REMEDIOS ANTONINO,

Petitioner,

G.R.
No. 185663
Present:

- versus -

THE REGISTER OF DEEDS OF MAKATICITY and

TAN TIAN SU,
Respondents.

CARPIO, J.,
Chairper
son,
BRION,
PEREZ,
SERENO,
and
REYES, JJ.
Promulgated:
June 20, 2012

x----------------------------------------------------------------------------------------x
RESOLUTION
REYES, J.:
Nature of the Case
This is a petition for review under Rule 45 of the Rules of Court, assailing
the Decision[1] dated May 26, 2008 and Resolution[2] dated December 5, 2008 of
the Court of Appeals (CA) in CA-G.R. SP No. 89145.
Factual Antecedents
Since March 21, 1978, petitioner Remedios Antonino (Antonino) had been
leasing a residential property located at Makati City and owned by private
respondent Tan Tian Su (Su). Under the governing lease contract, Antonino was
accorded with the right of first refusal in the event Su would decide to sell the
subject property.[3]
On July 7, 2004, the parties executed a document denominated as
Undertaking Agreement[4] where Su agreed to sell to Antonino the subject property

for P39,500,000.00. However, in view of a disagreement as to who between them

would shoulder the payment of the capital gains tax, the sale did not proceed as
intended.[5]
On July 9, 2004, Antonino filed a complaint against Su with the Regional
Trial Court (RTC) of Makati City, for the reimbursement of the cost of repairs on
the subject property and payment of damages. The complaint was raffled to
Branch 149 and docketed as Civil Case No. 04-802.[6] Later that same day,
Antonino filed an amended complaint to enforce the Undertaking Agreement and
compel Su to sell to her the subject property.[7]
In an Order[8] dated December 8, 2004, the RTC dismissed Antoninos
complaint on the grounds of improper venue and non-payment of the appropriate
docket fees. According to the RTC, Antoninos complaint is one for specific
performance, damages and sum of money, which are personal actions that should
have been filed in the court of the place where any of the parties resides. Antonino
and Su reside in Muntinlupa and Manila, respectively, thus Makati City is not the
proper venue. Specifically:
The instant case is an action for specific performance with
damages, a personal action, which 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 (Section 2,
Rule 5 of the Rules of Court). Records show that plaintiff is a resident
of 706 Acacia Avenue, Ayala AlabangVillage, Muntinlupa City while
defendant is a resident of 550 Sto. Cristo St.,
Binondo, Manila. Hence, the instant case should have been filed in
the place of residence of either the plaintiff or defendant, at the
election of the plaintiff. Contrary to the claim of plaintiff, the alleged
written agreements presented by the plaintiff in her Amended
Complaint do not contain any stipulation as to the venue of actions. x
x x[9]
The RTC also ruled that it did not acquire jurisdiction over Antoninos
complaint in view of her failure to pay the correct amount of docket
fees. Citing Manchester Development Corporation v. Court of Appeals,[10] the RTC
ruled that:

Anent the non-payment of filing fees on the Amended

Complaint, plaintiff alleges that no new assessment was made when
the Amended Complaint was filed since there [were] no additional
damages prayed for. The Manchester decision has been recently
relaxed as to allow additional payment of the necessary fees if the
Honorable Court so orders an assessment thereof.
The Court is not persuaded.
The Amended Complaint, which the Court notes to have been
filed at 4:00 oclock in the afternoon or few hours after the initial
complaint was filed, further prays that judgment be rendered
ordering defendant to sell his property located at 1623 Cypress,
Dasmarias Village, Makati City covered by TCT No. 426900 to
plaintiff in accordance with the terms and conditions stipulated in
their agreement dated July 7, 2004 and ordering defendant to desist
from selling his property to any other party other than plaintiff.,
which makes the instant case also an action for Specific Performance
in addition to the claim for Damages. However, the value of the
described property was not stated in the prayer and no docket fees
were paid. Thus, following the ruling of the Supreme Court in the
case of Manchester Development Corporation vs. Court of Appeals,
G.R. No. 75919, May 7, 1987, that the Court acquires jurisdiction
over any case only upon the payment of the prescribed docket fee, the
instant case is hereby dismissed.[11]
On December 23, 2004, Su filed an Omnibus Motion,[12] praying for the
cancellation of the notice of lis pendens, which Antonino caused to be annotated on
the title covering the subject property and the issuance of a summary judgment on
his counterclaims. Su, among others, alleged the propriety of cancelling the notice
of lis pendens in view of the dismissal of the complaint and Antoninos failure to
appeal therefrom.
On January 3, 2005, Antonino filed a Motion for Reconsideration,
claiming that her complaint is a real action and the location of the subject
property is determinative of its venue. Alternatively, she submitted a certification
issued by the Commission on Elections, stating that she is a resident
of Makati City. She then prayed for the reinstatement of her complaint and
issuance of an order directing the clerk of court to assess the proper docket
[13]

fees. This was denied by the RTC in an Order[14] dated January 6, 2005, holding
that there was non-compliance with Sections 4 and 5 of Rule 15 of the Rules of
Court.
Antonino thus filed a Motion for Reconsideration[15] dated January 21, 2005,
claiming that there was due observance of the rules on motions. Antonino alleged
that her motion for reconsideration from the RTCs December 8, 2004 was set for
hearing on January 7, 2005 and Su received a copy thereof on January 6, 2005.
Antonino pleaded for a liberal interpretation of the rules as Su was notified of her
motion before the hearing thereon and was not in any way prejudiced. She also
reiterated her arguments for the reinstatement of her complaint.
In a Joint Resolution[16] dated February 24, 2005, the RTC denied Sus
Omnibus Motion and Antoninos January 21, 2005 Motion for
Reconsideration. The RTC refused to cancel the notice of lis pendens, holding
that:
It is quite clear that the dismissal of the Amended Complaint
was anchored on two grounds, e.g. (1) for improper venue and (2) for
non-payment of docket fee. It is elementary that when a complaint
was dismissed based on these grounds[,] the court did not resolve the
case on the merits. Moreover, a court cannot acquire jurisdiction over
the subject matter of a case unless the docket fees are paid x x
x. Thus, the cause of action laid down in the complaint remains
unresolved for proper re-filing before the proper court. Furthermore,
the Supreme Court said: The cancellation of such a precautionary
notice is therefore also a mere incident in the action, and may be
ordered by the Court having jurisdiction of it at any given time. x x
x[17]
The RTC maintained its earlier ruling that Antoninos Motion for
Reconsideration from the December 8, 2004 Order is pro-forma and did not
suspend the running of the period to file an appeal. The RTC also reiterated that
Antoninos complaint is a personal action such that the proper venue therefore is
either the City of Manila or MuntinlupaCity.
On April 1, 2005, Antonino filed with the CA a petition for annulment of
judgment.[18] Antonino prayed for the nullification of the RTCs Order dated
December 8, 2004 dismissing her complaint, Order dated January 6, 2005 denying

her motion for reconsideration and Joint Resolution dated February 24, 2005
denying her motion for reconsideration of the January 6, 2005 Order. According to
Antonino, the RTC committed grave abuse of discretion amounting to lack of
jurisdiction when it ruled that her action for the enforcement of the Undertaking
Agreement is personal and when it deprived her of an opportunity to pay the
correct amount of docket fees. The RTCs grave abuse of discretion, Antonino
posited, was likewise exhibited by its strict application of the rules on motions and
summary denial of her motion for reconsideration.
In its Decision[19] dated May 26, 2008, the CA dismissed Antoninos
petition. While the CA recognized Antoninos faulty choice of remedy, it
proceeded to resolve the issues she raised relative to the dismissal of her
complaint. Thus:
It should be stressed that in this case, there is neither allegation
in the petition, nor sufficient proof adduced showing highly
exceptional circumstance to justify the failure of petitioner to avail of
the remedies of appeal, petition for relief or other appropriate remedy
through no fault attributable to [her] before filing this petition for
annulment of judgment. In Manipor v. Ricafort, the Supreme Court
held, thus:
If the petitioner failed to avail of such remedies
without sufficient justification, he cannot avail of an
action for annulment because, otherwise, he would
benefit from his own inaction or negligence.
Notwithstanding the foregoing procedural infirmity, and in the
interest of justice, we shall look into the issues raised and decide the
case on the merit.
xxxx
A perusal of the allegations of the complaint unambiguously
shows that petitioner seeks to enforce the commitment of private
respondent to sell his property in accordance with the terms and
conditions of their purported agreement dated July 7, 2004. By
implication, petitioner does not question the ownership of private
respondent over the property nor does she claim, by any color of title,
right to possess the property or to its recovery. The action is simply

for the enforcement of a supposed contract, and thus, unmistakably a

personal action.
xxxx
Guided by the above rule (Section 2 of the 1997 Rules of
Court), petitioner should have filed the case either in Muntinlupa City,
where she resides, or in Manila, where private respondent maintains
his residence. Other than filing the complaint in any of these places,
petitioner proceeds with the risk of a possible dismissal of her
case. Unfortunately for petitioner, private respondent forthwith raised
improper venue as an affirmative defense and his stand was sustained
by trial court, thus, resulting to the dismissal of the case.
Further, it is important to note that in a petition for annulment
of judgment based on lack of jurisdiction, the petitioner must show
not merely an abuse of jurisdictional discretion but an absolute lack of
jurisdiction. The concept of lack of jurisdiction as a ground to annul a
judgment does not embrace abuse of discretion. Petitioner, by
claiming grave abuse of discretion on the part of the trial court,
actually concedes and presupposes the jurisdiction of the court to take
cognizance of the case. She only assails the manner in which the trial
court formulated its judgment in the exercise of its jurisdiction. It
follows that petitioner cannot use lack of jurisdiction as ground to
annul the judgment by claiming grave abuse of discretion. In this case
where the court refused to exercise jurisdiction due to improper
venue, neither lack of jurisdiction nor grave abuse of discretion is
available to challenge the assailed order of dismissal of the trial court.
[20]
(Citations omitted)
Antonino filed a motion for reconsideration, which was denied by the CA in
its Resolution dated December 5, 2008. [21]
Issue
The sole issue for the resolution of this Court is the propriety of Antoninos
use of the remedy of a petition for annulment of judgment as against the final and
executory orders of the RTC.

Our Ruling
In Ramos v. Judge Combong, Jr.,[22] this Court expounded that the remedy of
annulment of judgment is only available under certain exceptional circumstances
as this is adverse to the concept of immutability of final judgments:
Annulment of judgment is a recourse equitable in character,
allowed only in exceptional cases as where there is no available or
other adequate remedy. Rule 47 of the 1997 Rules of Civil Procedure,
as amended, governs actions for annulment of judgments or final
orders and resolutions, and Section 2 thereof explicitly provides only
two grounds for annulment of judgment, i.e., extrinsic fraud and lack
of jurisdiction. The underlying reason is traceable to the notion that
annulling final judgments goes against the grain of finality of
judgment. Litigation must end and terminate sometime and
somewhere, and it is essential to an effective administration of justice
that once a judgment has become final, the issue or cause involved
therein should be laid to rest. The basic rule of finality of judgment is
grounded on the fundamental principle of public policy and sound
practice that at the risk of occasional error, the judgment of courts and
the award of quasi-judicial agencies must become final at some
definite date fixed by law.[23] (Citations omitted)
In Barco v. Court of Appeals,[24] this Court emphasized that only void
judgments, by reason of extrinsic fraud or the courts lack of jurisdiction, are
susceptible to being annulled.
The law sanctions the annulment of certain judgments which,
though final, are ultimately void. Annulment of judgment is an
equitable principle not because it allows a party-litigant another
opportunity to reopen a judgment that has long lapsed into finality but
because it enables him to be discharged from the burden of being
bound to a judgment that is an absolute nullity to begin with.[25]
Apart from the requirement that the existence of extrinsic fraud or lack of
jurisdiction should be amply demonstrated, one who desires to avail this remedy
must convince that the ordinary and other appropriate remedies, such as an appeal,

are no longer available for causes not attributable to him. This is clearly provided
under Section 1, Rule 47 of the Rules of Court.
Antoninos recourse to annulment of judgment is seriously flawed and the
reasons are patent. There is therefore no reason to disturb the questioned issuances
of the RTC that are already final and executory.
A petition for annulment of judgment
cannot serve as a substitute for the lost
remedy of an appeal.
First, Antonino cannot pursue the annulment of the various issuances of the
RTC, primary of which is the Order dated December 8, 2004, in order to avoid the
adverse consequences of their becoming final and executory because of her neglect
in utilizing the ordinary remedies available. Antonino did not proffer any
explanation for her failure to appeal the RTCs Order dated December 8, 2004 and,
thereafter, the Order dated January 6, 2005, denying her Motion for
Reconsideration dated January 3, 2005. Knowledge of rudimentary remedial rules
immediately indicates that an appeal was already available from the Order dated
December 8, 2004, as this is a final order as contemplated under Sections 2, 3 and
5 of Rule 41 of the Rules of Court, and there was no legal compulsion for Antonino
to move for reconsideration. Nonetheless, since there is no bar for her to file a
motion for reconsideration so as to give the RTC opportunity to reverse itself
before elevating the matter for the appellate courts review, appeal is the prescribed
remedy from the denial of such motion and not another motion for
reconsideration. While Section 1 of Rule 41 of the Rules of Court includes an
order denying a motion for new trial or reconsideration in the enumeration of
unappealable matters, this Court clarified in Quelnan v. VHF Philippines, Inc.
[26]
that such refers to a motion for reconsideration of an interlocutory order and the
denial of a motion for reconsideration of an order of dismissal is a final order,
therefore, appealable. Moreover, a second motion for reconsideration from a final
judgment or order is prohibited, hence, can never interrupt the period to perfect an
appeal.
The RTC may have been overly strict in the observance of the three-day
notice rule under Section 4, Rule 15 of the Rules of Court contrary to liberal stance
taken by this Court in cases when the purpose of such rule can be achieved by
giving the opposing party sufficient time to study and controvert the motion.
[27]
Justice and equity would thus suggest that the fifteen-day period within which

Antonino can appeal should be counted from her receipt on January 7, 2005[28] of
the Order dated January 6, 2005 denying her Motion for Reconsideration dated
January 3, 2005. Unfortunately, even liberality proved to be inadequate to
neutralize the adverse consequences of Antoninos negligence as she allowed such
period to lapse without filing an appeal, erroneously believing that a second motion
for reconsideration is the proper remedy. While a second motion for
reconsideration is not prohibited insofar as interlocutory orders are concerned,
[29]
the Orders dated December 8, 2004 and January 6, 2005 are final orders.
In fact, even if the period to appeal would be counted from Antoninos
receipt of the Order dated February 24, 2005 denying her second motion for
reconsideration, she interposed no appeal and filed a petition for annulment of
judgment on April 1, 2005 instead. This, for sure, constitutes a categorical
admission that the assailed issuances of the RTC had already become final and
executory in view of her omission to perfect an appeal within the mandated
period. By no means can her petition for annulment of judgment prosper as that
would, in effect, sanction her blatant negligence or sheer obliviousness to proper
procedure.
Let it be stressed at the outset that before a party can avail of
the reliefs provided for by Rule 47, i.e., annulment of judgments, final
orders, and resolutions, it is a condition sine qua nonthat one must
have failed to move for new trial in, or appeal from, or file a petition
for relief against said issuances or take other appropriate remedies
thereon, through no fault attributable to him. If he failed to avail of
those cited remedies without sufficient justification, he cannot resort
to the action for annulment provided in Rule 47, for otherwise he
would benefit from his own inaction or negligence.[30] (Citation
omitted)
Grave abuse of discretion is not a
ground to annul a final and executory
judgment.
Second, a petition for annulment of judgment can only be based on extrinsic
fraud and lack of jurisdiction and cannot prosper on the basis of grave abuse of
discretion. By anchoring her petition on the alleged grave abuse of discretion that
attended the dismissal of her complaint and the denial of her two (2) motions for

reconsideration, Antonino, is, in effect, enlarging the concept of lack of

jurisdiction. As this Court previously clarified in Republic of the Philippines v.
G Holdings, Inc.,[31] lack of jurisdiction as a ground for the annulment of
judgments pertains to lack of jurisdiction over the person of the defending party or
over the subject matter of the claim. It does not contemplate grave abuse of
discretion considering that jurisdiction is different from the exercise thereof. As
ruled in Tolentino v. Judge Leviste:[32]
Jurisdiction is not the same as the exercise of jurisdiction. As
distinguished from the exercise of jurisdiction, jurisdiction is the
authority to decide a cause, and not the decision rendered
therein. Where there is jurisdiction over the person and the subject
matter, the decision on all other questions arising in the case is but an
exercise of the jurisdiction. And the errors which the court may
commit in the exercise of jurisdiction are merely errors of judgment
which are the proper subject of an appeal.[33] (Citation omitted)
In fact, the RTC did not gravely abuse its discretion or err in dismissing
Antoninos complaint. The RTC was correct in classifying Antoninos cause of
action as personal and in holding that it was instituted in the wrong
venue. Personal action is one that is founded on privity of contracts between the
parties; and in which the plaintiff usually seeks the recovery of personal property,
the enforcement of a contract, or recovery of damages. Real action, on the other
hand, is one anchored on the privity of real estate, where the plaintiff seeks the
recovery of ownership or possession of real property or interest in it.[34] Antoninos
following allegations in her amended complaint show that one of her causes of
action is one for the enforcement or consummation of a contract, hence, a personal
action:
XII
On July 7, 2004, plaintiff and defendant executed a document
entitled Undertaking Agreement (copy of which is hereto attached
as Annex H) wherein defendant agreed to sell said property to plaintiff
who has leased said property since March 21, 1978 up to the
present with the plaintiff paying a downpayment of $50,000.00 US
dollars the following day, July 8, 2004.
xxxx

XIV
Defendant also refused to accept the $50,000.00 US Dollars and was
about to tear up the document they previously signed the day before
when plaintiff prevented him from doing so.
XV
Consequently, plaintiff discovered that defendant was already
negotiating to sell the said property to another Chinese national who
incidentally is also one of plaintiffs buyers.
xxxx
Premises considered, in the interest of substantial justice, it is
most respectfully prayed that after due hearing that judgment be
rendered:
1.
Ordering defendant to sell his property located at
1623 Cypress, Dasmarias Village, Makati City covered by TCT No.
426900 to plaintiff in accordance with the terms and conditions
stipulated in their agreement dated July 7, 2004.
x x x x[35]
Antoninos cause of action is premised on her claim that there has already
been a perfected contract of sale by virtue of their execution of the Undertaking
Agreement and Su had refused to comply with his obligations as seller. However,
by claiming the existence of a perfected contract of sale, it does not mean that
Antonino acquired title to the subject property. She does not allege otherwise and
tacitly acknowledges Sus title to the subject property by asking for the
consummation of the sale.
That there is a private document supposedly evidencing the alleged sale does
not confer to Antonino title to the subject property. Ownership is transferred when
there is actual or constructive delivery and the thing is considered delivered when
it is placed in the control or possession of the buyer or when the sale is made
through a public instrument and the contrary does not appear or cannot be clearly

inferred.[36] In other words, Antoninos complaint is not in the nature of a real

action as ownership of the subject property is not at issue.
Moreover, that the object of the alleged sale is a real property does not make
Antoninos complaint real in nature in the absence of a contrary claim of
title. After a contract of sale is perfected, the right of the parties to reciprocally
demand performance, thus consummation, arises the vendee may require the
vendor to compel the transfer the title to the object of the sale[37] and the vendor
may require the payment of the purchase price.[38] The action to cause the
consummation of a sale does not involve an adverse claim of ownership as the
vendors title is recognized and the vendor is simply being asked to perform an act,
specifically, the transfer of such title by any of the recognized modes of delivery.
Considering that the filing of the complaint in a wrong venue sufficed for the
dismissal thereof, it would be superfluous to discuss if Antoninos non-payment of
the correct docket fees likewise warranted it.
At any rate, even if the RTC erred in ordering the dismissal of her complaint,
such had already become final and executory and will not be disturbed as it had
jurisdiction and it was not alleged, much less, proved that there was extrinsic
fraud. Moreover, annulment of the assailed orders of the RTC will not issue if
ordinary remedies, such as an appeal, were lost and were not availed of because of
Antoninos fault. Litigation should end and terminate sometime and
somewhere. It is essential to an effective and efficient administration of justice
that, once a judgment has become final, the winning party should not be deprived
of the fruits of the verdict.[39]
WHEREFORE, premises considered, the petition is DENIED for lack of
merit and the Decision dated May 26, 2008 and Resolution dated December 5,
2008 of the Court of Appeals in CA-G.R. SP No. 89145 are hereby AFFIRMED.
SO ORDERED.

