[G.R. NO. 143736 : August 11, 2004] December 8, 1992 79,025.

50

OFELIA HERRERA-FELIX, Represented by JOVITA HERRERA-SEÑA, Petitioner, v. COURT December 9, 1992 275,190.00
OF APPEALS, and ST. JOSEPH RESOURCES DEVELOPMENT, INC., Respondents.
December 11, 1992 102,840.00
RESOLUTION
December 12, 1992 78,300.00
CALLEJO, SR., J.:
December 13, 1992 108,692.00
This is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals which
dismissed the petition to annul the Decision2 of the Regional Trial Court of Malabon, Metro December 14, 1992 32,379.50
Manila, Branch 73, in Civil Case No. 1967, on the ground of lack of jurisdiction over the person
of herein petitioner Ofelia Herrera-Felix.
Total . . . . . P 1,516,181.00
The Antecedents It was also alleged that the Felix Spouses still had an outstanding obligation amounting
to P1,132,065.50, after deducting their total payment of P438,615.50 from their aggregate
On March 11, 1993, respondent St. Joseph Resource Development, Inc. filed a complaint for purchases. The respondent prayed that, after due proceedings, judgment be rendered in its
sum of money against the Spouses Restituto and Ofelia Felix with a prayer for a writ of favor, thus:
preliminary attachment. It was alleged therein that, during the period from November 16, 1992
to December 14, 1992, the Felix Spouses purchased from the respondent tubs of assorted fish, WHEREFORE, it is respectfully prayed that judgment be rendered in favor of plaintiff and against
as follows: defendants, ordering the latter to pay the former the following:

Date of Purchase Amount of Fish Purchased 1. P1,132,065.50, representing their unpaid obligation, including unpaid tubs, plus legal interest
from the date of filing of the complaint;
November 16, 1992 P 183,360.00
2. Attorney's fees equivalent to 25% of the foregoing amount; andcralawlibrary
November 17, 1992 114,380.00
3. Costs of suit.
November 19, 1992 56,014.00
Plaintiff likewise prays that a writ of preliminary attachment be issued ex parte against the
November 20, 1992 183,400.00 properties of defendants as security for the satisfaction of any judgment that may be recovered.

December 2, 1992 70,000.00 Other just and equitable relief is also prayed for.3

December 3, 1992 159,100.00 The case was docketed as Civil Case No. 1967.

December 5, 1992 73,500.00 The trial court granted the respondent's prayer for a writ of preliminary attachment on a bond
of P1,132,065.50 which was posted on March 26, 1993. The Sheriff levied and took custody of
some of the personal properties of the Felix Spouses. On March 26, 1993, a copy of the writ of
preliminary attachment, summons and complaint were served on them at their residence,
through the sister of Ofelia Herrera-Felix, Ma. Luisa Herrera.4 According to the Sheriff's Return,
Ofelia Herrera-Felix was out of the country, as per the information relayed to him by Ma. Luisa
Herrera. On April 5, 1993, the Felix Spouses, through Atty. Celestino C. Juan, filed a motion
praying for an extension of time to file their answer to the complaint.5 On April 6, 1993, the trial
court issued an Order granting the motion. However, the Felix Spouses failed to file their answer
to the complaint. The respondent then filed a Motion dated April 23, 1993 to declare the said
spouses in default,6 which motion was granted by the court in its Resolution7 dated May 13,
1993. A copy of the said resolution was sent to and received by the counsel of the Felix Spouses
through registered mail.
On August 11, 1993, the court a quo rendered a decision in favor of the respondent, the decretal
portion of which reads:
WHEREFORE, judgment is hereby rendered ordering:
1. The defendants to pay, jointly and severally, the plaintiffs the amount of ONE MILLION
SEVENTY-SEVEN THOUSAND FIVE HUNDRED SIXTY-FIVE PESOS AND FIFTY
CENTAVOS (P1,077,565.50) plus legal rate of interest from the date of the filing of the
complaint;
2. The defendants to pay, jointly and severally, the amount of TWENTY-FIVE THOUSAND
PESOS (P25,000.00) - as/for reasonable Attorney's fees;
3. The defendants to pay the costs of this suit.
SO ORDERED. 8
Copies of the said decision were mailed to the Felix Spouses and their counsel, Atty. Celestino
C. Juan, by registered mail. The copy of the decision addressed to the spouses was returned to
the court after two notices for having been "Unclaimed." However, then counsel for the Felix
Spouses received his copy of the decision.
The decision of the trial court became final and executory after the Felix Spouses failed to appeal
the same. The respondent filed a motion for a writ of execution. A copy thereof was served on
the said spouses by registered mail, but they failed to oppose the motion. The court thereafter
issued an order granting the motion and directing the issuance of a writ of execution. The counsel
for the Felix Spouses received a copy of the said order. Thereafter, the following personal
properties of the latter were levied upon and sold by the sheriff at public auction for P83,200.00
to the respondent as the winning bidder:
(1) unit Jeep-semi stainless
(1) unit Jeep-stainless
(1) Victor-Radio/TV/Cassette Recorder
(1) Sony "17" TV w/ remote control
(1) Kawai Electric Organ
(3) Hitachi Stand Fan
(1) Standard Desk Fan
(1) 6 pieces Sala Set.9
On August 14, 1995, the Sheriff executed a Certificate of Sale of personal properties.10
On September 13, 1996, petitioner Ofelia Herrera-Felix, represented by another sister, Jovita
Herrera-Seña, filed a petition with the Court of Appeals under Rule 47 of the Rules of Court for
the nullification of the trial court's judgment by default, the writ of execution issued by the said
court, and the sale of her properties at public auction. The petitioner alleged, inter alia, that the
complaint and summons were handed over to her sister, Ma. Luisa Herrera, who was merely a
visitor in her house and, as such, was not a valid substituted service under Rule 14, Section 7
of the Rules of Court. She also alleged that her husband Restituto Felix had died as early as
April 23, 1988, as evidenced by his Certificate of Death.11
In its comment on the petition, the respondent alleged that the substituted service of the
complaint and summons on the petitioner, who was then temporarily outside the Philippines,
through her sister Ma. Luisa Herrera, was valid and effective. The respondent, likewise, averred
that even if such substituted service on the petitioner was defective, the defect was cured when
the latter, through her counsel, Atty. Celestino C. Juan, appeared in court and moved for an
extension of time to file her responsive pleading. The respondent also maintained that the
petitioner and her counsel were served with copies of the decision of the court a quo, but that
the petitioner failed to appeal the decision.
In her reply to the comment of the respondent, the petitioner alleged that since she failed to file
a responsive pleading to the complaint, the appearance of Atty. Celestino C. Juan, as her
counsel, did not constitute as a voluntary submission to the jurisdiction of the court.
On June 7, 2000, the CA rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, finding that the court a quo validly acquired jurisdiction
over the action and absent any ground warranting the annulment of its judgment, this petition is
hereby DISMISSED for lack of merit
SO ORDERED. 12
The petitioner, through her sister, Jovita Herrera-Seña, now comes to this Court via a Petition
for Review on Certiorari praying for the reversal of the decision of the Court of Appeals. She
alleges that the trial court did not acquire jurisdiction over her person through the service of the
complaint and summons on her sister, Ma. Luisa Herrera. She maintains that the latter was a
mere visitor in her house, not a resident therein; hence, the decision of the trial court is null and
void. She further alleges that even assuming the validity of the trial court's decision, such
decision never became final and executory since she was not served a copy of the same. As
such, the writ of execution issued by the trial court, the sale of her personal properties at public
auction, as well as the issuance of the Certificate of Sale, are null and void. She asserts that the
actuations of both the trial court and the Sheriff deprived her of her right to due process.
The contentions of the petitioner have no merit.
The court acquires jurisdiction over the person of the defendant by service of the complaint and
summons on him, either by personal service or by substituted service or by extra-territorial
service thereof or by his voluntary personal appearance before the court or through counsel. In
this case, the petitioner appeared before the court, through counsel, and filed a motion for
extension of time to file her answer to the complaint which the trial court granted. She even
admitted in the said motion that she was served with a copy of the complaint as well as the
summons. The admissions made in a motion are judicial admissions which are binding on the
party who made them. Such party is precluded from denying the same unless there is proof of
palpable mistake or that no such admission was made.13
Equally barren of factual basis is the claim of the petitioner that she was not served with a copy
of the decision of the trial court. The records show that aside from the copy of the decision sent
to her by the Branch Clerk of Court by registered mail, another copy of the decision was served
on her through her counsel, Atty. Celestino C. Juan, who received the same. The service of the
decision on the petitioner, through counsel, is binding on her, conformably to Rule 13, Section 2
of the Rules of Court.16
We reject the petitioner's plaint of having been deprived of her right to due process.
The essence of due process is a reasonable opportunity to be heard and submit evidence in
support of one's defense. What the law proscribes, therefore, is the lack of opportunity to be
heard.17 A party who opts not to avail of the opportunity to answer cannot complain of procedural
due process. There can be no denial of due process where a party had the opportunity to
participate in the proceedings but failed to do so through his own fault.
WHEREFORE, the petition is DENIED DUE COURSE. The assailed decision of the Court of
Appeals dated June 7, 2000 is hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.

By filing the said motion, through counsel, the petitioner thereby submitted herself to the
jurisdiction of the trial court. Indeed, in Busuego v. Court of Appeals,14 we ruled that:

A voluntary appearance is a waiver of the necessity of a formal notice. An appearance in

whatever form, without explicitly objecting to the jurisdiction of the court over the person, is a
submission to the jurisdiction of the court over the person. While the formal method of entering
an appearance in a cause pending in the courts is to deliver to the clerk a written direction
ordering him to enter the appearance of the person who subscribes it, an appearance may be
made by simply filing a formal motion, or plea or answer. This formal method of appearance is
not necessary. He may appear without such formal appearance and thus submit himself to the
jurisdiction of the court. He may appear by presenting a motion, for example, and unless by such
appearance he specifically objects to the jurisdiction of the court, he thereby gives his assent to
the jurisdiction of the court over his person. When the appearance is by motion objecting to the
jurisdiction of the court over his person, it must be for the sole and separate purpose of objecting
to the jurisdiction of the court. If his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits himself to the jurisdiction of the
court. 15
G.R. No. 190107 June 6, 2011
JAPRL DEVELOPMENT CORP., PETER RAFAEL C. LIMSON and JOSE
AROLLADO, Petitioners,
vs.
SECURITY BANK CORPORATION, Respondent.
DECISION
CARPIO MORALES, J.,
JAPRL Development Corporation (JAPRL), a domestic corporation engaged in fabrication,
manufacture and distribution of steel products, applied for a credit facility (Letter of Credit/Trust
Receipt) in the amount of Fifty Million (₱50,000,000) Pesos with Security Bank Corporation
(SBC). The application was approved and the Credit Agreement took effect on July 15, 1996.1
On November 5, 2001, petitioners Peter Rafael C. Limson (Limson) and Jose Uy Arollado
(Arollado), JAPRL Chairman and President, respectively, executed a Continuing Suretyship
Agreement (CSA)2 in favor of SBC wherein they guaranteed the due and full payment and
performance of JAPRL’s guaranteed obligations under the credit facility.3
In 2002, on JAPRL’s proposal, SBC extended the period of settlement of his obligations.
In 2003, JAPRL’s financial adviser, MRM Management Incorporated (MRM), convened JAPRL’s
creditors, SBC included, for the purpose of restructuring JAPRL’s existing loan obligations.
Copies of JAPRL’s financial statements from 1998 to 2001 were given for the creditors to study.
SBC soon discovered material inconsistencies in the financial statements given by MRM vis-à-
vis those submitted by JAPRL when it applied for a credit facility, drawing SBC to conclude that
JAPRL committed misrepresentation.
As paragraph 10 (c) of the Credit Agreement4 provided, if "any representation or warranty,
covenant or undertaking embodied [therein] and [in] the Credit Instrument or in any certificate,
statement or document submitted to SBC turns out to be untrue or ceases to be true in any
material respect, or is violated or not complied with," such will constitute an event of default
committed by JAPRL and its sureties.
On the basis of Item 2 of the CSA,5
SBC sent a formal letter of demand6
dated August 20, 2003
to petitioners JAPRL, Limson and Arollado for the immediate payment of Forty Three Million
Nine Hundred Twenty Six Thousand and Twenty One Pesos and 41/100 (₱43,926,021.41)
representing JAPRL’s outstanding obligations.
UY
Petitioners failed to comply with SBC’s demand, hence, SBC filed on September 1, 2003 a
complaint for sum of money with application for issuance of writ of preliminary
attachment7 before the Regional Trial Court (RTC) of Makati City against JAPRL, Limson and
Arollado.
During the hearing on the prayer for the issuance of writ of preliminary attachment on September
16, 2003, SBC’s counsel manifested that it received a copy of a Stay Order dated September 8,
2003 issued by the RTC of Quezon City, Branch 90 wherein JAPRL’s petition for rehabilitation
was lodged. The Makati RTC at once ordered in open court the archiving of SBC’s complaint for
sum of money until disposition by the Quezon City RTC of JAPRL’s petition for rehabilitation.8
When the Makati RTC reduced to writing its open court Order of September 16, 2003, however,
it instead declared the dismissal of SBC’s complaint without prejudice:
When this case was called for hearing, plaintiff’s counsel manifested that they received a Stay
Order from Regional Trial Court, Br. 190, Quezon City, relative to the approval of the
Rehabilitation Plan filed by defendant JAPRL Dev. Corp. and in view thereof he prayed that the
present case be archived instead. However, the Court is of the view to have the case dismissed
without prejudice so that a disposition be made on the case.
WHEREFORE, let the present case be ordered DISMISSED without prejudice to a refiling or
having a claim filed with the appropriate forum.
SO ORDERED.9 (underscoring supplied)
On SBC’s motion for reconsideration, however, the Makati RTC, by Order of January 9,
2004,10 reverted to its oral order of archiving SBC’s complaint.
SBC moved to clarify the Makati RTC January 9, 2004 Order, positing that the suspension of the
proceedings should only be with respect to JAPRL but not with respect to Limson and
Arollado.11 The Makati RTC, by Order of February 25, 2004, mantained its order archiving the
complaint against all petitioners herein, however.
SBC filed a motion for reconsideration12 of the February 25, 2004 Order, to which Limson and
Arollado separately filed an "Opposition (Ad Cautelam)"13 wherein they claimed that summons
were not served on them, hence, the Makati RTC failed to acquire jurisdiction over their person.
At any rate, they raised defenses against SBC’s claim that they acted as sureties of JAPRL.
Meanwhile, the proposed rehabilitation plan before the Quezon City RTC was disapproved by
Order of May 9, 2005.14 On SBC’s motion, the Makati RTC thus reinstated SBC’s complaint to
its docket, by Order of February 27, 2006.15
Petitioners later filed before the Makati RTC a Manifestation (Ad Cautelam)16 informing that a
Stay Order dated March 13, 200617 was issued, this time by the Calamba RTC, Branch 34, in a
new petition for rehabilitation filed by JAPRL and its subsidiary, RAPID Forming Corporation,
and praying for the archiving of SBC’s complaint.
By Order of June 30, 2006,18 the Makati RTC again archived SBC’s complaint against
petitioners. SBC, by Consolidated Motion, moved for the reconsideration of the June 30, 2006
Order, averring that its complaint should not have been archived with respect to sureties Limson
and Arollado; and that since the two failed to file their respective Answers within the reglementary
period, they should be declared in default.
The Makati RTC denied, by Order of October 2, 2006,19 the Consolidated Motion of SBC,
prompting SBC to file a petition for certiorari before the Court of Appeals.
By Decision of September 25, 2008,20 the appellate court held that Limson and Arollado
voluntarily submitted themselves to the jurisdiction of the Makati RTC, despite the qualification
that the filing of their respective "Opposition[s] Ad Cautelam" and "Manifestation[s] Ad
Cautelam," was "by way of special appearance" they having sought affirmative relief by praying
for the archiving of SBC’s complaint.
The Manifestations and Oppositions filed by the individual private respondents to the court a quo
have the purpose of asking the court to archive the case until the final resolution of either the
Petition for Rehabilitation filed by private respondent corporation JAPRL in Quezon City or the
subsisting Petition for Rehabilitation filed in Calamba City, Laguna. Clearly, the purpose of those
pleadings is to seek for affirmative relief, (i.e. Suspending the proceedings in Civil Case No. 03-
1036) from the said court. By those pleadings asking for affirmative relief, the individual private
respondents had voluntarily appeared in court. As expressly stated in Rule 14, Section 20, of
the Rules of Court, the defendant’s voluntary appearance in the action shall be equivalent to
service of summons. It is well settled that any form of appearance in court, by the defendant, by
his agent authorized to do so, or by attorney, is equivalent to service except where such
appearance is precisely to object to the jurisdiction of the court over the person of the defendant.
x x x 21 (italics in the original; underscoring supplied)
To the appellate court, SBC’s claim against Limson and Arollado in their capacity as sureties
could proceed independently of JAPRL’s petition for rehabilitation:
x x x [T]he property of the surety cannot be taken into custody by the rehabilitation
receiver (SEC) and said surety can be sued separately to enforce his liability as surety for the
debts or obligations of the debtor. The debts or obligations for which a surety may be liable
include future debts, an amount which may not be known at the time the surety is given.1âwphi1
Aside from that, it is specifically stated under Rule 4, Section 6 (b) of the Interim Rules of
Procedure on Corporate Rehabilitation, that the issuance of a Stay order will have an effect of:
(b) staying enforcement of all claims whether for money or otherwise and whether such
enforcement is by court action otherwise, against the debtor, its guarantors and sureties not
solidarily liable with the debtor.22 (emphasis and italics in the original; underscoring supplied)
The appellate court denied petitioners’ motion for reconsideration by Resolution of October 29,
2009,23 hence, the present petition for review on certiorari.24
The petition fails.
A reading of the separate Oppositions Ad Cautelam by Limson and Arollado to SBC’s Motion for
Reconsideration25 shows that they did not challenge the trial court’s jurisdiction. Albeit both
pleadings contained prefatory statements that the two did not receive summons, they pleaded
defenses in their favor, viz:
Limson’s Opposition Ad Cautelam
6. First of all, there is no gainsaying that herein defendant LIMSON as well as defendant
AROLLADO are being sued in their alleged capacities as SURETIES, with defendant JAPRL
being the DEBTOR. As SURETIES, they are covered by the Stay Order issued by the court
hearing the petition for corporate rehabilitation filed by Rapid Forming Corp. and defendant
JAPRL. The Stay Order directed, among others, the stay of enforcement of " ALL CLAIMS,
WHETHER FOR MONEY OR OTHERWISE, AND WHETHER SUCH ENFORCEMENT IS BY
COURT ACTION OR OTHERWISE, against the petitioner/s, and its/their guarantors and
SURETIES not solidarily liable with petitioner/s",26 x x x (all caps in the original)
Arollado’s Opposition (Ad Cautelam)
11. Certainly, the plaintiff cannot unjustly enrich itself and be allowed to recover from both the
DEBTOR JAPRL in accordance with the rehabilitation plan, and at the same time from the
alleged SURETIES LIMSON and AROLLADO through the present complaint.
12. Moreover, defendant AROLLADO, as surety, can set up against the plaintiff all the defenses
which pertain to the principal DEBTOR JAPRL and even those defenses that are inherent in the
debt. Likewise, defendant AROLLADO would, in any case, have a right of action for
reimbursement against JAPRL, the principal DEBTOR. Additionally, defendant AROLLADO is
given the right, under Article 1222 of the New Civil Code, to avail himself of all the
defenses which are derived from the nature of the obligation. Since the plaintiff, and even
defendants LIMSON and AROLLADO, are temporarily barred from enforcing a claim against
JAPRL, there is, therefore, every reason to suspend the proceedings against defendants
LIMSON and AROLLADO while the complaint is archived and cannot be prosecuted against the
DEBTOR JAPRL.27 (capitalization and emphasis in the original; underscoring supplied)
When a defendant’s appearance is made precisely to object to the jurisdiction of the court over
his person, it cannot be considered as appearance in court.28 Limson and Arollado glossed over
the alleged lack of service of summons, however, and proceeded to exhaustively discuss why
SBC’s complaint could not prosper against them as sureties. They thereby voluntarily submitted
themselves to the jurisdiction of the Makati RTC .
those which may subsequently be directed against the others, so long as the debt has not been
fully collected. (underscoring supplied)1âwphi1
IN FINE, SBC can pursue its claim against Limson and Arollado despite the pendency of
JAPRL’s petition for rehabilitation. For, by the CSA in favor of SBC, it is the obligation of the
sureties, who are therein stated to be solidary with JAPRL, to see to it that JAPRL’s debt is fully
paid.31
Finally, contrary to petitioners’ position, the appellate court’s decision only nullified the
suspension of proceedings against Limson and Arollado.32 The suspension with respect to
JAPRL remains, in line with Philippine Blooming Mills v. Court of Appeals.33
WHEREFORE, the petition is DENIED.
SO ORDERED.

On a trial court’s suspension of proceedings against a surety of a corporation in the process of

rehabilitation, Banco de Oro-EPCI, Inc. v. JAPRL Development Corporation29 holds that a
creditor can demand payment from the surety solidarily liable with the corporation seeking
rehabilitation, it being not included in the list of stayed claims:

Indeed, Section 6(b) of the Interim Rules of Procedure of Corporate Rehabilitation which the
appellate court cited in the earlier-quoted portion of its decision, provides that a stay order does
not apply to sureties who are solidarily liable with the debtor. In Limson and Arollado’s case,
their solidary liability with JAPRL is documented.

3. Liability of the Surety – The liability of the Surety is solidary and not contingent upon the
pursuit by the Bank of whatever remedies it may have against the Debtor or the collaterals/liens
it may possess. If any of the Guaranteed Obligation is not paid or performed on due date (at
stated maturity or by acceleration), the Surety shall, without need for any notice, demand or any
other act or deed, immediately become liable therefor and the Surety shall pay and perform the
same. 30 (emphasis and underscoring supplied)

Limson and Arollado, as sureties, whose liability is solidary cannot, therefore, claim protection
from the rehabilitation court, they not being the financially-distressed corporation that may be
restored, not to mention that the rehabilitation court has no jurisdiction over them. Article 1216
of the Civil Code clearly is not on their side:

ART. 1216. The creditor may proceed against any one of the solidary debtors or some or all of
them simultaneously. The demand made against any one of them shall not be an obstacle to
G.R. No. 184197 February 11, 2010
RAPID CITY REALTY AND DEVELOPMENT CORPORATION, Petitioner,
vs.
ORLANDO VILLA and LOURDES PAEZ-VILLA,1 Respondents.
DECISION
CARPIO MORALES, J.:
Sometime in 2004, Rapid City Realty and Development Corporation (petitioner) filed a complaint
for declaration of nullity of subdivision plans . . . mandamus and damages against several
defendants including Spouses Orlando and Lourdes Villa (respondents). The complaint, which
was docketed at the Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was lodged
at Branch 71 thereof.
After one failed attempt at personal service of summons, Gregorio Zapanta (Zapanta), court
process server, resorted to substituted service by serving summons upon respondents’
househelp who did not acknowledge receipt thereof and refused to divulge their names. Thus
Zapanta stated in the Return of Summons:
THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused the service of
summons together with a copy of the complaint with its annexes to defendant Spouses Lourdes
Estudillo Paez-Cline and Orlando Villa at their given address at 905 Padre Faura Street, Ermita
Manila, as per information given by two lady househelps who are also residing at the said
address, the defendant spouses are not around at that time. On the 27th of September, 2004, I
returned to the same place to serve the summons. I served the summons and the copy of the
complaint with its annexes to the two ladies (The same lady househelp I met on Sept. 24, 2004)
but they refused to sign to acknowledge receipt and they refused to tell their name as per
instruction of the defendants. With me who can attest to the said incident is Mr. Jun Llanes, who
was with me at that time.2 x x x (emphasis and underscoring supplied)
Despite substituted service, respondents failed to file their Answer, prompting petitioner to file a
"Motion to Declare Defendants[-herein respondents] in Default" which the trial court granted by
Order of May 3, 2005.
More than eight months thereafter or on January 30, 2006, respondents filed a Motion to Lift
Order of Default,3 claiming that on January 27, 2006 they "officially received all pertinent
papers such as Complaint and Annexes. Motion to Dismiss of the Solicitor General and the
ORDER dated May 3, 2005 granting the Motion to Declare [them] in Default." And they denied
the existence of two women helpers who allegedly refused to sign and acknowledge receipt of
the summons. In any event, they contended that assuming that the allegation were true, the
helpers had no authority to receive the documents.4
By Order of July 17, 2006, the trial court set aside the Order of Default and gave herein
respondents five days to file their Answer. Respondents just the same did not file an Answer,
drawing petitioner to again file a Motion to declare them in default, which the trial court again
granted by Order of February 21, 2007.
On April 18, 2007, respondents filed an Omnibus Motion for reconsideration of the second order
declaring them in default and to vacate proceedings, this time claiming that the trial court did not
acquire jurisdiction over their persons due to invalid service of summons.
The trial court denied respondents’ Omnibus Motion by Order of May 22, 2007 and proceeded
to receive ex-parte evidence for petitioner.
Respondents, via certiorari, challenged the trial court’s February 21, 2007 and April 18, 2007
Orders before the Court of Appeals.
In the meantime, the trial court, by Decision of September 4, 2007, rendered judgment in favor
of petitioner.
By Decision of April 29, 2008,5 the appellate court annulled the trial court’s Orders declaring
respondents in default for the second time in this wise:
In assailing the orders of the trial court through their Motion to Lift… and later
their Omnibus Motion… the petitioners [herein-respondents] never raised any other defense in
avoidance of the respondents’ [herein petitioners] claim, and instead focused all their energies
on questioning the said court’s jurisdiction. The latter motion clearly stated prefatorily their
counsel’s reservation or "special appearance to question jurisdiction" over the persons of the
petitioners. "A party who makes a special appearance in court challenging the jurisdiction of said
court based on the ground of invalid service of summons is not deemed to have submitted
himself to the jurisdiction of the court."6 (citation omitted; italics, emphasis and underscoring
supplied)
Petitioner’s motion for reconsideration having been denied by the appellate court by Resolution
of August 12, 2008, it comes to the Court via petition for review on certiorari, arguing in the main
that respondents, in filing the first Motion to Lift the Order of Default, voluntarily submitted
themselves to the jurisdiction of the court.
The petition is impressed with merit.
It is settled that if there is no valid service of summons, the court can still acquire jurisdiction 6. Respondents must be afforded "Due process of Law" as enshrined in the New Constitution,
over the person of the defendant by virtue of the latter’s voluntary appearance. Thus Section 20 which is a basic right of every Filipino, since they were not furnished copies of pleadings by the
of Rule 14 of the Rules of Court provides: plaintiff and the Order dated May 3, 2005;
Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be x x x x9
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person shall not be deemed a voluntary appearance. and accordingly prayed as follows:

And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and Lolita Dy, et WHEREFORE, . . . it is most respectfully prayed . . . that the Order dated May 5, 2005 declaring
al. enlightens: [them] in default be LIFTED.10

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive Respondents did not, in said motion, allege that their filing thereof was a special appearance for
power of legal processes exerted over his person, or his voluntary appearance in court. As a the purpose only to question the jurisdiction over their persons. Clearly, they had acquiesced to
general proposition, one who seeks an affirmative relief is deemed to have submitted to the the jurisdiction of the court.
jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that the WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision of April 29,
filing of motions to admit answer, for additional time to file answer, for reconsideration of a default 2008 is REVERSED and SET ASIDE.
judgment, and to lift order of default with motion for reconsideration, is considered voluntary
submission to the court’s jurisdiction. This, however, is tempered by the concept of conditional Let the original records of Civil Case No. 04-7350 be remanded to the court of origin, Regional
appearance, such that a party who makes a special appearance to challenge, among others, Trial Court of Antipolo City, Branch 71.
the court’s jurisdiction over his person cannot be considered to have submitted to its authority.
SO ORDERED.
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must
be explicitly made, i.e., set forth in an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in
instances where a pleading or motion seeking affirmative relief is filed and submitted to the court
for resolution.7 (italics and underscoring supplied)
In their first Motion to Lift the Order of Default8 dated January 30, 2006, respondents alleged:

xxxx
4. In the case of respondents, there is no reason why they should not receive the Orders of this
Honorable Court since the subject of the case is their multi-million real estate property and
naturally they would not want to be declared in default or lose the same outright without the
benefit of a trial on the merits;
5. It would be the height of injustice if the respondents is [sic] denied the equal protection of the
laws[;]
G.R. No. 164703 May 4, 2010
ALLAN C. GO, doing business under the name and style "ACG Express Liner," Petitioner,
vs.
MORTIMER F. CORDERO, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164747
MORTIMER F. CORDERO, Petitioner,
vs.
ALLAN C. GO, doing business under the name and style "ACG Express Liner," FELIPE
M. LANDICHO and VINCENT D. TECSON, Respondents.
DECISION
VILLARAMA, JR., J.:
For review is the Decision1 dated March 16, 2004 as modified by the Resolution2 dated July 22,
2004 of the Court of Appeals (CA) in CA-G.R. CV No. 69113, which affirmed with modifications
the Decision3 dated May 31, 2000 of the Regional Trial Court (RTC) of Quezon City, Branch 85
in Civil Case No. 98-35332.
The factual antecedents:
Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation
(Pamana), ventured into the business of marketing inter-island passenger vessels. After
contacting various overseas fast ferry manufacturers from all over the world, he came to meet
Tony Robinson, an Australian national based in Brisbane, Australia, who is the Managing
Director of Aluminium Fast Ferries Australia (AFFA).
Between June and August 1997, Robinson signed documents appointing Cordero as the
exclusive distributor of AFFA catamaran and other fast ferry vessels in the Philippines. As such
exclusive distributor, Cordero offered for sale to prospective buyers the 25-meter Aluminium
Passenger catamaran known as the SEACAT 25.4
After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the
owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to
close a deal for the purchase of two (2) SEACAT 25 as evidenced by the Memorandum of
Agreement dated August 7, 1997.5 Accordingly, the parties executed Shipbuilding Contract No.
7825 for one (1) high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00.6 Per
agreement between Robinson and Cordero, the latter shall receive commissions totalling
US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel.7
Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1) occasion
even accompanied Go and his family and Landicho, to monitor the progress of the building of
the vessel. He shouldered all the expenses for airfare, food, hotel accommodations,
transportation and entertainment during these trips. He also spent for long distance telephone
calls to communicate regularly with Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing directly with Robinson when he was
informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second
catamaran engine from their company which provided the ship engine for the first SEACAT 25.
Padua told Cordero that Go instructed him to fax the requested quotation of the second engine
to the Park Royal Hotel in Brisbane where Go was then staying. Cordero tried to contact Go and
Landicho to confirm the matter but they were nowhere to be found, while Robinson refused to
answer his calls. Cordero immediately flew to Brisbane to clarify matters with Robinson, only to
find out that Go and Landicho were already there in Brisbane negotiating for the sale of the
second SEACAT 25. Despite repeated follow-up calls, no explanation was given by Robinson,
Go, Landicho and Tecson who even made Cordero believe there would be no further sale
between AFFA and ACG Express Liner.
In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing directly
with Robinson violated his exclusive distributorship and demanded that they respect the same,
without prejudice to legal action against him and Robinson should they fail to heed the
same.8 Cordero’s lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, also wrote ACG
Express Liner assailing the fraudulent actuations and misrepresentations committed by Go in
connivance with his lawyers (Landicho and Tecson) in breach of Cordero’s exclusive
distributorship appointment.9
Having been apprised of Cordero’s demand letter, Thyne & Macartney, the lawyer of AFFA and
Robinson, faxed a letter to ACCRA law firm asserting that the appointment of Cordero as AFFA’s
distributor was for the purpose of one (1) transaction only, that is, the purchase of a high-speed
catamaran vessel by ACG Express Liner in August 1997. The letter further stated that Cordero
was offered the exclusive distributorship, the terms of which were contained in a draft agreement
which Cordero allegedly failed to return to AFFA within a reasonable time, and which offer is
already being revoked by AFFA.10
As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified before
the trial court that on the same day, Landicho, acting on behalf of Go, talked to him over the
telephone and offered to amicably settle their dispute. Tecson and Landicho offered to convince
Go to honor his exclusive distributorship with AFFA and to purchase all vessels for ACG Express
Liner through him for the next three (3) years. In an effort to amicably settle the matter, Landicho,
acting in behalf of Go, set up a meeting with Cordero on June 29, 1998 between 9:30 p.m. to
10:30 p.m. at the Mactan Island Resort Hotel lobby. On said date, however, only Landicho and
Tecson came and no reason was given for Go’s absence. Tecson and Landicho proposed that
they will convince Go to pay him US$1,500,000.00 on the condition that they will get a cut of
20%. And so it was agreed between him, Landicho and Tecson that the latter would give him a
weekly status report and that the matter will be settled in three (3) to four (4) weeks and neither
party will file an action against each other until a final report on the proposed settlement. No
such report was made by either Tecson or Landicho who, it turned out, had no intention to do
so and were just buying time as the catamaran vessel was due to arrive from Australia. Cordero
then filed a complaint with the Bureau of Customs (BOC) to prohibit the entry of SEACAT 25
from Australia based on misdeclaration and undervaluation. Consequently, an Alert Order was
issued by Acting BOC Commissioner Nelson Tan for the vessel which in fact arrived on July 17,
1998. Cordero claimed that Go and Robinson had conspired to undervalue the vessel by around
US$500,000.00.11
On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go,
Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in violating
his exclusive distributorship in bad faith and wanton disregard of his rights, thus depriving him
of his due commissions (balance of unpaid commission from the sale of the first vessel in the
amount of US$31,522.01 and unpaid commission for the sale of the second vessel in the amount
of US$328,742.00) and causing him actual, moral and exemplary damages, including
₱800,000.00 representing expenses for airplane travel to Australia, telecommunications bills and
entertainment, on account of AFFA’s untimely cancellation of the exclusive distributorship
agreement. Cordero also prayed for the award of moral and exemplary damages, as well as
attorney’s fees and litigation expenses.12
Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure
to state a cause of action, asserting that there was no act committed in violation of the
distributorship agreement. Said motion was denied by the trial court on December 20, 1999.
Robinson was likewise declared in default for failure to file his answer within the period granted
by the trial court.13 As for Go and Tecson, their motion to dismiss based on failure to state a
cause of action was likewise denied by the trial court on February 26, 1999.14 Subsequently,
they filed their Answer denying that they have anything to do with the termination by AFFA of
Cordero’s authority as exclusive distributor in the Philippines. On the contrary, they averred it
was Cordero who stopped communicating with Go in connection with the purchase of the first
vessel from AFFA and was not doing his part in making progress status reports and airing the
client’s grievances to his principal, AFFA, such that Go engaged the services of Landicho to fly
to Australia and attend to the documents needed for shipment of the vessel to the Philippines.
As to the inquiry for the Philippine price for a Wartsila ship engine for AFFA’s other on-going
vessel construction, this was merely requested by Robinson but which Cordero misinterpreted
as indication that Go was buying a second vessel. Moreover, Landicho and Tecson had no
transaction whatsoever with Cordero who had no document to show any such shipbuilding
contract. As to the supposed meeting to settle their dispute, this was due to the malicious
demand of Cordero to be given US$3,000,000 as otherwise he will expose in the media the
alleged undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause
of action for his commission for the sale of the second vessel under the memorandum of
agreement dated August 7, 1997 considering the termination of his authority by AFFA’s lawyers
on June 26, 1998.15
Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on
motion filed by Cordero through counsel, the trial court reconsidered the resetting of the pre-trial
to another date for the third time as requested by Go, Tecson and Landicho, in view of the latter’s
failure to appear at the pre-trial conference on January 7, 2000 despite due notice. The trial court
further confirmed that said defendants misled the trial court in moving for continuance during the
pre-trial conference held on December 10, 1999, purportedly to go abroad for the holiday season
when in truth a Hold-Departure Order had been issued against them.16 Accordingly, plaintiff
Cordero was allowed to present his evidence ex parte.
Cordero’s testimony regarding his transaction with defendants Go, Landicho and Tecson, and
the latter’s offer of settlement, was corroborated by his counsel who also took the witness stand.
Further, documentary evidence including photographs taken of the June 29, 1998 meeting with
Landicho, Tecson and Atty. Tabujara at Shangri-la’s Mactan Island Resort, photographs taken
in Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various
documents, communications, vouchers and bank transmittals were presented to prove that: (1)
Cordero was properly authorized and actually transacted in behalf of AFFA as exclusive
distributor in the Philippines; (2) Cordero spent considerable sums of money in pursuance of the
contract with Go and ACG Express Liner; and (3) AFFA through Robinson paid Cordero his
commissions from each scheduled payment made by Go for the first SEACAT 25 purchased
from AFFA pursuant to Shipbuilding Contract No. 7825.17
On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads as
follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of Plaintiff and
against defendants Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent Tecson. As
prayed for, defendants are hereby ordered to pay Plaintiff jointly and solidarily, the following:
1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO HUNDRED NINETY
ONE THOUSAND THREE HUNDRED FIFTY TWO AND FORTY THREE CENTAVOS
(P16,291,352.43) as actual damages with legal interest from 25 June 1998 until fully paid;
2. On the Second Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as moral
damages;
3. On the Third Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
exemplary damages; and
4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as
attorney’s fees;
Costs against the defendants.
SO ORDERED.18
Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have been
unduly prejudiced by the negligence of their counsel who was allegedly unaware that the pre-
trial conference on January 28, 2000 did not push through for the reason that Cordero was then
allowed to present his evidence ex-parte, as he had assumed that the said ex-parte hearing was
being conducted only against Robinson who was earlier declared in default.19 In its Order dated
July 28, 2000, the trial court denied the motion for new trial.20 In the same order, Cordero’s
motion for execution pending appeal was granted. Defendants moved to reconsider the said
order insofar as it granted the motion for execution pending appeal.21 On August 8, 2000, they
filed a notice of appeal.22
On August 18, 2000, the trial court denied the motion for reconsideration and on August 21,
2000, the writ of execution pending appeal was issued.23 Meanwhile, the notice of appeal was
denied for failure to pay the appellate court docket fee within the prescribed period.24 Defendants
filed a motion for reconsideration and to transmit the case records to the CA.25
On September 29, 2000, the CA issued a temporary restraining order at the instance of
defendants in the certiorari case they filed with said court docketed as CA-G.R. SP No. 60354
questioning the execution orders issued by the trial court. Consequently, as requested by the
defendants, the trial court recalled and set aside its November 6, 2000 Order granting the ex-
parte motion for release of garnished funds, cancelled the scheduled public auction sale of levied
real properties, and denied the ex-parte Motion for Break-Open Order and Ex-Parte Motion for
Encashment of Check filed by Cordero.26 On November 29, 2000, the trial court reconsidered
its Order dated August 21, 2000 denying due course to the notice of appeal and forthwith
directed the transmittal of the records to the CA.27
On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R.
SP No. 60354 and setting aside the trial court’s orders of execution pending appeal. Cordero
appealed the said judgment in a petition for review filed with this Court which was eventually
denied under our Decision dated September 17, 2002.28
On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in allowing
Cordero to present his evidence ex-parte after the unjustified failure of appellants (Go, Tecson
and Landicho) to appear at the pre-trial conference despite due notice; (2) in finding that it was
Cordero and not Pamana who was appointed by AFFA as the exclusive distributor in the
Philippines of its SEACAT 25 and other fast ferry vessels, which is not limited to the sale of one
(1) such catamaran to Go on August 7, 1997; and (3) in finding that Cordero is entitled to a
commission per vessel sold for AFFA through his efforts in the amount equivalent to 22.43% of
the price of each vessel or US$328,742.00, and with payments of US$297,219.91 having been
made to Cordero, there remained a balance of US$31,522.09 still due to him. The CA sustained
the trial court in ruling that Cordero is entitled to damages for the breach of his exclusive
distributorship agreement with AFFA. However, it held that Cordero is entitled only to
commission for the sale of the first catamaran obtained through his efforts with the remaining
unpaid sum of US$31,522.09 or ₱1,355,449.90 (on the basis of US$1.00=₱43.00 rate) with
interest at 6% per annum from the time of the filing of the complaint until the same is fully paid.
As to the ₱800,000.00 representing expenses incurred by Cordero for transportation, phone
bills, entertainment, food and lodging, the CA declared there was no basis for such award, the
same being the logical and necessary consequences of the exclusive distributorship agreement
which are normal in the field of sales and distribution, and the expenditures having redounded
to the benefit of the distributor (Cordero).
On the amounts awarded by the trial court as moral and exemplary damages, as well as
attorney’s fees, the CA reduced the same to ₱500,000.00, ₱300,000.00 and ₱50,000.00,
respectively. Appellants were held solidarily liable pursuant to the provisions of Article 1207 in
relation to Articles 19, 20, 21 and 22 of the New Civil Code. The CA further ruled that no error
was committed by the trial court in denying their motion for new trial, which said court found to
be pro forma and did not raise any substantial matter as to warrant the conduct of another trial.
By Resolution dated July 22, 2004, the CA denied the motions for reconsideration respectively
filed by the appellants and appellee, and affirmed the Decision dated March 16, 2004 with the
sole modification that the legal interest of 6% per annum shall start to run from June 24, 1998
until the finality of the decision, and the rate of 12% interest per annum shall apply once the
decision becomes final and executory until the judgment has been satisfied.
The case before us is a consolidation of the petitions for review under Rule 45 separately filed
by Go (G.R. No. 164703) and Cordero (G.R. No. 164747) in which petitioners raised the following
arguments:
G.R. No. 164703
(Petitioner Go)
I. THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES OF COURT AND
PERTINENT JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION IN NOT
RULING THAT THE RESPONDENT IS NOT THE REAL PARTY-IN-INTEREST AND IN NOT
DISMISSING THE INSTANT CASE ON THE GROUND OF LACK OF CAUSE OF ACTION;
II. THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND JURISPRUDENCE
AND ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN PETITIONER
RESPONSIBLE FOR THE BREACH IN THE ALLEGED EXCLUSIVE DISTRIBUTORSHIP
AGREEMENT WITH ALUMINIUM FAST FERRIES AUSTRALIA;
III. THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER LIABLE IN SOLIDUM WITH THE
CO-DEFENDANTS WITH RESPECT TO THE CLAIMS OF RESPONDENT;
IV. THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND JURISPRUDENCE AND
GRAVELY ABUSED ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE FOR UNPAID
COMMISSIONS, DAMAGES, ATTORNEY’S FEES, AND LITIGATION EXPENSES; and
V. THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND
JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT EFFECTIVELY
DEPRIVED HEREIN PETITIONER OF HIS RIGHT TO DUE PROCESS BY AFFIRMING THE
LOWER COURT’S DENIAL OF PETITIONER’S MOTION FOR NEW TRIAL.29
G.R. No. 164747
(Petitioner Cordero)
I.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF THE TRIAL
COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS COMMISSION FOR THE
SALE OF THE SECOND VESSEL, SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD
WHICH PROVES THAT THERE WAS A SECOND SALE OF A VESSEL.
A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST 1997 PROVIDES THAT
RESPONDENT GO WAS CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS FROM
AFFA.
B. RESPONDENT GO’S POSITION PAPER AND COUNTER-AFFIDAVIT/POSITION PAPER
THAT WERE FILED BEFORE THE BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT
HE HAD INDEED PURCHASED A SECOND VESSEL FROM AFFA.
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY HAD PURCHASED
A SECOND VESSEL.
II.
THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO
HIS COMMISSIONS FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT WAS
PETITIONER’S EFFORTS WHICH ACTUALLY FACILITATED AND SET-UP THE
TRANSACTION FOR RESPONDENTS.
III.
THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL INTEREST
RATE ON RESPONDENTS’ UNPAID OBLIGATION WHICH SHOULD BE TWELVE PERCENT
(12%) FROM THE TIME OF THE BREACH OF THE OBLIGATION.
IV.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL AMOUNT OF
CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY THE TRIAL COURT
CONSIDERING THE BAD FAITH AND FRAUDULENT CONDUCT OF RESPONDENTS IN
MISAPPROPRIATING THE MONEY OF PETITIONER.30
The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the legal
personality to sue the respondents for breach of contract; and (2) whether the respondents may
be held liable for damages to Cordero for his unpaid commissions and termination of his
exclusive distributorship appointment by the principal, AFFA.
I. Real Party-in-Interest
First, on the issue of whether the case had been filed by the real party-in-interest as required by
Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes
of this provision are: 1) to prevent the prosecution of actions by persons without any right, title
or interest in the case; 2) to require that the actual party entitled to legal relief be the one to
prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it
within certain bounds, pursuant to sound public policy.31 A case is dismissible for lack of
personality to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded
on failure to state a cause of action.32
On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the
exclusive distributor of AFFA in the Philippines as shown by the Certification dated June 1, 1997
issued by Tony Robinson.33 Petitioner Go mentions the following documents also signed by
respondent Robinson which state that "Pamana Marketing Corporation represented by Mr.
Mortimer F. Cordero" was actually the exclusive distributor: (1) letter dated 1 June 199734; (2)
certification dated 5 August 199735; and (3) letter dated 5 August 1997 addressed to petitioner
Cordero concerning "commissions to be paid to Pamana Marketing Corporation."36 Such
apparent inconsistency in naming AFFA’s exclusive distributor in the Philippines is of no
moment. For all intents and purposes, Robinson and AFFA dealt only with Cordero who alone
made decisions in the performance of the exclusive distributorship, as with other clients to whom
he had similarly offered AFFA’s fast ferry vessels. Moreover, the stipulated commissions from
each progress payments made by Go were directly paid by Robinson to Cordero.37 Respondents
Landicho and Tecson were only too aware of Cordero’s authority as the person who was
appointed and acted as exclusive distributor of AFFA, which can be gleaned from their act of
immediately furnishing him with copies of bank transmittals everytime Go remits payment to
Robinson, who in turn transfers a portion of funds received to the bank account of Cordero in
the Philippines as his commission. Out of these partial payments of his commission, Cordero
would still give Landicho and Tecson their respective "commission," or "cuts" from his own
commission. Respondents Landicho and Tecson failed to refute the evidence submitted by
Cordero consisting of receipts signed by them. Said amounts were apart from the earlier
expenses shouldered by Cordero for Landicho’s airline tickets, transportation, food and hotel
accommodations for the trip to Australia.38
Moreover, petitioner Go, Landicho and Tecson never raised petitioner Cordero’s lack of
personality to sue on behalf of Pamana,39 and did so only before the CA when they contended
that it is Pamana and not Cordero, who was appointed and acted as exclusive distributor for
AFFA.40 It was Robinson who argued in support of his motion to dismiss that as far as said
defendant is concerned, the real party plaintiff appears to be Pamana, against the real party
defendant which is AFFA.41 As already mentioned, the trial court denied the motion to dismiss
filed by Robinson.
We find no error committed by the trial court in overruling Robinson’s objection over the improper
resort to summons by publication upon a foreign national like him and in an action in personam,
notwithstanding that he raised it in a special appearance specifically raising the issue of lack of
jurisdiction over his person. Courts acquire jurisdiction over the plaintiffs upon the filing of the
complaint, while jurisdiction over the defendants in a civil case is acquired either through the
service of summons upon them in the manner required by law or through their voluntary
appearance in court and their submission to its authority.42 A party who makes a special
appearance in court challenging the jurisdiction of said court based on the ground of invalid
service of summons is not deemed to have submitted himself to the jurisdiction of the court.43
In this case, however, although the Motion to Dismiss filed by Robinson specifically stated as
one (1) of the grounds the lack of "personal jurisdiction," it must be noted that he had earlier filed
a Motion for Time to file an appropriate responsive pleading even beyond the time provided in
the summons by publication.44 Such motion did not state that it was a conditional appearance
entered to question the regularity of the service of summons, but an appearance submitting to
the jurisdiction of the court by acknowledging the summons by publication issued by the court
and praying for additional time to file a responsive pleading. Consequently, Robinson having
acknowledged the summons by publication and also having invoked the jurisdiction of the trial
court to secure affirmative relief in his motion for additional time, he effectively submitted
voluntarily to the trial court’s jurisdiction. He is now estopped from asserting otherwise, even
before this Court.45
II. Breach of Exclusive Distributorship, Contractual Interference and Respondents’ Liability for
Damages
In Yu v. Court of Appeals,46 this Court ruled that the right to perform an exclusive distributorship
agreement and to reap the profits resulting from such performance are proprietary rights which
a party may protect. Thus, injunction is the appropriate remedy to prevent a wrongful interference
with contracts by strangers to such contracts where the legal remedy is insufficient and the
resulting injury is irreparable. In that case, the former dealer of the same goods purchased the
merchandise from the manufacturer in England through a trading firm in West Germany and sold
these in the Philippines. We held that the rights granted to the petitioner under the exclusive
distributorship agreement may not be diminished nor rendered illusory by the expedient act of
utilizing or interposing a person or firm to obtain goods for which the exclusive distributorship
was conceptualized, at the expense of the sole authorized distributor.47
In the case at bar, it was established that petitioner Cordero was not paid the balance of his
commission by respondent Robinson. From the time petitioner Go and respondent Landicho
directly dealt with respondent Robinson in Brisbane, and ceased communicating through
petitioner Cordero as the exclusive distributor of AFFA in the Philippines, Cordero was no longer
informed of payments remitted to AFFA in Brisbane. In other words, Cordero had clearly been
cut off from the transaction until the arrival of the first SEACAT 25 which was sold through his
efforts. When Cordero complained to Go, Robinson, Landicho and Tecson about their acts
prejudicial to his rights and demanded that they respect his exclusive distributorship, Go simply
let his lawyers led by Landicho and Tecson handle the matter and tried to settle it by promising
to pay a certain amount and to purchase high-speed catamarans through Cordero. However,
Cordero was not paid anything and worse, AFFA through its lawyer in Australia even terminated
his exclusive dealership insisting that his services were engaged for only one (1) transaction,
that is, the purchase of the first SEACAT 25 in August 1997.
Petitioner Go argues that unlike in Yu v. Court of Appeals48 there is no conclusive proof adduced
by petitioner Cordero that they actually purchased a second SEACAT 25 directly from AFFA and
hence there was no violation of the exclusive distributorship agreement. Further, he contends
that the CA gravely abused its discretion in holding them solidarily liable to Cordero, relying on
Articles 1207, 19 and 21 of the Civil Code despite absence of evidence, documentary or
testimonial, showing that they conspired to defeat the very purpose of the exclusive
distributorship agreement.49
We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient evidence
that respondents actually purchased a second SEACAT 25 directly from AFFA. But this
circumstance will not absolve respondents from liability for invading Cordero’s rights under the
exclusive distributorship. Respondents clearly acted in bad faith in bypassing Cordero as they
completed the remaining payments to AFFA without advising him and furnishing him with copies
of the bank transmittals as they previously did, and directly dealt with AFFA through Robinson
regarding arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the
purchase of the second vessel pursuant to the Memorandum of Agreement which Cordero
signed in behalf of AFFA. As a result of respondents’ actuations, Cordero incurred losses as he
was not paid the balance of his commission from the sale of the first vessel and his exclusive
distributorship revoked by AFFA.
Petitioner Go contends that the trial and appellate courts erred in holding them solidarily liable
for Cordero’s unpaid commission, which is the sole obligation of the principal AFFA. It was
Robinson on behalf of AFFA who, in the letter dated August 5, 1997 addressed to Cordero,
undertook to pay commission payments to Pamana on a staggered progress payment plan in
the form of percentage of the commission per payment. AFFA explicitly committed that it will,
"upon receipt of progress payments, pay to Pamana their full commission by telegraphic transfer
to an account nominated by Pamana within one to two days of [AFFA] receiving such
payments."50 Petitioner Go further maintains that he had not in any way violated or caused the
termination of the exclusive distributorship agreement between Cordero and AFFA; he had also
paid in full the first and only vessel he purchased from AFFA.51
While it is true that a third person cannot possibly be sued for breach of contract because only
parties can breach contractual provisions, a contracting party may sue a third person not for
breach but for inducing another to commit such breach.
Article 1314 of the Civil Code provides:
Art. 1314. Any third person who induces another to violate his contract shall be liable for
damages to the other contracting party.
The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part
of the third person of the existence of a contract; and (3) interference of the third person is without
legal justification.52
The presence of the first and second elements is not disputed. Through the letters issued by
Robinson attesting that Cordero is the exclusive distributor of AFFA in the Philippines,
respondents were clearly aware of the contract between Cordero and AFFA represented by
Robinson. In fact, evidence on record showed that respondents initially dealt with and
recognized Cordero as such exclusive dealer of AFFA high-speed catamaran vessels in the
Philippines. In that capacity as exclusive distributor, petitioner Go entered into the Memorandum
of Agreement and Shipbuilding Contract No. 7825 with Cordero in behalf of AFFA.
As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals53 is instructive,
to wit:
A duty which the law of torts is concerned with is respect for the property of others, and a cause
of action ex delicto may be predicated upon an unlawful interference by one person of the
enjoyment by the other of his private property. This may pertain to a situation where a third
person induces a party to renege on or violate his undertaking under a contract. In the case
before us, petitioner’s Trendsetter Marketing asked DCCSI to execute lease contracts in its
favor, and as a result petitioner deprived respondent corporation of the latter’s property right.
Clearly, and as correctly viewed by the appellate court, the three elements of tort interference
above-mentioned are present in the instant case.
Authorities debate on whether interference may be justified where the defendant acts for the
sole purpose of furthering his own financial or economic interest. One view is that, as a general
rule, justification for interfering with the business relations of another exists where the actor’s
motive is to benefit himself. Such justification does not exist where his sole motive is to cause
harm to the other. Added to this, some authorities believe that it is not necessary that the
interferer’s interest outweigh that of the party whose rights are invaded, and that an individual
acts under an economic interest that is substantial, not merely de minimis, such that wrongful
and malicious motives are negatived, for he acts in self-protection. Moreover, justification for
protecting one’s financial position should not be made to depend on a comparison of his
economic interest in the subject matter with that of others. It is sufficient if the impetus of his
conduct lies in a proper business interest rather than in wrongful motives.
As early as Gilchrist vs. Cuddy, we held that where there was no malice in the interference of a
contract, and the impulse behind one’s conduct lies in a proper business interest rather than in
wrongful motives, a party cannot be a malicious interferer. Where the alleged interferer is
financially interested, and such interest motivates his conduct, it cannot be said that he is an
officious or malicious intermeddler.
In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the
warehouse to his enterprise at the expense of respondent corporation. Though petitioner took
interest in the property of respondent corporation and benefited from it, nothing on record
imputes deliberate wrongful motives or malice in him.
xxx
While we do not encourage tort interferers seeking their economic interest to intrude into existing
contracts at the expense of others, however, we find that the conduct herein complained of did
not transcend the limits forbidding an obligatory award for damages in the absence of any malice.
The business desire is there to make some gain to the detriment of the contracting parties. Lack
of malice, however, precludes damages. But it does not relieve petitioner of the legal liability for
entering into contracts and causing breach of existing ones. The respondent appellate court
correctly confirmed the permanent injunction and nullification of the lease contracts between
DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved the
respondents from further damage or injury caused by petitioner’s interference.54 [emphasis
supplied.]
Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention to do
ulterior and unjustifiable harm. Malice is bad faith or bad motive.55 In the case of Lagon v. Court
of Appeals,56 we held that to sustain a case for tortuous interference, the defendant must have
acted with malice or must have been driven by purely impure reasons to injure the plaintiff; in
other words, his act of interference cannot be justified. We further explained that the word
"induce" refers to situations where a person causes another to choose one course of conduct by
persuasion or intimidation. As to the allegation of private respondent in said case that petitioner
induced the heirs of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged
renewal of the original lease contract with the deceased landowner, we ruled as follows:
Assuming ex gratia argumenti that petitioner knew of the contract, such knowledge alone was
not sufficient to make him liable for tortuous interference. x x x
Furthermore, the records do not support the allegation of private respondent that petitioner
induced the heirs of Bai Tonina Sepi to sell the property to him. The word "induce" refers to
situations where a person causes another to choose one course of conduct by persuasion or
intimidation. The records show that the decision of the heirs of the late Bai Tonina Sepi to sell
the property was completely of their own volition and that petitioner did absolutely nothing to
influence their judgment. Private respondent himself did not proffer any evidence to support his
claim. In short, even assuming that private respondent was able to prove the renewal of his lease
contract with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad faith on
the part of petitioner in purchasing the property. Therefore, the claim of tortuous interference
was never established.57
In their Answer, respondents denied having anything to do with the unpaid balance of the
commission due to Cordero and the eventual termination of his exclusive distributorship by
AFFA. They gave a different version of the events that transpired following the signing of
Shipbuilding Contract No. 7825. According to them, several builder-competitors still entered the
picture after the said contract for the purchase of one (1) SEACAT 25 was sent to Brisbane in
July 1997 for authentication, adding that the contract was to be effective on August 7, 1997, the
time when their funds was to become available. Go admitted he called the attention of AFFA if
it can compete with the prices of other builders, and upon mutual agreement, AFFA agreed to
give them a discounted price under the following terms and conditions: (1) that the contract price
be lowered; (2) that Go will obtain another vessel; (3) that to secure compliance of such
conditions, Go must make an advance payment for the building of the second vessel; and (4)
that the payment scheme formerly agreed upon as stipulated in the first contract shall still be the
basis and used as the guiding factor in remitting money for the building of the first vessel. This
led to the signing of another contract superseding the first one (1), still to be dated 07 August
1997. Attached to the answer were photocopies of the second contract stating a lower purchase
price (US$1,150,000.00) and facsimile transmission of AFFA to Go confirming the transaction.58
As to the cessation of communication with Cordero, Go averred it was Cordero who was
nowhere to be contacted at the time the shipbuilding progress did not turn good as promised,
and it was always Landicho and Tecson who, after several attempts, were able to locate him
only to obtain unsatisfactory reports such that it was Go who would still call up Robinson
regarding any progress status report, lacking documents for MARINA, etc., and go to Australia
for ocular inspection. Hence, in May 1998 on the scheduled launching of the ship in Australia,
Go engaged the services of Landicho who went to Australia to see to it that all documents
needed for the shipment of the vessel to the Philippines would be in order. It was also during
this time that Robinson’s request for inquiry on the Philippine price of a Wartsila engine for
AFFA’s then on-going vessel construction, was misinterpreted by Cordero as indicating that Go
was buying a second vessel.59
We find these allegations unconvincing and a mere afterthought as these were the very same
averments contained in the Position Paper for the Importer dated October 9, 1998, which was
submitted by Go on behalf of ACG Express Liner in connection with the complaint-affidavit filed
by Cordero before the BOC-SGS Appeals Committee relative to the shipment valuation of the
first SEACAT 25 purchased from AFFA.60 It appears that the purported second contract
superseding the original Shipbuilding Contract No. 7825 and stating a lower price of
US$1,150,000.00 (not US$1,465,512.00) was only presented before the BOC to show that the
vessel imported into the Philippines was not undervalued by almost US$500,000.00. Cordero
vehemently denied there was such modification of the contract and accused respondents of
resorting to falsified documents, including the facsimile transmission of AFFA supposedly
confirming the said sale for only US$1,150,000.00. Incidentally, another document filed in said
BOC case, the Counter-Affidavit/Position Paper for the Importer dated November 16,
1998,61 states in paragraph 8 under the Antecedent facts thereof, that --
8. As elsewhere stated, the total remittances made by herein Importer to AFFA does not alone
represent the purchase price for Seacat 25. It includes advance payment for the acquisition of
another vessel as part of the deal due to the discounted price.62
which even gives credence to the claim of Cordero that respondents negotiated for the sale of
the second vessel and that the nonpayment of the remaining two (2) instalments of his
commission for the sale of the first SEACAT 25 was a result of Go and Landicho’s directly dealing
with Robinson, obviously to obtain a lower price for the second vessel at the expense of Cordero.
The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another
contract directly with ACG Express Liner to obtain a lower price for the second vessel resulted
in AFFA’s breach of its contractual obligation to pay in full the commission due to Cordero and
unceremonious termination of Cordero’s appointment as exclusive distributor. Following our
pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed malicious if impelled
by a proper business interest rather than in wrongful motives. The attendant circumstances,
however, demonstrated that respondents transgressed the bounds of permissible financial
interest to benefit themselves at the expense of Cordero. Respondents furtively went directly to
Robinson after Cordero had worked hard to close the deal for them to purchase from AFFA two
(2) SEACAT 25, closely monitored the progress of building the first vessel sold, attended to their
concerns and spent no measly sum for the trip to Australia with Go, Landicho and Go’s family
members. But what is appalling is the fact that even as Go, Landicho and Tecson secretly
negotiated with Robinson for the purchase of a second vessel, Landicho and Tecson continued
to demand and receive from Cordero their "commission" or "cut" from Cordero’s earned
commission from the sale of the first SEACAT 25.
Cordero was practically excluded from the transaction when Go, Robinson, Tecson and
Landicho suddenly ceased communicating with him, without giving him any explanation. While
there was nothing objectionable in negotiating for a lower price in the second purchase of
SEACAT 25, which is not prohibited by the Memorandum of Agreement, Go, Robinson, Tecson
and Landicho clearly connived not only in ensuring that Cordero would have no participation in
the contract for sale of the second SEACAT 25, but also that Cordero would not be paid the
balance of his commission from the sale of the first SEACAT 25. This, despite their knowledge
that it was commission already earned by and due to Cordero. Thus, the trial and appellate
courts correctly ruled that the actuations of Go, Robinson, Tecson and Landicho were without
legal justification and intended solely to prejudice Cordero.
The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the
trial court, when affirmed by the appellate court, are conclusive on this Court.63 We see no
compelling reason to reverse the findings of the RTC and the CA that respondents acted in bad
faith and in utter disregard of the rights of Cordero under the exclusive distributorship agreement.
The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good faith in
securing better terms for the purchase of high-speed catamarans from AFFA, to the prejudice of
Cordero as the duly appointed exclusive distributor, is further proscribed by Article 19 of the Civil
Code:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.
As we have expounded in another case:
Elsewhere, we explained that when "a right is exercised in a manner which does not conform
with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be responsible." The object of this article, therefore, is
to set certain standards which must be observed not only in the exercise of one’s rights but also
in the performance of one’s duties. These standards are the following: act with justice, give
everyone his due and observe honesty and good faith. Its antithesis, necessarily, is any act
evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal right or
duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.
When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of the Civil
Code. Article 20 pertains to damages arising from a violation of law x x x. Article 21, on the other
hand, states:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.
Article 21 refers to acts contra bonus mores and has the following elements: (1) There is an act
which is legal; (2) but which is contrary to morals, good custom, public order, or public policy;
and (3) it is done with intent to injure.
A common theme runs through Articles 19 and 21, and that is, the act complained of must be
intentional.64
Petitioner Go’s argument that he, Landicho and Tecson cannot be held liable solidarily with
Robinson for actual, moral and exemplary damages, as well as attorney’s fees awarded to
Cordero since no law or contract provided for solidary obligation in these cases, is equally bereft
of merit. Conformably with Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the quasi-delict is solidary.65 In Lafarge Cement Philippines, Inc. v.
Continental Cement Corporation,66 we held:
[O]bligations arising from tort are, by their nature, always solidary. We have assiduously
maintained this legal principle as early as 1912 in Worcester v. Ocampo, in which we held:
x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis
of the present action is tort. They fail to recognize the universal doctrine that each joint tort feasor
is not only individually liable for the tort in which he participates, but is also jointly liable with his
tort feasors. x x x
It may be stated as a general rule that joint tort feasors are all the persons who command,
instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission
of a tort, or who approve of it after it is done, if done for their benefit. They are each liable as
principals, to the same extent and in the same manner as if they had performed the wrongful act
themselves. x x x
Joint tort feasors are jointly and severally liable for the tort which they commit.1avvphi1 The
persons injured may sue all of them or any number less than all. Each is liable for the whole
damages caused by all, and all together are jointly liable for the whole damage. It is no defense
for one sued alone, that the others who participated in the wrongful act are not joined with him
as defendants; nor is it any excuse for him that his participation in the tort was insignificant as
compared to that of the others. x x x
Joint tort feasors are not liable pro rata. The damages can not be apportioned among them,
except among themselves. They cannot insist upon an apportionment, for the purpose of each
paying an aliquot part. They are jointly and severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any
claim which might exist against the others. There can be but satisfaction. The release of one of
the joint tort feasors by agreement generally operates to discharge all. x x x
Of course, the court during trial may find that some of the alleged tort feasors are liable and that
others are not liable. The courts may release some for lack of evidence while condemning others
of the alleged tort feasors. And this is true even though they are charged jointly and
severally.67 [emphasis supplied.]
The rule is that the defendant found guilty of interference with contractual relations cannot be
held liable for more than the amount for which the party who was inducted to break the contract
can be held liable.68 Respondents Go, Landicho and Tecson were therefore correctly held liable
for the balance of petitioner Cordero’s commission from the sale of the first SEACAT 25, in the
amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in violation
of the exclusive distributorship agreement, with interest at the rate of 6% per annum from June
24, 1998 until the same is fully paid.
Respondents having acted in bad faith, moral damages may be recovered under Article 2219 of
the Civil Code.69 On the other hand, the requirements of an award of exemplary damages are:
(1) they may be imposed by way of example in addition to compensatory damages, and only
after the claimant’s right to them has been established; (2) that they cannot be recovered as a
matter of right, their determination depending upon the amount of compensatory damages that
may be awarded to the claimant; and (3) the act must be accompanied by bad faith or done in a
wanton, fraudulent, oppressive or malevolent manner.70 The award of exemplary damages is
thus in order. However, we find the sums awarded by the trial court as moral and exemplary
damages as reduced by the CA, still excessive under the circumstances.
Moral damages are meant to compensate and alleviate the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injuries unjustly caused. Although incapable of pecuniary estimation, the amount
must somehow be proportional to and in approximation of the suffering inflicted. Moral damages
are not punitive in nature and were never intended to enrich the claimant at the expense of the
defendant. There is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar facts. Trial
courts are given discretion in determining the amount, with the limitation that it "should not be
palpably and scandalously excessive." Indeed, it must be commensurate to the loss or injury
suffered.71
We believe that the amounts of ₱300,000.00 and ₱200,000.00 as moral and exemplary
damages, respectively, would be sufficient and reasonable. Because exemplary damages are
awarded, attorney’s fees may also be awarded in consonance with Article 2208 (1).72 We affirm
the appellate court’s award of attorney’s fees in the amount of ₱50,000.00.
WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified by
the Resolution dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are hereby
AFFIRMED with MODIFICATION in that the awards of moral and exemplary damages are
hereby reduced to ₱300,000.00 and ₱200,000.00, respectively.
With costs against the petitioner in G.R. No. 164703.
SO ORDERED.

