FIRST DIVISION

G.R. No. 215281, March 05, 2018

ROLANDO DE ROCA, Petitioner, v. EDUARDO C. DABUYAN, JENNIFER A. BRANZUELA, JENNYLYN A.

RICARTE, AND HERMINIGILDO F. SABANATE, Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the June 19, 2014 Decision2 and October 28, 2014
Resolution3 of the Court of Appeals (CA) dismissing the Petition for Certiorari4 in CA-G.R. SP No. 127974 and
denying herein petitioner's Motion for Reconsideration,5 respectively.

Factual Antecedents

As found by the CA, the facts are as follows:

In 2012, private respondents filed a complaint6 for illegal dismissal against "RAF Mansion Hotel Old
Management and New Management and Victoriano Ewayan." Later, private respondents amended the
complaint and included petitioner Rolando De Roca as [co]-respondent. Summons was sent through
registered mail to petitioner but it was returned.

Thereafter, a conference was set but only complainants attended. Thus, another summons was issued and
personally served to petitioner by the bailiff of the NLRC as evidenced by the latter's return dated 14 March
2012. Despite service of summons, petitioner did not attend the subsequent hearings prompting the labor
arbiter to direct private respondents to submit their position paper.

On 18 April 2012, private respondents submitted their position paper. On the same day, petitioner filed his
motion to dismiss7 on the ground of lack of jurisdiction. He alleged that[,] while he [was] the owner of RAF
Mansion Hotel building, the same [was being] leased by Victoriano Ewayan, the owner of Oceanics Travel
and Tour Agency. Petitioner claims that Ewayan was the employer of private respondents, Consequently, he
asserted that there was no employer-employee relationship between him and private respondents and the
labor arbiter had no jurisdiction.

On 29 June 2012, the labor arbiter rendered a decision directing petitioner, among others, to pay backwages
and other monetary award to private respondents. In said decision, the labor arbiter also denied the motion
to dismiss for having been filed beyond the reglementary period. Petitioner received a copy of the decision
on 3 August 2012.

On 4 September 2012, petitioner filed a petition8 for annulment of judgment on the ground of lack of
jurisdiction before the NLRC. However, the petition was dismissed because it was also filed beyond the
period allowed by the 2011 NLRC Rules of Procedure. Petitioner sought reconsideration but the same was
also denied.9
Ruling of the Labor Arbiter

In the above-mentioned June 29, 2012 Decision10 in NLRC-NCR-Case No. 02-02490-12, Labor Arbiter J.
Potenciano F. Napenas, Jr. held, among others, that -
x x x [R]espondent Rolando De Roca surprisingly filed a "Motion to Dismiss" on the ground of lack of
jurisdiction. In substance, the motion is anchored on the alleged lack of employer-employee relationship
between the parties thereto. In support thereof, respondent De Roca further alleged that it was rather the
Oceanic Travel and Tour Agency and respondent Ewayan in whose favor respondent De Roca leased the
subject Hotel, are the true employers of the complainants as evidenced by the Contract of Lease of Buildings
(Annex "1" respondent's Motion to Dismiss).

Subsequent thereof [sic], complainants filed an Opposition with Motion to Implead (to Respondent's Motion
to Dismiss), seeking, among others, that the corporation "Oceanic Travel and Tour Agency" be impleaded as
additional respondent.

xxxx

Anent the Motion to Dismiss, Rule V, Sections 6 and 7 of the Revised 2011 NLRC Rules of Procedure
explicitly provide:
'SECTION 6. MOTION TO DISMISS. - Before the date set for the mandatory conciliation and mediation
conference, the respondent may file a motion to dismiss on grounds provided under Section 5, paragraph
(a) hereof. Such motion shall be immediately resolve[d] by the Labor Arbiter through a written order. An
order denying the motion to dismiss, or suspending its resolution until the final determination of the case, is
not appealable.

SECTION 7. EFFECT OF FAILURE TO FILE. - No motion to dismiss shall be allowed or entertained after the
lapse of the period provided in Section 6hereof.'
Clearly, respondent De Roca's Motion to Dismiss, having been filed long after the date set for the mandatory
conference, should be dismissed on such ground being a prohibited pleading.

Corning now on [sic] the meat of the controversy, since respondents obviously failed to controvert the
allegations by the complainants in their Position Papers accompanied with supporting evidence, We have no
recourse but to accord them credence for being uncontradicted.

xxxx

Obviously, respondents had failed to discharge such burden.

WHEREFORE, premises considered, judgement is hereby rendered finding all the respondents liable for
illegal dismissal.

Accordingly, all of them are hereby ordered to pay complainants their full backwages and other monetary
claims computed from date of their dismissal up to the promulgation of this decision plus 10% of the total
monetary award as attorney's fees.

xxxx

Lastly, the Motion to Dismiss is denied for being filed beyond the period allowed by the rules, thus, a
prohibited pleading. Also, the Motion to implead Oceanic Travel and Tours Agency as additional respondent
is denied for the same reason.

SO ORDERED.11
Ruling of the National Labor Relations Commission

Instead of filing an appeal before the National Labor Relations Commission (NLRC), petitioner instituted the
petition for annulment of judgment referred to above, which the NLRC dismissed in its September 28, 2012
Resolution12 for being tardy, as it was filed beyond the 10-day reglementary period prescribed under Section
3, Rule XII of the 2011 NLRC Rules of Procedure.

Ruling of the Court of Appeals

Petitioner filed a Petition for Certiorari before the CA, where he argued, among others, that he was never an
employer of the respondents, as he was merely the owner of the premises which were leased out to and
occupied by respondents' true employer, Victoriano Ewayan (Ewayan), who owned Oceanic Travel and Tours
Agency which operated the RAF Mansion Hotel where respondents were employed as cook, waitress, and
housekeeper; and that his inclusion in the labor case was borne of malice which is shown by the fact that
when the labor complaint was filed, he was not originally impleaded as a respondent, and was made so only
after respondents discovered that their employer had already absconded - in which case he was impleaded
under the pretext that he constituted the "new management of RAF Mansion Hotel".

On June 19, 2014, the CA rendered the assailed Decision dismissing the petition, decreeing thus:
At the outset, We note that the issue raised by petitioner is imprecise because the NLRC did not rule on the
propriety of finding petitioner liable to private respondents. It is obvious from the assailed resolution that
the petition for annulment of judgment was denied because it was tiled after the lapse of the period
presc1ibed under the 2011 NLRC Rules of Procedure and this is the issue that this Court will resolve.

xxxx

Record shows that petitioner received the decision of the labor arbiter on 3 August 2012 but he filed his
petition on 4 September 2012 or thirty-one days after such receipt. In this regard, the NLRC did not commit
any error in denying the petition much more grave abuse of discretion. The rule is clear and the NLRC may
not 'arbitrarily disregard specific provisions of the Rules which an precisely intended to assist the parties in
obtaining just, expeditious and inexpensive settlement of labor disputes.'

Similarly, the labor arbiter did not commit any grave abuse of discretion because he just observed the NLRC
rules when he denied petitioner's motion to dismiss. x x x

In addition, We also cannot attribute grave abuse of discretion in the labor arbiter's resolution of the motion
to dismiss in the decision itself. While this may seem peculiar, it must be emphasized that the motion to
dismiss was filed at about the period when the case was about to be submitted for decision.

xxxx

In the case at bar, the inclusion of the denial of the motion to dismiss in the decision is not without
justification. Petitioner not only failed to submit the motion to dismiss on time but also forfeited the right to
submit his position paper because he did not attend the conference and subsequent hearings. Even if the
labor arbiter denied the motion to dismiss in a separate order, petitioner would still be precluded from
submitting a position paper where he can buttress his claim of lack of jurisdiction. The labor arbiter,
therefore, could not be said to have committed grave abuse of discretion in denying the motion to dismiss
and in incorporating its order in the decision.

xxxx

As regards the claim of petitioner on the merits of his ground, We cannot consider his arguments and
assume that his allegation of lack of employer-employment [sic] relationship between him and private
respondents is true. First, he did not present any evidence to support his claim because he lost the
opportunity to submit a position paper. Thus, his allegations will remain mere allegations.

Second, it would transgress fairness if his allegations in this petition should be given any attention because
the private respondents never had the [opportunity to] present evidence to meet his claims. Private
respondents' arguments were correctly centered on the provisions of the 2011 NLRC Rules of Procedure
because they were the bases for the denial of petitioner's motion to dismiss and petition for annulment of
judgment.

Furthermore, petitioner did not submit the position paper of private respondents where We can find their
averments on the employment relationship between them and petitioner or lack thereof. This omission not
only rendered useless the evaluation of the asseverations in the petition but also gave Us another reason to
dismiss this petition under Section 3, Rule 46 of the Rules of Court. Petitioner is well-aware that this
pleading is material to the resolution of his petition and in neglecting to attach the same to his petition, the
same would warrant the dismissal of this petition.

Lastly, the ultimate aim of petitioner is for Us to review the findings of the labor arbiter on the employment
relationship between him and the private respondents. 'The basic issue of whether or not the NLRC has
jurisdiction over the case resolves itself into the question of whether an employer-employee relationship
existed' between them. Thus, it is an issue which necessitates presentation of evidence on the part of
petitioner and evaluation of the pieces of evidence of each party. Again, this is not proper in a petition for
certiorari.

WHEREFORE, the petition is DISMISSED.

 THIRD DIVISION

G.R. No. 193494, March 07, 2014

LUI ENTERPRISES, INC., Petitioner, v. ZUELLIG PHARMA CORPORATION AND THE PHILIPPINE
BANK OF COMMUNICATIONS, Respondents.

DECISION

LEONEN, J.:

There should be no inexplicable delay in the filing of a motion to set aside order of default. Even when a
motion is filed within the required period, excusable negligence must be properly alleged and proven.

This is a petition for review on certiorari of the Court of Appeals’ decision1 dated May 24, 2010 and
resolution2 dated August 13, 2010 in CA–G.R. CV No. 88023. The Court of Appeals affirmed in toto the
Regional Trial Court of Makati’s decision3 dated July 4, 2006.

The facts as established from the pleadings of the parties are as follows: chanRoble svirtual Lawlib ra ry

On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation entered into a 10–year contract of
lease4 over a parcel of land located in Barrio Tigatto, Buhangin, Davao City. The parcel of land was covered
by Transfer Certificate of Title No. T–166476 and was registered under Eli L. Lui.5

On January 10, 2003, Zuellig Pharma received a letter6 from the Philippine Bank of Communications.
Claiming to be the new owner of the leased property, the bank asked Zuellig Pharma to pay rent directly to
it. Attached to the letter was a copy of Transfer Certificate of Title No. 336962 under the name of the
Philippine Bank of Communications.7 Transfer Certificate of Title No. 336962 was derived from Transfer
Certificate of Title No. T–166476.8

Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of Communications’ claim. On
January 28, 2003, Lui Enterprises wrote to Zuellig Pharma and insisted on its right to collect the leased
property’s rent.9

Due to the conflicting claims of Lui Enterprises and the Philippine Bank of Communications over the rental
payments, Zuellig Pharma filed a complaint10 for interpleader with the Regional Trial Court of Makati. In its
complaint, Zuellig Pharma alleged that it already consigned in court P604,024.35 as rental payments. Zuellig
Pharma prayed that it be allowed to consign in court its succeeding monthly rental payments and that Lui
Enterprises and the Philippine Bank of Communications be ordered to litigate their conflicting claims.11

The Philippine Bank of Communications filed its answer12 to the complaint. On the other hand, Lui
Enterprises filed a motion to dismiss13 on the ground that Zuellig Pharma’s alleged representative did not
have authority to file the complaint for interpleader on behalf of the corporation. Under the secretary’s
certificate14 dated May 6, 2003 attached to the complaint, Atty. Ana L.A. Peralta was only authorized to
“initiate and represent [Zuellig Pharma] in the civil proceedings for consignation of rental payments to be
filed against Lui Enterprises, Inc. and/or [the Philippine Bank of Communications].”15

According to Lui Enterprises, an earlier filed nullification of deed of dation in payment case pending with the
Regional Trial Court of Davao barred the filing of the interpleader case.16 Lui Enterprises filed this
nullification case against the Philippine Bank of Communications with respect to several properties it
dationed to the bank in payment of its obligations. The property leased by Zuellig Pharma was among those
allegedly dationed to the Philippine Bank of Communications.17

In the nullification of deed of dation in payment case, Lui Enterprises raised the issue of which corporation
had the better right over the rental payments.18 Lui Enterprises argued that the same issue was involved in
the interpleader case. To avoid possible conflicting decisions of the Davao trial court and the Makati trial
court on the same issue, Lui Enterprises argued that the subsequently filed interpleader case be dismissed.

To support its argument, Lui Enterprises cited a writ of preliminary injunction19 dated July 2, 2003 issued by
the Regional Trial Court of Davao, ordering Lui Enterprises and the Philippine Bank of Communications “[to
maintain] status quo”20 with respect to the rent. By virtue of the writ of preliminary injunction, Lui
Enterprises argued that it should continue collecting the rental payments from its lessees until the
nullification of deed of dation in payment case was resolved. The writ of preliminary injunction dated July 2,
2003 reads: chanRoble svi rtual Lawli bra ry

WHEREAS, on June 30, 2003, the Court issued an Order, a portion of which is quoted:
WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary Injunction issue, restraining and enjoining
[the Philippine Bank of Communications], its agents or [representative], the Office of the Clerk of Court–
Sheriff and all persons acting on their behalf, from conducting auction sale on the properties of [Lui
Enterprises] in EJF–REM Case No. 6272–03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice,
Ecoland, Davao City, until the final termination of the case, upon plaintiff [sic] filing of a bond in the amount
of P1,000,000.00 to answer for damages that the enjoined parties may sustain by reason of the injunction if
the Court should finally decide that applicant is not entitled thereto.
WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved by this Court.

IT IS HEREBY ORDERED by the undersigned Judge that, until further orders, [the Philippine Bank of
Communications] and all [its] attorneys, representatives, agents and any other persons assisting [the
bank], are directed to restrain from conducting auction sale on the Properties of [Lui Enterprises] in EJF–
REM Case No. 6272–03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice, Ecoland, Davao City,
until the final termination of the case.21

Zuellig Pharma filed its opposition22 to the motion to dismiss. It argued that the motion to dismiss should be
denied for having been filed late. Under Rule 16, Section 1 of the 1997 Rules of Civil Procedure, a motion to
dismiss should be filed within the required time given to file an answer to the complaint, which is 15 days
from service of summons on the defendant.23 Summons was served on Lui Enterprises on July 4, 2003. It
had until July 19, 2003 to file a motion to dismiss, but Lui Enterprises filed the motion only on July 23,
2003.24

As to Lui Enterprises’ claim that the interpleader case was filed without authority, Zuellig Pharma argued
that an action interpleader “is a necessary consequence of the action for consignation.”25 Zuellig Pharma
consigned its rental payments because of “the clearly conflicting claims of [Lui Enterprises] and [the
Philippine Bank of Communications].”26 Since Atty. Ana L.A. Peralta was authorized to file a consignation
case, this authority necessarily included an authority to file the interpleader case.

Nevertheless, Zuellig Pharma filed in court the secretary’s certificate dated August 28, 2003,27 which
expressly stated that Atty. Ana L.A. Peralta was authorized to file a consignation and interpleader case on
behalf of Zuellig Pharma.28

With respect to the nullification of deed of dation in payment case, Zuellig Pharma argued that its pendency
did not bar the filing of the interpleader case. It was not a party to the nullification case.29

As to the writ of preliminary injunction issued by the Regional Trial Court of Davao, Zuellig Pharma argued
that the writ only pertained to properties owned by Lui Enterprises. Under the writ of preliminary injunction,
the Regional Trial Court of Davao enjoined the July 3, 2003 auction sale of Lui Enterprises’ properties, the
proceeds of which were supposed to satisfy its obligations to the Philippine Bank of Communications. As
early as April 21, 2001, however, the Philippine Bank of Communications already owned the leased property
as evidenced by Transfer Certificate of Title No. 336962. Thus, the writ of preliminary injunction did not
apply to the leased property.30

Considering that Lui Enterprises filed its motion to dismiss beyond the 15–day period to file an answer,
Zuellig Pharma moved that Lui Enterprises be declared in default.31

In its compliance32 dated September 15, 2003, the Philippine Bank of Communications “[joined Zuellig
Pharma] in moving to declare [Lui Enterprises] in default, and in [moving for] the denial of [Lui Enterprises’]
motion to dismiss.”33

The Regional Trial Court of Makati found that Lui Enterprises failed to file its motion to dismiss within the
reglementary period. Thus, in its order34 dated October 6, 2003, the trial court denied Lui Enterprises’
motion to dismiss and declared it in default.35

Lui Enterprises did not move for the reconsideration of the order dated October 6, 2003. Thus, the Makati
trial court heard the interpleader case without Lui Enterprises’ participation.