SPOUSES ATTY. ERLANDO A.

ABRENICA and JOENA B.
ABRENICA
Petitioners,
- versus -

G.R. No. 180572

Present:
CARPIO, Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

LAW FIRM OF ABRENICA,

TUNGOL and TIBAYAN, ATTYS.
Promulgated:
ABELARDO M. TIBAYAN and
DANILO N. TUNGOL,
June 18, 2012
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
SERENO, J.:
The present case is a continuation of G.R. No. 169420[1] decided by this
Court on 22 September 2006. For brevity, we quote the relevant facts narrated in
that case:
Petitioner Atty. Erlando A. Abrenica was a partner of individual
respondents, Attys. Danilo N. Tungol and Abelardo M. Tibayan, in the
Law Firm of Abrenica, Tungol and Tibayan (the firm).
In 1998, respondents filed with the Securities and Exchange
Commission (SEC) two cases against petitioner. The first was SEC
Case No. 05-98-5959, for Accounting and Return and Transfer of
Partnership Funds With Damages and Application for Issuance of
Preliminary Attachment, where they alleged that petitioner refused to
return partnership funds representing profits from the sale of a parcel
of land in Lemery, Batangas. The second was SEC Case No. 10-986123, also for
Accounting and Return and Transfer of Partnership Funds where
respondents sought to recover from petitioner retainer fees that he
received from two clients of the firm and the balance of the cash
advance that he obtained in 1997.

The SEC initially heard the cases but they were later transferred
to the Regional Trial Court of Quezon City pursuant to Republic Act
No. 8799, which transferred jurisdiction over intra-corporate
controversies from the SEC to the courts. In a Consolidated Decision
dated November 23, 2004, the Regional Trial Court of Quezon City,
Branch 226, held that:
WHEREFORE, in view of all the foregoing, judgment is
hereby rendered as follows:
CIVIL CASE NO. Q01-42948
1.
Ordering the respondent Atty. Erlando Abrenica
to render full accounting of the amounts he received as profits
from the sale and resale of the Lemery property in the amount
of 4,524,000.00;
2.
Ordering the respondent Atty. Erlando Abrenica
to remit to the law firm the said amount of 4,524,000.00 plus
interest of 12% per annum from the time he received the same
and converted the same to his own personal use or from
September 1997 until fully paid; and
3.

To pay the costs of suit.

CIVIL CASE NO. Q01-42959

1.
Ordering Atty. Erlando Abrenica to render a full
accounting of the amounts he received under the retainer
agreement between the law firm and Atlanta Industries Inc. and
Atlanta Land Corporation in the amount of 320,000.00.
2.
Ordering Atty. Erlando Abrenica to remit to the
law firm the amount received by him under the Retainer
Agreement with Atlanta Industries, Inc. and Atlanta Land
Corporation in the amount of 320,000.00 plus interests of 12%
per annum from June 1998 until fully paid;
3.
Ordering Atty. Erlando Abrenica to pay the law
firm his balance on his cash advance in the amount of
25,000.00 with interest of 12% per annum from the date this
decision becomes final; and

4.

To pay the costs of suit.

SO ORDERED.
Petitioner received a copy of the decision on December 17,
2004. On December 21, 2004, he filed a notice of appeal under Rule
41 and paid the required appeal fees.
Two days later, respondents filed a Motion for Issuance of Writ
of Execution pursuant to A.M. 01-2-04-SC, which provides that
decisions in intra-corporate disputes are immediately executory and
not subject to appeal unless stayed by an appellate court.
On January 7, 2005, respondents filed an Opposition (To
Defendant's Notice of Appeal) on the ground that it violated A.M. No.
04-9-07-SC[2] prescribing appeal by certiorari under Rule 43 as the
correct mode of appeal from the trial courts decisions on intracorporate disputes.
Petitioner thereafter filed a Reply with Manifestation (To the
Opposition to Defendant's Notice of Appeal) and an Opposition to
respondents motion for execution.
On May 11, 2005, the trial court issued an Order requiring
petitioner to show cause why it should take cognizance of the notice
of appeal in view of A.M. No. 04-9-07-SC. Petitioner did not comply
with the said Order. Instead, on June 10, 2005, he filed with the Court
of Appeals a Motion for Leave of Court to Admit Attached Petition for
Review under Rule 43 of the Revised Rules of Court. Respondents
opposed the motion.
The Court of Appeals denied petitioner's motion in its assailed
Resolution dated June 29, 2005 x x x.
xxx

xxx

x
The Court of Appeals also denied petitioner's motion for
reconsideration in its August 23, 2005 Resolution.

xx

Given the foregoing facts, we dismissed the Petition in G.R. No. 169420 on
the ground that the appeal filed by petitioner was the wrong remedy. For that
reason, we held as follows:[3]
Time and again, this Court has upheld dismissals of incorrect
appeals, even if these were timely filed. In Lanzaderas v. Amethyst
Security and General Services, Inc., this Court affirmed the dismissal
by the Court of Appeals of a petition for review under Rule 43 to
question a decision because the proper mode of appeal should have
been a petition for certiorari under Rule 65. x x x.
xxx

xxx

xxx

Indeed, litigations should, and do, come to an end. Public

interest demands an end to every litigation and a belated effort to
reopen a case that has already attained finality will serve no purpose
other than to delay the administration of justice. In the instant case,
the trial court's decision became final and executory on January 3,
2005. Respondents had already acquired a vested right in the effects
of the finality of the decision, which should not be disturbed any
longer.
WHEREFORE, the petition is DENIED. The Court of Appeals
Resolutions dated June 29, 2005 and August 23, 2005 in CA-G.R. SP
No. 90076 denying admission of petitioners Petition for Review
are AFFIRMED.
Thus, respondents sought the execution of the judgment. On 11 April 2007,
G.R. No. 169420 became final and executory.[4]
Apparently not wanting to be bound by this Courts Decision in G.R. No.
169420, petitioners Erlando and Joena subsequently filed with the Court of
Appeals (CA) a Petition for Annulment of Judgment with prayer for the issuance of
a writ of preliminary injunction and/or temporary restraining order, docketed as
CA-G.R. SP No. 98679. The Petition for Annulment of Judgment assailed the
merits of the RTCs Decision in Civil Case Nos. Q-01-42948 and Q-01-42959,
subject of G.R. No. 169420. In that Petition for Annulment, Petitioners raised the
following grounds:

I.

The lower court erred in concluding that both petitioners

and respondents did not present direct documentary evidence to
substantiate [their] respective claims.

II.

The lower court erred in concluding that both petitioners

and respondents relied mainly on testimonial evidence to prove
their respective position[s].

III.

The lower court erred in not ruling that the real estate
transaction entered into by said petitioners and spouses Roman
and Amalia Aguzar was a personal transaction and not a law
partnership transaction.

IV.

The lower court erred in ruling that the testimonies of the

respondents are credible.

V.

The lower court erred in ruling that the purchase price for
the lot involved was 3 million and not 8 million.

VI.

The lower court erred in ruling that petitioners retainer

agreement with Atlanta Industries, Inc. was a law partnership
transaction.

VII.

The lower court erred when it failed to rule on said

petitioners permissive counterclaim relative to the various
personal loans secured by respondents.

VIII.

The lower court not only erred in the exercise of its

jurisdiction but more importantly it acted without jurisdiction or
with lack of jurisdiction. [5]

We note that petitioners were married on 28 May 1998. The cases filed with
the Securities and Exchange Commission (SEC) on 6 May 1998 and 15 October
1998 were filed against petitioner Erlando only. It was with the filing of CA-G.R.
SP No. 98679 on 24 April 2007 that Joena joined Erlando as a co-petitioner.
On 26 April 2007, the CA issued a Resolution[6] dismissing the
Petition. First, it reasoned that the remedy of annulment of judgment under Rule
47 of the Rules of Court is available only when the ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available

through no fault of petitioners.[7]Considering that the dismissal of the appeal was

directly attributable to them, the remedy under Rule 47 was no longer available.
Second, the CA stated that the grounds alleged in the Petition delved on the
merits of the case and the appreciation by the trial court of the evidence presented
to the latter. Under Rule 47, the grounds for annulment are limited only to extrinsic
fraud and lack of jurisdiction.
Lastly, the CA held that the fact that the trial court was not designated as a
special commercial court did not mean that the latter had no jurisdiction over the
case. The appellate court stated that, in any event, petitioners could have raised this
matter on appeal or through a petition for certiorari under Rule 65, but they did not
do so.
Petitioners filed an Amended Petition for Annulment of Judgment dated 2
May 2007, but the CA had by then already issued the 26 April 2007 Resolution
dismissing the Petition.
On 24 May 2007, the 26 April 2007 Resolution in CA-G.R. SP No. 98679
became final and executory.[8]
Petitioners did not give up. They once again filed a 105-page Petition for
Annulment of Judgment with the CA dated 25 May 2007[9] docketed as CA-G.R.
SP No. 99719. This time, they injected the ground of extrinsic fraud into what
appeared to be substantially the same issues raised in CA-G.R. SP No. 98679. The
following were the grounds raised in CA-G.R. SP No. 99719:
A.

Extrinsic fraud and/or collusion attended the rendition of the

Consolidated Decision x x x based on the following badges of
fraud and/or glaring errors deliberately committed, to wit:
I.

The lower court deliberately erred in concluding that both

petitioners and respondents did not present direct
documentary evidence to substantiate their respective
claims, as it relied purely on the gist of what its personnel
did as regards the transcript of stenographic notes the latter
[sic] in collusion with the respondents.

II.

The lower court deliberately erred in concluding that both

petitioners and respondents relied mainly on testimonial
evidence to prove their respective positions by relying
totally on what was presented to it by its personnel who
drafted the Consolidated Decision in collusion with the
respondents.

III. The lower court deliberately erred in not ruling that the real
estate transaction entered into by said petitioners and
spouses Roman and Amalia Aguzar was a personal
transaction and not a law partnership transaction for the
same reasons as stated in Nos. 1 and II above.
IV. The lower court deliberately erred in ruling that the
testimonies of the respondents are credible as against the
petitioner Erlando Abrenica and his witnesses for the same
reasons as stated in Nos. I and II above.
V. The lower court deliberately erred in ruling that the
purchase price for the lot involved was 3 million and not
8 million for the same reasons as stated in Nos. 1 and II
above.
VI. The lower court deliberately erred in ruling that petitioners
retainer agreement with Atlanta Industries, Inc. was a law
partnership transaction for the same reasons as stated in Nos.
1 and II above.
VII. The lower court deliberately erred when it failed to rule on
said petitioners permissive counterclaim relative to the
various personal loans secured by respondents also for the
same reasons as the above.
B.

As an incident of the extrinsic fraud[,] the lower court[,] despite

full knowledge of its incapacity[,] rendered/promulgated the
assailed Consolidated Decision x x x without jurisdiction or with
lack of jurisdiction.[10] (Underscoring in the original.)

On 2 August 2007, the CA issued the first assailed Resolution[11] dismissing

the Petition in CA-G.R. SP No. 99719, which held the Petition to be insufficient in
form and substance. It noted the following:
x x x. Readily noticeable is that CA-G.R. SP No. 90076
practically contained the prayer for the annulment of the subject
consolidated Decision premised on the very same allegations,
grounds or issues as the present annulment of judgment case.
xxx

xxx

xxx

Annulment of judgment is a recourse equitable in character,

allowed only in exceptional cases as where there is no available or
other adequate remedy (Espinosa vs. Court of Appeals, 430 SCRA
96[2004]). Under Section 2 of Rule 47 of the Revised Rules of Court,
the only grounds for an annulment of judgment are extrinsic fraud and
lack of jurisdiction (Cerezo vs. Tuazon, 426 SCRA 167 [2004]).
Extrinsic fraud shall not be a valid ground if it was availed of, or
could have been availed of, in a motion for new trial or petition for
relief.
xxx

xxx

xx

x
x x x. In the case at bar, not only has the court a quo jurisdiction
over the subject matter and over the persons of the parties, what
petitioner is truly complaining [of] here is only a possible error in the
exercise of jurisdiction, not on the issue of jurisdiction itself. Where
there is jurisdiction over the person and the subject matter (as in this
case), the decision on all other questions arising in the case is but an
exercise of the jurisdiction. And the errors which the court may
commit in the exercise of jurisdiction are merely errors of judgment
which are the proper subject of
an appeal (Republic vs. G Holdings, supra, citing Tolentino vs.
Leviste, supra). (Emphasis supplied.)
Subsequently, petitioners filed a Humble Motion for Reconsideration[12] on
28 August 2007.

While the 28 August 2007 motion was pending, on 13 September 2007,

petitioner Erlando filed an Urgent Omnibus Motion[13] with Branch 226, alleging
that the sheriff had levied on properties belonging to his children and petitioner
Joena. In addition, Erlando alleged that the trial court still had to determine the
manner of distribution of the firms assets and the value of the levied properties.
Lastly, he insisted that the RTC still had to determine the issue of whether the Rule
41 appeal was the correct remedy.
On the same day, Joena filed an Affidavit of Third Party Claim[14] also with
Branch 226 of the RTC of Quezon City, alleging that she[15] and her
stepchildren[16] owned a number of the personal properties sought to be levied. She
also insisted that she owned half of the two (2) motor vehicles as well as the house
and lot covered by Transfer Certificate of Title (TCT) No. 216818, which formed
part of the absolute community of property. She likewise alleged that the real
property, being a family home, and the furniture and the utensils necessary for
housekeeping having a depreciated combined value of one hundred thousand pesos
(100,000) were exempt from execution pursuant to Rule 39, Section 13 of the
Rules of Court. Thus, she sought their discharge and release and likewise the
immediate remittance to her of half of the proceeds, if any.
Accordingly, the RTC scheduled[17] a hearing on the motion. On 17 October
2007, however, petitioner Erlando moved to withdraw his motion on account of
ongoing negotiations with respondents.[18]
Thereafter, petitioner Erlando and respondent Abelardo Tibayan, witnessed
by Sheriff Nardo de Guzman, Jr. of Branch 226 of the RTC of Quezon City,
executed an agreement to postpone the auction sale of the property covered by
TCT No. 216818 in anticipation of an amicable settlement of the money judgment.
[19]

Finally, on 30 October 2007, the CA in CA-G.R. SP No. 99719 issued the

second assailed Resolution[20] denying petitioners Motion for Reconsideration for
having been filed out of time, as the last day for filing was on 27 August 2007.
Moreover, the CA found that the grounds stated in the motion were merely
recycled and rehashed propositions, which had already been dispensed with.
Petitioners are now assailing the CA Resolutions dated 2 August 2007 and
30 October 2007, respectively, in CA-G.R. SP No. 99719. They insist that there is
still a pending issue that has not been resolved by the RTC. That issue arose from

the Order[21] given by the trial court to petitioner Erlando to explain why it should
take cognizance of the Notice of Appeal when the proper remedy was a petition for
review under Rule 43 of the Rules of Court.
Further, petitioners blame the trial and the appellate courts for the dismissal
of their appeal despite this Courts explanation in G.R. No. 169420 that the appeal
was the wrong remedy and was thus correctly dismissed by the CA. Instead of
complying with the show-cause Order issued by the RTC, petitioners went directly
to the CA and insisted that the remedy they had undertaken was correct.
Petitioners also contend that there was extrinsic fraud in the appreciation of
the merits of the case. They raise in the present Petition the grounds they cited in
the three (3) Petitions for Annulment of Judgment (including the Amended
Petition) quoted above.
Next, they assert that petitioner Joenas right to due process was also
violated when she was not made a party-in-interest to the proceedings in the lower
courts, even if her half of the absolute community of property was included in the
execution of the judgment rendered by Branch 226 of the RTC of Quezon City.
Finally, they insist that their Humble Motion for Reconsideration was filed
on time, since 27 August 2007 was a holiday. Therefore, they had until 28 August
2007 to file their motion.
Since then, it appears that a Sheriffs Certificate of Sale was issued on 3
January 2008 in favor of the law firm for the sum of 5 million for the property
covered by TCT No. 216818.
On 18 March 2009, while the case was pending with this Court, petitioners
filed a Complaint[22] with a prayer for the issuance of a writ of preliminary
injunction before the RTC of Marikina City against herein respondents and Sheriff
Nardo I. de Guzman, Jr. of Branch 226 of the RTC of Quezon City. The case was
docketed as Civil Case No. 09-1323-MK and was raffled to Branch 273 of the RTC
of Marikina City.[23] Petitioners sought the nullification of the sheriffs sale on
execution of the Decision in the consolidated cases rendered by Branch 226, as
well as the payment of damages. They alleged that the process of the execution
sale was conducted irregularly, unlawfully, and in violation of their right to due
process.

On 2 July 2009, Branch 273 of the RTC of Marikina City issued a Writ of
Preliminary Injunction enjoining respondents and/or their agents, and the Register
of Deeds of Marikina City from consolidating TCT No. 216818.[24]
The filing of the Complaint with the RTC of Marikina City prompted
respondents to file a Motion[25] before us to cite for contempt petitioner spouses
and their counsel, Atty. Antonio R. Bautista. This Motion was on the ground that
petitioners committed forum shopping when they filed the Complaint pending with
Branch 273 of the RTC of Marikina City, while the present case was also still
pending.
Meanwhile, on 22 September 2009, respondents filed before Branch 226
an Ex Parte Motion for Issuance of Writ of Possession.[26] That Motion was granted
by Branch 226 through a Resolution[27] issued on 10 November 2011. This
Resolution then became the subject of a Petition for Certiorari[28] under Rule 65
filed by petitioners before the CA docketed as CA-G.R. SP No. 123164.
Soon after, on 6 March 2012, petitioners filed with the CA an Urgent Motion
for Issuance of Temporary Restraining Order (T.R.O.)[29] after Sheriff De Guzman,
Jr. served on them a Notice to Vacate within five days from receipt or until 11
March 2012. As of the writing of this Decision, the CA has not resolved the issue
raised in the Petition in CA-G.R. SP No. 123164.

Our Ruling
Petitioners elevated this case to this Court, because they were allegedly
denied due process when the CA rejected their second attempt at the annulment of
the Decision of the RTC and their Humble Motion for Reconsideration.
We DENY petitioners claims.
The rules of procedure were formulated to achieve the ends of justice, not to
thwart them. Petitioners may not defy the pronouncement of this Court in G.R.
No. 169420 by pursuing remedies that are no longer available to them. Twice, the
CA correctly ruled that the remedy of annulment of judgment was no longer

available to them, because they had already filed an appeal under Rule 41. Due to
their own actions, that appeal was dismissed.
It must be emphasized that the RTC Decision became final and executory
through the fault of petitioners themselves when petitioner Erlando (1) filed an
appeal under Rule 41 instead of Rule 43; and (2) filed a Petition for Review
directly with the CA, without waiting for the resolution by the RTC of the issues
still pending before the trial court.
In Enriquez v. Court of Appeals,[30] we said:
It is true that the Rules should be interpreted so as to give
litigants ample opportunity to prove their respective claims and that a
possible denial of substantial justice due to legal technicalities should
be avoided. But it is equally true that an appeal being a purely
statutory right, an appealing party must strictly comply with the
requisites laid down in the Rules of Court. In other words, he who
seeks to avail of the right to appeal must play by the rules. x x x.
(Emphasis supplied.)
With regard to the allegation of petitioner Joena that her right to due process
was violated, it must be recalled that after she filed her Affidavit of Third Party
Claim on 13 September 2007 and petitioner Erlando filed his Urgent Omnibus
Motion raising the same issues contained in that third-party claim, he subsequently
filed two Motions withdrawing his Urgent Omnibus Motion. Petitioner Joena,
meanwhile, no longer pursued her third-party claim or any other remedy available
to her. Her failure to act gives this Court the impression that she was no longer
interested in her case. Thus, it was through her own fault that she was not able to
ventilate her claim.
Furthermore, it appears from the records that petitioner Erlando was first
married to a certain Ma. Aline Lovejoy Padua on 13 October 1983. They had three
children: Patrik Erlando (born on 14 April 1985), Maria Monica Erline (born on 9
September 1986), and Patrik Randel (born on 12 April 1990).
After the dissolution of the first marriage of Erlando, he and Joena got
married on 28 May 1998.[31] In her Affidavit, Joena alleged that she represented her

stepchildren; that the levied personal properties in particular, a piano with a chair,
computer equipment and a computer table were owned by the latter. We note that
two of these stepchildren were already of legal age when Joena filed her Affidavit.
As to Patrik Randel, parental authority over him belongs to his parents. Absent any
special power of attorney authorizing Joena to represent Erlandos children, her
claim cannot be sustained.
Petitioner Joena also asserted that the two (2) motor vehicles purchased in
1992 and 1997, as well as the house and lot covered by TCT No. 216818 formed
part of the absolute community regime. However, Art. 92, par. (3) of the Family
Code excludes from the community property the property acquired before the
marriage of a spouse who has legitimate descendants by a former marriage; and
the fruits and the income, if any, of that property. Neither these two vehicles nor
the house and lot belong to the second marriage.
We now proceed to discuss the Motion for contempt filed by respondents.
Respondents claim that petitioners and their present counsel, Atty. Antonio
R. Bautista, were guilty of forum shopping when the latter filed Civil Case No. 091323-MK with the RTC of Marikina City while the case was still pending before
us. In Executive Secretary v. Gordon,[32] we explained forum shopping in this wise:
Forum-shopping consists of filing multiple suits involving the
same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment. Thus,
it has been held that there is forum-shopping
(1) whenever as a result of an adverse decision in one forum, a
party seeks a favorable decision (other than by appeal or certiorari) in
another, or
(2) if, after he has filed a petition before the Supreme Court, a
party files another before the Court of Appeals since in such case he
deliberately splits appeals in the hope that even as one case in which
a particular remedy is sought is dismissed, another case (offering a
similar remedy) would still be open, or
(3) where a party attempts to obtain a preliminary injunction in
another court after failing to obtain the same from the original court.