G.R. No. 171092 March 15, 2010
EDNA DIAGO LHUILLIER, Petitioner,
vs.
BRITISH AIRWAYS, Respondent.
DECISION
DEL CASTILLO, J.:
Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a
power introduced for the public good, on account of the necessity of dispensing justice.1
Factual Antecedents
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint 2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged
that on February 28, 2005, she took respondent’s flight 548 from London, United Kingdom to
Rome, Italy. Once on board, she allegedly requested Julian Halliday (Halliday), one of the
respondent’s flight attendants, to assist her in placing her hand-carried luggage in the overhead
bin. However, Halliday allegedly refused to help and assist her, and even sarcastically remarked
that "If I were to help all 300 passengers in this flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the
business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the
other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules
and regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the plane’s
safety regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere
few centimeters away from that of the petitioner and menacingly told her that "We don’t like your
attitude."
Upon arrival in Rome, petitioner complained to respondent’s ground manager and demanded
an apology. However, the latter declared that the flight stewards were "only doing their job."
Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay ₱5
million as moral damages, ₱2 million as nominal damages, ₱1 million as exemplary damages,
₱300,000.00 as attorney’s fees, ₱200,000.00 as litigation expenses, and cost of the suit.
On May 16, 2005, summons, together with a copy of the complaint, was served on the
respondent through Violeta Echevarria, General Manager of Euro-Philippine Airline Services,
Inc.3
On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to
Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the respondent.
Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have
jurisdiction over the complaint for damages pursuant to the Warsaw Convention,5 Article 28(1)
of which provides:
An action for damages must be brought at the option of the plaintiff, either before the court of
domicile of the carrier or his principal place of business, or where he has a place of business
through which the contract has been made, or before the court of the place of destination.
Thus, since a) respondent is domiciled in London; b) respondent’s principal place of business is
in London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome);6 and
d) Rome, Italy is petitioner’s place of destination, then it follows that the complaint should only
be filed in the proper courts of London, United Kingdom or Rome, Italy.
Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person
of the respondent because the summons was erroneously served on Euro-Philippine Airline
Services, Inc. which is not its resident agent in the Philippines.
On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for
respondent to file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed on
June 27, 2005, an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and
Issuance of Alias Summons.8 Petitioner alleged that upon verification with the Securities and
Exchange Commission, she found out that the resident agent of respondent in the Philippines is
Alonzo Q. Ancheta. Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve
Pending Incident and Opposition to Motion to Dismiss.9
Ruling of the Regional Trial Court
On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order10 granting
respondent’s Motion to Dismiss. It ruled that:
The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our
Courts have to apply the principles of international law, and are bound by treaty stipulations
entered into by the Philippines which form part of the law of the land. One of this is the Warsaw
Convention. Being a signatory thereto, the Philippines adheres to its stipulations and is bound
by its provisions including the place where actions involving damages to plaintiff is to be
instituted, as provided for under Article 28(1) thereof. The Court finds no justifiable reason to
deviate from the indicated limitations as it will only run counter to the provisions of the Warsaw
Convention. Said adherence is in consonance with the comity of nations and deviation from it
can only be effected through proper denunciation as enunciated in the Santos case (ibid). Since
the Philippines is not the place of domicile of the defendant nor is it the principal place of
business, our courts are thus divested of jurisdiction over cases for damages. Neither was
plaintiff’s ticket issued in this country nor was her destination Manila but Rome in Italy. It bears
stressing however, that referral to the court of proper jurisdiction does not constitute constructive
denial of plaintiff’s right to have access to our courts since the Warsaw Convention itself provided
for jurisdiction over cases arising from international transportation. Said treaty stipulations must
be complied with in good faith following the time honored principle of pacta sunt servanda.
The resolution of the propriety of service of summons is rendered moot by the Court’s want of
jurisdiction over the instant case.
WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and
this case is hereby ordered DISMISSED.
Petitioner filed a Motion for Reconsideration but the motion was denied in an Order11 dated
January 4, 2006.
Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions
of law, raising the following issues:
Issues
I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS
CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE
PERSONNEL OF A FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT
OF ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW
CONVENTION.
II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION
TO DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE
CASE AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW
SUBMITTED ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO,
WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE
CARRIER.
Petitioner’s Arguments
Petitioner argues that her cause of action arose not from the contract of carriage, but from the
tortious conduct committed by airline personnel of respondent in violation of the provisions of
the Civil Code on Human Relations. Since her cause of action was not predicated on the contract
of carriage, petitioner asserts that she has the option to pursue this case in this jurisdiction
pursuant to Philippine laws.
Respondent’s Arguments
In contrast, respondent maintains that petitioner’s claim for damages fell within the ambit of
Article 28(1) of the Warsaw Convention. As such, the same can only be filed before the courts
of London, United Kingdom or Rome, Italy.
Our Ruling
The petition is without merit.
The Warsaw Convention has the force and effect of law in this country.
It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos
III v. Northwest Orient Airlines,12 we held that:
The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules
Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It
took effect on February 13, 1933. The Convention was concurred in by the Senate, through its
Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by
President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government
on November 9, 1950. The Convention became applicable to the Philippines on February 9,
1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201,
declaring our formal adherence thereto, "to the end that the same and every article and clause
thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the
citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine government
and, as such, has the force and effect of law in this country.13
The Warsaw Convention applies because the air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw
Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods performed
by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and the
place of destination, whether or not there be a break in the carriage or a transhipment, are
situated either within the territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place within a territory subject to
the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is
not a party to this Convention. A carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to be international for the purposes of this Convention.
(Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of carriage are
situated within the territories of two High Contracting Parties, said carriage is deemed an
"international carriage". The High Contracting Parties referred to herein were the signatories to
the Warsaw Convention and those which subsequently adhered to it.14
In the case at bench, petitioner’s place of departure was London, United Kingdom while her
place of destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 signed and ratified
the Warsaw Convention. As such, the transport of the petitioner is deemed to be an "international
carriage" within the contemplation of the Warsaw Convention.
Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject
matter of the action is governed by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages
before –
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the contract has been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation domiciled in London, United
Kingdom with London as its principal place of business. Hence, under the first and second
jurisdictional rules, the petitioner may bring her case before the courts of London in the United
Kingdom. In the passenger ticket and baggage check presented by both the petitioner and
respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the third
jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome in
Italy. Finally, both the petitioner and respondent aver that the place of destination is Rome, Italy,
which is properly designated given the routing presented in the said passenger ticket and
baggage check. Accordingly, petitioner may bring her action before the courts of Rome, Italy.
We thus find that the RTC of Makati correctly ruled that it does not have jurisdiction over the
case filed by the petitioner.
Santos III v. Northwest Orient Airlines18 applies in this case.
Petitioner contends that Santos III v. Northwest Orient Airlines19 cited by the trial court is
inapplicable to the present controversy since the facts thereof are not similar with the instant
case.
We are not persuaded.
In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of the Philippines,
purchased a ticket from Northwest Orient Airlines in San Francisco, for transport between San
Francisco and Manila via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to
Manila segment of his ticket, despite his prior reservation. Contending that Northwest Orient
Airlines acted in bad faith and discriminated against him when it canceled his confirmed
reservation and gave his seat to someone who had no better right to it, Augusto Santos III sued
the carrier for damages before the RTC. Northwest Orient Airlines moved to dismiss the
complaint on ground of lack of jurisdiction citing Article 28(1) of the Warsaw Convention. The
trial court granted the motion which ruling was affirmed by the Court of Appeals. When the case
was brought before us, we denied the petition holding that under Article 28(1) of the Warsaw
Convention, Augusto Santos III must prosecute his claim in the United States, that place being
the (1) domicile of the Northwest Orient Airlines; (2) principal office of the carrier; (3) place where
contract had been made (San Francisco); and (4) place of destination (San Francisco).21
We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:
A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and
not a venue provision. First, the wording of Article 32, which indicates the places where the
action for damages "must" be brought, underscores the mandatory nature of Article 28(1).
Second, this characterization is consistent with one of the objectives of the Convention, which
is to "regulate in a uniform manner the conditions of international transportation by air." Third,
the Convention does not contain any provision prescribing rules of jurisdiction other than Article
28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to
Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive
enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the will of the
parties regardless of the time when the damage occurred.
xxxx
In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a
dual concept. Jurisdiction in the international sense must be established in accordance with
Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must
be established pursuant to the applicable domestic law. Only after the question of which court
has jurisdiction is determined will the issue of venue be taken up. This second question shall be
governed by the law of the court to which the case is submitted.22
Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines23 is analogous to
the instant case because (1) the domicile of respondent is London, United Kingdom;24 (2) the
principal office of respondent airline is likewise in London, United Kingdom; 25 (3) the ticket was
purchased in Rome, Italy;26 and (4) the place of destination is Rome, Italy.27 In addition,
petitioner based her complaint on Article 217628 of the Civil Code on quasi-delict and Articles
1929 and 2130 of the Civil Code on Human Relations. In Santos III v. Northwest Orient
Airlines,31 Augusto Santos III similarly posited that Article 28 (1) of the Warsaw Convention did
not apply if the action is based on tort. Hence, contrary to the contention of the petitioner, the
factual setting of Santos III v. Northwest Orient Airlines32 and the instant case are parallel on the
material points.
Tortious conduct as ground for the petitioner’s complaint is within the purview of the Warsaw
Convention.
Petitioner contends that in Santos III v. Northwest Orient Airlines,33 the cause of action was
based on a breach of contract while her cause of action arose from the tortious conduct of the
airline personnel and violation of the Civil Code provisions on Human Relations.34 In addition,
she claims that our pronouncement in Santos III v. Northwest Orient Airlines35 that "the allegation
of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension
of the Warsaw Convention," is more of an obiter dictum rather than the ratio decidendi.36 She
maintains that the fact that said acts occurred aboard a plane is merely incidental, if not
irrelevant.37
We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion
entirely unnecessary for the decision of the case" and thus "are not binding as precedent."38 In
Santos III v. Northwest Orient Airlines,39 Augusto Santos III categorically put in issue the
applicability of Article 28(1) of the Warsaw Convention if the action is based on tort.
In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient
to exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of
action based on tort did not bring the case outside the sphere of the Warsaw Convention was
our ratio decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly,
the contention of the herein petitioner that the said ruling is an obiter dictum is without basis.
Relevant to this particular issue is the case of Carey v. United Airlines,40 where the passenger
filed an action against the airline arising from an incident involving the former and the airline’s
flight attendant during an international flight resulting to a heated exchange which included
insults and profanity. The United States Court of Appeals (9th Circuit) held that the "passenger's
action against the airline carrier arising from alleged confrontational incident between passenger
and flight attendant on international flight was governed exclusively by the Warsaw Convention,
even though the incident allegedly involved intentional misconduct by the flight attendant."41
In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline in
the state court, arising from a confrontation with the flight attendant during an international flight
to Mexico. The United States Court of Appeals (9th Circuit) held that the "Warsaw Convention
governs actions arising from international air travel and provides the exclusive remedy for
conduct which falls within its provisions." It further held that the said Convention "created no
exception for an injury suffered as a result of intentional conduct" 43 which in that case involved
a claim for intentional infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed against an airline passenger
during the course of the international carriage do not bring the case outside the ambit of the
Warsaw Convention.
Respondent, in seeking remedies from the trial court through special appearance of counsel, is
not deemed to have voluntarily submitted itself to the jurisdiction of the trial court.
Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial
court when the latter stated in its Comment/Opposition to the Motion for Reconsideration that
"Defendant [is at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was
Euro-Philippines Airlines Services, Inc. that has been making a special appearance since x x x
British Airways x x x has been clearly specifying in all the pleadings that it has filed with this
Honorable Court that it is the one making a special appearance."44
In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his
person, as by reason of absence or defective service of summons, and he also invokes other
grounds for the dismissal of the action under Rule 16, he is not deemed to be in estoppel or to
have waived his objection to the jurisdiction over his person."46
This issue has been squarely passed upon in the recent case of Garcia v.
Sandiganbayan,47 where we reiterated our ruling in La Naval Drug Corporation v. Court of
Appeals48 and elucidated thus:
Special Appearance to Question a Court’s Jurisdiction Is Not
Voluntary Appearance
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said
case elucidates the current view in our jurisdiction that a special appearance before the court––
challenging its jurisdiction over the person through a motion to dismiss even if the movant
invokes other grounds––is not tantamount to estoppel or a waiver by the movant of his objection
to jurisdiction over his person; and such is not constitutive of a voluntary submission to the
jurisdiction of the court.1avvphi1

The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB
provides: to cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived
Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be such defense of lack of jurisdiction. Consequently, there being no valid substituted services of
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside summons made, the SB did not acquire jurisdiction over the persons of petitioner and her
from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary children. And perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and
appearance. her three children are concerned, are null and void for lack of jurisdiction. (Emphasis supplied)
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss
person, together with other grounds raised therein, is not deemed to have appeared voluntarily and other pleadings before the trial court cannot be deemed to be voluntary submission to the
before the court. What the rule on voluntary appearance – the first sentence of the above-quoted jurisdiction of the said trial court. We hence disagree with the contention of the petitioner and
rule – means is that the voluntary appearance of the defendant in court is without qualification, rule that there was no voluntary appearance before the trial court that could constitute estoppel
in which case he is deemed to have waived his defense of lack of jurisdiction over his person or a waiver of respondent’s objection to jurisdiction over its person.
due to improper service of summons.
WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court
The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she of Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I:
(a) motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion SO ORDERED.
for reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion
to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash
Forfeiture II; and (b) motion for partial reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for
special appearance with the purpose of challenging the jurisdiction of the SB over her person
and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction over
her person and of her three children for lack of valid service of summons through improvident
substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner
never abandoned when she filed her motions for reconsideration, even with a prayer to admit
their attached Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth
affirmative defenses with a claim for damages. And the other subsequent pleadings, likewise,
did not abandon her stance and defense of lack of jurisdiction due to improper substituted
services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of
the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear
before the SB constitutive of or equivalent to service of summons.
G.R. No. L-38314 June 25, 1974
BELEN S. RODRIGUEZ and JOSE S. SANTOS, JR., petitioners,
vs.
HON. FEDERICO ALIKPALA (Presiding Judge, Branch XXII, Court of First Instance of
Manila), FEDERICO TOLENTINO and FELISA TOLENTINO, respondents.
Santos, Santos & Cunanan Law Office for petitioners.
Prospero A. Crescini & Associates for respondents.
CASTRO, J.:p
Failing to levy on the properties of the respondents Federico and Felisa Tolentino because of a
prohibitory judgment rendered by the respondent Court of First Instance of Manila in civil case
85998, the petitioners Belen S. Rodriguez and Jose S. Santos, Jr., have come to this Court on
appeal by certiorari.
On August 19, 1971 the petitioner Rodriguez, assisted by her counsel, the petitioner Santos,
filed an action, docketed as civil case 204601, with the city court of Manila against the spouses
Manuel and Fe Rebollado for recovery of the sum of P5,320 plus interest, attorney's fees and
costs. A writ of preliminary attachment was issued and served on the Rebollados at their store
in Divisoria market. Fe Rebollado immediately communicated with the petitioner Santos, and
later with the latter's client, the petitioner Rodriguez, to plead for time before the attachment was
to be effectively enforced. Rodriguez agreed to cause the suspension of the attachment writ on
condition that Fe Rebollado's parents, the now respondents Federico and Felisa Tolentino,
would bind themselves, jointly and severally with the Rebollado's, to pay the entire obligation
subject of the suit. Felisa Tolentino who was then present agreed to this proposal, and so the
petitioner Santos, at the request of the petitioner Rodriguez, drew up a motion for judgment on
a compromise embodying the terms of the agreement of the parties. On the basis of the said
motion, the city court, on August 14, 1971, rendered judgment, as follows:
Parties herein submitted the following compromise agreement and prayed that judgment be
rendered in accordance there with:
COMPROMISE AGREEMENT
xxx xxx xxx
1. That the defendants admit all the material allegations in the plaintiff's complaint and
acknowledged their indebtedness to the plaintiff in the total amount of P5,980.00, which amount
includes expenses of litigation;
2. That in consideration of defendants acknowledging their said indebtedness and confessing
judgment therefor, plaintiff has allowed defendants some consideration by allowing them to pay
their above-stated account in the following manner, to wit:
a) the sum of P200.00 shall be paid upon the signing of this compromise agreement;
b) the remaining balance shall be paid in installment basis at the rate of P100.00 a week, payable
every Saturday beginning August 28, 1971 and every Saturday of the week thereafter until fully
paid.
3. That in order to secure the prompt payment of the said obligations of the defendants, Federico
Tolentino and Felisa Tolentino hereby bind themselves to pay jointly and severally with the
defendants the said obligations, and in the event of default on the part of the defendants to pay
any of the said installments when the same is already due, the judgment which may be rendered
by virtue hereof as to full amount remaining unpaid, may likewise be executed as against the
properties of Federico Tolentino and Felisa Tolentino;
4. That failure on the part of the defendants to pay any one of the installments as above-
scheduled shall render the remaining balance unpaid immediately due and demandable and the
plaintiff shall then be entitled to the execution of the judgment which may be rendered by virtue
hereof;
WHEREFORE, judgment by COMPROMISE is hereby rendered pursuant to the foregoing
agreement, enjoining strict compliance thereto by the parties.
The Rebollado's subsequently failed to comply with the terms of the compromise, thus prompting
the petitioner Rodriguez to ask the city court for a writ of execution not only against the
Rebollados but as well against the Tolentino's. When this was granted; and later affirmed over
the opposition of the Tolentino's, the latter brought an action for certiorari in the respondent Court
of First Instance of Manila, docketed as civil case 85998, to enjoin the city court from enforcing
any writ of execution against them. On December 20, 1973, after hearing duly had, the
respondent court rendered judgment excluding the Tolentinos from the effects of the writ of
execution granted by the city court in civil case 204601. It is this judgment that is the subject of
the present appeal.
In excluding the Tolentino's from the effects of the judgment on a compromise rendered by the
city court, the respondent court invokes two reasons: first, the dispositive portion of the judgment
quoted above cannot be executed because it does not explicitly enjoin the Tolentino's to pay,
jointly and severally with the Rebollado's, the amount due to the plaintiff; and second, the city regime of law and order, repudiation of an agreement validly entered into can not be made
court never acquired jurisdiction over the persons of the Tolentino's and, therefore, the latter without any ground or reason in law or in fact for such repudiation."4
cannot be bound by the judgment rendered in civil cue 204601.
And even if we assume that estoppel does not apply in this case, we nonetheless cannot shunt
The respondent court is in error on both counts. aside the principle of equity that jurisdiction over a person not formally or originally a party to a
litigation may nevertheless be acquired, under proper conditions, thru the voluntary appearance
1. The dispositive portion of the judgment in civil case 204601 of the city court approving the of that person before the court. Thus, judgment may be directed against one who, although not
compromise and "enjoining strict compliance thereto by the parties" is adequate for purposes of a formal party in the case, has assumed or participated in the defense.5 By coming forward with
execution. It is not unusual for the body of a judgment on a compromise to merely quote the the original litigants in moving for a judgment on a compromise and, furthermore, by assuming
words of the agreement that spell out the respective rights and obligations of the parties, since such interest in the final adjudication of the case as would place them in unequivocal liability,
it is both unnecessary and improper for the court to still make preliminary adjudication of the together with the Rebollado's, to the plaintiff therein, the Tolentino's effectively submitted
facts and the law involved in the case.1 These rights and obligations, although not reproduced themselves to the jurisdiction of the city court. They were and are thus subject to its judgment.
in the dispositive portion of the judgment in obvious avoidance of repetition, are understood to
constitute the terms under which execution may issue. Decisions of similar tenor, import and ACCORDINGLY, the judgment a quo of December 20, 1973 is reversed, and the order of the
form have in the past been given effect by this Court.2 city court of November 26, 1971 in civil case 264601, directing the release of the writ of execution
against the Rebollado spouses and the Tolentino spouses, is hereby affirmed, with costs against
2. There is no question in the mind of the respondent court that the Rebollado's and the the respondents Federico and Felisa Tolentino.
Tolentinos freely and voluntarily entered into the compromise agreement which became the
basis of the judgment of the city court. Be it remembered that neither the Rebollado's nor the Makalintal, C.J., Teehankee, Makasiar, Esguerra and Muñoz Palma, JJ., concur.
Tolentino's question the existence of the indebtedness of the Rebollados or the amount thereof.
The respondent court heard the testimonies of the witnesses first hand and accorded no
credence to the version of the Rebollado's and the Tolentino's that Manuel and Fe Rebollado
and Felisa Tolentino were made to sign the motion for a judgment on a compromise without
being permitted to read its contents and, further, that Felisa Tolentino was induced to sign, too,
the name of her husband without any authority from the latter. The respondent court analyzed
the evidence at length and found that the involvement of the Tolentino's in the compromise
agreement arose out of their natural filial concern for their daughter Fe whose inventories at
Divisoria market were under imminent threat of levy and seizure. The respondent court,
moreover, brooks no doubt, and we concur with it, that both the Rebollado's and the Tolentino's
understood the plain unequivocal terms of the compromise agreement. And by assuming the
roles of co-movants in the motion for a judgment on a compromise, the Tolentino's actively
instigated the city court into giving its judicial imprimatur to the said agreement as well as their
participation therein. Under the circumstances, the Tolentino's are estopped from denying the
very authority they have invoked.3

Moreover, because they signed and executed the compromise agreement willingly and
voluntarily, and, in a manner of speaking, with their eyes wide open, they should be bound by
its terms. A person cannot, to paraphrase Justice Alejo Labrador, repudiate the effects of his
voluntary acts simply because they do not suit him. In the very words of Justice Labrador, "in a
G.R. No. L-34314 May 13, 1975
SOFIA PASTOR DE MIDGELY, petitioner,
vs.
THE HONORABLE PIO B. FERANDOS, Judge of the Court of First Instance of Cebu,
Branch IX and LEWELYN BARLITO QUEMADA, Special Administrator of the Testate and
Intestate Estate of ALVARO PASTOR Y TATO, respondents.
Abelardo P. Cecilio for petitioner.
Efipanio A. Anoos for private respondents.
AQUINO, J.:ñé+.£ªwph!1
Sofia Pastor de Midgely, a British subject residing at Cura Planelles, 10 Cura Jardin, Alicante,
Spain, filed this special civil action of certiorari against Judge Pio B. Ferandos and Lewelyn
Barlito Quemada in order to set aside the Judge's order dated May 8, 1971 which denied her
motion to dismiss based on lack of jurisdiction and on article 222 of the Civil Code.
She prayed for a declaration that the Court of First Instance of Cebu, Toledo City, Branch IX has
no jurisdiction over her person and properties and for the dismissal of the complaint against her
in Civil Case No. 274-T of that court. The ultimate facts found in the prolix pleadings are as
follows:
Alvaro Pastor, Sr., a Spanish citizen, was allegedly the owner of properties and rights in mining
claims located in Cebu and supposedly held in trust by his son, Alvaro Pastor, Jr., and his
daughter-in-law, Maria Elena Achaval-Pastor. Pastor, Sr. died on June 5, 1966. He was survived
by his wife, Sofia Pastor y Bossio (who died on October 21, 1966) and by his two legitimate
children, Mrs. Midgely and Alvaro Pastor, Jr. Respondent Quemada claims to be his illegitimate
child.
Alvaro Pastor, Sr. in his supposed holographic will dated July 31, 1961 devised to Lewelyn
Barlito Quemada thirty percent of his forty-two percent share in certain mining claims and real
properties. In 1970 the alleged will was presented for probate in Special Proceedings No. 3128-
R assigned to Branch I in Cebu City of the Court of First Instance of Cebu. Quemada was
appointed special administrator of the decedent's estate.
As such administrator and as heir of Alvaro Pastor, Sr., Quemada filed in the Court of First
Instance of Cebu at Toledo City a complaint dated December 7, 1970 against the spouses Alvaro
Pastor, Jr. and Maria Elena Achaval, Mrs. Midgely, Atlas Consolidated Mining and Development
Corporation and Caltex (Philippines), Inc. to settle the question of ownership over certain real
properties and the rights in some mining claims, to obtain an accounting and payment of the
royalties and income thereof and for the payment of damages amounting to P25,000.
Quemada's theory is that those properties and income belong to the estate of Alvaro Pastor, Sr.
Allegedly without complying with the requirements of Rule 14 of the Rules of Court, Quemada
caused extraterritorial service of summons to be made in that case through the Department of
Foreign Affairs and the Philippine Embassy in Madrid, Spain, which effected the service of the
summons by registered mail upon Mrs. Midgely and the Pastor, Jr. spouses at their respective
address in Alicante and Barcelona, Spain.
Alvaro Pastor, Jr. and Mrs. Midgely, in their respective letters to the Philippine Embassy dated
February 11 and 12, 1971, acknowledged the service of summons but reserved the right to
contest the courts jurisdiction over their persons. The Minister-Counselor of the Embassy
forwarded those letters to the Clerk of Court and apprised him of the manner the summons was
served.
Through counsel, Mrs. Midgely and the Pastor, Jr. spouses entered a special appearance and
filed a motion to dismiss on the ground of lack of jurisdiction. They contended that as
nonresidents they could be summoned only with leave of court and that the requirements laid
down in section 17 of Rule 14 should have been observed. As additional, ground they alleged
that the complaint does not show that earnest efforts toward a compromise have been made, as
required in article 222 of the Civil Code in suits between members of the same family (See sec.
1[j], Rule 16, Rules of Court). Quemada opposed the motion to dismiss.
As already stated, Judge Ferandos denied the motion. He ruled that Mrs. Midgely and the Pastor,
Jr. spouses had been properly summoned. He opined that article 222 was inapplicable to the
case because Quemada's civil status was involved and article 2035 of the Civil Code prohibits
a compromise on a person's civil status. He gave Mrs. Midgely and the Pastor, Jr. spouses
seventy days from February 12, 1971 within which to file their answer, deducting from that period
the time from March 10 to May 8, 1971 when their motion to dismiss was pending.
Mrs. Midgely's motion for reconsideration of the order denying her motion to dismiss was denied
by Judge Ferandos in his order of September 27, 1971 wherein he ruled that the action filed by
Quemada was for the recovery of real properties and real rights. He gave Mrs. Midgely and the
Pastor, Jr. spouses sixty days from notice within which to answer the complaint and directed
that a copy of his order be sent to them through the Philippine Embassy in Madrid. The petition
for certiorari herein was filed on November 3, 1971.
It was given due course. Respondent Quemada in his answer alleged that inasmuch as his
action against Mrs. Midgely concerns property located here in which she claims an interest, it is
not necessary that jurisdiction over her person be acquired. The service of summons upon her
was not for the purpose of acquiring jurisdiction over her person but merely as a matter of due
process.
Quemada alleged that as administrator he has been in actual possession of two parcels of land
owned by Alvaro Pastor, Jr. located at Biga, Toledo City with areas of 55.3 hectares and 5,225
square meters, respectively. They were included in the inventory submitted by him to the probate
court in the testate proceeding for his putative father's estate. His answer contains annexes
attesting to his efforts to recover possession of the other properties of the decedent.
In the meantime the spouses Alvaro Pastor, Jr. and Maria Elena Achaval filed a verified answer
to the complaint in Civil Case No. 274-T dated December 5, 1971. Their answer was filed through
the same counsel who has been representing Mrs. Midgely. The said spouses-alleged that they
were not waiving their defense of lack of jurisdiction over their persons and over the subject
matter of the action. They claimed to be the owners of the properties described in the complaint.
It should be noted that in the testate proceeding Mrs. Midgely and Alvaro Pastor, Jr. had filed a
verified opposition dated January 26, 1971. They prayed for the dismissal of the proceeding.
(The holographic will was probated in the lower court's order of December 5, 1972 which was
appealed to the Court of Appeals by Mrs. Midgely and Alvaro Pastor, Jr., CA-G.R. No. 52961-
R).
On May 10, 1972, this Court issued a writ of preliminary injunction suspending all proceedings
in Civil Case No. 274-T.
Contempt incident. — That writ of preliminary injunction spawned the contempt incident in this
case. Mrs. Midgely in a motion dated March 26, 1974 charged that Quemada committed
"unlawful interference of the case under injunction" and tried to circumvent the writ (1) by taking
possession of two parcels of land in Toledo City and (2) by asking the probate court to stop Altas
Consolidated Mining and Development Corporation from remitting to Mrs. Midgely and the
Pastor, Jr. spouses the landowner's share of the income from the Toledo City properties, with
the result that the probate court ordered the payment of said income to Quemada.
Quemada in his opposition to the motion countered that he had maintained the status quo in
Civil Case No. 274-T, as decreed in the writ of preliminary injunction; that the overseer delivered
in 1971 the possession of the two parcels of land to him in his capacity as administrator or before
the issuance of the writ, and that the order of Judge Juan Y. Reyes in Special Proceedings No.
3128-R did not constitute an interference with Civil Case No. 274-T which was assigned to Judge
Ferandos.
Quemada through counsel filed a counter-charge for contempt against Abelardo Cecilio, the
counsel of Mrs. Midgely, for having made false and malicious statements in his motion to declare
Quemada in contempt of court. Quemada was referring to Atty. Cecilio's allegations that the writ
of preliminary injunction was intended to prevent Quemada from taking possession of the
properties involved in Civil Case No. 274-T and that, notwithstanding the writ, he took possession
of the aforementioned two parcels of land. Quemada in his memorandum further charged Cecilio
with purporting to represent Alvaro Pastor, Jr. in this case although the latter is not a party herein.
Quemada branded the acts of Cecilio as misbehavior of an officer of the court and as improper
conduct tending to degrade and obstruct the administration of justice. Quemada later manifested
that he had turned over to Atty. Cecilio the two checks for the land-owner's share of the income
from the Toledo City properties.
The contempt charges were investigated by the Legal Officer of this Court. After going over the
record, we find that both contempt charges are devoid of merit.
The writ issued by this Court enjoined Judge Ferandos and Quemada "from holding hearings,
trial and proceedings and/or from further proceeding with Civil Case No. 274-T". It froze the
case. It was a preventive injunction.
The undisputed fact is that in February, 1971 Quemada as administrator was already in
possession of the two parcels of land in Toledo City. The fact that he continued to remain in
possession after the injunction was issued on May 10, 1972 (Exh. 16) was not a violation of the
injunction which was not mandatory in character.
As to the attempt of Quemada in Special Proceeding No. 3128-R in his capacity as administrator
to get hold of the land-owner's share of the income derived from the properties involved in Civil
Case No. 274-T, it is apparent that he did so in good faith and on the advice of his lawyer who
actually filed the necessary motion.
The probate at first upheld his right to receive that income. Later he complied with the court's
order to turn over the checks to the counsel of Alvaro Pastor, Jr. Inasmuch as that incident
transpired in the testamentary proceeding and as Quemada committed the alleged
contemptuous act through his counsel, the same cannot be properly characterized as a willful
interference with the injunction issued by this Court in Civil Case No. 274-T.
On the other hand, Atty. Cecilio's free-wheeling allegations in his motion to declare Quemada in
contempt of court, which averments were tailored to support his notion that Quemada
circumvented the injunction, may be viewed simply as a manifestation of a lawyer's propensity
to slant the presentation of his client's case so that it would appear to be meritorious. Such a
tactic is generally tolerated by understanding judges. They are not deceived by the
exaggerations and distortions in a counsel's lopsided submission of his client's case especially
where, as in this case, the alert opposing counsel calls the court's attention to that fact.
"Contempt of court presupposes a contumacious attitude, a flouting or arrogant belligerence, a
defiance of the court" (Matutina vs. Judge Buslon and the Sheriff of Surigao, 109 Phil. 140, 142).
It is an offense against the authority and dignity of the court. That is not true in this case. The
contempt charges should be dismissed.
The certiorari case. — The petitioner injected into this case issues which involve the merits of
Quemada's action for reconveyance of certain properties and which are not germane to the
instant certiorari action. Those issues will be resolved by the lower court in the main case.
The only legal issue to be resolved is whether Judge Ferandos gravely abused his discretion in
denying Mrs. Midgely's motion to dismiss based on the grounds of (a) lack of jurisdiction over
her person and (b) lack of a showing that earnest efforts were exerted to effect a compromise.
The said order is interlocutory. It could eventually be reviewed in the appeal in the main case.
While this Court generally does not entertain a petition for certiorari questioning the propriety of
an interlocutory order, yet when a grave abuse of discretion has been patently committed, or the
lower court has acted capriciously and whimsically, then it devolves upon this Court to exercise
its supervisory authority and to correct the error committed (Manila Electric Co. and Sheriff of
Quezon City vs. Hon. Enriquez, etc. and Espinosa, 110 Phil. 499, 503; Abad Santos vs. Province
of Tarlac, 67 Phil. 480).
We are of the opinion that the lower court has acquired jurisdiction over the person of Mrs.
Midgely by reason of her voluntary appearance. The reservation in her motion to dismiss that
she was making a special appearance to contest the court's jurisdiction over her person may be
disregarded.
It may be disregarded because it was nullified by the fact that in her motion to dismiss she relied
not only on the ground of lack of jurisdiction over the person but also on the ground that there
was no showing that earnest efforts were exerted to compromise the case and because she
prayed "for such other relief as" may be deemed "appropriate and proper".
Thus, it was held that where the defendant corporation (which was not properly summoned
because the summons was served upon its lawyer) filed a motion to dismiss on the ground of
lack of jurisdiction over its person but in the same motion it prayed for the dismissal of the
complaint on the ground of prescription, it was held that, by invoking prescription, it necessarily
admitted the court's jurisdiction upon its, person and, therefore, it was deemed to have
abandoned its special appearance and voluntarily submitted itself to the court's jurisdiction
(Republic vs. Ker & Co., Ltd., 64 O. G. 3761, 18 SCRA 207, 213-214 citing Flores vs. Zurbito,
37 Phil. 746 and Menghra vs. Tarachand and Rewachand, 67 Phil. 286).
"When the appearance is by motion for the purpose of objecting to the jurisdiction of the court
over the person, it must be for the sole and separate purpose of objecting to the jurisdiction of
the court. If his motion is for any other purpose than to object to the jurisdiction of the court over
his person, he thereby submits himself to the jurisdiction of the court. A special appearance by
motion made for the purpose of objecting to the jurisdiction of the court over the person will be
held to be a general appearance, if the party in said motion should, for example, ask for a
dismissal of the action upon the further ground that the court had no jurisdiction over the subject
matter." (Syllabus, Flores vs. Zurbito, supra, at page 751. That rule was followed in Ocampo vs.
Mina and Arejola, 41 Phil. 308).
Where the defendant contended that the court did not acquire jurisdiction over his person by
means of the publication of the corresponding summons in Hawaii, where he was residing,
because the action did not relate to personal or real properties situated in the Philippines in
which the defendant had or claimed a lien or interest, actual or contingent, it was held that the
said defendant nevertheless submitted to the court's jurisdiction when he filed a motion wherein
he contested the court's jurisdiction over his person and at the same time prayed that he be
relieved from the effects of the judgment by default, attaching to his motion an affidavit of merits.
"He thereby impliedly waived his special appearance assailing the jurisdiction of the court over
his person, and voluntarily submitted to the jurisdiction of said court." (Menghra vs. Tarachand
and Rewachand, supra. See Tenchavez vs. Escaño, L-19671, September 14, 1966, 17 SCRA
684 and Sharruf vs. Bubla, L-17029, September 30, 1964, 12 SCRA 79 where it was held that
a non-resident alien, by filing his complaint in a Philippine court, submits thereby to its jurisdiction
and the court acquires jurisdiction over him even if as a matter of fact he had never been able
to enter the Philippines).
Having shown that Mrs. Midgely had voluntarily submitted to the lower court's jurisdiction when
she filed her motion to dismiss (see sec. 23, Rule 14, Rules of Court), the inevitable conclusion
is that it did not commit any grave abuse of discretion in denying her motion to dismiss.
In petitioner's lengthy memorandum and reply she confined her arguments to the jurisdictional
issue. She even argued that the lower court does not have jurisdiction over the res, a contention
that is palpably baseless.
She did not discuss the second ground of her motion to dismiss, which is non-compliance with
the requirement of article 222 of the Civil Code on compromise of intra-family disputes. She was
presumably convinced by the lower court's argument that such a compromise would violate the
prohibition in article 2035 of the Civil Code against compromise on a person's civil status (See
De Raquiza vs. Castellvi, L-17630, October 31, 1963, 9 SCRA 395).
The case may be viewed from another angle. Supposing arguendo that the lower court did not
acquire jurisdiction over the person of Mrs. Midgely, still her motion to dismiss was properly
denied because Quemada's action against her may be regarded as a quasi in rem action where
jurisdiction over the person of the nonresident defendant is not necessary and where service of
summons is required only for the purpose of complying with the requirement of due process
(Perkins vs. Dizon, 69 Phil. 186; Banco Español-Filipino vs. Palanca, 37 Phil. 921; Mabanag vs.
Gallemore, 81 Phil. 254).
An action quasi in rem is an action between parties where the direct object is to reach and
dispose of property owned by them, or of some interest therein (1 Am Jur 2nd 574; State ex rel.
South Brevard Drainage Dist. vs. Smith, 170 So. 440, 126 Fla. 72). Quemada's action falls within
that category.
With respect to the extraterritorial service of summons to a nonresident defendant like Mrs.
Midgely, Rule 14 of the Rules of Court provides:têñ.£îhqwâ£
SEC. 17. Extraterritorial service. — When the defendant does not reside and is not found in the
Philippines and the action affects the personal status of the plaintiff or relates to, or the subject
of which is, property within the Philippines, in which the defendant has or claims a lien or interest,
actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the
defendant from any interest therein, or the property of the defendant has been attached within
the Philippines, service may, by leave of court, be effected out of the Philippines by personal
service as under section 7; or by publication in a newspaper of general circulation in such places
and for such time as the court may order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall specify a reasonable
time, which shall not be less than sixty (60) days after notice, within which the defendant must
answer.
Under section 17, extraterritorial service of summons is proper (1) when the action affects the
personal status of the plaintiff; (2) when the action relates to, or the subject of which is, property
within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent;
(3) when the relief demanded in such an action consists, wholly or in part, in excluding the
defendant from any interest in property located in the Philippines, and (4) when defendant
nonresident's property has been attached within the Philippines (Sec. 17, Rule 14, Rules of
Court).
In any of such four cases, the service of summons may, with leave of court, be effected out of
the Philippines in three ways: (1) by personal service; (2) by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a copy
of the summons and order of the court should be sent by registered mail to the last known
address of the defendant, and (3) service of summons may be effected in any other manner
which the court may deem sufficient. That third mode of extraterritorial service of summons was
substantially complied with in this case.
In Civil Case No. 274-T the subject matter of the action for reconveyance consists of properties
of Alvaro Pastor, Sr. which are located in Cebu. Mrs. Midgely claims an actual interest in those
properties. She has been receiving a share of the income therefrom. Therefore, the
extraterritorial service of summons upon her was proper. As already noted, the action against
her is quasi in rem. (See Brown vs. Brown, 113 Phil. 442).
The record does not show whether Judge Ferandos was consulted by the Clerk of Court and by
Quemada's counsel when the service of summons was effected through the Philippine Embassy
in Madrid. But although there was no court order allowing service in that manner, that mode of
service was later sanctioned or ratified by Judge Ferandos in his order of May 8, 1971. In another
order he corrected the defect in the summons by giving Mrs. Midgely the sixty-day reglementary
period for answering the complaint.
In the Banco Español-Filipino case, supra, the failure of the clerk of court, in a case of
foreclosure of a mortgage executed by a non-resident defendant (which is an action quasi in
rem) to mail to the defendant's last place of residence copies of the summons and complaint, as
required in section 399 of Act 190 (now section 17 of Rule 14) was held not to have affected the
court's jurisdiction over the res.
In the Perkins case, supra, Eugene Arthur Perkins sued in the Court of First Instance of Manila
the Benguet Consolidated Mining Company, a domestic firm, together with Idonah Slade Perkins
and George Engelhard, two nonresidents, who were summoned by publication. The service of
summons was based on section 398 of Act 190 (from which section 17 of Rule 14 was partly
taken) which provides that service of summons by publication may be made on a nonresident in
"an action which relates to, or the subject of which is, real or personal property within the Islands,
in which such person defendant or foreign corporation defendant, has or claims a lien or interest,
actual or contingent, or in which the relief demanded consists wholly or in part in excluding such
person or foreign corporation from any interest therein."
Eugene Arthur Perkins in his complaint prayed that Engelhard and Idonah Slade Perkins, "be
adjudged without interest" in certain shares of stock of the Benguet Consolidated Mining
Company and be excluded from any claim involving such shares.
Idonah Slade Perkins challenged the court's jurisdiction over her person. Judge Arsenio P. Dizon
overruled her objection. She filed in this Court a certiorari proceeding wherein she prayed that
the summons by publication issued against her be declared void and that Judge Dizon be
permanently prohibited from taking any action in the case.
This Court held that the action filed by Eugene Arthur Perkins against the two non-residents was
a quasi in rem action and not an action in personam. In that action plaintiff Perkins sought to
exclude Idonah Slade Perkins from any interest in property located in the Philippines consisting
shares of stock in a domestic sociedad anomina.
This Court clarified that in a quasi in rem action jurisdiction over the person of the nonresident
defendant is not essential. The service of summons by publication is required "merely to satisfy
the constitutional requirement of due process". The judgment of the court in the case would
settle the title to the shares of stock and to that extent it partakes of the nature of a judgment in
rem. Consequently, the lower court had jurisdiction to try the case even if it had not acquired
jurisdiction over the person of Idonah Slade Perkins. The judgment would be confined to the res.
No personal judgment could be rendered against the non-resident.

Other considerations may be adduced to indicate the frivolous character of Mrs. Midgely's
petition for certiorari. There is the circumstance that she actually received the summons and a
copy of the complaint. Thus, she cannot complain that she was unaware of the action against
her. The requirement of due process has been satisfied. She is cognizant not only of Quemada's
complaint in Civil Case No. 274-T in Branch IX of the Court of First Instance of Cebu at Toledo
City but also of the testamentary proceeding instituted earlier by Quemada for the settlement of
the estate of Alvaro Pastor, Sr. in the Cebu City Branch I of the Court of First Instance of Cebu.
In that proceeding she and her brother, Alvaro Pastor, Jr., through her counsel in this case,
submitted to the court's jurisdiction by filing an opposition to Quemada's petition.
It should be noted that Civil Case No. 274-T is related to the testamentary proceeding (which is
a proceeding in rem par excellance) because the former case was filed by Quemada for the
purpose of recovering the properties which, according to his understanding, belong to the estate
of Alvaro Pastor, Sr. and which are held by Mrs. Midgely and the spouses Alvaro Pastor, Jr. and
Maria Elena Achaval.
WHEREFORE, the contempt charges and the petition for certiorari are dismissed. Costs against
the petitioner.
SO ORDERED.

G.R. No. 46631 November 16, 1939
IDONAH SLADE PERKINS, petitioner,
vs.
ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and
BENGUET CONSOLIDATED MINING COMPANY, respondents.
Alva J. Hill for petitioner.
Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated Mining
Company.
DeWitt, Perkins & Ponce Enrile for respondent Perkins.
MORAN, J.:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First
Instance of Manila against the Benguet Consolidated Mining Company for dividends amounting
to P71,379.90 on 52,874 shares of stock registered in his name, payment of which was being
withheld by the company; and, for the recognition of his right to the control and disposal of said
shares, to the exclusion of all others. To the complaint, the company filed its answer alleging, by
way of defense, that the withholding of such dividends and the non-recognition of plaintiff's right
to the disposal and control of the shares were due to certain demands made with respect to said
shares by the petitioner herein, Idonah Slade Perkins, and by one George H. Engelhard. The
answer prays that the adverse claimants be made parties to the action and served with notice
thereof by publication, and that thereafter all such parties be required to interplead and settle
the rights among themselves. On September 5, 1938, the trial court ordered respondent Eugene
Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah Slade Perkins,
and George H. Engelhard. The complaint was accordingly amended and in addition to the relief
prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade
Perkins and George Engelhard be adjudged without interest in the shares of stock in question
and excluded from any claim they assert thereon. Thereafter, summons by publication were
served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard,
pursuant to the order of the trial court. On December 9, 1938, Engelhard filed his answer to the
amended complaint, and on December 10, 1938, petitioner Idonah Slade Perkins, through
counsel, filed her pleading entitled "objection to venue, motion to quash, and demurrer to
jurisdiction" wherein she challenged the jurisdiction of the lower court over her person.
Petitioner's objection, motion and demurrer having been overruled as well as her motion for
reconsideration of the order of denial, she now brought the present petition for certiorari, praying
that the summons by publication issued against her be declared null and void, and that, with
respect to her, respondent Judge be permanently prohibited from taking any action on the case.
The controlling issue here involved is whether or not the Court of First Instance of Manila has
acquired jurisdiction over the person of the present petitioner as a non-resident defendant, or,
notwithstanding the want of such jurisdiction, whether or not said court may validly try the case.
The parties have filed lengthy memorandums relying on numerous authorities, but the principles
governing the question are well settled in this jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued
in the Philippine courts and it appears, by the complaint or by affidavits, that the action relates
to real or personal property within the Philippines in which said defendant has or claims a lien or
interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in
excluding such person from any interest therein, service of summons maybe made by
publication.
We have fully explained the meaning of this provision in El Banco Español Filipino vs. Palanca,
37 Phil., 921, wherein we laid down the following rules:
(1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter
and over the persons of the parties. Jurisdiction over the subject-matter is acquired by
concession of the sovereign authority which organizes a court and determines the nature and
extent of its powers in general and thus fixes its jurisdiction with reference to actions which it
may entertain and the relief it may grant. Jurisdiction over the persons of the parties is acquired
by their voluntary appearance in court and their submission to its authority, or by the coercive
power of legal process exerted over their persons.
(2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot
acquire jurisdiction over his person even if the summons be served by publication, for he is
beyond the reach of judicial process. No tribunal established by one State can extend its process
beyond its territory so as to subject to its decisions either persons or property located in another
State. "There are many expressions in the American reports from which it might be inferred that
the court acquires personal jurisdiction over the person of the defendant by publication and
notice; but such is not the case. In truth, the proposition that jurisdiction over the person of a
non-resident cannot be acquired by publication and notice was never clearly understood even
in the American courts until after the decision had been rendered by the Supreme Court of the
United States in the leading case of Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the
light of that decisions which have subsequently been rendered in that and other courts, the
proposition that jurisdiction over the person cannot be thus acquired by publication and notice is
no longer open to question; and it is now fully established that a personal judgment upon
constructive or substituted service against a non-resident who does not appear is wholly invalid.
This doctrine applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is rendered;
and the only exception seems to be found in the case where the non-resident defendant has
expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A.
[N. S.], 292; see also L.R.A. 585; 35 L.R.A. [N.S.], 312.)
(3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a
Philippine court. Where, however, the action is in rem or quasi in rem in connection with property
located in the Philippines, the court acquires jurisdiction over the res, and its jurisdiction over the
person of the non-resident is non-essential. In order that the court may exercise power over
the res, it is not necessary that the court should take actual custody of the property, potential
custody thereof being sufficient. There is potential custody when, from the nature of the action
brought, the power of the court over the property is impliedly recognized by law. "An illustration
of what we term potential jurisdiction over the res, is found in the proceeding to register the title
of land under our system for the registration of land. Here the court, without taking actual physical
control over the property , assumes, at the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner
against all the world."
(4) As before stated, in an action in rem or quasi in rem against a non-resident defendant,
jurisdiction over his person is non-essential, and if the law requires in such case that the
summons upon the defendant be served by publication, it is merely to satisfy the constitutional
requirement of due process. If any be said, in this connection, that "may reported cases can be
cited in which it is assumed that the question of the sufficiency of publication or notice in the
case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes
said to acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly
originally adopted by the court because of the analogy between service by publication and
personal service of process upon the defendant; and, as has already been suggested, prior to
the decision of Pennoyer v. Neff (supra), the difference between the legal effects of the two forms
of service was obscure. It is accordingly not surprising that the modes of expression which had
already been moulded into legal tradition before that case was decided have been brought down
to the present day. But it is clear that the legal principle here involved is not affected by the
peculiar languages in which the courts have expounded their ideas."lawphi1.net
The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a
non-resident, as laid down by the Supreme Court of the United States in Pennoyer v. Neff, supra,
may be found in a recognized principle of public law to the effect that "no State can exercise
direct jurisdiction and authority over persons or property without its territory. Story, Confl. L., ch.
2; Wheat, Int. L., pt. 2, ch. 2. The several States are of equal dignity and authority, and the
independence of one implies the exclusion of power from all others. And so it is laid down by
jurists, as an elementary principle, that the laws of one State have no operation outside of its
territory, except so far as is allowed by comity; and that no tribunal established by it can extend
its process beyond that territory so as to subject either persons or property to its decisions. "Any
exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable
of binding such persons or property in any other tribunals." Story, Confl. L., sec. 539." (Pennoyer
v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.).
When, however, the action relates to property located in the Philippines, the Philippine courts
may validly try the case, upon the principle that a "State, through its tribunals, may subject
property situated within its limits owned by non-residents to the payment of the demand of its
own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the
sovereignty of the State where the owners are domiciled. Every State owes protection to its
citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority
to hold and appropriate any property owned by such non-residents to satisfy the claims of its
citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated
within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens,
and the inquiry can then be carried only to the extent necessary to control the disposition of the
property. If the non-resident has no property in the State, there is nothing upon which the
tribunals can adjudicate." (Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene Arthur Perkins
in his amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her
from any interest in a property located in the Philippines. That property consists in certain shares
of stocks of the Benguet Consolidated Mining Company, a sociedad anonima, organized in the
Philippines under the provisions of the Spanish Code of Commerce, with its principal office in
the City of Manila and which conducts its mining activities therein. The situs of the shares is in
the jurisdiction where the corporation is created, whether the certificated evidencing the
ownership of those shares are within or without that jurisdiction. (Fletcher Cyclopedia
Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold that the action
thus brought is quasi in rem, for while the judgement that may be rendered therein is not strictly
a judgment in rem, "it fixes and settles the title to the property in controversy and to that extent
partakes of the nature of the judgment in rem." (50 C.J., p 503). As held by the Supreme Court
of the United States in Pennoyer v. Neff (supra);
It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and
has for its object the disposition of the property, without reference to the title of individual
claimants; but , in a large and more general sense, the terms are applied to actions between
parties, where the direct object is to reach and dispose of property owned by them, or of some
interest therein.
The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the personal action, for it merely seeks to call conflicting claimants into court so that they may
person of the non-resident. In order to satisfy the constitutional requirement of due process, interplead and litigate their several claims among themselves, and no specific relief is prayed for
summons has been served upon her by publication. There is no question as to the adequacy of against them, as the interpleader have appeared in court, one of them pleads ownership of the
publication made nor as to the mailing of the order of publication to the petitioner's last known personal property located in the Philippines and seeks to exclude a non-resident claimant from
place of residence in the United States. But, of course, the action being quasi in rem and notice any interest therein, is a question which we do not decide not. Suffice it to say that here the
having be made by publication, the relief that may be granted by the Philippine court must be service of the summons by publication was ordered by the lower court by virtue of an action quasi
confined to the res, it having no jurisdiction to render a personal judgment against the non- in rem against the non-resident defendant.
resident. In the amended complaint filed by Eugene Arthur Perkins, no money judgment or other
relief in personam is prayed for against the petitioner. The only relief sought therein is that she Respondents contend that, as the petitioner in the lower court has pleaded over the subject-
be declared to be without any interest in the shares in controversy and that she be excluded matter, she has submitted herself to its jurisdiction. We have noticed, however, that these pleas
from any claim thereto. have been made not as independent grounds for relief, but merely as additional arguments in
support of her contention that the lower court had no jurisdiction over the person. In other words,
Petitioner contends that the proceeding instituted against her is one of interpleading and is she claimed that the lower court had no jurisdiction over her person not only because she is a
therefore an action in personam. Section 120 of our Code of Civil Procedure provides that non-resident, but also because the court had no jurisdiction over the subject-matter of the action
whenever conflicting claims are or may be made upon a person for or relating to personal and that the issues therein involved have already been decided by the New York court and are
property, or the performance of an obligation or any portion thereof, so that he may be made being relitigated in the California court. Although this argument is obviously erroneous, as neither
subject to several actions by different persons, such person may bring an action against the jurisdiction over the subject-matter nor res adjudicata nor lis pendens has anything to do with
conflicting claimants, disclaiming personal interest in the controversy, and the court may order the question of jurisdiction over her person, we believe and so hold that the petitioner has not,
them to interplead with one another and litigate their several claims among themselves, there by such erroneous argument, submitted herself to the jurisdiction of the court. Voluntary
upon proceed to determine their several claims. Here, The Benguet Consolidated Mining appearance cannot be implied from either a mistaken or superflous reasoning but from the
Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred that in nature of the relief prayed for.
connection with the shares of stock in question, conflicting claims were being made upon it by
said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George H. For all the foregoing, petition is hereby denied, with costs against petitioner.
Engelhard, and prayed that these last two be made parties to the action and served with Avanceña, C.J., Villa-Real, Imperial, Diaz and Concepcion, JJ., concur.
summons by publication, so that the three claimants may litigate their conflicting claims and
settle their rights among themselves. The court has not issued an order compelling the conflicting
claimants to interplead with one another and litigate their several claims among themselves, but
instead ordered the plaintiff to amend his complaint including the other two claimants as parties
defendant. The plaintiff did so, praying that the new defendants thus joined be excluded fro any
interest in the shares in question, and it is upon this amended complaint that the court ordered
the service of the summons by publication. It is therefore, clear that the publication of the
summons was ordered not in virtue of an interpleading, but upon the filing of the amended
complaint wherein an action quasi in rem is alleged.
Had not the complaint been amended, including the herein petitioner as an additional defendant,
and had the court, upon the filing of the answer of the Benguet Consolidated Mining Company,
issued an order under section 120 of the Code of Civil Procedure, calling the conflicting claimants
into court and compelling them to interplead with one another, such order could not perhaps
have validly been served by publication or otherwise, upon the non-resident Idonah Slade
Perkins, for then the proceeding would be purely one of interpleading. Such proceeding is a
G.R. No. 141423 November 15, 2000
MELINA P. MACAHILIG, petitioner,
vs.
The Heirs of GRACE M. MAGALIT, respondents.
DECISION
PANGANIBAN, J.:
An interlocutory order cannot give rise to res judicata. Only a final and unappealable judgment
on the merits rendered by a court of competent jurisdiction can effectively bar another action
that has identical parties, subject matter and cause of action as the prior one.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the
Decision1 dated October 15, 1999, and the Resolution dated December 28, 1999, issued by the
Court of Appeals (CA) in CA-GR SP No. 31809. The dispositive portion of the challenged
Decision reads as follows:
"WHEREFORE, the petition for certiorari is hereby DENIED and is accordingly DISMISSED for
lack of merit.
"SO ORDERED."2
The assailed Resolution,3 on the other hand, denied petitioner’s Motion for Reconsideration.
The Facts
On February 5, 1965, Pepito Magalit, deceased husband of Dr. Grace M. Magalit (now
substituted by her heirs as respondents in view of her recent demise), filed with the then
Philippine Fisheries Commission -- now Bureau of Fisheries and Aquatic Resources (BFAR) --
Fishpond Application No. 24400. The application was for eleven (11) hectares of land situated
in the Municipality of Batan, Province of Aklan.4 On April 13, 1972, Bernardo Macahilig,
deceased husband of petitioner, filed with the BFAR Fishpond Application No. 29972 for five of
the eleven hectares which Magalit had previously applied for.5 On February 28, 1972, BFAR
rejected Macahilig’s application for his failure to submit all the requirements.
Undaunted, Macahilig protested Magalit’s application (in what will be referred to as the "Fishpond
Case") on November 8, 1976, contending that for a period of 20 years, he had been in actual
possession of the five-hectare area included in Magalit’s application.
On August 22, 1979, the director of BFAR ordered the Committee on Fishpond Claims and
Conflict to hear and determine the rights of Macahilig and Magalit over the disputed area. The
Committee concluded that the former was merely the latter’s laborer and caretaker. On June 6,
1980, BFAR Director Felix R. Gonzales rendered an Order disposing as follows:
"WHEREFORE, premises considered, the letter protest dated November 8, 1976 filed by
Bernardo Macahilig against Pepito Magalit, should be as hereby it is DISMISSED for lack of
merit. Fp. A. No. 29972 of Bernardo Macahilig shall remain REJECTED; and Fp. A. No. 24400
filed by Pepito Magalit should be, as it is hereby GIVEN DUE COURSE, to contain 10.0 hectares
only, as discussed earlier on page 8 hereof, subject to the condition that the improvements
existing on the area shall be forfeited in favor of the Government with a provision that said Pepito
Magalit has the option if he so desire[s] to purchase from the government the aforesaid
improvements after the re-appraisal thereof by representatives of this Office, otherwise, said
area shall be declared open and available
"The Regional Director of Iloilo City is hereby directed to advise Bernardo Macahilig or other
occupants to vacate the premises after the finality of this Order and take custody of the area in
question. (Annex "B", id.; pp. 30-31, id.)."6
Macahilig elevated this disposition to the Office of the President. However, then Presidential
Assistant for Legal Affairs Manuel M. Lazaro, by "authority of the President," denied
reconsideration in this language:
"WHEREFORE, the motion for reconsideration of Bernardo Macahilig is hereby DENIED. This
DENIAL IS FINAL."
Subsequently, Macahilig challenged this action via a "Petition for Review with Prayer for an
Issuance of a Writ of Injunction and/or Restraining Order." He had filed the Petition originally
with the Supreme Court, which then referred it to the Intermediate Appellate Court (IAC) where
it was docketed as AC-GR SP No. 03448. On March 26, 1985, the appellate court rendered a
Decision declaring that Magalit had occupied, cleared and improved the land; and that Macahilig
was his mere caretaker and laborer. It disposed as follows:
"WHEREFORE, this petition for review is hereby DENIED and is DISMISSED, for lack of legal
and factual basis.
"It is hereby ordered that the petitioner or anybody acting in his behalf is/are to vacate the subject
property in question, and to turn it over to the heirs of Pepito Magalit, considering that the
challenged decision as abovestated, has long become final and executory on May 2, 1984 yet."7
Later on, Magalit instituted Civil Case No. 3517 in the Regional Trial Court of Kalibo, Aklan, for
the issuance of a Writ of Execution.8 On November 29, 1985, Deputy Provincial Sheriff of Aklan
Eriberto Taytayon Jr. implemented the Writ issued by Judge Jaime D. Discaya on October 30,
1985. The heirs of Pepito Magalit, represented by Dr. Magalit, filed on August 6, 1990, a "Motion
for Correction of the Implementation of the Decision of the Court of Appeals in CA-GR SP No.
03448 [p]romulgated [o]n March 26, 1985 and of the Decision of the Court dated October 30,
1985." In that Motion, they prayed that the trial court properly implement said IAC Decision by
ordering Spouses Macahilig to turn over to her the possession of Lot 4417, which had an area
of 2.0805 hectares, more or less.9 Dr. Magalit contended that the Writ of Execution was not
satisfied, because the spouses had refused to give up the fishpond in question.
On September 17, 1992, Judge Maria Carillo-Zaldivar issued the following Order:
"Finding from the Ma[n]ifestation of counsel on record for the movant that the two (2) hectares
of land she desires to be executed thru an alias writ is outside the ten (10) hectares awarded to
her by the Fisheries, this Court has no jurisdiction over her claim.
"WHEREFORE, the motion for reconsideration dated September 9, 1992 is hereby DENIED."10
On October 9, 1992, Dr. Magalit filed a "Petition for Contempt Against Melina Macahilig," alleging
that on November 29, 1985, Bernardo Macahilig had refused to turn over Lot 4417 to her.
The trial court appointed a commissioner to determine whether Lot 4417 was included in the
parcels of land awarded to the deceased Magalit.11 Sheriff Nelson R. dela Cruz, the appointed
commissioner, submitted his Commissioner’s Report dated May 13, 1993, pertinent portions of
which read:
"That on April 29, 1993[,] a certain Cipriano Matutino, an employee of the Department of
Agriculture Regional Office in Iloilo City personally came to the [o]ffice of the undersigned
commissioner and delivered a letter dated April 26, 1993, addressed to the undersigned with
attached [s]ketch. x x x.
"That on May 7, 1993, the undersigned constituted [sic] himself into the [f]ishpond in [q]uestion
which is situated at Lalab, Batan, Aklan, together with x x x Respondent Melina Macahilig,
Barangay Chairman Robinson de la Vega and the representative of Dr. Grace M. Magalit.
"That x x x Petitioner Dr. Grace M. Magalit is in the actual possession of Lot-A with an area of
99,114 [s]quare [m]eters or 9.9 [h]as. which is a fully developed [f]ishpond, and without any
question from the respondent. However, as per Order of the Bureau of Fisheries and Aquatic
Resources dated June 6, 1980, that portion labelled Parcel-A in the sketch with an area of 2.3
[h]as. has to be excluded because it is needed for [f]orest purposes. So if we deduct 2.3 [h]as.
from the 9.9 [h]as. the remaining area for the [p]etitioner will only be 7.6 [h]as., that is [why] the
Bureau of Fisheries has to include Lot 4417 and Lot 5216, in order that the area of 10.0 hectares
in said order will be satisfied."12
In the Order of June 18, 1993, the trial court adopted the Commissioner’s Report and ruled in
favor of Dr. Magalit in this wise:
"Finding from the [C]ommissioner’s [R]eport and [the] sketch submitted that the questioned Lot
4417 with an area of 20,805 square meters is actually in the possession of [Petitioner] Melina
Macahilig but which was given to the [respondent’s] husband, let a writ of execution be issued
in favor of the [respondent] and against [Petitioner] Melina Macahilig for the delivery of Lot 4417.
"As regards Lot 5216, the report of the commissioner states that the same is covered by an
Original Certificate of Title No. P-19359 in the name of Julie Cawaling. The petitioner is hereby
directed to desist from occupying this lot until the original certificate of title in the name of Julie
Cawaling shall have been passed upon by a competent court.
"Failure on the part of the [petitioner] to deliver x x x said area covered by Lot 4417 to the
[respondent], this court will declare her in contempt."13
Petitioner moved for reconsideration, but her motion was denied in the Order of July 14,
1993,14 which held that she had no valid reason to possess the disputed lot, considering that her
husband’s application therefor had been rejected.15
Unfazed by the unfavorable turn of events, petitioner filed with the CA, on August 12, 1993, a
Petition for Certiorari16 alleging that the trial court had acted with grave abuse of discretion in
issuing the Orders dated June 18 and July 14, 1993.
Ruling of the Court of Appeals
The CA ruled that the trial court did not commit grave abuse of discretion when it issued a Writ
of Execution ordering the delivery of Lot 4417 to Dr. Magalit. The records show that the fishpond
application of petitioner’s husband was rejected by the BFAR, and that petitioner did not present
any other evidence to prove her right of possession over the disputed property.
On the other hand, Dr. Magalit’s claim was based on the Decision in the Fishpond Case, which
upheld her right -- as the surviving spouse of the applicant -- to possess the ten hectares of land
awarded to him, including Lot 4417 which covered an area of more or less 2.0805 hectares. The
disputed lot was included in the area awarded to Dr. Magalit because of the report of the
commissioner appointed by the trial court to settle the issue. Petitioner had not objected either
to the said appointment or to the Report.
The Orders of June 18 and July 14, 1993 were based on the evidence presented before the trial
court. Consequently, they cannot be regarded as capricious and whimsical exercises of judicial
power.
Hence, this Petition.17
The Issues
Petitioner interposes the following issues for our resolution:18
"Whether x x x the Decision dated October 15, 1999 and the Resolution dated December 28,
1999 are contrary to law and established evidence and jurisprudence because the court a
quo has no jurisdiction to order the execution of the Orders dated June 18, 1993 and July 14,
1993 x x x requiring the petitioner to turn over Lot no. 4417 to Dra. Magalit.
"Whether x x x [said] Orders x x x are void for lack of jurisdiction.
"Whether [said] Orders include Lot 4417.
"Whether x x x the lot in question can be turned over to the private respondents.
"Whether x x x there is a judgment in favor of Dra. Magalit including Lot 4417.
"Whether x x x the Order dated September 17, 1992 is conclusive or operates as a bar to the
Orders dated June 18, 1993 and July 14, 1993."
In simpler terms, the Petition raises the following crucial issues:
1. Was the issuance of the Writ of Execution in Civil Case No. 3517 proper?
2. Did the trial court acquire jurisdiction over Lot 4417?
3. Did the September 17, 1992 Order constitute res adjudicata barring the June 18 and July 14,
1993 Orders of the trial court?
The Court’s Ruling
The Petition has no merit.
First Issue:
Propriety of Writ of Execution
Petitioner insists that the Decision in AC-GR SP No. 03448 has already been complied with,
because the fishponds adjudicated to respondents had been surrendered to the latter. She cites
as evidence the receipt dated November 27, 1985 signed by Robinson de la Vega, the
administrator of Dr. Magalit; and the Decision in Civil Case No. 3436 for annulment of mortgage.
The receipt19 stated that De la Vega had received from Deputy Sheriff Taytayon a parcel of land
located in Barangay Lalab, Batan, Aklan, having an area of 99,114 square meters. On the other
hand, the RTC of Kalibo, Aklan, issued on November 4, 1988, in Civil Case No. 3436, a Decision
for annulment of mortgage (the "Annulment Case," for short), which states:
"Moreover, as above stated, the disputed fishpond had, in December 1985, already been turned
over officially to [Dr. Grace Magalit] by the Office of the Provincial Sheriff with the assistance of
the Office of the Provincial Fishery Officer and the Philippine Constabulary."20
We disagree. A judgment is a final ruling by a court of competent jurisdiction regarding the rights
of the parties or other matters submitted to it in an action or a proceeding.21 As clearly stated in
the assailed Decision, the heirs of Dr. Magalit possessed a right superior to that of petitioner’s
husband, whose application was rejected by BFAR, Presidential Assistant Lazaro and the IAC.
Being the prevailing party, respondents were entitled to the execution of the Decision in the
Fishpond Case.
In her "Motion for Correction" filed in Civil Case No. 3517, Dr. Magalit averred that "per Officer’s
Return x x x the Writ of Execution dated November 29, 1985, x x x was not satisfied because
the defendant-spouses x x x opposed the official [turnover] of the fishpond land in question x x
x."22 Furthermore, in the "Petition for Contempt against Melina Macahilig" dated October 9, 1992,
she also stated that petitioner and her husband refused to turn over the possession of the
disputed fishpond with an area of 2.0905 hectares despite the service of the Writ of Execution.
She added that "on November 29, 1985, Deputy Sheriff x x x Taytayon Jr. [served] the Writ of
Execution x x x and that the defendant, Bernardo Macahilig, did not acknowledge receipt of the
Writ of Execution, [alleging] that he had nothing to turn over."23
This failure to satisfy the judgment in the Fishpond Case was confirmed by the Commissioner’s
Report dated May 13, 1993, which explained:
"That x x x Dr. Grace M. Magalit is in the actual possession of Lot-A with an area of 99,114
[s]quare [m]eters or 9.9 [h]as. which is a fully developed [f]ishpond, and without any question
from the [petitioner]. However, as per Order of the Bureau of Fisheries and Aquatic Resources
dated June 6, 1980, that portion labeled Parcel-A in the sketch with an area of 2.3 [h]as. has to
be excluded because it is needed for [f]orest purposes. So if we deduct 2.3 has. from the 9.9
[h]as. the remaining area for the petitioner will only be 7.6 [h]as., that is [why] the Bureau of
Fisheries has to include Lot 4417 and Lot 5216, in order that the area of 10.0 hectares in said
order will be satisfied."24
The Decision in the Annulment Case, on the other hand, has no effect or bearing on the Fishpond
Case. On February 28, 1985, the Annulment Case (Civil Case No. 3436) was filed with the RTC
of Kalibo, Aklan, praying for the invalidation of the real estate mortgage which Spouses Macahilig
had constituted in favor of the Aklan Development Bank. The mortgage was a lien on the
fishponds that had been awarded to Dr. Magalit’s husband. These fishponds were described in
the Complaint for annulment of mortgage as follows:
"PARCEL ONE:
"A parcel of fishpond land with an area of Twenty Thousand Eight Hundred Five (20,805)
[s]quare meters, more or less. Bounded on the North by Lot 5212; South by a [c]reek; East by a
[c]reek; West by Lot No. A in the [s]ketch [p]lan prepared by the Bureau of Fisheries."
"PARCEL TWO:
"A parcel of fishpond land with an area of Ninety Nine Thousand One Hundred Fourteen (99,114)
[s]quare meters, more or less, located in Lalab, Batan, Aklan. Bounded on the North by Lot 4420
Azarraga and others; South by a [c]reek; East by Lot 4417; and West by Lot B; shown in the
[s]ketch [p]lan prepared by the Bureau of Fisheries."25
On November 4, 1988, Judge Romulo T. Arellano invalidated the mortgage and the sale of said
parcel of land with a declaration that the "disputed fishpond" had already been turned over to
Dr. Magalit. The Annulment Case, however, was entirely different from the Fishpond Case. Thus,
the RTC of Kalibo, Aklan, was not barred from ordering the surrender of Lot 4417 to satisfy the
execution of the judgment in the Fishpond Case. The Decision in the Annulment Case simply
meant that the lots mortgaged by the petitioner to the Aklan Development Bank, which formed
part of the 10-hectare property awarded to Dr. Magalit’s husband in the Fishpond Case, were
separate and distinct from Lot 4417. Possession of said Lot 4417, which formed part of the
property awarded to Magalit, was not at issue in the Annulment Case. Contrary to petitioner’s
claim, the Decision therein did not state that this lot was actually turned over to respondents.
Second Issue: Jurisdiction
Petitioner further contends that the trial court gravely abused its discretion in ordering the
turnover of Lot 4417 to Dr. Magalit, because of its earlier ruling that it had no jurisdiction over
said property.
We cannot place much weight on this Order. First, the September 9, 1992 Motion for
Reconsideration taken up in said Order has not been attached to or alleged in the herein Petition.
Hence, we cannot fully consider the nature of the claim that was denied by this Order or
speculate on why the trial court ruled that it had no jurisdiction over the movant’s claim. We
cannot even guess which Order the unidentified movant wanted to be reconsidered.
More important, it is too late in the day for petitioner to challenge the jurisdiction of the trial court.
She clearly submitted to its authority by her unqualified participation in Civil Case No. 3517. We
cannot allow her to attack its jurisdiction simply because it rendered a Decision prejudicial to her
position. Participation in all stages of a case before a trial court effectively estops a party from
challenging its jurisdiction.26 One cannot belatedly reject or repudiate its decision after voluntarily
submitting to its jurisdiction, just to secure affirmative relief against one’s opponent or after failing
to obtain such relief.27 If, by deed or conduct, a party has induced another to act in a particular
manner, estoppel effectively bars the former from adopting an inconsistent position, attitude or
course of conduct that thereby causes loss or injury to the latter.28
Petitioner insists that the trial court had no jurisdiction over the res of Lot 4417 when it issued its
September 17, 1992 Order.
Again, we disagree. Jurisdiction over the res is acquired either (a) by the seizure of the property
under legal process, whereby it is brought into actual custody of the law; or (b) as a result of the
institution of legal proceedings, in which the power of the court is recognized and made
effective.29 In the latter condition, the property, though at all times within the potential power of
the court, may not be in the actual custody of said court.
The trial court acquired jurisdiction over the disputed lot by virtue of the institution of the Petition
for a Writ of Execution filed by the respondents’ predecessors in interest. Without taking actual
physical control of the property, it had an impliedly recognized potential jurisdiction or potential
custody over the res. This was the jurisdiction which it exercised when it issued the Writ of
Execution directing the surrender of Lot 4417 to Dr. Magalit.
Third Issue: Res Judicata
Citing Section 49 of Rule 39, Rules of Court, petitioner insists that the September 17, 1997 Order
of the trial court in Civil Case No. 3517 bars it from rehearing questions on the ownership of Lot
4417. She insists that said Order has become final and executory, because Dr. Magalit did not
appeal it.
We disagree. Final, in the phrase judgments or final orders found in Section 49 of Rule 39, has
two accepted interpretations. In the first sense, it is an order that one can no longer appeal
because the period to do so has expired, or because the order has been affirmed by the highest
possible tribunal involved. The second sense connotes that it is an order that leaves nothing
else to be done, as distinguished from one that is interlocutory. The phrase refers to a final
determination as opposed to a judgment or an order that settles only some incidental, subsidiary
or collateral matter arising in an action; for example, an order postponing a trial, denying a motion
to dismiss or allowing intervention. Orders that give rise to res judicata and conclusiveness of
judgment apply only to those falling under the second category.
For res judicata to apply, the following elements must concur: (1) there is a final judgment or
order; (2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the
judgment is one on the merits; and (4) there is, between the two cases, identity of parties, subject
matter and cause of action.30 For example, an order overruling a motion to dismiss does not give
rise to res adjudicata that will bar a subsequent action, because such order is merely
interlocutory and is subject to amendments until the rendition of the final judgment.31
A judgment or an order on the merits is one rendered after a determination of which party is
upheld, as distinguished from an order rendered upon some preliminary or formal or merely
technical point.32 Dismissal of a case for failure of plaintiff to comply with a "notice of case status"
signed by an officer-in-charge does not have the effect of an adjudication on the merits.33 Strictly
speaking, res judicata does not apply to decisions or orders adjudicating interlocutory motions.

