Republic of the Philippines Transfer Certificates of Title (TCT) Nos. T-44 and T-77-A.
6 Claiming to
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 198680 July 8, 2013
HEIRS OF MAGDALENO YPON, NAMELY, ALVARO YPON,
ERUDITA Y. BARON, CICERO YPON, WILSON YPON, VICTOR
YPON, AND HINIDINO Y. PEÑALOSA, PETITIONERS,
vs.
GAUDIOSO PONTERAS RICAFORTE A.K.A. "GAUDIOSO E.
YPON," AND THE REGISTER OF DEEDS OF TOLEDO
CITY, RESPONDENTS.
RESOLUTION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court from the Regional Trial Court of
Toledo City, Branch 59 (RTC), through a petition for review on
certiorari1 under Rule 45 of the Rules of Court, raising a pure question
of law. In particular, petitioners assail the July 27, 20112 and August
31, 20113 Orders of the RTC, dismissing Civil Case No. T-2246 for lack
of cause of action.
The Facts
On July 29, 2010, petitioners, together with some of their cousins, 4 filed
a complaint for Cancellation of Title and Reconveyance with Damages
(subject complaint) against respondent Gaudioso Ponteras Ricaforte
a.k.a. "Gaudioso E. Ypon" (Gaudioso), docketed as Civil Case No. T-
2246.5 In their complaint, they alleged that Magdaleno Ypon
(Magdaleno) died intestate and childless on June 28, 1968, leaving
behind Lot Nos. 2-AA, 2-C, 2-F, and 2-J which were then covered by
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be the sole heir of Magdaleno, Gaudioso executed an Affidavit of Self-
Adjudication and caused the cancellation of the aforementioned
certificates of title, leading to their subsequent transfer in his name
under TCT Nos. T-2637 and T-2638,7 to the prejudice of petitioners
who are Magdaleno’s collateral relatives and successors-in-interest.8
In his Answer, Gaudioso alleged that he is the lawful son of Magdaleno
as evidenced by: (a) his certificate of Live Birth; (b) two (2) letters from
Polytechnic School; and (c) a certified true copy of his
passport.9 Further, by way of affirmative defense, he claimed that: (a)
petitioners have no cause of action against him; (b) the complaint fails
to state a cause of action; and (c) the case is not prosecuted by the
real parties-in-interest, as there is no showing that the petitioners have
been judicially declared as Magdaleno’s lawful heirs.10
The RTC Ruling
On July 27, 2011, the RTC issued the assailed July 27, 2011
Order,11 finding that the subject complaint failed to state a cause of
action against Gaudioso. It observed that while the plaintiffs therein
had established their relationship with Magdaleno in a previous special
proceeding for the issuance of letters of administration,12 this did not
mean that they could already be considered as the decedent’s
compulsory heirs. Quite the contrary, Gaudioso satisfactorily
established the fact that he is Magdaleno’s son – and hence, his
compulsory heir – through the documentary evidence he submitted
which consisted of: (a) a marriage contract between Magdaleno and
Epegenia Evangelista; (b) a Certificate of Live Birth; (c) a Letter dated
February 19, 1960; and (d) a passport.13
The plaintiffs therein filed a motion for reconsideration which was,
however, denied on August 31, 2011 due to the counsel’s failure to
state the date on which his Mandatory Continuing Legal Education
Certificate of Compliance was issued.14
 Aggrieved, petitioners, who were among the plaintiffs in Civil Case No.
T-2246,15 sought direct recourse to the Court through the instant
petition.
The Issue Before the Court
The core of the present controversy revolves around the issue of
whether or not the RTC’s dismissal of the case on the ground that the
subject complaint failed to state a cause of action was proper.
The Court’s Ruling
The petition has no merit.
Cause of action is defined as the act or omission by which a party
violates a right of another.16 It is well-settled that the existence of a
cause of action is determined by the allegations in the complaint. 17 In
this relation, a complaint is said to assert a sufficient cause of action if,
admitting what appears solely on its face to be correct, the plaintiff
would be entitled to the relief prayed for.18Accordingly, if the allegations
furnish sufficient basis by which the complaint can be maintained, the
same should not be dismissed, regardless of the defenses that may be
averred by the defendants.19
As stated in the subject complaint, petitioners, who were among the
plaintiffs therein, alleged that they are the lawful heirs of Magdaleno
and based on the same, prayed that the Affidavit of Self-Adjudication
executed by Gaudioso be declared null and void and that the transfer
certificates of title issued in the latter’s favor be cancelled. While the
foregoing allegations, if admitted to be true, would consequently
warrant the reliefs sought for in the said complaint, the rule that the
determination of a decedent’s lawful heirs should be made in the
corresponding special proceeding 20 precludes the RTC, in an ordinary
action for cancellation of title and reconveyance, from granting the
same. In the case of Heirs of Teofilo Gabatan v. CA,21 the Court, citing
several other precedents, held that the determination of who are the
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decedent’s lawful heirs must be made in the proper special proceeding
for such purpose, and not in an ordinary suit for recovery of ownership
and/or possession, as in this case:
Jurisprudence dictates that the determination of who are the legal heirs
of the deceased must be made in the proper special proceedings in
court, and not in an ordinary suit for recovery of ownership and
possession of property. This must take precedence over the action for
1âwp hi1
recovery of possession and ownership. The Court has consistently
ruled that the trial court cannot make a declaration of heirship in the
civil action for the reason that such a declaration can only be made in a
special proceeding. Under Section 3, Rule 1 of the 1997 Revised Rules
of Court, a civil action is defined as one by which a party sues another
for the enforcement or protection of a right, or the prevention or redress
of a wrong while a special proceeding is a remedy by which a party
seeks to establish a status, a right, or a particular fact. It is then
decisively clear that the declaration of heirship can be made only in a
special proceeding inasmuch as the petitioners here are seeking the
establishment of a status or right.
In the early case of Litam, et al. v. Rivera, this Court ruled that the
declaration of heirship must be made in a special proceeding, and not
in an independent civil action. This doctrine was reiterated in Solivio v.
Court of Appeals x x x:
In the more recent case of Milagros Joaquino v. Lourdes Reyes, the
Court reiterated its ruling that matters relating to the rights of filiation
and heirship must be ventilated in the proper probate court in a special
proceeding instituted precisely for the purpose of determining such
rights. Citing the case of Agapay v. Palang, this Court held that the
status of an illegitimate child who claimed to be an heir to a decedent's
estate could not be adjudicated in an ordinary civil action which, as in
this case, was for the recovery of property.22 (Emphasis and
underscoring supplied; citations omitted)
 By way of exception, the need to institute a separate special
proceeding for the determination of heirship may be dispensed with for
the sake of practicality, as when the parties in the civil case had
voluntarily submitted the issue to the trial court and already presented
their evidence regarding the issue of heirship, and the RTC had
consequently rendered judgment thereon,23 or when a special
proceeding had been instituted but had been finally closed and
terminated, and hence, cannot be re-opened.24
In this case, none of the foregoing exceptions, or those of similar
nature, appear to exist. Hence, there lies the need to institute the
proper special proceeding in order to determine the heirship of the
parties involved, ultimately resulting to the dismissal of Civil Case No.
T-2246.
Verily, while a court usually focuses on the complaint in determining
whether the same fails to state a cause of action, a court cannot
disregard decisions material to the proper appreciation of the questions
before it.25 Thus, concordant with applicable jurisprudence, since a
determination of heirship cannot be made in an ordinary action for
recovery of ownership and/or possession, the dismissal of Civil Case
No. T-2246 was altogether proper. In this light, it must be pointed out
that the RTC erred in ruling on Gaudioso’s heirship which should, as
herein discussed, be threshed out and determined in the proper special
proceeding. As such, the foregoing pronouncement should therefore
be devoid of any legal effect.
WHEREFORE, the petition is DENIED. The dismissal of Civil Case No.
T-2246 is hereby AFFIRMED, without prejudice to any subsequent
proceeding to determine the lawful heirs of the late Magdaleno Ypon
and the rights concomitant therewith.
SO ORDERED.
Carpio, (Chairperson), Del Castillo, Perez, and Mendoza,* JJ.,
concur.
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Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 197380 October 8, 2014
ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact,
NYMPHA Z. SALES, Petitioners,
vs.
MARIA DIVINA GRACIA SANTOS-GRAN** and REGISTER OF
DEEDS OF MARIKINA CITY, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari 1 assailing the
Decision2 dated January 10, 2011 and the Resolution3 dated June 22,
2011 of the Court of Appeals (CA) in CA-G.R. CV No. 87849 which
affirmed the Order4 dated July 6, 2006 of the Regional Trial Court of
San Mateo, Rizal, Branch 76 (RTC) in Civil Case No. 2018-06,
dismissing the Amended Complaint for annulment of sale and
revocation of title on the ground of insufficiency of factual basis.
The Facts
On January 9, 2006, petitioner Eliza Zuñiga-Santos (petitioner),
through her authorized representative, Nympha Z. Sales,5 filed a
Complaint6 for annulment of sale and revocation of title against
respondents Maria Divina Gracia Santos-Gran (Gran) and the Register
of Deeds of Marikina City before the RTC, docketed asCivil Case No.
2018-06. The said complaint was later amended7 on March 10, 2006
(Amended Complaint).
 In her Amended Complaint,8 petitioner alleged, among others, that: (a)
she was the registered owner of three (3) parcels of land located in the
Municipality of Montalban, Province of Rizal, covered by Transfer
Certificate of Title (TCT) Nos. N-5500,9 224174,10 and N-423411 (subject
properties) prior to their transfer in the name of private respondent
Gran; (b) she has a second husband by the name ofLamberto C.
Santos (Lamberto), with whom she did not have any children; (c) she
was forced to take care of Lamberto’s alleged daughter, Gran, whose
birth certificate was forged to make it appear that the latter was
petitioner’s daughter; (d) pursuant to void and voidable documents, i.e.,
a Deed of Sale, Lamberto succeeded in transferring the subject
properties in favor of and in the name of Gran; (e) despite diligent
efforts, said Deed of Sale could not be located; and (f) she discovered
that the subject properties were transferred to Gran sometime in
November 2005. Accordingly, petitioner prayed, inter alia, that Gran
surrender to her the subject properties and pay damages, including
costs of suit.12
For her part, Gran filed a Motion to Dismiss,13 contending, inter alia,
that (a) the action filed by petitioner had prescribed since an action
upon a written contract must be brought within ten (10) years from the
time the cause of action accrues, or in this case, from the time of
registration of the questioned documents before the Registry of
Deeds;14 and (b) the Amended Complaint failed to state a cause of
action as the void and voidable documents sought to be nullified were
not properly identified nor the substance thereof set forth, thus,
precluding the RTC from rendering a valid judgment in accordance
withthe prayer to surrender the subject properties.15
The RTC Ruling
In an Order16 dated July 6, 2006, the RTC granted Gran’s motion and
dismissed the Amended Complaint for its failure to state a cause of
action, considering that the deed of sale sought to be nullified – an
"essential and indispensable part of [petitioner’s] cause of action"17 –
was not attached. It likewise held that the certificates oftitle covering
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the subject properties cannot be collaterally attacked and that since the
action was based on a written contract, the same had already
prescribed under Article 1144 of the Civil Code.18
Dissatisfied, petitioner elevated the matter to the CA.
The CA Ruling
In a Decision19 dated January 10, 2011, the CA sustained the dismissal
of petitioner’s Amended Complaint buton the ground of insufficiency of
factual basis. It disagreed with the RTC’s findingthat the said pleading
failed to state a cause of action since it had averred that: (a) petitioner
has a right over the subject properties being the registered owner
thereof prior to their transfer in the name of Gran; (b) Lamberto
succeeded in transferring the subject properties to his daughter, Gran,
through void and voidable documents; and (c) the latter’s refusal and
failure to surrender to her the subject properties despite demands
violated petitioner’s rights over them.20 The CA likewise ruled that the
action has not yet prescribed since an action for nullity of void deeds of
conveyance is imprescriptible.21 Nonetheless, it held that since the
Deed of Sale sought to be annulled was not attached to the Amended
Complaint, it was impossible for the court to determine whether
petitioner’s signature therein was a forgery and thus, would have no
basis to order the surrender or reconveyance of the subject
properties.22
Aggrieved, petitioner moved for reconsideration23 and attached, for the
first time, a copy of the questioned Deed of Sale24 which she claimed to
have recently recovered, praying that the order of dismissal be set
aside and the case be remanded to the RTC for further proceedings.
In a Resolution25 dated June 22, 2011, the CA denied petitioner’s
motion and held that the admission of the contested Deed of Sale at
this late stage would be contrary to Gran’s right to due process.
Hence, the instant petition.
 The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not the
dismissal of petitioner’s Amended Complaint should be sustained.
The Court’s Ruling
Failure to state a cause of action and lack of cause of action are
distinct grounds to dismiss a particularaction. The former refers to the
insufficiency of the allegations in the pleading, while the latter to the
insufficiency of the factual basis for the action. Dismissal for failure to
state a cause of action may be raised at the earliest stages of the
proceedings through a motion to dismiss under Rule16 of the Rules of
Court, while dismissal for lack of cause of action may be raised any
time after the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented by the plaintiff. 26 In
Macaslang v. Zamora,27 the Court, citing the commentary of Justice
Florenz D. Regalado, explained:
Justice Regalado, a recognized commentator on remedial law, has
explained the distinction:
x x x What is contemplated, therefore, is a failure to statea cause of
action which is provided in Sec. 1(g) of Rule 16. This is a matter of
insufficiency of the pleading. Sec. 5 of Rule 10, which was also
included as the last mode for raising the issue to the court, refers to the
situation where the evidence does not provea cause of action. This is,
therefore, a matter of insufficiency of evidence. Failure to state a cause
of action is different from failure to prove a cause of action. The
remedy in the first is to move for dismissal of the pleading, whilethe
remedy in the second is to demur to the evidence, hence reference to
Sec. 5 of Rule 10 has been eliminated in this section. The procedure
would consequently be to require the pleading to state a cause of
action, by timely objection to its deficiency; or, at the trial, to file a
demurrer to evidence, if such motion is warranted.28
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In the case at bar, both the RTC and the CA were one in dismissing
petitioner’s Amended Complaint, but varied on the grounds thereof –
that is, the RTC held that there was failure tostate a cause of action
while the CA ruled that there was insufficiency of factual basis.
At once, it is apparent that the CA based its dismissal on an incorrect
ground. From the preceding discussion, it is clear that "insufficiency of
factual basis" is not a ground for a motion to dismiss. Rather, it is a
ground which becomes available only after the questions of fact have
been resolved on the basis of stipulations, admissions or evidence
presented by the plaintiff. The procedural recourse to raise such
ground is a demurrer to evidence taken only after the plaintiff’s
presentation of evidence. This parameter is clear under Rule 33 of the
Rules of Court: RULE 33
Demurrer to Evidence
Section 1. Demurrer to evidence. — After the plaintiff has completed
the presentation of his evidence, the defendant may move for dismissal
on the ground that upon the facts and the law the plaintiff has shown
no right to relief. If his motion isdenied he shall have the right to
present evidence. If the motion is granted but on appeal the order of
dismissal is reversed he shall be deemed to have waived the right to
present evidence.
At the preliminary stages of the proceedings, without any presentation
of evidence even conducted, it is perceptibly impossible to assess the
insufficiency of the factual basis on which the plaintiff asserts his cause
of action, as in this case. Therefore, that ground could not be the basis
for the dismissal of the action.
However, the Amended Complaint is still dismissible but on the ground
of failure to state a cause of action, as correctly held by the RTC. Said
ground was properly raised by Granin a motion to dismiss pursuant to
Section 1, Rule 16 of the Rules of Court:
 RULE 16
Motion to Dismiss
Section 1. Grounds. — Within the time for but before filing the answer
to the complaint or pleading asserting a claim, a motion to dismiss may
be made on any of the following grounds:
xxxx
(g) That the pleading asserting the claim states no cause of action;
xxxx
A complaint states a cause of action if it sufficiently avers the existence
of the three (3) essential elements of a cause of action, namely: (a) a
right in favor of the plaintiff by whatever means and under whatever
law it arises or is created; (b) an obligation on the part of the named
defendant to respect or not to violate such right; and (c) an act or
omission on the part of the named defendant violative of the right of the
plaintiff or constituting a breach of the obligation of defendant tothe
plaintiff for which the latter may maintain an action for recovery of
damages.29 If the allegations of the complaint do not state the
concurrence of these elements, the complaint becomes vulnerable to a
motion to dismiss on the ground of failure to state a cause of action. 30
It is well to point out that the plaintiff’s cause of action should not
merely be "stated" but, importantly, the statement thereof should be
"sufficient." This is why the elementarytest in a motion to dismiss on
such ground is whether or not the complaint alleges facts which if true
would justify the relief demanded.31 As a corollary, it has been held that
only ultimate facts and not legal conclusions or evidentiary facts are
considered for purposes of applying the test.32 This is consistent with
Section 1, Rule 8 of the Rules of Court which states that the complaint
need only allege the ultimate facts or the essential facts constituting
the plaintiff’s cause of action. A fact is essential if they cannot be
stricken out without leaving the statement of the cause of action
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inadequate.33 Since the inquiry is into the sufficiency, not the veracity,
of the material allegations, it follows that the analysis should be
confined to the four corners of the complaint, and no other.34
A judicious examination of petitioner’s Amended Complaint readily
shows its failure to sufficiently state a cause of action. Contrary to the
findings of the CA, the allegations therein do not proffer ultimate facts
which would warrant an action for nullification of the sale and recovery
of the properties in controversy, hence,rendering the same dismissible.
While the Amended Complaint does allege that petitioner was the
registered owner of the subject properties in dispute, nothing in the
said pleading or its annexes would show the basis of that assertion,
either through statements/documents tracing the rootof petitioner’s title
or copies of previous certificates of title registeredin her name. Instead,
the certificates of title covering the said properties that were attached
to the Amended Complaint are in the name of Gran. At best, the
attached copies of TCT Nos. N-5500 and N-4234 only mention
petitioner as the representative of Gran at the time of the covered
property’s registration when she was a minor. Nothing in the pleading,
however, indicates that the former had become any of the properties’
owner. This leads to the logical conclusion that her right to the
properties in question – at least through the manner in which it was
alleged in the Amended Complaint – remains ostensibly unfounded.
Indeed, while the facts alleged in the complaint are hypothetically
admitted for purposes of the motion, it must, nevertheless, be
remembered that the hypothetical admission extends only to the
relevant and material facts well pleaded in the complaint as well as
toinferences fairly deductible therefrom.35 Verily, the filing of the motion
to dismiss assailing the sufficiency of the complaint does not
hypothetically admit allegations of which the court will take judicial
notice ofto be not true, nor does the rule of hypothetical admission
apply to legallyimpossible facts, or to facts inadmissible in evidence, or
to facts that appear to be unfounded by record or document included in
the pleadings.36
 Aside from the insufficiency of petitioner’s allegations with respect to
her right to the subject properties sought to be recovered, the ultimate
facts supposedly justifying the "annulment of sale," by which the
reconveyance of the subject properties is sought, were also
insufficiently pleaded. The following averments in the Amended
Complaint betray no more than an insufficient narration of facts:
6. That pursuant to a voidable [sic] and void documents, the second
husband of the plaintiff succeed [sic] in transferring the above TITLES
in the name of MARIA DIVINAGRACIA SANTOS, who is (sic) alleged
daughter of LAMBERTO C. SANTOS in violation of Article 1409, Par. 2
of the Civil Code;
7. That the said properties [were] transferred to the said defendant by a
Deed of Sale (DOS) to the said MARIA DIVINA GRACIA SANTOS
through a void documents [sic] considering that the seller is the alleged
mother of defendant is also the buyer of the said properties in favor of
defendant;
8. x x x.
9. That the alleged sale and transfer of the said properties in favor of
defendant was only discovered by [plaintiff’s] daughter CYNTHIA
BELTRAN-LASMARIAS when [plaintiff] has been requesting for
financial assistance, considering that the said mother of plaintiff [sic]
has so many properties which is now the subject of this complaint;
10. That plaintiff then return on [to] the Philippines sometime [in]
November, 2005 and discovered that all [plaintiff’s] properties [had]
been transferred to defendant MARIA DIVINA GRACIA SANTOS who
is not a daughter either by consanguinity or affinity to the plaintiff
mother [sic];
11. That the titles that [were] issued in the name of MARIA
DIVINAGRACIA SANTOS by virtue of the said alleged voidable and
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void documents, should be annulled and cancelled as the basis of the
transfer is through void and voidable documents;
x x x x37
Clearly, the claim that the sale was effected through "voidable and void
documents" partakes merely of a conclusion of law that is not
supported by any averment of circumstances that will show why or how
such conclusion was arrived at. In fact, what these "voidable and void
documents" are were not properly stated and/or identified. In Abad v.
Court of First Instance of Pangasinan,38 the Court pronounced that:
A pleading should state the ultimate facts essential to the rights of
action or defense asserted, as distinguished from mere conclusions of
fact, or conclusions of law. General allegations thata contract is valid or
legal, or is just, fair, and reasonable, are mere conclusions of law.
Likewise, allegations that a contract is void, voidable, invalid, illegal,
ultra vires, or against public policy, without stating facts showing its
invalidity, are mere conclusions of law.39 (Emphases supplied)
Hence, by merely stating a legal conclusion, the Amended Complaint
presented no sufficient allegation upon which the Court could grant the
relief petitioner prayed for. Thus, said pleading should be dismissed on
the ground of failure to state cause of action, as correctly held by the
RTC.
That a copy of the Deed of Saleadverted to in the Amended Complaint
was subsequently submitted by petitioner does not warrant a different
course of action. The submission of that document was made, as it
1 âwphi1
was purportedly "recently recovered," only on reconsideration before
the CA which, nonetheless, ruled against the remand of the case. An
examination of the present petition, however, reveals no counter-
argument against the foregoing actions; hence, the Court considers
any objection thereto as waived.
 In any event, the Court finds the Amended Complaint’s dismissal to be
in order considering that petitioner’s cause of action had already
prescribed.
It is evident that petitioner ultimately seeks for the reconveyance to her
of the subject properties through the nullification of their supposed sale
to Gran. An action for reconveyance is one that seeks to transfer
property, wrongfully registered by another, to its rightful and legal
owner.40 Having alleged the commission of fraud by Gran in the transfer
and registration of the subject properties in her name, there was, in
effect, an implied trust created by operation of law pursuant to Article
1456 of the Civil Code which provides:
Art. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust
for the benefit of the person from whom the property comes. 1âwphi1
To determine when the prescriptive period commenced in an action for
reconveyance, the plaintiff’s possession of the disputed property is
material. If there is an actual need to reconvey the property as when
the plaintiff is not in possession, the action for reconveyance based on
implied trust prescribes in ten (10) years, the reference point being the
date of registration of the deed or the issuance of the title. On the other
hand, if the real owner of the property remains in possession of the
property, the prescriptive period to recover titleand possession of the
property does not run against him and in such case,the action for
reconveyance would be in the nature of a suit for quieting of title which
is imprescriptible.41
In the case at bar, a reading ofthe allegations of the Amended
Complaint failed to show that petitioner remained in possession of the
subject properties in dispute. On the contrary, it can be reasonably
deduced that it was Gran who was in possession ofthe subject
properties, there being an admission by the petitioner that the property
covered by TCT No. 224174 was being used by Gran’s mother-in-
law.42 In fact, petitioner’s relief in the Amended Complaint for the
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"surrender" of three (3) properties to her bolsters such stance.43 And
since the new titles tothe subject properties in the name of Gran were
issued by the Registry of Deeds of Marikina on the following dates:
TCT No. 224174 on July 27, 1992,44 TCT No. N-5500 on January 29,
1976,45 and TCT No. N-4234 on November 26, 1975,46 the filing of the
petitioner’s complaint beforethe RTC on January 9, 2006 was
obviously beyond the ten-year prescriptive period, warranting the
Amended Complaint’s dismissal all the same.
WHEREFORE, the petition is DENIED. The Decision dated January
10, 2011 and the Resolution dated June 22, 2011 of the Court of
Appeals in CA-G.R. CV No. 87849 are hereby AFFIRMEDwith
MODIFICATION in that the Amended Complaint be dismissed on the
grounds of (a) failure to state a cause of action, and (b) prescription as
herein discussed.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 158239 January 25, 2012
PRISCILLA ALMA JOSE, Petitioner,
vs.
RAMON C. JAVELLANA, ET AL., Respondents.
 DECISION
BERSAMIN, J.:
The denial of a motion for reconsideration of an order granting the
defending party’s motion to dismiss is not an interlocutory but a final
order because it puts an end to the particular matter involved, or settles
definitely the matter therein disposed of, as to leave nothing for the trial
court to do other than to execute the order.1 Accordingly, the claiming
party has a fresh period of 15 days from notice of the denial within
which to appeal the denial.2
Antecedents
On September 8, 1979, Margarita Marquez Alma Jose (Margarita) sold
for consideration of ₱160,000.00 to respondent Ramon Javellana by
deed of conditional sale two parcels of land with areas of 3,675 and
20,936 square meters located in Barangay Mallis, Guiguinto, Bulacan.
They agreed that Javellana would pay ₱80,000.00 upon the execution
of the deed and the balance of ₱80,000.00 upon the registration of the
parcels of land under the Torrens System (the registration being
undertaken by Margarita within a reasonable period of time); and that
should Margarita become incapacitated, her son and attorney-in-fact,
Juvenal M. Alma Jose (Juvenal), and her daughter, petitioner Priscilla
M. Alma Jose, would receive the payment of the balance and proceed
with the application for registration.3
After Margarita died and with Juvenal having predeceased Margarita
without issue, the vendor’s undertaking fell on the shoulders of
Priscilla, being Margarita’s sole surviving heir. However, Priscilla did
not comply with the undertaking to cause the registration of the
properties under the Torrens System, and, instead, began to improve
the properties by dumping filling materials therein with the intention of
converting the parcels of land into a residential or industrial
subdivision.4 Faced with Priscilla’s refusal to comply, Javellana
commenced on February 10, 1997 an action for specific performance,
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injunction, and damages against her in the Regional Trial Court in
Malolos, Bulacan (RTC), docketed as Civil Case No. 79-M-97 entitled
Ramon C. Javellana, represented by Atty. Guillermo G. Blanco v.
Priscilla Alma Jose.
In Civil Case No. 79-M-97, Javellana averred that upon the execution
of the deed of conditional sale, he had paid the initial amount of
₱80,000.00 and had taken possession of the parcels of land; that he
had paid the balance of the purchase price to Juvenal on different
dates upon Juvenal’s representation that Margarita had needed funds
for the expenses of registration and payment of real estate tax; and
that in 1996, Priscilla had called to inquire about the mortgage
constituted on the parcels of land; and that he had told her then that
the parcels of land had not been mortgaged but had been sold to him. 5
Javellana prayed for the issuance of a temporary restraining order or
writ of preliminary injunction to restrain Priscilla from dumping filling
materials in the parcels of land; and that Priscilla be ordered to institute
registration proceedings and then to execute a final deed of sale in his
favor.6
Priscilla filed a motion to dismiss, stating that the complaint was
already barred by prescription; and that the complaint did not state a
cause of action.7
The RTC initially denied Priscilla’s motion to dismiss on February 4,
1998.8 However, upon her motion for reconsideration, the RTC
reversed itself on June 24, 1999 and granted the motion to dismiss,
opining that Javellana had no cause of action against her due to her
not being bound to comply with the terms of the deed of conditional
sale for not being a party thereto; that there was no evidence showing
the payment of the balance; that he had never demanded the
registration of the land from Margarita or Juvenal, or brought a suit for
specific performance against Margarita or Juvenal; and that his claim
of paying the balance was not credible.9
 Javellana moved for reconsideration, contending that the presentation
of evidence of full payment was not necessary at that stage of the
proceedings; and that in resolving a motion to dismiss on the ground of
failure to state a cause of action, the facts alleged in the complaint
were hypothetically admitted and only the allegations in the complaint
should be considered in resolving the motion.10 Nonetheless, he
attached to the motion for reconsideration the receipts showing the
payments made to Juvenal.11 Moreover, he maintained that Priscilla
could no longer succeed to any rights respecting the parcels of land
because he had meanwhile acquired absolute ownership of them; and
that the only thing that she, as sole heir, had inherited from Margarita
was the obligation to register them under the Torrens System.12
On June 21, 2000, the RTC denied the motion for reconsideration for
lack of any reason to disturb the order of June 24, 1999.13
Accordingly, Javellana filed a notice of appeal from the June 21, 2000
order,14 which the RTC gave due course to, and the records were
elevated to the Court of Appeals (CA).
In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted the
following as errors of the RTC,15 to wit:
I Priscilla countered that the June 21, 2000 order was not appealable;
THE TRIAL COURT GRIEVOUSLY ERRED IN NOT
CONSIDERING THE FACT THAT PLAINTIFF-APELLANT
HAD LONG COMPLIED WITH THE FULL PAYMENT OF THE
CONSIDERATION OF THE SALE OF THE SUBJECT
PROPERTY AND HAD IMMEDIATELY TAKEN ACTUAL AND
PHYSICAL POSSESSION OF SAID PROPERTY UPON THE
SIGNING OF THE CONDITIONAL DEED OF SALE;
II
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THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO
CONFLICTING INTERPRETATIONS OF THE PROVISION OF
THE CIVIL [CODE], PARTICULARLY ARTICLE 1911, IN THE
LIGHT OF THE TERMS OF THE CONDITIONAL DEED OF
SALE;
III
THE TRIAL COURT ERRED IN HOLDING THAT
DEFENDANT-APPELLEE BEING NOT A PARTY TO THE
CONDITIONAL DEED OF SALE EXECUTED BY HER
MOTHER IN FAVOR OF PLAINTFF-
APPELLANT IS NOT BOUND THEREBY AND CAN NOT BE
COMPELLED TO DO THE ACT REQUIRED IN THE SAID
DEED OF CONDITIONAL SALE;
IV
THE TRIAL COURT ERRED IN DISMISSING THE AMENDED
COMPLAINT WITHOUT HEARING THE CASE ON THE
MERITS.
that the appeal was not perfected on time; and that Javellana was
guilty of forum shopping.16
It appears that pending the appeal, Javellana also filed a petition for
certiorari in the CA to assail the June 24, 1999 and June 21, 2000
orders dismissing his complaint (C.A.-G.R. SP No. 60455). On August
6, 2001, however, the CA dismissed the petition for certiorari,17 finding
that the RTC did not commit grave abuse of discretion in issuing the
orders, and holding that it only committed, at most, an error of
judgment correctible by appeal in issuing the challenged orders.
 On November 20, 2002, the CA promulgated its decision in C.A.-G.R.
CV No. 68259,18 reversing and setting aside the dismissal of Civil Case
No. 79-M-97, and remanding the records to the RTC "for further
proceedings in accordance with law."19 The CA explained that the
complaint sufficiently stated a cause of action; that Priscilla, as sole
heir, succeeded to the rights and obligations of Margarita with respect
to the parcels of land; that Margarita’s undertaking under the contract
was not a purely personal obligation but was transmissible to Priscilla,
who was consequently bound to comply with the obligation; that the
action had not yet prescribed due to its being actually one for quieting
of title that was imprescriptible brought by Javellana who had actual
possession of the properties; and that based on the
complaint, Javellana had been in actual possession since 1979, and
the cloud on his title had come about only when Priscilla had started
dumping filling materials on the premises.20
On May 9, 2003, the CA denied the motion for
reconsideration, 21 stating that it decided to give due course to the
appeal even if filed out of time because Javellana had no intention to
delay the proceedings, as in fact he did not even seek an extension of
time to file his appellant’s brief; that current jurisprudence afforded
litigants the amplest opportunity to present their cases free from the
constraints of technicalities, such that even if an appeal was filed out of
time, the appellate court was given the discretion to nonetheless allow
the appeal for justifiable reasons.
Issues
Priscilla then brought this appeal, averring that the CA thereby erred in
not outrightly dismissing Javellana’s appeal because: (a) the June 21,
2000 RTC order was not appealable; (b) the notice of appeal had been
filed belatedly by three days; and (c) Javellana was guilty of forum
shopping for filing in the CA a petition for certiorari to assail the orders
of the RTC that were the subject matter of his appeal pending in the
CA. She posited that, even if the CA’s decision to entertain the appeal
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was affirmed, the RTC’s dismissal of the complaint should nonetheless
be upheld because the complaint stated no cause of action, and the
action had already prescribed.
On his part, Javellana countered that the errors being assigned by
Priscilla involved questions of fact not proper for the Court to review
through petition for review on certiorari; that the June 21, 2000 RTC
order, being a final order, was appealable; that his appeal was
perfected on time; and that he was not guilty of forum shopping
because at the time he filed the
petition for certiorari the CA had not yet rendered a decision in C.A.-
G.R.
CV No. 68259, and because the issue of ownership raised in C.A.-G.R.
CV No. 68259 was different from the issue of grave abuse of discretion
raised in C.A.-G.R. SP No. 60455.
Ruling
The petition for review has no merit.
I
Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable
Priscilla submits that the order of June 21, 2000 was not the proper
subject of an appeal considering that Section 1 of Rule 41 of the Rules
of Court provides that no appeal may be taken from an order denying a
motion for reconsideration.
Priscilla’s submission is erroneous and cannot be sustained.
 First of all, the denial of Javellana’s motion for reconsideration left
nothing more to be done by the RTC because it confirmed the
dismissal of Civil Case No. 79-M-97. It was clearly a final order, not an
interlocutory one. The Court has distinguished between final and
interlocutory orders in Pahila-Garrido v. Tortogo,22 thuswise:
The distinction between a final order and an interlocutory order is well
known. The first disposes of the subject matter in its entirety or
terminates a particular proceeding or action, leaving nothing more to
be done except to enforce by execution what the court has determined,
but the latter does not completely dispose of the case but leaves
something else to be decided upon. An interlocutory order deals with
preliminary matters and the trial on the merits is yet to be held and the
judgment rendered. The test to ascertain whether or not an order or a
judgment is
interlocutory or final is: does the order or judgment leave something to
be done in the trial court with respect to the merits of the case? If it
does, the order or judgment is interlocutory; otherwise, it is final.
And, secondly, whether an order is final or interlocutory determines
whether appeal is the correct remedy or not. A final order is
appealable, to accord with the final judgment rule enunciated in
Section 1, Rule 41 of the Rules of Court to the effect that "appeal may
be taken from a judgment or final order that completely disposes of the
case, or of a particular matter therein when declared by these Rules to
be appealable;"23 but the remedy from an interlocutory one is not an
appeal but a special civil action for certiorari. The explanation for the
differentiation of remedies given in Pahila-Garrido v. Tortogo is apt:
xxx The reason for disallowing an appeal from an interlocutory order is
to avoid multiplicity of appeals in a single action, which necessarily
suspends the hearing and decision on the merits of the action during
the pendency of the appeals. Permitting multiple appeals will
necessarily delay the trial on the merits of the case for a considerable
length of time, and will compel the adverse party to incur unnecessary
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expenses, for one of the parties may interpose as many appeals as
there are incidental questions raised by him and as there are
interlocutory orders rendered or issued by the lower court. An
interlocutory order may be the subject of an appeal, but only after a
judgment has been rendered, with the ground for appealing the order
being included in the appeal of the judgment itself.
The remedy against an interlocutory order not subject of an appeal is
an appropriate special civil action under Rule 65, provided that the
interlocutory order is rendered without or in excess of jurisdiction or
with grave abuse of discretion. Then is certiorari under Rule 65 allowed
to be resorted to.
Indeed, the Court has held that an appeal from an order denying a
motion for reconsideration of a final order or judgment is effectively an
appeal from the final order or judgment itself; and has expressly
clarified that the prohibition against appealing an order denying a
motion for
reconsideration referred only to a denial of a motion for reconsideration
of an interlocutory order.24
II
Appeal was made on time pursuant to Neypes v. CA
Priscilla insists that Javellana filed his notice of appeal out of time. She
points out that he received a copy of the June 24, 1999 order on July 9,
1999, and filed his motion for reconsideration on July 21, 1999 (or after
the lapse of 12 days); that the RTC denied his motion for
reconsideration through the order of June 21, 2000, a copy of which he
received on July 13, 2000; that he had only three days from July 13,
2000, or until July 16, 2000, within which to perfect an appeal; and that
having filed his notice of appeal on July 19, 2000, his appeal should
have been dismissed for being tardy by three days beyond the
expiration of the reglementary period.
 Section 3 of Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. — The appeal shall be taken
within fifteen (15) days from notice of the judgment or final order
appealed from. Where a record on appeal is required, the appellant
shall file a notice of appeal and a record on appeal within thirty (30)
days from notice of the judgment or final order.
The period of appeal shall be interrupted by a timely motion for new
trial or reconsideration. No motion for extension of time to file a motion
for new trial or reconsideration shall be allowed. (n)
Under the rule, Javellana had only the balance of three days from July
13, 2000, or until July 16, 2000, within which to perfect an appeal due
to the timely filing of his motion for reconsideration interrupting the
running of the period of appeal. As such, his filing of the notice of
appeal only on July 19, 2000 did not perfect his appeal on time, as
Priscilla insists.
The seemingly correct insistence of Priscilla cannot be upheld,
however, considering that the Court meanwhile adopted the fresh
period rule in Neypes v. Court of Appeals,25 by which an aggrieved
party desirous of appealing an adverse judgment or final order is
allowed a fresh period of 15 days within which to file the notice of
appeal in the RTC reckoned from receipt of the order denying a motion
for a new trial or motion for reconsideration, to wit:
The Supreme Court may promulgate procedural rules in all courts. It
has the sole prerogative to amend, repeal or even establish new rules
for a more simplified and inexpensive process, and the speedy
disposition of cases. In the rules governing appeals to it and to the
Court of Appeals, particularly Rules 42, 43 and 45, the Court allows
extensions of time, based on justifiable and compelling reasons, for
parties to file their appeals. These extensions may consist of 15 days
or more.
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To standardize the appeal periods provided in the Rules and to afford
litigants fair opportunity to appeal their cases, the Court deems it
practical to allow a fresh period of 15 days within which to file the
notice of appeal in the Regional Trial Court, counted from receipt of the
order dismissing a motion for a new trial or motion for reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule 40
governing appeals from the Municipal Trial Courts to the Regional Trial
Courts; Rule 42 on petitions for review from the Regional Trial Courts
to the Court of Appeals; Rule 43 on appeals from quasi-judicial
agencies to the Court of Appeals and Rule 45 governing appeals by
certiorari to the Supreme Court. The new rule aims to regiment or
make the appeal period uniform, to be counted from receipt of the
order denying the motion for new trial, motion for reconsideration
(whether full or partial) or any final order or resolution. 26
The fresh period rule may be applied to this case, for the Court has
already retroactively extended the fresh period rule to "actions pending
and undetermined at the time of their passage and this will not violate
any right of a person who may feel that he is adversely affected,
inasmuch as there are no vested rights in rules of
procedure."27 According to De los Santos v. Vda. de Mangubat:28
Procedural law refers to the adjective law which prescribes rules and
forms of procedure in order that courts may be able to administer
justice. Procedural laws do not come within the legal conception of a
retroactive law, or the general rule against the retroactive operation of statues
― they may be given retroactive effect on actions pending and undetermined at
the time of their passage and this will not violate any right of a person who may
feel that he is adversely affected, insomuch as there are no vested rights in rules of
procedure.
The "fresh period rule" is a procedural law as it prescribes a fresh
period of 15 days within which an appeal may be made in the event
that the motion for reconsideration is denied by the lower court.
 Following the rule on retroactivity of procedural laws, the "fresh period
rule" should be applied to pending actions, such as the present case.
Also, to deny herein petitioners the benefit of the "fresh period rule" will
amount to injustice, if not absurdity, since the subject notice of
judgment and final order were issued two years later or in the year
2000, as compared to the notice of judgment and final order in Neypes
which were issued in 1998. It will be incongruous and illogical that
parties receiving notices of judgment and final orders issued in the year
1998 will enjoy the benefit of the "fresh period rule" while those later
rulings of the lower courts such as in the instant case, will not.29
Consequently, we rule that Javellana’s notice of appeal was timely filed
pursuant to the fresh period rule.
III
No forum shopping was committed
Priscilla claims that Javellana engaged in forum shopping by filing a
notice of appeal and a petition for certiorari against the same orders.
As earlier noted, he denies that his doing so violated the policy against
forum shopping.
The Court expounded on the nature and purpose of forum shopping in
In Re: Reconstitution of Transfer Certificates of Title Nos. 303168 and
303169 and Issuance of Owner’s Duplicate Certificates of Title In Lieu
of Those Lost, Rolando Edward G. Lim, Petitioner:30
Forum shopping is the act of a party litigant against whom an adverse
judgment has been rendered in one forum seeking and possibly getting
a favorable opinion in another forum, other than by appeal or the
special civil action of certiorari, or the institution of two or more actions
or proceedings grounded on the same cause or supposition that one or
the other court would make a favorable disposition. Forum shopping
happens when, in the two or more pending cases, there is identity of
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parties, identity of rights or causes of action, and identity of reliefs
sought. Where the elements of litis pendentia are present, and where a
final judgment in one case will amount to res judicata in the other, there
is forum shopping. For litis pendentia to be a ground for the dismissal
of an action, there must be: (a) identity of the parties or at least such as
to represent the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same
acts; and (c) the identity in the two cases should be such that the
judgment which may be rendered in one would, regardless of which
party is successful, amount to res judicata in the other.
For forum shopping to exist, both actions must involve the same
transaction, same essential facts and circumstances and must raise
identical causes of action, subject matter and issues. Clearly, it does
not exist where different orders were questioned, two distinct causes of
action and issues were raised, and two objectives were sought.
Should Javellana’s present appeal now be held barred by his filing of
the petition for certiorari in the CA when his appeal in that court was
yet pending?
We are aware that in Young v. Sy,31 in which the petitioner filed a notice
of appeal to elevate the orders concerning the dismissal of her case
due to non-suit to the CA and a petition for certiorari in the CA assailing
the same orders four months later, the Court ruled that the successive
filings of the notice of appeal and the petition for certiorari to attain the
same objective of nullifying the trial court’s dismissal orders constituted
forum shopping that warranted the dismissal of both cases. The Court
said:
Ineluctably, the petitioner, by filing an ordinary appeal and a petition for
certiorari with the CA, engaged in forum shopping. When the petitioner
commenced the appeal, only four months had elapsed prior to her filing
with the CA the Petition for Certiorari under Rule 65 and which
eventually came up to this Court by way of the instant Petition (re: Non-
Suit). The elements of litis pendentia are present between the two
 suits. As the CA, through its Thirteenth Division, correctly noted, both
suits are founded on exactly the same facts and refer to the same
subject matter—the RTC Orders which dismissed Civil Case No. SP-
5703 (2000) for
failure to prosecute. In both cases, the petitioner is seeking the
reversal of the RTC orders. The parties, the rights asserted, the issues
1âwp hi1
professed, and the reliefs prayed for, are all the same. It is evident that
the judgment of one forum may amount to res judicata in the other.
xxxx
The remedies of appeal and certiorari under Rule 65 are mutually
exclusive and not alternative or cumulative. This is a firm judicial policy.
The petitioner cannot hedge her case by wagering two or more
appeals, and, in the event that the ordinary appeal lags significantly
behind the others, she cannot post facto validate this circumstance as
a demonstration that the ordinary appeal had not been speedy or
adequate enough, in order to justify the recourse to Rule 65. This
practice, if adopted, would sanction the filing of multiple suits in
multiple fora, where each one, as the petitioner couches it, becomes a
"precautionary measure" for the rest, thereby increasing the chances of
a favorable decision. This is the very evil that the proscription on forum
shopping seeks to put right. In Guaranteed Hotels, Inc. v. Baltao, the
Court stated that the grave evil sought to be avoided by the rule
against forum shopping is the rendition by two competent tribunals of
two separate and contradictory decisions. Unscrupulous party litigants,
taking advantage of a variety of competent tribunals, may repeatedly
try their luck in several different fora until a favorable result is reached.
To avoid the resultant confusion, the Court adheres strictly to the rules
against forum shopping, and any violation of these rules results in the
dismissal of the case.32
The same result was reached in Zosa v. Estrella,33 which likewise
involved the successive filing of a notice of appeal and a petition for
certiorari to challenge the same orders, with the Court upholding the
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CA’s dismissals of the appeal and the petition for certiorari through
separate decisions.
Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust here
even if the orders of the RTC being challenged through appeal and the
petition for certiorari were the same. The unjustness exists because
the appeal and the petition for certiorari actually sought different
objectives. In his appeal in C.A.-G.R. CV No. 68259, Javellana aimed
to undo the RTC’s erroneous dismissal of Civil Case No. 79-M-97 to
clear the way for his judicial demand for specific performance to be
tried and determined in due course by the RTC; but his petition for
certiorari had the ostensible objective "to prevent (Priscilla) from
developing the subject property and from proceeding with the
ejectment case until his appeal is finally resolved," as the CA explicitly
determined in its decision in C.A.-G.R. SP No. 60455.34
Nor were the dangers that the adoption of the judicial policy against
forum shopping designed to prevent or to eliminate attendant. The first
danger, i.e., the multiplicity of suits upon one and the same cause of
action, would not materialize considering that the appeal was a
continuity of Civil Case No. 79-M-97, whereas C.A.-G.R. SP No. 60455
dealt with an independent ground of alleged grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the RTC. The
second danger, i.e., the unethical malpractice of shopping for a friendly
court or judge to ensure a favorable ruling or judgment after not getting
it in the appeal, would not arise because the CA had not yet decided
C.A.-G.R. CV No. 68259 as of the filing of the petition for certiorari.
Instead, we see the situation of resorting to two inconsistent remedial
approaches to be the result of the tactical misjudgment by Javellana’s
counsel on the efficacy of the appeal to stave off his caretaker’s
eviction from the parcels of land and to prevent the development of
them into a residential or commercial subdivision pending the appeal.
In the petition for certiorari, Javellana explicitly averred that his appeal
was "inadequate and not speedy to prevent private respondent Alma
Jose and her transferee/assignee xxx from developing and disposing
 of the subject property to other parties to the total deprivation of
petitioner’s rights of possession and ownership over the subject
property," and that the dismissal by the RTC had "emboldened private
respondents to fully develop the property and for respondent Alma
Jose to file an ejectment case against petitioner’s overseer
xxx."35 Thereby, it became far-fetched that Javellana brought the
petition for certiorari in violation of the policy against forum shopping.
WHEREFORE, the Court DENIES the petition for review on certiorari;
AFFIRMS the decision promulgated on November 20, 2002; and
ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
TINGA, J.:
On appeal by way of certiorari under Rule 45 of the 1997 Rules of Civil
Procedure are the Decision1 and Resolution of the Court of Appeals in
CA-G.R. CV No. 54074. The Decision reversed the order of dismissal
of the Regional Trial Court (RTC), Branch 273, Marikina, and directed
the court a quo to conduct trial on the merits, while the Resolution
denied petitioner Pineda’s motion for reconsideration.
As borne out by the records, the following are the factual antecedents.
On 7 September 1995, respondents Eliseo Guevara, Jr., Zenaida G.
Sapalicio, Dante G. Guevara and Isagani S. Guevara, collectively
referred hereinafter as the Guevara heirs, filed an action for the
nullification of the certificates of title of a parcel of land measuring
approximately 2,304 hectares situated in Marikina.

