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This complaint arose from the dismissal of the complainants by the respondents.

They were
Remedy to correct errors of jurisdiction both dismissed on August 31, 1990 on the alleged ground of dishonesty in their work as Store
Jamer v NLRC Cashiers.

DECISION Complainants (sic) function as Store Cashiers is to accumulate, at the end of daily operations,
the cash sales receipts of the selling floor cash register clerks. At the close of business hours, all
HERMOSISIMA, JR., J.: the cash sales of the floor cash register clerks are turned over by them to the Store Cashiers,
complainants herein, together with the tally sheets prepared by the cash register clerks.
The decision[1] of public respondent National Labor Relations Commission (NLRC)[2] in Thereafter, complainants will reconcile the cash sales with the tally sheets to determine
NLRC NCR CA 002074-91,[3] promulgated on November 12 1993, is herein sought to be annulled shortages or coverages(sic) and deposit the same with the bank depositor(sic) of respondents
for having been rendered with grave abuse of discretion, it having reversed and set aside the company. Thereafter, the recorded transactions are forwarded to the main branch of respondents
decision[4] of Labor Arbiter Pablo C. Espiritu, Jr. by dismissing the petitioners complaint for company at Carriedo for counter-checking.
illegal dismissal against private respondent Isetann Department Store (Isetann, for brevity). The
decretal part of the NLRC decision reads: On July 16, 1990, complainants discovered a shortage of P15,353.78. It was complainant
Corazon Jamer who first discovered the shortage. In fact at first, she thought that it was merely
WHEREFORE, premises considered, the appealed decision is hereby set aside and new one a P1,000.00 shortage but when she reconciled the cash receipts, from the cash register counters,
promulgated declaring that the dismissal from the service of complainants Corazon Jamer and with the tally sheets and the actual money on hand, the shortage amounted to P15,353.78. She
Cristina Amortizado was valid and for cause. Consequently, the order of reinstatement with informed her co-store cashier, complainant Cristina Amortizado, about the shortage. Cristina
backwages and attorneys fees are likewise vacated and set aside. [5] Amortizado also reconciled and re-counted the sale previous to July 16, 1990 and she also
confirmed that there was a discrepancy or a shortage of P15,353.78.. They did not, (sic)
immediately report the shortage to management hoping to find the cause of the shortage but to
Although the Labor Arbiter[6] and the NLRC reached contrary conclusions, both agree on no avail they failed to reconcile the same. Hence, they had no other alternative but to report the
the following facts: same to the management on July 17, 1990.

Complainant, Corazon Jamer was employed on February 10, 1976 as a Cashier at Joy Mart, a Complainants, together with another Store Cashier, Lutgarda Inducta, were asked to explain and
sister company of Isetann. After two (2) years, she was later on promoted to the position of they submitted their respective written explanations for the shortage of P15,353.78. and
counter supervisor. She was transferred to Isetann, Carriedo Branch, as a money changer. In the P450.00 under deposit last July 14, 1990.
1982 she was transferred to the Cubao Branch of Isetann, as a money changer, till her dismissal
on August 31, 1990.
Respondents placed both complainants and their co-store cashier Lutgarda Inducta under
preventive suspension for the alleged shortages. Thereafter, respondents conducted an
Complainant Cristina Amortizado, on the other hand, was employed also at Joy Mart in May, administrative investigation. Finding the explanation of the complainants to be unsatisfactory,
1977 as a sales clerk. In 1980 she was promoted to the position as counter cashier. Thereafter, respondent dismissed the complainants from the service on August 31, 1990. Aggrieved and not
she was transferred to Young Un Department Store as an assistant to the money changer. Later satisfied with the decision of management terminating their services, complainant instituted this
on, or in 1985, she transferred to Isetann, Cubao Branch where she worked as a Store Cashier present action on September 26, 1990 for illegal dismissal praying for reinstatement with
till her dismissal on August 31, 1990. payment of backwages and other benefits. [7]

Both complainants were receiving a salary of P4,182.00 for eight (8) hours work at the time of In justifying complainants dismissal from their employment, respondents alleged:
their dismissal.
When the transactions for July 15, 1990 were being reconciled, a shortage of P15,353.78 was
Respondent Isetann Department Store on the other hand, is a corporation duly organized and discovered. Also uncovered was an under-deposit of P450.00 of cash receipts for July 14, 1990.
existing under laws of the Philippines and is engaged in retail trade and the department store
business. Individual respondent, John Go is the President/General (Manager) of respondent
Department Store. Considering that the foregoing deficits were attributable to herein appellees and to another store
cashier, Mrs. Lutgarda Inducta, who were the ones on duty those days respondent Isetanns
Human Resources Division Manager, Teresita A. Villanueva, issued letters (Exh. 1 and 5)
individually addressed to herein appellees and Mrs. Inducta requiring them to submit written
explanations in regard to their above malfeasance within 48 hours from receipt thereof. Pursuant SOM Mrs. Samonte, the supervisor in charge; 3) Alex Mejia, an employee assigned as utility
to said letters, they were likewise placed under preventive suspension. man; and 4) Boy Cabatuando.

Thereafter, the Committee o Discipline of appellant Isetann conducted a series of investigations There were (sic) three (3) keys to the money changers room, and these keys were assigned and
probing appellees and Mrs. Inductas aforestated shortages. In addition to the shortage distributed to: a) master key is or was with the SOMs (Mrs. Samonte) room at the 3 rd floor of
of P15,353.78(sic) and underdeposit of P450.00, said investigation also included the following the building; b) another key is or was in the possession of the keeper of the keys, i.e. Boy
sums which appellees failed to turnover or account for: Cabatuando; and c) the third and last key is any of the store cashiers depending on who is on
duty at the time.
a) P1,000.00- amount borrowed by Lutgarda Inducta from Corazon Jamer;
Likewise, there were four (4) persons who were aware and knew of the vault combination.
b) P 70.00- over replenishment of petty cash expenses incurred by Cristina Amortizado. These were the three store cashiers, i.e. herein complainants, Lutgarda Inducta and their SOM,
Mrs. Samonte.[8]
After the administrative investigation, the Committee on Discipline rendered its decision (Exhs.
3, 3-A, to 3-D) dated August 23, 1990 duly approved by the General Manager of respondent On July 23, 1991, Labor Arbiter Nieves V. de Castro, to whom the instant contoversy was
Isetann, finding the appellees and Mrs. Inducta responsible for said shortages and consequently originally assigned, rendered a decision[9] in favor of herein petitioners, finding that petitioners
requiring them to restitute the same to respondent Isetann. This Decision and the notices of had been illegally dismissed, the dispositive portion of which reads:
termination were sent by respondent Isetann to the appellees, and which the latter admittedly
received. WHEREFORE, respondents are hereby directed to reinstate complainants to service effective
August 1, 1991 with full backwages and without loss of seniority rights.
On the other hand, the complainants account of the factual antecedents that let (sic) to their
dismissal is as follows: SO ORDERED.[10]

Aside from the foregoing persons, Alex Mejia had and was allowed by management to have Expectedly, respondents Isetann and John Go appealed the aforesaid decision to the NLRC.
uncontrolled access to the said room including the vault. Ostensibly, the purpose was to assist in On January 31, 1992, the NLRC issued a resolution [11] remanding this case to the NLRC National
the bringing in or taking out of coin bags, monies, etc. Capital Region Arbitrattion Branch for further proceedings in the following manner:

There were therefore, at a minimum at least six (6) persons who could have had access to the WHEREFORE, premises considered, the challenged decision is hereby SET ASIDE and
company funds. To ascribe liability to the store cashiers alone, in the absence of a clear proof of VACATED.
any wrongdoing is not only unfair and discriminatory but is likewise illegal.
The entire records of this case is hereby remanded to the NLRC National Capital Region
Parenthetically, and within the parameters of their assigned tasks, herein complainants could not Arbitration Branch for further proceedings.
be faulted in any way for the said shortage as there is no showing that the loss occurred at the
time they were in control of the funds concerned. Considering that the Labor Arbiter a quo rendered a decision in this case and in order to dispel
any suspicion of pre-judgment of this case, the Executive Labor Arbiter is hereby directed to
Complainants do not dispute the fact that there appeared to be a shortage of P15.373.78(sic) for have this case re-raffled to another Labor Arbiter.
the July 15, 1990 (a Sunday) sales and which were tallied and the loss discovered on the
following day, July 16, 1990. They however vehemently deny any culpability or participation in SO ORDERED.[12]
any kind, directly or indirectly, in regard to the said loss or shortage. Given the kind of trust
reposed upon them by respondents for fourteen and thirteen years respectively they were not
Consequently, the present case was then re-raffled to Labor Arbiter Pablo C. Espiritu, Jr.
about, although they could have done so before given the negligence and laxity of management
in regard to the control and handling of funds of the store, to break said trust. After a full-blown trial, the said Labor Arbiter found for the petitioners and declared that there
was no justification, whether in fact or in law, for their dismissal. The decretal part of the
decision[13] dated March 31, 1993, states:
At the time the persons who had access either to the vault the money and/or the keys aside from
herein complainants, were: 1) Lutgarda Inducta, also a store cashier on duty at the time; 2) the
WHEREFORE, above premises considered, judgement(sic) is hereby rendered finding the When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted
dismissal of complainants, Cristina Amortizado and Corazon Jamer to be illegal and without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to
concomitantly, (r)espondents are hereby ordered to pay complainants, Corazon Jamer the lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy
amount of P125,460.00 and Cristina Amortizado the amount of P125,460.00, representing full in the ordinary course of law, a person aggrieved thereby may file a verified petition in the
backwages from the time of their dismissal (August 31, 1990) till actual or payroll reinstatement proper court, alleging the facts with certainty and praying that judgment be rendered annulling
at the option of the respondent (computed until promulgation only). Respondents are also or modifying the proceedings of such tribunal, board or officer, xxx
hereby further ordered to reinstate the complainants to their former position as Store Cashiers
without loss of seniority rights, privileges and benefits, failure to do so backwages shall The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal
continue to run but in no case to exceed three (3) years. or any other plain, speedy and adequate remedy in the ordinary course of law against the acts of
respondent.[19] In the case at bench, the plain and adequate remedy referred to in Rule 65, Section
Respondents are also ordered to pay complainants the amount of P25,092.00 representing 10% 1, is a motion for reconsideration of the challenged decision and the resolution thereof, which was
attorneys fees based in the total judgement(sic) award of P250,920.00. expected to provide an adequate and a more speedy remedy than the present petition
for certiorari.
SO ORDERED.[14] Petitioners asseverate that respondent NLRC committed a grave abuse of discretion when it
reversed the findings of facts of the Labor Arbiter.
Dissatisfied over the decision of the Labor Arbiter which struck private respondents as
grossly contrary to the evidence presented, the herein private respondents once again appealed to We find said submissions untenable.
the NLRC. And, as earlier stated, the NLRC rendered the challenged decision [15] on November In asserting that there was a grave abuse of discretion, petitioners advert to alleged variances
12, 1993, vacating the decision of the Labor Arbiter and entering a new one dismissing the in the factual findings of the Labor Arbiter and the respondent NLRC. This is inept and erroneous.
petitioners complaint. Firstly, errors of judgment, as distinguished from errors of jurisdiction, are not within the province
Hence, this petition wherein the main issue to be resolved is whether NLRC committed of a special civil action for certiorari.[20] Secondly, a careful reading of the records of this case
grave abuse of discretion in finding that petitioners were validly dismissed on the ground of loss would readily show that there is any error by public respondent in its analysis of the facts and its
of trust and confidence. evaluation of the evidence, it is not of such a degree as may be stigmatized as a grave abuse of
discretion does not necessarily follow just because there is a reversal by the NLRC of the decision
At the outset, the Court notes petitioners inexcusable failure to move for the reconsideration of the Labor Arbiter. Neither does the mere variance in the evidentiary assessment of the NLRC
of respondent NLRCs decision. Thus, the present petition suffers from a procedural defect that and that of the Labor Arbiter would, as a matter of course, so warrant another full review of the
warrants its outright dismissal. While in some exceptional cases we allowed the immediate facts. The NLRCs decision, so long as it is not bereft of support from the records, deserves respect
recourse to this Court, we find nothing herein that could warrant an exceptional treatment to this from the Court.[21]
petition which will justify the omission. This premature action of petitioners constitutes a fatal
infirmity as ruled in a long line of decisions,[16] most recently in the case of Building Care We must once more reiterate our much repeated but not well-heeded rule that the special
Corporation vs. National Labor Relations Commission, et al.:[17] civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and not
errors of judgment. The rationale for this rule is simple. When a court exercises its jurisdiction
being exercised when the error is committed. If it did, every error committed by a court would
the filing of such a motion is intended to afford public respondent an opportunity to correct any
deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot
actual or fancied error attributed to it by way of a re-examination of the legal and factual aspects
be allowed. The administration of justice would not countenance such a rule. Consequently, an
of the case. Petitioners inaction or negligence under the circumstances is tantamount to a
error of judgment that the court may commit in the exercise of its jurisdiction is not correctible
deprivation of the right and opportunity of the respondent Commission to cleanse itself of an
through the original special civil action of certiorari.[22]
error unwittingly committed or to vindicate itself of an act unfairly imputed. xxx
On the merits, we find and so hold that substantial evidence exists to warrant the finding
xxx And for failure to avail of the correct remedy expressly provided by law, petitioner has that petitioners were validly dismissed for just cause and after observance of due process.
permitted the subject Resolution to become final and executory after the lapse of the ten day
Under the Labor Code, as amended, the requirements for the lawful dismissal of an
period within which to file such motion for reconsideration.
employee by his employer are two-fold: the substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as provided by law (Articles 282, 283 and 284, of the
Likewise, a motion for reconsideration is an adequate remedy; Labor Code, as amended), but the rudimentary requirements of due process, basic of which are
hence certiorari proceedings,as in this case, will not prosper. [18] Rule 65, Section 1 of the Rules the opportunity to be heard and to defend himself, must be observed before an employee may be
of Civil Procedure, as amended, clearly provides that: dismissed.[23]
With respect to the first requisite, Article 282 of the Labor Code, as amended, provides: c) On the Underdeposit of Cash = P450.00.

ART. 282. Termination by Employer.- An employer may terminate an employment for any of The computation of Ms. Amortizado s sales collections last July 14, 1990 resulted to an overage
the following causes: of P350.00. Amortizado turned over the amount of P350.00, to cover up a shortage incurred by
her and Mrs. Inducta.
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work; Jamer used the money given to her by Amortizado (P350.00), and borrowed (P150.00) from the
change fund to cover the total shortage amounting to P500.00 which she had then.
(b) Gross and habitual neglect by the employee of his duties;
Jamer cannot trace how the shortage came about. Inducta and Jamer shouldered the total
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly shortage amounting to P500.00, P330.00 for Jamer and P200.00 for Inducta. Jamer claimed that
authorized representative; she returned the P350.00 in the box. However, the claim of respondent was further verified from
the payroll section which revealed that a value slip was issued last July 1990. Jamer and Inducta
were charged for P200.00 each. A value slip was issued last August 10, 1990 charging P100.00
(d) Commission of a crime or offense by the employee against the person of his employer or to Amortizado.
any immediate member of his family or his duly authorized representative; and
Jamer admitted that she failed to inform the Audit Staff regarding the P350.00 overage which
(e) Other causes analogous to the foregoing. (Italics supplied)
she received from Amortizado. A(s) per report of Ms. Agnes Gonzales dated 26 July 1990, there
was a total under deposit of cash amounting to P450.00.
In the instant case, we find no difficulty in agreeing with the findings of the public
respondent that the herein petitioners were guilty of acts of dishonesty by incurring several Total cash admitted P65,428.05
occurrences of shortages in the amounts of P15,353.78, P1,000.00, P450.00 and P70.00 which
they failed to turnover and account for/and in behalf of respondent Isetann. Fittingly, the findings
of the NLRC are worth stressing at this point, to wit: (cash in drawer)