Despite having been declared in default, Lui Enterprises filed the manifestation with prayer36 dated April 15,
2004. It manifested that the Regional Trial Court of Davao allegedly issued the order37 dated April 1, 2004,
ordering all of Lui Enterprises’ lessees to “observe status quo with regard to the rental payments”38 and
continue remitting their rental payments to Lui Enterprises while the nullification of deed of dation in
payment case was being resolved. The order dated April 1, 2004 of the Regional Trial Court of Davao
reads:chanRoble svirtual Lawli bra ry

ORDER

Posed for Resolution is the Motion for Amendment of Order filed by [Lui Enterprises] on September 23, 2003
seeking for the preservation of status quo on the payment/remittance of rentals to [it] and the
disposal/construction of the properties subject matter of this case.

xxxx

As elsewhere stated, [the Philippine Bank of Communications] did not oppose the instant motion up to the
present. In fact, during the hearing held on March 15, 2004, [the bank’s] counsel manifested in open court
that except for the rentals due from [Zuellig Pharma] which are the subject of a consignation suit before a
Makati Court, the other rental payments are continuously received by [Lui Enterprises].

There being no objection from [the Philippine Bank of Communications], and in order to protect the right of
[Lui Enterprises] respecting the subject of the action during the pendency of this case, this Court, in the
exercise of its discretion hereby grants the motion.

Accordingly, consistent with the order of this Court dated June 30, 2003, the parties are hereby directed to
further observe status quo with regard to the rental payments owing or due from the lessees of the
properties subject of the first set of deeds of dacion and that the defendants are enjoined from disposing of
the properties located at Green Heights Village, Davao City until the case is finally resolved.

With the order dated April 1, 2004 issued by the Regional Trial Court of Davao as basis, Lui Enterprises
argued that Zuellig Pharma must remit its rental payments to it and prayed that the interpleader case be
dismissed.

The Regional Trial Court of Makati only noted the manifestation with prayer dated April 15, 2004.39

It was only on October 21, 2004, or one year after the issuance of the order of default, that Lui Enterprises
filed a motion to set aside order of default40 in the Makati trial court on the ground of excusable negligence.
Lui Enterprises argued that its failure to file a motion to dismiss on time “was caused by the negligence of
[Lui Enterprises’] former counsel.”41 This negligence was allegedly excusable because “[Lui Enterprises] was
prejudiced and prevented from fairly presenting [its] case.”42

For its allegedly meritorious defense, Lui Enterprises argued that the earlier filed nullification of deed of
dation in payment case barred the filing of the interpleader case. The two actions allegedly involved the
same parties and the same issue of which corporation had the better right over the rental payments. To
prevent “the possibility of two courts x x x rendering conflicting rulings [on the same issue],”43 Lui
Enterprises argued that the subsequently filed interpleader case be dismissed.

Zuellig Pharma filed its opposition44 to the motion to set aside order of default. It argued that a counsel’s
failure to file a timely answer was inexcusable negligence which bound his client.

Further, Zuellig Pharma argued that the pending case for nullification of deed of dation in payment “[did]
not preclude [Zuellig Pharma] from seeking the relief prayed for in the [interpleader case].”45

While the motion to set aside order of default was still pending for resolution, Lui Enterprises filed the
manifestation and motion to dismiss46 dated April 21, 2005 in the Makati trial court. It manifested that the
Davao trial court issued another order47 dated April 18, 2005 in the nullification of deed of dation in payment
case. In this order, the Davao trial court directed the Philippine Bank of Communications to inform Zuellig
Pharma to pay rent to Lui Enterprises while the Davao trial court’s order dated April 1, 2004 was subsisting.
The order dated April 18, 2005 of the Davao trial court reads: chanRoblesv irtual Lawlib rary
 ORDER

Plaintiffs move for execution or implementation of the Order dated September 14, 2004. In substance, [Lui
Enterprises] seek[s] to compel the remittance in their favor of the rentals from [Zuellig Pharma], one of the
lessees alluded to in the September 14, 2004 Order whose rental payments “must be remitted to and
collected by [Lui Enterprises].” [The Philippine Bank of Communications] did not submit any opposition.

It appears from the records that sometime in February 2003, after being threatened with a lawsuit coming
from [the Philippine Bank of Communications], [Zuellig Pharma] stopped remitting its rentals to [Lui
Enterprises] and instead, has reportedly deposited the monthly rentals before a Makati court for
consignation.

As aptly raised by the plaintiffs, a possible impasse may insist should the Makati Court’s ruling be contrary
to or in conflict with the status quo order issued by this Court. To preclude this spectacle, Zuellig Pharma
should accordingly be advised with the import of the Order dated September 14, 2004, the salient portion of
which is quoted:
x x x prior to the institution of the instant case and by agreement of the parties, plaintiffs were given as
they did exercise the right to collect, receive and enjoy rental payments x x x.

Since the April 1, 2004 status quo order was a necessary implement of the writ of preliminary injunction
issued on June 30, 2003, it follows that plaintiff’s right to collect and receive rental payments which he
enjoyed prior to the filing of this case, must be respected and protected and maintained until the case is
resolved. As such, all rentals due from the above–enumerated lessees must be remitted to and collected by
the Plaintiffs.

Status quo simply means the last actual peaceable uncontested status that preceded the actual controversy.
(Searth Commodities Corp. v. Court of Appeals, 207 SCRA 622).
As such, the [Philippine Bank of Communications] [is] hereby directed to forthwith inform [Zuellig Pharma]
of the April 1, 2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for
the said lessee to remit all rentals due from February 23, 2003 and onwards to [Lui Enterprises] in the
meanwhile that the status quo order is subsisting.

In its manifestation and motion to dismiss, Lui Enterprises reiterated its prayer for the dismissal of the
interpleader case to prevent “the possibility of [the Regional Trial Court, Branch 143, Makati City] and [the
Regional Trial Court, Branch 16, Davao City] rendering conflicting rulings [on the same issue of which
corporation has the better right to the rental payments].”48

Without resolving the motion to set aside order of default, the Makati trial court denied the manifestation
with motion to dismiss dated April 21, 2005 on the ground that Lui Enterprises already lost its standing in
court.49

Lui Enterprises did not file any motion for reconsideration of the denial of the manifestation and motion to
dismiss dated April 21, 2005.

In its decision50 dated July 4, 2006, the Regional Trial Court of Makati ruled that Lui Enterprises “[was]
barred from any claim in respect of the [rental payments]”51 since it was declared in default. Thus,
according to the trial court, there was no issue as to which corporation had the better right over the rental
payments.52 The trial court awarded the total consigned amount of P6,681,327.30 to the Philippine Bank of
Communications and ordered Lui Enterprises to pay Zuellig Pharma P50,000.00 in attorney’s fees.53

Lui Enterprises appealed to the Court of Appeals.54

The Court of Appeals found Lui Enterprises’ appellant’s brief insufficient. Under Rule 44, Section 13 of the
1997 Rules of Civil Procedure, an appellant’s brief must contain a subject index, page references to the
record, table of cases, textbooks and statutes cited, and the statement of issues, among others. However,
Lui Enterprises’ appellant’s brief did not contain these requirements.55

As to the denial of Lui Enterprises’ motion to dismiss, the Court of Appeals sustained the trial court. The
Court of Appeals found that Lui Enterprises filed its motion to dismiss four days late.56

With respect to Lui Enterprises’ motion to set aside order of default, the Court of Appeals found that Lui
Enterprises failed to show the excusable negligence that prevented it from filing its motion to dismiss on
time. On its allegedly meritorious defense, the Court of Appeals ruled that the nullification of deed of dation
in payment case did not bar the filing of the interpleader case, with Zuellig Pharma not being a party to the
nullification case.57

On the award of attorney’s fees, the Court of Appeals sustained the trial court since “Zuellig Pharma x x x
was constrained to file the action for interpleader with consignation in order to protect its interests x x x.”58

Thus, in its decision59 promulgated on May 24, 2010, the Court of Appeals dismissed Lui Enterprises’ appeal
and affirmed in toto the Regional Trial Court of Makati’s decision.

Lui Enterprises filed a motion for reconsideration.60

The Court of Appeals denied Lui Enterprises’ motion for reconsideration in its resolution promulgated on
August 13, 2010.61 Hence, this petition.

In this petition for review on certiorari ,62 Lui Enterprises argued that the Court of Appeals applied “the rules
of procedure strictly”63 and dismissed its appeal on technicalities. According to Lui Enterprises, the Court of
Appeals should have taken a liberal stance and allowed its appeal despite the lack of subject index, page
references to the record, table of cases, textbooks and statutes cited, and the statement of issues in its
appellant’s brief.64

Lui Enterprises also claimed that the trial court should have set aside the order of default since its failure to
file a motion to dismiss on time was due to excusable negligence.65

For its allegedly meritorious defense, Lui Enterprises argued that the pending nullification of deed of dation
in payment case barred the filing of the interpleader case. The nullification of deed of dation in payment
case and the interpleader case allegedly involved the same issue of which corporation had the better right to
the rent. To avoid conflicting rulings on the same issue, Lui Enterprises argued that the subsequently filed
interpleader case be dismissed.66

No attorney’s fees should have been awarded to Zuellig Pharma as argued by Lui Enterprises. Zuellig
Pharma filed the interpleader case despite its knowledge of the nullification of deed of dation in payment
case filed in the Davao trial court where the same issue of which corporation had the better right over the
rental payments was being litigated. Thus, Zuellig Pharma filed the interpleader case in bad faith for which it
was not entitled to attorney’s fees.67

The Philippine Bank of Communications filed its comment68 on the petition for review on certiorari . It
argued that Lui Enterprises failed to raise any error of law and prayed that we affirm in toto the Court of
Appeals’ decision.

For Zuellig Pharma, it manifested that it was adopting the Philippine Bank of Communications’ arguments in
its comment.69

The issues for our resolution are:chanRoble svirtual Lawlib ra ry

I. Whether the Court of Appeals erred in dismissing Lui Enterprises’ appeal for lack of subject index, page
references to the record, table of cases, textbooks and statutes cited, and the statement of issues in Lui
Enterprises’ appellant’s brief;

II. Whether the Regional Trial Court of Makati erred in denying Lui Enterprises’ motion to set aside order of
default;

III. Whether the annulment of deed of dation in payment pending in the Regional Trial Court of Davao
barred the subsequent filing of the interpleader case in the Regional Trial Court of Makati; and

IV. Whether Zuellig Pharma was entitled to attorney’s fees.

Lui Enterprises’ petition for review on certiorari is without merit. However, we delete the award of attorney’s
fees.
 I

Lui Enterprises did not comply with the

rules on the contents of the appellant’s
brief

Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil Procedure, the Court of Appeals may, on
its own motion or that of the appellee, dismiss an appeal should the appellant’s brief lack specific
requirements under Rule 44, Section 13, paragraphs (a), (c), (d), and (f): chanRoblesvi rtua lLawl ib rary

Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its
own motion or on that of the appellee, on the following grounds: chanRoble svi rtual Lawli bra ry

xxxx

(f) Absence of specific assignment of errors in the appellant’s brief, or of page references to the record as
required in Section 13, paragraphs (a), (c), (d), and (f) of Rule 44.

These requirements are the subject index of the matter in brief, page references to the record, and a table
of cases alphabetically arranged and with textbooks and statutes cited: chanRoblesv irt ual Lawlib rary

Section 13. Contents of the appellant’s brief. – The appellant’s brief shall contain, in the order herein
indicated, the following:chanRob lesvi rtua lLawl ibra ry

(a) A subject index of the matter in brief with a digest of the arguments and page references, and a table of
cases alphabetically arranged, textbooks and statutes cited with references to the pages where they are
cited;

xxxx

(c) Under the heading “Statement of the Case,” a clear and concise statement of the nature of the action, a
summary of the proceedings, the appealed rulings and orders of the court, the nature of the controversy,
with page references to the record;

(d) Under the heading “Statement of Facts,” a clear and concise statement in a narrative form of the facts
admitted by both parties and of those in controversy, together with the substance of the proof relating
thereto in sufficient detail to make it clearly intelligible, with page references to the record;

xxxx

(f) Under the heading “Argument,” the appellant’s arguments on each assignment of error with page
references to the record. The authorities relied upon shall be cited by the page of the report at which the
case begins and the page of the report on which the citation is found;

xxxx

Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and table of cases,
textbooks and statutes cited. Under Rule 50, Section 1 of the 1997 Rules of Civil Procedure, the Court of
Appeals correctly dismissed Lui Enterprises’ appeal.

Except for cases provided in the Constitution,70 appeal is a “purely statutory right.”71 The right to appeal
“must be exercised in the manner prescribed by law”72 and requires strict compliance with the Rules of Court
on appeals.73 Otherwise, the appeal shall be dismissed, and its dismissal shall not be a deprivation of due
process of law.

In Mendoza v. United Coconut Planters Bank, Inc.,74 this court sustained the Court of Appeals’ dismissal of
Mendoza’s appeal. Mendoza’s appellant’s brief lacked a subject index, assignment of errors, and page
references to the record. In De Liano v. Court of Appeals,75 this court also sustained the dismissal of De
Liano’s appeal. De Liano’s appellant’s brief lacked a subject index, a table of cases and authorities, and page
references to the record.
There are exceptions to this rule. In Philippine Coconut Authority v. Corona International, Inc.,76 the
Philippine Coconut Authority’s appellant’s brief lacked a clear and concise statement of the nature of the
action, a summary of the proceedings, the nature of the judgment, and page references to the record.
However, this court found that the Philippine Coconut Authority substantially complied with the Rules. Its
appellant’s brief “apprise[d] [the Court of Appeals] of the essential facts and nature of the case as well as
the issues raised and the laws necessary [to dispose of the case].”77 This court “[deviated] from a rigid
enforcement of the rules”78 and ordered the Court of Appeals to resolve the Philippine Coconut Authority’s
appeal.

In Go v. Chaves,79 Go’s 17–page appellant’s brief lacked a subject index. However, Go subsequently filed a
subject index. This court excused Go’s procedural lapse since the appellant’s brief “[consisted] only of 17
pages which [the Court of Appeals] may easily peruse to apprise it of [the case] and of the relief
sought.”80 This court ordered the Court of Appeals to resolve Go’s appeal “in the interest of justice.”81

In Philippine Coconut Authority and Go, the appellants substantially complied with the rules on the contents
of the appellant’s brief. Thus, this court excused the appellants’ procedural lapses.

In this case, Lui Enterprises did not substantially comply with the rules on the contents of the appellant’s
brief. It admitted that its appellant’s brief lacked the required subject index, page references to the record,
and table of cases, textbooks, and statutes cited. However, it did not even correct its admitted “technical
omissions”82 by filing an amended appellant’s brief with the required contents.83 Thus, this case does not
allow a relaxation of the rules. The Court of Appeals did not err in dismissing Lui Enterprises’ appeal.

Rules on appeal “are designed for the proper and prompt disposition of cases before the Court of
Appeals.”84 With respect to the appellant’s brief, its required contents are designed “to minimize the [Court
of Appeals’] labor in [examining] the record upon which the appeal is heard and determined.”85

The subject index serves as the brief’s table of contents.86 Instead of “[thumbing] through the [appellant’s
brief]”87 every time the Court of Appeals Justice encounters an argument or citation, the Justice deciding the
case only has to refer to the subject index for the argument or citation he or she needs.88 This saves the
Court of Appeals time in reviewing the appealed case. Efficiency allows the justices of the appellate court to
substantially attend to this case as well as other cases.

Page references to the record guarantee that the facts stated in the appellant’s brief are supported by the
record.89 A statement of fact without a page reference to the record creates the presumption that it is
unsupported by the record and, thus, “may be stricken or disregarded altogether.”90

As for the table of cases, textbooks, and statutes cited, this is required so that the Court of Appeals can
easily verify the authorities cited “for accuracy and aptness.”91

Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and a table of cases,
textbooks, and statutes cited. These requirements “were designed to assist the appellate court in the
accomplishment of its tasks, and, overall, to enhance the orderly administration of justice.”92 This court will
not disregard rules on appeal “in the guise of liberal construction.”93 For this court to liberally construe the
Rules, the party must substantially comply with the Rules and correct its procedural lapses.94 Lui Enterprises
failed to remedy these errors.

All told, the Court of Appeals did not err in dismissing Lui Enterprises’ appeal. It failed to comply with Rule
44, Section 13, paragraphs (a), (c), (d), and (f) of the 1997 Rules of Civil Procedure on the required
contents of the appellant’s brief.