WE CONCUR: Named defendants were the estate of the late Pedro Gonzales,
Virginia Perez, Crisanta Perez, Jose Perez, Roy Guadalupe, Lino
Republic of the Philippines Bucad and Florentino Pineda. The complaint, docketed as Civil Case
SUPREME COURT No. 95-171-MK, was raffled to Branch 273 of the RTC of Marikina.
Manila
The Guevara heirs alleged in the complaint that they were the co-
SECOND DIVISION owners of a property originally covered by Original Certificate of Title
(OCT) No. 386 issued on 7 December 1910 in favor of the spouses
G.R. No. 143188 February 14, 2007 Emiliano Guevara and Matilde Crimen. The couple’s son, and the
Guevara heirs’ predecessor-in-interest, Eliseo Guevara, allegedly
purchased the property on 1 January 1932 and had exercised
FLORENTINO PINEDA, Petitioner,
ownership over the property since then by selling and donating
vs.
portions thereof to third persons. The Guevara heirs averred that the
HEIRS OF ELISEO GUEVARA, represented by ERNESTO E.
sale of the property to Eliseo Guevara was annotated at the back of
GUEVARA and ISAGANI S. GUEVARA, namely: ELISEO
OCT No. 386.
GUEVARA, JR., ZENAIDA G. SAPALICIO, DANTE G. GUEVARA,
DANILO C. GUEVARA, and ISAGANI S. GUEVARA, Respondents.
According to the Guevara heirs, the defendants illegally claimed
ownership and possession over a certain portion of the property,
DECISION
particularly that area covered by Transfer Certificate of Title (TCT) No.

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 223361 issued to the estate of Pedro C. Gonzales. TCT No. 223361
was derived from OCT No. 629, which the Guevara heirs described as
fake, having been issued only on 26 January 1912 or subsequent to
the issuance of OCT No. 386. Hence, the Guevara heirs prayed that
OCT No. 629 and its derivative titles, to wit, TCT Nos. 223361, 244447,
244448, 244449 be cancelled, that the Guevara heirs be declared
owners of the property and that a new certificate of title be issued in
their names.
Defendant Pineda filed an answer with counterclaim, raising the
defenses of lack of cause of action, prescription, laches and estoppel.
He averred that he was a buyer in good faith and had been in actual
possession of the land since 1970 initially as a lessor and
subsequently as an owner. He registered the property in his name and
was issued TCT No. 257272.
Defendants Virginia, Crisanta, and Jose, all surnamed Perez, filed an
answer with compulsory counterclaim and averred that their father,
Marcos Perez, purchased the property from the late Pedro Gonzales
and had it declared in Perez’s name for taxation purposes. According
to them, they had been in actual possession of a lot measuring 375
square meters before 1958 and had been regularly paying the property
taxes thereon.
The rest of the defendants, including the estate of Pedro Gonzales,
also filed an answer with counterclaim, raising the same defenses of
laches and prescription and res judicata. They claimed that OCT No.
629 was issued to the Municipality of Marikina in 1912 and that the late
Pedro Gonzales and his family started occupying the property as early
as 1950 as lessees thereon. The late Pedro Gonzales allegedly bought
the property from the Municipality of Marikina in a public bidding on 25
April 1966 and had allowed defendants to occupy the property. They
asserted that the Guevara heirs never actually occupied the property.
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On 4 December 1995, the RTC set the case for hearing as if a motion
to dismiss had been filed. During the hearing, the parties presented
oral arguments and were directed to file their memoranda.
After submission of memoranda, the RTC issued an Order dated 7
May 1996, dismissing the action on the ground of laches. The Guevara
heirs appealed the order of dismissal, claiming the denial of their right
to due process.
On 23 August 1999, the Court of Appeals promulgated the assailed
Decision, which set aside the RTC’s order of dismissal and directed the
reinstatement of Civil Case No. 95-171-MK. The appellate court ruled
that a complaint cannot be dismissed under Rule
16, Section 12 of the Rules of Court based on laches since laches is
not one of the grounds enumerated under said provision. Although the
RTC order of dismissal did not rule on the other affirmative defenses
raised by petitioners in the answer, such as lack of cause of action,
prescription and res judicata, the Court of Appeals discussed them and
ruled that none of these affirmative defenses raised were present to
warrant the dismissal of the action.
Only Pineda sought reconsideration. In its 3 May 2000 Resolution, the
Court of Appeals denied Pineda’s motion. Hence, the instant petition,
attributing the following errors to the Court of Appeals:
THE COURT OF APPEALS ERRED IN TAKING COGNIZANCE OF
THE APPEAL OF RESPONDENTS WHICH RAISED ONLY PURELY
QUESTIONS OF LAW; AND, THEREFORE, IT ACTED WITHOUT
JURISDICTION IN HEARING AND DECIDING THE SAID APPEALED
CASE.
THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE
AFFIRMATIVE DEFENSE OF LACHES AS ANALOGOUS TO
PRESCRIPTION.
 THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL
COURT’S DISMISSAL OF THE RESPONDENTS’ COMPLAINT IS
ERRONEOUS FOR THE REASON THAT THE AFFIRMATIVE
DEFENSE OF LACHES IS NOT AMONG THE GROUNDS FOR A
MOTION TO DISMISS UNDER THE RULES, WHICH MAY BE
ALLEGED AS AFFIRMATIVE DEFENSE TO BE PROVED DURING
THE TRIAL.
AS A COROLLARY TO THE THIRD ASSIGNED ERROR ABOVE,
THE COURT OF APPEALS ERRED IN NOT TREATING THE
ASSAILED ORDER OF DISMISSAL OF RESPONDENTS’
COMPLAINT BY THE TRIAL COURT AS A SUMMARY JUDGMENT,
TO AVOID PROTRACTED LITIGATION.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT WHILE
PRESCRIPTION IN DEROGATION OF THE TITLE TO REGISTERED
OWNERS WILL NOT LIE, LACHES WILL.3
Counsel for the estate of Pedro Gonzales filed a
Comment/Manifestation,4 stating that her clients have adopted and
joined Pineda’s petition praying for the reinstatement of the trial court’s
order of dismissal.
At bottom, the petition raises two main issues, to wit: (1) whether or not
the appeal of the heirs of Guevara was improperly elevated to the
Court of Appeals since, according to them, it raised a pure question of
law; and (2) whether or not the trial court correctly dismissed the action
on the ground of laches without conducting trial on the merits.
Petitioner Pineda had ample opportunity to raise before the Court of
Appeals the objection on the improper mode of appeal taken by the
heirs of Guevara. This, he failed to do. The issue of improper appeal
was raised only in Pineda’s motion for reconsideration of the Court of
Appeals’ Decision. Hence, this Court cannot now, for the first time on
appeal, pass upon this issue. For an issue cannot be raised for the first
time on appeal.5 In any case, the appeal by the heirs of Guevara also
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raised the issue regarding the existence of laches on the part of
petitioners as defendants, which is factual in nature as discussed
below.
Now, did the trial court correctly order the dismissal of the complaint
based on laches without conducting trial on the merits? The Court of
Appeals disagreed, holding that under Rule 16, Section 16 of the Rules
of Court, laches is not enumerated under said provision, hence, it must
be proved during trial. On the other hand, petitioner Pineda asserts that
laches is analogous to prescription and, therefore, can be a ground of
dismissing a complaint as though a motion to dismiss is filed.
Well-settled is the rule that the elements of laches must be proved
positively. Laches is evidentiary in nature which could not be
established by mere allegations in the pleadings and can not be
resolved in a motion to dismiss. At this stage therefore, the dismissal of
the complaint on the ground of laches is premature.7 Those issues
must be resolved at the trial of the case on the merits wherein both
parties will be given ample opportunity to prove their respective claims
and defenses.8
The elements of laches are: (1) conduct on the part of the defendant,
or of one under whom he claims, giving rise to the situation of which
the complaint seeks a remedy; (2) delay in asserting the complainant’s
rights, the complainant having had knowledge or notice of the
defendant’s conduct as having been afforded an opportunity to institute
a suit; (3) lack of knowledge or notice on the part of the defendant that
the complainant would assert the right in which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is accorded to
the complainant, or the suit is not held barred.9
Whether or not the elements of laches are present is a question
involving a factual determination by the trial court. There is no absolute
rule as to what constitutes laches or staleness of demand; each case is
to be determined according to its particular circumstances.10 Laches is
not concerned with the mere lapse of time, rather, the party must have
 been afforded an opportunity to pursue his claim in order that the delay
may sufficiently constitute laches.11 Without prejudging the instant
case, an apparent delay in the enforcement of one’s claim does not
automatically constitute laches. The party charged with negligence or
omission in invoking his right must be afforded the opportunity to raise
his defenses, which can be accommodated only in a contentious
proceeding.
In reversing the RTC’s order of dismissal, the Court of Appeals held
that "laches could not be a ground to dismiss the complaint as it is not
enumerated under Rule 16, Section 1."12 This is not entirely correct.
Under paragraph (h) thereof, where a claim or demand set forth in the
plaintiff’s pleading has been paid, waived, abandoned, or otherwise
extinguished, the same may be raised in a motion to dismiss. The
language of the rule, particularly on the relation of the words
"abandoned" and "otherwise extinguished" to the phrase "claim or
demand deemed set forth in the plaintiff’s pleading" is broad enough to
include within its ambit the defense of bar by laches. However, when a
party moves for the dismissal of the complaint based on laches, the
trial court must set a hearing on the motion where the parties shall
submit not only their arguments on the questions of law but also their
evidence on the questions of fact involved.13 Thus, being factual in
nature, the elements of laches must be proved or disproved through
the presentation of evidence by the parties. As discussed above, an
apparent delay in the filing of a complaint as shown in a pleading does
not automatically warrant the dismissal of the complaint on the ground
of laches.
In the case at bar, while the trial court correctly set the case for hearing
as though a motion to dismiss had been filed, the records do not reveal
that it extended to the parties the opportunity to present evidence. For
instance, counsel for the heirs of Guevara filed and served written
interrogatories14 on one of the defendants but the trial court held in
abeyance the resolution of the motion to order the defendant to submit
answers to the written interrogatories.15 The trial court likewise denied
the Ex Parte Motion To Set Trial filed by the heirs of Guevara.16 These
were the instances which would have enabled the trial court to receive
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evidence on which to anchor its factual findings. Although the trial court
heard oral arguments and required the parties to submit their
respective memoranda, the presentation of evidence on the defenses
which are grounds for a motion to dismiss was not held at all.
Otherwise, the oral arguments and memoranda submitted by the
parties would have enabled this Court to review the trial court’s factual
finding of laches instead of remanding the case for trial on the merits. A
perusal of the records precludes this Court from making a categorical
declaration on whether the heirs of Guevara were guilty of laches.
Neither does the affirmative defense of prescription alleged in an
answer automatically warrant the dismissal of the complaint under Rule
16. An allegation of prescription can effectively be used in a motion to
dismiss only when the complaint on its face shows that indeed the
action has already prescribed.17 Otherwise, the issue of prescription is
one involving evidentiary matters requiring a full-blown trial on the
merits and cannot be determined in a mere motion to
dismiss.18 Pineda’s theory that the defense of laches should be treated
as an affirmative defense of prescription warranting the dismissal of the
complaint is erroneous. 1awp hi1.n et
There is also no basis in procedural law to treat the RTC’s order of
dismissal as a summary judgment. The trial court cannot motu
proprio decide that summary judgment on an action is in order. Under
the applicable provisions of Rule 35, the defending party or the
claimant, as the case may be, must invoke the rule on summary
judgment by filing a motion.19 The adverse party must be notified of the
motion for summary judgment20 and furnished with supporting
affidavits, depositions or admissions before hearing is
conducted.21 More importantly, a summary judgment is permitted only if
there is no genuine issue as to any material fact and a moving party is
entitled to a judgment as a matter of law.22
Based on the parties’ allegations in the complaint and answer, the
issues in the case at bar are far from settled. For instance, both
petitioner and respondents claim their ownership rights over the same
 property based on two different original certificates of title. vs.
Respondents charge petitioner of illegal occupation while the latter JOSEPH ENARIO, Respondent.
invokes good faith in the acquisition of the property. Clearly, these are
factual matters which can be best ventilated in a full-blown proceeding DECISION
before the trial court, especially when what are involved appear to be
sizeable parcels of land covered by two certificates of title. PEREZ, J.:

Except for Pineda, the other defendants did not elevate the Court of The consequences of the failure of defendant to attend the pre-trial is
Appeals’ Decision to this Court. With respect to them, the appellate the central issue in this case.
court’s Decision has already become final and conclusive,
notwithstanding their adoption23 of Pineda’s petition.
Assailed in this petition is the Decision1 dated 28 September 2007, as
well as the Resolution2 dated 6 March 2008 of the Court of Appeals in
WHEREFORE, the instant petition for review on certiorari is DENIED CA-G.R. CV No. 82353, vacating and setting aside the orders dated 3
and the Decision and Resolution of the Court of Appeals in CA-G.R. June 20033 (June Order) and 24 November 20034, and the decision
CV No. 54074 are AFFIRMED. Let the records of the case be dated 24 February 20045 of the Regional Trial Court of
remanded for further proceedings to the Regional Trial Court of Manila6 declaring respondent Joseph Enario in default and ordering
Marikina City, which is hereby ORDERED to try and decide the case him to pay Philamlife ₱1,122,781.66.
with deliberate speed.
Respondent was appointed as agent of Philamlife on 12 November
SO ORDERED. 1991.7 Aside from being an active agent of Philamlife, respondent was
appointed unit manager where he also regularly received his override
DANTE O. TINGA Associate Justice commissions. He was afforded the privilege of receiving cash
advances from Philamlife, which the latter charges or debits against
WE CONCUR: future commissions due respondent, and the arrangement continued
until his resignation in February 2000.8
Republic of the Philippines
SUPREME COURT At the time of respondent’s resignation, Philamlife allegedly discovered
Manila that respondent had an outstanding debit balance of ₱1,237,336.20,
which he was obligated to settle and liquidate pursuant to the Revised
FIRST DIVISION Agency Contract he signed at the time of his employment, the pertinent
portion of which provides:
G.R. No. 182075 September 15, 2010
35. The Agent shall immediately at any time upon demand or without
THE PHILIPPINE AMERICAN LIFE & GENERAL INSURANCE necessity of demand upon termination of this Contract, return to the
COMPANY, Petitioner, Company and all documents, agency materials, paraphernalia, and

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 such other properties which he may have received therefrom to
effectively discharge and perform his duties and obligations. 9
Philamlife sent three (3) successive demand letters to respondent for
the settlement of his outstanding debit account.10 On 31 October 2000,
respondent requested that he be given time to review and settle his
accountabilities as he was still trying to reconcile his records. 11
When the parties failed to reach an agreement regarding the
settlement of the outstanding debit balance, Philamlife filed a complaint
for collection of a sum of money against respondent before the
Regional Trial Court (RTC) of Manila on 22 June 2001.
In his Answer, respondent denied the allegations that he had an
outstanding debit balance of ₱1,237,336.20 considering that he and
Philamlife had yet to reconcile the records of remittances with his
compensation, as well as overriding commissions. Respondent prayed
for the dismissal of the complaint and counterclaimed for damages.12
On 30 October 2002, the RTC set the pre-trial conference on 3 and 17
December 2002. The parties were directed to file their respective pre-
trial briefs before the date of the pre-trial conference.13 Respondent
moved for the postponement of the pre-trial to 14 January 2003 due to
conflict of schedule,14 which motion the RTC received on 2 December
2002.15
On 14 January 2003, the opposing counsels agreed to amicably settle
the case, prompting the RTC to reset the pre-trial to 8 May, 3 June and
1 July 2003.16
On 7 May 2003, respondent sent a telegram requesting for another
postponement of the pre-trial scheduled on the following day due to
medical reasons.
On 3 June 2003, respondent failed to appear. Consequently, Philamlife
manifested that respondent be declared in default for failure to appear
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at the pre-trial. The RTC granted the manifestation and allowed
Philamlife to present its evidence on 1 July 2003.17 The June Order
reads:
Appearance by Atty. Marivel A. Bautista Deodores, for the plaintiff. No
appearance by Atty. Casiano C. Vailoces, for the defendant.
Atty. Bautista-Deodores manifested that defendant be declared in
default for failure to appear four (4) times and that she be given 15
days from today to file a memorandum.
All manifestations, GRANTED. Plaintiff is allowed to present their
evidence on July 1, 2003 at 8:30 in the morning as previously
scheduled.
SO ORDERED.18
It was only on the following day, 4 June, that the RTC received
respondent’s motion for postponement of the 3 June 2003 hearing,
which was mailed on 30 May 2003.19
The 1 July 2003 hearing was reset to 28 August 2003 and Philamlife
was ordered to present its evidence ex parte.20
Respondent filed a motion for reconsideration of the June Order.
Despite notice, respondent still failed to appear on the 28 August 2003
pre-trial. Philamlife was then allowed to present its evidence ex parte,
which it did on that same hearing. Meanwhile, Philamlife was also
ordered to comment on the motion for reconsideration of the order of
default filed by respondent.21 Respondent denied receiving a notice of
hearing for 28 August 2003.22
In its Formal Offer of Evidence, Philamlife submitted statements of
account to prove that respondent has an outstanding debit account
 balance amounting to ₱1,237,390.26; and a summary of sale
underwriter vouchers (SUV) as evidence of cash advances, among
others.23
On 24 November 2003, the trial court issued an Order denying the
motion for reconsideration of the order of default and admitted
Philamlife’s Formal Offer of Evidence.24
On 24 February 2004, the trial court rendered judgment ordering
respondent to pay the following amount to Philamlife:
1. One Million One Hundred Twenty-two Thousand Seven
Hundred Eighty- One and 66/100 (₱1,122,781.66);
2. ₱10,000 as attorney’s fees;
3. Costs of Suit.25
Respondent elevated the case to the Court of Appeals via petition for
certiorari under Rule 65 of the Rules of Court. On 28 September 2007,
the Court of Appeals reversed the trial court’s decision and ruled, thus:
WHEREFORE, the orders dated June 3, 2003 and November 24, 2003
and the decision dated February 24, 2004 of the Regional Trial Court
of Manila (Branch 8) are VACATED and SET ASIDE and the case
REMANDED to that court for pre-trial and other proceedings.
SO ORDERED.26
The appellate court found that "respondent’s failure to appear for pre-
trial on 3 June 2003 does not constitute obstinate refusal to comply
with the lower court’s order."27 Further, the appellate court held that the
trial court erred in issuing an Order of Default since Section 5, Rule 18
of the Rules of Court explicitly provides that failure to appear for pre-
trial on the part of the defendant shall be cause to allow the plaintiff to
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present evidence ex parte and the court to render judgment on the
basis thereof. 28
Philamlife filed a motion for reconsideration, which was denied by the
Court of Appeals in its Resolution dated 6 March 2008.
Hence, this petition for certiorari was filed by Philamlife which attributes
error on the part of the Court of Appeals in vacating and setting aside
the RTC’s default order as a consequence of respondent’s failure to
appear during pre-trial. Philamlife concedes that the Court of Appeals
correctly relied on Justice Florenz Regalado’s annotation in his book,
REMEDIAL LAW COMPENDIUM, that instead of defendant being
declared in default by reason of his non-appearance, Section 5 Rule 18
of the Rules of Court spells out that the procedure will be to allow the
ex parte presentation of plaintiff’s evidence and the rendition of
judgment on the basis thereof. Likewise from Justice Regalado,
Philamlife argues that the reference to the word "default" which had
been deleted in the present rules solely for semantical propriety and
terminological accuracy, is not an error as the standing procedure was
followed by the trial court in allowing the ex parte presentation of
Philamlife’s evidence. Philamlife insists that since pre-trial is mandatory
in any action, when a party fails to appear therein, he may be non-
suited or declared in default.29
On the other hand, respondent maintains that the RTC committed an
egregious error when it issued an order of default against him for
failure to appear for pre-trial on 3 June 2003.
The fundamental issue is whether or not the RTC erred in declaring
respondent in default and allowing Philamlife to present its evidence ex
parte.
The resolution of this issue hinges on the interpretation and application
of Section 5, Rule 18 of the Rules of Court, which states:
 Section 5. Effect of failure to appear. — The failure of the plaintiff to
appear when so required pursuant to the next preceding section shall
be cause for dismissal of the action. The dismissal shall be with
prejudice, unless otherwise ordered by the court. A similar failure on
the part of the defendant shall be cause to allow the plaintiff to present
his evidence ex parte and the court to render judgment on the basis
thereof.
The "next preceding" section mandates that:
Section 4. Appearance of parties. – It shall be the duty of the parties
and their counsel to appear at the pre-trial. The non-appearance of a
party may be excused only if a valid cause is shown therefor or if a
representative shall appear in his behalf fully authorized in writing to
enter into an amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts
and of documents.
Note that nowhere in the first aforementioned provision was the word
"default" mentioned. Prior to the 1997 Revised Rules of Civil
Procedure, the phrase "as in default" was initially included in Rule 20 of
the old rules, and which read as follows:
Sec. 2. A party who fails to appear at a pre-trial conference may be
non-suited or considered as in default.
It was however amended in the 1997 Revised Rules of Civil Procedure.
Justice Regalado, in his book REMEDIAL LAW COMPENDIUM,
explained the rationale for the deletion of the phrase "as in default" in
the amended provision, to wit:
1. This is a substantial reproduction of Section 2 of the former Rule 20
with the change that, instead of defendant being declared "as in
default" by reason of his non-appearance, this section now spells out
that the procedure will be to allow the ex parte presentation of plaintiff’s
evidence and the rendition of judgment on the basis thereof. While
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actually the procedure remains the same, the purpose is one of
semantical propriety or terminological accuracy as there were
criticisms on the use of the word "default" in the former provision since
that term is identified with the failure to file a required answer, not
appearance in court.30
Still, in the same book, Justice Regalado clarified that while the order
of default no longer obtains, its effects were retained, thus:
Failure to file a responsive pleading within the reglementary period,
and not failure to appear at the hearing, is the sole ground for an order
of default, except the failure to appear at a pre-trial conference wherein
the effects of a default on the part of the defendant are followed, that
is, the plaintiff shall be allowed to present evidence ex parte and a
judgment based thereon may be rendered against defendant.31
As the rule now stands, if the defendant fails to appear for pre-trial, a
default order is no longer issued. Instead, the trial court may allow the
plaintiff to proceed with his evidence ex parte and the court can decide
the case based on the evidence presented by plaintiff.
The position of Philamlife is in accord with the Rule. Indeed, the
amendment did not change the essence of the original provision. The
legal ramification of defendant’s failure to appear for pre-trial is still
detrimental to him while beneficial to the plaintiff. The plaintiff is given
the privilege to present his evidence without objection from the
defendant, the likelihood being that the court will decide in favor of the
plaintiff, the defendant having forfeited the opportunity to rebut or
present its own evidence. lawph !1
Therefore, the June Order cannot be completely vacated because
semantics aside, the order substantially complied with Section 5 in
relation to Section 4, Rule 18 of the Rules of Court.
 The importance of pre-trial in civil actions cannot be overemphasized.
In Balatico v. Rodriguez32, the Court, citing Tiu v. Middleton33, delved
on the significance of pre-trial, thus:
Pre-trial is an answer to the clarion call for the speedy disposition of
cases. Although it was discretionary under the 1940 Rules of Court, it
was made mandatory under the 1964 Rules and the subsequent
amendments in 1997. Hailed as "the most important procedural
innovation in Anglo-Saxon justice in the nineteenth century," pre-trial
seeks to achieve the following:
(a) The possibility of an amicable settlement or of a submission
to alternative modes of dispute resolution;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the
pleadings;
(d) The possibility of obtaining stipulations or admissions of
facts and of documents to avoid unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a
commissioner;
(g) The propriety of rendering judgment on the pleadings, or
summary judgment, or of dismissing the action should a valid
ground therefor be found to exist;
(h) The advisability or necessity of suspending the
proceedings; and
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(i) Such other matters as may aid in the prompt disposition of
the action.34
Therefore, "pre-trial cannot be taken for granted. It is not a mere
technicality in court proceedings for it serves a vital objective: the
simplification, abbreviation and expedition of the trial, if not indeed its
dispensation."35 This considered, it is required in Section 4 of Rule 20
of the Rules of Court that:
Section 4. Appearance of parties. – It shall be the duty of the parties
and their counsel to appear at the pre-trial. The non-appearance of a
party may be excused only if a valid cause is shown therefor or if a
representative shall appear in his behalf fully authorized in writing to
enter into an amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts
and of documents. [Emphasis supplied]
Definitely, non-appearance of a party may only be excused for a valid
cause. We see none in this case even if the positions of the parties are
given a second consideration.
Philamlife claims that respondent was absent the four (4) times that the
case was called for pre-trial on 3 and 17 December 2002, 8 May 2003
and 3 June 2003. Philamlife underlines the belated filing of respondent
of his motions for postponement. The motion for the postponement of
the 3 and 17 December 2002 pre-trial was received by the trial court on
3 December 2002 while that for 8 May and 3 June 2003 pre-trial was
received on 4 June 2003 or the day after the pre-trial, where and when
respondent was declared in default. Philamlife considers the manner
by which respondent moved for postponements, as well as his claim
that he was not notified of the 28 August 2003 when records show that
he was in fact notified, as clear demonstration of negligence,
irresponsibility and contumacy.
Respondent counters that he moved for the postponement of the 3 and
17 December 2002 pre-trial due to a conflict of schedule while the 14
 January 2003 pre-trial was reset on account of the parties’ agreement
to settle the case amicably. The 8 May 2003 pre-trial was also
postponed due to medical reasons. While he did not appear on the pre-
trial of 3 June 2003, he filed on 30 May 2003 a motion for
postponement, although received by the trial court only on 4 June
2003. Respondent added that on 3 June and 1 July 2003 pre-trial days,
petitioner was not even ready to present its evidence. It was only on 28
August 2003 that Philamlife presented its evidence ex parte, despite
the unresolved motion for reconsideration of the 3 June 2003 order.
The Court of Appeals dismissed Philamlife’s contention and declared
that "respondent’s failure to appear for pre-trial on 3 June 2003 does
not constitute obstinate refusal to comply with the lower court’s order
and that only on that date was respondent absent when the case was
actually called for pre-trial."36
Respondent undeniably sought for postponement of the pre-trial at
least three (3) times. First, he cited conflict in schedule as reason to
seek postponement of the 3 and 17 December 2002 pre-trial. Second,
the 8 May 2003 pre-trial was reset upon motion of respondent through
a telegram due to medical reasons. Third, respondent also filed a
motion to postpone the pre-trial for 3 June 2003 and he explained that
"defendant and plaintiff’s Cebu Office are still negotiating the ways for
the projected settlement on possible monthly basis with property as
guarantee to be embodied in their Compromise Agreement, and since
plaintiff’s Cebu Officer could not always be available they have not yet
wind-up to bring matters to plaintiff’s Manila Office through their
counsel."37
The first two (2) motions for postponement were granted by the trial
court. Only the 3 June 2003 pre-trial proceeded in the absence of
respondent during which the trial court issued the default order. The
trial court’s denial of the motion for reconsideration of the June Order
amounted to a denial of his motion for postponement of the 3 June
2003 pre-trial date.
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A motion for postponement is a privilege and not a right. A movant for
postponement should not assume beforehand that his motion will be
granted. The grant or denial of a motion for postponement is a matter
that is addressed to the sound discretion of the trial court. Indeed, an
order declaring a party to have waived the right to present evidence for
performing dilatory actions upholds the trial court's duty to ensure that
trial proceeds despite the deliberate delay and refusal to proceed on
the part of one party. 38
In deciding whether to grant or deny a motion for postponement of pre-
trial, the court must take into account the following factors: (a) the
reason for the postponement, and (b) the merits of the case of
movant.39
The trial court correctly saw the reason proffered by respondent as
insufficient to excuse his non-appearance. Indeed, when the 14
January 2003 pre-trial was postponed to 8 May 2003, the parties were
in fact given the opportunity to settle the case amicably, as there was
ample time for both parties to reconcile their records and agree on
compromise figures. We cannot see how, inspite of the length of time
given to him, respondent can still use as reason a possible settlement,
about which Philamlife even denies having any knowledge.
Notably, the trial court could not have acted timely in his favor because
the trial court received the motion one day after the pre-trial schedule.
About this, we note further the practice of respondent in filing his
motions for postponement close to the scheduled pre-trial date. In his
motion to reset the 8 May 2003 pre-trial, his motion was mailed on 7
May 2003. Likewise, his motion for postponement for the 3 June 2003
pre-trial was mailed on 30 May 2003. In those occasions, the trial court
either received his motions on the day of pre-trial or a day after the pre-
trial date. The trial court, which at the day of the 3 June 2003 pre-trial
has not received any word from the respondent would logically, as it
did, proceed with the hearing.
 Respondent tries in vain to reason out that by allowing Philamlife to Republic of the Philippines
present its evidence ex parte, his right to due process was denied. SUPREME COURT
Manila
"The essence of due process is to be found in the reasonable
opportunity to be heard and submit any evidence one may have in THIRD DIVISION
support of one’s defense. Where the opportunity to be heard, either
through verbal arguments or pleadings, is accorded, and the party can G.R. No. 170606 November 23, 2007
present its side or defend its interest in due course, there is no denial
of procedural due process."40 LCK INDUSTRIES INC., CHIKO LIM and ELIZABETH T.
LIM, Petitioners,
Respondent had been given more than enough time to present his vs.
evidence. The pre-trial date was reset four (4) times for a total period of PLANTERS DEVELOPMENT BANK, Respondent.
6 months before the trial court allowed Philamlife to present its
evidence ex parte when respondent failed to appear on the scheduled DECISION
date.
CHICO-NAZARIO, J.:
With respect to the trial court’s order for respondent to pay
₱1,122,781.66 representing the amount of his outstanding debit
Before this Court is the Petition for Review on Certiorari under Rule 45
balance, we affirm its findings which were based on records presented
of the Revised Rules of Court filed by petitioners LCK Industries Inc.
by Philamlife. As a consequence of respondent’s non-appearance, he
(LCK), Chiko Lim and Elizabeth Lim, seeking the reversal and the
was deemed to have waived his right to present his own evidence, if
setting aside of the Decision1 dated 1 April 2005 and the
there was any.
Resolution2 dated 29 November 2005 of the Court of Appeals in CA-
G.R. CV No. 73944. The appellate court, in its assailed Decision and
We overturn the ruling of the Court of Appeals on the foregoing basis. Resolution, reversed the Decision3 of the Regional Trial Court (RTC) of
Quezon City, Branch 81, dated 3 September 2001, in Civil Case No. Q-
WHEREFORE, the Decision dated 28 September 2007, as well as the 98-33835, which found respondent Planters Development Bank
Resolution dated 6 March 2008 of the Court of Appeals in CA-G.R. CV (respondent bank) liable for the amount of ₱1,856,416.67, representing
No. 82353 are REVERSED and SET ASIDE. The Orders dated 3 June overpayment.
2003 and 24 November 2003 and the Decision dated 24 February
2004 of the Regional Trial Court of Manila ordering respondent Joseph Petitioner LCK is a domestic corporation duly organized and existing
Enario to pay Philamlife ₱1,122,781.66 are REINSTATED. as such under Philippine laws.4

SO ORDERED. Respondent bank is a banking institution duly authorized to engage in

