TANCREDO REDEA, Petitioner, vs. HON. COURT OF APPEALS and LEOCADIO REDEA, Respondents. DECISION GARCIA, J.

: In this special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, petitioner Tancredo Redea (Tancredo, hereafter) seeks the annulment and setting aside of the Resolution1 dated April 28, 2000 of the Court of Appeals in CA-G.R. CV No. 59641, as reiterated in its Resolution2 of November 16, 2000, denying the petitioners motion for reconsideration. The present controversy sprung from an action for partition filed by petitioner Tancredo against his older half-brother, herein private respondent Leocadio Redea (Leocadio, for brevity) before the then Court of First Instance (now Regional Trial Court [RTC]) of San Pablo City, Laguna, and thereat docketed as Civil Case No. S-241 which was subsequently inherited by Branch 33 of the RTC, Siniloan, Laguna. The basic complaint for partition alleges that plaintiff Tancredo and defendant Leocadio are both sons of one Maximo Redea: Tancredo, by Maximos marriage to Magdalena Fernandez, and Leocadio, by Maximos previous marriage to Emerenciana Redea. The complaint further alleged that the parties common father, Maximo, left several pieces of realty, to wit: a residential lot at M. Calim Street, Famy, Laguna; a riceland at Poroza, Famy, Laguna; and another parcel of land at Maate, also in Famy, Laguna. In a decision3 dated August 20, 1997, the trial court, based on the evidence presented, confined the partition to only the property actually pertaining to the estate of the parties deceased father and co-owned by them, namely, the parcel of land at Maate, and accordingly rendered judgment as follows: WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant [now respondent Leocadio] to partition only the property located at Maate, Famy, Laguna after plaintiffs [Tancredos] reimbursement of the expenses incurred by the defendant in relation to the said lot. However, partition cannot be effected with regard to properties located at M. Calim Street, Famy, Laguna and the property located at Poroza, Famy, Laguna, as the same belong to the defendant. No pronouncement as to costs. SO ORDERED. (Words in brackets supplied) On December 11, 1997, petitioner filed with the trial court a Notice of Appeal.4 The court gave due course to the notice and directed the elevation of the records of the case to the CA whereat petitioners appeal was docketed as CA-G.R.CV No. 59641.

On September 28, 1998, the CA issued a resolution directing petitioner, as appellant, to file his appellants brief. Evidently, the period for filing the brief was even extended by the CA. On March 9, 1999, there being no appellants brief filed within the extended period, the CA issued a resolution5 considering the appeal abandoned and accordingly dismissing the same. The dismissal resolution reads: For failure of plaintiff-appellant [now petitioner] to file the required brief within the extended period, the instant appeal is hereby considered ABANDONED and accordingly DISMISSED, pursuant to Section 1(e), Rule 50, 1997 Rules of Civil Procedure. On November 8, 1999 or eight (8) months after the CA issued the above resolution, petitioner filed a motion for reconsideration6 thereof. In a resolution7 of November 25, 1999, the CA denied the motion. Then, on December 28, 1999, in the same CA-G.R. CV No. 59641, petitioner filed a Petition for Relief8 bearing date December 27, 1999, anchored on Section 2,9 Rule 38 of the 1997 Rules of Civil Procedure. In that pleading, petitioner prays the CA to set aside its dismissal resolution of March 9, 1999, supra, reinstate his appeal and grant him a fresh period of forty-five (45) days from notice within which to file his appellants brief. In the herein assailed Resolution10 dated April 28, 2000, the CA denied the aforementioned Petition for Relief, thus: WHEREFORE, the petition for relief dated 27 December 1999 is hereby DENIED. SO ORDERED. Explains the CA in said resolution: Petition for relief is not among the remedies available in the Court of Appeals. In fact, authorities in remedial law (noted authors Regalado, Herrera, and Feria) are one in their commentaries that these petitions are filed with the trial courts. Not one of them has advanced an opinion or comment that this equitable relief can be obtained in the Court of Appeals. Under Rule 47, an annulment of judgment or final orders and resolutions may be filed before this court based on the ground of extrinsic fraud which seems to be the premise of the petition. Perhaps it is worth looking into by the petitioner if the factual basis of the present petition for relief may qualify as an extrinsic fraud, under Rule 47. Petitioners motion for reconsideration of the above-mentioned resolution was likewise denied by the CA in its equally challenged Resolution11 of November 16, 2000, wherein the appellate court further wrote: Under the 1964 Rules of Court, there was only one court where a petition for relief may be filed the Court of First Instance, now the Regional Trial Court. Section 1 thereof governs a petition to Court of First Instance for relief from judgment of inferior court while Section 2 thereof

governs petition to Court of First Instance for relief from judgment or other proceeding thereof. The 1997 Rules of Civil Procedure has altered the said precept. Now, it must be filed before the Municipal Trial Courts or Metropolitan Trial Courts for judgments or final orders or other proceedings taken in said courts, and in the same case. And for judgment, order, or other proceedings in the Regional Trial Court, it must be filed in the same Regional Trial Court which rendered the judgment or final order, or other proceedings taken and in the same case. In other words, under the present rule, such a petition may be filed in the same court which rendered the judgment or final order, or proceedings taken and in the same case. This is in accordance with uniform procedure rule for Municipal and Regional Trial Courts. The above construction to limit the term "any court" to Municipal Trial Court and Regional Trial Court and not to include the Court of Appeals finds support in Section 7 of the Rules which states: Sec. 7. Procedure where the denial of an appeal is set aside. Where the denial of an appeal is set aside, the lower court shall be required to give due course to the appeal and to elevate the record of the appealed case as if a timely and proper appeal had been made. Significantly, there is no specific provision in both the 1964 and 1997 Rules of Court making the petition under Rule 38, applicable in the Court of Appeals. The procedure in the Court of Appeals from Rule 44 to Rule 55 with the exception of Rule 45 which pertains to the Supreme Court, identifies the remedies available before said court such as annulment of judgment or final orders and resolution (Rule 47); motion for reconsideration (Rule 52); and, new trial, (Rule 53). Nowhere is petition for relief under Rule 38 mentioned. But even as the CA stood firm on its stand that a petition for relief from denial of appeal is not among the remedies available before the CA itself, the appellate court, in the same Resolution of November 16, 2000, left the final determination of the question to this Court, thus: Parenthetically, the main question presented herein is novel in that there is yet no definite and definitive jurisprudence from the Supreme Court. Perhaps, the case will clarify this gray area in our adjective law for guidance of the Bench and Bar. The issue should be elevated to that Tribunal. Presently, petitioner is now before this Court via the instant recourse on his submission that the CA committed grave abuse of discretion when it I XXX RULED THAT A PETITION FOR RELIEF IS NOT AN AVAILABLE REMEDY IN THE COURT OF APPEALS. II XXX REFUSED TO GRANT THE PETITION DESPITE A CLEAR SHOWING THAT (A) PETITIONER, BY REASON OF FRAUD AND MISTAKE, WAS PREVENTED FROM

PROSECUTING HIS APPEAL, AND (B) PETITIONER HAS A GOOD AND SUBSTANTIAL CAUSE OF ACTION AGAINST PRIVATE RESPONDENT. We DISMISS. In Hagonoy Market Vendor Association v. Municipality of Hagonoy, ulacan, G.R. No. 137621, February 6, 2002, then Associate Justice, now Chief Justice Reynato S. Puno, reminded us that Laws are of two (2) kinds: substantive and procedural. Substantive laws, insofar as their provisions are unambiguous, are rigorously applied to resolve legal issues on the merits. In contrast, courts generally frown upon an uncompromising application of procedural laws so as not to subvert substantial justice. Nonetheless, it is not totally uncommon for courts to decide cases based on a rigid application of the so-called technical rules of procedure as these rules exist for the orderly administration of justice. From the petition, it is clear that this Court is called upon to relax the application of procedural rules, or suspend them altogether, in favor of petitioners substantial rights. There is no doubt as to the power of this Court to do that. In a fairly recent case, we reiterated: The Court has often stressed that rules of procedure are merely tools designed to facilitate the attainment of justice. They were conceived and promulgated to effectively aid the court in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of judicial discretion. In rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat against substantive rights, and not the other way around. Thus, if the application of the Rules would tend to frustrate rather than promote justice, it is always within our power to suspend the rules or except a particular case from its operation.12 The Rules itself expressly states in Section 2 of Rule 1 that the rules shall be liberally construed in order to promote their object and to assist the parties in obtaining just, speedy and inexpensive determination of every action and proceeding. Courts, therefore, not only have the power but the duty to construe and apply technical rules liberally in favor of substantive law and substantial justice. Furthermore, this Court, unlike courts below, has the power not only to liberally construe the rules, but also to suspend them, in favor of substantive law or substantial rights. Such power inherently belongs to this Court, which is expressly vested with rule-making power by no less than the Constitution.13 1awphi1.net It is equally settled, however, that this Courts power to liberally construe and even to suspend the rules, presupposes the existence of substantial rights in favor of which, the strict application of technical rules must concede. The facts are borne out by the records pertaining to petitioners purported undivided share in the property at M. Calim Street, Famy, Laguna, and the property in Poroza clearly showed that these two properties had been subject of an agreement (Exh. "1") whereby petitioner recognized respondents rights to said properties. This fact binds this Court, there being nothing on record with the trial court as to the herein alleged fraud against the petitioner. Upon thorough deliberation of the supposed substantial rights claimed by the petitioner with the court below, the Court finds no cogent basis to favorably rule on the merits of

the appeal even if it may be given due course which is indispensable to justify this Court in considering this case as an exception to the rules. The present case will have to be decided in accordance with existing rules of procedure. We apply the settled principle that petition for relief under Rule 38 of the Rules of Court is of equitable character, allowed only in exceptional cases as when there is no other available or adequate remedy.14 Hence, a petition for relief may not be availed of where a party has another adequate remedy available to him, which is either a motion for new trial or appeal from the adverse decision of the lower court, and he is not prevented from filing such motion or taking the appeal. The rule is that relief will not be granted to a party who seeks to be relieved from the effect of the judgment when the loss of the remedy at law is due to his own negligence, or a mistaken mode of procedure; otherwise, the petition for relief will be tantamount to reviving the right of appeal which has already been lost either because of inexcusable negligence or due to a mistake in the mode of procedure taken by counsel.15 Under Section 2 of Rule 38, supra, of the Rules of Court, a party prevented from taking an appeal from a judgment or final order of a court by reason of fraud, accident, mistake or excusable negligence, may file in the same court and in the same case a petition for relief praying that his appeal be given due course. This presupposes, of course, that no appeal was taken precisely because of any of the aforestated reasons which prevented him from appealing his case. Hence, a petition for relief under Rule 38 cannot be availed of in the CA, the latter being a court of appellate jurisdiction. For sure, under the present Rules, petitions for relief from a judgment, final order or other proceeding rendered or taken should be filed in and resolved by the court in the same case from which the petition arose. Thus, petition for relief from a judgment, final order or proceeding involved in a case tried by a municipal trial court shall be filed in and decided by the same court in the same case, just like the procedure followed in the present Regional Trial Court.16 Here, the record shows that petitioner in fact filed a Notice of Appeal with the trial court, which the latter granted in its order of December 11, 1997 and ordered the elevation of the records to the CA. In turn, the CA, in its resolution of September 28, 1998, required the petitioner, thru his former counsel, Atty. Geminiano Almeda, to file his appellants brief. ut petitioner failed to comply. Consequently, in its resolution of March 9, 1999, the CA considered the appellants appeal as ABANDONED and DISMISSED the same. Additionally, after the dismissal of his appeal, petitioner filed with the CA a motion for reconsideration of the dismissal resolution. Unfortunately, however, the motion was filed very much late on November 8, 1999. Expectedly, in its resolution17 of November 25, 1999, the CA denied the motion for reconsideration, to wit: The last day to file a motion for reconsideration was on 06 April 1999 and as of 18 October 1999 no such motion was ever filed; in fact on 19 October 1999 the court resolved that an entry of judgment may now be issued. The motion for reconsideration, however, pleas for leniency on account of his former lawyers inefficiency and negligence in that he failed to appeal the case. This is not well taken.

His former lawyers lack of fidelity and devotion to his client in the discharge of his duty of perfecting the appeal on time without demonstrating fraud, accident, mistake or excusable negligence cannot be a basis for judicial relief. The client has to bear the adverse consequences of the inexcusable mistake or negligence of his counsel or of the latters employee and may not be heard to complain that the result of the litigation might have been different had he proceeded differently (Inocando v. Inocando, 100 Phil. 266) WHEREFORE, the motion is hereby DENIED. Petitioner presents himself as a mere farmer seeking the Courts leniency to the point of disregarding the rules on reglementary period for filing pleadings. But he fails to point out any circumstance which might lead the Court to conclude that his station in life had in any way placed his half-brother in a more advantageous position. As we see it, petitioner failed to show diligence in pursuing his cause. His condition as a farmer, by itself alone, does not excuse or exempt him from being vigilant on his right. He cannot lay the blame solely on his former lawyer. It is settled that clients are bound by the mistakes, negligence and omission of their counsel.18 While, exceptionally, a client may be excused from the failure of his counsel, the circumstances obtaining in this case do not convince the Court to take exception. In seeking exemption from the above rule, petitioner claims that he will suffer deprivation of property without due process of law on account of the gross negligence of his previous counsel. To him, the negligence of his former counsel was so gross that it practically resulted to fraud because he was allegedly placed under the impression that the counsel had prepared and filed his appellants brief. He thus prays the Court reverse the CA and remand the main case to the court of origin for new trial. Admittedly, this Court has relaxed the rule on the binding effect of counsels negligence and allowed a litigant another chance to present his case (1) where the reckless or gross negligence of counsel deprives the client of due process of law; (2) when application of the rule will result in outright deprivation of the clients liberty or property; or (3) where the interests of justice so require.19 None of these exceptions obtains here. For a claim of counsels gross negligence to prosper, nothing short of clear abandonment of the clients cause must be shown. Here, petitioners counsel failed to file the appellants brief. While this omission can plausibly qualify as simple negligence, it does not amount to gross negligence to justify the annulment of the proceedings below. In Legarda v. Court of Appeals,20 where the Court initially held that the counsels failure to file pleadings at the trial court and later on appeal amounted to gross negligence, the Court, on motion of the respondent therein, granted reconsideration and applied the general rule binding the litigant to her counsels negligence. In said case, the Court noted that the proceedings which led to the filing of the petition "were not attended by any irregularity." The same observation squarely applies here. To recapitulate, petitioner is not entitled to relief under Rule 38, Section 2 of the Rules of Court. He was not prevented from filing his notice of appeal by fraud, accident, mistake or excusable

negligence, as in fact he filed one. The relief afforded by Rule 38 will not be granted to a party who seeks to be relieved from the effects of the judgment when the loss of the remedy of law was due to his own negligence, or a mistaken mode of procedure for that matter; otherwise, the petition for relief will be tantamount to reviving the right of appeal which has already been lost, either because of inexcusable negligence or due to a mistake of procedure by counsel.21 The Rules allow a petition for relief only when there is no other available remedy, and not when litigants, like the petitioner, lose a remedy by negligence. On a final note, the extraordinary writ of certiorari may be issued only where it is clearly shown that there is patent and gross abuse of discretion as to amount to an evasion of positive duty or to virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility.22 The Court finds no such abuse of discretion in this case. WHEREFORE, the instant petition is DISMISSED and the assailed resolutions of the CA are AFFIRMED. No pronouncement as to costs. SO ORDERED.

ISIDRA VDA. DE VICTORIA Substituted by MARIO VICTORIA, petitioner, vs. HON. COURT OF APPEALS, HON. JUANITA T. GUERRERO, Presiding Judge of Regional Trial Court, Branch 37, Calamba, Laguna; HON. FLORENCIO P. BUESER, Presiding Judge, Municipal Trial Court, Calauan, Laguna; EX-OFFICIO SHERIFF Regional Trial Court, Calamba, Laguna and/or his Deputies; SPOUSES LUIS GIBE and ZENAIDA GIBE and All Persons Acting on their Behalf, respondents. DECISION CARPIO MORALES, J.: Through his appeal by certiorari,1 petitioner Mario Victoria seeks to set aside the Resolutions of the Court of Appeals promulgated on May 25, 2000 and July 12, 2000, which (1) dismissed petitioners special civil action for certiorari2 and (2) denied petitioners motion for reconsideration, respectively. The antecedents of the case are as follows: On October 27, 1993, respondent spouses Luis and Zenaida Gibe filed a Complaint for "Ejectment and Damages with a Writ of Preliminary Mandatory Injunction" 3 against Isidra Vda. de Victoria (the mother of herein petitioner Mario Victoria), Eusebio Arida, Juan Becina and Guillermo Becina with the Municipal Trial Court (MTC) of Calauan, Laguna, docketed as Civil Case No. 261 (the Ejectment Case). In their Complaint, the Gibe spouses alleged, among other things, the following: 1. In 1992 they acquired a parcel of land (the property) from the heirs of the late Judge Gregorio Lantin, designated as Lot 1-B-153-A with an area of approximately 27,064 square meters (sq. m.). 2. The property was originally part of Lot 1-B-153 with an area of approximately 34,829 sq. m., which was subdivided into seven parcels in 1989 among Judge Lantin and four of his tenants as follows: Lot No. Tenant/Owner/Claimant Area (in sq. m.) 27,064 883 3,900 2,019 624 224 115

1-B-153-A Gregorio Lantin 1-B-153-B Felix Victoria 1-B-153-C Guillermo Becina 1-B-153-D Juan Becina 1-B-153-E Felix Victoria 1-B-153-F Eusebio Arida 1-B-153-G Gregorio Lantin

Total Area

34,829

Felix Victoria, now deceased, was the husband of Isidra Victoria. All the defendants in the Ejectment Case, as former tenants, were given home lots, while Lot 1-B-153-A which was allotted to Gregorio Lantin was sold to the spouses Gibe. 3. In the course of fencing Lot 1-B-153-A, it was discovered that the Victoria house was standing on the northwestern portion of the property; that Mrs. Victoria was harvesting and picking fruits from the citrus trees planted in that area without the knowledge and permission of the Gibe spouses; and that Eusebio Arida, Juan Becina and Guillermo Becina were also surreptitiously planting palay on the northwestern portion. 4. The fencing was discontinued after the children of Mrs. Victoria threatened to shoot at the workers of the Gibe spouses with an armalite rifle, leaving approximately 8,000 sq. m. of the northwestern portion of Lot 1-B-153-A open and unfenced. In her Answer (With Motion to Dismiss),4 Mrs. Victoria denied having entered Judge Lantins lot alleged to have been purchased by the spouses Gibe, claiming that her farmhouse was constructed on the very lot awarded to her family by the DAR. Moving thus for the dismissal of the Ejectment Case for lack of cause of action, she interposed a counterclaim praying that, as a tenant of Judge Lantin, she be maintained in the peaceful possession and cultivation of her lot or, in the alternative, awarded disturbance compensation; and, in either event, reimbursed for the expenses she incurred as a result of the Ejectment Case. At the Preliminary Conference of the Ejectment Case, the parties mutually agreed to a relocation survey of the property to be conducted by a geodetic engineer. After the court-appointed geodetic engineer had submitted the results of the relocation survey, Mrs. Victoria and her co-defendants in the Ejectment Case filed a Manifestation with Motion5 requesting the trial court to allow them to engage the services of an independent surveyor, at their expense, to conduct another survey. Although the motion was granted, no resulting survey plan was, however, submitted by them. By Decision of May 21, 1998, the MTC, finding in favor of the plaintiffs-spouses Gibe, disposed as follows: WHEREFORE in the light of the foregoing, this Court on the basis of the evidences [sic] , the [sic] mutually submitted before it by both the plaintiffs and the defendants, this Court has to rule as follows: 1. That since it clearly appeared that the plaintiffs are the real owners of the real property with an area of 27,064 square meters, including the real property with an area of 5,825 square meters which is in possession of all the defendants, they have the absolute right to obtain the proper possession thereof and to eject all of them thru legal means;

2. That in as much as all the defendants are at present and also the real owners of the real properties and also in the possession thereof as evidence[d] by their respective emancipation patents, each of them is hereby ordered by this Court to properly and absolutely abandoned [sic] the portions of the real property covered by Transfer Certificate of Title No. T-140417 and immediately delivered its possession to the plaintiffs; 3. That considering the possession of the defendant Isidra Vda. de Victoria of the real properties with a total area of 1,508 square meters which she did not own, [she] is ordered by this Court to pay and remit to the above plaintiffs the sum of P45,000.00 as reasonable compensation for the use and occupation of the portion above mentioned as it belong[s] to the plaintiffs and the defendant Becina together with two other defendants Juan and Arida are in possession of the real property owned by the plaintiffs with an area of 4,327 square meters, they are hereby ordered [to] jointly pay the plaintiffs the sum of P50,000.00 jointly as reasonable compensation. 4. That all the defendants are hereby ordered to pay the counsel for the plaintiffs the sum of P20,000.00 jointly as attorneys fees; 5. That in view of failure of the plaintiffs to prove their entitlement to preliminary mandatory injunction and to the set the same for hearing as required by law, the same is hereby denied. 6. The defendants are hereby ordered to pay the costs of suit. SO ORDERED.6 (Underscoring supplied) On May 22, the spouses Gibe, without notice to the defendants in the Ejectment Case, filed a Motion for Immediate Execution and Demolition7 praying that "a writ of execution be issued to enforce and satisfy the judgment, for the ejectment and demolition of the house of the Defendants." Eight days after promulgation and receipt of the MTC decision or on May 29, 1998, the defendants in the Ejectment Case filed a Notice of Appeal8 without, however, filing a supersedeas bond to stay the immediate execution of the decision and depositing monthly rentals. By Order of June 1, 1998,9 the MTC granted the Motion for Immediate Execution and Demolition and accordingly issued a Writ of Execution.10 A Petition for Certiorari and Prohibition (With Prayer for Issuance of a Temporary Restraining Order [TRO] and a Writ of Preliminary Injunction)11 was filed on July 13, 1998 with the Regional Trial Court (RTC) of Calamba, Laguna, docketed as Civil Case No. 2625-98-C (the Petition for Certiorari). The Petition assailed the MTC Decision, its Order of June 1, 1998, and the Writ of Execution, contending that the MTC had no jurisdiction over the Ejectment Case and committed grave

abuse of discretion in deciding the case in favor of the spouses Gibe and in issuing the said Order and Writ of Execution pending appeal.12 Mrs. Victoria, it turned out, had passed away shortly before the MTC promulgated its May 21, 1998 Decision. Her son, petitioner Mario Victoria, thus substituted for her.13 Branch 37 of the RTC Calauan, to which the Petition for Certiorari was raffled, issued a Writ of Preliminary Injunction.14 In the meantime, the appeal filed by the defendants in the Ejectment Case before the RTC of Calauan, Laguna was dismissed by Branch 92 thereof by Order of October 7, 199815 for failure to file their appeal memorandum.16 By its Decision dated August 13, 1999,17 the RTC dismissed the Petition for Certiorari in light of the following ratiocination: The petitioner contends that the lower court has no jurisdiction to try the case and to issue the questioned decision because the subject parcels of land have been subjected and covered by P.D. 27 known as Operation Land Transfer and any dispute involving said lands must be referred to the Honorable Department of Agrarian Reform Adjudication Board (DARAB) for proper disposition. Jurisdiction of a court is determined by the allegations in the complaint. The complaint filed by the private respondents was for Ejectment and Damages With a Writ of Preliminary Mandatory Injunction. Ejectment proceedings are within the exclusive original jurisdiction of the Municipal Trial Court. xxx The Answer and the Position Paper of the petitioner Victoria in the case below show that she claimed ownership over the portion of the lot, by virtue of the Operation Land Transfer, which the private respondents Gibe alleged to have been occupied by the farm house of the petitioner. Petitioner Victoria did not question the jurisdiction of the Court but prayed for the dismissal of the case below for lack of cause of action. So much so, that when the respondent Court took into consideration the issue of ownership over the portion of the property allegedly transgressed, it did so only to determine who is better entitled to possession over said portion. And when it ordered the resurvey of the property to determine its actual boundaries and the admission of the Engineers report to aid it in the issuance of the questioned decision. It did not determine the question of ownership, i.e. as to who the real owner is which the petitioner may do so in a separate complaint before the proper forum. xxx The Decision of the Court below is therefore not an error of jurisdiction but an error of judgment which is not reviewable by certiorari proceedings. In other words, certiorari is a remedy

designed for the correction of errors of jurisdiction and not errors of judgment as its function is to keep and inferior court within its jurisdiction. Having found [the MTC] to have jurisdiction to issue the decision dated May 28, 1998, the respondent judge likewise has jurisdiction to direct the execution of the same pending appeal pursuant to Section 19, Rule 70 of the 1997 Rules of Civil Procedure.18 (Underscoring supplied) Herein petitioner, Mario Victoria, received a copy of the foregoing Decision of the RTC on September 18, 1999 and filed a Motion for Reconsideration of the same on September 28, 1999.19 In due course, the RTC denied petitioners Motion for Reconsideration by Order dated December 7, 1999.20 On March 28, 2000, petitioner instituted another special civil action for certiorari, this time with the Court of Appeals (CA), questioning both the August 13, 1999 Decision of the RTC and the May 21, 1998 Decision of the MTC with prayer for the issuance of a TRO and/or a Writ of Preliminary Injunction.21 This case was docketed as C.A. G.R. S.P. No. 47964 (the CA Certiorari Petition). By Resolution of May 25, 2000,22 the CA dismissed the CA Certiorari Petition in this wise: The petition is flawed for the following reasons viz: 1. The correct remedy from a decision of a Regional Trial Court in a petition for certiorari is an ordinary appeal pursuant to Section 1, Rule 41 of the 1997 Rules of Civil Procedure and section 5, Rule 6 of the Revised Internal Rules of the Court of Appeals; 2. The instant petition is filed out of time. The assailed RTC decision was received on September 18, 1999 while the Motion for Reconsideration was filed on September 28, 1999. (Rollo P. 152). Thus a period of nine (9) days had elapsed. The Order dated December 7, 1999 was received by petitioner on January 29, 2000 while the instant petition was filed only on March 28, 2000. Thus a period of fifty eight (58) days had passed. Hence, petitioner had consumed a period of 67 days, well beyond the 60-day period allowed by the rules as amended by Supreme Court En Banc resolution dated July 21, 1998.23 Plainly, the petition was filed out of time. 3. The statement of material dates as to timeliness of the filing of the petition is incomplete as it failed to state when the motion for reconsideration was filed in violation of Section 3, Rule 46. WHEREFORE, the petition is DISMISSED. SO ORDERED.24 Petitioners Motion for Reconsideration25 having been denied by the CA by Resolution of July 12, 200026 for being filed 2 days beyond the reglementary period, he filed the petition at bar after he was granted, on his motion, an extension of thirty days to file the petition, conditioned upon the timeliness of the motion for extension.27

Petitioner anchored his petition on the following grounds: I. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN [sic] EXCESS OF JURISDICTION BY NOT GIVING DUE COURSE TO THE PETITIONERS PETITION FOR CERTIORARI ON GROUND OF TECHNICALITY INSTEAD OF RESOLVING THE CASE ON THE MERITS. II. PUBLIC RESPONDENT REGIONAL TRIAL COURT OF CALAMBA, LAGUNA, COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN [sic] EXCESS OF JURISDICTION BY RULING THAT THIS CASE FALLS WITHIN THE JURISDICTION OF THE MUNICIPAL TRIAL COURT, AND THAT THE DECISION OF THE COURT A QUO WAS NOT AN ERROR [OF] JURISDICTION BUT AN ERROR OF JUDGMENT WHICH IS NOT REVIEWABLE IN CERTIORARI [P]ROCEEDINGS.28 The appeal must be denied. As earlier noted, this Court granted petitioner an extended period to file the petition, conditioned, however, on the timeliness of the filing of the Motion for Extension of Time to File Petition for Review on Certiorari. It is a basic rule of remedial law that a motion for extension of time must be filed before the expiration of the period sought to be extended.29 Where a motion for extension of time is filed beyond the period for appeal, the same is of no effect since there would no longer be any period to extend, and the judgment or order to be appealed from will have become final and executory.30 In the case at bar, an examination of the records reveals that the reglementary period to appeal had in fact expired almost 10 months prior to the filing of petitioners motion for extension of time on April 10, 2001. The Registry Return Receipt31 of the Resolution of the CA dismissing the CA Certiorari Petition shows that the same was received by counsel for petitioners agent on June 5, 2000. Hence, petitioner had only until June 20, 2000 within which to file an appeal or a motion for new trial or reconsideration.32 Clearly, the Court of Appeals committed no error when it denied petitioners Motion for Reconsideration for having been filed two days after the expiration of the reglementary period on June 22, 2000. Similarly, the instant petition for review must likewise be denied for having been filed on May 12, 2001, almost 11 months after the expiration of the period to appeal on June 20, 2000.33 In fact, a closer inspection of the records indicates that this case should have been terminated as early as January 4, 2000 with the lapse of the period within which petitioner could have appealed from the RTC Decision. By his own account, petitioner received a copy of the Decision of the RTC dismissing the Petition for Certiorari on September 18, 1999 and filed a Motion for Reconsideration of the same on September 28, 1999. As correctly pointed out by the CA, by that time a period of 9 days had already elapsed.34 Thus, upon receipt of the notice of the denial of the motion for

reconsideration, which was admitted to be on December 29, 1999,35 petitioner only had 6 days or until January 4, 200036 within which to file a notice of appeal. However, petitioner failed to do so, and he instead, on March 28, 2000, filed a petition for certiorari under Rule 65 with the Court of Appeals. As the Court of Appeals again correctly pointed out, "[t]he correct remedy from a decision of a Regional Trial Court in a petition for certiorari is an ordinary appeal pursuant to Section 1, Rule 41 of the 1997 Rules of Civil Procedure xxx." It is well settled that the perfection of an appeal in the manner and within the period permitted by law is not only mandatory, but also jurisdictional.37 Certiorari is not and cannot be made a substitute for an appeal where the latter remedy is available but was lost through fault or negligence.38 To be sure, petitioner has regularly invoked, before this Court and the lower courts, the policy in favor of a liberal interpretation of the Rules of Procedure. Apropos on this point are this Courts observations in Duremdes v. Duremdes :39 Although it has been said time and again that litigation is not a game of technicalities, that every case must be prosecuted in accordance with the prescribed procedure so that issues may be properly presented and justly resolved, this does not mean that procedural rules may altogether be disregarded. Rules of procedure must be faithfully followed except only when, for persuasive reasons, they may be relaxed to relieve a litigant of an injustice commensurate with his failure to comply with the prescribed procedure. Concomitant to a liberal application of the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.40 (Emphasis supplied; italics in the original; citations omitted) In the case at bar, petitioner has not provided any cogent explanation that would absolve him of the consequences of his repeated failure to abide by the rules. Moreover, petitioners principal substantive argument that the Ejectment Case properly falls within the jurisdiction of the DARAB and not of the MTC is without merit. The MTC does not automatically lose its exclusive original jurisdiction over ejectment cases by the mere allegation of a tenancy relationship. As thoroughly discussed in Rivera v. Santiago ,41 the party alleging tenancy must prove the existence of all the essential requisites of tenancy in order to oust the MTC of its jurisdiction over the case: Jurisdiction is determined by the allegations in the complaint. That is basic. Unquestionably, petitioner lodged an action for ejectment before the MTC. Under BP 129, the allegations in the complaint conferred initiatory jurisdiction on that first level court. xxx

However, when tenancy is averred as a defense and is shown prima facie to be the real issue, the MTC must dismiss the case for lack of jurisdiction. Under RA 6657, it is the DAR that has authority to hear and decide when tenancy is legitimately involved. In the instant case, respondents averred tenancy as an affirmative and/or special defense in their Answer with Counterclaim. Under the RSP [Revised Rule on Summary Procedure], the MTC was supposed to conduct a preliminary conference to determine if such relationship was indeed the real issue. We emphasize that the MTC did not automatically lose its jurisdiction simply because respondents raised tenancy as a defense. It continued to have the authority to hear the case precisely to determine whether it had jurisdiction to dispose of the ejectment suit on its merits. xxx An agrarian dispute refers to any controversy relating to, inter alia, tenancy over lands devoted to agriculture. To determine whether the CA was correct in its reversal of the trial court, it is necessary to keep in mind the essential requisites of tenancy which are as follows: (1) The parties are the landowner and the tenant or agricultural lessee; (2) The subject of the relationship is agricultural land; (3) There is mutual consent to the tenancy between the parties; (4) The purpose of the relationship is agricultural production; (5) There is personal cultivation by the tenant or agricultural lessee; and (6) There is a sharing of harvests between the parties. All these elements must concur. It is not enough that they are alleged; to divest the MTC of jurisdiction, they must all be shown to be present. x x x42 (Emphasis and underscoring supplied; italics in the original; citations omitted) In Duremdes v. Duremdes,43 where a similar argument was raised under factual circumstances analogous to the case at bar, this Court held: First. For the DARAB to have jurisdiction over the case, there must be a tenancy relationship between the parties. In order for a tenancy agreement to take hold over a dispute it is essential to establish all its indispensable elements, to wit: 1) [T]hat the parties are the landowner and the tenant or agricultural lessee; 2) that the subject matter of the relationship is an agricultural land; 3) that there is consent between the parties to the relationship; 4) that the purpose of the relationship is to bring about agricultural production; 5) that there is personal cultivation on the part

of the tenant or agricultural lessee; and 6) that the harvest is shared between the landowner and the tenant or agricultural lessee.l^vvphi1.net Second. The trial court found that no such tenancy agreement existed between the respondent and Herminio Tara, and that such allegation was a mere ploy to prevent the respondent from exercising dominion and ownership over the subject property. This was affirmed by the Court of Appeals. We find no cogent reason to reverse such finding. Third. The petitioner is barred from raising the issue of jurisdiction. The petitioner actively participated in all stages of the instant case, setting up a counterclaim and asking for affirmative relief in his answer. He failed, however, to question the courts jurisdiction over the suit. After relying on the jurisdiction of the regular courts, he cannot be permitted to turn around and question it. It is not right for a party who has affirmed and invoked the jurisdiction of a court in a particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction.44 (Emphasis supplied; italics in the original; citations omitted) In the present case, neither petitioner nor his predecessor-in-interest submitted evidence to substantiate the existence of the essential requisites of tenancy. Thus, there is no basis at all to support petitioners claim that the MTC was without jurisdiction to render the questioned Decision. What is more, as in Duremdes and unlike in Rivera, petitioners predecessor-in-interest never questioned the jurisdiction of the MTC. Instead, she based her prayer for the dismissal of the Ejectment Case on respondents alleged lack of cause of action; with a counterclaim praying that she be maintained in the peaceful possession and cultivation of the subject property or, in the alternative, awarded disturbance compensation; and, in either event, reimbursed for the expenses she incurred. Considering that petitioners predecessor-in-interest actively participated in the proceedings before the MTC and invoked its jurisdiction to secure an affirmative relief, petitioner cannot now turn around and question that courts jurisdiction. Finally, this Court notes with consternation petitioners attempts, with the aid of his counsel, Atty. Abdul A. Basar, to deliberately mislead this Court as to the material dates and status of the decision appealed from, thereby impeding if not frustrating the ends of justice. In his Motion for Extension of Time to File Petition for Review on Certiorari, petitioner declared under oath that: (1) he had "filed a timely Motion for Reconsideration" of the CA Resolution dismissing his petition for certiorari, and (2) the notice of the denial by the CA of his Motion for Reconsideration "was received by petitioner only [on] March 28, 2001," thus making it appear that he had until April 12, 2001 within which to perfect his appeal.1a\^/phi1.net Significantly, petitioner did not disclose, either in his motion for extension of time or in his subsequent petition, the date on which he received the Resolution of the CA denying his petition for certiorari, thereby concealing the actual period for appeal from the Court processor.