With regard to the several occurrences of shortages of the amounts Total cash remitted P64,978.05
of P15,353.78, P1,000.00, P450.00 and P70.00 , the Labor Arbiter has failed to consider the fact
that complainants-appellees were accorded the chance to explain their side as to the shortages (per tally sheet) _________
and that they have utterly failed to do so providing basis for their valid dismissal. This fact has
been established by the respondents-appellants in the findings of the Committee on Discipline Overage P 450.00
on Exhibits 3, 3-A to 3-D, as follows:
d) On the P70.00 Replenishment of Petty Cash Expenses:
a) On the Shortage of P15,353.78:
During the 3rd Administrative hearing, the Committee informed Ms. Amortizado regarding the
The 3 respondents, Lutgarda Inducta, Cristy Amortizado and Corazon Jamer denied any over replenishment of petty cash expenses as revealed by the Finance Manager last August 10,
involvement in the loss of P15,353.78. Although the money, is under their responsibility, not 1990.
one of them gave any explanation about the shortage or loss.
Mrs. Amortizado readily admitted and explained that she forgot to inform Mrs. Inducta
b) On the amount of P1,000.00 borrowed by Inducta from Jamer: regarding the P70.00. She admitted her failure to correct the amount from P100.00 to P30.00
(total expenses spent for the taxi fair).
On July 18, 1990, Lutgarda Inducta borrowed money from respondents (sic) Jamer amounting
to P1,000.00 to cover her shortage. She added that she previously incurred a shortage amounting to P100.00. Then she used
the P70.00 to cover for the shortage. The remaining balance of P30.00 was paid by Amortizado.
Ms. Jamer said that Ms. Inducta paid the amount on that day. But Ms. Jamer did not report the
Amortizado informed the Committee that she is willing to refund the P70.00 shortage. if there is some basis for such loss of confidence or if the employer has reasonable ground to
(Underscoring supplied).[24] believe or to entertain the moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein rendered him absolutely unworthy of
From the foregoing premises, it is crystal clear that the failure of petitioners to report the the trust and confidence demanded by his position. [32]
aforequoted shortages and overages to management as soon as they arose resulted in the breach
of the fiduciary trust reposed in them by respondent company, thereby causing the latter to lose Parenthetically, the fact that petitioners Jamer and Amortizado had worked for respondent
confidence in them. This warrants their dismissal. Moreover, it must be pointed out that herein company for fourteen (14) and thirteen (13) years, respectively, should be taken against them.
petitioners have in fact admitted the underpayment of P450.00 not only in their Sinumpaang The infractions that they committed, notwithstanding their long years of service with the
Salaysay but also during the hearing conducted before Labor Arbiter Pablo C. Espiritu.[25] And, company, reflects a regrettable lack of loyaltyloyalty that they should have shouldered instead of
the record shows that the petitioners in fact made a last ditch effort to conceal the same. Were it betrayed. If the petitioners length of service is to be regarded as a justifying circumstance in
not for its timely discovery by private respondents trusted employees, the incident could not have moderating the dismissal, it will actually become a prize for disloyalty, perverting the meaning
been discovered at all. Furthermore, it is worth stressing at this juncture that the petitioners have of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. [33]
also expressly admitted the shortage of P15,353.78a substantial amountin their respective sworn
statements, and they were not able to satisfactorily explain such shortage. [26] The Court is Petitioners also maintain that the NLRC acted with grave abuse of discretion when it failed
convinced that these particular acts or omissions provided Isetann with enough basis to forfeit its to consider the fact that, other than petitioners themselves, there were four (4) other persons who
trust and confidence over herein petitioners. had access to the company vaults, and hence, could have been responsible for the aforesaid cash
shortages imputed to them. They aver therefore, that there was a serious flaw and laxity in the
The NLRC, therefore, did not act with grave abuse of discretion in declaring that petitioners supervision and handling of company funds by respondent Isetann.[34]
were legally dismissed from employment. The failure of petitioners to report to management the
aforementioned irregularities constitute fraud or willful breach of the trust reposed in them by We also find this contention devoid of merit.
their employer or duly authorized representative one of the just causes in terminating employment First, it must pointed out that the petitioners remark that there was laxity in the accounting
as provided for by paragraph (c), Article 282 of the Labor Code, as amended. procedures of the company is a matter addressed to the respondent employer. However, this does
In other words, petitioners admissions in their sworn statements, together with the other not excuse dishonesty of employees and should not in any case hamper the right of the employer
documentary evidences on record, constituted breach of trust on their part which justifies their to terminate the employment of petitioners on the ground of loss of confidence or breach of trust.
dismissal. Private respondents Isetann Department Store and Mr. John Go cannot be compelled Precisely, the accounting procedure which called for improvements was based primarily on trust
to retain employees who are clearly guilty of malfeasance as their continued employment will be and confidence.[35]
prejudicial to the formers best interest.[27] The law, I protecting the rights of the employees, Secondly, it must be noted that the herein petitioners were store cashiers and as such, a
authorizes neither oppression nor self-destruction of the employer.[28] special and unique employment relationship exists between them and the respondent company.
The cause of social justice is not served by upholding the interest of petitioners in disregard More than most key positions, that of cashier calls for the utmost trust and confidence because
of the right of private respondents. Social justice ceases to be an effective instrument for the their primary function involves basically the handling of a highly essential property of the
equalization of the social and economic forces by the State when it is used to shield respondent employer --- the sales and revenues of the store. Employers are consequently given
wrongdoing.[29] While it is true that compassion and human consideration should guide the wider latitude of discretion in terminating the employment of managerial employees or other
disposition of cases involving termination of employment since it affects ones source or means personnel occupying positions of responsibility, such as in the instant case, than in the case of
of livelihood, it should not be overlooked that the benefits accorded to labor do not include ordinary rank-and-file employees, whose termination on the basis of these same grounds requires
compelling an employer to retain the services of an employee who has been shown to be a gross proof of involvement in the malfeasance in question. Mere uncorroborated assertions and
liability to the employer. It should be made clear that when the law tilts the scale of justice in accusations by the employer will not suffice.[36] In that respect , we quote with approval the
favor of labor, it is but a recognition of the inherent economic inequality between labor and observations of the NLRC:
management. The intent is to balance the scale of justice; to put up the two parties on relatively
equal positions. There may be cases where the circumstances warrant favoring labor over the To expound further, for the position of a cashier, the honesty and integrity of the persons
interests of management but never should the scale be so tilted if the result is an injustice to the assuming said position are the primary considerations for the nature of her work requires that
employer, Justicia remini regarda est (Justice is to be denied to none).[30] her actuations should be beyond suspicion as they are accorded the responsibility of handling
money and whatever they would do to such property of the employer largely depend on their
Thus, this Court has held time and again, in a number of decisions, [31] that: trustworthiness. Hence, the right of the employer to dismiss a cashier guilty of breach and trust
and confidence should be recognized. In a case decided by the Supreme Court it has been ruled
Loss of confidence is a valid ground for dismissing an employee and proof beyond reasonable that:
doubt of the employees misconduct is not required to dismiss him on this charge. It is sufficient
Honesty and integrity are the primary considerations in petitioners position. The nature of his dismissal is sought and, second, a subsequent notice informing the employee of the decision to
work requires that the actuations should be beyond suspicion, our empathy with the cause of dismiss him.[41]
labor should not blind us to the rights of management. As we have held, this Court should help
stamp out, rather than tolerate, the commission of irregular acts whenever these are noted. In accordance with this requirement, petitioners were given the required notices, on August
Malpractices should not be allowed to continue but should be rebuked. (Del Carmen vs. NLRC, 2, 1990 and then on August 23, 1990. The Court finds that petitioners were accorded due process
203 SCRA 245)[37] before they were dismissed on August 31, 1990. It is a well-established rule that the essence of
due process is simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling
Finally, we are convinced that the NLRC did not commit grave abuse of discretion in complained of.[42] It is evident from the records , that herein petitioners were given all the
evaluating the evidence. Petitioners merely denied the charges against them. Denials are weak opportunities to defend themselves and air their side before the Committee on Discipline, having
forms of defenses, particularly when they are not substantiated by clear and convincing been notified by respondent Isetanns Human Resources Division Manager, Teresita A.
evidence.[38] The petitioners failure to satisfactorily explain the cash shortages, for which sums Villanueva, on August 2, 1990 through letters individually sent to them. However, offered no
they are responsible, given their respective positions in respondent company, is enough reason to explanation or theory which could account for money lost in their possession. Hence, the company
warrant their dismissal on the ground of loss of confidence. They cannot place the burden on had no other alternative but to terminate their employment. As we elucidated in the case of
somebody else given the factual circumstances of this case. As succinctly put by the NLRC: Philippine Savings Bank vs. National Labor Relations Commission,[43] to wit:

That there were other persons who had access to the vaults of the appellant company implying xxx the requirement of due process is satisfied when a fair and reasonable opportunity to
that these other persons could have been responsible for the loss of the P15,353.78 is of no explain his side of the controversy is afforded the party. A formal or trial-type hearing is not at
moment inasmuch as the appellees were the ones who took first custody of the possession of all times and in all circumstances essential, especially when the employee chooses not to speak,
said collections. As store cashiers, it is expected of them to exercise ordinary prudence to count
the collection and record the same in the tally sheet before depositing to said vault to avoid a
slightest suspicion of having pocketed part of it should a shortage arise. They did not exert WHEREFORE, the assailed decision of the National Labor Relations Commission in
efforts to exercise such prudence demanded of their positions hence, appellants should not be NLRC NCR CA 002074-91 is hereby AFFIRMED. The petition is DISMISSED for lack of merit.
blamed when they were called for an investigation when said shortage was discovered. SO ORDERED.

xxx xxx xxx

That the occurrence of shortages is merely an isolated one and therefore should not be taken
against the complainant-appellees as a ground for loss of trust and confidence that would cause
their termination cannot be given any credence. The shortages having been established and
admitted has provided the employer sufficient basis for loss of confidence and whether such
occurrence is merely an isolated one or has been repeatedly committed is no longer material.
The bone of contention here is whether there is some basis for such loss of trust and confidence
and if the employer has reasonable ground to believe or to entertain the moral conviction that
the employee concerned is responsible for the misconduct which in the instant case has been

We reiterate the rule that in cases of dismissal for breach of trust and confidence, proof
beyond reasonable doubt of the employees misconduct is not required. It is sufficient that the
employer had reasonable ground to believe that the employees are responsible for the misconduct
which renders him unworthy of the trust and confidence demanded by their position. [40] In the
case at hand, it cannot be doubted that respondents succeeded in discharging its burden of proof.
As regards to the second requisite, the law requires that the employer must furnish the
worker sought to be dismissed with two (2) written notices before termination may be validly
effected: first, a notice apprising the employee of the particular acts or omission for which his
of the plaintiff and against the defendant to remove that portion of his building which stands on
the 101 square meters over plaintiffs property; to pay plaintiff the amount of P950.00 monthly
Questions of fact cannot be raised compensation from January 1986 until defendant vacates the premises; to pay attorney’s fees in
Day v RTC Zamboanga the sum of P5,000.00 and to pay the costs of the action. Defendant’s compulsory counterclaims
are hereby ordered dismissed." (Rollo, p. 27)

DECISION On April 23, 1986, without having first filed a motion for reconsideration, private respondent
Go Chu filed an original action for certiorari with respondent court, against Judge Cabato and
petitioner Victorino Day. Pending hearing of the application for preliminary injunction,
PARAS, J.: respondent court issued a temporary restraining order in the case.

On May 12, 1986, petitioner filed his Answer and Opposition to the Petition, to which private
This is a petition to review the decision of the Regional Trial Court of Zamboanga City, Branch respondent filed a reply.
XIII dated July 8, 1986 setting aside the decision of the Municipal Trial Court of Zamboanga
City, Branch II in Civil Case No. 3717 (169-11). At the hearing of the application for preliminary injunction, the parties waived further oral
arguments and submitted the case based on their pleadings and documents.chanrobles
The following, in brief, are the facts of the case:chanrob1es virtual 1aw library virtualawlibrary

Herein petitioner Victorino Day is the registered owner of a parcel of land covered by Original On May 27, 1986, respondent court issued an order resolving all the matters and issues in the
Certificate of Title No. P-2667 and situated at Tomas Claudio St., Zamboanga City. Private petition in favor of herein petitioner Day, that the petition on its main is "lacking in merit except
respondent Go Chu is the owner of a building constructed on the said lot occupying an area of that there are still certain matters which the respondent court would like to resolve after hearing
101 square meters.chanrobles lawlibrary : rednad thereon." (Rollo, p. 3). The application for preliminary injunction was likewise denied and the
hearing of the main petition was set on June 24, 1986. At the said hearing, respondent court
Private respondent was asked by petitioner to peacefully vacate and remove that portion of the gave the parties opportunity to adduce additional arguments on the merits of the case. They,
former’s building standing on the latter’s lot. Due to private respondent’s refusal to vacate the however, submitted the case for decision without further arguments, relying therefore on the
premises, on April 17, 1982, petitioner instituted a formal complaint against respondent with the pleadings and documents on record.
Office of the Barangay Chairman, Zone I, Zamboanga City. As no amicable settlement could be
reached in the case, the Barangay Chairman, on April 20, 1982, issued a certification that On July 8, 1986, however, respondent court issued another order granting the petition
conciliation of the dispute at the barangay level had failed. (MTC Decision, Annex "A", for certiorari and setting aside the decision of Judge Cabato of the Municipal Trial Court. In
Petition, pp. 1-2; Rollo, p. 25.) connection therewith, the parties were directed to submit their dispute before the Lupong
Tagapayapa pursuant to the requirements of PD 1508. Petitioner’s motion for reconsideration
The dispute was continuously discussed by the parties through 1982, 1983, and 1984. On was denied on June 25, 1987.
October 16, 1984, petitioner agreed to accept P1,000.00 from private respondent as rental for
the use of his lot from 1979 to December 1984. As petitioner had received the P1,000.00 as Hence, this petition.
compensation for respondent’s use of his land, respondent claimed the existence of a lease
contract between them. Respondent Go Chu, however, failed to prove the existence of a formal The following issues are presented for the court’s determination:chanrob1es virtual 1aw library
or even verbal contract of lease.
1) Whether or not the respondent court may modify or reverse its own order (of May 27, 1986)
On January 15, 1985, petitioner again made another demand on private respondent to remove after the lapse of 15 days from its issuance;
the building. Because of private respondent’s adamant and continued refusal to vacate the
disputed lot, petitioner filed on March 25, 1985 an action for unlawful detainer with application 2) Whether or not B.P. 129 allows the plaintiff in an unlawful detainer case to apply for a writ
for a writ of preliminary mandatory injunction. Apparently, petitioner Day did not use the of preliminary injunction;
former Barangay Certification in commencing the said suit against private Respondent. On
April 15, 1986, the trial court rendered a decision in favor of petitioner Day, the dispositive 3) Whether or not prior conciliation proceedings pursuant to P.D. 1508 is applicable to
portion reading as petitioner’s suit in the Municipal Trial Court;

"WHEREFORE, in view of the foregoing findings of facts judgment is hereby rendered in favor 4) Whether or not respondent court may entertain the petition for review on certiorari when the
proper remedy is ordinary appeal; issue or issues in a complaint is final and appealable, although the other issue or issues have not
been resolved, if the latter issues are distinct and separate from the others. Thus, the respondent
5) Whether or not respondent court, in a petition for certiorari, may entertain procedural court was without jurisdiction to modify or reverse the earlier order after the expiration of
questions or questions of facts or substance already decided by the lower court; and fifteen (15) days from and after receipt thereof by the parties, considering that there was no
motion for reconsideration filed by then private respondent Go Chu.
6) Whether or not respondent court may grant a Writ of Certiorari on grounds other than those
specified under Section 1, Rule 65 of the Rules of Court. As regards the second issue, We agree with petitioner that Section 33 of B.P. 129 allows the
plaintiff in an unlawful detainer action to apply for a writ of preliminary injunction. With the
On the first issue, petitioner maintains that the respondent court has no jurisdiction to reverse its advent of B.P. 129, Art. 539 of the New Civil Code, Sec. 88 of the Judiciary Act of 1948, and
own order after the lapse of 15 days from its issuance because the May 27, 1986 order was a Sec. 3, Rule 70 of the Rules of Court have been substantially modified. B.P. 129 provides:
final order, all issues in the main petition having been resolved therein. Said controversial order "provided the main action is within its jurisdiction, an inferior court can appoint a receiver and it
reads as follows:chanrobles law library has jurisdiction to issue a writ of preliminary injunction in either forcible entry or unlawful
detainer cases." (Regalado, Remedial Law Compendium, Second Revised Edition, p. 33).
"Although the primary objective of this order is the determination of whether or not to issue a "Under the present law, an inferior court has jurisdiction to grant provisional remedies in proper
writ of preliminary injunction in the instant case, yet in the consideration thereof, the Court cases. These proper cases would be:chanrob1es virtual 1aw library
finds the main petition for certiorari as it appears on the pleadings to be LACKING IN MERIT
. Hence, it follows that where the petitioner is not entitled to the primary relief demanded, he 1) Preliminary attachment under Rule 57, provided the principal action is within its jurisdiction
cannot likewise be entitled to the ancillary remedy of injunction, because injunction is not to such as an action for recovery of personal property valued at not more than P20,000.00; an
protect contingent or future right or enforce an abstract right (EMILLA VS. RADO, 23 SCRA action for recovery of a sum of money not exceeding P20,000.00; an action of forcible entry and
1983) or to protect a right not in esse. (DIZON VS. YATCO, 13 SCRA 167). However, there unlawful detainer.
are STILL CERTAIN MATTERS in the main petition that can only be completely resolved
after a hearing thereon." (Emphasis ours) And the Petition was set for hearing on June 24, 2) Preliminary injunction under Rule 58 in both forcible entry and unlawful detainer also in
1986." (Rollo, p. 4-A) cases mentioned in the preceding paragraph." (Dean Jose Y. Feria, Phil. Legal Studies, Series
No. 1, the Judiciary Reorganization Act of 1980, 1981 edition, pp. 43-44.)
According to petitioner, since the respondent court resolved no new or other matter in its July 8,
1986 order, the May 27, 1986 order should be considered as already a final one insofar as the The third issue centers on the applicability of prior conciliation proceedings pursuant to P.D.
issues resolved therein are concerned. To quote the petitioner, "this phrase ‘certain matters’ 1508, section 6 of which reads as
referred to by the respondent court did not touch or dwell on ‘certain matters’ not yet passed
upon by it, but reversed itself on the same matters already resolved by it earlier after the lapse of "Sec. 6. Conciliation, pre-condition to filing of complaint. — No complaint, petition, action or
the 15-day period without any motion for reconsideration ever asked by herein private proceeding involving any matter within the authority of the Lupon as provided in Sec. 2 hereof
respondent Go Chu." (Petition, p. 4) shall be filed or instituted in court or any other government office for adjudication unless there
has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no
Private respondent, on the other hand argues that the order of May 27, 1986 was merely an conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat
interlocutory order that did not finally dispose of the action and that the dispositive portion Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been
thereof dealt only with the preliminary injunction incident; that the denial of the issuance of the repudiated. However, the parties may go directly to court in the following cases:chanrob1es
writ of preliminary injunction and the setting of further hearing on the main petition was the virtual 1aw library
highlight of the said order and that since the order was interlocutory in nature, nothing
precluded respondent judge from further hearing the case after the issuance of the May 27, 1986 (1) where the accused is under detention;
order and deciding it on its merits on July 8, 1986.
(2) where a person has otherwise been deprived of personal liberty calling for habeas
We find the contention of the petitioner meritorious. In the case of de Ocampo v. Republic, L- corpusproceedings;
19533, Oct. 31, 1963, 9 SCRA 440, this Court said. "The test to ascertain whether an order is
interlocutory or final is: does it leave something to be done in the court with respect to the (3) actions coupled with provisional remedies such as preliminary injunction, attachment,
merits of the case? If it does, it is interlocutory; if it does not, it is final." In the instant case, it is delivery of personal property and support pendente lite; and
evident that the respondent court resolved no new or other matter in the order of July 8, 1986.
Such being the case, it necessarily follows that the order of May 27, 1986 should be deemed as a (4) where the action may otherwise be barred by the Statute of Limitations.
final order in so far as the issues resolved therein are concerned. An order which decides an
It is clear from the foregoing that prior conciliation proceedings as mandated by P.D. 1508 were
inapplicable to the petitioner’s suit before the Municipal Trial Court of Zamboanga City, the It is therefore clear that respondent court erred in reversing the lower court’s findings regarding
action being for ejectment with application for a writ of preliminary mandatory injunction. P.D. the sufficiency of the Barangay Certificate of 1982. It was an error for the respondent court to
1508 provides that an action "coupled with provisional remedies such as preliminary rule upon a question of fact or procedural question already decided by the lower court.
injunction," etc. does not require conciliation proceedings as a pre-condition for filing an action
in court. The case of petitioner being an exception to the requirement of prior conciliation by Finally, the question on whether or not the respondent court can grant a writ of certiorari on
P.D. 1508, it was not necessary for petitioner to first secure the necessary certification to file grounds other than those specified under Sec. 1, Rule 65 of the Rules of Court, Our answer is in
action from the proper barangay court. Even assuming that petitioner’s complaint for ejectment the negative.
in the Municipal Trial Court did not fall within the exceptions enumerated in Sec. 6 of P.D.
1508, the lower court in its decision ruled that the April 1982 certification to file action issued In an original action for certiorari under Sec. 1, Rule 65 of the Rules of Court, the grounds for
by the proper Barangay Court was sufficient compliance with P.D. 1508. the issuance of the Writ of Certiorari are as follows, to wit:chanrobles virtualawlibrary
As to the fourth issue, private respondent is of the firm belief that the action he filed before the
respondent Regional Trial Court was both an original action for certiorari and a petition (a) Lack of jurisdiction;
for certiorari as a mode of appeal. We disagree. Applying Sec. 22 of B.P. 129 (governing law in
the matter of appeals from the inferior courts to the Regional Trial Courts), decisions of inferior (b) Grave abuse of discretion; and
courts may be elevated to the Regional Trial Court only by ordinary appeal, that is, by filing a
Notice of Appeal with the inferior court. The said proviso does not admit of any other mode of (c) When the court acts without or in excess of jurisdiction.
elevating decisions of inferior courts to the Regional Trial Court presumably to carry out the
purpose of B.P. 129 which is to simplify judicial procedure to effect a speedy administration of We have consistently adhered to the principle that only errors of jurisdiction are correctible : virtual law library by certiorari. As early as in the case of Herrera v. Barreto, 25 Phil. 245, 271, the Supreme Court
ruled: "The office of the Writ of Certiorari has been reduced to the correction of defects of
Anent the fifth issue, We hold that respondent court has no jurisdiction in a certiorari case to jurisdiction solely and cannot legally be used for any other purpose."cralaw virtua1aw library
entertain procedural questions or questions of facts or substance already passed upon by the
lower court. The barangay certificate of 1982 was admitted and found to be sufficient by the Clearly, the only grounds which may serve as the basis for the respondent court to raise the writ
Municipal Trial Court, Branch II, Zamboanga City, after considering the circumstances of certiorari are lack of jurisdiction or grave abuse of discretion by the inferior court or that the
surrounding its issuance. This is a procedural question or a question of fact which cannot be said inferior court acted without or in excess of jurisdiction in its appreciation of the barangay
raised or corrected in a certiorari case, but should be assigned as error and reviewed in the certification as constituting sufficient compliance with P.D. 1508.
appeal properly taken from the decision rendered by the trial court on the merits of the case.
(Lamagan v. de la Cruz, 40 SCRA 101). It should be remembered that except for the lower In the ejectment suit filed by petitioner against private respondent, the lower court undoubtedly
court’s admission in evidence of the Barangay Certification of 1982 and the said court’s acquired jurisdiction over the subject matter and over the person of then defendant (now private
appreciations of the said Certification as sufficient compliance with P.D. 1508, the respondent respondent) by the filing of the complaint and service of summons upon then defendant (now
court’s order (RTC), which is herein sought to be nullified, resolved all the matters raised by private respondent) and the filing by the latter of his answer. Thus, it cannot be said that the
private respondent in his petition, against the latter. Admissibility of evidence is a matter that is lower court had no jurisdiction to render the decision set aside by respondent court. Assuming
addressed to the sound discretion of the trial court (the lower court in this case). Such being the that the lower court committed a mistake on the merits of the case, it was in the exercise of such
case, no potent reason existed to justify respondent court’s substitution of the lower court’s jurisdiction. The error, if at all, is at most one of judgment and not of jurisdiction, which cannot
judgment with its own judgment. be the object of a petition for certiorari. The proper remedy in such case was appeal. Errors in
the application of the law and the appreciation of evidence committed by a court after it has
"Errors in the appreciation of evidence may not be reviewed by certiorari because they do not acquired jurisdiction over a case, are correctible only by appeal (So Chu v. Nepomuceno, 29
involve any jurisdictional question." (Mujer v. CFI of Laguna, 35 O.G. 1384; Abig v. Phil. 208; Valencia v. Victoriano, 50 O.G. 5815, Dec. 1954 (CA) citing Herrera v. Barreto, Et
Constantino, L-12460, May 31, 1961) Al., 26 Phil. 245).chanrobles virtualawlibrary

