[G.R. No. 153951. July 29, 2005] PHILIPPINE NATIONAL BANK, petitioner, vs.

SANAO MARKETING CORPORATION, SPOUSES AMADO A. SANAO and SOLEDAD F. SANAO and SPOUSES WILLIAM (Willy) F. SANAO and HELEN SANAO and the COURT OF APPEALS, respondents. TINGA, J.: Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court, wherein petitioner Philippine National Bank (PNB) seeks the review of the Decision[2] rendered by the Court of Appeals Thirteenth Division in C.A. G.R. SP No. 63162. The assailed Decision nullified two orders[3] of the Regional Trial Court (RTC) of Pili, Camarines Sur, Branch 32, which respectively granted PNBs petition for issuance of a writ of possession over seven (7) parcels of land and directed the execution pending appeal of such writ of possession. The antecedents are as follows: In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and Soledad F. Sanao and the spouses William (Willy) F. Sanao and Helen Sanao (all respondents herein), as joint and solidary debtors, obtained a loan in the amount of One Hundred Fifty Million Pesos (P150,000,000.00) from PNB secured by a real estate mortgage of several parcels of land situated in the municipalities of Pili, Tigaon and Camaligan, all of Camarines Sur, and Naga City.[4] The contract expressly provided that the mortgage shall be governed by the provisions of Act No. 3135, as amended.[5] The pertinent portions of said contract provide that: .... F. FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP If at any time the Mortgagors fail or refuse to pay the obligation herein secured, or any of the amortization of such indebtedness when due, or to comply with any of the conditions and stipulations herein agreed, or shall during the time this mortgage is in force, institute insolvency proceedings or be involuntarily declared insolvent, or shall use the proceeds of this loan for purposes other than those specified herein, or if the mortgage cannot be recorded in or the Mortgagors fail to register the same with the corresponding Registry of Deeds, then all the obligations of the Mortgagors secured by this mortgage and all the amortization thereof shall immediately become due, payable and defaulted and the Mortgagee may immediately foreclose this mortgage judicially in accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended, and P.D. 385. For the purpose of extrajudicial foreclosure, the Mortgagors hereby appoint the Mortgagee their Attorney-in-Fact to sell the properties mortgaged under Act No. 3135, as amended, to sign all documents and perform any act requisite and necessary to accomplish said purpose and to appoint its substitute as Attorney-in-Fact with the same powers as above specified. In case of judicial foreclosure, the Mortgagors hereby consent to the appointment of the Mortgagee or of any of its employees as receiver, without any bond, to take charge of the mortgaged properties at once, and to hold possession of the same and the rents, benefits and profits derived from the mortgaged properties before the sale, less costs and expenses of the receivership. . . . [6] For failure of respondents to fully pay the loan upon its maturity, PNB caused the extrajudicial foreclosure of the mortgage through a certain Atty. Marvel C. Clavecilla (Atty. Clavecilla), a notary public for and in the City of Naga. The Notice of Extra-Judicial Foreclosure Sale announced that the sale of 13 titles consisting of 14 parcels of land located in Camarines Sur and Naga City is scheduled on 22 March 1999 at nine oclock in the morning or soon thereafter, at the entrance of the Municipal Court of Pili, Camarines Sur. This notice was published in the 7, 14 and 21 February 1999 issues of the Vox Bikol- a weekly tabloid published every Sunday and circulated in the Bicol region and continents with Bicol communities.[7] Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale[8] dated 26 April 1999 certifying that on the 22nd day of March 1999, at exactly ten oclock in the morning, he sold at a public auction at the lobby/main entrance of the Regional Trial Court, Hall of Justice, Naga City the mortgaged properties to PNB for Two Hundred Thirteen Million One Hundred Sixty-Two Thousand Seven Hundred Eighty- Seven and Fifty Centavos (P213,162,787.50), which amount the latter considered as payment pro tanto of petitioners loan.[9] This Provisional Certificate of Sale was registered with the Registry of Deeds of Camarines Sur on 3 May 1999 and with the Registry of Deeds of Naga City on 16 June 1999 for the properties respectively covered by their registries. [10] On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing Corporation filed a complaint [11] with the RTC of Naga City, Branch 61, against PNB, the Register of Deeds of the City of Naga and the Province of Camarines Sur, and Atty. Clavecilla, for the court to declare the Provisional Certificate of Sale and the auction and foreclosure proceedings null and void.[12] On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32, a petition for the issuance of a writ of possession, docketed therein as Spec. Proc. P-1182, over the properties located in Pili that are covered by Transfer Certificates of Title Nos. 21448, 24221, 14133, 15218, 15489, 13856, 15216. [13] To the petition, respondents Amado A. Sanao and Sanao Marketing Corporation interposed an answer in opposition, with special and affirmative defenses.[14]

PNB countered with its comments/reply to opposition. [15] On 24 November 2000, the RTC of Pili issued its first assailed order, [16] granting the writ of possession prayed for by PNB. Amado A. Sanao and Sanao Marketing Corporation filed a Motion for Reconsideration w/ Opposition to the Motion for Execution Pending Appeal,[17] which was denied per the second assailed order[18] dated 24 January 2001 of the RTC of Pili.[19] Respondents then filed a Petition[20] for certiorari and prohibition under Rule 65 of the Rules of Court before the Court of Appeals, imputing grave abuse of discretion on the part of the RTC of Pili in the issuance of the two assailed orders. The Petition likewise prayed for the issuance of a temporary restraining order which the Court of Appeals granted on 15 February 2001, enjoining the RTC of Pili and PNB from implementing the challenged orders. In their Memorandum,[21] respondents pointed out that the PNB had allegedly failed to submit the application for extrajudicial foreclosure of mortgage to the proper clerk of court after payment of the filing fee, in contravention of Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. In addition, respondents averred that the foreclosure sale was null and void as it was done at the lobby/main entrance of the RTC Hall of Justice, Naga City and not at the entrance of the Municipal Trial Court of Pili, Camarines Sur as published. [22] PNB, on the other hand, posited that the invoked administrative order is not applicable as extrajudicial proceedings conducted by a notary public, as in the case at bar, do not fall within the contemplation of the directive.[23] With regard to the variance of the venues of the auction sale as published in Vox Bikol and as recorded in the Provisional Certificate of Sale, PNB asserted that there was no violation of Act No. 3135 [24] or of the terms of the real estate mortgage contract,[25] as the sale of the mortgaged properties located in Camarines Sur were held in Naga City which is well within the territorial jurisdiction of said province. [26] The Court of Appeals ruled in favor of herein respondents. [27] The Court of Appeals rendered a litany of lapses that the notary public committed in the conduct of the foreclosure proceedings which in its estimation had effectively undermined the soundness of the foreclosure sale. Accordingly, the Court of Appeals held that the Provisional Certificate of Sale, upon which the issuance of the writ of possession was based, is fatally infirm, and that consequently, the writ of possession was not validly issued as the procedural requirements for its issuance were not satisfied.[28] Thus, the Court of Appeals declared null and void the two assailed orders of the RTC of Pili for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. [29] Aggrieved by the Decision, PNB filed the instant petition, arguing in the main that in nullifying the orders of the RTC of Pili, the Court of Appeals departed from the accepted and usual course of judicial proceedings as the issuance of writs of possession is purely ministerial on the part of the trial court. [30] In their comment,[31] respondents point out that the instant petition should not be given due course as it is not sufficient in form and substance. Respondents proffered the following grounds, thus: (1) there was no special of attorney or Board Resolution or Secretarys Certificate attached to the petition which could serve as basis for the petitioners signatory Domitila A. Amon to verify or attest to the truth of the allegations contained there in, in violation of existing laws and jurisprudence on the matter; (2) petitioners failed to move for a reconsideration of the assailed Decision of the Court of Appeals; (3) petitioners failed to disclose another similar case involving the same legal issues now pending in the Twelfth Division of the Court of Appeals, docketed as C.A. G.R. CV No. 73718, which is an appeal from an original petition for issuance of writ of possession filed by the same petitioner before the RTC of San Jose, Camarines Sur, Branch 58; (4) petitioner failed to furnish the Twelfth Division of the Court of Appeals a copy of the petition in C.A. G.R. No. 73718 pending therein, in violation of Section 5, Rule 7 of the 1997 Rules of Civil Procedure, which failure could lead to conflicting resolutions, between two divisions of the Court of Appeals and to the giving of inadequate information to the Supreme Court; and (5) the petition was only accompanied by Annexes A, B, C, D and E, which annexes do not satisfy the requirements laid down in Sections 4 and 5 of Rule 45 of the Rules of Court.[32] Respondents also reiterate that the PNB in the conduct of the extrajudicial foreclosure proceedings did not comply with Administrative Order No. 3 and Administrative Circular No. 3-98, and that the notice of publication was not sufficient to justify the execution of the Provisional Certificate of Sale.[33] Traversing the alleged procedural errors, PNB in its Reply[34] raise the following arguments: First, Mrs. Domitila A. Amon had authority to sign and verify its petition under Board Resolution No. 15 dated 8 October 1997,[35] in line with her authority to prosecute and defend cases for and/or against the bank.[36] Second, there are exceptions to the general rule that a motion for reconsideration must first be filed before elevating a case to a higher court. PNB insists that the Decision of the Court of Appeals is a patent nullity as it runs counter to the provisions of Act No. 3135 and existing jurisprudence stating that Administrative Order No. 3 covers judicial foreclosures.[37] As such, the filing of a motion for reconsideration prior to elevating the case on certiorari may be dispensed with.

Lastly, the case which according to respondents is not mentioned in the certification of non-forum shopping was commenced by respondents themselves, not PNB, and that the issues similar to those in the instant case have yet to be raised in respondents appeal to the Court of Appeals. Moreover, the subject matter and the properties involved in the other case are altogether different.[38] There is merit in the petition. A writ of possession is a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and give possession of it to the person entitled under the judgment. [39] A writ of possession may be issued under the following instances: [40] (1)in land registration proceedings under Section 17 of Act 496;[41] (2) in a judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; (3) in an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118; [42] and (4) in execution sales (last paragraph of Section 33, Rule 39 of the Rules of Court). [43] The present case falls under the third instance. Under Section 7 of Act No. 3135, as amended by Act No. 4118, a writ of possession may be issued either (1) within the one-year redemption period, upon the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond. [44] Section 7 of Act No. 3135, as amended by Act No. 4118, provides: SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. Under the above-quoted provision, the purchaser in a foreclosure sale may apply for a writ of possession during the redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property covered by a Torrens title. Upon the filing of such motion and the approval of the corresponding bond, the law also in express terms directs the court to issue the order for a writ of possession.[45] A writ of possession may also be issued after consolidation of ownership of the property in the name of the purchaser. It is settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of sale. As such, he is entitled to the possession of the property and can demand it any time following the consolidation of ownership in his name and the issuance of a new transfer certificate of title. In such a case, the bond required in Section 7 of Act No. 3135 is no longer necessary. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court. [46] It was held, thus: As the purchaser of the properties in the extra-judicial foreclosure sale, the PNCB is entitled to a writ of possession therefore. The law on extrajudicial foreclosure of mortgage provides that a purchaser in an extrajudicial foreclosure sale may take possession of the foreclosed property even before the expiration of the redemption period, provided he furnishes the necessary bond. Possession of the property may be obtained by filing an ex parte motion with the regional trial court of the province or place where the property is situated. Upon filing of the motion and the required bond, it becomes a ministerial duty of the court to order the issuance of a writ of possession in favor of the purchaser. After the expiration of the one-year period without redemption being effected by the property owner, the right of the purchaser to the possession of the foreclosed property becomes absolute. The basis of this right to possession is the purchasers ownership of the property. Mere filing of an ex parte motion for the issuance of the writ of possession would suffice, and no bond is required. [47] Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135, as amended by Act No. 4118. Such question is not to be raised as a justification for opposing the issuance of the writ of possession, since, under the Act, the proceeding is ex parte.[48] In case it is disputed that there was violation of the mortgage or that the procedural requirements for the foreclosure sale were not followed, Section 8 of Act No. 3135, as amended by Act No. 4118, provides, to wit: SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in

accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Number Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal. The law is clear that the purchaser must first be placed in possession. If the trial court later finds merit in the petition to set aside the writ of possession, it shall dispose the bond furnished by the purchaser in favor of the mortgagor. Thereafter, either party may appeal from the order of the judge. The rationale for the mandate is to allow the purchaser to have possession of the foreclosed property without delay, such possession being founded on his right of ownership.[49] It has been consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. The court neither exercises its official discretion nor judgment. [50] The judge issuing the order following these express provisions of law cannot be charged with having acted without jurisdiction or with grave abuse of discretion. [51] If only to stress the writs ministerial character, we have, in previous cases, disallowed injunction to prohibit its issuance, just as we have held that the issuance of the same may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.[52] In the case at bar, PNB has sufficiently established its right to the writ of possession. It presented as documentary exhibits the contract of real estate mortgage [53] and the Provisional Certificate of Sale[54] on the face of which appears proof of its registration with the Registry of Deeds in Camarines Sur on 3 May 1999. There is also no dispute that the lands were not redeemed within one year from the registration of the Provisional Certificate of Sale. It should follow, therefore, that PNB has acquired an absolute right, as purchaser, to the writ of possession. The RTC of Pili had the ministerial duty to issue that writ, as it did actually, upon mere motion, conformably to Section 7 of Act No. 3135, as amended.[55] However on certiorari, the Court of Appeals declared null and void the orders of the RTC of Pili granting the writ of possession and denying respondents motion for reconsideration. The Court of Appeals exhaustively discussed the reasons for such a declaration, noting the procedural errors of PNB in the conduct of the foreclosure proceedings which allegedly rendered the foreclosure sale and the Provisional Certificate of Sale of doubtful validity. The Court of Appeals relied on the case of Cometa v. Intermediate Appellate Court[56] in holding that for a writ of possession to be validly issued . in an extrajudicial foreclosure proceeding, all the procedural requirements should be complied with. Any flaw afflicting its stages could affect the validity of its issuance. [57] The Court of Appeals reproached the RTC of Pili Sur for granting the writ despite the existence of these alleged procedural lapses. This was erroneous. The judge to whom an application for writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure. In the issuance of a writ of possession, no discretion is left to the trial court. Any question regarding the cancellation of the writ or in respect of the validity and regularity of the public sale should be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135. [58] In fact, the question of the validity of the foreclosure proceedings can be threshed out in Civil Case No. RTC 2000-00074, pending before the RTC of Naga City, Branch 61, which was filed by respondents before PNB had filed a petition for the issuance of a writ of possession. The Court of Appeals should not have ruled on factual issues on which the RTC of Naga had yet to make any finding. Besides, a review of such factual matters is not proper in a petition for certiorari. Having noted the foregoing, the Court dispenses with the need to discuss the soundness of the foreclosure proceedings, the authenticity of the Provisional Certificate of Sale, and the applicability of Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. A review of the foregoing matters properly lies within the jurisdiction of the RTC of Naga City, Branch 61. It is worthy of note that the pendency of the case for annulment of the foreclosure proceedings is not a bar to the issuance of the writ of possession.[59] Pending such proceedings whose subject is the validity of the foreclosure proceedings, the purchaser in a foreclosure sale is entitled to the possession of property. Until such time the foreclosure sale is annulled, the issuance of the writ of possession is ministerial on the part of the RTC of Pili. [60] In addition, the Court of Appeals reliance on the case of Cometa[61] is misplaced. The cited case involved the issuance of a writ of possession following an execution sale. The declaration therein that the issuance of said writ is dependent on the valid execution of the procedural stages preceding it does not contemplate writs of possession available in extrajudicial foreclosures of real estate mortgages under Section 7 of Act No. 3135, as amended by Act No. 4118. Considering that the RTC of Pili issued the writ of possession in compliance with the provisions of Act No. 3135, as amended, it cannot be charged with having acted in excess of its jurisdiction or with grave abuse of discretion. Absent grave abuse of discretion, respondents should have filed an ordinary appeal instead of a petition for certiorari. The soundness of the order granting the writ of possession is a matter of judgment with respect to

which the remedy is ordinary appeal. An error of judgment committed by a court in the exercise of its legitimate jurisdiction is not the same as grave abuse of discretion. Errors of judgment are correctible by appeal, while those of jurisdiction are reviewable by certiorari.[62] Palpably, the Court of Appeals exceeded its jurisdiction when it granted respondents petition for certiorari and set aside the orders dated 24 November 2000 and 24 January 2001 of the RTC of Pili in Spec. Proc No. P-1182, and also when it made a determination as to the validity of the foreclosure proceedings in clear violation of Act No. 3135. The contention, therefore, that the Court should not entertain the instant petition until a motion for reconsideration has been filed may not hold water where the proceeding in which the error occurred is a patent nullity. Thus, we hold that a motion for reconsideration may be dispensed with in the instant case. [63] Anent the other procedural grounds for the denial of the instant petition, suffice it to say that PNBs rejoinder has sufficiently refuted respondents assertions. W e find and so hold that there was substantial compliance with the procedural requirements of the Court. Although belatedly filed, the Resolution of the PNB Board amply demonstrates Mrs. Domitila A. Amons authority to sign and verify the instant petition. PNB likewise was not obligated to disclose the alluded case pending before the Court of Appeals as it was not initiated by the bank and, more importantly, the subject matter and the properties involved therein are altogether different.[64] It is well to remember at this point that rules of procedure are but mere tools designed to facilitate the attainment of justice. Their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. [65] In proper cases, procedural rules may be relaxed or suspended in the interest of substantial justice. [66] And the power of the Court to except a particular case from its rules whenever the purposes of justice require it cannot be questioned.[67] WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 11 June 2002 in CA-G.R. S.P. No. 63162 is REVERSED and SET ASIDE. The orders dated 24 November 2000 and 24 January 2001 of the Regional Trial Court of Pili, Camarines Sur, Branch 32 in Spec. Pro. No. P-1182 directing the issuance of a writ of possession in favor of PNB are AFFIRMED. SO ORDERED.

[G.R. No. 138567. March 04, 2005] DEVELOPMENT BANK OF THE PHILIPPINES, petitioner vs. SPOUSES WILFREDO GATAL SANDOVAL-GUTIERREZ, J.: Before us for resolution is the petition for review on certiorari[1] assailing the Decision[2] dated January 18, 1999 of the Court of Appeals and its Resolution[3] dated April 27, 1999 in CA-G.R. SP No. 47736, Development Bank of the Philippines, petitioner, vs. Hon. Raineldo T. Son, in his capacity as Presiding Judge of Branch 47, Regional Trial Court of Tagbilaran City, and Spouses Wilfredo Gatal and Azucena Gatal, respondents. Records show that sometime in 1993, spouses Wilfredo and Azucena Gatal, respondents, obtained a loan of P1,500,000.00 from the Development Bank of the Philippines (DBP), petitioner. The loan was secured by a real estate mortgage over a commercial lot at No. 3 J.A. Clarin Street, Tagbilaran City, covered by Transfer Certificate of Title No. T-22697 of the Registry of Deeds, same city. For failure of respondents to pay their loan, petitioner foreclosed the mortgage in December 1994. In January 1996, the title of the lot was consolidated in the name of petitioner DBP. On October 29, 1996, the property was offered for sale at public auction, but none of the bidders was able to meet the bid price ceiling. On November 18, 1996, petitioner offered the property for negotiated sale on condition that the buyer must pay 20% of the selling price as down payment, the balance payable under the terms of the interested buyer. Respondents then submitted their bid in the amount of P2,160,000.00 and made a deposit equivalent to 10% of the bid price. However, another buyer, Jimmy Torrefranca, offered a bid ofP2,300,000.00, or P140,000.00 higher than respondents bid. Upon learning of Torrefrancas offer, respondents wrote [4] petitioner requesting that they will match his bid. But petitioner rejected respondents request because Torrefranca was already declared the preferred bidder.[5] Aggrieved, respondents, filed with the Regional Trial Court (RTC), Branch 4, Tagbilaran City a complaint for injunction with prayer for a temporary restraining order and a preliminary injunction, docketed as Civil Case No. 5996. The action sought to (a) declare the sale of the property to Torrefranca void and uphold respondents r ight of pre-emption; and (b) maintain the status quo between the parties prior to the filing of the suit. On February 22, 1997, the RTC issued an Order granting respondents application for a preliminary injunction. Meantime, on August 27, 1997, petitioner filed with the same RTC, Branch 47, a petition for issuance of a writ of possession, docketed as Civil Case No. 6097. On October 31, 1997, the court issued a writ of possession in favor of petitioner. On November 12, 1997, respondents filed with Branch 47 a motion to dismiss Civil Case No. 6097 and a motion to quash the writ of possession on the ground that there is another case (Civil Case No. 5996 for injunction) pending before Branch 4 involving the same parties, the same subject matter and the same legal issues. On December 18, 1997, Branch 47 issued an Order dismissing Civil Case No. 6097 and recalling its earlier Order granting the writ of possession on the ground of litis pendentia. Petitioner DBP filed a motion for reconsideration but was denied by Branch 47 in an Order dated February 10, 1998. Thereafter, petitioner filed with the Court of Appeals a petition for certiorari assailing the Orders dated December 18, 1997 and February 10, 1998 of Branch 47, docketed as CA-G.R. SP No. 47736. On January 18, 1999, the Appellate Court rendered its Decision dismissing the petition, thus upholding the challenged Orders. Petitioner filed a motion for reconsideration but was denied in a Resolution dated April 27, 1999. Hence, the instant petition. The fundamental issue for our resolution is whether the Court of Appeals committed a reversible error in holding that the trial court correctly dismissed Civil Case No. 6097 on the ground of litis pendentia. The petition is meritorious. One of the grounds for dismissing an action is when there is litis pendentia as provided under Section 1(e), Rule 16, of the 1997 Rules of Civil Procedure, as amended, thus: SECTION 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds: xxx (e) That there is another action pending between the same parties for the same cause; x x x.

For litis pendentia to lie as a ground for a motion to dismiss, the following requisites must be present: (1) that the parties to the action are the same; (2) that there is substantial identity in the causes of action and reliefs sought; and (3) that the result of the first action is determinative of the second in any event and regardless of which party is successful.[6] It is undisputed that both cases involve the same parties and the same property. Civil Case No. 5996 is an action for injunction filed by respondents against petitioner DBP. It seeks to declare the sale of the property to Torrefranca void and to order petitioner DBP to respect respondents right of pre-emption; and maintain the status quo between the parties. Upon the other hand, Civil Case No. 6097 is a petition for the issuance of a writ of possession filed by petitioner DBP, being the purchaser of the lot at the public auction. Clearly, the rights asserted and the reliefs sought by the parties in both cases are not identical. Thus, respondents claim of litis pendentia is unavailing. Section 33, Rule 39 of the same Rules provides: SECTION 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; x x x. Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. Corollarily, Section 7 of Act 3135,[7] as amended by Act 4118, reads: Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without complying with the requirements of this Act. x x x In Tan Soo Huat vs. Ongwico,[8] we ruled that once a mortgaged estate is extrajudicially sold, and is not redeemed within the reglementary period, no separate and independent action is necessary to obtain possession of the property. The purchaser at the public auction has only to file a petition for issuance of a writ of possession pursuant to Section 33 of Rule 39 of the Rules of Court. To give effect to the right of possession, the purchaser must invoke the aid of the court and ask for a writ or possession[9] without need of bringing a separate independent suit for this purpose.[10] Records show that title to the property has been consolidated to petitioner DBP. Thus, its petition for a writ of possession is in order. Obviously, the RTC (Branch 47) erred when it granted respondents motion to dismiss and recalled the writ of possession it earlier issued. Where, as here, the title is consolidated in the name of the mortgagee, the writ of possession becomes a matter of right on the part of the mortgagee, and it is a ministerial duty on the part of the trial court to issue the same. The pendency of a separate civil suit questioning the validity of the sale of the mortgaged property cannot bar the issuance of the writ of possession. The rule equally applies to separate civil suits questioning the validity of the mortgage or its foreclosure and the validity of the public auction sale. [11] There being no litis pendentia, the Court of Appeals likewise erred in applying the doctrine of non-interference between courts of equal rank. Under the said doctrine, a trial court has no authority to interfere with the proceedings of a court of equal jurisdiction.[12] When Branch 47 issued the writ of possession, it did not interfere with the jurisdiction of Branch 4 in the injunction case. It merely exercised its ministerial function of issuing the writ of possession. Finally, we do not find merit in respondents contention that petitioner violated the rule against forum shopping. Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.[13] This situation is not present here. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated January 18, 1999 and its Resolution dated April 27, 1999 in CA-G.R. SP No. 47736 are REVERSED. SO ORDERED.

[G.R. No. 138377. February 28, 2000] CONCEPCION V. AMAGAN, JOSEFINA V. AMAGAN and DINA V. AMAGAN, petitioners, vs. TEODORICO T. MARAYAG, respondent. DECISION PANGANIBAN, J.: As a general rule, an ejectment suit cannot be abated or suspended by the mere filing before the regional trial court (RTC) of another action raising ownership of the property as an issue. As an exception, however, unlawful detainer actions may be suspended even on appeal, on considerations of equity, such as when the demolition of petitioners' house would result from the enforcement of the municipal circuit trial court (MCTC) judgment. The Case Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the February 9, 1999 Resolution of the Court of Appeals (CA) in CA-GR SP No. 50472,[1] which disposed as follows: "It is plain to see that this Court, under its Decision, merely nullified the Order of the Respondent, dated November 26, 1996 granting Private Respondents Motion for Execution Pending Appeal and denying Petitioners Motion for Reconsideration [of] its said Order. This Court did not enjoin the Respondent Court from resolving Petitioners appeal from the Decision of the Municipal [Circuit] Trial Court, on its merits. "Petitioners complaint for Quieting of Title and Reconveyance in Civil Case No. 1632 filed [at] the Regional Trial Court does not abate the proceeding in Civil Case No. 1671 (TG) before the Respondent Court (Asset Privatization Trust v. Court of Appeals, 229 SCRA 627; Felicidad Javier, et al., versus Hon. Regino T. Veridiano, II, et al., 237 SCRA 565. "In sum, then, the [im]pugned Orders of the Respondent Court are in accord with case law and issued in the exercise of its sound discretion. "IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due course and is hereby dismissed. No cost. "SO ORDERED."[2] Also challenged by petitioners is the April 22, 1999 CA Resolution[3] denying their Motion for Reconsideration. The Facts The facts as found by the Court of Appeals are as follows: "x x x. On June 3, 1996, the private respondent filed a complaint against the petitioners for 'unlawful detainer' with the Municipal [Circuit] Trial Court in Silang, Cavite. On September 27, 1996, the trial court promulgated a Decision in favor of the private respondent and against the petitioners, the decretal portion of which reads as follows: 'IN VIEW OF THE FOREGOING, this Court finds for the plaintiff and against the defendants ordering the latter as follows: 1.......To vacate the property of plaintiff located at San Vicente, Silang, Cavite containing an area of 420 square meters and covered by Tax Declaration No. 13023 and remove their house constructed thereon; 2.......To pay plaintiff, jointly and severally, the amount of P10,000.00 starting from June 1, 1996 until the subject premises are fully vacated, as reasonable compensation for their continued unlawful use and occupation of the same and another amount of P50,000.00 as and by way of attorney's fees and other litigation expenses; and

3.......To pay the cost of suit. SO ORDERED.' "The petitioners appealed to the Regional Trial Court of Cavite from said Decision, which appeal was docketed as Civil Case No. 1671. On November 26, 1996, the private respondent filed a 'Motion for Execution Pending Appeal' with the Respondent Court which, on November 26, 1996, issued an Order granting said motion, the decretal portion of which reads as follows: 'As prayed for by the plaintiff(s), through (their) counsel, and finding the grounds alleged in their 'Motion for Immediate Exec(u)tion' to be impressed with merit, the same is hereby GRANTED. Accordingly, let a writ of execution pending appeal be issued in this case.' "The Petitioners' Motion for Reconsideration' [of] said Order, was denied by the Respondent Court per its Order dated February 21, 1997. "In the interim, the petitioners filed, on December 10, 19[96], a complaint against private respondent in the Regional Trial Court for 'Quieting of Title, Reconveyance and Damages,'entitled 'Concepcion v. Amagan, et al. versus Teodorico Marayag, Civil Case No. 1682 (TG).' "The petitioners filed, a 'Petition for Certiorari,' in the Court of Appeals, under Rule 65 of the Rules of Court, dated April 28, 1997, against the respondents for the nullification of the aforesaid Orders of the Respondent Court, dated November 26, 1996 and February 21, 1997, in Civil Case No. 1671, granting private respondent's 'Motion for Reconsideration'respectively, which Petition was entitled 'Concepcion v. Amagan, et al., versus Regional Trial Court, et al., CA-G.R. [SP No. 43611].' This Court issued a Resolution granting petitioners' plea for a temporary restraining order which expired on June 25, 1997. "On July 7, 1997, the private respondent filed, with the Respondent Court, in Civil Case No. 1671 (TG), an 'Ex-Parte Omnibus Motion to Direct Sheriff To Make a Report And/Or Implement Writ of Execution and Declare the Case Submitted for Decision' with the parties submitting to the Respondent Court their respective 'Memorandum on Appeal.' The next day, July 18, 1997, this Court promulgated, in CA-G.R. [SP No. 43611], a Decision in favor of the petitioners and against the respondents therein the decretal portion of which reads as follows: 'WHEREFORE, the Petition for certiorari is hereby GRANTED. Accordingly, the Order dated February 21, 1997, allowing execution pending appeal is REVERSED and SET ASIDE.' On July 11, 1997, the Respondent Court issued an Order granting private respondent's Omnibus Motion,' supra. The private respondent likewise filed a Petition for Review' with the Supreme Court, from the Decision of this Court in CA-G.R. [SP No. 43611] and its Resolution denying private respondent's 'Motion for Reconsideration' but the Supreme Court, per its Resolution dated November 12, 1997, issued a Resolution denying private respondents['] 'Petition for Review.' The Resolution of the Supreme Court became final and executory. "On December 12, 1997, the private respondent filed with the Respondent Court, in Civil Case No. TG-1671, a 'Manifestation and Ex-Parte Motion' praying that the Respondent Court resolve the case and promulgate its Decision on the merits. However, the petitioners filed an Opposition to private respondent's motion, contending that the proceedings before the Respondent Court, in Civil Case No. 1671 (TG), be suspended pending decision, on the merits, of the Regional Trial Court, in Civil Case No. 1682 (Quieting of Title, Reconveyance with Damages). On April 3, 1998, the Respondent Court issued its Order granting private respondent's motion, declaring that the Court, under its Decision, in CA-G.R. [SP No. 43611], merely nullified its Order granting execution pending appeal but did not enjoin the Respondent Court from hearing and resolving Civil Case No. 16[7]1 on the merits. The petitioners filed a 'Motion for Reconsideration' of the aforesaid Order of the Respondent Court but the latter issued an Order dated December 14, 1998 denying petitioners' Motion for Reconsideration, in this language: 'Anent the Motion for Reconsideration, movants anchored their arguments that this Court should restrain itself from further proceeding with the appealed case because of the decision, resolution of the Court of Appeals, and resolution of the Supreme Court. It is worthy to note that [what] was brought up with the higher Courts was the Order of the Court allowing the execution pending appeal, the

said Order was reversed and set aside by the Court of Appeals[;] however, there was no permanent injunction that has been issued for this Court to stop from further proceeding with the case. The said motion is, therefore, DENIED for lack of merit.'" The facts of this case may be simply summarized as follows. The MCTC rendered a Decision granting the ejectment suit filed by respondent against herein petitioners. While an appeal was pending before the RTC, respondent filed a Motion for immediate execution of the MCTC judgment, which was granted. However, the Court of Appeals [4] later reversed the RTC Order granting the execution pending appeal, a reversal that was subsequently affirmed by the Supreme Court. Meanwhile, petitioners also filed before the RTC a new action for quieting of title involving the same property. Petitioners thence claimed that the proceedings in the ejectment appeal should be suspended pending final judgment in the quieting of title case. The RTC ruled in the negative. Ruling of the Court of Appeals In sustaining the RTC, the CA held in two short paragraphs that its earlier Decision in CA-GR SP No. 43611 enjoined only the execution of the judgment pending appeal. Without discussing petitioners' plea for an exception, it curtly applied the jurisprudential principle that an action for quieting of title would not abate an ejectment suit. Hence, this Petition.[5] The Issue In their Memorandum, petitioners submitted for the consideration of the Court the following issues: "I.......Whether or not the 8 July 1997 Decision and 23 September 1997 Resolution of the Court of Appeals in CA-G.R. SP No. 43611 (Annex I), as affirmed in toto by the Supreme Court, called off and restrained the proceedings in this case; II. Whether or not the dispositive portion of the Decision in CA-G.R. SP No. 43611 should be referred to its body and text. III. Whether or not the Court of Appeals Decision having been based on Vda. de Legaspi vs. Avendano x x x, is now final and executory as it was upheld by the Supreme Court in toto. IV. Whether or not Lao vs. Court of Appeals [x x x] is applicable to the present case, and V. Whether or not the Court of Appeals failed to consider and pass judgment on the exceptional nature of the present case."[6] In the main, the issue is whether the peculiar circumstances of this case justify the suspension of the ejectment proceedings on appeal before the RTC, pending the resolution of the action for quieting of title. The Courts Ruling The Petition is meritorious. Main Issue: Suspension of the Ejectment Suit Unlawful detainer and forcible entry suits under Rule 70 are designed to summarily restore physical possession of a piece of land or building to one who has been illegally or forcibly deprived thereof, without prejudice to the settlement of the parties' opposing claims of juridical possession in appropriate proceedings. It has been held that these actions "are intended to avoid disruption of public order by those who would take the law in their hands purportedly to enforce their claimed right of possession." [7] In these cases, the issue is pure physical or de facto possession, and pronouncements made on questions of ownership are provisional in nature. As a general rule, therefore, a pending civil action involving ownership of the same property does not justify the suspension of ejectment proceedings. "The underlying reasons for the above ruling were that the actions in the Regional Trial Court did not involve physical or de facto possession, and, on not a few occasions, that the case in the Regional Trial Court was merely a ploy to delay disposition of the ejectment proceeding, or that the issues presented in the former could quite as easily be set up as defenses in the ejectment action and there resolved." [8]

Only in rare instances is suspension allowed to await the outcome of the pending civil action. One such exception is Vda. de Legaspi v. Avendao, wherein the Court declared: "x x x. Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and the right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial proceeding, it is more equitable and just and less productive of confusion and disturbance of physical possession, with all its concomitant inconvenience and expenses. For the Court in which the issue of legal possession, whether involving ownership or not, is brought to restrain, should a petition for preliminary injunction be filed with it, the effects of any order or decision in the unlawful detainer case in order to await the final judgment in the more substantive case involving legal possession or ownership. It is only where there has been forcible entry that as a matter of public policy the right to physical possession should be immediately set at rest in favor of the prior possession regardless of the fact that the other party might ultimately be found to have superior claim to the premises involved, thereby to discourage any attempt to recover possession thru force, strategy or stealth and without resorting to the courts." [9] From the foregoing, it is clear that the mere existence of a judicial proceeding putting at issue the right of the plaintiff to recover the premises is not enough reason to justify an exception to the general rule. In Salinas v. Navarro,[10] the Court explained that "the exception to the rule in x x x Vda. de Legaspi is based on strong reasons of equity not found in the present petition. The right of the petitioners is not so seriously placed in issue in the annulment case as to warrant a deviation, on equitable grounds, from the imperative nature of the rule. In the Vda. de Legaspi case, execution of the decision in the ejectment case would also have meant demolition of the premises, a factor not present in this petition." After a close reading of the peculiar circumstances of the instant case, however, we hold that equitable considerations impel an exception to the general rule. In its earlier July 8, 1997 Decision in CA-GR No. 43611-SP which has long become final, the Court of Appeals, through Justice Artemio G. Toquero, arrived upon the following factual findings which are binding on herein parties: "Admittedly, petitioners who appealed the judgment in the ejectment case did not file a supersedeas bond. Neither have they been depositing the compensation for their use and occupation of the property in question as determined by the trial court. Ordinarily, these circumstances would justify an execution pending appeal. However, there are circumstances attendant to this case which would render immediate execution injudicious and inequitable. "ONE. Private respondent Teodorico T. Marayag anchors his action for unlawful detainer on the theory that petitioners possession of the property in question was by mere tolerance. However, in answer to his demand letter dated April 13, 1996 (Annex D), petitioners categorically denied having any agreement with him, verbal or written, asserting that they are owners of the premises we are occupying at 108 J. P. Rizal Street, San Vicente, Silang, Cavite. In other words, it is not merely physical possession but ownership as well that is involved in this case. "TWO. In fact, to protect their rights to the premises in question, petitioners filed an action for reconveyance, quieting of title and damages against private respondents, docketed as Civil Case No. TG-1682 of the Regional Trial Court, Branch 18, Tagaytay City. The issue of ownership is squarely raised in this action. Undoubtedly, the resolution of this issue will be determinative of who is entitled to the possession of the premises in question. "THREE. The immediate execution of the judgment in the unlawful detainer case will include the removal of the petitioners house [from] the lot in question. "To the mind of the Court it is injudicious, nay enequitable, to allow demolition of petitioner's house prior to the determination of the question of ownership [of] the lot on which it stands. [11] Indisputably, the execution of the MCTC Decision would have resulted in the demolition of the house subject of the ejectment suit; thus, by parity of reasoning, considerations of equity require the suspension of the ejectment proceedings. We note that, like Vda. de Legaspi, the respondent's suit is one of unlawful detainer and not of forcible entry. And most certainly, the ejectment of petitioners would mean a demolition of their house, a matter that is likely to create the "confusion, disturbance, inconveniences and expenses" mentioned in the said exceptional case. Necessarily, the affirmance of the MCTC Decision[12] would cause the respondent to go through the whole gamut of enforcing it by physically removing the petitioners from the premises they claim to have been occupying since 1937. (Respondent is claiming ownership only of the land, not of the house.) Needlessly, the litigants as well as the courts will be wasting much time and effort by proceeding at a stage wherein the outcome is at best temporary, but the result of enforcement is permanent, unjust and probably irreparable.

We should stress that respondent's claim to physical possession is based not on an expired or a violated contract of lease, but allegedly on "mere tolerance." Without in any way prejudging the proceedings for the quieting of title, we deem it judicious under the present exceptional circumstances to suspend the ejectment case. The Suspension of Proceedings Even During Appeal One final point. In Vda. de Legaspi, the Court held that "if circumstances should so require, the proceedings in the ejectment case may be suspended in whatever stage it may be found." This statement is unequivocally clear; it includes even the appellate stage. WHEREFORE, the Petition is GRANTED and the appealed Decision REVERSED and SET ASIDE. The Regional Trial Court of Cavite is DIRECTED to suspend further action in Civil Case No. 1671 until Civil Case No. 1682 is concluded. No costs. SO ORDERED.

G.R. No. 166714

February 9, 2007

AMELIA S. ROBERTS, Petitioner, vs. MARTIN B. PAPIO, Respondent. DECISION CALLEJO, SR., J.: Assailed in this petition for review on certiorari is the Decision1 of the Court of Appeals (CA), in CA-G.R. CV No. 69034 which reversed and set aside the Decision2 of the Regional Trial Court (RTC), Branch 150, Makati City, in Civil Case No. 01-431. The RTC ruling had affirmed with modification the Decision3 of the Metropolitan Trial Court (MeTC), Branch 64, Makati City in Civil Case No. 66847. The petition likewise assails the Resolution of the CA denying the motion for reconsideration of its decision. The Antecedents The spouses Martin and Lucina Papio were the owners of a 274-square-meter residential lot located in Makati (now Makati City) and covered by Transfer Certificate of Title (TCT) No. S-44980.4 In order to secure aP59,000.00 loan from the Amparo Investments Corporation, they executed a real estate mortgage on the property. Upon Papios failure to pay the loan, the corporation filed a petition for the extrajudicial foreclosure of the mortgage. Since the couple needed money to redeem the property and to prevent the foreclosure of the real estate mortgage, they executed a Deed of Absolute Sale over the property on April 13, 1982 in favor of Martin Papios cousin, Amelia Roberts. Of the P85,000.00 purchase price, P59,000.00 was paid to the Amparo Investments Corporation, while the P26,000.00 difference was retained by the spouses. 5 As soon as the spouses had settled their obligation, the corporation returned the owners duplicate of TCT No. S-44980, which was then delivered to Amelia Roberts. Thereafter, the parties (Amelia Roberts as lessor and Martin Papio as lessee) executed a two-year contract of lease dated April 15, 1982, effective May 1, 1982. The contract was subject to renewal or extension for a like period at the option of the lessor, the lessee waiving thereby the benefits of an implied new lease. The lessee was obliged to pay monthly rentals of P800.00 to be deposited in the lessors account at the Bank of America, Makati City branch.6 On July 6, 1982, TCT No. S-44980 was cancelled, and TCT No. 114478 was issued in the name of Amelia Roberts as owner.7 Martin Papio paid the rentals from May 1, 1982 to May 1, 1984, and thereafter, for another year. 8 He then failed to pay rentals, but he and his family nevertheless remained in possession of the property for a period of almost thirteen (13) years. In a letter dated June 3, 1998, Amelia Roberts, through counsel, reminded Papio that he failed to pay the monthly rental of P2,500.00 from January 1, 1986 to December 31, 1997, and P10,000.00 from January 1, 1998 to May 31, 1998; thus, his total liability was P410,000.00. She demanded that Papio vacate the property within 15 days from receipt of the letter in case he failed to settle the amount.9 Because he refused to pay, Papio received another letter from Roberts on April 22, 1999, demanding, for the last time, that he and his family vacate the property.10 Again, Papio refused to leave the premises. On June 28, 1999, Amelia Roberts, through her attorney-in-fact, Matilde Aguilar, filed a Complaint11 for unlawful detainer and damages against Martin Papio before the MeTC, Branch 64, Makati City. She alleged the following in her complaint: Sometime in 1982 she purchased from defendant a 274-sq-m residential house and lot situated at No. 1046 Teresa St., Brgy. Valenzuela, Makati City.12 Upon Papios pleas to continue staying in the property, they executed a two year lease contract13 which commenced on May 1, 1982. The monthly rental was P800.00. Thereafter, TCT No. 11447814 was issued in her favor and she paid all the realty taxes due on the property. When the term of the lease expired, she still allowed Papio and his family to continue leasing the property. However, he took advantage of her absence and stopped payment beginning January 1986, and refused to pay despite repeated demands. In June 1998, she sent a demand letter15 through counsel requiring Papio to pay rentals from January 1986 up to May 1998 and to vacate the leased property. The accumulated arrears in rental are as follows: (a) P360,000.00 from January 1, 1986 to December 31, 1997 at P2,500.00 per month; and (b) P50,000.00, from January 1, 1998 to May 31, 1998 at P10,000.00 per month.16 She came to the Philippines but all efforts at an amicable settlement proved futile. Thus, in April 1999, she sent the final demand letter to defendant directing him and his family to pay and immediately vacate the leased premises.17

Roberts appended to her complaint copies of the April 13, 1982 Deed of Absolute Sale, the April 15, 1982 Contract of Lease, and TCT No. 114478. In his Answer with counterclaim, Papio alleged the following: He executed the April 13, 1982 deed of absolute sale and the contract of lease. Roberts, his cousin who is a resident of California, United States of America (USA), arrived in the Philippines and offered to redeem the property. Believing that she had made the offer for the purpose of retaining his ownership over the property, he accepted. She then remitted P59,000.00 to the mortgagor for his account, after which the mortgagee cancelled the real estate mortgage. However, he was alarmed when the plaintiff had a deed of absolute sale over the property prepared (for P83,000.00 as consideration) and asked him to sign the same. She also demanded that the defendant turn over the owners duplicate of TCT No. S-44980. The defendant was in a quandary. He then believed that if he signed the deed of absolute sale, Roberts would acquire ownership over the property. He asked her to allow him to redeem or reacquire the property at any time for a reasonable amount. 18 When Roberts agreed, Papio signed the deed of absolute sale. Pursuant to the right to redeem/repurchase given him by Roberts, Papio purchased the property for P250,000.00. In July 1985, since Roberts was by then already in the USA, he remitted to her authorized representative, Perlita Ventura, the amount of P150,000.00 as partial payment for the property.19 On June 16, 1986, she again remittedP100,000.00, through Ventura. Both payments were evidenced by receipts signed by Ventura. 20 Roberts then declared that she would execute a deed of absolute sale and surrender the title to the property. However, Ventura had apparently misappropriated P39,000.00 out of the P250,000.00 that she had received; Roberts then demanded that she pay the amount misappropriated before executing the deed of absolute sale. Thus, the sole reason why Roberts refused to abide by her promise was the failure of her authorized representative to remit the full amount of P250,000.00. Despite Papios demands, Roberts refused to execute a deed of absolute sale. Accordingly, defendant posited that plaintiff had no cause of action to demand payment of rental and eject him from the property. Papio appended to his Answer the following: (1) the letter dated July 18, 1986 of Perlita Ventura to the plaintiff wherein the former admitted having used the money of the plaintiff to defray the plane fares of Perlitas parents to the USA, and pleaded that she be allowed to repay the amount within one year; (b) the letter of Eugene Roberts (plaintiffs husband) to Perlita Ventura dated July 25, 1986 where he accused Ventura of stealing the money of plaintiff Amelia (thus preventing the latter from paying her loan on her house and effect the cancellation of the mortgage), and demanded that she deposit the balance;21 and (c) plaintiffs letter to defendant Papio dated July 25, 1986 requesting the latter to convince Ventura to remit the balance of P39,000.00 so that the plaintiff could transfer the title of the property to the defendant.22 Papio asserted that the letters of Roberts and her husband are in themselves admissions or declarations against interest, hence, admissible to prove that he had reacquired the property although the title was still in her possession. In her Affidavit and Position Paper,23 Roberts averred that she had paid the real estate taxes on the property after she had purchased it; Papios initial right to occupy the property was terminated when the original lease period expired; and his continued possession was only by mere tolerance. She further alleged that the Deed of Sale states on its face that the conveyance of the property was absolute and unconditional. She also claimed that any right to repurchase the property must appear in a public document pursuant to Article 1358, Paragraph 1, of the Civil Code of the Phililppines.24 Since no such document exists, defendants supposed real interest over the property could not b e enforced without violating the Statute of Frauds.25 She stressed that her Torrens title to the property was an "absolute and indefeasible evidence of her ownership of the property which is binding and conclusive upon the whole world." Roberts admitted that she demanded P39,000.00 from the defendant in her letter dated July 25, 1986. However, she averred that the amount represented his back rentals on the property.26 She declared that she neither authorized Ventura to sell the property nor to receive the purchase price therefor. She merely authorized her to receive the rentals from defendant and to deposit them in her account. She did not know that Ventura had received P250,000.00 from Papio in July 1985 and on June 16, 1986, and had signed receipts therefor. It was only on February 11, 1998 that she became aware of the receipts when she received defendant Papios letter to which were appended the said receipts. She and her husband offered to sell the property to the defendant in 1984 for US$15,000.00 on a "take it or leave it" basis when they arrived in the Philippines in May 1984.27 However, defendant refused to accept the offer. The spouses then offered to sell the property anew on December 20, 1997, for P670,000.00 inclusive of back rentals.28 However, defendant offered to settle his account with the spouses. 29Again, the offer came on January 11, 1998, but it was rejected. The defendant insisted that he had already purchased the property in July 1985 for P250,000.00. Roberts insisted that Papios claim of the right to repurchase the prop erty, as well as his claim of payment therefor, is belied by his own letter in which he offered to settle plaintiffs claim for back rentals. Even assuming that the purchase price of the property had been paid through Ventura, Papio did not adduce any proof to show that Ventura had been authorized to sell the property or to accept any payment thereon. Any payment to Ventura could have no binding effect on her since she was not privy to the transaction; if at all, such agreement would be binding only on Papio and Ventura.

She further alleged that defendants own inaction belies his claim of ownership over the property: first, he failed to cause any notice or annotation to be made on the Register of Deeds copy of TCT No. 114478 in order to protect his supposed adverse claim; second, he did not institute any action against Roberts to compel the execution of the necessary deed of transfer of title in his favor; and third, the defense of ownership over the property was raised only after Roberts demanded him to vacate the property. Based solely on the parties pleadings, the MeTC rendered its January 18, 2001 Decision 30 in favor of Roberts. The fallo of the decision reads: WHEREFORE, premises considered, finding this case for the plaintiff, the defendant is hereby ordered to: 1. Vacate the leased premises known as 1046 Teresa St., Valenzuela, Makati City; 2. Pay plaintiff the reasonable rentals accrual for the period January 1, 1996 to December 13, 1997 at the rate equivalent to Php2,500.00 per month and thereafter, Php10,000.00 from January 1998 until he actually vacates the premises; 3. Pay the plaintiff attorneys fees as Php20,000.00; and 4. Pay the costs SO ORDERED.31 The MeTC held that Roberts merely tolerated the stay of Papio in the property after the expiration of the contract of lease on May 1, 1984; hence, she had a cause of action against him since the only elements in an unlawful detainer action are the fact of lease and the expiration of its term. The defendant as tenant cannot controvert the title of the plaintiff or assert any right adverse thereto or set up any inconsistent right to change the existing relation between them. The plaintiff need not prove her ownership over the property inasmuch as evidence of ownership can be admitted only for the purpose of determining the character and extent of possession, and the amount of damages arising from the detention. The court further ruled that Papio made no denials as to the existence and authenticity of Roberts title to the property. It declared that "the certificate of title is indefeasible in favor of the person whose name appears therein and incontrovertible upon the expiration of the one-year period from the date of issue," and that a Torrens title, "which enjoys a strong presumption of regularity and validity, is generally a conclusive evidence of ownership of the land referred to therein." As to Papios claim that the transfer of the property was one with right of repurchase, the MeTC held it to be bereft of merit since the Deed of Sale is termed as "absolute and unconditional." The court ruled that the right to repurchase is not a right granted to the seller by the buyer in a subsequent instrument but rather, a right reserved in the same contract of sale. Once the deed of absolute sale is executed, the seller can no longer reserve the right to repurchase; any right thereafter granted in a separate document cannot be a right of repurchase but some other right. As to the receipts of payment signed by Ventura, the court gave credence to Robertss declaration in her Affidavit that she authorized Ventura only to collect rentals from Papio, and not to receive the repurchase price. Papios letter of January 31, 1998, which called her attention to the fact that she had been sending people without written authority to collect money since 1985, bolstered the courts finding t hat the payment, if at all intended for the supposed repurchase, never redounded to the benefit of the spouses Roberts. Papio appealed the decision to the RTC, alleging the following: I. THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR EJECTMENT OUTRIGHT ON THE GROUND OF LACK OF CAUSE OF ACTION. II. THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THE DOCUMENTARY EVIDENCE ADDUCED BY DEFENDANT-APPELLANT WHICH ESTABLISHED THAT A REPURCHASE TRANSACTION EXISTED BETWEEN THE PARTIES ONLY THAT PLAINTIFF-APPELLEE WITHHELD THE EXECUTION OF THE ABSOLUTE DEED OF SALE AND THE TRANSFER OF TITLE OF THE SAME IN DEFENDANT-APPELLANTS NAME. III.

THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THAT THE LETTERS OF PLAINTIFF[APPELLEE] AND OF HER HUSBAND ADDRESSED TO DEFENDANT-APPELLANT AND HIS WIFE ARE IN THEMSELVES ADMISSION AND/OR DECLARATION OF THE FACT THAT DEFENDANTAPPELLANT HAD DULY PAID PLAINTIFF-APPELLEE OF THE PURCHASE AMOUNT COVERING THE SUBJECT PROPERTY. IV. THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR EJECTMENT OUTRIGHT CONSIDERING THAT PLAINTIFF-APPELLEE WHO IS [AN] AMERICAN CITIZEN AND RESIDENT THEREIN HAD NOT APPEARED IN COURT ONCE, NEITHER WAS HER ALLEGED ATTORNEY-INFACT, MATILDE AGUILAR NOR [DID] THE LATTER EVER [FURNISH] THE LOWER COURT A SPECIAL POWER OF ATTORNEY AUTHORIZING HER TO APPEAR IN COURT IN BEHALF OF HER PRINCIPAL. 32 Papio maintained that Roberts had no cause of action for eviction because she had already ceded her right thereto when she allowed him to redeem and reacquire the property upon payment of P250,000.00 to Ventura, her duly authorized representative. He also contended that Robertss claim that the authority of Ventura is limited only to the collection of the rentals and not of the purchase price was a mere afterthought, since her appended Affidavit was executed sometime in October 1999 when the proceedings in the MeTC had already started. On March 26, 2001, Roberts filed a Motion for Issuance of Writ of Execution.33 The court granted the motion in an Order34 dated June 19, 2001. Subsequently, a Writ of Execution35 pending appeal was issued on September 28, 2001. On October 29, 2001, Sheriff Melvin M. Alidon enforced the writ and placed Roberts in possession of the property. Meanwhile, Papio filed a complaint with the RTC of Makati City, for specific performance with damages against Roberts. Papio, as plaintiff, claimed that he entered into a contract of sale with pacto de retro with Roberts, and prayed that the latter be ordered to execute a Deed of Sale over `the property in his favor and transfer the title over the property to and in his name. The case was docketed as Civil Case No. 01-851. On October 24, 2001, the RTC rendered judgment affirming the appealed decision of the MeTC. The fallo of the decision reads:36 Being in accordance with law and the circumstances attendant to the instant case, the court finds merit in plaintiffappellees claim. Wherefore, the challenged decision dated January 18, 2001 is hereby affirmed in toto. SO ORDERED.37 Both parties filed their respective motions for reconsideration. 38 In an Order39 dated February 26, 2002, the court denied the motion of Papio but modified its decision declaring that the computation of the accrued rentals should commence from January 1986, not January 1996. The decretal portion of the decision reads: Wherefore, the challenged decision dated January 18, 2001 is hereby affirmed with modification that defendant pay plaintiff the reasonable rentals accrued for the period January 1, 1986 to December [31, 1997] per month and thereafter and P10,000.00 [per month] from January 1998 to October 28, 2001 when defendant-appellant actually vacated the subject leased premises. SO ORDERED.40 On February 28, 2002, Papio filed a petition for review41 in the CA, alleging that the RTC erred in not finding that he had reacquired the property from Roberts for P250,000.00, but the latter refused to execute a deed of absolute sale and transfer the title in his favor. He insisted that the MeTC and the RTC erred in giving credence to petitioners claim that she did not authorize Ventura to receive his payments for the purchase price of the property, citing Roberts letter dated July 25, 1986 and the letter of Eugene Roberts to Ventura of even date. He also averred that the MeTC and the RTC erred in not considering his documentary evidence in deciding the case. On August 31, 2004, the CA rendered judgment granting the petition. The appellate court set aside the decision of the RTC and ordered the RTC to dismiss the complaint. The decretal portion of the Decision42 reads: WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and a new one entered: (1) rendering an initial determination that the "Deed of Absolute Sale" dated April 13, 1982 is in fact an equitable mortgage under Article 1603 of the New Civil Code; and (2) resolving therefore that petitioner Martin B. Papio is entitled to possession of the property subject of this action; (3) But such determination of ownership and equitable mortgage are not clothed with finality and will not constitute a binding and conclusive adjudication on the merits with respect to the issue of ownership and such judgment shall not bar an action between the same parties respecting

title to the land, nor shall it be held conclusive of the facts therein found in the case between the same parties upon a different cause of action not involving possession. All other counterclaims for damages are hereby dismissed. Cost against the respondent. SO ORDERED.43 According to the appellate court, although the MeTC and RTC were correct in holding that the MeTC had jurisdiction over the complaint for unlawful detainer, they erred in ignoring Papios defense of equitable mortgage, and in not finding that the transaction covered by the deed of absolute sale by and between the parties was one of equitable mortgage under Article 1602 of the New Civil Code. The appellate court ruled that Papio retained the ownership of the property and its peaceful possession; hence, the MeTC should have dismissed the complaint without prejudice to the outcome of Civil Case No. 01-851 relative to his claim of ownership over the property. Roberts filed a motion for reconsideration of the decision on the following grounds: I. Petitioner did not allege in his Answer the defense of equitable mortgage; hence, the lower courts [should] not have discussed the same; II. Even assuming that Petitioner alleged the defense of equitable mortgage, the MeTC could not have ruled upon the said defense, III. The M[e]TC and the RTC were not remiss in the exercise of their jurisdiction. 44 The CA denied the motion. In this petition for review, Amelia Salvador-Roberts, as petitioner, avers that: I. THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN DECLARING THAT THE M[e]TC AN(D) THE RTC WERE REMISS IN THE EXERCISE OF THAT JURISDICTION ACQUIRED BECAUSE IT DID NOT CONSIDER ALL PETITIONERS DEFENSE OF EQUITABLE MORTGAGE. II. THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN REQUIRING THE M[e]TC AND RTC TO RULE ON A DEFENSE WHICH WAS NEVER AVAILED OF BY RESPONDENT.45 Petitioner argues that respondent is barred from raising the issue of equitable mortgage because his defense in the MeTC and RTC was that he had repurchased the property from the petitioner; by such representation, he had impliedly admitted the existence and validity of the deed of absolute sale whereby ownership of the property was transferred to petitioner but reverted to him upon the exercise of said right. The respondent even filed a complaint for specific performance with damages, which is now pending in the RTC of Makati City, docketed as Civil Case No. 01-851 entitled "Martin B. Papio vs. Amelia Salvador-Roberts." In that case, respondent claimed that his transaction with the petitioner was a sale with pacto de retro. Petitioner posits that Article 1602 of the Civil Code applies only when the defendant specifically alleges this defense. Consequently, the appellate court was proscribed from finding that petitioner and respondent had entered into an equitable mortgage under the deed of absolute sale. Petitioner further avers that respondent was ably represented by counsel and was aware of the difference between a pacto de retro sale and an equitable mortgage; thus, he could not have been mistaken in declaring that he repurchased the property from her. As to whether a sale is in fact an equitable mortgage, petitioner claims that the issue should be properly addressed and resolved by the RTC in an action to enforce ownership, not in an ejectment case before the MeTC where the main issue involved is possession de facto. According to her, the obvious import of the CA Decision is that, in resolving an ejectment case, the lower court must pass upon the issue of ownership (in this case, by applying the presumptions under Art. 1602) which, in effect, would use the same yardstick as though it is the main action. The procedure will not only promote multiplicity of suits but also place the new owner in the absurd position of having to first seek the declaration of ownership before filing an ejectment suit. Respondent counters that the defense of equitable mortgage need not be particularly stated to apprise petitioner of the nature and character of the repurchase agreement. He contends that he had amply discussed in his pleadings before the trial and appellate courts all the surrounding circumstances of the case, such as the relative situation of the parties at the time; their attitude, acts, conduct, and declarations; and the negotiations between them that led to the repurchase agreement. Thus, he argues that the CA correctly ruled that the contract was one of equitable mortgage. He insists that petitioner allowed him to redeem and reacquire the property, and accepted his full payment of the property through Ventura, the authorized representative, as shown by the signed receipts.

The threshold issues are the following: (1) whether the MeTC had jurisdiction in an action for unlawful detainer to resolve the issue of who between petitioner and respondent is the owner of the property and entitled to the de facto possession thereof; (2) whether the transaction entered into between the parties under the Deed of Absolute Sale and the Contract of Lease is an equitable mortgage over the property; and (3) whether the petitioner is entitled to the material or de facto possession of the property. The Ruling of the Court On the first issue, the CA ruling (which upheld the jurisdiction of the MeTC to resolve the issue of who between petitioner or respondent is the lawful owner of the property, and is thus entitled to the material or de facto possession thereof) is correct. Section 18, Rule 70 of the Rules of Court provides that when the defendant raises the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession. The judgment rendered in an action for unlawful detainer shall be conclusive with respect to the possession only and shall in no wise bind the title or affect the ownership of the land or building. Such judgment would not bar an action between the same parties respecting title to the land or building.46 The summary nature of the action is not changed by the claim of ownership of the property of the defendant. 47The MeTC is not divested of its jurisdiction over the unlawful detainer action simply because the defendant asserts ownership over the property. The sole issue for resolution in an action for unlawful detainer is material or de facto possession of the property. Even if the defendant claims juridical possession or ownership over the property based on a claim that his transaction with the plaintiff relative to the property is merely an equitable mortgage, or that he had repurchased the property from the plaintiff, the MeTC may still delve into and take cognizance of the case and make an initial or provisional determination of who between the plaintiff and the defendant is the owner and, in the process, resolve the issue of who is entitled to the possession. The MeTC, in unlawful detainer case, decides the question of ownership only if it is intertwined with and necessary to resolve the issue of possession. 48 The resolution of the MeTC on the ownership of the property is merely provisional or interlocutory. Any question involving the issue of ownership should be raised and resolved in a separate action brought specifically to settle the question with finality, in this case, Civil Case No. 01-851 which respondent filed before the RTC. The ruling of the CA, that the contract between petitioner and respondent was an equitable mortgage, is incorrect. The fact of the matter is that the respondent intransigently alleged in his answer, and even in his affidavit and position paper, that petitioner had granted him the right to redeem or repurchase the property at any time and for a reasonable amount; and that, he had, in fact, repurchased the property in July 1985 for P250,000.00 which he remitted to petitioner through an authorized representative who signed receipts therefor; he had reacquired ownership and juridical possession of the property after his repurchase thereof in 1985; and consequently, petitioner was obliged to execute a deed of absolute sale over the property in his favor. Notably, respondent alleged that, as stated in his letter to petitioner, he was given the right to reacquire the property in 1982 within two years upon the payment of P53,000.00, plus petitioners airfare for her trip to the Philippines from the USA and back; petitioner promised to sign the deed of absolute sale. He even filed a complaint against the petitioner in the RTC, docketed as Civil Case No. 01-851, for specific performance with damages to compel petitioner to execute the said deed of absolute sale over the property presumably on the strength of Articles 1357 and 1358 of the New Civil Code. Certainly then, his claim that petitioner had given him the right to repurchase the property is antithetical to an equitable mortgage. An equitable mortgage is one that, although lacking in some formality, form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to change a real property as security for a debt and contain nothing impossible or contrary to law.49 A contract between the parties is an equitable mortgage if the following requisites are present: (a) the parties entered into a contract denominated as a contract of sale; and (b) the intention was to secure an existing debt by way of mortgage. 50 The decisive factor is the intention of the parties. In an equitable mortgage, the mortgagor retains ownership over the property but subject to foreclosure and sale at public auction upon failure of the mortgagor to pay his obligation. 51 In contrast, in a pacto de retro sale, ownership of the property sold is immediately transferred to the vendee a retro subject only to the right of the vendor a retro to repurchase the property upon compliance with legal requirements for the repurchase. The failure of the vendor a retro to exercise the right to repurchase within the agreed time vests upon the vendee a retro, by operation of law, absolute title over the property.52 One repurchases only what one has previously sold. The right to repurchase presupposes a valid contract of sale between the same parties.53 By insisting that he had repurchased the property, respondent thereby admitted that the deed of absolute sale executed by him and petitioner on April 13, 1982 was, in fact and in law, a deed of absolute sale and not an equitable mortgage; hence, he had acquired ownership over the property based on said deed. Respondent is, thus, estopped from asserting that the contract under the deed of absolute sale is an equitable

mortgage unless there is allegation and evidence of palpable mistake on the part of respondent; 54 or a fraud on the part of petitioner. Respondent made no such allegation in his pleadings and affidavit. On the contrary, he maintained that petitioner had sold the property to him in July 1985 and acknowledged receipt of the purchase price thereof except the amount of P39,000.00 retained by Perlita Ventura. Respondent is thus bound by his admission of petitioners ownership of the property and is barred from claiming otherwise. 55 Respondents admission that petitioner acquired ownership over the property under the April 13, 1982 deed of absolute sale is buttressed by his admission in the Contract of Lease dated April 15, 1982 that petitioner was the owner of the property, and that he had paid the rentals for the duration of the contract of lease and even until 1985 upon its extension. Respondent was obliged to prove his defense that petitioner had given him the right to repurchase, and that petitioner obliged herself to resell the property for P250,000.00 when they executed the April 13, 1982 deed of absolute sale. We have carefully reviewed the case and find that respondent failed to adduce competent and credible evidence to prove his claim. As gleaned from the April 13, 1982 deed, the right of respondent to repurchase the property is not incorporated therein. The contract is one of absolute sale and not one with right to repurchase. The law states that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.56 When the language of the contract is explicit, leaving no doubt as to the intention of the drafters, the courts may not read into it any other intention that would contradict its plain import. 57 The clear terms of the contract should never be the subject matter of interpretation. Neither abstract justice nor the rule of liberal interpretation justifies the creation of a contract for the parties which they did not make themselves, or the imposition upon one party to a contract or obligation to assume simply or merely to avoid seeming hardships. 58Their true meaning must be enforced, as it is to be presumed that the contracting parties know their scope and effects.59 As the Court held in Villarica, et al. v. Court of Appeals:60 The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but some other right like the option to buy in the instant case.61 In Ramos v. Icasiano,62 we also held that an agreement to repurchase becomes a promise to sell when made after the sale because when the sale is made without such agreement the purchaser acquires the thing sold absolutely; and, if he afterwards grants the vendor the right to repurchase, it is a new contract entered into by the purchaser as absolute owner. An option to buy or a promise to sell is different and distinct from the right of repurchase that must be reserved by means of stipulations to that effect in the contract of sale. 63 There is no evidence on record that, on or before July 1985, petitioner agreed to sell her property to the respondent for P250,000.00. Neither is there any documentary evidence showing that Ventura was authorized to offer for sale or sell the property for and in behalf of petitioner for P250,000.00, or to receive the said amount from respondent as purchase price of the property. The rule is that when a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void 64 and cannot produce any legal effect as to transfer the property from its lawful owner. 65 Being inexistent and void from the very beginning, said contract cannot be ratified.66 Any contract entered into by Ventura for and in behalf of petitioner relative to the sale of the property is void and cannot be ratified by the latter. A void contract produces no effect either against or in favor of anyone.67 Respondent also failed to prove that the negotiations between him and petitioner has culminated in his offer to buy the property for P250,000.00, and that they later on agreed to the sale of the property for the same amount. He likewise failed to prove that he purchased and reacquired the property in July 1985. The evidence on record shows that petitioner had offered to sell the property for US$15,000 on a "take it or leave it" basis in May 1984 upon the expiration of the Contract of Lease68 an offer that was rejected by respondentwhich is why on December 30, 1997, petitioner and her husband offered again to sell the property to respondent for P670,000.00 inclusive of back rentals and the purchase price of the property under the April 13, 1982 Deed of absolute Sale. 69The offer was again rejected by respondent. The final offer appears to have been made on January 11, 1998 70but again, like the previous negotiations, no contract was perfected between the parties. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.71 Under Article 1318 of the New Civil Code, there is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established. Contracts are perfected by mere consent manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.72 Once perfected, they bind the contracting parties and the obligations arising therefrom have the form of law between the parties which must be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law. 73 There was no contract of sale entered into by the parties based on the Receipts dated July 1985 and June 16, 1986, signed by Perlita Ventura and the letter of petitioner to respondent dated July 25, 1986. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing and the other, to pay therefor a price certain in money or its equivalent. 74 The absence of any of the essential elements will negate the existence of a perfected contract of sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:75 A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.76 A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party without acceptance of the other, there is no contract. 77 When the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties. 78 Respondents reliance on petitioners letter to him da ted July 25, 1986 is misplaced. The letter reads in full: 7-25-86 Dear Martin & Ising, Enclosed for your information is the letter written by my husband to Perlita. I hope that you will be able to convince your cousin that its to her best interest to depo sit the balance of your payment to me ofP39,000.00 in my bank acct. per our agreement and send me my bank book right away so that we can transfer the title of the property. Regards, Amie 79 We have carefully considered the letter of Perlita Ventura, dated July 18, 1986, and the letter of Eugene Roberts, dated July 25, 1986, where Ventura admitted having used the money of petitioner amounting to P39,000.00 without the latters knowledge for the plane fare of Venturas parents. Ventura promised to refund the amount of P39,000.00, inclusive of interests, within one year.80 Eugene Roberts berated Ventura and called her a thief for stealing his and petitioners money and that of respondents wife, Ising, who allegedly told petitioner that she, Ising, loaned the money to her parents for their plane fare to the USA. Neither Ventura nor Eugene Roberts declared in their letters that Ventura had used the P250,000.00 which respondent gave to her. Petitioner in her letter to respondent did not admit, either expressly or impliedly, having received P211,000.00 from Ventura. Moreover, in her letter to petitioner, only a week earlier, or on July 18, 1986, Ventura admitted having spent the P39,000.00 and pleaded that she be allowed to refund the amount within one (1) year, including interests. Naririto ang total ng pera mo sa bankbook mo, P55,000.00 pati na yong deposit na sarili mo at bale ang nagalaw ko diyan ay P39,000.00. Huwag kang mag-alala ibabalik ko rin sa iyo sa loob ng isang taon pati interest. Ate Per81 1awphi1.net It is incredible that Ventura was able to remit to petitioner P211,000.00 before July 25, 1986 when only a week earlier, she was pleading to petitioner for a period of one year within which to refund the P39,000.00 to petitioner. It would have bolstered his cause if respondent had submitted an affidavit of Ventura stating that she had remittedP211,000.00 out of the P250,000.00 she received from respondent in July 1985 and June 20, 1986.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 69034 is REVERSED and SET ASIDE. The Decision of the Metropolitan Trial Court, affirmed with modification by the Regional Trial Court, is AFFIRMED. SO ORDERED.

G.R. No. 171124

February 13, 2008

ALEJANDRO NG WEE, petitioner, vs. MANUEL TANKIANSEE, respondent. DECISION NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 14, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006 Resolution2denying the motion for reconsideration thereof. The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont Bank (now United Overseas Bank), made several money placements totaling P210,595,991.62 with the bank's affiliate, Westmont Investment Corporation (Wincorp), a domestic entity engaged in the business of an investment house with the authority and license to extend credit.3 Sometime in February 2000, petitioner received disturbing news on Wincorp's financial condition prompting him to inquire about and investigate the company's operations and transactions with its borrowers. He then discovered that the company extended a loan equal to his total money placement to a corporation [Power Merge] with a subscribed capital of only P37.5M. This credit facility originated from another loan of about P1.5B extended by Wincorp to another corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp instituted a case against it and its surety. Settlement was, however, reached in which Hottick's president, Luis Juan L. Virata (Virata), assumed the obligation of the surety.4 Under the scheme agreed upon by Wincorp and Hottick's president, petitioner's money placements were transferred without his knowledge and consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. Allegedly, through the false representations of Wincorp and its officers and directors, petitioner was enticed to roll over his placements so that Wincorp could loan the same to Virata/Power Merge. 5 Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorp's officers and directors to fraudulently obtain for his benefit without any intention of paying the said placements, petitioner instituted, on October 19, 2000, Civil Case No. 00-99006 for damages with the Regional Trial Court (RTC) of Manila. 6 One of the defendants impleaded in the complaint is herein respondent Manuel Tankiansee, Vice-Chairman and Director of Wincorp.7 On October 26, 2000, on the basis of the allegations in the complaint and the October 12, 2000 Affidavit 8 of petitioner, the trial court ordered the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case subject, among others, to petitioner's filing of a P50Mbond.9The writ was, consequently, issued on November 6, 2000. 10 Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient, respondent, on December 22, 2000, moved for the discharge of the attachment. 11 The other defendants likewise filed similar motions.12 On October 23, 2001, the RTC, in an Omnibus Order, 13 denied all the motions for the discharge of the attachment. The defendants, including respondent herein, filed their respective motions for reconsideration 14 but the trial court denied the same on October 14, 2002.15 Incidentally, while respondent opted not to question anymore the said orders, his co-defendants, Virata and UEMMARA Philippines Corporation (UEM-MARA), assailed the same via certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No. 74610]. The appellate court, however, denied the certiorari petition on August 21, 2003,16 and the motion for reconsideration thereof on March 16, 2004. 17 In a petition for review on certioraribefore this Court, in G.R. No. 162928, we denied the petition and affirmed the CA rulings on May 19, 2004 for Virata's and UEM-MARA's failure to sufficiently show that the appellate court committed any reversible error.18 We subsequently denied the petition with finality on August 23, 2004. 19 On September 30, 2004, respondent filed before the trial court another Motion to Discharge Attachment, 20 repleading the grounds he raised in his first motion but raising the following additional grounds: (1) that he was not present in Wincorp's board meetings approving the questionable transactions; 21 and (2) that he could not have connived with Wincorp and the other defendants because he and Pearlbank Securities, Inc., in which he is a major stockholder, filed cases against the company as they were also victimized by its fraudulent schemes. 22 Ruling that the grounds raised were already passed upon by it in the previous orders affirmed by the CA and this Court, and that the additional grounds were respondent's affirmative defenses that properly pertained to the merits of the case, the trial court denied the motion in its January 6, 2005 Order. 23

With the denial of its motion for reconsideration,24 respondent filed a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On September 14, 2005, the appellate court rendered the assailed Decision25 reversing and setting aside the aforementioned orders of the trial court and lifting the November 6, 2000 Writ of Preliminary Attachment26 to the extent that it concerned respondent's properties. Petitioner moved for the reconsideration of the said ruling, but the CA denied the same in its January 6, 2006 Resolution.27 Thus, petitioner filed the instant petition on the following grounds: A. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT, WHICH, UNDER PREVAILING JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT OF CERTIORARI. B. MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER PREVAILING JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT. C. LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE LOWER COURT.28 For his part, respondent counters, among others, that the general and sweeping allegation of fraud against respondent in petitioner's affidavit-respondent as an officer and director of Wincorp allegedly connived with the other defendants to defraud petitioner-is not sufficient basis for the trial court to order the attachment of respondent's properties. Nowhere in the said affidavit does petitioner mention the name of respondent and any specific act committed by the latter to defraud the former. A writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules. Connivance cannot also be based on mere association but must be particularly alleged and established as a fact. Respondent further contends that the trial court, in resolving the Motion to Discharge Attachment, need not actually delve into the merits of the case. All that the court has to examine are the allegations in the complaint and the supporting affidavit. Petitioner cannot also rely on the decisions of the appellate court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to support his claim because respondent is not a party to the said cases. 29 We agree with respondent's contentions and deny the petition. In the case at bench, the basis of petitioner's application for the issuance of the writ of preliminary attachment against the properties of respondent is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads: Section 1. Grounds upon which attachment may issue.-At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: xxxx (d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof. For a writ of attachment to issue under this rule, the applicant must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation.30 The applicant must then be able to demonstrate that the debtor has intended to defraud the creditor.31 In Liberty Insurance Corporation v. Court of Appeals,32 we explained as follows: To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the

agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case. 33 In the instant case, petitioner's October 12, 2000 Affidavit34 is bereft of any factual statement that respondent committed a fraud. The affidavit narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why this Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to the participation of respondent in the said transaction, the affidavit merely states that respondent, an officer and director of Wincorp, connived with the other defendants in the civil case to defraud petitioner of his money placements. No other factual averment or circumstance details how respondent committed a fraud or how he connived with the other defendants to commit a fraud in the transaction sued upon. In other words, petitioner has not shown any specific act or deed to support the allegation that respondent is guilty of fraud. The affidavit, being the foundation of the writ,35 must contain such particulars as to how the fraud imputed to respondent was committed for the court to decide whether or not to issue the writ. 36 Absent any statement of other factual circumstances to show that respondent, at the time of contracting the obligation, had a preconceived plan or intention not to pay, or without any showing of how respondent committed the alleged fraud, the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment. 37 In the application for the writ under the said ground, compelling is the need to give a hint about what constituted the fraud and how it was perpetrated38 because established is the rule that fraud is never presumed. 39 Verily, the mere fact that respondent is an officer and director of the company does not necessarily give rise to the inference that he committed a fraud or that he connived with the other defendants to commit a fraud. While under certain circumstances, courts may treat a corporation as a mere aggroupment of persons, to whom liability will directly attach, this is only done when the wrongdoing has been clearly and convincingly established. 40 Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and annoyance.41 The rules governing its issuance are, therefore, strictly construed against the applicant,42 such that if the requisites for its grant are not shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which issues it acts in excess of its jurisdiction. 43 Likewise, the writ should not be abused to cause unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient allegations, it should at once be corrected.44 Considering, therefore, that, in this case, petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the alleged fraud committed by respondent, the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against the properties of respondent. We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et al.,45 that [t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution could force a trial of the merits of the case on his motion.46 However, the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the issuance of the writ against the properties of respondent. 47 The evil sought to be prevented by the said ruling will not arise, because the propriety or impropriety of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support of the application. Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of attachment is properly issued insofar as it concerns the properties of Virata and UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA, respondent is "never a party thereto." 48 Also, he is not in the same situation as Virata and UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or Power Merge, only a general allegation of fraud was made against respondent. We state, in closing, that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondent-it does not concern the other parties in the civil case, nor affect the trial court's resolution on the merits of the aforesaid civil case. WHEREFORE, premises considered, the petition is DENIED. The September 14, 2005 Decision and the January 6, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 90130 are AFFIRMED. SO ORDERED.

G.R. No. L-23851 March 26, 1976 WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant, vs. LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees. Leonardo Abola for appellant. Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won. Bienvenido A. Tan in his own behalf.

CASTRO, C.J.: This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiffappellant's complaint of interpleader upon the grounds of failure to state a cause of action and res judicata. In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club, Inc., a nonstock, civic and athletic corporation duly organized under the laws of the Philippines, with principal office in Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its first cause of action, that the defendant Lee E. Won claims ownership of its membership fee certificate 201, by virtue of the decision rendered in civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club, Inc." and also by virtue of membership fee certificate 201-serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of Manila, for and in behalf of the president and the secretary of the Corporation and of the People's Bank & Trust Company as transfer agent of the said Corporation, pursuant to the order of September 23, 1963 in the said case; that the defendant Bienvenido A. Tan, on the other hand, claims to be lawful owner of its aforesaid membership fee certificate 201 by virtue of membership fee certificate 201-serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz," the original owner and holder of membership fee certificate 201; that under its articles of incorporation and by-laws the Corporation is authorized to issue a maximum of 400 membership fee certificates to persons duly elected or admitted to proprietary membership, all of which have been issued as early as December 1939; that it claims no interest whatsoever in the said membership fee certificate 201; that it has no means of determining who of the two defendants is the lawful owner thereof; that it is without power to issue two separate certificates for the same membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee, without violating its articles of incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by the defendant Tan and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee proceed from the same membership fee certificate 201, originally issued in the name of "Swan, Culbertson and Fritz". For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the deputy clerk of court of court of the CFI of Manila in behalf of the Corporation is null and void because issued in violation of its by-laws, which require the surrender and cancellation of the outstanding membership fee certificate 201 before issuance may be made to the transferee of a new certificate duly signed by its president and secretary, aside from the fact that the decision of the CFI of Manila in civil case 26044 is not binding upon the defendant Tan, holder of membership fee certificate 201-serial no. 1199; that Tan is made a party because of his refusal to join it in this action or bring a separate action to protect his rights despite the fact that he has a legal and beneficial interest in the subject matter of this litigation; and that he is made a part so that complete relief may be accorded herein. The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting claims; and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of membership fee certificate 201, and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478 issued in the name of Lee. In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the Corporation. Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial court dismissed the complaint, with costs against the Corporation. In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended and supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that "the principal motive for the present action is to reopen the Manila Case and collaterally attack the decision of the said Court"; (2) in finding that the decision in civil case 26044 of the CFI of Manila constitutes res judicata and bars its present action; and (3) in dismissing its action instead of compelling the appellees to interplead and litigate between themselves their respective claims.

The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint, instead of compelling the appellees to interplead because there actually are conflicting claims between the latter with respect to the ownership of membership fee certificate 201, and, as there is not Identity of parties, of subject-matter, and of cause of action, between civil case 26044 of the CFI of Manila and the present action, the complaint should not have been dismissed upon the ground of res judicata. On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the effect of reopening civil case 26044, the present action is barred by res judicata. Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving for the dismissal of the complaint and upon which the trial court actually dismissed the complaint, the determinative issue, as can be gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of interpleader. The action of interpleader, under section 120 of the Code of Civil Procedure, 2 is a remedy whereby a person who has personal property in his possession, or an obligation to render wholly or partially, without claiming any right to either, comes to court and asks that the persons who claim the said personal property or who consider themselves entitled to demand compliance with the obligation, be required to litigate among themselves in order to determine finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not against double liability but against double vexation in respect of one liability. 3 The procedure under the Rules of Court 4 is the same as that under the Code of Civil Procedure, 5 except that under the former the remedy of interpleader is available regardless of the nature of the subject-matter of the controversy, whereas under the latter an interpleader suit is proper only if the subject-matter of the controversy is personal property or relates to the performance of an obligation. There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the facts and circumstances obtaining. A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7 He need not await actual institution of independent suits against him before filing a bill of interpleader. 8 He should file an action of interpleader within a reasonable time after a dispute has arisen without waiting to be sued by either of the contending claimants. 9 Otherwise, he may be barred by laches 10 or undue delay. 11 But where he acts with reasonable diligence in view of the environmental circumstances, the remedy is not barred. 12 Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees with respect to the membership fee certificate 201 long before it filed the present interpleader suit. It had been recognizing Tan as the lawful owner thereof. It was sued by Lee who also claimed the same membership fee certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to defend itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already been executed. It is not therefore too late for it to invoke the remedy of interpleader. It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered against him in favor of one of the contending claimants, 13 especially where he had notice of the conflicting claims prior to the rendition of the judgment and neglected the opportunity to implead the adverse claimants in the suit where judgment was entered. This must be so, because once judgment is obtained against him by one claimant he becomes liable to the latter. 14 In once case, 15 it was declared: The record here discloses that long before the rendition of the judgment in favor of relators against the Hanover Fire Insurance Company the latter had notice of the adverse claim of South to the proceeds of the policy. No reason is shown why the Insurance Company did not implead South in the former suit and have the conflicting claims there determined. The Insurance Company elected not to do so and that suit proceeded to a final judgment in favor of relators. The Company thereby became independently liable to relators. It was then too late for such company to invoke the remedy of interpleader The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case 26044 to compel the appellees herein to litigate between themselves their conflicting claims of ownership. It was only after adverse final judgment was rendered against it that the remedy of interpleader was invoked by it. By then it was too late, because to he entitled to this remedy the applicant must be able to show that lie has not been made independently liable to any of the claimants. And since the Corporation is already liable to Lee under a final judgment, the present interpleader suit is clearly improper and unavailing. It is the general rule that before a person will be deemed to be in a position to ask for an order of intrepleader, he must be prepared to show, among other prerequisites, that he has not become

independently liable to any of the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8. It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has been rendered in favor of one of the claimants of the fund, this being especially true when the holder of the funds had notice of the conflicting claims prior to the rendition of the judgment and had an opportunity to implead the adverse claimants in the suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275. 16 Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case at hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory explanation for its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader suit cannot prosper because it was filed much too late. If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him without filing a bill of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of interpleader to restrain a separate proceeding at law by claimant so as to avoid the resulting partial judgment; and if the stakeholder acquiesces in one claimant's trying out his claim and establishing it at law, he cannot then have that part of the litigation repeated in an interpleader suit. 4 Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's Summary of Eq. Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450. 17 It is the general rule that a bill of interpleader comes too late when application therefore is delayed until after judgment has been rendered in favor of one of the claimants of the fund, and that this is especially true where the holder of the fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598, also 5 Pomeroy's Eq. Juris. Sec. 41.) The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker county suit to proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in the present suit other than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown why he did not implead them in the suit. 18 To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil case 26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits, which is one of the purposes of an action of interpleader, with the possibility that the latter would lose the benefits of the favorable judgment. This cannot be done because having elected to take its chances of success in said civil case 26044, with full knowledge of all the fact, the Corporation must submit to the consequences of defeat. The act providing for the proceeding has nothing to say touching the right of one, after contesting a claim of one of the claimants to final judgment unsuccessfully, to involve the successful litigant in litigation anew by bringing an interpleader action. The question seems to be one of first impression here, but, in other jurisdictions, from which the substance of the act was apparently taken, the rule prevails that the action cannot be resorted to after an unsuccessful trial against one of the claimants. It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity to compel others, claiming property in his hands, to interplead, must do so before putting them to the test of trials at law. Yarborough v. Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy by interpleader is afforded to protect the party from the annoyance and hazard of two or more actions touching the same property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief, or elects to take the chances for success in the actions at law, ought to submit to the consequences of defeat. To permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to diminish the number of suits; to put upon the shoulders of others the burden which he asks may be taken from his own. ....' It is urged, however, that the American Surety Company of New York was not in position to file an interpleader until it had tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed the interpleader. The reason why, it urges, it was not in such

position until then is that had it succeeded before this court in sustaining its construction of the bond and the law governing the bond, it would not have been called upon to file an interpleader, since there would have been sufficient funds in its hands to have satisfied all lawful claimants. It may be observed, however, that the surety company was acquainted with all of the facts, and hence that it simply took its chances of meeting with success by its own construction of the bond and the law. Having failed to sustain it, it cannot now force relatrix into litigation anew with others, involving most likely a repetition of what has been decided, or force her to accept a pro rata part of a fund, which is far from benefits of the judgment. 19 Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and compelled to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack upon the judgment. The jurisprudence of this state and the common law states is well-settled that a claimant who has been put to test of a trial by a surety, and has establish his claim, may not be impleaded later by the surety in an interpleader suit, and compelled to prove his claim again with other adverse claimants.American Surety Company of New York v. Brim, 175 La. 959, 144 So. 727; American Surety Company of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas v. N.Y. Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence, 1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa. 430, 21 A. 450, 451;Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383. There can be no doubt that relator's claim has been finally and definitely established, because that matter was passed upon by three courts in definitive judgments. The only remaining item is the value of the use of the land during the time that relator occupied it. The case was remanded solely and only for the purpose of determining the amount of that credit. In all other aspects the judgment is final. 20 It is generally held by the cases it is the office of interpleader to protect a party, not against double liability, but against double vexation on account of one liability. Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is too late for the remedy of interpleader if the party seeking this relef has contested the claim of one of the parties and suffered judgment to be taken. In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a bill of interpleader comes too late when application therefor is delayed until after judgment has been rendered in favor of one of the claimants of the fund, and this is especially true where the holder of the fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No. 41.' The principle thus stated has been recognized in many cases in other jurisdictions, among which may be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3 Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v. McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047. It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the judgment creditor is in effect a collateral attack upon the judgment. 21 In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently liable in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack upon the final judgment in the said civil case; the appellee Lee had already established his rights to membership fee certificate 201 in the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his rights anew, and thereby increase instead of diminish litigations, which is one of the purposes of an interpleader suit, with the possiblity that the benefits of the final judgment in the said civil case might eventually be taken away from him; and because the Corporation allowed itself to be sued to final judgment in the said case, its action of interpleader was filed inexcusably late, for which reason it is barred by laches or unreasonable delay.

G.R. No. 158290

October 23, 2006

HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES, ENRIQUE BELO HENARES, and CRISTINA BELO HENARES, petitioners, vs. LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, respondents.

RESOLUTION

QUISUMBING, J.: Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land Transportation Franchising and Regulatory Board (LTFRB) and the Department of Transportation and Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural gas (CNG) as alternative fuel. Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996,1 the Environmental Management Bureau (EMB) of the National Capital Region, 2 a study of the Asian Development Bank,3 the Manila Observatory4 and the Department of Environment and Natural Resources 5 (DENR) on the high growth and low turnover in vehicle ownership in the Philippines, including diesel-powered vehicles, two-stroke engine powered motorcycles and their concomitant emission of air pollutants, petitioners attempt to present a compelling case for judicial action against the bane of air pollution and related environmental hazards. Petitioners allege that the particulate matters (PM) complex mixtures of dust, dirt, smoke, and liquid droplets, varying in sizes and compositions emitted into the air from various engine combustions have caused detrimental effects on health, productivity, infrastructure and the overall quality of life. Petitioners particularly cite the effects of certain fuel emissions from engine combustion when these react to other pollutants. For instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NOx) creates smog; with sulfur dioxide, it creates acid rain; and with ammonia, moisture and other compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause retardation and leaf bleaching in plants. According to petitioner, another emission, carbon monoxide (CO), when not completely burned but emitted into the atmosphere and then inhaled can disrupt the necessary oxygen in blood. With prolonged exposure, CO affects the nervous system and can be lethal to people with weak hearts.6 Petitioners add that although much of the new power generated in the country will use natural gas while a number of oil and coal-fired fuel stations are being phased-out, still with the projected doubling of power generation over the next 10 years, and with the continuing high demand for motor vehicles, the energy and transport sectors are likely to remain the major sources of harmful emissions. Petitioners refer us to the study of the Philippine Environment Monitor 20027, stating that in four of the country's major cities, Metro Manila, Davao, Cebu and Baguio, the exposure to PM10, a finer PM which can penetrate deep into the lungs causing serious health problems, is estimated at over US$430 million.8 The study also reports that the emissions of PMs have caused the following: Over 2,000 people die prematurely. This loss is valued at about US$140 million. Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million. Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a year in Davao and Cebu, and five to six times in Metro Manila and Baguio), costs about US$170 million. This is a 70 percent increase, over a decade, when compared with the findings of a similar study done in 1992 for Metro Manila, which reported 33 million cases.9 Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that vehicular emissions in Metro Manila have resulted to the prevalence of chronic obstructive pulmonary diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to 27.5 percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent among child vendors. The studies also revealed that the children in Metro Manila showed more compromised pulmonary function than their rural counterparts. Petitioners infer that these are mostly due to the emissions of PUVs. To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the use of CNG. According to petitioners, CNG is a natural gas comprised mostly of methane which although containing small amounts of propane and butane,10 is colorless and odorless and considered the cleanest fossil fuel because it produces much less pollutants than coal and petroleum; produces up to 90 percent less CO compared to gasoline and diesel fuel; reduces NOx emissions by 50 percent and cuts hydrocarbon emissions by half; emits 60 percent less

PMs; and releases virtually no sulfur dioxide. Although, according to petitioners, the only drawback of CNG is that it produces more methane, one of the gases blamed for global warming. 11 Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of mandamus to order the LTFRB to require PUVs to use CNG as an alternative fuel, lie in Section 16, 12 Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of Republic Act No. 8749 otherwise known as the "Philippine Clean Air Act of 1999." Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the Department of Transportation and Communications (DOTC) as additional respondent. In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the Revised Rules of Court and explains that the writ of mandamus is not the correct remedy since the writ may be issued only to command a tribunal, corporation, board or person to do an act that is required to be done, when he or it unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, there being no other plain, speedy and adequate remedy in the ordinary course of law. 15 Further citing existing jurisprudence, the Solicitor General explains that in contrast to a discretionary act, a ministerial act, which a mandamus is, is one in which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to a mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of an act done. The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits the use of gasoline and diesel by owners of motor vehicles. Sadly too, according to the Solicitor General, Rep. Act No. 8749 does not even mention the existence of CNG as alternative fuel and avers that unless this law is amended to provide CNG as alternative fuel for PUVs, the respondents cannot propose that PUVs use CNG as alternative fuel. The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and not the LTFRB nor the DOTC. Moreover, he says, it is the Department of Energy (DOE), under Section 26 16 of Rep. Act No. 8749, that is required to set the specifications for all types of fuel and fuel-related products to improve fuel compositions for improved efficiency and reduced emissions. He adds that under Section 21 17 of the cited Republic Act, the DOTC is limited to implementing the emission standards for motor vehicles, and the herein respondents cannot alter, change or modify the emission standards. The Solicitor General opines that the Court should declare the instant petition for mandamus without merit. Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers to implement measures in accordance with the policies and principles mandated by Rep. Act No. 8749, specifically Section 218 and Section 21.19 Petitioners state that under these laws and with all the available information provided by the DOE on the benefits of CNG, respondents cannot ignore the existence of CNG, and their failure to recognize CNG and compel its use by PUVs as alternative fuel while air pollution brought about by the emissions of gasoline and diesel endanger the environment and the people, is tantamount to neglect in the performance of a duty which the law enjoins. Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and adequate remedy in the ordinary course of law. Petitioners insist that the writ in fact should be issued pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor General invokes. In their Memorandum, petitioners phrase the issues before us as follows: I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT ACTION II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT THE SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS (CNG) IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A WRIT OF MANDAMUS20 Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition before us? Second, Should mandamus issue against respondents to compel PUVs to use CNG as alternative fuel?

According to petitioners, Section 16,21 Article II of the 1987 Constitution is the policy statement that bestows on the people the right to breathe clean air in a healthy environment. This policy is enunciated in Oposa.22 The implementation of this policy is articulated in Rep. Act No. 8749. These, according to petitioners, are the bases for their standing to file the instant petition. They aver that when there is an omission by the government to safeguard a right, in this case their right to clean air, then, the citizens can resort to and exhaust all remedies to challenge this omission by the government. This, they say, is embodied in Section 4 23 of Rep. Act No. 8749. Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed with power to regulate and control motor vehicles, particularly PUVs, and with the same agencies' awareness and knowledge that the PUVs emit dangerous levels of air pollutants, then, the responsibility to see that these are curbed falls under respondents' functions and a writ of mandamus should issue against them. The Solicitor General, for his part, reiterates his position that the respondent government agencies, the DOTC and the LTFRB, are not in a position to compel the PUVs to use CNG as alternative fuel. The Solicitor General explains that the function of the DOTC is limited to implementing the emission standards set forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum limit for the emission of vehicles, but it does not recognize CNG as alternative engine fuel. The Solicitor General avers that the petition should be addressed to Congress for it to come up with a policy that would compel the use of CNG as alternative fuel. Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge this Court to decide if what petitioners propose could be done through a less circuitous, speedy and unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in the Oposa case,24 describes as "inter-generational responsibility" and "inter-generational justice." Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case before this Court. Even respondents do not question their standing. This petition focuses on one fundamental legal right of petitioners, their right to clean air. Moreover, as held previously, a party's standing before this Court is a procedural technicality which may, in the exercise of the Court's discretion, be set aside in view of the importance of the issue raised. We brush aside this issue of technicality under the principle of the transcendental importance to the public, especially so if these cases demand that they be settled promptly. Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it concerns the air they breathe, but it is also impressed with public interest. The consequences of the counter-productive and retrogressive effects of a neglected environment due to emissions of motor vehicles immeasurably affect the wellbeing of petitioners. On these considerations, the legal standing of the petitioners deserves recognition. Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue against respondents. Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1) against any tribunal which unlawfully neglects the performance of an act which the law specifically enjoins as a duty; (2) in case any corporation, board or person unlawfully neglects the performance of an act which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any tribunal, corporation, board or person unlawfully excludes another from the use and enjoyment of a right or office to which such other is legally entitled; and there is no other plain, speedy, and adequate remedy in the ordinary course of law. In University of San Agustin, Inc. v. Court of Appeals,25 we said, It is settled that mandamus is employed to compel the performance, when refused, of a ministerial duty, this being its main objective. It does not lie to require anyone to fulfill contractual obligations or to compel a course of conduct, nor to control or review the exercise of discretion. On the part of the petitioner, it is essential to the issuance of a writ of mandamus that he should have a clear legal rightto the thing demanded and it must be the imperative duty of the respondent to perform the act required. It never issues in doubtful cases. While it may not be necessary that the duty be absolutely expressed, it must however, be clear. The writ will not issue to compel an official to do anything which is not his duty to do or which is his duty not to do, or give to the applicant anything to which he is not entitled by law. The writ neither confers powers nor imposes duties. It is simply a command to exercise a power already possessed and to perform a duty already imposed. (Emphasis supplied.) In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional and a statutory policy already articulated in operational terms, e.g. in Rep. Act No. 8749, the Philippine Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically provides that when PUVs are concerned, the responsibility of implementing the policy falls on respondent DOTC. It provides as follows:

SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor vehicles set pursuant to and as provided in this Act. To further improve the emission standards, the Department [DENR] shall review, revise and publish the standards every two (2) years, or as the need arises. It shall consider the maximum limits for all major pollutants to ensure substantial improvement in air quality for the health, safety and welfare of the general public. Paragraph (b) states: b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an action plan for the control and management of air pollution from motor vehicles consistent with the Integrated Air Quality Framework . . . . (Emphasis supplied.) There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission standards for fuel use and the task of developing an action plan. As far as motor vehicles are concerned, it devolves upon the DOTC and the line agency whose mandate is to oversee that motor vehicles prepare an action plan and implement the emission standards for motor vehicles, namely the LTFRB. In Oposa26 we said, the right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the environment. We also said, it is clearly the duty of the responsible government agencies to advance the said right. Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance of a writ of mandamus commanding the respondents to require PUVs to use CNG as an alternative fuel. Although both are general mandates that do not specifically enjoin the use of any kind of fuel, particularly the use of CNG, there is an executive order implementing a program on the use of CNG by public vehicles. Executive Order No. 290, entitledImplementing the Natural Gas Vehicle Program for Public Transport (NGVPPT) , took effect on February 24, 2004. The program recognized, among others, natural gas as a clean burning alternative fuel for vehicle which has the potential to produce substantially lower pollutants; and the Malampaya Gas-to-Power Project as representing the beginning of the natural gas industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of its objectives, the use of CNG as a clean alternative fuel for transport. Furthermore, one of the components of the program is the development of CNG refueling stations and all related facilities in strategic locations in the country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of 2002, designated the DOE as the lead agency (a) in developing the natural gas industry of the country with the DENR, through the EMB and (b) in formulating emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the DOTC, working with the DOE, to develop an implementation plan for "a gradual shift to CNG fuel utilization in PUVs and promote NGVs [natural gas vehicles] in Metro Manila and Luzon through the issuance of directives/orders providing preferential franchises in present day major routes and exclusive franchises to NGVs in newly opened routes" A thorough reading of the executive order assures us that implementation for a cleaner environment is being addressed. To a certain extent, the instant petition had been mooted by the issuance of E.O. No. 290. Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ of mandamus commanding the respondents to require PUVs to use CNG, is unavailing. Mandamus is available only to compel the doing of an act specifically enjoined by law as a duty. Here, there is no law that mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use CNG. At most the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant preferential and exclusive Certificates of Public Convenience (CPC) or franchises to operators of NGVs based on the results of the DOTC surveys." Further, mandamus will not generally lie from one branch of government to a coordinate branch, for the obvious reason that neither is inferior to the other.27 The need for future changes in both legislation and its implementation cannot be preempted by orders from this Court, especially when what is prayed for is procedurally infirm. Besides, comity with and courtesy to a coequal branch dictate that we give sufficient time and leeway for the coequal branches to address by themselves the environmental problems raised in this petition. In the same manner that we have associated the fundamental right to a balanced and healthful ecology with the twin concepts of "inter-generational responsibility" and "inter-generational justice" in Oposa,28 where we upheld the right of future Filipinos to prevent the destruction of the rainforests, so do we recognize, in this petition, the right of petitioners and the future generation to clean air. In Oposa we said that if the right to a balanced and healthful ecology is now explicitly found in the Constitution even if the right is "assumed to exist from the inception of humankind, it is because of the well-founded fear of its framers [of the Constitution] that unless the rights to a balanced and healthful ecology and to health are mandated as state policies by the Constitution itself, thereby highlighting their continuing importance and imposing upon the state a solemn obligation to preserve the first and protect and advance the second, the day would not be too far when all else would be lost not only for the present generation, but also for those to come. . ." 29

It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed on the protection of the environment in the landmark case of Oposa. Yet, as serious as the statistics are on air pollution, with the present fuels deemed toxic as they are to the environment, as fatal as these pollutants are to the health of the citizens, and urgently requiring resort to drastic measures to reduce air pollutants emitted by motor vehicles, we must admit in particular that petitioners are unable to pinpoint the law that imposes an indubitable legal duty on respondents that will justify a grant of the writ of mandamus compelling the use of CNG for public utility vehicles. It appears to us that more properly, the legislature should provide first the specific statutory remedy to the complex environmental problems bared by herein petitioners before any judicial recourse by mandamus is taken. WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit. SO ORDERED.

G.R. No. 168696

February 28, 2006

MA. LUTGARDA P. CALLEJA, JOAQUIN M. CALLEJA, JR., JADELSON PETER P. CALLEJA, MA. JESSICA T. FLORES, MERCIE C. TIPONES and PERFECTO NIXON C. TABORA, Petitioners, vs. JOSE PIERRE A. PANDAY, AUGUSTO R. PANDAY and MA. THELNA P. MALLARI, Respondents. DECISION AUSTRIA-MARTINEZ, J.: This resolves the petition for review on certiorari assailing the Order1 of the Regional Trial Court of San Jose, Camarines Sur, Branch 58 (RTC-Br. 58) issued on July 13, 2005. The antecedent facts are as follows. On May 16, 2005, respondents filed a petition with the Regional Trial Court of San Jose, Camarines Sur for quo warranto with Damages and Prayer for Mandatory and Prohibitory Injunction, Damages and Issuance of Temporary Restraining Order against herein petitioners. Respondents alleged that from 1985 up to the filing of the petition with the trial court, they had been members of the board of directors and officers of St. John Hospital, Incorporated, but sometime in May 2005, petitioners, who are also among the incorporators and stockholders of said corporation, forcibly and with the aid of armed men usurped the powers which supposedly belonged to Respondents. On May 24, 2005, RTC-Br. 58 issued an Order transferring the case to the Regional Trial Court in Naga City. According to RTC-Br. 58, since the verified petition showed petitioners therein (herein respondents) to be residents of Naga City, then pursuant to Section 7, Rule 66 of the 1997 Rules of Civil Procedure, the action for quo warranto should be brought in the Regional Trial Court exercising jurisdiction over the territorial area where the respondents or any of the respondents resides. However, the Executive Judge of RTC, Naga City refused to receive the case folder of the subject case for quo warranto, stating that improper venue is not a ground for transferring a quo warranto case to another administrative jurisdiction. The RTC-Br. 58 then proceeded to issue and serve summons on herein petitioners (respondents below). Petitioner Tabora filed his Answer dated June 8, 2005, raising therein the affirmative defenses of (1) improper venue, (2) lack of jurisdiction, and (3) wrong remedy of quo warranto. Thereafter, the other petitioners also filed their Answer, also raising the same affirmative defenses. All the parties were then required to submit their respective memoranda. On July 13, 2005, RTC-Br. 58 issued the assailed Order, the pertinent portions of which read as follows: It is undisputed that the plaintiffs cause of action involves controversies arising out of intra -corporate relations, between and among stockholders, members or associates of the St. John Hospital Inc. which originally under PD 902-A approved on March 11, 1976 is within the original and exclusive jurisdiction of the Securities and Exchange Commission to try and decide in addition to its regulatory and adjudicated functions (Section 5, PD 902-A). Upon the advent of RA 8799 approved on July 19, 2000, otherwise known as the Securities and Regulation Code, the Commissions jurisdiction over all cases enumerated in Section 5, Presidential Decree 902-A were transferred ["]to the Court of general jurisdiction or the appropriate Regional Trial Court with a proviso that the "Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases." Pursuant to this mandate of RA 8799, the Supreme Court in the exercise of said mandated authority, promulgated on November 21, 2000, A.M. No. 00-11-03-SC which took effect 15 December 2000 designated certain branches of the Regional Trial Court to try and decide Securities and Exchange Commission Cases arising within their respective territorial jurisdiction with respect to the National Capital Region and within the respective provinces in the First to Twelve Judicial Region. Accordingly, in the Province of Camarines Sur, (Naga City) RTC Branch 23 presided by the Hon. Pablo M. Paqueo, Jr. was designated as "special court" (Section 1, A.M. No. 00-11-03-SC). Subsequently, on January 23, 2001, supplemental Administrative Circular No. 8-01 which took effect on March 1, 2001 was issued by the Supreme Court which directed that "all SEC cases originally assigned or transmitted to the regular Regional Trial Court shall be transferred to branches of the Regional Trial Court specially designated to hear such cases in accordance with A.M. No. 00-11-03-SC. On March 13, 2001, A.M. No. 01-2-04 SC was promulgated and took effect on April 1, 2001. From the foregoing discussion and historical background relative to the venue and jurisdiction to try and decide cases originally enumerated in Section 5 of PD 902-A and later under Section 5.2 of RA 8799, it is evident that the clear intent of the circular is to bestow the juridiction "to try and decide these cases to the "special courts" created under A.M. No. 00-11-03-SC. . . .

Under Section 8, of the Interim Rules, [a] Motion to Dismiss is among the prohibited pleadings. On the otherhand, the Supreme Court under Administrative Order 8-01 has directed the transfer from the regular courts to the branches of the Regional Trial Courts specially designated to try and decide intra-corporate dispute. In the light of the above-noted observations and discussion, the Motion to Dismiss is DENIED pursuant to the Interim Rules of Procedure for Intra-Corporate Controversies (A.M. No. 01-2-04-SC) which mandates that motion to dismiss is a prohibited pleading (Section 8) and in consonance with Administrative Order 8-01 of the Supreme Court dated March 1, 2001, this case is hereby ordered remanded to the Regional Trial Court Branch 23, Naga City which under A.M. No. 00-11-03-SC has been designated as special court to try and decide intra-corporate controversies under R.A. 8799. The scheduled hearing on the prayer for temporary restraining order and preliminary injunction set on July 18, 2005 is hereby cancelled. For reasons of comity the issue of whether Quo Warranto is the proper remedy is better left to the court of competent jurisdiction to rule upon. SO ORDERED. 2 Petitioners no longer moved for reconsideration of the foregoing Order and, instead, immediately elevated the case to this Court via a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure. The petition raises the following issues: I 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 COEQUAL COURT IN ORDER TO CURE THE DEFECTS ON VENUE AND JURISDICTION II WHETHER OR NOT ADMINISTRATIVE CIRCULAR NO. 8-01 DATED JANUARY 23, 2001 WHICH TOOK EFFECT ON MARCH 1, 2001 MAY BE APPLIED IN THE PRESENT CASE WHICH WAS FILED ON MAY 16, 2005. 3 In their Comment, respondents argue that the present petition should be denied due course and dismissed on the grounds that (1) an appeal under Rule 45 is inappropriate in this case because the Order dated July 13, 2005 is merely an interlocutory order and not a final order as contemplated under Rule 45 of the 1997 Rules of Civil Procedure; (2) a petition for review on certiorari under Rule 45 is the wrong remedy under A.M. No. 04-9-07-SC, which provides that "all decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealable to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court;" and (3) the petition was intended merely to delay the proceedings in the trial court because when the case was transferred to Branch 21 of the Regional Trial Court, said court granted petitioners motion to hold the proceedings in view of the present petition pending before this Court. Subsequently, petitioners also filed an Urgent Motion to Restore Status Quo Ante, alleging that on January 12, 2006, respondent Jose Pierre Panday, with the aid of 14 armed men, assaulted the premises of St. John Hospital in Naga City, taking away the daily hospital collections estimated at P400,000.00. The Court notes that, indeed, petitioners chose the wrong remedy to assail the Order of July 13, 2005. It is hornbook principle that Rule 45 of the 1997 Rules of Civil Procedure governs appeals from judgments or final orders. 4 The Order dated July 13, 2005 is basically a denial of herein petitioners prayer in their Answer for the dismissal of respondents case against them. As a consequence of the trial courts refusal to dismiss the case, it then directed the transfer of the case to another branch of the Regional Trial Court that had been designated as a special court to hear cases formerly cognizable by the SEC. Verily, the order was merely interlocutory as it does not dispose of the case completely, but leaves something more to be done on its merits. Such being the case, the assailed Order cannot ordinarily be reviewed through a petition under Rule 45. As we held in Tolentino v. Natanauan, 5 to wit: In the case of Bangko Silangan Development Bank vs. Court of Appeals, the Court reiterated the well-settled rule that: . . . an order denying a motion to dismiss is merely interlocutory and therefore not appealable, nor can it be the subject of a petition for review on certiorari. Such order may only be reviewed in the ordinary course of law by an

appeal from the judgment after trial. The ordinary procedure to be followed in that event is to file an answer, go to trial, and if the decision is adverse, reiterate the issue on appeal from the final judgment. 6 It appears, however, that the longer this case remains unresolved, the greater chance there is for more violence between the parties to erupt. In Philippine Airlines v. Spouses Kurangking,7 the Court proceeded to give due course to a case despite the wrong remedy resorted to by the petitioner therein, stating thus: While a petition for review on certiorari under Rule 45 would ordinarily be inappropriate to assail an interlocutory order, in the interest, however, of arresting the perpetuation of an apparent error committed below that could only serve to unnecessarily burden the parties, the Court has resolved to ignore the technical flaw and, also, to treat the petition, there being no other plain, speedy and adequate remedy, as a special civil action for certiorari. Not much, after all, can be gained if the Court were to refrain from now making a pronouncement on an issue so basic as that submitted by the parties.8 In this case, the basic issue of which court has jurisdiction over cases previously cognizable by the SEC under Section 5, Presidential Decree No. 902-A (P.D. No. 902-A), and the propensity of the parties to resort to violence behoove the Court to look beyond petitioners technical lapse of filing a petition for review on certiorari instead of filing a petition for certiorari under Rule 65 with the proper court. Thus, the Court shall proceed to resolve the case on its merits. It should be noted that allegations in a complaint for quo warranto that certain persons usurped the offices, powers and functions of duly elected members of the board, trustees and/or officers make out a case for an intra-corporate controversy.9 Prior to the enactment of R.A. No. 8799, the Court, adopting Justice Jose Y. Ferias view, declared in Unilongo v. Court of Appeals 10 that Section 1, Rule 66 of the 1997 Rules of Civil Procedure is "limited to actions of quo warranto against persons who usurp a public office, position or franchise; public officers who forfeit their office; and associations which act as corporations without being legally incorporated," while "[a]ctions of quo warranto against corporations, or against persons who usurp an office in a corporation, fall under the jurisdiction of the Securities and Exchange Commission and are governed by its rules. (P.D. No. 902-A as amended)."11 However, R.A. No. 8799 was passed and Section 5.2 thereof provides as follows: 5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902 -A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. xxx Therefore, actions of quo warranto against persons who usurp an office in a corporation, which were formerly cognizable by the Securities and Exchange Commission under PD 902-A, have been transferred to the courts of general jurisdiction. But, this does not change the fact that Rule 66 of the 1997 Rules of Civil Procedure does not apply to quo warranto cases against persons who usurp an office in a private corporation. Presently, Section 1(a) of Rule 66 reads thus: Section 1. Action by Government against individuals. An action for the usurpation of a public office, position or franchise may be commenced by a verified petition brought in the name of the Republic of the Philippines against (a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or franchise; xxxx As explained in the Unilongo12 case, Section 1(a) of Rule 66 of the present Rules no longer contains the phrase "or an office in a corporation created by authority of law" which was found in the old Rules. Clearly, the present Rule 66 only applies to actions of quo warranto against persons who usurp a public office, position or franchise; public officers who forfeit their office; and associations which act as corporations without being legally incorporated despite the passage of R.A. No. 8799. It is, therefore, The Interim Rules of Procedure Governing Intra-Corporate Controversies Under R.A. No. 8799 (hereinafter the Interim Rules) which applies to the petition for quo warrantofiled by respondents before the trial court since what is being questioned is the authority of herein petitioners to assume the office and act as the board of directors and officers of St. John Hospital, Incorporated. The Interim Rules provide thus: Section 1. (a) Cases covered. These Rules shall govern the procedure to be observed in civil cases involving the following: xxxx

(2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates, and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; (3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations; xxxx SEC. 5. Venue. All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation, partnership, or association concerned. xxx (Emphasis ours) Pursuant to Section 5.2 of R.A. No. 8799, the Supreme Court promulgated A.M. No. 00-11-03-SC (effective December 15, 2000) designating certain branches of the Regional Trial Courts to try and decide cases formerly cognizable by the Securities and Exchange Commission. For the Fifth Judicial Region, this Court designated the following branches of the Regional Trial Court, to wit: Camarines Sur (Naga City) Branch 23, Judge Pablo M. Paqueo, Jr. Albay (Legaspi City) Branch 4, Judge Gregorio A. Consulta Sorsogon (Sorsogon) Branch 52, Judge Honesto A. Villamor Subsequently, the Court promulgated A.M. No. 03-03-03-SC, effective July 1, 2003, which provides that: 1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this Court dated 21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002, all issued in A.M. No. 00-1103-SC, (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as Special Commercial Courts to try and decide cases involving violations of Intellectual Property Rights which fall within their jurisdiction and those cases formerly cognizable by the Securities and Exchange Commission; xxxx 4. The Special Commercial Courts shall have jurisdiction over cases arising within their respective territorial jurisdiction with respect to the National Capital Judicial Region and within the respective provinces with respect to the First to Twelfth Judicial Regions. Thus, cases shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial Court ; (Emphasis ours) The next question then is, which branch of the Regional Trial Court has jurisdiction over the present action for quo warrato? Section 5 of the Interim Rules provides that the petition should be commenced and tried in the Regional Trial Court that has jurisdiction over the principal office of the corporation. It is undisputed that the principal office of the corporation is situated at Goa, Camarines Sur. Thus, pursuant to A.M. No. 00-11-03-SC and A.M. No. 0303-03-SC, it is the Regional Trial Court designated as Special Commercial Courts in Camarines Sur which shall have jurisdiction over the petition for quo warranto filed by herein Respondents. Evidently, the RTC-Br. 58 in San Jose, Camarines Sur is bereft of jurisdiction over respondents petition for quo warranto. Based on the allegations in the petition, the case was clearly one involving an intra-corporate dispute. The trial court should have been aware that under R.A. No. 8799 and the aforementioned administrative issuances of this Court, RTC-Br. 58 was never designated as a Special Commercial Court; hence, it was never vested with jurisdiction over cases previously cognizable by the SEC. 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. In HLC Construction and Development Corp. v. Emily Homes Subdivision Homeowners Association,13 the Court held that the trial court, having no jurisdiction over the subject matter of the complaint, should dismiss the same so the issues therein could be expeditiously heard and resolved by the tribunal which was clothed with jurisdiction. Note, further, that respondents petition for quo warranto was filed as late as 2005. A.M. No. 03-03-03-SC took effect as early as July 1, 2003 and it was clearly provided therein that such petitions shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial Court . Since the official station of the designated Special Commercial Court for Camarines Sur is the Regional Trial Court in Naga City, respondents should have filed their petition with said court. A.M. No. 00-11-03-SC having been in effect for four years and A.M. No. 03-03-03-SC having been in effect for almost two years by the time respondents filed their

petition, there is no cogent reason why respondents were not aware of the appropriate court where their petition should be filed. The ratiocination of RTC-Br.58 that Administrative Circular No. 08-2001 authorized said trial court to order the transfer of respondents petition to the Regional Trial Court of Naga City is specious because as of the tim e of filing of the petition, A.M. No. 03-03-03-SC, which clearly stated that cases formerly cognizable by the SEC should be filed with the Office of the Clerk of Court in the official station of the designated Special Commercial Court, had been in effect for almost two years. Thus, the filing of the petition with the Regional Trial Court of San Jose, Camarines Sur, which had no jurisdiction over those kinds of actions, was clearly erroneous. WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The Order of the Regional Trial Court of San Jose, Camarines Sur dated July 13, 2005 is SET ASIDE for being NULL and VOID. The petition for quo warrantoin Civil Case No. T-1007 (now re-docketed as SEC Case No. RTC 2005-0001), entitled "Jose Pierre A. Panday, et al. v. Sps. Joaquin M. Calleja, Jr., et al." is ordered DISMISSED. SO ORDERED.

UBEN SANTOS, petitioner, vs. SPOUSES TONY AYON and MERCY AYON, respondents. DECISION SANDOVAL-GUTIERREZ, J.: For our resolution is the petition for review on certiorari assailing the Decision[1] of the Court of Appeals dated October 5, 1998 in CA-G.R. SP No. 4735 and its Resolution[2] dated December 11, 1998 denying the motion for reconsideration. The petition alleges that on November 6, 1996, Ruben Santos, petitioner, filed with the Municipal Trial Court in Cities (MTCC), Branch 2, Davao City a complaint for illegal detainer against spouses Tony and Mercy Ayon, respondents, docketed as Civil Case No. 3506-B-96. In his complaint, petitioner averred that he is the registered owner of three lots situated at Lanzona Subdivision, Matina, Davao City, covered by Transfer Certificates of Title (TCT) Nos. 108174, 108175, and 108176. Respondent spouses are the registered owners of an adjacent parcel of land covered by TCT No. T-247792. The previous occupant of this property built a building which straddled both the lots of the herein parties. Respondents have been using the building as a warehouse. Petitioner further alleged in his complaint that in 1985, when he bought the three lots, he informed respondents that the building occupies a portion of his land. However, he allowed them to continue using the building. But in 1996, he needed the entire portion of his lot, hence, he demanded that respondents demolish and remove the part of the building encroaching his property and turn over to him their possession. But they refused. Instead, they continued occupying the contested portion and even made improvements on the building. The dispute was then referred to thebarangay lupon, but the parties failed to reach an amicable settlement. Accordingly, on March 27, 1996, a certification to file action was issued. In their answer, respondents sought a dismissal of this case on the ground that the court has no jurisdiction over it since there is no lessor-lessee relationship between the parties. Respondents denied they were occupying petitioners property by mere tolerance, claiming they own the contested portion and have been occupying the same long before petitioner acquired his lots in 1985. On July 31, 1997, the MTCC rendered its Decision in favor of petitioner, thus: WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants ordering the latter, their successors-in-interest and other persons acting in their behalf to vacate the portion of the subject properties and peacefully surrender possession thereof to plaintiff as well as dismantle/remove the structures found thereon. Defendants are further ordered to pay reasonable value for the use and occupation of the encroached area in the amount of One Thousand Pesos (P1,000.00) a month beginning September 1996 and the subsequent months thereafter until premises are vacated; to pay attorneys fees of Ten Thousand Pesos ( P10,000.00); and to pay the costs of suit. SO ORDERED.[3] On appeal, the Regional Trial Court (RTC), Branch 11, Davao City, in its Decision dated February 12, 1998 in Civil Case No. 25, 654-97, affirmed in toto the MTCC judgment.[4] The RTC upheld the finding of the MTCC that respondents occupation of the contested portion was by mere tolerance. Hence, when petitioner needed the same, he has the right to eject them through court action. Respondents then elevated the case to the Court of Appeals through a petition for review. In its Decision dated October 5, 1988 now being challenged by petitioner, the Court of Appeals held that petitioners proper remedy should have been an accion publiciana before the RTC, not an action for unlawful detainer, thus: In this case, petitioners were already in possession of the premises in question at the time private respondent bought three (3) lots at the Lanzona Subdivision in 1985, a portion of which is occupied by a building being used by the former as a bodega. Apart from private respondents bare claim, no evidence was alluded to show that petitioners possession was tolerated by (his) predecessor-in-interest. The fact that respondent might have tolerated petitioners possession is not decisive. What matters for purposes of determining the proper cause of action is the nature of petitioners possession from its inception. And in this regard, the Court notes that the complaint itself merely alleges that defendants-petitioners have been occupying a portion of the above properties of the plaintiff for the past several years by virtue of the tolerance of the plaintiff. Nowhere is it alleged that his predecessor likewise tolerated petitioners possession of the premises. x x x. Consequently, x x x, respondent should present his claim before the Regional Trial Court in an accion publiciana and not before the Municipal Trial Court in a summary proceeding of unlawful detainer. WHEREFORE, the decision under review is hereby REVERSED and SET ASIDE. Accordingly, the complaint for unlawful detainer is ordered DISMISSED.[5]

Petitioner filed a motion for reconsideration, but was denied by the Appellate Court in its Resolution dated December 11, 1998. Hence, the instant petition for review on certiorari ascribing to the Court of Appeals the following errors: I THE HONORABLE COURT OF APPEALS MISAPPLIED THE LAW IN DISMISSING THE INSTANT CASE ON THE GROUND THAT PETITIONER SHOULD PRESENT HIS CLAIM BEFORE THE REGIONAL TRIAL COURT IN AN ACCION PUBLICIANA. II THE FINDINGS OF THE HONORABLE COURT OF APPEALS IS NOT IN CONSONANCE WITH EXISTING LAWS AND JURISPRUDENCE. The sole issue here is whether the Court of Appeals committed a reversible error of law in holding that petitioners complaint is within the competence of the RTC, not the MTCC. Petitioner contends that it is not necessary that he has prior physical possession of the questioned property before he could file an action for unlawful detainer. He stresses that he tolerated respondents occupancy of the portion in controversy until he needed it. After his demand that they vacate, their continued possession became illegal. Hence, his action for unlawful detainer before the MTCC is proper. Respondents, in their comment, insisted that they have been in possession of the disputed property even before petitioner purchased the same on April 10, 1985. Hence, he cannot claim that they were occupying the property by mere tolerance because they were ahead in time in physical possession. We sustain the petition. It is an elementary rule that the jurisdiction of a court over the subject matter is determined by the allegations of the complaint and cannot be made to depend upon the defenses set up in the answer or pleadings filed by the defendant.[6] This rule is no different in an action for forcible entry or unlawful detainer.[7] All actions for forcible entry or unlawful detainer shall be filed with the proper Metropolitan Trial Courts, the Municipal Trial Courts and the Municipal Circuit Trial Courts, which actions shall include not only the plea for restoration of possession but also all claims for damages and costs arising therefrom.[8] The said courts are not divested of jurisdiction over such cases even if the defendants therein raises the question of ownership over the litigated property in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership.[9] Section 1, Rule 70 on forcible entry and unlawful detainer of the 1997 Rules of Civil Procedure, as amended, reads: Section 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee or other person may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs. Under the above provision, there are two entirely distinct and different causes of action, to wit: (1) a case for forcible entry, which is an action to recover possession of a property from the defendant whose occupation thereof is illegal from the beginning as he acquired possession by force, intimidation, threat, strategy or stealth; and (2) a case for unlawful detainer, which is an action for recovery of possession from defendant whose possession of the property was inceptively lawful by virtue of a contract (express or implied) with the plaintiff, but became illegal when he continued his possession despite the termination of his right thereunder.[10] Petitioners complaint for unlawful detainer in Civil Case No. 3506 -B-96 is properly within the competence of the MTCC. His pertinent allegations in the complaint read: 4. That defendants (spouses) have constructed an extension of their residential house as well as other structures and have been occupying a portion of the above PROPERTIES of the plaintiff for the past several years by virtue of the tolerance of the plaintiff since at the time he has no need of the property ; 5. That plaintiff needed the property in the early part of 1996 and made demands to the defendants to vacate and turn over the premises as well as the removal (of) their structures found inside the PROPERTIES of plaintiff; that without any justifiable reasons, defendants refused to vacate the portion of the PROPERTIES occupied by them to the damage and prejudice of the plaintiff .

6. Hence, plaintiff referred the matter to the Office of the Barangay Captain of Matina Crossing 74-A, Davao City for a possible settlement sometime in the latter part of February 1996. The barangay case reached thePangkat but no settlement was had. Thereafter, a Certification To File Action dated March 27, 1996 was issued x x x; x x x.[11] (underscoring ours) Verily, petitioners allegations in his complaint clearly make a case for an unlawful detainer. We find no error in the MTCC assuming jurisdiction over petitioners complaint. A complaint for unlawful detainer is sufficient if it alleges that the withholding of the possession or the refusal to vacate is unlawful without necessarily employing the terminology of the law.[12] Here, there is an allegation in petitioners complaint that respondents occupancy on the portion of his property is by virtue of his tolerance. Petitioners cause of action for unlawful detainer springs from respondents failure to vacate the questioned premises upon his demand sometime in 1996. Within one (1) year therefrom, or on November 6, 1996, petitioner filed the instant complaint. It bears stressing that possession by tolerance is lawful, but such possession becomes unlawful when the possessor by tolerance refuses to vacate upon demand made by the owner. Our ruling in Roxas vs. Court of Appeals[13] is applicable in this case: A person who occupies the land of another at the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which, a summary action for ejectment is the proper remedy against him. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 47435 are hereby REVERSED and SET ASIDE. The Decision dated February 12, 1998 of the Regional Trial Court, Branch 11, Davao City in Civil Case No. 25, 654-97, affirming the Decision dated July 31, 1997 of the Municipal Trial Court in Cities, Branch 2, Davao City in Civil Case No. 3506-B-96, is hereby REINSTATED. SO ORDERED.

G.R. No. 148759

June 8, 2006

GERMELINA TORRES RACAZA and BERNALDITA TORRES PARAS, Petitioners, vs. ERNESTO GOZUM,1 Respondent. DECISION AZCUNA, J.: In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners Germelina Torres Racaza and Bernaldita Torres Paras seek the nullification of the decision2 dated July 12, 2000 as well as the resolution3dated June 28, 2001 rendered by the Court of Appeals (CA) in CA-G.R. CV No. 61227 which reversed and set aside the decision4 dated September 30, 1998 of the Regional Trial Court (RTC), Branch 158 of Pasig City, consequently dismissing the complaint for accion publiciana filed by petitioners against respondent Ernesto Gozum. The antecedents of this case are as follows: The plaintiffs are the registered co-owners of a parcel of land under Transfer Certificate of Title No. PT-92411 situated at Amang Rodriguez Avenue, Santolan, Pasig City. Standing on this lot is a 2-storey, 3-door apartment. The property was formerly owned by the father of the plaintiffs, the late Carlos Torres. In 1981, defendant Ernesto Gozum occupied the back portion of the property on a P3,500.00 monthly rental and continued to occupy the same even after the death of Carlos Torres on December 26, 1993. On July 1, 1995, plaintiffs sent Gozum a letter of demand to vacate [the] premises ( Annex G, Complaint). After a failed barangay conciliation, on November 24, 1995, plaintiffs commenced an ejectment case [with the Metropolitan Trial Court] against Gozum. The case was, however, dismissed due to [a] technicality. Almost two (2) years thereafter, on May 27, 1997, plaintiffs sent anew a formal demand letter to vacate on the ground that the verbal contract of lease over the property had already expired sometime in July 1995, and the same has not been renewed and since then, defendant had discontinued paying the monthly rentals of P3,500.00. When this latter demand was not heeded, on June 4, 1997, the present complaint for recovery of possession or accion publiciana was initiated before the Regional Trial Court of Pasig City. The initial reaction of the defendant was to file a motion to dismiss based on lack of jurisdiction claiming that the cause of action should have been for unlawful detainer falling within the jurisdiction of the municipal trial courts and that the provision of P.D. No. 1508 was not complied with. In the Order dated September 30, 1997, the court a quo denied the motion to dismiss on the ground that an unlawful detainer must be filed within one (1) year from the notice to vacate [given] as early as July 1, 1995 and since over two (2) years had passed when the case was filed, the proper action is accion publiciana and no longer unlawful detainer. Defendant thereafter filed his answer asseverating that he has a 10-year contract of lease (Annex 1, Complaint) over the premises executed between him and plaintiffs late father on October 1, 1989 to expire on September 30, 1999 and so, the notice to vacate and the present case were all prematurely done. Defendant likewise denied the allegation that he has not been paying rentals. The truth is that it was the plaintiffs who refused to receive payments so that the same were deposited with the bank. In the same answer, defendant asserted that the contract of lease gave him the right of first refusal to buy the property and in violation thereof, plaintiffs have already sold the property to a certain Ernesto Brana. After due proceedings on September 30, 1998, the appealed decision was promulgated with the following dispositive portion: "WHEREFORE, in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendant, ordering the latter and all persons claiming rights under him to vacate the premises covered by Transfer Certificate of Title No. PT-92411 of the Register of Deeds of Pasig City and turn it over to the plaintiffs. Defendant is also ordered to pay plaintiffs the amount of P3,500.00 effective July 1, 1995 until such time he shall have vacated the premises. In addition, he shall pay attorneys fees in the amount of P30,000.00 plus P1,500.00 per court appearance and the cost of suit. SO ORDERED. Pasig City, September 30, 1998." (pp. 4-5, RTC Decision; pp. 76-77, Rollo).5

Aggrieved, respondent seasonably appealed the decision to the CA, ascribing to the lower court the following errors: I. THE COURT A QUO ERRED IN HOLDING THAT THE PLAINTIFFS HAVE A LEGAL RIGHT TO RECOVER POSSESSION OF THE SUBJECT PROPERTY FROM THE DEFENDANT. II. THE LOWER COURT ERRED IN NOT RECOGNIZING THE VALIDITY OF THE CONTRACT OF LEASE DATED OCTOBER 5, 1989, WHICH WAS PREVIOUSLY EXECUTED BY THE PLAINTIFFS FATHER, ATTORNEY CARLOS P. TORRES, AND HEREIN DEFENDANT. III. THE COURT A QUO ERRED IN DECLARING THAT THE ABOVEMENTIONED CONTRACT IS FRAUDULENT, FABRICATED AND FICTITIOUS AND THAT THE SIGNATURE OF ATTY. TORRES AFFIXED THEREON IS NOT GENUINE. IV. THE TRIAL COURT COMMITTED ERROR IN AWARDING DAMAGES AND ATTORNEYS FEES IN FAVOR OF PLAINTIFFS.6 After the submission by the parties of their respective briefs but prior to the resolution of the appeal, petitioners filed with the CA a Motion to Dismiss or for Execution Pending Appeal 7 dated December 6, 1999 on the ground that the lease contract relied upon by respondent to justify his continued possession of the subject property had, by its own terms and respondents own admission, expired on September 30, 1999. Thereafter, without acting upon petitioners motion to dismiss, the CA reversed the decision of the RTC and dismissed the case, holding that the lower court had no jurisdiction over the complaint for accion publicianaconsidering that it had been filed before the lapse of one (1) year from the date the last letter of demand to respondent had been made. The CA ruled that the proper remedy of petitioners should have been an action for unlawful detainer filed with the first level court, or the municipal or metropolitan trial court. Their motion for reconsideration having been denied, petitioners filed this present petition arguing that: 1) The Court of Appeals decided a question of substance not in accord with jurisprudence and remedial law authorities when it declared as null and void the entire proceedings in the trial court despite the fact that: (i) petitioners correctly filed the accion publiciana with the trial court below; (ii) respondent actively participated in the trial proceeding, testified in person, and submitted to the trial courts authority to decide the case; and (iii) respondent did not raise any jurisdictional issue in his appeal where he raised only the substantive portions of the trial courts decision. 2) The Court of Appeals likewise departed from the accepted and usual course of judicial proceedings amounting to serious abuse of discretion when it chose to ignore the gla ring fact that respondents appeal had become moot and academic with the expiration of the lease contract upon which his appeal rested. 8 In due course, respondent filed his Comment9 dated October 10, 2001, asserting that the CA correctly set aside the decision of the RTC because the lower court had no jurisdiction over the subject matter of the case. In this regard, respondent pointed out that he had previously assailed the jurisdiction of the trial court in the proceedings below via his Motion to Dismiss10 dated July 8, 1997. Respondent likewise adopted the reasoning of the CA and argued that petitioners ran afoul of Section 1, Rule 70 11 of the Rules of Court considering that petitioners Complaint12 dated June 4, 1997 for recovery of possession was filed only within months from the date the second demand letter to vacate dated May 27, 1997 was served upon him. In their Reply13 dated October 20, 2001, petitioners countered that respondent is estopped from raising any jurisdictional issue in connection with the demand letter dated May 27, 1997 considering that respondent never argued during the trial or even in his appeal to the CA that the existence of the second letter divested the trial court of jurisdiction over the complaint. The petition has merit. The allegations of a complaint determine the nature of the action as well as which court will have jurisdiction over the case.14 The complaint would be deemed sufficient if, on its face, it shows that the court has jurisdiction without resorting to parol testimony.15 Precisely because ejectment proceedings are summary in nature, the complaint should contain a statement of facts which would bring the party clearly within the class of cases for which the statutes provide a remedy.

In the present case, petitioners made the following allegations in their complaint: xxx 2. [Petitioners] are the duly registered co-owners of a parcel of land and its improvements, more particularly identified as a 3-door apartment, specifically located between Fumakilla Laboratories, Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila x x x. 3. Sometime in 1981, [respondent] entered into a verbal lease contract with the parents of herein [petitioners], who agreed to lease to the [respondent], on a month-to-month basis, the aforementioned property at the rental rate of Php3,500.00 per month. 4. On July 1, 1995, [petitioners] sent [respondent] a Notice to Vacate x x x informing the latter of the termination of the said verbal lease contract and demanding from him to vacate and peacefully surrender to the [petitioners] the aforesaid premises, the possession of which [respondent] has unlawfully withheld from the latter. Notwithstanding these written and oral demands, [respondent] has repeatedly failed and up to now still refuses to turn over the said premises peacefully to the [petitioners]. Since that time, [respondent] has failed to remit his monthly rentals of Php3,500.00 so that as of May 30, 1997, [respondent] has incurred rental arrears now totaling Php 80,500.00 x x x 16 To summarize, petitioners claim that (1) they are the owners of the property, being the successors-in-interest of the original owners; (2) their predecessors-in-interest entered into a verbal lease agreement with respondent on a monthto-month basis; (3) they decided to terminate the verbal lease contract upon the expiration of the last monthly term sometime in 1995; and (4) on July 1, 1995, they demanded that respondent leave the property, but respondent refused to do so. Undeniably, the foregoing averments constitute a cause of action that is based primarily on unlawful deprivation or withholding of possession. Petitioners seek the recovery of the possession of the leased premises following the lapse of the term of the verbal lease contract entered into by petitioners predecessors -in-interest with respondent. The allegation that the contract is on a month-to-month basis becomes material in this sense because it signifies that the lease contract is terminable at the end of every month.17 Thus, petitioners may exercise their right to terminate the contract at the end of any month even if none of the conditions of the contract had been violated, and such right cannot be defeated by the lessee's timely payment of the rent or by his willingness to continue doing so. The lease contract expires at the end of every month unless there is an implied or tacit renewal thereof as when the lessee is allowed to continue enjoying the leased premises for fifteen (15) days after the end of every month with the acquiescence of the lessor. Such exception, however, cannot be invoked when notice to vacate is given to the lessee in which case the contract of lease expires at the end of the month. 18 Moreover, even if the month-to-month agreement is only on a verbal basis, if it is shown that the property is needed for the lessors own use or for the use of an immediate member of the family or for any of the other statutory grounds to eject, then the lease is considered terminated as of the end of the month, after proper notice or demand to vacate has been given.19 At this juncture, it must be pointed out that notice or demand to vacate had been properly served upon respondent through the letter20 dated July 1, 1995, to wit: July 1/95 Dear Ernesto Gozom, I would like to reiterate my verbal demand upon you to vacate the premises you are presently occupying made sixty (60) days ago. The said premises should be vacated within THIRTY (30) 21 DAYS upon receipt hereof for I badly needed it and please take this notice as my final demand after I have verbally given you sixty (60) days already. Hoping you will give this matter your preferential and utmost attention in order to avoid a costly litigation. Very truly yours, (sgd.) GERMELINA T. RACAZA and (sgd.) BERNALDITA T. PARAS

Verily, respondents right to remain in possession of the property subject of the lease was extinguished upon the expiration of the grace period mentioned in the July 1, 1995 demand letter. It thus becomes respondents obligation to turn over the property to petitioners, failing which petitioners would have the right to immediately resort to ejectment action to recover possession. Their complaint could thus fall under two kinds of ejectment suits, the first being for unlawful detainer cognizable by the metropolitan or municipal trial courts under Rule 70 and the second being for accion publiciana cognizable by the regional trial courts.22 An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor, vendee or other persons, after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied. 23 This summary action should be filed with the municipal trial courts within one year after the occurrence of the unlawful deprivation or withholding of possession. 24 Beyond the one-year period, the real right of possession may be recovered through the filing of an accion publiciana with the regional trial courts. 25 In upholding the propriety of the mode adopted by petitioners to recover possession of their real property, the trial court found that more than one (1) year had lapsed from the time of petitioners dispossession, to wit: xxx As to the first issue, the [petitioners] have the legal right to recover the property from the [respondent]. [Petitioners] are the absolute owners of the property and the portion of the property which is occupied by the [respondent]. The possession by the [respondent] of the back portion of the property is unlawful and [petitioners] have been unlawfully deprived of the property since July 1, 1995 when they served the notice to vacate to the [respondent]. [Respondent] admits that after the notice to vacate was served upon him, he stopped paying his monthly rentals to the [petitioners]. The present action for recovery of possession was filed more than one year from the time the cause of action of the [petitioners] accrued, which was from the time the [respondent] stopped paying his rental to the [petitioners] or on July 1, 1995. x x x26 Respondent nevertheless insists, for the first time, that the one-year period must be reckoned from the date of the second demand letter to vacate, that is, on May 27, 1997. Considering that petitioners complaint was filed within days from this date, respondent contends that the RTC had no jurisdiction to hear the case. Adopting in toto the position of the CA, respondent argues that petitioners should have filed an action for unlawful detainer instead with the metropolitan or municipal trial courts. The records of the case, however, do not support this view. Demand or notice to vacate is not a jurisdictional requirement when the action is based on the expiration of the lease. Any notice given would only negate any inference that the lessor has agreed to extend the period of the lease. The law requires notice to be served only when the action is due to the lessees failure to pay or the failure to comply with the conditions of the lease. 27 The oneyear period is thus counted from the date of first dispossession. To reiterate, the allegation that the lease was on a month-to-month basis is tantamount to saying that the lease expired every month. Since the lease already expired mid-year in 1995 as communicated in petitioners letter dated July 1, 1995, it was at that time that respondents occupancy became unlawful. Even assuming, for the sake of argument, that a demand or notice to vacate was necessary, a reading of the second letter shows that petitioners were merely reiterating their original demand for respondent to vacate on the basis of the expiration of the verbal lease contract mentioned in the first letter. For clarity, the full text of the second letter28 sent by petitioners counsel is reproduced below: Dear Mr. Gozom: My principals, Germelina Torres Racaza and Bernaldita Torres Paras, have brought to me for legal action the fact of your unjustified and unlawful possession and occupation of the entire back portion of their apartment building, located between Fumakilla Laboratories Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila. According to my principals, your verbal contract of lease covering the said premises already expired sometime in July 1995 and the same has never been renewed , for which reason you discontinued paying your monthly rentals of Php3,500.00. Notwithstanding their constant reminders and requests to you, for you to immediately vacate the aforesaid leased premises in view of the expiration of the lease contract, you have up to this time failed and still refuse to vacate the said premises to the prejudice of my clients. In this regard, please consider this letter our formal demand and notice for you to vacate the said leased premises on or before the 2nd day of June 1997. Should you fail to so vacate and leave the premises and to pay your total

monthly rental arrearages, amounting to Php 80,500.00, on or before the said date, we shall be constrained to pursue all available remedies under the law to protect the interests of my clients. Very truly yours, (sgd.) ATTY. CELSO P. YLADAN II Counsel for Germelina Torres Racaza and Bernaldita Torres Paras (Emphases supplied.) The Court has, in the past, ruled that subsequent demands which are merely in the nature of reminders or reiterations of the original demand do not operate to renew the one-year period within which to commence the ejectment suit considering that the period will still be reckoned from the date of the original demand. 29 Besides, the allegations in the complaint and the answer put in issue the existence and validity of the verbal lease contract itself. Respondent contends that the lease term over the property is ten (10) years based on a written lease contract purportedly executed by him and petitioners pred ecessors-in interest. In this situation, it is the RTC which would be in the best position to determine the true nature of the agreement between the parties and to decide which of the two agreements is valid. In fact, it found that the written lease contract was spurious and not binding upon the petitioners. Moreover, it is too late for respondent to invoke the defense of lack of jurisdiction on the ground that the action was filed before the lapse of one year from the date of last demand. Based on the records, respondent never pursued this line of argument in the proceedings before the trial court and even in his appeal to the CA. While it is true that prior to the filing of his answer, respondent moved to dismiss the complaint on the theory that the allegations therein merely constituted an action for unlawful detainer, the motion did not raise any jurisdictional issue relative to the second demand letter. When his motion to dismiss was denied, respondent no longer challenged the jurisdiction of the trial court in his subsequent pleadings and instead actively participated in the proceedings held before the RTC by relying principally on the strength of the written lease contract allegedly executed between him and petitioners predecessors-in-interest. It was only when the CA motu proprio dismissed the complaint that respondent conveniently thought of adopting the novel theory embodied in the assailed decision of the appellate court. Under these circumstances, estoppel has already set in. In Tijam v. Sibonghanoy,30 this Court held that a partys active participation in all stages of the case before the trial court, which includes invoking the courts authority to grant affirmative relief, effectively estops such party from later challenging that same courts jurisdiction. The CAs conclusion that the doctrine enunciated in Tijam has been abandoned is erroneous as, in fact, the same has been upheld and reiterated in many succeeding cases.31Thus, while an order or decision rendered without jurisdiction is a total nullity and may be assailed at any stage, a partys active participation in the proceedings in the tribunal which rendered the order or decision will bar such party from attacking its jurisdiction. In any event, this Court notes that by respondents own claim, 32 the term of the alleged written lease contract expired on September 30, 1999 or several months before the decision of the appellate court was rendered. The CA should have taken cognizance of this material fact considering that the statement is binding upon respondent and is an admission which renders moot the issue of who has a better right of possession. WHEREFORE, the petition is GRANTED and the assailed Decision dated July 12, 2000 as well as the Resolution dated June 28, 2001 rendered by the Court of Appeals in CA-G.R. CV No. 61227 are REVERSED and SET ASIDE. Accordingly, the Decision dated September 30, 1998 of the Regional Trial Court, Branch 158, Pasig City in Civil Case No. 66295 is REINSTATED. No costs. SO ORDERED.