banking business under Philippine laws.5
JOSE PORTUGAL PEREZ
Associate Justice

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 On 1 September 1995, petitioner LCK obtained a loan from the
respondent bank in the amount of ₱3,000,000.00 as evidenced by two
promissory notes.6
As a security for the loan obligation, petitioners-spouses Chiko and
Elizabeth Lim executed a Real Estate Mortgage over a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-138623, registered
under their names and located at Quezon City, with an area of 68
square meters (Quezon City property).7 Later on, to secure the same
obligation, another Real Estate Mortgage was executed over another
parcel of land covered by TCT No. T-62773, also registered under the
names of the petitioner-spouses, with an area of 71 square meters
located at Baguio City (Baguio City property).8
Subsequently, petitioner LCK incurred default in its payment; thus,
making the obligation due and demandable. Several demands were
thereafter made by the respondent bank to no avail.9 On 13 October
1997, a final letter-demand was sent by respondent bank to petitioner
LCK asking for the payment of its obligation in the amount of
₱2,962,500.00. Such final demand notwithstanding, petitioner LCK
failed or refused to pay its obligation.
Consequently, respondent bank caused the extrajudicial foreclosure of
the Baguio City property which was sold at the public auction for
₱2,625,000.00 as shown in the Certificate of Sale10 dated 29 January
1998. Since the proceeds of the foreclosed Baguio City property were
not enough to satisfy the entire loan obligation which amounted to
₱2,962,500.00, respondent bank further caused the extrajudicial
foreclosure of the Quezon City property. As evidenced by the
Certificate of Sale11 dated 18 March 1998, signed by Notary Public
Atty. Allene Anigan (Atty. Anigan), the foreclosed Quezon City property
was sold at a public auction for ₱2,231,416.67. The respondent bank
was the highest bidder on both occasions.
Prior to the auction sale of the Quezon City property on 18 March
1998, petitioners, on 12 March 1998, filed with the RTC of Quezon
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City, Branch 81, an action for Annulment of the Foreclosure of
Mortgage and Auction Sale of the Quezon City property with
Restraining Order/Preliminary Injunction and with Damages against
respondent bank and Atty. Anigan.12 The case was docketed as Civil
Case No. Q-98-33835.
In their Complaint,13 petitioners alleged that respondent bank failed to
comply with the posting and publication requirements as well as with
the filing of the Petition for the Extrajudicial Foreclosure of the Real
Estate Mortgage with the Clerk of Court as required by Act No.
3135.14 Petitioners prayed for the issuance of temporary restraining
order (TRO) in order to enjoin the respondent bank from conducting
the auction sale, and in the alternative, to enjoin the Registry of Deeds
of Quezon City from transferring the ownership of the Quezon City
property to the purchaser at the auction sale.
In its Answer with the Opposition to the Prayer for the Issuance of
Temporary Restraining Order (TRO), respondent bank averred that it
had fully observed the posting and publication requirements of Act No.
3135. It insisted that the filing of the Petition for Extrajudicial
Foreclosure of the Mortgage Property with the Notary Public was
sanctioned by the same statute. Respondent bank thus prayed for the
dismissal of petitioners’ complaint for lack of merit.15
For failure of the counsels for both petitioners and respondent bank to
appear in the scheduled hearing for the issuance of temporary
restraining order, the RTC, in an Order dated 15 May 1998, deemed
the prayer for TRO abandoned.16
Thereafter, the RTC conducted a pre-trial conference. In the Pre-Trial
Order17 dated 8 September 2000, the parties made the following
admissions and stipulations:
(1) the real estate mortgage executed by the plaintiffs in favor
of the defendant bank covers the loan obligation in the total
amount of ₱3,000,000.00;
 (2) there were two promissory notes executed by the plaintiffs:
one for ₱2,700,000.00 and another for ₱300,000.00;
(3) a demand letter dated 13 October 1997 was sent to
petitioner LCK by respondent bank stating that the remaining
balance of petitioner LCK’s loan obligation was ₱2,962,500.00
as of 13 October 1997;
(4) a Notice of Auction Sale by Notary Public was made by the
respondent bank in foreclosing the Baguio City property, and in
the Certificate of Sale issued by the Notary Public, the
respondent bank bid ₱2,625,000.00 for the property;
(5) the respondent bank also foreclosed the real estate
mortgage over the petitioners’ Quezon City property on 18
March 1998 and said defendant bank bid ₱2,231,416.67 for the
property;
(6) the foreclosure of petitioners’ Quezon City property was
made by a notary public;
(7) the petition for foreclosure was not included in the raffle of
judicial notice;
(8) the petitioners failed to fully pay their loan obligation as of
13 October 1997 in the amount of ₱962,500.00; and
(9) despite the demands, petitioners failed to pay their due
obligations.
The court further defined the issues as follows:
(1) whether or not the petition was filed with the Office of the
Clerk of Court;
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(2) whether or not the extra-judicial foreclosure of real estate
mortgage by defendant bank was made in accordance with the
provisions of Act 3135, as amended; and
(3) whether or not the parties are entitled to their respective
claims for attorney’s fees and damages.18
The parties were given 15 days from receipt of the Pre-Trial Order to
make amendments or corrections thereon.
On 18 April 2001, the parties agreed to submit the case for the
decision of the RTC based on the stipulations and admissions made at
the pre-trial conference. The parties further manifested that they were
waiving their respective claims for attorney’s fees. On the same day,
the RTC required the parties to submit their respective memoranda.19
In their Memorandum,20 petitioners, aside from reiterating issues
previously raised in their Complaint, further claimed that there was an
overpayment of the loan obligation by ₱1,856,416.67. As shown in the
letter-demand dated 13 October 1997 received by petitioner LCK, its
outstanding loan obligation amounted to ₱2,962,500.00. The Baguio
City property was purchased by respondent bank at the public auction
for ₱2,625,000.00, while the Quezon City property was purchased for
₱2,231,416.67.
For its part, respondent bank maintained in its Memorandum 21 that the
complaint filed by petitioners is devoid of merit. It further asseverated
that petitioners’ claim for overpayment was not among the issues
submitted for the resolution of the RTC. It is clear from the Pre-Trial
Order that the issues to be resolved are limited to whether the petition
for the foreclosure of the real estate mortgage was filed before the
Clerk of Court and whether or not the extrajudicial foreclosure of real
estate mortgage was made by the respondent bank in accordance with
the provisions of Act No. 3135. For failure of petitioners to promptly
raise the alleged overpayment, the RTC is now barred from
adjudicating this issue.
 On 3 September 2001, the RTC rendered its Decision22 declaring the
foreclosure and the auction sale of the Quezon City property legal and
valid, but ordered respondent bank to return the overpayment made by
petitioners in the amount of ₱1,856,416.67. The dispositive portion of
the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as
follows:
1. Declaring the extra-judicial foreclosure and auction sale of
the Quezon City property of plaintiffs LCK Industries, Inc.,
Chiko Lim and Elizabeth Lim subject of this case legal and
valid;
2. Ordering defendant Planters Development Bank to pay to
plaintiffs the amount of ₱1,856,416.67 representing
overpayment;
3. Dismissing plaintiffs’ claim for attorney’s fees and other
litigation expenses;
4. Dismissing the case against defendant Atty. Allene M.
Anigan; and
5. Dismissing the counterclaims of defendants Planters
Development Bank and Atty. Arlene M. Anigan.23
For lack of merit, the Motion for Reconsideration filed by the
respondent bank was denied by the RTC in its Order dated 3
December 2001.24
Aggrieved, respondent bank elevated the matter to the Court of
Appeals by assailing the portion of the RTC Decision ordering it to pay
petitioners the amount of ₱1,856,416.67 representing the alleged
overpayment. The respondent bank’s appeal was docketed as CA-
G.R. CV No. 73944.25
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On 1 April 2005, the Court of Appeals granted the appeal of the
respondent bank and partially reversed the RTC Decision insofar as it
ordered respondent bank to pay the overpaid amount of ₱1,856,416.67
to petitioners. In deleting the award of overpayment, the appellate court
emphasized that the primary purpose of pre-trial is to make certain that
all issues necessary for the disposition of the case are properly raised
in order to prevent the element of surprise. Since the alleged
overpayment was only raised by the petitioners long after the pre-trial
conference, the court a quo cannot dispose of such issue without
depriving the respondent bank of its right to due process.26
The Motion for Reconsideration filed by petitioners was denied by the
Court of Appeals in its Resolution27 dated 29 November 2005.
Petitioners are now before this Court via a Petition for Review
on Certiorari,28 under Rule 45 of the Revised Rules of Court, assailing
the Court of Appeals Decision and raising the following issues as
grounds:
I.
WHETHER OR NOT THE EXCESS AMOUNT OF
₱1,893,916.67 WHICH THE RESPONDENT BANK
ACQUIRED FROM THE AUCTION SALE OF THE
PETITIONERS’ PROPERTIES SHALL BE RETURNED TO
THEM.
II.
WHETHER OR NOT THE ISSUE OF OVERPAYMENT WAS
RAISED BY THE PARTIES AND INCLUDED IN THE PRE-
TRIAL ORDER.29
The petition centers on the claim propounded by petitioners that there
was an overpayment of the loan obligation in the amount of
₱1,856,416.67. Petitioners insist they are entitled to the reimbursement
 of the overpaid amount invoking the elementary principle of in rem
verso30 in human relations and the rule on the disposition of the
proceeds of the sale providing that the balance or the residue after
deducting the cost of the sale and the payment of the mortgage debt
due, shall be paid to the junior encumbrancers, and in the absence of
junior encumbrancers, to the mortgagor or his duly authorized
representative.31
On the other hand, respondent bank counters that the question of
overpayment, not being included in the issues stipulated in Pre-Trial
Order dated 8 September 2000, and totally unrelated therein, cannot
be considered by the RTC. The belated ventilation of the alleged
overpayment precluded the RTC from ruling on the matter in
consonance with the primordial purpose of the pre-trial conference
which is to delineate the issues necessary for the disposition of the
case. 32
The conduct of pre-trial in civil actions has been mandatory as early as
1 January 1964 upon the effectivity of the Revised Rules of
Court.33 Pre-trial is a procedural device intended to clarify and limit the
basic issues between the parties34 and to take the trial of cases out of
the realm of surprise and maneuvering.35
Pre-trial is an answer to the clarion call for the speedy disposition of
cases. Hailed as the most important procedural innovation in Anglo-
Saxon justice in the nineteenth century,36 pre-trial is a device intended
to clarify and limit the basic issues between the parties.37 It thus paves
the way for a less cluttered trial and resolution of the case.38 Pre-trial
seeks to achieve the following:
(a) The possibility of an amicable settlement or of a submission
to alternative modes of dispute resolution;
(b) The simplification of the issues;
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(c) The necessity or desirability of amendments to the
pleadings;
(d) The possibility of obtaining stipulations or admissions of
facts and of documents to avoid unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a
commissioner;
(g) The propriety of rendering judgment on the pleadings, or
summary judgment, or of dismissing the action should a valid
ground therefor be found to exist;
(h) The advisability or necessity of suspending the
proceedings; and
(i) Such other matters as may aid in the prompt disposition of
the action.39
The purpose of entering into a stipulation of facts is to expedite trial
and to relieve the parties and the court as well of the costs of proving
facts which will not be disputed on trial and the truth of which can be
ascertained by reasonable inquiry. Its main objective is to simplify,
abbreviate and expedite the trial, or totally dispense with it. 40
The parties themselves or their representative with written authority
from them are required to attend in order to arrive at a possible
amicable settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or admissions of facts and
documents. All of the matters taken up during the pre-trial, including
the stipulation of facts and the admissions made by the parties, are
required to be recorded in a pre-trial order.41
 Thus, Section 7, Rule 18 of the Revised Rules of Court provides:
SEC. 7. Record of pre-trial. – The proceedings in the pre-trial shall be
recorded. Upon the termination thereof, the court shall issue an order
which shall recite in detail the matters taken up in the conference, the
action taken thereon, the amendments allowed to the pleadings, and
the agreements or admissions made by the parties as to any of the
matters considered. Should the action proceed to trial, the order shall
explicitly define and limit the issues to be tried. The contents of the
order shall control the subsequent course of the action, unless
modified before trial to prevent manifest injustice.
In the Pre-Trial Order dated 8 September 2000, the RTC defined the
issues as follows: (1) whether or not the petition was filed with the
Office of the Clerk of Court; (2) whether or not the extrajudicial
foreclosure of real estate mortgage by defendant bank was made in
accordance with the provisions of Act No. 3135; and (3) whether or not
the parties are entitled to their respective claims for attorney’s fees and
damages.
Based on the admissions and stipulations during the pre-trial
conference and the issues defined by the court a quo as embodied in
the Pre-Trial Order, the parties agreed to submit the case for the
resolution of the RTC. Both petitioners and respondent also manifested
that they would forego their respective claims for attorney’s fees,
leaving solely the issue of the validity of the foreclosure of mortgage
and auction sale for the RTC’s disposition. However, in petitioners’
Memorandum filed after the case was submitted for
resolution, petitioners raised the question of overpayment, a new issue
that was included neither in their Complaint nor in the issues defined in
the Pre-Trial Order issued by the RTC.
Generally, pre-trial is primarily intended to make certain that all issues
necessary to the disposition of a case are properly raised. Thus, to
obviate the element of surprise, parties are expected to disclose at the
pre-trial conference all issues of law and fact they intend to raise at the
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trial.42 However, in cases in which the issue may involve privileged or
impeaching matters,43 or if the issues are impliedly included therein or
may be inferable therefrom by necessary implication to be integral
parts of the pre-trial order as much as those that are expressly
stipulated, the general rule will not apply.44 Thus, in Velasco v.
Apostol,45 this Court highlighted the aforesaid exception and ruled in
this wise:
A pre-trial order is not meant to be a detailed catalogue of each and
every issue that is to be or may be taken up during the trial. Issues that
are impliedly included therein or may be inferable therefrom by
necessary implication are as much integral parts of the pre-trial order
as those that are expressly stipulated.
In fact, it would be absurd and inexplicable for the respondent
company to knowingly disregard or deliberately abandon the issue of
non-payment of the premium on the policy considering that it is the
very core of its defense. Correspondingly, We cannot but perceive here
an undesirable resort to technicalities to evade an issue determinative
of a defense duly averred. (Emphasis supplied).
The case at bar falls under this particular exception. Upon scrupulous
examination of the Pre-Trial Order dated 8 September 2000, it can be
deduced that the parties stipulated that the remaining sum of petitioner
LCK’s obligation as of 13 October 1997 was ₱2,962,500.00. In the
same Pre-Trial Order, the parties likewise stipulated that the Baguio
City property was sold at the public auction for ₱2,625,000.00 and the
Quezon City property for ₱2,231,416.67. On both occasions,
respondent bank emerged as the highest bidder. By applying simple
mathematical operation, the mortgaged properties were purchased by
the respondent at the public auctions for ₱4,856,416.67; thus, after
deducting therefrom the balance of petitioner LCK’s obligation in the
amount of ₱2,962,500.00, an excess in the sum of ₱1,893,916.67
remains.
 Needless to say, the fact of overpayment, though not expressly
included in the issues raised in the Pre-Trial Order dated 8 September
2000, can be evidently inferred from the stipulations and admissions
made by the parties therein. Even only upon plain reading of the said
Pre-Trial Order, it can be readily discerned that there was an
overpayment.
The pertinent provisions of the Revised Rules of Court on extrajudicial
foreclosure sale provide:
Rule 39. SEC. 21. Judgment obligee as purchaser. – When the
purchaser is the judgment obligee, and no third-party claim has been
filed, he need not pay the amount of the bid if it does not exceed the
amount of the judgment. If it does, he shall pay only the excess.
Rule 68. SEC. 4. Disposition of proceeds of sale.- The amount realized
from the foreclosure sale of the mortgaged property shall, after
deducting the costs of the sale, be paid to the person foreclosing the
mortgage, and when there shall be any balance or residue, after
paying off the mortgage debt due, the same shall be paid to junior
encumbrancers in the order of their priority, to be ascertained by the
court, or if there be no such encumbrancers or there be a balance or
residue after payment to them, then to the mortgagor or his duly
authorized agent, or to the person entitled to it. (Emphasis supplied.)
The renowned jurist Florenz Regalado, in Sulit v. Court of
Appeals,46 underscored the obligation of the mortgagee with respect to
the surplus money resulting from a foreclosure sale of the mortgaged
property:
The application of the proceeds from the sale of the mortgaged
property to the mortgagor’s obligation is an act of payment, not
payment by dation; hence, it is the mortgagee’s duty to return any
surplus in the selling price to the mortgagor. Perforce, a mortgagee
who exercises the power of sale contained in a mortgage is considered
a custodian of the fund, and, being bound to apply it properly, is liable
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to the persons entitled thereto if he fails to do so. And even though the
mortgagee is not strictly considered a trustee in a purely equitable
sense, but as far as concerns the unconsumed balance, the mortgagee
is deemed a trustee for the mortgagor or owner of the equity of
redemption. 1âwphi 1
Commenting on the theory that a mortgagee, when he sells under a
power, cannot be considered otherwise than as a trustee, the vice-
chancellor in Robertson v. Norris (1 Giff. 421) observed: "That
expression is to be understood in this sense: that with the power being
given to enable him to recover the mortgage money, the court requires
that he shall exercise the power of sale in a provident way, with a due
regard to the rights and interests of the mortgagor in the surplus money
to be produced by the sale. (Emphasis supplied.)
Petitioner LCK’s obligation with the respondent bank was already fully
satisfied after the mortgaged properties were sold at the public auction
for more than the amount of petitioner LCK’s remaining debt with the
respondent bank. As the custodian of the proceeds from the
foreclosure sale, respondent bank has no legal right whatsoever to
retain the excess of the bid price in the sum of ₱1,893,916.67, and is
under clear obligation to return the same to petitioners.
In any case, this Court would not allow respondent bank to hide behind
the cloak of procedural technicalities in order to evade its obligation to
return the excess of the bid price, for such an act constitutes a violation
of the elementary principle of unjust enrichment in human relations.
Under the principle of unjust enrichment - nemo cum alterius
detrimento locupletari potest - no person shall be allowed to enrich
himself unjustly at the expense of others.47 This principle of equity has
been enshrined in our Civil Code, Article 22 of which provides:
Art. 22. Every person who through an act of performance by another,
or any other means, acquires or comes into possession of something
 at the expense of the latter without just or legal ground, shall return the
same to him.
We have held that there is unjust enrichment when a person unjustly
retains a benefit to the loss of another, or when a person retains the
money or property of another against the fundamental principles of
justice, equity and good conscience.48
Equity, as the complement of legal jurisdiction, seeks to reach and
complete justice where courts of law, through the inflexibility of their
rules and want of power to adapt their judgments to the special
circumstances of cases, are incompetent to do so. Equity regards the
spirit and not the letter, the intent and not the form, the substance
rather than the circumstance, as it is variously expressed by different
courts.49
It is the policy of the Court to afford party-litigants the amplest
opportunity to enable them to have their cases justly determined, free
from constraints of technicalities. Since the rules of procedures are
mere tools designed to facilitate the attainment of justice, it is well
recognized that this Court is empowered to suspend its operation, or
except a particular case from its operation, when the rigid application
thereof tends to frustrate rather promote the ends of justice.50
Court litigations are primarily for search of truth, and a liberal
interpretation of the rules by which both parties are given the fullest
opportunity to adduce proofs is the best way to ferret such truth. The
dispensation of justice and vindication of legitimate grievances should
not be barred by technicalities.51
Given the foregoing discussion, this Court finds the respondent bank
liable not only for retaining the excess of the bid price or the surplus
money in the sum of ₱1,893,916.67, but also for paying the interest
thereon at the rate of 6% per annum from the time of the filing of the
complaint until finality of judgment. Once the judgment becomes final
and executory, the interest of 12% per annum, should be imposed, to
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be computed from the time the judgment becomes final and executory
until fully satisfied.52
WHEREFORE, premises considered, the instant Petition
is GRANTED. The Court of Appeals Decision dated 1 April 2005 and
its Resolution dated 29 November 2005 in CA-G.R. CV No. 73944 are
hereby REVERSED. Respondent Planters Development Bank is
ORDERED to return to the petitioners LCK Industries Inc., Chiko Lim
and Elizabeth Lim, the sum of ₱1,893,916.67 with interest computed at
6% per annum from the time of the filing of the complaint until its full
payment before finality of judgment. Thereafter, if the amount adjudged
remains unpaid, the interest rate shall be 12% per annum computed
from the time the judgment became final and executory until fully
satisfied. Costs against respondent Planters Development Bank.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CIRCULAR NO. 38-98 August 11, 1998
IMPLEMENTING THE PROVISIONS OF REPUBLIC ACT NO. 8493,
ENTITLED "AN ACT TO ENSURE A SPEEDY TRIAL OF ALL
CRIMINAL CASES BEFORE THE SANDIGANBAYAN, REGIONAL
TRIAL COURT, METROPOLITAN TRIAL COURT, MUNICIPAL TRIAL
COURT IN CITIES, MUNICIPAL TRIAL COURT AND MUNICIPAL
CIRCUIT TRIAL COURT, APPROPRIATING FUNDS THEREFOR,
AND FOR OTHER PURPOSES."
SECTION 1. PURPOSE OF CIRCULAR. — This Circular is
promulgated for the purpose of implementing the provisions of
Republic Act No. 8493, otherwise known as the "Speedy Trial Act of
1998," as directed in Section 15 hereof.
 Sec. 2. TIME LIMIT FOR ARRAIGNMENT AND PRE-TRIAL. — The
arraignment and the pre-trial, if the accused pleads not guilty to the
crime charged, shall be held within thirty (30) days from the date the
court acquires jurisdiction over the person of the accused. The period
of the pendency of a motion to quash, or for a bill of particulars, or
other causes justifying suspension of arraignment shall be excluded.
Sec. 3. MANDATORY PRE-TRIAL IN CRIMINAL CASES. — In all
criminal cases cognizable by the Sandiganbayan, Regional Trial Court,
Metropolitan Trial Court, Municipal Trial Court in Cities, Municipal Trial
Court and Municipal Circuit Trial Court, the court shall, after
arraignment, order a pre-trial conference to consider the following:
(a) Plea bargaining;
(b) Stipulation of facts;
(c) Marking for identification of evidence of the parties;
(d) Waiver of objections to admissibility of evidence;
and
(e) Such other matters as will promote a fair and
expeditious trial of the criminal and civil aspects of the
case.
If the accused has pleaded not guilty to the crime charged, he may
state whether he interposes a negative or affirmative defense. A
negative defense shall require the prosecution to proved the guilt of the
accused beyond reasonable doubt, while an affirmative defense may
modify the order of trial and require the accused to prove such defense
by clear and convincing evidence.
Sec. 4. PRE-TRIAL AGREEMENT. — All agreements or admissions
made or entered into during the pre-trial conference shall be reduced
to writing and signed by the accused and counsel, otherwise the same
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shall not be used against the accused. The agreements in relation to
matters referred to in Section 3 hereof are subject to the approval of
the court; Provided, That the agreement on the please of the accused
should be to a lesser offense necessarily included in the offense
charged.
Sec. 5. NON-APPEARANCE AT PRE-TRIAL CONFERENCE.
— Where counsel for the accused or the prosecutor does not appear at
the pretrial conference and does not offer an acceptable excuse for his
lack of cooperation, the court may impose proper sanctions or
penalties.
Sec. 6. PRE-TRIAL ORDER. — After the pre-trial conference, the court
shall issue an order reciting the actions taken, the facts stipulated, and
the evidence marked. Such order shall bind the parties, limit the trial to
matters not disposed of and control the course of action during the trial,
unless modified by the court to prevent manifest injustice.
Thereafter, where a plea of not guilty is entered, the accused shall
have at least fifteen (15) days to prepare for trial which shall
commence within thirty (30) days from receipt of the pre-trial order.
Sec. 7. EXTENDED TIME LIMIT. — Notwithstanding the provisions of
the preceding sections 2 and 6 for the first twelve-calendar-month
period following its effectivity, the time limit with respect to the period
from arraignment to trial imposed by said provision shall be one
hundred eighty (180) days. For the second twelve-month period, the
time limit shall be one hundred twenty (120) days, and for the third
twelve-month period the time limit shall be eighty (80) days.
Sec. 8. TIME LIMIT FOR TRIAL. — In criminal cases involving persons
charged with a crime, except those subject to the Rule of Summary
Procedure, or where the penalty prescribed by law does not exceed six
(6) months imprisonment, or a fine of one thousand pesos (P1,000.00)
or both, irrespective of other imposable penalties, the court shall, after
consultation with the public prosecutor and the counsel for the
 accused, set the case for continuous trial on a weekly or other short-
term trial calendar at the earliest possible time so as to ensure speedy
trial. In no case shall the entire trial period exceed one hundred eighty
(180) days from the first day of trial, except as otherwise authorized by
the Court Administrator pursuant to Section 2, Rule 30 of the Rules of
Court.
Sec. 9. EXCLUSIONS. — The following periods of delay shall be
excluded in computing the time within which trial must commence:
(a) Any period resulting from other proceedings
concerning the accused, including but not limited to the
following:
(1) delay resulting from an examination
of the physical and mental condition of
the accused;
(2) delay resulting from proceedings
with respect to other criminal charges
against the accused;
(3) delay resulting from extraordinary
remedies against interlocutory orders;
(4) delay resulting from pre-trial
proceedings; Provided, that the delay
does not exceed thirty (30) days;
(5) delay resulting from orders of
inhibition or proceedings relating to
change of venue of cases or transfer
from other courts;
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(6) delay resulting from a finding of the
existence of a valid prejudicial question;
and
(7) delay reasonably attributable to any
period, not to exceed thirty (30) days,
during which any proceeding
concerning the accused is actually
under advisement.
(b) Any period of delay resulting from the absence or
unavailability of an essential witness.
For purposes of this subparagraph, an essential witness shall be
considered absent when his whereabouts are unknown or his
whereabouts cannot be determined by due diligence. An essential
witness shall be considered unavailable whenever his whereabouts are
known but his presence for trial cannot be obtained by due diligence.
(c) Any period of delay resulting from the fact that the
accused is mentally incompetent or physically unable to
stand trial.
(d) If the information is dismissed upon motion of the
prosecution and thereafter a charge is filed against the
accused for the same offense, any period of delay from
the date the charge was dismissed to the date the time
limitation would commence to run as to the subsequent
charge had there been no previous charge.
(e) A reasonable period of delay when the accused is
mentally incompetent or physically unable to stand trial.
(f) Any period of delay resulting from a continuance
granted by any court motu propio or on motion of either
the accused for the same offense, any period of delay
 from the date the charge was dismissed to the date the
time limitation would commence to run as to the
subsequent charge had there been no previous charge.
Sec. 10. FACTORS FOR GRANTING CONTINUANCE. — The
following factors, among others, shall be considered by a court in
determining whether to grant a continuance under subparagraph (f) of
Section 9 hereof:
(a) Whether or not the failure to grant a continuance in
the proceeding would be like to make a continuation of
such proceeding impossible, or result in a miscarriage
of justice; and
(b) Whether or not the case taken as a whole is so
novel, unusual and complex, due to the number of
accused or the nature of the prosecution or otherwise,
that it is unreasonable to expect adequate preparation
within the periods of time established herein.
No continuance under subparagraph (f) Section 9
hereof shall be granted because of congestion of the
court’s calendar, or lack of diligent preparation or failure
to obtain available witnesses on the part of the public
prosecutor.
Sec. 11. TIME LIMIT FOLLOWING AN ORDER FOR NEW
TRIAL. — If the accused is to be tried again pursuant to an order of a
court for a new trial, the trial shall commence within thirty (30) days
from notice of that order, except that the court retrying the case may
extend such period but not to exceed one hundred eighty (180) days
from notice of said order for a new trial if unavailability of witnesses or
other factors make trial within thirty (30) days impractical.
Sec. 12. PUBLIC ATTORNEY’S DUTIES WHERE ACCUSED IS
IMPRISONED. — If the public attorney assigned to defend a person
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charged with a crime knows that the latter is preventively detained,
either because he is charged with a bailable crime and has no means
to post bail, or is charged with a non-bailable crime, or is serving a
term of imprisonment in any penal institution:
(a) The public attorney shall promptly undertake to
obtain the presence of the prisoner for trial, or cause a
notice to be served on the person having custody of the
prisoner requiring such person to so advise the prisoner
of his right to demand trial.
(b) Upon receipt of that notice, the person having
custody of the prisoner shall promptly advise the
prisoner of the charge and of his right to demand trial, If
at any time thereafter the prisoner informs his custodian
that he demands such trial, the latter shall cause notice
to that effect to be sent promptly to the public attorney.
(c) Upon receipt of such notice, the public attorney shall
promptly seek to obtain the presence of the prisoner for
trial.
(d) When the person having custody of the prisoner
receives from the public attorney a properly supported
request for the availability of the prisoner for purposes
of the trial, the prisoner shall be made available
accordingly.
Sec. 13. SANCTIONS. — In any case in which private counsel for the
accused, the public attorney or the public prosecutor:
(a) knowingly allows the case to be set for trial without
disclosing the fact that a necessary witness would be
unavailable for trial;
 (b) files a motion solely for the purpose of delay which
he knows is totally frivolous and without merit;
(c) makes a statement for the purpose of obtaining
continuance which he know to be false and which is
material to the granting of a continuance; or
(d) otherwise willfully fails to proceed to trial without
justification consistent with the provisions hereof, the
court may punish any such counsel, attorney or
prosecutor, as follows:
(1) in the case of a counsel privately
retained in connection with the defense
of an accused, by imposing a fine of not
exceeding twenty thousand pesos
(P20,000.00);
(2) by imposing on any appointed
counsel de oficio, public attorney or
public prosecutor a fine not exceeding
five thousand pesos (P5,000.00); and
(3) by denying any defense counsel or
public prosecutor the right to practice
before the court considering the case
for a period not exceeding thirty (30)
days.
The authority to punish provided for by this section shall be without
prejudice to any appropriate criminal action or any other sanction
authorized under the Rules of Court.
Sec. 14. REMEDY WHERE ACCUSED IS NOT BROUGHT TO TRIAL
WITHIN THE TIME LIMIT. — If the accused is not brought to trial
within the time limit required by Sections 2 and 6 hereof, as extended
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by Section 7, the information may be dismissed on motion of the
accused on the ground of denial of his right to speedy trial. The
accused shall have the burden of proving such motion by the
prosecution shall have the burden of going forward with the evidence in
connection with the exclusion of time under Section 9 hereof. The
dismissal shall be subject to the rules on double jeopardy.
Failure of the accused to move for dismissal prior to trial shall
constitute a waiver of the right to dismiss under this section.
Sec. 15. REPUBLIC ACT NO 8493 NOT A BAR TO PROVISION ON
SPEEDY TRIAL IN THE CONSTITUTION. — No provision of Republic
Act No. 8493 shall be interpreted as a bar to any charge of denial of
speedy trial as provided by Article III, Section 14(2), of the 1987
Constitution.
Sec. 16. EFFECTIVITY. — This Circular shall be published in two (2)
newspapers of general circulation and shall take effect on September
15, 1998.
August 11, 1998.
Tenth Congress
Republic Act No. 8493 February 12, 1998
AN ACT TO ENSURE A SPEEDY TRIAL OF ALL CRIMINAL CASES
BEFORE THE SANDIGANBAYAN, REGIONAL TRIAL COURT,
METROPOLITAN TRIAL COURT, MUNICIPAL TRIAL COURT, AND
MUNICIPAL CIRCUIT TRIAL COURT, APPROPRIATING FUNDS
THEREFOR, AND FOR OTHER PURPOSES
 Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
Section 1. Title. - This Act shall be known as the "Speedy Trial Act of
1998."
Section 2. Mandatory Pre-Trial in Criminal Cases. - In all cases
cognizable by the Municipal Trial Court, Municipal Circuit Trial Court,
Metropolitan Trial Court, Regional Trial Court, and the Sandiganbayan,
the justice or judge shall, after arraignment, order a pre-trial conference
to consider the following:
(a) Plea bargaining;
(b) Stipulation of Facts;
(c) Marking for identification of evidence of parties;
(d) Waiver of objections to admissibility of evidence; and
(e) Such other matters as will promote a fair and expeditious
trial.
Section 3. Pre-Trial Agreement. - All agreements or admissions
made or entered into during the pre-trial conference shall be reduced
to writing and signed by the accused and counsel, otherwise the same
shall not be used in evidence against the accused. The agreements in
relation to matters referred to in Section 2 hereof is subject to the
approval of the court: Provided, That the agreement on the plea of the
accused to a lesser offense may only be revised, modified, or annulled
by the court when the same is contrary to law, public morals, or public
policy.
Section 4. Nonappearance at Pre-Trial Conference. - Where
counsel for the accused or the prosecutor does not appear at the pre-
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trial conference and does not offer an acceptable excuse for his/her
lack of cooperation, the pre-trial justice or judge may impose proper
sanctions or penalties.
Section 5. Pre-Trial Order. - After the pre-trial conference, the court
shall issue an order reciting the actions taken, the facts stipulated, and
evidence marked. Such order shall bind the parties, limit the trial to
matters not disposed of and control the course of action during the trial,
unless modified by the court to prevent manifest injustice.
Section 6. Time Limit for Trial. - In criminal cases involving persons
charged of a crime, except those subject to the Rules on Summary
Procedure, or where the penalty prescribed by law does not exceed six
(6) months imprisonment, or a fine of One thousand pesos (P1,000.00)
or both, irrespective of other imposable penalties, the justice or judge
shall, after consultation with the public prosecutor and the counsel for
the accused, set the case for continuous trial on a weekly or other
short-term trial calendar at the earliest possible time so as to ensure
speedy trial. In no case shall the entire trial period exceed one hundred
eighty (180) days from the first day of trial, except as otherwise
authorized by the Chief Justice of the Supreme Court pursuant to
Section 3, Rule 22 of the Rules of Court.
Section 7. Time Limit Between Filing of Information and
Arraignment and Between Arraignment and Trial. - The
arraignment of an accused shall be held within thirty (30) days from the
filing of the information, or from the date the accused has appeared
before the justice, judge or court in which the charge is pending,
whichever date last occurs. Thereafter, where a plea of not guilty is
entered, the accused shall have at least fifteen (15) days to prepare for
trial. Trial shall commence within thirty (30) days from arraignment as
fixed by the court.
If the accused pleads not guilty to the crime charged, he/she shall state
whether he/she interposes a negative or affirmative defense. A
negative defense shall require the prosecution to prove the guilt of the
 accused beyond reasonable doubt, while an affirmative defense may
modify the order of trial and require the accused to prove such defense
by clear and convincing evidence.
Section 8. Time Limit Following an Order for New Trial. - If the
accused is to be tried again following an order of a court for a new trial,
the trial shall commence within thirty (30) days from the date the order
for a new trial becomes final, except that the court retrying the case
may extend such period but in any case shall not exceed one hundred
eighty (180) days from the date the order for a new trial becomes final
if unavailability of witnesses or other factors resulting from passage of
time shall make trial within thirty (30) days impractical.
Section 9. Extended Time Limit. - Notwithstanding the provisions of
Section 7 of this Act, for the first twelve-calendar-month period
following its effectivity, the time limit with respect to the period from
arraignment to trial imposed by Section 7 of this Act shall be one
hundred eighty (180) days. For the second twelve-month period the
time limit shall be one hundred twenty (120) days, and for the third
twelve-month period the time limit with respect to the period from
arraignment to trial shall be eighty (80) days.
Section 10. Exclusions. - The following periods of delay shall be
excluded in computing the time within which trial must commence:
(a) Any period of delay resulting from other proceedings
concerning the accused, including but not limited to the
following:
(1) delay resulting from an examination of the accused,
and hearing on his/her mental competency, or physical
incapacity;
(2) delay resulting from trials with respect to charges
against the accused;
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(3) delay resulting from interlocutory appeals;
(4) delay resulting from hearings on pre-trial motions:
Provided, That the delay does not exceed thirty (30)
days,
(5) delay resulting from orders of inhibition, or
proceedings relating to change of venue of cases or
transfer from other courts;
(6) delay resulting from a finding of the existence of a
valid prejudicial question; and
(7) delay reasonably attributable to any period, not to
exceed thirty (30) days, during which any proceeding
concerning the accused is actually under advisement.
(b) Any period of delay resulting from the absence or
unavailability of the accused or an essential witness.
For purposes of this subparagraph, an accused or an essential
witness shall be considered absent when his/her whereabouts
are unknown and, in addition, he/she is attempting to avoid
apprehension or prosecution or his/her whereabouts cannot be
determined by due diligence. An accused or an essential
witness shall be considered unavailable whenever his/her
whereabouts are known but his/her presence for trial cannot be
obtained by due diligence or he/she resists appearing at or
being returned for trial.
(c) Any period of delay resulting from the fact that the accused
is mentally incompetent or physically unable to stand trial.
(d) If the information is dismissed upon motion of the
prosecution and thereafter a charge is filed against the
accused for the same offense, or any offense required to be
 joined with that offense, any period of delay from the date the
charge was dismissed to the date the time limitation would
commence to run as to the subsequent charge had there been
no previous charge.
(e) A reasonable period of delay when the accused is joined for
trial with a co-accused over whom the court has not acquired
jurisdiction, or as to whom the time for trial has not run and no
motion for severance has been granted.
(f) Any period of delay resulting from a continuance granted by
any justice or judge motu propio or on motion of the accused or
his/her counsel or at the request of the public prosecutor, if the
justice or judge granted such continuance on the basis of
his/her findings that the ends of justice served by taking such
action outweigh the best interest of the public and the
defendant in a speedy trial. No such period of delay resulting
from a continuance granted by the court in accordance with this
subparagraph shall be excludable under this section unless the
court sets forth, in the record of the case, either orally or in
writing, its reasons for finding that the ends of justice served by
the granting of such continuance outweigh the best interests of
the public and the accused in a speedy trial.
Section 11. Factors for Granting Continuance. - The factors, among
others, which a justice or judge shall consider in determining whether
to grant a continuance under subparagraph (f) of Section 10 of this Act
are as follows:
(a) Whether the failure to grant such a continuance in the
proceeding would be likely to make a continuation of such
proceeding impossible, or result in a miscarriage of justice.
(b) Whether the case taken as a whole is so novel, so unusual
and so complex, due to the number of accused or the nature of
the prosecution or otherwise, that it is unreasonable to expect
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adequate preparation within the periods of time established by
this Act.
No continuance under subparagraph (f) of Section 10 shall be granted
because of general congestion of the court's calendar, or lack of
diligent preparation or failure to obtain available witnesses on the part
of the public prosecutor.
Section 12. Public Attorney's Duties Where Accused is
Imprisoned. - If the public attorney knows that a person charged of a
crime is preventively detained, either because he/she is charged of a
bailable crime and has no means to post bail, or is charged of a non-
bailable crime, or is serving a term of imprisonment in any penal
institution, the public attorney shall promptly:
(a) Undertake to obtain the presence of the prisoner for trial, or
cause a notice to be served on the person having custody of
the prisoner mandating such person to so advise the prisoner
of his/her right to demand trial.
(b) Upon receipt of a notice, the person having custody of the
prisoner shall promptly advise the prisoner of the charge and of
his/her right to demand trial. If at any time thereafter the
prisoner informs the person having custody that he/she
demands trial, such person shall cause notice to that effect to
be sent promptly to the public attorney.
(c) Upon receipt of such notice, the public attorney shall
promptly seek to obtain the presence of the prisoner for trial.
(d) When the person having custody of the prisoner receives
from the public attorney a properly supported request for
temporary custody of the prisoner for trial, the prisoner shall be
made available to that public attorney.
 Section 13. Remedy Where Accused is Not Brought to Trial Within
the Time Limit. - If an accused is not brought to trial within the time
limit required by Section 7 of this Act as extended by Section 9, the
information shall be dismissed on motion of the accused. The accused
shall have the burden of proof of supporting such motion but the
prosecution shall have the burden of going forward with the evidence in
connection with the exclusion of time under Section 10 of this Act.
In determining whether to dismiss the case with or without prejudice,
the court shall consider, among other factors, the seriousness of the
offense, the facts and circumstances of the case which led to the
dismissal, and the impact of a reprosecution on the implementation of
this Act and on the administration of justice. Failure of the accused to
move for dismissal prior to trial or entry of a plea of guilty shall
constitute a waiver of the right to dismissal under this section.
Section 14. Sanctions. - In any case in which counsel for the
accused, the public prosecution or public attorney:
(a) knowingly allows the case to be set for trial without
disclosing the fact that a necessary witness would be
unavailable for trial;
(b) files a motion solely for the purpose of delay which he/she
knows is totally frivolous and without merit;
(c) makes a statement for the purpose of obtaining continuance
which he/she knows to be false and which is material to the
granting of a continuance; or
(d) otherwise willfully fails to proceed to trial without justification
consistent with the provisions of this Act, the court may, without
prejudice to any appropriate criminal and/or administrative
charges to be instituted by the proper party against the erring
counsel if and when warranted, punish any such counsel or
attorney, as follows:
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(1) in the case of a counsel privately retained in
connection with the defense of an accused, by
imposing a fine not exceeding; fifty percent (50%) of the
compensation to which he/she is entitled in connection
with his/her defense of the accused;
(2) by imposing on any appointed counsel de officio or
public prosecutor a fine not exceeding Ten thousand
pesos (10,000.00); and
(3) by denying any defense counsel or public
prosecutor the right to practice before the court
considering the case for a period not exceeding thirty
(30) days.
The authority to punish provided for by this section shall be in
addition to any other authority or power available to the court.
The court shall follow the procedures established in the Rules
of Court in punishing any counsel or public prosecutor pursuant
to this section.
Section 15. Rules and Regulations. - The Supreme Court shall
promulgate rules, regulations, administrative orders and circulars which
shall seek to accelerate the disposition of criminal cases. The rules,
regulations, administrative orders and circulars formulated shall
provide sanctions against justices and judges who willfully fail to
proceed to trial without justification consistent with the provisions of this
Act.
Section 16. Funding. - For the effective implementation of the rules,
regulations, administrative orders and circulars promulgated under this
Act, the amount of Twenty million pesos (P20,000,000.00) annually
shall be appropriated from the allocation of the Supreme Court under
the General Appropriations Act. Thereafter, such additional amounts as
may be necessary for its continued implementation shall be included in
the annual General Appropriations Act.
 Section 17. Act Not a Bar to Speedy Trial Claim Under the x - - - - - - - - - - - - - - - - - - - - - - -x
Constitution. - No provision of this Act shall be interpreted as a bar to
any claim of denial of speedy trial as required by Article III, Section G.R. No. 177133 July 31, 2009
14(2) of the 1987 Constitution.
CITIBANK, N.A., Petitioner,
Section 18. Repealing Clause. - All laws, presidential decrees, vs.
executive orders, rules and regulations or parts thereof inconsistent SPOUSES AZUCENA B. CORPUZ AND RENATO S.
with the provisions of this Act are hereby repealed or modified CORPUZ, Respondents.
accordingly.
DECISION
Section 19. Separability Clause. - In case any provision of this Act is
declared unconstitutional, the other provisions shall remain in effect. CARPIO MORALES, J.:

Section 20. Effectivity. - This Act shall take effect after fifteen (15) The facts which spawned the filing of the present consolidated petitions
days following its publication in the Official Gazette or in any are as follows:
newspaper of general circulation: Provided, That Section 7 of this Act
shall become effective after the expiration of the aforementioned third-
Azucena Corpuz (Azucena) was a cardholder of Citibank Mastercard
calendar-month period provided in Section 9 of this Act.
No. 5423-3925-5788-2007 and Citibank VISA Card No. 4539-7105-
2572-2001 both issued by Citibank, N.A. (Citibank). Each card had a
Approved: February 12, 1998 credit limit of ₱40,000.00. In view of her then impending official
business trip to Europe, Azucena paid in full on December 7, 1998 her
Republic of the Philippines monthly charges1 on both credit cards via checks and also
SUPREME COURT made advance check payments of ₱20,000.00 on December 8, 1998
Manila for her VISA Card, and another ₱20,000.00 for her Mastercard on
December 14, 1998, to cover future transactions.2
SECOND DIVISION
While in Italy on December 9, 1998, Azucena dined at a restaurant. To
G.R. No. 175677 July 31, 2009 settle her bill of 46,000 liras, she presented her VISA Card, but to her
surprise and embarrassment, the restaurant did not honor it. She then
SPOUSES AZUCENA B. CORPUZ AND RENATO S. brought out her Mastercard which the restaurant honored. On even
CORPUZ, Petitioners, date, Azucena incurred a bill of 378,000 liras at a shop which she
vs. intended to charge to her credit cards. This time, both her VISA and
CITIBANK, N.A. AND HON. RAUL B. VILLANUEVA as Presiding Mastercard were not honored, drawing her to pay the bill in cash. 3
Judge of Branch 255, Regional Trial Court in Las Piñas
City, Respondents. Informed of the incidents via overseas telephone calls to Manila,
Azucena’s husband Renato Corpuz (Renato) inquired why his wife’s

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 credit cards were not honored, to which Citibank explained that her
check-payments had not yet been cleared at the time.4
Upon her return to the country, Azucena wrote Citibank on January 13,
1999 informing it that her credit cards had not been honored and
demanding the refund of her overseas call expenses amounting to
132,000 liras or ₱3,175.00 at the time.5 Citibank did not respond to the
letter, however, drawing Azucena to write Citibank for the cancellation
of the cards.6
Citibank still sent billing statements to Azucena, however, charging her
interest charges and late payment penalties.7 Only after Azucena’s
counsel informed Citibank of imminent legal remedies 8 on her part did
Citibank indulge Azucena with a written explanation why her credit
cards were not honored in Italy.9
Azucena and Renato (hereafter the spouses) later filed on November
12, 1999 a complaint for damages against Citibank at the Regional
Trial Court of Las Piñas City.
To the Complaint, Citibank filed a motion to dismiss for improper
venue.10 The spouses opposed the motion and moved to have Citibank
declared in default.11 Branch 255 of the RTC, by Order of September
28, 2000, denied the motion to dismiss as well as the motion to declare
Citibank in default.12
Citibank thus filed its Answer with Compulsory Counterclaim.13 After an
exchange of pleadings ─ reply, rejoinder and sur-rejoinder ─ by the
parties, and the issues having been joined, the trial court set the case
for pre-trial conference14 on May 5, 2003 during which the spouses and
their counsel failed to appear, despite notice. On Citibank’s counsel’s
motion, the trial court, by Order15 of even date, dismissed the spouses’
Complaint and directed Citibank to present evidence on its Compulsory
Counterclaim.
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The spouses moved for the reconsideration of the trial court’s May 5,
2003 Order, explaining that their failure to attend the pre-trial
conference was due to the negligence16 of their counsel who "failed to
inform [them] about [the pre-trial] and include the same in his calendar
because . . . the pre-trial was still far away."
The spouses’ motion for reconsideration was denied by Order of
September 17, 2003.17 In the same Order, the trial court directed
Citibank to present evidence on its Counterclaim within 30 days from
receipt thereof. Citibank received copy of this Order on September 29,
200318 and, therefore, had up to October 29, 2003 to present evidence
on its Counterclaim.
The spouses assailed the trial court’s Order dismissing their Complaint
via petition for certiorari before the Court of Appeals, docketed as CA-
G.R. SP No. 80095. During the pendency of this petition or on January
5, 2004, Citibank filed before the trial court a motion to defer the
presentation of evidence on its Counterclaim in view of the pendency
of said petition of the spouses before the appellate court. The trial court
did not act on Citibank’s motion, however, as it bore no notice of
hearing.19
Citibank re-filed on January 30, 2004 the motion to defer, this time
containing a notice of hearing.20 The trial court thereupon set the
motion for hearing on February 13, 2004 during which only Azucena
appeared. The motion was denied for lack of merit by Order of
February 13, 2004.21
Citibank having failed to present evidence within 30 days from its
receipt22 on September 29, 2003 of the trial court’s Order of September
17, 2003, the trial court dismissed its Counterclaim by Order of June
30, 2005.23 Its motion for reconsideration of this June 30, 2005 Order
having been denied, Citibank went on certiorari to the Court of
Appeals, docketed as CA G.R. CV No. 86401.
 In the meantime or on May 25, 2006, the appellate court, by Decision
of even date in CA-G.R. SP No. 80095, set aside the trial court’s
September 17, 2003 Order 24 allowing Citibank to present evidence ex
parte on its Counterclaim, but upheld the dismissal of the spouses’
Complaint, it holding that they should have filed an appeal, instead of a
petition for certiorari, as the trial court’s order dismissing their
complaint was a final decision on the merits. At all events, it
underscored that:
[the spouses] did not come forward with the most persuasive of
reasons for the relaxation of the rules. We cannot consider the
following excuses to be valid and justifiable: 1) the failure to note down
the date of pre-trial was because the date of resetting was three
months away; 2) the [spouses’] counsel was beset with heavy case
load and conflict of schedule; 3) the instant case was a personal case
of [spouses’] counsel and not one of the cases assigned by the office
where he worked which was the reason why his secretary failed to
calendar the pre-trial; and 4) [spouses], being members of the bar,
were also busy with their own cases. (Underscoring supplied)
The spouses and Citibank moved for reconsideration and partial
reconsideration, respectively, of the appellate court’s May 25, 2006
decision. By Resolution of November 30, 2006, the appellate court
granted only Citibank’s motion for partial reconsideration, ultimately
allowing it to prosecute its Counterclaim. Thus the appellate court
explained:25
Section 3, Rule 17 provides that if a complaint is dismissed due to the
fault of the plaintiff, such dismissal is "without prejudice to the right of
the defendant to prosecute his counterclaim in the same or in a
separate action. Under this new innovation, the dismissal of the
complaint due to the fault of plaintiff does not necessarily carry with it
the dismissal of the counterclaim, compulsory or otherwise. In fact, the
dismissal of the complaint is without prejudice to the right of
defendants to prosecute the counterclaim. In this case, the private
respondent bank, after moving that the case against it be dismissed for
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failure of the petitioners to prosecute, properly moved that it be allowed
to present evidence ex-parte on its counterclaim. (Citations omitted;
emphasis and underscoring supplied)
The spouses’ motion for reconsideration of the appellate court’s
Resolution of November 30, 2006 upholding the dismissal of their
Complaint having been denied, they filed a petition for review before
this Court, docketed as G.R. No. 175677, the first petition subject of
this Decision.
In the meantime, the appellate court, by Decision of September 27,
2006 in CA-G.R. CV No. 86401, affirmed the trial court’s June 30, 2005
Order dismissing Citibank’s Counterclaim, drawing Citibank to file a
petition for review before this Court, G.R. No. 177133, the other
petition subject of this Decision.
By Resolution of June 6, 2007, the Court denied Citibank’s petition for
review in G.R. No. 177133 for failure to sufficiently show that the
appellate court had committed any reversible error in dismissing its
Counterclaim.26 Citibank filed a Motion for Reconsideration during the
pendency of which the Court resolved to consolidate G.R. No. 177133
with G.R. No. 175677.27
RE G.R. NO. 175677: The spouses assert that their non-appearance at
the pre-trial may be excused if there is a valid cause such as when a
party forgets the date of the pre-trial; that the merits of their case
should have been considered when their Complaint was dismissed;
that Sections 4 and 5 of Rule 18 on pre-trial and Section 3 of Rule 17
on dismissal due to the fault of the plaintiff provide for different and
distinct sanctions, citing Pinga v. Heirs of German Santiago; and that
certiorari was their proper remedy before the appellate court as the trial
court’s order was not in accord with Section 5 of Rule 18 or even with
Section 3 of Rule 17.28
The Court denies the spouses’ petition.
 Section 529 of Rule 18 provides that the dismissal of an action due to
the plaintiff’s failure to appear at the pre-trial shall be with prejudice,
unless otherwise ordered by the court. In this case, the trial court
deemed the plaintiffs-herein spouses as non-suited and ordered the
dismissal of their Complaint. As the dismissal was a final order, the
proper remedy was to file an ordinary appeal and not a petition for
certiorari. The spouses’ petition for certiorari was thus properly
dismissed by the appellate court.
Procedural infirmities aside, this Court took a considered look at the
spouses’ excuse to justify their non-appearance at the pre-trial but
found nothing exceptional to warrant a reversal of the lower courts’
disposition thereof.
Counsel for the spouses admit having failed to inform his clients of the
scheduled pre-trial because he forgot to note the same in his calendar
and eventually forgot about it due to "heavy workload." The spouses
eventually admitted too having received the notice of pre-
trial.30 Azucena, who is a lawyer herself, advanced the reason that she
forgot about the scheduled pre-trial owing to her then forthcoming
retirement at the Office of the Solicitor General to thus press her to
accomplish her assigned work including winding up all administrative
matters in the office prior to her leaving.
While Section 431 of Rule 18 of the Rules of Court allows as an
exception a valid cause for the non-appearance of a party at the pre-
trial, the instances cited by the spouses and their counsel hardly
constitute compelling exigencies or situations which warrant occasional
flexibility of litigation rules.
In Quelnan v. VHF Philippines32 where the counsel for the therein
petitioner failed to calendar a scheduled pre-trial in his diary, the Court
held that:
The alleged failure of petitioner’s counsel to record the scheduled pre-
trial in his 1997 diary to justify his absence at the pre-trial cannot
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amount to excusable negligence. To constitute excusable negligence,
the absence must be due to petitioner’s counsel’s failure to take the
proper steps at the proper time, not in consequence of his
carelessness, inattention or willful disregard of the process of the court,
but in consequence of some unexpected or unavoidable hindrance or
accident. (Underscoring in the original)
Petitioner’s counsel’s failure to record the date of pre-trial in his 1997
diary reflects his carelessness, his failure to heed his responsibility of
not neglecting a legal matter entrusted to him, especially given the fact
that he was given a Special Power of Attorney to represent petitioner in
the pre-trial and trial of the case and that the repeated resettings of the
pre-trial for a period of 1 year and more than 10 months had unduly
prolonged the disposition of petitioner’s complaint which was filed in
1994 yet.
Petitioner’s counsel must know that pre-trial is mandatory. Being
mandatory, the trial court has discretion to declare a party non-
suited. Absent a showing of grave abuse in the trial court’s exercise
thereof, as in the case at bar, appellate courts will not
interfere.33 (Citations omitted; underscoring and emphasis supplied)
As for the spouses’ assertion that Section 5 of Rule 18 "does not give
the defendant [Citibank in this case] the alternative remedy of
prosecuting its Counterclaim, whether compulsory or permissive, in the
same or separate action because there is no longer any pending action
where he can prosecute his claim," consideration thereof has been
rendered unnecessary by, as will be dealt with shortly, this Court’s
denial of Citibank’s motion for reconsideration of the dismissal of its
herein petition. Suffice it to state that the spouses’ view, apparently
established in BA Finance v. Co,34 had long been abandoned by the
Court.
In the 2006 case of Pinga v. Heirs of German Santiago,35 the Court,
after noting the observations of Justice Florenz Regalado in his
 separate opinion in BA Finance on Section 3 of Rule 17 which section,
for convenience, is again quoted,36 viz:
SEC. 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause,
the plaintiff fails to appear on the date of the presentation of his
evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any
order of the court, the complaint may be dismissed upon motion of the
defendant or upon the court’s own motion, without prejudice to the right
of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication
upon the merits, unless otherwise declared by the court. (Emphasis
and underscoring supplied),
explained:
xxxx
Section 3, [of Rule 17] on the other hand, contemplates a dismissal not
procured by plaintiff, albeit justified by causes imputable to him and
which, in the present case, was petitioner’s failure to appear at the pre-
trial. This situation is also covered by Section 3, as extended by judicial
interpretation, and is ordered upon motion of defendant or motu proprio
by the court. Here, the issue of whether defendant has a pending
counterclaim, permissive or compulsory is not of determinative
significance. The dismissal of plaintiff’s complaint is evidently a
confirmation of the failure of evidence to prove his cause of action
outlined therein, hence the dismissal is considered, as a matter of
evidence, an adjudication on the merits. This does not, however, mean
that there is likewise such an absence of evidence to prove
defendant’s counterclaim although the same arises out of the subject
matter of the complaint which was merely terminated for lack of
proof. To hold otherwise would not only work injustice to defendant but
would be reading a further provision into Section 3 and wresting a
meaning therefrom although neither exists even by mere implication. x
x x x. (Emphasis and italics in the original; underscoring supplied)37
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Besides, Section 5 of Rule 18 which is, for convenience, again
requoted,38 provides:
SEC. 5. Effect of failure to appear. ─ The failure of the plaintiff to
appear [at the pre-trial] when so required pursuant to the next
preceding section shall be cause for dismissal of the action. The
dismissal shall be with prejudice, unless otherwise ordered by the
court. A similar failure on the part of the defendant shall be cause to
allow the plaintiff to present his evidence ex parte and the court to
render judgment on the basis thereof.,
must be read in conjunction with the above-quoted Section 3 of Rule
17.
Thus, in Perkin Elmer Singapore v. Dakila Trading,39 the Court,
discussing the application of the dictum in Pinga to situations outside of
Section 3 of Rule 17, held:
It is true that the aforesaid declaration of the Court refers to instances
covered by Section 3, Rule 17 of the 1997 Revised Rules of Civil
Procedure on dismissal of the complaint due to fault of the plaintiff.
Nonetheless, it does not also preclude the application of the same to
the instant case just because the dismissal of respondent’s [plaintiff’s]
Complaint was upon the instance of the petitioner[-defendant] who
correctly argued lack of jurisdiction over its person.40
As the failure of the spouses to appear at the pre-trial amounted to a
failure to comply with the Rules or any order of the court, the dismissal
of their Complaint was essentially due to their fault and the therein
defendant Citibank could still prosecute its Counterclaim in the same or
in a separate action.
RE G.R. NO. 177133: As stated early on, this Court, by Resolution of
November 30, 2006, denied Citibank’s petition for review from the
appellate court’s September 27, 2006 Decision in CA-G.R. CV No.
86401, drawing it to file a motion for reconsideration now the subject of
 consideration. In its Decision41 of September 27, 2006, the appellate
court affirmed the trial court’s Orders dated June 30, 2005 and January
13, 2006 dismissing Citibank’s Counterclaim. In affirming the trial
court’s dismissal Orders, the appellate court ratiocinated:
The pending petition with the Court of Appeals does not automatically
suspend the proceedings in the lower court. Under Section 7, Rule 65
of the 1997 Rules of Civil Procedure it provides that unless a
temporary restraining order or writ of preliminary injunction was issued,
the proceedings of the principal case is never suspended.
xxxx
Citibank already knew of the denial [by Order of February 13, 2004] of
its request for the deferment of its presentation of evidence pending
the spouses’ Petition for Certiorari as early as February 23, 2004. It
should have proceeded in prosecuting its compulsory counterclaim, but
despite that Citibank never presented evidence on its counterclaim. It
never sought a reconsideration of the Order dated February 13, 2004,
denying Citibank’s ex parte Motion to present evidence. It was only on
August 4, 2005 when Citibank filed a Motion for Reconsideration.
Indeed, it is too late to ask for a reconsideration of an Order that had
long become final. (Emphasis and underscoring supplied)
Citibank contends that the appellate court issued two conflicting
decisions in CA G.R. SP No. 80095 (the subject of G.R. No. 175677)
and CA G.R. CV No. 86401 (the subject of G.R. No. 177133) where
"one ruling hold[s] that [Citibank] can prosecute its counterclaims and
another ruling hold[s] that it cannot prosecute the same
counterclaims;"42 that the trial court’s order for it to present evidence on
its Counterclaim "did not acquire finality for being an incomplete order
as it failed to provide the period within which the ex parte presentation .
. . should be completed;"43 that the trial court erred in denying its
motion to defer the presentation of evidence on its Counterclaim for
lack of notice of hearing considering that a hearing on an ex parte
motion is not required;44 and that the motion for deferment was filed out
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of deference to the appellate court where the spouses’ petition
involving the same parties was then still pending.45
The Court denies Citibank’s Motion for Reconsideration.
To be sure, there is no conflict in the appellate court’s rulings in CA
G.R. SP No. 80095 and CA G.R. CV No. 86401. The appellate court
ruled in CA G.R. SP No. 80095 that Citibank could still prosecute its
Counterclaim, while it ruled in CA G.R. CV No. 86401 that Citibank’s
right to present evidence thereon had lapsed, hence, it denied
Citibank’s motion to defer and dismissed its Counterclaim.
Complementary as they are, the appellate court’s rulings essentially
resolved that Citibank could present evidence on its Counterclaim but
within the 30-day period, as mandated by the trial court.
The trial court’s Order of September 17, 2003, which reiterated its
earlier May 5, 2003 Order, is not an incomplete order as it is clear that
Citibank was "allowed to present its evidence [ex parte] on its
counterclaim within the 30-day period provided therein reckoned anew
from the date of receipt hereof." The Order plainly mentioned the
allowable period when Citibank was to present its evidence. As to
when the ex parte presentation of evidence would terminate, the
branch clerk of court, as the commissioner in such a proceeding, 46 has
discretion thereon.
It bears noting that Citibank never attempted to present even just initial
evidence within the 30-day period ordered by the trial court, despite
receipt of such Order on September 29, 2003. It thereafter belatedly
filed a motion to defer presentation of evidence on January 5, 2004, or
more than two months after the expiration of the 30-day period. The
clerk of court, via Commissioner’s Report of October 20, 2003, even
pointed out Citibank’s failure to present evidence.lawp h!l
It bears noting furthermore that Citibank did not seek reconsideration of
the trial court’s Order of February 13, 2004 denying its ex parte motion
 to present evidence, and it was only after more than five months or on LEONARDO A. QUISUMBING
August 4, 2005 when it, again, belatedly filed a motion for Associate Justice
reconsideration of the June 30, 2005 Order dismissing its Chairperson
Counterclaim.
TERESITA J. LEONARDO-DE
As for Citibank’s faulting the trial court for denying its motion for MINITA V. CHICO-NAZARIO
CASTRO
deferment for lack of notice of hearing, it does not lie, given that Associate Justice
Associate Justice
Citibank re-filed the same motion, this time with the requisite notice of
hearing. Clearly, it is estopped from raising this issue.
DIOSDADO M. PERALTA*
Associate Justice
AT ALL EVENTS, the appellate court was correct in its finding that the
trial court did not commit any reversible error in proceeding with the
ATTESTATION
case as no restraining order or injunction was issued in CA G.R. SP
No. 80095. Section 7 of Rule 65 of the Rules of Court, as amended,
provides that a petition for certiorari shall not interrupt the course of the I attest that the conclusions in the above Decision had been reached in
principal case unless the public respondent is enjoined from further consultation before the case was assigned to the writer of the opinion
proceeding with the case.47 of the Court’s Division.

WHEREFORE, the petition for review in G.R. No. 175677 is DENIED LEONARDO A. QUISUMBING
for lack of merit. Associate Justice
Chairperson
Petitioner’s motion for reconsideration in G.R. No. 177133 is DENIED
for lack of merit. CERTIFICATION

Costs against petitioners in both petitions. Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, I certify that the conclusions in the above
decision had been reached in consultation before the case was
SO ORDERED.
assigned to the writer of the opinion of the Court’s Division.
CONCHITA CARPIO MORALES
REYNATO S. PUNO
Associate Justice
Chief Justice
WE CONCUR: SECOND DIVISION