Civil Case No. 09-1323-MK was filed to question the proceedings

undertaken by the sheriff in executing the judgment in Civil Case Nos. Q01-42948
and Q01-42959. On the other hand, the present case questions the merits of the
Decision itself in Civil Case Nos. Q01-42948 and Q01-42959. These cases have
different causes of action. Thus, it cannot be said that petitioners were clearly
guilty of forum shopping when they filed the Complaint before the RTC of
Marikina City.
WHEREFORE, in view of the foregoing, the Petition is hereby DENIED.
The Resolutions dated 2 August 2007 and 30 October 2007 issued by the Court of
Appeals in CA-G.R. SP No. 99719 are AFFIRMED.
SO ORDERED.
SPOUSES EULOGIA MANILA
and RAMON MANILA,
Petitioners,

- versus -

G.R. No. 163602

Present:
CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

SPOUSES EDERLINDA
Promulgated:
GALLARDO-MANZO
and
DANIEL MANZO,
September 7, 2011
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
This resolves the petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, assailing the Decision[1] dated February 27,
2004 and Resolution[2] dated May 14, 2004 of the Court of Appeals (CA) in CAG.R. SP No. 49998 which granted the petition for annulment of judgment filed by
the respondents.

The controversy stemmed from an action for ejectment[3] filed by the

respondents, spouses Ederlinda Gallardo-Manzo and Daniel Manzo, against the
petitioners, spouses Ramon and Eulogia Manila, before the Metropolitan Trial
Court (MeTC) of Las Pias City, Branch 79 (Civil Case No. 3537). The facts as
summarized by the said court are as follows:
On June 30, 1982, Ederlinda Gallardo leased two (2) parcels of
land situated along Real St., Manuyo, Las Pias, Metro Manila, to
Eulogia Manila for a period of ten (10) years at a monthly rental(s) of
P2,000.00 for the first two years, and thereafter an increase of ten (10)
percent every after two years. They also agreed that the lessee shall
have the option to buy the property within two (2) years from the date
of execution of the contract of lease at a fair market value of One
Hundred and Fifty Thousand Pesos (P150,000.00)
The contract of lease expired on July 1, 1992 but the lessee
continued in possession of the property despite a formal demand letter
dated August 8, 1992, to vacate the same and pay the rental
arrearages. In a letter reply dated August 12, 1992, herein defendant
claimed that no rental fee is due because she allegedly became the
owner of the property at the time she communicated to the plaintiff
her desire to exercise the option to buy the said property.
Their disagreement was later brought to the Barangay for
conciliation but the parties failed to reach a compromise, hence the
present action.[4]
On July 14, 1993, the MeTC rendered its decision,[5] the dispositive portion
of which reads:
WHEREFORE, a judgment is rendered in favor of the plaintiffs
ordering the defendants:
1)

To vacate the subject parcels of land and surrender

possession thereof upon the payment by the plaintiff of onehalf of the value of the building constructed by the
lessee. Should the lessor refuse to reimburse the aforesaid
amount, the lessee shall have the option to exercise her right
under Article 1678 of the New Civil Code;

2)

To pay rental arrearages up to July 1, 1992 in the amount

of Two Hundred Twenty Eight Thousand and Forty Four
80/100 Pesos (P228,044.80);

3)

To pay, as reasonable compensation for their continued

withholding of possession of the subject lots, the sum of
Three Thousand Two Hundred and Twenty One Pesos
(P3,221.00) every month, commencing July 2, 1992 up to
such time that they finally yield possession thereof to the
plaintiffs, subject to an increase of ten percent (10%) after
every two (2) years from said date; and

4)

To pay plaintiffs attorneys fees in the sum of Five

Thousand Pesos (P5,000.00)

No pronouncement as to costs.
SO ORDERED.[6]
Petitioners appealed to the Regional Trial Court (RTC) of Makati City, Branch
63 (Civil Case No. 93-3733) which reversed the MeTC. The RTC found that
petitioners have in fact exercised their option to buy the leased property but the
respondents refused to honor the same. It noted that respondents even informed the
petitioners about foreclosure proceedings on their property, whereupon the
petitioners tried to intervene by tendering rental payments but the respondents
advised them to withhold such payments until the appeal of respondents in the case
they filed against the Rural Bank of Bombon (Camarines Sur), Inc. (Civil Case No.
6062) is resolved. It further noted that respondents intention to sell the lot to
petitioners is confirmed by the fact that the former allowed the latter to construct a
building of strong materials on the premises. The RTC thus decreed:
IN THE LIGHT OF THE FOREGOING, judgment is hereby
rendered reversing the decision of the lower court dated July 14, 1993
and ordering as follows:
1)

2)

That plaintiffs execute a deed of absolute sale over that

parcel of land subject of the Contract of Lease dated June
30, 1982 after full payment of defendants of the purchase
price of P150,000.00;
That plaintiffs pay the costs of suit.

SO ORDERED.[7]
Respondents filed a motion for reconsideration on December 23, 1994. In
its Order dated March 24, 1995, the RTC denied the motion for having been filed
beyond the fifteen (15)-day period considering that respondents received a copy of
the decision on December 7, 1994.[8] Consequently, the November 18, 1994
decision of the RTC became final and executory.[9]
On December 22, 1998, respondents filed a petition for annulment of the
RTC decision in the CA. Respondents assailed the RTC for ordering them to sell
their property to petitioners arguing that said courts appellate jurisdiction in
ejectment cases is limited to the determination of who is entitled to the physical
possession of real property and the only judgment it can render in favor of the
defendant is to recover his costs, which judgment is conclusive only on the issue of
possession and does not affect the ownership of the land. They contended that the
sale of real property by one party to another may be ordered by the RTC only in a
case for specific performance falling under its original exclusive jurisdiction, not in
the exercise of its appellate jurisdiction in an ejectment case. Respondents also
alleged that the petition for annulment is the only remedy available to them
because the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault on their part.
By Decision dated February 27, 2004, the CA granted the petition, annulled
the November 18, 1994 RTC decision and reinstated the July 14, 1993 MeTC
decision. On the issue of lack of jurisdiction raised by the respondents, the CA
ruled as follows:
It must be stressed that the main action before the Metropolitan
Trial Court is one for ejectment grounded on the expiration of the
parties contract of lease. And said court, finding that petitioners have
a valid right to ask for the ejectment of private respondents, ordered
the latter to vacate the premises and to pay their rentals in arrears. To
Our mind, what the respondent court should have done in the exercise
of its appellate jurisdiction, was to confine itself to the issue of
whether or not petitioners have a valid cause of action for ejectment
against the private respondents.
Unfortunately, in the decision herein sought to be annulled, the
respondent court went further than what is required of it as an
appellate court when it ordered the petitioners to sell their properties

to the private respondents. In a very real sense, the respondent court

materially changed the nature of petitioners cause of action by
deciding the question of ownership even as the appealed case
involves only the issue of prior physical possession which, in every
ejectment suit, is the only question to be resolved. As it were, the
respondent court converted the issue to one for specific performance
which falls under its original, not appellate jurisdiction. Sad to say,
this cannot be done by the respondent court in an appealed ejectment
case because the essential criterion of appellate jurisdiction is that it
revises and corrects the proceedings in a cause already instituted and
does not create that cause (Marbury v. Madison, 1 Cranch (U.S.), 137,
172, 2 L. edition 60, cited in 15 Corpus Juris 727).
It follows that the respondent Regional Trial Court clearly acted
without jurisdiction when it ordered the petitioners to sell their
properties to the private respondents. The order to sell can be made
only by the respondent court in an action for specific performance
under its exclusive original jurisdiction, and not in the exercise of
its appellate jurisdiction in an appealed ejectment suit, as in this case.
Worse, the relief granted by the same court was not even prayed for
by the private respondents in their Answer and position paper before
the MTC, whereat they only asked for the dismissal of the complaint
filed against them.[10] (Emphasis supplied.)
With the denial of their motion for reconsideration, petitioners filed the
present petition raising the following issues:
A
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE
ERROR IN ANNULLING THE JUDGMENT BY THE REGIONAL
TRIAL COURT OF MAKATI CITY NOTWITHSTANDING THE
FINDING THAT THE ORDINARY REMEDIES OF NEW TRIAL,
APPEAL, PETITION FOR RELIEF OR OTHER APPROPRIATE
REMEDIES WERE LOST THROUGH THE FAULT OF THE
RESPONDENTS
B
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE
ERROR IN ANNULLING THE JUDGMENT BY THE REGIONAL

TRIAL COURT OF MAKATI CITY ON THE GROUND OF LACK

OF JURISDICTION WHEN IT HAS NOT BEEN SHOWN THAT
THE REGIONAL TRIAL COURT OF MAKATI CITY HAD NO
JURISDICTION OVER THE PERSON OF THE RESPONDENTS
OR THE SUBJECT MATTER OF THE CLAIM[11]
The petition is meritorious.
A petition for annulment of judgments or final orders of a Regional Trial
Court in civil actions can only be availed of where the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies are no longer
available through no fault of the petitioner.[12] It is a remedy granted only under
exceptional circumstances and such action is never resorted to as a substitute for a
partys own neglect in not promptly availing of the ordinary or other appropriate
remedies.[13] The only grounds provided in Sec. 2, Rule 47 are extrinsic fraud and
lack of jurisdiction.
In this case, respondents alleged that the loss of remedies against the RTC
decision was attributable to their former counsels late filing of their motion for
reconsideration and failure to file any proper petition to set aside the said decision.
They claimed that they had been constantly following up the status of the case with
their counsel, Atty. Jose Atienza, who repeatedly assured them he was on top of the
situation and would even get angry if repeatedly asked about the case. Out of their
long and close relationship with Atty. Atienza and due regard for his poor health due
to his numerous and chronic illnesses which required frequent prolonged
confinement at the hospital, respondents likewise desisted from hiring the services
of another lawyer to assist Atty. Atienza, until the latters death on September 10,
1998. Thus, it was only on November 1998 that respondents engaged the services
of their new counsel who filed the petition for annulment of judgment in the CA.
We are not persuaded by respondents asseveration. They could have
directly followed up the status of their case with the RTC especially during the
period of Atty. Atienzas hospital confinement. As party litigants, they should have
constantly monitored the progress of their case. Having completely entrusted their
case to their former counsel and believing his word that everything is alright, they
have no one to blame but themselves when it turned out that their opportunity to
appeal and other remedies from the adverse ruling of the RTC could no longer be
availed of due to their counsels neglect. That respondents continued to rely on the
services of their counsel notwithstanding his chronic ailments that had him

confined for long periods at the hospital is unthinkable. Such negligence of

counsel is binding on the client, especially when the latter offered no plausible
explanation for his own inaction. The Court has held that when a party retains the
services of a lawyer, he is bound by his counsels actions and decisions regarding
the conduct of the case. This is true especially where he does not complain against
the manner his counsel handles the suit.[14] The oft-repeated principle is that an
action for annulment of judgment cannot and is not a substitute for the lost remedy
of appeal.[15]
In any event, the petition for annulment was based not on fraudulent
assurances or negligent acts of their counsel, but on lack of jurisdiction.
Petitioners assail the CA in holding that the RTC decision is void because it
granted a relief inconsistent with the nature of an ejectment suit and not even
prayed for by the respondents in their answer. They contend that whatever maybe
questionable in the decision is a ground for assignment of errors on appeal or in
certain cases, as ground for a special civil action for certiorari under Rule 65 and
not as ground for its annulment. On the other hand, respondents assert that the CA,
being a higher court, has the power to adopt, reverse or modify the findings of the
RTC in this case. They point out that the CA in the exercise of its sound discretion
found the RTCs findings unsupported by the evidence on record which also
indicated that the loss of ordinary remedies of appeal, new trial and petition for
review was not due to the fault of the respondents.
We agree with the petitioners.
Lack of jurisdiction as a ground for annulment of judgment refers to either
lack of jurisdiction over the person of the defending party or over the subject
matter of the claim.[16] In a petition for annulment of judgment based on lack of
jurisdiction, petitioner must show not merely an abuse of jurisdictional discretion
but an absolute lack of jurisdiction. Lack of jurisdiction means absence of or no
jurisdiction, that is, the court should not have taken cognizance of the petition
because the law does not vest it with jurisdiction over the subject
matter. Jurisdiction over the nature of the action or subject matter is conferred by
law.[17]
There is no dispute that the RTC is vested with appellate jurisdiction over
ejectment cases decided by the MeTC, MTC or MCTC. We note that petitioners
attack on the validity of the RTC decision pertains to a relief erroneously granted

on appeal, and beyond the scope of judgment provided in Section 6 (now Section
17) of Rule 70.[18] While the court in an ejectment case may delve on the issue of
ownership or possession de jure solely for the purpose of resolving the issue of
possession de facto, it has no jurisdiction to settle with finality the issue of
ownership[19] and any pronouncement made by it on the question of ownership is
provisional in nature.[20] A judgment in a forcible entry or detainer case disposes of
no other issue than possession and establishes only who has the right of possession,
but by no means constitutes a bar to an action for determination of who has the
right or title of ownership.[21] We have held that although it was proper for the
RTC, on appeal in the ejectment suit, to delve on the issue of ownership and
receive evidence on possession de jure, it cannot adjudicate with semblance of
finality the ownership of the property to either party by ordering the cancellation of
the TCT.[22]
In this case, the RTC acted in excess of its jurisdiction in deciding the appeal
of respondents when, instead of simply dismissing the complaint and awarding any
counterclaim for costs due to the defendants (petitioners), it ordered the
respondents-lessors to execute a deed of absolute sale in favor of the petitionerslessees, on the basis of its own interpretation of the Contract of Lease which
granted petitioners the option to buy the leased premises within a certain period
(two years from date of execution) and for a fixed price (P150,000.00).[23] This
cannot be done in an ejectment case where the only issue for resolution is who
between the parties is entitled to the physical possession of the property.
Such erroneous grant of relief to the defendants on appeal, however, is but
an exercise of jurisdiction by the RTC. Jurisdiction is not the same as the exercise
of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the
authority to decide a cause, and not the decision rendered therein.[24] The ground
for annulment of the decision is absence of, or no, jurisdiction; that is, the court
should not have taken cognizance of the petition because the law does not vest it
with jurisdiction over the subject matter.[25]
Thus, while respondents assailed the content of the RTC decision, they failed
to show that the RTC did not have the authority to decide the case on appeal. As
we held in Ybaez v. Court of Appeals:[26]
On the first issue, we feel that respondent court acted
inadvertently when it set aside the RTC ruling relative to the validity
of the substituted service of summons over the persons of the
petitioners in the MTC level. We must not lose sight of the fact that

what was filed before respondent court is an action to annul the RTC
judgment and not a petition for review. Annulment of judgment may
either be based on the ground that a judgment is void for want of
jurisdiction or that the judgment was obtained by extrinsic
fraud. There is nothing in the records that could cogently show that
the RTC lacked jurisdiction. Chiefly, Section 22 of B.P. Blg. 129,
otherwise known as the Judiciary Reorganization Act of 1980, vests
upon the RTC the exercise of an appellate jurisdiction over all cases
decided by the Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts in their respective territorial
jurisdictions. Clearly then, when the RTC took cognizance of
petitioners appeal from the adverse decision of the MTC in the
ejectment suit, it (RTC) was unquestionably exercising its
appellate jurisdiction as mandated by law. Perforce, its decision
may not be annulled on the basis of lack of jurisdiction as it has,
beyond cavil, jurisdiction to decide the appeal.[27] (Emphasis
supplied.)
The CA therefore erred in annulling the November 18, 1994 RTC decision
on the ground of lack of jurisdiction as said court had jurisdiction to take
cognizance of petitioners appeal.
On the timeliness of the petition for annulment of judgment filed with the
CA, Section 3, Rule 47 of the Rules of Court provides that a petition for annulment
of judgment based on extrinsic fraud must be filed within four years from its
discovery; and if based on lack of jurisdiction, before it is barred by laches or
estoppel. The principle of laches or stale demands ordains that the failure or
neglect, for an unreasonable and unexplained length of time, to do that which by
exercising due diligence could or should have been done earliernegligence or
omission to assert a right within a reasonable time, warrants a presumption that the
party entitled to assert it has abandoned it or declined to assert it.[28] There is no
absolute rule as to what constitutes laches or staleness of demand; each case is to
be determined according to its particular circumstances.[29]
Here, respondents failure to assail the RTC ruling in a petition for review or
certiorari before the CA, rendered the same final and executory. Having lost these
remedies due to their lethargy for three and a half years, they cannot now be
permitted to assail anew the said ruling rendered by the RTC in the exercise of its
appellate jurisdiction. Their inaction and neglect to pursue available remedies to set

aside the RTC decision for such length of time, without any acceptable explanation
other than the word of a former counsel who already passed away, constitutes
unreasonable delay warranting the presumption that they have declined to assert
their right over the leased premises which continued to be in the possession of the
petitioners. Clearly, respondents petition to annul the final RTC decision is barred
under the equitable doctrine of laches.
WHEREFORE, the petition for review on certiorari
is GRANTED. The Decision dated February 27, 2004 and Resolution dated May 14,
2004 of the Court of Appeals in CA-G.R. SP No. 49998 are SET ASIDE. The
petition for annulment of judgment filed by herein respondents is DISMISSED.
No costs.
SO ORDERED.
Navida v Dizon
Facts:
Beginning 1993, a number of personal injury suits were filed in different Texas
state courts by citizens of twelve foreign countries, including the Philippines. The
thousands of plaintiffs sought damages for injuries they allegedly sustained from
their exposure to dibromochloropropane (DBCP), a chemical used to kill
nematodes (worms), while working on farms in 23 foreign countries. The cases
were eventually transferred to, and consolidated in, the Federal District Court for
the Southern District of Texas, Houston Division. The defendants in the
consolidated cases prayed for the dismissal of all the actions under the doctrine of
forum non conveniens.
In a Memorandum Order, the Federal District Court conditionally granted the
defendants motion to dismiss provided the defendants:
(1) participated in expedited discovery in the United States
(2) either waived or accepted service of process and waived any other
jurisdictional defense in any action commenced by a plaintiff in these actions in his
home country or the country in which his injury occurred.
(3) waived any limitations-based defense that has matured since the
commencement of these actions in the courts of Texas;

(4) stipulated that any discovery conducted during the pendency of these actions
may be used in any foreign proceeding to the same extent as if it had been
conducted in proceedings initiated there; and
(5) submitted an agreement binding them to satisfy any final judgment rendered in
favor of plaintiffs by a foreign court.
In the event that the highest court of any foreign country finally affirms the
dismissal for lack of jurisdiction of an action commenced by a plaintiff in these
actions in his home country or the country in which he was injured, that plaintiff
may return to this court and, upon proper motion, the court will resume jurisdiction
over the action as if the case had never been dismissed for.
Case 1 (125078) and 2 (125598):
336 plaintiffs from General Santos City filed a Joint Complaint in the RTC of
General Santos City. Named as defendants therein were: Shell Oil Co. (SHELL);
Dow Chemical Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole
Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co., Standard Fruit and
Steamship Co. (hereinafter collectively referred to as DOLE); Chiquita Brands,
Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte Fresh
Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter collectively referred
to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine
Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are
hereinafter collectively referred to as defendant companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and
injuries to the reproductive systems which they allegedly suffered because of their
exposure to DBCP. They claimed, among others, that they were exposed to this
chemical during the early 1970s up to the early 1980s when they used the same in
the banana plantations where they worked at; and/or when they resided within the
agricultural area where such chemical was used. NAVIDA, et al., claimed that their
illnesses and injuries were due to the fault or negligence of each of the defendant
companies in that they produced, sold and/or otherwise put into the stream of
commerce DBCP-containing products. According to NAVIDA, et al., they were
allowed to be exposed to the said products, which the defendant companies knew,
or ought to have known, were highly injurious to the formers health and wellbeing.

