1

[G.R. NOS. 138701-02 : October 17, 2006]

SPOUSES ROQUE YU, SR. and ASUNCION YU and LEYTE LUMBER YARD &
HARDWARE CO., INC., Petitioners, v. BASILIO G. MAGNO CONSTRUCTION AND
DEVELOPMENT ENTERPRISES, INC. and THE ESTATE OF BASILIO G.
MAGNO, Respondents.

DECISION

GARCIA, SR., J.:

In this Petition for Review under Rule 45 of the Rules of Court, the spouses Roque Yu,
Sr. and Asuncion Yu, with co-petitioner Leyte Lumber Yard & Hardware, Co., Inc.,
(Leyte Lumber) assail and seek to set aside the consolidated Decision1 dated October
20, 1998 of the Court of Appeals (CA) inCA-G.R. CV Nos. 43714 and 43715, as
reiterated in its Resolution2 of May 11, 1999, denying the petitioners' motion for
reconsideration. CA-G.R. CV No. 43714 is an appeal by the spouses Roque Yu, Sr. and
Asuncion Yu from the decision of the Regional Trial Court (RTC) of Tacloban City in its
Civil Case No. 5823, while CA-G.R. CV No. 43715 is an appeal taken by Leyte Lumber
Yard from the decision of the same RTC in its Civil Case No. 5822.

The assailed CA decision holds petitioner Leyte Lumber liable to the herein respondents
in Civil Case No. 5822 for the amount of P631,235.61 with interest, and, on the same
breath, holds the respondents liable to petitioner spouses Roque Yu, Sr. and Asuncion
Yu in Civil Case No. 5823 in the amount of P625,000.00 with interest, and P50,000.00
as and by way of attorney's fees.

The facts:

The spouses Roque Yu, Sr. and Asuncion Yu are the controlling stockholders of Leyte
Lumber, a business enterprise engaged in the sale of lumber, building and electrical
supplies and other construction materials. During his lifetime, Engr. Basilio G. Magno
(Magno) entered into a verbal agreement with Leyte Lumber through Roque Yu, Sr.,
whereby the latter agreed to supply Magno with building materials he may need in his
construction business. The success of Magno's business gave birth to the Basilio G.
Magno Construction and Development Enterprises, Inc. (BG Magno).

Owing to this fruitful relationship, the two (Roque Yu, Sr. and Magno) entered into a
joint venture, the Great Pacific Construction Company (GREPAC), with Yu as President
and Magno as Vice President.3

Magno, for what he obtained from Leyte Lumber, paid either in cash or by check. The
relationship between Yu and Magno began in 1975 and continued until Magno's death
on August 21, 1978.4

By the time the business relationship between Yu and Magno was coming to an end,
the respondents allege that the parties have dealt with each other to the amount of at
least P7,068,000.00.5

On January 30, 1979, in the RTC of Tacloban City, the petitioners instituted two (2)
separate complaints for sums of money with damages and preliminary attachment
against the respondents. One was Civil Case No. 5822,6 raffled to Branch 8 of the
court, instituted by Leyte Lumber against BG Magno and the Estate of Basilio Magno,
to collect on the principal amount of P1,270,134.87 for construction materials claimed
 2

to have been obtained on credit by BG Magno, and the other was Civil Case No.
5823,7 raffled to Branch 6, filed by the Yu spouses against BG Magno and the Estate of
Basilio Magno, to collect upon loans and advances (P3,575,000.00) allegedly made by
the spouses to BG Magno.

As defendants in Civil Case No. 5823, the respondents moved to dismiss the case on
the ground that the claims must be pursued against the estate of the deceased Magno.
The motion was denied, and eventually the estate of Magno was dropped as party-
defendant.

On the other hand, in Civil Case No. 5822, during the pretrial conference, the
petitioners, as plaintiffs in that case, proposed that a commissioner be appointed. The
respondents as defendants in the case interposed no objections, and so Atty. Romulo
Tiu was appointed and tasked with the duty to examine and make a detailed report on
the documents and books of account of the parties to determine the nature and extent
of their respective claims and liabilities.8 Atty. Tiu was later replaced by Mr. Uldarico
Quintana, and finally by Mr. Ernesto C. Silvano, who is a lawyer and an accountant9by
profession.

The commissioner prepared a summary of account receivables10 and submitted three

reports: the first, dated November 1, 1980; the second, dated February 19, 1981; and
the third, dated March 29, 1982.11 To these reports the parties submitted their
respective comments and objections.

During trial, the petitioners presented in Civil Case No. 5822 before Branch 8 three
witnesses, namely: petitioner Roque Yu, Sr., himself, Atty. Ernesto C. Silvano (the
commissioner) and Yao Ping Chan, cashier of Consolidated Bank and Trust Co., who
testified merely on the circumstances surrounding specific checks that were issued
during the course of the transactions between the parties. For their part, the
respondents offered two witnesses: the widow Perpetua Magno and commissioner
Silvano.

As regards Civil Case No. 5823 before Branch 6, the petitioners presented three
witnesses: Roque Yu, Sr., Roque Yu, Jr., and senior bookkeeper Eduardo de Veyra of
the Tacloban Branch of the United Coconut Planters Bank. For their part, the
respondents did not present a single witness, but adopted their evidence presented in
Civil Case No. 5822. They did not, however, make a formal offer of their evidence in
both cases.

On June 17, 1993, Branch 8 of the court rendered its decision12 in Civil Case No. 5822,
the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiff:

1. Dismissing the complaint;

2. Declaring that defendant had made overpayment to the plaintiff in the sum of
P620,239.61;

3. Ordering the plaintiff to return to the defendant the amount of P620,239.61 with
interest of 12% per annum from the date hereof until fully paid;
 3

4. Ordering the plaintiff to pay defendant the sum of P200,000.00 for exemplary
damages;

5. Ordering the plaintiff to pay defendant the sum of P50,000.00 for attorney's fees
and litigation expenses; andcralawlibrary

6. Ordering plaintiff to pay the costs of this suit.

SO ORDERED.

Also, on the same date - June 17, 1993 - Branch 6 rendered its decision13 in Civil Case
No. 5823, thefallo of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiffs:

1. Dismissing the plaintiffs' complaint;

2. Declaring that defendant had made overpayments to the plaintiffs in the sum of
P1,602,625.52;

3. Ordering plaintiffs to return to defendant the sum of P1,602,625.52 with 12%

interest per annum from the date hereof until fully paid;

4. The Writ of Attachment is hereby ordered immediately dissolved;

5. Ordering the plaintiffs to pay defendant the sum of P200,000.00 moral and
exemplary damages;

6. Ordering the plaintiffs to pay defendant P100,000.00 attorney's fees and litigation
expenses;

7. Ordering plaintiffs to pay the costs of this suit.

SO ORDERED.

The two separate decisions of even date were penned by Judge Getulio M. Francisco,
the presiding judge of Branch 6 to which only Civil Case No. 5823 was raffled. In other
words, Judge Francisco of Branch 6 rendered the decision in Civil Case No. 5822 earlier
raffled to and heard by Branch 8 of which he was not the presiding judge. The parties
did not move for a reconsideration of the two decisions nor did they call the attention
of Judge Francisco on the absence of an order for consolidation of the two cases.
Instead, they directly interposed their respective appeals to the CA.

In the CA, the two cases on appeal, docketed as CA-G.R. CV Nos. 43714 (for Civil Case
No. 5823) and 4371514 (for Civil Case No. 5822), were consolidated.

On October 20, 1998, the CA rendered its questioned consolidated

decision15 dispositively reading, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

In Civil Case No. 5822, the appealed decision is MODIFIED by declaring that
defendant B.G. Magno Construction and Development Enterprises, Inc., made an
overpayment in the amount of P631,235.61, instead of P620,239.61 as found by the
 4

court a quo, and ordering plaintiff to return said amount to defendant, with interest of
12% per annum from promulgation hereof until fully paid, and by DELETING the
award of exemplary damages in the sum of P200,000.00 in favor of defendant. Thus
modified, the judgment below is AFFIRMED in all other respects.

In Civil Case No. 5823, the appealed decision is REVERSED and SET ASIDE.
Accordingly, defendant B.G. Magno Construction and Development Enterprises, Inc. is
ordered to pay plaintiffs the sum of P625,000.00, with 12% interest per annum from
promulgation hereof until fully paid, and the further sum of P50,000.00 by way of
attorney's fees, plus costs of suit.

SO ORDERED.

With their motion for reconsideration having been denied by the CA through its
Resolution of May 11, 1999, the petitioners are now with this Court via the present
recourse, submitting the following arguments for our consideration:

A. Re: C.A.-G.R. CV No. 43714: (Civil Case No. 5823)

1. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO EXCLUDE

EVIDENCE OFFERED TO RTC BRANCH 8, BUT NOT TO BRANCH 6, OF WHICH EVIDENCE
RTC BRANCH 6 IMPROPERLY TOOK JUDICIAL NOTICE.

2. ASSUMING FOR THE SAKE OF ARGUMENT THAT RTC BRANCH 6 COULD TAKE
JUDICIAL NOTICE OF EVIDENCE NOT OFFERED TO IT, NONETHELESS, SUCH
EVIDENCE SHOW THAT RESPONDENT B.G. MAGNO IS LIABLE TO PETITIONERS FOR
P3,675,000.00.

B. Re: C.A.-G.R. CV No. 43715: (Civil Case No. 5822)

1. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING THE DECISION

OF RTC BRANCH 6 BECAUSE THE LATTER HAD NO JURISDICTION OVER CIVIL CASE
NO. 5822 WHICH WAS TRIED IN ITS ENTIRETY BY RTC BRANCH 8.

2. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING THE DECISION

OF RTC BRANCH 6 BECAUSE BASED ON EVIDENCE PRESENTED TO RTC BRANCH 8, NO
COURT COULD HAVE DECIDED IN FAVOR OF RESPONDENTS.

In sum, the petitioners question, first, the propriety of the presiding judge of Branch 6
rendering a decision in a case filed and heard in Branch 8. They claim that Branch 6
had no jurisdiction to decide Civil Case No. 5822 pending in Branch 8 in the absence of
a motion or order of consolidation of the two cases; second, Branch 6 erred in
considering the evidence presented in Branch 8; and third, the preponderance of
evidence in both cases warrants a resolution of the cases in their favor.

The respondents, on the other hand, hold steadfast to the CA's finding of overpayment
on their part, and that Branch 6 had jurisdiction to render a decision in Civil Case No.
5822 of Branch 8 since the circumstance that the judge who penned the decision in
both cases did not hear the other case in its entirety is not a compelling reason to
jettison his findings and conclusions.16

On the issue of Branch 6 taking judicial notice of the evidence presented in Branch 8,
the respondents argue that there was a previous agreement of the parties with respect
to the same.
 5

On the question of the propriety of Judge Francisco of Branch 6 formulating the

decision in Civil Case No. 5822 which was pending and tried in Branch 8, we declare
that there was nothing irregular in the procedure taken. The records show that there
appears to have been a previous agreement to either transfer or consolidate the two
cases for decision by the presiding judge of Branch 6. As found by the CA:

'although Civil Case No. 5822 was raffled to and tried in Branch 8', the court a quo
issued joint orders dated February 16, 1993 and September 10, 1993 in Civil Case Nos.
5822 and 5823 Recognizing the apparent transfer of Civil Case No. 5822 to the court a
quo, appellants' [petitioners'] counsel filed his formal appearance dated October 20,
1993

with Branch 6 There is therefore no basis to appellants' contention that the court a quo
is devoid of authority to decide Civil Case No. 5822.17

Indeed, when the respondents filed a Motion to Lift, Dissolve and Quash the Writs of
Attachment with Branch 6 on January 20, 1993, the caption thereof indicated the
docket numbers of both cases.18Likewise, on October 29, 1993, when the petitioners'
new counsel entered his Formal Appearance, in the caption thereof was also written
the docket numbers of both cases.19 Petitioners' previous counsel of longstanding
(whose representation dates back to the filing of the two complaints in 1979) filed his
Motion to Withdraw as Counsel on October 30, 1993, and the caption thereof similarly
indicated the docket numbers of both cases.20 Subsequent orders of the court which
emanated from Branch 6 also bear, in the caption thereof, the titles and docket
numbers of both cases.21 In other words, as early as six months prior to the
promulgation of Judge Francisco's decisions in the two (2) cases, there appears to have
been a transfer or consolidation of said cases in Branch 6 and the parties knew of it,
albeit the actual date when the two cases were consolidated or transferred does not
appear on record. Nonetheless, the fact remains that no opposition or objection in any
manner was registered by either of the parties to the same, thereby evincing their
consent thereto. It is, therefore, already too late in the day for the petitioners to
question the competence of Judge Francisco to render the separate decisions in the
two cases. To reecho what this Court has said before:

Petitioners may not now question the transfer or consolidation of the two cases on
appeal, for they knew of it and did not question the same in the court below. They may
not now make a total turn-around and adopt a contrary stance; more so when the
judgment issued is adverse to their cause.22

The next logical questions are: Is the consolidation of the two cases (Civil Case Nos.
5822 and 5823) a procedural step which the court a quo could have properly taken? Is
it a remedy available within the context of the surrounding circumstances?cralawlibrary

We answer both questions in the affirmative. The two cases were filed just a few
months apart;23they involve simple cases of collection of sums of money between
identical parties and no other; the respondents (as defendants therein) claim, in both
cases, essentially the same defense, which is overpayment; they cover the same
period of transacting continuous business that spans four years; they relate to simple
issues of fact that are intimately related to each other; they entailed the presentation
of practically identical evidence and witnesses; in fact, a broad part of the evidence
and testimonies in one case was totally adopted or reproduced in the other by either or
both parties. And the trial court, being multi-sala courts, its Branches 6 and 8
possessed jurisdiction to try either or both cases on their own.
 6

A court may order several actions pending before it to be tried together where they
arise from the same act, event or transaction, involve the same or like issues, and
depend largely or substantially on the same evidence, provided that the court has
jurisdiction over the case to be consolidated and that a joint trial will not give one
party an undue advantage or prejudice the substantial rights of any of the parties
(citing 1 CJS, 1347). Consolidation of actions is expressly authorized under Section 1,
Rule 31 of the Rules of Court:

"Section 1. Consolidation. - When actions involving a common question of law or fact

are pending before the court, it may order a joint hearing or trial of any or all the
matters in issue in the actions; it may order all the actions consolidated; and it may
make such orders concerning proceedings therein as may tend to avoid unnecessary
costs or delay."

The obvious purpose of the above rule is to avoid multiplicity of suits, to guard against
oppression and abuse, to prevent delays, to clear congested dockets, to simplify the
work of the trial court; in short the attainment of justice with the least expense and
vexation to the parties litigants (citing 1 CJS 1342-1343).

Consolidation of actions is addressed to the sound discretion of the court, and its action
in consolidating will not be disturbed in the absence of manifest abuse of discretion. In
the instant case, respondent judge did not abuse his discretion in ordering the joint
trial of the two cases. There is no showing that such joint trial would prejudice any
substantial right of petitioner. Neither does the latter question the court's jurisdiction
to try and decide the two cases.24

Likewise, it became apparent that, after the commissioner filed his reports in court and
the parties their comments thereto, but before trial could commence, the claims and
defenses of the parties in Civil Case No. 5823 are covered by and may be threshed out
by a consideration of the evidence presented in Civil Case No. 5822 as well, which
consisted mainly of the reports of the commissioner. Based on the commissioner's
reports in the case pending in Branch 8 (Civil Case No. 5822), the petitioners' claims,
including those in Branch 6, appear to have been paid; indeed, this is in essence the
defense of the respondents as set forth in their Answers to the two complaints. Yet,
despite all these, neither of the lawyers for the parties sought a consolidation of
the two cases, which would otherwise have been mandatory.

When two or more cases involve the same parties and affect closely related subject
matters, they must be consolidated and jointly tried, in order to serve the best
interests of the parties and to settle expeditiously the issues involved. Consolidation,
when appropriate, also contributes to the declogging of court dockets'

Inasmuch as the binding force of the Dealership Agreement was put in question, it
would be more practical and convenient to submit to the Iloilo court all the incidents
and their consequences. The issues in both civil cases pertain to the respective
obligations of the same parties under the Dealership Agreement. Thus, every
transaction as well as liability arising from it must be resolved in the judicial forum
where it is put in issue. The consolidation of the two cases then becomes
imperative to a complete, comprehensive and consistent determination of all these
related issues.

Two cases involving the same parties and affecting closely related subject
mattersmust be ordered consolidated and jointly tried in court, where the earlier
 7

case was filed. The consolidation of cases is proper when they involve the resolution of
common questions of law or facts.

Indeed, upon the consolidation of the cases, the interests of both parties in the two
civil cases will best be served and the issues involved therein expeditiously settled.
After all, there is no question on the propriety of the venue in the Iloilo
case.25 (Emphasis supplied)cralawlibrary

Consolidation of cases, when proper, results in the simplification of proceedings, which

saves time, the resources of the parties and the courts, and a possible major
abbreviation of trial. It is a desirable end to be achieved, within the context of the
present state of affairs where court dockets are full and individual and state finances
are limited. It contributes to the swift dispensation of justice, and is in accord with the
aim of affording the parties a just, speedy, and inexpensive determination of their
cases before the courts. Another compelling argument that weighs heavily in favor of
consolidation is the avoidance of the possibility of conflicting decisions being rendered
by the courts in two or more cases which would otherwise require a single judgment.26

In fine, we declare the consolidation of the two cases to have been made with
regularity. To quote what the Court has said in an earlier case:

The ordered consolidation of cases, to our mind, crystallizes into reality the thinking of
our predecessors that:

". . . The whole purpose and object of procedure is to make the powers of the court
fully and completely available for justice. The most perfect procedure that can be
devised is that which gives opportunity for the most complete and perfect exercise of
the powers of the court within the limitations set by natural justice. It is that one
which, in other words, gives the most perfect opportunity for the powers of the court to
transmute themselves into concrete acts of justice between the parties before it. The
purpose of such a procedure is not to restrict the jurisdiction of the court over the
subject matter, but to give it effective facility in righteous action. It may be said in
passing that the most salient objection which can be urged against procedure today is
that it so restricts the exercise of the court's powers by technicalities that part of its
authority effective for justice between the parties is many times an inconsiderable
portion of the whole. The purpose of procedure is not to thwart justice. Its proper aim
is to facilitate the application of justice to the rival claims of contending parties. It was
created not to hinder and delay but to facilitate and promote the administration of
justice. It does not constitute the thing itself which courts are always striving to secure
to litigants. It is designed as the means best adapted to obtain that thing. In other
words, it is a means to an end. It is the means by which the powers of the court are
made effective in just judgments. When it loses the character of the one and takes on
that of the other the administration of justice becomes incomplete and unsatisfactory
and lays itself open to grave criticism."27

Having given their assent to the consolidation of Civil Case Nos. 5822 and 5823,
petitioners' other assignment of errors must fail. The evidence in each case effectively
became the evidence for both, and there ceased to exist any need for the deciding
judge to take judicial notice of the evidence presented in each case.

On the issue relative to the pecuniary liabilities of the parties in respect of their
corresponding claims and defenses, suffice it to state that this Court is not a trier of
facts. The findings of fact of the CA, supported as they are by the evidence on record,
bind this Court.
 8

Prefatorily, we restate the time-honored principle that in petitions for review under
Rule 45 of the Rules of Court, only questions of law may be raised. It is not our
function to analyze or weigh all over again evidence already considered in the
proceedings below, our jurisdiction being limited to reviewing only errors of law that
may have been committed by the lower court. The resolution of factual issues is the
function of lower courts, whose findings on these matters are received with respect. A
question of law which we may pass upon must not involve an examination of the
probative value of the evidence presented by the litigants.28

We disagree, however, with the CA in holding the petitioners liable to the respondents
in the amount of P142,817.27 representing the unpaid account of GREPAC for filling
materials delivered to it by BG Magno. As it is, GREPAC possesses a distinct corporate
personality separate from Leyte Lumber whom BG Magno sought to be liable therefor.
GREPAC's own liabilities may not be made chargeable against petitioner Leyte Lumber
as the CA ruled after piercing the corporate veil of GREPAC. To our mind, the situation
does not call for a piercing of GREPAC's corporate veil since there is no clear and
convincing evidence showing fraud and illegality in the formation and operation of
GREPAC. Quite the contrary, what has been proved suggests that GREPAC was a
product of the close business and personal ties that bound Roque Yu, Sr., and Magno
during better times. It was a bona fide joint venture between the two.

We cannot help but discern how the respondents were put to expense by the
petitioners' mishandling of the cases in the trial courts. First of all is the petitioners'
filing of two (2) separate actions of simple collection cases which were ultimately found
to revolve essentially around the same factual milieu. And, as soon as it became
apparent that the two cases were inexorably linked, it became the duty of the
petitioners to seek a consolidation of the cases a quo. Yet they did not; instead, they
took advantage of every perceived technicality, all the way to this Court, in order to
defeat the respondents' case. They vigorously opposed the adoption by the
respondents of the latter's evidence in the other branch of the court, thereby
advancing misleading arguments for consolidation that had already occurred with their
visible consent. They attribute error to the trial court's "taking judicial notice" of the
respondents' evidence in the other court, when it no longer was a proper argument in
view of the resultant consolidation. We do not approve of the practice of counsel
employing subtlety, advancing gratuitous arguments that tend only to muddle the
issues, and seizing upon every opportunity to win the case for his client, when in the
first place the confusion in the proceedings was precipitated by his failure to act
accordingly, as counsel for the plaintiffs, in seeking the proper consolidation of the two
cases. The result is a simple collection case that has remained pending for twenty-
seven years now.

Likewise, what the petitioners did in filing the two cases in different branches of the
court may be held to be tantamount to forum shopping which not only put the
respondents to additional unnecessary expense, but wasted the precious time of the
courts as well.

Forum-shopping is a deplorable practice of litigants in resorting to two different fora for

the purpose of obtaining the same relief, to increase his or her chances of obtaining a
favorable judgment. What is pivotal to consider in determining whether forum
shopping exists or not is the vexation caused to courts and the parties-litigants by a
person who asks appellate courts and/or administrative entities to rule on the same
related causes and/or to grant the same or substantially the same relief, in the process
creating the possibility of conflicting decisions by the different courts or fora upon the
same issues.29
 9

Finally, we admonish RTC Branches 6 and 8 for the manner in which the case before
each sala was handled and conducted. We note the lack of an order of consolidation in
the records of the cases. As to Judge Francisco's two separate decisions, we do not
perceive any advantage or benefit derived from promulgating two separate decisions
on the same day in the two cases that have already been consolidated into one.
Although we recognize no ill intent or attribute no deliberate irregularity to the same,
such demeanor can only breed suspicion and promote distrust for our judicial
institutions. A judge should avoid every situation where the propriety of his conduct
would be placed in question. His official acts must at all times be above reproach,30 and
they must be consistent with the proceedings taken in his court.

WHEREFORE, judgment is hereby rendered MODIFYING the assailed CA decision

by SETTING ASIDE and DELETING the award of the respondents' counterclaim in the
amount of P142,817.27 in Civil Case No. 5822; REITERATING the P50,000.00 award
of attorneys' fees and litigation expenses in favor of the respondents in Civil Case No.
5822; and DELETING the award of attorneys' fees to the petitioners in Civil Case No.
5823. In all other respects, the assailed decision is AFFIRMED.

Costs against the petitioners.

SO ORDERED.
 10

[G.R. No. 152375 : December 16, 2011]

REPUBLIC OF THE PHILIPPINES, PETITIONER, VS SANDIGANBAYAN (FOURTH

DIVISION), JOSE L. AFRICA (SUBSTITUTED BY HIS HEIRS), MANUEL H.
NIETO, JR., FERDINAND E. MARCOS (SUBSTITUTED BY HIS HEIRS), IMELDA R.
MARCOS, FERDINAND R. MARCOS, JR., JUAN PONCE ENRILE, AND
POTENCIANO ILUSORIO (SUBSTITUTED BY HIS HEIRS), RESPONDENTS.

DECISION

BRION, J.:

Before us is the petition for certiorari[1] filed by the Republic of the Philippines
(petitioner) to set aside the February 7, 2002 resolution (2002 resolution)[2] of the
Sandiganbayan[3] denying the petitioner's Motion to Admit Supplemental Offer of
Evidence (Re: Deposition of Maurice V. Bane) (3rdmotion).cralaw

THE ANTECEDENTS

On July 22, 1987, the petitioner Republic of the Philippines, through the Presidential
Commission on Good Government (PCGG), filed a complaint (docketed as Civil Case
No. 0009) against Jose L. Africa, Manuel H. Nieto, Jr., Ferdinand E. Marcos, Imelda R.
Marcos, Ferdinand R. Marcos, Jr., Juan Ponce Enrile, and Potenciano Ilusorio
(collectively, the respondents) for reconveyance, reversion, accounting,
restitution, and damages before the Sandiganbayan. The petitioner alleged, inter
alia, that the respondents illegally manipulated the purchase of the major
shareholdings of Cable and Wireless Limited in Eastern Telecommunications
Philippines, Inc. (ETPI), which shareholdings respondents Jose Africa and Manuel Nieto,
Jr. held for themselves and, through their holdings and the corporations they
organized, beneficially for respondents Ferdinand E. Marcos and Imelda R. Marcos.[4]

Civil Case No. 0009 is the main case subject of the present petition. Victor Africa
(Africa), son of the late Jose L. Africa, was not impleaded in and so is plainly
not a party to Civil Case No. 0009.[5]

Civil Case No. 0009 spawned numerous incidental cases,[6] among them, Civil Case No.
0130.[7] The present respondents were not made parties either in Civil Case
No. 0130.

I. Civil Case No. 0130

In the August 7, 1991 PCGG-conducted ETPI stockholders meeting, a PCGG-controlled

 11

board of directors was elected. Later, the registered ETPI stockholders convened a
special stockholders meeting wherein another set of board of directors was elected. As
a result, two sets of ETPI board and officers were elected.[8]

Thereafter, Africa, as an ETPI stockholder, filed a petition for certiorari, with prayer for
a temporary restraining order/preliminary injunction with the Sandiganbayan
(docketed as Civil Case No. 0130), seeking to nullify the August 5, 1991 and August
9, 1991 Orders of the PCGG. These Orders directed Africa:

[T]o account for his sequestered shares in ETPI and to cease and desist from
exercising voting rights on the sequestered shares in the special stockholder' meeting
to be held on August 12, 1991, from representing himself as a director, officer,
employee or agent of ETPI, and from participating, directly or indirectly[,] in the
management of ETPI.[9]

During the pendency of Africa's petition, Civil Case No. 0130, Africa filed a motion with
the Sandiganbayan, alleging that since January 29, 1988 the PCGG had been 'illegally
'exercising' the rights of stockholders of ETPI,'[10] especially in the election of the
members of the board of directors. Africa prayed for the issuance of an order for the
'calling and holding of [ETPI] annual stockholders meeting for 1992 under the [c]ourt's
control and supervision and prescribed guidelines.'[11]

In its November 13, 1992 resolution, the Sandiganbayan favored Africa's motion in this
wise:

WHEREFORE, it is ordered that an annual stockholders meeting of the [ETPI], for 1992
be held on Friday, November 27, 1992, at 2:00 o'clock in the afternoon, at the ETPI
Board Room, Telecoms Plaza, 7th Floor, 316 Gil J. Puyat Avenue, Makati, Metro Manila.
x x x The stockholders meeting shall be conducted under the supervision and control of
this Court, through Mr. Justice Sabino R. de Leon, Jr. [O]nly the registered owners,
their duly authorized representatives or their proxies may vote their corresponding
shares.

The following minimum safeguards must be set in place and carefully maintained until
final judicial resolution of the question of whether or not the sequestered shares of
stock (or in a proper case the underlying assets of the corporation concerned)
constitute ill-gotten wealth[.][12]

The PCGG assailed this resolution before this Court via a petition for certiorari docketed
as G.R. No. 107789[13] (PCGG's petition), imputing grave abuse of discretion on the
Sandiganbayan for holding, inter alia, that the registered stockholders of ETPI had the
right to vote.[14] In our November 26, 1992 Resolution, we enjoined the
Sandiganbayan from implementing its assailed resolution.

In the meantime, in an April 12, 1993 resolution, the Sandiganbayan ordered

the consolidation of Civil Case No. 0130, among others, with Civil Case No.
0009, with the latter as the main case and the former merely an incident.[15]

During the pendency of PCGG's petition (G.R. No. 107789), the PCGG filed with this
Court a 'Very Urgent Petition for Authority to Hold Special Stockholders' Meeting for
[the] Sole Purpose of Increasing [ETPI's] Authorized Capital Stock' (Urgent Petition). In
our May 7, 1996 Resolution, we referred this Urgent Petition to the Sandiganbayan for
reception of evidence and immediateresolution.[16] The Sandiganbayan included the
Urgent Petition in Civil Case No. 0130.[17]cralaw
 12

In the proceedings to resolve the Urgent Petition, the testimony of Mr. Maurice V. Bane
(former director and treasurer-in-trust of ETPI) was taken'“ at the petitioner's instance
and after serving notice of the deposition-taking on the respondents[18] '“ on October
23 and 24, 1996 by way of deposition upon oral examination (Bane deposition) before
Consul General Ernesto Castro of the Philippine Embassy in London, England.

Invoking Section 1, Rule 24 (of the old Rules of Court), purportedly allowing the
petitioner to depose Bane without leave of court, i.e., as a matter of right after
the defendants have filed their answer, the notice stated that '[t]he purpose of the
deposition is for [Bane] to identify and testify on the facts set forth in his affidavit[19] x
x x so as to prove the ownership issue in favor of [the petitioner] and/or establish
the prima facie factual foundation for sequestration of [ETPI's] Class A stock in support
of the [Urgent Petition].'[20] The notice also states that the petitioner shall use the Bane
deposition 'in evidence'¦ in the main case of Civil Case No. 0009.'[21] On the scheduled
deposition date, only Africa was present and he cross-examined Bane.

On December 13, 1996, the Sandiganbayan resolved the Urgent Petition by granting
authority to the PCGG (i) 'to cause the holding of a special stockholder' meeting of
ETPI for the sole purpose of increasing ETPI's authorized capital stock' and (ii) 'to vote
therein the sequestered Class 'A' shares of stock.'[22] Thus, a special stockholders
meeting was held, as previously scheduled, on March 17, 1997 and the increase in
ETPI's authorized capital stock was 'unanimously approved.'[23] From this ruling, Africa
went to this Court via a petition for certiorari[24] docketed as G.R. No. 147214
(Africa's petition).

We jointly resolved the PCGG's and Africa's petitions, and ruled:

This Court notes that, like in Africa's motion to hold a stockholders meeting (to elect a
board of directors), the Sandiganbayan, in the PCGG's petition to hold a stockholders
meeting (to amend the articles of incorporation to increase the authorized capital
stock), again failed to apply the two-tiered test. On such determination hinges the
validity of the votes cast by the PCGG in the stockholders meeting of March 17, 1997.
This lapse by the Sandiganbayan leaves this Court with no other choice but to remand
these questions to it for proper determination.

xxxx

WHEREFORE, this Court Resolved to REFER the petitions at bar to the Sandiganbayan
for reception of evidence to determine whether there is a prima facie evidence showing
that the sequestered shares in question are ill-gotten and there is an imminent danger
of dissipation to entitle the PCGG to vote them in a stockholders meeting to elect the
ETPI Board of Directors and to amend the ETPI Articles of Incorporation for the sole
purpose of increasing the authorized capital stock of ETPI.

The Sandiganbayan shall render a decision thereon within sixty (60) days from receipt
of this Resolution and in conformity herewith.

II. Civil Case No. 0009

Although Civil Case No. 0009 was filed on July 22, 1987, it was only on November 29,
1996 and March 17, 1997 that the first pre-trial conference was scheduled and
concluded.[25]
 13

In its Pre-Trial Brief[26] dated August 30, 1996, the petitioner offered to present the
following witnesses:

WITNESSES TO BE PRESENTED AND A BRIEF DESCRIPTION OF THEIR TESTIMONIES

(1) Maurice V. Bane '“ representative of Cable and Wireless Limited (C & W) at the
time ETPI was organized.

xxxx

(2) Mr. Manuel H. Nieto '“ x x x

(3) Ms. Evelyn Singson '“ x x x

(4) Mr. Severino P. Buan, Jr. '“ x x x

(5) Mr. Apolinario K. Medina - x x x

(6) Mr. Potenciano A. Roque '“ x x x

(7) Caesar Parlade - x x x

IIa. Motion to Admit the Bane Deposition

At the trial of Civil Case No. 0009, the petitioner filed a Motion[27] (1st motion), stating
that '“

1. In the hearings of the incidents of [Civil Case No. 0009], i.e., Civil Case Nos.
0048, 0050, 0130, 0146[28] the following witnesses were presented therein:

a. Cesar O.V. Parlade

b. Maurice Bane
c. Evelyn Singson
d. Leonorio Martinez
e. Ricardo Castro; and
f. Rolando Gapud

2. [The petitioner] wishes to adopt in [Civil Case No. 0009] their testimonies and
the documentary exhibits presented and identified by them, since their
testimonies and the said documentary exhibits are very relevant to prove the
case of the [petitioner] in [Civil Case No. 0009].

3. The adverse parties in the aforementioned incidents had the opportunity to

cross-examine them.

The respondents filed their respective Oppositions to the 1st motion;[29] in turn, the
petitioner filed a Common Reply[30] to these Oppositions.

On April 1, 1998, the Sandiganbayan[31] promulgated a resolution[32] (1998 resolution)

denying the petitioner's 1st motion, as follows:

Wherefore, the [petitioner's] Motion x x x is '“

 14

1. partly denied insofar as [the petitioner] prays therein to adopt the testimonies
on oral deposition of Maurice V. Bane and Rolando Gapud as part of its
evidence in Civil Case No. 0009 for the reason that said deponents
according to the [petitioner] are not available for cross-examination in
this Court by the [respondents]. (emphasis added)

2. partly Granted, in the interest of speedy disposition of this long pending case,
insofar as plaintiff prays therein to adopt certain/particular testimonies of Cesar
O. Parlade, Evelyn Singson, Leoncio Martinez, and Ricardo Castro and
documentary exhibits which said witnesses have identified in incident Civil Case
Nos. xxx 0130 xxx, subject to the following conditions :

1. xxx
2. xxx
3. That the said witnesses be presented in this Court so that they can be
cross-examined on their particular testimonies in incident Civil Cases xxx
[by the respondents].

IIb. Urgent Motion and/or Request for Judicial Notice

The petitioner did not in any way question the 1998 resolution, and instead
made its Formal Offer of Evidence on December 14, 1999.[33] Significantly, the
Bane deposition was not included as part of its offered exhibits. Rectifying the
omission, the petitioner filed an Urgent Motion and/or Request for Judicial
Notice[34] (2nd motion) dated February 21, 2000, with the alternative prayer that:

1. An order forthwith be issued re-opening the plaintiff's case and setting the
same for trial any day in April 2000 for the sole purpose of introducing additional
evidence and limited only to the marking and offering of the [Bane deposition]
which already forms part of the records and used in Civil Case No. 0130 x x x;

2. In the alternative, x x x the [Sandiganbayan] to take judicial notice of the facts

established by the [Bane deposition], together with the marked exhibits
appended thereto. [emphasis ours]

On August 21, 2000, the Sandiganbayan promulgated a resolution[35] (2000 resolution)

denying the petitioner's 2nd motion:

Judicial notice is found under Rule 129 which is titled 'What Need Not Be Proved.'
Apparently, this provision refers to the Court's duty to consider admissions made by
the parties in the pleadings, or in the course of the trial or other proceedings in
resolving cases before it. The duty of the Court is mandatory and in those cases where
it is discretionary, the initiative is upon the Court. Such being the case, the Court finds
the Urgent Motion and/or Request for Judicial Notice as something which need not be
acted upon as the same is considered redundant.

On the matter of the [Bane deposition], [its] admission is done through the
ordinary formal offer of exhibits wherein the defendant is given ample
opportunity to raise objection on grounds provided by law. Definitely, it is not
under Article (sic) 129 on judicial notice. [Emphasis ours]

On November 6, 2000 and on several dates thereafter, the respondents separately

filed their respective demurrers to evidence.[36] On the other hand, the petitioner
 15

moved for the reconsideration of the 2000 resolution, but was rebuffed by the
Sandiganbayan in its April 3, 2001 resolution[37] (2001 resolution).

IIc. Motion to Admit Supplemental Offer of

Evidence (Re: Deposition of Maurice Bane)

On November 16, 2001, the petitioner filed its 3rd Motion, seeking once more the
admission of the Bane deposition.[38] On February 7, 2002 (pending resolution of the
respondents' demurrers to evidence),[39] the Sandiganbayan promulgated the
assailed 2002 resolution,[40] denying the petitioner's 3rd motion. The
Sandiganbayan ruled:

But in the court's view, it is not really a question of whether or not plaintiff has already
rested its case as to obviate the further presentation of evidence. It is not even a
question of whether the non-appearing defendants are deemed to have waived their
right to cross-examine Bane as to qualify the admission of the deposition sans such
cross-examination. Indeed, We do not see any need to dwell on these matters in view
of this Court's Resolution rendered on April 1, 1998 which already denied the
introduction in evidence of Bane's deposition and which has become final in view of
plaintiff's failure to file any motion for reconsideration or appeal within the
15-day reglementary period. Rightly or wrongly, the resolution stands and for this
court to grant plaintiff's motion at this point in time would in effect sanction plaintiff's
disregard for the rules of procedure. Plaintiff has slept on its rights for almost two
years and it was only in February of 2000 that it sought to rectify its ineptitude by
filing a motion to reopen its case as to enable it to introduce and offer Bane's
deposition as additional evidence, or in the alternative for the court to take judicial
notice of the allegations of the deposition. But how can such a motion be granted when
it has been resolved as early as 1998 that the deposition is inadmissible. Without
plaintiff having moved for reconsideration within the reglementary period, the
resolution has attained finality and its effect cannot be undone by the simple
expedient of filing a motion, which though purporting to be a novel motion, is in
reality a motion for reconsideration of this court's 1998 ruling. [emphases ours]

The resolution triggered the filing of the present petition.

THE PETITION

The petitioner filed the present petition claiming that the Sandiganbayan committed
grave abuse of discretion:

I.

x x x IN HOLDING THAT ITS INTERLOCUTORY ORDER IN 1998 HAD BECOME

FINAL.

II.

x x x IN x x x REFUSING TO ADMIT THE BANE DEPOSITION '“WHICH WAS

ALREADY ADMITTED AS EVIDENCE IN AN INCIDENT CASE (CIVIL CASE NO.
0130) '“ AS PART OF PETITIONER'S EVIDENCE IN THE MAIN x x x CASE
(CIVIL CASE NO. 0009).

III.

x x x IN REFUSING TO ADMIT A HIGHLY RELEVANT AND IMPORTANT PIECE OF

 16

EVIDENCE FOR THE PETITIONER ON THE BASIS OF FLIMSY AND TENUOUS

TECHNICAL GROUNDS.

The petitioner[41] argues that the 1998 resolution of the Sandiganbayan is merely an
interlocutory order; thus, the petitioner's failure to question this 1998 resolution could
not have given it a character of 'finality' so long as the main case remains
pending.[42] On this basis, the petitioner concludes that the Sandiganbayan's denial of
its 3rd motion was plainly tainted with grave abuse of discretion.

On the issue of the Sandiganbayan's refusal (in its 2002 resolution) either to take
judicial notice of or to admit the Bane deposition as part of its evidence, the petitioner
asserts that Civil Case No. 0130 (where the Bane deposition was originally taken,
introduced and admitted in evidence) is but a 'child' of the 'parent' case, Civil Case No.
0009; under this relationship, evidence offered and admitted in any of the 'children'
cases should be considered as evidence in the 'parent' case.

Lastly, the petitioner claims that given the crucial importance of the Bane deposition,
the Sandiganbayan should not have denied its admission on 'flimsy grounds,'
considering that:

1. It was also already stated in the notice (of the taking of the Bane deposition)
that it would be used as evidence in Civil Case No. 0009. Notices having
been duly served on all the parties concerned, they must accordingly be deemed
to have waived their right to cross-examine the witness when they failed to
show up.

2. The Bane deposition was a very vital cog in the case of the petitioner relative to
its allegation that the respondents' interest in ETPI and related firms properly
belongs to the government.br>
3. The non-inclusion of the Bane deposition in the petitioner's formal offer of
evidence was obviously excusable considering the period that had lapsed from
the time the case was filed and the voluminous records that the present case has
generated.[43]

THE RESPONDENTS' COMMENTS

and THE PETITIONER'S REPLY

In the respondents' Comments[44] (filed in compliance with our Resolution of April

10, 2002[45]), they claim that the present petition was filed out of time - i.e., beyond
the 60-day reglementary period prescribed under Section 4, Rule 65 of the Rules of
Court.[46] This assertion proceeds from the view that the petitioner's 3rd motion, being
a mere rehash of similar motions earlier filed by the petitioner, likewise simply assails
the Sandiganbayan's 1998 resolution. Along the same line, they posit that the
petitioner's 3rd motion actually partakes of a proscribed third motion for
reconsideration of the Sandiganbayan's 1998 resolution.[47] They likewise assert, on
the assumption that the 1998 resolution is interlocutory in character, that the
petitioner's failure to contest the resolution by way ofcertiorari within the proper period
gave the 1998 resolution a character of 'finality.'

The respondents further claim that after a party has rested its case, the admission of a
supplemental offer of evidence requires the reopening of the case at the discretion of
the trial court; the Sandiganbayan simply exercised its sound discretion in refusing to
 17

reopen the case since the evidence sought to be admitted was 'within the knowledge of
the [petitioner] and available to [it] before [it] rested its case.'[48] The respondents
also advert to the belated filing of the petitioner's 3rdmotion '“ i.e., after the
respondents had filed their respective demurrers to evidence.

On the petitioner's claim of waiver, the respondents assert that they have not waived
their right to cross-examine the deponent; the Sandiganbayan recognized this right in
its 1998 resolution and the petitioner never questioned this recognition. They also
assert that the allegations in the Bane deposition cannot be a proper subject of judicial
notice under Rule 129 of the Rules of Court. The respondents lastly submit that the
Bane deposition is inadmissible in evidence because the petitioner failed to comply with
the requisites for admission under Section 47, Rule 130 of the Rules of Court.

In its Reply,[49] the petitioner defends the timeliness of the present petition by arguing
that a party may opt to wait out and collect a pattern of questionable acts before
resorting to the extraordinary remedy of certiorari. The petitioner stresses that it filed
the 3rd motion precisely because of the Sandiganbayan's 2000 resolution, which held
that the admission of the Bane deposition should be done through the ordinary formal
offer of evidence. Thus, the Sandiganbayan seriously erred in considering the
petitioner's 3rd motion as a proscribed motion for reconsideration. The petitioner
generally submits that the dictates of substantial justice should have guided the
Sandiganbayan to rule otherwise.

The petitioner also clarifies that it has not yet rested its case although it has filed a
formal offer of evidence. A party normally rests his case only after the admission of the
pieces of evidence he formally offered; before then, he still has the opportunity to
present further evidence to substantiate his theory of the case should the court reject
any piece of the offered evidence.[50]

The petitioner further maintains that the mere reasonable opportunity to cross-
examine the deponent is sufficient for the admission of the Bane deposition considering
that the deponent is not an ordinary witness who can be easily summoned by our
courts in light of his foreign residence, his citizenship, and his advanced age. The
petitioner asserts that Rule 24 (now Rule 23), and not Section 47, Rule 130, of the
Rules of Court should apply to the present case, as explicitly stated in the notice of the
deposition-taking.

To date, respondents Imelda Marcos and the heirs of Potenciano Ilusorio have yet to
file their respective comments on the petition. Given the time that had lapsed since we
required their comments, we resolve to dispense with the filing of these comments and
to consider this petition submitted for decision.

THE ISSUES

On the basis of the pleadings, we summarize the pivotal issues for our resolution, as
follows:

1. Whether the petition was filed within the required period.

2. Whether the Sandiganbayan committed grave abuse of discretion '“

i. In holding that the 1998 resolution has already attained finality;

ii. In holding that the petitioner's 3rd motion partakes of a prohibited motion
for reconsideration;
 18

iii. In refusing to re-open the case given the critical importance of the Bane
deposition to the petitioner's cause; and

iv. In refusing to admit the Bane deposition notwithstanding the prior

consolidation of Civil Case No. 0009 and Civil Case No. 0130.

3. Whether the Bane deposition is admissible under -

i. Rule 23, Section 4, par. (c) alone or in relation to Section 47, Rule 130 of
the Rules of Court; and

ii. The principle of judicial notice.

THE COURT'S RULING

We deny the petition for lack of merit.

I. Preliminary Considerations

I (a). The interlocutory nature of

the Sandiganbayan's 1998 resolution.

In determining the appropriate remedy or remedies available, a party aggrieved by a

court order, resolution or decision must first correctly identify the nature of the order,
resolution or decision he intends to assail.[51] In this case, we must preliminarily
determine whether the 1998 resolution is 'final' or 'interlocutory' in nature.

Case law has conveniently demarcated the line between a final judgment or order and
an interlocutory one on the basis of the disposition made.[52] A judgment or order is
considered final if the order disposes of the action or proceeding completely, or
terminates a particular stage of the same action; in such case, the remedy available to
an aggrieved party is appeal. If the order or resolution, however, merely resolves
incidental matters and leaves something more to be done to resolve the merits of the
case, the order is interlocutory[53] and the aggrieved party's remedy is a petition for
certiorari under Rule 65. Jurisprudence pointedly holds that:

As distinguished from a final order which disposes of the subject matter in its entirety
or terminates a particular proceeding or action, leaving nothing else to be done but to
enforce by execution what has been determined by the court, an interlocutory order
does not dispose of a case completely, but leaves something more to be adjudicated
upon. The term 'final' judgment or order signifies a judgment or an order which
disposes of the case as to all the parties, reserving no further questions or directions
for future determination.

On the other hand, a court order is merely interlocutory in character if it leaves

substantial proceedings yet to be had in connection with the controversy. It does not
end the task of the court in adjudicating the parties' contentions and determining their
rights and liabilities as against each other. In this sense, it is basically provisional in
its application.[54] (emphasis supplied)

Under these guidelines, we agree with the petitioner that the 1998 resolution is
 19

interlocutory. The Sandiganbayan's denial of the petitioner's 1st motion through the
1998 Resolution came at a time when the petitioner had not even concluded the
presentation of its evidence. Plainly, the denial of the motion did not resolve the merits
of the case, as something still had to be done to achieve this end.

We clarify, too, that an interlocutory order remains under the control of the court until
the case is finally resolved on the merits. The court may therefore modify or rescind
the order upon sufficient grounds shown at any time before final judgment.[55] In this
light, the Sandiganbayan's 1998 resolution '“ which merely denied the adoption of the
Bane deposition as part of the evidence in Civil Case No. 0009 '“ could not have
attained finality (in the manner that a decision or final order resolving the case on the
merits does) despite the petitioner's failure to move for its reconsideration or to
appeal.[56]

I (b). The 3rd motion was not

prohibited by the Rules.

We also agree with the petitioner that its 3rd motion cannot be considered as a
proscribed third (actually second) motion for reconsideration of the Sandiganbayan's
1998 resolution. As Section 5, Rule 37 of the Rules of Court clearly provides, the
proscription against a second motion for reconsideration is directed against 'a
judgment or final order.' Although a second motion for reconsideration of an
interlocutory order can be denied on the ground that it is a mere "rehash" of the
arguments already passed upon and resolved by the court, it cannot be rejected on the
ground that it is forbidden by the law or by the rules as a prohibited motion.[57]

I (c). The 1998 resolution was not ripe

for a petition for certiorari.

Under Section 1, Rule 41 of the Rules of Court, an aggrieved party may appeal from a
judgment or final order which completely disposes of a case or from an order that the
Rules of Court declares to be appealable. While this provision prohibits an appeal from
an interlocutory order, the aggrieved party is afforded the chance to question an
interlocutory order through a special civil action ofcertiorari under Rule 65; the petition
must be filed within sixty days from notice of the assailed judgment, order, resolution,
or denial of a motion for reconsideration.

On the premise that the 1998 resolution is interlocutory in nature, the respondents
insist that the 60-day period for filing a petition for certiorari should be reckoned from
the petitioner's notice of the Sandiganbayan's 1998 resolution. They argue that since
this ruling had long been rendered by the court, the petitioner's subsequent filing of
similar motions was actually a devious attempt to resuscitate the long-denied
admission of the Bane deposition.

We do not find the respondents' submission meritorious. While the 1998 resolution is
an interlocutory order, as correctly argued by the petitioner and impliedly conceded by
the respondents, the claim that the 1998 resolution should have been immediately
questioned by the petitioner on certiorari is not totally correct as a petition for
certiorari is not grounded solely on the issuance of a disputed interlocutory
ruling.[58] For a petition for certiorari to prosper, Section 1, Rule 65 of the Rules of
Court requires, among others, that neither an appeal nor any plain, speedy and
adequate remedy in the ordinary course of law is available to the aggrieved party. As
a matter of exception, the writ ofcertiorari may issue notwithstanding the existence of
an available alternative remedy, if such remedy is inadequate or insufficient in relieving
 20

the aggrieved party of the injurious effects of the order complained of.[59]

We note that at the time of its 1st motion in Civil Case No. 0009, the petitioner had not
yet concluded the presentation of its evidence, much less made any formal offer of
evidence. At this stage of the case, the prematurity of using the extraordinary remedy
of certiorari to question the admission of the Bane deposition is obvious. After the
denial of the 1st motion, the plain remedy available to the petitioner was to move for a
reconsideration to assert and even clarify its position on the admission of the Bane
deposition. The petitioner could introduce[60] anew the Bane deposition and include this
as evidence in its formal offer[61] '“ as the petitioner presumably did in Civil Case No.
0130.

Thus, at that point, the case was not yet ripe for the filing of a petition
for certiorari, and the denial of the 1st motion could not have been the reckoning point
for the period of filing such a petition.

II. The Sandiganbayan's ruling on the finality

of its 1998 resolution was legally erroneous but
did not constitute grave abuse of discretion

In light of the above discussions and conclusions, the Sandiganbayan undoubtedly

erred on a question of law in its ruling, but this legal error did not necessarily amount
to a grave abuse of discretion in the absence of a clear showing that its action was a
capricious and whimsical exercise of judgment affecting its exercise of jurisdiction.[62]
Without this showing, the Sandiganbayan's erroneous legal conclusion was only
an error of judgment, or, at best, an abuse of discretion but not a grave one. For
this reason alone, the petition should be dismissed.

Despite this conclusion, however, we opt not to immediately dismiss the petition in
light of the unique circumstances of this case where the petitioner cannot entirely be
faulted for not availing of the remedy at the opportune time, and where the case, by
its nature, is undoubtedly endowed with public interest and has become a matter of
public concern.[63] In other words, we opt to resolve the petition on the merits to lay
the issues raised to rest and to avoid their recurrence in the course of completely
resolving the merits of Civil Case No. 0009.

Although the word 'rested' nowhere appears in the Rules of Court, ordinary court
procedure has inferred it from an overview of trial sequence under Section 5, Rule
30 (which capsulizes the order of presentation of a party's evidence during trial),
read in relation to Rule 18 on Pre-Trial,[64]both of the Rules of Court. Under Section 5,
Rule 30, after a party has adduced his direct evidence in the course of discharging the
burden of proof,[65] he is considered to have rested his case, and is thereafter allowed
to offer rebutting evidence only.[66] Whether a party has rested his case in some
measure depends on his manifestation in court on whether he has concluded his
presentation of evidence.[67]

In its second and third motions, respectively, the petitioner expressly admitted that
'due to oversight, [the petitioner] closed and rested its case';[68] and that it
'had terminated the presentation of its evidence in x x x Civil Case No. 0009.'[69] In
the face of these categorical judicial admissions,[70]the petitioner cannot suddenly
make an about-face and insist on the introduction of evidence out of the usual order.
Contrary to the petitioner's assertion, the resting of its case could not have been
conditioned on the admission of the evidence it formally offered. To begin with, the
Bane deposition, which is the lone piece of evidence subject of this present petition,
 21

was not among the pieces of evidence included in its formal offer of evidence and thus
could not have been admitted or rejected by the trial court.

The Court observes with interest that it was only in this present petition
for certiorari that the petitioner had firmly denied having rested its case.[71] Before
then, the petitioner never found it appropriate to question on certiorari the
Sandiganbayan's denial of its 2nd motion which prayed, inter alia, for the reopening of
the case. This is a fatal defect in the petitioner's case.

Although the denial of the petitioner's first motion did not necessitate an immediate
recourse to the corrective writ of certiorari, the denial of the 2nd motion dictated a
different course of action. The petitioner's non-observance of the proper procedure for
the admission of the Bane deposition, while seemingly innocuous, carried fatal
implications for its case. Having been rebuffed on its first attempt to have the Bane
deposition adopted in Civil Case No. 0009, and without seeking reconsideration of the
denial, the petitioner presented its other pieces of evidence and eventually rested its
case. This time, the petitioner forgot about the Bane deposition and so failed to include
that piece of evidence in its formal offer of evidence.

More than two years later, the petitioner again tried to squeeze in the Bane deposition
into its case. In resolving the petitioner's motion for reconsideration of the
Sandiganbayan's 2000 resolution, the Sandiganbayan held that the Bane deposition
has 'become part and parcel' of Civil Case No. 0009. This pronouncement has obscured
the real status of the Bane deposition as evidence (considering that, earlier, the
Sandiganbayan already denied the petitioner's attempt to adopt the Bane deposition as
evidence in Civil Case No. 0009 for the deponent cannot be cross-examined in court).
Nevertheless, the Sandiganbayan ultimately denied the petitioner's motion to reopen
the case. Having judicially admitted the resting of its case, the petitioner should have
already questioned the denial of its 2nd motion by way of certiorari, since the denial of
its attempt to reopen the case effectively foreclosed all avenues available to it for the
consideration of the Bane deposition. Instead of doing so, however, the petitioner
allowed the 60-day reglementary period, under Section 4, Rule 65 of the Rules
of Court, to lapse, and proceeded to file its 3rd motion.

Significantly, the petitioner changed its legal position in its 3rd motion by denying
having rested its case and insisting on the introduction of the Bane deposition.
Rebuffed once more, the petitioner filed the present petition, inviting our attention to
the Sandiganbayan's resolutions,[72] which allegedly gave it 'mixed signals.'[73] By
pointing to these resolutions, ironically, even the petitioner impliedly recognized that
they were then already ripe for review on certiorari. What the petitioner should have
realized was that its 2nd motion unequivocally aimed to reopen the case for the
introduction of further evidence consisting of the Bane deposition. Having
been ultimately denied by the court, the petitioner could not have been prevented from
taking the proper remedy notwithstanding any perceived ambiguity in the resolutions.

On the other end, though, there was nothing intrinsically objectionable in the
petitioner's motion to reopen its case before the court ruled on its formal offer of
evidence. The Rules of Court does not prohibit a party from requesting the court to
allow it to present additional evidence even after it has rested its case. Any such
opportunity, however, for the ultimate purpose of the admission of additional evidence
is already addressed to the sound discretion of the court. It is from the prism of the
exercise of this discretion that the Sandiganbayan's refusal to reopen the case (for the
purpose of introducing, 'marking and offering' additional evidence) should be viewed.
We can declare this Sandiganbayan action invalid if it had acted with grave abuse of
 22

discretion.

III. The Sandiganbayan gravely abused its

discretion in ultimately refusing to reopen
the case for the purpose of introducing and
admitting in evidence the Bane deposition

The basis for a motion to reopen a case to introduce further evidence is Section 5, Rule
30 of the Rules of Court, which reads:

Sec. 5. Order of trial. '“ Subject to the provisions of section 2 of Rule 31, and unless
the court for special reasons otherwise directs, the trial shall be limited to the issues
stated in the pre-trial order and shall proceed as follows:

xxxx

(f) The parties may then respectively adduce rebutting evidence only, unless the
court, for good reasons and in the furtherance of justice, permits them to adduce
evidence upon their original case[.] [emphases ours]

Under this rule, a party who has the burden of proof must introduce, at the first
instance, all the evidence he relies upon[74] and such evidence cannot be given
piecemeal.[75] The obvious rationale of the requirement is to avoid injurious surprises
to the other party and the consequent delay in the administration of justice.[76]

A party's declaration of the completion of the presentation of his evidence prevents

him from introducing further evidence;[77] but where the evidence is rebuttal in
character, whose necessity, for instance, arose from the shifting of the burden of
evidence from one party to the other;[78] or where the evidence sought to be presented
is in the nature of newly discovered evidence,[79] the party's right to introduce further
evidence must be recognized. Otherwise, the aggrieved party may avail of the remedy
of certiorari.

Largely, the exercise of the court's discretion[80] under the exception of Section 5(f),
Rule 30 of the Rules of Court depends on the attendant facts '“ i.e., on whether the
evidence would qualify as a 'good reason' and be in furtherance of 'the interest of
justice.' For a reviewing court to properly interfere with the lower court's exercise of
discretion, the petitioner must show that the lower court's action was attended by
grave abuse of discretion. Settled jurisprudence has defined this term as the
capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction; or,
the exercise of power in an arbitrary manner by reason of passion, prejudice, or
personal hostility, so patent or so gross as to amount to an evasion of a positive duty,
to a virtual refusal to perform the mandated duty, or to act at all in contemplation of
the law.[81] Grave abuse of discretion goes beyond the bare and unsupported
imputation of caprice, whimsicality or arbitrariness, and beyond allegations that merely
constitute errors of judgment[82] or mere abuse of discretion.[83]

In Lopez v. Liboro,[84] we had occasion to make the following pronouncement:

After the parties have produced their respective direct proofs, they are allowed to offer
rebutting evidence only, but, it has been held, the court, for good reasons, in the
furtherance of justice, may permit them to offer evidence upon their original case, and
its ruling will not be disturbed in the appellate court where no abuse of discretion
appears. So, generally, additional evidence is allowed when it is newly discovered,
 23

or where it has been omitted through inadvertence or mistake, or where the

purpose of the evidence is to correct evidence previously offered. The omission to
present evidence on the testator's knowledge of Spanish had not been deliberate. It
was due to a misapprehension or oversight. (citations omitted; emphases ours)

Likewise, in Director of Lands v. Roman Archbishop of Manila,[85] we ruled:

The strict rule is that the plaintiff must try his case out when he commences.
Nevertheless, a relaxation of the rule is permitted in the sound discretion of the court.
'The proper rule for the exercise of this discretion,' it has been said by an eminent
author, 'is, that material testimony should not be excluded because offered by
the plaintiff after the defendant has rested, although not in rebuttal, unless it
has been kept back by a trick, and for the purpose of deceiving the defendant
and affecting his case injuriously.'

These principles find their echo in Philippine remedial law. While the general rule is
rightly recognized, the Code of Civil Procedure authorizes the judge 'for special
reasons,' to change the order of the trial, and "for good reason, in the furtherance of
justice," to permit the parties 'to offer evidence upon their original case.' These
exceptions are made stronger when one considers the character of registration
proceedings and the fact that where so many parties are involved, and action is taken
quickly and abruptly, conformity with precise legal rules should not always be
expected. Even at the risk of violating legal formulæ, an opportunity should be
given to parties to submit additional corroborative evidence in support of
their claims of title, if the ends of justice so require. (emphases ours)

In his commentaries, Chief Justice Moran had this to say:

However, the court for good reasons, may, in the furtherance of justice, permit the
parties to offer evidence upon their original case, and its ruling will not be disturbed
where no abuse of discretion appears, Generally, additional evidence is allowed
when x x x; but it may be properly disallowed where it was withheld
deliberately and without justification.[86]

The weight of the exception is also recognized in foreign jurisprudence.[87]

Under these guidelines, we hold that the Sandiganbayan gravely abused its
discretion in refusing to reopen the case. Instead of squarely ruling on the
petitioner's 2nd motion to avoid any uncertainty on the evidentiary status of the Bane
deposition, the Sandiganbayan's action actually left the petitioner's concern in limbo by
considering the petitioner's motion 'redundant.' This is tantamount to a refusal to
undertake a positive duty as mandated by the circumstances and is equivalent to an
act outside the contemplation of law.

It has not escaped our notice that at the time the petitioner moved to re-open its case,
the respondents had not yet even presented their evidence in chief. The respondents,
therefore, would not have been prejudiced by allowing the petitioner's introduction of
the Bane deposition, which was concededly omitted 'through oversight.'[88] The higher
interest of substantial justice, of course, is another consideration that cannot be taken
lightly.[89]

In light of these circumstances, the Sandiganbayan should not have perfunctorily

applied Section 5, Rule 30 of the Rules of Court on the petitioner's request to reopen
the case for the submission of the Bane deposition.
 24

On the basis of this conclusion, a remand of this case should follow as a matter of
course. The state of the parties' submissions and the delay that has already attended
this aspect of Civil Case No. 0009, however, dictate against this obvious course of
action. At this point, the parties have more than extensively argued for or against the
admission of the Bane deposition. Civil Case No. 0009 is a 25-year old sequestration
case that is now crying out for complete resolution. Admissibility, too, is an issue that
would have again been raised on remand and would surely stare us in the face after
remand.[90] We are thus left with no choice but to resolve the issue of admissibility of
the Bane deposition here and now.

IV. The admissibility of the Bane deposition

IV (a). The consolidation of Civil Case No. 0009 and Civil Case No. 0130 did
not dispense with the usual requisites of admissibility

In support of its 3rd motion, the petitioner argues that the Bane deposition can be
admitted in evidence without observing the provisions of Section 47, Rule 130 of the
Rules of Court.[91] The petitioner claims that in light of the prior consolidation of Civil
Case No. 0009 and Civil Case No. 0130, among others,[92] the 'former case or
proceeding' that Section 47, Rule 130 speaks of no longer exists.

Rule 31 of the old Rules of Court[93] '“ the rule in effect at the time Civil Case Nos.
0009 and 0130 were consolidated '“ provided that:

Rule 31
Consolidation or Severance

Section 1. Consolidation. '“ When actions involving a common question of law or fact
are pending before the court, it may order a joint hearing or trial of any or all the
matters in issue in the actions; it may order all the actions consolidated; and it
may make such orders concerning proceedings therein as may tend to avoid
unnecessary costs or delay.[94] (emphases ours)

Consolidation is a procedural device granted to the court as an aid in deciding

how cases in its docket are to be tried so that the business of the court may be
dispatched expeditiously and with economy while providing justice to the parties. To
promote this end, the rule permits the consolidation and a single trial of several cases
in the court's docket, or the consolidation of issues within those cases.[95]

A reading of Rule 31 of the Rules of Court easily lends itself to two observations. First,
Rule 31 is completely silent on the effect/s of consolidation on the cases consolidated;
on the parties and the causes of action involved; and on the evidence presented in the
consolidated cases. Second, while Rule 31 gives the court the discretion either to order
a joint hearing or trial, or to order the actions consolidated, jurisprudence will show
that the term 'consolidation' is used generically and even synonymously with joint
hearing or trial of several causes.[96] In fact, the title 'consolidation' of Rule 31 covers
all the different senses of consolidation, as discussed below.

These observations are not without practical reason. Considering that consolidation is
basically a function given to the court, the latter is in the best position to determine for
itself (given the nature of the cases, the complexity of the issues involved, the parties
affected, and the court's capability and resources vis-Ã -vis all the official business
pending before it, among other things) what 'consolidation' will bring, bearing in mind
 25

the rights of the parties appearing before it.

To disregard the kind of consolidation effected by the Sandiganbayan on the

simple and convenient premise that the deposition-taking took place after the
Sandiganbayan ordered the consolidation is to beg the question. It is
precisely the silence of our Rules of Procedure and the dearth of applicable
case law on the effect of 'consolidation' that strongly compel this Court to
determine the kind of 'consolidation' effected to directly resolve the very
issue of admissibility in this case.

In the context of legal procedure, the term 'consolidation' is used in three different
senses:[97]

(1) Where all except one of several actions are stayed until one is tried, in which
case the judgment in the one trial is conclusive as to the others. This
is not actually consolidation but is referred to as such. (quasi-consolidation)[98]
(2) Where several actions are combined into one, lose their separate identity, and
become a single action in which a single judgment is rendered. This is
illustrated by a situation where several actions are pending between the same
parties stating claims which might have been set out originally in one
complaint. (actual consolidation)[99]
(3) Where several actions are ordered to be tried together but each retains its
separate character and requires the entry of a separate judgment. This type of
consolidation does not merge the suits into a single action, or cause the
parties to one action to be parties to the other. (consolidation for trial)[100]

Considering that the Sandiganbayan's order[101] to consolidate several incident cases

does not at all provide a hint on the extent of the court's exercise of its discretion as to
the effects of the consolidation it ordered '“ in view of the function of this procedural
device to principally aid the court itself in dealing with its official business '“ we are
compelled to look deeper into the voluminous records of the proceedings conducted
below. We note that there is nothing that would even suggest that the Sandiganbayan
in fact intended a merger of causes of action, parties and evidence.[102] To be sure,
there would have been no need for a motion to adopt (which did not remain
unopposed) the testimonies in the incident cases had a merger actually resulted from
the order of consolidation, for in that case, the Sandiganbayan can already take judicial
notice of the same.

Significantly, even the petitioner itself viewed consolidation, at most, to be

merely a consolidation for trial.[103] Accordingly, despite the consolidation in 1993,
the petitioner acceded to the Sandiganbayan's 1998 Resolution (which denied the
petitioner's 1st Motion on the ground that the witnesses, whose testimony in the
incident cases is sought to be adopted, 'are not available for cross-examination in' the
Sandiganbayan) by presenting these other witnesses again in the main case, so that
the respondents can cross-examine them.

These considerations run counter to the conclusion that the Sandiganbayan's order of
consolidation had actually resulted in the complete merger of the incident cases with
the main case, in the sense of actual consolidation, and that the parties in these
consolidated cases had (at least constructively) been aware of and had allowed actual
consolidation without objection.[104]

Considering, too, that the consolidated actions were originally independent of one
another and the fact that in the present case the party respondents to Civil Case No.
 26

0009 (an action for reconveyance, accounting, restitution and damages) are not
parties to Civil Case No. 0130 (a special civil action filed by an ETPI stockholder
involving a corporate squabble within ETPI), the conclusion that the Sandiganbayan in
fact intended an actual consolidation and, together with the parties affected,[105] acted
towards that end - where the actions become fused and unidentifiable from one
another and where the evidence appreciated in one action is also appreciated in
another action '“ must find support in the proceedings held below. This is particularly
true in a case with the magnitude and complexity of the present case. Otherwise, to
impose upon the respondents the effects of an actual consolidation (which find no clear
support in the provisions of the Rules of Court, jurisprudence,[106] and even in the
proceedings before the Sandiganbayan itself and despite the aforementioned
considerations) results in an outright deprivation of the petitioner's right to due
process. We reach this conclusion especially where the evidence sought to be admitted
is not simply a testimony taken in one of the several cases, but a deposition upon oral
examination taken in another jurisdiction and whose admission is governed by specific
provisions on our rules on evidence.

We stress on this point, too, that while the Sandiganbayan ordered the consolidation in
1993 (that is, before the deposition was taken), neither does the Pre-Trial
Order[107] issued by the Sandiganbayanin 1997 in Civil Case No. 0009 contain any
reference, formal or substantive, to Civil Case No. 0130.[108] Interestingly, in its Pre-
Trial Brief dated August 30, 1996,[109] the petitioner even made a representation to
present Bane as one of its witnesses.

IV (b). Use of deposition under Section 4,

Rule 23 and as a former testimony under
Section 47, Rule 130

Since the present consolidation did not affect Civil Case No. 0130 as an original, albeit
incidental, case, the admissibility of the Bane deposition cannot avoid being measured
against the requirements of Section 47, Rule 130 of the Rules of Court '“ the rule on
the admissibility of testimonies or deposition taken in a different proceeding. In this
regard, the petitioner argues that Section 4, Rule 23 of the Rules of Court (then Rule
24)[110] must, at any rate, prevail over Section 47, Rule 130[111]of the same Rules.

At the outset, we note that when the petitioner's motion to adopt the testimonies
taken in the incident cases drew individual oppositions from the respondents, the
petitioner represented to the Sandiganbayan its willingness to comply with the
provisions of Section 47, Rule 130 of the Rules of Court,[112] and, in fact, again
presented some of the witnesses. The petitioner's about-face two years thereafter even
contributed to the Sandiganbayan's own inconsistency on how to treat the Bane
deposition, in particular, as evidence.

Section 4, Rule 23 of the Rules of Court on 'Deposition Pending Action' (deposition de

bene esse) provides for the circumstances when depositions may be used in the trial,
or at the hearing of a motion or an interlocutory proceeding.

SEC. 4. Use of depositions. '” At the trial or upon the hearing of a motion or an
interlocutory proceeding, any part or all of a deposition, so far as admissible under
the rules of evidence, may be used against any party who was present or
represented at the taking of the deposition or who had due notice thereof, in
accordance with any one of the following provisions:

xxxx
 27

(c) The deposition of a witness, whether or not a party, may be used by any party for
any purpose if the court finds: (1) that the witness is dead; or (2) that the witness
resides at a distance more than one hundred (100) kilometers from the place of trial or
hearing, or is out of the Philippines, unless it appears that his absence was procured by
the party offering the deposition; or (3) that the witness is unable to attend or testify
because of age, sickness, infirmity, or imprisonment; or (4) that the party offering the
deposition has been unable to procure the attendance of the witness by subpoena; or
(5) upon application and notice, that such exceptional circumstances exist as to make
it desirable, in the interest of justice and with due regard to the importance of
presenting the testimony of witnesses orally in open court, to allow the deposition to
be used[.] [emphasis ours]

On the other hand, Section 47, Rule 130 of the Rules of Court provides:

SEC. 47. Testimony or deposition at a former proceeding. '“ The testimony or

deposition of a witness deceased or unable to testify, given in a former case or
proceeding, judicial or administrative, involving the same parties and subject
matter,may be given in evidence against the adverse party who had the opportunity
to cross-examine him.

A plain reading of Rule 23 of the Rules of Court readily rejects the petitioner's position
that the Bane deposition can be admitted into evidence without observing the
requirements of Section 47, Rule 130 of the Rules of Court.

Before a party can make use of the deposition taken at the trial of a pending action,
Section 4, Rule 23 of the Rules of Court does not only require due observance of its
sub-paragraphs (a) to (d); it also requires, as a condition for admissibility, compliance
with 'the rules on evidence.' Thus, even Section 4, Rule 23 of the Rules of Court
makes an implied reference to Section 47, Rule 130 of the Rules of Court before the
deposition may be used in evidence. By reading Rule 23 in isolation, the petitioner
failed to recognize that the principle conceding admissibility to a deposition under Rule
23 should be consistent with the rules on evidence under Section 47, Rule 130.[113] In
determining the admissibility of the Bane deposition, therefore, reliance cannot be
given on one provision to the exclusion of the other; both provisions must be
considered. This is particularly true in this case where the evidence in the prior
proceeding does not simply refer to a witness' testimony in open court but to a
deposition taken under another and farther jurisdiction.

A common thread that runs from Section 4, Rule 23 of the Rules of Court and Section
47, Rule 130 of the same Rules is their mutual reference to depositions.

A deposition is chiefly a mode of discovery whose primary function is to supplement

the pleadings for the purpose of disclosing the real points of dispute between the
parties and affording an adequate factual basis during the preparation for
trial.[114] Since depositions are principally made available to the parties as a means of
informing themselves of all the relevant facts, depositions are not meant as
substitute for the actual testimony in open court of a party or witness.
Generally, the deponent must be presented for oral examination in open court at the
trial or hearing. This is a requirement of the rules on evidence under Section 1, Rule
132 of the Rules of Court.[115]

Examination to be done in open court. '” The examination of witnesses presented

in a trial or hearing shall be done in open court, and under oath or affirmation. Unless
 28

the witness is incapacitated to speak, or the question calls for a different mode of
answer, the answers of the witness shall be given orally.

Indeed, any deposition offered to prove the facts set forth therein, in lieu of the actual
oral testimony of the deponent in open court, may be opposed by the adverse party
and excluded under the hearsay rule '“ i.e., that the adverse party had or has no
opportunity to cross-examine the deponent at the time that his testimony is
offered. That opportunity for cross-examination was afforded during
the taking of the deposition alone is no argument, as the opportunity for
cross-examination must normally be accorded a party at the time that the
testimonial evidence is actually presented against him during the trial or
hearing of a case.[116] However, under certain conditions and for
certain limited purposes laid down in Section 4, Rule 23 of the Rules of Court, the
deposition may be used without the deponent being actually called to the witness
stand.[117]

Section 47, Rule 130 of the Rules of Court is an entirely different provision.
While a former testimony or deposition appears under the Exceptions to the Hearsay
Rule, the classification of former testimony or deposition as an admissible hearsay is
not universally conceded.[118] A fundamental characteristic of hearsay evidence is the
adverse party's lack of opportunity to cross-examine the out-of-court declarant.
However, Section 47, Rule 130 explicitly requires, inter alia, for the admissibility of a
former testimony or deposition that the adverse party must have had an opportunity to
cross-examine the witness or the deponent in the prior proceeding.

This opportunity to cross-examine though is not the ordinary cross-

examination[119] afforded an adverse party in usual trials regarding 'matters stated in
the direct examination or connected therewith.' Section 47, Rule 130 of the Rules of
Court contemplates a different kind of cross-examination, whether actual or a mere
opportunity, whose adequacy depends on the requisite identity of issues in the former
case or proceeding and in the present case where the former testimony or deposition is
sought to be introduced.

Section 47, Rule 130 requires that the issues involved in both cases must, at least, be
substantially the same; otherwise, there is no basis in saying that the former
statement was - or would have been - sufficiently tested by cross-examination or by an
opportunity to do so.[120] (The requirement of similarity though does not mean that all
the issues in the two proceedings should be the same.[121]Although some issues may
not be the same in the two actions, the admissibility of a former testimony on an issue
which is similar in both actions cannot be questioned.[122])

These considerations, among others, make Section 47, Rule 130 a distinct rule on
evidence and therefore should not be confused with the general provisions on
deposition under Rule 23 of the Rules of Court. In other words, even if the petitioner
complies with Rule 23 of the Rules of Court on the use of depositions, the observance
of Section 47, Rule 130 of the Rules of Court cannot simply be avoided or disregarded.

Undisputably, the Sandiganbayan relied on the Bane deposition, taken in Civil Case No.
0130, for purposes of this very same case. Thus, what the petitioner
established and what the Sandiganbayan found, for purposes of using the Bane
deposition, refer only to the circumstances laid down under Section 4(c), Rule 23 of
the Rules of Court, not necessarily to those of Section 47, Rule 130 of the Rules of
Court, as a distinct rule on evidence that imposes further requirements in the use of
depositions in a different case or proceeding. In other words, the prior use of the
 29

deposition under Section 4(c), Rule 23 cannot be taken as compliance with Section 47,
Rule 130 which considers the same deposition as hearsay, unless the requisites for its
admission under this rule are observed. The aching question is whether the petitioner
complied with the latter rule.

Section 47, Rule 130 of the Rules of Court lays down the following requisites for
the admission of a testimony or deposition given at a former case or proceeding.

1. The testimony or deposition of a witness deceased or otherwise unable to testify;

2. The testimony was given in a former case or proceeding, judicial or administrative;
3. Involving the same parties;
4. Relating to the same matter;
5. The adverse party having had the opportunity to cross-examine him.[123]

The reasons for the admissibility of testimony or deposition taken at a former trial or
proceeding are the necessity for the testimony and its trustworthiness.[124] However,
before the former testimony or deposition can be introduced in evidence, the
proponent must first lay the proper predicate therefor,[125] i.e., the party must
establish the basis for the admission of the Bane deposition in the realm of admissible
evidence. This basis is the prior issue that we must now examine and resolve.

IV (c). Unavailability of witness

For the admission of a former testimony or deposition, Section 47, Rule 130 of the
Rules of Court simply requires, inter alia, that the witness or deponent be 'deceased or
unable to testify.' On the other hand, in using a deposition that was taken during the
pendency of an action, Section 4, Rule 23 of the Rules of Court provides several
grounds that will justify dispensing with the actual testimony of the deponent in open
court and specifies, inter alia, the circumstances of the deponent's inability to attend or
testify, as follows:

(3) that the witness is unable to attend or testify because of age, sickness, infirmity,
or imprisonment[.] [emphases ours][126]

The phrase 'unable to testify' appearing in both Rule 23 and Rule 130 of the Rules of
Court refers to a physical inability to appear at the witness stand and to give a
testimony.[127] Hence notwithstanding the deletion of the phrase 'out of the
Philippines,' which previously appeared in Section 47, Rule 130 of the Rules of
Court, absence from jurisdiction[128] - the petitioner's excuse for the non-presentation
of Bane in open court - may still constitute inability to testify under the same rule. This
is not to say, however, that resort to deposition on this instance of unavailability will
always be upheld. Where the deposition is taken not for discovery purposes, but
to accommodate the deponent, then the deposition should be rejected in
evidence.[129]

Although the testimony of a witness has been given in the course of a former
proceeding between the parties to a case on trial, this testimony alone is not a ground
for its admission in evidence. The witness himself, if available, must be produced in
court as if he were testifying de novo since his testimony given at the former trial is
mere hearsay.[130] The deposition of a witness, otherwise available, is also inadmissible
for the same reason.

Indeed, the Sandiganbayan's reliance on the Bane deposition in the other case (Civil
Case No. 0130) is an argument in favor of the requisite unavailability of the witness.
 30

For purposes of the present case (Civil Case No. 0009), however, the Sandiganbayan
would have no basis to presume, and neither can or should we, that the previous
condition, which previously allowed the use of the deposition, remains and would
thereby justify the use of the same deposition in another case or proceeding, even if
the other case or proceeding is before the same court. Since the basis for the
admission of the Bane deposition, in principle, being necessity,[131] the burden of
establishing its existence rests on the party who seeks the admission of the evidence.
This burden cannot be supplanted by assuming the continuity of the previous condition
or conditions in light of the general rule against the non-presentation of the deponent
in court.[132]

IV (d). The requirement of opportunity of

the adverse party to cross-examine; identity
of parties; and identity of subject matter

The function of cross-examination is to test the truthfulness of the statements of a

witness made on direct examination.[133] The opportunity of cross-examination has
been regarded as an essential safeguard of the accuracy and completeness of a
testimony. In civil cases, the right of cross-examination is absolute, and is not a mere
privilege of the party against whom a witness may be called.[134] This right is available,
of course, at the taking of depositions, as well as on the examination of witnesses at
the trial. The principal justification for the general exclusion of hearsay statements and
for the admission, as an exception to the hearsay rule, of reported testimony taken at
a former hearing where the present adversary was afforded the opportunity to cross-
examine, is based on the premise that the opportunity of cross-examination is an
essential safeguard[135] against falsehoods and frauds.

In resolving the question of whether the requirement of opportunity to cross-examine

has been satisfied, we have to consider first the required identity of parties as the
present opponent to the admission of the Bane deposition to whom the opportunity to
cross-examine the deponent is imputed may not after all be the same 'adverse party'
who actually had such opportunity.

To render the testimony of a witness admissible at a later trial or action, the parties to
the first proceeding must be the same as the parties to the later proceeding. Physical
identity, however, is not required; substantial identity[136] or identity of
interests[137] suffices, as where the subsequent proceeding is between persons who
represent the parties to the prior proceeding by privity in law, in blood, or in estate.
The term 'privity' denotes mutual or successive relationships to the same rights of
property.[138]

In the present case, the petitioner failed to impute, much less establish, the identity of
interest or privity between the then opponent, Africa, and the present opponents, the
respondents. While Africa is the son of the late respondent Jose Africa, at most, the
deposition should be admissible only against him as an ETPI stockholder who filed the
certiorari petition docketed as Civil Case No. 0130 (and, unavoidably, as successor-in-
interest of the late respondent Jose Africa). While Africa and the respondents are all
ETPI stockholders, this commonality does not establish at all any privity between them
for purposes of binding the latter to the acts or omissions of the former respecting the
cross-examination of the deponent. The sequestration of their shares does not result in
the integration of their rights and obligations as stockholders which remain distinct and
personal to them, vis-a-vis other stockholders.[139]

IV (d1). The respondents' notice of taking of

 31

Bane deposition is insufficient evidence of waiver

The petitioner staunchly asserts that the respondents have waived their right to cross-
examine the deponent for their failure to appear at the deposition-taking despite
individual notices previously sent to them.[140]

In its first Notice to Take Oral Deposition of Mr. Maurice V. Bane dated August 30,
1996,[141] the petitioner originally intended to depose Mr. Bane on September 25-26
1996. Because it failed to specify in the notice the purpose for taking Mr. Bane's
deposition, the petitioner sent a Second Amended Notice to Take Deposition of Mr.
Maurice V. Bane Upon Oral Examination where it likewise moved the scheduled
deposition-taking to October 23-26, 1996.

The records show that Africa moved several times for protective orders against the
intended deposition of Maurice Bane.[142] On the other hand, among the respondents,
only respondent Enrile appears to have filed an Opposition[143] to the petitioner's first
notice, where he squarely raised the issue of reasonability of the petitioner's nineteen-
day first notice. While the Sandiganbayan denied Africa's motion for protective
orders,[144] it strikes us that no ruling was ever handed down on respondent Enrile's
Opposition.[145]

It must be emphasized that even under Rule 23, the admission of the deposition upon
oral examination is not simply based on the fact of prior notice on the individual sought
to be bound thereby. In Northwest Airlines v. Cruz, [146] we ruled that -

The provision explicitly vesting in the court the power to order that the deposition shall
not be taken connotes the authority to exercise discretion on the matter. However, the
discretion conferred by law is not unlimited. It must be exercised, not arbitrarily or
oppressively, but in a reasonable manner and in consonance with the spirit of he
law.The courts should always see to it that the safeguards for the protection
of the parties and deponents are firmly maintained. As aptly stated by Chief
Justice Moran:

. . . . (T)his provision affords the adverse party, as well as the deponent, sufficient
protection against abuses that may be committed by a party in the exercise of his
unlimited right to discovery. As a writer said: "Any discovery involves a prying into
another person's affairs '” prying that is quite justified if it is to be a legitimate aid to
litigation, but not justified if it is not to be such an aid." For this reason, courts are
given ample powers to forbid discovery which is intended not as an aid to litigation, but
merely to annoy, embarrass or oppress either the deponent or the adverse party, or
both. (emphasis ours)

In the present case, not only did the Sandiganbayan fail to rule on respondent Enrile's
Opposition (which is equally applicable to his co-respondents), it also failed to provide
even the bare minimum 'safeguards for the protection of,' (more so) non-
parties,[147] and to ensure that these safeguards are firmly maintained. Instead, the
Sandiganbayan simply bought the petitioner's assertion (that the taking of Bane
deposition is a matter of right) and treated the lingering concerns '“ e.g., reasonability
of the notice; and the non-party status of the respondents in Civil Case No. 0130 - at
whose incident (docketed as G.R. No. 107789) the Bane deposition was taken - rather
perfunctorily to the prejudice of the respondents.

In conjunction with the order of consolidation, the petitioner's reliance on the prior
notice on the respondents, as adequate opportunity for cross-examination, cannot
 32

override the non-party status of the respondents in Civil Case No. 0130 '“ the effect of
consolidation being merely for trial. As non-parties, they cannot be bound by
proceedings in that case. Specifically, they cannot be bound by the taking of the Bane
deposition without the consequent impairment of their right of cross-
examination.[148] Opportunity for cross-examination, too, even assuming its presence,
cannot be singled out as basis for the admissibility of a former testimony or
deposition since such admissibility is also anchored on the requisite identity of parties.
To reiterate, although the Sandiganbayan considered the Bane deposition in resolving
Civil Case No. 0130, its action was premised on Africa's status as a party in that case
where the Bane deposition was taken.

Corollarily, the idea of privity also permeates Rule 23 of the Rules of Court through its
Section 5 which provides:

Effect of substitution of parties. '” Substitution of parties does not affect the right
to use depositions previously taken; and, when an action has been dismissed and
another action involving the same subject is afterward brought between the same
parties or their representatives or successors in interest, all depositions lawfully taken
and duly filed in the former action may be used in the latter as if originally taken
therefor. [italics and underscoring ours]

In light of these considerations, we reject the petitioner's claim that the respondents
waived their right to cross-examination when they failed to attend the taking of the
Bane deposition. Incidentally, the respondents' vigorous insistence on their right to
cross-examine the deponent speaks loudly that they never intended any waiver of this
right.

Interestingly, the petitioner's notice of the deposition-taking relied on Rule 23 of the

Rules of Court. Section 15 of this rule reads:

Deposition upon oral examination; notice; time and place. '” A party desiring to
take the deposition of any person upon oral examination shall give reasonable notice in
writing to every other party to the action. The notice shall state the time and place
for taking the deposition and the name and address of each person to be examined, if
known, and if the name is not known, a general description sufficient to identify him or
the particular class or group to which he belongs. On motion of any party upon whom
the notice is served, the court may for cause shown enlarge or shorten the time.

Under this provision, we do not believe that the petitioner could reasonably expect that
the individual notices it sent to the respondents would be sufficient to bind them to the
conduct of the then opponent's (Africa's) cross-examination since, to begin with, they
were not even parties to the action. Additionally, we observe that in the notice of the
deposition taking, conspicuously absent was any indication sufficient to forewarn the
notified persons that their inexcusable failure to appear at the deposition taking would
amount to a waiver of their right of cross-examination, without prejudice to the right of
the respondents to raise their objections at the appropriate time.[149] We would be
treading on dangerous grounds indeed were we to hold that one not a party to an
action, and neither in privity nor in substantial identity of interest with any of
the parties in the same action, can be bound by the action or omission of the
latter, by the mere expedient of a notice. Thus, we cannot simply deduce a
resultant waiver from the respondents' mere failure to attend the deposition-taking
despite notice sent by the petitioner.

Lastly, we see no reason why the Bane deposition could not have been taken earlier in
 33

Civil Case No. 0009 '“ the principal action where it was sought to be introduced '“ while
Bane was still here in the Philippines. We note in this regard that the Philippines was
no longer under the Marcos administration and had returned to normal democratic
processes when Civil Case No. 0009 was filed. In fact, the petitioner's notice itself
states that the 'purpose of the deposition is for Mr. Maurice Bane to identify and testify
on the facts set forth in his Affidavit,' which Mr. Bane had long executed in 1991 in
Makati, Metro Manila.[150] Clearly, a deposition could then have been taken - without
compromising the respondents' right to cross-examine a witness against them -
considering that the principal purpose of the deposition is chiefly a mode of discovery.
These, to our mind, are avoidable omissions that, when added to the deficient handling
of the present matter, add up to the gross deficiencies of the petitioner in the
handling of Civil Case No. 0009.

After failing to take Bane's deposition in 1991 and in view of the peculiar circumstances
of this case, the least that the petitioner could have done was to move for the taking
of the Bane deposition and proceed with the deposition immediately upon securing a
favorable ruling thereon. On that occasion, where the respondents would have a
chance to be heard, the respondents cannot avoid a resultant waiver of their right of
cross-examination if they still fail to appear at the deposition-taking.Fundamental
fairness dictates this course of action. It must be stressed that not only were the
respondents non-parties to Civil Case No. 0130, they likewise have no interest in
Africa's certioraripetition asserting his right as an ETPI stockholder.

Setting aside the petitioner's flip-flopping on its own representations,[151] this Court can
only express dismay on why the petitioner had to let Bane leave the Philippines before
taking his deposition despite having knowledge already of the substance of what he
would testify on. Considering that the testimony of Bane is allegedly a 'vital cog' in the
petitioner's case against the respondents, the Court is left to wonder why the petitioner
had to take the deposition in an incident case (instead of the main case) at a time
when it became the technical right of the petitioner to do so.

V. The petitioner cannot rely on principle of judicial notice

The petitioner also claims that since the Bane deposition had already been previously
introduced and admitted in Civil Case No. 0130, then the Sandiganbayan should have
taken judicial notice of the Bane deposition as part of its evidence.

Judicial notice is the cognizance of certain facts that judges may properly take and act
on without proof because these facts are already known to them.[152] Put differently, it
is the assumption by a court of a fact without need of further traditional evidentiary
support. The principle is based on convenience and expediency in securing and
introducing evidence on matters which are not ordinarily capable of dispute and are
not bona fide disputed.[153]

The foundation for judicial notice may be traced to the civil and canon law
maxim, manifesta (or notoria) non indigent probatione.[154] The taking of judicial notice
means that the court will dispense with the traditional form of presentation of
evidence. In so doing, the court assumes that the matter is so notorious that it would
not be disputed.

The concept of judicial notice is embodied in Rule 129 of the Revised Rules on
Evidence. Rule 129 either requires the court to take judicial notice, inter alia, of 'the
official acts of the x x x judicial departments of the Philippines,'[155] or gives the court
the discretion to take judicial notice of matters 'ought to be known to judges because
 34

of their judicial functions.'[156] On the other hand, a party-litigant may ask the court to
take judicial notice of any matter and the court may allow the parties to be heard on
the propriety of taking judicial notice of the matter involved.[157] In the present case,
after the petitioner filed its Urgent Motion and/or Request for Judicial Notice, the
respondents were also heard through their corresponding oppositions.

In adjudicating a case on trial, generally, courts are not authorized to take judicial
notice of the contents of the records of other cases, even when such cases have been
tried or are pending in the same court, and notwithstanding that both cases may have
been tried or are actually pending before the same judge.[158] This rule though admits
of exceptions.

As a matter of convenience to all the parties, a court may properly treat all or any part
of the original record of a case filed in its archives as read into the record of a case
pending before it, when, with the knowledge of, and absent an objection from,
the adverse party, reference is made to it for that purpose, by name and
number or in some other manner by which it is sufficiently designated; or when the
original record of the former case or any part of it, is actually withdrawn from the
archives at the court's direction, at the request or with the consent of the parties,
andadmitted as a part of the record of the case then pending.[159]

Courts must also take judicial notice of the records of another case or cases, where
sufficient basis exists in the records of the case before it, warranting the dismissal of
the latter case.[160]

The issue before us does not involve the applicability of the rule on mandatory taking
of judicial notice; neither is the applicability of the rule on discretionary taking of
judicial notice seriously pursued. Rather, the petitioner approaches the concept of
judicial notice from a genealogical perspective of treating whatever evidence offered
in any of the 'children' cases '“ Civil Case 0130 '“ as evidence in the 'parent' case '“
Civil Case 0009 - or 'of the whole family of cases.'[161] To the petitioner, the supposed
relationship of these cases warrants the taking of judicial notice.

We strongly disagree. First, the supporting cases[162] the petitioner cited are
inapplicable either because these cases involve only a single proceeding or an
exception to the rule, which proscribes the courts from taking judicial notice of the
contents of the records of other cases.[163] Second, the petitioner's proposition is
obviously obnoxious to a system of orderly procedure. The petitioner itself admits that
the present case has generated a lot of cases, which, in all likelihood, involve issues of
varying complexity. If we follow the logic of the petitioner's argument, we would be
espousing judicial confusion by indiscriminately allowing the admission of evidence in
one case, which was presumably found competent and relevant in another case, simply
based on the supposed lineage of the cases. It is the duty of the petitioner, as a party-
litigant, to properly lay before the court the evidence it relies upon in support of the
relief it seeks, instead of imposing that same duty on the court. We invite the
petitioner's attention to our prefatory pronouncement in Lopez v. Sandiganbayan:[164]

Down the oft-trodden path in our judicial system, by common sense, tradition and the
law, the Judge in trying a case sees only with judicial eyes as he ought to know
nothing about the facts of the case, except those which have been adduced judicially in
evidence. Thus, when the case is up for trial, the judicial head is empty as to facts
involved and it is incumbent upon the litigants to the action to establish by evidence
the facts upon which they rely. (emphasis ours)
 35

We therefore refuse, in the strongest terms, to entertain the petitioner's argument that
we should take judicial notice of the Bane deposition.

VI. Summation

To recapitulate, we hold that: (1) the Sandiganbayan's denial of the petitioner's

3rd motion '“ theMotion to Admit Supplemental Offer of Evidence (Re: Deposition of
Maurice Bane) '“ was a legal error that did not amount to grave abuse of discretion;
(2) the Sandiganbayan's refusal to reopen the case at the petitioner's instance was
tainted with grave abuse of discretion; and (3) notwithstanding the grave abuse of
discretion, the petition must ultimately fail as the Bane deposition is not admissible
under the rules of evidence.[165]

VII. Refutation of Justice Carpio's

Last Minute Modified Dissent

At the last minute, Justice Carpio circulated a modified dissent, quoting the Bane
deposition. His covering note states:

I have revised my dissenting opinion to include the Bane deposition so that the Court
and the public will understand what the Bane deposition is all about. (underlining
added)

In light of this thrust, a discussion refuting the modified dissent is in order.

First: Contents of the Bane deposition not an Issue. The dissent perfectly
identified what is at issue in this case '“ i.e., the admissibility of the Bane
deposition. Admissibility is concerned with the competence and relevance[166] of the
evidence, whose admission is sought. While the dissent quoted at length the Bane
deposition, it may not be amiss to point out that the relevance of the Bane
deposition (or, to adopt the dissent's characterization, whether 'Maurice V. Bane is a
vital witness') is not an issue here unless it can be established first that the Bane
deposition is acompetent evidence.

Second: Misrepresentation of Cited Authority. The dissent insists that 'in

Philippine Jurisprudence, the consolidation of cases merges the different actions into
one and the rights of the parties are adjudicated in a single judgment,' citing Vicente J.
Francisco. In our discussion on consolidation, we footnoted the following in response to
the dissent's position, which we will restate here for emphasis:

In the 1966 edition of Vicente J. Francisco's Revised Rules of Court, Francisco wrote:

The effect of consolidation of actions is to unite and merge all of the different actions
consolidated into a single action, in the same manner as if the different causes of
actions involved had originally been joined in a single action, and the order of
consolidation, if made by a court of competent jurisdiction, is binding upon all the
parties to the different actions until it is vacated or set aside. After the consolidation
there can be no further proceedings in the separate actions, which are by virtue of the
consolidation discontinued and superseded by a single action, which should be entitled
in such manner as the court may direct, and all subsequent proceedings therein be
conducted and the rights of the parties adjudicated in a single action (1 C.J.S., 113,
pp. 1371-1372).
 36

At the very beginning of the discussion on consolidation of actions in the Corpus Juris
Secundum, the following caveat appears:

The term consolidation is used in three different senses. First, where several actions
are combined into one and lose their separate identity and become a single action in
which a single judgment is rendered; second, where all except one of several actions
are stayed until one is tried, in which case the judgment in the one is conclusive as to
the others; third, where several actions are ordered to be tried together but each
retains its separate character and requires the entry of a separate judgment. The
failure to distinguish between these methods of procedure, which are entirely
distinct, the two latter, strictly speaking, not being consolidation, a fact which
has not always been noted, has caused some confusion and conflict in the
cases. (1 C.J.S., 107, pp. 1341-1342) (Emphasis added).

In defining the term 'consolidation of actions,' Francisco provided a colatilla that

the term 'consolidation' is used in three different senses, citing 1 C.J.S. 1341
and 1 Am. Jur. 477 (Francisco, Revised Rules of Court, p. 348).

From the foregoing, it is clear that the dissent appears to have quoted Francisco's
statement out of context. As it is, the issue of the effect of consolidation on evidence is
at most an unsettled matter that requires the approach we did in the majority's
discussion on consolidation.[167]cralaw

Third: Misappreciation of the Purpose of Consolidation. The dissent then turns to

the purpose of consolidation '“ to 'expeditiously settle the interwoven issues involved in
the consolidated cases' and 'the simplification of the proceedings.' It argues that this
can only be achieved if the repetition of the same evidence is dispensed with.

It is unfortunate that the dissent refuses to recognize the fact that since consolidation
is primarily addressed to the court concerned to aid it in dispatching its official
business, it would be in keeping with the orderly trial procedure if the court should
have a say on what consolidation would actually bring[168] (especially where several
cases are involved which have become relatively complex). In the present case, there
is nothing in the proceedings below that would suggest that the Sandiganbayan or the
parties themselves (the petitioner and the respondents) had in mind a
consolidation beyond joint hearing or trial. Why should this Court '“ which is not a trial
court '“ impose a purported effect that has no factual or legal grounds?

Fourth: The Due Process Consideration. The dissent argues that even if the
consolidation only resulted in a joint hearing or trial, the 'respondents are still bound
by the Bane deposition considering that they were given notice of the deposition-
taking.' The issue here boils down to one of due process '“ the fundamental
reason why a hearsay statement (not subjected to the rigor of cross-examination) is
generally excluded in the realm of admissible evidence '“ especially when read in light
of the general rule that depositions are not meant as substitute for the actual
testimony, in open court, of a party or witness.

Respondent Enrile had a pending Opposition to the notice of deposition-taking

(questioning the reasonableness thereof '“ an issue applicable to the rest of the
respondents) which the Sandiganbayan failed to rule on. To make the Sandiganbayan's
omission worse, the Sandiganbayan blindly relied on the petitioner's assertion that the
deposition-taking was a matter of right and, thus, failed to address the consequences
and/or issues that may arise from the apparently innocuous statement of the petitioner
(that it intends to use the Bane deposition in Civil Case No. 0009, where only the
 37

respondents, and not Africa, are the parties).[169] There is simply the absence of 'due'
in due process.

Fifth: Misstatement of the Sandiganbayan's Action. The dissent repeatedly

misstates that the Sandiganbayan 'granted' the request for the deposition-taking. For
emphasis, the Sandiganbayan did not 'grant' the request since the petitioner
staunchly asserted that the deposition-taking was amatter of right. No one can deny
the complexity of the issues that these consolidated cases have reached. Considering
the consolidation of cases of this nature, the most minimum of fairness demands
upon the petitioner to move for the taking of the Bane deposition and for the
Sandiganbayan to make a ruling thereon (including the opposition filed by
respondent Enrile which equally applies to his co-respondents). The burgeoning
omission and failures that have prevailed in this case cannot be cured by this Court
without itself being guilty of violating the constitutional guarantee of due process.

Sixth: Issues Posed and Resolved Go Beyond Technicalities. The above

conclusions, contrary to the petitioner's claim, are not only matters of technicality.
Admittedly, rules of procedure involve technicality, to which we have applied the
liberality that technical rules deserve. But the resolution of the issues raised goes
beyond pure or mere technicalities as the preceding discussions show. They involve
issues of due process and basic unfairness to the respondents, particularly to
respondent Enrile, who is portrayed in the Bane deposition to be acting in behalf of the
Marcoses so that these shares should be deemed to be those of the Marcoses. They
involved, too, principles upon which our rules of procedure are founded and which we
cannot disregard without flirting with the violation of guaranteed substantive rights and
without risking the disorder that these rules have sought to avert in the course of their
evolution.