The interlocutory nature of the Order of September 17, 1992 is evident from the fact that the trial
court proceeded to hear and determine the inclusion of Lot 4417 in the Fishpond Case. Without
any objection from petitioner, it commissioned Sheriff de la Cruz to hear and submit a report on
the issue. If it is true, as she claims, that the September 17, 1992 Order constituted a final
judgment, then she should have objected to any further proceedings.
Petitioner alleges that her failure to object on time to the Commissioner’s Report was a "plain
error," which could be corrected by the CA. This is wrong. Her failure to object to the Report
cannot be dismissed as just a matter of assigning errors on appeal. Rather, it was a failure to
assert her right over the lot in dispute, an inaction that constituted estoppel. After having
performed affirmative acts upon which a person acted in good faith, the actor cannot thereafter
repudiate those acts or renege on their effects, to the prejudice of the former.34
The apparent conflict between the Orders of the trial court cannot be construed in favor of
petitioner, since her Petition does not present sufficient basis for us to reverse the CA. The rule
of thumb in these cases is to uphold the validity of all these orders.35 To be sure, petitioner’s lack
of any right to own or possess the disputed lot should be put to rest, as this issue has been
resolved against her several times. It is about time she faces the consequences of those
decisions.
WHEREFORE, the Petition is DENIED, and the assailed Decision and
Resolution AFFIRMED. Petitioner is ordered to SURRENDER the possession of Lot 4417 to
respondents. Costs against petitioner.
SO ORDERED.
[G.R. NO. 162416 - January 31, 2006]
CHESTER DE JOYA, Petitioner, v. JUDGE PLACIDO C. MARQUEZ, in his capacity as
Presiding Judge of Branch 40, Manila-RTC, PEOPLE OF THE PHILIPPINES and THE
SECRETARY OF THE DEPARTMENT OF JUSTICE, Respondents.
DECISION
AZCUNA, J.:
This is a petition for certiorari and prohibition that seeks the Court to nullify and set aside the
warrant of arrest issued by respondent judge against petitioner in Criminal Case No. 03-219952
for violation of Article 315, par. 2(a) of the Revised Penal Code in relation to Presidential Decree
(P.D.) No. 1689. Petitioner asserts that respondent judge erred in finding the existence of
probable cause that justifies the issuance of a warrant of arrest against him and his co-accused.
Section 6, Rule 112 of the Revised Rules of Criminal Procedure provides:
Sec. 6. When warrant of arrest may issue. - (a) By the Regional Trial Court. - Within ten (10)
days from the filing of the complaint or information, the judge shall personally evaluate the
resolution of the prosecutor and its supporting evidence. He may immediately dismiss the case
if the evidence on record clearly fails to establish probable cause. If he finds probable cause,
he shall issue a warrant of arrest, or a commitment order if the accused has already been
arrested pursuant to a warrant issued by the judge who conducted the preliminary
investigation or when the complaint or information was filed pursuant to section 7 of this
Rule. In case of doubt on the existence of probable cause, the judge may order the prosecutor
to present additional evidence within five (5) days from notice and the issuance must be resolved
by the court within thirty (30) days from the filing of the complaint or information.
This Court finds from the records of Criminal Case No. 03-219952 the following documents to
support the motion of the prosecution for the issuance of a warrant of arrest:
1. The report of the National Bureau of Investigation to Chief State Prosecutor Jovencito R. Zuño
as regards their investigation on the complaint filed by private complainant Manuel Dy Awiten
against Mina Tan Hao @ Ma. Gracia Tan Hao and Victor Ngo y Tan for syndicated estafa. The
report shows that Hao induced Dy to invest more than a hundred million pesos in State
Resources Development Management Corporation, but when the latter's investments fell due,
the checks issued by Hao in favor of Dy as payment for his investments were dishonored for
being drawn against insufficient funds or that the account was closed.2
2. Affidavit-Complaint of private complainant Manuel Dy Awiten.3
3. Copies of the checks issued by private complainant in favor of State Resources Corporation.4
4. Copies of the checks issued to private complainant representing the supposed return of his
investments in State Resources.5
5. Demand letter sent by private complainant to Ma. Gracia Tan Hao.6
6. Supplemental Affidavit of private complainant to include the incorporators and members of
the board of directors of State Resources Development Management Corporation as participants
in the conspiracy to commit the crime of syndicated estafa. Among those included was petitioner
Chester De Joya.7
7. Counter-Affidavits of Chester De Joya and the other accused, Ma. Gracia Hao and Danny S.
Hao.
Also included in the records are the resolution issued by State Prosecutor Benny Nicdao finding
probable cause to indict petitioner and his other co-accused for syndicated estafa,8 and a copy
of the Articles of Incorporation of State Resources Development Management Corporation
naming petitioner as incorporator and director of said corporation.
This Court finds that these documents sufficiently establish the existence of probable cause as
required under Section 6, Rule 112 of the Revised Rules of Criminal Procedure. Probable cause
to issue a warrant of arrest pertains to facts and circumstances which would lead a reasonably
discreet and prudent person to believe that an offense has been committed by the person sought
to be arrested. It bears remembering that "in determining probable cause, the average man
weighs facts and circumstances without resorting to the calibrations of our technical rules of
evidence of which his knowledge is nil. Rather, he relies on the calculus of common sense of
which all reasonable men have an abundance."9 Thus, the standard used for the issuance of a
warrant of arrest is less stringent than that used for establishing the guilt of the accused. As long
as the evidence presented shows a prima facie case against the accused, the trial court judge
has sufficient ground to issue a warrant of arrest against him.
The foregoing documents found in the records and examined by respondent judge tend to show
that therein private complainant was enticed to invest a large sum of money in State Resources
Development Management Corporation; that he issued several checks amounting
to P114,286,086.14 in favor of the corporation; that the corporation, in turn, issued several
checks to private complainant, purportedly representing the return of his investments; that said
checks were later dishonored for insufficient funds and closed account; that petitioner and his
co-accused, being incorporators and directors of the corporation, had knowledge of its activities
and transactions. These are all that need to be shown to establish probable cause for the
purpose of issuing a warrant of arrest. It need not be shown that the accused are indeed guilty
of the crime charged. That matter should be left to the trial. It should be emphasized that before
issuing warrants of arrest, judges merely determine personally the probability, not the certainty,
of guilt of an accused. Hence, judges do not conduct a de novo hearing to determine the
existence of probable cause. They just personally review the initial determination of the
prosecutor finding a probable cause to see if it is supported by substantial evidence.10 In case
of doubt on the existence of probable cause, the Rules allow the judge to order the prosecutor
to present additional evidence. In the present case, it is notable that the resolution issued by
State Prosecutor Benny Nicdao thoroughly explains the bases for his findings that there is
probable cause to charge all the accused with violation of Article 315, par. 2(a) of the Revised
Penal Code in relation to P.D. No. 1689.
The general rule is that this Court does not review the factual findings of the trial court, which
include the determination of probable cause for the issuance of warrant of arrest. It is only in
exceptional cases where this Court sets aside the conclusions of the prosecutor and the trial
judge on the existence of probable cause, that is, when it is necessary to prevent the misuse of
the strong arm of the law or to protect the orderly administration of justice. The facts obtaining
in this case do not warrant the application of the exception.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
In addition, it may not be amiss to note that petitioner is not entitled to seek relief from this Court
nor from the trial court as he continuously refuses to surrender and submit to the court's
jurisdiction. Justice Florenz D. Regalado explains the requisites for the exercise of jurisdiction
and how the court acquires such jurisdiction, thus:
x x x Requisites for the exercise of jurisdiction and how the court acquires such jurisdiction:
A. Jurisdiction over the plaintiff or petitioner: This is acquired by the filing of the complaint,
petition or initiatory pleading before the court by the plaintiff or petitioner.
in land registration proceedings or suits involving civil status or real property in the Philippines
of a non-resident defendant.
Justice Regalado continues to explain:
In two cases, the court acquires jurisdiction to try the case, even if it has not acquired jurisdiction
over the person of a nonresident defendant, as long as it has jurisdiction over the res, as when
the action involves the personal status of the plaintiff or property in the Philippines in which the
defendant claims an interest. In such cases, the service of summons by publication and notice
to the defendant is merely to comply with due process requirements. Under Sec. 133 of the
Corporation Code, while a foreign corporation doing business in the Philippines without a license
cannot sue or intervene in any action here, it may be sued or proceeded against before our
courts or administrative tribunals.11
Again, there is no exceptional reason in this case to allow petitioner to obtain relief from the
courts without submitting to its jurisdiction. On the contrary, his continued refusal to submit to
the court's jurisdiction should give this Court more reason to uphold the action of the respondent
judge. The purpose of a warrant of arrest is to place the accused under the custody of the law
to hold him for trial of the charges against him. His evasive stance shows an intent to circumvent
and frustrate the object of this legal process. It should be remembered that he who invokes the
court's jurisdiction must first submit to its jurisdiction.
WHEREFORE, the petition is DISMISSED.

b. Jurisdiction over the defendant or respondent: This is acquired by the voluntary

appearance or submission by the defendant or respondent to the court or by coercive
process issued by the court to him, generally by the service of summons.
c. Jurisdiction over the subject matter: This is conferred by law and, unlike jurisdiction over the
parties, cannot be conferred on the court by the voluntary act or agreement of the parties.
d. Jurisdiction over the issues of the case: This is determined and conferred by the pleadings
filed in the case by the parties, or by their agreement in a pre-trial order or stipulation, or, at times
by their implied consent as by the failure of a party to object to evidence on an issue not covered
by the pleadings, as provided in Sec. 5, Rule 10.
e. Jurisdiction over the res (or the property or thing which is the subject of the litigation). This is
acquired by the actual or constructive seizure by the court of the thing in question, thus placing
it in custodia legis, as in attachment or garnishment; or by provision of law which recognizes in
the court the power to deal with the property or subject matter within its territorial jurisdiction, as

G.R. No. L-286 March 29, 1946
FREDESVINDO S. ALVERO, petitioner,
vs.
M.L. DE LA ROSA, Judge of First Instance of Manila, JOSE R. VICTORIANO, and
MARGARITA VILLARICA, respondents.
Revilla and Palma for petitioner.
Francisco Claravall for respondents.
DE JOYA, J.:
This is an original petition for certiorari filed in this court.
The record shows that, on June 25, 1945, respondent Jose R. Victoriano had filed a complaint,
in the Court of First Instance of the City of Manila, against petitioner Fredesvindo S. Alvero and
one Margarita Villarica, alleging two causes of action, to wit, (1) to declare in force the contract
of sale, made on October 1, 1940, between said Jose R. Victoriano and Margarita Villarica, of
two (2) parcels of land in the Manotoc subdivision, Balintawak, in the barrio of Calaanan,
municipality of Caloocan, Province of Rizal, with a combined area of 480 square meters, which
land was subsequently sold by said Villarica, in favor of petitioner Fredesvindo S. Alvero, on
December 31, 1944, for the sum of P100,000 in Japanese military notes; and (2) to declare said
subsequent sale null and void.
On July 7, 1945, Margarita Villarica filed an answer to said complaint, expressly admitting having
sold said land to Fresdesvindo S. Alvero, for P100,000, in December, 1944, due to the imperative
necessity of raising funds with which to provide for herself and family, and that she did not
remember the previous sale; at the same time, offering to repurchase said land from Fredesvindo
S. Alvero in the sum of P5,000, but that the latter refused to accept the offer.
On July 13, 1945, Fredesvindo S. Alvero, in answering said complaint, denied the allegations
made therein, and claimed exclusive ownership of the land in question, and at the same time
set up a counterclaim and crossclaim in his answer, demanding from Jose R. Victoriano a P200-
monthly rent on said property, beginning from February, 1945, plus P2,000 as damages.
On July 21, 1945, Jose R. Victoriano filed an answer to said counterclaim, denying Fredesvindo
S. Alvero's alleged ownership over said land, and the other allegations contained in Alvero's
answer.
After the trial of the case before the Hon. Mariano L. de la Rosa, Judge of the Court of First
Instance of the City of Manila, one of the respondents in this case, on November 16, 1945, said
respondent judge rendered his decision, in which it was declared that the two (2) parcels of land
in question, with a combined area of 480 square meters had been sold by Margarita Villarica to
Jose R. Victoriano, since October 1, 1940, for the sum of P6,000, on the condition that the
purchaser should make a down payment of P1,700, and a monthly payment of P76.86 in 120
equal monthly installments; that Jose R. Victoriano continued making said monthly payments
until December, 1941, but that owing to the war-time conditions then existing, Margarita Villarica
agreed verbally to suspend such payments until the restoration of peace; that immediately after
said sale of said land to him, Jose R. Victoriano took possession thereof and made
improvements thereon to the amount of P800, and continued occupying said property until
December, 1944, when he abandoned the same to go to evacuation places, but returned thereto
in February, 1945; that Margarita Villarica, having forgotten the sale of said land to Jose R.
Victoriano, sold the same for P100,000 in Japanese military notes, on December 31, 1944, to
Fredesvindo S. Alvero, but afterwards offered to repurchase said property from him, for the sum
of P8,000 in genuine Philippine currency, after liberation; that Fredesvindo S. Alvero presented
the deed of sale, executed in his favor, to the Register of Deeds of the City of Manila, on January
3, 1945, and took possession of said property in December, 1944, but afterwards found Jose R.
Victoriano in the premises in February, 1945; that in the contract of sale executed by Margarita
Villarica, in favor of Jose R. Victoriano, it was agreed that, upon failure of the purchaser to make
payments of three (3) successive mothly installments, the vendor would be free to sell the
property again, forfeiting the payments made, except in the case of force majeure; that there
was really a verbal agreement between Margarita Villarica and Jose Victoriano, made in
February, 1942, for the suspension of the payment of the monthly installments until the
restoration of peace; and that although Jose R. Victoriano had presented the deed of sale,
executed in his favor, to the Register of Deeds, in Pasig, Rizal, like Fredesvindo S. Alvero, he
had also failed to secure the transfer of title to his name. And considering that Jose R.
Victoriano's document was older than that of Fredesvindo S. Alvero, and that he had taken
possession of said property, since October 1, 1940, the respondent judge rendered his decision
in favor of Jose R. Victoriano, adjudging to him the title over the property in question, including
all the improvements existing thereon, and dismissed the counterclaim.
On November 28, 1945, Fredesvindo S. Alvero was notified of said decision; and on December
27, 1945, he filed a petition for reconsideration and new trial, which was denied on January 3,
1946; and of said order he was notified on January 7, 1946.
On January 8, 1946, Fredesvindo S. Alvero filed his notice of appeal and record on appeal
simultaneously in the lower court, without filing the P60-appeal bond.
On January 14, 1946, Jose R. Victoriano filed a petition to dismiss the appeal, and at the same
time, asked for the execution of the judgment.
On January 15, 1946, Fredesvindo S. Alvero filed an opposition to said motion to dismiss,
alleging that on the very same day, January 15, 1946, said appeal bond for P60 had been
actually filed, and allege as an excuse, for not filing the said appeal bond, in due time, the illness
of his lawyer's wife, who died on January 10, 1946, and buried the following day.
On January 17, 1946, the respondent judge, Hon. Mariano L. de la Rosa, ordered the dismissal
of the appeal, declaring that, although the notice of appeal and record on appeal had been filed
in due time, the P60-appeal bond was filed too late.
On January 23, 1946, Fredesvindo S. Alvero filed a petition for the reconsideration of the said
order dated January 17, 1946, dismissing his appeal; and said petition for reconsideration was
denied on January 29, 1946. Hence, this petition for certiorari.
On February 11, 1946, the respondents filed their answer to the petition for certiorari, alleging
(1) that said petition is defective in form as well as in substance; (2) that there has been no
excusable negligence, on the part of the petitioner, or grave abuse of discretion on the part of
the respondent judge, in the instant case.
As already stated, the decision rendered by the respondent judge, Hon. Mariano L. de la Rosa,
was dated November 16, 1945, of which counsel for Fredesvindo S. Alvero was notified on
November 28, 1945; that his motion for reconsideration and new trial was filed on December 27,
1945, and denied on January 3, 1946, and that said counsel for Alvero was notified of said order
on January 7, 1946; and that he filed his notice of appeal and record on appeal the following
day, to wit, January 8, 1946, and that the P60-appeal bond was filed only on January 15, 1946.
According to the computation erroneously made by the court, the last day for filing and perfecting
the appeal, in this case, was January 8, 1946, or which date, Fredesvindo S. Alvero should have
filed his (1) notice of appeal, (2) record on appeal, and (3) appeal bond. But the P60-appeal
bond was filed only on January 15, 1946.
Failure to perfect the appeal, within the time prescribed by the rules of court, will cause the
judgment to become final, and the certification of the record on appeal thereafter, cannot restore
the jurisdiction which has been lost. (Roman Catholic Bishop of Tuguegarao vs. Director of
Lands, 34 Phil., 623; Estate of Cordoba and Zarate vs. Alabado, 34 Phil., 920; and
Bermudez vs. Director of Lands, 36 Phil., 774.)
The period within which the record on appeal and appeal bond should be perfected and filed
may, however, be extended by order of the court, upon application made, prior to the expiration
of the original period. (Layda vs. Legaspi, 39 Phil., 83.)
Rules of courts, promulgated by authority of law, have the force and effect of law; and rules of
court prescribing the time within which certain acts must be done, or certain proceedings taken,
are considered absolutely indispensable to the prevention of needless delays and to the orderly
and speedy discharge of judicial business. (Shioji vs. Harvey, 43 Phil., 333.)
Strict compliance with the rules of court has been held mandatory and imperative, so that failure
to pay the docket fee in the Supreme Court, within the period fixed for that purpose, will cause
the dismissal of the appeal. (Salaveria vs. Albindo, 39Phil., 922.) In the same manner, on failure
of the appellant in a civil case to serve his brief, within the time prescribed by said rules, on
motion of the appellee and notice to the appellant, or on its own motion, the court may dismiss
the appeal. (Shioji vs. Harvey, 43 Phil., 333.)
Counsel for the petitioner Fredesvindo Alvero alleges as an excuse, for his failure to perfect and
file his appeal, in due time, the illness of his wife, which ended in her death on January 10, 1946,
and by which he was greatly affected.
How little, indeed, does one realize that in life he lives in the midst of death; and that every that
passes in a step nearer towards eternity. Yet, notwithstanding the inexorable laws of human
destiny, every mortal fears death, and such fear is worse than death itself. That is perhaps the
reason why those feeling its approach, in their last moments, want to be surrounded by the ones
dearest to their heart, to hear from them words of tenderness and eternal truth, and thus receive
as balm their love and the cheering influence of the traditional faith, and the consolation of
religious hope.
The virtuous and loving wife is the peculiar gift of heaven, and Mother is the name for God in the
innocent lips and hearts of adoring children. "She looketh well to the ways of her household, and
eateth not the bread of idleness." "And her daughters arise up and call her blessed." And when
she dies in the bosom of God, her children find solace in the contemplation of her eternal bliss,
as mirrored in her tranquil beauty.
It is not, therefore, difficult to understand the state of mind of the attorney, and his intense
devotion and ardent affection towards his dying wife.
Unfortunately, counsel for petitioner has created a difficult situation. In his motion for
reconsideration and new trial, dated December 27, 1945, he did not point out specifically the
findings or conclusions in the judgment, are not supported by the evidence or which are contrary
to law, making express reference to the pertinent evidence or legal provisions, as expressly
required by Rule 37, section 2, paragraph (c) of the Rules of Court. Motions of that kind have
been considered as motions pro forma intended merely to delay the proceeding, and, as such,
they cannot and will not interrupt or suspend the period of time for the perfection of the appeal.
(Valdez vs. Jugo, 74 Phil., 49, and Reyes vs. Court of Appeals and Bautista, 74 Phil., 235.)
Hence, the period for perfecting herein petitioner's appeal commenced from November 28, 1945,
when he was notified of the judgment rendered in the case, and expired on December 28, 1945;
and, therefore, his notice of appeal and record on appeal filed on January 8, 1946, were filed
out of time, and much more so his appeal bond, which was only filed on January 15, 1946.
It is futile to speak of hospitals, doctors and nurses to minister alone to the needs of the sick and
the dying, who are dearest to us, for our reasoning powers are of little avail when sorrow or
despair rages within.
But human laws are inflexible and no personal consideration should stand in the way of
performing a legal duty.
The attorney for petitioner Fredesvindo S. Alvero could have asked for an extension of time,
within which to file and perfect his appeal, in the court below; but he had failed to do so, and he
must bear the consequences of his act. A strict observance of the rules of court, which have
been considered indispensable to the prevention of needless delays and to the orderly and
speedy dispatch of judicial business, is an imperative necessity.

It may not be amiss to state in this connection that no irreparable damage has been caused to
the petitioner Fredesvindo S. Alvero, as Margarita Villarica, the vendor to the two, of the land in
question, has shown readiness to repair the damage done.
No showing having been made that there had been merely excusable negligece, on the part of
the attorney for petitioner Fredesvindo S. Alvero, and that there had been gave abuse of sound
judicial discretion, on the part of the respondent judge, the petition for certiorari filed in this case,
is, therefore, hereby dismissed, without costs. So ordered.
G.R. No. L-6120 June 30, 1953
CIPRIANO P. PRIMICIAS, petitioner,
vs.
FELICISIMO OCAMPO, as Judge-at-large presiding over Branch C of the Court of First
Instance of Manila and EUGENIO ANGELES, as City Fiscal of Manila, representing the
PEOPLE OF THE PHILIPPINES, respondents.
Claro M. Recto for petitioner.
City Fiscal Eugenio Angeles for respondents.
BAUTISTA ANGELO, J.:
This is a petition which seeks to prohibit respondent Judge from proceeding with the trial of two
criminal cases which were then pending against petitioner without the assistance of assessors
in accordance with the provisions of section 49 of Republic Act No. 409 in relation to section 154
of Act No. 190, and as an auxiliary remedy, to have a writ of preliminary injunction issued so that
the trial may be held pending until further orders of this court.
This petition was originally filed with the Court of Appeals, but was later certified to this court on
the ground that the main basis of the petition is section 49 of Republic Act No. 409, otherwise
known as Revised Charter of the City of Manila, approved on June 18, 1949, and respondents
assail the constitutionality of said section in that it contravenes the constitutional provision that
the rules of court "shall be uniform for all courts of the same grade . . . .(Section 13, Article VIII
of the Constitution.).
Petitioner was charged before the Court of First Instance of Manila with two statutory offenses,
namely, (1) with a violation of Commonwealth Act No. 606, which was docketed as criminal case
No. 18374, in that he knowingly chartered a vessel of Philippine registry to an alien without the
approval of the President of the Philippines and (2) with a violation of section 129 in relation to
section 2713 of the Revised Administrative Code, which was docketed as Criminal Case No.
18375, in that he failed to submit to the Collector of Customs the manifests and certain
authenticated documents for the vessel "Antarctic" and failed to obtain the necessary clearance
from the Bureau of Customs prior to the departure of said vessel for a foreign port.
On April 23, 1952, before the trial of said criminal cases, petitioner filed a motion praying that
assessors be appointed to assist the court in considering the questions of fact involved in said
cases as authorized by section 49 of Republic Act No. 409, otherwise known as Revised Charter
of the City of Manila, which provides that "the aid of assessors in the trial of any civil or criminal
action in the Municipal Court, or the Court of First Instance, within the City, may be invoked in
the manner provided in the Code of Civil Procedure." This motion was opposed by the City Fiscal
who appeared for the People of the Philippines.
On April 28, 1952, the court issued an order denying the motion holding in effect that with the
promulgation of the Rules of Court by the Supreme Court, which became effective on July 1,
1940, all rules concerning pleading, practice and procedure in all courts of the Philippines
previously existing were not only superseded but expressly repealed, that the Supreme Court,
having been vested with the rule-making power, expressly omitted the portions of the Code of
Civil Procedure regarding assessors in said Rules of Court, and that the reference to said statute
by section 49 of Republic Act No. 409 on the provisions regarding assessors should be deemed
as a mere surplusage. Believing that this order is erroneous, petitioner now comes to this court
imputing abuse of discretion to the respondent Judge.
The issues now posed by petitioner are:.
I. The right of the petitioner to a trial with the aid of assessors is an absolute substantive right,
and the duty of the court to provide assessors is mandatory.
II. The right to trial with the aid of assessors, being a substantive right, cannot be impaired by
this court in the exercise of its rule-making power.
III. Section 154 of the Code of Civil Procedure and Section 2477 of the Old Charter of Manila,
creating the right to trial with the aid of assessors, are substantive law and were not repealed by
Rules of Court.
IV. Granting without admitting that the provisions on assessors of the Code of Civil Procedure
and the old Charter of Manila were impliedly repealed, nevertheless, the same provisions were
later reenacted by reference in section 49 of the Revised Charter of Manila, which is now the
source of the right to trial with the aid of assessors and which refers to the Code of Civil
Procedure merely to indicate the procedure for appointing assessors.
V. Section 49 of the Revised Charter of Manila is not invalid class legislation and does not violate
the constitutional provision that the rules of pleading, practice and procedure 'shall be uniform
for all the courts of the same grade.
A brief summary of the historical background of the legislation regarding trial with the aid of
assessors in the Philippines may be of help in the determination of the issues posed by
petitioner. The first provision which allowed trial with the aid of assessors in civil cases in inferior
courts and Courts of First Instance is contained in Act No. 190 of the Philippine Commission,
otherwise known as the Code of Civil Procedure, which took effect on October 1, 1901 (Sections
58-62; 154-161). Almost simultaneously, or on October 17, 1901, the trial with the aid of
assessors both in civil and criminal cases was allowed in the Manila courts upon the enactment
of Act No. 267, amending Act No. 183, the original Charter of Manila. In 1914, the trial by
assessors was allowed in criminal cases in the courts of first instance in the provinces with the
enactment of Act No. 2369. And in 1915, Act No. 2520 was passed extending the same trial by
assessors to the courts of first instance and justice of the peace courts in the Department of
Mindanao and Sulu.
In connection with the use of assessors in Manila, section 44 of Act No. 183, the original Charter
of Manila, as amended by section 13 of Act No. 267, was reenacted as section 2449 of the
Administrative Code 1916, Act No. 2657. Section 2449 of the Administrative Code of 1916
became section 2477 of Act No. 2711, otherwise known as the Revised Administrative Code of
1917. And section 2477 in turn became section 49 of the Republic Act No. 409, which is the
present Charter of the City of Manila. This section 49 is the law now invoked by petitioner in
support of his claim to a trial with the aid of assessors in the two criminal cases now pending
against him. Its pertinent provisions are quoted hereunder for ready reference:.
SEC. 49. Assessors in the courts in the city. — The aid of assessors in the trial of any civil or
criminal action in the municipal court, or the Court of First Instance, within the city, may be
invoked in the manner provided in the Code of Civil Procedure. It shall be the duty of the
Municipal Board to prepare one list of the names of twenty-five residents of the City best fitted
by education, natural ability and reputation for probity to sit as assessors in the trial of actions in
the municipal court and a like list of persons to sit as assessors in the trial of the action in the
Court of First Instance. The Board may at any time strike any name from the list so prepared, by
reason of the death, permanent disability, or unfitness of the person named; and in case names
are so stricken out, other names shall be added in their place, to be selected as in this section
provided. Parties desiring to avail themselves of the use of assessors in the municipal or Court
of First Instance shall proceed as provided for by law or rules of court; and the method of
summoning assessors, enforcing their attendance, excusing them from attendance, their
compensation, oath duties and effect of dissent from the opinion of the judges shall be as
provided in those laws or rules.
A careful analysis of the above provisions is interesting. Their most salient features are: The aid
of assessors in the trial of any civil or criminal action in the Municipal Court or the Court of First
Instance may be invoked in the manner provided in the Code of Civil Procedure. The parties
desiring to avail themselves of the use of assessors "shall proceed as provided for by law or
rules of court", and "the method of summoning assessors, enforcing their attendance, excusing
them from attendance, their compensation, oath, duties, and effect of the dissent from the
opinion of the judge shall be as provided in those laws or rules." If we are to be guided merely
by these provisions, the right to trial with the aid of assessor would seem to be beyond dispute.
These provisions are simple and clear and appear to be mandatory. But where the difficulty
arises is in their relation or bearing on the directive of the Constitution which provides that "the
existing laws on pleading, practice, and procedure are hereby repealed as statutes, and are
declared rules of courts subject to the power of the Supreme Court to alter and modify the same."
Pursuant to this rule-making power, the Supreme Court promulgated the present Rules of Court,
which became effective on July 1, 1940, but because it failed to incorporate therein the
provisions of the Code of Civil Procedure on assessors, respondents now contend that the right
to trial with the aid of assessors, with all its concomitant provisions, cannot now be invoked
because, being procedural in nature, the same must be deemed to have been impliedly
eliminated.
This claim would be correct if we were to hold that the right to trial with the aid of assessors is
not substantive but procedural or adjective in nature. If it were merely procedural, not having
been incorporated in the Rules of Court, the logical conclusion is that the rule- making power
has deemed wise to eliminate it. But no such presumption, nor conclusion, can be drawn for the
reason that the right to a trial by assessors is substantive in the sense that it must created and
defined by express enactment as opposed to a mere remedy devised to enforce such right or
obtain redress therefor. "Rules of procedure should be distinguished from substantive law. A
substantive law creates, defines or regulates rights concerning life, liberty or property, or the
powers of agencies or instrumentalities for the administration of public affairs, whereas rules of
procedure are provisions prescribing the method by which substantive rights may be enforced
in courts of justice." (Moran, Comments on the Rules of Court, Vol. I, 1952 ed., p.4.)
In Bustos vs. Lucero,* (46 Off. Gaz., January Supp., pp. 445, 448), this Court cited with approval
the following definitions of substantive law:
Substantive law creates substantive rights and the two terms in this respect may be said to be
synonymous. Substantive rights in a term which includes those rights which one enjoys under
the legal system prior to the disturbance of normal relations. (60 C.J. 980.)
Substantive law is that part of the law which creates, defines and regulates rights, or which
regulates the right and duties which give rise to a cause of action; that part of the law which
courts are established to administer; as opposed to adjective or remedial law, which prescribes
the method of enforcing rights or obtain redress for their invasions (36 C.J. 27; 52 C.J.S. 1026).
The trial with the aid of assessors as granted by section 154 of the Code of Civil Procedure and
section 2477 of the old Charter of Manila are parts of substantive law and as such are not
embraced by the rule-making power of the Supreme Court. This is so because in said section
154 this matter is referred to as a right given by law to a party litigant. Section 2477 of the
Administrative Code of 1917 is couched is such a manner that a similar right is implied when
invoked by a party litigant. It says that the aid may be invoked in the manner provided in the
Code of Civil Procedure. And this right has been declared absolute and substantial by this Court
in several cases where the aid of assessors had been invoked (Berbari vs. Concepcion, et al.,
40 Phil., 320; Colegio de San Jose vs. Sison, 54 Phil., 344.) Thus, it was there said that these
provisions "necessarily lead to the conclusion that the intervention of the assessors is not an
empty formality which may be disregarded without violating either the letter or the spirit of the
law. It is another security given by the law to the litigants, and as such, it is a substantial right of
which they cannot be deprived without vitiating all the proceedings. Were we to agree that for
one reason or another the trial by assessors may be done away with, the same line of reasoning
would force us to admit that the parties litigant may be deprived of their right to be represented
by counsel, to appear and be present at the hearings, and so on, to the extent of omitting the
trial in a civil case, and thus set at naught the essential rights granted by the law to the parties,
with consequent nullity of the proceedings." (Colegio de San Jose vs. Sison, 54 Phil., 344, 349.)
Being substantive in nature, it is not difficult to see why the provisions concerning trial by
assessors embodied in the Code of Civil Procedure have not been incorporated by the Supreme
Court in the present Rules of Court. To have done so, it would have been a travesty of its rule-
making power which, by direct mandate of the Constitution, is limited to matters referring to
pleading, practice and procedure. The application that the respondents draw from the failure to
incorporate these provisions in the present Rules of Court to the effect that the intention was to
eliminate them or repeal them all together cannot, therefore, stand in the light of the observations
and authorities we have above adverted to.
There is a point in the claim that the provisions concerning trial by assessors embodied in the
Code of Civil Procedure are not wholly substantive but portions thereof are remedial such as
those which refer to the method of summoning assessors, enforcing their attendance, excusing
them from attendance, their compensation, oath, duties and effect of dissent from the opinion of
the judge, as to which no cogent reason is seen for their non-incorporation if the intent is not to
eliminate them from the Rules of Court. This is true; but it is likewise true that because said
remedial provisions are inextricably interwoven with the substantive part, it must have been
deemed wise and proper to leave them as they were for reasons of coordination and expediency,
it being a truism that the one cannot be detached from the other. Ubi jus ibi remedium. Remedial
measures are but implementary in character and they must be appended to the portion of the
law to which they belong. Mention should be made here that not all of the provisions appearing
in the Code of Civil Procedure are remedial in nature, such as those pertaining to prescription,
the requisites for making a will, and the succession of the estate of an adopted child, which are
admittedly substantive in character and for that reason were not incorporated in the Rules of
Court. To this group belong the provisions under consideration.
Granting arguendo that the provisions on assessors of the Code of Civil Procedure and even in
the old Charter of Manila are purely remedial in nature and because of the failure to incorporate
them in the Rules of Court they are deemed to have been impliedly repealed as claimed by
respondents, we are of the opinion that they can still be invoked by a litigant upon the theory
that they had been reaffirmed and reenacted by Republic Act No. 409, which was approved in
1949, or nine years after the Rules of Court became effective. As already stated, section 49 of
said Act states that the aid of assessors may be invoked in the manner provided in the Code of
Civil Procedure. It likewise states that the parties desiring to avail themselves for the use of
assessors shall proceed as provided for by law. The mention made of the Code of Civil
Procedure in said section indicates in itself a re-enactment or incorporation by reference of the
provisions concerning assessors contained in said law. Congress, whose members were mostly
lawyers, must be presumed to know that at the time said Act was approved the Rules of Court
had already been promulgated without incorporating therein the provisions concerning the aid
to assessors, and fully cognizant of this situation, and not desiring to omit this right granted to a
litigant, they must have deemed it wise and proper to re-enact them by reference in said section
49. This Congress can do, for, while our Constitution has given the power to adopt rules of
procedure to the Supreme Court, such grant did not preclude Congress from enacting any
procedural law or altering, amending, or supplementing any of the rules that may be promulgated
by the Supreme Court (Section 13, Article VIII, Philippine Constitution).
The practice of making such reference has long been sanctioned. Our Congress did this not only
in connection with courts in the City of Manila. It also did it in connection with courts in Quezon
City (Republic Act No. 537). Statutes which refer to other statutes and make them applicable to
the subject for legislation are called "reference statutes". These statutes are frequently used "to
avoid encumbering the statute books by unnecessary repetition, and they have frequently been
recognized as an approval method of legislation, in the absence of constitutional restrictions."
[50 Am. Jur. 57; Gruen vs. Tax Commission, 211 P. (2d) (1949) 651, 666.].
Again, it has been held that "The adoption of an earlier statute by reference makes it as much
as a part of the latter act as though it had been incorporated at full length. This is true of a
legislative act which refers to another act for the procedure to be taken." (50 Am. Jur. 58.) The
reference in Republic Act No. 409 to the provisions on assessors must be deemed, therefore, to
have incorporated therein the pertinent provisions on the matter contained in the Code of Civil
Procedure in much the same manner as if the whole provisions had been reproduced. Consistent
with this theory, we cannot but hold that the observations made by respondents to the effect that
the reference made to said provisions is section 49 is a mere surplusage, or was due to a mere
oversight, has no legal basis, as such innuendo would be tantamount to imputing lack of
foresight, if not brazen negligence, to our legislative body.
It is finally contended that section 49 of Republic Act No. 409 is unconstitutional because it
violates the constitutional provisions that procedural rules "shall be uniform for all courts of the
same grade" and, therefore, it is a class legislation. This contention cannot be entertained: firstly,
because it is raised for the first time in this instance, a procedural defect which would bar any
further discussion on the matter following well-known precedents1 and, secondly, because it is
not correct that at present only in Manila trial with the aid of assessors may be invoked if we will
sustain the theory that the promulgation of the Rules of Court did not have the effect of repealing
the provisions on assessors embodied in the Code of Civil Procedure.
The contention of respondents — we reckon — is predicated on the assumption that the
provisions on assessors of the Code of Civil Procedure had been impliedly repealed. Such is not
the case. We have already pointed out that the basic provisions on the matter partake of the
nature of substantive law and as such they were left intact by the Supreme Court. The corollary
to this conclusion is that this remedy may be invoked out only in Manila but in all other places
where it existed prior to the promulgation of the Rules of Court. This is true in civil cases. With
regard to criminal cases, we have already said that the same remedy may be invoked in the
cities of Cebu, Iloilo and Quezon, with the particularity that their charters make express
reference, either directly or indirectly, to the provisions of the code of Civil Procedure. With this
historical background, the claim that under the theory we have entertained the trial with the aid
of assessors can only be invoked in the City of Manila is certainly without merit.
In view of the foregoing, we hold that the provisions on assessors embodied in the Code of Civil
Procedure are still in force and that the same may still be invoked in the light of the provisions
of section 49 of the Republic Act No. 409. It is therefore our opinion that the respondent Judge
acted with abuse of discretion in denying petitioner his right to the aid of assessors in the trial of
the two criminal cases now pending in the Court of First Instance of Manila.

Wherefore, petition is hereby granted, without pronouncement as to costs.

G.R. No. 180291 July 27, 2010
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and WINSTON F. GARCIA, in his
capacity as PRESIDENT and GENERAL MANAGER of the GSIS, Petitioners,
vs.
DINNAH VILLAVIZA, ELIZABETH DUQUE, ADRONICO A. ECHAVEZ, RODEL RUBIO,
ROWENA THERESE B. GRACIA, PILAR LAYCO, and ANTONIO JOSE
LEGARDA, Respondents.
DECISION
MENDOZA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse
and set aside the August 31, 2007 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No.
98952, dismissing the petition for certiorari of Government Service Insurance System (GSIS)
assailing the Civil Service Commission's Resolution No. 062177.
THE FACTS:
Petitioner Winston Garcia (PGM Garcia), as President and General Manager of the GSIS, filed
separate formal charges against respondents Dinnah Villaviza, Elizabeth Duque, Adronico A.
Echavez, Rodel Rubio, Rowena Therese B. Gracia, Pilar Layco, and Antonio Jose Legarda for
Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service pursuant to the
Rules of Procedure in Administrative Investigation (RPAI) of GSIS Employees and Officials, III,
D, (1, c, f) in relation to Section 52A (3), (20), Rule IV, of the Uniform Rules on Administrative
Cases in the Civil Service (URACCS), in accordance with Book V of the Administrative Code of
1987, committed as follows:
That on 27 May 2005, respondent, wearing red shirt together with some employees, marched to
or appeared simultaneously at or just outside the office of the Investigation Unit in a mass
demonstration/rally of protest and support for Messrs. Mario Molina and Albert Velasco, the latter
having surreptitiously entered the GSIS premises;
xxx xxx xxx
That some of these employees badmouthed the security guards and the GSIS management and
defiantly raised clenched fists led by Atty. Velasco who was barred by Hearing Officer Marvin R.
Gatpayat in an Order dated 24 May 2005 from appearing as counsel for Atty. Molina pursuant
to Section 7 (b) (2) of R.A. 6713 otherwise known as the Code of Conduct and Ethical Standards
for Public Officials and Employees;
That respondent, together with other employees in utter contempt of CSC Resolution No.
021316, dated 11 October 2002, otherwise known as Omnibus Rules on Prohibited Concerted
Mass Actions in the Public Sector caused alarm and heightened some employees and disrupted
the work at the Investigation Unit during office hours.2
This episode was earlier reported to PGM Garcia, through an office memorandum dated May
31, 2005, by the Manager of the GSIS Security Department (GSIS-SD), Dennis Nagtalon. On
the same day, the Manager of the GSIS Investigation Unit (GSIS-IU), Atty. Lutgardo Barbo,
issued a memorandum to each of the seven (7) respondents requiring them to explain in writing
and under oath within three (3) days why they should not be administratively dealt with.3
Respondents Duque, Echavez, Rubio, Gracia, Layco, and Legarda, together with two others,
submitted a letter-explanation to Atty. Barbo dated June 6, 2005. Denying that there was a
planned mass action, the respondents explained that their act of going to the office of the GSIS-
IU was a spontaneous reaction after learning that their former union president was there. Aside
from some of them wanting to show their support, they were interested in that hearing as it might
also affect them. For her part, respondent Villaviza submitted a separate letter explaining that
she had a scheduled pre-hearing at the GSIS-IU that day and that she had informed her
immediate supervisor about it, attaching a copy of the order of pre-hearing. These letters were
not under oath.4
PGM Garcia then filed the above-mentioned formal charges for Grave Misconduct and/or
Conduct Prejudicial to the Best Interest of the Service against each of the respondents, all dated
June 4, 2005. Respondents were again directed to submit their written answers under oath within
three (3) days from receipt thereof.5 None was filed.
On June 29, 2005, PGM Garcia issued separate but similarly worded decisions finding all seven
(7) respondents guilty of the charges and meting out the penalty of one (1) year suspension plus
the accessory penalties appurtenant thereto.
On appeal, the Civil Service Commission (CSC) found the respondents guilty of the lesser
offense of Violation of Reasonable Office Rules and Regulations and reduced the penalty to
reprimand. The CSC ruled that respondents were not denied their right to due process but there
was no substantial evidence to hold them guilty of Conduct Prejudicial to the Best Interest of the
Service. Instead,
x x x. The actuation of the appellants in going to the IU, wearing red shirts, to witness a public
hearing cannot be considered as constitutive of such offense. Appellants' (respondents herein)
assembly at the said office to express support to Velasco, their Union President, who pledged
to defend them against any oppression by the GSIS management, can be considered as an
exercise of their freedom of expression, a constitutionally guaranteed right.6 x x x
PGM Garcia sought reconsideration but was denied. Thus, PGM Garcia went to the Court of
Appeals via a Petition for Review under Rule 43 of the Rules on Civil Procedure.7 The CA upheld
the CSC in this wise:
The Civil Service Commission is correct when it found that the act sought to be punished hardly
falls within the definition of a prohibited concerted activity or mass action. The petitioners failed
to prove that the supposed concerted activity of the respondents resulted in work stoppage and
caused prejudice to the public service. Only about twenty (20) out of more than a hundred
employees at the main office, joined the activity sought to be punished. These employees, now
respondents in this case, were assigned at different offices of the petitioner GSIS. Hence,
despite the belated claim of the petitioners that the act complained of had created substantial
disturbance inside the petitioner GSIS' premises during office hours, there is nothing in the
record that could support the claim that the operational capacity of petitioner GSIS was affected
or reduced to substantial percentage when respondents gathered at the Investigation Unit.
Despite the hazy claim of the petitioners that the gathering was intended to force the
Investigation Unit and petitioner GSIS to be lenient in the handling of Atty. Molina's case and
allow Atty. Velasco to represent Atty. Molina in his administrative case before petitioner GSIS,
there is likewise no concrete and convincing evidence to prove that the gathering was made to
demand or force concessions, economic or otherwise from the GSIS management or from the
government. In fact, in the separate formal charges filed against the respondents, petitioners
clearly alleged that respondents "marched to or appeared simultaneously at or just outside the
office of the Investigation Unit in a mass demonstration/rally of protest and support for Mssrs.
Mario Molina and Albert Velasco, the latter surreptitiously entered the GSIS premises." Thus,
petitioners are aware at the outset that the only apparent intention of the respondents in going
to the IU was to show support to Atty. Mario Molina and Albert Velasco, their union officers. The
belated assertion that the intention of the respondents in going to the IU was to disrupt the
operation and pressure the GSIS administration to be lenient with Atty. Mario Molina and Albert
Velasco, is only an afterthought.8
Not in conformity, PGM Garcia is now before us via this Petition for Review presenting the
following:
STATEMENT OF THE ISSUES
I
WHETHER AN ADMINISTRATIVE TRIBUNAL MAY APPLY SUPPLETORILY THE
PROVISIONS OF THE RULES OF COURT ON THE EFFECT OF FAILURE TO DENY THE
ALLEGATIONS IN THE COMPLAINT AND FAILURE TO FILE ANSWER, WHERE THE
RESPONDENTS IN THE ADMINISTRATIVE PROCEEDINGS DID NOT FILE ANY
RESPONSIVE PLEADING TO THE FORMAL CHARGES AGAINST THEM.
II
WHETHER THE RULE THAT ADMINISTRATIVE DUE PROCESS CANNOT BE EQUATED
WITH DUE PROCESS IN JUDICIAL SENSE AUTHORIZES AN ADMINISTRATIVE TRIBUNAL
TO CONSIDER IN EVIDENCE AND GIVE FULL PROBATIVE VALUE TO UNNOTARIZED
LETTERS THAT DID NOT FORM PART OF THE CASE RECORD.
III
WHETHER A DECISION THAT MAKES CONCLUSIONS OF FACTS BASED ON EVIDENCE
ON RECORD BUT MAKES A CONCLUSION OF LAW BASED ON THE ALLEGATIONS OF A
DOCUMENT THAT NEVER FORMED PART OF THE CASE RECORDS IS VALID.
IV
WHETHER FURTHER PROOF OF SUSBTANTIAL REDUCTION OF THE OPERATIONAL
CAPACITY OF AN AGENCY, DUE TO UNRULY MASS GATHERING OF GOVERNMENT
EMPLOYEES INSIDE OFFICE PREMISES AND WITHIN OFFICE HOURS, IS REQUIRED TO
HOLD THE SAID EMPLOYEES LIABLE FOR CONDUCT PREJUDICIAL TO THE BEST
INTEREST OF THE SERVICE PURSUANT TO CSC RESOLUTION NO. 021316.
V
WHETHER AN UNRULY MASS GATHERING OF TWENTY EMPLOYEES, LASTING FOR
MORE THAN AN HOUR DURING OFFICE HOURS, INSIDE OFFICE PREMISES AND WITHIN
A UNIT TASKED TO HEAR AN ADMINISTRATIVE CASE, TO PROTEST THE PROHIBITION
AGAINST THE APPEARANCE OF THEIR LEADER AS COUNSEL IN THE SAID
ADMINISTRATIVE CASE, FALLS WITHIN THE PURVIEW OF THE CONSTITUTIONAL
GUARANTEE TO FREEDOM OF EXPRESSION AND PEACEFUL ASSEMBLY.
VI
WHETHER THE CONCERTED ABANDONMENT OF EMPLOYEES OF THEIR POSTS FOR
MORE THAN AN HOUR TO HOLD AN UNRULY PROTEST INSIDE OFFICE PREMISES ONLY
CONSTITUTES THE ADMINISTRATIVE OFFENSE OF VIOLATION OF REASONABLE
OFFICE RULES AND REGULATIONS.9
The Court finds no merit in the petition.
Petitioners primarily question the probative value accorded to respondents' letters of explanation
in response to the memorandum of the GSIS-IU Manager. The respondents never filed their
answers to the formal charges. The petitioners argue that there being no answers, the
allegations in the formal charges that they filed should have been deemed admitted pursuant to
Section 11, Rule 8 of the Rules of Court which provides:
SECTION 11. Allegations not specifically denied deemed admitted.- Material averment in the
complaint, other than those as to the amount of liquidated damages, shall be deemed admitted
when not specifically denied. Allegations of usury in a complaint to recover usurious interest are
deemed admitted if not denied specifically and under oath.
According to the petitioners, this rule is applicable to the case at bench pursuant to Rule 1,
Section 4 of the Rules of Court which reads:
SECTION 4. In what cases not applicable. - These Rules shall not apply to election cases, land
registration, cadastral, naturalization and insolvency proceedings, and other cases not herein
provided for, except by analogy or in a suppletory character and whenever practicable and
convenient. (underscoring supplied)
The Court does not subscribe to the argument of the petitioners. Petitioners' own rules, Rule XI,
Section 4 of the GSIS' Amended Policy and Procedural Guidelines No. 178-04, specifically
provides:
If the respondent fails to file his Answer within five (5) working days from receipt of the Formal
Charge for the supporting evidence, when requested, he shall be considered to have waived his
right to file an answer and the PGM or the Board of Trustees, in proper cases, shall render
judgment, as may be warranted by the facts and evidence submitted by the prosecution.
A perusal of said section readily discloses that the failure of a respondent to file an answer
merely translates to a waiver of "his right to file an answer." There is nothing in the rule that says
that the charges are deemed admitted. It has not done away with the burden of the complainant
to prove the charges with clear and convincing evidence.
It is true that Section 4 of the Rules of Court provides that the rules can be applied in a
"suppletory character." Suppletory is defined as "supplying deficiencies."10 It means that the
provisions in the Rules of Court will be made to apply only where there is an insufficiency in the
applicable rule. There is, however, no such deficiency as the rules of the GSIS are explicit in
case of failure to file the required answer. What is clearly stated there is that GSIS may "render
judgment as may be warranted by the facts and evidence submitted by the prosecution."
Even granting that Rule 8, Section 11 of the Rules of Court finds application in this case,
petitioners must remember that there remain averments that are not deemed admitted by the
failure to deny the same. Among them are immaterial allegations and incorrect conclusions
drawn from facts set out in the complaint.11 Thus, even if respondents failed to file their answer,
it does not mean that all averments found in the complaint will be considered as true and correct
in their entirety, and that the forthcoming decision will be rendered in favor of the petitioners. We
must not forget that even in administrative proceedings, it is still the complainant, or in this case
the petitioners, who have the burden of proving, with substantial evidence, the allegations in the
complaint or in the formal charges.12
A perusal of the decisions of the CA and of the CSC will reveal that the case was resolved
against petitioners based, not on the absence of respondents' evidence, but on the weakness of
that of the petitioners. Thus, the CA wrote:
Petitioners correctly submitted the administrative cases for resolution without the respondents'
respective answer to the separate formal charges in accordance with Section 4, Rule XI of the
RPAI. Being in full control of the administrative proceeding and having effectively prevented
respondents from further submitting their responsive answer and evidence for the defense,
petitioners were in the most advantageous position to prove the merit of their allegations in the
formal charges. When petitioner Winston Garcia issued those similarly worded decisions in the
administrative cases against the respondents, it is presumed that all evidence in their favor were
duly submitted and justly considered independent of the weakness of respondent's evidence in
view of the principle that ''the burden of proof belongs to the one who alleges and not the one
who denies."13
On the merits, what needs to be resolved in the case at bench is the question of whether or not
there was a violation of Section 5 of CSC Resolution No. 02-1316. Stated differently, whether or
not respondents' actions on May 27, 2005 amounted to a "prohibited concerted activity or mass
action." Pertinently, the said provision states:
Section 5. As used in this Omnibus Rules, the phrase ''prohibited concerted activity or mass
action'' shall be understood to refer to any collective activity undertaken by government
employees, by themselves or through their employees organizations, with intent of effecting
work stoppage or service disruption in order to realize their demands of force concession,
economic or otherwise, from their respective agencies or the government. It shall include mass
leaves, walkouts, pickets and acts of similar nature. (underscoring supplied)
In this case, CSC found that the acts of respondents in going to the GSIS-IU office wearing red
shirts to witness a public hearing do not amount to a concerted activity or mass action proscribed
above. CSC even added that their actuations can be deemed an exercise of their constitutional
right to freedom of expression. The CA found no cogent reason to deviate therefrom.
As defined in Section 5 of CSC Resolution No. 02-1316 which serves to regulate the political
rights of those in the government service, the concerted activity or mass action proscribed must
be coupled with the "intent of effecting work stoppage or service disruption in order to realize
their demands of force concession." Wearing similarly colored shirts, attending a public hearing
at the GSIS-IU office, bringing with them recording gadgets, clenching their fists, some even
badmouthing the guards and PGM Garcia, are acts not constitutive of an (i) intent to effect work
stoppage or service disruption and (ii) for the purpose of realizing their demands of force
concession.
Precisely, the limitations or qualifications found in Section 5 of CSC Resolution No. 02-1316 are
there to temper and focus the application of such prohibition. Not all collective activity or mass
undertaking of government employees is prohibited. Otherwise, we would be totally depriving
our brothers and sisters in the government service of their constitutional right to freedom of
expression.
Government workers, whatever their ranks, have as much right as any person in the land to
voice out their protests against what they believe to be a violation of their rights and interests.
Civil Service does not deprive them of their freedom of expression. It would be unfair to hold that
by joining the government service, the members thereof have renounced or waived this basic
liberty. This freedom can be reasonably regulated only but can never be taken away.
A review of PGM Garcia's formal charges against the respondents reveals that he himself was
not even certain whether the respondents and the rest of the twenty or so GSIS employees who
were at the GSIS-IU office that fateful day marched there or just simply appeared there
simultaneously.14 Thus, the petitioners were not even sure if the spontaneous act of each of the
twenty or so GSIS employees on May 27, 2005 was a concerted one. The report of Manager
Nagtalon of the GSIS-SD which was the basis for PGM Garcia's formal charges reflected such
uncertainty. Thus,
Of these red shirt protesters, only Mr. Molina has official business at the Investigation Unit during
this time. The rest abandoned their post and duties for the duration of this incident which lasted
until 10:55 A.M. It was also observed that the protesters, some of whom raised their clenched
left fists, carefully planned this illegal action as evident in their behavior of arrogance, defiance
and provocation, the presence of various recording gadgets such as VCRs, voice recorders and
digital cameras, the bad mouthing of the security guards and the PGM, the uniformity in their
attire and the collusion regarding the anomalous entry of Mr. Albert Velasco to the premises as
reported earlier.15
The said report of Nagtalon contained only bare facts. It did not show respondents' unified intent
to effect disruption or stoppage in their work. It also failed to show that their purpose was to
demand a force concession.
In the recent case of GSIS v. Kapisanan ng mga Manggagawa sa GSIS,16 the Court upheld the
position of petitioner GSIS because its employees, numbering between 300 and 800 each day,
staged a walkout and participated in a mass protest or demonstration outside the GSIS for four
straight days. We cannot say the same for the 20 or so employees in this case. To equate their
wearing of red shirts and going to the GSIS-IU office for just over an hour with that four-day mass
action in Kapisanan ng mga Manggagawa sa GSIS case and to punish them in the same manner
would most certainly be unfair and unjust.
Recent analogous decisions in the United States, while recognizing the government's right as
an employer to lay down certain standards of conduct, tend to lean towards a broad definition of
"public concern speech" which is protected by their First Amendment. One such case is that of
Scott v. Meters.17 In said case, the New York Transit Authority (NYTA), responsible for operation
of New York City's mass transit service, issued a rule prohibiting employees from wearing
badges or buttons on their uniforms. A number of union members wore union buttons promoting
their opposition to a collective bargaining agreement. Consequently, the NYTA tried to enforce
its rule and threatened to subject these union members to discipline. The court, though
recognizing the government's right to impose reasonable restrictions, held that the NYTA's rule
was "unconstitutionally overboard."
In another case, Communication Workers of America v. Ector County Hospital District,18 it was
held that,
A county hospital employee's wearing of a "Union Yes" lapel pin during a union organization
drive constituted speech on a matter of public concern, and the county's proffered interest in
enforcing the anti-adornment provision of its dress code was outweighed by the employee's
interest in exercising his First Amendment speech and associational rights by wearing a pro-
union lapel button.19
Thus, respondents' freedom of speech and of expression remains intact, and CSC's Resolution
No. 02-1316 defining what a prohibited concerted activity or mass action has only tempered or
regulated these rights. Measured against that definition, respondents' actuations did not amount
to a prohibited concerted activity or mass action. The CSC and the CA were both correct in
arriving at said conclusion.
WHEREFORE, the assailed August 31, 2007 Decision of the Court of Appeals as well as its
October 16, 2007 Resolution in CA G.R. SP No. 98952 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 172841 December 15, 2010
RENATO REYES, represented by RAMON REYES, Petitioner,
vs.
LEOPOLDO BARRIOS, substituted by LUCIA MANALUS-BARRIOS, Respondent.
DECISION
CARPIO, J.:
The Case
This petition for review1 assails the 8 February 2006 Decision2 and the 29 May 2006
Resolution3 of the Court of Appeals in CA-G.R. SP No. 90212. The Court of Appeals affirmed
the 29 June 1998 Decision and the 7 December 2004 Resolution of the Department of Agrarian
Reform Adjudication Board (DARAB) in DARAB Case No. 5504, declaring Leopoldo Barrios as
bona fide tenant of the subject landholding. The DARAB reversed the 31 October 1996 Decision
of the Provincial Agrarian Reform Board (PARAD) of San Fernando, Pampanga.
The Facts
On 26 September 1995, petitioner Renato Reyes (petitioner) filed before the Department of
Agrarian Reform, Region III, PARAD of San Fernando, Pampanga, a complaint for ejectment
against respondent Leopoldo Barrios (respondent). The case was docketed as DARAB CASE
No. 1089-P’95.
The case involves a parcel of land measuring approximately 3.6 hectares (landholding)4 which
forms part of the property with an aggregate area of 527,695 square meters (property)5 located
at Mapaniqui, Candaba, Pampanga covered by Transfer Certificate of Title (TCT) No.
14488.6 The property was co-owned by petitioner and his four sisters.7 Petitioner claimed that
the property became subject of the Operation Land Transfer under Presidential Decree No. 27
(PD 27), except the 3.6‒hectare landholding which was allegedly retained. In his
Memorandum8 dated 18 September 2007, petitioner averred that he and his sister Leticia V.
Reyes are the co-owners of the landholding. Petitioner hired respondent as the overseer of the
farm and piggery on the landholding. However, petitioner contended that respondent never
remitted the proceeds from the piggery business and the fruits from the landholding.9
On the other hand, respondent alleged that he was a tenant of the landholding since 1972 and
he even built his house on the subject landholding. Respondent also acted as the caretaker of
the piggery business on the landholding. Contrary to petitioner’s allegations, respondent stated
that petitioner’s wife took all the proceeds from the piggery business, which later ceased
operation due to an epidemic.
When respondent failed to appear during the scheduled hearings, petitioner moved to submit
the case for decision on the basis of the evidence presented. Respondent alleged that his failure
to attend the scheduled hearings was because he received the Notice for the 29 February 1996
hearing only on 6 March 1996. Respondent moved for the postponement of the hearing because
he was bedridden due to hypertension and heart ailment.10 However, the PARAD again heard
the case ex-parte on 28 March 1996, of which respondent alleged that he was still not notified.
On 31 October 1996, the PARAD rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, this Office renders judgment declaring that herein plaintiff
[Renato Reyes] is entitled to recover the possession of the property subject of this present
litigation; ordering the defendant [Leopoldo Barrios] or anyone claiming any right or authority
under him to vacate the premises in question and surrender possession thereof to the plaintiff;
and ordering the defendant to pay the sum of ₱3,000.00 to the plaintiff as attorney’s fees.
No pronouncement as to cost.
SO ORDERED.11
Respondent appealed to the DARAB. Meanwhile, respondent passed away on 13 February
199712 and was substituted by his spouse Lucia Manalus-Barrios.13
On 29 June 1998, the DARAB reversed the PARAD decision and held that respondent is a bona
fide tenant of the landholding and that he cannot be ejected from the landholding absent any
justifiable cause. The DARAB held:
It appears that Respondent-Appellant is listed as farmer-beneficiary of the land transfer program,
as evidenced by the Certification issued by the Officer-in-charge of Arayat-Sta. Ana-Candaba
Agrarian Reform Team. The fact of tenancy is buttressed by the joint statement dated March 5,
1989 of residents of neighboring lots who attest to Respondent-Appellant’s cultivation of subject
lot. As tenant thereon, Respondent-Appellant, therefore, cannot just be ejected. The causes for
extinguishment of Leasehold Relation pursuant to Section 36, Republic Act No. 6657 are:
1. Abandonment of the landholding without the knowledge of the lessor;
2. Voluntary surrender of the landholding by the lessee, written notice of which shall be served
three (3) months in advance;
3. Absence of successor or qualified heir, in case of death or permanent incapacity of the lessee;
4. Judicial ejectment of the lessee for causes provided under Sec. 36 of the Code;
5. Acquisition by the lessee of the landholding;
6. Termination of the leasehold under Sec. 38;
7. Mutual consent of the parties; and
8. Conversion of the landholding for non-agricultural purposes subject to the conditions required
by law.
The records are bereft of evidence showing the existence of any of the above-quoted
circumstances to justify ejectment of Respondent-Appellant from said landholding.
Under the prevailing circumstances, we hold that Respondent-Appellant Barrios is a bona fide
tenant of the landholding.
WHEREFORE, premises considered, the appealed decision is SET ASIDE, and a new one
entered:
1. Declaring Respondent-Appellant Leopoldo Barrios a bona fide tenant of the subject
landholding. However, due to his death during the pendency of this case, the surviving spouse,
if qualified, shall succeed; if not, the eldest descendant will succeed or the descending
descendant in the order of their age;
2. Directing the plaintiff-landowner Renato Reyes to reinstate the qualified heir of Respondent-
Appellant and to maintain him in peaceful possession as cultivator thereof; and
3. Directing the DAR Regional Office, through its Municipal Agrarian Reform Officer (MARO) to
issue Certificate of Agricultural Lease (CAL) after fixing the lease rental therefor.
SO ORDERED.14
Petitioner filed a Motion for Reconsideration, asking for the reversal of the DARAB decision and
the reinstatement of the PARAD decision. Respondent, substituted by his spouse Lucia
Manalus-Barrios, also filed a Motion for Partial Reconsideration, asking for the modification of
the decision by declaring respondent as a beneficiary under PD 27 and to issue an Emancipation
Patent in favor of respondent’s surviving spouse Lucia Manalus-Barrios.
In its 7 December 2004 Resolution, the DARAB denied petitioner’s Motion for Reconsideration
for lack of merit and granted respondent’s Motion for Partial Reconsideration, thus:
In the Motion for Partial Reconsideration, Movant alleged that this Board in its decision has
declared that the deceased Defendant-Appellant Leopoldo Barrios is a bona fide tenant on the
subject landholding. Moreover, Plaintiff-Appellee maintains that page three (3) of the decision
rendered by this Board finds and provides that "Operation Land Transfer (OLT) or Presidential
Decree No. 27 was signed into law decreeing the emancipation of tenants from the bondage of
the soil, transferring to them the ownership of the land they till and providing the instruments and
mechanisms therefore." Hence, movant prayed that an Emancipation Patent be issued in lieu of
the Certificate of Agricultural Lease in consonance with the findings of this Board and DAR
Administrative Order No. 13, Series of 1988.
Acting on said motion, this Board finds that the appealed decision shows substantial appreciation
that deceased Defendant-Appellant was a bona fide tenant on the subject landholding. Likewise,
this Board, in the assailed decision sustained the provisions of Presidential Decree No. 27,
providing "the emancipation of tenants from the bondage of the soil . . ."
From the foregoing findings, the pronouncement of this Board specifically paragraph three (3) of
the decision seeks modification. In finding that deceased Defendant-Appellant was a bona fide
tenant of the subject landholding and declaring the emancipation of tenants from the bondage
of the soil, the subsequent issuance of a Certificate of Agricultural Lease as provided in the
assailed decision is not in consonance with the findings of the Board. Hence, this Board is
constrained to modify or apply the correct conclusions drawn from the facts of the case.
WHEREFORE, premises considered, the herein Motion for Reconsideration dated September
30, 1995 is hereby DENIED for lack of merit. Whereas, the Motion for Partial Reconsideration
dated October 5, 1998 is GRANTED and a new judgment is rendered, as follows:
1. Paragraph three (3) of the decision dated June 29, 1998 is hereby modified;
2. Directing the DAR Regional Director, through the Municipal Agrarian Reform Officer (MARO),
to issue Emancipation Patent in favor of Defendant-Appellant or his heir, herein substitute
Defendant-Appellant Lucia Manalus-Barrios;
3. Directing Plaintiff-Appellee’s successors, co-owners, and the alleged former tenants and all
those persons acting on their behalf to vacate the subject landholding and to immediately
reinstate the substitute Defendant-Appellant thereto and to maintain her in peaceful possession
thereof;
4. Declaring the landholding fully paid by the defendant-appellant;
5. Directing the Plaintiff-Appellee’s successors and co-owners to reimburse 75% of palay
harvest, of its cash equivalent, on the remaining 12½ croppings to the Defendant-Appellant and
deducting therefrom the amount of the expenses incurred by the Plaintiff-Appellee’s successors
and co-owners in the present planting season.
Let records of this case be remanded to the Sala of the Honorable Provincial Adjudicator of
Pampanga for the immediate issuance of a writ of execution.
SO ORDERED.15
Petitioner filed another Motion for Reconsideration, which the DARAB denied in its Resolution PETITIONER CAN SCRUTINIZE THEM AND CROSS-EXAMINE PRIVATE RESPONDENT ON
dated 5 May 2005.16 Petitioner then appealed to the Court of Appeals, which denied the petition THEM.
for review in its 8 February 2006 Decision. The Court of Appeals likewise denied petitioner’s
motion for reconsideration in its 29 May 2006 Resolution. 2. THE COURT OF APPEALS COMMITTED GRIEVOUS LEGAL ERROR AND/OR GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION BY
Hence, this petition for review. FAILING TO CORRECT THE DARAB IN NOT RECOGNIZING PETITIONER’S RIGHT OVER
HIS RETAINED AREA WHICH HAD ALREADY BEEN THE SUBJECT OF AN AWARD IN
The Ruling of the Court of Appeals CLAIM 83-144 OF LAND BANK OF THE PHILIPPINES.18
The Court of Appeals concurred with the findings of the DARAB, thus: The Ruling of the Court
But the petitioner insists that public respondent decided the case at bench against him in We partially grant the petition. We hold that respondent is a bona fide tenant of the subject
defiance of the evidence on record. We do not agree. The DARAB based its findings on the landholding, as stated in the 29 June 1998 DARAB Decision in DARAB Case No. 5504.
certification dated December 7, 1982 of then Ministry of Agrarian Reform (now Department of However, the 7 December 2004 DARAB Resolution, modifying the 29 June 1998 DARAB
Agrarian Reform) of Sta. Ana, Pampanga finding Leopoldo Barrios as legitimate farmer- Decision and directing the DAR Regional Director to issue Emancipation Patent in favor of
beneficiary over a four (4) hectare unirrigated land owned by Renato Reyes, located at respondent or his heirs, should be set aside.
Mapaniqui, Candaba, Pampanga; on the certification issued by the Officer-in-charge of Arayat-
Sta. Ana-Candaba Agrarian Reform Team listing respondent-appellant as farmer-beneficiary; In this case, the DARAB ruling that respondent is a bona fide tenant is supported by evidence
and on the joint statement dated March 5, 1989 of residents of neighboring lots who attested to submitted by respondent, which included: (1) certification dated 7 December 1982 of the Arayat-
respondent-appellant’s cultivation and occupation of the subject lot. Sta. Ana-Candaba Agrarian Reform Team, Ministry of Agrarian Reform, Region III, Pampanga
District, stating that respondent is a bona fide farmer-beneficiary under the Operation Land
It bears stressing that in administrative proceedings, as in the case at bench, the quantum of Transfer of the four (4)-hectare farmholding owned by petitioner;19 (2) joint statement
evidence required to sustain a judgment is only substantial evidence. It is such relevant evidence ("Salaysay") dated 5 March 1989 of the former farmworkers of the neighboring farmlots attesting
as a reasonable mind might accept as adequate to support a conclusion, even if other minds to respondent’s occupation and cultivation of the subject landholding;20 (3) pictures of the subject
equally reasonable might conceivably opine differently. Thus, findings of fact of quasi-judicial landholding which was planted with palay crops;21 and (4) picture of respondent’s house
agencies are generally accorded respect, and even finality, by the appellate tribunal, if supported constructed on the subject landholding.221avvphi1
by substantial evidence, this in recognition of their expertise on the specific matters under their
consideration.17 Furthermore, in compliance with the Order23 dated 30 September 2002 of the DARAB, the
Provincial Agrarian Reform Officer (PARO) of Pampanga forwarded to the DARAB the status
The Issues report on the subject landholding,24 which states:
In his petition, petitioner submits that: Republic of the Philippines
1. THE COURT OF APPEALS BY RULING IN ITS QUESTIONED DECISION (ANNEX "A") DEPARTMENT OF AGRARIAN REFORM
THAT THE DARAB WAS CORRECT IN DECIDING THE CASE AGAINST HIM AS THIS IS Region III
SUPPORTED BY THE CERTIFICATIONS ISSUED BY THE MINISTRY OF AGRARIAN Municipal Agrarian Reform Office
REFORM AND THE OFFICER-IN-CHARGE OF THE AGRARIAN REFORM TEAM OF Candaba, Pampanga
ARAYAT-STA. ANA-CANDABA, PAMPANGA DENIED PETITIONER HIS RIGHT TO DUE Engr. Rodolfo S. Pangilinan
PROCESS OF LAW AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO OIC-PARO
LACK OR EXCESS OF JURISDICTION BECAUSE THE RECORD SHOWS THAT NOT ONLY DARPO-Del Pilar,
ARE THE EVIDENCE OF BARRIOS IRRELEVANT BUT THEY [ARE] ALSO MERE MACHINE City of San Fernando Pampanga
COPIES WHICH WERE NEVER PRESENTED IN A PROPER HEARING WHERE THE
Sir:
This refers to the Order dated September 30, 2002 issued by DARCO Appeal Board with the
instruction to submit status report of the subject landholding owned by Renato Reyes located at
Mapanique, Candaba, Pampanga.
That the undersigned conducted ocular inspection/verification and reveal the following finding to
wit:
1. That Renato Reyes the landowner and Leopoldo Barrios tenant are both deceased.
2. That the subject landholding was taken over by Renato Reyes since 1996 and it is being
administered by Antonio Manalus.
3. That at present the land in question is planted to palay by the administrator Antonio
Manalus with the used (sic) of farm labor and 30 mango tree[s] are existing of the subject
landholding.
4. That the house of Lucia Vda. De Barrios was constructed to the subject landholding with
an area of 450 square meters more or less.
5. That the qualified tenant beneficiaries [are] among the surviving heirs of Leopoldo
Barrios is the wife of (sic) Lucia Vda. M. Barrios.
In view of the foregoing facts and base[d] on the Order dated September 30, 2002[,] [t]he
undersigned schedule[d] mediation conference on November 18, 2002 in preparation of
the Certificate of Agricultural Leasehold.
Very truly yours,
(signed)
SALVADOR S. TOTAAN
M.A.R.O.25
Under Section 3, Rule I of the 1994 DARAB New Rules of Procedure (now Section 3, Rule I of
the 2009 DARAB Rules of Procedure26), the Board and its Regional and Provincial Adjudicators
are not bound by technical rules of procedure and evidence, thus:
SECTION 3. Technical Rules Not Applicable. The Board and its Regional and Provincial
Adjudicators shall not be bound by technical rules of procedure and evidence as prescribed in
the Rules of Court, but shall proceed to hear and decide all agrarian cases, disputes or
controversies in a most expeditious manner, employing all reasonable means to ascertain the
facts of every case in accordance with justice and equity.
xxx
c) The provisions of the Rules of Court shall not apply even in suppletory character unless
adopted herein or by resolution of the Board. However, due process of law shall be observed
and followed in all instances.
Section 1, Rule VIII of the 1994 DARAB New Rules of Procedure (now Section 1, Rule X of the
2009 DARAB Rules of Procedure27) reiterates the non-applicability of technical rules regarding
the admission and sufficiency of evidence, thus:
SECTION 1. Nature of Proceedings. The proceedings before the Board or its Adjudicators shall
be non-litigious in nature. Subject to the essential requirements of due process, the technicalities
of law and procedures and the rules governing the admissibility and sufficiency of evidence
obtained in the courts of law shall not apply. x x x
Thus, in Reyes v. Court of Appeals,28 the Court held:
Finally, we rule that the trial court did not err when it favorably considered the affidavits of
Eufrocina and Efren Tecson (Annexes "B" and "C") although the affiants were not presented and
subjected to cross-examination. Section 16 of P.D. No. 946 provides that ‘Rules of Court shall
not be applicable in agrarian cases even in a suppletory character.’ The same provision states
that ‘In the hearing, investigation and determination of any question or controversy, affidavits
and counter-affidavits may be allowed and are admissible in evidence.’29
Besides, the DARAB Rules should be liberally construed to carry out the objectives of agrarian
reform and to promote just, expeditious, and inexpensive adjudication and settlement of agrarian
cases, disputes or controversies.30
Although we affirm the ruling of the DARAB that respondent is a bona fide tenant, we disagree
with its order for the issuance of an Emancipation Patent in favor of respondent’s heir, as
provided in its Resolution dated 7 December 2004. The records show that when the property
was placed under the Operation Land Transfer, respondent was not included in the list of tenant
beneficiaries who were issued Emancipation Patents, as noted on the title of the property, TCT
No. 14488, which was partially canceled in view of the issuance of the new TCTs in favor of the
tenant beneficiaries.31
The Primer on Agrarian Reform32 enumerates the steps in transferring the land to the tenant-
tiller, thus:
a. First step: the identification of tenants, landowners, and the land covered by OLT.
b. Second step: land survey and sketching of the actual cultivation of the tenant to determine
parcel size, boundaries, and possible land use;
c. Third step: the issuance of the Certificate of Land Transfer (CLT). To ensure accuracy and
safeguard against falsification, these certificates are processed at the National Computer Center
(NCC) at Camp Aguinaldo;
d. Fourth step: valuation of the land covered for amortization computation;
e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year period; and
f. Sixth step: the issuance of the Emancipation Patent.33
Thus, there are several steps to be undertaken before an Emancipation Patent can be issued.
As regards respondent, the records are bereft of evidence indicating that this procedure has
been followed.
Furthermore, there are several supporting documents which a tenant-farmer must submit before
he can receive the Emancipation Patent, such as:
a. Application for issuance of Emancipation Patent;
b. Applicant’s (owner’s) copy of Certificate of Land Transfer.
c. Certification of the landowner and the Land Bank of the Philippines that the applicant has
tendered full payment of the parcel of land as described in the application and as actually tilled
by him;
d. Certification by the President of the Samahang Nayon or by the head of farmers’ cooperative
duly confirmed by the municipal district officer (MDO) of the Ministry of Local Government and
Community Development (MLGCD) that the applicant is a full-fledged member of a duly
registered farmers’ cooperative or a certification to these effect;
e. Copy of the technical (graphical) description of the land parcel applied for prepared by the
Bureau of Land Sketching Team (BLST) and approved by the regional director of the Bureau of
Lands;
f. Clearance from the MAR field team (MARFT)or the MAR District Office (MARDO) legal officer
or trial attorney; or in their absence, a clearance by the MARFT leader to the effect that the land
parcel applied for is not subject of adverse claim, duly confirmed by the legal officer or trial
attorney of the MAR Regional Office or, in their absence, by the regional director;
g. Xerox copy of Official Receipts or certification by the municipal treasurer showing that the
applicant has fully paid or has effected up-to-date payment of the realty taxes due on the land
parcel applied for; and
h. Certification by the MARFT leader whether applicant has acquired farm machineries from the
MAR and/or from other government agencies.34
Majority of these supporting documents are lacking in this case. Hence, it was improper for the
DARAB to order the issuance of the Emancipation Patent in favor of respondent without the
required supporting documents and without following the requisite procedure before an
Emancipation Patent may be validly issued.
Moreover, there was no sufficient evidence to prove that respondent has fully paid the value of
the subject landholding. As held in Mago v. Barbin,35 the laws mandate full payment of just
compensation for the lands acquired under PD 27 prior to the issuance of Emancipation Patents,
thus:
In the first place, the Emancipation Patents and the Transfer Certificates of Title should not have
been issued to petitioners without full payment of the just compensation. Under Section 2 of
Presidential Decree No. 266, the DAR will issue the Emancipation Patents only after the tenant-
farmers have fully complied with the requirements for a grant of title under PD 27. Although PD
27 states that the tenant-farmers are already deemed owners of the land they till, it is understood
that full payment of the just compensation has to be made first before title is transferred to them.
Thus, Section 6 of EO 228 provides that ownership of lands acquired under PD 27 may be
transferred only after the agrarian reform beneficiary has fully paid the amortizations.36
Clearly, respondent is not entitled to be issued an Emancipation Patent considering that he has
not fully complied with the requirements for a grant of title under PD 27.37
On the issue of petitioner’s claim that the subject landholding forms part of the retained area
awarded to him and his sisters, the Court notes that there was no sufficient evidence to
substantiate petitioner’s claim. Furthermore, as held by the Court of Appeals, only the Office of
the Secretary of the Department of Agrarian Reform (DAR) has the exclusive jurisdiction to
resolve the issue of whether petitioner is entitled to a retention area.38 Indeed, under Section 3
(3.5), Rule II of the DARAB 2003 Rules of Procedure, the exercise of the right of retention by
the landowner is under the exclusive prerogative of and cognizable by the Office of the Secretary
of the DAR. Besides, even if the subject landholding forms part of petitioner’s retained area,
petitioner landowner may still not eject respondent tenant absent any of the causes provided
under the law. The landowner cannot just terminate the leasehold relationship without valid
cause.
WHEREFORE, we PARTIALLY GRANT the petition. We SET ASIDE the 8 February 2006
Decision and the 29 May 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 90212.
We REINSTATE the 29 June 1998 Decision of the Department of Agrarian Reform Adjudication
Board in DARAB Case No. 5504.
SO ORDERED.
G.R. No. 169466 May 9, 2007 SEC. 23. Composition. – Subject to the limitation provided for in this Act, the Philippine National
Police, hereinafter referred to as the PNP, is hereby established, initially consisting of the
DEPARTMENT OF BUDGET AND MANAGEMENT, represented by SECRETARY ROMULO members of the police forces who were integrated into the Integrated National Police (INP)
L. NERI, PHILIPPINE NATIONAL POLICE, represented by POLICE DIRECTOR GENERAL pursuant to Presidential Decree No. 765, and the officers and enlisted personnel of the Philippine
ARTURO L. LOMIBAO, NATIONAL POLICE COMMISSION, represented by CHAIRMAN Constabulary (PC).
ANGELO T. REYES, AND CIVIL SERVICE COMMISSION, represented by CHAIRPERSON
KARINA C. DAVID, Petitioners, A little less than eight (8) years later, or on February 25, 1998, R.A. No. 6975 was amended by
vs. R.A. No. 8551, otherwise known as the "PHILIPPINE NATIONAL POLICE REFORM AND
MANILA’S FINEST RETIREES ASSOCIATION, INC., represented by P/COL. FELICISIMO G. REORGANIZATION ACT OF 1998." Among other things, the amendatory law reengineered the
LAZARO (RET.), AND ALL THE OTHER INP RETIREES, Respondents. retirement scheme in the police organization. Relevantly, PNP personnel, under the new law,
stood to collect more retirement benefits than what INP members of equivalent rank, who had
DECISION retired under the INP Law, received.
GARCIA, J.: The INP retirees illustrated the resulting disparity in the retirement benefits between them and
Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of the the PNP retirees as follows:4
Rules of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. CV No.
78203, to wit: Retirement Rank Monthly Pension Difference