II

Lui Enterprises failed to show that its

failure to answer the complaint within
the required period was due to excusable
negligence

When a defendant is served with summons and a copy of the complaint, he or she is required to answer
within 15 days from the day he or she was served with summons.95 The defendant may also move to
dismiss the complaint “[w]ithin the time for but before filing the answer.”96

Fifteen days is sufficient time for a defendant to answer with good defenses against the plaintiff’s allegations
in the complaint. Thus, a defendant who fails to answer within 15 days from service of summons either
presents no defenses against the plaintiff’s allegations in the complaint or was prevented from filing his or
her answer within the required period due to fraud, accident, mistake or excusable negligence.97

In either case, the court may declare the defendant in default on plaintiff’s motion and notice to
defendant.98 The court shall then try the case until judgment without defendant’s participation99 and grant
the plaintiff such relief as his or her complaint may warrant.100

A defendant declared in default loses his or her standing in court.101 He or she is “deprived of the right to
take part in the trial and forfeits his [or her] rights as a party litigant,”102 has no right “to present evidence
[supporting his or her] allegations,”103 and has no right to “control the proceedings [or] cross–examine
witnesses.”104 Moreover, he or she “has no right to expect that [the court] would [act] upon [his or her
pleadings]”105 or that he or she “may [oppose] motions filed against him [or her].”106

However, the defendant declared in default “does not [waive] all of [his or her] rights.”107 He or she still has
the right to “receive notice of subsequent proceedings.”108 Also, the plaintiff must still present evidence
supporting his or her allegations “despite the default of [the defendant].”109

Default, therefore, is not meant to punish the defendant but to enforce the prompt filing of the answer to
the complaint. For a defendant without good defenses, default saves him or her “the embarrassment of
openly appearing to defend the indefensible.”110 As this court explained in Gochangco v. The Court of First
Instance of Negros Occidental, Branch IV:111

It does make sense for a defendant without defenses, and who accepts the correctness of the specific
relief prayed for in the complaint, to forego the filing of the answer or any sort of intervention in the action
at all. For even if he did intervene, the result would be the same: since he would be unable to establish any
good defense, having none in fact, judgment would inevitably go against him. And this would be an
acceptable result, if not being in his power to alter or prevent it, provided that the judgment did not go
beyond or differ from the specific relief stated in the complaint. x x x.112 (Emphasis in the original)

On the other hand, for a defendant with good defenses, “it would be unnatural for him [or her] not to set x x
x up [his or her defenses] properly and timely.”113 Thus, “it must be presumed that some insuperable cause
prevented him [or her] from [answering the complaint].”114 In which case, his or her proper remedy
depends on when he or she discovered the default and whether the default judgment was already rendered
by the trial court.

After notice of the declaration of default but before the court renders the default judgment, the defendant
may file, under oath, a motion to set aside order of default. The defendant must properly show that his or
her failure to answer was due to fraud, accident,115 mistake116 or excusable negligence.117 The defendant
must also have a meritorious defense. Rule 9, Section 3, paragraph (b) of the 1997 Rules of Civil Procedure
provides:c hanRoble svirtual Lawli bra ry

Section 3. Default; declaration of. – x x x x

(b) Relief from order of default. – A party declared in default may at any time after notice thereof and before
judgment file a motion under oath to set aside the order of default upon proper showing that his failure to
answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense.
In such case, the order of default may be set aside on such terms and conditions as the judge may impose
in the interest of justice.

If the defendant discovers his or her default after judgment but prior to the judgment becoming final and
executory, he or she may file a motion for new trial under Rule 37, Section 1, paragraph (a) of the 1997
Rules of Civil Procedure.118 If he or she discovers his or her default after the judgment has become final and
executory, a petition for relief from judgment under Rule 38, Section 1 of the 1997 Rules of Civil Procedure
may be filed.119

Appeal is also available to the defendant declared in default. He or she may appeal the judgment for being
contrary to the evidence or to the law under Rule 41, Section 2 of the 1997 Rules of Civil Procedure.120 He or
she may do so even if he or she did not file a petition to set aside order of default.121

A petition for certiorari may also be filed if the trial court declared the defendant in default with grave abuse
of discretion.122

The remedies of the motion to set aside order of default, motion for new trial, and petition for relief from
judgment are mutually exclusive, not alternative or cumulative. This is to compel defendants to remedy
their default at the earliest possible opportunity. Depending on when the default was discovered and
whether a default judgment was already rendered, a defendant declared in default may avail of only one of
the three remedies.

Thus, if a defendant discovers his or her default before the trial court renders judgment, he or she shall file
a motion to set aside order of default. If this motion to set aside order of default is denied, the defendant
declared in default cannot await the rendition of judgment, and he or she cannot file a motion for new trial
before the judgment becomes final and executory, or a petition for relief from judgment after the judgment
becomes final and executory.

Also, the remedies against default become narrower and narrower as the trial nears judgment. The
defendant enjoys the most liberality from this court with a motion to set aside order of default, as he or she
has no default judgment to contend with, and he or she has the whole period before judgment to remedy his
or her default.

With a motion for new trial, the defendant must file the motion within the period for taking an appeal123or
within 15 days from notice of the default judgment. Although a default judgment has already been rendered,
the filing of the motion for new trial tolls the reglementary period of appeal, and the default judgment
cannot be executed against the defendant.

A petition for relief from judgment is filed after the default judgment has become final and executory. Thus,
the filing of the petition for relief from judgment does not stay the execution of the default judgment unless
a writ of preliminary injunction is issued pending the petition’s resolution.124

Upon the grant of a motion to set aside order of default, motion for new trial, or a petition for relief from
judgment, the defendant is given the chance to present his or her evidence against that of plaintiff’s. With
an appeal, however, the defendant has no right to present evidence on his or her behalf and can only appeal
the judgment for being contrary to plaintiff’s evidence or the law.

Similar to an appeal, a petition for certiorari does not allow the defendant to present evidence on his or her
behalf. The defendant can only argue that the trial court committed grave abuse of discretion in declaring
him or her in default.

Thus, should a defendant prefer to present evidence on his or her behalf, he or she must file either a motion
to set aside order of default, motion for new trial, or a petition for relief from judgment.

In this case, Lui Enterprises had discovered its default before the Regional Trial Court of Makati rendered
judgment. Thus, it timely filed a motion to set aside order of default, raising the ground of excusable
negligence.

Excusable negligence is “one which ordinary diligence and prudence could not have guarded against.”125The
circumstances should be properly alleged and proved. In this case, we find that Lui Enterprises’ failure to
answer within the required period is inexcusable.

Lui Enterprises’ counsel filed its motion to dismiss four days late. It did not immediately take steps to
remedy its default and took one year from discovery of default to file a motion to set aside order of default.
In its motion to set aside order of default, Lui Enterprises only “conveniently blamed its x x x counsel [for
the late filing of the answer]”126 without offering any excuse for the late filing. This is not excusable
negligence under Rule 9, Section 3, paragraph (b)127 of the 1997 Rules of Civil Procedure. Thus, the
Regional Trial Court of Makati did not err in refusing to set aside the order of default.

Lui Enterprises argued that the Regional Trial Court of Makati should have been liberal in setting aside its
order of default. After it had been declared in default, Lui Enterprises filed several manifestations informing
the Makati trial court of the earlier filed nullification of deed of dation in payment case which barred the
filing of the interpleader case. Lui Enterprises’ president, Eli L. Lui, and counsel even flew in from Davao to
Makati to “formally [manifest that] a [similar] action between [Lui Enterprises] and [the Philippine Bank of
Communications]”128 was already pending in the Regional Trial Court of Davao. However, the trial court did
not recognize Lui Enterprises’ standing in court.

The general rule is that courts should proceed with deciding cases on the merits and set aside orders of
default as default judgments are “frowned upon.”129 As much as possible, cases should be decided with both
parties “given every chance to fight their case fairly and in the open, without resort to technicality.”130

However, the basic requirements of Rule 9, Section 3, paragraph (b) of the 1997 Rules of Civil Procedure
must first be complied with.131 The defendant’s motion to set aside order of default must satisfy three
conditions. First is the time element. The defendant must challenge the default order before judgment.
Second, the defendant must have been prevented from filing his answer due to fraud, accident, mistake or
excusable negligence. Third, he must have a meritorious defense. As this court held in SSS v. Hon.
Chaves:132

Procedural rules are not to be disregarded or dismissed simply because their non–observance may have
resulted in prejudice to a party’s substantive rights. Like all rules[,] they are to be followed, except only
when for the most persuasive of reasons they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. x x
x.133

As discussed, Lui Enterprises never explained why its counsel failed to file the motion to dismiss on time. It
just argued that courts should be liberal in setting aside orders of default. Even assuming that it had a
meritorious defense and that its representative and counsel had to fly in from Davao to Makati to personally
appear and manifest in court its meritorious defense, Lui Enterprises must first show that its failure to
answer was due to fraud, accident, mistake or excusable negligence. This Lui Enterprises did not do.

Lui Enterprises argued that Zuellig Pharma filed the interpleader case to compel Lui Enterprises and the
Philippine Bank of Communications to litigate their claims. Thus, “[d]eclaring the other claimant in default
would ironically defeat the very purpose of the suit.”134 The Regional Trial Court of Makati should not have
declared Lui Enterprises in default.

Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a special civil action for
interpleader if conflicting claims are made against him or her over a subject matter in which he or she has
no interest. The action is brought against the claimants to compel them to litigate their conflicting claims
among themselves. Rule 62, Section 1 of the 1997 Rules of Civil Procedure provides: cha nRoblesvi rtua lLawl ibra ry

Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or
may be made against a person who claims no interest whatever in the subject matter, or an interest which
in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants
to compel them to interplead and litigate their several claims among themselves.

An interpleader complaint may be filed by a lessee against those who have conflicting claims over the rent
due for the property leased.135 This remedy is for the lessee to protect him or her from “double vexation in
respect of one liability.”136 He or she may file the interpleader case to extinguish his or her obligation to pay
rent, remove him or her from the adverse claimants’ dispute, and compel the parties with conflicting claims
to litigate among themselves.

In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. Its purpose in
filing the interpleader case “was not defeated”137 when the Makati trial court declared Lui Enterprises in
default.

At any rate, an adverse claimant in an interpleader case may be declared in default. Under Rule 62, Section
5 of the 1997 Rules of Civil Procedure, a claimant who fails to answer within the required period may, on
motion, be declared in default. The consequence of the default is that the court may “render judgment
barring [the defaulted claimant] from any claim in respect to the subject matter.”138 The Rules would not
have allowed claimants in interpleader cases to be declared in default if it would “ironically defeat the very
purpose of the suit.”139

The Regional Trial Court of Makati declared Lui Enterprises in default when it failed to answer the complaint
within the required period. Lui Enterprises filed a motion to set aside order of default without an acceptable
excuse why its counsel failed to answer the complaint. It failed to prove the excusable negligence. Thus, the
Makati trial court did not err in refusing to set aside the order of default.

III

The nullification of deed in dation in

payment case did not bar the filing of
the interpleader case. Litis pendentia
is not present in this case.

Lui Enterprises allegedly filed for nullification of deed of dation in payment with the Regional Trial Court of
Davao. It sought to nullify the deed of dation in payment through which the Philippine Bank of
Communications acquired title over the leased property. Lui Enterprises argued that this pending nullification
case barred the Regional Trial Court of Makati from hearing the interpleader case. Since the interpleader
case was filed subsequently to the nullification case, the interpleader case should be dismissed.

Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil Procedure, a motion to dismiss may be
filed on the ground of litis pendentia: chanRoble svi rtual Lawli bra ry

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: chanRoble svirtual Lawli bra ry

xxxx

(e) That there is another action pending between the same parties for the same cause;

xxxx

Litis pendentia is Latin for “a pending suit.”140 It exists when “another action is pending between the same
parties for the same cause of action x x x.”141 The subsequent action is “unnecessary and vexatious”142 and
is instituted to “harass the respondent [in the subsequent action].”143

The requisites of litis pendentia are:chanRoblesv irt ual Lawlib rary

(1) Identity of parties or at least such as represent the same interest in

both actions;
(2) Identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; and
(3) The identity in the two cases should be such that the judgment that
may be rendered in one would, regardless of which party is successful,
amount to res judicata in the other.144
All of the requisites must be present.145 Absent one requisite, there is no litis pendentia.146

In this case, there is no litis pendentia since there is no identity of parties in the nullification of deed of
dation in payment case and the interpleader case. Zuellig Pharma is not a party to the nullification case filed
in the Davao trial court.

There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises filed the first case to nullify
the deed of dation in payment it executed in favor of the Philippine Bank of Communications. Zuellig Pharma
subsequently filed the interpleader case to consign in court the rental payments and extinguish its obligation
as lessee. The interpleader case was necessary and was not instituted to harass either Lui Enterprises or the
Philippine Bank of Communications.

Thus, the pending nullification case did not bar the filing of the interpleader case.
Lui Enterprises cited Progressive Development Corporation, Inc. v. Court of Appeals147 as authority to set
aside the subsequently filed interpleader case. In this cited case, petitioner Progressive Development
Corporation, Inc. entered into a lease contract with Westin Seafood Market, Inc. The latter failed to pay
rent. Thus, Progressive Development Corporation, Inc. repossessed the leased premises, inventoried the
movable properties inside the leased premises, and scheduled the public sale of the inventoried properties
as they agreed upon in their lease contract.

Westin Seafood Market, Inc. filed for forcible entry with damages against Progressive Development
Corporation, Inc. It subsequently filed an action for damages against Progressive Development Corporation
for its “forcible takeover of the leased premises.”148

This court ordered the subsequently filed action for damages dismissed as the pending forcible entry with
damages case barred the subsequently filed damages case.

Progressive Development Corporation, Inc. does not apply in this case. The action for forcible entry with
damages and the subsequent action for damages were filed by the same plaintiff against the same
defendant. There is identity of parties in both cases.

In this case, the nullification of deed of dation in payment case was filed by Lui Enterprises against the
Philippine Bank of Communications. The interpleader case was filed by Zuellig Pharma against Lui
Enterprises and the Philippine Bank of Communications. A different plaintiff filed the interpleader case
against Lui Enterprises and the Philippine Bank of Communications. Thus, there is no identity of parties, and
the first requisite of litis pendentia is absent.

As discussed, Lui Enterprises filed the nullification of deed of dation in payment to recover ownership of the
leased premises. Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. There is
no identity of reliefs prayed for, and the second requisite of litis pendentia is absent.

Since two requisites of litis pendentia are absent, the nullification of deed of dation in payment case did not
bar the filing of the interpleader case.

Lui Enterprises alleged that the Regional Trial Court of Davao issued a writ of preliminary injunction against
the Regional Trial Court of Makati. The Regional Trial Court of Davao allegedly enjoined the Regional Trial
Court of Makati from taking cognizance of the interpleader case. Lui Enterprises argued that the Regional
Trial Court of Makati “should have respected the orders issued by the Regional Trial Court of Davao.”149 Lui
Enterprises cited Compania General de Tabacos de Filipinas v. Court of Appeals150 where this court allegedly
held:cha nRoblesv irt ual Lawlib rary

x x x [T]he issuance of the said writ by the RTC of Agoo, La Union not only seeks to enjoin Branch 9 of the
RTC of Manila from proceedingwith the foreclosure case but also has the effect of pre–empting the latter’s
order. x x x.151

Compania General de Tabacos de Filipinas is not an authority for the claim that a court can issue a writ of
preliminary injunction against a co–equal court. The cited sentence was taken out of context. In Compania
General de Tabacos de Filipinas, this court held that the Regional Trial Court of Agoo had no power to issue
a writ of preliminary injunction against the Regional Trial Court of Manila.152 A court cannot enjoin the
proceedings of a co–equal court.

Thus, when this court said that the Regional Trial Court of Agoo’s writ of preliminary injunction “not only
seeks to enjoin x x x [the Regional Trial Court of Manila] from proceeding with the foreclosure case but also
has the effect of pre–empting the latter’s orders,”153 this court followed with “[t]his we cannot
countenance.”154

At any rate, the Regional Trial Court of Davao’s order dated April 18, 2005 was not a writ of preliminary
injunction. It was a mere order directing the Philippine Bank of Communications to inform Zuellig Pharma to
pay rent to Lui Enterprises while the status quo order between Lui Enterprises and the Philippine Bank of
Communications was subsisting. The Regional Trial Court of Davao did not enjoin the proceedings before the
Regional Trial Court of Makati. The order dated April 18, 2005 provides: chanRoble svirtual Lawli bra ry

As such, [the Philippine Bank of Communications] [is] hereby directed to forthwith inform Zuellig Pharma
Corp., of the April 1, 2004 status quo order and the succeeding September 14, 2004 Order, and
consequently, for the said lessee to remit all rentals due from February 23, 2003 and onwards to plaintiff Lui
Enterprises, Inc., in the meanwhile that the status quo order is subsisting.155

Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial Court of Makati from hearing the
interpleader case.

All told, the trial court did not err in proceeding with the interpleader case. The nullification of deed of dation
in payment case pending with the Regional Trial Court of Davao did not bar the filing of the interpleader
case with the Regional Trial Court of Makati.