Without resolving the motions filed by the parties, the RTC of General Santos City
issued an Order dismissing the complaint. First, the trial court determined that it
did not have jurisdiction to hear the case because the substance of the cause of
action as stated in the complaint against the defendant foreign companies cites
activity on their part which took place abroad and had occurred outside and beyond
the territorial domain of the Philippines. These acts of defendants cited in the
complaint included the manufacture of pesticides, their packaging in containers,
their distribution through sale or other disposition, resulting in their becoming part
of the stream of commerce. The subject matter stated in the complaint and which is
uniquely particular to the present case, consisted of activity or course of conduct
engaged in by foreign defendants outside Philippine territory, hence, outside and
beyond the jurisdiction of Philippine Courts, including the present Regional Trial
Court.
Second, the RTC of General Santos City adjudged that NAVIDA, et al., were
coerced into submitting their case to the Philippine courts, merely to comply with
the U.S. District Courts Order and in order to keep open to the plaintiffs the
opportunity to return to the U.S. District Court.
Third, the trial court ascribed little significance to the voluntary appearance of the
defendant companies. Defendants have appointed their agents authorized to accept
service of summons/processes in the Philippines pursuant to the agreement in the
U.S. court that defendants will voluntarily submit to the jurisdiction of this court.
While it is true that this court acquires jurisdiction over persons of the defendants
through their voluntary appearance, it appears that such voluntary appearance of
the defendants in this case is conditional. Thus in the Defendants Amended
Agreement Regarding Conditions of Dismissal for Forum Non Conveniens filed
with the U.S. District Court, defendants declared that (t)he authority of each
designated representative to accept service of process will become effective upon
final dismissal of these actions by the Court. The decision of the U.S. District
Court dismissing the case is not yet final and executory since both the plaintiffs
and defendants appealed therefrom. Consequently, since the authority of the agent
of the defendants in the Philippines is conditioned on the final adjudication of the
case pending with the U.S. courts, the acquisition of jurisdiction by this court over
the persons of the defendants is also conditional.
Fourth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of
filing the case in the Philippine courts violated the rules on forum shopping and
litis pendencia. This court frowns upon the fact that the parties herein are both
vigorously pursuing their appeal of the decision of the U.S. District court

dismissing the case filed thereat. To allow the parties to litigate in this court when
they are actively pursuing the same cases in another forum, violates the rule on
forum shopping so abhorred in this jurisdiction. Moreover, the filing of the case
in the U.S. courts divested this court of its own jurisdiction. This court takes note
that the U.S. District Court did not decline jurisdiction over the cause of action.
The case was dismissed on the ground of forum non conveniens, which is really a
matter of venue. By taking cognizance of the case, the U.S. District Court has, in
essence, concurrent jurisdiction with this court over the subject matter of this case.
It is settled that initial acquisition of jurisdiction divests another of its own
jurisdiction.
Case 3 (126654), 4 (127856), 5(128398)
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL,
DOLE, DEL MONTE, and CHIQUITA was filed before Branch 16 of the RTC of
Davao City by 155 plaintiffs from Davao City. They alleged that as workers in the
banana plantation and/or as residents near the said plantation, they were made to
use and/or were exposed to nematocides, which contained the chemical DBCP.
According to ABELLA, et al., such exposure resulted in serious and permanent
injuries to their health, including, but not limited to, sterility and severe injuries to
their reproductive capacities.
The RTC of Davao City, however, junked Civil Cases. The Court however is
constrained to dismiss the case at bar not solely on the basis of the above but
because it shares the opinion of legal experts given in the interview made by the
Inquirer in its Special report Pesticide Cause Mass Sterility, Former Justice
Secretary Demetrio Demetria in a May 1995 opinion said: The Philippines should
be an inconvenient forum to file this kind of damage suit against foreign
companies since the causes of action alleged in the petition do not exist under
Philippine laws. There has been no decided case in Philippine Jurisprudence
awarding to those adversely affected by DBCP. This means there is no available
evidence which will prove and disprove the relation between sterility and DBCP.
Eventually, the cases reached the SC!
Present case:
The main contention of the petitioners states that the allegedly tortious acts and/or
omissions of defendant companies occurred within Philippine territory. Said fact
allegedly constitutes reasonable basis for our courts to assume jurisdiction over the

case.
DOLE similarly maintains that the acts attributed to defendant companies
constitute a quasi-delict, which falls under Article 2176 of the Civil Code. DOLE
also argues that if indeed there is no positive law defining the alleged acts of
defendant companies as actionable wrong, Article 9 of the Civil Code dictates that
a judge may not refuse to render a decision on the ground of insufficiency of the
law. The court may still resolve the case, applying the customs of the place and, in
the absence thereof, the general principles of law.
CHIQUITA (another petitioner) argues that the courts a quo had jurisdiction over
the subject matter of the cases filed before them. CHIQUITA avers that the
pertinent matter is the place of the alleged exposure to DBCP, not the place of
manufacture, packaging, distribution, sale, etc., of the said chemical. This is in
consonance with the lex loci delicti commisi theory in determining the situs of a
tort, which states that the law of the place where the alleged wrong was committed
will govern the action. CHIQUITA and the other defendant companies also
submitted themselves to the jurisdiction of the RTC by making voluntary
appearances and seeking for affirmative reliefs during the course of the
proceedings.
Issue:
Whether or not the RTCs have jurisdiction over the subject matter in these cases.
Held: Yes.
1. The rule is settled that jurisdiction over the subject matter of a case is conferred
by law and is determined by the allegations in the complaint and the character of
the relief sought, irrespective of whether the plaintiffs are entitled to all or some of
the claims asserted therein. Once vested by law, on a particular court or body, the
jurisdiction over the subject matter or nature of the action cannot be dislodged by
anybody other than by the legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases
under Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorneys fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the abovementioned items

exceeds Two hundred thousand pesos (P200,000.00).

Supreme Court Administrative Circular No. 09-94, states:
The exclusion of the term damages of whatever kind in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of
action, the amount of such claim shall be considered in determining the jurisdiction
of the court.
It is clear that the claim for damages is the main cause of action and that the total
amount sought in the complaints is approximately P2.7 million for each of the
plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in
General Santos City and Davao City.
2. The jurisdiction of the court cannot be made to depend upon the defenses set up
in the answer or upon the motion to dismiss, for otherwise, the question of
jurisdiction would almost entirely depend upon the defendants. What determines
the jurisdiction of the court is the nature of the action pleaded as appearing from
the allegations in the complaint. The averments therein and the character of the
relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies
constitute a quasi-delict which is the basis for the claim for damages filed by
NAVIDA, et al., and ABELLA, et al., with individual claims of approximately P2.7
million for each plaintiff claimant, which obviously falls within the purview of the
civil action jurisdiction of the RTCs.
3. It is, therefore, error on the part of the courts a quo when they dismissed the
cases on the ground of lack of jurisdiction on the mistaken assumption that the
cause of action narrated by NAVIDA, et al., and ABELLA, et al., took place abroad
and had occurred outside and beyond the territorial boundaries of the Philippines,
i.e., the manufacture of the pesticides, their packaging in containers, their
distribution through sale or other disposition, resulting in their becoming part of
the stream of commerce, and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of
the act complained of, would be determinative of jurisdiction and venue for trial of
cases. In personal civil actions, such as claims for payment of damages, the Rules

of Court allow the action to be commenced and tried in the appropriate court,
where any of the plaintiffs or defendants resides, or in the case of a non-resident
defendant, where he may be found, at the election of the plaintiff.
In a very real sense, most of the evidence required to prove the claims of NAVIDA,
et al., and ABELLA, et al., are available only in the Philippines. First, plaintiff
claimants are all residents of the Philippines, either in General Santos City or in
Davao City. Second, the specific areas where they were allegedly exposed to the
chemical DBCP are within the territorial jurisdiction of the courts a quo wherein
NAVIDA, et al., and ABELLA, et al., initially filed their claims for damages.
Third, the testimonial and documentary evidence from important witnesses, such
as doctors, co-workers, family members and other members of the community,
would be easier to gather in the Philippines.
---Re: Jurisdiction over the person
The RTC of General Santos City and the RTC of Davao City validly acquired
jurisdiction over the persons of all the defendant companies. All parties voluntarily,
unconditionally and knowingly appeared and submitted themselves to the
jurisdiction of the courts a quo. All the defendant companies submitted themselves
to the jurisdiction of the courts a quo by making several voluntary appearances, by
praying for various affirmative reliefs, and by actively participating during the
course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v.
Sandiganbayan, held that jurisdiction over the person of the defendant in civil
cases is acquired either by his voluntary appearance in court and his submission to
its authority or by service of summons. Furthermore, the active participation of a
party in the proceedings is tantamount to an invocation of the courts jurisdiction
and a willingness to abide by the resolution of the case, and will bar said party
from later on impugning the court or bodys jurisdiction.
--Jurisdiction v Exercise of Jurisdiction
It may also be pertinently stressed that jurisdiction is different from the exercise
of jurisdiction. Jurisdiction refers to the authority to decide a case, not the orders
or the decision rendered therein. Accordingly, where a court has jurisdiction over
the persons of the defendants and the subject matter, as in the case of the courts a

quo, the decision on all questions arising therefrom is but an exercise of such
jurisdiction. Any error that the court may commit in the exercise of its jurisdiction
is merely an error of judgment, which does not affect its authority to decide the
case, much less divest the court of the jurisdiction over the case.
---Re: Bad faith in filing cases to procure a dismissal and to allow petitioners to
return to the forum of their choice.
This Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are
unsupported by evidence on record. This Court does not rule on allegations which
are manifestly conjectural, as these may not exist at all. This Court deals with facts,
not fancies; on realities, not appearances.
* We REMAND the records of this case to the respective Regional Trial Courts of
origin for further and appropriate proceedings in line with the ruling herein that
said courts have jurisdiction over the subject matter of the amended complaints.
MAIN DECISION: see page 10 PDF
RESOLUTION: Republic v Mangotara
G.R. No. 170375
October 13, 2010
RESOLUTION
LEONARDO-DE CASTRO, J.:
On
July 7, 2010,
the First
of this dispositive
Court promulgated
consolidated
Petitions,
withDivision
the following
portion: its Decision in seven
WHEREFORE,
premises considered, the Court renders the following judgment in
the Petitions at bar:
1)
In G.R.
No. 170375
Case),
the Court
GRANTSand
the
Petition
for Review
of the (Expropriation
Republic
the12,
Philippines.
It
REVERSES
SETS
ASIDE
the Resolutions
dated1of
July
2005
andLanao
October
24,
2005of
the
Regional
Trial
Court,
Branch
of
Iligan
City,
del
Norte.
It
further
ORDERS
theSupplemental
reinstatementComplaint
of the Complaint
in Civil Case
No.return
106,
the
admission
of the
ofcourt
the Republic,
andforthe
of
the
original
record
of
the
case
to
the
of
origin
further
proceedings. No costs.
2)
In DENIES
G.R. Nos.
and Petitions
178894 for
(Quieting
Case),
the
Court
the 178779
consolidated
ReviewofCabildo
of Title
Landtrade
Realty
Corporation,
Teofilo
Cacho,
and/or
Atty.January
Godofredo
for
lack
of
merit.
It
AFFIRMS
the
Decision
dated
19,
2007
and
Resolution
dated
Julyin4,toto
2007
ofDecision
the Court
of Appeals
in2004
CA-G.R.
CV.
No. 00456,
affirming
the
dated
July
17,
of
the
Regional
Trial
Court,
Branch 3Landtrade
of Iligan Realty
City, Lanao
del Norte,Teofilo
in Civil
Case No.
Costs
against
Corporation,
Cacho,
and 4452.
Atty.
Godofredo
Cabildo.
3)
In G.R. pending
No. 170505
(The before
Ejectment
or Regional
Unlawful Trial
Detainer
Casethe

execution
appeal
Court),
Court
DENIES
the
Petition
for Review
ofthe
Landtrade
Realty
Corporation
for
being
moot
and
academic
given
that
the
Regional
Trial
Court,
Branch
1
of
Iligan
City,
Norte
already
a Decision dated
December
12,Lanao
2005 indel
Civil
Case had
No. 6613.
No rendered
costs.
4)
In G.R.
Nos.
173355-56
and 173563-64
(ThetheEjectment
or Unlawful
Detainer
Case
execution
pending
appeal before
Court of Appeals),
the

Court
GRANTS
the consolidated
Petitions
for Certiorari
and Prohibition
of
the
National
Power
Corporation
andJune
National
Transmission
It
SETS
ASIDE
the Resolution
dated
30, 2006
of the
CourtCorporation.
of
Appeals
in
CA-G.R.
SP
Nos.
00854
and
00889
for
having
been
rendered
with
grave
abuse
of discretion Court
amounting
to lackto orissue
excess
of jurisdiction.
It
further
ORDERSthe
of Appeals
a writ
of preliminary
injunction
enjoining
theCourt,
execution
of the
Decision
dated
December
12, 2005
of
the
Regional
Trial
Branch
1
of
Iligan
City,
Lanao
del
Norte,
in
Civil
Case
6613, while
the 00854
same isand
pending
appeal
before
the Courtthe
of
Appeals
in No.
CA-G.R.
SP Nos.
00889.
finally
DIRECTS
Court
of Appeals
toNos.
resolve
without
furtherindelay
theItpending
appeals before
it,
in
CA-G.R.
SP
00854
and
00889,
a
manner
not
inconsistent
with
this Decision. No costs.
5)
In G.R.
No. 173401
(Cancellation
ofofTitles
and Reversion
Case), the
Court
GRANTS
theSETS
Petition
for Review
the
Republic
of the13,
Philippines.
It
REVERSES
and
ASIDE
theCourt,
Orders
dated
December
2005
and
May
16,
2006
of
the
Regional
Trial
Branch
4
of
Iligan
City
in Civil
Case
No. 6686.
It furtherORDERS
thethereinstatement
of the
Complaint
in
1
Civil
Case
No.
6686
and
the
return
of
original
record
of
the
case
to
the
court of origin for further proceedings. No costs.
2
In
a Resolution
dated August 25,
2010,
Court denied
with (Teofilo)
finality theand
separate
motions
for
reconsideration
filed
by the
[1]
Cacho
Atty.
Godofredo
Cabildoand(Atty.
Cabildo);
[2] Teofilo
Land
Trade
Realty International
Corporation
(LANDTRADE);
[3]
Demetria
Vidal
(Vidal),
Azimuth
Development
Corporation
(AZIMUTH),
and
Maria
Cristina
Fertilizer
Corporation
(MCFC),
considering
thattothe
basic aissues
were already
upon
and there
no
substantial
argument
warrant
modification
of thepassed
previous
judgment
ofwas
the
Court.

Also
in the August
25, 2010
Resolution,
the to
Court
denied
the Banc
joint motion
Vidal,
AZIMUTH,
and
MCFC
to
refer
the7, cases
the
Court En
becauseofper
SC
Circular
No.
2-89
dated
February
1989,
asan
amended
by
thetoResolution
dated
November
18,
1993,
the
Court
En
Banc
is
not
appellate
court
which
decisions
or
resolutions
of
the
Divisions
may
be
appealed.
It
is
for
this
same
reason
that
the
Court
is now178894,
similarly
denying
the Motion
[To Refer173562-64
to Court En
Banc
178779
G.R.
Nos. 170505,
173355-56,
(sic)
andG.R.
G.R.Nos.
No.
173401]and
of LANDTRADE.
Thus,
the
only and
otherAdmit
matterAttached
left for determination
of this Courtwith
is the
for
Leave
tofor
File
Motion for
Clarification,
theMotion
appended
Motion
Clarification,
of the
the pronouncements
Republic
of the
Philippines
(Republic).
The
Republic
is
concerned
that
of
this
Court
as
regards
the
Quieting
of Title Caseof(G.R.
Nos. 178779ofand
178894)
would effectively
bar or
limit
the prosecution
theCase
Cancellation
Titles
and
Reversion
Case (G.R.
173401)
Expropriation
(G.R. No. 170375).
Hence,
the Republic
seeksNo.
the
followingand
reliefs
from this Court:
WHEREFORE,
it is respectfully prayed that a clarification be made confirming
that:
1.
The
pronouncement inofG.R.
Nos. 178779
and
178894
that:
"Azimuth is
is
the
successor-in-interest
Demetria
Vidal toof
theCivil
extent
of
23
without
to the final
disposition
Case
No.hectares"
6686 for
reversion;prejudice
and,
2.
The pronouncement
in G.R.her
Nos.
178779right
and to
178894,
on Demetria
Vidal
Confesors
heirship vis--vis
supposed
transfer
to Azimuth,
is
without
prejudice
to may
the outcome
of Civil Case
No.
106title
(Expropriation)
where
the
government
present
eveidence
(sic)
to
belie
the
aforestated
heirship
andor (sic) Demetria Confesor Vidals entitlement to just
compensation.
Other reliefs deemed just and equitable under the premises are likewise prayed for.3
The Court only partly grants the Motion for Clarification of the Republic.
In the Quieting of Title Case, the Court held:
Thus,
the Court
Appeals
did notamong
err when
it affirmed in
toto theVidal
judgment
ofsole
the
RTC-Branch
3ofof
which
declared,
other
surviving
heir
Doa
Demetria,
who
alone
has things,
rights tothat
and (a)
interest
in isthethe
subject
parcels
of
land;
(b)
AZIMUTH
is
Vidals
successor-in-interest
to
portions
of
the
said
properties
in accordance
with the(c)1998
Memorandum
ofson
Agreement
and
2004
Deed
of Conditional
Conveyance;
Teofilo
is
not
the
or
heir
of
Doa
Demetria;
and
(d)
Teofilo,
Atty.
Cabildo,
and
their
transferees/assignees,
including
LANDTRADE,
have no valid right to or interest in the same properties. (Emphasis
supplied.)4
Of
the Nos.
total 0-1200
land area
of and
38.23
hectares
covered
by
Original
Certificate ofCacho
Title
(OCT)
(a.f.)
0-1201
intothe
name
of Doa
(Doa
Demetria),
Vidal
transferred
her(a.f.),
rights
and
interests
in aDemetria
portion thereof,
measuring
23
hectares,
to
AZIMUTH
by
virtue
of
the
aforementioned
1998
Memorandum
of Agreement
2004
Deed
Conditional of
Conveyance.
it
should Vidal
be stressed
that theand
main
issue
inofthe
Title
Case However,
was
who
between
and surviving
Teofilo
had
valid
title
toorQuieting
the
subject
properties
as Doa
Demetrias
rightful
heir.
The
extent
area
of
the
properties
inherited
was not put into question in said case.
Moreover,
theReversion
Court alsoCase
ordered
in its Julybefore
7, 2010
Decision
that
theCourt,
Cancellation
of
Titles and
be reinstated
the
Regional
Trial
Branch
4Republic
(RTC-Branch
4)case
of Iligan
City,
Lanao
del Norte.
Itand
is the
main
contention
of and
the
in
said
that
OCT
Nos.
0-1200
(a.f.)
0-1201
(a.f.)
are the
null
void
because
they
covered
parcels
of
land
beyond
those
granted
by
land
registration
court
to
Doa
Demetria
in
GLRO
Record
Nos.
6908
and
6909.
Should
the
RTC-Branch
4 affirm
the nullity
OCTs, to
then
can order
the
cancellation
of unlawfully
said
certificates
of therein.1avvphi1
title of
andthethetwo
reversion
the itRepublic
of the
parcels of land
included
The
Court 38.23
agreeshectares,
with the covered
Republicbythat
necessarily,
the rights
to
and interests
in
the
entire
Nos.
0-1200
(a.f.) in
and
(a.f.),
claimed
byshould
Vidal as
the declared
sole OCT
heir
of
Doa
Demetria
the0-1201
Quieting
of
Title
Case,
be
without
prejudice
to
the
outcome
of
the
Cancellation
of
Titles
and
Reversion
Case
yet to be
heard
by theproperties,
RTC-Branch
4. As Vidals
successor-ininterest
to theshoes
23
hectares
subject
AZIMUTH
onlyacquire
stepped
into
the
formers
in so
far5of
as the
said
portion
is concerned.
Nogoes,
one can
a right
greater
than
what
the
transferor
himself
has.
As
the
saying
the
spring
cannot
rise
higher
than
its
source.
As
a
consequence,
the
rights
to
and
interests
in
the
23hectare
portionofofAgreement
the subjectand
properties,
acquired
by AZIMUTH
under the
1998
Memorandum
2004 Deed
of Conditional
Conveyance,
referred

to
by this in
Court
in the Quieting
of Title
are likewise
judgment
the Cancellation
of Titles
andCase,
Reversion
Case. dependent on the final
As
to whether
thethisRepublic
may
challenge
heirship
in the
Expropriation
Case,
is an Decision.
issue
not still
raised
in anylegal
of Vidals
the
resolved
by
this
Court
in
its
July
7,established
2010
ItExpropriation
involves
andPetitions
factual
matters
that
need
to
be
argued
and
in
the
Case,
which
was
ordered
reinstated
by
this
Court
before
the
RTC-Branch
1.
Thus,
it
is
beyond
the
ambit
of
this Court to determine by mere motion for clarification of the Republic.
WHEREFORE, premises considered, the Court hereby RESOLVES:
(1)
TO
WITH
FINALITY
the G.R.
MotionNos.
[To 170505,
Refer to173355-56,
Court En
Banc
G.R.DENY
Nos.and
178779
and173401]
178894,
173562-64
(sic)
G.R. No.
of Land Trade
Realty Corporation;
(2)
TO PARTLY
GRANT that
the Motion
for Clarification
of the
Republic
of the
Philippines
bysubject
declaring
thetransferred
rights
to and
interests
in
the to23-hectare
portion
of the
properties,
by Demetria
Vidal
Azimuth
International
Development
Corporation
by
virtue
of
the
1998
Memorandum
of
Agreement
2004
Deedand
of Conditional
Conveyance,
referred
by this
Court
inprejudice
G.R. and
Nos.
178894
(Quieting
of6686
Title
Case),toshall
be
without
to 178779
the
outcome
ofthis
Civil
Casein No.
(Cancellation
of
Titles
and
Reversion
Case),
which
Court,
its
Decision
dated
July
7,
2010,
ordered
reinstated
before
the
Regional
Trial
Court,
Branch
4
of
Iligan
City, Lanao del Norte; and
(3)
TO ORDER
be in
entertained
consolidated
casesthat
andno
thatfurther
entry ofpleadings
judgment shall
be made
due course.in these
SO ORDERED.
Biaco v Philippine countryside rural bank
515 SCRA 106 Civil Procedure In rem vs In personam proceedings Service of Summons Resident Defendant Extrinsic Fraud
Ernestothe
Biaco, husband
of Teresa Biaco,
acquiredfavor
several
loans
from
Countryside
Rural1996
Bankto(PCRB)
from
1996 to 1998.
To
secure
he mortgaged
property
of the
bank.
HePhilippine
was able to
pay loans from
1997 but
he defaulted
in loans
obtained in loans,
1998 which
amountedcertain
to more
than a in
million pesos.
Eventually,
PCRB
filed a at
complaint
for office.
foreclosure
against was
the spouses
Summons were issued by the trial judge. The Sherriff served
the
summons
to Ernesto
the latters
No summons
served toBiaco.
Teresa.
Ernesto
did not and
file athe
responsive
pleading
(so did
Teresathe
because
shefailure
was not
aware
sans
the summons
being
The case was
heard
ex-parte
spouses were
ordered
to satisfy
debt and
to do
so will
authorize
the Sheriff
to served
auctionher).
the mortgaged
the
property.
Eventually,
mortgaged
was properties
auctioned of
forTeresa
P150kto
which
is not
of levy was the
issued
against property
the personal
satisfy
the sufficient
deficiency.to cover the P1 M+ debt. Upon motion by PCRB, a notice
It
was only
at
this
point
that Teresa
learned
of when
the previous
parte
proceedings.
She
sought
have
the judgment
annulled
she now
claims
thatwas
she
was
deprived
of due
process
she didex
not
receive
summons;
thatthen
it was
onlyto
her
husband
who received
theas
summons;
that there
extrinsic
fraud because
her husband
deliberately
hid the fact
of the foreclosure
proceeding.
PRCB
argued
that the
proceeding happened
is an action the
quasi
in at
rem,
Teresas
participation
is not required
so longsuch
as the
court
acquires
jurisdiction
overforeclosure
the res which
case
bar;hence
that Teresa
cannot
invoke extrinsic
fraud because
situation
cannot
occur
in her case
because
she isisawhat
co-defendant ofinErnesto.
ISSUE: Whether or not the judgment of the trial court should be annulled.
HELD:
Yes.
It istoadmitted
that
the proceeding
a (mortgaged
quasi in remproperty).
proceeding
and that the
of Teresa
is
because
theover
trial
courtprocedural
was
able
acquirementioned.
jurisdiction
overright
the is
res
HOWEVER,
herpresence
constitutional
right
tonot
duerequired
process
isas
superior
the
matters
Her
to due
process
was violated
when
she
did
notasreceive
summons.
Teresa,
a 14
resident
defendant,
who Even
does ifnot
voluntary
appear
in court
must
be
personally
served
summons
provided
under
Section
6,The
Rulesubstituted
of the
Rules ofmade
Court.
theaction
ishusbands
quasi
in rem,
personal
service
of summons
is with
essential
in order
to
afford her
dueefforts
process.
service
by
the
sheriff
at
her
office
cannot
be
deemed
proper
service
absent
any
explanation
that
had
been
made
to
personally
serve summons
her but that
such efforts
failed.
the order
of the trial
court
compelling
Teresaover
to pay
using
herperson
personal
property upon
is a judgment
in personam
which
the Further,
court cannot
do because
it only
acquired
jurisdiction
the off
resthe
anddebt
not
over the
of Teresa.
On
thewhen
issue there
of extrinsic
fraud, theact
Court of Appeals,
agreeing
with party
PCRB,
is correct
that
there
is none
the casethe
at bar.
Extrinsic
fraud
exists
is a fraudulent
prevailing
outside
ofon
the
trial
ofthe
the
case,inwhereby
defeated
party
was
prevented
from presenting
fully
hisbeen
sidecommitted
of the caseby
bythe
fraud
or deception
practiced
him
prevailing
party.
fraud
is
present
where
the unsuccessful
party
had
prevented
from
exhibiting
fully
his
case,
fraud
or by
deception
practiced
onExtrinsic
him
his
opponent,
as
by
keeping
from
a false
promise
of
a compromise;
oror
where
theby
defendant
never had
knowledge
of
theby
suit,
being
kept
in
ignorance
byhim
theaway
actsattorney
of
thecourt,
plaintiff;
or employed
where
an attorney
fraudulently
without
authority
assumes
to
represent
a party
and
connives
at
his
defeat;
or
where
the
regularly
corruptly
sells
out
his
clients
interest
to
the
other
side.
The
above
is
not
applicable
in
the
case
of
Teresa.
It
was
not
PCRB
which
made
any
fraud.
It
should
be
noted
that
spouses
Biaco
were
co-defendants
in
the
case
and
shared
the same interest.

MA. TERESA CHAVES BIACO,

Petitioner,

- versus -

G.R. No. 161417

Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,

TINGA, and
VELASCO, JR., JJ.
PHILIPPINE COUNTRYSIDE RURAL
BANK,
Respondent.

Promulgated:
February 8, 2007

x----------------------------------------------------------------------------x
DECISION
TINGA, J.:

Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the

Decision[1] of the Court of Appeals in CA-G.R. No. 67489
dated August 27, 2003, which denied her petition for annulment
of judgment, and the Resolution[2] dated December 15,
2003 which denied her motion for reconsideration.
The facts as succinctly stated by the Court of Appeals are as
follows:
Ernesto Biaco is the husband of petitioner Ma. Teresa
Chaves Biaco. While employed in the Philippine
Countryside Rural Bank (PCRB) as branch manager,
Ernesto obtained several loans from the respondent bank
as evidenced by the following promissory notes:
Feb. 17, 1998
Mar. 18, 1998
May 6, 1998
May 20, 1998
July 30, 1998
Sept. 8, 1998

P 65,000.00
30,000.00
60,000.00
350,000.00
155,000.00
40,000.00

Sept. 8, 1998

120,000.00

As security for the payment of the said loans,

Ernesto executed a real estate mortgage in favor of the
bank covering the parcel of land described in Original
Certificate of Title (OCT) No. P-14423. The real estate
mortgages bore the signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned
loans on its due date, respondent bank through counsel
sent him a written demand on September 28, 1999. The
amount due as ofSeptember 30, 1999 had already
reached ONE MILLION EIGHTY THOUSAND SIX HUNDRED
SEVENTY SIX AND FIFTY CENTAVOS (P1,080,676.50).
The written demand, however, proved futile.
On February 22, 2000, respondent bank filed a
complaint for foreclosure of mortgage against the
spouses Ernesto and Teresa Biaco before the RTC of
Misamis Oriental. Summons was served to the spouses
Biaco through Ernesto at his office (Export and Industry
Bank) located at Jofelmor Bldg., Mortola Street, Cagayan
de Oro City.
Ernesto received the summons but for unknown
reasons, he failed to file an answer. Hence, the spouses
Biaco were declared in default upon motion of the
respondent bank. The respondent bank was allowed to
present its evidence ex parte before the Branch Clerk of
Court who was then appointed by the court as
Commissioner.

Arturo Toring, the branch manager of the respondent

bank, testified that the spouses Biaco had been obtaining
loans from the bank since 1996 to 1998. The loans for
the years 1996-1997 had already been paid by the

spouses Biaco, leaving behind a balance of P1,260,304.33

representing the 1998 loans. The amount being claimed is
inclusive of interests, penalties and service charges as
agreed upon by the parties. The appraisal value of the
land subject of the mortgage is only P150,000.00 as
reported by the Assessors Office.
Based on the report of the Commissioner, the
respondent judge ordered as follows:
WHEREFORE, judgment is hereby rendered
ordering defendants spouses ERNESTO R. BIACO and
MA. THERESA [CHAVES] BIACO to pay plaintiff bank
within a period of not less than ninety (90) days nor
more than one hundred (100) days from receipt of
this decision the loan of ONE MILLION TWO
HUNDRED SIXTY THOUSAND THREE HUNDRED FOUR
PESOS and THIRTY THREE CENTAVOS
(P1,260,304.33) plus litigation expenses in the
amount of SEVEN THOUSAND SIX HUNDRED FORTY
PESOS (P7,640.00) and attorneys fees in the
amount of TWO HUNDRED FIFTY TWO THOUSAND
THIRTY PESOS and FORTY THREE CENTAVOS
(P252,030.43) and cost of this suit.
In case of non-payment within the period,
the Sheriff of this Court is ordered to sell at public
auction the mortgaged Lot, a parcel of registered
land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10002342-D}), located at Gasi, Laguindingan, Misamis
Oriental and covered by TCT No. P-14423 to satisfy
the mortgage debt, and the surplus if there be any
should be delivered to the defendants spouses
ERNESTO and MA. THERESA [CHAVES] BIACO. In the
event however[,] that the proceeds of the auction
sale of the mortgage[d] property is not enough to
pay the outstanding obligation, the defendants are
ordered to pay any deficiency of the judgment as
their personal liability.
SO ORDERED.

On July 12, 2000, the sheriff personally served the

above-mentioned judgment to Ernesto Biaco at his office
at Export and Industry Bank. The spouses Biaco did not
appeal from the adverse decision of the trial court.
On October 13, 2000, the respondent bank filed an ex
parte motion for execution to direct the sheriff to sell the
mortgaged lot at public auction. The respondent bank
alleged that the order of the court requiring the
spouses Biaco to pay within a period of 90 days had
passed, thus making it necessary to sell the mortgaged
lot at public auction, as previously mentioned in the order
of the court. The motion for execution was granted by the
trial court per Order dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of
the writ of execution to the spouses Biaco at their
residence in #92 9th Street, Nazareth, Cagayan de Oro
City. The writ of execution was personally received by
Ernesto. By virtue of the writ of execution issued by the
trial court, the mortgaged property was sold at public
auction in favor of the respondent bank in the amount of
ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00).
The amount of the property sold at public auction
being insufficient to cover the full amount of the
obligation, the respondent bank filed an ex parte motion
for judgment praying for the issuance of a writ of
execution against the other properties of the spouses
Biaco for the full settlement of the remaining obligation.
Granting the motion, the court ordered that a writ of
execution be issued against the spouses Biaco to enforce
and satisfy the judgment of the court for the balance of
ONE MILLION THREE HUNDRED SIXTY NINE THOUSAND
NINE HUNDRED SEVENTY FOUR PESOS AND SEVENTY
CENTAVOS (P1,369,974.70).
The sheriff executed two (2) notices of levy against
properties registered under the name of petitioner Ma.
Teresa Chaves Biaco. However, the notices of levy were
denied registration because Ma. Teresa had already sold

the two (2) properties to her daughters on April 11, 2001.

[3]

Petitioner sought the annulment of the Regional Trial Court

decision contending that extrinsic fraud prevented her from
participating in the judicial foreclosure proceedings. According to
her, she came to know about the judgment in the case only after
the lapse of more than six (6) months after its finality. She
claimed that extrinsic fraud was perpetrated against her because
the bank failed to verify the authenticity of her signature on the
real estate mortgage and did not inquire into the reason for the
absence of her signature on the promissory notes. She moreover
asserted that the trial court failed to acquire jurisdiction because
summons were served on her through her husband without any
explanation as to why personal service could not be made.
The Court of Appeals considered the two circumstances that
kept petitioner in the dark about the judicial foreclosure
proceedings: (1) the failure of the sheriff to personally serve
summons on petitioner; and (2) petitioners husbands
concealment of his knowledge of the foreclosure proceedings. On
the validity of the service of summons, the appellate court ruled
that judicial foreclosure proceedings are actions quasi in rem. As
such, jurisdiction over the person of the defendant is not essential
as long as the court acquires jurisdiction over the res. Noting that
the spouses Biaco were not opposing parties in the case, the
Court of Appeals further ruled that the fraud committed by one
against the other cannot be considered extrinsic fraud.
Her motion for reconsideration having been denied,
petitioner filed the instant Petition for Review, [4] asserting that
even if the action is quasi in rem, personal service of summons is
essential in order to afford her due process. The substituted
service made by the sheriff at her husbands office cannot be
deemed proper service absent any explanation that efforts had
been made to personally serve summons upon her but that such
efforts failed. Petitioner contends that extrinsic fraud was
perpetrated not so much by her husband, who did not inform her
of the judicial foreclosure proceedings, but by the sheriff who

allegedly connived with her husband to just leave a copy of the

summons intended for her at the latters office.
Petitioner further argues that the deficiency judgment is a
personal judgment which should be deemed void for lack of
jurisdiction over her person.
Respondent PCRB filed its Comment,[5] essentially reiterating
the appellate courts ruling. Respondent avers that service of
summons upon the defendant is not necessary in actions quasi
in rem it being sufficient that the court acquire jurisdiction over
the res. As regards the alleged conspiracy between petitioners
husband and the sheriff, respondent counters that this is a new
argument which cannot be raised for the first time in the instant
petition.
We required the parties to file their respective memoranda in
the Resolution[6] dated August 18, 2004. Accordingly, petitioner
filed her Memorandum[7] dated October 10, 2004, while
respondent filed its Memorandum for
Respondent[8] dated September 9, 2004.
Annulment of judgment is a recourse equitable in character,
allowed only in exceptional cases as where there is no available or
other adequate remedy. Jurisprudence and Sec. 2, Rule 47 of the
1997 Rules of Civil Procedure (Rules of Court) provide that
judgments may be annulled only on grounds of extrinsic fraud and
lack of jurisdiction or denial of due process. [9]
Petitioner asserts that extrinsic fraud consisted in her
husbands concealment of the loans which he obtained from
respondent PCRB; the filing of the complaint for judicial
foreclosure of mortgage; service of summons; rendition of
judgment by default; and all other proceedings which took place
until the writ of garnishment was served. [10]
Extrinsic fraud exists when there is a fraudulent act
committed by the prevailing party outside of the trial of the case,
whereby the defeated party was prevented from presenting fully

his side of the case by fraud or deception practiced on him by

the prevailing party.[11] Extrinsic fraud is present where
the unsuccessful party had been prevented from exhibiting fully
his case, by fraud or deception practiced on him by
his opponent, as by keeping him away from court, a false promise
of a compromise; or where thedefendant never had knowledge of
the suit, being kept in ignorance by the acts of the plaintiff; or
where an attorney fraudulently or without authority assumes to
represent a party and connives at his defeat; or where the
attorney regularly employed corruptly sells out his clients interest
to the other side. The overriding consideration is that the
fraudulent scheme of the prevailing litigant prevented a party
from having his day in court.[12]
With these considerations, the appellate court acted well in
ruling that there was no fraud perpetrated by respondent bank
upon petitioner, noting that the spouses Biaco were codefendants in the case and shared the same interest. Whatever
fact or circumstance concealed by the husband from the wife
cannot be attributed to respondent bank.
Moreover, petitioners allegation that her signature on the
promissory notes was forged does not evince extrinsic fraud. It is
well-settled that the use of forged instruments during trial is not
extrinsic fraud because such evidence does not preclude the
participation of any party in the proceedings. [13]
The question of whether the trial court has jurisdiction
depends on the nature of the action, i.e., whether the action is in
personam, in rem, or quasi in rem. The rules on service of
summons under Rule 14 of the Rules of Court likewise apply
according to the nature of the action.
An action in personam is an action against a person on the
basis of his personal liability. An action in rem is an action against
the thing itself instead of against the person. An action quasi in
rem is one wherein an individual is named as defendant and the
purpose of the proceeding is to subject his interest therein to the
obligation or lien burdening the property. [14]

In an action in personam, jurisdiction over the person of the

defendant is necessary for the court to validly try and decide the
case. In a proceeding in rem or quasi in rem,jurisdiction over the
person of the defendant is not a prerequisite to confer jurisdiction
on the court provided that the court acquires jurisdiction over
the res. Jurisdiction over theres is acquired either (1) by the
seizure of the property under legal process, whereby it is brought
into actual custody of the law; or (2) as a result of the institution
of legal proceedings, in which the power of the court is recognized
and made effective.[15]
Nonetheless, summons must be served upon the defendant
not for the purpose of vesting the court with jurisdiction but
merely for satisfying the due process requirements. [16]
A resident defendant who does not voluntarily appear in
court, such as petitioner in this case, must be personally served
with summons as provided under Sec. 6, Rule 14 of the Rules of
Court. If she cannot be personally served with summons within a
reasonable time, substituted service may be effected (1) by
leaving copies of the summons at the defendants residence with
some person of suitable age and discretion then residing therein,
or (2) by leaving the copies at defendants office or regular place
of business with some competent person in charge thereof in
accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by
respondent PCRB undoubtedly vested the trial court with
jurisdiction over the res. A judicial foreclosure proceeding is an
action quasi in rem. As such, jurisdiction over the person of
petitioner is not required, it being sufficient that the trial court is
vested with jurisdiction over the subject matter.
There is a dimension to this case though that needs to be
delved into. Petitioner avers that she was not personally served
summons. Instead, summons was served to her through her
husband at his office without any explanation as to why the

particular surrogate service was resorted to. The Sheriffs Return

of Service dated March 21, 2000 states:
xxxx
That on March 16, 2000, the undersigned served the
copies of Summons, complaint and its annexes to the
defendants Sps. Ernesto R. & Ma. Teresa Ch. Biaco thru
Ernesto R. Biaco[,] defendant of the above-entitled
case at his office EXPORT & INDUSTRY
BANK, Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City
and he acknowledged receipt thereof as evidenced with
his signature appearing on the original copy of the
Summons.[17] [Emphasis supplied]

Without ruling on petitioners allegation that her husband

and the sheriff connived to prevent summons from being served
upon her personally, we can see that petitioner was denied due
process and was not able to participate in the judicial foreclosure
proceedings as a consequence. The violation of petitioners
constitutional right to due process arising from want of valid
service of summons on her warrants the annulment of the
judgment of the trial court.
There is more, the trial court granted respondent PCRBs exparte motion for deficiency judgment and ordered the issuance of
a writ of execution against the spouses Biaco to satisfy the
remaining balance of the award. In short, the trial court went
beyond its jurisdiction over the res and rendered a personal
judgment against the spouses Biaco. This cannot be
countenanced.
In Sahagun v. Court of Appeals,[18] suit was brought against a
non-resident defendant, Abelardo Sahagun, and a writ of
attachment was issued and subsequently levied on a house and
lot registered in his name. Claiming ownership of the house, his
wife, Carmelita Sahagun, filed a motion to intervene. For failure
of plaintiff to serve summons extraterritorially upon Abelardo, the
complaint was dismissed without prejudice.