1. Decision1 dated July 7, 2005 which affirmed in toto the decision of the Regional Trial Court of
INP PNP INP PNP
Manila, Branch 32, in Civil Case No. 02-103702, a suit for declaratory relief, declaring the herein
respondents entitled to the same retirement benefits accorded upon retirees of the Philippine
National Police (PNP) under Republic Act (R.A.) No. 6975, as amended by R.A. No. 8551, and Corporal SPO3 P 3,225.00 P 11,310.00 P 8,095.00
ordering the herein petitioners to implement the proper adjustments on respondents’ retirement
benefits; and Captain P. Sr. Insp. P 5,248.00 P 15,976.00 P10,628.00
2. Resolution2 dated August 24, 2005 which denied the petitioners’ motion for reconsideration.
Brig. Gen. P. Chief Supt. P 10,054.24 P 18,088.00 P 8,033.76
The antecedent facts:
Hence, on June 3, 2002, in the Regional Trial Court (RTC) of Manila, all INP retirees,
In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the Integrated National
spearheaded by the Manila’s Finest Retirees Association, Inc., or the MFRAI (hereinafter
Police (INP) to be composed of the Philippine Constabulary (PC) as the nucleus and the
collectively referred to as the INP Retirees), filed a petition for declaratory relief,5 thereunder
integrated police forces as components thereof. Complementing P.D. No. 765 was P.D. No.
impleading, as respondents, the Department of Budget and Management (DBM), the PNP, the
11843 dated August 26, 1977 (INP Law, hereinafter) issued to professionalize the INP and
National Police Commission (NAPOLCOM), the Civil Service Commission (CSC) and the
promote career development therein.
Government Service Insurance System (GSIS). Docketed in the RTC as Civil Case No. 02-
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled "AN ACT ESTABLISHING THE 103702, which was raffled to Branch 22 thereof, the petition alleged in gist that INP retirees were
PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE equally situated as the PNP retirees but whose retirement benefits prior to the enactment of R.A.
INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES," hereinafter referred No. 6975, as amended by R.A. No. 8551, were unconscionably and arbitrarily excepted from the
to as PNP Law, was enacted. Under Section 23 of said law, the Philippine National Police (PNP) higher rates and adjusted benefits accorded to the PNP retirees. Accordingly, in their petition,
would initially consist of the members of the INP, created under P.D. No. 765, as well as the the petitioning INP retirees pray that a –
officers and enlisted personnel of the PC. In part, Section 23 reads:
DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that they,
as INP-retirees, are truly absorbed and equally considered as PNP-retirees and thus, entitled to
enjoy the SAME or IDENTICAL retirement benefits being bestowed to PNP-retirees by virtue of
said PNP Law or Republic Act No. 6975, as amended by Republic Act 8551, with the corollary
mandate for the respondents-government agencies to effect the immediate adjustment on their
previously received disparate retirement benefits, retroactive to its effectivity, and with due
payment thereof.
The GSIS moved to dismiss the petition on grounds of lack of jurisdiction and cause of action.
On the other hand, the CSC, DBM, NAPOLCOM and PNP, in their respective answers, asserted
that the petitioners could not claim the more generous retirement benefits under R.A. No. 6975
because at no time did they become PNP members, having retired prior to the enactment of said
law. DBM, NAPOLCOM and PNP afterwards filed their respective pre-trial briefs.
The ensuing legal skirmish is not relevant to the disposition of the instant case. The bottom line
is that, on March 21, 2003, the RTC came out with its decision6 holding that R.A. No. 6975, as
amended, did not abolish the INP but merely provided for the absorption of its police functions
by the PNP, and accordingly rendered judgment for the INP retirees, to wit:
WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP Retirees entitled
to the same or identical retirement benefits and such other benefits being granted, accorded and
bestowed upon the PNP Retirees under the PNP Law (RA No. 6975, as amended).
The respondents Government Departments and Agencies shall IMMEDIATELY EFFECT and
IMPLEMENT the proper adjustments on the INP Retirees’ retirement and such other benefits,
RETROACTIVE to its date of effectivity, and RELEASE and PAY to the INP Retirees the due
payments of the amounts.
SO ORDERED.
On April 2, 2003, the trial court issued what it denominated as Supplement to the Decision
whereunder it granted the GSIS’ motion to dismiss and thus considered the basic petition as
withdrawn with respect to the latter.
From the adverse decision of the trial court, the remaining respondents, namely, DBM, PNP,
NAPOLCOM and CSC, interposed an appeal to the CA whereat their appellate recourse was
docketed as CA-G.R. CV No. 78203.
As stated at the threshold hereof, the CA, in its decision of July 7, 2005,7 affirmed that of the trial
court upholding the entitlement of the INP retirees to the same or identical retirement benefits
accorded upon PNP retirees under R.A. No. 6975, as amended.
Their motion for reconsideration having been denied by the CA in` its equally assailed resolution
of August 24, 2005,8 herein petitioners are now with this Court via the instant recourse on their
singular submission that -
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN AFFIRMING THE
DECISION OF THE TRIAL COURT NOTWITHSTANDING THAT IT IS CONTRARY TO LAW
AND ESTABLISHED JURISPRUDENCE.
We DENY.
In the main, it is petitioners’ posture that R.A. No. 6975 clearly abolished the INP and created in
its stead a new police force, the PNP. Prescinding therefrom, petitioners contend that since the
PNP is an organization entirely different from the INP, it follows that INP retirees never became
PNP members. Ergo, they cannot avail themselves of the retirement benefits accorded to PNP
members under R.A. No. 6975 and its amendatory law, R.A. No. 8551.
A flashback at history is proper.
As may be recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or just about
four (4) years after the 1986 Edsa Revolution toppled down the dictatorship regime. Egged on
by the current sentiment of the times generated by the long period of martial rule during which
the police force, the PC-INP, had a military character, being then a major service of the Armed
Forces of the Philippines, and invariably moved by a fresh constitutional mandate for the
establishment of one police force which should be national in scope and, most importantly, purely
civilian in character,9 Congress enacted R.A. No. 6975 establishing the PNP and placing it under
the Department of Interior and Local Government. To underscore the civilian character of the
PNP, R.A. No. 6975 made it emphatically clear in its declaration of policy the following:
Section 2. Declaration of policy - It is hereby declared to be the policy of the State to promote
peace and order, ensure public safety and further strengthen local government capability aimed
towards the effective delivery of the basic services to the citizenry through the establishment of
a highly efficient and competent police force that is national in scope and civilian in character.
xxx.
The police force shall be organized, trained and equipped primarily for the performance of police
functions. Its national scope and civilian character shall be paramount. No element of the police
force shall be military nor shall any position thereof be occupied by active members of the [AFP].
(Emphasis and word in bracket supplied.)
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially consisted of the members of
the police forces who were integrated into the INP by virtue of P.D. No. 765, while Section 8610 of
the same law provides for the assumption by the PNP of the police functions of the INP and its
absorption by the former, including its appropriations, funds, records, equipment, etc., as well as
its personnel.11 And to govern the statute’s implementation, Section 85 of the Act spelled out the
following absorption phases:
Phase I – Exercise of option by the uniformed members of the [PC], the PC elements assigned
with the Narcotics Command, CIS, and the personnel of the technical services of the AFP
assigned with the PC to include the regular CIS investigating agents and the operatives and
agents of the NAPOLCOM Inspection. Investigation and Intelligence Branch, and the personnel
of the absorbed National Action Committee on Anti-Hijacking (NACAH) of the Department of
National Defense to be completed within six (6) months from the date of the effectivity of this
Act. At the end of this phase, all personnel from the INP, PC, AFP Technical Services, NACAH,
and NAPOLCOM Inspection, Investigation and Intelligence Branch shall have been covered by
official orders assigning them to the PNP, Fire and Jail Forces by their respective units.
Phase II – Approval of the table of organization and equipment of all bureaus and offices created
under this Act, preparation and filling up of their staffing pattern, transfer of assets to the [DILG]
and organization of the Commission, to be completed within twelve (12) months from the
effectivity date hereof. At the end of this phase, all personnel to be absorbed by the [DILG] shall
have been issued appointment papers, and the organized Commission and the PNP shall be
fully operational.
The PC officers and enlisted personnel who have not opted to join the PNP shall be reassigned
to the Army, Navy or Air Force, or shall be allowed to retire under existing AFP rules and
regulations. Any PC-INP officer or enlisted personnel may, within the twelve-month period from
the effectivity of this Act, retire and be paid retirement benefits corresponding to a position two
(2) ranks higher than his present grade, subject to the conditions that at the time he applies for
retirement, he has rendered at least twenty (20) years of service and still has, at most, twenty-
four (24) months of service remaining before the compulsory retirement age as provided by
existing law for his office.
Phase III – Adjustment of ranks and establishment of one (1) lineal roster of officers and another
for non-officers, and the rationalization of compensation and retirement systems; taking into
consideration the existing compensation schemes and retirement and separation benefit
systems of the different components of the PNP, to ensure that no member of the PNP shall
suffer any diminution in basic longevity and incentive pays, allowances and retirement benefits
due them before the creations of the PNP, to be completed within eighteen (18) months from the
effectivity of this Act. xxx.
Upon the effectivity of this Act, the [DILG] Secretary shall exercise administrative supervision as
well as operational control over the transferred, merged and/or absorbed AFP and INP units.
The incumbent Director General of the PC-INP shall continue to act as Director General of the
PNP until … replaced …. (Emphasis and words in brackets supplied.)
From the foregoing, it appears clear to us that the INP was never, as posited by the petitioners,
abolished or terminated out of existence by R.A. No. 6975. For sure, nowhere in R.A. No. 6975
does the words "abolish" or "terminate" appear in reference to the INP. Instead, what the law
provides is for the "absorption," "transfer," and/or "merger" of the INP, as well as the other offices
comprising the PC-INP, with the PNP. To "abolish" is to do away with, to annul, abrogate or
destroy completely;12 to "absorb" is to assimilate, incorporate or to take in.13 "Merge" means to
cause to combine or unite to become legally absorbed or extinguished by merger14 while
"transfer" denotes movement from one position to another. Clearly, "abolition" cannot be
equated with "absorption."
True it is that Section 9015 of R.A. No. 6975 speaks of the INP "[ceasing] to exist" upon the
effectivity of the law. It ought to be stressed, however, that such cessation is but the logical
consequence of the INP being absorbed by the PNP.1a\^/phi1.net
Far from being abolished then, the INP, at the most, was merely transformed to become the
PNP, minus of course its military character and complexion.
Even the petitioners’ effort at disclosing the legislative intent behind the enactment of R.A. No.
6975 cannot support their theory of abolition. Rather, the Senate and House deliberations on
the bill that eventually became R.A. No. 6975 reveal what has correctly been held by the CA in
its assailed decision: that the PNP was precisely created to erase the stigma spawned by the
militarization of the police force under the PC-INP structure. The rationale behind the passage
of R.A. No. 6975 was adequately articulated by no less than the sponsor16 of the corresponding
House bill in his sponsorship speech, thus:
By removing the police force from under the control and supervision of military officers, the bill
seeks to restore and underscore the civilian character of police work - an otherwise universal
concept that was muddled up by the martial law years.
Indeed, were the legislative intent was for the INP’s abolition such that nothing would be left of
it, the word "abolish" or what passes for it could have easily found its way into the very text of
the law itself, what with the abundant use of the word during the legislative deliberations. But as
can be gleaned from said deliberations, the lawmakers’ concern centered on the fact that if the
entire PC-INP corps join the PNP, then the PC-INP will necessarily be abolished, for who then
would be its members? Of more consequence, the lawmakers were one in saying that there
should never be two national police agencies at the same time.
With the conclusion herein reached that the INP was not in fact abolished but was merely
transformed to become the PNP, members of the INP which include the herein respondents are,
therefore, not excluded from availing themselves of the retirement benefits accorded to PNP
retirees under Sections 7417 and 7518 of R.A. No. 6975, as amended by R.A. No. 8551. It may
be that respondents were no longer in the government service at the time of the enactment of
R.A. No. 6975. This fact, however, without more, would not pose as an impediment to the
respondents’ entitlement to the new retirement scheme set forth under the aforecited sections.
As correctly ratiocinated by the CA to which we are in full accord:
For sure, R.A. No. 6975 was not a retroactive statute since it did not impose a new obligation to
pay the INP retirees the difference between what they received when they retired and what
would now be due to them after R.A. No. 6975 was enacted. Even so, that did not render the
RTC’s interpretation of R.A. No. 6975 any less valid. The [respondents’] retirement prior to the
passage of R.A. No. 6975 did not exclude them from the benefits provided by R.A. No. 6975, as
amended by R.A. No. 8551, since their membership in the INP was an antecedent fact that
nonetheless allowed them to avail themselves of the benefits of the subsequent laws. R.A. No.
6975 considered them as PNP members, always referring to their membership and service in
the INP in providing for their retirement benefits. 19
Petitioners maintain, however, that NAPOLCOM Resolution No. 8,20 particularly Section
1121 thereof, bars the payment of any differential in retirement pay to officers and non-officers
who are already retired prior to the effectivity of R.A. No. 6975.
The contention does not commend itself for concurrence.
Under the amendatory law (R.A. No. 8551), the application of rationalized retirement benefits to
PNP members who have meanwhile retired before its (R.A. No. 8551) enactment was not
prohibited. In fact, its Section 3822 explicitly states that the rationalized retirement benefits
schedule and program "shall have retroactive effect in favor of PNP members and officers retired
or separated from the time specified in the law." To us, the aforesaid provision should be made
applicable to INP members who had retired prior to the effectivity of R.A. No. 6975. For, as afore-
held, the INP was, in effect, merely absorbed by the PNP and not abolished.
Indeed, to bar payment of retirement pay differential to INP members who were already retired
before R.A. No. 6975 became effective would even run counter to the purpose of NAPOLCOM
Resolution No. 8 itself, as expressed in its preambulatory clause, which is to rationalize the
retirement system of the PNP taking into consideration existing retirement and benefit systems
(including R.A. No. 6975 and P.D. No. 1184) of the different components thereof "to ensure that
no member of the PNP shall suffer any diminution in the retirement benefits due them before the
creation of the PNP."23
Most importantly, the perceived restriction could not plausibly preclude the respondents from
asserting their entitlement to retirement benefits adjusted to the level when R.A. No. 6975 took
effect. Such adjustment hews with the constitutional warrant that "the State shall, from time to
time, review to upgrade the pensions and other benefits due to retirees of both the government
and private sectors,"24 and the implementing mandate under the Senior Citizen’s Law25 that "to
the extent practicable and feasible, retirement benefits xxx shall be upgraded to be at par with
the current scale enjoyed by those in actual service."1awphi1.nét
Certainly going for the respondents in their bid to enjoy the same retirement benefits granted to
PNP retirees, either under R.A. No. 6975 or R.A. No. 8551, is Section 34 of the latter law which
amended Section 75 of R.A. No. 6975 by adding thereto the following proviso:
Section 75. Retirement benefits. x x x: Provided, finally, That retirement pay of the officers/non-
officers of the PNP shall be subject to adjustments based on the prevailing scale of base pay of
police personnel in the active service.
Then, too, is the all familiar rule that:
Retirement laws should be liberally construed in favor of the retiree because their intention is to
provide for his sustenance and hopefully, even comfort, when he no longer has the stamina to
continue earning his livelihood. The liberal approach aims to achieve the humanitarian purposes
of the law in order that efficiency, security and well-being of government employees may be
enhanced.26
The petitioners parlay the notion of prospective application of statutes, noting in this regard that
R.A. No. 6975, as amended, cannot be applied retroactively, there being no provision to that
effect.
We are not persuaded.
As correctly found by the appellate court, R.A. No. 6975 itself contextually provides for its
retroactive application to cover those who had retired prior to its effectivity. In this regard, we
invite attention to the three (3) phases of implementation under Section 85 for the absorption
and continuation in the service of, among others, the INP members under the newly-established
PNP.
In a further bid to scuttle respondents’ entitlement to the desired retirement benefits, the
petitioners fault the trial court for ordering the immediate adjustments of the respondents’
retirement benefits when the basic petition filed before it was one for declaratory relief. To the
petitioners, such petition does not essentially entail an executory process, the only relief proper
under that setting being a declaration of the parties’ rights and duties.
Petitioners’ above posture is valid to a point. However, the execution of judgments in a petition
for declaratory relief is not necessarily indefensible. In Philippine Deposit Insurance
Corporation[PDIC] v. Court of Appeals,27 wherein the Court affirmed the order for the petitioners object to. Being aware of said prayer, the petitioners then already knew the logical consequence
therein to pay the balance of the deposit insurance to the therein respondents, we categorically if, as it turned out, a declaratory judgment is rendered in the respondents’ favor.
ruled:
At bottom then, the trial court’s judgment forestalled multiplicity of suits which, needless to stress,
Now, there is nothing in the nature of a special civil action for declaratory relief that proscribes would only entail a long and arduous process. Considering their obvious advanced years, the
the filing of a counterclaim based on the same transaction, deed or contract subject of the respondents can hardly afford another protracted proceedings. It is thus for this Court to already
complaint. A special civil action is after all not essentially different from an ordinary civil action, write finis to this case.
which is generally governed by Rules 1 to 56 of the Rules of Court, except that the former deals
with a special subject matter which makes necessary some special regulation. But the identity WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the
between their fundamental nature is such that the same rules governing ordinary civil suits may CA, respectively dated July 7, 2005 and August 24, 2005, are AFFIRMED.
and do apply to special civil actions if not inconsistent with or if they may serve to supplement No costs.
the provisions of the peculiar rules governing special civil actions.28
SO ORDERED.
Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur:29 the
Court upheld the lower court’s order for a party to refund the amounts paid by the adverse party
under the municipal ordinance therein questioned, stating:
x x x Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into an ordinary
action and the parties allowed to file such pleadings as may be necessary or proper, if before
the final termination of the case "a breach or violation of an … ordinance, should take place." In
the present case, no breach or violation of the ordinance occurred. The petitioner decided to pay
"under protest" the fees imposed by the ordinance. Such payment did not affect the case; the
declaratory relief action was still proper because the applicability of the ordinance to future
transactions still remained to be resolved, although the matter could also be threshed out in an
ordinary suit for the recovery of taxes paid …. In its petition for declaratory relief, petitioner-
appellee alleged that by reason of the enforcement of the municipal ordinance by respondents
it was forced to pay under protest the fees imposed pursuant to the said ordinance, and
accordingly, one of the reliefs prayed for by the petitioner was that the respondents be ordered
to refund all the amounts it paid to respondent Municipal Treasurer during the pendency of the
case. The inclusion of said allegation and prayer in the petition was not objected to by the
respondents in their answer. During the trial, evidence of the
payments made by the petitioner was introduced. Respondents were thus fully aware of the
petitioner's claim for refund and of what would happen if the ordinance were to be declared
invalid by the court.
The Court sees no reason for treating this case differently from PDIC and
Matalin.1awphi1.nét This disposition becomes all the more appropriate considering that the
respondents, as petitioners in the RTC, pleaded for the immediate adjustment of their retirement
benefits which, significantly, the herein petitioners, as respondents in the same court, did not
G.R. No. 79981 April 2, 1991 her husband's estate particularly her failure to render an accounting thereof for eight (8) years.
Finding thus the probate court to have acted properly, it dismissed the petition for lack of merit.
ENGRACIA BACATE AMBERTI, petitioner,
vs. After payment of the estate and inheritance taxes due, private respondent Maria Teresa, as the
HONORABLE COURT OF APPEALS, HONORABLE EFICIO B. ACOSTA, Presiding Judge new administratrix, filed a motion with the probate court to terminate the administration
of Branch CLV, Regional Trial Court, Pasig, Metro Manila, and MARIA TERESA proceedings and to declare her as the universal heir of the deceased Pietro Amberti and the
AMBERTI TALAG, represented by her husband/attorney-in-fact WILFREDO M. absolute owner of all the real and personal properties of his estate. In compliance with the court's
TALAG, respondents. order of November 29, 1985, she submitted an inventory listing of all the real and personal
properties of the subject estate which disclosed, among others, that petitioner had already sold
Jose Oliver Cortes for petitioner. one-half (1/2) of the 975-square meter West Avenue (Quezon City) property and had disposed
Benjamin Quitoriano collaborating counsel for petitioner. of the various mining equipment used in the once thriving marble business of the deceased in
Nicolas M. De Guzman for private respondent. the reported total amount of P687,500.00.3

On January 10, 1986, the lower court rendered judgment in Special Proceedings No. 5958
awarding ownership of the residue of the entire Amberti estate consisting of real and personal
FERNAN, C.J.: properties to the decedent's universal heir, private respondent Maria Teresa.4

For review is the decision dated September 16, 1987 of the Court of Appeals which dismissed On April 14, 1986, petitioner moved for a reconsideration of the January 10, 1986 decision,
Engracia Bacate Amberti's petition for annulment of the orders of the Regional Trial Court, questioning for the first time the provisions of the holographic will and asserting her alleged right
Branch 155 (Pasig) dated January 10, 1986 and November 4, 1986, respectively in CA-G.R. SP of usufruct over one-half (1/2) of the estate. The trial court denied said motion on November 4,
No. 10991. 1986 for having been filed long after the judgment of January 10, 1986 had acquired finality.5

The case at bar is another lamentable instance of a mother and her only daughter clashing with
each other in bitter controversy over inheritance.
Pietro (Piero) Amberti, an Italian citizen, married petitioner Engracia V. Bacate on September
16, 1965. They have one child, herein private respondent Maria Teresa Amberti, now married to
Wilfredo M. Talag. In June, 1970, Pietro, then a resident of Antipolo, Rizal, died in Torino, Italy,
leaving behind considerable properties in the Philippines and a holographic will designating
Maria Teresa as his universal heir in accordance with the laws of Italy. The will was subsequently
admitted to probate in the Philippines on August 2, 1971 and the widow Engracia was named
the executrix, only to be removed after eight (8) years by the same probate court for
maladministration of the Amberti estate, failure to submit an inventory or render an accounting
for more than eight (8) years and to account for the money received by the estate totalling more
than P7,000,000.00. She was ordered replaced by her daughter, Maria Teresa, upon the latter's
motion.1
Petitioner then filed a petition for certiorari, prohibition and mandamus in the Appellate Court to
protest her removal and replacement.2 In its decision dated April 10, 1980, the Appellate Court
noted the various anomalies and irregularities committed by petitioner in her administration of
Petitioner again sought recourse in the Court of Appeals,6 this time to seek the annulment of the
orders of January 10, 1986 and November 4, 1986 on the ground that the notice of the January
10, 1986 order sent by registered mail was not "actually" received by her counsel of record
resulting in "deprivation of due process."7 But before private respondent could comment on the
petition, petitioner filed a motion to withdraw CA-G.R. SP No. 10786 stating that she was no
longer interested in pursuing her action. Consequently, the Appellate Court dismissed CA-G.R.
SP No. 10786 in its resolution of January 9, 1987 which read:
The petition is dismissed, petitioner having expressed that she is no longer pursuing it to
judgment.8
However, it would appear that petitioner had a change of heart for on January 12, 1987 she
instituted another action before the Court of Appeals9 to annul and reverse the orders dated
January 10, 1986 and November 4, 1986 of the Regional Trial Court, the very same orders
subject of CA-G.R. SP No. 10786. Petitioner claimed that the act of private respondent in
furnishing petitioner with a copy of the motion to terminate the administration proceedings
through her former counsel (Atty. Rogelio Velarde) and not through her new counsel of record
(Atty. Antonio P. Coronel) constituted extrinsic fraud calculated to deprive her of her day in court.
She likewise sought the invalidation of the inventory submitted by her daughter on the ground
that said inventory included properties allegedly belonging to her exclusively or to the conjugal
partnership with the deceased Pietro Amberti.
On March 24, 1987, the Appellate Court issued another resolution declaring as final the dismissal
of the petition in CA-G.R. SP No. 10786:
Considering that the resolution dismissing the appeal dated January 9, 1987 has become final
as of January 31, 1987, the Court Resolved: Let the corresponding entry of judgment issue and
the case remanded to the court of origin for execution of judgment.10
Finally, on September 16, 1987, the Court of Appeals rendered in CA-G.R. SP No. 10991 the
decision under review which reads in the main:
Significantly, and as the Comment filed by private respondent cited, the petition filed omitted to
mention the fact that on December 8, 1986, the same petitioner filed certiorari proceedings with
prayer for preliminary injunction in this Court, docketed as CA-G.R. SP No. 10786 against same
respondents herein, to annul the judgment of January 10, 1986 and the order of denial of
November 4, 1986 on grounds of alleged lack of due process, or abuse of discretion. . . .
xxx xxx xxx
Although in the dismissal of CA-G.R. SP No. 10786, there was no opportunity for this Court to
go over the merits of the grounds alleged, since the petitioner filed a motion to withdraw before
private respondents can file their comment to the petition, the dismissal of the same is binding
on the petitioner. Certainly, she is now estopped from disputing the order of dismissal by bringing
another action and pretending that it is different from the other which was earlier dismissed upon
her instance. Indeed, such dismissal is with prejudice. To hold otherwise is to allow petitioner to
trifle with this Court and waste its precious time which could be utilized to decide cases brought
by other litigants who are more earnest and serious with their cases.
Certainly, the question of whether or not the decision of January 10, 1986 has been served on
petitioner's counsel of record can no longer be raised since by her withdrawal of CA-G.R. SP
No. 10786, petitioner is deemed to have waived any right to raise the issue.
xxx xxx xxx
WHEREFORE, the instant petition should be, as it is hereby DISMISSED. . .11
The ultimate issue raised in this petition for review is whether or not the dismissal of CA-G.R.
SP No. 10786 by respondent Appellate Court amounts to a dismissal with prejudice such that
petitioner is now precluded from bringing a second action (CA-G.R SP No. 10991) based on the
same subject matter.
A careful scrutiny of the records shows that CA-G.R. SP No. 10786 is a special civil action
for certiorari with prayer for preliminary injunction under Rule 65 of the Revised Rules of Court
which petitioner filed on December 8, 1986 to annul the judgment of the trial court of January
10, 1986 and the order of denial of petitioner's motion for reconsideration of November 4, 1986
on the grounds of lack of due process and grave abuse of discretion.12 As above related, before
respondents could submit their comment, petitioner filed a motion to withdraw the petition stating
that she was no longer interested in pursuing the case. The motion was granted by the Appellate
Court in its resolution of January 9, 1987. On March 24, 1987, said resolution having become
final, entry of judgment was issued and the case was remanded to the court of origin for
execution of judgment.
Section 1, Rule 62 of the Rules of Court under the heading SPECIAL CIVIL ACTIONS provides
as follows:
Sec. 1. Preceding rules applicable in special civil actions. — The provisions of the preceding
rules shall apply in special actions for interpleader, declaratory relief and similar
remedies, certiorari, prohibition, mandamus, quo warranto, eminent domain, foreclosure of
mortgage, partition, forcible entry and detainer, and contempt, which are not inconsistent with or
may serve to supplement the provisions of the rules relating to such special civil actions.
From the foregoing, it is clearly stated that in special civil actions the preceding rules are
applicable in a supplementary manner. More specifically, under Sections 2 and 4, Rule 50 of
Rules of Court, relating to DISMISSAL OF APPEAL in the Court of Appeals, the following are
provided:
Sec. 2. Effect of dismissal. — Fifteen (15) days after the dismissal of an appeal the clerk shall
return to the court below the record on appeal with a certificate under the seal of the court
showing that the appeal has been dismissed. Upon the receipt of such certificate in the lower
court the case shall stand there as though no appeal had ever been taken, and the judgment of
the said court may be enforced with the additional costs allowed by the appellate court upon
dismissing the appeal.
Sec. 4. Withdrawal of appeal. — An appeal may be withdrawn as of right at any time before the
filing of appellee's brief.1âwphi1 After the brief is filed the withdrawal may be allowed by the
court in its discretion. The withdrawal of an appeal shall have the same effect as that of a
dismissal in accordance with Section 2 of this rule
Applying the foregoing rules in a supplementary manner, upon the withdrawal of a petition in a
special civil action before the answer or comment thereto has been filed, the case shall stand
as though no appeal has been taken, so that the judgment or order of the lower court being
questioned becomes immediately final and executory. Thus, a resolution granting the withdrawal
of such a petition is with prejudice and petitioner is precluded from bringing a second action
based on the same subject matter.
The subsequent petition in CA-G.R. SP No. 10991 is an original action for annulment of judgment
filed by petitioner in the Court of Appeals in accordance with Section 9 of the Judiciary
Reorganization Act of 1980 (B.P. Blg. 129) which vests upon the Intermediate Appellate Court
(now Court of Appeals) the original exclusive jurisdiction over actions for annulment of judgments
of the Regional Trial Courts. No doubt that second petition is barred by res judicata, as the
dismissal of the earlier petition for certiorari in C.A. G.R. SP No. 10786 was with prejudice and
on the merits. It has not escaped this Court's attention that these two petitions are based on the
same ground of the alleged deprivation of due process and sought the same reliefs, i.e., the
annulment or setting aside of the January 10, 1986 judgment and November 4, 1986 order of
the trial court. A party cannot evade the effects of res judicata by varying the form of his action
or adopting a different method of presenting his case as petitioner attempted to do in instituting
an original action for annulment of judgment to obtain the same relief sought in the petition
for certiorari earlier withdrawn from the Court of Appeals.13
This should now put an end to the travails of a daughter whose mother, after having dissipated
so much of the estate of her late husband, still proposes to share in what little is left of the
inheritance of their daughter.
WHEREFORE, the petition is dismissed, with costs against petitioner. This decision is
immediately executory.
SO ORDERED.
G. R. No. 76431 October 16, 1989
FORTUNE MOTORS, (PHILS.) INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, METROPOLITAN BANK and TRUST
COMPANY, respondents.
Quirante & Associates Law Office for petitioner.
Bautista, Cruz & Associates Law Offices for private respondent.
PARAS, J.:
This is a petition for review on certiorari seeking the reversal of: (a) the July 30, 1986 decision
of the Court of Appeals in AC-G.R. SP No. 09255 entitled "Metropolitan Bank & Trust Co. v. Hon.
Herminio C. Mariano, et al." dismissing Civil Case No. 8533218 entitled "Fortune Motors (Phils.)
Inc. v. Metropolitan Bank & Trust Co." filed in the Regional Trial Court of Manila, Branch IV for
improper venue and (b) the resolution dated October 30, 1986 denying petitioner's motion for
reconsideration.
The undisputed facts of the case are as follows:
On March 29,1982 up to January 6,1984, private respondent Metropolitan Bank extended
various loans to petitioner Fortune Motors in the total sum of P32,500,000.00 (according to the
borrower; or P34,150,000.00 according to the Bank) which loan was secured by a real estate
mortgage on the Fortune building and lot in Makati, Rizal. (Rollo, pp. 60-62)
Due to financial difficulties and the onslaught of economic recession, the petitioner was not able
to pay the loan which became due. (Rollo, p. 62)
For failure of the petitioner to pay the loans, the respondent bank initiated extrajudicial
foreclosure proceedings. After notices were served, posted, and published, the mortgaged
property was sold at public auction for the price of P47,899,264.91 to mortgagee Bank as the
highest bidder. (Rollo, p. 11)
The sheriff's certificate of sale was registered on October 24, 1984 with the one-year redemption
period to expire on October 24,1985. (Rollo, p. 12)
On October 21, 1985, three days before the expiration of the redemption period, petitioner
Fortune Motors filed a complaint for annulment of the extrajudicial foreclosure sale alleging that
the foreclosure was premature because its obligation to the Bank was not yet due, the publication
of the notice of sale was incomplete, there was no public auction, and the price for which the
property was sold was "shockingly low". (Rollo, pp. 60-68)
Before summons could be served private respondent Bank filed a motion to dismiss the
complaint on the ground that the venue of the action was improperly laid in Manila for the realty
covered by the real estate mortgage is situated in Makati, therefore the action to annul the
foreclosure sale should be filed in the Regional Trial Court of Makati. (Rollo, pp. 67-71-A )
The motion was opposed by petitioner Fortune Motors alleging that its action "is a personal
action" and that "the issue is the validity of the extrajudicial foreclosure proceedings" so that it
may have a new one year period to redeem. (Rollo, pp. 72-73)
On January 8, 1986 an order was issued by the lower court reserving the resolution of the Bank's
motion to dismiss until after the trial on the merits as the grounds relied upon by the defendant
were not clear and indubitable. (Rollo, p. 81)
The Bank filed a motion for reconsideration of the order dated January 8, 1986 but it was denied
by the lower court in its order dated May 28, 1986. (Rollo, Annex "L" pp. 93-96; Annex "N" p. 99)
On June 11, 1986 the respondent Bank filed a petition for certiorari and prohibition in the Court
of Appeals. (Rollo, Annex "O" pp. 100-115)
And on July 30, 1986, a decision was issued by the Court of Appeals, the dispositive part of
which reads as follows:
WHEREFORE, the petition for certiorari and prohibition is granted. The complaint in the Civil
Case No. 85-33218 is dismissed without prejudice to its being filed in the proper venue. Costs
against the private respondent.
SO ORDERED. (Rollo, p. 15)
A motion for reconsideration was filed on August 11, 1986 on the said decision and on October
30, 1986 a resolution was issued denying such motion for reconsideration. (Rollo, Annex "O" pp.
121-123; Annex "S" p. 129)
Hence, the petition for review on certiorari.
On June 10, 1987 the Court gave due course to the petition, required the parties to file their
respective memoranda within twenty (20) days from the notice hereof, and pay deposit for costs
in the amount of P80.40.
Both parties have filed their respective memoranda, and the case was submitted for Court's Thus, as aptly decided by the Court of Appeals in a decision penned by then Court of Appeals
resolution in the resolution dated December 14, 1987. (Rollo,Metrobank's Memorandum pp. 45- Associate Justice now Associate Justice of the Supreme Court Carolina C. Griño-Aquino, the
59; petitioner's memorandum pp.130-136; Res. p. 138) pertinent portion reads: "Since an extrajudicial foreclosure of real property results in a
conveyance of the title of the property sold to the highest bidder at the sale, an action to annul
The only issue in this case is whether petitioner's action for annulment of the real estate the foreclosure sale is necessarily an action affecting the title of the property sold. It is therefore
mortgage extrajudicial foreclosure sale of Fortune Building is a personal action or a real action a real action which should be commenced and tried in the province where the property or part
for venue purposes. thereof lies."
In a real action, the plaintiff seeks the recovery of real property, or as indicated in Sec. 2 (a) of PREMISES CONSIDERED, the instant petition is DENIED for lack of merit and the assailed
Rule 4, a real action is an action affecting title to real property, or for the recovery of possession, decision of the respondent Court of Appeals is AFFIRMED.
or for the partition or condemnation of, or foreclosure of a mortgage on real property. (Comments
on the Rules of Court by Moran, Vol. 1, p. 122) SO ORDERED.
Real actions or actions affecting title to, or for the recovery of possession, or for the partition or
condemnation of, or foreclosure of mortgage on real property, must be instituted in the Court of
First Instance of the province where the property or any part thereof lies. (Enriquez v. Macadaeg,
84 Phil. 674,1949; Garchitorena v. Register of Deeds, 101 Phil. 1207, 1957)
Personal actions upon the other hand, may be instituted in the Court of First Instance where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiffs resides, at the election of the plaintiff (Sec. 1, Rule 4, Revised Rules of Court).
A prayer for annulment or rescission of contract does not operate to efface the true objectives
and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97,
1948)

An action for the annulment or rescission of a sale of real property is a real action. Its prime
objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760,1954)
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul
a private sale of real property. (Munoz v. Llamas, 87 Phil. 737,1950)
While it is true that petitioner does not directly seek the recovery of title or possession of the
property in question, his action for annulment of sale and his claim for damages are closely
intertwined with the issue of ownership of the building which, under the law, is considered
immovable property, the recovery of which is petitioner's primary objective. The prevalent
doctrine is that an action for the annulment or rescission of a sale of real property does not
operate to efface the fundamental and prime objective and nature of the case, which is to recover
said real property. It is a real action. Respondent Court, therefore, did not err in dismissing the
case on the ground of improper venue (Sec. 2, Rule 4) which was timely raised (Sec. 1, Rule
16). (Punzalan, Jr. v. Vda. de Lacsamana, 121 SCRA 336, [1983]).
G.R. No. 156759 June 5, 2013
ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY REYES, JANET
BAY, JESUS R. GALANG, AND RANDY HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.
DECISION
BERSAMIN, J.:
To warrant the substituted service of the summons and copy of the complaint, the serving officer
must first attempt to effect the same upon the defendant in person. Only after the attempt at
personal service has become futile or impossible within a reasonable time may the officer resort
to substituted service.
The Case
Petitioners – defendants in a suit for libel brought by respondent – appeal the decision
promulgated on March 8, 20021 and the resolution promulgated on January 13, 2003,2 whereby
the Court of Appeals (CA) respectively dismissed their petition for certiorari, prohibition and
mandamus and denied their motion for reconsideration. Thereby, the CA upheld the order the
Regional Trial Court (RTC), Branch 51, in Manila had issued on March 12, 2001 denying their
motion to dismiss because the substituted service of the summons and copies of the complaint
on each of them had been valid and effective.3
Antecedents
On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in
Manila, sued Abante Tonite, a daily tabloid of general circulation; its Publisher Allen A. Macasaet;
its Managing Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its Editors Janet
Bay, Jesus R. Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes (petitioners),
claiming damages because of an allegedly libelous article petitioners published in the June 6,
2000 issue of Abante Tonite. The suit, docketed as Civil Case No. 00-97907, was raffled to
Branch 51 of the RTC, which in due course issued summons to be served on each defendant,
including Abante Tonite, at their business address at Monica Publishing Corporation, 301-305
3rd Floor, BF Condominium Building, Solana Street corner A. Soriano Street, Intramuros,
Manila.4
In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the stated
address to effect the personal service of the summons on the defendants. But his efforts to
personally serve each defendant in the address were futile because the defendants were then
out of the office and unavailable. He returned in the afternoon of that day to make a second
attempt at serving the summons, but he was informed that petitioners were still out of the office.
He decided to resort to substituted service of the summons, and explained why in his sheriff’s
return dated September 22, 2005,5 to wit:
SHERIFF’S RETURN
This is to certify that on September 18, 2000, I caused the service of summons together with
copies of complaint and its annexes attached thereto, upon the following:
1. Defendant Allen A. Macasaet, President/Publisher of defendant AbanteTonite, at Monica
Publishing Corporation, Rooms 301-305 3rd Floor, BF Condominium Building, Solana corner A.
Soriano Streets, Intramuros, Manila, thru his secretary Lu-Ann Quijano, a person of sufficient
age and discretion working therein, who signed to acknowledge receipt thereof. That effort (sic)
to serve the said summons personally upon said defendant were made, but the same were
ineffectual and unavailing on the ground that per information of Ms. Quijano said defendant is
always out and not available, thus, substituted service was applied;
2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu-Ann Quijano, who signed
to acknowledge receipt thereof. That effort (sic) to serve the said summons personally upon said
defendant were made, but the same were ineffectual and unavailing on the ground that per
information of (sic) his wife said defendant is always out and not available, thus, substituted
service was applied;
3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, at the
same address, thru Rene Esleta, Editorial Assistant of defendant AbanteTonite, a person of
sufficient age and discretion working therein who signed to acknowledge receipt thereof. That
effort (sic) to serve the said summons personally upon said defendants were made, but the same
were ineffectual and unavailing on the ground that per information of (sic) Mr. Esleta said
defendants is (sic) always roving outside and gathering news, thus, substituted service was
applied.
Original copy of summons is therefore, respectfully returned duly served.
Manila, September 22, 2000.
On October 3, 2000, petitioners moved for the dismissal of the complaint through counsel’s
special appearance in their behalf, alleging lack of jurisdiction over their persons because of the
invalid and ineffectual substituted service of summons. They contended that the sheriff had
made no prior attempt to serve the summons personally on each of them in accordance with
Section 6 and Section 7, Rule 14 of the Rules of Court. They further moved to drop Abante
Tonite as a defendant by virtue of its being neither a natural nor a juridical person that could be
impleaded as a party in a civil action.
At the hearing of petitioners’ motion to dismiss, Medina testified that he had gone to the office
address of petitioners in the morning of September 18, 2000 to personally serve the summons
on each defendant; that petitioners were out of the office at the time; that he had returned in the
afternoon of the same day to again attempt to serve on each defendant personally but his
attempt had still proved futile because all of petitioners were still out of the office; that some
competent persons working in petitioners’ office had informed him that Macasaet and Quijano
were always out and unavailable, and that Albano, Bay, Galang, Hagos and Reyes were always
out roving to gather news; and that he had then resorted to substituted service upon realizing
the impossibility of his finding petitioners in person within a reasonable time.
On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners to file their
answers to the complaint within the remaining period allowed by the Rules of Court,6 relevantly
stating:
Records show that the summonses were served upon Allen A. Macasaet, President/Publisher
of defendant AbanteTonite, through LuAnn Quijano; upon defendants Isaias Albano, Janet Bay,
Jesus R. Galang, Randy Hagos and Lily Reyes, through Rene Esleta, Editorial Assistant of
defendant Abante Tonite (p. 12, records). It is apparent in the Sheriff’s Return that on several
occasions, efforts to served (sic) the summons personally upon all the defendants were
ineffectual as they were always out and unavailable, so the Sheriff served the summons by
substituted service.
Considering that summonses cannot be served within a reasonable time to the persons of all
the defendants, hence substituted service of summonses was validly applied. Secretary of the
President who is duly authorized to receive such document, the wife of the defendant and the
Editorial Assistant of the defendant, were considered competent persons with sufficient
discretion to realize the importance of the legal papers served upon them and to relay the same
to the defendants named therein (Sec. 7, Rule 14, 1997 Rules of Civil Procedure).
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for lack of
merit..
Accordingly, defendants are directed to file their Answers to the complaint within the period still
open to them, pursuant to the rules.
SO ORDERED.
Petitioners filed a motion for reconsideration, asserting that the sheriff had immediately resorted
to substituted service of the summons upon being informed that they were not around to
personally receive the summons, and that Abante Tonite, being neither a natural nor a juridical
person, could not be made a party in the action.
On June 29, 2001, the RTC denied petitioners’ motion for reconsideration.7 It stated in respect
of the service of summons, as follows:
The allegations of the defendants that the Sheriff immediately resorted to substituted service of
summons upon them when he was informed that they were not around to personally receive the
same is untenable. During the hearing of the herein motion, Sheriff Raul Medina of this Branch
of the Court testified that on September 18, 2000 in the morning, he went to the office address
of the defendants to personally serve summons upon them but they were out. So he went back
to serve said summons upon the defendants in the afternoon of the same day, but then again
he was informed that the defendants were out and unavailable, and that they were always out
because they were roving around to gather news. Because of that information and because of
the nature of the work of the defendants that they are always on field, so the sheriff resorted to
substituted service of summons. There was substantial compliance with the rules, considering
the difficulty to serve the summons personally to them because of the nature of their job which
compels them to be always out and unavailable. Additional matters regarding the service of
summons upon defendants were sufficiently discussed in the Order of this Court dated March
12, 2001.
Regarding the impleading of Abante Tonite as defendant, the RTC held, viz:
"Abante Tonite" is a daily tabloid of general circulation. People all over the country could buy a
copy of "Abante Tonite" and read it, hence, it is for public consumption. The persons who
organized said publication obviously derived profit from it. The information written on the said
newspaper will affect the person, natural as well as juridical, who was stated or implicated in the
news. All of these facts imply that "Abante Tonite" falls within the provision of Art. 44 (2 or 3),
New Civil Code. Assuming arguendo that "Abante Tonite" is not registered with the Securities
and Exchange Commission, it is deemed a corporation by estoppels considering that it
possesses attributes of a juridical person, otherwise it cannot be held liable for damages and
injuries it may inflict to other persons.
Undaunted, petitioners brought a petition for certiorari, prohibition, mandamusin the CA to nullify
the orders of the RTC dated March 12, 2001 and June 29, 2001.
Ruling of the CA
On March 8, 2002, the CA promulgated its questioned decision,8 dismissing the petition for
certiorari, prohibition, mandamus, to wit:
We find petitioners’ argument without merit. The rule is that certiorari will prosper only if there is
a showing of grave abuse of discretion or an act without or in excess of jurisdiction committed
by the respondent Judge. A judicious reading of the questioned orders of respondent Judge
would show that the same were not issued in a capricious or whimsical exercise of judgment.
There are factual bases and legal justification for the assailed orders. From the Return, the sheriff
certified that "effort to serve the summons personally xxx were made, but the same were
ineffectual and unavailing xxx.
and upholding the trial court’s finding that there was a substantial compliance with the rules that
allowed the substituted service.
Furthermore, the CA ruled:
Anent the issue raised by petitioners that "Abante Tonite is neither a natural or juridical person
who may be a party in a civil case," and therefore the case against it must be dismissed and/or
dropped, is untenable.
The respondent Judge, in denying petitioners’ motion for reconsideration, held that:
xxxx
Abante Tonite’s newspapers are circulated nationwide, showing ostensibly its being a corporate
entity, thus the doctrine of corporation by estoppel may appropriately apply.
An unincorporated association, which represents itself to be a corporation, will be estopped from
denying its corporate capacity in a suit against it by a third person who relies in good faith on
such representation.
There being no grave abuse of discretion committed by the respondent Judge in the exercise of
his jurisdiction, the relief of prohibition is also unavailable.
WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent Judge are
AFFIRMED.
SO ORDERED.9
On January 13, 2003, the CA denied petitioners’ motion for reconsideration.10
Issues
Petitioners hereby submit that:
1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE
TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.
2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING THE
INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT CASE.11
Ruling
The petition for review lacks merit.
Jurisdiction over the person, or jurisdiction in personam –the power of the court to render a
personal judgment or to subject the parties in a particular action to the judgment and other rulings
rendered in the action – is an element of due process that is essential in all actions, civil as well
as criminal, except in actions in rem or quasi in rem. Jurisdiction over the defendantin an action
in rem or quasi in rem is not required, and the court acquires jurisdiction over an actionas long
as it acquires jurisdiction over the resthat is thesubject matter of the action. The purpose of
summons in such action is not the acquisition of jurisdiction over the defendant but mainly to
satisfy the constitutional requirement of due process.12
The distinctions that need to be perceived between an action in personam, on the one hand,
and an action inrem or quasi in rem, on the other hand, are aptly delineated in Domagas v.
Jensen,13 thusly:
The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature
and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal
rights and obligations brought against the person and is based on the jurisdiction of the person,
although it may involve his right to, or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the mandate of the court. The purpose
of a proceeding in personam is to impose, through the judgment of a court, some responsibility
or liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An
action in personam is said to be one which has for its object a judgment against the person, as
distinguished from a judgment against the property to determine its state. It has been held that
an action in personam is a proceeding to enforce personal rights or obligations; such action is
brought against the person. As far as suits for injunctive relief are concerned, it is well-settled
that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that
proceedings to enforce personal rights and obligations and in which personal judgments are
rendered adjusting the rights and obligations between the affected parties is in personam.
Actions for recovery of real property are in personam.
On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject
the property of such persons to the discharge of the claims assailed. In an action quasi in rem,
an individual is named as defendant and the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to ascertain or cut
off the rights or interests of all possible claimants. The judgments therein are binding only upon
the parties who joined in the action.
As a rule, Philippine courts cannot try any case against a defendant who does not reside and is
not found in the Philippines because of the impossibility of acquiring jurisdiction over his person
unless he voluntarily appears in court; but when the case is an action in rem or quasi in rem
enumerated in Section 15, Rule 14 of the Rules of Court, Philippine courts have jurisdiction to
hear and decide the case because they have jurisdiction over the res, and jurisdiction over the
person of the non-resident defendant is not essential. In the latter instance, extraterritorial
service of summons can be made upon the defendant, and such extraterritorial service of
summons is not for the purpose of vesting the court with jurisdiction, but for the purpose of
complying with the requirements of fair play or due process, so that the defendant will be
informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff, and he can thereby take steps to protect his interest if he is so minded. On
the other hand, when the defendant in an action in personam does not reside and is not found
in the Philippines, our courts cannot try the case against him because of the impossibility of
acquiring jurisdiction over his person unless he voluntarily appears in court.14
As the initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of
the court by the act of filing the initiatory pleading. As to the defendant, the court acquires
jurisdiction over his person either by the proper service of the summons, or by a voluntary
appearance in the action.15
Upon the filing of the complaint and the payment of the requisite legal fees, the clerk of court
forthwith issues the corresponding summons to the defendant.16 The summons is directed to the
defendant and signed by the clerk of court under seal. It contains the name of the court and the
names of the parties to the action; a direction that the defendant answers within the time fixed
by the Rules of Court; and a notice that unless the defendant so answers, the plaintiff will take
judgment by default and may be granted the relief applied for.17 To be attached to the original
copy of the summons and all copies thereof is a copy of the complaint (and its attachments, if
any) and the order, if any, for the appointment of a guardian ad litem.18
The significance of the proper service of the summons on the defendant in an action in personam
cannot be overemphasized. The service of the summons fulfills two fundamental objectives,
namely: (a) to vest in the court jurisdiction over the person of the defendant; and (b) to afford to
the defendant the opportunity to be heard on the claim brought against him.19 As to the former,
when jurisdiction in personam is not acquired in a civil action through the proper service of the
summons or upon a valid waiver of such proper service, the ensuing trial and judgment are
void.20 If the defendant knowingly does an act inconsistent with the right to object to the lack of
personal jurisdiction as to him, like voluntarily appearing in the action, he is deemed to have
submitted himself to the jurisdiction of the court.21 As to the latter, the essence of due process
lies in the reasonable opportunity to be heard and to submit any evidence the defendant may
have in support of his defense. With the proper service of the summons being intended to afford
to him the opportunity to be heard on the claim against him, he may also waive the process.21 In
other words, compliance with the rules regarding the service of the summons is as much an
issue of due process as it is of jurisdiction.23
Under the Rules of Court, the service of the summons should firstly be effected on the defendant
himself whenever practicable. Such personal service consists either in handing a copy of the
summons to the defendant in person, or, if the defendant refuses to receive and sign for it, in
tendering it to him.24 The rule on personal service is to be rigidly enforced in order to ensure the
realization of the two fundamental objectives earlier mentioned. If, for justifiable reasons, the
defendant cannot be served in person within a reasonable time, the service of the summons
may then be effected either (a) by leaving a copy of the summons at his residence with some
person of suitable age and discretion then residing therein, or (b) by leaving the copy at his office
or regular place of business with some competent person in charge thereof.25 The latter mode
of service is known as substituted service because the service of the summons on the defendant
is made through his substitute.
It is no longer debatable that the statutory requirements of substituted service must be followed
strictly, faithfully and fully, and any substituted service other than that authorized by statute is
considered ineffective.26 This is because substituted service, being in derogation of the usual
method of service, is extraordinary in character and may be used only as prescribed and in the
circumstances authorized by statute.27 Only when the defendant cannot be served personally
within a reasonable time may substituted service be resorted to. Hence, the impossibility of
prompt personal service should be shown by stating the efforts made to find the defendant
himself and the fact that such efforts failed, which statement should be found in the proof of
service or sheriff’s return.28 Nonetheless, the requisite showing of the impossibility of prompt
personal service as basis for resorting to substituted service may be waived by the defendant
either expressly or impliedly.29
There is no question that Sheriff Medina twice attempted to serve the summons upon each of
petitioners in person at their office address, the first in the morning of September 18, 2000 and
the second in the afternoon of the same date. Each attempt failed because Macasaet and
Quijano were "always out and not available" and the other petitioners were "always roving
outside and gathering news." After Medina learned from those present in the office address on
his second attempt that there was no likelihood of any of petitioners going to the office during
the business hours of that or any other day, he concluded that further attempts to serve them in
person within a reasonable time would be futile. The circumstances fully warranted his
conclusion. He was not expected or required as the serving officer to effect personal service by
all means and at all times, considering that he was expressly authorized to resort to substituted
service should he be unable to effect the personal service within a reasonable time. In that
regard, what was a reasonable time was dependent on the circumstances obtaining. While we
are strict in insisting on personal service on the defendant, we do not cling to such strictness
should the circumstances already justify substituted service instead. It is the spirit of the
procedural rules, not their letter, that governs.30
In reality, petitioners’ insistence on personal service by the serving officer was demonstrably
superfluous. They had actually received the summonses served through their substitutes, as
borne out by their filing of several pleadings in the RTC, including an answer with compulsory
counterclaim ad cautelam and a pre-trial brief ad cautelam. They had also availed themselves
of the modes of discovery available under the Rules of Court. Such acts evinced their voluntary
appearance in the action.

Nor can we sustain petitioners’ contention that Abante Tonite could not be sued as a defendant
due to its not being either a natural or a juridical person. In rejecting their contention, the CA
categorized Abante Tonite as a corporation by estoppel as the result of its having represented
itself to the reading public as a corporation despite its not being incorporated. Thereby, the CA
concluded that the RTC did not gravely abuse its discretion in holding that the non-incorporation
of Abante Tonite with the Securities and Exchange Commission was of no consequence, for,
otherwise, whoever of the public who would suffer any damage from the publication of articles
in the pages of its tabloids would be left without recourse. We cannot disagree with the CA,
considering that the editorial box of the daily tabloid disclosed that basis, nothing in the box
indicated that Monica Publishing Corporation had owned Abante Tonite.
WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002; and ORDERS
petitioners to pay the costs of suit.
SO ORDERED.
[G.R. NO. 152808. September 30, 2005]
ANTONIO T. CHUA, Petitioners, v. TOTAL OFFICE PRODUCTS AND SERVICES (TOPROS),
INC., Respondent.
DECISION
QUISUMBING, J.:
For review on certiorari is the decision1 dated November 28, 2001 of the Court of Appeals and
its resolution2 of April 1, 2002 in CA-G.R. SP No. 62592. The assailed decision and resolution
dismissed the special civil action for certiorari against the orders of August 9, 20003 and October
6, 20004 issued by Judge Lorifel Lacap Pahimna in Civil Case No. 67736.
The pertinent facts, based on the records, are as follows:
On December 28, 1999, respondent Total Office Products and Services, Inc., (TOPROS) lodged
a complaint for annulment of contracts of loan and real estate mortgage against herein petitioner
Antonio T. Chua before the Regional Trial Court of Pasig City. The case was docketed as Civil
Case No. 67736 and was raffled to the sala of Judge Lorifel Lacap Pahimna.
The said suit sought to annul a loan contract allegedly extended by petitioner to respondent
TOPROS in the amount of ten million four hundred thousand pesos (P10,400,000) and the
accessory real estate mortgage contract covering two parcels of land situated in Quezon City as
collateral.
It appeared on the face of the subject contracts that TOPROS was represented by its president
John Charles Chang, Jr. However, TOPROS alleged that the purported loan and real estate
mortgage contracts were fictitious, since it never authorized anybody, not even its president, to
enter into said transaction.
On February 28, 2000, petitioner filed a motion to dismiss on the ground of improper venue. He
contended that the action filed by TOPROS affects title to or possession of the parcels of land
subject of the real estate mortgage. He argued that it should thus have been filed in the Regional
Trial Court of Quezon City where the encumbered real properties are located, instead of Pasig
City where the parties reside.
On August 9, 2000, Judge Pahimna issued an order denying the motion to dismiss. She
reasoned that the action to annul the loan and mortgage contracts is a personal action and thus,
the venue was properly laid in the RTC of Pasig City where the parties reside.
Petitioner moved for a reconsideration of the said order, which Judge Pahimna denied in its
order of October 6, 2000. Hence, petitioner filed with the Court of Appeals a special civil action
for certiorari alleging:
THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN
DISREGARDING THE RULING OF THE SUPREME COURT IN PASCUAL v. PASCUAL
REGARDING THE RULE ON PROPER VENUE, AND CONSEQUENTLY ADJUDGING TO BE
A PERSONAL ACTION A CIVIL COMPLAINT FOR THE ANNULMENT OF AN ALLEGEDLY
FICTITIOUS CONTRACT.5
The Court of Appeals dismissed said petition in its decision dated November 28, 2001. It held
that the authorities relied upon by petitioner, namely Pascual v. Pascual6 and Banco Español-
Filipino v. Palanca,7 are inapplicable in the instant case. The appellate court instead
applied Hernandez v. Rural Bank of Lucena, Inc.8 wherein we ruled that an action for the
cancellation of a real estate mortgage is a personal action if the mortgagee has not foreclosed
the mortgage and the mortgagor is in possession of the premises, as neither the mortgagor's
title to nor possession of the property is disputed.
Dissatisfied, petitioner filed a motion for reconsideration, which the Court of Appeals denied for
lack of merit in its resolution of April 1, 2002.
Undeterred, petitioner now comes to us on a Petition for Review raising the following issues:
WHETHER AN ACTION TO ANNUL A LOAN AND MORTGAGE CONTRACT DULY ALLEGED
AS 'FICTITIOUS' FOR BEING WITH ABSOLUTELY NO CONSIDERATION IS A PERSONAL
ACTION OR REAL ACTION?cralawlibrary
WHETHER IN AN ACTION TO ANNUL A LOAN AND MORTGAGE CONTRACT DULY
ALLEGED AS 'FICTITIOUS' FOR BEING WITH ABSOLUTELY NO CONSIDERATION, THE
PERSON ALLEGED TO HAVE '[LACKED] AUTHORITY' TO ENTER INTO SAID CONTRACTS
IS AN INDISPENSABLE PARTY?9
Petitioner contends that Hernandez should not be applied here because in the said case: (1)
venue was improperly laid at the outset; (2) the complaint recognized the validity of the principal
contract involved; and (3) the plaintiff sought to compel acceptance by the defendant of plaintiff's
payment of the latter's mortgage debt. He insists that the Pascual case should be applied
instead. He invokes our pronouncement in Pascual, to wit:
'It appearing, however, that the sale is alleged to be fictitious, with absolutely no consideration,
it should be regarded as a non-existent, not merely null, contract'. And there being no contract
between the deceased and the defendants, there is in truth nothing to annul by action. The action
brought cannot thus be for annulment of contract, but is one for recovery of a fishpond, a real
action that should be, as it has been, brought in Pampanga, where the property is located'.10
Petitioner likewise cites the Banco Español-Filipino case, thus:
Where the defendant in a mortgage foreclosure lives out of the Islands and refuses to appear or
otherwise submit himself to the authority of the court, the jurisdiction of the latter is limited to the
mortgaged property, with respect to which the jurisdiction of the court is based upon the fact that
the property is located within the district and that the court, under the provisions of law applicable
in such cases, is vested with the power to subject the property to the obligation created by the
mortgage. In such case personal jurisdiction over the nonresident defendant is nonessential and
in fact cannot be acquired.11
Petitioner also alleges that John Charles Chang, Jr., the president of TOPROS, who allegedly
entered into the questioned loan and real estate mortgage contracts, is an indispensable party
who has not been properly impleaded.
TOPROS, however, maintains that the appellate court correctly sustained the lower court's
finding that the instant complaint for annulment of loan and real estate mortgage contracts is a
personal action. TOPROS points out that a complaint for the declaration of nullity of a loan
contract for lack of consent and consideration remains a personal action even if the said action
will necessarily affect the accessory real estate mortgage.
TOPROS argues that Pascual is inapplicable because the subject contract therein was a
contract of sale of a parcel of land where title and possession were already transferred to the
defendant. TOPROS further contends that Banco Español-Filipino is also inapplicable since
the personal action filed therein was one which affected the personal status of a nonresident
defendant.
Considering the facts and the submission of the parties, we find the petition bereft of merit.
Well-settled is the rule that an action to annul a contract of loan and its accessory real estate
mortgage is a personal action. In a personal action, the plaintiff seeks the recovery of personal
property, the enforcement of a contract or the recovery of damages.12 In contrast, in a real
action, the plaintiff seeks the recovery of real property, or, as indicated in Section 2 (a), Rule 4
of the then Rules of Court, a real action is an action affecting title to real property or for
the recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on,
real property.13
In the Pascual case, relied upon by petitioner, the contract of sale of the fishpond was assailed
as fictitious for lack of consideration. We held that there being no contract to begin with, there is
nothing to annul. Hence, we deemed the action for annulment of the said fictitious contract
therein as one constituting a real action for the recovery of the fishpond subject thereof.
We cannot, however, apply the foregoing doctrine to the instant case. Note that in Pascual, title
to and possession of the subject fishpond had already passed to the vendee. There was,
therefore, a need to recover the said fishpond. But in the instant case, ownership of the parcels
of land subject of the questioned real estate mortgage was never transferred to petitioner, but
remained with TOPROS. Thus, no real action for the recovery of real property is involved. This
being the case, TOPROS' action for annulment of the contracts of loan and real estate mortgage
remains a personal action.
Petitioner's reliance on the Banco Español-Filipino case is likewise misplaced. That case
involved a foreclosure of real estate mortgage against a nonresident. We held therein that
jurisdiction is determined by the place where the real property is located and that personal
jurisdiction over the nonresident defendant is nonessential and, in fact, cannot be acquired.
Needless to stress, the instant case bears no resemblance to the Banco Español-Filipino case.
In the first place, this is not an action involving foreclosure of real estate mortgage. In the second
place, none of the parties here is a nonresident. We find no reason to apply here our ruling
in Banco Español-Filipino.
The Court of Appeals finds that Hernandez v. Rural Bank of Lucena, Inc. provides the proper
precedent in this case. In Hernandez, appellants contended that the action of the Hernandez
spouses for the cancellation of the mortgage on their lots was a real action affecting title to real
property, which should have been filed in the place where the mortgaged lots were situated.
Rule 4, Section 2 (a), of the then Rules of Court, was applied, to wit:
SEC. 2. Venue in Courts of First Instance. - (a) Real actions. - Actions affecting title to, or for
recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real
property, shall be commenced and tried in the province where the property or any part thereof
lies.
The Court pointed out in the Hernandez case that with respect to mortgage, the rule on real
actions only mentions an action for foreclosure of a real estate mortgage. It does not include an
action for the cancellation of a real estate mortgage. Exclusio unios est inclusio alterius. The
latter thus falls under the catch-all provision on personal actions under paragraph (b) of the
above-cited section, to wit:
SEC. 2 (b) Personal actions. - All other actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiffs resides, at the election of the plaintiff.
In the same vein, the action for annulment of a real estate mortgage in the present case must We thus hold that John Charles Chang, Jr., is not an indispensable party in Civil Case No. 67736.
fall under Section 2 of Rule 4, to wit: This is without prejudice to any separate action TOPROS may institute against Chang, Jr., in a
proper proceeding.
SEC. 2. Venue of personal actions. - All other actions may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal WHEREFORE, the petition is DENIED. The assailed decision dated November 28, 2001 and
defendants resides, or in the case of a non-resident defendant where he may be found, at the resolution dated April 1, 2002 of the Court of Appeals upholding the Orders of Judge Lorifel
election of the plaintiff.14 Lacap Pahimna are AFFIRMED.
Thus, Pasig City, where the parties reside, is the proper venue of the action to nullify the subject No pronouncement as to costs.
loan and real estate mortgage contracts. The Court of Appeals committed no reversible error in
upholding the orders of the Regional Trial Court denying petitioner's motion to dismiss the case SO ORDERED.
on the ground of improper venue.
Anent the second issue, Section 7, Rule 3 of the Revised Rules of Court provides:
SEC. 7. Compulsory joinder of indispensable parties. - Parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or defendants.
(Emphasis ours)
The presence of indispensable parties is necessary to vest the court with jurisdiction. The
absence of an indispensable party renders all subsequent actuations of the court null and void,
because of that court's want of authority to act, not only as to the absent parties but even as to
those present.15 Thus, whenever it appears to the court in the course of a proceeding that an
indispensable party has not been joined, it is the duty of the court to stop the trial and order the
inclusion of such party.16

A person is not an indispensable party, however, if his interest in the controversy or subject
matter is separable from the interest of the other parties, so that it will not necessarily be directly
or injuriously affected by a decree which does complete justice between them.17
Is John Charles Chang, Jr., the president of TOPROS who allegedly entered into the disputed
contracts of loan and real estate mortgage, an indispensable party in this case?cralawlibrary
We note that although it is Chang's signature that appears on the assailed real estate mortgage
contract, his participation is limited to being a representative of TOPROS, allegedly without
authority. The document18 which constitutes as the contract of real estate mortgage clearly
points to petitioner and TOPROS as the sole parties-in-interest to the agreement as mortgagee
and mortgagor therein, respectively. Any rights or liabilities arising from the said contract would
therefore bind only the petitioner and TOPROS as principal parties. Chang, acting as mere
representative of TOPROS, acquires no rights whatsoever, nor does he incur any liabilities,
arising from the said contract between petitioner and TOPROS. Certainly, in our view, the only
indispensable parties to the mortgage contract are petitioner and TOPROS alone.
G.R. No. L-49475 September 28, 1993
JORGE C. PADERANGA, petitioner,
vs.
Hon. DIMALANES B. BUISSAN, Presiding Judge, Court of First Instance of Zamboanga
del Norte, Branch III and ELUMBA INDUSTRIES COMPANY, represented by its General
Manager, JOSE J. ELUMBA, respondents.
A.E. Dacanay for petitioner.
Uldarico Mejorada & Associates for private respondent.
BELLOSILLO, J.:
We are called upon in this case to determine the proper venue of an action to fix the period of a
contract of lease which, in the main, also prays for damages.
Sometime in 1973, petitioner JORGE C. PADERANGA and private respondent ELUMBA
INDUSTRIES COMPANY, a partnership represented by its General Manager JOSE J. ELUMBA,
entered into an oral contract of lease for the use of a commercial space within a building owned
by petition in Ozamiz City.1 The lease was for an indefinite period although the rent of P150.00
per month was paid on a month-to-month basis. ELUMBA INDUSTRIES COMPANY utilized the
area under lease as the Sales Office of Allied Air Freight in Ozamiz City.
On 4 April 1977, PADERANGA subdivided the leased premises into two (2) by constructing a
partition wall in between. He then took possession of the other half, which repossession was
said to have been undertaken with the acquiescence of the local manager of ELUMBA,2 although
private respondent maintains that this is not the case.3 At any rate, the validity of the
repossession is not here in issue.
On 18 July 1977, private respondent instituted an action for damages4 which, at the same time,
prayed for the fixing of the period of lease at five (5) years, before the then court of First Instance
of Zamboanga del Norte based in Dipolog City.5 Petitioner, a resident of Ozamiz City, moved for
its dismissal contending that the action was a real action which should have been filed with the
Court of First Instance of Misamis Occidental stationed in Ozamiz City where the property in
question was situated.
On 6 November 1978, respondent Judge Dimalanes B. Buissan denied the Motion to Dismiss
and held that Civil Case No. 2901 merely involved the enforcement of the contract of lease, and
while affecting a portion of real property, there was no question of ownership raised.6 Hence,
venue was properly laid.
Petitioner pleaded for reconsideration of the order denying his Motion to Dismiss. He contended
that while the action did not involve a question of ownership, it was nevertheless seeking
recovery of possession; thus, it was a real action which, consequently, must be filed in Ozamiz
City.7
On 4 December 1978, respondent judge denied reconsideration.8 While admitting that Civil Case
No. 2901 did pray for recovery of possession, he nonetheless ruled that this matter was not the
main issue at hand; neither was the question of ownership raised. Not satisfied, petitioner
instituted the present recourse.
PADERANGA argues that inasmuch as ELUMBA seeks to recover possession of the portion
surrendered to him by the local manager of private respondent, as well as to fix the period of
lease at five (5) years, Dipolog City could not be the proper venue of the action. it being a real
action, venue is laid in the court having jurisdiction over the territory in which the property lies.
ELUMBA counters that the present action is chiefly for damages arising from an alleged breach
in the lease contract; hence, the issue of recovery of possession is merely incidental. ELUMBA
further argues that the action is one in personam and not in rem. Therefore venue may be laid
in the place where plaintiff or defendant resides at the option of plaintiff.
Private respondent appears to be confused over the difference between personal and real
actions vis-a-vis actions in personam and in rem. The former determines venue; the latter, the
binding effect of a decision the court may render over the party, whether impleaded or not.
**IMPORTANT**
In the case before us, it is indubitable that the action instituted by private respondent against
petitioner affects the parties alone, not the whole world. Hence, it is an action in personam, i.e.,
any judgment therein is binding only upon the parties properly impleaded.9 However, this does
not automatically mean that the action for damages and to fix the period of the lease contract is
also a personal action. For, a personal action may not at the same time be an action in rem.
In Hernandez v. Rural Bank of Lucena, Inc., 10 we held thus —
In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a
contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real
property, or, as indicated in section 2(a) of Rule 4, a real action is an action affecting title to real
property or for the recovery of possession, or for partition or condemnation of, or foreclosure of
a mortgage on, real property.
An action in personam is an action against a person on the basis of his personal liability, while
an action in rem is an action against the thing itself, instead of against the person. Hence, a real
action may at the same time be an action in personam and not necessarily an action in rem.
Consequently, the distinction between an action in personam and an action in rem for purposes
of determining venue is irrelevant. Instead, it is imperative to find out if the action filed is a
personal action or real action. After all, personal actions may be instituted in the Regional Trial
Court (then Court of First Instance) where the defendant or any of the defendants resides or may
be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.11 On
the other hand, real actions should be brought before the Regional Trial Court having jurisdiction
over the territory in which the subject property or part thereof lies. 12