Further, in an original action for certiorari, questions of fact cannot be raised much less passed Neither can it be said that the lower court committed a grave abuse of discretion or exceeded its
upon by the respondent court. Thus, it has been ruled jurisdiction when it appreciated the barangay certification as sufficient compliance with P.D.
1508. In the petition for certiorari filed by private respondent before the respondent court, he
"Questions of fact cannot be raised in an original action for certiorari. Only established or did not allege that the lower court’s decision was outside or in excess of its jurisdiction, or was
admitted facts can be considered." (Rubio v. Reyes, Et Al., L-24581, May 27, 1968) issued in grave abuse of discretion. Private respondent merely alleged that the lower court
"erroneously" appreciated facts and evidence, issued interlocutory orders, and appreciated the
issues. He also challenged the soundness of the decision. These do not constitute excess of
jurisdiction or grave abuse of discretion. It must be remembered that there is "excess of
jurisdiction" where the court has jurisdiction but has transcended the same or acted without any
statutory authority. (Soriano v. del Rosario, 55 Phil. 924). There is "grave abuse of discretion"
where there is a capricious and whimsical exercise of judgment amounting to lack of
jurisdiction or where the power is exercised in an arbitrary and despotic manner by reasons of
passion or personal hostility, and it is so patent and gross as to amount to an invasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.
(Tavera-Luna, Inc. v. Nable, 67 Phil. 341) We find no such grave abuse of discretion committed
by the lower court in appreciating the barangay certification to be sufficient compliance with
P.D. 1508. In fact, the respondent court categorically ruled that there was no grave abuse of
discretion or excess of jurisdiction on the part of the lower court when it held

"The foregoing recital and discussions of each particular questioned act of the respondent judge
would plainly show that no grave abuse of discretion has been committed by him. If any, they
could have been assigned as errors in an ordinary appeal, which to the mind of the Court should
have been the remedy resorted to by the herein petitioner." (Paragraph 2, Page 5 of the Order of
the Respondent Court dated May 27, 1986.) (Rollo, p. 142)

WHEREFORE, finding merit in the appeal of petitioner, the assailed order of the respondent
court is hereby SET ASIDE and the order of the Municipal Trial Court of Zamboanga City,
Branch II in Civil Case No. 3717 (169-11) is hereby REINSTATED.

Petitioners elevated the case to the Court of Appeals, which dismissed the same in a resolution
dated September 21, 1965 (Ibid., p. 28). Consequently, the judgment in Civil Case No. 3191-11
Only issue involved is jurisdiction, either want of or excess thereof
became final and executory on October 11, 1965 (Ibid., p. 15).
Gerardo v De la Pena
Upon motion of herein private respondents, on January 31, 1966, a writ of execution was issued
and the same was duly served as per sheriff's return dated February 12, 1966, placing private
respondents in possession of their respective portions or shares in the properties in question (Ibid.,
DECISION p. 28).
Again, upon motion of herein private respondents, an alias writ of execution dated April 6, 1970
PARAS, J.: was issued by the lower court for the collection of damages and the costs of suit from herein
petitioners. Accordingly, levy on execution was made on the rights, shares, interest and
participation of herein petitioners in question. Thereafter, said shares, interest and participation
This is a petition for Certiorari, prohibition and mandamus seeking to reverse and set aside the of herein petitioners were sold at public auction to a certain Luis Antonio. The certificate of sale
order 1 dated August 13, 1982 of the then Court of First Instance of Ilocos Norte and Laoag City covering said properties were then registered in the Office of the Register of Deeds of Ilocos
which denied petitioners' motion for reconsideration of the resolution dated July 26, 1982 of the Norte on March 16, 1971 (Ibid., pp. 28-29).
said court which dismissed with prejudice Civil Case No. 7590 on the ground of res judicata. Several years later, or on March 18, 1982, petitioners herein filed a complaint as pauper-litigants
The properties involved in the instant case are Lots 26022, 26158 and 9525 of Laoag Cadastre for reconveyance of properties, annulment of judgment and damages against private respondents
(Rollo, p. 13) containing an area of 34,478 square meters of agricultural lands and 722 square in the lower court, which was docketed as Civil Case No. 7590 (Ibid., p. 4).
meters of residential land (Ibid., p. 5).chanrobles virtual law library On May 4, 1982, private respondents filed a motion to dismiss said complaint on the grounds of
The original owner of said properties was Angel Gerardo, married to Andrea Tungpalan who res judicata, prescription of action and lack of cause of action, which motion was granted by the
predeceased him; that he declared said properties for taxation purposes as early as 1921; that out lower court in its resolution dated July 26, 1982 discoursing, viz:
of the marriage, the following children were born, namely Filomina, Berta, Santiago and Delfina, "The essential requisites for the existence of res judicata are:
all surnamed Gerardo; that Filomina was survived by her children, Policarpo and Basilio, both
surnamed Batacan (private respondents herein); that Berta was survived by her children, Isabel, '(1) the former judgment must be final;
Irineo, Eduardo, Dionicio, Dominga and Herminio, all surnamed Bangloy (private respondents '(2) it must have been rendered by a court having jurisdiction of the subject matter and the parties;
herein); that Santiago was survived by his children Vicente, Valentina, Cornelio, Faustino,
Benjamin, Angel and Constante, all surnamed Gerardo (petitioners herein). (Ibid., p. 13) '(3) it must be a judgment on the merits; and
The record further reveals that before the cadastral hearing involving the properties in question '(4) there must be between the first and second actions identity of the parties, identity of the subject
could commence, Angel Gerardo, father of Santiago Gerardo who in turn was the father of herein matter and identity of cause of action.'
petitioners, died. Subsequently, Santiago Gerardo filed the corresponding answers for the three
"There is no doubt that the judgment in Civil Case No. 3191-II became final on October 11, 1965,
(3) lots in question. It was alleged in said answers that he (Santiago) was the heir of Angel Gerardo
and likewise, that the court in taking cognizance of the case had jurisdiction over the subject
and that said three (3) lots were being claimed by him as his inheritance from his late father, Angel
matter and the parties because it involves question of co-ownership of real properties arising from
Gerardo (Ibid., p. 14).
rights of the parties as heirs of Angel Gerardo, their predecessor-in-interest. Likewise, it had
After hearing, Lots 26022 and 26158 were registered in the name of Santiago Gerardo and OCT jurisdiction over the persons of the parties, the defendants having been duly summoned and filed
No. 15059 was correspondingly issued in the latter's name, and so with OCT No. 9801 covering their corresponding answers to the plaintiffs' complaint; that the judgment rendered was on the
Lot 9525 (Ibid.) merits of the case because there was actual trial where both parties presented their evidence; and
lastly, in both cases, the same parties and properties, and the same causes of action are involved.
About sixteen (16) years later, or on April 28, 1960; private respondents instituted an action for All the essential requisites of res judicata, therefore, are present.' (Ibid., p. 15).: nad
ownership, partition and accounting against herein petitioners in the then Court of First Instance
of Ilocos Norte, which was docketed as Civil Case No. 3191-11, praying, among others, for the The motion for reconsideration having been denied, petitioners elevated the case to this Court by
cancellation of OCT Nos. 15059 and 9801 (Ibid., pp. 14, 26) way of Certiorari, prohibition and mandamus.
On February 18, 1964, the lower court rendered judgment in favor of private respondents and The only issue for resolution in the instant case is whether or not the lower court committed a
against herein petitioners, declaring all the former and the latter as legal heirs of the late Angel grave abuse of discretion when it ordered the dismissal of the complaint in Civil Case No. 7590
Gerardo and co-owners of Lots 26022, 26158 and 9525 (Ibid., pp. 14, 27). on the ground of res judicata.
The petition is devoid of merit. (Canlas v. Court of Appeals, 164 SCRA 160 [1988]; Macabingkil v. People's Homesite and
Housing Corporation, 72 SCRA 326 [1976]).
The Supreme Court possesses no authority to rule upon non-jurisdictional issues in
aCertiorari proceeding. The only question involved in Certiorari is jurisdiction; either want of or In the instant case, there is no showing whatsoever that extrinsic or collateral fraud, as
in excess thereof (C & C Commercial Corporation v. Philippine National Bank, et al., 175 SCRA hereinabove defined, indeed vitiated the proceedings in Civil Case No. 3191-11. Hence, there is
1 [1989]). In the case at bar, respondent Judge correctly dismissed the complaint in Civil Case no cause of action for annulment of the judgment in the said case.
No. 7590 based on res judicata considering the prior judgment in Civil Case No. 3191-11.
Moreover, the trial court has no jurisdiction to entertain an action to annul the judgment in the
There is res judicata when the following requisites are present: (1) the judgment or order must be prior case, Civil Case No. 3191-11 rendered by a court of coordinate branch. Exclusive original
final; (2) the court rendering it must have jurisdiction over the subject matter and of the parties; jurisdiction over actions for annulment of judgments of a regional trial court is vested in the Court
(3) identity of parties, identity of subject matter and identity of cause of action (Maglalang v. of Appeals (Section 9[2], Batas Pambansa Blg. 129) (Islamic Da'Wah Council of the Philippines
Court of Appeals, 175 SCRA 808 [1989]). v. Court of Appeals, supra).- nad
There is no question that petitioners have no right at all to claim exclusive ownership of the PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the order appealed
properties in question. Ownership thereof having been settled in favor of both herein petitioners from is hereby AFFIRMED.
and private respondents as co-owners of the subject properties in Civil Case No. 3191-11 which
constitutes res judicata to Civil Case No. 7590. Such prior judgment in Civil Case No. 3191-11 is
conclusive in the subsequent suit, i.e., Civil Case No. 7590, between the same parties on the same
subject matter, and the same cause of action, not only as to matter which were decided in the first
action but could have been properly set up in the prior suit, which the petitioners apparently failed
to do.
Grave abuse of discretion means such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must
be so patent and gross as to amount to an evasion of positive duty enjoined by or to act at all in
contemplation of law (Carson, et al. v. Judge Pantanosas, Jr., G.R. No. 75934, December 15,
1989), which circumstances are not obtaining in the present case.
Respondent judge who dismisses a complaint on the ground of res judicata does not commit grave
abuse of discretion.
Petitioners maintain that the judgment in Civil Case No. 3191-11, being inconsistent with the
decisions in Cadastral Cases Nos. 31, 44 and 47 dated August 31, 1937, November 28, 1934 and
December 31, 1935, respectively, awarding OCT No. 15059 solely in the name of the late
Santiago Gerardo (petitioners' father), OCT No. 9801 likewise solely in the latter's name, and
OCT No. 11942, naming Santiago Gerardo as one of the co-owners of the parcel of land embraced
in the said title, respectively (Ibid., pp. 5-6), is void ab initio (Ibid., p. 8).
It is well-settled that a judgment may be annulled on the ground of extrinsic or collateral fraud
(Islamic Da'Wah Council of the Philippines vs. Court of Appeals, G.R. No. 80892, September 29,
1989) and such extrinsic or collateral fraud must be committed by the adverse party (Sanchez v.
Tupas, 158 SCRA 465 [1988]). It is only extrinsic or collateral fraud that can serve as a basis for
the annulment of judgment. There is extrinsic or collateral fraud "where it is one the effect of
which prevents a party from having a trial, or real contest, or from presenting all of his case to the
court, or where it operates upon matters pertaining, not to the judgment itself, but of the manner
in which it was procured so that there is not a fair submission of the controversy." In other words,
extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is
committed outside of the trial of the case, whereby the defeated party has been prevented from
exhibiting fully his side of the case, by fraud or deception practiced on him by his opponent
Distinction between certiorari under 45 as a mode of appeal and certiorari under 65 as 3. The maximum rate of interest, including commissions, premiums, fees and
special civil action other charges on loans with maturity of more than seven hundred thirty (730)
days, by banking institutions, including thrift banks, or by financial
Banco Filipino v CA intermediaries authorized to engage in quasi-banking functions shall be
nineteen percent (19%) per annum.
Before us is a Petition for Review on Certiorari of the Decision of the Court of Appeals[1] in
CA-G.R. CV No. 45891 entitled CALVIN S. ARCILLA and ELSA B. ARCILLA vs. BANCO xxx
FILIPINO SAVINGS and MORTGAGE BANK, ET. AL. which affirmed the decision of the
Regional Trial Court (RTC), Branch 33, Manila ordering BANCO FILIPINO to pay CALVIN 7. Except as provided in this Circular and Circular No. 493, loans or
and ELSA ARCILLA the amount of P126,139.00 with interest thereon at 12% per annum from renewals thereof shall continue to be governed by the Usury Law, as
the filing of the complaint. amended. (idem, supra)

The undisputed facts as found by the Court of Appeals are as follows: In the meantime, the Skyline Builders, Inc., through its President, Appellee Calvin Arcilla,
secured loans from the Bank of the Philippine Islands in the total amount of P450,000.00. To
"Elsa Arcilla and her husband, Calvin Arcilla, the Appellees in the present insure payment of the aforesaid loan, the FGU Insurance Corporation, issued PG Bond No.
recourse, secured, on three (3) occasions, loans from the Banco Filipino 1003 for the amount of P225,000.00 (pages 434-436, Records) in favor of the Bank of the
Savings and Mortgage Bank, the Appellant in the present recourse, in the Philippine Islands. Skyline Buildings, Inc., and the Appellees executed an "Agreement of
total amount of P107,946.00 as evidenced by "Promissory Note" executed by Counter-Guaranty with Mortgage" in favor of the FGU Insurance Corporation covering the
the Appellees in favor of the Appellant. To secure the payment of said loans, aforesaid parcels of land to assure payment of any amount that the insurance company may pay
the Appellees executed "Real Estate Mortgages" in favor of the Appellants on account of said loans (pages 429-436, Records). The mortgage was annotated as Entry No.
over their parcels of land located in BF-Paraaque, covered by Transfer 58009 at the dorsal portion of Appellees titles.
Certificate of Title Nos. 444645, 450406, 450407 and 455410 of the Registry
of Deeds of Paraaque (Annexes "B" to "B-2", Amended Complaint). Under After October 30, 1978, the Appellant prepared and issued a "Statement of Account" to the
said deeds, the Appellant may increase the rate of interest, on said loans, Appellees on their loan account to the effect that, as of October 30, 1978, the balance of their
within the limits allowed by law, as Appellants Board of Directors may loan account, inclusive of interests, computed at 17% per annum, amounted to 284,490.75 (page
prescribe for its borrowers. At that time, under the Usury Law, Act 2655, as 555, Records). It turned out that the Appellant unilaterally increased the rate of interest on the
amended, the maximum rate of interest for loans secured by real estate loan account of the Appellees from 12% per annum, as covenanted in the "Real Estate
mortgages was 12% per annum. On January 10, 1975, the Appellees and the Mortgage" and "Deed of Consolidated and Amended Real Estate Mortgage" to 17% per annum
Appellant executed a "Deed of Consolidation and Amendment of Real Estate on the authority of the aforequoted Central Bank Circular.
Mortgage" whereby the aforementioned loans of the Appellees and the "Real
Estate Mortgage" executed by them as security for the payment of said loans The Appellees failed to pay their monthly amortizations to Appellant. The latter forthwith filed,
were consolidated (pages 33-35, Record). Likewise, under said deed, the loan on April 3, 1979, a petition, with the Provincial Sheriff, for the extrajudicial foreclosure of
of the Appellees from the Appellant was increased to P188,000.00. The Appellees "Real Esate Mortgage" in favor of the Appellant for the amount of
Appellees executed a "Promissory Note", dated January 15, 1975, whereby P342,798.00 inclusive of the 17% per annum which purportedly was the totality of Appellees
they bound and obliged themselves, jointly and severally, to pay the account with the Appellant on their loans. The Appellant was the purchaser of the property at
Appellant the aforesaid amount of P188,000.00 with interest at the rate of public auction for the aforesaid amount of P324,798.00. On May 25, 1979, the Sheriff executed
12% per annum, in nineteen (19) years from date thereof, in stated a "Certificate of Sale" over the aforesaid properties in favor of the Appellant for the aforesaid
installments of P2,096.93 a month (page 32, Records). amount (pages 37-38, Records).