G.R. No. 209605, January 12, 2015

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 NEIL B. AGUILAR AND RUBEN
CALIMBAS, Petitioners, v. LIGHTBRINGERS CREDIT
COOPERATIVE, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari filed by petitioners Neil B. Aguilar
(Aguilar) and Ruben Calimbas (Calimbas), seeking to reverse and set aside
the April 5, 20131 and October 9, 20132 Resolutions of the Court of Appeals
(CA) in CA-G.R. SP No. 128914, which denied the petition for review
outright, assailing the January 2, 2013 Decision3 of the Regional Trial Court,
Branch 5, Dinalupihan, Bataan (RTC) and the May 9, 2012 Decision4 of the
First Municipal Circuit Trial Court, Dinalupihan, Bataan (MCTC).
In the lower courts, one of the issues involved was the proper application of
the rules when a party does not appear in the scheduled pre-trial conference
despite due notice. In this petition, the dismissal by the CA of the petition
filed under Rule 42 for failure to attach the entire records has also been put
to question, aside from the veracity of indebtedness issue.
The Facts
This case stemmed from the three (3) complaints for sum of money
separately filed by respondent Lightbringers Credit
Cooperative (respondent) on July 14, 2008 against petitioners Aguilar and
Calimbas, and one Perlita Tantiangco (Tantiangco) which were consolidated
before the First Municipal Circuit Trial Court, Dinalupihan, Bataan (MCTC).
The complaints alleged that Tantiangco, Aguilar and Calimbas were
members of the cooperative who borrowed the following funds:
1. In Civil Case No. 1428, Tantiangco allegedly borrowed
P206,315.71 as evidenced by Cash Disbursement Voucher
No. 4010 but the net loan was only P45,862.00 as
supported by PNB Check No. 0000005133.5 ch an Rob lesv irt u alLaw lib rary
2. In Civil Case No. 1429, petitioner Calimbas allegedly
borrowed P202,800.18 as evidenced by Cash Disbursement
Voucher No. 3962 but the net loan was only P60,024.00 as
supported by PNB Check No. 0000005088;6 ch an Rob les virt u alLa wlib rary
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3. In Civil Case No. 1430, petitioner Aguilar allegedly
borrowed P126,849.00 as evidenced by Cash Disbursement
Voucher No. 3902 but the net loan was only P76,152.00 as
supported by PNB Check No. 0000005026;7
Tantiangco, Aguilar and Calimbas filed their respective answers. They
uniformly claimed that the discrepancy between the principal amount of the
loan evidenced by the cash disbursement voucher and the net amount of
loan reflected in the PNB checks showed that they never borrowed the
amounts being collected. They also asserted that no interest could be
claimed because there was no written agreement as to its imposition.
On the scheduled pre-trial conference, only respondent and its counsel
appeared. The MCTC then issued the Order,8 dated August 25, 2009,
allowing respondent to present evidence ex parte. Respondent later
presented Fernando Manalili (Manalili), its incumbent General Manager, as
its sole witness. In his testimony, Manalili explained that the discrepancy
between the amounts of the loan reflected in the checks and those in the
cash disbursement vouchers were due to the accumulated interests from
previous outstanding obligations, withheld share capital, as well as the
service and miscellaneous fees. He stated, however, that it was their
bookkeeper who could best explain the details.
Aguilar and Calimbas insisted that they should have the right to cross-
examine the witness of respondent, notwithstanding the fact that these
cases were being heard ex parte. In the interest of justice, the MCTC
directed the counsels of the parties to submit their respective position
papers on the issue of whether or not a party who had been declared “as in
default” might still participate in the trial of the case. Only respondent,
however, complied with the directive. In its Order, 9 dated April 27, 2011, the
ch an rob le svirt u alla wlib rary
MCTC held that since the proceedings were being heard ex parte, the
petitioners who had been declared “as in default” had no right to participate
therein and to cross-examine the witnesses. Thereafter, respondent filed its
formal offer of evidence.10ch an Rob lesv irt u alLa wlib rary
MCTC Ruling
On May 9, 2012, the MCTC resolved the consolidated cases in three separate
decisions. In Civil Case No. 1428, 11 the MCTC dismissed the complaint
against Tantiangco because there was no showing that she received the
amount being claimed. Moreover, the PNB check was made payable to
“cash” and was encashed by a certain Violeta Aguilar. There was, however,
 no evidence that she gave the proceeds to Tantiangco. Further, the dates
indicated in the cash disbursement voucher and the PNB check varied from
each other and suggested that the voucher could refer to a different loan.
The decisions in Civil Case No. 142912 and 1430,13 however, found both
Calimbas and Aguilar liable to respondent for their respective debts. The PNB
checks issued to the petitioners proved the existence of the loan
transactions. Their receipts of the loan were proven by their signatures
appearing on the dorsal portions of the checks as well as on the cash
disbursement vouchers. As a matter of practice, banks would allow the
encashment of checks only by the named payee and subject to the
presentation of proper identification. Nonetheless, the MCTC ruled that only
the amount shown in the PNB check must be awarded because respondent
failed to present its bookkeeper to justify the higher amounts being claimed.
The court also awarded attorney’s fees in favor of respondent. The
dispositive portion of the decision in Civil Case No. 1429 reads:
WHEREFORE, premises considered, judgment is hereby rendered in plaintiff’s
favor and against the defendant, ordering the latter to pay plaintiff the
amount of P60,024.00 with interest at the rate of 12% per annum from April
4, 2007 until fully paid, plus P15,000.00 as attorney’s fees.
Costs against the defendant.
SO ORDERED.14
And in Civil Case No. 1430, the dispositive portion states: ch an rob lesvirt u all awlib rary
WHEREFORE, premises considered, judgment is hereby rendered in plaintiff’s
favor and against the defendant, ordering the latter to pay the plaintiff the
amount of ?76,152.00 with interest at the rate of 12% per annum from
February 28, 2007 until fully paid.
Defendant is further directed to pay attorney’s fees equivalent to 25% of the
adjudged amount.
Costs against the defendant.
SO ORDERED.15
On July 12, 2012, a notice of appeal16 was filed by the petitioners, and on
August 15, 2012, they filed their joint memorandum for appeal17 before the
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ch an rob l esvirt u all awlib rary
Regional Trial Court, Branch 5, Bataan (RTC). Aguilar and Calimbas argued
out that had they been allowed to present evidence, they would have
established that the loan documents were bogus. Respondent produced
documents to appear that it had new borrowers but did not lend any amount
to them. Attached to the joint memorandum were photocopies of the dorsal
portions of the PNB checks which showed that these checks were to be
deposited back to respondent’s bank account.
RTC Ruling
On January 2, 2013, the RTC rendered separate decisions in Civil Case No.
DH-1300-1218 and Civil Case No. DH-1299-1219 which affirmed the MCTC
decisions. It held that the PNB checks were concrete evidence of the
indebtedness of the petitioners to respondent. The RTC relied on the findings
of the MCTC that the checks bore no endorsement to another person or
entity. The checks were issued in the name of the petitioners and, thus, they
had the right to encash the same and appropriate the proceeds. The decretal
portions of the RTC decision in both cases similarly read:ch an rob lesvirt u all awlib rar y
WHEREFORE, premises considered, the appeal is hereby DENIED. The
Decision dated May 9, 2012 of the First Municipal Circuit Trial Court
(1st MCTC), Dinalupihan-Hermosa, Bataan is hereby affirmed in toto.
SO ORDERED.
On January 18, 2013, the petitioners filed their joint motion for
reconsideration/new trial20 before the RTC. Aguilar and Calimbas reiterated
their position that they did not receive the proceeds of the checks. As an
alternative prayer, petitioners moved that the RTC remand the case to the
MCTC for a new trial on account of the Sinumpaang Salaysay of Arcenit Dela
Torre, the bookkeeper of respondent.
On February 11, 2013, the RTC issued separate orders21 denying the motion
of the petitioners. It explained that all the issues were already passed upon
and the supposed newly discovered evidence was already available during
appeal, but the petitioners failed to present the same in time.
CA Ruling
Aggrieved, Aguilar and Calimbas filed a petition for review 22 before the CA
on March 11, 2013. It was dismissed, however, in the questioned
resolution,23 dated April 5, 2013, stating that the petition was formally
defective because the “verification and disclaimer of forum shopping” and
 the “affidavit of service” had a defective jurat for failure of the notary public
to indicate his notarial commission number and office address. Moreover,
the entire records of the case, inclusive of the oral and documents evidence,
were not attached to the petition in contravention of Section 2, Rule 42 of
the Rules of Court.
A motion for reconsideration24 was filed by the petitioners which sought the
leniency of the CA. They attached a corrected verification and disclaimer of
forum shopping and affidavit of service. They asked the CA to simply order
the RTC to elevate the records of the case pursuant to Section 7, Rule 42 of
the Rules of Court. Moreover, the petitioners could not attach the records of
the case because the flooding caused by “Habagat” in August 2012 soaked
the said records in water.
In the other questioned resolution, dated October 9, 2013, the CA denied
the motion because the petitioners still failed to attach the entire records of
the case which was a mandatory requirement under Section 2, Rule 42.
Hence, this petition.
SOLE ASSIGNMENT OF ERROR
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
DISMISSED THE PETITION FOR REVIEW FILED BEFORE IT BY THE
PETITIONERS UNDER RULE 42 OF THE RULES OF COURT CITING
THAT THE SAID PETITION IS FORMALLY DEFECTIVE FOR FAILURE OF
THE PETITIONERS TO SUBMIT WITH THE SAID PETITION THE
ENTIRE RECORDS OF THE APPEALED CIVIL CASE NOS. DH-1300-12
AND DH-1299-12.25
The petitioners argue that contrary to the findings of the CA, they
substantially complied with the required form and contents of a petition for
review under Section 2, Rule 42 of the Rules of Court. There is nothing in
the provision which requires that the entire records of the appealed case
should be endorsed to the CA. Such requirement would definitely be
cumbersome to poor litigants like them.
They assert that they submitted the following pleadings and material
portions of the court records in their petition for review: (1) certified copies
of the decisions, orders or resolutions of the RTC and the MCTC; (2)
complaints against the petitioners attached with documents used by
respondent in its formal offer of evidence; (3) answer of the petitioners; (4)
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order of the MCTC declaring the petitioners in default; (5) respondent’s
formal offer of evidence; (6) notice of appeal; (7) joint memorandum of
appeal; and (8) joint motion for reconsideration/new trial. According to the
petitioners, these pleadings and records were sufficient to support their
petition for review.
Assuming that there was a reason to dismiss the petition on account of
technicalities, the petitioners argue that the CA should not have strictly
applied the rules of procedure and provided leniency to the petitioners. They
also ask the Court to give a glance on the merits of their case brought
before the CA.
On February 7, 2014, respondent filed its comment26 contending that the
petitioners had no excuse in their non-compliance with Section 2, Rule 42.
They claim that the court records were not attached because these were
soaked in flood water in August 2012, but the RTC rendered its decision in
January 2013. The petitioners failed to secure a certification from the RTC
that these records were indeed unavailable.
On May 21, 2014, the petitioners filed their reply before this Court, 27 adding
that the elevation of the entire records of the case was not a mandatory
requirement, and the CA could exercise its discretion that it furnished with
the entire records of the case by invoking Section 7, Rule 42 of the Rules of
Court.cral awred
The Court’s Ruling
First Procedural Issue
On the sole assignment of error, the Court agrees with the petitioners that
Section 2, Rule 42 does not require that the entire records of the case be
attached to the petition for review. The provision states:
ch an rob lesv irt u allawl ib rary
Sec. 2. Form and contents. - The petition shall be filed in seven (7) legible
copies, with the original copy intended for the court being indicated as such
by the petitioner, and shall (a) state the full names of the parties to the
case, without impleading the lower courts or judges thereof either as
petitioners or respondents; (b) indicate the specific material dates showing
that it was filed on time; (c) set forth concisely a statement of the matters
involved, the issues raised, the specification of errors of fact or law, or both,
allegedly committed by the Regional Trial Court, and the reasons or
arguments relied upon for the allowance of the appeal; (d) be
 accompanied by clearly legible duplicate originals or true copies of
the judgments or final orders of both lower courts, certified correct
by the clerk of court of the Regional Trial Court, the requisite
number of plain copies thereof and of the pleadings and other
material portions of the record as would support the allegations of
the petition. [Emphasis and underscoring supplied]
The abovequoted provision enumerates the required documents that must
be attached to a petition for review, to wit: (1) clearly legible duplicate
originals or true copies of the judgments or final orders of both lower courts,
certified correct by the clerk of court of the Regional Trial Court; (2) the
requisite number of plain copies thereof; and (3) of the pleadings and other
material portions of the record as would support the allegations of the
petition. Clearly, the Rules do not require that the entire records of the case
be attached to the petition for review. Only when these specified documents
are not attached in the petition will it suffer infirmities under Section 3, Rule
42, which states:
ch an rob le svirt u all awlib rary
Sec. 3. Effect of failure to comply with requirements. - The failure of the
petitioner to comply with any of the foregoing requirements regarding the
payment of the docket and other lawful fees, the deposit for costs, proof of
service of the petition, and the contents of and the documents which should
accompany the petition shall be sufficient ground for the dismissal thereof.
In Canton v. City of Cebu,28 the Court discussed the importance of attaching
the pleadings or material portions of the records to the petition for review.
“[P]etitioner’s discretion in choosing the documents to be attached to the
petition is however not unbridled. The CA has the duty to check the exercise
of this discretion, to see to it that the submission of supporting documents is
not merely perfunctory. The practical aspect of this duty is to enable the CA
to determine at the earliest possible time the existence of prima facie merit
in the petition.”29 In that case, the petition was denied because the
petitioner failed to attach the complaint, answer and appeal memorandum to
support their allegation.
In Cusi-Hernandez v. Diaz,30 a case where the petitioner did not attach to
her petition for review a copy of the contract to sell that was at the center of
controversy, the Court nonetheless found that there was a substantial
compliance with the rule, considering that the petitioner had appended to
the petition for review a certified copy of the decision of the MTC that
contained a verbatim reproduction of the omitted contract.
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Recently, in Galvez, v. CA,31 it was held that attaching the other records of
the MTC and the RTC were not necessary based on the circumstances of the
case. The petitioner therein was not assailing the propriety of the findings of
fact by the MTC and the RTC, but only the conclusions reached by the said
lower courts after their appreciation of the facts. In dealing with the
questions of law, the CA could simply refer to the attached decisions of the
MTC and the RTC.
Thus, the question in the case at bench is whether or not the petitioners
attached the sufficient pleadings and material portions of the records in their
petition for review. The Court rules that the petition was in substantial
compliance with the requirements.
The assignment of error32 in the petition for review clearly raises questions
of fact as the petitioners assail the appreciation of evidence by the MCTC
and the RTC. Thus, aside from the decisions and orders of the MCTC and the
RTC, the petitioners should attach pertinent portions of the records such as
the testimony of the sole witness of respondent, the copies of the cash
disbursement vouchers and the PNB checks presented by respondent in the
MCTC. In the petition for review, the petitioners attached respondent’s
complaints before the MCTC which contained the photocopies of the cash
disbursement vouchers and PNB checks. These should be considered as
ample compliance with Section 2, Rule 42 of the Rules of Court.
Second Procedural Issue
Nevertheless, instead of remanding the case to the CA, this Court deems it
fit to rule on the merits of the case to once and for all settle the dispute of
the parties.
The rule is that a court can only consider the evidence presented by
respondent in the MCTC because the petitioners failed to attend the pre-trial
conference on August 25, 2009 pursuant to Section 5, Rule 18 of the Rules
of Court.33 The Court, however, clarifies that failure to attend the pre-trial
does not result in the “default” of the defendant. Instead, the failure of the
defendant to attend shall be cause to allow the plaintiff to present his
evidence ex parte and the court to render judgment on the basis thereof.
The case of Philippine American Life & General Insurance Company v. Joseph
Enario34 discussed the difference between non-appearance of a defendant in
a pre-trial conference and the declaration of a defendant in default in the
present Rules of Civil Procedure. The decision states: ch an rob les virt u allaw lib rary
 Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default"
was initially included in Rule 20 of the old rules, and which read as
follows: Ch an Rob l esVirt u alaw lib rary
Sec. 2. A party who fails to appear at a pre-trial conference may be non-
suited or considered as in default.
It was however amended in the 1997 Revised Rules of Civil Procedure.
Justice Regalado, in his book REMEDIAL LAW COMPENDIUM, explained the
rationale for the deletion of the phrase "as in default" in the amended
provision, to wit:
Ch an Rob l esVirt u alaw lib rary
1. This is a substantial reproduction of Section 2 of the former Rule 20 with
the change that, instead of defendant being declared "as in default" by
reason of his non-appearance, this section now spells out that the procedure
will be to allow the ex parte presentation of plaintiff’s evidence and the
rendition of judgment on the basis thereof. While actually the procedure
remains the same, the purpose is one of semantical propriety or
terminological accuracy as there were criticisms on the use of the word
"default" in the former provision since that term is identified with the failure
to file a required answer, not appearance in court.
If the absent party is the plaintiff, then his case shall be dismissed. If it is
the defendant who fails to appear, then the plaintiff is allowed to present his
evidence ex parte and the court shall render judgment on the basis thereof.
Thus, the plaintiff is given the privilege to present his evidence without
objection from the defendant, the likelihood being that the court will decide
in favor of the plaintiff, the defendant having forfeited the opportunity to
rebut or present his own evidence.35
The pre-trial cannot be taken for granted. It is not a mere technicality in
court proceedings for it serves a vital objective: the simplification,
abbreviation and expedition of the trial, if not indeed its dispensation.36 More
significantly, the pre-trial has been institutionalized as the answer to the
clarion call for the speedy disposition of cases. Hailed as the most important
procedural innovation in Anglo-Saxon justice in the nineteenth century, it
paved the way for a less cluttered trial and resolution of the case. It is, thus,
mandatory for the trial court to conduct pre-trial in civil cases in order to
realize the paramount objective of simplifying, abbreviating and expediting
trial.37 ch an Rob lesvirt u alL awlib rary
In the case at bench, the petitioners failed to attend the pre-trial conference
set on August 25, 2009. They did not even give any excuse for their non-
appearance, manifestly ignoring the importance of the pre-trial stage. Thus,
the MCTC properly issued the August 25, 2009 Order,38 allowing respondent
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to present evidence ex parte.
The MCTC even showed leniency when it directed the counsels of the parties
to submit their respective position papers on whether or not Aguilar and
Calimbas could still participate in the trial of the case despite their absence
in the pre-trial conference. This gave Aguilar and Calimbas a second chance
to explain their non-attendance and, yet, only respondent complied with the
directive to file a position paper. The MCTC, in its Order,39 dated April 27,
2011, properly held that since the proceedings were being heard ex parte,
Aguilar and Calimbas had no right to participate therein and to cross-
examine the witness.
Thus, as it stands, the Court can only consider the evidence on record
offered by respondent. The petitioners lost their right to present their
evidence during the trial and, a fortiori, on appeal due to their disregard of
the mandatory attendance in the pre-trial conference.
Substantive Issue
And on the merits of the case, the Court holds that there was indeed a
contract of loan between the petitioners and respondent. The Court agrees
with the findings of fact of the MCTC and the RTC that a check was a
sufficient evidence of a loan transaction. The findings of fact of the trial
court, its calibration of the testimonies of the witnesses and its assessment
of the probative weight thereof, as well as its conclusions anchored on the
findings are accorded high respect, if not conclusive effect. 40ch an Rob lesvirt u alLa wlib rary
ch an Rob lesvirt u alL awl ib rary
The case of Pua v. Spouses Lo Bun Tiong41 discussed the weight of a check
as an evidence of a loan: ch an rob les virt u alla wlib rary
In Pacheco v. Court of Appeals, this Court has expressly recognized that a
check constitutes an evidence of indebtedness and is a veritable proof of an
obligation. Hence, it can be used in lieu of and for the same purpose as a
promissory note. In fact, in the seminal case of Lozano v. Martinez, We
pointed out that a check functions more than a promissory note since it not
only contains an undertaking to pay an amount of money but is an "order
addressed to a bank and partakes of a representation that the drawer has
funds on deposit against which the check is drawn, sufficient to ensure
payment upon its presentation to the bank." This Court reiterated this rule in
the relatively recent Lim v. Mindanao Wines and Liquour Galleria stating that
a check, the entries of which are in writing, could prove a loan transaction. 42
There is no dispute that the signatures of the petitioners were present on
 both the PNB checks and the cash disbursement vouchers. The checks were
also made payable to the order of the petitioners. Hence, respondent can
properly demand that they pay the amounts borrowed. If the petitioners
believe that there is some other bogus scheme afoot, then they must
institute a separate action against the responsible personalities. Otherwise,
the Court can only rule on the evidence on record in the case at bench,
applying the appropriate laws and jurisprudence.
As to the award of attorney’s fees, the Court is of the view that the same
must be removed. Attorney's fees are in the concept of actual or
compensatory damages allowed under the circumstances provided for in
Article 2208 of the Civil Code, and absent any evidence supporting its grant,
the same must be deleted for lack of factual basis. 43 In this case, the MCTC
merely stated that respondent was constrained to file the present suit on
account of the petitioners’ obstinate failure to settle their obligation. Without
any other basis on record to support the award, such cannot be upheld in
favor of respondent. The settled rule is that no premium should be placed on
the right to litigate and that not every winning party is entitled to an
automatic grant of attorney’s fees.44 ch an Rob lesvirt u alL awlib rar ych an rob lesl aw
WHEREFORE, the petition is PARTIALLY GRANTED.
In accord with the discourse on the substantive issue, the January 2, 2013
decision of the Regional Trial Court, Branch 5, Dinalupihan, Bataan,
is AFFIRMED. The award of attorney's fees is, however, DELETED.
SO ORDERED.
cral awl aw lib rary
Carpio, (Chairperson), Velasco, Jr.,* Del Castillo, and Leonen, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 179419 January 12, 2011
DURBAN APARTMENTS CORPORATION, doing business under
the name and style of City Garden Hotel, Petitioner,
Sensitivity: Confidential
vs.
PIONEER INSURANCE AND SURETY CORPORATION, Respondent.
DECISION
NACHURA, J.:
For review is the Decision1 of the Court of Appeals (CA) in CA-G.R. CV
No. 86869, which affirmed the decision2 of the Regional Trial Court
(RTC), Branch 66, Makati City, in Civil Case No. 03-857, holding
petitioner Durban Apartments Corporation solely liable to respondent
Pioneer Insurance and Surety Corporation for the loss of Jeffrey See’s
(See’s) vehicle.
The facts, as found by the CA, are simple.
On July 22, 2003, [respondent] Pioneer Insurance and Surety
Corporation x x x, by right of subrogation, filed [with the RTC of Makati
City] a Complaint for Recovery of Damages against [petitioner] Durban
Apartments Corporation, doing business under the name and style of
City Garden Hotel, and [defendant before the RTC] Vicente
Justimbaste x x x. [Respondent averred] that: it is the insurer for loss
and damage of Jeffrey S. See’s [the insured’s] 2001 Suzuki Grand
Vitara x x x with Plate No. XBH-510 under Policy No. MC-CV-HO-01-
0003846-00-D in the amount of ₱1,175,000.00; on April 30, 2002, See
arrived and checked in at the City Garden Hotel in Makati corner
Kalayaan Avenues, Makati City before midnight, and its parking
attendant, defendant x x x Justimbaste got the key to said Vitara from
See to park it[. O]n May 1, 2002, at about 1:00 o’clock in the morning,
See was awakened in his room by [a] telephone call from the Hotel
Chief Security Officer who informed him that his Vitara was carnapped
while it was parked unattended at the parking area of Equitable PCI
Bank along Makati Avenue between the hours of 12:00 [a.m.] and 1:00
[a.m.]; See went to see the Hotel Chief Security Officer, thereafter
reported the incident to the Operations Division of the Makati City
Police Anti-Carnapping Unit, and a flash alarm was issued; the Makati
 City Police Anti-Carnapping Unit investigated Hotel Security Officer,
Ernesto T. Horlador, Jr. x x x and defendant x x x Justimbaste; See
gave his Sinumpaang Salaysay to the police investigator, and filed a
Complaint Sheet with the PNP Traffic Management Group in Camp
Crame, Quezon City; the Vitara has not yet been recovered since July
23, 2002 as evidenced by a Certification of Non- Recovery issued by
the PNP TMG; it paid the ₱1,163,250.00 money claim of See and
mortgagee ABN AMRO Savings Bank, Inc. as indemnity for the loss of
the Vitara; the Vitara was lost due to the negligence of [petitioner]
Durban Apartments and [defendant] Justimbaste because it was
discovered during the investigation that this was the second time that a
similar incident of carnapping happened in the valet parking service of
[petitioner] Durban Apartments and no necessary precautions were
taken to prevent its repetition; [petitioner] Durban Apartments was
wanting in due diligence in the selection and supervision of its
employees particularly defendant x x x Justimbaste; and defendant x x
x Justimbaste and [petitioner] Durban Apartments failed and refused to
pay its valid, just, and lawful claim despite written demands.
Upon service of Summons, [petitioner] Durban Apartments and
[defendant] Justimbaste filed their Answer with Compulsory
Counterclaim alleging that: See did not check in at its hotel, on the
contrary, he was a guest of a certain Ching Montero x x x; defendant x
x x Justimbaste did not get the ignition key of See’s Vitara, on the
contrary, it was See who requested a parking attendant to park the
Vitara at any available parking space, and it was parked at the
Equitable Bank parking area, which was within See’s view, while he
and Montero were waiting in front of the hotel; they made a written
denial of the demand of [respondent] Pioneer Insurance for want of
legal basis; valet parking services are provided by the hotel for the
convenience of its customers looking for a parking space near the hotel
premises; it is a special privilege that it gave to Montero and See; it
does not include responsibility for any losses or damages to motor
vehicles and its accessories in the parking area; and the same holds
true even if it was See himself who parked his Vitara within the
premises of the hotel as evidenced by the valet parking customer’s
claim stub issued to him; the carnapper was able to open the Vitara
Sensitivity: Confidential
without using the key given earlier to the parking attendant and
subsequently turned over to See after the Vitara was stolen; defendant
x x x Justimbaste saw the Vitara speeding away from the place where
it was parked; he tried to run after it, and blocked its possible path but
to no avail; and See was duly and immediately informed of the
carnapping of his Vitara; the matter was reported to the nearest police
precinct; and defendant x x x Justimbaste, and Horlador submitted
themselves to police investigation.
During the pre-trial conference on November 28, 2003, counsel for
[respondent] Pioneer Insurance was present. Atty. Monina Lee x x x,
counsel of record of [petitioner] Durban Apartments and Justimbaste
was absent, instead, a certain Atty. Nestor Mejia appeared for
[petitioner] Durban Apartments and Justimbaste, but did not file their
pre-trial brief.
On November 5, 2004, the lower court granted the motion of
[respondent] Pioneer Insurance, despite the opposition of [petitioner]
Durban Apartments and Justimbaste, and allowed [respondent]
Pioneer Insurance to present its evidence ex parte before the Branch
Clerk of Court.
See testified that: on April 30, 2002, at about 11:30 in the evening, he
drove his Vitara and stopped in front of City Garden Hotel in Makati
Avenue, Makati City; a parking attendant, whom he had later known to
be defendant x x x Justimbaste, approached and asked for his ignition
key, told him that the latter would park the Vitara for him in front of the
hotel, and issued him a valet parking customer’s claim stub; he and
Montero, thereafter, checked in at the said hotel; on May 1, 2002, at
around 1:00 in the morning, the Hotel Security Officer whom he later
knew to be Horlador called his attention to the fact that his Vitara was
carnapped while it was parked at the parking lot of Equitable PCI Bank
which is in front of the hotel; his Vitara was insured with [respondent]
Pioneer Insurance; he together with Horlador and defendant x x x
Justimbaste went to Precinct 19 of the Makati City Police to report the
carnapping incident, and a police officer came accompanied them to
 the Anti-Carnapping Unit of the said station for investigation, taking of
their sworn statements, and flashing of a voice alarm; he likewise
reported the said incident in PNP TMG in Camp Crame where another
alarm was issued; he filed his claim with [respondent] Pioneer
Insurance, and a representative of the latter, who is also an adjuster of
Vesper Insurance Adjusters-Appraisers [Vesper], investigated the
incident; and [respondent] Pioneer Insurance required him to sign a
Release of Claim and Subrogation Receipt, and finally paid him the
sum of ₱1,163,250.00 for his claim.
Ricardo F. Red testified that: he is a claims evaluator of [petitioner]
Pioneer Insurance tasked, among others, with the receipt of claims and
documents from the insured, investigation of the said claim, inspection
of damages, taking of pictures of insured unit, and monitoring of the
processing of the claim until its payment; he monitored the processing
of See’s claim when the latter reported the incident to [respondent]
Pioneer Insurance; [respondent] Pioneer Insurance assigned the case
to Vesper who verified See’s report, conducted an investigation,
obtained the necessary documents for the processing of the claim, and
tendered a settlement check to See; they evaluated the case upon
receipt of the subrogation documents and the adjuster’s report, and
eventually recommended for its settlement for the sum of
₱1,163,250.00 which was accepted by See; the matter was referred
and forwarded to their counsel, R.B. Sarajan & Associates, who
prepared and sent demand letters to [petitioner] Durban Apartments
and [defendant] Justimbaste, who did not pay [respondent] Pioneer
Insurance notwithstanding their receipt of the demand letters; and the
services of R.B. Sarajan & Associates were engaged, for ₱100,000.00
as attorney’s fees plus ₱3,000.00 per court appearance, to prosecute
the claims of [respondent] Pioneer Insurance against [petitioner]
Durban Apartments and Justimbaste before the lower court.
Ferdinand Cacnio testified that: he is an adjuster of Vesper;
[respondent] Pioneer Insurance assigned to Vesper the investigation of
See’s case, and he was the one actually assigned to investigate it; he
conducted his investigation of the matter by interviewing See, going to
the City Garden Hotel, required subrogation documents from See, and
Sensitivity: Confidential
verified the authenticity of the same; he learned that it is the standard
procedure of the said hotel as regards its valet parking service to assist
their guests as soon as they get to the lobby entrance, park the cars for
their guests, and place the ignition keys in their safety key box;
considering that the hotel has only twelve (12) available parking slots, it
has an agreement with Equitable PCI Bank permitting the hotel to use
the parking space of the bank at night; he also learned that a Hyundai
Starex van was carnapped at the said place barely a month before the
occurrence of this incident because Liberty Insurance assigned the
said incident to Vespers, and Horlador and defendant x x x
Justimbaste admitted the occurrence of the same in their sworn
statements before the Anti-Carnapping Unit of the Makati City Police;
upon verification with the PNP TMG [Unit] in Camp Crame, he learned
that See’s Vitara has not yet been recovered; upon evaluation, Vesper
recommended to [respondent] Pioneer Insurance to settle See’s claim
for ₱1,045,750.00; See contested the recommendation of Vesper by
reasoning out that the 10% depreciation should not be applied in this
case considering the fact that the Vitara was used for barely eight (8)
months prior to its loss; and [respondent] Pioneer Insurance acceded
to See’s contention, tendered the sum of ₱1,163,250.00 as settlement,
the former accepted it, and signed a release of claim and subrogation
receipt.
The lower court denied the Motion to Admit Pre-Trial Brief and Motion
for Reconsideration field by [petitioner] Durban Apartments and
Justimbaste in its Orders dated May 4, 2005 and October 20, 2005,
respectively, for being devoid of merit.3
Thereafter, on January 27, 2006, the RTC rendered a decision,
disposing, as follows:
WHEREFORE, judgment is hereby rendered ordering [petitioner
Durban Apartments Corporation] to pay [respondent Pioneer Insurance
and Surety Corporation] the sum of ₱1,163,250.00 with legal interest
thereon from July 22, 2003 until the obligation is fully paid and
attorney’s fees and litigation expenses amounting to ₱120,000.00.
 SO ORDERED.4
On appeal, the appellate court affirmed the decision of the trial court,
viz.:
WHEREFORE, premises considered, the Decision dated January 27,
2006 of the RTC, Branch 66, Makati City in Civil Case No. 03-857 is
hereby AFFIRMED insofar as it holds [petitioner] Durban Apartments
Corporation solely liable to [respondent] Pioneer Insurance and Surety
Corporation for the loss of Jeffrey See’s Suzuki Grand Vitara.
SO ORDERED.5
Hence, this recourse by petitioner.
The issues for our resolution are:
1. Whether the lower courts erred in declaring petitioner as in
default for failure to appear at the pre-trial conference and to
file a pre-trial brief;
2. Corollary thereto, whether the trial court correctly allowed
respondent to present evidence ex-parte;
3. Whether petitioner is liable to respondent for attorney’s fees
in the amount of ₱120,000.00; and
4. Ultimately, whether petitioner is liable to respondent for the
loss of See’s vehicle.
The petition must fail.
We are in complete accord with the common ruling of the lower courts
that petitioner was in default for failure to appear at the pre-trial
conference and to file a pre-trial brief, and thus, correctly allowed
Sensitivity: Confidential
respondent to present evidence ex-parte. Likewise, the lower courts
did not err in holding petitioner liable for the loss of See’s vehicle.
Well-entrenched in jurisprudence is the rule that factual findings of the
trial court, especially when affirmed by the appellate court, are
accorded the highest degree of respect and are considered conclusive
between the parties.6 A review of such findings by this Court is not
warranted except upon a showing of highly meritorious circumstances,
such as: (1) when the findings of a trial court are grounded entirely on
speculation, surmises, or conjectures; (2) when a lower court’s
inference from its factual findings is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion in the
appreciation of facts; (4) when the findings of the appellate court go
beyond the issues of the case, or fail to notice certain relevant facts
which, if properly considered, will justify a different conclusion; (5)
when there is a misappreciation of facts; (6) when the findings of fact
are conclusions without mention of the specific evidence on which they
are based, are premised on the absence of evidence, or are
contradicted by evidence on record.7 None of the foregoing exceptions
permitting a reversal of the assailed decision exists in this instance.
Petitioner urges us, however, that "strong [and] compelling reason[s]"
such as the prevention of miscarriage of justice warrant a suspension
of the rules and excuse its and its counsel’s non-appearance during
the pre-trial conference and their failure to file a pre-trial brief.
We are not persuaded.
Rule 18 of the Rules of Court leaves no room for equivocation;
appearance of parties and their counsel at the pre-trial conference,
along with the filing of a corresponding pre-trial brief, is mandatory,
nay, their duty. Thus, Section 4 and Section 6 thereof provide:
SEC. 4. Appearance of parties.–It shall be the duty of the parties and
their counsel to appear at the pre-trial. The non-appearance of a party
may be excused only if a valid cause is shown therefor or if a
 representative shall appear in his behalf fully authorized in writing to
enter into an amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts
and documents.
SEC. 6. Pre-trial brief.–The parties shall file with the court and serve on
the adverse party, in such manner as shall ensure their receipt thereof
at least three (3) days before the date of the pre-trial, their respective
pre-trial briefs which shall contain, among others:
xxxx
Failure to file the pre-trial brief shall have the same effect as failure to
appear at the pre-trial.
Contrary to the foregoing rules, petitioner and its counsel of record
were not present at the scheduled pre-trial conference. Worse, they did
not file a pre-trial brief. Their non-appearance cannot be excused as
Section 4, in relation to Section 6, allows only two exceptions: (1) a
valid excuse; and (2) appearance of a representative on behalf of a
party who is fully authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute resolution, and to
enter into stipulations or admissions of facts and documents.
Petitioner is adamant and harps on the fact that November 28, 2003
was merely the first scheduled date for the pre-trial conference, and a
certain Atty. Mejia appeared on its behalf. However, its assertion is
belied by its own admission that, on said date, this Atty. Mejia "did not
have in his possession the Special Power of Attorney issued by
petitioner’s Board of Directors."
As pointed out by the CA, petitioner, through Atty. Lee, received the
notice of pre-trial on October 27, 2003, thirty-two (32) days prior to the
scheduled conference. In that span of time, Atty. Lee, who was
charged with the duty of notifying petitioner of the scheduled pre-trial
conference,8 petitioner, and Atty. Mejia should have discussed which
Sensitivity: Confidential
lawyer would appear at the pre-trial conference with petitioner, armed
with the appropriate authority therefor. Sadly, petitioner failed to
comply with not just one rule; it also did not proffer a reason why it
likewise failed to file a pre-trial brief. In all, petitioner has not shown any
persuasive reason why it should be exempt from abiding by the rules.
The appearance of Atty. Mejia at the pre-trial conference, without a
pre-trial brief and with only his bare allegation that he is counsel for
petitioner, was correctly rejected by the trial court. Accordingly, the trial
court, as affirmed by the appellate court, did not err in allowing
respondent to present evidence ex-parte.
Former Chief Justice Andres R. Narvasa’s words continue to resonate,
thus:
Everyone knows that a pre-trial in civil actions is mandatory, and has
been so since January 1, 1964. Yet to this day its place in the scheme
of things is not fully appreciated, and it receives but perfunctory
treatment in many courts. Some courts consider it a mere technicality,
serving no useful purpose save perhaps, occasionally to furnish ground
for non-suiting the plaintiff, or declaring a defendant in default, or,
wistfully, to bring about a compromise. The pre-trial device is not thus
put to full use. Hence, it has failed in the main to accomplish the chief
objective for it: the simplification, abbreviation and expedition of the
trial, if not indeed its dispensation. This is a great pity, because the
objective is attainable, and with not much difficulty, if the device were
more intelligently and extensively handled.
xxxx
Consistently with the mandatory character of the pre-trial, the Rules
oblige not only the lawyers but the parties as well to appear for this
purpose before the Court, and when a party "fails to appear at a pre-
trial conference (he) may be non-suited or considered as in default."
The obligation "to appear" denotes not simply the personal
appearance, or the mere physical presentation by a party of one’s self,
 but connotes as importantly, preparedness to go into the different
subject assigned by law to a pre-trial. And in those instances where a
party may not himself be present at the pre-trial, and another person
substitutes for him, or his lawyer undertakes to appear not only as an
attorney but in substitution of the client’s person, it is imperative for that
representative of the lawyer to have "special authority" to make such
substantive agreements as only the client otherwise has capacity to
make. That "special authority" should ordinarily be in writing or at the
very least be "duly established by evidence other than the self-serving
assertion of counsel (or the proclaimed representative) himself."
Without that special authority, the lawyer or representative cannot be
deemed capacitated to appear in place of the party; hence, it will be
considered that the latter has failed to put in an appearance at all, and
he [must] therefore "be non-suited or considered as in default,"
notwithstanding his lawyer’s or delegate’s presence.9
We are not unmindful that defendant’s (petitioner’s) preclusion from
presenting evidence during trial does not automatically result in a
judgment in favor of plaintiff (respondent). The plaintiff must still
substantiate the allegations in its complaint.10 Otherwise, it would be
inutile to continue with the plaintiff’s presentation of evidence each time
the defendant is declared in default.
In this case, respondent substantiated the allegations in its complaint,
i.e., a contract of necessary deposit existed between the insured See
and petitioner. On this score, we find no error in the following
disquisition of the appellate court:
[The] records also reveal that upon arrival at the City Garden Hotel,
See gave notice to the doorman and parking attendant of the said
hotel, x x x Justimbaste, about his Vitara when he entrusted its ignition
key to the latter. x x x Justimbaste issued a valet parking customer
claim stub to See, parked the Vitara at the Equitable PCI Bank parking
area, and placed the ignition key inside a safety key box while See
proceeded to the hotel lobby to check in. The Equitable PCI Bank
parking area became an annex of City Garden Hotel when the
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management of the said bank allowed the parking of the vehicles of
hotel guests thereat in the evening after banking hours.11
Article 1962, in relation to Article 1998, of the Civil Code defines a
contract of deposit and a necessary deposit made by persons in hotels
or inns:
Art. 1962. A deposit is constituted from the moment a person receives
a thing belonging to another, with the obligation of safely keeping it and
returning the same. If the safekeeping of the thing delivered is not the
principal purpose of the contract, there is no deposit but some other
contract.
Art. 1998. The deposit of effects made by travelers in hotels or inns
shall also be regarded as necessary. The keepers of hotels or inns
1avv phi1
shall be responsible for them as depositaries, provided that notice was
given to them, or to their employees, of the effects brought by the
guests and that, on the part of the latter, they take the precautions
which said hotel-keepers or their substitutes advised relative to the
care and vigilance of their effects.
Plainly, from the facts found by the lower courts, the insured See
deposited his vehicle for safekeeping with petitioner, through the
latter’s employee, Justimbaste. In turn, Justimbaste issued a claim stub
to See. Thus, the contract of deposit was perfected from See’s
delivery, when he handed over to Justimbaste the keys to his vehicle,
which Justimbaste received with the obligation of safely keeping and
returning it. Ultimately, petitioner is liable for the loss of See’s vehicle.
Lastly, petitioner assails the lower courts’ award of attorney’s fees to
respondent in the amount of ₱120,000.00. Petitioner claims that the
award is not substantiated by the evidence on record.
We disagree.
 While it is a sound policy not to set a premium on the right to
litigate,12 we find that respondent is entitled to reasonable attorney’s
fees. Attorney’s fees may be awarded when a party is compelled to
litigate or incur expenses to protect its interest,13 or when the court
deems it just and equitable.14 In this case, petitioner refused to answer
for the loss of See’s vehicle, which was deposited with it for
safekeeping. This refusal constrained respondent, the insurer of See,
and subrogated to the latter’s right, to litigate and incur expenses.
However, we reduce the award of ₱120,000.00 to ₱60,000.00 in view
of the simplicity of the issues involved in this case.
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. CV No. 86869 is AFFIRMED with the
MODIFICATION that the award of attorney’s fees is reduced to
₱60,000.00. Costs against petitioner.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 185527 July 18, 2012
HARRY L. GO, TONNY NGO, JERRY NGO AND JANE
GO, Petitioners,
vs.
THE PEOPLE OF THE PHILIPPINES and HIGHDONE COMPANY,
LTD., ET AL., Respondents.
DECISION
Sensitivity: Confidential
PERLAS-BERNABE, J.:
The procedure for taking depositions in criminal cases recognizes the
prosecution's right to preserve testimonial evidence and prove its case
despite the unavailability of its witness. It cannot, however, give license
to prosecutorial indifference or unseemly involvement in a prosecution
witness' absence from trial. To rule otherwise would effectively deprive
the accused of his fundamental right to be confronted with the
witnesses against him.
In this Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court, petitioners seek to nullify and set aside the February
19, 2008 Decision1 and November 28, 2008 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 99383, which reversed the
September 12, 2006 Order3 issued by the Regional Trial Court (RTC) of
Manila, Branch 27 in Civil Case No. 06-114844 and upheld the grant of
the prosecution’s motion to take the testimony of a witness by oral
depositions in Laos, Cambodia.
Petitioners Harry Go, Tonny Ngo, Jerry Ngo and Jane Go were
charged before the Metropolitan Trial Court (MeTC) of Manila for Other
Deceits under Article 318 of the Revised Penal Code (RPC) docketed
as Criminal Case No. 396447. The Information4 dated September 24,
2003, later amended5 on September 14, 2004, reads:
"That sometime in August 1996, in the City of Manila, Philippines, the
said accused, conspiring, confederating together and helping one
another, did then and there willfully, unlawfully and feloniously defraud
Highdone Company Ltd. Represented by Li Luen Ping, in the following
manner, to wit: all said accused, by means of false manifestations and
fraudulent representations which they made to said Li Luen Ping to the
effect that they have chattels such as machinery, spare parts,
equipment and raw materials installed and fixed in the premises of
BGB Industrial Textile Mills Factory located in the Bataan Export
Processing Zone (BEPZ) in Mariveles, Bataan, executed a Deed of
Mortgage for a consideration of the amount of $464,266.90 or its peso
 equivalent at P20,892,010.50 more or less in favor of ML Resources
and Highdone Company Ltd. Representing that the said deed is a
FIRST MORTGAGE when in truth and in fact the accused well knew
that the same had been previously encumbered, mortgaged and
foreclosed by CHINA BANK CORPORATION as early as September
1994 thereby causing damage and prejudice to said HIGHDONE
COMPANY LTD., in the said amount of $464,266.90 or its peso
equivalent at P20,892,010.50 more or less."
Upon arraignment, petitioners pleaded not guilty to the charge.
The prosecution's complaining witness, Li Luen Ping, a frail old
businessman from Laos, Cambodia, traveled from his home country
back to the Philippines in order to attend the hearing held on
September 9, 2004. However, trial dates were subsequently postponed
due to his unavailability.
On October 13, 2005, the private prosecutor filed with the MeTC a
Motion to Take Oral Deposition6 of Li Luen Ping, alleging that he was
being treated for lung infection at the Cambodia Charity Hospital in
Laos, Cambodia and that, upon doctor's advice, he could not make the
long travel to the Philippines by reason of ill health.
Notwithstanding petitioners' Opposition,7 the MeTC granted8 the motion
after the prosecution complied with the directive to submit a Medical
Certificate of Li Luen Ping. Petitioners sought its reconsideration which
the MeTC denied,9 prompting petitioners to file a Petition for
Certiorari10 before the RTC.
On September 12, 2006, the RTC granted the petition and declared the
MeTC Orders null and void.11 The RTC held that Section 17, Rule 23 on
the taking of depositions of witnesses in civil cases cannot apply
suppletorily to the case since there is a specific provision in the Rules
of Court with respect to the taking of depositions of prosecution
witnesses in criminal cases, which is primarily intended to safeguard
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the constitutional rights of the accused to meet the witness against him
face to face.
Upon denial by the RTC of their motion for reconsideration through an
Order dated March 5, 2006,12 the prosecution elevated the case to the
CA.
On February 19, 2008, the CA promulgated the assailed Decision
which held that no grave abuse of discretion can be imputed upon the
MeTC for allowing the deposition-taking of the complaining witness Li
Luen Ping because no rule of procedure expressly disallows the taking
of depositions in criminal cases and that, in any case, petitioners would
still have every opportunity to cross-examine the complaining witness
and make timely objections during the taking of the oral deposition
either through counsel or through the consular officer who would be
taking the deposition of the witness.
On November 28, 2008, the CA denied petitioners' motion for
reconsideration. Hence, this petition alleging that –
I.THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE METROPOLITAN TRIAL COURT INFRINGED THE
CONSTITUTIONAL RIGHT OF THE PETITIONERS TO A
PUBLIC TRIAL IN ALLOWING THE TAKING OF THE
DEPOSITION OF THE COMPLAINING WITNESS IN LAOS,
CAMBODIA.
II.THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE DEPOSITION TAKING OF THE COMPLAINING
WITNESS IN LAOS, CAMBODIA IS AN INFRINGEMENT OF
THE CONSTITUTIONAL RIGHT OF THE PETITIONERS TO
CONFRONT THE SAID WITNESS FACE TO FACE.
III.THE COURT OF APPEALS ERRED IN SUSTAINING THE
JUDICIAL LEGISLATION COMMITTED BY THE
METROPOLITAN TRIAL COURT IN APPLYING THE RULES
 ON DEPOSITION-TAKING IN CIVIL CASES TO CRIMINAL
CASES.
IV.THE COURT OF APPEALS ERRED IN LIMITING THE
TRADITIONAL DEFINITION OF GRAVE ABUSE OF
DISCRETION, OVERLOOKING THE ESTABLISHED RULE
THAT VIOLATION OF THE CONSTITUTION, THE LAW OR
JURISPRUDENCE SIMILARLY COMES WITHIN THE
PURVIEW OF GRAVE ABUSE OF DISCRETION.
We rule in favor of petitioners.
The Procedure for Testimonial Examination of an Unavailable
Prosecution Witness is Covered Under Section 15, Rule 119.
The examination of witnesses must be done orally before a judge in
open court.13 This is true especially in criminal cases where the
Constitution secures to the accused his right to a public trial and to
meet the witnessess against him face to face. The requirement is the
"safest and most satisfactory method of investigating facts" as it
enables the judge to test the witness' credibility through his manner
and deportment while testifying.14 It is not without exceptions, however,
as the Rules of Court recognizes the conditional examination of
witnesses and the use of their depositions as testimonial evidence in
lieu of direct court testimony.
Even in criminal proceedings, there is no doubt as to the availability of
conditional examination of witnesses – both for the benefit of the
defense, as well as the prosecution. The Court's ruling in the case of
Vda. de Manguerra v. Risos15 explicitly states that –
"x x x As exceptions, Rule 23 to 28 of the Rules of Court provide for the
different modes of discovery that may be resorted to by a party to an
action. These rules are adopted either to perpetuate the testimonies of
witnesses or as modes of discovery. In criminal proceedings, Sections
12, 13 and 15, Rule 119 of the Revised Rules of Criminal Procedure,
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which took effect on December 1, 2000, allow the conditional
examination of both the defense and prosecution witnesses."
(Underscoring supplied)16
The procedure under Rule 23 to 28 of the Rules of Court allows the
taking of depositions in civil cases, either upon oral examination or
written interrogatories, before any judge, notary public or person
authorized to administer oaths at any time or place within the
Philippines; or before any
Philippine consular official, commissioned officer or person authorized
to administer oaths in a foreign state or country, with no additional
requirement except reasonable notice in writing to the other party.17
But for purposes of taking the deposition in criminal cases, more
particularly of a prosecution witness who would forseeably be
unavailable for trial, the testimonial examination should be made
before the court, or at least before the judge, where the case is
pending as required by the clear mandate of Section 15, Rule 119 of
the Revised Rules of Criminal Procedure. The pertinent provision
reads thus:
SEC. 15. Examination of witness for the prosecution. – When it
satisfactorily appears that a witness for the prosecution is too sick or
infirm to appear at the trial as directed by the court, or has to leave the
Philippines with no definite date of returning, he may forthwith be
conditionally examined before the court where the case is pending.
Such examination, in the presence of the accused, or in his absence
after reasonable notice to attend the examination has been served on
him shall be conducted in the same manner as an examination at the
trial. Failure or refusal of the accused to attend the examination after
notice shall be considered a waiver. The statement taken may be
admitted in behalf of or against the accused.
Since the conditional examination of a prosecution witness must take
place at no other place than the court where the case is pending, the
 RTC properly nullified the MeTC's orders granting the motion to take
the deposition of Li Luen Ping before the Philippine consular official in
Laos, Cambodia. We quote with approval the RTC's ratiocination in this
wise:
The condition of the private complainant being sick and of advanced
age falls within the provision of Section 15 Rule 119 of the Rules of
Court. However, said rule substantially provides that he should be
conditionally examined before the court where the case is pending.
Thus, this Court concludes that the language of Section 15 Rule 119
must be interpreted to require the parties to present testimony at the
hearing through live witnesses, whose demeanor and credibility can be
evaluated by the judge presiding at the hearing, rather than by means
of deposition. No where in the said rule permits the taking of deposition
outside the Philippines whether the deponent is sick or
not.18 (Underscoring supplied)
Certainly, to take the deposition of the prosecution witness elsewhere
and not before the very same court where the case is pending would
not only deprive a detained accused of his right to attend the
proceedings but also deprive the trial judge of the opportunity to
observe the prosecution witness' deportment and properly assess his
credibility, which is especially intolerable when the witness' testimony is
crucial to the prosecution's case against the accused. This is the import
of the Court's ruling in Vda. de Manguerra19 where we further declared
that –
While we recognize the prosecution's right to preserve the testimony of
its witness in order to prove its case, we cannot disregard the rules
which are designed mainly for the protection of the accused's
constitutional rights. The giving of testimony during trial is the general
rule. The conditional examination of a witness outside of the trial is only
an exception, and as such, calls for a strict construction of the
rules.20 (Underscoring supplied)
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It is argued that since the Rules of Civil Procedure is made explicitly
applicable in all cases, both civil and criminal as well as special
proceedings, the deposition-taking before a Philippine consular official
under Rule 23 should be deemed allowable also under the
circumstances.
However, the suggested suppletory application of Rule 23 in the
testimonial examination of an unavailable prosecution witness has
been categorically ruled out by the Court in the same case of Vda. de
Manguerra, as follows:
It is true that Section 3, Rule 1 of the Rules of Court provides that the
rules of civil procedure apply to all actions, civil or criminal, and special
proceedings. In effect, it says that the rules of civil procedure have
suppletory application to criminal cases. However, it is likewise true
that criminal proceedings are primarily governed by the Revised Rules
of Criminal Procedure.
Considering that Rule 119 adequately and squarely covers the
situation in the instant case, we find no cogent reason to apply Rule 23
suppletorily or otherwise." (Underscoring supplied)
The Conditional Examination of a Prosecution Witness Cannot Defeat
the Rights of the Accused to Public Trial and Confrontation of
Witnesses
The CA took a simplistic view on the use of depositions in criminal
cases and overlooked fundamental considerations no less than the
Constitution secures to the accused, i.e., the right to a public trial and
the right to confrontation of witnesses. Section 14(2), Article III of the
Constitution provides as follows:
Section 14. (1) x x x
 (2) In all criminal prosecutions, the accused shall be presumed
innocent until the contrary is proved, and shall enjoy the right to be
heard by himself and counsel, to be informed of the nature and cause
of the accusation against him, to have a speedy, impartial and public
trial, to meet the witnesses face to face, and to have compulsory
process to secure the attendance of witnesses and the production of
evidence in his behalf. However, after arraignment, trial may proceed
notwithstanding the absence of the accused provided that he has been
duly notified and his failure to appear is unjustifiable. (Underscoring
supplied)
In dismissing petitioners' apprehensions concerning the deprivation of
their constitutional rights to a public trial and confrontation, the CA
opined that petitioners would still be accorded the right to cross-
examine the deponent witness and raise their objections during the
deposition-taking in the same manner as in a regular court trial.
We disagree. There is a great deal of difference between the face-to-
face confrontation in a public criminal trial in the presence of the
presiding judge and the cross-examination of a witness in a foreign
place outside the courtroom in the absence of a trial judge. In the aptly
cited case of People v. Estenzo,21 the Court noted the uniqueness and
significance of a witness testifying in open court, thus:
"The main and essential purpose of requiring a witness to appear and
testify orally at a trial is to secure for the adverse party the opportunity
of cross-examination. "The opponent", according to an eminent
authority, "demands confrontation, not for the idle purpose of gazing
upon the witness, or of being gazed upon by him, but for the purpose
of cross examination which cannot be had except by the direct and
personal putting of questions and obtaining immediate answers." There
is also the advantage of the witness before the judge, and it is this – it
enables the judge as trier of facts "to obtain the elusive and
incommunicable evidence of a witness' deportment while testifying,
and a certain subjective moral effect is produced upon the witness. It is
only when the witness testifies orally that the judge may have a true
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idea of his countenance, manner and expression, which may confirm
or detract from the weight of his testimony. Certainly, the physical
condition of the witness will reveal his capacity for accurate
observation and memory, and his deportment and physiognomy will
reveal clues to his character. These can only be observed by the judge
if the witness testifies orally in court. x x x" 22 (Underscoring supplied)
1âwphi1
The right of confrontation, on the other hand, is held to apply
specifically to criminal proceedings and to have a twofold purpose: (1)
to afford the accused an opportunity to test the testimony of witnesses
by cross-examination, and (2) to allow the judge to observe the
deportment of witnesses.23 The Court explained in People v.
Seneris24 that the constitutional requirement "insures that the witness
will give his testimony under oath, thus deterring lying by the threat of
perjury charge; it forces the witness to submit to cross-examination, a
valuable instrument in exposing falsehood and bringing out the truth;
and it enables the court to observe the demeanor of the witness and
assess his credibility."25
As the right of confrontation is intended "to secure the accused in the
right to be tried as far as facts provable by witnesses as meet him face
to face at the trial who give their testimony in his presence, and give to
the accused an opportunity of cross-examination,"26 it is properly viewed
as a guarantee against the use of unreliable testimony in criminal trials.
In the American case of Crawford v. Washington,27 the US Supreme
Court had expounded on the procedural intent of the confrontation
requirement, thus:
Where testimonial statements are involved, we do not think the
Framers meant to leave the Sixth Amendment's right to confront
witness face to face protection to the vagaries of the rules of evidence,
much less to amorphous notions of "reliability". Certainly, none of the
authorities discussed above acknowledges any general reliability
exception to the common-law rule.
 Admitting statements deemed reliable by a judge is fundamentally at
odds with the right of confrontation. To be sure, the Clause's ultimate
goal is to ensure reliability of evidence, but it is a procedural rather
than a substantive guarantee. It commands, not that evidence be
reliable, but that reliability be assessed in a particular manner: by
testing in the crucible of cross-examination. The Clause thus reflects a
judgment, not only about the desirability of reliable evidence (a point on
which there could be little dissent), but about how reliability can best be
determined." (Underscoring supplied)
The Webb Ruling is Not on All Fours with the Instant Case
The CA found the frail and infirm condition of the prosecution witness
as sufficient and compelling reason to uphold the MeTC Orders
granting the deposition-taking, following the ruling in the case of
People v. Webb28 that the taking of an unavailable witness' deposition is
in the nature of a discovery procedure the use of which is within the
trial court's sound discretion which needs only to be exercised in a
reasonable manner and in consonance with the spirit of the law.29
But the ruling in the cited case is not instantly applicable herein as the
factual settings are not similar. The accused in the Webb case had
1âwphi1
sought to take the oral deposition of five defense witnesses before a
Philippine consular agent in lieu of presenting them as live witnesses,
alleging that they were all residents of the United States who could not
be compelled by subpoena to testify in court. The trial court denied the
motion of the accused but the CA differed and ordered the deposition
taken. When the matter was raised before this Court, we sustained the
trial court's disallowance of the deposition-taking on the limited ground
that there was no necessity for the procedure as the matter sought to
be proved by way of deposition was considered merely corroborative of
the evidence for the defense.30
In this case, where it is the prosecution that seeks to depose the
complaining witness against the accused, the stringent procedure
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under Section 15, Rule 119 cannot be ignored without violating the
constitutional rights of the accused to due process.
Finally, the Court takes note that prosecution witness Li Luen Ping had
managed to attend the initial trial proceedings before the MeTC of
Manila on September 9, 2004. At that time, Li Luen Ping's old age and
fragile constitution should have been unmistakably apparent and yet
the prosecution failed to act with zeal and foresight in having his
deposition or testimony taken before the MeTC pursuant to Section 15,
Rule 119 of the Revised Rules of Court. In fact, it should have been
imperative for the prosecution to have moved for the preservation of Li
Luen Ping's testimony at that first instance given the fact that the
witness is a non-resident alien who can leave the Philippines anytime
without any definite date of return. Obviously, the prosecution allowed
its main witness to leave the court's jurisdiction without availing of the
court procedure intended to preserve the testimony of such witness.
The loss of its cause is attributable to no other party.
Still, even after failing to secure Li Luen Ping's conditional examination
before the MeTC prior to said witness' becoming sick and unavailable,
the prosecution would capitalize upon its own failure by pleading for a
liberal application of the rules on depositions. It must be emphasized
that while the prosecution must provide the accused every opportunity
to take the deposition of witnesses that are material to his defense in
order to avoid charges of violating the right of the accused to
compulsory process, the State itself must resort to deposition-taking
sparingly if it is to guard against accusations of violating the right of the
accused to meet the witnesses against him face to face. Great care
must be observed in the taking and use of depositions of prosecution
witnesses to the end that no conviction of an accused will rely on ex
parte affidavits and deposition.31
Thus, the CA ignored the procedure under the Revised Rules of
Criminal Procedure for taking the deposition of an unavailable
prosecution witness when it upheld the trial court's order allowing the
deposition of prosecution witness Li Luen Ping to take place in a venue
 other than the court where the case is pending. This was certainly
grave abuse of discretion.
WHEREFORE, the petition is hereby GRANTED. The assailed
Decision dated February 19, 2008 and the Resolution dated November
28, 2008 of the Court of Appeals are REVERSED and SET ASIDE.
Accordingly, the Decision of the Regional Trial Court which disallowed
the deposition-taking in Laos, Cambodia is REINSTATED.
SO ORDERED.
January 27, 2016
G.R. No. 217694
FAIRLAND KNITCRAFT CORPORATION, Petitioner,
vs.
ARTURO LOO PO, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari1 seeking to reverse and set
aside the October 31, 2014 Decision2 and the March 6, 2015
Resolution3 of the Court of Appeals (CA), in CA-G.R. SP No. 134701
which affirmed the September 16, 2013 Decision4 of the Regional Trial
Court of Pasig City, Branch 67 (RTC) in SCA Case No. 3831. The RTC
decision, in turn, sustained the March 21, 2013 Decision5 of the
Metropolitan Trial Court, Branch 72, Pasig City (MeTC), which
dismissed the unlawful detainer case filed by petitioner Fairland
Knitcraft Corporation (Fairland) against respondent Arturo Loo
Po (Po) for failure to prove its case by preponderance of evidence.
The Antecedents
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In a complaint6 for unlawful detainer, docketed as Civil Case No.
19429, filed before the MeTC, Fairland alleged that it was the owner of
Condominium Unit No. 205 in Cedar Mansion II on Ma. Escriba Street,
Pasig City. The said unit was leased by Fairland to Po by verbal
agreement, with a rental fee of P20,000.00 a month, to be paid by Po
at the beginning of each month. From March 2011, Po had
continuously failed to pay rent. For said reason, Fairland opted not to
renew the lease agreement anymore.
On January 30, 2012, Fairland sent a formal letter 7 to Po demanding
that he pay the amount of P220,000.00, representing the rental
arrears, and that he vacate the leased premises within fifteen (15) days
from the receipt of the letter. Despite receipt of the demand letter and
the lapse of the said 15-day period to comply, Po neither tendered
payment for the unpaid rent nor vacated the premises. Thus, on
December 12, 2012, Fairland was constrained to file the complaint for
unlawful detainer before the MeTC. Po had until January 7, 2013 to file
his answer but he failed to do so. Hence, on February 6, 2013, Fairland
filed a motion to render judgment.8
In its February 21, 2013 Order,9 the MeTC considered the case
submitted for decision.
On March 1, 2013, Po’s counsel filed his Entry of Appearance with
Motion for Leave of Court to file Comment/Opposition to Motion to
Render Judgment.10 In the attached Comment/Opposition, Po denied
the allegations against him and commented that there was no
supporting document that would show that Fairland owned the
property; that there was no lease contract between them; that there
were no documents attached to the complaint which would show that
previous demands had been made and received by him; that the
alleged unpaid rental was P220,000.00, but the amount of damages
being prayed for was P440,000.00; that the issue in the case was one
of ownership; and that it was the RTC which had jurisdiction over the
case.
 The MeTC treated the comment/opposition as Po’s answer to the
complaint. Considering, however, that the case fell under the Rules of
Summary Procedure, the same was deemed filed out of time. Hence,
the motion was denied.11
The Ruling of the Metropolitan Trial Court
In its March 21, 2013 Decision, the MeTC dismissed the complaint for
lack of merit due to Fairland’s failure to prove its claim by
preponderance of evidence. The MeTC explained that although the
complaint sufficiently alleged a cause of action, Fairland failed to prove
that it was entitled to the possession of the subject property. There was