While the instant action is for damages arising from alleged breach of the lease contract, it
likewise prays for the fixing of the period of lease at five (5) years. If found meritorious, private
respondent will be entitled to remain not only as lessee for another five (5) years but also to the
recovery of the portion earlier taken from him as well. This is because the leased premises under
the original contract was the whole commercial space itself and not just the subdivided portion
thereof.
While it may be that the instant complaint does not explicitly pray for recovery of possession,
such is the necessary consequence thereof. 13 The instant action therefore does not operate to
efface the fundamental and prime objective of the nature of the case which is to recover the one-
half portion repossessed by the lessor, herein petitioner. 14 Indeed, where the ultimate purpose
of an action involves title to or seeks recovery of possession, partition or condemnation of, or
foreclosure of mortgage on, real property, 15 such an action must be deemed a real action and
must perforce be commenced and tried in the province where the property or any part thereof
lies.
Respondent judge, therefore, in denying petitioner's Motion to Dismiss gravely abused his
discretion amounting to lack or excess of jurisdiction.
WHEREFORE, the Petition for Prohibition is GRANTED. The Orders of 6 November 1978 and
4 December 1978 of respondent Judge Dimalanes B. Buissan are SET ASIDE. The branch of
the Regional Trial Court of Dipolog City where Civil Case No. 2901 may be presently assigned
is DIRECTED to DISMISS the case for improper venue. This decision is immediately executory.
Costs against private respondent ELUMBA INDUSTRIES COMPANY.
SO ORDERED.
G.R. No. L-5402 January 28, 1911
CAYETANO DE LA CRUZ, Plaintiff-Appellee,
vs.
EL SEMINARIO DE LA ARCHIDIOCESIS DE MANILA, ET AL., Defendants-Appellants.
Hartigan and Rohde for appellants.
Gibbs and Gale for appellee.
TRENT, J. :
The appellee, Cayetano de la Cruz, was a member and the president of a Methodist Episcopal
religious association at Dinalupijan, Province of Bataan, Philippine Islands. The members of this
association, including Cayetano de la Cruz, having decided to lease a building site and erect
thereon a chapel, made voluntary contributions for that purpose, Cayetano de la Cruz being
among those who contributed. Cayetano de la Cruz, as such member and president, was then
authorized by the association to lease a certain building site and to use the funds contributed for
the purpose of constructing a chapel. So on the 17th of May, 1907, he leased from one J. C.
Miller, the agent of the appellant, His Grace Jeremiah J. Harty, Archbishop of Manila and
administrator of the hacienda of Dinalupijan, for a period of two years, a certain lot or parcel of
land, being a part of that hacienda and which is fully described in the written contract of lease,
agreeing to pay as rental P2 per year, the first year's rent to be paid in advance. On the execution
of this lease Cayetano de la Cruz, as member and president of the Methodist Episcopal
association, was placed in possession of this lot or building site and proceeded to construct
thereon a chapel for the use of the said religious association. About the time this chapel was
completed an action of forcible entry and detainer was commenced by one Raymundo
Sinsuangco in the justice of the peace court of Dinalupijan, in which Cayetano de la Cruz, as
lessee of the lot upon which the chapel was constructed, and J. C. Miller, as agent and
representative of the appellants, who, in such capacity executed said lease, as lessor, were
made defendants. Judgment was rendered against the defendants in the action. The appellants
in the case at bar were duly notified of the judgment of the justice of the peace and were
requested to appeal to the Court of First Instance. No appeal was taken and the judgment
becoming final was executed in such a manner that the above-mentioned chapel was completely
destroyed. Subsequently thereto, and on the 21st of October, 1907, Cayetano de la Cruz
commenced this action in the Court of First Instance of the city of Manila against the appellants
to recover the sum of P2,000 as damages for a breach of the rental contract. To this complaint
the appellants, through their attorneys, presented a demurrer, based upon the following grounds:
(1) That the Court of First Instance of the city of Manila was without jurisdiction to try and
determine this action for the reason that damages for injuries caused to real property situated in
the Province of Bataan is sought to be recovered; and (2) the complaint fails to allege facts
sufficient to constitute a cause of action. This demurrer was overruled, the appellants duly noting
their exception. After all the evidence had been submitted by both parties, the appellee, after
due notice to the appellants, presented an amended complaint, to conform, as he alleged, with
the agreed statement of facts and the admissions made by the appellants in their answer. This
amended complaint was admitted by the court without objection on the part of the appellants.
The amended complaint is the same as the original complaint, with the following exceptions: (1)
A number of unnamed person were made parties plaintiff; (2) in paragraph 2 of the amended
complaint it is alleged that Cayetano de la Cruz was the president, agent, and member of the
Methodist Episcopal religious association: and (3) a judgment for only P402 was asked.
The court below on the 29th of March, 1909, rendered judgment in favor of the appellees and
against the appellants for the sum of P402, P2 being the rent for the first year paid in advance,
and the P400 being the agreed value of the chapel which was destroyed by the sheriff in
executing the judgment rendered by the justice of the peace. The appellants after noting their
exception to the judgment and making a motion for a new trial, which motion was overruled and
exception thereto noted, appealed to this court, and now insist:
1. That as this action is one for damages to real estate situated in the Province of Bataan, under
the provisions of section 377 of the Code of Civil Procedure the Court of First Instance of the
city of Manila had no jurisdiction;
2. The court below erred in admitting the amended complaint by which the other members of the
religious association, jointly interested with Cayetano de la Cruz, were made parties plaintiff;
and,
3. That the appellants are not liable for the consequences of the judgment of the justice of the
peace.
The demurrer was properly overruled. This is not an action to recover damages to real estate; it
is an action for breach of covenant in a lease. The fact that the damages to real estate are
involved, as an incident to the breach of the contract, does not change the character of the
action. Such an action is personal and transitory. The rule is well stated in the case of Neil vs.
Owen (3 Tex., 145), wherein the court said (p. 146):
If the action is founded on privity of contract between the parties, then the action whether debt
or covenant, is transitory. But if there is no privity of contract and the action is founded on privity
of estate only, such a covenant that runs with the land in the hands of the remote grantees, then
the action is local and must be brought in the country wherein the land lies.
In an action on a covenant contained in a lease, whether begun by the lessor against the lessee,
or by the lessee against the lessor, the action is transitory because it is founded on a mere privity
of contract. (Thursby vs. Plant, cited in vol. 5, Ency. Plead. & Prac., p. 362.)
In general, also, actions which are founded upon contracts are transitory. In an action upon a
lease for nonpayment of rent or other breach of covenants, when the action is founded on the
privity of contract it is transitory and the venue may laid in any county. (22 Ency. Plead. & Prac.,
pp. 782-783.)
Therefore, section 377 of the Code of Civil Procedure, which provides, among other things, that
actions to recover damages for injuries to real estate shall be brought in the province where the
land, or a part thereof, is situated, is not applicable. (Molina vs. De la Riva, 6 Phil. Rep., 12.) The
amended complaint clearly states facts sufficient to constitute a cause of action. (Sec. 90, Code
of Civil Procedure.)
The defendants in the second assignment of error assert that the plaintiff ought not to have been
allowed to amend his complaint so as to make him the representative of all the persons
interested in the subject matter of this action. We are of the opinion that such amendment was
properly allowed. Section 110 of the Code of Civil Procedure is exceedingly broad in its term
and there is no disposition in this court to narrow its term or meaning. We are also of the opinion
that this is particularly the class of action to which section 118 of the Code of Civil Procedure
refers. It would be exceedingly difficult and expensive to require that all persons interested be
made parties plaintiff. To avoid this was the very purpose in enacting section 118. The plaintiff,
as appears from the record, is the person chosen by the members of the association in question
to look after and represent their interest and it is correspondingly appropriate that he should
represent and act for them in this action. In permitting this court is not thwarting their will or
endangering their interest, but, rather, is carrying out their desires and purposes as they have
already expressed them. In the third assignment of error it is insisted that the appellants are not
liable for the consequences of the judgment of the justice of the peace, for the reason that
according to that judgment the plaintiff, in violation of the rights of Raymundo Sinsuangco,
entered upon the lot in question. It is argued that the plaintiff should not have entered into
possession of this lot in violation of the rights of Sinsuangco, but that he should have acquired
possession by due judicial process, and that having entered into possession in this manner he
must suffer the consequences of his illegal acts. In this we can not agree. When this rental
contract was executed the lot in question was vacant. The agent, Miller, led the plaintiff to believe
that he could place him in legal possession of the lot. It was upon this theory that the plaintiff
entered into this contract and paid the rent for the first year. The record does not affirmatively
show that Miller placed the plaintiff in possession of this lot, but in the absence of proof to the
contrary we think it fair to presume that this occurred. Miller then placed the plaintiff in possession
of this lot, but not in the legal possession of same. He himself did not have the legal possession
as was shown by the proof before the justice of the peace. Sinsuangco was the person who was
in the actual possession and Miller should have known this and he should have known at the
time he entered into the contract with the plaintiff that he could not place the plaintiff in legal,
peaceful, and quiet possession of this lot. The plaintiff took possession under these
circumstances and proceeded to construct the chapel, which was afterwards destroyed in the
execution of the judgment of the justice of the peace. In the contract entered into between Miller
and the plaintiff, it was Miller's duty to place the plaintiff legally in possession of this lot and
maintain him in the peaceful and quiet possession of the same during the entire period of the
contract. virtual law library
The rights and obligations of lessor and lessee are treated in articles 1554 to 1574, inclusive, of
the Civil Code. Article 1554 provides:
The lessor is obligated:
xxx xxx xxx
3. To maintain the lessee in the peaceful enjoyment of the premises for the entire period of the
contract.
Article 1568 is as follows:
If the thing leased is lost or any of the contracting parties do not comply with what has been
stipulated, the provisions of article 1182 and 1183 shall be respectively observed.
Article 1101 provides:
Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and those who
in any manner whatsoever act in contravention of the stipulations of the same, shall be subject
to indemnify for the losses and damages caused thereby.
Under this contract of lease it was the duty of the defendants to give the plaintiff the legal
possession of the premises. This they did not do. The defendants failed in the performance of
their contract, and, as we have seen by article 1101 of the Civil Code, the person who fails in
the performance of his obligations shall be subject to indemnify for the losses and damages
caused thereby. "The true measure of damages for the breach of such a contract is what the
plaintiff has lost by the breach." (Lock vs. Furze, L. R. 1, C. P., 441; Dexter vs. Manley, 4 Cush.
(Mass.), 14.)
The sum of P402, in our opinion, not being excessive damages for the injuries caused by the
breach of contract on the part of the defendants, the judgment should be and the same is hereby
affirmed, with costs against the appellants. So ordered.
Arellano, C. J., Mapa, Carson and Moreland, JJ., concur.
[G.R. No. 129184. February 28, 2001.]
EMERGENCY LOAN PAWNSHOP INCORPORATED and DANILO R.
NAPALA, Petitioners, v. THE COURT OF APPEALS (Tenth Division) and TRADERS
ROYAL BANK, Respondents.
DECISION
PARDO, J.:
May an appeal be taken from a decision of the Regional Trial Court denying a motion to
dismiss the complaint on the ground of improper venue? If not, will certiorari lie?
The case before the Court is a petition for review on certiorari assailing the decision of the
Court of Appeals, 1 granting respondent’s petition for certiorari and dismissing the complaint
below on the ground of improper venue.
On January 18, 1996, Traders Royal Bank (TRB for brevity) sold in favor of petitioner
Emergency Loan Pawnshop Incorporated (ELPI for brevity) a parcel of land located at Km. 3
Asin, Baguio City for Five Hundred Thousand Pesos (P500,000.00). 2
At the time of the sale, TRB misrepresented to ELPI that the subject property was a vacant
residential lot valued at P600.00 to P800.00 per square meter, with a usable land area of
1,143.75 square meters (approximately 75% of the land area of 1,525 sq. m.) without any
illegal occupants or squatters, when it truth the subject property was dominantly a public road
with only 140 square meters usable area.
ELPI, after having spent to fully ascertain the actual condition of the property, demanded from
TRB the rescission and cancellation of the sale of the property. TRB refused, hence, on April
16, 1996, ELPI filed with the Regional Trial Court, Davao, Branch 17, a complaint for
annulment of sale and damages against TRB. 3
On August 27, 1996, TRB filed a Motion to Dismiss 4 the complaint on the ground of improper
venue. On September 18, 1996 the trial court denied the motion to dismiss. 5 On October 21,
1996, TRB filed a motion for reconsideration. 6 On November 14, 1996, the trial court denied
the motion. 7
On January 15, 1997, TRB elevated the case to the Court of Appeals by petition
for certiorari and prohibition with preliminary injunction or temporary restraining order,
contending that the trial court committed a grave abuse of discretion in denying its motion to
dismiss the complaint on the ground of improper venue. 8
After due proceedings, on March 11, 1997, the Court of Appeals promulgated its decision, the
dispositive portion of which reads:jgc:chanrobles.com.ph
"WHEREFORE, finding merit in the petition, the Orders dated September 18,1996 and
November 14, 1996 are hereby ANNULLED and SET ASIDE and Civil Case No. 24, 317-96 is
hereby DISMISSED on ground of improper venue." 9
Hence, this petition. 10
Petitioners seek to set aside the decision of the Court of Appeals alleging that:
1. The Court of Appeals erred in entertaining the petition for certiorari and prohibition, for lack
of jurisdiction;
2. The Court of Appeals erred in ruling that the Regional Trial Court erred in not dismissing the
complaint for improper venue. 11
According to petitioners, the determination of whether the venue of an action was improperly
laid was a question of law, thus, the Court of Appeals had no jurisdiction to entertain the
petition for certiorari and prohibition, which involved pure questions of law.
Petitioners further alleged that an order denying a motion to dismiss is interlocutory in nature
that can not be the subject of an appeal and can not be even reviewed by a special civil action
for certiorari.
We find the petition not meritorious.
The general rule is that the denial of a motion to dismiss a complaint is an interlocutory order
and, hence, cannot be appealed or questioned via a special civil action of certiorari until a final
judgment on the merits of the case is rendered. 12
The remedy of the aggrieved party is to file an answer to the complaint and to interpose as
defenses the objections raised in his motion to dismiss, proceed to trial, and in case of an
adverse decision, to elevate the entire case by appeal in due course. However, the rule is not
ironclad. Under certain situations, recourse to certiorari or mandamus is considered
appropriate, that is, (a) when the trial court issued the order without or in excess of jurisdiction;
(b) where there is patent grave abuse of discretion by the trial court; or, (c) appeal would not
prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a
defendant from the injurious effects of the patently mistaken order maintaining the plaintiff’s
baseless action and compelling the defendant needlessly to go through a protracted trial and
clogging the court dockets by another futile case."

In the case at bar, we agree with the Court of Appeals that the trial court erred grievously
amounting to ousting itself of jurisdiction. The motion of respondent TRB was well founded
because venue was clearly improperly laid. The action in the Regional Trial Court was for
annulment of sale involving a parcel of land located at Km. 3 Asin Road, Baguio City. The
venue of such action is unquestionably within the territorial jurisdiction of the proper court
where the real property or part thereof lies. 14 An action affecting title to real property, or for
recovery of, or foreclosure of mortgage on real property, shall be commenced and tried in the
proper court having jurisdiction over the area where the real property or any part thereof lies.

Hence, the case at bar clearly falls within the exceptions to the rule. The Regional Trial Court
has committed a palpable and grievous error amounting to lack or excess of jurisdiction in
denying the motion to dismiss the complaint on the ground of improper venue.

WHEREFORE, the Court denies the petition and affirms the decision of the Court of Appeals in
CA-G. R. SP No. 43095, in toto.

No costs.

SO ORDERED.
G.R. No. 172172 February 24, 2009
SPS. ERNESTO V. YU and ELSIE ONG YU, Petitioners,
vs.
BALTAZAR N. PACLEB, (Substituted by ANTONIETA S PACLEB, LORNA PACLEB-
GUERRERO, FLORENCIO C. PACLEB, and MYRLA C. PACLEB), Respondents.
DECISION
PUNO, C.J.:
Before the Court is a Petition filed under Rule 45 of the Rules of Court assailing: (i) the
Decision1 dated August 31, 2005 of the Court of Appeals in CA-G.R. CV No. 78629 setting aside
the Decision2 dated December 27, 2002 of the Regional Trial Court in Civil Case No. 1325-96;
and (ii) the Resolution3 dated April 3, 2006 of the Court of Appeals denying reconsideration of
the said decision.
The facts are well established.
Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the registered owners
of an 18,000-square meter parcel of land in Barrio Langcaan, Dasmariñas, Cavite, covered by
Transfer Certificate of Title (TCT) No. T-1183754 (Langcaan Property).
In 1992, the Langcaan Property became the subject of three (3) documents purporting to transfer
its ownership. On February 27, 1992, a Deed of Absolute Sale5 was entered into between
Spouses Baltazar N. Pacleb and Angelita Chan and Rebecca Del Rosario. On May 7, 1992, a
Deed of Absolute Sale6 was entered into between Rebecca Del Rosario and Ruperto L. Javier
(Javier). On November 10, 1992, a Contract to Sell7 was entered into between Javier and
petitioner spouses Ernesto V. Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu
agreed to pay Javier a total consideration of ₱900,000. Six hundred thousand pesos (₱600,000)
(consisting of ₱200,000 as previous payment and ₱400,000 to be paid upon execution of the
contract) was acknowledged as received by Javier and ₱300,000 remained as balance. Javier
undertook to deliver possession of the Langcaan Property and to sign a deed of absolute sale
within thirty (30) days from execution of the contract.
All the aforementioned sales were not registered.
On April 23, 1993, petitioner spouses Yu filed with the Regional Trial Court of Imus, Cavite, a
Complaint8 for specific performance and damages against Javier, docketed as Civil Case No.
741-93, to compel the latter to deliver to them ownership and possession, as well as title to the
Langcaan Property. In their Complaint, they alleged that Javier represented to them that the
Langcaan Property was not tenanted. However, after they already paid ₱200,000 as initial
payment and entered into an Agreement dated September 11, 1992 for the sale of the Langcaan
Property, they discovered it was tenanted by Ramon C. Pacleb (Ramon).9 Petitioner spouses
demanded the cancellation of their agreement and the return of their initial payment. Thereafter,
petitioner spouses and Javier verified from Ramon if he was willing to vacate the property and
the latter was agreeable. Javier then promised to make arrangements with Ramon to vacate the
property and to pay the latter his disturbance compensation. Hence, they proceeded to enter
into a Contract to Sell canceling the Agreement mentioned. However, Javier failed to comply
with his obligations.
Javier did not appear in the proceedings and was declared in default. On September 8, 1994,
the trial court rendered a Decision,10 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant based
on the sale of subject parcel of land to the former who is entitled thereby to the ownership and
possession thereof from the said defendant who is further directed to pay damages of Thirty
Thousand Pesos (₱30,000.00) including attorney’s fees and expenses incurred by the plaintiff
in this case as a consequence.
The defendant is further directed to deliver the certificate of title of the land to the plaintiff who is
entitled to it as transferee and new owner thereof upon payment by the plaintiff of his balance of
the purchase price in the sum of Three Hundred Thousand Pesos (₱300,000.00) with legal
interest from date.
SO ORDERED.
The said Decision and its Certificate of Finality11 were annotated on TCT No. T-118375 as Entry
No. 2676-7512 and Entry No. 2677-75,13 respectively.
On March 10, 1995, petitioner spouses and Ramon and the latter’s wife, Corazon Bodino,
executed a "Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa
Karapatan."14 Under the said agreement, petitioner spouses paid Ramon the amount of
₱500,000 in exchange for the waiver of his tenancy rights over the Langcaan Property.
On October 12, 1995, respondent filed a Complaint15 for annulment of deed of sale and other
documents arising from it, docketed as Civil Case No. 1199-95. He alleged that the deed of sale
purportedly executed between him and his late first wife and Rebecca Del Rosario was spurious
as their signatures thereon were forgeries. Respondent moved to have summons served upon
Rebecca Del Rosario by publication since the latter’s address could not be found. The trial court,
however, denied his motion.16 Respondent then moved to dismiss the case, and the trial court
granted the motion in its Order17 dated April 11, 1996, dismissing the case without prejudice.
Meanwhile, on November 23, 1995, petitioner spouses filed an action for forcible entry against
respondent with the Municipal Trial Court (MTC). They alleged that they had prior physical
possession of the Langcaan Property through their trustee, Ramon, until the latter was ousted
by respondent in September 1995. The MTC ruled in favor of petitioner spouses, which decision
was affirmed by the Regional Trial Court.18 However, the Court of Appeals set aside the
decisions of the lower courts and found that it was respondent who had prior physical possession
of the property as shown by his payment of real estate taxes thereon.19
On May 29, 1996, respondent filed the instant case for removal of cloud from title with damages
to cancel Entry No. 2676-75 and Entry No. 2677-75, the annotated Decision in Civil Case No.
741-93 and its Certificate of Finality, from the title of the Langcaan Property.20 Respondent
alleged that the deed of sale between him and his late first wife and Rebecca Del Rosario, who
is not known to them, could not have been possibly executed on February 27, 1992, the date
appearing thereon. He alleged that on said date, he was residing in the United States21 and his
late first wife, Angelita Chan, died twenty (20) years ago.221avvphi1
On May 28, 1997, during the pendency of the instant case before the trial court, respondent died
without having testified on the merits of his case. Hence, he was substituted by his surviving
spouse, Antonieta S. Pacleb, and Lorna Pacleb-Guerrero, Florencio C. Pacleb and Myrla C.
Pacleb representing the children with the first wife.23
On December 27, 2002, the trial court dismissed respondent’s case and held that petitioner
spouses are purchasers in good faith.24 The trial court ratiocinated that the dismissal of
respondent’s complaint for annulment of the successive sales at his instance "sealed the
regularity of the purchase"25 by petitioner spouses and that he "in effect admits that the said
sale…was valid and in order."26 Further, the trial court held that the Decision in Civil Case No.
741-93 on petitioner spouses’ action for specific performance against Javier is already final and
can no longer be altered. Accordingly, the trial court ordered the cancellation of TCT No. T-
118375 in the name of respondent and the issuance of a new title in the name of petitioner
spouses. The trial court also ordered the heirs of respondent and all persons claiming under
them to surrender possession of the Langcaan Property to petitioner spouses.
On appeal by respondent, the Court of Appeals reversed and set aside the decision of the trial
court.27 The Court of Appeals ruled that petitioner spouses are not purchasers in good faith and
that the Decision in Civil Case No. 741-93 did not transfer ownership of the Langcaan Property
to them. Accordingly, the appellate court ordered the cancellation of the annotation of the
Decision in Civil Case No. 741-93 on the title of the Langcaan Property. The Court of Appeals
denied reconsideration of said decision.28
Hence, this Petition.
Two issues are involved in the instant petition. The first is whether petitioner spouses are
innocent purchasers for value and in good faith. The second is whether ownership over the
Langcaan Property was properly vested in petitioner spouses by virtue of the Decision in Civil
Case No. 741-93.
Petitioner spouses argue that they are purchasers in good faith. Further, they contend that the
Court of Appeals erred in finding that: "Ramon told him [Ernesto V. Yu] that the property is owned
by his father, Baltazar, and that he is the mere caretaker thereof"29 since Ramon clarified that
his father was the former owner of the Langcaan Property. In support of their stance, they cite
the following testimony of petitioner Ernesto V. Yu:
Atty. Abalos: Mr. Witness, you testified during the direct that you acquired the subject property
from one Ruperto Javier, when for the first time have you come to know Mr. Ruperto Javier?
A: I first came to know him in the year 1992 when he was accompanied by Mr. Kalagayan. He
showed me some papers to the office.
Q: Do you know the exact date Mr. Witness?
A: I forgot the exact date, ma’am.
Q: More or less can you estimate what month?
A: Sometime in February or March 1992.
Q: When you said that the subject property was offered to you for sale, what did you do Mr.
Witness, in preparation for a transaction?
A: I asked my lawyer Atty. Florencio Paredes to check and verify the Deed of Sale.
Q: And after Atty. Florencio Paredes verified the document you decided to buy the property?
A: No, ma’am. We visited the place.
Q: When was that?
A: I could not remember the exact date but I visited the place and I met the son, Ramon Pacleb.
I went there in order to verify if the property is existing. When I verified that the property is existing
Mr. Javier visited me again to follow-up what decision I have but I told him that I will wait for my
lawyer’s advi[c]e.
Q: Mr. Witness, what particular instruction did you give to your lawyer?
A: To verify the title and the documents.
Court: Documents for the title?
A: Yes, Your Honor.
Atty. Abalos: When you were able to get the title in whose name the title was registered?
A: It was registered in the name of the older Pacleb.
Court: By the way Mr. Witness, when you said you met Ramon Pacleb the son of the owner of
the property, was he residing there or he was (sic) just went there? When you visited the property
did you find him to be residing in that property?
A: No, Your Honor.
Atty. Abalos: You mean to say Mr. Witness, you just met Mr. Ramon Pacleb in the place at the
time you went there?
A: No, ma’am. He went to my office with Mr. Kalagayan. He was introduced to me at the Kelly
Hardware. I do not know Mr. Ruperto Javier. He told me that there is a property that [is] tenanted
and occupied by the son Ramon Pacleb after that I went with them to visit the place. On (sic)
there he introduced me [to] Mr. Ramon Pacleb the caretaker of the property and I told them that
I will still look at the property and he gave me some documents and that (sic) documents I gave
it to my lawyer for verification.
Q: You said that Mr. Ruperto Javier went to your office with Mr. Kalagayan, so the first time you
visited the property you did not see Mr. Ramon Pacleb there?
A: No, ma’am. When I went there I met Ramon Pacleb the caretaker and he was the one who
showed the place to us.
Q: Mr. Witness, since you visited the place you were able to see the allege[d] caretaker Mr.
Ramon Pacleb, did you ask him regarding the property or the whereabouts of the registered
owner, did you ask him?
A: When Ruperto introduced me to Mr. Ramon Pacleb he told me that he is the son of the owner
and he is the caretaker and his father is in the States. He showed me the place, I verified and I
saw the monuments and I told him I will come back to check the papers and if it is okay I will
bring with me the surveyor.
Q: Could you estimate Mr. Witness, more or less what was the month when you were able to
talk to Mr. Ramon Pacleb?
A: I am not sure but it was morning of February.
Q: So it was in February, Mr. Witness?
A: I am not sure if February or March.
Q: But definitely…
A: Before I purchased the property I checked the property.
Q: But that was definitely after Mr. Ruperto offered to you for sale the subject property?
xxx
Atty. Abalos: Okay, Mr. Witness, you said that you talked to Mr. Ramon Pacleb and he told you
that his father is the owner of the property?
A: He told me that property is their former property and it was owned by them. Now, he is the
tenant of the property.30 (Emphasis ours)
Petitioner spouses conclude that based on their personal inspection of the property and the
representations of the registered tenant thereon, they had no reason to doubt the validity of the
deeds of absolute sale since these were duly notarized. Consequently, the alleged forgery of
Angelita Chan’s signature is of no moment since they had no notice of any claim or interest of
some other person in the property despite their diligent inquiry.
We find petitioner spouses’ contentions without merit.
At the outset, we note that in petitioner Ernesto V. Yu’s testimony, he stated that he inspected
the Langcaan Property and talked with the tenant, Ramon, before he purchased the same.
However, in his Complaint for specific performance and damages which he filed against Javier,
he alleged that it was only after he had entered into an Agreement for the sale of the property
and his initial payment of ₱200,000 that he discovered that the property was indeed being
tenanted by Ramon who lives in the said farm, viz.:
8. Sometime on September 11, 1992, defendant came again to the Office of plaintiff reiterating
his offer to sell said Lot No. 6853-D, containing an area of 18,000 square meters, at ₱75.00 per
square meters (sic). Defendant manifested to the plaintiff that if his offer is acceptable to the
plaintiff, he binds and obligates himself to pay the capital gains of previous transactions with the
BIR and register subject Lot No. 6853-D in his name (defendant). On these conditions, plaintiff
accepted the offer and made [the] initial payment of Two Hundred Thousand Pesos
(₱200,000.00) to defendant by issuance and delivery of plaintiff’s personal check.
9. Sometime on September 11, 1992, plaintiff and defendant signed an AGREEMENT on the
sale of Lot No. 6853-D of the subdivision plan (LRC) Psd-282604, containing an area of 18,000
square meters, more or less, located at Bo. Langcaan, Municipality of Dasmarinas, Province of
Cavite, at a selling price of ₱75.00 per square meter. A xerox copy of this AGREEMENT signed
by the parties thereto is hereto attached and marked as ANNEX "D" of this complaint.
10. Thereafter, however, plaintiff and defendant, with their surveyor discovered that subject Lot
No. 6853-D offered for sale to the plaintiff is indeed being tenanted by one RAMON PACLEB
who lives in the said farm.
11. In view of the foregoing developments, plaintiff informed defendant that he wanted the
Agreement be cancelled and for the defendant to return the sum of TWO HUNDRED
THOUSAND PESOS (₱200,000.00).31 (Emphasis supplied)
This inconsistency casts grave doubt as to whether petitioner spouses personally inspected the
property before purchasing it.
More importantly, however, several facts should have put petitioner spouses on inquiry as to the
alleged rights of their vendor, Javier, over the Langcaan Property.
First, it should be noted that the property remains to be registered in the name of respondent
despite the two (2) Deeds of Absolute Sale32 purporting to transfer the Langcaan Property from
respondent and his late first wife, Angelita Chan, to Rebecca Del Rosario then from the latter to
Javier. Both deeds were not even annotated in the title of the Langcaan Property.
Second, a perusal of the two deeds of absolute sale reveals that they were executed only about
two (2) months apart and that they contain identical provisions.
Third, it is undisputed that the Langcaan Property is in the possession of Ramon, the son of the
registered owner. Regardless of the representations given by the latter, this bare fact alone
should have made petitioner spouses suspicious as to the veracity of the alleged title of their
vendor. Moreover, as noted by the Court of Appeals, petitioner spouses could have easily
verified the true status of the Langcaan Property from Ramon’s wife, since the latter is their
relative, as averred in paragraph 13 of their Answer in Civil Case No. 1199-95.33 The case law
is well settled, viz.:
The law protects to a greater degree a purchaser who buys from the registered owner himself.
Corollarily, it requires a higher degree of prudence from one who buys from a person who is not
the registered owner, although the land object of the transaction is registered. While one who
buys from the registered owner does not need to look behind the certificate of title, one who buys
from one who is not the registered owner is expected to examine not only the certificate of title
but all factual circumstances necessary for him to determine if there are any flaws in the title of
the transferor, or in his capacity to transfer the land.
This Court has consistently applied the stricter rule when it comes to deciding the issue of good
faith of one who buys from one who is not the registered owner, but who exhibits a certificate of
title.34 (Emphasis supplied)
Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil Case No. 1199-
95 (the action to annul the successive sales of the property) cannot serve to validate the sale to
petitioner spouses since the dismissal was ordered because Rebecca Del Rosario and Javier
could no longer be found. Indeed, the dismissal was without prejudice.
Based on the foregoing, therefore, petitioner spouses cannot be considered as innocent
purchasers in good faith.
We now go to the second issue.
Petitioner spouses argue that the decision of the Regional Trial Court in Civil Case No. 741-93
as to the rightful owner of the Langcaan Property is conclusive and binding upon respondent
even if the latter was not a party thereto since it involved the question of possession and
ownership of real property, and is thus not merely an action in personam but an action quasi in
rem.
In Domagas v. Jensen,35 we distinguished between actions in personam and actions quasi in
rem.
The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature
and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal
rights and obligations brought against the person and is based on the jurisdiction of the person,
although it may involve his right to, or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the mandate of the court. The purpose
of a proceeding in personam is to impose, through the judgment of a court, some responsibility
or liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An
action in personam is said to be one which has for its object a judgment against the person, as
distinguished from a judgment against the propriety (sic) to determine its state. It has been held
that an action in personam is a proceeding to enforce personal rights or obligations; such action
is brought against the person.
xxx
On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject
the property of such persons to the discharge of the claims assailed. In an action quasi in rem,
an individual is named as defendant and the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to ascertain or cut
off the rights or interests of all possible claimants. The judgments therein are binding only upon
the parties who joined in the action. (CLASSIC E.G.: Attachment and Foreclosure of mortgage)
**(Direct against a person but the real purpose is to subject his property to the burden on the
property which is binding on the whole world.) (What makes it in rem? Directed against a
specific thing which can be a real.)
Civil Case No. 741-93 is an action for specific performance and damages filed by petitioner
spouses against Javier to compel performance of the latter’s undertakings under their Contract
to Sell. As correctly held by the Court of Appeals, its object is to compel Javier to accept the full
payment of the purchase price, and to execute a deed of absolute sale over the Langcaan
Property in their favor. The obligations of Javier under the contract to sell attach to him alone,
and do not burden the Langcaan Property.36
We have held in an unbroken string of cases that an action for specific performance is an action
in personam.37 In Cabutihan v. Landcenter Construction and Development Corporation,38 we
ruled that an action for specific performance praying for the execution of a deed of sale in
connection with an undertaking in a contract, such as the contract to sell, in this instance, is an
action in personam.
Being a judgment in personam, Civil Case No. 741-93 is binding only upon the parties properly
impleaded therein and duly heard or given an opportunity to be heard.39 Therefore, it cannot
bind respondent since he was not a party therein. Neither can respondent be considered as privy
thereto since his signature and that of his late first wife, Angelita Chan, were forged in the deed
of sale.

All told, we affirm the ruling of the Court of Appeals finding that, as between respondent and
petitioner spouses, respondent has a better right over the Langcaan Property as the true owner
thereof.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is affirmed.
Costs against petitioners.
SO ORDERED.
G.R. No. L-59731 January 11, 1990
ALFREDO CHING, petitioner,
vs.
THE HONORABLE COURT OF APPEALS & PEDRO ASEDILLO, respondents.
Joaquin E. Chipeco & Lorenzo D. Fuggan for petitioners.
Edgardo Salandanan for private respondent.
(REAL ACTION: ACTION IN PERSONAM)
PARAS, J.:
This is a petition for review on certiorari which seeks to nullify the decision of respondent Court
of Appeals (penned by Hon. Rodolfo A. Nocon with the concurrence of Hon. Crisolito Pascual
and Juan A. Sison) in CA-G.R. No. 12358-SP entitled Alfredo Ching v. Hon. M. V. Romillo, et al.
which in effect affirmed the decision of the Court of First Instance of Rizal, now Regional Trial
Court (penned by Judge Manuel V. Romillo, Jr. then District Judge, Branch XXVII Pasay City)
granting ex-parte the cancellation of title registered in the name of Ching Leng in favor of Pedro
Asedillo in Civil Case No. 6888-P entitled Pedro Asedillo v. Ching Leng and/or Estate of Ching
Leng.
The facts as culled from the records disclose that:
In May 1960, Decree No. N-78716 was issued to spouses Maximo Nofuente and Dominga
Lumandan in Land Registration Case No. N-2579 of the Court of First Instance of Rizal and
Original Certificate of Title No. 2433 correspondingly given by the Register of Deeds for the
Province of Rizal covering a parcel of land situated at Sitio of Kay-Biga Barrio of San Dionisio,
Municipality of Paranaque, Province of Rizal, with an area of 51,852 square meters (Exhibit "7",
p. 80, CA, Rollo).
In August 1960, 5/6 portion of the property was reconveyed by said spouses to Francisco,
Regina, Perfects, Constancio and Matilde all surnamed Nofuente and Transfer Certificate of Title
No. 78633 was issued on August 10, 1960 accordingly (Exhibit "8", pp. 81 and 82, Ibid.).
By virtue of a sale to Ching Leng with postal address at No. 44 Libertad Street, Pasay City,
Transfer Certificate of Title No. 91137 was issued on September 18, 1961 and T.C.T. No. 78633
was deemed cancelled. (Exhibit "5-2", pp. 76-77 and 83, Ibid.).
On October 19, 1965, Ching Leng died in Boston, Massachusetts, United States of America. His
legitimate son Alfredo Ching filed with the Court of First Instance of Rizal (now RTC) Branch III,
Pasay City a petition for administration of the estate of deceased Ching Leng docketed as Sp.
Proc. No. 1956-P. Notice of hearing on the petition was duly published in the "Daily Mirror", a
newspaper of general circulation on November 23 and 30 and December 7, 1965. No oppositors
appeared at the hearing on December 16, 1965, consequently after presentation of evidence
petitioner Alfredo Ching was appointed administrator of Ching Leng's estate on December 28,
1965 and letters of administration issued on January 3, 1966 (pp. 51-53, Rollo). The land
covered by T.C.T. No. 91137 was among those included in the inventory submitted to the court
(p. 75, Ibid.).
Thirteen (13) years after Ching Leng's death, a suit against him was commenced on December
27, 1978 by private respondent Pedro Asedillo with the Court of First Instance of Rizal (now
RTC), Branch XXVII, Pasay City docketed as Civil Case No. 6888-P for reconveyance of the
abovesaid property and cancellation of T.C.T. No. 91137 in his favor based on possession (p.
33, Ibid.). Ching Leng's last known address is No. 44 Libertad Street, Pasay City which appears
on the face of T.C.T. No. 91137 (not No. 441 Libertad Street, Pasay City, as alleged in private
respondent's complaint). (Order dated May 29, 1980, p. 55, Ibid.). An amended complaint was
filed by private respondent against Ching Leng and/or Estate of Ching Leng on January 30, 1979
alleging "That on account of the fact that the defendant has been residing abroad up to the
present, and it is not known whether the defendant is still alive or dead, he or his estate may be
served by summons and other processes only by publication;" (p. 38, Ibid.). Summons by
publication to Ching Leng and/or his estate was directed by the trial court in its order dated
February 7, 1979. The summons and the complaint were published in the "Economic Monitor",
a newspaper of general circulation in the province of Rizal including Pasay City on March 5, 12
and 19, 1979. Despite the lapse of the sixty (60) day period within which to answer defendant
failed to file a responsive pleading and on motion of counsel for the private respondent, the
court a quo in its order dated May 25, 1979, allowed the presentation of evidence ex-parte. A
judgment by default was rendered on June 15, 1979, the decretal portion of which reads:
WHEREFORE, finding plaintiffs causes of action in the complaint to be duly substantiated by the
evidence, judgment is hereby rendered in favor of the plaintiff and against the defendant
declaring the former (Pedro Asedillo) to be the true and absolute owner of the property covered
by T.C.T. No. 91137; ordering the defendant to reconvey the said property in favor of the plaintiff;
sentencing the defendant Ching Leng and/or the administrator of his estate to surrender to the
Register of Deeds of the Province of Rizal the owner's copy of T.C.T. No. 91137 so that the
same may be cancelled failing in which the said T.C.T. No. 91137 is hereby cancelled and the
Register of Deeds of the Province of Rizal is hereby ordered to issue, in lieu thereof, a new
transfer certificate of title over the said property in the name of the plaintiff Pedro Asedillo of legal
age, and a resident of Estrella Street, Makati, Metro Manila, upon payment of the fees that may
be required therefor, including the realty taxes due the Government.
IT IS SO ORDERED. (pp. 42-44, Ibid.)
Said decision was likewise served by publication on July 2, 9 and 16, 1979 pursuant to Section
7 of Rule 13 of the Revised Rules of Court (CA Decision, pp. 83-84, Ibid.). The title over the
property in the name of Ching Leng was cancelled and a new Transfer Certificate of Title was
issued in favor of Pedro Asedillo (p. 77, CA Rollo) who subsequently sold the property to Villa
Esperanza Development, Inc. on September 3, 1979 (pp. 125-126, Ibid.).
On October 29, 1979 petitioner Alfredo Ching learned of the abovestated decision. He filed a
verified petition on November 10, 1979 to set it aside as null and void for lack of jurisdiction
which was granted by the court on May 29, 1980 (penned by Hon. Florentino de la Pena,
Vacation Judge, pp. 54-59, Rollo).
On motion of counsel for private respondent the said order of May 29, 1980 was reconsidered
and set aside, the decision dated June 15, 1979 aforequoted reinstated in the order dated
September 2, 1980. (pp. 60-63, Ibid.)
On October 30, 1980, petitioner filed a motion for reconsideration of the said latter order but the
same was denied by the trial court on April 12, 1981 (pp. 77-79, Ibid.)
Petitioner filed an original petition for certiorari with the Court of Appeals but the same was
dismissed on September 30, 1981. His motion for reconsideration was likewise denied on
February 10, 1982 (pp. 81-90, Ibid.)
Private respondent Pedro Asedillo died on June 7, 1981 at Makati, Metro Manila during the
pendency of the case with the Court of Appeals (p. 106, CA Rollo).
Hence, the instant petition.
Private respondent's comment was filed on June 1, 1982 (p. 117, Ibid.) in compliance with the
resolution dated April 26, 1982 (p. 109, Ibid.) Petitioner filed a reply to comment on June 18,
1982 (p. 159, Ibid ), and the Court gave due course to the petition in the resolution of June 28,
1982 (p. 191, Ibid.)
Petitioner raised the following:
ASSIGNMENTS OF ERROR
I The petition is impressed with merit.
WHETHER OR NOT A DEAD MAN CHING LENG AND/OR HIS ESTATE MAY BE VALIDLY
SERVED WITH SUMMONS AND DECISION BY PUBLICATION.
II
WHETHER OR NOT AN ACTION FOR RECONVEYANCE OF PROPERTY AND
CANCELLATION OF TITLE IS IN PERSONAM, AND IF SO, WOULD A DEAD MAN AND/OR
HIS ESTATE BE BOUND BY SERVICE OF SUMMONS AND DECISION BY PUBLICATION.
III
WHETHER OR NOT THE PROCEEDINGS FOR RECONVEYANCE AND CANCELLATION OF
TITLE CAN BE HELD EX-PARTE.
IV
WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION OVER THE SUBJECT
MATTER AND THE PARTIES.
V
WHETHER OR NOT PRIVATE RESPONDENT IS GUILTY OF LACHES IN INSTITUTING THE
ACTION FOR RECONVEYANCE AFTER THE LAPSE OF 19 YEARS FROM THE TIME THE
DECREE OF REGISTRATION WAS ISSUED.
Petitioner's appeal hinges on whether or not the Court of Appeals has decided a question of
substance in a way probably not in accord with law or with the applicable decisions of the
Supreme Court.
Petitioner avers that an action for reconveyance and cancellation of title is in personam and the
court a quo never acquired jurisdiction over the deceased Ching Leng and/or his estate by
means of service of summons by publication in accordance with the ruling laid down in Ang
Lam v. Rosillosa et al., 86 Phil. 448 [1950].
On the other hand, private respondent argues that an action for cancellation of title is quasi in
rem, for while the judgment that may be rendered therein is not strictly a judgment in in rem, it
fixes and settles the title to the property in controversy and to that extent partakes of the nature
of the judgment in rem, hence, service of summons by publication may be allowed unto Ching
Leng who on the face of the complaint was a non-resident of the Philippines in line with the
doctrine enunciated in Perkins v. Dizon, 69 Phil. 186 [1939].
An action to redeem, or to recover title to or possession of, real property is not an action in rem or
an action against the whole world, like a land registration proceeding or the probate of a will; it
is an action in personam, so much so that a judgment therein is binding only upon the parties
properly impleaded and duly heard or given an opportunity to be heard. Actions in personam and
actions in rem differ in that the former are directed against specific persons and seek personal
judgments, while the latter are directed against the thing or property or status of a person and
seek judgments with respect thereto as against the whole world. An action to recover a parcel
of land is a real action but it is an action in personam, for it binds a particular individual only
although it concerns the right to a tangible thing (Ang Lam v. Rosillosa, supra).
Private respondent's action for reconveyance and cancellation of title being in personam, the
judgment in question is null and void for lack of jurisdiction over the person of the deceased
defendant Ching Leng. Verily, the action was commenced thirteen (13) years after the latter's
death. As ruled by this Court in Dumlao v. Quality Plastic Products, Inc. (70 SCRA 475 [1976])
the decision of the lower court insofar as the deceased is concerned, is void for lack of jurisdiction
over his person. He was not, and he could not have been validly served with summons. He had
no more civil personality. His juridical personality, that is fitness to be subject of legal relations,
was lost through death (Arts. 37 and 42 Civil Code).
The same conclusion would still inevitably be reached notwithstanding joinder of Ching Leng's
estate as co-defendant. it is a well-settled rule that an estate can sue or be sued through an
executor or administrator in his representative capacity (21 Am. Jr. 872). Contrary to private
respondent's claims, deceased Ching Leng is a resident of 44 Libertad Street, Pasay City as
shown in his death certificate and T. C. T. No. 91137 and there is an on-going intestate
proceedings in the same court, Branch III commenced in 1965, and notice of hearing thereof
duly published in the same year. Such misleading and misstatement of facts demonstrate lack
of candor on the part of private respondent and his counsel, which is censurable.
The complaint for cancellation of Ching Leng's Torrens Title must be filed in the original land
registration case, RTC, Pasig, Rizal, sitting as a land registration court in accordance with
Section 112 of the Land Registration Act (Act No. 496, as amended) not in CFI Pasay City in
connection with, or as a mere incident in Civil Case No. 6888-P (Estanislao v. Honrado, 114
SCRA 748 [1982]).
Section 112 of the same law requires "notice to all parties in interest." Since Ching Leng was
already in the other world when the summons was published he could not have been notified at
all and the trial court never acquired jurisdiction over his person. The ex-parte proceedings for
cancellation of title could not have been held (Estanislao v. Honrado, supra).
The cited case of Perkins v. Dizon, supra is inapplicable to the case at bar since petitioner
Perkins was a non-resident defendant sued in Philippine courts and sought to be excluded from
whatever interest she has in 52,874 shares of stocks with Benguet Consolidated Mining
Company. The action being a quasi in rem summons by publication satisfied the constitutional
requirement of due process.
The petition to set aside the judgment for lack of jurisdiction should have been granted and the
amended complaint of private respondent based on possession and filed only in 1978 dismissed
outrightly. Ching Leng is an innocent purchaser for value as shown by the evidence adduced in
his behalf by petitioner herein, tracing back the roots of his title since 1960, from the time the
decree of registration was issued.
The sole remedy of the landowner whose property has been wrongfully or erroneously registered
in another's name—after one year from the date of the decree—is not to set aside the decree,
but respecting the decree as incontrovertible and no longer open to review, to bring an ordinary
action in the ordinary court of justice for damages if the property has passed unto the hands of
an innocent purchaser for value (Sy, Sr. v. Intermediate Appellate Court, G.R. No. 66742;
Teoville Development Corporation v. IAC, et al., G.R. No. 75011, June 16, 1988).
Failure to take steps to assert any rights over a disputed land for 19 years from the date of
registration of title is fatal to the private respondent's cause of action on the ground of laches.
Laches is the failure or neglect, for an unreasonable length of time to do that which by exercising
due diligence could or should have been done, earlier; it is negligence or omission to assert a
right within a reasonable time warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it (Bailon-Casilao v. Court of Appeals, G.R. No. 78178,
April 15, 1988; Villamor v. Court of Appeals, G.R. No. 41508, June 27, 1988).
The real purpose of the Torrens system is to quiet title to land and to stop forever any question
as to its legality. Once a title is registered, the owner may rest secure, without the necessity of
waiting in the portals of the court, or sitting on the "mirador su casa," to avoid the possibility of
losing his land (National Grains Authority v. IAC, 157 SCRA 388 [1988]).
A Torrens title is generally a conclusive evidence of the ownership of the land referred to therein
(Section 49, Act 496). A strong presumption exists that Torrens titles are regularly issued and
that they are valid. A Torrens title is incontrovertible against any "information possessoria" or
title existing prior to the issuance thereof not annotated on the title (Salamat Vda. de Medina v.
Cruz, G.R. No. 39272, May 4, 1988).
PREMISES CONSIDERED, (1) the instant petition is hereby GRANTED; (2) the appealed
decision of the Court of Appeals is hereby REVERSED and SET ASIDE; (3) the trial court's
decision dated June 15, 1979 and the Order dated September 2, 1980 reinstating the same are
hereby declared NULL and VOID for lack of jurisdiction and (4) the complaint in Civil Case No.
6888-P is hereby DISMISSED.
SO ORDERED.
G.R. No. 150656. April 29, 2003
MARGARITA ROMUALDEZ-LICAROS, Petitioner, v. ABELARDO B. LICAROS, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to annul the Decision2 dated 9 August 2001 of the Court
of Appeals in CA-G.R. SP No. 58487, as well as the Resolution dated 23 October 2001 denying
the motion for reconsideration. The Court of Appeals dismissed the petition to annul the following
decisions3 rendered by Branch 143 of the Regional Trial Court of Makati:
(1) The Decision dated 27 December 19904 granting the dissolution of the conjugal partnership
of gains of the spouses Abelardo B. Licaros and Margarita Romualdez-Licaros;
(2) The Decision dated 8 November 19915 declaring the marriage between the same spouses
null and void.
The Facts
The antecedent facts as found by the Court of Appeals are as follows:
x x x Abelardo Licaros (Abelardo, for short) and Margarita Romualdez-Licaros (Margarita,
hereafter) were lawfully married on December 15, 1968. Out of this marital union were born
Maria Concepcion and Abelardo, Jr. Ironically, marital differences, squabbles and irreconcilable
conflicts transpired between the spouses, such that sometime in 1979, they agreed to separate
from bed and board.
In 1982, Margarita left for the United States and there, to settle down with her two (2) children.
In the United States, on April 26, 1989, Margarita applied for divorce before the Superior Court
of California, County of San Mateo (Annex 1, Rejoinder, pp. 164-165) where she manifested
that she does not desire counseling at that time (Quotation, p. 166, Rollo). On August 6, 1990,
Margarita was granted the decree of divorce (Annex 2, Answer, p. 108, Rollo) together with a
distribution of properties between her and Abelardo (pp. 167-168, Rollo).
Not long after, on August 17, 1990, Abelardo and Margarita executed an Agreement of
Separation of Properties (pp. 60-64, Rollo). This was followed-up by a petition filed on August
21, 1990 before the Regional Trial Court of Makati for the dissolution of the conjugal partnership
of gains of the spouses and for the approval of the agreement of separation of their properties.
This was docketed as Special Proceeding No. 2551. On December 27, 1990, a decision was
issued granting the petition and approving the separation of property agreement.
For his part, on June 24, 1991, Abelardo commenced Civil Case No. 91-1757, for the declaration
of nullity of his marriage with Margarita, based on psychological incapacity under the New Family
Code. As Margarita was then residing at 96 Mulberry Lane, Atherton, California, U.S.A.,
Abelardo initially moved that summons be served through the International Express Courier
Service. The court a quo denied the motion. Instead, it ordered that summons be served by
publication in a newspaper of general circulation once a week for three (3) consecutive weeks,
at the same time furnishing respondent a copy of the order, as well as the corresponding
summons and a copy of the petition at the given address in the United States through the
Department of Foreign Affairs, all at the expense of Abelardo. Respondent was given sixty (60)
days after publication to file a responsive pleading.
On July 15, 1991, Process Server, Maximo B. Dela Rosa, submitted his Officers Return quoted
hereunder:
OFFICERS RETURN
THIS IS TO CERTIFY that on July 3, 1991, I have served a copy of summons and complaint
with annexes together with order dated June 28, 1991 issued by the Court in the above-entitled
case upon defendant Margarita Romualdez-Licaros c/o DFA. (sent by Mail) thru Pat G. Martines
receiving Clerk of Department of Foreign Affairs a person authorized to receive this kind of
process who acknowledged the receipt thereof at ADB Bldg., Roxas Blvd., Pasay City, Metro
Manila. (p. 40, Rollo)
As required by law, the case was referred to Trial Prosecutor Bruselas, Jr. to find out any
possible collusion between the parties in the case. Thereafter, with the negative report of
collusion, Abelardo was allowed to present his evidence ex-parte. On November 8, 1991, the
Decision (Annex A, Petition) was handed down in Civil Case No. 91-1757 declaring the
marriage between Abelardo and Margarita null and void.
Almost nine (9) years later, on April 28, 2000, the petition at bench was commenced when
Margarita received a letter dated November 18, 1991 from a certain Atty. Angelo Q. Valencia
informing her that she no longer has the right to use the family name Licaros inasmuch as her
marriage to Abelardo had already been judicially dissolved by the Regional Trial Court of Makati
on November 8, 1991. Asseverating to have immediately made some verifications and finding
the information given to be true, petitioner commenced the instant petition on the following
grounds:
(A) THERE WAS EXTRINSIC FRAUD IN THE PREPARATION AND FILING BY ABELARDO
OF THE PETITION FOR DISSOLUTION OF THE CONJUGAL PARTNERSHIP OF GAINS AND
ITS ANNEX, THE AGREEMENT OF SEPARATION OF PROPERTIES.
(B) THE TRIAL COURT LACKED JURISDICTION TO HEAR AND DECIDE THE PETITION
FOR DECLARATION OF NULLITY OF MARRIAGE.6
The Ruling of the Court of Appeals
The Court of Appeals debunked the claim of Margarita that there was extrinsic fraud in the
preparation and filing by Abelardo of the Petition for Dissolution of Conjugal Partnership of
Gains and its annex, the Agreement of Separation of Properties. The Court of Appeals stated:
x x x, the extrinsic fraud alluded to consists of Abelardo coercing Margarita into signing the
petition to dissolve their conjugal partnership of gains together with the agreement of separation
of properties, by threatening to cut-off all financial and material support of their children then still
studying in the United States; that petitioner had no hand directly or indirectly in the preparation
of the petition and agreement of separation of properties; that petitioner never met the counsel
for the petitioner, nor the notary public who notarized the deed; and, petitioner never received
any notice of the pendency of the petition nor a copy of the decision.
Antithetically, a meticulous perusal of the controversial petition (Annex B-1) and the agreement
of separation of properties (pp. 60-64, Rollo) readily shows that the same were signed by the
petitioner on the proper space after the prayer and on the portion for the verification of the
petition. The same is true with the agreement of separation of properties. What is striking to note
is that on August 6, 1990, Margarita appeared before Amado P. Cortez, Consul of the Republic
of the Philippines at the San Francisco, California, United States Consulate Office, to affirm and
acknowledge before said official that she executed the agreement of separation of properties of
her own free will and deed, after being informed of the contents thereof. And yet, there is no
showing that Abelardo was with her at the Philippine Consulate Office in confirming the
separation of property agreement. Moreover, on page 2 of the same agreement, it is specifically
stated that such property separation document shall be subject to approval later on by the proper
court of competent jurisdiction. The clear import of this is that the agreement must have to be
submitted before the proper court for approval, which explains and confirms petitioners signature
on the petition filed in court.
In main, We see no indication nor showing of coercion or fraud from these facts, which could
very well be considered as extrinsic or collateral fraud to justify a petition under Rule 47. From
all indications, the pretended coerced documents were rather freely and voluntarily executed by
the parties therein knowing fully well the imports thereof. This conclusion finds more weight if
We consider the fact that the separation of property was fully implemented and enforced, when
apparently both parties correspondingly received the properties respectively assigned to each
of them under the said document.7cräläwvirtualibräry
The Court of Appeals also rejected Margaritas claim that the trial court lacked jurisdiction to hear
and decide the Petition for Declaration of Nullity of Marriage for improper service of summons
on her. The case involves the marital status of the parties, which is an action in rem or quasi in
rem. The Court of Appeals ruled that in such an action the purpose of service of summons is not
to vest the trial court with jurisdiction over the person of the defendant, but only to comply with
due process. The Court of Appeals concluded that any irregularity in the service of summons
involves due process which does not destroy the trial courts jurisdiction over the res which is the
parties marital status. Neither does such irregularity invalidate the judgment rendered in the
case. Thus, the Court of Appeals dismissed the petition for annulment of judgment, stating that:
At bar, the case involves the personal (marital) status of the plaintiff and the defendant. This
status is the res over which the Philippine court has acquired jurisdiction. This is also the kind
of action which the Supreme Court had ruled that service of summons may be served
extraterritorially under Section 15 (formerly Section 17) of Rule 14 and where such service of
summons is not for the purpose of vesting the trial court with jurisdiction over the person of the
defendant but only for the purpose of complying with the requirements of fair play and due
process. A fortiori, the court a quo had properly acquired jurisdiction over the person of herein
petitioner-defendant when summons was served by publication and a copy of the summons, the
complaint with annexes, together with the Order of June 28, 1991, was served to the defendant
through the Department of Foreign Affairs by registered mail and duly received by said office to
top it all. Such mode was upon instruction and lawful order of the court and could even be treated
as any other manner the court may deem sufficient.8cräläwvirtualibräry
Hence, the instant petition.
The Issues
The issues raised by Margarita are restated as follows:
I. Whether Margarita was validly served with summons in the case for declaration of nullity of
her marriage with Abelardo;
II. Whether there was extrinsic fraud in the preparation and filing by Abelardo of the Petition for
Dissolution of the Conjugal Partnership of Gains and its annex, the Agreement of Separation of
Properties.
The Courts Ruling
The petition is bereft of merit.
First Issue: Validity of the Service of Summons on Margarita
Margarita insists that the trial court never acquired jurisdiction over her person in the petition for
declaration of nullity of marriage since she was never validly served with summons. Neither did
she appear in court to submit voluntarily to its jurisdiction.
On the other hand, Abelardo argues that jurisdiction over the person of a non-resident defendant
in an action in rem or quasi in rem is not necessary. The trial and appellate courts made a clear
factual finding that there was proper summons by publication effected through the Department
of Foreign Affairs as directed by the trial court. Thus, the trial court acquired jurisdiction to render
the decision declaring the marriage a nullity.
Summons is a writ by which the defendant is notified of the action brought against him. Service
of such writ is the means by which the court acquires jurisdiction over his
person.9cräläwvirtualibräry
As a rule, when the defendant does not reside and is not found in the Philippines, Philippine
courts cannot try any case against him because of the impossibility of acquiring jurisdiction over
his person unless he voluntarily appears in court. But when the case is one of actions in
rem or quasi in rem enumerated in Section 15,10 Rule 14 of the Rules of Court, Philippine
courts have jurisdiction to hear and decide the case. In such instances, Philippine courts have
jurisdiction over the res, and jurisdiction over the person of the non-resident defendant is not
essential.11cräläwvirtualibräry
Actions in personam12 and actions in rem or quasi in rem differ in that actions in personam are
directed against specific persons and seek personal judgments. On the other hand, actions in
rem or quasi in rem are directed against the thing or property or status of a person and seek
judgments with respect thereto as against the whole world.13cräläwvirtualibräry
At the time Abelardo filed the petition for nullity of the marriage in 1991, Margarita was residing
in the United States. She left the Philippines in 1982 together with her two children. The trial
court considered Margarita a non-resident defendant who is not found in the Philippines. Since
the petition affects the personal status of the plaintiff, the trial court authorized extraterritorial
service of summons under Section 15, Rule 14 of the Rules of Court. The term personal status
includes family relations, particularly the relations between husband and
wife.14cräläwvirtualibräry
Under Section 15 of Rule 14, a defendant who is a non-resident and is not found in the country
may be served with summons by extraterritorial service in four instances: (1) when the action
affects the personal status of the plaintiff; (2) when the action relates to, or the subject of
which is property within the Philippines, in which the defendant has or claims a lien or interest,
actual or contingent; (3) when the relief demanded consists, wholly or in part, in excluding the
defendant from any interest in property located in the Philippines; or (4) when the property of the
defendant has been attached within the Philippines.
In these instances, extraterritorial service of summons may be effected under any of three
modes: (1) by personal service out of the country, with leave of court; (2) by publication and
sending a copy of the summons and order of the court by registered mail to the defendants last
known address, also with leave of court; or (3) by any other means the judge may consider
sufficient.
Applying the foregoing rule, the trial court required extraterritorial service of summons to be
effected on Margarita in the following manner:
x x x, service of Summons by way of publication in a newspaper of general circulation once a
week for three (3) consecutive weeks, at the same time, furnishing respondent copy of this
Order as well as the corresponding Summons and copy of the petition at her given address at
No. 96 Mulberry Lane, Atherton, California, U.S.A., thru the Department of Foreign Affairs,
all at the expense of petitioner.15 (Emphasis ours)
The trial courts prescribed mode of extraterritorial service does not fall under the first or second
mode specified in Section 15 of Rule 14, but under the third mode. This refers to any other
means that the judge may consider sufficient.
The Process Servers Return of 15 July 1991 shows that the summons addressed to Margarita
together with the complaint and its annexes were sent by mail to the Department of Foreign
Affairs with acknowledgment of receipt. The Process Servers certificate of service of summons
is prima facie evidence of the facts as set out in the certificate.16 Before proceeding to declare
the marriage between Margarita and Abelardo null and void, the trial court stated in its Decision
dated 8 November 1991 that compliance with the jurisdictional requirements
hav(e) (sic) been duly established. We hold that delivery to the Department of Foreign Affairs
was sufficient compliance with the rule. After all, this is exactly what the trial court required and
considered as sufficient to effect service of summons under the third mode of extraterritorial
service pursuant to Section 15 of Rule 14.
Second Issue: Validity of the Judgment Dissolving the
Conjugal Partnership of Gains
Margarita claims that Abelardo coerced her into signing the Petition for Dissolution of the
Conjugal Partnership of Gains (Petition) and its annex, the Agreement of Separation of
Properties (Agreement). Abelardo allegedly threatened to cut off all financial and material
support to their children if Margarita did not sign the documents.
The trial court did not find anything amiss in the Petition and Agreement that Abelardo filed, and
thus the trial court approved the same. The Court of Appeals noted that a meticulous perusal of
the Petition and Agreement readily shows that Margarita signed the same on the proper space
after the prayer and on the portion for the verification of the petition. The Court of Appeals
observed further that on 6 August 1990, Margarita appeared before Consul Amado Cortez in the
Philippine Consulate Office in San Francisco, California, to affirm that she executed the
Agreement of her own free will. There was no showing that Abelardo was at that time with her
at the Philippine Consulate Office. Abelardo secured judicial approval of the Agreement as
specifically required in the Agreement.
The Court is bound by the factual findings of the trial and appellate courts that the parties freely
and voluntarily executed the documents and that there is no showing of coercion or fraud. As a
rule, in an appeal by certiorari under Rule 45, the Court does not pass upon questions of fact as
the factual findings of the trial and appellate courts are binding on the Court. The Court is not a
trier of facts. The Court will not examine the evidence introduced by the parties below to
determine if the trial and appellate courts correctly assessed and evaluated the evidence on
record.17

The due and regular execution of an instrument acknowledged before an officer authorized to
administer oaths cannot be overthrown by bare allegations of coercion but only by clear and
convincing proof.18 A person acknowledging an instrument before an officer authorized to
administer oaths acknowledges that he freely and voluntarily executed the instrument, giving
rise to a prima facie presumption of such fact.
In the instant case, Margarita acknowledged the Agreement before Consul Cortez. The
certificate of acknowledgment signed by Consul Cortez states that Margarita personally
appeared before him and acknowledged before me that SHE executed the same of her own
free will and deed.19 Thus, there is a prima facie presumption that Margarita freely and
voluntarily executed the Agreement. Margarita has failed to rebut this prima facie presumption
with clear and convincing proof of coercion on the part of Abelardo.
A document acknowledged before a notary public is prima facie evidence of the due and regular
execution of the document.20 A notarized document has in its favor the presumption of regularity
in its execution, and to contradict the same, there must be evidence that is clear, convincing and
more than merely preponderant.21cräläwvirtualibräry
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 58487 dismissing the
petition to annul judgment is AFFIRMED.
SO ORDERED.
G.R. No. 127692 : March 10, 2004
FORTUNATO GOMEZ and AURORA GOMEZ, Petitioners, v. COURT OF APPEALS,
ADOLFO TROCINO and MARIANO TROCINO, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the decision1 of the Court of Appeals dated September 30, 1996, in CA-G.R. SP No. 40067,
nullifying the decision and orders of the Regional Trial Court of Cebu City (Branch 10) in Civil
Case No. CEB-11103, for want of jurisdiction.
Civil Case No. CEB-11103 is an action for specific performance and/or rescission filed by herein
Petitioners, spouses Fortunato and Aurora Gomez, against the heirs of Jesus J. Trocino, Sr.,
which include herein respondents and their mother Caridad Trocino.2
Filed on December 16, 1991, the complaint alleges:Some time in 1975, the spouses Jesus and
Caridad Trocino mortgaged two parcels of land covered by TCT Nos. 10616 and 31856 to Dr.
Clarence Yujuico.The mortgage was subsequently foreclosed and the properties sold at public
auction on July 11, 1988, and before the expiry of the redemption period, the spouses Trocino
sold the property to petitioners on December 12, 1989, who in turn, redeemed the same from
Dr. Yujuico.The spouses Trocino, however, refused to convey ownership of the properties to
Petitioners, hence, the complaint.
On January 10, 1992, the trial courts Process Server served summons on respondents, in the
manner described in his Return of Service, to wit:
Respectfully returned to the Branch Clerk of Court, Regional Trial Court of Cebu, Branch 10, the
herein attached original summons issued in the above-entitled case with the information that on
January 8, 1992 summons and copies of the complaint were served to the defendants Jacob,
Jesus Jr., Adolfo, Mariano, Consolacion, Alice, Racheal thru defendant Caridad Trocino at their
given address at Maria Cristina Extension (besides Sacred Heart School for Girls), Cebu City,
evidence by her signature found at the lower portion of the original summons.3
WHEREFORE I, respectfully return the original summons duly served to the court of origin.
Cebu City, Philippines, January 10, 1992.
(signed)
DELFIN D. BARNIDO
RTC Process Server
On January 27, 1992, the defendants, through their counsel Atty. Expedito P. Bugarin, filed their
Answer.Defendant Caridad A. Trocino, respondents mother, verified said pleading.4
After trial on the merits, the RTC rendered its decision on March 1993, with the following
disposition:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendants.
The latter are hereby ordered to jointly and severally execute a Deed of Sale in favor of the
plaintiffs and to deliver the owners duplicate copies of TCT Nos. 10616 and 31856, covering the
properties sold, to the plaintiffs within ten (10) days from the finality of the judgment, after which
plaintiffs shall pay in turn to the defendants the balance of P2,000,000.00.Otherwise, the sale is
rescinded and revoked and the defendants are directed to return to the plaintiffs the amount
of P500,000.00, with interest of 12% per annum computed from December 6, 1989, until the full
amount is paid.
In addition thereto, defendants are to pay jointly and severally to the plaintiffs, the amount
of P50,000.00 as moral damages; P20,000.00 as exemplary damages; P40,000.00 by way of
attorneys fees; and P10,000.00 as litigation expenses.
SO ORDERED.5
Due to the defendants failure to deliver the owners duplicate of TCT Nos. 10616 and 31856, the
RTC issued an order on August 29, 1995 declaring said titles null and void, and ordering the
Register of Deeds of Cebu City to issue new titles in the name of herein petitioners.6
Thereafter, or on March 13, 1996, respondents Adolfo and Mariano Trocino filed with the Court
of Appeals, a petition for the annulment of the judgment rendered by the RTC-Cebu (Branch 10)
in Civil Case No. CEB-11103.Private respondents alleged that the trial courts decision is null
and void on the ground that it did not acquire jurisdiction over their persons as they were not
validly served with a copy of the summons and the complaint.According to them, at the time
summons was served on them, Adolfo Trocino was already in Ohio, U.S.A., and has been
residing there for 25 years, while Mariano Trocino was in Talibon, Bohol, and has been residing
there since 1986.They also refuted the receipt of the summons by Caridad A. Trocino, and the
representation made by Atty. Bugarin in their behalf.Respondents also contended that they have
a meritorious defense.7 Petitioners filed their Comment/Answer to the petition.8
On September 30, 1996, the Court of Appeals issued the assailed Decision granting the petition
and annulling the decision of the RTC-Cebu (Branch 10).The decretal portion of the decision
reads:
WHEREFORE, the decision of the Regional Trial Court of Cebu City, Branch 10, in Civil Case
No. CEB-11103 as well as all Orders issued to implement the same are hereby ANNULLED
AND SET ASIDE.The Register of Deeds of Cebu City is hereby ENJOINED from cancelling
Transfer Certificates of Title Nos. 10616 and 31856.No pronouncement as to costs.
SO ORDERED.9
Their motion for reconsideration having been denied by the Court of Appeals, petitioners filed
the present petition, setting forth the following assignment of errors:
I.THE COURT OF APPEALS ERRED IN FINDING LACK OF PRIOR KNOWLEDGE ON THE
PART OF RESPONDENTS TROCINO, REGARDING THE PROCEEDINGS BEFORE THE
RTC OF CEBU CITY AND IN NOT DISMISSING THE PETITION FOR VIOLATION OF
SUPREME COURT CIRCULAR 04-94.
II.THE COURT OF APPEALS ERRED IN DECLARING THE NEED FOR PERSONAL AND/OR
EXTRATERRITORIAL SERVICE OF SUMMONS, DESPITE THE NATURE OF THE CAUSE
OF ACTION BEING ONE IN REM.
III.THE COURT OF APPEALS ERRED IN ANNULLING THE JUDGMENT, CAUSING
FURTHER USELESS LITIGATION AND UNNECESSARY EXPENSE ON PETITIONERS AND
RESPONDENTS, ESPECIALLY SINCE RESPONDENTS HAVE NOT SHOWN ANY VALID
DEFENSE AS GROUND FOR REVERSAL OF JUDGMENT OF THE RTC.
IV.THE COURT OF APPEALS ERRED IN RULING THAT ITS JUDGMENT IS APPLICABLE IN
FAVOR OF CARIDAD TROCINO.10
Summons is a writ by which the defendant is notified of the action brought against him.Service
of such writ is the means by which the court acquires jurisdiction over his person.11 Any judgment
without such service in the absence of a valid waiver is null and void.12
The resolution of the present petition hinges on the issue of whether or not summons was
effectively served on respondents.If in the affirmative, the trial court had validly acquired
jurisdiction over their persons and therefore its judgment is valid.
To resolve whether there was valid service of summons on respondents, the nature of the action
filed against them must first be determined.As the Court explained in Asiavest Limited vs. Court
of Appeals, it will be helpful to determine first whether the action is in personam, in rem, or quasi
in rem because the rules on service of summons under Rule 14 of the Rules of Court of the
Philippines apply according to the nature of the action.13
In actions in personam, summons on the defendant must be served by handing a copy thereof
to the defendant in person, or, if he refuses to receive it, by tendering it to him.This is specifically
provided in Section 7, Rule 14 of the Rules of Court,14 which states:
SEC. 7. Personal service of summons.-- The summons shall be served by handing a copy
thereof to the defendant in person or, if he refuses to receive it, by tendering it to him.
If efforts to find defendant personally makes prompt service impossible, substituted service may
be effected by leaving copies of the summons at the defendant's dwelling house or residence
with some person of suitable age and discretion then residing therein, or by leaving the copies
at the defendant's office or regular place of business with some competent person in charge
thereof.15 In substituted service, it is mandated that the fact of impossibility of personal service
should be explained in the proof of service.16
When the defendant in an action in personam is a non-resident who does not voluntarily submit
himself to the authority of the court, personal service of summons within the State is essential to
the acquisition of jurisdiction over his person.This cannot be done if the defendant is not
physically present in the country, and thus, the court cannot acquire jurisdiction over his person
and therefore cannot validly try and decide the case against him.17 An exception was accorded
in Gemperle vs. Schenker wherein service of summons through the non-residents wife, who was
a resident of the Philippines, was held valid, as the latter was his representative and attorney-
in-fact in a prior civil case filed by the non-resident, and the second case was merely an offshoot
of the first case.18
Meanwhile, in actions in rem or quasi in rem, jurisdiction over the person of the defendant is not
a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over
the res, although summons must be served upon the defendant in order to satisfy the due
process requirements.19 Thus, where the defendant is a non-resident who is not found in the
Philippines, and (1) the action affects the personal status of the plaintiff; (2) the action relates to,
or the subject matter of which is property in the Philippines in which the defendant has or claims
a lien or interest; (3) the action seeks the exclusion of the defendant from any interest in the
property located in the Philippines; or (4) the property of the defendant has been attached in the
Philippines, summons may be served extraterritorially by (a) personal service out of the country,
with leave of court; (b) publication, also with leave of court; or (c) any other manner the court
may deem sufficient.20
In the present case, petitioners cause of action in Civil Case No. CEB-11103 is anchored on the
claim that the spouses Jesus and Caridad Trocino reneged on their obligation to convey
ownership of the two parcels of land subject of their sale.Thus, petitioners pray in their complaint
that the spouses Trocino be ordered to execute the appropriate deed of sale and that the titles
be delivered to them (petitioners); or in the alternative, that the sale be revoked and rescinded;
and spouses Trocino ordered to return to petitioners their down payment in the amount of
P500,000.00 plus interests.The action instituted by petitioners affect the parties alone, not the
whole world.Hence, it is an action in personam, i.e., any judgment therein is binding only upon
the parties properly impleaded.21
Contrary to petitioners belief, the complaint they filed for specific performance and/or rescission
is not an action in rem.While it is a real action because it affects title to or possession of the two
parcels of land covered by TCT Nos. 10616 and 31856, it does not automatically follow that the
action is already one in rem.In Hernandez vs. Rural Bank of Lucena, Inc., the Court made the
following distinction:
In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a
contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real
property, or, as indicated in section 2(a) of Rule 4, a real action is an action affecting title to real
property or for the recovery of possession, or for partition or condemnation of, or foreclosure of
a mortgage on, real property.
An action in personam is an action against a person on the basis of his personal liability, while
an action in rem is an action against the thing itself, instead of against the person. Hence, a real
action may at the same time be an action in personam and not necessarily an action in rem.
The objective sought in petitioners complaint was to establish a claim against respondents for
their alleged refusal to convey to them the title to the two parcels of land that they inherited from
their father, Jesus Trocino, who was one of the sellers of the properties to petitioners .Hence, to
repeat, Civil Case No. CEB-11103 is an action in personam because it is an action against
persons, namely, herein respondents, on the basis of their personal liability. As such, personal
service of summons upon the defendants is essential in order for the court to acquire of
jurisdiction over their persons.
A distinction, however, must be made with regard to service of summons on respondents Adolfo
Trocino and Mariano Trocino.Adolfo Trocino, as records show, is already a resident of Ohio,
U.S.A. for 25 years.Being a non-resident, the court cannot acquire jurisdiction over his person
and validly try and decide the case against him.
On the other hand, Mariano Trocino has been in Talibon, Bohol since 1986.To validly acquire
jurisdiction over his person, summons must be served on him personally, or through substituted
service, upon showing of impossibility of personal service. Such impossibility, and why efforts
exerted towards personal service failed, should be explained in the proof of service.The pertinent
facts and circumstances attendant to the service of summons must be stated in the proof of
service or Officers Return.Failure to do so would invalidate all subsequent proceedings on
jurisdictional grounds.24
In the present case, the process server served the summons and copies of the complaint on
respondents Jacob, Jesus, Jr., Adolfo, Mariano, Consolacion, Alice and Racheal,25 through their
mother, Caridad Trocino.26 The return did not contain any particulars as to the impossibility of
personal service on Mariano Trocino within a reasonable time.Such improper service renders
the same ineffective.
Due process of law requires personal service to support a personal judgment, and, when the
proceeding is strictly in personam brought to determine the personal rights and obligations of
the parties, personal service within the state or a voluntary appearance in the case is essential
to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement
of due process.27
Moreover, inasmuch as the sheriffs return failed to state the facts and circumstances showing
the impossibility of personal service of summons upon respondents within a reasonable time,
petitioners should have sought the issuance of an alias summons.Under Section 5, Rule 14 of
the Rules of Court, alias summons may be issued when the original summons is returned without
being served on any or all of the defendants.28 Petitioners, however, did not do so, and they
should now bear the consequences of their lack of diligence.
The fact that Atty. Expedito Bugarin represented all the respondents without any exception does
not transform the ineffective service of summons into a valid one.It does not constitute a valid
waiver or even a voluntary submission to the trial courts jurisdiction.There was not even the
slightest proof showing that respondents authorized Atty. Bugarins appearance for and in their
behalf.As found by the Court of Appeals:
While Caridad Trocino may have engaged the services of Atty. Bugarin, it did not necessarily
mean that Atty. Bugarin also had the authority to represent the defendant heirs.The records
show that in all the pleadings which required verification, only Caridad Trocino signed the
same.There was never a single instance where defendant heirs signed the pleading.The fact
that a pleading is signed by one defendant does not necessarily mean that it is binding on a co-
defendant.Furthermore, Caridad Trocino represented herself as the principal defendant in her
Motion to Withdraw Appeal. (Rollo, p. 80)
Since the defendant heirs are co-defendants, the trial court should have verified the extent of
Atty. Bugarins authority when petitioners failed to appear as early as the pre-trial stage, where
the parties are required to appear.The absence of the defendant heirs should have prompted
the trial court to inquire from the lawyer whether he was also representing the other petitioners.
As co-defendant and co-heirs over the disputed properties, the defendant heirs had every right
to be present during the trial.Only Caridad Trocino appeared and testified on her own behalf.All
the defenses raised were her own, not the defendant heirs.29
Consequently, the judgment sought to be executed against respondents were rendered without
jurisdiction as there was neither a proper service of summons nor was there any waiver or
voluntary submission to the trial courts jurisdiction.Hence, the same is void, with regard to private
respondents except Caridad Trocino.
It must be pointed out that while it was the spouses Jesus and Caridad Trocino who sold the
properties to Petitioners, their right to proceed against Jesus Trocino when he died was passed
on to his heirs, which includes respondents and Caridad Trocino.Such transmission of right
occurred by operation of law, more particularly by succession, which is a mode of acquisition by
virtue of which the property, rights and obligations to the extent of the value of the inheritance of
a person are transmitted.30 When the process server personally served the summons on Caridad
Trocino, the trial court validly acquired jurisdiction over her person alone.Hence, the trial courts
decision is valid and binding with regard to her, but only in proportion to Caridad Trocinos
share.As aptly stated by the Court of Appeals:
This Courts decision is therefore applicable to all the defendant heirs with the exception of
defendant Caridad Trocino considering that it was the latter who entered into the alleged sale
without the consent of her husband.She is therefore estopped from questioning her own
authority to enter into the questioned sale.Moreover, Caridad Trocino was validly served with
summons and was accorded due process.31
WHEREFORE, the petition for review is DENIED.The decision of the Court of Appeals in CA-
G.R. SP No. 40067 is AFFIRMED.