IV

The Court of Appeals erred in awarding attorney’s fees

In its ordinary sense, attorney’s fees “represent the reasonable compensation [a client pays his or her
lawyer] [for legal service rendered].”156 In its extraordinary sense, attorney’s fees “[are] awarded x x x as
indemnity for damages [the losing party pays the prevailing party].”157

The award of attorney’s fees is the exception rather than the rule.158 It is not awarded to the prevailing
party “as a matter of course.”159 Under Article 2208 of the Civil Code, attorney’s fees cannot be recovered in
the absence of stipulation, except under specific circumstances: chanRoblesvi rtua lLawl ibra ry

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff’s plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmen’s compensation and
employer’s liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorney’s fees and expenses of litigation should be recovered.160
Even if a party is “compelled to litigate with third persons or to incur expenses to protect his [or her]
rights,”161 attorney’s fees will not be awarded if no bad faith “could be reflected in a party’s persistence in a
case.”162

To award attorney’s fees, the court must have “factual, legal, [and] equitable justification.”163 The court
must state the award’s basis in its decision.164 These rules are based on the policy that “no premium should
be placed on the right to litigate.”165

In this case, the Court of Appeals awarded attorney’s fees as “[Zuellig Pharma] was compelled to litigate
with third persons or to incur expenses to protect [its] interest[s].”166 This is not a compelling reason to
award attorney’s fees. That Zuellig Pharma had to file an interpleader case to consign its rental payments
did not mean that Lui Enterprises was in bad faith in insisting that rental payments be paid to it. Thus, the
Court of Appeals erred in awarding attorney’s fees to Zuellig Pharma.

All told, the Court of Appeals’ award of P50,000.00 as attorney’s fees must be deleted.

WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED. The Court of
Appeals’ decision and resolution in CA–G.R. CV No. 88023 are AFFIRMED with MODIFICATION. The
award of P50,000.00 attorney’s fees to Zuellig Pharma Corporation is DELETED.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Abad, and Mendoza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Baguio City

SECOND DIVISION

G.R. No. 170483 April 19, 2010

MANUEL C. BUNGCAYAO, SR., represented in this case by his Attorney-in-fact ROMEL R.

BUNGCAYAO,Petitioner,
vs.
FORT ILOCANDIA PROPERTY HOLDINGS, AND DEVELOPMENT CORPORATION, Respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 21 November 2005 Decision2 of the Court of
Appeals in CA-G.R. CV No. 82415.

The Antecedent Facts

Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of the two entrepreneurs who introduced
improvements on the foreshore area of Calayab Beach in 1978 when Fort Ilocandia Hotel started its
construction in the area. Thereafter, other entrepreneurs began setting up their own stalls in the
foreshore area. They later formed themselves into the D’Sierto Beach Resort Owner’s Association,
Inc. (D’Sierto).

In July 1980, six parcels of land in Barrio Balacad (now Calayad) were transferred, ceded, and
conveyed to the Philippine Tourism Authority (PTA) pursuant to Presidential Decree No. 1704. Fort
Ilocandia Resort Hotel was erected on the area. In 1992, petitioner and other D’Sierto members
applied for a foreshore lease with the Community Environment and Natural Resources Office
(CENRO) and was granted a provisional permit. On 31 January 2002, Fort Ilocandia Property
Holdings and Development Corporation (respondent) filed a foreshore application over a 14-hectare
area abutting the Fort Ilocandia Property, including the 5-hectare portion applied for by D’Sierto
members. The foreshore applications became the subject matter of a conflict case, docketed
Department of Environment and Natural Resources (DENR) Case No. 5473, between respondent
and D’Sierto members. In an undated Order,3 DENR Regional Executive Director Victor J. Ancheta
denied the foreshore lease applications of the D’Sierto members, including petitioner, on the ground
that the subject area applied for fell either within the titled property or within the foreshore areas
applied for by respondent. The D’Sierto members appealed the denial of their applications. In a
Resolution4 dated 21 August 2003, then DENR Secretary Elisea G. Gozun denied the appeal on the
ground that the area applied for encroached on the titled property of respondent based on the final
verification plan.

In a letter dated 18 September 2003,5 respondent, through its Public Relations Manager Arlene de
Guzman, invited the D’Sierto members to a luncheon meeting to discuss common details beneficial
to all parties concerned. Atty. Liza Marcos (Atty. Marcos), wife of Governor Bongbong Marcos, was
present as she was asked by Fort Ilocandia hotel officials to mediate over the conflict among the
parties. Atty. Marcos offered ₱300,000 as financial settlement per claimant in consideration of the
improvements introduced, on the condition that they would vacate the area identified as
respondent’s property. A D’Sierto member made a counter-offer of ₱400,000, to which the other
D’Sierto members agreed.

Petitioner alleged that his son, Manuel Bungcayao, Jr., who attended the meeting, manifested that
he still had to consult his parents about the offer but upon the undue pressure exerted by Atty.
Marcos, he accepted the payment and signed the Deed of Assignment, Release, Waiver and
Quitclaim6 in favor of respondent.

Petitioner then filed an action for declaration of nullity of contract before the Regional Trial Court of
Laoag, City, Branch 13 (trial court), docketed as Civil Case Nos. 12891-13, against respondent.
Petitioner alleged that his son had no authority to represent him and that the deed was void and not
binding upon him.

Respondent countered that the area upon which petitioner and the other D’Sierto members
constructed their improvements was part of its titled property under Transfer Certificate of Title No.
T-31182. Respondent alleged that petitioner’s sons, Manuel, Jr. and Romel, attended the luncheon
meeting on their own volition and they were able to talk to their parents through a cellular phone
before they accepted respondent’s offer. As a counterclaim, respondent prayed that petitioner be
required to return the amount of ₱400,000 from respondent, to vacate the portion of the
respondent’s property he was occupying, and to pay damages because his continued refusal to
vacate the property caused tremendous delay in the planned implementation of Fort Ilocandia’s
expansion projects.

In an Order7 dated 6 November 2003, the trial court confirmed the agreement of the parties to cancel
the Deed of Assignment, Release, Waiver and Quitclaim and the return of ₱400,000 to respondent.
Petitioner’s counsel, however, manifested that petitioner was still maintaining its claim for damages
against respondent.

Petitioner and respondent agreed to consider the case submitted for resolution on summary
judgment. Thus, in its Order8 dated 28 November 2003, the trial court considered the case submitted
for resolution. Petitioner filed a motion for reconsideration, alleging that he manifested in open court
that he was withdrawing his earlier manifestation submitting the case for resolution. Respondent filed
a Motion for Summary Judgment.

The trial court rendered a Summary Judgment9 dated 13 February 2004.

 The Decision of the Trial Court

The trial court ruled that the only issue raised by petitioner was his claim for damages while
respondent’s issue was only his claim for possession of the property occupied by petitioner and
damages. The trial court noted that the parties already stipulated on the issues and admissions had
been made by both parties. The trial court ruled that summary judgment could be rendered on the
case.

The trial court ruled that the alleged pressure on petitioner’s sons could not constitute force, violence
or intimidation that could vitiate consent. As regards respondent’s counterclaim, the trial court ruled
that based on the pleadings and admissions made, it was established that the property occupied by
petitioner was within the titled property of respondent. The dispositive portion of the trial court’s
decision reads:

WHEREFORE, the Court hereby renders judgment DISMISSING the claim of plaintiff for damages
as it is found to be without legal basis, and finding the counterclaim of the defendant for recovery of
possession of the lot occupied by the plaintiff to be meritorious as it is hereby GRANTED.
Consequently, the plaintiff is hereby directed to immediately vacate the premises administratively
adjudicated by the executive department of the government in favor of the defendant and yield its
possession unto the defendant. No pronouncement is here made as yet of the damages claimed by
the defendant.

SO ORDERED.10

Petitioner appealed from the trial court’s decision.

The Decision of the Court of Appeals

In its 21 November 2005 Decision, the Court of Appeals affirmed the trial court’s decision in toto.

The Court of Appeals sustained the trial court in resorting to summary judgment as a valid
procedural device for the prompt disposition of actions in which the pleadings raise only a legal issue
and not a genuine issue as to any material fact. The Court of Appeals ruled that in this case, the
facts are not in dispute and the only issue to be resolved is whether the subject property was within
the titled property of respondent. Hence, summary judgment was properly rendered by the trial court.

The Court of Appeals ruled that the counterclaims raised by respondent were compulsory in nature,
as they arose out of or were connected with the transaction or occurrence constituting the subject
matter of the opposing party’s claim and did not require for its adjudication the presence of third
parties of whom the court could not acquire jurisdiction. The Court of Appeals ruled that respondent
was the rightful owner of the subject property and as such, it had the right to recover its possession
from any other person to whom the owner has not transmitted the property, including petitioner.

The dispositive portion of the Court of Appeals’ decision reads:

WHEREFORE, the assailed decision dated February 13, 2004 of the Regional Trial Court of Laoag
City, Branch 13 is hereby AFFIRMED in toto.

SO ORDERED.11

Thus, the petition before this Court.

 The Issues

Petitioner raises the following issues in his Memorandum:12

1. Whether respondent’s counterclaim is compulsory; and

2. Whether summary judgment is appropriate in this case.

The Ruling of this Court

The petition has merit.

Compulsory Counterclaim

A compulsory counterclaim is any claim for money or any relief, which a defending party may have
against an opposing party, which at the time of suit arises out of, or is necessarily connected with,
the same transaction or occurrence that is the subject matter of the plaintiff’s complaint.13 It is
compulsory in the sense that it is within the jurisdiction of the court, does not require for its
adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and will be
barred in the future if not set up in the answer to the complaint in the same case.14Any other
counterclaim is permissive.15

The Court has ruled that the compelling test of compulsoriness characterizes a counterclaim as
compulsory if there should exist a logical relationship between the main claim and the
counterclaim.16 The Court further ruled that there exists such a relationship when conducting
separate trials of the respective claims of the parties would entail substantial duplication of time and
effort by the parties and the court; when the multiple claims involve the same factual and legal
issues; or when the claims are offshoots of the same basic controversy between the parties.17

The criteria to determine whether the counterclaim is compulsory or permissive are as follows:

(a) Are issues of fact and law raised by the claim and by the counterclaim largely the same?

(b) Would res judicata bar a subsequent suit on defendant’s claim, absent the compulsory
rule?

(c) Will substantially the same evidence support or refute plaintiff’s claim as well as
defendant’s counterclaim?

(d) Is there any logical relations between the claim and the counterclaim?

A positive answer to all four questions would indicate that the counterclaim is compulsory.18

In this case, the only issue in the complaint is whether Manuel, Jr. is authorized to sign the Deed of
Assignment, Release, Waiver and Quitclaim in favor of respondent without petitioner’s express
approval and authority. In an Order dated 6 November 2003, the trial court confirmed the agreement
of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim and the return of
₱400,000 to respondent. The only claim that remained was the claim for damages against
respondent. The trial court resolved this issue by holding that any damage suffered by Manuel, Jr.
was personal to him. The trial court ruled that petitioner could not have suffered any damage even if
Manuel, Jr. entered into an agreement with respondent since the agreement was null and void.
Respondent filed three counterclaims. The first was for recovery of the ₱400,000 given to Manuel,
Jr.; the second was for recovery of possession of the subject property; and the third was for
damages. The first counterclaim was rendered moot with the issuance of the 6 November 2003
Order confirming the agreement of the parties to cancel the Deed of Assignment, Release, Waiver
and Quitclaim and to return the ₱400,000 to respondent. Respondent waived and renounced the
third counterclaim for damages.19 The only counterclaim that remained was for the recovery of
possession of the subject property. While this counterclaim was an offshoot of the same basic
controversy between the parties, it is very clear that it will not be barred if not set up in the answer to
the complaint in the same case. Respondent’s second counterclaim, contrary to the findings of the
trial court and the Court of Appeals, is only a permissive counterclaim. It is not a compulsory
counterclaim. It is capable of proceeding independently of the main case.

The rule in permissive counterclaim is that for the trial court to acquire jurisdiction, the
counterclaimant is bound to pay the prescribed docket fees.20 Any decision rendered without
jurisdiction is a total nullity and may be struck down at any time, even on appeal before this
Court.21 In this case, respondent did not dispute the non-payment of docket fees. Respondent only
insisted that its claims were all compulsory counterclaims. As such, the judgment by the trial court in
relation to the second counterclaim is considered null and void22 without prejudice to a separate
action which respondent may file against petitioner. 1avv phi 1

Summary Judgment

Section 1, Rule 35 of the 1997 Rules of Civil Procedure provides:

Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim, counterclaim,
or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto
has been served, move with supporting affidavits, depositions or admissions for a summary
judgment in his favor upon all or any part thereof.

Summary judgment has been explained as follows:

Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations and
useless delays. When the pleadings on file show that there are no genuine issues of fact to be tried,
the Rules allow a party to obtain immediate relief by way of summary judgment, that is, when the
facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the
material facts. Conversely, where the pleadings tender a genuine issue, summary judgment is not
proper. A "genuine issue" is such issue of fact which requires the presentation of evidence as
distinguished from a sham, fictitious, contrived or false claim. Section 3 of the said rule provides two
(2) requisites for summary judgment to be proper: (1) there must be no genuine issue as to any
material fact, except for the amount of damages; and (2) the party presenting the motion for
summary judgment must be entitled to a judgment as a matter of law. 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. A summary judgment is proper if, while the pleadings on their face
appear to raise issues, the affidavits, depositions, and admissions presented by the moving party
show that such issues are not genuine.23

Since we have limited the issues to the damages claimed by the parties, summary judgment has
been properly rendered in this case.

WHEREFORE, we MODIFY the 21 November 2005 Decision of the Court of Appeals in CA-G.R. CV
No. 82415 which affirmed the 13 February 2004 Decision of the Regional Trial Court of Laoag City,
Branch 13, insofar as it ruled that respondent’s counterclaim for recovery of possession of the
subject property is compulsory in nature. We DISMISS respondent’s permissive counterclaim
without prejudice to filing a separate action against petitioner.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 175796 July 22, 2015

BPI FAMILY SAVINGS BANK INC., Petitioner,

vs.
SPOUSES BENEDICTO & TERESITA YUJUICO, Respondents,

DECISION

BERSAMIN, J.:

An action to recover the deficiency after extrajudicial foreclosure of a real property mortgage is a
personal action because it does not affect title to or possession of real property, or any interest
therein.

The Case

This appeal is taken by the petitioner to overturn the decision promulgated on March 31,
2006,1 whereby the Court of Appeals (CA) set aside the orders issued by the Regional Trial Court,
Branch 60, in Makati City (Makati RTC) on October 17, 2003 2 and February 1, 2005 3 dismissing

their action against the respondents to recover the deficiency after the extrajudicial foreclosure of
their mortgage (Civil Case No.03-450) on the ground of improper venue.

Antecedents

On August 22, 1996, the City of Manila filed a complaint against the respondents for the
expropriation of five parcels of land located in Tondo, Manila and registered in the name of
respondent Teresita Yujuico. Two of the parcels of land, covered by Transfer Certificate of Title
(TCT) No. 261331 and TCT No. 261332, were previously mortgaged to Citytrust Banking
Corporation, the petitioner's predecessor-in-interest, under a First Real Estate Mortgage
Contract.4On June 30, 2000, the Regional Trial Court in Manila (Manila RTC) rendered its judgment
declaring the five parcels of land expropriated for public use. The judgment became final and
executory on January 28, 2001 and was entered in the book of entries of judgment on March 23,
2001.5 The petitioner subsequently filed a Motion to Intervene in Execution with Partial Opposition to
Defendant's Request to Release, but the RTC denied the motion for having been "filed out of time."
Hence, the petitioner decided to extrajudicially foreclose the mortgage constituted on the two parcels
of land subject of the respondents' loan. After holding the public auction, the sheriff awarded the two
lots to the petitioner as the highest bidder at ₱10, 000, 000.00. 6

Claiming a deficiency amounting to Pl8, 522155.42, the pet1t1oner sued the respondents to recover
such deficiency in the Makati RTC (Civil Case No. 03-450). The respondents moved to dismiss the
1âwphi1

complaint on several grounds, namely: that the suit was barred by res judicata; that the complaint
stated no cause of action; and that the plaintiffs claim had been waived, abandoned, or
extinguished. 7

In its order issued on October 17, 2003, the Makati RTC denied the respondents' motion to dismiss,
ruling that there was no res judicata; that the complaint stated a sufficient cause of action to recover
the deficiency; and that there was nothing to support the claim that the obligation had been
abandoned or extinguished apart from the respondents' contention that the properties had been
subjected to expropriation by the City of Manila.8

On November 4, 2003, the respondents moved for reconsideration, reiterating their grounds earlier
made in their motion to dismiss. 9

In turn, the petitioner adopted its comment/opposition to the motion to dismiss. 10

The respondents then filed their reply, 11 in which they raised for the first time their objection on the
ground of improper venue. They contended that the action for the recovery of the deficiency, being a
supplementary action of the extrajudicial foreclosure proceedings, was a real action that should have
been brought in the Manila RTC because Manila was the place where the properties were located.12

On February 1, 2005, the Makati RTC denied the respondents' motion for reconsideration for its lack
of merit; and held on the issue of improper venue that:

It would be improper for this Court to dismiss the plaintiffs complaint on the ground of improper
venue, assuming that the venue is indeed improperly laid, since the said ground was not raised in
the defendant's Motion to Dismiss. On this point, it was held in the case of Malig, et al. vs. Bush, L
22761, May 31, 1969 that "an action cannot be dismissed on a ground not alleged in the motion
therefore even if said ground, e.g., prescription, is provided in Rule 16. 13

Decision of the CA

Not satisfied, the respondents assailed the orders dated October 1 7, 2003 and February 1, 2005 by
petition for certiorari.14 They submitted for consideration by the CA the following issues, namely:

x x x (WHETHER OR NOT) RESPONDENT TRIAL COURT COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED ITS
ASSAILED ORDERS CONSIDERING THAT:

A THE COMPLAINT A QUO IS BARRED BY RES JUDICATA.