no evidence presented to support its claim against Po either.
Aggrieved, Fairland seasonably filed its appeal before the RTC under
Rule 40 of the Rules of Court. Being an appealed case, the RTC
required the parties to submit their respective memoranda.
In its memorandum,12 Fairland argued that an unlawful detainer case
was a special civil action governed by summary procedure. In cases
where a defendant failed to file his answer, there was no need for a
declaration of default. Fairland claimed that the Rules stated that in
such cases, judgment should be based on the “facts alleged in the
complaint,”13 and that there was no requirement that judgment must be
based on facts proved by preponderance of evidence. Considering that
the presentation of evidence was not required when a defendant in an
ejectment case failed to appear in a preliminary conference, the same
should be applied when no answer had been filed.
Fairland continued that the failure to file an answer in an ejectment
case was tantamount to an admission by the defendant of all the
ultimate facts alleged in the complaint. There was no more need for
evidence in such a situation as every allegation of ultimate facts in the
complaint was deemed established by the defendant’s acquiescence.
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On July 18, 2013, Po filed his memorandum 14 and countered that there
was no merit in Fairland’s insistence that evidence was unnecessary
when no answer had been filed. The facts stated in the complaint did
not warrant a rendition of judgment in the plaintiff’s favor. The court
had the discretion to rule on the pleadings based on its evaluation of
the allegation of facts.
Further, all the statements in the complaint were mere allegations
which were not substantiated by any competent evidence. Po asserted
that there was no proof presented to show that the subject property
was indeed owned by Fairland; that there was no lease contract
between the parties; that he never received the demand letter, dated
January 30, 2012; and that the amount stated in the prayer of the
complaint did not coincide with the amount of unpaid rent. Po also
reiterated that the case involved an issue of ownership over the
condominium unit he was occupying.
The Ruling of the Regional Trial Court
On September 16, 2013, the RTC affirmed the MeTC ruling and
agreed that Fairland failed to establish its case by preponderance of
evidence. There was nothing on record that would establish Fairland’s
right over the property subject of the complaint. Though it had been
consistently ruled that the only issue for resolution in an ejectment
case was the physical or material possession of the property involved,
independent of any claim of ownership by any of the party-litigants, the
court may go beyond the question of physical possession provisionally.
The RTC concluded that even assuming that Po was not the lawful
owner, his actual physical possession of the subject property created
the presumption that he was entitled to its possession thereof.
Fairland filed a motion for reconsideration15 attaching its condominium
certificate of title16 over the subject property, but it was denied by the
RTC in its Order,17 dated February 24, 2014.
 Undaunted, Fairland filed a petition for review 18 under Rule 42 of the
Rules of Court before the CA.
The Ruling of the Court of Appeals
In the assailed Decision, dated October 31, 2014, the CA dismissed
the petition and ruled that an action for unlawful detainer would not lie
against Po. Notwithstanding the abbreviated proceeding it ordained
and the limited pleadings it allowed, the Rules on Summary Procedure
did not relax the rules on evidence. In order for an action for recovery
of possession to prosper, it was indispensable that he who brought the
action should prove not only his ownership but also the identity of the
property claimed. The CA concluded, however, that Fairland failed to
discharge such bounden duty.
Fairland filed its motion for reconsideration, but it was denied by the
CA in its assailed Resolution, dated March 6, 2015.
Hence, this petition.
ARGUMENTS/DISCUSSIONS
I was the erroneous dismissal of the ejectment case for lack of
IN AN EJECTMENT CASE WHEREIN NO ANSWER WAS
SEASONABLY FILED, IT IS AN ERROR OF LAW TO BASE
JUDGMENT ON PREPONDERANCE OF EVIDENCE
II
HOLDING THAT EVIDENCE IN AN EJECTMENT CASE SHOULD
HAVE BEEN ATTACHED TO THE COMPLAINT IS AN ERROR OF
LAW.19
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Fairland argues that in ejectment cases, presentation of evidence was
undertaken through the submission of position papers but the same
was dispensed with when the defendant failed to file an answer or
when either party failed to appear during the preliminary conference. In
an ejectment case, the scope of inquiry should be limited to the
sufficiency of the cause of action stated in the complaint when no
seasonable answer was filed. The attachment of documentary
evidence to the Complaint was not a requirement and was even
proscribed by law.
In his Comment,20 Po countered that the present petition raised a
question of fact. Although couched in different words, the issues raised
here were substantially the same as the issues raised before the CA.
There was no legal basis in Fairland’s assertion that evidence was
dispensed with when no answer to the complaint had been filed. Such
argument would undermine the inherent authority of the courts to
resolve legal issues based on the facts of the case and on the rules on
evidence. Contrary to Fairland’s position, the court decided the case on
the basis of the complaint which was found wanting in preponderance
of evidence.
In its Reply,21 Fairland posited that the petition did not raise mere
questions of fact but one of law as what was being sought for review
preponderance of evidence. Since no answer was filed and the
complaint sufficiently alleged a cause of action for unlawful detainer, it
became the duty of the MeTC to decide the case in its favor.
The Court’s Ruling
The petition is meritorious.
Complaint has a valid cause of action for Unlawful Detainer
Section 1 of Rule 70 of the Rules of Court lays down the requirements
for filing a complaint for unlawful detainer, to wit:
 Section 1. – Who may institute proceedings, and when. –
Subject to the provision of the next succeeding section, a
person deprived of the possession of any land or building by
force, intimidation, threat, strategy, or stealth, or a lessor,
vendor, vendee, or other person against whom the possession
of any land or building is unlawfully withheld after the expiration
or termination of the right to hold possession, by virtue of any
contract, express or implied, or the legal representatives or
assigns of any such lessor, vendor, vendee, or other person,
may, at any time within one (1) year after such unlawful
deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any
person or persons claiming under them, for the restitution of
such possession, together with damages and costs. 1âw phi1
Stated differently, unlawful detainer is a summary action for the
recovery of possession of real property. This action may be filed by a
lessor, vendor, vendee, or other person from whom the possession of
any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession by virtue of any contract,
express or implied. The possession of the defendant was originally
legal, as his possession was permitted by the plaintiff on account of an
express or implied contract between them. The defendant’s
possession, however, became illegal when the plaintiff demanded that
the defendant vacate the subject property due to the expiration or
termination of the right to possess under the contract, and the
defendant refused to heed such demand. A case for unlawful detainer
must be instituted one year from the unlawful withholding of
possession.22
A complaint sufficiently alleges a cause of action for unlawful detainer if
it recites the following: (1) initially, possession of the property by the
defendant was by contract with or by tolerance of the plaintiff; (2)
eventually, such possession became illegal upon notice by the plaintiff
to the defendant of the termination of the latter’s right of possession;
(3) thereafter, the defendant remained in possession of the property,
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and deprived the plaintiff of the enjoyment thereof; and (4) within one
(1) year from the last demand on defendant to vacate the property, the
plaintiff instituted the complaint for ejectment.23
There is no question that the complaint filed by Fairland adequately
alleged a cause of action for unlawful detainer. The pertinent portion of
the said complaint reads:
xxx
3. Plaintiff is the owner of, and had been leasing to the
defendant, the premises mentioned above as the residence of
the latter;
4. There is no current written lease contract between plaintiff
and the defendant, but the latter agreed to pay the former the
amount of Php20,000.00 as rent at the beginning of each
month. Thus, the term of the lease agreement is renewable on
a month-to-month basis;
5. Since March 2011, defendant has not been paying the
aforesaid rent despite plaintiff’s repeated demands;
6. Due to defendant’s continuous failure to pay rent, plaintiff
reached a decision not to renew the lease agreement. It sent a
formal letter, x x x demanding defendant to pay the amount of
Php220,000.00, representing defendant’s twelve month rental
arrears beginning January 2011, and to vacate the leased
premises, both within fifteen (15) days from receipt of said
letter;
7. Despite receipt of the aforesaid demand letter and lapse of
the fifteen day period given to comply with plaintiff’s demand,
defendant neither tendered payment for the unpaid rent nor
vacated the leased premises. Worse, defendant has not been
paying rent up to now;
 x x x24
The above-cited portions of the complaint sufficiently alleged that
Fairland was the owner of the subject property being leased to Po by
virtue of an oral agreement. There was a demand by Fairland for Po to
pay rent and vacate before the complaint for unlawful detainer was
instituted. The complaint was seasonably filed within the one-year
period prescribed by law. With all the elements present, there was
clearly a cause of action in the complaint for unlawful detainer.
Under the Rules of Summary Procedure, the weight of evidence is not
considered when a judgment is rendered based on the complaint
The question now is whether the MeTC correctly dismissed the case
for lack of preponderance of evidence. Fairland posits that judgment
should have been rendered in its favor on the basis of the complaint
itself and not on its failure to adduce proof of ownership over the
subject property.
The Court agrees with Fairland’s position.
The summons, together with the complaint and its annexes, was
served upon Po on December 28, 2012. This presupposes that the
MeTC found no ground to dismiss the action for unlawful
detainer.25 Nevertheless, Po failed to file his answer on time and the
MeTC had the option to render judgment motu proprio or on motion of
the plaintiff. In relation thereto, Sections 5 and 6 of the Rules on
Summary Procedure provide:
Sec. 5. Answer. – Within ten (10) days from service of summons, the
defendant shall file his answer to the complaint and serve a copy
thereof on the plaintiff. Affirmative and negative defenses not pleaded
therein shall be deemed waived, except for lack of jurisdiction over the
subject matter. Cross-claims and compulsory counterclaims not
asserted in the answer shall be considered barred. The answer to
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counterclaims or cross-claims shall be filed and served within ten (10)
days from service of the answer in which they are pleaded.
Sec. 6. Effect of failure to answer. – Should the defendant fail to
answer the complaint within the period above provided, the court, motu
proprio or on motion of the plaintiff, shall render judgment as may be
warranted by the facts alleged in the complaint and limited to
what is prayed for therein. The court may in its discretion reduce the
amount of damages and attorney’s fees claimed for being excessive or
otherwise unconscionable, without prejudice to the applicability of
Section 4, Rule 18 of the Rules of Court, if there are two or more
defendants.
[Emphasis Supplied]
Section 6 is clear that in case the defendant failed to file his answer,
the court shall render judgment, either motu proprio or upon plaintiff’s
motion, based solely on the facts alleged in the complaint and
limited to what is prayed for. The failure of the defendant to timely
file his answer and to controvert the claim against him constitutes his
acquiescence to every allegation stated in the complaint. Logically,
there is nothing to be done in this situation26 except to render judgment
as may be warranted by the facts alleged in the complaint.27
Similarly, under Section 7, Rule 70 of the Rules of Court, which
governs the rules for forcible entry and unlawful detainer, if the
defendant fails to answer the complaint within the period provided, the
court has no authority to declare the defendant in default. Instead, the
court, motu proprio or on motion of the plaintiff, shall render judgment
as may be warranted by the facts alleged in the complaint and
limited to what is prayed for.28
This has been enunciated in the case of Don Tino Realty and
Development Corporation v. Florentino,29 citing Bayog v.
Natino,30 where the Court held that there was no provision for an entry
 of default under the Rules of Summary Procedure if the defendant
failed to file his answer.
In this case, Po failed to file his answer to the complaint despite proper
service of summons. He also failed to provide a sufficient justification
to excuse his lapses. Thus, as no answer was filed, judgment must be
1âwphi 1
rendered by the court as may be warranted by the facts alleged in the
complaint.
Failure to attach annexes is not fatal if the complaint alleges a
sufficient cause of action; evidence need not be attached to the
complaint
The lower courts erroneously dismissed the complaint of Fairland
simply on the ground that it failed to establish by preponderance of
evidence its ownership over the subject property. As can be gleaned
above, the rules do not compel the plaintiff to attach his evidence to the
complaint because, at this inception stage, he only has to file his
complaint to establish his cause of action. Here, the court was only
tasked to determine whether the complaint of Fairland alleged a
sufficient cause of action and to render judgment thereon.
Also, there was no need to attach proof of ownership in the complaint
because the allegations therein constituted a sufficient cause of action
for unlawful detainer. Only when the allegations in the complaint are
insufficient to form a cause of action shall the attachment become
material in the determination thereof. Even under Section 4 of the
Rules of Summary Procedure,31 it is not mandatory to attach annexes
to the complaint.
In the case of Lazaro v. Brewmaster32 (Lazaro), where judgment was
rendered based on the complaint due to the failure of the defendant to
file an answer under the Rules of Summary Procedure, it was written
that:
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xxx To determine whether the complaint states a cause of action, all
documents attached thereto may, in fact, be considered, particularly
when referred to in the complaint. We emphasize, however, that the
inquiry is into the sufficiency, not the veracity of the material
allegations in the complaint. Thus, consideration of the annexed
documents should only be taken in the context of ascertaining the
sufficiency of the allegations in the complaint.
[Emphasis Supplied]
In Lazaro, the assailed invalid invoices attached to the complaint were
not considered because the complaint already alleged a sufficient
cause of action for collection of sum of money. Those assailed
documents were not the bases of the plaintiff’s action for sum of
money, but were only attached to the complaint to provide evidentiary
details on the alleged transactions.
Similarly, in the case at bench, there was no need for documentary
attachments to prove Fairland’s ownership over the subject
property. First, the present action is an action for unlawful detainer
wherein only de facto or material possession is required to be alleged.
Evidently, the attachment of any deed of ownership to the complaint is
not indispensable because an action for unlawful detainer does not
entirely depend on ownership.
Second, Fairland sufficiently alleged ownership and superior right of
possession over the subject property. These allegations were evidently
manifest in the complaint as Fairland claimed to have orally agreed to
lease the property to Po. The Court is of the view that these allegations
were clear and unequivocal and did not need supporting attachments
to be considered as having sufficiently established its cause of action.
Even the MeTC conceded that the complaint of Fairland stated a valid
cause of action for unlawful detainer.33 It must be stressed that inquiry
into the attached documents in the complaint is for the sufficiency, not
the veracity, of the material allegations in the complaint.
 Third, considering that Po failed to file an answer within the prescribed
period, he was deemed to have admitted all the allegations in the
complaint including Fairland’s claim of ownership. To reiterate, the
failure of the defendant to timely file his answer and controvert the
claim against him constituted his acquiescence to every allegation
stated in the complaint.
In the Entry of Appearance with Motion for Leave of Court to file
Comment/Opposition to Motion to Render Judgment, which was
belatedly filed and so was denied by the MeTC, Po merely denied the
allegations against him without even bothering to aver why he claimed
to have a superior right of possession of the subject property.34
Fourth, it is only at the later stage of the summary procedure when the
affidavits of witnesses and other evidence on factual issues shall be
presented before the court. Sections 8 and 9 of the Rules on Summary
Procedure state:
Sec. 8. Record of preliminary conference. – Within five (5) days after
the termination of the preliminary conference, the court shall issue an
order stating the matters taken up therein, x x x
Sec. 9. Submission of affidavits and position papers. – Within ten (10)
days from receipt of the order mentioned in the next preceding section,
the parties shall submit the affidavits of their witnesses and other
evidence on the factual issues defined in the order, together with
their position papers setting forth the law and the facts relied upon by
them.
[Emphasis Supplied]
Again, it is worth stressing that these provisions are exactly Sections 9
and 10 under Rule 70 of the Rules of Court.
Accordingly, it is only at this part of the proceedings that the parties will
be required to present and offer their evidence before the court to
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establish their causes and defenses. Before the issuance of the record
of preliminary conference, the parties are not yet required to present
their respective evidence.
These specific provisions under the Rules of Summary Procedure
which are also reflected in Rule 70 of the Rules of Court, serve their
purpose to immediately settle ejectment proceedings. “Forcible entry
and unlawful detainer cases are summary proceedings designed to
provide for an expeditious means of protecting actual possession or
the right to possession of the property involved. It does not admit of a
delay in the determination thereof. It is a ‘time procedure’ designed to
remedy the situation.35 Thus, as a consequence of the defendant’s
failure to file an answer, the court is simply tasked to render judgment
as may be warranted by the facts alleged in the complaint and limited
to what is prayed for therein.
As the complaint contains a valid cause of action, a judgment can
already be rendered
In order to achieve an expeditious and inexpensive determination of
unlawful detainer cases, a remand of this case to the lower courts is no
longer necessary and the case can be determined on its merits by the
Court.
To recapitulate, as Po failed to file his answer on time, judgment shall
be rendered based only on the complaint of Fairland without the need
to consider the weight of evidence. As discussed above, the complaint
of Fairland had a valid cause of action for unlawful detainer.
Consequently, there is no more need to present evidence to establish
the allegation of Fairland of its ownership and superior right of
possession over the subject property. Po’s failure to file an answer
constitutes an admission of his illegal occupation due to his non-
payment of rentals, and of Fairland’s rightful claim of material
possession. Thus, judgment must be rendered finding that Fairland has
the right to eject Po from the subject property.
 The Judicial Affidavit Rule
On a final note, the Court deems it proper to discuss the relevance of
the Judicial Affidavit Rule or A.M. No. 12-8-8-SC, where documentary
or object evidence are required to be attached. To begin with, the rule
is not applicable because such evidence are required to be attached to
a judicial affidavit, not to a complaint. Moreover, as the rule took effect
only on January 1, 2013, it cannot be required in this case because this
was earlier filed on December 12, 2012.
Granting that it can be applied retroactively, the rule being essentially
remedial, still it has no bearing on the ruling of this Court.
In the Judicial Affidavit Rule, the attachments of documentary or object
evidence to the affidavits is required when there would be a pre-trial
or preliminary conference or the scheduled hearing. As stated
earlier, where a defendant fails to file an answer, the court shall render
judgment, either motu proprio or upon plaintiff’s motion, based solely
on the facts alleged in the complaint and limited to what is prayed for.
Thus, where there is no answer, there is no need for a pre-trial,
preliminary conference or hearing. Section 2 of the Judicial Affidavit
Rule reads:
Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct
testimonies. - (a) The parties shall file with the court and serve on the
adverse party, personally or by licensed courier service, not later than
five days before pre-trial or preliminary conference or the scheduled
hearing with respect to motions and incidents, the following:
(1) The judicial affidavits of their witnesses, which shall
take the place of such witnesses' direct testimonies;
and
(2) The parties' docun1entary or object evidence, if any,
which shall be attached to the judicial affidavits and
marked as Exhibits A, B, C, and so on in the case of
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the complainant or the plaintiff, and as Exhibits 1, 2, 3,
and so on in the case of the respondent or the
defendant.
(b) Should a party or a witness desire to keep the original document or
object evidence in his possession, he may, after the same has been
identified, marked as exhibit, and authenticated, warrant in his judicial
affidavit that the copy or reproduction attached to such affidavit is a
faithful copy or reproduction of that original. In addition, the party or
witness shall bring the original document or object evidence for
comparison during the preliminary conference with the attached copy,
reproduction, or pictures, failing which the latter shall not be admitted.
This is without prejudice to the introduction of secondary evidence in
place of the original when allowed by existing rules.
WHEREFORE, the petition is GRANTED. The October 31, 2014
Decision and the March 6, 2015 Resolution of the Court of Appeals in
CAG. R. SP No. 134701 are hereby REVERSED and SET
ASIDE. Respondent Arturo Loo Po is ORDERED TO
VACATE Condominium Unit No. 205 located in Cedar Mansion II on
Ma. Escriba Street, Pasig City.
Respondent Po is further ORDERED TO PAY the rentals-in-arrears, as
well as the rentals accruing in the interim until he vacates the property.
The unpaid rentals shall incur a legal interest of six percent (6%) per
annum from January 30, 2012, when the demand to pay and to vacate
was made, up to the finality of this decision. Thereafter, an interest of
six percent (6%) per annum shall be imposed on the total amount due
until full payment is made.
SO ORDERED.
JOSE CATRAL MENDOZA
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176652 June 4, 2014
AUGUSTO C. SOLIMAN, Petitioner,
vs.
JUANITO C. FERNANDEZ, m his capacity as Receiver of SMC
PNEUMATICS (PHILS.), INC., Respondent.
DECISION
PEREZ, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45
of the Rules of Court assailing the 27 July 2006 Decision2 and the 12
February 2007 Resolution of the Sixteenth Division of the Court of
Appeals (CA) in CA-G.R. CV No. 84983. The Decision reversed the
Orders of the Regional Trial Court (RTC) of Quezon City, Branch 83,
dated 31 January 20053 and 22 April 2005,4 which dismissed the
complaint filed by Juanito C. Fernandez (respondent) against Augusto
C. Soliman (petitioner) in Civil Case No.Q-04-5~183 and denied
respondent's motion for reconsideration.
Culled from the records are the following antecedent facts:
On 10 March 2003, SMC Pneumatics Philippines, Inc. (SMC
Pneumatics) filed a Motion for Appointment of Management Committee
before the RTC (Special Commercial Court) of Calamba City, Branch
34, docketed as RTC SEC Case No. 44-2003-C.5 It was consolidated
with SEC Case No. 50-2003-C and SEC No. 49-2003. The latter two
cases refer to the involuntary dissolution cases filed by SMC
Pneumatics.6 As a result, the RTC issued an Order7 appointing
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respondent as the Receiver pending the hearing on the composition
and appointment of the members of the Management Committee.8
All the assets, affairs and operations of SMC Pneumatics were placed
under receivership.9 Respondent discovered that two (2) of the vehicles
owned by the SMC Pneumatics are still in the possession of the
petitioner. Respondent demanded that the petitioner return the
vehicles. For failure of petitioner to surrender possession, respondent
filed a Complaint for Recovery of Personal Properties with Writ of
Replevin10 before the RTC-QC Branch 83.
The lower court issued a Writ of Replevin and subsequently, a Writ of
Seizure11 was issued. Petitioner filed a Motion for Extension of Time to
File Answer.12 Thereafter, he filed an Urgent Motion to Admit
Answer.13 The Answer was admitted in an Order14 dated 20 August
2004.
In his Answer, petitioner maintained that the receiver is not entitled to
the possession of the subject vehicles. As president of SMC
Pneumatics he insisted that he is entitled to the possession and use
thereof.
On 31 January 2005, the RTC issued the following Order:
Per Order dated August 20, 2004, [petitioner’s] Urgent Motion Admit
Answer dated June 10, 2004 was granted and the Answer attached
thereto was admitted. Said Order was received by counsel for the
[respondent] on September 21, 2004 but to date, said counsel has not
taken any step for the further prosecution of this case.
WHEREFORE, for failure to prosecute let this case be, as it is hereby
DISMISSED.15 Respondent filed a Motion for Reconsideration16 but it
was denied by the trial court in its 22 April 2005 Order. Respondent
filed a Notice of Appeal17 seeking the reversal of the Orders of the RTC.
 In his Brief,18 respondent argued that it is the duty of the Branch Clerk
of Court to set a case for pre-trial. Respondent hinged this argument
on the Supreme Court Resolution entitled "Guidelines to be Observed
by Trial Court Judges and Clerks of Court in the Conduct of Pre-Trial
and Use of Deposition-Discovery Measures,"19 wherein the Court ruled
that:
Within five (5) days from the date of filing of reply, the plaintiff must
promptly move ex parte that the case be set for pre-trial conference. If
the plaintiff fails to file said motion within the given period, the Branch
COC shall issue a notice of pre-trial.
Respondent contended that the Guidelines set by the Supreme Court
has effectively relaxed Rule 18, Section 1 of the Revised Rules of
Court, which states that it shall be the duty of the plaintiff to promptly
move ex parte that the case be set for pre-trial.
Finding merit in the contentions advanced by respondent, the appellate
court held that the lower court need not immediately dismiss the case
for failure of respondent to file a motion to set the case for pre-trial
because the Branch Clerk of Court should have issued a Notice of Pre-
Trial. The dispositive portion of the assailed Decision of the CA read:
WHEREFORE, premises considered, the appeal is GRANTED. The
assailed Orders are hereby REVERSED and SET ASIDE. Let this case
be REMANDED to the Regional Trial Court of Quezon City, Branch 83
for further proceedings.20
Aggrieved by the Decision, petitioner filed with the CA a Motion for
Reconsideration of the 27 July 2006 Decision.21 Petitioner’s Motion for
Reconsideration was denied in a Resolution22 of the CA dated 12
February 2007. Petitioner elevated the case to this Court by filing the
present Petition for Review on Certiorari.
Petitioner raised in issue the CA jurisdiction to entertain respondent’s
appeal from the order of dismissal of the RTC. He contends that since
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the respondent’s appeal from the RTC order of dismissal raised a
question purely of law, the same was within the exclusive appellate
jurisdiction of the Supreme Court.23
He maintained that the Decision of the CA should therefore be deemed
null and void ab initio. Respondent, on the other hand, emphasized
that petitioner cannot raise the issue of jurisdiction in the present
Petition for Review on Certiorari under Rule 45 of the Rules of Court.
He argued that petitioner should have filed instead a special civil action
under Rule 65. For such error, he insisted that the instant petition
should be dismissed outright. Respondent further pointed out that
petitioner never questioned the jurisdiction of the CA while the case
was pending before the appellate court. He even invoked its jurisdiction
when it prayed for the reconsideration of the assailed decision.
Petitioner should not be allowed to assail the CA’s jurisdiction after he
failed to get what he wanted.
We deem it unnecessary to pass upon these questions thoroughly
because, whether we deal with the proceedings before us as one for
review on certiorari of the Decision of the CA, or as a direct appeal
from the order of dismissal of the RTC, the result is the same.24
We find it proper to delve into the more important issue to be resolved,
that is, whether the trial court was correct in dismissing the complaint
of the plaintiff for failure to prosecute. We do so to avoid the invocation
of procedural rules for observance of yet another rule on technicality.
It has long been established and settled that the question of whether a
case should be dismissed for failure to prosecute is mainly addressed
to the sound discretion of the trial court.25 Pursuant to Rule 17, Section
3 of the Rules of Court, a court can dismiss a case on the ground of
failure to prosecute. The true test for the exercise of such power is
whether, under the prevailing circumstances, the plaintiff is culpable for
want of due diligence in failing to proceed with reasonable
promptitude.26 As to what constitutes "unreasonable length of time," this
Court has ruled that it depends on the circumstances of each particular
 case and that "the sound discretion of the court" in the determination of
the said question will not be disturbed, in the absence of patent
abuse.27 The Court, however, in the case of Belonio v. Rodriguez,28 held
that:
The power of the trial court to dismiss an action for non-prosequitur is
not without its limits. If a pattern or scheme to delay the disposition of
the case or a wanton failure to observe the mandatory requirement of
the rules on the part of the plaintiff is not present, as in this case,
courts should not wield their authority to dismiss. Indeed, while the
dismissal rests on the prerogative of the trial court, it must soundly be
exercised and not be abused, as there must be sufficient reason to
justify its extinctive effect on the plaintiff’s cause of action. Deferment
of proceedings may be tolerated so that the court, aimed at a just and
inexpensive determination of the action, may adjudge cases only after
a full and free presentation of all the evidence by both parties. In this
regard, courts are reminded to exert earnest efforts to resolve the
matters before them on the merits, and adjudicate the case in accord
with the relief sought by the parties so that appeals may be
discouraged; otherwise, in hastening the proceedings, they further
delay the final settlement of the case.
Petitioner argued that the appellate court mistakenly concluded that the
trial court need not immediately dismiss the case for failure of the
respondent to file a motion to set the case for pre-trial. He alleged that
a closer reading of the Regional Trial Court Order 29 would reveal that
the Order simply stated that respondent did not take any step for the
further prosecution of the case. He noted that "any step for the further
prosecution of the case" is not necessarily limited to the setting of the
case for pre-trial. The phrase may include an equally significant,
available remedy and course of action such as a motion for a judgment
on the pleadings or for summary judgment. He maintained that the
failure to take any of the three (3) available courses of action prompted
the trial court to conclude that the respondent has not taken any step
for the further prosecution of the case and to dismiss the same for
failure to prosecute.
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Such contention is speculative. We cannot presume that the
respondent had the intention of availing of the remedies of motion for
judgment on the pleadings or summary judgment but failed to file the
same. The fact remains that the respondent had the option to move for
pre-trial and if he fails to do so as he did, the branch clerk of court had
the duty to have the case set for pre-trial. Moreover, the period of more
than four (4) months or from 21 September 2004 up to 31 January
2005 may not be considered an unreasonable length of time to warrant
the terminal consequence of dismissal of the case.
To be sure, the dismissal of the case cannot be for respondent’s
"failing to take any step for further prosecution of this case" because
the further step is not his, but for the clerk of court, to take.
In Malayan Insurance Co, Inc. v. Ipil International, Inc.,30 this Court held
that the failure of a plaintiff to prosecute the action without any
justifiable cause within a reasonable period of time will give rise to the
presumption that he is no longer interested to obtain from the court the
relief prayed for in the complaint. The presumption is not, by any
means, conclusive because the plaintiff, on a motion for
reconsideration of the order of dismissal, may allege and establish a
justifiable cause for such failure.
We also note that in the trial court, petitioner as defendant was in delay
in filing his answer yet the court showed some leniency in admitting his
answer despite of the delay. We find no reason why respondent as
plaintiff should not be granted the same leniency for his failure to move
for pre-trial. For after all, and to underscore the point, the resolution of
the Court in A.M. No. 03-1-09-SC31 provides that: "Within five (5) days
from date of filing of the reply, the plaintiff must move ex parte that the
case be set for pre-trial conference. If the plaintiff fails to file said
motion within the given period, the Branch Clerk of Court shall issue a
notice of pre-trial." Dismissal of the case for failure to prosecute is not
the result stated in the rule. The trial court is required to proceed to
pre-trial through the notice of pre-trial and setting the case for pre-trial
by the Branch Clerk of Court.
 On a final note, we emphasize that in the absence of a pattern or
scheme to delay the disposition of the case or a wanton failure to
observe the mandatory requirement of the rules on the part of the
plaintiff, as in the case at bar, courts should decide to dispense with
rather than wield their authority to dismiss.32 This is in line with the time-
honoured principle that cases should be decided only after giving all
parties the chance to argue their causes and defenses. Technicality
and procedural imperfections should thus not serve as basis of
decisions.33

WHEREFORE, in light of the foregoing, the instant Petition for Review

on Certiorari is DENIED. The 27 July 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 84983 and its 12 February 2007
Resolution denying petitioner's Motion for Reconsideration are hereby
AFFIRMED.

SO ORDERED.

JOSE PORTUGAL PEREZ

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