Costs against petitioners.

SO ORDERED.

G.R. No. 190710 June 6, 2011
JESSE U. LUCAS, Petitioner,
vs.
JESUS S. LUCAS, Respondent.
DECISION
NACHURA, J.:
Is a prima facie showing necessary before a court can issue a DNA testing order? In this petition
for review on certiorari, we address this question to guide the Bench and the Bar in dealing with
a relatively new evidentiary tool. Assailed in this petition are the Court of Appeals (CA)
Decision1 dated September 25, 2009 and Resolution dated December 17, 2009.
The antecedents of the case are, as follows:
On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to Establish Illegitimate Filiation
(with Motion for the Submission of Parties to DNA Testing)2 before the Regional Trial Court
(RTC), Branch 72, Valenzuela City. Petitioner narrated that, sometime in 1967, his mother, Elsie
Uy (Elsie), migrated to Manila from Davao and stayed with a certain "Ate Belen (Belen)" who
worked in a prominent nightspot in Manila. Elsie would oftentimes accompany Belen to work.
On one occasion, Elsie got acquainted with respondent, Jesus S. Lucas, at Belen’s workplace,
and an intimate relationship developed between the two. Elsie eventually got pregnant and, on
March 11, 1969, she gave birth to petitioner, Jesse U. Lucas. The name of petitioner’s father
was not stated in petitioner’s certificate of live birth. However, Elsie later on told petitioner that
his father is respondent. On August 1, 1969, petitioner was baptized at San Isidro Parish, Taft
Avenue, Pasay City. Respondent allegedly extended financial support to Elsie and petitioner for
a period of about two years. When the relationship of Elsie and respondent ended, Elsie refused
to accept respondent’s offer of support and decided to raise petitioner on her own. While
petitioner was growing up, Elsie made several attempts to introduce petitioner to respondent,
but all attempts were in vain.
Attached to the petition were the following: (a) petitioner’s certificate of live birth; (b) petitioner’s
baptismal certificate; (c) petitioner’s college diploma, showing that he graduated from Saint Louis
University in Baguio City with a degree in Psychology; (d) his Certificate of Graduation from the
same school; (e) Certificate of Recognition from the University of the Philippines, College of
Music; and (f) clippings of several articles from different newspapers about petitioner, as a
musical prodigy.
Respondent was not served with a copy of the petition. Nonetheless, respondent learned of the
petition to establish filiation. His counsel therefore went to the trial court on August 29, 2007 and
obtained a copy of the petition.
Petitioner filed with the RTC a Very Urgent Motion to Try and Hear the Case. Hence, on
September 3, 2007, the RTC, finding the petition to be sufficient in form and substance, issued
the Order3 setting the case for hearing and urging anyone who has any objection to the petition
to file his opposition. The court also directed that the Order be published once a week for three
consecutive weeks in any newspaper of general circulation in the Philippines, and that the
Solicitor General be furnished with copies of the Order and the petition in order that he may
appear and represent the State in the case.
On September 4, 2007, unaware of the issuance of the September 3, 2007 Order, respondent
filed a Special Appearance and Comment. He manifested inter alia that: (1) he did not receive
the summons and a copy of the petition; (2) the petition was adversarial in nature and therefore
summons should be served on him as respondent; (3) should the court agree that summons
was required, he was waiving service of summons and making a voluntary appearance; and (4)
notice by publication of the petition and the hearing was improper because of the confidentiality
of the subject matter.4
On September 14, 2007, respondent also filed a Manifestation and Comment on Petitioner’s
Very Urgent Motion to Try and Hear the Case. Respondent reiterated that the petition for
recognition is adversarial in nature; hence, he should be served with summons.
After learning of the September 3, 2007 Order, respondent filed a motion for
reconsideration.5 Respondent averred that the petition was not in due form and substance
because petitioner could not have personally known the matters that were alleged therein. He
argued that DNA testing cannot be had on the basis of a mere allegation pointing to respondent
as petitioner’s father. Moreover, jurisprudence is still unsettled on the acceptability of DNA
evidence.
On July 30, 2008, the RTC, acting on respondent’s motion for reconsideration, issued an
Order6 dismissing the case. The court remarked that, based on the case of Herrera v.
Alba,7 there are four significant procedural aspects of a traditional paternity action which the
parties have to face: a prima facie case, affirmative defenses, presumption of legitimacy, and
physical resemblance between the putative father and the child. The court opined that petitioner
must first establish these four procedural aspects before he can present evidence of paternity
and filiation, which may include incriminating acts or scientific evidence like blood group test and
DNA test results. The court observed that the petition did not show that these procedural aspects
were present. Petitioner failed to establish a prima facie case considering that (a) his mother did
not personally declare that she had sexual relations with respondent, and petitioner’s statement
as to what his mother told him about his father was clearly hearsay; (b) the certificate of live birth
was not signed by respondent; and (c) although petitioner used the surname of respondent,
there was no allegation that he was treated as the child of respondent by the latter or his family.
The court opined that, having failed to establish a prima facie case, respondent had no obligation
to present any affirmative defenses. The dispositive portion of the said Order therefore reads:
WHEREFORE, for failure of the petitioner to establish compliance with the four procedural
aspects of a traditional paternity action in his petition, his motion for the submission of parties to
DNA testing to establish paternity and filiation is hereby denied. This case is DISMISSED without
prejudice.
SO ORDERED.8
Petitioner seasonably filed a motion for reconsideration to the Order dated July 30, 2008, which
the RTC resolved in his favor. Thus, on October 20, 2008, it issued the Order9 setting aside the
court’s previous order, thus:
WHEREFORE, in view of the foregoing, the Order dated July 30, 2008 is hereby reconsidered
and set aside.
Let the Petition (with Motion for the Submission of Parties to DNA Testing) be set for hearing
on January 22, 2009 at 8:30 in the morning.
xxxx
SO ORDERED.10
This time, the RTC held that the ruling on the grounds relied upon by petitioner for filing the
petition is premature considering that a full-blown trial has not yet taken place. The court stressed
that the petition was sufficient in form and substance. It was verified, it included a certification
against forum shopping, and it contained a plain, concise, and direct statement of the ultimate
facts on which petitioner relies on for his claim, in accordance with Section 1, Rule 8 of the Rules
of Court. The court remarked that the allegation that the statements in the petition were not of
petitioner’s personal knowledge is a matter of evidence. The court also dismissed respondent’s
arguments that there is no basis for the taking of DNA test, and that jurisprudence is still
unsettled on the acceptability of DNA evidence. It noted that the new Rule on DNA
Evidence11 allows the conduct of DNA testing, whether at the court’s instance or upon
application of any person who has legal interest in the matter in litigation.
Respondent filed a Motion for Reconsideration of Order dated October 20, 2008 and for
Dismissal of Petition,12 reiterating that (a) the petition was not in due form and substance as no
defendant was named in the title, and all the basic allegations were hearsay; and (b) there was
no prima facie case, which made the petition susceptible to dismissal.
The RTC denied the motion in the Order dated January 19, 2009, and rescheduled the hearing.13
Aggrieved, respondent filed a petition for certiorari with the CA, questioning the Orders dated
October 20, 2008 and January 19, 2009.
On September 25, 2009, the CA decided the petition for certiorari in favor of respondent, thus:
WHEREFORE, the instant petition for certiorari is hereby GRANTED for being meritorious. The
assailed Orders dated October 20, 2008 and January 19, 2009 both issued by the Regional Trial
Court, Branch 172 of Valenzuela City in SP. Proceeding Case No. 30-V-07 are REVERSED and
SET ASIDE. Accordingly, the case docketed as SP. Proceeding Case No. 30-V-07 is
DISMISSED.14
The CA held that the RTC did not acquire jurisdiction over the person of respondent, as no
summons had been served on him. Respondent’s special appearance could not be considered
as voluntary appearance because it was filed only for the purpose of questioning the jurisdiction
of the court over respondent. Although respondent likewise questioned the court’s jurisdiction
over the subject matter of the petition, the same is not equivalent to a waiver of his right to object
to the jurisdiction of the court over his person.
The CA remarked that petitioner filed the petition to establish illegitimate filiation, specifically
seeking a DNA testing order to abbreviate the proceedings. It noted that petitioner failed to show
that the four significant procedural aspects of a traditional paternity action had been met. The
CA further held that a DNA testing should not be allowed when the petitioner has failed to
establish a prima facie case, thus:
While the tenor [of Section 4, Rule on DNA Evidence] appears to be absolute, the rule could not
really have been intended to trample on the substantive rights of the parties. It could have not
meant to be an instrument to promote disorder, harassment, or extortion. It could have not been
intended to legalize unwarranted expedition to fish for evidence. Such will be the situation in this
particular case if a court may at any time order the taking of a DNA test. If the DNA test in
compulsory recognition cases is immediately available to the petitioner/complainant without
requiring first the presentation of corroborative proof, then a dire and absurd rule would result.
Such will encourage and promote harassment and extortion.
xxxx
At the risk of being repetitious, the Court would like to stress that it sees the danger of allowing
an absolute DNA testing to a compulsory recognition test even if the plaintiff/petitioner failed to
establish prima facie proof. x x x If at anytime, motu proprio and without pre-conditions, the court
can indeed order the taking of DNA test in compulsory recognition cases, then the prominent
and well-to-do members of our society will be easy prey for opportunists and extortionists. For
no cause at all, or even for [sic] casual sexual indiscretions in their younger years could be used
as a means to harass them. Unscrupulous women, unsure of the paternity of their children may
just be taking the chances-just in case-by pointing to a sexual partner in a long past one-time
encounter. Indeed an absolute and unconditional taking of DNA test for compulsory recognition
case opens wide the opportunities for extortionist to prey on victims who have no stomach for
scandal.15
Petitioner moved for reconsideration. On December 17, 2009, the CA denied the motion for lack
of merit.16
In this petition for review on certiorari, petitioner raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RESOLVED THE ISSUE
OF LACK OF JURISDICTION OVER THE PERSON OF HEREIN RESPONDENT ALBEIT THE
SAME WAS NEVER RAISED IN THE PETITION FOR CERTIORARI.
I.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RULED THAT
JURISDICTION WAS NOT ACQUIRED OVER THE PERSON OF THE RESPONDENT.
I.B
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT FAILED TO REALIZE THAT
THE RESPONDENT HAD ALREADY SUBMITTED VOLUNTARILY TO THE JURISDICTION
OF THE COURT A QUO.
I.C
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ESSENTIALLY RULED
THAT THE TITLE OF A PLEADING, RATHER THAN ITS BODY, IS CONTROLLING.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ORDERED THE
DISMISSAL OF THE PETITION BY REASON OF THE MOTION (FILED BY THE PETITIONER
BEFORE THE COURT A QUO) FOR THE CONDUCT OF DNA TESTING.
II.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ESSENTIALLY RULED
THAT DNA TESTING CAN ONLY BE ORDERED AFTER THE PETITIONER ESTABLISHES
PRIMA FACIE PROOF OF FILIATION.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED WITH ITS MISPLACED RELIANCE
ON THE CASE OF HERRERA VS. ALBA,
ESPECIALLY AS REGARDS THE ‘FOUR SIGNIFICANT PROCEDURAL ASPECTS OF A
TRADITIONAL PATERNITY ACTION.’17
Petitioner contends that respondent never raised as issue in his petition for certiorari the court’s
lack of jurisdiction over his person. Hence, the CA had no legal basis to discuss the same,
because issues not raised are deemed waived or abandoned. At any rate, respondent had
already voluntarily submitted to the jurisdiction of the trial court by his filing of several motions
asking for affirmative relief, such as the (a) Motion for Reconsideration of the Order dated
September 3, 2007; (b) Ex Parte Motion to Resolve Motion for Reconsideration of the Order
dated November 6, 2007; and (c) Motion for Reconsideration of the Order dated October 20,
2008 and for Dismissal of Petition. Petitioner points out that respondent even expressly admitted
that he has waived his right to summons in his Manifestation and Comment on Petitioner’s Very
Urgent Motion to Try and Hear the Case. Hence, the issue is already moot and academic.
Petitioner argues that the case was adversarial in nature. Although the caption of the petition
does not state respondent’s name, the body of the petition clearly indicates his name and his
known address. He maintains that the body of the petition is controlling and not the caption.
Finally, petitioner asserts that the motion for DNA testing should not be a reason for the dismissal
of the petition since it is not a legal ground for the dismissal of cases. If the CA entertained any
doubt as to the propriety of DNA testing, it should have simply denied the motion.18 Petitioner
points out that Section 4 of the Rule on DNA Evidence does not require that there must be a
prior proof of filiation before DNA testing can be ordered. He adds that the CA erroneously relied
on the four significant procedural aspects of a paternity case, as enunciated in Herrera v.
Alba.19 Petitioner avers that these procedural aspects are not applicable at this point of the
proceedings because they are matters of evidence that should be taken up during the trial.20
In his Comment, respondent supports the CA’s ruling on most issues raised in the petition for
certiorari and merely reiterates his previous arguments. However, on the issue of lack of
jurisdiction, respondent counters that, contrary to petitioner’s assertion, he raised the issue
before the CA in relation to his claim that the petition was not in due form and substance.
Respondent denies that he waived his right to the service of summons. He insists that the alleged
waiver and voluntary appearance was conditional upon a finding by the court that summons is
indeed required. He avers that the assertion of affirmative defenses, aside from lack of
jurisdiction over the person of the defendant, cannot be considered as waiver of the defense of
lack of jurisdiction over such person.
The petition is meritorious.
Primarily, we emphasize that the assailed Orders of the trial court were orders denying
respondent’s motion to dismiss the petition for illegitimate filiation. An order denying a motion to
dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it
leaves something to be done by the court before the case is finally decided on the merits. As
such, the general rule is that the denial of a motion to dismiss cannot be questioned in a special
civil action for certiorari, which is a remedy designed to correct errors of jurisdiction and not
errors of judgment. Neither can a denial of a motion to dismiss be the subject of an appeal unless
and until a final judgment or order is rendered. In a number of cases, the court has granted the
extraordinary remedy of certiorari on the denial of the motion to dismiss but only when it has
been tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.21 In the
present case, we discern no grave abuse of discretion on the part of the trial court in denying
the motion to dismiss.
The grounds for dismissal relied upon by respondent were (a) the court’s lack of jurisdiction over
his person due to the absence of summons, and (b) defect in the form and substance of the
petition to establish illegitimate filiation, which is equivalent to failure to state a cause of action.
We need not belabor the issues on whether lack of jurisdiction was raised before the CA, whether
the court acquired jurisdiction over the person of respondent, or whether respondent waived his
right to the service of summons. We find that the primordial issue here is actually whether it was
necessary, in the first place, to serve summons on respondent for the court to acquire jurisdiction
over the case. In other words, was the service of summons jurisdictional? The answer to this
question depends on the nature of petitioner’s action, that is, whether it is an action in personam,
in rem, or quasi in rem.
An action in personam is lodged against a person based on personal liability; an action in rem
is directed against the thing itself instead of the person; while an action quasi in rem names a
person as defendant, but its object is to subject that person's interest in a property to a
corresponding lien or obligation. A petition directed against the "thing" itself or the res, which
concerns the status of a person, like a petition for adoption, annulment of marriage, or correction
of entries in the birth certificate, is an action in rem.22
In an action in personam, jurisdiction over the person of the defendant is necessary for the court
to validly try and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to confer jurisdiction on the court, provided that the
latter has jurisdiction over the res. Jurisdiction over the res is acquired either (a) by the seizure
of the property under legal process, whereby it is brought into actual custody of the law, or (b)
as a result of the institution of legal proceedings, in which the power of the court is recognized
and made effective. 23
The herein petition to establish illegitimate filiation is an action in rem. By the simple filing of the
petition to establish illegitimate filiation before the RTC, which undoubtedly had jurisdiction over
the subject matter of the petition, the latter thereby acquired jurisdiction over the case. An in
rem proceeding is validated essentially through publication. Publication is notice to the whole
world that the proceeding has for its object to bar indefinitely all who might be minded to make
an objection of any sort to the right sought to be established.24 Through publication, all interested
parties are deemed notified of the petition.
If at all, service of summons or notice is made to the defendant, it is not for the purpose of vesting
the court with jurisdiction, but merely for satisfying the due process requirements.25 This is but
proper in order to afford the person concerned the opportunity to protect his interest if he so
chooses.26 Hence, failure to serve summons will not deprive the court of its jurisdiction to try and
decide the case. In such a case, the lack of summons may be excused where it is determined
that the adverse party had, in fact, the opportunity to file his opposition, as in this case. We find
that the due process requirement with respect to respondent has been satisfied, considering that
he has participated in the proceedings in this case and he has the opportunity to file his
opposition to the petition to establish filiation.
To address respondent’s contention that the petition should have been adversarial in form, we
further hold that the herein petition to establish filiation was sufficient in form. It was indeed
adversarial in nature despite its caption which lacked the name of a defendant, the failure to
implead respondent as defendant, and the non-service of summons upon respondent. A
proceeding is adversarial where the party seeking relief has given legal warning to the other
party and afforded the latter an opportunity to contest it.27 In this petition—classified as an action
in rem—the notice requirement for an adversarial proceeding was likewise satisfied by the
publication of the petition and the giving of notice to the Solicitor General, as directed by the trial
court.
The petition to establish filiation is sufficient in substance. It satisfies Section 1, Rule 8 of the
Rules of Court, which requires the complaint to contain a plain, concise, and direct statement of
the ultimate facts upon which the plaintiff bases his claim. A fact is essential if it cannot be
stricken out without leaving the statement of the cause of action inadequate.28 A complaint states
a cause of action when it contains the following elements: (1) the legal right of plaintiff, (2) the
correlative obligation of the defendant, and (3) the act or omission of the defendant in violation
of said legal right.29
The petition sufficiently states the ultimate facts relied upon by petitioner to establish his filiation
to respondent. Respondent, however, contends that the allegations in the petition were hearsay
as they were not of petitioner’s personal knowledge. Such matter is clearly a matter of evidence
that cannot be determined at this point but only during the trial when petitioner presents his
evidence.
In a motion to dismiss a complaint based on lack of cause of action, the question submitted to
the court for determination is the sufficiency of the allegations made in the complaint to constitute
a cause of action and not whether those allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint.30
The inquiry is confined to the four corners of the complaint, and no other.31 The test of the
sufficiency of the facts alleged in the complaint is whether or not, admitting the facts alleged, the
court could render a valid judgment upon the same in accordance with the prayer of the
complaint.32
If the allegations of the complaint are sufficient in form and substance but their veracity and
correctness are assailed, it is incumbent upon the court to deny the motion to dismiss and require
the defendant to answer and go to trial to prove his defense. The veracity of the assertions of
the parties can be ascertained at the trial of the case on the merits.33
The statement in Herrera v. Alba34 that there are four significant procedural aspects in a
traditional paternity case which parties have to face has been widely misunderstood and
misapplied in this case. A party is confronted by these so-called procedural aspects during trial,
when the parties have presented their respective evidence. They are matters of evidence that
cannot be determined at this initial stage of the proceedings, when only the petition to establish
filiation has been filed. The CA’s observation that petitioner failed to establish a prima facie
case—the first procedural aspect in a paternity case—is therefore misplaced. A prima facie case
is built by a party’s evidence and not by mere allegations in the initiatory pleading.
Clearly then, it was also not the opportune time to discuss the lack of a prima facie case vis-à-
vis the motion for DNA testing since no evidence has, as yet, been presented by petitioner. More
essentially, it is premature to discuss whether, under the circumstances, a DNA testing order is
warranted considering that no such order has yet been issued by the trial court. In fact, the latter
has just set the said case for hearing.
At any rate, the CA’s view that it would be dangerous to allow a DNA testing without corroborative
proof is well taken and deserves the Court’s attention. In light of this observation, we find that
there is a need to supplement the Rule on DNA Evidence to aid the courts in resolving motions
for DNA testing order, particularly in paternity and other filiation cases. We, thus, address the
question of whether a prima facie showing is necessary before a court can issue a DNA testing
order.
The Rule on DNA Evidence was enacted to guide the Bench and the Bar for the introduction
and use of DNA evidence in the judicial system. It provides the "prescribed parameters on the
requisite elements for reliability and validity (i.e., the proper procedures, protocols, necessary
laboratory reports, etc.), the possible sources of error, the available objections to the admission
of DNA test results as evidence as well as the probative value of DNA evidence." It seeks "to
ensure that the evidence gathered, using various methods of DNA analysis, is utilized effectively
and properly, [and] shall not be misused and/or abused and, more importantly, shall continue to
ensure that DNA analysis serves justice and protects, rather than prejudice the public."35
Not surprisingly, Section 4 of the Rule on DNA Evidence merely provides for conditions that are
aimed to safeguard the accuracy and integrity of the DNA testing. Section 4 states:
SEC. 4. Application for DNA Testing Order. – The appropriate court may, at any time, either motu
proprio or on application of any person who has a legal interest in the matter in litigation, order
a DNA testing. Such order shall issue after due hearing and notice to the parties upon a showing
of the following:
(a) A biological sample exists that is relevant to the case;
(b) The biological sample: (i) was not previously subjected to the type of DNA testing now
requested; or (ii) was previously subjected to DNA testing, but the results may require
confirmation for good reasons;
(c) The DNA testing uses a scientifically valid technique;
(d) The DNA testing has the scientific potential to produce new information that is relevant to the
proper resolution of the case; and
(e) The existence of other factors, if any, which the court may consider as potentially affecting
the accuracy or integrity of the DNA testing.
This Rule shall not preclude a DNA testing, without need of a prior court order, at the behest of
any party, including law enforcement agencies, before a suit or proceeding is commenced.
This does not mean, however, that a DNA testing order will be issued as a matter of right if,
during the hearing, the said conditions are established.
In some states, to warrant the issuance of the DNA testing order, there must be a show cause
hearing wherein the applicant must first present sufficient evidence to establish a prima facie
case or a reasonable possibility of paternity or "good cause" for the holding of the test. 36 In these
states, a court order for blood testing is considered a "search," which, under their Constitutions
(as in ours), must be preceded by a finding of probable cause in order to be valid. Hence, the
requirement of a prima facie case, or reasonable possibility, was imposed in civil actions as a
counterpart of a finding of probable cause. The Supreme Court of Louisiana eloquently explained
—

Although a paternity action is civil, not criminal, the constitutional prohibition against
unreasonable searches and seizures is still applicable, and a proper showing of sufficient
justification under the particular factual circumstances of the case must be made before a court
may order a compulsory blood test. Courts in various jurisdictions have differed regarding the
kind of procedures which are required, but those jurisdictions have almost universally found that
a preliminary showing must be made before a court can constitutionally order compulsory blood
testing in paternity cases. We agree, and find that, as a preliminary matter, before the court may
issue an order for compulsory blood testing, the moving party must show that there is a
reasonable possibility of paternity. As explained hereafter, in cases in which paternity is
contested and a party to the action refuses to voluntarily undergo a blood test, a show cause
hearing must be held in which the court can determine whether there is sufficient evidence to
establish a prima facie case which warrants issuance of a court order for blood
testing.371avvphi1
The same condition precedent should be applied in our jurisdiction to protect the putative father
from mere harassment suits. Thus, during the hearing on the motion for DNA testing, the
petitioner must present prima facie evidence or establish a reasonable possibility of paternity.
Notwithstanding these, it should be stressed that the issuance of a DNA testing order remains
discretionary upon the court. The court may, for example, consider whether there is absolute
necessity for the DNA testing. If there is already preponderance of evidence to establish paternity
and the DNA test result would only be corroborative, the court may, in its discretion, disallow a
DNA testing.
WHEREFORE, premises considered, the petition is GRANTED. The Court of Appeals Decision
dated September 25, 2009 and Resolution dated December 17, 2009 are REVERSED and SET
ASIDE. The Orders dated October 20, 2008 and January 19, 2009 of the Regional Trial Court
of Valenzuela City are AFFIRMED.
SO ORDERED.

G.R. No. 128803. September 25, 1998
ASIAVEST LIMITED, Petitioner, v. THE COURT OF APPEALS AND ANTONIO
HERAS, Respondents.
DECISION
DAVIDE, JR., J.:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision1 of Branch 107 of the Regional Trial Court of
Quezon City in Civil Case No. Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant
Antonio Heras praying that said defendant be ordered to pay to the plaintiff the amounts awarded
by the Hong Kong Court Judgment dated December 28, 1984 and amended on April 13, 1987,
to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of payment with legal
interest from December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to December
28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorneys fees, litigation expenses and cost, with interest
thereon from the date of the judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could
resolve the said motion, a fire which partially razed the Quezon City Hall Building on June 11,
1988 totally destroyed the office of this Court, together with all its records, equipment and
properties. On July 26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution of
Case Records. The Court, after allowing the defendant to react thereto, granted the said Motion
and admitted the annexes attached thereto as the reconstituted records of this case per Order
dated September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of which had been
deferred, was denied by the Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial conference.
At the conference, the parties could not arrive at any settlement. However, they agreed on the
following stipulations of facts:
1) The defendant admits the existence of the judgment dated December 28, 1984 as well as its
amendment dated April 13, 1987, but not necessarily the authenticity or validity thereof;
2) The plaintiff is not doing business and is not licensed to do business in the Philippines;
3) The residence of defendant, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong Kong
Court has been repelled by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud or clear mistake of law or fact, such as to overcome the presumption established in Section
50, Rule 39 of the Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the aforementioned judgment (Pls.
See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of
January 18, 1989), as well as the legal presumption in favor of the plaintiff as provided for in
paragraph (b), Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by the proper officials concerned (Pls.
See Exhibits A thru B, with their submarkings). In addition, the plaintiff presented testimonial and
documentary evidence to show its entitlement to attorneys fees and other expenses of litigation.
On the other hand, the defendant presented two witnesses, namely, Fortunata dela Vega and
Russel Warren Lousich.
The gist of Ms. dela Vegas testimony is to the effect that no writ of summons or copy of a
statement of claim of Asiavest Limited was ever served in the office of the Navegante Shipping
Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of summons was
either served on the defendant at his residence in New Manila, Quezon City. Her knowledge is
based on the fact that she was the personal secretary of Mr. Heras during his JD Transit days
up to the latter part of 1972 when he shifted or diversified to shipping business in Hong Kong;
that she was in-charge of all his letters and correspondence, business commitments,
undertakings, conferences and appointments, until October 1984 when Mr. Heras left Hong
Kong for good; that she was also the Officer-in-Charge or Office Manager of Navegante Shipping
Agency LTD, a Hong Kong registered and based company acting as ships agent, up to and until
the company closed shop sometime in the first quarter of 1985, when shipping business
collapsed worldwide; that the said company held office at 34-35 Connaught Road, Central Hong
Kong and later transferred to Caxton House at Duddel Street, Hong Kong, until the company
closed shop in 1985; and that she was certain of such facts because she held office at Caxton
House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of
the law office of the defendants counsel who made a verification of the record of the case filed
by the plaintiff in Hong Kong against the defendant, as well as the procedure in serving Court
processes in Hong Kong.
In his affidavit (Exh. 2) which constitutes his direct testimony, the said witness stated that:
The defendant was sued on the basis of his personal guarantee of the obligations of Compania
Hermanos de Navegacion S.A. There is no record that a writ of summons was served on the
person of the defendant in Hong Kong, or that any such attempt at service was made. Likewise,
there is no record that a copy of the judgment of the High Court was furnished or served on the
defendant; anyway, it is not a legal requirement to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the solicitor (lawyer) of the claimant or plaintiff.
In Hong Kong there are no Court personnel who serve writs of summons and/or most other
processes.
b) If the writ of summons or claim (or complaint) is not contested, the claimant or the plaintiff is
not required to present proof of his claim or complaint nor present evidence under oath of the
claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or decision rendered by the Court in Hong
Kong [to] make a recitation of the facts or the law upon which the claim is based.
d) There is no necessity to furnish the defendant with a copy of the Judgment or decision
rendered against him.
e) In an action based on a guarantee, there is no established legal requirement or obligation
under Hong Kong laws that the creditor must first bring proceedings against the principal debtor.
The creditor can immediately go against the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned by the law firm of
the defendants counsel as an expert witness and to verify the records of the Hong Kong case,
he had been acting as counsel for the defendant in a number of commercial matters; that there
was an application for service of summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service upon Heras outside of Hong Kong,
particularly in Manila or any other place in the Philippines (p. 9, TSN, 2/14/90); that there must
be adequate proof of service of summons, otherwise the Hong Kong Court will refuse to render
judgment (p. 10, ibid); that the mere fact that the Hong Kong Court rendered judgment, it can be
presumed that there was service of summons; that in this case, it is not just a presumption
because there was an affidavit stating that service was effected in [sic] a particular man here in
Manila; that such affidavit was filed by one Jose R. Fernandez of the firm Sycip Salazar on the
21st of December 1984, and stated in essence that on Friday, the 23rd of November 1984 he
served the 4th defendant at No. 6 First Street, Quezon City by leaving it at that address with Mr.
Dionisio Lopez, the son-in-law of the 4th defendant the copy of the writ and Mr. Lopez informed
me and I barely believed that he would bring the said writ to the attention of the 4th defendant
(pp. 11-12, ibid.); that upon filing of that affidavit, the Court was asked and granted judgment
against the 4th defendant; and that if the summons or claim is not contested, the claimant of the
plaintiff is not required to present proof of his claim or complaint or present evidence under oath
of the claim in order to obtain judgment; and that such judgment can be enforced in the same
manner as a judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a
presumptive evidence of a right as between the parties; hence, the party impugning it had the
burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden. He
did not testify to state categorically and under oath that he never received summons. Even his
own witness Lousich admitted that HERAS was served with summons in his Quezon City
residence. As to De la Vegas testimony regarding non-service of summons, the same was
hearsay and had no probative value.
As to HERAS contention that the Hong Kong court judgment violated the Constitution and the
procedural laws of the Philippines because it contained no statements of the facts and the law
on which it was based, the trial court ruled that since the issue related to procedural matters, the
law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich,
such legalities were not required under Hong Kong laws. The trial court also debunked HERAS
contention that the principle of excussion under Article 2058 of the Civil Code of the Philippines
was violated. It declared that matters of substance are subject to the law of the place where the
transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given
effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the
foreign judgment. It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to the plaintiff the
following sums or their equivalents in Philippine currency at the time of payment:
US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per annum from
October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with legal interests on the
aggregate amount from December 28, 1984, and to pay attorneys fees in the sum of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs
and an increase in attorneys fees in the amount of US$19,346.45 with interest until full payment
of the said obligations. On the other hand, HERAS no longer opposed the motion and instead
appealed the decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV No.
29513.
In its order2 November 1990, the trial court granted ASIAVESTs motion for reconsideration by
increasing the award of attorneys fees to US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE
CURRENCY, AND TO PAY THE COSTS OF THIS SUIT, provided that ASIAVEST would pay
the corresponding filing fees for the increase. ASIAVEST appealed the order requiring prior
payment of filing fees. However, it later withdrew its appeal and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision3 reversing the decision of the trial
court and dismissing ASIAVESTs complaint without prejudice. It underscored the fact that a
foreign judgment does not of itself have any extraterritorial application. For it to be given effect,
the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If
such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure such as
those relating to service of summons upon the defendant are governed by the lex fori, which
was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousichs testimony
that under the Hong Kong law, the substituted service of summons upon HERAS effected in the
Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would be valid provided
that it was done in accordance with Philippine laws. It then stressed that where the action is in
personam and the defendant is in the Philippines, the summons should be personally served on
the defendant pursuant to Section 7, Rule 14 of the Rules of Court.4 Substituted service may
only be availed of where the defendant cannot be promptly served in person, the fact of
impossibility of personal service should be explained in the proof of service. It also found as
persuasive HERAS argument that instead of directly using the clerk of the Sycip Salazar
Hernandez & Gatmaitan law office, who was not authorized by the judge of the court issuing the
summons, ASIAVEST should have asked for leave of the local courts to have the foreign
summons served by the sheriff or other court officer of the place where service was to be made,
or for special reasons by any person authorized by the judge.
The Court of Appeals agreed with HERAS that notice sent outside the state to a non-resident is
unavailing to give jurisdiction in an action against him personally for money recovery. Summons
should have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST,
HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an
attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did not
acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the claim of ASIAVEST;
thus:
While We are not fully convinced that [HERAS] has a meritorious defense against [ASIAVESTs]
claims or that [HERAS] ought to be absolved of any liability, nevertheless, in view of the
foregoing discussion, there is a need to deviate from the findings of the lower court in the interest
of justice and fair play. This, however, is without prejudice to whatever action [ASIAVEST] might
deem proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence
supporting the validity of the foreign judgment be submitted, and that our courts are not bound
to give effect to foreign judgments which contravene our laws and the principle of sound morality
and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling
that
I.
IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE SUPPORTING THE
VALIDITY OF THE JUDGMENT;
II.
THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINE LAW;
III.
SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG;
IV.
THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF PHILIPPINE
COURTS;
V.
THE FOREIGN JUDGMENT CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF
SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court,5 which was the governing law
at the time this case was decided by the trial court and respondent Court of Appeals, a foreign
judgment against a person rendered by a court having jurisdiction to pronounce the judgment is
presumptive evidence of a right as between the parties and their successors in interest by the
subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of
proof to the contrary, a court, or judge acting as such, whether in the Philippines or elsewhere,
is presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds
provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party
challenging the foreign judgment -- HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the
other hand, ASIAVEST presented evidence to prove rendition, existence, and authentication of
the judgment by the proper officials. The judgment is thus presumed to be valid and binding in
the country from which it comes, until the contrary is shown.6 Consequently, the first ground
relied upon by ASIAVEST has merit. The presumption of validity accorded foreign judgment
would be rendered meaningless were the party seeking to enforce it be required to first establish
its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme
Court did not acquire jurisdiction over the person of HERAS. This involves the issue of whether
summons was properly and validly served on HERAS. It is settled that matters of remedy and
procedure such as those relating to the service of process upon the defendant are governed by
the lex fori or the law of the forum,7 i.e., the law of Hong Kong in this case. HERAS insisted that
according to his witness Mr. Lousich, who was presented as an expert on Hong Kong laws, there
was no valid service of summons on him.
In his counter-affidavit,8 which served as his direct testimony per agreement of the
parties,9 Lousich declared that the record of the Hong Kong case failed to show that a writ of
summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither
did the record show that a copy of the judgment of the court was served on HERAS. He stated
further that under Hong Kong laws (a) a writ of summons could be served by the solicitor of the
claimant or plaintiff; and (b) where the said writ or claim was not contested, the claimant or
plaintiff was not required to present proof under oath in order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong court
authorized service of summons on HERAS outside of its jurisdiction, particularly in the
Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip
Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on
HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERASs
son-in-law Dionisio Lopez.10 On redirect examination, Lousich declared that such service of
summons would be valid under Hong Kong laws provided that it was in accordance with
Philippine laws.11cräläwvirtualibräry
We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich
as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules of
Evidence, the record of public documents of a sovereign authority, tribunal, official body, or
public officer may be proved by (1) an official publication thereof or (2) a copy attested by the
officer having the legal custody thereof, which must be accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the custody. The certificate may be issued
by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent,
or any officer in the foreign service of the Philippines stationed in the foreign country in which
the record is kept, and authenticated by the seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the original, or a specific part thereof, as the case
may be, and must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An
authority12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the above rule, however,
the Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal,13 that Section
41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the
presentation of other competent evidence to prove the existence of a foreign law. In that case,
the Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco,
California, who quoted verbatim a section of California Civil Code and who stated that the same
was in force at the time the obligations were contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view, the Supreme Court in the Collector of
Internal Revenue v. Fisher et al.,14 upheld the Tax Court in considering the pertinent law of
California as proved by the respondents witness. In that case, the counsel for respondent
testified that as an active member of the California Bar since 1951, he is familiar with the revenue
and taxation laws of the State of California. When asked by the lower court to state the pertinent
California law as regards exemption of intangible personal properties, the witness cited Article
4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derrings
California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full
quotation of the cited section was offered in evidence by respondents. Likewise, in several
naturalization cases, it was held by the Court that evidence of the law of a foreign country on
reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of
practice, may be allowed and used as basis for favorable action, if, in the light of all the
circumstances, the Court is satisfied of the authenticity of the written proof offered.15 Thus, in a
number of decisions, mere authentication of the Chinese Naturalization Law by the Chinese
Consulate General of Manila was held to be competent proof of that law.16cräläwvirtualibräry
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of
Hong Kong in respect of service of summons either in actions in rem or in personam, and where
the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof
of the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-
called processual presumption shall come into play. It will thus be presumed that the Hong Kong
law on the matter is similar to the Philippine law.17cräläwvirtualibräry
As stated in Valmonte vs. Court of Appeals,18 it will be helpful to determine first whether the
action is in personam, in rem, or quasi in rem because the rules on service of summons under
Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An
action in rem is an action against the thing itself instead of against the person.19 An action quasi
in rem is one wherein an individual is named as defendant and the purpose of the proceeding is
to subject his interest therein to the obligation or lien burdening the property.20cräläwvirtualibräry
In an action in personam, jurisdiction over the person of the defendant is necessary for the court
to validly try and decide the case. Jurisdiction over the person of a resident defendant who does
not voluntarily appear in court can be acquired by personal service of summons as provided
under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons
within a reasonable time, substituted service may be made in accordance with Section 8 of said
Rule. If he is temporarily out of the country, any of the following modes of service may be resorted
to: (1) substituted service set forth in Section 8;21 (2) personal service outside the country, with
leave of court; (3) service by publication, also with leave of court;22 or (4) any other manner the
court may deem sufficient.23cräläwvirtualibräry
However, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons within the
state is essential to the acquisition of jurisdiction over her person.24 This method of service is
possible if such defendant is physically present in the country. If he is not found therein, the court
cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case
against him.25 An exception was laid down in Gemperle v. Schenker26 wherein a non-resident
was served with summons through his wife, who was a resident of the Philippines and who was
his representative and attorney-in-fact in a prior civil case filed by him; moreover, the second
case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res. Nonetheless, summons must be served upon the defendant not for the
purpose of vesting the court with jurisdiction but merely for satisfying the due process
requirements.27 Thus, where the defendant is a non-resident who is not found in the Philippines
and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the
subject matter of which is property in the Philippines in which the defendant has or claims a lien
or interest; (3) the action seeks the exclusion of the defendant from any interest in the property
located in the Philippines; or (4) the property of the defendant has been attached in the
Philippines -- service of summons may be effected by (a) personal service out of the country,
with leave of court; (b) publication, also with leave of court; or (c) any other manner the court
may deem sufficient.28cräläwvirtualibräry
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was
based on his personal guarantee of the obligation of the principal debtor. Before we can apply
the foregoing rules, we must determine first whether HERAS was a resident of Hong Kong.
Fortunata de la Vega, HERASs personal secretary in Hong Kong since 1972 until
1985,29 testified that HERAS was the President and part owner of a shipping company in Hong
Kong during all those times that she served as his secretary. He had in his employ a staff of
twelve.30 He had business commitments, undertakings, conferences, and appointments until
October 1984 when [he] left Hong Kong for good.31 HERASs other witness, Russel Warren
Lousich, testified that he had acted as counsel for HERAS for a number of commercial
matters.32 ASIAVEST then infers that HERAS was a resident of Hong Kong because he
maintained a business there.
It must be noted that in his Motion to Dismiss,33 as well as in his Answer34 to ASIAVESTs
complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that the
Hong Kong court did not have jurisdiction over him because the fundamental rule is that
jurisdiction in personam over non-resident defendants, so as to sustain a money judgment, must
be based upon personal service of summons within the state which renders the
judgment.35cräläwvirtualibräry
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss36 contended: The question of
Hong Kong courts want of jurisdiction is therefore a triable issue if it is to be pleaded by the
defendant to repel the foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong
Kong suit was in personam, that defendant was not a resident of Hong Kong when the suit was
filed or that he did not voluntarily submit to the Hong Kong courts jurisdiction) should be alleged
and proved by the defendant.37chanroblesvirtuallawlibrary
In his Reply (to the Opposition to Motion to Dismiss),38 HERAS argued that the lack of jurisdiction
over his person was corroborated by ASIAVESTs allegation in the complaint that he has his
residence at No. 6, 1st St., New Manila, Quezon City, Philippines. He then concluded that such
judicial admission amounted to evidence that he was and is not a resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among
which was that the residence of defendant, Antonio Heras, is New Manila, Quezon
City.39cräläwvirtualibräry
We note that the residence of HERAS insofar as the action for the enforcement of the Hong defendant who is temporarily absent from the country, because even if HERAS be considered
Kong court judgment is concerned, was never in issue. He never challenged the service of as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong not only
summons on him through a security guard in his Quezon City residence and through a lawyer in temporarily but for good.
his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the Philippine
court over his person on the ground of invalid service of summons. What was in issue was his IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this
residence as far as the Hong Kong suit was concerned. We therefore conclude that the stipulated case and AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513.
fact that HERAS is a resident of New Manila, Quezon City, Philippines refers to his residence at No costs.
the time jurisdiction over his person was being sought by the Hong Kong court. With that
stipulation of fact, ASIAVEST cannot now claim that HERAS was a resident of Hong Kong at the SO ORDERED.
time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him was,
indisputably, one in personam, summons should have been personally served on him in Hong
Kong. The extraterritorial service in the Philippines was therefore invalid and did not confer on
the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court judgment
cannot be given force and effect here in the Philippines for having been rendered without
jurisdiction.

Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in
November 1984 when the extraterritorial service of summons was attempted to be made on him.
As declared by his secretary, which statement was not disputed by ASIAVEST, HERAS left Hong
Kong in October 1984 for good.40 His absence in Hong Kong must have been the reason why
summons was not served on him therein; thus, ASIAVEST was constrained to apply for leave to
effect service in the Philippines, and upon obtaining a favorable action on the matter, it
commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the summons here
in the Philippines.
In Brown v. Brown,41 the defendant was previously a resident of the Philippines. Several days
after a criminal action for concubinage was filed against him, he abandoned the Philippines.
Later, a proceeding quasi in rem was instituted against him. Summons in the latter case was
served on the defendants attorney-in-fact at the latters address. The Court held that under the
facts of the case, it could not be said that the defendant was still a resident of the Philippines
because he ha[d] escaped to his country and [was] therefore an absentee in the Philippines. As
such, he should have been summoned in the same manner as one who does not reside and is
not found in the Philippines.
Similarly, HERAS, who was also an absentee, should have been served with summons in the
same manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of
Court providing for extraterritorial service will not apply because the suit against him was in
personam. Neither can we apply Section 18, which allows extraterritorial service on a resident

G.R. No. 102998 July 5, 1996
BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS and ROBERTO M. REYES, respondents.
VITUG, J.:p
The case at bar is a suit for replevin and damages. The petition for review on certiorari assails
the decision of the Court of Appeals1 in CA-G.R. CV No. 23605 affirming that of the Regional
Trial Court of Manila, Branch
XX,2 which has disposed of its Civil Case No. 87-42270 in this wise:
WHEREFORE, the case against defendant-spouses (sic) Reynaldo Manahan is hereby
dismissed without prejudice, for failure to prosecute. Plaintiff having failed to show the liability of
defendant John Doe in the person of Roberto M. Reyes, the case against the latter should
likewise be dismissed. Moreover, plaintiff is hereby directed to return the vehicle seized by virtue
of the order of seizure issued by this Court with all its accessories to the said Roberto M. Reyes.3
The decisions of both the appellate court and the court a quo are based on a like finding of the
facts hereinafter briefly narrated.
The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a promissory
note4 binding themselves to pay Carmasters, Inc., the amount of P83,080.00 in thirty-six monthly
installments commencing 01 July 1980. To secure payment, the Manahan spouses executed a
deed of chattel mortgage5 over a motor vehicle, a Ford Cortina 1.6 GL, with motor and serial
number CUBFWE-801010. Carmasters later assigned6 the promissory note and the chattel
mortgage to petitioner BA Finance Corporation with the conformity of the Manahans. When the
latter failed to pay the due installments, petitioner sent demand letters. The demands not having
been heeded, petitioner, on 02 October 1987, filed a complaint for replevin with damages against
the spouses, as well as against a John Doe, praying for the recovery of the vehicle with an
alternative prayer for the payment of a sum of money should the vehicle not be returned. Upon
petitioner's motion and the filing of a bond in the amount of P169,161.00 the lower court issued
a writ of replevin. The court, however, cautioned petitioner that should summons be not served
on the defendants within thirty (30) days from the writ's issuance, the case would be dismissed
to failure to prosecute.7 The warning was based on what the court perceived to be the deplorable
practice of some mortgagees of "freezing (the) foreclosure or replevin cases" which they would
so "conveniently utilize as a leverage for the collection of unpaid installments on mortgaged
chattels."8
The service of summons upon the spouses Manahan was caused to be served by petitioner at
No. 35 Lantana St., Cubao, Quezon City. The original of the summons had the name and the
signature of private respondent Roberto M. Reyes indicating that he received, on 14 October
1987, a copy of the summons and the complaint.9 Forthwith, petitioner, through its Legal
Assistant, Danilo E. Solano, issued a certification to the effect that it had received from Orson
R. Santiago, the deputy sheriff of the Regional Trial Court of Manila, Branch 20, the Ford Cortina
seized from private respondent Roberto M. Reyes, the John Doe referred to in the
complaint, 10 in Sorsogon, Sorsogon. 11 On 20 October 1987, the lower court came out with an
order of seizure.
Alleging possession in good faith, private respondent filed, on 26 October 1987, a motion for an
extension of time within which to file his answer and/or a motion for intervention. The court
granted the motion.
A few months later, or on 18 February 1988, the court issued an order which, in part, stated:
Perusal of the record shows that an order for the seizure of personal property was issued on
October 20, 1987 in pursuance to a previous order of the Court dated October 13, 1987.
However, to date, there is no showing that the principal defendants were served with summons
inspite of the lapse of four (4) months.
Considering, this is a replevin case and to forestall the evils that arise from this practice, plaintiff
failing to heed the Order dated October 13, 1987, particularly second paragraph thereof, the
above-entitled case is hereby ordered DISMISSED for failure to prosecute and further ordering
the plaintiff to return the property seized with all its accessories to defendant John Doe in the
person of Roberto M. Reyes.
SO ORDERED. 12
On 26 February 1988, petitioner filed a notice of dismissal of the case "without prejudice and
without pronouncement as to costs, before service of Summons and Answer, under Section 1,
Rule 17, of the Rules of Court." 13 It also sought in another motion the withdrawal of the replevin
bond. In view of the earlier dismissal of the case (for petitioner's failure to prosecute), the court,
on 02 March 1988, merely noted the notice of dismissal and denied the motion to withdraw the
replevin bond considering that the writ of replevin had meanwhile been implemented. 14
On 09 March 1988, private respondent filed a motion praying that petitioner be directed to comply
with the court order requiring petitioner to return the vehicle to him. In turn, petitioner filed, on 14
March 1988, a motion for the reconsideration of the orders of 18 February 1988 and 02 March
1988 contending that: (a) the dismissal of the case was tantamount to adjudication on the merits
that thereby deprived it with the remedy to enforce the promissory note, the chattel mortgage
and the deed of assignment, under Section 3, Rule 117, of the Rules of Court; (b) the order to
return the vehicle to private respondent was a departure from jurisprudence recognizing the right
of the mortgagor to foreclose the property to respond to the unpaid obligation secured by the
chattel mortgage, and (c) there were no legal and factual bases for the court's view that the filing
of the replevin case was "characterized (by) evil practices." 15
On 20 April 1988, the court granted petitioner's motion for reconsideration and accordingly
recalled the order directing the return of the vehicle to private respondent, set aside the order
dismissing the case, directed petitioner "to cause the service of summons together with a copy
of the complaint on the principal defendants within five (5) days from receipt" 16 thereof at
petitioner's expense, and ordered private respondent to answer the complaint.
A few months later, or on 02 August 1988, petitioner filed a motion to declare private respondent
in default. The court granted the motion on that same day and declared private respondent "in
default for his failure to file the . . . answer within the reglementary period." 17 The court likewise
granted petitioner's motion to set the case for the presentation, ex parte, of evidence. Petitioner,
thereupon, submitted the promissory note, the deed of chattel mortgage, the deed of
assignment, a statement of account in the name of Florencia Manahan and two demand letters.
On 27 February 1989, the trial court rendered a decision dismissing the complaint against the
Manahans for failure of petitioner to prosecute the case against them. It also dismissed the case
against private respondent for failure of petitioner to show any legal basis for said respondent's
liability. The court ratiocinated:
. . . . Roberto M. Reyes is merely ancillary debtor in this case. The defendant spouses Manahan
being the principal debtor(s) and as there is no showing that the latter has been brought before
the jurisdiction of this court, it must necessarily follow that the plaintiff has no cause of action
against said Roberto M. Reyes herein before referred to as defendant John Doe. Under the
circumstances, it is incumbent upon the plaintiff to return the seized vehicle unto the said Roberto
M. Reyes. 18
In its appeal to the Court of Appeals, petitioner has asserted that a suit for replevin aimed at the
foreclosure of the chattel is an action quasi in rem which does not necessitate the presence of
the principal obligors as long as the court does not render any personal judgment against them.
This argument did not persuade the appellate court, the latter holding that —
. . . . In action quasi in rem an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the property, such
as proceedings having for their sole object the sale or disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy (Sandejas vs. Robles,
81 Phil. 421). In the case at bar, the court cannot render any judgment binding on the defendants
spouses for having allegedly violated the terms and conditions of the promissory note and the
contract of chattel mortgage on the ground that the court has no jurisdiction over their persons
no summons having been served on them. That judgment, it rendered, is void for having denied
the defendants spouses due process of law which contemplates notice and opportunity to be
heard before judgment is rendered, affecting one's person or property (Macabingkil vs. Yatco,
26 SCRA 150, 157).
It is next contended by appellant that as between appellant, as mortgagee, and John Doe, whose
right to possession is dubious if not totally non-existent, it is the former which has the superior
right of possession.
We cannot agree.
It is an undisputed fact that the subject motor vehicle was taken from the possession of said
Roberto M. Reyes, a third person with respect to the contract of chattel mortgage between the
appellant and the defendants spouses Manahan.
The Civil Code expressly provides that every possessor has a right to be respected in his
possession (Art. 539, New Civil Code); that good faith is always presumed, and upon him who
alleges bad faith on the part of a possessor rests the burden of proof (Art. 527, ibid.); and that
the possession of movable property acquired in good faith is equivalent to a title; nevertheless,
one who has lost any movable or has been unlawfully deprived thereof, may recover it from the
person in possession of the same (Art. 559, ibid.). Thus, it has been held that a possessor in
good faith is entitled to be respected and protected in his possession as if he were the true owner
thereof until a competent court rules otherwise (Chus Hai vs. Kapunan, 104 Phil. 110; Yu, et al.
vs. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did not err in
holding that the complaint does not state any cause of action against Roberto M. Reyes, and in
ordering the return of the subject chattel to him. 19
The appellate court, subsequently, denied petitioner's motion for reconsideration.
In the instant appeal, petitioner insists that a mortgagee can maintain an action for replevin
against any possessor of the object of a chattel mortgage even if the latter were not a party to
the mortgage.
Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It
may refer either to the action itself, i.e., to regain the possession of personal chattels being
wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow
the plaintiff to retain the thing during the pendency of the action and hold it pendente lite. 20 The
action is primarily possessory in nature and generally determines nothing more than the right of
possession. Replevin is so usually described as a mixed action, being partly in rem and partly in
personam — in rem insofar as the recovery of specific property is concerned, and in
personam as regards to damages involved. As an "action in rem," the gist of the replevin action
is the right of the plaintiff to obtain possession of specific personal property by reason of his
being the owner or of his having a special interest therein. Consequently, the person in
possession of the property sought to be replevied is ordinary the proper and only necessary
party defendant, and the plaintiff is not required to so join as defendants other persons claiming
a right on the property but not in possession thereof. Rule 60 of the Rules of Court allows an
application for the immediate possession of the property but the plaintiff must show that he has
a good legal basis, i.e., a clear title thereto, for seeking such interim possession.
Where the right of the plaintiff to the possession of the specific property is so conceded or
evident, the action need only be maintained against him who so possesses the property. In rem
actio est per quam rem nostram quae ab alio possidetur petimus, et semper adversus eum est
qui rem possidet. In Northern Motors, Inc. vs. Herrera, 22 the Court has said:
There can be no question that persons having a special right of property in the goods the
recovery of which is sought; such as a chattel mortgagee, may maintain an action for replevin
therefor. Where the mortgage authorizes the mortgagee to take possession of the property on
default, he may maintain an action to recover possession of the mortgaged chattels from the
mortgagor or from any person in whose hands he may find them. 23
In effect then, the mortgagee, upon the mortgagor's default, is constituted an attorney-in-fact of
the mortgagor enabling such mortgagee to act for and in behalf of the owner. Accordingly, that
the defendant is not privy to the chattel mortgage should be inconsequential. By the fact that the
object of replevin is traced to his possession, one properly can be a defendant in an action for
replevin. It is here assumed that the plaintiffs right to possess the thing is not or cannot be
disputed.
In case the right of possession on the part of the plaintiff, or his authority to claim such
possession or that of his principal, is put to great doubt (a contending party might contest the
legal bases for plaintiffs cause of action or an adverse and independent claim of ownership or
right of possession is raised by that party), it could become essential to have other persons
involved and accordingly impleaded for a complete determination and resolution of the
controversy. For instance, in Servicewide Specialists, Inc., vs. Court of Appeals, et al., G.R. No.
103301, 08 December 1995, this Court ruled.
While, in its present petition for review on certiorari, Servicewide has raised a number of points,
the crucial issue still remains, however, to be whether or not an action filed by the mortgagee for
replevin to effect a foreclosure of the property covered by the chattel mortgage would require
that the mortgagor be so impleaded as an indispensable party thereto.
Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of possession of
personal property, to apply for a writ of replevin if it can be shown that he is the owner of the
property claimed . . . or is entitled to the possession thereof.' The plaintiff need not be the owner
so long as he is able to specify his right to the possession of the property and his legal basis
therefor. The question then, insofar as the matter finds relation to the instant case, is whether or
not the plaintiff (herein petitioner) who has predicated his right on being the mortgagee of a
chattel mortgage should implead the mortgagor in his complaint that seeks to recover
possession of the encumbered property in order to effect its foreclosure.
The answer has to be in the affirmative. In a suit for replevin, a clear right of possession must
be established. A foreclosure under a chattel mortgage may properly be commenced only once
there is default on the part of the mortgagor of his obligation secured by the mortgage. The
replevin in the instant case has been sought to pave the way for the foreclosure of the object
covered by the chattel mortgage. The conditions essential for that foreclosure would be to show,
firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor. These
requirements must be established since the validity of the plaintiffs exercise of the right of
foreclosure are inevitably dependent thereon. It would thus seem, considering particularly an
adverse and independent claim of ownership by private respondent that the lower court acted
improvidently when it granted the dismissal of the complaint against Dollente, albeit on
petitioner's (then plaintiff) plea, on the ground that the "non-service of summons upon Ernesto
Dollente (would) only delay the determination of the merits of the case, to the prejudice of the
parties." In Imson v. Court of Appeals, we have explained:
. . . . An indispensable party is one whose interest will be affected by the court's action in the
litigation, and without whom no final determination of the case can be had. The party's interest
in the subject matter of the suit and in the relief sought are so inextricably intertwined with the
other parties' that his legal presence as a party to the proceeding is an absolute necessity. In
his absence there cannot be a resolution of the dispute of the parties before the court which is
effective, complete, or equitable.
Conversely, a party is not indispensable to the suit if his interest in the controversy or subject
matter is distinct and divisible from the interest of the other parties and will not necessarily be
prejudiced by a judgment which does complete justice to the parties in court. He is not
indispensable if his presence would merely permit complete relief between him and those
already parties to the action or will simply avoid multiple litigation.
Without the presence of indispensable parties to a suit or proceeding, a judgment of a court
cannot attain real finality. (Footnotes omitted.)
A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to the possession of the
property unless and until the mortgagor defaults and the mortgagee thereupon seeks to
foreclose thereon. Since the mortgagee's right of possession is conditioned upon the actual fact
of default which itself may be controverted, the inclusion of other parties like the debtor or the
mortgagor himself, may be required in order to allow a full and conclusive determination of the
case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the
mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage
that, among other things, can properly uphold the right to replevy the property. The burden to
establish a valid justification for that action lies with the plaintiff. An adverse possessor, who is
not the mortgagor, cannot just be deprived of his possession, let alone be bound by the terms
of the chattel mortgage contract, simply because the mortgagee brings up an action for replevin.
The appellate court, accordingly, acted well in arriving at its now questioned judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED No costs.
SO ORDERED
[G.R. No. L-30738. July 30, 1982.]
BOARD OF LIQUIDATORS, TRUSTEE OF THE LAND SETTLEMENT AND DEVELOPMENT
CORPORATION, Plaintiff-Appellant, v. JOSE ZULUETA, Defendant-Appellee.
Dominador Garin, for Plaintiff-Appellant.
Jesus S. Santelices, for Defendant-Appellee.
SYNOPSIS
A decision of the trial court in a civil case, based on an amicable settlement between the parties
and ordering the defendant to pay to the plaintiff corporation a certain sum of money, became
final and executory on November 23, 1955. The decision not having been enforced, plaintiff-
appellant, as trustee of the said corporation, filed an action for revival of the judgment on March
5, 1965, which was however dismissed for failure to prosecute due to inability to serve summons
on the defendant-appellee who proved rather elusive. A second action for revival of the same
judgment was filed on May 10, 1966 or 14 days after plaintiff-appellant received notice of the
denial of its motion for reconsideration of the dismissal of the first revival suit. The action was
likewise dismissed on the wound of prescription, relying on the rulings in Fruto (31 Phil. 130)
and Jureidini (71 Phil. 25) that the running of the period of limitation is not interrupted by an
action filed within the said period where the said action is dismissed due to abandonment or
waiver by the plaintiff of its claim. Hence, this petition.
The Supreme Court held that the filing of the second revival action was well within the period
allowed by the statute of limitations pursuant to the principles that prescription of actions is
interrupted when they are filed before the court and that such interruption lasts during the
pendency of the action; and that the rulings in Fruto and Jureidini are not applicable to this case
because the petitioner-appellant may not be deemed to have abandoned or waived its claim.
Judgment reversed and another one entered.
SYLLABUS
1. CIVIL LAW; PRESCRIPTION OF ACTIONS BASED UPON A JUDGMENT;
PRESCRIPTIVE PERIOD STARTS FROM TIME JUDGMENT BECOMES FINAL AND
EXECUTORY; CASE AT BAR. — Article 1144 of the New Civil Code provides that an action
based upon a judgment "must be brought within ten (10) years from the time the right of action
accrues." The prescriptive period starts from the time that the judgment becomes final and
executory.
2. ID.; ID.; ID.; PRINCIPLES REGARDING INTERRUPTION OF RUNNING OF PERIOD;
APPLICABLE IN CASE AT BAR. — Article 1155 of the New Civil Code expressly provides that
the "prescription of action is interrupted when they are filed before the court . . ." (Sotelo v.
Dizon, 67 Phil. 537; Cabrera v. Tianco, 8 SCRA 582) Such interruption lasts during the
pendency of the action. (Florendo v. Organo. 90 Phil. 483.) These principles apply to the
prescription of the action to revive or enforce a judgment.
3. ID.; ID.; RULINGS IN FRUTO AND JUREIDINI NO APPLICABLE TO CASE AT BAR. —
When the trial court relied on the rulings in Conspecto v. Fruto, Et Al., 31 Phil. 148 and Oriental
Commercial Co., Inc. v. Jureidini Inc., et at., 71 Phil. 25, said reliance is misplaced, the facts in
the said cases being different from those appearing in the one under consideration. In Fruto, it
was held that the running of the period of limitations was not interrupted by an action filed
within the said period because the said action was discontinued by "its dismissal or voluntary
abandonment by the plaintiff." In the case under consideration, the first action for revival, Civil
Case No. 60112, was dismissed not by reason of abandonment but primarily due to the failure
to serve summons on defendant- appellee who had somehow managed to evade being placed
under the jurisdiction of the Court. Nor may the ruling in Jureidini defeat herein plaintiff-
appellant’s cause of action where, as in Fruto, the filing of the actions within the prescriptive
period was considered as not interrupting the running of the period of limitation due to the
circumstance that the plaintiff is deemed to have abandoned or waived its claim. Subsequent
acts of plaintiff-appellant after the dismissal of Civil Case 60112 adequately negated any
supposed intention to waive or abandon its claim against Defendant-Appellee.
4. ID.; ID.; RULINGS IN FRUTO AND JUREIDINI OF DOUBTFUL APPLICABILITY UNDER
THE NEW CIVIL CODE. — The cases of Fruto (31 Phil. 130) and Jureidini (71 Phil. 25) relied
upon by the trial court were both decided when the statute of limitations was contained in the
old Code of Civil Procedure, Act No. 190, with no specific provision as that now contained in
Article 1155 of the Civil Code, that "the prescription of actions is interrupted when they are filed
in court." It is accordingly extremely doubted if the rulings in Fruto and Jureidini may still be
availed of to uphold the view that the period of prescription is not interrupted by an action
which the plaintiff shall abandon or otherwise fail to prosecute. The language of Article 1155 is
unqualified and does not give room for making a distinction as to the effect of the filing of an
action in court on the running of the period of prescription.
5. ID.; ID.; WRITTEN EXTRA-JUDICIAL DEMANDS INTERRUPT RUNNING OF
PRESCRIPTIVE PERIOD. — Written extra-judicial demands made by plaintiff-appellant upon
defendant-appellee by means of letters also produced the result of interrupting the period of
prescription of the action for revival of judgment in the instant case.
6. REMEDIAL LAW; CIVIL PROCEDURE; REMAND OF CASE TO COURT OF ORIGIN FOR
FURTHER PROCEEDINGS UNNECESSARY IN CASE AT BAR. — Although the trial court
erred in dismissing the case, the Court does not find it necessary to remand the case to the
court of origin for further proceedings since in the decision rendered by the trial court, it made
a finding of the material facts upon which the plaintiff’s cause of action is based. The facts
found by the trial court suffice to justify the rendition of a decision on the merits which the trial
court failed to do in view of its ruling that the action is barred by the statute of limitations.
DECISION
VASQUEZ, J.:
This is an appeal by petition for review from a decision of the Court of First Instance of Manila
dismissing the complaint filed by plaintiff-appellant against defendant-appellee in Civil Case
No. 65341.
On November 23, 1955, a decision was rendered by the Court of First Instance of Manila,
Branch VII, in Civil Case No. 22237, entitled "Land Settlement and Development Corporation,
Plaintiff, versus Jose Zulueta, Defendant", based on an amicable settlement between the
parties, pursuant to which defendant-appellee was ordered to pay the Land Settlement and
Development Corporation the sum of P10,391.62 with interest at four (4%) per cent per annum
from January 13, 1948 until the same is fully paid in the manner stated in the amicable
settlement and subject to the terms thereof, without pronouncement as to costs.
On March 5, 1965, herein plaintiff-appellant, as trustee of the Land Settlement and
Development Corporation, filed a complaint in the Court of First Instance of Manila against
defendant-appellee, docketed as Civil Case No. 60112 to revive the judgment rendered in Civil
Case No. 22237 which had not been enforced by that time. Difficulty was encountered in
serving summons on defendant-appellee, thereby prompting the trial court to dismiss Civil
Case No. 60112 in an order dated March 12, 1966, reading as follows:
"It appearing that this case has long been pending with this Court, the same having been filed
way back on March 5, 1965, and since then defendant has not yet been served with summons,
and notwithstanding such fact, no further action has been taken by plaintiff; for lack of interest
to prosecute, the instant case is hereby DISMISSED without prejudice, and without
pronouncement as to costs.
IT IS SO ORDERED." (Rollo, p. 27.)
Plaintiff-appellant’s motion for reconsideration of the order of dismissal having been denied,
plaintiff-appellant filed a new complaint, docketed as Civil Case No. 66341 which is the present
action and which is also for revival and enforcement of the judgment rendered in Civil Case
No. 22237.
Defendant-appellee filed a motion to dismiss the complaint in Civil Case No. 65341 on the
ground that plaintiff-appellant’s cause of action had already prescribed. On January 12, 1967,
the trial court denied the motion to dismiss for the reason that the filing of Civil Case No. 60112
on March 5, 1965 interrupted the running of the period of prescription, and it started to run
again only after its dismissal on March 12, 1966; and, therefore, when Civil Case No. 65341
was filed on May 10, 1966, only 9 years, 5 months and 11 days had expired from the time that
the judgment in Civil Case No. 22237 had become final and executory. Defendant-appellee’s
repeated attempts to secure a reconsideration of the denial of his motion to dismiss failed to
achieve a favorable result. Defendant-appellee filed an answer to the complaint with a
counterclaim.
On September 19, 1968, after plaintiff-appellant had presented its evidence, the trial court
reset the continuation of the hearing on November 28, 1968 for the presentation of the
evidence of defendant-appellee. On the last mentioned date, the defendant-appellee failed to
appear and the trial court declared the case submitted for decision.
In a decision dated December 27, 1968, the trial court dismissed Civil Case No. 65341. The
said dismissal was reasoned out as follows:
"The plaintiff contends that the filing on March 5, 1965 of the first action for revival of judgment
interrupted the period of prescription. Upon the other hand, the defendant, arguing that the
dismissal of the said action for lack of prosecution did not stop the period of prescription, which
is ten years from November 23, 1955, has cited the decision in Conspecto v. Fruto, Et Al., 31
Phil. 144, wherein it was held that
‘While the commencement of the action would of course, stop the running of the statute of
limitations, its dismissal or voluntary abandonment by plaintiff would leave the parties in
exactly the same position as if no action had been commenced at all. Said action by reason of
its dismissal or abandonment took no time out of the period of prescription.’
and the decision in Oriental Commercial Co., Inc. v. Jureidini, Inc., Et Al., 71 Phil. 25, to the
effect that
‘Cuando se entabla una accion dentro del plazo de prescripcion y se desiste de ella despues,
o se sobresee sin condiciones, por una razon u otra, no hace que la accion’s que se entable
mas tarde, pero ya fuera del periodo de prescripcion, se pueda considerar como presentada
dentro de dicho periodo porque quiere contares con la accion entablada con anterioridad. La
falta de gestion de la recurrente por cuya causa de desestimaron sus demandas segunda y
tercera, no puede interpretarse sino como una renuncia de su parte; y, al ejercitar su ultima
accion no se ha colocado en la misma situacion en que antes se hallaba al ejercitar sus tres
anteriores acciones. Este es el mismo criterio que expresamos cuando se nos presento una
cuestion analoga en la causa de Conspecto contra Fruto, 31 Jur. Fil., 155.’
In the opinion of the Court, the stand of the defendant is well taken. It has not been intimated
by the plaintiff that the authorities relied upon by the defendant had been overruled by any
subsequent pronouncement of the Supreme Court. As the decision sought to be revived was
rendered and became final and executory on November 23, 1955, and the present action was
instituted on May 10, 1966, or more than the ten-year period provided for in Article 1144 of the
Civil Code, the said action has already prescribed. As held in Conspecto v. Fruto, Et Al., cited,
in Commercial Co., Inc. v. Jureidini, Inc., Et Al., the dismissal of the action filed on March 5,
1965 left the parties in exactly the same position as if no action had been commenced at all,
and took no time out of the period of prescription.
WHEREFORE, the complaint is dismissed without pronouncement as to costs.
SO ORDERED."
A motion for the reconsideration of the said decision was denied by the trial court. On August
4, 1969, plaintiff-appellant filed the present petition for review. The petition was given due
course in Our Resolution of August 6, 1969 and the petitioner filed its brief as plaintiff-
appellant. No brief was filed in behalf of Defendant-Appellee.
The only issue raised in this appeal is whether or not plaintiff-appellant’s cause of action in
Civil Case No. 65341 had already prescribed.
Article 1144 of the New Civil Code provides that an action based upon a judgment "must be
brought within ten (10), years from the time the right of action accrues." The prescriptive period
starts from the time that the judgment becomes final and executory. In the case at bar, the
decision sought to be enforced, to wit, that rendered in Civil Case No. 22237, being based on a
compromise agreement, the same became final and executory on the date of its rendition on
November 23, 1955.
There is no question that when the first revival action, docketed as Civil Case No. 60112, was
filed on March 5, 1965, only 9 years, 3 months and 12 days had elapsed from November 23,
1955. It is also a fact that when the second action to revive judgment was filed on May 10,
1965, it was already more than 10 years from the finality of the decision rendered in Civil Case
No. 22237 which is sought to be revived therein. These circumstances render it necessary to
determine whether the filing of Civil Case No. 60112, the first action to revive judgment tolled
the running of the 10-year prescriptive period to enforce the subject judgment. In the
affirmative case, it would follow that the filing of Civil Case No. 65341 on May 10, 1966 was
well within the period allowed by the statute of limitations.
Article 1155 of the New Civil Code expressly provides that the "prescription of action is
interrupted when they are filed before the court . . ." (Sotelo v. Dizon, 67 Phil. 537; Cabrera v.
Tianco, 8, SCRA 582.) Such interruption lasts during the pendency of the action. (FIorendo v.
Organo, 9 Phil. 483.)
These principles apply to the prescription of the action to revive or enforce a judgment. (Marc
Donnelly v. Court of First Instance of Manila, 44 SCRA 381.) The facts in the last cited case
are almost similar to the present action. In Marc Donnelly, a judgment was rendered by the
Court of First Instance of Manila which became final on August 5, 1957. On July 8, 1967, an
action was filed to revive the judgment. Due to the fact that summons could not be served on
the defendant despite the exercise of due diligence by the plaintiff, the revival action was
dismissed "for failure to prosecute, but the dismissal shall be without prejudice." Copy of the
order of dismissal was received by the plaintiff on March 19, 1969. Twelve (12) days later or on
March 31, 1969, a second action for revival was filed. The second action was dismissed by the
trial court on the ground that the said revival action was instituted after the lapse of 10 years
from the time that the decision sought to be revived had become final and executory.
Resolving the issue of whether or not the first action for revival of judgment interrupted the
period of prescription, We reversed the dismissal of the second action to revive judgment upon
the following considerations:
"The sole issue to be resolved herein is whether or not prescription has set in to bar the filing
by petitioner of his second action to revive the judgment in Civil Case No. 23466. An action for
the revival of a judgment prescribes in ten (10) years (Art. 1144[3], Civil Code). The ten-year
period is counted either from the date the judgment became final or from the date of its entry
(Vda. de Decena v. De los Angeles, etc., Et Al., L-29317, May 29, 1971, 39 SCRA 95, 99). The
prescription of an action is interrupted, among others, by its filing before the court (Art. 1155,
Civil Code).
Applying the foregoing tenets to the case at bar, we find that petitioner’s filing of the first action
for revival of the judgment in Civil Case No. 23466 was well within the ten-year prescriptive
period. Final judgment was entered by the Court of Appeals on August 5, 1957. Petitioners
filed Civil Case No. 70028 (his first action to revive the judgment) on July 8, 1967. Therefore,
as of the latter date, only nine (9) years, eleven (11) months and three (3) days had elapsed.
The ten-year prescriptive period was effectively suspended by the filing of Civil Case No.
70028.
Let us now consider the second complaint (Civil Case No. 76166) for revival of the same
judgment in Civil Case No. 23466, in which complaint petitioner also alleged that final entry of
the judgment was made on August 5, 1957. The first such action (Civil Case No. 70028) was
dismissed by the court without prejudice; and copy of the dismissal order was received by
petitioner on March 19, 1969. On March 31, 1969, petitioner filed the second action for revival
of the judgment. When a case is ordered dismissed without prejudice, the plaintiff may file his
complaint against the same defendant in a separate action, even if the order has already
become final and executory (Rapadaz Vda. de Rapisura v. Nicolas, etc., Et Al., L-22594, April
29, 1966, 16 SCRA 798, 801). As it is, the second case to revive the judgment was filed even
before the order of dismissal in the first case could become final, for only twelve (12) days had
expired between March 19, 1969, when petitioner received notice of the dismissal order, and
March 31, 1969, when he filed the second motion. In any event, the dismissal of the first case
being without prejudice, the filing of the second action was still within the original period of ten
(10) years. At any rate, when the defendant’s address cannot with due diligence be
ascertained and no property of his can be found, the period of prescription is tolled under
article 1108(2) of the new Civil Code. In the premises, our conclusion must necessarily be that
the trial court committed a reversible error in dismissing Civil Case No. 76166 on the ground of
prescription." (44 SCRA pp. 383-384.)
As may be noted from the decision dismissing Civil Case No. 65341, the trial court relied on
the rulings in Conspecto v. Fruto, Et Al., 31 Phil. 148 and Oriental Commercial Co. Inc. v.
Jureidini, Inc., Et. Al. 71 Phil. 25. Said reliance is misplaced, the facts in the said cases being
different from those appearing in the one under consideration. In Fruto, it was held that the
running of the period of limitation was not interrupted by an action filed within the said period
because the said action was discontinued by "its dismissal or voluntary abandonment by the
plaintiff." The decision went on to state that "the real reason for the said dismissal does not
clearly appear of record."
In the case under consideration, the first action for revival, Civil Case No. 60112, was
dismissed not by reason of abandonment. As in the case of Marc Donnelley, the dismissal of
the first revival action as due to the inability to serve summons on the defendant-appellee. This
was because, as stated in the petition for review, the defendant-appellee was so elusive that
when summons was forwarded to his address at Iloilo City, the same was returned unserved
because defendant-appellee was in Manila; and when it was attempted to be served in Manila,
he was supposed to be in Iloilo City. (Rollo, p. 14.)
In Fruto, it is also recognized that the dismissal of an action filed within the prescriptive period
does not necessarily result in the non-interruption of the period of limitation. Thus, it was
declared:chanrobles.com : virtual law library
"Where a suit, commenced within the period of limitation, is abandoned or dismissed by reason
of the death of the plaintiff, the operation of the statute is prevented if the suit is recommenced,
within a reasonable time, by the representatives of the deceased. (Martin v. Archer, 3 Hill,
[S.C.] 211.)" (Italics supplied.)
The plaintiff-appellant may not be accused of having abandoned Civil Case No. 60112. They
asserted due diligence in trying to serve summons on defendant-appellee but unfortunately,
their efforts were thwarted due to the ability of the defendant-appellee to evade service of such
court process on him. Neither may plaintiff-appellant be charged with failure to recommence its
suit within a reasonable time after its dismissal. The record reveals that plaintiff-appellant
received notice of the dismissal of Civil Case No. 60112 on March 21, 1966. Four (4) days
later, or on March 25, 1966, plaintiff-appellant filed a motion for reconsideration of said order of
dismissal. Plaintiff-appellant received the order denying the motion for reconsideration on April
26, 1966. On May 10, 1966, plaintiff-appellant filed its second action for revival, docketed as
Civil Case No. 65341.
Nor may the ruling in Jureidini defeat herein plaintiff-appellant’s cause of action. In Jureidini the
plaintiff filed three (3) cases within the period of prescription, all of which were dismissed, the
first on motion of the plaintiff, and the other two (2) for failure to prosecute. When the fourth
action was filed beyond the prescriptive period, it was held that the act of the plaintiff in failing
to prosecute his first three (3) cases may not be interpreted except as a waiver on its part and
did not place the plaintiff on the same situation where it was before the filing of the first of the
three actions; and, following the view expressed in the analogous case of Conspecto v. Fruto,
31 Phil. 150, the fourth action should be dismissed on the ground of prescription. It is to be
noted that as in Fruto, the filing of the actions within the prescriptive period was considered as
not interrupting the running of the period of limitation due to the circumstance that the plaintiff
is deemed to have abandoned or waived its claim.
As already stated above, herein plaintiff-appellant may not be faulted with having abandoned
its claim against the defendant-appellee which the former had asserted in filing Civil Case No.
60112. The said case was dismissed primarily due to the failure to serve summons on
defendant-appellee who had somehow managed to evade being placed under the jurisdiction
of the Court. Subsequent acts of plaintiff-appellant after the dismissal of Civil Case No. 60112
adequately negated any supposed intention to waive or abandon its claim against Defendant-
Appellee.
It will be noted that the two cases relied upon by the trial court were both decided when the
statute of limitations was contained in the old Code of Civil Procedure, Act No. 190. In said
law, there was no specific provision, as that now contained in Article 1155 of the Civil Code,
that "the prescription of actions is interrupted when they are filed in court." (Florendo v.
Organo, 90 Phil. 483.) It is accordingly extremely doubted if the rulings in Fruto and Jureidini
may still be availed of to uphold the view that the period of prescription is not interrupted by an
action which the plaintiff shall abandon or otherwise fail to prosecute. The language of Article
1155 is unqualified and does not give room for making a distinction as to the effect of the filing
of an action in court or the running of the period of prescription.
The record further reveals that plaintiff-appellant made written extra-judicial demands upon
defendant-appellee by means of letters marked as Exhibits "E-2" and "F", respectively. Such
written extrajudicial demand also produced the result of interrupting the period of prescription.
(Art. 1155, Civil Code; Marella v. Agoncillo, 44 Phil;. 844.)
There can be no serious dispute that the plaintiff Board of Liquidators can prosecute this action
as trustee of the abolished Land Settlement and Development Corporation, known for short as
LASEDECO. The principal issue is whether or not the action has prescribed." (Decision, Rollo,
pp. 79-80.)
The defendant-appellee presented no contradictory evidence, he having failed to appear for
the trial of the case scheduled on November 28, 1968 despite notice, thereby prompting the
trial court to consider the case submitted for decision on the basis of the evidence presented
by the plaintiff. The facts found by the trial court suffice to justify the rendition of a decision on
the merits which the trial court failed to do in view of its ruling that the action is barred by the
statute of limitations.
WHEREFORE, the judgment appealed from is hereby REVERSED AND SET ASIDE. In lieu
thereof, another one is rendered ordering defendant-appellee to pay plaintiff-appellant the sum
of P10,391.62 with interest at four (4%) per cent per annum from January 13, 1948 until full
payment, with costs against Defendant-Appellee.
SO ORDERED.

We are accordingly of the considered view that the trial court erred in dismissing Civil Case
No. 65341. We do not find it necessary, however, to remand the case to the court of origin for
further proceedings. In the decision rendered by the trial court, it made a finding of the material
fact upon which the plaintiff’s cause of action is based. It stated the following:

"It appears from the evidence presented by the plaintiff (the defendant did not present any
evidence) that under date of November 23, 1965, a decision was rendered in Civil Case No.
22237 of the Court of First Instance of Manila, Land Settlement and Development Corporation
versus Jose Zulueta, based on an amicable settlement, ordering the defendant to pay to the
plaintiff the sum of P10,391.62, with interest at 4% per annum from January 13, 1948 (Exhibit
‘A’); that the said judgment has not as yet been satisfied; that as of February 15, 1965, the
outstanding obligation of the defendant is P18,501.97 (Exhibit ‘E’); that demands for payment
were made on the defendant on January 6, 1956 (Exhibit ‘E-2’) and on January 18, 1965
(Exhibit ‘F’).
G.R. No. L-46492 April 26, 1939
RAMON SOTELO, Petitioner, vs. ARSENIO P. DIZON, Judge of First Instance of Manila,
L. PASICOLAN, Sheriff of the City of Manila, and HARRIE S. EVERETT, Respondents.
Jose Sotelo for petitioner.
Duran and Lim for respondents.
IMPERIAL, J.: chanrobles virtual law library
This petition for certiorari assails the legality of the order issued by the respondent judge on
January 5, 1939, directing the sheriff or any of his agents to execute the order of the 3d of said
month appointing R. Marino Corpus receiver, by placing him in possession of the cinematograph
business established in the Savory Theatre, together with its equipment and existing
funds.chanroblesvirtualawlibrary chanrobles virtual law library
On July 22, 1938, the respondent Harrie S. Everett brought civil case No. 53411 in the Court of
First Instance of Manila against Lazarus Joseph, to recover the ownership and possession of
the cinematograph business established in the Fox and Savory theatres, with the equipment and
existing funds. The respondent asked in his complaint that a writ of preliminary injunction be
issued. As the then defendant alleged that the cinematograph business had been transferred by
him to the partnership Joseph Brothers, the respondent Everett amended his complaint by
including as defendants the said partnership and its partners, John Joseph and George Joseph.
Everett dropped out his prayer for preliminary injunction and in his amended complaint asked
that R. Marino Corpus be appointed receiver to take charge of the properties in litigation during
the pendency of the case. On December 16, 1938 the court appointed R. Marino Corpus receiver
of the cinematograph business known as Savoy as well as all its equipment and existing funds,
ordering him to take possession thereof and administer them in accordance with law after having
qualified and filed a bond for P2,000. When the receiver tried to take possession of the properties
entrusted to him, he was met by the petitioner's allegation that he is the owner thereof by
purchase from Joseph Brothers on December 15, 1938. In view of this and of the fact that the
petitioner had refused to deliver the properties, Everett filed a supplementary complaint on
December 23, 1938 including the petitioner as defendant and asking that the order of December
16th appointing a receiver be confirmed. On January 3, 1939 the respondent judge issued an
order allowing the supplementary complaint and at the same time reiterating the order of
December 16, 1938 appointing a receiver. On the 4th of the same month the receiver looked for
the petitioner to require him to give up the properties under receivership, but we unable to locate
him either in his office or in his house as he was informed that the petitioner was sick in the
province. On the same date, January 4, 1939, Everett filed a motion asking that the court order
the sheriff or his agent to place the receiver in possession of the properties. On the 5th of the
said month, the court favorably acted upon the motion, and on the following day, January 6th,
the deputy sheriff went to the Savoy Theatre to make deliver thereof to the receiver, but the
petitioner refused to make delivery and forthwith filed this petition. The petitioner was served
wityh the supplementary complaint in the morning of January 6, 1939 and when he filed the
petition for certiorari in this case he had already been duly summoned. In the same morning of
January 6, 1939 and before his petition for certiorari was filed, the petitioner was likewise notified
of the order of the respondent judge issued on the 5th of the said month directing the sheriff to
place the properties in the receiver's possession.chanroblesvirtualawlibrary chanrobles virtual
law library
The petitioner contends that the order of January 5, 1939, providing for the execution of the other
order of the 3d of the same month and for the placing of the properties in the possession of the
receiver, is illegal because on said date there was yet no pending action against him and
bacause he was not duly served with the supplementary complaint, citing in his support sections
173 and 389 of the Code of Civil Procedure reading as follows:
SEC. 173. Receivers, who may appoint. - A judge of the Supreme Court, or a judge of the Court
of First Instance in which the action is pending, may appoint one or more receivers of the
property, real, personal, or mixed, which is the subject of the action, in the manner and under
the conditions hereinafter provided.chanroblesvirtualawlibrary chanrobles virtual law library
SEC. 389. Commencement of actions. - Civil actions must be commenced by filing a complaint
with the clerk of the court in which the action is to be instituted. The date of the filing of the
complaint upon which process is issued and duly served shall be deemed to be the true time of
the commencement of the action.
The first contention is not justified by the facts because it appears that the supplementary
complaint had been admitted by the court on January 3, 1939, hence, when the order of the 5th
of said month was issued directing the sheriff to place the receiver in possession of the
properties, there was already an action in court against the
petitioner.chanroblesvirtualawlibrary chanrobles virtual law library
As to the second legal question before us, the petitioner argues that he was not yet duly served
with the supplementary complaint when the order of January 5, 1939 was issued, because the
summons only took place on the 6th of the said month, and under section 389 no action in court
was yet pending against him. We find no merit in this contention. Under section 389, a civil action
is deemed legally commenced from the date of the filing and docketing of the complaingt with
the clerk of the Court of First Instance, without taking into account the issuance and service of
the summons. Section 389 of the Code of Civil Procedure is taken from section 405 of the
California Code of Civil Procedure, and the Supreme Court of said State has so interpreted it in
Tinn vs. United States District Attorney (148 Cal., 773); Dowling vs. Comerford (99 Cal.,
204); Ex parte Fil Ki (79 Cal., 584); and Nash vs. El Dorado County (24 Fed. 252; 1 C. J., sec.
403, pp. 1155, 1156).chanroblesvirtualawlibrary chanrobles virtual law library
Under the facts the respondent judge had jurisdiction to issue the orders of January 3 and 5,
1939, and he did not exceed the same or the discretion conferred upon him by law in such cases.
From the same facts it follows that the preliminary injunction obtained by the petitioner in these
proceedings was issued without just cause, wherefor, the petitioner is answerable for damages
which he might have caused the respondent Everett. We reserve to the latter the right to claim
and substantiate said damages in the Court of First Instance where the principal cause is
pending, upon petition which he may present for that
purpose.chanroblesvirtualawlibrary chanrobles virtual law library
For the foregoing reasons, the remedy prayed for is denied, with the cost to the petitioner. The
preliminary injunction issued in this case is set aside. So ordered.
G.R. No. L-17299 July 31, 1963
JOSEFINA POTESTAS CABRERA and CRESENCIA POTESTAS OMULON, plaintiffs-
appellees,
vs.
MARIANO T. TIANO, defendant-appellant.
Pablito C. Pielago for plaintiffs-appellees.
Prud. V. Villafuerte for defendant-appellant.
PAREDES, J.:
Ciriaco Potestas and Gregoria Blanco, were parents of five children, Isabelo, Lourdes,
Clemente, Josefina, and Cresencia. Gregoria died before the second world war, together with
Clemente, single. During their lifetime, the spouses acquired properties, among which was a
parcel of agricultural land, of about seven (7) hectares, located at barrio Manga, municipality of
Tangub, Misamis Occidental, planted to coconuts and fruit-bearing trees. On July 2, 1947,
Ciriaco, the surviving husband and three (3) children (Isabelo, Lourdes and Cresencia),
purportedly sold the above mentioned parcel to herein defendant Mariano T. Tiano, for
P3,500.00. At the time of the sale, Cresencia was a minor, and the other child, Josefina, did not
sign the deed of sale, and did not know about the transaction.
Under date of June 20, 1957, in action for "Partition and Recovery of Real Estate, with Damages"
was filed by Josefina and Cresencia against Tiano. In the complaint, it was alleged that they
were entitled to a portion of the land, since Josefina did not sign the sale and Crescencia was a
minor; that defendant Tiano had usurped the portions belonging to them, to their damage and
prejudice in the amount of P7,000.00, which consisted of their share in the produce of the
property, during the period of defendant's possession.
In answer, defendant claimed that the plaintiffs herein knew of the sale and that he was not
aware of any defect in the title of his vendors. As a Special Defense, defendant alleged that he
was the absolute owner of the land by acquisitive prescription of ten (10) years, from the date of
purchase. Before the trial, the parties agreed to a stipulation of facts, parts of which recite —
xxx xxx xxx
3. That at the time of the sale, appearing in Doc. No. 54, Page 81, Book No. 7, S. 1947, in the
book of Notary Public Basilio Binaoro of Tangub, Mis. Occ., Cresencia was a minor being only
16 years old, while Josefina who was long married and of legal age did not know about the sale
and/or did not give her consent to the same;
4. That the plaintiffs commenced this case against the defendant on June 20, 1957 and the
judicial summons was issued by the Clerk of Court on June 21, 1957, but defendant received
the same on July 2, 1957.
After the hearing, the court a quo rendered the following judgment —
WHEREFORE, premises considered, the court hereby renders judgment declaring that the
plaintiffs are entitled each to 1/8 of the property in question and therefore Judgment is hereby
ordered declaring them entitled to partition the property in question in proportion of 1/8 each of
them, plus damages for both of them in the amount of P1,000.00 and attorney's fees in the
amount of P200.00.
The trial court in the same decision, commissioned the Deputy Provincial Sheriff, to partition the
property in question and render a report within 30 days. Defendant moved for a reconsideration
of the decision, contending that prescription had already set in, and his (defendant's) title, had
become irrevocable, and that the award of damages had no factual and legal basis. The motion
for reconsideration was denied on March 5, 1960. The Commissioner's report, partitioning the
property was submitted on April 11, 1960. Defendant perfected his appeal on May 9, 1960, and
on May 14, 1960, the same was given due course and elevated to this Court.
In claiming that prescription had taken place, appellant insists that the period should be counted
from the date the summons was served on him, which was on July 2, 1957. It was agreed,
however, that the complaint for the recovery of the land in question was presented on June 20,
1957, and the summons was sent out the following day. The Civil Code, provides that—
The prescription of actions is interrupted when they are filed before the court, when there is a
written extra-judicial demand by the creditors, and when there is any written acknowledgment of
the debt of the debtor. (Art. 1155)
Since the sale of the property took place on July 2, 1947, the ten (10) year period within which
to file the action had not yet elapsed on June 20, 1957, when the complaint was presented.
While it is true that the sale in question had taken place before the effectivity of the new Civil
Code and the law then on matter of prescription was Act No. 190, said law, however, contained
no specific provision on the interruption of the prescriptive period; and the established rule then,
as it is the rule now, is that the commencement of the suit prior to the expiration of the applicable
limitation period, interrupts the running of the statute, as to all parties to the action (34 Am. Jur.,
Sec. 247, pp. 202-203; Peralta, et al. v. Alipio, G. R. No. L-8273, Oct. 24, 1955). The fact that
summons was only served on defendant on July 2, 1957, which incidentally and/or coincidentally
was the end of the ten (10) year period, is of no moment, since civil actions are deemed
commenced from date of the filing and docketing of the complaint with the Clerk of Court, without
taking into account the issuance and service of summons (Sotelo v. Dizon, et al., 67 Phil. 573).
The contention that the period was not interrupted, until after defendant received the summons
is, therefore, without legal basis.
Defendant-appellant claims that he had already acquired full ownership of the property in
question because the judicial summons, which could civilly interrupt his possession (Art. 1123,
N.C.C.), was received by him only on July 2, 1957. Conceding, for the purposes of argument,
that the article cited is applicable, still appellant cannot avail himself of acquisitive prescription,
for the simple reason that no finding was made by the trial court that his possession from the
time of the sale (July 2, 1947), was with just title, in good faith, in the concept of an owner, public,
peaceful, adverse and uninterrupted (Arts. 1117 & 1118, N.C.C.). Good faith is a question of fact
which must be proved (Art. 1127, N.C.C.). For the purposes of acquisitive prescription, just title
must also be proved, it is never presumed (Art. 1131, N.C.C.). The factual requisite of adverse
possession do not appear in the stipulation of facts and the trial court did not make findings to
this effect. These circumstances could and/or should have been ventilated, had the appeal been
taken to the Court of Appeals. Defendant, however, having chosen to appeal the decision directly
to this Court, he is deemed to have waived questions of fact and raised only questions of law.
There being no factual finding by the lower court of the presence of the requisites of acquisitive
prescription this Court has to reject, as did the trial court, said defense. Moreover, on July 2,
1957, when the summons was received, the ten (10) years necessary for acquisitive prescription
had not yet elapsed. In fact, said period terminated on that very day.1äwphï1.ñët
As to the award of damages, We find Ourselves devoid of ample authority to review the same,
since it involves appreciation of facts. It cannot be denied, as found by the lower court, that
plaintiffs herein are entitled to a share in the land. Verily, they should also share in the produce,
which, admittedly, was enjoyed by the defendant-appellant herein.
WHEREFORE, the decision appealed from should be, as it is hereby affirmed. Costs against
appellant in both instances.
G.R. No. 75919 May 7, 1987
MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners,
vs.
COURT OF APPEALS, CITY LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS,
ANDREW LUISON, GRACE LUISON and JOSE DE MAISIP, respondents.
Tanjuatco, Oreta and Tanjuatco for petitioners.
Pecabar Law Offices for private respondents.
RESOLUTION
GANCAYCO, J.:
Acting on the motion for reconsideration of the resolution of the Second Division of January
28,1987 and another motion to refer the case to and to be heard in oral argument by the Court En
Banc filed by petitioners, the motion to refer the case to the Court en banc is granted but the
motion to set the case for oral argument is denied.
Petitioners in support of their contention that the filing fee must be assessed on the basis of the
amended complaint cite the case of Magaspi vs. Ramolete. 1 They contend that the Court of
Appeals erred in that the filing fee should be levied by considering the amount of damages
sought in the original complaint.
The environmental facts of said case differ from the present in that —
1. The Magaspi case was an action for recovery of ownership and possession of a parcel of land
with damages.2 While the present case is an action for torts and damages and specific
performance with prayer for temporary restraining order, etc.3
2. In the Magaspi case, the prayer in the complaint seeks not only the annulment of title of the
defendant to the property, the declaration of ownership and delivery of possession thereof to
plaintiffs but also asks for the payment of actual moral, exemplary damages and attorney's fees
arising therefrom in the amounts specified therein. 4 However, in the present case, the prayer is
for the issuance of a writ of preliminary prohibitory injunction during the pendency of the action
against the defendants' announced forfeiture of the sum of P3 Million paid by the plaintiffs for
the property in question, to attach such property of defendants that maybe sufficient to satisfy
any judgment that maybe rendered, and after hearing, to order defendants to execute a contract
of purchase and sale of the subject property and annul defendants' illegal forfeiture of the money
of plaintiff, ordering defendants jointly and severally to pay plaintiff actual, compensatory and
exemplary damages as well as 25% of said amounts as maybe proved during the trial as
attorney's fees and declaring the tender of payment of the purchase price of plaintiff valid and
producing the effect of payment and to make the injunction permanent. The amount of damages
sought is not specified in the prayer although the body of the complaint alleges the total amount
of over P78 Million as damages suffered by plaintiff.5
3. Upon the filing of the complaint there was an honest difference of opinion as to the nature of
the action in the Magaspi case. The complaint was considered as primarily an action for recovery
of ownership and possession of a parcel of land. The damages stated were treated as merely to
the main cause of action. Thus, the docket fee of only P60.00 and P10.00 for the sheriff's fee
were paid. 6
In the present case there can be no such honest difference of opinion. As maybe gleaned from
the allegations of the complaint as well as the designation thereof, it is both an action for
damages and specific performance. The docket fee paid upon filing of complaint in the amount
only of P410.00 by considering the action to be merely one for specific performance where the
amount involved is not capable of pecuniary estimation is obviously erroneous. Although the
total amount of damages sought is not stated in the prayer of the complaint yet it is spelled out
in the body of the complaint totalling in the amount of P78,750,000.00 which should be the basis
of assessment of the filing fee.
4. When this under-re assessment of the filing fee in this case was brought to the attention of
this Court together with similar other cases an investigation was immediately ordered by the
Court. Meanwhile plaintiff through another counsel with leave of court filed an amended
complaint on September 12, 1985 for the inclusion of Philips Wire and Cable Corporation as co-
plaintiff and by emanating any mention of the amount of damages in the body of the complaint.
The prayer in the original complaint was maintained. After this Court issued an order on October
15, 1985 ordering the re- assessment of the docket fee in the present case and other cases that
were investigated, on November 12, 1985 the trial court directed plaintiffs to rectify the amended
complaint by stating the amounts which they are asking for. It was only then that plaintiffs
specified the amount of damages in the body of the complaint in the reduced amount of
P10,000,000.00. 7 Still no amount of damages were specified in the prayer. Said amended
complaint was admitted.
On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to pay the amount
of P3,104.00 as filing fee covering the damages alleged in the original complaint as it did not
consider the damages to be merely an or incidental to the action for recovery of ownership and
possession of real property. 8 An amended complaint was filed by plaintiff with leave of court to
include the government of the Republic as defendant and reducing the amount of damages, and
attorney's fees prayed for to P100,000.00. Said amended complaint was also admitted. 9
In the Magaspi case, the action was considered not only one for recovery of ownership but also
for damages, so that the filing fee for the damages should be the basis of assessment. Although
the payment of the docketing fee of P60.00 was found to be insufficient, nevertheless, it was
held that since the payment was the result of an "honest difference of opinion as to the correct
amount to be paid as docket fee" the court "had acquired jurisdiction over the case and the
proceedings thereafter had were proper and regular." 10 Hence, as the amended complaint
superseded the original complaint, the allegations of damages in the amended complaint should
be the basis of the computation of the filing fee. 11
The Court serves warning that it will take drastic action upon a repetition of this unethical
practice.
To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar
pleadings should specify the amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be considered in the assessment of the
filing fees in any case. Any pleading that fails to comply with this requirement shall not bib
accepted nor admitted, or shall otherwise be expunged from the record.

In the present case no such honest difference of opinion was possible as the allegations of the The Court acquires jurisdiction over any case only upon the payment of the prescribed docket
complaint, the designation and the prayer show clearly that it is an action for damages and fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the
specific performance. The docketing fee should be assessed by considering the amount of Court, much less the payment of the docket fee based on the amounts sought in the amended
damages as alleged in the original complaint. pleading. The ruling in the Magaspi case 14 in so far as it is inconsistent with this pronouncement
is overturned and reversed.
As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed only upon
payment of the docket fee regardless of the actual date of filing in court . 12 Thus, in the present WHEREFORE, the motion for reconsideration is denied for lack of merit.
case the trial court did not acquire jurisdiction over the case by the payment of only P410.00 as SO ORDERED.
docket fee. Neither can the amendment of the complaint thereby vest jurisdiction upon the
Court. 13 For an legal purposes there is no such original complaint that was duly filed which
could be amended. Consequently, the order admitting the amended complaint and all
subsequent proceedings and actions taken by the trial court are null and void.
The Court of Appeals therefore, aptly ruled in the present case that the basis of assessment of
the docket fee should be the amount of damages sought in the original complaint and not in the
amended complaint.
The Court cannot close this case without making the observation that it frowns at the practice of
counsel who filed the original complaint in this case of omitting any specification of the amount
of damages in the prayer although the amount of over P78 million is alleged in the body of the
complaint. This is clearly intended for no other purpose than to evade the payment of the correct
filing fees if not to mislead the docket clerk in the assessment of the filing fee. This fraudulent
practice was compounded when, even as this Court had taken cognizance of the anomaly and
ordered an investigation, petitioner through another counsel filed an amended complaint,
deleting all mention of the amount of damages being asked for in the body of the complaint. It
was only when in obedience to the order of this Court of October 18, 1985, the trial court directed
that the amount of damages be specified in the amended complaint, that petitioners' counsel
wrote the damages sought in the much reduced amount of P10,000,000.00 in the body of the
complaint but not in the prayer thereof. The design to avoid payment of the required docket fee
is obvious.
[G.R. NO. 150780 : May 5, 2006]
NESTLE PHILIPPINES, INC., Petitioner, v. FY SONS, INCORPORATED, Respondent.
DECISION
CORONA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 57299 dated January 11, 2001 which
in turn affirmed with modification the decision of Branch 57 of the Regional Trial Court (RTC) of
Makati City in Civil Case No. 90-3169,2 as well as the CA's resolution3 dated November 14, 2001
which denied petitioner's motion for reconsideration.
The antecedent facts follow.
Petitioner is a corporation engaged in the manufacture and distribution of all Nestle products
nationwide. Respondent, on the other hand, is a corporation engaged in trading, marketing,
selling and distributing food items to restaurants and food service outlets. On December 23,
1998, petitioner and respondent entered into a distributorship agreement (agreement) whereby
petitioner would supply its products for respondent to distribute to its food service outlets. A deed
of assignment was also executed by respondent in favor of petitioner on December 13, 1988,
assigning the time deposit of a certain Calixto Laureano in the amount of P500,000 to secure
respondent's credit purchases from petitioner. A special power of attorney was likewise executed
by Laureano authorizing the respondent to use the time deposit as collateral.
The areas covered by the agreement were Baguio, Dagupan, Angeles, Bulacan, Pampanga,
Urdaneta, La Union, Tarlac and Olongapo. At the end of 1989, the agreement expired and the
parties executed a renewal agreement on January 22, 1990. A supplemental agreement was
executed on June 27, 1990, to take effect on July 1, 1990.
On July 2, 1990, petitioner fined respondent P20,000 for allegedly selling 50 cases of Krem-Top
liquid coffee creamer to Lu Hing Market, a retail outlet in Tarlac. This was purportedly proscribed
by the agreement. Respondent paid the fine. In September 1990, Krem-Top liquid coffee
creamer was sold to Augustus Bakery and Grocery, an act again allegedly in violation of the
agreement. Petitioner imposed a P40,000 fine which respondent refused to pay.
On October 19, 1990, respondent, through counsel, wrote petitioner to complain about the
latter's breaches of their agreement and the various acts of bad faith committed by petitioner
against respondent. Respondent demanded the payment of damages. In turn, on November 5,
1990, petitioner sent respondent a demand letter and notice of termination, alleging that the
latter had outstanding accounts of P995,319.81. When the alleged accounts were not settled,
petitioner applied the P500,000 time deposit as partial payment.
Respondent filed a complaint for damages against petitioner, alleging bad faith.4 According to
respondent:
'[petitioner] made representations and promises of rendering support, including marketing
support, assignment of representatives by way of assistance in its development efforts, and
assurances of income in a marketing area not previously developed. Thus, [respondent] was
lured into executing a distributorship agreement with the [petitioner]'. [Respondent] thereby
invested huge sums of money, time and efforts to abide by such distributorship agreement, and
to develop market areas for [petitioner's] products. Thereafter, the [petitioner] breached the
distributorship agreement by committing various acts of bad faith such as: failing to provide
promotional support; deliberately failing to promptly supply the [respondent] with the stocks for
its orders; intentionally diminishing the [respondent's] sales by supporting a non-distributor; and
concocting falsified charges to cause the termination of the distributorship agreement without
just cause. By such termination, [petitioner] would be able to obtain the market gains made by
[respondent] at the latter's own efforts and expenses. When [respondent] complained to
[petitioner] about the latter's acts of bad faith, the latter terminated the agreement on the
allegation that [respondent] did not pay its accounts. [Petitioner] also seized [respondent's] time
deposit collateral without basis; penalized [respondent] with monetary penalty for the concocted
charge; and unilaterally suspended the supply of stocks to [respondent].5
Respondent sought actual damages of P1,000,000, moral damages of P200,000, exemplary
damages of P100,000, attorney's fees of P100,000, plus the return of the P500,000 time deposit
and costs of suit. In its answer, petitioner interposed a counterclaim for P495,319.81
representing the balance of respondent's overdue accounts, with interest of 2% per month from
the date of default until fully paid, moral damages of P100,000, exemplary damages
of P200,000, attorney's fees of P120,000 and costs of suit.
In a decision dated November 10, 1997, the Makati City RTC ruled in favor of the respondent:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendant ordering the defendant to pay plaintiff the following:
1. The amount of P1,000,000.00 as actual damages sustained by the plaintiff by reason of the
unwarranted and illegal acts of the defendant in terminating the distributorship agreement;
2. The amount of P100,000.00 as exemplary damages;
3. The amount of P100,000.00 as attorney's fees;
The plaintiff however, is hereby ordered to pay the defendant the amount of P53,214,26 (sic)
which amount has been established as the amount the defendant is entitled from the plaintiff.
Three-fourths costs against the defendant.
. AN EXCEPTION TO THE HEARSAY RULE UNDER SECTION 45 (SIC), RULE 130, OF THE
SO ORDERED.6
Petitioner appealed the decision to the CA. On January 11, 2001, the CA rendered a decision
affirming the RTC's decision with modification:
WHEREFORE, the judgment appealed from is AFFIRMED with the following MODIFICATIONS:
(1) the actual damages is INCREASED from P1,000,000.00 to P1,500,000.00;7 and (2) the
amount of P53,214.26 payable by the appellee to the appellant is DELETED.
SO ORDERED.8
Both the CA and the RTC found, among others, that petitioner indeed failed to provide support
to respondent, its distributor; that petitioner unjustifiably refused to deliver stocks to respondent;
that the imposition of the P20,000 fine was void for having no basis; that petitioner failed to prove
respondent's alleged outstanding obligation; that petitioner terminated the agreement without
sufficient basis in law or equity and in bad faith; and that petitioner should be held liable for
damages.
Hence this petition raising the following grounds:
(1)
THE [CA] COMMITTED A GRAVE ERROR IN LAW WHEN IT RULED THAT: "THE
RATIOCINATIONS OF THE APPELLANT AS TO THE APPELLEE'S ALLEGED VIOLATION OF
THE CONTRACT ARE THUS WEAK AND UNCONVINCING" AND "THE APPELLEE'S
ALLEGED NON-PAYMENT AND OUTSTANDING BALANCE OF P995,319.81 WAS NOT
SUFFICIENTLY PROVEN" DESPITE THE FACT THAT FLORENTINO YUE, JR., THE
MANAGER OF THE RESPONDENT ADMITTED IN OPEN COURT IN ANSWER TO THE
QUESTION OF THEN PRESIDING JUDGE PHINNY C. ARAQUIL THAT THE
DISTRIBUTORSHIP AGREEMENT WAS TERMINATED BY YOUR PETITIONER BECAUSE
OF THE UNPAID BALANCE OF THE RESPONDENT OF AROUND P900,000.00.
(2)
THE [CA] COMMITTED A GRAVE ERROR IN LAW IN DISREGARDING THE TESTIMONY OF
THE WITNESS FOR THE PETITIONER, CRISTINA RAYOS WHO PREPARED THE
STATEMENT OF ACCOUNT (EXHIBIT 11) ON THE GROUNDS THAT SHE WAS NOT
INVOLVED IN THE DELIVERY AS SHE WAS ONLY IN CHARGE OF THE RECORDS AND
DOCUMENTS OF ALL ACCOUNTS RECEIVABLES AS PART OF HER DUTIES AS CREDIT
AND COLLECTION MANAGER CONSIDERING THAT THE EVIDENCE PRESENTED WAS
REVISED RULES ON EVIDENCE.
(3)
THE [CA] COMMITTED A GRAVE ERROR IN LAW IN AWARDING TO THE RESPONDENT
ACTUAL DAMAGES IN THE AMOUNT OF P1,000,000.00 AND ORDERING THE REFUND OF
THE AMOUNT OF P500,000.00 REPRESENTING THE TIME DEPOSIT OF THE
RESPONDENT WHICH WAS ASSIGNED AS SECURITY FOR THE RESPONDENT'S CREDIT
LINE BECAUSE THE PETITIONER HAD THE RIGHT TO TERMINATE THE
DISTRIBUTORSHIP AGREEMENT UNDER ART. 1191 OF THE CIVIL CODE AND
PARAGRAPHS 5 AND 22 OF THE DISTRIBUTORSHIP AGREEMENT BECAUSE OF THE
FAILURE OF THE RESPONDENT TO SETTLE ITS ACCOUNT IN THE AMOUNT
OF P995,319.81 AND THAT THE EVIDENCE SUBMITTED BY THE RESPONDENT ON THE
ALLEGED ACTUAL DAMAGES IT SUSTAINED AS A RESULT OF THE TERMINATION OF
THE DISTRIBUTORSHIP AGREEMENT (EXHIBIT 5) AND COMPANION EXHIBITS WERE
MERELY SPECULATIVE AND DID NOT HAVE PROBATIVE VALUE.
(4)
THE [CA] COMMITTED A GRAVE ERROR IN LAW FOR NOT AWARDING TO THE
PETITIONER ITS COUNTERCLAIM.9
On the first issue, petitioner asserts that respondent's witness, Florentino Yue, Jr., a director and
officer of respondent corporation, admitted in open court that the respondent had an unpaid
obligation to petitioner in the amount of "around P900,000."10
Respondent counters that this statement was merely in answer to the question of the presiding
judge on what ground petitioner supposedly terminated the agreement. The witness was not
being asked, nor was he addressing, the truth of such ground. In fact, this witness later testified
that "(petitioner) wrote us back saying that they (had) terminated my contract and that I owe(d)
them something like P900,000."11
Petitioner's argument is palpably without merit and deserves scant consideration. It quoted Mr.
Yue's statement in isolation from the rest of his testimony and took it out of context. Obviously,
Yue's statement cannot be considered a judicial admission that respondent had an unpaid
obligation of P900,000 and that the agreement had been terminated for this reason.
On the second issue, petitioner argues that the CA should not have disregarded the testimony
of petitioner's witness, Cristina Rayos, who prepared the statement of account on the basis of
the invoices and delivery orders corresponding to the alleged overdue accounts of
respondent.12 The CA ruled that petitioner was not able to prove that respondent indeed had
unpaid accounts, saying, among others, that the testimony of Rayos constituted incompetent
evidence:
xxx the appellee's alleged non-payment and outstanding balance of P995,319.81 was not
sufficiently proven.
xxx
Anyway, the appellant's Statement of Account showing such alleged unpaid balance is undated,
and it does not show receipt thereof by the appellee, and when, if such indeed was received.
Moreover, there are no supporting documents to sustain such unpaid accounts. The witness for
the appellant who prepared the Statement, Cristina Rayos, in fact admitted that the Invoices
corresponding to the alleged overdue accounts are not signed. Her explanation was that there
were DO's or Delivery Orders covering the transactions. However, she did not identify the
signatures appearing on the Delivery Orders marked as Exhibits "13-A", "14-A", "15-A" and "16-
A" as the persons who received the goods for the appellant. In any case, she could not have
identified the same, for she was not involved in the delivery, as she is only in charge of the
records and documents on all accounts receivables as part of her duties as Credit and Collection
Manager.13
Petitioner contends that the testimony of Rayos was an exception to the hearsay rule under
Section 43, Rule 130 of the Rules of Court:14
Entries in the course of business. - Entries made at, or near the time of the transactions to which
they refer, by a person deceased, or unable to testify, who was in a position to know the facts
therein stated, may be received as prima facie evidence, if such person made the entries in his
professional capacity or in the performance of duty and in the ordinary or regular course of
business or duty.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Petitioner's contention has no merit.
The provision does not apply to this case because it does not involve entries made in the course
of business. Rayos testified on a statement of account she prepared on the basis of invoices
and delivery orders which she, however, knew nothing about. She had no personal knowledge
of the facts on which the accounts were based since, admittedly, she was not involved in the
delivery of goods and was merely in charge of the records and documents of all accounts
receivable as part of her duties as credit and collection manager.15 She thus knew nothing of the
truth or falsity of the facts stated in the invoices and delivery orders, i.e., whether such deliveries
were in fact made in the amounts and on the dates stated, or whether they were actually received
by respondent. She was not even the credit and collection manager during the period the
agreement was in effect.16 This can only mean that she merely obtained these documents from
another without any personal knowledge of their contents.
The foregoing shows that Rayos was incompetent to testify on whether or not the invoices and
delivery orders turned over to her correctly reflected the details of the deliveries made. Thus, the
CA correctly disregarded her testimony.
Furthermore, the invoices and delivery orders presented by petitioner were self-serving. Having
generated these documents, petitioner could have easily fabricated them. Petitioner's failure to
present any competent witness to identify the signatures and other information in those invoices
and delivery orders cast doubt on their veracity.
Petitioner next argues that respondent did not deny during the trial that it received the goods
covered by the invoices and was therefore deemed to have admitted the same.17 This argument
cannot be taken seriously. From the very beginning, respondent's position was that petitioner
concocted falsified charges of non-payment to justify the termination of their agreement.18 In no
way could respondent be deemed to have admitted those deliveries.
On the third issue, petitioner questions the award of actual damages in the amount
of P1,000,000 and the refund of the P500,000 time deposit, contending that it validly terminated
the agreement because of respondent's failure to pay its overdue accounts.
As discussed above, the CA declared that petitioner was not able to prove that respondent had
unpaid accounts, thus debunking the claim of a valid termination. The CA also held petitioner
guilty of various acts which violated the provisions of the agreement.19 Consequently, for
petitioner's breach of the agreement, the CA awarded actual damages to respondent in the
amount of P1,000,000. Petitioner, other than claiming that it validly terminated the agreement,
did not challenge the findings of the CA that it committed various violations of the agreement.
Hence, there was legal basis for the grant of actual damages.
Petitioner asserts that the documentary evidence presented by respondent to prove actual
damages in the amount of P4,246,015.60 should not have been considered because
respondent's complaint only prayed for an award of P1,000,000. It further contends that the court
acquires jurisdiction over the claim only upon payment of the prescribed docket fee.20
Indeed, a court acquires jurisdiction over the claim of damages upon payment of the correct
docket fees.21 In this case, it is not disputed that respondent paid docket fees based on the
amounts prayed for in its complaint. Respondent adduced evidence to prove its losses. It was
proper for the CA and the RTC to consider this evidence and award the sum of P1,000,000. Had
the courts below awarded a sum more than P1,000,000, which was the amount prayed for, an
additional filing fee would have been assessed and imposed as a lien on the
judgment.22 However, the courts limited their award to the amount prayed for.
Both the RTC and CA found that respondent had satisfactorily proven the factual bases for the
damages adjudged against the petitioner. This is a factual matter binding and conclusive upon
this Court.23 It is well-settled that -
. . . findings of fact of the trial court, when affirmed by the Court of Appeals, are binding upon the
Supreme Court. This rule may be disregarded only when the findings of fact of the Court of
Appeals are contrary to the findings and conclusions of the trial court, or are not supported by
the evidence on record. But there is no ground to apply this exception to the instant case. This
Court will not assess all over again the evidence adduced by the parties particularly where as in
this case the findings of both the trial court and the Court of Appeals completely coincide.24
Likewise, the determination of the amount of damages commensurate with the factual findings
upon which it is based is primarily the task of the trial court.25 Considering that the amount
adjudged is not excessive, we affirm its correctness.
Moreover, given that petitioner was not able to prove that respondent had unpaid accounts in
the amount of P995,319.81, the seizure of the P500,000 time deposit was improper. As a result,
the refund of this amount with interest is also called for.
Finally, petitioner's counterclaims are necessarily without merit. It failed to prove the alleged
outstanding accounts of respondent. Accordingly, it is not entitled to the supposed unpaid
balance of P495,319.81 with interest.

Petitioner, being at fault and in bad faith, and there being no proof that respondent was guilty of
any wrongdoing, cannot claim moral and exemplary damages and attorney's fees from
respondent.
In fine, we find no error in the assailed decision and resolution of the CA. We therefore affirm
them.
WHEREFORE, the petition is hereby DENIED for lack of merit. The decision of the Court of
Appeals dated January 11, 2001 and resolution dated November 14, 2001 in CA-G.R. CV No.
57299 are hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.

G.R. Nos. 79937-38 February 13, 1989
SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, petitioners,
vs.
HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial Court,
Quezon City and MANUEL CHUA UY PO TIONG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles Law Offices for petitioners.
Tanjuatco, Oreta, Tanjuatco, Berenguer & Sanvicente Law Offices for private respondent.
GANCAYCO, J.:
Again the Court is asked to resolve the issue of whether or not a court acquires jurisdiction over
a case when the correct and proper docket fee has not been paid.
On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a complaint
with the Regional Trial Court of Makati, Metro Manila for the consignation of a premium refund
on a fire insurance policy with a prayer for the judicial declaration of its nullity against private
respondent Manuel Uy Po Tiong. Private respondent as declared in default for failure to file the
required answer within the reglementary period.
On the other hand, on March 28, 1984, private respondent filed a complaint in the Regional Trial
Court of Quezon City for the refund of premiums and the issuance of a writ of preliminary
attachment which was docketed as Civil Case No. Q-41177, initially against petitioner SIOL, and
thereafter including E.B. Philipps and D.J. Warby as additional defendants. The complaint
sought, among others, the payment of actual, compensatory, moral, exemplary and liquidated
damages, attorney's fees, expenses of litigation and costs of the suit. Although the prayer in the
complaint did not quantify the amount of damages sought said amount may be inferred from the
body of the complaint to be about Fifty Million Pesos (P50,000,000.00).
Only the amount of P210.00 was paid by private respondent as docket fee which prompted
petitioners' counsel to raise his objection. Said objection was disregarded by respondent Judge
Jose P. Castro who was then presiding over said case. Upon the order of this Court, the records
of said case together with twenty-two other cases assigned to different branches of the Regional
Trial Court of Quezon City which were under investigation for under-assessment of docket fees
were transmitted to this Court. The Court thereafter returned the said records to the trial court
with the directive that they be re-raffled to the other judges in Quezon City, to the exclusion of
Judge Castro. Civil Case No. Q-41177 was re-raffled to Branch 104, a sala which was then
vacant.
On October 15, 1985, the Court en banc issued a Resolution in Administrative Case No. 85-10-
8752-RTC directing the judges in said cases to reassess the docket fees and that in case of
deficiency, to order its payment. The Resolution also requires all clerks of court to issue
certificates of re-assessment of docket fees. All litigants were likewise required to specify in their
pleadings the amount sought to be recovered in their complaints.
On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-41177 was
temporarily assigned, issuedan order to the Clerk of Court instructing him to issue a certificate
of assessment of the docket fee paid by private respondent and, in case of deficiency, to include
the same in said certificate.
On January 7, 1984, to forestall a default, a cautionary answer was filed by petitioners. On
August 30,1984, an amended complaint was filed by private respondent including the two
additional defendants aforestated.
Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter assigned, after
his assumption into office on January 16, 1986, issued a Supplemental Order requiring the
parties in the case to comment on the Clerk of Court's letter-report signifying her difficulty in
complying with the Resolution of this Court of October 15, 1985 since the pleadings filed by
private respondent did not indicate the exact amount sought to be recovered. On January 23,
1986, private respondent filed a "Compliance" and a "Re-Amended Complaint" stating therein a
claim of "not less than Pl0,000,000. 00 as actual compensatory damages" in the prayer. In the
body of the said second amended complaint however, private respondent alleges actual and
compensatory damages and attorney's fees in the total amount of about P44,601,623.70.
On January 24, 1986, Judge Asuncion issued another Order admitting the second amended
complaint and stating therein that the same constituted proper compliance with the Resolution
of this Court and that a copy thereof should be furnished the Clerk of Court for the reassessment
of the docket fees. The reassessment by the Clerk of Court based on private respondent's claim
of "not less than P10,000,000.00 as actual and compensatory damages" amounted to
P39,786.00 as docket fee. This was subsequently paid by private respondent.
Petitioners then filed a petition for certiorari with the Court of Appeals questioning the said order
of Judie Asuncion dated January 24, 1986.
On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim
of P20,000,000.00 as d.qmages so the total claim amounts to about P64,601,623.70. On
October 16, 1986, or some seven months after filing the supplemental complaint, the private
respondent paid the additional docket fee of P80,396.00.1
On August 13, 1987, the Court of Appeals rendered a decision ruling, among others, as follows:
WHEREFORE, judgment is hereby rendered:
1. Denying due course to the petition in CA-G.R. SP No. 1, 09715 insofar as it seeks annulment
of the order
(a) denying petitioners' motion to dismiss the complaint, as amended, and
(b) granting the writ of preliminary attachment, but giving due course to the portion thereof
questioning the reassessment of the docketing fee, and requiring the Honorable respondent
Court to reassess the docketing fee to be paid by private respondent on the basis of the amount
of P25,401,707.00. 2
Hence, the instant petition.
During the pendency of this petition and in conformity with the said judgment of respondent court,
private respondent paid the additional docket fee of P62,432.90 on April 28, 1988. 3
The main thrust of the petition is that the Court of Appeals erred in not finding that the lower
court did not acquire jurisdiction over Civil Case No. Q-41177 on the ground of nonpayment of
the correct and proper docket fee. Petitioners allege that while it may be true that private
respondent had paid the amount of P182,824.90 as docket fee as herein-above related, and
considering that the total amount sought to be recovered in the amended and supplemental
complaint is P64,601,623.70 the docket fee that should be paid by private respondent is
P257,810.49, more or less. Not having paid the same, petitioners contend that the complaint
should be dismissed and all incidents arising therefrom should be annulled. In support of their
theory, petitioners cite the latest ruling of the Court in Manchester Development Corporation vs.
CA, 4 as follows:
The Court acquires jurisdiction over any case only upon the payment of the prescribed docket
fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the
Court, much less the payment of the docket fee based on the amounts sought in the amended
pleading. The ruling in the Magaspi Case in so far as it is inconsistent with this pronouncement
is overturned and reversed.
On the other hand, private respondent claims that the ruling in Manchester cannot apply
retroactively to Civil Case No. Q41177 for at the time said civil case was filed in court there was
no such Manchester ruling as yet. Further, private respondent avers that what is applicable is
the ruling of this Court in Magaspi v. Ramolete, 5 wherein this Court held that the trial court
acquired jurisdiction over the case even if the docket fee paid was insufficient.
The contention that Manchester cannot apply retroactively to this case is untenable. Statutes
regulating the procedure of the courts will be construed as applicable to actions pending and
undetermined at the time of their passage. Procedural laws are retrospective in that sense and
to that extent. 6
In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full amount of the
docket fee is an indispensable step for the perfection of an appeal. In a forcible entry and
detainer case before the justice of the peace court of Manaoag, Pangasinan, after notice of a
judgment dismissing the case, the plaintiff filed a notice of appeal with said court but he
deposited only P8.00 for the docket fee, instead of P16.00 as required, within the reglementary
period of appeal of five (5) days after receiving notice of judgment. Plaintiff deposited the
additional P8.00 to complete the amount of the docket fee only fourteen (14) days later. On the
basis of these facts, this court held that the Court of First Instance did notacquire jurisdiction to
hear and determine the appeal as the appeal was not thereby perfected.
In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become a Filipino
citizen by sending it through registered mail to the Office of the Solicitor General in 1953 but the
required filing fee was paid only in 1956, barely 5V2 months prior to the filing of the petition for
citizenship. This Court ruled that the declaration was not filed in accordance with the legal
requirement that such declaration should be filed at least one year before the filing of the petition
for citizenship. Citing Lazaro, this Court concluded that the filing of petitioner's declaration of
intention on October 23, 1953 produced no legal effect until the required filing fee was paid on
May 23, 1956.
In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were applied. It was
an original petition for quo warranto contesting the right to office of proclaimed candidates which
was mailed, addressed to the clerk of the Court of First Instance, within the one-week period
after the proclamation as provided therefor by law.10 However, the required docket fees were
paid only after the expiration of said period. Consequently, this Court held that the date of such
payment must be deemed to be the real date of filing of aforesaid petition and not the date when
it was mailed.
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee must be paid
before a court will act on a petition or complaint. However, we also held that said rule is not
applicable when petitioner seeks the probate of several wills of the same decedent as he is not
required to file a separate action for each will but instead he may have other wills probated in
the same special proceeding then pending before the same court.
Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is deemed filed
only upon payment of the docket fee regardless of the actual date of its filing in court. Said case
involved a complaint for recovery of ownership and possession of a parcel of land with damages
filed in the Court of First Instance of Cebu. Upon the payment of P60.00 for the docket fee and
P10.00 for the sheriffs fee, the complaint was docketed as Civil Case No. R-11882. The prayer
of the complaint sought that the Transfer Certificate of Title issued in the name of the defendant
be declared as null and void. It was also prayed that plaintiff be declared as owner thereof to
whom the proper title should be issued, and that defendant be made to pay monthly rentals of
P3,500.00 from June 2, 1948 up to the time the property is delivered to plaintiff, P500,000.00 as
moral damages, attorney's fees in the amount of P250,000.00, the costs of the action and
exemplary damages in the amount of P500,000.00.
The defendant then filed a motion to compel the plaintiff to pay the correct amount of the docket
fee to which an opposition was filed by the plaintiff alleging that the action was for the recovery
of a parcel of land so the docket fee must be based on its assessed value and that the amount
of P60.00 was the correct docketing fee. The trial court ordered the plaintiff to pay P3,104.00 as
filing fee.
The plaintiff then filed a motion to admit the amended complaint to include the Republic as the
defendant. In the prayer of the amended complaint the exemplary damages earlier sought was
eliminated. The amended prayer merely sought moral damages as the court may determine,
attorney's fees of P100,000.00 and the costs of the action. The defendant filed an opposition to
the amended complaint. The opposition notwithstanding, the amended complaint was admitted
by the trial court. The trial court reiterated its order for the payment of the additional docket fee
which plaintiff assailed and then challenged before this Court. Plaintiff alleged that he paid the
total docket fee in the amount of P60.00 and that if he has to pay the additional fee it must be
based on the amended complaint.
The question posed, therefore, was whether or not the plaintiff may be considered to have filed
the case even if the docketing fee paid was not sufficient. In Magaspi, We reiterated the rule that
the case was deemed filed only upon the payment of the correct amount for the docket fee
regardless of the actual date of the filing of the complaint; that there was an honest difference of
opinion as to the correct amount to be paid as docket fee in that as the action appears to be one
for the recovery of property the docket fee of P60.00 was correct; and that as the action is also
one, for damages, We upheld the assessment of the additional docket fee based on the
damages alleged in the amended complaint as against the assessment of the trial court which
was based on the damages alleged in the original complaint.
However, as aforecited, this Court overturned Magaspi in Manchester. Manchester involves an
action for torts and damages and specific performance with a prayer for the issuance of a
temporary restraining order, etc. The prayer in said case is for the issuance of a writ of
preliminary prohibitory injunction during the pendency of the action against the defendants'
announced forfeiture of the sum of P3 Million paid by the plaintiffs for the property in question,
the attachment of such property of defendants that may be sufficient to satisfy any judgment that
may be rendered, and, after hearing, the issuance of an order requiring defendants to execute
a contract of purchase and sale of the subject property and annul defendants' illegal forfeiture of
the money of plaintiff. It was also prayed that the defendants be made to pay the plaintiff jointly
and severally, actual, compensatory and exemplary damages as well as 25% of said amounts
as may be proved during the trial for attorney's fees. The plaintiff also asked the trial court to
declare the tender of payment of the purchase price of plaintiff valid and sufficient for purposes
of payment, and to make the injunction permanent. The amount of damages sought is not
specified in the prayer although the body of the complaint alleges the total amount of over P78
Millon allegedly suffered by plaintiff.
Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the docket fee
based on the nature of the action for specific performance where the amount involved is not
capable of pecuniary estimation. However, it was obvious from the allegations of the complaint
as well as its designation that the action was one for damages and specific performance. Thus,
this court held the plaintiff must be assessed the correct docket fee computed against the amount
of damages of about P78 Million, although the same was not spelled out in the prayer of the
complaint.
Meanwhile, plaintiff through another counsel, with leave of court, filed an amended complaint on
September 12, 1985 by the inclusion of another co-plaintiff and eliminating any mention of the
amount of damages in the body of the complaint. The prayer in the original complaint was
maintained.
On October 15, 1985, this Court ordered the re-assessment of the docket fee in the said case
and other cases that were investigated. On November 12, 1985, the trial court directed the
plaintiff to rectify the amended complaint by stating the amounts which they were asking for. This
plaintiff did as instructed. In the body of the complaint the amount of damages alleged was
reduced to P10,000,000.00 but still no amount of damages was specified in the prayer. Said
amended complaint was admitted.
Applying the principle in Magaspi that "the case is deemed filed only upon payment of the docket
fee regardless of the actual date of filing in court," this Court held that the trial court did not
acquire jurisdiction over the case by payment of only P410.00 for the docket fee. Neither can the
amendment of the complaint thereby vest jurisdiction upon the Court. For all legal purposes
there was no such original complaint duly filed which could be amended. Consequently, the
order admitting the amended complaint and all subsequent proceedings and actions taken by
the trial court were declared null and void.13
The present case, as above discussed, is among the several cases of under-assessment of
docket fee which were investigated by this Court together with Manchester. The facts and
circumstances of this case are similar to Manchester. In the body of the original complaint, the
total amount of damages sought amounted to about P50 Million. In the prayer, the amount of
damages asked for was not stated. The action was for the refund of the premium and the
issuance of the writ of preliminary attachment with damages. The amount of only P210.00 was
paid for the docket fee. On January 23, 1986, private respondent filed an amended complaint
wherein in the prayer it is asked that he be awarded no less than P10,000,000.00 as actual and
exemplary damages but in the body of the complaint the amount of his pecuniary claim is
approximately P44,601,623.70. Said amended complaint was admitted and the private
respondent was reassessed the additional docket fee of P39,786.00 based on his prayer of not
less than P10,000,000.00 in damages, which he paid.
On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim
of P20,000,000.00 in damages so that his total claim is approximately P64,601,620.70. On
October 16, 1986, private respondent paid an additional docket fee of P80,396.00. After the
promulgation of the decision of the respondent court on August 31, 1987 wherein private
respondent was ordered to be reassessed for additional docket fee, and during the pendency of
this petition, and after the promulgation of Manchester, on April 28, 1988, private respondent
paid an additional docket fee of P62,132.92. Although private respondent appears to have paid
a total amount of P182,824.90 for the docket fee considering the total amount of his claim in the
amended and supplemental complaint amounting to about P64,601,620.70, petitioner insists
that private respondent must pay a docket fee of P257,810.49.
The principle in Manchester could very well be applied in the present case. The pattern and the
intent to defraud the government of the docket fee due it is obvious not only in the filing of the
original complaint but also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee until] the case was
decided by this Court on May 7, 1987. Thus, in Manchester, due to the fraud committed on the
government, this Court held that the court a quo did not acquire jurisdiction over the case and
that the amended complaint could not have been admitted inasmuch as the original complaint
was null and void.
In the present case, a more liberal interpretation of the rules is called for considering that, unlike
Manchester, private respondent demonstrated his willingness to abide by the rules by paying
the additional docket fees as required. The promulgation of the decision in Manchester must
have had that sobering influence on private respondent who thus paid the additional docket fee
as ordered by the respondent court. It triggered his change of stance by manifesting his
willingness to pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was paid is still insufficient considering
the total amount of the claim. This is a matter which the clerk of court of the lower court and/or
his duly authorized docket clerk or clerk in-charge should determine and, thereafter, if any
amount is found due, he must require the private respondent to pay the same.
Thus, the Court rules as follows:
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 fee 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.
WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the court a
quo is hereby instructed to reassess and determine the additional filing fee that should be paid
by private respondent considering the total amount of the claim sought in the original complaint
and the supplemental complaint as may be gleaned from the allegations and the prayer thereof
and to require private respondent to pay the deficiency, if any, without pronouncement as to
costs.
SO ORDERED.
[G.R. NO. 165147 : July 9, 2008]
PHILIPPINE FIRST INSURANCE CO., INC. and PARAMOUNT GENERAL INSURANCE
CORPORATION, Petitioners, v. PYRAMID LOGISTICS AND TRUCKING CORPORATION
(formerly PANACOR INTEGRATED WAREHOUSING AND TRUCKING
CORPORATION), Respondent.
DECISION
CARPIO MORALES, J.:
The issue, in the main, in the present case is whether respondent, Pyramid Logistics and
Trucking Corporation (Pyramid), which filed on November 7, 2001 a complaint,1 denominated
as one for specific performance and damages, against petitioners Philippine First Insurance
Company, Inc. (Philippine First) and Paramount General Insurance Corporation (Paramount)
before the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 01-1609, paid the
correct docket fee; if in the negative, whether the complaint should be dismissed or Pyramid can
still be ordered to pay the fee.
Pyramid sought to recover the proceeds of two insurance policies issued to it, Policy No. IN-
002904 issued by petitioner Paramount, and Policy No. MN-MCL-HO-00-0000007-00 issued by
petitioner Philippine First. Despite demands, petitioners allegedly failed to settle them, hence, it
filed the complaint subject of the present petition.
In its complaint, Pyramid alleged that on November 8, 2000, its delivery van bearing license
plate number PHL-545 which was loaded with goods belonging to California Manufacturing
Corporation (CMC) valued at PESOS NINE HUNDRED SEVEN THOUSAND ONE HUNDRED
FORTY NINE AND SEVEN/100 (P907,149.07) left the CMC Bicutan Warehouse but the van,
together with the goods, failed to reach its destination and its driver and helper were nowhere to
be found, to its damage and prejudice; that it filed a criminal complaint against the driver and the
helper for qualified theft, and a claim with herein petitioners as co-insurers of the lost goods but,
in violation of petitioners' undertaking under the insurance policies, they refused without just and
valid reasons to compensate it for the loss; and that as a direct consequence of petitioners'
failure, despite repeated demands, to comply with their respective undertakings under the
Insurance Policies by compensating for the value of the lost goods, it suffered damages and was
constrained to engage the services of counsel to enforce and protect its right to recover
compensation under said policies, for which services it obligated itself to pay the sum equivalent
to twenty-five (25%) of any amount recovered as and for attorney's fees and legal expenses.2
Pyramid thus prayed
. . . that after due proceedings, judgment be rendered, ordering [herein petitioners] to comply
with their obligation under their respective Insurance Policies by paying to [it] jointly and
severally, the claims arising from the subject losses.
THAT, [herein petitioners] be adjudged jointly and severally to pay to [it], in addition to the
foregoing, the following:
1. The sum of PHP 50,000.00 plus PHP 1,500.00 for each Court session attended by counsel
until the instant [case] is finally terminated, as and for attorney's fees;
2. The costs of suit[;]3 (Underscoring supplied)cralawlibrary
and for other reliefs just and equitable in the premises.4
Pyramid was assessed P610 docket fee, apparently on the basis of the amount of P50,000
specified in the prayer representing attorney's fees, which it duly paid.5
Pyramid later filed a 1st Amended Complaint6 containing minor changes in its body7 but bearing
the same prayer.8 Branch 148 of the Makati RTC to which the complaint was raffled admitted
the Amended Complaint.9
Petitioners filed a Motion to Dismiss on the ground of, inter alia, lack of jurisdiction, Pyramid not
having paid the docket fees in full, arguing thus:
xxx
In the body of the Amended Complaint, plaintiff alleged that the goods belonging to California
Manufacturing Co., Inc. (CMC) is [sic] "valued at Php907,149.07" and consequently, "plaintiff
incurred expenses, suffered damages and was constrained to engage the services of counsel
to enforce and protect its right to recover compensation under the said policies and for which
services, it obligated itself to pay the sum equivalent to twenty-five (25%) of any recovery in the
instant action, as and for attorney's fees and legal expenses".
On the other hand, in the prayer in the Complaint, plaintiff deliberately omitted to specify what
these damages are. x x x
xxx
Verily, this deliberate omission by the plaintiff is clearly intended for no other purposes than to
evade the payment of the correct filing fee if not to mislead the docket clerk, in the assessment
of the filing fee. In fact, the docket clerk in the instant case charged the plaintiff a total
of Php610.00 only as a filing fee, which she must have based on the amount of Php50,000.00
[attorney's fees] only.10 (Emphasis in the original; italics and underscoring supplied)
Petitioners cited11 Manchester Development Corporation v. Court of Appeals12 which held:
x x x [A]ll complaints, petitions, answers and other similar pleadings should specify the amount
of damages being prayed for not only in the body of the pleading but also in the prayer, and said
damages shall be considered in the assessment of the filing fees in any case. Any pleading that
fails to comply with this requirement shall not be accepted or admitted, or shall otherwise be
expunged from the record.13 (Emphasis and underscoring supplied)cralawlibrary
They cited too Sun Insurance Office, Ltd. v. Asuncion14 which held that "[i]t is not simply the filing
of the complaint or appropriate 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."15
Petitioners thus concluded:
With the above cases as a backdrop, the Supreme Court, in revising the rules of pleading and
practice in the 1997 Rules of Civil Procedure, added a tenth ground to a Motion to Dismiss - to
wit, "[t]hat a condition precedent for filing claim [sic] has not been complied with.["]
On the contrary, if plaintiff would insist that its claim against the defendants is only Php50,000.00
plus Php 1,500.00 as appearance fee per court hearing, then it follows that it is the Metropolitan
Trial Court which has jurisdiction over this case, not this Honorable Court. Such amount is way
below the minimum jurisdictional amount prescribed by the rules in order to confer jurisdiction to
the Regional Trial Court.16 (Underscoring supplied)cralawlibrary
To the Motion to Dismiss Pyramid filed its Opposition,17 alleging that if there was a mistake in
the assessment of the docket fees, the trial court was not precluded from acquiring jurisdiction
over the complaint as "it has the authority to direct the mistaken party to complete the docket
fees in the course of the proceedings . . ."18 The Opposition merited a Reply19 from petitioners.
By Order of June 3, 2002, the trial court20 denied the Motion to Dismiss in this wise:
xxx
Indeed, a perusal of the Complaint reveals that while plaintiff made mention of the value of the
goods, which were lost, the prayer of plaintiff did not indicate its exact claim from the defendants.
The Complaint merely prayed defendants "to comply with their obligation under their respective
insurance policies by paying to plaintiff jointly and severally, the claims arising from the subject
losses" and did not mention the amount of PHP907,149.07, which is the value of the goods and
which is also the subject of insurance. This resulted to the assessment and payment of docket
fees in the amount of P610 only. The Court, even without the Motion to Dismiss filed by
defendant, actually noted such omission which is actually becoming a practice for some lawyers.
For whatever purpose it may be, the Court will not dwell into it. In this instant case, this being for
specific performance, it is not dismissible on that ground but unless proper docket fees are paid,
the Court can only grant what was prayed for in the Complaint.
x x x x21 (Emphasis and underscoring supplied)cralawlibrary
Petitioners' Motion for Reconsideration22 of the denial of their Motion to Dismiss having been
denied23 by Order of August 1, 2002, they filed their Answer with Compulsory Counterclaim ad
Cautelam,24 alleging that they intended to file a Petition for Certiorari with the Court of Appeals.25
Petitioners did indeed eventually file before the Court of Appeals a Petition for Certiorari (With
Preliminary Injunction and Urgent Prayer for Restraining Order)26 posing the following two of
three queries, viz:
First. Does [Pyramid's] deliberate omission to pay the required correct docket and filing fee vest
the trial court [with] jurisdiction to entertain the subject matter of the instant case?cralawred
Second. [Is] the instant case an action for specific performance or simply one for damages or
recovery of a sum of money?
x x x x27
By Decision of June 3, 2004,28 the Court of Appeals partially granted petitioners' petition
for certiorari by setting aside the trial judge's assailed orders and ordering Pyramid to file the
correct docket fees within a reasonable time, it holding that while the complaint was denominated
as one for specific performance, it sought to recover from petitioners Pyramid's "claims arising
from the subject losses." The appellate court ratiocinated:
xxx
Indeed, it has been held that "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." To determine the docket fees, it is necessary to
determine the true nature of the action by examining the allegations of the complaint. x x x
xxx
While the captions of the complaint and 1st amended complaint denominated the case as one
for "Specific Performance and Damages", the allegations and prayer therein show that the
specific performance sought by private respondent was for petitioners to "comply with their
obligation under their respective Insurance Policies by paying to plaintiff jointly and severally,
the claims arising from the subject losses" as well as the attorney's fees and costs of suit.
Obviously, what constitutes specific performance is the payment itself by petitioners of private
respondent's claims arising from the losses it allegedly incurred. x x x29
xxx
Public respondent should have ordered private respondent to pay the correct docket fees on the
basis of the allegations of the complaint. x x x
xxx
While it has been held in Manchester Development Corporation v. Court of Appeals x x x that
"any pleading that fails to comply with this requirement of specifying the amount of damages not
only in the body of the pleading but also in the prayer shall not be accepted nor admitted, or shall
otherwise be expunged from the record," this rule was relaxed in subsequent cases, wherein
payment of the correct docket fees was allowed within a reasonable time. . .
x x x x30 (Emphasis and underscoring supplied)cralawlibrary
Thus the appellate court disposed:
WHEREFORE, the petition is partially granted. The Orders dated June 3, 2002 and August 1,
2002 of public respondent are partially set aside insofar as they dispensed with the payment of
the correct docket fees. Consequently, [Pyramid] is hereby directed to pay the correct docket
fees on the basis of the losses alleged in the body of the complaint, plus the attorney's fees
mentioned in the prayer, within a reasonable time which should not go beyond the applicable
prescriptive or reglementary period. In all other respects, the said Orders are
affirmed.31 (Underscoring supplied)cralawlibrary
Petitioners filed a Motion for Reconsideration32 of the appellate court's decision. Pyramid filed
its Comment and Opposition to the Motion for Reconsideration,33 arguing thus:
xxx
In the present case, [Pyramid] thru its Complaint simply sought from petitioners compliance with
their contractual undertaking as insurers of the goods insured which were lost in [its] custody.
Private respondent did not specify the extent of petitioners' obligation as it left the matter entirely
in the judgment of the trial court to consider. Thus, the Complaint was labeled "Specific
Performance" which [Pyramid] submitted to the Clerk of Court for assessment of the docket fee,
after which, it paid the same based on the said assessment. There was no indication whatsoever
that [Pyramid] had refused to pay; rather, it merely argued against petitioners' submissions as it
maintained the correctness of the assessment made.34 (Underscoring supplied)cralawlibrary
By Resolution of August 23, 2004, the Court of Appeals denied petitioners' Motion for
Reconsideration;35 hence, the present Petition for Review on Certiorari,36 raising the issues of
whether the appellate court erred:
. . . WHEN IT APPLIED IN THE INSTANT CASE THE LIBERAL RULE ENUNCIATED IN SUN
INSURANCE OFFICE, LTD. (SIOL) v. ASUNCION, 170 SCRA 274 AND NATIONAL STEEL
CORPORATION v. COURT OF APPEALS, 302 SCRA 523 (1999) IN RESPECT TO THE
PAYMENT OF THE PRESCRIBED FILING AND DOCKET FEES DESPITE CLEAR SHOWING
OF RESPONDENT'S INTENTION TO EVADE THE PAYMENT OF THE CORRECT DOCKET
FEE WHICH WARRANTS THE APPLICATION OF THE DOCTRINE LAID DOWN
IN MANCHESTER DEVELOPMENT CORPORATION VS. COURT OF APPEALS, 149 SCRA
562.
. . . WHEN IT DID NOT APPLY THE RULING OF THIS HONORABLE TRIBUNAL IN
MARCOPPER MINING CORPORATION v. GARCIA, 143 SCRA 178, TAN v. DIRECTOR OF
FORESTRY, 125 SCRA 302, AND CHINA ROAD AND BRIDGE CORPORATION v. COURT
OF APPEALS, 348 SCRA 401.37 (Underscoring supplied)cralawlibrary
Petitioners invoke the doctrine in Manchester Development Corporation v. Court of
Appeals38 that a pleading which does not specify in the prayer the amount sought shall not be
admitted or shall otherwise be expunged, and that the court acquires jurisdiction only upon the
payment of the prescribed docket fee.39
Pyramid, on the other hand, insists, in its Comment on the Petition,40 on the application of Sun
Insurance Office, Ltd. (SIOL) v. Asuncion41 and subsequent rulings relaxing the Manchester
ruling by allowing payment of the docket fee within a reasonable time, in no case beyond the
applicable prescriptive or reglementary period, where the filing of the initiatory pleading is not
accompanied by the payment of the prescribed docket fee.42
In Tacay v. Regional Trial Court of Tagum, Davao del Norte,43 the Court clarified the effect of
the Sun Insurance ruling on the Manchester ruling as follows:
As will be noted, the requirement in Circular No. 7 [of this Court which was issued based on the
Manchester ruling44] that complaints, petitions, answers, and similar pleadings should specify
the amount of damages being prayed for not only in the body of the pleading but also in the
prayer, has not been altered. What has been revised is the rule that subsequent "amendment of
the complaint or similar pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amount sought in the amended pleading," the trial court
now being authorized to allow payment of the fee within a reasonable time but in no case beyond
the applicable prescriptive period or reglementary period. Moreover, a new rule has been added,
governing the awards of claims not specified in the pleading - i.e., damages arising after the
filing of the complaint or similar pleading - as to which the additional filing fee therefore shall
constitute a lien on the judgment.
Now, under the Rules of Court, docket or filing fees are assessed on the basis of the "sum
claimed," on the one hand, or the "value of the property in litigation or the value of the estate,"
on the other. . .
Where the action is purely for the recovery of money or damages, the docket fees are assessed
on the basis of the aggregate amount claimed, exclusive only of interests and costs. In this case,
the complaint or similar pleading should, according to Circular No. 7 of this Court, "specify the
amount of damages being prayed for not only in the body of the pleading but also in the prayer,
and said damages shall be considered in the assessment of filing fees in any case."
Two situations may arise. One is where the complaint or similar pleading sets out a claim purely
for money and damages and there is no statement of the amounts being claimed. In this event
the rule is that the pleading will "not be accepted nor admitted, or shall otherwise be expunged
from the record." In other words, the complaint or pleading may be dismissed, or the claims as
to which amounts are unspecified may be expunged, although as aforestated the Court may, on
motion, permit amendment of the complaint and payment of the fees provided the claim has not
in the meantime become time-barred. The other is where the pleading does specify the amount
of every claim, but the fees paid are insufficient; and here again, the rule now is that the court
may allow a reasonable time for the payment of the prescribed fees, or the balance thereof, and
upon such payment, the defect is cured and the court may properly take cognizance of the
action, unless in the meantime prescription has set in and consequently barred the right of
action.45 (Emphasis and underscoring supplied)cralawlibrary
Indeed, Pyramid captioned its complaint as one for "specific performance and damages" even if
it was, as the allegations in its body showed, seeking in the main the collection of its claims-
sums of money representing losses the amount of which it, by its own admission, "knew."46 And,
indeed, it failed to specify in its prayer in the complaint the amount of its claims/damages.
When Pyramid amended its complaint, it still did not specify, in its prayer, the amount of
claims/damages it was seeking. In fact it has the audacity to inform this Court, in its Comment
on the present Petition, that
x x x In the natural order of things, when a litigant is given the opportunity to spend less for a
docket fee after submitting his pleading for assessment by the Office of the Clerk of Court, he
would not decline it inasmuch as to request for a higher assessment under the circumstances
[for such] is against his interest and would be senseless. Placed under the same situation,
petitioner[s] would certainly do likewise. To say otherwise would certainly be dishonest,47
which comment drew petitioners to conclude as follows:
[This] only shows respondent's dishonesty and lack of regard of the rules. Following this line of
reasoning, respondent would do everything if only for it to spend less for the filing fee, even to
the extent of circumventing and defying the rule on the payment of the filing fee.
In spite of the fact that the respondent was already caught in the quagmire of its own cobweb of
deception, it further justified its unethical act by ratiocinating that "placed under the same
situation, petitioner would certainly do likewise, to say otherwise would certainly be dishonest".
This attitude of the respondent is very alarming! Having been caught red-handed, the honorable
thing that respondent should have done is admit its own violation rather than justify an act which
it knows is a clear contravention of the rules and jurisprudence.48 (Italics and emphasis in the
original)
Pyramid's following justification for omitting to specify in the prayer of its complaint the amount
of its claims/damages, viz:
xxx
x x x While respondent knew its losses and alleged them in the body of the Complaint, it was not
aware of the extent of petitioners' respective liability under the two insurance policies. The
allegation of respondent's losses, albeit, without repeating them in its prayer for relief was not
motivated by an intention to mislead, cheat or defraud the Court. It just left the matter of liability
arising from two separate and distinct Insurance Policies covering the same insurable risk for
the trial court's determination, hence, respondent came up with an action for "specific
performance[,]"49 (Emphasis and underscoring supplied)cralawlibrary
fails to impress.
As the salient allegations of Pyramid's complaint show and as priorly stated, they constitute, in
the main, an action for collection of its claims it admittedly "knew."
Assuming arguendo that Pyramid has other claims the amounts of which are yet to be
determined by the trial court, the rule established in Manchester which was embodied in this
Court's Circular No. 7-88 issued on March 24, 1988, as modified by the Sun Insurance ruling,
still applies. Consider this Court's pronouncement bearing on the matter in Ayala Corporation v.
Madayag:50 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
xxx
Apparently, the trial court misinterpreted paragraph 3 of the [Sun Insurance] ruling of this Court
wherein it stated that "where the judgment awards a claim not specified in the pleading, or if
specified, the same has been left for the determination of the court, the additional filing fee
therefor shall constitute a lien on the judgment" by considering it to mean that where in the body
and prayer of the complaint there is a prayer xxx the amount of which is left to the discretion of
the Court, there is no need to specify the amount being sought, and that any award thereafter
shall constitute a lien on the judgment.
x x x While it is true that the determination of certain damages x x x is left to the sound discretion
of the court, it is the duty of the parties claiming such damages to specify the amount sought
on the basis of which the court may make a proper determination, and for the proper assessment
of the appropriate docket fees. The exception contemplated as to claims not specified or to
claims although specified are left for determination of the court is limited only to any damages
that may arise after the filing of the complaint or similar pleading for then it will not be possible
for the claimant to specify nor speculate as to the amount thereof. (Emphasis and underscoring
supplied)cralawlibrary

If respondent Pyramid's counsel had only been forthright in drafting the complaint and taking the
cudgels for his client and the trial judge assiduous in applying Circular No. 7 vis a vis prevailing
jurisprudence, the precious time of this Court, as well as of that of the appellate court, would not
have been unnecessarily sapped.

The Court at this juncture thus reminds Pyramid's counsel to observe Canon 12 of the Code of
Professional Ethics which enjoins a lawyer to "exert every effort and consider it his duty to assist
in the speedy and efficient administration of justice," and Rule 12.04 of the same Canon which
enjoins a lawyer "not [to] unduly delay a case, impede the execution of a judgment or misuse
court processes." And the Court reminds too the trial judge to bear in mind that the nature of an
action is determined by the allegations of the pleadings51 and to keep abreast of all laws and
prevailing jurisprudence, consistent with the standard that magistrates must be the embodiments
of competence, integrity and independence.52
WHEREFORE, in light of the foregoing discussions, the petition is DENIED.
SO ORDERED.

G.R. No. 192649 March 9, 2011
HOME GUARANTY CORPORATION, Petitioner,
vs.
R-II BUILDERS INC., and NATIONAL HOUSING AUTHORITY, Respondents.
DECISION
PEREZ, J.:
Primarily assailed in this petition for review filed pursuant to Rule 45 of the 1997 Rules of Civil
Procedure, is the Decision dated 21 January 2010 rendered by the Former Fifteenth Division of
the Court of Appeals (CA) in CA-G.R. SP No. 111153,1 the dispositive portion of which states as
follows:
WHEREFORE, the petition for certiorari and prohibition is hereby DENIED.
The assailed Orders, dated March 3, 2009 and September 29, 2009, of the Regional Trial Court
of Manila, Branch 22 are hereby AFFIRMED.
Consequently, the injunction earlier issued on December 4, 2009, restraining the proceedings in
Civil Case No. 05-113407, is hereby DISSOLVED.2
The Facts
On 19 March 1993, a Joint Venture Agreement (JVA) was entered into between respondents
National Housing Authority (NHA) and R-II Builders, Inc. (R-II Builders) for the implementation
of the Smokey Mountain Development and Reclamation Project (SMDRP). Amended and
restated on 21 February 19943 and 11 August 1994,4 the JVA was aimed at implementing a two-
phase conversion of the Smokey Mountain Dumpsite "into a habitable housing project inclusive
of the reclamation of the area across Radial Road 10 (R-10)".5 By the terms of the JVA, R-II
Builders, as developer, was entitled to own 79 hectares of reclaimed land and the 2.3 hectare
commercial area at the Smokey Mountain. As landowner/implementing agency, NHA, on the
other hand, was entitled to own the 2,992 temporary housing units agreed to be built in the
premises, the cleared and fenced incinerator site consisting of 5 hectares, 3,520 units of
permanent housing to be awarded to qualified on site residents, the industrial area consisting of
3.2 hectares and the open spaces, roads and facilities within the Smokey Mountain Area.6
On 26 September 1994, NHA and R-II Builders, alongside petitioner Housing Guaranty
Corporation (HGC) as guarantor and the Philippine National Bank (PNB) as trustee, entered into
an Asset Pool Formation Trust Agreement which provided the mechanics for the implementation
of the project.7 To back the project, an Asset Pool was created composed of the following assets:
(a) the 21.2 hectare Smokey Mountain Site in Tondo, Manila; (b) the 79-hectare Manila Bay
foreshore property in the name of the NHA; (c) the Smokey Mountain Project Participation
Certificates (SMPPCs) to be issued, or their money proceeds; (d) disposable assets due to R-II
Builders and/or its proceeds as defined in the JVA; (e) the resulting values inputted by R-II
Builders for pre-implementation activities and some start-up works amounting to
₱300,000,000.00; (f) the 2,992 temporary housing facilities/units to be constructed by R-II
Builders; and, (g) all pertinent documents and records of the project.8
On the same date, the parties likewise executed a Contract of Guaranty whereby HGC, upon
the call made by PNB and conditions therein specified, undertook to redeem the regular
SMPPCs upon maturity and to pay the simple interest thereon to the extent of 8.5% per
annum.9 The foregoing agreements led to the securitization of the project through the issuance
of 5,216 SMPPCs upon the Asset Pool, with a par value of 1 Million each, classified and to be
redeemed by the trustee or, in case of call on its guaranty, by HGC, in the following order of
priority:
a) Regular SMPPCs worth ₱2.519 Billion, issued for value to the general public at specified
interests and maturity dates. These were to be redeemed by the PNB which was obliged to
exhaust all liquid assets of the Asset Pool before calling on the HGC guarantee;
b) Special SMPPCs worth ₱1.403 Billion, issued exclusively to the NHA for conveyance of the
Smokey Mountain Site and Manila Bay foreshore property to the Asset Pool, redeemable upon
turnover of the developed project; and
c) Subordinated SMPPCs worth ₱1.294 Billion, issued exclusively to R-II Builders for its rights
and interests in the JVA, redeemable with the turnover of all residual values, assets and
properties remaining in the Asset Pool after both the Regular and Special SMPPCs are
redeemed and all the obligations of the Asset Pool are settled.10
Subsequent to R-II Builders' infusion of ₱300 Million into the project, the issuance of the
SMPPCs and the termination of PNB’s services on 29 January 2001, NHA, R-II Builders and
HGC agreed on the institution of Planters Development Bank (PDB) as trustee on 29 January
2001.11 By 24 October 2002, however, all the Regular SMPPCs issued had reached maturity
and, unredeemed, already amounted to an aggregate face value of ₱2.513 Billion. The lack of
liquid assets with which to effect redemption of the regular SMPPCs prompted PDB to make a
call on HGC’s guaranty and to execute in the latter’s favor a Deed of Assignment and
Conveyance (DAC) of the entire Asset Pool, consisting of: (a) 105 parcels of land comprising
the Smokey Mountain Site and the Reclamation Area, with a total area of 539,471.47 square
meters, and all the buildings and improvements thereon; (b) shares of stock of Harbour Centre
Port Terminal, Inc. (HCPTI); and, (c) other documents.12
On 1 September 2005, R-II Builders filed the complaint against HGC and NHA which was
docketed as Civil Case No. 05-113407 before Branch 24 of the Manila Regional Trial Court, a
Special Commercial Court (SCC). Contending that HGC’s failure to redeem the outstanding
regular SMPPCs despite obtaining possession of the Asset Pool ballooned the stipulated
interests and materially prejudiced its stake on the residual values of the Asset Pool, R-II Builders
alleged, among other matters, that the DAC should be rescinded since PDB exceeded its
authority in executing the same prior to HGC’s redemption and payment of the guaranteed
SMPPCs; that while the estimated value of Asset Pool amounted to ₱5,919,716,618.62 as of 30
June 2005, its total liabilities was estimated at ₱2,796,019,890.41; and, that with the cessation
of PDB’s functions as a trustee and HGC’s intention to use the Asset Pool to settle its obligations
to the Social Security System (SSS), it was best qualified to be appointed as new trustee in the
event of the resolution of the DAC. Assessed docket fees corresponding to an action incapable
of pecuniary estimation, the complaint sought the grant of the following reliefs: (a) a temporary
restraining order/preliminary and permanent injunction, enjoining disposition/s of the properties
in the Asset Pool; (b) the resolution or, in the alternative, the nullification of the DAC; (c) R-II
Builders' appointment as trustee pursuant to Rule 98 of the Rules of Court; (d) HGC’s rendition
of an accounting of the assets and the conveyance thereof in favor of R-II Builders; and, (e)
₱500,000.00 in attorney’s fees.13
On 26 October 2005, Branch 24 of the Manila RTC issued the writ of preliminary injunction
sought by R-II Builders which, upon the challenge thereto interposed by HGC, was later affirmed
by the CA in the 17 December 2007 decision rendered in CA-G.R. SP No. 98953.14 Having filed
its answer to the complaint, in the meantime, HGC went on to move for the conduct of a
preliminary hearing on its affirmative defenses which included such grounds as lack of
jurisdiction, improper venue and the then pendency before this Court of G.R. No. 164537,
entitled Francisco Chavez vs. National Housing Authority, et al., a case which challenged,
among other matters, the validity of the JVA and its subsequent amendments.15 On 2 August
2007, R-II Builders, in turn, filed a motion to admit16 its Amended and Supplemental Complaint
which deleted the prayer for resolution of the DAC initially prayed for in its original complaint. In
lieu thereof, said pleading introduced causes of action for conveyance of title to and/or
possession of the entire Asset Pool, for NHA to pay the Asset Pool the sum of
₱1,803,729,757.88 representing the cost of the changes and additional works on the project and
for an increased indemnity for attorney’s fees in the sum of ₱2,000,000.00.17
Consistent with its joint order dated 2 January 2008 which held that R-II Builders’ complaint was
an ordinary civil action and not an intra-corporate controversy,18 Branch 24 of the Manila RTC
issued a clarificatory order dated 1 February 2008 to the effect, among other matters, that it did
not have the authority to hear the case.19 As a consequence, the case was re-raffled to
respondent Branch 22 of the Manila RTC (respondent RTC) which subsequently issued the 19
May 2008 order which, having determined that the case is a real action, admitted the aforesaid
Amended and Supplemental Complaint, subject to R-II Builders’ payment of the "correct and
appropriate" docket fees.20 On 15 August 2008, however, R-II Builders filed a motion to admit it
Second Amended Complaint, on the ground that its previous Amended and Supplemental
Complaint had not yet been admitted in view of the non-payment of the correct docket fees
therefor.21 Said Second Amended Complaint notably resurrected R-II Builders’ cause of action
for resolution of the DAC, deleted its causes of action for accounting and conveyance of title to
and/or possession of the entire Asset Pool, reduced the claim for attorney’s fees to ₱500,000.00,
sought its appointment as Receiver pursuant to Rule 59 of the Rules of Court and, after an
inventory in said capacity, prayed for approval of the liquidation and distribution of the Asset
Pool in accordance with the parties’ agreements.22
On 2 September 2008, HGC filed its opposition to the admission of R-II Builders’ Second
Amended Complaint on the ground that respondent RTC had no jurisdiction to act on the case
until payment of the correct docket fees and that said pleading was intended for delay and
introduced a new theory inconsistent with the original complaint and the Amended and
Supplemental Complaint. Claiming that R-II Builders had defied respondent court’s 19 May 2008
order by refusing to pay the correct docket fees, HGC additionally moved for the dismissal of the
case pursuant to Section 3, Rule 17 of the 1997 Rules of Civil Procedure.23 On 24 November
2008, R-II Builders also filed an Urgent Ex-Parte Motion for Annotation of Lis Pendens on the
titles of the properties in the Asset Pool, on the ground that HGC had sold and/or was intending
to dispose of portions thereof, in violation of the writ of preliminary injunction issued in the
premises.24 Finding that jurisdiction over the case was already acquired upon payment of the
docket fees for the original complaint and that the Second Amended Complaint was neither
intended for delay nor inconsistent with R-II Builders’ previous pleadings, respondent RTC
issued its first assailed order dated 3 March 2009 which: (a) denied HGC’s motion to dismiss;
(b) granted R-II Builders’ motion to admit its Second Amended Complaint; and, (c) noted R-II
Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens, to which the attention of the
Manila Register of Deeds was additionally called.25
Undaunted, HGC filed its 22 March 2009 motion for reconsideration of the foregoing order,
arguing that: (a) the case is real action and the docket fees paid by R-II Builders were grossly
insufficient because the estimated value of properties in the Asset Pool exceeds
₱5,000,000,000.00; (b) a complaint cannot be amended to confer jurisdiction when the court
had none; (c) the RTC should have simply denied the Urgent Ex-Parte Motion for Annotation of
Lis Pendens instead of rendering an advisory opinion thereon. In addition, HGC faulted R-II
Builders with forum shopping, in view of its 10 September 2008 filing of the complaint docketed
as Civil Case No. 08-63416 before Branch 91 of the Quezon City RTC, involving a claim for
receivables from the NHA.26 In turn, R-II Builders opposed the foregoing motion27 and, on the
theory that the Asset Pool was still in danger of dissipation, filed an urgent motion to resolve its
application for the appointment of a receiver and submitted its nominees for said position.28
On 29 September 2009, respondent RTC issued its second assailed order which (a) denied
HGC’s motion for reconsideration; (b) granted R-II Builders’ application for appointment of
receiver and, for said purpose: [i] appointed Atty. Danilo Concepcion as Receiver and, [ii]
directed R-II Builders to post a bond in the sum of ₱10,000,000.00.29 Imputing grave abuse of
discretion against the RTC for not dismissing the case and for granting R-II Builders’ application
for receivership, HGC filed the Rule 65 petition for certiorari and prohibition docketed as CA-
G.R. SP No. 111153 before the CA30 which, thru its Former Special Fifteenth Division, rendered
the herein assailed 21 January 2010 decision,31 upon the following findings and conclusions:
a) Irrespective of whether it is real or one incapable of pecuniary estimation, the action
commenced by R-II Builders indubitably falls squarely within the jurisdiction of respondent RTC;
b) From the allegations of R-II Builders’ original complaint and amended complaint the character
of the relief primarily sought, i.e., the declaration of nullity of the DAC, the action before
respondent RTC is one where the subject matter is incapable of pecuniary estimation;
c) R-II Builders need not pay any deficiency in the docket fees considering its withdrawal of its
Amended and Supplemental Complaint;
d) A receiver may be appointed without formal hearing, particularly when it is within the interest
of both parties and does not result in the delay of any government infrastructure projects or
economic development efforts;
e) Respondent RTC’s act of calling the attention of the Manila Registrar of Deeds to R-II Builders’
Urgent Ex-Parte Motion for Annotation of Lis Pendens is well-within its residual power to act on
matters before it; and
f) The withdrawal of R-II Builders’ Amended and Supplemental Complaint discounted the forum
shopping imputed against it by HGC.32
HGC’s motion for reconsideration of the foregoing decision33 was denied for lack of merit in the
CA’s resolution dated 21 June 2010, hence, this petition.
The Issues
HGC urges the affirmative of the following issues in urging the grant of its petition, to wit:
"Did the Honorable Court of
Appeals Seriously Err When It
Failed to Rule That:
I. The Regional Trial Court a quo had no jurisdiction to proceed with the case considering that:
(1) the original court was without authority to hear the case and;
(2) despite an unequivocal order from the trial court a quo, Private Respondent (R-II Builders)
failed and refused to pay the correct and proper docket fees, whether it be for a real or personal
action, based on the values of the properties or claims subject of the complaints.
II. Since the Honorable Court of Appeals had characterized the case as a personal action, the
action before the Regional Trial Court a quo should have been dismissed for improper venue.
III. The order appointing a receiver was made with grave abuse of discretion as amounting to
lack of jurisdiction for having been issued under the following circumstances:
(1) It was made without a hearing and without any evidence of its necessity;
(2) It was unduly harsh and totally unnecessary in view of other available remedies, especially
considering that Petitioner HGC is conclusively presumed to be solvent;
(3) It effectively prevented the performance of HGC’s functions in recovering upon its guaranty
exposure and was in contravention of Presidential Decree Nos. 385 and 1818, Republic Act No.
8927 and Supreme Court Circular Nos. 2-91, 13-93, 68-94 and Administrative Circular No. 11-
00."34
Acting on HGC’s motion for resolution of its application for a temporary restraining order and/or
preliminary injunction,35 the Court issued the resolution dated 23 August 2010, enjoining the
enforcement of respondent RTC’s assailed orders.36
The Court’s Ruling
We find the petition impressed with merit.
Jurisdiction is defined as the authority to hear and determine a cause or the right to act in a
case.37 In addition to being conferred by the Constitution and the law,38 the rule is settled that a
court’s jurisdiction over the subject matter is determined by the relevant allegations in the
complaint,39 the law in effect when the action is filed,40 and the character of the relief sought
irrespective of whether the plaintiff is entitled to all or some of the claims asserted.41 Consistent
with Section 1, Rule 141 of the Revised Rules of Court which provides that the prescribed fees
shall be paid in full "upon the filing of the pleading or other application which initiates an action
or proceeding", the well-entrenched rule is to the effect that a court acquires jurisdiction over a
case only upon the payment of the prescribed filing and docket fees.42
The record shows that R-II Builders’ original complaint dated 23 August 2005 was initially
docketed as Civil Case No. 05-113407 before Branch 24 of the Manila, a designated Special
Commercial Court.43 With HGC’s filing of a motion for a preliminary hearing on the affirmative
defenses asserted in its answer44 and R-II Builders’ filing of its Amended and Supplemental
Complaint dated 31 July 2007,45 said court issued an order dated 2 January 2008 ordering the
re-raffle of the case upon the finding that the same is not an intra-corporate dispute.46 In a
clarificatory order dated 1 February 2008,47 the same court significantly took cognizance of its
lack of jurisdiction over the case in the following wise:
At the outset, it must be stated that this Court is a designated Special Commercial Court tasked
to try and hear, among others, intra-corporate controversies to the exclusion of ordinary civil
cases.
When the case was initially assigned to this Court, it was classified as an intra-corporate case.
However, in the ensuing proceedings relative to the affirmative defences raised by defendants,
even the plaintiff conceded that the case is not an intra-corporate controversy or even if it is, this
Court is without authority to hear the same as the parties are all housed in Quezon City.
Thus, the more prudent course to take was for this Court to declare that it does not have the
authority to hear the complaint it being an ordinary civil action. As to whether it is personal or
civil, this Court would rather leave the resolution of the same to Branch 22 of this Court. (Italics
supplied).
We find that, having squarely raised the matter in its Rule 65 petition for certiorari and prohibition
docketed as CA-G.R. SP No. 111153,48 HGC correctly faults the CA for not finding that Branch
24 of the Manila RTC had no authority to order the transfer of the case to respondent
RTC.49 Being outside the jurisdiction of Special Commercial Courts, the rule is settled that cases
which are civil in nature, like the one commenced by R-II Builders, should be threshed out in a
regular court.50 With its acknowledged lack of jurisdiction over the case, Branch 24 of the Manila
RTC should have ordered the dismissal of the complaint, since a court without subject matter
jurisdiction cannot transfer the case to another court.51 Instead, it should have simply ordered
the dismissal of the complaint, considering that the affirmative defenses for which HGC sought
hearing included its lack of jurisdiction over the case.
Calleja v. Panday,52 while on facts the other way around, i.e., a branch of the RTC exercising
jurisdiction over a subject matter within the Special Commercial Court’s authority, dealt squarely
with the issue:
Whether a branch of the Regional Trial Court which has no jurisdiction to try and decide a case
has authority to remand the same to another co-equal Court in order to cure the defects on
venue and jurisdiction.
Calleja ruled on the issue, thus:
Such being the case, RTC Br. 58 did not have the requisite authority or power to order the
transfer of the case to another branch of the Regional Trial Court. The only action that RTC-Br.
58 could take on the matter was to dismiss the petition for lack of jurisdiction.
Certainly, the pronouncement of Br. 24, the Special Commercial Court, in its Joint Order of 2
January 2008 that the case is not an intracorporate controversy, amplified in its Order of 1
February 2008 that it "does not have the authority to hear the complaint it being an ordinary civil
action" is incompatible with the directive for the re-raffle of the case and to "leave the resolution
of the same to Branch 22 of this Court." Such a directive is an exercise of authority over the
case, which authority it had in the same breath declared it did not have. What compounds the
jurisdictional error is the fact that at the time of its surrender of jurisdiction, Br. 24 had already
acted on the case and had in fact, on 26 October 2005, issued the writ of preliminary injunction
sought by herein respondent R-II Builders. At that point, there was absolutely no reason which
could justify a re-raffle of the case considering that the order that was supposed to have caused
the re-raffle was not an inhibition of the judge but a declaration of absence of jurisdiction. So
faulty was the order of re-raffle that it left the impression that its previously issued preliminary
injunction remained effective since the case from which it issued was not dismissed but merely
transferred to another court. A re-raffle which causes a transfer of the case involves courts with
the same subject matter jurisdiction; it cannot involve courts which have different jurisdictions
exclusive of the other. More apt in this case, a re-raffle of a case cannot cure a jurisdictional
defect.
Prescinding from the foregoing considerations, and to show that the proceedings below was
error upon error, we find that the CA also gravely erred in not ruling that respondent RTC’s
(Branch 22, the regular court) jurisdiction over the case was curtailed by R-II Builders’ failure to
pay the correct docket fees. In other words, the jurisdictionally flawed transfer of the case from
Branch 24, the SCC to Branch 22, the regular court, is topped by another jurisdictional defect
which is the non-payment of the correct docket fees. In its order dated 19 May 2008 which
admitted R-II Builders’ Amended and Supplemental Complaint, respondent RTC distinctly ruled
that the case was a real action and ordered the re-computation and payment of the correct
docket fees.53 In patent circumvention of said order, however, R-II Builders filed its 14 August
2008 motion to admit its Second Amended Complaint which effectively deleted its causes of
action for accounting and conveyance of title to and/or possession of the entire Asset Pool and,
in addition to reducing the claim for attorney’s fees and seeking its appointment as a receiver,
reinstated its cause of action for resolution of the DAC.54 Acting on said motion as well as the
opposition and motion to dismiss interposed by HGC,55 respondent RTC ruled as follows in its
assailed 3 March 2009 order,56 to wit:
1. The docket fees of the original complaint has been paid, thus, the Court already acquired
jurisdiction over the instant case. The admission of the Amended and Supplemental Complaint,
is subject to the payment of docket fees pursuant to the Order of this Court dated May 18, 2008.
The non-payment of the docket fees stated in the Order dated May 18, 2008 will result only in
the non-admission of the Amended and Supplemental Complaint, which means that the Original
Complaint remains. However, since the Amended and Supplemental Complaint is being
withdrawn and in lieu thereof a new Amended Complaint is sought to be admitted, there is no
more need to pay the docket fees as provided for in the said Order.
2. It is settled that once jurisdiction is acquired and vested in a Court, said Court maintains its
jurisdiction until judgment is had (Aruego, Jr., et al. vs. CA). Such acquired jurisdiction is not lost
by the amendment of a pleading that raises additional/new cause(s) of action. The jurisdiction
of a Court is not even lost even if the additional docket fees are required by reason of the
amendment.
Indeed, the Supreme Court held in PNOC vs. Court of Appeals (G.R. No. 107518, October 8,
1998) that:
"Its failure to pay the docket fee corresponding to its increased claim for damages under the
amended complaint should not be considered as having curtailed the lower court’s jurisdiction.
Pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, the unpaid docket fees
should be considered as a lien on the judgment even though private respondent specified the
amount of ₱600,000.00 as its claim for damages in its amended complaint.
Thus, even on the assumption that additional docket fees are required as a consequence of any
amended complaint, its non-payment will not result in the court’s loss of jurisdiction over the
case.57
Distinctly, the principal reference remained to be the "original complaint," in which R-II Builders
itself submitted that the case "is a real action as it affects title and possession of real property or
interest therein." It was precisely this submission which was the basis of the conclusion of the
SCC court, Br. 24 that the case is not an intra-corporate controversy and therefore is outside its
authority.
We see from the assailed Order that the regular court accepted the case on the reason that "the
docket fees of the original complaint has been paid," so that, furthermore, the Amended and
Supplemental Complaint may be admitted "subject to the payment of docket fees." When the
required fees were not paid, the court considered it as resulting in the non-admission of the
Amended and Supplemental Complaint such that "the original complaint remains." That
remaining original complaint can then be amended by "a new Amended Complaint" which is no
longer subject to the conditions attached to the unadmitted Amended and Supplemental
Complaint.
The Order of 3 March 2009, with its logic and reason, is wholly unacceptable.
In upholding the foregoing order as well as its affirmance in respondent RTC’s 29 September
2009 order,58 the CA ruled that the case – being one primarily instituted for the
resolution/nullification of the DAC – involved an action incapable of pecuniary estimation. While
it is true, however, that R-II Builder's continuing stake in the Asset Pool is "with respect only to
its residual value after payment of all the regular SMPPCs holders and the Asset Pool
creditors",59 the CA failed to take into account the fact that R-II Builders’ original complaint and
Amended and Supplemental Complaint both interposed causes of action for conveyance and/or
recovery of possession of the entire Asset Pool. Indeed, in connection with its second cause of
action for appointment as trustee in its original complaint,60 R-II Builders distinctly sought the
conveyance of the entire Asset Pool61 which it consistently estimated to be valued at
₱5,919,716,618.62 as of 30 June 2005.62 In its opposition to HGC’s motion to dismiss, R-II
Builders even admitted that the case is a real action as it affects title to or possession of real
property or an interest therein.63 With R-II Builders' incorporation of a cause of action for
conveyance of title to and/or possession of the entire Asset Pool in its Amended and
Supplemental Complaint,64 on the other hand, no less than respondent RTC, in its 19 May 2008
order, directed the assessment and payment of docket fees corresponding to a real action.
Admittedly, this Court has repeatedly laid down the test in ascertaining whether the subject
matter of an action is incapable of pecuniary estimation by determining the nature of the principal
action or remedy sought. While a claim is, on the one hand, considered capable of pecuniary
estimation if the action is primarily for recovery of a sum of money, the action is considered
incapable of pecuniary estimation where the basic issue is something other than the right to
recover a sum of money, the money claim being only incidental to or merely a consequence of,
the principal relief sought.65 To our mind, the application of foregoing test does not, however,
preclude the further classification of actions into personal actions and real action, for which
appropriate docket fees are prescribed. In contrast to personal actions where the plaintiff seeks
the recovery of personal property, the enforcement of a contract, or the recovery of damages,
real actions are those which affect title to or possession of real property, or interest
therein.66 While personal actions should be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he may be found, at the election of the
plaintiff,67 the venue for real actions is the court of the place where the real property is located.68
Although an action for resolution and/or the nullification of a contract, like an action for specific
performance, fall squarely into the category of actions where the subject matter is considered
incapable of pecuniary estimation,69 we find that the causes of action for resolution and/or
nullification of the DAC was erroneously isolated by the CA from the other causes of action
alleged in R-II Builders' original complaint and Amended and Supplemental Complaint which
prayed for the conveyance and/or transfer of possession of the Asset Pool. In Gochan v.
Gochan,70 this Court held that an action for specific performance would still be considered a real
action where it seeks the conveyance or transfer of real property, or ultimately, the execution of
deeds of conveyance of real property. More to the point is the case of Ruby Shelter Builders and
Realty Development Corporation v. Hon. Pablo C. Formaran III71 where, despite the annulment
of contracts sought in the complaint, this Court upheld the directive to pay additional docket fees
corresponding to a real action in the following wise, to wit:
x x x [I]n Siapno v. Manalo, the Court disregarded the title/denomination of therein plaintiff
Manalo's amended petition as one for Mandamus with Revocation of Title and Damages; and
adjudged the same to be a real action, the filing fees for which should have been computed
based on the assessed value of the subject property or, if there was none, the estimated value
thereof. The Court expounded in Siapno that:
In his amended petition, respondent Manalo prayed that NTA's sale of the property in dispute to
Standford East Realty Corporation and the title issued to the latter on the basis thereof, be
declared null and void. In a very real sense, albeit the amended petition is styled as one
for "Mandamus with Revocation of Title and Damages", it is, at bottom, a suit to recover from
Standford the realty in question and to vest in respondent the ownership and possession thereof.
In short, the amended petition is in reality an action in res or a real action. Our pronouncement
in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, we said:
A prayer for annulment or rescission of contract does not operate to efface the true objectives
and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97,
1948)
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul
a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).
While it is true that petitioner does not directly seek the recovery of title or possession of the
property in question, his action for annulment of sale and his claim for damages are closely
intertwined with the issue of ownership of the building which, under the law, is considered
immovable property, the recovery of which is petitioner's primary objective. The prevalent
doctrine is that an action for the annulment or rescission of a sale of real property does not
operate to efface the fundamental and prime objective and nature of the case, which is to recover
said real property. It is a real action.72
Granted that R-II Builders is not claiming ownership of the Asset Pool because its continuing
stake is, in the first place, limited only to the residual value thereof, the conveyance and/or
transfer of possession of the same properties sought in the original complaint and Amended and
Supplemental Complaint both presuppose a real action for which appropriate docket fees
computed on the basis of the assessed or estimated value of said properties should have been
assessed and paid. In support of its original complaint’s second cause of action for appointment
as trustee and conveyance of the properties in the Asset Pool, R-II Builders distinctly alleged as
follows:
5.12. As the Court-appointed Trustee, R-II Builders shall have and exercise the same powers,
rights and duties as if [it] had been originally appointed, having the principal duty of redeeming
and buying back the Regular SMPPC’s and thereafter liquidating the Asset Pool, which are also
the end goals of the Agreement.
5.12.1. R-II Builders, as the Trustee, shall have the power and right to invest, transfer, convey
or assign any of the assets of the Asset Pool, whether funds, receivables, real or personal
property, in exchange for shares of stocks, bonds, securities, real or personal properties of any
kind, class or nature, provided that any such investment, transfer, conveyance or assignment
shall not impair the value of the Asset Pool.
5.12.2. R-II Builders, as the Trustee, shall have the power and right to sell, change, assign or
otherwise dispose of any stocks, bonds, securities, real or personal properties or other assets
constituting the Asset Pool.
5.12. 3. R-II Builders, as the Trustee, shall have the power and right to enter into lease
agreements as lessor or any other related contract for the benefit of the Asset Pool; and
5.12.4. It is understood that the aforecited powers and rights of R-II Builders as the court-
appointed Trustee, are non-exclusive; and is deemed to include all the rights and powers
necessary and incidental to achieve the goals and objectives of the Agreement.73
From the foregoing allegations in its original complaint, it cannot be gainsaid that R-II Builders
was unquestionably seeking possession and control of the properties in the Asset Pool which
predominantly consisted of real properties. Having admitted that "the case is a real action as it
affects title to or possession of real property or (an) interest therein",74 R-II Builders emphasized
the real nature of its action by seeking the grant of the following main reliefs in the Amended and
Supplemental Complaint it subsequently filed, to wit:
5. After trial on the merits, render judgment:
(i) Declaring the annulment of the Deed of Assignment and conveyance executed by PDB in
favor of HGC; or in the alternative, declaring the nullity of the said instrument;
(ii) Appointing R-II Builders as the Trustee of the Asset Pool Properties, with powers and
responsibilities including but not limited to those stated in 5.12.1, 5.12.2, 5.12.3 and 5.12.4
herein and those spelled out in the Re-Stated Smokey Mountain Asset Pool Formation Trust
Agreement;
(iii) Ordering HGC to render an accounting of all properties of the Asset Pool transferred thereto
under the Deed of Assignment and Conveyance and thereafter convey title to and/or
possession of the entire Asset Pool to R-II Builders as the Trustee thereof which assets consist
of, but is not limited to the following:
(a) 105 parcels of land comprising the Smokey Mountain Site, and, the Reclamation Area,
consisting of the 539,471.47 square meters, and all the buildings and improvements thereon,
with their corresponding certificates of title;
(b) shares of stock of Harbour Center Port Terminal, Inc. which are presently registered in the
books of the said company in the name of PDB for the account of the Smokey Mountain Asset
Pool; and
(c) other documents as listed in Annex E of the Contract of Guaranty.
(iv) Ordering NHA to pay the Asset Pool the amount of Php1,803,729,757.88 including the direct
and indirect cost thereon as may be found by this Honorable Court to be due thereon;
(v) Making the injunction permanent;
(vi) Ordering HGC and the NHA to pay Attorney’s fees in the amount of ₱2,000,000 and the
costs of suit.75
For failure of R-II Builders to pay the correct docket fees for its original complaint or, for that
matter, its Amended and Supplemental Complaint as directed in respondent RTC's 19 May 2008
order, it stands to reason that jurisdiction over the case had yet to properly attach. Applying the
rule that "a case is deemed filed only upon payment of the docket fee regardless of the actual
date of filing in court" in the landmark case of Manchester Development Corporation v. Court of
Appeals,76 this Court ruled that jurisdiction over any case is acquired only upon the payment of
the prescribed docket fee which is both mandatory and jurisdictional. To temper said ruling, the
Court subsequently issued the following guidelines in Sun Insurance Office, Ltd. v. Hon.
Maximiano Asuncion,77 viz.:
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 fee 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.
True to the foregoing guidelines, respondent RTC admitted R-II Builder’s Amended and
Supplemental Complaint and directed the assessment and payment of the appropriate docket
fees in the order dated 19 May 2008. Rather than complying with said directive, however, R-II
Builders manifested its intent to evade payment of the correct docket fees by withdrawing its
Amended and Supplemental Complaint and, in lieu thereof, filed its Second Amended Complaint
which deleted its cause of action for accounting and conveyance of title to and/or possession of
the entire Asset Pool, reduced its claim for attorney’s fees, sought its appointment as Receiver
and prayed for the liquidation and distribution of the Asset Pool.78 In upholding the admission of
said Second Amended Complaint in respondent RTC’s assailed 3 March 2009 Order, however,
the CA clearly lost sight of the fact that a real action was ensconced in R-II Builders’ original
complaint and that the proper docket fees had yet to be paid in the premises. Despite the latter’s
withdrawal of its Amended and Supplemental Complaint, it cannot, therefore, be gainsaid that
respondent RTC had yet to acquire jurisdiction over the case for non-payment of the correct
docket fees.
In the 15 February 2011 Resolution issued in the case of David Lu v. Paterno Lu Ym, Sr.,79 this
Court, sitting En Banc, had occasion to rule that an action for declaration of nullity of share issue,
receivership and corporate dissolution is one where the value of the subject matter is incapable
of pecuniary estimation. Subsequent to the trial court's rendition of a decision on the merits
declared to be immediately executory and the CA's denial of their application for a writ of
preliminary injunction and/or temporary restraining order to enjoin enforcement of said decision,
the defendants questioned the sufficiency of the docket fees paid a quo which supposedly failed
take into consideration the value of the shares as well as the real properties involved for which
the plaintiff additionally caused notices of lis pendens to be annotated. Finding that defendants
were already estopped in questioning the jurisdiction of the trial court on the ground of non-
payment of the correct docket fees, the Court discounted intent to defraud the government on
the part of the plaintiff who can, at any rate, be required to pay the deficiency which may be
considered a lien on the judgment that may be rendered, without automatic loss of the jurisdiction
already acquired, in the first instance, by the trial court.1avvphi1
The factual and legal milieus of the case at bench could not, however, be more different. While
R-II Builders styled its original complaint and Amended and Supplemental Complaint as one
primarily for the resolution and/or declaration of the DAC, it simultaneously and unmistakably
prayed for the conveyance, possession and control of the Asset Pool. Alongside the fact that
HGC has consistently questioned the sufficiency of the docket fees paid by R-II Builders,
estoppel cannot be said to have set in since, the lapse of more than five years from the
commencement of the complaint notwithstanding, it appears that the case has yet to be tried on
the merits. Having admitted that its original complaint partook the nature of a real action and
having been directed to pay the correct docket fees for its Amended and Supplemental
Complaint, R-II Builders is, furthermore, clearly chargeable with knowledge of the insufficiency
of the docket fees it paid. Unmistakably manifesting its intent to evade payment of the correct
docket fees, moreover, R-II Builders withdrew its Amended and Supplemental Complaint after
its admission and, in lieu thereof, filed its’ Second Amended Complaint on the ground that said
earlier pleading cannot be considered admitted in view of its non-payment of the docket and
other fees it was directed to pay. In so doing, however, R-II Builders conveniently overlooked
the fact that the very same argument could very well apply to its original complaint for which –
given its admitted nature as a real action - the correct docket fees have also yet to be paid.
The importance of filing fees cannot be over-emphasized for they are intended to take care of
court expenses in the handling of cases in terms of costs of supplies, use of equipment, salaries
and fringe benefits of personnel, and others, computed as to man-hours used in the handling of
each case. The payment of said fees, therefore, cannot be made dependent on the result of the
action taken without entailing tremendous losses to the government and to the judiciary in
particular.80 For non-payment of the correct docket fees which, for real actions, should be
computed on the basis of the assessed value of the property, or if there is none, the estimated
value thereof as alleged by the claimant,81 respondent RTC should have denied admission of R-
II Builders’ Second Amended Complaint and ordered the dismissal of the case. Although a
catena of decisions rendered by this Court eschewed the application of the doctrine laid down
in the Manchester case,82 said decisions had been consistently premised on the willingness of
the party to pay the correct docket fees and/or absence of intention to evade payment of the
correct docket fees. This cannot be said of R-II Builders which not only failed to pay the correct
docket fees for its original complaint and Amended and Supplemental Complaint but also clearly
evaded payment of the same by filing its Second Amended Complaint.
By itself, the propriety of admitting R-II Builders’ Second Amended Complaint is also cast in
dubious light when viewed through the prism of the general prohibition against amendments
intended to confer jurisdiction where none has been acquired yet. Although the policy in this
jurisdiction is to the effect that amendments to pleadings are favored and liberally allowed in the
interest of justice, amendment is not allowed where the court has no jurisdiction over the original
complaint and the purpose of the amendment is to confer jurisdiction upon the court.83 Hence,
with jurisdiction over the case yet to properly attach, HGC correctly fault the CA for upholding
respondent RTC’s admission of R-II Builders’ Second Amended Complaint despite non-payment
of the docket fees for its original complaint and Amended and Supplemental Complaint as well
as the clear intent to evade payment thereof.
With the determination of the jurisdictional necessity of the dismissal of the complaint of R-II
Builders docketed as Civil Case No. 05-113407, first before Br. 24 and later before Br. 22 both
of the RTC of Manila, we no longer find any reason to go into a discussion of the remaining
issues HGC proffers for resolution. In view, particularly, of its non-acquisition of jurisdiction over
the case, respondent RTC clearly had no authority to grant the receivership sought by R-II
Builders. It needs pointing out though that the prayer for receivership clearly indicates that the
R-II Builders sought the transfer of possession of property consisting of the assets of the JVA
from HGC to the former’s named Receiver. As already noted, said transfer of possession was
sought by respondent R-II Builders since the very start, overtly at the first two attempts, covertly
in the last, the successive amendments betraying the deft maneuverings to evade payment of
the correct docket fees.
WHEREFORE, premises considered, the assailed Decision dated 21 January 2010 is
REVERSED and SET ASIDE. In lieu thereof, another is entered NULLIFYING the regular
court’s, RTC Branch 22’s Orders dated 3 March 2009 and 29 September 2009 as well as the
SCC’s, RTC Branch 24’s Order dated 26 October 2005 which was rendered void by the SCC’s
subsequent declaration of absence of authority over the case. The complaint of R-II Builders
docketed as Civil Case No. 05-113407 first before Br. 24 and thereafter before Br. 22 both of
the RTC of Manila is hereby DISMISSED.
SO ORDERED.

G.R. Nos. 175277 & 175285 September 11, 2013
UNICAPITAL, INC., UNICAPITAL REALTY, INC., and JAIME J. MARTINEZ, Petitioners,
vs.
RAFAEL JOSE CONSING, JR., and THE PRESIDING JUDGE OF THE REGIONAL TRIAL
COURT OF PASIG CITY, BRANCH 168, Respondents.
x-----------------------x
G.R. No. 192073
RAFAEL JOSE CONSING, JR., Petitioner,
vs.
HON. MARISSA MACARAIG-GUILLEN, in her capacity as the Presiding Judge of the
Regional Trial Court of Makati City, Branch 60 and UNICAPITAL, INC., Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court are consolidated petitions for review on certiorari1 assailing separate issuances
of the Court of Appeals (CA) as follows:
(a) The petitions in G.R. Nos. 175277 and 175285 filed by Unicapital, Inc., (Unicapital), Unicapital
Realty, Inc. (URI), and Unicapital Director and Treasurer Jaime J. Martirez (Martirez)assail the
CA’s Joint Decision2 dated October 20, 2005 and Resolution3 dated October 25, 2006 in CA-
G.R. SP Nos. 64019and 64451 which affirmed the Resolution4 dated September 14,1999 and
Order5 dated February 15, 2001 of the Regional Trial Court (RTC) of Pasig City, Branch 68
(RTC-Pasig City) in SCA No. 1759, upholding the denial of their motion to dismiss; and
(b) The petition in G.R. No. 192073 filed by Rafael Jose Consing, Jr. (Consing, Jr.) assails the
CA’s Decision6 dated September 30, 2009 and Resolution7 dated April 28, 2010 inCA-G.R. SP
No. 101355 which affirmed the Orders dated July16, 20078 and September 4, 20079 of the RTC
of Makati City, Branch 60 (RTC-Makati City) in Civil Case No. 99-1418,upholding the denial of
his motion for consolidation.
The Facts
In 1997, Consing, Jr., an investment banker, and his mother, Cecilia Dela Cruz (Dela Cruz),
obtained an ₱18,000,000.00 loan from Unicapital,₱12,000,000.00 of which was acquired on July
24, 1997 and the remaining₱6,000,000.00 on August 1, 1997. The said loan was secured by
Promissory Notes10 and a Real Estate Mortgage11 over a 42,443 square meter-parcel of land
located at Imus, Cavite, registered in the name of Dela Cruz as per Transfer Certificate of Title
(TCT) No. T-687599 (subject property).12 Prior to these transactions, Plus Builders, Inc. (PBI), a
real estate company, was already interested to develop the subject property into a residential
subdivision.13 In this regard, PBI entered into a joint venture agreement with Unicapital, through
its real estate development arm, URI. In view of the foregoing, the loan and mortgage over the
subject property was later on modified into an Option to Buy Real Property14 and, after further
negotiations, Dela Cruz decided to sell the same to Unicapital and PBI. For this purpose, Dela
Cruz appointed Consing, Jr. as her attorney-in-fact.15
Eventually, Unicapital, through URI, purchased one-half of the subject property for a
consideration of ₱21,221,500.00 (against which Dela Cruz’s outstanding loan obligations were
first offset), while PBI bought the remaining half for the price of ₱21,047,000.00.16 In this relation,
Dela Cruz caused TCT No. T-687599 to be divided into three separate titles as follows: (a) TCT
No. T-851861 for URI;17 (b) TCT No. T-851862 for PBI;18 and (c)TCT No. T-51863 which was
designated as a road lot.19 However, even before URI and PBI were able to have the titles
transferred to their names, Juanito Tan Teng (Teng) and Po Willie Yu (Yu) informed Unicapital
that they are the lawful owners of the subject property as evidenced by TCT No.T-114708;20 that
they did not sell the subject property; and that Dela Cruz’s title, i.e., TCT No. T-687599, thereto
was a mere forgery.21 Prompted by Teng and Yu’s assertions, PBI conducted further
investigations on the subject property which later revealed that Dela Cruz's title was actually of
dubious origin. Based on this finding, PBI and Unicapital sent separate demand letters22 to Dela
Cruz and Consing, Jr., seeking the return of the purchase price they had paid for the subject
property.
From the above-stated incidents stemmed the present controversies as detailed hereunder.
The Proceedings Antecedent to G.R. Nos. 175277 & 175285
On May 3, 1999, Consing, Jr. filed a complaint, denominated as a Complex Action for
Declaratory Relief23 and later amended to Complex Action for Injunctive Relief24 (Consing, Jr.’s
complaint) before the RTC-Pasig City against Unicapital, URI, PBI, Martirez, PBI General
Manager Mariano Martinez (Martinez), Dela Cruz and Does 1-20, docketed as SCA No. 1759.
In his complaint, Consing, Jr. claimed that the incessant demands/recovery efforts made upon
him by Unicapital and PBI to return to them the purchase price they had paid for the subject
property constituted harassment and oppression which severely affected his personal and
professional life.25 He also averred that he was coerced to commit a violation of Batas Pambansa
Blg. 2226 as Unicapital and PBI, over threats of filing acase against him, kept on forcing him to
issue a post-dated check in the amount sought to be recovered, notwithstanding their knowledge
that he had no funds for the same.27 He further alleged that Unicapital and URI required him to
sign blank deeds of sale and transfers without cancelling the old one sin violation of the laws on
land registration and real estate development.28 Likewise, Consing, Jr. added that Unicapital and
PBI’s representatives were" speaking of him in a manner that was inappropriate and
libelous,"29 and that some John Does "deliberately engaged in a fraudulent scheme to
compromise Consing, Jr.’s honor, integrity and fortune x x x consisting of falsifying or causing to
be falsified, or attempting to present as falsified certain transfers of Land Titles and Deeds for
profit,"30 classifying the foregoing as ultra vires acts which should warrant sanctions under the
corporation law, Revised Securities Act and related laws.31 Accordingly, Consing, Jr. prayed
that: (a) he be declared as a mere agent of Dela Cruz, and as such, devoid of any obligation to
Unicapital, URI, and PBI for the transactions entered into concerning the subject property; (b)
Unicapital, URI, and PBI be enjoined from harassing or coercing him, and from speaking about
him in a derogatory fashion; and (c) Unicapital, URI, and PBI pay him actual and consequential
damages in the amount of ₱2,000,000.00, moral damages of at least ₱1,000,000.00, exemplary
damages of ₱1,000,000.00, all per month, reckoned from May 1, 1999 and until the controversy
is resolved, and attorney's fees and costs of suit.32
For their part, Unicapital, URI, and Martirez (Unicapital, et al.) filed separate Motions to
Dismiss33 Consing, Jr.’s complaint (Unicapital, et al.’s motion to dismiss) on the ground of failure
to state a cause of action, considering that: (a) no document was attached against which
Consing, Jr. supposedly derived his right and against which his rights may be as certained; (b)
the demands to pay against Consing, Jr. and for him to tender post-dated checks to cover the
amount due were well within the rights of Unicapital as an unpaid creditor, as Consing, Jr. had
already admitted his dealings with them; (c) the utterances purportedly constituting libel were
not set out in the complaint; and (d) the laws supposedly violated were not properly identified.
Moreover, Unicapital, et al. posited that the RTC-PasigCity did not acquire jurisdiction over the
case given that Consing, Jr. failed to pay the proper amount of docket fees. In the same vein,
they maintained that the RTC-Pasig City had no jurisdiction over their supposed violations of the
Corporation Code and Revised Securities Act, which, discounting its merits, should have been
supposedly lodged with the Securities and Exchange Commission. Finally, they pointed out that
Consing, Jr.’s complaint suffers from a defective verification and, thus, dismissible.34
Similar to Unicapital et al.’s course of action, PBI and its General Manager, Martinez (Unicapital
and PBI, et al.), sought the dismissal of Consing, Jr.’s complaint on the ground that it does not
state a cause of action. They also denied having singled out Consing, Jr. because their collection
efforts were directed at both Consing, Jr. and Dela Cruz, which should be deemed as valid and,
therefore, should not be restrained.35
On September 14, 1999, the RTC-Pasig City issued a Resolution36 denying the above
mentioned motions to dismiss, holding that Consing, Jr.’s complaint sufficiently stated a cause
of action for tort and damages pursuant to Article 19 of the Civil Code. It ruled that where there
is abusive behavior, a complainant, like Consing, Jr., has the right to seek refuge from the courts.
It also noted that the elements of libel in a criminal case are not the same as those for a civil
action founded on the provisions of the Civil Code, and therefore, necessitates a different
treatment. It equally refused to dismiss the action on the ground of non-payment of docket fees,
despite Consing, Jr.’s escalated claims for damages therein, as jurisdiction was already vested
in it upon the filing of the original complaint. Moreover, it resolved to apply the liberal construction
rule as regards the subject complaint’s verification and certification, despite its improper wording,
considering further that such defect was not raised at the first opportunity. Consequently, it
ordered Unicapital and PBI, et al. to file their Answer and, in addition, to submit" any Comment
or Reaction within five (5) days from receipt hereof on the allegations of Consing, Jr. in his
rejoinder of September 9, 1999regarding the supposed filing of an identical case in Makati
City,"37 i.e., Civil Case No. 99-1418. Unperturbed, Unicapital and PBI, et al. moved for
reconsideration therefrom which was, however, denied by the RTC-Pasig City in an
Order38 dated February 15, 2001 for lack of merit. Aggrieved, they elevated the denial of their
motions to dismiss before the CA via a petition for certiorari and prohibition,39 docketed as CA-
G.R. SP Nos. 64019 and 64451.
On October 20, 2005, the CA rendered a Joint Decision40 holding that no grave abuse of
discretion was committed by the RTC-Pasig City in refusing to dismiss Consing, Jr.'s
complaint.1âwphi1 At the outset, it ruled that while the payment of the prescribed docket fee is
a jurisdictional requirement, its non-payment will not automatically cause the dismissal of the
case. In this regard, it considered that should there be any deficiency in the payment of such
fees, the same shall constitute a lien on the judgment award.41 It also refused to dismiss the
complaint for lack of proper verification upon a finding that the copy of the amended complaint
submitted to the RTC-Pasig City was properly notarized.42 Moreover, it upheld the order of the
RTC-Pasig City for Unicapital and PBI, et al. to submit their comment due to the alleged
existence of a similar case filed before the RTC-Makati City.43
Anent the substantive issues of the case, the CA concurred with the RTC-Pasig City that Consing
Jr.'s complaint states a cause of action. It found that Unicapital and PBI, et al.’s purportedly
abusive manner in enforcing their claims against Consing, Jr. was properly constitutive of a
cause of action as the same, if sufficiently proven, would have subjected him to "defamation of
his name in business circles, the threats and coercion against him to reimburse the purchase
price, fraud and falsification and breach of fiduciary obligation." It also found that the fact that
Consing Jr.'s complaint contains "nebulous" allegations will not warrant its dismissal as any
vagueness therein can be clarified through a motion for a bill of particulars."44 Furthermore, it
noted that Consing, Jr. does not seek to recover his claims against any particular provision of
the corporation code or the securities act but against the actions of Unicapital and PBI, et al.;
hence, Consing, Jr.’s complaint was principally one for damages over which the RTC has
jurisdiction, and, in turn, there lies no misjoinder of causes of action.45
Dissatisfied, only Unicapital, et al. sought reconsideration therefrom but the same was denied
by the CA in a Resolution46 dated October 25,2006. Hence, the present petitions for review on
certiorari in G.R. Nos.175277 and 175285.
The Proceedings Antecedent to G.R. No. 192073
On the other hand, on August 4, 1999, Unicapital filed a complaint47 for sum of money with
damages against Consing, Jr. and Dela Cruz before the RTC-Makati City, docketed as Civil
Case No. 99-1418, seeking to recover (a) the amount of ₱42,195,397.16, representing the value
of their indebtedness based on the Promissory Notes (subject promissory notes) plus interests;
(b) ₱5,000,000.00 as exemplary damages; (c) attorney's fees; and (d) costs of suit.48
PBI also filed a complaint for damages and attachment against Consing, Jr. and Dela Cruz
before the RTC of Manila, Branch 12, docketed as Civil Case No. 99-95381, also predicated on
the same set of facts as above narrated.49 In its complaint, PBI prayed that it be allowed to
recover the following: (a) ₱13,369,641.79, representing the total amount of installment payments
made as actual damages plus interests; (b) ₱200,000.00 as exemplary damages; (c)
₱200,000.00 as moral damages; (d) attorney's fees; and (e) costs of suit.50 Civil Case No. 99-
95381 was subsequently consolidated with SCA No. 1759 pending before the RTC-Pasig City.51
For his part, Consing, Jr. filed a Motion to Dismiss Civil Case No. 99-1418 which was, however,
denied by the RTC-Makati City in an Order52 dated November 16, 1999. Thereafter, he filed a
Motion for Consolidation53 (motion for consolidation) of Civil Case No. 99-1418 with his own
initiated SCA No. 1759 pending before the RTC-Pasig City.
In an Order54 dated July 16, 2007, the RTC-Makati City dismissed Consing, Jr.’s motion for
consolidation and, in so doing, ruled that the cases sought to be consolidated had no identity of
rights or causes of action and the reliefs sought for by Consing, Jr. from the RTC-Pasig City will
not bar Unicapital from pursuing its money claims against him. Moreover, the RTC-Makati City
noted that Consing, Jr. filed his motion only as an after thought as it was made after the mediation
proceedings between him and Unicapital failed. Consing, Jr.'s motion for reconsideration
therefrom was denied in an Order55 dated September 4, 2007. Hence, he filed a petition for
certiorari before the CA, docketed as CA-G.R. SP No. 101355, ascribing grave abuse of
discretion on the part of the RTC-Makati City in refusing to consolidate Civil Case No. 99-1418
with SCA No. 1759 in Pasig City.
On September 30, 2009, the CA rendered a Decision56 sustaining the Orders dated July 16,
2007 and September 4, 2007 of the RTC-Makati City which denied Consing, Jr.’s motion for
consolidation. It held that consolidation is a matter of sound discretion on the part of the trial
court which could be gleaned from the use of the word "may" in Section 1, Rule38 of the Rules
of Court. Considering that preliminary steps (such as mediation) have already been undertaken
by the parties in Civil Case No.99-1418 pending before the RTC-Makati City, its consolidation
with SCA No. 1759 pending before the RTC-Pasig City "would merely result in complications in
the work of the latter court or squander the resources or remedies already utilized in the Makati
case."57 Moreover, it noted that the records of the consolidated Pasig and Manila cases, i.e.,
SCA No. 1759 and Civil Case No. 99-95381, respectively, had already been elevated to the
Court, that joint proceedings have been conducted in those cases and that the pre-trial therein
had been terminated as early as October 23, 2007.Therefore, due to these reasons, the
consolidation prayed for would be impracticable and would only cause a procedural faux pas.
Undaunted, Consing, Jr. filed a motion for reconsideration therefrom but was denied by the CA
in a Resolution58 dated April 28, 2010. Hence, the present petition for review on certiorari in G.R.
No. 192073.
The Proceedings Before the Court
After the filing of the foregoing cases, the parties were required to file their respective comments
and replies. Further, considering that G.R. No.192073 (Makati case) involves the same parties
and set of facts with those in G.R. Nos. 175277 & 175285 (Pasig case), these cases were
ordered consolidated per the Court's Resolution59 dated November 17, 2010. On March 9, 2011,
the Court resolved to give due course to the instant petitions and required the parties to submit
their respective memoranda.60
The Issues Before the Court
The essential issues in these cases are as follows: (a) in G.R. Nos.175277 and 175285, whether
or not the CA erred in upholding the RTC-Pasig City’s denial of Unicapital, et al.’s motion to
dismiss; and (b) in G.R. No. 192073, whether or not the CA erred in upholding the RTC-Makati
City’s denial of Consing, Jr.’s motion for consolidation.
The Court’s Ruling
A. Propriety of the denial of
Unicapital, et al.’s motion to
dismiss and ancillary issues.
A cause of action is defined as the act or omission by which a party violates a right of another.61 It
is well-settled that the existence of a cause of action is determined by the allegations in the
complaint.62 In this relation, a complaint is said to sufficiently assert a cause of action if, admitting
what appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed
for.63 Thus, if the allegations furnish adequate basis by which the complaint can be maintained,
then the same should not be dismissed, regardless of the defenses that may be averred by the
defendants.64 As edified in the case of Pioneer Concrete Philippines, Inc. v. Todaro,65 citing
Hongkong and Shanghai Banking Corporation, Limited. v. Catalan66 (HSBC):
The elementary test for failure to state a cause of action is whether the complaint alleges facts
which if true would justify the relief demanded. Stated otherwise, may the court render a valid
judgment upon the facts alleged therein? The inquiry is into the sufficiency, not the veracity of
the material allegations. If the allegations in the complaint furnish sufficient basis on which it can
be maintained, it should not be dismissed regardless of the defense that may be presented by
the defendants.67 (Emphasis supplied)
Stated otherwise, the resolution on this matter should stem from an analysis on whether or not
the complaint is able to convey a cause of action; and not that the complainant has no cause of
action. Lest it be misunderstood, failure to state a cause of action is properly a ground for a
motion to dismiss under Section 1(g), Rule 1668 of the Rules of Court(Rules), while the latter is
not a ground for dismissal under the same rule.
In this case, the Court finds that Consing, Jr.’s complaint in SCA No.1759 properly states a cause
of action since the allegations there insufficiently bear out a case for damages under Articles 19
and 26 of the Civil Code.
Records disclose that Consing, Jr.’s complaint contains allegations which aim to demonstrate
the abusive manner in which Unicapital and PBI, et al. enforced their demands against him.
Among others, the complaint states that Consing, Jr. "has constantly been harassed and
bothered by Unicapital and PBI, et al.; x x x besieged by phone calls from them; x x x has had
constant meetings with them variously, and on a continuing basis, such that he is unable to
attend to his work as an investment banker."69 In the same pleading, he also alleged that
Unicapital and PBI, et al.’s act of "demanding a postdated check knowing fully well that he does
not have the necessary funds to cover the same, nor is he expecting to have them is equivalent
to asking him to commit a crime under unlawful coercive force."70 Accordingly, these specific
allegations, if hypothetically admitted, may result into the recovery of damages pursuant to
Article 19 of the Civil Code which states that "every person must, in the exercise of his rights
and in the performance of his duties, act with justice, give everyone his due, and observe honesty
and good faith." As explained in the HSBC case:
When a right is exercised in a manner which does not conform with the norms enshrined in
Article 19 and results in damage to another, a legal wrong is thereby committed for which the
wrongdoer must beheld responsible. But a right, though by itself legal because it is recognized
or granted by law as such, may nevertheless become the source of some illegality. A person
should be protected only when he acts in the legitimate exercise of his right, that is, when he
acts with prudence and in good faith; but not when he acts with negligence or abuse. There is
an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. The
exercise of a right must be in accordance with the purpose for which it was established, and
must not be excessive or unduly harsh; there must be no intention to injure another.71 (Emphasis
supplied)
Likewise, Consing, Jr.’s complaint states a cause of action for damages under Article 26 of the
Civil Code which provides that:
Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for damages, prevention and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of
birth, physical defect, or other personal condition.
The rationale therefor was explained in the case of Manaloto v. Veloso III,72 citing Concepcion
v. CA,73 to wit:
The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The
Code Commission stressed in no uncertain terms that the human personality must be exalted.
The sacredness of human personality is a concomitant consideration of every plan for human
amelioration. The touchstone of every system of law, of the culture and civilization of every
country, is how far it dignifies man. If the statutes insufficiently protect a person from being
unjustly humiliated, in short, if human personality is not exalted - then the laws are indeed
defective. Thus, under this article, the rights of persons are amply protected, and damages are
provided for violations of a person's dignity, personality, privacy and peace of mind.74
To add, a violation of Article 26 of the Civil Code may also lead to the payment of moral damages
under Article 2219(10)75 of the Civil Code.
Records reveal that Consing, Jr., in his complaint, alleged that "he has come to discover that
Unicapital and PBI, et al. are speaking of him in a manner that is inappropriate and libelous; and
that they have spread their virulent version of events in the business and financial community
such that he has suffered and continues to suffer injury upon his good name and reputation
which, after all, is the most sacred and valuable wealth he possesses - especially considering
that he is an investment banker."76 In similar regard, the hypothetical admission of these
allegations may result into the recovery of damages pursuant to Article 26, and even
Article2219(10), of the Civil Code.
Corollary thereto, Unicapital, et al.’s contention77 that the case should be dismissed on the
ground that it failed to set out the actual libelous statements complained about cannot be given
credence. These incidents, as well as the specific circumstances surrounding the manner in
which Unicapital and PBI, et al. pursued their claims against Consing, Jr. may be better
ventilated during trial. It is a standing rule that issues that require the contravention of the
allegations of the complaint, as well as the full ventilation, in effect, of the main merits of the
case, should not be within the province of a mere motion to dismiss,78 as in this case. Hence, as
what is only required is that the allegations furnish adequate basis by which the complaint can
be maintained, the Court – in view of the above-stated reasons – finds that the RTC-Pasig City’s
denial of Unicapital, et al.’s motion to dismiss on the ground of failure to state a cause of action
was not tainted with grave abuse of discretion which would necessitate the reversal of the CA’s
ruling. Verily, for grave abuse of discretion to exist, the abuse of discretion must be patent and
gross so as to amount to an evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law.79 This the Court does not perceive in the
case at bar.
Further, so as to obviate any confusion on the matter, the Court equally finds that the causes of
action in SCA No. 1759 were not – as Unicapital, et al. claim – misjoined even if Consing, Jr.
averred that Unicapital and PBI, et al. violated certain provisions of the Corporation Law and the
Revised Securities Act.80
The rule is that a party’s failure to observe the following conditions under Section 5, Rule 2 of
the Rules results in a misjoinder of causes of action:81
SEC. 5. Joinder of causes of action . - A party may in one pleading assert, in the alternative or
otherwise, as many causes of action as he may have against an opposing party, subject to the
following conditions:
(a) The party joining the causes of action shall comply with the rules on joinder of parties;
(b) The joinder shall not include special civil actions governed by special rules;
(c) Where the causes of action are between the same parties but pertain to different venues or
jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes
of action falls within the jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for recovery of money the
aggregate amount claimed shall be the test of jurisdiction. (Emphasis supplied)
A careful perusal of his complaint discloses that Consing, Jr. did not seek to hold Unicapital and
PBI, et al. liable for any specific violation of the Corporation Code or the Revised Securities Act.
Rather, he merely sought damages for Unicapital and PBI, et al.’s alleged acts of making him
sign numerous documents and their use of the same against him. In this respect, Consing, Jr.
actually advances an injunction and damages case82 which properly falls under the jurisdiction
of the RTC-Pasig City.83 Therefore, there was no violation of Section 5, Rule 2 of the Rules,
particularly, paragraph (c) thereof. Besides, even on the assumption that there was a misjoinder
of causes of action, still, such defect should not result in the dismissal of Consing, Jr.’s complaint.
Section 6, Rule 2 of the Rules explicitly states that a "misjoinder of causes of action is not a
ground for dismissal of an action" and that "a misjoined cause of action may, on motion of a
party or on the initiative of the court, be severed and proceeded with separately."
Neither should Consing, Jr.’s failure to pay the required docket fees lead to the dismissal of his
complaint.1âwphi1 It has long been settled that while the court acquires jurisdiction over any
case only upon the payment of the prescribed docket fees, its non-payment at the time of the
filing of the complaint does not automatically cause the dismissal of the complaint provided that
the fees are paid within a reasonable period.84 Consequently, Unicapital, et al.’s insistence that
the stringent rule on non-payment of docket fees enunciated in the case of Manchester
Development Corporation v. CA85 should be applied in this case cannot be sustained in the
absence of proof that Consing, Jr. intended to defraud the government by his failure to pay the
correct amount of filing fees. As pronounced in the case of Heirs of Bertuldo Hinog v. Hon.
Melicor:86
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.
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.87 (Emphasis and italics in the
original)
Indeed, while the Court acknowledges Unicapital, et al.'s apprehension that Consing, Jr.'s
"metered" claim for damages to the tune of around ₱2,000,000.00 per month88 may balloon to a
rather huge amount by the time that this case is finally disposed of, still, any amount that may
by then fall due shall be subject to assessment and any additional fees determined shall
constitute as a lien against the judgment as explicitly provided under Section 2,89 Rule 141 of
the Rules.
Finally, on the question of whether or not Consing, Jr.'s complaint was properly verified, suffice
it to state that since the copy submitted to the trial court was duly notarized by one Atty. Allan B.
Gepty and that it was only Unicapital, et al.’s copy which lacks the notarization, then there was
sufficient compliance with the requirements of the rules on pleadings.90
In fine, the Court finds no reversible error on the part of the CA in sustaining the RTC-Pasig
City’s denial of Unicapital et al.’s motion to dismiss. As such, the petitions in G.R. Nos. 175277
and 175285 must be denied.
B. Propriety of the denial of
Consing, Jr.’s motion for
consolidation.
The crux of G.R. No. 192073 is the propriety of the RTC-Makati City’s denial of Consing, Jr.’s
motion for the consolidation of the Pasig case, i.e., SCA No. 1759, and the Makati case, i.e.,
Civil Case No. 99-1418.Records show that the CA upheld the RTC-Makati City’s denial of the
foregoing motion, finding that the consolidation of these cases was merely discretionary on the
part of the trial court. It added that it was "impracticable and would cause a procedural faux pas
"if it were to "allow the RTC-Pasig City to preside over the Makati case."91
The CA’s ruling is proper.
It is hornbook principle that when or two or more cases involve the same parties and affect
closely related subject matters, the same must be consolidated and jointly tried, in order to serve
the best interest of the parties and to settle the issues between them promptly, thus, resulting in
a speedy and inexpensive determination of cases. In addition, consolidation serves the purpose
of avoiding the possibility of conflicting decisions rendered by the courts in two or more cases,
which otherwise could be disposed of in a single suit.92 The governing rule is Section 1, Rule 31
of the Rules which provides:
Likewise, as the CA correctly pointed out, the RTC-Makati City could not have been failured in
retaining Civil Case No. 99-1418 in its dockets since pre-trial procedures have already been
undertaken therein and, thus, its consolidation with SCA No. 1759 pending before the RTC-
Pasig City would merely result in complications on the part of the latter court or squander the
resources or remedies already utilized in Civil Case No. 99-1418.93 In this light, aside from the
perceived improbability of having conflicting decisions, the consolidation of SCA No. 1759 and
Civil Case No. 99-1418 would, contrary to its objective, only delay the proceedings and entail
unnecessary costs.
All told, the Court finds the consolidation of SCA No. 1759 and Civil Case No. 99-1418 to be
improper, impelling the affirmance of the CA’s ruling. Consequently, the petition in G.R. No.
192073 must also be denied.
WHEREFORE, the petitions in G.R. Nos. 175277, 175285 and 192073 are DENIED.
Accordingly, the Court of Appeals’ Joint Decision dated October 20, 2005 and Resolution dated
October 25, 2006 in CA-G.R. SP Nos. 64019 and 64451 and the Decision dated September 30,
2009 and Resolution dated April 28, 2010 in CA-G.R. No. 101355 are hereby AFFIRMED.

SEC. 1. Consolidation. - When actions involving a common question of law or fact are pending
before the court, it may order a joint hearing or trial of any or all the matters in issue in the
actions; it may order all the actions consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay.

In the present case, the Court observes that the subject cases, i.e., SCA No. 1759 and Civil
Case No. 99-1418, although involving the same parties and proceeding from a similar factual
milieu, should remain unconsolidated since they proceed from different sources of obligations
and, hence, would not yield conflicting dispositions. SCA No. 1759 is an injunction and damages
case based on the Civil Code provisions on abuse of right and defamation, while Civil Case No.
99-1418 is a collection and damages suit based on actionable documents, i.e., the subject
promissory notes. In particular, SCA No. 1759 deals with whether or not Unicapital and BPI, et
al, abused the manner in which they demanded payment from Consing, Jr., while Civil Case No.
99-1418 deals with whether or not Unicapital may demand payment from Consing, Jr. based on
the subject promissory notes. Clearly, a resolution in one case would have no practical effect as
the core issues and reliefs sought in each case are separate and distinct from the other.