulgated by the court, when all such orders may be contested in a single appeal.
The reason of the law in permitting appeal only from a final order or judgment, and not from
interlocutory or incidental one, is to avoid multiplicity of appeals in a single action, which must
necessarily suspend the hearing and decision on the merits of the case during the pendency
of the appeal. If such appeal were allowed the trial on the merits of the case should
necessarily be delayed for a considerable length of time, and compel the adverse party to
incur unnecessary expenses; for one of the parties may interpose as many appeals as
incidental questions may be raised by him and interlocutory orders rendered or issued by the
lower court.[19]
Under Section 1, Rule 45 of the Revised Rules of Court, only final judgments, orders or
resolutions of the Court of Appeals or Sandiganbayan may be assailed therein. The remedy
is a mode of appeal on questions of law only.[20]
In the case at bar, the CA merely denied the petitioners omnibus motion to dismiss
based on forum shopping, on its finding that there was no litis pendentia between the parties.
The motion is only an incident in CA-G.R. CV No. 64281, which is a continuation of Civil Case
No. Q-98-35444 for damages and reconveyance instituted by the respondent against the
petitioner. The appellate court had yet to resolve the appeal on its merits. Being interlocutory,
the resolution is not appealable[21] but may be assailed in this Court only under Rule 65 of
the Revised Rules of Court grounded on grave abuse of discretion amounting to excess or
lack of jurisdiction committed by the CA. However, the petitioner opted to file a petition for
review on certiorari under Rule 45 of the Revised Rules of Court.
Even on the merits, the petition must be denied.
The petitioner avers that there are three (3) species of forum shopping: (1) forum
shopping grounded either on res judicata or litis pendentia; (2) forum shopping for non-
compliance to report the pendency of another action or proceeding involving the same issues;
and (3) forum shopping based on the submission of a false certification on non-forum
shopping by not disclosing the pendency of another action or proceedings involving the same
issues as provided in paragraph 2 of SC Adm. Cir. No. 04-94. To violate SC Adm. Cir. No.
04-94, it maintains, similarity of issues between the first and the second case is enough.
The petitioner faults the CA for denying its omnibus motion based on its so-called first
species of forum shopping. It argues that what it invoked therein were the other two (2)
species, not the first one. It avers that respondent and his counsel violated SC Adm. Cir. No.
04-94 because:
a.) Respondent Singson and Atty. Camacho did not report in CA-G.R. CV No. 64281
(Civil Case No. Q-98-35444) the pendency of Civil Case No. Q-00-39794 filed by
respondent himself on January 26, 2000 and which case involves the same
principal issues of validity and enforceability of the same deed of exchange dated
April 18, 1997.
b.) Vice-versa, respondent and Atty. Camacho did not report in Civil Case No. Q-00-
39794 the pendency of CA-G.R. CV No. 64281 (Civil Case No. Q-98-35444);
 c.) Respondent Singson submitted a false certification on non-forum shopping in the
original complaint in Civil Case Q-00-39794 by wilful (sic) non-disclosure of the
pendency of CA-G.R. CV No. 64281 (Civil Case No. Q-98-35444);
d.) Corollary to the above, respondent Singson and Atty. Camacho submitted a false
certification on non-forum shopping in the amended complaint in Civil Case No.
Q-00-39794 by wilful (sic) non-disclosure of the pendency of CA-G.R. CV No.
64281 (Civil Case No. Q-98-35444).[22]
We are not swayed.
The rule on forum shopping was first included in Section 17 of the Interim Rules and
Guidelines issued by this Court on January 11, 1983, which imposed a sanction in this wise:
A violation of the rule shall constitute contempt of court and shall be a cause for the summary
dismissal of both petitions, without prejudice to the taking of appropriate action against the
counsel or party concerned. Thereafter, the Court restated the rule in Revised Circular No.
28-91 and Adm. Cir. No. 04-94. The rule is now embodied in Section 5, Rule 7 of the Revised
Rules of Court which reads:
SECTION 5. Certification against forum shopping. The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court,
tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or
similar action or claim has been filed or is pending, he shall report that fact within five (5)
days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment
of the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and after hearing. The submission
of a false certification or non-compliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary dismissal with prejudice and shall constitute
direct contempt as well as a cause for administrative sanctions.
Forum shopping exists when, as a result of an adverse opinion in one forum, a party
seeks a favorable opinion (other than by appeal or certiorari) in another, or when he institutes
two or more actions or proceedings grounded on the same cause, on the gamble that one or
the other court would make a favorable disposition.[23]
What is pivotal in determining whether forum shopping exists or not is the vexation
caused the courts and parties-litigants by a party who asks different courts and/or
administrative agencies to rule on the same or related causes and/or grant the same or
substantially the same reliefs, in the process creating possibility of conflicting decisions being
rendered by the different courts and/or administrative agencies upon the same issues. [24]
In Ayala Land, Inc. v. Valisno,[25] the Court explained the concept of forum shopping, to
wit
Forum shopping exists when the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in another (Alejandrino v. Court of Appeals,
295 SCRA 536, 554 [1998]; Philippine Womans Christian Temperance Union, Inc. v. Abiertas
House of Friendship, Inc., 292 SCRA 785, 794 [1998]). Litis pendentia requires the
concurrence of the following requisites:
1. Identity of parties, or at least such parties as those representing the same
interests in both actions;
2. Identity of rights asserted and reliefs prayed for, the reliefs being founded on the
same facts; and
3. Identity with respect to the two preceding particulars in the two cases, such that
any judgment that may be rendered in the pending case, regardless of which
party is successful, would amount to res adjudicata in the other case.
(Philippine Womans Christian Temperance Union, Inc. v. Abiertas House of
Friendship, Inc., supra, at 791; citations omitted.)
As explained by this Court in First Philippine International Bank v. Court of Appeals (252
SCRA 259 [1996]), forum-shopping exists where the elements of litis pendentia are present,
and where a final judgment in one case will amount to res judicata in the other. Thus, there
is forum shopping when, between an action pending before this Court and another one, there
exist: a) identity of parties, or at least such parties as represent the same interests in both
actions, b) identity of rights asserted and relief prayed for, the relief being founded on the
same facts, and c) the identity of the two preceding particulars is such that any judgment
rendered in the other action, will, regardless of which party is successful, amount to res
judicata in the action under consideration; said requisites also constitutive of the requisites
for auter action pendant or lis pendens. Another case elucidates the consequence of forum
shopping: [W]here a litigant sues the same party against whom another action or actions for
the alleged violation of the same right and the enforcement of the same relief is/are still
pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment
in one would constitute res judicata and thus would cause the dismissal of the rest.
(Prubankers Association v. Prudential Bank & Trust Company, 302 SCRA 74, 83-84 [1999].)
 We agree with the contention of the petitioner that, under Section 5, Rule 7, of the
Revised Rules of Court, a complaint may be dismissed for failure of the plaintiff therein to
inform the court of the filing of the same or similar complaint within five (5) days from such
filing. The same or similar complaint referred to in the rule refers to a complaint wherein the
parties, causes of action, issues and reliefs prayed for, are identical to those in the first
complaint. The plaintiff may also be declared in indirect contempt of court if he submits a
false certification.
But the respondent cannot be faulted for stating in his Affidavit of Non-Forum Shopping
in Civil Case No. Q-00-39794 that he had not commenced any other action or proceeding
involving the same issues in the CA or in any other tribunal; nor can he be charged with
executing a falsified certification in Civil Case No. Q-00-39794 for stating that he had not
commenced before any other tribunal any initiatory pleading involving the same issues.
The petitioner was not mandated to inform the trial court in Civil Case No. Q-00-39794
and Civil Case No. Q-98-35444 and of CA-G.R. CV No. 64281. This is so because, as
admitted by the petitioner, there is no identity of the causes of action, the parties, issues and
reliefs prayed for in the two complaints. The subject matter of the suit in Civil Case No. Q-
00-39794 is Room 302, while that in Civil Case No. Q-98-35444 is Room 404. The principal
issue raised in Civil Case No. Q-00-39794 is whether the extrajudicial foreclosure of the real
estate mortgage over Room 404 and the sale thereof to Allied Banking Corporation are null
and void, while the principal issue in Civil Case No. Q-98-35444 is whether or not the
petitioner as defendant therein is obliged to convey to the respondent Room 404.
While it is true that in his Amended Complaint in Civil Case No. Q-98-35444, the
respondent sought to compel the petitioner to execute a deed of sale over Room 404 free
from any liens or encumbrances arising from the real estate mortgage over the said unit as
security for a loan of P2,000,000.00 secured by the petitioner from Allied Banking
Corporation, it cannot thereby be concluded that the issues raised in the said case are the
same or similar to those in Civil Case No. Q-00-39794.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed Resolutions
of the Court of Appeals are AFFIRMED. No costs.
SO ORDERED.
[G.R. NO. 142236 : September 27, 2006]
FILIPRO, INC., Petitioner, v. PERMANENT SAVINGS & LOAN BANK thru its duly
appointed receiver/liquidator, MR. ARNULFO B. AURELLANO of the Central Bank of
the Philippines,Respondents.
DECISION
YNARES-SANTIAGO, J.:
This Petition for Review assails the February 23, 2000 Decision 1 of the Court of Appeals in
CA-G.R. SP No. 29566, which dismissed respondent Permanent Savings & Loan Bank's
petition for certiorari and prohibition but at the same time ordered petitioner Filipro, Inc. to
remit the sum of P547,000.00 to the duly appointed receiver of respondent's bank.
The antecedent facts are as follows:
On January 17, 1984, Filipro, Inc. filed a complaint2 for damages with the Regional Trial Court
of Makati against the Philippine Banking Corporation ("Philbank") for allegedly clearing a
patently altered Philbank check 3 dated July 12, 1983 in the sum of P359,651.75. The check
was issued by Mr. So Peng Tiam to the petitioner but was stolen by one of petitioner's
employees, Jessie Fuentes who materially altered the check by crossing out the word "INC"
in the name "FILIPRO, INC.," payee of the said check. The alteration was allegedly clearly
visible to the naked eye, and is not authenticated by any signature or initial of the drawer.
Fuentes purportedly deposited the check in an account he had opened under the name of
FILIPRO with the Carriedo (Quiapo) branch of herein respondent, Permanent Savings and
Loan Bank.
The respondent bank thereafter deposited the check with Allied Banking Corporation (Allied
Bank) which in turn presented the check to Philbank for clearing. After the check was cleared,
Fuentes withdrew the face value of the check from his deposit with the respondent bank and
disposed of the same for his own personal benefit.4
On May 31, 1984, Philbank filed a third-party complaint against Allied Bank based on the
latter's guarantee appearing at the dorsal side of the check, reading, "(All) prior
endorsements and/or lack of endorsement guaranteed." In turn, Allied Bank filed a fourth-
party complaint against the respondent bank for reimbursement in the event that it would be
held liable under the third-party complaint.
On June 6, 1986, the trial court declared respondent bank as in default5 for failure to appear
during the pre-trial conference. Consequently, Allied Bank was allowed to present its
evidence ex parte on its fourth party complaint.
Thereafter, on July 2, 1986, the trial court rendered a Partial Decision 6 holding respondent
bank liable to Allied Bank on the latter's fourth party complaint. Respondent bank filed a
motion7 to set aside the order of default which was granted by the trial court 8 but only for the
purpose of allowing petitioner to cross-examine the witnesses of Allied Bank.9 On several
scheduled dates for the cross examination of witnesses, the representatives of respondent
bank failed to appear. Consequently, in an Order 10 dated September 5, 1988, the trial court
considered the respondent bank as having waived its right to examine the witnesses of Allied
Bank and reiterated its order declaring the respondent bank in default.
On September 7, 1988, respondent bank filed a motion to dismiss 11 Allied Bank's fourth party
complaint on the ground that the Central Bank had placed it under receivership on December
17, 1984. The motion to dismiss was denied in the Order dated February 20, 1989 holding
that:
The MOTION TO DISMISS filed by Fourth Party Defendant Permanent Savings and Loan
Bank could no longer be acted upon by this Court considering that the Order of this Court of
5 September 1988 clearly states that the JUDGMENT by default rendered by this Court on 2
July 1986 was vacated only for purposes of allowing Fourth Party Defendant to cross-
examine the witness of Fourth Party Plaintiff and in the hearing of 16 August 1988, the cross-
examination of the witnesses of Fourth Party Plaintiff by movant Bank was considered as
waived and on the findings of the COURT that the JUDGMENT of 2 July 1986 was considered
as still valid as against Fourth Party Defendant after forfeiting the cross-examination, and the
said ORDER of 2 July 1986 has already become final and executory, which in effect
considers the DECISION of this Court of 2 July 1986 against Fourth Party Defendant
Permanent Savings Bank as final and executory as no Motion for Reconsideration nor appeal
was filed by said party on record.12
On October 16, 1989, Filipro, Philbank and Allied Bank entered into a compromise agreement
hereby quoted in full:
COME NOW the Plaintiff, Defendant/Third-Party Plaintiff and Third-Party Defendant/Fourth
Party Plaintiff, assisted by their respective counsel, and to this Honorable Court, respectfully
submit the following Compromise Agreement to wit:
1. That the Philippine Banking Corporation (Defendant/Third-Party Plaintiff, Philbank) admits
its liability to Filipro, Inc. (Plaintiff, Filipro) for the sum of FIVE HUNDRED FORTY SEVEN
THOUSAND (P547,000.00) PESOS inclusive of interest, attorney's fees and expenses of
litigation which Filipro hereby accepts as the full amount of its claims against Philbank;
2. That Allied Banking Corporation (Third-Party Defendant/ Fourth-Party Plaintiff, Allied
Bank) admits liability to Philbank for the said sum of P547,000.00, inclusive of interest, plus
attorney's fees and expenses of litigation in the amount of P10,000.00 only which Philbank
accepts also as the full amount of its claims against Allied Bank;
3. That in the Fourth Party Complaint this Honorable Court, on July 2, 1986, had issued a
Partial Decision against Permanent Savings and Loan Bank (Fourth Party Defendant,
Permanent) and in favor of Allied Bank which decision is already final and executory. The
dispositive portion of the Partial Decision reads:
"WHEREFORE, finding Fourth Party Plaintiff Allied's claim against Fourth Party Defendant
Permanent Savings to be substantiated, the Court hereby renders judgment by default,
ordering said Fourth Party Defendant Permanent Savings and Loan Bank to reimburse
Fourth Party Plaintiff Allied Banking Corporation for whatsoever amount it may be adjudged
liable to pay Defendant and Third Party Plaintiff Philippine Banking Corporation, and further
ordering said Fourth Party Defendant Permanent Savings to pay Fourth Party Plaintiff Allied
P10,000.00 attorney's fees and costs of suit.
SO ORDERED.
4. That upon the approval of this agreement by this Honorable Court, Allied Bank shall,
pursuant to the aforedescribed Partial Decision, directly remit to Filipro the said sum of FIVE
HUNDRED FORTY SEVEN THOUSAND (P547,000.00) PESOS in full satisfaction of
Filipro's claim against Philbank and the latter's claim against Allied Bank and directly remit to
Philbank the amount of P10,000.00 representing Philbank's expenses of litigation and
attorney's fees mentioned in paragraph 2 hereof, which amounts shall be taken from the
funds of Permanent presently deposited with and in the possession of Allied Bank pursuant
to the order of this Honorable Court placing the said amount in custodia legis;
5. That the parties hereto hereby waive their respective claims against each other;
6. In the event that this Compromise Agreement is not approved by this Honorable Court, all
the admissions and the other provisions herein, except that of the Partial Decision as
mentioned in paragraph 3 hereof, shall be deemed abandoned and void and shall not bind
the parties herein and shall have no probation or evidentiary value, and/or effects against the
parties herein and the instant case shall be decided on the basis of the evidences presented
and/or to be presented by the parties herein as if the said admissions and other provisions
were never agreed upon.13
The trial court approved the compromise agreement and rendered judgment thereon in its
Order14 dated November 7, 1989, thus:
WHEREFORE, finding the aforestated Compromise Agreement to be not contrary to law,
morals, and public policy, the same is hereby APPROVED and judgment is rendered in
accordance therewith. The parties are hereby enjoined to comply strictly with the terms and
conditions embodied therein.
SO ORDERED.15
Respondent bank filed a petition for certiorari and prohibition16 with the Court of Appeals on
November 27, 1992, or more than three years after the trial court rendered judgment on the
compromise agreement. The Court of Appeals dismissed the petition but ordered petitioner
and Philbank to remit the respective sums of P547,000.00 and P10,000.00 to respondent
bank's receiver, thus:
WHEREFORE, the instant petition is hereby DISMISSED but private respondents Filipro and
Philbank are ordered to remit the respective sums of P547,000.00 and P10,000.00 to the
duly appointed receiver of the petitioner in SP No. 85-3371, whereat both respondents may
file their respective judgment claims.
SO ORDERED.17
The petitioner is now before us raising the sole issue of:
WHETHER THE COURT OF APPEALS ERRED IN ORDERING FILIPRO INC. AND
PHILBANK TO REMIT THE RESPECTIVE SUMS OF P547,000.00 AND P10,000.00 TO
THE RECEIVER OF PERMANENT SAVINGS AND LOAN IN SP. No. 85-3371.18
In ordering petitioner and Philbank to remit the aforementioned sums to the receiver of
Permanent Savings and Loan Bank, the Court of Appeals held that:
But even as We find nothing to vitiate the respondent court's partial and subsequent decisions
of July 2, 1986 and November 7, 1989, respectively, We feel, however, that the money
deposited by petitioner (Permanent Savings and Loan Bank) with Allied is not beyond the
reach of petitioner's receiver/liquidator. Although a judgment based on compromise is
immediately executory, Allied cannot motu propio appropriate petitioner's money. Section 29
of the Central Bank Act, before its amendment by Executive Order No. 289 (September,
1987), reads:
"Sec. 29. Proceedings upon insolvency. - Whenever, upon examination by the head of the
appropriate supervising and examining department or his examiners or agents into the
condition of any banking institution, it shall be disclosed that the condition of the same is one
of insolvency, or that its continuance in business would involve probable loss to its depositors
or creditors, it shall be the duty of the department head concerned forthwith, in writing, to
inform the Monetary Board of the facts, and the Board, upon finding the statements of the
department head to be true, shall forthwith forbid the institution to do business in the
Philippines and shall designate an official of the Central Bank, or a person of recognized
competence in banking, as receiver to immediately take charge of its assets and liabilities as
expeditiously as possible collect and gather all the assets and administer the same for the
benefit of its creditors, exercising all the powers necessary for these purposes including, but
not limited to, bringing suits and foreclosing mortgages in the name of the banking institution."
It is not disputed that petitioner was placed under receivership by the Monetary Board of the
Central Bank on December 14, 1984. For sure, there now pends in Branch IV of the Regional
Trial Court of Manila SP NO. 85-3371, an insolvency proceeding thereat instituted by the
Central Bank against the herein petitioner, about which a receiver for the petitioner had been
duly appointed by the same court.
Once the Monetary Board declares a bank as insolvent and orders it to cease operations,
the Board becomes the trustee of the bank's assets for the equal benefit of all the creditors,
including depositors. (Lipana v. Development Bank of Rizal, 154 SCRA 257, 261). And when
a receiver is appointed for an insolvent bank, the bank's assets pass into the possession and
control of the receiver whose duty is to administer the same for the benefit of the bank's
creditors. (Villanueva v. Court of Appeals, 244 SCRA 395, 404) Here, albeit private
respondents were aware that petitioner was placed under receivership, they nevertheless
proceeded to appropriate petitioner's money in satisfying their obligations among
themselves. Clearly, Allied had committed a mistake in giving Filipro and Philbank the sums
of P547,000.00 and P10,000.00, respectively. Under Article 1456 of the Civil Code, Filipro
and Philbank shall be considered as trustees of an implied trust for the benefit of the
receiver/liquidator of the petitioner.19
Petitioner anchors its challenge to the foregoing ruling of the Court of Appeals on the "well
settled doctrine on the inviolability and unalterablity of final and inappealable
judgments."20 Petitioner posits that since the Court of Appeals have ruled that the petition of
herein respondent bank was filed late, the Court of Appeals could no longer alter or modify
the final and executory ruling of the trial court thus, it erred in ordering petitioner and Philbank
to remit the subject amounts to the receiver of respondent bank.
The petition is meritorious.
Nothing is more settled in law than that once a judgment attains finality it thereby becomes
immutable and unalterable. It may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be made by the court
rendering it or by the highest court of the land. Just as the losing party has the right to file an
appeal within the prescribed period, the winning party also has the correlative right to enjoy
the finality of the resolution of his case.21
Litigation must end and terminate sometime and somewhere, and it is essential to an
effective administration of justice that once a judgment has become final, the issue or cause
involved therein should be laid to rest. The basic rule of finality of judgment is grounded on
the fundamental principle of public policy and sound practice that at the risk of occasional
error, the judgment of courts and the award of quasi-judicial agencies must become final at
some definite date fixed by law.22
Applying the foregoing pronouncements to the instant petition, we find that the Court of
Appeals committed reversible error when it rendered the assailed promulgations. As
discussed by the Court of Appeals itself:
On November 27, 1992, or after the lapse of more than three (3) years from the promulgation
of the challenged decisions, petitioner came to this Court via the instant recourse, insisting
that the respondent court had lost jurisdiction to take further cognizance of Allied's fourth-
party complaint against it after the Central Bank had placed it under receivership on
December 14, 1984.
We are not inclined to disturb the assailed decisions of the respondent court.
For one, be it under Rule 65 of the old Rules of Court which, by case law, had been construed
to mean that a petition for certiorari must be filed "within a reasonable time" from notice of
the judgment, order or resolution sought to be assailed (Great Pacific Life Insurance Corp. v.
NLRC, 188 SCRA 139; Ismael, Jr. & Co., Inc. v. Executive Secretary, 190 SCRA 673), or
under the present Rules which require the filing of such a petition "within sixty (60) days from
notice" (Sec. 4, Rule 65), it cannot be denied that the present petition was filed very much
late.
Explaining the unreasonable delay, petitioner would excuse itself by saying that it has no
reason to contest the respondent court's reinstatement of the partial decision thru its order of
September 5, 1988 because the same court has yet to resolve its motion for reconsideration
of said partial decision.
The casualness with which petitioner bandies its excuse only serves to dismay Us. The
elapsed time emphasizes the burden of the petitioner to give Us a compelling reason on why
We should ignore its tardiness in the filing of this petition. Sadly, petitioner did not even offer
any explanation on its failure to appeal the respondent court's compromise judgment and
simply contented itself with the canard that it is still waiting for the resolution of its motion for
reconsideration of the respondent court's reinstatement of the partial decision. Significantly,
however, petitioner did not even bother to dispute Philbank's claim in its Comment that the
same court had indeed denied petitioner's motion for reconsideration in its order of February
20, 1989, quoted earlier herein. In sum, the delay poses an insurmountable obstacle to Our
review of the lower court's alleged grave abuse of discretion in coming out with the decisions
in question.23
By ruling as it did, the Court of Appeals has effectively held that the trial court's decision
based on the compromise agreement has already attained finality and that it cannot anymore
be the subject of any modification. The Court of Appeals even declared that respondent
bank's belated attempt to the trial court's decision is an "insurmountable obstacle" to its
review. Yet, in the dispositive portion of its assailed decision, the Court of Appeals, while
dismissing the petition of respondent bank, modified the lower court's judgment by ordering
petitioner and Philbank to remit the sums of P547,000.00 and P10,000.00 to respondent
bank's duly appointed receiver. The said disposition runs contrary to the aforequoted
pronouncements of the Court of Appeals and as such, it cannot be countenanced.

The orderly administration of justice requires that the judgments/resolutions of a court or

quasi-judicial body must reach a point of finality set by the law, rules and regulations. The
noble purpose is to write finis to disputes once and for all. This is a fundamental principle in
our justice system, without which there could be no end to litigations. Utmost respect and
adherence to this principle must always be maintained by those who wield the power of
adjudication. Any act which violates such principle must be struck down. 24

In addition, the basis of the trial court's November 7, 1989 Order was the compromise
agreement entered into among the petitioner, Allied Bank and Philbank. Once stamped with
judicial imprimatur, a compromise agreement becomes more than a mere contract binding
upon the parties; having the sanction of the court and entered as its determination of the
controversy, it has the force and effect of any other judgment. 25 Since a judgment based on
a compromise agreement is no different from any other judgment, once it attains finality, it
can no longer be subject to any alteration, modification or review.

While it is true that respondent bank was not a party to the compromise agreement, it is
likewise undeniable that, by its own inaction, the respondent bank has taken itself out of the
equation as far as its personality before the trial court is concerned after it was declared in
default on account of its failure to appear during the pre-trial conference. When the trial court
rendered its November 7, 1989 order approving the compromise agreement, the respondent
bank was already in default having been declared as such by the lower court on June 6,
1986. A party declared in default loses his standing in court, as such, he cannot appear in
court, adduce evidence, be heard or be entitled to notice.26

WHEREFORE, the petition is GRANTED. The dispositive portion of the Decision of the Court
of Appeals in CA-G.R. SP No. 29566 dated February 23, 2000 is MODIFIED. The portion
ordering petitioner Filipro, Inc. and Philippine Banking Corporation to remit the sums of
P547,000.00 and P10,000.00 to the duly appointed receiver of Permanent Savings and Loan
Bank in SP-No. 85-3371 is DELETED.
 In National Power Corporation v. Alonzo-Legasto,[3] the Court awarded the amount
THIRD DIVISION of Seventy Four Million Thirty-Five Thousand Five Hundred Three Pesos and Fifty Centavos
FIRST UNITED CONSTRUCTORS G.R. No. 171901
CORPORATION, (P74,035,503.50) plus interest to FUCC in relation to its claim against National Power
Petitioner, Present: Corporation (NPC). The amount represented the just compensation payable to FUCC for the
QUISUMBING, J., blasting work it undertook in connection with its contract with NPC for the construction of
Chairperson, power facilities. The decision became final and executory on January 4, 2005.
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
FUCC filed a motion with the Regional Trial Court (RTC), Branch 99, Quezon City,
VELASCO, JR., JJ.
THE HON. COURT OF APPEALS, for the appointment of a new implementing sheriff to complete the implementation of a
HON. ALEXANDER S. BALUT,
PRESIDING JUDGE OF BRANCH Promulgated: previously issued Writ of Execution in accordance with National Power Corporation v.
76 OF THE REGIONAL TRIAL Alonzo-Legasto. Subsequently, a certain Engr. Ernesto Bautista (Bautista) of Dynamic
COURT (NCRJ, QUEZON CITY), December 19, 2006
THE SHERIFF OF RTC, BRANCH 76, Blasting Specialist of the Philippines filed a motion with the trial court asking the court to
ENGR. ERNESTO G. BAUTISTA/ direct the branch sheriff to turn over to him the sum of Thirty Seven Million Seven Hundred
DYNAMIC BLASTING SPECIALIST
OF THE PHILIPPINES and NATIONAL Twenty Three Thousand Eight Hundred Twenty Three Pesos (P37,723,823.00), plus interest,
POWER CORPORATION,
allegedly belonging to him. The motion was set for hearing.
Respondents.
x----------------------------------------------------------------------------x
During the hearing, FUCC manifested that it does not recognize the personality of
R E S O L U T I ON Bautista to file the motion since Bautista was not a party to the case. It reiterated its

TINGA, J.:
We resolve the Petition[1] dated March 30, 2006 filed by First United Constructors
Corporation (FUCC), seeking the issuance of a Temporary Restraining Order (TRO) and/or
Writ of Preliminary Injunction annulling the Court of Appeals Resolution[2] of even date, which
directed respondents to file their comment on FUCCs petition in CA-G.R. SP. No. 93586 but
denied the latters prayer for the issuance of a TRO.
The factual antecedents are as follows:
manifestation in its Ex-Parte Comment Ad Cautelam praying that Bautistas motion be
expunged as he does not have personality to file a motion with the court not having been a
party to the proceedings in the case. NPC also filed a comment.
The trial court issued an Order[4] dated July 18, 2005, holding that it has jurisdiction
to determine Bautistas claim. CitingPaman, et al. v. Hon. Seneris, et al.[5] and Yap v.
Hon. Taada, etc., et al.,[6] the trial court ruled that it has the power to determine all issues of
fact and law which may be involved in the execution of a case and that in the interest of
substantial justice, one who is not a party to a case is entitled to enter the same to get his
claim. The trial court found that both FUCC and NPC recognize Bautista as the sub-
contractor for the blasting works. Being a privy to the case was bound by the decision
in National Power Corporation v. Alonzo-Legasto is binding on Bautista. Accordingly, the trial
court granted Bautistas motion and directed that the respective money claims of FUCC and
Bautista shall be satisfied through the release of the funds of NPC deposited with the Land
Bank of the Philippines(Land Bank). It then ordered that the amount of P37,723,823.00 due
Bautista shall be deducted from the amount of P74,035,503.50 adjudged to FUCC
in National Power Corporation v. Alonzo-Legasto. An Alias Writ of Execution[7] dated July 29,
2005 was issued pursuant to this Order of the trial court.
had the opportunity to correct this grievous error but the judge to whom the case was re-
raffled refused to annul the order on the ground that it cannot annul an order of a judge of
another branch of the same court. FUCC contends that the doctrine against intra-court
interference is not violated when the judge of a branch who annuls or modifies the order
issued by a judge of another branch acts in the same case and belongs to the same court. It
points out that Civil Case No. Q-94-20062 was merely re-raffled to RTC, Branch
76, Quezon City upon the inhibition of the Presiding Judge of RTC, Branch 99, Quezon City.

In a Resolution[8] dated August 8, 2005, the Court, upon FUCCs filing of an Urgent In the Resolution[13] dated April 17, 2006, the Court required respondents to comment on the
Motion for the Issuance of a Temporary Restraining Order, directed the trial court to maintain petition and directed the issuance of a TRO enjoining the trial court and the Branch Sheriff of
the status quo as of August 3, 2005 until further orders from it. Subsequently, the Court the Regional Trial Court, Branch 76, from implementing the Order dated March 8, 2006 and
granted FUCCs Motion for Leave to Withdraw Urgent Motion for Issuance of a Temporary the Alias Writ of Execution dated July 29, 2005 until further orders from the Court.
Restraining Order.
A Comment[14] dated April 27, 2006 was filed by Atty. Amador F. Brioso, Jr. supposedly on
FUCC then sought the annulment of the July 18, 2005 Order of the trial court. Its behalf of Bautista. However, in a Manifestation[15] dated May 2, 2006, Bautista himself
motion was denied in the Order[9] dated March 8, 2006 issued by Hon. Alexander S. Balut of informed the Court that he had already discharged his counsel and that he intends to hire a
the RTC, Branch 76, Quezon City, on the grounds that the trial court cannot interfere with an new counsel to review the procedure adopted by his former counsel. Bautista subsequently
order of a judge of another branch of the same court and that the questioned order had filed a Manifestation/Motion[16] dated May 10, 2006, informing the Court that he filed Civil
already attained finality. Case No. Q-06-57869 for specific performance with damages against FUCC, NPC and Land
Bank upon the advise of his new counsel, and praying that the Court exclude the amount
FUCC questioned the Orders dated July 18, 2005[10] and March 8, 2006,[11] as well of P37,723,823.00 from the decision in National Power Corporation v. Alonzo-
as the Alias Writ of Execution[12] dated July 29, 2005, before the Court of Appeals via a Legasto pending the resolution of the case which he filed.
petition for certiorari and prohibition with prayer for the issuance of a TRO and/or Writ of
Preliminary Injunction but the appellate court refused the issuance of a TRO for failure of In his Comment[17] dated August 28, 2006, Bautista again states that he has filed the
FUCC to show facts that would entitle it to the relief demanded. appropriate collection case with the trial court and reiterates the prayer in
his Manifestation/Motion.
In this Petition, FUCC alleges that the Order dated July 18, 2005 is a patent nullity
and therefore never attained finality. FUCC argues that the Order dated July 18, 2005 altered The Office of the Solicitor General (OSG) filed a Comment[18] dated August 24,
the final decision of the Court in National Power Corporation v. Alonzo-Legasto.The trial court 2006 on behalf of the NPC, averring that the petition should be dismissed on the ground of
forum-shopping. Moreover, there is allegedly no basis for the issuance of an injunctive writ the Order dated July 18, 2005 in the Court of Appeals did not affect the basis for the issuance
because the procedure laid down in Presidential Decree No. 1445 directing that all money of the status quo order. In fact, in the Resolution[22] dated January 16, 2006
claims against the government must first be filed with the Commission on Audit was not granting FUCCs motion for leave, the Court deliberately did not lift the status quo order, fully
complied with. cognizant of the need to continue to enjoin the implementation of the Order dated July 18,
2005 until it shall have been finally determined that the latter does not alter, amend or modify
The main question for resolution is whether the Court of Appeals committed grave the Courts decision in National Power Corporation v. Alonzo-Legasto.
abuse of discretion in refusing to issue the TRO prayed for by FUCC in C.A.-G.R. SP. No.
93586. However, in order to finally settle the present controversy, and in view of the fact that Such action by the Court should have prompted the appellate court to make its own
this case is fundamentally just an offshoot of our decision in National Power Corporation v. independent evaluation of FUCCsallegations in support of its prayer for TRO instead of
Alonzo-Legasto, we shall also resolve the collateral issues pertaining to the validity of perfunctorily denying the same. The factual antecedents of this case should have made it
the Orders of the trial court dated July 18, 2005 and March 8, 2006, and the Alias Writ of obvious to the Court of Appeals that the preservation of the status quo is both desirable and
Execution dated July 29, 2005. essential.[23]

In denying the TRO, the appellate court held that the dissolution of this Courts status
quo order dated August 8, 2005 rendered the trial courts Order dated July 18, 2005 and
its Alias Writ of Execution dated July 29, 2005 enforceable. Hence, FUCC is no longer
entitled to a TRO. It is significant to note, moreover, that Bautista has chosen another avenue of
redress by filing a separate complaint for specific performance with the RTC, effectively
A reading of the Resolution dated August 8, 2005 readily reveals that the Court abandoning his earlier assertion that the Orders of the trial court dated July 18,
categorically enjoined the RTC, Branch 99, Quezon City, from taking any further action 2005and March 8, 2006 are valid. His prayer in this case that the Court exclude the amount
relative to the implementation of its Order dated July 18, 2005 x x x x until further orders from of P37,723,823.00 from the award to FUCC in the amount of P74,035,503.50 plus interest
this Court.[19] The status quo order was predicated on FUCCs allegation, which the Court adjudged in National Power Corporation v. Alonzo-Legasto is utterly baseless.
deemed meritorious, that in issuing the Order dated July 18, 2005, the trial court effectively
allowed the intervention of Bautista without any motion to intervene having been filed by the We should reiterate, in this connection, that the decision in National Power
latter, re-opened the case, admitted alleged new evidence, and rendered a new decision Corporation v. Alonzo-Legasto awarded to FUCC the amount of P74,035,503.50 plus legal
altering the Decision of this Court.[20] interest. Nowhere in the decision did we rule on Bautistas entitlement to even a portion of
this amount. The trial court committed egregious error in altering the clear tenor of this
The subsequent withdrawal of FUCCs Urgent Motion for the Issuance of a decision by directing that the respective money claims of FUCC and Bautista shall be
Temporary Restraining Order[21] upon its manifestation that it shall assail satisfied through the release of the funds of NPC deposited with the Land Bank and ordering
that the amount of P37,723,823.00 be deducted from the award to FUCC. By refusing to
issue a TRO, the appellate court abetted this grave error, in effect sustaining the trial courts
orders amending or altering a final and executory judgment.

Public policy and sound practice demand that at the risk of occasional errors,
judgments of courts should become final and irrevocable at some definite date fixed by
law. This is better observed if the court executing the judgment would refrain from creating
further controversy by effectively modifying and altering the dispositive portion of the
decision, thus further delaying the satisfaction of the judgment. No matter how just the
intention of the trial court, it cannot legally reverse what has already been settled. [24]

WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals

dated March 30, 2006, as well as the Order dated March 8, 2006 issued by the Regional Trial
Court, Branch 76, Quezon City, and the Order dated July 18, 2005 and Alias Writ of
Execution dated July 29, 2005 issued by the Regional Trial Court, Branch 99, Quezon City,
in Civil Case No. Q-94-20062, are hereby ANNULLED AND SET ASIDE. The trial court is
hereby DIRECTED to forthwith issue an Alias Writ of Execution in accordance with our
decision in National Power Corporation v. Alonzo-Legasto, G.R. No. 148318, November 22,
2004, 443 SCRA 342. No pronouncement as to costs.
 AMANTE O. SAN PEDRO, G.R. No. 126207 the court, petitioner alleged that on December 18, 1981, the respondents executed in his
Petitioner, favor a deed of absolute sale over a parcel of land with an area of two-hundred nineteen
Present:
(219) square meters and covered by Transfer Certificate of Title (TCT) No. T-55830 of the
PANGANIBAN, J., Chairman Registry of Deeds of Cagayan. Petitioner further averred that respondents have failed to
SANDOVAL-GUTIERREZ,
CORONA, cause the registration of the deed of sale. He thus prayed for the declaration of his ownership
- versus - CARPIO MORALES and over the subject piece of land, the registration of the deed and the issuance of the
GARCIA, JJ.
corresponding certificate of title in his name.

Promulgated:
In their verified Answer with counterclaim, respondents denied having executed the deed of
MARCIANA M. BINALAY, assisted
by her husband ROBERTO sale relied upon by the petitioner, alleging that they never sold the parcel of land to anybody,
BULURAN and WILSON M. August 25, 2005
BINALAY, let alone to petitioner. They also contend that such deed is fictitious and a falsification.
Respondents.
x-----------------------------------------------------------------------x After pre-trial but before the presentation of his evidence, petitioner, as plaintiff filed a Motion
to Withdraw Complaint, in which he stated:
DECISION COMES NOW, the undersigned plaintiff and unto this Honorable Court,
respectfully prays (sic) that:

GARCIA, J.: 1. That the complaint has been filed, way back in May 23,
1985, and that the undersigned plaintiff is no longer
interested to further prosecute the above-entitled case,
Before the Court is this petition for review on certiorari seeking the reversal of the provided the defendants herein will also dismissed (sic) their
decision[1] dated June 28, 1996 of the Court of Appeals (CA) in CA G.R. No. CV- counterclaims;

40209 and its resolution[2] dated August 13, 1996, denying petitioners motion for 2. That in order not to clog the docket of this court the
undersigned prays for the dismissal of the above-entitled
reconsideration. case.
The assailed decision affirmed the September 16, 1992 order of the Regional Trial Court at
PRAYER
Tuguegarao, Cagayan dismissing petitioners complaint in Civil Case No. 4404 on ground
of res judicata. WHEREFORE, he prays that the Honorable Court orders the dismissal of
the above-entitled case and orders also the counterclaims be dismissed. [3]

Reviewed, the records reveal the following factual antecedents:

To the foregoing motion, respondents interposed a Manifestation and Counter-Motion

On May 22, 1985, in the Regional Trial Court at Tuguegaro, Cagayan, petitioner Amante D. wherein they expressed conformity to the desired dismissal of petitioners complaint and their
counterclaim, provided such dismissal is with prejudice. [4]
San Pedro instituted an action for Specific Performance with Damages against the
respondents. In his complaint, docketed as Civil Case No. 3467 and raffled to Branch II of

In the hearing on the motion to withdraw and counter-motion, petitioner and respondents
mutually agreed to the dismissal with prejudice of their complaint and counterclaim,
respectively. Thus, on August 27, 1990, the trial court issued the following order:
Acting on the Motion to Withdraw complaint by the plaintiff as well as the
Motion of his counsel and the Motion of counsel for the defendants, and
finding the former to be well-taken, let this case be dismissed with prejudice.
xxx.
The Counterclaim of the defendants is ordered dismissed.
SO ORDERED.[5]
A little over a year later, or on February 11, 1992, petitioner again filed suit against
respondents with the same Regional Trial Court, this time for Recovery of Possession and
Ownership with Damages. In his second complaint, docketed as Civil Case No. 4404 and
raffled to Branch I of the court, petitioner sought to recover possession and ownership of the
same land covered by TCT No. T-55380. To this new complaint, respondents filed a motion
to dismiss on ground of res judicata, arguing that a similar case (Civil Case No. 3467) earlier
instituted by the petitioner against them had already been dismissed with prejudice.
As to be expected, petitioner opposed respondents motion to dismiss.
In its order dated September 16, 1992, the trial court granted respondents motion to
dismiss and accordingly dismissed Civil Case No. 4404 on ground of res judicata.
Therefrom, petitioner appealed to the Court of Appeals.
As stated at the outset hereof, the appellate court, in its decision dated June 28,
1996,[6] affirmed the trial courts order of dismissal on the following ratiocination:
The puerile reasoning proffered by plaintiff-appellant [herein petitioner] is
taxing to ones credulity. Apparently at a loss of what argument to advance
to support his contention, he randomly invoked a provision of law which is
not obviously apt in this case . . . . The records are crystal clear that it was
at the instance of plaintiff-appellant, through a motion filed to that effect, that
his complaint was dismissed with prejudice. Said motion with the
corresponding manifestation filed thereto by defendants-appellees
[respondents herein] was not perfunctorily granted but was in fact set for
hearing and in the said hearing, both parties agreed to the dismissal of the
complaint with prejudice. And in accordance with the agreement of both
parties, the trial court issued the Order dated August 27, 1990 dismissing
the case with prejudice. Thus, as aptly stated by Vicente Francisco in his
book The Revised Rules of Court in the Phils., Vol. 1, Annotated, Second
Edition, 1973, p. 986,
A plaintiffs dismissal of a suit with prejudice is as
conclusive of the rights of the parties as an adverse
judgment after trial, being res judicata of all questions which
might have been litigated in the suit.[7]
In time, petitioner moved for a reconsideration but his motion was denied by the appellate
court in its resolution[8] of August 13, 1996.
Hence, petitioners present recourse anchored on the following grounds:
I
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE
DOCTRINE OF RES JUDICATA CONSIDERING THAT THERE IS NO
IDENTITY OF THE CAUSES OF ACTION BETWEEN CIVIL CASE NO.
4404 AND CIVIL CASE NO. 3467.
II
ASSUMING ARGUENDO THAT THERE IS AN IDENTITY OF CAUSES OF
ACTION, THE HONORABLE COURT OF APPEALS ERRED IN APPLYING
THE DOCTRINE OF RES JUDICATA BECAUSE IT WOULD RESULT IN
INJUSTICE.[9]
WE DENY.
Petitioner contends that the cause of action in Civil Case No. 3467 and in Civil Case No.
4404 differs, the former being a suit for specific performance to compel the respondents to
register the deed of sale over the of land they sold to him, while Civil Case No. 4404 is
an accion reivindicatoria to recover possession and ownership of the same land. This

dissimilarity, according to petitioner, argues against the applicability of the res
judicata principle.
While the appellate court did not state so explicitly, the provision upon which it predicated its
ruling is Section 47, Rule 39 of the Rules of Court, which pertinently reads:
SEC. 47. Effect of judgments or final orders. The effect of a judgment or final
order rendered by a court of the Philippines, having jurisdiction to pronounce
judgment or final order, may be as follows:
xxx xxx xxx
(b) In other cases, the judgment or final order is, with respect to the matter
directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in
interest by title subsequent to the commencement of the action or special
proceeding litigating for the same thing and under the same title and in the
same capacity; and
(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have been adjudged in a former judgment or
final order which appears upon its face to have been so adjudged, or which
was actually and necessarily included therein or necessary thereto.
The aforequoted provision enunciates the principle of res judicata to the end that
controversies once decided on the merits by a court of sufficient jurisdiction shall remain in
repose. The principle has two (2) aspects: a) as a bar to the prosecution of a subsequent
action based on the same claim or cause of action; and b) as preclusion to the relitigation of
particular issues or facts in another action between the same parties on a different demand
or cause of action. The first aspect corresponds to the aforequoted par. (b) of Section 39 of
Rule 47, while the second is embodied in paragraph (c) of the same Section. [10] This Court
has explained the distinction between the two concepts embraced in the res judicata principle
in the following wise:
There is no question that where as between the first case where the
judgment is rendered and the second case where such judgment is invoked,
there is identify of parties, subject matter and cause of action, the judgment
on the merits in the first case constitutes an absolute bar to the subsequent
action not only as to every matter which was offered and received to sustain
or defeat the claim or demand, but also as to any other admissible matter
which might have been offered for that purpose and to all matters that could
have been adjudged in that case. This is designated as bar by former
judgment.
But where the second action between the same parties is upon a different
claim or demand, the judgment in the prior action operates as an estoppel
only as to those matter in issue or points controverted, upon the
determination of which the finding or judgment was rendered. In fine, the
previous judgment is conclusive in the second case only as those matters
actually and directly controverted and determined and not as to matters
merely involved therein. This is the rule on conclusiveness of judgment .
. . .[11] (Emphasis added)
By force of res judicata, a final judgment is conclusive not only on the issues actually
determined by the decision but on all issues that could have been raised or litigated in the
anterior suit.[12] In fine, when material facts or questions which were in issue in a former action
and were there admitted or judicially determined are conclusively settled by a judgment
rendered therein, such facts or questions become res judicata and may not again be litigated
in a subsequent action between the same parties or their privies, regardless of the form of
the latter.[13] This is, as it should be, for a judgment is an adjudication on all matters which
are essential to support it and that every proposition assumed or decided by the court leading
up to the final conclusion and upon which such conclusion is reached is as effectually passed
upon as the ultimate question which is finally solved.[14]
For res judicata to serve as an absolute bar to a subsequent action, the following
requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it
must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or
order on the merits; and (4) there must be between the two cases identity of parties, subject
matter and causes of action.[15]
There can be no quibbling that the first three (3) requisites adverted to above obtain in this
case. So too are the elements of identity of parties and subject matter mentioned in the fourth
requisite. There is thus no need to belabor the point, as even petitioner himself concedes the

presence of all the requisites adverted to, his only challenge against the applicability of
the res judicata principle being limited to the absence of identity of the causes of action
between Civil Case No. 4404 and Civil Case No. 3467.
Contrary to petitioners submission, there is identity of causes of action in the two (2) civil
cases. We shall explain.
Rule 2, Section 2 of the Rules of Court defines cause of action as the act or omission
by which a party violates the right of another. Its elements are: (1) the existence of a legal
right in the plaintiff; (2) a correlative obligation on the part of the defendant; and (3) an act or
omission of the defendant in violation of said legal right for which the plaintiff may maintain
an action for recovery of damages or other appropriate reliefs.[16]
Causes of action are identical when there is an identity in the facts essential to the
maintenance of the two actions or where the same evidence will sustain both actions. If the
same facts or evidence can sustain either, the two actions are considered the same, so that
the judgment in one is a bar to the other.[17]
Here, the act alleged to be in violation of petitioners legal right consists of respondents failure
or refusal to transfer to him the possession and ownership of the lot in question. Upon the
other hand, petitioner in his complaint for specific performance in Civil Case No. 3467,
alleged:
xxx xxx xxx
2. The Defendants were the owners, by right of succession, of the parcel of
land described as follows:
3. x x x the defendants sold absolutely the above-described parcel of land to
the plaintiff for the sum of SIXTY THOUSAND PESOS xxx.
4. It was agreed between the Plaintiff and the Defendants that the latter
would shoulder all expenses of the sale, . . ., and would deliver the certificate
of title already in the name of the Plaintiff, and it was for this reason that the
Defendants pleaded to the Plaintiff that the amount to be stated in the deed
of sale would only be FIVE THOUSAND PESOS (P5, 000.00) instead of
SIXTY THOUSAND PESOS (P60, 000.00) which was actually paid to and
received by the Defendants.
xxx xxx xxx
6. Up to the present, the Defendants refused and failed, and still refuse and
fail, to cause the registration of the deed of sale (Annex A) and the issuance
of the certificate of title in the name of the Plaintiff despite repeated demands
made by the latter upon the former.
xxx xxx xxx
WHEREFORE, the Plaintiff respectfully prays that the Honorable Court
render judgment:
1. Declaring him (Plaintiff) the lawful owner of the parcel of land described in
the Complaint;
2. Ordering the Defendants to register the deed of sale in the Office of the
Register of Deeds of Cagayan, and to cause the issuance of the
corresponding transfer certificate of title to and in the name of the Plaintiff.
xxx xxx xxx
As may readily be deduced from the averments in the complaint in Civil Case No.
3467, the ownership of the land in question is tendered as an issue and what petitioner is
asking thereat is for the trial court to order the respondents to deliver to him the title and
necessarily ownership of the same parcel of land he allegedly purchased from them. At the
other end, Civil Case No. 4404 is a suit for recovery of possession and ownership of the
same land sought to be recovered in Civil Case No. 3467. In net effect, petitioners ultimate
objective in instituting the two actions is to peremptorily secure title, possession and
ownership of the same piece of land.
In the first (Civil Case No. 3467), as in the second case (Civil Case No. 4404), the
controversy turns on petitioners right of dominion over a piece of real estate pursuant to a
deed of sale purportedly executed by the respondents in his favor. In fine, petitioners cause
in either case could plausibly prosper only upon proof of the fact of a valid sale covering the
land in dispute. And such fact can in turn be established by evidence showing that the deed absence of the sale transaction covering the disputed land and the fictitious nature of the
of absolute sale appended to the complaint in the first case is authentic. deed of sale allegedly executed by and between petitioner and respondents over the same
As it were, however, respondents denied having sold the subject land to petitioner land, are deemed conclusive between the parties in the second case.
and specifically denied the genuineness and due execution of the conveying deed. Instead,
Res judicata aims to accord stability to judgments. Without it, multiplicity of action
however, of demonstrating by competent preponderating evidence the superiority of his case
would be the order of the day.[19] Do away with the principle and there shall be no end to
and, in the process, demolishing respondents denial of the fact of sale, petitioner made a
litigation.[20]
deliberate retreat and took the first step which eventually led to the dismissal with prejudice
of his first complaint. By himself no less moving for such dismissal after going to all the trouble Given the foregoing perspectives, petitioners plea to relax the rule on res
and expense of initiating a lawsuit, petitioner virtually conceded that he had no case against judicata since its application in this case would, to him, result in injustice is utterly devoid of
respondents; that his claim of ownership is a sham; and that the very document supportive merit and, ergo, need not detain us long. Lest it be overlooked, it was petitioner himself who
of such claim is, as asserted by respondents, spurious.
moved for the dismissal of his own complaint in Civil Case No. 3467, doubtless after realizing
the untenability of his case, anchored as it were on a fictitious deed of sale. Accordingly,
Prescinding from the foregoing premises, it is indubitable that there is, as between the two
petitioner cannot now be permitted to benefit from his own undoing. Once a litigants rights
actions, an identity of rights asserted and reliefs prayed for, as well as of the facts from which
had been adjudicated in a valid final judgment of a competent court, he should not be granted
the reliefs are founded. Moreover, the evidence to support petitioners cause of action in the
an unbridled license to come back for another try. [21]
specific performance case (Civil Case No. 3467) is included and forms part of the evidence
he needed to support his cause of action in the case for recovery of possession and
It has been said that he who comes to equity must do so with clean hands; that one
ownership (Civil Case No. 4404). There cannot, therefore, be a serious dispute as to the
who would have himself excepted from the provisions of the Rules of Court must present the
identity of causes of action in Civil Case No. 3467 and Civil Case No. 4404. The difference
most persuasive of reasons.[22] With the view we take of this case, petitioner is undeserving
in form of the two actions or, however petitioner styled each, is of no moment. A party cannot
of the helping hand of equity, having, at bottom, latched his fortune in both Civil Cases No.
evade the preclusive effect of res judicata by the simple expedient of varying the form of the
3467 and 4404 on a supposed deed of sale, the authenticity of which is suspect, to say the
action or by adopting a different mode of presenting his case. [18] The doctrine of res
least. What is more, accommodating petitioner in his bid to evade the bar of res
judicata will apply as long as the parties are litigating for the same thing and more importantly,
judicata would be most prejudicial to the respondents who would then have to undergo all
the same contentions. As can be gleaned from the records, petitioners arguments in Civil
over again the rigors and expense of a trial. This Court, as a matter of simple justice and
Case No. 3467 bear extreme resemblance with those raised in Civil Case No. 4404.
good conscience, would not allow itself to be a party to such iniquitous situation.

But even if we were to assume purely ex hypothesi that the cause of action in Civil Case No. WHEREFORE, the petition is DENIED and the assailed decision and resolution of
3467 is not identical to that in Civil Case No. 4404, petitioner could still not escape from the the Court of Appeals AFFIRMED.
clutches of res judicata. For, consistent with the principle of conclusiveness of judgment, all Costs against petitioner.
relevant issues actually or deemed adjudged and settled finally in the first case, i.e., the
[G.R. No. 144882. February 04, 2005]
LUISA BRIONES-VASQUEZ, petitioner, vs. COURT OF APPEALS and HEIRS OF
MARIA MENDOZA VDA. DE OCAMPO, respondents.
DECISION
AZCUNA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Civil Procedure, assailing
the Resolution of the Court of Appeals in CA-G.R. CV No. 39025, dated June 9, 2000, which
denied petitioners motion for clarificatory judgment and the Resolution of the Court of
Appeals, dated August 3, 2000, which denied the motion for reconsideration.
Under an agreement denominated as a pacto de retro sale, Maria Mendoza Vda. De
Ocampo acquired a parcel of land from Luisa Briones. The latter thereunder reserved the
right to repurchase the parcel of land up to December 31, 1970.[1]
Maria Mendoza Vda. De Ocampo passed away on May 27, 1979. [2] On June 14, 1990,
Hipolita Ocampo Paulite and Eusebio Mendoza Ocampo, the heirs of Maria Mendoza Vda.
De Ocampo, filed a petition for consolidation of ownership, alleging that the seller was not
able to exercise her privilege to redeem the property on or before December 31, 1970.[3]
The Regional Trial Court (RTC) of Pili, Camarines Sur, Branch 32 rendered a
Decision[4] on January 30, 1992 as follows:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. declaring that exh. A is a true pacto de retro sale;
2. declaring that the defendant can still redeem the property within 30 days
from the finality of this judgment, subject to the provisions of Art. 1616 of
the New Civil Code;
3. No costs.
SO ORDERED.[5]
Plaintiffs therein -- herein private respondents -- appealed the RTC Decision to the Court
of Appeals.[6] On June 29, 1995, the Court of Appeals promulgated a Decision[7] and disposed
of the case in the following manner:
THE FOREGOING CONSIDERED, the contested decision is hereby set aside; and declaring
the 1970 sale with right of repurchase, Exhibit A, as one of an equitable mortgage.
SO ORDERED.[8]
Respondents filed a motion for reconsideration which the Court of Appeals denied
through a Resolution,[9] dated December 15, 1995. The Court of Appeals Decision became
final and executory and entry of judgment was made on July 17, 1996.[10]
Subsequently, at the RTC, both petitioner and respondents filed their respective motions
for a writ of execution. The RTC issued a writ of execution. However, the writ was returned
unserved per sheriffs return which reads as follows:
Respectfully returned to this Court thru the Clerk of Court VI, RTC, Pili, Camarines Sur the
herein attached original copy of the Writ of Execution issued in the above-entitled case with
the following information, to wit:
That the plaintiffs [herein private respondents] were informed that the writ of execution was
already issued for implementation and that they should pay the necessary sheriffs and
kilometrage fees;
That [one of] the plaintiff[s] came to the Office of the Clerk of Court VI but did not deposit any
amount for the kilometrage fee and for the expenses in the implementation of the said writ,
but instead plaintiff said that he is not interested to implement such writ;
That the 60-day period within which the said writ should be implemented has already expired.
WHEREFORE, the original copy of the Writ of Execution is hereby returned unserved.
Cadlan, Pili, Camarines Sur July 8, 1997
For the Clerk of Court VI and Ex-Officio Provincial Sheriff by:
(signed)
EDDIE M. ROSERO Sheriff IV[11]
Petitioner thereafter filed a motion for an alias writ of execution. This was granted by the
RTC:[12]
ALIAS WRIT OF EXECUTION
T O : THE SHERIFF or any person authorized
to serve process, RTC, Br. 32, Pili, C.s.
THRU : THE CLERK OF COURT VI and EX-OFFICIO
PROVINCIAL SHERIFF
Regional Trial Court
Pili, Camarines Sur
GREETINGS:
WHEREAS, on January 20, 1992, a decision was rendered by this Court,
the dispositive portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered as
follows:
1. declaring that Exh. A is a true pacto de retro sale;
2. declaring that the defendant can still redeem the property within
30 days from the finality of this judgment, subject to the provisions
of Art. 1616 of the New Civil Code.
3. No costs.
WHEREAS, in an order of this Court dated June 16, 1992, the notice of appeal filed by
counsel for the defendant has been granted and the Clerk of Court V of this Court transmitted
the entire records of the case to the Court of Appeals, Manila;
WHEREAS, on June 29, 1995, a decision was rendered by the Court of Appeals, Manila, the
dispositive portion of which reads as follows:
THE FOREGOING CONSIDERED, the contested decision is hereby set aside; and declaring
the 1970 sale with right of repurchase, Exh. A as one of an equitable mortgage.
WHEREAS, on March 5, 1997, the Hon. Nilo A. Malanyaon, Presiding Judge of this Court
issued an order granting the issuance of a writ of execution, hereunder quoted as follows:
It appearing that the decision of the Court of Appeals had become final and executory, and
an entry of final judgment had already been issued by the Honorable Court of Appeals, let a
writ of execution issue.
WHEREAS, on July 10, 1997, Sheriff Eddie M. Rosero submitted his return:
WHEREFORE, the original copy of the Writ of execution is hereby returned unserved.
WHEREAS, on July 18, 1997, the Hon. Nilo A. Malanyaon issued an Order:
The motion for issuance of alias writ of execution filed by counsel for the defendant, Atty.
Lucille Fe R. Maggay-Principe, is hereby granted.
Consequently, the Clerk of Court of this Court is directed to issue alias writ of execution.
WHEREFORE, you the Provincial Sheriff of Camarines Sur or his lawful deputy is hereby
commanded to effect the satisfaction of the above-quoted decision of the Honorable Court of
Appeals, Manila. Return this writ to this Court within sixty (60) days from your receipt hereof.
WITNESS THE HON. NILO A. MALANYAON, Judge of this Court, this 21st day of July, 1997,
at Cadlan, Pili, Camarines Sur.
(Sgd.) LALAINE P. MONSERATE
Officer-In-Charge
Legal Researcher II
The Sheriff was unable to effect the satisfaction of the alias writ as stated in the sheriffs
report, which is worded thus:
This is to report on the status of the implementation of the Alias Writ of Execution issued in
the above-entitled case, to wit:
That on August 6, 1997 the plaintiff[s] represented by Sps. Policarpio Paulite and Hipolita
Ocampo and Eusebio M. Ocampo personally received copy of the Alias Writ of Execution but
they refused to sign on the original copy of the said writ, together with the letter of advise
informing them to withdraw at any time the amount deposited to the Office of the Clerk of
Court VI, RTC, Pili, Camarines Sur by defendant Luisa Briones so that the mortgage may
now be deemed released or cancelled.
That until this time the said plaintiff[s] failed and or did not bother to withdraw the said amount
deposited by defendant Luisa Briones despite letter of advice and the alias writ of execution
having been personally received by them.
Cadlan, Pili, Camarines Sur September 9, 1997.
For the Clerk of Court and Ex-Officio Sheriff by:
(signed)
EDDIE M. ROSERO Sheriff IV[13]
Unable to effect the execution of the Court of Appeals decision, petitioner filed with the
RTC an omnibus motion, dated May 25, 1999, praying:
WHEREFORE, it is respectfully prayed that an order issue:
a) Declaring the equitable mortgage, Exhibit A, discharged;
b) Directing the issuance of a Writ of Possession against the plaintiffs for the delivery of
possession of the land in question to the defendant. [14]
 The RTC denied the omnibus motion in an Order dated November 16, 1999, which
states:
Acting on the omnibus motion of plaintiff dated 25 May 1999 and the opposition thereto of
defendant, and considering that the decision of the Court of Appeals referring the decision of
this Court has become final and executory, hence, this Court can no longer alter, modify or
add anything thereto, the prayers set forth in the omnibus motion is, as it is, hereby denied.
SO ORDERED.[15]
Petitioner filed a motion for reconsideration[16] of the above Order, which was denied by
the RTC in an Order dated February 23, 2000.[17]
Petitioner then filed a motion for clarificatory judgment, dated April 5, 2000, with the
Court of Appeals.[18] The motion was denied in a Resolution, dated June 9, 2000, which reads
as follows:
The only issues that reached Us, through an appeal, was whether the 1970 Sale with Right
of Repurchase was actually an equitable mortgage. We ruled, it was, necessarily there is
nothing to clarify.
If it is a matter however whether the prevailing party should be entitled to a right to repossess
the property, then the remedy is not with Us, but with the Court below.
For lack of merit, the Motion for Clarificatory Judgment is hereby DENIED.
SO ORDERED.[19]
Petitioner filed a motion for reconsideration of the above Resolution. The Court of
Appeals denied the same in a Resolution dated August 3, 2000.[20]
Petitioner now comes to this Court raising the following issues:
PETITIONER SUBMITS THAT THE PUBLIC RESPONDENT ACTED ARBITRARILY, WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN ISSUING
THE FOLLOWING RESOLUTIONS:
A) RESOLUTION DATED JUNE 9, 2000, DENYING PETITIONERS MOTION FOR
CLARIFICATORY JUDGMENT.
B) RESOLUTION DATED AUGUST 3, 2000, DENYING PETITIONERS MOTION FOR
RECONSIDERATION.[21]
The sole issue is whether or not the Court of Appeals acted with grave abuse of
discretion amounting to lack of jurisdiction in refusing to grant petitioners motion for
clarificatory judgment.
It must be noted, as narrated above, that the Decision of the Court of Appeals had
already become final and executory at the time that the motion for clarificatory judgment was
filed. With regards to final judgments, this Court has pronounced that:
nothing is more settled in the law than that when a final judgment becomes executory, it
thereby becomes immutable and unalterable. The judgment may no longer be modified in
any respect, even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to be made
by the Court rendering it or by the highest Court of the land. The only recognized exceptions
are the correction of clerical errors or the making of so-called nunc pro tunc entries which
cause no prejudice to any party, and, of course, where the judgment is void.[22]
As a general rule, therefore, final and executory judgments are immutable and
unalterable except under the three exceptions named above: a) clerical errors; b) nunc pro
tunc entries which cause no prejudice to any party; and c) void judgments.
In the present case, petitioner claims the second exception, i.e., that her motion for
clarificatory judgment is for the purpose of obtaining a nunc pro tunc amendment of the final
and executory Decision of the Court of Appeals.
Nunc pro tunc judgments have been defined and characterized by this Court in the
following manner:
The office of a judgment nunc pro tunc is to record some act of the court done at a former
time which was not then carried into the record, and the power of a court to make such entries
is restricted to placing upon the record evidence of judicial action which has been actually
taken. It may be used to make the record speak the truth, but not to make it speak what
it did not speak but ought to have spoken. If the court has not rendered a judgment
that it might or should have rendered, or if it has rendered an imperfect or improper
judgment, it has no power to remedy these errors or omissions by ordering the
entry nunc pro tunc of a proper judgment. Hence a court in entering a judgment nunc
pro tunc has no power to construe what the judgment means, but only to enter of
record such judgment as had been formerly rendered, but which had not been entered
of record as rendered.In all cases the exercise of the power to enter judgments nunc pro
tunc presupposes the actual rendition of a judgment, and a mere right to a judgment will not
furnish the basis for such an entry. (15 R. C. L., pp. 622-623.)
The object of a judgment nunc pro tunc is not the rendering of a new judgment and
the ascertainment and determination of new rights, but is one placing in proper form
on the record, the judgment that had been previously rendered, to make it speak the
truth, so as to make it show what the judicial action really was, not to correct judicial
errors, such as to render a judgment which the court ought to have rendered, in place
of the one it did erroneously render, nor to supply nonaction by the court, however
erroneous the judgment may have been. (Wilmerding vs. Corbin Banking Co., 28 South.,
640, 641; 126 Ala., 268.)
A nunc pro tunc entry in practice is an entry made now of something which was actually
previously done, to have effect as of the former date. Its office is not to supply omitted
action by the court, but to supply an omission in the record of action really had, but
omitted through inadvertence or mistake. (Perkins vs. Haywood, 31 N. E., 670, 672.)
It is competent for the court to make an entry nunc pro tunc after the term at which the
transaction occurred, even though the rights of third persons may be affected. But
entries nunc pro tunc will not be ordered except where this can be done without injustice to
either party, and as a nunc pro tunc order is to supply on the record something which
has actually occurred, it cannot supply omitted action by the court . . . (15 C. J., pp.
972-973.)[23]
From the above characterization of a nunc pro tunc judgment it is clear that the judgment
petitioner sought through the motion for clarificatory judgment is outside its scope. Petitioners
did not allege that the Court of Appeals actually took judicial action and that such action was
not included in the Court of Appeals Decision by inadvertence. A nunc pro tunc judgment
cannot correct judicial error nor supply nonaction by the court. [24]
Since the judgment sought through the motion for clarificatory judgment is not a nunc
pro tunc one, the general rule regarding final and executory decisions applies. In this case,
no motion for reconsideration having been filed after the Court of Appeals rendered its
decision on June 29, 1995 and an entry of judgment having been made on July 17, 1996, the
same became final and executory and, hence, is no longer susceptible to amendment. It,
therefore, follows that the Court of Appeals did not act arbitrarily nor with grave abuse of
discretion amounting to lack of jurisdiction when it issued the aforementioned Resolution
denying petitioners motion for clarificatory judgment and the Resolution denying petitioners
motion for reconsideration.
Nevertheless, for purposes of guiding the parties in the execution of the aforesaid
Decision of the CA, without altering the same, the following should be noted:
The Court of Appeals pronounced in its Decision that the contract between the parties
is an equitable mortgage. Since the contract is characterized as a mortgage, the provisions
of the Civil Code governing mortgages apply. Article 2088 of the Civil Code states:
The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose
of them. Any stipulation to the contrary is null and void.
This Court has interpreted this provision in the following manner:
The essence of pacto commissorio, which is prohibited by Article 2088 of the Civil Code, is
that ownership of the security will pass to the creditor by the mere default of the debtor
(Guerrero v. Yigo, et al., 96 Phil. 37, 41-42; Puig v. Sellner, et al., 45 Phil. 286, 287 88) [25]
The only right of a mortgagee in case of non-payment of a debt secured by mortgage would
be to foreclose the mortgage and have the encumbered property sold to satisfy the
outstanding indebtedness. The mortgagors default does not operate to vest in the mortgagee
the ownership of the encumbered property, for any such effect is against public policy, as
enunciated by the Civil Code [26]
Applying the principle of pactum commissorium specifically to equitable mortgages,
in Montevergin v. CA,[27] the Court enunciated that the consolidation of ownership in the
person of the mortgagee in equity, merely upon failure of the mortgagor in equity to pay the
obligation, would amount to a pactum commissorium. The Court further articulated that an
action for consolidation of ownership is an inappropriate remedy on the part of the mortgagee
in equity. The only proper remedy is to cause the foreclosure of the mortgage in equity. And
if the mortgagee in equity desires to obtain title to the mortgaged property, the mortgagee in
equity may buy it at the foreclosure sale.
The private respondents do not appear to have caused the foreclosure of the mortgage
much less have they purchased the property at a foreclosure sale. Petitioner, therefore,
retains ownership of the subject property. The right of ownership necessarily includes the
right to possess, particularly where, as in this case, there appears to have been no availment
of the remedy of foreclosure of the mortgage on the ground of default or non-payment of the
obligation in question.
WHEREFORE, the petition for certiorari is DISMISSED. The parties are directed to
proceed upon the basis of the final Decision of the Court of Appeals, dated June 29, 1995,
in CA-G.R. CV No. 39025, that the contract in question was an equitable mortgage and not
a sale.
No costs.
SO ORDERED.
[G.R. No. 158971. August 25, 2005]
MARIANO Y. SIY, in his personal capacity, as well as in his capacity as owner of
PHILIPPINE AGRI TRADING CENTER, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and ELENA EMBANG, respondents.
RESOLUTION
CORONA, J.:
For resolution is private respondent Elena Embangs motion to cite Atty. Frederico P.
Quevedo, counsel of petitioner Mariano Y. Siy, in contempt of court for delaying this case
and impeding the execution of the judgment rendered herein, in violation of Canon 12 [1] and
Rule 12.04[2] of the Code of Professional Responsibility.
This case originated from a complaint for illegal dismissal and non-payment of holiday
pay and holiday premium pay filed by Embang against petitioner and Philippine Agri Trading
Center. The labor arbiter ruled in favor of Embang. The dispositive portion of his September
29, 2000 decision[3] read:
WHEREFORE, judgment is hereby rendered declaring [Embang] to be a regular employee
of the PHIL-AGRI TRADING CENTER and ordering the latter to reinstate her to her former
position and pay her backwages from the date of her dismissal on February 18, 2000 until
her reinstatement which computed as of today amounts to P37,771.50 (P5881 x 6.5 months)
plus 1/12 thereof or the amount of P3,147.62 as corresponding 13th month pay for the period.
An additional award of 5% of the total award is also rendered since [,] compelled to litigate [,]
[Embang] had to engage the services of counsel.
All other claims are DISMISSED for lack of merit.
SO ORDERED.
On March 8, 2002, the Third Division of the National Labor Relations Commission
(NLRC) denied petitioners appeal and affirmed the decision of the labor arbiter with
modification. Thus:
WHEREFORE, premises considered, the appeal is DENIED for lack of merit and the Decision
dated September 29, 2000 is hereby AFFIRMED with MODIFICATION in [that Mariano Y.
Siy] should be made jointly and severally liable together with Phil. Agri Trading Center and
that [Embang] is entitled only [to] the ten (10%) percent of his awarded 13 th month pay as
attorneys fees.
SO ORDERED.[4]
After the NLRC refused to reconsider its March 8, 2002 resolution, petitioner elevated
the case to the Court of Appeals (CA) by way of a petition for certiorari. Finding the petition
to be without merit, the appellate court dismissed the same.[5] The motion for reconsideration
filed by petitioner was likewise denied.[6]
Undaunted, petitioner filed a petition for review on certiorari before this Court
questioning the CAs decision (dismissing his petition) and resolution (denying his motion for
reconsideration). Since we found no reversible error on the part of the appellate court, we
denied the petition in our September 22, 2003 resolution. Petitioner sought a reconsideration
of our resolution but we resolved to deny the same with finality. Thereafter, entry of judgment
was made on December 30, 2003.
In accordance with the rules of procedure of the NLRC, Embangs counsel filed a motion
for the issuance of a writ of execution dated February 16, 2004 before the labor arbiter.
Subsequently, Atty. Quevedo entered his appearance for the petitioner and filed a comment
to the motion for writ of execution.[7] He alleged that Embang rejected the various offers of
reinstatement extended to her by petitioner; hence, she should be entitled to backwages only
up to September 29, 2000, the date of the promulgation of the labor arbiters decision.
This was followed by a protracted exchange of pleadings and motions between the
parties.[8] Finding that his office was never informed by petitioner and Philippine Agri Trading
Center of any intention on their part to reinstate Embang to her former position, the labor
arbiter issued an order dated July 30, 2004[9] granting the February 16, 2004 motion and
directing that a writ of execution be issued.
Atty. Quevedo refused to be deterred. He filed an appeal with the NLRC on August 12,
2004. He insisted that the labor arbiter committed grave abuse of discretion in failing to
specify in his order that the backwages should be computed until September 29, 2000 only
and that no backwages should accrue thereafter because of Embangs refusal to be
reinstated.
Embangs counsel moved to dismiss the appeal. He contended that the appeal was not
perfected because petitioner and Philippine Agri Trading Center did not post the required
cash or surety bond. Pending the resolution of the appeal, Embang filed the instant motion
to cite Atty. Quevedo in contempt of court.
By way of comment, Atty. Quevedo maintains that he did not delay the execution of the
decision but only sought the consideration of Embangs refusal to be reinstated in any writ of
execution that may be issued. He claims that such refusal on Embangs part constituted a
supervening event that justified the filing of an appeal ― notwithstanding the finality of the
decision. He also asserts that an appeal was the proper remedy to question the July 30, 2004
order of the labor arbiter.
Meanwhile, the Third Division of the NLRC issued a resolution[10] on February 28, 2005
resolving not to give due course to the appeal and to remand the case to the regional
arbitration branch for further proceedings. The NLRC held that the July 30, 2004 order was
not appealable. Despite the denial of the appeal, however, Atty. Quevedo filed a motion for
clarification/partial reconsideration of the NLRCs February 28, 2005 resolution.
For his obstinacy in refusing to respect a final and executory judgment, we hold Atty.
Quevedo in contempt of court.
Contempt of court is disobedience to the court by acting in opposition to its authority,
justice and dignity. It signifies not only a willful disregard or disobedience of the courts orders
but also conduct tending to bring the authority of the court and the administration of law into
disrepute or, in some manner, to impede the due administration of justice.[11] Under the Rules
of Court, contempt is classified into either direct or indirect contempt. Direct contempt is
committed in the presence of or so near a court or judge as to obstruct or interrupt the
proceedings before the same.[12] Indirect contempt is one not committed in the presence of
a court.[13] It is an act done at a distance which tends to belittle, degrade, obstruct or
embarrass the court and justice.[14]
Atty. Quevedo should be sanctioned for indirect contempt. Indirect contempt is
committed by a person who commits the following acts, among others: disobedience or
resistance to a lawful writ, process, order or judgment of a court; [15] any abuse of or any
unlawful interference with the processes or proceedings of a court not constituting direct
contempt;[16] and any improper conduct tending, directly or indirectly, to impede, obstruct or
degrade the administration of justice.[17]
We denied with finality the petitioners petition for review on certiorari almost two years
ago. But the decision of the labor arbiter (affirmed with modification by the NLRC and upheld
by the CA and this Court) remains unsatisfied up to now because of Atty. Quevedos sly
maneuvers on behalf of his client.
Once a case is decided with finality, the controversy is settled and the matter is laid to
rest. The prevailing party is entitled to enjoy the fruits of his victory while the other party is
obliged to respect the courts verdict and to comply with it. We reiterate our pronouncement
in Sacdalan v. Court of Appeals:[18]
well-settled is the principle that a decision that has acquired finality becomes immutable and
unalterable and may no longer be modified in any respect even if the modification is meant
to correct erroneous conclusions of fact or law and whether it will be made by the court that
rendered it or by the highest court of the land.
The reason for this is that litigation must end and terminate sometime and somewhere, and
it is essential to an effective and efficient administration of justice that, once a judgment has
become final, the winning party be not deprived of the fruits of the verdict. Courts must guard
against any scheme calculated to bring about that result and must frown upon any attempt
to prolong the controversies.
The only exceptions to the general rule are the correction of clerical errors, the so-called nunc
pro tunc entries which cause no prejudice to any party, void judgments, and whenever
circumstances transpire after the finality of the decision rendering its execution unjust and
inequitable.
This case does not fall under any of the recognized exceptions. Contrary to Atty.
Quevedos contention, there existed no supervening event that would have brought the case
outside the ambit of the general rule on the immutability of final and executory decisions.
Supervening events refer to facts which transpire after judgment becomes final and
executory or to new circumstances which develop afterjudgment acquires finality.[19] The
refusal of Embang to be reinstated happened, assuming it really happened, before the
finality of our September 22, 2003 resolution, i.e., before the decision of the labor arbiter as
modified by the NLRC became final and executory.
In fact, the issue of the alleged offer of reinstatement and Embangs rejection of the same
was not a new one and had already been passed upon by the courts. Atty. Quevedo himself
admits that petitioner brought the issue before the CA in his June 6, 2002 petition
for certiorari and December 3, 2002 memorandum. The appellate court brushed it aside and
found neither factual nor legal merit in the petition. The matter was again raised in petitioners
June 3, 2003 motion for reconsideration which was denied on the ground that the basic
issues had already been previously considered by the court. Embangs alleged refusal to be
reinstated was also alleged in the petition for review on certiorari filed by petitioner before
this Court. We denied it for failing to show that a reversible error had been committed by the
CA.
Atty. Quevedos client was bound by the finality of our affirmance of the modified decision
of the labor arbiter. He should not have tried, under the guise of a flimsy appeal to the NLRC,
to reopen a case already decided with finality. Nor should he have raised anew matters
previously considered and issues already laid to rest.
Atty. Quevedos act of filing a baseless appeal with the NLRC was obviously intended to
defeat the implementation of a final and executory decision. Elementary is the rule that an
order granting a motion for a writ of execution is not appealable. [20] Thus, Atty. Quevedos
deceptively innocent appeal constituted either a willful disregard or gross ignorance of basic
rules of procedure resulting in the obstruction of justice.
By his acts, Atty. Quevedo has tried to prevent Embang from enjoying the fruits of her
hard earned legal victory. In effect, he has been tying the hands of justice and preventing it
from taking its due course. His conduct has thwarted the due execution of a final and
executory decision. By appealing an order which he knew to be unappealable, he abused
court processes and hindered the dispensation of justice. His dilatory tactics were an affront
to the dignity of the Court, clearly constituting indirect contempt.
We note that the ground cited in the motion to cite Atty. Quevedo in contempt of court
was his violation of Canon 12 and Rule 12.04 of the Code of Professional Responsibility.
While a lawyers violation of his duties as an officer of the court may also constitute contempt,
the grounds for holding a person in contempt and for holding him administratively liable for
the violation of his lawyers oath are distinct and separate from each other. They are specified
in Rule 71 of the Rules of Court. A finding of contempt on the part of a lawyer does not
preclude the imposition of disciplinary sanctions against him for his contravention of the
ethics of the legal profession. Thus:
x x x the power to punish for contempt and the power to disbar are separate and distinct, and
that the exercise of one does not exclude the exercise of the other. A contempt proceeding
for misbehavior in court is designed to vindicate the authority of the court; on the other hand,
the object of a disciplinary proceeding is to deal with the fitness of the courts officer to
continue in that office, to preserve and protect the court and the public from the official
ministrations of persons unfit or unworthy to hold such office. The principal purpose of the
exercise of the power to cite for contempt is to safeguard the functions of the court [while
that] of the exercise of disciplinary authority by the Supreme Court is to assure respect for
orders of such court by attorneys who, as much as judges, are responsible for the orderly
administration of justice.
task and responsibility of dispensing justice and resolving disputes in society. Any act on his
part which visibly tends to obstruct, pervert, or impede and degrade the administration of
justice constitutes both professional misconduct calling for the exercise of disciplinary action
against him, and contumacious conduct warranting application of the contempt power.[21]
We therefore refer the complaint against Atty. Quevedos behavior to the Committee on
Bar Discipline of the Integrated Bar of the Philippines for an investigation of his possible
liabilities under Canon 12 and Rule 12.04 of the Code of Professional Responsibility.
WHEREFORE, Atty. Frederico P. Quevedo is hereby found GUILTY of INDIRECT
CONTEMPT for which a FINE of P30,000 is imposed upon him, payable in full within five
days from receipt of this resolution.
SO ORDERED.

Moreover, it has been held that the imposition of a fine as a penalty in a contempt proceeding
is not considered res judicata to a subsequent charge for unprofessional conduct. In the
same manner, an attorneys conviction for contempt was not collaterally estopped by reason
of a subsequent disbarment proceeding in which the court found in his favor on essentially
the same facts leading to conviction. It has likewise been the rule that a notice to a lawyer to
show cause why he should not be punished for contempt cannot be considered as a notice
to show cause why he should not be suspended from the practice of law, considering that
they have distinct objects and for each of them a different procedure is established. Contempt
of court is governed by the procedures laid down under Rule 71 of the Rules of Court,
whereas disciplinary actions in the practice of law are governed by Rules 138 and 139
thereof.

Although apparently different in legal bases, the authority to punish for contempt and to
discipline lawyers are both inherent in the Supreme Court and are equally incidents of the
courts basic power to oversee the proper administration of justice and the orderly discharge
of judicial functions. As was succinctly expounded in Zaldivar v. Sandiganbayan, et al.:

There are, in other words, two (2) related powers which come into play in cases like that
before us here: the Courts inherent power to discipline attorneys and the contempt power.
The disciplinary authority of the Court over members of the Bar is broader [than] the power
to punish for contempt. Contempt of court may be committed both by lawyers and non-
lawyers, both in and out of court. Frequently, where the contemnor is a lawyer, the
contumacious conduct also constitutes professional misconduct which calls into play the
disciplinary authority of the Supreme Court. Where the respondent is a lawyer, however, the
Supreme Courts disciplinary authority over lawyers may come into play whether or not the
misconduct with which the respondent is charged also constitutes contempt of court. The
power to punish for contempt of court does not exhaust the scope of disciplinary authority of
the Court over lawyers. The disciplinary authority of the Court over members of the Bar is but
corollary to the Courts exclusive power of admission to the Bar. A lawyer is not merely a
professional but also an officer of the court and as such, he is called upon to share in the
Industrial Timber Corp. Vs. Ababon G.R. No. 164518 January 25, 2006
January 25, 2006 alleged lack of logs for milling constrained ITC to lay off all its workers until further notice.
This was followed by a final notice of closure or cessation of business operations on August
x ---------------------------------------------------------------------------------------- x
17, 1990 with an advice for all the workers to collect the benefits due them under the law and
DECISION CBA.[7]
YNARES-SANTIAGO, J.:
On October 15, 1990, IPGC took over the plywood plant after it was issued a Wood
Processing Plant Permit No. WPR-1004-081791-042,[8] which included the anti-pollution
Before us are two petitions for review under Rule 45 of the Rules of Court. G.R. No. 164518
permit, by the Department of Environment and Natural Resources (DENR) coincidentally on
assails the October 21, 2002 Decision[1]of the Court of Appeals, in CA-GR. SP No. 51966,
the same day the ITC ceased operation of the plant.
which set aside the May 24, 1995 Decision[2] of the National Labor Relations Commission
(NLRC), as well as the July 16, 2004 Resolution[3] denying its motion for reconsideration.
This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for
G.R. No. 164965 assails only the July 16, 2004 Resolution of the Court of Appeals which
illegal dismissal, unfair labor practice and damages. They alleged, among others, that the
denied their partial motion for reconsideration. These cases were consolidated because they
cessation of ITCs operation was intended to bust the union and that both corporations are
arose out of the same facts set forth below.
one and the same entity being controlled by one owner.

Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at
On January 20, 1992, after requiring both parties to submit their respective position
Agusan, Pequeo, Butuan City, leased to Industrial Timber Corporation (ITC) on August 30,
papers, Labor Arbiter Irving A. Petilla rendered a decision which refused to pierce the veil of
1985 for a period of five years.[4] Thereafter, ITC commenced operation of the plywood plant
corporate fiction for lack of evidence to prove that it was used to perpetuate fraud or illegal
and hired 387 workers.
act; upheld the validity of the closure; and ordered ITC to pay separation pay of month for
every year of service. The dispositive portion of the decision reads:
On March 16, 1990, ITC notified the Department of Labor and Employment (DOLE) and its
workers that effective March 19, 1990 it will undergo a no plant operation due to lack of raw PREMISES CONSIDERED, judgment is hereby rendered ordering
materials and will resume only after it can secure logs for milling.[5] respondent Industrial Timber Corporation (ITC) to pay herein ninety-seven
individual complainants their separation pay at the rate of one-half (1/2)
months pay for every year of service, a fraction of at least six (6) months to
Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990 and its be considered as one whole year, reckoned until August 1990.

intention not to renew the same. All other claims of complainants are hereby ordered DISMISSED for
want of merit.

On June 26, 1990, ITC notified the DOLE and its workers of the plants shutdown due SO ORDERED.[9]
to the non-renewal of anti-pollution permit that expired in April 1990.[6] This fact and the
Ababon, et al. appealed to the NLRC. On May 20, 1993, the NLRC set aside the decision of
the Labor Arbiter and ordered the reinstatement of the employees to their former positions,
and the payment of full back wages, damages and attorneys fees. [10]
ITC and IPGC filed a Motion for Reconsideration through JRS, a private courier, on June 24,
1993.[11] However, it was dismissed for being filed out of time having been filed only on the
date of actual receipt by the NLRC on June 29, 1993, three days after the last day of the
reglamentary period.[12] Thus, they filed a Petition for Relief from Resolution,[13] which was
treated as a second motion for reconsideration by the NLRC and dismissed for lack of merit
in a Resolution dated September 29, 1994.[14]
From said dismissal, petitioners filed a Notice of Appeal with the Supreme
Court.[15] Subsequently, they filed a Motion for Reconsideration/Second Petition for Relief
with the NLRC.[16]
On December 7, 1994, the Supreme Court dismissed the Notice of Appeal for being
a wrong mode of appeal from the NLRC decision. [17] On the other hand, the NLRC granted
the Second Petition for Relief and set aside all its prior decision and resolutions. The
dispositive portion of the May 24, 1995 decision reads:
WHEREFORE, the decision of this Commission dated May 10, 1993 and its
subsequent resolutions dated June 22, 1994 and September 29, 1994 are
Set Aside and Vacated. Accordingly, the appeal of complainants is
Dismissed for lack of merit and the decision of the Labor Arbiter dated
January 20, 1992 is Reinstated and hereby Affirmed.
SO ORDERED.[18]
On October 2, 1995, Virgilio Ababon, et al. filed a Petition for Certiorari with the Supreme
Court, which was docketed as G.R. No. 121977.[19] However, pursuant to our ruling in St.
Martins Funeral Home v. NLRC, we referred the petition to the Court of Appeals for
appropriate action and disposition.[20]
On October 21, 2002, the Court of Appeals rendered a decision setting aside the May 24,
1995 decision of the NLRC and reinstated its May 20, 1993 decision and September 29,
1993 resolution, thus:
WHEREFORE, the petition is GRANTED. The decision dated May 24, 1995
of the National Labor Relations Commission is ANNULLED and SET ASIDE,
with the result that its decision dated May 20, 1993 and resolution dated
September 29, 1994 are REINSTATED.
SO ORDERED.[21]
Both parties filed their respective motions for reconsideration which were denied, hence, the
present consolidated petitions for review based on the following assigned errors:
In G.R. No. 164518
THE COURT OF APPEALS ERRED IN LIBERALLY APPLYING THE
RULES OF PROCEDURE WITH RESPECT TO RESPONDENTS BUT
BEING RIGID IN ITS APPLICATION AS REGARDS PETITIONERS.[22]
In G.R. No. 164965
WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR WHEN IT REFUSED TO APPLY SECTION 279 OF
THE LABOR CODE AS AMENDED BY RA 6715 TO MODIFY THE
DECISION OF 20 MAY 1993 WITH RESPECT TO BACKWAGES FOR
PETITIONERS.[23]
ITC and IPGC contend that the Court of Appeals erred in reversing the May 24, 1995 decision
of the NLRC since its May 20, 1993 decision had become immutable for their failure to file
motion for reconsideration within the reglementary period. While they admit filing their motion
for reconsideration out of time due to excusable negligence of their counsels secretary,
however, they advance that the Court of Appeals should have relaxed the rules of technicality
in the paramount interest of justice, as it had done so in favor of the employees, and ruled
on the merits of the case; after all, the delay was just three days.
 Ordinarily, once a judgment has become final and executory, it can no longer be
disturbed, altered or modified. However, this rule admits of exceptions in cases of special
and exceptional nature as we held in Industrial Timber Corporation v. National Labor
Relations Commission:[24]
It is true that after a judgment has become final and executory, it can
no longer be modified or otherwise disturbed. However, this principle admits
of exceptions, as where facts and circumstances transpire which render its
execution impossible or unjust and it therefore becomes necessary, in the
interest of justice, to direct its modification in order to harmonize the
disposition with the prevailing circumstances.
A careful scrutiny of the facts and circumstances of these consolidated cases
warrants liberality in the application of technical rules and procedure. We agree with the
NLRC that substantial justice is best served by allowing the petition for relief despite
procedural defect of filing the motion for reconsideration three days late, for to rule otherwise,
a greater injustice would be done to ITC by ordering it to reinstate the employees to their
former positions that no longer exist due to valid and legitimate cessation of business and
pay huge judgment award.[25]
Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the exercise of
its appellate powers, correct, amend, or waive any error, defect or irregularity whether in
substance or in form. Further, Article 221 of the same code provides that in any proceeding
before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts
of law or equity shall not be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process.[26]
Also, the rule under Section 14 of Rule VII of the New Rules of Procedure of the NLRC that
a motion for reconsideration of any order, resolution or decision of the Commission shall not
be entertained except when based on palpable or patent errors, provided that the motion is
under oath and filed within 10 calendar days from receipt of the order, resolution or
decision should not be interpreted as to sacrifice substantial justice to technicality. It should
be borne in mind that the real purpose behind the limitation of the period is to forestall or
avoid an unreasonable delay in the administration of justice, from which the NLRC absolved
ITC and IPGC because the filing of their motion for reconsideration three days later than the
prescribed period was due to excusable negligence. Indeed, the Court has the power to
except a particular case from the operation of the rule whenever the purposes of justice
requires it because what should guide judicial action is that a party is given the fullest
opportunity to establish the merits of his action or defense rather than for him to lose life,
honor, or property on mere technicalities.[27]
We now come to the main issues of whether Ababon, et al. were illegally dismissed due to
the closure of ITCs business; and whether they are entitled to separation pay, backwages,
and other monetary awards.
Work is a necessity that has economic significance deserving legal protection. The
social justice and protection to labor provisions in the Constitution dictate so. On the other
hand, employers are also accorded rights and privileges to assure their self-determination
and independence, and reasonable return of capital. This mass of privileges comprises the
so-called management prerogatives. Although they may be broad and unlimited in scope,
the State has the right to determine whether an employer's privilege is exercised in a manner
that complies with the legal requirements and does not offend the protected rights of labor.
One of the rights accorded an employer is the right to close an establishment or
undertaking.[28]
The right to close the operation of an establishment or undertaking is one of the
authorized causes in terminating employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.

Article 283 of the Labor Code provides:
ART. 283. Closure of establishment and reduction of personnel. The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one
(1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or to at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
A reading of the foregoing law shows that a partial or total closure or cessation of operations
of establishment or undertaking may either be due to serious business losses or financial
reverses or otherwise. Under the first kind, the employer must sufficiently and convincingly
prove its allegation of substantial losses,[29] while under the second kind, the employer can
lawfully close shop anytime[30] as long as cessation of or withdrawal from business operations
was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial
rights of employees,[31] and as long as he pays his employees their termination pay in the
amount corresponding to their length of service.[32] Just as no law forces anyone to go into
business, no law can compel anybody to continue the same. It would be stretching the intent
and spirit of the law if a court interferes with management's prerogative to close or cease its
business operations just because the business is not suffering from any loss or because of
the desire to provide the workers continued employment.[33]
In sum, under Article 283 of the Labor Code, three requirements are necessary for a
valid cessation of business operations: (a) service of a written notice to the employees and
to the DOLE at least one month before the intended date thereof; (b) the cessation of
business must be bona fide in character; and (c) payment to the employees of termination
pay amounting to one month pay or at least one-half month pay for every year of service,
whichever is higher.
In these consolidated cases, we find that ITCs closure or cessation of business was
done in good faith and for valid reasons.
The records reveal that the decision to permanently close business operations was arrived
at after a suspension of operation for several months precipitated by lack of raw materials
used for milling operations, the expiration of the anti-pollution permit in April 1990, and the
termination of the lease contract with IPGC in August 1990 over the plywood plant at Agusan,
Pequeo, Butuan City. We quote with approval the observation of the Labor Arbiter:
As borne out from the records, respondent ITC actually underwent no plant
operation since 19 March 1990 due to lack of log supply. This fact is admitted
by complainants (Minutes of hearing, 28 October 1991). Since then several
subsequent incidents prevented respondent ITC to resume its business
operations e.g. expiration and non-renewal of the wood processing plant
permit, anti-pollution permit, and the lease contract on the plywood
plant. Without the raw materials respondent ITC has nothing to produce.
Without the permits it cannot lawfully operate the plant. And without the
contract of lease respondent ITC has no option but to cease operation and
turn over the plant to the lessor.[34] (Emphasis supplied)
Moreover, the lack of raw materials used for milling operations was affirmed in Industrial
Timber Corporation v. National Labor Relations Commission[35] as one of the reasons for the
valid closure of ITCs Butuan Logs Plant in 1989. In said case, we upheld the management
prerogative to close the plant as the only remedy available in order to prevent imminent heavy
losses on account of high production costs, erratic supply of raw materials, depressed prices
and poor market conditions for its wood products.
In Shoppers Gain Supermarket v. National Labor Relations Commission,[36] we held that the In Ariola v. Philex Mining Corporation,[38] we held:
non-renewal of petitioner corporations lease contract and its consequent closure and
In Agabon v. National Labor Relations Commission and Jaka Food
cessation of operations may be considered an event beyond petitioners control, in the nature Processing Corporation v. Pacot, the Court sustained the dismissals for just
of a force majeure situation. As such, it amounts to an authorized cause for termination of cause under Article 282 and for authorized cause under Article 283 of the
Labor Code, respectively, despite non-compliance with the statutory
the private respondents. requirement of notice and hearing. The grounds for the dismissals in those
cases, namely, neglect of duty and retrenchment, remained valid because
the non-compliance with the notice and hearing requirement in the Labor
Having established that ITCs closure of the plywood plant was done in good faith Code did not undermine the validity of the grounds for the dismissals.
and that it was due to causes beyond its control, the conclusion is inevitable that said closure Indeed, to invalidate a dismissal merely because of a procedural defect
creates absurdity and runs counter to public interest. We explained
is valid. Consequently, Ababon, et al. could not have been illegally dismissed to be entitled in Agabon:
to full backwages. Thus, we find it no longer necessary to discuss the issue regarding the
The unfairness of declaring illegal or ineffectual dismissals
computation of their backwages. However, they are entitled to separation pay equivalent to for valid or authorized causes but not complying with
statutory due process may have far-reaching
one month pay or at least one-half month pay for every year of service, whichever is higher. consequences.
Although the closure was done in good faith and for valid reasons, we find that ITC did not
This would encourage frivolous suits, where even the most
comply with the notice requirement. While an employer is under no obligation to conduct notorious violators of company policy are rewarded by
hearings before effecting termination of employment due to authorized cause, [37] however, invoking due process. This also creates absurd situations
where there is a just or authorized cause for dismissal but a
the law requires that it must notify the DOLE and its employees at least one month before procedural infirmity invalidates the termination. Let us take
for example a case where the employee is caught stealing
the intended date of closure.
or threatens the lives of his co-employees or has become a
criminal, who has fled and cannot be found, or where
serious business losses demand that operations be ceased
In the case at bar, ITC notified its employees and the DOLE of the no plant operation on in less than a month. Invalidating the dismissal would not
March 16, 1990 due to lack of raw materials. This was followed by a shut down notice dated serve public interest. It could also discourage investments
that can generate employment in the local economy.
June 26, 1990 due to the expiration of the anti-pollution permit. However, this shutdown was
only temporary as ITC assured its employees that they could return to work once the renewal
Where the dismissal is based on an authorized cause under Article 283 of the Labor Code
is acted upon by the DENR. On August 17, 1990, the ITC sent its employees a final notice of
but the employer failed to comply with the notice requirement, the sanction should be stiff as
closure or cessation of business operations to take effect on the same day it was released.
the dismissal process was initiated by the employers exercise of his management
We find that this falls short of the notice requirement for termination of employment due to
prerogative, as opposed to a dismissal based on a just cause under Article 282 with the same
authorized cause considering that the DOLE was not furnished and the notice should have
procedural infirmity where the sanction to be imposed upon the employer should be tempered
been furnished both the employees and the DOLE at least one month before the intended
as the dismissal process was, in effect, initiated by an act imputable to the employee.[39]
date of closure.
In light of the factual circumstances of the cases at bar, we deem it wise and reasonable to
award P50,000.00 to each employee as nominal damages.

WHEREFORE, in view of the foregoing, the October 21, 2002 Decision of the Court of
Appeals in CA-GR. SP No. 51966, which set aside the May 24, 1995 Decision of the NLRC,
as well as the July 16, 2004 Resolution denying ITCs motion for reconsideration, are
hereby REVERSED. The May 24, 1995 Decision of the NLRC reinstating the decision of the
Labor Arbiter finding the closure or cessation of ITCs business valid, is AFFIRMED with the
MODIFICATIONS that ITC is ordered to pay separation pay equivalent to one month pay or
to at least one-half month pay for every year of service, whichever is higher, and P50,000.00
as nominal damages to each employee.

SO ORDERED.
 The Case
THIRD DIVISION

Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court,
LUZON DEVELOPMENT BANK, G.R. No. 163338
Petitioner, assailing the December 16, 2003 Decision[2] of the Court of Appeals (CA) in CA-GR CV No.
Present:
Panganiban, J., 71589 and its April 14, 2004 Resolution[3] denying petitioners Motion for Reconsideration.
- versus - Chairman
The challenged Decision disposed thus:
Sandoval-Gutierrez,
Corona,
IN VIEW OF THE FOREGOING, the order appealed from is SET
Carpio Morales, and
ASIDE and the case REMANDED for further proceedings.[4]
BENEDICTO C. CONQUILLA, Garcia, JJ
CORNELIA C. CONQUILLA
DOROTEA C. ORCINE and Promulgated: The Facts
FELICIANO S. CONQUILLA,
Respondents. September 21, 2005

x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x According to the CA, the facts are as follows:

x x x. Feliciano Conquilla was the president of an educational

DECISION
PANGANIBAN, J.:
n the present case, the Court stresses that the use of facts admitted in the Complaint will not
subject the judgment basedthereon to a claim of nullity grounded on lack of due process.
Clearly, the facts alleged in the Complaint bound the plaintiff. Thus, the trial court correctly used
I After some months, Feliciano Conquilla applied for a restructuring of
the allegations or admissions therein as basis to grant the Motion to Dismiss, in the same
manner that it could have done so on a motion to render judgment on the pleadings.
institution located at Noveleta Cavite and known asColumbia College. He
was joined by his children Benedicto, Cornelio and Dorotea in mortgaging
the three properties on which the school sat and titled in their names as TCT
No. T-593582 to 84 to secure a loan from the Luzon Development Bank. The
transaction underwent a series of amendments. Initially, on March 7, 1996,
they borrowed P4,720,000, which was increased to P7,220,000 on April 2
by way of a Promissory Note and Amendment Of Real Estate
Mortgage. The Promissory Note appears to have been signed by the four in
their personal capacities, but Felicianos name in the Amendment of Real
Estate Mortgage was preceded by the telling
phrase Columbia College By. An amount of P2,500,000 was specifically
earmarked for building construction. On May 2, they acknowledged a loan
of P10,000,000 in a promissory note signed by them again without any
qualification, and raising the amount for building construction to P2,780,000.
the loan. He wrote the bank that they had sought extra funding to finish the
school building, and with the increased enrollment that would follow on the
heels of their expansion program, assured that their loan obligations would
be met. The request granted, they again issued on December 27,
1996 a Promissory Note for P12,242,000 payable monthly for the next five
years.
 They failed to deliver on their promise, and by March 1998, their
unpaid amortizations rose to more than P4 million. To prevent the impending
foreclosure of the mortgaged properties, Feliciano filed in the name of
Columbia College with the RTC of Cavite City [C]ivil [C]ase N-6659 against
Luzon Development Bank and the notary public[,] Rolando Torres. This suit
was filed on February 18, 1998. Less than a month later, on March 11, 1998,
Judge Christopher [Lock] of Branch 88 of the court dismissed the case on
the ground that the plaintiff failed to establish its cause of action. As
mentioned in his order, the case was set for hearing on March 5, and on this
date only Feliciano Conquilla appeared. Nothing more was said about the
hearing, but it is difficult to see what else could happen in the absence of the
other parties[,] and all the lawyers. 6 days later, in the order, he declared
that there was no reason why the foreclosure of mortgage should be
enjoined, and ruled that in the face of the clear admission of plaintiff that they
were unable to settle their obligations[,] which were secured by the
mortgage, defendants have a clear right to foreclose the mortgage[,] which
is the remedy provided by law.
With the cases out of the way, the properties were auctioned off to
Luzon Development Bank. In June, it advised Columbia College through
Feliciano of its right to buy back the lots within the redemption period. Not
amenable to this solution, Feliciano Conquilla and his children filed the
present case in January 1999, their final trump card against the inevitable
outcome of the foreclosure proceeding.
As the plaintiffs in LP 99-0019, the Conquillas alleged in their
complaint that of the amount of the loan of P7.2 million agreed to on April 2,
1996, the defendant Luzon Development Bank failed to release to them the
amount of P1,940,000, thus causing a breach of contract and rendering the
foreclosure premature. The contract obligation was, furthermore, increased
to over P12 million without further releases. Even as it bidded for the
properties in the amount of over P18 million, it failed to turn over to them the
difference between this price and the amount of the actual releases,
representing a balance of about P13 million.[5]

The next day, March 12, Feliciano Conquilla[,] joined by his wife Salud[,] filed
case N-6669 in his own name[,] which still fell in the sala of Judge [Lock],
praying for the same remedy of injunction against the foreclosure. On a
motion to dismiss, he ruled that the complaint was a rehash of the one made The defendant bank moved to dismiss the Complaint on the ground that the case
in N-6659 and already dismissed. His order of March 16 contained this
disquisition: had already been barred by two prior judgments in Civil Case Nos. N-6659 (First Case) and

Except for the allegations that the defendants did N-6669 (Second Case).[6] On May 4, 2000, the trial court issued an Order dismissing Civil
not comply with the requirement of notice and publication,
and that the plaintiffs are now suing in their personal Case No. LP 99-0019 (Third Case) on the ground of res judicata.[7] In denying the Motion for
capacity, the averments in the complaint are mere rehash
of the allegations in the complaint docketed as [C]ivil [C]ase
Reconsideration, the trial court explained that the causes of action in the Third Case were so
No. N-6659[,] filed by the plaintiff Feliciano Conquilla on
behalf of Columbia College Inc.[,] which has been dismissed
intimately and closely related to those in the First and the Second Cases that to allow a re-
by this court per its order dated March 11, 1998.

It appearing from the opposition filed by the litigation would constitute a circuity of suits.[8]
defendants that the latter (have) complied with the notice
and publication requirements under Act 3135, and it
appearing further that the plaintiffs (have) no cause of action
to institute the present complaint, the reasons of which Respondents appealed this Order, alleging that the dismissal of the Third Case was
(have) already been discussed in the order of the court
dated March 11, 1998, the prayer for the issuance of a a denial of their right to be heard;[9] that the First and the Second Cases did not constitute res
temporary restraining order is hereby denied; and finding
merit in the motion to dismiss filed by defendants, the same judicata;[10] and that the foreclosure was premature, because the entire loan had yet to be
is granted. Consequently, let the complaint filed in this case
be, as it is hereby dismissed. released.[11]
 The appellate court noted that the lower court had ordered the dismissal of the

previous cases without any pretrial or trial.[17] Although the CA recognized that a formal trial
Respondents argued that the trial court had erred in dismissing Civil Case No. LP 99-0019
was not necessary for a judgment to be on the merits, it nevertheless held that the parties
on the ground of res judicata. They added that the Third Case had a different cause of action
should have been given the opportunity to be heard on their claims before judgment was
and was not barred by the unfavorable judgments in the previous two cases. [12] While the
passed. Thus, it ruled that the orders of dismissal were violative of respondents right to due
First and the Second Cases were filed in order to prevent the mortgage foreclosure, the
process.[18]
object of the Third Case was the nullification of the foreclosure proceedings and the collection

of the balance of the loan.

Additionally, the appellate court observed that the denial of the First Case was

grounded on the failure of the Complaint to state a cause of action. Under Rule 16 of the
Elaborating, respondents explained that of the P7.2 million loan agreed upon, only P5.28
Rules of Court, dismissals on this particular ground did not constitute res judicata.[19]
million had been released at the time of the foreclosure.[13] Therefore, they argued, the

foreclosure was premature and should be nullified.[14]

For these reasons, the CA remanded Civil Case No. LP 99-0019 to the trial court for

further proceedings.
Further, respondents criticized the dismissal of the case by the Regional Trial Court (RTC)

on the basis of a mere Motion to Dismiss. They argued that the RTC should have ordered
Hence, this Petition.[20]
petitioner to file a responsive pleading. Because the trial court had failed to do so, their

Complaint was dismissed without trial on the merits. [15]

Issues
Lastly, respondents pointed out that petitioner bank should have been declared in default

because of its failure to file a responsive pleading in Civil Case No. LP 99-0019. They Petitioner raised the following issues in its Memorandum:

theorized that its Motion to Dismiss, grounded on res judicata, was defective, considering
that Rule 16 of the Rules of Court did not include res judicata among the grounds for
dismissal. They contended that the grounds mentioned in Rule 16 were prior judgment or
statute of limitations, which were different from res judicata.[16]
Ruling of the Court of Appeals
I. Whether or not the Court of Appeals acted without or in excess of
jurisdiction or with grave abuse of discretion when they decided to remand
the case back to the lower [court] despite finality of the order of dismissal[;
and]
II. Whether or not the Court of Appeals decision to remand the case to the
lower court violates jurisprudence on forum shopping and res judicata.[21]
 Failure to Establish Cause of Action,
After going over the arguments of petitioner, the Court believes that the resolution of this Not Failure to State a Cause of Action
case hinges on the principal issue of whether the dismissal of the First Case on the ground
of failure to establish a cause of action operates as res judicata on the Third Case.

Preliminarily, we have to determine the actual ground for the dismissal of Civil Case
The Courts Ruling

No. N-6659. According to the CA, the ground for dismissal could not possibly be failure
The Petition is partially meritorious.
to establish [respondents] cause of action, as stated by the trial court, because there was no
Main Issue:
Res Judicata hearing on the case. Rather, the CA ruled that the ground for dismissal could only be failure

to state a cause of action in the light of the fact that the trial court had looked only at the
A case is barred by prior judgment or res judicata when the following requisites concur: (1)

the former judgment is final; (2) it is rendered by a court having jurisdiction over the subject allegations in the Complaint. [24]

matter and the parties; (3) it is a judgment or an order on the merits; (4) there is -- between

the first and the second actions -- identity of parties, of subject matter, and of causes of

action.[22] Cause of action is the act or omission by which a party violates a right of another.[25] It

contains three elements: (1) a right existing in favor of the plaintiff, (2) a duty on the part of
The parties do not dispute the fact that Branch 88 of the RTC of Cavite has
jurisdiction over the First Case, and that its Order of dismissal has long become final and the defendant to respect the right of the plaintiff, and (3) a breach of the defendants duty.
executory[23] because of respondents failure to appeal it. There is no controversy, either,

regarding the identity of the subject matter.

Civil Case No. N-6659 stated a cause of action: first, plaintiff (Respondent Feliciano)
Therefore, the dispute lies only in the presence of the three remaining elements --

judgment on the merits, identity of parties, and identity of causes of action. had a right to apply for an injunction to enjoin a premature foreclosure a foreclosure before

December 27, 2001; second, defendant (petitioner herein) had a duty not to foreclose the
The Ground for Dismissal:
mortgage prematurely; third, the alleged breach arose when defendant applied for In the First Case, the trial judge clearly deviated from the usual course when he

foreclosure in 1998, three years prior to the stipulated maturity of the loan. dismissed the Complaint on the ground of failure to establish its cause of action without giving

the parties an opportunity to present their evidence. Under the special circumstances of

From the foregoing, it is clear that plaintiff had a cause of action to apply for an this case, however, we find that the absence of a trial did not substantively deprive the

injunction on the basis of the alleged breach. In other words, the allegations in the Complaint respondents of their day in court.

are sufficient to enable Notably, the Complaint (and its Annexes) admitted that respondents own default

the trial court to grant the relief prayed for. Therefore, we do not agree that there was a failure triggered the acceleration clause of the mortgage Contract. An acceleration clause is a

to state a cause of action; on the contrary, there was no insufficiency of allegations in the stipulation stating that, on the occasion of the mortgagors default, the whole sum remaining

pleading. unpaid automatically becomes due and payable. The presence and activation of the

acceleration clause, the validity of which was never questioned by respondents, negates their

To repeat, the actual ground for dismissal was the insufficiency of the factual contention that the foreclosure was premature.

basis for the action.[26] It may be raised at any time after the questions of fact shall have been

resolved on the basis of stipulations, admissions, or evidence presented.[27] Usually, the To state it simply, respondents are saying in their own pleading that the breach

declaration that a plaintiff failed to establish a cause of action is postponed until after the committed by petitioner bank is actually justified in the light of their breach of the agreement

parties are given the opportunity to present all relevant evidence on questions of fact.[28] on the monthly installments. Hence, on the basis of their admission of their breach of their
own obligations to the bank, the trial court found that petitioner had a right to foreclose the factual finding that they defaulted on their monthly payments for a period of fifteen months

mortgage. was their own uncontroverted admission. If the trial courts factual finding was wrong,

respondents should have sought a reconsideration of the matter by showing that no such

This is not a flimsy conclusion arrived at by the trial court. It is a fact derived from admission was made, or that it was made through a palpable mistake.[32] A motion for

respondents Complaint and its Annexes.[29] Being in the nature of a judicial admission made reconsideration was the remedy provided them by law, but they took no such action. Thus,

in the course of the proceedings, it did not require proof.[30]This factual admission in the they are bound by their admission. On this basis, the trial court cannot be completely faulted

pleadings on record dispensed with the need for petitioner to present evidence to prove the for concluding that they failed to establish their cause of action.

admitted fact.

What transpired in the court below is akin to a judgment on the pleadings. A judgment

on the pleadings may be rendered by the court either on motion [33] of the plaintiff or motu
Moreover, findings of fact are not unbendingly postponed until after trial, but may be

proprio.[34] Such judgment is based exclusively upon the pleadings without introduction of
made as soon as there is sufficient evidence available. [31] In the present case, the evidence

evidence; therefore, it is proper whenever it appears that there is no controverted factual

that the trial court needed in order to make a decision on the matter was the admission

issue.
contained in respondents Complaint and its Annexes.

There was no controverted factual issue in the First Case because, in filing a Motion
Although the procedure in the RTC was not conducted in the usual manner, this

to Dismiss, petitioner was hypothetically admitting all the allegations in the Complaint.
Court is not prepared to say that it deprived respondents of their right to due process. The
 While it is indisputable that there was no trial on the merits in Civil Case No. N-6659,
Although no motion for a judgment on the pleadings was filed by respondents, the trial court
the ruling was nonetheless a judgment on the merits. Escarte v. Office of the

-- on the authority akin to that granted by Rule 18 Section 2(g) -- decided motu proprio to President[36] held that a ruling based on a motion to dismiss, without any trial on the merits

or formal presentation of evidence, can still be a judgment on the merits.

render a judgment on the pleadings. Merits has been defined as a matter of substance in law, as distinguished from a

matter of form; it refers to the real or substantial grounds of action or defense, as contrasted

with some technical or collateral matter raised in the course of the suit. [37] A judgment is on
The only difference between what transpired in Civil Case No. N-6659 and a Rule 34
the merits when it amounts to a legal declaration of the respective rights and duties of the

judgment on the pleadings is the absence of an answer in the former; instead, what was filed parties, based upon the disclosed facts.[38]

was a motion to dismiss. This procedural flaw could have injured, not the plaintiff

(Respondent Feliciano), but the defendant (petitioner herein), because a judgment was In Allied Banking Corporation v. CA,[39] the trial court, after finding that on the basis of the

rendered without giving it the opportunity to counter plaintiffs factual allegations. Considering, allegations of the Complaint, there [was] really no cause of action against defendant

however, that the defendant did not object to this procedural lapse, it is clear that it had Alano,[40] granted the Motion to Dismiss. Four months later, the plaintiff (Allied Bank) filed a

waived whatever procedural injury was caused by the courts action. new Complaint against Alano, which practically restated the causes of action in the earlier

Dismissal on the Ground of

case. Both the trial and the appellate courts found that the filing of the second case was
Failure to Establish Cause of Action,
a Judgment on the Merits
barred by res judicata.[41] The issue presented before the Court was whether the CA erred in

The CA ruled that Civil Case No. N-6659 did not operate as res judicata, because no affirming the dismissal of the second case on the ground of res judicata.[42] Petitioner
trial had ever been conducted in the trial court; hence, no judgment on the merits could have

possibly been issued.[35] contended that the judgment dismissing the earlier case for failure to state a cause of action

was not a judgment on the merits.

 xxxxxxxxx

x x x. In the case at bench, we fail to see any reason why the

In denying the Petition, this Court held that, although the Complaint had stated a
cause of action, its allegations showed that Alano had not incurred any liability at all.
foreclosure of the mortgages should be enjoined. On the face of the clear
admission of [respondent] that they were unable to settle their obligations
which were secured by the mortgages, [petitioners] have a clear right to
foreclose the mortgages[,] which is the remedy provided for by law.[45]

The dismissal was on the merits,[43] because it unequivocally determined the rights and
Contrary to the findings of the appellate court, the dismissal of Civil Case No. N-6659 was a
obligations of the [bank] and [Alano] with respect to the causes of action and the subject
dismissal on the merits. The Order was based on the finding that the Complaint contained
matter of the case.[44]
an admission that respondents had violated the terms of the Mortgage Contract, a violation

that gave petitioner the right to foreclose the mortgaged property. The judgment was on the
Similarly, the Complaint in the present Civil Case No. N-6659 alleged a cause of action, but
merits, because it ruled that petitioners defense was substantial enough to overcome the
since plaintiff himself showed through his allegations that defendant had not incurred any
relief sought by respondents. The Order applied the law to the facts as stated in the
liability, the trial court dismissed the Complaint. Through its Order of Dismissal, the RTC ruled
Complaint; it was and is thus conclusive on the propriety of foreclosure and determinative of
on the issue presented before it -- the propriety of foreclosing the mortgaged property.
the legal rights and obligations of the parties with respect to the mortgage. The Order
Relevant portions of the Order are quoted as follows:

Paragraph 5 of the complaint clearly show[s] that the [respondent] definitively put an end to the controversy and barred any subsequent action on the same
has not paid the amortizations due from December 1996 up to March 1998
or a period covering 15 months. Paragraph 4 of the promissory notes subject matter.
executed by the [respondent] also disclose[s] that the [respondent] agreed
that in case of default in the payment of any of the installments and advance
interest, the whole sum remaining unpaid shall automatically become due
and payable. As it appears that there is a clear admission on the part of
[respondent] that [he] failed to settle to the fullest [his] obligation, foreclosure
is valid. Foreclosure is valid where the debtors, as in this case, are in default
in the payment of their obligation.
 Even assuming arguendo that the ground for dismissal in the First Case was the The same conclusion was arrived at in Mendiola v. CA.[49] In that case, Petitioner

failure to state a cause of action, that particular Order of Dismissal was still a judgment on Mendiola gave a special power of attorney (SPA) to another person to mortgage the formers

the merits and operated as res judicata on a subsequent case. parcels of land in Marikina for the purpose of financing their planned joint venture. Although

they had already abandoned that business plan, the person who had been given an SPA

In Manalo v. CA,[46] without any trial, the RTC dismissed CEB-11735 on the ground of failure nevertheless mortgaged Mendiolas properties to the Philippine National Bank (PNB). When

to state a cause of action. When the same case was again filed, the respondent moved to the bank initiated foreclosure proceedings, Mendiola filed a separate case

dismiss on the ground of res judicata. The Motion was sustained by the trial court. Upon for injunction against it. The trial court sustained the Motion to Dismiss on the ground that the

review before this Court, the petitioners alleged that the Order of dismissal in CEB-11735 did Complaint did not state a sufficient cause of action.[50] During the pendency of Mendiolas

not constitute res judicata; the Order was not an adjudication on the merits, since the appeal, the foreclosure pushed through, and the properties were sold at the auction.

Complaint was dismissed for failure to state a cause of action.[47]

Because of the turn of events, Mendiola filed a case to annul the auction sale. Again,

This Court found no merit in the Petition. It ruled that res judicata had barred the subsequent PNB moved to dismiss on the ground that an appeal was still pending for the same cause of

Complaint despite the absence of a trial or a cause of action properly alleged. Since the action. After due hearing, the trial court dismissed the second case on the ground of litis

Order of Dismissal actually ruled on the issues raised in the Complaint, the judgment pendentia.[51] The CA subsequently affirmed the dismissal of the first case.

constituted a bar on this case.[48]

 Coming before this Court, petitioner therein maintained that the first case could not

bar the second one, because the former, which was dismissed for failure to state a cause of In the present case, the Order of Dismissal in Civil Case No. N-6659 ruled on the

action, had not ruled on PNBs right to foreclose the properties. right of petitioner to foreclose the property. It held that foreclosure was valid; and that the

debtor was in default in the payment of his obligation.[53] The Order of Dismissal also

This Court ruled that the second case was dismissible under the principle of res judicata. It explained that the Mortgage Contract and the Promissory Notes had authorized the

found that the dismissal of the first case, which was based on a Motion to Dismiss, was a mortgagee to foreclose.[54] It clearly looked into the facts as presented by respondents

judgment on the merits. It was rendered only after due consideration of the facts and pleadings and applied the law accordingly. Thus, based on Manalo and Mendiola, the Order

evidence presented by both parties. The Order of Dismissal went into the substance of the carried the effect of res judicata, it definitively settled the controversy between the parties.

relief sought by Mendiola (which was the issuance of a writ of injunction) and must be

regarded as an adjudication on the merits.[52] Although Mendiola differs slightly from the instant case in the sense that the plaintiff

in the former was given a hearing to argue the merits of his case, the procedural difference

These cases show that even a dismissal on the ground of failure to state a cause of is not substantial enough to arrive at a different conclusion. Notably, in the present case, the

action may operate as res judicata on a subsequent case involving the same parties, subject uncontroverted admission of the Complaint rendered a hearing unnecessary. To reiterate, an

matter, and causes of action, provided that the order of dismissal actually ruled on the issues admission in the course of the proceedings, such as that in the pleadings on record, does

raised. What appears to be essential to a judgment on the merits is that it be a reasoned not require proof. In other words, the Complaint contained the facts that the trial court used

decision, which clearly states the facts and the law on which it is based. to render a judgment on the merits.
 defined as an unconditional promise in writing made by one person to another, signed by the
Substantial Identity of Parties

maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in

money to order or to bearer.[63] This definition shows that the makers or signatories of a
Respondents argue that there is no identity of parties between the First Case and

promissory note have the duty to pay the amount stated on it.
the Third Case.[55] The party in the First Case was Columbia College, Inc., represented by

Feliciano S. Conquilla;[56] while the parties in the Third Case were Feliciano S. Conquilla,

Therefore, it is only logical that the present respondents were debtors, together with
Benedicto C. Conquilla, Cornelio C. Conquilla, and Dorotea C. Orcine.[57] The parties in the

Columbia College, Inc. This fact explains why they are also claiming the balance of the loan,
latter case were the registered owners of the mortgaged properties.[58]

instead of merely asking for the nullification of the foreclosure of their property. Together with

It is axiomatic that to invoke res judicata, absolute identity of parties is not required. Columbia College, Inc., they are interested in annulling the contracted loan and in preventing

A substantial identity of parties is sufficient.[59] There is substantial identity of parties when the foreclosure of the properties.

there is a community of interest between a party in the first case and that in the second one,

even if the latter party was not impleaded in the first case.[60] Moreover, we find that Columbia College, Inc. claimed that it had

mortgaged its properties to petitioner bank and executed the Promissory

In the instant controversy, the Complaint alleged that Columbia College, Inc., was the Note.[64] Reconciling this fact with the finding of the CA that respondents were the

only debtor.[61] But the CA found that the Promissory Note given to petitioner contained the mortgagors,[65] we can only come to the conclusion that they and Columbia College were not

signatures of all the four registered owners, without any qualification.[62] A Promissory Note is only common debtors; all of them were also mortgagors.
 The cause of action in the First Case arose from petitioners alleged premature foreclosure of

Therefore, they were all parties to the same Contract, protecting the same interests, the mortgage. On the other hand, the Third Case involves three alternative causes of action:

and seeking the same relief. Clearly, the actions were instituted for the protection of (1) nullification of the foreclosure and the auction sale, (2) release of the balance of the loan,

the common interest of respondents in the loan and the mortgage. They shared an identity or (3) recovery of the excess proceeds of the sale.

of interest from which flowed an identity of relief sought; that is, to have the foreclosure

Respondents insist that the two cases involve different causes of action, allegedly
nullified. Their identity of interest in the loan
because the First Case seeks to prevent, and the Third Case to nullify, the

and the mortgaged property is enough to hold them privy-in-law; this fact meets the foreclosure.[67] However, hornbook is the rule that identity of causes of action does not mean
absolute identity. Otherwise, a party could easily escape the operation of res judicata by
substantive requisite of identity of parties. changing the form of the action or the relief sought.[68]

The test to determine whether the causes of action are identical is to ascertain

That the children-respondents were not joined in the First Case is not enough to whether the same evidence will sustain both actions, or whether there is an identity in the

facts essential to the maintenance of the two actions. If the same facts or evidence would
show that there is no identity of parties. The joining of new parties does not remove a case
sustain both, the two actions are considered the same, and a judgment in the first case is a

from the operation of res judicata; otherwise, the litigants can easily renew the litigation by bar to the subsequent action.[69]

simply joining new parties.[66] The validity of the foreclosure in Civil Case No. LP 99-0019 is assailed by

respondents on the ground of prematurity.[70] Despite the stipulation that the loan would
Identical Causes of Action mature only on December 27, 2001, the foreclosure of their mortgage took place on March
16, 1998.[71] Notably, that cause of action was the same as that raised, considered, and

The fourth requisite of res judicata is identity of causes of action between the two cases. conclusively passed upon in Civil Case No. N-6659. In the latter case, Respondent Feliciano

sought to prevent foreclosure by also contending that it was premature.[72]

 of the Contract. What respondents are saying is that petitioner has no right to foreclose, on

In order to obtain the reliefs sought, respondents in both cases should have the ground that it has yet to comply fully with its obligation. In other words, the foreclosure is
presented proof that the bank had no right to foreclose before December 27, 2001. By allegedly premature and invalid.[76] In order to sustain their claim, respondents should have

applying the same evidence test, it becomes readily apparent that the evidence or facts presented proof that petitioner had no right to foreclose at the time of their application. It will

needed to sustain the cause of action in Civil Case No. N-6659 is the same as the evidence be recalled that this was the same proof needed to sustain the claim in the First Case. Since

or facts needed to allow relief in Civil Case No. LP 99-0019. Tellingly, the first cause of action the same evidence sustains both actions, they are considered to be the same for purposes

in Civil Case No. LP 99-0019 (nullification of foreclosure) is identical with that in Civil Case of res judicata.

No. N-6659 (injunction of foreclosure).

Moreover, the alleged failure of petitioner bank to release the balance of the loan was a fact

This ruling finds support in Mendiola.[73] In that case, we ruled that the actions to already in existence at the time that the First Case was filed in court. If petitioner had really

enjoin foreclosure and to annul the auction sale based on the same grounds were identical. violated the terms of the loan agreement, this fact should have been pleaded by respondents

in the First Case. If true, such fact bolstered the claim of respondents that petitioner had no
right to foreclose. According to the principle of res judicata, a judgment is conclusive between
At any rate, the Order of Dismissal in the First Case was already a final the parties with respect to matters directly adjudged and to any other matter that may have

been raised in relation to it.[77] By failing to raise this matter in the first instance, respondents
judgment;[74] hence, it was appealable. Respondents could have appealed it, but they did not.
are deemed to have waived it. They can no longer cite any ground for invalidating the

Having failed to appeal from that judgment, they may not abuse court processes by Mortgage Contract, which was already in existence at the time of the First Case.

repeatedly re-filing the same case to obviate the conclusive effects of dismissal. It now
In putting an end to litigation between the same parties over a subject that has

already been adjudicated, the principle of res judicata is dictated by public interest.
operates as res judicata.Hence, respondents can no longer assail the validity of the
Relitigation of issues already settled
foreclosure on the ground of prematurity. merely burdens the courts and the taxpayers, creates uneasiness and confusion, and wastes

valuable time and energy that could be devoted to worthier cases. [78] Even at the risk of
The second cause of action in the Third Case (recovery of the balance of the loan) occasional errors, judgments of courts should become final at some definite time fixed by law
is likewise identical with that in the First Case. Respondents allege that petitioner bank and x x x parties should not be permitted to litigate the same issues over again. [79]
released only P5.2 million of the total P7.42 million agreed upon;[75]thus, there was a breach
Remand of the
New Cause of Action
accessory nature of mortgage, the mortgagee has the right to foreclose the mortgaged

A different fate befalls the third alternative cause of action in Civil Case No. LP 99- property only to the extent of the loan secured by it. Any decision to the contrary abets unjust
0019, which is for recovery of the excess proceeds of the foreclosure sale. Respondents
enrichment.
allege that the mortgaged property was sold for P18,462,900, which allegedly far exceeded

the amount of loan agreed upon by the parties.[80]

To stress, the recovery of the excess proceeds of the sale is the only cause of action
Under the same evidence test, this is a different cause of action from an injunction
that should be remanded to the lower court. Preliminarily, the trial court should first determine
of foreclosure. As already discussed, Civil Case No. N-6659 requires proof that the
the amount of loan actually contracted by the parties, because the true amount is disputed.
mortgagee had no right to foreclose; on the other hand, the alternative cause of action in Civil
According to petitioner[82] and the CA,[83] the contracted loan was P12 million, but
Case No. LP 99-0019 requires proof that the bid price of the mortgaged property was in
respondents maintain that the amount was only P7.42 million.[84] Afterwards, the court a
excess of the contracted loan. The two issues require different sets of evidence; there is no
quo should limit itself to a determination of whether the property was sold for an amount
identity of causes of action.
exceeding the contracted loan, while taking into consideration the interests and costs of the

sale. If the sale price of the mortgaged property is greater than the amount of indebtedness

to the bank, the bank must be ordered to turn over the excess to respondents.
Moreover, the recovery of the excess proceeds of the sale was not and could not be

included in Civil Case No. N-6659, because it was a new cause of action that had arisen The lower court should no longer inquire into the validity of the mortgage loan and

the right to foreclose. The resolution of these two matters have reached finality in Civil Case
only after the foreclosure. It was not barred by res judicata, because it could not have been
No. N-6659, which decided that petitioner had the right to foreclose on the presumption that

raised then. This is the only matter that may be remanded to the trial court. the mortgage was also valid. If respondents are allowed to question the validity of the

mortgage loan all over again, the consequent foreclosure would likewise have to be subjected
to a review, which is no longer possible by operation of res judicata. Forever barred now are
If it is proven that the mortgaged property was foreclosed and sold for an amount all questions regarding the validity of the Mortgage Contract and the subsequent foreclosure,

questions that have been directly adjudged or could have been raised and adjudged in Civil
exceeding the loan contracted, respondent must be allowed to recover the excess. [81] By the
Case No. N-6659.
 WHEREFORE, the Petition is PARTLY GRANTED. The assailed Decision and
Resolution are hereby MODIFIED pursuant to the above discussion. The case

is REMANDED to the Regional Trial Court of Cavite City for further proceedings, only on the

matter of recovery of the alleged excess proceeds of the auction sale. No pronouncement as

to costs.

SO ORDERED.
[G.R. No. 138490. November 24, 2004]
DESIREE L. PAGE-TENORIO, petitioner, vs. WILFREDO C. TENORIO and PRESIDING
JUDGE JOSE R. HERNANDEZ OF REGIONAL TRIAL COURT, BRANCH 158,
PASIG CITY, respondents.
DECISION
CHICO-NAZARIO, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking to nullify and
set aside the Order of the Regional Trial Court (RTC), Branch 158, Pasig City, dated 10
March 199[9][1] denying petitioners formal offer of exhibits for her failure to furnish copies
thereof to the Office of the Solicitor General (OSG) and the City Prosecutor, and the
Order[2] of the RTC dated 13 April 1999 denying petitioners Motion for Reconsideration.
Stripped of circumlocution, the factual antecedents are -
On 07 August 1998, petitioner Desiree L. Page-Tenorio filed a petition for the declaration
of nullity of her marriage to respondent Wilfredo C. Tenorio.[3] On 20 August 1998, a copy of
the summons, together with the petition and its annexes, was served upon private respondent
and was received by him personally. On 02 December 1998, petitioner completed her
testimony on direct and cross-examination. On 05 February 1999, Mrs. Regina Togores,
Clinical Psychologist of the Judicial and Bar Council, Supreme Court, finished her testimony.
On the same day, Julieta C. Tobias, the court-appointed Social Worker, was also presented
and she, likewise, concluded her testimony.[4] On 15 February 1999,[5]petitioner, through
counsel, filed a formal offer of evidence furnishing private respondent with a copy thereof by
registered mail. As earlier stated, the trial court, acting on the offer, denied the same on the
ground that petitioner failed to furnish copies of said formal offer of evidence to the OSG and
the office of the City Prosecutor. Petitioners motion for reconsideration was further denied in
the Order dated 13 April 1999.
Hence, this Petition.
Petitioner assigns a single error[6] (of the trial court) for our resolution:
THE HONORABLE COURT GRAVELY ABUSED HIS (sic) DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN DENYING PETITIONERS MOTION FOR
RECONSIDERATION OF THE ORDER DATED 5 FEBRUARY 1999 GIVEN THE FACT
THAT THERE WAS ALREADY SUBSTANTIAL COMPLIANCE WITH THE SAME.
In a resolution of this Court dated 16 June 1999, we resolved, without giving due course
to the petition, to require respondents to Comment within ten (10) days from notice. [7]
In its Compliance, the OSG prayed for the dismissal of the petition on the ground that
the order was not tainted with grave abuse of discretion and the fact that the petition should
have been filed with the Court of Appeals.[8]
Replying[9] to this Comment, petitioner, through counsel, countered that in her motion
for reconsideration dated 18 March 1999 seeking to set aside the Order of the trial court
dated 10 March 199[9][10] denying her formal offer of evidence, counsel sincerely apologized
and attached proof of compliance to the trial courts order and explained that the failure to
furnish copies of said formal offer was due to mere oversight brought about by daily court
appearances and counsels treatment for hypertension at that time.
In his Comment,[11] private respondent Wilfredo Tenorio manifested that he just wants
to be left alone in peace. He has no comment or opposition to the petition and will abide by
the decision of this Court.
The petition is not meritorious.
It is noteworthy that on 30 April 1999, the trial court issued an Order [12] dismissing this
case on grounds that petitioners Formal Offer of Exhibits was denied admission and that her
other evidence was not preponderant enough to entitle her to a declaration of nullity of
marriage under Article 36 of the Family Code.
Petitioner in the main cites that since the OSG and the Public Prosecutor were
subsequently furnished copies of her formal offer of evidence, the same constitutes
substantial compliance with the 05 February 1999 Order of the trial court. Besides, no
damage or prejudice was caused by her belated compliance and, more importantly, technical
rules should be relaxed in order to obtain a speedy and efficient administration of justice.
The Order of the trial court dated 05 February 1999 reads:
The testimonies of witnesses Regina Beltran Togores and Julieta Tobias were terminated
and as prayed for, counsel for petitioner is given a period of ten (10) days from today within
which to file her formal offer of evidence, copy furnished the offices of the Solicitor General
and Public Prosecutor, which are given a similar period of time from their receipt of the offer
to file their comments/objections, after which, the incident is submitted for resolution.
After the petitioner shall have rested her case, set the initial presentation of oppositors
evidence, if any, on March 16, 1999 at 8:30 oclock in the morning.[13]
In denying Petitioners motion for reconsideration, the trial court rationalized: [14]
This resolves petitioners Motion for Reconsideration.
The motion is denied. This Court could not fathom why petitioner failed to furnish the Office
of the Solicitor General and the Public Prosecutors Office of Pasig City a copy of its offer of
exhibits. It is not only contained in the Order of February 5, 1999 but very obvious in Article
48 of the Family Code and in the Molina case decided by the Supreme Court.
Consequently, the Order of March 10, 199[9][15] stays.
In the earlier case of Vergara, Sr. v. Suelto,[16] this Court made a ruling on the propriety
of filing directly to this Court an application for a writ of mandamus or other extraordinary writ
against a municipal trial court considering that jurisdiction to issue these writs is also
possessed by the Court of Appeals as well as the RTC, thus-
We turn now to the second question posed in the opening paragraph of this opinion, as to
the propriety of a direct resort to this Court for the remedy of mandamus or other
extraordinary writ against a municipal court, instead of an attempt to initially obtain that relief
from the Regional Trial Court of the district or the Court of Appeals, both of which tribunals
share this Courts jurisdiction to issue the writ. As a matter of policy such a direct recourse to
this Court should not be allowed. The Supreme Court is a court of last resort, and must so
remain if it is to satisfactorily perform the functions assigned to it by the fundamental charter
and immemorial tradition. It cannot and should not be burdened with the task of dealing with
causes in the first instance. Its original jurisdiction to issue the so-called extraordinary writs
should be exercised only where absolutely necessary or where serious and important
reasons exist therefor. Hence, that jurisdiction should generally be exercised relative to
actions or proceedings before the Court of Appeals, or before constitutional or other tribunals,
bodies or agencies whose acts for some reason or another, are not controllable by the Court
of Appeals. Where the issuance of an extraordinary writ is also within the competence of the
Court of Appeals or a Regional Trial Court, it is in either of these courts that the specific action
for the writs procurement must be presented. This is and should continue to be the policy in
this regard, a policy that courts and lawyers must strictly observe.
Resolutely, this Court has consistently decreed that a deviation from the strict
observance of the principle of judicial hierarchy may be justified only in case of special and
important reasons clearly and specifically set forth in the petition. The petitioner, in the instant
petition, has not shown to the satisfaction of this Court, by any degree, such special and
important reason warranting a disregard of this well-established principle or to rationalize the
obvious procedural gaffe committed therein.
At the outset, it is necessary to stress that a direct recourse to this court is highly improper,
for it violates the established policy of strict observance of the judicial hierarchy of courts. We
need to reiterate, for the guidance of petitioner, that this Courts original jurisdiction to issue
a writ of certiorari (as well as prohibition, mandamus, quo warranto, habeas corpus and
injunction) is concurrent with the Court of Appeals (CA), as in the present case, and with the
RTCs in proper cases within their respective regions. However, this concurrence of
jurisdiction does not grant a party seeking any of the extraordinary writs the absolute freedom
to file his petition with the court of his choice. This Court is a court of last resort, and must so
remain if it is to satisfactorily perform the functions assigned to it by the Constitution and
immemorial tradition. The hierarchy of courts determines the appropriate forum for such
petitions. Thus, petitions for the issuance of such extraordinary writs against the first level
(inferior) courts should be filed with the RTC, and those against the latter, with the CA. A
direct invocation of this Courts original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is the established policy. It is a policy that is necessary to prevent inordinate
demands upon this Courts time and attention which are better devoted to those matters within
its exclusive jurisdiction, and to prevent further over-crowding of its docket.[17] (Emphasis
ours)
This same principle was laid down in the case of People v. Cuaresma,[18] where it was
held:
. . . A direct invocation of the Supreme Courts original jurisdiction to issue these writs should
be allowed only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is established policy. It is a policy that is necessary to
prevent inordinate demands upon the Courts time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Courts docket. Indeed, the removal of the restriction on the jurisdiction of the Court of Appeals
in this regard, supra resulting from the deletion of the qualifying phrase, in aid of its appellate
jurisdiction was evidently intended precisely to relieve this Court pro tanto of the burden of
dealing with applications for the extraordinary writs which, but for the expansion of the
appellate courts corresponding jurisdiction, would have had to be filed with it.
The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence
thereto in the light of what it perceives to be a growing tendency on the part of litigants and
lawyers to have their applications for the so-called extraordinary writs, and sometime even
their appeals, passed upon and adjudicated directly and immediately by the highest tribunal
of the land. The proceeding at bar is a case in point. The application for the writ
of certiorari sought against a City Court was brought directly to this Court although there is
no discernible special and important reason for not presenting it to the Regional Trial Court.
The Court therefore closes this decision with the declaration, for the information and guidance
of all concerned, that it will not only continue to enforce the policy, but will require a more
strict observance thereof.
This is not to say though that petitioner is left without any remedy under the law as res
judicata does not apply in this case considering that a dismissal on the ground of petitioners
failure to furnish copies of her formal offer of evidence to the city prosecutor and the solicitor
general does not constitute an adjudication on the merits. The case was dismissed not on
the merits, but on a technicality -- the petitioners failure to comply with an order of the
court.[19] It was not an order or judgment determinative of an issue of fact pending before the
Court. It was an interlocutory order, because it required the parties to perform certain acts for
final adjudication of awards.[20] A judgment on the merits is one rendered after a
determination of which party is right, as distinguished from a judgment rendered upon some
preliminary or formal or merely technical point.[21] The decision having resolved only an
interlocutory matter, res judicata cannot be applied.[22]
 We find pertinent the ruling of this Court in the case of Macahilig v. Heirs of Grace M.
Magalit:[23]
A judgment or an order on the merits is one rendered after a determination of which party is
upheld, as distinguished from an order rendered upon some preliminary or formal or merely
technical point. Dismissal of a case for failure of plaintiff to comply with a notice of case status
signed by an officer-in-charge does not have the effect of an adjudication on the merits.
Strictly speaking, res judicata does not apply to decisions or orders adjudicating interlocutory
motions.
Regrettably, while res judicata does not apply, the case cannot be revived because the
action is barred by the finality of the order of dismissal rendered by the trial court on 30 April
1999 which the petitioner never questioned. Petitioner may, however, avail herself of the
remedy as pronounced in the case of Madarieta v. RTC-Br. 28, Mambajao, Camiguin:[24]
Upon finality of the order of dismissal, the case could no longer be revived. The trial court
has lost authority over the case. Squarely applicable is the decision where this Court
emphatically said that after the dismissal has become final through the lapse of the fifteen-
day reglementary period, the only way by which the action may be resuscitated or revived, is
by the institution of a subsequent action through the filing of another complaint and the
payment of the fees prescribed by law. This is so because upon attainment of finality of a
dismissal through the lapse of said reglementary period, the Court losses jurisdiction and
control over it and can no longer make any disposition in respect thereof inconsistent with
such dismissal.
[G.R. No. 138884. June 6, 2002]
RODOLFO DE LEON, petitioner, vs. COURT OF APPEALS and SPOUSES ESTELITA
and AVELINO BATUNGBACAL, respondents.
DECISION
QUISUMBING, J.:
Before us is a special civil action for certiorari and prohibition under Rule 65 of the Rules
of Court. It seeks to annul and set aside the resolution[1] dated January 13, 1999 of the Court
of Appeals, in CA-G.R. CV No. 57989, denying petitioners motion (a) to dismiss the appeals
of private respondents, and (b) to suspend the period to file appellees brief. Also assailed is
the CA resolution[2] dated April 19, 1999, denying petitioners motion for reconsideration.
The antecedent facts are as follows:
On March 11, 1996, petitioner Rodolfo de Leon filed with the Regional Trial Court of
Bataan, Branch 3, a complaint[3] for a sum of money plus damages, with a prayer for
preliminary attachment, against herein private respondents Avelino and Estelita
Batungbacal. The complaint averred that private respondent Estelita Batungbacal executed
a promissory note[4] in favor of herein petitioner for her P500,000 loan with stipulated interest
at 5 percent monthly. The loan and interest remained unpaid allegedly because the check
issued by Estelita was dishonored. Private respondents filed an answer with
counterclaim. Estelita admitted the loan obligation, but Avelino denied liability on the ground
that his wife was not the designated administrator and therefore had no authority to bind the
conjugal partnership. Avelino further averred that his wife contracted the debt without his
knowledge and consent.
Based on Estelitas admission, petitioner filed a motion for partial judgment against
Estelita, which the trial court granted in an order[5] dated May 14, 1996:
WHEREFORE, the Motion for Partial Judgment on the Pleadings is hereby granted in
accordance with Sec. 4 of Rule 36, Rules of Court. As prayed for, judgment is hereby
rendered against Estelita Q. Batungbacal, ordering her to pay plaintiff Rodolfo de Leon the
principal amount of the loan obligation of P500,000.00 plus the stipulated interest which has
accrued thereon at 5% per month since May 1995 until now, plus interest at the legal rate on
said accrued interest from date of judicial demand until the obligation is fully paid.
SO ORDERED.
Counsel for private respondent spouses received a copy of the partial judgment on May
21, 1996, but no appeal was taken therefrom. Thus, petitioner filed a motion for execution of
said judgment on June 6, 1996. Counsel for private respondents was furnished a copy of the
motion on the same date. As private respondents interposed no objection, a writ of execution
was correspondingly issued. The sheriff then proceeded to execute the writ and partially
satisfied the judgment award against the paraphernal property of Estelita and the conjugal
properties of the private respondents with due notice to the latter and their counsel. Again,
private respondents interposed no objection.
Pre-trial was held and trial proceeded on two main issues: (1) whether the loan was
secured with the knowledge and consent of the husband and whether the same redounded
to the benefit of the conjugal partnership; and (2) whether the capital of the husband would
be liable if the conjugal assets or the paraphernal property of the wife were insufficient to
satisfy the loan obligation. On June 2, 1997, the trial court rendered judgment[6] ordering
private respondent Avelino Batungbacal to pay the amount of the loan plus interest and other
amounts in accordance with Article 121 of the Family Code.
Counsel for private respondent spouses received a copy of the decision on June 6,
1997. Avelino through counsel, filed a notice of appeal[7] on June 19, 1997. In a notice of
appearance[8] dated June 25, 1997 bearing the conformity solely of Estelita, a new counsel
appeared in collaboration with the counsel of record for the private respondents. On the same
date, Estelita through said new counsel, served a notice that she is appealing both decisions
promulgated on May 14, 1996, and June 2, 1997, to the Court of Appeals. However, the trial
court, in an order[9] dated July 7, 1997 denied the notice of appeal[10] filed by Estelita on the
ground that said notice was filed beyond the reglementary period to appeal.
Private respondents appeal was docketed with the respondent Court of Appeals as CA-
G.R. CV No. 57989. Petitioner then filed with the Court of Appeals a Motion to Dismiss the
Appeal with Motion to Suspend period to file Appellees Brief[11] on October 21,
1998. Petitioner based his motion to dismiss on the following grounds: (1) that the statement
of the case as well as the statement of the facts in the appellants brief do not have page
references to the record, and that the authorities relied upon in the arguments are not cited
by the page of the report at which the case begins and the page of the report on which the
citation is found; (2) that no copy of the appealed decision of the lower court was attached to
the appellants brief, in violation of the Internal Rules of the Court of Appeals; (3) that private
respondents furnished only one copy of the appellants brief to the petitioner, also in violation
of the Rules of Court; (4) that the decision promulgated against Estelita on May 14, 1996 is
no longer appealable; and (5) that the notice of appeal filed on June 25, 1996 by Estelita
concerning the decision of the trial court against Avelino was filed beyond the reglementary
period to appeal.[12] The motion also prayed that the period for filing the appellees brief be
suspended in view of the pendency of the motion to dismiss.[13]
Private respondents, in their opposition,[14] insisted that the statements of the case as
well as the statement of facts in their brief contained page references to the record, and that
Estelita had seasonably filed her appeal. Private respondent spouses also stated that they
had filed an Amended Appellants Brief[15] on November 27, 1998 and that two copies thereof
had been served on petitioner together with copies of the trial courts decisions.
On January 13, 1999, the Court of Appeals issued the assailed resolution [16] denying
petitioners motion to dismiss and virtually admitting the Amended Appellants Brief as follows:
As submitted by appellants, they adopted pertinent portions of the appealed Decision in the
Statement of the Case, indicated specific pages in the appealed decision where the quoted
portions are found. In the bottom of page 2 of the brief, is the quoted portions of the decision,
referring to pages 1 and 2 thereof.On page 3 of the brief is the dispositive portion, taken on
page 11 of the decision. The rest of the narration in the Statement of the Case are the specific
dates of the pleadings, orders, and portions of the decision citing the page references where
they are found.
Two (2) copies of the Amended Brief were served upon appellee with the appealed Decision
attached as Annex A, and B.
Appellant Estellita Batungbacal explained that her appeal was filed on time. She
cited Guevarra, et. al. vs. Court of Appeals, et. al., L-49017 and 49024, that a partial
judgment may be appealed only together with the judgment in the main case. She personally
received a copy of the main Decision, dated June 2, 1997 on June 10, 1997, and filed her
notice of appeal dated June 25, 1995 (sic) sent by registered mail on even date, per Registry
Receipt No. 2618, attached as Annex C hereof, thereby showing that the notice of appeal
was filed within 15 days from receipt of the Decision appealed from. At any rate, the merit of
appellees contention that appellant Estellita Batungbacal can no longer appeal from the
decision may be resolved after the case is considered ready for study and report.
WHEREFORE, the motion to dismiss is hereby DENIED, and appellee is required to file his
appellees brief within forty-five (45) days from receipt hereof.
SO ORDERED.
On January 22, 1999, petitioner filed a Motion for Reconsideration [17] of the aforesaid
resolution but said motion was denied by the Court of Appeals in a resolution [18] dated April
19, 1999, the pertinent portion of which reads as follows:
The resolution promulgated on January 13, 1999 required appellee to file his appellees brief
within forty-five (45) days from receipt of that resolution, or up to March 4, 1999. Up to this
date no appellees brief has been submitted.
WHEREFORE, the appeal by appellants is deemed submitted for decision without the benefit
of appellees brief, and the records of this case is hereby transmitted to the Raffle Committee,
for re-raffle, for study and report.
SO ORDERED.
Hence, this Petition for Certiorari and Prohibition[19] wherein petitioner contends that
respondent Court of Appeals acted:
(1) WITHOUT JURISDICTION IN ENTERTAINING THE APPEAL OF PRIVATE
RESPONDENT ESTELITA BATUNGBACAL;
(2) WITH GRAVE ABUSE OF DISCRETION AND IN DISREGARD OF THE
EXPRESS MANDATORY REQUIREMENTS OF THE RULES AS WELL AS
AGAINST SETTLED JURISPRUDENCE WHEN IT DENIED THE
PETITIONERS MOTION TO DISMISS THE APPEAL OF THE PRIVATE
RESPONDENT SPOUSES;
(3) WITH GRAVE ABUSE OF DISCRETION AND IN GRAVE VIOLATION OF DUE
PROCESS OF LAW IN ADMITTING THE AMENDED APPELLANTS BRIEF
FILED BY PRIVATE RESPONDENTS AND IN REQUIRING THE PETITIONER
AS APPELLEE TO FILE HIS APPELLEES BRIEF;
(4) WITHOUT DUE PROCESS OF LAW WHEN IT RESOLVED TO HAVE THE
APPEAL OF THE APPELLANT PRIVATE RESPONDENTS DEEMED
SUBMITTED FOR DECISION WITHOUT BENEFIT OF APPELLEES BRIEF.[20]
Simply put, the following are the issues presented before this Court for resolution: (1)
whether or not the appellate court erred in taking cognizance of the appeal; and (2) whether
or not the appellate court erred or committed grave abuse of discretion when it considered
the appeal as submitted for decision without petitioners brief.
On the first issue, petitioner contends that the decisions of the trial court in Civil Case
No. 6480 promulgated on May 14, 1996 and June 2, 1997 had become final and executory
as to private respondent Estelita Batungbacal. This is because Estelita never appealed the
partial judgment promulgated on May 14, 1996. In fact, there has been a partial execution of
said judgment with notice to and without objection from private respondent spouses. As
regards the decision dated June 2, 1997, petitioner contends that the same had become final
for failure to file the notice of appeal within 15 days, counted from the time counsel of record
for private respondent spouses received a copy on June 6, 1997 and not from the time
Estelita received a copy on June 10, 1997. Petitioner points to Section 2 of Rule 13 of the
Rules of Court and argues that since the trial court never ordered that service of the judgment
be made upon Estelita, she was not entitled to service of the judgment. The fact that she
received a copy of the judgment separately from her counsel cannot prejudice the legal
consequences arising out of prior receipt of copy of the decision by her counsel. It was thus
clear error for the Court of Appeals to accept Estelitas argument that the reglementary period
commenced not from receipt of a copy of the decision by counsel of record but from the time
she received a copy of the decision. The appeal having been filed out of time, the Court of
Appeals did not have jurisdiction to entertain the appeal of Estelita.
Petitioner also assails the appellants brief for certain formal defects. As pointed out in
his motion to dismiss filed before the public respondent, there are no page references to the
record in the statements of the case and of the facts in the appellants brief submitted by
private respondents. Petitioner asserts that while there are many pleadings and orders
mentioned in said statements, only the decision dated June 2, 1997 is cited, and the citation
is limited only to the particular page or pages in said decision where the citation or quotation
is taken, without any reference to the pages in the record where the decision can be
found. Neither is there reference to the pages in the record where the particular cited or
quoted portions of the decision can be found.
Petitioner likewise alleges that the authorities relied upon in the appellants brief of
private respondents are also not cited by the page on which the citation is found, as required
in Sec. 13 (f) of Rule 44 of the Rules of Court. Page references to the record are also required
in Section 13, paragraphs (c), (d) and (f) of Rule 44 and absence thereof is a ground for
dismissal of the appeal, pursuant to Sec. 1 (f) of Rule 50 of the Rules of Court. Petitioner also
harps on the failure of private respondents to furnish petitioner with two copies of the original
appellants brief, to submit proof of service of two copies of the brief on the appellee, and to
furnish the petitioner with two copies of the amended appellants brief as required by the
Rules of Court. Additionally, petitioner asserts that the failure of private respondents to
append copies of the appealed decisions to their appellants brief constitutes a violation of
the Internal Rules of the Court of Appeals and is likewise a ground for dismissal under Section
1 of Rule 50 of the Rules of Court.
Lastly, petitioner contends that the virtual admission into the record by the respondent
court of the amended appellants brief of the private respondents under the resolution dated
January 13, 1999 and its corresponding action to require the petitioner to respond thereto,
constitute grave abuse of discretion and blatant disregard of due process of law because the
amended brief was filed without leave of court.
Private respondents, for their part, argue that the resolutions being assailed by petitioner
are interlocutory in character because the Court of Appeals still has to decide the appeal on
the merits; hence, certiorari does not lie in his favor. Private respondents allege that petitioner
has another adequate and speedy remedy, i.e., to file his brief raising all issues before the
Court of Appeals. Once the appeal is resolved on the merits, all proper issues may be
elevated to the Supreme Court. An order denying a motion to dismiss being merely
interlocutory, it cannot be the basis of a petition for certiorari. The proper remedy is to appeal
in due course after the case is decided on the merits.
We find the petition devoid of merit.
On the first issue, we find that the Court of Appeals did not act without jurisdiction in
entertaining the appeal filed by private respondent Estelita Batungbacal. Contrary to
petitioners apparent position, the judgments rendered by the trial court in this case are not
several judgments under the Rules of Court so that there would be multiple periods of finality.
A several judgment is proper only when the liability of each party is clearly separable
and distinct from that of his co-parties, such that the claims against each of them could have
been the subject of separate suits, and judgment for or against one of them will not
necessarily affect the other.[21] Where a common cause of action exists against the
defendants, as in actions against solidary debtors, a several judgment is not proper. In this
case, private respondents are sued together under a common cause of action and are sought
to be held liable as solidary debtors for a loan contracted by Estelita. This is the clear import
of the allegation in the complaint that the proceeds of the loan benefited the conjugal
partnership.
Thus, between the two judgments rendered by the trial court, there could only be one
judgment that finally disposes of the case on the merits. Receipt of notice of this final
judgment marks the point when the reglementary period is to begin running. In this case, that
judgment is the decision[22] rendered by the trial court on June 2, 1997 and it is only from the
date of notice of this decision that the reglementary period began to run. The partial judgment
dated May 14, 1996 was rendered only with respect to one issue in the case and is not the
final and appealable order or judgment that finally disposes of the case on the merits. [23] It
must, therefore, only be appealed together with the decision dated June 2, 1997.
A final order is that which gives an end to the litigation. [24] When the order or judgment
does not dispose of the case completely but leaves something to be done upon the merits, it
is merely interlocutory.[25] Quite obviously, the partial judgment ordering Estelita to pay
petitioner is an interlocutory order because it leaves other things for the trial court to do and
does not decide with finality the rights and obligations of the parties. Specifically, at the time
the partial judgment was rendered, there remained other issues including whether the
husband Avelino had any liability under Article 121 of the Family Code.However, as the
partial judgment disposed of one of the issues involved in the case, it is to be taken in
conjunction with the decision dated June 2, 1997.Together, these two issuances form one
integrated decision.
 The question now is when the period to appeal should actually commence, from June
6, 1997, as petitioner contends; or from June 10, 1997, as private respondent Estelita
Batungbacal claims? We hold that the period began to run on June 6, 1997 when counsel for
private respondents received a copy of the decision dated June 2, 1997. When a party is
represented by counsel of record, service of orders and notices must be made upon said
attorney and notice to the client and to any other lawyer, not the counsel of record, is not
notice in law.[26] The exception to this rule is when service upon the party himself has been
ordered by the court.[27] In this case, it does not appear that there was any substitution of
counsel or that service upon private respondent Estelita Batungbacal had been specifically
ordered by the trial court; hence, the counsel of record for the private respondents is
presumed to be their counsel on appeal and the only one authorized to receive court
processes. Notice of the judgment upon such counsel, therefore, was notice to the clients for
all legal intents and purposes.
Private respondents appeal had been taken within the reglementary period since
Avelino Batungbacal had filed a notice of appeal on June 19, 1997 or 13 days from their
counsels receipt of the decision on June 6, 1997. Respondent spouses having been jointly
sued under a common cause of action, an appeal made by the husband inures to the benefit
of the wife. The notice of appeal filed by Estelita was a superfluity, the appeal having been
perfected earlier by her husband.
We come now to petitioners contention that the appellants brief suffers from fatal
defects.
Worth stressing, the grounds for dismissal of an appeal under Section 1 of Rule 50 [28] of
the Rules of Court are discretionary upon the Court of Appeals.This can be seen from the
very wording of the Rules which uses the word may instead of shall. This Court has held
in Philippine National Bank vs. Philippine Milling Co., Inc.[29] that Rule 50, Section 1 which
provides specific grounds for dismissal of appeal manifestly confers a power and does not
impose a duty. What is more, it is directory, not mandatory.[30] With the exception of Sec.
1(b), the grounds for the dismissal of an appeal are directory and not mandatory, and it is not
the ministerial duty of the court to dismiss the appeal.[31] The discretion, however, must be a
sound one to be exercised in accordance with the tenets of justice and fair play having in
mind the circumstances obtaining in each case.[32]
The Court of Appeals rightly exercised its discretion when, in denying petitioners motion
to dismiss, it ruled that the citations contained in the appellants brief were in substantial
compliance with the rules. Where the citations found in the appellants brief could sufficiently
enable the appellate court to locate expeditiously the portions of the record referred to, there
is substantial compliance with the requirements of Section 13(c) and (d), Rule 46 of the Rules
of Court. Such determination was properly within the appellate courts discretion. Nothing in
the records indicate that it was exercised capriciously, whimsically, or with a view of
permitting injury upon a party litigant. For the same reasons, we hold that the respondent
Court of Appeals also did not err when it did not dismiss the appeal based on the allegation
that appellants brief failed to comply with the internal rules of said court.
However, the Court of Appeals erred in requiring petitioner to file the appellees brief in
response to the amended appellants brief. Note that the amended brief was filed without the
proper motion for leave to do so and corresponding order from the respondent court. Even
more significant, it was filed beyond the extensions of time granted to appellants. The
discretion in accepting late briefs conferred upon respondent court which this Court applied
in the cases of Maqui vs. CA[33] and Vda. de Haberer vs. CA,[34] finds no application under
the present circumstances because, unlike in these two cases, here no valid reason was
advanced for the late filing of the amended brief. While the amended brief[35] might contain
no substantial and prejudicial changes, it was error for the respondent court to accept the
amended brief as filed and then require petitioner to file appellees brief because admittedly
the amended brief was filed beyond August 31, 1998, the last period of extension granted to
private respondents.
On the second issue, we hold that the Court of Appeals did not commit grave abuse of
discretion in considering the appeal submitted for decision. The proper remedy in case of
denial of the motion to dismiss is to file the appellees brief and proceed with the
appeal. Instead, petitioner opted to file a motion for reconsideration which, unfortunately,
was pro forma. All the grounds raised therein have been discussed in the first resolution of
the respondent Court of Appeals. There is no new ground raised that might warrant reversal
of the resolution. A cursory perusal of the motion would readily show that it was a
near verbatim repetition of the grounds stated in the motion to dismiss; hence, the filing of
the motion for reconsideration did not suspend the period for filing the appellees
brief. Petitioner was therefore properly deemed to have waived his right to file appellees brief.
WHEREFORE, the petition is DENIED. The resolutions dated January 13, 1999 and
April 19, 1999 of the Court of Appeals in CA-G.R. CV No. 57989 are AFFIRMED, and the
Court of Appeals is ordered to proceed with the appeal and decide the case with dispatch. No
pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, De Leon, Jr., and Corona, JJ., concur.