B. THE COMPLAINT STATED NO CAUSE OF ACTION.

C. PRIVATE RESPONDENT'S CLAIM HAS BEEN WAIVED, ABANDONED OR

OTHERWISE EXTINGUISHED.

D. VENUE WAS IMPROPERLY LAID. 15

On March 31, 2006, the CA granted the petition for certiorari of the respondents on the basis of the
fourth issue, opining:

xxxx

Thus, a suit for recovery of the deficiency after the foreclosure of a mortgage is in the nature of a
mortgage action because its purpose is precisely to enforce the mortgage contract; it is upon a
written contract and upon an obligation of the mortgage-debtor to pay the deficiency which is created
by law. As such, the venue of an action for recovery of deficiency must necessarily be the same
venue as that of the extrajudicial foreclosure of mortgage.

xxxx

In this regard, We take note that the parcels of land subject of the mortgage contract are located in
Tondo, Manila, under Transfer Certificates of Title Nos. 216331 and 216332. On the other hand, the
extrajudicial foreclosure of the real estate mortgage took place at the R TC of Manila on January 28,
2003. Thus, the suit for judgment on the deficiency filed by respondent BPI against petitioners
Yujuico, being an action emanating from the foreclosure of the real estate mortgage contract
between them, must necessarily be filed also at the RTC of Manila, not at the RTC of Makati.

x x x x 16

The CA denied the respondents' Motion for Partial Reconsideration and the petitioner's Partial
Motion for Reconsideration on December 7, 2006.17

Issues

Hence, this appeal by the petitioner, to assail the CA's dismissal of Civil Case No. 03-450 on the
ground of improper venue upon the following grounds,18 namely:

I.

WHETHER OR NOT THE HONORA.BLE COURT OF APPEALS' DENIAL OF THE PETITIONER'S

PARTIAL MOTION FOR RECONSIDERATION ON THE GROUND OF IMPROPER VENUE AS A
RESULT DISMISSED THE COMPLAINT FOR SUM OF MONEY IS CONTRARY TO LAW.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS['] ACT OF APPRECIATING THE

ADDITIONAL GROUND OF IMPROPER VENUE, ONLY RAISED IN THE MOTION FOR
RECONSIDERATION FILED IN THE LOWER COURT AFTER IT DENIED RESPONDENTS'
MOTION TO DISMISS, IS CONTRARY TO LAW AND JURISPRUDENCE.19

Ruling of the Court

We grant the petition for review on certiorari.

It is basic that the venue of an action depends on whether it is a real or a personal action. The
determinants of whether an action is of a real or a personal nature have been fixed by the Rules of
Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real action
is one that affects title to or possession of real property, or an interest therein. Thus, an action for
partition or condemnation of, or foreclosure of mortgage on, real property is a real action. 20 The real
action is to be commenced and tried in the proper court having jurisdiction over the area wherein the
real property involved, or a portion thereof, is situated, which explains why the action is also referred
to as a local action. In contrast, the Rules of Court declares all other actions as personal
actions. 21 such actions may include those brought for the recovery of personal property, or for the
enforcement of some contract or recovery of damages for its breach, or for the recovery of damages
for the commission of an injury to the person or property.22 The venue of a personal action is the
place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant where he may be found, at
the election of the plaintiff, 23 for which reason the action is considered a transitory one.

Based on the distinctions between real and personal actions, an action to recover the deficiency
after the extrajudicial foreclosure of the real property mortgage is a personal action, for it does not
affect title to or possession of real property, or any interest therein.

It is true that the Court has said in Caltex Philippines, Inc. v. Intermediate Appellate Court 24 that "a
suit for the recovery of the deficiency after the foreclosure of a mortgage is in the nature of a
mortgage action because its purpose is precisely to enforce the mortgage contract." However, the
CA erred in holding, upon the authority of Caltex Philippines, Inc., that the venue of Civil Case No.
03 450 must necessarily be Manila, the same venue as that of the extrajudicial foreclosure of
mortgage. An examination of Caltex Philippines, Inc. reveals that the Court was thereby only
interpreting the prescriptive period within which to bring the suit for the recovery of the deficiency
after the foreclosure of the mortgage, and was not at all ruling therein on the venue of such suit or on
the nature of such suit being either a real or a personal action.

Given the foregoing, the petitioner correctly brought Civil Case No.03-450 in the Makati RTC
because Makati was the place where the main office of the petitioner was located. 1avv phi1

Moreover, the Makati RTC observed, and the observation is correct in our view, that it would be
improper to dismiss Civil Case No. 03-450 on the ground of improper venue, assuming that the
venue had been improperly laid, considering that the respondents had not raised such ground in
their Motion to Dismiss. As earlier indicated, they came to raise the objection of improper venue for
the first time only in their reply to the petitioner's comment on their Motion for Reconsideration. They
did so belatedly.

We underscore that in civil proceedings, venue is procedural, not jurisdictional, and may be waived
by the defendant if not seasonably raised either in a motion to dismiss or in the answer.25 Section 1,
Rule 9 of the Rules of Court thus expressly stipulates that defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. As it relates to the place of trial,
indeed, venue is meant to provide convenience to the parties, rather than to restrict their access to
the courts.26 In other words, unless the defendant seasonably objects, any action may be tried by a
court despite its being the improper venue.

WHEREFORE, we GRANT the petition for review on certiorari; REVERSE and SET ASIDE the
decision promulgated by the Court of Appeals on March 31, 2006; REINSTATE the orders dated
October 17, 2003 and February 1, 2005 of the Regional Trial Court, Branch 60, in Makati City;
and ORDER the respondents to pay the costs of suit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 179638 July 8, 2013

HEIRS OF NUMERIANO MIRANDA, SR., namely: CIRILA (deceased), CORNELIO,

NUMERIANO, JR., ERLINDA, LOLITA, RUFINA, DANILO, ALEJANDRO, FELIMON, TERESITA,
ELIZABETH and ANALIZA, all surnamed MIRANDA, Petitioners,
vs.
PABLO R. MIRANDA, Respondent.

DECISION

DEL CASTILLO, J.:

An action for revival of a judgment cannot modify, alter, or reverse the original judgment, which is
already final and executory.1

This Petition for Review on Certiorari2 under Rule 45 of the Rules of Court assails the
Decision3 dated June 14, 2007 and the Resolution4 dated September 11, 2007 of the Court of
Appeals (CA) in CA-G.R. SP No. 97350.

Factual Antecedents

In 1994, petitioners Cirila, Cornelio, Numeriano, Jr., Erlinda, Lolita, Rufina, Danilo, Alejandro,
Felimon, Teresita, Elizabeth, and Analiza, all surnamed Miranda, representing themselves as the
heirs of Numeriano Miranda, Sr., filed before the Regional Trial Court (RTC) of Muntinlupa City, a
Complaint5 for Annulment of Titles and Specific Performance, docketed as Civil Case No. 94-612,
against the heirs of Pedro Miranda, namely: Pacita and Oscar Miranda; the heir of Tranquilino
Miranda, Rogelio Miranda; and the spouses respondent Pablo Miranda and Aida Lorenzo.

After trial, the RTC, Branch 256, rendered a Decision6 dated August 30, 1999, the dispositive portion
of which reads:

WHEREFORE, premises considered, this court resolves:

1. To uphold and sustain the validity of TCT Nos. 186011, 186012, and 186013;

2. Ordering Pablo Miranda to indemnify all other heirs of NUMERIANO MIRANDA the amount
equivalent to 12/13 fair market value of the co-owned residential house, erected on the lot 826-A-3
covered by TCT No. 186013 corresponding to their shares, and for the said heirs to divide among
themselves the aforesaid amount as follows:

1/13 to CIRILA MIRANDA

1/13 to CORNELIO MIRANDA

1/13 to NUMERIANO MIRANDA, JR.

 1/13 to ERLINDA MIRANDA

1/13 to LOLITA MIRANDA

1/13 to RUFINA MIRANDA

1/13 to DANILO MIRANDA

1/13 to ALEJANDRO MIRANDA

1/13 to FELIMON MIRANDA

1/13 to TERESITA MIRANDA

1/13 to ELIZABETH MIRANDA

1/13 to ANALIZA MIRANDA

3. Ordering Plaintiffs Lolita Miranda, Alejandro Miranda, Teresita Miranda, Rufina Miranda and all
persons claiming rights under them to immediately vacate the abovementioned residential house
and to jointly and severally pay to the spouses Pablo and Aida Miranda a monthly rental of
₱2,000.00 from the date of notice of the promulgation of this judgment up to the time that they have
actually vacated the property;

4. Proclaiming that ROGELIO MIRANDA is not the biological son or child by nature of
TRANQUILINO MIRANDA, and therefore is not entitled to inherit from the latter;

5. Declaring CORNELIO MIRANDA, NUMERIANO MIRANDA, JR., ERLINDA MIRANDA, LOLITA

MIRANDA, RUFINA MIRANDA, DANIL[O] MIRANDA, ALEJANDRO MIRANDA, FELIMON
MIRANDA, TERESITA MIRANDA, ELIZABETH MIRANDA, ANALIZA MIRANDA, PABLO MIRANDA
and PACITA MIRANDA as the lawful legal heirs of the deceased TRANQUILINO MIRANDA and
ordering them to partition among themselves Lot 826-A-1 covered by TCT No. 186011 registered in
the name of TRANQUILINO MIRANDA, containing an area of 213 square meters, as follows:

1/13 aliquot share to Cornelio Miranda

1/13 aliquot share to Numeriano Miranda, Jr.

1/13 aliquot share to Erlinda Miranda

1/13 aliquot share to Lolita Miranda

1/13 aliquot share to Rufina Miranda

1/13 aliquot share to Danilo Miranda

1/13 aliquot share to Alejandro Miranda

1/13 aliquot share to Felimon Miranda

 1/13 aliquot share to Teresita Miranda

1/13 aliquot share to Elizabeth Miranda

1/13 aliquot share to Analiza Miranda

1/13 aliquot share to Pablo Miranda

1/13 aliquot share to Pacita Miranda

6. Ordering all the abovenamed heirs to commission the survey of Lot 826-A-1 or to authorize in
writing, one of them to commission such survey, in order to avoid a chaotic situation similar to the
case at bar. Should they not agree as to what particular portion shall belong to one another, they
may agree that it be allotted to one or two or several of them, who shall indemnify the others at a
price agreed upon by all of them. Should they not agree as to whom shall the property be allotted, to
sell the property to a third person at a price agreed upon by a majority of all of them, and to partition
the proceeds of the sale in accordance with No. 5 above.

SO ORDERED.7

Petitioners did not file any appeal hence the Decision became final and executory.8

On December 11, 2001, the RTC issued a Writ of Execution,9 which was not implemented.10

On July 8, 2005, respondent filed an Ex-parte Motion11 praying that the RTC issue a "Break-Open
and Demolition Order" in order to compel the petitioners to vacate his property.12 But since more
than five years have elapsed from the time the Writ of Execution should have been enforced, the
RTC denied the Motion in its Order13 dated August 16, 2005.

This prompted respondent to file with the RTC a Petition14 for Revival of Judgment, which was
docketed as Civil Case No. 05-131. Petitioners opposed the revival of judgment assailing, among
others, the jurisdiction of the RTC to take cognizance of the Petition for Revival of Judgment.15

On June 20, 2006, the RTC rendered a Decision16 granting the Petition. Thus:

WHEREFORE, finding the instant petition to be meritorious, the petition is hereby GRANTED.
Pursuant to Rule 39, Section 6 of the Rules of Court, the Decision dated August 30, 1999 in Civil
Case No. 94-612 is hereby REVIVED.

SO ORDERED.17

On July 13, 2006, petitioners filed a Notice of Appeal18 via LBC,19 which was opposed by respondent
on the ground that the Decision dated August 30, 1999 has long become final and
executory.20 Petitioners, in turn, moved for the transmittal of the original records of the case to the
CA, insisting that respondent’s opposition is without merit.21

Ruling of the Regional Trial Court

Finding the appeal barred by prescription, the RTC denied the Notice of Appeal in its Order22 dated
October 10, 2006, to wit:
WHEREFORE, in view of the foregoing, the notice of appeal herein filed is hereby DENIED for lack
of merit.

SO ORDERED.23

Feeling aggrieved, petitioners filed a Petition for Mandamus24 with the CA praying that their Notice of
Appeal be given due course.25

Ruling of the Court of Appeals

On June 14, 2007, the CA denied the Petition for Mandamus on the ground that the Notice of Appeal
was filed out of time.26 The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the petition is DENIED. The appeal is hereby DISMISSED for
having been filed out of time.

SO ORDERED.27

Petitioners moved for reconsideration but the same was denied by the CA in its Resolution28 dated
September 11, 2007.

Issues

Hence, this recourse, with petitioners raising the following issues:

1. WHETHER X X X THE APPEAL WAS PERFECTED ON TIME?

2. WHETHER X X X THE LATE (ONE DAY) FILING WAS JUSTIFIED?

3. WHETHER X X X AN ACTION FOR REVIVAL OF JUDGMENT IS APPEALABLE?

4. WHETHER THE APPEAL IS MERITORIOUS?

a. Whether the RTC below has exclusive original jurisdiction over an action for
revival of judgment?

b. Whether xxx respondent herein, plaintiff therein, as one of the judgment creditors
can file the said action for revival ALONE?

c. Whether subsequent events or laws have rendered the judgment sought to be

revived modified or altered, or prevent its enforcement?

d. Whether res judicata or laches has seeped in, other judgment creditors not suing
for any such implementation of the 1999 judgment, ONLY PLAINTIFF ALONE?

e. Whether x x x the Petitioners are entitled to damages?29

Petitioners’ Arguments
Petitioners assert that an action to revive judgment is appealable,30 and that their appeal was
perfected on time.31They insist that the Notice of Appeal, which they filed on the 15th day via LBC,
was seasonably filed since the law does not require a specific mode of service for filing a notice of
appeal.32

Besides, even if their appeal was belatedly filed, it should still be given due course in the interest of
justice,33considering that their counsel had to brave the storm and the floods caused by typhoon
"Florita" just to file their Notice of Appeal on time.34

Petitioners further contend that their appeal is meritorious.35 They insist that it is the Metropolitan
Trial Court (MeTC), not the RTC, which has jurisdiction over the Petition for Revival of Judgment
since the amount in the tax declarations of the properties involved is less than Fifty Thousand Pesos
(₱50,000.00).36 They likewise assail the Decision dated August 30, 1999, claiming that the deeds
and certificates of title subject of Civil Case No. 94-612 were falsified.37

Respondent’s Arguments

Respondent, on the other hand, maintains that the Notice of Appeal was belatedly filed,38 and that
the revival of judgment is unappealable as it is barred by prescription.39

Our Ruling

The Petition lacks merit.

The Notice of Appeal was belatedly filed.

It is basic and elementary that a Notice of Appeal should be filed "within fifteen (15) days from notice
of the judgment or final order appealed from."40

Under Section 3,41 Rule 13 of the Rules of Court, pleadings may be filed in court either personally or
by registered mail. In the first case, the date of filing is the date of receipt. In the second case, the
date of mailing is the date of receipt.

In this case, however, the counsel for petitioners filed the Notice of Appeal via a private courier, a
mode of filing not provided in the Rules. Though not prohibited by the Rules, we cannot consider the
filing of petitioners’ Notice of Appeal via LBC timely filed. It is established jurisprudence that "the
date of delivery of pleadings to a private letter-forwarding agency is not to be considered as the date
of filing thereof in court;" instead, "the date of actual receipt by the court x x x is deemed the date of
filing of that pleading."42 Records show that the Notice of Appeal was mailed on the 15th day and
was received by the court on the 16th day or one day beyond the reglementary period. Thus, the CA
correctly ruled that the Notice of Appeal was filed out of time.