On January 2, 1976, the Central Bank of the Philippines issued Central Bank Circular No. 494, The Appellant filed a "Petition for a Writ of Possession" with the Regional Trial Court entitled
quoted infra, as follows: "Banco Filipino Savings and Mortgage Bank vs. Elsa Arcilla, et al., LRC Case No. P-7757-P".
On February 28, 1980, the Court rendered a Decision granting the Petition of the Appellant. The
xxx Appellees appealed to the Court of Appeals but the latter Court, on June 29, 1985, promulgated
a Decision affirming the Decision of the Regional Trial Court (pages 190-198, Records).
In the meantime, the FGU Insurance Corporation, Inc., redeemed the aforesaid properties from In its Answer to the Complaint, the Appellant averred that the interests
the Appellant by paying to the latter the amount of P389,289.41 inclusive of interest computed charged by it on Appellees loan accounts and that the said loan contracts and
at 17% per annum. The Appellant and FGU Insurance Corp., Inc., executed, on May 27, 1980, a mortgages were lawful. The Appellant further averred that the Appellees
"Deed of Redemption" (pages 126-129, Records). action had already prescribed.

On September 2, 1985, the Appellees filed a complaint in the Court a quo for the "Annulment of In the interim, the Supreme Court promulgated its Decision in the precedent -
the Loan Contracts, Foreclose Sale with Prohibition and Injunction, Etc." entitled "Calvin setting case of "Banco Filipino Savings and Mortgage Bank vs. Hon. Miguel
Arcilla, et al. vs. Banco Filipino Savings and Mortgage Bank, et al." (pages 1-38, Records). Navarro, et al., 152 SCRA 346" where it declared that Central Bank Circular
No. 494 was not the "law" envisaged in the mortgage deeds of borrowers of
The Appellees averred, in their complaint, inter alia, that the loan contracts and mortgages the Bank; that the escalation clause incorporated in said deeds giving
between the Appellees and the Appellant were null and void because: (a) the interests, charges, authority to the Appellant to increase the rate of interests without the
etc., were deducted in advance from the face value of the "Promissory Notes" executed by the corresponding deescalation clause should not be given effect because of its
Appellees; and (b) the rate of interests charged by the Appellant were usurious. The Appellees one-sidedness in favor of the Appellant; that the aforesaid Central Bank
prayed that judgment be rendered in their favor as follows: Circular did not apply to loans secured by real estate mortgages, and that,
therefore, the Appellant cannot rely said Circular as authority for it to
unilaterally increase the rate of interests on loans secured by Real Estate
"x x x

WHEREFORE, it is respectfully prayed

In the meantime, the FGU Insurance Corp., Inc., filed a "Motion for
Substitution" with the Regional Trial Court, in LRC Case No. Pq-7757-P
a) Pending hearing on the prayer for the issuance of the Writ of Preliminary praying that it be substituted as the Petitioner in said case (pages 354-356,
Injunction, a restraining order be immediately issued against the defendants Records). The Appellees were served with a copy of said motion and filed
or anyone acting in their behalf from enforcing the writ of possession issued their Opposition thereto. However, on November 10, 1987, the Regional
against the plaintiffs; Trial Court rendered a Decision granting the motion of FGU Insurance
Company (page 369, Records)
b) After notice and hearing, a writ of preliminary injunction be issued against
the defendants, particularly defendants FGU Insurance Corporation and the On December 3, 1987, the Appellees filed a Motion, with the Court a quo,
City Sheriff of Pasay City, MM, or any of his deputies or anyone acting in for leave to file an "Amended Complaint" to implead FGU Insurance
their behalf from enforcing the writ of possession; Corporation as party defendant (pages 83-129, Records). The Court granted
said motion and admitted Appellees Amended Complaint.
c) After trial
After the requisite pre-trial, the Court a quo issued a Pre-Trial Order which
1) To make the injunction permanent; defined, inter alia, Appellees action against the Appellant, and the latters
defenses, to wit:
2) Declare the loan contracts null and void;
"x x x
3) Declare the extrajudicial foreclosure null and void;
On the part of the defendants Banco Filipino Savings to simplify
4) Ordering the defendants to pay the plaintiffs the sums of the case, it seeks to declare as null and void plaintiffs loan contract
P100,000.00 as moral damages; P50,000.00 as attorney fees; and, with Banco Filipino obtained in May 1974, on the ground that the
costs of suit. interest agreed in the contract was usurious. Plaintiffs also seek to
declare as null and void the foreclosure of their mortgage by Banco
Filipino on the ground that the loan with the said mortgagee
PLAINTIFFS further pray for such other reliefs and remedies just foreclosure maybe validly done.
and equitable in the premises." (pages 88-89, Records)
DEFENSES affidavit to said Opposition. On March 26, 1993, the Court a
quo promulgated a Decision, the decretal portion of which reads as follows:
1. Prescription
WHEREFORE, premises considered, judgment is hereby rendered
2. Laches in favor of the plaintiffs and against defendant Banco Filipino
ordering defendant Banco Filipino to pay spouses Calvin S. Arcilla
and Elsa B. Arcilla the sum of P126,139.00 with interest thereon at
3. Estoppel" (page 496, Records)
12% per annum reckoned from the filing of the complaint.

In the meantime, the Appellees and FGU Insurance Corporation entered into SO ORDERED. (pages 584-585, Records)"[2]
and forged a "Compromise Agreement." The Court a quo promulgated a
Decision, dated April 3, 1991, based on said "Compromise Agreement."
Under the "Compromise Agreement", the Appellees bound and obliged Petitioner appealed to the Court of Appeals, which affirmed the decision of the RTC the
themselves, jointly and severally, to pay to FGU Insurance Corporation the dispositive portion of which reads:
amount of P1,964,117.00 in three (3) equal installments and that:
"IN THE LIGHT OF ALL THE FOREGOING, the assailed Decision is
"x x x AFFIRMED. Appellants appeal is DISMISSED. With costs against the
6. Upon faithful compliance by plaintiffs Calvin S. Arcilla and Elsa
B. Arcilla with their Agreement, defendant FGU Insurance SO ORDERED."[3]
Corporation shall renounce in their favor all its rights, interests and
claims to the four (4) parcels of land mentioned in paragraph No. 4 Their Motion for Reconsideration[4] was denied hence this petition where the petitioner assigns
of this Compromise Agreement, together with all the improvements the following errors:
thereon, and plaintiffs Calvin S. Arcilla and Elsa B. Arcilla shall be
subrogated to all such rights, interests and claims. In addition, "I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT
defendant FGU Insurance Corporation shall execute in favor of HELD THAT THE CAUSE OF ACTION OF THE PRIVATE
plaintiffs Calvin S. Arcilla and Elsa B. Arcilla a deed of RESPONDENTS ACCRUED ON OCTOBER 30, 1978, AND
cancellation of the real estate mortgage constituted in its favor on THEREFORE THE FILING OF THEIR COMPLAINT FOR
the above-mentioned four (4) parcels of land, together with all the ANNULMENT OF THEIR LOAN CONTRACTS WITH THE
improvements thereon. All documentary stamps and expenses for PETITIONER IN 1985 WAS NOT YET BARRED BY
registration of the said deed of cancellation of mortgage shall be for PRESCRIPTION.
the account of plaintiffs Calvin S. Arcilla and Elsa B. Arcilla.
7. Subject to the provisions of paragraph No. 4 of this Compromise HELD THAT THE MATERIAL ALLEGATIONS OF THE PRIVATE
Agreement, the execution of this Compromise Agreement shall be RESPONDENTS COMPLAINT WERE SUFFICIENT TO WARRANT
without prejudice to the prosecution of the claims of plaintiffs THE RELIEFS GRANTED TO THEM BY THE LOWER COURT,
Calvin S. Arcilla and Elsa B. Arcilla. (pages 543-544, Records) PATICULARLY THE REFUND OF P126,139.00 REPRESENTING
Thereafter, the Appellees and the Appellant agreed, upon the prodding of the
Court a quo, that the only issue to be resolved by the Court a quo was, III. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
whether or not the Appellees were entitled to the refund, under the Decision THAT THE PRIVATE RESPONDENTS WERE ENTITLED TO THE
of the Supreme Court in "Banco Filipino Savings and Mortgage Bank vs. SAID REFUND OF P126,139.00 CLAIMED BY THEM."[5]
Hon. Miguel Navarro, et al.," supra. On November 8, 1991, the Appellees
filed a "Motion for Summary Judgment" appending thereto, inter alia, the
The petitioner maintains that the complaint filed by herein private respondents was an action for
Affidavit of Appellee Calvin S. Arcilla and the appendages thereof (pages
Annulment of Loan Contracts, foreclosure sale with prohibition and injunction. It is contended
550-555, Records). Appellant filed its Opposition but did not append any
that these causes of action accrued on the date of the execution of the promissory note and deed
of mortgage on January 15, 1975 and not October 30, 1978 as found by the Court of Appeals. "It is the legal possibility of bringing the action that determines the starting
Thus, private respondents cause of action has already prescribed inasmuch as the case was filed point for the computation of the period of prescription (Constancia C.
on September 2, 1985 or more than ten years thereafter. Petitioner further contends that private Telentino vs. Court of Appeals, et al., 162 SCRA 66). In fine, the ten-year
respondents cannot rely on the ruling in the case of Banco Filipino Savings & Mortgage Bank prescriptive period is to be reckoned from the accrual of Appellees right of
vs. Navarro[6] considering that they were not parties to said case. Petitioner also maintains that action, not necessarily on the very date of the execution of the contracts
the order of the lower court, which was affirmed by the Court of Appeals ordering the petitioner subject of the action (Naga Telepone Co. Inc. vs. Court of Appeals, et al.,
to refund the excess interest paid by private respondents in the amount of P126,318.00 was 230 SCRA 351). A partys right of action accrues only when the confluence
without any legal basis since private respondents never raised the issue of interest nor prayed for of the following elements is established:
any relief with respect thereto. Moreover, the private respondents never paid said amount to the
petitioner. While the amount was included in the bid price of the bank when it bought the "xxx: a) a right in favor of the plaintiff by whatever means and
mortgaged properties during the public auction, said bid price did not prejudice the private under whatever law it arises or is created; b) an obligation on the
respondents because when the private respondents repurchased the properties, the amount they part of defendant to respect such right; and c) an act or omission on
paid was different and independent of the redemption price of the bank. Besides, the agreement the part of such defendant violative of the right of the plaintiff
between the private respondents and FGU Insurance Corporation was one of sale and not (Cole vs. Vda. de Gregorio, 116 SCRA 670 [1982]; Mathay vs.
redemption. Thus, any amount paid by the private respondents to FGU was voluntarily entered Consolidated Bank & Trust Co., 58 SCRA 559 [1974]; Vda. de
into by them and was not a consequence of the foreclosure of the mortgage properties. Enriquez vs. Dela Cruz, 54 SCRA 1 [1973]. It is only when the last
element occurs or takes place that it can be said in law that a cause
Conversely, private respondents allege that their action has not prescribed considering that of action has arisen (Cole vs. Vda. De Gregorio, supra)" (Maria U.
prescription begins to run from the day the action may be brought; the date their right of action Espaol vs. Chairman, etc., et al.,, 137 SCRA 314, page 318)
accrued. It is their contention that the period of prescription of their action should commence to
run from October 30, 1978 when the petitioner unilaterally increased the rate of interest on More, the aggrieved must have either actual or presumptive knowledge of the
private respondents loan to 17% per annum. Thus, when private respondents filed their action violation, by the guilty party of his rights either by an act or omission. The
against the petitioner on September 2, 1985 or almost eight years thereafter, their action had not question that now comes to the fore is when the Appellees became precisely
yet prescribed. Moreover, private respondents aver that they are entitled to the refund inasmuch aware of the unilateral increase, by the Appellant, of the rate of interest on
as the escalation clause incorporated in the loan contracts do not have a corresponding de- their loan account to 17% per annum. As can be ascertained from the records,
escalation clause and is therefore illegal. the Appellees discovered or should have discovered, for the first time, the
unilateral increase by the Appellant of the rate of interest to 17% per annum
The appeal is unmeritorious. when they received the "Statement of Account" of the Appellant as of
October 30, 1978. Hence, it was only then that the prescriptive period for the
There are only two issues, which must be resolved in the present appeal. First, has the action of Appellees to institute their action in the Court a quo commenced. Since the
the private respondents prescribed; and second, are the respondents entitled to the refund of the Appellees filed their complaint in the Court a quo on September 2, 1985, the
alleged interest overpayments. same was seasonably filed within the ten-year prescriptive period."[10]

Petitioners claim that the action of the private respondents has prescribed is bereft of merit. Anent the second issue as to whether the respondents are entitled to recover the alleged
Under Article 1150 of the Civil Code, the time for prescription of all kinds of actions, when overpayments of interest, we find that they are despite the absence of any prayer therefor. This
there is no special provision which ordains otherwise, shall be counted from the day they may Court has ruled that it is the material allegations of fact in the complaint, not the legal
be brought. Thus, the period of prescription of any cause of action is reckoned only from the conclusion made therein or the prayer that determines the relief to which the plaintiff is
date the cause of action accrued.[7] And a cause of action arises when that which should have entitled.[11] It is the allegations of the pleading which determine the nature of the action and the
been done is not done, or that which should not have been done is done. [8] The period should not Court shall grant relief warranted by the allegations and the proof even if no such relief is
be made to retroact to the date of the execution of the contract on January 15, 1975 as claimed prayed for.[12] Thus, even if the complaint seeks the declaration of nullity of the contract, the
by the petitioner for at that time, there would be no way for the respondents to know of the Court of Appeals correctly ruled that the factual allegations contained therein ultimately seek
violation of their rights.[9] The Court of Appeals therefore correctly found that respondents the return of the excess interests paid.
cause of action accrued on October 30, 1978, the date they received the statement of account
showing the increased rate of interest, for it was only from that moment that they discovered the The amended complaint[13] of herein private respondents specifically allege that the contracts of
petitioners unilateral increase thereof. We quote with approval the pertinent portions of the loan entered into by them and the petitioner were contrary to and signed in violation of the
Court of Appeals decision as follows:
Usury Law[14] and consequentially pray that said contracts be declared null and void. The The escalation clause in the loan contracts reads as follows:
amended complaint reads:
"xxx g) The rate of interest charged on the obligation secured by this
"6. The aforementioned loans granted by defendant Banco Filipino to the mortgage, as well as the interest on the amount which may have been
plaintiffs as stated on the face of the promissory note and real estate advanced by the Mortgagee in accordance with paragraph (b) and (d) hereof,
mortgage (Annexes "B" to "D", inclusive) were not actually received by the shall be subject, during the terms of this contract, to such an increase, within
plaintiffs because interests, charges, etc. were deducted in advance from the the limits allowed by law, as the Board of Directors of the Mortgagee may
face value of the loans not in accordance with the contracts; prescribe for its debtors; xxx" (emphasis supplied)[18]

7. Even the loan contracts (Annexes "B" to "D", inclusive) required by In Banco Filipino Savings & Mortgage Bank vs. Navarro, [19] which involved a similar
defendant Banco Filipino to be signed by the plaintiffs were contrary to and escalation clause[20], we ruled that Central Bank Circular 494, although it has the force and
in violation of the then Usury Law, as amended; effect of law, is not a law and is not the law contemplated by the parties which authorizes the
petitioner to unilaterally raise the interest rate of the loan.[21] Consequently, the reliance by the
8. Assuming arguendo that the loan contracts between plaintiffs and petitioner on Central Bank Circular 494 to unilaterally raise the interest rates on the loan in
defendant Banco Filipino are valid, the extra-judicial foreclosure of the question was without any legal basis.
properties of the plaintiffs on May 24, 1979 was null and void for having
been conducted in clear violation of the law (Act 3135), namely: a) lack of Petitioners argument that the Banco Filipino case cannot be applied to the present case since the
roper notice to the plaintiffs; b) lack of proper publication and posting as respondents were not intervenors therein is flawed. Only the judgment in said case cannot bind
required by law; c) the alleged sale was conducted at the place other than that the respondents as they were not parties thereto, however, the doctrine enunciated therein is a
prescribed by law, among others; judicial decision and forms part of the legal system of the land. [22] It forms a precedent, which
must be adhered to under the doctrine of stare decisis.[23] Thus, even if the respondents were not
9. On May 27, 1990, defendant Banco Filipino purportedly executed in favor parties to the above-mentioned case, the doctrine enunciated therein may be applied to the
of defendant FGU Insurance Corporation a Deed of Redemption over the present case.
foreclosed properties of the plaintiffs, again, without notice to the latter, as
evidenced by the said Deed of Redemption, copy of which is hereto attached WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 45891 is
and marked as Annex "F". AFFIRMED and the instant petition is hereby DENIED.

10. The Deed of Redemption (Annex "F") is clearly null and void for having No pronouncement as to costs.
been executed in violation of Rule 39, Rules of Court, and other related
provisions of the Rules of Court."[15] SO ORDERED.

The loan contracts with real estate mortgage entered into by and between the petitioner and
respondent stated that the petitioner may increase the interest on said loans, within the limits
allowed by law, as petitioners Board of Directors may prescribe for its borrowers. At the time
the contracts were entered into, said escalation clause was valid.[16] It was only pursuant to P.D.
No. 1684 which became effective March 17, 1980 wherein to be valid, escalation clauses should
provide: 1.) that there can be an increase in interest if increased by law or by the Monetary
Board; and 2.) in order for such stipulation to be valid, it must include a provision for the
reduction of the stipulated interest in the event that the maximum rate of interest is reduced by
law or by the Monetary Board.[17]

Given the validity of the escalation clause, could the petitioner increase the stipulated interest
pursuant to the Central Bank Circular 494 from 12% to 17%.

We rule that it may not.

General Rule if appeal available, no certiorari 4) Spouses Salvador Lot No. 9, Block 17 March 1988 6
and Engracia No. 2, covered by
Fajardo v Francisco Gianan TCT No. T-66273

On the other hand, private respondent Fernando Realty and Development Corporation
(hereinafter FERNANDO) as SELLER, and petitioner Emily Yu Fajardo as BUYER signed on
22 February 1985 a CONTRACT TO SELL 7 under which for the considerations therein stated,
FERNANDO agreed to sell to Fajardo Lot No. 10, Block No. 3, also located at the Calamba
Central Compound Subdivision, 8 and upon full payment of the agreed price and interest
This is a special civil action for certiorari which seeks to annul the 4 September 1991 Order of thereon, to execute a deed of absolute sale in favor of Fajardo.
the respondent Judge dismissing the complaints of the petitioners for lack of jurisdiction, and
the 20 September 1991 Order denying the petitioners' motion for reconsideration. The
It appears, however, that on 18 October 1986, the JAREÑOS sold the aforesaid lots subject of
respondent Judge had ruled that jurisdiction over the cases pertained to the Housing and Land
the different contracts to sell to private respondent Ruben Habacon (hereinafter HABACON)
Use Regulatory Board (HLRB) and not the Regional Trial Court. The petitioners asseverate that
under separate documents denominated as "Kasulatan ng Bilihan." 9 On 18 February 1991,
the RTC has jurisdiction over the cases.
HABACON caused the cancellation of the certificates of title covering the said lots and the
issuance of new ones in his name. 10
The pleadings of the parties disclose the following facts:
When the petitioners learned of these, they filed on 21 June 1991 separate complaints with the
Private respondents Isabelo Jareño and Purita Jareño (hereinafter JAREÑOS) are the owners court a quo for annulment of the sales in favor of HABACON and of the new certificates of title
and developers of a subdivision known as the Calamba Central Compound. On various dates, issued to him, for reinstatement of the certificates of title cancelled by those issued to
they as SELLERS, and the petitioners as BUYERS signed separate contracts, each designated as HABACON, and for accounting and damages. They prayed in their complaints for a judgment
a CONTRACT TO SELL, under which, for the considerations therein stated, they bound (a) declaring the "Kasulatan na Bilihan" executed in favor of HABACON as an equitable
themselves to sell to the petitioners the lots subject thereof, and after the latter shall have paid mortgage; (b) annulling the new certificates of title issued to HABACON and reinstating those
the purchase price and interest, to execute in favor of the petitioners the corresponding deeds of previously cancelled by the new certificates of title; (c) ordering HABACON and the
transfer of title, free from any lien or encumbrance except those expressly provided for in the JAREÑOS to determine the unpaid balance of the purchase price under the Contracts to Sell, to
Contract to Sell. The Contracts to Sell are herein described: accept payments thereof, and to execute the deeds of absolute sale in favor of the petitioners;
and (e) ordering the defendants to pay actual and exemplary damages and attorney's fees
Petitioners-Buyers Lot subject Date of execution of specified therein, as well as the costs.
of contract to sell contract to sell
The complaints were docketed as Civil Cases Nos. 1683-91-C, 11 1684-91-C, 12 1685-91-
1) Spouses Julian a) Lot No. 9, Block C, 13 1686-91-C, 14 and 1688-91-C, 15 and were assigned to Branch 37 of the Regional Trial
and Teresita No. 3, covered by Court of Calamba.
Cuizon TCT No. T-66231 25 January 19791
On 9 August 1991, HABACON filed a motion to dismiss the complaints on the ground that the
b) Lot No. 11, Block plaintiffs (petitioners herein) have no legal capacity to sue because they were not parties to the
No. 1.2 24 April 19793 "BILIHAN." 16

2) Teresita Rivera Lot No. 12, BLock 5 December 1985 4 In its Order of 12 August 1991, 17 the trial court, through the respondent Judge, directed the
and Ricardo No. 3, covered by plaintiffs to show cause why their complaints should not be dismissed for lack of jurisdiction
Villanueva TCT No. 7-62229 pursuant to P.D. No. 957 (Subdivision and Condominium Buyers' Protective Decree), as
amended by P.D. No. 1344, and the doctrine laid down by this Court in Solid Homes, Inc. vs.
3) Spouses Rene and Lot No. 14, Block 17 December 1985 5 Payawal. 18
Beverly Rodelas No. 3, covered by
TCT No. T-66231 In their compliance 19 with the show cause order, the petitioners maintained that it is the trial
court, and not the HLRB, which has jurisdiction over the complaint. They contend that Solid
Homes, Inc. vs. Payawal is inapplicable because in their cases: (1) the title of the developers, the wrong, is a
JAREÑOS, had already passed to a third person, HABACON; (2) their action is for the final order, and hence a proper subject of appeal, not certiorari. 30 The remedies of appeal
annulment of the title of a third person; (3) HABACON is not a developer; and (4) Section and certiorari are mutually exclusive and not alternative or
19(1) of B.P. Blg. 129 vests upon the Regional Trial Court the jurisdiction to hear and decide all successive. 31 Accordingly, although the special civil action of certiorari is not proper when an
civil actions which involve title to or possession of any real property or any interest therein, ordinary appeal is available, it may be granted where it is shown that the appeal would be
except actions for unlawful detainer and forcible entry. inadequate, slow, insufficient, and will not promptly relieve a party from the injurious effects of
the order complained of, or where appeal is inadequate and
In its Order of 4 September 1991, 20 the trial court dismissed the aforesaid civil cases for lack of ineffectual. 32 Nevertheless, certiorari cannot be a substitute for the lost or lapsed remedy of
jurisdiction. It held: appeal, 33 where such loss is occasioned by the petitioner's own neglect or error in the choice of
remedies. 34
The Court does not agree with the plaintiffs. PD No. 957 as amended by P.D.
No. 1344 gives the National Housing Authority now the Human Settlement The petitioners admit that they received a copy of the trial court's order dismissing their
Regulatory Commission (HSRC) 21 inclusive [sic] jurisdiction to hear and, complaints on 4 October 1991. 35 The instant petition was filed on 24 October 1991 or beyond
decide cases of "unsound real estate business practices" (Sec. 1(a), P.D. the 15-day period to appeal from the order. The petitioners have not even attempted to explain
1344). This authority is broad enough to include all kinds of real estate why they were unable to appeal from the challenged order within the reglementary period. This
transactions involving subdivision lot or condominium, wherein either the civil action then was resorted to as a substitute for the lost or lapsed remedy of appeal, and since
subdivision lot or condominium buyer, project owner, developer, dealer, none of the exceptions to the rigid rule barring substitution of remedies was alleged to exist in
broker or salesman is involved. this petition, or even indicated by the pleadings, this petition must be dismissed.

The petitioners filed a motion for the reconsideration of the order, but the trial court denied this Even if we were to accept this petition in the broader interest of justice, it must still fail for the
in its Order of 20 September 1991. 22 It ruled that while HABACON may not be the developer, trial court correctly ruled that it has no jurisdiction over the subject matter in Civil Cases Nos.
the JAREÑOS are, and by selling the same lots to HABACON after they were previously sold 1683-91-C, 1684-91-C, 1685-91-C, 1686- 91-C, and 1688-91-C. Jurisdiction thereon was
to different parties, the JAREÑOS may have committed an "unsound business practice." originally vested in the National Housing Authority (NHA) under P.D. No. 957, as amended by
Moreover, it ruled that Section 19(2) of B.P. Blg. 129, being a general law, should yield to P.D. P.D. No. 1344. Under E.O. No. 648 of 7 February 1981, this jurisdiction was transferred to the
No. 957, as amended by P.D. No. 1344, which is a special law. Human Settlements Regulatory Commission (HSRC) which, pursuant to E.O. No. 90 of 17
December 1986, was renamed as the Housing and Land Use Regulatory Board.
On 24 December 1991, the petitioners filed the instant special civil action for certiorari to annul
the 4 September 1991 and 20 September 1991 Orders of the trial court on the ground that the We agree with the trial court that the complaints do involve unsound real estate business
judge acted with grave abuse of discretion amounting to lack of jurisdiction in dismissing their practices on the part of the owners and developers of the subdivision who entered into Contracts
complaints and that they have no other plain, speedy, and adequate remedy in the ordinary to Sell with the petitioners. By virtue of Section 1 of P.D. No. 1344 and our decision in Solid
course of law. The petitioners maintain that the trial court has jurisdiction over their complaints. Homes, Inc. vs. Payawal, the NHA, now HLRB, has the exclusive jurisdiction to hear and
decide the matter. In addition to involving unsound real estate business practices, the complaints
also involve specific performance of the contractual and statutory obligations of the owners or
In the Resolution of 18 November 1991, 23 we required the respondents to comment on the
developers of the subdivision. The claims for annulment of the "Kasulatan ng Bilihan" in favor
petition. Private respondent HABACON filed his comment and opposition on 27 August of HABACON and the certificates of title issued to him and for damages are merely incidental.
1992 24 while public respondent Cesar S. Reyes filed his comment on 24 August 1993. 25 Both
respondents rely on our pronouncement in Solid Homes, Inc. vs. Payawal and echo the ruling of
the trial court in the questioned orders. The copy of the resolution sent to the JAREÑOS was Section 1 of P.D. No. 1344, promulgated on 2 April 1978, provides as follows:
returned unserved and in the Resolution of 21 July 1993, we considered it as served on
them. 26 As required, the petitioners filed a reply to the comment. 27 On 8 November 1993, we Sec. 1. In the exercise of its functions to regulate the real estate trade and
resolved to give due course to the petition and required the parties to submit their memoranda, business and in addition to its powers provided for in Presidential Decree No.
which the petitioners complied with on 29 December 1993 28 and the private respondents, on 28 957, the National Housing Authority shall have exclusive jurisdiction to hear
March 1994. 29 and decide cases of the following nature:

The core issue in this case is whether the trial court gravely abused its discretion in dismissing, A. Unsound real estate business practices;
for lack of jurisdiction, the complaints filed by the petitioners. Before resolving this issue, a
procedural matter must first be considered. Generally, an order of dismissal, whether right or
B. Claims involving refund and any is an essentially judicial power exercisable ordinarily only by the courts of
other claims filed by subdivision lot or justice. This departure from the traditional allocation of governmental
condominium unit buyer against the powers is justified by expediency, or the need of the government to respond
project owner, developer, dealer, swiftly and competently to the pressing problems of the modern world.
broker or salesman; and
Accordingly, the trial court committed no grave abuse of discretion in dismissing the complaints
C. Cases involving specific of the petitioners.
performance of contractual and
statutory obligations filed by buyers of WHEREFORE, the due course Resolution of 8 November 1993 is RECALLED and, for lack of
subdivision lots or condominium units merit, the instant petition is DISMISSED with costs against the petitioners.
against the owner, developer, dealer,
broker or salesman. (Italics supplied)

Conformably with this section, we had earlier upheld the jurisdiction of the NHA to determine
the rights of the parties under a contract to sell a subdivision lot in Antipolo Reality Corp. vs.
National Housing Authority 36 and struck down the exercise of jurisdiction by the Regional Trial
Court over a case instituted by a lot buyer for delivery of title against the subdivision owner
in Solid Homes, Inc. vs. Payawal. We also sustained the jurisdiction of the HLRB over
complaints for (a) the refund of reservation fees for the purchase of a subdivision lot, 37 (b)
specific performance filed by a lot buyer against the seller of a subdivision lot, 38 (c) annulment
of the mortgage constituted by the project owner without the buyer's consent, the mortgage
foreclosure sale, and the condominium certificate of title issued to the highest bidder at the said
foreclosure sale, 39 and (d) collection of the balance of the unpaid purchase price of a
subdivision lot filed by the developer of a subdivision against the lot
buyer. 40

In CT Torres Enterprises, Inc. vs. Hibionada, 41 we further declared that incidental claims for
damages may be resolved by the HLRB. Thus:

It is clear from Section 1(c) of the above quoted PD No. 1344 that the
complaint for specific performance with damages filed by Diongon with the
Regional Trial Court of Negros Occidental comes under the jurisdiction of
the Housing and Land Use Regulatory Board. Diongon is a buyer of a
subdivision lot seeking specific performance of the seller's obligation to
deliver to him the corresponding certificate of title.

The argument that only courts of justice can adjudicate claims resoluble
under the provisions of the Civil Code is out of step with the
fast-changing times. There are hundreds of administrative bodies now
performing this function by virtue of a valid authorization from the
legislature. This quasi-judicial function, as it is called, is exercised by them
as an incident of the principal power entrusted to them of regulating certain
activities falling under their particular expertise.

In the Solid Homes case for example the Court affirmed the competence of
the Housing and Land use Regulatory Board to award damages although this
May be availed of even when appeal is available or period to appeal has expired Cancellation of Notice of Lis Pendens. The motion was granted in an order dated March 27,
1982, which reads:
Luis v CA
Acting on the "Motion to Dismiss and for, Cancellation of Notices
of Lis Pendens" filed by Atty. Juan B. Bañez, Jr., counsel for the defendant,
and it appearing that despite the order of revival granted by the Court in its
Order of October 13, 1981, plaintiff has not done anything in this case and as
a matter of fact, the lawyer who filed the motion for revival, Atty. Eli
Natividad, withdrew as counsel for the plaintiff with the conformity of the
This is a petition for review on certiorari under Rule 46 of the Revised Rules of Court, to annul plaintiff, for lack of interest, this case is hereby DISMISSED and
the decision of the Court of Appeals (CA-G.R. CV. No. 09842), which set aside the order of the notices of lis pendens on defendants' Transfer Certificate of Title Nos. T-
dismissal on the ground of res judicata of Civil Case No. 6779-M of the Regional Trial Court, 30-384(M) and T-30-386(M) arising from this case are hereby ordered
Branch XVI, Malolos, Bulacan. CANCELLED (Rollo, p. 48).

Sometime in 1980, respondent Rodillo commenced with the Court of First Instance of Respondent Rodillo filed a Motion for Reconsideration, which was denied on April 29, 1982.
Valenzuela, Bulacan, Civil Case No. 1120-V-80 (entitled "Maria Clara Rodillo versus Spouses
Luis Ilasco, Jr. and Rosario dela Cruz") to declare null and void the donation given to No appeal was taken from the Orders dated March 27, 1982 and
petitioners Luis Ilasco and Rosario dela Cruz by Cipriano Rodillo and Victoria dela Cruz and April 29, 1982. Instead, on March 9, 1983, respondent Rodillo commenced in the Regional Trial
the reconveyance of the one-half portion of the same to respondent Rodillo.
Court, Bulacan, Civil Case No. 6779-M (entitled: "Maria Clara Rodillo versus Spouses Luis
Ilasco, Jr. and Rosario dela Cruz and Spouses Eusebio Mutya and Estelita Rodillo).
In her complaint, respondent Rodillo alleged: (a) Her widowed grandmother, Asuncion Laurel,
who died on June 23, 1943, had two sons, Nicolas and Cipriano Rodillo. Nicolas predeceased
Petitioners Ilasco and dela Cruz moved for the dismissal of the case against them on the ground
Asuncion, having died on December 25, 1942. Nicolas' sole heir was respondent Rodillo, his of res judicata. In granting the motion, the trial court reasoned out:
(b) Upon the death of Asuncion, her heirs, Cipriano and respondent Rodillo succeeded to the
entire estate as co-heirs, the latter inheriting by right of representation; (c) Inasmuch as . . . It was shown that Civil Case No. 1120-V-80 was filed at the then Court
respondent Rodillo was a minor at the time of the death of Asuncion, Cipriano acted as her of First Instance of Bulacan (Valenzuela) by plaintiff Maria Clara Rodillo
trustee who administered her interests in the estate; (d) Cipriano executed a document entitled against movants in this instant case. Eusebio Mutya and Estelita Rodillo were
"Paglilipat sa Sarili ng Pag-aari ng Namatay," falsely stating therein that he was the only heir of however added as defendants in this instant case. Although the civil case
Asuncion and adjudicating to himself the entire estate left by the deceased; and (e) On June 16, filed at Valenzuela was for "Action to Declare the Donation Null and Void"
1978, Cipriano and his wife, Victoria dela Cruz, donated the other half portion of the land to and this instant case is for "Annulment of Document and Reconveyance," the
petitioner spouses, Luis Ilasco and Rosario dela Cruz. prayers in both cases are identical: to declare as nullity (sic) the donation
executed by Sps. Cipriano Rodillo and Victoria dela Cruz in favor of the
movants and the reconveyance of one-half portion of the same to the
Respondent Rodillo prayed that the document entitled "Paglilipat sa Sarili ng Pag-aari ng plaintiff. The Civil Case filed with the Valenzuela Court was ordered
Namatay" and the donation made in favor of petitioner Luis Ilasco and Rosario dela Cruz be terminated in the order of Judge Eduardo Caguioa dated March 27, 1982 and
declared null and void; and that the donated property be reconveyed to her. the order of dismissal is now final (Rollo, p. 27).