As already noted, petitioners motion for reconsideration failed to suspend the running of the reglementary period since it was filed two days too late. Worse, the Registry Return Receipt45 of the CA Resolution denying petitioners motion for reconsideration shows that it was received by counsel for petitioners agent on September 20, 2000, and not March 28, 2001 as claimed by petitioner.1awphi1.nt In fact, by Resolution dated May 7, 2001,46 the CA had ordered the issuance of an Entry of Judgment in this case, which was later withdrawn by Resolution of October 23, 200147 following receipt by it of the instant Petition on May 15, 2001. It cannot be overemphasized that parties and their counsel are duty-bound to observe honesty and truthfulness in all their pleadings, motions and statements before the courts. Canon 10 of the Code of Professional Responsibility states, "A lawyer owes candor, fairness and good faith to the court;" while Rules 10.01 and 10.03 of the same provide: Rule 10.01 A lawyer shall not do any falsehood, nor consent to the doing of any in Court; nor shall he mislead, or allow the Court to be mislead by any artifice. xxx Rule 10.03 A lawyer shall observe the rules of procedure and shall not misuse them to defeat the ends of justice. Petitioner and his counsel, Atty. Abdul A. Basar, are thus hereby directed TO SHOW CAUSE, within 10 days from receipt of a copy of this Decision, why they should not be held in contempt of court and disciplinarily dealt with for violation of Canon 10 of the Code of Professional Responsibility, respectively. WHEREFORE, the petition is hereby DENIED. Petitioner MARIO VICTORIA and his counsel, Atty. Abdul A. Basar, are hereby ORDERED TO SHOW CAUSE, within ten (10) days from receipt of a copy of this Decision, why they should not be held in contempt of court and disciplinarily dealt with for violation of Canon 10 of the Code of Professional Responsibility, respectively. Treble costs against petitioner. SO ORDERED.

FRANCISCO S. HERNANDEZ and JOSEFA U. ATIENZA, plaintiffs-appellees, vs. RURAL BANK OF LUCENA, INC., CENTRAL BANK OF THE PHILIPPINES, in its capacity as Liquidator of Rural Bank of Lucena, and JOSE S. MARTINEZ in his capacity as Receiver of Rural Bank of Lucena, defendants-appellants. Ciceron B. Angeles & Fabian S. Lombos for appellants. Tomas Yumol and Felipe Dimaculangan for appellees.

AQUINO, J.: This case is about the propriety of a separate action to compel a distress rural bank. which is under Judicial liquidation, to accept a check in payment of a mortgage debt. The fact are as follows: On March 21, 1961 the spouses Francisco S. Hernandez and Josefa U. Atienza obtained from the Rural Bank of Lucena, Inc. a loan of P6,000 which was payable on March 21, 1962. The loan was cured by a mortgage on their two lots situated in Cubao, Quezon City with a total area of 600 square meters. The interest for one year was paid in advance. About three months after that loan was obtained, the Lucena Bank became a distress bank. In a letter dated June 6, 1961 the Acting Governor of the Central Bank apprised the stockholders of the Lucena bank that the Monetary Board in its Resolution No. 928, which was approved on June 13, 1961 allegedly after hearing the Lucena bank. found that its officers, directors and employees had committed certain anomalies or had resorted to unsound and unsafe banking practices which were prejudicial to the government, its depositors and creditors. The Monetary Board advised the stockholders to reorganize the Lucena bank by electing a new board of directors and directed that bank (a) not to grant new loans or renewals; (b) not to accept deposits from new depositors; (c) to service only the existing deposit accounts and (d) not to issue drafts or make any disbursements without the prior approval of Central Bank examiners. The Monetary Board gave the warning that, if its directives were not obeyed, the Central Bank. would take over the management of the Lucena bank. The Central Bank Governor informed the Lucena bank that the chief examiner of the department of rural banks would oversee the operations of the Lucena bank. That letter of the Central Bank Governor was construed as a directive to the Lucena bank to suspend operations. The Manila times in its issue of June 21, 1961 carried a

news story with the heading "Bank told to suspend operations". The story was accompanied by a picture of depositors who jammed the lobby of the bank trying to withdraw their money. Instead of bowing to the will of the Monetary Board, the Lucena bank and its board of directors filed with the Court of First Instance of Manila a complaint dated June 21, 1961 seeking to restrain the implementation of Resolution No. 928 (Civil Case No. 47345). Before the expiration of the one-year term of the loan, or on August 22, 1961, Hernandez went to the Lucena bank and offered to pay the loan by means of a check for P6,000 dated August 8, 1961 which was drawn against the bank by a depositor, the San Pablo Colleges, and which was payable to Fernandez As the bank's executive vice president was not available, the payment was not consummated. At the time that the check was issued, the San Pablo Colleges, had a deposit in the Lucena bank amounting to P11,890.16 (27 tsn April 25, 1966). Instead of withdrawing P6,000 from that deposit, the San Pablo Colleges chose to issue a check for that amount w Hernandez. It is not clear whether in August, 1961 the San Pablo Colleges could make a withdrawal from its deposit in the Lucena bank. On the following day, August 23, Hernandez sent to the bank by registered mail a photostat of the check and a letter inquiring whether the bank would honor the check and when he should go personally to the bank for that purpose. That letter was received by the bank on August 29. On August 30, the executive vice-president wrote to Hernandez and informed him that the check could not be honored for the time being because of adverse events that had disrupted the bank's operations. What the vice-president meant was that by reason of the letter of the Central Bank Governor dated June 16. 1961 the operations of the Lucena bank were suspended (6 tsn August 15, 1966). The vice-president explained that because there was a run the bank its assets were exhausted, and so the check sent by Hernandez, which check was drawn against the Lucena bank, could not be accepted (16, 21-24 tsn August 15, 1966). The vice-president said that when Hernandez presented the check, the Lucena bank was no longer in a position to honor withdrawals and that had Hernandez paid cash, his payment would have been accepted. To honor the check would have been tantamount to allowing a depositor (San Pablo Colleges) to make a withdrawal but the Lucena bank could not entertain withdrawals without the consent of the Central Bank examiners (2628 tsn). Payment by check was a disbursement (31 tsn). Apparently, the vice-president did not take the trouble of asking the Central Bank examiners whether the payment by check made by Hernandez could be accepted. Hernandez himself who should have known that the bank was a distressed bank which

had suspended operations and which was under the supervision of Central Bank examiners, did not bother to take up his problem with the said examiners. Hernandez, in his letter of October 18, 1961, again asked the bank when he could deliver the check. The executive vice-president, in his reply of October 24, told Hernandez that the bank could not yet honor the check because it had not resumed its banking operations; that it was awaiting the outcome of a case filed by the bank against the Central Bank; that it might reopen in January, 1962, and that, anyway, the loan would not be due until March 21, 1962. Hernandez sent another letter dated February 1, 1962. Finally, he enclosed the original check (duly endorsed) with his letter to the bank dated March 7, 1962, which was sent by registered mail and special delivery. That letter of March 7, together with the check, was returned to Hernandez because the bank's manager was allegedly in Manila. Undeterred, Hernandez again mailed the check to the bank on April 25, with the request that his mortgage be cancelled. In the meantime, the Monetary Board had decided to liquidate the Lucena Bank. The Governor of the Central Bank in a letter dated February 8, 1962 enjoined the Lucena bank from transacting business and advised it to turn over its assets, documents and records to the chief bank examiner. The bank building was sealed. The following notice was posted at the entrance of the building:
This bank is temporarily closed pending final decision of the courts as to its status. Payments of loans would be accepted; meanwhile, no payments of withdrawals against deposits can be made. Please transact business with the Central Bank's representatives only.

To head off the liquidation, the Lucena Bank filed with the Court of First Instance of Lucena City a complaint dated February 12, 1962, praying that the Central Bank be enjoined from liquidating the said bank. On February 14, the court issued an ex parte preliminary injunction which it dissolved ten days later (civil Case No. 6471; Rural Bank of Lucena, Inc. vs. Arca, L-21146, September 20, 1965, 15 SCRA 66). On February 14, 1962, the Manila court rendered a decision in Civil Case No. 47345, restraining the enforcement of the Monetary Board resolution, which required the Lucena bank to undertake a reorganization and to curtail its operations. The Central Bank appealed. (This Court reversed that decision and dismissed the complaint for injunction. Rural Bank of Lucena, Inc. vs. Central Bank, L-19621, November 29, 1969, 30 SCRA 628). To implement the resolution of the Monetary Board for the Liquidation of the Lucena bank, the Central Bank, pursuant to section 29 of its charter and on the assumption that the Lucena bank was insolvent, filed with the Court of first Instance of Manila a petition dated March 27, 1962 for assistance and supervision in the liquidation of the Lucena bank (Civil Case No. 50019).

Acting on that petition, the Court of First Instance of Manila issued an order dated march 28, 1963, directing the Lucena bank to turn over its assets to the Central Bank's authorized representative. The Monetary Board in its Resolution No. 426 dated April 2, 1963 designated the Superintendent of Banks or his duly authorized representative to take charge of the assets of the Lucena bank. The Board in its resolution of November 27, 1963 ordered the Superintendent of Banks to convert the assets of the Lucena bank to money. The Lucena bank, by means of certiorari sought to annul the liquidation proceeding . This Court denied its petition (Rural Bank of Lucena, Inc. vs. Arca, L-21146, September 20, 1965, 15 SCRA 66). Among the accounts receivable of the Lucena bank inventoried by the Central Bank's representative was the account of Hernandez- In a letter dated October 29, 1963 Hernandez informed the Central Bank that he had sent to the Lucena bank on April 25, 1962 the chock for P6,000. He again requested that his mortgage be cancelled. The Associate Superintendent of Banks in his answer dated December 9, 1963 returned the chock to Hernandez and informed him that, according to the Lucena bank's executive vice-president, the check could not be applied to the payment of Hernandez' loan because the bank was already closed when he received the check. Moreover, the chock was drawn against the current deposits of the San Pablo Colleges in the Lucena bank which was in the process of liquidation. Hernandez was advised to settle his account by paying cash or by means of a chock drawn against a bank other than the Lucena bank. Disregarding that suggestion, Hernandez announced to the Associate Superintendent of Banks in his letter of December 16, 1963 that he was going to deposit the said check in the court of First Instance of Lipa City on or before December 26, 1963. Instead of filing a consignation complaint, Hernandez enclosed the check with his letter dated January 2, 1964 to the clerk of court of the Court of First Instance at Lipa City. That letter was received in court on January 6, 1964. Hernandez wrote a letter dated January 11, 1964 informing the Associate Superintendent of Banks of the judicial deposit of the check. Copies of that letter were furnished the Lucena bank and the San Pablo Colleges. It was only on October 12, 1964 when Hernandez and his wife filed an action in the Court of First Instance at Lipa City to compel the Rural Bank of Lucena, Inc., the Central Bank as liquidator, and Jose S. Martinez as receiver, to accept the check and to execute the cancellation of the real estate mortgage. The Hernandez spouses also asked for moral damages in the amount of P10.000 and attorney's fees of P3,000 (Civil Case No. 1615).

On October 20, 1964 the Central Bank filed a motion to dismiss. It contended that there was improper venue because, as the action allegedly involved title to real property, it should have been instituted in Quezon City where the encumbered lots are situated. It Mother contended that since the Lucena bank is under liquidation and is in the hands of a receiver, its properties and assets are in custodia legis and may, therefore, be reached only by motion or petition in Civil Case No. 50019 of the Court of First Instance of Manila. The motion was denied. To complete the facts, it should be stated that the counsel for the Lucena bank on January 30, 1967 offered to compromise the case by stipulating that the Central Bank would apply the check in question to the mortgage debt of Hernandez if the balance of the deposit of the San Pablo Colleges would be enough to cover the amount of the check of P6,000 and that, by virtue of that compromise, the complaint and counterclaim would be dismissed. That conditional and equivocal compromise offer fizzled out, because the lawyers of Hernandez and the Central Bank did not assent to it. After trial, the lower court rendered an amended decision dated October 31, 1967, ordering the Lucena Bank or the Central Bank, as liquidator, to accept the honor the check, to cancel the mortage, and to pay Hernandez spouses (P25,000 as moral damages (not P10,000 as prayed for the complaint) plus P1,000 as attorney's fees. The Lucena bank, the Central Bank and its employee, the receiver, appealed to this Court. The Central Bank contends that the trial court erred (1) in not holding that the venue was improperly laid; (2) in not holding that it had no jurisdiction because the Hernandez spouses should have ventilated their claim in the liquidation proceeding pending in the Court of First Instance of Manila. instead of filing a separate action in the Court of First Instance at Lipa City; (3) in not holding that there was no valid consignation, (4) in awarding moral damages and attorney's fees, and (5) in ordering execution pending appeal in spite of the tact that the assets of the Lucena bank are in custodia legis or in the custody of the liquidation court and the receiver appointed by it. On the issue of venue, defendants-appellants contend that the action of the Hernandez spouses to compel them to honor the check in question and to cancel the mortgage on their two lots is a real action affecting title to real property which should have been filed in the Court of First Instance of Rizal at Quezon City where the mortgaged lots are situated. Section 2(a), Rule 4 of the Rules of Court provides that "actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the province where the property or any part thereof lies".

Note that the rule mentions an action for foreclosure of a real estate mortgage but does not mention an action for the cancellation of a real mortgage. In the instant case, the action is primarily to compel the mortgagee to accept payment of the mortgage debt and to release the mortgage. That action, which is not expressive included in the enumeration found in section 2(a) of Rule 4, does not involve the title to the mortgage lots. It is a personal action and not a real action. The mortgagee has, not foreclosure the mortgage, Plaintiffs' title is not in question. They are in possession of the mortgaged lots. Hence, the venue of plaintiffs' personal action is the place where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff (Sec. 2[b], Rule 4). The plaintiffs in their brief confound a real action with an action in rem and a personal action with an action in personam. They argue that their action is not an action in rem and, therefore, it could be brought in a place other than the place where the mortgaged lots are located. A real action is not the same as an action in rem and a personal action is not the same as an action in personam. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property. or, as indicated in section 2(a) of Rule 4, a real action Is an action affecting tithe to real property or for the recovery of possession. or for partition or condemnation of, or foreclosure of a mortage on, real property. An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person (1 C. J. S. 943-4), Hence, a real action may at the same time be an action in personam and not necessary an action in rem. In this case, the plaintiffs alleged in their complaint that they were residents of San Juan, Batangas, which in their brief (They characterize as their legal residence and which appears to be their domicile of origin. On the other hand, it is indicated in the promissory note and mortgage signed by them and in the Torrens title covering the mortgaged lots that their residence is at 11 Chicago Street, Cubao, Quezon City, which apparently is the place where the said lots are located, The plaintiffs did not testify during the trial. So, they have no testimony in the records as to their actual residence. We hold that the trial court should have dismissed the action because the venue thereof was improperly laid in Batangas. The term "resides" in section 2[b] of Rule 4 refers to the place of actual residence or domicile.)

San Juan, Batangas might be the place where the plaintiffs have their domicile or legal residence but there is no question that 11 Chicago Street, Cubao, Quezon City is their place of abode or the place where they actually reside. So, the action in this case, which is a personal action to compel the defendants to honor the check in question and to Cancel the mortgage, should have been filed in Quezon City if the plaintiffs intended to use their residence as the basis for their choice of venue. Thus, it was held that venue was improperly laid in a case where plaintiff Jose Coloma filed a complaint in the Court of First Instance of Ilocos Norte, because he was allegedly a resident of San Nicolas, Ilocos Norte, where he was born and reared, but his actual residence was at 57 K-6th Kamias, 486 Barangka Drive, Mandaluyong, Rizal (Koh vs. Court of Appeals, L-40428, December 17, 1975; 70 SCRA 298). In Gracia Fule vs. Court of Appeals, L-404502, November 29, 1976, 74 SCRA 189, it was held that an intestate proceedings 9 for the settlement of the estate of the deceased Amado G. Garcia was improperly filed in the Court of First Instance of Laguna. The deceased was allegedly domiciled in Calamba, Laguna. He was a delegate of the first district of Laguna to the constitutional convention. However, at the time of his death he was actually a resident of Quezon City. Hence. the proper venue of the intestate proceeding was Quezon City. In the foregoing discussion. it is assumed that the plaintiff could bring a separate action to compel the defendants honor the check in question in spite of the fact that the Lucena bank is under liquidation in Civil Case No. 50019 of the Court of First Instance of Manila. The Central Bank contends that such a separate action was not maintainable and that the Hernandez spouse should have ventilated in the liquidation proceeding their claim that they had already paid their mortgage debt by means of the check issued by the San Pablo Colleges and that their mortgage should be cancelled. The Central Bank points out that the redemption action the Hernandez spouses would ultimately affect the funds and property of the Lucena Bank. Hence, the liquidation court is the competent tribunal to pass upon the issue as to whether the Hernandez spouses could validly pay their mortage debt by means of the check of the San Pablo Colleges. On the other hand, the Hernandez spouses argue that their action in the Court of First Instance at Lipa City "deals with a sum of money which is still not in the possession, custody, and administration" of the Central Bank and the receiver; that their action had "nothing to do with the funds and property" held by the receiver; that the Lucena bank had not lost its juridical personality after it was placed under liquidation, and that the issue as to whether the Lucena bank should have accepted the chock in question was "not in any way connected with the causes and grounds under which the liquidation proceedings were instituted nor with the administration of the property and funds under liquidation"

Those contentions of the Hernandez spouse are untenable. The trial court did not rule squarely on the Jurisdictional issue raised by the Central Bank and the receiver We hold that the liquidation court or the Manila court has exclusive jurisdiction to entertain the claim of the Hernandez spouses that their mortgage obligation had already been extinguished by means of their tender of the check issued by the San Pablo Colleges. At the time the Hernandez spouses filed in 1964 their consignation complaint the Lucena bank was already under liquidation. The Manila court in its order of March 28,1963 had ordered the officers of the Lucena bank to turn over to the Central Bank or to the receiver, the Superintendent of Banks, all of its assets, properties and papers. Among the assets turned over to the receiver was the outstanding or unpaid account of the Hernandez spouses which appears in the inventory as: "393. Hernandez, Francisco St., 11 Chicago St., Cubao, Q.C. TCT-34262 3/21/61, P6,000.00" (Exh. 4-CB). And among the papers or obligations turned over to the receiver was Ledger No. 056 evidencing the deposit of the San Pablo Colleges in the Lucena bank in the sum of P11,890.16. against which the check for P6,000 was drawn. It was that check which the Hernandez spouses had issued to pay the mortgage debt to the Lucena bank. Under the section 29 of the Central Bank Act, republic Act No. 265, when the Monetary Board, upon information submitted by the Superintendent of the Bank, finds a bank to be insolvent, it shall be forbid the bank to do the business and it shall take care of its assets according to law. In that case, if the Monetary Board finds out that the insolvent bank cannot resume business with safety to its creditors, it shall through the Solicitor General, file a petition in the Court of First Instance, praying for the assistance and supervision of the court in the liquidation of the bank's affairs. Thereafter, the Superintendent of Banks, upon order of the Monetary Board and under the supervision of the court, shall convert to money the bank's assets. "Subido es que uno de los deberes primordiales de un depositario es hacerse cargo immediatemente de todol el activo y pasivo de un banco" (Luy Lam & Co. vs. Mercantile Bank of China, 71 Phil. 573, 576). The fact the insolvent bank is forbidden to do business, that its assets are turn over to the Superintendent of Banks, as a receiver, for conversation into cash, and that its liquidation is undertaken with judicial intervention means that, as far as lawful and practicable, all claims against the insolvent bank and that the liquidation court should be filed in the liquidation proceeding. The judicial liquidation is intended to prevent multiplicity of actions against the insolvent bank. The lawmaking body contemplated that for convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintended of Banks and control his operations.

In the course of the liquidation, contentious cases might arise wherein a full-dress hearing would be required and legal issues would have to be resolved. Hence, it would be necessary in justice to all concerned that a Court of First Instance should assist and supervise the liquidation and should act umpire and arbitrator in the allowance and disallowance of claims. The judicial liquidation is a pragmatic arrangement designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. Thus, in the liquidation before the war of the insolvement Mercantile Bank of china, various claims were adjudicated by the liquidation Court, which was the court of First Instance of Manila, pursuant to section 1639 of the Revised Administrative Code, from which section 29 pf the Central Bank Law was taken. (See In re Liquidation of Mercantile Bank of China: Tan Tiong Tick vs. American Apothecaries Co., 65 Phil. 414; Pacific Coast Biscuit Co. vs Chinese Grocers Association, 65 Phil. 375; Fletcher American National Bank vs. Ang cheng Lian, 65 Phil. 385; Pacific Commercial Co. vs. American Apothecaries Co., 65 Phil. 429; Gopoco Grocery vs. Pacific Coast Biscuit co., 65 Phil. 443; Chinese Grocers' Association vs. American Apothecaries Co., 65 Phil. 395; and Yu Ping Kun, 65 Phil. 410). There is a ruling that, although the taking over of a bank by state officials for liquidation does not dissolve the bank, a court has no jurisdiction (after such takeover) to entertain an action or to render a judgment against the bank (9 C.J.S. 852, note 38 citing Bushnell vs. F.W. Woolworth co., 241 Pac. 738. 112 Okl. 297; State vs. Quigley, 220 Pac. 918, 93 Okl. 296). It has been held that an insolvent bank, which was under the control of the finance commissioner for liquidation, was without power or capacity to sue or be sued, prosecute or defend or otherwise function except through the finance commissioner or liquidator (Wauer vs. Bank of Pendleton, 65 S.W. 2nd 167 228 Mo. App. 1150). Suits brought against a bank after the issuance of a notice that the finance commissioner has taken possession of the bank should be dismissed or are barred for want of jurisdiction (Rouse vs. Bank of Darlington, 41 S.W. 2nd 159; Bartlett vs. Mc Callister, 289 S.W. 814, 316 Mo. 129). This Court has already held that after a savings bank was declared insolvent by the Monetary Board, a depositor could not bring a separate action against it for the recovery of his time deposit. His remedy is to intervene in the liquidation proceeding (Central Bank of the Philippines vs. Morfe, L-38427, March 12, 1975, 63 SCRA 144). * In the instant case, the Hernandez spouses, after having become cognizant of the fact that the Lucena bank was under liquidation, chose to file a separate action against that bank for redemption and damages. Although residents of Cubao, Quezon City, where

the mortgage lots are located and which was the address used by them in dealing with the Lucena bank, they chose Lipa City as the venue of their action. They ignored the liquidation court. Evidently, one of their objectives was to obtain against the Lucena bank a judgment for moral damages which they surmised would not be granted by the Manila liquidation court. They attained more than what they had originally desired because, instead of the moral damages of P10,00 indicated in their complaint, the trial court generously awarded them P25,000. Not only that. The trial court granted execution pending appeal although it was aware that eventually the claim of the Hernandez spouses would have to be submitted to the liquidation court for allowance. The sheriff could not enforce the writ of execution because the Lucena bank was under liquidation (p. 92, Rollo). Hence, the Hernandez spouses had to file a claim with the liquidation court. That court has been pending since September, 1968. Thus, much time, money and effort would have been saved if at the outset the Hernandez spouse filed their claim in the liquidation court. WHEREFORE, the trial court judgment is reversed and set aside. The case is dismissed without prejudice to the right of the Hernandez spouses to take up with the liquidation court the settlement of their mortgage obligation. Costs against the plaintiffsappellees. SO ORDERED.

EMERITA MUOZ, Petitioner, - versus ATTY. VICTORIANO R. YABUT, JR. and SAMUEL GO CHAN, Respondents. EMERITA MUOZ, Petitioner, - versus SPOUSES SAMUEL GO CHAN and AIDA C. CHAN, and THE BANK OF THE PHILIPPINE ISLANDS,

Respondents. G.R. No. 142676 G.R. No. 146718

LEONARDO-DE CASTRO, J.: Before Us are the following consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. In G.R. No. 142676, Emerita Muoz (Muoz) is seeking the reversal, annulment, and setting aside of the Decision[1] dated July 21, 1995 and Resolution[2] dated March 9, 2000 of the Court of Appeals in CAG.R. SP No. 35322, which affirmed the Orders[3] dated June 10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 (RTC-Branch 88) of Quezon City in Civil Case No. Q-94-20632. The RTC dismissed Civil Case No. 8286, the forcible entry case instituted by Muoz against Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel Go Chan before the Metropolitan Trial Court (MeTC), Branch 33 of Quezon City; and nullified the MeTC Order*4+ dated May 16, 1994, granting Muozs prayer for the issuance of a writ of preliminary mandatory injunction which restored possession of the subject property to Muoz.

In G.R. No. 146718, Muoz is praying for the reversal, setting aside, and nullification of the Decision[5] dated September 29, 2000 and Resolution[6] dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which affirmed the Orders[7] dated August 21, 1995 and October 3, 1995 of the Quezon City RTC, Branch 95 (RTC-Branch 95) in Civil Case No. Q-28580 denying Muozs Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297*8+ against respondents Bank of the Philippine Islands (BPI) and the spouses Samuel Go Chan and Aida C. Chan (spouses Chan) I FACTS The subject property is a house and lot at No. 48 Scout Madrian St., Diliman, Quezon City, formerly owned by Yee L. Ching. Yee L. Ching is married to Emilia M. Ching (spouses Ching), Muozs sister. Muoz lived at the subject property with the spouses Ching. As consideration for the valuable services rendered by Muoz to the spouses Chings family, Yee L. Ching agreed to have the subject property transferred to Muoz. By virtue of a Deed of Absolute Sale, seemingly executed by Yee L. Ching in favor of Muoz,[9] the latter acquired a Transfer Certificate of Title (TCT) No. 186306 covering the subject property in her name on December 22, 1972.[10] However, in a Deed of Absolute Sale dated December 28, 1972, Muoz purportedly sold the subject property to her sister, Emilia M. Ching. As a result, TCT No. 186306 was cancelled and TCT No. 186366 was issued in Emilia M. Chings name. Emilia M. Ching, in a Deed of Absolute Sale dated July 16, 1979, sold the subject property to spouses Go Song and Tan Sio Kien (spouses Go), hence, TCT No. 186366 was cancelled and replaced by TCT No. 258977 in the spouses Gos names. On October 15, 1979, Muoz registered her adverse claim to the subject property on TCT No. 258977 of the spouses Go. The next day, on October 16, 1979, Muoz filed a complaint for the annulment of the deeds of absolute sale dated December 28, 1972 and July 16, 1979, the cancellation of TCT No. 258977 in the spouses Gos names, and the restoration and revival of TCT No. 186306 in Muozs name. The complaint was docketed as Civil Case No. Q-28580 and raffled to RTC-Branch 95. On October 17, 1979, Muoz caused the annotation of a notice of lis pendens on TCT No. 258977 of the spouses Go. In an Order dated December 17, 1979, the RTC-Branch 95 granted the spouses Gos motion for the issuance of a writ of preliminary mandatory injunction and ordered the sheriff to put the spouses Go in possession of the subject property. The writ was implemented by the sheriff on March 26, 1980, driving Muoz and her housemates away from the subject property. Muoz filed a petition for certiorari and prohibition before the Court of Appeals, assailing the issuance of the writ of preliminary mandatory injunction, which was docketed as CA-G.R. SP No. 10148. The appellate court dismissed Muozs petition on January 4, 1980. Yee L. Ching and his son Frederick M. Ching filed an urgent motion for leave to intervene in CA-G.R. SP No. 10148 and for the issuance of a temporary restraining order (TRO). The Court of Appeals issued a TRO. However, in a Resolution dated March 18, 1980, the appellate court denied the motion to intervene of Yee L. Ching and Frederick M. Ching, and cancelled the TRO previously issued. Yee L. Ching and Frederick M. Ching challenged before

this Court, in G.R. No. 53463, the Resolution dated March 18, 1980 of the Court of Appeals. Eventually, in a Resolution dated June 3, 1981, the Court dismissed the petition in G.R. No. 53463, for lack of merit and failure of Yee L. Ching and Frederick M. Ching to substantially show that the RTC-Branch 95 and the Court of Appeals gravely abused their discretion. In a subsequent Resolution dated June 21, 1982, the Court clarified that its Resolution of June 3, 1981 was without prejudice to the continuation of the litigation in Civil Case No. Q-28580 still pending before the trial court, in order that proper and final adjudication may be made of whether or not the deed of sale by Emerita L. Muoz in favor of Emilia M. Ching is a real, genuine and authentic transaction, thereby to settle once and for all the issue of ownership of the property herein in question.*11+ Trial in Civil Case No. Q-28580 proceeded before RTC-Branch 95. In the meantime, Muozs adverse claim and notice of lis pendens on TCT No. 258977 was cancelled on October 28, 1982 on the basis of an alleged final judgment in favor of the spouses Go.[12] The spouses Go obtained a loan of P500,000.00 from BPI Family Savings Bank (BPI Family) and to secure the same, they constituted a mortgage on the subject property on November 23, 1982.[13] When the spouses Go defaulted on the payment of their loan, BPI Family foreclosed the mortgage. BPI Family was the highest bidder at the auction sale of the subject property. The spouses Go failed to exercise their right of redemption within the prescribed period, thus, BPI Family was finally able to register the subject property in its name on October 23, 1987 under TCT No. 370364.[14] Apparently, the original copy of TCT No. 370364 was among those razed in the fire at the Quezon City Register of Deeds on June 11, 1988. As a result of the administrative reconstitution of the lost title, TCT No. RT-54376 (370364) was issued to BPI Family. On December 3, 1990, BPI Family executed in favor of the spouses Samuel Go Chan and Aida C. Chan (spouses Chan) a Deed of Absolute Sale[15] covering the subject property for and in consideration of P3,350,000.00. Consequently, TCT No. RT-54376 (370364) in the name of BPI Family was cancelled and TCT No. 53297 was issued in the spouses Chans names on January 28, 1991.*16+ The spouses Chan obtained a loan from BPI Family on October 2, 1992 for the construction of a building on the subject property, and to secure the same, constituted a mortgage on the subject property in favor of BPI Family.[17] On July 19, 1991, RTC-Branch 95 rendered its Decision[18] in Civil Case No. Q-28580, against Emilia M. Ching, Yee L. Ching, and the spouses Go (Emilia M. Ching, et al.). It found that Muozs signature on the Deed of Absolute Sale dated December 28, 1972 was forged; that Muoz never sold the subject property to her sister, Emilia M. Ching; and that the spouses Go were not innocent purchasers for value of the subject property. The fallo of the said decision reads: WHEREFORE, judgment is hereby rendered dismissing for lack of merit *Emilia M. Ching, et al.s+ respective counterclaims, cross-claims, and counter-cross-claim, declaring as null and void ab initio the following documents, to wit: (a) Deed of Absolute Sale dated December 28, 1972, copy of which is marked in evidence as Exh. M; (b) TCT No. 186366 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. N; (c) Deed of Absolute Sale dated July 16, 1979, copy of which is marked in evidence as Exh. 3; and, (d) TCT No. 258977 of the Registry of Deeds for Metro Manila District III, copy of which is marked in evidence as Exh. 4, and directing defendant Register of Deeds of Quezon

City to cancel from the records of the subject property the registrations of all the said documents and to restore and revive, free from all liens and encumbrances, TCT No. 186306 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. L, as well as ordering defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay [Muoz] the sum of P50,000.00 as and for attorneys fees and to pay the costs of suit. The court also hereby dismisses the rest of the claims in *Muozs+ complaint, there being no satisfactory warrant therefor.*19+ Emilia M. Ching, et al.s, appeal of the foregoing judgment of the RTC-Branch 95 was docketed as CAG.R. CV No. 33811 before the Court of Appeals. In its Decision[20] dated March 4, 1993, the appellate court not only affirmed the appealed judgment, but also ordered the spouses Go and their successorsin-interest and assigns and those acting on their behalf to vacate the subject property, to wit: WHEREFORE, premises considered, the decision appealed from is AFFIRMED, with costs against [Emilia M. Ching, et al.]. The writ of preliminary mandatory injunction issued on December 17, 1979 is hereby set aside and declared dissolved. Defendants-appellants Go and Tan, their successors-in-interest and assigns and those acting on their behalf, are ordered to vacate the disputed premises and to deliver the same to [Muoz] immediately upon receipt of this decision.[21] Emilia L. Ching, et al., filed before this Court a motion for extension of time to file their petition for review, which was assigned the docket number G.R. No. 109260. However, they failed to file their intended petition within the extended period which expired on April 23, 1993. In a Resolution[22] dated July 12, 1993, the Court declared G.R. No. 109260 terminated. The Resolution dated July 12, 1993 of the Court in G.R. No. 109260 became final and executory on July 15, 1993 and was entered in the Book of Entries of Judgments on even date.[23] More than two months later, on September 20, 1993, the RTC-Branch 95 issued a writ of execution to implement the judgment in Civil Case No. Q-28580. The spouses Chan, who bought the subject property from BPI Family, then came forward and filed before the RTC-Branch 95 on October 22, 1993 an Urgent Motion to Stop Execution as Against Spouses Samuel Go Chan and Aida Chan,[24] opposing the writ of execution issued in Civil Case No. Q-28580. The spouses Chan asserted ownership and possession of the subject property on the basis of a clean title registered in their names under TCT No. 53297. The spouses Chan further contended that the final judgment in Civil Case No. Q-28580 could not be executed against them since they were not parties to the said case; they were not successors-in-interest, assigns, or acting on behalf of the spouses Go; and they purchased the subject property from BPI Family without any notice of defect in the latters title. It was only at this point that Muoz, upon her own inquiry, discovered the cancellation on October 28, 1982 of her adverse claim and notice of lis pendens annotated on the spouses Gos TCT No. 258977, and the subsequent events that led to the transfer and registration of the title to the subject property from the spouses Go, to BPI Family, and finally, to the spouses Chan.

In its Order[25] dated December 28, 1993, the RTC-Branch 95 denied the spouses Chans urgent motion to stop the execution. According to the RTC-Branch 95, the photocopy of TCT No. 370364 in the name of BPI Family, submitted by the spouses Chan with their motion, could hardly be regarded as satisfactory proof that Muozs adverse claim and notice of lis pendens annotated therein were also missing from the original copy of said certificate of title. Muozs adverse claim and notice of lis pendens were annotated on TCT No. 258977 in the spouses Gos names as P.E.-8078 and P.E.-8178, respectively. So when TCT No. 258977 of the spouses Go was cancelled and TCT No. 370364 was issued to BPI Family, it could be presumed that the Register of Deeds regularly performed his official duty by carrying over Muozs adverse claim and notice of lis pendens to TCT No. 370364. In addition, the RTC-Branch 95 pointed out that in this jurisdiction, the entry of the notice of lis pendens in the day book of the Register of Deeds was already sufficient notice to the whole world of the dispute over the subject property, and there was no more need to annotate the same on the owners duplicate of the certificate of title. Finally, the RTC-Branch 95 held that TCT No. RT-54376 (370364) of BPI Family and TCT No. 53297 of the spouses Chan shall be subject to the reservation under Section 7 of Republic Act No. 26*26+ *t+hat certificates of title reconstituted extrajudicially, in the manner stated in sections five and six hereof, shall be without prejudice to any party whose right or interest in the property was duly noted in the original, at the time it was lost or destroyed, but entry or notation of which has not been made on the reconstituted certificate of title. Thus, the spouses Chan were deemed to have taken the disputed property subject to the final outcome of Civil Case No. Q-28580. On January 3, 1994, the RTC-Branch 95 issued an Alias Writ of Execution.[27] On January 10, 1994, the writ was enforced, and possession of the subject property was taken from the spouses Chan and returned to Muoz.[28] In its Orders dated April 8, 1994 and June 17, 1994, the RTC-Branch 95 denied the spouses Chans motion for reconsideration and notice of appeal, respectively.*29+ G.R. No. 142676 Pending resolution by the RTC-Branch 95 of the spouses Chans motion for reconsideration and notice of appeal in Civil Case No. Q-28580, Muoz instituted before the MeTC on February 4, 1994 a Complaint for Forcible Entry with Prayer for Preliminary Mandatory Injunction[30] against Samuel Go Chan and Atty. Yabut, docketed as Civil Case No. 8286. Muoz alleged in her complaint that she had been in actual and physical possession of the subject property since January 10, 1994. She hired a caretaker and two security guards for the said property. On February 2, 1994, Samuel Go Chan and Atty. Yabut, along with 20 other men, some of whom were armed, ousted Muoz of possession of the subject property by stealth, threat, force, and intimidation. Muoz prayed for the issuance of a writ of preliminary mandatory injunction directing Samuel Go Chan and Atty. Yabut and all persons claiming right under them to vacate the subject property. Muoz additionally prayed for judgment making the mandatory injunction permanent and directing Samuel Go Chan and Atty. Yabut to pay Muoz: (1) compensation for the unlawful occupation of the subject property in the amount of P50,000.00 per month, beginning February 2, 1994 until the said property is fully and completely turned over to Muoz; (2) attorneys fees in the amount of P50,000.00, plus P1,500.00 per court appearance of Muozs counsel; and (3) costs of suit.

Samuel Go Chan and Atty. Yabut denied Muozs allegations, insisting that Samuel Go Chan is the valid, lawful, and true legal owner and possessor of the subject property. Samuel Go Chan and Atty. Yabut averred that the Turn-Over of Possession and Receipt of Possession dated January 10, 1994 attached to Muozs complaint as proof that the subject property had been placed in her possession is a falsified document. The Writ of Execution issued on September 20, 1993 in Civil Case No. Q-28580 had already expired and the Sheriffs Return on the Writ another document purporting to show that possession of the subject property was turned-over to Muoz on January 10, 1994 was then being challenged in a complaint before the Office of Deputy Court Administrator Reynaldo L. Suarez of the Supreme Court. Samuel Go Chans possession of the subject property has never been interrupted. His sister, Cely Chan, resided at the subject property and was never removed therefrom. On February 2, 1994, Atty. Yabut was at the subject property only to protect the rights and interest of his client, Samuel Go Chan, and since the latters possession of the subject property had never been interrupted, Atty. Yabut entered the same peacefully, without intimidation, force, or stealth. The other people at the subject property on February 2, 1994 were there to attend the services at the Buddhist Temple which occupied the fourth floor of the building erected by the spouses Chan on the subject property. Samuel Go Chan and Atty. Yabut, thus, asked the MeTC to dismiss Muozs complaint for lack of merit and legal basis.[31] The MeTC received evidence from the parties on whether a writ of preliminary injunction should be issued, as prayed for by Muoz. In its Order dated May 16, 1994, the MeTC adjudged that the final judgment in Civil Case No. Q-28580 was already executed against the spouses Chan and there was, indeed, a turn-over of possession of the subject property to Muoz. Accordingly, the MeTC granted Muozs prayer for the issuance of a writ of preliminary mandatory injunction, restoring possession of the subject property to Muoz. Samuel Go Chan and Atty. Yabut questioned the foregoing MeTC order through a Petition for Certiorari with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction[32] before the RTCBranch 88, which was docketed as Civil Case No. Q-94-20632. They asserted that they were not bound by the execution of the final judgment of RTC-Branch 95 in Civil Case No. Q-28580 as they were not parties to the said case. Muoz, on the other hand, argued that the MeTC Order of May 16, 1994 was an interlocutory order, and under Section 19 of the Rules of Summary Procedure, a petition for certiorari against an interlocutory order issued by the court is one of the prohibited pleadings and motions in summary proceedings. In its Order dated June 10, 1994, the RTC-Branch 88 issued a writ of preliminary injunction to enjoin the implementation of the MeTC Order dated May 16, 1994. On August 5, 1994, the RTC-Branch 88 issued another Order resolving Muozs motion to dismiss the petition for certiorari in Civil Case No. Q-94-20632, motion for reconsideration of the Order dated June 10, 1994 of RTC-Branch 88 granting the issuance of a writ of preliminary injunction, and motion to resolve with additional grounds for dismissal. According to the RTC-Branch 88, the MeTC failed to distinguish the issue of finality of the judgment of the RTC-Branch 95 in Civil Case No. Q-28580 from the assertions of Samuel Go Chan and Atty. Yabut that the spouses Chan are not covered by said final

judgment because they are not successors-in-interest, assigns, or privies of the spouses Go and they are purchasers of the subject property in good faith. The issue of whether the final judgment in Civil Case No. Q-28580 extended to the spouses Chan was then still being litigated in the same case before RTCBranch 95, where the spouses Chans motion for reconsideration of the denial of their notice of appeal was pending. The RTC-Branch 88 further found that the MeTC committed grave abuse of discretion in not dismissing Muozs complaint for forcible entry on the ground of lis pendens, as the issue as to who between Muoz and the spouses Chan had the better right to possession of the subject property was the subject of the pending proceeding in Civil Case No. Q-28580 before the RTC-Branch 95. In the end, the RTC-Branch 88 decreed: WHEREFORE, premises considered, the Court renders judgment (a) Denying the motion to dismiss of respondent Muoz for lack of merit;

(b) Denying the motion for reconsideration of respondent Muoz for the recall and/or setting aside of the writ of preliminary injunction granted to petitioners; (c) Declaring the Order dated May 16, 1994 of Public respondent Hon. Elsa de Guzman in Civil Case No. 8286 illegal and therefore null and void; and (d) Dismissing the ejectment suit in Civil Case No. 8286 on ground of lis pendens.

Without pronouncement as to costs.[33] Muoz appealed the Orders dated June 10, 1994 and August 5, 1994 of RTC-Branch 88 before the Court of Appeals. Her appeal was docketed as CA-G.R. SP No. 35322. Aside from the nullification of the two orders, Muoz additionally prayed for the dismissal from the service of the RTC-Branch 88 presiding judge and the disbarment of Atty. Yabut. The Court of Appeals, in its Decision dated July 21, 1995, sustained the appealed orders of RTC-Branch 88. The Court of Appeals held that the MeTC should have dismissed the forcible entry case on the ground of lis pendens; that the spouses Chan were not parties in Civil Case No. Q-28580, and impleading them only in the execution stage of said case vitiated their right to due process; that the order of the RTC-Branch 95 involving the spouses Chan in Civil Case No. Q-28580 was null and void, considering that they are strangers to the case, and they are innocent purchasers for value of the subject property; that the notice of lis pendens was already cancelled from the spouses Gos certificate of title at the time they mortgaged the subject property to BPI Family; and that the title to the subject property was already free of any and all liens and encumbrances when the spouses Chan purchased the said property from BPI Family. The Court of Appeals, in its Resolution dated March 9, 2000, denied Muozs motion for reconsideration.

G.R. No. 146718

Meanwhile, Muoz filed before the RTC-Branch 95 in Civil Case No. Q-28580 a Motion to Cite the Register of Deeds in Contempt of Court for the failure of the Register of Deeds to restore Muozs TCT No. 186306 despite having been served with a copy of the writ of execution on October 11, 1993. In its Judgment (on the Contempt Proceedings against the Register of Deeds of Quezon City Samuel C. Cleofe)[34] dated March 18, 1994, the RTC-Branch 95 denied Muozs motion, convinced that the Register of Deeds had a valid excuse for his inability to implement the served writ. The Register of Deeds could not cancel the spouses Chans TCT No. 53297, the subsisting certificate of title over the subject property, absent any authority or directive for him to do so. The directive in the final judgment in Civil Case No. Q-28580 and the writ of execution for the same only pertained to the cancellation of the spouses Gos TCT No. 258977. Thereafter, Muoz filed a Motion for Contempt against the spouses Chan and a Second Motion for Contempt against Samuel Go Chan and Atty. Yabut. Muoz also filed a Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297,*35+ in which she prayed for the issuance of an alias writ of execution directing the Register of Deeds not only to cancel TCT No. 258977 and all documents declared null and void ab initio in the dispositive portion of the Decision[36] dated July 19, 1991 of RTC-Branch 95 in Civil Case No. Q-28580, and to restore and revive, free from all liens and encumbrances Muozs TCT No. 186306, but likewise to cancel the present certificate of title covering the subject property, TCT No. 53297. In its Order dated August 21, 1995, the RTC-Branch 95 denied all of Muozs aforementioned motions. The RTC-Branch 95 was of the view that Samuel Go Chans title should be litigated in another forum, not in Civil Case No. Q-28580 where the judgment had already become final and executory. The RTC-Branch 95 also stressed that since the judgment in Civil Case No. Q-28580 had long become final and executory, it could no longer be changed or amended except for clerical error or mistake. Accordingly, the RTCBranch 95 resolved as follows: 1. Ordering, as it hereby orders, the denial of *Muozs+ first and second motions for contempt and hereby absolves respondents Samuel Go Chan, Celia Chan, Atty. Victoriano R. Yabut, Jr., and several John Does of the Contempt Charges against them. 2. Ordering, as it hereby orders, the issuance of an alias writ of execution directing the Courts Deputy Sheriff: (a) Defendants Go Song and Tan Sio Kien, their successors-in-interest and assigns and those acting on their behalf to vacate the disputed premises and deliver the same to [Muoz]; (b) Defendant Register of Deeds of Quezon City to cancel from the records of the subject property the registration of all the following documents, to wit: (1) Deed of Absolute Sale dated December 28, 1972; (2) Transfer Certificate of Title (TCT) No. 186366 of the Register of Deeds of Quezon City; (3) Deed of Absolute Sale dated July 16, 1979; and (4) TCT No. 258977 of the Registry of Deeds for Metro Manila II, and to restore and revive, free from all liens and encumbrances TCT No. 186306 of the Registry of Deeds for Quezon City; and

(c) Defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay [Muoz] the sum of P50,000.00 as and for attorneys fees and to pay the cost of suit.*37+ Unrelenting, Muoz filed a Motion for Clarificatory Order, pointing out that the spouses Chan are the present occupants of the subject property. The Order dated August 21, 1995 of the RTC-Branch 95 directed the deputy sheriff to deliver the subject property to Muoz, and this could not be done unless the spouses Chan are evicted therefrom. Resultantly, Muoz prayed that a clarificatory order be made categorically stating that the spouses Samuel Go Chan and Aida C. Chan, and all persons claiming right under them, are likewise evicted from the subject premises pursuant to the Order of 21 August 1995.*38+ Once more, the RTC-Branch 95 denied Muozs motion in its Order dated October 3, 1995. The RTCBranch 95 reiterated the rule that after the judgment had become final, only clerical errors, as distinguished from substantial errors, can be amended by the court. Furthermore, when the decision or judgment sought to be amended is promulgated by an appellate court, it is beyond the power of the trial court to change, amplify, enlarge, alter, or modify. Ultimately, the RTC-Branch 95 pronounced that it was restrained x x x to consider as mere clerical error the exclusion of spouses Samuel Go Chan and Aida C. Chan in the Decision of the Court dated July 19, 1991, a final judgment, which judgment cannot now be made to speak a different language.*39+ Attributing grave abuse of discretion on the part of the RTC-Branch 95 in issuing its Orders dated August 21, 1995 and October 3, 1995, Muoz filed before this Court a Petition for Certiorari and Mandamus, which was remanded to the Court of Appeals in observance of the hierarchy of courts, where it was docketed as CA-G.R. SP No. 40019. The Court of Appeals promulgated its Decision on September 29, 2000 dismissing Muozs petition. The Court of Appeals agreed with the RTC-Branch 95 that the spouses Chan could not be covered by the alias writ of execution considering that they were not impleaded in Civil Case No. Q-28580. The cancellation of TCT No. 53297 in the spouses Chans names could not be done apart from a separate action exclusively for that matter. The spouses Chan are deemed buyers in good faith and for value as the certificate of title delivered to them by BPI Family was free from any liens or encumbrances or any mark that would have raised the spouses Chans suspicions. Every person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendors acquisition of the property. The Court of Appeals denied Muozs motion for reconsideration in a Resolution dated January 5, 2001. Muoz comes before this Court via the present consolidated petitions. Muoz posits that the final judgment and writ of execution of RTC-Branch 95 in Civil Case No. Q-28580 bind not only Emilia M. Ching and the spouses Go, but also their successors-in-interest, assigns, or persons acting on their behalf, namely, BPI Family and spouses Chan. The spouses Chan cannot be deemed innocent purchasers for value of the property since the cancellation of the adverse claim and notice of lis pendens on the spouses Gos TCT No. 258977 is completely null and void.

Muoz further argues that the MeTC Order dated May 16, 1994 in Civil Case No. 8286 correctly ordered the issuance of a writ of preliminary mandatory injunction restoring possession of the subject property to her, as she had already acquired prior possession of the said property upon the execution of the final judgment in Civil Case No. Q-28580. Also, the spouses Chans petition for certiorari before the RTCBranch 88, docketed as Civil Case No. Q-94-20632, challenging the Order dated May 16, 1994 of the MeTC in Civil Case No. 8286, is a prohibited pleading under the Rules of Summary Procedure; and the RTC-Branch 88 and the Court of Appeals should be faulted for giving due course to the said petition even in the absence of jurisdiction. On the other hand, in their comments to the two petitions at bar, the spouses Chan, Atty. Yabut, and BPI Family assert that given the peculiar factual circumstances of the case, RTC-Branch 88 was justified in taking cognizance of Samuel Go Chan and Atty. Yabuts petition for certiorari in Civil Case No. Q-9420632; that Muoz is estopped from questioning the jurisdiction of RTC-Branch 88 after participating in the proceedings in Civil Case No. Q-94-20632; that the spouses Chans title to the subject property is not affected by the final judgment of RTC-Branch 95 in Civil Case No. Q-28580, and the said judgment cannot be executed against the spouses Chan since they are neither parties to the case, nor are they the successors-in-interest, assigns, or persons acting on behalf of Emilia M. Ching or the spouses Go; that BPI Family and consequently, the spouses Chan, obtained title to the subject property as innocent purchasers for value, there being no notice of any infirmity in said title; and that Muoz is guilty of forum shopping for filing her petition in G.R. No. 146718 even while her petition in G.R. No. 142676 is still pending. II RULING For the sake of expediency, we will be discussing first the merits of the petition in G.R. No. 146718. G.R. No. 146718 Civil Case No. Q-28580 involved Muozs complaint for the annulment of the deeds of absolute sale dated December 28, 1972[40] and July 16, 1979,[41+ the cancellation of the spouses Gos TCT No. 258977, and the restoration and revival of Muozs TCT No. 186306. The final judgment of RTC-Branch 95 in Civil Case No. Q-28580 was in favor of Muoz and against Emilia M. Ching and the spouses Go. The problem arose when during the pendency of the said case, title and possession of the subject property were transferred from the spouses Go, to BPI Family, and finally, to the spouses Chan. BPI Family and the spouses Chan were never impleaded as parties and were not referred to in the dispositive portion of the final judgment in Civil Case No. Q-28580. Muoz questions in G.R. No. 146718: (1) the Order dated August 21, 1995 denying her Motion for Contempt against the spouses Chan, Second Motion for Contempt against Samuel Go Chan and Atty. Yabut, and Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297; and (2) the Order dated October 3, 1995 denying her Motion for Clarificatory Order, both issued by the RTC-Branch 95 in Civil Case No. Q-28580, and upheld by the Court of Appeals

in CA-G.R. SP No. 40019. In sum, Muoz was seeking in her aforementioned motions: (1) a categorical order from the RTC-Branch 95 that the final judgment in Civil Case No. Q-28580 be executed against the spouses Chan; and (2) the surrender and cancellation of the spouses Chans TCT No. 53297 and restoration of Muozs TCT No. 186306. There is no merit in Muozs petition in G.R. No. 146718. Civil Case No. Q-28580 is an action for reconveyance of real property. In Heirs of Eugenio Lopez, Sr. v. Enriquez,[42] we described an action for reconveyance as follows: An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in anothers name. Although the decree is recognized as incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens. As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and not with the land registration court. Reconveyance is always available as long as the property has not passed to an innocent third person for value. A notice of lis pendens may thus be annotated on the certificate of title immediately upon the institution of the action in court. The notice of lis pendens will avoid transfer to an innocent third person for value and preserve the claim of the real owner.[43] (Emphases ours.)

The rule is that: (1) a judgment in rem is binding upon the whole world, such as a judgment in a land registration case or probate of a will; and (2) a judgment in personam is binding upon the parties and their successors-in-interest but not upon strangers. A judgment directing a party to deliver possession of a property to another is in personam; it is binding only against the parties and their successors-ininterest by title subsequent to the commencement of the action. An action for declaration of nullity of title and recovery of ownership of real property, or re-conveyance, is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to a tangible thing. Any judgment therein is binding only upon the parties properly impleaded.[44] Since they were not impleaded as parties and given the opportunity to participate in Civil Case No. Q28580, the final judgment in said case cannot bind BPI Family and the spouses Chan. The effect of the said judgment cannot be extended to BPI Family and the spouses Chan by simply issuing an alias writ of execution against them. No man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by any judgment rendered by the court. In the same manner, a writ of execution can be issued only against a party and not against one who did not have his day in court. Only real parties in interest in an action are bound by the judgment therein and by writs of execution issued pursuant thereto.[45] A similar situation existed in Dino v. Court of Appeals,[46] where we resolved that:

As the registered owner of the subject property, petitioners are not bound by decision in Civil Case No. R-18073 for they were never summoned in said case and the notice of lis pendens annotated on TCT No. 73069 was already cancelled at the time petitioners purchased the subject property. While it is true that petitioners are indispensable parties in Civil Case No. R-18073, without whom no complete relief could be accorded to the private respondents, the fact still remains that petitioners were never actually joined as defendants in said case. Impleading petitioners as additional defendants only in the execution stage of said case violated petitioners right to due process as no notice of lis pendens was annotated on the existing certificate of title of said property nor were petitioners given notice of the pending case, therefore petitioners remain strangers in said case and the Order of the trial court involving them is null and void, considering that petitioners are innocent purchasers of the subject property for value.[47] We further stress that Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, clearly provides that *a+ certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. Herein, several Torrens titles were already issued after the cancellation of Muozs. Certificates of title had been successively issued to Emilia M. Ching, spouses Go, BPI Family, and spouses Chan. Civil Case No. Q-28580, in which a final judgment had already been rendered, specifically challenged the validity of the certificates of title of Emilia M. Ching and the spouses Go only. To have the present certificate of title of the spouses Chan cancelled, Muoz must institute another case directly attacking the validity of the same. The fact that the titles to the subject property of Emilia M. Ching and the spouses Go were already declared null and void ab initio by final judgment in Civil Case No. Q-28580 is not enough, for it does not automatically make the subsequent titles of BPI Family and the spouses Chan correspondingly null and void ab initio. It has long been ingrained in our jurisprudence that a void title may become the root of a valid title if the derivative title was obtained in good faith and for value. Following the principle of indefeasibility of a Torrens title, every person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendors acquisition of the property. The rights of innocent third persons who relied on the correctness of the certificate of title and acquired rights over the property covered thereby cannot be disregarded and the courts cannot order the cancellation of such certificate for that would impair or erode public confidence in the Torrens system of land registration.[48] Hence, we pronounced in Republic v. Agunoy, Sr.[49]: Here, it bears stressing that, by petitioner's own judicial admission, the lots in dispute are no longer part of the public domain, and there are numerous third, fourth, fifth and more parties holding Torrens titles in their favor and enjoying the presumption of good faith. This brings to mind what we have reechoed in Pino v. Court of Appeals and the cases therein cited:

[E]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger.[50] (Emphases ours.) Although the RTC-Branch 95 had declared with finality in Civil Case No. Q-28580 that the titles of Emilia M. Ching and the spouses Go were null and void, there is yet no similar determination on the titles of BPI Family and the spouses Chan. The question of whether or not the titles to the subject property of BPI Family and the spouses Chan are null and void, since they are merely the successors-in-interest, assigns, or privies of Emilia M. Ching and the spouses Go, ultimately depends on the issue of whether or not BPI Family and the spouses Chan obtained their titles to the subject property in bad faith, i.e., with notice of Muozs adverse claim and knowledge of the pendency of Civil Case No. Q-28580. The latter is a factual issue on which we cannot rule in the present petition, not only because we are not a trier of facts, but more importantly, because it was not among the issues raised and tried in Civil Case No. Q28580. In support of her prayer for an alias writ of execution against BPI Family and the spouses Go, Muoz cites our ruling in Calalang v. Register of Deeds of Quezon City,[51] in relation to De la Cruz v. De la Cruz.[52] De la Cruz is an action for reconveyance of Lot 671 founded on breach of trust filed by Augustina de la Cruz, et al., against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo (INK). We upheld the validity of the sale of Lot 671 by Lucia to INK, and thereby validated the title of INK to the said property. Calalang actually involved two petitions: (1) a special civil action for certiorari and prohibition originally filed by Virginia Calalang (Calalang) before this Court, and (2) a petition for injunction with damages originally filed by Augusto M. de Leon (De Leon), et al., before the RTC and docketed as Civil Case No. Q45767. Calalang and De Leon, et al., assert titles that were adverse to that of INK. De Leon, et al., in particular, claim that their titles to Lot 671 were derived from Amando Clemente. Calalang and De Leon, et al., sought from the court orders enjoining INK from building a fence to enclose Lot 671; requiring the Administrator of the National Land Titles and Deeds Registration Administration (NLTDRA) to conduct an investigation of the anomaly regarding Lucias reconstituted title to Lot 671; and dismissing the proceedings instituted by the Register of Deeds for the cancellation of their titles. We dismissed the petitions of Calalang and De Leon, et al., on the ground of res judicata, the legality or validity of the title of INK over Lot 671 had been settled with finality in De la Cruz. De la Cruz was applied to Calalang and De Leon, et al., since the facts on which such decision was predicated continued to be the facts on which the petitions of Calalang and De Leon, et al., were based. Muozs reliance on Calalang is misplaced. There are substantial differences in the facts and issues involved in Calalang and the present case.

In Calalang, there is duplication or overlapping of certificates of title issued to different persons over the same property. We already upheld in De la Cruz the validity of the certificate of title of INK over Lot 671, which effectively prevents us from recognizing the validity of any other certificate of title over the same property. In addition, Lucia, the predecessor-in-interest of INK, had her certificate of title judicially reconstituted. The judicial reconstitution of title is a proceeding in rem, constituting constructive notice to the whole world. Hence, we rejected the petitions of Calalang and De Leon, et al., to enjoin INK from building a fence enclosing Lot 671, and the concerned public authorities from instituting appropriate proceedings to have all other certificates of title over Lot 671 annulled and cancelled. In the instant case, there has been no duplication or overlapping of certificates of title. The subject property has always been covered by only one certificate of title at a time, and at present, such certificate is in the spouses Chans names. As we have previously discussed herein, Muoz cannot have the spouses Chans TCT No. 53297 cancelled by a mere motion for the issuance of an alias writ of execution in Civil Case No. Q-28580, when the spouses Chan were not parties to the case. Civil Case No. Q-28580 was a proceeding in personam, and the final judgment rendered therein declaring null and void the titles to the subject property of Emilia M. Ching and the spouses Go should bind only the parties thereto. Furthermore, despite the void titles of Emilia M. Ching and the spouses Go, the derivative titles of BPI Family and the spouses Chan may still be valid provided that they had acquired the same in good faith and for value. More in point with the instant petition is Pineda v. Santiago.[53] Pineda still involved Lot 671. INK sought from the RTC a second alias writ of execution to implement the judgment in Calalang against Conrado Pineda (Pineda), et. al. In opposing the issuance of such writ, Pineda, et al., asserted that they held titles to Lot 671 adverse to those of Lucia and INK and that they were not parties in De la Cruz or in Calalang. In its assailed order, the RTC granted the second alias writ of execution on the basis that the issue of ownership of Lot 671 was already determined with finality in favor of Lucia and INK. The writ ordered the deputy sheriff to eject Pineda, et al., from Lot 671. When the matter was brought before us, we annulled the assailed order as the writ of execution issued was against Pineda, et al., who were not parties to Civil Case No. Q-45767, the ejectment suit instituted by De Leon, et al. We elaborated in Pineda that: Being a suit for injunction, Civil Case No. Q-45767 partakes of an action in personam. In Domagas v. Jensen, we have explained the nature of an action in personam and enumerated some actions and proceedings which are in personam, viz: The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions

to fasten a pecuniary liability on him. An action in personam is said to be one which has for its object a judgment against the person, as distinguished from a judgment against the propriety to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of real property are in personam. The respondent judge's jurisdiction is, therefore, limited to the parties in the injunction suit. To stress, the petition for injunction, docketed as Civil Case No. Q-45767, was filed only by therein petitioners Augusto M. de Leon, Jose de Castro, Jose A. Panlilio, Felicidad Vergara Vda. De Pineda, Fernando L. Vitug I, Fernando M. Vitug II, Fernando M. Vitug III, and Faustino Tobia, and later amended to include Elena Ostrea and Feliza C. Cristobal-Generoso as additional petitioners therein, against Bishop Erao Manalo, in his capacity as titular and spiritual head of I.N.K. Herein petitioners Conrado Pineda, et al. never became parties thereto. Any and all orders and writs of execution, which the respondent judge may issue in that case can, therefore, be enforced only against those parties and not against the herein petitioners Conrado Pineda, et al. In issuing the assailed Order dated 22 April 1998, which directed the issuance of the 2nd Alias Writ of Execution to eject non-parties (herein petitioners), the respondent judge clearly went out of bounds and committed grave abuse of discretion. The nature of the injunction suit Civil Case No. Q-45767 as an action in personam in the RTC remains to be the same whether it is elevated to the CA or to this Court for review. An action in personam does not become an action in rem just because a pronouncement confirming I.N.K.'s title to Lot 671 was made by this Court in the Calalang decision. Final rulings may be made by this Court, as the Highest Court of the Land, in actions in personam but such rulings are binding only as against the parties therein and not against the whole world. Here lies another grave abuse of discretion on the part of the respondent judge when he relied on the Calalang decision in his assailed Order dated 07 May 1998 as if it were binding against the whole world, saying: After evaluating the arguments of both parties, decisive on the incident is the decision of the Supreme Court in favor of the respondent I.N.K., represented by its titular and spiritual head Bishop Erao G. Manalo, sustaining its ownership over the subject Lot 671. This Court could do no less but to follow and give substantial meaning to its ownership which shall include all dominical rights by way of a Writ of Execution. To delay the issuance of such writ is a denial of justice due the I.N.K. As a final word, this decision shall not be misinterpreted as disturbing or modifying our ruling in Calalang. The final ruling on I.N.K.'s ownership and title is not at all affected. Private respondent I.N.K., as the true and lawful owner of Lot 671 as ruled by the Court in Calalang, simply has to file the proper action against the herein petitioners to enforce its property rights within the bounds of the law and our rules. I.N.K.'s recourse of asking for the issuance of an alias writ of execution against the petitioners in Civil Case No. Q-45767 and the respondent judge's orders in said case, granting I.N.K.'s prayer and

enforcing the alias writ of execution against the present petitioners, constitutes blatant disregard of very fundamental rules and must therefore be stricken down.[54] (Emphases ours.) Consistent with Pineda, and as appositely recommended by the RTC-Branch 95 and the Court of Appeals in the present case, Muozs legal remedy is to directly assail in a separate action the validity of the certificates of title of BPI Family and the spouses Chan. G.R. No. 142676 G.R. No. 142676 is Muozs appeal of the dismissal of Civil Case No. 8286, the forcible entry case she instituted against Samuel Go Chan and Atty. Yabut before the MeTC. There is forcible entry or desahucio when one is deprived of physical possession of land or building by means of force, intimidation, threat, strategy or stealth. In such cases, the possession is illegal from the beginning and the basic inquiry centers on who has the prior possession de facto. In filing forcible entry cases, the law tells us that two allegations are mandatory for the municipal court to acquire jurisdiction: first, the plaintiff must allege prior physical possession of the property, and second, he must also allege that he was deprived of his possession by any of the means provided for in Section 1, Rule 70 of the Rules of Court, i.e., by force, intimidation, threat, strategy, or stealth. It is also settled that in the resolution thereof, what is important is determining who is entitled to the physical possession of the property. Indeed, any of the parties who can prove prior possession de facto may recover such possession even from the owner himself since such cases proceed independently of any claim of ownership and the plaintiff needs merely to prove prior possession de facto and undue deprivation thereof.[55] Title is never in issue in a forcible entry case, the court should base its decision on who had prior physical possession. The main thing to be proven in an action for forcible entry is prior possession and that same was lost through force, intimidation, threat, strategy, and stealth, so that it behooves the court to restore possession regardless of title or ownership.[56] We more extensively discussed in Pajuyo v. Court of Appeals[57] that: Ownership or the right to possess arising from ownership is not at issue in an action for recovery of possession. The parties cannot present evidence to prove ownership or right to legal possession except to prove the nature of the possession when necessary to resolve the issue of physical possession. The same is true when the defendant asserts the absence of title over the property. The absence of title over the contested lot is not a ground for the courts to withhold relief from the parties in an ejectment case.

The only question that the courts must resolve in ejectment proceedings is - who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It does not even matter if a partys title to the property is questionable, or when both parties intruded into public land and their applications to own the land have yet to be approved by the proper government agency. Regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful withholding of property allowed. Courts will always uphold respect for prior possession. Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to physical possession.[58] (Emphases ours.) Based on the foregoing, we find that the RTC-Branch 88 erred in ordering the dismissal of Civil Case No. 8286 even before completion of the proceedings before the MeTC. At the time said case was ordered dismissed by RTC-Branch 88, the MeTC had only gone so far as holding a hearing on and eventually granting Muozs prayer for the issuance of a writ of preliminary mandatory injunction. Muoz alleges in her complaint in Civil Case No. 8286 that she had been in prior possession of the subject property since it was turned-over to her by the sheriff on January 10, 1994, pursuant to the Alias Writ of Execution issued by the RTC-Branch 95 to implement the final judgment in Civil Case No. Q28580. The factual issue of who was in prior possession of the subject property should be litigated between the parties regardless of whether or not the final judgment in Civil Case No. Q-28580 extended to the spouses Chan. Hence, the pendency of the latter issue in Civil Case No. Q-28580 before the RTCBranch 95 did not warrant the dismissal of Civil Case No. 8286 before the MeTC on the ground of litis pendentia. The two cases could proceed independently of one another. Samuel Go Chan and Atty. Yabut aver that the spouses Chan have never lost possession of the subject property since acquiring the same from BPI Family in 1990. This is a worthy defense to Muozs complaint for forcible entry, which Samuel Go Chan and Atty. Yabut should substantiate with evidence in the continuation of the proceedings in Civil Case No. 8286 before the MeTC. In addition, Civil Case No. 8286, a forcible entry case, is governed by the Revised Rule on Summary Procedure, Section 19 whereof provides: SEC. 19. Prohibited pleadings and motions. The following pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule: (g) Petition for certiorari, mandamus, or prohibition against any interlocutory order issued by the court.

The purpose of the Rule on Summary Procedure is to achieve an expeditious and inexpensive determination of cases without regard to technical rules. Pursuant to this objective, the Rule prohibits petitions for certiorari, like a number of other pleadings, in order to prevent unnecessary delays and to expedite the disposition of cases.[59] Interlocutory orders are those that determine incidental matters that do not touch on the merits of the case or put an end to the proceedings.[60] An order granting a preliminary injunction, whether mandatory or prohibitory, is interlocutory and unappealable.[61] The writ of preliminary mandatory injunction issued by the MeTC in its Order dated May 16, 1994, directing that Muoz be placed in possession of the subject property during the course of Civil Case No. 8286, is an interlocutory order. Samuel Go Chan and Atty. Yabut assailed the said order before the RTCBranch 88 via a petition for certiorari, docketed as Civil Case No. Q-94-20632. The RTC-Branch 88 gave due course to said petition, and not only declared the MeTC Order dated May 16, 1994 null and void, but went further by dismissing Civil Case No. 8286. The prohibition in Section 19(g) of the Revised Rule on Summary Procedure is plain enough. Its further exposition is unnecessary verbiage.[62] The petition for certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 is clearly covered by the said prohibition, thus, it should have been dismissed outright by the RTC-Branch 88. While the circumstances involved in Muozs forcible entry case against Samuel Go Chan and Atty. Yabut are admittedly very peculiar, these are insufficient to except the petition for certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 from the prohibition. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.[63] Nonetheless, even though the peculiar circumstances extant herein do not justify the dismissal of Civil Case No. 8286, they do require limiting pro hac vice the reliefs the MeTC may accord to Muoz in the event that she is able to successfully prove forcible entry by Samuel Go Chan and Atty. Yabut into the subject property (i.e., that the sheriff actually turned-over to Muoz the possession of the subject property on January 10, 1994, and that she was deprived of such possession by Samuel Go Chan and Atty. Yabut on February 2, 1994 by means of force, intimidation, threat, strategy, and stealth). Taking into account our ruling in G.R. No. 146718 that the final judgment in Civil Case No. Q-28580 does not extend to the spouses Chan, who were not impleaded as parties to the said case the MeTC is precluded from granting to Muoz relief, whether preliminary or final, that will give her possession of the subject property. Otherwise, we will be perpetuating the wrongful execution of the final judgment in Civil Case No. Q-28580. Based on the same reason, Muoz can no longer insist on the reinstatement of the MeTC Order dated May 16, 1994 granting a preliminary mandatory injunction that puts her in possession of the subject property during the course of the trial. Muoz though may recover damages if she is able to prove wrongful deprivation of possession of the subject property from February 2, 1994 until the finality of this decision in G.R. No. 146718.

WHEREFORE, in view of the foregoing, we: (1) GRANT Emerita Muozs petition in G.R. No. 142676. We REVERSE and SET ASIDE the Decision dated July 21, 1995 and Resolution dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders dated June 10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 of Quezon City in Civil Case No. Q-94-20632. We DIRECT the Metropolitan Trial Court, Branch 33 of Quezon City to reinstate Emerita Muozs complaint for forcible entry in Civil Case No. 8286 and to resume the proceedings only to determine whether or not Emerita Muoz was forcibly deprived of possession of the subject property from February 2, 1994 until finality of this judgment, and if so, whether or not she is entitled to an award for damages for deprivation of possession during the aforementioned period of time; and (2) DENY Emerita Munozs petition in G.R. No. 146718 for lack of merit, and AFFIRM the Decision dated September 29, 2000 and Resolution dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which in turn, affirmed the Orders dated August 21, 1995 and October 3, 1995 of the Regional Trial Court, Branch 95 of Quezon City in Civil Case No. Q-28580. SO ORDERED.

JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS BANK, ANGELO V. MANAHAN, FRANCISCO C. ZARATE, PERLITA A. URBANO and ATTY. EDWARD MARTIN, respondents.

DECISION

CHICO-NAZARIO, J.: Before Us is a Petition for Review on Certiorari1 assailing the Decision2 dated 31 July 2002 of the Court of Appeals in CA-G.R. SP No. 62625, the decretal portion of which reads: WHEREFORE, the petition is GRANTED and the assailed orders dated June 7, 2000, August 9, 2000 and November 8, 2000 are SET ASIDE. Respondent judge is directed to DISMISS Civil Case No. 67878 on the ground of improper venue.3 Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners of Noahs Ark International, Noahs Ark Sugar Carriers, Noahs Ark Sugar Truckers, Noahs Ark Sugar Repacker, Noahs Ark Sugar Insurers, Noahs Ark Sugar Terminal, Noahs Ark Sugar uilding, and Noahs Ark Sugar Refinery.4 Sometime in August 1996, petitioner Jimmy T. Go and Alberto T. Looyuko applied for an Omnibus Line accommodation with respondent United Coconut Planters Bank (UCPB) in the amount of Nine Hundred Million (P900,000,000) Pesos,5 and was favorably acted upon by the latter. The transaction was secured by Real Estate Mortgages over parcels of land, covered by Transfer Certificate of Title (TCT) No. 64070, located at Mandaluyong City with an area of 24,837 square meters, and registered in the name of Mr. Looyuko; and TCT No. 3325, also located at Mandaluyong City with an area of 14,271 square meters, registered in the name of Noahs Ark Sugar Refinery. On 21 July 1997, the approved Omnibus Line accommodation granted to petitioner was subsequently cancelled6 by respondent UCPB. As a consequence, petitioner Jimmy T. Go demanded from UCPB the return of the two (2) TCTs (No. 64070 and No. 3325) covered by Real Estate Mortgages earlier executed. UCPB refused to return the same and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized on 22 July 1997 and caused the registration thereof before the Registry of Deeds of Mandaluyong City on 02 September 1997.

On 15 June 1999, respondent UCPB filed with the Office of the Clerk of Court and Ex-Officio Sheriff of Mandaluyong City an extrajudicial foreclosure of real estate mortgage7 covered by TCT No. 64070, for nonpayment of the obligation secured by said mortgage. As a result, the public auction sale of the mortgaged property was set on 11 April 2000 and 03 May 2000. To protect his interest, petitioner Jimmy T. Go filed a complaint for Cancellation of Real Estate Mortgage and damages, with prayer for temporary restraining order and/or writ of preliminary injunction, against respondent bank and its officers, namely, Angelo V. Manahan, Francisco C. Zarate, Perlita A. Urbano and Atty. Edward E. Martin, together with Ex-Officio Sheriff Lydia G. San Juan and Sheriff IV Helder A. Dyangco, with the Regional Trial Court of Pasig City, Branch 266, docketed as Civil Case No. 67878. The complaint was subsequently amended8 on 22 May 2000. The amended complaint alleged, among other things, the following: that petitioner Jimmy T. Go is a co-owner of the property covered by TCT No. 64070, although the title is registered only in the name of Looyuko; that respondent bank was aware that he is a co-owner as he was asked to sign two deeds of real estate mortgage covering the subject property; that the approved omnibus credit line applied for by him and Looyuko did not materialize and was cancelled by respondent bank on 21 July 1997, so that the pre-signed real estate mortgages were likewise cancelled; that he demanded from respondent bank that TCTs No. 64070 and No. 3325 be returned to him, but respondent bank refused to do so; that despite the cancellation of the omnibus credit line on 21 July 1997, respondent bank had the two deeds of real estate mortgage dated and notarized on 22 July 1997 and caused the extrajudicial foreclosure of mortgage constituted on TCT No. 64070; that the auction sale scheduled on 11 April 2000 and 03 May 2000 be enjoined; that the two real estate mortgages be cancelled and TCTs No. 64070 and No. 3325 be returned to him; and that respondent bank and its officers be ordered to pay him moral and exemplary damages and attorneys fees. On 07 June 2000, respondent bank, instead of filing an answer, filed a motion to dismiss9 based on the following grounds: 1) that the court has no jurisdiction over the case due to nonpayment of the proper filing and docket fees; 2) that the complaint was filed in the wrong venue; 3) an indispensable party/real party in interest was not impleaded and, therefore, the complaint states no cause of action; 4) that the complaint was improperly verified; and 5) that petitioner is guilty of forum shopping and submitted an insufficient and false certification of non-forum shopping. On 07 June 2000, the trial court issued an order10 granting petitioners application for a writ of preliminary injunction. Correspondingly, the auction sale, scheduled on 11 April 2000 and 03 May 2000, was enjoined. On 09 August 2000, the trial court denied11 respondent banks motion to dismiss Civil Case No. 67878. A motion for reconsideration12 was filed, but the same was likewise denied in an Order13 dated 08 November 2000. Respondent bank questioned said orders before the Court of Appeals via a petition for certiorari14 dated 03 January 2001, alleging that the trial court acted without or in excess of jurisdiction or with grave abuse of discretion in issuing an order denying the motion to dismiss and the motion for reconsideration thereof.

On 31 July 2002, the Court of Appeals15 set aside the Orders dated 07 June 2000, 09 August 2000 and 08 November 2000 issued by the trial court and directed the trial court to dismiss Civil Case No. 67878 on the ground of improper venue. A motion for reconsideration was filed by petitioner,16 which was denied in an order dated 14 November 2002.17 Hence, this petition for review on certiorari.18 On 16 June 2003, the Court gave due course to the petition, and required19 the parties to file their respective memoranda. Respondents filed their Joint Memorandum on 27 August 2003, while petitioner filed his on 25 September 2003 upon prior leave of court for extension. With leave of this Court, private respondents filed their reply to petitioners memorandum. In his memorandum, petitioner raised a lone issue: WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY THE LAW AND ESTABLISHED JURISPRUDENCE ON THE MATTER BY ISSUING THE QUESTIONED RESOLUTIONS FINDING THAT THE CASE A QUO IS A "REAL ACTION." Simply put, the issue to be resolved in this case is whether petitioners complaint for cancellation of real estate mortgage is a personal or real action for the purpose of determining venue. In a real action, the plaintiff seeks the recovery of real property, or as provided for in Section 1, Rule 4,20 a real action is an action affecting title to or possession of real property, or interest therein. These include partition or condemnation of, or foreclosure of mortgage on, real property. The venue for real actions is the same for regional trial courts and municipal trial courts -- the court which has territorial jurisdiction over the area where the real property or any part thereof lies.21 Personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property.22 The venue for personal actions is likewise the same for the regional and municipal trial courts -- the court of the place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of the plaintiff, as indicated in Section 2 of Rule 4.23 It is quite clear then that the controlling factor in determining venue for cases of the above nature is the primary objective for which said cases are filed. Thus: 1. In Commodities Storage & Ice Plant Corp. v. Court of Appeals,24 this Court ruled that "an action to redeem by the mortgage debtor affects his title to the foreclosed property. If the action is seasonably made, it seeks to erase from the title of the judgment or mortgage debtor the lien created by registration of the mortgage and sale. If not made seasonably, it may seek to recover ownership to the land since the purchasers inchoate title to the

property becomes consolidated after [the] expiration of the redemption period. Either way, redemption involves the title to the foreclosed property. It is a real action." 2. In Fortune Motors, (Phils.), Inc., v. Court of Appeals,25 this Court quoting the decision of the Court of Appeals ruled that "since an extrajudicial foreclosure of real property results in a conveyance of the title of the property sold to the highest bidder at the sale, an action to annul the foreclosure sale is necessarily an action affecting the title of the property sold. It is therefore a real action which should be commenced and tried in the province where the property or part thereof lies." 3. In Punsalan, Jr. v. Vda. de Lacsamana,26 this court ruled that "while it is true that petitioner does not directly seek the recovery . . . of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioners primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue which was timely raised." 4. In Ruiz v. J. M. Tuason Co., Inc., et al.,27 the court ruled that "although [a] complaint is entitled to be one for specific performance, yet the fact that [complainant] asked that a deed of sale of a parcel of land . . . be issued in his favor and that a transfer certificate of title covering said land be issued to him, shows that the primary objective and nature of the action is to recover the parcel of land itself because to execute in favor of complainant the conveyance requested there is need to make a finding that he is the owner of the land which in the last analysis resolves itself into an issue of ownership. Hence, the action must be commenced in the province where the property is situated . . . ." 5. In Dr. Antonio A. Lizares, Inc. v. Hon. Hermogenes Caluag,28 this Court ruled that "an action praying that defendant be ordered `to accept the payment being made by plaintiff for the lot which the latter contracted to buy on installment basis from the former, to pay plaintiff compensatory damages and attorneys fees and to enjoin defendant and his agents from repossessing the lot in question, is one that affects title to the land under Section 3 of Rule 5, of the Rules of Court, and shall be commenced and tried in the province where the property or any part thereof lies, because, although the immediate remedy is to compel the defendant to accept the tender of payment allegedly made, it is obvious that this relief is merely the first step to establish plaintiffs title to [the] real property." 6. In Land Tenure Administration, et al. v. The Honorable Higinio B. Macadaeg and Alejandro T. Lim,29 this Court ruled that "where the lessee seeks to establish an interest in an hacienda that runs with the land and one that must be respected by the purchaser of the land even if the latter is not a party to the original lease contract, the question of whether or not the standing crop is immovable property become[s] irrelevant, for venue is determined by the nature of the principal claim. Since the lessee is primarily interested in

establishing his right to recover possession of the land for the purpose of enabling him to gather his share of the crops, his action is real and must be brought in the locality where the land is situated." 7. In Espineli & Mojica v. Hon. Santiago and Vda. de Ramirez,30 the court ruled that "although the main relief sought in the case at bar was the delivery of the certificate of title, said relief, in turn, entirely depended upon who, between the parties, has a better right to the lot in question. As it is not possible for the court to decide the main relief, without passing upon the claim of the parties with respect to the title to and possession of the lot in question, the claim shall be determined x x x in the province where [the] said property or any part thereof lies." The case of Carandang v. Court of Appeals,31 is more particularly instructive. There, we held that an action for nullification of the mortgage documents and foreclosure of the mortgaged property is a real action that affects the title to the property. Thus, venue of the real action is before the court having jurisdiction over the territory in which the property lies, which is the Court of First Instance of Laguna. Petitioner in this case contends that a case for cancellation of mortgage is a personal action and since he resides at Pasig City, venue was properly laid therein. He tries to make a point by alluding to the case of Francisco S. Hernandez v. Rural Bank of Lucena.32 Petitioners reliance in the case of Francisco S. Hernandez v. Rural ank of Lucena33 is misplaced. Firstly, said case was primarily an action to compel the mortgagee bank to accept payment of the mortgage debt and to release the mortgage. That action, which is not expressly included in the enumeration found in Section 2(a) of Rule 4 of the Old Civil Procedure and now under Section 1, Rule 4 of the 1997 Rules of Civil Procedure, does not involve titles to the mortgaged lots. It is a personal action and not a real action. The mortgagee has not foreclosed the mortgage. The plaintiffs title is not in question. They are in possession of the mortgaged lots. Hence, the venue of the plaintiffs personal action is the place where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. In the case at bar, the action for cancellation of real estate mortgage filed by herein petitioner was primarily an action to compel private respondent bank to return to him the properties covered by TCTs No. 64070 and No. 3325 over which the bank had already initiated foreclosure proceedings because of the cancellation by the said respondent bank of the omnibus credit line on 21 July 1997. The prime objective is to recover said real properties. Secondly, Carandang distinctly articulated that the ruling in Hernandez does not apply where the mortgaged property had already been foreclosed. Here, and as correctly pointed out by the appellate court, respondent bank had already initiated extrajudicial foreclosure proceedings, and were it not for the timely issuance of a restraining order secured by petitioner Go in the lower court, the same would have already been sold at a public auction. In a relatively recent case, Asset Privatization Trust v. Court of Appeals,34 it was succinctly stated that the prayer for the nullification of the mortgage is a prayer affecting real property, hence, is a real action.

In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real action, considering that a real estate mortgage is a real right and a real property by itself.35 An action for cancellation of real estate mortgage is necessarily an action affecting the title to the property. It is, therefore, a real action which should be commenced and tried in Mandaluyong City, the place where the subject property lies. WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision dated 31 July 2002 and the Order dated 14 November 2002 denying the motion for reconsideration are hereby AFFIRMED. With costs. SO ORDERED.

G.R. No. 153267

June 23, 2005

CHINA BANKING CORPORATION, petitioner, vs. HON. COURT OF APPEALS and ARMED FORCES AND POLICE SAVINGS & LOAN ASSOCIATION, INC. (AFPSLAI), respondents. DECISION QUISUMBING, J.: For review is the D E C I S I O N1 dated November 23, 2001 of the Court of Appeals in CAG.R. SP No. 65740, affirming the Orders2 dated August 25, 2000 and April 17, 2001, of the Regional Trial Court of Quezon City, ranch 216, which denied petitioners motion to dismiss the civil action for a sum of money filed by private respondent. Likewise impugned is the Resolution3 dated April 24, 2002 of the Court of Appeals denying petitioners motion for reconsideration of said decision. The antecedent facts, as summarized by the appellate court, are as follows: On September 24, 1996, private respondent Armed Forces and Police Savings and Loan Association, Inc. (AFPSLAI) filed a complaint for a sum of money against petitioner China Banking Corporation (CBC) with the Regional Trial Court of Quezon City, Branch 216. In its Answer,4 the petitioner admitted being the registered owner of the Home Notes, the subject matter of the complaint. These are instruments of indebtedness issued in favor of a corporation named Fund Centrum Finance, Inc. (FCFI) and were sold, transferred and assigned to private respondent. Thus, the petitioner filed a Motion to Dismiss alleging that the real party in interest was FCFI, which was not joined in the complaint, and that petitioner was a mere trustee of FCFI. The trial court denied the motion to dismiss. Petitioner filed a motion for reconsideration, which the court a quo again denied. Petitioner elevated the case to the Court of Appeals through a Petition for Certiorari and Prohibition. The appellate court denied the petition for lack of merit. The petitioner then brought the matter to this Court via a Petition for Certiorari, under Rule 65. We dismissed the petition for being an improper remedy. Petitioner filed another Motion to Dismiss, this time invoking prescription. The lower court denied said motion to dismiss for lack of merit. It held that it was not apparent in the complaint whether or not prescription had set in. Thus, the trial judge directed petitioner to present its evidence. However, petitioner instead filed a motion for reconsideration, which the trial court denied, ratiocinating thus: This Court finds that there are conflicting claims on the issue of whether or not the action has already prescribed. A full blown trial is in order to determine fully the rights of the contending parties.5

Undeterred, petitioner impugned, through a petition under Rule 65, the two orders of the trial court claiming before the appellate court that: RESPONDENT COURT GROSSLY ERRED OR GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DENYING THE MOTION TO DISMISS AND DECLARING THAT PRESCRIPTION HAS NOT SET IN AGAINST PRIVATE RESPONDENT.6 In its assailed Decision, the Court of Appeals dismissed the petition, ruling that: Since the defense of prescription under the facts obtaining did not rest on solid ground, the trial court took a more judicious move to direct the defendant therein, herein petitioner, to present its evidence. It is self-evident that with the evidence of both parties adduced, the trial court could proceed to decide on the merits of the case including prescription, and thus avoid collateral proceedings such as the one at bar that unduly prolong the final determination of the controversy. After all, prescription subsists as a valid issue in the decision process. The trial court wanted precisely a definite and definitive-factual premise to determine whether or not the action has prescribed. Surely, such exercise of judgment is not grave abuse of discretion correctible by writ of certiorari. If ever he erred, it was error in judgment. Errors of judgment may be reviewed only by appeal.7 Undaunted, petitioner now comes to this Court raising a simple issue: WHETHER [OR] NOT THE DATE OF MATURITY OF THE INSTRUMENTS IS THE DATE OF ACCRUAL OF CAUSE OF ACTION.8 Petitioner insists that upon the face of the complaint, prescription has set in. It claims that the Home Notes annexed to the pleading bearing a uniform maturity date of December 2, 1983 indicate the date of accrual of the cause of action. Hence, argues petitioner, private respondents filing of the complaint for sum of money on September 24, 1996, is way beyond the prescriptive period of ten years under Article 11449 of the Civil Code. Citing Soriano v. Ubat,10 petitioner maintains the prescription period starts from the time when the creditor may file an action, not from the time he wishes to do so. However, private respondent counters that prescription is not apparent in the complaint because the maturity date of the Home Notes attached thereto is not the time of accrual of petitioners action. Relying on Elido, Sr. v. Court of Appeals,11 private respondent insists that the action accrued only on July 20, 1995, when demand to pay was made on petitioner. Private respondent also points out that since both the trial court and the appellate court found that prescription is not apparent on the face of the complaint, such factual finding should therefore be binding on this Court. We find the petition without merit. The Court of Appeals validly dismissed the petition, there being no grave abuse of discretion committed by the trial court in denying petitioners motion to dismiss the complaint on the ground of prescription.

Well-settled is the rule that since a cause of action requires, as essential elements, not only a legal right of the plaintiff and a correlative duty of the defendant but also "an act or omission of the defendant in violation of said legal right," the cause of action does not accrue until the party obligated refuses, expressly or impliedly, to comply with its duty.12 Otherwise stated, a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.13 It bears stressing that it is only when the last element occurs that a cause of action arises. Accordingly, a cause of action on a written contract accrues only when an actual breach or violation thereof occurs.14 Applying the foregoing principle to the instant case, we rule that private respondents cause of action accrued only on July 20, 1995, when its demand for payment of the Home Notes was refused by petitioner. It was only at that time, and not before that, when the written contract was breached and private respondent could properly file an action in court. The cause of action cannot be said to accrue on the uniform maturity date of the Home Notes as petitioner posits because at that point, the third essential element of a cause of action, namely, an act or omission on the part of petitioner violative of the right of private respondent or constituting a breach of the obligation of petitioner to private respondent, had not yet occurred. The subject Home Notes, in fact, specifically states that payment of the principal and interest due on the notes shall be made only upon presentation for notation and/or surrender for cancellation of the notes, thus: Payment of the principal amount and interest due on this Note shall be made by the Company at the principal office of the Trustee herein referred to or at such other office or agency that the Company may designate for the purpose, in such coin or currency of the Republic of the Philippines as at the time of payment shall be legal tender for payment of public and private debts, upon presentation for notation and/or surrender for cancellation of this Note. . . .15 (Emphasis supplied.) Thus, the maturity date of the Home Notes is not controlling as far as accrual of cause of action is concerned. What said date indicates is the time when the obligation matures, when payment on the Notes would commence, subject to presentation, notation and/or cancellation of those Notes. The date for computing when prescription of the action for collection begins to set in is properly a function related to the date of actual demand by the holder of the Notes for payment by the obligor, herein petitioner bank. Since the demand was made only on July 20, 1995, while the civil action for collection of a sum of money was filed on September 24, 1996, within a period of not more than ten years, such action was not yet barred by prescription.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated November 23, 2001, and the Resolution dated April 24, 2002, of the Court of Appeals are AFFIRMED. Costs against petitioner. SO ORDERED.

G.R. No. 167724

June 27, 2006

BPI FAMILY SAVINGS BANK, INC., Petitioner, vs. MARGARITA VDA. DE COSCOLLUELA, Respondent. DECISION CALLEJO, SR., J.: Assailed before this Court is a Petition for Review under Rule 45 of the Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 69732 granting respondents petition for certiorari, and its resolution denying petitioners motion for reconsideration. The Antecedents Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtained an agricultural sugar crop loan from the Far East Bank & Trust Co. (FEBTC) Bacolod City Branch (later merged with petitioner Bank of the Philippine Islands) for crop years 1997 and 1998.2 However, in the book of FEBTC, the loan account of the spouses was treated as a single account,3 which amounted to P13,592,492.00 as evidenced by 67 Promissory Notes4 executed on various dates, from August 29, 1996 to January 23, 1998, to wit: 1avvphil.net Promissory Note No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 02-052-960971 02-052-961095 02-052-961122 02-052-961205 02-052-961231 02-052-961252 02-052-961274 02-052-961310 02-052-961373 02-052-961442 Date 29 August 1996 23 September 1996 27 September 1996 11 October 1996 18 October 1996 24 October 1996 30 October 1996 8 November 1996 21 November 1996 6 December 1996 Amount (in Phil. Peso) 148,000 1,200,000 550,000 180,000 155,000 190,000 115,000 90,000 125,000 650,000

11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

02-052-961464 02-052-961498 02-052-961542 02-052-970018 02-052-970052 02-052-970078 02-052-970087 02-052-970131 02-052-970163 02-052-970190 02-052-970215 02-052-970254 02-052-970293 02-052-970345 02-052-970367 02-052-970402 02-052-970422 02-052-970453 02-052-970478 02-052-970502 02-052-970539 02-052-970558 02-052-970589 02-052-970770 02-052-970781

12 December 1996 19 December 1996 27 December 1996 3 January 1997 10 January 1997 15 January 1997 17 January 1997 23 January 1997 31 January 1997 7 February 1997 13 February 1997 20 February 1997 28 February 1997 7 March 1997 13 March 1997 21 March 1997 26 March 1997 4 April 1997 11 April 1997 17 April 1997 25 April 1997 30 April 1997 8 May 1997 25 June 1997 27 June 1997

240,000 164,000 200,000 120,000 185,000 80,000 170,000 180,000 220,000 110,000 170,000 140,000 130,000 90,000 50,000 160,000 190,000 82,000 150,000 80,000 145,000 135,000 54,000 646,492 160,000

36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60.

02-052-970819 02-052-970852 02-052-970926 02-052-970949 02-052-970975 02-052-970999 02-052-971028 02-052-971053 02-052-971073 02-052-971215 02-052-971253 02-052-971280 02-052-971317 02-052-971340 02-052-971351 02-052-971362 02-052-971394 02-052-971407 02-052-971449 02-052-971464 02-052-971501 02-052-971527 02-052-971538 02-052-971569 02-052-971604

4 July 1997 11 July 1997 1 August 1997 5 August 1997 8 August 1997 15 August 1997 22 August 1997 29 August 1997 4 September 1997 12 September 1997 19 September 1997 26 September 1997 2 October 1997 10 October 1997 15 October 1997 16 October 1997 24 October 1997 29 October 1997 6 November 1997 13 November 1997 20 November 1997 25 November 1997 28 November 1997 4 December 1997 12 December 1997

250,000 350,000 170,000 200,000 120,000 150,000 110,000 130,000 90,000 160,000 190,000 140,000 115,000 115,000 700,000 90,000 185,000 170,000 105,000 170,000 150,000 620,000 130,000 140,000 220,000

61. 62. 63. 64. 65. 66. 67.

02-052-971642 02-052-971676 02-052-971688 02-052-980019 02-052-980032 02-052-980064 02-052-980079

18 December 1997 23 December 1997 29 December 1997 7 January 1998 8 January 1998 15 January 1998 23 January 1998

185,000 117,000 100,000 195,000 170,000 225,000 176,000

The promissory notes listed under Nos. 1 to 33 bear the maturity date of February 9, 1998, with a 30-day extension of up to March 11, 1998, while those listed under Nos. 34 to 67 bear December 28, 1998 as maturity date. Meanwhile, on June 13, 1997, the spouses Coscolluela executed a real estate mortgage in favor of FEBTC over their parcel of land located in Bacolod City covered by Transfer Certificate of Title (TCT) No. T-109329 as security of loans on credit accommodation obtained by the spouses from FEBTC and those that may be obtained by the mortgagees which was fixed at P7,000,000.00, as well as those that may be extended by the mortgagor to the mortgagees.5 Under the terms and conditions of the real estate mortgage, in the event of failure to pay the mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall become immediately due; upon such breach or violation of the terms and conditions thereof, FEBTC may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed FEBTC as its attorney-in-fact with full power and authority to enter the premises where the mortgaged property is located and to take actual possession and control thereof without need of any order of any court, nor written permission from the spouses, and with special power to sell the mortgaged property at a public or private sale at the option of the mortgagee; and that the spouses expressly waived the term of 30 days or any other terms granted by law as the period which must elapse before the mortgage agreement may be foreclosed and, in any case, such period has already lapsed. The mortgage was registered with the Registry of Deeds of Bacolod and was annotated in the title of the land on June 20, 1997.6 Meantime, Oscar died intestate and was survived by his widow, herein respondent. For failure to settle the outstanding obligation on the maturity dates, FEBTC sent a final demand letter7 to respondent on March 10, 1999 demanding payment, within five days from notice, of the principal of the loan amounting to P13,481,498.68, with past due interests and penalties or in the total amount of P19,482,168.31 as of March 9, 1999.8 Respondent failed to settle her obligation.

On June 10, 1999, FEBTC filed a petition for the extrajudicial foreclosure of the mortgaged property, significantly only for the total amount of P4,687,006.68 exclusive of balance, interest and penalty, covered by promissory notes from 1 to 33, except nos. 2 and 10.9 While the extrajudicial foreclosure proceeding was pending, petitioner FEBTC filed a complaint10 with the Regional Trial Court (RTC) of Makati City, Branch 64, against respondent for the collection of the principal amount of P8,794,492.00 plus interest and penalty, or the total amount of P12,672,000.31, representing the amounts indicated in the rest of the promissory notes, specifically Promissory Note Nos. 34 to 67, as well as those dated December 6, 1996 and September 23, 1996: PN No. 2-052-980079 2-052-980064 2-052-980032 2-052-980019 2-052-971688 2-052-971676 2-052-971642 2-052-971604 2-052-971569 2-052-971538 2-052-971527 2-052-971501 2-052-971464 2-052-971449 2-052-971407 2-052-971394 2-052-971362 2-052-971351 Date January 02, 1998 January 15, 1998 January 08, 1998 January 07, 1998 December 29, 1997 December 23, 1997 December 18, 1997 December 12, 1997 December 04, 1997 November 28, 1997 November 25, 1997 November 20, 1997 November 13, 1997 November 06, 1997 October 29, 1997 October 24, 1997 October 16, 1997 October 15, 1997 Amount 176,000.00 225,000.00 170,000.00 195,000.00 100,000.00 117,000.00 185,000.00 220,000.00 140,000.00 130,000.00 620,000.00 150,000.00 170,000.00 105,000.00 170,000.00 185,000.00 90,000.00 700,000.00 Annex A B C D E F G H I J K L M N O P Q R

2-052-971340 2-052-971317 2-052-971280 2-052-971253 2-052-971215 2-052-971073 2-052-971053 2-052-971028 2-052-970999 2-052-970975 2-052-970949 2-052-970926 2-052-970852 2-052-970819 2-052-970781 2-052-970770 2-052-961442 2-052-961095

October 15, 1997 October 02, 1997 September 26, 1997 September 19, 1997 September 12, 1997 September 04, 1997 August 29, 1997 August 22, 1997 August 15, 1997 August 08, 1997 August 05, 1997 August 01, 1997 July 11, 1997 July 04, 1997 June 27, 1997 June 25, 1997 December 06, 1996 September 23, 1996

115,000.00 115,000.00 140,000.00 190,000.00 160,000.00 90,000.00 130,000.00 110,000.00 150,000.00 120,000.00 200,000.00 170,000.00 350,000.00 250,000.00 160,000.00 646,492.00 650,000.00 1,200,000.00

S T U V W X Y Z AA BB CC DD EE FF GG HH II JJ11

Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus: WHEREFORE, it is respectfully prayed that, after trial, judgment be rendered in its favor and against defendants ordering them to pay the following: a. The amount TWELVE MILLION SIX HUNDRED SEVENTY-TWO THOUSAND PESOS and 31/100 (P12,672,000.31), with additional stipulated interest and penalty equivalent to one (1%) percent of the amount due for every thirty (30) days or fraction thereof, until fully paid; b. Expense of litigation amounting to P50,000.00;

c. The amount of P500,000.00 as attorneys fees. Other reliefs just and equitable in the premises are similarly prayed for.12 In her answer, respondent alleged, by way of special and affirmative defense, that the complaint was barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of the real estate mortgage, thus: 8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached to plaintiffs complaint are also the same promissory notes which were made the basis of the plaintiff in their extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in support of their opposition to the issuance of the preliminary injunction in Civil Case No. 99-10864; 9) That plaintiff-bank has not only charged but over charged the defendant-spouses with excessive and exorbitant interest over and above those authorized by law. And in order to add more injury to the defendants, plaintiff also included other charges not legally collectible from the defendant-spouses; 10) That the act of the plaintiff-bank in seeking to collect twice on the same promissory notes is not only unfair and unjust but also condemnable as plaintiff seek to unjustly enrich itself at the expense of the defendants; 11) That there is another action pending between the same parties for the same cause; 12) That the claim or demand set forth in the plaintiffs complaint has either been waived, abandoned or otherwise extinguished.13 Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole witness. He testified that the spouses Coscolluela were granted an agricultural sugar loan which is designed to finance the cultivation and plantation of sugar farms of the borrowers.14 Borrowers were allowed to make successive drawdowns or availments against the loan as their need arose. Each drawdown is covered by a promissory note with uniform maturity dates.15 The witness also testified that the loan account of the spouses was a "single loan account."16 After petitioner rested its case, respondent filed a demurrer to evidence17 contending, among others, that, with Ganuelas admission, there is only one loan account secured by the real estate mortgage, that the promissory notes were executed as evidence of the loans. Plaintiff was thus barred from instituting a personal action for collection of the drawdowns evidenced by Promissory Note Nos. 2, 10, and 34 to 67 after instituting a petition for extrajudicial foreclosure of the real estate mortgage for the amount covered by Promissory Note Nos. 1, 3 to 9, and 11 to 33. Respondent insisted that by filing a complaint for a sum of money, petitioner thereby split its cause of action against her; hence, the complaint must perforce be dismissed on the ground of litis pendentia.

Petitioner opposed the demurrer arguing that while the loans were considered as a single account, each promissory note executed by respondent constituted a separate contract. It reiterated that its petition for the extrajudicial and foreclosure of the real estate mortgage before the Ex-Oficio Provincial Sheriff involves obligations different and separate from those in its action for a sum of money before the court. Thus, petitioner could avail of the personal action for the collection of the amount evidenced by the 36 promissory notes not subject of its petition for the extrajudicial foreclosure of the real estate mortgage. Petitioner insists that the promissory notes subject of its collection suit should be treated separately from the other set of obligations, that is, the 31 promissory notes subject of its extrajudicial foreclosure petition.18 In its Order19 dated January 10, 2002, the trial court denied the demurrer on the ground that the promissory notes executed by respondent and her deceased husband contained different amounts, and each note covered a loan distinct from the others. Thus, petitioner had the option to file a petition for the extrajudicial foreclosure of the real estate mortgage covering 31 of the promissory notes, and, as to the rest, to file an ordinary action for collection. Petitioner, thus, merely opted to institute an action for collection of the debt on the 36 promissory notes, and waived its action for the foreclosure of the security given on these notes. Respondent filed a motion for reconsideration,20 which the trial court denied in its February 19, 2002 Order,21 prompting her to file a certiorari petition22 under Rule 65 with the CA, assailing the January 10, 2002 and February 19, 2002 Orders of the trial court. Respondent alleged that: 1. PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS ACTIONS FOR FORECLOSURE AND FOR COLLECTION. Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate mortgage was sold at public auction where petitioner emerged as the highest bidder.23 On September 30, 2004, the CA rendered its Decision24 granting the petition, holding, under prevailing jurisprudence, the remedies either a real action to foreclose the mortgage or a personal action to collect the debt of a mortgage creditor are alternative and not cumulative. Since respondent availed of the first one, it was deemed to have waived the second. Further, the filing of both actions results in a splitting of a single cause of action. Thus, in denying her Demurrer to Evidence, the RTC committed grave abuse of discretion as it overruled settled judicial pronouncements. The dispositive part of the decision states: WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002 and February 19, 2002 are SET ASIDE. SO ORDERED. The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal and Oriental Commercial Co., Inc.25

Aggrieved, petitioner filed a motion for reconsideration26 on October 12, 2004. Respondent filed her opposition27 to the motion on October 26, 2004. The CA thereafter denied the motion in a resolution promulgated on April 6, 2005.28 Petitioner filed the instant petition for review on certiorari, alleging that: I. THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON THE GROUND OF GRAVE ABUSE OF DISCRETION. xxxx The Trial Court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in denying the Demurrer to Evidence filed by the respondents. Petitioner, in instituting a petition for the Extra Judicial Foreclosure of the Mortgage of respondents based on 31 promissory notes executed by respondents and another action to collect on a separate set of 36 promissory notes, did not split their cause of action. xxxx The trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it denied respondents Demurrer to Evidence. In this wise, the Petition for Certiorari filed by respondents should not have been granted.29 During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a manifestation and joint motion for substitution, informing the court that petitioner bank has assigned to the Philippine Asset Investment, Inc. all its rights, title and interest over its nonperforming loan accounts pursuant to Republic Act No. 9182 entitled "The Special Purpose Vehicle Act of 2002." The issues raised in this case are (1) whether the petition for certiorari under Rule 65 of the Rules of Court filed by respondent in the CA was the proper remedy to assail the January 10, 2002 Order of the trial court; (2) whether the appellate court issued its January 10, 2002 Order with grave abuse of its discretion amounting to excess or lack of jurisdiction. Petitioner avers that the January 10, 2002 Order of the RTC denying the Demurrer to Evidence of respondent was interlocutory, and as such could not be the subject of a petition for certiorari.30 The RTC did not commit a grave abuse of its discretion in issuing its January 10, 2002 Order. Petitioner maintains that respondent executed 67 separate loan obligations evidenced by 67 separate promissory notes, with different amounts and maturity dates. It avers that each of the loans, as evidenced by each of the promissory notes, may properly be the subject of a separate action; thus, each promissory note is an actionable document. Moreover, the real estate mortgage executed by the spouses secured an obligation only to a fixed amount of P7,000,000.00 which is covered by Promissory Note Nos. 1 to 31, whereas the loans secured by the spouses covered by the Promissory Note Nos. 32 to 67 for the total amount of P12,672,000.31 were not secured by

the real estate mortgage. Petitioner insists that it was proper to file the petition for extrajudicial foreclosure of the real estate mortgage only for respondents loan account covered by the 36 promissory notes for the amount of P7,755,733.64. It was not barred from filing a separate action for the collection of the P12,672,000.31 against respondent in the RTC for the drawdowns as evidenced by Promissory Note Nos. 34 to 67. What should apply, petitioner asserts, is the ruling of this Court in Caltex Philippines, Inc. v. Intermediate Appellate Court31 and Quiogue v. Bautista,32 and not the ruling of this Court in Bachrach which involves only one promissory note. Petitioner insists that, although respondent and her husband had a joint account with it, they had separate loan obligations as evidenced by the promissory notes; hence, it had separate causes of action for each and every drawdown evidenced by a promissory note. For her part, respondent admits having executed the promissory notes. However, as testified to by Ganuelas, the witness for petitioner, she and her husband only have one loan account with petitioner, hence, the latter had only one cause of action against her either for the collection of the entire loan account or for the extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the loan. Petitioner cannot split her single loan account by filing a simple collection suit and a petition for extrajudicial foreclosure of the real estate mortgage without violating the rule against splitting a single cause of action. Respondent asserts that the real estate mortgage executed by respondent and her deceased husband was a security not only of their loan account in the amount of P7,000,000.00 but for all other loans that may have been extended to them in excess of that amount. The petition is unmeritorious. On the first issue, we agree with petitioners contention that the general rule is that an order denying a motion to dismiss or demurrer to evidence is interlocutory and is not appealable. Consequently, defendant must go to trial and adduce its evidence, and appeal, in due course, from an adverse decision of the trial court. However, the rule admits of exceptions. Where the denial by the trial court of a motion to dismiss or demurrer to evidence is tainted with grave abuse of discretion amounting to excess or lack of jurisdiction, the aggrieved party may assail the order of dismissal on a petition for certiorari under Rule 65 of the Rules of Court. A wide breadth of discretion is granted in certiorari proceedings in the interest of substantial justice and to prevent a substantial wrong.33 As the Court held in Preferred Home Specialties, Inc. v. Court of Appeals:34 It bears stressing that a writ of certiorari is of the highest utility and importance for curbing excessive jurisdiction and correcting errors and most essential to the safety of the people and the public welfare. Its scope has been broadened and extended, and is now one of the recognized modes for the correction of errors by this Court. The cases in which it will lie cannot be defined. To do so would be to destroy its comprehensiveness and limit its usefulness. The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice arising from errors of law committed in proceedings affecting justiciable rights when no other means for an adequate and speedy relief is open. It is founded upon a sense of justice, to release

against wrongs otherwise irreconcilable, wrongs which go unredressed because of want of adequate remedy which would be a grave reproach to any system of jurisprudence.35 The aggrieved party is entitled to a writ of certiorari where the trial court commits a grave abuse of discretion amounting to excess or lack of jurisdiction in denying a motion to dismiss a complaint on the ground of litis pendentia. An appeal while available eventually is cumbersome and inadequate for it requires the parties to undergo a useless and time-consuming and expensive trial. The second case constitutes a rude if not debilitating imposition on the trial and the docket of the judiciary.36 In the present case, we agree with the ruling of the CA that the RTC acted with grave abuse of discretion amounting to excess or lack of jurisdiction when it denied the Demurrer to Evidence of respondent and, in the process, ignored applicable rulings of this Court. Although respondent had the right to appeal the decision of the trial court against her after trial, however, she, as defendant, need not use up funds and undergo the tribulations of a trial and thereafter appeal from an adverse decision. Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a party may not institute more than one suit for a single cause of action and, if two or more suits are instituted on the basis of the same cause of action, the filing of one on a judgment upon the merits in any one is available as ground for the dismissal of the other or others.37 A party will not be permitted to split up a single cause of action and make it a basis for several suits.38 A party seeking to enforce a claim must present to the court by the pleadings or proofs or both, all the grounds upon which he expects a judgment in his favor. He is not at liberty to split up his demands and prosecute it by piecemeal, or present only a portion of the grounds upon which special relief is sought, and leave the rest to be presented in a second suit if the first fails.39 The law does not permit the owner of a single or entire cause of action or an entire or indivisible demand to divide and split the cause or demand so as to make it the subject of several actions. The whole cause must be determined in one action. Indeed, in Goldberg v. Eastern Brewing Co.,40 the New York Supreme Court emphasized that: It was held in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where a party had several demands or existing causes of action growing out of the same contract or resting in matter of account, which may be joined and sued for in the same action, they must be joined; and if the demands or causes of action be split up, and a suit brought for part only, and subsequently a second suit for the residue is brought, the first action may be pleaded in abatement or in bar of the second action. x x x41 The rule against splitting causes of action is not altogether one of original legal right but is one of interposition based upon principles of public policy and of equity to prevent the inconvenience and hardship incident to repeated and unnecessary litigation.42 It is not always easy to determine whether in a particular case under consideration, the cause of action is single and entire or separate. The question must often be determined, not by the general rules but by reference to the facts and circumstances of the particular case. Where deeds arising

out of contract are distinct and separate, they give rise to separate cause of action for which separate action may be maintained; but it is also true that the same contract may give rise to different causes of action either by reason of successive breaches thereof or by reason of different stipulations or provisions of the contract.43 The true rule which determines whether a party has only a single and entire cause of action for all that is due him, and which must be sued for in one action, or has a severable demand for which he may maintain separate suits, is whether the entire amount arises from one and the same act or contract or the several parts arise from distinct and different acts or contracts.44 Where there are entirely distinct and separate contracts, they give rise to separate causes of action for which separate actions may be instituted and presented. When money is payable by installments, a distinct cause of action assails upon the following due by each installment and they may be recovered in successive action. On the other hand, where several claims payable at different times arise out of the same transactions, separate actions may be brought as each liability accounts. But where no action is brought until more than one is due, all that are due must be included in one action; and that if an action is brought to recover upon one or more that are due but not upon all that are due, a recovery in such action will be a bar to a several or other actions brought to recover one or more claims of the other claims that were due at the time the first action was brought.45 The weight of authority is that in the absence of special controlling circumstances, an open or continuous running account between the same parties constitutes a single and indivisible demand, the aggregate of all the items of the account constituting the amount due. But the rule is otherwise where it affirmatively appears that the parties regarded the different items of the account as separate transactions and not parts of an ordinary running account. And there may also be, even between the same parties, distinct and separate actions upon which separate actions may be maintained.46 In fine, what is decisive is that there be either an express contract, or the circumstances must be such as to raise an implied contract embracing all the items to make them, when they arise, at different times, a single or entire demand or cause of action.47 Decisive of the principal issue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal and Oriental Commercial Co., Inc.48 in which it ruled that on the nonpayment of a note secured by a mortgage, the creditor has a single cause of action against the debtor. The single cause of action consists in the recovery of the credit with execution of the suit. In a mortgage credit transaction, the credit gives rise to a personal action for collection of the money. The mortgage is the guarantee which gives rise to a mortgage foreclosure suit to collect from the very property that secured the debt.49 The action of the creditor is anchored on one and the same cause: the nonpayment by the debtor of the debt to the creditor-mortgagee. Though the debt may be covered by a promissory note or several promissory notes and is covered by a real estate mortgage, the latter is subsidiary to the former and both refer to one and the same obligation. A mortgage creditor may institute two alternative remedies against the mortgage debtor, either a personal action for the collection of debt, or a real action to foreclose the mortgage, but not both. Each remedy is complete by itself. As explained by this Court:

We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely accidental and are all under his right of election. On the other hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the property lies.50 If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the collection of the debt and vice versa.51 If the creditor is allowed to file its separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so much costs to the court and with so much vexation and oppressiveness to the debtor.52 In the present case, petitioner opted to file a petition for extrajudicial foreclosure of the real estate mortgage but only for the principal amount of P4,687,006.08 or in the total amount of P7,755,733.64 covering only 31 of the 67 promissory notes. By resorting to the extrajudicial foreclosure of the real estate mortgage, petitioner thereby waived its personal action to recover the amount covered not only by said promissory notes but also of the rest of the promissory notes. This is so because when petitioner filed its petition before the Ex-Oficio Provincial Sheriff on June 10, 1999, the entirety of the loan account of respondent under the 67 promissory notes was already due. The obligation of respondent under Promissory Note Nos. 1 to 33 became due on February 9, 1998 but was extended up to March 11, 1998, whereas, those covered by Promissory Note Nos. 34 to 67 matured on December 28, 1998. Petitioner should have caused the extrajudicial foreclosure of the real estate mortgage for the recovery of the entire obligation of respondent, on all the promissory notes. By limiting the account for which the real estate mortgage was being foreclosed to the principal amount of P4,687,006.68, exclusive of interest and penalties, petitioner thereby waived recovery of the rest of respondents agricultural loan account. It must be stressed that the parties agreed in the Real Estate Mortgage that in the event that respondent shall fail to pay the mortgage obligation "or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding shall become immediately due, payable and defaulted," thus:

3. The terms and conditions of the Mortgage have been violated when the Mortgagors failed and/or refused to pay, notwithstanding repeated demands, the installment and/or maturity amount of the Mortgage obligation which became due and payable on the said date; 4. Under the terms and conditions of the Mortgage Agreement, in the event the Mortgagors fail and/or refuse to pay the Mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall, without need for demand, notice, or any other act or deed, become immediately due, payable and defaulted; 5. The Mortgage Agreement provides that upon such breach or violation of the terms and conditions thereof, the Mortgagee may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed the Mortgagee as its attorney-in-fact with full power and authority to enter the premises where the Mortgaged property is located and to take actual possession and control thereof without need of any order of any Court, nor written permission from the Mortgagors, and with special power to sell the Mortgaged Property at a public or private sale at the option of the Mortgagee.53 Petitioner cannot split the loan account of respondent by filing a petition for the extrajudicial foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the first set of promissory notes, and a personal action for the collection of the principal amount of P12,672,000.31 covered by the second set of promissory notes without violating the proscription against splitting a single cause of action against respondent. The contention of petitioner that respondents loan account that was secured by the real estate mortgage was limited only to those covered by the Promissory Note Nos. 1 to 33 or for the total amount of P7,000,000.00 is belied by the real estate mortgage and by its own evidence. Under the deed, the mortgage was to secure the payment of a credit accommodation already obtained by respondent, the principal of all of which was fixed at P7,000,000.00, as well as any other obligation that may be extended to respondent, including interest and expenses, to wit: That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure the payment of the same and those that may hereafter be obtained, the principal of all of which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,000,000.00), Philippine Currency, as well as those that the MORTGAGEE may extend to the MORTGAGOR, including interest and expenses or any other obligation owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as appears in the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby transfer and convey by way of mortgage unto the MORTGAGEE, its successors or assigns, the parcels of land which are described in the list inserted on the back of this document and/or appended herein, together with all the buildings and improvements now existing or which may hereafter be erected or constructed thereon, of which the MORTGAGOR declares that he/it is the absolute owner free from all liens and encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its successors

or assigns, the obligation secured by this mortgage when due, together with interest, and shall keep and perform all and singular the covenants and agreements herein contained for the MORTGAGOR to keep and perform, then this mortgage shall be void, otherwise, it shall remain in full force and effect.54 (Emphasis supplied) The testimony of Ganuelas in the RTC relative to the real estate mortgage follows: Q The real estate mortgage states: "That for and in consideration of credit accommodation obtained from the mortgagee." This simply means, Mr. Witness, that this mortgage is offered to secure loans already obtained by the mortgagor from the mortgagee Far East Bank and Trust Company. I am referring only to that phrase, obtained from the mortgagee, is that correct? A Yes, Sir. Q So from this phrase in the real estate mortgage, this mortgage was constituted to secure the credit accommodation already obtained by the mortgagor, the defendant spouses, as of the time of the execution of the real estate mortgage, is that correct? A Yes, Sir. Q Now since the loan secured by the defendants are evidenced by promissory notes, will you agree with me, Mr. Witness, that this real estate mortgage was executed for promissory notes already executed by the defendant spouses as of the time of the execution of the mortgage on June 13, 1997, is that correct? A Yes, Sir. ATTY. MIRANO: For purposes of identification, we respectfully request that this phrase: "that for and in consideration of the credit accommodation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acting court interpreter marking said phrase as Exhibit 6-B.) Q Now in accordance with the terms of this real estate mortgage, this real estate mortgage was executed by the defendant spouses not only to secure the loan already obtained by the said spouses as of the time of the execution of the mortgage on June 13, 1997 but also all other loans that may be extended by Far East Bank and Trust Company to the defendant spouses after the execution of the mortgage as stated in this portion of the real estate mortgage which we quote: "to secure the payment as and those that may hereafter be obtained," is that correct? A Yes, Sir. Q So from your statement, Mr. Witness, this real estate mortgage was offered by the defendant spouses as a security for the loans they already secured as of the time of the execution of the mortgage but also for the loans that they will secure thereafter, is that correct?

A Yes, Sir.55 (Emphasis supplied) As gleaned from the plain terms of the real estate mortgage, the real estate of respondent served as continuing security liable for future advancements or obligations beyond the amount of P7,000,000.00. The mortgage partakes of the nature of contract for future advancements. As explained by this Court in the early case of Lim Julian v. Lutero:56 The rule, of course, is well settled that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage. The exact amount, however, for which the mortgage is given need not always be specifically named. The amount for which the mortgage is given may be stated in definite or general terms, as is frequently the case in mortgages to secure future advancements. The amount named in the mortgage does not limit the amount for which it may stand as security, if, from the four corners of the document, the intent to secure future indebtedness or future advancements is apparent. Where the plain terms, of the mortgage, evidence such an intent, they will control as against a contention of the mortgagor that it was the understanding of the parties that the mortgage was security only for the specific amount named. (Citizens Savings ank v. Kock, 117 Mich. 225). In that case, the amount mentioned in the mortgage was $7,000. The mortgage, however, contained a provision that "the mortgagors agree to pay said mortgagee any sum of money which they may now or hereafter owe said mortgagee." At the time the action of foreclosure was brought, the mortgagors owed the mortgagee the sum of $21,522. The defendants contended that the amount to be recovered in an action to foreclose should be limited to the amount named in the mortgage. The court held that the amount named as consideration for the mortgage did not limit the amount for which the mortgage stood as security, if, from the whole instrument the intent to secure future indebtedness could be gathered. The court held that a mortgage to cover future advances is valid. (Michigan Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, sec. 373; Keyes v. umps Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brown v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 65 Wis. 153) Literal accuracy in describing the amount due, secured by a mortgage, is not required, but the description of the debt must be correct and full enough to direct attention to the sources of correct information in regard to it, and be such as not to mislead or deceive as to the amount of it, by the language used. Reading the mortgage before us from its four corners, we find that the description of the debt is full enough to give information concerning the amount due. The mortgage recites that it is given to secure the sum of P12,000, interest, commissions, damages, and all other amounts which may be found to be due at maturity. The terms of the contract are sufficiently clear to put all parties who may have occasion to deal with the property mortgaged upon inquiry. The parties themselves from the very terms of the mortgage could not be in ignorance at any time of the amount of their obligation and the security held to guarantee the payment. When a mortgage is given for future advancements and the money is paid to the mortgagor "little by little" and repayments are made from time to time, the advancements and the repayments must be considered together for the purpose of ascertaining the amount due upon the mortgage at maturity. Courts of equity will not permit the consideration of the repayments only for the purpose of determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26

Phil. 111) The mere fact that, in contract of advancements, the repayments at any one time exceeds the specific amount mentioned in the mortgage will not have the effect of discharging the mortgage when the advancements at that particular time are greatly in excess of the repayments; especially is this true when the contract of advancement or mortgage contains a specific provision that the mortgage shall cover all "such other amounts as may be then due." Such a provision is added to the contract of advancements or mortgage for the express purpose of covering advancements in excess of the amount mentioned in the mortgage. (Luengo & Martinez v. Moreno, supra) The sum found to be owing by the debtor at the termination of the contract of advancements between him and the mortgagee, during continuing credit, is still secured by the mortgage on the debtors property, and the mortgagee is entitled to bring the proper action for the collection of the amounts still due and to request the sale of the property covered by the mortgage. (Luengo & Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v. Byard, 26 N.J. Equity 225) Under a mortgage to secure the payment of future advancements, the mere fact that the repayments on a particular day equal the amount of the mortgage will not discharge the mortgage before maturity so long as advancements may be demanded and are being received. (Luengo & Martinez v. Moreno, supra)57 Moreover, the series of loan advancements herein cannot be likened to the credit line discussed in Caltex Philippines, Inc. v. Intermediate Appellate Court,58 as petitioner posited in its reply59 filed before this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not contain a "dragnet" clause60 that would subsume all past and future debts. The mortgage therein specifically secured only the loans extended prior to the mortgage. Thus, in the said case, the future debts were deemed as constituting a separate transaction from the past debts secured by the mortgage. The ruling of the Court in Quiogue v. Bautista61 is likewise inapplicable. In that case, the Court deemed the loan transactions as separate, considering that those were two separate loans secured by two separate mortgages. In this case, however, there is only one mortgage securing all 67 drawdowns made by respondent. In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of action arising from such non-payment. This single cause of action consists in the recovery of the credit with execution of the security.62 Petitioner is proscribed from splitting its single cause of action by filing an extrajudicial foreclosure proceedings on June 10, 1999 with respect to the amounts in the 31 promissory notes, and, during the pendency thereof, file a collection case on June 23, 1999, with respect to the amounts in the remaining 36 promissory notes. Considering, therefore, that, in the case at bar, petitioner had already instituted extrajudicial foreclosure proceedings of the mortgaged property, it is now barred from availing itself of a personal action for the collection of the indebtedness.

IN VIEW OF ALL THE FOREGOING, the instant petition is DISMISSED for lack of merit. Costs against petitioner. SO ORDERED.

G.R. No. L-46000 March 18, 1985 GLICERIO AGUSTIN (Deceased) as Administrator of the Intestate Estate of Susana Agustin, petitioner-plaintiff-appellant, vs. LAUREANO BACALAN and the PROVINCIAL SHERIFF OF CEBU, respondentsdefendants-appellees.

GUTIERREZ, JR., J.: The precursor of this case was a complaint for ejectment with damages filed by plaintiffappellant Agustin, as adininistrator of the Intestate Estate of Susana Agustin, against defendant-appellee Bacalan, before the City Court of Cebu. Bacalan is a lessee of a one-door ground floor space in a building owned by the late Susana Agustin. Due to nonpayment of rentals despite repeated demands an action to eject him was filed. In his complaint, the plaintiff-appellant prayed that the defendant-appellee be ordered to immediately vacate the place in question, to pay plaintiff-appellant the sum of P2,300.00 representing arrearages in rentals plus the corresponding rentals until he actually vacates the place, attorney's fees, expenses, and costs. In his answer, the defendant-appellee included a counter-claim alleging that the present action was "clearly unfounded and devoid of merits, as it is tainted with malice and bad faith on the part of the plaintiff for the obvious reason that plaintiff pretty well knows that defendant does not have any rentals in arrears due to the estate of Susana Agustin, but notwithstanding this knowledge, plaintiff filed the present action merely to annoy, vex, embarrass and inconvenience the defendant." He stated, "That by virtue of the unwarranted and malicious filing of this action by the plaintiff against the defendant, the latter suffered, and will continue to suffer, actual and moral damages in the amount of no less than P50,000.00; P10,000.00 in concept of exemplary damages. In addition, defendant has been compelled to retain the services of undersigned counsel to resist plaintiffs' reckless, malicious and frivolous claim and to protect and enforce his rights for which he obligated himself to pay the further sum of P3,500.00 as attorney's fees." The City Court of Cebu subsequently rendered judgment dismissing the counterclaim and ordering the defendant to vacate the premises in question and to pay the plaintiff the sum of P3,887.10 as unpaid back rentals and the sum of P150.00 as attorney's fees' From this decision, the defendant filed an appeal with Branch Ill of the Court of First Instance of Cebu. The case was designated as Civil Case No. R-12430. Availing of Republic Act 6031 which does away with trials de novo in appeals before it, the Court of First Instance rendered a decision, the dispositive portion of which reads:

WHEREFORE, based on all the foregoing considerations, the appealed judgment is hereby set aside. Judgment is hereby required in favor of the defendant 1. Ordering the plaintiff to pay. a) P10,000.00 as moral damages; b) P5,000.00 as exemplary damages; c) P1,000.00 as attorney's fees; and 2. With costs against plaintiff. JUDGMENT REVERSED.

No appeal was taken by the plaintiff-appellant. The decision lapsed into finality and became executory. A writ of execution was issued by virtue of which a notice to sell at public auction real properties belonging to the estate of Susana Agustin was issued by the Deputy Sheriff to satisfy judgment in the case. Plaintiff's counsel filed a motion for reconsideration, confessing his fault and giving the reason why he failed to perfect the appeal on time. The motion was denied. Thereafter, with the aid of new counsel, the plaintiff-appellant filed a complaint with Branch V, Court of First Instance of Cebu, against the defendant and the Deputy Sheriff of Cebu for the declaration of the nullity of the above-cited decision of Branch III, Court of First Instance of Cebu in the ejectment case on the ground that the exercise of its appellate jurisdiction was null and void from the beginning for the following reasons:
(a) It grants relief in the total sum of P16,000.00 (exclusive of costs) distributed thus: P10,000.00 as moral damages P5,000.00 as exemplary damages P1,000.00 as attorney's fees which is clearly beyond the jurisdiction of the City Court of Cebu; Section 88 of the Judiciary Act of 1948, as amended by Rep. Acts Nos. 2613 and 3828, limits the jurisdiction of the city courts in civil cases to P10,000.00 as the maximum amount of the demand (exclusive of interest and costs); (b) Moreover, said Decision (Annex "G") grants moral damages to the defendant in the sum of P10,000.00 which constitutes a grave abuse of discretion amounting to lack of jurisdiction, there being no evidence to support it and the subject matter of the suit in Civil Case No. R-13504 being purely contractual where moral damages are not recoverable.

A motion to dismiss was filed by the defendant on the grounds that the plaintiff has no cause of action and that the court lacks jurisdiction to declare the nullity of a decision of another branch of the Court of First Instance of Cebu.

While rejecting the second ground for the motion to dismiss, the court sustained the defendant and ruled:
Clearly from a reading of the complaint, the plaintiff seeks the annulment of the decision rendered by the Third Branch of this Court because the award exceeded the jurisdiction amount cognizable by the City Court of Cebu and the said Branch III of this Court has no jurisdiction to award the defendants herein (plaintiff in Civil Case No. 12430) an amount more than P10,000.00; It is the considered opinion of this Court that this allegation of the herein plaintiff cannot be availed of as a ground for annulment of a judgment. It may perhaps, or at most, be a ground for a petition for certiorari. But then, the remedy should be availed of within the reglementary period to appeal. Nevertheless, even if the plaintiff did take his cause by certiorari, just the same, it would have been futile.... xxx xxx xxx In fine, this Court believes that the present complaint fails to allege a valid cause of action as the same is only a clear attempt at utilizing the remedy for the annulment of the judgment rendered by this Court in Civil Case No. 12430 to offset the adverse effects of failure to appeal.

Plaintiff-appellant's motion for reconsideration was denied, prompting him to file an appeal before the Court of Appeals, which, in a resolution, certified the same to us on the ground that it involves pure questions of law. We ruled in Macabingkil v. People's Homesite and Housing Corporation (72 SCRA 326, citing Reyes v. Barretto-Datu, 94 Phil. 446, 448-449)Under our rules of procedure, the validity of a judgment or order of the court, which has become final and executory, may he attacked only by a direct action or proceeding to annul the same, or by motion in another case if, in the latter case, the court had no jurisdiction to enter the order or pronounce the judgment (section 44, Rule 39 of the Rules of Court). The first proceeding is a direct attack against the order or judgment, because it is not incidental to, but is the main object of, the proceeding. The other one is the collateral attack, in which the purpose of the proceedings is to obtain some relief, other than the vacation or setting aside of the judgment, and the attack is only an incident. (I Freeman on Judgments, sec. 306, pages 607-608.) A third manner is by a petition for relief from the judgment order as authorized by the statutes or by the rules, such as those expressly provided in Rule 38 of the Rules of Court, but in this case it is to be noted that the relief is granted by express statutory authority in the same action or proceeding in which the judgment or order was entered ...

The question is thus poised, whether or not the present action for the annulment of the judgment in the ejectment case is the proper remedy after it has become final and executory. To this procedural dilemma, the solution lies in the determination of the validity of the judgment sought to be annulled, for against a void judgment, plaintiff-appellant's recourse would be proper.

There is no question as to the validity of the court's decision with respect to the issue of physical possession of property, the defendant-appellee's right to the same having been upheld. However, the plaintiff-appellant assails the money judgment handed down by the court which granted damages to the defendant-appellee. By reason thereof, he seeks the declaration of the nullity of the entire judgment. It is the plaintiff-appellant's contention that moral damages may not properly be awarded in ejectment cases, the only recoverable damages therein being the reasonable compensation for use and occupancy of the premises and the legal measure of damages being the fair rental value of the property. Plaintiff-appellant loses sight of the fact that the money judgment was awarded the defendant-appellee in the concept of a counterclaim. A defending party may set up a claim for money or any other relief which he may have against the opposing party in a counterclaim (Section 6, Rule 6, Revised Rules of Court). And the court may, if warranted, grant actual, moral, or exemplary damages as prayed for. The grant of moral damages, in the case at bar, as a counterclaim, and not as damages for the unlawful detention of property must be upheld. However, the amount thereof is another matter. Plaintiff-appellant raises the issue of whether or not the Court of First Instance may, in an appeal, award the defendant-appellee's counterclaim in an amount exceeding or beyond the jurisdiction of the court of origin. It is well-settled that a court has no jurisdiction to hear and determine a set-off or counterclaim in excess of its jurisdiction (Section 5, Rule 5, Revised Rules of Court; Ago v. Buslon, 10 SCRA 202). A counterclaim beyond the court's jurisdiction may only be pleaded by way of defense, the purpose of which, however, is only to defeat or weaken plaintiff's claim, but not to obtain affirmative relief (Section 5, Rule 5, Revised Rules of Court). Nevertheless, the defendant-appellee, in the case at bar, set up his claim in excess of the jurisdiction of the city court as a compulsory counterclaim. What is the legal effect of such a move? Pertinent to our disposition of this question is our pronouncement in the case of Hyson Tan, et al. v. Filipinas Compania de Seguros, et al., (G.R. No. L-10096, March 23, 1956) later adopted in Pindangan Agricultural Co., Inc. v. Dans (6 SCRA 14) and the later case of One Heart Club, Inc. v. Court of Appeals (108 SCRA 416) to wit:
xxx xxx xxx ... An appellant who files his brief and submits his case to the Court of Appeals for decision, without questioning the latter's jurisdiction until decision is rendered therein, should be considered as having voluntarily waives so much of his claim as would exceed the jurisdiction of said Appellate Court; for the reason that a contrary rule would encourage the undesirable practice of appellants submitting their cases for decision to the Court of Appeals in expectation of favorable judgment, but with intent of attacking its jurisdiction should the decision be unfavorable. ...

Thus, by presenting his claim voluntarily before the City Court of Cebu, the defendantappellee submitted the same to the jurisdiction of the court. He became bound thereby. The amount of P10,000.00 being the jurisdictional amount assigned the City Court of Cebu, whose jurisdiction the defendant-appellee has invoked, he is thereby deemed to have waived the excess of his claim beyond P10,000.00. It is as though the defendantappellee had set up a counterclaim in the amount of P10,000.00 only. May the Court of First Instance then, on appeal, award defendant-appellee's counterclaim beyond that amount? The rule is that a counterclaim not presented in the inferior court cannot be entertained in the Court of First Instance on appeal (Francisco, The Revised Rules of Court in the Philippines, Vol. III, p. 26, citing the cases of Bernardo v. Genato, 11 Phil. 603 and Yu Lay v. Galmes, 40 Phil. 651). As explained in Yu Lay v. Galmes "Upon an appeal to a court of first instance from the judgment of a justice of the peace, it is not possible, without changing the purpose of the appeal, to alter the nature of the question raised by the complaint and the answer in the original action. There can be no doubt, therefore, of the scope of the doctrine laid down in the several decisions of the Court. Consequently, We hold that, upon an appeal to the Court of First Instance, the plaintiff as well as the defendant cannot file any pleading or allegation which raises a question essentially distinct from that raised and decided in the justice of the peace court. "This rule was reiterated in cases from Ng Cho Cio v. Ng Diong (1 SCRA 275) to Development Bank of the Philippines v. Court of Appeals (116 SCRA 636). Thus, the defendant-appellee's counterclaim beyond P10,000.00, the jurisdictional amount of the city Court of Cebu, should be treated as having been deemed waived. It is as though it has never been brought before trial court. It may not be entertained on appeal. The amount of judgment, therefore, obtained by the defendant-appellee on appeal, cannot exceed the jurisdiction of the court in which the action began. Since the trial court did not acquire jurisdiction over the defendant's counterclaim in excess of the jurisdictional amount, the appellate court, likewise, acquired no jurisdiction over the same by its decisions or otherwise. Appellate jurisdiction being not only a continuation of the exercise of the same judicial power which has been executed in the court of original jurisdiction, also presupposes that the original and appellate courts are capable of participating in the exercise of the same judicial power (See 2 Am. Jur. 850; Stacey Cheese Company v. R.E. Pipkin, Appt. 155 NC 394, 71 S.E. 442, 37 LRA 606) It is the essential criterion of appellate jurisdiction that it revises and corrects the proceedings in a cause already instituted, and does not create that cause (See 2 Am. Jur 850 citing Marbury v. Madison, 1 Cranch US, 137, 2 L. ed. 60). It is, of course, a well-settled rule that when court transcends the limits prescribed for it by law and assumes to act where it has no jurisdiction, its adjudications will be utterly void and of no effect either as an estoppel or otherwise (Planas v. Collector of Internal Revenue, 3 SCRA 395; Parades v. Moya, 61 SCRA 526). The Court of First Instance, in the case at bar, having awarded judgment in favor of the defendant-appellee in excess

of its appellate jurisdiction to the extent of P6,000.00 over the maximum allowable award of P10,000.00, the excess is null and void and of no effect. Such being the case, an action to declare the nullity of the award as brought by the plaintiff-appellant before the Court of First Instance of Cebu, Branch V is a proper remedy. The nullity of such portion of the decision in question, however, is not such as to affect the conclusions reached by the court in the main case for ejectment. As held in Vda. de Pamintuan v. Tiglao (53 Phil. 1) where the amount set up by the defendant was not proper as a defense and it exceeded the inferior court's jurisdiction, it cannot be entertained therein, but the court's jurisdiction over the main action will remain unaffected. Consequently, the decision over the main action, in the case at bar, must stand, best remembering that a counter-claim, by its very nature, is a cause of action separate and independent from the plaintiff's claim against the defendant. WHEREFORE, the decision of the Court of First Instance of Cebu, Branch III in Civil Case No. R-12430 for ejectment is hereby DECLARED NULL AND VOID insofar as it awards damages on the defendant-appellee's counterclaim in excess of P6,000.00 beyond its appellate jurisdiction. The decision in all other respects is AFFIRMED. The order of the Court of First Instance of Cebu, Branch V dismissing Civil Case No. R13462 for declaration of nullity of judgment with preliminary injunction is hereby MODIFIED, Civil Case No. R-13462 is ordered DISMISSED insofar as the decision sought to be annulled upholds the defendant's right to possession of the disputed property. The defendant's counterclaim for damages is GRANTED to the extent of TEN THOUSAND (P10,000.00) PESOS. The grant of SIX THOUSAND (P6,000.00) PESOS in excess of such amount is hereby declared NULL and VOID, for having been awarded beyond the jurisdiction of the court. SO ORDERED.

G.R. No. L-66620 September 24, 1986 REMEDIO V. FLORES, petitioner, vs. HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO CALION, respondents. Lucio A. Dixon for respondent F. Calion. FERIA, J.: The Court rules that the application of the totality rule under Section 33(l) of Batas Pambansa Blg. 129 and Section 11 of the Interim Rules is subject to the requirements for the permissive joinder of parties under Section 6 of Rule 3 which provides as follows: Permissive joinder of parties.-All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest. Petitioner has appealed by certiorari from the order of Judge Heilia S. Mallare-Phillipps of the Regional Trial Court of Baguio City and Benguet Province which dismissed his complaint for lack of jurisdiction. Petitioner did not attach to his petition a copy of his complaint in the erroneous belief that the entire original record of the case shall be transmitted to this Court pursuant to the second paragraph of Section 39 of BP129. This provision applies only to ordinary appeals from the regional trial court to the Court of Appeals (Section 20 of the Interim Rules). Appeals to this Court by petition for review on certiorari are governed by Rule 45 of the Rules of Court (Section 25 of the Interim Rules). However, the order appealed from states that the first cause of action alleged in the complaint was against respondent Ignacio Binongcal for refusing to pay the amount of P11,643.00 representing cost of truck tires which he purchased on credit from petitioner on various occasions from August to October, 1981; and the second cause of action was against respondent Fernando Calion for allegedly refusing to pay the amount of P10,212.00 representing cost of truck tires which he purchased on credit from petitioner on several occasions from March, 1981 to January, 1982. On December 15, 1983, counsel for respondent Binongcal filed a Motion to Dismiss on the ground of lack of jurisdiction since the amount of the demand against said respondent was only P11,643.00, and under Section 19(8) of BP129 the regional trial court shall exercise exclusive original jurisdiction if the amount of the demand is more than twenty thousand pesos (P20,000.00). It was further averred in said motion that although another person, Fernando Calion, was allegedly indebted to petitioner in the amount of P10,212.00, his obligation was separate and distinct from that of the other respondent. At

the hearing of said Motion to Dismiss, counsel for respondent Calion joined in moving for the dismissal of the complaint on the ground of lack of jurisdiction. Counsel for petitioner opposed the Motion to Dismiss. As above stated, the trial court dismissed the complaint for lack of jurisdiction. Petitioner maintains that the lower court has jurisdiction over the case following the "novel" totality rule introduced in Section 33(l) of BP129 and Section 11 of the Interim Rules. The pertinent portion of Section 33(l) of BP129 reads as follows: ... Provided,That where there are several claims or causes of action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions. ... Section 11 of the Interim Rules provides thus: Application of the totality rule.-In actions where the jurisdiction of the court is dependent on the amount involved, the test of jurisdiction shall be the aggregate sum of all the money demands, exclusive only of interest and costs, irrespective of whether or not the separate claims are owned by or due to different parties. If any demand is for damages in a civil action, the amount thereof must be specifically alleged. Petitioner compares the above-quoted provisions with the pertinent portion of the former rule under Section 88 of the Judiciary Act of 1948 as amended which reads as follows: ... Where there are several claims or causes of action between the same parties embodied in the same complaint, the amount of the demand shall be the totality of the demand in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions; but where the claims or causes of action joined in a single complaint are separately owned by or due to different parties, each separate claim shall furnish the jurisdictional test. ... and argues that with the deletion of the proviso in the former rule, the totality rule was reduced to clarity and brevity and the jurisdictional test is the totality of the claims in all, not in each, of the causes of action, irrespective of whether the causes of action arose out of the same or different transactions. This argument is partly correct. There is no difference between the former and present rules in cases where a plaintiff sues a defendant on two or more separate causes of action. In such cases, the amount of the demand shall be the totality of the claims in all the causes of action irrespective of whether the causes of action arose out of the same or different transactions. If the total demand exceeds twenty thousand pesos, then the regional trial court has jurisdiction. Needless to state, if the causes of action are separate and independent, their joinder in one complaint is permissive and not mandatory, and any cause of action where the amount of the demand is twenty thousand pesos or less may be the subject of a separate complaint filed with a metropolitan or municipal trial court.

On the other hand, there is a difference between the former and present rules in cases where two or more plaintiffs having separate causes of action against a defendant join in a single complaint. Under the former rule, "where the claims or causes of action joined in a single complaint are separately owned by or due to different parties, each separate claim shall furnish the jurisdictional test" (Section 88 of the Judiciary Act of 1948 as amended, supra). This was based on the ruling in the case of Vda. de Rosario vs. Justice of the Peace, 99 Phil. 693. As worded, the former rule applied only to cases of permissive joinder of parties plaintiff. However, it was also applicable to cases of permissive joinder of parties defendant, as may be deduced from the ruling in the case of Brillo vs. Buklatan, thus: Furthermore, the first cause of action is composed of separate claims against several defendants of different amounts each of which is not more than P2,000 and falls under the jurisdiction of the justice of the peace court under section 88 of Republic Act No, 296. The several claims do not seem to arise from the same transaction or series of transactions and there seem to be no questions of law or of fact common to all the defendants as may warrant their joinder under Rule 3, section 6. Therefore, if new complaints are to be filed in the name of the real party in interest they should be filed in the justice of the peace court. (87 Phil. 519, 520, reiterated in Gacula vs. Martinez, 88 Phil. 142, 146) Under the present law, the totality rule is applied also to cases where two or more plaintiffs having separate causes of action against a defendant join in a single complaint, as well as to cases where a plaintiff has separate causes of action against two or more defendants joined in a single complaint. However, the causes of action in favor of the two or more plaintiffs or against the two or more defendants should arise out of the same transaction or series of transactions and there should be a common question of law or fact, as provided in Section 6 of Rule 3. The difference between the former and present rules in cases of permissive joinder of parties may be illustrated by the two cases which were cited in the case of Vda. de Rosario vs. Justice of the Peace (supra) as exceptions to the totality rule. In the case of Soriano y Cia vs. Jose (86 Phil. 523), where twenty-nine dismissed employees joined in a complaint against the defendant to collect their respective claims, each of which was within the jurisdiction of the municipal court although the total exceeded the jurisdictional amount, this Court held that under the law then the municipal court had jurisdiction. In said case, although the plaintiffs' demands were separate, distinct and independent of one another, their joint suit was authorized under Section 6 of Rule 3 and each separate claim furnished the jurisdictional test. In the case of International Colleges, Inc. vs. Argonza (90 Phil. 470), where twenty-five dismissed teachers jointly sued the defendant for unpaid salaries, this Court also held that the municipal court had jurisdiction because the amount of each claim was within, although the total exceeded, its jurisdiction and it was a case of permissive joinder of parties plaintiff under Section 6 of Rule 3. Under the present law, the two cases above cited (assuming they do not fall under the Labor Code) would be under the jurisdiction of the regional trial court. Similarly, in the abovecited cases of Brillo vs. Buklatan and Gacula vs. Martinez (supra), if the separate claims against the several defendants arose out of the same transaction or series of transactions and there is a common question of law or fact, they would now be under the jurisdiction of the regional trial court.

In other words, in cases of permissive joinder of parties, whether as plaintiffs or as defendants, under Section 6 of Rule 3, the total of all the claims shall now furnish the jurisdictional test. Needless to state also, if instead of joining or being joined in one complaint separate actions are filed by or against the parties, the amount demanded in each complaint shall furnish the jurisdictional test. In the case at bar, the lower court correctly held that the jurisdictional test is subject to the rules on joinder of parties pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and that, after a careful scrutiny of the complaint, it appears that there is a misjoinder of parties for the reason that the claims against respondents Binongcal and Calion are separate and distinct and neither of which falls within its jurisdiction. WHEREFORE, the order appealed from is affirmed, without pronouncement as to costs.

SO ORDERED.

PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN, petitioners, vs. STANDARD INSURANCE COMPANY, INC., and MARTINA GICALE, respondents. DECISION SANDOVAL-GUTIERREZ, J.: Before us is a petition for review on certiorari assailing the Decision[1] dated July 23 1999 and Resolution[2] dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453, entitled Standard Insurance Company, Inc., and Martina Gicale vs. PANTRANCO North Express, Inc., and Alexander Buncan. In the afternoon of October 28, 1984, Crispin Gicale was driving the passenger jeepney owned by his mother Martina Gicale, respondent herein. It was then raining. While driving north bound along the National Highway in Talavera, Nueva Ecija, a passenger bus, owned by Pantranco North Express, Inc., petitioner, driven by Alexander Buncan, also a petitioner, was trailing behind. When the two vehicles were negotiating a curve along the highway, the passenger bus overtook the jeepney. In so doing, the passenger bus hit the left rear side of the jeepney and sped away. Crispin reported the incident to the Talavera Police Station and respondent Standard Insurance Co., Inc. (Standard), insurer of the jeepney. The total cost of the repair was P21,415.00, but respondent Standard paid only P8,000.00. Martina Gicale shouldered the balance of P13,415.00. Thereafter, Standard and Martina, respondents, demanded reimbursement from petitioners Pantranco and its driver Alexander Buncan, but they refused. This prompted respondents to file with the Regional Trial Court (RTC), Branch 94, Manila, a complaint for sum of money. In their answer, both petitioners specifically denied the allegations in the complaint and averred that it is the Metropolitan Trial Court, not the RTC, which has jurisdiction over the case. On June 5, 1992, the trial court rendered a Decision[3] in favor of respondents Standard and Martina, thus: WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs, Standard Insurance Company and Martina Gicale, and against defendants Pantranco Bus Company and Alexander Buncan, ordering the latter to pay as follows: (1) to pay plaintiff Standard Insurance the amount of P8,000.00 with interest due thereon from November 27, 1984 until fully paid; (2) to pay plaintiff Martina Gicale the amount of P13,415.00 with interest due thereon from October 22, 1984 until fully paid; (3) to pay the sum of P10,000.00 for attorneys fees;

(4)

to pay the expenses of litigation and the cost of suit.

SO ORDERED. On appeal, the Court of Appeals, in a Decision[4] dated July 23, 1999, affirmed the trial courts ruling, holding that: The appellants argue that appellee Gicales claim of P13,415.00 and appellee insurance companys claim of P8,000.00 individually fell under the exclusive original jurisdiction of the municipal trial court. This is not correct because under the Totality Rule provided for under Sec. 19, Batas Pambansa Bilang 129, it is the sum of the two claims that determines the jurisdictional amount. xxx In the case at bench, the total of the two claims is definitely more than P20,000.00 which at the time of the incident in question was the jurisdictional amount of the Regional Trial Court. Appellants contend that there was a misjoinder of parties. Assuming that there was, under the Rules of Court (Sec. 11, Rule 7) as well as under the Rules of Civil Procedure (ditto), the same does not affect the jurisdiction of the court nor is it a ground to dismiss the complaint. xxx It does not need perspicacity in logic to see that appellees Gicales and insurance companys individual claims against appellees (sic) arose from the same vehicular accident on October 28, 1984 involving appellant Pantrancos bus and appellee Gicales jeepney. That being the case, there was a question of fact common to all the parties: Whose fault or negligence caused the damage to the jeepney? Appellants submit that they were denied their day in court because the case was deemed submitted for decision without even declaring defendants in default or to have waived the presentation of evidence. This is incorrect. Of course, the court did not declare defendants in default because that is done only when the defendant fails to tender an answer within the reglementary period. When the lower court ordered that the case is deemed submitted for decision that meant that the defendants were deemed to have waived their right to present evidence. If they failed to adduce their evidence, they should blame nobody but themselves. They failed to be present during the scheduled hearing for the reception of their evidence despite notice and without any motion or explanation. They did not even file any motion for reconsideration of the order considering the case submitted for decision. Finally, contrary to the assertion of the defendant-appellants, the evidence preponderantly established their liability for quasi-delict under Article 2176 of the Civil Code. Petitioners filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated November 4, 1999.

Hence, this petition for review on certiorari raising the following assignments of error: I WHETHER OR NOT THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT OF THE ACTION CONSIDERING THAT RESPONDENTS RESPECTIVE CAUSE OF ACTION AGAINST PETITIONERS DID NOT ARISE OUT OF THE SAME TRANSACTION NOR ARE THERE QUESTIONS OF LAW AND FACTS COMMON TO BOTH PETITIONERS AND RESPONDENTS. II WHETHER OR NOT PETITIONERS ARE LIABLE TO RESPONDENTS CONSIDERING THAT BASED ON THE EVIDENCE ADDUCED AND LAW APPLICABLE IN THE CASE AT BAR, RESPONDENTS HAVE NOT SHOWN ANY RIGHT TO THE RELIEF PRAYED FOR. III WHETHER OR NOT PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE PROCESS. For their part, respondents contend that their individual claims arose out of the same vehicular accident and involve a common question of fact and law. Hence, the RTC has jurisdiction over the case. I Petitioners insist that the trial court has no jurisdiction over the case since the cause of action of each respondent did not arise from the same transaction and that there are no common questions of law and fact common to both parties. Section 6, Rule 3 of the Revised Rules of Court,[5] provides: Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest. Permissive joinder of parties requires that: (a) the right to relief arises out of the same transaction or series of transactions; (b) there is a question of law or fact common to all the plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by the provisions of the Rules on jurisdiction and venue.[6]

In this case, there is a single transaction common to all, that is, Pantrancos bus hitting the rear side of the jeepney. There is also a common question of fact, that is, whether petitioners are negligent. There being a single transaction common to both respondents, consequently, they have the same cause of action against petitioners. To determine identity of cause of action, it must be ascertained whether the same evidence which is necessary to sustain the second cause of action would have been sufficient to authorize a recovery in the first.[7] Here, had respondents filed separate suits against petitioners, the same evidence would have been presented to sustain the same cause of action. Thus, the filing by both respondents of the complaint with the court below is in order. Such joinder of parties avoids multiplicity of suit and ensures the convenient, speedy and orderly administration of justice. Corollarily, Section 5(d), Rule 2 of the same Rules provides: Sec. 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions: xxx (d) Where the claims in all the causes of action are principally for recovery of money the aggregate amount claimed shall be the test of jurisdiction. The above provision presupposes that the different causes of action which are joined accrue in favor of the same plaintiff/s and against the same defendant/s and that no misjoinder of parties is involved.[8] The issue of whether respondents claims shall be lumped together is determined by paragraph (d) of the above provision. This paragraph embodies the totality rule as exemplified by Section 33 (1) of B.P. Blg. 129[9] which states, among others, that where there are several claims or causes of action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions. As previously stated, respondents cause of action against petitioners arose out of the same transaction. Thus, the amount of the demand shall be the totality of the claims. Respondent Standards claim is P8,000.00, while that of respondent Martina Gicale is P13,415.00, or a total of P21,415.00. Section 19 of B.P. Blg. 129 provides that the RTC has exclusive original jurisdiction over all other cases, in which the demand, exclusive of interest and cost or the value of the property in controversy, amounts to more than twenty thousand pesos (P20,000.00). Clearly, it is the RTC that has jurisdiction over the instant case. It bears emphasis that when the complaint was filed, R.A. 7691 expanding the jurisdiction of the Metropolitan, Municipal and Municipal Circuit Trial Courts had not yet taken effect. It became effective on April 15, 1994. II

The finding of the trial court, affirmed by the Appellate Court, that petitioners are negligent and thus liable to respondents, is a factual finding which is binding upon us, a rule well-established in our jurisprudence. It has been repeatedly held that the trial court's factual findings, when affirmed by the Appellate Court, are conclusive and binding upon this Court, if they are not tainted with arbitrariness or oversight of some fact or circumstance of significance and influence. Petitioners have not presented sufficient ground to warrant a deviation from this rule.[10] III There is no merit in petitioners contention that they were denied due process. Records show that during the hearing, petitioner Pantrancos counsel filed two motions for resetting of trial which were granted by the trial court. Subsequently, said counsel filed a notice to withdraw. After respondents had presented their evidence, the trial court, upon petitioners motion, reset the hearing to another date. On this date, Pantranco failed to appear. Thus, the trial court warned Pantranco that should it fail to appear during the next hearing, the case will be submitted for resolution on the basis of the evidence presented. Subsequently, Pantrancos new counsel manifested that his client is willing to settle the case amicably and moved for another postponement. The trial court granted the motion. On the date of the hearing, the new counsel manifested that Pantrancos employees are on strike and moved for another postponement. On the next hearing, said counsel still failed to appear. Hence, the trial court considered the case submitted for decision. We have consistently held that the essence of due process is simply an opportunity to be heard, or an opportunity to explain ones side or an opportunity to seek for a reconsideration of the action or ruling complained of.[11] Petitioner Pantranco filed an answer and participated during the trial and presentation of respondents evidence. It was apprised of the notices of hearing issued by the trial court. Indeed, it was afforded fair and reasonable opportunity to explain its side of the controversy. Clearly, it was not denied of its right to due process. What is frowned upon is the absolute lack of notice and hearing which is not present here. WHEREFORE, the petition is DENIED. The assailed Decision dated July 23 1999 and Resolution dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453 are hereby AFFIRMED. Costs against petitioners. SO ORDERED.

SPOUSES DANILO and CRISTINA DECENA, petitioners, vs. SPOUSES PEDRO and VALERIA PIQUERO, respondents. RESOLUTION CALLEJO, SR., J.: The petitioners, Spouses Danilo and Cristina Decena were the owners of a parcel of land, with a house constructed thereon, located in Paraaque, Metro Manila (now Paraaque City) covered by Transfer Certificate of Title (TCT) No. 134391 issued on February 24, 1998.[1] On September 7, 1997, the petitioners and the respondents, the Spouses Pedro and Valeria Piquero, executed a Memorandum of Agreement (MOA)[2] in which the former sold the property to the latter for the price of P940,250.00 payable in six (6) installments via postdated checks. The vendees forthwith took possession of the property. It appears in the MOA that the petitioners obliged themselves to transfer the property to the respondents upon the execution of the MOA with the condition that if two of the postdated checks would be dishonored by the drawee bank, the latter would be obliged to reconvey the property to the petitioners. On May 17, 1999, the petitioners, then residents of Malolos, Bulacan, filed a Complaint[3] against the respondents with the Regional Trial Court (RTC) of Malolos, Bulacan, for the annulment of the sale/MOA, recovery of possession and damages. The petitioners alleged therein that, they did not transfer the property to and in the names of the respondents as vendees because the first two checks drawn and issued by them in payment for the purchase price of the property were dishonored by the drawee bank, and were not replaced with cash despite demands therefor. The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus: a. The sale/Memorandum of Agreement (Annex A, supra) be declared null and void, rescinded and with no further force and effect; b. Defendants, and all persons claiming right under them, be ordered to immediately vacate the subject property and turnover its possession to the plaintiffs; c. Defendants, jointly and severally, be ordered to pay the plaintiffs:

i. P10,000.00 monthly, starting 01 October 1997 until complete turnover of the subject property to the plaintiffs, as reasonable compensation for its continued unlawful use and occupation by the defendants; ii. P200,000.00 moral damages; iii. P200,000.00 exemplary damages;

iv. P250,000.00 attorneys fees and litigation related expenses; and v. the costs of suit. Other reliefs just and equitable are, likewise, prayed for.[4] The petitioners declared in their complaint that the property subject of the complaint was valued at P6,900,000.00. They appended copies of the MOA and TCT No. 134391 to their complaint. The case was eventually raffled to Branch 13 of the RTC of Malolos, Bulacan. The respondents filed a motion to dismiss the complaint on the ground, inter alia, of improper venue and lack of jurisdiction over the property subject matter of the action. On the first ground, the respondents averred that the principal action of the petitioners for the rescission of the MOA, and the recovery of the possession of the property is a real action and not a personal one; hence, it should have been brought in the RTC of Paraaque City, where the property subject matter of the action was located, and not in the RTC of Malolos, Bulacan, where the petitioners resided. The respondents posited that the said court had no jurisdiction over the property subject matter of the action because it was located in Paraaque City.[5] In opposition, the petitioners insisted that their action for damages and attorneys fees is a personal action and not a real action; hence, it may be filed in the RTC of Bulacan where they reside. They averred that while their second cause of action for the recovery of the possession of the property is a real action, the same may, nevertheless, be joined with the rest of their causes of action for damages, conformably with Section 5(c), Rule 2 of the Rules of Court.[6] By way of reply, the respondents averred that Section 5(c), Rule 2 of the Rules of Court applies only when one or more of multiple causes of action falls within the exclusive jurisdiction of the first level courts, and the other or others are within the exclusive jurisdiction of the RTC, and the venue lies therein. On February 9, 2000, the trial court issued an Order[7] denying the motion for lack of merit. It found merit in the petitioners contention that Section 5(c), Rule 2 was applicable. Meanwhile, the case was re-raffled to Branch 10 of the RTC of Malolos, Bulacan. In a Motion[8] dated December 20, 2000, the respondents prayed for the reconsideration of the trial courts February 9, 2000 Order. On October 16, 2001, the court issued an Order[9] granting the motion and ordered the dismissal of the complaint. It ruled that the principal action of the petitioners was a real action and should have been filed in the RTC of Paraaque City where the property subject matter of the complaint was located. However, since the case was filed in the RTC of Bulacan where the petitioners reside, which court had no jurisdiction over the subject matter of the action, it must be dismissed. Hence, the present recourse. The petition has no merit.

The sole issue is whether or not venue was properly laid by the petitioners in the RTC of Malolos, Bulacan. The resolution of this issue is, in turn, anchored on whether Section 5, Rule 2 of the Rules of Court invoked by the petitioners is applicable in this case. Under the said Rule, a party may, in one pleading, assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party subject to the conditions therein enumerated, one of which is Section 5(c) which reads: Sec. 5. Joinder of causes of action. -- (c) Where the causes of action are between the same parties but pertain to different venues or jurisdiction, the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein; Explaining the aforequoted condition, Justice Jose Y. Feria declared: (c) Under the third condition, if one cause of action falls within the jurisdiction of the Regional Trial Court and the other falls within the jurisdiction of a Municipal Trial Court, the action should be filed in the Regional Trial Court. If the causes of action have different venues, they may be joined in any of the courts of proper venue. Hence, a real action and a personal action may be joined either in the Regional Trial Court of the place where the real property is located or where the parties reside.[10] A cause of action is an act or omission of one party in violation of the legal right of the other which causes the latter injury. The essential elements of a cause of action are the following: (1) the existence of a legal right of the plaintiff; (2) a correlative legal duty of the defendant to respect ones right; and (3) an act or omission of the defendant in violation of the plaintiffs right.[11] A cause of action should not be confused with the remedies or reliefs prayed for. A cause of action is to be found in the facts alleged in the complaint and not in the prayer for relief. It is the substance and not the form that is controlling.[12] A party may have two or more causes of action against another party. A joinder of causes of action is the uniting of two or more demands or right of action in a complaint. The question of the joinder of causes of action involves in particular cases a preliminary inquiry as to whether two or more causes of action are alleged.[13] In declaring whether more than one cause of action is alleged, the main thrust is whether more than one primary right or subject of controversy is present. Other tests are whether recovery on one ground would bar recovery on the other, whether the same evidence would support the other different counts and whether separate actions could be maintained for separate relief;[14] or whether more than one distinct primary right or subject of controversy is alleged for enforcement or adjudication.[15] A cause of action may be single although the plaintiff seeks a variety of remedies. The mere fact that the plaintiff prays for multiple reliefs does not indicate that he has stated more than one

cause of action. The prayer may be an aid in interpreting the petition and in determining whether or not more than one cause of action is pleaded.[16] If the allegations of the complaint show one primary right and one wrong, only one cause of action is alleged even though other matters are incidentally involved, and although different acts, methods, elements of injury, items of claims or theories of recovery are set forth.[17] Where two or more primary rights and wrongs appear, there is a joinder of causes of action. After due consideration of the foregoing, we find and so rule that Section 5(c), Rule 2 of the Rules of Court does not apply. This is so because the petitioners, as plaintiffs in the court a quo, had only one cause of action against the respondents, namely, the breach of the MOA upon the latters refusal to pay the first two installments in payment of the property as agreed upon, and turn over to the petitioners the possession of the real property, as well as the house constructed thereon occupied by the respondents. The claim for damages for reasonable compensation for the respondents use and occupation of the property, in the interim, as well as moral and exemplary damages suffered by the petitioners on account of the aforestated breach of contract of the respondents are merely incidental to the main cause of action, and are not independent or separate causes of action.[18] The action of the petitioners for the rescission of the MOA on account of the respondents breach thereof and the latters failure to return the premises subject of the complaint to the petitioners, and the respondents eviction therefrom is a real action.[19] As such, the action should have been filed in the proper court where the property is located, namely, in Paraaque City, conformably with Section 1, Rule 4 of the Rules of Court which reads: SECTION 1. Venue of real actions. Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. Since the petitioners, who were residents of Malolos, Bulacan, filed their complaint in the said RTC, venue was improperly laid; hence, the trial court acted conformably with Section 1(c), Rule 16 of the Rules of Court when it ordered the dismissal of the complaint. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the petitioners. SO ORDERED.

G.R. No. 171456

August 9, 2007

UNIWIDE HOLDINGS, INC., petitioner, vs. ALEXANDER M. CRUZ, respondent. DECISION CARPIO MORALES, J.: Petitioner, Uniwide Holdings, Inc. (UHI), whose principal office is located in Paraaque City, entered into a Franchise Agreement1 (the agreement) granting respondent, Alexander M. Cruz (Cruz), a five-year franchise to adopt and use the "Uniwide Family Store System" for the establishment and operation of a "Uniwide Family Store" along Marcos Highway, Sta. Cruz, Cogeo, Marikina City. Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a monthly service fee of P50,000 or three percent of gross monthly purchases, whichever is higher, payable within five days after the end of each month without need of formal billing or demand from UHI. In case of any delay in the payment of the monthly service fee, Cruz would, under Article 10.33 of the agreement, be liable to pay an interest charge of three percent per month. It appears that Cruz had purchased goods from UHIs affiliated companies First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI). In August 2002, FPC and USWCI executed Deeds of Assignment4 in favor of UHI assigning all their rights and interests over Cruzs accounts payable to them. As of August 13, 2002, Cruz had outstanding obligations with UHI, FPC, and USWCI in the total amount of P1,358,531.89, drawing UHI to send him a letter of even date for the settlement thereof in five days. His receipt of the letter notwithstanding, Cruzs accounts remained unsettled. Thus UHI filed a complaint5 for collection of sum of money before the Regional Trial Court (RTC) of Paraaque docketed as Civil Case No. 04-0278 against Cruz on the following causes of action: First Cause of Action 10. Being entitled to the payment of monthly service fee pursuant to the FA, which defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: One Million Three Hundred Twenty Seven Thousand Six Hundred Sixty Nine & 83/100 (P1,327,669.83), computed as of 05 April 2004, for which defendant should be held liable together with legal interest thereon from the date of filing of this Complaint, until fully paid.

Second Cause of Action 11. Being the assignee of the receivable of FPC, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: Sixty Four Thousand One Hundred Sixty Five & 96/100 (P64,165.96) for which defendant should be held liable together with the legal interest thereon computed from date of receipt of plaintiffs demand letter, or on August 16, 2002 to be exact, until fully paid. Third Cause of Action 12. Being the assignee of the receivable of USWCI, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the total amount of Phil. Peso: One Million Five Hundred Seventy Nine Thousand Sixty One & 36/100 (P1,579,061.36), computed as of 05 April 2004, inclusive of the two and a half percent (2.5%) monthly interest, as and by way of penalty, and the three (3%) annual interest on the unpaid amount, for which defendant should be held liable, with legal interest thereon from the date of filing of this Complaint, until fully paid. Fourth Cause of Action 13. y reason of defendants obstinate refusal or failure to pay his indebtedness, plaintiff was constrained to file this Complaint and in the process incur expenses by way of attorneys fees, which could be reasonably estimated to reach at least Phil. Peso: Two Hundred Fifty Thousand (P250,000.00) and for which defendant should be held answerable for.6 (Emphasis and underscoring supplied) To the complaint Cruz filed a motion to dismiss7 on the ground of improper venue, he invoking Article 27.5 of the agreement which reads: 27.5 Venue Stipulation The Franchisee consents to the exclusive jurisdiction of the courts of Quezon City, the Franchisee waiving any other venue.8 (Emphasis supplied) Branch 258 of the Paraaque RTC, by Order9 of December 12, 2005, granted Cruzs motion to dismiss. Hence, the present petition before this Court, raising the sole legal issue of: WHETHER A CASE BASED ON SEVERAL CAUSES OF ACTION IS DISMISSIBLE ON THE GROUND OF IMPROPER VENUE WHERE ONLY ONE OF THE CAUSES OF ACTION ARISES FROM A CONTRACT WITH EXCLUSIVE VENUE STIPULATION.10 (Underscoring supplied) Petitioner contends that nowhere in the agreement is there a mention of FPC and USWCI, and neither are the two parties thereto, hence, they cannot be bound to the stipulation on "exclusive venue."

The petition is impressed with merit. The general rule on venue of personal actions, as in petitioners complaint for collection of sum of money, is embodied in Section 2, Rule 4 of the Rules of Court which provides: Sec. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a nonresident defendant, where he may be found, at the election of the plaintiff. (Emphasis and underscoring supplied) The afore-quoted provision is, however, qualified by Section 4 of the same rule which allows parties, before the filing of the action, to validly agree in writing on an exclusive venue.11 The forging of a written agreement on an exclusive venue of an action does not, however, preclude parties from bringing a case to other venues. Where there is a joinder of causes of action between the same parties one of which does not arise out of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at bar, may be brought before other venues provided that such other cause of action falls within the jurisdiction of the court and the venue lies therein.12 Based on the allegations in petitioners complaint, the second and third causes of action are based on the deeds of assignment executed in its favor by FPC and USWCI. The deeds bear no exclusive venue stipulation with respect to the causes of action thereunder. Hence, the general rule on venue applies that the complaint may be filed in the place where the plaintiff or defendant resides.13 It bears emphasis that the causes of action on the assigned accounts are not based on a breach of the agreement between UHI and Cruz. They are based on separate, distinct and independent contracts-deeds of assignment in which UHI is the assignee of Cruzs obligations to the assignors FPC and USWCI. Thus, any action arising from the deeds of assignment cannot be subjected to the exclusive venue stipulation embodied in the agreement. So San Miguel Corporation v. Monasterio14 enlightens: Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit relates to breach of said contract. But where the exclusivity clause does not make it necessarily encompassing, such that even those not related to the enforcement of the contract should be subject to the exclusive venue, the stipulation designating exclusive venues should be strictly confined to the specific undertaking or agreement. Otherwise, the basic principles of freedom to contract might work to the great disadvantage of a weak party-suitor who ought to be allowed free access to courts of justice.15 (Emphasis and underscoring supplied) In fine, since the other causes of action in petitioners complaint do not relate to a breach of the agreement it forged with Cruz embodying the exclusive venue stipulation, they should not be subjected thereto. As San Miguel further enlightens:

Restrictive stipulations are in derogation of the general policy of making it more convenient for the parties to institute actions arising from or in relation to their agreements. Thus, the restriction should be strictly construed as relating solely to the agreement for which the exclusive venue stipulation is embodied. Expanding the scope of such limitation on a contracting party will create unwarranted restrictions which the parties might find unintended or worse, arbitrary and oppressive.16 (Underscoring supplied) WHEREFORE, the petition is GRANTED. The December 12, 2005 Order of Regional Trial Court of Paraaque City, Branch 258 in Civil Case No. 04-0278 is SET ASIDE. The case is REMANDED to said court which is directed to reinstate the case to its docket and conduct further proceedings thereon with dispatch. SO ORDERED.

G.R. No. 102976 October 25, 1995 IRON AND STEEL AUTHORITY, petitioner, vs. THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER CORPORATION, respondents.

FELICIANO, J.: Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree (P.D.) No. 272 dated 9 August 1973 in order, generally, to develop and promote the iron and steel industry in the Philippines. The objectives of the ISA are spelled out in the following terms:
Sec. 2. Objectives The Authority shall have the following objectives: (a) to strengthen the iron and steel industry of the Philippines and to expand the domestic and export markets for the products of the industry; (b) to promote the consolidation, integration and rationalization of the industry in order to increase industry capability and viability to service the domestic market and to compete in international markets; (c) to rationalize the marketing and distribution of steel products in order to achieve a balance between demand and supply of iron and steel products for the country and to ensure that industry prices and profits are at levels that provide a fair balance between the interests of investors, consumers suppliers, and the public at large; (d) to promote full utilization of the existing capacity of the industry, to discourage investment in excess capacity, and in coordination, with appropriate government agencies to encourage capital investment in priority areas of the industry; (e) to assist the industry in securing adequate and low-cost supplies of raw materials and to reduce the excessive dependence of the country on imports of iron and steel.

The list of powers and functions of the ISA included the following:
Sec. 4. Powers and Functions. The authority shall have the following powers and functions: xxx xxx xxx (j) to initiate expropriation of land required for basic iron and steel facilities for subsequent resale and/or lease to the companies involved if it is shown that such use of the State's power is necessary to implement the construction of capacity which is needed for the attainment of the objectives of the Authority; xxx xxx xxx

(Emphasis supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August 1973. 1 When ISA's original term expired on 10 October 1978, its term was extended for another ten (10) years by Executive Order No. 555 dated 31 August 1979. The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National Development Corporation which is itself an entity wholly owned by the National Government, embarked on an expansion program embracing, among other things, the construction of an integrated steel mill in Iligan City. The construction of such a steel mill was considered a priority and major industrial project of the Government. Pursuant to the expansion program of the NSC, Proclamation No. 2239 was issued by the President of the Philippines on 16 November 1982 withdrawing from sale or settlement a large tract of public land (totalling about 30.25 hectares in area) located in Iligan City, and reserving that land for the use and immediate occupancy of NSC. Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a non-operational chemical fertilizer plant and related facilities owned by private respondent Maria Cristina Fertilizer Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16 November 1982, was issued directing the NSC to "negotiate with the owners of MCFC, for and on behalf of the Government, for the compensation of MCFC's present occupancy rights on the subject land." LOI No. 1277 also directed that should NSC and private respondent MCFC fail to reach an agreement within a period of sixty (60) days from the date of LOI No. 1277, petitioner ISA was to exercise its power of eminent domain under P.D. No. 272 and to initiate expropriation proceedings in respect of occupancy rights of private respondent MCFC relating to the subject public land as well as the plant itself and related facilities and to cede the same to the NSC. 2 Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August 1983, petitioner ISA commenced eminent domain proceedings against private respondent MCFC in the Regional Trial Court, Branch 1, of Iligan City, praying that it (ISA) be places in possession of the property involved upon depositing in court the amount of P1,760,789.69 representing ten percent (10%) of the declared market values of that property. The Philippine National Bank, as mortgagee of the plant facilities and improvements involved in the expropriation proceedings, was also impleaded as partydefendant. On 17 September 1983, a writ of possession was issued by the trial court in favor of ISA. ISA in turn placed NSC in possession and control of the land occupied by MCFC's fertilizer plant installation. The case proceeded to trial. While the trial was ongoing, however, the statutory existence of petitioner ISA expired on 11 August 1988. MCFC then filed a motion to dismiss, contending that no valid judgment could be rendered against ISA which had ceased to be a juridical person. Petitioner ISA filed its opposition to this motion.

In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss and did dismiss the case. The dismissal was anchored on the provision of the Rules of Court stating that "only natural or juridical persons or entities authorized by law may be parties in a civil case." 3 The trial court also referred to non-compliance by petitioner ISA with the requirements of Section 16, Rule 3 of the Rules of Court. 4 Petitioner ISA moved for reconsideration of the trial court's Order, contending that despite the expiration of its term, its juridical existence continued until the winding up of its affairs could be completed. In the alternative, petitioner ISA urged that the Republic of the Philippines, being the real party-in-interest, should be allowed to be substituted for petitioner ISA. In this connection, ISA referred to a letter from the Office of the President dated 28 September 1988 which especially directed the Solicitor General to continue the expropriation case. The trial court denied the motion for reconsideration, stating, among other things that:
The property to be expropriated is not for public use or benefit [__] but for the use and benefit [__] of NSC, a government controlled private corporation engaged in private business and for profit, specially now that the government, according to newspaper reports, is offering for sale to the public its [shares of stock] in the National Steel Corporation in line with the pronounced policy of the present administration to disengage 5 the government from its private business ventures. (Brackets supplied)

Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the Court of Appeals affirmed the order of dismissal of the trial court. The Court of Appeals held that petitioner ISA, "a government regulatory agency exercising sovereign functions," did not have the same rights as an ordinary corporation and that the ISA, unlike corporations organized under the Corporation Code, was not entitled to a period for winding up its affairs after expiration of its legally mandated term, with the result that upon expiration of its term on 11 August 1987, ISA was "abolished and [had] no more legal authority to perform governmental functions." The Court of Appeals went on to say that the action for expropriation could not prosper because the basis for the proceedings, the ISA's exercise of its delegated authority to expropriate, had become ineffective as a result of the delegate's dissolution, and could not be continued in the name of Republic of the Philippines, represented by the Solicitor General:
It is our considered opinion that under the law, the complaint cannot prosper, and therefore, has to be dismissed without prejudice to the refiling of a new complaint for expropriation if the Congress sees it fit." (Emphases supplied)

At the same time, however, the Court of Appeals held that it was premature for the trial court to have ruled that the expropriation suit was not for a public purpose, considering that the parties had not yet rested their respective cases. In this Petition for Review, the Solicitor General argues that since ISA initiated and prosecuted the action for expropriation in its capacity as agent of the Republic of the Philippines, the Republic, as principal of ISA, is entitled to be substituted and to be made a party-plaintiff after the agent ISA's term had expired.

Private respondent MCFC, upon the other hand, argues that the failure of Congress to enact a law further extending the term of ISA after 11 August 1988 evinced a "clear legislative intent to terminate the juridical existence of ISA," and that the authorization issued by the Office of the President to the Solicitor General for continued prosecution of the expropriation suit could not prevail over such negative intent. It is also contended that the exercise of the eminent domain by ISA or the Republic is improper, since that power would be exercised "not on behalf of the National Government but for the benefit of NSC." The principal issue which we must address in this case is whether or not the Republic of the Philippines is entitled to be substituted for ISA in view of the expiration of ISA's term. As will be made clear below, this is really the only issue which we must resolve at this time. Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:
Sec. 1. Who May Be Parties. Only natural or juridical persons or entities authorized by law may be parties in a civil action.

Under the above quoted provision, it will be seen that those who can be parties to a civil action may be broadly categorized into two (2) groups:
(a) those who are recognized as persons under the law whether natural, i.e., biological persons, on the one hand, or juridical person such as corporations, on the other hand; and (b) entities authorized by law to institute actions.

Examination of the statute which created petitioner ISA shows that ISA falls under category (b) above. P.D. No. 272, as already noted, contains express authorization to ISA to commence expropriation proceedings like those here involved:
Sec. 4. Powers and Functions. The Authority shall have the following powers and functions: xxx xxx xxx (j) to initiate expropriation of land required for basic iron and steel facilities for subsequent resale and/or lease to the companies involved if it is shown that such use of the State's power is necessary to implement the construction of capacity which is needed for the attainment of the objectives of the Authority; xxx xxx xxx (Emphasis supplied)

It should also be noted that the enabling statute of ISA expressly authorized it to enter into certain kinds of contracts "for and in behalf of the Government" in the following terms:

xxx xxx xxx (i) to negotiate, and when necessary, to enter into contracts for and in behalf of the government, for the bulk purchase of materials, supplies or services for any sectors in the industry, and to maintain inventories of such materials in order to insure a continuous and adequate supply thereof and thereby reduce operating costs of such sector; xxx xxx xxx (Emphasis supplied)

Clearly, ISA was vested with some of the powers or attributes normally associated with juridical personality. There is, however, no provision in P.D. No. 272 recognizing ISA as possessing general or comprehensive juridical personality separate and distinct from that of the Government. The ISA in fact appears to the Court to be a non-incorporated agency or instrumentality of the Republic of the Philippines, or more precisely of the Government of the Republic of the Philippines. It is common knowledge that other agencies or instrumentalities of the Government of the Republic are cast in corporate form, that is to say, are incorporated agencies or instrumentalities, sometimes with and at other times without capital stock, and accordingly vested with a juridical personality distinct from the personality of the Republic. Among such incorporated agencies or instrumentalities are: National Power Corporation; 6 Philippine Ports Authority; 7 National Housing Authority; 8 Philippine National Oil Company; 9 Philippine National Railways; 10 Public Estates Authority; 11 Philippine Virginia Tobacco Administration, 12 and so forth. It is worth noting that the term "Authority" has been used to designate both incorporated and non-incorporated agencies or instrumentalities of the Government. We consider that the ISA is properly regarded as an agent or delegate of the Republic of the Philippines. The Republic itself is a body corporate and juridical person vested with the full panoply of powers and attributes which are compendiously described as "legal personality." The relevant definitions are found in the Administrative Code of 1987:
Sec. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a particular statute, require a different meaning: (1) Government of the Republic of the Philippines refers to the corporate governmental entity through which the functions of government are exercised throughout the Philippines, including, save as the contrary appears from the context, the various arms through which political authority is made effective in the Philippines, whether pertaining to the autonomous regions, the provincial, city, municipal or barangay subdivisions or other forms of local government. xxx xxx xxx (4) Agency of the Government refers to any of the various units of the Government, including a department, bureau, office, instrumentality, or government-owned or controlled corporation, or a local government or a distinct unit therein. xxx xxx xxx

(10) Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations. xxx xxx xxx (Emphases supplied)

When the statutory term of a non-incorporated agency expires, the powers, duties and functions as well as the assets and liabilities of that agency revert back to, and are reassumed by, the Republic of the Philippines, in the absence of special provisions of law specifying some other disposition thereof such as, e.g., devolution or transmission of such powers, duties, functions, etc. to some other identified successor agency or instrumentality of the Republic of the Philippines. When the expiring agency is an incorporated one, the consequences of such expiry must be looked for, in the first instance, in the charter of that agency and, by way of supplementation, in the provisions of the Corporation Code. Since, in the instant case, ISA is a non-incorporated agency or instrumentality of the Republic, its powers, duties, functions, assets and liabilities are properly regarded as folded back into the Government of the Republic of the Philippines and hence assumed once again by the Republic, no special statutory provision having been shown to have mandated succession thereto by some other entity or agency of the Republic. The procedural implications of the relationship between an agent or delegate of the Republic of the Philippines and the Republic itself are, at least in part, spelled out in the Rules of Court. The general rule is, of course, that an action must be prosecuted and defended in the name of the real party in interest. (Rule 3, Section 2) Petitioner ISA was, at the commencement of the expropriation proceedings, a real party in interest, having been explicitly authorized by its enabling statute to institute expropriation proceedings. The Rules of Court at the same time expressly recognize the role of representative parties:
Sec. 3. Representative Parties. A trustee of an expressed trust, a guardian, an executor or administrator, or a party authorized by statute may sue or be sued without joining the party for whose benefit the action is presented or defended; but the court may, at any stage of the proceedings, order such beneficiary to be made a party. . . . . (Emphasis supplied)

In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or delegate or representative of the Republic of the Philippines pursuant to its authority under P.D. No. 272. The present expropriation suit was brought on behalf of and for the benefit of the Republic as the principal of ISA. Paragraph 7 of the complaint stated:
7. The Government, thru the plaintiff ISA, urgently needs the subject parcels of land for the construction and installation of iron and steel manufacturing facilities that are

indispensable to the integration of the iron and steel making industry which is vital to the promotion of public interest and welfare. (Emphasis supplied)

The principal or the real party in interest is thus the Republic of the Philippines and not the National Steel Corporation, even though the latter may be an ultimate user of the properties involved should the condemnation suit be eventually successful. From the foregoing premises, it follows that the Republic of the Philippines is entitled to be substituted in the expropriation proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little differently, the expiration of ISA's statutory term did not by itself require or justify the dismissal of the eminent domain proceedings. It is also relevant to note that the non-joinder of the Republic which occurred upon the expiration of ISA's statutory term, was not a ground for dismissal of such proceedings since a party may be dropped or added by order of the court, on motion of any party or on the court's own initiative at any stage of the action and on such terms as are just. 13 In the instant case, the Republic has precisely moved to take over the proceedings as party-plaintiff. In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the Court recognized that the Republic may initiate or participate in actions involving its agents. There the Republic of the Philippines was held to be a proper party to sue for recovery of possession of property although the "real" or registered owner of the property was the Philippine Ports Authority, a government agency vested with a separate juridical personality. The Court said:
It can be said that in suing for the recovery of the rentals, the Republic of the Philippines acted as principal of the Philippine Ports Authority, directly exercising the commission it 15 had earlier conferred on the latter as its agent. . . . (Emphasis supplied)

In E.B. Marcha, the Court also stressed that to require the Republic to commence all over again another proceeding, as the trial court and Court of Appeals had required, was to generate unwarranted delay and create needless repetition of proceedings:
More importantly, as we see it, dismissing the complaint on the ground that the Republic of the Philippines is not the proper party would result in needless delay in the settlement of this matter and also in derogation of the policy against multiplicity of suits. Such a decision would require the Philippine Ports Authority to refile the very same complaint already proved by the Republic of the Philippines and bring back as it were to square 16 one. (Emphasis supplied)

As noted earlier, the Court of Appeals declined to permit the substitution of the Republic of the Philippines for the ISA upon the ground that the action for expropriation could not prosper because the basis for the proceedings, the ISA's exercise of its delegated authority to expropriate, had become legally ineffective by reason of the expiration of

the statutory term of the agent or delegated i.e., ISA. Since, as we have held above, the powers and functions of ISA have reverted to the Republic of the Philippines upon the termination of the statutory term of ISA, the question should be addressed whether fresh legislative authority is necessary before the Republic of the Philippines may continue the expropriation proceedings initiated by its own delegate or agent. While the power of eminent domain is, in principle, vested primarily in the legislative department of the government, we believe and so hold that no new legislative act is necessary should the Republic decide, upon being substituted for ISA, in fact to continue to prosecute the expropriation proceedings. For the legislative authority, a long time ago, enacted a continuing or standing delegation of authority to the President of the Philippines to exercise, or cause the exercise of, the power of eminent domain on behalf of the Government of the Republic of the Philippines. The 1917 Revised Administrative Code, which was in effect at the time of the commencement of the present expropriation proceedings before the Iligan Regional Trial Court, provided that:
Sec. 64. Particular powers and duties of the President of the Philippines . In addition to his general supervisory authority, the President of the Philippines shall have such other specific powers and duties as are expressly conferred or imposed on him by law, and also, in particular, the powers and duties set forth in this Chapter. Among such special powers and duties shall be: xxx xxx xxx (h) To determine when it is necessary or advantageous to exercise the right of eminent domain in behalf of the Government of the Philippines; and to direct the Secretary of Justice, where such act is deemed advisable, to cause the condemnation proceedings to be begun in the court having proper jurisdiction. (Emphasis supplied)

The Revised Administrative Code of 1987 currently in force has substantially reproduced the foregoing provision in the following terms:
Sec. 12. Power of eminent domain. The President shall determine when it is necessary or advantageous to exercise the power of eminent domain in behalf of the National Government, and direct the Solicitor General, whenever he deems the action advisable, to institute expopriation proceedings in the proper court . (Emphasis supplied)

In the present case, the President, exercising the power duly delegated under both the 1917 and 1987 Revised Administrative Codes in effect made a determination that it was necessary and advantageous to exercise the power of eminent domain in behalf of the Government of the Republic and accordingly directed the Solicitor General to proceed with the suit. 17 It is argued by private respondent MCFC that, because Congress after becoming once more the depository of primary legislative power, had not enacted a statute extending the term of ISA, such non-enactment must be deemed a manifestation of a legislative design to discontinue or abort the present expropriation suit. We find this argument much too speculative; it rests too much upon simple silence on the part of Congress

and casually disregards the existence of Section 12 of the 1987 Administrative Code already quoted above. Other contentions are made by private respondent MCFC, such as, that the constitutional requirement of "public use" or "public purpose" is not present in the instant case, and that the indispensable element of just compensation is also absent. We agree with the Court of Appeals in this connection that these contentions, which were adopted and set out by the Regional Trial Court in its order of dismissal, are premature and are appropriately addressed in the proceedings before the trial court. Those proceedings have yet to produce a decision on the merits, since trial was still on going at the time the Regional Trial Court precipitously dismissed the expropriation proceedings. Moreover, as a pragmatic matter, the Republic is, by such substitution as party-plaintiff, accorded an opportunity to determine whether or not, or to what extent, the proceedings should be continued in view of all the subsequent developments in the iron and steel sector of the country including, though not limited to, the partial privatization of the NSC. WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to the extent that it affirmed the trial court's order dismissing the expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is REMANDED to the court a quo which shall allow the substitution of the Republic of the Philippines for petitioner Iron and Steel Authority and for further proceedings consistent with this Decision. No pronouncement as to costs. SO ORDERED.

G.R. Nos. L-63253-54 April 27, 1989 PABLO RALLA, petitioner, vs. HON. ROMULO P. UNTALAN, HON. DOMINGO CORONEL REYES, AND LEONIE RALLA, PETER RALLA AND MARINELLA RALLA, respondents. Rafael Triunfante for the Heirs of Pablo Ralla. Ruben R. Basa for respondents.

SARMIENTO, J.: This petition seeks the nullification of the Order of respondent Judge Romulo P. Untalan, 1 dated July 16,1981, excluding from the probate proceedings sixty-three parcels of land, as well as the Orders issued by respondent Judge Domingo Coronel Reyes, 2 denying the petitioner's motions for reconsideration of the same Order of Judge Untalan dated July 16, 1981. The petition's beginnings are traced to January 27, 1959, when Rosendo Ralla, a widower, filed a petition for the probate of his own will in the then Court of First Instance (now Regional Trial Court) of Albay, which was docketed as Special Proceedings No. 564. In his will he left his entire estate to his son, Pablo (the petitioner herein who, upon his death during the pendency of this petition, was substituted by his heirs), leaving nothing to his other son, Pedro. In the same year, Pedro Ralla filed an action for the partition of the estate of their mother, Paz Escarella; this was docketed as Civil Case No. 2023. In the course of the hearing of the probate case (Special Proceedings No. 564), Pablo Ralla filed a motion to dismiss the petition for probate on the ground that he was no longer interested in the allowance of the will of his late father, Rosendo Ralla, for its probate would no longer be beneficial and advantageous to him. This motion was denied, and the denial was denied by the Court of Appeals. (The latter court agreed with the lower court's conclusion that, indeed, the petitioner stood to gain if the testate proceedings were to be dismissed because then he would not be compelled to submit for inclusion in the inventory of the estate of Rosendo Ralla 149 parcels of land from which he alone had been collecting rentals and receiving income, to the exclusion and prejudice of his brother, Pedro Ralla, who was being deprived of his successional rights over the said properties.) The denial of this motion to dismiss was likewise affirmed by this Court (in G.R. No. L-26253). 3 On the scheduled hearing on November 3, 1966, the petitioner reiterated his lack of interest in the probate of the subject will. Consequently, the court, through Judge Perfecto Quicho, declared Pedro and Pablo Ralla the only

heirs of Rosendo Ralla who should share equally upon the division of the latter's estate, and thereupon converted the testate proceedings into one of intestacy. Meanwhile, the brothers agreed to compromise in the partition case (Civil Case No. 2023). On December 18, 1967, they entered into a project of partition whereby sixtythree parcels of land, apparently forming the estate of their deceased mother, Paz Escarella, were amicably divided between the two of them. This project of partition was approved on December 19,1967 by Judge Ezekiel Grageda. Eleven years later, or on February 28, 1978, Joaquin Chancoco, brother-in- law of the petitioner (Pablo) filed a petition, docketed as Special Proceedings No. 1106, for the probate of the same will of Rosendo Ralla on the ground that the decedent owed him P5,000.00. Pablo Ralla then filed a manifestation stating that he had no objections to the probate; thereafter, he filed a "Motion to Intervene as Petitioner for the Probate of the Will." This motion was heard ex parte and granted despite the written opposition of the heirs of Pedro Ralla. Likewise, the petition for probate was granted; Teodorico Almine, son-in-law of the petitioner, was appointed special administrator, over and above the objection of the heirs of Pedro Ralla. However, in taking possession of the properties belonging to the estate of Rosendo Ralla, Teodorico Almine also took possession of the sixty-three parcels of land covered by the project of partition mentioned earlier. Consequently, the heirs of Pedro Ralla (the private respondents herein) moved to exclude from the estate of Rosendo Ralla the aforesaid parcels of land. In an Omnibus order dated August 3, 1979, 4 respondent Judge Romulo P. Untalan ruled, inter alia, that the sixty-three parcels of land should be included in the proceedings for the settlement of the estate of Rosendo Ralla and that said proceedings (both Special Proceedings No. 564 and Special Proceedings No. 1106, which were ordered consolidated by this Court) should proceed as probate proceedings. About two years later, or on June 11, 1981, the private respondents filed a "Petition To Submit Anew For Consideration Of The Court The Exclusion Of 67 (sic) Parcels of Land Subject Of The Project Of Partition In Civil Case No. 2023." 5 In his Order of July 16,1981, Judge Untalan reconsidered his earlier Order, to wit:
Premises considered, Order is hereby issued reconsidering the Omnibus Order of this Court dated August 3,1979, more particularly paragraph 3 of the dispositive portion thereof. The Project of Partition should, therefore, be respected and upheld. Hence, the sixty-three (63) parcels referred to therein should be excluded from the probate proceedings and, likewise from the administration of Special Administrator Teodorico Almine, Jr. SO ORDERED. 6

Thereafter, the petitioner filed a motion for reconsideration of the foregoing order but the same was denied 7 by respondent Judge Domingo Coronel Reyes, to whose sala Special Proceedings No. 564 and No. 1 1 06 were apparently transferred. Still, a second motion for reconsideration was filed; the same, however, was also denied. 8

In assailing the aforesaid Order of July 16, 1981, the following arguments are raised in the present special civil action for certiorari. The first argument is stated as follows:
... The extrajudicial partition of the 63 parcels made after the filing of the petition for the probate of the Will, and before said Will was probated, is a NULLITY, considering that as already decided by this Court in the case of Ernesto M. Guevara, vs. Rosario Guevara et al., Vol. 74 Phil. Reports, there can be no valid partition among the heirs till after the Will had been probated. ... 9

The above argument is obviously flawed and misleading for the simple reason that the aforementioned partition was made in the civil case for partition of the estate of Paz Escarella, which is distinct from, and independent of, the special proceedings for the probate of the will of Rosendo Ralla. Verily, the rule is that there can be no valid partition among the heirs till after the will has been probated. This, of course, presupposes that the properties to be partitioned are the same properties embraced in the win. Thus the rule invoked is inapplicable in this instance where there are two separate cases (Civil Case No. 2023 for partition, and Special Proceedings No. 564 originally for the probate of a will), each involving the estate of a different person (Paz Escarella and Rosendo Ralla, respectively) comprising dissimilar properties. In his second and third arguments, 10 the petitioner claims that the Order of August 3, 1979 mentioned earlier could no longer be validly reversed by the court two years after it was issued. Thus, it is alleged that by flip-flopping, Judge Untalan committed a grave abuse of discretion. An examination of the August 3, 1979 Order would reveal that the same resolved a number of divergent issues (ten as enumerated) 11 springing from four separate special proceedings,12 all of which were pending in Branch I of the then Court of First Instance of Albay; accordingly, there are at least nine 13 specific directives contained therein. However, a distinction must be made between those directives that partake of final orders and the other directives that are in the nature of inter-locutory orders. Two closely related orders are the following quoted portions of the said August 3, 1979 Order of respondent Judge Untalan:
xxx xxx xxx 2. The 149 parcels referred to in our elucidation on issue No. 2 as well as the 63 lots also mentioned therein all of which may be summed up to 212 parcels, except those already validly disposed, conveyed, or transferred to third persons, should be submitted, at least provisionally, to the probate or testate proceedings. Hence, the Motion to exclusion the 149 parcels filed on June 2, 1979, by petitioner intervenor Pablo Ralla thru counsel in Special Proceeding 1106 and the motion for exclusion filed by the heirs of Pedro Ralla thru counsel in Special Proceedings 564 and 1106 are hereby Denied; (Emphasis supplied.)

3. The Project of partition, for purposes of these proceedings, is hereby stripped of its judicial recognition; 14

xxx xxx xxx

As regards the abovequoted paragraph 2, this Court finds that the same is interlocutory in character because it did not decide the action with finality and left substantial proceedings still to be had.15 The foregoing order of inclusion of the subject parcels of land was a mere incident that arose in the settlement of the estate of Rosendo Ralla. It is elementary that interlocutory orders, prior to the rendition of the final judgment, are, at any time, subject to such corrections or amendments as the court may deem proper. Thus, in issuing the questioned Order dated July 16,1981, which reversed the aforementioned interlocutory order and upheld the project of partition, respondent Judge Untalan acted well within his jurisdiction and without grave abuse of discretion. There is, however, a more important reason why we do not find any grave abuse of discretion in the issuance of the questioned Order dated July 16,1981. Consider the following undisputed facts: the properties involved in the present petition were the subject of the project of partition signed by both the petitioner, Pablo Ralla, and Pedro Ralla in Civil Case No. 2023; the lower court approved the said project of partition on December 19, 1967; subsequently, Pablo and Pedro Ralla jointly manifested that they had already received "the ownership and possession of the respective parcels of land adjudicated to them in the said project of partition," 16 and upon their motion Judge Ezekiel Grageda declared the partition case closed and terminated in its Order of December 29, 1967; there was no appeal made from this decision within the reglementary period to do so, consequently, it attained finality. Furthermore, the Court had occasion to rule that
Where a partition had not only been approved and thus become a judgment of the court, but distribution of the estate in pursuance of such partition had fully been carried out, and the heirs had received the property assigned to them, they are precluded from subsequently attacking its validity or any part of it. 17

Likewise:
Where a piece of land has been included in a partition, and there is no allegation that the inclusion was effected through improper means or without the petitioners' knowledge, the partition barred any further litigation on said title and operated to bring the property under the control and jurisdiction of the court for proper disposition according to the tenor of the partition . . . They can not attack the partition collaterally, as they are trying to do in this case. 18 (Emphasis supplied.)

Based on the foregoing pronouncements, the Order of August 3, 1979 setting aside the project of Partition was clearly erroneous. Realizing this and the fact that it was not yet too late for him to correct his mistake, respondent Judge Untalan issued the questioned Order of July 16, 1981.

In fine, the partition in Civil Case No. 2023 is valid and binding upon the petitioner and Pedro Ralla, as well as upon their heirs, especially as this was accompanied by delivery of possession to them of their respective shares in the inheritance from their mother, the late Paz Escarella. They are duty bound to respect the division agreed upon by them and embodied in the document of partition. Thus, the petitioner could no longer question the exclusion of the lands subject of the partition from the proceedings for the settlement of the estate of Rosendo Ralla. Could it be that the petitioner's keen interest in including these lands in the estate proceedings is directly related to the fact that his son-in-law is the administrator of the said estate of Rosendo Ralla? WHEREFORE, the petition is hereby DISMISSED. Costs against the petitioner. SO ORDERED.

G.R. No. 161298

January 31, 2006

Spouses ANTHONY and PERCITA OCO, Petitioners, vs. VICTOR LIMBARING, Respondent. DECISION PANGANIBAN, CJ.: Basic in procedural law is the rule that every action must be prosecuted or defended in the name of the real party in interest. In the present case, the respondent, who was not a party to the contracts being sued upon, was not able to prove material interest in the litigation. For his failure to do so, the trial court cannot be faulted for dismissing the action to rescind the contracts. His status as trustor remained a bare allegation, as he had failed to rebut the legal presumption: that there is absence of a trust when the purchase price in a deed of sale is paid by a parent in favor of a child. Here, the prima facie presumption is "that there is a gift in favor of the child." Any allegation to the contrary must be proven by clear and satisfactory evidence, a burden that was not discharged by the plaintiff. The Case Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the August 26, 2003 Decision2 and the November 25, 2003 Resolution3 of the Court of Appeals (CA) in CA-GR CV No. 69386. The challenged Decision disposed as follows: "WHEREFORE, the order dated October 2, 2000 of the Regional Trial Court, Branch 15, Ozami[s] City in Civil Case No. OZC 99-14 is hereby REVERSED. The agreement entered upon by plaintiff-appellant and defendant-appellee Percita L. Oco is hereby RESCINDED. After returning the agreed purchase amount of P60,000.00 to defendants-appellees, the Register of Deeds of Ozami[s] City shall issue the new Transfer Certificates of Title in the name of plaintiffappellant thereby canceling the TCT Nos. T-22073 and T-22072."4 The Facts The pertinent facts are not disputed. Sometime in 1996, Sabas Limbaring subdivided his Lot 2325-D, covered by Transfer Certificate of Title (TCT) No. 5268, into two lots denominated as Lot Nos. 2325-D-1 and 2325-D-2.5 He then executed in favor of Jennifer Limbaring a Deed of Sale for Lot 2325-D-2 for P60,000; and, in favor of Sarah Jane Limbaring, another Deed for Lot 2325-D-1 for P14,440. Accordingly, TCT No. 5268 was cancelled and TCT Nos. T-21921 and T-21920 were issued in the names of Jennifer and Sarah Jane, respectively.6 Sensing some irregularities in the transaction, Percita Oco, the daughter of Sabas Limbaring, left Puerto Princesa City and went to Ozamis City.7 She then filed a case of perjury and falsification of documents against respondent, her uncle who was the father of Jennifer and Sarah Jane. During the pre-litigation conference called by City Prosecutor Luzminda Uy on July 1, 1996, the

parties agreed that the two parcels of land should be reconveyed to Percita, who was to pay respondent all the expenses that had been and would be incurred to transfer the titles to her name.8 Respondent demanded P30,000 for the estimated expenses for documentation, capital gains, and documentary stamp taxes; registration fees for the Register of Deeds; and other incidental expenses for clearances from the Department of Agrarian Reform (DAR).9 Percita succeeded in lowering the amount to P25,000, for which she executed an undertaking worded as follows: "I, Percita Oco, of legal age, and residing at Puerto Princesa, do hereby undertake to give the full amount of Twenty Five Thousand (P25,000.00) Pesos to my uncle Victor Limbaring after document No. 230, series of 1996; Transfer Certificate of Title No. T-21920 and Transfer Certificate of Title No. T-21921 shall have been cancelled and revoked. "Ozamis City, Philippines, July 1, 1996."10 Pursuant to their agreement, respondent facilitated the transfer of the titles to her from the names of his daughters. After the transfer had been effected on July 12, 1996, Percita left for Puerta Princesa on July 17, 1996, without paying the P25,000. Several demands were made, but she refused to pay. On April 6, 1999, respondent filed against Spouses Anthony and Percita Oco a Complaint for the rescission of the sales contracts, with recovery of possession and ownership of the two parcels of land.11 Among others, he claimed 1) that he was the actual buyer of the lots, but the vendees whose names appeared on the Deeds were his daughters; 2) that he initially refused to reconvey the properties because he had paid for them with his hard-earned money, which was partly used by Sabas Limbaring for medical expenses; 3) that Percita had prepared the two Deeds of Sale, which his daughters signed despite receiving no consideration as stated in the Deeds; 4) that because she refused to pay the P25,000, the Limbaring clan held a meeting on October 26, 1996, during which it was agreed that P1,000 per month would be given to respondent from the rentals of Sabas Limbarings house; and 5) that the agreement was not implemented, because Percita had failed to cooperate.12 On May 27, 1999, Spouses Oco filed a Motion to Dismiss on the ground that the plaintiff (herein respondent) was not the real party in interest.13 In his Opposition to the Motion to Dismiss, respondent contended that he was a trustor, whose property was being held in trust by his daughters.14 He also averred that, on the assumption that he was not the real party in interest, he was entitled to an amendment of the pleadings.15 On August 30, 1999, the RTC issued an Order denying the Motion to Dismiss. It ruled that evidence was required to resolve the parties respective allegations.16 On October 4, 1999, Spouses Oco filed an Answer with Counterclaim, alleging in the main: 1) that respondent had tried to secure a DAR clearance and to have a certificate of title issued in his name, but failed because Republic Act (RA) 6657 prohibited the acquisition of more than five hectares of agricultural land; 2) that through deceit and manipulation, respondent was able to

convince Sabas Limbaring to execute the two Deeds of Sale, notwithstanding the lack of any consideration; 3) that Sabas informed Percita that the agricultural land had never been sold; 4) that she refused to pay the P25,000, because the suspensive conditions stated in the Promissory Note had not been complied with; 5) that she paid for all the expenses incurred in their transaction; 6) that for her alleged failure to pay the P25,000 and for "other deceits," respondent filed a criminal Complaint docketed as Criminal Case No. 2985; 7) that respondent was guilty of forum shopping for filing that case despite the institution of the civil aspect in the criminal case; 8) that respondent was not the real party in interest and had no legal standing to sue; 9) that the lots, which were acquired by Jennifer and Sarah Jane without paying any consideration, should be returned to Percita without any consideration; and 10) that the Deeds of Sale reconveying the lots acknowledged receipt of consideration.17 Respondent testified on his behalf. He then formally offered his exhibits.18 After filing their Comments to Plaintiffs Formal Offer of Exhibits, Spouses Oco filed a Demurrer to Evidence, to which he filed his Opposition.19 On October 2, 2000, the RTC granted the demurrer and dismissed the Complaint and Counterclaim,20 on the ground that respondent was not the real party in interest. The trial court also held that Jennifer and Sarah Jane had already acknowledged receipt of the consideration for the reconveyance of the lots. It added that the P25,000 was an independent obligation for the reimbursement of the expenses incurred for the transfer of the titles.21 Ruling of the Court of Appeals The CA held that a trust relationship was created when respondent purchased the lots in favor of his daughters.22 Thus, he was a real party in interest. The appellate court also ruled that the P25,000 was part of the consideration for the reconveyance of the two parcels of land.23 The CA held that, since Percita had admitted her failure to pay the amount, respondent had the right to rescind the contracts of reconveyance.24 The assailed November 25, 2003 CA Resolution denied reconsideration. Hence, this Petition. 25 The Issues Petitioners state the issues in this wise: "I. The Honorable Court of Appeals gravely erred in finding respondent the trustor of the subject properties and in declaring respondent the real party in interest for the rescission of the two deeds of absolute sale executed by Jennifer Limbaring and Sarah Jane Limbaring in favor of the petitioners. "II. The Honorable Court of Appeals gravely erred in declaring that respondent has fully complied [with] his obligation in the undertaking executed by petitioner after the ownership of the subject properties were transferred to petitioners.

"III. The Honorable Court of Appeals gravely erred and gravely abused [its] discretion in ordering the rescission of the Deed of Absolute Sale executed by Jennifer Limbaring and Sarah Jane Limbaring in favor of the petitioners involving the subject properties. "IV. The Honorable Court of Appeals gravely abused [its] discretion when it ignored the pending case before the Fourth Division of the Honorable Court of Appeals with the same transaction, essential facts and circumstances in this case."26 The threshold issue is whether respondent, who was the plaintiff in the trial court, was a real party in interest in the suit to rescind the Deeds of Reconveyance. The Courts Ruling The Petition is meritorious. Main Issue: Real Party in Interest Petitioners contend that respondent was not a trustor, and therefore not the real party in interest and had no legal right to institute the suit.27 The real parties in interest were Jennifer and Sarah Jane, to whom the subject properties had been given as gifts.28 The controversy centers on Rule 3 of the Rules of Court, specifically an elementary rule in remedial law, which is quoted as follows: "Sec. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest." As applied to the present case, this provision has two requirements: 1) to institute an action, the plaintiff must be the real party in interest; and 2) the action must be prosecuted in the name of the real party in interest.29 Necessarily, the purposes of this provision are 1) to prevent the prosecution of actions by persons without any right, title or interest in the case; 2) to require that the actual party entitled to legal relief be the one to prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it within certain bounds, pursuant to sound public policy.30 Interest within the meaning of the Rules means material interest or an interest in issue to be affected by the decree or judgment of the case, as distinguished from mere curiosity about the question involved.31 One having no material interest to protect cannot invoke the jurisdiction of the court as the plaintiff in an action.32 When the plaintiff is not the real party in interest, the case is dismissible on the ground of lack of cause of action.33 Action on Contracts

The parties to a contract are the real parties in interest in an action upon it, as consistently held by the Court.34 Only the contracting parties are bound by the stipulations in the contract;35 they are the ones who would benefit from and could violate it.36 Thus, one who is not a party to a contract, and for whose benefit it was not expressly made, cannot maintain an action on it. One cannot do so, even if the contract performed by the contracting parties would incidentally inure to ones benefit.37 As an exception, parties who have not taken part in a contract may show that they have a real interest affected by its performance or annulment.38 In other words, those who are not principally or subsidiarily obligated in a contract, in which they had no intervention, may show their detriment that could result from it.39 Contracts pour autrui are covered by this exception.40 In this latter instance, the law requires that the "contracting parties must have clearly and deliberately conferred a favor upon a third person." A "mere incidental benefit is not enough." Action on the Contracts Presently Involved Respondents Complaint, entitled "Rescission of Contract & Recovery of Possession & Ownership of Two Parcels of Land," is clearly an action on a contract. The agreements sought to be rescinded41 clearly show that the parties to the Deeds of Absolute Sale were Jennifer and Sarah Jane Limbaring42 as vendors and Percita Oco as vendee. Clearly then, the action upon the contracts may -- as a rule -- be instituted only by Jennifer and Sarah Jane against Percita. Respondent is not a real party in interest. He was not a party to the contracts and has not demonstrated any material interest in their fulfillment. Evidently, the allegations in the Complaint do not show that the properties would be conveyed to him, even if Percita were to be proven to have committed a breach of the subject agreements. Trust Relationship To show material interest, respondent argues that a trust was created when he purchased the properties from Sabas Limbaring in favor of his daughters. As trustor, he allegedly stands to be benefited or injured by any decision in the case.43 Trust is the legal relationship between one person who has equitable ownership of a property and another who owns the legal title to the property.44 The trustor is the one who establishes the trust; the beneficiary, the person for whose benefit the trust was created; and the trustee, the one in whom, by conferment of a legal title, confidence has been reposed as regards the property of the beneficiary.45 Trusts may be either express or implied.46 Express trusts are those created by direct and positive acts of the parties, such as by some writing, deed or will; or by words either expressly or impliedly evidencing an intention to create a trust. Implied trusts are those that, without being expressed, are deducible from the nature of the transaction as matters of intent; or that are super-

induced in the transaction by operation of law as a matter of equity, independently of the particular intention of the parties.47 Respondent has presented only bare assertions that a trust was created. Noting the need to prove the existence of a trust, this Court has held thus: "As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements. While implied trusts may be proved by oral evidence, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be fabricated."48 On this point, the Civil Code states as follows: "ART. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child." Under the last sentence of Article 1448, respondents alleged acts -- paying the price of the subject properties and, in the titles, naming his children as owners -- raise the presumption that a gift was effected in their favor. Respondent failed to rebut this presumption. Absent any clear proof that a trust was created, he cannot be deemed a real party in interest.49 That he should be deemed a trustor on the basis merely of having paid the purchase price is plainly contradicted by the presumption based on Article 1448 of the Civil Code "that there is a gift in favor of the child," not a trust in favor of the parent. Other Issues Having found that respondent is not a real party in interest, this Court deems it no longer necessary to rule on the other issues raised by petitioner. WHEREFORE, the Petition is GRANTED, and the assailed Decision and Resolution are SET ASIDE. Civil Case No. OZC99-14, entitled "Victor Limbaring v. Spouses Percita L. Oco and Anthony Oco," is DISMISSED. No pronouncement as to costs. SO ORDERED.

DANTE M. PASCUAL, represented by REYMEL R. SAGARIO, Petitioner,

G.R. No. 157830

Present:

PANGANIBAN, Chairman, SANDOVAL- GUTIERREZ,* -versusCORONA, CARPIO MORALES, and GARCIA, JJ.

MARILOU M. PASCUAL, Respondent.

Promulgated:

November 17, 2005

x-------------------------------------------------- --------------x

DECISION

CARPIO MORALES, J.:

On challenge via Petition for Review on Certiorari is the February 10, 2003 Order of the Regional Trial Court (RTC) of Isabela, Branch 23 at Roxas dismissing, on motion of herein

respondent Marilou M. Pascual, the complaint filed against her by her brother-herein petitioner Dante M. Pascual, represented by his attorney-in-fact Reymel R. Sagario (Sagario), for noncompliance with the conciliation provision-pre condition to filing of complaint in court under R.A. 7160 (the Local Government Code).

Petitioner, a permanent resident of the United States of America, appointed Sagario as his attorney-in-fact by a Special Power of Attorney (SPA) dated April 10, 2002: 1. To file a case for the cancellation of Transfer Certificate of Title No. T-271656 issued in the name of Marilou M. Pascual as well as the Deed of Sale of Registered Land (Dec. No. 639; Page No. 52; Book No. XXI; Series of 1994) and/or Reconveyance at the appropriate court;

2. To collect the monthly rentals from the tenant;

3. To enter into amicable settlement with Marilou M. Pascual or any other mode of payment/and/or dispute resolution;

4. To execute and sign any and all papers, contracts/documents which may be necessary relative to the above acts.

x x x[1]

Pursuant to the SPA, Sagario filed on October 14, 2002 before the Isabela RTC at Roxas a complaint entitled Dante M. Pascual, plaintiff v. Marilou M. Pascual and Register of Deeds, Defendants, docketed as Civil Case No. r. 23-713-02, for Annulment of Transfer Certificate of Title No. T-271657 of Isabela and Deed of Absolute Sale of Registered Land and/or Reconveyance with Damages.[2]

To the Complaint the defendant-herein respondent Marilou M. Pascual filed a Motion to Dismiss[3] on two grounds one of which was non-compliance with the requirement under Section 412 of the Local Government Code,[4] she contending that there is no showing that the dispute was referred to the barangay court before the case was filed in court.

By the assailed Order of February 10, 2003,[5] Branch 23 of the Isabela RTC at Roxas granted respondents Motion to Dismiss in this wise:

. . . RA 7160 repealing P.D. 1508 otherwise known as the Revised Katarungang Pambarangay provides under Section 409 All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated. Hence, the reliance of the plaintiff on Section 408 of R.A. 7160 is incorrect. When real property or any interest therein is involved, the dispute shall be filed before the barangay where the property is located, regardless of the residence of the parties. Besides, it is incorrect to say that the parties are not residents of the same place, Vira, Roxas, Isabela. The Attorney-in-fact of the plaintiff in the person of Reymel R. Sagario is a resident of Vira, Roxas, Isabela, and he substitute (sic) Dante Pascual by virtue of said Special Power of Attorney. Hence, said Attorney-in-fact should have brought the dispute before barangay Vira, Roxas, Isabela, where the property is located. In the case of Royales vs. Intermediate Appellate Court 127 SCRA 470, Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the plaintiffs cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity.[6] (Emphasis and underscoring supplied)

Petitioners Motion for Reconsideration[7] of the above-said order was denied by Order of March 24, 2003:[8]

xxx

Consequently, the Court is [of] the opinion that the said Attorney-in-fact shall be deemed to be the real party in interest, reading from the tenor of the provisions of the Special Power of Attorney. Being a real party in interest, the Attorney-in-fact is therefore obliged to bring this case first before the Barangay Court. Sec. 3, Rule 3 of the Rules of Court provides that Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest.

xxx

Being the real party in interest, the Attorney-in-fact may therefore bring the necessary complaint before the Lupon Tagapayapa and appear in person as if he is the owner of the land.[9] (Emphasis and underscoring supplied)

Hence, the present petition questioning the palpable legal errors of the RTC.

Petitioner argues that since he, not his attorney-in-fact Sagario, is the real party in interest, and since he actually resides abroad, the lupon would have no jurisdiction to pass upon the dispute involving real property, he citing Agbayani v. Belen.[10]

Respondent submits, on the other hand, that Section 408, paragraph (f), of the Local Government Code, is qualified by paragraph (c) of Section 409 of the same Code the latter of which provides that [a]ll disputes involving real property or any interest therein shall be brought in the barangay where the real property is located, hence, the use of the word shall makes it mandatory for the bringing of the dispute before the lupon. That attorney-in-fact Sagario is a resident of the same barangay as that of hers, respondent argues in any event, brings the matter under the jurisdiction of the lupon, for Sagario, following Section 3 of Rule 3 of the 1997 Rules of Civil Procedure which provides:

Sec. 3. Representative as parties. - Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary

shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal,

being a substitute, becomes the real party-in-interest. Respondents submissions do not lie.

The pertinent provisions of the Local Government Code read:

SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; and

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice.

The court in which non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable settlement. (Emphasis supplied)

SEC. 409. Venue. (a) Disputes between persons actually residing in the same barangay shall be brought for amicable settlement before the lupon of said barangay .

(b) Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant.

(c) All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated.

(d) Those arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study shall be brought in the barangay where such workplace or institution is located.

Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived. Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice or his duly designated representative whose ruling thereon shall be binding. (Emphasis supplied)

In the 1982 case of Tavora v. Veloso,[11] this Court held that where the parties are not actual residents in the same city or municipality or adjoining barangays, there is no requirement for them to submit their dispute to the lupon as provided for in Section 6 vis a vis Sections 2 and 3 of P.D. 1508 (Katarungang Pambarangay Law).

[B]y express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where the parties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other. (Underscoring supplied)

In the 2000 case of Vercide v. Hernandez,[12] this Court, noting that the Tavora ruling, reiterated in other cases including the 1996 case of Agbayani[13] cited by petitioner, was decided under the provisions of P.D. No. 1508 (Katarungang Pambarangay) Law which were, except for some modifications, echoed in Sections 408-409 of the Local Government Code which took effect on January 1, 1992, held that the Tavora ruling remained.

To construe the express statutory requirement of actual residency as applicable to the attorney-in-fact of the party-plaintiff, as contended by respondent, would abrogate the meaning of a real party in interest as defined in Section 2 of Rule 3[14] of the 1997 Rules of Court vis a vis Section 3 of the same Rule which was earlier quoted but misread and misunderstood by respondent.

In fine, since the plaintiff-herein petitioner, the real party in interest, is not an actual resident of the barangay where the defendant-herein respondent resides, the local lupon has no jurisdiction over their dispute, hence, prior referral to it for conciliation is not a pre-condition to its filing in court. The RTC thus erred in dismissing petitioners complaint.

WHEREFORE, the petition is granted. The assailed February 10, 2003 Order, as well as the March 24, 2003 Order denying reconsideration of the first, of Branch 23 of the Regional Trial Court of Isabela at Roxas is SET ASIDE. Said court is accordingly directed to reinstate Civil Case No. 23-713-02 to its docket and take appropriate action thereon with dispatch.

SO ORDERED.

JOWETT K. GOLANGCO, Petitioner,

G.R. No. 157952

Present:

PUNO, CJ., Chairperson, - versus CARPIO, LEONARDO- DE CASTRO, BERSAMIN, and DEL CASTILLO,* JJ.

JONE B. FUNG, Respondent.

Promulgated: September 8, 2009

x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

We have before us a petition for review on certiorari seeking the review of the decision dated September 12, 2002 (dismissing the petitioners petition for certiorari)1[1] and the resolution dated April 2, 2003 (denying the petitioners motion for reconsideration),2[2] both promulgated by the Court of Appeals in C.A.-G.R. SP No. 66616 entitled Jowett K. Golangco v. The Presiding Judge of Branch 53, Regional Trial Court of Manila and Jone B. Fung.

Antecedents

C.A.-G.R. SP No. 66616 was a special civil action for certiorari commenced by the petitioner to assail the order issued by the Regional Trial Court (RTC), Branch 53, in Manila in Criminal Case No. 95-145703 entitled People v. Jone B. Fung, whereby the RTC declared the Prosecution to have terminated the

presentation of further evidence and required the Prosecution to file a written offer of evidence within 20 days, furnishing a copy of the offer to the accused who in turn had to comment on the offer within 15 days from receipt.

Criminal Case No. 95-145703, a prosecution for libel initiated by the petitioner as the complainant against the respondent, was commenced in 1995.3[3] Allegedly, the respondent had issued an office memorandum dated May 10, 1995 maliciously imputing against the petitioner the commission of bribery and had sent copies of the memorandum to the petitioners superiors in the Philippine Overseas Employment Administration (POEA) and to other public officers and personalities not connected with the POEA, causing damage and prejudice to the petitioner.4[4]

After almost 6 years, the Prosecution had presented only two witnesses in Criminal Case No. 95-145703. On February 16, 2001, the Prosecution requested that a subpoena ad testificandum be issued to and served on Atty. Oscar Ramos, Resident Ombudsman of the POEA, to compel him to testify in the criminal case on February 20, 2001. The hearing of February 20, 2001 was, however, reset to May 23, 2001 due to the unavailability of Atty. Ramos.

On May 23, 2001, the Prosecution still failed to present Atty. Ramos as its witness because no subpoena had been issued to and served on him for the purpose. Consequently, the RTC judge issued an order terminating the Prosecutions presentation of evidence,5[5] as follows:

ORDER When the case was called for hearing, the accused is in court with his lawyer Atty. Benigno Palamos. Private prosecutor Atty. Agripino Baybay is in court but he has no witnesses today. He manifested that he has to present Atty. Oscar Ramos, but since the last hearing on February 20, to this date he has not asked for any subpoena. Defense counsel moves to terminate the presentation of prosecution evidence in view of the failure of the prosecution to present witnesses despite numerous postponements. The private prosecutor asks for another continuance. The records show that on January 23, 2001 this Court gave a stern warning to the prosecutor that it is giving one final postponement for the production of witnesses. Yet the prosecution caused the service of the subpoena too late for the hearing on February 20. For the next three months, the prosecution simply did not apply for a subpoena. The Court finds that the intention to delay the proceedings is evident. As prayed for, the prosecution is declared to have terminated further evidence. The prosecution is given 20 days from today to make its formal offer with copy furnished the defense counsel who is given 15 days from receipt to make his comment and thereafter the offer will be deemed submitted for resolution. SO ORDERED.

The petitioner, by his lonesome, assailed on certiorari in the Court of Appeals the order dated May 23, 2001, claiming that the RTC judge thereby

committed grave abuse of discretion for not issuing the subpoena to require Atty. Ramos to appear and testify in the May 23, 2001 hearing. He contended that his prior request for the subpoena for the February 20, 2001 hearing should have been treated as a continuing request for the subpoena considering that the Rules of Court did not require a party to apply for a subpoena again should it not be served in the first time.6[6]

In its decision dated September 12, 2002, the Court of Appeals rebuffed the petitioner and dismissed the petition for certiorari, holding:

Axiomatically, any request for a subpoena to a witness must indicate the date and time when the witness must appear in court to give his or her testimony. It is on the basis of that request that the court personnel prepares the subpoena indicating the title of the case, the date and time for the appearance of the intended witness. This is where petitioner fell into error. His urgent request for subpoena (Annex A) failed to contain the date and time when the intended witness, Atty. Oscar Ramos, must appear in court to testify. Even then, granting that the subpoena issued for February 20, 2001 hearing was properly served but which hearing was later on postponed, there is still a need to ask for a new subpoena to the same witness for the next scheduled hearing. The court cannot be tasked to guess whether or not petitioner still intends to present the witness at the next hearing. An intention to still present the witness necessarily requires another request for a subpoena. Moreover, the case was last heard on January 23, 2001 prior to the February 20, 2001 hearing. Apropos, to ask for a subpoena to his next witness on February 16, 2001, for the hearing on February 20, 2001 was rather late. As the complainant in the case, petitioner should have exercised due diligence or proper zeal in the prosecution of his case which has long been pending for five (5) years,

let alone that it was the last chance given by the court to the prosecution to the prosecution to produce its witness on February 20, 2001 on account of its previous failure to do so. Then, again, as correctly observed by the court a quo, from February 20, 2001 to May 23, 2001, a good three (3) months period passed without the prosecution requesting for a subpoena for its intended witness. When the respondent court, as a consequence, deemed the prosecution evidence terminated and required it to formally offer its evidence, it was not committing any error nor abuse of discretion. Here, petitioner created its own predicament and should suffer from its adverse effect.7[7]

Hence, this appeal.

Issue

The issue is whether the Court of Appeals correctly ruled on the petition for certiorari of the petitioner.

Ruling of the Court

We find no reversible error on the part of the Court of Appeals.

Before dealing with the petition for review, we point out the gross procedural misstep committed by the petitioner in the Court of Appeals.

The petitioner did not join the People of the Philippines as a party in his action for certiorari in the Court of Appeals. He thereby ignored that the People of the Philippines were indispensable parties due to his objective being to set aside the trial courts order dated May 23, 2001 that concerned the public aspect of Criminal Case No. 95-145703. The omission was fatal and already enough cause for the summary rejection of his petition for certiorari.

The petitioner did not also obtain the consent of the Office of the Solicitor General (OSG) to his petition for certiorari. At the very least, he should have furnished a copy of the petition for certiorari to the OSG prior to the filing thereof,8[8] but even that he did not do. Thereby, he violated Section 35(l), Chapter 12, Title III of Book IV of Executive Order No. 292 (The Administrative Code of 1987), which mandates the OSG to represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the

Government and its officers in the Supreme Court, the Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party.

Although the petition for certiorari bore the conformity of the public prosecutor (i.e., Assistant City Prosecutor Danilo Formoso of Manila), that conformity alone did not suffice. The authority of the City Prosecutor or his assistant to appear for and represent the People of the Philippines was confined only to the proceedings in the trial court.

II

Even on the merits, the petition for review fails.

The criminal case had been pending since 1995 and the petitioner as the complainant had presented only two witnesses as of the issuance of the assailed order. The trial court had not been wanting in giving warnings to the Prosecution on the dire consequences should the Prosecution continue to fail to complete its evidence. The Prosecution had retained the duty to ensure that its witnesses would be present during the trial, for its obligation to the administration of justice had been to prove its case sans vexatious and oppressive delays. Yet, the warnings of the trial court had gone unheeded. Instead, the Prosecution would deflect the

responsibility for the delays to the failure of the trial court to issue the subpoena to its proposed witness and to cause the subpoena to be served. Such attitude of the Prosecution, which included the petitioner as the complainant, manifested a lack of the requisite diligence required of all litigants coming to the courts to seek redress.

We find that the trial judge did not act capriciously, arbitrarily or whimsically in issuing the assailed order. Thus, the Court of Appeals properly dismissed the petition for certiorari. The petitioner now needs to be reminded that certiorari is an extraordinary remedy to correct a grave abuse of discretion amounting to lack or excess of jurisdiction when an appeal, or any plain, speedy and adequate remedy in the ordinary course of law is not available. In this regard, grave abuse of discretion implies a capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction whenever the power is exercised in an arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law.9[9]

Also, it does not escape our notice that the trial courts assailed order terminating the Prosecutions presentation of evidence was merely interlocutory. This fact surely adds justification to the Court of Appeals rejection of the petition for certiorari, because it is the settled rule that certiorari does not lie to review an interlocutory order, but only a final judgment or order that terminates the

proceedings. Certiorari will be refused where there has been no final judgment or order and the proceeding for which the writ is sought is still pending and undetermined in the lower court. Indeed, a writ of certiorari is not intended to correct every controversial interlocutory ruling unless the ruling is attended by grave abuse of discretion or tainted by whimsical exercise of judgment equivalent to lack of jurisdiction, for the function of certiorari is limited to keeping an inferior court within its jurisdiction and to relieving persons from its arbitrary acts acts that courts or judges have no power or authority in law to perform.

Instead, the proper remedy for the petitioner was to proceed in the action until judgment, which, once rendered, might then be reviewed on appeal, along with the assailed interlocutory order.10[10] As long as the trial court acted within its jurisdiction, its alleged error committed in the exercise of its jurisdiction amounted to nothing more than an error of judgment that was reviewable by a timely appeal, not by a special civil action of certiorari.11[11]

WHEREFORE, we affirm the decision dated September 12, 2002 rendered in CA-G.R. SP No. 66616.

Costs of suit to be paid by the petitioner.

SO ORDERED. EQUITABLE PCI BANK, INC. (now known as BANCO DE ORO EPCI, INC.) Petitioner, Present:

G.R. No. 178529

- versus -

QUISUMBING, J., Chairperson, CARPIO MORALES, BRION, DEL CASTILLO, and

HEIRS OF ANTONIO C. TIU, namely: ARLENE T. FU, MICHAEL U. TIU, ANDREW U. TIU, EDGAR U. TIU and ERWIN U. TIU, Respondents.

ABAD, JJ.

Promulgated:

September 4, 2009

x------------------------------------------------- x

DECISION

CARPIO MORALES, J.:

To secure loans in the aggregate amount of P7 Million obtained by one Gabriel Ching from herein petitioner Equitable PCI Bank, Inc. (now known as Banco de Oro-EPCI, Inc.),12[1] Antonio C. Tiu (Antonio), of which herein respondents allege to be heirs, executed on July 6, 1994 a Real Estate Mortgage (REM)13[2] in favor of petitioner covering a lot located in Tacloban City. Before

the words With my Marital Consent appearing in the REM is a signature attributed to Antonios wife Matilde.

On October 5, 1998, Antonio executed an Amendment to the Real Esate Mortgage14[3] (AREM) increasing the amount secured by the mortgage to P26 Million, also bearing a signature attributed to his wife Matilde above the words With my Marital Consent.

The property mortgaged was covered by TCT No. T-1381 of the Tacloban Register of Deeds which, the AREM states, was registered in the name of the Mortgagor.

Antonio died on December 26, 1999.15[4]

The loan obligation having remained unsettled, petitioner filed in November 2003 before the Regional Trial Court (RTC) of Tacloban City a Petition for

Sale16[5] dated November 4, 2003, for the extrajudicial foreclosure of the AREM and the sale at public auction of the lot covered thereby. Acting on the petition, the RTC Clerk of Court and Ex-Oficio Sheriff scheduled the public auction on December 17, 2003.17[6]

A day before the scheduled auction sale or on December 16, 2003, the herein respondents, Heirs of Antonio C. Tiu, namely Arlene T. Fu, Michael U. Tiu, Andrew U. Tiu, Edgar U. Tiu, and Erwin U. Tiu, filed a Complaint/Petition18[7] before the RTC of Tacloban against petitioner and the Clerk of Court-Ex Oficio Sheriff, docketed as Civil Case No. 2003-12-205 for annulment of the AREM, injunction with prayer for issuance of writ of preliminary injunction and/or temporary restraining order and damages, alleging, among other things, that

x x x the said AREM is without force and effect, the same having been executed without the valid consent of the wife of mortgagor Antonio C. Tiu who at the time of the execution of the said instrument was already suffering from advance[d] Alzheimers Disease and, henceforth, incapable of giving consent,

more so writing and signing her name[.]19[8] (Emphasis and underscoring supplied.)

The RTC issued a temporary restraining order,20[9] and subsequently, a writ of preliminary injunction.21[10]

To the Complaint petitioner filed a Motion to Dismiss,22[11] raising the following grounds:

I THE PLAINTIFFS/PETITIONERS NOT BEING THE REAL PARTIES-ININTEREST, THEIR COMPLAINT STATES NO CAUSE OF ACTION; II EVEN IF THERE IS A CAUSE OF ACTION, THE SAME IS ALREADY BARRED BY THE STATUTE OF LIMITATIONS; and

III THE PRESENT ACTION BEING A PERSONAL ONE, THE VENUE IS IMPROPERLY LAID.23[12] (Underscoring supplied)

By Resolution24[13] of April 14, 2004, Branch 8 of the Tacloban RTC denied the Motion to Dismiss in this wise:

From the facts of the case, herein plaintiffs/petitioners are so situated that they will either be benefited or injured in subject action. They are therefore real parties in interest, as they will be damnified and injured or their inheritance rights and interest on the subject property protected and preserved in this action. As they are real parties in interest, they therefore have a cause of action against herein defendant.25[14]

It thus ordered petitioner to file Answer within the reglementary period. Petitioners motion for reconsideration of the said Resolution having been denied,26[15] it filed a Petition27[16] for Certiorari, Prohibition, and Mandamus

with prayer for preliminary injunction before the Court of Appeals which it denied by Decision28[17] of August 30, 2006, quoting with approval the trial courts ratio in denying petitioners Motion to Dismiss.

Hence, the present Petition,29[18] petitioner faulting the Court of Appeals in affirming the trial courts denial of its Motion to Dismiss.

Petitioner argues, in the main, that as respondents are not the real parties in interest, their complaint states no cause of action. Citing Travel Wide Associated, Inc. v. Court of Appeals,30[19] petitioner adds that since the party in interest is respondents mother but the complaint is not brought in her name, respondents complaint states no cause of action.

The issue in the main thus is whether the complaint filed by respondentschildren of Antonio, without impleading Matilde who must also be Antonios heir and who, along with Antonio, was principally obliged under the AREM sought to be annulled, is dismissible for lack of cause of action.

The pertinent provision of the Civil Code on annulment of contracts reads:

Art. 1397. The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity of those with whom they contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base their action upon these flaws of the contract. (Emphasis and underscoring supplied)

Upon the other hand, the pertinent provisions of Rule 3 of the Rules of Court (Parties to Civil Actions) read:
SEC. 2 Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. (Emphasis and underscoring supplied) SEC. 3. Representatives as parties. Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal. (Emphasis and underscoring supplied)

The AREM was executed by Antonio, with the marital consent of Matilde. Since the mortgaged property is presumed conjugal, she is obliged principally under the AREM. It is thus she, following Art. 1397 of the Civil Code vis a vis Sec. 2 of Rule 3 of the Rules of Court, who is the real party in interest, hence, the action must be prosecuted in her name as she stands to be benefited or injured in the action. Assuming that Matilde is indeed incapacitated, it is her legal guardian who should file the action on her behalf. Not only is there no allegation in the

complaint, however, that respondents have been legally designated as guardians to file the action on her behalf. The name of Matilde, who is deemed the real party in interest, has not been included in the title of the case, in violation of Sec. 3 of Rule 3 of the Rules of Court. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated August 30, 2006 is REVERSED and SET ASIDE. Civil Case No. 2003-12-205 lodged before Branch 8 of the Regional Trial Court of Tacloban City is DISMISSED for lack of cause of action.

SO ORDERED.