Neither can petitioners use typhoon "Florita" as an excuse for the belated filing of the Notice of
Appeal because work in government offices in Metro Manila was not suspended on July 13, 2006,
the day petitioners’ Notice of Appeal was mailed via LBC.43

And even if we, in the interest of justice, give due course to the appeal despite its late filing, the
result would still be the same. The appeal would still be denied for lack of merit.

The Decision dated August 30, 1999 is already final and executory.
An action for revival of judgment is a new and independent action.44 It is different and distinct from
the original judgment sought to be revived or enforced.45 As such, a party aggrieved by a decision of
a court in an action for revival of judgment may appeal the decision, but only insofar as the merits of
the action for revival is concerned. The original judgment, which is already final and executory, may
no longer be reversed, altered, or modified.46

In this case, petitioners assail the Decision dated August 30, 1999, which is the original judgment
sought to be revived or enforced by respondent. Considering that the said Decision had already
1âwphi1

attained finality, petitioners may no longer question its correctness. As we have said, only the merits
of the action for revival may be appealed, not the merits of the original judgment sought to be
revived or enforced.

RTC has jurisdiction over the Petition for Revival of Judgment

As to whether the RTC has jurisdiction, we rule in the affirmative. An action for revival of judgment
may be filed either "in the same court where said judgment was rendered or in the place where the
plaintiff or defendant resides, or in any other place designated by the statutes which treat of the
venue of actions in general."47 In this case, respondent filed the Petition for Revival of Judgment in
the same court which rendered the Decision dated August 30, 1999.

All told, we find no error on the part of the CA in denying the Petition and dismissing the appeal for
having been filed out of time.

WHEREFORE, the Petition is hereby DENIED. The Decision dated June 14, 2007 and the
Resolution dated September 11, 2007 of the Court of Appeals in CA-G.R. SP No. 97350 are hereby
AFFIRMED.

SO ORDERED.

THIRD DIVISION

APRIL 4, 2018

G.R. No. 195814

EVERSLEY CHILDS SANITARIUM, represented by DR. GERARDO M. AQUINO, JR. (now DR.
PRIMO JOEL S. ALVEZ) CHIEF OF SANITARIUM,, Petitioner
vs
SPOUSES ANASTACIO PERLABARBARONA, Respondents

DECISION
LEONEN, J.:

A case for unlawful detainer must state the period from when the occupation by tolerance started
and the acts of tolerance exercised by the party with the right to possession. If it is argued that the
possession was illegal from the start, the proper remedy is to file an accion publiciana, or a plenary
action to recover the right of possession. Moreover, while an ejectment case merely settles the issue
of the right of actual possession, the issue of ownership may be provisionally passed upon if the
issue of possession cannot be resolved without it. Any fina1 disposition on the issue of ownership,
however, must be resolved in the proper forum.

This is a Petition for Review on Certiorari 1 assailing the Court of Appeals February 17, 2011
Decision,2 which upheld the judgments of the Municipal Trial Court and Regional Trial Court ordering
Eversley Childs Sanitarium (Eversley) to vacate the disputed property. Eversley assails the August
31, 2011 Resolution3 of the Court of Appeals for resolving its Motion for Reconsideration despite its
earlier submission of a Motion to Withdraw the Motion for Reconsideration.

Eversley is a public health facility operated by the Department of Health to administer care and
treatment to patients suffering from Hansen's disease, commonly known as leprosy, and to provide
basic health services to non-Hansen's cases.4 Since 1930, it has occupied a portion of a parcel of
land denominated as Lot No. 1936 in Jagobiao, Mandaue City, Cebu.5

Spouses Anastacio and Perla Barbarona (the Spouses Barbarona) allege that they are the owners
of Lot No. 1936 by virtue of Transfer Certificate of Title (TCT) No. 53698. They claim that they have
acquired the property from the Spouses Tarcelo B. Gonzales and Cirila Alba (the Spouses
Gonzales),6 whose ownership was covered by Original Certificate of Title (OCT) No. R0-824. Per the
Spouses Barbarona's verification, OCT No. R0-824 was reconstituted based on Decree No. 699021,
issued to the Spouses Gonzales by the Land Registration Office on March 29, 1939.7

On May 6, 2005, the Spouses Barbarona filed a Complaint for Ejectment (Complaint)8 before the
Municipal Trial Court in Cities of Mandaue City against the occupants of Lot No. 1936, namely,
Eversley, Jagobiao National High School, the Bureau of Food and Drugs, and some residents
(collectively, the occupants). The Spouses Barbarona alleged that they had sent demand letters and
that the occupants were given until April 15, 2005 to vacate the premises. They further claimed that
despite the lapse of the period, the occupants refused to vacate; hence, they were constrained to file
the Complaint.9

In their Answer, 10 the occupants alleged that since they had been in possession of the property for
more than 70 years, the case was effectively one for recovery of possession, which was beyond the
jurisdiction of the Municipal Trial Court. They likewise claimed that the Spouses Barbarona were
guilty of laches since it took more than 60 years for them to seek the issuance of a Torrens title over
the property. They also averred that the Spouses Barbarona's certificate of title was void since they,
the actual inhabitants of the property, were never notified of its issuance. 11

In its September 29, 2005 Decision, 12 the Municipal Trial Court in Cities ordered the occupants to
vacate the property, finding that the action was one for unlawful detainer, and thus, within its
jurisdiction. It likewise found that the Spouses Barbarona were the lawful owners of Lot No. 1936
and that the occupants were occupying the property by mere tolerance. 13

The Municipal Trial Court in Cities also held that a titled property could not be acquired through
laches. It found that even the occupants' tax declarations in their names could not prevail over a
valid certificate of title. 14 The dispositive portion of its Decision read:
WHEREFORE, judgment is hereby rendered in favor of the [the Spouses Barbarona] and against all
the [occupants] and ordering the latter to peacefully vacate the portion of the premises in question
and remove their houses, structures or any building and improvements introduced or constructed on
said portion on Lot 1936 covered by TCT No. 53698.

The [occupants] are further ordered to pay the following, to wit:

1. The amount of ₱10.00 per square meter for the area occupied by each [of the
occupants] as reasonable monthly compensation for the use of the portion of the
property of [the Spouses Barbarona] from the date of the filing of the complaint until
[the occupants] shall have actually vacated and turned over the portion of their
possession to the [Spouses Barbarona];

2. The amount of ₱20,000 as litigation expenses and P20,000 as reasonable

attorney[']s fees; and

3. The cost of suit.

Counterclaims of the [occupants] are hereby ordered DISMISSED for lack of merit.

SO ORDERED.15

The occupants appealed to the Regional Trial Court. In its November 24, 2006 Decision, 16 the
Regional Trial Court affirmed in toto the Decision of the Municipal Trial Court in Cities. One of the
occupants, Eversley, filed a motion for reconsideration. 17

During the pendency of Eversley's motion, or on February 19, 2007, the Court of Appeals in CA-G.R.
CEB-SP No. 01503 rendered a Decision, cancelling OCT No. R0-824 and its derivative titles,
including TCT No. 53698, for lack of notice to the owners of the adjoining properties and its
occupants. 18

On April 23, 2007, the Regional Trial Court issued an Order denying Eversley's Motion for
Reconsideration. 19

Eversley filed a Petition for Review20 with the Court of Appeals, arguing that the Municipal Trial Court
had no jurisdiction over the action and that the Regional Trial Court erred in not recognizing that the
subsequent invalidation of the Spouses Barbarona's certificate of title was prejudicial to their cause
of action.21

On February 17, 2011, the Court of Appeals rendered its Decision, 22 denying the Petition. According
to the Court of Appeals, the allegations in the Complaint were for the recovery of the physical
possession of the property and not a determination of the property's ownership. The action, thus,
was one for unlawful detainer and was properly filed with the Municipal Trial Court. 23

The Court of Appeals held that the subsequent invalidation of the issuance of the certificate of title
was immaterial, stating:

Whether or not [the Spouses Barbarona are] holder[s] or not of a certificate of title is immaterial. The
matter of the issuance of the decree by the Land Registration Office in favor of [the Spouses
Barbarona's] predecessor[s-]in[-]interest has not been resolved on the merits by the RTC. [The
Spouses Barbarona,] having acquired all the rights of their predecessors-in-interest[,] have[,] from
the time of the issuance of the decree[,] also derived title over the property and nullification of the
title based on procedural defects is not tantamount to the nullification of the decree. The decree
stands and remains a prima facie source of the [Spouses Barbarona's] right of ownership over the
subject property. 24

Eversley, represented by the Office of the Solicitor General, filed a Petition for Review25 with this
Court assailing the February 17, 2011 Decision of the Court of Appeals. It likewise prayed for the
issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction26 to restrain the
immediate execution of the assailed judgment and to prevent impairing the operations of the
government hospital, which had been serving the public for more than 80 years.

In its May 13, 2011 Resolution, 27 this Court issued a Temporary Restraining Order enjoining the
implementation of the Court of Appeals February 17, 2011 Decision. Respondents were also
directed to comment on the Petition.

In its Petition before this Court, petitioner argues that the nullification of TCT No. 53698 should have
been prejudicial to respondents' right to recover possession over the property. Petitioner claims that
since the Metropolitan Trial Comi relied on respondents' title to determine their right of possession
over the property, the subsequent nullification of their title should have invalidated their right of
possession. Petitioner maintains that even if Decree No. 699021 was valid, the effect of its validity
does not extend to respondents since there is no evidence to prove that they have acquired the
property from Tarcelo B. Gonzales, the owner named in the decree.28

Petitioner points out that respondents' Complaint before the trial court was a case for accion
publiciana, not one for unlawful detainer, since respondents have not proven petitioner's initial
possession to be one of mere tolerance. It claims that respondents' bare allegation that they merely
tolerated petitioner's possession is insufficient in a case for unlawful detainer, especially with
petitioner's possession of the property since 1930, which pre-dates the decree that was reconstituted
in 193 9. 29 It argues that its long occupancy should have been the subject of judicial notice since it is
a government hospital serving the city for decades and is even considered as a landmark of the
city. 30

On the other hand, respondents counter that the cancellation of TCT No. 53698 "does not ... divest
respondents of their rightful ownership of the subject property[,] more so their right of
possession"31 since their predecessors-in-interest's title was still valid and protected under the
Torrens system. They insist that "petitioner has not shown . . . any sufficient evidence proving [its]
ownership ... much less, [its] right of possession."32

Respondents maintain that the Municipal Trial Court had jurisdiction over their complaint since prior
physical possession is not an indispensable requirement and all that is required is "that the one-year
period of limitation commences from the time of demand to vacate."33

While the Petition was pending before this Court, respondents raised a few procedural concerns
before submitting their Comment. In their Motion for Leave to File
Comment/Manifestation,34 respondents informed this Court that petitioner still had a pending and
unresolved Motion for Reconsideration35 before the Court of Appeals, in violation of the rule against
forum shopping. Respondents, nonetheless, filed their Comment/Manifestation,36 to which this Court
ordered petitioner to reply.37

Petitioner filed its Reply38 and submitted a Manifestation,39 explaining that the Court of Appeals had
issued a Resolution40 on August 31, 2011, denying its Motion for Reconsideration despite its earlier
filing on April 14, 2011 of a Manifestation and Motion to Withdraw its Motion for Reconsideration.
Thus, it manifested its intention to likewise question the Court of Appeals August 31, 2011
Resolution with this Court.

On November 28, 2011, this Court noted that petitioner's Reply and Manifestation and directed
respondents to comment on the Manifestation.41

In their Comment on Petitioner's Manifestation,42 respondents assert that while petitioner submitted a
Manifestation and Motion to Withdraw its Motion for Reconsideration, the Court of Appeals did not
issue any order considering petitioner's Motion for Reconsideration to have been abandoned. The
Court of Appeals instead proceeded to resolve it in its August 31, 2011 Resolution; hence,
respondents submit that petitioner violated the rule on non-forum shopping.43

Based on the arguments of the parties, this Court is asked to resolve the following issues:

First, whether or not the nullification of the Spouses Anastacio and Perla Barbarona's title had the
effect of invalidating their right of possession over the disputed property; and

Second, whether or not the Spouses Anastacio and Perla Barbarona's complaint against Eversley
Childs Sanitarium was for accion publiciana or for unlawful detainer.

Before these issues may be passed upon, however, this Court must first resolve the procedural
question of whether or not Eversley Childs Sanitarium violated the rule on non-forum shopping.

In City of Taguig v. City of Makati, 44 this Court discussed the definition, origins, and purpose of the
rule on forum shopping:

Top Rate Construction & General Services, Inc. v. Paxton Development Corporation explained that:

Forum shopping is committed by a party who institutes two or more suits -in different courts, either
simultaneously or successively, in order to ask the courts to rule on the same or related causes or to
grant the same or substantially the same reliefs, on the supposition that one or the other court would
make a favorable disposition or increase a party's chances of obtaining a favorable decision or
action.

First Philippine International Bank v. Court of Appeals recounted that forum shopping originated as a
concept in private international law:

To begin with, forum-shopping originated as a concept in private international law, where non-
resident litigants are given the option to choose the forum or place wherein to bring their suit for
various reasons or excuses, including to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue. To combat these less
than honorable excuses, the principle of forum non conveniens was developed whereby a court, in
conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most "convenient"
or available forum and the parties are not precluded from seeking remedies elsewhere.

In this light, Black's Law Dictionary says that forum-shopping "occurs when a party attempts to have
his action tried in a particular court or jurisdiction where he feels he will receive the most favorable
judgment or verdict." Hence, according to Words and Phrases, "a litigant is open to the charge of
'forum shopping' whenever he chooses a forum with slight connection to factual circumstances
surrounding his suit, and litigants should be encouraged to attempt to settle their differences without
imposing undue expense and vexatious situations on the courts."

Further, Prubankers Association v. Prudential Bank and Trust Co. recounted that:

The rule on forum-shopping was first included in Section 17 of the Interim Rules and Guidelines
issued by this Court on January 11, 1983, which imposed a sanction in this wise: "A violation of the
rule shall constitute contempt of court and shall be a cause for the summary dismissal of both
petitions, without prejudice to the taking of appropriate action against the counsel or party
concerned." Thereafter, the Court restated the rule in Revised Circular No. 28-91 and Administrative
Circular No. 04-94. Ultimately, the rule was embodied in the 1997 amendments to the Rules of
Court. 45

There is forum shopping when a party files different pleadings in different tribunals, despite having
the same "identit[ies] of parties, rights or causes of action, and reliefs sought."46 Consistent with the
principle of fair play, parties are prohibited from seeking the same relief in multiple forums in the
hope of obtaining a favorable judgment. The rule against forum shopping likewise fulfills an
administrative purpose as it prevents conflicting decisions by different tribunals on the same issue.

In filing complaints and other initiatory pleadings, the plaintiff or petitioner is required to attach a
certification against forum shopping, certifying that (a) no other action or claim involving the same
issues has been filed or is pending in any court, tribunal, or quasi-judicial agency, (b) if there is a
pending action or claim, the party shall make a complete statement of its present status, and (c) if
the party should learn that the same or similar action has been filed or is pending, that he or she will
report it within five (5) days to the tribunal where the complaint or initiatory pleading is pending.
Thus, Rule 7, Section 5 of the Rules of Court provides:

Section 5. Certification against forum shopping. - The plaintiff or principal party shall certify under
oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification
annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and,
to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such
other pending action or claim, a complete statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause
for administrative sanctions.

Petitioner, through the Office of the Solicitor General, is alleged to have committed forum shopping
when it filed its Petition for Review on Ce1iiorari with this Court, despite a pending Motion for
Reconsideration with the Court of Appeals.

According to the Solicitor General, it filed a Motion for Extension of Time to File a Petition for Review
on Certiorariwith this Court on March 10, 2011 but that another set of solicitors erroneously filed a
Motion for Reconsideration with the Court of Appeals on March 11, 2011.47 Thus, it was constrained
to file a Manifestation and Motion to Withdraw its Motion for Reconsideration on April 14, 2011,48 the
same date as its Petition for Review on Certiorariwith this Court. Indeed, its Certification of Non-
Forum Shopping, as certified by State Solicitor Joan V. Ramos-Fabella, provides:

....

5. I certify that there is a pending Motion/or Reconsideration erroneously filed in the Court of
Appeals, Special Eighteenth Division which we have asked to be withdrawn. Aside from said
pending motion, I have not commenced any action or filed any claim involving the same issues in
any court, tribunal or quasi-judicial agency and, to the best of my knowledge, no such other action or
claim is pending therein; and should I thereafter learn that the same or similar action or claim is
pending before any other court, tribunal or quasi-judicial agency, I shall report such fact within five
(5) days therefrom from the court wherein this petition has been filed. 49 (Emphasis supplied)

The Office of the Solicitor General, however, mistakenly presumed that the mere filing of a motion to
withdraw has the effect of withdrawing the motion for reconsideration without having to await the
action of the Court of Appeals. The Office of the Solicitor General's basis is its reading of Rule VI,
Section 15 of the 2002 Internal Rules of the Court of Appeals:

Section 15. Effect of Filing an Appeal in the Supreme Court. - No motion for reconsideration or
rehearing shall be acted upon if the movant has previously filed in the Supreme Court a petition for
review on certiorari or a motion for extension of time to file such petition. If such petition or motion is
subsequently filed, the motion for reconsideration pending in this Court shall be deemed abandoned.