Finding difficulty in serving the summonses on petitioners Ilasco and dela Cruz, who were
The Court of Appeals reversed the decision of the trial court and reinstated the complaint,
residents of the United States, respondent Rodillo filed a Motion for Leave to Archive Case
holding that while all the elements of res judicata were present such principle was inapplicable
dated August 6, 1980. The Court of First Instance of Valenzuela, Bulacan, issued an order dated
to the case considering the "environmental circumstances" thereof. By "environmental
August 8, 1980 approving the motion.
circumstances," the Court of Appeals meant the utter dependence of respondent Rodillo on her
counsel and the failure to prosecute the case due to the failure to summon the defendants, who
On October 2, 1981, respondent Rodillo filed an Ex-Parte Motion to Revive Case which was were residing abroad.
granted by the trial court on October 13, 1981. As no further action was taken by respondent
Maria Clara Rodillo, petitioners Ilasco and dela Cruz filed a Motion to Dismiss and for In pertinent part, the decision of the Court of Appeals states:
xxx xxx xxx 2. The court rendering the judgment must have jurisdiction over the subject
Res judicata is to be disregarded if its application would involve the sacrifice
of justice to technicality (Republic, et al. v. Judge de Los Angeles, G.R. No. 3. The former judgment is a judgment on the merits;
30240, 23 March 88). While procedurally speaking since the dismissal was
unqualified, it had the effect of an adjudication on the merits, given the 4. There is between the first and second actions identity of the parties, subject
equities of the case it would be more in keeping with substantial justice if the matter and of causes of action (Ipekdjian Merchandising Co. Inc. v. Court of
controversy between the parties were resolved on the merits rather than on a Tax Appeals, 9 SCRA 72 [1963]; Abes v. Rodil, 17 SCRA 822 [1966] ).
procedural technicality in light of the express mandate of the rules that they
be liberally construed in order to promote their object and to assist the parties
The judgment in Civil Case No. 1120-V-80 is a final judgment, since plaintiff failed to appeal
in obtaining just, speedy and inexpensive determination of every action and
therefrom within the reglementary period.
proceeding. (Olivares v. Gonzales, et al., G.R. No. 34500, 18 March 88).

The trial court which rendered the judgment had jurisdiction over the subject matter.
The dismissal of the actions is based on sound judicial discretion and such
discretion must be exercised wisely and prudently with a view to substantial
justice (supra). While the first case was pending for almost two years, the The dismissal of Civil Case No. 1120-V-80 on the ground of lack of interest or failure to
inability to prosecute was not really due to an unwillingness of the plaintiff to prosecute on the part of the plaintiff has the effect of judgment on the merits (Revised Rules of
proceed with the case but the difficulty in serving defendants with summons Court, Rule 17, Sec. 3). It has the force of res judicata against the revival of substantially the
for being non-residents. While this could not have been a legal obstacle to its same action originally filed in another court (Insular Veneer, Inc. v. Plan, 73 SCRA 1 [1976];
prosecution given the nature of the case, as aptly stated in Tandoc v. De La Cruz v. Paras, 69 SCRA 556 [1976] ).
Tensuan, 93 SCRA 880, "it is not fair to visit this error of counsel on the
poor petitioner-litigant (who depended only on her counsel's advice and The trial court and the Court of Appeals agreed that the prayers in both cases are identical.
judgment) and inflict upon her just suit the capital penalty of dismissal." Rule There was no showing that the additional defendants could not have been impleaded in the first
17, Section 3 permits such dismissal which has "the effect of an adjudication case or that their interests in the subject of the case were derived from parties other than the
on the merits" only if plaintiff "fails to prosecute (her) action for an original defendants, there was, therefore, only a change in the form and name of the action and
unreasonable length of time" and under the environmental circumstances of nothing less.
this case, as duly explained by counsel, petitioner could not be adjudged
guilty of failure to prosecute for an unreasonable length of time (p. 883, A party, by varying the form of the action or by bringing forward in a second action additional
supra)(Rollo, p. 29) parties or arguments, cannot escape the effects of the principle of res judicata when the facts
remain the same or at least where such new parties or matter could have been impleaded or
Petitioners assail the decision of the Court of Appeals, assigning the following errors: pleaded in the prior action (Sangalang v. Caparas, 151 SCRA 53 [1987]; Filinvest Credit
Corporation v. Intermediate Appellate Court, 207 SCRA 59 [1992] ).
1) The respondent court erred in not applying the doctrine of res
judicata despite its own finding that all the elements of said doctrine are The Court of Appeals fell into error because of its wrong appreciation of the issue before it. The
present in the instant case; issue was whether the Order dated March 27, 1982 of the Court of First Instance of Valenzuela,
Bulacan in Civil Case No. 1120-V-80 operated as res judicata to Civil Case No. 6779-M. What
2) The respondent court erred in denying the Motion for Reconsideration the Court of Appeals resolved was the question of whether the trial court erred in dismissing
without stating the legal basis therefore in violation of Civil Case No. 1120-V-80 without stating that the dismissal was "without prejudice." Invoking
Sec. 14, Art. VIII of the 1986 Constitution. the rule that justice should not be sacrificed to technicality, the Court of Appeals set aside the
Order of the dismissal dated March 27, 1982 and the Order dated April 27, 1982, denying the
motion for reconsideration in Civil Case No. 1120-V-80.
We agree with petitioners.

Compresent in the case at bench are the elements of res judicata, which are the following: The Court of Appeals would have been correct if the plaintiff (private respondent herein) in
Civil Case No. 1120-V-80 had timely appealed the Order of dismissal dated March 27, 1982
and raised the issue that the trial court had gravely abused its discretion in dismissing the case
1. There must be a final judgment or order; with prejudice in view of the "environmental circumstances" of the case.
Private respondent has only herself to blame for her present predicament. Instead of appealing
from the order of dismissal in Civil Case No. 1120-V-80, she filed another case (Civil Case No.
6779-M) almost one year later.

Before procedural rules can be relaxed to give way to substantive justice, it is implicit that such
liberality be applied in a proper case.

Private respondent is bound by the negligence and mistakes in procedural matters of her counsel
(B.R. Sebastian Enterprises, Inc. v. Court of Appeals, 206 SCRA 28 [1992]; Mobil Oil
Philippines, Inc. v. Court of First Instance, 208 SCRA 523 [1992].

It is a principle of public policy that at the risk of occasional errors, judgments of court should
become final at some definite time fixed by law. The very object of which the courts were
constituted was to put an end to controversies (Vda. de Kilayko v. Tengco, 207 SCRA 600
[1992] ).

WHEREFORE, the decision of the Court of Appeals appealed from is SET ASIDE. A new
judgment is rendered REINSTATING and AFFIRMING the Orders dated March 27, 1982 and
April 29, 1982 of the Regional Trial Court, Branch XVI, Malolos, Bulacan in civil Case No.

When appeal not adequate, or equally beneficial, speedy or adequate primary conditions of such chattel mortgage were that plaintiffs would turn over to defendant
corporation all the logs they may produce from the aforesaid concession the same to be priced
Jaca v Davao Lumber either as export or domestic and their value to be applied by defendant to, and be credited for,
the account of plaintiff's indebtedness, and further that in case of need, plaintiffs may secure, by
way of advances, either cash, foodstuffs, materials or equipment's, under an "open credit
account"; that under the aforementioned "open credit account" relationship between the
plaintiffs and defendant, orders were secured by plaintiffs, by way of advances, from the
FERNANDEZ, J.: defendant, this to be paid by them with plaintiffs' production from their concession, liquidating
those old accounts and keeping all accounts current; that in pursuance to the agreement, as
This is a petition for certiorari with a prayer for a writ of preliminary injunction filed by Urbano aforestated, plaintiff Urbano Jaca executed assignments of letters of credit in favor of the
Jaca and Bonifacio Jaca against the Davao Lumber Company and Honorable Manases Reyes as defendant, in order that the latter may be able to use, as defendant corporation did in fact use,
Judge of the Court of First Instance of Davao seeking the following relief: the said letters of credit for bank negotiations of the former in the exportation of logs; that the
plaintiffs and the defendant had this business relationship, as aforementioned, from 1954 up to
WHEREFORE, petitioners pray — sometime in August, 1963; that during this whole period of time, the plaintiffs had been
faithfully delivering all their log production to the defendant for export or domestic purposes;
that before the filing of this complaint, the plaintiff made repeated demands on the defendant for
1. That a writ of Preliminary Injunction be immediately issued restraining the a formal accounting of their business relationship from 1954 up to August, 1963, but that the
respondent Judge from carrying out or enforcing the Orders (Annexes "Z" defendant failed and refused, and still fails and refuses, to effect such formal accounting,
and "FF") complained of pending the hearing of the merits of the instant asserting that it had no time as yet to examine into all the details of the accounting; that
petition; sometime on October 30, 1963, much to their surprise, plaintiffs received letters of demand
from the defendant in which they were requested to pay their accounts in favor of defendant,
2. After due hearing, that this Honorable Court annuls and sets aside the which according to the latter had long been overdue; (Copies of such letters are hereto attached
complained Orders (Annexes "Z" and "FF"); marked as Annexes "A" and "B", and made integral parts of this complaint) that plaintiffs are no
longer indebted to the defendant, and as a matter of act it is their belief that, if a formal
Petitioners further pray for all other reliefs which are just and equitable in the accounting be made, there would still appear a claim in their favor in the amount of
premises. P250,000.00 more or less, representing the price differentials of logs which they delivered to the
defendant from 1954 up to August, 1963; and that further, there was a deliberate fraud practiced
by the defendant on them, especially in defendant's under grading and/or reclassification of logs
Davao City, Philippines, February 5, 1966. 1
delivered to it by plaintiffs; that further, there were many errors committed in the monthly
statements submitted to the plaintiffs, arising from the fact that there were charges of cash,
In November, 1963, Urbano Jaca and Bonifacio Jaca filed with the Court of First Instance of equipment's, materials and foodstuffs in said statements never ordered and/or received by the
Davao a complaint for Accounting, Return of Price Differentials and Damages against the plaintiffs; and still further that the proceeds of the letter of credit were not fully applied and/or
Davao Lumber Company. The case was docketed as Civil Case No. 4189. credited to the account of plaintiffs; that defendant has up to the present denied the plaintiffs the
benefits of a formal accounting and inasmuch as the invoices, receipts, vouchers, requisition
The complaint alleges that the plaintiff Urbano Jaca has been, and still is, a licensee of a logging slips and other pertinent papers and document of their business transactions are in the
concession located in the City of Davao, and together with his co-plaintiff, Bonifacio Jaca, possession of defendant, it is difficult for plaintiffs to ascertain with accuracy the ledger balance
engaged in the logging business of producing timber and logs for export and/or domestic between the parties, unless a detailed examination of the matter is had; that plaintiffs have
purposes; that the defendant is a business corporation with which plaintiffs had business thereby been constrained to file this case in Court in order to compel defendant to have a formal
dealings covering the sale and/or exportation of their logs; that sometime in 1954, the herein accounting between them, and that it is the desire of plaintiffs that pending the formal hearing of
parties-litigants entered into an agreement whereby plaintiffs may secure, by way of advances, this case, three commissioners, constituting accountants be judicially appointed for the purpose
either cash or materials, foodstuffs, and/or equipment's from the defendant corporation; that the of examining all the books, pertinent papers and documents and all other data in relation with
payment of such account was to be made either in cash and/or by plaintiff's turning over all the their business transaction; that in order to protect their interest and to litigate this case, the
logs that they produce in the aforesaid concession to the defendant, and in the latter case, the plaintiffs were compelled to secure and retain the services of attorneys, and that they have
current prices, either export or domestic, of the logs at the time of their delivery was to be thereby suffered damages in the sum of Twenty Thousand Pesos (P20,000.00) by way of
considered; that while the aforesaid business relationship between the parties was subsisting, attorney's fees. 2
defendant made plaintiff Urbano Jaca execute in its favor a chattel mortgage, a copy of which
instrument. however, plaintiffs were never furnished but that as far as they can recollect the
In December, 1963, the Davao Lumber Company filed its Answer with Affirmative Defenses 3. There are good reasons to authorize an order of execution pending appeal
and Counterclaim. 3 pursuant to Rule 39, Section 2 of the Rules of Court, which provides:

In its counterclaim, the Davao Lumber Company alleged that Plaintiffs Urbano Jaca and SEC. 2. Execution pending appeal. — On motion of the prevailing party with
Bonifacio Jaca are the ones indebted to the defendant in the sum of P756,236.52 and notice to the adverse party the court may, in its discretion, order execution to
P91,651.97, respectively; that on January 24, 1961, the plaintiff Urbano Jaca executed a chattel issue before the expiration of the. time to appeal, upon good reasons to be
mortgage in favor of the defendant to secure the payment of any and all obligations contracted stated in a special order. If a record on appeal is filed thereafter the motion
by him in favor of the defendant covering several chattels valued at P532,000.00; that said and the special order shall be included therein.
obligation of Urbano Jaca totalling P756,236.52 is overdue and unpaid despite repeated formal
demands for settlement thereof made by defendant; that the action brought by the plaintiffs is (a) In this same civil case,, the court issued an Order dated November 17,
purely baseless and malicious for which the plaintiffs should be required to pay defendant 1964 directing the plaintiffs 'to deliver to the receiver all the properties,
damages and attorney's fees amounting to at least P20.000.00. 4 chattels and equipment covered by the Chattel Mortgage, the delivery to be
made within thirty (30) days', but plaintiffs did not, comply with said Order
In June, 1965, the respondent Judge rendered a decision the dispositive portion of which reads: of November 17, 1964.

CONSIDERING THE FOREGOING, judgment is hereby rendered in favor (b) Defendant's counsel filed a 'Motion to Implement Order ordering Urbano
of defendant and against the plaintiff, ordering that: Jaca to deliver Chattels to Receiver' dated July 28, 1965, but up this date,
plaintiffs have not complied with said Order.
1. The complaint for accounting, return of price differentials and damages
filed by plaintiffs Urbano Jaca and Bonifacio Jaca versus defendant Davao (c) That there are various reports from the receiver, one of them dated April
Lumber Company is dismissed, as it is hereby dismissed; 19, 1965, stating that the Receiver has not taken custody of the mortgaged
chattels due to the refusal or inability to mortgagor Urbano Jaca to deliver the
2. Ordering Urbano Jaca to pay defendant the amount of P756,236.52 with same to him.
legal interest from the date of the filing of the counterclaim;
(d) Despite the long lapse of time from the Order of November 17, 1964, the
3. Ordering plaintiff Bonifacio Jaca to pay defendant the amount of court in its Order of September 1, 1965, directed said mortgagor Urbano Jaca
P91,651.00 with legal interest; to comply forthwith with the Order dated November 17, 1964 'fifteen (15)
days upon receipt of this Order', but up to this date there has been consistent
refusal or failure to comply with said order of delivery.
4. Ordering that the chattel mortgage executed by Urbano Jaca in favor of
defendant Exhibit "3", be foreclosed as it is hereby foreclosed;
(2) Another good reason for execution pending appeal (Rule 39, Section 2) is
the fact that plaintiff Urbano Jaca the mortgagor in the deed of chattel
5. Ordering plaintiffs to pay jointly and severally P20,000.00 as attorney's
mortgage dated January 24, 1961, has violated Article 319 of the Revised
fees in favor of defendant.
Penal Code, for he has sold some of the mortgaged properties to third
persons, particularly, a wrecker, to Teodoro M. Alagon of Davao City on
6. With cost against plaintiffs. February 12, 1962 for P10,000.00. A copy of the letter-complaint addressed
by defendant's counsel to the City Fiscal of Davao, dated February 5, 1964 is
SO ORDERED. attached hereto and made an integral part of this Motion as Annex "A".

Given at Davao City, on this 11th day of June, 1965. 5 (3) Moreover, plaintiffs have not only failed to comply with the Order of the
Honorable Court for the delivery of the properties under receivership to the
In September, 1965, the Davao Lumber Company filed a motion for execution pending appeal Receiver (par. 3 of this Motion) and in fact has violated the Chattel Mortgage
on the following grounds: contract (Par. 4 of this Motion); but plaintiffs have no properties or assets
with which to satisfy the judgment of this Honorable Court, which amounts
to principal items of P756,326.52, P91,651.00 and P20,000.00, or a total of 2) the respondent judge acted with grave abuse of discretion equivalent to
P867,887.52. lack of jurisdiction in finding that there exists special or good reasons for
execution pending appeal because discretionary execution under Section 2,
(4) Obviously, the appeal interposed by the plaintiffs is to delay the Rule 39 of the Rules of Court will only issue if there are superior
enforcement and/or execution of the decision rendered by this Honorable circumstances demanding urgency which outweigh the injury or damage that
Court, so that when the Decision correctly rendered by this Honorable Court the losing party may suffer upon securing a reversal of the judgment on
should be affirmed on appeal the judgment will become nugatory. 6 appeal considering the merits of his appeal (Moran, Com. on the Rules of
Court Vol. 2, Part II, 1963 ed., p. 239 and p. 242, citing Aguilos vs. Barrios,
et al. 72 Phil. 285: Ledesma vs. Teodoro, 52 O.G. 784; De Leon, et al. vs.
The respondent judge granted the motion for execution pending appeal in an order dated Soriano, et al., L-7684, Sept. 17, 1954; City of Bacolod vs. Enriquez, 55
November 29, 1965. 7
O.G. p. 10545), and in the instant case, the reasons ultimately relied upon by
the respondent Judge in granting execution pending appeal as stated in the
Urbano Jaca and Bonifacio Jaca filed a motion for reconsideration of the order granting Order (Annex "FF"), denying petitioners motion for reconsideration of the
execution pending appeal in December, 1965, 8 but the same was denied in an order dated Order granting execution, are not such superior circumstances demanding
January 10, 1966. 9 urgency of execution because:

Petitioners Urbano Jaca and Bonifacio Jaca contend that the respondent Judge acted in excess of (a) the first reason that petitioner Urbano Jaca sold a wrecker to Teodoro M.
jurisdiction and/or with grave abuse of discretion in issuing the order granting execution Alagon is alleged to have been made yet on February 12, 1962, or about over
pending appeal and the order denying the motion for reconsideration of the order granting one and half years prior to the filing of the instant case on November 22,
execution pending appeal because said orders were issued in complete disregard of the 1963, and such sale would not show a fraudulent design on the part of
applicable provisions of the Rules of Court, the laws, and the settled decisions of the Honorable petitioner Urbano Jaca to defeat the judgment against him by disposing of the
Supreme Court. mortgaged chattels and thus would demand urgency of execution of the
Petitioners assail the order granting execution pending appeal and the order denying the motion
for execution pending appeal on the following grounds: (b) the second reason regarding the sale of the two chevrolet trucks (not
alleged to be a part of the mortgaged chattels to the respondent Davao
1) granting that execution pending appeal win issue in a foreclosure Lumber Company) to Atty. Raul Nengasca does not refer to the property of
proceedings — either of the petitioners, neither does it refer to a sale made by anyone of
them; rather, it refers to a sale made by Florentina Perez (wife of petitioner
the respondent Judge acted in excess of jurisdiction when he considered, over Urbano Jaca), who is not a party to the action, regarding her own property;
the objection of petitioners, in the motion for reconsideration of the Order
granting premature execution (Annex "AA") the alleged sale by Florentina (c) the third and last reason that the orders of the court directing petitioner
Perez, wife of petitioner, Urbano Jaca of the two (2) chevrolet trucks which Urbano Jaca to deliver all the mortgaged chattels to the receiver are valid and
were not part of the mortgaged chattels to Atty. Raul Nengasca as a reason must be complied with could not even be considered any reason at all for
for execution pending appeal in his Order (Annex "FF") denying the motion immediate execution, as it does not supply at all any element of a superior
for reconsideration, since this matter is not among the grounds stated in the circumstance requiring urgency of execution for there is, in fact, no legal
motion for execution pending appeal (Annex "X") neither has it been brought connection whatsoever in the validity of such Orders and their compliance
out during the hearing of said motion, nor is it one of the reasons stated in the with the propriety of an immediate execution of the judgment pending
Order of execution pending appeal (Annex "Z") which is the Order sought to appeal;
be reconsidered and it is a cardinal rule in pleadings that a motion should
state the grounds upon which it is based (Section 3, Rule 15 of the Rules of furthermore, the appeal of petitioners are based on good grounds and could
Court) and the order sought to be obtained and that no other grounds can be never be said to be intended merely for delay, and that the amount involved
entertained, passed upon and considered by the court over the objection of in the judgment is huge;
the adverse party;
3) That there are, in fact, good reasons for not allowing execution pending
appeal considering —
(1) that the amount involved in the judgment is huge; correct in ordering the issuance of a writ of execution (Annex "1"). Furthermore, to stay
execution, petitioners should have filed a supersedeas bond in accordance with Sec. 3 of Rule 3.
(2) that the petitioners have challenged the Counterclaim, under which the
judgment sought to be executed is rendered, for lack of cause of action; a) Respondent denies the erroneous and gratuitous conclusion of alleged
'excess of jurisdiction' as alleged in par. 44(a) of the Petition. It further denies
(3) that the petitioners have challenged the chattel mortgage, under which the the other misleading statements alleged therein, the truth of the matter being
judgment of foreclosure has been rendered, as null and void ab initio and that the grounds enumerated in the Motion for Execution Pending Appeal (Annex
no cause of action can arise therefrom; "X") and the reasons mentioned in the Order (Annex "Z") granting said
(4) that the petitioners have challenged the Commissioner's Report to be null
and void which is the primary, if not in fact the sole, evidence of said b) Respondent denies the erroneous conclusion that the respondent Judge
respondent on its Counterclaim and upon which the judgment sought to be acted with grave abuse of discretion, equivalent to lack of jurisdiction' as
executed is based; alleged in par. 44(b) of the Petition, and states that the respondent Judge
correctly acted in accordance with Sec. 2, Rule 39 of the Rules of Court. It
further denies the misleading statement therein that the reasons ultimately
4) no execution pending appeal, in fact, can issue on foreclosure proceedings
relied upon by the respondent Judge are those stated in the Order (Annex
because the ninety-day period provided in Section 2, Rule 68 of the Rules of
"FF"), which is false, because the good and valid reasons relied upon by the
Court is a substantive right granted to the mortgagor-debtor which may not
respondent Judge are those stated in his Order (Annex "Z") granting the
be omitted and that upon taking an appeal, said period is suspended and is Motion for Execution Pending Appeal (Annex "X").
not revived until the judgment is affirmed by the appellate court and the case
returned to the trial court, and in the instant case, the respondent judge acted
in excess of jurisdiction in allowing execution pending appeal when the (1) Respondent admits the allegation that petitioner Urbano Jaca sold a
Counterclaim under which the judgment sought to be executed is rendered, is wrecker to Teodoro M. Alagon on February 12, 1962 for P10,000.00; and
for a foreclosure of chattel mortgage and that petitioners have taken an denies the statement that such sale would not show a fraudulent design on his
appeal to the judgment rendered against them ...; part to defeat the judgment against him. It further alleges that it is one of the
good and valid reasons for execution pending appeal (Rule 39, Sec. 2),
because said petitioner, the mortgagor in the deed of chattel mortgage dated
5) granting arguendo, that the foreclosure proceedings is only against
January 24, 1961, has violated Article 319 of the Revised Penal Code in
petitioner Urbano Jaca as mortgagor, but the action against petitioner selling the said mortgaged property;
Bonifacio Jaca is for a collection of a sum of money, the respondent Judge
acted with grave abuse of discretion equivalent to lack of jurisdiction in
allowing execution pending appeal as against said petitioner Bonifacio Jaca (2) The misleading allegations contained in subparagraphs 2 and 3 of par.
because in so far as said petitioner is concerned there is no showing of any 44(b) of the Petition are false, for they are matters that arose in the
special or good reasons, in fact, there is no showing of any reason at all petitioners' Motion for Reconsideration of the Order granting execution
anywhere in the records of the case, including the Orders complained of, as a pending appeal. Respondent further states that they are not the original and
basis for which discretionary execution may be issued against him. 10 valid reasons given by the respondent Judge in his Order (Annex "Z");

The private respondent maintains that the respondent judge acted in full compliance with the c) There are goods reasons for allowing execution pending appeal
Rules of Court, the law and applicable decisions of this Honorable Court because: considering that —

1) The present case is an action for accounting and not a foreclosure proceeding. Therefore, (1) the amount involved in the judgment in favor of respondent Davao
execution pending appeal can be issued pursuant to Sec. 2 of Rule 39, Rules of Court. This Lumber Company is P867,887.52 plus attorney's fees of P20,000.00, and the
provision of the Rules of Court applies in the present case for there are good and valid reasons petitioners admitted at the hearing of the Motion for Execution Pending
for the issuance of a writ of execution pending appeal as stated in respondents' Motion (Annex Appeal that they are insolvent (See Order, Annex "Z" );
"X"). Moreover, petitioners have no properties or assets with which to satisfy the judgment of
P867,887.52 plus other items stated in the Decision. The respondent Judge, therefore, was (2) the petitioners have never challenged the Counterclaim of respondent
Davao Lumber Company during the hearing on the merits;
(3) the petitioners failed to present any evidence challenging the chattel urgency which will outweigh the injury or damage should the losing party secure a reversal of
mortgage under which the counterclaim for foreclosure has been rendered; the judgment on appeal. 14

(4) the petitioners have not disproved the Commissioner's Report (Annex The decision in Civil Case No. 4189 requires petitioners to pay the enormous amount of
"K"). In fact, they failed to present their own evidence before the P867,887.52. Clearly, premature execution of said decision wig result in irreparable damage to
Commissioner which might tend to controvert the undisputed documentary petitioners as the collection of said amount may be enforced through the seizure of money
evidence of respondent Davao Lumber Company; and/or sale of properties used in the logging business of petitioners. In other words, execution of
the decision in Civil Case No. 4189 may result in the termination of petitioner's business. Thus,
(5.) execution pending appeal was properly issued in the present case, which any damage to the petitioners brought about by the premature execution of the decision will be
is an ordinary civil action for accounting and not primarily a foreclosure of justified only upon a finding that the appeal is being taken only for the purpose of delay and of
chattel mortgage the respondent Judge, therefore, acted in full compliance rendering the judgment nugatory.
with the law and jurisprudence in allowing execution pending appeal;
The facts of record show that the petitioner's appeal is not frivolous and not intended for delay.
(6) the judgment sought to be executed pending appeal sentences petitioner The findings of the respondent judge that the petitioners are indebted to the respondent Davao
Urbano Jaca to pay respondent Davao Lumber Company the amount of Lumber Company are based solely on the report submitted by Estanislao R. Lagman, the
P756,236.52 with legal interest; sentences petitioner Bonifacio Jaca to pay commissioner appointed by the court. This report was assailed by the petitioners as null and
said respondent the amount of P91,651.00 with legal interest; orders the void in a motion to strike out the report from the records of the case. According to petitioners,
Chattel Mortgage executed by Urbano Jaca in favor of said respondent the report is null and void because:
foreclosed; orders petitioners to pay, jointly and severally, the amount of
P20,000.00 as attorney's fees and costs; the said judgment was rendered after ... the so-called 'findings of the Commissioner in his report filed before this
hearing on the merits of its action for accounting, which is not a proceeding Honorable Court is the result of the exercise of certain highly irregular
for foreclosure of chattel mortgage; the provisions of the Rules of Court on function not contemplated by the Rules of Court and therefore deprived
foreclosure proceeding invoked by petitioners do not find any application in Plaintiffs' their constitutional right to their day in court.
the case at bar; the respondent Judge, therefore, in allowing execution
pending appeal, precisely acted in full compliance with Sec. 2 of Rule 39; ARGUMENTS:

(7) as above pointed out, the judgment rendered in this case is joint and 1. That among other things, Section 3, Rule 33 of Rules of Court, provides:
several, and consequently, the respondent Judge was correct in ordering the
execution thereof as against both petitioners who have no properties or assets
to satisfy the judgment in favor of respondent company. 11 Section 3: ... Subject to the specifications and limitations stated in the order
the commissioner has and shall exercise the power to regulate the
proceedings in every hearing before him and to do all act and take measures
The basic issue in this case is whether or not there are good reasons justifying the issuance of an necessary or proper for the efficient performance of his duties under the
order granting premature execution. order, ... The trial or hearing before him shall proceed in all respect as
though the same had been had before the Court.
Section 2, Rule 39 of the Rules of Court provides that on motion of the prevailing party with
notice to the adverse party the court may, in its discretion, order execution to issue even before 2. That on August 22, 1964, without the proper notice to their respective
the expiration of the time to appeal, upon good reasons to be stated in a special order. If a record counsels, the Plaintiffs received the following letter from the Commissioner,
on appeal is filed thereafter, the motion and the special order shall be included therein. The pertinent portions of which reads as follows: and, copy of which letter is
discretionary power of the Court of First Instance to grant or deny a motion for execution before attached hereto, forming an integral part in this Opposition, marked Annex
the expiration of the time to appeal will not be interfered with by the appellate court, unless it be "A" — In compliance to the above order, I am now to proceed, as ordered by
shown that there has been an abuse thereof or a subsequent change of conditions. 12 the Court, to examine your books of accounts and other records for the year
1962 and 1963.
As provided in Sec. 2, Rule 39 of the New Rules of Court, the existence of good reasons is what
confers discretionary power on a court of first instance to issue a writ of execution pending I will be dropping at your office on August 25, 1964. Kindly have our records
appeal. 13 The reasons allowing execution must constitute superior circumstances demanding ready.
3. That on August 25, 1964, the Commissioner went to Plaintiff's' office and The respondent judge's refusal to order the commissioner to conduct a hearing in accordance
asked to see the Books, and if possible to bring the same with him to his with Section 5, Rule 33 was fatal to the cause of the petitioners. Under Section 10 of Rule 33,
office; that, the plaintiffs' counsel refused to have said records examined in objections to the report based upon grounds which were available to the parties during the
such manner; proceedings before the commissioner other than objections to the findings and conclusions
therein set forth shall not be considered by the court, unless they were made before the
4. That the Counsel for the Plaintiffs reminded the Commissioner on many commissioner. Objections to the report which were available to the parties during the
occasions that, the examination of books and records of Accounts should be proceedings refer to objections to the admissibility or non-admissibility of evidence to be
done in a manner provided for under the Rules of Court and, that in considered by the commissioner. Since no meeting was held before the commissioner,
pursuance of said mandate, a hearing and/or proceedings be conducted in the petitioners never had the opportunity to object to the admissibility of evidence of cash,
presence of all parties, their witnesses and, their counsels and, the hearing be equipment, materials and foodstuff, which they alleged in their complaint, were never received
conducted as if it were taken before the court of justice, as said accounts by them. Also, they failed to question the failure of the commissioner to include in his
being one controversial and contested in issues; examination the price quotations of the logs which, as claimed in the complaint, were under
classified and undergraded.
5. That said commissioner refused to conduct said hearing in accordance to
law; The records show that respondent Davao Lumber Company was able to prove its claim against
petitioners because respondent judge refused to order the commissioner to hold a hearing as
required by the rules. Thus, objections which petitioners may have against the claims of
6. That report is void in law. 15
respondent were never considered. In the same manner, the claim of petitioner that respondent
Davao Lumber Company is indebted to them was not also considered. The Commissioner
In an order dated November 17, 1964, the respondent judge approved the commissioners' limited his examination to the following:
report in toto As to the allegation of the plaintiff that they were denied their day in court, the
respondent judge stated that "plaintiffs deliberately ignored to comply with the lawful order of MR. URBANO LACAS ACCOUNTS:
the court directing them to present the pertinent books of accounts on the 12th day of October,
1964, at 2:00 P.M. Sala of Branch 11, and therefore, their position that they are denied their day
in court is clearly untenable." 16 (a) From Feb. 17, 1961 to Oct. 31, 1962, Urbano Jaca purchased on account
from the Merchandise Dept. of Davao Lumber Co. per statement attached,
marked schedule 1......................................................................................
Petitioners filed their motion for reconsideration of the order approving the commissioner's P190:010.41
report in November, 1964, explaining that their failure to appear was due to the fact that they
received the order requiring them to appear on October 12, 1964 already after said date when it
was too late for them to comply with the order of appearance. 17 Notwithstanding the reasonable (b) From July 2, 1960 to Oct. 31, 1962, Urbano Jaca purchased on account
explanation of their absence in the hearing of October 12, 1964, the respondent judge denied the from the Sawmill Dept. of Davao Lumber Co. per statement hereto attached,
motion for reconsideration in an order dated December 4, 1964. 18 marked schedule 2.......................................................................................
It is obvious that the refusal of the respondent judge to order a hearing before the commissioner
was in clear violation of Section 3, Rule 33, Revised Rules of Court, which specifically (c) Old vales or cash advances prior to July 25, 1963 which Urbano Jaca
provides "... that the trial or hearing before a commissioner shall proceed in all respects as replaced with four (4) BPI Checks Nos. D-236619 to D-236622 P50,000.00
though the same had been had before the court." For this purpose Section 5 of the same Rule each as alleged by DLC
provides that "upon receipt of the order of reference, unless otherwise provided therein, the ........................................................................................... P200,000.00
commissioner shall forthwith set a time and place for the first meeting of the parties or their
attorneys to be held within ten (10) days after the date of reference ..." Pertinent also is Section (d) From Nov. 3, 1962 to Aug. 30, 1963, Urbano Jaca purchased on accounts
10 of Rule 33 which provides that "... Objections to the report based upon grounds which were from the Sawmill Dept. various goods, per attached statement, marked
available to the parties during the proceedings before the commissioner, other than objections to Schedule 3 ...................................................................................................
the findings and conclusions therein set forth, shall not be considered by the court unless they P57,459.27
were made before the commissioner."
(e) From Nov. 3, 1962 to Aug. 30, 1963, Urbano Jaca purchased from the There is doubt that petitioners are really indebted to respondent Davao Lumber Company in
Mds. Dept. of DLC various goods, per attached statement, marked Scheduled such a big amount as found by the trial court. The appeal of the petitioner appears to be
4 ................................................................................................ P68,857.07 meritorious. The fear of respondent that the judgment of the trial court might not be satisfied if
not executed at once is not well founded. If the judgment is executed now, and on appeal the
(f) From July 25, 1963 to Sept. 16, 1963 Urbano Jaca obtained cash advances same is reversed, although there are provisions for restitution, damages incurred by petitioners
or vales per attached statement, marked schedule 5............ P164,844.45 can not be fully compensated. 21

(g) Purchase of gasoline made by Urbano Jaca from Shell Co., under Davao The reasons stated in the order of execution pending appeal are not well founded.
Lumber Co.'s guaranty ......................................................................
P2,523.60 The first reason stated in the order was the consistent refusal of petitioner to deliver the
mortgaged chattels to the receiver. 22 The records disclose that respondent Davao Lumber
Total amount due Davao Lumber Co. from Urbano Jaca .......... P758,770.53 Company is not even entitled to the appointment of a receiver. It is an established rule that the
applicant for receivership must have an actual and existing interest in the property for which a
receiver is sought to be appointed. 23 The Davao Lumber Company's proof of interest in the
The amount of P2,523.60 due Shell Co. may be deducted from the total
property is the deed of chattel mortgage executed by Urbano Jaca in favor of the Davao Lumber
amount if Urbano Jaca can show proof that the account has been paid.
Company on January 24, 1961. This deed of chattel mortgage is void because it provides that
the security stated therein is for the payment of any and all obligations herein before contracted
MR. BONIFACIO JACAS ACCOUNTS: and which may hereafter be contracted by the Mortgagor in favor of the Mortgagee. 24 In the
case of Belgian Catholic Missionaries vs. Magallanes Press this Court held:
(a) From Nov. 3, 1962 to Aug. 8, 1963 Bonifacio Jaca purchased on account
various goods from the Sawmill Dept. of DLC per attached statement,. A mortgage that contains a stipulation in regard to future advances in the
marked schedule credit will take effect only from the date the same are made and not from the
6.................................................................................................. P39,999.69 date of the mortgage (11 CJ, 448; 5 RCL 420-421). ... Where the statute
provides that the parties to a chattel mortgage must make oath that the debt is
(b) From Feb. 4, 1963 to Aug. 8, 1963 Bonifacio Jaca purchased on account a just debt, honestly due and owing from the mortgagor to the mortgagee, it
from the Mdse. Dept. various goods, per attached statement marked schedule is obvious that a valid mortgage cannot be made to secure a debt to be
7................................................................................................................... thereafter contracted. (11 CJ. 448) 25
The second reason stated was the fact that petitioner Urbano Jaca violated Article 319 of the
(c) Purchases of gasoline from Shell Co. guaranteed by Davao Lumber Co. Revised Penal Code by selling to a certain Teodoro Alagon some of the mortgaged
................................................................................................................ properties. 26 As already discussed, the deed of chattel mortgage executed by Urbano Jaca in
P5,252.12. favor of the Davao Lumber Company is void. Hence, petitioner Urbano Jaca could not have
violated Article 319 of the Revised Penal Code. Moreover, the respondent Davao Lumber
(d) From Aug. 6, 1963 to Aug. 23, 1963, Bonifacio Jaca obtained cash Company has not successfully refuted the allegation of the petitioners that the sale of the
advances or vales, per attached statement marked schedule 8........... wrecker to Teodoro Alagon was exclusively negotiated by the lumber company's managing
P3,333.20 partner, Tian Se, and that the latter caused Urbano Jaca to sign the deed of sale because he was
the owner of the wrecker.
Total amount due Davao Lumber Co. from Mr. Bonifacio Jaca P96,904.09. 19
The third reason stated is the fact that petitioners have no properties and assets to satisfy the
judgment. 27 The basis of respondent judge's conclusion that petitioners do not have sufficient
Clearly, the examination was only made on advances made to petitioners. There was not even assets is an unsubstantiated allegation in the motion for execution pending appeal of respondent
an attempt to examine receipts of payments made by petitioners. It is hard to believe that the lumber company. 28 To rectify this omission, respondent lumber company, in its opposition to
petitioners had not paid any amount for the advances made to them. In fact, the respondents the motion for reconsideration of the order of execution pending appeal, tried to point out that
stated in paragraph 4 of its answer to the complaint that the plaintiffs stopped delivering logs in the sale of two chevrolet trucks by Urbano Jaca and their failure to file a counterbond indicate
August, 1963, 20 indicating that from 1962 to 1963, the years included in the report of the that they are without sufficient assets. 29 This later attempt to substantiate a baseless allegation
commissioner, the petitioners had delivered logs to the Davao Lumber Company. in the motion for execution pending appeal is futile. The trucks alleged to be sold are not
properties of petitioner Urbano Jaca They are paraphernalia properties of his wife, Florentina
Perez, and the same trucks were in fact sold by her. And even if said trucks were owned by
Urbano Jaca their sale to Atty. Raul Nengasca does not totally indicate insolvency. As has been
repeatedly observed, petitioner Urbano Jaca is engaged in business. Sale of property used in
business does not establish insolvency. The sale may have been prompted by the need for more
modern equipment on account of obsolescence, or the need of to be directed to more profitable
endeavor. The same reason applies to their failure to file a counterbound. The cash needed for
the counterbound may be utilized for the continuance of the business or to increase business
profits. In short, the acts of petitioner can not be always be interpreted as signs of insolvency but
may also indicate sound business judgment prompted by the need to have liquid reserve of cash.

In its answer to the petition, 30 respondent lumber company contends that petitioners, having
availed of the remedy of appeal are barred form filling a petition for certiorari. Although
Section 1, Rule 65 of the Rules of Court provides that the special civil action of certiorari may
only be invoked when "there is no appeal, nor any plain speedy and adequate remedy in the
course of law," this rule is not without exception. The availability of the ordinary course of
appeal does not constitute sufficient ground to prevent a party from making use of the
extraordinary remedy of certiorari where the appeal is not an adequate remedy or equally
beneficial, speedy and sufficient. 31 It is the inadequacy — not the mere absence — of all other
legal remedies and the danger of failure of justice without the writ, that must usually determine
the propriety of certiorari.

In the case at bar, the remedy of appeal is inadequate. It will not immediately relieve petitioners
from the injurious effect of the order granting execution. The slow and inexpensive remedy of
appeal will not prevent respondent judge from executing his decision requiring petitioners to
pay the huge amount of P867,887.52. Moreover, to dismiss the petition on the ground that
petitioner has already availed of the remedy of appeal will only aggravate the patent injustice
already inflicted on petitioners.

The reasons stated in the order granting execution pending appeal are not sufficient.

WHEREFORE, the petition for writ of certiorari is granted and the orders granting execution
pending appeal dated November 29, 1965 and the order denying the motion for reconsideration
of the order granting execution pending appeal dated January 10, 1966 are nullified and set
aside, without pronouncement as to costs.

Motion for reconsideration required; exceptions Petitioner filed a comment thereon with an omnibus motion to strike out DPGs motion for
new trial, coupled with a prayer for the issuance of a writ of execution.
Tan v CA On November 23, 1990, the trial court issued an Order denying, in effect, the motion for
FRANCISCO, J.: new trial, the entirety of which reads:

Petitioner Antonio P. Tan was the lessee of a piece of property located at 3658 Ramon ORDER
Magsaysay Boulevard, Sampaloc, Manila when on April 21, 1986, respondent DPG
Developmentand Management Corporation (DPG for brevity) acquired ownership thereof by Today is the consideration of the Motion for New Trial and Motion to Admit Answer of DPG
purchase from one Manuel J. Gonzales. Subsequently, DPG filed with the Metropolitan Trial Dev. & Mgt. Corp. filed by Atty. Benjamin Formoso. The plaintiff opposed the Motion for New
Court of Manila on April 13, 1989 an ejectment suit for nonpayment of rentals against Vermont Trial on the following grounds:
Packaging, Inc. which was managed by petitioner.
1) Defendant is represented by counsel of record in the person of Atty. Abundio Bello and that
During the pendency of said suit, petitioner, on January 24, 1990, filed Civil Case No. 90-
there is no substitution of counsel by the mere filing of Notice of Appearance by Atty. Benjamin
51767 against the Register of Deeds of Manila and DPG for cancellation/annulment of TCT No.
169146 issued in the name of DPG. In a nutshell, this complaint challenges the validity of TCT
No. 169146 which, according to petitioner, emanated from TCT No. 165501 that covered parcels
of land outside of Manila. 2) Defendant did not even file the requisite motion to lift order of default to regain its standing
or personality before the Court and that the mere filing of motion by the alleged new counsel
DPG received summons and the copy of the complaint on February 6, 1990. More than a did not automatically suspend the running of the period; and
month later or on March 22, 1990, DPGs then counsel, Atty. Abundio Bello, filed a motion for
extension of time to file its answer to the complaint. The motion was granted. However, instead
3) That the decision in the above-entitled case had not become final and executory.
of filing the answer within the extended period, Atty. Bello filed a second motion for more time
to file answer. The court granted the motion but only for fifteen (15) days from April 25, 1990.
The records will show that Atty. Abundio Bello filed a Withdrawal of Apperance (sic) on
As DPG still failed to file its answer, petitioner filed a motion to declare the former in November 5, 1990 after the defendant DPG Dev. & Mgt. Corp. had already been furnished with
default. On May 22, 1990, the trial court granted the motion and accordingly declared DPG in a copy of the decision by this Court, and that the Notice of Appearance of Atty. Benjamin
default. Petitioner thereafter presented evidence. Formoso on November 2, 1990 was actually ahead of the withdrawal of appearance by Atty.
Abundio Bello on November 5, 1990. Such being the case, the appearance of new counsel Atty.
On October 5, 1990, the trial court rendered a decision in Civil Case No. 90-51767 favoring Benjamin Formoso, granting that he is the authorized counsel for the defendant, did not actually
petitioner, the dispositive portion of which reads: stop the running of the period within which to appeal the adverse decision of the court.

WHEREFORE, it is hereby ordered that TCT No. 169146 registered in the name of defendant The Decision of the Court dated October 5, 1990 had already become final and executory, and
DPG Development & Management Corporation be cancelled with the consequential effect that the Motion for New Trial need not be acted upon by the Court.
the land reverts to the government disposable to qualified applicants. It is further ordered that
the Bureau of Lands consider the application of the plaintiff for the purchase of the area
occupied by him pursuant to the recommendation of the land investigator on the matter. WHEREFORE, let there be issued a Writ og (sic) Execution in the above-entitled case, the same
to be implemented by Branch Sheriff Ramon G. Enriquez of this Court.
Attorneys fees in the amount of P5,000.00.
Cost of suit.
DPG questioned this Order through a petition for certiorari before public respondent Court
of Appeals (CA) claiming that the trial court gravely abused its discretion and exceeded its
DPG received a copy of the trial courts decision on October 25, 1990. Nine (9) days later or jurisdiction in failing to take action on and/or in denying its motion for new trial and to admit
on November 3, 1990, Atty. Benjamin S. Formoso filed a notice of appearance as new counsel answer, and in granting petitioners omnibus motion to strike out said motion for new trial and
for DPG. On the same day, said counsel filed a motion for new trial and to admit answer with prayer for the issuance of a writ of execution.
In its Decision of October 23, 1992 disposing of DPGs petition for certiorari,[2] the CA interests of the Government[8] or of the petitioner[9] or the subject matter of the action is
ruled for DPG, the dispositive portion of which reads: perishable;[10] (d) where, under the circumstances, a motion for reconsideration would be
useless;[11] (e) where petitioner was deprived of due process and there is extreme urgency for
WHEREFORE, the petition is hereby GRANTED. As prayed for, the ORDER of the respondent relief;[12] (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of
judge issued on November 23, 1990, is hereby ANNULLED and SET ASIDE. such relief by the trial Court is improbable;[13] (g) where the proceedings in the lower court are a
nullity for lack of due process;[14] (h) where the proceedings was ex parte or in which the
petitioner had no opportunity to object;[15] and (i) where the issue raised is one purely of law or
As a consequence,
where public interest is involved.[16] It is exceptive circumstance (b) that justified DPGs non-filing
of a motion for reconsideration, inasmuch as DPGs petition for certiorari before the CA involved
(1) The writ of execution and alias writ of execution that have been issued are likewise declared a similar issue or question passed upon by the trial court in its November 23, 1990 Order, i.e., the
null and void; propriety of the motion for new trial filed by DPGs new counsel (Atty. Formoso).
It must also be stressed that what is determinative of the propriety of certiorari is the danger
(2) Petitioners motion for new trial and for admission of answer that the order of November 23,
of failure of justice without the writ, not the mere absence of all other legal remedies.[17]Thus,
1990 has, in effect, denied is considered GRANTED;
even when appeal is available and is the proper remedy, a writ of certiorari has been allowed
when the orders of the lower court were issued either in excess of or without
(3) Petitioners Answer to the private respondents complaint in Civil Case No. 90-51767 is, jurisdiction.[18] Certiorari may also be availed of where an appeal would be slow, inadequate and
accordingly, considered ADMITTED; and insufficient[19] and that to strictly observe the general rule would result in a miscarriage of
justice.[20]This is especially true when the petition, such as DPGs certiorari petition before the
(4) The DECISION of respondent judge in said case is hereby VACATED, and respondent CA, appears to be meritorious and the trial judge indeed seems to have committed grave abuse of
judge is hereby ordered to conduct a new trial in said civil case. Conformably to Section 5 of discretion.
Rule 37 however, the recorded evidence taken upon the former trial so far as the same is
material and competent to establish the issues, shall be used at the new trial without retaking the This brings us to the second argument which touches on the heart of the matter. There is no
same. question that the remedy against a judgment by default is a motion for new trial under Rule 37 of
the Rules of Court which should be filed within the period for perfecting an appeal, and that the
timely filing thereof interrupts the 15-day reglementary period. The CA has thus correctly
SO ORDERED. observed that:

Hence, this petition, with the following principal arguments raised by petitioner in support It is settled in Our jurisprudence that a motion for new trial is the appropriate remedy when the
thereof: defendant discovers that he has been declared in default and that a judgment has already been
rendered, which has not, however, become final and executory as yet. (Leyte vs. Cusi, Jr., 152
1) the CA should not have entertained DPGs petition for certiorari considering that no motion SCRA 496; Tiburcio vs. Castro, 161 SCRA 583; Dolos vs. Court of Appeals, 188 SCRA 413;
for reconsideration of the trial courts October 5, 1990 Decision was first filed by DPG and that Circle Finance Corp vs. Court of Appeals, 196 SCRA 166). It is not required that the defendant
the proper remedy is an appeal; file first a motion to life the order of default to regain his standing.

2) the filing of the motion for new trial did not interrupt the finality of the trial courts Decision The filing of a motion for new trial suspends the reglementary period for the attainment by the
inasmuch as there was no valid substitution between DPGs previous counsel on record Atty. decision of finality. (Rule 41, Section 3; PCIBank vs. Ortiz, 150 SCRA 383) for
Bello and new counsel Atty. Formoso who filed the said motion for new trial.
If a new trial be granted, x x x the judgment shall be vacated, and the action shall stand for
The petition must fail. trial de novo, x x x. (Rule 37, Section 5)[21]
On the first argument, as a rule, the special civil action of certiorari will not lie unless a
motion for reconsideration is first filed before the respondent court to allow it an opportunity to There is also no dispute that a motion for new trial (and to admit answer with counterclaim)
correct its errors.[3] However, this rule admits of certain recognized exceptions such as (a) where was filed on behalf of DPG within the 15-day appeal period, i.e., on November 3, 1990 or just
the order is a patent nullity,[4] as where the Court a quo had no jurisdiction;[5] (b) where the nine (9) days from DPGs receipt (on October 25, 1990) of a copy of the trial courts October 5,
questions raised in the certiorari proceeding have been duly raised and passed upon by the lower 1990 Decision. Petitioner insists on the correctness of the trial courts finding (contained in its
court,[6] or are the same as those raised and passed upon in the lower court;[7] (c) where there is an November 23, 1990 Order earlier quoted in this Decision) that the motion for new trial filed by
urgent necessity for the resolution of the question and any further delay would prejudice the DPGs new counsel Atty. Formoso did not interrupt the finality of the trial courts October 5, 1990
Decision since there was no proper substitution of DPGs original counsel of record Atty. Bello technicalities that tend to frustrate rather than promote substantial justice, must always be
by Atty. Formoso, it appearing that Atty. Formosos notice of appearance did not contain Atty. avoided. Even the Rules of Court envision this liberality.
Bellos written consent to the substitution and that said notice of appearance even preceded Atty.
Bellos notice of withdrawal as DPGs counsel. And so petitioner argues that the CA erred in xxx xxx xxx
reversing the trial court and in allowing a new trial to be conducted.
Petitioners and the trial courts position, indeed, cannot be sustained. Atty. Formosos The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
appearance as second attorney, which bears the conformity of DPG, does not authorize the justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere
presumption that the authority of the first attorney (Atty. Bello) has been withdrawn, because a slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in
party may have two or more lawyers working in collaboration as his counsel in a given rendering real justice have always been, as they in fact ought to be, conscientiously guided by
litigation.[22] Certainly, DPG cannot be denied the prerogative to employ additional counsel to the norm that when on the balance, technicalities take a backseat against substantive rights, and
protect his rights. Even granting that Atty. Formosos appearance was really intended to be a not the other way around. Truly then, technicalities, in the appropriate language of Justice
substitution and that there was lack of strict observance of the requisites thereof, to wit: Makalintal, should give way to the realities of the situation.[25] (Underscoring ours)

a) upon written application; Being similarly situated, DPG should also benefit from the liberal application of the rules
specifically pertaining to substitution of counsels.
b) with written consent of the client; Of course, it would have been different if the appearance of a new counsel was, for instance,
occasioned by the death of the original counsel of record. In which case, all the requirements of
c) upon written consent of the attorney to be substituted; and a proper substitution must be met, one of which is a verified proof of the death of such
attorney. The party seeking substitution, therefore, cannot escape the effects of new counsels error
d) in case the consent of attorney to be substituted cannot be obtained, there must be at least a in failing to furnish the required proof of death, as such negligence does not result in deprivation
proof of notice that the motion for substitution has been served upon him in the manner of due process to said party.
prescribed by the rules (Section 26, Rule 138, Rules of Court), [23] Finally, and as correctly ruled by the CA, DPG is entitled to a new trial it prays for inasmuch
as negligence or incompetency of counsel is a well-recognized ground for new trial.[26] This would
the attendant circumstances here are compelling enough to validate the substitution. rectify the serious error committed by DPGs former counsel Atty. Bello, give the DPG the
opportunity to present its evidence with the assistance of a hopefully more vigilant counsel (Atty.
Note that DPG was declared in default (and was thus denied opportunity to present evidence
Formoso), and thus level the playing field.
and participate in the trial) by reason of Atty. Bellos negligence. Said counsel failed to file an
answer despite being given by the trial court two (2) extensions of time to file it. True, the general WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed
rule is that the client is bound by the mistakes of counsel. But this is not a hard and fast rule. In De Decision of the Court of Appeals dated October 23, 1992 is AFFIRMED in toto. Let this case be
Guzman v. Sandiganbayan[24] for instance, this Court, ever mindful of the supremacy of REMANDED to the court of origin for further proceedings.
substantive rights over technicalities and invoking its power to suspend the rules, relieved
petitioner De Guzman from the costly importunings of his previous lawyers who filed a demurrer SO ORDERED.
to evidence despite leave for that purpose having been denied by the trial court. We thus said:

x x x. Under the circumstances, higher interests of justice and equity demand that petitioner be
not penalized for the costly importunings of his previous lawyers based on the same principles
why this Court had, on many occasions where it granted new trial, excused parties from the
negligence or mistakes of counsel. To cling to the general rule in this case is only to condone
rather than rectify a serious injustice to petitioners whose only fault was to repose his faith and
entrust his innocence to his previous lawyers.

xxx xxx xxx

Let us not forget 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