In the Court En Banc deliberations of December 6, 2011, the Court failed to arrive at a
conclusive decision because of a tie vote (7-7, with one Justice taking no part). The
same vote resulted in the re-voting of December 13, 2011. In this light, the ponencia
is deemed sustained.

WHEREFORE, premises considered, we DISMISS the petition for lack of merit. No

costs.

SO ORDERED.
 38

[G.R. No. L-41667. April 30, 1976.]

DELTA MOTOR SALES CORPORATION, Petitioner, v. HON. JUDGE IGNACIO

MANGOSING, Branch XXIV, Court of First Instance of Manila, THE CITY
SHERIFF OF MANILA, and JOSE LUIS PAMINTUAN, Respondents.

Bonoan, Santos, Lazo & Associates for Petitioner.

Villareal, Matic & Associates for respondent Jose Luis Pamintuan.

SYNOPSIS

For failure to file its answer, petitioner was declared in default and a default judgment
was rendered a petition to lift the order of default, to set aside the judgment and for
new trial, alleging that they employee who accepted the service summons, was not the
corporate secretary but a secretary in the Corporation’s personnel department and that
 39

service upon her was a mistake. The Supreme Court held that the trial court did not
acquire jurisdiction over petitioner because it was not properly served with summons.
The service of summons on the secretary of the personnel department who is not
among the persons mentioned in Section 13, of Rule 14, was sufficient.

SYLLABUS

1. CIVIL PROCEDURE; JURISDICTION; SUMMONS; SERVICE UPON PRIVATE DOMESTIC

CORPORATION. — For the purpose of receiving service of summons and being bound
by it, a corporation is identified with its agent or officer who under the rule is
designated to accept service of process. The corporate power to receive and act on
such service so far as to make it known to the corporation, is thus vested in such
officer or agent; and where a particular method of serving process is pointed out by a
statute, that method must be followed, and the rule is especially exacting in reference
to corporations.

2. ID.; ID.; ID.; DESIGNATION OF OFFICER UPON WHOM SERVICE MAY BE MADE
EXCLUDES OTHERS. — When the statute designates a particular officer to whom the
process may be delivered and with whom it may be left, as service upon the
corporation, no other officer or person can be substituted in his place. The designation
of one officer upon whom service may be made excludes all others.

3. ID.; ID.; ID.; STRICT COMPLIANCE WITH MODE OF SERVICE NECESSARY TO

CONFER JURISDICTION OF COURT OVER A CORPORATION. — A strict compliance with
the mode of service is necessary to confer jurisdiction of the court over a corporation.
The officer upon whom service is made must be the one who is named in they statute;
otherwise the service is insufficient. The purpose is to render it reasonably certain that
the corporation will receive prompt and proper notice in an action against it or to
insure that the summons be served on a representative so integrated with the
corporation that such person will know what to do with the legal papers served on him.

4. ID.; ID.; ID.; CONSTRUCTION AND INTERPRETATION. — The liberal construction

rule cannot be invoked and utilized as substitute for the plain legal requirements as to
the manner in which summons should be served on a domestic corporation.

5. ID.; ID.; ID.; SERVICE SUMMONS ON PERSONS NOT MENTIONED IN THE RULES IS
INSUFFICIENT. — The court does not acquire jurisdiction over defendant corporation
where it is not properly served with summons. Service of summons on a secretary of
the corporation’s personnel department, who is not among the persons mentioned in
Section 13 of Rule 14, is insufficient. It does not bind the corporation.

6. ID.; ID.; ID.; JURISDICTION, HOW ACQUIRED. — Court acquires jurisdiction over
the person of a party defendant and of the subject matter of the action of the virtue of
the service summons in the manner required by law. Where there is no service of
summons or a voluntary general appearance by the defendant the court acquires no
jurisdiction to pronounce a judgment in the cause.

DECISION

AQUINO, J.:
 40

Delta Motor Sales Corporation (Delta Motor for short) in this special civil action
of certiorari seeks to annul certain orders of the Court of First Instance of Manila
denying its motion to set aside the order of default and the judgment by default in Civil
Case No. 97373 and granting the motion for execution of Jose Luis Pamintuan. The
facts are as follows:chanrob1es virtual 1aw library

On April 16, 1975 Pamintuan sued Delta Motor for the recovery of the sum of P58,000
as damages and attorney’s fees. The basis of the action was that Delta Motor, as the
seller of an allegedly defective Toyota car to Pamintuan for the sum of P33,950, failed
to fulfill its warranty obligation by not properly repairing the car.

The summons for Delta Motor was served on April 9 on its employee, Dionisia G.
Miranda, who acknowledged its receipt by signing on the lower portion of the original
summons.

Delta Motor did not answer the complaint within the reglementary period which expired
on May 4. On May 27 Pamintuan filed a motion to declare Delta Motor in default. A
copy of the motion was furnished Delta Motor. The Manila court granted the motion in
its order of June 3.

In its decision dated June 16, 1975 the lower court found that Pamintuan bought from
Delta Motor on June 20, 1974 a Toyota car; that the leaks emanating from its
windshield, doors and windows were not stopped by Delta Motor, and that in
consequence of its breach of warranty Delta Motor should pay Pamintuan P45,000 as
damages.

That decision was served on Delta Motor on June 27. On July 21, its lawyers filed a
petition to lift the order of default, to set aside the judgment and for new trial. Delta
Motor alleged that Dionisia G. Miranda, who accepted the service of summons, was not
the corporate secretary but the secretary of Alberto Ramos of the personnel
department who was on sick leave and that service upon her was a mistake; that
Pamintuan is still indebted to Delta Motor for the unpaid balance of the price in the
sum of P25,000; that the entity liable for breach of warranty was Toyota Motor Sales
Company, and that Delta Motor has good defenses to the action.

The motion was supported by the affidavit of Dionisia G. Miranda who alleged that, as
there was no instruction from the sheriff that the summons and complaint should be
delivered to the officers of Delta Motor, she just kept the same "for reference" to her
immediate superior, Ramos, who, however, seldom went to office. Geldino S. Santos,
the administrative officer of Delta Motor, in his affidavit, also attached to the motion,
confirmed that Dionisia G. Miranda was Ramos’ secretary.

The lower court denied the motion in its order of July 29 on the ground that Dionisia G.
Miranda was a person of suitable age and discretion who could receive summons for
another person, as contemplated in section 8, Rule 14 of the Revised Rules of Court,
and that although Delta Motor’s legal department was served on May 27 with a copy of
the motion to declare it in default, it did not oppose the motion.

The order of denial was received by Delta Motor’s counsel on August 4. It filed a
motion for reconsideration at ten minutes before five o’clock in the afternoon of the
thirtieth day, August 8. The lower court denied it in its order of August 25. That order
of denial was received by Delta Motor’s counsel on September 4.
 41

On the following day, September 5, Delta Motor deposited P120 as appeal bond and
filed a notice of appeal and record on appeal.

Pamintuan countered with a motion for execution. He contended that the judgment
was already final because Delta Motor’s motion for reconsideration was filed after four-
thirty in the afternoon of the thirtieth day or after the close of office hours.

The Manila court in its order of October 13 refused to give due course to Delta Motor’s
appeal and granted Pamintuan’s motion for execution. The instant petition was filed on
October 20, 1975. The sheriff levied upon a Toyota mini-bus and a car to satisfy the
judgment for damages against Delta Motor.

Pamintuan in his comment on the petition revealed that on May 27, 1975, when Delta
Motor was furnished with a copy of the motion to declare it in default, it sued
Pamintuan in the Court of First Instance of Rizal, Pasig Branch XIII for the rescission of
the sale and the recovery of the car (Civil Case No. 21303). A writ of replevin was
issued in that case. A deputy sheriff of Rizal seized from Pamintuan the Toyota car on
June 6, 1975.

Pamintuan filed a motion to dismiss Delta Motor’s complaint in the Pasig court on the
ground of the pendency in the Manila court of Civil Case No. 97373 involving the same
Toyota car. Delta Motor opposed it. It was denied.

Pamintuan filed in the Court of Appeals a petition for certiorari in order to set aside the
Pasig court’s order denying his motion to dismiss (Pamintuan v. Revilla, CA-G.R No.
SP-04743). The Court of Appeals in its decision dated February 16, 1976 denied the
petition. It held that the Rizal court did not commit any grave abuse of discretion in not
dismissing Delta Motor’s action.

The issue in this case is whether Delta Motor was properly served with summons or
whether the Manila court had jurisdiction to render the judgment by default against it
and to execute that judgment.

Rule 14 of the Revised Rules of Court provides:jgc:chanrobles.com.ph

"SEC. 13. Service upon private domestic corporation or partnership. — If the defendant
is a corporation organized under the laws of the Philippines or a partnership duly
registered, service may be made on the president, manager, secretary, cashier, agent,
or any of its directors."cralaw virtua1aw library

For the purpose of receiving service of summons and being bound by it, a corporation
is identified with its agent or officer who under the rule is designated to accept service
of process. "The corporate power to receive and act on such service, so far as to make
it known to the corporation, is thus vested in such officer or agent." (Lafayette
Insurance Co. v. French, 15 L. Ed. 451, 453).

As noted by the Federal Supreme Court, "the cases are numerous which decide that
where a particular method of serving process is pointed out by statute, that method
must be followed, and the rule is especially exacting in reference to corporations" (Amy
v. City of Watertown, 32 L. Ed. 946). .

The Amy case cited the ruling in Watertown v. Robinson, 69 Wis. 230 that the
particular mode of service indicated in the statute should be followed because ita lex
 42

scripta est. "There is no chance to speculate whether some other mode will not answer
as well. This has been too often held by this court to require further citations. When
the statute designates a particular officer to whom the process may be delivered and
with whom it may be left, as service upon the corporation, no other officer or person
can be substituted in his place. The designation of one particular officer upon whom
service may be made excludes all others." (Page 952).

A strict compliance with the mode of service is necessary to confer jurisdiction of the
court over a corporation. The officer upon whom service is made must be one who is
named in the statute; otherwise the service is insufficient. So, where the statute
requires that in the case of a domestic corporation summons should be served on "the
president or head of the corporation, secretary, treasurer, cashier or managing agent
thereof", service of summons on the secretary’s wife did not confer jurisdiction over
the corporation in the foreclosure proceeding against it. Hence, the decree of
foreclosure and the deficiency judgment were void and should be vacated. (Reader v.
District Court, 94 Pacific 2nd 858).

The purpose is to render it reasonably certain that the corporation will receive prompt
and proper notice in an action against it or to insure that the summons be served on a
representative so integrated with the corporation that such person will know what to
do with the legal papers served on him. In other words, "to bring home to the
corporation notice of the filing of the action." (35A C.J.S. 288 citing Jenkins v. Lykes
Bros. S.S. Co., 48 F. Supp. 848; McCarthy v. Langston, D.C. Fla., 23 F.R.D. 249).

The liberal construction rule cannot be invoked and utilized as a substitute for the plain
legal requirements as to the manner in which summons should be served on a
domestic corporation (U.S. v. Mollenhauer Laboratories, Inc., 267 Fed. Rep. 2nd 260).

In the instant case the Manila court did not acquire jurisdiction over Delta Motor
because it was not properly served with summons. The service of summons on Dionisia
G. Miranda, who is not among the persons mentioned in section 13 of Rule 14, was
insufficient. It did not bind the Delta Motor.

"Courts acquire jurisdiction over the person of a party defendant and of the subject-
matter of the action by virtue of the service of summons in the manner required by
law. Where there is no service of summons or a voluntary general appearance by the
defendant, the court acquires no jurisdiction to pronounce a judgment in the cause."
(Syllabi, Salmon and Pacific Commercial Co. v. Tan Cueco, 36 Phil. 556).

Consequently, the order of default, the judgment by default and the execution in Civil
Case No. 97373 are void and should be set aside.

It appears that Civil Case No. 21303 filed by Delta Motor against Pamintuan in the
Pasig court, which is in effect a counter-claim to the Manila case, deals with the same
sale of the Toyota car which is involved in Civil Case No. 97373 of the Manila court.

In the interest of justice and to avoid conflicting decisions, the trial of the two cases
should be consolidated. The Pasig case should be transferred to Branch XXIV of the
Court of First Instance of Manila where Civil Case No. 97373 is assigned. Apparently,
Delta Motor filed its replevin case in Pasig because it was stipulated in the invoice
covering the sale that any action thereunder may be instituted in any competent court
of Rizal.

WHEREFORE, the order of default, judgment by default and the other proceedings in
 43

Civil Case No. 97373 are set aside. The lower court is directed to admit the answer of
Delta Motor.

Respondent Pamintuan may likewise file his answer in Civil Case No. 21303. The record
of that case should be transferred to the Court of First Instance of Manila as indicated
above.

If the parties do not come to any amicable settlement during the pre-trial of the two
cases, then further proceedings may be had for the adjudication of the said cases. No
costs.

SO ORDERED.

Concepcion, Jr., concur.

Fernando, C.J., in the result.

Separate Opinions

BARREDO, J., concurring:chanrob1es virtual 1aw library

I concur in the judgment setting aside the order of default as well as all subsequent
proceedings in Civil Case No. 97373, even if I am not inclined to agree that in the
service of summons upon private domestic corporations, it is indispensable that the
same should necessarily be made in person to the officers named in Section 13 of Rule
14, namely, the president, manager, secretary, cashier, agent or any of the directors
of the corporation. I feel that even as to said officers, service may be validly made by
substitution pursuant to Section 8 of the same rule, that is," (a) by leaving copies of
the summons at the defendant’s (any of such officer’s) dwelling house or residence
with some person of suitable age and discretion then residing therein, or (b) by leaving
the copies at defendant’s (the officer’s) office or regular place of business with some
competent person in charge thereof." I cannot see why if an individual defendant can
be served in such manner, the same method of service cannot be made to any of the
officers of the corporation indicated in the rule, the essence and effect of the act to be
done being practically identical, inasmuch as in the situation contemplated and for the
legal purposes intended, said officer is virtually the embodiment of the corporation.
And so, in the case at bar, it cannot be said that there was proper substituted service
upon Delta Motor, there being no evidence that Dionisia G. Miranda was the
"competent person in charge (of the office)" of any of the officers upon whom service
of summons can be made under the rule.

As to the filing of Delta Motor of Civil Case No. 21303 in the Court of First Instance of
Rizal, I believe that the same should have been considered by that court as barred by
the Manila Case (Civil Case No. 97373), but inasmuch as its adverse ruling on this
point was sustained by the Court of Appeals in CA-G.R. No. SP-04743 and the decision
therein is already final, respondent is bound by said decision as the law of the case.
 44

[G.R. No. L-64250. September 30, 1983.]

SUPERLINES TRANSPORTATION CO., INC. and ERLITO LORCA, Petitioners, v.

HON. LUIS L. VICTOR, Judge Presiding over Branch XVI of the Regional Trial
Court of Cavite, TIMOTEA T. MORALDE, CAYETANO T. MORALDE, JR.,
ALEXANDER T. MORALDE, EMMANUEL T. MORALDE, and JOCELYN MORALDE
ABELLANA, Respondents.

Benito P. Fabio for Plaintiff-Appellee.

Michael Moralde for Private Respondents.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; JUDICIAL ECONOMY AND ADMINISTRATION AS WELL AS

CONVENIENCE OF THE PARTIES; CONSIDERATIONS FOR CONSOLIDATION OF CASES
IN THE CASE AT BAR. — There is, however, a more pragmatic solution to the
cotroversy at bar; and that is to consolidate the Gumaca case with the Cavite case.
Considerations of judicial economy and administration, as well as the convenience of
the parties for which the rules on procedure and venue were formulated, dictate that it
is the Cavite court, rather than the Gumaca court, which serves as the more suitable
forum for the determination of the rights and obligations of the parties concerned. As
observed by both the trial and appellate courts, to require private respondents who are
all residents of Kawit, Cavite, to litigate their claims in the Quezon Court would
unnecessarily expose them to considerable expenses. On the other hand, no like
prejudice would befall the defendants transportation companies if they were required
to plead their causes in Cavite, for such change of venue would not expose them to
expenses which are not already liable to incur in connection with the Gumaca case.

2. ID.; PURPOSE AND OBJECT OF PROCEDURE. — The whole purpose and object of
procedure is to make the powers of the court fully and completely available for justice.
The most perfect procedure that can be devised is that which gives opportunity for the
most complete and perfect exercise of the powers of the court within the limitations set
by natural justice. It is that one which, in other words, gives the most perfect
opportunity for the powers of the count to transmute themselves into concrete acts of
justice between the parties before it. The purpose of such a procedure is not to restrict
the jurisdiction of the court over the subject matter, but to give it effective facility in
righteous action. The purpose of procedure is not to thwart justice. Its proper aim is to
facilitate the application of justice to the rival claims of contending parties. It was
created not to hinder and delay but to facilitate and promote the administration of
justice. It does not constitute the thing itself which courts are always striving to secure
to litigants. It is designed as the means best adapted to obtain that thing. In other
words, it is a means to an end. It is the means by which the powers of the court are
made effective in just judgments. When it loses the character of the one and takes on
that of the other the administration of justice becomes incomplete and unsatisfactory
 45

and lays itself open to grave criticism." (Manila Railroad Co. v. Attorney-General, 20
Phil. 523)

DECISION

ESCOLIN, J.:

A petition for certiorari to set aside the decision of the Intermediate Appellate Court in
CA-G.R. No. SP-00708 entitled "Superlines Transportation Co., Inc., Et. Al. versus Hon.
Luis L. Victor, Et Al.," which affirmed the orders dated March 28 and April 27, 1983 of
herein respondent Judge Luis L. Victor in Civil Case No. N-4338 of the Regional Trial
Court of Cavite, entitled "Timotea T. Moralde, Et. Al. versus Pantranco South Express,
Inc., Et. Al."cralaw virtua1aw library

On December 19, 1982, Bus No. 3008 of the Pantranco South Express, Inc., Pantranco
for short, driven by Rogelio Dillomas, collided with Bus No. 331 of the Superlines
Transportation Co., Inc., Superlines for short, then driven by Erlito Lorca along the
highway at Lumilang, Calauag, Quezon, resulting in the instantaneous death of
Cayetano P. Moralde, Sr., a passenger in the Pantranco bus.cralawnad

On January 4, 1983, Superlines instituted an action for damages before the then Court
of First Instance of Quezon, Gumaca Branch, against Pantranco and Rogelio Dillomas,
driver of said Pantranco Bus No. 3008. In its complaint, docketed as Civil Case No.
1671-G, Superlines alleged that the recklessness and negligence of the Pantranco bus
driver was the proximate cause of the accident and that there was want of diligence on
the part of Pantranco in the selection and supervision of its driver.

On February 11, 1983, private respondents Timotea T. Moralde, widow of the deceased
Cayetano P. Moralde, Sr., and her children, Cayetano, Jr., Alexander, Ramon,
Emmanuel, all surnamed Moralde, and Jocelyn M. Abellana, filed a complaint for
damages, docketed as Civil Case No. N-4338 of the Regional Trial Court of Cavite City,
against Superlines and its driver, Erlito Lorca, as well as Pantranco and its driver,
Rogelio Dillomas. The cause of action pleaded against Superlines was based on quasi-
delict, while that against Pantranco, on culpa-contractual.

On February 28, 1983, herein petitioners Superlines and its driver Erlito Lorca filed a
motion to dismiss in Civil Case No. N-4338 on the ground of pendency of another
action, obviously referring to Civil Case No. 1671-G pending before the Regional Trial
Court of Quezon, Gumaca Branch.

Finding that the two cases (Civil Cases No. 1671-G and No. N-4338) involved different
parties as well as different causes of action, respondent Judge Luis Victor denied the
motion to dismiss in the challenged order of March 28, 1983. Superlines moved for a
reconsideration, but the same was denied on April 27, 1983.

Dissatisfied, Superlines filed with the Intermediate Appellate Court a petition

for certiorari and prohibition with preliminary injunction, which petition, however, was
denied due course. Hence, this present recourse.

It is suggested by petitioners that private respondents Moraldes should pursue their

claim for damages by intervening in the Gumaca action, pursuant to Sec. 2, Rule 12 of
 46

the Rules of Court and in the light of Municipality of Hagonoy v. Secretary of

Agriculture and Natural Resources [73 SCRA 507] and Orellano v. Alvestir [76 SCRA
536]. It is contended that since the right of private respondents to claim damages is
founded on the same facts involved in the Gumaca action, any judgment rendered
therein will amount to res judicata in the Cavite case, for whatever adjudication is
made in the former case between Pantranco and Superlines as regards either of the
parties’ culpability would set said issue at rest. Furthermore, such intervention would
prevent multiplicity of suits and avoid confusion that may arise should the trial courts
render conflicting decisions.chanroblesvirtualawlibrary

Petitioners’ stand is consistent with our ruling in the case of Marapao v. Mendoza, 119
SCRA 97, where We held that:jgc:chanrobles.com.ph

"While respondent Castillo has not been impleaded in the Bohol case, she has similar
interests as Hotel de Mercedes, the defendant therein which is her employer. Petitioner
and private respondent both claim damages based on the same incident. A decision,
whether in favor of petitioner or private respondent in the Bohol case would amount to
res judicata in the Cebu case. Damages in favor of one party would preclude damages
in favor of the other.

"There is an additional reason for dismissal and that is, to avoid multiplicity of suits.
(Ago Timber Co. v. Hon. Ruiz, Et Al., 21 SCRA 138 (1967); Erlanger v. Villamor, 98
Phil. 1003 (1956); Teodoro, Jr. v. Mirasol, 99 Phil. 150 (1956).

"To protect the interests of respondent employee, she may intervene as a party in the
Bohol case and file a counterclaim for damages against petitioner."cralaw virtua1aw
library

There is, however, a more pragmatic solution to the controversy at bar; and that is to
consolidate the Gumaca case with the Cavite case. Considerations of judicial economy
and administration, as well as the convenience of the parties for which the rules on
procedure and venue were formulated, dictate that it is the Cavite court, rather than
the Gumaca court, which serves as the more suitable forum for the determination of
the rights and obligations of the parties concerned.

As observed by both the trial and appellate courts, to require private respondents who
are all residents of Kawit, Cavite, to litigate their claims in the Quezon Court would
unnecessarily expose them to considerable expenses. On the other hand, no like
prejudice would befall the defendants transportation companies if they were required
to plead their causes in Cavite, for such change of venue would not expose them to
expenses which they are not already liable to incur in connection with the Gumaca
case. The objection interposed by Superlines that it has its offices in Atimonan,
Quezon, should not detract from the overall convenience afforded by the consolidation
of cases in the Cavite Court. For apart from the fact that petitioner and its driver are
represented by the same counsel with offices located in Manila, defendants
transportation companies can readily avail of their facilities for conveying their
witnesses to the place of trial.chanrobles virtual lawlibrary

The ordered consolidation of cases, to our mind, crystallizes into reality the thinking of
our predecessors that:jgc:chanrobles.com.ph

". . . The whole purpose and object of procedure is to make the powers of the court
fully and completely available for justice. The most perfect procedure that can be
devised is that which gives opportunity for the most complete and perfect exercise of
 47

the powers of the court within the limitations set by natural justice. It is that one
which, in other words, gives the most perfect opportunity for the powers of the court to
transmute themselves into concrete acts of justice between the parties before it. The
purpose of such a procedure is not to restrict the jurisdiction of the court over the
subject matter, but to give it effective facility in righteous action. It may be said in
passing that the most salient objection which can be urged against procedure today is
that it so restricts the exercise of the court’s powers by technicalities that part of its
authority effective for justice between the parties is many times an inconsiderable
portion of the whole. The purpose of procedure is not to thwart justice. Its proper aim
is to facilitate the application of justice to the rival claims of contending parties. It was
created not to hinder and delay but to facilitate and promote the administration of
justice. It does not constitute the thing itself which courts are always striving to secure
to litigants. It is designed as the means best adapted to obtain that thing. In other
words, it is a means to an end. It is the means by which the powers of the court are
made effective in just judgments. When it loses the character of the one and takes on
that of the other the administration of justice becomes incomplete and unsatisfactory
and lays itself open to grave criticism." (Manila Railroad Co. v. Attorney-General, 20
Phil. 523)

WHEREFORE, the instant petition is hereby denied. Civil Case No. 1671-G of the
Regional Trial Court of Quezon is hereby ordered consolidated with Civil Case No. N-
4338 pending before the Regional Trial Court of Cavite. The Regional Trial Court of
Quezon, Gumaca Branch, is directed to transfer, without unnecessary delay, the
records of Civil Case No. 1671-G to the Regional Court of Cavite, Branch XVI.

SO ORDERED.
 48

[G.R. No. L-61308. December 29, 1983.]

VALLACAR TRANSIT, INC. and MARIO HAMBALA, Petitioners, v. CELESTINO

YAP and JENNY YAP and HON. VICENTE A. HIDALGO (Formerly presided by
Hon. EUTROPIO MIGRIÑO) Presiding Judge, Court of First Instance of Agusan
del Sur, Respondents.

Ceferino S. Paredes, Jr., for Petitioners.

Dollfuss R. Go & Associates for Respondents.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; PENDENCY OF TWO CASES IN TWO DIFFERENT COURTS

INVOLVING THE SAME PARTIES AND CAUSE OF ACTION; CONSOLIDATION OF THE
TWO CASES DESIRABLE TO SUBSERVE THE ORDERLY ADMINISTRATION OF JUSTICE.
— The pendency of these two (2) cases in two different courts and the possibility of
conflicting decisions being rendered by them are factors that will not subserve the
orderly administration of justice. Civil Case No. 6742 should therefore be consolidated
and tried with Civil Case No. 264 of the Regional Trial Court of Agusan del Sur. The
latter court, to Our mind, is the more suitable forum for the determination of the
controversy since Civil Case No. 264, instituted by respondents Yap against Vallacar,
Hambala and Hanil, had already been pending before the filing of Civil Case No. 6742.
Such consolidation is desirable in order to prevent confusion, to avoid multiplicity of
suits, and to save unnecessary cost and expense. Needless to add, this procedure is
well in accord with the principle that the rules of procedure "shall be liberally construed
in order to promote their object and to assist the parties in obtaining just, speedy and
inexpensive determination of every action and proceeding." (Rule 1, Sec. 2, Rules
Court)

DECISION

ESCOLIN, J.:
 49

Vallacar Transit, Inc., Vallacar for short, and its driver Mario Hambala filed this petition
to annul the order of the then Court of First Instance of Agusan del Sur, dated January
7, 1982, which dismissed their third party complaint against private respondent Hanil
Development Co., Ltd. in Civil Case No. 264, entitled "Celestino Yap, Et. Al. v. Vallacar
Transit, Inc., Et. Al."cralaw virtua1aw library

It appears that on May 16, 1979, Bus No. 646 of Vallacar, with Mario Hambala at the
wheel, figured in a collision with a dump truck owned by Hanil Development Co., Ltd.,
Hanil for short, at the highway at Bo. Talisay, Gingoog City. As a result of the accident,
private respondents Celestino Yap and Jenny Yap passengers of the Vallacar Bus,
suffered physical injuries, while Eddie Gonzaga, driver of the dump truck, died.

On August 23, 1979, respondents Yap filed an action for damages against Vallacar,
Mario Hambala and Hanil in the Court of First Instance of Agusan del Sur, docketed as
Civil Case No. 264. The cause of action against Vallacar was based on culpa
contractual, while that against Hanil was on quasi-delict. 1

On October 21, 1979, Vallacar and Mario Hambala filed their answer with cross-claim
against Hanil, laying the blame for the accident on the latter’s driver Eddie Gonzaga. 2

Respondents Celestino Yap and Jenny Yap subsequently filed an undated motion to
discharge Hanil as party-defendant in said case, on the ground that the latter, whose
address was unknown, could not be served with summons. On November 18, 1980,
the Court of First Instance of Agusan del Sur issued an order discharging Hanil as
defendant.chanrobles.com:cralaw:red

Meanwhile, on September 30, 1979, Hanil filed a separate complaint for damages
against Vallacar before the Court of First Instance of Misamis Oriental, docketed
therein as Civil Case No. 6742. Hanil alleged that the accident of May 16, 1979, which
resulted in the death of its (Hanil’s) driver Eddie Gonzaga and the destruction of its
dump truck, was due to the reckless and gross negligence of Vallacar’s driver. 3

On November 5, 1979, Vallacar filed its answer with counter claim in Civil Case No.
6742, alleging that the mishap was due solely to the fault of Hanil’s driver and that it
exercised due diligence in the selection, recruitment and supervision of its employees.
4

On August 8, 1981 Vallacar filed in Civil Case No. 264 of the Agusan del Sur Court a
motion for leave to file a third party complaint against Hanil. Said motion was granted
by the court. In its third party complaint, Vallacar sought to hold Hanil liable for
damages suffered by its injured passengers as well as its vehicle. 5

On November 20, 1981, Hanil moved to dismiss the aforesaid third party complaint
advancing, as ground therefor, the pendency of Civil Case No. 6742 in the Court of
First Instance of Misamis Oriental, involving the same parties, and the same cause and
reliefs sought. 6 The Court of First Instance of Agusan del Sur, finding merit in the
motion, issued the challenged order of January 7, 1982, dismissing petitioners’ third
party complaint on ground of litis pendentia. 7

The respondent court pointed out that petitioners, as third party plaintiffs in Civil Case
No. 264, alleged gross imprudence and lack of foresight on the part of the respondent
Hanil; that identical averments were made in their answer with counterclaim in Civil
Case No. 6742; that similarly, respondent Hanil, as plaintiff in Civil Case No. 6742,
averred that Vallacar and its driver were guilty of negligence in said mishap; and that
 50

the main issue in both cases involved the determination of the party blamable for the
accident.

While the respondent is technically correct in dismissing petitioners’ third party

complaint, such dismissal will not obviate the practical difficulties that may arise in the
adjudication of these cases.

We agree with the observation of respondent court that, as between the third party
complaint filed by petitioners in Civil Case No. 264 and respondent Hanil’s complaint in
Civil Case No. 6742, there is identity of parties as well as identity of rights asserted,
and that any judgment that may be rendered in one case will amount to res judicata in
the other. But the pendency of these two (2) cases in two different courts and the
possibility of conflicting decisions being rendered by them are factors that will not
subserve the orderly administration of justice.chanrobles virtual lawlibrary

Civil Case No, 6742 should therefore be consolidated and tried with Civil Case No, 264
of the Regional Trial Court of Agusan del Sur. The latter court, to Our mind, is the
more suitable forum for the determination of the controversy since Civil Case No. 264,
instituted by respondents Yap against Vallacar, Hambala and Hanil, had already been
pending before the filing of Civil Case No. 6742. Such consolidation is desirable in order
to prevent confusion, to avoid multiplicity of suits, and to save unnecessary cost and
expense. Needless to add, this procedure is well in accord with the principle that the
rules of procedure "shall be liberally construed in order to promote their object and to
assist the parties in obtaining just, speedy and inexpensive determination of every
action and proceeding." 8

WHEREFORE, Civil Case No. 6742 is hereby ordered consolidated with Civil Case No.
264 in the Regional Trial Court of Agusan del Sur. The Regional Trial Court of Misamis
Oriental is directed to forthwith transfer the records of Civil Case No. 6742 to the
Regional Trial Court of Agusan del Sur. No costs.

SO ORDERED.
 51

[G.R. No. 169677, February 18, 2013]

METROPOLITAN BANK AND TRUST COMPANY, AS SUCCESSOR-IN-INTEREST

OF ASIAN BANK CORPORATION, Petitioner, v. HON. EDILBERTO G. SANDOVAL,
HON. FRANCISCO H. VILLARUZ, JR. AND HON. RODOLFO A. PONFERRADA (IN
THEIR CAPACITIES AS CHAIRMAN AND MEMBERS, RESPECTIVELY, OF THE
SECOND DIVISION OF SANDIGANBAYAN) AND THE REPUBLIC OF THE
PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

The court, in furtherance of convenience or to avoid prejudice, may order a separate

trial of any claim, cross-claim, counterclaim, or third-party complaint, or of any
separate issue or of any number of claims, cross-claims, counterclaims, third-party
complaints or issues.1 But a separate trial may be denied if a party is thereby deprived
of his right to be heard upon an issue dealt with and determined in the main trial.

Through this special civil action for certiorari, Metropolitan Bank and Trust Company
(Metrobank) hereby seeks to set aside and nullify the resolutions dated June 25,
20042 and July 13, 20053 issued in Civil Case No. 0004, whereby the Sandiganbayan
granted the motion for separate trial filed by the Republic of the Philippines (Republic),
and upheld its jurisdiction over the Republic’s claim against the petitioner as the
successor-in-interest of Asian Bank Corporation (Asian Bank).

Antecedents

On July 17, 1987, the Republic brought a complaint for reversion, reconveyance,
restitution, accounting and damages in the Sandiganbayan against Andres V. Genito,
 52

Jr., Ferdinand E. Marcos, Imelda R. Marcos and other defendants. The action was
obviously to recover allegedly ill-gotten wealth of the Marcoses, their nominees,
dummies and agents. Among the properties subject of the action were two parcels of
commercial land located in Tandang Sora (Old Balara), Quezon City, covered by
Transfer Certificate of Title (TCT) No. 2664234 and TCT No. 2665885 of the Registry of
Deeds of Quezon City registered in the names of Spouses Andres V. Genito, Jr. and
Ludivina L. Genito.

On February 5, 2001, the Republic moved for the amendment of the complaint in order
to implead Asian Bank as an additional defendant. The Sandiganbayan granted the
motion.6 It appears that Asian Bank claimed ownership of the two parcels of land as
the registered owner by virtue of TCT No. N-201383 and TCT No. N-201384 issued in
its name by the Registry of Deeds of Quezon City. Asian Bank was also in possession of
the properties by virtue of the writ of possession issued by the Regional Trial Court
(RTC) in Quezon City.7

When the Republic was about to terminate its presentation of evidence against the
original defendants in Civil Case No. 0004, it moved to hold a separate trial against
Asian Bank.8

Commenting on the motion, Asian Bank sought the deferment of any action on the
motion until it was first given the opportunity to test and assail the testimonial and
documentary evidence the Republic had already presented against the original
defendants, and contended that it would be deprived of its day in court if a separate
trial were to be held against it without having been sufficiently apprised about the
evidence the Republic had adduced before it was brought in as an additional
defendant.9

In its reply to Asian Bank’s comment, the Republic maintained that a separate trial for
Asian Bank was proper because its cause of action against Asian Bank was entirely
distinct and independent from its cause of action against the original defendants; and
that the issue with respect to Asian Bank was whether Asian Bank had actual or
constructive knowledge at the time of the issuance of the TCTs for the properties in its
name that such properties were the subject of the complaint in Civil Case No. 0004,
while the issue as to the original defendants was whether they had “committed the
acts complained of as constituting illegal or unlawful accumulation of wealth which
would, as a consequence, justify forfeiture of the said properties or the satisfaction
from said properties of the judgement that may be rendered in favor of the
Republic.”10

Asian Bank’s rejoinder to the Republic’s reply asserted that the issue concerning its
supposed actual or constructive knowledge of the properties being the subject of the
complaint in Civil Case No. 0004 was intimately related to the issue delving on the
character of the properties as the ill-gotten wealth of the original defendants; that it
thus had a right to confront the evidence presented by the Republic as to the character
of the properties; and that the Sandiganbayan had no jurisdiction to decide Asian
Bank’s ownership of the properties because the Sandiganbayan, being a special court
with limited jurisdiction, could only determine the issue of whether or not the
properties were illegally acquired by the original defendants.11

On June 25, 2004, the Sandiganbayan issued the first assailed resolution granting the
Republic’s motion for separate trial, giving its reasons as follows:
 53

xxxx

A cursory reading of the comment filed by defendant Asian Bank to plaintiff’s request
for a separate trial would readily reveal that defendant is not actually opposing the
conduct of a separate trial insofar as the said bank is concerned. What it seeks is the
opportunity to confront the witnesses and whatever documentary exhibits that may
have been earlier presented by plaintiff in the case before the Court grants a separate
trial. This being the situation, we find no reason to deny the motion in light of plaintiff’s
position that its claim as against Asian Bank is entirely separate and distinct from its
claims as against the original defendants, albeit dealing with the same subject matter.
In fact, as shown by the allegations of the Second Amended Complaint where Asian
Bank was impleaded as a party defendant, the action against the latter is anchored on
the claim that its acquisition of the subject properties was tainted with bad faith
because of its actual or constructive knowledge that the said properties are subject of
the present recovery suit at the time it acquired the certificates of title covering the
said properties in its name. Consequently, whether or not it is ultimately established
that the properties are ill-gotten wealth is of no actual significance to the incident
pending consideration since the action against defendant bank is predicated not on the
claim that it had knowledge of the ill-gotten wealth character of the properties in
question but rather on whether or not it had knowledge, actual or constructive, of the
fact that the properties it registered in its name are the subject of the instant recovery
suit. Besides, plaintiff already admits that the evidence it had presented as against the
original defendants would not apply to defendant bank for the reason that there is no
allegation in the second amended complaint imputing responsibility or participation on
the part of the said bank insofar as the issue of accumulation of wealth by the original
defendants are concerned. Thus, there appears no basis for defendant bank’s
apprehension that it would be deprived of its right to due process if its not given the
opportunity to cross-examine the witnesses presented prior to its inclusion as party
defendant in the case. To reiterate, the only issue insofar as defendant bank is
concerned is whether there is evidence to show that it acquired the titles to the
sequestered properties in bad faith.

Neither are we inclined to sustain defendant’s bank argument that the Court cannot
grant a separate trial in this case because it has no jurisdiction over the claim that
defendant bank acquired the properties in bad faith. Indeed, the issue of defendant
bank’s acquisition of the properties in bad faith is merely incidental to the main action
which is for reversion, reconveyance, restitution, accounting and damages. It is
axiomatic that jurisdiction over the subject matter of a case is conferred by law and is
determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein (Russell v. Vestil, 304 SCRA 738; Saura v. Saura, Jr., 313 SCRA 465).12

Asian Bank moved for the reconsideration of the resolution, but the Sandiganbayan
denied its motion through the second assailed resolution issued on July 13, 2005.13

Hence, Metrobank commenced this special civil action for certiorari as the successor-in-
interest of Asian Bank and transferee of the properties.14

Issues

Metrobank contends that the Sandiganbayan committed grave abuse of discretion in

ruling that: (1) the Republic was entitled to a separate trial against Asian Bank; (2) the
only issue as regards Asian Bank was whether there was evidence that Asian Bank
acquired the properties in bad faith; and (3) the Sandiganbayan had jurisdiction over
 54

the issue of Asian Bank’s alleged bad faith in acquiring the properties.15

Anent the first issue, Metrobank states that the holding of a separate trial would deny
it due process, because Asian Bank was entitled to contest the evidence of the Republic
against the original defendants prior to Asian Bank’s inclusion as an additional
defendant; that Asian Bank (Metrobank) would be deprived of its day in court if a
separate trial was held against it, considering that the Republic had already presented
such evidence prior to its being impleaded as an additional defendant; that such
evidence would be hearsay unless Asian Bank (Metrobank) was afforded the
opportunity to test and to object to the admissibility of the evidence; that because
Asian Bank disputed the allegedly ill-gotten character of the properties and denied any
involvement in their allegedly unlawful acquisition or any connivance with the original
defendants in their acquisition, Asian Bank should be given the opportunity to refute
the Republic’s adverse evidence on the allegedly ill-gotten nature of the properties.16

With respect to the second issue, Metrobank submits thuswise:

8.02 x x x the Honorable Sandiganbayan failed to consider that Respondent Republic of

the Philippines’ claim for the recovery of the subject properties from Asian Bank
Corporation is anchored mainly on its allegations that: a) the subject properties
constitute ill-gotten wealth of the other defendants in the instant civil case; and, b)
Asian Bank Corporation acquired the subject properties in bad faith and with due notice
of the pendency of the ill-gotten wealth case. In other words, the determination of the
character of the subject properties as “ill-gotten wealth” is equally important and
relevant for Asian Bank Corporation as it is for the other defendants considering that
the issue of its alleged acquisition in bad faith of the subject properties is premised on
Respondent Republic of the Philippines’ claim that the subject properties form part of
the ill-gotten wealth of the late President Marcos and his cronies. Such being the case,
Asian Bank Corporation is entitled as a matter of right to contest whatever evidence
was presented by Respondent Republic of the Philippines on these two (2) issues,
specifically the character and nature of the subject properties.

8.03 It must be stressed that the discretion of the court to order a separate trial of
such issues should only be exercised where the issue ordered to be separately tried is
so independent of the other issues that its trial will in no way involve the trial of the
issues to be thereafter tried and where the determination of that issues will
satisfactorily and with practical certainty dispose of the case, if decided for defendant.
Considering that the issue on Asian Bank Corporation’s alleged acquisition in bad faith
of the subject properties is intimately related to the issue on the character and nature
of the subject properties as ill-gotten wealth of the other defendants in the instant civil
case, there is absolutely no legal or factual basis for the holding of a separate trial
against Asian Bank Corporation.17

As to the third issue, Metrobank posits that Asian Bank acquired the properties long
after they had been acquired by the original defendants supposedly through unlawful
means; that the Republic admitted that the evidence adduced against the original
defendants would not apply to Asian Bank because the amended complaint in Civil
Case No. 0004 did not impute any responsibility to Asian Bank for the accumulation of
wealth by the original defendants, or did not allege that Asian Bank had participated in
such accumulation of wealth; that there was also no allegation or proof that Asian Bank
had been a business associate, dummy, nominee or agent of the Marcoses; that the
inclusion of Asian Bank was not warranted under the law; that Asian Bank was a
transferee in good faith and for valuable consideration; that the Sandiganbayan had no
jurisdiction over civil cases against innocent purchasers for value like Asian Bank that
 55

had no notice of the allegedly ill-gotten nature of the properties; and that considering
the admission of the Republic that the issue on the accumulation of wealth by the
original defendants did not at all concern Asian Bank, it follows that the Sandiganbayan
had no jurisdiction to pass judgment on the validity of Asian Bank’s ownership of the
properties.18

In contrast, the Republic insists that the Rules of Court allowed separate trials if the
issues or claims against several defendants were entirely distinct and separate,
notwithstanding that the main claim against the original defendants and the issue
against Asian Bank involved the same properties; that the allegations in the case
against Spouses Genito and the other original defendants pertained to the Republic’s
claim that the properties listed in Annex A of the original complaint constituted ill-
gotten wealth, resulting in the probable forfeiture of the listed properties should the
Republic establish in the end that such original defendants had illegally or unlawfully
acquired such properties; that although the Republic conceded that neither Asian Bank
nor Metrobank had any participation whatsoever in the commission of the illegal or
unlawful acts, the only issue relevant to Metrobank being whether it had knowledge
that the properties had been in custodia legis at the time of its acquisition of them to
determine its allegation of being an innocent purchaser for valuable consideration; that
because the properties were situated in the heart of Quezon City, whose land records
had been destroyed by fire in 1998, resulting in the rampant proliferation of fake land
titles, Asian Bank should have acted with extra caution in ascertaining the validity of
the mortgagor’s certificates of title; and that the series of transactions involving the
properties was made under dubious circumstances.19

The Republic posits that the Sandiganbayan had exclusive original jurisdiction over all
cases involving the recovery of ill-gotten wealth pursuant to Executive Orders No. 1,
No. 2, No. 14 and No. 14-A issued in 1986, laws encompassing the recovery of
sequestered properties disposed of by the original defendants while such properties
remained in custodia legis and pending the final resolution of the suit; and that the
properties pertaining to Spouses Genito were among the properties placed under the
writs of sequestration issued by the Presidential Commission on Good Government
(PCGG), thereby effectively putting such properties in custodia legis and rendering
them beyond disposition except upon the prior approval of the Sandiganbayan.20

Ruling

The petition for certiorari is partly meritorious.

The Sandiganbayan gravely abused its discretion in granting the Republic’s motion for
separate trial, but was correct in upholding its jurisdiction over the Republic’s claim
against Asian Bank (Metrobank).

First and Second Issues:

Separate Trials are Improper

The first and second issues, being interrelated, are jointly discussed and resolved.

The rule on separate trials in civil actions is found in Section 2, Rule 31 of the Rules of
Court, which reads:

Section 2. Separate trials. – The court, in furtherance of convenience or to avoid

prejudice, may order a separate trial of any claim, cross-claim, counterclaim, or third-
 56

party complaint, or of any separate issue or of any number of claims, cross-claims,

counterclaims, third-party complaints or issues.

The text of the rule grants to the trial court the discretion to determine if a separate
trial of any claim, cross-claim, counterclaim, or third-party complaint, or of any
separate issue or of any number of claims, cross-claims, counterclaims, third-party
complaints or issues should be held, provided that the exercise of such discretion is in
furtherance of convenience or to avoid prejudice to any party.

The rule is almost identical with Rule 42(b) of the United States Federal Rules of Civil
Procedure (Federal Rules), a provision that governs separate trials in the United States
Federal Courts (US Federal Courts),viz:

Rule 42. Consolidation; Separate Trials.

xxxx

(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or

when separate trials will be conducive to expedition and economy, may order a
separate trial of any claim, crossclaim, counterclaim, or third-party claim, or of any
separate issue or of any number of claims, crossclaims, counterclaims, third-party
claims, or issues, always preserving the inviolate right of trial by jury as declared by
the Seventh Amendment to the Constitution or as given by a statute of the United
States.

The US Federal Courts have applied Rule 42(b) by using several principles and
parameters whose application in this jurisdiction may be warranted because our rule
on separate trials has been patterned after the original version of Rule 42(b).21 There
is no obstacle to adopting such principles and parameters as guides in the application
of our own rule on separate trials. This is because, generally speaking, the Court has
randomly accepted the practices in the US Courts in the elucidation and application of
our own rules of procedure that have themselves originated from or been inspired by
the practice and procedure in the Federal Courts and the various US State Courts.

In Bowers v. Navistar International Transport Corporation,22 we find the following

explanation made by the US District Court for the Southern District of New York on the
objectives of having separate trials, to wit:

The aim and purpose of the Rule is aptly summarized in C. Wright and A Miller’s
Federal Practice and Procedure:

The provision for separate trials in Rule 42 (b) is intended to further convenience,
avoid delay and prejudice, and serve the ends of justice. It is the interest of efficient
judicial administration that is to be controlling rather than the wishes of the parties.
The piecemeal trial of separate issues in a single suit is not to be the usual course. It
should be resorted to only in the exercise of informed discretion when the court
believes that separation will achieve the purposes of the rule.

xxxx

As explained recently by the Second Circuit in United v. Alcan Aluminum Corp., Nos.
92-6158, 6160 1993 WL 100100, 1 (2d Cir., April 6, 1993), the purpose of separate
trials under Rule 42 (b) is to “isolate issues to be resolved, avoid lengthy and perhaps
needless litigation . . . [and to] encourage settlement discussions and speed up
 57

remedial action.” (citing,Amoco Oil v. Borden, Inc., 889 F.2d 664, 668 (5th Cir.
1989); Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir.), cert. denied sub nom., 469 U.S.
1072, 105 S. Ct. 565, 83 L. Ed. 2d 506 (1984) (separate trials are proper to further
convenience or to avoid prejudice); Ismail v. Cohen, 706 F. Supp. 243, 251 (S.D.N.Y.
1989) (quoting, United States v. International Business Machines Corp., 60 F.R.D. 654,
657 (S.D.N.Y. 1973) (separate trials under Rule 42 (b) are appropriate, although not
mandatory, to “(1) avoid prejudice; (2) provide for convenience, or (3) expedite the
proceedings and be economical.”) Separate trials, however, remain the exception
rather than the rule. See, e.g., Response of Carolina, Inc. v. Leasco Response, Inc.,
537 F.2d 137 (5th Cir. 1976) xxx (separation of issues is not the usual course under
Rule 42 (b)). The moving party bears the burden of establishing that separate trials
are necessary to prevent prejudice or confusion and serve the ends of justice. Buscemi
v. Pepsico, Inc., 736 F. Supp. 1267, 1271 (S.D.N.Y. 1990).

In Divine Restoration Apostolic Church v. Nationwide Mutual Insurance Co.,23 the US

District Court for the Southern District of Texas, Houston Division specified that
separate trials remained the exception, and emphasized that the moving party had the
burden to establish the necessity for the separation of issues, viz:

Rule 42 (b) provides that a court has discretion to order separate trials of claims “in
furtherance of convenience or to avoid prejudice, or when separate trials will be
conducive to expedition and economy.” FED. R. CIV. P.42 (b). Thus, the two primary
factors to be considered in determining whether to order separate trials are efficient
judicial administration and potential prejudice. Separation of issues for separate trials
is “not the usual course that should be followed,” McDaniel v. Anheuser-Bush, Inc., 987
F. 2d 298, 304 (5th Cir. 1993), and the burden is on the party seeking separate trials to
prove that separation is necessary. 9A CHARLES ALAN WRIGHT, ARTHUR R. MILLER &
MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE 2388 (3d ed. 2001).

xxxx

Still, in Corrigan v. Methodist Hospital,24 the US District Court for the Eastern District of
Pennsylvania has cautioned against the unfettered granting of separate trials, thusly:

Courts order separate trials only when “clearly necessary.” Wetherill v. University of
Chicago, 565 F. Supp. 1553, 1566-67 (N.D. Ill. 1983) (citing 5 James William Moore,
Moore’s Federal Practice at pp. 42-37 to 42-38 & n.4 (1982)). This is because a “single
trial will generally lessen the delay, expense, and inconvenience to the parties and the
courts.” 5 James William Moore, Moore’s Federal Practice P. 42-031, at p. 42-43
(1994); Laitram Corp. v. Hewlett-Packard Co., 791 F. Supp. 113, 115 (E.D. La.
1992); Willemijn Houdstermaatschaapij BV. V. Apollo Computer, 707 F. Supp. 1429,
1433 (D. Del. 1989). The movant has the burden to show prejudice. Moore at p. 42-
48.

x x x A Colorado District Court found three factors to weigh in determining whether to

order separate trials for separate defendants. These are 1) whether separate trials
would further the convenience of the parties; 2) whether separate trials would promote
judicial economy; and 3) whether separate trials would avoid substantial prejudice to
the parties. Tri-R Sys. V. Friedman & Son, 94 F.R.D. 726, 727 (D. Colo. 1982).

In Miller v. American Bonding Company,25 the US Supreme Court has delimited the
holding of separate trials to only the exceptional instances where there were special
and persuasive reasons for departing from the general practice of trying all issues in a
case at only one time, stating:
 58

In actions at law, the general practice is to try all the issues in a case at one time; and
it is only in exceptional instances where there are special and persuasive reasons for
departing from this practice that distinct causes of action asserted in the same case
may be made the subjects of separate trials. Whether this reasonably may be done in
any particular instance rests largely in the court’s discretion.
Further, Corpus Juris Secundum26 makes clear that neither party had an absolute right
to have a separate trial of an issue; hence, the motion to that effect should be allowed
only to avoid prejudice, further convenience, promote justice, and give a fair trial to all
parties, to wit:

Generally speaking, a lawsuit should not be tried piecemeal, or at least such a trial
should be undertaken only with great caution and sparingly. There should be one full
and comprehensive trial covering all disputed matters, and parties cannot, as of right,
have a trial divided. It is the policy of the law to limit the number of trials as far as
possible, and separate trials are granted only in exceptional cases. Even under a
statute permitting trials of separate issues, neither party has an absolute right to have
a separate trial of an issue involved. The trial of all issues together is especially
appropriate in an action at law wherein the issues are not complicated, x x x, or where
the issues are basically the same x x x

x x x Separate trials of issues should be ordered where such separation will avoid
prejudice, further convenience, promote justice, and give a fair trial to all parties.

Bearing in mind the foregoing principles and parameters defined by the relevant US
case law, we conclude that the Sandiganbayan committed grave abuse of its discretion
in ordering a separate trial as to Asian Bank (Metrobank) on the ground that the issue
against Asian Bank was distinct and separate from that against the original defendants.
Thereby, the Sandiganbayan veered away from the general rule of having all the issues
in every case tried at one time, unreasonably shunting aside the dictum in Corrigan,
supra, that a “single trial will generally lessen the delay, expense, and inconvenience
to the parties and the courts.”27

Exceptions to the general rule are permitted only when there are extraordinary
grounds for conducting separate trials on different issues raised in the same case, or
when separate trials of the issues will avoid prejudice, or when separate trials of the
issues will further convenience, or when separate trials of the issues will promote
justice, or when separate trials of the issues will give a fair trial to all parties.
Otherwise, the general rule must apply.

As we see it, however, the justification of the Sandiganbayan for allowing the separate
trial did not constitute a special or compelling reason like any of the exceptions. To
begin with, the issue relevant to Asian Bank was not complicated. In that context, the
separate trial would not be in furtherance of convenience. And, secondly, the cause of
action against Asian Bank was necessarily connected with the cause of action against
the original defendants. Should the Sandiganbayan resolve the issue against Spouses
Genito in a separate trial on the basis of the evidence adduced against the original
defendants, the properties would be thereby adjudged as ill-gotten and liable to
forfeiture in favor of the Republic without Metrobank being given the opportunity to
rebut or explain its side. The outcome would surely be prejudicial towards Metrobank.

The representation by the Republic in its comment to the petition of Metrobank, that
the latter “merely seeks to be afforded the opportunity to confront the witnesses and
documentary exhibits,” and that it will “still be granted said right during the conduct of
the separate trial, if proper grounds are presented therefor,”28 unfairly dismisses the
 59

objective possibility of leaving the opportunity to confront the witnesses and

documentary exhibits to be given to Metrobank in the separate trial as already too late.
The properties, though already registered in the name of Asian Bank, would be
meanwhile declared liable to forfeiture in favor of the Republic, causing Metrobank to
suffer the deprivation of its properties without due process of law. Only a joint trial
with the original defendants could afford to Metrobank the equal and efficient
opportunity to confront and to contest all the evidence bearing on its ownership of the
properties. Hence, the disadvantages that a separate trial would cause to Metrobank
would far outweigh any good or benefit that the Republic would seemingly stand to
gain from the separation of trials.

We must safeguard Metrobank’s right to be heard in the defense of its registered

ownership of the properties, for that is what our Constitution requires us to do. Hence,
the grant by the Sandiganbayan of the Republic’s motion for separate trial, not being in
furtherance of convenience or would not avoid prejudice to a party, and being even
contrary to the Constitution, the law and jurisprudence, was arbitrary, and, therefore,
a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the Sandiganbayan.29

Third Issue:
Sandiganbayan has exclusive original jurisdiction
over the matter involving Metrobank

Presidential Decree No. 1606,30 as amended by Republic Act No. 797531 and Republic
Act No. 8249,32 vests the Sandiganbayan with original exclusive jurisdiction over civil
and criminal cases instituted pursuant to and in connection with Executive Orders No.
1, No. 2, No. 14 and No. 14-A, issued in 1986 by then President Corazon C. Aquino.

Executive Order No. 1 refers to cases of recovery and sequestration of ill-gotten wealth
amassed by the Marcoses their relatives, subordinates, and close associates, directly or
through nominees, by taking undue advantage of their public office and/or by using
their powers, authority, influence, connections or relationships. Executive Order No. 2
states that the ill-gotten wealth includes assets and properties in the form of estates
and real properties in the Philippines and abroad. Executive Orders No. 14 and No. 14-
A pertain to the Sandiganbayan’s jurisdiction over criminal and civil cases relative to
the ill-gotten wealth of the Marcoses and their cronies.

The amended complaint filed by the Republic to implead Asian Bank prays for
reversion, reconveyance, reconstitution, accounting and damages. In other words, the
Republic would recover ill-gotten wealth, by virtue of which the properties in question
came under sequestration and are now, for that reason, in custodia legis.33

Although the Republic has not imputed any responsibility to Asian Bank for the illegal
accumulation of wealth by the original defendants, or has not averred that Asian Bank
was a business associate, dummy, nominee, or agent of the Marcoses, the allegation in
its amended complaint in Civil Case No. 0004 that Asian Bank acted with bad faith for
ignoring the sequestration of the properties as ill-gotten wealth has made the cause of
action against Asian Bank incidental or necessarily connected to the cause of action
against the original defendants. Consequently, the Sandiganbayan has original
exclusive jurisdiction over the claim against Asian Bank, for the Court has ruled
in Presidential Commission on Good Government v. Sandiganbayan,34 that “the
Sandiganbayan has original and exclusive jurisdiction not only over principal causes of
action involving recovery of ill-gotten wealth, but also over all incidents arising from,
incidental to, or related to such cases.” The Court made a similar pronouncement
 60

sustaining the jurisdiction of the Sandiganbayan inRepublic of the Philippines (PCGG) v.

Sandiganbayan (First Division), 35 to wit:

We cannot possibly sustain such a puerile stand. Peña itself already dealt with the
matter when it stated that under Section 2 of Executive Order No. 14, all cases of the
Commission regarding alleged ill-gotten properties of former President Marcos and his
relatives, subordinates, cronies, nominees and so forth, whether civil or criminal, are
lodged within the exclusive and original jurisdiction of the Sandiganbayan, “and all
incidents arising from, incidental to, or related to such cases necessarily fall likewise
under the Sandiganbayan’s exclusive and original jurisdiction, subject to review on
certiorari exclusively by the Supreme Court.”

WHEREFORE, the Court PARTIALLY GRANTS the petition for certiorari.

Let the writ of certiorari issue: (a) ANNULLING AND SETTING ASIDE the Resolution
dated June 25, 2004 and the Resolution dated July 13, 2005 issued by the
Sandiganbayan in Civil Case No. 0004 granting the motion for separate trial of the
Republic of the Philippines as to Metropolitan Bank and Trust Company; and
(b), DIRECTING the Sandiganbayan to hear Civil Case No. 0004 against Metropolitan
Bank and Trust Company in the same trial conducted against the original defendants in
Civil Case No. 0004.

The Court DECLARES that the Sandiganbayan has original exclusive jurisdiction over
the amended complaint in Civil Case No. 0004 as against Asian Bank
Corporation/Metropolitan Bank and Trust Company.

No pronouncements on costs of suit.

SO ORDERED.
 61

[G.R. No. L-40948. June 29, 1976.]

GREGORIO ESTRADA, Petitioner, v. HONORABLE FRANCISCO CONSOLACION,

Judge of the Court of First Instance of Davao, Br. II, CORAZON RAMIREZ UY,
and LUCIO GALAURA,Respondents.

Leonides T. Tan for Petitioner.

Oscar V. Breva for Private Respondents.

SYNOPSIS

Private respondents were sued in the court a quo for breach of their obligations as
common carrier, by reason of the death of plaintiff’s wife, a passenger of their vehicle.
Said respondents, in their defense, claimed that the proximate and only cause of the
accident was the negligence of third persons over whom they had no supervision and
control; and they set up a counterclaim for damages by reason of the institution of the
suit against them. Subsequently, they moved for summary judgment against the
plaintiff on the ground that there was no genuine issue as to any material fact in the
case, except as to the amount of damages sought by way of counterclaim, and
submitted supporting affidavits to disprove liability for the offense. The plaintiff
opposed the motion, relying heavily on the presumption that in case of death of a
 62

passenger, the common carrier is presumed "to have been at fault or to have acted
negligently unless the carrier proves that he has observed extraordinary diligence."
Notwithstanding the opposition, respondent Judge issued his questioned order,
decreeing that defendants (private respondents) were entitled to summary judgment,
except as to the amount of damages recoverable. A motion for reconsideration was
filed on the ground that said court order failed to state clearly and distinctly the facts
and law on which it is based. The motion for reconsideration having proved futile, this
instant petition was filed.

The Supreme Court held that respondent Judge’s observation that "there is no genuine
issue as to any material fact and no controversial question of fact to be submitted to
the trial court" was a mere interlocutory order and cannot be considered a judgment.
There being no judgment to annul the Supreme Court considered the petition
for certiorari with prohibition as premature.

Petition dismissed.

SYLLABUS

1. CIVIL PROCEDURE; SUMMARY JUDGMENTS; WHO MAY MOVE FOR SUMMARY

JUDGMENTS. — Pursuant to Section 2, Rule 34, of the Revised Rules, "A party against
whom a claim, counterclaim, or crossclaim is asserted or a declaratory relief is sought
may, at any time, move with supporting affidavits for a summary judgment in his favor
and to all or any part thereof." The defendant who believes that he is entitled to a
judgment either on the pleadings or on the basis of extrinsic facts established by
affidavits or depositions may move for summary judgment in his favor.

2. ID.; ID.; SUPPORTING AFFIDAVITS; CONTENTS. — When the moving party is a

defending party, his pleadings, depositions or affidavits must show that his defenses or
denials are sufficient to defeat the claimant’s claim. The affidavit submitted by the
party moving for summary judgment shall be by persons having personal knowledge of
the facts; it shall recite all material facts and show that there is no defense to the
cause of action or that the cause of action has no merit.

3. ID.; ID.; OPPOSING AFFIDAVITS MUST ESTABLISH GENUINE ISSUES OF FACTS. —

The adverse party may also prior to the date of hearing, serve opposing affidavits. The
opposing papers, including pleadings, depositions, and affidavits must establish a
genuine issue of fact in order to defeat a motion for summary judgment.

4. ID.; ID.; OBJECT. — Summary Judgment or Accelerated Judgment is a device for

weeding out sham claims or defenses at an early stage of the litigation, thereby
avoiding the expense and loss of time involved in a trial. The very object is to separate
what is formal or pretended in denial or averment from what is genuine and
substantial, so that only the latter may subject a suitor to the burden of a trial.

5. ID.; ID.; GRANT, BASIS OF. — Summary judgment should not be granted where it
fairly appears that there is a triable issue. The Court should not pass on questions of
credibility or weight of evidence, and the summary judgment procedure should not be
perverted to the trial of disputed questions of facts upon affidavits. The test, therefore,
of a motion for summary judgment is — whether the pleadings, affidavits and exhibits
in support of the motions are sufficient to overcome the opposing papers and to justify
a finding as a matter of law that there is no defense to the action or the claim is clearly
 63

meritorious.

6. ID.; ID.; PROCEEDINGS. — In proceedings for summary judgments, the burden of

proof is upon the plaintiff to prove the cause of action and to show that the defense is
interposed solely for the purpose of delay. After plaintiff’s burden has been discharged,
defendant has the burden to show facts sufficient to entitle him to defend.

7. ID.; ID; WHEN QUESTIONED ORDER MERELY INTERLOCUTORY. — The issue as to

whether a carrier used such reasonable precautions to avoid the accident as would
ordinarily be used by careful, prudent persons under like circumstances is a question
essentially of fact and, therefore, ordinarily, such issue must be decided at the trial.
But where as in the case at bar, petitioner has not submitted opposing affidavits to
controvert private respondent’s evidence that the driver of the passenger jeepney was
free of contributory fault as he stopped the jeepney to avoid the accident, but in spite
of such precaution the accident occurred, respondent Judge did not, therefore, act
arbitrarily in declaring in his Order of May 20, 1975, that "there is no genuine issue as
to any material fact and no controversial question of fact to be submitted at the trial."
This was, however, a mere interlocutory order directing that a hearing be conducted
for the purpose of ascertaining the amount or the assessment of damages which may
be adjudged in favor of the prevailing party. It is a determination of the court of a
preliminary point or directing some steps in the proceedings, but not a disposition on
the merits.

8. ID.; ID.; DUTY OF COURTS WHEN RENDERING SUMMARY JUDGMENTS. — In the

absence of any findings of fact and conclusions of law, an order of a Judge cannot be
considered a judgment. It has been held that "a trial court in granting summary
judgment should file findings of fact and conclusion of law or a memorandum opinion
so as to disclose grounds upon which the trial court reached its determination." In this
jurisdiction, pursuant to Section 9 of Article X of the Constitution and the procedural
rules, all judgments determining the merits of cases should state clearly and distinctly
the facts and the law on which it is based.

9. CONTRACT OF CARRIAGE; REQUIREMENT OF EXTRAORDINARY DILIGENCE OF

CARRIER; FORTUITOUS EVENT AS A GROUND TO OVERCOME PRESUMPTION OF
LIABILITY IN CASE OF PASSENGER’S DEATH; REQUIREMENTS. — In order to
constitute a caso fortuito that would exempt a person from responsibility, it is
necessary that (1) the event must be independent of the human will; (2) the
occurrence must render it impossible for the obligor to fulfill his obligation in a normal
manner; and (3) the obligor must be free of a concurrent or contributory fault or
negligence.

10. CERTIORARI; PETITION PREMATURE WHEN THERE IS NO JUDGMENT TO BE SET

ASIDE. — Where the order sought to be annulled cannot be considered a judgment in
view of the absence of any findings of fact and conclusions of law, the petition
for certiorari with prohibition is premature.

BARREDO, J., concurring:chanrob1es virtual 1aw library

1. CIVIL PROCEDURE; SUMMARY JUDGMENTS; DISTINGUISHED FROM JUDGMENT ON

THE PLEADINGS. — There is the usual error of equating summary judgment with
judgment on the pleadings. Very often, it is contended that because the allegations in
the pleadings give rise to triable issue of fact, summary judgment is not proper. In
other words, it is assumed that just because there is a jointing of the factual issues in
the pleadings, which are not under oath, necessarily a trial with presentation of
 64

evidence by both parties is called for. But such criterion is true only for denying a
motion for judgment on the pleadings, certainly not for summary judgment. For the
basic reason for judgment on the pleadings is that the allegations in the pleadings of
the contending parties show that there is no controversy at all between them as to the
facts, which is not the reason behind summary judgments. In summary judgment
procedure, it is assumed precisely that in their pleadings, the parties have joined
issues on the ultimate facts, at least, but just the same, trial is foreclosed because the
factual issues thus joined do not appear to be genuine, meaning to say, they are not
real but sham.

2. ID.; ID.; FACTUAL ISSUES RAISED BY PARTY WHEN CONSIDERED SHAM. — And a
factual issue raised by a party is considered as sham when by its nature it is evident
that it cannot be proven or it is such that the party tendering the same has neither any
sincere intention nor adequate evidence to prove it. This usually happens in denials
made by defendants merely for the sake of having an issue and thereby gaining delay,
taking advantage of the fact that their answers are not under oath anyway.

3. ID.; ID.; DETERMINATION OF THE GENUINENESS OF THE FACTUAL ISSUES. — The

determination of the genuineness of the factual issues in a given case and referred to
in a motion for summary judgment is not supposed to be based on the tenor or
contents of the pleadings. It is only from the consideration and appraisal of the facts
alleged under oath by the parties and/or their witnesses in their affidavits submitted
with the motion and the corresponding opposition that such genuineness may and
should be determined.

4. ID.; ID.; CHOICE BETWEEN RENDERING SUMMARY JUDGMENT AND CONDUCTING

TRIAL DISCRETIONARY UPON THE JUDGE. — Whether or not the court should decide in
favor of either a summary judgment or a full-blown trial lies in the sound discretion of
the trial judge, it being understood that he has fully imbibed the basic objective of the
remedy, namely, to do away with unnecessary trials as long as this can be done
without causing injustice to any of the parties. He must not avoid trial just because it
involves more work and time, but, on the other hand, he must not waste time and
effort in receiving evidence, where, on the basis of the affidavits and counter-affidavits
before him, the result is already a foregone conclusion or indubitably predictable. In
case of doubt, it is, of course preferable to hold a trial, in which event, he and the
parties under his guidance, may as far as practicable make use of such portions of the
affidavit and counter-affidavits as would conduce to the abbreviation of the
proceedings.

5. ID.; ID.; PRE-TRIAL NOT INDISPENSABLE BEFORE SUMMARY JUDGMENT. — A

motion for summary judgment, particularly that of a defendant before filing his
answer, precludes, the necessity of a prior pre-trial; it is after an attempt to secure
summary judgment fails that a pre-trial is not only mandatory but more appropriate.

6. ID.; ID.; PROPRIETY. — When the party against whom a summary judgment is
asked fails to submit counter-affidavits to support the opposition and, on the other
hand, the facts alleged by the moving party, confirmed in the sworn statements
submitted with the motion, do not appear to be by their very nature false or not
susceptible to proof, a summary judgment is reasonable, if not undeniably, proper.

7. CERTIORARI; DISMISSAL; PROPER WHERE QUESTIONED ORDER NOT A SUMMARY

JUDGMENT BUT MERELY AN INTERLOCUTORY ORDER. — The questioned order
decreeing that there "is no genuine issue as to any material fact and no controversial
question of fact to be submitted to the trial court" and concluding that "defendants are
 65

entitled to a judgment as a matter of law except as to the amount of damages

recoverable" is not entirely erroneous but only improperly worded and
therefore certiorari does not lie against the respondent court on the basis thereof. Said
order is merely and interlocutory one and is not a final appealable judgment. As an
order declaring the propriety of a summary judgment, it should not have been worded
as "decreeing that defendants have judgments summarily against plaintiff" ; for the
real summary judgment is not only supposed to be rendered after the proof of
damages shall have been presented, but it should also state clearly and distinctly the
facts and the law on which it is based, a constitutional requirement which a court of
record is not relieved from complying even when the judgment it renders is a summary
one pursuant to Rule 34.

AQUINO, J., concurring:chanrob1es virtual 1aw library

1. CIVIL PROCEDURE; SUMMARY JUDGMENT; NOT WARRANTED IN CASE AT BAR. —

Summary judgment is not warranted in Civil Case 8793. The said order is erroneous
and unjust. Reasons: (1) thereby, the plaintiff would be the one held liable for
damages to the defendant when he sued for damages in utmost good faith; (2) it was
rendered hastily by the trial judge without setting the case for pre-trial, mandatory
under Section 1, Rule 20 of the Rules of Court; (3) the possibility of amendment of the
complaint for the purpose of impleading the drivers and the owners of the two pick-up
trucks to enable plaintiff to rely alternatively on a cause of action for delict or quasi-
delict was never considered; (4) the possibility of plaintiff’s remedy to intervene in
Criminal Case 8099-B of the City Court of Davao City and to claim civil liability for the
death of his wife was also not considered; and (5) there was a genuine triable issue in
the pleadings.

2. ID.; ID.; ID.; ORDER MERELY INTERLOCUTORY; PETITION FOR CERTIORARI TO BE

DISMISSED. — The order complained of is an interlocutory order that is not
appealable. The plaintiff could still move to have it set aside. The petition for review is
not an order.

DECISION

ANTONIO, J.:

Certiorari with prohibition to annul the Order, dated May 20, 1975, of the Court of First
Instance of Davao in Civil Case No. 8739, which "decreed that defendants have
judgment summarily against the plaintiff for such amount as may be found due them
for damages, to be ascertained by trial upon that issue alone on June 9, 1975 at 8:30
a.m." chanrobles law library : red

On February 14, 1975, petitioner Gregorio Estrada filed a complaint for damages
against private respondents Corazon Ramirez Uy and Lucio Galaura, owner and driver,
respectively of an AC jeep, with Plate No. ZE-501, for breach of their obligations as a
common carrier, in view of the death of his wife while she was a passenger of the
vehicle.

The complaint alleges that: on January 1, 1975, plaintiff’s wife, Simeona Estrada, was
a passenger of the AC Jeep, with Plate No. ZE-501, owned and operated by defendant
Corazon Ramirez Uy and driven by defendant Lucio Galaura, while said jeep was
 66

cruising along Claro M. Recto Avenue, heading: towards the direction of the Jones
Circle, Davao City the driver (Lucio Galaura) "without regard for the safety of plaintiff’s
wife who was among his passengers and without taking the necessary precaution" in
accordance with the situation, bumped a Ford pick-up truck; as a consequence of the
incident plaintiff’s wife sustained a fractured left humerus (pulmonary) embolism and
shock due to respiratory failure; she was brought to the San Pedro Hospital where she
died.

Plaintiff further alleged in his complaint that defendant Corazon Ramirez Uy, as owner
of the AC jeep and a common carrier, in violation of the contract of carriage, failed to
safely conduct the plaintiff’s wife to her place of destination by reason on her "failure
to exercise even the diligence of a good father of a family" and her "gross and evident
bad faith, malevolence and wantonnes" in discharging her obligation as a common
carrier. Plaintiff, therefore, asked for actual damages, indemnification for the death of
his wife, moral damages and attorney’s fees in specified amounts.

Defendants, in their answer, while admitting that plaintiff’s wife was a passenger and
that she died as a result of the accident, alleged that the proximate and only cause of
the accident was the negligence of third persons (the drivers, Danilo Ang and Rodolfo
D. Endino, of a Toyota pick-up truck bearing Plate No. T-RU-221, and a Ford pick-up
truck with Plate No. TRU-420, respectively) over whom defendant Corazon Ramirez Uy
had no supervision and control, and who were then driving their respective vehicles at
a fast rate of speed and from different directions, as a result of which said vehicles
collided, and because of that collision the Ford pick-up truck was deviated from its lane
and hit the jeep of defendants. Defendants likewise set up a counterclaim for damages
by reason of plaintiffs institution of the clearly unfounded suit against them.

ON April 16, 1975, respondents filed a motion for summary judgment against plaintiff
on the ground that there is no genuine issue as to any material fact in the case except
as to the amount of damages defendants are seeking from plaintiff by way of
counterclaim. In support of their motion for summary judgment, certain annexes to the
answer were incorporated therein, as follows:chanrob1es virtual 1aw library

(a) The sketch of the accident made by Traffic Investigator J.S. Formeloza of the
Davao City Police Department, marked as Annex ‘3’ of the defendants answer.

(b) Said investigator’s affidavit detailing his findings upon investigation stating that the
pick-up with plate No. T-RU-420 upon reaching the intersection of Recto and Bonifacio
Streets collided with the pick-up with plate No. T-RU-221, and that upon impact, the
latter pick-up collided with the jeep driven by Lucio Galaura that was coming from the
opposite direction (Annex ‘4’ of defendants’ answer)’

(c) The respective sworn statements of the drivers of the two pick-ups (Danilo Ang and
Rodolfo Endino) taken by the Traffic Division of the Davao City Police Department after
the accident, marked as Annexes ‘5’ and of the defendants’ answer wherein each driver
respectively claimed that he exercised due care but attributed to the other negligence
as the cause of the collision; and

(d) The sworn statement of defendant driver (Lucio Galaura) of said A. C. Jeep,
likewise taken by the Traffic Division of the Davao City Police Department detailing
what he did in order to prevent or minimize damages to his vehicle and his passengers,
marked as Annex ‘7’ of defendants’ answer.

By means of the foregoing annexes, respondents sought to prove that they were
 67

relieved of any liability to petitioner inasmuch as the accident which caused the death
of petitioner’s wife "resulted from the negligence of third persons over whom
defendants had no supervision or control, namely, the drivers of the two pick-up trucks
which collided at the intersection of C. M. Recto Ave. and Bonifacio St., Davao City, as
a result of which collision, one of them was deviated from course to the lane where
defendants’ A.C.-Jeep was then travelling, where it also collided with the latter."cralaw
virtua1aw library

Petitioner opposed the above motion, relying heavily on the presumption that in case
of death of the passenger, the common carrier is presumed "to have been at fault or to
have acted negligently," 1 unless the carrier proves that he has observed extraordinary
diligence with due regard to all the circumstances, which movants failed to do.

Notwithstanding the opposition filed by the plaintiffs, respondent Judge issued the
order of May 20, 1975, stating, in part, as follows:jgc:chanrobles.com.ph

"The Court has considered at length and thoroughly the pleadings in the action, the
affidavits and other pertinent annexes (Annexes 1 to 6), of the movants and has found
that there is no genuine issue as to any material fact and no controversial question of
fact to be submitted to the trial court, and has concluded that defendant entitled to a
judgment as a matter of law except as to the amount of damages recoverable.

"It is therefore ordered and decreed that defendants have judgment summarily against
the plaintiff for such amount as may be found due them for damages to be ascertained
by trial upon that issue alone on June 9, 1975 at 8:30 a.m."cralaw virtua1aw library

A motion for reconsideration of the afore-quoted Order, on the ground that said Order,
having failed to state clearly and distinctly the facts and the law on which it is based,
violated the Constitution and the Rules of Court, was denied "for lack of merit" on June
9, 1975, hence the present petition for certiorari with prohibition.

Pursuant to Section 2, Rule 34, of the Revised Rules, "A party against whom a claim,
counterclaim, or crossclaim is asserted or a declaratory relief is sought may, at any
time, move with supporting affidavits for a summary judgment in his favor as to all or
any part thereof." 2 The defendant who believes that he is untitled to a judgment
either on the pleadings or on the basis of extrinsic facts established by affidavits or
depositions may move for summary judgment in his favor. 3 In other words, when the
moving party is a defending party, his pleadings, depositions or affidavits must show
that his defenses or denials arc sufficient to defeat the claimant’s claim. The affidavit
submitted by the party moving for summary judgment shall be by persons having
personal knowledge of the facts; it shall recite all material facts and show that there is
no defense to the cause of actions or that the cause of action has no merits. 4 This
motion shall be served on the adverse party at least ten (10) days prior to the time
specified in the hearing. The adverse party may also, prior to said date, serve opposing
affidavits The opposing papers, including pleadings, depositions, and affidavits must
establish a genuine issue of fact in order to defeat a motion for summary judgment.
After hearing, the motion for summary judgment shall be granted if, on the basis of all
the papers and proofs submitted, the cause of action or defense shall be established
sufficiently to warrant the court as a matter of law in directing judgment in favor of
any party. The motion shall be denied if any party shall show facts sufficient to require
a trial of any issue of fact other than an issue as to the amount or extent of the
damages. 5 This Summary Judgment or Accelerated Judgment is a device for weeding
out sham claims or defenses at an early stage of the litigation, thereby avoiding the
expense and loss of time involved in a trial. 6 The very object is to separate what is
 68

formal or pretended in denial or averment from what is genuine and substantial, so

that only the latter may subject a suitor to the burden of a trial. 7 In conducting the
hearing, the purpose of the judge is not to try the issue, but merely to determine
whether there is a meritorious issue to be tried. Where a motion is made for summary
judgment, such motion is not directed to the pleadings and deals only with the
question of whether there are triable issues of facts and where such issues exist
summary judgment must he denied. 8 Summary judgment should not be granted
where is fairly appears that there is a triable issue to be tried. 9 "The Court should not
pass, on questions of credibility or weight of evidence, and that the summary judgment
procedure ‘should not be perverted to the trial of disputed questions of fact upon
affidavits." 10 The test, therefore, of a motion for summary judgment is — whether the
pleadings, affidavits and exhibits in support of the motions are sufficient to overcome
the opposing papers and to justify a finding as a matter of law that there is no defense
to the action or the claim is clearly meritorious. 11

In proceedings for summary judgment, the burden of proof is upon the plaintiff to
prove the cause of action and to show that the defense is interposed solely for the
purpose of delay. 12 After plaintiff’s burden has been discharged, defendant has the
burden to show facts sufficient to entitle him to defend. 13

Under the contract of carriage, private respondents assumed the express obligation to
transport the wife of petitioner to her destination safely and to observe extra ordinary
diligence with due regard for all the circumstances, and that any injury suffered by her
in the course thereof, is immediately attributable to the negligence of the carrier. 14 To
overcome such presumption, it must be shown that the carrier had observed the
required extraordinary diligence, 15 which means that the carrier must show the
"utmost diligence of very cautious persons . . . as far as human care and foresight can
provide", 16 or that the accident was caused by a fortuitous event. 17 In order to
constitute a case fortuito that would exempt a person from responsibility, it is
necessary that (1) the event must be independent of the human will; (2) the
occurrence must render it impossible for the obligor to fulfill his obligation m a normal
manner; and (3) the obligor must be free of a concurrent or contributory fault or
negligence. 18 It was precisely because of the legal presumption that once a passenger
in the course of travel is injured or does not reach his destination safely, the carrier
and the driver are presumed to be at fault, that private respondents submitted
affidavits to prove that the accident which resulted in the death of petitioner’s wife was
due to the fault or negligence of the drivers of the two pickup trucks over whom the
carrier had no supervision or control. Having, therefore, shown prima facie that the
accident was due to a caso fortuito and that the driver of the respondent was free of
concurrent or contributory fault or negligence, it was incumbent upon petitioner to
rebut such proof. Having failed to do so, the defense of the carrier that the proximate
cause of the accident was a caso fortuito remains unrebuted. We are not unmindful
that the issue as to whether a carrier used such reasonable precautions to avoid the
accident as would ordinarily be used by careful, prudent persons under like
circumstances is a question essentially one of fact and, therefore, ordinarily such issue
must be decided at the trial. 19 But where, as in the case at bar, petitioner has not
submitted opposing affidavits to controvert private respondents’ evidence that the
driver of the passenger jeepney was free of contributory fault as he stopped the
jeepney to avoid the accident, but in spite of such precaution the accident occurred,
respondent Judge did not, therefore, act arbitrarily in declaring in his Order of May 20,
1975, that "there is no genuine issue to any material fact and no controversial question
of fact to be submitted to the trial court." This was, however, a mere interlocutory
order directing that a hearing be conducted for the purpose of ascertaining the amount
or the assessment of damages which may be adjudged in favor of the prevailing party.
 69

It is a determination of the court of a preliminary point or directing some steps in the

proceedings, but not a disposition of the merits. 20 "Upon the rendering of the
assessment, the Court shall direct the entry forthwith of the appropriate summary
judgment." 21

In the absence of any findings of fact and conclusions of law, the aforesaid order of
respondent Judge cannot be considered a judgment. It has been held that "a trial court
in granting summary judgment should file findings of fact and conclusion of law or a
memorandum opinion so as to disclose grounds upon which the trial court reached its
determination." 22 In this jurisdiction, pursuant to Section 9 of Article X of the
Constitution and the procedural rules, all judgments determining the merits of cases
should state clearly and distinctly the facts and the law on which it is based. 23

There being no judgment, the present petition is, therefore, premature. Certainly,
petitioner could move for the setting aside of the aforesaid Order of May 20, 1975 by
the presentation of opposing affidavits showing that, other than the issue as to the
amount or extent of damages, there is a genuine issue of fact on the carrier’s liability.

ACCORDINGLY, the petition for certiorari with prohibition is dismissed, without special
pronouncement as to costs.

Fernando (Chairman), and Martin, JJ., concur.

Concepcion, Jr., is on leave.

Martin, J., was designated to sit in the Second Division.

Separate Opinions

BARREDO, J., concurring:chanrob1es virtual 1aw library

I concur in the judgment dismissing the instant petition, but I believe it is necessary to
emphasize that this decision does not mean that the Court is upholding the questioned
order as the summary judgment prayed for by private respondents. Actually, the said
order must be construed, despite its seemingly inaccurate tenor, as nothing but an
interlocutory one holding that respondents have sufficiently established the bases for a
summary judgment which will be rendered after the court has received and duly
evaluated the evidence as to the amount of damages that should be awarded to them
for their counterclaim.chanrobles.com.ph : virtual law library

Indeed, it is opportune for the Court to clear up in this case some points in summary
judgment procedure which by all means should be encouraged whenever appropriate,
regardless of the nature of the cause of action involved, if summary Judgment
procedure which has been purposely designed to abbreviate proceedings in cases
where the issues are not genuine is to continue to have any place at all in the Rules of
Court. The trouble is that there is such a lamentable dearth of knowledge not only of
the concept but also of the procedure contemplated that in actual practice, in the few
instances it has been resorted to, the results have been rather disappointing, almost
frustrating.

To start with, there is the usual error of equating summary judgment with judgment on
the pleadings. Very often, it is contended that because the allegations in the pleadings
give rise to triable issues of fact, summary judgment is not proper. In other words, it is
 70

assumed that just because there is a joining of the factual issues in the pleadings
which, by the way, are not under oath, necessarily a trial with presentation of evidence
by both parties is called for. But such criterion is true only for denying a motion for
judgment on the pleadings, certainly not for summary judgment. For the basic reason
for judgment on the pleadings is that the allegations in the pleadings of the contending
parties show that there is no controversy at all between them as to the facts, which is
not the reason behind summary judgments. In summary judgment procedure, it is
assumed precisely that in their pleadings, the parties have joined issues on the
ultimate facts, at least, but just the same, trial is foreclosed because the factual issues
thus joined do not appear to be genuine, meaning to say, they are not real but sham.
And a factual issue raised by a party is considered as sham when by its nature it is
evident that it cannot be proven or it is such that the party tendering the same has
neither any sincere intention nor adequate evidence to prove it. This usually happens
in denials made by defendants merely for the sake of having an issue and thereby
gaining delay, taking advantage of the fact that their answers are not under oath
anyway.

On that score, the problem that is apparently troubling the trial courts and the
practitioners and which has brought about the confusion underlying the seeming
reluctance, if not inability, of some courts to resort to summary judgment procedure is
how to determine that the factual issues in a given case and referred to in the motion
for summary judgment are genuine or not. It is my impression after forty years in the
bar that it is not yet clear to everyone concerned that such determination is not
supposed to be based on the tenor or contents of the pleadings. It is only from the
consideration and appraisal of the facts alleged under oath by the parties and/or their
witnesses in their affidavits submitted with the motion and the corresponding
opposition that such genuineness may and should be determined. Of course, the
function of examining and weighing the said affidavits for the purpose just indicated
can be properly performed only by one who is thoroughly prepared, both in theory and
in practice, more particularly the latter. The precise objective in such undertaking is to
find out, from a general consideration of all the detailed facts stated in the affidavits
taken together, whether or not the denial by one party of the truth of the allegations of
the adversary is such that it would be safe to conclude from the fact of said affidavits
that ultimately, one of them will necessarily prevail. In this connection, it goes without
saying that the facts that should be stated in the affidavits must be specific and
categorical, and not merely general and equivocal. Should the court feel that in the
light of such facts, assuming their veracity, the actual reception of evidence would be
superfluous because even the general thrust alone is definitely in favor of the moving
party, then it is obvious that a summary judgment may be rendered.

In the main, whether or not the court should decide in favor of either a summary
judgment or a full-blown trial lies in the sound discretion of the trial judge, it being
understood that he has fully imbibed the basic objective of the remedy, namely, to do
away with unnecessary trial as long as this can be done without causing injustice to
any of the parties. He must not avoid trial just because it involves more work and time,
but, on the other hand, he must not waste time and effort in receiving evidence,
where, on the basis of the affidavits and counter-affidavits before him, the result is
already a foregone conclusion or indubitably predictable. In case of doubt, it is, of
course, preferable to hold a trial, in which event, he and the parties, under his
guidance, may as far as practicable make use of such portions of the affidavits and
counter-affidavits as would conduce to the abbreviation of the proceedings. And this
may be best accomplished at the pre-trial, which, to my mind, is not indispensable
before summary judgment procedure may be started. In other words, a motion for
summary judgment, particularly that of a defendant before filing his answer, precludes
 71

the necessity of a prior pre-trial; it is after an attempt to secure summary judgment

fails that a pre-trial is not only mandatory but more appropriate.

The foregoing discussion should make it plain that when the party against whom a
summary judgment is asked fails to submit counter-affidavits to support the opposition
and, on the other hand, the facts alleged by the moving party, confirmed in the sworn
statements submitted with the motion, do not appear to be by their very nature false
or not susceptible to proof, a summary judgment is reasonably, if not undeniably,
proper. And such is the situation in the case at bar. The fundamental theory of
petitioner’s complaint is that as common carriers, the respondents were by contract
and law obliged to conduct his wife safely to her destination, and having failed to do
so, because as a result of the collision of the vehicle, owned by respondents, in which
she was a passenger, with another vehicle, she suffered injuries which caused her
death, the legal presumption is that they failed to exercise the degree of extraordinary
diligence the law requires in the premises. Such presumption invoked is, however, one
of fact that is subject to rebuttal by actual proof to the contrary. Now, petitioner’s
invocation of the presumption was countered in respondents’ motion for summary
judgment thru ("the affidavits and other pertinent annexes, Annexes 1 to 6"), which on
their face tend to show that respondents’ vehicle carrying petitioner’s wife was
travelling with due care on its proper side of the road and it was because of the
collision of two vehicles at the intersection of C.M. Recto and Bonifacio streets that one
of them was suddenly and unexpectedly diverted to the lane of respondents’ vehicle,
thus hitting the same without any fault at all of their driver. This factual rebuttal of the
factual presumption of the law in favor of the petitioner was not met by any counter-
affidavit indicating that there was in actual fact some degree of negligence on the part
of respondents’ driver. Under these circumstances, it would appear that contrary to the
presumption aforementioned, respondents have succeeded in proving by means of the
above-mentioned six annexes that the cause of the injuries suffered by petitioner’s
wife was not any kind or degree of negligence on the part of respondents or their
driver, but the negligence of a third-party which was unforseen and inevitable, hence a
force majeure or an act of God. Such being the case, it would also appear that
respondents are entitled as a matter of law to be absolved from any obligation to pay
damages to petitioner.

While such seems to be the present situation of the case below, I hasten to add that,
considering that petitioner’s wife was an innocent passenger who could not have
contributed in any way to the cause of the tragedy that befell her, it still lies in the
hands of respondent court to do justice to petitioner, her widowed husband. Indeed,
fortunately for petitioner, respondent court’s order of May 20, 1975 he is impugning is
not in reality and in law a final judgment yet. It is merely an interlocutory order which
does not preclude further procedural measures which will enable petitioner to secure
relief. The main opinion spells this matter out quite clearly.

To be more precise, it is still within the sound discretion of the trial court, in the light of
the peculiar circumstances of this case where counsel for petitioner might have overly
relied on the factual presumption of negligence of common carriers, apparently
equating the same with a legal presumption, and for this reason omitted to file
counter-affidavits, and, what is more probable, counsel happens to be among those
who have not resorted to summary judgment procedure and hence is not very
proficient relative thereto, to consider the possibility of allowing petitioner to file the
corresponding counter affidavit or affidavits needed to compel a trial and the
corresponding setting aside of the order in question. If this should not be feasible
because there might not be adequate means of showing that respondents or their
driver failed to exercise extraordinary diligence in the face of the unexpected swerving
 72

into the lane of their vehicle of the pick-up truck that hit it, it would not yet be too late
to allow the petitioner to amend his complaint in order to implead alternatively the
owners and drivers of the other two vehicles that featured in the incident in question,
thereby insuring as the facts may warrant relief to petitioner, if not from respondents,
from the other parties whom the court may find to have been at fault. And with
particular reference to the respondents’ counterclaim, it may not be out of place for
respondent judge to take into account that the peculiar and unique relationship
between a common carrier and its passengers is such that in case of injury to the
latter, to claim against the former is reasonably the first recourse, and it is only where
the common carrier proves exercise of extraordinary diligence that he is relieved of
liability, and, accordingly, an award for damages to the carrier for supposed filing of a
totally unfounded suit can hardly be fair and just, unless actual malice on the part of
the passenger or his or her heirs is clearly evident.

Summarizing, I hold that, as explained above, the questioned order is not entirely
erroneous but only improperly worded and therefore certiorari does not lie against
respondent court on the basis thereof. I also hold that said order is merely an
interlocutory one and is not a final appealable judgment. As an order declaring the
propriety of a summary judgment, it should not have been worded as "decreeing that
defendants have judgment summarily against plaintiff", for the real summary
judgment is not only supposed to be rendered after the proof of damages shall have
been presented, but it should also state clearly and distinctly the facts and the law on
which it is based, a constitutional requirement which a court of record is not relieved
from complying even when the judgment it renders is a summary one pursuant to Rule
34. Upon these premises, I vote to dismiss the petition.

In addition, I hold that upon the resumption of the proceedings in the court below,
respondent court should look into the procedural possibilities discussed above to the
end that the loss suffered by petitioner as a result of the tragic death of his wife may
not be left without relief from the party at fault merely because of the procedural
missteps that have taken place in the past proceedings before it. The main objective of
the rules of procedure is to provide the steps by which a party suffering a legal wrong
may secure relief from the courts, and in the instances where the particular pertinent
rules are themselves rather indefinite and the possibility of miscomprehending the
same is not remote, it would be a travesty of justice to allow said rules to be
successfully invoked to prevent redress altogether. Worse, in the instant case, the
order in controversy, inaccurate in its tenor as it is, because it is based on an
inadequate comprehension of the pertinent rules, which to be sure are not themselves
clearly definite, would even augment petitioner’s loss by making him liable for
damages to respondents, just because his lawyer has misapprehended the situation as
well as the applicable rules. Such a result cannot be but shocking to the conscience.

AQUINO, J., concurring:chanrob1es virtual 1aw library

I concur in the result. Gregorio Estrada acted on the assumption that the lower court’s
order of May 20, 1975 is either a summary judgment or an order of dismissal. He
appealed from that order under Republic Act No. 5440.

Since it is clearly pointed out in the decision that the said interlocutory order is not
appealable and that Estrada could still move to have it set aside, I agree that the
petition for review herein is not in order. The said order is erroneous and unjust.
Summary judgment is not warranted in Civil Case No. 8739. It is ironical that Estrada,
as plaintiff, would, by reason of that order, be the one held liable for damages to the
defendants whom he (plaintiff) had sued for damages in utmost good faith.
 73

The trial judge acted rather hastily in rendering summary judgment. The defendants
filed an answer with counterclaim dated March 12, 1975. On April 16, 1975 or a few
weeks later, the defendants filed a motion for summary judgment. The record does not
show whether the ease was set for pre-trial. Pretrial is mandatory (Sec. 1, Rule 20,
Rules of Court).

It is true that during the pre-trial the court may explore the advisability of rendering
summary judgment (Ibid, sec. 3). But the fact remains that in the proceedings below
the trial court without holding a pre-trial immediately proceeded to consider the
rendition of a summary judgment. The amendment of the complaint for the purpose of
impleading the drivers and owners of the two pick-up trucks and to enable Estrada to
rely alternatively on a cause of action for delict or quasi-delict was never considered.

Also not considered in the pre-trial (for there was no pretrial) nor in the said order,
which in effect dismissed the complaint, was the possibility that the petitioner’s remedy
is to intervene in Criminal Case No, 8099-B of the City Court, Davao City and to claim
civil liability for the death of his wife.

The order in question was not proper because there is a genuine triable issue in the
pleadings. That factual issue is whether Corazon Ramirez Uy, the owner of the
jeepney, as a common carrier, complied with her obligation of carrying the deceased
passenger, Simeona Estrada, "safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the
circumstances."cralaw virtua1aw library

The trial of that issue was not foreclosed by the sketch made by the traffic investigator
and by his affidavit, the sworn statements of the drivers of the pickup trucks and the
sworn statement of the carrier’s driver, all of which are hearsay as far as Estrada is
concerned.

[G.R. No. 152154. July 15, 2003.]

REPUBLIC OF THE PHILIPPINES, Petitioner, v. HONORABLE SANDIGANBAYAN

(SPECIAL FIRST DIVISION), FERDINAND E. MARCOS (REPRESENTED BY HIS
ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA [IMEE] MARCOS-
MANOTOC, FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA) AND
IMELDA ROMUALDEZ MARCOS, Respondents.

DECISION

CORONA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to (1) set
aside the Resolution dated January 31, 2002 issued by the Special First Division of the
Sandiganbayan in Civil Case No. 0141 entitled Republic of the Philippines v. Ferdinand
E. Marcos, et. al., and (2) reinstate its earlier decision dated September 19, 2000
which forfeited in favor of petitioner Republic of the Philippines (Republic) the amount
held in escrow in the Philippine National Bank (PNB) in the aggregate amount of
US$658,175,373.60 as of January 31, 2002.chanrob1es virtua1 1aw 1ibrary
 74

BACKGROUND OF THE CASE

On December 17, 1991, petitioner Republic, through the Presidential Commission on

Good Government (PCGG), represented by the Office of the Solicitor General (OSG),
filed a petition for forfeiture before the Sandiganbayan, docketed as Civil Case No.
0141 entitled Republic of the Philippines v. Ferdinand E. Marcos, represented by his
Estate/Heirs and Imelda R. Marcos, pursuant to RA 1379 1 in relation to Executive
Order Nos. 1, 2 2, 3 14 4 and 14-A. 5

In said case, petitioner sought the declaration of the aggregate amount of US$356
million (now estimated to be more than US$658 million inclusive of interest) deposited
in escrow in the PNB, as ill-gotten wealth. The funds were previously held by the
following five account groups, using various foreign foundations in certain Swiss
banks:chanrob1es virtual 1aw library

(1) Azio-Verso-Vibur Foundation accounts;

(2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus-Avertina Foundation accounts;

(3) Trinidad-Rayby-Palmy Foundation accounts;

(4) Rosalys-Aguamina Foundation accounts and

(5) Maler Foundation accounts.

In addition, the petition sought the forfeiture of US$25 million and US$5 million in
treasury notes which exceeded the Marcos couple’s salaries, other lawful income as
well as income from legitimately acquired property. The treasury notes are frozen at
the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, by virtue of the
freeze order issued by the PCGG.

On October 18, 1993, respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene
M. Araneta and Ferdinand R. Marcos, Jr. filed their answer.

Before the case was set for pre-trial, a General Agreement and the Supplemental
Agreements 6 dated December 28, 1993 were executed by the Marcos children and
then PCGG Chairman Magtanggol Gunigundo for a global settlement of the assets of
the Marcos family. Subsequently, respondent Marcos children filed a motion dated
December 7, 1995 for the approval of said agreements and for the enforcement
thereof.

The General Agreement/Supplemental Agreements sought to identify, collate, cause

the inventory of and distribute all assets presumed to be owned by the Marcos family
under the conditions contained therein. The aforementioned General Agreement
specified in one of its premises or "whereas clauses" the fact that petitioner "obtained
a judgment from the Swiss Federal Tribunal on December 21, 1990, that the Three
Hundred Fifty-six Million U.S. dollars (US$356 million) belongs in principle to the
Republic of the Philippines provided certain conditionalities are met. . . ." The said
decision of the Swiss Federal Supreme Court affirmed the decision of Zurich District
Attorney Peter Consandey, granting petitioner’s request for legal assistance. 7
Consandey declared the various deposits in the name of the enumerated foundations
to be of illegal provenance and ordered that they be frozen to await the final verdict in
favor of the parties entitled to restitution.
 75

Hearings were conducted by the Sandiganbayan on the motion to approve the

General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as
witness for the purpose of establishing the partial implementation of said agreements.

On October 18, 1996, petitioner filed a motion for summary judgment and/or judgment
on the pleadings. Respondent Mrs. Marcos filed her opposition thereto which was later
adopted by respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.

In its resolution dated November 20, 1997, the Sandiganbayan denied petitioner’s
motion for summary judgment and/or judgment on the pleadings on the ground that
the motion to approve the compromise agreement" (took) precedence over the motion
for summary judgment."cralaw virtua1aw library

Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was not a
party to the motion for approval of the Compromise Agreement and that she owned
90% of the funds with the remaining 10% belonging to the Marcos estate.