Subsequently, plaintiff filed a motion for leave to serve

summons by publication upon Abelardo. The trial court granted
the motion. Plaintiff later filed an amended complaint
against Abelardo, this time impleading Carmelita and Rallye as
additional defendants. Summons was served
on Abelardo through publication in the Manila Evening
Post. Abelardo failed to file an answer and was declared in
default. Carmelita went on certiorari to the Court of Appeals
assailing as grave abuse of discretion the declaration of default
of Abelardo. The Court of Appeals dismissed the petition and
denied reconsideration.
In her petition with this Court, Carmelita raised the issue of
whether the trial court acquired jurisdiction over her husband, a
non-resident defendant, by the publication of summons in a
newspaper of general circulation in the Philippines. The Court
sustained the correctness of extrajudicial service of summons by
publication in such newspaper.
The Court explained, citing El Banco Espaol-Filipino
v. Palanca,[19] that foreclosure and attachment proceedings are
both actions quasi in rem. As such, jurisdiction over the person of
the (non-resident) defendant is not essential. Service of
summons on a non-resident defendant who is not found in the
country is required, not for purposes of physically acquiring
jurisdiction over his person but simply in pursuance of the
requirements of fair play, so that he may be informed of the
pendency of the action against him and the possibility that
property belonging to him or in which he has an interest may be
subjected to a judgment in favor of a resident, and that he may
thereby be accorded an opportunity to defend in the action,
should he be so minded.
Significantly, the Court went on to rule,
citing De Midgely v. Ferandos, et. al.[20] and Perkins v. Dizon, et al.
[21]
that in a proceeding in rem or quasi in rem, the only relief that
may be granted by the court against a defendant over whose
person it has not acquired jurisdiction either by valid service of

summons or by voluntary submission to its jurisdiction, is limited

to the res.
Similarly, in this case, while the trial court acquired
jurisdiction over the res, its jurisdiction is limited to a rendition of
judgment on the res. It cannot extend its jurisdiction beyond
the res and issue a judgment enforcing petitioners personal
liability. In doing so without first having acquired jurisdiction over
the person of petitioner, as it did, the trial court violated her
constitutional right to due process, warranting the annulment of
the judgment rendered in the case.
WHEREFORE, the instant petition is GRANTED. The Decision
dated August 27, 2003 and the Resolution dated December 15,
2003 of the Court of Appeals in CA-G.R. SP No. 67489 are SET
ASIDE. The Judgment dated July 11, 2000 and Order
dated February 9, 2001 of the Regional Trial Court of Cagayan de
Oro City, Branch 20, are likewise SET ASIDE.
SO ORDERED.
VELAYO-FONG V. SPOUSES VELAYO
Facts:
-

Spouses Raymond and Maria Hedy Velayo filed a complaint for collection of sum of money against Velayo-Fong.
In the complaint, Spouses Velayo alleged that Velayo-Fong was a resident of Honolulu, Hawaii, USA.
Since Velayo-Fong
was ainnon-resident
and not found in the Philippines, Spouses Velayo-Fong prayed for a writ to attach VelayoFong's
properties found
the Philippines.
However,
before
the application
for the
writ Two
can be
acted upon Suites.
by the RTC,
Spouses
Velayo filedPasay
an Urgent
Motion
praying
the
summons
be served
to Velayo-Fong
at her
Condominium
One
Roxas
Boulevard,
City and
another,
at that
Burgos
Street, T. Towers
Condominium,
Makati.
Subsequently,
the RTC granted
theatsaid
motion.
Then,
the
Process
Server
indicated
on
his
Officers
Return
that
after
several
failed
attempts
to
serve
the
copy
of
summons
and
complaints
issued
at the
addresses
of Velayo-Fong,
finally,
the Process
Serverbut
wasatable
to serve
together
the copy
of given
the complaint
upon
Velayo-Fong,
notinatreceipt
her
twothereof.
addresses
the lobby
of apersonally
hotel, rightthe
in summons
the presence
of a lobbywith
counter
personnel
but Velayo-Fong
refused to sign
Later, the RTC in its Order declared Velayo-Fong in default for failure to file an answer.
Velayo-Fong,
uponpleading
knowingand
the order
of theherself
RTC, against
filed a Motion
to Set Aside Orderbecause
of Default
claiming
that she
prevented from
filing
a responsive
defending
respondents'
of fraud,
accident
or was
mistake;
contrary
to thematerial
Officer'sallegations.
Return, no
summons
was served upon
her; that complaint
she has valid and meritorious
defenses
to refute that
respondents'
The RTC denied the Motion and CA affirmed RTCs order.
Now,
Velayo-Fong
questioned
propriety and
validity
of the service
of summons
madeshe
upon
herentering
as she the
did not remember
having
been
served
with
butthe
remembers
that
a man
hurled
some to
papers
at her
while
was
not
knowing
what
the summons
papers
were
about, she
threw
back
the papers
the man
before
the elevator
closed; thatelevator
she hasand,
a valid
and
meritorious
defense
to refute
theallmaterial
allegations
of respondents'
complaint.
She also argued that the summons should have been served through extraterritorial service since she is a non-resident.

ISSUES: 1. How may service of summons be effected on a non-resident?

2. WON there was a valid service of summons on Velayo-Fong. YES.
Ruling:
1.

2.

Under Sec. 17, Rule

when
the defendant
is a nonresident
he is
foundis inin the
may quasi
be served
extraterritorially.
This14,
kind
of service
of summons
applies onlyand
where
thenot
action
remcountry,
becausesummons
in in remand
in rem actions,
jurisdiction
jurisdiction over
over the
the person
res. of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires
a. is
Where
the action
isacquisition
in personam
and when over
the defendant
is This
a non-resident,
personal
serviceif of
summons
within
essential
to
the
of
jurisdiction
the
person.
cannot
be
done,
however,
the
defendant
is notthe state
physically
present
in the
and thus,
validly try and
decide
thecountry,
case against
him. the court cannot acquire jurisdiction over his person and therefore cannot
b. In
the
present
case,
Spouses
Velayo's
cause
of
action
and
their
prayer
that
actual
and
moral
damages,
plus
attorney's
fees,parties
be awarded in impleaded.
their favor affect the
alone,
not the whole
world.personal
Any judgment therein is binding only
upon
the
isparties
an toaction
in personam.
such,
defendantsproperly
is essential in order Thus,
for theitcourt
acquire
jurisdictionAs
over
their persons.service of summons upon the
c. Although
in
the
complaint,
Velayo-Fong
was
alleged
to
be
a
non-resident
who
is
not
found
in
the
Philippines
for
reason the Spouses
first
prayed upon
that athe
writRTC.
of preliminary
attachment
bedidissued
againstitsher
properties
within
thewhich
Philippines
to
confer
jurisdiction
However,
the
spouses
not
pursue
application
for
said
writ
when
Velayo-Fong
was subsequently found physically present in the Philippines and personal service of summons was
effected on her.
A process server's certificate of service is prima facie evidence of the facts as set out in the certificate. Between the claims of nonreceipt of summons by a party against the assertion of an official whose duty is to send notices, the latter assertion is secured by the
presumption that official duty has been regularly performed.
o To overcome the presumption of regularity of performance of official functions in favor of such Officer's Return, the
evidence against it must be clear and convincing.
o In this case, Velayo-Fong failed to come forward with the requisite quantum of proof to the contrary, the presumption of
regularity of performance on the part of the process server stands.

NOTEs:
-

the party seeking to have the order of default lifted must first show that her failure to file an answer or any other responsive pleading
was due to fraud, accident, mistake, or excusable neglect and then she must show that she has a valid and meritorious defense.
In this case, petitioner failed to show that her failure to file an answer was due to fraud, accident, mistake or excusable neglect.
Except for her bare unsupported allegation that the summons were only thrown to her at the elevator, petitioner did not present any
competent evidence to justify the setting aside of the order of default.
she must also show that she has a meritorious defense or that something would be gained by having the order of default set aside.
In thefiled
present
case,
petitioner
contented
herself
with stating
her affidavit
of merit
that
the casesofagainst
respondent
Raymond
were
at the
instance
of her
father.41 Such
allegation
a in
conclusion
rather
than
a statement
facts showing
meritorious
defense. The
affidavit
failed
to controvert
the facts
allegedis by
the respondents.
Petitioner
has not shown
that she ahas
a meritorious
defense.
Velayo-Fong failed to show that her failure file an answer was not due to fraud, accident, mistake, or excusable neglect; and that
she had a valid and meritorious defense, there is no merit to her prayer for a liberal interpretation of procedural rules.

ERLINDA R. VELAYO-FONG,
Petitioner,

G.R. NO. 155488

Present:

- versus -

SPOUSES RAYMOND and

MARIA HEDY VELAYO,
Respondents.

PANGANIBAN, C.J.
(Chairperson)
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

Promulgated:
Dec

ember 6, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure seeking the reversal of the Decision[1] of the Court
of Appeals (CA) dated May 14, 2002 in CA-G.R. CV No. 54434 which affirmed
the Decision of the Regional Trial Court, Branch 105, Quezon City (RTC) in Civil
Case No. Q-93-17133; and the CA Resolution[2] dated October 1, 2002 which
denied petitioners motion for reconsideration.

The procedural antecedents and factual background of the case are as

follows:
On August 9, 1993, Raymond Velayo (Raymond) and his wife, Maria
Hedy Velayo (respondents) filed a complaint for sum of money and damages with
prayer for preliminary attachment against Erlinda R. Velayo-Fong (petitioner),
Rodolfo R. Velayo, Jr. (Rodolfo Jr.) and Roberto R. Velayo (Roberto).[3] Raymond
is the half-brother of petitioner and her co-defendants.
In their Complaint, respondents allege that petitioner, a resident of
1860 Alamoana Boulevard, Honolulu, Hawaii, USA, and her co-defendants, who
are residents of the Philippines, made it appear that their common father, Rodolfo
Velayo, Sr. (Rodolfo Sr.) and petitioner had filed a complaint against Raymond
before the National Bureau of Investigation (NBI), accusing Raymond of the
crimes of estafa and kidnapping a minor; that petitioner and her co-defendants also
requested that respondents be included in the Hold Departure List of the Bureau of
Immigration and Deportation (BID) which was granted, thereby preventing them
from leaving the country and resulting in the cancellation of respondents trips
abroad and caused all of respondents business transactions and operations to be
paralyzed to their damage and prejudice; that petitioner and her co-defendants also
filed a petition before the Securities and Exchange Commission (SEC) docketed as
Case No. 4422 entitled Rodolfo Velayo Sr. et al. v. Raymond Velayo et al. which
caused respondents funds to be frozen and paralyzed the latters business
transactions and operations to their damage and prejudice. Since petitioner was a
non-resident and not found in the Philippines, respondents prayed for a writ of
preliminary attachment against petitioners properties located in the Philippines.

Before respondents application for a writ of preliminary attachment can be

acted upon by the RTC, respondents filed on September 10, 1993 an Urgent
Motion praying that the summons addressed to petitioner be served to her at Suite
201, Sunset View Towers Condominium, Roxas Boulevard, Pasay City and at No.
5040 P. Burgos Street, T. Towers Condominium, Makati.[4] In its Order
dated September 13, 1993, the RTC granted the said motion.[5]
The Process Server submitted the Officers Return, to wit:

THIS IS TO CERTIFY, that after several failed attempts to

serve the copy of summons and complaint issued in the above-entitled
case at the given addresses of defendant ErlindaVelayo as mentioned
in the Order of this Court dated September 13, 1993, finally, on the
23rd day of September, 1993, at the instance of herein plaintiffs
through counsel, undersigned was able to SERVED (sic) personally
upon defendant Erlinda Velayo the copy of summons together with the
thereto attached copy of the complaint, not at her two (2) given
addresses, but at the lobby of Intercontinental Hotel, Makati, Metro
Manila, right in the presence of lobby counter personnel by the name
of Ms. A. Zulueta, but said defendant refused to sign in receipt
thereof.
I FURTHER CERTIFY, that on the 27th day of September,
1993, copy of the same WAS SERVED personally upon the other
defendant Rodolfo R. Velayo, Jr., at No. Block 57, Lots 17 and 19, G.
Sanchez Street, BF Resort Village, Las Pias, Metro Manila, but who
also refused to sign in receipt thereof.
WHEREFORE, original copy of the summons is now being
respectfully returned to the Honorable Court DULY SERVED.
Quezon City, Philippines, September 30, 1993.[6]
Upon ex-parte motions[7] of respondents, the RTC in its Order
dated November 23, 1993 and January 5, 1994, declared petitioner and her codefendant in default for failure to file an answer and ordered the exparte presentation of respondents evidence.[8]
On June 15, 1994, the RTC rendered its Decision in respondents favor, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered ordering the defendants to pay the plaintiffs:
1. the amount of P65,000.00 as actual damages;
2. the amount of P200,000.00 as moral damages;

3. Attorneys fees in the amount of P5,000,00 it being a

judgment by default; and
4. cost of suit.
SO ORDERED.[9]
On September 1, 1994, petitioner filed a Motion to Set Aside Order of
Default claiming that she was prevented from filing a responsive pleading and
defending herself against respondents complaint because of fraud, accident or
mistake; that contrary to the Officers Return, no summons was served upon her;
that she has valid and meritorious defenses to refute respondents material
allegations.[10] Respondents opposed said Motion.[11]
In its Order dated May 29, 1995, the RTC denied petitioners Motion ruling
that the presumption of regularity in the discharge of the function of the Process
Server was not sufficiently overcome by petitioners allegation to the contrary; that
there was no evident reason for the Process Server to make a false narration
regarding the service of summons to defaulting defendant in the Officers Return.
[12]

On September 4, 1995, respondents filed a Motion for Execution.

On September 22, 1995, petitioner filed an Opposition to Motion for Execution
contending that she has not yet received the Decision and it is not yet final and
executory as against her.[14]
[13]

In its Order dated January 3, 1996, the RTC, finding that the Decision dated
June 15, 1994 and the Order dated May 29, 1995 were indeed not furnished or
served upon petitioner, denied respondents motion for execution against petitioner
and ordered that petitioner be furnished the said Decision and Order.[15]
On March 28, 1996, the RTC issued an Order directing the issuance of the
writ of execution against petitioners co-defendant.[16]
On May 23, 1996, petitioner, through her counsel, finally received the
Decision dated June 15, 1994 and the Order dated May 29, 1995.[17]
Petitioner filed an appeal with the CA questioning the propriety and validity
of the service of summons made upon her. Respondents opposed the appeal,

arguing that the petition should be dismissed since it raised pure questions of law,
which is not within the CAs jurisdiction to resolve under Section 2 (c) of Rule 41
of the Revised Rules of Court; that, in any case, petitioners reliance on the rule of
extraterritorial service is misplaced; that the judgment by default has long been
final and executory since as early as August 1994 petitioner became aware of the
judgment by default when she verified the status of the case; that petitioner should
have filed a motion for new trial or a petition for relief from judgment and not a
motion to set aside the order of default since there was already a judgment by
default.
On May 14, 2002, the CA rendered its Decision affirming the Decision and
Order of the RTC[18] ruling that it (CA) has jurisdiction since the petition raised a
question of fact, that is, whether petitioner was properly served with summons; that
the judgment by default was not yet final and executory against petitioner since the
records reveal and the RTC Order dated January 3, 1996 confirmed that she was
not furnished or served a copy of the decision; that petitioner was validly served
with summons since the
complaint for damages is an action in personam and only personal, not
extraterritorial service, of summons, within the forum, is essential for the
acquisition of jurisdiction over her person; that petitioners allegations that
she did not know what was being served upon her and that somebody just hurled
papers at her were not substantiated by competent evidence and cannot overcome
the presumption of regularity of performance of official functions in favor of the
Officers Return.
Petitioner filed a Motion for Reconsideration[19] but the CA denied it in its
Resolution dated October 1, 2002.[20]
Hence, the present petition anchored on the following grounds:
I
THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING
THAT PETITIONER WAS NOT VALIDLY SERVED WITH
SUMMONS.
II

THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING

THAT PETITIONER WAS PREVENTED FROM FILING
RESPONSIVE PLEADING AND DEFENDING AGAINST
RESPONDENTS COMPLAINT BECAUSE OF FRAUD,
ACCIDENT AND MISTAKE.[21]
Parties filed their respective Memoranda on September 8 and 9, 2005.
Petitioner argues that summons should have been served through
extraterritorial service since she is a non-resident; that the RTC should have lifted
the order of default since a default judgment is frowned upon and parties should be
given their day in court; that she was prevented from filing
a responsive pleading and defending against respondents complaint
through fraud, accident or mistake considering that the statement in the Officers
Return that she was personally served summons is inaccurate; that
she does not remember having been served with summons during the said date but
remembers that a man hurled some papers at her while she was entering the
elevator and, not knowing what the papers were all about, she threw back the
papers to the man before the elevator closed; that she has a valid and meritorious
defense to refute the material allegations of respondents complaint.
On the other hand, respondents contend that petitioner was validly served
with summons since the rules do not require that service be made upon her at her
place of residence as alleged in the complaint or stated in the summons; that
extraterritorial service applies only when the defendant does not reside and is not
found in the Philippines; that petitioner erred in filing a motion to set aside the
order of default at the time when a default judgment was already rendered by the
RTC since the proper remedy is a motion for new trial or a petition for relief from
judgment under Rule 38; that the issue on summons is a pure question of law
which the CA does not have jurisdiction to resolve under Section 2 (c) of Rule 41
of the 1997 Rules of Civil Procedure.[22]
The Court finds it proper to resolve first whether the issue involved in the
appeal filed with the CA is a question of law and therefore not within the
jurisdiction of the CA to resolve.
In Murillo v. Consul,[23] which was later adopted by the 1997 Rules of Civil
Procedure, the Court clarified the three modes of appeal from decisions of the
RTC, namely: (a) ordinary appeal or appeal by writ of error, where judgment was

rendered in a civil or criminal action by the RTC in the exercise of original

jurisdiction; (b) petition for review, where judgment was
rendered by the RTC in the exercise of appellate jurisdiction; and (c) petition for
review to the Supreme Court.
The first mode of appeal, governed by Rule 41, is taken to the Court of
Appeals on questions of fact or mixed questions of fact and law. The second mode
of appeal, covered by Rule 42, is brought to the Court of Appeals on questions of
fact, of law, or mixed questions of fact and law. The third mode of appeal,
provided for by Rule 45, is elevated to the Supreme Court only on questions of
law.
A question of law arises when there is doubt as to what the law is on a
certain state of facts, while there is a question of fact when the doubt arises as to
the truth or falsity of the alleged facts.[24] For a question to be one of law, the same
must not involve an examination of the probative value of the evidence presented
by the litigants or any of them.[25] The resolution of the issue must rest solely on
what the law provides on the given set of circumstances. Once it is clear that the
issue invites a review of the evidence presented, the question posed is one of fact.
[26]
Thus, the test of whether a question is one of law or of fact is not the appellation
given to such question by the party raising the same; rather, it is whether the
appellate court can
determine the issue raised without reviewing or evaluating the evidence, in which
case, it is a question of law; otherwise it is a question of fact.[27]
Respondents claim that the issues raised by petitioner before the CA are
pure legal questions is not tenable.
A scrutiny of petitioners petition before the CA reveals that it raised two
issues: (a) the propriety of the service effected on a non-resident; and (b) the
validity of the service made upon her. The first is a question of law. There is
indeed a question as to what and how the law should be applied. The second is a
question of fact. The resolution of said issue entails a review of the factual
circumstances that led the RTC to conclude that service was validly effected upon
petitioner. Therefore, petitioner properly brought the case to the CA via the first
mode of appeal under the aegis of Rule 41.
How may service of summons be effected on a non-resident?
Section 17,[28] Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service When the defendant does

not
reside and is not found in the Philippines and the action affect
s the
personal status of the plaintiff or relates to, or the subject of which, is
property within the Philippines, in which the defendant has or
claims a
lien or interest, actual or contingent, or in which relief demanded
consists, wholly or in part, in excluding the defendant from any
interest therein, or the property of the defendant has been attached in
the Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section
7; or by publication in a newspaper of general
circulation in such places and for such time as the court may order, in
which case a copy of the summons and order of the court shall be sent
by registered mail to the last known address of the defendant, or in
any other manner the court may deem sufficient. Any order granting
such leave shall
specify a reasonable time, which shall not be less than sixty (60) days
after notice, within which the defendant must answer.
Under this provision, when the defendant is a nonresident and he is not
found in the country, summons may be served extraterritorially. There are only
four instances when extraterritorial service of summons is proper, namely: (a)
when the action affects the personal status of the plaintiffs; (b) when the action
relates to, or the subject of which is property, within the Philippines, in which the
defendant claims a lien or interest, actual or contingent; (c) when the relief
demanded in such action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines; and (d) when the
defendants property has been attached within the Philippines. In these instances,
service of summons may be effected by (a) personal service out of the country,
with leave of court; (b) publication, also with leave of court; or (c) any other
manner the court may deem sufficient.
Thus, extrajudicial service of summons apply only where the action is in
rem, that is, an action against the thing itself instead of against the person, or in an
action quasi in rem, where an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation or loan burdening

the property. The rationale for this is that in in rem and quasi in rem actions,
jurisdiction over the person of the defendant is
not a prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res.[29]
Where the action is in personam, that is, one brought against a person
on the basis of her personal liability, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide the case. When the
defendant is a non-resident, personal service of summons within the state is
essential to the acquisition of jurisdiction over the person.[30] Summons on the
defendant must be served by handing a copy thereof to the defendant in person, or,
if he refuses to receive it, by tendering it to him.[31]This cannot be done, however, if
the defendant is not physically present in the country, and thus, the court cannot
acquire jurisdiction over his person and therefore cannot validly try and decide the
case against him.[32]
In the present case, respondents cause of action in Civil Case No. Q-9317133 is anchored on the claim that petitioner and her co-defendants maliciously
instituted a criminal complaint before the NBI and a petition before the SEC which
prevented the respondents from leaving the country and paralyzed the latters
business transactions. Respondents pray that actual and moral damages, plus
attorneys fees, be awarded in their favor. The action instituted by respondents
affect the parties alone, not the whole world. Any judgment therein is binding only
upon the parties properly impleaded.[33] Thus, it is an action in personam. As such,
personal service of summons upon the defendants is essential in order for the court
to acquire jurisdiction over their persons.[34]
The Court notes that the complaint filed with the RTC alleged that petitioner
is a non-resident who is not found in the Philippines for which reason respondents
initially prayed that a writ of preliminary attachment be issued against her
properties within the Philippines to confer jurisdiction upon the RTC. However,
respondents did not pursue its application for said writ when petitioner was
subsequently found physically present in the Philippines and personal service of
summons was effected on her.
Was there a valid service of summons on petitioner? The answer is in the
affirmative.
Petitioners bare allegation that the statement in the Officers Return that
she was personally served summons is inaccurate is not sufficient. A process

servers certificate of service is prima facie evidence of the facts as set out in the
certificate.[35] Between the claim of non-receipt of summons by a party against the
assertion of an official whose duty is to send notices, the latter assertion is fortified
by the presumption that official duty has been regularly performed.[36] To overcome
the presumption of regularity of performance of official functions in favor of such
Officers Return, the evidence against it must be clear and convincing. Petitioner
having been unable to come forward with the requisite quantum of proof to the
contrary, the presumption of regularity of performance on the part of the process
server stands.
The Court need not make a long discussion on the propriety of the remedy
adopted by petitioner in the RTC of filing a motion to set aside the order of default
at a time when there was already a judgment by default. As aptly held by the CA,
since petitioner was not furnished or served a copy of the judgment of default,
there was no notice yet of such judgment as against her. Thus, the remedy of filing
a motion to set aside the order of default in the RTC was proper.
Petitioners argument that the RTC should have set aside the order of default
and applied the liberal interpretation of rules with a view of affording parties their
day in court is not tenable. While indeed default orders are not viewed with
favor, the party seeking to have the order of default lifted must
first show that her failure to file an answer or any other responsive pleading was
due to fraud, accident, mistake, or excusable neglect and then she must show that
she has a valid and meritorious defense.[37]
In this case, petitioner failed to show that her failure to file an answer was
due to fraud, accident, mistake or excusable neglect. Except for her bare
unsupported allegation that the summons were only thrown to her at the elevator,
petitioner did not present any competent evidence to justify the setting aside of the
order of default.
Moreover, when a party files a motion to lift order of default, she must also
show that she has a meritorious defense or that something would be gained by
having the order of default set aside.[38] The term meritorious defense implies that
the applicant has the burden of proving such a defense in order to have the
judgment set aside. The cases usually do not require such a strong showing. The
test employed appears to be essentially the same as used in considering summary
judgment, that is, whether there is enough evidence to present an issue for
submission to the trier of fact, or a showing that on the undisputed facts it is not
clear that the judgment is warranted as a matter of law. [39] The defendant

must show that she has a meritorious defense otherwise the grant of her motion
will prove to be a useless exercise. Thus, her motion must be accompanied by a
statement of the evidence which she intends to present if the motion is granted
and which is such as to warrant a reasonable belief that the result of the case
would probably be otherwise if a new trial is granted.[40]
In the present case, petitioner contented herself with stating in her affidavit
of merit that the cases against respondent Raymond were filed at the instance of
her father.[41]Such allegation is a conclusion rather than a statement of facts
showing a meritorious defense. The affidavit failed to
controvert the facts alleged by the respondents. Petitioner has not shown
that she has a meritorious defense.
Thus, since petitioner failed to show that her failure file an answer was not
due to fraud, accident, mistake, or excusable neglect; and that she had a valid and
meritorious defense, there is no merit to her prayer for a liberal interpretation of
procedural rules.
WHEREFORE, the instant petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioner.
SO ORDERED.
[G.R. No. 190384 : April 21, 2010]
HEIRS OF SPOUSES CRISPULO FERRER AND ENGRACIA PUHAWAN,
PETITIONERS VS. COURT OF APPEALS, NATIONAL POWER
CORPORATION, ET AL., RESPONDENTS.
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated 21
April 2010:
G.R. No. 190384 - HEIRS OF SPOUSES CRISPULO FERRER and
ENGRACIA PUHAWAN,petitioners -versus- COURT OF APPEALS,
NATIONAL POWER CORPORATION, ET AL.,respondents.

The present case involves the parties' conflicting claims of ownership over three
parcels of land located in Lumban, Laguna: Lot 1873, Lot 90, and Lot 72.
In 1936, respondent National Power Corporation (Napocor) constructed the
Caliraya Hydroelectric Power Plant on portions of the subject lots. In 1997,
Napocor began to undertake privatization measures and decided to sell the entire
power plant including the land where it stood. Petitioners, the heirs of spouses
Crispulo Ferrer and Engracia Puhawan, opposed the proposed sale alleging that
Napocor does not have any legal rights over the land. They claimed that portions of
Lots 1873, 90, and 72 where the power plant stood were owned by their parents
who, upon their deaths, passed the same to them as their legal heirs. To enjoin the
sale and to collect rent for the use of the subject lots since 1936, the petitioners
instituted an action for injunction and damages against Napocor before Branch
27, Regional Trial Court (RTC) of Santa Cruz, Laguna.
Napocor denied the petitioners' allegations and claimed that it acquired some
29,598 square meters of Lot 1873[1] through purchase from Crispulo Ferrer's
daughter from his first marriage, Oliva Ferrer.[2] The purchase was evidenced by
two deeds of sale dated August 31, 1940 and March 4, 1948, both executed by
Oliva Ferrer, duly notarized, and registered under Act No. 3344 (System of
Recording for Unregistered Real Estate).[3]
Napocor also claimed ownership over 14,500 square meters of Lot 90[4] which it
acquired through purchase, but admitted that it occupied the remaining 438 squares
meters of Lot 90 without any right or authority from the petitioners since 1954.
Insofar as Lot 72 was concerned, Napocor claimed that its right to occupy and use
the lot stemmed from the Right of Way Agreement executed by Engracia Puhawan
in its favor on April 22, 1940. The encumbrance was in fact annotated on the title.
The petitioners opposed Napocor's claims and contended that the sale of portions
of Lot 1873 between Napocor and Oliva Ferrer was void. They alleged that Oliva
Ferrer was merely a co-owner of Lot 1873, which fact was clearly indicated in both
deeds of sale covering Lot 1873. As an heir of Crispulo Ferrer, Oliva Ferrer
inherited only 3,129 square meters of Lot 1873, and the sale to Napocor of an area
in excess of this amount without authority from the other co-owners was,
according to the petitioners, void. To further support their claim of ownership, the
petitioners presented a Certification dated January 26, 1978 issued by the Bureau
of Lands stating that Lot 1873 was claimed by and surveyed for Crispulo Ferrer.

They also relied on the Original Certificates of Title (OCT) Nos. P-3898 and P3899 issued on September 25, 1977 in the name of Emiliano Ferrer, son of
Crispulo Ferrer and Engracia Puhawan and one of petitioners herein.
On March 15, 2000, the RTC issued a decision dismissing petitioners' action
insofar as Lot 1873 and 11 were concerned. The trial court ruled that the
petitioners failed to present convincing proof of their claim of ownership over Lot
1873; other than the Bureau of Lands Certification, which by itself was not a proof
of ownership, the petitioners had nothing to support their claim. In contrast,
Napocor was able to present two deeds of sale covering 29,598 square meters of
Lot 1873, which were duly notarized and registered under Act No. 3344. The RTC
also took cognizance of the fact that Napocor has been in possession of Lot 1873
and constructed numerous structures thereon since 1936. It was thus ridiculous for
petitioners or their predecessors not to raise a restraining hand or shout of protest
during Napocor's long occupation and use of the lot.
As for Lot 72, the RTC found that the certificate of title covering the lot contained
an entry "memorandum of encumbrance affecting the property," where Engracia
Puhawan and the other heirs of Bernabe Puhawan (mother of Engracia Puhawan)
granted Napocor the right of way over the lot. In the absence of proof that the entry
had been cancelled, the RTC said that the easement should be respected.[5]
Since Napocor had admitted occupying portions of Lot 90 that were not covered
by the sale, the RTC declared it liable to pay rentals for the actual area occupied.[6]
The dispositive portion of the RTCs March 15, 2000 decision read:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Denying the petition for preliminary injunction;
2. Dismissing the action for damages;
3. Ordering the defendants to pay the plaintiffs the reasonable value of the
excess area occupied by [Napocor] in Lot 90, estimated to be [438] square
meters or such excess area as may be determined though a survey of Lot 90.
SO ORDERED.[7]
The petitioners appealed the RTC's decision before the Court of Appeals (CA),
alleging that the RTC erred in finding that they did not have any evidence to

sustain their claim of ownership. They assailed the RTC's reliance on the deeds of
sale executed by Oliva Ferrer in favor of Napocor, insisting that Oliva Ferrer had
no right to sell Lot 1873. Lot 1873, petitioners stated, was acquired during the
marriage of spouses Crispulo Ferrer and Engracia Puhawan; Oliva Ferrer was,
however, Crispulo Ferrer's child from his first marriage. At most, she can transfer
only what she was bound to inherit as one of Crispulo Ferrer's heirs, which was
some 3,129 square meters of Lot 1873. The sale of 29,598 square meters of Lot
1873, without authority from the other heirs, was thus void and, the notarization
and registration of the deeds of sale were without any effect.
The CA, however, found no reason to reverse the trial court's ruling. In its
May 12, 2009 decision, the CA held that the Bureau of Lands Certification did not
establish Crispulo Ferrer's ownership of Lot 1873, it only proves that he is a survey
claimant of the lot. Although petitioner Emilio Ferrer was the registered owner of
portions of Lot 1873,[8] the CA found that these portions do not pertain to those
occupied by Napocor.
The CA noted that petitioners only raised and discussed issues and arguments
involving their claim over Lot 1873. implying that they were not taking any issue
with regard to the RTC's ruling on their claims involving Lot 90 and Lot 72.
Nevertheless, the CA still resolved the matter and, like the RTC, found no basis to
support petitioners' claims over these lots other than the excess area of Lot 90
which Napocor admitted occupying without authority from petitioners. Thus, the
CA directed Napocor to pay the petitioners damages by way of rentals for its
occupancy of the excess area of Lot 90.[9]
The petitioners then sought a reconsideration of the CA's May 12, 2009 decision,
which the appellate court denied in a resolution dated October 23, 2009. The
petitioners received a copy of the CA's October 23, 2009 resolution on
November 3, 2009. Thirty-eight days later, on December 11, 2009, the
petitioners filed with the Court a petition for certiorari under Rule 65 of the
Rules of Court, alleging grave abuse of discretion on the part of the CA in
issuing its May 12, 2009 decision and October 23, 2009 resolution.
In a Resolution dated January 18, 2010. the Court resolved to deny petitioners'
petition forfailing to sufficiently show any reversible error in the assailed
decision to warrant the exercise of the Court's discretionary appellate jurisdiction.
The petitioners now file a motion for reconsideration of our January 18, 2010
Resolution, pointing out that they filed a petition for certiorari under Rule 65, not

a petition for review on certiorari under Rule 45, and thus contended that the
denial for failure to show any reversible error on the CA's part was not proper. In
asking the Court to give due course to their motion, the petitioners attribute the
following errors committed by the CA, which are the same errors they raised in
their petition forcertiorari:
1. The Honorable Court of Appeals manifestly overlooked a certain and
undisputed fact that, if properly considered, would justify a different
conclusion;
2. The Honorable Court of Appeals in this regard made a conclusion based on
speculation, surmise, or conjecture;
3. Likewise, the inference made by the Honorable Court of Appeals was
manifestly mistaken, absurd or impossible; and
4. The Honorable Court of Appeals thus committed a grave abuse of discretion
amounting to lack or excess of jurisdiction.

THE COURTS RULING

We resolved to deny petitioners' motion for reconsideration.
A certiorari petition filed under Rule 65 of the Rules of Court is a remedy against
a tribunal, board, or officer exercising judicial or quasi-judicial functions, which
has acted without or in excess of its jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction. Grave abuse of discretion means such
capricious or whimsical exercise of judgment which is equivalent to lack of
jurisdiction.[11] To justify the issuance of the writ of certiorari, the abuse of
discretion must be grave, as when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and it must be so
patent and gross as to amount 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, as to be
equivalent to having acted without jurisdiction.[12] As the party invoking the Court's
exercise of its jurisdiction to issue this extraordinary writ, the petitioner bears the
burden of proving that the public respondent has committed a grave abuse of its
discretion amounting to lack or excess of jurisdiction; in other words, the petitioner

must raise and prove an error of jurisdiction.[13]

In the present case, however, other than including the words "grave abuse of
discretion" in its assignment of errors, the petitioners failed to allege and
substantiate particular acts of the CA that can be characterized as a capricious or
whimsical exercise of its judgment. More importantly, the petitioners' assignment
of errors, which are actually mere conclusions of law, do not go into the
jurisdiction of the appellate court. The gist of petitioners' objections to the CA
ruling was the appellate court's failure to appreciate their arguments and evidence
in support of their claims, but this does not amount to an error of
jurisdiction. A certiorari writ will not be issued to cure errors by the lower
court in its appreciation of the evidence, its conclusions anchored on the said
findings, and its conclusions of law. As long as the court acts within its
jurisdiction, any alleged errors committed in the exercise of its discretion will
amount to nothing more than mere errors of judgment, correctible by an
appeal or a petition for review on certiorari under Rule 45 of the Rules of
Court.[14] Indeed, considering petitioners' assignment of errors, it was through this
perspective that we reviewed the petition; we considered the petition as a
petition for review oncertiorari filed under Rule 45. Why petitioners insist that
we treat their petition as one filed under Rule 65 is, however, not lost on us.
Under Section 2 of Rule 45, a petition for review on certiorari must be filed within
15 days from notice of the judgment, final order, or resolution appealed from. The
petitioners received the CA resolution denying their motion for reconsideration on
November 3, 2009; they filed the present petition 38 days later, or on December
11, 2009. As a petition for review on certiorari, it was clearly filed out of time.
Nevertheless, to secure a reversal of the adverse CA judgment, the petitioners
resorted to a petition for certiorari which, under Section 4 of Rule 65, may be filed
within 60 days from notice of the judgment, order, or resolution assailed. In other
words, the petitioners used the petition for certiorari as a substitute for the lost
appeal[15] - a practice the Court has consistently reproved. Based on this procedural
lapse alone, the Court could have denied the petition, but in the interest of fully
resolving the case, proceeded to examine the substance of petitioners' claims and
arguments. Regrettably for petitioners, we did not find any legal error committed
by the CA that merited the reversal of its ruling; hence, our resolution of January
18, 2010.
Notably, the present case stemmed from the action for injunction and damages
filed by petitioners against Napocor. For an injunctive suit to prosper, the
plaintiff must prove that he has a clear and positive legal right over the

subject of the suit that must be protected.[16] Since petitioners were seeking to
enjoin Napocor from selling the subject lots, it was incumbent upon them show
that they have a better claim of ownership over the subject lots than Napocor. But,
as correctly ruled by both the RTC and the CA, the evidence which petitioners
presented in support of its claim - the Bureau of Lands Certification in the name of
Crispulo Ferrer and the OCTs in the name of Emiliano Ferrer - did not adequately
establish their right to Lot 1873. All that the Certification proved was that Crispulo
Ferrer was a survey claimant. The purpose of a survey plan is simply to identify
and delineate the extent of the land.[17] A survey plan, even if approved by the
Bureau of Lands, is not a proof of ownership of the land covered by the plan. Even
though the OCTs in Emiliano Ferrer's name covering portions of Lot 1873 were
never contested, the CA found that the portions of land covered by his certificates
of title were not those on which Napocor's power plant stood. Napocor, on the
other hand, presented two deeds of sale covering Lot 1873, both duly notarized and
recorded with the Registry of Deeds. Act No. 3344 declares as valid an instrument
transferring rights with respect to real estate that was not registered under the
provisions of the Land Registration Act but was registered, in the manner
prescribed by law, in the Register of Deeds. In addition, Napocor has declared Lot
1873 for tax purposes and has occupied the subject lot since 1936. Tax declarations
become a strong evidence of ownership acquired by prescription when
accompanied by proof of actual possession of the property.[18] Given the notarized
and registered deeds of sale in Napocor's favor, the tax declarations in its name,
and the uninterrupted and continuous possession for over 60 years, Napocor has
sufficiently established its claim of ownership over the pertinent portions of Lot
1873.
It was too late for the petitioners to assail the nullity of the sale to Napocor by their
co-heir/co-owner, Oliva Ferrer, of portions of Lot 1873. While Article 1410 of the
Civil Code declares that an action to declare the inexistence of a contract does not
prescribe, nevertheless, the long delay in instituting an action may amount to
laches, which is defined as the failure to assert a right for an unreasonable and
unexplained length of time, warranting a presumption that the party entitled to
assert it has either abandoned or declined to assert it. This equitable defense is
based upon grounds of public policy, which requires the discouragement of stale
claims for the peace of society.[19] From 1936 when Napocor began construction of
the power plant up to 1997 when the action for injunction and damages was
instituted, the petitioners made no move to assert their claim over Lot 1873; for 61
long years, the petitioners have slept on their rights, but now ironically demand
vigilance on the Court's part to protect their rights. In Vda. De Rigonan v. Derecho,
[20]
we held:

Although we condemn the fraudulent acts of Leandro and the five co-owners in
their scheme to deprive their relatives of the latter's rightful shares in the
inheritance, the fact remains that respondents and their forebears wasted their
opportunity through a lifetime of indifference and apathy. They cannot now be
permitted to recover property that others have possessed, developed, and invested
in for sixty-five years. It would be sheer injustice to allow the latter to reap benefits
after generations of predecessors passively slept on their rights. The Court aptly
stated in Miguel v. Catalino:
Courts cannot look with favor at parties who, by their silence, delay, and inaction,
knowingly induce another to spend time, effort, and expense in cultivating the
land, paying taxes and making improvements thereon xxx only to spring from
ambush and claim title when the possessor's efforts and the rise of land values offer
an opportunity to make easy profit at his expense.
To grant respondents relief when they have not even offered any justifiable
excuse for their inaction would be unjust. It is certainly beyond our
comprehension how they could have remained silent for more than 50 years. They
have only themselves to blame if the Court at this late hour can no longer
afford them relief against the inequities they allegedly suffered.[21] [Emphasis
supplied.]
As to Lots 72 and 90, the CA correctly pointed out that the petitioners never took
any issue with the RTC's ruling concerning the parties' rights over these lots; the
petitioners devoted most of their time discussing their claims over Lot 1873. At
any rate, the parties' rights with respect to these lots have been carefully considered
and resolved by the RTC and CA, and we agree with their findings and
conclusions.
Read in its entirety, the CA decision was arrived at after it had carefully considered
the evidence and arguments presented by both parties. Its ruling was based on
factual findings and grounded on sound legal principles; we find no basis to
reverse it. Corollarily, no grave abuse of discretion can be attributed to the CA in
issuing the assailed rulings. Viewed either from the standards of Rule 45 or Rule
65, the petition utterly fails to raise issues that merit the setting aside of the CA
decision and resolution.
WHEREFORE, we DENY the petitioners' motion for reconsideration of our
January 18, 2010 Resolution. The petitioners' petition
for certiorari is DISMISSED. Costs against the petitioners.