This would have been true had the Office of the Solicitor General merely manifested that it had
already considered its Motion for Reconsideration before the Court of Appeals as abandoned,
pursuant to its Internal Rules. However, it filed a Motion to Withdraw, effectively submitting the
withdrawal of its Motion for Reconsideration to the Court of Appeals' sound discretion. A motion is
not presumed to have already been acted upon by its mere filing. Prudence dictated that the Office
of the Solicitor General await the Court of Appeals' action on its Motion to Withdraw before
considering its Motion for Reconsideration as withdrawn.

Ordinarily, "a motion that is not acted upon in due time is deemed denied."50 When the Court of
Appeals denied the Office of the Solicitor General's Motion for Reconsideration without acting on its
Motion to Withdraw, the latter was effectively denied. Petitioner, thus, committed forum shopping
when it filed its Petition before this Court despite a pending Motion for Reconsideration before the
Court of Appeals.

To rule in this manner, however, is to unnecessarily deprive petitioner of its day in court despite the
Court of Appeals' failure to apply its own Internal Rules. The Internal Rules of the Court of Appeals
clearly provide that a subsequent motion for reconsideration shall be deemed abandoned if the
movant filed a petition for review or motion for extension of time to file a petition for review before
this Court. While the Office of the Solicitor General can be faulted for filing a motion instead of a
mere manifestation, it cannot be faulted for presuming that the Court of Appeals would follow its
Internal Rules as a matter of course.

Rule VI, Section 15 of the Internal Rules of the Court of Appeals is provided for precisely to prevent
forum shopping. It mandates that once a party seeks relief with this Court, any action for relief with
the Court of Appeals will be deemed abandoned to prevent conflicting decisions on the same issues.
Had the Court of Appeals applied its own Internal Rules, petitioner's Motion for Reconsideration
would have been deemed abandoned.
Moreover, unlike this Court, which can suspend the effectivity of its own rules when the ends of
justice require it,51the Court of Appeals cannot exercise a similar power. Only this Court may suspend
the effectivity of any provision in its Internal Rules.52 Thus, it would be reasonable for litigants to
expect that the Court of Appeals would comply with its own Internal Rules.

Petitioner's Motion for Reconsideration having been deemed abandoned with its filing of a Motion for
Extension of Time before this Court, the Court of Appeals' August 31, 2011 Resolution denying the
Motion for Reconsideration, thus, has no legal effect. It is as if no motion for reconsideration was
filed at all. 53 Considering that petitioner counted the running of the period to file its Petition with this
Court from its receipt of the Court of Appeals February 17, 2011 Decision, and not of the Court of
Appeals August 31, 2011 Resolution, it does not appear that petitioner "wanton[ly] disregard[ed] the
rules or cause[d] needless delay in the administration of justice."54 In this particular instance,
petitioner did not commit a fatal procedural error.

II

By its very nature, an ejectment case only resolves the issue of who has the better right of
possession over the property. The right of possession in this instance refers to actual possession,
not legal possession. While a party may later be proven to have the legal right of possession by
virtue of ownership, he or she must still institute an ejectment case to be able to dispossess an
actual occupant of the property who refuses to vacate. In Mediran v. Villanueva: 55

Juridically speaking, possession is distinct from ownership, and from this distinction are derived legal
consequences of much importance. In giving recognition to the action of forcible entry and detainer
the purpose of the law is to protect the person who in fact has actual possession; and in case of
controverted right, it requires the parties to preserve the status quo until one or the other of them
sees fit to invoke the decision of a court of competent jurisdiction upon the question of ownership. It
is obviously just that the person who has first acquired possession should remain in possession
pending this decision; and the parties cannot be permitted meanwhile to engage in a petty warfare
over the possession of the property which is the subject of dispute. To permit this would be highly
dangerous to individual security and disturbing to social order. Therefore, where a person supposes
himself to be the owner of a piece of property and desires to vindicate his ownership against the
party actually in possession, it is incumbent upon him to institute an action to this end in a court of
competent jurisdiction; and he [cannot] be permitted, by invading the property and excluding the
actual possessor, to place upon the latter the burden of instituting an action to try the property right.56

In ejectment cases, courts will only resolve the issue of ownership provisionally if the issue of
possession cannot be resolved without passing upon it. In Co v. Militar: 57

We have, time and again, held that the only issue for resolution in an unlawful detainer case is
physical or material possession of the property involved, independent of any claim of ownership by
any of the party litigants. Moreover, an ejectment suit is summary in nature and is not susceptible to
circumvention by the simple expedient of asserting ownership over the property.

In forcible entry and unlawful detainer cases, even if the defendant raises the question of ownership
in his pleadings and the question of possession cannot be resolved without deciding the issue of
ownership, the lower courts and the Court of Appeals, nonetheless, have the undoubted
competence to provisionally resolve the issue of ownership for the sole purpose of determining the
issue of possession.
Such decision, however, does not bind the title or affect the ownership of the land nor is conclusive
of the facts therein found in a case between the same parties upon a different cause of action
involving possession. 58

In this instance, respondents anchor their right of possession over the disputed property on TCT No.
5369859 issued in their names. It is true that a registered owner has a right of possession over the
property as this is one of the attributes of ownership.60 Ejectment cases, however, are not
automatically decided in favor of the party who presents proof of ownership, thus:

Without a doubt, the registered owner of real property is entitled to its possession. However, the
owner cannot simply wrest possession thereof from whoever is in actual occupation of the property.
To recover possession, he must resort to the proper judicial remedy and, once he chooses what
action to file, he is required to satisfy the conditions necessary for such action to prosper.

In the present case, petitioner opted to file an ejectment case against respondents. Ejectment cases
- forcible entry and unlawful detainer - are summary proceedings designed to provide expeditious
means to protect actual possession or the right to possession of the property involved. The only
question that the courts resolve in ejectment proceedings is: who is entitled to the physical
possession of the premises, that is, to the possession de facto and not to the possession de Jure. It
does not even matter if a party's title to the property is questionable. For this reason, an ejectment
case will not necessarily be decided in favor of one who has presented proof of ownership of the
subject property. Key jurisdictional facts constitutive of the particular ejectment case filed must be
averred in the complaint and sufficiently proven.61 (Emphasis supplied)

Here, respondents alleged that their right of ownership was derived from their predecessors-in-
interest, the Spouses Gonzales, whose Decree No. 699021 was issued on March 29, 1939.62 The
Register of Deeds certified that there was no original certificate of title or owner's duplicate issued
over the property, or if there was, it may have been lost or destroyed during the Second World War.
The heirs of the Spouses Gonzales subsequently executed a Deed of Full Renunciation of Rights,
Conveyance of Full Ownership and Full Waiver of Title and Interest on March 24, 2004 in
respondents' favor. Thus, respondent Anastacio Barbarona succeeded in having Decree No. 699021
reconstituted on July 27, 2004 and having TCT No. 53698 issued in respondents' names on
February 7, 2005.63

The Municipal and Regional Trial Courts referred to respondents' Torrens title as basis to rule the
ejectment case in their favor:

The complaint in this case sufficiently ... establish[es] beyond doubt that [the Spouses Barbarona]
are the lawful owners of Lot 1936, situated at Jagobiao, Mandaue City, as evidenced by Transfer
Certificate of Title No. 53698 . . . .

....

A certificate of title is a conclusive evidence of ownership and as owners, the [the Spouses
Bnrbarona] are entitled to possession of the property . . . .

This Court however cannot just simply closed (sic) its eyes into the fact presented before the trial
court that the subject lot owned by [the Spouses Barbarona] is covered by a Torrens Certificate of
Title. Until such time or period that such title is rendered worthless, the same is BINDING UPON
THE WHOLE WORLD in terms of ownership[.]64 (Emphasis in the original)
During the interim, the Republic of the Philippines, represented by the Office of the Solicitor General,
filed a Petition for Annulment of Judgment before the Court of Appeals to assail the reconstitution of
Decree No. 699021, docketed as CA-G.R. SP No. 01503. On February 19, 2007,65 the Court of
Appeals in that case found that the trial court reconstituted the title without having issued the
required notice and initial hearing to the actual occupants, rendering all proceedings void. The
dispositive portion of the Decision read:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered GRANTING the instant
petition and SETTING ASIDE the Order of Branch 55 of the Regional Trial Court, Mandaue City in
Case No. 3 G.L.R.O., Record No. 4030.

SO ORDERED.66

As a consequence of this ruling, TCT No. 53698 was cancelled by the

Register of Deeds on January 25, 2011.67

Despite these developments, the Court of Appeals in this case proceeded to affirm the Municipal
Trial Court's and Regional Trial Court's judgments on the basis that Decree No. 699021 was still
valid, stating:

Whether or not [the Spouses Barbarona are] holder[s] or not of a certificate of title is immaterial. The
matter of the issuance of the decree by the Land Registration Office in favor of [the Spouses
Barbarona's] predecessor[ s-]in[-]interest has not been resolved on the merits by the RTC. [The
Spouses Barbarona,] having acquired all the rights of their predecessors-in-interest[,] have[,] from
the time of the issuance of the decree[,] also derived title over the property and nullification of the
title based on procedurai defects is not tantamount to the nullification of the decree. The decree
stands and remains a prima facie source of the [Spouses Barbarona's] right of ownership over the
subject property. 68

Blinded by respondents' allegedly valid title on the property, the three (3) tribunals completely
ignored how petitioner came to occupy the property in the first place.

Petitioner, a public hospital operating as a leprosarium dedicated to treating persons suffering from
Hansen's disease, has been occupying the property since May 30, 1930. According to its history:

The institution was built by the Leonard Wood Memorial with most of the funds donated by the late
Mr. Eversley Childs of New York, USA, hence the name, Eversley Childs Sanitarium, in honor of the
late donor. The total cost was about 400,000.00 which were spent for the construction of 52 concrete
buildings (11 cottages for females and 22 for males, 5 bathhouses, 2 infirmaries, powerhouse,
carpentry shop, general kitchen and storage, consultation and treatment clinics and offices),
waterworks, sewerage, road and telephone system, equipment and the likes.

The construction of the building [was] started sometime on May 1928 and was completed 2 years
later. It was formally turned over the Philippine government and was opened [on] May 30, 1930 with
540 patients transferred in from Caretta Treatment Station, now Cebu Skin Clinic in Cebu City.69

Proclamation No. 507 was issued on October 21, 1932, "which reserved certain parcels of land in
Jagobiao, Mandaue City, Cebu as additional leprosarium site for the Eversley Childs Treatment
Station."70 Petitioner's possession of the property, therefore, pre-dates that of respondents'
predecessors-in-interest, whose Decree No. 699021 was issued in 1939.
It is true that defects in TCT No. 53698 or even Decree No. 699021 will not affect the fact of
ownership, considering that a certificate of title does not vest ownership. The Torrens system "simply
recognizes and documents ownership and provides for the consequences of issuing paper titles."71

Without TCT No. 53698, however, respondents have no other proof on which to anchor their claim.
The Deed of Full Renunciation of Rights, Conveyance of Full Ownership and Full Waiver of Title and
Interest executed in their favor by the heirs of the Spouses Gonzales is insufficient to prove
conveyance of property since no evidence was introduced to prove that ownership over the property
was validly transferred to the Spouses Gonzales' heirs upon their death.

Moreover, Proclamation No. 507, series of 1932, reserved portions of the property specifically for
petitioner's use as a leprosarium. Even assuming that Decree No. 699021 is eventually held as a
valid Torrens title, a title under the Torrens system is always issued subject to the annotated liens or
encumbrances, or what the law warrants or reserves. Thus:

Under the Torrens system of registration, the government is required to issue an official certificate of
title to attest to the fact that the person named is the owner of the property described therein, subject
to such liens and encumbrances as thereon noted or what the law warrants or reserves. 72 (Emphasis
supplied)

Portions occupied by petitioner, having been reserved by law, cannot be affected by the issuance of
a Torrens title. Petitioner cannot be considered as one occupying under mere tolerance of the
registered owner since its occupation was by virtue of law. Petitioner's right of possession, therefore,
shall remain unencumbered subject to the final disposition on the issue of the property's ownership.

III

There are three (3) remedies available to one who has been dispossessed of property: (I) an action
for ejectment to recover possession, whether for unlawful detainer or forcible entry; (2) accion
publiciana or accion plenaria de posesion, or a plenary action to recover the right of · possession;
and (3) accion reivindicatoria, or an action to recover ownership. 73

Although both ejectment and accion publiciana are actions specifically to recover the right of
possession, they have two (2) distinguishing differences. The first is the filing period. Ejectment
cases must be filed within one (I) year from the date of dispossession. If the dispossession lasts for
more than a year, then an accion publiciana must be filed. The second distinction concerns
jurisdiction. Ejectment cases, being summary in nature, are filed with the Municipal Trial
Courts. Accion publiciana, however, can only be taken cognizance by the Regional Trial Court.74

Petitioner argues that the Municipal Trial Court has no jurisdiction over the case since respondents'
cause of action makes a case for ace ion publiciana and not ejectment through unlawful detainer. It
asserts that respondents failed to prove that petitioner occupied the property by mere tolerance.

Jurisdiction over subject matter is conferred by the allegations stated in the

complaint. 75 Respondents' Complaint before the Municipal Trial Court states:

That [the occupants] are presently occupying the above-mentioned property of the [Spouses
Barbarona] without color [of] right or title. Such occupancy is purely by mere tolerance. Indeed, [the
occupants'] occupying the lot owned by [the Spouses Barbarona] is illegal and not anchored upon
any contractual relations with the [Spouses Barbarona.]76
Indeed, no mention has been made as to how petitioner came to possess the property and as to
what acts constituted tolerance on the part of respondents or their predecessors-in-interest to allow
petitioner's occupation. In Carbonilla v. Abiera:77

A requisite for a valid cause of action in an unlawful detainer case is that possession must be
originally lawful, and such possession must have turned unlawful only upon the expiration of the right
to possess. It must be shown that the possession was initially lawful; hence, the basis of such lawful
possession must be established. If, as in this case, the claim is that such possession is by mere
tolerance of the plaintiff, the acts of tolerance must be proved.

Petitioner failed to prove that respondents' possession was based on his alleged tolerance. He did
1âwphi1

not offer any evidence or even only an affidavit of the Garcianos attesting that they tolerated
respondents' entry to and occupation of the subject properties. A bare allegation of tolerance will not
suffice. Plaintiff must, at least, show overt acts indicative of his or his predecessor's permission to
occupy the subject property . . . .

....

In addition, plaintiff must also show that the supposed acts of tolerance have been present right from
the very start of the possession - from entry to the property. Otherwise, if the possession was
unlawful from the start, an action for unlawful detainer would be an improper remedy. Notably, no
mention was made in the complaint of how entry by respondents was effected or how and when
dispossession started. Neither was there any evidence showing such details.

In any event, petitioner has some other recourse. He may pursue recovering possession of his
property by filing an accion publiciana, which is a plenary action intended to recover the better right
to possess; or an accion reivindicatoria, a suit to recover ownership of real property. We stress,
however, that the pronouncement in this case as to the ownership of the land should be regarded as
merely provisional and, therefore, would not bar or prejudice an action between the same parties
involving title to the land. 78

The same situation is present in this case. Respondents failed to state when petitioner's possession
was initially lawful, and how and when their dispossession started. All that appears from the
Complaint is that petitioner's occupation "is illegal and not anchored upon any contractual relations
with [respondents.]"79

This, however, is insufficient to determine if the action was filed within a year from dispossession, as
required in an ejectment case. On the contrary, respondents allege that petitioner's occupation was
illegal from the start. The proper remedy, therefore, should have been to file an accion
publiciana or accion reivindicatoria to assert their right of possession or their right of ownership.

Considering that respondents filed the improper case before the Municipal Trial Court, it had no
jurisdiction over the case. Any disposition made, therefore, was void. The subsequent judgments of
the Regional Trial Court and the Court of Appeals, which proceeded from the void Municipal Trial
Court judgment, are likewise void.