Meanwhile, on August 10, 1995, petitioner filed with the District Attorney in Zurich,
Switzerland, an additional request for the immediate transfer of the deposits to an
escrow account in the PNB. The request was granted. On appeal by the Marcoses, the
Swiss Federal Supreme Court, in a decision dated December 10, 1997, upheld the
ruling of the District Attorney of Zurich granting the request for the transfer of the
funds. In 1998, the funds were remitted to the Philippines in escrow. Subsequently,
respondent Marcos children moved that the funds be placed in custodia legis because
the deposit in escrow in the PNB was allegedly in danger of dissipation by petitioner.
The Sandiganbayan, in its resolution dated September 8, 1998, granted the motion.

After the pre-trial and the issuance of the pre-trial order and supplemental pre-trial
order dated October 28, 1999 and January 21, 2000, respectively, the case was set for
trial. After several resettings, Petitioner, on March 10, 2000, filed another motion for
summary judgment pertaining to the forfeiture of the US$356 million, based on the
following grounds:chanrob1es virtual 1aw library

THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF THE FUNDS SUBJECT
OF THE PETITION UNDER R.A. NO. 1379 ARE ADMITTED BY RESPONDENTS IN THEIR
PLEADINGS AND OTHER SUBMISSIONS MADE IN THE COURSE OF THE PROCEEDING.

II

RESPONDENTS’ ADMISSION MADE DURING THE PRE-TRIAL THAT THEY DO NOT HAVE
ANY INTEREST OR OWNERSHIP OVER THE FUNDS SUBJECT OF THE ACTION FOR
FORFEITURE TENDERS NO GENUINE ISSUE OR CONTROVERSY AS TO ANY MATERIAL
FACT IN THE PRESENT ACTION, THUS WARRANTING THE RENDITION OF SUMMARY
JUDGMENT. 8

Petitioner contended that, after the pre-trial conference, certain facts were established,
warranting a summary judgment on the funds sought to be forfeited.chanrob1es
virtua1 1aw 1ibrary

Respondent Mrs. Marcos filed her opposition to the petitioner’s motion for summary
 76

judgment, which opposition was later adopted by her co-respondents Mrs. Manotoc,
Mrs. Araneta and Ferdinand, Jr.

On March 24, 2000, a hearing on the motion for summary judgment was conducted.

In a decision 9 dated September 19, 2000, the Sandiganbayan granted petitioner’s

motion for summary judgment:chanrob1es virtual 1aw library

CONCLUSION

There is no issue of fact which calls for the presentation of evidence.

The Motion for Summary Judgment is hereby granted.

The Swiss deposits which were transmitted to and now held in escrow at the PNB are
deemed unlawfully acquired as ill-gotten wealth.

DISPOSITION

WHEREFORE, judgment is hereby rendered in favor of the Republic of the Philippines

and against the respondents, declaring the Swiss deposits which were transferred to
and now deposited in escrow at the Philippine National Bank in the total aggregate
value equivalent to US$627,608,544.95 as of August 31, 2000 together with the
increments thereof forfeited in favor of the State. 10

Respondent Mrs. Marcos filed a motion for reconsideration dated September 26, 2000.
Likewise, Mrs. Manotoc and Ferdinand, Jr. filed their own motion for reconsideration
dated October 5, 2000. Mrs. Araneta filed a manifestation dated October 4, 2000
adopting the motion for reconsideration of Mrs. Marcos, Mrs. Manotoc and Ferdinand,
Jr.

Subsequently, petitioner filed its opposition thereto.

In a resolution 11 dated January 31, 2002, the Sandiganbayan reversed its September
19, 2000 decision, thus denying petitioner’s motion for summary judgment:chanrob1es
virtual 1aw library

CONCLUSION

In sum, the evidence offered for summary judgment of the case did not prove that the
money in the Swiss Banks belonged to the Marcos spouses because no legal proof
exists in the record as to the ownership by the Marcoses of the funds in escrow from
the Swiss Banks.

The basis for the forfeiture in favor of the government cannot be deemed to have been
established and our judgment thereon, perforce, must also have been without basis.

WHEREFORE, the decision of this Court dated September 19, 2000 is reconsidered and
set aside, and this case is now being set for further proceedings. 12

Hence, the instant petition. In filing the same, petitioner argues that the
Sandiganbayan, in reversing its September 19, 2000 decision, committed grave abuse
of discretion amounting to lack or excess of jurisdiction considering that —
 77

PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE WITH THE REQUISITES
OF SECTIONS 2 AND 3 OF R.A. NO. 1379:chanrob1es virtual 1aw library

A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT ONLY THE PERSONAL

CIRCUMSTANCES OF FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC
OFFICIALS BUT ALSO THE EXTENT OF THEIR SALARIES AS SUCH PUBLIC OFFICIALS,
WHO UNDER THE CONSTITUTION, WERE PROHIBITED FROM ENGAGING IN THE
MANAGEMENT OF FOUNDATIONS.

B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF THE SWISS

DEPOSITS AND THEIR OWNERSHIP THEREOF:chanrob1es virtual 1aw library

1. ADMISSIONS IN PRIVATE RESPONDENTS’ ANSWER;

2. ADMISSION IN THE GENERAL/SUPPLEMENTAL AGREEMENTS THEY SIGNED AND

SOUGHT TO IMPLEMENT;

3. ADMISSION IN A MANIFESTATION OF PRIVATE RESPONDENT IMELDA R. MARCOS

AND IN THE MOTION TO PLACE THE RES IN CUSTODIA LEGIS; AND

4. ADMISSION IN THE UNDERTAKING TO PAY THE HUMAN RIGHTS VICTIMS.

C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE INCOME OF

FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS.

D. PETITIONER HAS ESTABLISHED A PRIMA FACIE PRESUMPTION OF UNLAWFULLY

ACQUIRED WEALTH.

II

SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS HAVE NOT RAISED

ANY GENUINE ISSUE OF FACT CONSIDERING THAT:chanrob1es virtual 1aw library

A. PRIVATE RESPONDENTS’ DEFENSE THAT SWISS DEPOSITS WERE LAWFULLY

ACQUIRED DOES NOT ONLY FAIL TO TENDER AN ISSUE BUT IS CLEARLY A SHAM;
AND

B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS DEPOSITS, PRIVATE

RESPONDENTS ABANDONED THEIR SHAM DEFENSE OF LEGITIMATE ACQUISITION,
AND THIS FURTHER JUSTIFIED THE RENDITION OF A SUMMARY JUDGMENT.

III

THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED.

IV

THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE OF DISCRETION IN

 78

REVERSING HIMSELF ON THE GROUND THAT ORIGINAL COPIES OF THE

AUTHENTICATED SWISS DECISIONS AND THEIR "AUTHENTICATED TRANSLATIONS"
HAVE NOT BEEN SUBMITTED TO THE COURT, WHEN EARLIER THE SANDIGANBAYAN
HAS QUOTED EXTENSIVELY A PORTION OF THE TRANSLATION OF ONE OF THESE
SWISS DECISIONS IN HIS “PONENCIA” DATED JULY 29, 1999 WHEN IT DENIED THE
MOTION TO RELEASE ONE HUNDRED FIFTY MILLION US DOLLARS ($150,000,000.00)
TO THE HUMAN RIGHTS VICTIMS.

PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR OBJECTION TO THE

AUTHENTICITY OF THE SWISS FEDERAL SUPREME COURT DECISIONS. 13

Petitioner, in the main, asserts that nowhere in the respondents’ motions for
reconsideration and supplemental motion for reconsideration were the authenticity,
accuracy and admissibility of the Swiss decisions ever challenged. Otherwise stated, it
was incorrect for the Sandiganbayan to use the issue of lack of authenticated
translations of the decisions of the Swiss Federal Supreme Court as the basis for
reversing itself because respondents themselves never raised this issue in their
motions for reconsideration and supplemental motion for reconsideration. Furthermore,
this particular issue relating to the translation of the Swiss court decisions could not be
resurrected anymore because said decisions had been previously utilized by the
Sandiganbayan itself in resolving a "decisive issue" before it.

Petitioner faults the Sandiganbayan for questioning the non-production of the

authenticated translations of the Swiss Federal Supreme Court decisions as this was a
marginal and technical matter that did not diminish by any measure the conclusiveness
and strength of what had been proven and admitted before the Sandiganbayan, that
is, that the funds deposited by the Marcoses constituted ill-gotten wealth and thus
belonged to the Filipino people.

In compliance with the order of this Court, Mrs. Marcos filed her comment to the
petition on May 22, 2002. After several motions for extension which were all granted,
the comment of Mrs. Manotoc and Ferdinand, Jr. and the separate comment of Mrs.
Araneta were filed on May 27, 2002.

Mrs. Marcos asserts that the petition should be denied on the following
grounds:chanrob1es virtual 1aw library

A.

PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT THE

SANDIGANBAYAN.

B.

THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN SETTING THE CASE FOR
FURTHER PROCEEDINGS. 14

Mrs. Marcos contends that petitioner has a plain, speedy and adequate remedy in the
ordinary course of law in view of the resolution of the Sandiganbayan dated January
31, 2000 directing petitioner to submit the authenticated translations of the Swiss
decisions. Instead of availing of said remedy, petitioner now elevates the matter to this
 79

Court. According to Mrs. Marcos, a petition for certiorari which does not comply with
the requirements of the rules may be dismissed. Since petitioner has a plain, speedy
and adequate remedy, that is, to proceed to trial and submit authenticated translations
of the Swiss decisions, its petition before this Court must be dismissed. Corollarily, the
Sandiganbayan’s ruling to set the case for further proceedings cannot and should not
be considered a capricious and whimsical exercise of judgment.

Likewise, Mrs. Manotoc and Ferdinand, Jr., in their comment, prayed for the dismissal
of the petition on the grounds that:chanrob1es virtual 1aw library

(A)

BY THE TIME PETITIONER FILED ITS MOTION FOR SUMMARY JUDGMENT ON 10

MARCH 2000, IT WAS ALREADY BARRED FROM DOING SO.

(1) The Motion for Summary Judgment was based on private respondents’ Answer and
other documents that had long been in the records of the case. Thus, by the time the
Motion was filed on 10 March 2000, estoppel by laches had already set in against
petitioner.

(2) By its positive acts and express admissions prior to filing the Motion for Summary
Judgment on 10 March 1990, petitioner had legally bound itself to go to trial on the
basis of existing issues. Thus, it clearly waived whatever right it had to move for
summary judgment.

(B)

EVEN ASSUMING THAT PETITIONER WAS NOT LEGALLY BARRED FROM FILING THE
MOTION FOR SUMMARY JUDGMENT, THE SANDIGANBAYAN IS CORRECT IN RULING
THAT PETITIONER HAS NOT YET ESTABLISHED A PRIMA FACIE CASE FOR THE
FORFEITURE OF THE SWISS FUNDS.

(1) Republic Act No. 1379, the applicable law, is a penal statute. As such, its
provisions, particularly the essential elements stated in section 3 thereof, are
mandatory in nature. These should be strictly construed against petitioner and liberally
in favor of private respondents.

(2) Petitioner has failed to establish the third and fourth essential elements in Section
3 of R.A. 1379 with respect to the identification, ownership, and approximate amount
of the property which the Marcos couple allegedly "acquired during their incumbency" .

(a) Petitioner has failed to prove that the Marcos couple "acquired" or own the Swiss
funds.

(b) Even assuming, for the sake of argument, that the fact of acquisition has been
proven, petitioner has categorically admitted that it has no evidence showing how
much of the Swiss funds was acquired "during the incumbency" of the Marcos couple
from 31 December 1965 to 25 February 1986.

(3) In contravention of the essential element stated in Section 3 (e) of R.A. 1379,
petitioner has failed to establish the other proper earnings and income from
legitimately acquired property of the Marcos couple over and above their government
salaries.
 80

(4) Since petitioner failed to prove the three essential elements provided in paragraphs
(c) 15 (d) 16 and (e) 17 of Section 3, R.A. 1379, the inescapable conclusion is that the
prima facie presumption of unlawful acquisition of the Swiss funds has not yet
attached. There can, therefore, be no premature forfeiture of the funds.

(C)

IT WAS ONLY BY ARBITRARILY ISOLATING AND THEN TAKING CERTAIN STATEMENTS

MADE BY PRIVATE RESPONDENTS OUT OF CONTEXT THAT PETITIONER WAS ABLE TO
TREAT THESE AS "JUDICIAL ADMISSIONS" SUFFICIENT TO ESTABLISH A PRIMA FACIE
AND THEREAFTER A CONCLUSIVE CASE TO JUSTIFY THE FORFEITURE OF THE SWISS
FUNDS.

(1) Under Section 27, Rule 130 of the Rules of Court, the General and Supplemental
Agreements, as well as the other written and testimonial statements submitted in
relation thereto, are expressly barred from being admissible in evidence against private
respondents.

(2) Had petitioner bothered to weigh the alleged admissions together with the other
statements on record, there would be a demonstrable showing that no such “judicial
admissions” were made by private respondents.

(D)

SINCE PETITIONER HAS NOT (YET) PROVEN ALL THE ESSENTIAL ELEMENTS TO
ESTABLISH A PRIMA FACIE CASE FOR FORFEITURE, AND PRIVATE RESPONDENTS
HAVE NOT MADE ANY JUDICIAL ADMISSION THAT WOULD HAVE FREED IT FROM ITS
BURDEN OF PROOF, THE SANDIGANBAYAN DID NOT COMMIT GRAVE ABUSE OF
DISCRETION IN DENYING THE MOTION FOR SUMMARY JUDGMENT. CERTIORARI,
THEREFORE, DOES NOT LIE, ESPECIALLY AS THIS COURT IS NOT A TRIER OF FACTS.
18

For her part, Mrs. Araneta, in her comment to the petition, claims that obviously
petitioner is unable to comply with a very plain requirement of respondent
Sandiganbayan. The instant petition is allegedly an attempt to elevate to this Court
matters, issues and incidents which should be properly threshed out at the
Sandiganbayan. To respondent Mrs. Araneta, all other matters, save that pertaining to
the authentication of the translated Swiss Court decisions, are irrelevant and
impertinent as far as this Court is concerned. Respondent Mrs. Araneta manifests that
she is as eager as respondent Sandiganbayan or any interested person to have the
Swiss Court decisions officially translated in our known language. She says the
authenticated official English version of the Swiss Court decisions should be presented.
This should stop all speculations on what indeed is contained therein. Thus, respondent
Mrs. Araneta prays that the petition be denied for lack of merit and for raising matters
which, in elaborated fashion, are impertinent and improper before this
Court.chanrob1es virtua1 1aw 1ibrary

PROPRIETY OF PETITIONER’S

ACTION FOR CERTIORARI

But before this Court discusses the more relevant issues, the question regarding the
propriety of petitioner Republic’s action for certiorari under Rule 65 19 of the 1997
Rules of Civil Procedure assailing the Sandiganbayan Resolution dated January 21,
 81

2002 should be threshed out.

At the outset, we would like to stress that we are treating this case as an exception to
the general rule governing petitions for certiorari. Normally, decisions of the
Sandiganbayan are brought before this Court under Rule 45, not Rule 65. 20 But where
the case is undeniably ingrained with immense public interest, public policy and deep
historical repercussions, certiorari is allowed notwithstanding the existence and
availability of the remedy of appeal. 21

One of the foremost concerns of the Aquino Government in February 1986 was the
recovery of the unexplained or ill-gotten wealth reputedly amassed by former President
and Mrs. Ferdinand E. Marcos, their relatives, friends and business associates. Thus,
the very first Executive Order (EO) issued by then President Corazon Aquino upon her
assumption to office after the ouster of the Marcoses was EO No. 1, issued on February
28, 1986. It created the Presidential Commission on Good Government (PCGG) and
charged it with the task of assisting the President in the "recovery of all ill-gotten
wealth accumulated by former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates, whether located in the Philippines or
abroad, including the takeover or sequestration of all business enterprises and entities
owned or controlled by them during his administration, directly or through nominees,
by taking undue advantage of their public office and/or using their powers, authority,
influence, connections or relationship." The urgency of this undertaking was tersely
described by this Court in Republic v. Lobregat 22 :chanrob1es virtual 1aw library

surely . . . an enterprise "of great pith and moment" ; it was attended by "great
expectations" ; it was initiated not only out of considerations of simple justice but also
out of sheer necessity — the national coffers were empty, or nearly so.

In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to
set aside technicalities and formalities that merely serve to delay or impede judicious
resolution. This Court prefers to have such cases resolved on the merits at the
Sandiganbayan. But substantial justice to the Filipino people and to all parties
concerned, not mere legalisms or perfection of form, should now be relentlessly and
firmly pursued. Almost two decades have passed since the government initiated its
search for and reversion of such ill-gotten wealth. The definitive resolution of such
cases on the merits is thus long overdue. If there is proof of illegal acquisition,
accumulation, misappropriation, fraud or illicit conduct, let it be brought out now. Let
the ownership of these funds and other assets be finally determined and resolved with
dispatch, free from all the delaying technicalities and annoying procedural sidetracks.
23

We thus take cognizance of this case and settle with finality all the issues therein.

ISSUES BEFORE THIS COURT

The crucial issues which this Court must resolve are: (1) whether or not respondents
raised any genuine issue of fact which would either justify or negate summary
judgment; and (2) whether or not petitioner Republic was able to prove its case for
forfeiture in accordance with Sections 2 and 3 of RA 1379.

(1) The Propriety of Summary Judgment

We hold that respondent Marcoses failed to raise any genuine issue of fact in their
pleadings. Thus, on motion of petitioner Republic, summary judgment should take
 82

place as a matter of right.

In the early case of Auman v. Estenzo 24 , summary judgment was described as a

judgment which a court may render before trial but after both parties have pleaded. It
is ordered by the court upon application by one party, supported by affidavits,
depositions or other documents, with notice upon the adverse party who may in turn
file an opposition supported also by affidavits, depositions or other documents. This is
after the court summarily hears both parties with their respective proofs and finds that
there is no genuine issue between them. Summary judgment is sanctioned in this
jurisdiction by Section 1, Rule 35 of the 1997 Rules of Civil Procedure:chanrob1es
virtual 1aw library

SECTION 1. Summary judgment for claimant. — A party seeking to recover upon a

claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.25cralaw:red

Summary judgment is proper when there is clearly no genuine issue as to any material
fact in the action. 26 The theory of summary judgment is that, although an answer
may on its face appear to tender issues requiring trial, if it is demonstrated by
affidavits, depositions or admissions that those issues are not genuine but sham or
fictitious, the Court is justified in dispensing with the trial and rendering summary
judgment for petitioner Republic.

The Solicitor General made a very thorough presentation of its case for
forfeiture:chanrob1es virtual 1aw library

x x x

4. Respondent Ferdinand E. Marcos (now deceased and represented by his

Estate/Heirs) was a public officer for several decades continuously and without
interruption as Congressman, Senator, Senate President and President of the Republic
of the Philippines from December 31, 1965 up to his ouster by direct action of the
people of EDSA on February 22-25, 1986.

5. Respondent Imelda Romualdez Marcos (Imelda, for short) the former First Lady who
ruled with FM during the 14-year martial law regime, occupied the position of Minister
of Human Settlements from June 1976 up to the peaceful revolution in February 22-25,
1986. She likewise served once as a member of the Interim Batasang Pambansa
during the early years of martial law from 1978 to 1984 and as Metro Manila Governor
in concurrent capacity as Minister of Human Settlements. . . .

x x x

11. At the outset, however, it must be pointed out that based on the Official Report of
the Minister of Budget, the total salaries of former President Marcos as President from
1966 to 1976 was P60,000 a year and from 1977 to 1985, P100,000 a year; while that
of the former First Lady, Imelda R. Marcos, as Minister of Human Settlements from
June 1976 to February 22-25, 1986 was P75,000 a year. . . .

ANALYSIS OF RESPONDENTS
 83

LEGITIMATE INCOME

x x x

12. Based on available documents, the ITRs of the Marcoses for the years 1965-1975
were filed under Tax Identification No. 1365-055-1. For the years 1976 until 1984, the
returns were filed under Tax Identification No. M 6221-J 1117-A-9.

13. The data contained in the ITRs and Balance Sheet filed by the "Marcoses are
summarized and attached to the reports in the following schedules:chanrob1es virtual
1aw library

Schedule A:chanrob1es virtual 1aw library

Schedule of Income (Annex "T" hereof);

Schedule B:chanrob1es virtual 1aw library

Schedule of Income Tax Paid (Annex "T-1" hereof);

Schedule C:chanrob1es virtual 1aw library

Schedule of Net Disposable Income (Annex "T-2" hereof);

Schedule D:chanrob1es virtual 1aw library

Schedule of Networth Analysis (Annex "T-3" hereof).

14. As summarized in Schedule A (Annex "T" hereof), the Marcoses reported

P16,408,442.00 or US$2,414,484.91 in total income over a period of 20 years from
1965 to 1984. The sources of income are as follows:chanrob1es virtual 1aw library

Official Salaries - P2,627,581.00 - 16.01%

Legal Practice - 11,109,836.00 - 67.71%

Farm Income - 149,700.00 - .91%

Others - 2,521,325.00 - 15.37%

——————— ————

Total P16,408,442.00 - 100.00%

15. FM’s official salary pertains to his compensation as Senate President in 1965 in the
amount of P15,935.00 and P1,420,000.00 as President of the Philippines during the
period 1966 until 1984. On the other hand, Imelda reported salaries and allowances
only for the years 1979 to 1984 in the amount of P1,191,646.00. The records indicate
that the reported income came from her salary from the Ministry of Human
Settlements and allowances from Food Terminal, Inc., National Home Mortgage
Finance Corporation, National Food Authority Council, Light Rail Transit Authority and
Home Development Mutual Fund.
 84

16. Of the P11,109,836.00 in reported income from legal practice, the amount of
P10,649,836.00 or 96% represents "receivables from prior years" during the period
1967 up to 1984.

17. In the guise of reporting income using the cash method under Section 38 of the
National Internal Revenue Code, FM made it appear that he had an extremely
profitable legal practice before he became a President (FM being barred by law from
practicing his law profession during his entire presidency) and that, incredibly, he was
still receiving payments almost 20 years after. The only problem is that in his Balance
Sheet attached to his 1965 ITR immediately preceding his ascendancy to the
presidency he did not show any Receivables from client at all, much less the P10,65-M
that he decided to later recognize as income. There are no documents showing any
withholding tax certificates. Likewise, there is nothing on record that will show any
known Marcos client as he has no known law office. As previously stated, his networth
was a mere P120,000.00 in December, 1965. The joint income tax returns of FM and
Imelda cannot, therefore, conceal the skeletons of their kleptocracy.

18. FM reported a total of P2,521,325.00 as Other Income for the years 1972 up to
1976 which he referred to in his return as "Miscellaneous Items" and "Various
Corporations." There is no indication of any payor of the dividends or earnings.

19. Spouses Ferdinand and Imelda did not declare any income from any deposits and
placements which are subject to a 5% withholding tax. The Bureau of Internal Revenue
attested that after a diligent search of pertinent records on file with the Records
Division, they did not find any records involving the tax transactions of spouses
Ferdinand and Imelda in Revenue Region No. 1, Baguio City, Revenue Region No. 4A,
Manila, Revenue Region No. 4B1, Quezon City and Revenue No. 8, Tacloban, Leyte.
Likewise, the Office of the Revenue Collector of Batac. Further, BIR attested that no
records were found on any filing of capital gains tax return involving spouses FM and
Imelda covering the years 1960 to 1965.

20. In Schedule B, the taxable reported income over the twenty-year period was
P14,463,595.00 which represents 88% of the gross income. The Marcoses paid income
taxes totaling P8,233,296.00 or US$1,220,667.59. The business expenses in the
amount of P861,748.00 represent expenses incurred for subscription, postage,
stationeries and contributions while the other deductions in the amount of P567,097.00
represents interest charges, medicare fees, taxes and licenses. The total deductions in
the amount of P1,994,845.00 represents 12% of the total gross income.

21. In Schedule C, the net cumulative disposable income amounts to P6,756,301.00 or

US$980,709.77. This is the amount that represents that portion of the Marcoses
income that is free for consumption, savings and investments. The amount is arrived
at by adding back to the net income after tax the personal and additional exemptions
for the years 1965-1984, as well as the tax-exempt salary of the President for the
years 1966 until 1972.

22. Finally, the networth analysis in Schedule D, represents the total accumulated
networth of spouses, Ferdinand and Imelda. Respondent’s Balance Sheet attached to
their 1965 ITR, covering the year immediately preceding their ascendancy to the
presidency, indicates an ending networth of P120,000.00 which FM declared as Library
and Miscellaneous assets. In computing for the networth, the income approach was
utilized. Under this approach, the beginning capital is increased or decreased, as the
case may be, depending upon the income earned or loss incurred. Computations
 85

establish the total networth of spouses Ferdinand and Imelda, for the years 1965 until
1984 in the total amount of US$957,487.75, assuming the income from legal practice
is real and valid. . . .

G. THE SECRET MARCOS DEPOSITS

IN SWISS BANKS

23. The following presentation very clearly and overwhelmingly show in detail how
both respondents clandestinely stashed away the country’s wealth to Switzerland and
hid the same under layers upon layers of foundations and other corporate entities to
prevent its detection. Through their dummies/nominees, fronts or agents who formed
those foundations or corporate entities, they opened and maintained numerous bank
accounts. But due to the difficulty if not the impossibility of detecting and documenting
all those secret accounts as well as the enormity of the deposits therein hidden, the
following presentation is confined to five identified accounts groups, with balances
amounting to about $356-M with a reservation for the filing of a supplemental or
separate forfeiture complaint should the need arise.

H. THE AZIO-VERSO-VIBUR

FOUNDATION ACCOUNTS

24. On June 11, 1971, Ferdinand Marcos issued a written order to Dr. Theo Bertheau,
legal counsel of Schweizeresche Kreditanstalt or SKA, also known as Swiss Credit
Bank, for him to establish the AZIO Foundation. On the same date, Marcos executed a
power of attorney in favor of Roberto S. Benedicto empowering him to transact
business in behalf of the said foundation. Pursuant to the said Marcos mandate, AZIO
Foundation was formed on June 21, 1971 in Vaduz. Walter Fessler and Ernst Scheller,
also of SKA Legal Service, and Dr. Helmuth Merling from Schaan were designated as
members of the Board of Trustees of the said foundation. Ferdinand Marcos was
named first beneficiary and the Marcos Foundation, Inc. was second beneficiary. On
November 12, 1971, FM again issued another written order naming Austrahil PTY Ltd.
In Sydney, Australia, as the foundation’s first and sole beneficiary. This was recorded
on December 14, 1971.

25. In an undated instrument, Marcos changed the first and sole beneficiary to CHARIS
FOUNDATION. This change was recorded on December 4, 1972.

26. On August 29, 1978, the AZIO FOUNDATION was renamed to VERSO
FOUNDATION. The Board of Trustees remained the same. On March 11, 1981, Marcos
issued a written directive to liquidated VERSO FOUNDATION and to transfer all its
assets to account of FIDES TRUST COMPANY at Bank Hofman in Zurich under the
account "Reference OSER." The Board of Trustees decided to dissolve the foundation
on June 25, 1981.

27. In an apparent maneuver to bury further the secret deposits beneath the thick
layers of corporate entities, FM effected the establishment of VIBUR FOUNDATION on
May 13, 1981 in Vaduz. Atty. Ivo Beck and Limag Management, a wholly-owned
subsidiary of Fides Trust, were designated as members of the Board of Trustees. The
account was officially opened with SKA on September 10, 1981. The beneficial owner
was not made known to the bank since Fides Trust Company acted as fiduciary.
However, comparison of the listing of the securities in the safe deposit register of the
VERSO FOUNDATION as of February 27, 1981 with that of VIBUR FOUNDATION as of
 86

December 31, 1981 readily reveals that exactly the same securities were listed.

28. Under the foregoing circumstances, it is certain that the VIBUR FOUNDATION is the
beneficial successor of VERSO FOUNDATION.

29. On March 18, 1986, the Marcos-designated Board of Trustees decided to liquidate
VIBUR FOUNDATION. A notice of such liquidation was sent to the Office of the Public
Register on March 21, 1986. However, the bank accounts and respective balances of
the said VIBUR FOUNDATION remained with SKA. Apparently, the liquidation was an
attempt by the Marcoses to transfer the foundation’s funds to another account or bank
but this was prevented by the timely freeze order issued by the Swiss authorities. One
of the latest documents obtained by the PCGG from the Swiss authorities is a
declaration signed by Dr. Ivo Beck (the trustee) stating that the beneficial owner of
VIBUR FOUNDATION is Ferdinand E. Marcos. Another document signed by G. Raber of
SKA shows that VIBUR FOUNDATION is owned by the "Marcos Familie" .

30. As of December 31, 1989, the balance of the bank accounts of VIBUR
FOUNDATION with SKA, Zurich, under the General Account No. 469857 totaled
$3,597,544.00.

I. XANDY-WINTROP: CHARIS-SCOLARI-

VALAMO-SPINUS-AVERTINA

FOUNDATION ACCOUNTS

31. This is the most intricate and complicated account group. As the Flow Chart hereof
shows, two (2) groups under the foundation organized by Marcos dummies/nominees
for FM’s benefit, eventually joined together and became one (1) account group under
the AVERTINA FOUNDATION for the benefit of both FM and Imelda. This is the biggest
group from where the $50-M investment fund of the Marcoses was drawn when they
bought the Central Bank’s dollar-denominated treasury notes with high-yielding
interests.

32. On March 20, 1968, after his second year in the presidency, Marcos opened bank
accounts with SKA using an alias or pseudonym WILLIAM SAUNDERS, apparently to
hide his true identity. The next day, March 21, 1968, his First Lady, Mrs. Imelda
Marcos also opened her own bank accounts with the same bank using an American-
sounding alias, JANE RYAN. Found among the voluminous documents in Malacañang
shortly after they fled to Hawaii in haste that fateful night of February 25, 1986, were
accomplished forms for "Declaration/Specimen Signatures" submitted by the Marcos
couple. Under the caption "signature(s)" Ferdinand and Imelda signed their real names
as well as their respective aliases underneath. These accounts were actively operated
and maintained by the Marcoses for about two (2) years until their closure sometime in
February, 1970 and the balances transferred to XANDY FOUNDATION.

33. The XANDY FOUNDATION was established on March 3, 1970 in Vaduz. C.W.
Fessler, C. Souviron and E. Scheller were named as members of the Board of Trustees.

34. FM and Imelda issued the written mandate to establish the foundation to Markus
Geel of SKA on March 3, 1970. In the handwritten Regulations signed by the Marcos
couple as well as in the type-written Regulations signed by Markus Geel both dated
February 13, 1970, the Marcos spouses were named the first beneficiaries, the
surviving spouse as the second beneficiary and the Marcos children – Imee, Ferdinand,
 87

Jr. (Bongbong) and Irene – as equal third beneficiaries.

35. The XANDY FOUNDATION was renamed WINTROP FOUNDATION on August 29,
1978. The Board of Trustees remained the same at the outset. However, on March 27,
1980, Souviron was replaced by Dr. Peter Ritter. On March 10. 1981, Ferdinand and
Imelda Marcos issued a written order to the Board of Wintrop to liquidate the
foundation and transfer all its assets to Bank Hofmann in Zurich in favor of FIDES
TRUST COMPANY. Later, WINTROP FOUNDATION was dissolved.

36. The AVERTINA FOUNDATION was established on May 13, 1981 in Vaduz with Atty.
Ivo Beck and Limag Management, a wholly-owned subsidiary of FIDES TRUST CO., as
members of the Board of Trustees. Two (2) account categories, namely: CAR and NES,
were opened on September 10, 1981. The beneficial owner of AVERTINA was not made
known to the bank since the FIDES TRUST CO. acted as fiduciary. However, the
securities listed in the safe deposit register of WINTROP FOUNDATION Category R as of
December 31, 1980 were the same as those listed in the register of AVERTINA
FOUNDATION Category CAR as of December 31, 1981. Likewise, the securities listed in
the safe deposit register of WINTROP FOUNDATION Category S as of December 31,
1980 were the same as those listed in the register of Avertina Category NES as of
December 31, 1981. Under the circumstances, it is certain that the beneficial successor
of WINTROP FOUNDATION is AVERTINA FOUNDATION. The balance of Category CAR as
of December 31, 1989 amounted to US$231,366,894.00 while that of Category NES as
of 12-31-83 was US$8,647,190.00. Latest documents received from Swiss authorities
included a declaration signed by IVO Beck stating that the beneficial owners of
AVERTINA FOUNDATION are FM and Imelda. Another document signed by G. Raber of
SKA indicates that Avertina Foundation is owned by the "Marcos Families."cralaw
virtua1aw library

37. The other groups of foundations that eventually joined AVERTINA were also
established by FM through his dummies, which started with the CHARIS FOUNDATION.

38. The CHARIS FOUNDATION was established in VADUZ on December 27, 1971.
Walter Fessler and Ernst Scheller of SKA and Dr. Peter Ritter were named as directors.
Dr. Theo Bertheau, SKA legal counsel, acted as founding director in behalf of FM by
virtue of the mandate and agreement dated November 12, 1971. FM himself was
named the first beneficiary and Xandy Foundation as second beneficiary in accordance
with the handwritten instructions of FM on November 12, 1971 and the Regulations. FM
gave a power of attorney to Roberto S. Benedicto on February 15, 1972 to act in his
behalf with regard to Charis Foundation.

39. On December 13, 1974, Charis Foundation was renamed Scolari Foundation but
the directors remained the same. On March 11, 1981 FM ordered in writing that the
Valamo Foundation be liquidated and all its assets be transferred to Bank Hofmann, AG
in favor of Fides Trust Company under the account "Reference OMAL." The Board of
Directors decided on the immediate dissolution of Valamo Foundation on June 25,
1981.

40. The SPINUS FOUNDATION was established on May 13, 1981 in Vaduz with Atty.
Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co., as
members of the Foundation’s Board of Directors. The account was officially opened
with SKA on September 10, 1981. The beneficial owner of the foundation was not
made known to the bank since Fides Trust Co. acted as fiduciary. However, the list of
securities in the safe deposit register of Valamo Foundation as of December 31, 1980
are practically the same with those listed in the safe deposit register of Spinus
 88

Foundation as of December 31, 1981. Under the circumstances, it is certain that the
Spinus Foundation is the beneficial successor of the Valamo Foundation.

41. On September 6, 1982, there was a written instruction from Spinus Foundation to
SKA to close its Swiss Franc account and transfer the balance to Avertina Foundation.
In July/August, 1982, several transfers from the foundation’s German marks and US
dollar accounts were made to Avertina Category CAR totaling DM 29.5-M and $58-M,
respectively. Moreover, a comparison of the list of securities of the Spinus Foundation
as of February 3, 1982 with the safe deposit slips of the Avertina Foundation Category
CAR as of August 19, 1982 shows that all the securities of Spinus were transferred to
Avertina.

J. TRINIDAD-RAYBY-PALMY

FOUNDATION ACCOUNTS

42. The Trinidad Foundation was organized on August 26, 1970 in Vaduz with C.W.
Fessler and E. Scheller of SKA and Dr. Otto Tondury as the foundation’s directors.
Imelda issued a written mandate to establish the foundation to Markus Geel on August
26, 1970. The regulations as well as the agreement, both dated August 28, 1970 were
likewise signed by Imelda. Imelda was named the first beneficiary and her children
Imelda (Imee), Ferdinand, Jr. (Bongbong) and, Irene were named as equal second
beneficiaries.

43. Rayby Foundation was established on June 22, 1973 in Vaduz with Fessler, Scheller
and Ritter as members of the board of directors. Imelda issued a written mandate to
Dr. Theo Bertheau to establish the foundation with a note that the foundation’s
capitalization as well as the cost of establishing it be debited against the account of
Trinidad Foundation. Imelda was named the first and only beneficiary of Rayby
foundation. According to written information from SKA dated November 28, 1988,
Imelda apparently had the intention in 1973 to transfer part of the assets of Trinidad
Foundation to another foundation, thus the establishment of Rayby Foundation.
However, transfer of assets never took place. On March 10, 1981, Imelda issued a
written order to transfer all the assets of Rayby Foundation to Trinidad Foundation and
to subsequently liquidate Rayby. On the same date, she issued a written order to the
board of Trinidad to dissolve the foundation and transfer all its assets to Bank Hofmann
in favor of Fides Trust Co. Under the account "Reference Dido," Rayby was dissolved on
April 6, 1981 and Trinidad was liquidated on August 3, 1981.

44. The PALMY FOUNDATION was established on May 13, 1981 in Vaduz with Dr. Ivo
Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co, as
members of the Foundation’s Board of Directors. The account was officially opened
with the SKA on September 10, 1981. The beneficial owner was not made known to
the bank since Fides Trust Co. acted as fiduciary. However, when one compares the
listing of securities in the safe deposit register of Trinidad Foundation as of December
31,1980 with that of the Palmy Foundation as of December 31, 1980, one can clearly
see that practically the same securities were listed. Under the circumstances, it is
certain that the Palmy Foundation is the beneficial successor of the Trinidad
Foundation.

45. As of December 31, 1989, the ending balance of the bank accounts of Palmy
Foundation under General Account No. 391528 is $17,214,432.00.

46. Latest documents received from Swiss Authorities included a declaration signed by
 89

Dr. Ivo Beck stating that the beneficial owner of Palmy Foundation is Imelda. Another
document signed by Raber shows that the said Palmy Foundation is owned by “Marcos
Familie”.

K. ROSALYS-AGUAMINA

FOUNDATION ACCOUNTS

47. Rosalys Foundation was established in 1971 with FM as the beneficiary. Its Articles
of Incorporation was executed on September 24, 1971 and its By-Laws on October 3,
1971. This foundation maintained several accounts with Swiss Bank Corporation (SBC)
under the general account 51960 where most of the bribe monies from Japanese
suppliers were hidden.

48. On December 19, 1985, Rosalys Foundation was liquidated and all its assets were
transferred to Aguamina Corporation’s (Panama) Account No. 53300 with SBC. The
ownership by Aguamina Corporation of Account No. 53300 is evidenced by an opening
account documents from the bank. J. Christinaz and R.L. Rossier, First Vice-President
and Senior Vice President, respectively, of SBC, Geneva issued a declaration dated
September 3, 1991 stating that the by-laws dated October 3, 1971 governing Rosalys
Foundation was the same by-law applied to Aguamina Corporation Account No. 53300.
They further confirmed that no change of beneficial owner was involved while
transferring the assets of Rosalys to Aguamina. Hence, FM remains the beneficiary of
Aguamina Corporation Account No. 53300.

As of August 30, 1991, the ending balance of Account No. 53300 amounted to
$80,566,483.00.

L. MALER FOUNDATION ACCOUNTS

49. Maler was first created as an establishment. A statement of its rules and
regulations was found among Malacañang documents. It stated, among others, that
50% of the Company’s assets will be for sole and full right disposal of FM and Imelda
during their lifetime, which the remaining 50% will be divided in equal parts among
their children. Another Malacañang document dated October 19, 1968 and signed by
Ferdinand and Imelda pertains to the appointment of Dr. Andre Barbey and Jean Louis
Sunier as attorneys of the company and as administrator and manager of all assets
held by the company. The Marcos couple, also mentioned in the said document that
they bought the Maler Establishment from SBC, Geneva. On the same date, FM and
Imelda issued a letter addressed to Maler Establishment, stating that all instructions to
be transmitted with regard to Maler will be signed with the word "JOHN LEWIS." This
word will have the same value as the couple’s own personal signature. The letter was
signed by FM and Imelda in their signatures and as John Lewis.

50. Maler Establishment opened and maintained bank accounts with SBC, Geneva. The
opening bank documents were signed by Dr. Barbey and Mr. Sunnier as authorized
signatories.

51. On November 17, 1981, it became necessary to transform Maler Establishment into
a foundation. Likewise, the attorneys were changed to Michael Amaudruz, Et. Al.
However, administration of the assets was left to SBC. The articles of incorporation of
Maler Foundation registered on November 17, 1981 appear to be the same articles
applied to Maler Establishment. On February 28, 1984, Maler Foundation cancelled the
power of attorney for the management of its assets in favor of SBC and transferred
 90

such power to Sustrust Investment Co., S.A.

52. As of June 6, 1991, the ending balance of Maler Foundation’s Account Nos.
254,508 BT and 98,929 NY amount SF 9,083,567 and SG 16,195,258, respectively, for
a total of SF 25,278,825.00. GM only until December 31, 1980. This account was
opened by Maler when it was still an establishment which was subsequently
transformed into a foundation.

53. All the five (5) group accounts in the over-all flow chart have a total balance of
about Three Hundred Fifty Six Million Dollars ($356,000,000.00) as shown by Annex
"R-5" hereto attached as integral part hereof.

x x x. 27

Respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and

Ferdinand Marcos, Jr., in their answer, stated the following:chanrob1es virtual 1aw
library

x x x

4. Respondents ADMIT paragraphs 3 and 4 of the Petition.

5. Respondents specifically deny paragraph 5 of the Petition in so far as it states that

summons and other court processes may be served on Respondent Imelda R. Marcos
at the stated address the truth of the matter being that Respondent Imelda R. Marcos
may be served with summons and other processes at No. 10-B Bel Air Condominium
5022 P. Burgos Street, Makati, Metro Manila, and ADMIT the rest.

x x x

10. Respondents ADMIT paragraph 11 of the Petition.

11. Respondents specifically DENY paragraph 12 of the Petition for lack of knowledge
sufficient to form a belief as to the truth of the allegation since Respondents were not
privy to the transactions and that they cannot remember exactly the truth as to the
matters alleged.

12. Respondents specifically DENY paragraph 13 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs and
Balance Sheet.

13. Respondents specifically DENY paragraph 14 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs.

14. Respondents specifically DENY paragraph 15 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs.

15. Respondents specifically DENY paragraph 16 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
 91

Respondents cannot remember with exactitude the contents of the alleged ITRs.

16. Respondents specifically DENY paragraph 17 of the Petition insofar as it attributes

willful duplicity on the part of the late President Marcos, for being false, the same being
pure conclusions based on pure assumption and not allegations of fact; and specifically
DENY the rest for lack of knowledge or information sufficient to form a belief as to the
truth of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs or the attachments thereto.

17. Respondents specifically DENY paragraph 18 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs.

18. Respondents specifically DENY paragraph 19 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs and
that they are not privy to the activities of the BIR.

19. Respondents specifically DENY paragraph 20 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs.

20. Respondents specifically DENY paragraph 21 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs.

21. Respondents specifically DENY paragraph 22 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of the allegation since
Respondents cannot remember with exactitude the contents of the alleged ITRs.

22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents

clandestinely stashed the country’s wealth in Switzerland and hid the same under
layers and layers of foundation and corporate entities for being false, the truth being
that Respondents aforesaid properties were lawfully acquired.

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the
Petition for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents were not privy to the transactions regarding the
alleged Azio-Verso-Vibur Foundation accounts, except that as to Respondent Imelda R.
Marcos she specifically remembers that the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36, 37, 38, 39, 40,
and 41 of the Petition for lack of knowledge or information sufficient to form a belief as
to the truth of the allegations since Respondents are not privy to the transactions and
as to such transaction they were privy to they cannot remember with exactitude the
same having occurred a long time ago, except that as to Respondent Imelda R. Marcos
she specifically remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth of the
allegations since Respondents were not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to Respondent Imelda R. Marcos she
specifically remembers that the funds involved were lawfully acquired.
 92

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for
lack of knowledge or information sufficient to form a belief as to the truth of the
allegations since Respondents were not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to Respondent Imelda R. Marcos she
specifically remembers that the funds involved were lawfully acquired.

Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos and
the Marcos children indubitably failed to tender genuine issues in their answer to the
petition for forfeiture. A genuine issue is an issue of fact which calls for the
presentation of evidence as distinguished from an issue which is fictitious and
contrived, set up in bad faith or patently lacking in substance so as not to constitute a
genuine issue for trial. Respondents’ defenses of "lack of knowledge for lack of privity"
or" (inability to) recall because it happened a long time ago" or, on the part of Mrs.
Marcos, that "the funds were lawfully acquired" are fully insufficient to tender genuine
issues. Respondent Marcoses’ defenses were a sham and evidently calibrated to
compound and confuse the issues.

The following pleadings filed by respondent Marcoses are replete with indications of a
spurious defense:chanrob1es virtual 1aw library

(a) Respondents’ Answer dated October 18, 1993;

(b) Pre-trial Brief dated October 4, 1999 of Mrs. Marcos, Supplemental Pre-trial Brief
dated October 19, 1999 of Ferdinand, Jr. and Mrs. Imee Marcos-Manotoc adopting the
pre-trial brief of Mrs. Marcos, and Manifestation dated October 19, 1999 of Irene
Marcos-Araneta adopting the pre-trial briefs of her co- respondents;

(c) Opposition to Motion for Summary Judgment dated March 21, 2000, filed by Mrs.
Marcos which the other respondents (Marcos children) adopted;

(d) Demurrer to Evidence dated May 2, 2000 filed by Mrs. Marcos and adopted by the
Marcos children;

(e) Motion for Reconsideration dated September 26, 2000 filed by Mrs. Marcos; Motion
for Reconsideration dated October 5, 2000 jointly filed by Mrs. Manotoc and Ferdinand,
Jr., and Supplemental Motion for Reconsideration dated October 9, 2000 likewise
jointly filed by Mrs. Manotoc and Ferdinand, Jr.;

(f) Memorandum dated December 12, 2000 of Mrs. Marcos and Memorandum dated
December 17, 2000 of the Marcos children;

(g) Manifestation dated May 26, 1998; and

(h) General/Supplemental Agreement dated December 23, 1993.

An examination of the foregoing pleadings is in order.

Ø Respondents’ Answer dated October 18, 1993.

In their answer, respondents failed to specifically deny each and every allegation
contained in the petition for forfeiture in the manner required by the rules. All they
gave were stock answers like "they have no sufficient knowledge" or "they could not
 93

recall because it happened a long time ago," and, as to Mrs. Marcos, "the funds were
lawfully acquired," without stating the basis of such assertions.chanrob1es virtua1 1aw
1ibrary

Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides:chanrob1es virtual
1aw library

A defendant must specify each material allegation of fact the truth of which he does
not admit and, whenever practicable, shall set forth the substance of the matters upon
which he relies to support his denial. Where a defendant desires to deny only a part of
an averment, he shall specify so much of it as is true and material and shall deny the
remainder. Where a defendant is without knowledge or information sufficient to form a
belief as to the truth of a material averment made in the complaint, he shall so state,
and this shall have the effect of a denial. 28

The purpose of requiring respondents to make a specific denial is to make them

disclose facts which will disprove the allegations of petitioner at the trial, together with
the matters they rely upon in support of such denial. Our jurisdiction adheres to this
rule to avoid and prevent unnecessary expenses and waste of time by compelling both
parties to lay their cards on the table, thus reducing the controversy to its true terms.
As explained in Alonso v. Villamor, 29

A litigation is not a game of technicalities in which one, more deeply schooled and
skilled in the subtle art of movement and position, entraps and destroys the other. It is
rather a contest in which each contending party fully and fairly lays before the court
the facts in issue and then, brushing aside as wholly trivial and indecisive all
imperfections of form and technicalities of procedure, asks that justice be done upon
the merits. Lawsuits, unlike duels, are not to be won by a rapier’s thrust.

On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired.
However, she failed to particularly state the ultimate facts surrounding the lawful
manner or mode of acquisition of the subject funds. Simply put, she merely stated in
her answer with the other respondents that the funds were "lawfully acquired" without
detailing how exactly these funds were supposedly acquired legally by them. Even in
this case before us, her assertion that the funds were lawfully acquired remains bare
and unaccompanied by any factual support which can prove, by the presentation of
evidence at a hearing, that indeed the funds were acquired legitimately by the Marcos
family.

Respondents’ denials in their answer at the Sandiganbayan were based on their alleged
lack of knowledge or information sufficient to form a belief as to the truth of the
allegations of the petition.

It is true that one of the modes of specific denial under the rules is a denial through a
statement that the defendant is without knowledge or information sufficient to form a
belief as to the truth of the material averment in the complaint. The question,
however, is whether the kind of denial in respondents’ answer qualifies as the specific
denial called for by the rules. We do not think so. In Morales v. Court of Appeals, 30
this Court ruled that if an allegation directly and specifically charges a party with
having done, performed or committed a particular act which the latter did not in fact
do, perform or commit, a categorical and express denial must be made.

Here, despite the serious and specific allegations against them, the Marcoses
responded by simply saying that they had no knowledge or information sufficient to
 94

form a belief as to the truth of such allegations. Such a general, self-serving claim of
ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an
issue. Respondent Marcoses should have positively stated how it was that they were
supposedly ignorant of the facts alleged. 31

To elucidate, the allegation of petitioner Republic in paragraph 23 of the petition for

forfeiture stated:chanrob1es virtual 1aw library

23. The following presentation very clearly and overwhelmingly show in detail how
both respondents clandestinely stashed away the country’s wealth to Switzerland and
hid the same under layers upon layers of foundations and other corporate entities to
prevent its detection. Through their dummies/nominees, fronts or agents who formed
those foundations or corporate entities, they opened and maintained numerous bank
accounts. But due to the difficulty if not the impossibility of detecting and documenting
all those secret accounts as well as the enormity of the deposits therein hidden, the
following presentation is confined to five identified accounts groups, with balances
amounting to about $356-M with a reservation for the filing of a supplemental or
separate forfeiture complaint should the need arise. 32

Respondents’ lame denial of the aforesaid allegation was:chanrob1es virtual 1aw

library

22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents

clandestinely stashed the country’s wealth in Switzerland and hid the same under
layers and layers of foundations and corporate entities for being false, the truth being
that Respondents’ aforesaid properties were lawfully acquired. 33

Evidently, this particular denial had the earmark of what is called in the law on
pleadings as a negative pregnant, that is, a denial pregnant with the admission of the
substantial facts in the pleading responded to which are not squarely denied. It was in
effect an admission of the averments it was directed at. 34 Stated otherwise, a
negative pregnant is a form of negative expression which carries with it an affirmation
or at least an implication of some kind favorable to the adverse party. It is a denial
pregnant with an admission of the substantial facts alleged in the pleading. Where a
fact is alleged with qualifying or modifying language and the words of the allegation as
so qualified or modified are literally denied, it has been held that the qualifying
circumstances alone are denied while the fact itself is admitted. 35

In the instant case, the material allegations in paragraph 23 of the said petition were
not specifically denied by respondents in paragraph 22 of their answer. The denial
contained in paragraph 22 of the answer was focused on the averment in paragraph 23
of the petition for forfeiture that "Respondents clandestinely stashed the country’s
wealth in Switzerland and hid the same under layers and layers of foundations and
corporate entities." Paragraph 22 of the respondents’ answer was thus a denial
pregnant with admissions of the following substantial facts:chanrob1es virtual 1aw
library

(1) that the Swiss bank deposits existed and

(2) that the estimated sum thereof was US$356 million as of December, 1990.

Therefore, the allegations in the petition for forfeiture on the existence of the Swiss
bank deposits in the sum of about US$356 million, not having been specifically denied
by respondents in their answer, were deemed admitted by them pursuant to Section
 95

11, Rule 8 of the 1997 Revised Rules on Civil Procedure:chanrob1es virtual 1aw library

Material averment in the complaint, . . . shall be deemed admitted when not

specifically denied. . . . 36

By the same token, the following unsupported denials of respondents in their answer
were pregnant with admissions of the substantial facts alleged in the Republic’s petition
for forfeiture:chanrob1es virtual 1aw library

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the
Petition for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since respondents were not privy to the transactions regarding the
alleged Azio-Verso-Vibur Foundation accounts, except that, as to respondent Imelda R.
Marcos, she specifically remembers that the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36, 37, 38, 39, 40,
41 of the Petition for lack of knowledge or information sufficient to form a belief as to
the truth of the allegations since respondents were not privy to the transactions and as
to such transactions they were privy to, they cannot remember with exactitude the
same having occurred a long time ago, except as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 45, and 46 of the petition for
lack of knowledge or information sufficient to from a belief as to the truth of the
allegations since respondents were not privy to the transactions and as to such
transaction they were privy to, they cannot remember with exactitude, the same
having occurred a long time ago, except that as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52 of the petition for
lack of knowledge and information sufficient to form a belief as to the truth of the
allegations since respondents were not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.

The matters referred to in paragraphs 23 to 26 of the respondents’ answer pertained to

the creation of five groups of accounts as well as their respective ending balances and
attached documents alleged in paragraphs 24 to 52 of the Republic’s petition for
forfeiture. Respondent Imelda R. Marcos never specifically denied the existence of the
Swiss funds. Her claim that "the funds involved were lawfully acquired" was an
acknowledgment on her part of the existence of said deposits. This only reinforced her
earlier admission of the allegation in paragraph 23 of the petition for forfeiture
regarding the existence of the US$356 million Swiss bank deposits.chanrob1es virtua1
1aw 1ibrary

The allegations in paragraphs 47 37 and 48 38 of the petition for forfeiture referring to

the creation and amount of the deposits of the Rosalys-Aguamina Foundation as well
as the averment in paragraph 52-a 39 of the said petition with respect to the sum of
the Swiss bank deposits estimated to be US$356 million were again not specifically
denied by respondents in their answer. The respondents did not at all respond to the
issues raised in these paragraphs and the existence, nature and amount of the Swiss
funds were therefore deemed admitted by them. As held in Galofa v. Nee Bon Sing, 40
if a defendant’s denial is a negative pregnant, it is equivalent to an admission.
 96

Moreover, respondents’ denial of the allegations in the petition for forfeiture "for lack of
knowledge or information sufficient to form a belief as to the truth of the allegations
since respondents were not privy to the transactions" was just a pretense. Mrs. Marcos’
privity to the transactions was in fact evident from her signatures on some of the vital
documents 41 attached to the petition for forfeiture which Mrs. Marcos failed to
specifically deny as required by the rules. 42

It is worthy to note that the pertinent documents attached to the petition for forfeiture
were even signed personally by respondent Mrs. Marcos and her late husband,
Ferdinand E. Marcos, indicating that said documents were within their knowledge. As
correctly pointed out by Sandiganbayan Justice Francisco Villaruz, Jr. in his dissenting
opinion:chanrob1es virtual 1aw library

The pattern of: 1) creating foundations, 2) use of pseudonyms and dummies, 3)

approving regulations of the Foundations for the distribution of capital and income of
the Foundations to the First and Second beneficiary (who are no other than FM and his
family), 4) opening of bank accounts for the Foundations, 5) changing the names of
the Foundations, 6) transferring funds and assets of the Foundations to other
Foundations or Fides Trust, 7) liquidation of the Foundations as substantiated by the
Annexes U to U-168, Petition [for forfeiture] strongly indicate that FM and/or Imelda
were the real owners of the assets deposited in the Swiss banks, using the Foundations
as dummies. 43

How could respondents therefore claim lack of sufficient knowledge or information

regarding the existence of the Swiss bank deposits and the creation of five groups of
accounts when Mrs. Marcos and her late husband personally masterminded and
participated in the formation and control of said foundations? This is a fact respondent
Marcoses were never able to explain.

Not only that. Respondents’ answer also technically admitted the genuineness and due
execution of the Income Tax Returns (ITRs) and the balance sheets of the late
Ferdinand E. Marcos and Imelda R. Marcos attached to the petition for forfeiture, as
well as the veracity of the contents thereof.

The answer again premised its denials of said ITRs and balance sheets on the ground
of lack of knowledge or information sufficient to form a belief as to the truth of the
contents thereof. Petitioner correctly points out that respondents’ denial was not really
grounded on lack of knowledge or information sufficient to form a belief but was based
on lack of recollection. By reviewing their own records, respondent Marcoses could
have easily determined the genuineness and due execution of the ITRs and the balance
sheets. They also had the means and opportunity of verifying the same from the
records of the BIR and the Office of the President. They did not.

When matters regarding which respondents claim to have no knowledge or information

sufficient to form a belief are plainly and necessarily within their knowledge, their
alleged ignorance or lack of information will not be considered a specific denial. 44 An
unexplained denial of information within the control of the pleader, or is readily
accessible to him, is evasive and is insufficient to constitute an effective denial. 45

The form of denial adopted by respondents must be availed of with sincerity and in
good faith, and certainly not for the purpose of confusing the adverse party as to what
allegations of the petition are really being challenged; nor should it be made for the
purpose of delay. 46 In the instant case, the Marcoses did not only present
 97

unsubstantiated assertions but in truth attempted to mislead and deceive this Court by
presenting an obviously contrived defense.

Simply put, a profession of ignorance about a fact which is patently and necessarily
within the pleader’s knowledge or means of knowing is as ineffective as no denial at
all. 47 Respondents’ ineffective denial thus failed to properly tender an issue and the
averments contained in the petition for forfeiture were deemed judicially admitted by
them.

As held in J.P. Juan & Sons, Inc. v. Lianga Industries, Inc.:chanrob1es virtual 1aw
library

Its "specific denial" of the material allegation of the petition without setting forth the
substance of the matters relied upon to support its general denial, when such matters
were plainly within its knowledge and it could not logically pretend ignorance as to the
same, therefore, failed to properly tender on issue. 48

Thus, the general denial of the Marcos children of the allegations in the petition for
forfeiture "for lack of knowledge or information sufficient to form a belief as to the
truth of the allegations since they were not privy to the transactions" cannot rightfully
be accepted as a defense because they are the legal heirs and successors-in-interest of
Ferdinand E. Marcos and are therefore bound by the acts of their father vis-a-vis the
Swiss funds.chanrob1es virtua1 1aw 1ibrary

Ø Pre-Trial Brief Dated October 18, 1993

The pre-trial brief of Mrs. Marcos was adopted by the three Marcos children. In said
brief, Mrs. Marcos stressed that the funds involved were lawfully acquired. But, as in
their answer, they failed to state and substantiate how these funds were acquired
lawfully. They failed to present and attach even a single document that would show
and prove the truth of their allegations. Section 6, Rule 18 of the 1997 Rules of Civil
Procedure provides:chanrob1es virtual 1aw library

The parties shall file with the court and serve on the adverse party, . . . their
respective pre-trial briefs which shall contain, among others:chanrob1es virtual 1aw
library

x x x

(d) the documents or exhibits to be presented, stating the purpose thereof;

x x x

(f) the number and names of the witnesses, and the substance of their respective
testimonies. 49

It is unquestionably within the court’s power to require the parties to submit their pre-
trial briefs and to state the number of witnesses intended to be called to the stand, and
a brief summary of the evidence each of them is expected to give as well as to disclose
the number of documents to be submitted with a description of the nature of each. The
tenor and character of the testimony of the witnesses and of the documents to be
deduced at the trial thus made known, in addition to the particular issues of fact and
 98

law, it becomes apparent if genuine issues are being put forward necessitating the
holding of a trial. Likewise, the parties are obliged not only to make a formal
identification and specification of the issues and their proofs, and to put these matters
in writing and submit them to the court within the specified period for the prompt
disposition of the action. 50

The pre-trial brief of Mrs. Marcos, as subsequently adopted by respondent Marcos

children, merely stated:chanrob1es virtual 1aw library

x x x

WITNESSES

4.1 Respondent Imelda will present herself as a witness and reserves the right to
present additional witnesses as may be necessary in the course of the trial.

x x x

DOCUMENTARY EVIDENCE

5.1 Respondent Imelda reserves the right to present and introduce in evidence
documents as may be necessary in the course of the trial.

Mrs. Marcos did not enumerate and describe the documents constituting her evidence.
Neither the names of witnesses nor the nature of their testimony was stated. What
alone appeared certain was the testimony of Mrs. Marcos only who in fact had
previously claimed ignorance and lack of knowledge. And even then, the substance of
her testimony, as required by the rules, was not made known either. Such cunning
tactics of respondents are totally unacceptable to this Court. We hold that, since no
genuine issue was raised, the case became ripe for summary judgment.

Ø Opposition to Motion for Summary Judgment dated March 21, 2000

The opposition filed by Mrs. Marcos to the motion for summary judgment dated March
21, 2000 of petitioner Republic was merely adopted by the Marcos children as their
own opposition to the said motion. However, it was again not accompanied by
affidavits, depositions or admissions as required by Section 3, Rule 35 of the 1997
Rules on Civil Procedure:chanrob1es virtual 1aw library

. . . The adverse party may serve opposing affidavits, depositions, or admissions at

least three (3) days before hearing. After hearing, the judgment sought shall be
rendered forthwith if the pleadings, supporting affidavits, depositions, and admissions
on file, show that, except as to the amount of damages, there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of
law. 51

The absence of opposing affidavits, depositions and admissions to contradict the sworn
declarations in the Republic’s motion only demonstrated that the averments of such
opposition were not genuine and therefore unworthy of belief.

Ø Demurrer to Evidence dated May 2, 2000; 52 Motions for Reconsideration; 53 and

Memoranda of Mrs. Marcos and the Marcos Children 54
 99

All these pleadings again contained no allegations of facts showing their lawful
acquisition of the funds. Once more, respondents merely made general denials without
alleging facts which would have been admissible in evidence at the hearing, thereby
failing to raise genuine issues of fact.

Mrs. Marcos insists in her memorandum dated October 21, 2002 that, during the pre-
trial, her counsel stated that his client was just a beneficiary of the funds, contrary to
petitioner Republic’s allegation that Mrs. Marcos disclaimed ownership of or interest in
the funds.

This is yet another indication that respondents presented a fictitious defense because,
during the pre-trial, Mrs. Marcos and the Marcos children denied ownership of or
interest in the Swiss funds:chanrob1es virtual 1aw library

PJ Garchitorena:chanrob1es virtual 1aw library

Make of record that as far as Imelda Marcos is concerned through the statement of
Atty. Armando M. Marcelo that the US$360 million more or less subject matter of the
instant lawsuit as allegedly obtained from the various Swiss Foundations do not belong
to the estate of Marcos or to Imelda Marcos herself. That’s your statement of facts?

Atty. MARCELO:chanrob1es virtual 1aw library

Yes, Your Honor.

PJ Garchitorena:chanrob1es virtual 1aw library

That’s it. Okay. Counsel for Manotoc and Ferdinand, Jr. What is your point here? Does
the estate of Marcos own anything of the $360 million subject of this case.

Atty. TECSON:chanrob1es virtual 1aw library

We joined the Manifestation of Counsel.

PJ Garchitorena:chanrob1es virtual 1aw library

You do not own anything?

Atty. TECSON:chanrob1es virtual 1aw library

Yes, Your Honor.

PJ Garchitorena:chanrob1es virtual 1aw library

Counsel for Irene Araneta?

Atty. SISON:chanrob1es virtual 1aw library

I join the position taken by my other compañeros here, Your Honor.

x x x
 100

Atty. SISON:chanrob1es virtual 1aw library

Irene Araneta as heir do (sic) not own any of the amount, Your Honor. 55

We are convinced that the strategy of respondent Marcoses was to confuse petitioner
Republic as to what facts they would prove or what issues they intended to pose for
the court’s resolution. There is no doubt in our mind that they were leading petitioner
Republic, and now this Court, to perplexity, if not trying to drag this forfeiture case to
eternity.

Ø Manifestation dated May 26, 1998 filed by Mrs. Marcos; General/Supplemental

Compromise Agreement dated December 28, 1993

These pleadings of respondent Marcoses presented nothing but feigned defenses. In

their earlier pleadings, respondents alleged either that they had no knowledge of the
existence of the Swiss deposits or that they could no longer remember anything as it
happened a long time ago. As to Mrs. Marcos, she remembered that it was lawfully
acquired.

In her Manifestation dated May 26, 1998, Mrs. Marcos stated that:chanrob1es virtual
1aw library

COMES NOW undersigned counsel for respondent Imelda R. Marcos, and before this
Honorable Court, most respectfully manifests:chanrob1es virtual 1aw library

That respondent Imelda R, Marcos owns 90% of the subject matter of the above-
entitled case, being the sole beneficiary of the dollar deposits in the name of the
various foundations alleged in the case;

That in fact only 10% of the subject matter in the above-entitled case belongs to the
estate of the late President Ferdinand E. Marcos.

In the Compromise/Supplemental Agreements, respondent Marcoses sought to

implement the agreed distribution of the Marcos assets, including the Swiss deposits.
This was, to us, an unequivocal admission of ownership by the Marcoses of the said
deposits.

But, as already pointed out, during the pre-trial conference, respondent Marcoses
denied knowledge as well as ownership of the Swiss funds.

Anyway we look at it, respondent Marcoses have put forth no real defense. The "facts"
pleaded by respondents, while ostensibly raising important questions or issues of fact,
in reality comprised mere verbiage that was evidently wanting in substance and
constituted no genuine issues for trial.

We therefore rule that, under the circumstances, summary judgment is proper.

In fact, it is the law itself which determines when summary judgment is called for.
Under the rules, summary judgment is appropriate when there are no genuine issues
of fact requiring the presentation of evidence in a full-blown trial. Even if on their face
the pleadings appear to raise issue, if the affidavits, depositions and admissions show
that such issues are not genuine, then summary judgment as prescribed by the rules
must ensue as a matter of law. 56
 101

In sum, mere denials, if unaccompanied by any fact which will be admissible in

evidence at a hearing, are not sufficient to raise genuine issues of fact and will not
defeat a motion for summary judgment. 57 A summary judgment is one granted upon
motion of a party for an expeditious settlement of the case, it appearing from the
pleadings, depositions, admissions and affidavits that there are no important questions
or issues of fact posed and, therefore, the movant is entitled to a judgment as a
matter of law. A motion for summary judgment is premised on the assumption that the
issues presented need not be tried either because these are patently devoid of
substance or that there is no genuine issue as to any pertinent fact. It is a method
sanctioned by the Rules of Court for the prompt disposition of a civil action where there
exists no serious controversy. 58 Summary judgment is a procedural device for the
prompt disposition of actions in which the pleadings raise only a legal issue, not a
genuine issue as to any material fact. The theory of summary judgment is that,
although an answer may on its face appear to tender issues requiring trial, if it is
established by affidavits, depositions or admissions that those issues are not genuine
but fictitious, the Court is justified in dispensing with the trial and rendering summary
judgment for petitioner. 59

In the various annexes to the petition for forfeiture, petitioner Republic attached sworn
statements of witnesses who had personal knowledge of the Marcoses’ participation in
the illegal acquisition of funds deposited in the Swiss accounts under the names of five
groups or foundations. These sworn statements substantiated the ill-gotten nature of
the Swiss bank deposits. In their answer and other subsequent pleadings, however,
the Marcoses merely made general denials of the allegations against them without
stating facts admissible in evidence at the hearing, thereby failing to raise any genuine
issues of fact.

Under these circumstances, a trial would have served no purpose at all and would have
been totally unnecessary, thus justifying a summary judgment on the petition for
forfeiture. There were no opposing affidavits to contradict the sworn declarations of the
witnesses of petitioner Republic, leading to the inescapable conclusion that the matters
raised in the Marcoses’ answer were false.

Time and again, this Court has encountered cases like this which are either only half-
heartedly defended or, if the semblance of a defense is interposed at all, it is only to
delay disposition and gain time. It is certainly not in the interest of justice to allow
respondent Marcoses to avail of the appellate remedies accorded by the Rules of Court
to litigants in good faith, to the prejudice of the Republic and ultimately of the Filipino
people. From the beginning, a candid demonstration of respondents’ good faith should
have been made to the court below. Without the deceptive reasoning and
argumentation, this protracted litigation could have ended a long time ago.

Since 1991, when the petition for forfeiture was first filed, up to the present, all
respondents have offered are foxy responses like "lack of sufficient knowledge or lack
of privity" or "they cannot recall because it happened a long time ago" or, as to Mrs.
Marcos, "the funds were lawfully acquired." But, whenever it suits them, they also
claim ownership of 90% of the funds and allege that only 10% belongs to the Marcos
estate. It has been an incredible charade from beginning to end.

In the hope of convincing this Court to rule otherwise, respondents Maria Imelda
Marcos-Manotoc and Ferdinand R. Marcos Jr. contend that "by its positive acts and
express admissions prior to filing the motion for summary judgment on March 10,
2000, petitioner Republic had bound itself to go to trial on the basis of existing issues.
Thus, it had legally waived whatever right it had to move for summary judgment." 60
 102

We do not think so. The alleged positive acts and express admissions of the petitioner
did not preclude it from filing a motion for summary judgment.

Rule 35 of the 1997 Rules of Civil Procedure provides:chanrob1es virtual 1aw library

Rule 35

Summary Judgment

Section 1. Summary judgment for claimant. — A party seeking to recover upon a

claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.

Section 2. Summary judgment for defending party. — A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any
time, move with supporting affidavits, depositions or admissions for a summary
judgment in his favor as to all or any part thereof. (Emphasis ours) 61

Under the rule, the plaintiff can move for summary judgment "at any time after the
pleading in answer thereto (i.e., in answer to the claim, counterclaim or cross-claim)
has been served." No fixed reglementary period is provided by the Rules. How else
does one construe the phrase "any time after the answer has been served?"

This issue is actually one of first impression. No local jurisprudence or authoritative

work has touched upon this matter. This being so, an examination of foreign laws and
jurisprudence, particularly those of the United States where many of our laws and rules
were copied, is in order.

Rule 56 of the Federal Rules of Civil Procedure provides that a party seeking to recover
upon a claim, counterclaim or cross-claim may move for summary judgment at any
time after the expiration of 20 days from the commencement of the action or after
service of a motion for summary judgment by the adverse party, and that a party
against whom a claim, counterclaim or cross-claim is asserted may move for summary
judgment at any time.

However, some rules, particularly Rule 113 of the Rules of Civil Practice of New York,
specifically provide that a motion for summary judgment may not be made until issues
have been joined, that is, only after an answer has been served. 62 Under said rule,
after issues have been joined, the motion for summary judgment may be made at any
stage of the litigation. 63 No fixed prescriptive period is provided.

Like Rule 113 of the Rules of Civil Practice of New York, our rules also provide that a
motion for summary judgment may not be made until issues have been joined,
meaning, the plaintiff has to wait for the answer before he can move for summary
judgment. 64 And like the New York rules, ours do not provide for a fixed reglementary
period within which to move for summary judgment.

This being so, the New York Supreme Court’s interpretation of Rule 113 of the Rules of
Civil Practice can be applied by analogy to the interpretation of Section 1, Rule 35, of
our 1997 Rules of Civil Procedure.
 103

Under the New York rule, after the issues have been joined, the motion for summary
judgment may be made at any stage of the litigation. And what exactly does the
phrase "at any stage of the litigation" mean? In Ecker v. Muzysh, 65 the New York
Supreme Court ruled:jgc:chanrobles.com.ph

"PER CURIAM.

Plaintiff introduced her evidence and the defendants rested on the case made by the
plaintiff. The case was submitted. Owing to the serious illness of the trial justice, a
decision was not rendered within sixty days after the final adjournment of the term at
which the case was tried. With the approval of the trial justice, the plaintiff moved for a
new trial under Section 442 of the Civil Practice Act. The plaintiff also moved for
summary judgment under Rule 113 of the Rules of Civil Practice. The motion was
opposed mainly on the ground that, by proceeding to trial, the plaintiff had waived her
right to summary judgment and that the answer and the opposing affidavits raised
triable issues. The amount due and unpaid under the contract is not in dispute. The
Special Term granted both motions and the defendants have appealed.

The Special Term properly held that the answer and the opposing affidavits raised no
triable issue. Rule 113 of the Rules of Civil Practice and the Civil Practice Act prescribe
no limitation as to the time when a motion for summary judgment must be made. The
object of Rule 113 is to empower the court to summarily determine whether or not a
bona fide issue exists between the parties, and there is no limitation on the power of
the court to make such a determination at any stage of the litigation." (Emphasis ours)

On the basis of the aforequoted disquisition, "any stage of the litigation" means that
"even if the plaintiff has proceeded to trial, this does not preclude him from thereafter
moving for summary judgment." 66

In the case at bar, petitioner moved for summary judgment after pre-trial and before
its scheduled date for presentation of evidence. Respondent Marcoses argue that, by
agreeing to proceed to trial during the pre-trial conference, petitioner "waived" its right
to summary judgment.

This argument must fail in the light of the New York Supreme Court ruling which we
apply by analogy to this case. In Ecker, 67 the defendant opposed the motion for
summary judgment on a ground similar to that raised by the Marcoses, that is, "that
plaintiff had waived her right to summary judgment" by her act of proceeding to trial.
If, as correctly ruled by the New York court, plaintiff was allowed to move for summary
judgment even after trial and submission of the case for resolution, more so should we
permit it in the present case where petitioner moved for summary judgment before
trial.

Therefore, the phrase "anytime after the pleading in answer thereto has been served"
in Section 1, Rule 35 of our Rules of Civil Procedure means "at any stage of the
litigation." Whenever it becomes evident at any stage of the litigation that no triable
issue exists, or that the defenses raised by the defendant(s) are sham or frivolous,
plaintiff may move for summary judgment. A contrary interpretation would go against
the very objective of the Rule on Summary Judgment which is to "weed out sham
claims or defenses thereby avoiding the expense and loss of time involved in a trial."
68

In cases with political undertones like the one at bar, adverse parties will often do
almost anything to delay the proceedings in the hope that a future administration
 104

sympathetic to them might be able to influence the outcome of the case in their favor.
This is rank injustice we cannot tolerate.

The law looks with disfavor on long, protracted and expensive litigation and
encourages the speedy and prompt disposition of cases. That is why the law and the
rules provide for a number of devices to ensure the speedy disposition of cases.
Summary judgment is one of them.

Faithful therefore to the spirit of the law on summary judgment which seeks to avoid
unnecessary expense and loss of time in a trial, we hereby rule that petitioner Republic
could validly move for summary judgment any time after the respondents’ answer was
filed or, for that matter, at any subsequent stage of the litigation. The fact that
petitioner agreed to proceed to trial did not in any way prevent it from moving for
summary judgment, as indeed no genuine issue of fact was ever validly raised by
respondent Marcoses.

This interpretation conforms with the guiding principle enshrined in Section 6, Rule 1 of
the 1997 Rules of Civil Procedure that the" [r]ules should be liberally construed in
order to promote their objective of securing a just, speedy and inexpensive disposition
of every action and proceeding." 69

Respondents further allege that the motion for summary judgment was based on
respondents’ answer and other documents that had long been in the records of the
case. Thus, by the time the motion was filed on March 10, 2000, estoppel by laches
had already set in against petitioner.

We disagree. Estoppel by laches is the failure or neglect for an unreasonable or

unexplained length of time to do that which, by exercising due diligence, could or
should have been done earlier, warranting a presumption that the person has
abandoned his right or declined to assert it. 70 In effect, therefore, the principle of
laches is one of estoppel because "it prevents people who have slept on their rights
from prejudicing the rights of third parties who have placed reliance on the inaction of
the original parties and their successors-in-interest." 71

A careful examination of the records, however, reveals that petitioner was in fact never
remiss in pursuing its case against respondent Marcoses through every remedy
available to it, including the motion for summary judgment.

Petitioner Republic initially filed its motion for summary judgment on October 18,
1996. The motion was denied because of the pending compromise agreement between
the Marcoses and petitioner. But during the pre-trial conference, the Marcoses denied
ownership of the Swiss funds, prompting petitioner to file another motion for summary
judgment now under consideration by this Court. It was the subsequent events that
transpired after the answer was filed, therefore, which prevented petitioner from filing
the questioned motion. It was definitely not because of neglect or inaction that
petitioner filed the (second) motion for summary judgment years after respondents’
answer to the petition for forfeiture.

In invoking the doctrine of estoppel by laches, respondents must show not only
unjustified inaction but also that some unfair injury to them might result unless the
action is barred. 72

This, respondents failed to bear out. In fact, during the pre-trial conference, the
Marcoses disclaimed ownership of the Swiss deposits. Not being the owners, as they
 105

claimed, respondents did not have any vested right or interest which could be
adversely affected by petitioner’s alleged inaction.

But even assuming for the sake of argument that laches had already set in, the
doctrine of estoppel or laches does not apply when the government sues as a
sovereign or asserts governmental rights. 73 Nor can estoppel validate an act that
contravenes law or public policy. 74

As a final point, it must be emphasized that laches is not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or claim to be
enforced or asserted. 75 Equity demands that petitioner Republic should not be barred
from pursuing the people’s case against the Marcoses.chanrob1es virtua1 1aw 1ibrary

(2) THE PROPRIETY OF FORFEITURE

The matter of summary judgment having been thus settled, the issue of whether or
not petitioner Republic was able to prove its case for forfeiture in accordance with the
requisites of Sections 2 and 3 of RA 1379 now takes center stage.

The law raises the prima facie presumption that a property is unlawfully acquired,
hence subject to forfeiture, if its amount or value is manifestly disproportionate to the
official salary and other lawful income of the public officer who owns it. Hence,
Sections 2 and 6 of RA 1379 76 provide:chanrob1es virtual 1aw library

x x x

Section 2. Filing of petition. — Whenever any public officer or employee has acquired
during his incumbency an amount or property which is manifestly out of proportion to
his salary as such public officer or employee and to his other lawful income and the
income from legitimately acquired property, said property shall be presumed prima
facie to have been unlawfully acquired.

x x x

Sec. 6. Judgment. — If the respondent is unable to show to the satisfaction of the

court that he has lawfully acquired the property in question, then the court shall
declare such property in question, forfeited in favor of the State, and by virtue of such
judgment the property aforesaid shall become the property of the State. Provided, That
no judgment shall be rendered within six months before any general election or within
three months before any special election. The Court may, in addition, refer this case to
the corresponding Executive Department for administrative or criminal action, or both.

From the above-quoted provisions of the law, the following facts must be established in
order that forfeiture or seizure of the Swiss deposits may be effected:chanrob1es
virtual 1aw library

(1) ownership by the public officer of money or property acquired during his
incumbency, whether it be in his name or otherwise, and

(2) the extent to which the amount of that money or property exceeds, i.e., is grossly
disproportionate to, the legitimate income of the public officer.
 106

That spouses Ferdinand and Imelda Marcos were public officials during the time
material to the instant case was never in dispute. Paragraph 4 of respondent Marcoses’
answer categorically admitted the allegations in paragraph 4 of the petition for
forfeiture as to the personal circumstances of Ferdinand E. Marcos as a public official
who served without interruption as Congressman, Senator, Senate President and
President of the Republic of the Philippines from December 1, 1965 to February 25,
1986. 77 Likewise, respondents admitted in their answer the contents of paragraph 5
of the petition as to the personal circumstances of Imelda R. Marcos who once served
as a member of the Interim Batasang Pambansa from 1978 to 1984 and as Metro
Manila Governor, concurrently Minister of Human Settlements, from June 1976 to
February 1986. 78

Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the allegations of
paragraph 11 of the petition for forfeiture which referred to the accumulated salaries of
respondents Ferdinand E. Marcos and Imelda R. Marcos. 79 The combined accumulated
salaries of the Marcos couple were reflected in the Certification dated May 27, 1986
issued by then Minister of Budget and Management Alberto Romulo. 80 The
Certification showed that, from 1966 to 1985, Ferdinand E. Marcos and Imelda R.
Marcos had accumulated salaries in the amount of P1,570,000 and P718,750,
respectively, or a total of P2,288,750:chanrob1es virtual 1aw library

Ferdinand E. Marcos, as President

1966-1976 at P60,000/year P660,000

1977-1984 at P100,000/year 800,000

1985 at P110,000/year 110,000

————

P1,570,00

Imelda R. Marcos, as Minister

June 1976-1985 at P75,000/year P718,000

In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple’s
combined salaries from January to February 1986 in the amount of P30,833.33. Hence,
their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars
on the basis of the corresponding peso-dollar exchange rates prevailing during the
applicable period when said salaries were received, the total amount had an equivalent
value of $304,372.43.chanrob1es virtua1 1aw 1ibrary

The dollar equivalent was arrived at by using the official annual rates of exchange of
the Philippine peso and the US dollar from 1965 to 1985 as well as the official monthly
rates of exchange in January and February 1986 issued by the Center for Statistical
Information of the Bangko Sentral ng Pilipinas.

Prescinding from the aforesaid admissions, Section 4, Rule 129 of the Rules of Court
provides that:chanrob1es virtual 1aw library

Section 4. — Judicial admissions — An admission, verbal or written, made by a party in

the course of the proceedings in the same case does not require proof. The admission
 107

may be contradicted only by showing that it was made through palpable mistake or
that no such admission was made. 81

It is settled that judicial admissions may be made: (a) in the pleadings filed by the
parties; (b) in the course of the trial either by verbal or written manifestations or
stipulations; or (c) in other stages of judicial proceedings, as in the pre-trial of the
case. 82 Thus, facts pleaded in the petition and answer, as in the case at bar, are
deemed admissions of petitioner and respondents, respectively, who are not permitted
to contradict them or subsequently take a position contrary to or inconsistent with such
admissions. 83

The sum of $304,372.43 should be held as the only known lawful income of
respondents since they did not file any Statement of Assets and Liabilities (SAL), as
required by law, from which their net worth could be determined. Besides, under the
1935 Constitution, Ferdinand E. Marcos as President could not receive "any other
emolument from the Government or any of its subdivisions and instrumentalities." 84
Likewise, under the 1973 Constitution, Ferdinand E. Marcos as President could "not
receive during his tenure any other emolument from the Government or any other
source." 85 In fact, his management of businesses, like the administration of
foundations to accumulate funds, was expressly prohibited under the 1973
Constitution:chanrob1es virtual 1aw library

Article VII, Sec. 4(2) — The President and the Vice-President shall not, during their
tenure, hold any other office except when otherwise provided in this Constitution, nor
may they practice any profession, participate directly or indirectly in the management
of any business, or be financially interested directly or indirectly in any contract with,
or in any franchise or special privilege granted by the Government or any other
subdivision, agency, or instrumentality thereof, including any government owned or
controlled corporation.

Article VII, Sec. 11 — No Member of the National Assembly shall appear as counsel
before any court inferior to a court with appellate jurisdiction, . . . . Neither shall he,
directly or indirectly, be interested financially in any contract with, or in any franchise
or special privilege granted by the Government, or any subdivision, agency, or
instrumentality thereof including any government owned or controlled corporation
during his term of office. He shall not intervene in any matter before any office of the
government for his pecuniary benefit.

Article IX, Sec. 7 — The Prime Minister and Members of the Cabinet shall be subject to
the provision of Section 11, Article VIII hereof and may not appear as counsel before
any court or administrative body, or manage any business, or practice any profession,
and shall also be subject to such other disqualification as may be provided by law.

Their only known lawful income of $304,372.43 can therefore legally and fairly serve
as basis for determining the existence of a prima facie case of forfeiture of the Swiss
funds.

Respondents argue that petitioner was not able to establish a prima facie case for the
forfeiture of the Swiss funds since it failed to prove the essential elements under
Section 3, paragraphs (c), (d) and (e) of RA 1379. As the Act is a penal statute, its
provisions are mandatory and should thus be construed strictly against the petitioner
and liberally in favor of respondent Marcoses.

We hold that it was not for petitioner to establish the Marcoses’ other lawful income or
 108

income from legitimately acquired property for the presumption to apply because, as
between petitioner and respondents, the latter were in a better position to know if
there were such other sources of lawful income. And if indeed there was such other
lawful income, respondents should have specifically stated the same in their answer.
Insofar as petitioner Republic was concerned, it was enough to specify the known
lawful income of respondents.

Section 9 of the PCGG Rules and Regulations provides that, in determining prima facie
evidence of ill-gotten wealth, the value of the accumulated assets, properties and other
material possessions of those covered by Executive Order Nos. 1 and 2 must be out of
proportion to the known lawful income of such persons. The respondent Marcos couple
did not file any Statement of Assets and Liabilities (SAL) from which their net worth
could be determined. Their failure to file their SAL was in itself a violation of law and to
allow them to successfully assail the Republic for not presenting their SAL would
reward them for their violation of the law.

Further, contrary to the claim of respondents, the admissions made by them in their
various pleadings and documents were valid. It is of record that respondents judicially
admitted that the money deposited with the Swiss banks belonged to them.

We agree with petitioner that respondent Marcoses made judicial admissions of their
ownership of the subject Swiss bank deposits in their answer, the
General/Supplemental Agreements, Mrs. Marcos’ Manifestation and Constancia dated
May 5, 1999, and the Undertaking dated February 10, 1999. We take note of the fact
that the Associate Justices of the Sandiganbayan were unanimous in holding that
respondents had made judicial admissions of their ownership of the Swiss funds.

In their answer, aside from admitting the existence of the subject funds, respondents
likewise admitted ownership thereof. Paragraph 22 of respondents’ answer
stated:chanrob1es virtual 1aw library

22. Respondents specifically DENY PARAGRAPH 23 insofar as it alleges that

respondents clandestinely stashed the country’s wealth in Switzerland and hid the
same under layers and layers of foundations and corporate entities for being false, the
truth being that respondents’ aforesaid properties were lawfully acquired. (Emphasis
supplied)

By qualifying their acquisition of the Swiss bank deposits as lawful, respondents

unwittingly admitted their ownership thereof.chanrob1es virtua1 law library

Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits by failing
to deny under oath the genuineness and due execution of certain actionable
documents bearing her signature attached to the petition. As discussed earlier, Section
11, Rule 8 86 of the 1997 Rules of Civil Procedure provides that material averments in
the complaint shall be deemed admitted when not specifically denied.

The General 87 and Supplemental 88 Agreements executed by petitioner and

respondents on December 28, 1993 further bolstered the claim of petitioner Republic
that its case for forfeiture was proven in accordance with the requisites of Sections 2
and 3 of RA 1379. The whereas clause in the General Agreement declared
that:chanrob1es virtual 1aw library

WHEREAS, the FIRST PARTY has obtained a judgment from the Swiss Federal Tribunal
on December 21, 1990, that the $356 million belongs in principle to the Republic of the
 109

Philippines provided certain conditionalities are met, but even after 7 years, the FIRST
PARTY has not been able to procure a final judgment of conviction against the PRIVATE
PARTY.

While the Supplemental Agreement warranted, inter alia, that:chanrob1es virtual 1aw
library

In consideration of the foregoing, the parties hereby agree that the PRIVATE PARTY
shall be entitled to the equivalent of 25% of the amount that may be eventually
withdrawn from said $356 million Swiss deposits.

The stipulations set forth in the General and Supplemental Agreements undeniably
indicated the manifest intent of respondents to enter into a compromise with
petitioner. Corollarily, respondents’ willingness to agree to an amicable settlement with
the Republic only affirmed their ownership of the Swiss deposits for the simple reason
that no person would acquiesce to any concession over such huge dollar deposits if he
did not in fact own them.

Respondents make much capital of the pronouncement by this Court that the General
and Supplemental Agreements were null and void. 89 They insist that nothing in those
agreements could thus be admitted in evidence against them because they stood on
the same ground as an accepted offer which, under Section 27, Rule 130 90 of the
1997 Rules of Civil Procedure, provides that "in civil cases, an offer of compromise is
not an admission of any liability and is not admissible in evidence against the
offeror."cralaw virtua1aw library

We find no merit in this contention. The declaration of nullity of said agreements was
premised on the following constitutional and statutory infirmities: (1) the grant of
criminal immunity to the Marcos heirs was against the law; (2) the PCGG’s
commitment to exempt from all forms of taxes the properties to be retained by the
Marcos heirs was against the Constitution; and (3) the government’s undertaking to
cause the dismissal of all cases filed against the Marcoses pending before the
Sandiganbayan and other courts encroached on the powers of the judiciary. The
reasons relied upon by the Court never in the least bit even touched on the veracity
and truthfulness of respondents’ admission with respect to their ownership of the Swiss
funds. Besides, having made certain admissions in those agreements, respondents
cannot now deny that they voluntarily admitted owning the subject Swiss funds,
notwithstanding the fact that the agreements themselves were later declared null and
void.

The following observation of Sandiganbayan Justice Catalino Castañeda, Jr. in the

decision dated September 19, 2000 could not have been better said:chanrob1es virtual
1aw library

. . . The declaration of nullity of the two agreements rendered the same without legal
effects but it did not detract from the admissions of the respondents contained therein.
Otherwise stated, the admissions made in said agreements, as quoted above, remain
binding on the respondents. 91

A written statement is nonetheless competent as an admission even if it is contained in

a document which is not itself effective for the purpose for which it is made, either by
reason of illegality, or incompetency of a party thereto, or by reason of not being
signed, executed or delivered. Accordingly, contracts have been held as competent
evidence of admissions, although they may be unenforceable. 92
 110

The testimony of respondent Ferdinand Marcos, Jr. during the hearing on the motion
for the approval of the Compromise Agreement on April 29, 1998 also lent credence to
the allegations of petitioner Republic that respondents admitted ownership of the Swiss
bank accounts. We quote the salient portions of Ferdinand Jr.’s formal declarations in
open court:chanrob1es virtual 1aw library

ATTY. FERNANDO:chanrob1es virtual 1aw library

Mr. Marcos, did you ever have any meetings with PCGG Chairman Magtanggol C.
Gunigundo?

F. MARCOS, JR.:chanrob1es virtual 1aw library

Yes. I have had very many meetings in fact with Chairman.

ATTY. FERNANDO:chanrob1es virtual 1aw library

Would you recall when the first meeting occurred?

PJ GARCHITORENA:chanrob1es virtual 1aw library

In connection with what?

ATTY. FERNANDO:chanrob1es virtual 1aw library

In connection with the ongoing talks to compromise the various cases initiated by
PCGG against your family?

F. MARCOS, JR.:chanrob1es virtual 1aw library

The nature of our meetings was solely concerned with negotiations towards achieving
some kind of agreement between the Philippine government and the Marcos family.
The discussions that led up to the compromise agreement were initiated by our then
counsel Atty. Simeon Mesina . . .. 93

x x x

ATTY. FERNANDO:chanrob1es virtual 1aw library

What was your reaction when Atty. Mesina informed you of this possibility?

F. MARCOS, JR.:chanrob1es virtual 1aw library

My reaction to all of these approaches is that I am always open, we are always open,
we are very much always in search of resolution to the problem of the family and any
approach that has been made us, we have entertained. And so my reaction was the
same as what I have always . . . why not? Maybe this is the one that will finally put an
end to this problem. 94

x x x
 111

ATTY. FERNANDO:chanrob1es virtual 1aw library

Basically, what were the true amounts of the assets in the bank?

PJ GARCHITORENA:chanrob1es virtual 1aw library

So, we are talking about liquid assets here? Just Cash?

F. MARCOS, JR.:chanrob1es virtual 1aw library

Well, basically, any assets. Anything that was under the Marcos name in any of the
banks in Switzerland which may necessarily be not cash. 95

x x x

PJ GARCHITORENA:chanrob1es virtual 1aw library

. . . What did you do in other words, after being apprised of this contract in connection
herewith?

F. MARCOS, JR.:chanrob1es virtual 1aw library

I assumed that we are beginning to implement the agreement because this was
forwarded through the Philippine government lawyers through our lawyers and then,
subsequently, to me. I was a little surprised because we hadn’t really discussed the
details of the transfer of the funds, what the bank accounts, what the mechanism
would be. But nevertheless, I was happy to see that as far as the PCGG is concerned,
that the agreement was perfected and that we were beginning to implement it and that
was a source of satisfaction to me because I thought that finally it will be the end. 96

Ferdinand Jr.’s pronouncements, taken in context and in their entirety, were a

confirmation of respondents’ recognition of their ownership of the Swiss bank deposits.
Admissions of a party in his testimony are receivable against him. If a party, as a
witness, deliberately concedes a fact, such concession has the force of a judicial
admission. 97 It is apparent from Ferdinand Jr.’s testimony that the Marcos family
agreed to negotiate with the Philippine government in the hope of finally putting an
end to the problems besetting the Marcos family regarding the Swiss accounts. This
was doubtlessly an acknowledgment of ownership on their part. The rule is that the
testimony on the witness stand partakes of the nature of a formal judicial admission
when a party testifies clearly and unequivocally to a fact which is peculiarly within his
own knowledge. 98

In her Manifestation 99 dated May 26, 1998, respondent Imelda Marcos furthermore
revealed the following:chanrob1es virtual 1aw library

That respondent Imelda R. Marcos owns 90% of the subject matter of the above-
entitled case, being the sole beneficiary of the dollar deposits in the name of the
various foundations alleged in the case;

That in fact only 10% of the subject matter in the above-entitled case belongs to the
estate of the late President Ferdinand E. Marcos;

x x x
 112

Respondents’ ownership of the Swiss bank accounts as borne out by Mrs. Marcos’
manifestation is as bright as sunlight. And her claim that she is merely a beneficiary of
the Swiss deposits is belied by her own signatures on the appended copies of the
documents substantiating her ownership of the funds in the name of the foundations.
As already mentioned, she failed to specifically deny under oath the authenticity of
such documents, especially those involving "William Saunders" and "Jane Ryan" which
actually referred to Ferdinand Marcos and Imelda Marcos, respectively. That failure of
Imelda Marcos to specifically deny the existence, much less the genuineness and due
execution, of the instruments bearing her signature, was tantamount to a judicial
admission of the genuineness and due execution of said instruments, in accordance
with Section 8, Rule 8 100 of the 1997 Rules of Civil Procedure.

Likewise, in her Constancia 101 dated May 6, 1999, Imelda Marcos prayed for the
approval of the Compromise Agreement and the subsequent release and transfer of the
$150 million to the rightful owner. She further made the following
manifestations:chanrob1es virtual 1aw library

x x x

2. The Republic’s cause of action over the full amount is its forfeiture in favor of the
government if found to be ill-gotten. On the other hand, the Marcoses defend that it is
a legitimate asset. Therefore, both parties have an inchoate right of ownership over
the account. If it turns out that the account is of lawful origin, the Republic may yield
to the Marcoses. Conversely, the Marcoses must yield to the Republic. (Emphasis
supplied)

x x x

3. Consistent with the foregoing, and the Marcoses having committed themselves to
helping the less fortunate, in the interest of peace, reconciliation and unity, defendant
MADAM IMELDA ROMUALDEZ MARCOS, in firm abidance thereby, hereby affirms her
agreement with the Republic for the release and transfer of the US Dollar 150 million
for proper disposition, without prejudice to the final outcome of the litigation respecting
the ownership of the remainder.

Again, the above statements were indicative of Imelda’s admission of the Marcoses’
ownership of the Swiss deposits as in fact "the Marcoses defend that it (Swiss deposits)
is a legitimate (Marcos) asset."cralaw virtua1aw library

On the other hand, respondents Maria Imelda Marcos-Manotoc, Ferdinand Marcos, Jr.
and Maria Irene Marcos-Araneta filed a motion 102 on May 4, 1998 asking the
Sandiganbayan to place the res (Swiss deposits) in custodia legis:chanrob1es virtual
1aw library

7. Indeed, the prevailing situation is fraught with danger! Unless the aforesaid Swiss
deposits are placed in custodia legis or within the Court’s protective mantle, its
dissipation or misappropriation by the petitioner looms as a distinct possibility.

Such display of deep, personal interest can only come from someone who believes that
he has a marked and intimate right over the considerable dollar deposits. Truly, by
 113

filing said motion, the Marcos children revealed their ownership of the said deposits.

Lastly, the Undertaking 103 entered into by the PCGG, the PNB and the Marcos
foundations on February 10, 1999, confirmed the Marcoses’ ownership of the Swiss
bank deposits. The subject Undertaking brought to light their readiness to pay the
human rights victims out of the funds held in escrow in the PNB. It stated:chanrob1es
virtual 1aw library

WHEREAS, the Republic of the Philippines sympathizes with the plight of the human
rights victims-plaintiffs in the aforementioned litigation through the Second Party,
desires to assist in the satisfaction of the judgment awards of said human rights
victims-plaintiffs, by releasing, assigning and or waiving US$150 million of the funds
held in escrow under the Escrow Agreements dated August 14, 1995, although the
Republic is not obligated to do so under final judgments of the Swiss courts dated
December 10 and 19, 1997, and January 8, 1998;

WHEREAS, the Third Party is likewise willing to release, assign and/or waive all its
rights and interests over said US$150 million to the aforementioned human rights
victims-plaintiffs.

All told, the foregoing disquisition negates the claim of respondents that "petitioner
failed to prove that they acquired or own the Swiss funds” and that "it was only by
arbitrarily isolating and taking certain statements made by private respondents out of
context that petitioner was able to treat these as judicial admissions." The Court is fully
aware of the relevance, materiality and implications of every pleading and document
submitted in this case. This Court carefully scrutinized the proofs presented by the
parties. We analyzed, assessed and weighed them to ascertain if each piece of
evidence rightfully qualified as an admission. Owing to the far-reaching historical and
political implications of this case, we considered and examined, individually and totally,
the evidence of the parties, even if it might have bordered on factual adjudication
which, by authority of the rules and jurisprudence, is not usually done by this Court.
There is no doubt in our mind that respondent Marcoses admitted ownership of the
Swiss bank deposits.

We have always adhered to the familiar doctrine that an admission made in the
pleadings cannot be controverted by the party making such admission and becomes
conclusive on him, and that all proofs submitted by him contrary thereto or
inconsistent therewith should be ignored, whether an objection is interposed by the
adverse party or not. 104 This doctrine is embodied in Section 4, Rule 129 of the Rules
of Court:chanrob1es virtual 1aw library

SEC. 4. Judicial admissions. — An admission, verbal or written, made by a party in the

course of the proceedings in the same case, does not require proof. The admission may
be contradicted only by showing that it was made through palpable mistake or that no
such admission was made. 105

In the absence of a compelling reason to the contrary, respondents’ judicial admission

of ownership of the Swiss deposits is definitely binding on them.

The individual and separate admissions of each respondent bind all of them pursuant
to Sections 29 and 31, Rule 130 of the Rules of Court:chanrob1es virtual 1aw library

SEC. 29. Admission by co-partner or agent. — The act or declaration of a partner or

agent of the party within the scope of his authority and during the existence of the
 114

partnership or agency, may be given in evidence against such party after the
partnership or agency is shown by evidence other than such act or declaration. The
same rule applies to the act or declaration of a joint owner, joint debtor, or other
person jointly interested with the party. 106

SEC. 31. Admission by privies. — Where one derives title to property from another, the
act, declaration, or omission of the latter, while holding the title, in relation to the
property, is evidence against the former. 107

The declarations of a person are admissible against a party whenever a "privity of

estate" exists between the declarant and the party, the term "privity of estate"
generally denoting a succession in rights. 108 Consequently, an admission of one in
privity with a party to the record is competent. 109 Without doubt, privity exists
among the respondents in this case. And where several co-parties to the record are
jointly interested in the subject matter of the controversy, the admission of one is
competent against all. 110

Respondents insist that the Sandiganbayan is correct in ruling that petitioner Republic
has failed to establish a prima facie case for the forfeiture of the Swiss deposits.

We disagree. The sudden turn-around of the Sandiganbayan was really strange, to say
the least, as its findings and conclusions were not borne out by the voluminous records
of this case.

Section 2 of RA 1379 explicitly states that "whenever any public officer or employee
has acquired during his incumbency an amount of property which is manifestly out of
proportion to his salary as such public officer or employee and to his other lawful
income and the income from legitimately acquired property, said property shall be
presumed prima facie to have been unlawfully acquired. . . ."cralaw virtua1aw library

The elements which must concur for this prima facie presumption to apply
are:chanrob1es virtual 1aw library

(1) the offender is a public officer or employee;

(2) the must have acquired a considerable amount of money or property during his
incumbency; and

(3) said amount is manifestly out of proportion to his salary as such public officer or
employee and to his other lawful income and the income from legitimately acquired
property.

It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers.
Hence, the first element is clearly extant.chanrob1es virtua1 1aw 1ibrary

The second element deals with the amount of money or property acquired by the
public officer during his incumbency. The Marcos couple indubitably acquired and
owned properties during their term of office. In fact, the five groups of Swiss accounts
were admittedly owned by them. There is proof of the existence and ownership of
these assets and properties and it suffices to comply with the second element.

The third requirement is met if it can be shown that such assets, money or property is
manifestly out of proportion to the public officer’s salary and his other lawful income. It
is the proof of this third element that is crucial in determining whether a prima facie
 115

presumption has been established in this case.

Petitioner Republic presented not only a schedule indicating the lawful income of the
Marcos spouses during their incumbency but also evidence that they had huge deposits
beyond such lawful income in Swiss banks under the names of five different
foundations. We believe petitioner was able to establish the prima facie presumption
that the assets and properties acquired by the Marcoses were manifestly and patently
disproportionate to their aggregate salaries as public officials. Otherwise stated,
petitioner presented enough evidence to convince us that the Marcoses had dollar
deposits amounting to US $356 million representing the balance of the Swiss accounts
of the five foundations, an amount way, way beyond their aggregate legitimate income
of only US$304,372.43 during their incumbency as government officials.

Considering, therefore, that the total amount of the Swiss deposits was considerably
out of proportion to the known lawful income of the Marcoses, the presumption that
said dollar deposits were unlawfully acquired was duly established. It was sufficient for
the petition for forfeiture to state the approximate amount of money and property
acquired by the respondents, and their total government salaries. Section 9 of the
PCGG Rules and Regulations states:chanrob1es virtual 1aw library

Prima Facie Evidence. – Any accumulation of assets, properties, and other material
possessions of those persons covered by Executive Orders No. 1 and No. 2, whose
value is out of proportion to their known lawful income is prima facie deemed ill-gotten
wealth.

Indeed, the burden of proof was on the respondents to dispute this presumption and
show by clear and convincing evidence that the Swiss deposits were lawfully acquired
and that they had other legitimate sources of income. A presumption is prima facie
proof of the fact presumed and, unless the fact thus prima facie established by legal
presumption is disproved, it must stand as proved. 111

Respondent Mrs. Marcos argues that the foreign foundations should have been
impleaded as they were indispensable parties without whom no complete
determination of the issues could be made. She asserts that the failure of petitioner
Republic to implead the foundations rendered the judgment void as the joinder of
indispensable parties was a sine qua non exercise of judicial power. Furthermore, the
non-inclusion of the foreign foundations violated the conditions prescribed by the Swiss
government regarding the deposit of the funds in escrow, deprived them of their day in
court and denied them their rights under the Swiss constitution and international law.
112

The Court finds that petitioner Republic did not err in not impleading the foreign
foundations. Section 7, Rule 3 of the 1997 Rules of Civil Procedure, 113 taken from
Rule 19b of the American Federal Rules of Civil Procedure, provides for the compulsory
joinder of indispensable parties. Generally, an indispensable party must be impleaded
for the complete determination of the suit. However, failure to join an indispensable
party does not divest the court of jurisdiction since the rule regarding indispensable
parties is founded on equitable considerations and is not jurisdictional. Thus, the court
is not divested of its power to render a decision even in the absence of indispensable
parties, though such judgment is not binding on the non-joined party. 114

An indispensable party 115 has been defined as one:chanrob1es virtual 1aw library

[who] must have a direct interest in the litigation; and if this interest is such that it
 116

cannot be separated from that of the parties to the suit, if the court cannot render
justice between the parties in his absence, if the decree will have an injurious effect
upon his interest, or if the final determination of the controversy in his absence will be
inconsistent with equity and good conscience.

There are two essential tests of an indispensable party: (1) can relief be afforded the
plaintiff without the presence of the other party? and (2) can the case be decided on its
merits without prejudicing the rights of the other party? 116 There is, however, no
fixed formula for determining who is an indispensable party; this can only be
determined in the context and by the facts of the particular suit or litigation.

In the present case, there was an admission by respondent Imelda Marcos in her May
26, 1998 Manifestation before the Sandiganbayan that she was the sole beneficiary of
90% of the subject matter in controversy with the remaining 10% belonging to the
estate of Ferdinand Marcos. 117 Viewed against this admission, the foreign foundations
were not indispensable parties. Their non-participation in the proceedings did not
prevent the court from deciding the case on its merits and according full relief to
petitioner Republic. The judgment ordering the return of the $356 million was neither
inimical to the foundations’ interests nor inconsistent with equity and good conscience.
The admission of respondent Imelda Marcos only confirmed what was already generally
known: that the foundations were established precisely to hide the money stolen by
the Marcos spouses from petitioner Republic. It negated whatever illusion there was, if
any, that the foreign foundations owned even a nominal part of the assets in question.

The rulings of the Swiss court that the foundations, as formal owners, must be given
an opportunity to participate in the proceedings hinged on the assumption that they
owned a nominal share of the assets. 118 But this was already refuted by no less than
Mrs. Marcos herself. Thus, she cannot now argue that the ruling of the Sandiganbayan
violated the conditions set by the Swiss court. The directive given by the Swiss court
for the foundations to participate in the proceedings was for the purpose of protecting
whatever nominal interest they might have had in the assets as formal owners. But
inasmuch as their ownership was subsequently repudiated by Imelda Marcos, they
could no longer be considered as indispensable parties and their participation in the
proceedings became unnecessary.

In Republic v. Sandiganbayan, 119 this Court ruled that impleading the firms which are
the res of the action was unnecessary:jgc:chanrobles.com.ph

"And as to corporations organized with ill-gotten wealth, but are not themselves guilty
of misappropriation, fraud or other illicit conduct — in other words, the companies
themselves are not the object or thing involved in the action, the res thereof — there is
no need to implead them either. Indeed, their impleading is not proper on the strength
alone of their having been formed with ill-gotten funds, absent any other particular
wrongdoing on their part . . .

Such showing of having been formed with, or having received ill-gotten funds, however
strong or convincing, does not, without more, warrant identifying the corporations in
question with the person who formed or made use of them to give the color or
appearance of lawful, innocent acquisition to illegally amassed wealth — at the least,
not so as place on the Government the onus of impleading the former with the latter in
actions to recover such wealth. Distinguished in terms of juridical personality and legal
culpability from their erring members or stockholders, said corporations are not
themselves guilty of the sins of the latter, of the embezzlement, asportation, etc., that
gave rise to the Government’s cause of action for recovery; their creation or
 117

organization was merely the result of their members’ (or stockholders’) manipulations
and maneuvers to conceal the illegal origins of the assets or monies invested therein.
In this light, they are simply the res in the actions for the recovery of illegally acquired
wealth, and there is, in principle, no cause of action against them and no ground to
implead them as defendants in said actions."cralaw virtua1aw library

Just like the corporations in the aforementioned case, the foreign foundations here
were set up to conceal the illegally acquired funds of the Marcos spouses. Thus, they
were simply the res in the action for recovery of ill-gotten wealth and did not have to
be impleaded for lack of cause of action or ground to implead them.

Assuming arguendo, however, that the foundations were indispensable parties, the
failure of petitioner to implead them was a curable error, as held in the previously cited
case of Republic v. Sandiganbayan: 120

"Even in those cases where it might reasonably be argued that the failure of the
Government to implead the sequestered corporations as defendants is indeed a
procedural aberration, as where said firms were allegedly used, and actively
cooperated with the defendants, as instruments or conduits for conversion of public
funds and property or illicit or fraudulent obtention of favored government contracts,
etc., slight reflection would nevertheless lead to the conclusion that the defect is not
fatal, but one correctible under applicable adjective rules — e.g., Section 10, Rule 5 of
the Rules of Court [specifying the remedy of amendment during trial to authorize or to
conform to the evidence]; Section 1, Rule 20 [governing amendments before trial], in
relation to the rule respecting omission of so-called necessary or indispensable parties,
set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this context to
advert to the old familiar doctrines that the omission to implead such parties "is a mere
technical defect which can be cured at any stage of the proceedings even after
judgment" ; and that, particularly in the case of indispensable parties, since their
presence and participation is essential to the very life of the action, for without them
no judgment may be rendered, amendments of the complaint in order to implead them
should be freely allowed, even on appeal, in fact even after rendition of judgment by
this Court, where it appears that the complaint otherwise indicates their identity and
character as such indispensable parties." 121

Although there are decided cases wherein the non-joinder of indispensable parties in
fact led to the dismissal of the suit or the annulment of judgment, such cases do not
jibe with the matter at hand. The better view is that non-joinder is not a ground to
dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is
founded on equity. And the spirit of the law is reflected in Section 11, Rule 3 122 of the
1997 Rules of Civil Procedure. It prohibits the dismissal of a suit on the ground of non-
joinder or misjoinder of parties and allows the amendment of the complaint at any
stage of the proceedings, through motion or on order of the court on its own initiative.
123

Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section 7,
Rule 3 124 on indispensable parties was copied, allows the joinder of indispensable
parties even after judgment has been entered if such is needed to afford the moving
party full relief. 125 Mere delay in filing the joinder motion does not necessarily result
in the waiver of the right as long as the delay is excusable. 126 Thus, respondent Mrs.
Marcos cannot correctly argue that the judgment rendered by the Sandiganbayan was
void due to the non-joinder of the foreign foundations. The court had jurisdiction to
render judgment which, even in the absence of indispensable parties, was binding on
all the parties before it though not on the absent party. 127 If she really felt that she
 118

could not be granted full relief due to the absence of the foreign foundations, she
should have moved for their inclusion, which was allowable at any stage of the
proceedings. She never did. Instead she assailed the judgment rendered.

In the face of undeniable circumstances and the avalanche of documentary evidence

against them, respondent Marcoses failed to justify the lawful nature of their
acquisition of the said assets. Hence, the Swiss deposits should be considered ill-gotten
wealth and forfeited in favor of the State in accordance with Section 6 of RA
1379:chanrob1es virtual 1aw library

SEC. 6. Judgment. — If the respondent is unable to show to the satisfaction of the

court that he has lawfully acquired the property in question, then the court shall
declare such property forfeited in favor of the State, and by virtue of such judgment
the property aforesaid shall become property of the State . . . .

THE FAILURE TO PRESENT AUTHENTICATED

TRANSLATIONS OF THE SWISS DECISIONS

Finally, petitioner Republic contends that the Honorable Sandiganbayan Presiding

Justice Francis Garchitorena committed grave abuse of discretion in reversing himself
on the ground that the original copies of the authenticated Swiss decisions and their
authenticated translations were not submitted to the court a quo. Earlier PJ
Garchitorena had quoted extensively from the unofficial translation of one of these
Swiss decisions in his ponencia dated July 29, 1999 when he denied the motion to
release US$150 Million to the human rights victims.

While we are in reality perplexed by such an incomprehensible change of heart, there

might nevertheless not be any real need to belabor the issue. The presentation of the
authenticated translations of the original copies of the Swiss decision was not de
rigueur for the public respondent to make findings of fact and reach its conclusions. In
short, the Sandiganbayan’s decision was not dependent on the determination of the
Swiss courts. For that matter, neither is this Court’s.

The release of the Swiss funds held in escrow in the PNB is dependent solely on the
decision of this jurisdiction that said funds belong to the petitioner Republic. What is
important is our own assessment of the sufficiency of the evidence to rule in favor of
either petitioner Republic or respondent Marcoses. In this instance, despite the
absence of the authenticated translations of the Swiss decisions, the evidence on hand
tilts convincingly in favor of petitioner Republic.

WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the

Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which were
transferred to and are now deposited in escrow at the Philippine National Bank in the
estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus
interest, are hereby forfeited in favor of petitioner Republic of the
Philippines.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.
 119

[G.R. No. 184122 : January 20, 2010]

BANK OF THE PHILIPPINE ISLANDS, INC., PETITIONER, SPS. NORMAN AND

ANGELINA YU AND TUANSON BUILDERS CORPORATION REPRESENTED BY
PRES. NORMAN YU, RESPONDENTS.

DECISION

ABAD, J.:

This case is about the propriety of a summary judgment in resolving a documented

claim of alleged excessive penalty charges, interest, attorney's fees, and foreclosure
expenses imposed in an extrajudicial foreclosure of mortgage.

The Facts and the Case

Respondents Norman and Angelina Yu (the Yus), doing business as Tuanson Trading,
and Tuanson Builders Corporation (Tuanson Builders) borrowed various sums totaling
P75 million from Far East Bank and Trust Company. For collateral, they executed real
estate mortgages over several of their properties,[1] including certain lands in Legazpi
City owned by Tuanson Trading.[2] In 1999, unable to pay their loans, the Yus and
Tuanson Builders requested a loan restructuring,[3] which the bank, now merged with
Bank of the Philippine Islands (BPI), granted.[4] By this time, the Yus' loan balance
stood at P33,400,000.00. The restructured loan used the same collaterals, with the
exception of Transfer Certificate of Title 40247 that secured a loan of P1,600,000.[5]

Despite the restructuring, however, the Yus still had difficulties paying their loan. They
asked BPI to release some of the mortgaged lands since their total appraised value far
exceeded the amount of the remaining debt. When BPI ignored their request, the Yus
withheld payments on their amortizations. Thus, BPI extrajudicially foreclosed[6] the
mortgaged properties in Legazpi City and in Pili, Camarines Sur. But the Yus sought by
court action against BPI and the winning bidder, Magnacraft Development Corporation
(Magnacraft), the annulment of the foreclosure sale.

In the course of the proceedings, however, the Yus and Magnacraft entered into a
compromise agreement[7] that affirmed the latter's ownership of three out of the 10
parcels of land that were auctioned. By virtue of this agreement, the court dismissed
the complaint against Magnacraft,[8] without prejudice to the Yus filing a new one
against BPI.

On October 24, 2003 the Yus filed their new complaint before the Regional Trial Court
(RTC) of Legazpi City, Branch 1, in Civil Case 10286 against BPI for recovery of alleged
excessive penalty charges, attorney's fees, and foreclosure expenses that the bank
caused to be incorporated in the price of the auctioned properties.[9]

In its answer,[10] BPI essentially admitted the foreclosure of the mortgaged properties
for P39,055,254.95, broken down as follows: P33,283,758.73 as principal debt;
P2,110,282.78 as interest; and P3,661,213.46 as penalty charges.[11] BPI qualified that
the total of P39,055,254.95 corresponded only to the Yus' debt as of date of filing of
the petition.[12] The notice of the auction sale said that the total was "inclusive of
interest, penalty charges, attorney's fee and expenses of this foreclosure."[13]
 120

BPI further admitted that its bid of P45,090,566.41 for all the auctioned properties was
broken down as follows:[14]

Interest 2,763,088.93
Penalty Charges 5,568.649.09
Sub-total............... 40,520,461.09
Add: 10% Attorney's Fees 4,052,046.11
Litigation Expenses & Interest 446,726.74
Cost of Publication & Interest 71,332.47
TOTAL................ P 45,090,566.41

BPI also admitted that Magnacraft submitted the highest and winning bid of
P45,500,000.00.[15] The sheriff turned over this amount to BPI.[16] According to BPI, it
in turn remitted to the Clerk of Court the P409,433.59 difference between its bid price
and that of Magnacraft's.[17] Although the proceeds of the sale exceeded the
P39,055,254.95 stated in the notice of sale by P6,035,311.46,[18] the bid amount
increased because it now included litigation expenses and attorney's fees as well as
interests and penalties as recomputed.[19]

BPI admitted that it also pushed through with the second auction for the sale of a lot in
Pili, Camarines Sur that secured a remaining debt of P5,562,000.[20] BPI made the lone
bid[21] of P1,701,934.09.[22]

The Yus had three causes of action against BPI.

First. The bank imposed excessive penalty charges and interests: over P5 million in
penalty charges computed at 36% per annum compared to the 12% per annum that
the Court fixed in the cases of State Investment House, Inc. v. Court of
Appeals[23] and Ruiz v. Court of Appeals.[24] In addition, BPI collected a 14% yearly
interest on the principal, bringing the combined penalty charges and interest to 50% of
the principal per annum.

Second. BPI also imposed a charge of P4,052,046.11 in attorney's fees, the equivalent
of 10% of the principal, interest, and penalty charges.

Third. BPI did not provide documents to support its claim for foreclosure expenses of
P446,726.74 and cost of publication of P518,059.21.

As an alternative to their three causes of action, the Yus claimed that BPI was in
estoppel to claim more than the amount stated in its published notices. Consequently,
it must turn over the excess bid of P6,035,311.46.

After pre-trial, the Yus moved for summary judgment,[25] pointing out that based on
the answer,[26] the common exhibits of the parties,[27] and the answer to the written
interrogatories to the sheriff,[28] no genuine issues of fact exist in the case. The Yus
waived their claim for moral damages so the RTC can dispose of the case through a
summary judgment.[29]

Initially, the RTC granted only a partial summary judgment. It reduced the penalty
charge of 36% per annum[30] to 12% per annum until the debt would have been fully
paid but maintained the attorney's fees as reasonable considering that BPI already
waived the P1,761,511.36 that formed part of the attorney's fees and reduced the rate
 121

of attorney's fees it collected from 25% to 10% of the amount due. The RTC ruled that
facts necessary to resolve the issues on penalties and fees had been admitted by the
parties thus dispensing with the need to receive evidence.[31]

Still, the RTC held that it needed to receive evidence for the resolution of the issues of
(1) whether or not the foreclosure and publication expenses were justified; (2) whether
or not the foreclosure of the lot in Pili, Camarines Sur, was valid given that the
proceeds of the foreclosure of the properties in Legazpi City sufficiently covered the
debt; and (3) whether or not BPI was entitled to its counterclaim for attorney's fees,
moral damages, and exemplary damages.[32]

The Yus moved for partial reconsideration.[33] They argued that, since BPI did not mark
in evidence any document in support of the foreclosure expenses it claimed, it may be
assumed that the bank had no evidence to prove such expenses. As regards their right
to the pro-rating of their debt among the mortgaged properties, the Yus pointed out
that BPI did not dispute the fact that the proceeds of the sale of the properties in
Legazpi City fully satisfied the debt. Thus, the court could already resolve without trial
the issue of whether or not the foreclosure of the Pili property was valid.

Further, the Yus sought reconsideration of the reduction of penalty charges and the
allowance of the attorney's fees. They claimed that the penalty charges should be
deleted for violation of Republic Act (R.A.) 3765 or the Truth in Lending Act. BPI's
disclosure did not state the rate of penalties on late amortizations. Also, the Yus asked
the court to reduce the attorney's fees from 10% to 1% of the amount due. On
January 3, 2006 the RTC reconsidered its earlier decision and rendered a summary
judgment:[34]

1. Deleting the penalty charges imposed by BPI for non-compliance with the Truth in
Lending Act;

2. Reducing the attorney's fees to 1% of the principal and interest;

3. Upholding the reasonableness of the foreclosure expenses and cost of publication,

both with interests;

4. Reiterating the turnover by the Clerk of Court to the Yus of the excess in the bid
price;

5. Deleting the Yus' claim for moral damages they having waived it;

6. Denying the Yus' claim for attorney's fees for lack of basis; and

7. Dismissing BPI's counterclaim for moral and exemplary damages and for attorney's
fees for lack of merit considering that summary judgment has been rendered in favor
of the Yus.

BPI appealed the decision to the Court of Appeals (CA) in CA-G.R. CV 86577. But the
CA rendered judgment on January 23, 2008, affirming the RTC decision in all respects.
And when BPI asked for reconsideration,[35] the CA denied it on July 14,
2008,[36] hence, the bank's recourse to this Court.

The Issues Presented

BPI presents the following issues:

 122

1. Whether or not the case presented no genuine issues of fact such as to warrant a
summary judgment by the RTC; and

2. Where summary judgment is proper, whether or not the RTC and the CA a) correctly
deleted the penalty charges because of BPI's alleged failure to comply with the Truth in
Lending Act; b) correctly reduced the attorney's fees to 1% of the judgment debt; and
c) properly dismissed BPI's counterclaims for moral and exemplary damages,
attorney's fees, and litigation expenses.
The Court's Rulings

One. A summary judgment is apt when the essential facts of the case are uncontested
or the parties do not raise any genuine issue of fact.[37] Here, to resolve the issue of
the excessive charges allegedly incorporated into the auction bid price, the RTC simply
had to look at a) the pleadings of the parties; b) the loan agreements, the promissory
note, and the real estate mortgages between them; c) the foreclosure and bidding
documents; and d) the admissions and other disclosures between the parties during
pre-trial. Since the parties admitted not only the existence, authenticity, and genuine
execution of these documents but also what they stated, the trial court did not need to
hold a trial for the reception of the evidence of the parties.

BPI contends that a summary judgment was not proper given the following issues that
the parties raised: 1) whether or not the loan agreements between them were valid
and enforceable; 2) whether or not the Yus have a cause of action against BPI; 3)
whether or not the Yus are proper parties in interest; 4) whether or not the Yus are
estopped from questioning the foreclosure proceeding after entering into a compromise
agreement with Magnacraft; 5) whether or not the penalty charges and fees and
expenses of litigation and publication are excessive; and 6) whether or not BPI violated
the Truth in Lending Act.[38]

But these are issues that could be readily resolved based on the facts established by
the pleadings and the admissions of the parties.[39] Indeed, BPI has failed to name any
document or item of fact that it would have wanted to adduce at the trial of the case. A
trial would have been such a great waste of time and resources.

Two. Both the RTC and CA decisions cited BPI's alleged violation of the Truth in
Lending Act and the ruling of the Court in New Sampaguita Builders Construction, Inc.
v. Philippine National Bank[40] to justify their deletion of the penalty charges. Section 4
of the Truth in Lending Act states that:

SEC. 4. Any creditor shall furnish to each person to whom credit is extended, prior to
the consummation of the transaction, a clear statement in writing setting forth, to the
extent applicable and in accordance with rules and regulations prescribed by the Board,
the following information:

(1) the cash price or delivered price of the property or service to be acquired;
(2) the amounts, if any, to be credited as down payment and/or trade-in;
(3) the difference between the amounts set forth under clauses (1) and (2);
(4) the charges, individually itemized, which are paid or to be paid by such person in
connection with the transaction but which are not incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be financed expressed
as a simple annual rate on the outstanding unpaid balance of the obligation.
 123

Penalty charge, which is liquidated damages resulting from a breach,[41] falls under
item (6) or finance charge. A finance charge "represents the amount to be paid by the
debtor incident to the extension of credit."[42] The lender may provide for a penalty
clause so long as the amount or rate of the charge and the conditions under which it is
to be paid are disclosed to the borrower before he enters into the credit agreement.

In this case, although BPI failed to state the penalty charges in the disclosure
statement, the promissory note that the Yus signed, on the same date as the
disclosure statement, contained a penalty clause that said: "I/We jointly and severally,
promise to further pay a late payment charge on any overdue amount herein at the
rate of 3% per month." The promissory note is an acknowledgment of a debt and
commitment to repay it on the date and under the conditions that the parties agreed
on.[43] It is a valid contract absent proof of acts which might have vitiated consent.[44]

The question is whether or not the reference to the penalty charges in the promissory
note constitutes substantial compliance with the disclosure requirement of the Truth in
Lending Act.[45] The RTC and CA relied on the ruling in New Sampaguita as authority
that the non-disclosure of the penalty charge renders its imposition illegal. But New
Sampaguita is not attended by the same circumstances. What New
Sampaguita disallowed, because it was not mentioned either in the disclosure
statement or in the promissory note, was the unilateral increase in the rates of penalty
charges that the creditor imposed on the borrower. Here, however, it is not shown that
BPI increased the rate of penalty charge that it collected from the Yus. [46]

The ruling that is more in point is that laid down in The Consolidated Bank and Trust
Corporation v. Court of Appeals,[47] a case cited in New Sampaguita. The Consolidated
Bank ruling declared valid the penalty charges that were stipulated in the promissory
notes.[48] What the Court disallowed in that case was the collection of a handling
charge that the promissory notes did not contain.

The Court has affirmed that financial charges are amply disclosed if stated in the
promissory note in the case of Development Bank of the Philippines v. Arcilla,
Jr.[49] The Court there said, "Under Circular 158 of the Central Bank, the lender is
required to include the information required by R.A. 3765 in the contract covering the
credit transaction or any other document to be acknowledged and signed by the
borrower. In addition, the contract or document shall specify additional charges, if any,
which will be collected in case certain stipulations in the contract are not met by the
debtor." In this case, the promissory notes signed by the Yus contained data, including
penalty charges, required by the Truth in Lending Act. They cannot avoid liability based
on a rigid interpretation of the Truth in Lending Act that contravenes its goal.

Nonetheless, the courts have authority to reduce penalty charges when these are
unreasonable and iniquitous.[50] Considering that BPI had already received over P2.7
million in interest and that it seeks to impose the penalty charge of 3% per month or
36% per annum on the total amount due--principal plus interest, with interest not paid
when due added to and becoming part of the principal and also bearing interest at the
same rate--the Court finds the ruling of the RTC in its original decision[51] reasonable
and fair. Thus, the penalty charge of 12% per annum or 1% per month[52] is imposed.

Three. As for the award of attorney's fee, it being part of a party's liquidated
damages, the same may likewise be equitably reduced.[53] The CA correctly affirmed
the RTC Order[54] to reduce it from 10% to 1% based on the following reasons: (1)
attorney's fee is not essential to the cost of borrowing, but a mere incident of
collection;[55] (2) 1% is just and adequate because BPI had already charged foreclosure
 124

expenses; (3) attorney's fee of 10% of the total amount due is onerous considering the
rote effort that goes into extrajudicial foreclosures.

WHEREFORE, the Court DENIES the petition and AFFIRMS the Court of Appeals
Decision in CA-G.R. CV 86577 dated January 23, 2008 subject to
the RESTORATION of the penalty charge of 12% per annum or 1% per month of the
amount due computed from date of nonpayment or November 25, 2001.

SO ORDERED.

[G.R. NO. 149603 : March 14, 2007]

ESTATE OF LIM CHING, Represented by ATTORNEY JOSE

LIM, Petitioner, v. FLORENCIA BACALA, DOLORES L. MENDOZA, JUANITA
ALVAREZ AND APOLINARIO LAURENA,Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

Before us for resolution is a Petition for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, assailing the January 31, 2001 Decision1 and
August 17, 2001 Resolution of the Court of Appeals in CA-G.R. CV No. 62495, entitled
"Estate of Lim Ching, represented by Attorney Jose Lim, v. Florencia L. Bacala, Dolores
L. Mendoza, Juanita L. Alvarez and Apolinario C. Laurena."

The facts are:

On December 10, 1934, Ireneo Laurena executed a pacto de retro sale in favor of Lim
Ching of two parcels of land located at Barangay Cabagawan, Saint Bernard, Southern
Leyte. However, on February 23, 1935, Ireneo executed a deed of
renunciation covering the same parcels of land wherein he waived his right to
repurchase the same, thus vesting ownership and possession of the land to Lim Ching.

Sometime in 1936, Ireneo filed with the then Court of First Instance (CFI), now
Regional Trial Court (RTC), Maasin, Leyte a complaint for recovery of the two parcels of
land against Lim Ching, docketed as Civil Case No. 1919.
 125

On October 19, 1937, the CFI rendered a Decision2 ordering Lim Ching to return the
two parcels of land to Ireneo.

On appeal by Lim Ching, docketed as T-A G.R. No. 2647, the Tribunal de Apelacion
(now Court of Appeals) rendered a Decision3 dated August 19, 1939 reversing the trial
court's judgment and declaring Lim Ching the owner of the property. The
Decision4 became final and executory since Ireneo did not take further action.

Lim Ching then continued exercising his right of ownership. Upon his death, his heirs,
including Atty. Jose Lim, representing the estate of Lim Ching, herein petitioner,
inherited the land.

After 57 years, or in February 1996, Ireneo's heirs, herein respondents Florencia

Bacala, Dolores L. Mendoza, Juanita Alvarez, and Apolinario Laurena, took possession
of the property without the consent of Lim Ching's heirs. Respondents claimed they
inherited it from Ireneo.

Several times, petitioner demanded that respondents vacate the land but they refused.
Hence, on March 21, 1996, petitioner filed with the RTC, Branch 26, San Juan,
Southern Leyte a complaint forquieting of title with prayer for a writ of preliminary
injunction against respondents, docketed as Civil Case No. R-448.5 Petitioner alleged
that it is the absolute owner of the land in question as held by the Tribunal de
Apelacion (now Court of Appeals) in its Decision dated August 19, 1939 in TA-G.R. No.
2647.

In their answer to the complaint,6 respondents countered that petitioner has no cause
of action as the land it is claiming is different from the lot they have been occupying.

On October 24, 1996, upon agreement of both parties, the RTC issued an Order
creating a committee to undertake an ocular inspection of the property. The committee
was composed of Calvin Tabada, Head of the City Environment and Natural Resources
Office (CENRO), San Juan, Southern Leyte; Nicandro Nombrado, then acting court
sheriff; and Grace Botoy, the municipal assessor, also of Saint Bernard, Southern
Leyte.

On December 13, 1996, the committee submitted to the RTC its Commissioner's
Report7 stating that the land being claimed by petitioner is also the same property
being claimed by respondents.

On February 20, 1997, the RTC issued an Order8 approving the Commissioner's Report.

On October 16, 1997, petitioner filed with the RTC a motion for summary
judgment9 based on the Commissioner's Report10 and the August 19, 1939 Decision of
the Tribunal de Apelacion (now Court of Appeals) in T-A G.R. No. 2647 declaring Lim
Ching the owner of the property. As mentioned earlier, Lim Ching is the predecessor of
Atty. Jose Lim representing herein petitioner.

On February 20, 1998, respondents filed their comments and opposition11 to

petitioner's motion for summary judgment.

On March 18, 1998, the RTC issued an Order12 granting the motion for summary
judgment and submitting the case for resolution. Respondents filed their motion for
reconsideration13 but it was denied.14
 126

On December 15, 1998, the RTC rendered its Decision15 in favor of the petitioner,
holding that its claim deserves more credence, thus:

xxx

As borne out by the evidence adduced by both parties during the trial, it was admitted
that there was a prior case that involved the predecessors in interests of both parties
and that the land or subject property is located at Barangay Cabagawan, St. Bernard,
Sourthern Leyte. Plaintiff averred and anchored their claim of ownership over the
subject property or a decision rendered by the Court of Appeals dated August 19,
1939. Plaintiff's claim of ownership and possession of the property in dispute was all
evidenced by Exhibits "A", "B", "C", "D", "F" and "H". Defendants, on the other hand,
vehemently denied plaintiff's claim of ownership and possession of the property in
dispute and stressed that what they are claiming is separate and distinct land from
those that are subject of the aforesaid Court of Appeals decision. Defendants were able
to present tax declarations and tax receipts evidencing payment of realty taxes over
the subject property they are claiming ownership.

After examining and evaluating the conflicting claim of the plaintiff and defendants, the
plaintiff's claim deserves more credence.

The RTC further held that respondents failed to substantiate their defense that the area
they are claiming is different from the land in controversy.

The dispositive portion of the Decision16 reads:

WHEREFORE, IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered in

favor of the plaintiff and against the defendants. The plaintiff is declared as the legal
owner and possessor of the land in litigation and the defendant is hereby ordered to:

1. To respect said ownership and possession by the plaintiff;

2. To vacate from the land in question immediately and demolish all structures built on
the premises of the subject property;

3. To jointly and severally pay the plaintiff the sums of P50,000.00 as moral damages,
P20,000.00 as attorney's fees, P1,691.50 as exemplary damages to deter others from
committing the same act.

SO ORDERED.

Respondents interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV

No. 62495.

On January 31, 2001, the Court of Appeals rendered the assailed Decision reversing
the RTC Decision. It found that there are questions of fact in issue, such as
respondents' contentions that they have been in possession of the land in dispute since
time immemorial and that petitioner's action has been barred by prescription. Thus,
the appellate court ordered the remand of the case to the trial court for further
proceedings.

The issue raised in this petition is whether a summary judgment may be rendered by
the trial court.
 127

Summary judgment is sanctioned in this jurisdiction by Section 1, Rule 35 of the 1997

Rules of Civil Procedure, as amended, reproduced hereunder:

SECTION 1. Summary judgment for claimant. - A party seeking to recover upon a

claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time,
after the pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.

The theory of summary judgment is that, although an answer may on its face appear
to tender issues requiring trial, if it is demonstrated by affidavits, depositions or
admissions that those issues are not genuine but sham or fictitious, the court is
justified in dispensing with the trial and rendering summary judgment.17 It was devised
to aid parties in avoiding the expense and loss of time involved in a trial.18

In this case, the parties agreed that a committee be formed to conduct an ocular
inspection to determine whether they are claiming the same property. The trial court
approved the finding of the committee, stated in the Commissioner's Report, that
respondents are claiming a property which is also being claimed by petitioner.
Considering that the parties agreed to the formation of a committee, they are bound
by its finding. It is settled that when a referee (the commissioners in this case) is
appointed, he becomes for the time being an accredited agent and an officer of the
court, and the reference is clearly a judicial proceeding. What the referee does while
acting within the scope of his official duty is, therefore, in the contemplation of law,
done by the court itself. Hence, his conclusions must be assumed to be correct
until error is properly shown,19 which is not so in the present case.

It must be recalled that respondents' main defense is that they are occupying a
property different from that being claimed by petitioner. Consequently, based on the
Commissioner's Report, respondents failed to prove that they are the rightful owners of
the disputed land considering that what they own is a different area.

At any rate, petitioner has shown that as early as August 19, 1939, the Tribunal de
Apelacion (now Court of Appeals) rendered a Decision declaring Lim Ching, the
predecessor of Atty. Jose Lim, herein representative of petitioner, the owner of the
property.

Clearly, a summary judgment was correctly rendered by the trial court since there was
no more genuine factual issue to be resolved.

It is settled that a court may grant a summary judgment to settle expeditiously a case
if, on motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved, except the
amount of damages. In such event, the moving party is entitled to a judgment as a
matter of law.20

WHEREFORE, we GRANT the petition. The challenged Decision and Resolution of the
Court of Appeals in CA-G.R. CV No. 62495 are REVERSED. The Decision of the RTC in
Civil Case No. R-448 isAFFIRMED.

SO ORDERED.
 128

[G.R. No. 175291 : July 27, 2011]

THE HEIRS OF NICOLAS S. CABIGAS, NAMELY: LOLITA ZABATE CABIGAS,

ANECITA C. CANQUE, DIOSCORO CABIGAS, FIDEL CABIGAS, AND RUFINO
CABIGAS, PETITIONERS, VS. MELBA L. LIMBACO, LINDA L. LOGARTA, RAMON
C. LOGARTA, HENRY D. SEE, FREDDIE S. GO, BENEDICT Y. QUE, AWG
DEVELOPMENT CORPORATION, PETROSA DEVELOPMENT CORPORATION, AND
UNIVERSITY OF CEBU BANILAD, INC., RESPONDENTS.

DECISION

BRION, J.:

We resolve the petition for review on certiorari [1] filed by Lolita Cabigas, Anecita
Canque, Dioscoro Cabigas, Fidel Cabigas, and Rufino Cabigas (petitioners), heirs of
Nicolas S. Cabigas, to reverse and set aside the resolutions of the Court of Appeals
(CA) in CA-G.R. CV No. 01144 dated May 31, 2006[2] and October 4,
2006, [3] dismissing their ordinary appeal for being the wrong recourse.

THE FACTS

On February 4, 2003, the petitioners filed a complaint for the annulment of titles of
various parcels of land registered in the names of Melba Limbaco, Linda Logarta,
Ramon Logarta, Eugenio Amores, New Ventures Realty Corporation, Henry See,
Freddie Go, Benedict Que, AWG Development Corporation (AWG), Petrosa
Development Corporation (Petrosa), and University of Cebu Banilad, Inc. (UCB) with
the Regional Trial Court (RTC) of Cebu City, docketed as Civil Case No. 28585.

The complaint alleged that petitioner Lolita Cabigas and her late husband, Nicolas
Cabigas, purchased two lots (Lot No. 742 [4] and Lot No. 953 [5]) from Salvador
Cobarde on January 15, 1980. Cobarde in turn had purchased these lots from Ines
 129

Ouano [6] on February 5, 1948.

Notwithstanding the sale between Ouano and Cobarde, and because the two lots
remained registered in her name, [7] Ouano was able to sell these same lots to the
National Airports Corporationon November 25, 1952 for its airport expansion
project. The National Airports Corporation promptly had the titles of these properties
registered in its name.

When the airport expansion project fell through, respondents Melba Limbaco, Ramon
Logarta, and Linda Logarta, the legal heirs of Ouano, succeeded in reclaiming title to
the two lots through an action for reconveyance filed with the lower court; [8] the titles
over these lots were thereafter registered in their names. [9] They then subdivided the
two lots [10] and sold them to New Ventures Realty Corporation, Eugenio Amores,
Henry See, Freddie Go, Benedict Que, Petrosa, and AWG. AWG, in turn, sold one of the
parcels of land to UCB. All the buyers registered the titles over their respective lots in
their names.

After the respondents had filed their individual Answers, respondents Henry See,
Freddie Go and Benedict Que filed a motion to set the case for hearing on special
affirmative defenses on July 8, 2004. On the other hand, respondents AWG, Petrosa,
and UCB filed a motion for summary judgment on April 13, 2005, admitting as true the
facts stated in the petitioners' complaint, but claiming that the petitioners had no legal
right to the properties in question.

THE RTC RESOLUTION

On August 23, 2005, the RTC issued a resolution, [11] granting the motion for summary
judgment filed by AWG, Petrosa and UCB, and dismissing the petitioners' complaint.
According to the RTC, while the petitioners alleged bad faith and malice on the part of
Ouano when she sold the same properties to the National Airports Corporation, they
never alleged bad faith on the part of the buyer, the National Airports Corporation.
Since good faith is always presumed, the RTC concluded that the National Airports
Corporation was a buyer in good faith and its registration of the properties in
its name effectively transferred ownership over the two lots, free from all the
unrecorded prior transactions involving these properties, including the prior
sale of the lots to Cobarde.

As the RTC explained, the unregistered sale of the lots by Ouano to Cobarde was
merely an in personam transaction, which bound only the parties. On the other hand,
the registered sale between Ouano and the National Airports Corporation, a buyer in
good faith, was an in rem transaction that bound the whole world. Since Cobarde's
rights to the properties had already been cut off with their registration in the
name of the National Airports Corporation, he could not sell any legal interest
in these properties to the Cabigas spouses. Hence, under the Torrens system, the
petitioners are strangers to the lots and they had no legally recognized interest binding
it in rem that the courts could protect and enforce against the world. [12]

The petitioners filed a notice of appeal to question the RTC resolution. In response,
respondents AWG, Petrosa, and UCB filed a motion to dismiss the appeal, claiming that
the petitioners raised only questions of law in their appeal; thus, they should have filed
an appeal by certiorari with the Supreme Court, and not an ordinary appeal with the
appellate court.

THE COURT OF APPEALS RESOLUTIONS

 130

In its May 31, 2006 resolution, the CA ruled that the petitioners should have filed a
petition for review on certiorari under Rule 45 of the Rules of Court with the Supreme
Court instead of an ordinary appeal since they only raised a question of law, i.e., the
propriety of the summary judgment. Accordingly, insofar as the respondents who filed
the motion for summary judgment are concerned, namely, AWG, Petrosa, and UCB,
the CA dismissed the petitioners' appeal.

However, the CA remanded the case to the RTC for further proceedings on the Motion
to Set Case for Hearing on Special and Affirmative Defenses filed by respondents Henry
See, Freddie Go, and Benedict Que.

In its October 4, 2006 resolution, the CA resolved the petitioners' motion for
reconsideration, as well as the Partial Motion for Reconsideration filed by respondents
Henry See, Freddie Go, and Benedict Que. The CA observed that it did not have
jurisdiction to entertain the appeal since it raised a pure question of law. Since it
dismissed the appeal based on a technicality, it did not have the jurisdiction to order
that the case be remanded to the RTC.

Furthermore, the trial court had already dismissed the case in its entirety when it held
that the petitioners had no enforceable right as against the respondents, since they
had no registered legal interest in the properties. There was thus no need to remand
the case to the RTC.

Hence, the petitioners seek recourse with this Court via the present petition, raising
the following grounds:

(1) The Court of Appeals committed grave and serious error in dismissing the appeal
and in holding that a summary judgment is appealable only through a petition for
review on certiorariunder Rule 45 to the Supreme Court.

(2) The paramount and overriding considerations of substantial justice and equity
justify the reversal and setting aside of the questioned resolutions.

THE RULING

We AFFIRM the assailed CA resolutions.

Petitioners availed of the wrong mode of appeal

Section 2, Rule 41 of the Rules of Court provides the three modes of appeal, which are
as follows:

Section 2. Modes of appeal. --

(a) Ordinary appeal. -- The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall be
required except in special proceedings and other cases of multiple or separate appeals
where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.
 131

(b) Petition for review. -- The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for
review in accordance with Rule 42.

(c) Appeal by certiorari. -- In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on certiorariin
accordance with Rule 45.

The first mode of appeal, the ordinary appeal under Rule 41 of the Rules of Court, is
brought to the CA from the RTC, in the exercise of its original jurisdiction, and resolves
questions of fact or mixed questions of fact and law. The second mode of appeal, the
petition for review under Rule 42 of the Rules of Court, is brought to the CA from the
RTC, acting in the exercise of its appellate jurisdiction, and resolves questions of fact
or mixed questions of fact and law. The third mode of appeal, the appeal
by certiorari under Rule 45 of the Rules of Court, is brought to the Supreme Court and
resolves only questions of law.

Where a litigant files an appeal that raises only questions of law with the CA, Section 2,
Rule 50 of the Rules of Court expressly mandates that the CA should dismiss the
appeal outright as the appeal is not reviewable by that court.

There is a question of law when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being
admitted, and the doubt concerns the correct application of law and jurisprudence on
the matter. [13] On the other hand, there is a question of fact when the doubt or
controversy arises as to the truth or falsity of the alleged facts.

While the petitioners never filed their appellants' brief, we discern from the petitioners'
submissions to the CA, [14] as well as from their petition with this Court, their perceived
issues with respect to the RTC's summary judgment, and they are as follows:

a) Whether or not the National Airports Corporation acted with good faith when it
purchased the properties from Ouano;

b) Whether the heirs of Ouano acted with good faith in recovering the properties from
the National Airports Corporation; and

c) Whether the subsequent buyers of the properties acted with good faith in purchasing
the properties from the heirs of Ouano.

Given that the question of whether a person acted with good faith or bad faith in
purchasing and registering real property is a question of fact, [15] it appears, at first
glance, that the petitioners raised factual issues in their appeal and, thus, correctly
filed an ordinary appeal with the CA. After reviewing the RTC resolution being assailed,
however, we find that the petitioners actually raised only questions of law in their
appeal.

We quote the pertinent portions of the RTC decision:

The main issue to be resolved is who between [the] plaintiffs and the defendants have
a better right to the subject lots.

In selling the land in favor of the National Airports Corporation[,] plaintiffs alleged bad
faith and malice on the part of the seller Ine[s] Ouano but have not pleaded bad faith
 132

on the part of the buyer. Since good faith is always presumed under Article 427 of the
Civil Code, the National Airports Corporation was therefore a buyer in good faith. Being
[a] purchaser in good faith and for value, it is axiomatic that the right of [the] National
Airports Corporation must be upheld and its titles protected over the claim of the
plaintiffs. In the case of Flordeliza Cabuhat vs. The Honorable Court of Appeals, G.R.
No. 122425, September 28, 2001, the Supreme Court upheld the validity of the title of
an innocent purchaser in good faith and for value and at the same time invoked the
principle of stability of our Torrens system and indefeasibility of title guaranteeing the
integrity of land titles once the claim of ownership is established and recognized.

"However, it is well-settled that even if the procurement of a certificate of title was

tainted with fraud and misrepresentation, such defective title may be the source of a
completely legal and valid title in the hands of an innocent purchaser for value. Thus:
where innocent third persons, relying on the correctness of the certificate of title thus
issued, acquire rights over the property the court cannot disregard such rights and
order the total cancellation of the certificate. The effect of such an outright cancellation
would be to impair public confidence in the certificate of title, for everyone dealing with
property registered under [the] Torrens system would have to inquire in every instance
whether the title has been regularly or irregularly issued. This is contrary to the
evident purpose of the law. Every person dealing with the registered land may safely
rely on the correctness of the certificate of title issued therefore and the law will in no
way oblige him to go behind the certificate to determine the condition of the property."

The subject lots being registered land under the Torrens [s]ystem the recordation of
the sale by the National Airports Corporation, a buyer in good faith gave National
Airports Corporation a title free of all unrecorded prior transactions, deeds, liens and
encumbrances, and conversely forever erased or cut off the unrecorded interest of
Salvador Cobarde. Section 50 of Article 496 of the Land Registration Act (now sec. 51
of PD 1529) reads: "No deed, mortgage, lease or other voluntary instrument, except a
will, purporting to convey or affect registered land shall take effect as a conveyance or
bind the land xxx. The act of registration shall be the operative act to convey and
affect [the] land." In the case of National Grains Authority v. IAC, 157 SCRA 380, the
Supreme Court ruled, thus, the possession by plaintiffs and their predecessors-in-
interest is irrelevant to this case because possession of registered land can never ripen
into ownership. "No title to registered land in derogation of the title of the registered
owner shall be acquired by prescription or adverse possession." (Sec. 46 of Act 496,
now Sec. 47 of PD 1529).

In the eyes of the Torrens system, the unregistered sale of the property by Ine[s]
Ouano to Salvador Cobarde did not bind the land or the whole world in rem; it
bound,in personam, only the parties. On the other hand, the registered sale by Ine[s]
Ouano to National Airports Corporation, a buyer in good faith, bound the land in rem,
meaning that the whole world was put on constructive notice that thenceforth the land
belonged to National Airports Corporation free of all prior transactions, deeds and
encumbrances, such as the claim of Salvador Cobarde, which were at the very moment
National Airports Corporation registered its title free of prior claims - forever erased or
cut off by operation of law.

xxxx

Salvador Cobarde, whose rights to the property had been erased or cut off by
operation of law, had nothing or had no legally recognized interest in the property that
he could sell - when he "sold" the property to Nicolas and Lolita Cabigas. Nicolas and
Lolita Cabigas having bought nothing could transmit nothing to their successors-in-
 133

interest, the plaintiffs herein. Under the Torrens system, herein plaintiffs are strangers
to the property; they possess no legally recognized interest binding the property in
remthat courts could protect and enforce against the world. [16]

As astutely observed by the CA, the RTC resolution merely collated from the pleadings
the facts that were undisputed, admitted, and stipulated upon by the parties, and
thereafter ruled on the legal issues raised by applying the pertinent laws and
jurisprudence on the matter. In other words, the RTC did not resolve any factual
issues, only legal ones.

When there is no dispute as to the facts, the question of whether or not the conclusion
drawn from these facts is correct is a question of law. [17] When the petitioners assailed
the summary judgment, they were in fact questioning the conclusions drawn by the
RTC from the undisputed facts, and raising a question of law.

In light of the foregoing, jurisdiction over the petitioners' appeal properly lay with this
Court via an appeal by certiorari, and the CA was correct in dismissing the appeal for
lack of jurisdiction.

Rendition of summary judgment was proper

Even if we overlook the procedural lapse and resolve the case on the merits, we still
affirm the assailed CA resolutions.

Under the Rules of Court, a summary judgment may be rendered where, on motion of
a party and after hearing, the pleadings, supporting affidavits, depositions and
admissions on file show that, "except as to the amount of damages, there is no
genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law." [18] The Court explained the concept of summary
judgment in Asian Construction and Development Corporation v. Philippine Commercial
International Bank: [19]

Summary or accelerated judgment is a procedural technique aimed at weeding out

sham claims or defenses at an early stage of litigation thereby avoiding the expense
and loss of time involved in a trial.

Under the Rules, summary judgment is appropriate when there are no genuine issues
of fact which call for the presentation of evidence in a full-blown trial. Even if on their
face the pleadings appear to raise issues, when the affidavits, depositions and
admissions show that such issues are not genuine, then summary judgment
as prescribed by the Rules must ensue as a matter of law. The determinative
factor, therefore, in a motion for summary judgment, is the presence or absence of a
genuine issue as to any material fact. [Emphasis supplied.]

The petitioners assert that the RTC erred in rendering a summary judgment since there
were factual issues that required the presentation of evidence at a trial.

We disagree with the petitioners.

At the outset, we note from the respondents' pleadings that several

respondents [20] denied that the sale between anwhile, missed the information against
all the accused. on in Court, claiming that cutors, who are his subordinates. Ouano and
Cobarde ever occurred. It would, therefore, appear that a factual issue existed that
required resolution through a formal trial, and the RTC erred in rendering summary
 134

judgment.

A closer examination of the parties' submissions, however, makes it apparent that this
is not a genuine issue of fact because, as will be discussed below, the petitioners do
not have any legally enforceable right to the properties in question, as their
predecessors-in-interest are not buyers in good faith.

i. Cabigas spouses are not buyers in good faith

A purchaser in good faith is one who buys the property of another without notice that
some other person has a right to or interest in such property, and pays a full and fair
price for the same at the time of such purchase or before he has notice of the claim of
another person. [21] It is a well-settled rule that a purchaser cannot close his
eyes to facts which should put a reasonable man upon his guard, and then
claim that he acted in good faith under the belief that there was no defect in
the title of the vendor. His mere refusal to believe that such defect exists, or his
willful closing of his eyes to the possibility of the existence of a defect in his vendor's
title, will not make him an innocent purchaser for value, if it afterwards develops that
the title was in fact defective, and it appears that he had such notice of the defect as
would have led to its discovery had he acted with that measure of precaution which
may reasonably be required of a prudent man in a like situation. [22]

We are dealing with registered land, a fact known to the Cabigas spouses since they
received the duplicate owner's certificate of title from Cobarde when they purchased
the land. At the time of the sale to the Cabigas spouses, however, the land was
registered not in Cobarde's name, but in Ouano's name. By itself, this fact should
have put the Cabigas spouses on guard and prompted them to check with the Registry
of Deeds as to the most recent certificates of title to discover if there were any liens,
encumbrances, or other attachments covering the lots in question. As the Court
pronounced in Abad v. Sps. Guimba: [23]

[The law protects to a greater degree a purchaser who buys from the registered owner
himself. Corollarily, it] requires a higher degree of prudence from one who buys from a
person who is not the registered owner, although the land object of the transaction is
registered. While one who buys from the registered owner does not need to look
behind the certificate of title, one who buys from one who is not the registered
owner is expected to examine not only the certificate of title but all factual
circumstances necessary for [one] to determine if there are any flaws in the
title of the transferor, or in [the] capacity to transfer the land. (emphasis supplied)

Instead, the Cabigas spouses relied completely on Cobarde's representation that he

owned the properties in question, and did not even bother to perform the most
perfunctory of investigations by checking the properties' titles with the Registry of
Deeds. Had the Cabigas spouses only done so, they would easily have learned
that Cobarde had no legal right to the properties they were acquiring since
the lots had already been registered in the name of the National Airports
Corporation in 1952. Their failure to exercise the plain common sense expected of
real estate buyers bound them to the consequences of their own inaction.

ii. No allegation that the National Airports Corporation registered the lots in
bad faith

All the parties to this case trace their ownership to either of the two persons that
Ouano sold the properties to - either to Cobarde, who allegedly purchased the land in
 135

1948, or to the National Airports Corporation, which bought the land in 1952.
Undoubtedly, the National Airports Corporation was the only party that registered the
sale with the Registry of Deeds. For this registration to be binding, we now have to
determine whether the National Airports Corporation acted with good faith when it
registered the properties, in accordance with Article 1544 of the Civil Code, which
provides:

Article 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

Based on this provision, the overriding consideration to determine ownership of an

immovable property is the good or bad faith not of the seller, but of the buyer;
specifically, we are tasked to determine who first registered the sale with the Registry
of Property (Registry of Deeds) in good faith.

As accurately observed by the RTC, the petitioners, in their submissions to the lower
court, never imputed bad faith on the part of the National Airports Corporation in
registering the lots in its name. This oversight proves fatal to their cause, as we
explained in Spouses Chu, Sr. v. Benelda Estate Development Corporation:

In a case for annulment of title, therefore, the complaint must allege that the
purchaser was aware of the defect in the title so that the cause of action against him
will be sufficient. Failure to do so, as in the case at bar, is fatal for the reason that the
court cannot render a valid judgment against the purchaser who is presumed to be in
good faith in acquiring the said property. Failure to prove, much less impute, bad
faith on said purchaser who has acquired a title in his favor would make it
impossible for the court to render a valid judgment thereon due to the
indefeasibility and conclusiveness of his title. [24]

Since the petitioners never alleged that the National Airports Corporation acted with
bad faith when it registered the lots in its name, the presumption of good faith
prevails. Consequently, the National Airports Corporation, being a registrant in good
faith, is recognized as the rightful owner of the lots in question, and the registration of
the properties in its name cut off any and all prior liens, interests and encumbrances,
including the alleged prior sale to Cobarde, that were not recorded on the titles.
Cobarde, thus, had no legal rights over the property that he could have transferred to
the Cabigas spouses.

Since the Cabigas spouses have no legally recognizable interest in the lots in question,
it follows that the petitioners, who are subrogated to the rights of the former by virtue
of succession, also have no legally recognizable rights to the properties that could be
enforced by law. The petitioners clearly have no cause of action against the
respondents, and the RTC correctly dismissed their complaint for annulment of title.

WHEREFORE, premises considered, we DENY the petition for lack of merit,

and AFFIRM the Resolutions, dated May 31, 2006 and October 4, 2006, of the Court
 136

of Appeals in CA-G.R. CV No. 01144. No costs.

SO ORDERED.

[G.R. No. 172660 : August 24, 2011]

EUGENIO BASBAS, TEOFILO ARAS, RUFINO ARAS, GERVACIO BASBAS, ISMAEL

ARAS, EUGENIO ARAS, SIMFRONIO ARAS, FELICIANO ARAS, ROSITA ARAS,
EUGENIO BASBAS, JR. AND SPOUSES PABLITO BASARTE AND MARCELINA
BASBAS BASARTE, PETITIONERS, VS. BEATA SAYSON AND ROBERTO SAYSON,
JR., RESPONDENTS.

DECISION

DEL CASTILLO, J.:

Petitioners seek to prevent the revival of a judgment rendered in favor of the

respondents more than two decades back.

This Petition for Review on Certiorari assails the February 17, 2004 Decision[1]of the
Court of Appeals (CA) in CA-G.R. CV No. 72385 which denied the appeal filed before it
and affirmed in toto the May 21, 2001 Order[2] of the Regional Trial Court of Ormoc
City, Branch 35. Also assailed is the April 19, 2006 Resolution[3] denying the Motion
for Reconsideration thereto.

Factual Antecedents

On September 2, 1976, respondent Beata Sayson (Beata) and her husband Roberto
 137

Sayson, Sr. (Roberto Sr.) filed a Petition for Registration of an agricultural land located
in Cagbatang, Balagtas, Matag-ob, Leyte docketed as Land Registration Case No. 0-
177. The said application was opposed by the Republic of the Philippines and herein
petitioners Eugenio Basbas (Eugenio Sr.), Teofilo Aras (Teofilo) and Rufino Aras
(Rufino). On March 22, 1979, the Court of First Instance (CFI) of Leyte, Branch V
(Ormoc City) rendered a Decision adjudicating to the spouses Sayson said agricultural
land and approving its registration under their names.[4]

The oppositors filed their appeal to the CA docketed as CA-G.R. No. 66541. In a
Decision[5] dated July 24, 1985, the appellate court affirmed in toto the Decision of the
CFI. This CA Decision became final and executory on August 21, 1985[6] and,
accordingly, a Writ of Possession was issued on November 21, 1985, which was never
implemented.

The following year or on September 17, 1986, Original Certificate of Title (OCT) No.
2496[7] was issued to the spouses Sayson pursuant to the March 22, 1979 CFI
Decision. An Alias Writ of Possession was issued on April 6, 1989 but this could also
not be implemented in view of the refusal of Eugenio Sr. and his son Eugenio Basbas,
Jr. (Eugenio Jr.). Claiming that the land they occupied is not the same land subject of
the CFI Decision,[8] they demanded that a relocation survey be conducted. Hence, a
relocation survey was conducted by order of the Regional Trial Court (RTC), Branch 12,
Ormoc City.[9]

In an Order[10] dated September 13, 1989, the RTC approved the Commissioner's
Report[11] on the relocation survey and ordered the original oppositors, petitioners
Eugenio Sr., Teofilo and Rufino, as well as their co-petitioners herein Gervacio Basbas
(Gervacio), Ismael Aras (Ismael), Eugenio Aras (Eugenio), Simfronio Aras (Simfronio),
Feliciano Aras (Feliciano), Rosita Aras (Rosita) and Eugenio Jr. to vacate the subject
property, viz:

[R]espondents are directed to vacate the portion of Lot No. 1, Psu-08-000235 covered
by OCT No. 2496 and subject of the final decree of registration which, [up to the]
present, said respondents are still possessing pursuant to the final and executory
judgment of the Court of Appeals and as particularly defined in the Commissioner's
report submitted on August 3, 1989 x x x.

Respondents are reminded that under Rule 71 of the New Rules of Court, failure on
their part to so obey this order may make them liable for contempt of this Court.

SO ORDERED.[12]

Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita and Eugenio Jr., although not
oppositors in CA-G.R. No. 66541, were likewise ordered to vacate the property in view
of the following pronouncement in the RTC's September 13, 1989 Order:

It appearing from the records that respondents Eugenio Basbas, Teofilo

Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras, Simfronio Aras,
Feliciano Aras, Rosita Aras and Eugenio Basbas[,] Jr. are parties to the
present case, they having been the principal oppositors to the petition filed by
the applicants as shown in the records, pages 34, 35 and 36, Vol. 1 x x
x[13] (Emphasis supplied.)

This September 13, 1989 Order was, however, not implemented within the five-year
period from the time it became final.[14] Hence, respondent Beata and her son Roberto
 138

Sayson, Jr. (Roberto Jr.), as successor-in-interest of the late Roberto Sr., filed on
August 18, 1995 a Complaint for Revival of Judgment[15] before the RTC of Ormoc City,
Branch 12,[16] docketed as Civil Case No. 3312-0. Impleaded as defendants were
Eugenio Sr., Teofilo, Rufino, Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita,
and Eugenio Jr. Petitioner-spouses Pablito Basarte and Marcelina Basbas-
Sabarte[17] (spouses Basarte), who, although not identified in the September 13, 1989
Order as principal oppositors in the land registration case, were likewise impleaded as
defendants since they also allegedly harvested, processed, and sold the coconuts found
in the subject property.

Upon receipt of summons, Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita and
Eugenio Jr. filed a Motion to Dismiss[18] on the ground that the Complaint states no
cause of action. This was, however, denied[19] so the same set of petitioners, except
for Feliciano, filed an Answer with Counterclaim.[20]

In their Answer with counterclaim, said petitioners admitted the allegations in

paragraphs 4, 5, 6, 7, 8, 9, 10, 11 and 12 of respondents' Complaint which state that:

xxxx

4. On March 22, 1979, the Honorable Judge Numeriano Estenzo rendered a decision in
the above-mentioned Land Registration [c]ase in favor of the petitioners x x x and
against the oppositors, the dispositive portion of said decision reads:

`WHEREFORE, decision is hereby rendered x x x [and] the land described under Plan
PSU-08-000235 dated September 10, 1973 of Geodetic Engineer Nestorio Encenzo
already APPROVED by the Acting Regional Director on June 27, 1974 is hereby
adjudicated and registered in the names of the Spouses ROBERTO SAYSON and BEATA
O. SAYSON, of legal ages, Filipinos, spouses and residents of Campokpok, Tabango,
Leyte, Philippines and as soon as this decision becomes final, let a decree of
registration be issued by the Land Registration Commission.

SO ORDERED.' (x x x)

5. From the above decision the oppositors (defendants herein) appealed;

6. On July 24, 1985, the Honorable Court of Appeals rendered its decision, the
dispositive portion [of which] reads:
`WHEREFORE, PREMISES CONSIDERED, finding no merit in this appeal the decision
appealed from is hereby AFFIRMED in toto.

SO ORDERED.'

and the said decision has become final and executory on August 21, 1985 per Entry of
Judgment issued by the Court of Appeals x x x.

7. That consequently, on September 17, 1986 an Original Certificate of Title No. N-

2496 was issued in the names of Roberto Sayson and Beata O. Sayson, pursuant to
Decree No. N-191615, by the Register of Deeds for the Province of Leyte;

8. That on motion, the Honorable Court, on November 21, 1985, issued a Writ of
Possession which for some reason or [another] was not satisfied, so that the Honorable
Court, on April 7, 1989 - acting on an ex-parte motion dated April 6, 1989 - directed
the issuance of an Alias Writ of Possession;
 139

9. That the Deputy Sheriff of this Court, Mr. Placid[o] Cayco tendered the Alias Writ of
Possession to the oppositors, particularly to Mr. Eugenio Basbas, Sr. and Eugenio
Basbas, Jr. who, as the Deputy Sheriff stated in his Progress Report dated May 18,
1989 `did not believe and obey the CFI Decision and the decision of the Court of
Appeals' and `x x x [t]hey demanded a relocation survey to determine the exact
location of applicants' (complainant[s] herein) property described in the alias writ of
possession.' x x x;

10. That on June 16, 1989, the Honorable Court, acting on the Progress Report of
Deputy Sheriff Placido Cayco, issued an Order on even date appointing Geodetic
Engineer Jose A. Tahil as Court Commissioner specifically `to relocate Lot No. 1, Plan
Psu-08-000235, LRC No. 0-177, Land Reg. Record No. N51830 x x x' This Order was
dictated in open court in the presence of Mr. Eugenio Basbas, Sr. and Eugenio Basbas,
Jr. who had both objected to the Writ of Possession, and their counsel Atty. Evargisto
Escalon, and Attorney Demetrio D. Sarit, counsel for the applicants. x x x

11. That pursuant to the [O]rder dated June 16, 1989 x x x the Court assigned
Commissioner, Engr. Jose A. Tahil, submitted his report stating that `the job assigned
to the commissioner was already fully and peacefully accomplished; that his `findings
[show] that all points are existing and intact on the field except x x x corner 3 of said
lot x x x which at present [is] already defined and indicated on the ground.' The
commissioner also attached a Sketch Plan of the land to his report. x x x

12. That, finally, the Honorable Court, on September 13, 1989 issued an Order
approving the Commissioner's Report and further stated:

[R]espondents (defendants herein) are directed to vacate the portion of Lot No. 1, Psu-
08-000235 covered by OCT No. 2496 and subject of final decree of registration which,
until [the] present, said respondents are still possessing, pursuant to the final and
executory judgment of the Court of Appeals and as particularly [defined] in the
Commissioner's Report submitted on August 3, 1989 x x x

Respondents are reminded that under Rule 71 of the New Rules of Court, failure on
their part to so obey this Order may make them liable for contempt of this Court.[21]

However, petitioners admitted but denied in part:

1) paragraphs 2 and 3, insofar as they alleged that they were all oppositors to the land
registration case when only Eugenio Sr., Teofilo and Rufino were the oppositors
therein; and

2) paragraph 14, with respect to the allegation on the retirement of the Deputy Sheriff
and the heart condition of the Clerk of Court, for lack of sufficient knowledge and
information sufficient to form a belief thereon.

On the other hand, they specifically denied:

1) paragraph 13, on the ground that they have the right of ownership and/or
possession over the subject property; and

2) paragraph 15, on the ground that the property they are cultivating is owned by
them, hence, respondents cannot suffer losses and damages.
 140

Paragraphs 2, 3, 13, 14 and 15 alluded to in the foregoing are as follows:

2. All the defendants named above are x x x of legal age and are residents of Balagtas,
Matag-ob, Leyte where they may be served summons and other court processes; while
defendant-spouses Pablito Basarte and Marcelina Basbas Basarte were not named as
among the oppositors in the land registration case whose decision is herein sought to
be revived, said spouses are nonetheless participating in the harvest, processing and
sale of the coconuts with the other defendants named above;

3. Plaintiffs Beata Sayson and her late husband, Roberto Sayson are petitioners in Land
Registration Case No. 0-177 for the registration of a parcel of agricultural land situated
in Barrio Balagtas, Matag-ob, Leyte, filed on September 2, 1976 with the then Court of
First Instance of Leyte, Branch V, Ormoc City. The above-named defendants, namely:
Eugenio Basbas, Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio
Aras, Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas, Jr. were
oppositors to the application;[22]

xxxx

13. That despite this admonition in the [September 13, 1989] [O]rder that they could
be cited for contempt of Court, the respondents, defendants herein, had continuously
defied the same and this notwithstanding the fact that it was upon their own demands
and insistence that a relocation survey be made on the premises subject of this case
before they would obey the alias writ of possession x x x and that the finding[s] of the
Court[-]appointed Commissioner Engr. Jose A. Tahil show that the oppositors-
respondents did [encroach] on the land of plaintiffs herein;

14. That this [September 13, 1989] Order however was not implemented thru a Writ
of Execution within the five-year period from the time the Order became final because
of the retirement of Deputy Sheriff Placido Cayco and by reason also of the fact that
the then Clerk of Court, Atty. Constantino A. Trias, Jr. who was also the ex-officio
Provincial Sheriff was not physically fit to hike thru the mountains and hills of Brgy.
Balagtas where the property and the defendants therein reside due to his heart
condition;

15. That despite their knowledge of the Court[`s] [September 13, 1989] Order, the
same [having been] dictated in open court, the respondents had continued to occupy
the land of the plaintiffs and for more than five (5) years since this Order for them to
vacate the land in question was issued, they had harvested the coconuts growing
thereon and such other produce of the land herein involved. And until the decision of
the Court of Appeals is executed, plaintiff will continue to suffer losses and damages by
reason of defendants' unlawful occupation and possession and their continued
harvesting of the produce of this land of the herein plaintiffs.[23]

By way of special and affirmative defenses, said petitioners contended that the Order
sought to be revived is not the "judgment" contemplated under Section 6, Rule 39 of
the Rules of Court, hence the action for revival of judgment is improper. Also, except
for Rufino, petitioners averred that they cannot be made parties to the complaint for
revival of judgment as they were not parties to the land registration case. They thus
believed that the September 13, 1989 Order sought to be revived is not binding upon
them and hence, the complaint states no cause of action with respect to them. As to
the counterclaim, petitioners prayed that respondents pay them moral and exemplary
damages, attorney's fees and litigation expenses.
 141

Pre-trial conference was thereafter set[24] but since not all petitioners were served with
summons, this was reset and alias summons was issued and served upon Simfronio
and the spouses Basarte.[25] Upon receipt of summons, Simfronio adopted the Answer
with Counterclaim of Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita and Eugenio
Jr.[26] while the spouses Basarte filed a Motion to Dismiss[27] on the ground of lack of
cause of action. As said motion was also denied,[28] the spouses Basarte later filed a
Manifestation[29] that they were also adopting the Answer with Counterclaim filed by
Gervacio and the others.

During the pre-trial conference on July 14, 1999, the RTC issued an Order[30] which
provides in part,viz:

In today's pre-trial conference, manifestations and counter-manifestations were

exchanged. All the parties and their counsels are present. x x x [P]laintiffs' counsel
presented a Special Power of Attorney by Beata Sayson but the Court
observed that same was not duly acknowledged before the Philippine
Consulate or Embassy in Canada. However, this matter is not so important[.]
[W]hen the Court tried to dig and discuss with the parties on their real positions, it
turned out that the plaintiffs are seeking revival of the previous final judgment,
the original parties of which were Eugenio Basbas, Teofilo Aras and Rufino
Aras. Eugenio and Teofilo are all dead, leaving Rufino Aras alive. It is quite
complicated considering that in this action, the plaintiffs relied on the Order
of this Court penned by the previous judge dated September 13, 1989 which
was made after or consequent to the final judgment aforementioned, wherein
the names of the other defendants were mentioned in the body thereof. After
considering the merits of the various contentions, the Court is of the view that
the complaint had to limit itself to the names of the original parties appearing
in the original judgment now being sought for revival. The interest of the
plaintiffs in seeking implementation or execution of the judgment sought to be revived
which would involve the other defendants can be taken when the judgment shall have
been revived.

In this connection therefore and as part of the matters to be made part in the pre-trial
conference, in the exercise of the authority granted to it by law, this Court directs
the plaintiffs to make the necessary amendment and/or to submit a
manifestation first to this Court on the point above raised regarding
amendment of the designation of the parties having in mind the objection of the
defendants who manifested that should there be an amendment, this counter-claim
shall be disregarded since they were brought in unnecessarily in this kind of action.

Plaintiffs therefore are given a period of ten (10) days from today within which to
submit the requisite manifestation furnishing copy thereof to the defendant who upon
receipt shall also be given a period of ten (10) days within which this Court will make
the necessary resolution before allowing any amendment.

Hold the pre-trial conference in abeyance.

SO ORDERED. [31] (Emphasis supplied.)

In their Manifestation with Prayer,[32] respondents informed the RTC about the death of
Eugenio Sr. and Teofilo who were oppositors in the land registration case and the
substitution by their heirs, namely, Gervacio, Marcelina Basbas Basarte,[33] and
Eugenio Jr. for Eugenio Sr. and Ismael, Vicente, Ligaya Aras (Ligaya), Rosendo Aras
 142

(Rosendo) and Daina Aras (Daina) for Teofilo. Respondents prayed that their
manifestation be considered for the purpose of determining the proper parties to the
case. Despite petitioners' Counter-Manifestation,[34] the RTC issued the following
Order[35] on May 15, 1999:

The Manifestation of plaintiffs and the Counter-Manifestation of defendants having

already been submitted and duly noted, the Court hereby directs that henceforth in the
denomination of this case, the names of the original parties, Eugenio Basbas and
Teofilo Aras (in Land Registration Case No. 0-177) shall still remain to be so stated as
defendants for purposes of the present case but with additional names of their
respective heirs to be included and stated immediately after each name as heirs in
substitution, namely: for Eugenio Basbas - 1) Gervacio Basbas, 2) Marcelina Basbas
Basarte, and 3) Eugenio Basbas, Jr.; and for Teofilo Aras - 1) Ismael Aras, 2) Vicente
Aras, 3) Ligaya Aras, 4) Rosendo Aras, and 5) Daina Aras.

Since from the records, only Gervacio Basbas, Eugenio Basbas, Jr. and Ismael Aras
were duly served with summons, the Branch Clerk of Court is hereby directed to serve
summons on the other heirs, namely: Marcelina Basbas Basarte, Vicente Aras, Ligaya
Aras, Rosendo Aras, and Daina Aras.

x x x x[36]

After summons were served, Vicente, Rosendo, Ligaya and Daina were, however,
declared in default for not filing any responsive pleading.[37] On February 2, 2001, the
RTC issued a Pre-Trial Order[38]where the controverted stipulations and issues to be
tried, among others, were enumerated as follows:

Controverted Stipulations:

1. That defendants are not enjoying the produce of the land because there are
period[s] wherein the fruits were subject of theft and the same is now pending at
the Municipal Trial Court of Matag-ob;
2. That [even] before the start of the original case, the original defendants referring
to the late Eugenio Basbas, Sr. and Teofilo Aras, [and] Rufino Aras were
occupying the property and they were succeeded by the respective heirs of the
deceased Eugenio Basbas, Sr. and Teofilo Aras [sic];
3. That plaintiff Teofilo Aras, Sr. has a daughter named Fedeliza Aras;

Issues

1. Whether x x x the plaintiffs are entitled to revival of judgment in the earlier [land
registration] case;
2. Whether x x x the defendants except for defendant Rufino Aras are the proper
parties in the present action;
3. Whether x x x the complaint states a cause of action;
4. Whether x x x defendants are entitled to their counterclaim, and;
5. Whether judgment on the pleadings is allowed or is tenable.[39]

Respondents subsequently filed an Omnibus Motion for Judgment on the Pleadings

and/or Summary Judgment.[40] They contended that since petitioners' Answer failed to
tender an issue, they having expressly admitted the material allegations in the
 143

complaint, particularly paragraphs 4 to 12, a judgment on the pleadings or summary

judgment is proper.

Petitioners filed an Opposition Re: Omnibus Motion for Judgment on the Pleadings
and/or Summary Judgment and Memorandum Re: Failure of Plaintiff Beata Sayson to
Appear in the Pre-trial Conference.[41] They argued that the case cannot be decided
based on the pleadings nor through summary judgment considering that the
controverted stipulations and issues defined in the Pre-Trial Order must be proven by
evidence. In addition, they questioned the Special Power of Attorney (SPA) executed
by Beata in Canada empowering her son Roberto Jr. to appear on her behalf in the pre-
trial conference. They argued that since said SPA has not been authenticated by a
Philippine Consulate official, it is not sufficient authorization and hence, Beata cannot
be considered to have attended the pre-trial conference. The case must, therefore, be
dismissed insofar as she is concerned.

Ruling of the Regional Trial Court

In resolving respondents' Omnibus Motion for Judgment on the Pleadings and/or

Summary Judgment, the RTC found that petitioners' Answer does not essentially
tender an issue since the material allegations of the Complaint were admitted. Hence,
said court issued an Order[42] dated May 21, 2001, the dispositive portion of which
reads:

Wherefore, finding merit in the motion, judgment is hereby rendered for and in favor of
the plaintiffs and against the defendants ordering the revival of the decision of the
Court of Appeals promulgated on July 24, 1985 affirming the decree of registration of
this Court in the decision of the Land Registration Case No. 0-177 dated March 22,
1979, and of the final Order of this Court dated September 13, 1989 and upon finality
of this Order, ordering the issuance of Writ of Possession for the lot made subject of
the decision. Without pronouncement as to costs.

SO ORDERED.[43]

Petitioners thus filed a Notice of Appeal[44] which was approved in an Order dated June
06, 2001.[45]

Ruling of the Court of Appeals

Finding no merit in the appeal, the CA denied the same in a Decision[46] dated February
17, 2004. It noted that petitioners' Answer admitted almost all of the allegations in
respondents' complaint. Hence, the RTC committed no reversible error when it granted
respondents' Motion for Judgment on the Pleadings and/or Summary Judgment. The
appellate court likewise found untenable the issue as regards the failure of the
complaint to state a cause of action. To the appellate court, petitioners' refusal to
vacate the subject property despite the final and executory Decision of the CA in the
land registration case and the September 13, 1989 Order of the RTC for them to
vacate the same, clearly support respondents' cause of action against them. Also
contrary to petitioners' posture, the September 13, 1989 Order is a final order as it
finally disposed of the controversy between the parties in the land registration case.
The CA likewise found the SPA executed by Beata in favor of Roberto Jr. as valid,
hence, she was duly represented during the pre-trial conference. The dispositive
portion of said CA Decision reads:
 144

WHEREFORE, premises considered, the present appeal is DENIED. The May 21, 2001
Decision of the Regional Trial Court of Ormoc City, Branch 35 is AFFIRMED.

SO ORDERED.[47]

Their Motion for Reconsideration[48] having been denied in a Resolution[49] dated April
19, 2006, petitioners are now before this Court through the present Petition for Review
on Certiorari.

Issues

Petitioners impute upon the CA the following errors:

1. The Honorable Court of Appeals clearly committed serious errors of law in its
decision and Resolution dated February 17, 2004 and April 19, 2006 when it affirmed
the Order of the Regional Trial Court dated May 21, 2001 and declared that no
reversible error was committed by the Regional Trial Court of Ormoc City in granting
respondents' motion for judgment on the pleadings and/or summary judgment;

2. The Honorable Court of Appeals clearly committed serious errors of law in its
Decision and Resolution dated February 17, 2004 and April 19, 2006 when it affirmed
the Order of the Regional Trial Court of Ormoc City dated May 21, 2001 and declared
that petitioners' argument that respondents' complaint failed to state a cause of action
has no merit.

3. The Honorable Court of Appeals clearly committed serious errors of law when it
affirmed the Order of the Regional Trial Court of Ormoc City which ordered the revival
of the Judgment of this Court of Appeals in CA-G.R. No. 66541 entitled Beata Sayson
and Roberto Sayson vs. Eugenio Basbas, et al., despite the fact that this was not the
judgment sought to be revived in Civil Case No. 3312-0;

4. The Honorable Court of Appeals clearly committed serious errors of law in ruling
that the duly notarized Special Power of Attorney in favor of Roberto Sayson[,] Jr. is
valid and the latter is authorized to represent his mother, Beata Sayson[,] which is
contrary to the ruling in the case of ANGELITA LOPEZ, represented by PRISCILLA L. TY
vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF QUEZON CITY x x x (G.R. No.
77008, December 29, 1987).[50]

The Parties' Arguments

Petitioners insist that a judgment on the pleadings or a summary judgment

is not proper in this case since the controverted stipulations and the first three issues
enumerated in the pre-trial order involve facts which must be threshed out during
trial. They also claim that the Complaint for Revival of Judgment states no cause of
action because the September 13, 1989 Order which it sought to revive is not the
"judgment" contemplated under Section 6, Rule 39 of the Rules of Court and,
therefore, cannot be the subject of such an action. Moreover, they argue that the CA
Decision in the land registration case should not have been revived as same was not
prayed for in the Complaint for Revival of Judgment. Lastly, petitioners assail the SPA
which authorized Roberto Jr. to represent his mother, Beata, during the pre-trial
conference, it not having been authenticated by a Philippine consulate officer in
Canada where it was executed. Citing Lopez v. Court of Appeals,[51] they contend that
said document cannot be admitted in evidence and hence, Beata was not duly
 145

represented during said pre-trial conference. The case, therefore, should have been
dismissed insofar as she is concerned.

For their part, respondents point out that the RTC's basis in granting the Motion for
Judgment on the Pleadings and/or Summary Judgment was petitioners' admission of
practically all the material allegations in the complaint. They aver that Section 1, Rule
34 of the Rules of Court clearly provides that where an answer fails to tender an issue
or otherwise admits the material allegations of the adverse party's pleading, the court
may, on motion of that party, direct judgment on the pleadings. Also, the test for a
motion for summary judgment is whether the pleadings, affidavits or exhibits in
support of the motion are sufficient to overcome the opposing papers and to justify a
finding as a matter of law that there is no defense to the action or the claim is clearly
meritorious. And since, as found by the CA, petitioners' Answer did not tender an issue
and that there is no defense to the action, the grant of the Motion for Judgment on the
Pleadings and/or Summary Judgment was appropriate. Respondents likewise contend
that if their prayer in the Complaint is taken in its proper context, it can be deduced
that what they were really seeking is the implementation of the CA Decision dated July
24, 1985 and the orders ancillary thereto. With respect to the SPA, they submit that
the law does not require that a power of attorney be notarized. Moreover, Section 4,
Rule 18 of the Rules of Court simply requires that a representative appear fully
authorized "in writing". It does not specify a particular form of authority.

Our Ruling

There is no merit in the petition.

I. The instant case is proper for the rendition of a summary judgment.

Petitioners principally assail the CA's affirmance of the RTC's Order granting
respondents' Motion for Judgment on the Pleadings and/or Summary Judgment.

In Tan v. De la Vega,[52] citing Narra Integrated Corporation v. Court of Appeals,[53] the

court distinguished summary judgment from judgment on the pleadings, viz:

The existence or appearance of ostensible issues in the pleadings, on the one hand,
and their sham or fictitious character, on the other, are what distinguish a proper case
for summary judgment from one for a judgment on the pleadings. In a proper case for
judgment on the pleadings, there is no ostensible issue at all because of the failure of
the defending party's answer to raise an issue. On the other hand, in the case of a
summary judgment, issues apparently exist - i.e. facts are asserted in the complaint
regarding which there is as yet no admission, disavowal or qualification; or specific
denials or affirmative defenses are in truth set out in the answer - but the issues thus
arising from the pleadings are sham, fictitious or not genuine, as shown by affidavits,
depositions, or admissions. x x x.

Simply stated, what distinguishes a judgment on the pleadings from a summary

judgment is the presence of issues in the Answer to the Complaint. When the Answer
fails to tender any issue, that is, if it does not deny the material allegations in the
complaint or admits said material allegations of the adverse party's pleadings by
admitting the truthfulness thereof and/or omitting to deal with them at all, a judgment
on the pleadings is appropriate.[54] On the other hand, when the Answer specifically
denies the material averments of the complaint or asserts affirmative defenses, or in
other words raises an issue, a summary judgment is proper provided that the issue
raised is not genuine. "A `genuine issue' means an issue of fact which calls for the
 146

presentation of evidence, as distinguished from an issue which is fictitious or contrived

or which does not constitute a genuine issue for trial."[55]

a) Judgment on the pleadings is not proper

because petitioners' Answer tendered issues.

In this case, we note that while petitioners' Answer to respondents' Complaint

practically admitted all the material allegations therein, it nevertheless asserts the
affirmative defenses that the action for revival of judgment is not the proper action and
that petitioners are not the proper parties. As issues obviously arise from these
affirmative defenses, a judgment on the pleadings is clearly improper in this case.

However, before we consider this case appropriate for the rendition of summary
judgment, an examination of the issues raised, that is, whether they are genuine
issues or not, should first be made.

b) The issues raised are not genuine issues,

hence rendition of summary judgment is proper.

To resolve the issues of whether a revival of judgment is the proper action and
whether respondents are the proper parties thereto, the RTC merely needed to
examine the following: 1) the RTC Order dated September 13, 1989, to determine
whether same is a judgment or final order contemplated under Section 6, Rule 39 of
the Rules of Court; and, 2) the pleadings of the parties and pertinent portions of the
records[56] showing, among others, who among the respondents were oppositors to the
land registration case, the heirs of such oppositors and the present occupants of the
property. Plainly, these issues could be readily resolved based on the facts established
by the pleadings. A full-blown trial on these issues will only entail waste of time and
resources as they are clearly not genuine issues requiring presentation of evidence.

Petitioners aver that the RTC should not have granted respondents' Motion for
Judgment on the Pleadings and/or Summary Judgment because of the controverted
stipulations and the first three issues enumerated in the Pre-trial Order, which,
according to them, require the presentation of evidence. These stipulations and issues,
however, when examined, basically boil down to questions relating to the propriety of
the action resorted to by respondents, which is revival of judgment, and to the proper
parties thereto - the same questions which we have earlier declared as not constituting
genuine issues.

In sum, this Court holds that the instant case is proper for the rendition of a summary
judgment, hence, the CA committed no error in affirming the May 21, 2001 Order of
the RTC granting respondents' Motion for Judgment on the Pleadings and/or Summary
Judgment.

II. The Complaint states a cause of action.

Petitioners contend that the complaint states no cause of action since the

September 13, 1989 Order sought to be revived is not the judgment contemplated
under Section 6, Rule 39 of the Rules of Court. They also aver that the RTC erred
when it ordered the revival not only of the September 13, 1989 Order but also of the
July 24, 1985 CA Decision, when what was prayed for in the complaint was only the
revival of the former.
 147

This Court, however, agrees with respondents that these matters have already been
sufficiently addressed by the RTC in its Order of May 9, 1997[57] and we quote with
approval, viz:

The body of the Complaint as well as the prayer mentioned about the executory
decision of the Court of Appeals promulgated on July 24, 1985 that had to be finally
implemented. So it appears to this Court that the Complaint does not alone invoke or
use as subject thereof the Order of this Court which would implement the decision or
judgment regarding the land in question. The Rules of Court referring to the execution
of judgment, particularly Rule 39, Sec. 6, provides a mechanism by which the
judgment that had not been enforced within five (5) years from the date of its entry or
from the date the said judgment has become final and executory could be enforced. In
fact, the rule states: "...judgment may be enforced by action."

So in this Complaint, what is sought is the enforcement of a judgment and the Order of
this Court dated September 13, 1989 is part of the process to enforce that judgment.
To the mind of the Court, therefore, the Complaint sufficiently states a cause of
action.[58]

III. Any perceived defect in the SPA would not serve to bar the case from
proceeding.

Anent the SPA, we find that given the particular circumstances in the case at bar, an
SPA is not even necessary such that its efficacy or the lack of it would not in any way
preclude the case from proceeding. This is because upon Roberto Sr.'s death, Roberto
Jr., in succession of his father, became a co-owner of the subject property together
with his mother, Beata. As a co-owner, he may, by himself alone, bring an action for
the recovery of the co-owned property pursuant to the well-settled principle that "in a
co-ownership, co-owners may bring actions for the recovery of co-owned property
without the necessity of joining all the other co-owners as co-plaintiffs because the suit
is presumed to have been filed for the benefit of his co-owners."[59]

While we note that the present action for revival of judgment is not an action for
recovery, the September 13, 1989 Order sought to be revived herein ordered the
petitioners, among others, to vacate the subject property pursuant to the final and
executory judgment of the CA affirming the CFI's adjudication of the same in favor of
respondents. This Order was issued after the failure to enforce the writ of execution
and alias writ of execution due to petitioners' refusal to vacate the property. To this
Court's mind, respondents' purpose in instituting the present action is not only to have
the CA Decision in the land registration case finally implemented but ultimately, to
recover possession thereof from petitioners. This action is therefore one which Roberto
Jr., as co-owner, can bring and prosecute alone, on his own behalf and on behalf of his
co-owner, Beata. Hence, a dismissal of the case with respect to Beata pursuant to
Sec. 5,[60] Rule 18 of the Rules of Court will be futile as the case could nevertheless be
continued by Roberto Jr. in behalf of the two of them.

WHEREFORE, the Petition for Review on Certiorari is DENIED and the assailed
Decision of the Court of Appeals dated February 17, 2004 and Resolution dated April
19, 2006 in CA-G.R. CV No. 72385 areAFFIRMED.

SO ORDERED.
 148

[G.R. NO. 160730 : December 10, 2004]

SISTER MA. ANGELINA M. FERNANDO, R.V.M., Petitioner, v. HON. CESAR D.

SANTAMARIA, Presiding Judge of the Regional Trial Court, National Capital
Region, Branch 145, Makati City, CHUA PING HIAN, WILLIBALDO UY,
LAUREANA P. BORRES and the REGISTER of DEEDS FOR MAKATI
CITY, Respondents.

DECISION

YNARES-SANTIAGO, J.:

This is a Petition for Review of the August 18, 2003 Decision1 of the Court of Appeals in
CA-G.R. SP No. 72787, and its November 6, 2003 Resolution2 denying petitioner's
motion for reconsideration.

The antecedent facts are as follows:

On October 13, 2000, petitioner filed a complaint3 against respondents Willibaldo Uy

(Uy), Chua Ping Hian (Chua) and the latter's agent, Laureana P. Borres (Borres). She
 149

alleged that on three separate occasions, she obtained loans from Chua in the total
amount of P5.5 million. As security for said loans, she executed a real estate mortgage
over a lot4 covered by Transfer Certificate of Title (TCT) No. 124391, registered in her
name and located at No. 1661, Evangelista St., Bangkal, Makati City. Before the third
loan could be released, she signed a deed of absolute sale conveying the lot in favor of
Chua in consideration of the amount of P3 Million5 upon the assurance of Borres that
the deed was a mere formality. On November 9, 1995, however, she learned that her
title over the property was cancelled and that a new one was issued on November 8,
1995 in the name of Chua.

Thereafter, Chua offered to sell back the property to petitioner for P10 million, which
the latter accepted. However, on December 7, 1995, petitioner came to know that
Chua sold the subject lot for P7 Million to Uy, to whom a new transfer certificate of title
was issued by the Makati Register of Deeds.

Petitioner filed a complaint on the following causes of action: (1) annulment of the
deeds of absolute sale over the subject lot in favor of Chua and Uy and the cancellation
of the TCT issued in the name of the latter; (2) recovery from Borres of the amount of
P200,000.00 which she allegedly gave as payment of the real property taxes of the lot
as well as the amount of P120,000.00 which Borres unlawfully deducted from her third
loan; and (3) recovery of damages against all respondents.

Chua filed a motion to dismiss6 on the ground that petitioner's action which is founded
on fraud is barred by prescription. In their Answer,7 Uy and Borres contended, among
others, that petitioner's cause of action, if any, has been waived or abandoned.

On July 24, 2001 the trial court dismissed the complaint against all the respondents on
the grounds of prescription, ratification and abandonment of cause of action. It held
that petitioner ratified Chua's act of selling the lot to Uy by acknowledging that the
latter is now the owner of the lot in her letter dated December 19, 1995 offering to
repurchase the same and to pay the incidental expenses of the sale. The letter reads -

Mr. Willie Uy
Quezon City
Philippines

Dear Mr. Uy,

I offer to buy back the property at 1661 Evangelista St., Bangkal, Makati City, M.M.
which once belonged to me and my family at thirteen million (P13,000,000.00) pesos
and I will pay on or before January 22, 1996.

I agree to shoulder all expenses after I buy the said property like the Capital Gains Tax
and others.

My request is to include in the Deed of Sale all necessary documents such as all
receipts etc., and the cancelled Title under my name for keep sake.

Thank you.

Very sincerely yours,

Ma. Angelina M. Fernando8

 150

On October 25, 2001, the trial court modified its order dated July 24, 2001 by
reinstating the complaint insofar as the action for recovery of sum of money against
Borres is concerned. Thus -

Consequently, the Order dated 24 July 2001 is therefore MODIFIED, as to the dismissal
of the complaint against the defendant Borres is concerned, and the complaint against
said defendant is reinstated. Defendant Borres is given a new fifteen (15) day' period
from receipt of a copy of this Order, through counsel, within which to file her Answer to
the complaint, particularly as to plaintiff's cause of action stated in paragraphs 16 to
19 thereof.

The Order of dismissal of the complaint against Chua and Uy still stands.

SO ORDERED. (Emphasis supplied)9

On November 16, 2001, petitioner filed a notice of appeal10 questioning the July 24,
2001 and October 25, 2001 orders of the trial court.

Chua filed a motion to dismiss11 petitioner's appeal for failure to file a record on appeal
within the required period. On August 19, 2002, the trial court granted the motion,
thus -

PREMISES CONSIDERED, the motion to dismiss filed by defendant Chua is GRANTED

for the reasons aforementioned. Necessarily, the motion for reconsideration filed by
plaintiff dated March 25, 2002 is DENIED for lack of merit. However, the motion for
execution filed by defendant Uy dated April 15, 2002 is not to be acted upon until
finality of this Order. On the other hand, the motion of defendant Borres to have the
same scheduled for pre-trial conference is GRANTED and the same is scheduled on
September 16, 2002 at 8:30 a.m. Notify the plaintiff and defendant Borres of this
assignment immediately as well as their respective counsel.

SO ORDERED.12

Petitioner filed a petition for certiorari with the Court of Appeals contending that her
complaint seeks to hold all respondents solidarily liable for the fraudulent conveyance
of her property. She claimed that the trial court cannot render several judgment and
separate the liability of Borres with that of her co-respondents. As such, appeal from
the decision of the trial court can be perfected by the filing of a notice of appeal within
15 days from receipt of the questioned order without need of submitting a record on
appeal.

On August 18, 2003, the Court of Appeals dismissed the petition holding that the trial
court validly rendered several judgment because the liability of Borres in petitioner's
third cause of action is distinct from the liability of the other respondents. To perfect an
appeal, the Court of Appeals ruled that petitioner must file a record on appeal in
addition to the notice of appeal within 30 days from notice of the assailed order
pursuant to Section 2(a) and 3, Rule 41 of the Revised Rules of Civil Procedure. The
dispositive portion of the decision, states -

IN VIEW OF ALL THE FOREGOING, we find that the respondent judge did not commit
grave abuse of discretion in issuing the Order dated 19 August 2002. Accordingly, for
lack or merit, the instant petition is hereby DISMISSED and the assailed Order is
hereby AFFIRMED.
 151

SO ORDERED.13

On November 6, 2003, petitioner's motion for reconsideration was denied. Hence, the
instant petition.

The issue for resolution is whether or not petitioner was able to perfect an appeal
within the required period.

Section 4, Rule 36 of the Revised Rules of Civil Procedure provides -

SEC. 4. Several judgments. In an action against several defendants, the court may,
when a several judgment is proper, render judgment against one or more of them,
leaving the action to proceed against the others.

A several judgment is proper 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.14

In the instant case, the trial court correctly applied the foregoing provision because the
complaint was filed against several defendants with respect to whom, rendition of
several judgment is proper. Pertinent portion of petitioner's complaint reads -

As Third Cause of Action

17. Defendant BORRES did not comply with her undertaking to pay the real property
taxes on the aforementioned property for the year 1995 - the same having been
actually paid by MONTE DE PIEDAD & SAVINGS BANK (later renamed KEPPEL MONTE
BANK), the administrator of the said property for plaintiff - for which she received the
sum of ONE HUNDRED TWENTY THOUSAND PESOS (P120,000.00).

18. Furthermore, said defendant BORRES unlawfully deducted the sum of TWO
HUNDRED THOUSAND PESOS (P200,000.00) from the third loan obtained by plaintiff
from defendant CHUA.

19. Plaintiff is entitled to recover the aforesaid sums from defendant BORRES with
interest.

Prayer

c. that thereafter, judgment be rendered in favor of plaintiff and against the

defendants:

on the first cause of action, declaring the Deed of Absolute Sale (Annex "B") null and
void and of no effect whatsoever, and as a result thereof, directing defendant RD
[Register of Deeds] to cancel Transfer Certificate of Title No. 203326 (Annex "C")
which was issued in the name of defendant CHUA pursuant thereto;

on the second cause of action, directing defendant RD similarly to cancel Transfer

Certificate of Title No. 203771 (Annex "E") issued in the name of defendant Uy;

on the third cause of action, ordering defendant BORRES to return to plaintiff

the sums of P120,000.00 and P200,000.00 wrongfully obtained by her from
 152

the latter, with interest at the legal rate from the filing of the instant case
until fully paid; and

on the fourth cause of action, ordering defendants, except defendant RD, jointly and
severally, to pay plaintiff:

moral damages in the amount of not less than P1,000,000.00

the sum of P500,000.00 as and for attorney's fees and expenses of litigation.

the sum of P100,000.00 as exemplary or corrective damages;

and ordering defendants, except defendant RD, jointly and severally, to pay the costs
of suit. (Emphasis, supplied)15

It is clear that the third cause of action for payment of the amounts of P200,000.00
and P120,000.00 is directed only against Borres to the exclusion of Uy and Chua.
There is no dispute that Chua, through Borres, granted loans to petitioner secured by a
mortgage on the subject lot. The issues of whether or not Borres should reimburse the
amount of P120,000.00 allegedly received from petitioner for payment real estate
taxes of the lot, and the P200,000.00 purportedly deducted by Borres from petitioner's
third loan, are distinct from and independent of the question of whether petitioner
signed the deed of absolute sale through the misrepresentation of respondents.
Otherwise stated, even if the trial court debunk petitioner's claim that respondents
(including Borres) connived in defrauding her to convey the property, the action
against Borres for sum of money will still subsist because it is based on issues which
has nothing to do with the issue of fraud, i.e., whether Borres received the amount of
P120,000.00 and whether she has the obligation to pay the real estate taxes of the
mortgaged lot. As to the amount of P200,000.00 the question is the validity of the
deduction of said amount from the third loan obtained by petitioner. The cause of
action for collection of sum of money against Borres can thus proceed independently of
the dismissal of the action to hold her solidarily liable with Chua and Uy for the alleged
fraudulent conveyance of the lot (first, second and fourth causes of action of the
complaint). As admitted by petitioner in her motion for reconsideration of the July 24,
2001 Order, the issue against Borres is one for misappropriation of the amounts
sought to be recovered.

In Roman Catholic Archbishop of Manila v. Court of Appeals,16 which was cited by

petitioner, private respondent-lessees withhold rental payments to petitioner-lessor in
order to force the latter to make adjustments or correction on the area of the leased
lot alleged to be encroached upon by the fence erected on the adjacent lot. The issues
presented before the trial court were: (1) the existence of a right to compel correction
or adjustment the alleged encroached portion; (2) the validity of petitioner-lessor's
claim for non-payment of rentals; and (3) the propriety of compelling petitioner-lessor
to sell to the subject lot to respondent-lessees. Separately resolving the issues in a
motion to dismiss and judgment on the pleadings, the trial court ruled that private
respondents-lessees cannot compel petitioner-lessor to sell the lot and that the former
should pay rental arrearages to the latter. The same issues were raised before the
Court of Appeals, except for the existence of private respondents-lessees' right to
compel adjustment of the alleged encroachment which was not yet resolved by the
trial court. The Court of Appeals held that the case is not one where multiple appeals
can be taken, hence a notice of appeal is sufficient and a record on appeal is not
required to perfect an appeal, thus -
 153

The disputes in the case below for specific performance have arisen from the demand
to make adjustments on the property where the adjacent owner is alleged to have
usurped a part thereof, the exercise of the right of pre-emption and the payment of
rental arrearages. A ruling on the issue of encroachment will perforce be determinative
of the issue of unpaid rentals. These two points do not arise from two or more causes
of action, but from the same cause of action. Hence, this suit does not require multiple
appeals. There is no ground for the splitting of appeals in this case, even if it involves
an Order granting (and denying) a motion to dismiss and a Partial Judgment granting a
motion for judgment on the pleadings. The subject matter covered in the Order and in
the Partial Judgment pertain to the same lessor-lessee relationship, lease contract and
parcel of land. Splitting appeals in the instant case would, in effect, be violative of the
rule against multiplicity of appeals.

The conclusion is irresistible that since a case has not been made out for multiple
appeals, a record on appeal is unnecessary to perfect the appeal.17

In the said cited case, the issue of encroachment and the area thereof, if there is any,
will determine the propriety of awarding back rentals as well as the basis of the
computation of rental arrearages on a per square meter basis. The trial court cannot
validly render decision on the amount of arrearages without resolving first the question
on encroachment. Hence, no several judgments can be rendered and no multiple
appeals can be made in the said case because the issues arose from a single cause of
action, i.e., to compel correction or adjustment of the encroached area. Accordingly,
the Court affirmed the decision of the Court of Appeals, holding among others, that the
trial court erred in rendering partial judgment on the rental arrearages because the
averments and available evidence tendered a valid issue which could not be resolved
merely on the pleadings.

The doctrine laid down in Roman Catholic Archbishop of Manila v. Court of Appeals, is
not applicable to the instant case. Petitioner's cause of action against Borres for
collection of sum of money is clearly severable from her action against the other
respondents. Thus, rendition of several judgment is proper.

Sections 2(a), 3 and 13 of Rule 41 of the Revised Rules of Civil Procedure provides'

SEC. 2. Modes of appeal.'

(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall be
required except in special proceedings and other cases of multiple or separate
appeals where the law or these Rules so require. In such cases, the record on
appeal shall be filed and served in like manner. (Emphasis, supplied)

SEC. 3. Period of ordinary appeal, appeal in habeas corpus 'The appeal shall be taken
within fifteen (15) days from notice of the judgment or final order appealed from.
Where a record on appeal is required, the appellant shall file a notice of appeal and a
record on appeal within thirty (30) days from notice of the judgment or final order.
(Emphasis, supplied)

SEC. 13. Dismissal of appeal. Prior to the transmittal of the original record or the
record on appeal to the appellate court, the trial court may motu propio or on motion
to dismiss the appeal for having been taken out of time, or for non-payment of the
 154

docket and other lawful fees within the reglementary period. (As amended by A.M. No.
00-2-10-SC, May 21, 2000).

The rationale for requiring the filing of a record on appeal in cases where several
judgment is rendered is to enable the appellate court to decide the appeal without the
original record which should remain with the court a quo pending disposal of the case
with respect to the other defendants.18

Under Section 2(a) in relation to Section 3, of Rule 41, petitioner is required to file a
record on appeal within thirty days from November 15, 2001,19 her date of receipt of
the October 25, 2001 order. Considering that no record on appeal was filed, the Court
of Appeals correctly sustained the order of the trial court dismissing her appeal for
failure to perfect the same within the reglementary period. A fundamental precept is
that the reglementary periods under the Rules are to be strictly observed for being
considered indispensable interdictions against needless delays and an orderly discharge
of judicial business. The strict compliance with such periods has more than once been
held to be imperative, particularly and most significantly in respect to the perfection of
appeals. Upon expiration of the period without an appeal having been perfected, the
assailed order or decision becomes final and executory and the court loses all
jurisdiction over the case.20

While it is true that litigation is not a game of technicalities, it is equally true that every
case must be prosecuted in accordance with the prescribed procedure to insure an
orderly and speedy administration of justice.21 In instances where we applied a liberal
interpretation of the rules on filing a record on appeal, the parties although late, filed
the required record on appeal.22 Such, however, is not the case here because
petitioner adamantly refused to file the required record on appeal.

The right to appeal is not a natural right or a part of due process. It is merely a
statutory privilege, and may be exercised only in the manner and in accordance with
the provisions of law. The party who seeks to avail of the same must comply with the
requirements of the rules. Failing to do so, the right to appeal is lost.23

Finally, even if we brush aside the procedural flaws in the instant case, the appeal is
still dismissible because petitioner's conduct is inconsistent with her claim of fraud.
Instead of impugning the validity of the sale of the lot to Chua, petitioner accepted the
latter's offer to resell the property in the amount of P10 Million. After learning that
Chua sold the same lot to Uy, she again offered the buy the lot for P13 Million and to
shoulder the payment of all incidental expenses, thus, confirming that Uy has a valid
title over the property. What is more, petitioner filed a criminal complaint for estafa
with the Pasay City Prosecutor's Office against respondents only on October 6,
1998,24 or almost 3 years from the time she learned of the alleged fraudulent transfers
of her property. In dismissing the complaint, the City Prosecutor found petitioner to be
intelligent to understand the import and consequences of signing the deed of sale and
thus rejected her claim that she was defrauded by respondents. He also gave no
credence to her contention that Borres refused to release the 3rd loan unless she sign
the deed of sale because said deed was in fact executed on October 24, 1995, a much
later date than the release of the 3rd loan on June 29, 1995.25

WHEREFORE, in view of all the foregoing, the petition is DENIED. The August 18,
2003 Decision and the November 6, 2003 Resolution of the Court of Appeals in CA-G.R.
No. SP No. 72787, which sustained the August 19, 2002 order of the Regional Trial
Court, of Makati Branch 145 dismissing the appeal of petitioner in Civil Case No. 00-
1249 are AFFIRMED.
 155

SO ORDERED.

[A.M. NO. 09-2-19-SC : February 24, 2009]

IN RE: UNDATED LETTER OF MR. LOUIS C. BIRAOGO, PETITIONER IN

BIRAOGO V. NOGRALES AND LIMKAICHONG, G.R. No. 179120.

DECISION

PER CURIAM:

Before this Court is the Report of the Investigating Committee created under the
Resolution dated December 10, 2008, to investigate the unauthorized release of the
unpromulgated ponencia of Justice Ruben T. Reyes in the consolidated cases of
Limkaichong v. COMELEC, Villando v. COMELEC, Biraogo v. Nograles and Limkaichong,
and Paras v. Nograles, docketed as G.R. NOS. 178831-32, 179240-41, 179120 and
179132-33, respectively, to determine who are responsible for the leakage of a
confidential internal document of the En Banc.
 156

The investigating committee, composed of Mr. Justice Leonardo A. Quisumbing as

Chairperson and Mme. Justice Conchita Carpio Morales and Mr. Justice Renato C.
Corona as Members, submitted the following report:

INVESTIGATING COMMITTEE CREATED UNDER THE

EN BANC RESOLUTION DATED DECEMBER 10, 2008

MEMORANDUM FOR:

HON. REYNATO S. PUNO, Chief Justice

HON. CONSUELO YNARES-SANTIAGO, Associate Justice

HON. ANTONIO T. CARPIO, Associate Justice

HON. MA. ALICIA AUSTRIA-MARTINEZ, Associate Justice

HON. DANTE O. TINGA, Associate Justice

HON. MINITA V. CHICO-NAZARIO, Associate Justice

HON. PRESBITERO J. VELASCO, JR., Associate Justice

HON. ANTONIO EDUARDO B. NACHURA, Associate Justice

HON. TERESITA J. LEONARDO-DE CASTRO, Associate Justice

HON. ARTURO D. BRION, Associate Justice

HON. DIOSDADO M. PERALTA, Associate Justice

RE: Report on the Investigation of the Unauthorized Release of the

Unpromulgated Ponencia of Justice Ruben T. Reyes in the Consolidated Cases
of Limkaichong v. COMELEC, Villando v. COMELEC, Biraogo v. Nograles and
Limkaichong, and Paras v. Nograles, Docketed as G.R. NOS. 178831-32, 179240-
41, 179120 and 179132-33, Respectively, to Determine Who are Responsible for the
Leakage of a Confidential Internal Document of the En Banc

Respectfully submitted for the consideration of the Honorable Chief Justice and
Associate Justices of the Supreme Court the following report on the results of the
investigation of the committee created under the En Banc Resolution dated December
10, 2008.

ANTECEDENT FACTS

During its session on July 15, 2008, the Court En Banc continued its deliberations on
the draft of Justice Ruben T. Reyes in the consolidated cases of Limkaichong v.
Comelec, Villando v. Comelec, Biraogo v. Nograles and Limkaichong, and Paras v.
Nograles, docketed as G.R. NOS. 178831-32, 179240-41, 179120 and 179132-33,
respectively, (Limkaichong case) which was used by this Court as a working basis for
its deliberations. Since no one raised any further objections to the draft, the En Banc
approved it. It having been already printed on Gilbert paper, albeit a number of
Justices manifested that they were concurring "in the result," Justice Reyes
immediately circulated the ponencia during the same session.
 157

After the session and during lunch, Chief Justice Reynato S. Puno noted that seven of
the 13 Justices (excluding Justice Reyes) concurred "in the result" with the ponencia of
Justice Reyes (hereafter Gilbert copy or Justice Reyes's ponencia or ponencia or
unpromulgated ponencia). Justices Minita Chico-Nazario and Teresita Leonardo-De
Castro then informed the Chief Justice that they too wanted to concur only "in the
result." Since nine Justices, not counting the Chief Justice, would concur only "in the
result," the Justices unanimously decided to withhold the promulgation of the Gilbert
copy. It was noted that if a majority concurred only "in the result," the ponencia would
have no doctrinal value. More importantly, any decision ousting a sitting member of
the House of Representatives should spell out clearly the legal basis relied upon by the
majority for such extreme measure. Justice Antonio T. Carpio then volunteered to write
his Reflections on Justice Reyes's ponencia for discussion in the following week's En
Banc session.

During its session on July 22, 2008, the En Banc deliberated on Justice
Carpio's Reflections which had in the meantime been circulated to the members of the
Court. As a result, the En Banc unanimously decided to push through and set the date
for holding oral arguments on the Limkaichong case on August 26, 2008.

On the request of Justice Reyes, however, the Limkaichong case was included in the
agenda of July 29, 2008 where it was listed as Item No. 66. The decision to hold oral
arguments remained, however.

On December 9, 2008, Louis C. Biraogo, petitioner in Biraogo v. Nograles and

Limkaichong, G.R. No. 179120, held a press conference at the Barrio Fiesta Restaurant
in Maria Orosa Street, Ermita, Manila, and circulated to the media an undated letter
signed by him, together with what appeared to be a xerox copy of the unpromulgated
ponencia. In his letter, Biraogo insinuated that the Court, at the instance of the Chief
Justice and with the implied consent of the other Justices, unlawfully and with improper
motives withheld the promulgation of the ponencia.

Noting that the unauthorized release of a copy of the unpromulgated

ponencia infringed on the confidential internal deliberations of the Court and
constituted contempt of court, the Court, in a Resolution dated December 10, 2008,
directed

1. The creation of an Investigating Committee, chaired by Senior Associate Justice

Leonardo A. Quisumbing, with Associate Justice Consuelo Ynares-Santiago, J.,
Chairperson, Third Division and Associate Justice Antonio T. Carpio, Working
Chairperson, First Division, as Members to investigate the unauthorized release of the
unpromulgated ponencia of Justice Reyes to determine who are responsible for this
leakage of a confidential internal document of the En Banc, and to recommend to the
En Banc the appropriate actions thereon;

2. Mr. Louis C. Biraogo to SHOW CAUSE, within ten (10) days from receipt of this
Resolution, why he should not be punished for contempt for writing the undated letter
and circulating the same together with the unpromulgated ponencia of Justice Reyes.

As directed, the committee, composed of the aforementioned three senior Justices,

conducted initial hearings on December 15 and 16, 2008.

In the meantime, in compliance with the Court's above-quoted Resolution dated

December 10, 2008, Biraogo submitted to the Court his Compliance dated December
22, 2008 to which he attached the following annexes: (1) an undated photocopy of a
 158

3-page printed letter addressed to "Dear Mr. Biraogo" which purportedly was sent by a
"Concerned Employee" as Annex "A"; (2) a June 12, 2008 note handwritten on a
memo pad of Justice Reyes reading:

Re: G.R. NOS. 178831-32, etc. [the comma and "etc." are
handwritten]

Dear Colleagues,

I am circulating a revised draft of the ponencia.

(Sgd.)
RUBEN T. REYES,

together with a copy of Justice Reyes's Revised Draft ponencia for the June 17, 2008
agenda as Annex "B"; (3) a photocopy of the unpromulgated ponencia bearing the
signatures of 14 Justices as Annex "C"; and (4) a photocopy of Justice
Carpio'sReflections as Annex "D".

Justice Ynares-Santiago later inhibited herself upon motion of Justice Ruben T. Reyes
while Justice Carpio voluntarily inhibited himself. They were respectively replaced by
Justice Renato C. Corona and Justice Conchita Carpio Morales, by authority of the Chief
Justice based on seniority. Additional hearings were then held by the reconstituted
committee on January 14, 16, 19, 20, 21 and 22, 2009.

The following witnesses/resource persons were heard:

1. Armando A. Del Rosario, Court Stenographer III, Office of Associate Justice Ruben T.
Reyes

2. Rodrigo E. Manabat, Jr., PET Judicial Staff Officer II, Office of Associate Justice
Ruben T. Reyes

3. Atty. Rosendo B. Evangelista, Judicial Staff Head, Office of Associate Justice Ruben
T. Reyes

4. Associate Justice Minita V. Chico-Nazario

5. Associate Justice Antonio Eduardo B. Nachura

6. Associate Justice Teresita J. Leonardo-De Castro

7. ACA Jose Midas P. Marquez, Chief, Public Information Office

8. Ramon B. Gatdula, Executive Assistant II, Office of the Chief Justice

9. Atty. Ma. Luisa D. Villarama, Clerk of Court En Banc

10. Major Eduardo V. Escala, Chief Judicial Staff Officer, Security Division, Office of
Administrative Services

11. Atty. Felipa B. Anama, Assistant Clerk of Court

12. Willie Desamero, Records Officer III, Office of the Clerk of Court
 159

13. Glorivy Nysa Tolentino, Executive Assistant I, Office of Associate Justice Antonio
Eduardo B. Nachura

14. Onofre C. Cuento, Process Server, Office of the Clerk of Court

15. Chester George P. Del Castillo, Utility Worker, Office of Associate Justice Ruben
T. Reyes

16. Conrado B. Bayanin, Jr., Messenger, Office of Associate Justice Ruben T. Reyes

17. Fermin L. Segotier, Judicial Staff Assistant II, Office of Associate Justice Antonio
Eduardo B. Nachura

18. Retired Justice Ruben T. Reyes

SUMMARIES OF TESTIMONIES

Below are the summaries of their testimonies:

1. ARMANDO A. DEL ROSARIO, Court Stenographer III, Office of Associate Justice

Ruben T. Reyes, testified as follows:

He was in charge of circulating ponencias for the signatures of the Justices and of
forwarding signed (by all the Associate Justices who are not on leave) ponencias to the
Office of the Chief Justice (OCJ).

On July 15, 2008, after the En Banc session, he received from Justice Reyes the
original of the unpromulgated ponencia (Gilbert copy). Because he was busy at that
time, he instructed his co-employee Rodrigo Manabat, Jr. to bring the Gilbert copy to
the Office of Justice Nachura for signature and to wait for it. He instructed Manabat to
rush to Justice Nachura's office because the latter was going out for lunch. After more
than 30 minutes, Manabat returned with the Gilbert copy already signed by Justice
Nachura, who was the last to sign.1 Del Rosario then transmitted the Gilbert copy
together with the rollo, temporary rollos, and diskettes to the OCJ pursuant to
standard operating procedures for the promulgation of decisions. The documents were
received by Ramon Gatdula on the same day at around 3:00 p.m.

The following day, on July 16, 2008, at around 4:00 p.m., Justice Reyes instructed him
to retrieve the Gilbert copy and the accompanying documents and diskettes as he was
told that the promulgation of the ponencia had been placed on hold. He brought the
Gilbert copy to Justice Reyes who told him to keep it. He then placed the Gilbert copy
in a sealed envelope and placed it inside his unlocked drawer and wrote a note in his
logbook when he retrieved the Gilbert copy that its promulgation was on hold and
would be called again on July 29, 2008.2

The Gilbert copy was in his sole custody from July 16, 2008 until December 15, 2008
(when the investigating committee held its first hearing).3 He never opened the
envelope from the day he sealed it on July 16, 2008 until December 10, 2008, when
Justice Reyes told everybody in their office that the Gilbert copy had been photocopied
and leaked. He did not have any news of any leakage before then. And he also did not
photocopy the Gilbert copy. The seal placed on the envelope was still intact when he
opened it on December 10, 2008.4 Although the lawyers in their office knew that he
kept original copies of drafts in his unlocked drawer, he believed that nobody in his
office was interested in photocopying the Gilbert copy. He was solely responsible for
 160

keeping the Gilbert copy. He did not know any of the parties to the case and none of
them ever called him. And he did not know what Gatdula did after receiving the Gilbert
copy.5

The Limkaichong case was called again on July 29, 2008 as Item No. 66. The Office of
Justice Reyesreceived the En Banc agenda for the said date on July 25, 2008. Upon
receipt of the said En Banc agenda and the new item number, their office prepared a
new cover page and attached it to the Gilbert copy. The original cover page of the
Gilbert copy for the agenda of July 15, 2008 showing the case as item number 52 was
thrown away.6

On being recalled on January 20, 2009, Del Rosario further testified as follows:

On July 15, 2008 when the Justices were about to leave the En Banc session room
after the adjournment of the session, he entered the room just like the rest of the
aides.7 He carried the folders of Justice Reyes, returned them to the office, and went
back to, and waited for Justice Reyes until Justice Reyes finished lunch at the En Banc
dining room.8 The Gilbert copy was left with Justice Reyes.9 Before 1:00 p.m., after the
Justices had taken lunch,10 Justice Reyes, who was then carrying an orange envelope,
handed to him the Gilbert copy and instructed him to speed up the ponencia's signing
by Justice Nachura (who was not taking part in the oral arguments of a case scheduled
at 1:30 p.m. that day) since the latter might be leaving.11 He heard Justice Reyes say
"Ihabol mo ito' Ihabol na ipapirma kay Justice Nachura" in the presence of Judicial
Staff Head, Atty. Rosendo Evangelista, as the three of them were going down the stairs
to their office from the session room.12

He was not the one who brought the ponencia to the Office of Justice Nachura because
he gave the task to Manabat to whom he relayed the instruction.13 There were already
signatures on page 36 of the ponencia when he gave it to Manabat and only the
signature of Justice Nachura was missing.14 He pointed this to Manabat saying, "ito na
lang ang walang pirma, dalhin mo doon." Manabat obliged him.15

After a few minutes, Manabat returned to their office bearing the Gilbert copy. He went
to Atty. Evangelista, showing him that the ponencia had already been signed by Justice
Nachura. Atty. Evangelista then instructed him to have the ponencia promulgated by
delivering the same to the OCJ. He (Del Rosario) complied, personally handing the
Gilbert copy with the rollo, records and diskettes to Ramon Gatdula of the OCJ at 3:30
p.m., also of July 15, 2008.16 The ponencia stayed at the OCJ until the afternoon of the
following day, July 16, 2008.17

He was not told that the promulgation of the ponencia was on hold until the afternoon
of July 16, 2008, when Justice Reyes called him to his chambers and instructed him to
retrieve the ponencia. He also stated that someone from the OCJ called their office and
requested them to retrieve the ponencia because its promulgation was on hold. 18 At
4:00 p.m. that day, he retrieved the ponencia etc. from the OCJ19 and gave the
ponencia to Justice Reyes.20

He merely showed the ponencia to Justice Reyes who ordered him to keep it ("tabi mo
muna yan").21He then placed a note "Hold, reset July 29" in his logbook after being
informed by Atty. Evangelista of such date of resetting.22 He reiterated that he placed
the Gilbert copy in a brown envelope, sealed it with the officially issued blue and white
seal provided by the Printing Office, and placed the envelope inside his unlocked
drawer. The envelope was still sealed when he checked it on December 10, 2008.23 He
admitted that from the time he kept the Gilbert copy in his drawer until the Special En
 161

Banc meeting on December 10, 2008, he and no one else was in possession of the
Gilbert copy. But he denied that he ever opened the envelope or photocopy the Gilbert
copy. In fact, he did not mind it.24 And nobody inquired about it since July 16, 2008
until December 10, 2008.25 He likewise denied that he knew Congressman Paras or
Biraogo or that the two ever called his office.26

When asked if he could produce the envelope into which he placed the Gilbert copy, he
replied that Justice Reyes had taken it.27 He also informed that what was placed on the
face of the brown envelope was a computer print-out containing the title of the case,
the names of the ponente and the other Justices, and the manner they voted.28

When he was asked by Justice Carpio Morales whether it was possible for him to
recognize any tampering if, for instance, the envelope and the seal were replaced with
a similar envelope and blue and white seal with a similar print-out information on the
face of the envelope, he answered in the negative.29 (At that point, Justice Carpio
Morales remarked that Del Rosario, therefore, could not have been certain when he
said that the envelope remained sealed from July 16, 2008 to December 10, 2008.)30

Nobody else knew where he put the Gilbert copy in the same place as the other drafts.
It was possible for someone to take the Gilbert copy from his drawer and photocopy it
on a weekend or after office hours.31 Nobody told him to guard the Gilbert copy.32

Everybody in the office knew how to operate the xerox machine.33 He drew a sketch of
the layout of the desks inside the office of Justice Reyes, illustrating that his location
was two desks away from the table of April Candelaria, a secretary in the office, and
that the xerox machine was situated at the back of the long table of the receiving
clerks.34

He stayed in the office as long as Justice Reyes was still there but he could not say for
sure that nobody photocopied the Gilbert copy after office hours as he also went out of
the office to smoke in the nearby garden area or repair to the toilet.35

He never reported to office on Saturdays and there was one time Justice Reyes went to
office on a Saturday as he was also asked to report but he refused.36 Justice Reyes
sometimes dropped by the office on Sundays after attending services at the United
Methodist Church along Kalaw Street, as told to him by the driver.37

He also circulated copies of the Revised Draft of the decision to the other Justices but
he never received a copy of Justice Carpio's Reflections.38 He did not offer an
explanation why the Gilbert copy, which was in his possession, and the Revised Draft,
were leaked.39 No information was supplied by his officemates, friends or relatives to
help explain the leakage.40 Among his relatives working in the Court are his mother-in-
law, Jasmin P. Mateo of the OCJ, sister of former Court Administrator Ernani Pano, and
Mrs. Mateo's sibling, who works at the Hall of Justice Committee.41

He and the driver of Justice Reyes were given keys to the main door of the Office of
Justice Reyes but he could not say that only the two of them held keys to the main
door.42 April Candelaria and Atty. Ferdinand Juan asked for and got duplicates of the
key, but could not remember exactly when. Atty. Juan got a duplicate of the key
because the lawyers sometimes went out for dinner and needed to go back to the
office to retrieve their personal belongings.43

April Candelaria's secretarial functions included recording of the social activities of

Justice Reyes and delivering door-to-door papers to his chambers.44 Candelaria and the
 162

driver were in the staff of Justice Reyes since the latter's stint at the Court of Appeals,
while Atty. Juan was employed ahead of him.45

Everybody in the office knew how to operate the xerox machine because all of them
photocopied personal documents and were too ashamed to ask other officemates to do
it for them.46

When news of the leakage came out, Justice Reyes called all his legal staff and him to
a meeting. In a tone that was both angry and sad, Justice Reyes asked them if they
knew anything about the leakage.47 A meeting among Justice Reyes, Atty. Evangelista,
Manabat and him took place on December 15, 2008, before the initial hearing by the
investigating committee.48 Justice Reyes also talked to him one-on-one and asked him
if a copy of Justice Carpio's Reflections was attached to the Gilbert copy and other
documents when they were sent to the OCJ. He replied that there was none and that
he just kept the Gilbert copy in his drawer and had in fact forgotten all about it until
Justice Reyes inquired about it in December.49 He was not able to read Jarius Bondoc's
column about the leakage of the Gilbert copy (which came out in the Inquirer in
October 2008 about the Gilbert copy) nor had Justice Reyes confronted him about said
column before December 2008.50

During the initial hearing in December 15, 2008, nobody talked to him or knew that he
was testifying as he was even surprised that he was called to testify.51 When
confronted with the testimony of his officemate, Chester Del Castillo, who testified that
Justice Reyes called only one meeting, he opined that Del Castillo might not have
known about the meeting with the lawyers since Del Castillo was frequently absent.52

2. RODRIGO E. MANABAT, JR., PET Judicial Staff Employee II, Office of Associate
Justice Ruben T. Reyes, testified as follows:

He was the personal aide of Justice Reyes. On July 15, 2008, he brought the Gilbert
copy to the Office of Justice Nachura for signature upon the instruction of Del Rosario
and Atty. Evangelista.53 He gave the Gilbert copy to the receptionist and waited outside
the said office. After ten minutes, the document was returned to him.54 He then
immediately gave it to Del Rosario. It took him not more than 15 minutes to return the
document to Del Rosario.55 He averred that he did not photocopy the Gilbert copy nor
did he notice if anybody from the Office of Justice Nachura photocopied it.56 He also did
not know if Del Rosario placed the document in a sealed envelope or photocopied
it.57 After returning the Gilbert copy to Del Rosario, he went back to Justice Reyes who
asked him if Justice Nachura had already signed the ponencia. He answered yes and
told Justice Reyes that the ponencia was already with Del Rosario.58

3. ATTY. ROSENDO B. EVANGELISTA, Judicial Staff Head, Office of Associate Justice

Ruben T. Reyes, testified that as follows:

Around 1:00 p.m. on July 15, 2008, Justice Reyes instructed him to have signature
page 36 of the ponencia reprinted and circulated for signing allegedly because Justice
Minita Chico-Nazario wanted to change her qualified concurrence thereon' "in the
result" to an unqualified concurrence. He thus instructed Jean Yabut, the stenographer
in charge of finalizing drafts, to reprint page 36 of the Gilbert copy. Then he ordered
the reprinted page circulated for signatures together with the other pages of the
ponencia. He assumed that the original page 36 was discarded as it was no longer in
their files. He likewise assumed that the signatures were completed on the reprinted
page 36 as the Gilbert copy was forwarded around 3:00 p.m. to the OCJ per standard
operating procedure.59 He was not informed then by Justice Reyes or anybody that the
 163

promulgation of the Gilbert copy had been put on hold per agreement of the
Justices.60 He came to know that it was on hold only on July 17, 2008, when Del
Rosario informed him upon his arrival at the office. Because the information was
unusual and because it was his duty to make sure that signed decisions were
promulgated, he asked Justice Reyes. Justice Reyes then confirmed that the
promulgation of the ponencia was on hold.61 After that,he just assumed that the
Gilbert copy was in their office with Del Rosario who was assigned to keep such
documents. However, he did not know exactly where in his work area Del Rosario kept
it.62 He did not make a photocopy of the Gilbert copy nor did he order Del Rosario and
Manabat to make photocopies. Neither did he know how the Gilbert copy was
photocopied. He only came to know about the leakage last December 10, 2008.63

When, on January 22, 2009, he was recalled by the committee, he further testified as
follows:

He occupied the last cubicle in the lawyers' room and the xerox machine was located
outside the lawyers' room.64 It was upon the instruction of Justice Reyes that their
office reprint page 36 of the Gilbert copy and circulate it for signature. The instruction
to circulate the reprinted page, which was circulated together with the other pages of
the Gilbert copy, was given by him to either Manabat or Del Rosario.65 He saw the
original page 36 where Justice Chico-Nazario (supposedly) wrote the phrase "in the
result" on top of her signature.66 Aside from him, Court Attorney VI Czar Calabazaron,
who principally researched on the case, also saw the qualification in Justice Chico-
Nazario's signature while the Gilbert copy lay on top of Justice Reyes's coffee table
inside his chambers. He recalled thatat about 12:30 p.m. or before 1:00 p.m. right
after the En Banc session on July 15, 2008, Justice Reyes called the him and Atty.
Calabazaron to his chambers.67 In that meeting, Justice Reyes phoned Justice Chico-
Nazario after noticing that Justice Chico-Nazario's signature bore the notation "in the
result."68 He, however, did not hear what they talked about since the less-than-five-
minute phone conversation was inaudible, even though he was just approximately one
meter away.69 Justice Reyes thereafter instructed him to reprint the second signature
page (page 36). He assumed from the context of the instruction that it was due to the
change in Justice Chico-Nazario's concurrence, without asking Justice Reyes the reason
therefor.70 He then directed the stenographer to, as she did, reprint the second
signature page, page 36, which was brought in to Justice Reyes in his chambers.71

He attended the oral arguments on a case scheduled at 1:30 p.m. on that day (July
15, 2008) and arrived at the session hall before that time.72 As far as he could recall,
he went down to the Office of Justice Reyes about 3:00 p.m. to retrieve a material
needed for the oral arguments. He denied having testified that he went down
purposely to check if the ponencia had been circulated and the second signature page
signed anew and to make sure that the ponencia had already been transmitted to the
OCJ.73 When confronted with the transcript of stenographic notes, he maintained that it
was part of his duties to see to it that every ponencia of Justice Reyes was
promulgated.74 He was sure that he went down to their office at around 3:30 p.m.,
although he could not recall his purpose for doing so. It was probably to get some
materials related to the oral arguments, and that it just so happened that Del Rosario
saw him and informed him that the Gilbert copy had already been transmitted to the
OCJ.75

When asked as to the whereabouts of the original signature page 36, he surmised that
it must have been shredded since it was not made part of the official documents
submitted to the OCJ.76 While he searched for it in his cubicle, it could no longer be
located.77 He did not inquire from Justice Reyes or from Del Rosario who also had
 164

access to that page, because he assumed that it could not be located since what was
submitted to the OCJ was the one where Justice Chico-Nazario's concurrence was no
longer qualified by the phrase "in the result."78 As he was attending the oral
arguments, he had no opportunity to see the reprinted signature page 36 with the
affixed signatures prior to the transmittal to the OCJ.79

He came to know that the Gilbert copy was retrieved on July 16, 2008.80 It was Del
Rosario who informed him on July 17, 2008 that the promulgation of the ponencia was
on hold and was returned to their office.81 Justice Reyes did not advise them earlier
that the promulgation was on hold.82 After learning about it, he inquired from Justice
Reyes who confirmed that the promulgation was indeed on hold. He never asked for
the reason even though that was their first "on hold" incident because he thought that
the case would be called again at another session.83 He read the newspaper reports
about the unpromulgated ponencia but did not validate them with Justice Reyes.84

He assumed that Del Rosario, being the custodian, kept the Gilbert copy in their
office.85 Their office reprinted the second signature page 36 of the Gilbert copy.86 When
shown page 36 of the Gilbert copy by the committee, he assumed that it was the
reprinted page since Justice Chico-Nazario's signature no longer contained any
qualification.87 He stated that it was the practice of their office to photocopy drafts
signed by Justice Reyes and to furnish the other Justices with advance copies for their
review before the session. Only such drafts were photocopied. Ponencias, which had
already been signed by the other Justices and printed on Gilbert paper, were never
photocopied. Del Rosario only logged them in his logbook and prepared soft copies for
submission to the Division Chair or the Chief Justice.88 He assured the committee that
this practice was 100% complied with despite the fact that he was not one of those
assigned to photocopy, but later yielded to given situations by Justice Carpio Morales.89

When directed to compare the front page of the photocopy Biraogo submitted as Annex
"C" to his Compliance to the Show Cause Order with the original Gilbert copy submitted
to the committee by Justice Reyes, Atty. Evangelista noticed the difference in the dates
of the agenda. He noted thatBiraogo's copy, which was the copy allegedly leaked to
him, bore the agenda date "July 15, 2008," while the Gilbert copy submitted by Justice
Reyes to the committee bore the agenda date "July 29, 2008." He also noted that
the item numbers were also different because the Limkaichong case was listed as Item
No. 52 in the photocopy submitted by Biraogo, whereas in the Gilbert copy, the case
was listed as Item No. 66.90 To him, it was probable that Biraogo got his copy from
another source but it was not probable that Biraogo photocopied a copy in the office.

Only a few persons were authorized to operate the xerox machine in their office,
namely, Conrado Bayanin, Jr., Armando Del Rosario, Chester Del Castillo, a certain
Leonard and a certain Ramon.91 He could not recall who among the five had been
directed to photocopy the July 15, 2008 draft.92 He ventured a guess that the top page
of the Gilbert copy might have been reprinted but could not impute any motive to any
person.93 Even if he was the staff head, he was not privy to the preparation of the first
page nor of the top cover bearing the date "July 29, 2008" copy.94

Finally, he manifested that from the time the Gilbert copy was signed by 14 Justices
until December 15, 2008, he did not acquire exclusive control or possession of the
Gilbert copy because Del Rosario was the custodian thereof.95 He reiterated that he did
not know where, exactly, Del Rosario kept the documents. He admitted that he was
remiss in his duties as staff head for not knowing.96 It was their practice not to lock
drawers.97 He was aware that Justice Reyes eventually prepared another draft of a
ponencia changing his position in the Limkaichong case because he helped in the
 165

research in November 2008.98 He never consulted the Gilbert copy because he had a
softcopy thereof in his computer.99 He did not ask why Justice Reyes was departing
from his original position.100 He denied that he knew Biraogo, Limkaichong, Jerome
Paras, Olive Paras or any party to the case.101

He winded up his testimony by manifesting that the investigation was an experience

that he hoped would not happen again and that he would not have to undergo
again.102

4. ASSOCIATE JUSTICE MINITA V. CHICO-NAZARIO testified as follows:

She signed the Gilbert copy only once, in the En Banc conference room before going to
the En Banc dining hall.103 Justice Reyes was beside her, looking on, when she affixed
her signature. Immediately after signing, she returned the Gilbert copy to Justice
Reyes who circulated it for the signatures of the other Justices. She remembered
that Justice Reyes was holding the document even when the Justices were already at
the dining hall. She did not photocopy the ponencia nor was there any opportunity for
her to do so as there was only one Gilbert copy and the only time she held it was when
she affixed her signature. She added that her concurrence to the ponencia was without
qualification but when it was noted during lunch that most of the Justices had simply
concurred "in the result," she and Justice Teresita Leonardo-De Castro signified their
intention to qualify their concurrence and concur likewise only "in the
result."104 However, she was no longer able to indicate the change on the document as
she and the other Justices had decided to put on hold the promulgation of the decision
until after holding oral arguments on the Limkaichong case. No reprinted signature
page was ever sent to her office for her signature and she did not affix her signature
on any other copy of the ponencia. She was not the last to sign the ponencia.105

5. ASSOCIATE JUSTICE TERESITA J. LEONARDO-DE CASTRO testified as follows:

She signed the Gilbert copy right after the En Banc session and Justice Reyes was right
beside her when she signed the ponencia.106 No reprinted signature page 36 was ever
sent to her office for signature and she did not affix her signature on any other copy of
the ponencia. She did not photocopy the ponencia and there could have been no
opportunity to do so right after she signed it.107

6. ASSOCIATE JUSTICE ANTONIO EDUARDO B. NACHURA testified as follows:

He believed that he signed the ponencia in the En Banc conference room just before he
went to the En Banc dining hall for lunch. He believed he was never sent a reprinted
signature page. He either returned the ponencia to Justice Reyes right after signing it
or passed it on to the other Justices for them to sign. He could not recall if he was the
last to sign the ponencia. Asked whether he leaked the decision, Justice Nachura
replied that he did not. Nor did he order any of his staff to photocopy it. In fact, there
was no opportunity to photocopy the ponencia as he was not in custody
thereof.108Although he knew the husband of one of the petitioners, Olivia Paras, neither
she nor her husband ever asked for a copy of the ponencia.109

7. ASSISTANT COURT ADMINISTRATOR JOSE MIDAS P. MARQUEZ, Chief, Public

Information Office (PIO), testified as follows:

The copy of Biraogo's undated letter with the attached copy of the unpromulgated
ponencia of Justice Reyes, which he furnished the En Banc, came from a member of
the media. Around 3:00 p.m. on December 9, 2008, a reporter called him on the
 166

phone, asking if he would like to give a statement because Biraogo was going to hold a
press conference about the Limkaichong case later that day at Barrio Fiesta
Restaurant, in front of the Court of Appeals. He requested the reporter to inform him of
what was going to be taken up during the press conference. The reporter went to his
office around 5:00 p.m. the same day, and furnished him a copy of Biraogo's undated
letter. Attached to the letter was a copy of the unpromulgated ponencia. The reporter
informed him that Biraogo distributed to the media during the press conference copies
of the letter and the attachment.110

Sometime in October 2008, months before Biraogo held the press conference, Jarius
Bondoc had published a blind item column on the Limkaichong case. On November 8,
2008, another column, this time by columnist Fel Maragay, came out in the Manila
Standard. The words used in both columns were the same so he thought that there
was really an effort to report the story in the media. Knowing Jarius Bondoc to be a
respectable journalist, he met with him to clarify matters as many of the statements in
the news item were false or inaccurate. He provided Bondoc with the surrounding
circumstances on the matter so that Bondoc would have the proper context in case he
was again requested to publish the story. Bondoc offered to write about what he had
said, but he told Bondoc that there was no need because there was no truth to the
story given to the media anyway. He left it to Bondoc whether he would use the new
information if he was again asked to publish the story.111

The leak could not have come from the PIO as they were never given a copy of the
unpromulgated ponencia bearing the signatures of 14 Justices. He also did not bring
drafts from the OCJ to the PIO. It is only after a case has been promulgated that the
Clerk of Court gives the PIO copies. But in this case, the Clerk of Court did not even
have a copy as the decision had not been signed by the Chief Justice.112

8. RAMON B. GATDULA, Executive Assistant III, Office of the Chief Justice, testified
as follows:

On July 15, 2008, at 3:30 p.m., he received from Armando Del Rosario the Gilbert
copy of the ponencia together with the rollos and two diskettes. He kept the Gilbert
copy in his locked cabinet overnight and gave it to the Chief Justice's secretary the
following day. In the afternoon of July 16, 2008, an employee from the Office of Justice
Reyes retrieved the Gilbert copy. He did not inquire anymore about the reason why
they were retrieving it as it was common practice for the offices of the ponentes to
retrieve drafts whenever there were corrections. When asked whether he photocopied
the ponencia, Gatdula said that he does not photocopy the decisions he receives. Their
office also never photocopies decisions. They forward such decisions straight to the
Clerk of Court for promulgation and they receive copies thereof only after the Clerk of
Court has affixed her signature thereon and indicated the date of promulgation.113

9. ATTY. MA. LUISA D. VILLARAMA, the En Banc Clerk of Court, testified on the
procedure for promulgation of ponencias.

After the Chief Justice affixes his signature on a decision, the decision is brought
together with the rollo to the En Banc Clerk of Court to be logged, recorded and
checked. If the necessary requirements for promulgation are present, she signs the
decision. It is at this time that the decision is considered as promulgated. The Office of
the Clerk of Court distributes copies to the parties to the case. The date of
promulgation is then encoded in the case monitoring system and a copy of the decision
is given to the PIO.114 Decisions reaching their office usually come with the rollos
except where a particular decision is considered rush.115
 167

She denied having seen the unpromulgated ponencia of Justice Reyes and stated that
the same never reached their office during the period from July 16, 2008 to December
10, 2008.116 She and her staff only learned of the draft decision after it was circulated
by the media.117 In her office, decisions for promulgation are always brought to Verna
Albano for recording, then to her for signature.118 If Verna is absent, it is Atty. Felipa
Anama, the assistant clerk of court, who receives the ponencias and rollos.119 She
further stated that in her more than 10 years of work in the Court, she never heard
any incident of a draft ponencia being leaked except this one.120

10. MAJOR EDUARDO V. ESCALA, Chief Judicial Staff Officer of the Security Division,
Office of Administrative Services, testified as follows:

Security personnel inspect all offices everyday at 5:00 p.m.121 Security personnel used
to inspect even the offices of the Justices, but they stopped doing so since last
year.122 As far as photocopiers are concerned, security personnel only make sure that
these are unplugged after office hours.123 His office has nothing to do with the
operation of the machines.124 They always check if employees bring out papers from
the Court. But they encounter problems especially from the offices of Justices because
employees from these offices always claim that they have been allowed or instructed
by their Justice to bring papers home with them, and there is no way to check the
veracity of those claims.125 Since he assumed office on July 14, 2008, he is not aware
of any record of a leak.126 He suggested that the memory cards of the machines be
checked.127

11. ATTY. FELIPA B. ANAMA, Assistant Clerk of Court, testified as follows:

She acts as Clerk of Court in the absence of Atty. Villarama.128 Their office never
releases unpromulgated ponencias129 and they ascertain that every decision or
resolution to be promulgated is complete.130 She remembered that their office released
the Show Cause Resolution dated December 10, 2008 and had it delivered personally
to Biraogo as it was an urgent resolution.131Willie Desamero was the employee who
personally served the resolution on Biraogo.132

She indicated that it was very difficult to serve something at Biraogo's residence for by
the account of Desamero, he was stopped at the guard house and was made to wait in
the clubhouse until Biraogo was notified of his presence; and that it took Desamero
two hours to serve the December 10, 2008 resolution on Biraogo.133

She has been with the Supreme Court for 29 years and she never encountered a leak
nor did she ever issue a resolution or decision without the signature of the Chief
Justice.134

12. WILLIE DESAMERO, Records Officer III, Office of the Clerk of Court En Banc,
testified as follows:

He served the December 10, 2008 Resolution on Biraogo on December 12, 2008.135 It
was difficult to serve the Resolution. It took him six rides to get to Biraogo's
subdivision in Laguna and when he got there, he was stopped by the security guards at
the entrance of the subdivision. They asked him to wait at the clubhouse and it took
Biraogo two hours to arrive.136 When Biraogo saw him, Biraogo commented, "Ang bilis
naman"137 and "bakit ka lang naka-tricycle? Meron naman kayong sasakyan"?138 Birago
read the Resolution before he signed to receive the document.139 Biraogo arrived in a
car and had a back-up car.140 Biraogo was in his early 50s, was wearing short pants,
and had a sarcastic smile at that time.141
 168

An officemate of his had also been to Biraogo's house to serve some

Resolutions.142 While it was not his usual duty to serve court processes, Atty. Anama
and Atty. Villarama requested him to serve the resolution on Biraogo since the regular
process servers in their office were not then available and he is the only one in their
office who resides in Laguna.143 In his years of service with the Court, he knew of no
case which involved leakage of court documents.144

13. GLORIVY NYSA TOLENTINO, Executive Assistant I, Office of Associate Justice

Antonio Eduardo B. Nachura, testified as follows:

She is responsible for communications, drafts and door-to-door papers that come in at
the Office of Justice Nachura.145 She presented page 267 of her logbook, to which
Justice Reyes had earlier invited the committee's attention. According to the logbook
entry, the Gilbert copy was brought to their office on July 15, 2008 and that Justice
Nachura signed the copy. However, since it is not office practice to record the time of
receipt or release, she could not remember what time the Gilbert copy was brought to
their office for signature.146 Nonetheless, the Gilbert copy did not stay long in their
office because it was a door-to-door paper and was accordingly given preferential
treatment. Justice Nachura immediately signed the ponencia when she gave it to
him.147 However, she could not recall if Justice Nachura was the last to sign the Gilbert
copy.148 She added that their office did not have a copy of the unpromulgated ponencia
bearing the signatures of 14 Justices. They only had the advance copies circulated for
concurrence.149

14. ONOFRE C. CUENTO, Process Server, Office of the Clerk of Court En Banc,
testified as follows:

He personally served two resolutions on Biraogo at his residence last August 6, 2008,
together with driver Mateo Bihag.150 On the day he served the resolutions, they were
stopped at the guardhouse and were escorted by a barong-clad security officer to
Biraogo's house.151 They had a hard time getting to the residence of Biraogo whom he
does not personally know.152 Biraogo did not mention or send his regards to any
member of the Court.153

15. CHESTER GEORGE P. DEL CASTILLO, Utility Worker, Office of Associate Justice
Ruben T. Reyes, testified as follows:

He joined the staff of Justice Reyes in September 2007 upon the recommendation of
Court of Appeals Justice Mariano Del Castillo and Retired Justice Cancio Garcia.154

He was the most proficient in the use of the photocopiers in the office of Justice Reyes
so it was to him that the task of photocopying documents was usually given by Del
Rosario and the lawyers.155He, however, never photocopied any paper bearing the
signatures of the Justices.156 He did not handle ponencias in Gilbert paper nor ever
photocopy any ponencia in Gilbert paper.157

He usually left the office at 4:30 p.m. He sometimes saw members of the staff
photocopying papers even beyond 4:30 p.m. It was Del Rosario who often gave orders
to photocopy drafts and who was the most trusted member of the staff as
demonstrated by the fact that he could go in and out of Justice Reyes's
chambers.158 Del Rosario never left the office before Justice Reyes and he (Del Rosario)
often left late.159
 169

He had never been to Barangay Malamig although he had been to Biñan,

Laguna.160 He does not know Biraogo or his wife.161 Neither does he know Paras.162 He
did not know where Gilbert copies were kept.163 When he was asked who would leave
the office first, Justice Reyes or Del Rosario, he said he did not know. Del Rosario was
tasked to lock the main door of the office.164

The office staff knew of the leaked decision on the Limkaichong case, but the staff
remained apathetic and did not talk about it.165 The apathy was probably because the
staff thought that the matter had already been settled since Del Rosario and Atty.
Evangelista had already been interviewed.166 He was not sure if anyone from their
office was involved in the leakage.167 He was not part of the meeting called by Justice
Reyes before the start of the investigation.168 Only Atty. Evangelista, Del Rosario, and
Manabat were called to the meeting.169 He surmised that the meeting was about the
leakage.170

16. CONRADO B. BAYANIN, JR., Messenger, Office of Associate Justice Ruben T.

Reyes, who was called by the committee upon Justice Reyes's suggestion, testified as
follows:

Part of his duties in the Office of Justice Reyes was to receive and release papers and
rollos as he was seated near the door.171 It was not his duty to handle or receive
ponencias in Gilbert form.172He could not remember if he had ever received any paper
in connection with the Limkaichong case.173 While he knew how to operate the xerox
machine, just like all the other utility workers in the office,174 he had never
photocopied anything signed by the Justices, especially those on Gilbert paper.175

When asked who handled photocopies ordered by Justice Reyes, he replied that he did
not know.176He did not know and had no opinion on how the ponencia was
leaked.177 He only knew that his officemates talked about the leak,178 but he did not
know specifically what his officemates talked about.179 Before Justice Reyes's
retirement ceremony, Justice Reyes called him to his chambers and very calmly asked
him if he knew if anybody had photocopied the unpromulgated ponencia.180

17. FERMIN L. SEGOTIER, Judicial Staff Assistant II and receptionist at the Office of
Associate Justice Antonio Eduardo B. Nachura, testified as follows:

His duty is to receive communications, but only Glorivy Nysa Tolentino keeps a logbook
for the door-to-door papers that come to their office.181 He does not remember any
details pertaining to the July 15, 2008 signing of the Limkaichong Ponencia, aside from
the fact that it was to Justice Reyes's staff to whom he gave it back.182 He assumed
that it was to Del Rosario to whom he returned the Gilbert copy because in the Office
of Justice Reyes, Del Rosario was the one in charge of circulating ponencias in Gilbert
form for signature.183 He could not recall handing a Gilbert paper to Manabat.184The
ponencia stayed only for a short time (about 5 minutes) in their office because it was a
door-to-door paper. After it was signed by Justice Nachura, it was handed back to the
staff of Justice Reyes, so there was no chance for them to photocopy the
ponencia.185 It was not their standard operating procedure to leave any Gilbert paper
in their office if it could not be signed right away.186

18. RETIRED JUSTICE RUBEN T. REYES, for his part, submitted during the hearing
on January 22, 2009, a written statement entitled "Notes/Observations" (Notes)
consisting of 12 paragraphs. In his Notes, Justice Reyes stressed the following:
 170

Biraogo did not point to him as the source of the leak of the unpromulgated
ponencia;187 in Biraogo's December 22, 2008 Compliance with the Court's Show Cause
Order, Biraogo stated that his informant was allegedly a "SC concerned employee" who
left a brown envelope with a letter and some documents in his Biñan, Laguna home;
it could be seen from the attachments to Biraogo's Compliance that it was not only the
unpromulgated ponencia or Gilbert copy that was leaked but also two other confidential
documents: his Revised Draft ponencia for the June 17, 2008 agenda (attached as
Annex "B" to the Compliance) and Justice Carpio's Reflections (attached as Annex "D");
and since these other documents were circulated to all Justices, the investigation
should not only focus on the leak of the unpromulgated ponencia but also on the leak
of the two other confidential and internal documents of the Court.188

Justice Reyes also pointed out in his Notes as follows: the committee should not only
look into his office but also the offices of Justice Carpio and the other Justices. He,
however, reiterated that he had said in his media interviews that he believed that none
of the Justices themselves, much less the Chief Justice, leaked the ponencia or
authorized its leakage.

Justice Reyes pointed out that Biraogo's informant mentioned a certain Atty. Rosel,
who was allegedly a close friend and former partner of Justice Carpio. Justice Reyes
said that Atty. Rosel allegedly asked a favor from Justice Carpio before the latter wrote
his Reflections.189 Thus, he said, the committee should also question Atty. Rosel and
even Justice Carpio himself.

On why he did not lift a finger when Biraogo got hold of the decision, despite reports
regarding the leak, Justice Reyes stated that he was on a sabbatical leave with the
Mandatory Continuing Legal Education research in four States in the United States
from October 10, 2008 to November 1, 2008.

He had nothing to do with the leak and he even prepared a second draft decision
(deviating from his prior disposition) after oral arguments were held on the case.

Thus, in his Notes, he posed: "If he leaked it, why would he prepare a second different
decision?" He willingly obliged to the holding of oral arguments. He had no
commitment to anybody and had no reason to leak the unpromulgated ponencia.190 He
added, "[I]f he had a hand in the leak, why would it include Justice Carpio's Reflections
which was contrary to the unpromulgated decision?"

Justice Reyes, still in his Notes, stated that no Justice in his right mind would leak the
unpromulgated ponencia or other confidential documents, such as the Revised Draft
and Justice Carpio's Reflections.

He went on to refer to Biraogo's Compliance that the informant was purportedly "an
old hand in the Supreme Court who was accustomed to the practices of the Justices"
and had a "circle" or group in the Supreme Court. Since all his office staff, except two
stenographers, one utility worker and one messenger, were all new in the Court, then
the "old hand" referred to could not have come from his office. But if it could be proven
by evidence that one of his staff was the source of the leak, Justice Reyes argued that
only that staff should be made liable, for he had publicly declared that he did not and
would never allow nor tolerate such leakage.191

More on Justice Reyes's Notes: He suggested that Newsbreak writers Marites Vitug and
Aries Rufo be cited for contempt of court, for obtaining, without lawful authority,
confidential information and documents from the Court, officials or employees, and for
 171

writing false, malicious articles which tended to influence the investigation of the
committee and to degrade, impede and obstruct the administration of justice.192

Aside from submitting his Notes, Justice Reyes also testified as follows:

While he was first heard on January 16, 2009, after he presented a 9-paragraph
written statement, he noticed that it needed refinement and revision so he requested
for time to edit it. Hence, he submitted his above-mentioned Notes on January 22,
2009.

Justice Reyes identified the Gilbert copy, which he submitted earlier to the committee
for safekeeping, and his Notes."193 He clarified that the Compliance he was referring to
in his Notes was Biraogo's December 22, 2008 Compliance with the Court's Show
Cause Order.194

His desire to include Justice Carpio in the investigation, per number 4 of his Notes,
came about because it appeared from Biraogo's Compliance and from the alleged
informant's letter that it was not only the unpromulgated ponencia signed by 14
Justices that was leaked but also the Revised Draft ponencia and Justice Carpio's
Reflections.195 He suggested that what should be investigated was the source of the
three documents.196 Justice Quisumbing replied that the matter seemed settled
because Justice Reyes also mentioned in Paragraph No. 6 of his Notes that he believed
that none of the Justices, much less the Chief Justice, caused or authorized the
leak.197 Justice Reyes stressed that he thought it was only fair that the Committee also
call Justice Carpio to shed light on the matter in the same way that he was asked to
shed light thereon.198

Justice Carpio Morales pointed out that Justice Reyes's ponencia as signed by 14
Justices did not come into the possession of the other Justices but only of Justice
Reyes.199 She added that if logic were followed, then all of the Justices should be
investigated because copies of Justice Carpio's Reflections were circulated to all. She
declared that she was willing to be investigated and that she was volunteering to be
investigated.200 However, she pointed out that the logic of Justice Reyes was
misplaced, considering that the documents attached to Biraogo's Compliance were
allegedly received at the same time. If Biraogo received the documents at the same
time and one Justice never took hold of the ponencia as signed, said Justice could not
have made the leak to Biraogo.201

Justice Reyes went on to testify as follows: The Gilbert copy which he submitted to the
committee was given to him by Del Rosario.202 He did not photocopy the Gilbert copy
nor provide Biraogo a copy thereof or instruct any of his staff to photocopy the
same.203

The xerox copy of the Gilbert copy attached to the Compliance of Biraogo appeared to
be the same as the committee's copy because he (Justice Reyes) looked at the initials
on each page and found them to be similar.204 Justice Quisumbing thereupon invited
Justice Reyes's attention to the cover page of the Gilbert copy which had been
submitted to and in custody of the committee (committee's copy).205 Upon perusal
thereof, Justice Reyes stated that the cover page of the committee's copy did not
appear to be the same as the cover page of Biraogo's copy. He observed that the cover
page of the committee's copy showed the agenda date "July 29, 2008," and that the
Limkaichong case was listed as Item No. 66, whereas the cover page of Biraogo's copy
showed the agenda date "July 15, 2008," and that the same case was listed as Item
No. 52.206 Justice Reyes then qualified his earlier statement and said that he was only
 172

referring to those pages of the decision itself which bore his initials, when he spoke of
similarity, and said that the cover page did not bear his initials.207

Justice Corona pointed out, and Justice Reyes confirmed, that page 1 of the
committee's copy also differed from page 1 of Biraogo's copy. Justice Corona pointed
that in the committee's copy, there were asterisks after the names of Justice Azcuna
and Justice Tinga and footnotes that the two were on official leave, whereas no such
asterisks and footnotes appeared on page 1 of Biraogo's copy.208Justice Corona also
pointed out and Justice Reyes once again confirmed that there was a slight variance
between the initials on page 34 of the committee's copy and the initials on page 34 of
Biraogo's copy.209

Justice Quisumbing then posed the question whether Justice Reyes would admit that
there were at least two sources.210 At this juncture, Justice Reyes brought
out another photocopy (new copy or Justice Reyes's new copy) of the Gilbert copy to
which new copy the left top corner of the top cover was stapled a 1"x1" piece of thick
paper bearing the initials "RTR" and on the right top corner of the same cover
appeared a handwritten notation reading "Gilbert copy." Justice Reyes repeatedly
stated that his new copy was a facsimile of the committee's copy. He pointed out that
the initials on page 34 of the new copy and that of the committee's copy matched. He
concluded, however, that page 34 of Biraogo's copy was not a faithful reproduction of
the committee's copy.211 Justice Reyes avoided the question of whether he or his staff
kept more than one xerox copy of the Gilbert copy that had been signed by majority or
14 members of the Court, saying that he could not say so because he did not
personally attend to photocopying of decisions.212 He stressed that his initials on page
34 of the new copy differed from the initials appearing on page 34 of Biraogo's
copy.213 He also pointed out that in Biraogo's copy, particularly on page 3, there was a
handwritten correction superimposed over the misspelled name of Jerome Paras while
no such handwritten correction appeared on page 3 of both the committee's copy and
the new copy.214 He added that he did not know who made the handwritten correction
in Biraogo's copy and that the new copy he was presenting to the committee was
furnished to him by the committee. Said copy was allegedly the xerox copy of the
Gilbert copy.215

Justice Reyes professed that he had nothing to do with the leak as he would not leak,
authorize, allow, or tolerate any leak of his decision or revised draft. He dispelled any
pecuniary profit from such leakage, especially since he was about to retire when the
leak happened. He could not, however, say the same of his office staff since he did not
want to speculate, so he was giving the committee the broadest latitude in calling any
of his staff.216

Upon Justice Carpio Morales's interrogation, Justice Reyes stated that he found the new
copy in his files just the week before the January 22, 2009 hearing.217 Justice Carpio
Morales then invited his attention to the fact that page 1 of the new copy, like page 1
of Biraogo's copy, did not contain the footnotes and asterisks appearing in the
committee's copy. She also noted that the copy of Biraogo and the new copy presented
by Justice Reyes matched to a T.218 Justice Reyes only replied that he did not pay
particular attention nor personally attend to the photocopying.219

Justice Reyes stated that there should only be one copy of the Gilbert copy,220 but it
appeared that he supplied the committee with two apparently different copies (the
Gilbert copy and the new copy).221 Justice Reyes noted that the new copy and
Biraogo's copy did not match exactly as regards pages 3 and 34. He stressed that
there appeared on page 3 of Biraogo's copy a handwritten correction over the
 173

misspelled name of Jerome Paras while no such correction was made on the new copy.
Additionally, on page 34 of Biraogo's copy, his initial appeared to have a smudge while
on page 34 of the new copy, there was no smudge.222

When asked to explain why the new copy, which he claimed to have been photocopied
from the committee's copy, did not match the committee's copy on page 1 but
matched page 1 of Biraogo's copy, Justice Reyes offered no explanation.223 Justice
Reyes also refused to submit the new copy to the committee ("Why should I?") and
questioned the committee's request that he initial the controversial pages of the new
copy.224 Thus, the committee members decided to affix their signatures on the first five
pages of the new copy and then drew a rectangle around their signatures and the date
January 22, 2009.225 The committee then had the new copy
photocopied.226Justice Corona soon noticed that Justice Reyes was trying to
hide the new copy between his files. At that point, Justice Corona pulled out
the new copy from Justice Reyes's files. Justice Reyes then repeatedly said
that he was not submitting it to the committee.227 The committee proceeded
to discuss the other matters contained in Justice Reyes's Notes.

Justice Reyes at that point then stated that he had not withdrawn his standing motion
for inhibition against Justice Carpio Morales, to which Justice Carpio Morales replied
that she would remain impartial. Justice Carpio Morales likewise stressed that the
committee would decide according to the evidence.228

Upon being asked by the committee, Justice Reyes said that he could not recall if he
was holding the Gilbert copy after the En Banc session and while having lunch.229 He
stated that per standard arrangement, his staff would usually get his folders and bring
them to his office.230 As far as he could recall, before the Court adjourned, the
members already knew that many concurred only in the result.231 He could not recall,
however, if the Chief Justice learned about it only at the dining room.232

Justice Reyes denied having given Atty. Evangelista the instruction to reprint signature
page 36 of the Gilbert copy and stated that it must have been Atty. Evangelista's sole
decision. What Justice Reyes remembered telling Atty. Evangelista after the En Banc
session was that many concurred only "in the result" and that Justice Chico-Nazario
wanted to change her concurrence.233 Justice Carpio Morales confronted him with
certain portions of the December 15, 2008 TSN where he clearly volunteered the
information that he was the one who instructed Atty. Evangelista to reprint page 36
which is the second signature page.234 Justice Reyes replied that maybe Atty.
Evangelista was under the mistaken impression that the change of the said page
pushed through because, as it turned out, there was no qualification in the concurrence
of Justice Chico-Nazario. He also insisted that he did not volunteer the information that
he was the one who ordered the reprinting of page 36. He contended that he was in
fact questioning Atty. Evangelista when the latter said that the instruction came from
him.235

With regard to the "re-signing" by Justice Nachura,236 Justice Reyes declared that it
was difficult to speculate and rely on inaccurate recollection, especially since several
months had passed. Justice Corona replied that the testimonies could not be inaccurate
since there were entries in the logbook, showing that Justice Nachura indeed signed in
his chambers.237 Justice Reyes stated that the changing of the original signature page
36 was not carried out238 and that Atty. Evangelista's recollection of the event was
inaccurate. Justice Reyes also stated he could not recall calling Justice Chico-Nazario
on the phone after the En Banc session on July 15, 2008.239
 174

Justice Reyes stated that Del Rosario was assigned to keep and take care of the
circulated drafts and ponencias printed on Gilbert paper, and from time to time Atty.
Evangelista would have access to them since the latter was the judicial staff
head.240 Justice Reyes's staff members in October were the same until he retired on
December 18, 2008.241 Justice Reyes's impression of Biraogo's letter was that
somebody who had an axe to grind against the Chief Justice or who wanted to discredit
him could have done it.242

Justice Reyes said that he never had any personal interest in the case and argued that
the best proof of this was that he did not stick to his original decision after the case
was heard on oral arguments on August 26, 2008, just to prove that he was not
beholden to any party.243

Justice Reyes could not offer a straight answer to the question of what his undue
interest was in still trying to have the signature of all the Justices after he had taken
his lunch and to forward the Gilbert copy and the rollo etc. to the OCJ even after the
decision to put the promulgation of the ponencia on hold was arrived at, at lunchtime
of July 15, 2008. He simply dismissed the recollections of his staff and preferred to
believe Del Rosario's over those of Evangelista's or Manabat's. He insisted that he
never had the chance to talk to Del Rosario or to Atty. Evangelista right after the En
Banc session, and claimed that he never gave the instruction to bring the Gilbert copy
to the Office of Justice Nachura. He likewise insisted that the testimony of Atty.
Evangelista was incorrect and that he would rather believe Del Rosario's testimony.244

THE INVESTIGATING COMMITTEE'S FINDINGS OF FACT

From the testimonies of the witnesses, the committee finds the following facts
established.

On July 15, 2008, even after the Justices had agreed at lunchtime to withhold the
promulgation of the Gilbert copy in the Limkaichong case, Justice Reyes, under
his misimpression that Justice Nazario had "concurred in the result" and that she
would finally remove such qualification, instructed his Judicial Staff Head, Atty.
Evangelista, and Del Rosario to have the signature page 36 (where the names of
Justices Nazario, Nachura and three others appeared) reprinted and to bring the
Gilbert copy to the Office of Justice Nachura for signature as Justice Nachura, who was
not participating in the oral arguments on the case scheduled at 1:30 that afternoon,
might be going out. Jean Yabut was tasked by Atty. Evangelista to reprint the second
signature page (page 36) on Gilbert paper.

The reprinted signature page 36, together with the rest of the pages of the Gilbert
copy, was then given by Atty. Evangelista to Del Rosario. Del Rosario, in turn, gave the
Gilbert copy, together with the reprinted signature page 36, to Manabat whom he
instructed to go to the Office of Justice Nachura for him to affix his signature thereon.

Manabat immediately went to the Office of Justice Nachura and handed the Gilbert
copy to Fermin Segotier, the receptionist at Justice Nachura's office. As the Gilbert
copy was a door-to-door document, Segotier immediately gave it to Glorivy Nysa
Tolentino who recorded it in her logbook. She then brought the Gilbert copy to Justice
Nachura. When the reprinted page 36 of the Gilbert copy was brought out from Justice
Nachura's chambers and returned to Tolentino, she recorded it in her logbook that it
was already signed. The whole process took not more than five minutes. The Gilbert
copy was returned to Manabat, who had waited outside the office of Justice Nachura.
 175

Manabat then repaired to the chambers of Justice Reyes who inquired from him if
Justice Nachura had signed the reprinted page 36 to which he answered in the
affirmative. Manabat thereafter handed the Gilbert copy to Del Rosario.

When Atty. Evangelista, who was attending the oral arguments on a case scheduled
that afternoon, went down the Office of Justice Reyes at about 3:30 p.m., he and/or
Del Rosario must have eventually noticed that Justice Nazario did not, after all, qualify
her concurrence on the original signature page 36 of the Gilbert copy with the words
"in the result." Since neither Atty. Evangelistanor Del Rosario was advised by Justice
Reyes that the promulgation of the Gilbert copy was on hold, Del Rosario brought the
Gilbert copy, together with the rollo, records and diskettes to the OCJ to be
promulgated and gave it at 3:30 p.m. to Ramon Gatdula of the OCJ. Gatdula later
transmitted the Gilbert copy to the secretary of the Chief Justice.

The following day, July 16, 2008, at around 4:00 p.m., Justice Reyes called Del Rosario
to his chambers and instructed him to retrieve the Gilbert copy, etc. from the OCJ,
informing him for the first time that the promulgation of the ponencia had been put on
hold. Around that same time, the OCJ phoned the Office of Justice Reyes and told them
to retrieve the ponencia for the same reason.

Thus, Del Rosario went to the OCJ and asked for the return of the Gilbert copy. As
Gatdula had already forwarded the same to the Chief Justice's secretary for the Chief
Justice's signature, Gatdula retrieved it from the secretary. Del Rosario retrieved all
that he submitted the previous day, except the rollo which had, in the meantime, been
borrowed by Justice Carpio.

Del Rosario then brought the Gilbert copy to Justice Reyes who told him to keep it. Del
Rosario informed Atty. Evangelista the following day, July 17, 2008, that the
promulgation of the Gilbert copy was on hold. After Atty. Evangelista verified the
matter from Justice Reyes, he (Atty. Evangelista) told Del Rosario that the case would
be called again on July 29, 2008. Del Rosario made a note in his logbook to that effect.

On July 25, 2008, the Office of Justice Reyes received the En Banc agenda for July 29,
2008 where the Limkaichong case was listed as Item No. 66. A new cover page
reflecting the case as Item No. 66 was thus prepared and attached to the Gilbert copy
bearing only 14 signatures.

After the Gilbert copy was retrieved from the OCJ on July 16, 2008, it remained in the
sole custody of Del Rosario until December 15, 2008, the initial hearing conducted by
the investigating committee. The Gilbert copy remained inside his unlocked drawer, in
a brown envelope, which he had sealed with the blue and white seal used by all
Justices. He opened it only on December 10, 2008, after Justice Reyes informed his
staff that there was a leak of the ponencia.

When news of Biraogo's conduct of a press conference on December 9, 2008 bearing

on the leakage came out, Justice Reyes immediately called his legal staff and Del
Rosario to a meeting and asked them if they knew anything about the leakage. He
called for a second meeting among Atty. Evangelista, Manabat and Del Rosario on
December 15, 2008, before the hearing by the investigating committee took place in
the afternoon of that day. Justice Reyes likewise had a one-on-one talk with Del
Rosario and asked him if a copy of Justice Carpio's Reflections was attached to the
Gilbert copy and related documents when they were sent to the OCJ, to which he (Del
Rosario) answered in the negative.
 176

EVALUATION

The committee finds that the photocopying of the Gilbert copy occurred between July
15, 2008,before it was brought to the OCJ or after it was retrieved on July 16, 2008
from the OCJ, and July 25, 2008, when the Office of Justice Reyes caused the
preparation of the new cover page of the Gilbert copy to reflect that it was agendaed
as Item No. 66 in the July 29, 2008 En Banc session, because the cover page of the
photocopy in the possession of Biraogo, as well as the cover page of Justice Reyes's
new copy, still bore the agenda date "July 15, 2008" and Item No. 52.

The committee likewise finds that the leakage was intentionally done. It was not the
result of a copy being misplaced and inadvertently picked up by Biraogo or someone in
his behalf. The committee notes that none of the offices to which the Gilbert copy was
brought (OCJ and the Office of Justice Nachura) and which acquired control over it
photocopied ponencias in Gilbert form and released photocopies thereof to party
litigants. In any event, as earlier reflected, page 1 of the Gilbert copy that was sent to
the OCJ and Justice Nachura's Office and page 1 of Biraogo's photocopy differ.

To reiterate, the Gilbert copy bearing the signatures of 14 Justices was photocopied
and that a copy thereof was intentionally leaked directly or indirectly to Biraogo. As will
be discussed below, the committee FINDS that the leak came from the Office of Justice
Reyes.

It bears reiterating that the leak did not come from the OCJ even if the Gilbert copy
stayed therein from 3:30 p.m. on July 15, 2008 up to 4:00 p.m. on July 16, 2008. This
is clear from the fact thatpage 1 of the copy in Biraogo's possession differs from page 1
of the Gilbert copy which was forwarded to the OCJ. Thus, on page 1 of the Gilbert
copy which contains the names of the Justices of the Court, there appear asterisks
after the names of Justice Adolfo S. Azcuna and Justice Dante O. Tinga. These
asterisks have corresponding footnotes stating that Justice Azcuna was on official leave
per Special Order No. 510 dated July 15, 2008 and Justice Tinga was likewise on
official leave per Special Order No. 512 dated July 16, 2008. In contrast, page 1 of
Biraogo's copy and Justice Reyes's new copy, glaringly contain no such asterisks and
footnotes, which indicates that page 1 of Biraogo's copy was photocopied from page 1
of the draft prepared by Justice Reyes before it was finalized on Gilbert paper.

The leak also could not have come from the offices of the other associate justices,
contrary to Justice Reyes's insinuation. Justice Reyes insinuated that because all the
Justices were furnished with advance copies of the draft ponencia before the session of
July 15, 2008, anyone from those offices could have leaked the decision. An
examination of the copy in Biraogo's possession readily shows that every page thereof
- pages 1 to 36 - contained Justice Reyes's authenticating initials while none of the
advance copies furnished to the Justices was similarly authenticated.

Advance copies of a draft given to the justices as a working basis for deliberations are
not initialed by the justice who prepares it. And they do not contain the signature of
any of the Justices, except the one who prepared the draft, precisely because the
Justices have yet to go over it and deliberate on it. As standard procedure, it is only
after a draft decision has been adopted by the Court that it is finalized-printed on
Gilbert paper and every page thereof is authenticated by the ponente, and circulated
for signature by the other Justices.

It need not be underlined that there was no opportunity for anyone from the offices of
the Associate Justices to photocopy the ponencia as none of said offices acquired
 177

possession of the document, except the Office of Justice Reyes and the Office of Justice
Nachura. But based on testimony, the unpromulgated ponencia stayed in the Office of
Justice Nachura only for less than five minutes, which did not suffice for it to be signed
by Justice Nachura and to be photocopied. Again, and in any event, page 1 of the
photocopy in Biraogo's possession does not match the same page of the Gilbert copy.

Furthermore, except for Justice Reyes, the Associate Justices took hold of the Gilbert
copy only briefly when they signed it at the En Banc conference room. At no other time
did any of them hold the document long enough to photocopy it. Pursuant to standard
procedure, only the ponente, Justice Reyes in this case, and his staff, took custody of
the ponencia bearing the signatures of 14 Justices before it was sent to the OCJ.

But who from the Office of Justice Reyes leaked the unpromulgated ponencia? While
the evidence shows that the chain of custody could not rule out the possibility that the
Gilbert copy was photocopied by Del Rosario who had control and possession of it, and
while there is no direct evidence as to the identity of the perpetrator of the
leakage, the committee FINDS that based on the circumstantial evidence reflected
above, particularly the evident undue interest of Justice Reyes to circulate a draft
ponencia of the case soonest even before the memoranda of all the parties fell due,
and to withhold the information to Atty. Evangelista and Del Rosario that the
promulgation of the ponencia was put on hold and, instead, allow the immediate
promulgation after lunch despite his admission that the decision to hold the
promulgation was arrived at at lunchtime, it was Justice Reyes himself who leaked a
photocopy thereof.

Recall that the Court gave due course to the petition on April 8, 2008 and the first
memorandum was filed by the Office of the Solicitor General only on June 16, 2008.
The other parties, namely, Olivia Paras, Speaker Nograles, et al., and Biraogo
subsequently filed their respective memoranda only onJuly 1, 2, and 24, 2008. Even
before the En Banc session of June 10, 2008, however, Justice Reyes had already
circulated a draft decision.

Further, still later or on June 12, 2008, Justice Reyes circulated, via transmittal letter
of even date printed on his memo pad and signed by him, a Revised Draft, copy of
which transmittal letter, as well as the Revised Draft, also came into the possession of
Biraogo (Annex "B" to Biraogo's Compliance).

Furthermore, even after the Justices had, at lunchtime of July 15, 2008, unanimously
decided that the promulgation of the Gilbert copy would be put on hold - -and this was,
it bears repeating, admitted by Justice Reyes - -, Justice Reyes, after partaking lunch
at the dining room and before 1:00 p.m., instead of advising his Chief of Staff Atty.
Evangelista and Del Rosario that the promulgation was put on hold, still instructed
them to reprint the second signature page (page 36) and to have the reprinted page
immediately brought to the Office of Justice Nachura for signature; and before Justice
Reyes left for the session hall for the oral arguments of that case scheduled at 1:30
p.m. that day, Justice Reyes still followed up the case by asking Manabat if Justice
Nachura had already signed the Gilbert copy.245

When confronted with the incontrovertible evidence of his undue interest in the case
and haste in having the Gilbert copy promulgated, Justice Reyes was notably evasive.
On January 16, 2009, Justice Carpio Morales asked Justice Reyes if he would admit
that he prepared a draft of the decision even before the first memorandum was
submitted on June 16, 2008. Justice Reyes stated that he could not admit that
fact.246 Such fact is documented, however, and it would not have escaped him as the
 178

records of the Limkaichong case were with him and yet he already prepared and
caused the circulation of a draft of the decision on June 12, 2008.

Justice Reyes also gave conflicting accounts on when he gave the Gilbert copy to Del
Rosario after the En Banc session of July 15, 2008 was adjourned. During the
proceedings of the committee on December 15, 2008, Justice Reyes categorically
stated that pursuant to standard operating procedures, he gave the signed Gilbert
copy to Del Rosario after the Chief Justice noted that seven Justices had concurred "in
the result."247 It bears recalling that the Chief Justice confirmed noting such fact during
lunchtime. However, the following day, during the December 16, 2008 proceedings,
Justice Reyes implied that pursuant to standard operating procedures, his staff got his
foldersincluding the Gilbert copy right after the En Banc session. Hence, so he
reasoned, as the agreement to put on hold the promulgation of the Gilbert copy and to
hold oral arguments on the case was arrived at only after lunch which followed the
adjournment of the En Banc session, his staff did not know about such
agreement.248 But even Del Rosario, whose testimony he credits more than any of the
other members of his staff, categorically stated that Justice Reyes gave him the Gilbert
copy afterhe (Justice Reyes) had taken his lunch and while he (Del Rosario), Justice
Reyes and Atty. Evangelista were, before 1:00 p.m., on their way to Justice Reyes's
office, and that, at that instant, Justice Reyes instructed Atty. Evangelista to have the
signature page 36 reprinted and have Justice Nachura (who was not participating in
the oral arguments scheduled that afternoon) sign.

During the January 22, 2009 hearing, when asked to explain why the top cover of
the new copy which he brought with him and which he claimed to have been
photocopied from the committee's copy, did not match the top cover of the
committee's copy (or the original Gilbert copy) but matched the top cover of Biraogo's
copy, Justice Reyes offered no explanation. Neither did he account for the other
dissimilarities between page 1 of his new copy and the same page 1 of Biraogo on one
hand, and page 1 of the Gilbert copy, viz: page 1 of the new copy, like page 1 of
Biraogo's copy, does not have asterisks after the names of Justices Tinga and
Azcuna and the corresponding footnotes, which the Gilbert copy has.

Justice Reyes, despite his professed desire to bring out the truth, refused to submit
his new copy to the committee and questioned the committee's request that he place
his initials on the questioned pages of his new copy. Later, while the committee was
discussing other points in his Notes, Justice Reyes tried to hide his new copy. Justice
Corona had to pry it out of Justice Reyes's files.ςηαñrοblεš νιr†υαl lαω
lιbrαrÿ

As Justice Reyes repeatedly said that he was not submitting his new copy to the
committee ("Why should I"), the committee members were prompted to photocopy his
new copy, but only after they affixed their signatures and date (January 22, 2009) on
the first 5 pages thereof.

To the members of the committee, the foregoing proven facts and circumstances
constitute more than substantial evidence which reasonably points to Justice Reyes,
despite his protestations of innocence,249 as THE source of the leak. He must,
therefore, be held liable for GRAVE MISCONDUCT.

Effect of Justice Reyes's Retirement

The subsequent retirement of a judge or any judicial officer from the service does not
preclude the finding of any administrative liability to which he is answerable.250
 179

A case becomes moot and academic only when there is no more actual controversy
between the parties or no useful purpose can be served in passing upon the merits of
the case. The instant case is not moot and academic, despite Justice Reyes's
retirement.

Even if the most severe of administrative sanctions may no longer be imposed, there
are other penalties which may be imposed if one is later found guilty of the
administrative offenses charged, including the disqualification to hold any
government office and the forfeiture of benefits.251

The Court retains jurisdiction either to pronounce a respondent official innocent of the
charges or declare him/her guilty thereof. A contrary rule would be fraught with
injustice and pregnant with dreadful and dangerous implications. For, what remedy
would the people have against a civil servant who resorts to wrongful and illegal
conduct during his/her last days in office? What would prevent a corrupt and
unscrupulous government employee from committing abuses and other condemnable
acts knowing fully well that he/she would soon be beyond the pale of the law and
immune from all administrative penalties?cralawred

If only for reasons of public policy, this Court must assert and maintain its jurisdiction
over members of the judiciary and other officials under its supervision and control for
acts performed in officewhich are inimical to the service and prejudicial to the
interests of litigants and the general public. If innocent, a respondent official merits
vindication of his/her name and integrity as he leaves the government which he/she
served well and faithfully; if guilty, he/she deserves to receive the corresponding
censure and a penalty proper and imposable under the situation.252

The Court cannot over-emphasize the importance of the task of preserving the
confidentiality and integrity of court records. A number of rules and internal procedures
are in place to ensure the observance of this task by court personnel.

The New Code of Judicial Conduct253 provides that confidential information acquired by
justices and judges in their judicial capacity shall not be used or disclosed for any other
purpose not related to their judicial duties.254 The Code of Conduct for Court Personnel
likewise devotes one whole canon on confidentiality, to wit:

SECTION 1. Court personnel shall not disclose to any unauthorized person any
confidential information acquired by them while employed in the judiciary, whether
such information came from authorized or unauthorized sources.

Confidential information means information not yet made a matter of public

record relating to pending cases, as well as information not yet made public
concerning the work of any justice or judge relating to pending cases,
including notes, drafts, research papers, internal discussions, internal
memoranda, records of internal deliberations and similar papers.

The notes, drafts, research papers, internal discussions, internal memoranda, records
of internal deliberations and similar papers that a justice or judge uses in preparing a
decision, resolution or order shall remain confidential even after the decision,
resolution or order is made public.

SEC. 2. Confidential information available to specific individuals by reason of statute,

court rule or administrative policy shall be disclosed only by persons authorized to do
so.
 180

SEC. 3. Unless expressly authorized by the designated authority, court personnel shall
not disclose confidential information given by litigants, witnesses or attorneys to
justices, judges or any other person.

SEC. 4. Former court personnel shall not disclose confidential information acquired by
them during their employment in the Judiciary when disclosed by current court
personnel of the same information would constitute a breach of confidentiality. Any
disclosure in violation of this provisions shall constitute indirect contempt of
court.255 (Emphasis and underscoring supplied.)

Ineluctably, any release of a copy to the public, or to the parties, of an unpromulgated

ponencia infringes on the confidential internal deliberations of the Court. It is settled
that the internal deliberations of the Court are confidential.256 A frank exchange of
exploratory ideas and assessments, free from the glare of publicity and pressure by
interested parties, is essential to protect the independence of decision-making of those
tasked to exercise judicial power.257

In Mirasol v. De La Torre, Jr.,258 the Court stated that "[c]ourt documents are
confidential documents. They must not be taken out of the court without proper
authority and without the necessary safeguards to ensure their confidentiality and
integrity." Thus, the Court found the clerk of court guilty of gross misconduct.
Moreover, the case enunciates that acts of gross misconduct destroy the good image of
the judiciary so the Court cannot countenance them nor allow the perpetrators to
remain in office. This same pronouncement was reiterated in Betguen v.
Masangcay.259 Though both cases involve indiscretions of clerks of court, it is but
logical that a higher standard of care be imposed upon magistrates of the Court.

PAGCOR v. Rilloza,260 in fact, commands persons who routinely handle confidential

matters to be confidential employees. They are thus expected to be more careful than
an ordinary employee in their day to day business. They are reposed such trust and
confidence that a breach of their duty would mean breach of trust. As applied to the
case of Justice Reyes, the breach of duty amounts to breach of public trust as
the committee believes that the leak was motivated by self-interest.

The fact that Justice Reyes was not formally charged is of no moment. It is settled
that under the doctrine of res ipsa loquitur, the Court may impose its authority
upon erring judges whoseactuations, on their face, would show gross
incompetence, ignorance of the law or misconduct.261

In People v. Valenzuela,262 which deals with the administrative aspect of a case

brought on certiorari, the Court dispensed with the conduct of further hearings under
the principle of res ipsa loquitur and proceeded to consider critical factors in deducing
malice and bad faith on the part of the judge, after it did not accept at face value the
judge's mere denial. In that case, the judge ordered the return of the peso equivalent
of the foreign currency to the accused despite its forfeiture as dutiable goods and even
after the finding that the accused had nothing to do with the mailing thereof.

In Cathay Pacific Airways, Ltd. v. Romillo, Jr.,263 where the Court took into
account glaring circumstances in the proceedings of the case in concluding that the
judge acted with bad faith, the judge was similarly found guilty of grave and serious
misconduct when he unjustly declared the defendant in default and awarded
outrageously exorbitant damages. l
 181

Prudential Bank v. Castro264 was an administrative case spawned by a party's

complaint, wherein the Court, in light of the surrounding circumstances, found that the
judge committed serious and grave misfeasance because the issuance of the orders
and ill-conceived summary judgment showed the judge's partiality to, or confabulation
with the plaintiff and its lawyers.

In Consolidated Bank and Trust Corporation v. Capistrano,265 the Court proceeded in

adjudging theattendant circumstances as tainted with bad faith and questionable
integrity to call for the exercise of the Court's disciplinary powers over members of the
judiciary. In that case, the Court found the submissions of the judge unacceptable and
clearly inadequate to overcome the cumulative effect of the highly questionable
actuations' taking cognizance of a claim for damages arising from an attachment,
instead of having it litigated in the same action where the writ was issued - as evincing
gross ignorance of the law and active bias or partiality.

The Court, in Cruz v. Yaneza,266 perceived the judge's persistent pattern of approving
bail bonds and issuing release orders beyond its territorial jurisdiction as evincing
a modus operandi that flagrantly flaunts fundamental rules.

In De Los Santos v. Magsino,267 the Court again applied the doctrine of res ipsa
loquitur when a judge irregularly approved a bail bond and issued a release order of an
accused whose case was pending in another province, in palpable disregard and gross
ignorance of the procedural law on bail.

The principle was also applied to discipline court personnel and suspend members of
the Bar from the practice of law.

The Court, in Office of the Court Administrator v. Pardo,268 found the clerk of court
guilty of gross discourtesy in the course of official duties when he failed to accord
respect for the person and rights of a judge as can be gleaned from a mere reading of
his letter to the Executive Judge.

In Sy v. Moncupa,269 the Court found the evidence against the clerk for malversation of
public funds eloquently speaks of her criminal misdeed to justify the application of the
doctrine of res ipsa loquitur. The clerk admitted the shortage in the court funds in her
custody and pleaded for time to pay the amount she had failed to account for.

In maintaining an earlier Resolution,270 the Court, in In re Wenceslao Laureta,271 also

declared that nothing more was needed to be said or proven and the necessity to
conduct any further evidentiary hearing was obviated. In that case, the Court found
that the letters and charges leveled against the Justices were, of themselves and by
themselves, malicious and contemptuous, and undermined the independence of the
judiciary.

Meanwhile, in Emiliano Court Townhouses Homeowners Association v. Dioneda,272 it

was held that it was reasonable to conclude that under the doctrine of res ipsa loquitur,
the respondent committed an infringement of ethical standards by his act of receiving
money as acceptance fee for legal services in a case and subsequently failing to render
such service. The Court found the respondent liable for disloyalty to his client and
inexcusable negligence in legal matters entrusted to him.

The Court, in Dizon, clarified the doctrine of res ipsa loquitur, viz:
 182

In these res ipsa loquitur resolutions, there was on the face of the assailed decisions,
an inexplicable grave error bereft of any redeeming feature, a patent railroading of a
case to bring about an unjust decision, or a manifestly deliberate intent to wreak an
injustice against a hapless party. The facts themselves, previously proven or admitted,
were of such a character as to give rise to a strong inference that evil intent was
present. Such intent, in short, was clearly deducible from what was already of record.
The res ipsa loquitur doctrine does not except or dispense with the necessity of proving
the facts on which the inference of evil intent is based. It merely expresses the clearly
sound and reasonable conclusion that when such facts are admitted or are already
shown by the record, and no credible explanation that would negative the strong
inference of evil intent is forthcoming, no further hearing to establish them to support
a judgment as to the culpability of a respondent is necessary.273 (Underscoring and
emphasis supplied.)

The apparent toning down of the application of the res ipsa loquitur rule was further
amplified in at least two cases. In Louis Vuitton S.A. v. Villanueva,274 the Court ruled
that the doctrine of res ipsa loquitur does not apply to cases of knowingly rendering a
manifestly unjust judgment, and even if the doctrine is appreciable, complainant still
has to present proof of malice or bad faith.

Then came Fernandez v. Verzola,275 where it was held that failure to substantiate a
claim of corruption and bribery and mere reliance on conjectures and suppositions
cannot sustain an administrative complaint. In dismissing the complaint, the Court
rejected as untenable the reasoning that the decision itself is evidence of corruption
per doctrine of res ipsa loquitur. It upheld the rule that rendering an erroneous or
baseless judgment, in itself, is not sufficient to justify the judge's dismissal from the
service.

The supposed tempering of the principle of res ipsa loquitur in Dizon only bolstered and
solidified the application of the doctrine in cases not only of gross negligence but of
serious misconduct as well, since it speaks of "inference of evil intent."

As explained in Louis Vuitton, the familiar rule in administrative cases is that the acts
of a judge in his judicial capacity are not subject to disciplinary action, and
that he cannot be subjected to civil, criminal or administrative liability for any
of his official acts, no matter how erroneous,as long as he acts in good
faith. The rule adds that the proper remedy is via judicial recourse and not through an
administrative action.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

It must be pointed out that Louis Vuitton involves gross ignorance of the law and/or
knowingly rendering an unjust judgment. In cases of leakage or breach of
confidentiality, however, the familiar rule obviously does not apply. While the injured
party is the Court itself, there is no judicial remedy available to undo the disclosure.
Moreover, the premature disclosure does not spring from the four corners of the
assailed decision or resolution nor can it gleaned on the face of the issuance itself.
Indeed, one need not dwell on the substance of the decision since that in itself is
inherently insufficient. In unearthing the misdeed, it becomes not only desirable but
also necessary to trace the attendant circumstances, apparent pattern and critical
factors surrounding the entire scenario.

In Macalintal v. Teh,276 the Court pronounced:

When the inefficiency springs from a failure to consider so basic and elemental a rule,
a law or a principle in the discharge of his duties, a judge is either too incompetent and
 183

undeserving of the position and title he holds or he is too vicious that the oversight or
omission was deliberately done in bad faith and in grave abuse of judicial authority. In
both instances, the judge's dismissal is in order.ςηαñrοblεš νιr†υαl
lαω lιbrαrÿ

After all, faith in the administration of justice exists only if every party-litigant is
assured that occupants of the bench cannot justly be accused of deficiency in their
grasp of legal principles.277(Underscoring supplied.)

The same norm equally applies in the breach of the basic and essential rule of
confidentiality that, as described in one case, "[a]ll conclusions and judgments of the
Court, be they en banc or by Division, are arrived at only after deliberation [and c]ourt
personnel are not in a position to know the voting in any case because all deliberations
are held behind closed doors without any one of them being present.278

As Dizon declared, the doctrine of res ipsa loquitur does not dispense with the
necessity of proving the facts on which the inference of evil intent is based. It merely
expresses that absent a credible explanation, it is clearly sound and reasonable to
conclude a strong inference of evil intent on the basis of facts duly admitted or shown
by the record. In fine, jurisprudence allows the reception of circumstantial evidence to
prove not only gross negligence but also serious misconduct.

Justice Reyes is Likewise Liable for Violating his Lawyer's Oath and the Code of
Professional Responsibility

For leaking a confidential internal document of the En Banc, the committee likewise
finds Justice Reyes administratively liable for GROSS MISCONDUCT for violating his
lawyer's oath and the Code of Professional Responsibility, for which he may be
disbarred or suspended per Section 27,279 Rule 138 of the Rules of Court. Canon 1 of
the Code of Professional Responsibility requires a lawyer to uphold the Constitution,
obey the laws of the land and promote respect for law and legal processes. It is
likewise provided in Rule 1.01 and 1.02 of the said canon that a lawyer shall not
engage in unlawful, dishonest, immoral or deceitful conduct and that a lawyer shall not
counsel or abet activities aimed at defiance of the law or at lessening confidence in the
legal system. Here, the act of Justice Reyes not only violated the New Code of Judicial
Conduct for the Philippine Judiciary, the Code of Judicial Conduct and the Canons of
Judicial Ethics, it also infringed on the internal deliberations of the Court and impeded
and degraded the administration of justice. The act is rendered all the more pernicious
considering that it was committed by no less than a justice of the Supreme Court who
was supposed to serve as example to the bench and bar.

That Justice Reyes was an impeachable officer when the investigation started is of no
moment. The rule prohibiting the institution of disbarment proceedings against an
impeachable officer who is required by the Constitution to be a member of the bar as a
qualification in office applies only during his or her tenure and does not create
immunity from liability for possibly criminal acts or for alleged violations of the Code of
Judicial Conduct or other supposed violations.280 Once the said impeachable officer is
no longer in office because of his removal, resignation, retirement or permanent
disability, the Court may proceed against him or her and impose the corresponding
sanctions for misconduct committed during his tenure, pursuant to the Court's power
of administrative supervision over members of the bar. Provided that the requirements
of due process are met, the Court may penalize retired members of the Judiciary for
misconduct committed during their incumbency. Thus, in Cañada v. Suerte,281 this
 184

Court ordered the disbarment of a retired judge for misconduct committed during his
incumbency as a judge.

However, pernicious as Justice Reyes's infractions may have been, the committee finds
the imposition of the supreme penalty of disbarment unwarranted. In the
determination of the imposable disciplinary sanction against an erring lawyer, the
Court takes into account the primary purpose of disciplinary proceedings, which is to
protect the administration of justice by requiring that those who exercise this
important function shall be competent, honorable, and reliable men in whom courts
and clients may repose confidence. While the assessment of what sanction may be
imposed is primarily addressed to the Court's sound discretion, the sanction should
neither be arbitrary or despotic, nor motivated by personal animosity or prejudice.
Rather, it should ever be controlled by the imperative need to scrupulously guard the
purity and independence of the bar. Thus, the supreme penalty of disbarment is meted
out only in clear cases of misconduct that seriously affect the standing and character of
the lawyer as an officer of the court and member of the bar. Under the circumstances
of this case, the committee finds the penalty of indefinite suspension from the practice
of law sufficient and proper.

Liability of Atty. Rosendo B. Evangelista

The Committee finds that Atty. Evangelista, Justice Reyes' Judicial Staff Head, was
remiss in his duties, which includes the supervision of the operations of the office,
particularly with respect to the promulgation of decisions. While it is incumbent upon
him to devise ways and means to secure the integrity of confidential documents, his
actuations reflected above evinced "a disregard of a duty resulting from carelessness
or indifference."282

Atty. Evangelista was admittedly unmindful of the responsible safekeeping of draft

ponencias in an unlocked drawer of a member of the staff. He failed to make sure that
the unused portion of confidential documents like the second signatory page of the
ponencia in Gilbert form had been properly disposed of or shredded. He was not on top
of things that concerned the promulgation of ponencias, for he failed to ascertain the
status and procedural implication of an "on hold" order after having been apprised
thereof by his subordinate, Del Rosario, on July 17, 2008. Despite his awareness that
the Limkaichong case would eventually be called again, he admitted that he was not
privy to the preparation of the copy of the ponencia for the subsequent session on July
29, 2008.

With these findings, the Court finds him liable for SIMPLE NEGLECT OF DUTY.

Liability of Armando Del Rosario

The committee likewise finds Del Rosario administratively liable for failing to exercise
the required degree of care in the custody of the Gilbert copy. Del Rosario admittedly
kept the Gilbert copy in an unlocked drawer from July 16, 2008 to December 10, 2008
when he should have known that, by the nature of the document in his custody, he
should have kept it more securely. His carelessness renders him
administratively liable for SIMPLE NEGLECT OF DUTY, defined as the failure to give
proper attention to a task expected of an employee resulting from either carelessness
or indifference.283

Time and again, the Court has emphasized the heavy burden and responsibility which
court officials and employees are mandated to carry. They are constantly reminded
 185

that any impression of impropriety, misdeed or negligence in the performance of

official functions must be avoided. The Court will never countenance any conduct, act
or omission on the part of all those involved in the administration of justice which
would violate the norm of public accountability and diminish the people's faith in the
judiciary.

Under Section 23, Rule XIV of the Omnibus Civil Service Rules and Regulations,
(simple) neglect of duty is punishable by suspension of one month and one day to six
months for the first offense. Under Sec. 19, Rule XIV of the same Rules, the penalty of
fine (instead of suspension) may also be imposed in the alternative.284 Following the
Court's ruling in several cases involving (simple) neglect of duty,285 we find the penalty
of fine on Atty. Evangelista and Del Rosario in the amount of P10,000 and P5,000,
respectively, just and reasonable.

RECOMMENDATIONS

IN VIEW OF THE FOREGOING, the Investigating Committee respectfully recommends

that

(1) Justice Ruben T. Reyes (Ret.) be found liable for GROSS MISCONDUCT for violating
his oath as a member of the Bar and the Code of Professional Responsibility and be
meted the penalty of INDEFINITE SUSPENSION as a member of the Bar;

(2) Justice Ruben T. Reyes (Ret.) also be found liable for GRAVE MISCONDUCT for
leaking a confidential internal document of the Court and be FINED in the amount
ofP500,000, to be charged against his retirement benefits; andcralawlibrary

(3) Atty. Rosendo B. Evangelista and Armando Del Rosario be held liable for SIMPLE
NEGLECT OF DUTY and be FINED in the amount of P10,000 and P5,000, respectively.

RESPECTFULLY SUBMITTED.

(Sgd.)
LEONARDO A. QUISUMBING
Chairman

(Sgd.) (Sgd.)
RENATO C. CORONA CONCHITA CARPIO MORALES
Member Member

The Court finds the above-quoted report well taken. Pursuant to Section 13, Article
VIII of the Constitution, this per curiam decision was reached after deliberation of the
Court En Banc by a unanimous decision of all the members of the Court except for two
(2) Justices who are on official leave.

WHEREFORE,in view of the foregoing, the Court ADOPTS thefindingsand APPROVES

WITH MODIFICATION the Recommendations of the Investigating Committee as
follows:

(1) Justice Ruben T. Reyes (Ret.) is held liable for GRAVE MISCONDUCT for leaking a
confidential internal document of the Court and he is FINED P500,000.00,to be
charged against his retirement benefits, and disqualified to hold any office or
employment in any branch or instrumentality of the government including
government-owned or controlled corporations; furthermore, Justice Ruben T. Reyes is
 186

directed to SHOW CAUSE within ten (10) days from receipt of a copy of this Decision
why he should not be disciplined as a member of the Bar in light of the aforementioned
findings.

(2) Atty. Rosendo B. Evangelista and Armando Del Rosario are held liable for SIMPLE
NEGLECT OF DUTY and are ordered to pay the FINE in the amount
of P10,000.00and P5,000.00, respectively.

This Decision shall take effect immediately.

SO ORDERED.
 187

[G.R. No. 196358 : March 21, 2012]

JANDY J. AGOY, PETITIONER, VS. ARANETA CENTER, INC., RESPONDENTS.

RESOLUTION

ABAD, J.:

This case reiterates the Court’s ruling that the adjudication of a case by minute
resolution is an exercise of judicial discretion and constitutes sound and valid judicial
practice.
c ralaw

The Facts and the Case

On June 15, 2011 the Court denied petitioner Jandy J. Agoy’s petition for review
through a minute resolution that reads:

“G.R. No. 196358 (Jandy J. Agoy vs. Araneta Center, Inc.).- The Court resolves
toGRANT petitioner’s motion for extension of thirty (30) days from the expiration of
the reglementary period within which to file a petition for review on certiorari.

The court further resolves to DENY the petition for review on certiorari assailing the
Decision dated 19 October 2010 and Resolution dated 29 March 2011 of the Court of
Appeals (CA), Manila, in CA-G.R. SP No. 108234 for failure to show that the CA
committed reversible error when it affirmed the dismissal of petitioner Jandy J. Agoy.
Petitioner’s repeated delays in remitting the excess cash advances and admission that
he spent them for other purposes constitute serious misconduct and dishonesty which
rendered him unworthy of the trust and confidence reposed in him by respondent
Araneta Center, Inc.”

Apparently, however, Agoy doubted the authenticity of the copy of the above minute
resolution that he received through counsel since he promptly filed a motion to rescind
the same and to have his case resolved on its merits via a regular resolution or
decision signed by the Justices who took part in the deliberation. In a related
development, someone claiming to be Agoy’s attorney-in-fact requested an
investigation of the issuance of the resolution of June 15, 2011.

On September 21, 2011 the Court denied Agoy’s motion to rescind the subject minute
resolution and confirmed the authenticity of the copy of the June 15, 2011 resolution.
It also treated his motion to rescind as a motion for reconsideration and denied the
same with finality.

Upon receipt of the Court’s September 21, 2011 resolution, Agoy filed a motion to
rescind the same or have his case resolved by the Court En Banc pursuant to Section
13 in relation to Sec. 4(3), Article VIII of the 1987 Constitution. Agoy reiterated his
view that the Court cannot decide his petition by a minute resolution. He thus prayed
that it rescind its June 15 and September 21, 2011 resolutions, determine whether it
was proper for the Court to resolve his petition through a minute resolution, and
submit the case to the Court en banc for proper disposition through a signed resolution
or decision.

Questions Presented
 188

At the heart of petitioner’s motions are the following questions:

1. Whether or not the copies of the minute resolutions dated June 15, 2011 and
September 21, 2011 that Agoy received are authentic; and

2. Whether or not it was proper for the Court to deny his petition through a minute
resolution.

The Court’s Rulings

One. The notices of the minute resolutions of June 15 and September 21, 2011 sent
to Agoy, bearing the signatures of Assistant Clerk of Court Teresita Aquino Tuazon and
Deputy Division Clerk of Court Wilfredo V. Lapitan, both printed on pink paper and duly
received by counsel for petitioner as evidenced by the registry return cards, are
authentic and original copies of the resolutions. The Court has given Tuazon and
Lapitan the authority to inform the parties under their respective signatures of the
Court’s actions on the incidents in the cases.

Minute resolutions are issued for the prompt dispatch of the actions of the Court.
While they are the results of the deliberations by the Justices of the Court, they are
promulgated by the Clerk of Court or his assistants whose duty is to inform the parties
of the action taken on their cases by quoting verbatim the resolutions adopted by the
Court.[1] Neither the Clerk of Court nor his assistants take part in the deliberations of
the case. They merely transmit the Court’s action in the form prescribed by its
Internal Rules:

Sec. 7. Form of notice of a minute resolution.—A notice of minute resolution shall be

embodied in a letter of the Clerk of Court or the Division Clerk of Court notifying the
parties of the action or actions taken in their case. In the absence of or whenever so
deputized by the Clerk of Court or the Division Clerk of Court, the Assistant Clerk of
Court or Assistant Division Clerk of Court may likewise sign the letter which shall be in
the following form:

(SUPREME COURT Seal)

REPUBLIC OF THE PHILIPPINES

SUPREME COURT
Manila

EN BANC/____ DIVISION

NOTICE

Sirs/Mesdames:

Please take notice that the Court en banc/___ Division issued a Resolution dated
_____, which reads as follows:

“G.R./UDK/A.M./A.C. No. ____ (TITLE).—(QUOTE RESOLUTION)”

Very truly yours,

(Sgd.)
 189

CLERK OF COURT/Division
Clerk of Court

As the Court explained in Borromeo v. Court of Appeals,[2] no law or rule requires its
members to sign minute resolutions that deny due course to actions filed before it or
the Chief Justice to enter his certification on the same. The notices quote the Court’s
actual resolutions denying due course to the subject actions and these already state
the required legal basis for such denial. To require the Justices to sign all its
resolutions respecting its action on new cases would be unreasonable and unnecessary.

Based on last year’s figures, the Court docketed a total of 5,864 new cases, judicial
and administrative. The United States Supreme Court probably receives lesser new
cases since it does not have administrative supervision of all courts. Yet, it gives due
course to and decides only about 100 cases per year. Agoy’s demand that this Court
give due course to and decide all cases filed with it on the merits, including his case, is
simply unthinkable and shows a lack of discernment of reality.

Two. While the Constitution requires every court to state in its decision clearly and
distinctly the fact and the law on which it is based, the Constitution requires the court,
in denying due course to a petition for review, merely to state the legal basis for such
denial.

Sec. 14. No decision shall be rendered by any court without expressing therein clearly
and distinctly the facts and the law on which it is based. No petition for review or
motion for reconsideration of a decision of the court shall be refused due
course or denied without stating the legal basis therefor.[3] (Emphasis supplied)

With the promulgation of its Internal Rules, the Court itself has defined the instances
when cases are to be adjudicated by decision, signed resolution, unsigned resolution or
minute resolution.[4] Among those instances when a minute resolution shall issue is
when the Court “denies a petition filed under Rule 45 of the [Rules of Court], citing as
legal basis the absence of reversible error committed in the challenged decision,
resolution, or order of the court below.”[5] The minute resolutions in this case complied
with this requirement.

The Court has repeatedly said that minute resolutions dismissing the actions filed
before it constitute actual adjudications on the merits.[6] They are the result of
thorough deliberation among the members of the Court.[7] When the Court does not
find any reversible error in the decision of the CA and denies the petition, there is no
need for the Court to fully explain its denial, since it already means that it agrees with
and adopts the findings and conclusions of the CA. The decision sought to be reviewed
and set aside is correct.[8] It would be an exercise in redundancy for the Court to
reproduce or restate in the minute resolution denying the petition the conclusions that
the CA reached.

Agoy questions the Court’s act of treating his motion to rescind as a motion for
reconsideration, arguing that it had no basis for doing so. But the Court was justified
in its action since his motion to rescind asked the Court to review the merits of his case
again.cra law

WHEREFORE, the Court DENIES petitioner Jandy J. Agoy’s motion to rescind dated
December 21, 2011 and the Motion for Clarification and to Resolve Pending Incidents
dated January 31, 2012 for lack of merit.
 190

The Court shall not entertain further pleadings or motions in this case. Let entry of
judgment be issued.

SO ORDERED.
 191

G.R. No. 165585, November 20, 2013

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioners, v. PRUDENTIAL

GUARANTEE AND ASSURANCE, INC., DEVELOPMENT BANK OF THE
PHILIPPINES, AND LAND BANK OF THE PHILIPPINES, Respondents.

[G.R. NO. 176982]

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioners, v. PRUDENTIAL

GUARANTEE AND ASSURANCE, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in these consolidated petitions for review on certiorari1 are separate issuances
of the Court of Appeals (CA) in relation to the complaint for sum of money filed by
Prudential Guarantee and Assurance, Inc. (PGAI) against the Government Service
Insurance System (GSIS) before the Regional Trial Court of Makati City, Branch 149
(RTC), docketed as Civil Case No. 01-1634.

In particular, the petition in G.R. No. 165585 assails the Decision2 dated May 26, 2004
and Resolution3 dated October 6, 2004 of the CA in CA-G.R. SP No. 69289 which
affirmed the Order4dated February 14, 2002, as well as the Order,5 Notices of
Garnishment,6 and Writ of Execution,7 all dated February 19, 2002, issued by the RTC
authorizing execution pending appeal.

On the other hand, the petition in G.R. No. 176982 assails the Decision8 dated October
30, 2006 and Resolution9 dated March 12, 2007 of the CA in CA-G.R. CV No. 73965
which dismissed the appeal filed by GSIS, affirming with modification the Order10 dated
January 11, 2002 of the RTC rendering judgment on the pleadings.

The Facts

Sometime in March 1999, the National Electrification Administration (NEA) entered

into a Memorandum of Agreement11 (MOA) with GSIS insuring all real and personal
properties mortgaged to it by electrical cooperatives under an Industrial All Risks Policy
(IAR policy).12 The total sum insured under the IAR policy was P16,731,141,166.80,
out of which, 95% or P15,894,584,108.40 was reinsured by GSIS with PGAI for a
period of one year or from March 5, 1999 to March 5, 2000.13 As reflected in
Reinsurance Request Note No. 99-15014 (reinsurance cover) and the Reinsurance
Binder15 dated April 21, 1999 (reinsurance binder), GSIS agreed to pay PGAI
reinsurance premiums in the amount of ?32,885,894.52 per quarter or a total of
P131,543,578.08.16 While GSIS remitted to PGAI the reinsurance premiums for the
first three quarters, it, however, failed to pay the fourth and last reinsurance premium
due on December 5, 1999 despite demands. This prompted PGAI to file, on November
15, 2001, a Complaint17 for sum of money (complaint) against GSIS before the RTC,
docketed as Civil Case No. 01-1634.

In its complaint, PGAI alleged, among others, that: (a) after it had issued the IAR
policy, it further reinsured the risks covered under the said reinsurance with reputable
reinsurers worldwide such as Lloyds of London, Copenhagen Re, Cigna Singapore, CCR,
 192

Generali, and Arig;18 (b) the first three reinsurance premiums were paid to PGAI by
GSIS and, in the same vein, NEA paid the first three reinsurance premiums due to
GSIS;19 (c) GSIS failed to pay PGAI the fourth and last reinsurance premium due on
December 5, 1999;20 (d) the IAR policy remained in full force and effect for the entire
insurable period and, in fact, the losses/damages on various risks reinsured by PGAI
were paid and accordingly settled by it;21 (e) PGAI is under continuous pressure from
its reinsurers in the international market to settle the matter;22 and (f) GSIS
acknowledged its obligation to pay the last reinsurance premium as it, in turn,
demanded from NEA the fourth and last reinsurance premium.23

In its Answer,24 GSIS admitted, among others, that: (a) its request for reinsurance
cover was accepted by PGAI in a reinsurance binder;25 (b) it remitted to PGAI the first
three reinsurance premiums which were paid by NEA;26 and (c) it failed to remit the
fourth and last reinsurance premium to PGAI.27 It, however, denied, inter alia, that:
(a) it had acknowledged its obligation to pay the last quarter’s reinsurance premium to
PGAI;28 and (b) the IAR policy remained in full force and effect for the entire insurable
period of March 5, 1999 to March 5, 2000.29 GSIS also proffered the following
affirmative defenses: (a) the complaint states no cause of action against GSIS because
the non-payment of the last reinsurance premium only renders the reinsurance
contract ineffective, and does not give PGAI a right of action to collect;30 (b) pursuant
to the regulations issued by the Commission on Audit, GSIS is prohibited from
advancing payments to PGAI occasioned by the failure of the principal insured, NEA, to
pay the insurance premium;31 and (c) PGAI’s cause of action lies against NEA since
GSIS merely acted as a conduit.32 By way of counterclaim, GSIS prayed that PGAI be
ordered to pay exemplary damages, including litigation expenses, and costs of suit.33

On December 18, 2001, PGAI filed a Motion for Judgment on the Pleadings34 averring
that GSIS essentially admitted the material allegations of the complaint, such as: (a)
the existence of the MOA between NEA and GSIS; (b) the existence of the reinsurance
binder between GSIS and PGAI; (c) the remittance by GSIS to PGAI of the first three
quarterly reinsurance premiums; and (d) the failure/refusal of GSIS to remit the fourth
and last reinsurance premium.35 Hence, PGAI prayed that the RTC render a judgment
on the pleadings pursuant to Section 1, Rule 34 of the Rules of Court (Rules). GSIS
opposed36 the foregoing motion by reiterating the allegations and defenses in its
Answer.

On January 11, 2002, the RTC issued an Order37 (January 11, 2002 Order) granting
PGAI’s Motion for Judgment on the Pleadings. It observed that the admissions of GSIS
that it paid the first three quarterly reinsurance premiums to PGAI affirmed the validity
of the contract of reinsurance between them. As such, GSIS cannot now renege on its
obligation to remit the last and remaining quarterly reinsurance premium.38 It further
pointed out that while it is true that the payment of the premium is a requisite for the
validity of an insurance contract as provided under Section 77 of Presidential Decree
No. (PD) 612,39 otherwise known as “The Insurance Code,” it was held in Makati
Tuscany Condominium Corp. v. CA40 (Makati Tuscany) that insurance policies are valid
even if the premiums were paid in installments, as in this case.41 Thus, in view of the
foregoing, the RTC ordered GSIS to pay PGAI the last quarter reinsurance premium in
the sum of ?32,885,894.52, including interests amounting to ?6,519,515.91 as of July
31, 2000 until full payment, attorney’s fees, and costs of suit.42 Dissatisfied, GSIS filed
a notice of appeal.43

Meanwhile, PGAI filed a Motion for Execution Pending Appeal44 based on the following
reasons: (a) GSIS’ appeal was patently dilatory since it already acknowledged the
validity of PGAI’s claim;45 (b) GSIS posted no valid defense as its Answer raised no
 193

genuine issues;46 and (c) PGAI would suffer serious and irreparable injury as it may be
blacklisted as a consequence of the non-payment of premiums due.47 PGAI also
manifested its willingness to post a sufficient surety bond to answer for any resulting
damage to GSIS.48 The latter opposed49 the motion asserting that there lies no
sufficient ground or urgency to justify execution pending appeal. It also claimed that all
its funds and properties are exempted from execution citing Section 39 of Republic Act
No. (RA) 8291,50 otherwise known as “The Government Service Insurance System Act
of 1997.”51

On February 14, 2002, the RTC issued an Order52 (February 14, 2002 Order) granting
PGAI’s Motion for Execution Pending Appeal, conditioned on the posting of a bond. It
further held that only the GSIS Social Insurance Fund is exempt from execution.
Accordingly, PGAI duly posted a surety bond which the RTC approved through an
Order53 dated February 19, 2002, resulting to the issuance of a writ of execution54 and
notices of garnishment55 (February 19, 2002 issuances), all of even date, against
GSIS.

The CA Proceedings Antecedent to G.R. No. 165585

Aggrieved by the RTC’s February 14, 2002 Order, as well as the February 19, 2002
issuances, GSIS – without first filing a motion for reconsideration (from the said order
of execution) or a sufficientsupersedeas bond56 – filed on February 26, 2002 a petition
for certiorari 57 before the CA, docketed as CA-G.R. SP No. 69289, against the RTC
and PGAI. It also impleaded in the said petition the Land Bank of the Philippines (LBP)
and the Development Bank of the Philippines (DBP) as nominal parties so as to render
them subject to the writs and processes of the CA.58

In its petition, GSIS argued that: (a) none of the grounds proffered by PGAI justifies
the issuance of a writ of execution pending appeal;59 and (b) all funds and assets of
GSIS are exempt from execution and levy in accordance with RA 8291.60

On April 4, 2002, the CA issued a temporary restraining order (TRO)61 enjoining the
garnishment of GSIS’ funds with LBP and DBP. Nevertheless, since the TRO’s effectivity
lapsed, GSIS’ funds with the LBP were eventually garnished.62

On May 26, 2004, the CA rendered a Decision63 dismissing GSIS’ petition, upholding,
among others, the validity of the execution pending appeal pursuant to the RTC’s
February 14, 2002 Order as well as the February 19, 2002 issuances. It found that the
impending blacklisting of PGAI constitutes a good reason for allowing the execution
pending appeal (also known as “discretionary execution”) considering that the
imposition of international sanctions on any single local insurance company puts in
grave and immediate jeopardy not only the viability of that company but also the
integrity of the entire local insurance system including that of the state insurance
agency. It pointed out that the insurance business thrives on credibility which is
maintained by honoring financial commitments.

On the claimed exemption of GSIS funds from execution, the CA held that such
exemption only covers funds under the Social Insurance Fund which remains liable for
the payment of benefits like retirement, disability and death compensation and not
those covered under the General Insurance Fund, as in this case, which are meant for
investment in the business of insurance and reinsurance.64

GSIS’ motion for reconsideration65 was denied by the CA in a Resolution66 dated

October 6, 2004. Hence, the petition for review on certiorari in G.R. No. 165585.67 chanroblesv irt ualawli bra ry
 194

The CA Proceedings Antecedent to G.R. No. 176982

Separately, GSIS also assailed the RTC’s January 11, 2002 Order which granted PGAI’s
Motion for Judgment on the Pleadings through an appeal68 filed on October 7, 2002,
docketed as CA G.R. CV No. 73965.

GSIS averred that the RTC gravely erred in: (a) rendering judgment on the pleadings
since it specifically denied the material allegations in PGAI’s complaint; (b) ordering
execution pending appeal since there are no justifiable reasons for the same; and (c)
effecting execution against funds and assets of GSIS given that RA 8291 exempts the
same from levy, execution and garnishment.69

For its part, PGAI maintained that: (a) the judgment on the pleadings was in order
given that GSIS never disputed the facts as alleged in its complaint; (b) the
discretionary execution was proper in view of the dilatory methods employed by GSIS
in order to evade the payment of a valid obligation; and (c) the general insurance fund
of GSIS, which was attached and garnished by the RTC, is not exempt from
execution.70

In a Decision71 dated October 30, 2006, the CA sustained the RTC’s January 11, 2002
Order but deleted the awards of interest and attorney’s fees for lack of factual and
legal basis.72

The CA ruled that judgment on the pleadings was proper since GSIS did not specifically
deny the genuineness, due execution, and perfection of its reinsurance contract with
PGAI.73 In fact, PGAI even settled reinsurance claims during the covering period
rendering the reinsurance contract not only perfected but partially executed as well.74

Passing on the issue of the exemption from execution of GSIS funds, the CA,
citing Rubia v. GSIS75(Rubia), held that the exemption provided for by RA 8291 is not
absolute since it only pertains to the social security benefits of its members; thus,
funds used by the GSIS for business investments and commercial ventures, as in this
case, may be attached and garnished.76

GSIS’ motion for reconsideration77 was denied by the CA in a Resolution78 dated March
12, 2007. Hence, the present petition for review on certiorari in G.R. No. 176982.79 chanroble svirtualawl ibra ry

The Issues Before the Court

In these consolidated petitions, the essential issues are the following: (a) in G.R. No.
165585, whether the CA erred in (1) upholding the RTC’s February 14, 2002 Order
authorizing execution pending appeal, and (2) ruling that only the Social Insurance
Fund and not the General Fund of the GSIS is exempt from garnishment; and (b)
in G.R. No. 176982, whether the CA erred in sustaining the RTC’s January 11, 2002
Order rendering judgment on the pleadings.

The Court’s Ruling

The petitions are partly meritorious.

A. Good reasons to allow execution pending

appeal and the nature of the exemption under
Section 39 of RA 8291.
 195

The execution of a judgment pending appeal is an exception to the general rule that
only a final judgment may be executed.80 In order to grant the same pursuant to
Section 2,81 Rule 39 of the Rules, the following requisites must concur: (a) there must
be a motion by the prevailing party with notice to the adverse party; (b) there must be
a good reason for execution pending appeal; and (c) the good reason must be stated
in a special order.82

Good reasons call for the attendance of compelling circumstances warranting

immediate execution for fear that favorable judgment may yield to an empty victory.
In this regard, the Rules do not categorically and strictly define what constitutes “good
reason,” and hence, its presence or absence must be determined in view of the
peculiar circumstances of each case. As a guide, jurisprudence dictates that the “good
reason” yardstick imports a superior circumstance that will outweigh injury or damage
to the adverse party.83 Corollarily, the requirement of “good reason” does not
necessarily entail unassailable and flawless basis but at the very least, an invocation
thereof must be premised on solid footing.84

In the case at bar, the RTC, as affirmed by the CA, granted PGAI’s motion for
execution pending appeal on the ground that the impending sanctions against it by
foreign underwriters/reinsurers constitute good reasons therefor. It must, however, be
observed that PGAI has not proffered any evidence to substantiate its claim, as it
merely presented bare allegations thereon. It is hornbook doctrine that mere
allegations do not constitute proof. As held in Real v. Belo,85 “[i]t is basic in the rule of
evidence that bare allegations, unsubstantiated by evidence, are not equivalent to
proof. In short, mere allegations are not evidence.”86 Hence, without any sufficient
basis to support the existence of its alleged “good reasons,” it cannot be said that the
second requisite to allow an execution pending appeal exists. To reiterate, the
requirement of “good reasons” must be premised on solid footing so as to ensure that
the “superior circumstance” which would impel immediate execution is not merely
contrived or based on speculation. This, however, PGAI failed to demonstrate in the
present case. In fine, the Court therefore holds that the CA’s affirmance of the RTC’s
February 14, 2002 Order authorizing execution pending appeal, as well as the February
19, 2002 issuances related thereto, was improper.

Nevertheless, while an execution pending appeal should not lie in view of the above-
discussed reasons, it must be noted that the funds and assets of GSIS may – after the
resolution of the appeal and barring any provisional injunction thereto – be subject to
execution, attachment, garnishment or levy since the exemption under Section 39 of
RA 829187 does not operate to deny private entities from properly enforcing their
contractual claims against GSIS.88 This has been established in the case
of Rubia wherein the Court held as follows: chanRob lesvi rtua lLawl ibra ry

[T]he declared policy of the State in Section 39 of the GSIS Charter granting GSIS an
exemption from tax, lien, attachment, levy, execution, and other legal processes
should be read together with the grant of power to the GSIS to invest its “excess
funds” under Section 36 of the same Act. Under Section 36, the GSIS is granted the
ancillary power to invest in business and other ventures for the benefit of the
employees, by using its excess funds for investment purposes. In the exercise of such
function and power, the GSIS is allowed to assume a character similar to a private
corporation. Thus, it may sue and be sued, as also explicitly granted by its
charter. Needless to say, where proper, under Section 36, the GSIS may be
held liable for the contracts it has entered into in the course of its business
investments. For GSIS cannot claim a special immunity from liability in regard to its
business ventures under said Section. Nor can it deny contracting parties, in our
 196

view, the right of redress and the enforcement of a claim, particularly as it

arises from a purely contractual relationship of a private character between
an individual and the GSIS. 89 (Emphases supplied and citations omitted)

Thus, the petition in G.R. No. 165585 is partly granted.

B. Propriety of judgment on the pleadings.

Judgment on the pleadings is appropriate when an answer fails to tender an issue, or

otherwise admits the material allegations of the adverse party’s pleading. The rule is
stated in Section 1, Rule 34 of the Rules which reads as follows: chanRoble svirtual Lawlib ra ry

Sec. 1. Judgment on the pleadings. – Where an answer fails to tender an issue, or

otherwise admits the material allegations of the adverse party’s pleading, the court
may, on motion of that party, direct judgment on such pleading. x x x.

In this relation, jurisprudence dictates that an answer fails to tender an issue if it does
not comply with the requirements of a specific denial as set out in Sections 890 and
10,91 Rule 8 of the Rules, resulting in the admission of the material allegations of the
adverse party’s pleadings.92 As such, it is a form of judgment that is exclusively based
on the submitted pleadings without the introduction of evidence as the factual issues
remain uncontroverted.93

In this case, records disclose that in its Answer, GSIS admitted the material allegations
of PGAI’s complaint warranting the grant of the relief prayed for. In particular, GSIS
admitted that: (a) it made a request for reinsurance cover which PGAI accepted in a
reinsurance binder effective for one year;94 (b) it remitted only the first three
reinsurance premium payments to PGAI;95 (c) it failed to pay PGAI the fourth and final
reinsurance premium installment;96 and (d) it received demand letters from PGAI.97 It
also did not refute the allegation of PGAI that it settled reinsurance claims during the
reinsured period. On the basis of these admissions, the Court finds that the CA did not
err in affirming the propriety of a judgment on the pleadings.

GSIS’ affirmative defense that the non-payment of the last reinsurance premium
merely rendered the contract ineffective pursuant to Section 7798 of PD 612 no longer
involves any factual issue, but stands solely as a mere question of law in the light of
the foregoing admissions hence allowing for a judgment on the pleadings. Besides, in
the case of Makati Tuscany, the Court already ruled that the non-payment of
subsequent installment premiums would not prevent the insurance contract from
taking effect; that the parties intended to make the insurance contract valid and
binding is evinced from the fact that the insured paid – and the insurer received –
several reinsurance premiums due thereon, although the former refused to pay the
remaining balance, viz.: cha nRoblesv irt ual Lawlib rary

We hold that the subject policies are valid even if the premiums were paid on
installments. The records clearly show that petitioner and private respondent intended
subject insurance policies to be binding and effective notwithstanding the staggered
payment of the premiums. The initial insurance contract entered into in 1982 was
renewed in 1983, then in 1984. In those three (3) years, the insurer accepted all the
installment payments. Such acceptance of payments speaks loudly of the insurer’s
intention to honor the policies it issued to petitioner. Certainly, basic principles of
equity and fairness would not allow the insurer to continue collecting and accepting the
premiums, although paid on installments, and later deny liability on the lame excuse
that the premiums were not prepaid in full.
 197

We therefore sustain the Court of Appeals. contained in its Resolution denying the
motion to reconsider its Decision —

While the import of Section 77 is that prepayment of premiums is strictly

required as a condition to the validity of the contract, We are not prepared to
rule that the request to make installment payments duly approved by the
insurer, would prevent the entire contract of insurance from going into effect
despite payment and acceptance of the initial premium or first
installment.Section 78 of the Insurance Code in effect allows waiver by the insurer of
the condition of prepayment by making an acknowledgment in the insurance policy of
receipt of premium as conclusive evidence of payment so far as to make the policy
binding despite the fact that premium is actually unpaid. Section 77 merely
precludes the parties from stipulating that the policy is valid even if premiums
are not paid, but does not expressly prohibit an agreement granting credit
extension, and such an agreement is not contrary to morals, good customs,
public order or public policy (De Leon, the Insurance Code, at p. 175). So is an
understanding to allow insured to pay premiums in installments not so proscribed. At
the very least, both parties should be deemed in estoppel to question the
arrangement they have voluntarily accepted.

[I]n the case before Us, petitioner paid the initial installment and thereafter
made staggered payments resulting in full payment of the 1982 and 1983
insurance policies. For the 1984 policy, petitioner paid two (2) installments
although it refused to pay the balance.

It appearing from the peculiar circumstances that the parties actually

intended to make three (3) insurance contracts valid, effective and binding,
petitioner may not be allowed to renege on its obligation to pay the balance of
the premium after the expiration of the whole term of the third policy (No. AH-
CPP-9210651) in March 1985. Moreover, as correctly observed by the appellate court,
where the risk is entire and the contract is indivisible, the insured is not entitled to a
refund of the premiums paid if the insurer was exposed to the risk insured for
any period, however brief or momentary. 99 (Emphases supplied and citation
omitted)

Thus, owing to the identical complexion of Makati Tuscany with the present case, the
Court upholds PGAI’s right to be paid by GSIS the amount of the fourth and last
reinsurance premium pursuant to the reinsurance contract between them. All told, the
petition in G.R. No. 176982 is denied.

WHEREFORE, the petition in G.R. No. 165585 is PARTLY GRANTED. The Decision
dated May 26, 2004 and Resolution dated October 6, 2004 of the Court of Appeals in
CA-G.R. SP No. 69289 areMODIFIED only insofar as it upheld the validity of Prudential
Guarantee and Assurance, Inc.’s execution pending appeal. In this respect, the Order
dated February 14, 2002 of the Regional Trial Court of Makati, Branch 149 as well as
all other issuances related thereto are set aside.

On the other hand, the petition in G.R. No. 176982 is DENIED. The Decision dated
October 30, 2006 and Resolution dated March 12, 2007 in CA-G.R. CV No. 73965 are
hereby AFFIRMED. chanRoblesvi rtua lLawl ibra ry

SO ORDERED.
 198

G.R. No. 196251, July 09, 2014

OLIVAREZ REALTY CORPORATION AND DR. PABLO R.

OLIVAREZ, Petitioners, v. BENJAMIN CASTILLO, Respondent.

DECISION

LEONEN, J.:

Trial may be dispensed with and a summary judgment rendered if the case can be
resolved judiciously by plain resort to the pleadings, affidavits, depositions, and other
papers filed by the parties.

This is a petition for review on certiorari1 of the Court of Appeals’ decision2 dated July
20, 2010 and resolution3 dated March 18, 2011 in CA-G.R. CV No. 91244.

The facts as established from the pleadings of the parties are as follows: c ralawlawl ibra ry

Benjamin Castillo was the registered owner of a 346,918-square-meter parcel of land

located in Laurel, Batangas, covered by Transfer Certificate of Title No. T-19972.4 The
Philippine Tourism Authority allegedly claimed ownership of the same parcel of land
based on Transfer Certificate of Title No. T-18493.5 cralawred

On April 5, 2000, Castillo and Olivarez Realty Corporation, represented by Dr. Pablo R.
Olivarez, entered into a contract of conditional sale6 over the property. Under the deed
of conditional sale, Castillo agreed to sell his property to Olivarez Realty Corporation
for P19,080,490.00. Olivarez Realty Corporation agreed to a down payment of
P5,000,000.00, to be paid according to the following schedule: cha nRoblesvi rt ual Lawlib rary

DATE AMOUNT
April 8, 2000 P500,000.00
May 8, 2000 500,000.00
May 16, 2000 500,000.00
June 8, 2000 1,000,000.00
July 8, 2000 500,000.00
August 8, 2000 500,000.00
September 8, 2000 500,000.00
October 8, 2000 500,000.00
November 8, 2000 500,000.007

As to the balance of P14,080,490.00, Olivarez Realty Corporation agreed to pay in 30

equal monthly installments every eighth day of the month beginning in the month that
the parties would receive a decision voiding the Philippine Tourism Authority’s title to
the property.8 Under the deed of conditional sale, Olivarez Realty Corporation shall file
the action against the Philippine Tourism Authority “with the full assistance of
[Castillo].”9 Paragraph C of the deed of conditional sale provides: c hanRoble svirtual Lawlib ra ry
 199

C. [Olivarez Realty Corporation] assumes the responsibility of taking necessary

legal action thru Court to have the claim/title TCT T-18493 of Philippine Tourism
Authority over the above-described property be nullified and voided; with the full
assistance of [Castillo][.]10

Should the action against the Philippine Tourism Authority be denied, Castillo agreed to
reimburse all the amounts paid by Olivarez Realty Corporation. Paragraph D of the
deed of conditional sale provides: c hanRoble svirtual Lawlib ra ry

D. In the event that the Court denie[s] the petition against the Philippine Tourism
Authority, all sums received by [Castillo] shall be reimbursed to [Olivarez Realty
Corporation] without interest[.]11

As to the “legitimate tenants” occupying the property, Olivarez Realty Corporation

undertook to pay them “disturbance compensation,” while Castillo undertook to clear
the land of the tenants within six months from the signing of the deed of conditional
sale. Should Castillo fail to clear the land within six months, Olivarez Realty
Corporation may suspend its monthly down payment until the tenants vacate the
property. Paragraphs E and F of the deed of conditional sale provide: cha nRoblesv irt ual Lawlib rary

E. That [Olivarez Realty Corporation] shall pay the disturbance compensation to

legitimate agricultural tenants and fishermen occupants which in no case shall
exceed ONE MILLION FIVE HUNDRED THOUSAND (P1,500,000.00) PESOS. Said
amount shall not form part of the purchase price. In excess of this amount, all
claims shall be for the account of [Castillo]; chan roble svirtual lawlib rary

F. That [Castillo] shall clear the land of [the] legitimate tenants within a period of
six (6) months upon signing of this Contract, and in case [Castillo] fails, [Olivarez
Realty Corporation] shall have the right to suspend the monthly down payment
until such time that the tenants [move] out of the land[.]12

The parties agreed that Olivarez Realty Corporation may immediately occupy the
property upon signing of the deed of conditional sale. Should the contract be cancelled,
Olivarez Realty Corporation agreed to return the property’s possession to Castillo and
forfeit all the improvements it may have introduced on the property. Paragraph I of the
deed of conditional sale states:
chanRob lesvi rtua lLawl ibra ry

I. Immediately upon signing this Contract, [Olivarez Realty Corporation] shall be

entitled to occupy, possess and develop the subject property. In case this
Contract is canceled [sic], any improvement introduced by [the corporation] on
the property shall be forfeited in favor of [Castillo][.]13

On September 2, 2004, Castillo filed a complaint14 against Olivarez Realty Corporation

and Dr. Olivarez with the Regional Trial Court of Tanauan City, Batangas.

Castillo alleged that Dr. Olivarez convinced him into selling his property to Olivarez
Realty Corporation on the representation that the corporation shall be responsible in
clearing the property of the tenants and in paying them disturbance compensation. He
further alleged that Dr. Olivarez solely prepared the deed of conditional sale and that
he was made to sign the contract with its terms “not adequately explained [to him] in
 200

Tagalog.”15 cralawred

After the parties had signed the deed of conditional sale, Olivarez Realty Corporation
immediately took possession of the property. However, the corporation only paid
P2,500,000.00 of the purchase price. Contrary to the agreement, the corporation did
not file any action against the Philippine Tourism Authority to void the latter’s title to
the property. The corporation neither cleared the land of the tenants nor paid them
disturbance compensation. Despite demand, Olivarez Realty Corporation refused to
fully pay the purchase price.16 cralawred

Arguing that Olivarez Realty Corporation committed substantial breach of the contract
of conditional sale and that the deed of conditional sale was a contract of adhesion,
Castillo prayed for rescission of contract under Article 1191 of the Civil Code of the
Philippines. He further prayed that Olivarez Realty Corporation and Dr. Olivarez be
made solidarily liable for moral damages, exemplary damages, attorney’s fees, and
costs of suit.17 cralaw red

In their answer,18 Olivarez Realty Corporation and Dr. Olivarez admitted that the
corporation only paid P2,500,000.00 of the purchase price. In their defense,
defendants alleged that Castillo failed to “fully assist”19 the corporation in filing an
action against the Philippine Tourism Authority. Neither did Castillo clear the property
of the tenants within six months from the signing of the deed of conditional sale. Thus,
according to defendants, the corporation had “all the legal right to withhold the
subsequent payments to [fully pay] the purchase price.”20 cralawred

Olivarez Realty Corporation and Dr. Olivarez prayed that Castillo’s complaint be
dismissed. By way of compulsory counterclaim, they prayed for P100,000.00 litigation
expenses and P50,000.00 attorney’s fees.21 cralawred

Castillo replied to the counterclaim,22 arguing that Olivarez Realty Corporation and Dr.
Olivarez had no right to litigation expenses and attorney’s fees. According to Castillo,
the deed of conditional sale clearly states that the corporation “assume[d] the
responsibility of taking necessary legal action”23against the Philippine Tourism
Authority, yet the corporation did not file any case. Also, the corporation did not pay
the tenants disturbance compensation. For the corporation’s failure to fully pay the
purchase price, Castillo claimed that he had “all the right to pray for the rescission of
the [contract],”24 and he “should not be held liable . . . for any alleged damages by
way of litigation expenses and attorney’s fees.”25 cralawred

On January 10, 2005, Castillo filed a request for admission,26 requesting Dr. Olivarez to
admit under oath the genuineness of the deed of conditional sale and Transfer
Certificate of Title No. T-19972. He likewise requested Dr. Olivarez to admit the truth
of the following factual allegations: chanRoble svi rtual Lawli bra ry

1. That Dr. Olivarez is the president of Olivarez Realty Corporation; c hanroblesv irt uallawl ibra ry

2. That Dr. Olivarez offered to purchase the parcel of land from Castillo and that he
undertook to clear the property of the tenants and file the court action to void the
Philippine Tourism Authority’s title to the property; chan roble svirtuallaw lib rary

3. That Dr. Olivarez caused the preparation of the deed of conditional sale; cha nro blesvi rtua llawli bra ry

4. That Dr. Olivarez signed the deed of conditional sale for and on behalf of Olivarez
Realty Corporation; chan rob l esvirt uallawl ibra ry
 201

5. That Dr. Olivarez and the corporation did not file any action against the Philippine
Tourism Authority; chan roble svi rtual lawlibra ry

6. That Dr. Olivarez and the corporation did not pay the tenants disturbance
compensation and failed to clear the property of the tenants; and Cha nRobles Vi rtua lawlib rary

7. That Dr. Olivarez and the corporation only paid P2,500,000.00 of the agreed
purchase price.27

On January 25, 2005, Dr. Olivarez and Olivarez Realty Corporation filed their
objections to the request for admission,28 stating that they “reiterate[d] the allegations
[and denials] in their [answer].”29 cralawred

The trial court conducted pre-trial conference on December 17, 2005.

On March 8, 2006, Castillo filed a motion for summary judgment and/or judgment on
the pleadings.30He argued that Olivarez Realty Corporation and Dr. Olivarez
“substantially admitted the material allegations of [his] complaint,”31 specifically: chanRo blesvi rtua lLaw lib rary

1. That the corporation failed to fully pay the purchase price for his property;32 cral awred

2. That the corporation failed to file an action to void the Philippine Tourism Authority’s
title to his property;33 and

3. That the corporation failed to clear the property of the tenants and pay them
disturbance compensation.34

Should judgment on the pleadings be improper, Castillo argued that summary

judgment may still be rendered as there is no genuine issue as to any material
fact.35 He cited Philippine National Bank v. Noah’s Ark Sugar Refinery36 as authority.

Castillo attached to his motion for summary judgment and/or judgment on the
pleadings his affidavit37 and the affidavit of a Marissa Magsino38 attesting to the truth
of the material allegations of his complaint.

Olivarez Realty Corporation and Dr. Olivarez opposed39 the motion for summary
judgment and/or judgment on the pleadings, arguing that the motion was “devoid of
merit.”40 They reiterated their claim that the corporation withheld further payments of
the purchase price because “there ha[d] been no favorable decision voiding the title of
the Philippine Tourism Authority.”41 They added that Castillo sold the property to
another person and that the sale was allegedly litigated in Quezon City.42 cralawred

Considering that a title adverse to that of Castillo’s existed, Olivarez Realty Corporation
and Dr. Olivarez argued that the case should proceed to trial and Castillo be required
to prove that his title to the property is “not spurious or fake and that he had not sold
his property to another person.”43 cralawred

In reply to the opposition to the motion for summary judgment and/or judgment on
the pleadings,44Castillo maintained that Olivarez Realty Corporation was responsible for
the filing of an action against the Philippine Tourism Authority. Thus, the corporation
could not fault Castillo for not suing the Philippine Tourism Authority.45 The corporation
illegally withheld payments of the purchase price.
 202

As to the claim that the case should proceed to trial because a title adverse to his title
existed, Castillo argued that the Philippine Tourism Authority’s title covered another
lot, not his property.46 cralawred

During the hearing on August 3, 2006, Olivarez Realty Corporation and Dr. Olivarez
prayed that they be given 30 days to file a supplemental memorandum on Castillo’s
motion for summary judgment and/or judgment on the pleadings.47 cralawred

The trial court granted the motion. It gave Castillo 20 days to reply to the
memorandum and the corporation and Dr. Olivarez 15 days to respond to Castillo’s
reply.48
cralawred

In their supplemental memorandum,49 Olivarez Realty Corporation and Dr. Olivarez

argued that there was “an obvious ambiguity”50 as to which should occur first — the
payment of disturbance compensation to the tenants or the clearing of the property of
the tenants.51 This ambiguity, according to defendants, is a genuine issue and “ought
to be threshed out in a full blown trial.”52 cralawred

Olivarez Realty Corporation and Dr. Olivarez added that Castillo prayed for
irreconcilable reliefs of reformation of instrument and rescission of contract.53 Thus,
Castillo’s complaint should be dismissed.

Castillo replied54 to the memorandum, arguing that there was no genuine issue
requiring trial of the case. According to Castillo, “common sense dictates . . . that the
legitimate tenants of the [property] shall not vacate the premises without being paid
any disturbance compensation . . .”55 Thus, the payment of disturbance compensation
should occur first before clearing the property of the tenants.

With respect to the other issues raised in the supplemental memorandum, specifically,
that Castillo sold the property to another person, he argued that these issues should
not be entertained for not having been presented during pre-trial.56 cralaw red

In their comment on the reply memorandum,57 Olivarez Realty Corporation and Dr.
Olivarez reiterated their arguments that certain provisions of the deed of conditional
sale were ambiguous and that the complaint prayed for irreconcilable reliefs.58 cralawred

As to the additional issues raised in the supplemental memorandum, defendants

argued that issues not raised and evidence not identified and pre-marked during pre-
trial may still be raised and presented during trial for good cause shown. Olivarez
Realty Corporation and Dr. Olivarez prayed that Castillo’s complaint be dismissed for
lack of merit.59 cralawred

Ruling of the trial court

The trial court found that Olivarez Realty Corporation and Dr. Olivarez’s answer
“substantially [admitted the material allegations of Castillo’s] complaint and [did] not .
. . raise any genuine issue [as to any material fact].”60 cralawred

Defendants admitted that Castillo owned the parcel of land covered by Transfer
Certificate of Title No. T-19972. They likewise admitted the genuineness of the deed of
conditional sale and that the corporation only paid P2,500,000.00 of the agreed
purchase price.61 cralawre d

According to the trial court, the corporation was responsible for suing the Philippine
 203

Tourism Authority and for paying the tenants disturbance compensation. Since
defendant corporation neither filed any case nor paid the tenants disturbance
compensation, the trial court ruled that defendant corporation had no right to withhold
payments from Castillo.62 cralaw red

As to the alleged ambiguity of paragraphs E and F of the deed of conditional sale, the
trial court ruled that Castillo and his witness, Marissa Magsino, “clearly
established”63 in their affidavits that the deed of conditional sale was a contract of
adhesion. The true agreement between the parties was that the corporation would both
clear the land of the tenants and pay them disturbance compensation.

With these findings, the trial court ruled that Olivarez Realty Corporation breached the
contract of conditional sale. In its decision64 dated April 23, 2007, the trial court
ordered the deed of conditional sale rescinded and the P2,500,000.00 forfeited in favor
of Castillo “as damages under Article 1191 of the Civil Code.”65 cralawred

The trial court declared Olivarez Realty Corporation and Dr. Olivarez solidarily liable to
Castillo for P500,000.00 as moral damages, P50,000.00 as exemplary damages, and
P50,000.00 as costs of suit.66 cralawred

Ruling of the Court of Appeals

Olivarez Realty Corporation and Dr. Olivarez appealed to the Court of Appeals.67 cralawred

In its decision68 dated July 20, 2010, the Court of Appeals affirmed in toto the trial
court’s decision. According to the appellate court, the trial court “did not err in its
finding that there is no genuine controversy as to the facts involved [in this
case].”69 The trial court, therefore, correctly rendered summary judgment.70 cralawred

As to the trial court’s award of damages, the appellate court ruled that a court may
award damages through summary judgment “if the parties’ contract categorically
[stipulates] the respective obligations of the parties in case of default.”71 As found by
the trial court, paragraph I of the deed of conditional sale categorically states that “in
case [the deed of conditional sale] is cancelled, any improvement introduced by
[Olivarez Realty Corporation] on the property shall be forfeited in favor of
[Castillo].”72 Considering that Olivarez Realty Corporation illegally retained possession
of the property, Castillo forewent rent to the property and “lost business
opportunities.”73 The P2,500,000.00 down payment, according to the appellate court,
should be forfeited in favor of Castillo. Moral and exemplary damages and costs of suit
were properly awarded.

On August 11, 2010, Olivarez Realty Corporation and Dr. Olivarez filed their motion for
reconsideration,74 arguing that the trial court exceeded its authority in forfeiting the
P2,500,000.00 down payment and awarding P500,000.00 in moral damages to Castillo.
They argued that Castillo only prayed for a total of P500,000.00 as actual and moral
damages in his complaint.75 Appellants prayed that the Court of Appeals “take a
second hard look”76 at the case and reconsider its decision.

In the resolution77 dated March 18, 2011, the Court of Appeals denied the motion for
reconsideration.

Proceedings before this court

Olivarez Realty Corporation and Dr. Olivarez filed their petition for review on
 204

certiorari78 with this court. Petitioners argue that the trial court and the Court of
Appeals erred in awarding damages to Castillo. Under Section 3, Rule 35 of the 1997
Rules of Civil Procedure, summary judgment may be rendered except as to the amount
of damages. Thus, the Court of Appeals “violated the procedural steps in rendering
summary judgment.”79 cralawred

Petitioners reiterate that there are genuine issues of material fact to be resolved in this
case. Thus, a full-blown trial is required, and the trial court prematurely decided the
case through summary judgment. They cite Torres v. Olivarez Realty Corporation and
Dr. Pablo Olivarez,80 a case decided by the Ninth Division of the Court of Appeals.

In Torres, Rosario Torres was the registered owner of a parcel of land covered by
Transfer Certificate of Title No. T-19971. Under a deed of conditional sale, she sold her
property to Olivarez Realty Corporation for P17,345,900.00. When the corporation
failed to fully pay the purchase price, she sued for rescission of contract with damages.
In their answer, the corporation and Dr. Olivarez argued that they discontinued
payment because Rosario Torres failed to clear the land of the tenants.

Similar to Castillo, Torres filed a motion for summary judgment, which the trial court
granted. On appeal, the Court of Appeals set aside the trial court’s summary judgment
and remanded the case to the trial court for further proceedings.81 The Court of
Appeals ruled that the material allegations of the complaint “were directly disputed by
[the corporation and Dr. Olivarez] in their answer”82 when they argued that they
refused to pay because Torres failed to clear the land of the tenants.

With the Court of Appeals’ decision in Torres, Olivarez Realty Corporation and Dr.
Olivarez argue that this case should likewise be remanded to the trial court for further
proceedings under the equipoise rule.

Petitioners maintain that Castillo availed himself of the irreconcilable reliefs of

reformation of instrument and rescission of contract.83 Thus, the trial court should have
dismissed the case outright.

Petitioners likewise argue that the trial court had no jurisdiction to decide the case as
Castillo failed to pay the correct docket fees.84 Petitioners argue that Castillo should
have paid docket fees based on the property’s fair market value since Castillo’s
complaint is a real action.85 cralaw red

In his comment,86 Castillo maintains that there are no genuine issues as to any
material fact in this case. The trial court, therefore, correctly rendered summary
judgment.

As to petitioners’ claim that the trial court had no jurisdiction to decide the case,
Castillo argues that he prayed for rescission of contract in his complaint. This action is
incapable of pecuniary estimation, and the Clerk of Court properly computed the
docket fees based on this prayer.87 cralawred

Olivarez Realty Corporation and Dr. Olivarez replied,88 reiterating their arguments in
the petition for review on certiorari.

The issues for our resolution are the following: chanRob lesvi rtua lLawl ibra ry
 205

I. Whether the trial court erred in rendering summary judgment; c hanro blesvi rt uallawl ibra ry

II. Whether proper docket fees were paid in this case. chan roble slaw

The petition lacks merit.

The trial court correctly rendered

summary judgment, as there were no
genuine issues of material fact in this
case

Trial “is the judicial examination and determination of the issues between the parties to
the action.”89During trial, parties “present their respective evidence of their claims and
defenses.”90 Parties to an action have the right “to a plenary trial of the case”91 to
ensure that they were given a right to fully present evidence on their respective claims.

There are instances, however, when trial may be dispensed with. Under Rule 35 of the
1997 Rules of Civil Procedure, a trial court may dispense with trial and proceed to
decide a case if from the pleadings, affidavits, depositions, and other papers on file,
there is no genuine issue as to any material fact. In such a case, the judgment issued
is called a summary judgment.

A motion for summary judgment is filed either by the claimant or the defending
party.92 The trial court then hears the motion for summary judgment. If indeed there
are no genuine issues of material fact, the trial court shall issue summary judgment.
Section 3, Rule 35 of the 1997 Rules of Civil Procedure provides: cha nRoblesv irt ual Lawlib rary

SEC. 3. Motion and proceedings thereon. – The motion shall be served at least ten (10)
days before the time specified for the hearing. The adverse party may serve opposing
affidavits, depositions, or admission at least three (3) days before the hearing. After
the hearing, the judgment sought shall be rendered forthwith if the pleadings,
supporting affidavits, depositions, and admissions on file, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.

An issue of material fact exists if the answer or responsive pleading filed specifically
denies the material allegations of fact set forth in the complaint or pleading. If the
issue of fact “requires the presentation of evidence, it is a genuine issue of
fact.”93 However, if the issue “could be resolved judiciously by plain resort”94 to the
pleadings, affidavits, depositions, and other papers on file, the issue of fact raised is
sham, and the trial court may resolve the action through summary judgment.

A summary judgment is usually distinguished from a judgment on the pleadings. Under

Rule 34 of the 1997 Rules of Civil Procedure, trial may likewise be dispensed with and
a case decided through judgment on the pleadings if the answer filed fails to tender an
issue or otherwise admits the material allegations of the claimant’s pleading.95 cralaw red

Judgment on the pleadings is proper when the answer filed fails to tender any issue, or
otherwise admits the material allegations in the complaint.96 On the other hand, in a
summary judgment, the answer filed tenders issues as specific denials and affirmative
defenses are pleaded, but the issues raised are sham, fictitious, or otherwise not
 206

genuine.97 cralawre d

In this case, Olivarez Realty Corporation admitted that it did not fully pay the purchase
price as agreed upon in the deed of conditional sale. As to why it withheld payments
from Castillo, it set up the following affirmative defenses: First, Castillo did not file a
case to void the Philippine Tourism Authority’s title to the property; second, Castillo did
not clear the land of the tenants; third, Castillo allegedly sold the property to a third
person, and the subsequent sale is currently being litigated before a Quezon City court.

Considering that Olivarez Realty Corporation and Dr. Olivarez’s answer tendered an
issue, Castillo properly availed himself of a motion for summary judgment.

However, the issues tendered by Olivarez Realty Corporation and Dr. Olivarez’s answer
are not genuine issues of material fact. These are issues that can be resolved
judiciously by plain resort to the pleadings, affidavits, depositions, and other papers on
file; otherwise, these issues are sham, fictitious, or patently unsubstantial.

Petitioner corporation refused to fully pay the purchase price because no court case
was filed to void the Philippine Tourism Authority’s title on the property. However,
paragraph C of the deed of conditional sale is clear that petitioner Olivarez Realty
Corporation is responsible for initiating court action against the Philippine Tourism
Authority:chanRoble svirtual Lawli bra ry

C. [Olivarez Realty Corporation] assumes the responsibility of taking necessary

legal action thru Court to have the claim/title TCT T-18493 of Philippine Tourism
Authority over the above-described property be nullified and voided; with the full
assistance of [Castillo].98

Castillo’s alleged failure to “fully assist”99 the corporation in filing the case is not a
defense. As the trial court said, “how can [Castillo] assist [the corporation] when [the
latter] did not file the action [in the first place?]”100
cralawred

Neither can Olivarez Realty Corporation argue that it refused to fully pay the purchase
price due to the Philippine Tourism Authority’s adverse claim on the property. The
corporation knew of this adverse claim when it entered into a contract of conditional
sale. It even obligated itself under paragraph C of the deed of conditional sale to sue
the Philippine Tourism Authority. This defense, therefore, is sham.

Contrary to petitioners’ claim, there is no “obvious ambiguity”101 as to which should

occur first — the payment of the disturbance compensation or the clearing of the land
within six months from the signing of the deed of conditional sale. The obligations must
be performed simultaneously. In this case, the parties should have coordinated to
ensure that tenants on the property were paid disturbance compensation and were
made to vacate the property six months after the signing of the deed of conditional
sale.

On one hand, pure obligations, or obligations whose performance do not depend upon
a future or uncertain event, or upon a past event unknown to the parties, are
demandable at once.102 On the other hand, obligations with a resolutory period also
take effect at once but terminate upon arrival of the day certain.103 cralawred

Olivarez Realty Corporation’s obligation to pay disturbance compensation is a pure

obligation. The performance of the obligation to pay disturbance compensation did not
depend on any condition. Moreover, the deed of conditional sale did not give the
 207

corporation a period to perform the obligation. As such, the obligation to pay

disturbance compensation was demandable at once. Olivarez Realty Corporation should
have paid the tenants disturbance compensation upon execution of the deed of
conditional sale.

With respect to Castillo’s obligation to clear the land of the tenants within six months
from the signing of the contract, his obligation was an obligation with a resolutory
period. The obligation to clear the land of the tenants took effect at once, specifically,
upon the parties’ signing of the deed of conditional sale. Castillo had until October 2,
2000, six months from April 5, 2000 when the parties signed the deed of conditional
sale, to clear the land of the tenants.

Olivarez Realty Corporation, therefore, had no right to withhold payments of the

purchase price. As the trial court ruled, Olivarez Realty Corporation “can only claim
non-compliance [of the obligation to clear the land of the tenants in] October
2000.”104 It said:c hanRoblesv irtual Lawlib rary

. . . it is clear that defendant [Olivarez Realty Corporation] should have paid the
installments on the P5 million downpayment up to October 8, 2000, or a total of
P4,500,000.00. That is the agreement because the only time that defendant
[corporation] can claim non-compliance of the condition is after October, 2000 and so
it has the clear obligation to pay up to the October 2000 the agreed installments. Since
it paid only P2,500,000.00, then a violation of the contract has already been
committed. . . .105

The claim that Castillo sold the property to another is fictitious and was made in bad
faith to prevent the trial court from rendering summary judgment. Petitioners did not
elaborate on this defense and insisted on revealing the identity of the buyer only
during trial.106 Even in their petition for review on certiorari, petitioners never disclosed
the name of this alleged buyer. Thus, as the trial court ruled, this defense did not
tender a genuine issue of fact, with the defense “bereft of details.”107 cralawred

Castillo’s alleged prayer for the irreconcilable reliefs of rescission of contract and
reformation of instrument is not a ground to dismiss his complaint. A plaintiff may
allege two or more claims in the complaint alternatively or hypothetically, either in one
cause of action or in separate causes of action per Section 2, Rule 8 of the 1997 Rules
of Civil Procedure.108 It is the filing of two separate cases for each of the causes of
action that is prohibited since the subsequently filed case may be dismissed under
Section 4, Rule 2 of the 1997 Rules of Civil Procedure109 on splitting causes of action.

As demonstrated, there are no genuine issues of material fact in this case. These are
issues that can be resolved judiciously by plain resort to the pleadings, affidavits,
depositions, and other papers on file. As the trial court found, Olivarez Realty
Corporation illegally withheld payments of the purchase price. The trial court did not
err in rendering summary judgment.

II

Castillo is entitled to cancel the

contract of conditional sale

Since Olivarez Realty Corporation illegally withheld payments of the purchase price,
Castillo is entitled to cancel his contract with petitioner corporation. However, we
 208

properly characterize the parties’ contract as a contract to sell, not a contract of

conditional sale.

In both contracts to sell and contracts of conditional sale, title to the property remains
with the seller until the buyer fully pays the purchase price.110 Both contracts are
subject to the positive suspensive condition of the buyer’s full payment of the purchase
price.111
cralawred

In a contract of conditional sale, the buyer automatically acquires title to the property
upon full payment of the purchase price.112 This transfer of title is “by operation of law
without any further act having to be performed by the seller.”113 In a contract to sell,
transfer of title to the prospective buyer is not automatic.114 “The prospective seller
[must] convey title to the property [through] a deed of conditional sale.”115 cralawred

The distinction is important to determine the applicable laws and remedies in case a
party does not fulfill his or her obligations under the contract. In contracts of
conditional sale, our laws on sales under the Civil Code of the Philippines apply. On the
other hand, contracts to sell are not governed by our law on sales116 but by the Civil
Code provisions on conditional obligations.

Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal obligations
does not apply to contracts to sell.117 As this court explained in Ong v. Court of
Appeals,118 failure to fully pay the purchase price in contracts to sell is not the breach
of contract under Article 1191.119 Failure to fully pay the purchase price is “merely an
event which prevents the [seller’s] obligation to convey title from acquiring binding
force.”120 This is because “there can be no rescission of an obligation that is still non-
existent, the suspensive condition not having [happened].”121 cralawred

In this case, Castillo reserved his title to the property and undertook to execute a deed
of absolute sale upon Olivarez Realty Corporation’s full payment of the purchase
price.122 Since Castillo still has to execute a deed of absolute sale to Olivarez Realty
Corporation upon full payment of the purchase price, the transfer of title is not
automatic. The contract in this case is a contract to sell.

As this case involves a contract to sell, Article 1191 of the Civil Code of the Philippines
does not apply. The contract to sell is instead cancelled, and the parties shall stand as
if the obligation to sell never existed.123
cralawred

Olivarez Realty Corporation shall return the possession of the property to Castillo. Any
improvement that Olivarez Realty Corporation may have introduced on the property
shall be forfeited in favor of Castillo per paragraph I of the deed of conditional sale: cra lawlawlib ra ry

I. Immediately upon signing this Contract, [Olivarez Realty Corporation] shall be

entitled to occupy, possess and develop the subject property. In case this
Contract is cancelled, any improvement introduced by [Olivarez Realty
Corporation] on the property shall be forfeited in favor of [Castillo.]124

As for prospective sellers, this court generally orders the reimbursement of the
installments paid for the property when setting aside contracts to sell.125 This is true
especially if the property’s possession has not been delivered to the prospective buyer
prior to the transfer of title.

In this case, however, Castillo delivered the possession of the property to Olivarez
 209

Realty Corporation prior to the transfer of title. We cannot order the reimbursement of
the installments paid.

In Gomez v. Court of Appeals,126 the City of Manila and Luisa Gomez entered into a
contract to sell over a parcel of land. The city delivered the property’s possession to
Gomez. She fully paid the purchase price for the property but violated the terms of the
contract to sell by renting out the property to other persons. This court set aside the
contract to sell for her violation of the terms of the contract to sell. It ordered the
installments paid forfeited in favor of the City of Manila “as reasonable compensation
for [Gomez’s] use of the [property]”127 for eight years.

In this case, Olivarez Realty Corporation failed to fully pay the purchase price for the
property. It only paid P2,500,000.00 out of the P19,080,490.00 agreed purchase price.
Worse, petitioner corporation has been in possession of Castillo’s property for 14 years
since May 5, 2000 and has not paid for its use of the property.

Similar to the ruling in Gomez, we order the P2,500,000.00 forfeited in favor of Castillo
as reasonable compensation for Olivarez Realty Corporation’s use of the property.

III

Olivarez Realty Corporation is liable for

moral and exemplary damages and attorney’s
fees

We note that the trial court erred in rendering summary judgment on the amount of
damages. Under Section 3, Rule 35 of the 1997 Rules of Civil Procedure, summary
judgment may be rendered, except as to the amount of damages.

In this case, the trial court erred in forfeiting the P2,500,000.00 in favor of Castillo as
damages under Article 1191 of the Civil Code of the Philippines. As discussed, there is
no breach of contract under Article 1191 in this case.

The trial court likewise erred in rendering summary judgment on the amount of moral
and exemplary damages and attorney’s fees.

Nonetheless, we hold that Castillo is entitled to moral damages, exemplary damages,

and attorney’s fees.

Moral damages may be awarded in case the claimant experienced physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury.128 cralawred

As for exemplary damages, they are awarded in addition to moral damages by way of
example or correction for the public good.129 Specifically in contracts, exemplary
damages may be awarded if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.130 cralawred

Under the deed of conditional sale, Olivarez Realty Corporation may only suspend the
monthly down payment in case Castillo fails to clear the land of the tenants six months
from the signing of the instrument. Yet, even before the sixth month arrived, Olivarez
Realty Corporation withheld payments for Castillo’s property. It even used as a defense
the fact that no case was filed against the Philippine Tourism Authority when, under
the deed of conditional sale, Olivarez Realty Corporation was clearly responsible for
 210

initiating action against the Philippine Tourism Authority. These are oppressive and
malevolent acts, and we find Castillo entitled to P500,000.00 moral damages and
P50,000.00 exemplary damages: chanRoble svi rtual Lawli bra ry

Plaintiff Castillo is entitled to moral damages because of the evident bad faith exhibited
by defendants in dealing with him regarding the sale of his lot to defendant [Olivarez
Realty Corporation]. He suffered much prejudice due to the failure of defendants to
pay him the balance of purchase price which he expected to use for his needs which
caused him wounded feelings, sorrow, mental anxiety and sleepless nights for which
defendants should pay P500,000.00 as moral damages more than six (6) years had
elapsed and defendants illegally and unfairly failed and refused to pay their legal
obligations to plaintiff, unjustly taking advantage of a poor uneducated man like
plaintiff causing much sorrow and financial difficulties. Moral damages in favor of
plaintiff is clearly justified . . . [Castillo] is also entitled to P50,000.00 as exemplary
damages to serve as a deterrent to other parties to a contract to religiously comply
with their prestations under the contract.131

We likewise agree that Castillo is entitled to attorney’s fees in addition to the

exemplary damages.132Considering that Olivarez Realty Corporation refused to satisfy
Castillo’s plainly valid, just, and demandable claim,133 the award of P50,000.00 as
attorney’s fees is in order.

However, we find that Dr. Pablo R. Olivarez is not solidarily liable with Olivarez Realty
Corporation for the amount of damages.

Under Article 1207 of the Civil Code of the Philippines, there is solidary liability only
when the obligation states it or when the law or the nature of the obligation requires
solidarity.134 In case of corporations, they are solely liable for their obligations.135 The
directors or trustees and officers are not liable with the corporation even if it is through
their acts that the corporation incurred the obligation. This is because a corporation is
separate and distinct from the persons comprising it.136 cralawred

As an exception to the rule, directors or trustees and corporate officers may be

solidarily liable with the corporation for corporate obligations if they acted “in bad faith
or with gross negligence in directing the corporate affairs.”137 cralawred

In this case, we find that Castillo failed to prove with preponderant evidence that it was
through Dr. Olivarez’s bad faith or gross negligence that Olivarez Realty Corporation
failed to fully pay the purchase price for the property. Dr. Olivarez’s alleged act of
making Castillo sign the deed of conditional sale without explaining to the latter the
deed’s terms in Tagalog is not reason to hold Dr. Olivarez solidarily liable with the
corporation. Castillo had a choice not to sign the deed of conditional sale. He could
have asked that the deed of conditional sale be written in Tagalog.

Thus, Olivarez Realty Corporation is solely liable for the moral and exemplary damages
and attorney’s fees to Castillo.

IV

The trial court acquired jurisdiction over

Castillo’s action as he paid the correct
docket fees

Olivarez Realty Corporation and Dr. Olivarez claimed that the trial court had no
 211

jurisdiction to take cognizance of the case. In the reply/motion to dismiss the

complaint138 they filed with the Court of Appeals, petitioners argued that Castillo failed
to pay the correct amount of docket fees. Stating that this action is a real action,
petitioners argued that the docket fee Castillo paid should have been based on the fair
market value of the property. In this case, Castillo only paid P4,297.00, which is
insufficient “if the real nature of the action was admitted and the fair market value of
the property was disclosed and made the basis of the amount of docket fees to be paid
to the court.”139 Thus, according to petitioners, the case should be dismissed for lack of
jurisdiction.

Castillo countered that his action for rescission is an action incapable of pecuniary
estimation. Thus, the Clerk of Court of the Regional Trial Court of Tanauan City did not
err in assessing the docket fees based on his prayer.

We rule for Castillo. In De Leon v. Court of Appeals,140 this court held that an action for
rescission of contract of sale of real property is an action incapable of pecuniary
estimation. In De Leon, the action involved a real property. Nevertheless, this court
held that “it is the nature of the action as one for rescission of contract which is
controlling.”141 Consequently, the docket fees to be paid shall be for actions incapable
of pecuniary estimation, regardless if the claimant may eventually recover the real
property. This court said:chanRob lesvi rtua lLawl ibra ry

. . . the Court in Bautista v. Lim, held that an action for rescission of contract is one
which cannot be estimated and therefore the docket fee for its filing should be the flat
amount of P200.00 as then fixed in the former Rule 141, §141, §5(10). Said this
Court:
We hold that Judge Dalisay did not err in considering Civil Case No. V-144 as basically
one for rescission or annulment of contract which is not susceptible of pecuniary
estimation (1 Moran's Comments on the Rules of Court, 1970 Ed, p. 55; Lapitan vs.
Scandia, Inc., L-24668, July 31, 1968, 24 SCRA 479, 781-483).

Consequently, the fee for docketing it is P200, an amount already paid by plaintiff, now
respondent Matilda Lim. (She should pay also the two pesos legal research fund fee, if
she has not paid it, as required in Section 4 of Republic Act No. 3870, the charter of
the U.P. Law Center).
Thus, although eventually the result may be the recovery of land, it is the nature of the
action as one for rescission of contract which is controlling. The Court of Appeals
correctly applied these cases to the present one. As it said:
We would like to add the observations that since the action of petitioners [private
respondents] against private respondents [petitioners] is solely for annulment or
rescission which is not susceptible of pecuniary estimation, the action should not be
confused and equated with the "value of the property" subject of the transaction; that
by the very nature of the case, the allegations, and specific prayer in the complaint,
sans any prayer for recovery of money and/or value of the transaction, or for actual or
compensatory damages, the assessment and collection of the legal fees should not be
intertwined with the merits of the case and/or what may be its end result; and that to
sustain private respondents' [petitioners'] position on what the respondent court may
decide after all, then the assessment should be deferred and finally assessed only after
the court had finally decided the case, which cannot be done because the rules require
that filing fees should be based on what is alleged and prayed for in the face of the
complaint and paid upon the filing of the complaint.142

Although we discussed that there is no rescission of contract to speak of in contracts of

conditional sale, we hold that an action to cancel a contract to sell, similar to an action
 212

for rescission of contract of sale, is an action incapable of pecuniary estimation. Like

any action incapable of pecuniary estimation, an action to cancel a contract to sell
“demands an inquiry into other factors”143 aside from the amount of money to be
awarded to the claimant. Specifically in this case, the trial court principally determined
whether Olivarez Realty Corporation failed to pay installments of the property’s
purchase price as the parties agreed upon in the deed of conditional sale. The principal
nature of Castillo’s action, therefore, is incapable of pecuniary estimation.

All told, there is no issue that the parties in this case entered into a contract to sell a
parcel of land and that Olivarez Realty Corporation failed to fully pay the installments
agreed upon. Consequently, Castillo is entitled to cancel the contract to sell.

WHEREFORE, the petition for review on certiorari is DENIED. The Court of Appeals’
decision dated July 20, 2010 and in CA-G.R. CV No. 91244
is AFFIRMED with MODIFICATION.

The deed of conditional sale dated April 5, 2000 is declared CANCELLED. Petitioner
Olivarez Realty Corporation shall RETURN to respondent Benjamin Castillo the
possession of the property covered by Transfer Certificate of Title No. T-19972
together with all the improvements that petitioner corporation introduced on the
property. The amount of P2,500,000.00 is FORFEITED in favor of respondent
Benjamin Castillo as reasonable compensation for the use of petitioner Olivarez Realty
Corporation of the property.

Petitioner Olivarez Realty Corporation shall PAY respondent Benjamin Castillo

P500,000.00 as moral damages, P50,000.00 as exemplary damages, and P50,000.00
as attorney’s fees with interest at 6% per annum from the time this decision becomes
final and executory until petitioner corporation fully pays the amount of damages.144 cralawred

SO ORDERED.
 213

G.R. No. 186063, January 15, 2014

PHILIPPINE NATIONAL BANK, Petitioner, v. SAN MIGUEL

CORPORATION, Respondent.

DECISION

PERALTA, J.:

This treats of the petition for review on certiorari of the Decision1 and Resolution2 of
the Court of Appeals (CA), dated June 7 2008 and December 15, 2008, respectively, in
CA-G.R. SP No. 01249-MIN.

The facts, as summarized by the CA, are as follows:

On July 1, 1996, respondent San Miguel Corporation (SMC, for brevity) entered into an
Exclusive Dealership Agreement with a certain Rodolfo R. Goroza (Goroza, hereafter),
wherein the latter was given by SMC the right to trade, deal, market or otherwise sell
its various beer products.

Goroza applied for a credit line with SMC, but one of the requirements for the credit
line was a letter of credit. Thus, Goroza applied for and was granted a letter of credit
by the PNB in the amount of two million pesos (P2,000,000.00). Under the credit
agreement, the PNB has the obligation to release the proceeds of Goroza's credit line
to SMC upon presentation of the invoices and official receipts of Goroza's purchases of
SMC beer products to the PNB, Butuan Branch.

On August 1, 1996, Goroza availed of his credit line with PNB and started selling SMC's
beer products x x x.

On February 11, 1997, Goroza applied for an additional credit line with the PNB. The
latter granted Goroza a one (1) year revolving credit line in the amount not exceeding
two million four hundred thousand pesos (P2,400,000.00). Thus, Goroza's total credit
line reached four million four hundred thousand pesos (P4,400,000.00) x x x. Initially,
Goroza was able to pay his credit purchases with SMC x x x. Sometime in January
1998, however, Goroza started to become delinquent with his accounts.

Demands to pay the amount of three million seven hundred twenty-two thousand four
hundred forty pesos and 88/100 (P3,722,440.88) were made by SMC against Goroza
and PNB, but neither of them paid. Thus, on April 23, 2003, SMC filed a Complaint for
collection of sum of money against PNB and Goroza with the respondent Regional Trial
Court Branch 3, Butuan City.3

After summons, herein petitioner filed its Answer,4 while Goroza did not. Upon
respondent's Motion to Declare Defendant in Default,5 Goroza was declared in default.

Trial ensued insofar as Goroza was concerned and respondent presented its evidence
ex parte against the former. Respondent made a formal offer of its exhibits on April 6,
2004 and the trial court admitted them on June 16, 2004.

Thereafter, on January 21, 2005, pre-trial between PNB and SMC was held.6
 214

On May 10, 2005, the RTC rendered a Decision,7 disposing as follows:

WHEREFORE, the Court hereby renders judgment in favor of plaintiff [SMC] ordering
defendant Rodolfo Goroza to pay plaintiff the following:

1. The principal amount of P3,722,440.00;

2. The interest of 12% per annum on the principal amount reckoned from January 27,
1998 up to the time of execution of the Judgment of this case;

3. Attorney's fees of P30,000.00;

4. Litigation expenses of P20,000.00.

SO ORDERED.8

Goroza filed a Notice of Appeal,9 while SMC filed a Motion for Reconsideration.10

On July 14, 2005, the RTC granted SMC's motion for reconsideration. The trial court
amended its Decision by increasing the award of litigation expenses to P90,652.50.11

Thereafter, on July 25, 2005, the RTC issued an Order,12 pertinent portions of which
read as follows:

xxx

Finding the Notice of Appeal filed within the reglementary period and the corresponding
appeal fee paid, x x x. The same is hereby given due course.

Considering that the case as against defendant PNB is still on-going, let the Record in
this case insofar as defendant Rodolfo R. Goroza is concerned, be reproduced at the
expense of defendant-appellant so that the same can be forwarded to the Court of
Appeals, together with the exhibits and transcript of stenographic notes in the required
number of copies.

SO ORDERED.13

In the meantime, trial continued with respect to PNB.

On September 27, 2005, PNB filed an Urgent Motion to Terminate Proceedings14 on the
ground that a decision was already rendered on May 10, 2005 finding Goroza solely
liable.

The RTC denied PNB's motion in its Resolution15 dated October 11, 2005.

On October 14, 2005, the RTC issued a Supplemental Judgment,16 thus:

The Court omitted by inadvertence to insert in its decision dated May 10, 2005 the
phrase "without prejudice to the decision that will be made against the other co-
defendant, PNB, which was not declared in default."

WHEREFORE, the phrase "without prejudice to the decision made against the other
defendant PNB which was not declared in default" shall be inserted in the dispositive
portion of said decision.
 215

SO ORDERED.17

On even date, the RTC also issued an Amended Order,18 to wit:

The Court's Order dated July 25, 2005 is hereby amended to include the phrase "this
appeal applies only to defendant Rolando Goroza and without prejudice to the
continuance of the hearing on the other defendant Philippine National Bank".

SO ORDERED.19

PNB then filed a Motion for Reconsideration20 of the above-quoted Supplemental

Judgment and Amended Order, but the RTC denied the said motion via its
Resolution21 dated July 6, 2006.

Aggrieved, PNB filed a special civil action for certiorari with the CA imputing grave
abuse of discretion on the part of the RTC for having issued its July 6, 2006
Resolution.22

On June 17, 2008, the CA rendered its questioned Decision denying the petition and
affirming the assailed Resolution of the RTC.

PNB filed a Motion for Reconsideration,23 but the CA denied it in its assailed Resolution.
Hence, the instant petition with the following Assignment of Errors:

THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT WAS CORRECT
IN RENDERING A SUPPLEMENTAL JUDGMENT AND AMENDED ORDER AGAINST THE
BANK DESPITE THE PERFECTION OF APPEAL OF ONE OF THE DEFENDANTS.

THE COURT OF APPEALS ERRED IN HOLDING THAT PROCEEDINGS MAY CONTINUE

AGAINST PNB DESPITE THE COMPLETE ADJUDICATION OF RELIEF IN FAVOR OF
SMC.24

PNB contends that the CA erred in holding that the RTC was correct in rendering its
Supplemental Judgment and Amended Order despite the perfection of Goroza's appeal.
PNB claims that when Goroza's appeal was perfected, the RTC lost jurisdiction over the
entire case making the assailed Supplemental Judgment and Amended Order void for
having been issued without or in excess of jurisdiction.

PNB also argues that the CA erred in ruling that proceedings against it may continue in
the RTC, despite the trial court's complete adjudication of relief in favor of SMC. PNB
avers that the May 10, 2005 Decision of the RTC, finding Goroza solely liable to pay
the entire amount sought to be recovered by SMC, has settled the obligation of both
Goroza and PNB, and that there is no longer any ground to hold PNB for trial and make
a separate judgment against it; otherwise, SMC will recover twice for the same cause
of action.

The petition lacks merit.

It is clear from the proceedings held before and the orders issued by the RTC that the
intention of the trial court is to conduct separate proceedings to determine the
respective liabilities of Goroza and PNB, and thereafter, to render several and separate
judgments for or against them. While ideally, it would have been more prudent for the
trial court to render a single decision with respect to Goroza and PNB, the procedure
adopted the RTC is, nonetheless, allowed under Section 4, Rule 36 of the Rules of
 216

Court, which provides that "in an action against several defendants, the court may,
when a several judgment is proper, render judgment against one or more of them,
leaving the action to proceed against the others." In addition, Section 5 of the same
Rule states that "when more than one claim for relief is presented in an action, the
court at any stage, upon a determination of the issues material to a particular claim
and all counterclaims arising out of the transaction or occurrence which is the subject
matter of the claim may render a separate judgment disposing of such claim." Further,
the same provision provides that "the judgment shall terminate the action with respect
to the claim so disposed of and the action shall proceed as to the remaining claims."
Thus, the appeal of Goroza, assailing the judgment of the RTC finding him liable, will
not prevent the continuation of the ongoing trial between SMC and PNB. The RTC
retains jurisdiction insofar as PNB is concerned, because the appeal made by Goroza
was only with respect to his own liability. In fact, PNB itself, in its Reply to
respondent's Comment, admitted that the May 10, 2005 judgment of the RTC was
"decided solely against defendant Rodolfo Goroza."25

The propriety of a several judgment is borne by the fact that SMC's cause of action
against PNB stems from the latter's alleged liability under the letters of credit which it
issued. On the other hand, SMC's cause of action against Goroza is the latter's failure
to pay his obligation to the former. As to the separate judgment, PNB has a
counterclaim against SMC which is yet to be resolved by the RTC.

Indeed, the issues between SMC and PNB which are to be resolved by the RTC, as
contained in the trial court's Pre-Trial Order dated January 21, 2005, were not
addressed by the RTC in its Decision rendered against Goroza. In particular, the RTC
judgment against Goroza did not make any determination as to whether or not PNB is
liable under the letter of credit it issued and, if so, up to what extent is its liability. In
fact, contrary to PNB's claim, there is nothing in the RTC judgment which ruled that
Goroza is "solely liable" to pay the amount which SMC seeks to recover.

In this regard, this Court's disquisition on the import of a letter of credit, in the case
ofTransfield Philippines, Inc. v. Luzon Hydro Corporation,26 as correctly cited by the CA,
is instructive, to wit:

By definition, a letter of credit is a written instrument whereby the writer requests or

authorizes the addressee to pay money or deliver goods to a third person and assumes
responsibility for payment of debt therefor to the addressee. A letter of credit,
however, changes its nature as different transactions occur and if carried through to
completion ends up as a binding contract between the issuing and honoring banks
without any regard or relation to the underlying contract or disputes between the
parties thereto.

xxx

Thus, the engagement of the issuing bank is to pay the seller or beneficiary of the
credit once the draft and the required documents are presented to it. The so-called
"independence principle" assures the seller or the beneficiary of prompt payment
independent of any breach of the main contract and precludes the issuing bank from
determining whether the main contract is actually accomplished or not. Under this
principle, banks assume no liability or responsibility for the form, sufficiency, accuracy,
genuineness, falsification or legal effect of any documents, or for the general and/or
particular conditions stipulated in the documents or superimposed thereon, nor do they
assume any liability or responsibility for the description, quantity, weight, quality,
condition, packing, delivery, value or existence of the goods represented by any
 217

documents, or for the good faith or acts and/or omissions, solvency, performance or
standing of the consignor, the carriers, or the insurers of the goods, or any other
person whomsoever.

xxx

As discussed above, in a letter of credit transaction, such as in this case, where the
credit is stipulated as irrevocable, there is a definite undertaking by the issuing bank to
pay the beneficiary provided that the stipulated documents are presented and the
conditions of the credit are complied with. Precisely, the independence principle
liberates the issuing bank from the duty of ascertaining compliance by the parties in
the main contract. As the principle's nomenclature clearly suggests, the obligation
under the letter of credit is independent of the related and originating contract. In
brief, the letter of credit is separate and distinct from the underlying transaction.27

In other words, PNB cannot evade responsibility on the sole ground that the RTC
judgment found Goroza liable and ordered him to pay the amount sought to be
recovered by SMC. PNB's liability, if any, under the letter of credit is yet to be
determined.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals,
dated June 17, 2008, and its Resolution dated December 15, 2008, both in CA-G.R. SP
No. 01249-MIN, are AFFIRMED.

SO ORDERED.
 218

G.R. No. 178899 : November 15, 2010

PHILIPPINE BUSINESS BANK, Petitioner, v. FELIPE CHUA, Respondent.

DECISION

BRION, J.:

We resolve the petition for review on certiorari[1] filed by Philippine Business Bank (PBB) challenging
the decision of the Court of Appeals (CA) in CA-G.R. SP No. 94883 dated February 8, 2007,[2] insofar as
it overturned the Regional Trial Court’s (RTC’s) order dated December 16, 2005 declaring the finality of
its Partial Summary Judgment and granting the issuance of a writ of execution against respondent Felipe
Chua (respondent Chua). PBB also seeks to overturn the resolution of the CA dated July 18, 2007, which
denied its motion for reconsideration.

FACTUAL ANTECEDENTS

From the records, the following facts are not in dispute.

On March 22, 2002, Tomas Tan (Tan), a stockholder and director/Treasurer of CST Enterprises, Inc.
(CST), filed a derivative suit for the Declaration of Unenforceability of Promissory Notes and Mortgage,
Nullity of Secretary’s Certificate, Injunction, Damages with Prayer for the Issuance of Temporary
Restraining Order/Writ of Preliminary Injunction against PBB, Francis Lee, Alfredo Yao, Rodulfo Besinga,
Stephen Taala, Rose Robles, Henry Ramos, Yu Heng, Mabuhay Sugar Central, Inc., Nancy Chan, Henry
Chan, John Dennis Chua, Jaime Soriano, Voltaire Uychutin, Peter Salud, Edgar Lo, respondent Felipe
Chua, and John Does before the Makati City Regional Trial Court.[3] c hanro blesvi rt ualawlib ra ry

In Tan’s amended complaint dated January 9, 2003, he alleged that sometime in February 2001, before
he went abroad for medical treatment, he turned over to respondent Chua, a director and the President
of CST, the original copies of Transfer Certificate of Title Nos. 124275 and 157581, titles to lands owned
by, and registered in the name of, CST. In January 2002, the respondent informed him that CST’s
properties had been fraudulently used as collateral for loans allegedly taken out in CST’s name, but
without proper authority from CST stockholders and/or the Board of Directors.[4]

From his investigation, Tan discovered that a certain Atty. Jaime Soriano had issued a Secretary’s
certificate, which stated that John Dennis Chua was authorized during a duly constituted CST
board meeting to open a bank account and obtain credit facilities under the name of CST with
PBB. This Secretary’s Certificate also authorized John Dennis Chua to use CST’s properties as
security for these loans.[5] Using this Secretary’s Certificate, John Dennis Chua took out loans with
PBB in the total amount of Ninety-One Million One Hundred Thousand Pesos (P91,100,000.00),[6] and
used CST properties as collateral.[7] Respondent Chua signed as co-maker with John Dennis
Chua, who signed both as the representative of CST, as well as in his personal capacity, on six
promissory notes to PBB to evidence parts of this loan.[8]

When PBB threatened to foreclose the mortgage on these properties after CST defaulted,[9] Tan filed
the present complaint, essentially arguing that the loans/promissory notes and mortgage made out in
CST’s name are unenforceable against it, since they were entered into by persons who were
unauthorized to bind the company.[10] chan roble svirtualawl ibra ry

In its Amended Answer,[11] PBB claimed that the loans to CST, as well as the corresponding mortgage
over CST properties, were all valid and binding since the loan applications and documents accomplished
by John Dennis Chua were supported by the duly accomplished secretary’s certificate, which authorized
him to obtain credit facilities in behalf of CST. In addition, the original copies of the titles to the
properties were offered to PBB as collaterals.

PBB’s Amended Answer also included a cross-claim against respondent Chua, demanding payment of the
promissory notes he signed as co-maker with John Dennis Chua.[12]

In respondent Chua’s Answer to the Cross-Claim of PBB,[13] he claimed that he never applied for a loan
with the PBB. He further denied authorizing John Dennis Chua to apply for any loans in CST’s name, or
to use CST properties as security for any loans.[14] Nevertheless, he admitted that he signed, as co-
maker, six promissory notes covering the loans obtained by John Dennis Chua with
PBB. According to respondent Chua, he executed these promissory notes after the loans had already
 219

been consummated, “in a sincere effort to persuade John Dennis Chua to pay off the unauthorized loan
and retrieve from cross-claimant PBB the CST titles.”[15]

PBB subsequently filed a Motion for Partial Summary Judgment based on Section 1, Rule 35 of the 1997
Rules of Civil Procedure (Rules), claiming that since respondent Chua already admitted the execution of
the promissory notes in favor of PBB amounting to Seventy Five Million Pesos
(P75,000,000.00),[16] insofar as its cross-claim against him was concerned, there was no genuine issue
on any material fact on the issue of his liability to PBB. PBB argued that although respondent Chua
claimed that he signed the promissory notes merely to persuade John Dennis Chua to pay off his loan to
PBB, he was still liable as an accommodation party under Section 29 of the Negotiable Instruments
Law.[17] c hanro blesvi rt ualawlib ra ry

THE RTC’S PARTIAL SUMMARY JUDGMENT

Acting on PBB’s motion, the RTC issued a partial summary judgment on PBB’s cross-claim on July 27,
2005, finding respondent Chua liable as a signatory to the promissory notes amounting to Seventy-Five
Million Pesos (P75,000,000.00). The RTC reasoned that by signing as a co-maker, he obligated himself
to pay the amount indicated in the promissory notes, even if he received no consideration in return.
Thus, the RTC ordered him to pay PBB the amount of P75,000,000.00, plus interests and costs.[18]

In its order dated December 16, 2005, the RTC resolved respondent Chua’s Notice of Appeal, as well as
PBB’s Motion to Disallow Appeal and to Issue Execution. Citing Section 1, Rule 41 of the Rules, the RTC
ruled that respondent Chua could not file a notice of appeal. Instead, he should have filed a special civil
action for certiorari under Rule 65 of the Rules. However, since the period for filing a certiorari petition
had already lapsed without respondent filing any petition, the partial summary judgment had become
final and executory. Thus, it ordered the issuance of a writ of execution for the satisfaction of the partial
summary judgment in favor of PBB.[19] cha nrob lesvi rtua lawlib rary

On December 21, 2005, the RTC issued an order appointing Renato Flora as the special sheriff to
implement the writ of execution. In line with this order, Renato Flora, on December 23, 2005, issued a
Notice of Levy and Sale on Execution of Personal Properties, addressed to respondent Chua. He
proceeded with the execution sale, and on December 28, 2005, he issued a certificate of sale over
respondent Chua’s 900 shares of stock in CST in favor of PBB. He also posted a notice of sheriff’s sale on
January 10, 2006 over respondent Chua’s five parcels of land located in Las Pinas, Pasay City, and
Muntinlupa.[20]

THE COURT OF APPEALS DECISION

Respondent Chua filed a petition for certiorari and mandamus with the CA to challenge: (a) the
December 16, 2005 order, granting PBB’s motion to disallow his appeal; (b) the December 21, 2005
order, granting PBB’s motion to appoint Renato Flora as special sheriff to implement the writ of
execution; and (c) the February 16, 2006 order denying his motion for reconsideration and to suspend
execution. In essence, respondent Chua alleged that the RTC acted with grave abuse of discretion in
disallowing his appeal of the partial summary judgment, and in issuing a writ of execution. Significantly,
respondent Chua did not question the propriety of the partial summary judgment. chan roblesv irt ualawli bra ry

On February 8, 2007, the CA issued the assailed decision, partly affirming the RTC order dated
December 16, 2005 on the matter of the disallowance of respondent Chua’s appeal. The CA held that
respondent Chua could not appeal the partial summary judgment while the main case remained
pending, in keeping with Section 1(g), Rule 41 of the Rules.

However, the CA held that the RTC committed grave abuse of discretion when it issued the writ of
execution against respondent Chua. As found by the CA, the RTC grievously erred when it held that the
partial judgment had become final and executory when respondent Chua failed to avail of the proper
remedy of certiorariwithin the 60 day reglementary period under Rule 65. Since a partial summary
judgment does not finally dispose of the action, it is merely an interlocutory, not a final, order. Thus, it
could not attain finality. chan roble svirtualawl ibra ry

The CA further noted that certiorari is an independent action and not part of the appeal proceedings, and
failure to file a certiorari petition would not result in the finality of the judgment or final order. The RTC,
thus, committed grave abuse of discretion amounting to lack of jurisdiction when it granted the issuance
of a writ of execution, and the corresponding writ of execution issued by the court a quo, as well as the
subsequent implementing proceedings, were void. chanrob lesvi rtua lawlib rary
 220

THE PETITION

PBB submits two issues for our resolution:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR IN

APPLYING JURISPRUDENCE NOT ON ALL FOURS [WITH] THE FACTUAL BACKDROP OF
THE CASE.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR IN

RECALLING AND SETTING ASIDE THE WRIT OF EXECUTION AND ALL THE PROCEEDINGS
TAKEN FOR ITS IMPLEMENTATION ON THE WRONG NOTION THAT THE PARTIAL SUMMARY
JUDGMENT HAS NOT BECOME FINAL AND EXECUTORY.

THE RULING

We DENY the petition for being unmeritorious.

Nature of Partial Summary Judgment

PBB’s motion for partial summary judgment against respondent Chua was based on Section 1, Rule 35
of the Rules, which provides:

Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits, depositions
or admissions for a summary judgment in his favor upon all or any part thereof.

A summary judgment, or accelerated judgment, is a procedural technique to promptly dispose of cases

where the facts appear undisputed and certain from the pleadings, depositions, admissions and
affidavits on record, or for weeding out sham claims or defenses at an early stage of the litigation to
avoid the expense and loss of time involved in a trial.[21] When the pleadings on file show that there
are no genuine issues of fact to be tried, the Rules allow a party to obtain immediate relief by way of
summary judgment, that is, when the facts are not in dispute, the court is allowed to decide the case
summarily by applying the law to the material facts.[22]

The rendition by the court of a summary judgment does not always result in the full adjudication of all
the issues raised in a case. For these instances, Section 4, Rule 35 of the Rules provides:

Section 4. Case not fully adjudicated on motion. – If on motion under this Rule, judgment
is not rendered upon the whole case or for all the reliefs sought and a trial is
necessary, the court at the hearing of the motion, by examining the pleadings and the
evidence before it and by interrogating counsel shall ascertain what material facts exist
without substantial controversy and what are actually and in good faith controverted. It
shall thereupon make an order specifying the facts that appear without substantial
controversy, including the extent to which the amount of damages or other relief is not
in controversy, and directing such further proceedings in the action as are just. The facts
so specified shall be deemed established, and the trial shall be conducted on the
controverted facts accordingly.

This is what is referred to as a partial summary judgment. A careful reading of this section reveals that a
partial summary judgment was never intended to be considered a “final judgment,” as it does
not “[put] an end to an action at law by declaring that the plaintiff either has or has not entitled himself
to recover the remedy he sues for.”[23] The Rules provide for a partial summary judgment as a means
to simplify the trial process by allowing the court to focus the trial only on the assailed facts, considering
as established those facts which are not in dispute.

After this sifting process, the court is instructed to issue an order, the partial summary judgment, which
specifies the disputed facts that have to be settled in the course of trial. In this way, the partial
 221

summary judgment is more akin to a record of pre-trial,[24] an interlocutory order, rather than a final
judgment.

The differences between a “final judgment” and an “interlocutory order” are well-established. We said
in Denso (Phils.) Inc. v. Intermediate Appellate Court[25] that:

[A] final judgment or order is one that finally disposes of a case, leaving nothing more to
be done by the Court in respect thereto, e.g., an adjudication on the merits which, on the
basis of the evidence presented at the trial, declares categorically what the rights and
obligations of the parties are and which party is in the right; or a judgment or order that
dismisses an action on the ground, for instance, of res judicata or prescription. Once
rendered, the task of the Court is ended, as far as deciding the controversy or determining
the rights and liabilities of the litigants is concerned. Nothing more remains to be done by
the Court except to await the parties' next move . . . 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.”

x x x x

Conversely, an order that does not finally dispose of the case, and does not end the
Court's task of adjudicating the parties' contentions and determining their rights and
liabilities as regards each other, but obviously indicates that other things remain to be
done by the Court, is “interlocutory”, e.g., an order denying a motion to dismiss under
Rule 16 of the Rules x x x Unlike a 'final judgment or order, which is appealable,
as above pointed out, an 'interlocutory order may not be questioned on appeal
except only as part of an appeal that may eventually be taken from the final
judgment rendered in the case.[26]

Bearing in mind these differences, there can be no doubt that the partial summary judgment
envisioned by the Rules is an interlocutory order that was never meant to be treated
separately from the main case. As we explained inGuevarra v. Court of Appeals:[27]

It will be noted that the judgment in question is a “partial summary judgment.” It was
rendered only with respect to the private respondents’ first and second causes of action
alleged in their complaint. It was not intended to cover the other prayers in the said
complaint, nor the supplementary counterclaim filed by the petitioners against the private
respondents, nor the third-party complaint filed by the petitioners against the Security
Bank and Trust Company. A partial summary judgment “is not a final or appealable
judgment.”(Moran, Vol. 2, 1970 Edition, p. 189, citing several cases.) “It is merely a
pre-trial adjudication that said issues in the case shall be deemed established for
the trial of the case.” (Francisco, Rules of Court, Vol. II, p. 429.)

x x x x

The partial summary judgment rendered by the trial court being merely interlocutory and
not ‘a final judgment’, it is puerile to discuss whether the same became final and
executory due to the alleged failure to appeal said judgment within the supposed period of
appeal. What the rules contemplate is that the appeal from the partial summary
judgment shall be taken together with the judgment that may be rendered in the
entire case after a trial is conducted on the material facts on which a substantial
controversy exists. This is on the assumption that the partial summary judgment was
validly rendered, which, as shown above, is not true in the case at bar.[28]

We reiterated this ruling in the cases of Province of Pangasinan v. Court of

Appeals[29] and Government Service Insurance System v. Philippine Village Hotel, Inc.[30]

Applicability of Guevarra

PBB asserts that our pronouncement in the cases of Guevarra, Province of Pangasinan, and Government
Service Insurance System cannot be applied to the present case because these cases involve factual
circumstances that are completely different from the facts before us. While the partial summary
judgments in the cited cases decided only some of the causes of action presented, leaving other issues
unresolved, PBB insists that as far as its cross-claim against respondent Chua is concerned, the court a
 222

quo’s partial summary judgment is a full and complete adjudication because the award is for the whole
claim.[31] According to PBB, whatever the court decides as regards the main case, this will not affect
the liability of respondent Chua as a solidary debtor in the promissory notes, since the creditor can
proceed against any of the solidary debtors. In other words, no substantial controversy exists between
PBB and respondent Chua, and there is nothing more to be done on this particular issue.

We do not agree with PBB’s submission.

In the Guevarra case, the Court held that the summary judgment rendered by the lower court was in
truth a partial summary judgment because it failed to resolve the other causes of action in the
complaint, as well as the counterclaim and the third party complaint raised by the defendants.

Contrary to PBB’s assertions, the same could be said for the case presently before us. The partial
summary judgment in question resolved only the cross-claim made by PBB against its co-defendant,
respondent Chua, based on the latter’s admission that he signed promissory notes as a co-maker in
favor of PBB. This is obvious from the dispositive portion of the partial summary judgment, quoted
below for convenient reference:

WHEREFORE, a partial summary judgment is hereby rendered on the cross-claim of cross-

defendant Philippine Business Bank against cross-defendant Felipe Chua, ordering the
latter to pay the former as follows:

1. The amount of Ten Million (P10,000,000.00) Pesos, representing the value of the
Promissory Note dated April 17, 2001, plus interest thereof at the rate of 16% from
April 12, 2002, until fully paid;

2. The amount of Twelve Million (P12,000,000.00) Pesos, representing the value of

the Promissory Note dated April 5, 2001, plus interest thereon at the rate of 17%
from April 1, 2002, until fully paid;

3. The amount of Twenty Three Million (P23,000,000.00) Pesos, representing the

value of the Promissory Note dated April 25, 2001, plus interest thereon at the rate
of 16% from April 19, 2002, until fully paid;

4. The amount of Eight Million (P8,000,000.00) Pesos, representing the value of the
Promissory Note dated June 20, 2001, plus interest thereon at the rate of 17%
from June 20, 2001, until fully paid;

5. The amount of Seven Million (P7,000,000.00) Pesos, representing the value of the
Promissory Note dated June 22, 2001, plus interest thereon at the rate of 17%
from June 17, 2002, until fully paid;

6. The amount of Fifteen Million (P15,000,000.00) Pesos, representing the value of

the Promissory Note dated June 28, 2001, plus interest thereon at the rate of 17%
from June 24, 2002, until fully paid;

7. Plus cost of suit.

SO ORDERED. [32]

Clearly, this partial summary judgment did not dispose of the case as the main issues raised in
plaintiff Tomas Tan’s complaint, i.e., the validity of the secretary’s certificate which authorized John
Dennis Chua to take out loans, and execute promissory notes and mortgages for and on behalf of CST,
as well as the validity of the resultant promissory notes and mortgage executed for and on behalf of
CST, remained unresolved.

Chua shares common interest with co-defendant-

debtors

Still, PBB insists that the partial summary judgment is a final judgment as regards PBB’s cross-claim
against respondent Chua since respondent Chua’s liability will not be affected by the resolution of the
issues of the main case.
 223

On its face, the promissory notes were executed by John Dennis Chua in two capacities – as the alleged
representative of CST, and in his personal capacity. Thus, while there can be no question as to
respondent Chua’s liability to PBB (since he already admitted to executing these promissory notes as a
co-maker), still, the courta quo’s findings on: (a) whether John Dennis Chua was properly authorized to
sign these promissory notes on behalf of CST, and (b) whether John Dennis Chua actually signed these
promissory notes in his personal capacity, would certainly have the effect of determining whether
respondent Chua has the right to go after CST and/or John Dennis Chua for reimbursement on any
payment he makes on these promissory notes, pursuant to Article 1217 of the Civil Code, which states:

Article 1217. Payment made by one of the solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share
to the debtor paying the obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each.

In other words, PBB has a common cause of action against respondent Chua with his alleged co-debtors,
John Dennis Chua and CST, it would simply not be proper to treat respondent Chua separately from his
co-debtors.

Moreover, we cannot turn a blind eye to the clear intention of the trial court in rendering a partial
summary judgment. Had the trial court truly intended to treat PBB’s cross-claim against respondent
Chua separately, it could easily have ordered a separate trial via Section 2, Rule 31 of the Rules, which
states:

Section 2. Separate trials. – The court, in furtherance of convenience or to avoid

prejudice, may order a separate trial of any claim, cross-claim, counterclaim, or third-
party complaint, or of any separate issue or of any number of claims, cross-claims,
counterclaims, third-party complaints or issues.

That the trial court did not do so belies PBB’s contention.

It has also not escaped our attention that PBB, in its Motion to Disallow Appeal and to Issue Execution
Against Cross-Defendant Felipe Chua,[33] already admitted that the partial summary judgment is
not a judgment or final order that completely disposes of the case. In its own words:

x x x x

3. However, the remedy availed of by [respondent Chua] is patently erroneous because

under Rule 41 Section 1 of the Rules of Court, an appeal may be taken only from a
judgment or final order that completely disposes the case;

4. The judgment rendered by [the RTC] dated July 27, 2005 isonly a partial
summary judgment against [respondent Chua], on the crossclaim of cross-
claimant Philippine Business Bank. The main case which involves the claim of
plaintiffs against the principal defendants is still pending and has not yet been
adjudged by [the RTC].[34]

Thus, PBB cannot now be allowed to deny the interlocutory nature of the partial summary judgment.

Certiorari not the proper remedy

PBB also maintains that the partial summary judgment attained finality when respondent Chua failed to
file a certiorari petition, citing the last paragraph of Section 1, Rule 41 of the Rules as basis. We quote:

Section 1. Subject of appeal. – An appeal maybe taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these
Rules to be appealable.

No appeal may be taken from:

 224

x x x x

(g) A judgment or final order for or against one or more of several parties or in separate
claims, counterclaims, cross-claims and third party complaints, while the main case is
pending, unless the court allows an appeal therefrom;

x x x x

In all the above instances where the judgment, or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule 65.

Contrary to PBB’s contention, however, certiorari was not the proper recourse for respondent Chua. The
propriety of the summary judgment may be corrected only on appeal or other direct review, not a
petition for certiorari,[35] since it imputes error on the lower court’s judgment. It is well-settled
that certiorari is not available to correct errors of procedure or mistakes in the judge’s findings and
conclusions of law and fact.[36] As we explained in Apostol v. Court of Appeals:[37]

As a legal recourse, the special civil action of certiorari is a limited form of review. The
jurisdiction of this Court is narrow in scope; it is restricted to resolving errors of
jurisdiction, not errors of judgment. Indeed, as long as the courts below act within their
jurisdiction, alleged errors committed in the exercise of their discretion will amount to
mere errors of judgment correctable by an appeal or a petition for review.[38]

In light of these findings, we affirm the CA’s ruling that the partial summary judgment is an interlocutory
order which could not become a final and executory judgment, notwithstanding respondent Chua’s
failure to file a certiorari petition to challenge the judgment. Accordingly, the RTC grievously erred when
it issued the writ of execution against respondent Chua.

In view of this conclusion, we find it unnecessary to resolve the issue raised by respondent Chua on the
validity of the RTC’s appointment of a special sheriff for the implementation of the execution writ.

Propriety of Summary Judgment Reserved for Appeal

As a final point, we note that respondent Chua has raised with this Court the issue of the propriety of
the partial summary judgment issued by the RTC. Notably, respondent Chua never raised this issue in
his petition for certiorari before the CA. It is well settled that no question will be entertained on appeal
unless it has been raised in the proceedings below.[39] Basic considerations of due process impel the
adoption of this rule.[40]

Furthermore, this issue would be better resolved in the proper appeal, to be taken by the parties once
the court a quo has completely resolved all the issues involved in the present case in a final judgment. If
we were to resolve this issue now, we would be preempting the CA, which has primary jurisdiction over
this issue.

Lastly, taking jurisdiction over this issue now would only result in multiple appeals from a single case
which concerns the same, or integrated, causes of action. As we said in Santos v. People:[41]

Another recognized reason of the law in permitting appeal only from a final order or
judgment, and not from an 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 would 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.

WHEREFORE, premises considered, we DENY the petition for lack of merit andAFFIRM the Decision of
the Court of Appeals in CA-G.R. SP No. 94883 dated February 8, 2007, as well as its Resolution dated
July 18, 2007. Costs against the petitioner, Philippine Business Bank.

SO ORDERED.
 225

G.R. No. 199595, April 02, 2014

PHILIPPINE WOMAN’S CHRISTIAN TEMPERANCE UNION,

INC., Petitioner, v. TEODORO R. YANGCO 2ND AND 3RD GENERATION HEIRS
FOUNDATION, INC., Respondent.

DECISION

REYES, J.:

This is a petition for certiorari and prohibition1 under Rule 65 of the Rules of Court
seeking the issuance of an order commanding the Register of Deeds of Quezon City
and the Court Sheriff of the Regional Trial Court (RTC) of Quezon City, Branch 218, to
cease and desist from implementing the Court Resolutions dated July 21, 20102 and
September 15, 20103 in G.R. No. 190193 denying with finality Philippine Woman’s
Christian Temperance Union, Inc.’s (PWCTUI) petition for review of the Court of
Appeals (CA) Decision4 dated November 6, 2009 in CA–G.R. CV No. 90763 which
affirmed the Decision5 dated January 24, 2008 of the RTC in LRC Case No. Q–
18126(04) disposing as follows: chanRo blesvi rtua lLaw lib rary

WHEREFORE, the Register of Deeds of Quezon City is hereby ordered to cancel TCT
No. 20970 T–22702 and issue in lieu thereof a new title in the name of Teodoro R.
Yangco 2ndand 3rd Generation Heirs Foundation, Inc. free from all liens and
encumbrances.

SO ORDERED.6

PWCTUI also prays, as ancillary remedy, for the re–opening of LRC Case No. Q–
18126(04) and as provisional remedy, for the issuance of a temporary restraining
order (TRO) and/or a writ of preliminary injunction.

The Antecedents

On May 19, 2004, respondent Teodoro R. Yangco (2nd and 3rd Generation Heirs)
Foundation, Inc. (TRY Foundation) filed before the RTC of Quezon City, acting as a
Land Registration Court, a Petition for the Issuance of New Title in Lieu of
Transfer Certificate of Title (TCT) No. 20970 T–22702 of the Office of the Register of
Deeds of Quezon City docketed as LRC Case No. Q–18126(04).7

TRY Foundation alleged that it is composed of the 2nd and 3rd generation heirs and
successors–in–interest to the first generation testamentary heirs of the late
philanthropist Teodoro R. Yangco (Yangco) who donated on May 19, 1934 a 14,073–
square meter parcel of land (subject property) located at 21 Boni Serrano Avenue,
Quezon City in the following manner,8viz: chanRoblesv irtual Lawlib rary

a) the property shall be used as a site for an institution to be known as the Abierrtas
House of Friendship the purpose of which shall be to provide a Home for needy and
unfortunate women and girls, including children of both sexes and promote, foster all
efforts, work and activities looking toward their protection from the ravages of all
forms of immoralities;

b) Should the property herein be used for any other purpose or purposes not herein
specified, the present gift shall become ipso facto null and void and property given
shall automatically revert to the donor, his heirs and assigns, but any improvement or
 226

improvements placed, constructed and/or maintained on said premises by the Donee,

shall remain the property of said Donee to be by it removed there[f]rom (sic) at its
expense after reasonable notice from the donor, his heirs and assigns.9

The property was registered in the name of PWCTUI by virtue of TCT No. 20970 at the
back of which the above–quoted conditions of the donation were annotated. PWCTUI
is a non–stock, non–profit corporation originally registered with the Securities and
Exchange Commission (SEC) in 1929 under SEC Registration No. PW–959.10

PWCTUI’s corporate term expired in September 1979.11 Five years thereafter, using
the same corporate name, PWCTUI obtained SEC Registration No. 12208812 and
forthwith applied for the issuance of a new owner’s duplicate copy of TCT No. 20970
over the subject property thru LRC Case No. 22702. The application was granted and
PWCTUI was issued a new TCT No. 20970 T–2270213 which, however, bore only the
first condition imposed on the donation.

Recounting the foregoing episodes, TRY Foundation claimed that the expiration of
PWCTUI’s corporate term in 1979 effectively rescinded the donation pursuant to the
“unwritten resolutory condition” deemed written by Article 1315 of the Civil
Code14 prescribing that the Corporation Code, specifically Section 12215thereof, be read
into the donation. Interestingly the latter provision mandates dissolved corporation to
wind up their affairs and dispose of their assets within three years from the expiration
of their term. Being comprised of the heirs of the donor, TRY Foundation claimed that
it is entitled to petition for the issuance of a new title in their name pursuant to Section
108 of Presidential Decree (P.D.) No. 1529.16 TRY Foundation prayed for the issuance
of a new title in its name after the cancellation of PWCTUI’s TCT No. 20970 T–22702.

PWCTUI opposed the petition arguing that: (1) TRY Foundation has no legal personality
to bring the action because the donation has never been revoked and any right to
demand for its revocation already prescribed; (2) although PCWTUI’s corporate
term was not extended upon its expiration in 1979, it nonetheless registered anew and
continued the operations, affairs and social work of the corporation; it also continued
to possess the property and exercised rights of ownership over it; (3) only the
appropriate government agency and not TRY Foundation or any other private individual
can challenge the corporate life and existence of PCWTUI; (4) TRY Foundation and its
counsel are guilty of forum shopping because they have already questioned PWCTUI’s
corporate personality in a different forum but failed to obtain a favorable relief;
(5) TRY Foundation is guilty of fraud for failing to include PWCTUI as an indispensable
party and to furnish it with a copy of the petition; and (6) the RTC has no jurisdiction
over the petition because PWCTUI is unaware of its publication.17

In a Resolution dated April 4, 2005, the RTC denied the Opposition18 of PWCTUI.
According to the trial court, when the corporate life of PWCTUI expired in 1979, the
property ceased to be used for the purpose for which it was intended, hence, it
automatically reverted to Yangco. As such, TRY Foundation, being composed of his
heirs, is considered “other person in interest” under Section 108 of P.D. No. 1529 with
a right to file a petition for the issuance of title over the property.

Hearings were thereafter held for the reception of evidence of TRY Foundation. On
January 24, 2008, the RTC rendered its Decision19 sustaining TRY Foundation’s
petition.

The RTC ruled that PWCTUI, with SEC Registration No. PW–959 in whose name the
property was registered is separate and distinct from oppositor PWCTUI with SEC
 227

Registration No. 122088. The legal personality of PWCTUI (PW–959) ipso facto ended
when its registration expired in September 1979. The new PWCTUI (122088) has its
own personality separate and distinct from PWCTUI (PW–959) hence the latter is not
the donee and thus has no claim to the property. As such, the reversion clause in the
donation came about and the property must revert to the donor or his heirs, thus: cha nRoblesv irt ual Lawlib rary

It is clear that Don Teodoro R. Yangco is the primary reversion owner of the property.
He is succeeded as reversion owner by the first generation heirs or those testamentary
heirs named in his Last Will and Testament which will was admitted to probate by the
Supreme Court in the abovecited case. The second generation heirs are the nieces and
nephews of Don Teodoro R. Yangco and the sons/daughters of the “strangers” named
in the will. The second generation heirs succeeded the first generation/testamentary
heirs in their own right. x x x.20 (Citations omitted)

The RTC granted TRY Foundation’s petition by ordering the cancellation of PWCTUI’s
TCT No. 20970 T–22702 and the issuance of a new title in the name of TRY
Foundation.21

PWCTUI appealed to the CA, arguing, among others, that it must be determined
whether the condition imposed in the donation has already occurred or deemed
fulfilled. The appeal was docketed as CA–G.R. CV No. 90763. In its
Decision22 dated November 6, 2009, the CA affirmed the RTC’s findings. The CA added
that the subsequent re–registration of PWCTUI (122088) did not revive or continue the
corporate existence of PWCTUI (PW–959). Hence, PWCTUI (122088) is not the real
donee contemplated in the donation made by Yangco and as such any issue on
revocation of donation is improper. The CA Decision disposed thus: chanRob lesvi rtua lLawl ibra ry

WHEREFORE, the appeal is DENIED. The assailed Decision is AFFIRMED in toto.

Costs against [PWCTUI].

SO ORDERED.23

PWCTUI sought recourse with the Court thru a petition for review
on certiorari docketed as G.R. No. 190193. In a Resolution24 dated July 21, 2010, we
denied the petition for failure to sufficiently show any reversible error in the assailed
CA decision. PWCTUI moved for reconsideration but its motion was denied with finality
in another Resolution25 dated September 15, 2010. An entry of judgment was
thereafter issued stating that the Court Resolution dated July 21, 2010 became final
and executory on October 20, 2010.26

On December 23, 2011, PWCTUI filed the herein petition captioned as one
for “Prohibition & Certiorari and to Re–Open the Case with Prayer for Issuance of
Temporary Restraining Order (TRO) &/or Writ of Preliminary Injunction.”27 PWCTUI
prayed for the following reliefs:
chanRob lesvi rtua lLawl ibra ry

a.) a TRO and/or a writ of preliminary injunction be issued preventing and/or enjoining
public respondents, Register of Deeds of Quezon City and the Sheriff of the RTC of
Quezon City, Branch 218 from executing the RTC Decision dated January 24, 2008;

b.) to make the injunction permanent by annulling and setting aside all orders,
decisions, resolutions and proceedings issued and taken in relation to LRC Case No. Q–
18126(04) before the trial and appellate courts for having been promulgated in excess
of jurisdiction or with grave abuse of discretion; and
 228

c.) LRC Case No. Q–18126(04) be re–opened, re–considered and re–studied in the
interest of true and fair justice.
In support of its pleas, PWCTUI submitted the following arguments: chanRob lesvi rtua lLawl ibra ry

a. based on the deed of donation, the expiration of PWCTUI’s corporate term is not
stated as a ground for the nullification of the donation and the operation of the
reversion clause;

b. the commercial leasing of portions of the donated land did not violate the condition
in the donation because the lease contract with Jelby Acres was pursued for the
generation of funds in order for PWCTUI to carry on the charitable purposes of the
Abiertas House of Friendship;

c. TRY Foundation has no legal standing or cause of action to claim the land because its
members are not the true heirs of Yangco who died single and without descendants.
His only relatives are his half–siblings who are the legitimate children of his mother,
Doña Ramona Arguelles Corpus and her first husband Tomas Corpus, hence, no right
of inheritance ab intestato can take place between them pursuant to Article 992 of the
Civil Code; and
d. Even assuming that TRY Foundation has a cause of action for the revocation of the
donation, the same has already prescribed because more than 40 years has lapsed
from the date the donation was made in May 19, 1934.

The Court’s Ruling

On its face, it is immediately apparent that the petition merits outright dismissal in
view of the doctrine of immutability attached to the Court’s final and executory
Resolutions dated July 21, 2010 and September 15, 2010 in G.R. No. 190193.

The doctrine postulates 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 and law, and whether it
is made by the court that rendered it or by the Highest Court of the land. Any act
which violates this principle must immediately be struck down.28

A long and intent study, however, of the arguments raised in the present recourse vis–
à–vis the proceedings taken in LRC Case No. Q–18126(04) disclose that it is
necessary, obligatory even, for the Court to accord affirmative consideration to the
supplications tendered by PWCTUI in the petition at bar.

While firmly ingrained as a basic procedural tenet in Philippine jurisprudence,

immutability of final judgments was never meant to be an inflexible tool to excuse and
overlook prejudicial circumstances. The doctrine must yield to practicality, logic,
fairness and substantial justice. Hence, it’s application admits the following exceptions:
(1) the correction of clerical errors; (2) the so–called nunc pro tunc entries which
cause no prejudice to any party; (3) void judgments; and (4) whenever circumstances
transpire after the finality of the decision rendering its execution unjust and
inequitable.29

Here, the third exception is attendant. The nullity of the RTC judgment and all
subsequent rulings affirming the same, render inoperative the doctrine of immutability
of judgment, and consequently justify the propriety of giving due course to the present
petition.
 229

To expound, the RTC judgment in LRC Case No. Q–18126(04) and all proceedings
taken in relation thereto were void because the RTC did not acquire jurisdiction over
the fundamental subject matter of TRY Foundation’s petition for the issuance of a title
which was in reality, a complaint for revocation of donation, an ordinary civil action
outside the ambit of Section 108 of P.D. No. 1529.

The petition filed by TRY

Foundation was a disguised
complaint for revocation of
donation.

It has been held that the jurisdiction of a court over the subject matter of a particular
action is determined by the plaintiff’s allegations in the complaint and the principal
relief he seeks in the light of the law that apportions the jurisdiction of courts.30
Jurisdiction should be determined by considering not only the status or the relationship
of the parties but also the nature of the issues or questions that is the subject of the
controversy.31

The petition is premised on allegations that the deed of donation from whence PWCTUI
derived its title was automatically revoked when the latter’s original corporate term
expired in 1979. Consequently, reversion took effect in favor of the donor and/or his
heirs. As relief, TRY Foundation sought the cancellation of TCT No. 20970 T–22702
and the issuance of a new title in its name, to wit: cha nRoblesv irt ual Lawlib rary

WHEREFORE, in view of all the foregoing, it is respectfully prayed of the Hon. Court
that after due hearing, the Hon. Court render judgment: cha nRoblesv irt ual Lawlib rary

Ordering the Register of Deeds of Quezon City to cancel TCT No. 20970 T–22702 and
issue in lieu thereof a new title in the name of TRY Heirs (2nd and 3rd Generation) Heirs
Foundation, Inc. free from all liens and encumbrances.32

The above contentions and plea betray the caption of the petition. Observably, TRY
Foundation is actually seeking to recover the possession and ownership of the subject
property from PWCTUI and not merely the cancellation of PWCTUI’s TCT No. 20970 T–
22702. The propriety of pronouncing TRY Foundation as the absolute owner of the
subject property rests on the resolution of whether or not the donation made to
PWCTUI has been effectively revoked when its corporate term expired in 1979. Stated
otherwise, no judgment proclaiming TRY Foundation as the absolute owner of the
property can be arrived at without declaring the deed of donation revoked.

The Court made a similar observation in Dolar v. Barangay Lublub (now P.D. Monfort
North), Municipality of Dumangas,33 the facts of which bear resemblance to the facts at
hand. In Dolar, the petitioner filed a complaint for quieting of title and recovery of
possession with damages involving a land he had earlier donated to the respondent.
The petitioner claimed that the donation had ceased to be effective when the
respondent failed to comply with the conditions of the donation. As relief, the
petitioner prayed that he be declared the absolute owner of the property. The
complaint was dismissed by the trial court on the ground that the petitioner’s cause of
action for revocation has already prescribed and as such, its claim for quieting of title is
ineffective notwithstanding that the latter cause of action is imprescriptible. In
sustaining such dismissal, the Court remarked: chanRob lesvi rtua lLawl ibra ry

As aptly observed by the trial court, the petitory portion of petitioner’s complaint in
Civil Case No. 98–033 seeks for a judgment declaring him the absolute owner of the
 230

donated property, a plea which necessarily includes the revocation of the deed of
donation in question. Verily, a declaration of petitioner’s absolute ownership appears
legally possible only when the deed of donation is contextually declared peremptorily
revoked.

xxxx

It cannot be overemphasized that respondent barangay traces its claim of ownership

over the disputed property to a valid contract of donation which is yet to be effectively
revoked. Such rightful claim does not constitute a cloud on the supposed title of
petitioner over the same property removable by an action to quiet title. Withal, the
remedy afforded in Article 476 of the Civil Code is unavailing until the donation shall
have first been revoked in due course under Article 764 or Article 1144 of the Code.34

An action which seeks the recovery

of property is outside the ambit of
Section 108 of P.D. No. 1529.

Whether the donation merits revocation and consequently effect reversion of the
donated property to the donor and/or his heirs cannot be settled by filing a mere
petition for cancellation of title under Section 108 of P.D. No. 1529 which reads: chanRob lesvi rtua lLawl ibra ry

Sec. 108. Amendment and alteration of certificates. – No erasure, alteration, or

amendment shall be made upon the registration book after the entry of a certificate of
title or of a memorandum thereon and the attestation of the same by the Register of
Deeds, except by order of the proper Court of First Instance. A registered owner or
other person having interest in the registered property, or, in proper cases, the
Register of Deeds with the approval of the Commissioner of Land Registration, may
apply by petition to the court upon the ground that the registered interest of any
description, whether vested, contingent, expectant or inchoate appearing on the
certificate, have terminated and ceased; or that new interest not appearing upon the
certificate have arisen or been created; or that an omission or an error was made in
entering a certificate or any memorandum thereon, or on any duplicate certificate: or
that the same or any person in the certificate has been changed or that the registered
owner has married, or, if registered as married, that the marriage has been terminated
and no right or interest of heirs or creditors will thereby be affected; or that a
corporation which owned registered land and has been dissolved has not yet convened
the same within three years after its dissolution; or upon any other reasonable ground;
and the court may hear and determine the petition after notice to all parties in interest,
and may order the entry or cancellation of a new certificate, the entry or cancellation
of a memorandum upon a certificate, or grant any other relief upon such terms and
conditions, requiring security and bond if necessary, as it may consider proper;
Provided, however, That this section shall not be construed to give the court authority
to reopen the judgment or decree of registration, and that nothing shall be done or
ordered by the court which shall impair the title or other interest of a purchaser holding
a certificate for value and in good faith, or his heirs and assigns without his or their
written consent. Where the owner’s duplicate certificate is not presented, a similar
petition may be filed as provided in the preceding section.

All petitions or motions filed under this section as well as any other provision of this
decree after original registration shall be filed and entitled in the original case in which
the decree of registration was entered.

A parallel issue was encountered by the Court in Paz v. Republic of the

 231

Philippines,35 which involved a petition for the cancellation of title brought under the
auspices of Section 108 of P.D. No. 1529. The petition sought the cancellation of
Original Certificate of Title No. 684 issued thru LRC Case No. 00–059 in favor of the
Republic, Filinvest Development Corporation and Filinvest Alabang, Inc., and the
issuance of a new title in the name of the petitioner therein. The petition was
dismissed by the RTC. The dismissal was affirmed by the CA and eventually by this
Court on the following reasons: cha nRoblesvi rt ualLaw lib rary

We agree with both the CA and the RTC that the petitioner was in reality seeking the
reconveyance of the property covered by OCT No. 684, not the cancellation of a
certificate of title as contemplated by Section 108 of P.D. No. 1529. Thus, his petition
did not fall under any of the situations covered by Section 108, and was for that reason
rightly dismissed.

Moreover, the filing of the petition would have the effect of reopening the decree of
registration, and could thereby impair the rights of innocent purchasers in good faith
and for value. To reopen the decree of registration was no longer permissible,
considering that the one–year period to do so had long ago lapsed, and the properties
covered by OCT No. 684 had already been subdivided into smaller lots whose
ownership had passed to third persons. x x x.

xxxx

Nor is it subject to dispute that the petition was not a mere continuation of a previous
registration proceeding. Shorn of the thin disguise the petitioner gave to it, the
petition was exposed as a distinct and independent action to seek the reconveyance of
realty and to recover damages. Accordingly, he should perform jurisdictional acts, like
paying the correct amount of docket fees for the filing of an initiatory pleading, causing
the service of summons on the adverse parties in order to vest personal jurisdiction
over them in the trial court, and attaching a certification against forum shopping (as
required for all initiatory pleadings). He ought to know that his taking such required
acts for granted was immediately fatal to his petition, warranting the granting of the
respondents’ motion to dismiss.36

By analogy, the above pronouncements may be applied to the controversy at bar

considering that TRY Foundation’s exposed action for revocation of the donation
necessarily includes a claim for the recovery of the subject property.

The circumstances upon which the ruling in Paz was premised are attendant in the
present case. The petition of TRY Foundation had the effect of reopening the decree of
registration in the earlier LRC Case No. 20970 which granted PWCTUI’s application for
the issuance of a new owner’s duplicate copy of TCT No. 20970. As such, it breached
the caveat in Section 108 that “this section shall not be construed to give the court
authority to reopen the judgment or decree of registration.” The petition of TRY
Foundation also violated that portion in Section 108 stating that “all petitions or
motions filed under this section as well as any other provision of this decree after
original registration shall be filed and entitled in the original case in which the decree of
registration was entered.” The petition of TRY Foundation in LRC Case No. Q–
18126(04) was clearly not a mere continuation of LRC Case No. 20970.

Further, the petition filed by TRY Foundation is not within the province of Section 108
because the relief thereunder can only be granted if there is unanimity among the
parties, or that there is no adverse claim or serious objection on the part of any party
in interest.37 Records show that in its opposition to the petition, PWCTUI maintained
 232

that it “remains and continues to be the true and sole owner in fee simple of the
property” and that TRY Foundation “has no iota of right” thereto.38

More so, the enumerated instances for amendment or alteration of a certificate of title
under Section 108 are non–controversial in nature. They are limited to issues so
patently insubstantial as not to be genuine issues. The proceedings thereunder are
summary in nature, contemplating insertions of mistakes which are only clerical, but
certainly not controversial issues.39 Undoubtedly, revocation of donation entails
litigious and controversial matters especially in this case where the condition
supposedly violated by PWCTUI is not expressly stated in the deed of donation. Thus,
it is imperative to conduct an exhaustive examination of the factual and legal bases of
the parties’ respective positions for a complete determination of the donor’s desires.
Certainly, such objective cannot be accomplished by the court through the abbreviated
proceedings of Section 108.

In fact, even if it were specifically imposed as a ground for the revocation of the
donation that will set off the automatic reversion of the donated property to the donor
and/or his heirs, court intervention is still indispensable.

As ruled in Vda. de Delgado v. CA,40 “[a]lthough automatic reversion immediately

happens upon a violation of the condition and therefore no judicial action is necessary
for such purpose, still judicial intervention must be sought by the aggrieved party if
only for the purpose of determining the propriety of the rescission made.”41 In
addition, where the donee denies the rescission of the donation or challenges the
propriety thereof, only the final award of the court can conclusively settle whether the
resolution is proper or not.42 Here, PWCTUI unmistakably refuted the allegation that
the expiration of its corporate term in 1979 rescinded the donation.

Lastly, the issues embroiled in revocation of donation are litigable in an ordinary civil
proceeding which demands stricter jurisdictional requirements than that imposed in a
land registration case.

Foremost of which is the requirement on the service of summons for the court to
acquire jurisdiction over the persons of the defendants. Without a valid service of
summons, the court cannot acquire jurisdiction over the defendant, unless the
defendant voluntarily submits to it. Service of summons is a guarantee of one’s right
to due process in that he is properly apprised of a pending action against him and
assured of the opportunity to present his defenses to the suit.43

In contrast, jurisdiction in a land registration cases being a proceeding in rem, is

acquired by constructive seizure of the land through publication, mailing and posting of
the notice of hearing.44 Persons named in the application are not summoned but
merely notified of the date of initial hearing on the petition.45

The payment of docket fees is another jurisdictional requirement for an action for
revocation which was absent in the suit filed by TRY Foundation. On the other hand,
Section 111 of P.D. No. 1529 merely requires the payment of filing fees and not docket
fees.

Filing fees are intended to take care of court expenses in the handling of cases in terms
of cost of supplies, use of equipment, salaries and fringe benefits of personnel, etc.,
computed as to man hours used in handling of each case. Docket fees, on the other
hand, vest the trial court jurisdiction over the subject matter or nature of action.46
 233

The absence of the above jurisdictional requirements for ordinary civil actions thus
prevented the RTC, acting as a land registration court, from acquiring the power to
hear and decide the underlying issue of revocation of donation in LRC Case No. Q–
18126(04). Any determination made involving such issue had no force and effect; it
cannot also bind PWCTUI over whom the RTC acquired no jurisdiction for lack of
service of summons.

“Jurisdiction is the power with which courts are invested for administering justice; that
is, for hearing and deciding cases. In order for the court to have authority to dispose
of the case on the merits, it must acquire jurisdiction over the subject matter and the
parties.”47

Conclusion

All told, the RTC, acting as a land registration court, had no jurisdiction over the actual
subject matter contained in TRY Foundation’s petition for issuance of a new title. TRY
Foundation cannot use the summary proceedings in Section 108 of P.D. No. 1529 to
rescind a contract of donation as such action should be threshed out in ordinary civil
proceedings. In the same vein, the RTC had no jurisdiction to declare the donation
annulled and as a result thereof, order the register of deeds to cancel PWCTUI’s TCT
No. 20970 T–22702 and issue a new one in favor of TRY Foundation.

The RTC, acting as a land registration court, should have dismissed the land
registration case or re–docketed the same as an ordinary civil action and thereafter
ordered compliance with stricter jurisdictional requirements. Since the RTC had no
jurisdiction over the action for revocation of donation disguised as a land
registration case, the judgment in LRC Case No. Q–18126(04) is null and void. Being
void, it cannot be the source of any right or the creator of any obligation. It can never
become final and any writ of execution based on it is likewise void.48 It may even be
considered as a lawless thing which can be treated as an outlaw and slain at sight, or
ignored wherever and whenever it exhibits its head.49

Resultantly, the appellate proceedings relative to LRC Case No. Q–18126(04) and all
issuances made in connection with such review are likewise of no force and effect. A
void judgment cannot perpetuate even if affirmed on appeal by the highest court of the
land. All acts pursuant to it and all claims emanating from it have no legal effect.50

The Court Resolutions dated July

21, 2010 and September 15, 2010
do not bar the present ruling.

It is worth emphasizing that despite PWCTUI’s incessant averment of the RTC’s lack of
jurisdiction over TRY Foundation’s petition, the trial court shelved the issue, took
cognizance of matters beyond those enveloped under Section 108 and sorted out, in
abridged proceedings, complex factual issues otherwise determinable in a full–blown
trial appropriate for an ordinary civil action.

PWCTUI no longer raised the jurisdiction issue before the CA and limited its appeal to
the factual findings and legal conclusions of the RTC on its corporate existence and
capacity as the subject property’s uninterrupted owner. The matter reached the
Court thru a petition for review under Rule 45, but with the question of jurisdiction
absent in the appellate pleadings, the Court was constrained to review only mistakes of
judgment.
 234

While PWCTUI could have still challenged the RTC’s jurisdiction even on appeal, its
failure to do so cannot work to its disadvantage. The issue of jurisdiction is not lost by
waiver or by estoppel; no laches will even attach to a judgment rendered without
jurisdiction.51

Hence, since the Court Resolutions dated July 21, 2010 and September 15, 2010 in
G.R. No. 190193 disposed the case only insofar as the factual and legal questions
brought before the CA were concerned, they cannot operate as a procedural
impediment to the present ruling which deals with mistake of jurisdiction.

This is not to say, however, that a certiorari before the Court is a remedy against its
own final and executory judgment. As made known in certain cases, the Court is
invested with the power to suspend the application of the rules of procedure as a
necessary complement of its power to promulgate the same.52 Barnes v. Hon. Quijano
Padilla53 discussed the rationale for this tenet, viz:
chanRob lesvi rtua lLawl ibra ry

Let it be emphasized that the rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice. Their strict and rigid application, which
would result in technicalities that tend to frustrate rather than promote substantial
justice, must always be eschewed. Even the Rules of Court reflect this principle. The
power to suspend or even disregard rules can be so pervasive and compelling as to
alter even that which this Court itself has already declared to be final, x x x.

The emerging trend in the rulings of this Court is to afford every party litigant the
amplest opportunity for the proper and just determination of his cause, free from the
constraints of technicalities. Time and again, this Court has consistently held that rules
must not be applied rigidly so as not to override substantial justice.54 (Citation omitted
and italics supplied)

Here, the grave error in jurisdiction permeating the proceedings taken in LRC Case No.
Q–18126(04) deprived PWCTUI of its property without the very foundation of judicial
proceedings – due process. Certainly, the Court cannot let this mistake pass
without de rigueur rectification by suspending the rules of procedure and permitting
the present recourse to access auxiliary review.

If the Court, as the head and guardian of the judicial branch, must continuously merit
the force of public trust and confidence — which ultimately is the real source of its
sovereign power — and if it must decisively discharge its sacred duty as the last
sanctuary of the oppressed and the weak, it must, in appropriate cases, pro–actively
provide weary litigants with immediate legal and equitable relief, free from the delays
and legalistic contortions that oftentimes result from applying purely formal and
procedural approaches to judicial dispensations.55

WHEREFORE, all things studiedly viewed in the correct perspective, the petition is
hereby GRANTED. All proceedings taken, decisions, resolutions, orders and other
issuances made in LRC Case No. Q–18126(04), CA–G.R. CV No. 90763 and G.R. No.
190193 are hereby ANNULLED and SET ASIDE.

The Register of Deeds of Quezon City is hereby ORDERED to CANCEL any Transfer
Certificate of Title issued in the name of Teodoro R. Yangco 2nd and 3rd Generation
Heirs Foundation, Inc. as a consequence of the execution of the disposition in LRC Case
No. Q–18126(04), and to REINSTATE Transfer Certificate of Title No. 20970 T–22702
in the name of Philippine Woman’s Christian Temperance Union, Inc.
 235

[G.R. No. 94457. March 18, 1991.]

VICTORIA LEGARDA, Petitioner, v. THE HONORABLE COURT OF APPEALS, NEW

CATHAY HOUSE, INC., TEE HONORABLE REGIONAL TRIAL COURT OF QUEZON
CITY, BRANCH 94, Respondents.

Singson, Valdez & Associates for Petitioner.

Lenito T . Serrano for Private Respondent.

SYLLABUS

1. LEGAL ETHICS; ATTORNEY-CLIENT; A LAWYER OWES ENTIRE DEVOTION TO THE

INTEREST OF HIS CLIENT; HE SHOULD PRESENT EVERY REMEDY OR DEFENSE
AUTHORIZED BY LAW TO SUPPORT HIS CLIENT’S CAUSE. — A lawyer owes entire
devotion to the interest of his client, warmth and zeal in the maintenance and defense
of his rights and the exertion of his utmost learning and ability, to the end that nothing
can be taken or withheld from his client except in accordance with the law. He should
present every remedy or defense authorized by the law in support of his client’s cause,
regardless of his own personal views. In the full discharge of his duties to his client,
the lawyer should not be afraid of the possibility that he may displease the judge or
the general public.

2. ID.; ID.; A CLIENT IS BOUND BY THE MISTAKE OF HIS COUNSEL; EXCEPTION. — In

Escudero v. Judge Dulay, this Court, in holding that the counsel’s blunder in procedure
is an exception to the rule that the client is bound by the mistakes of counsel, made
the following disquisition: ". . . Ordinarily, a special civil action under Rule 65 of the
Rules of Court will not be a substitute or cure for failure to file a timely petition for
review on certiorari (appeal) under Rule 45 of the Rules. Where, however, the
application of the rule will result in a manifest failure or miscarriage of justice, the rule
may be relaxed . . . While this Court is cognizant of the rule that, generally, a client
will suffer the consequences of the negligence, mistake or lack of competence of his
counsel, in the interest of justice and equity, exceptions may be made to such rule, in
accordance with the facts and circumstances of each case. Adherence to the general
rule would, in the instant case, result in the outright deprivation of their property
through a technicality."c ralaw vi rtua1aw l ib rary

3. ID.; ATTORNEYS; REPEATED NEGLIGENCE AND INACTION TO PRESENT EVERY

REMEDY OR DEFENSE TO SUPPORT A CLIENT’S CAUSE, CONSTITUTES GROSS
NEGLIGENCE; CASE AT BAR. — In its questioned decision dated November 19, 1989
the Court of Appeals found, in no uncertain terms, the negligence of the then counsel
for petitioner when he failed to file the proper motion to dismiss or to draw a
compromise agreement if it was true that they agreed on a settlement of the case; or
in simply filing an answer; and that after having been furnished a copy of the decision
by the court he failed to appeal therefrom or to file a petition for relief from the order
declaring petitioner in default. In all these instances the appellate court found said
counsel negligent but his acts were held to bind his client, petitioner herein,
nevertheless. The Court disagrees and finds that the negligence of counsel in this case
appears to be so gross and inexcusable. This was compounded by the fact, that after
petitioner gave said counsel another chance to make up for his omissions by asking
him to file a petition for annulment of the judgment in the appellate court, again
counsel abandoned the case of petitioner in that after he received a copy of the
 236

adverse judgment of the appellate court, he did not do anything to save the situation
or inform his client of the judgment. He allowed the judgment to lapse and become
final. Such reckless and gross negligence should not be allowed to bind the petitioner.
Petitioner was thereby effectively deprived of her day in court. The Court cannot allow
such a grave injustice to prevail. It cannot tolerate such unjust enrichment of the
private respondent at the expense of the petitioner. The situation is aggravated by the
fact that said counsel is a well-known practicing lawyer and the dean of a law school as
the Court at the beginning of this discourse observed. His competence should be
beyond cavil. Thus, there appears to be no cogent excuse for his repeated negligence
and inaction. His lack of devotion to duty is so gross and palpable that this Court must
come to the aid of his distraught client, the petitioner herein.

4. ID.; ID.; A MEMBER OF THE BAR OWES COMPLETE FIDELITY TO THE CAUSE OF HIS
CLIENT; HE SHOULD ACCEPT ONLY SO MANY CASES HE CAN AFFORD TO HANDLE. —
As member of the Philippine Bar he owes complete fidelity to the cause of his client. He
should give adequate attention, care and time to his cases. This is the reason why a
practicing lawyer should accept only so many cases he can afford to handle. And once
he agrees to handle a case, he should undertake the task with dedication and care. If
he should do any less, then he is not true to his oath as a lawyer.

5. REMEDIAL LAW; ACTIONS; DECISIONS AND SHERIFF CERTIFICATE OF SALE

DECLARED NULL AND VOID AND PRIVATE RESPONDENT ORDERED TO RECONVEY
PROPERTY WHERE A PARTY THROUGH HIS COUNSEL’S GROSS NEGLIGENCE WAS
DEPRIVED OF HER DAY IN COURT. — WHEREFORE, the petition is GRANTED and the
questioned decision of the Regional Trial Court of Quezon City dated March 25, 1985 in
Civil Case No. Q-43811; the decision of the Court of Appeals dated November 29, 1989
in CA-G.R. No. SP-10487; the Sheriff’s Certificate of Sale dated June 27, 1985 of the
property in question; and the subsequent final deed of sale covering the same
property, are all hereby declared null and void. Private respondent New Cathay House,
Inc. is directed to reconvey said property to the petitioner, and the Register of Deeds is
ordered to cancel the registration of said property in the name of private respondent
and to issue a new one in the name of petitioner.

DECISION

GANCAYCO, J.:

Nothing is more settled than the rule that the mistake of a counsel binds the client. It
is only in case of gross or palpable negligence of counsel when the courts must step in
and accord relief to a client who suffered thereby.

The present case is a typical example of such rare exception.

Petitioner Victoria Legarda was the owner of a parcel of land and the improvements
thereon located at 123 West Avenue, Quezon City. On January 11, 1985 respondent
New Cathay House, Inc. filed a complaint against the petitioner for specific
performance with preliminary injunction and damages in the Regional Trial Court (RTC)
for Quezon City alleging, among others, that petitioner entered into a lease agreement
with the private respondent through its representative, Roberto V. Cabrera, Jr., of the
aforestated property of petitioner effective January 1, 1985 until December 31, 1989
or for a period of five (5) years; that the rental is P25,000.00 per month with 5%
 237

escalation per year; that on November 23, 1984, private respondent deposited the
amount of P72,000.00 with petitioner as down payment of rentals; that respondent
drew up the written contract and sent it to petitioner; that petitioner failed and refused
to execute and sign the same despite demands of respondent; and that the respondent
suffered damages due to the delay in the renovation and opening of its restaurant
business. The private respondent prayed that pending the resolution of the case a
restraining order be issued against petitioner or her agents enjoining them from
stopping the renovation and use of the premises by private Respondent. It was also
prayed that after due hearing the petitioner be ordered to execute the lease contract;
to pay actual compensatory, exemplary and other damages in such amount as may be
proved during the trial including P30,000.00 attorney’s fees plus P300.00 per
appearance of counsel, and to pay the expenses of litigation. 1

Petitioner engaged the services of counsel to handle her case. Said counsel filed his
appearance with an urgent motion for extension of time to file the answer within ten
(10) days from February 26, 1985. 2 However, said counsel failed to file the answer
within the extended period prayed for. Counsel for private respondent filed an ex-parte
motion to declare petitioner in default. This was granted by the trial court on March 25,
1985 and private respondent was allowed to present evidence ex-parte. Thereafter, on
March 25, 1985, the trial court rendered its decision, the dispositive part of which
reads as follows:c hanrobles vi rt ualawlib ra ry chan roble s.c om:chanro bles. com.ph

"WHEREFORE, judgment is hereby rendered ordering defendant Victoria G. Legarda to

execute and sign Exhibit "D" :, the lease contract for the premises at 123 West
Avenue, Quezon City. Accordingly, the preliminary injunction earlier issued on January
31, 1985 is hereby made permanent.

Judgment is likewise rendered ordering defendant to pay exemplary damages in the

sum of P100,000.00 to serve as example and deterrent for others, and actual and
compensatory damages as follows: chan rob1e s virtual 1aw l ib rary

1. For loss and destroyed goodwill and reputation in the amount of P100,000.00;

2. The sum of P61,704.40 as adjustments in the costs of labor and materials for the
renovation of the premises;

3. The sum of P50,000.00 as unearned income for the delay of plaintiff’s operations
from January 1, 1985 up to February 26, 1985 or a period of almost two (2) months;

4. The sum of P16,635.57 and P50,424.40 as additional compensatory damages

incurred by plaintiff for the extension of the lease of its premises at Makati and salaries
of idle employees, respectively;

5. The sum of P10,000.00 as and by way of attorney’s fees; and

6. The costs of suit." 3

Copy of said decision was duly served on counsel for the petitioner but he did not take
any action. Thus, the judgment became final and executory. On May 8, 1985, upon
motion of private respondent, a writ of execution of the judgment was issued by the
trial court. 4

At public auction, the sheriff sold the aforestated property of petitioner to Roberto V.
Cabrera, Jr. for the sum of P376,500.00 to satisfy the judgment. The sheriff issued a
 238

certificate of sale dated June 8, 1985 covering the said property.5 After the one-year
redemption period expired without the petitioner redeeming the property, ownership
was consolidated in the name of Roberto V. Cabrera, Jr. The sheriff issued a final deed
of sale on July 8, 1986 in his favor. Cabrera registered the same in the office of the
Register of Deeds on July 11, 1986.

Upon learning of this unfortunate turn of events, petitioner prevailed upon her counsel,
to seek the appropriate relief. On November 6, 1986 said counsel filed in the Court of
Appeals a petition for annulment of judgment calling attention to the unjust
enrichment of private respondent in securing the transfer in its name of the property
valued at P2.5 million without justification; that when the complaint was filed in court
by private respondent against the petitioner, the parties came to an agreement to
settle their differences, the private respondent assuring petitioner that the complaint it
filed shall be withdrawn so petitioner advised her lawyer that there was no longer any
need to file an answer to the complaint; that on February 22, 1985, private respondent
nevertheless filed an ex-parte motion to declare the petitioner in default; that
petitioner was deprived of the right to present her defense through false pretenses,
misrepresentation and fraud practiced upon her by private respondent warranting the
annulment of the judgment; that the documentary evidence presented by private
respondent, which served as the basis of the decision, is falsified and tampered with;
that as an example, the voucher filed by petitioner, contains typewritten entries to the
effect that the term of the lease is for five (5) years to which petitioner never agreed,
and that the option to buy the property was given to the private respondent; that the
fact that the property worth P2 million was sold at public auction at a shockingly and
questionably low price of P376,500.00 is by itself a sufficient basis for annulling the
sale for being grossly inadequate to shock the conscience and understanding of men,
giving rise to a presumption of fraud. 6 Thus, it was prayed that a preliminary
mandatory injunction issue ordering the private respondent to surrender the property
to petitioner and to enjoin the former from further harassing and threatening the
peaceful possession of petitioner; and that after hearing, the decision of the trial court
in Civil Case No. Q-43811 and the sheriffs certificate of sale 7 be likewise annulled;
that private respondent be adjudged to pay petitioner no less than P500,000.00 actual
and moral damages, as well as exemplary damages and attorney s fees in the amount
of P50,000.00, plus the costs of the suit. 8

On February 2, 1987 an amended petition was filed by counsel for petitioner in the
Court of Appeals raising the additional issue that the decision is not supported by the
allegations in the pleadings or by the evidence submitted. 9

In due course, a decision was rendered by the Court of Appeals on November 29,
1989. 10 The appellate court made the following observations: jgc:c hanrobles. com.ph

"On the other hand, petitioner’s above allegation of fraud supposedly practiced upon
her by Roberto V. Cabrera, Jr. is so improbable as to inspire belief. For the Coronel Law
Office had already entered its appearance as petitioner’s counsel by then, so that if it
were true that Cabrera had already agreed to the conditions imposed by petitioner,
said law office would have asked plaintiff to file the proper motion to dismiss or
withdraw complaint with the Court, and if plaintiff had refused to do so, it would have
filed defendant’s answer anyway so that she would not be declared in default. Or said
law office would have prepared a compromise agreement embodying the conditions
imposed by their client in the lease contract in question which plaintiff had allegedly
already accepted, so that the same could have been submitted to the Court and
judgment on a compromise could be entered. All these, any conscientious lawyer of
lesser stature than the Coronel Law Office, headed by no less than a former law dean,
 239

Dean Antonio Coronel, or even a new member of the bar, would normally have done
under the circumstances to protect the interests of their client, instead of leaving it to
the initiative of plaintiff to withdraw its complaint against defendant, as it had allegedly
promised the latter. Thus, it is our belief that this case is one of pure and simple
negligence on the part of defendant’s counsel who simply failed to file the answer in
behalf of defendant. But counsel’s negligence does not stop here. For after it had been
furnished with copy of the decision by default against defendant, it should then have
appealed therefrom or file a petition from relief from the order declaring their client in
default or from the judgment by default. [sic] Again, counsel negligently failed to do
either. Hence, defendant is bound by the acts of her counsel in this case and cannot be
heard to complain that the result might have been different if it had proceeded
differently (Pulido v. C.A., 122 SCRA 63; Ayllon v. Sevilla, 156 SCRA 257, among other
cases). And the rationale of this rule is obvious and clear. For ‘if such grounds were to
be admitted as reasons for opening cases, there would never be an end to a suit so
long as new counsel could be employed who could allege and show that the prior
counsel had not been sufficiently diligent, or experienced, or learned’ (Fernandez v.
Tan Tiong Tick, 1 SCRA 1138)." 11

Despite these findings, the appellate court nevertheless dismissed the petition for
annulment of judgment with costs against the petitioner. A copy of the said judgment
appears to have been served on counsel for the petitioner. However, said counsel did
not file a motion for reconsideration or appeal therefrom, so it became final. cha nrob les lawl ibra ry : redna d

It was only in March 1990 when the secretary of counsel for petitioner informed the
latter of the adverse decision against her only after persistent telephone inquiries of
the petitioner.

Hence, petitioner secured the services of another lawyer who filed this petition
for certiorari under Rule 65 of the Rules of Court wherein it is prayed that the
judgment of the Regional Trial Court of Quezon City in Civil Case No. Q-43811, the
decision of the Court of Appeals in CA-GR. No. 10487 and the sheriff’s sale at public
auction of the property in question be annulled, as the same are attributable to the
gross negligence and inefficiency of petitioner’s counsel, whose blunder cannot bind
the petitioner who was deprived of due process thereby. It is further prayed that
private respondent Cathay House, Inc. be ordered to reconvey to petitioner the
property covered by TCT No. 270814, which was sold at public auction to Roberto V.
Cabrera, Jr. and in whose favor its ownership was consolidated, and thereafter
ownership appears to have been transferred to private Respondent.

The petition is impressed with merit.

Petitioner’s counsel is a well-known practicing lawyer and dean of a law school. It is to

be expected that he would extend the highest quality of service as a lawyer to the
petitioner. Unfortunately, counsel appears to have abandoned the cause of petitioner.
After agreeing to defend the petitioner in the civil case filed against her by private
respondent, said counsel did nothing more than enter his appearance and seek for an
extension of time to file the answer. Nevertheless, he failed to file the answer. Hence,
petitioner was declared in default on motion of private respondent’s counsel. After the
evidence of private respondent was received ex-parte, a judgment was rendered by
the trial court.

Said counsel for petitioner received a copy of the judgment but took no steps to have
the same set aside or to appeal therefrom. Thus, the judgment became final and
executory. The property of petitioner was sold at public auction to satisfy the judgment
 240

in favor of private Respondent. The property was sold to Roberto V. Cabrera, Jr.,
representative of private respondent, and a certificate of sale was issued in his favor.
The redemption period expired after one year so a final deed of sale was issued by the
sheriff in favor of Cabrera, who in turn appears to have transferred the same to
private Respondent.

During all the time, the petitioner was abroad. When, upon her return, she learned, to
her great shock, what happened to her case and property, she nevertheless did not
lose faith in her counsel. She still asked Atty. Coronel to take such appropriate action
possible under the circumstances.

As above related, said counsel filed a petition for annulment of judgment and its
amendment in the Court of Appeals. But that was all he did. After an adverse judgment
was rendered against petitioner, of which counsel was duly notified, said counsel did
not inform the petitioner about it. He did not even ask for a reconsideration thereof, or
file a petition for review before this Court. Thus, the judgment became final. It was
only upon repeated telephone inquiries of petitioner that she learned from the
secretary of her counsel of the judgment that had unfortunately become final.

A lawyer owes entire devotion to the interest of his client, warmth and zeal in the
maintenance and defense of his rights and the exertion of his utmost learning and
ability, to the end that nothing can be taken or withheld from his client except in
accordance with the law. He should present every remedy or defense authorized by the
law in support of his client’s cause, regardless of his own personal views. In the full
discharge of his duties to his client, the lawyer should not be afraid of the possibility
that he may displease the judge or the general public. 12

Judged by the actuations of said counsel in this case, he has miserably failed in his
duty to exercise his utmost learning and ability in maintaining his client’s cause. 13 It
is not only a case of simple negligence as found by the appellate court, but of reckless
and gross negligence, so much so that his client was deprived of her property without
due process of law.

In People’s Homesite & Housing Corp. v. Tiongco and Escasa, 14 this Court ruled as
follows:jgc:c hanro bles. com.ph

"Procedural technicality should not be made a bar to the vindication of a legitimate

grievance. When such technicality deserts from being an aid to justice, the courts are
justified in excepting from its operation a particular case. Where there was something
fishy and suspicious about the actuations of the former counsel of petitioner in the case
at bar, in that he did not given any significance at all to the processes of the court,
which has proven prejudicial to the rights of said clients, under a lame and flimsy
explanation that the court’s processes just escaped his attention, it is held that said
lawyer deprived his clients of their day in court, thus entitling said clients to petition for
relief from judgment despite the lapse of the reglementary period for filing said period
for filing said petition." cra law virtua1aw li bra ry

In Escudero v. Judge Dulay, 15 this Court, in holding that the counsel’s blunder in
procedure is an exception to the rule that the client is bound by the mistakes of
counsel, made the following disquisition: chan roble s.com : vi rtua l law lib rary

"Petitioners contend, through their new counsel, that the judgments rendered against
them by the respondent court are null and void, because they were therein deprived of
their day in court and divested of their property without due process of law, through
 241

the gross ignorance, mistake and negligence of their previous counsel. They
acknowledge that, while as a rule, clients are bound by the mistake of their counsel,
the rule should not be applied automatically to their case, as their trial counsel’s
blunder in procedure and gross ignorance of existing jurisprudence changed their cause
of action and violated their substantial rights.

We are impressed with petitioner’s contentions.

Ordinarily, a special civil action under Rule 65 of the Rules of Court will not be a
substitute or cure for failure to file a timely petition for review on certiorari (appeal)
under Rule 45 of the Rules. Where, however, the application of the rule will result in a
manifest failure or miscarriage of justice, the rule may be relaxed.

x x x

While this Court is cognizant of the rule that, generally, a client will suffer the
consequences of the negligence, mistake or lack of competence of his counsel, in the
interest of justice and equity, exceptions may be made to such rule, in accordance with
the facts and circumstances of each case. Adherence to the general rule would, in the
instant case, result in the outright deprivation of their property through a technicality."
virtua 1aw lib rary
c ralaw

In its questioned decision dated November 19, 1989 the Court of Appeals found, in no
uncertain terms, the negligence of the then counsel for petitioner when he failed to file
the proper motion to dismiss or to draw a compromise agreement if it was true that
they agreed on a settlement of the case; or in simply filing an answer; and that after
having been furnished a copy of the decision by the court he failed to appeal therefrom
or to file a petition for relief from the order declaring petitioner in default. In all these
instances the appellate court found said counsel negligent but his acts were held to
bind his client, petitioner herein, nevertheless.

The Court disagrees and finds that the negligence of counsel in this case appears to be
so gross and inexcusable. This was compounded by the fact, that after petitioner gave
said counsel another chance to make up for his omissions by asking him to file a
petition for annulment of the judgment in the appellate court, again counsel
abandoned the case of petitioner in that after he received a copy of the adverse
judgment of the appellate court, he did not do anything to save the situation or inform
his client of the judgment. He allowed the judgment to lapse and become final. Such
reckless and gross negligence should not be allowed to bind the petitioner. Petitioner
was thereby effectively deprived of her day in court.

Thus, We have before Us a case where to enforce an alleged lease agreement of the
property of petitioner, private respondent went to court, and that because of the gross
negligence of the counsel for the petitioner, she lost the case as well as the title and
ownership of the property, which is worth millions. The mere lessee then now became
the owner of the property. Its true owner then, the petitioner, now is consigned to
penury all because her lawyer appear to have abandoned her case not once but
repeatedly.

The Court cannot allow such a grave injustice to prevail. It cannot tolerate such unjust
enrichment of the private respondent at the expense of the petitioner. The situation is
aggravated by the fact that said counsel is a well-known practicing lawyer and the
dean of a law school as the Court at the beginning of this discourse observed. His
competence should be beyond cavil. Thus, there appears to be no cogent excuse for
 242

his repeated negligence and inaction. His lack of devotion to duty is so gross and
palpable that this Court must come to the aid of his distraught client, the petitioner
herein.chan roble s virtual lawl ibra ry

As member of the Philippine Bar he owes complete fidelity to the cause of his client. He
should give adequate attention, care and time to his cases. This is the reason why a
practicing lawyer should accept only so many cases he can afford to handle. And once
he agrees to handle a case, he should undertake the task with dedication and care. If
he should do any less, then he is not true to his oath as a lawyer.

WHEREFORE, the petition is GRANTED and the questioned decision of the Regional Trial
Court of Quezon City dated March 25, 1985 in Civil Case No. Q-43811; the decision of
the Court of Appeals dated November 29, 1989 in CA-G.R. No. SP-10487; the Sheriff’s
Certificate of Sale dated June 27, 1985 of the property in question; and the
subsequent final deed of sale covering the same property, are all hereby declared null
and void. Private respondent New Cathay House, Inc. is directed to reconvey said
property to the petitioner, and the Register of Deeds is ordered to cancel the
registration of said property in the name of private respondent and to issue a new one
in the name of petitioner. Costs against private Respondent. Said counsel for petitioner
is hereby required to show cause within ten (10) days from notice why he should not
be held administratively liable for his acts and omissions hereinabove described in this
decision.

SO ORDERED.
 243

[G.R. NOS. 96027-28 : March 08, 2005]

BRIG. GEN. LUTHER A. CUSTODIO* , CAPT. ROMEO M. BAUTISTA, 2nd LT. JESUS
D. CASTRO, SGT. CLARO L. LAT, SGT. ARNULFO B. DE MESA, C1C ROGELIO B.
MORENO, C1C MARIO E. LAZAGA, SGT. FILOMENO D. MIRANDA, SGT.
ROLANDO C. DE GUZMAN, SGT. ERNESTO M. MATEO, SGT. RODOLFO M.
DESOLONG, A1C CORDOVA G. ESTELO, MSGT. PABLO S. MARTINEZ, SGT.
RUBEN AQUINO, SGT. ARNULFO ARTATES, A1C FELIZARDO
TARAN, Petitioners, v.SANDIGANBAYAN and PEOPLE OF THE
PHILIPPINES, Respondents.

RESOLUTION

PUNO, J.:

Before us is a Motion To Re-Open Case With Leave Of Court filed by petitioners who
were convicted and sentenced to reclusion perpetua by the Sandiganbayan in Criminal
Cases Nos. 10010 and 10011 for the double murder of Senator Benigno Aquino, Jr. and
Rolando Galman on August 21, 1983.1

Petitioners were members of the military who acted as Senator Aquino's security detail
upon his arrival in Manila from his three-year sojourn in the United States. They were
charged, together with several other members of the military, before the
Sandiganbayan for the killing of Senator Aquino who was fatally shot as he was coming
down from the aircraft of China Airlines at the Manila International Airport. Petitioners
were also indicted for the killing of Rolando Galman who was also gunned down at the
airport tarmac.

On December 2, 1985, the Sandiganbayan rendered a Decision in Criminal Cases Nos.

10010-10011 acquitting all the accused, which include the petitioners. However, the
proceedings before the Sandiganbayan were later found by this Court to be a sham
trial. The Court thus nullified said proceedings, as well as the judgment of acquittal,
and ordered a re-trial of the cases.2

A re-trial ensued before the Sandiganbayan.

In its decision dated September 28, 1990, the Sandiganbayan, while acquitting the
other accused, found the petitioners guilty as principals of the crime of murder in both
Criminal Cases Nos. 10010 and 10011. It sentenced them to reclusion perpetua in each
case.3 The judgment became final after this Court denied petitioners' Petition for
Review of the Sandiganbayan decision for failure to show reversible error in the
questioned decision,4 as well as their subsequent motion for reconsideration.5

In August 2004, petitioners sought legal assistance from the Chief Public Attorney who,
in turn, requested the Independent Forensic Group of the University of the Philippines
to make a thorough review of the forensic evidence in the double murder case. The
petitioners, assisted by the Public Attorney's Office, now want to present the findings
of the forensic group to this Court and ask the Court to allow the re-opening of the
cases and the holding of a third trial to determine the circumstances surrounding the
death of Senator Benigno Aquino, Jr. and Rolando Galman.

Petitioners invoke the following grounds for the re-opening of the case:
 244

Existence of newly discovered pieces of evidence that were not available during the
second trial of the above-entitled cases which could have altered the judgment of the
Sandiganbayan, specifically:

A) Independent forensic evidence uncovering the false forensic claims that led to the
unjust conviction of the petitioners-movants.

B) A key defense eyewitness to the actual killing of Senator Benigno Aquino, Jr.

II

There was a grave violation of due process by reason of:

A) Insufficient legal assistance of counsel;

B) Deprivation of right to counsel of choice;

C) Testimonies of defense witnesses were under duress;

D) Willful suppression of evidence;

E) Use of false forensic evidence that led to the unjust conviction of the petitioners-
movants.

III

There was serious misapprehension of facts on the part of the Sandiganbayan based on
false forensic evidence, which entitles petitioners-movants to a re-trial.6

Petitioners seek to present as new evidence the findings of the forensic group
composed of Prof. Jerome B. Bailen, a forensic anthropologist from the University of
the Philippines, Atty. Erwin P. Erfe, M.D., a medico-legal practitioner, Benito E. Molino,
M.D., a forensic consultant and Human Rights and Peace Advocate, and Anastacio N.
Rosete, Jr., D.M.D., a forensic dentistry consultant. Their report essentially concludes
that it was not possible, based on the forensic study of the evidence in the double
murder case, that C1C Rogelio Moreno fired at Senator Aquino as they descended the
service stairway from the aircraft. They posit that Senator Aquino was shot while he
was walking on the airport tarmac toward the waiting AVSECOM van which was
supposed to transport him from the airport to Fort Bonifacio. This is contrary to the
finding of the Sandiganbayan in the second trial that it was C1C Moreno, the security
escort positioned behind Senator Aquino, who shot the latter. The report also suggests
that the physical evidence in these cases may have been misinterpreted and
manipulated to mislead the court. Thus, petitioners assert that the September 28,
1990 decision of the Sandiganbayan should be voided as it was based on false forensic
evidence. Petitioners submit that the review by the forensic group of the physical
evidence in the double murder case constitutes newly discovered evidence which
would entitle them to a new trial under Rule 121 of the 2000 Rules of Criminal
Procedure. In addition to the report of the forensic group, petitioners seek to present
the testimony of an alleged eyewitness, the driver of the waiting AVSECOM van, SPO4
Ruben M. Cantimbuhan. In his affidavit submitted to this Court, SPO4 Cantimbuhan
states that he saw a man in blue uniform similar to that of the Philippine Airlines
 245

maintenance crew, suddenly fire at Senator Aquino as the latter was about to board
the van. The man in blue was later identified as Rolando Galman.

Petitioners pray that the Court issue a resolution:

1. [a]nnulling and setting aside this Honorable Court's Resolutions dated July 23, 1991
and September 10, 1991;

2. [a]nnulling and setting aside the Decision of the Sandiganbayan (3rd Division) dated
September 28, 1990 in People v. Custodio, et al., Case No. 10010-10011[;]

3. [o]rdering the re-opening of this case; [and]

4. [o]rdering the Sandiganbayan to allow the reception of additional defense

evidence/re-trial in the above entitled cases.7

The issue now is whether petitioners are entitled to a third trial under Rule 121 of
the 2000 Rules of Criminal Procedure.

The pertinent sections of Rule 121 of the 2000 Rules of Criminal Procedure provide:

Section 1. New Trial or reconsideration. - At any time before a judgment of

conviction becomes final, the court may, on motion of the accused or at its own
instance but with the consent of the accused, grant a new trial or reconsideration.

Sec. 2. Grounds for a new trial. - The court shall grant a new trial on any of the
following grounds:

(a) That errors of law or irregularities prejudicial to the substantial rights of the
accused have been committed during the trial;

(b) That new and material evidence has been discovered which the accused
could not with reasonable diligence have discovered and produced at the trial
and which if introduced and admitted would probably change the judgment.

xxx

Sec. 6. Effects of granting a new trial or reconsideration. - The effects of

granting a new trial or reconsideration are the following:

(a) When a new trial is granted on the ground of errors of law or irregularities
committed during the trial, all the proceedings and evidence affected thereby shall be
set aside and taken anew. The court may, in the interest of justice, allow the
introduction of additional evidence.

(b) When a new trial is granted on the ground of newly discovered evidence, the
evidence already adduced shall stand and the newly-discovered and such other
evidence as the court may, in the interest of justice, allow to be introduced shall be
taken and considered together with the evidence already in the record.

(c) In all cases, when the court grants new trial or reconsideration, the original
judgment shall be set aside or vacated and a new judgment rendered
accordingly. (emphasis supplied)
 246

In line with the objective of the Rules of Court to set guidelines in the dispensation of
justice, but without shackling the hands that dispense it, the remedy of new trial has
been described as "a new invention to temper the severity of a judgment or prevent
the failure of justice."8 Thus, the Rules allow the courts to grant a new trial when there
are errors of law or irregularities prejudicial to the substantial rights of the accused
committed during the trial, or when there exists newly discovered evidence. In the
proceedings for new trial, the errors of law or irregularities are expunged from the
record or new evidence is introduced. Thereafter, the original judgment is vacated and
a new one is rendered.9

Under the Rules, a person convicted of a crime may avail of the remedy of new trial
before the judgment of conviction becomes final. Petitioners admit that the decision of
the Sandiganbayan in Criminal Cases Nos. 10010 and 10011 became final and
executory upon denial of their Petition for Review filed before this Court and their
motion for reconsideration. Entry of judgment has in fact been made on September 30,
1991.10Nonetheless, they maintain that equitable considerations exist in this case to
justify the relaxation of the Rules and re-open the case to accord petitioners the
opportunity to present evidence that will exonerate them from the charges against
them. We do not find merit in their submission.

Petitioners anchor their motion on the ground of newly discovered evidence. Courts are
generallyreluctant in granting motions for new trial on the ground of newly discovered
evidence for it ispresumed that the moving party has had ample opportunity to
prepare his case carefully and to secure all the necessary evidence before the trial.
Such motions are treated with great caution due to the danger of perjury and the
manifest injustice of allowing a party to allege that which may be the consequence of
his own neglect to defeat an adverse judgment. Hence, the moving party is often
required to rebut a presumption that the judgment is correct and that there has been a
lack of due diligence, and to establish other facts essential to warrant the granting of a
new trial on the ground of newly discovered evidence.11 This Court has repeatedly held
that before a new trial may be granted on the ground of newly discovered evidence, it
must be shown (1) that the evidence was discovered after trial; (2) that such
evidence could not have been discovered and produced at the trial even with the
exercise of reasonable diligence; (3) that it is material, not merely cumulative,
corroborative, or impeaching; and (4) the evidence is of such weight that it would
probably change the judgment if admitted. If the alleged newly discovered evidence
could have been very well presented during the trial with the exercise of reasonable
diligence, the same cannot be considered newly discovered.12

These standards, also known as the "Berry" rule, trace their origin to the 1851 case
of Berry v. State of Georgia13 where the Supreme Court of Georgia held:

Applications for new trial on account of newly discovered evidence, are not favored by
the Courts. x x x Upon the following points there seems to be a pretty general
concurrence of authority, viz; that it is incumbent on a party who asks for a new trial,
on the ground of newly discovered evidence, to satisfy the Court, 1st. That the
evidence has come to his knowledge since the trial. 2d. That it was not owing to the
want of due diligence that it did not come sooner. 3d. That it is so material that it
would produce a different verdict, if the new trial were granted. 4th. That it is not
cumulative only - viz; speaking to facts, in relation to which there was evidence on the
trial. 5th. That the affidavit of the witness himself should be produced, or its absence
accounted for. And 6th, a new trial will not be granted, if the only object of the
testimony is to impeach the character or credit of a witness. (citations omitted)
 247

These guidelines have since been followed by our courts in determining the propriety of
motions for new trial based on newly discovered evidence.

It should be emphasized that the applicant for new trial has the burden of showing
that the new evidence he seeks to present has complied with the requisites to justify
the holding of a new trial.

The threshold question in resolving a motion for new trial based on newly discovered
evidence is whether the proferred evidence is in fact a "newly discovered evidence
which could not have been discovered by due diligence." The question of whether
evidence is newly discovered has two aspects: a temporal one, i.e., when was
the evidence discovered, and a predictive one, i.e., when should or could it have
been discovered. It is to the latter that the requirement of due diligence has
relevance.14 We have held that in order that a particular piece of evidence may be
properly regarded as newly discovered to justify new trial, what is essential is not so
much the time when the evidence offered first sprang into existence nor the time when
it first came to the knowledge of the party now submitting it; what is essential is that
the offering party had exercised reasonable diligence in seeking to locate such
evidence before or during trial but had nonetheless failed to secure it.15

The Rules do not give an exact definition of due diligence, and whether the movant has
exercised due diligence depends upon the particular circumstances of each
case.16 Nonetheless, it has been observed that the phrase is often equated with
"reasonable promptness to avoid prejudice to the defendant." In other words, the
concept of due diligence has both a time component and a good faith component.
The movant for a new trial must not only act in a timely fashion in gathering evidence
in support of the motion; he must act reasonably and in good faith as well. Due
diligence contemplates that the defendant acts reasonably and in good faith to obtain
the evidence, in light of the totality of the circumstances and the facts known to him.17

Applying the foregoing tests, we find that petitioners' purported evidence does not
qualify as newly discovered evidence that would justify the re-opening of the case and
the holding of a third trial.

The report of the forensic group may not be considered as newly discovered evidence
as petitioners failed to show that it was impossible for them to secure an independent
forensic study of the physical evidence during the trial of the double murder case. It
appears from their report that the forensic group used the same physical and
testimonial evidence proferred during the trial, but made their own analysis
and interpretation of said evidence. They cited the materials and methods that
they used for their study, viz:

MATERIALS AND METHODS

MATERIALS:

A. Court records of the case, especially photographs of: a) the stairway where the late
Sen. Aquino and his escorts descended; b) the part of the tarmac where the lifeless
bodies of the late Sen. Aquino and Galman fell; and c) the autopsy conducted by the
NBI Medico-legal team headed by Dr. Mu[ñ]oz; and the autopsy report of the late
Sen. Benigno Aquino[,] Jr. signed by Dr. Mu[ñ]oz and Dr. Solis;

b. The gun and live ammunitions collected at the crime scene;

 248

c. A reference human skull photos and X-rays of the same to demonstrate wound
location and bullet trajectory;

d. The reports of interviews and statements by the convicted military escorts, and
other witnesses;

e. Re-enactment of the killing of Aquino based on the military escorts['] version, by the
military escorts themselves in the Bilibid Prison and by volunteers at the NAIA Tarmac;

f. Various books and articles on forensic and the medico-legal field[;]

g. Results of Forensic experiments conducted in relation to the case.

METHODS:

A. Review of the forensic exhibits presented in the court;

b. Review of TSNs relevant to the forensic review;

c. Study of and research on the guns, slugs and ammunitions allegedly involved in the
crime;

d. Interviews/re-enactment of the crime based on the military's accounts, both in the

Bilibid Prison where the convicts are confined and the MIA (now NAIA) stairway and
tarmac;

e. Conduct of ocular inspection and measurements on the actual crime scene (stairway
and tarmac) at the old Manila International Airport (now NAIA);

f. Retracing the slug's trajectory based on the autopsy reports and experts' testimonies
using an actual human skull;

g. X-rays of the skull with the retraced trajectory based on the autopsy report and
experts' testimonies;

h. Evaluation of the presented facts and opinions of local experts in relation to

accepted forensic findings in international publications on forensic science, particularly
on guns and [gunshot] wound injuries;

i. Forensic experiments and simulations of events in relation to this case.18

These materials were available to the parties during the trial and there was nothing
that prevented the petitioners from using them at the time to support their theory that
it was not the military, but Rolando Galman, who killed Senator Aquino. Petitioners, in
their present motion, failed to present any new forensic evidence that could not have
been obtained by the defense at the time of the trial even with the exercise of due
diligence. If they really wanted to seek and offer the opinion of other forensic experts
at the time regarding the physical evidence gathered at the scene of the crime, there
was ample opportunity for them to do so before the case was finally submitted and
decided.19

A reading of the Sandiganbayan decision dated September 28, 1990 shows a thorough
study by the court of the forensic evidence presented during the trial, viz:
 249

COURT FINDINGS

As to the physical
evidence

Great significance has to be accorded the trajectory of the single bullet that penetrated
the head and caused the death of Sen. Benigno Aquino, Jr. Basic to the question as to
trajectory ought to be the findings during the autopsy. The prosector in the autopsy,
Dr. Bienvenido Muñoz, NBI Medico-Legal Officer, reported in his Autopsy Report No.
N-83-22-36, that the trajectory of the gunshot, the wound of entrance having been
located at the mastoid region, left, below the external auditory meatus, and the exit
wound having been at the anterior portion of the mandible, was "forward, downward
and medially." (Autopsy Report No. N-83-22-36, Exhibit "NNNN-2-t-2")

A controversy as to this trajectory came about when, upon being cross-examined by

counsel for the defense, Dr. Bienvenido Muñoz made a significant turn-about by
stating that the correct trajectory of the fatal bullet was "upward, downward, and
medially." The present position of Dr. Muñoz is premised upon the alleged fact that
he found the petrous bone fractured, obviously hit by the fatal bullet. He concluded, in
view of this finding, that the fatal bullet must have gone upward from the wound of
entrance. Since the fatal bullet exited at the mandible, it is his belief that the petrous
bone deflected the trajectory of the bullet and, thus, the bullet proceeded downwards
from the petrous bone to the mandible.

This opinion of Dr. Bienvenido Muñoz in this regard notwithstanding, We hold that the
trajectory of the fatal bullet which killed Sen. Benigno Aquino, Jr. was, indeed,
"forward, downward and medially." For the reason that the wound of entrance was at a
higher elevation than the wound of exit, there can be no other conclusion but that the
trajectory was downward. The bullet when traveling at a fast rate of speed takes a
straight path from the wound of entrance to the wound of exit. It is unthinkable that
the bullet, while projected upwards, would, instead of exiting to the roof of the head,
go down to the mandible because it was allegedly deflected by a petrous bone which
though hard is in fact a mere spongy protuberance, akin to a cartilage.

Clear is proof of the downward trajectory of the fatal bullet; First, as Dr. Pedro Solis
and Dr. Ceferino Cunanan, the immediate superiors of Dr. Bienvenido Muñoz,
manifested before the Court, that, since the wound of entrance appeared ovaloid and
there is what is known as a contusion collar which was widest at the superior portion,
indicating an acute angle of approach, a downward trajectory of the bullet is indicated.
This phenomenon indicates that the muzzle of the fatal gun was at a level higher than
that of the point of entry of the fatal bullet.

There was no showing as to whether a probe could have been made from the wound of
entrance to the petrous bone. Out of curiosity, Dr. Juanito Billote tried to insert a probe
from the wound of exit into the petrous bone. He was unsuccessful notwithstanding
four or five attempts. If at all, this disproves the theory of Dr. Muñoz that the
trajectory was upward, downward and medially. On the other hand, Dr. Juanito Billote
and photographer Alexander Loinaz witnessed the fact that Dr. Muñoz' [s]
understudy, Alejandrino Javier, had successfully made a probe from the wound of
entrance directly towards the wound of exit. Alejandrino Javier shouted with
excitement upon his success and Alexander Loinaz promptly photographed this event
with Alejandrino Javier holding the protruding end of the probe at the mandible.
(Exhibit "XXXXX-39-A")
 250

To be sure, had the main bullet hit the petrous bone, this spongy mash of cartilage
would have been decimated or obliterated. The fact that the main bullet was of such
force, power and speed that it was able to bore a hole into the mandible and crack it, is
an indication that it could not have been stopped or deflected by a mere petrous bone.
By its power and force, it must have been propelled by a powerful gun. It would have
been impossible for the main bullet to have been deflected form an upward course by a
mere spongy protuberance. Granting that it was so deflected, however, it could not
have maintained the same power and force as when it entered the skull at the mastoid
region so as to crack the mandible and make its exit there.

But what caused the fracture of the petrous bone? Was there a cause of the fracture,
other than that the bullet had hit it? Dr. Pedro Solis, maintaining the conclusion that
the trajectory of the bullet was downward, gave the following alternative explanations
for the fracture of the petrous bone:

First, the petrous bone could have been hit by a splinter of the main bullet,
particularly, that which was found at the temporal region; and,

Second, the fracture must have been caused by the kinetic force applied to the point of
entrance at the mastoid region which had the tendency of being radiated towards the
petrous bone.

Thus, the fracture in the occipital bone, of the temporal bone, and of the parietal bone,
Dr. Pedro Solis pointed out, had been caused by the aforesaid kinetic force. When a
force is applied to the mastoid region of the head, Dr. Pedro Solis emphasized, a
radiation of forces is distributed all over the cranial back, including, although not
limited to, the parietal bone. The skull, Dr. Solis explains, is a box-like structure. The
moment you apply pressure on the portion, a distortion, tension or some other
mechanical defect is caused. This radiation of forces produces what is known as the
"spider web linear fracture" which goes to different parts of the body. The so-called
fracturing of the petrous portion of the left temporal bone is one of the consequences
of the kinetic force forcefully applied to the mastoid region.

The fact that there was found a fracture of the petrous bone is not necessarily
indicative of the theory that the main bullet passed through the petrous bone.

Doubt was expressed by Dr. Pedro Solis as to whether the metal fragments alleged by
Dr. Bienvenido Muñoz to have been found by him inside the skull or at the wound of
exit were really parts of the main bullet which killed the Senator. When Dr. Pedro Solis
examined these fragments, he found that two (2) of the fragments were larger in size,
and were of such shapes, that they could not have gone out of the wound of exit
considering the size and shape of the exit wound.

Finding of a downward
trajectory of the
fatal bullet fatal
to the credibility
of defense witnesses.

The finding that the fatal bullet which killed Sen. Benigno Aquino, Jr. was directed
downwards sustains the allegation of prosecution eyewitnesses to the effect that Sen.
Benigno Aquino, Jr. was shot by a military soldier at the bridge stairs while he was
being brought down from the plane. Rebecca Quijano saw that the senator was shot by
the military man who was directly behind the Senator while the Senator and he were
 251

descending the stairs. Rebecca Quijano's testimony in this regard is echoed by Jessie
Barcelona, Ramon Balang, Olivia Antimano, and Mario Laher, whose testimonies this
Court finds likewise as credible.

The downward trajectory of the bullet having been established, it stands to reason that
the gun used in shooting the Senator was fired from an elevation higher than that of
the wound of entrance at the back of the head of the Senator. This is consistent with
the testimony of prosecution witnesses to the effect that the actual killer of the
Senator shot as he stood at the upper step of the stairs, the second or third behind
Senator Aquino, while Senator Aquino and the military soldiers bringing him were at
the bridge stairs. This is likewise consistent with the statement of Sandra Jean Burton
that the shooting of Senator Aquino occurred while the Senator was still on the bridge
stairs, a conclusion derived from the fact that the fatal shot was fired ten (10) seconds
after Senator Aquino crossed the service door and was led down the bridge stairs.

It was the expert finding of Dr. Matsumi Suzuki that, as was gauged from the sounds
of the footsteps of Senator Aquino, as the Senator went down the bridge stairs, the
shooting of the Senator occurred while the Senator had stepped on the 11 th step from
the top.

At the ocular inspection conducted by this Court, with the prosecution and the defense
in attendance, it should be noted that the following facts were established as regards
the bridge stairs:

"Observations:

The length of one block covering the tarmac - 19 6";

The width of one block covering the tarmac - 10';

The distance from the base of the staircase leading to the emergency tube to the Ninoy
marker at the tarmac - 12 6";

There are 20 steps in the staircase including the landing;

The distance from the first rung of the stairway up to the 20th rung which is the landing
of stairs - 20 8";

Distance from the first rung of the stairway up to the 20th rung until the edge of the
exit door - 23 11";

Distance from the 4th rung up to the exit door - 21';

Distance from the 5th rung up to the exit door - 19 11";

Length of one rung including railpost - 3 4";

Space between two rungs of stairway - 9";

Width of each rung - 11-1/2";

Length of each rung (end to end) - 2 9":

Height of railpost from edge of rung to railing - 2 5".

 252

(underlining supplied)20

The Sandiganbayan again exhaustively analyzed and discussed the forensic evidence in
its resolution dated November 15, 1990 denying the motion for reconsideration filed by
the convicted accused. The court held:

The Autopsy Report No. N-83-2236, Exhibit "NNNN-2-t-2" indicated a downward

trajectory of the fatal bullet when it stated that the fatal bullet was "forward,
downward, and medially . . ."

xxx

II

The wound of entrance having been at a higher elevation than the wound of exit, there
can be no other conclusion but that the trajectory was downward. The fatal bullet,
whether it be a Smith and Wesson Caliber .357 magnum revolver or a .45 caliber,
must have traveled at a fast rate of speed and it stands to reason that it took a
straight path from the wound of entrance to the wound of exit. A hole indicating this
straight path was proven to have existed. If, as contended on cross-examination by Dr.
Bienvenido Muñoz, that the bullet was projected upwards, it ought to have exited at
the roof of the head. The theory that the fatal bullet was deflected by a mere petrous
bone is inconceivable.

III

Since the wound of entrance appeared ovaloid and there is what is known as a
contusion collar which was widest at the superior portion, indicating an acute angle of
approach, a downward trajectory of the fatal bullet is conclusively indicated. This
phenomenon indicates that the muzzle of the fatal gun was at a level higher than that
of the point of entry of the fatal bullet.

IV

There was no hole from the petrous bone to the mandible where the fatal bullet had
exited and, thus, there is no support to the theory of Dr. Bienvenido Muñoz that the
fatal bullet had hit the petrous bone on an upward trajectory and had been deflected
by the petrous bone towards the mandible. Dr. Juanito Billote's testimony in this
regard had amplified the matter with clarity.

xxx

These physical facts, notwithstanding the arguments and protestations of counsel for
the defense as now and heretofore avowed, compel the Court to maintain the holding:
(1) that the trajectory of the fatal bullet which hit and killed Senator Benigno Aquino,
Jr. was "forward, downward and medially"; (2) that the Senator was shot by a person
who stood at a higher elevation than he; and (3) that the Senator was shot and killed
by CIC Rogelio Moreno on the bridge stairs and not on the tarmac, in conspiracy with
the rest of the accused convicted herein.21

This Court affirmed said findings of the Sandiganbayan when it denied the Petition for
Review in its resolution of July 25, 1991. The Court ruled:
 253

The Court has carefully considered and deliberated upon all the contentions of the
petitioners but finds no basis for the allegation that the respondent Sandiganbayan has
gravely erred in resolving the factual issues.

The attempt to place a constitutional dimension in the petition is a labor in vain.

Basically, only questions of fact are raised. Not only is it axiomatic that the factual
findings of the Sandiganbayan are final unless they fall within specifically recognized
exceptions to the rule but from the petition and its annexes alone, it is readily apparent
that the respondent Court correctly resolved the factual issues.

xxx

The trajectory of the fatal bullet, whether or not the victim was descending the
stairway or was on the tarmac when shot, the circumstances showing conspiracy, the
participants in the conspiracy, the individual roles of the accused and their respective
parts in the conspiracy, the absence of evidence against thirteen accused and their co-
accused Col. Vicente B. Tigas, Jr., the lack of credibility of the witnesses against former
Minister Jose D. Aspiras, Director Jesus Z. Singson, Col. Arturo A. Custodio, Hermilo
Gosuico, Major General Prospero Olivas, and the shooting of Rolando Galman are all
factual matters w[h]ich the respondent court discussed with fairness and at length. The
petitioners' insistence that a few witnesses in their favor should be believed while that
of some witnesses against them should be discredited goes into the question of
credibility of witnesses, a matter which under the records of this petition is best left to
the judgment of the Sandiganbayan.22

The report of the forensic group essentially reiterates the theory presented by
the defense during the trial of the double murder case. Clearly, the report is not
newly discovered, but rather recently sought, which is not allowed by the Rules.23 If at
all, it only serves to discredit the version of the prosecution which had already been
weighed and assessed, and thereafter upheld by the Sandiganbayan.

The same is true with the statement of the alleged eyewitness, SPO4 Cantimbuhan. His
narration merely corroborates the testimonies of other defense witnesses during the
trial that they saw Senator Aquino already walking on the airport tarmac toward the
AVSECOM van when a man in blue-gray uniform darted from behind and fired at the
back of the Senator's head.24 The Sandiganbayan, however, did not give weight to
their account as it found the testimonies of prosecution eyewitnesses Rebecca Quijano
and Jessie Barcelona more credible. Quijano and Barcelona testified that they saw the
soldier behind Senator Aquino on the stairway aim and fire a gun on the latter's nape.
As earlier quoted, the Sandiganbayan found their testimonies to be more consistent
with the physical evidence. SPO4 Cantimbuhan's testimony will not in any way alter
the court's decision in view of the eyewitness account of Quijano and Barcelona, taken
together with the physical evidence presented during the trial. Certainly, a new trial
will only be allowed if the new evidence is of such weight that it would
probably change the judgment if admitted.25 Also, new trial will not be
granted if the new evidence is merely cumulative, corroborative or
impeaching.

As additional support to their motion for new trial, petitioners also claim that they were
denied due process because they were deprived of adequate legal assistance by
counsel. We are not persuaded. The records will bear out that petitioners were ably
represented by Atty. Rodolfo U. Jimenez during the trial and when the case was
elevated to this Court. An experienced lawyer in criminal cases, Atty. Jimenez
vigorously defended the petitioners' cause throughout the entire proceedings. The
 254

records show that the defense presented a substantial number of witnesses and
exhibits during the trial. After the Sandiganbayan rendered its decision, Atty. Jimenez
filed a Petition for Review with this Court, invoking all conceivable grounds to acquit
the petitioners. When the Court denied the Petition for Review , he again filed a motion
for reconsideration exhausting his deep reservoir of legal talent. We therefore find
petitioners' claim to be unblushingly unsubstantiated. We note that they did not allege
any specific facts in their present motion to show that Atty. Jimenez had been remiss
in his duties as counsel. Petitioners are therefore bound by the acts and decisions of
their counsel as regards the conduct of the case. The general rule is that the client is
bound by the action of his counsel in the conduct of his case and cannot be heard to
complain that the result of the litigation might have been different had his counsel
proceeded differently.26We held in People v. Umali:27

In criminal as well as civil cases, it has frequently been held that the fact that blunders
and mistakes may have been made in the conduct of the proceedings in the trial court,
as a result of the ignorance, inexperience, or incompetence of counsel, does not
furnish a ground for a new trial.

If such grounds were to be admitted as reasons for reopening cases, there would never
be an end to a suit so long as new counsel could be employed who could allege and
show that prior counsel had not been sufficiently diligent, or experienced, or learned.

So it has been held that mistakes of attorneys as to the competency of a witness, the
sufficiency, relevancy, materiality, or immateriality of a certain evidence, the proper
defense, or the burden of proof are not proper grounds for a new trial; and in general
the client is bound by the action of his counsel in the conduct of his case, and can not
be heard to complain that the result of the litigation might have been different had
counsel proceeded differently. (citations omitted)

Finally, we are not moved by petitioners' assertion that the forensic evidence may have
been manipulated and misinterpreted during the trial of the case. Again, petitioners did
not allege concrete facts to support their crass claim. Hence, we find the same to be
unfounded and purely speculative.

IN VIEW WHEREOF, the motion is DENIED.

SO ORDERED.
 255

[G.R. NO. 167321 : July 31, 2006]

EPIFANIO SAN JUAN, JR., Petitioner, v. JUDGE RAMON A. CRUZ, REGIONAL

TRIAL COURT, BRANCH 224, QUEZON CITY and ATTY. TEODORICO A.
AQUINO, Respondents.

DECISION

CALLEJO, SR., J.:

Before the Court is a Petition for Review on Certiorari of the Resolution1 of the Court of
Appeals (CA) in CA-G.R. SP No. 87458 dismissing the Petition for Certiorari with Prayer
for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction of
petitioner Epifanio San Juan, Jr., as well as its Resolution2 denying the motion for
reconsideration thereof.

The Antecedents

Loreto Samia San Juan executed a Last Will and Testament naming Oscar Casa as one
of the devisees therein. Upon Loreto's death on October 25, 1988, Atty. Teodorico A.
Aquino filed a petition for the probate of the will in the Regional Trial Court (RTC) of
Quezon City. The case was raffled to Branch 224 of the court and was docketed as
Special Proceedings No. 98-36118.

While the petition was pending, Oscar Casa died intestate on May 24, 1999. The firm of
Aquino, Galang, Lucas, Espinoza, Miranda & Associates entered their appearance as
counsel of Federico Casa, Jr., who claimed to be one of the heirs of Oscar Casa and
their representative.

On August 14, 2002, the probate court issued an Order denying the entry of
appearance of said law firm, considering that Federico Casa, Jr. was not the executor
or administrator of the estate of the devisee, hence, cannot be substituted for the
deceased as his representative as required by Section 16, Rule 3 of the Rules of Court.
On November 22, 2002, the court issued an order directing Aquino to secure the
appointment of an administrator or executor of the estate of Oscar Casa in order that
the appointee be substituted in lieu of the said deceased.

On February 26, 2003, Aquino filed a pleading entitled "Appointment of Administrator"

signed by Candelaria, Jesus, Arlyn, Nestor, Edna, Benhur, Federico, Rafael and Ma.
Eden, all surnamed Casa, on February 24, 2003, praying that one of them, Federico
Casa, Jr., be designated as administrator of the estate of the deceased and that he be
substituted for the deceased.

NOW THEREFORE, in compliance with the ORDER of the Probate Court, cited above,
we, the legal heirs of the deceased OSCAR CASA, unanimously designate and appoint
FEDERICO CASA, JR., as the ADMINISTRATOR of the property to be inherited by the
deceased OSCAR CASA, in the WILL of the late LORETO SAMIA SAN JUAN, considering
that FEDERICO CASA, JR., is the nearest accessible heir to attend the hearing of the
probate of the will and is most competent to assume the responsibilities and the duties
of the ADMINISTRATOR. We authorize him to represent us the heirs of the deceased
OSCAR CASA, on the hearing of the probate of the will of the testatrix and to perform
such duties as might be required by the Probate Court; to take possession of the
properties designated in the WILL upon distribution by the appointed ADMINISTRATOR
of the Estate of LORETO SAMIA SAN JUAN. (emphasis supplied)3
 256

In compliance with the order of the court, Epifanio San Juan filed a "Motion to Declare
Appointment of Administrator As Inadequate or Insufficient."4 He maintained that the
heirs should present an administrator of the estate of Oscar Casa as the representative
of the estate in the case.

In his reply, Aquino stated that, under Section 16, Rule 3 of the Rules of Court, the
heirs of Oscar Casa may be substituted for the deceased without need for appointment
of an administrator or executor of the estate. He also claimed that the court is enjoined
to require the representative to appear before the court and be substituted within the
prescribed period.

On December 2, 2003, the RTC issued an Order denying the motion of San Juan.
Contrary to its Order dated November 22, 2002, the court held that there was, after
all, no need for the appointment of an administrator or executor as substitute for the
deceased devisee. It is enough, the court declared, that a representative be appointed
as provided in Section 16, Rule 3 of the Rules of Court.5

San Juan received a copy of the December 2, 2003 Order on December 15, 2003 and
filed, on December 30, 2003, a motion for reconsideration thereof. Citing the ruling of
this Court in Lawas v. Court of Appeals,6 he averred that, under Section 16, Rule 3 of
the Rules of Court, while the court may allow the heirs of the deceased to be
substituted in cases of unreasonable delay in the appointment of an executor or
administrator, or where the heirs resort to an extrajudicial settlement of the estate,
priority is still given to the legal representative of the deceased, that is, the executor or
administrator of the estate. Moreover, in case the heirs of the deceased will be
substituted, there must be a prior determination by the probate court of who the
rightful heirs are. He opined that this doctrine is in line with Article 1058 of the New
Civil Code, and the provisions of Section 6, Rule 78 and Section 2, Rule 79 of the Rules
of Court. In this case, however, the alleged heirs of Oscar Casa did not file any petition
for the appointment of an administrator of his estate; hence, Federico Casa, Jr. is not
qualified to be appointed as substitute for the deceased devisee. San Juan pointed out
that the December 2, 2003 Order of the probate court contravened its August 14, 2002
and November 22, 2002 Orders.7

The motion for reconsideration was denied on February 27, 2004 where the probate
court declared that it had carefully evaluated the arguments raised by the parties and
found no compelling ground or cogent reason to set aside its December 2, 2003
Order.8 Petitioner received a copy of the Order on March 18, 2004.

On May 7, 2004, San Juan filed a Motion to Admit his second motion for
reconsideration dated May 6, 2004, appending thereto the December 2, 2003 Order of
the RTC.9 He cited Torres, Jr. v. Court of Appeals,10 where it was held that the purpose
behind the rule on substitution of parties is the protection of the right of every party to
due process, to ensure that the deceased party would continue to be properly
represented in the suit through the duly appointed legal representative of his estate.
The need for substitution of heirs is based on the right to due process accruing to
every party in any proceeding, and the exercise of judicial power to hear and
determine a cause presupposes that the trial court acquires jurisdiction over the
persons of the parties.

San Juan emphasized that it is only in the absence of an executor or administrator that
the heirs may be allowed by the court to substitute the deceased party. He averred
that the purported heirs simply agreed among themselves to appoint a representative
to be substituted for the deceased, which is contrary to the requirement of a prior
 257

hearing for the court to ascertain who the rightful heirs are. The Orders of the Court
dated December 2, 2003 and February 27, 2004 may be used by purported heirs in
order to "inherit" properties from estates of deceased parties, which will then allow the
rules of procedure to be used as an instrument for fraud and undermining due
process.11 San Juan reiterated the rulings of this Court in Dela Cruz v. Court of
Appeals12 and Lawas v. Court of Appeals,13 that court proceedings conducted or
continued without a valid substitution of a deceased party cannot be accorded validity
and binding effect. He prayed that the February 27, 2004 Order be reconsidered and a
new order be issued as follows:

(a) declaring the "Appointment of Administrator" dated February 14, 2003 insufficient
or inadequate compliance with the rules of procedure on substitution of a deceased
party;

(b) directing petitioner to secure from the appropriate court the appointment of an
administrator of the estate of the deceased Oscar Casa; and cra lawlib rary

(c) directing that further proceedings in the case be deferred until after the substitution
of the deceased Oscar Casa by the court-appointed administrator or executor of his
estate.

Oppositor prays for other and further reliefs which may be just and equitable.14

On June 11, 2004, the probate court issued an order denying the second motion for
reconsideration of San Juan. It noted that the motion merely reiterated the same
arguments in his first motion for reconsideration which had already been passed upon.
Citing the rulings in Montañano v. Suesa15 andRiera v. Palmanori,16 it concluded that
there was no need for the appointment of an administrator of the estate of the
deceased Oscar Casa at that stage of the proceedings since a legatee is not considered
either as an indispensable or necessary party in the probate of a will.17

When San Juan received a copy of the June 11, 2004 Order of the trial court, he filed,
on July 23, 2004, a motion for reconsideration thereof. He took exception to the
probate court's reliance in the Montañanoand Riera cases, as claiming that said
rulings were not relevant to the issue of the validity of the appointment of Federico
Casa Jr., by the alleged heirs of Oscar Casa, as administrator and substitute for the
deceased devisee. He insisted that the cases dealt only with the question of whether or
not the probate court can rule on the validity of the provisions of the will; they do not
involve the same issue presented by the oppositor, namely, whether or not a
substitution of a legatee under the will who died during the probate proceedings may
be done by simply submitting an "Appointment of Administrator," or whether or not
there is a need for a deceased legatee to be substituted by his/her duly appointed legal
representative or administrator of his estate.

San Juan further posited that the estate court, sitting as a probate court, does not only
decide on the questions of identity and testamentary capacity of the testator and the
due execution of the will; it is likewise charged with the settlement of the estate of the
testator after the will has been approved. Thus, the probate court must not only
determine the validity of the will, but also the rightful heirs, legatees and devisees for
the purpose of settling the estate of the testator.18

Aquino opposed the motion, contending that it was, in fact, a third motion for
reconsideration, a prohibited pleading under Section 3, Rule 37 of the 1997 Rules of
Civil Procedure.19
 258

On September 8, 2004, the probate court issued an Order sustaining Aquino's

argument and denied the motion for reconsideration of San Juan.20

San Juan, now petitioner, filed a Petition for Certiorari with the CA on November 22,
2004 for the nullification of the orders issued by the probate court on the following
grounds:

A. THE RESPONDENT REGIONAL TRIAL COURT OF QUEZON CITY GRAVELY ABUSED

ITS DISCRETION WHICH AMOUNTS TO LACK, OR IN EXCESS, OF JURISDICTION IN
RULING THAT THE "APPOINTMENT OF ADMINISTRATOR" DATED FEBRUARY 14, 2003
MADE BY PRIVATE RESPONDENT IS IN ACCORDANCE WITH THE RULES ON CIVIL
PROCEDURE ON PROPER SUBSTITUTION OF PARTIES.

B. THE RESPONDENT REGIONAL TRIAL COURT OF QUEZON CITY GRAVELY ABUSED

ITS DISCRETION WHICH AMOUNTS TO LACK, OR IN EXCESS, OF JURISDICTION IN
DENYING DUE COURSE TO PETITIONER'S MOTION FOR RECONSIDERATION ON THE
GROUND THAT SAID MOTION IS A THIRD MOTION FOR RECONSIDERATION WHICH IS
A PROHIBITED PLEADING UNDER SEC. 5, RULE 37 OF THE RULES OF COURT.21

On December 1, 2004, the CA dismissed the petition on the ground that it was filed
beyond the 60-day period counted from notice to petitioner of the trial court's February
27, 2004 Order. The appellate court declared that the May 6, 2004 motion for
reconsideration of petitioner was a pro forma motion because it was a second motion
for reconsideration which sought the same relief as the first motion, hence, did not toll
the running of the 60-day period.22 The appellate court cited the ruling of this Court
in University of Immaculate Concepcion v. Secretary of Labor and Employment.23

Petitioner filed a motion for reconsideration of the resolution of the CA, contending that
the orders sought to be reconsidered by him were interlocutory, hence, cannot be
considered pro forma or forbidden by the Rules of Court. He cited the rulings of this
Court in Dizon v. Court of Appeals,24 Philgreen Trading Construction Corporation v.
Court of Appeals,25 and the cases cited in the latter decision.26 However, on February
24, 2005, the CA resolved to deny the motion of petitioner.27

Petitioner now seeks relief from this Court, via a Petition for Review on Certiorari, for
the reversal of the resolutions of the appellate court. He raises the following issues:

(A)

WHETHER OR NOT THE SIXTY-DAY PERIOD FOR FILING A PETITION FOR CERTIORARI
UNDER RULE 65 OF THE RULES OF COURT IS RECKONED FROM NOTICE OF DENIAL OF
THE FIRST MOTION FOR RECONSIDERATION OF AN INTERLOCUTORY ORDER EVEN
THOUGH A SECOND AND THIRD MOTION FOR RECONSIDERATION (WHICH ARE NOT
PROHIBITED MOTIONS) OF THE SAME INTERLOCUTORY ORDER HAD BEEN FILED AND
WERE LATER DENIED.

(B)

WHETHER OR NOT A PERSON NOMINATED AS "ADMINISTRATOR" BY PURPORTED

HEIRS OF A DEVISEE OR LEGATEE IN A WILL UNDER PROBATE MAY VALIDLY
SUBSTITUTE FOR THAT DEVISEE OR LEGATEE IN THE PROBATE PROCEEDINGS
DESPITE THE FACT THAT SUCH "ADMINISTRATOR" IS NOT THE COURT-APPOINTED
ADMINISTRATOR OF THE ESTATE OF THE DECEASED DEVISEE OR LEGATEE.28
 259

On the first issue, petitioner avers that the reckoning of the 60-day period for filing a
Petition for Certiorariunder Rule 65 of the Rules of Court from the notice of denial of
the first motion for reconsideration is applicable only if the subject of the petition is a
judgment, final resolution, or order. It does not apply if the subject of the petition is
merely an interlocutory order. He points out that the reason for this is that only one
motion for reconsideration of a judgment or final order is allowed under Section 5, Rule
37 of the Rules of Court. A second motion for reconsideration of a judgment or final
order is a prohibited pleading; hence, the period for filing a Petition for Certiorari may
not be reckoned from notice of denial of such second and prohibited motion for
reconsideration. Petitioner asserts that a second (or even a third) motion for
reconsideration of an interlocutory order is not prohibited; hence, the 60-day period for
filing a Petition forCertiorari may be reckoned from notice of denial of subsequent
motions for reconsideration.

Petitioner further claims that the Orders dated December 2, 2003, February 27, 2004,
June 11, 2004 and September 8, 2004 issued by the RTC are only interlocutory orders.
They deal solely with the issue concerning the proper substitution of the deceased
Oscar Casa who is one of the devisees and legatees named in the purported will of the
testatrix, Loreto San Juan, which is the subject matter of the probate proceedings
pending with the respondent court. Said orders did not terminate or finally dispose of
the case but left something to be done by the respondent court before the case is
finally decided on the merits. The assailed orders do not go into the merits of the
probate case, particularly on the due execution and validity of the will. It pertains only
to the proper substitution of the parties. Thus, the orders are not final orders from
which no second or third motion for reconsideration may be filed.29 It cannot also be
said that the second motion for reconsideration did not toll the running of the
reglementary period for filing a Petition forCertiorari, considering that there is no
prohibition in the filing of a second motion for reconsideration of an interlocutory order.
Furthermore, there is no intention on the part of petitioner to delay proceedings before
the lower court when he filed the third motion for reconsideration, as he only sought to
correct the probate court's patently erroneous application of the law. Petitioner
emphasizes that he filed the Petition forCertiorari with the CA in view of the grave
abuse of discretion which amounted to lack of or excess of jurisdiction committed by
respondent trial court when it wrongfully assumed in its Order denying the third motion
for reconsideration that the order sought to be reconsidered is a final order on the
merits of the case and that the motion for reconsideration is a third motion for
reconsideration of a final order.30

The petition is denied for lack of merit.

We agree with the ruling of the CA that the Petition for Certiorari filed by petitioner in
the appellate court was time-barred. However, the raison d'etre for its ruling is
incorrect.

Contrary to the ruling of the CA, the proscription against a pro forma motion applies
only to a final resolution or order and not to an interlocutory one. The ruling of this
Court in University of Immaculate Concepcion v. Secretary of Labor and
Employment31 involved a final order of the NLRC and not an interlocutory order.

In this case, the December 2, 2003 Order of the trial court denying the motion of
petitioner to consider insufficient or inadequate respondent's compliance with its
November 22, 2002 Order is interlocutory. The order does not finally dispose of the
case, and does not end the task of the court of adjudicating the parties' contentions
and determining their rights and liabilities as regards each other but obviously
 260

indicates that other things remain to be done. Such order may not be questioned
except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.32 It bears stressing however that while the motion for
reconsideration filed by petitioner assailing the December 2, 2003 Order of the trial
court based on the same grounds as those alleged in his first motion is not pro forma,
such second motion for reconsideration can nevertheless be denied on the ground that
it is merely a rehash or a mere reiteration of grounds and arguments already passed
upon and resolved by the court. Such a motion cannot be rejected on the ground that
a second motion for reconsideration of an interlocutory order is forbidden by law or by
the Rules of Court.33

Section 4, Rule 65 of the Rules of Civil Procedure as amended by the resolution of the
Court in Bar Matter No. 00-2-03-SC which took effect on September 1, 2000, reads:

Sec. 4. Where and when petition filed. - The petition shall be filed not later than sixty
(60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of the said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions
of a lower court or of a corporation, board, officer or person, in the Regional Trial Court
exercising jurisdiction over the territorial area as defined by the Supreme Court. It may
also be filed in the Court of Appeals whether or not the same is in the aid of its
appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction.
If it involves the acts or omissions of a quasi-judicial agency, unless otherwise
provided by law or these rules, the petition shall be filed in and cognizable only by the
Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason
and in no case exceeding fifteen (15) days.

Thus, there are three essential dates that must be stated in a Petition
for Certiorari brought under Rule 65 of the Rules of Court for the nullification of a
judgment, resolution or order: (1) the date when notice of the judgment, resolution or
order was received; (2) when a motion for a new trial or reconsideration of the
judgment, order or resolution was submitted; and (3) when notice of the denial thereof
was received by petitioner.

The requirement of setting forth the three (3) dates in a Petition for Certiorari under
Rule 65 of the Rules of Court is for the purpose of determining its timeliness,
considering that a petition is required to be filed not later than 60 days from notice of
the judgment, order or resolution sought to be nullified.34

We agree with the ruling of the CA that the Petition for Certiorari filed by petitioner
with the CA on November 22, 2004 was filed beyond the 60-day period therefor.
Petitioner received, on March 18, 2004, the February 27, 2004 Order of the court
denying his motion for reconsideration of the December 2, 2003 Order. Petitioner had
60 days from March 18, 2004 or until May 17, 2004 within which to file his Petition
forCertiorari. However, petitioner filed his Petition for Certiorari with the CA only on
November 22, 2004.

The 60-day period should not be reckoned from petitioner's receipt on June 11, 2004
of the denial of his May 7, 2004 second motion for reconsideration. The 60-day period
 261

shall be reckoned from the trial court's denial of his first motion for reconsideration,
otherwise indefinite delays will ensue.35

We note that the parties articulated their stance in their respective pleadings not only
on the timeliness of the Petition for Certiorari in the CA but also on the validity of the
assailed December 2, 2003 Order of the trial court. Ordinarily, in view of the dismissal
of the petition because it was time-barred, the Court will no longer delve into and
resolve the other issues raised in the petition. However, in this case, we find it
appropriate and necessary to resolve once and for all the issue of whether there is a
need for the appointment of an administrator of the estate of Oscar Casa, or whether it
is enough that he be substituted by his heirs.

Section 16, Rule 3 of the 1997 Rules of Civil Procedure reads:

Sec. 16. Death of party; duty of counsel. - Whenever a party to a pending action dies,
and the claim is not thereby extinguished, it shall be the duty of his counsel to inform
the court within thirty (30) days after such death of the fact thereof, and to give the
name and address of his legal representative or representatives. Failure of counsel to
comply with this duty shall be a ground for disciplinary action.

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

The court shall forthwith order said legal representative or representatives to appear
and be substituted within a period of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one
so named shall fail to appear within the specified period, the court may order the
opposing party, within a specified time, to procure the appointment of an executor or
administrator for the estate of the deceased and the latter shall immediately appear for
and on behalf of the deceased. The court charges in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs.

The rule is a revision of Section 17, Rule 3 of the Rules of Court which reads:

Death of party. - After a party dies and the claim is not thereby extinguished, the court
shall order, upon proper notice, the legal representative of the deceased to appear and
to be substituted for the deceased, within a period of thirty (30) days, or within such
time as may be granted. If the legal representative fails to appear within said time, the
court may order the opposing party to procure the appointment of a legal
representative of the deceased within a time to be specified by the court, and the
representative shall immediately appear for and on behalf of the interest of the
deceased. The court charges involved in procuring such appointment, if defrayed by
the opposing party, may be recovered as costs. The heirs of the deceased may be
allowed to be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad litem for the minor
heirs.36

The second paragraph of the rule is plain and explicit: the heirs may be allowed to be
substituted for the deceased without requiring the appointment of an administrator or
executor. However, if within the specified period a legal representative fails to appear,
the court may order the opposing counsel, within a specified period, to process the
appointment of an administrator or executor who shall immediately appear for the
 262

estate of the deceased.37 The pronouncement of this Court in Lawas v. Court of

Appeals38(relied upon by petitioner), that priority is given to the legal representative of
the deceased (the executor or administrator) and that it is only in case of unreasonable
delay in the appointment of an executor or administrator, or in cases where the heirs
resort to an extrajudicial settlement of the estate that the court may adopt the
alternative of allowing the heirs of the deceased to be substituted for the deceased, is
no longer true.39 In Gochan v. Young,40 a case of fairly recent vintage, the Court ruled
as follows:

The above-quoted rules, while permitting an executor or administrator to represent or

to bring suits on behalf of the deceased, do not prohibit the heirs from representing
the deceased. These rules are easily applicable to cases in which an administrator has
already been appointed. But no rule categorically addresses the situation in which
special proceedings for the settlement of an estate have already been instituted, yet no
administrator has been appointed. In such instances, the heirs cannot be expected to
wait for the appointment of an administrator; then wait further to see if the
administrator appointed would care enough to file a suit to protect the rights and the
interests of the deceased; and in the meantime do nothing while the rights and the
properties of the decedent are violated or dissipated.

The Rules are to be interpreted liberally in order to promote their objective of securing
a just, speedy and inexpensive disposition of every action and proceeding. They cannot
be interpreted in such a way as to unnecessarily put undue hardships on litigants. For
the protection of the interests of the decedent, this Court has in previous instances
recognized the heirs as proper representatives of the decedent, even when there is
already an administrator appointed by the court. When no administrator has been
appointed, as in this case, there is all the more reason to recognize the heirs as the
proper representatives of the deceased. Since the Rules do not specifically prohibit
them from representing the deceased, and since no administrator had as yet been
appointed at the time of the institution of the Complaint with the SEC, we see nothing
wrong with the fact that it was the heirs of John D. Young, Sr. who represented his
estate in the case filed before the SEC. (Emphasis supplied)41

The heirs of the estate of Oscar Casa do not need to first secure the appointment of an
administrator of his estate, because from the very moment of his death, they stepped
into his shoes and acquired his rights as devisee/legatee of the deceased Loreto San
Juan. Thus, a prior appointment of an administrator or executor of the estate of Oscar
Casa is not necessary for his heirs to acquire legal capacity to be substituted as
representatives of the estate.42 Said heirs may designate one or some of them as their
representative before the trial court.

Hence, even on the threshold issue raised in the RTC and in the Petition
for Certiorari in the CA, the assailed order of the RTC is correct.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Costs against

petitioner.

SO ORDERED.
 263

[G.R. No. 152375 : December 16, 2011]

REPUBLIC OF THE PHILIPPINES, PETITIONER, VS SANDIGANBAYAN (FOURTH

DIVISION), JOSE L. AFRICA (SUBSTITUTED BY HIS HEIRS), MANUEL H.
NIETO, JR., FERDINAND E. MARCOS (SUBSTITUTED BY HIS HEIRS), IMELDA R.
MARCOS, FERDINAND R. MARCOS, JR., JUAN PONCE ENRILE, AND
POTENCIANO ILUSORIO (SUBSTITUTED BY HIS HEIRS), RESPONDENTS.

DECISION

BRION, J.:

Before us is the petition for certiorari[1] filed by the Republic of the Philippines
(petitioner) to set aside the February 7, 2002 resolution (2002 resolution)[2] of the
Sandiganbayan[3] denying the petitioner's Motion to Admit Supplemental Offer of
Evidence (Re: Deposition of Maurice V. Bane) (3rd motion). c ralaw

THE ANTECEDENTS

On July 22, 1987, the petitioner Republic of the Philippines, through the Presidential
Commission on Good Government (PCGG), filed a complaint (docketed as Civil Case
No. 0009) against Jose L. Africa, Manuel H. Nieto, Jr., Ferdinand E. Marcos, Imelda R.
Marcos, Ferdinand R. Marcos, Jr., Juan Ponce Enrile, and Potenciano Ilusorio
(collectively, the respondents) for reconveyance, reversion, accounting,
restitution, and damages before the Sandiganbayan. The petitioner alleged, inter
alia, that the respondents illegally manipulated the purchase of the major
shareholdings of Cable and Wireless Limited in Eastern Telecommunications
Philippines, Inc. (ETPI), which shareholdings respondents Jose Africa and Manuel Nieto,
Jr. held for themselves and, through their holdings and the corporations they
organized, beneficially for respondents Ferdinand E. Marcos and Imelda R. Marcos.[4]

Civil Case No. 0009 is the main case subject of the present petition. Victor Africa
(Africa), son of the late Jose L. Africa, was not impleaded in and so is plainly
not a party to Civil Case No. 0009.[5]

Civil Case No. 0009 spawned numerous incidental cases,[6] among them, Civil Case No.
0130.[7] The present respondents were not made parties either in Civil Case
No. 0130.

I. Civil Case No. 0130

In the August 7, 1991 PCGG-conducted ETPI stockholders meeting, a PCGG-controlled

board of directors was elected. Later, the registered ETPI stockholders convened a
special stockholders meeting wherein another set of board of directors was elected. As
a result, two sets of ETPI board and officers were elected.[8]

Thereafter, Africa, as an ETPI stockholder, filed a petition for certiorari, with prayer for
a temporary restraining order/preliminary injunction with the Sandiganbayan
(docketed as Civil Case No. 0130), seeking to nullify the August 5, 1991 and August
9, 1991 Orders of the PCGG. These Orders directed Africa:

[T]o account for his sequestered shares in ETPI and to cease and desist from
exercising voting rights on the sequestered shares in the special stockholder' meeting
 264

to be held on August 12, 1991, from representing himself as a director, officer,

employee or agent of ETPI, and from participating, directly or indirectly[,] in the
management of ETPI.[9]

During the pendency of Africa's petition, Civil Case No. 0130, Africa filed a motion with
the Sandiganbayan, alleging that since January 29, 1988 the PCGG had been 'illegally
'exercising' the rights of stockholders of ETPI,'[10] especially in the election of the
members of the board of directors. Africa prayed for the issuance of an order for the
'calling and holding of [ETPI] annual stockholders meeting for 1992 under the [c]ourt's
control and supervision and prescribed guidelines.'[11]

In its November 13, 1992 resolution, the Sandiganbayan favored Africa's motion in this
wise:

WHEREFORE, it is ordered that an annual stockholders meeting of the [ETPI], for 1992
be held on Friday, November 27, 1992, at 2:00 o'clock in the afternoon, at the ETPI
Board Room, Telecoms Plaza, 7th Floor, 316 Gil J. Puyat Avenue, Makati, Metro Manila.
x x x The stockholders meeting shall be conducted under the supervision and control of
this Court, through Mr. Justice Sabino R. de Leon, Jr. [O]nly the registered owners,
their duly authorized representatives or their proxies may vote their corresponding
shares.

The following minimum safeguards must be set in place and carefully maintained until
final judicial resolution of the question of whether or not the sequestered shares of
stock (or in a proper case the underlying assets of the corporation concerned)
constitute ill-gotten wealth[.][12]

The PCGG assailed this resolution before this Court via a petition for certiorari docketed
as G.R. No. 107789[13] (PCGG's petition), imputing grave abuse of discretion on the
Sandiganbayan for holding, inter alia, that the registered stockholders of ETPI had the
right to vote.[14] In our November 26, 1992 Resolution, we enjoined the
Sandiganbayan from implementing its assailed resolution.

In the meantime, in an April 12, 1993 resolution, the Sandiganbayan ordered

the consolidation of Civil Case No. 0130, among others, with Civil Case No.
0009, with the latter as the main case and the former merely an incident.[15]

During the pendency of PCGG's petition (G.R. No. 107789), the PCGG filed with this
Court a 'Very Urgent Petition for Authority to Hold Special Stockholders' Meeting for
[the] Sole Purpose of Increasing [ETPI's] Authorized Capital Stock' (Urgent Petition). In
our May 7, 1996 Resolution, we referred this Urgent Petition to the Sandiganbayan for
reception of evidence and immediate resolution.[16] The Sandiganbayan included
the Urgent Petition in Civil Case No. 0130.[17] cralaw

In the proceedings to resolve the Urgent Petition, the testimony of Mr. Maurice V. Bane
(former director and treasurer-in-trust of ETPI) was taken'“ at the petitioner's instance
and after serving notice of the deposition-taking on the respondents[18] '“ on October
23 and 24, 1996 by way of deposition upon oral examination (Bane deposition) before
Consul General Ernesto Castro of the Philippine Embassy in London, England.

Invoking Section 1, Rule 24 (of the old Rules of Court), purportedly allowing the
petitioner to depose Banewithout leave of court, i.e., as a matter of right after
the defendants have filed their answer, the notice stated that '[t]he purpose of the
deposition is for [Bane] to identify and testify on the facts set forth in his affidavit[19] x
 265

x x so as to prove the ownership issue in favor of [the petitioner] and/or establish

the prima facie factual foundation for sequestration of [ETPI's] Class A stock in support
of the [Urgent Petition].'[20] The notice also states that the petitioner shall use the Bane
deposition 'in evidence'¦ in the main case of Civil Case No. 0009.'[21] On the scheduled
deposition date, only Africa was present and he cross-examined Bane.

On December 13, 1996, the Sandiganbayan resolved the Urgent Petition by granting
authority to the PCGG (i) 'to cause the holding of a special stockholder' meeting of
ETPI for the sole purpose of increasing ETPI's authorized capital stock' and (ii) 'to vote
therein the sequestered Class 'A' shares of stock.'[22]Thus, a special stockholders
meeting was held, as previously scheduled, on March 17, 1997 and the increase in
ETPI's authorized capital stock was 'unanimously approved.'[23] From this ruling, Africa
went to this Court via a petition for certiorari[24] docketed as G.R. No. 147214
(Africa's petition).

We jointly resolved the PCGG's and Africa's petitions, and ruled:

This Court notes that, like in Africa's motion to hold a stockholders meeting (to elect a
board of directors), the Sandiganbayan, in the PCGG's petition to hold a stockholders
meeting (to amend the articles of incorporation to increase the authorized capital
stock), again failed to apply the two-tiered test. On such determination hinges the
validity of the votes cast by the PCGG in the stockholders meeting of March 17, 1997.
This lapse by the Sandiganbayan leaves this Court with no other choice but to remand
these questions to it for proper determination.

xxxx

WHEREFORE, this Court Resolved to REFER the petitions at bar to the Sandiganbayan
for reception of evidence to determine whether there is a prima facie evidence showing
that the sequestered shares in question are ill-gotten and there is an imminent danger
of dissipation to entitle the PCGG to vote them in a stockholders meeting to elect the
ETPI Board of Directors and to amend the ETPI Articles of Incorporation for the sole
purpose of increasing the authorized capital stock of ETPI.

The Sandiganbayan shall render a decision thereon within sixty (60) days from receipt
of this Resolution and in conformity herewith.

II. Civil Case No. 0009

Although Civil Case No. 0009 was filed on July 22, 1987, it was only on November 29,
1996 and March 17, 1997 that the first pre-trial conference was scheduled and
concluded.[25]

In its Pre-Trial Brief[26] dated August 30, 1996, the petitioner offered to present the
following witnesses:

WITNESSES TO BE PRESENTED AND A BRIEF DESCRIPTION OF THEIR TESTIMONIES

(1) Maurice V. Bane '“ representative of Cable and Wireless Limited (C & W) at the
time ETPI was organized.

xxxx

(2) Mr. Manuel H. Nieto '“ x x x

 266

(3) Ms. Evelyn Singson '“ x x x

(4) Mr. Severino P. Buan, Jr. '“ x x x

(5) Mr. Apolinario K. Medina - x x x

(6) Mr. Potenciano A. Roque '“ x x x

(7) Caesar Parlade - x x x

IIa. Motion to Admit the Bane Deposition

At the trial of Civil Case No. 0009, the petitioner filed a Motion[27] (1st motion), stating
that '“

1. In the hearings of the incidents of [Civil Case No. 0009], i.e., Civil Case Nos.
0048, 0050, 0130, 0146[28] the following witnesses were presented therein:

a. Cesar O.V. Parlade

b. Maurice Bane
c. Evelyn Singson
d. Leonorio Martinez
e. Ricardo Castro; and
f. Rolando Gapud

2. [The petitioner] wishes to adopt in [Civil Case No. 0009] their testimonies and
the documentary exhibits presented and identified by them, since their
testimonies and the said documentary exhibits are very relevant to prove the
case of the [petitioner] in [Civil Case No. 0009].

3. The adverse parties in the aforementioned incidents had the opportunity to

cross-examine them.

The respondents filed their respective Oppositions to the 1st motion;[29] in turn, the
petitioner filed a Common Reply[30] to these Oppositions.

On April 1, 1998, the Sandiganbayan[31] promulgated a resolution[32] (1998 resolution)

denying the petitioner's 1st motion, as follows:

Wherefore, the [petitioner's] Motion x x x is '“

1. partly denied insofar as [the petitioner] prays therein to adopt the testimonies
on oral deposition of Maurice V. Bane and Rolando Gapud as part of its
evidence in Civil Case No. 0009 for the reason that said deponents
according to the [petitioner] are not available for cross-examination in
this Court by the [respondents]. (emphasis added)

2. partly Granted, in the interest of speedy disposition of this long pending case,
insofar as plaintiff prays therein to adopt certain/particular testimonies of Cesar
O. Parlade, Evelyn Singson, Leoncio Martinez, and Ricardo Castro and
documentary exhibits which said witnesses have identified in incident Civil Case
Nos. xxx 0130 xxx, subject to the following conditions :

1. xxx
 267

2. xxx
3. That the said witnesses be presented in this Court so that they can be
cross-examined on their particular testimonies in incident Civil Cases xxx
[by the respondents].

IIb. Urgent Motion and/or Request for Judicial Notice

The petitioner did not in any way question the 1998 resolution, and instead
made its Formal Offer of Evidence on December 14, 1999.[33] Significantly, the
Bane deposition was not included as part of its offered exhibits. Rectifying the
omission, the petitioner filed an Urgent Motion and/or Request for Judicial
Notice[34] (2nd motion) dated February 21, 2000, with the alternative prayer that:

1. An order forthwith be issued re-opening the plaintiff's case and setting the
same for trial any day in April 2000 for the sole purpose of introducing additional
evidence and limited only to the marking and offering of the [Bane deposition]
which already forms part of the records and used in Civil Case No. 0130 x x x;

2. In the alternative, x x x the [Sandiganbayan] to take judicial notice of the facts

established by the [Bane deposition], together with the marked exhibits
appended thereto. [emphasis ours]

On August 21, 2000, the Sandiganbayan promulgated a resolution[35] (2000 resolution)

denying the petitioner's 2nd motion:

Judicial notice is found under Rule 129 which is titled 'What Need Not Be Proved.'
Apparently, this provision refers to the Court's duty to consider admissions made by
the parties in the pleadings, or in the course of the trial or other proceedings in
resolving cases before it. The duty of the Court is mandatory and in those cases where
it is discretionary, the initiative is upon the Court. Such being the case, the Court finds
the Urgent Motion and/or Request for Judicial Notice as something which need not be
acted upon as the same is considered redundant.

On the matter of the [Bane deposition], [its] admission is done through the
ordinary formal offer of exhibits wherein the defendant is given ample
opportunity to raise objection on grounds provided by law. Definitely, it is not
under Article (sic) 129 on judicial notice. [Emphasis ours]

On November 6, 2000 and on several dates thereafter, the respondents separately

filed their respective demurrers to evidence.[36] On the other hand, the petitioner
moved for the reconsideration of the 2000 resolution, but was rebuffed by the
Sandiganbayan in its April 3, 2001 resolution[37] (2001 resolution).

IIc. Motion to Admit Supplemental Offer of

Evidence (Re: Deposition of Maurice Bane)

On November 16, 2001, the petitioner filed its 3rd Motion, seeking once more the
admission of the Bane deposition.[38] On February 7, 2002 (pending resolution of the
respondents' demurrers to evidence),[39]the Sandiganbayan promulgated the
assailed 2002 resolution,[40] denying the petitioner's 3rdmotion. The
Sandiganbayan ruled:
 268

But in the court's view, it is not really a question of whether or not plaintiff has already
rested its case as to obviate the further presentation of evidence. It is not even a
question of whether the non-appearing defendants are deemed to have waived their
right to cross-examine Bane as to qualify the admission of the deposition sans such
cross-examination. Indeed, We do not see any need to dwell on these matters in view
of this Court's Resolutionrendered on April 1, 1998 which already denied the
introduction in evidence of Bane's deposition and which has become final in view of
plaintiff's failure to file any motion for reconsideration or appeal within the
15-day reglementary period. Rightly or wrongly, the resolution stands and for this
court to grant plaintiff's motion at this point in time would in effect sanction plaintiff's
disregard for the rules of procedure. Plaintiff has slept on its rights for almost two
years and it was only in February of 2000 that it sought to rectify its ineptitude by
filing a motion to reopen its case as to enable it to introduce and offer Bane's
deposition as additional evidence, or in the alternative for the court to take judicial
notice of the allegations of the deposition. But how can such a motion be granted when
it has been resolved as early as 1998 that the deposition is inadmissible. Without
plaintiff having moved for reconsideration within the reglementary period, the
resolution has attained finality and its effect cannot be undone by the simple
expedient of filing a motion, which though purporting to be a novel motion, is in
reality a motion for reconsideration of this court's 1998 ruling. [emphases ours]

The resolution triggered the filing of the present petition.

THE PETITION

The petitioner filed the present petition claiming that the Sandiganbayan committed
grave abuse of discretion:

I.

x x x IN HOLDING THAT ITS INTERLOCUTORY ORDER IN 1998 HAD BECOME

FINAL.

II.

x x x IN x x x REFUSING TO ADMIT THE BANE DEPOSITION '“WHICH WAS

ALREADY ADMITTED AS EVIDENCE IN AN INCIDENT CASE (CIVIL CASE NO.
0130) '“ AS PART OF PETITIONER'S EVIDENCE IN THE MAIN x x x CASE
(CIVIL CASE NO. 0009).

III.

x x x IN REFUSING TO ADMIT A HIGHLY RELEVANT AND IMPORTANT PIECE OF

EVIDENCE FOR THE PETITIONER ON THE BASIS OF FLIMSY AND TENUOUS
TECHNICAL GROUNDS.

The petitioner[41] argues that the 1998 resolution of the Sandiganbayan is merely an
interlocutory order; thus, the petitioner's failure to question this 1998 resolution could
not have given it a character of 'finality' so long as the main case remains
pending.[42] On this basis, the petitioner concludes that the Sandiganbayan's denial of
its 3rd motion was plainly tainted with grave abuse of discretion.

On the issue of the Sandiganbayan's refusal (in its 2002 resolution) either to take
judicial notice of or to admit the Bane deposition as part of its evidence, the petitioner
asserts that Civil Case No. 0130 (where the Bane deposition was originally taken,
 269

introduced and admitted in evidence) is but a 'child' of the 'parent' case, Civil Case No.
0009; under this relationship, evidence offered and admitted in any of the 'children'
cases should be considered as evidence in the 'parent' case.

Lastly, the petitioner claims that given the crucial importance of the Bane deposition,
the Sandiganbayan should not have denied its admission on 'flimsy grounds,'
considering that:

1. It was also already stated in the notice (of the taking of the Bane deposition)
that it would be used as evidence in Civil Case No. 0009. Notices having
been duly served on all the parties concerned, they must accordingly be deemed
to have waived their right to cross-examine the witness when they failed to
show up.

2. The Bane deposition was a very vital cog in the case of the petitioner relative to
its allegation that the respondents' interest in ETPI and related firms properly
belongs to the government.br>
3. The non-inclusion of the Bane deposition in the petitioner's formal offer of
evidence was obviouslyexcusable considering the period that had lapsed from
the time the case was filed and the voluminous records that the present case has
generated.[43]

THE RESPONDENTS' COMMENTS

and THE PETITIONER'S REPLY

In the respondents' Comments[44] (filed in compliance with our Resolution of April

10, 2002[45]), they claim that the present petition was filed out of time - i.e., beyond
the 60-day reglementary period prescribed under Section 4, Rule 65 of the Rules of
Court.[46] This assertion proceeds from the view that the petitioner's 3rd motion, being
a mere rehash of similar motions earlier filed by the petitioner, likewise simply assails
the Sandiganbayan's 1998 resolution. Along the same line, they posit that the
petitioner's 3rd motion actually partakes of a proscribed third motion for
reconsideration of the Sandiganbayan's 1998 resolution.[47] They likewise assert, on
the assumption that the 1998 resolution is interlocutory in character, that the
petitioner's failure to contest the resolution by way of certiorari within the proper
period gave the 1998 resolution a character of 'finality.'

The respondents further claim that after a party has rested its case, the admission of a
supplemental offer of evidence requires the reopening of the case at the discretion of
the trial court; the Sandiganbayan simply exercised its sound discretion in refusing to
reopen the case since the evidence sought to be admitted was 'within the knowledge of
the [petitioner] and available to [it] before [it] rested its case.'[48] The respondents
also advert to the belated filing of the petitioner's 3rd motion '“ i.e., after the
respondents had filed their respective demurrers to evidence.

On the petitioner's claim of waiver, the respondents assert that they have not waived
their right to cross-examine the deponent; the Sandiganbayan recognized this right in
its 1998 resolution and the petitioner never questioned this recognition. They also
assert that the allegations in the Bane deposition cannot be a proper subject of judicial
notice under Rule 129 of the Rules of Court. The respondents lastly submit that the
Bane deposition is inadmissible in evidence because the petitioner failed to comply with
the requisites for admission under Section 47, Rule 130 of the Rules of Court.
 270

In its Reply,[49] the petitioner defends the timeliness of the present petition by arguing
that a party may opt to wait out and collect a pattern of questionable acts before
resorting to the extraordinary remedy ofcertiorari. The petitioner stresses that it filed
the 3rd motion precisely because of the Sandiganbayan's 2000 resolution, which held
that the admission of the Bane deposition should be done through the ordinary formal
offer of evidence. Thus, the Sandiganbayan seriously erred in considering the
petitioner's 3rd motion as a proscribed motion for reconsideration. The petitioner
generally submits that the dictates of substantial justice should have guided the
Sandiganbayan to rule otherwise.

The petitioner also clarifies that it has not yet rested its case although it has filed a
formal offer of evidence. A party normally rests his case only after the admission of the
pieces of evidence he formally offered; before then, he still has the opportunity to
present further evidence to substantiate his theory of the case should the court reject
any piece of the offered evidence.[50]

The petitioner further maintains that the mere reasonable opportunity to cross-
examine the deponent is sufficient for the admission of the Bane deposition considering
that the deponent is not an ordinary witness who can be easily summoned by our
courts in light of his foreign residence, his citizenship, and his advanced age. The
petitioner asserts that Rule 24 (now Rule 23), and not Section 47, Rule 130, of the
Rules of Court should apply to the present case, as explicitly stated in the notice of the
deposition-taking.

To date, respondents Imelda Marcos and the heirs of Potenciano Ilusorio have yet to
file their respective comments on the petition. Given the time that had lapsed since we
required their comments, we resolve to dispense with the filing of these comments and
to consider this petition submitted for decision.

THE ISSUES

On the basis of the pleadings, we summarize the pivotal issues for our resolution, as
follows:

1. Whether the petition was filed within the required period.

2. Whether the Sandiganbayan committed grave abuse of discretion '“

i. In holding that the 1998 resolution has already attained finality;

ii. In holding that the petitioner's 3rd motion partakes of a prohibited motion
for reconsideration;

iii. In refusing to re-open the case given the critical importance of the Bane
deposition to the petitioner's cause; and

iv. In refusing to admit the Bane deposition notwithstanding the prior

consolidation of Civil Case No. 0009 and Civil Case No. 0130.

3. Whether the Bane deposition is admissible under -

 271

i. Rule 23, Section 4, par. (c) alone or in relation to Section 47, Rule 130 of
the Rules of Court; and

ii. The principle of judicial notice.

THE COURT'S RULING

We deny the petition for lack of merit.

I. Preliminary Considerations

I (a). The interlocutory nature of

the Sandiganbayan's 1998 resolution.

In determining the appropriate remedy or remedies available, a party aggrieved by a

court order, resolution or decision must first correctly identify the nature of the order,
resolution or decision he intends to assail.[51] In this case, we must preliminarily
determine whether the 1998 resolution is 'final' or 'interlocutory' in nature.

Case law has conveniently demarcated the line between a final judgment or order and
an interlocutory one on the basis of the disposition made.[52] A judgment or order is
considered final if the order disposes of the action or proceeding completely, or
terminates a particular stage of the same action; in such case, the remedy available to
an aggrieved party is appeal. If the order or resolution, however, merely resolves
incidental matters and leaves something more to be done to resolve the merits of the
case, the order is interlocutory[53] and the aggrieved party's remedy is a petition for
certiorari under Rule 65. Jurisprudence pointedly holds that:

As distinguished from a final order which disposes of the subject matter in its entirety
or terminates a particular proceeding or action, leaving nothing else to be done but to
enforce by execution what has been determined by the court, an interlocutory order
does not dispose of a case completely, but leaves something more to be adjudicated
upon. The term 'final' judgment or order signifies a judgment or an order which
disposes of the case as to all the parties, reserving no further questions or directions
for future determination.

On the other hand, a court order is merely interlocutory in character if it leaves

substantial proceedings yet to be had in connection with the controversy. It does not
end the task of the court in adjudicating the parties' contentions and determining their
rights and liabilities as against each other. In this sense, it is basically provisional in
its application.[54](emphasis supplied)

Under these guidelines, we agree with the petitioner that the 1998 resolution is
interlocutory. The Sandiganbayan's denial of the petitioner's 1st motion through the
1998 Resolution came at a time when the petitioner had not even concluded the
presentation of its evidence. Plainly, the denial of the motion did not resolve the merits
of the case, as something still had to be done to achieve this end.

We clarify, too, that an interlocutory order remains under the control of the court until
the case is finally resolved on the merits. The court may therefore modify or rescind
the order upon sufficient grounds shown at any time before final judgment.[55] In this
light, the Sandiganbayan's 1998 resolution '“ which merely denied the adoption of the
 272

Bane deposition as part of the evidence in Civil Case No. 0009 '“ could not have
attained finality (in the manner that a decision or final order resolving the case on the
merits does) despite the petitioner's failure to move for its reconsideration or to
appeal.[56]

I (b). The 3rd motion was not

prohibited by the Rules.

We also agree with the petitioner that its 3rd motion cannot be considered as a
proscribed third (actually second) motion for reconsideration of the Sandiganbayan's
1998 resolution. As Section 5, Rule 37 of the Rules of Court clearly provides, the
proscription against a second motion for reconsideration is directed against 'a
judgment or final order.' Although a second motion for reconsideration of an
interlocutory order can be denied on the ground that it is a mere "rehash" of the
arguments already passed upon and resolved by the court, it cannot be rejected on the
ground that it is forbidden by the law or by the rules as a prohibited motion. [57]

I (c). The 1998 resolution was not ripe

for a petition for certiorari.

Under Section 1, Rule 41 of the Rules of Court, an aggrieved party may appeal from a
judgment or final order which completely disposes of a case or from an order that the
Rules of Court declares to be appealable. While this provision prohibits an appeal from
an interlocutory order, the aggrieved party is afforded the chance to question an
interlocutory order through a special civil action of certiorari under Rule 65; the
petition must be filed within sixty days from notice of the assailed judgment, order,
resolution, or denial of a motion for reconsideration.

On the premise that the 1998 resolution is interlocutory in nature, the respondents
insist that the 60-day period for filing a petition for certiorari should be reckoned from
the petitioner's notice of the Sandiganbayan's 1998 resolution. They argue that since
this ruling had long been rendered by the court, the petitioner's subsequent filing of
similar motions was actually a devious attempt to resuscitate the long-denied
admission of the Bane deposition.

We do not find the respondents' submission meritorious. While the 1998 resolution is
an interlocutory order, as correctly argued by the petitioner and impliedly conceded by
the respondents, the claim that the 1998 resolution should have been immediately
questioned by the petitioner on certiorari is not totally correct as a petition for
certiorari is not grounded solely on the issuance of a disputed interlocutory
ruling.[58] For a petition for certiorari to prosper, Section 1, Rule 65 of the Rules of
Court requires, among others, that neither an appeal nor any plain, speedy and
adequate remedy in the ordinary course of law is available to the aggrieved party. As
a matter of exception, the writ of certiorari may issue notwithstanding the existence of
an available alternative remedy, if such remedy is inadequate or insufficient in relieving
the aggrieved party of the injurious effects of the order complained of.[59]

We note that at the time of its 1st motion in Civil Case No. 0009, the petitioner had not
yet concluded the presentation of its evidence, much less made any formal offer of
evidence. At this stage of the case, the prematurity of using the extraordinary remedy
of certiorari to question the admission of the Bane deposition is obvious. After the
denial of the 1st motion, the plain remedy available to the petitioner was to move for a
reconsideration to assert and even clarify its position on the admission of the Bane
deposition. The petitioner could introduce[60] anew the Bane deposition and include this
 273

as evidence in its formal offer[61] '“ as the petitioner presumably did in Civil Case No.
0130.

Thus, at that point, the case was not yet ripe for the filing of a petition
for certiorari, and the denial of the 1st motion could not have been the reckoning point
for the period of filing such a petition.

II. The Sandiganbayan's ruling on the finality

of its 1998 resolution was legally erroneous but
did not constitute grave abuse of discretion

In light of the above discussions and conclusions, the Sandiganbayan undoubtedly

erred on a question of law in its ruling, but this legal error did not necessarily amount
to a grave abuse of discretion in the absence of a clear showing that its action was a
capricious and whimsical exercise of judgment affecting its exercise of jurisdiction.[62]
Without this showing, the Sandiganbayan's erroneous legal conclusion was only
an error of judgment, or, at best, an abuse of discretion but not a grave one. For
this reason alone, the petition should be dismissed.

Despite this conclusion, however, we opt not to immediately dismiss the petition in
light of the unique circumstances of this case where the petitioner cannot entirely be
faulted for not availing of the remedy at the opportune time, and where the case, by
its nature, is undoubtedly endowed with public interest and has become a matter of
public concern.[63] In other words, we opt to resolve the petition on the merits to lay
the issues raised to rest and to avoid their recurrence in the course of completely
resolving the merits of Civil Case No. 0009.

Although the word 'rested' nowhere appears in the Rules of Court, ordinary court
procedure has inferred it from an overview of trial sequence under Section 5, Rule
30 (which capsulizes the order of presentation of a party's evidence during trial),
read in relation to Rule 18 on Pre-Trial,[64] both of the Rules of Court. Under Section 5,
Rule 30, after a party has adduced his direct evidence in the course of discharging the
burden of proof,[65] he is considered to have rested his case, and is thereafter allowed
to offer rebutting evidence only.[66] Whether a party has rested his case in some
measure depends on his manifestation in court on whether he has concluded his
presentation of evidence.[67]

In its second and third motions, respectively, the petitioner expressly admitted that
'due to oversight, [the petitioner] closed and rested its case';[68] and that it
'had terminated the presentation of its evidencein x x x Civil Case No. 0009.'[69] In the
face of these categorical judicial admissions,[70] the petitioner cannot suddenly make
an about-face and insist on the introduction of evidence out of the usual order.
Contrary to the petitioner's assertion, the resting of its case could not have been
conditioned on the admission of the evidence it formally offered. To begin with, the
Bane deposition, which is the lone piece of evidence subject of this present petition,
was not among the pieces of evidence included in its formal offer of evidence and thus
could not have been admitted or rejected by the trial court.

The Court observes with interest that it was only in this present petition
for certiorari that the petitioner had firmly denied having rested its case.[71] Before
then, the petitioner never found it appropriate to question on certiorari the
Sandiganbayan's denial of its 2nd motion which prayed, inter alia, for thereopening of
the case. This is a fatal defect in the petitioner's case.
 274

Although the denial of the petitioner's first motion did not necessitate an immediate
recourse to the corrective writ of certiorari, the denial of the 2nd motion dictated a
different course of action. The petitioner's non-observance of the proper procedure for
the admission of the Bane deposition, while seemingly innocuous, carried fatal
implications for its case. Having been rebuffed on its first attempt to have the Bane
deposition adopted in Civil Case No. 0009, and without seeking reconsideration of the
denial, the petitioner presented its other pieces of evidence and eventually rested its
case. This time, the petitioner forgot about the Bane deposition and so failed to include
that piece of evidence in its formal offer of evidence.

More than two years later, the petitioner again tried to squeeze in the Bane deposition
into its case. In resolving the petitioner's motion for reconsideration of the
Sandiganbayan's 2000 resolution, the Sandiganbayan held that the Bane deposition
has 'become part and parcel' of Civil Case No. 0009. This pronouncement has obscured
the real status of the Bane deposition as evidence (considering that, earlier, the
Sandiganbayan already denied the petitioner's attempt to adopt the Bane deposition as
evidence in Civil Case No. 0009 for the deponent cannot be cross-examined in court).
Nevertheless, the Sandiganbayan ultimately denied the petitioner's motion to reopen
the case. Having judicially admitted the resting of its case, the petitioner should have
already questioned the denial of its 2nd motion by way ofcertiorari, since the denial of
its attempt to reopen the case effectively foreclosed all avenues available to it for the
consideration of the Bane deposition. Instead of doing so, however, the petitioner
allowed the 60-day reglementary period, under Section 4, Rule 65 of the Rules
of Court, to lapse, and proceeded to file its 3rd motion.

Significantly, the petitioner changed its legal position in its 3rd motion by denying
having rested its case and insisting on the introduction of the Bane deposition.
Rebuffed once more, the petitioner filed the present petition, inviting our attention to
the Sandiganbayan's resolutions,[72] which allegedly gave it 'mixed signals.'[73] By
pointing to these resolutions, ironically, even the petitioner impliedly recognized that
they were then already ripe for review on certiorari. What the petitioner should have
realized was that its 2nd motion unequivocally aimed to reopen the case for the
introduction of further evidence consisting of the Bane deposition. Having
been ultimately denied by the court, the petitioner could not have been prevented from
taking the proper remedy notwithstanding any perceived ambiguity in the resolutions.

On the other end, though, there was nothing intrinsically objectionable in the
petitioner's motion to reopen its case before the court ruled on its formal offer of
evidence. The Rules of Court does not prohibit a party from requesting the court to
allow it to present additional evidence even after it has rested its case. Any such
opportunity, however, for the ultimate purpose of the admission of additional evidence
is already addressed to the sound discretion of the court. It is from the prism of the
exercise of this discretion that the Sandiganbayan's refusal to reopen the case (for the
purpose of introducing, 'marking and offering' additional evidence) should be viewed.
We can declare this Sandiganbayan action invalid if it had acted with grave abuse of
discretion.

III. The Sandiganbayan gravely abused its

discretion in ultimately refusing to reopen
the case for the purpose of introducing and
admitting in evidence the Bane deposition

The basis for a motion to reopen a case to introduce further evidence is Section 5, Rule
30 of the Rules of Court, which reads:
 275

Sec. 5. Order of trial. '“ Subject to the provisions of section 2 of Rule 31, and unless
the court for special reasons otherwise directs, the trial shall be limited to the issues
stated in the pre-trial order and shall proceed as follows:

xxxx

(f) The parties may then respectively adduce rebutting evidence only, unless the
court, forgood reasons and in the furtherance of justice, permits them to adduce
evidence upon their original case[.] [emphases ours]

Under this rule, a party who has the burden of proof must introduce, at the first
instance, all the evidence he relies upon[74] and such evidence cannot be given
piecemeal.[75] The obvious rationale of the requirement is to avoid injurious surprises
to the other party and the consequent delay in the administration of justice.[76]

A party's declaration of the completion of the presentation of his evidence prevents

him from introducing further evidence;[77] but where the evidence is rebuttal in
character, whose necessity, for instance, arose from the shifting of the burden of
evidence from one party to the other;[78] or where the evidence sought to be presented
is in the nature of newly discovered evidence,[79] the party's right to introduce further
evidence must be recognized. Otherwise, the aggrieved party may avail of the remedy
of certiorari.

Largely, the exercise of the court's discretion[80] under the exception of Section 5(f),
Rule 30 of the Rules of Court depends on the attendant facts '“ i.e., on whether the
evidence would qualify as a 'good reason' and be in furtherance of 'the interest of
justice.' For a reviewing court to properly interfere with the lower court's exercise of
discretion, the petitioner must show that the lower court's action was attended by
grave abuse of discretion. Settled jurisprudence has defined this term as the
capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction; or,
the exercise of power in an arbitrary manner by reason of passion, prejudice, or
personal hostility, so patent or so gross as to amount to an evasion of a positive duty,
to a virtual refusal to perform the mandated duty, or to act at all in contemplation of
the law.[81] Grave abuse of discretion goes beyond the bare and unsupported
imputation of caprice, whimsicality or arbitrariness, and beyond allegations that merely
constitute errors of judgment[82] or mere abuse of discretion.[83]

In Lopez v. Liboro,[84] we had occasion to make the following pronouncement:

After the parties have produced their respective direct proofs, they are allowed to offer
rebutting evidence only, but, it has been held, the court, for good reasons, in the
furtherance of justice, may permit them to offer evidence upon their original case, and
its ruling will not be disturbed in the appellate court where no abuse of discretion
appears. So, generally, additional evidence is allowed when it is newly discovered,
or where it has been omitted through inadvertence or mistake, or where the
purpose of the evidence is to correct evidence previously offered. The omission to
present evidence on the testator's knowledge of Spanish had not been deliberate. It
was due to a misapprehension or oversight. (citations omitted; emphases ours)

Likewise, in Director of Lands v. Roman Archbishop of Manila,[85] we ruled:

The strict rule is that the plaintiff must try his case out when he commences.
Nevertheless, a relaxation of the rule is permitted in the sound discretion of the court.
'The proper rule for the exercise of this discretion,' it has been said by an eminent
 276

author, 'is, that material testimony should not be excluded because offered by
the plaintiff after the defendant has rested, although not in rebuttal, unless it
has been kept back by a trick, and for the purpose of deceiving the defendant
and affecting his case injuriously.'

These principles find their echo in Philippine remedial law. While the general rule is
rightly recognized, the Code of Civil Procedure authorizes the judge 'for special
reasons,' to change the order of the trial, and "for good reason, in the furtherance of
justice," to permit the parties 'to offer evidence upon their original case.' These
exceptions are made stronger when one considers the character of registration
proceedings and the fact that where so many parties are involved, and action is taken
quickly and abruptly, conformity with precise legal rules should not always be
expected. Even at the risk of violating legal formulæ,an opportunity should be
given to parties to submit additional corroborative evidence in support of
their claims of title, if the ends of justice so require.(emphases ours)

In his commentaries, Chief Justice Moran had this to say:

However, the court for good reasons, may, in the furtherance of justice, permit the
parties to offer evidence upon their original case, and its ruling will not be disturbed
where no abuse of discretion appears, Generally, additional evidence is allowed
when x x x; but it may be properly disallowed where it was withheld
deliberately and without justification.[86]

The weight of the exception is also recognized in foreign jurisprudence.[87]

Under these guidelines, we hold that the Sandiganbayan gravely abused its
discretion in refusing to reopen the case. Instead of squarely ruling on the
petitioner's 2nd motion to avoid any uncertainty on the evidentiary status of the Bane
deposition, the Sandiganbayan's action actually left the petitioner's concern in limbo by
considering the petitioner's motion 'redundant.' This is tantamount to a refusal to
undertake a positive duty as mandated by the circumstances and is equivalent to an
act outside the contemplation of law.

It has not escaped our notice that at the time the petitioner moved to re-open its case,
the respondents had not yet even presented their evidence in chief. The respondents,
therefore, would not have been prejudiced by allowing the petitioner's introduction of
the Bane deposition, which was concededly omitted 'through oversight.'[88] The higher
interest of substantial justice, of course, is another consideration that cannot be taken
lightly.[89]

In light of these circumstances, the Sandiganbayan should not have perfunctorily

applied Section 5, Rule 30 of the Rules of Court on the petitioner's request to reopen
the case for the submission of the Bane deposition.

On the basis of this conclusion, a remand of this case should follow as a matter of
course. The state of the parties' submissions and the delay that has already attended
this aspect of Civil Case No. 0009, however, dictate against this obvious course of
action. At this point, the parties have more than extensively argued for or against the
admission of the Bane deposition. Civil Case No. 0009 is a 25-year old sequestration
case that is now crying out for complete resolution. Admissibility, too, is an issue that
would have again been raised on remand and would surely stare us in the face after
remand.[90] We are thus left with no choice but to resolve the issue of admissibility of
the Bane deposition here and now.
 277

IV. The admissibility of the Bane deposition

IV (a). The consolidation of Civil Case No. 0009 and Civil Case No. 0130 did
not dispense with the usual requisites of admissibility

In support of its 3rd motion, the petitioner argues that the Bane deposition can be
admitted in evidence without observing the provisions of Section 47, Rule 130 of the
Rules of Court.[91] The petitioner claims that in light of the prior consolidation of Civil
Case No. 0009 and Civil Case No. 0130, among others,[92] the 'former case or
proceeding' that Section 47, Rule 130 speaks of no longer exists.

Rule 31 of the old Rules of Court[93] '“ the rule in effect at the time Civil Case Nos.
0009 and 0130 were consolidated '“ provided that:

Rule 31
Consolidation or Severance

Section 1. Consolidation. '“ When actions involving a common question of law or fact
are pending before the court, it may order a joint hearing or trial of any or all the
matters in issue in the actions; it may order all the actions consolidated; and it
may make such orders concerning proceedings therein as may tend to avoid
unnecessary costs or delay.[94](emphases ours)

Consolidation is a procedural device granted to the court as an aid in deciding

how cases in its docket are to be tried so that the business of the court may be
dispatched expeditiously and with economy while providing justice to the parties. To
promote this end, the rule permits the consolidation and a single trial of several cases
in the court's docket, or the consolidation of issues within those cases.[95]

A reading of Rule 31 of the Rules of Court easily lends itself to two observations. First,
Rule 31 is completely silent on the effect/s of consolidation on the cases consolidated;
on the parties and the causes of action involved; and on the evidence presented in the
consolidated cases. Second, while Rule 31 gives the court the discretion either to order
a joint hearing or trial, or to order the actions consolidated, jurisprudence will show
that the term 'consolidation' is used generically and even synonymously with joint
hearing or trial of several causes.[96] In fact, the title 'consolidation' of Rule 31 covers
all the different senses of consolidation, as discussed below.

These observations are not without practical reason. Considering that consolidation is
basically a function given to the court, the latter is in the best position to determine for
itself (given the nature of the cases, the complexity of the issues involved, the parties
affected, and the court's capability and resources vis-Ã -vis all the official business
pending before it, among other things) what 'consolidation' will bring, bearing in mind
the rights of the parties appearing before it.

To disregard the kind of consolidation effected by the Sandiganbayan on the

simple and convenient premise that the deposition-taking took place after the
Sandiganbayan ordered the consolidation is to beg the question. It is
precisely the silence of our Rules of Procedure and the dearth of applicable
case law on the effect of 'consolidation' that strongly compel this Court to
determine the kind of 'consolidation' effected to directly resolve the very
issue of admissibility in this case.
 278

In the context of legal procedure, the term 'consolidation' is used in three different
senses:[97]

(1) Where all except one of several actions are stayed until one is tried, in which
case the judgment in the one trial is conclusive as to the others. This
is not actually consolidation but is referred to as such. (quasi-consolidation)[98]
(2) Where several actions are combined into one, lose their separate identity, and
become a single action in which a single judgment is rendered. This is
illustrated by a situation where several actions are pending between the same
parties stating claims which might have been set out originally in one
complaint. (actual consolidation)[99]
(3) Where several actions are ordered to be tried together but each retains its
separate character and requires the entry of a separate judgment. This type of
consolidation does not merge the suits into a single action, or cause the
parties to one action to be parties to the other. (consolidation for trial)[100]

Considering that the Sandiganbayan's order[101] to consolidate several incident cases

does not at all provide a hint on the extent of the court's exercise of its discretion as to
the effects of the consolidation it ordered '“ in view of the function of this procedural
device to principally aid the court itself in dealing with its official business '“ we are
compelled to look deeper into the voluminous records of the proceedings conducted
below. We note that there is nothing that would even suggest that the Sandiganbayan
in fact intended a merger of causes of action, parties and evidence.[102] To be sure,
there would have been no need for a motion to adopt (which did not remain
unopposed) the testimonies in the incident cases had a merger actually resulted from
the order of consolidation, for in that case, the Sandiganbayan can already take judicial
notice of the same.

Significantly, even the petitioner itself viewed consolidation, at most, to be

merely a consolidation for trial.[103] Accordingly, despite the consolidation in 1993,
the petitioner acceded to the Sandiganbayan's 1998 Resolution (which denied the
petitioner's 1st Motion on the ground that the witnesses, whose testimony in the
incident cases is sought to be adopted, 'are not available for cross-examination in' the
Sandiganbayan) by presenting these other witnesses again in the main case, so that
the respondents can cross-examine them.

These considerations run counter to the conclusion that the Sandiganbayan's order of
consolidation had actually resulted in the complete merger of the incident cases with
the main case, in the sense of actual consolidation, and that the parties in these
consolidated cases had (at least constructively) been aware of and had allowed actual
consolidation without objection.[104]

Considering, too, that the consolidated actions were originally independent of one
another and the fact that in the present case the party respondents to Civil Case No.
0009 (an action for reconveyance, accounting, restitution and damages) are not
parties to Civil Case No. 0130 (a special civil action filed by an ETPI stockholder
involving a corporate squabble within ETPI), the conclusion that the Sandiganbayan in
fact intended an actual consolidation and, together with the parties affected,[105] acted
towards that end - where the actions become fused and unidentifiable from one
another and where the evidence appreciated in one action is also appreciated in
another action '“ must find support in the proceedings held below. This is particularly
true in a case with the magnitude and complexity of the present case. Otherwise, to
impose upon the respondents the effects of an actual consolidation (which find no clear
support in the provisions of the Rules of Court, jurisprudence,[106] and even in the
 279

proceedings before the Sandiganbayan itself and despite the aforementioned

considerations) results in an outright deprivation of the petitioner's right to due
process. We reach this conclusion especially where the evidence sought to be admitted
is not simply a testimony taken in one of the several cases, but a deposition upon oral
examination taken in another jurisdiction and whose admission is governed by specific
provisions on our rules on evidence.

We stress on this point, too, that while the Sandiganbayan ordered the consolidation in
1993 (that is, before the deposition was taken), neither does the Pre-Trial
Order[107] issued by the Sandiganbayan in 1997 in Civil Case No. 0009 contain any
reference, formal or substantive, to Civil Case No. 0130.[108]Interestingly, in its Pre-
Trial Brief dated August 30, 1996,[109] the petitioner even made a representation to
present Bane as one of its witnesses.

IV (b). Use of deposition under Section 4,

Rule 23 and as a former testimony under
Section 47, Rule 130

Since the present consolidation did not affect Civil Case No. 0130 as an original, albeit
incidental, case, the admissibility of the Bane deposition cannot avoid being measured
against the requirements of Section 47, Rule 130 of the Rules of Court '“ the rule on
the admissibility of testimonies or deposition taken in a different proceeding. In this
regard, the petitioner argues that Section 4, Rule 23 of the Rules of Court (then Rule
24)[110] must, at any rate, prevail over Section 47, Rule 130[111] of the same Rules.

At the outset, we note that when the petitioner's motion to adopt the testimonies
taken in the incident cases drew individual oppositions from the respondents, the
petitioner represented to the Sandiganbayan its willingness to comply with the
provisions of Section 47, Rule 130 of the Rules of Court,[112] and, in fact, again
presented some of the witnesses. The petitioner's about-face two years thereafter even
contributed to the Sandiganbayan's own inconsistency on how to treat the Bane
deposition, in particular, as evidence.

Section 4, Rule 23 of the Rules of Court on 'Deposition Pending Action' (deposition de

bene esse) provides for the circumstances when depositions may be used in the trial,
or at the hearing of a motion or an interlocutory proceeding.

SEC. 4. Use of depositions. '” At the trial or upon the hearing of a motion or an
interlocutory proceeding, any part or all of a deposition, so far as admissible under
the rules of evidence, may be used against any party who was present or
represented at the taking of the deposition or who had due notice thereof, in
accordance with any one of the following provisions:

xxxx

(c) The deposition of a witness, whether or not a party, may be used by any party for
any purpose if the court finds: (1) that the witness is dead; or (2) that the witness
resides at a distance more than one hundred (100) kilometers from the place of trial or
hearing, or is out of the Philippines, unless it appears that his absence was procured by
the party offering the deposition; or (3) that the witness is unable to attend or testify
because of age, sickness, infirmity, or imprisonment; or (4) that the party offering the
deposition has been unable to procure the attendance of the witness by subpoena; or
(5) upon application and notice, that such exceptional circumstances exist as to make
it desirable, in the interest of justice and with due regard to the importance of
 280

presenting the testimony of witnesses orally in open court, to allow the deposition to
be used[.] [emphasis ours]

On the other hand, Section 47, Rule 130 of the Rules of Court provides:

SEC. 47. Testimony or deposition at a former proceeding. '“ The testimony or

deposition of a witness deceased or unable to testify, given in a former case or
proceeding, judicial or administrative, involving the same parties and subject
matter, may be given in evidence against the adverse party who had the
opportunity to cross-examine him.

A plain reading of Rule 23 of the Rules of Court readily rejects the petitioner's position
that the Bane deposition can be admitted into evidence without observing the
requirements of Section 47, Rule 130 of the Rules of Court.

Before a party can make use of the deposition taken at the trial of a pending action,
Section 4, Rule 23 of the Rules of Court does not only require due observance of its
sub-paragraphs (a) to (d); it also requires, as a condition for admissibility, compliance
with 'the rules on evidence.' Thus, even Section 4, Rule 23 of the Rules of Court
makes an implied reference to Section 47, Rule 130 of the Rules of Court before the
deposition may be used in evidence. By reading Rule 23 in isolation, the petitioner
failed to recognize that the principle conceding admissibility to a deposition under Rule
23 should be consistent with the rules on evidence under Section 47, Rule 130.[113] In
determining the admissibility of the Bane deposition, therefore, reliance cannot be
given on one provision to the exclusion of the other; both provisions must be
considered. This is particularly true in this case where the evidence in the prior
proceeding does not simply refer to a witness' testimony in open court but to a
deposition taken under another and farther jurisdiction.

A common thread that runs from Section 4, Rule 23 of the Rules of Court and Section
47, Rule 130 of the same Rules is their mutual reference to depositions.

A deposition is chiefly a mode of discovery whose primary function is to supplement

the pleadings for the purpose of disclosing the real points of dispute between the
parties and affording an adequate factual basis during the preparation for
trial.[114] Since depositions are principally made available to the parties as a means of
informing themselves of all the relevant facts, depositions are not meant as
substitute for the actual testimony in open court of a party or witness.
Generally, the deponent must be presented for oral examination in open court at the
trial or hearing. This is a requirement of the rules on evidence under Section 1, Rule
132 of the Rules of Court.[115]

Examination to be done in open court. '” The examination of witnesses presented

in a trial or hearing shall be done in open court, and under oath or affirmation. Unless
the witness is incapacitated to speak, or the question calls for a different mode of
answer, the answers of the witness shall be given orally.

Indeed, any deposition offered to prove the facts set forth therein, in lieu of the actual
oral testimony of the deponent in open court, may be opposed by the adverse party
and excluded under the hearsay rule '“i.e., that the adverse party had or has no
opportunity to cross-examine the deponent at the time that his testimony is
offered. That opportunity for cross-examination was afforded during
the taking of the deposition alone is no argument, as the opportunity for
cross-examination must normally be accorded a party at the time that the
 281

testimonial evidence is actually presented against him during the trial or

hearing of a case.[116] However, under certain conditions and for
certainlimited purposes laid down in Section 4, Rule 23 of the Rules of Court, the
deposition may be used without the deponent being actually called to the witness
stand.[117]

Section 47, Rule 130 of the Rules of Court is an entirely different provision.
While a former testimony or deposition appears under the Exceptions to the Hearsay
Rule, the classification of former testimony or deposition as an admissible hearsay is
not universally conceded.[118] A fundamental characteristic of hearsay evidence is the
adverse party's lack of opportunity to cross-examine the out-of-court declarant.
However, Section 47, Rule 130 explicitly requires, inter alia, for the admissibility of a
former testimony or deposition that the adverse party must have had an opportunity to
cross-examine the witness or the deponent in the prior proceeding.

This opportunity to cross-examine though is not the ordinary cross-

examination[119] afforded an adverse party in usual trials regarding 'matters stated in
the direct examination or connected therewith.' Section 47, Rule 130 of the Rules of
Court contemplates a different kind of cross-examination, whether actual or a mere
opportunity, whose adequacy depends on the requisite identity of issues in the former
case or proceeding and in the present case where the former testimony or deposition is
sought to be introduced.

Section 47, Rule 130 requires that the issues involved in both cases must, at least, be
substantially the same; otherwise, there is no basis in saying that the former
statement was - or would have been - sufficiently tested by cross-examination or by an
opportunity to do so.[120] (The requirement of similarity though does not mean that all
the issues in the two proceedings should be the same.[121] Although some issues may
not be the same in the two actions, the admissibility of a former testimony on an issue
which is similar in both actions cannot be questioned.[122])

These considerations, among others, make Section 47, Rule 130 a distinct rule on
evidence and therefore should not be confused with the general provisions on
deposition under Rule 23 of the Rules of Court. In other words, even if the petitioner
complies with Rule 23 of the Rules of Court on the use of depositions, the observance
of Section 47, Rule 130 of the Rules of Court cannot simply be avoided or disregarded.

Undisputably, the Sandiganbayan relied on the Bane deposition, taken in Civil Case No.
0130, for purposes of this very same case. Thus, what the petitioner
established and what the Sandiganbayan found, for purposes of using the Bane
deposition, refer only to the circumstances laid down under Section 4(c), Rule 23 of
the Rules of Court, not necessarily to those of Section 47, Rule 130 of the Rules of
Court, as a distinct rule on evidence that imposes further requirements in the use of
depositions in a different case or proceeding. In other words, the prior use of the
deposition under Section 4(c), Rule 23 cannot be taken as compliance with Section 47,
Rule 130 which considers the same deposition as hearsay, unless the requisites for its
admission under this rule are observed. The aching question is whether the petitioner
complied with the latter rule.

Section 47, Rule 130 of the Rules of Court lays down the following requisites for
the admission of a testimony or deposition given at a former case or proceeding.

1. The testimony or deposition of a witness deceased or otherwise unable to testify;

2. The testimony was given in a former case or proceeding, judicial or administrative;
 282

3. Involving the same parties;

4. Relating to the same matter;
5. The adverse party having had the opportunity to cross-examine him.[123]

The reasons for the admissibility of testimony or deposition taken at a former trial or
proceeding are the necessity for the testimony and its trustworthiness.[124] However,
before the former testimony or deposition can be introduced in evidence, the
proponent must first lay the proper predicate therefor,[125]i.e., the party must establish
the basis for the admission of the Bane deposition in the realm of admissible evidence.
This basis is the prior issue that we must now examine and resolve.

IV (c). Unavailability of witness

For the admission of a former testimony or deposition, Section 47, Rule 130 of the
Rules of Court simply requires, inter alia, that the witness or deponent be 'deceased or
unable to testify.' On the other hand, in using a deposition that was taken during the
pendency of an action, Section 4, Rule 23 of the Rules of Court provides several
grounds that will justify dispensing with the actual testimony of the deponent in open
court and specifies, inter alia, the circumstances of the deponent's inability to attend or
testify, as follows:

(3) that the witness is unable to attend or testify because of age, sickness, infirmity,
or imprisonment[.] [emphases ours][126]

The phrase 'unable to testify' appearing in both Rule 23 and Rule 130 of the Rules of
Court refers to a physical inability to appear at the witness stand and to give a
testimony.[127] Hence notwithstanding the deletion of the phrase 'out of the
Philippines,' which previously appeared in Section 47, Rule 130 of the Rules of
Court, absence from jurisdiction[128] - the petitioner's excuse for the non-presentation
of Bane in open court - may still constitute inability to testify under the same rule. This
is not to say, however, that resort to deposition on this instance of unavailability will
always be upheld. Where the deposition is taken not for discovery purposes, but
to accommodate the deponent, then the deposition should be rejected in
evidence.[129]

Although the testimony of a witness has been given in the course of a former
proceeding between the parties to a case on trial, this testimony alone is not a ground
for its admission in evidence. The witness himself, if available, must be produced in
court as if he were testifying de novo since his testimony given at the former trial is
mere hearsay.[130] The deposition of a witness, otherwise available, is also inadmissible
for the same reason.

Indeed, the Sandiganbayan's reliance on the Bane deposition in the other case (Civil
Case No. 0130) is an argument in favor of the requisite unavailability of the witness.
For purposes of the present case (Civil Case No. 0009), however, the Sandiganbayan
would have no basis to presume, and neither can or should we, that the previous
condition, which previously allowed the use of the deposition, remains and would
thereby justify the use of the same deposition in another case or proceeding, even if
the other case or proceeding is before the same court. Since the basis for the
admission of the Bane deposition, in principle, being necessity,[131] the burden of
establishing its existence rests on the party who seeks the admission of the evidence.
This burden cannot be supplanted by assuming the continuity of the previous condition
or conditions in light of the general rule against the non-presentation of the deponent
in court.[132]
 283

IV (d). The requirement of opportunity of

the adverse party to cross-examine; identity
of parties; and identity of subject matter

The function of cross-examination is to test the truthfulness of the statements of a

witness made on direct examination.[133] The opportunity of cross-examination has
been regarded as an essential safeguard of the accuracy and completeness of a
testimony. In civil cases, the right of cross-examination is absolute, and is not a mere
privilege of the party against whom a witness may be called.[134] This right is available,
of course, at the taking of depositions, as well as on the examination of witnesses at
the trial. The principal justification for the general exclusion of hearsay statements and
for the admission, as an exception to the hearsay rule, of reported testimony taken at
a former hearing where the present adversary was afforded the opportunity to cross-
examine, is based on the premise that the opportunity of cross-examination is an
essential safeguard[135] against falsehoods and frauds.

In resolving the question of whether the requirement of opportunity to cross-examine

has been satisfied, we have to consider first the required identity of parties as the
present opponent to the admission of the Bane deposition to whom the opportunity to
cross-examine the deponent is imputed may not after all be the same 'adverse party'
who actually had such opportunity.

To render the testimony of a witness admissible at a later trial or action, the parties to
the first proceeding must be the same as the parties to the later proceeding. Physical
identity, however, is not required; substantial identity[136] or identity of
interests[137] suffices, as where the subsequent proceeding is between persons who
represent the parties to the prior proceeding by privity in law, in blood, or in estate.
The term 'privity' denotes mutual or successive relationships to the same rights of
property.[138]

In the present case, the petitioner failed to impute, much less establish, the identity of
interest or privity between the then opponent, Africa, and the present opponents, the
respondents. While Africa is the son of the late respondent Jose Africa, at most, the
deposition should be admissible only against him as an ETPI stockholder who filed the
certiorari petition docketed as Civil Case No. 0130 (and, unavoidably, as successor-in-
interest of the late respondent Jose Africa). While Africa and the respondents are all
ETPI stockholders, this commonality does not establish at all any privity between them
for purposes of binding the latter to the acts or omissions of the former respecting the
cross-examination of the deponent. The sequestration of their shares does not result in
the integration of their rights and obligations as stockholders which remain distinct and
personal to them, vis-a-vis other stockholders.[139]

IV (d1). The respondents' notice of taking of

Bane deposition is insufficient evidence of waiver

The petitioner staunchly asserts that the respondents have waived their right to cross-
examine the deponent for their failure to appear at the deposition-taking despite
individual notices previously sent to them.[140]

In its first Notice to Take Oral Deposition of Mr. Maurice V. Bane dated August 30,
1996,[141] the petitioner originally intended to depose Mr. Bane on September 25-26
1996. Because it failed to specify in the notice the purpose for taking Mr. Bane's
deposition, the petitioner sent a Second Amended Notice to Take Deposition of Mr.
 284

Maurice V. Bane Upon Oral Examination where it likewise moved the scheduled
deposition-taking to October 23-26, 1996.

The records show that Africa moved several times for protective orders against the
intended deposition of Maurice Bane.[142] On the other hand, among the respondents,
only respondent Enrile appears to have filed an Opposition[143] to the petitioner's first
notice, where he squarely raised the issue of reasonability of the petitioner's nineteen-
day first notice. While the Sandiganbayan denied Africa's motion for protective
orders,[144] it strikes us that no ruling was ever handed down on respondent Enrile's
Opposition.[145]

It must be emphasized that even under Rule 23, the admission of the deposition upon
oral examination is not simply based on the fact of prior notice on the individual sought
to be bound thereby. In Northwest Airlines v. Cruz, [146] we ruled that -

The provision explicitly vesting in the court the power to order that the deposition shall
not be taken connotes the authority to exercise discretion on the matter. However, the
discretion conferred by law is not unlimited. It must be exercised, not arbitrarily or
oppressively, but in a reasonable manner and in consonance with the spirit of he
law. The courts should always see to it that the safeguards for the protection
of the parties and deponents are firmly maintained. As aptly stated by Chief
Justice Moran:

. . . . (T)his provision affords the adverse party, as well as the deponent, sufficient
protection against abuses that may be committed by a party in the exercise of his
unlimited right to discovery. As a writer said: "Any discovery involves a prying into
another person's affairs '” prying that is quite justified if it is to be a legitimate aid to
litigation, but not justified if it is not to be such an aid." For this reason, courts are
given ample powers to forbid discovery which is intended not as an aid to litigation, but
merely to annoy, embarrass or oppress either the deponent or the adverse party, or
both. (emphasis ours)

In the present case, not only did the Sandiganbayan fail to rule on respondent Enrile's
Opposition (which is equally applicable to his co-respondents), it also failed to provide
even the bare minimum 'safeguards for the protection of,' (more so) non-
parties,[147] and to ensure that these safeguards are firmly maintained. Instead, the
Sandiganbayan simply bought the petitioner's assertion (that the taking of Bane
deposition is a matter of right) and treated the lingering concerns '“ e.g., reasonability
of the notice; and the non-party status of the respondents in Civil Case No. 0130 - at
whose incident (docketed as G.R. No. 107789) the Bane deposition was taken - rather
perfunctorily to the prejudice of the respondents.

In conjunction with the order of consolidation, the petitioner's reliance on the prior
notice on the respondents, as adequate opportunity for cross-examination, cannot
override the non-party status of the respondents in Civil Case No. 0130 '“ the effect of
consolidation being merely for trial. As non-parties, they cannot be bound by
proceedings in that case. Specifically, they cannot be bound by the taking of the Bane
deposition without the consequent impairment of their right of cross-
examination.[148] Opportunity for cross-examination, too, even assuming its presence,
cannot be singled out as basis for the admissibility of a former testimony or
deposition since such admissibility is also anchored on the requisite identity of parties.
To reiterate, although the Sandiganbayan considered the Bane deposition in resolving
Civil Case No. 0130, its action was premised on Africa's status as a party in that case
where the Bane deposition was taken.
 285

Corollarily, the idea of privity also permeates Rule 23 of the Rules of Court through its
Section 5 which provides:

Effect of substitution of parties. '” Substitution of parties does not affect the right
to use depositions previously taken; and, when an action has been dismissed and
another action involving the same subject is afterward brought between the same
parties or their representatives or successors in interest, all depositions lawfully taken
and duly filed in the former action may be used in the latter as if originally taken
therefor. [italics and underscoring ours]

In light of these considerations, we reject the petitioner's claim that the respondents
waived their right to cross-examination when they failed to attend the taking of the
Bane deposition. Incidentally, the respondents' vigorous insistence on their right to
cross-examine the deponent speaks loudly that they never intended any waiver of this
right.

Interestingly, the petitioner's notice of the deposition-taking relied on Rule 23 of the

Rules of Court. Section 15 of this rule reads:

Deposition upon oral examination; notice; time and place. '” A party desiring to
take the deposition of any person upon oral examination shall give reasonable notice in
writing to every other party to the action. The notice shall state the time and place
for taking the deposition and the name and address of each person to be examined, if
known, and if the name is not known, a general description sufficient to identify him or
the particular class or group to which he belongs. On motion of any party upon whom
the notice is served, the court may for cause shown enlarge or shorten the time.

Under this provision, we do not believe that the petitioner could reasonably expect that
the individual notices it sent to the respondents would be sufficient to bind them to the
conduct of the then opponent's (Africa's) cross-examination since, to begin with, they
were not even parties to the action. Additionally, we observe that in the notice of the
deposition taking, conspicuously absent was any indication sufficient to forewarn the
notified persons that their inexcusable failure to appear at the deposition taking would
amount to a waiver of their right of cross-examination, without prejudice to the right of
the respondents to raise their objections at the appropriate time.[149] We would be
treading on dangerous grounds indeed were we to hold that one not a party to an
action, and neither in privity nor in substantial identity of interest with any of
the parties in the same action, can be bound by the action or omission of the
latter, by the mere expedient of a notice. Thus, we cannot simply deduce a
resultant waiver from the respondents' mere failure to attend the deposition-taking
despite notice sent by the petitioner.

Lastly, we see no reason why the Bane deposition could not have been taken earlier in
Civil Case No. 0009 '“ the principal action where it was sought to be introduced '“ while
Bane was still here in the Philippines. We note in this regard that the Philippines was
no longer under the Marcos administration and had returned to normal democratic
processes when Civil Case No. 0009 was filed. In fact, the petitioner's notice itself
states that the 'purpose of the deposition is for Mr. Maurice Bane to identify and testify
on the facts set forth in his Affidavit,' which Mr. Bane had long executed in 1991 in
Makati, Metro Manila.[150]Clearly, a deposition could then have been taken - without
compromising the respondents' right to cross-examine a witness against them -
considering that the principal purpose of the deposition is chiefly a mode of discovery.
These, to our mind, are avoidable omissions that, when added to the deficient handling
 286

of the present matter, add up to the gross deficiencies of the petitioner in the
handling of Civil Case No. 0009.

After failing to take Bane's deposition in 1991 and in view of the peculiar circumstances
of this case, the least that the petitioner could have done was to move for the taking
of the Bane deposition and proceed with the deposition immediately upon securing a
favorable ruling thereon. On that occasion, where the respondents would have a
chance to be heard, the respondents cannot avoid a resultant waiver of their right of
cross-examination if they still fail to appear at the deposition-taking. Fundamental
fairness dictates this course of action. It must be stressed that not only were the
respondents non-parties to Civil Case No. 0130, they likewise have no interest in
Africa's certiorari petition asserting his right as an ETPI stockholder.

Setting aside the petitioner's flip-flopping on its own representations,[151] this Court can
only express dismay on why the petitioner had to let Bane leave the Philippines before
taking his deposition despite having knowledge already of the substance of what he
would testify on. Considering that the testimony of Bane is allegedly a 'vital cog' in the
petitioner's case against the respondents, the Court is left to wonder why the petitioner
had to take the deposition in an incident case (instead of the main case) at a time
when it became the technical right of the petitioner to do so.

V. The petitioner cannot rely on principle of judicial notice

The petitioner also claims that since the Bane deposition had already been previously
introduced and admitted in Civil Case No. 0130, then the Sandiganbayan should have
taken judicial notice of the Bane deposition as part of its evidence.

Judicial notice is the cognizance of certain facts that judges may properly take and act
on without proof because these facts are already known to them.[152] Put differently, it
is the assumption by a court of a fact without need of further traditional evidentiary
support. The principle is based on convenience and expediency in securing and
introducing evidence on matters which are not ordinarily capable of dispute and are
not bona fide disputed.[153]

The foundation for judicial notice may be traced to the civil and canon law
maxim, manifesta (or notoria) non indigent probatione.[154] The taking of judicial notice
means that the court will dispense with the traditional form of presentation of
evidence. In so doing, the court assumes that the matter is so notorious that it would
not be disputed.

The concept of judicial notice is embodied in Rule 129 of the Revised Rules on
Evidence. Rule 129 either requires the court to take judicial notice, inter alia, of 'the
official acts of the x x x judicial departments of the Philippines,'[155] or gives the court
the discretion to take judicial notice of matters 'ought to be known to judges because
of their judicial functions.'[156] On the other hand, a party-litigant may ask the court to
take judicial notice of any matter and the court may allow the parties to be heard on
the propriety of taking judicial notice of the matter involved.[157] In the present case,
after the petitioner filed its Urgent Motion and/or Request for Judicial Notice, the
respondents were also heard through their corresponding oppositions.

In adjudicating a case on trial, generally, courts are not authorized to take judicial
notice of the contents of the records of other cases, even when such cases have been
tried or are pending in the same court, and notwithstanding that both cases may have
been tried or are actually pending before the same judge.[158]This rule though admits
 287

of exceptions.

As a matter of convenience to all the parties, a court may properly treat all or any part
of the original record of a case filed in its archives as read into the record of a case
pending before it, when, with the knowledge of, and absent an objection from,
the adverse party, reference is made to it for that purpose, by name and
number or in some other manner by which it is sufficiently designated; or when the
original record of the former case or any part of it, is actually withdrawn from the
archives at the court's direction, at the request or with the consent of the parties,
and admitted as a part of the record of the case then pending.[159]

Courts must also take judicial notice of the records of another case or cases, where
sufficient basis exists in the records of the case before it, warranting the dismissal of
the latter case.[160]

The issue before us does not involve the applicability of the rule on mandatory taking
of judicial notice; neither is the applicability of the rule on discretionary taking of
judicial notice seriously pursued. Rather, the petitioner approaches the concept of
judicial notice from a genealogical perspective of treating whatever evidence offered
in any of the 'children' cases '“ Civil Case 0130 '“ as evidence in the 'parent' case '“
Civil Case 0009 - or 'of the whole family of cases.'[161] To the petitioner, the supposed
relationship of these cases warrants the taking of judicial notice.

We strongly disagree. First, the supporting cases[162] the petitioner cited are
inapplicable either because these cases involve only a single proceeding or an
exception to the rule, which proscribes the courts from taking judicial notice of the
contents of the records of other cases.[163] Second, the petitioner's proposition is
obviously obnoxious to a system of orderly procedure. The petitioner itself admits that
the present case has generated a lot of cases, which, in all likelihood, involve issues of
varying complexity. If we follow the logic of the petitioner's argument, we would be
espousing judicial confusion by indiscriminately allowing the admission of evidence in
one case, which was presumably found competent and relevant in another case, simply
based on the supposed lineage of the cases. It is the duty of the petitioner, as a party-
litigant, to properly lay before the court the evidence it relies upon in support of the
relief it seeks, instead of imposing that same duty on the court. We invite the
petitioner's attention to our prefatory pronouncement in Lopez v. Sandiganbayan:[164]

Down the oft-trodden path in our judicial system, by common sense, tradition and the
law, the Judge in trying a case sees only with judicial eyes as he ought to know
nothing about the facts of the case, except those which have been adduced judicially in
evidence. Thus, when the case is up for trial, the judicial head is empty as to facts
involved and it is incumbent upon the litigants to the action to establish by evidence
the facts upon which they rely. (emphasis ours)

We therefore refuse, in the strongest terms, to entertain the petitioner's argument that
we should take judicial notice of the Bane deposition.

VI. Summation

To recapitulate, we hold that: (1) the Sandiganbayan's denial of the petitioner's

3rd motion '“ the Motion to Admit Supplemental Offer of Evidence (Re: Deposition of
Maurice Bane) '“ was a legal error that did not amount to grave abuse of discretion;
(2) the Sandiganbayan's refusal to reopen the case at the petitioner's instance was
tainted with grave abuse of discretion; and (3) notwithstanding the grave abuse of
 288

discretion,the petition must ultimately fail as the Bane deposition is not admissible
under the rules of evidence.[165]

VII. Refutation of Justice Carpio's

Last Minute Modified Dissent

At the last minute, Justice Carpio circulated a modified dissent, quoting the Bane
deposition. His covering note states:

I have revised my dissenting opinion to include the Bane deposition so that the Court
and the public will understand what the Bane deposition is all about. (underlining
added)

In light of this thrust, a discussion refuting the modified dissent is in order.

First: Contents of the Bane deposition not an Issue. The dissent perfectly
identified what is at issue in this case '“ i.e., the admissibility of the Bane
deposition. Admissibility is concerned with the competence and relevance[166] of the
evidence, whose admission is sought. While the dissent quoted at length the Bane
deposition, it may not be amiss to point out that the relevance of the Bane
deposition (or, to adopt the dissent's characterization, whether 'Maurice V. Bane is a
vital witness') is not an issue here unless it can be established first that the Bane
deposition is a competent evidence.

Second: Misrepresentation of Cited Authority. The dissent insists that 'in

Philippine Jurisprudence, the consolidation of cases merges the different actions into
one and the rights of the parties are adjudicated in a single judgment,' citing Vicente J.
Francisco. In our discussion on consolidation, we footnoted the following in response to
the dissent's position, which we will restate here for emphasis:

In the 1966 edition of Vicente J. Francisco's Revised Rules of Court, Francisco wrote:

The effect of consolidation of actions is to unite and merge all of the different actions
consolidated into a single action, in the same manner as if the different causes of
actions involved had originally been joined in a single action, and the order of
consolidation, if made by a court of competent jurisdiction, is binding upon all the
parties to the different actions until it is vacated or set aside. After the consolidation
there can be no further proceedings in the separate actions, which are by virtue of the
consolidation discontinued and superseded by a single action, which should be entitled
in such manner as the court may direct, and all subsequent proceedings therein be
conducted and the rights of the parties adjudicated in a single action (1 C.J.S., 113,
pp. 1371-1372).

At the very beginning of the discussion on consolidation of actions in the Corpus Juris
Secundum, the following caveat appears:

The term consolidation is used in three different senses. First, where several actions
are combined into one and lose their separate identity and become a single action in
which a single judgment is rendered; second, where all except one of several actions
are stayed until one is tried, in which case the judgment in the one is conclusive as to
the others; third, where several actions are ordered to be tried together but each
retains its separate character and requires the entry of a separate judgment. The
failure to distinguish between these methods of procedure, which are entirely
distinct, the two latter, strictly speaking, not being consolidation, a fact which
 289

has not always been noted, has caused some confusion and conflict in the
cases. (1 C.J.S., 107, pp. 1341-1342) (Emphasis added).

In defining the term 'consolidation of actions,' Francisco provided a colatilla that

the term 'consolidation' is used in three different senses, citing 1 C.J.S. 1341
and 1 Am. Jur. 477 (Francisco, Revised Rules of Court, p. 348).

From the foregoing, it is clear that the dissent appears to have quoted Francisco's
statement out of context. As it is, the issue of the effect of consolidation on evidence is
at most an unsettled matter that requires the approach we did in the majority's
discussion on consolidation.[167]
cralaw

Third: Misappreciation of the Purpose of Consolidation. The dissent then turns to

the purpose of consolidation '“ to 'expeditiously settle the interwoven issues involved in
the consolidated cases' and 'the simplification of the proceedings.' It argues that this
can only be achieved if the repetition of the same evidence is dispensed with.

It is unfortunate that the dissent refuses to recognize the fact that since consolidation
is primarily addressed to the court concerned to aid it in dispatching its official
business, it would be in keeping with the orderly trial procedure if the court should
have a say on what consolidation would actually bring[168](especially where several
cases are involved which have become relatively complex). In the present case, there
is nothing in the proceedings below that would suggest that the Sandiganbayan or the
parties themselves (the petitioner and the respondents) had in mind a
consolidation beyond joint hearing or trial. Why should this Court '“ which is not a trial
court '“ impose a purported effect that has no factual or legal grounds?

Fourth: The Due Process Consideration. The dissent argues that even if the
consolidation only resulted in a joint hearing or trial, the 'respondents are still bound
by the Bane deposition considering that they were given notice of the deposition-
taking.' The issue here boils down to one of due process '“ the fundamental
reason why a hearsay statement (not subjected to the rigor of cross-examination) is
generally excluded in the realm of admissible evidence '“ especially when read in light
of the general rule that depositions are not meant as substitute for the actual
testimony, in open court, of a party or witness.

Respondent Enrile had a pending Opposition to the notice of deposition-taking

(questioning the reasonableness thereof '“ an issue applicable to the rest of the
respondents) which the Sandiganbayan failed to rule on. To make the Sandiganbayan's
omission worse, the Sandiganbayan blindly relied on the petitioner's assertion that the
deposition-taking was a matter of right and, thus, failed to address the consequences
and/or issues that may arise from the apparently innocuous statement of the petitioner
(that it intends to use the Bane deposition in Civil Case No. 0009, where only the
respondents, and not Africa, are the parties).[169] There is simply the absence of 'due'
in due process.

Fifth: Misstatement of the Sandiganbayan's Action. The dissent repeatedly

misstates that the Sandiganbayan 'granted' the request for the deposition-taking. For
emphasis, the Sandiganbayan did not 'grant' the request since the petitioner
staunchly asserted that the deposition-taking was a matter of right. No one can deny
the complexity of the issues that these consolidated cases have reached. Considering
the consolidation of cases of this nature, the most minimum of fairness demands
upon the petitioner to move for the taking of the Bane deposition and for the
Sandiganbayan to make a ruling thereon (including the opposition filed by
 290

respondent Enrile which equally applies to his co-respondents). The burgeoning

omission and failures that have prevailed in this case cannot be cured by this Court
without itself being guilty of violating the constitutional guarantee of due process.

Sixth: Issues Posed and Resolved Go Beyond Technicalities. The above

conclusions, contrary to the petitioner's claim, are not only matters of technicality.
Admittedly, rules of procedure involve technicality, to which we have applied the
liberality that technical rules deserve. But the resolution of the issues raised goes
beyond pure or mere technicalities as the preceding discussions show. They involve
issues of due process and basic unfairness to the respondents, particularly to
respondent Enrile, who is portrayed in the Bane deposition to be acting in behalf of the
Marcoses so that these shares should be deemed to be those of the Marcoses. They
involved, too, principles upon which our rules of procedure are founded and which we
cannot disregard without flirting with the violation of guaranteed substantive rights and
without risking the disorder that these rules have sought to avert in the course of their
evolution.

In the Court En Banc deliberations of December 6, 2011, the Court failed to arrive at a
conclusive decision because of a tie vote (7-7, with one Justice taking no part). The
same vote resulted in the re-voting of December 13, 2011. In this light, the ponencia
is deemed sustained.

WHEREFORE, premises considered, we DISMISS the petition for lack of merit. No

costs.

SO ORDERED.
 291

G.R. No. 185663 June 20, 2012

REMEDIOS ANTONINO, Petitioner,

vs.
THE REGISTER OF DEEDS OF MAKATI CITY and TAN TIAN
SU, Respondents.

RESOLUTION

REYES, J.:

Nature of the Case

This is a petition for review under Rule 45 of the Rules of Court, assailing the
Decision1 dated May 26, 2008 and Resolution2 dated December 5, 2008 of the
Court of Appeals (CA) in CA-G.R. SP No. 89145.

Factual Antecedents

Since March 21, 1978, petitioner Remedios Antonino (Antonino) had been
leasing a residential property located at Makati City and owned by private
respondent Tan Tian Su (Su). Under the governing lease contract, Antonino
was accorded with the right of first refusal in the event Su would decide to sell
the subject property.3

On July 7, 2004, the parties executed a document denominated as Undertaking

Agreement4 where Su agreed to sell to Antonino the subject property
for P39,500,000.00. However, in view of a disagreement as to who between
them would shoulder the payment of the capital gains tax, the sale did not
proceed as intended.5

On July 9, 2004, Antonino filed a complaint against Su with the Regional Trial
Court (RTC) of Makati City, for the reimbursement of the cost of repairs on the
subject property and payment of damages. The complaint was raffled to Branch
149 and docketed as Civil Case No. 04-802.6 Later that same day, Antonino
filed an amended complaint to enforce the Undertaking Agreement and compel
Su to sell to her the subject property.7

In an Order8 dated December 8, 2004, the RTC dismissed Antonino’s complaint

on the grounds of improper venue and non-payment of the appropriate docket
fees. According to the RTC, Antonino’s complaint is one for specific
performance, damages and sum of money, which are personal actions that
should have been filed in the court of the place where any of the parties
resides. Antonino and Su reside in Muntinlupa and Manila, respectively, thus
Makati City is not the proper venue. Specifically:
 292

The instant case is an action for specific performance with damages, a personal
action, which may be commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the principal
defendants resides (Section 2, Rule 5 of the Rules of Court). Records show that
plaintiff is a resident of 706 Acacia Avenue, Ayala Alabang Village, Muntinlupa
City while defendant is a resident of 550 Sto. Cristo St., Binondo, Manila.
Hence, the instant case should have been filed in the place of residence of
either the plaintiff or defendant, at the election of the plaintiff. Contrary to the
claim of plaintiff, the alleged written agreements presented by the plaintiff in her
Amended Complaint do not contain any stipulation as to the venue of actions. x
x x9

The RTC also ruled that it did not acquire jurisdiction over Antonino’s complaint
in view of her failure to pay the correct amount of docket fees. Citing
Manchester Development Corporation v. Court of Appeals, 10 the RTC ruled that:

Anent the non-payment of filing fees on the Amended Complaint, plaintiff

alleges that no new assessment was made when the Amended Complaint was
filed since there [were] no additional damages prayed for. The Manchester
decision has been recently relaxed as to allow additional payment of the
necessary fees if the Honorable Court so orders an assessment thereof.

The Court is not persuaded.

The Amended Complaint, which the Court notes to have been filed at 4:00
o’clock in the afternoon or few hours after the initial complaint was filed, further
prays that judgment be rendered "ordering defendant to sell his property located
at 1623 Cypress, Dasmariñas Village, Makati City covered by TCT No. 426900
to plaintiff in accordance with the terms and conditions stipulated in their
agreement dated July 7, 2004 and ordering defendant to desist from selling his
property to any other party other than plaintiff.", which makes the instant case
also an action for Specific Performance in addition to the claim for Damages.
However, the value of the described property was not stated in the prayer and
no docket fees were paid. Thus, following the ruling of the Supreme Court in the
case of Manchester Development Corporation vs. Court of Appeals, G.R. No.
75919, May 7, 1987, that the Court acquires jurisdiction over any case only
upon the payment of the prescribed docket fee, the instant case is hereby
dismissed.11

On December 23, 2004, Su filed an Omnibus Motion,12 praying for the

cancellation of the notice of lis pendens, which Antonino caused to be
annotated on the title covering the subject property and the issuance of a
summary judgment on his counterclaims. Su, among others, alleged the
propriety of cancelling the notice of lis pendens in view of the dismissal of the
complaint and Antonino’s failure to appeal therefrom.
 293

On January 3, 2005, Antonino filed a Motion for Reconsideration, 13 claiming that

her complaint is a real action and the location of the subject property is
determinative of its venue. Alternatively, she submitted a certification issued by
the Commission on Elections, stating that she is a resident of Makati City. She
then prayed for the reinstatement of her complaint and issuance of an order
directing the clerk of court to assess the proper docket fees. This was denied by
the RTC in an Order14 dated January 6, 2005, holding that there was non-
compliance with Sections 4 and 5 of Rule 15 of the Rules of Court.

Antonino thus filed a Motion for Reconsideration15 dated January 21, 2005,
claiming that there was due observance of the rules on motions. Antonino
alleged that her motion for reconsideration from the RTC’s December 8, 2004
was set for hearing on January 7, 2005 and Su received a copy thereof on
January 6, 2005. Antonino pleaded for a liberal interpretation of the rules as Su
was notified of her motion before the hearing thereon and was not in any way
prejudiced. She also reiterated her arguments for the reinstatement of her
complaint.

In a Joint Resolution16 dated February 24, 2005, the RTC denied Su’s Omnibus
Motion and Antonino’s January 21, 2005 Motion for Reconsideration. The RTC
refused to cancel the notice of lis pendens, holding that:

It is quite clear that the dismissal of the Amended Complaint was anchored on
two grounds, e.g. (1) for improper venue and (2) for non-payment of docket fee.
It is elementary that when a complaint was dismissed based on these
grounds[,] the court did not resolve the case on the merits. Moreover, "a court
cannot acquire jurisdiction over the subject matter of a case unless the docket
fees are paid" x x x. Thus, the cause of action laid down in the complaint
remains unresolved for proper re-filing before the proper court. Furthermore, the
Supreme Court said: "The cancellation of such a precautionary notice is
therefore also a mere incident in the action, and may be ordered by the Court
having jurisdiction of it at any given time." x x x17

The RTC maintained its earlier ruling that Antonino’s Motion for
Reconsideration from the December 8, 2004 Order is pro-forma and did not
suspend the running of the period to file an appeal. The RTC also reiterated
that Antonino’s complaint is a personal action such that the proper venue
therefore is either the City of Manila or Muntinlupa City.

On April 1, 2005, Antonino filed with the CA a petition for annulment of

judgment.18 Antonino prayed for the nullification of the RTC’s Order dated
December 8, 2004 dismissing her complaint, Order dated January 6, 2005
denying her motion for reconsideration and Joint Resolution dated February 24,
2005 denying her motion for reconsideration of the January 6, 2005 Order.
According to Antonino, the RTC committed grave abuse of discretion amounting
to lack of jurisdiction when it ruled that her action for the enforcement of the
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Undertaking Agreement is personal and when it deprived her of an opportunity

to pay the correct amount of docket fees. The RTC’s grave abuse of discretion,
Antonino posited, was likewise exhibited by its strict application of the rules on
motions and summary denial of her motion for reconsideration.

In its Decision19 dated May 26, 2008, the CA dismissed Antonino’s petition.
While the CA recognized Antonino’s faulty choice of remedy, it proceeded to
resolve the issues she raised relative to the dismissal of her complaint. Thus:

It should be stressed that in this case, there is neither allegation in the petition,
nor sufficient proof adduced showing highly exceptional circumstance to justify
the failure of petitioner to avail of the remedies of appeal, petition for relief or
other appropriate remedy through no fault attributable to [her] before filing this
petition for annulment of judgment. In Manipor v. Ricafort, the Supreme Court
held, thus:

If the petitioner failed to avail of such remedies without sufficient justification, he

cannot avail of an action for annulment because, otherwise, he would benefit
from his own inaction or negligence.

Notwithstanding the foregoing procedural infirmity, and in the interest of justice,

we shall look into the issues raised and decide the case on the merit.

xxxx

A perusal of the allegations of the complaint unambiguously shows that

petitioner seeks to enforce the commitment of private respondent to sell his
property in accordance with the terms and conditions of their purported
agreement dated July 7, 2004. By implication, petitioner does not question the
ownership of private respondent over the property nor does she claim, by any
color of title, right to possess the property or to its recovery. The action is simply
for the enforcement of a supposed contract, and thus, unmistakably a personal
action.

xxxx

Guided by the above rule (Section 2 of the 1997 Rules of Court), petitioner
should have filed the case either in Muntinlupa City, where she resides, or in
Manila, where private respondent maintains his residence. Other than filing the
complaint in any of these places, petitioner proceeds with the risk of a possible
dismissal of her case. Unfortunately for petitioner, private respondent forthwith
raised improper venue as an affirmative defense and his stand was sustained
by trial court, thus, resulting to the dismissal of the case.

Further, it is important to note that in a petition for annulment of judgment based

on lack of jurisdiction, the petitioner must show not merely an abuse of
jurisdictional discretion but an absolute lack of jurisdiction. The concept of lack
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of jurisdiction as a ground to annul a judgment does not embrace abuse of

discretion. Petitioner, by claiming grave abuse of discretion on the part of the
trial court, actually concedes and presupposes the jurisdiction of the court to
take cognizance of the case. She only assails the manner in which the trial
court formulated its judgment in the exercise of its jurisdiction. It follows that
petitioner cannot use lack of jurisdiction as ground to annul the judgment by
claiming grave abuse of discretion. In this case where the court refused to
exercise jurisdiction due to improper venue, neither lack of jurisdiction nor grave
abuse of discretion is available to challenge the assailed order of dismissal of
the trial court.20 (Citations omitted)

Antonino filed a motion for reconsideration, which was denied by the CA in its
Resolution dated December 5, 2008. 21

Issue

The sole issue for the resolution of this Court is the propriety of Antonino’s use
of the remedy of a petition for annulment of judgment as against the final and
executory orders of the RTC.

Our Ruling

In Ramos v. Judge Combong, Jr.,22 this Court expounded that the remedy of
annulment of judgment is only available under certain exceptional
circumstances as this is adverse to the concept of immutability of final
judgments:

Annulment of judgment is a recourse equitable in character, allowed only in

exceptional cases as where there is no available or other adequate remedy.
Rule 47 of the 1997 Rules of Civil Procedure, as amended, governs actions for
annulment of judgments or final orders and resolutions, and Section 2 thereof
explicitly provides only two grounds for annulment of judgment, i.e., extrinsic
fraud and lack of jurisdiction. The underlying reason is traceable to the notion
that annulling final judgments goes against the grain of finality of judgment.
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.23 (Citations omitted)

In Barco v. Court of Appeals,24 this Court emphasized that only void judgments,
by reason of "extrinsic fraud" or the court’s lack of jurisdiction, are susceptible to
being annulled.
 296

The law sanctions the annulment of certain judgments which, though final, are
ultimately void. Annulment of judgment is an equitable principle not because it
allows a party-litigant another opportunity to reopen a judgment that has long
lapsed into finality but because it enables him to be discharged from the burden
of being bound to a judgment that is an absolute nullity to begin with. 25

Apart from the requirement that the existence of "extrinsic fraud" or "lack of
jurisdiction" should be amply demonstrated, one who desires to avail this
remedy must convince that the ordinary and other appropriate remedies, such
as an appeal, are no longer available for causes not attributable to him. This is
clearly provided under Section 1, Rule 47 of the Rules of Court.

Antonino’s recourse to annulment of judgment is seriously flawed and the

reasons are patent. There is therefore no reason to disturb the questioned
issuances of the RTC that are already final and executory.

A petition for annulment of judgment cannot serve as a substitute for the lost
remedy of an appeal.

First, Antonino cannot pursue the annulment of the various issuances of the
RTC, primary of which is the Order dated December 8, 2004, in order to avoid
the adverse consequences of their becoming final and executory because of
her neglect in utilizing the ordinary remedies available. Antonino did not proffer
any explanation for her failure to appeal the RTC’s Order dated December 8,
2004 and, thereafter, the Order dated January 6, 2005, denying her Motion for
Reconsideration dated January 3, 2005. Knowledge of rudimentary remedial
rules immediately indicates that an appeal was already available from the Order
dated December 8, 2004, as this is a final order as contemplated under
Sections 2, 3 and 5 of Rule 41 of the Rules of Court, and there was no legal
compulsion for Antonino to move for reconsideration. Nonetheless, since there
is no bar for her to file a motion for reconsideration so as to give the RTC
opportunity to reverse itself before elevating the matter for the appellate courts’
review, appeal is the prescribed remedy from the denial of such motion and not
another motion for reconsideration. While Section 1 of Rule 41 of the Rules of
Court includes "an order denying a motion for new trial or reconsideration" in
the enumeration of unappealable matters, this Court clarified in Quelnan v. VHF
Philippines, Inc.26 that such refers to a motion for reconsideration of an
interlocutory order and the denial of a motion for reconsideration of an order of
dismissal is a final order, therefore, appealable. Moreover, a second motion for
reconsideration from a final judgment or order is prohibited, hence, can never
interrupt the period to perfect an appeal.

The RTC may have been overly strict in the observance of the three-day notice
rule under Section 4, Rule 15 of the Rules of Court contrary to liberal stance
taken by this Court in cases when the purpose of such rule can be achieved by
giving the opposing party sufficient time to study and controvert the
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motion.27 Justice and equity would thus suggest that the fifteen-day period
within which Antonino can appeal should be counted from her receipt on
January 7, 200528 of the Order dated January 6, 2005 denying her Motion for
Reconsideration dated January 3, 2005. Unfortunately, even liberality proved to
be inadequate to neutralize the adverse consequences of Antonino’s
negligence as she allowed such period to lapse without filing an appeal,
erroneously believing that a second motion for reconsideration is the proper
remedy. While a second motion for reconsideration is not prohibited insofar as
interlocutory orders are concerned,29 the Orders dated December 8, 2004 and
January 6, 2005 are final orders.

In fact, even if the period to appeal would be counted from Antonino’s receipt of
the Order dated February 24, 2005 denying her second motion for
reconsideration, she interposed no appeal and filed a petition for annulment of
judgment on April 1, 2005 instead. This, for sure, constitutes a categorical
admission that the assailed issuances of the RTC had already become final and
executory in view of her omission to perfect an appeal within the mandated
period. By no means can her petition for annulment of judgment prosper as that
would, in effect, sanction her blatant negligence or sheer obliviousness to
proper procedure.

Let it be stressed at the outset that before a party can avail of the reliefs
provided for by Rule 47, i.e., annulment of judgments, final orders, and
resolutions, it is a condition sine qua non that one must have failed to move for
new trial in, or appeal from, or file a petition for relief against said issuances or
take other appropriate remedies thereon, through no fault attributable to him. If
he failed to avail of those cited remedies without sufficient justification, he
cannot resort to the action for annulment provided in Rule 47, for otherwise he
would benefit from his own inaction or negligence.30 (Citation omitted)

"Grave abuse of discretion" is not a ground to annul a final and executory

judgment.

Second, a petition for annulment of judgment can only be based on "extrinsic

fraud" and "lack of jurisdiction" and cannot prosper on the basis of "grave abuse
of discretion". By anchoring her petition on the alleged grave abuse of discretion
that attended the dismissal of her complaint and the denial of her two (2)
motions for reconsideration, Antonino, is, in effect, enlarging the concept of
"lack of jurisdiction". As this Court previously clarified in Republic of the
Philippines v. "G" Holdings, Inc.,31 "lack of jurisdiction" as a ground for the
annulment of judgments pertains to lack of jurisdiction over the person of the
defending party or over the subject matter of the claim. It does not contemplate
"grave abuse of discretion" considering that "jurisdiction" is different from the
exercise thereof. As ruled in Tolentino v. Judge Leviste:32
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Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from

the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and
not the decision rendered therein. Where there is jurisdiction over the person
and the subject matter, the decision on all other questions arising in the case is
but an exercise of the jurisdiction. And the errors which the court may commit in
the exercise of jurisdiction are merely errors of judgment which are the proper
subject of an appeal.33 (Citation omitted)

In fact, the RTC did not gravely abuse its discretion or err in dismissing
Antonino’s complaint. The RTC was correct in classifying Antonino’s cause of
action as personal and in holding that it was instituted in the wrong venue.
Personal action is one that is founded on privity of contracts between the
parties; and in which the plaintiff usually seeks the recovery of personal
property, the enforcement of a contract, or recovery of damages. Real action,
on the other hand, is one anchored on the privity of real estate, where the
plaintiff seeks the recovery of ownership or possession of real property or
interest in it.34 Antonino’s following allegations in her amended complaint show
that one of her causes of action is one for the enforcement or consummation of
a contract, hence, a personal action:

XII

On July 7, 2004, plaintiff and defendant executed a document entitled

"Undertaking Agreement" (copy of which is hereto attached as Annex H)
wherein defendant agreed to sell said property to plaintiff "who has leased said
property since March 21, 1978 up to the present" with the plaintiff paying a
downpayment of $50,000.00 US dollars the following day, July 8, 2004.

xxxx

XIV

Defendant also refused to accept the $50,000.00 US Dollars and was about to
tear up the document they previously signed the day before when plaintiff
prevented him from doing so.

XV

Consequently, plaintiff discovered that defendant was already negotiating to sell

the said property to another Chinese national who incidentally is also one of
plaintiff’s buyers.

xxxx

Premises considered, in the interest of substantial justice, it is most respectfully

prayed that after due hearing that judgment be rendered:
 299

1. Ordering defendant to sell his property located at 1623 Cypress, Dasmariñas

Village, Makati City covered by TCT No. 426900 to plaintiff in accordance with
the terms and conditions stipulated in their agreement dated July 7, 2004.

x x x x35

Antonino’s cause of action is premised on her claim that there has already been
a perfected contract of sale by virtue of their execution of the Undertaking
Agreement and Su had refused to comply with his obligations as seller.
However, by claiming the existence of a perfected contract of sale, it does not
mean that Antonino acquired title to the subject property. She does not allege
otherwise and tacitly acknowledges Su’s title to the subject property by asking
for the consummation of the sale.

That there is a private document supposedly evidencing the alleged sale does
not confer to Antonino title to the subject property. Ownership is transferred
1âw phi1

when there is actual or constructive delivery and the thing is considered

delivered when it is placed in the control or possession of the buyer or when the
sale is made through a public instrument and the contrary does not appear or
cannot be clearly inferred.36 In other words, Antonino’s complaint is not in the
nature of a real action as ownership of the subject property is not at issue.

Moreover, that the object of the alleged sale is a real property does not make
Antonino’s complaint real in nature in the absence of a contrary claim of title.
After a contract of sale is perfected, the right of the parties to reciprocally
demand performance, thus consummation, arises – the vendee may require the
vendor to compel the transfer the title to the object of the sale 37 and the vendor
may require the payment of the purchase price.38 The action to cause the
consummation of a sale does not involve an adverse claim of ownership as the
vendor’s title is recognized and the vendor is simply being asked to perform an
act, specifically, the transfer of such title by any of the recognized modes of
delivery.

Considering that the filing of the complaint in a wrong venue sufficed for the
dismissal thereof, it would be superfluous to discuss if Antonino’s non-payment
of the correct docket fees likewise warranted it.

At any rate, even if the RTC erred in ordering the dismissal of her complaint,
such had already become final and executory and will not be disturbed as it had
jurisdiction and it was not alleged, much less, proved that there was extrinsic
fraud. Moreover, annulment of the assailed orders of the RTC will not issue if
ordinary remedies, such as an appeal, were lost and were not availed of
because of Antonino’s fault. Litigation should end and terminate sometime and
somewhere. It is essential to an effective and efficient administration of justice
that, once a judgment has become final, the winning party should not be
deprived of the fruits of the verdict.39
 300

WHEREFORE, premises considered, the petition is DENIED for lack of merit

and the Decision dated May 26, 2008 and Resolution dated December 5, 2008
of the Court of Appeals in CA-G.R. SP No. 89145 are hereby AFFIRMED.

SO ORDERED.
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