SO ORDERED.
LUCIA BARRAMEDA VDA. DE
BALLESTEROS,
Petitioner,

- versus -

RURAL BANK OF CANAMAN

INC., represented by its
Liquidator, THE PHILIPPINE
DEPOSIT INSURANCE
CORPORATION,
Respondent.

G.R. No. 176260

Present:
CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:
November 24, 2010

X -------------------------------------------------------------------------------------- X
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules
of Civil Procedure assailing the August 15, 2006 Decision[1] of the Court of
Appeals (CA) in CA-G.R. No. 82711, modifying the decision of the Regional Trial
Court of Iriga City, Branch 36 (RTC-Iriga), in Civil Case No. IR-3128, by ordering
the consolidation of the said civil case with Special Proceeding Case No. M5290 (liquidation case) before the Regional Trial Court of Makati City, Branch
59 (RTC-Makati).
It appears from the records that on March 17, 2000, petitioner Lucia
Barrameda Vda. De Ballesteros (Lucia) filed a complaint for Annulment of Deed of
Extrajudicial Partition, Deed of Mortgage and Damages with prayer for

Preliminary Injunction against her children, Roy, Rito, Amy, Arabel, Rico, Abe,
Ponce Rex and Adden, all surnamed Ballesteros, and the Rural Bank of Canaman,
Inc., Baao Branch (RBCI) before the RTC-Iriga. The case was docketed as Civil
Case No. IR-3128.
In her complaint, Lucia alleged that her deceased husband, Eugenio, left two
(2) parcels of land located in San Nicolas, Baao, Camarines Sur, each with an area
of 357 square meters; that on March 6, 1995, without her knowledge and consent,
her children executed a deed of extrajudicial partition and waiver of the estate of
her husband wherein all the heirs, including Lucia, agreed to allot the two parcels
to Rico Ballesteros (Rico); that, still, without her knowledge and consent, Rico
mortgaged Parcel B of the estate in favor of RBCI which mortgage was being
foreclosed for failure to settle the loan secured by the lot; and that Lucia was
occupying Parcel B and had no other place to live. She prayed that the deed of
extrajudicial partition and waiver, and the subsequent mortgage in favor of RBCI
be declared null and void having been executed without her knowledge and
consent. She also prayed for damages.
In its Answer, RBCI claimed that in 1979, Lucia sold one of the two parcels
to Rico which represented her share in the estate of her husband. The extrajudicial
partition, waiver and mortgage were all executed with the knowledge and consent
of Lucia although she was not able to sign
the document. RBCI further
claimed that Parcel B had already
been foreclosed way back in 1999
which fact was known to Lucia through the auctioning notary public. Attorneys
fees were pleaded as counterclaim.
The case was then set for pre-trial conference. During the pre-trial, RBCIs
counsel filed a motion to withdraw after being informed that Philippine Deposit
Insurance Corporation (PDIC) would handle the case as RBCI had already been
closed and placed under the receivership of the PDIC. Consequently, on February
4, 2002, the lawyers of PDIC took over the case of RBCI.
On May 9, 2003, RBCI, through PDIC, filed a motion to dismiss on the
ground that the RTC-Iriga has no jurisdiction over the subject matter of the
action. RBCI stated that pursuant to Section 30, Republic Act No. 7653 (RA No.
7653), otherwise known as the New Central Bank Act, the RTC-Makati, already
constituted itself, per its Order dated August 10, 2001, as the liquidation court to
assist PDIC in undertaking the liquidation of RBCI. Thus, the subject matter of
Civil Case No. IR-3128 fell within the exclusive jurisdiction of such liquidation
court. Lucia opposed the motion.

On July 29, 2003, the RTC-Iriga issued an order[2] granting the Motion to
Dismiss, to wit:
This resolves the Motion to Dismiss filed by the defendant
Rural Bank of Canaman, Inc., premised on the ground that this court
has no jurisdiction over the subject matter of the action. This issue of
jurisdiction was raised in view of the pronouncement of the Supreme
Court in Ong v. C.A. 253 SCRA 105 and in the case of Hernandez v.
Rural Bank of Lucena, Inc., G.R. No. L-29791 dated January 10,
1978, wherein it was held that the liquidation court shall have
jurisdiction to adjudicate all claims against the bank whether they be
against assets of the insolvent bank, for Specific Performance, Breach
of Contract, Damages or whatever.

It is in view of this jurisprudential pronouncement made by no

less than the Supreme Court, that this case is, as far as defendant
Rural Bank of Canaman Inc., is concerned, hereby ordered
DISMISSED without prejudice on the part of the plaintiff to ventilate
their claim before the Liquidation Court now, RTC Branch
59, Makati City.
SO ORDERED.
Not in conformity, Lucia appealed the RTC ruling to the CA on the ground
that the RTC-Iriga erred in dismissing the case because it had jurisdiction over
Civil Case No. IR-3128 under the rule on adherence of jurisdiction.
On August 15, 2006, the CA rendered the questioned decision ordering the
consolidation of Civil Case No. IR-3128 and the liquidation case pending before
RTC-Makati. The appellate court ratiocinated thus:
The consolidation is desirable in order to prevent confusion,
to avoid multiplicity of suits and to save unnecessary cost and
expense. Needless to add, this procedure is well in accord with the
principle that the rules of procedure 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

(Vallacar Transit, Inc. v. Yap, 126 SCRA 500 [1983]; Suntay v.
Aguiluz, 209 SCRA 500 [1992] citing Ramos v. Ebarle, 182 SCRA
245 [1990]). It would be more in keeping with the demands of equity
if the cases are simply ordered consolidated. Pursuant to Section 2,
Rule 1, Revised Rules of Court, the rules on consolidation should be
liberally construed to achieve the object of the parties in obtaining
just, speedy and inexpensive determination of their cases (Allied
Banking Corporation v. Court of Appeals, 259 SCRA 371 [1996]).
The dispositive portion of the decision reads:
IN VIEW OF ALL THE FOREGOING, the appealed decision
is hereby MODIFIED, in such a way that the dismissal of this case
(Civil Case No. IR-3128) is set aside and in lieu thereof another one is
entered ordering the consolidation of said case with the liquidation
case docketed as Special Proceeding No. M-5290 before Branch 59 of
theRegional Trial Court of Makati City, entitled In Re: Assistance in
the Judicial Liquidation of Rural Bank of Canaman, Camarines Sur,
Inc., Philippine Deposit Corporation, Petitioner. No pronouncement
as to cost.
SO ORDERED.[3]
Lucia filed a motion for reconsideration[4] but it was denied by the CA in its
Resolution dated December 14, 2006.[5]
Hence, the present petition for review on certiorari anchored on the
following
GROUNDS
(I)
THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE REGIONAL TRIAL COURT OF IRIGA CITY, BRANCH
36 IS VESTED WITH JURISDICTION TO CONTINUE
TRYING AND ULTIMATELY DECIDE CIVIL CASE NO. IR3128.

(II)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED
ITS DISCRETION IN ORDERING THE CONSOLIDATION OF
CIVIL CASE NO. IR-3128 WITH THE LIQUIDATION CASE
DOCKETED AS SPECIAL PROCEEDINGS NO. M-5290
BEFORE BRANCH 59 OF
THE REGIONAL TRIAL COURT OF MAKATI CITY.[6]
Given the foregoing arguments, the Court finds that the core issue to be
resolved in this petition involves a determination of whether a liquidation court can
take cognizance of a case wherein the main cause of action is not a simple money
claim against a bank ordered closed, placed under receivership of the PDIC, and
undergoing a liquidation proceeding.
Lucia contends that the RTC-Iriga is vested with jurisdiction over Civil Case
No. 3128, the constitution of the liquidation court notwithstanding. According to
her, the case was filed before the RTC-Iriga on March 17, 2000 at the time RBCI
was still doing business or before the defendant bank was placed under
receivership of PDIC in January 2001.
She further argues that the consolidation of the two cases is improper. Her
case, which is for annulment of deed of partition and waiver, deed of mortgage and
damages, cannot be legally brought before the RTC-Makati with the liquidation
case considering that her cause of action against RBCI is not a simple claim arising
out of a creditor-debtor relationship, but one which involves her rights and interest
over a certain property irregularly acquired by RBCI. Neither is she a creditor of
the bank, as only the creditors of the insolvent bank are allowed to file and
ventilate claims before the liquidator, pursuant to the August 10, 2001 Order of the
RTC-Makati which granted the petition for assistance in the liquidation of RBCI.
In its Comment,[7] PDIC, as liquidator of RBCI, counters that the
consolidation of Civil Case No. 3128 with the liquidation proceeding is proper. It
posits that the liquidation court of RBCI, having been established, shall have
exclusive jurisdiction over all claims against the said bank.
After due consideration, the Court finds the petition devoid of
merit.

Lucias argument, that the RTC-Iriga is vested with jurisdiction to continue

trying Civil Case No. IR-3128 until its final disposition, evidently falls out from a
strained interpretation of the law and jurisprudence. She contends that:
Since the RTC-Iriga has already obtained jurisdiction over the
case it should continue exercising such jurisdiction until the final
termination of the case. The jurisdiction of a court once attached
cannot be ousted by subsequent happenings or events, although of a
character which would have prevented jurisdiction from attaching in
the first instance, and the Court retains jurisdiction until it finally
disposes of the case (Aruego Jr. v. Court of Appeals, 254 SCRA 711).
When a court has already obtained and is exercising jurisdiction
over a controversy, its jurisdiction to proceed to final determination of
the case is not affected by a new legislation transferring jurisdiction
over such proceedings to another tribunal. (Alindao v. Joson, 264
SCRA 211). Once jurisdiction is vested, the same is retained up to the
end of the litigation (Bernate v. Court of Appeals, 263 SCRA 323).[8]
The afore-quoted cases, cited by Lucia to bolster the plea for the continuance
of her case, find no application in the case at bench.
Indeed, the Court recognizes the doctrine on adherence of
jurisdiction. Lucia, however, must be reminded that such principle is not without
exceptions. It is well to quote the ruling of the CA on this matter, thus:
This Court is not unmindful nor unaware of the doctrine on the
adherence of jurisdiction. However, the rule on adherence of
jurisdiction is not absolute and has exceptions. One of the exceptions
is that when the change in jurisdiction is curative in character (Garcia
v. Martinez, 90 SCRA 331 [1979]; Calderon, Sr. v. Court of Appeals,
100 SCRA 459 [1980]; Atlas Fertilizer Corporation v. Navarro, 149
SCRA 432 [1987]; Abad v. RTC of Manila, Br. Lll, 154 SCRA 664
[1987]).
For sure, Section 30, R.A. 7653 is curative in character when it
declared that the liquidation court shall have jurisdiction in the same
proceedings to assist in the adjudication of the disputed claims against
the Bank. The interpretation of this Section (formerly Section 29,

R.A. 265) becomes more obvious in the light of its intent. InManalo
v. Court of Appeals (366 SCRA 752, [2001]), the Supreme Court says:
xxx The requirement that all claims against the
bank be pursued in the liquidation proceedings filed by
the Central Bank is intended to prevent multiplicity of
actions against the insolvent bank and 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 (citing Ong v. CA, 253
SCRA 105 [1996]). 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 Superintendents of
Banks and regulate his operations (citing Central Bank of
the Philippines, et al. v. CA, et al., 163 SCRA 482
[1988]).[9]
As regards Lucias contention that jurisdiction already attached when Civil
Case No. IR-3128 was filed with, and jurisdiction obtained by, the RTC-Iriga prior
to the filing of the liquidation case before the RTC-Makati, her stance fails to
persuade this Court. In refuting this assertion, respondent PDIC cited the case
of Lipana v. Development Bank of Rizal[10] where it was held that the time of the
filing of the complaint is immaterial, viz:
It is the contention of petitioners, however, that the placing
under receivership of Respondent Bank long after the filing of the
complaint removed it from the doctrine in the said Morfe Case.
This contention is untenable. The time of the filing of the
complaint is immaterial. It is the execution that will obviously
prejudice the other depositors and creditors. Moreover, as stated in the
said Morfe case, the effect of the judgment is only to fix the amount
of the debt, and not to give priority over other depositors and
creditors.
The cited Morfe case[11] held that after the Monetary Board has declared
that a bank is insolvent and has ordered it to cease operations, the Board becomes
the trustee of its assets for the equal benefit of all the creditors, including
depositors. The assets of the insolvent banking institution are held in trust for the

equal benefit of all creditors, and after its insolvency, one cannot obtain an
advantage or a preference over another by an attachment, execution or otherwise.
Thus, to allow Lucias case to proceed independently of the liquidation case,
a possibility of favorable judgment and execution thereof against the assets of
RBCI would not only prejudice the other creditors and depositors but would defeat
the very purpose for which a liquidation court was constituted as well.
Anent the second issue, Lucia faults the CA in directing the consolidation of
Civil Case No. IR-3128 with Special Proceedings No. M-5290. The CA
committed no error. Lucias complaint involving annulment of deed of mortgage
and damages falls within the purview of a disputed claim in contemplation of
Section 30 of R.A. 7653 (The New Central Bank Act). The jurisdiction should be
lodged with the liquidation court. Section 30 provides:
Sec. 30. Proceedings
in Receivership
and Liquidation.
Whenever,
report ofBoard
the head
thea supervising
or examiningdepartment,upon
the Monetary
findsofthat
bank or quasi-bank:
(a) course
is unable
pay its Provided,
liabilities That
as they
become
dueinclude
in the
ordinary
of to
business:
this
shall by
not
inability
to pay
caused
by extraordinary
demands
induced
financial
panic in the
banking
community;
(b)Sentral,
has insufficient
realizable or
assets, as determined by the
Bangko
to meet its liabilities;
cannot
continue
in business
without involving probable
losses (c)
to its
depositors
or creditors;
or
has wilfully
violated
a cease and
desist order which
under amount
Section
37
that(d)
has
final,
or transactions
to
fraud
or abecome
dissipation
ofinvolving
the
assetsacts
of the
institution;
in which
cases,
the
Monetary
Board
may
summarily
and
without
need
for
prior
hearing
forbid the
institution
from
doing business
in Corporation
the Philippines
and
designate
the
Philippine
Deposit
Insurance
as
receiver of the banking institution.
Foror afinance
quasi-bank,
person asofreceiver.
recognized competence in
banking
may beany
designated
The
receiver
shall
immediately
gather
and takethe
charge
offor
all the
assets
and
liabilities
ofand
the exercise
institution,
administer
same
the
benefit
of Revised
its
creditors,
the
general
powers
of
a receiver
under
the
Rules
of
Court
but
shall
not,
with
the
exception
of
administrative
expenditures,
pay
or
commit
any
act
that
will
involve
the
transfer
or disposition
of any
assetthe
of funds
the institution:
Provided,
That
the
receiver
may
deposit
or
place
of
the
institution
in
non-speculative
investments.
The receiver
shall
determine
as whether
soon as
possible,
but not
laterbethan
ninety
(90)ordays
from
take
over,
the
institution
may
rehabilitated
otherwise
placed
in
such
condition
that
may be permitted
to
resumepublic:
business
with safety
toany
itsa
depositors
andit
creditors
and theof
general
Provided,
That
determination
for
the
resumption
business
of
the
institution
shall
be
subject to prior approval of the Monetary Board.
If the orreceiver
determines
that
the institution
cannot
be
rehabilitated
permitted
to
resume
business
accordance
the
next
preceding
paragraph,
the
Monetary
Boardin
shall
notify to
inwith
writing
the
board
of
directors
of
its
findings
and
direct
the
receiver
proceed
with the liquidation of the institution. The receiver shall:
(1) file of
ex parte
the proper
trial court,
and without
requirement
prior with
notice
or institution
anyregional
other pursuant
action,
a apetition
for
assistance
in the
liquidation
of the
to
liquidation
plan
adopted
by
the
Philippine
Deposit
Insurance
Corporation
for
general
application
to
all
closed
banks.
In
case
of
quasi-banks,
the
liquidation
plan shall the
be court
adopted
by upon
the Monetary
Board.
Upon
acquiring
jurisdiction,
shall,
motion
by
the
receiver
after
due
notice, adjudicate
disputed liabilities
claimsagainst
institution,
assist
theand
enforcement
ofdecide
individual
of may
thethe
stockholders,
directors
officers,
and
on other issues
as
be
material
to
implement
the
liquidation
plan
adopted.
The
receiver
shall
pay the
cost of the proceedings from the assets of the institution.
(2)creditors
convert and
the assets
of the institution
to money,
dispose
the
same
to
other
parties,
for the
of concurrence
paying
theof
debts
of
such
institution
inunder
accordance
with
thepurpose
rules
on
and
preference
of
credit
the
Civil
Code
of
the
Philippines
and
he
may,
in
theretain,
name institute
of the institution,
and as
with
thebeassistance
oftocounsel
as
herecover
may
such
actions
may
necessary
collect
and
accounts
and
assets
of,
or
defend
any
action
against,
the
institution.
of anin custodia
institutionlegis
under
or
liquidation The
shall assets
be deemed
in thereceivership
hands of the

receiver
and shall, from
the momentbetheexempt
institution
wasany
placed
under
such
receivership
or liquidation,
from
order
of
garnishment,
levy, attachment,
or execution. [Emphasis
supplied]
xxx
Disputed claims refers to all claims, whether they be against the assets of
the insolvent bank, for specific performance, breach of contract, damages, or
whatever.[12]Lucias action being a claim against RBCI can properly be
consolidated with the liquidation proceedings before the RTC-Makati. A
liquidation proceeding has been explained in the case of In Re: Petition For
Assistance in the Liquidation of the Rural Bank of BOKOD (Benguet), Inc. v.
Bureau of Internal Revenue[13] as follows:
A liquidation proceeding is a single proceeding which consists
of a number of cases properly classified as "claims." It is basically a
two-phased proceeding. The first phase is concerned with the
approval and disapproval of claims. Upon the approval of the
petition seeking the assistance of the proper court in the liquidation
of a closed entity, all money claims against the bank are required to
be filed with the liquidation court. This phase may end with the
declaration by the liquidation court that the claim is not proper or
without basis. On the other hand, it may also end with the liquidation
court allowing the claim. In the latter case, the claim shall be
classified whether it is ordinary or preferred, and thereafter included
Liquidator. In either case, the order allowing or disallowing a
particular claim is final order, and may be appealed by the party
aggrieved thereby.
The second phase involves the approval by the Court of the
distribution plan prepared by the duly appointed liquidator. The
distribution plan specifies in detail the total amount available for
distribution to creditors whose claim were earlier allowed. The Order
finally disposes of the issue of how much property is available for
disposal. Moreover, it ushers in the final phase of the liquidation
proceeding - payment of all allowed claims in accordance with the
order of legal priority and the approved distribution plan.
xxx
A liquidation proceeding is commenced by the filing of a
single petition by the Solicitor General with a court of competent

jurisdiction entitled, "Petition for Assistance in the Liquidation of

e.g., Pacific Banking Corporation. All claims against the insolvent
are required to be filed with the liquidation court. Although the
claims are litigated in the same proceeding, the treatment is
individual. Each claim is heard separately. And the Order issued
relative to a particular claim applies only to said claim, leaving the
other claims unaffected, as each claim is considered separate and
distinct from the others. x x x [Emphasis supplied.]
It is clear, therefore, that the liquidation court has jurisdiction over all
claims, including that of Lucia against the insolvent bank. As declared in Miranda
v. Philippine Deposit Insurance Corporation,[14] regular courts do not have
jurisdiction over actions filed by claimants against an insolvent bank, unless there
is a clear showing that the action taken by the BSP, through the Monetary Board, in
the closure of financial institutions was in excess of jurisdiction, or with grave
abuse of discretion. The same is not obtaining in this present case.
The power and authority of the Monetary Board to close banks and liquidate
them thereafter when public interest so requires is an exercise of the police power
of the State. Police power, however, is subject to judicial inquiry. It may not be
exercised arbitrarily or unreasonably and could be set aside if it is either
capricious, discriminatory, whimsical, arbitrary, unjust, or is tantamount to a denial
of due process and equal protection clauses of the Constitution.[15]
In sum, this Court holds that the consolidation is proper considering that the
liquidation court has jurisdiction over Lucias action. It would be more in keeping
with law and equity if Lucias case is consolidated with the liquidation case in
order to expeditiously determine whether she is entitled to recover the property
subject of mortgage from RBCI and, if so, how much she is entitled to receive
from the remaining assets of the bank.
WHEREFORE, the petition is DENIED.
SO ORDERED.