WHEREFORE, the Petition is GRANTED. The February 17, 2011 Decision and August 31, 2011
Resolution of the Court of Appeals in CAG. R. SP No. 02762 are REVERSED and SET ASIDE. The
Temporary Restraining Order dated May 13, 2011 is made PERMANENT.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT

SECOND DIVISION

G.R. No. 140954. April 12, 2005

HEIRS OF BERTULDO1 HINOG: Bertuldo Hinog II, Bertuldo Hinog III, Bertuldo Hinog, Jr.,
Jocelyn Hinog, Bertoldo Hinog IV, Bertoldo Hinog V, Edgardo Hinog, Milagros H. Pabatao,
Lilian H. King, Victoria H. Engracia, Terisita C. Hinog, Paz H. Besana, Roberto C. Hinog,
Vicente C. Hinog, Roel C. Hinog, Marilyn C. Hinog, Bebot C. Hinog, lordes C. Hinog, Pablo
Chiong, Arlene Lanasang (All respresented by Bertuldo Hinog III), Petitioners,
vs.
HON. ACHILLES MELICOR, in his capacity as Presiding Judge, RTC, Branch 4, 7th Judicial
Region, Tagbiliran City, Bohol, and CUSTODIO BALANE, RUFO BALANE, HONORIO BALANE,
and TOMAS BALANE,Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of Court which assails
the Orders dated March 22, 1999, August 13, 1999 and October 15, 1999 of the Regional Trial
Court, Branch 4, of Tagbilaran City, Bohol in Civil Case No. 4923.

The factual background of the case is as follows:

On May 21, 1991, private respondents Custodio, Rufo, Tomas and Honorio, all surnamed Balane,
filed a complaint for "Recovery of Ownership and Possession, Removal of Construction and
Damages" against Bertuldo Hinog (Bertuldo for brevity). They alleged that: they own a 1,399- square
meter parcel of land situated in Malayo Norte, Cortes, Bohol, designated as Lot No. 1714; sometime
in March 1980, they allowed Bertuldo to use a portion of the said property for a period of ten years
and construct thereon a small house of light materials at a nominal annual rental of ₱100.00 only,
considering the close relations of the parties; after the expiration of the ten-year period, they
demanded the return of the occupied portion and removal of the house constructed thereon but
Bertuldo refused and instead claimed ownership of the entire property.

Accordingly, private respondents sought to oust Bertuldo from the premises of the subject property
and restore upon themselves the ownership and possession thereof, as well as the payment of
moral and exemplary damages, attorney’s fees and litigation expenses "in amounts justified by the
evidence." 2

On July 2, 1991, Bertuldo filed his Answer. He alleged ownership of the disputed property by virtue
of a Deed of Absolute Sale dated July 2, 1980, executed by one Tomas Pahac with the knowledge
and conformity of private respondents.3

After the pre-trial, trial on the merits ensued. On November 18, 1997, private respondents rested
their case. Thereupon, Bertuldo started his direct examination. However, on June 24, 1998, Bertuldo
died without completing his evidence.
On August 4, 1998, Atty. Sulpicio A. Tinampay withdrew as counsel for Bertuldo as his services
were terminated by petitioner Bertuldo Hinog III. Atty. Veronico G. Petalcorin then entered his
appearance as new counsel for Bertuldo.4

On September 22, 1998, Atty. Petalcorin filed a motion to expunge the complaint from the record
and nullify all court proceedings on the ground that private respondents failed to specify in the
complaint the amount of damages claimed so as to pay the correct docket fees; and that
under Manchester Development Corporation vs. Court of Appeals,5 non-payment of the correct
docket fee is jurisdictional.6

In an amended motion, filed on October 2, 1998, Atty. Petalcorin further alleged that the private
respondents failed to pay the correct docket fee since the main subject matter of the case cannot be
estimated as it is for recovery of ownership, possession and removal of construction.7

Private respondents opposed the motion to expunge on the following grounds: (a) said motion was
filed more than seven years from the institution of the case; (b) Atty. Petalcorin has not complied
with Section 16, Rule 3 of the Rules of Court which provides that the death of the original defendant
requires a substitution of parties before a lawyer can have legal personality to represent a litigant
and the motion to expunge does not mention of any specific party whom he is representing; (c)
collectible fees due the court can be charged as lien on the judgment; and (d) considering the lapse
of time, the motion is merely a dilatory scheme employed by petitioners.8

In their Rejoinder, petitioners manifested that the lapse of time does not vest the court with
jurisdiction over the case due to failure to pay the correct docket fees. As to the contention that
deficiency in payment of docket fees can be made as a lien on the judgment, petitioners argued that
the payment of filing fees cannot be made dependent on the result of the action taken.9

On January 21, 1999, the trial court, while ordering the complaint to be expunged from the records
and the nullification of all court proceedings taken for failure to pay the correct docket fees,
nonetheless, held:

The Court can acquire jurisdiction over this case only upon the payment of the exact prescribed
docket/filing fees for the main cause of action, plus additional docket fee for the amount of damages
being prayed for in the complaint, which amount should be specified so that the same can be
considered in assessing the amount of the filing fees. Upon the complete payment of such fees, the
Court may take appropriate action in the light of the ruling in the case of Manchester Development
Corporation vs. Court of Appeals, supra.10

Accordingly, on January 28, 1999, upon payment of deficiency docket fee, private respondents filed
a manifestation with prayer to reinstate the case.11 Petitioners opposed the reinstatement12 but on
March 22, 1999, the trial court issued the first assailed Order reinstating the case.13

On May 24, 1999, petitioners, upon prior leave of court,14 filed their supplemental pleading,
appending therein a Deed of Sale dated November 15, 1982.15 Following the submission of private
respondents’ opposition thereto,16 the trial court, in its Order dated July 7, 1999, denied the
supplemental pleading on the ground that the Deed of Absolute Sale is a new matter which was
never mentioned in the original answer dated July 2, 1991, prepared by Bertuldo’s original counsel
and which Bertuldo verified; and that such new document is deemed waived in the light of Section 1,
Rule 917 of the Rules of Court. The trial court also noted that no formal substitution of the parties was
made because of the failure of defendant’s counsel to give the names and addresses of the legal
representatives of Bertuldo, so much so that the supposed heirs of Bertuldo are not specified in any
pleading in the case. 18
On July 14, 1999, petitioners manifested that the trial court having expunged the complaint and
nullified all court proceedings, there is no valid case and the complaint should not be admitted for
failure to pay the correct docket fees; that there should be no case to be reinstated and no case to
proceed as there is no complaint filed.19

After the submission of private respondents’ opposition20 and petitioners’ rejoinder,21 the trial court
issued the second assailed Order on August 13, 1999, essentially denying petitioners’
manifestation/rejoinder. The trial court held that the issues raised in such manifestation/rejoinder are
practically the same as those raised in the amended motion to expunge which had already been
passed upon in the Order dated January 21, 1999. Moreover, the trial court observed that the Order
dated March 22, 1999 which reinstated the case was not objected to by petitioners within the
reglementary period or even thereafter via a motion for reconsideration despite receipt thereof on
March 26, 1999.22

On August 25, 1999, petitioners filed a motion for reconsideration23 but the same was denied by the
trial court in its third assailed Order dated October 15, 1999. The trial court held that the Manchester
rule was relaxed in Sun Insurance Office, Ltd. vs. Asuncion.24 Noting that there has been no
substitution of parties following the death of Bertuldo, the trial court directed Atty. Petalcorin to
comply with the provisions of Section 16, Rule 3 of the Rules of Court. The trial court also reiterated
that the Order dated March 22, 1999 reinstating the case was not assailed by petitioners within the
reglementary period, despite receipt thereof on March 26, 1999.25

On November 19, 1999, Atty. Petalcorin complied with the directive of the trial court to submit the
names and addresses of the heirs of Bertuldo.26

On November 24, 1999, petitioners filed before us the present petition for certiorari and
prohibition.27 They allege that the public respondent committed grave abuse of discretion in allowing
the case to be reinstated after private respondents paid the docket fee deficiency since the trial court
had earlier expunged the complaint from the record and nullified all proceedings of the case and
such ruling was not contested by the private respondents. Moreover, they argue that the public
respondent committed grave abuse of discretion in allowing the case to be filed and denying the
manifestation with motion to dismiss, despite the defect in the complaint which prayed for damages
without specifying the amounts, in violation of SC Circular No. 7, dated March 24, 1988.

In their Comment, private respondents aver that no grave abuse of discretion was committed by the
trial court in reinstating the complaint upon the payment of deficiency docket fees because
petitioners did not object thereto within the reglementary period. Besides, Atty. Petalcorin possessed
no legal personality to appear as counsel for the heirs of Bertuldo until he complies with Section 16,
Rule 3 of the Rules of Court.28

At the outset, we note the procedural error committed by petitioners in directly filing the instant
petition before this Court for it violates the established policy of strict observance of the judicial
hierarchy of courts.

Although the Supreme Court, Court of Appeals and the Regional Trial Courts have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court
forum.29 As we stated in People vs. Cuaresma:30

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court
with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not,
however, to be taken as according to parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor will be directed. There is after all a
hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a
general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s
original jurisdiction to issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a
policy necessary to prevent inordinate demands upon the Court’s time and attention which are better
devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Court’s docket.31

The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this
Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the
adjudication of cases, which in some instances had to be remanded or referred to the lower court as
the proper forum under the rules of procedure, or as better equipped to resolve the issues because
this Court is not a trier of facts.32

Thus, this Court will not entertain direct resort to it unless the redress desired cannot be obtained in
the appropriate courts, and exceptional and compelling circumstances, such as cases of national
interest and of serious implications, justify the availment of the extraordinary remedy of writ
of certiorari, calling for the exercise of its primary jurisdiction. Exceptional and compelling
circumstances were held present in the following cases: (a) Chavez vs. Romulo33 on citizens’ right to
bear arms; (b) Government of the United States of America vs. Purganan34 on bail in extradition
proceedings; (c) Commission on Elections vs. Quijano-Padilla35 on government contract involving
modernization and computerization of voters’ registration list; (d) Buklod ng Kawaning EIIB vs.
Zamora36 on status and existence of a public office; and (e) Fortich vs. Corona37 on the so-called "Win-
Win Resolution" of the Office of the President which modified the approval of the conversion to agro-
industrial area.

In this case, no special and important reason or exceptional and compelling circumstance analogous
to any of the above cases has been adduced by the petitioners so as to justify direct recourse to this
Court. The present petition should have been initially filed in the Court of Appeals in strict
observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the
dismissal of the petition at bar.

In any event, even if the Court disregards such procedural flaw, the petitioners’ contentions on the
substantive aspect of the case fail to invite judgment in their favor.

The unavailability of the writ of certiorari and prohibition in this case is borne out of the fact that
petitioners principally assail the Order dated March 22, 1999 which they never sought
reconsideration of, in due time, despite receipt thereof on March 26, 1999. Instead, petitioners went
through the motion of filing a supplemental pleading and only when the latter was denied, or after
more than three months have passed, did they raise the issue that the complaint should not have
been reinstated in the first place because the trial court had no jurisdiction to do so, having already
ruled that the complaint shall be expunged.

After recognizing the jurisdiction of the trial court by seeking affirmative relief in their motion to serve
supplemental pleading upon private respondents, petitioners are effectively barred by estoppel from
challenging the trial court’s jurisdiction.38 If a party invokes the jurisdiction of a court, he cannot
thereafter challenge the court’s jurisdiction in the same case.39 To rule otherwise would amount to
speculating on the fortune of litigation, which is against the policy of the Court.40
Nevertheless, there is a need to correct the erroneous impression of the trial court as well as the
private respondents that petitioners are barred from assailing the Order dated March 22, 1999 which
reinstated the case because it was not objected to within the reglementary period or even thereafter
via a motion for reconsideration despite receipt thereof on March 26, 1999.

It must be clarified that the said order is but a resolution on an incidental matter which does not
touch on the merits of the case or put an end to the proceedings.41 It is an interlocutory order since
there leaves something else to be done by the trial court with respect to the merits of the case.42 As
such, it is not subject to a reglementary period. Reglementary period refers to the period set by the
rules for appeal or further review of a final judgment or order, i.e., one that ends the litigation in the
trial court.

Moreover, the remedy against an interlocutory order is generally not to resort forthwith to certiorari,
but to continue with the case in due course and, when an unfavorable verdict is handed down, to
take an appeal in the manner authorized by law.43 Only when the court issued such order without or
in excess of jurisdiction or with grave abuse of discretion and when the assailed interlocutory order is
patently erroneous and the remedy of appeal would not afford adequate and expeditious relief
will certiorari be considered an appropriate remedy to assail an interlocutory order.44Such special
circumstances are absolutely wanting in the present case.

Time and again, the Court has held that the Manchester rule has been modified in Sun Insurance
Office, Ltd. (SIOL) vs. Asuncion45 which defined the following guidelines involving the payment of
docket fees:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the
prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the
action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee,
the court may allow payment of the fees within a reasonable time but in no case beyond the
applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which
shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may
also allow payment of said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and
payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in
the pleading, or if specified the same has been left for determination by the court, the additional filing
fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court
or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its non-
payment at the time of filing does not automatically cause the dismissal of the case, as long as the
fee is paid within the applicable prescriptive or reglementary period, more so when the party involved
demonstrates a willingness to abide by the rules prescribing such payment.46 Thus, when insufficient
filing fees were initially paid by the plaintiffs and there was no intention to defraud the government,
the Manchester rule does not apply.47

Under the peculiar circumstances of this case, the reinstatement of the complaint was just and
proper considering that the cause of action of private respondents, being a real action, prescribes in
thirty years,48 and private respondents did not really intend to evade the payment of the prescribed
docket fee but simply contend that they could not be faulted for inadequate assessment because the
clerk of court made no notice of demand or reassessment.49 They were in good faith and simply relied
on the assessment of the clerk of court.

Furthermore, the fact that private respondents prayed for payment of damages "in amounts justified
by the evidence" does not call for the dismissal of the complaint for violation of SC Circular No. 7,
dated March 24, 1988 which required that all complaints must specify the amount of damages
sought not only in the body of the pleadings but also in the prayer in order to be accepted and
admitted for filing. Sun Insurance effectively modified SC Circular No. 7 by providing that filing fees
for damages and awards that cannot be estimated constitute liens on the awards finally granted by
the trial court.50

Thus, while the docket fees were based only on the real property valuation, the trial court acquired
jurisdiction over the action, and judgment awards which were left for determination by the court or as
may be proven during trial would still be subject to additional filing fees which shall constitute a lien
on the judgment. It would then be the responsibility of the Clerk of Court of the trial court or his duly
authorized deputy to enforce said lien and assess and collect the additional fees.51

It is worth noting that when Bertuldo filed his Answer on July 2, 1991, he did not raise the issue of
lack of jurisdiction for non-payment of correct docket fees. Instead, he based his defense on a claim
of ownership and participated in the proceedings before the trial court. It was only in September 22,
1998 or more than seven years after filing the answer, and under the auspices of a new counsel,
that the issue of jurisdiction was raised for the first time in the motion to expunge by Bertuldo’s heirs.

After Bertuldo vigorously participated in all stages of the case before the trial court and even invoked
the trial court’s authority in order to ask for affirmative relief, petitioners, considering that they merely
stepped into the shoes of their predecessor, are effectively barred by estoppel from challenging the
trial court’s jurisdiction. Although the issue of jurisdiction may be raised at any stage of the
proceedings as the same is conferred by law, it is nonetheless settled that a party may be barred
from raising it on ground of laches or estoppel.52

Moreover, no formal substitution of the parties was effected within thirty days from date of death of
Bertuldo, as required by Section 16, Rule 353 of the Rules of Court. Needless to stress, the purpose
behind the rule on substitution is the protection of the right of every party to due process. It is to
ensure that the deceased party would continue to be properly represented in the suit through the
duly appointed legal representative of his estate.54 Non-compliance with the rule on substitution would
render the proceedings and judgment of the trial court infirm because the court acquires no
jurisdiction over the persons of the legal representatives or of the heirs on whom the trial and the
judgment would be binding.55 Thus, proper substitution of heirs must be effected for the trial court to
acquire jurisdiction over their persons and to obviate any future claim by any heir that he was not
apprised of the litigation against Bertuldo or that he did not authorize Atty. Petalcorin to represent
him.

The list of names and addresses of the heirs was submitted sixteen months after the death of
Bertuldo and only when the trial court directed Atty. Petalcorin to comply with the provisions of
Section 16, Rule 3 of the Rules of Court. Strictly speaking therefore, before said compliance, Atty.
Petalcorin had no standing in the court a quo when he filed his pleadings. Be that as it may, the
matter has been duly corrected by the Order of the trial court dated October 15, 1999.

To be sure, certiorari under Rule 6556 is a remedy narrow in scope and inflexible in character. It is not
a general utility tool in the legal workshop.57 It offers only a limited form of review. Its principal function
is to keep an inferior tribunal within its jurisdiction.58 It can be invoked only for an error of jurisdiction,
that is, one where the act complained of was issued by the court, officer or a quasi-judicial body
without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in
excess of jurisdiction,59 not to be used for any other purpose,60 such as to cure errors in proceedings
or to correct erroneous conclusions of law or fact.61 A contrary rule would lead to confusion, and
seriously hamper the administration of justice.

Petitioners utterly failed to show that the trial court gravely abused its discretion in issuing the
assailed resolutions. On the contrary, it acted prudently, in accordance with law and jurisprudence.

WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit.