[G.R. No. 136426.

August 6, 1999]
E. B. VILLAROSA & PARTNER CO., LTD., petitioner, vs. HON. HERMINIO I. BENITO, in his
capacity as Presiding Judge, RTC, Branch 132, Makati City and IMPERIAL
DEVELOPMENT CORPORATION, respondent.
DECISION
GONZAGA-REYES, J.:
Before this Court is a petition for certiorari and prohibition with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction seeking to annul and set aside the
Orders dated August 5, 1998 and November 20, 1998 of the public respondent Judge Herminio I.
Benito of the Regional Trial Court of Makati City, Branch 132 and praying that the public respondent
court be ordered to desist from further proceeding with Civil Case No. 98-824.
Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address at
102 Juan Luna St., Davao City and with branch offices at 2492 Bay View Drive, Tambo, Paraaque,
Metro Manila and Kolambog, Lapasan, Cagayan de Oro City. Petitioner and private respondent
executed a Deed of Sale with Development Agreement wherein the former agreed to develop certain
parcels of land located at Barrio Carmen, Cagayan de Oro belonging to the latter into a housing
subdivision for the construction of low cost housing units. They further agreed that in case of litigation
regarding any dispute arising therefrom, the venue shall be in the proper courts of Makati.
On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of Contract and
Damages against petitioner, as defendant, before the Regional Trial Court of Makati allegedly for
failure of the latter to comply with its contractual obligation in that, other than a few unfinished low cost
houses, there were no substantial developments therein. [1]
Summons, together with the complaint, were served upon the defendant, through its Branch
Manager Engr. Wendell Sabulbero at the stated address at Kolambog, Lapasan, Cagayan de Oro
City[2] but the Sheriffs Return of Service[3] stated that the summons was duly served upon defendant E.
B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. WENDELL SALBULBERO on May 5,
1998 at their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by the
signature on the face of the original copy of the summons.
On June 9, 1998, defendant filed a Special Appearance with Motion to Dismiss [4]alleging that on
May 6, 1998, summons intended for defendant was served upon Engr. Wendell Sabulbero, an
employee of defendant at its branch office at Cagayan de Oro City. Defendant prayed for the
dismissal of the complaint on the ground of improper service of summons and for lack of jurisdiction
over the person of the defendant. Defendant contends that the trial court did not acquire jurisdiction
over its person since the summons was improperly served upon its employee in its branch office at
Cagayan de Oro City who is not one of those persons named in Section 11, Rule 14 of the 1997
Rules of Civil Procedure upon whom service of summons may be made.
Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in Default [5] alleging
that defendant has failed to file an Answer despite its receipt allegedly on May 5, 1998 of the
summons and the complaint, as shown in the Sheriffs Return.
On June 22, 1998, plaintiff filed an Opposition to Defendants Motion to Dismiss [6] alleging that the
records show that defendant, through its branch manager, Engr. Wendell Sabulbero actually received
the summons and the complaint on May 8, 1998 as evidenced by the signature appearing on the copy
of the summons and not on May 5, 1998 as stated in the Sheriffs Return nor on May 6, 1998 as stated
in the motion to dismiss; that defendant has transferred its office from Kolambog, Lapasan, Cagayan

de Oro to its new office address at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the purpose of
the rule is to bring home to the corporation notice of the filing of the action.
On August 5, 1998, the trial court issued an Order [7] denying defendants Motion to Dismiss as
well as plaintiffs Motion to Declare Defendant in Default. Defendant was given ten (10) days within
which to file a responsive pleading. The trial court stated that since the summons and copy of the
complaint were in fact received by the corporation through its branch manager Wendell Sabulbero,
there was substantial compliance with the rule on service of summons and consequently, it validly
acquired jurisdiction over the person of the defendant.
On August 19, 1998, defendant, by Special Appearance, filed a Motion for
Reconsideration[8] alleging that Section 11, Rule 14 of the new Rules did not liberalize but, on the
contrary, restricted the service of summons on persons enumerated therein; and that the new
provision is very specific and clear in that the word manager was changed to general manager,
secretary to corporate secretary, and excluding therefrom agent and director.
On August 27, 1998, plaintiff filed an Opposition to defendants Motion for
Reconsideration[9] alleging that defendants branch manager did bring home to the defendantcorporation the notice of the filing of the action and by virtue of which a motion to dismiss was filed;
and that it was one (1) month after receipt of the summons and the complaint that defendant chose to
file a motion to dismiss.
On September 4, 1998, defendant, by Special Appearance, filed a Reply [10] contending that the
changes in the new rules are substantial and not just general semantics.
Defendants Motion for Reconsideration was denied in the Order dated November 20, 1998. [11]
Hence, the present petition alleging that respondent court gravely abused its discretion
tantamount to lack or in excess of jurisdiction in denying petitioners motions to dismiss and for
reconsideration, despite the fact that the trial court did not acquire jurisdiction over the person of
petitioner because the summons intended for it was improperly served. Petitioner invokes Section 11
of Rule 14 of the 1997 Rules of Civil Procedure.
Private respondent filed its Comment to the petition citing the cases of Kanlaon Construction
Enterprises Co., Inc. vs. NLRC[12] wherein it was held that service upon a construction project
manager is valid and in Gesulgon vs. NLRC[13] which held that a corporation is bound by the service of
summons upon its assistant manager.
The only issue for resolution is whether or not the trial court acquired jurisdiction over the person
of petitioner upon service of summons on its Branch Manager.
When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil Procedure
was already in force.[14]
Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides that:
When the defendant is a corporation, partnership or association organized under the laws of the
Philippines with a juridical personality, service may be made on the president, managing
partner, general manager, corporate secretary, treasurer, or in-house counsel. (underscoring
supplied).
This provision revised the former Section 13, Rule 14 of the Rules of Court which provided that:

SEC. 13. Service upon private domestic corporation or partnership. If the defendant is a corporation
organized under the laws of the Philippines or a partnership duly registered, service may be made on
the president, manager, secretary, cashier, agent, or any of its directors. (underscoring supplied).
Petitioner contends that the enumeration of persons to whom summons may be served is
restricted, limited and exclusive following the rule on statutory construction expressio unios est
exclusio alteriusand argues that if the Rules of Court Revision Committee intended to liberalize the
rule on service of summons, it could have easily done so by clear and concise language.
We agree with petitioner.
Earlier cases have uphold service of summons upon a construction project manager [15]; a
corporations assistant manager[16]; ordinary clerk of a corporation [17]; private secretary of corporate
executives[18]; retained counsel[19]; officials who had charge or control of the operations of the
corporation, like the assistant general manager[20]; or the corporations Chief Finance and
Administrative Officer[21]. In these cases, these persons were considered as agent within the
contemplation of the old rule. [22] Notably, under the new Rules, service of summons upon an agent of
the corporation is no longer authorized.
The cases cited by private respondent are therefore not in point.
In the Kanlaon case, this Court ruled that under the NLRC Rules of Procedure, summons on the
respondent shall be served personally or by registered mail on the party himself; if the party is
represented by counsel or any other authorized representative or agent, summons shall be served on
such person. In said case, summons was served on one Engr. Estacio who managed and supervised
the construction project in Iligan City (although the principal address of the corporation is in Quezon
City) and supervised the work of the employees. It was held that as manager, he had sufficient
responsibility and discretion to realize the importance of the legal papers served on him and to relay
the same to the president or other responsible officer of petitioner such that summons for petitioner
was validly served on him as agent and authorized representative of petitioner. Also in the Gesulgon
case cited by private respondent, the summons was received by the clerk in the office of the Assistant
Manager (at principal office address) and under Section 13 of Rule 14 (old rule), summons may be
made upon the clerk who is regarded as agent within the contemplation of the rule.
The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997
Rules of Civil Procedure. The rule now states general manager instead of only manager; corporate
secretary instead of secretary; and treasurer instead of cashier. The phrase agent, or any of its
directors is conspicuously deleted in the new rule.
The particular revision under Section 11 of Rule 14 was explained by retired Supreme Court
Justice Florenz Regalado, thus:[23]
x x x the then Sec. 13 of this Rule allowed service upon a defendant corporation to be made on the
president, manager, secretary, cashier, agent or any of its directors. The aforesaid terms were
obviously ambiguous and susceptible of broad and sometimes illogical interpretations, especially the
word agent of the corporation. The Filoil case, involving the litigation lawyer of the corporation who
precisely appeared to challenge the validity of service of summons but whose very appearance for
that purpose was seized upon to validate the defective service, is an illustration of the need for this
revised section with limited scope and specific terminology. Thus the absurd result in the Filoil case
necessitated the amendment permitting service only on the in-house counsel of the corporation who is
in effect an employee of the corporation, as distinguished from an independent practitioner.
(underscoring supplied)

Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision
Committee, stated that (T)he rule must be strictly observed. Service must be made to one named in
(the) statute x x x.[24]
It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict
compliance with the rules has been enjoined. In the case of Delta Motor Sales Corporation vs.
Mangosing,[25] the Court held:
A strict compliance with the mode of service is necessary to confer jurisdiction of the court over a
corporation. The officer upon whom service is made must be one who is named in the statute;
otherwise the service is insufficient. x x x.
The purpose is to render it reasonably certain that the corporation will receive prompt and proper
notice in an action against it or to insure that the summons be served on a representative so
integrated with the corporation that such person will know what to do with the legal papers served on
him. In other words, to bring home to the corporation notice of the filing of the action. x x x.
The liberal construction rule cannot be invoked and utilized as a substitute for the plain legal
requirements as to the manner in which summons should be served on a domestic corporation. x x x.
(underscoring supplied).
Service of summons upon persons other than those mentioned in Section 13 of Rule 14 (old rule)
has been held as improper.[26] Even under the old rule, service upon a general manager of a firms
branch office has been held as improper as summons should have been served at the firms principal
office. In First Integrated Bonding & Ins. Co., Inc. vs. Dizon, [27] it was held that the service of summons
on the general manager of the insurance firms Cebu branch was improper; default order could have
been obviated had the summons been served at the firms principal office.
And in the case of Solar Team Entertainment, Inc. vs. Hon. Helen Bautista Ricafort, et al. [28] the
Court succinctly clarified that, for the guidance of the Bench and Bar, strictest compliance with Section
11 of Rule 13 of the 1997 Rules of Civil Procedure (on Priorities in modes of service and filing) is
mandated and the Court cannot rule otherwise, lest we allow circumvention of the innovation by the
1997 Rules in order to obviate delay in the administration of justice.
Accordingly, we rule that the service of summons upon the branch manager of petitioner at its
branch office at Cagayan de Oro, instead of upon the general manager at its principal office at Davao
City is improper. Consequently, the trial court did not acquire jurisdiction over the person of the
petitioner.
The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction
upon its person. There is no question that the defendants voluntary appearance in the action is
equivalent to service of summons.[29] Before, the rule was that a party may challenge the jurisdiction of
the court over his person by making a special appearance through a motion to dismiss and if in the
same motion, the movant raised other grounds or invoked affirmative relief which necessarily involves
the exercise of the jurisdiction of the court, the party is deemed to have submitted himself to the
jurisdiction of the court.[30] This doctrine has been abandoned in the case of La Naval Drug
Corporation vs. Court of Appeals, et al., [31] which became the basis of the adoption of a new provision
in the former Section 23, which is now Section 20 of Rule 14 of the 1997 Rules. Section 20 now
provides that the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over
the person of the defendant shall not be deemed a voluntary appearance. The emplacement of this
rule clearly underscores the purpose to enforce strict enforcement of the rules on
summons. Accordingly, the filing of a motion to dismiss, whether or not belatedly filed by the
defendant, his authorized agent or attorney, precisely objecting to the jurisdiction of the court over the
person of the defendant can by no means be deemed a submission to the jurisdiction of the
court. There being no proper service of summons, the trial court cannot take cognizance of a case for

lack of jurisdiction over the person of the defendant. Any proceeding undertaken by the trial court will
consequently be null and void.[32]
WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public respondent
trial court are ANNULLED and SET ASIDE. The public respondent Regional Trial Court of Makati,
Branch 132 is declared without jurisdiction to take cognizance of Civil Case No. 98-824, and all its
orders and issuances in connection therewith are hereby ANNULLED and SET ASIDE.
SO ORDERED.

PEDRO T. SANTOS, JR., G.R. No. 170943

Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- v e r s u s - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.
PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:
September 23, 2008
x---------------------------------------------------x
DECISION
CORONA, J.:

This is a petition for review[1] of the September 22, 2005 decision [2] and December 29, 2005
resolution[3] of the Court of Appeals in CA-G.R. SP No. 82482.
On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a
sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch
167. The complaint, docketed as Civil Case No. 69262, sought to collect the amount of P698,502.10
representing petitioners unpaid balance of the car loan [4] advanced to him by respondent when he was
still a member of its board of directors.
Personal service of summons to petitioner failed because he could not be located in his last known
address despite earnest efforts to do so. Subsequently, on respondents motion, the trial court allowed
service of summons by publication.
Respondent caused the publication of the summons in Remate, a newspaper of general circulation in
the Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of publication of the
advertising manager of Remate [5] and an affidavit of service of respondents employee [6] to the effect
that he sent a copy of the summons by registered mail to petitioners last known address.

When petitioner failed to file his answer within the prescribed period, respondent moved that the case
be set for the reception of its evidence ex parte. The trial court granted the motion in an order dated
September 11, 2003.
Respondent proceeded with the ex parte presentation and formal offer of its evidence.
Thereafter, the case was deemed submitted for decision on October 15, 2003.
On October 28, 2003, petitioner filed an Omnibus Motion for Reconsideration and to Admit Attached
Answer. He sought reconsideration of the September 11, 2003 order, alleging that the affidavit of
service submitted by respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it
was not executed by the clerk of court. He also claimed that he was denied due process as he was
not notified of the September 11, 2003 order. He prayed that respondents evidence ex parte be
stricken off the records and that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it complied with the rules on service by
publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed in
default for failure to file an answer within the prescribed period.
In an order dated February 6, 2004, the trial court denied petitioners motion for reconsideration of the
September 11, 2003 order. It held that the rules did not require the affidavit of complementary service
by registered mail to be executed by the clerk of court. It also ruled that due process was observed as
a copy of the September 11, 2003 order was actually mailed to petitioner at his last known address. It
also denied the motion to admit petitioners answer because the same was filed way beyond the
reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court
in the Court of Appeals via a petition for certiorari. He contended that the orders were issued with
grave abuse of discretion. He imputed the following errors to the trial court: taking cognizance of the
case despite lack of jurisdiction due to improper service of summons; failing to furnish him with copies
of its orders and processes, particularly the September 11, 2003 order, and upholding technicality
over equity and justice.

During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in Civil
Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of suit.[7]
Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision [8] sustaining the
September 11, 2003 and February 6, 2004 orders of the trial court and dismissing the petition. It
denied reconsideration.[9] Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of
jurisdiction over his person due to improper service of summons, failure of the trial court to furnish him
with copies of its orders and processes including the September 11, 2003 order and preference for
technicality rather than justice and equity. In particular, he claims that the rule on service by
publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not
actions in personam like a complaint for a sum of money. He also contends that the affidavit of service
of a copy of the summons should have been prepared by the clerk of court, not respondents
messenger.
The petition lacks merit.
PROPRIETYOF
SERVICE BY PUBLICATION

Section 14, Rule 14 (on Summons) of the Rules of Court provides:

SEC. 14. Service upon defendant whose identity or whereabouts are
unknown. In any action where the defendant is designated as an unknown owner, or
the like, or whenever his whereabouts are unknown and cannot be ascertained
by diligent inquiry, service may, by leave of court, be effected upon him by
publication in a newspaper of general circulationand in such places and for such
times as the court may order. (emphasis supplied)

Since petitioner could not be personally served with summons despite diligent efforts to locate
his whereabouts, respondent sought and was granted leave of court to effect service of summons
upon him by publication in a newspaper of general circulation. Thus, petitioner was properly served
with summons by publication.

Petitioner invokes the distinction between an action in rem and an action in personam and claims that
substituted service may be availed of only in an action in rem. Petitioner is wrong. The in rem/in
personam distinction was significant under the old rule because it was silent as to the kind of action to
which the rule was applicable.[10] Because of this silence, the Court limited the application of the old
rule to in rem actions only.[11]
This has been changed. The present rule expressly states that it applies [i]n any action where the
defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown
and cannot be ascertained by diligent inquiry. Thus, it now applies to any action, whether in
personam, in rem or quasi in rem.[12]
Regarding the matter of the affidavit of service, the relevant portion of Section 19, [13] Rule 14
of the Rules of Court simply speaks of the following:
an affidavit showing the deposit of a copy of the summons and order for publication in
the post office, postage prepaid, directed to the defendant by registered mail to his
last known address.

Service of summons by publication is proved by the affidavit of the printer, his foreman or
principal clerk, or of the editor, business or advertising manager of the newspaper which published the
summons. The service of summons by publication is complemented by service of summons
by registered mail to the defendants last known address. This complementary service is evidenced by
an affidavit showing the deposit of a copy of the summons and order for publication in the post office,
postage prepaid, directed to the defendant by registered mail to his last known address.
The rules, however, do not require that the affidavit of complementary service be executed by
the clerk of court. While the trial court ordinarily does the mailing of copies of its orders and
processes, the duty to make the complementary service by registered mail is imposed on the party
who resorts to service by publication.
Moreover, even assuming that the service of summons was defective, the trial court
acquired jurisdiction over the person of petitioner by his own voluntary appearance in the
action against him. In this connection, Section 20, Rule 14 of the Rules of Court states:

SEC. 20. Voluntary appearance. The defendants voluntary appearance in

the action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance. (emphasis supplied)

Petitioner voluntarily appeared in the action when he filed the Omnibus Motion for Reconsideration
and to Admit Attached Answer.[14] This was equivalent to service of summons and vested the trial court
with jurisdiction over the person of petitioner.
ENTITLEMENTTO
NOTICE OF PROCEEDINGS

The trial court allowed respondent to present its evidence ex parte on account of petitioners
failure to file his answer within the prescribed period. Petitioner assails this action on the part of the
trial court as well as the said courts failure to furnish him with copies of orders and processes issued
in the course of the proceedings.
The effects of a defendants failure to file an answer within the time allowed therefor are
governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of Court:
SEC. 3. Default; declaration of. If the defending party fails to answer
within the time allowed therefor, the court shall, upon motion of the claiming
party with notice to the defending party, and proof of such failure, declare the
defending party in default. Thereupon, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence. Such reception of evidence may
be delegated to the clerk of court.
SEC. 4. Effect of order of default. A party in default shall be entitled to
notice of subsequent proceedings but not to take part in the trial. (emphasis
supplied)

If the defendant fails to file his answer on time, he may be declared in default upon motion of the
plaintiff with notice to the said defendant. In case he is declared in default, the court shall proceed to
render judgment granting the plaintiff such relief as his pleading may warrant, unless the court in its
discretion requires the plaintiff to submit evidence. The defaulting defendant may not take part in the
trial but shall be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his answer on time.
That was in fact why he had to file an Omnibus Motion for Reconsideration and to Admit Attached
Answer. But respondent moved only for the ex parte presentation of evidence, not for the declaration
of petitioner in default. In its February 6, 2004 order, the trial court stated:
The disputed Order of September 11, 2003 allowing the presentation of
evidence ex-parte precisely ordered that despite and notwithstanding service of
summons by publication, no answer has been filed with the Court within the required
period and/or forthcoming.[] Effectively[,] that was a finding that the defendant
[that is, herein petitioner] was in default for failure to file an answer or any
responsive pleading within the period fixed in the publication as precisely the
defendant [could not] be found and for which reason, service of summons by
publication was ordered. It is simply illogical to notify the defendant of the Order of
September 11, 2003 simply on account of the reality that he was no longer residing
and/or found on his last known address and his whereabouts unknown thus the
publication of the summons. In other words, it was reasonable to expect that the
defendant will not receive any notice or order in his last known address. Hence, [it
was] impractical to send any notice or order to him. Nonetheless, the record[s] will
bear out that a copy of the order of September 11, 2003 was mailed to the
defendant at his last known address but it was not claimed. (emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent to
present its evidence ex parte but in effect issued an order of default. But the trial court could not
validly do that as an order of default can be made only upon motion of the claiming party. [15] Since no
motion to declare petitioner in default was filed, no default order should have been issued.
To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of
subsequent proceedings, all the more should a party who has not been declared in default be entitled
to such notice. But what happens if the residence or whereabouts of the defending party is not known
or he cannot be located? In such a case, there is obviously no way notice can be sent to him and the
notice requirement cannot apply to him. The law does not require that the impossible be done.
[16]

Nemo tenetur ad impossibile. The law obliges no one to perform an impossibility. [17] Laws and rules

must be interpreted in a way that they are in accordance with logic, common sense, reason and
practicality.[18]
Hence, even if petitioner was not validly declared in default, he could not reasonably demand
that copies of orders and processes be furnished him. Be that as it may, a copy of the September 11,
2003 order was nonetheless still mailed to petitioner at his last known address but it was unclaimed.

CORRECTNESSOF
NON-ADMISSION OF ANSWER

Petitioner failed to file his answer within the required period. Indeed, he would not have
moved for the admission of his answer had he filed it on time. Considering that the answer was
belatedly filed, the trial court did not abuse its discretion in denying its admission.
Petitioners plea for equity must fail in the face of the clear and express language of the rules
of procedure and of the September 11, 2003 order regarding the period for filing the answer. Equity is
available only in the absence of law, not as its replacement. [19] Equity may be applied only in the
absence of rules of procedure, never in contravention thereof.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.

LEAH PALMA,
Petitioner,

G.R. No. 165273

Present:
CORONA, J., Chairperson,
VELASCO, JR.,
NACHURA,
PERALTA, and
MENDOZA, JJ.

- versus -

HON. DANILO P. GALVEZ, in his capacity as

PRESIDING JUDGE of the REGIONAL TRIAL
COURT OF ILOILO CITY, BRANCH 24; and
PSYCHE ELENA AGUDO,
Respondents.

Promulgated:
March 10, 2010

x-----------------------------------------------------------------------------------------x
DECISION
PERALTA, J.:

Assailed in this petition for certiorari under Rule 65 of the Rules of Court are the Orders dated May 7,
2004[1] and July 21, 2004[2] of the Regional Trial Court (RTC) of IloiloCity, Branch 24, granting the
motion to dismiss filed by private respondent Psyche Elena Agudo and denying reconsideration
thereof, respectively.

On July 28, 2003, petitioner Leah Palma filed with the RTC an action for damages against the
Philippine Heart Center (PHC), Dr. Danilo Giron and Dr. Bernadette O. Cruz, alleging that the
defendants committed professional fault, negligence and omission for having removed her right ovary
against her will, and losing the same and the tissues extracted from her during the surgery; and that
although the specimens were subsequently found, petitioner was doubtful and uncertain that the
same was hers as the label therein pertained that of somebody else. Defendants filed their respective
Answers. Petitioner subsequently filed a Motion for Leave to Admit Amended Complaint, praying for
the inclusion of additional defendants who were all nurses at the PHC, namely, Karla Reyes, Myra
Mangaser and herein private respondent Agudo. Thus, summons were subsequently issued to them.
On February 17, 2004, the RTC's process server submitted his return of summons stating that the
alias summons, together with a copy of the amended complaint and its annexes, were served upon
private respondent thru her husband Alfredo Agudo, who received and signed the same as private
respondent was out of the country.[3]

On March 1, 2004, counsel of private respondent filed a Notice of Appearance and a Motion for
Extension of Time to File Answer [4] stating that he was just engaged by private respondent's husband
as she was out of the country and the Answer was already due.
On March 15, 2004, private respondent's counsel filed a Motion for Another Extension of Time to File
Answer,[5] and stating that while the draft answer was already finished, the same would be sent to
private respondent for her clarification/verification before the Philippine Consulate in Ireland; thus, the
counsel prayed for another 20 days to file the Answer.
On March 30, 2004, private respondent filed a Motion to Dismiss [6] on the ground that the RTC had
not acquired jurisdiction over her as she was not properly served with summons, since she was
temporarily out of the country; that service of summons on her should conform to Section 16, Rule 14
of the Rules of Court. Petitioner filed her Opposition[7] to the motion to dismiss, arguing that a
substituted service of summons on private respondent's husband was valid and binding on her; that
service of summons under Section 16, Rule 14 was not exclusive and may be effected by other
modes of service, i.e., by personal or substituted service. Private respondent filed a Comment [8] on
petitioner's Opposition, and petitioner filed a Reply[9] thereto.
On May 7, 2004, the RTC issued its assailed Order granting private respondent's motion to dismiss. It
found that while the summons was served at private respondent's house and received by
respondent's husband, such service did not qualify as a valid service of summons on her as she was
out of the country at the time the summons was served, thus, she was not personally served a
summons; and even granting that she knew that a complaint was filed against her, nevertheless, the
court did not acquire jurisdiction over her person as she was not validly served with summons; that
substituted service could not be resorted to since it was established that private respondent was out
of the country, thus, Section 16, Rule 14 provides for the service of summons on her by publication.
Petitioner filed a motion for reconsideration, which the RTC denied in its Order dated July 21, 2004.
Petitioner is now before us alleging that the public respondent committed a grave abuse of discretion
amounting to lack or excess of jurisdiction when he ruled that:
I. Substituted service of summons upon private respondent, a defendant
residing in the Philippines but temporarily outside the country is invalid;
II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits the mode
of service of summons upon a defendant residing in the Philippines, but temporarily
outside the country, exclusively to extraterritorial service of summons under section
15 of the same rule;
III. In not ruling that by filing two (2) motions for extension of time to file
Answer, private respondent had voluntarily submitted herself to the jurisdiction of
respondent court, pursuant to Section 20, Rule 14 of the 1997 Rules of Civil
Procedure, hence, equivalent to having been served with summons;
IV. The cases cited in his challenged Order of May 7, 2004 constitute stare
decisis despite his own admission that the factual landscape in those decided cases
are entirely different from those in this case.[10]

Petitioner claims that the RTC committed a grave abuse of discretion in ruling that Section 16, Rule
14, limits the service of summons upon the defendant-resident who is temporarily out of the country
exclusively by means of extraterritorial service, i.e., by personal service or by publication, pursuant to
Section 15 of the same Rule. Petitioner further argues that in filing two motions for extension of time
to file answer, private respondent voluntarily submitted to the jurisdiction of the court.
In her Comment, private respondent claims that petitioner's certiorari under Rule 65 is not the proper
remedy but a petition for review under Rule 45, since the RTC ruling cannot be considered as having
been issued with grave abuse of discretion; that the petition was not properly verified because while
the verification was dated September 15, 2004, the petition was dated September 30, 2004. She
insists that since she was out of the country at the time the service of summons was made, such
service should be governed by Section 16, in relation to Section 15, Rule 14 of the Rules of Court;
that there was no voluntary appearance on her part when her counsel filed two motions for extension
of time to file answer, since she filed her motion to dismiss on the ground of lack of jurisdiction within
the period provided under Section 1, Rule 16 of the Rules of Court.
In her Reply, petitioner claims that the draft of the petition and the verification and certification against
forum shopping were sent to her for her signature earlier than the date of the finalized petition, since
the petition could not be filed without her signed verification. Petitioner avers that when private
respondent filed her two motions for extension of time to file answer, no special appearance was
made to challenge the validity of the service of summons on her.
The parties subsequently filed their respective memoranda as required.
We shall first resolve the procedural issues raised by private respondent.
Private respondent's claim that the petition for certiorari under Rule 65 is a wrong remedy thus the
petition should be dismissed, is not persuasive. A petition for certiorari is proper when any tribunal,
board or officer exercising judicial or quasi-judicial functions has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is
no appeal, or any plain, speedy, and adequate remedy at law.[11] There is grave abuse of discretion
when public respondent acts in a capricious or whimsical manner in the exercise of its judgment as to
be equivalent to lack of jurisdiction.
Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken only from
a final order that completely disposes of the case; that no appeal may be taken from (a) an order
denying a motion for new trial or reconsideration; (b) an order denying a petition for relief or any
similar motion seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or
dismissing an appeal; (e) an order denying a motion to set aside a judgment by consent, confession
or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) an
order of execution; (g) a judgment or final order for or against one or more of several parties or
in separate claims, counterclaims, cross-claims and third-party complaints, while the main

case is pending, unless the court allows an appeal therefrom; or (h) an order dismissing an
action without prejudice. In all the above instances where the judgment or final order is not
appealable, the aggrieved party may file an appropriate special civil action for certiorari under Rule
65.
In this case, the RTC Order granting the motion to dismiss filed by private respondent is a
final order because it terminates the proceedings against her, but it falls within exception (g) of the
Rule since the case involves several defendants, and the complaint for damages against these
defendants is still pending.[12] Since there is no appeal, or any plain, speedy, and adequate remedy in
law, the remedy of a special civil action for certiorari is proper as there is a need to promptly relieve
the aggrieved party from the injurious effects of the acts of an inferior court or tribunal. [13]
Anent private respondent's allegation that the petition was not properly verified, we find the
same to be devoid of merit. The purpose of requiring a verification is to secure an assurance that the
allegations of the petition have been made in good faith, or are true and correct, not merely
speculative.[14] In this instance, petitioner attached a verification to her petition although dated earlier
than the filing of her petition. Petitioner explains that since a draft of the petition and the verification
were earlier sent to her in New York for her signature, the verification was earlier dated than the
petition for certiorari filed with us. We accept such explanation. While Section 1, Rule 65 requires that
the petition forcertiorari be verified, this is not an absolute necessity where the material facts alleged
are a matter of record and the questions raised are mainly of law. [15] In this case, the issue raised is
purely of law.
Now on the merits, the issue for resolution is whether there was a valid service of summons on private
respondent.
In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the service
of summons or by the latters voluntary appearance and submission to the authority of the former.
[16]

Private respondent was a Filipino resident who was temporarily out of the Philippines at the time of

the service of summons; thus, service of summons on her is governed by Section 16, Rule 14 of the
Rules of Court, which provides:
Sec. 16. Residents temporarily out of the Philippines. When an action is commenced
against a defendant who ordinarily resides within the Philippines, but who is
temporarily out of it, servicemay, by leave of court, be also effected out of
the Philippines, as under the preceding section. (Emphasis supplied)

The preceding section referred to in the above provision is Section 15, which speaks of
extraterritorial service, thus:

SEC. 15. Extraterritorial service. When the defendant does not reside and is
not found in the Philippines, and the action affects the personal status of the plaintiff or

relates to, or the subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service as
under section 6; 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.

The RTC found that since private respondent was abroad at the time of the service of
summons, she was a resident who was temporarily out of the country; thus, service of summons may
be made only by publication.
We do not agree.
In Montefalcon v. Vasquez,[17] we said that because Section 16 of Rule 14 uses the words
may and also, it is not mandatory. Other methods of service of summons allowed under the Rules
may also be availed of by the serving officer on a defendant-resident who is temporarily out of
the Philippines. Thus, if a resident defendant is temporarily out of the country, any of the following
modes of service may be resorted to: (1) substituted service set forth in section 7 ( formerly Section
8), Rule 14; (2) personal service outside the country, with leave of court; (3) service by publication,
also with leave of court; or (4) in any other manner the court may deem sufficient. [18]

In Montalban v. Maximo,[19] we held that substituted service of summons under the present
Section 7, Rule 14 of the Rules of Court in a suit in personam against residents of
the Philippines temporarily absent therefrom is the normal method of service of summons that will
confer jurisdiction on the court over such defendant. In the same case, we expounded on the rationale
in providing for substituted service as the normal mode of service for residents temporarily out of
the Philippines.
x x x A man temporarily absent from this country leaves a definite place of residence,
a dwelling where he lives, a local base, so to speak, to which any inquiry about him
may be directed and where he is bound to return. Where one temporarily absents
himself, he leaves his affairs in the hands of one who may be reasonably expected to
act in his place and stead; to do all that is necessary to protect his interests; and to
communicate with him from time to time any incident of importance that may affect him
or his business or his affairs. It is usual for such a man to leave at his home or with his
business associates information as to where he may be contacted in the event a
question that affects him crops up. If he does not do what is expected of him, and a
case comes up in court against him, he cannot just raise his voice and say that he is
not subject to the processes of our courts. He cannot stop a suit from being filed
against him upon a claim that he cannot be summoned at his dwelling house or
residence or his office or regular place of business.

Not that he cannot be reached within a reasonable time to enable him to

contest a suit against him. There are now advanced facilities of communication. Long
distance telephone calls and cablegrams make it easy for one he left behind to
communicate with him.[20]

Considering that private respondent was temporarily out of the country, the summons and
complaint may be validly served on her through substituted service under Section 7, Rule 14 of the
Rules of Court which reads:
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may be
effected (a) by leaving copies of the summons at the defendants residence with some
person of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendants office or regular place of business with some competent person
in charge thereof.

We have held that a dwelling, house or residence refers to the place where the person named in the
summons is living at the time when the service is made, even though he may be temporarily out of the
country at the time.[21] It is, thus, the service of the summons intended for the defendant that must be
left with the person of suitable age and discretion residing in the house of the defendant. Compliance
with the rules regarding the service of summons is as important as the issue of due process as that of
jurisdiction.[22]
Section 7 also designates the persons with whom copies of the process may be left. The rule
presupposes that such a relation of confidence exists between the person with whom the copy is left
and the defendant and, therefore, assumes that such person will deliver the process to defendant or
in some way give him notice thereof.[23]
In this case, the Sheriff's Return stated that private respondent was out of the country; thus, the
service of summons was made at her residence with her husband, Alfredo P. Agudo, acknowledging
receipt thereof. Alfredo was presumably of suitable age and discretion, who was residing in that place
and, therefore, was competent to receive the summons on private respondent's behalf.
Notably, private respondent makes no issue as to the fact that the place where the summons was
served was her residence, though she was temporarily out of the country at that time, and that Alfredo
is her husband. In fact, in the notice of appearance and motion for extension of time to file answer
submitted by private respondent's counsel, he confirmed the Sheriff's Return by stating that private
respondent was out of the country and that his service was engaged by respondent's husband. In his
motion for another extension of time to file answer, private respondent's counsel stated that a draft of
the answer had already been prepared, which would be submitted to private respondent, who was in
Ireland for her clarification and/or verification before the Philippine Consulate there. These statements

establish the fact that private respondent had knowledge of the case filed against her, and that her
husband had told her about the case as Alfredo even engaged the services of her counsel.
In addition, we agree with petitioner that the RTC had indeed acquired jurisdiction over the person of
private respondent when the latter's counsel entered his appearance on private respondent's behalf,
without qualification and without questioning the propriety of the service of summons, and even filed
two Motions for Extension of Time to File Answer. In effect, private respondent, through counsel, had
already invoked the RTCs jurisdiction over her person by praying that the motions for extension of
time to file answer be granted. We have held that the filing of motions seeking affirmative relief, such
as, to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to
lift order of default with motion for reconsideration, are considered voluntary submission to the
jurisdiction of the court.[24] When private respondent earlier invoked the jurisdiction of the RTC to
secure affirmative relief in her motions for additional time to file answer, she voluntarily submitted to
the jurisdiction of the RTC and is thereby estopped from asserting otherwise. [25]
Considering the foregoing, we find that the RTC committed a grave abuse of discretion amounting to
excess of jurisdiction in issuing its assailed Orders.

WHEREFORE, the petition is GRANTED. The Orders dated May 7, 2004 and July 21, 2004 of
the Regional Trial Court of Iloilo City,

Branch

24,

are

hereby SET

ASIDE.Private

respondent

is DIRECTED to file her Answer within the reglementary period from receipt of this decision.
SO ORDERED.

SPOUSES DANTE and G.R. No. 167230

MA. TERESA L. GALURA,
Petitioners, Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.
MATH-AGRO CORPORATION, Promulgated:
Respondent. August 14, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
CARPIO, J.:
The Case
This is a petition[1] for review on certiorari under Rule 45 of the Rules of Court, with
prayer for the issuance of a writ of preliminary injunction or temporary restraining order. The
petition challenges the 25 January and 28 February 2005 Resolutions [2] of the Court of Appeals
in CA-G.R. SP No. 88088 dismissing the petition[3] for annulment of judgment and final order
and denying the motion[4] for reconsideration, respectively, filed by Dante and Ma. Teresa L.
Galura (Spouses Galura). The Spouses Galura sought to annul the 27 June 2001
Decision[5] and 10 November 2004 Order[6] of the Regional Trial Court (RTC), Judicial Region 3,
Malolos, Bulacan, Branch 22, in Civil Case No. 473-M-2000.
The Facts
In March 1997, the Spouses Galura purchased broiler starters and finishers
worth P426,000

from

Math-Agro

Corporation

(MAC). The

Spouses

Galura

paid

MAC P72,500. Despite several demands, they failed to pay the P353,500 unpaid balance.
MAC engaged the services of a certain Atty. Ronolfo S. Pasamba (Atty. Pasamba) for
the purpose of collecting the P353,500 unpaid balance from the Spouses Galura. In his
letter[7] dated 13 November 1998 and addressed to the Spouses Galura, Atty. Pasamba stated:
Ang kinatawan ng aming kliyente na Math Agro Corporation na may
tanggapan sa Balagtas , Bulacan, ay lumapit sa aming tanggapan at kinuha ang
aming paglilingkod bilang manananggol kaugnay sa inyong natitirang
pagkakautang sa kanila na halagang P353,500.00, na hanggang sa ngayon ay
hindi pa ninyo nababayaran.

Dahilan dito , kayo ay binibigyan namin ng limang (5) araw mula sa

pagkatanggap ng sulat na ito upang bayaran ang aming nabanggit na kliyente,
pati na ang kaukulang tubo nito. Ikinalulungkot naming sabihin sa inyo na kung
hindi ninyo bibigyang pansin ang mga bagay na ito, mapipilitan na kaming
magsampa ng kaukulang dimanda sa hukuman laban sa inyo upang
mapangalagaan namin ang karapatan at interes ng aming nabanggit na
kliyente.
Inaasahan namin na bibigyang pansin ninyo ang mga bagay na ito .

In its complaint[8] dated 21 June 2000 and filed with the RTC, MAC prayed that the RTC
order the Spouses Galura to pay the P353,500 unpaid balance andP60,000 attorneys fees and
litigation expenses. In the complaint, MAC stated that defendants are both of legal age,
spouses, and residents of G.L. Calayan Agro System Inc., Bo. Kalayaan, Gerona, Tarlac, and/or
230 Apo St., Sta. Mesa Heights, Quezon City, where they may be served with summonses and
other processes of this Honorable Court.
Clerk of Court Emmanuel L. Ortega issued the corresponding summons [9] dated 15 August
2000 requiring the Spouses Galura to file their answer within 15 days, otherwise judgment by default
would be taken against them.
On 17 September 2000, Court Process Server Faustino B. Sildo (Sildo) went to 230 Apo Street, Sta.
Mesa Heights, Quezon City, to serve the summons. There, Dante Galuras father, Dominador Galura,
told Sildo that the Spouses Galura were presently residing at Tierra Pura Subdivision, Tandang Sora,
Quezon City. On 22 September 2000, Sildo went to G.L. Calayan Agro System, Inc. in Barrio
Kalayaan, Gerona, Tarlac to serve the summons. Sildo learned that the property had been foreclosed
and that the Spouses Galura no longer resided there. On 26 September 2000, Sildo went to Tierra
Pura Subdivision, Tandang Sora, Quezon City, to serve the summons. Sildo served the summons on
Teresa L. Galuras sister, Victoria Lapuz (Lapuz). In his return of service[10] dated 4 October 2000, Sildo
stated:
THIS IS TO CERTIFY that on September 22, 2000 the undersigned went to
the given address of the defendant at G. Bo. Kalayaan, Gerona, Tarlac for the
purpose of serving the summons, issued in the above-entitled case
That the defendants is [sic] no longer residing at the given address and their property was foreclose
[sic] by the Bank,
That on September 17, the undersigned went to the given address of the defendants at 230 Apo St.,
Sta Mesa Heights, Quezon City;
That the defendants is [sic] not residing at the given address as per information given by Mr.
Dominador Galura father of the defendants.
That Mr. Dominador Galura give [sic] the address of the defendant where they are presently residing
at Tierra Fura [sic] Subd. at Tandang Sora, Quezon City.
That on September 26, 2000 the undersigned went to Tandang Sora where the defendants presently
residing [sic] Tierra Fura [sic] Subd. for the purpose of serving the summons, complaint together with
the annexes,
That Ms. Victoria Lapuz sister-in-Law of Dante Galura received the copy of said summons, as
evidence [sic] by her signature appearing on the face of original summons.

The Spouses Galura failed to file their answer. In its Order dated 23 January 2001, the RTC
declared the Spouses Galura in default and allowed MAC to present its evidence ex parte.
In its 27 June 2001 Decision, the RTC ruled in favor of MAC and ordered the Spouses Galura to pay
the P353,500 unpaid balance, P30,000 attorneys fees, and expenses of litigation. The RTC stated:
Based on the facts and findings established above, the Court is of the
considered view that a judgment in favor of the plaintiff is in order. Likewise, this Court
strongly believes that the failure of the defendants or their refusal to file any answer to
the complaint is a clear admission on their part of their obligation to the plaintiff. It
may even be safely presumed that by their inaction, defendants have no valid
defense against the claim of the plaintiff such that under the circumstances, this Court
has no other alternative but to pass judgment on the issued [sic] based on the
evidence on record.
The award of attorneys fees in the amount of P30,000.00 is justified under the premises in view of the
courts finding that the defendants acted in gross and evident bad faith in refusing to satisfy plaintiffs
plainly valid, just and demandable claim.
WHEREFORE, judgment is hereby rendered ordering the defendants to pay the plaintiff the following:
1.
The sum of P353,500.00 representing the unpaid purchase price
of the poultry products plus interest of 6% per annum accruing from the date
of defendants receipt of the first demand letter on October 18, 1998 until full
payment is made;

2. The sum of P30,000.00 as and for attorneys fees; and

3. The costs of suit.
SO ORDERED.[11]
In its Order dated 10 November 2004, the RTC issued a writ of execution to implement the 27
June 2001 Decision. The RTC stated:
In support of the motion, it is alleged among others that on June 27, 2001,
the Decision was rendered in the above-entitled case, has become final and
executory on August 1, 2001 and was duly recorded in the Book of Entry of
Judgment.
On the other hand, the fifteen (15) days period given to the defendants, from receipt of the order of
the Court dated November 11, 2003 had already lapsed without complying therewith, hence his right
to file comment on the Motion for Execution filed by the plaintiff was waived.
For reasons heretofore made apparent, the Court resolves to grant the motion for execution. [12]

On 13 December 2004, the Spouses Galura received from their parents-in-law a copy of the
10 November 2004 Order. On 6 January 2005, the Spouses Galura filed with the Court of Appeals a

petition[13] for annulment of judgment and final order under Rule 47 of the Rules of Court, with prayer
for the issuance of a writ of preliminary injunction or temporary restraining order. The Spouses Galura
claimed that the RTCs 27 June 2001 Decision and 10 November 2004 Order were void for two
reasons: (1) the RTC failed to acquire jurisdiction over their persons because the substituted service
of summons was invalid, and (2) there was extrinsic fraud because MAC made them believe that it
would not file a case against them. The Spouses Galura stated:

The assailed decision dated June 27, 2001 and the order of execution dated
November 10, 2004, issued by respondent Judge in Civil Case No. 473-M-2000,
should be annulled pursuant to Rule 47 of the 1997 Rules of Court.
1.
The assailed decision and order of execution are null and void having
been rendered and issued despite failure of the court a quo to first acquire jurisdiction
over the persons of the petitioners, on account of the improper service of summons
upon them.
2.
The assailed decision and order of execution were rendered with
extrinsic fraud in attendance. The owner of Math-Agro and herein petitioners had an
existing agreement for the settlement of their obligation, and herein petitioners were
complying with the agreement. Math-Agro, despite the commitment of its owner not to
file the complaint, did so. Such an act on the part of Math-Agro and its owner
constitutes extrinsic fraud, as it prevented petitioners from defending themselves in
the action lodged with the court a quo.[14]

The Court of Appeals Ruling

In its 25 January 2005 Resolution, the Court of Appeals dismissed the petition for lack of
merit. The Court of Appeals held that there was a valid substituted service of summons, that the
allegation of extrinsic fraud was unbelievable, and that the Spouses Galura should have first availed
of the ordinary remedies of new trial, appeal, or petition for relief. The Court of Appeals stated:
1.
Petitioners make no denial that insofar as known by the respondent
Math-Agro Corporation, their address at the time of the filing of the complaint on July
25, 2000 was at G.L. Calayaan Agro System Inc., Bo. Kalayaan, Gerona, Tarlac
and/or 230 Apo St., Sta. Mesa Heights, Quezon City. They likewise do not deny the
proceedings taken by Court Process Server Paulino Sildo as narrated in his Return of
Service dated October 4, 2000 x x x.
Under the circumstances, we believe, and so hold, that there was a valid substituted service of
summons on the petitioners as defendants in the case. To begin with, the petitioners never took the
bother of informing the creditor Math-Agro Corporation that they were leaving their address known to
the latter and were moving on to another place of residence, so the process server took it upon
himself to diligently trace the whereabouts of the petitioners until he was able to effect service of the
summons on Victoria Lapuz, a sister-in-law of petitioner Dante Galura at Tierra Fura Subdivision in
Tandang Sora, Quezon City, where the defendants were then residing. What they claim is that
substituted service was immediately resorted to without the process server first exhausting all
opportunities for personal service which is improper. x x x

Far from being improper, the actuations taken and the efforts exerted by the process server are highly
commendable for he started looking for the petitioners in the addresses given by them to their creditor
and alleged by the latter in the complaint. Finding them not to be there, he methodically traced their
whereabouts until he came upon their latest address at Tierra Fura Subdivision, Tandang Sora,
Quezon City, as given by Dominador Galura, father of petitioner-husband, Dante Galura. Quite
conspicuously, the petitioner do not deny that they were residing at that place when service of the
summons was made on petitioner-husbands sister-in-law, Victoria Lapuz.
xxxx
2.
Petitioners posturing that they are at the receiving end of extrinsic fraud
because they had an existing payment arrangement with their creditor, Math-Agro
Corporation, that the latter would not resort to judicial action for as long as payments
are being made by them and that they had been paying their obligation until July,
2004 is hard to be believed in. This is but a bare and vagrant allegation without any
visible means of support for nowhere in their petition, as well as in their joint affidavit
of merit, did they attach copies of the corresponding receipts of their payments. x x x
3.
Prescinding from the foregoing records also show that contrary to
Section 1, Rule 47 of the 1997 Rules of Civil Procedure, petitioners have not availed
themselves first of the ordinary remedies of a motion to lift order of default, new trial,
appeal, petition for relief before resorting to this extra-ordinary action for annulment of
judgment.[15]

The Spouses Galura filed a motion for reconsideration dated 14 February 2005. In its
Resolution dated 28 February 2005, the Court of Appeals denied the motion for lack of merit.
Hence, the present petition.

The Issues
In their petition dated 8 April 2005, the Spouses Galura raised as issues that the Court of
Appeals erred when it ruled that (1) there was a valid substituted service of summons; (2) the
allegation of extrinsic fraud was unbelievable; and (3) they should have availed first of the ordinary
remedies of new trial, appeal, or petition for relief.
In its Resolution[16] dated 27 April 2005, the Court issued a temporary restraining order enjoining the
Court of Appeals from implementing its 25 January and 28 February 2005 Resolutions.
The Courts Ruling
The petition is meritorious.
The Spouses Galura claim that the RTC failed to acquire jurisdiction over their persons because the
substituted service of summons was invalid. They stated:
The resort of the process server to what purports to be a substituted service,
when he left the summons with Ms. Victoria Lapuz is clearly unjustified, as it was

premature. He could still serve the summons personally upon herein petitioners had
he exerted efforts to do so. Unfortunately, he did not, and he immediately resorted to
a substituted service of the summons. Clearly, the acts of the trial courts process
server contravenes the rulings espoused by the Honorable Supreme Court that
summons must be served personally on the defendant as much as possible.
xxxx
The process server, in his return of service above, did not state that his attempts to serve the
summons by personal service upon the petitioners at the Tierra Pura Subdivision address failed, and
that the same could not be made within a reasonable time. He likewise failed to state facts and
circumstances showing why personal service of the summons upon the petitioners at the said address
was impossible. Finally, he also failed to state that Ms. Victoria Lapuz, the person with whom he left
the summons, was a person of sufficient age and discretion, and residing in the said Tierra Pura
address.[17]

The Court agrees. Section 6, Rule 14 of the Rules of Court states that, Whenever practicable,
the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses
to receive and sign for it, by tendering it to him. Section 7 states:
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may be
effected (a) by leaving copies of the summons at the defendants residence with some
person of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendants office or regular place of business with some competent person
in charge thereof.

In Sandoval II v. HRET,[18] the Court enumerated the requisites of a valid substituted service:
(1) service of summons within a reasonable time is impossible; (2) the person serving the summons
exerted efforts to locate the defendant; (3) the person to whom the summons is served is of sufficient
age and discretion; (4) the person to whom the summons is served resides at the defendants place of
residence; and (5) pertinent facts showing the enumerated circumstances are stated in the return of
service. In Sandoval, the Court held that statutory restrictions for substituted service must be strictly,
faithfully and fully observed.
In the present case, there is no showing that personal service of summons within a
reasonable time was impossible. On 17 September 2000, Sildo went to 230 Apo Street, Sta. Mesa
Heights, Quezon City, to serve the summons. There, Dominador Galura told him that the Spouses
Galura were presently residing at Tierra Pura Subdivision, Tandang Sora, Quezon City. Despite being
told of the Spouses Galuras correct address, Sildo still went to G.L. Calayan Agro System, Inc. in
Barrio Kalayaan, Gerona, Tarlac to serve the summons, only to find out that the property had already
been foreclosed and that the Spouses Galura no longer resided there. On 26 September 2000, Sildo
went to Tierra Pura Subdivision, Tandang Sora, Quezon City, and, without any explanation, served the
summons on Lapuz. In his 4 October 2000 return of service, Sildo stated:

That on September 26, 2000 the undersigned went to Tandang Sora where
the defendants presently residing [sic] Tierra Fura [sic] Subd. for the purpose of
serving the summons, complaint together with the annexes,
That Ms. Victoria Lapuz sister-in-Law of Dante Galura received the copy of said summons, as
evidence [sic] by her signature appearing on the face of original summons.

Whenever practicable, the summons must be served on the defendant in person. Substituted
service may be resorted to only when service of summons within a reasonable time is
impossible. Impossibility of prompt service should appear in the return of service the efforts exerted to
find the defendant and the fact that such efforts failed must be stated in the return of
service. In Keister v. Judge Navarro,[19] the Court held:
Service of summons upon the defendant is the means by which the court
may acquire jurisdiction over his person. In the absence of a valid waiver, trial and
judgment without such service are null and void. This process is solely for the benefit
of the defendant. Its purpose is not only to give the court jurisdiction of the person of
the defendant, but also to afford the latter an opportunity to be heard on the claim
made against him.
The summons must be served to the defendant in person. It is only when the defendant cannot be
served personally within a reasonable time that a substituted service may be made. Impossibility of
prompt service should be shown by stating the efforts made to find the defendant personally and the
fact that such efforts failed. This statement should be made in the proof of service. This is necessary
because substituted service is in derogation of the usual method of service. It has been held that this
method of service is in derogation of the common law; it is a method extraordinary in character, and
hence may be used only as prescribed and in the circumstances authorized by statute. Thus, under
the controlling decisions, the statutory requirements of substituted service must be followed strictly,
faithfully and fully, and any substituted service other than that authorized by the statute is considered
ineffective.
Indeed, the constitutional requirement of due process requires that the service be such as may be
reasonably expected to give the desired notice to the party of the claim against him.

In the present case, there was no showing in the return of service (1) of the impossibility of
personal service within a reasonable time; (2) that Lapuz, the person on whom summons was served,
was of suitable age and discretion; and (3) that Lapuz resided in the residence of the Spouses
Galura. Consequently, the RTC did not acquire jurisdiction over the persons of the Spouses Galura,
and thus the Spouses Galura are not bound by the RTCs 27 June 2001 Decision and 10 November
2004 Order.[20]
The Spouses Galura claim that the Court of Appeals erred when it ruled that they should have first
availed of the ordinary remedies of new trial, appeal, or petition for relief. The Spouses Galura stated:
In the case at bar, the assailed decision was rendered in June 27, 2001. More
than three years have passed since the said decision, clearly the remedies for a

motion to lift order of default, new trial, appeal, petition for relief, have already
prescribed. Herein petitioners, therefore, are left only with the remedy of a petition for
the annulment of judgment.[21]
The Court agrees. When a petition for annulment of judgment or final order under Rule 47 is
grounded on lack of jurisdiction over the person of the defendant, the petitioner does not need to
allege that the ordinary remedies of new trial, appeal, or petition for relief are no longer available
through no fault of his or her own. In Ancheta v. Ancheta,[22] the Court held:

[T]he Court of Appeals erred in dismissing the original petition and denying admission
of the amended petition. This is so because apparently, the Court of Appeals failed to
take note from the material allegations of the petition, that the petition was based not
only on extrinsic fraud but also on lack of jurisdiction over the person of the petitioner,
on her claim that the summons and the copy of the complaint in Sp. Proc. No. NC662 were not served on her. While the original petition and amended petition did not
state a cause of action for the nullification of the assailed order on the ground of
extrinsic fraud, we rule, however, that it states a sufficient cause of action for the
nullification of the assailed order on the ground of lack of jursdiction of the RTC over
the person of the petitioner, notwithstanding the absence of any allegation therein that
the ordinary remedy of new trial or reconsideration, or appeal are no longer available
through no fault of the petitioner.
In a case where a petition for annulment of a judgment or final order of
the RTC filed under Rule 47 of the Rules of Court is grounded on lack of
jurisdiction over the person of the defendant/respondent or over the nature or
subject of the action, the petitioner need not allege in the petition that the
ordinary remedy of new trial or reconsideration of the final order or judgment or
appeal therefrom are no longer available through no fault of her own. This is so
because a judgment rendered or final order issued by the RTC without jurisdiction is
null and void and may be assailed any time either collaterally or in a direct action or
by resisting such judgment or final order an any action or proceeding whenever it is
invoked, unless barred by laches. (Emphasis supplied)

WHEREFORE, the Court (1) GRANTS the petition, (2) SETS ASIDE the 25 January and 28
February 2005 Resolutions of the Court of Appeals in CA-G.R. SP No. 88088, (3) MAKES
PERMANENT the temporary restraining order issued on 27 April 2005, and (4) SETS ASIDE the 27
2001 Decision and 10 November 2004 Order of the Regional Trial Court, Judicial Region 3, Malolos,
Bulacan, Branch 22, in Civil Case No. 473-M-2000.
SO ORDERED.

CONSTANTINO
PASCUAL,substituted by his heirs,
byZENAIDA PASCUAL,
Petitioner,

-versus-

LOURDES S. PASCUAL,
Respondent.

A.
represented

G.R. No. 171916

Present:
CORONA, J., Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
Promulgated:

December 4, 2009
x-----------------------------------------------------------------------------------------x
DECISION
PERALTA, J.:

Due process dictates that jurisdiction over the person of a defendant can only be acquired by
the courts after a strict compliance with the rules on the proper service of summons.
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction, seeking to annul the
Decision[1] dated June 29, 2005 and the Resolution[2] dated March 14, 2006 of the Court of Appeals
(CA) nullifying and vacating the Decision [3] dated December 3, 2002 and Order[4] dated April 4, 2003 of
the Regional Trial Court (RTC), Branch 12, Malolos, Bulacan.
The facts, as found in the records, are the following:
Petitioner filed a Complaint for Specific Performance with Prayer for Issuance of Preliminary
Mandatory Injunction with Damages before the RTC of Malolos, Bulacan against respondent. The
process server, in his Return of Service[5] dated May 21, 2002, reported, among others that:
The undersigned Process Server of this Honorable Court went at defendant's
given address at No. 4 Manikling St., Talayan Village, Quezon City on May 20,
2002 to serve the summons and copy of the Complaint together with the annexes
thereto in connection with the above-entitled case.
At the time of the service of the said summons, the defendant was not at her
home and only her maid was there who refused to receive the said summons [in
spite] of the insistence of the undersigned.
The undersigned, upon his request with the Brgy. Clerk at the said place, was
given a certification that he really exerted effort to effect the service of the said
summons but failed due to the above reason. (Annex A).

The following day, May 21, 2002, the undersigned went back at defendant's
residence to have her receive the subject summons but again the above defendant
was not at her house.
WHEREFORE, the original summons and copy of the complaint is hereby
returned to the Honorable Court NOT SERVED.
Malolos, Bulacan, May 21, 2002.

Thereafter, an alias summons was issued by the RTC and, on May 29, 2002, the following
report was submitted:
The undersigned, on May 29, 2002, made a 3 rd attempt to serve the alias
summons issued by the Hon. Court relative with the above-entitled case at the given
address of the defendant.
The undersigned, accompanied by the barangay officials of the said place,
proceeded at defendant's residence but the undersigned was not permitted to go
inside her house and was given information by her maid that the defendant was not
there.
The defendant's car was parked inside her house and inquiries/verification
made on her neighbors revealed that the defendant was inside her house at the time
of service of said summons and probably did not want to show-up when her maid
informed her of undersigned's presence.
WHEREFORE, the undersigned court process server respectfully returned
the alias summons dated May 29, 2002 issued by the Hon. Court UNSERVED for its
information and guidance.
Malolos, Bulacan, May 30, 2002.[6]

Subsequently, on August 14, 2002, the process server returned with the following report,
[7]

stating that a substituted service was effected:

This is to certify that on the 14th day of August, 2002, I personally went at Dr.
Lourdes Pascual's residence at #4 Manikling Street, Talayan Village, Quezon City, to
serve the copy of the Summons dated August 12, 2002, together with a copy of the
Complaint and its annexes thereto.
Defendant Dr. Lourdes Pascual was out during the time of service of the said
summons and only her housemaid was present. The undersigned left a copy of the
same to the latter who is at the age of reason but refused to sign the same.
WHEREFORE, the undersigned respectfully return the service
summons duly served for information and guidance of the Honorable Court.

of

Malolos, Bulacan, August 14, 2002.

For failure of the respondent to file a responsive pleading, petitioner, on September 17, 2002,
filed a Motion to Declare Defendant in Default[8] to which the petitioner filed an Opposition/Comment to

Plaintiff's Motion to Declare Defendant in Default[9] dated October 1, 2002, claiming that she was not
able to receive any summons and copy of the complaint. The RTC, in its Order[10] dated October 30,
2002, declared respondent in default and allowed petitioner to file his evidence ex-parte.
Respondent filed a Motion for Reconsideration[11] dated November 18, 2002 seeking to set
aside the above-mentioned Order dated October 30, 2002. However, the said motion was denied by
the RTC in its Order[12] dated November 27, 2002.
Consequently, on December 3, 2002, the RTC, in its Decision, [13] found in favor of the
petitioner. The dispositive portion of the said Decision reads:
WHEREFORE, in light of all the foregoing, judgment is hereby rendered in
favor of the plaintiff, Constantino A. Pascual, and against Lourdes S. Pascual,
ordering the latter as follows:
a. to CEASE AND DESIST from further intervening with the corporate and
internal affairs of Rosemoor Mining Corporation, consisting of acts and omissions
prejudicial and detrimental to the interest of the said corporation resulting to
irreparable injury to herein plaintiff;
b. to pay plaintiff the sum of One Hundred Thousand Pesos (P100,000.00),
for and by way of moral damages;
c. to pay the sum of Thirty Thousand Pesos (P30,000.00) for and by way of
Attorney's fees; and
d. to pay the costs of this suit.
SO ORDERED.

Respondent then filed a Motion to Set Aside Order of Default [14] dated December 13, 2002,
with the argument of non-service of summons upon her. This was denied by the RTC in its
Order[15] dated April 4, 2003; and on the same day, a Certificate of Finality and Entry of Judgment was
issued. Eventually, respondent, on April 28, 2003, filed a Motion for Reconsideration [16] of the Order
dated April 4, 2003, which was denied by the RTC in its Order [17] dated June 23, 2003. Finally,
on June 26, 2003, a Writ of Execution was issued to enforce the Decision dated December 3, 2002 of
the RTC.
Aggrieved, respondent filed with the CA a Petition for Certiorari and Prohibition under Rule 65
of the Rules of Court which was granted by the same Court in its Decision [18] dated June 29, 2005, the
dispositive portion of which reads:
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The
said Decision, as well as the Orders and the processes on which this is premised, are
NULLIFIED and VACATED.

SO ORDERED.

Petitioner comes now to this Court through a Petition for Review on Certiorari under Rule 45
of the Rules of Court, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction,
on the following grounds:
I
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS
AN INVALID SERVICE OF SUMMONS UPON THE RESPONDENT AND, HENCE,
THE COURT (REGIONAL TRIAL COURT) DID NOT ACQUIRE JURISDICTION
OVER THE RESPONDENT.
II
THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO
THE PETITION WHEN FROM THE UNDISPUTED FACTS, THE RESPONDENT'S
FAILURE TO INTERPOSE AN APPEAL OR TO FILE A MOTION FOR
RECONSIDERATION OR A PETITION FOR RELIEF FROM JUDGMENT CLEARLY
BARS
THE
INSTITUTION
OF
THE
SPECIAL
CIVIL
ACTION
FOR CERTIORARI UNDER RULE 65, 1997 RULES OF CIVIL PROCEDURE.

Petitioner insists that there was a valid substituted service of summons and that there should
be a presumption of regularity in the performance of official functions. He also avers that certiorari,
which was filed by the respondent with the CA, does not lie when the remedy of appeal has been lost.
In her Comment with Motion to Cite for Contempt [19] dated August 29, 2006, respondent
raises the following issues:
1. SHOULD THE PETITION BE DISMISSED FOR HAVING BEEN FILED IN
VIOLATION REPUBLIC ACT NO. 6713 IN RELATION TO ART. 5 OF THE CIVIL
CODE?
2. ARE THE PETITIONER AND HIS COUNSEL PUNISHABLE FOR CONTEMPT OF
COURT FOR KNOWINGLY MISLEADING THIS HONORABLE COURT?
3. WAS THE ALLEGED SERVICE OF SUMMONS ON THE ILLITERATE MAID
EFFECTIVE TO CONFER JURISDICTION OVER THE DEFENDANT BEFORE THE
RTC OF MALOLOS, BULACAN?
4. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE SERVICE OF
SUMMONS WAS VALID, WAS THE ORDER DECLARING THE DEFENDANT IN
DEFAULT RENDERED WITH GRAVE ABUSE OF DISCRETION?
5. WAS THE ORDER DENYING THE MOTION TO LIFT AND SET ASIDE THE
ORDER OF DEFAULT RENDERED WITH GRAVE ABUSE OF DISCRETION?
6. IS THE PETITIONER GUILTY OF FORUM SHOPPING?

7. WILL THIS HONORABLE COURT ALLOW THE NULL AND VOID DECEMBER 3,
2002 DECISION OF THE RTC TO BECOME FINAL AND EXECUTORY AND
OBLITERATE THE CRIMINAL ACT OF FALSIFICATION, THEREBY REWARDING
THE AUTHOR OF THE CRIMINAL OFFENSE?

In addressing the above issues, the respondent argues that the CA decision became final by
operation of law because the present petition is null and void for being a violation of the provisions of
Republic Act No. 6712, in relation to Article 5 of the Civil Code, the counsel for petitioner having filed a
Motion for Extension of Time to File Petition for Review and, thereafter, the Petition for Review itself.
She also claims that there was no proper service of summons as the maid who was purportedly
served a copy thereof was illiterate and has denied being served in a sworn statement executed
before a notary public and, thus, the RTC never acquired jurisdiction over her person. According to
her, assuming that the summons were indeed served, the RTC was guilty of grave abuse of discretion
for declaring her in default and for refusing to lift the order of default because it deprived her of her
right to present evidence in support of her defense. She further disputes the argument of the
petitioner that the Decision dated December 3, 2002 became final because it did not become the
subject of appeal by stating that the said principle can only be applied to valid judgments that were
rendered in accordance with law and not to void judgments rendered without jurisdiction or in excess
thereof. In addition, she avers that petitioner made a deliberate and malicious concealment of the fact
that at the time he filed the case for specific performance, as well as during the time it was being
heard, he was already being investigated in administrative proceedings before the National Bureau of
Investigation, the Department of Justice and the Municipal Trial Court of Malolos, Bulacan, Branch 2,
involving the same subject matter, issues and parties; hence, he violated the law against forum
shopping. Lastly, respondent points out that the CA Decision dated June 29, 2005 is a permanent
injunction against the implementation of the contested Orders and Decisions of the RTC; therefore,
there is an urgent necessity to enforce the said judgment.
On June 30, 2008, this Court granted [20] the substitution of the respondent by his heirs as
represented by his wife Zenaida Pascual, after the Manifestation [21] dated June 12, 2008 was filed
informing this Court of the demise of the same respondent.
After a careful study of the records of this case, this Court finds the petition bereft of any
merit.
Clearly, the main, if not the only issue that needs to be resolved is whether or not there was a
proper and valid substituted service of summons, the resolution of which, will determine whether
jurisdiction was indeed acquired by the trial court over the person of the petitioner.

In a case where the action is in personam and the defendant is in the Philippines, the service
of summons may be done by personal or substituted service as laid out in Sections 6 and 7 of Rule 14
of the Revised Rules of Court. The provisions state:
Section 6. Service in person on defendant. - Whenever practicable, the
summons shall be served by handing a copy thereof to the defendant in person, or, if
he refuses to receive and sign for it, by tendering it to him.
Section 7. Substituted service. - If, for justifiable causes, the defendant
cannot be served within a reasonable time as provided in the preceding section,
service may be effected (a) by leaving copies of the summons at the defendant's
residence with some person of suitable age and discretion then residing therein, or
(b) by leaving the copies at defendants office or regular place of business with some
competent person in charge thereof.
A plain and simple reading of the above provisions indicates that personal service of
summons should and always be the first option, and it is only when the said summons cannot be
served within a reasonable time can the process server resort to substituted service.
This Court gave an in-depth discussion as to the nature and requisites of substituted service
in Manotoc v. Court of Appeals, et al.:[22]
We can break down this section into the following requirements to effect a
valid substituted service:
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must show that
defendant cannot be served promptly or there is impossibility of prompt
service.[23] Section 8, Rule 14 provides that the plaintiff or the sheriff is given a
reasonable time to serve the summons to the defendant in person, but no specific
time frame is mentioned. Reasonable time is defined as so much time as is
necessary under the circumstances for a reasonably prudent and diligent man to do,
conveniently, what the contract or duty requires that should be done, having a regard
for the rights and possibility of loss, if any, to the other party. [24] Under the Rules,
the service of summons has no set period. However, when the court, clerk of court, or
the plaintiff asks the sheriff to make the return of the summons and the latter submits
the return of summons, then the validity of the summons lapses. The plaintiff may
then ask for an alias summons if the service ofsummons has failed.[25] What then is a
reasonable time for the sheriff to effect a personal service in order to demonstrate
impossibility of prompt service? To the plaintiff, reasonable time means no more than
seven (7) days since an expeditious processing of a complaint is what a plaintiff
wants. To the sheriff, reasonable time means 15 to 30 days because at the end of the
month, it is a practice for the branch clerk of court to require the sheriff to submit a
return of the summons assigned to the sheriff for service. The Sheriffs Return
provides data to the Clerk of Court, which the clerk uses in the Monthly Report of
Cases to be submitted to the Office of the Court Administrator within the first ten (10)
days of the succeeding month. Thus, one month from the issuance of summons can
be considered reasonable time with regard to personal service on the defendant.
Sheriffs are asked to discharge their duties on the service of summons with
due care, utmost diligence, and reasonable promptness and speed so as not to

prejudice the expeditious dispensation of justice. Thus, they are enjoined to try their
best efforts to accomplish personal service on defendant. On the other hand, since
the defendant is expected to try to avoid and evadeservice of summons, the sheriff
must be resourceful, persevering, canny, and diligent in serving the process on the
defendant. For substituted service of summons to be available, there must be several
attempts by the sheriff to personally serve the summons within a reasonable period
[of one month] which eventually resulted in failure to prove impossibility of prompt
service. Several attempts means at least three (3) tries, preferably on at least two
different dates. In addition, the sheriff must cite why such efforts were unsuccessful. It
is only then that impossibility of service can be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service.[26] The efforts made
to find the defendant and the reasons behind the failure must be clearly
narrated in detail in the Return. The date and time of the attempts on personal
service, the inquiries made to locate the defendant, the name/s of the occupants of
the alleged residence or house of defendant and all other acts done, though futile, to
serve the summons on defendant must be specified in the Return to justify
substituted service. The form on Sheriffs Return of Summons on Substituted Service
prescribed in the Handbook for Sheriffs published by the Philippine Judicial Academy
requires a narration of the efforts made to find the defendant personally and the fact
of failure.[27] Supreme Court Administrative Circular No. 5 dated November 9,
1989 requires that impossibility of prompt service should be shown by stating the
efforts made to find the defendant personally and the failure of such efforts, which
should be made in the proof of service.
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendants house or
residence, it should be left with a person of suitable age and discretion then
residing therein.[28] A person of suitable age and discretion is one who has attained
the age of full legal capacity (18 years old) and is considered to have enough
discernment to understand the importance of a summons. Discretion is defined as the
ability to make decisions which represent a responsible choice and for which an
understanding of what is lawful, right or wise may be presupposed. [29] Thus, to be of
sufficient discretion, such person must know how to read and understand English to
comprehend the import of the summons, and fully realize the need to deliver the
summons and complaint to the defendant at the earliest possible time for the person
to take appropriate action. Thus, the person must have the relation of confidence to
the defendant, ensuring that the latter would receive or at least be notified of the
receipt of the summons. The sheriff must therefore determine if the person found in
the alleged dwelling or residence of defendant is of legal age, what the recipients
relationship with the defendant is, and whether said person comprehends the
significance of the receipt of the summons and his duty to immediately deliver it to the
defendant or at least notify the defendant of said receipt of summons. These matters
must be clearly and specifically described in the Return of Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendants office or regular place of
business, then it should be served on a competent person in charge of the place.
Thus, the person on whom the substituted service will be made must be the one
managing the office or business of defendant, such as the president or manager; and
such individual must have sufficient knowledge to understand the obligation of the
defendant in the summons, its importance, and the prejudicial effects arising from
inaction on the summons. Again, these details must be contained in the Return.

Petitioner contends that there was a valid substituted service of summons as shown in not
one, but three Officer's Return. He points out that the absence in the officer's return of a statement
about the impossibility of personal service does not conclusively prove that the service was
invalid. He adds that proof of prior attempts to serve personally can be deduced from the other
returns when there are several in a series of officer's returns all tending to establish the impossibility
of personal service upon the respondent. However, the said argument of the petitioner is merely a
plain deduction that veers away from the well-established requisite that the officer must show that the
defendant cannot be served promptly, or that there was an impossibility of prompt service. A cursory
reading of the three Officer's Returns does not show any compliance with the said requisite. The
Return of Service dated May 21, 2002 inadequately states that:
xxxx
At the time of service of the said summons, the defendant was not at her
home and only her maid was there who refused to receive the said summons [in
spite] of the insistence of the undersigned.
The undersigned, upon his request with the Brgy. Clerk at the said place, was
given a certification that he really exerted effort to effect the service of the said
summons but failed due to the above reason. (Annex A).
The following day, May 21, 2002, the undersigned went back at defendant's
residence to have her receive the subject summons but again the above defendant
was not at her house.
xxxx
Similarly, in the Return of Service dated May 30, 2002, pertinent details were wanting, as it
reads:
xxxx
The undersigned accompanied by the barangay officials of the said place
proceeded at defendant's residence but the undersigned was not permitted to go
inside her house and was given information by her maid that the defendant was not
there.
The defendant's car was parked inside her house and inquiries/verification
made on her neighbors revealed that the defendant was inside her house at the time
of service of said summons and probably did not want to show-up when her maid
informed her of undersigned's presence.
xxxx
Lastly, the Return of Service dated August 14, 2002 was no different. It reads:
xxxx
Defendant Dr. Lourdes Pascual was out during the time of service of the said
summons and only her housemaid was present. The undersigned left a copy of the
same to the latter who is at the age of reason but refused to sign the same.
xxxx

The above Return of Summons does not show or indicate the actual exertion or any positive
steps taken by the officer or process server in serving the summons personally to the defendant. As
in Jose v. Boyon,[30] this Court ruled that:
The Return of Summons shows no effort was actually exerted and no positive
step taken by either the process server or petitioners to locate and serve the
summons personally on respondents. At best, the Return merely states the alleged
whereabouts of respondents without indicating that such information was verified from
a person who had knowledge thereof. Certainly, without specifying the details of the
attendant circumstances or of the efforts exerted to serve the summons, a general
statement that such efforts were made will not suffice for purposes of complying with
the rules of substituted service of summons.
The necessity of stating in the process server's Return or Proof of Service the
material facts and circumstances sustaining the validity of substituted service was
explained by this Court inHamilton v. Levy,[31] from which we quote:
x x x The pertinent facts and circumstances attendant to the
service of summons must be stated in the proof of service or Officer's
Return; otherwise, any substituted service made in lieu of personal
service cannot be upheld. This is necessary because substituted
service is in derogation of the usual method of service. It is a method
extraordinary in character and, hence, may be used only as
prescribed and in the circumstances authorized by statute. Here, no
such explanation was made. Failure to faithfully, strictly, and fully
comply with the requirements of substituted service renders said
service ineffective.[32]

Petitioner further states that the presumption of regularity in the performance of official
functions must be applied to the present case. He expounds on the fact that as between the process
server's return of substituted service, which carries with it the presumption of regularity and the
respondent's self-serving assertion that she only came to know of the case against her when she
received a copy of the petitioner's motion to declare her in default, the process server's return is
undoubtedly more deserving of credit. The said argument, however, is only meritorious, provided that
there was a strict compliance with the procedure for serving a summons. In the absence of even the
barest compliance with the procedure for a substituted service of summons outlined in the Rules of
Court, the presumption of regularity in the performance of public functions does not apply.[33]
Applying the above disquisitions, the jurisdiction over the person of the respondent was never
vested with the RTC, because the manner of substituted service by the process server was
apparently invalid and ineffective. As such, there was a violation of due process. Jurisdiction over the
defendant is acquired either upon a valid service ofsummons or the defendants voluntary appearance
in court. When the defendant does not voluntarily submit to the courts jurisdiction or when there is no
valid service ofsummons, any judgment of the court which has no jurisdiction over the person of the
defendant is null and void.[34]

Petitioner also raises the issue of the impropriety of the remedy resorted to by the respondent
which is the filing of a Petition for Certiorari under Rule 65 of the Rules of Court, claiming that the said
remedy is inappropriate because there are still other plain, speedy and adequate remedies available,
such as an ordinary appeal, the Decision of the RTC having attained its finality. The question,
however, is whether the said Decision has indeed attained finality. The importance of the doctrine of
the finality of judgment has always been emphasized by this Court. In Pasiona, Jr. v. Court of
Appeals,[35] this Court has expounded on the said doctrine, thus:
The Court re-emphasizes the doctrine of finality of judgment. In Alcantara v.
Ponce,[36] the Court, citing its much earlier ruling in Arnedo v. Llorente,[37] stressed the
importance of said doctrine, to wit:
It is true that it is the purpose and intention of the law that
courts should decide all questions submitted to them "as truth and
justice require," and that it is greatly to be desired that all judgments
should be so decided; but controlling and irresistible reasons of
public policy and of sound practice in the courts demand that at the
risk of occasional error, judgments of courts determining
controversies submitted to them should become final at some definite
time fixed by law, or by a rule of practice recognized by law, so as to
be thereafter beyond the control even of the court which rendered
them for the purpose of correcting errors of fact or of law, into which,
in the opinion of the court it may have fallen. The very purpose for
which the courts are organized is to put an end to controversy, to
decide the questions submitted to the litigants, and to determine the
respective rights of the parties. With the full knowledge that courts
are not infallible, the litigants submit their respective claims for
judgment, and they have a right at some time or other to have final
judgment on which they can rely as a final disposition of the issue
submitted, and to know that there is an end to the litigation. [38]
Then, in Juani v. Alarcon,[39] it was held, thus:
This doctrine of finality of judgment is grounded on
fundamental considerations of public policy and sound practice. In
fact, nothing is more settled in law than that once a judgment attains
finality it thereby becomes immutable and unalterable. It may no
longer be modified in any respect, even if the modification is meant
to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be
made by the court rendering it or by the highest court of the land. [40]
Again, in Dinglasan v. Court of Appeals,[41] the Court declared that:
After the judgment or final resolution is entered in the entries of
judgment, the case shall be laid to rest. x x x
xxxx
The finality of decision is a jurisdictional event which cannot
be made to depend on the convenience of the party. To rule
otherwise would completely negate the purpose of the rule on
completeness of service, which is to place the date of receipt of
pleadings, judgment and processes beyond the power of the party
being served to determine at his pleasure.[42]

The said doctrine, however, is applicable only when the judgment or decision is valid. In the
present case, as earlier pronounced, and as ruled by the CA, the judgment in question is void, the
RTC not having acquired jurisdiction over the person of the respondent. It is a well-entrenched
principle that a void judgment can never become final. As ruled by this Court in Metropolitan Bank &
Trust Company v. Alejo:[43]
In Leonor v. Court of Appeals [44] and Arcelona v. Court of Appeals,[45] we held
thus:
A void judgment for want of jurisdiction is no judgment
at all. It cannot be the source of any right nor the creator of any
obligation. All acts performed pursuant to it and all claims emanating
from it have no legal effect. Hence, it can never become final and any
writ of execution based on it is void: x x x it may be said to be a
lawless thing which can be treated as an outlaw and slain at sight, or
ignored wherever and whenever it exhibits its head.
Thus, from the above discussion, the Decision of the RTC, not having attained its finality due to
its being void, the Petition for Certiorari under Rule 65, filed by the respondent with the CA, was
proper.
WHEREFORE, the Petition dated May 3, 2006 is hereby DENIED and the Decision dated June 29,
2005 of the Court of Appeals in CA-G.R. SP No. 77789 is herebyAFFIRMED in toto.
SO ORDERED.

G.R. No. 79374 October 2, 1992

TOMAS G. MAPA, petitioner,
vs.
COURT OF APPEALS, JUDGE MAXIMO A. SAVELLANO, JR., REGIONAL TRIAL COURT OF
MANILA, BRANCH LIII, and LAND BANK OF THE PHILIPPINES, respondents.
G.R. No. 82986 October 2, 1992
TOMAS G. MAPA, petitioner,
vs.
COURT OF APPEALS and LAND BANK OF THE PHILIPPINES, respondents.

DAVIDE, JR., J.:

The validity of a substituted service of summons upon the petitioner is raised as the common issue in
these two (2) cases. Since identical parties are involved in both, this Court ordered their
consolidation. 1
G.R. No. 79374 involves a petition filed under Rule 45 of the Rules of Court to review the 3 June 1987
Decision of public respondent Court of Appeals in C.A.-G.R. SP No. 08535 2 denying, for lack of merit,
the petition therein which sought to set aside the decision of Branch 53 of the Regional Trial Court
(RTC) of Manila.
A similar petition under Rule 45 of the Rules of Court was filed in G.R. No. 82986 to review the
decision of public respondent Court of Appeals, dated 20 January 1988, in C.A.-G.R. SP No.
13252. 3 The said decision set aside (a) the 4 May 1987 Order of Branch 10 of the Regional Trial
Court of Manila in Civil Case No. 82-13465 reversing its earlier decision of 18 September 1983 on the
ground that the herein petitioner was not validly served with summons and (b) the 16 October 1987
Order denying the motion for reconsideration of the latter.
The antecedent facts as disclosed by the records in these cases are not disputed.
High Peak Mining Exploration Corporation (hereinafter referred to as High Peak), through its duly
authorized corporate officers Encarnacion C. Tittel and Juergen Tittel, borrowed various sums of
money from the private respondent Land Bank of the Philippines (LBP), the latter acting as trustee of
Trust Account No. 01-139. The loans are evidenced by the following Promissory Notes executed on
different dates, signed by the said officers and made payable to the Trust Account:
(1) On 23 June 1980, the sum of Five Million Pesos (P5,000.000.00) for a term of 360 days, with
interest at 16%per annum and with a maturity value of P5,800,000.00, under Promissory Note (SER
No. 0001);
(2) On 14 August 1980, the sum to Three Million Pesos (P3,000,000.00) for a term of 360 days, with
interest at 17% per annum and with a maturity value of P3,510,000.00, under Promissory Note (SER
No. 0002); and
(3) On 9 September 1980, the sum of Three Million Pesos (P3,000,000.00) for a term of 360 days,
with interest at 17% per annum and with a maturity value of P3,510,000.00, under Promissory Note
(SER No. 0003).

No security being required, none was put up by High Peak for the faithful performance of its
obligations under the Promissory Notes.
These three (3) Promissory Notes expressly provide that demand and dishonor are waived by High
Peak and its officers.
High Peak failed to pay the said loans. Despite the waiver of notice of demand, the LBP nevertheless
sent demand letters to the former which ignored the same. The LBP was thus constrained to take
legal action based on the three (3) Promissory Notes.
The first note become the subject matter of a complaint for the recovery of a sum of money with an
application for a writ of preliminary attachment filed solely against High Peak. The complaint was filed
on 14 July 1981 with the then Court of First Instance (now Regional Trial Court) of Manila. It was
docketed therein as Civil Case No. 82-6235 and was assigned to Branch 26 thereof. The case was
later renumbered as Civil Case No. 142400 when Branch 26 became Branch 53 of the Regional Trial
Court of Manila. The complaint was thereafter amended to implead as additional defendants the
petitioner herein, in his personal capacity and as Chairman of High Peak's Board of Directors, and the
abovenamed signatories to the promissory notes. The amended complaint was admitted by the court
in its Order of 16 September 1982. This is the case involved in G.R. No. 79374.
The second and third Promissory Notes, on the other hand, became the subject matter of a complaint
for the recovery of a sum of money filed against High Peak, the herein petitioner in his personal
capacity and as Chairman of High Peak's Board of Directors and the aforementioned signatories to
the three (3) Promissory Notes. This complaint was likewise filed on 29 October 1982 with the Court
of First Instance of Manila. It was docketed as Civil Case No. 82-13465 and was assigned to Branch
10 thereof. This is the case involved in G.R. No. 82986.
The amended complaint in Civil Case No. 142400 and the complaint in Civil Case No. 82-13465 both
allege that the defendants could be served with summons at the Second Floor, First Midland
Condominium Bldg., Gamboa St., Legaspi Village Makati, Metro Manila.
The subsequent procedural antecedents in each case are hereunder summarized.
G.R. No. 79374
(re Civil Case No. 142400)
On 2 December 1982, Deputy Sheriff Romulo A. Flores of the Office of the Provincial
Sheriff filed a return of service of summons in Civil Case No. 142400, reading as
follows:
SHERIFF'S RETURN
THIS IS TO CERTIFY that on the 10th day of November, 1982 I have served copies
of herein summons with complaint and annexes attached thereto issued by the Court
in the above entitled case upon the defendants High Peak Mining Exploration
Corporation, Tomas G. Mapa, Encarnacion C. Tittel and Juergen Tittel, thru SUSAN
O. DELA TORRE, a person of suitable age and discretion working therein, who claims
to be the person authorized to received processess (sic) of this nature and who
acknowledged the receipt thereof at second (sic) floor, First Midland Condominium
Bldg., Gamboa Street, Legaspi Village, Makati, Metro-Manila.
WHEREFORE, said summons is hereby returned to the Honorable Court of origin
DULY SERVED, for its record and information.
Pasig, Metro-Manila, November 15, 1982.

No answer having been filed by the defendants, the trial court, upon motion of the LBP, issued an
order on 15 April 1983 declaring the defendants in default and ordering the LBP to present its
evidence ex-parte. On 20 September 1983, said court, per Judge Maximo Savellano, Jr., rendered a
decision against the defendants; the latter's liability for the amount adjudged was made joint and
several. Herein petitioner, as one of the defendants below, received a copy of the decision in his
residence at No. 625 N.S. Amoranto Ave., Sta. Mesa Heights, Quezon City on 10 December 1984.
On 21 December 1984, petitioner filed a Motion to Dismiss and Set Aside Judgment 5 on the ground
that service of summons upon him and High Peak was fatally defective because it was not made in
accordance with law. As to him, the sheriff's return did not show that the sheriff exerted efforts to
personally serve the summons; thus, substituted service pursuant to Section 7 and 8, Rule 14 of the
Rules of Court was not warranted. Petitioner additionally postulates that even granting that the
substituted service was proper, the actual service upon Susan O. dela Torre cannot be considered
valid because "(a) it was left not at defendant Mapa's residence and dela Torre was not residing
therein, and (b) that he (Mapa) was not holding office or regular place of business at the second floor,
First Midland Condominium Bldg., Gamboa St., Legaspi Village, Makati, Metro Manila;" he holds office
in his residence. The motion was denied by the trial court in its Order of 10 May 1985. A motion to
reconsider the same was likewise denied in the Order of 31 January 1986.
Petitioner then sought redress from the respondent Court of Appeals through a petition
for certiorari against Judge Savellano and the LBP. The case was docketed as C.A. G.R. SP No.
08535. In its decision promulgated on 3 June 1987, 6 respondent Court of Appeals denied the petition
on the ground that ". . . respondent Court was right in assuming jurisdiction over the defendants
Tomas G. Mapa, Encarnacion C. Tittel and Juergen Tittel who were being sued in their personal
capacities, on the basis of its finding that the substituted service of summons pursuant to Section 8,
Rule 14 of the Rules of Court was properly affected (sic) by Deputy Sheriff Romulo A. Flores."
Respondent Court further ruled that the service of summons upon Susan O. dela Torre, an employee
of the corporation, may be regarded as service upon an agent of a corporation within the meaning of
Section 13 of Rule 14. Finally, it took note of the trial court's observation in the latter's Order of 10 May
1985 that since petitioner Mapa has not even assailed the merits of the court's 30 September 1983
decision, justice and equity demanded that "the same should be left undisturbed."
His motion to reconsider the adverse decision having been denied in the respondent Court's
resolution of 29 July 1987, petitioner filed the instant petition on 16 September 1987.
G.R. No. 82986
(re Civil Case No. 82-13465)
The duty to serve the summons in Civil Case No. 82-13465 also fell on the shoulders
of Deputy Sheriff Romulo A. Flores. On 15 November 1982, he filed his return of
service which reads:
SHERIFF'S RETURN
THIS IS TO CERTIFY that on the 10th day of November, 1982, I have served copies
of herein summons with complaint and annexes attached thereto issued by the Court
in the above-entitled case upon defendants High Peak Mining Exploration
Corporation, Tomas G. Mapa, Encarnacion C. Tittel and Juegen (sic) Tittel, thru
SUSAN O. DELA TORRE, a person of suitable age and discretion working with said
defendants, who claims to be the person authorized (sic) to receive process (sic) of
this nature and who acknowledged the receipt thereof at 2nd Floor, First Midland
Condominium Bldg., Gamboa St., Legaspi Vill., Makati, Metro-Manila.
WHEREFORE, said summons is hereby returned to the Honorable Court of origin
DULY SERVED, for its record and information.

Pasig, Metro-Manila, November 15, 1982.

No answer having been filed by the defendants therein, the LBP a motion to declare them in default,
which the trial court granted. On 18 September 1983, said court, per then Judge Eduardo R.
Bengzon, handed down a decision against the defendants. The latter were adjudged joint and
severally liable for the amounts to be paid. 8
On 14 October 1986, petitioner filed a Motion to Dismiss and Set Aside Judgment 9 on the ground that
service of summons to him and the corporation was fatally defective; he reiterated the same
arguments he raised in the similar motion he filed in Civil Case No. 142400. Over the LBP's
opposition, the trial court, this time per Judge Josefina Cruz Rodil, issued an Order on 4 May
1987 10 partly granting the said motion by setting aside the decision because no jurisdiction was
acquired over both the petitioner and High Peak. The court held that there is no showing that efforts
were exerted by the sheriff to serve the summons personally upon the petitioner; the former
immediately resorted to substituted service upon Susan O. dela Torre who cannot be considered a
competent person in charge of the office. With respect to High Peak, Miss dela Torre, a mere
employee thereof, is not one of those explicitly authorized to receive summons in behalf of a
corporation under Section 13, Rule 14 of the Rules of Court. It denied, however, the motion to
dismiss; instead, it allowed the petitioner "to file his answer or responsive pleading within fifteen (15)
days from receipt of this Order," and directed the issuance of summons on the other defendants. 11 On
15
June
1987,
the
LBP
filed
a
motion
to
reconsider
this
Order 12 alleging therein that there was substantial compliance with the rule on service of summons.
The LBP further invited the trial court's attention to the 3 June 1987 decision of the Court of Appeals in
the aforementioned C.A.-G.R. SP No. 08535. Petitioner consequently filed his opposition 13 thereto;
he reiterates the arguments raised in his motion to dismiss and, with respect to the aforesaid decision
of the Court of Appeals, contends that since the same is not final, it does not yet control. The trial
court denied the motion in its Order of 16 October 1987. 14
Unable to accept the above orders of the trial court, the LBP filed with the Court of Appeals a special
civil action for certiorari, prohibition and mandamus which was docketed therein as C.A.-G.R. SP No.
13252.
On 20 January 1988, the Court of Appeals promulgated its decision in said C.A.-G.R. SP No.
13252 15 finding the trial court to have committed grave abuse of discretion amounting to lack of
jurisdiction in issuing the challenged orders, and resolving as follows:
WHEREFORE, the petition for certiorari is hereby GRANTED and the decision 16 of
the respondent court dated May 4, 1987 and October 16, 1987 are hereby set aside
for being contrary to law. The restraining order issued on November 16, 1987 is
likewise made permanent. . . . 17
His motion to reconsider the said decision having been denied on 13 April 1988,
the instant petition.

18

the petitioner filed

On 20 May 1988, this Court gave due course to G.R. No. 79374. 19 After the petitioner filed his reply to
the private respondent's comment in G.R. No. 82986, this Court, in the Resolution of 6 March 1989,
ordered the latter's consolidation with the former. 20
The parties in these cases, particularly the private respondent, as plaintiff below, should have striven
to consolidate Civil Case No. 142400 and Civil Case No. 82-13465 while they were still pending
before the trial court. Both involve identical parties, similar transactions made one after the other and
the same trust account of the LBP. As a matter of fact, if the filing of Civil Case No. 142400 had only
been delayed by just three (3) months, there would have been no need to file more than one (1) case.
Moreover, summonses upon defendants in both cases were served on the same occasion. Valuable
time of the parties, the two (2) branches of the trial court and eventually even of the Court of Appeals

would have been saved had the said cases been consolidated pursuant to Section 1, Rule 31 of the
Rules of Court. Parties should avail of this rule both for their own and the court's advantage and
benefit. The purpose or object of consolidation is precisely to avoid multiplicity of suits, guard against
oppression or abuse, prevent delay, declog congested dockets, simplify the work of the trial court and
save unnecessary costs or expenses; in short, the aim is to attain justice with the least expense and
vexation to the parties litigants. 21
As stated in the exordium of this ponencia, the basic issue raised in these petitions is whether or not
there was a valid substituted service of summons in both Civil Case No. 142400 and Civil Case No.
82-13465. Both cases are unquestionably actions in personam. Jurisdiction over the petitioner, as
defendant therein, can therefore be acquired either by his voluntary submission to such jurisdiction, as
when he appears in court, or by service of summons upon him. Voluntary appearance is equivalent to
service of summons; 22 in fact, it even cures the defect of summons. 23 Since petitioner did not
voluntarily submit to the jurisdiction of the trial court in both cases, personal service became
imperative.
Section 7, Rule 14 of the Rules of Court explicitly requires personal service of summons which is
accomplished "by handing a copy thereof to the defendant in person, or, if he refuses to receive it, by
tendering it to him." However, if personal service cannot be effected within a reasonable time,
substituted service, as provided for in Section 8 of the abovementioned Rule 14, may suffice:
Sec. 8 Substituted service. If the defendant cannot be served within a reasonable
time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's dwelling house or residence with some
person of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendant's office or regular place of business with some competent person
in charge thereof.
This provision is a reproduction of Section 8, Rule 7 of the 1940 Rules of Court except
that, inter alia, the work "promptly" in the latter was changed to "within a reasonable time" in
the former. Of course, "within a reasonable time" contemplates a period of time longer than
that demarcated by the word "prompt", and presupposes that a prior attempt at personal
service, within a justifiable time frame as would be necessary to bring the defendant within the
jurisdiction of the court, had failed.
It is not shown when the summonses in Civil Cases Nos. 142400 and 82-13465 were actually issued;
what is clear to this Court is that the amended complaint in the first case was admitted by the trial
court on 16 September 1982, while the complaint in Civil Case No. 82-13465 was filed on 29 October
1982. While the separate Sheriff's returns indicate that the summonses in both cases were served
on 10 November 1982, these returns do not show that prior attempts at personal service were made
by the Sheriff and that such attempts had failed, prompting the latter to resort to substituted service.
In Keister vs. Navarro, 24 this Court described how the impossibility of personal service should be
shown:
Impossibility of prompt service should be shown by stating the efforts made to find the
defendant personally and the fact that such efforts failed. This statement should be
made in the proof of service (I Moran, Comments on the Rules of Court, 1970 Ed., p.
444). This is necessary because substituted service is in derogation of the usual
method of service. It has been held that this method of service is "in derogation of the
common law"; it is a method extraordinary in character, and hence may be "used only
as prescribed and in the circumstances authorized by statute." . . . (72 C.J.S. 1053).
The proof of service alluded to is the return required by Section 6 of Rule 14 which reads:

Sec. 6. Return. When the service has been completed, the server shall give notice
thereof, by registered mail, to the plaintiff or his counsel, and shall return the
summons to the clerk who issued it, accompanied with the proof of service.
In Busuego vs. Court of Appeals, 25 this Court also succinctly expressed how such impossibility is to
be shown. Thus:
. . . Perusal, however, of the sheriff's return reveals that the sheriff failed to specify
therein what prior efforts, if any, had been exerted to serve summons upon the other
defendants personally within a reasonable period of time, and the lack of success of
such efforts, before proceeding to substituted service. . . .
As earlier adverted to, the sheriff's returns in Civil Cases Nos. 142400 and 82-13465 are patently
wanting it particulars that would justify the substituted service. Accordingly, it is fatally flawed and
defective; on that basis alone, therefore, the trial court acquired no jurisdiction over the person of the
petitioner.
It must nevertheless be emphasized that the absence in the sheriff's return of a statement about the
impossibility of personal service does not conclusively prove that the service is invalid. Proof of prior
attempts at personal service may be submitted by the plaintiff during the hearing of any incident
assailing the validity of the substituted service. While the sheriff's return carries with it the
presumption, albeit disputable, of regularity in the sense thatinter alia, the entries therein are deemed
correct, it does not necessarily follow that an act done in relation of the official duty for which the
return is made was not done simply because it is not disclosed therein. Besides, the sheriff's neglect
in making such a disclosure should not unduly prejudice the plaintiff if what was undisclosed was in
fact done. Unfortunately in these instant cases, the private respondent failed to present evidence
during the hearings of the petitioner's separate motions to dismiss and set aside judgment to prove
that substituted service of summons was indeed effected in strict compliance with Section 8, Rule 14
of the Rules of Court. During such hearings, the private respondent could also have presented
evidence to show that the petitioner did in fact receive from Susan O. dela Torre the summonses,
together with copies of the complaints, in both cases. If indeed the petitioner received the same, the
requirement of due process would have been complied with. Thus, inBoticano vs. Chu, 26 this Court
had the occasion to state:
In the case at bar, there is no question that summons was timely issued and received
by private respondent. In fact, he never denied actual receipt of such summons but
confined himself to the argument that the Sheriff should prove that personal service
was first made before resorting to substituted service.
This brings to the fore the question of procedural due process. In Montalban
vs. Maximo (22 SCRA 1077 [1968]) the Court ruled that "The Constitutional
requirement of due process exacts that the service be such as may be reasonably
expected to give the notice desired. Once the service provided by the rules
reasonably accomplishes that end, the requirement of justice is answered; the
traditional notions of fair play are satisfied; due process is served."
Indeed, such construction is but fair, and in accord with substantial justice. The
burden on a plaintiff is not to be enlarged with a restrictive construction desired by the
defendant. (Ibid., p. 1078).
On the same matter, Moran 27 has this to say:
Irregularities of this kind may, however, be cured by proof that the copies have
actually been delivered to the defendant, which is equivalent to personal service.

While in his separate motions to dismiss and set aside judgment in the two (2) cases filed before the
trial court and annexed to his pleadings in these petitions, petitioner never alleged that he did not in
fact receive the summonses, such circumstance by itself cannot warrant the conclusion that he
actually received from Susan dela Torre the said summonses and copies of the complaints. In the
absence of a categorical admission similar to that made in Boticano vs. Chu, no such inference to the
contrary could be drawn. It was thus incumbent upon the private respondent to prove that Susan dela
Torre delivered to the petitioner copies of both the summonses and the complaints.
The conclusion then is inevitable that neither a valid personal nor substituted service of summons in
Civil Cases Nos. 142400 and 82-13465 had been effected on the petitioner.
However, Branch 10 of the RTC of Manila gravely erred when, in its Order of 4 May 1987, it set aside
the decision of 18 September 1983 because it was also of the opinion that there was no valid service
of summons on High Peak and the other defendants. It entirely forgot that it was only the petitioner
herein who filed a motion to dismiss and set aside the judgment. For reasons which remain
undisclosed, petitioner did not include his co-defendants in the said motion. In any event, the validity
of the service of summonses on Encarnacion Tittel and Juergen Tittel has not been raised in issue;
moreover, based on the sheriff's return of service in said case, this Court is satisfied that there was a
valid service of summons on High Peak. Section 13, Rule 14 of the Rules of Court provides for the
manner in which service of summons upon a private domestic corporation shall be made. It reads:
Sec. 13. Service upon private domestic corporation or partnership. If the defendant
is a corporation organized under the laws of the Philippines or a partnership duly
registered, services may be made on the president, manager, secretary, cashier,
agent, or any of its directors.
The rationale for the above rule is to render it reasonably certain that the corporation will receive
prompt and proper notice in an action against it or to insure that the summons be served on a
representative so integrated with the corporation that such a person will know what to do with the
legal papers served on him. In other words, the rule is meant to bring home to the corporation notice
of the filing of the action. 28
The summonses for High Peak in Civil Cases Nos. 142400 and 82-13465 were received by Susan O.
dela Torre who is described in the separate sheriff's returns as "a person of suitable age and
discretion working therein, who claims to be the person authorized to receive processess (sic) of this
nature and who acknowledged the receipt thereof of second (sic) floor, First Midland Condominium
Bldg., Gamboa Street, Legaspi Village, Makati, Metro Manila." In his separate motions to dismiss,
while petitioner categorically admits that this Susan O. dela Torre is an employee of the corporation,
he does not disclose her specific duties and responsibilities. He does not even deny the statement,
made in the said returns, that Susan is "authorized to receive processess (sic) of this nature." Until
rebutted by competent evidence, these returns would have to stand in the meantime for they enjoy the
presumption of regularity. Susan O. dela Torre may thus be deemed an agent of High Peak for
purposes of the aforesaid Section 13 of Rule 14. It is then logical to presume that she delivered the
copies of the summonses and complaints to the corporation, considering especially the fact that she
was working in the office of the said corporation as indicated in the complaints. This latter
presumption has not likewise been rebutted. Accordingly, even if Miss dela Torre may not strictly be
considered as the proper agent for purposes of the aforecited Section 13, there was, nonetheless,
substantial compliance therewith. In G&G Trading Corporation vs. Court of Appeals,29 this Court
stated:
Although it may be true that the service of summons was made on a person not
authorized to receive the same in behalf of the petitioner, nevertheless since it
appears that the summons and compliant were in fact received by the corporation,
through its said clerk, the Court finds that there was substantial compliance with the
rule on service of summons. Indeed the purpose of said rule as above stated to

assure service of summons on the corporation had thereby been attained. The need
for speedy justice must prevail over a technicality.
One final word. As stated earlier, the three (3) promissory notes involving the original amounts of
P5,000,000.00, P3,000,000.00 and P3,000,000.00, or a total of P11,000,000.00, were to be released
as loans from Trust Account of the LBP unsecured by mortgage or any other security. This Court is
unable to understand how Eleven Million Pesos an enormous amount can be so easily released
without any form of security. Unless allowed by the Trust Account itself or the rules and regulations of
the LBP, the transactions appear to be highly questionable. In this regard, since private respondent
LBP is a government-owned institution, an inquiry by appropriate agencies of the government is in
order to determine who were responsible for the approval of said loans.
WHEREFORE, subject to the modification as above indicated, the instant petitions are hereby partly
GRANTED.
The decision of respondent Court of Appeals of 3 June 1987 in C.A.-G.R. SP No. 08535, subject of
G.R. No. 79374, is AFFIRMED in all respects except insofar as it sustains the ruling of the trial court in
Civil Case No. 142400 that the petitioner was validly served with summons in said case; that Decision
of 20 September 1983 of Branch 53 of the Regional Trial Court of Manila in Civil Case No. 142400
(formerly R-82-6235) stands as to the other defendants but is hereby SET ASIDE as against the
petitioner, and its Orders of 10 May 1985 and 31 January 1986 are accordingly MODIFIED. Said court
shall cause alias summons to be served on the petitioner.
The Decision of respondent Court of Appeals of 20 January 1988 in C.A.-G.R. SP No. 13252, subject
of G.R. No. 82986, is AFFIRMED in all respects except insofar as the petitioner is concerned. The
Decision of 18 September 1983 of Branch 10 of the Regional Trial Court of Manila in said Civil Case
No. 82-13465 stands as against the other defendants therein but is hereby SET ASIDE as against the
petitioner, and the Orders therein of 4 May 1987 and 16 October 1987 are thus MODIFIED
accordingly.
A separate trial is hereby ordered against the petitioner in Civil Case No. 142400 and Civil Case No.
82-13465, for which purpose the latter shall be consolidated with the former.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 163584

December 12, 2006

REMELITA M. ROBINSON, petitioner,

vs.
CELITA B. MIRALLES, respondent.

DECISION

SANDOVAL-GUTIERREZ, J.:
Before us is the instant petition for review on certiorari assailing the Resolutions dated February
111 and May 11, 20042 of the Regional Trial Court (RTC), Branch 274, Paraaque City, in Civil Case
No. 00-0372.
On August 25, 2000, Celita Miralles, respondent, filed with the said court a complaint for sum of
money against Remelita Robinson, petitioner, docketed as Civil Case No. 00-0372. Respondent
alleged that petitioner borrowed from her US$20,054.00 as shown by a Memorandum of Agreement
they both executed on January 12, 2000.
Summons was served on petitioner at her given address. However, per return of service of Sheriff
Maximo Potente dated March 5, 2001, petitioner no longer resides at such address.
On July 20, 2001, the trial court issued an alias summons to be served at No. 19 Baguio St., Alabang
Hills, Muntinlupa City, petitioners new address.
Again, the summons could not be served on petitioner. Sheriff Potente explained that:
The Security Guard assigned at the gate of Alabang Hills refused to let me go inside the
subdivision so that I could effect the service of the summons to the defendant in this case.
The security guard alleged that the defendant had given them instructions not to let anybody
proceed to her house if she is not around. I explained to the Security Guard that I am a sheriff
serving the summons to the defendant, and if the defendant is not around, summons can be
received by any person of suitable age and discretion living in the same house. Despite of all
the explanation, the security guard by the name of A.H. Geroche still refused to let me go
inside the subdivision and served (sic) the summons to the defendant. The same thing
happened when I attempted to serve the summons previously.
Therefore, the summons was served by leaving a copy thereof together with the copy of the
complaint to the security guard by the name of A.H. Geroche, who refused to affix his
signature on the original copy thereof, so he will be the one to give the same to the defendant.
Eventually, respondent filed a motion to declare petitioner in default for her failure to file an answer
seasonably despite service of summons.
On February 28, 2003, the trial court granted respondents motion declaring petitioner in default and
allowing respondent to present her evidence ex parte.
On June 20, 2003, the trial court issued an Order, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendant
ordering the defendant to pay the plaintiff as follows:
1. The sum of US$20,054.00 as the unpaid obligation, plus the stipulated interest of 3% a
month from May 2000 (date of default) until fully paid;
2. Php100,000.00 for moral damages;
3. Php50,000.00 plus Php1,500.00 per appearance as attorneys fees;
4. Costs of suit.
SO ORDERED.
A copy of the Order was sent to petitioner by registered mail at her new address.
Upon respondents motion, the trial court, on September 8, 2003, issued a writ of execution.
On September 26, 2003, petitioner filed with the trial court a petition for relief from the judgment by
default. She claimed that summons was improperly served upon her, thus, the trial court never
acquired jurisdiction over her and that all its proceedings are void.
On February 11, 2004, the trial court issued a Resolution denying the petition for relief. Petitioner filed
a motion for reconsideration, but it was denied by the trial court in a Resolution dated May 11, 2004.
Hence, the instant recourse.
The sole issue for our resolution is whether the trial court correctly ruled that a substituted service of
summons upon petitioner has been validly effected.
Summons is a writ by which the defendant is notified of the action brought against him or her. 3 In a
civil action, service of summons is the means by which the court acquires jurisdiction over the person
of the defendant.4 Any judgment without such service, in the absence of a valid waiver, is null and
void.5 Where the action is in personamand the defendant is in the Philippines, the service of summons
may be made through personal or substituted service in the manner provided for in Sections 6 and 7,
Rule 14 of the 1997 Rules of Procedure, as amended, 6thus:
SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be
served by handing a copy thereof to the defendant in person, or if he refuses to receive and
sign for it, by tendering it to him.
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within
a reasonable time as provided in the preceding section, service may be effected (a) by
leaving copies of the summons at the defendants residence with some person of suitable age
and discretion then residing therein; or (b) by leaving the copies at the defendants office or
regular place of business with some competent person in charge thereof.
Under our procedural rules, personal service is generally preferred over substituted service, the latter
mode of service being a method extraordinary in character.7 For substituted service to be justified, the
following circumstances must be clearly established: (a) personal service of summons within a
reasonable time was impossible; (b) efforts were exerted to locate the party; and (c) the summons
was served upon a person of sufficient age and discretion residing at the partys residence or upon a
competent person in charge of the partys office or place of business. 8 Failure to do so would
invalidate all subsequent proceedings on jurisdictional grounds. 9
Petitioner contends that the service of summons upon the subdivision security guard is not in
compliance with Section 7, Rule 14 since he is not related to her or staying at her residence.

Moreover, he is not duly authorized to receive summons for the residents of the village. Hence, the
substituted service of summons is not valid and that the trial court never acquired jurisdiction over her
person.
We have ruled that the statutory requirements of substituted service must be followed strictly,
faithfully, and fully and any substituted service other than that authorized by the Rules is considered
ineffective.10 However, we frown upon an overly strict application of the Rules. It is the spirit, rather
than the letter of the procedural rules, that governs.
In his Return, Sheriff Potente declared that he was refused entry by the security guard in Alabang Hills
twice. The latter informed him that petitioner prohibits him from allowing anybody to proceed to her
residence whenever she is out. Obviously, it was impossible for the sheriff to effect personal or
substituted service of summons upon petitioner. We note that she failed to controvert the sheriffs
declaration. Nor did she deny having received the summons through the security guard.
Considering her strict instruction to the security guard, she must bear its consequences. Thus, we
agree with the trial court that summons has been properly served upon petitioner and that it has
acquired jurisdiction over her.
WHEREFORE, we DENY the petition and we AFFIRM the assailed Orders of the RTC, Branch 274,
Paraaque City, in Civil Case No. 00-0372. Costs against petitioner.
SO ORDERED.

ORION SECURITY CORPORATION,

G.R. No. 163287

Petitioner,
Present:

QUISUMBING, J., Chairperson,

CARPIO,
- versus -

CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

KALFAM ENTERPRISES, INC.,

Promulgated:

Respondent.

April 27, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
RESOLUTION

QUISUMBING, J.:

For review on certiorari are the Decision[1] dated February 17, 2004 and Resolution[2] dated April
22, 2004 of the Court of Appeals in CA-G.R. CV No. 70565, which reversed the Decision [3] dated March
15, 2000 of the Regional Trial Court of Quezon City, Branch 215, in Civil Case No. Q-97-32024.
The facts, borne by the records, are as follows:
Petitioner Orion Security Corporation is a domestic private corporation engaged in the
business of providing security services. One of its clients is respondent Kalfam Enterprises, Inc.

Respondent was not able to pay petitioner for services rendered. Petitioner thus filed a
complaint[4] against respondent for collection of sum of money. The sheriff tried to serve the summons
and a copy of the complaint on the secretary of respondents manager. However, respondents
representatives allegedly refused to acknowledge their receipt.The summons and the copy of the
complaint were left at respondents office.[5]
When respondent failed to file an Answer, petitioner filed a motion to declare respondent in
default.[6] The trial court, however, denied the motion on the ground that there was no proper service
of summons on respondent.[7]

Petitioner then filed a motion for alias summons, which the trial court granted. [8] The process
server again left the summons and a copy of the complaint at respondents office through respondents
security guard, who allegedly refused to acknowledge their receipt. [9]
Again, respondent failed to file an Answer. On motion[10] of petitioner, respondent was
declared in default.[11] Thereafter, petitioner was allowed to adduce evidence ex parte.
Respondent filed a motion for reconsideration [12] of the resolution declaring it in
default. Respondent alleged the trial court did not acquire jurisdiction over its person due to invalid
service of summons. The trial court denied the motion for reconsideration. [13]
On March 15, 2000, the trial court rendered a default judgment, the decretal portion of which
reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Orion
Security Corporation and against defendant Kalfam Enterprises, Inc., ordering said
defendant to pay plaintiff the amounts as follows:
a)
FIVE HUNDRED THIRTEEN THOUSAND EIGHT HUNDRED THIRTY
NINE PESOS AND TWENTY SIX CENTAVOS (P513,839.26), Philippine Currency, as
the total amount of the balance due to the plaintiff, plus interest thereon at the rate of
twelve percent (12%) per annum, computed from August 29, 1997, the date of the
filing of this case until said obligation is fully paid;
b)
FIFTY ONE THOUSAND THREE HUNDRED EIGHTY THREE PESOS
AND NINETY TWO CENTAVOS (P51,383.92), Philippine Currency, which is ten
percent (10%) of the outstanding obligation, as attorneys fees;
c)
FIVE THOUSAND PESOS (P5,000.00), Philippine Currency, as
litigation expenses; and THREE THOUSAND FIVE HUNDRED SIXTY THREE
PESOS AND TWENTY FIVE CENTAVOS (P3,563.25) for the costs of suit.
SO ORDERED.[14]

On appeal, the Court of Appeals held that summons was not validly served on respondent,
decreeing thus:

WHEREFORE, in view of the foregoing, the appealed decision

is REVERSED and SET ASIDE. The case is hereby REMANDED to the trial court for
further proceedings upon valid service of summons to the parties concerned.
SO ORDERED.[15]

Petitioners motion for reconsideration of the Court of Appeals decision was denied. Hence,
the instant petition raising the following as issues:
I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

DECISION DATED FEBRUARY 17, 2004 AND ITS RESOLUTION
DATED APRIL 22, 2004 ARE NULL AND VOID FOR FAILURE TO COMPLY
WITH SEC. 14, ART. VIII OF THE 1987 CONSTITUTION;

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

SERIOUSLY ERRED IN NOT RULING THAT THE TRIAL COURT HAS IN
FACT ACQUIRED JURISDICTION OVER THE PERSON OF THE
RESPONDENT DUE TO THE LATTERS VOLUNTARY APPEARANCE IN
THE PROCEEDINGS THEREIN;

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

SERIOUSLY ERRED IN NOT HOLDING THAT THE SUBSTITUTED
SERVICE OF SUMMONS EFFECTED UPON THE SECURITY GUARD OF
THE RESPONDENT SHOULD BE DEEMED SUBSTANTIAL COMPLIANCE
WITH THE RULE ON SERVICE OF SUMMONS, IN VIEW OF THE
EXCEPTIONAL CIRCUMSTANCES ATTENDANT IN THE PRESENT CASE.
[16]

Simply put, the sole issue is whether the trial court acquired jurisdiction over respondent
either by (1) valid substituted service of summons on respondent; or (2) respondents voluntary
appearance in the trial court and submission to its authority.
Petitioner contends that the Court of Appeals completely brushed aside respondents
voluntary appearance in the proceedings of the trial court. According to petitioner, the trial court
acquired jurisdiction over respondent due to the latters voluntary appearance in the proceedings
before the said court. Petitioner insists substituted service of summons on respondents security guard
is substantial compliance with the rule on service of summons, in view of the exceptional
circumstances in the present case.
Respondent, however, counters that the special appearance of its counsel does not constitute
voluntary appearance. Respondent maintains that its filing of an opposition to petitioners motion to
declare respondent in default and other subsequent pleadings questioning the trial courts jurisdiction
over it does not amount to voluntary appearance.Respondent stresses it was not properly served with
summons via substituted service since the security guard on whom it was purportedly served was not
the competent person contemplated by Section 7, Rule 14 of the Rules of Court.
We find the petition without merit.

Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint. On the other
hand, jurisdiction over the defendants in a civil case is acquired either through the service of
summons upon them or through their voluntary appearance in court and their submission to its
authority.[17]
In case of domestic private juridical entities such as respondent in the instant case, Section
11 of Rule 14 states:

SEC. 11. Service upon domestic private juridical entity. When the defendant
is a corporation, partnership or association organized under the laws of the
Philippines with a juridical personality, service may be made on the president,
managing partner, general manager, corporate secretary, treasurer, or in-house
counsel.

As a rule, summons should be personally served on the defendant. It is only when summons
cannot be served personally within a reasonable period of time that substituted service may be
resorted to. In this connection, Section 7 of Rule 14 provides:

SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may be
effected (a) by leaving copies of the summons at the defendants residence with some
person of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendants office or regular place of business with some competent
person in charge thereof.

In this case, records show that respondents president, managing partner, general manager,
corporate secretary, treasurer, or in-house counsel never received the summons against respondent,
either in person or by substituted service.
Note that in case of substituted service, there should be a report indicating that the person
who received the summons in the defendants behalf was one with whom the defendant had a relation
of confidence ensuring that the latter would actually receive the summons. [18] Here, petitioner failed to
show that the security guard who received the summons in respondents behalf shared such relation
of confidence that respondent would surely receive the summons. Hence, we are unable to accept
petitioners contention that service on the security guard constituted substantial compliance with the
requirements of substituted service.
Neither did the trial court acquire jurisdiction over respondent by the latters voluntary
appearance in court proceedings. Note that a party who makes a special appearance in court

challenging the jurisdiction of said court based on the ground of invalid service of summons is not
deemed to have submitted himself to the jurisdiction of the court. [19]In this case, records show that
respondent, in its special appearance, precisely questioned the jurisdiction of the trial court on the
ground of invalid service of summons. Thus, it cannot be deemed to have submitted to said courts
authority.
Since the trial court never acquired jurisdiction over respondent, either by valid substituted
service of summons or by respondents voluntary appearance in court and submission to its authority,
respondent cannot be bound by the trial courts judgment ordering it to pay petitioner a sum of money.
WHEREFORE, the petition is DENIED. The assailed Decision dated February 17, 2004 and
Resolution

dated April

22,

2004 of

the

Court

of

Appeals

in

CA-G.R.

CV

No.

70565

are AFFIRMED. Let the case be REMANDED to the trial court for further proceedings upon valid
service of summons to respondent.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 108538. January 22, 1996]

LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners, vs. THE HONORABLE
COURT OF APPEALS, THIRD DIVISION and ROSITA DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for
partition filed against her and her husband, who is also her attorney, summons intended for her may
be served on her husband, who has a law office in the Philippines. The Regional Trial Court of Manila,
Branch 48, said no and refused to declare Lourdes A. Valmonte in default, but the Court of Appeals
said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both
residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte,
who is a member of the Philippine bar, however, practices his profession in the Philippines,
commuting for this purpose between his residence in the state of Washington and Manila, where he
holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes
A. Valmonte, filed a complaint for partition of real property and accounting of rentals against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the Regional Trial Court of Manila,
Branch 48. The subject of the action is a three-door apartment located in Paco,Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road,
Chesterfield, Missouri, U.S.A., while the defendants are spouses, of legal age and at present
residents of 90222 Carkeek Drive, South Seattle, Washington, U.S.A., but, for purposes of this
complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita,
Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmontes spouse holds
office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter previously sent by
petitioner Lourdes A. Valmonte to private respondents counsel
in which, in regard to the partition of the property in question, she referred private respondents
counsel to her husband as the party to whom all communications intended for her should be sent. The
letter reads:
July 4, 1991
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I received on 3 July 1991. Please
address all communications to my lawyer, Atty. Alfredo D. Valmonte, whose address, telephone and
fax numbers appear below.
c/o Prime Marine

Gedisco Center, Unit 304

1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 21-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at
his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was
concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on the ground that
he was not authorized to accept the process on her behalf. Accordingly the process server left without
leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes
A. Valmonte, however, did not file her Answer. For this reason private respondent moved to declare
her in default. Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his wife and
opposed the private respondents motion.
In its Order dated July 3, 1992, the trial court, denied private respondents motion to declare
petitioner Lourdes A. Valmonte in default. A motion for reconsideration was similarly denied
on September 23, 1992. Whereupon, private respondent filed a petition for certiorari, prohibition and
mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the petition and
declaring Lourdes A. Valmonte in default. A copy of the appellate courts decision was received by
petitioner Alfredo D. Valmonte on January 15, 1993 at his Manila office and on January 21,
1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte
was validly served with summons. In holding that she had been, the Court of Appeals stated: [1]
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned
counsel of Dimalanta to address all communications (evidently referring to her controversy with her
sister Mrs. Dimalanta over the Paco property, now the subject of the instant case) to her lawyer who
happens also to be her husband. Such directive was made without any qualification just as was her
choice/designation of her husband Atty. Valmonte as her lawyer likewise made without any
qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being his
wifes attorney (at least with regard to the dispute vis-a-vis [sic] the Paco property) would appear to be
feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmontes subsequent alleged special appearance made on behalf of
his wife. Whereas Mrs. Valmonte had manifestly authorized her husband to serve as her lawyer
relative to her dispute with her sister over the Paco property and to receive all communications
regarding the same and subsequently to appear on her behalf by way of a so-called special
appearance, she would nonetheless now insist that the same husband would nonetheless had
absolutely no authority to receive summons on her behalf. In effect, she is asserting that
representation by her lawyer (who is also her husband) as far as the Paco property controversy is
concerned, should only be made by him when such representation would be favorable to her but not
otherwise. It would obviously be inequitable for this Court to allow private respondent Lourdes A.
Valmonte to hold that her husband has the authority to represent her when an advantage is to be
obtained by her and to deny such authority when it would turn out to be her disadvantage. If this be

allowed, Our Rules of Court, instead of being an instrument to promote justice would be made use of
to thwart or frustrate the same.
xxx xxx xxx
Turning to another point, it would not do for Us to overlook the fact that the disputed summons was
served not upon just an ordinary lawyer of private respondent Lourdes A. Valmonte, but upon her
lawyer husband. But that is not all, the same lawyer/husband happens to be also her co-defendant in
the instant case which involves real property which, according to her lawyer/husband/ co-defendant,
belongs to the conjugal partnership of the defendants (the spouses Valmonte). It is highly
inconceivable and certainly it would be contrary to human nature for the lawyer/husband/co-defendant
to keep to himself the fact that they (the spouses Valmonte) had been sued with regard to a property
which he claims to be conjugal. Parenthetically, there is nothing in the records of the case before Us
regarding any manifestation by private respondent Lourdes A. Valmonte about her lack of knowledge
about the case instituted against her and her lawyer/husband/co-defendant by her sister Rosita.
PREMISES CONSIDERED, the instant petition for certiorari, prohibition and mandamus is given due
course. This Court hereby Resolves to nullify the orders of the court a quo dated July 3,
1992 andSeptember 23, 1992 and further declares private respondent Lourdes Arreola Valmonte as
having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in
refusing to apply the provisions of Rule 14, 17 of the Revised Rules of Court and applying instead
Rule 14, 8 when the fact is that petitioner Lourdes A. Valmonte is a nonresident defendant; and (2)
because even if Rule 14, 8 is the applicable provision, there was no valid substituted service as there
was no strict compliance with the requirement by leaving a copy of the summons and complaint with
petitioner Alfredo D. Valmonte. Private respondent, upon the other hand, asserts that petitioners are
invoking a technicality and that strict adherence to the rules would only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an
action in personam, in rem or quasi in rem. This is because the rules on service of summons
embodied in Rule 14 apply according to whether an action is one or the other of these actions.
In an action in personam, personal service of summons or, if this is not possible and he cannot
be personally served, substituted service, as provided in Rule 14, 7-8 [2] is essential for the acquisition
by the court of jurisdiction over the person of a defendant who does not voluntarily submit himself to
the authority of the court.[3] If defendant cannot be served with summons because he is temporarily
abroad, but otherwise he is a Philippine resident, service of summons may, by leave of court, be
made by publication.[4] Otherwise stated, a resident defendant in an action in personam, who cannot
be personally served with summons, may be summoned either by means of substituted service in
accordance with Rule 14, 8 or by publication as provided in 17 and 18 of the same Rule. [5]
In all of these cases, it should be noted, defendant must be a resident of the Philippines,
otherwise an action in personam cannot be brought because jurisdiction over his person is essential
to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction over
the res. If the defendant is a nonresident and he is not found in the country, summons may be served
extraterritorially in accordance with Rule 14, 17, which provides:

17. Extraterritorial service. - When the defendant does not reside and is not found in the Philippines
and the action affects the personal status of the plaintiff or relates to, or the subject of which is,
property within the Philippines, in which the defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from
any interest therein, or the property of the defendant has been attached within the Philippines, service
may, by leave of court, be effected out of the Philippines by personal service as under Section 7; or by
publication in a newspaper of general circulation in such places and for such time as the court may
order, in which case a copy of the summons and order of the court shall be sent by registered mail to
the last known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days
after notice, within which the defendant must answer.
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has
jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the Philippines
or the property litigated or attached. Service of summons in the manner provided in 17 is not for the
purpose of vesting it with jurisdiction but for complying with the requirements of fair play or due
process, so that he will be informed of the pendency of the action against him and the possibility that
property in the Philippines belonging to him or in which he has an interest may be subjected to a
judgment in favor of the plaintiff and he can thereby take steps to protect his interest if he is so
minded.[6]
Applying the foregoing rules to the case at bar, private respondents action, which is for partition
and accounting under Rule 69, is in the nature of an action quasi in rem. Such an action is essentially
for the purpose of affecting the defendants interest in a specific property and not to render a judgment
against him. As explained in the leading case of Banco Espaol Filipino v. Palanca :[7]
[An action quasi in rem is] an action which while not strictly speaking an action in rem partakes of that
nature and is substantially such. . . . The action quasi in rem differs from the true action in rem in the
circumstance that in the former 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. All
proceedings having for their sole object the sale or other disposition of the property of the defendant,
whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated.
The judgment entered in these proceedings is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of
summons on her must be in accordance with Rule 14, 17. Such service, to be effective outside the
Philippines, must be made either (1) by personal service; (2) by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which case a copy of the
summons and order of the court should be sent by registered mail to the last known address of the
defendant; or (3) in any other manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not
done by means of any of the first two modes, the question is whether the service on her attorney,
petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, in any . . . manner the
court may deem sufficient.
We hold it cannot. This mode of service, like the first two, must be made outside the Philippines,
such as through the Philippine Embassy in the foreign country where the defendant resides.
[8]
Moreover, there are several reasons why the service of summons on Atty. Alfredo D. Valmonte
cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte. In the first place,
service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the court as
required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court which in fact
refused to consider the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in
default for her failure to file an answer.

In the second place, service in the attempted manner on petitioner was not made upon prior
leave of the trial court as required also in Rule 14, 17. As provided in 19, such leave must be applied
for by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and setting
forth the grounds for the application.
Finally, and most importantly, because there was no order granting such leave, petitioner
Lourdes A. Valmonte was not given ample time to file her Answer which, according to the rules, shall
be not less than sixty (60) days after notice. It must be noted that the period to file an Answer in an
action against a resident defendant differs from the period given in an action filed against a
nonresident defendant who is not found in the Philippines. In the former, the period is fifteen (15) days
from service of summons, while in the latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance of due process. That is
why in one case,[9] although the Court considered publication in the Philippines of the summons
(against the contention that it should be made in the foreign state where defendant was residing)
sufficient, nonetheless the service was considered insufficient because no copy of the summons was
sent to the last known correct address in the Philippines.
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in
which it was held that service of summons upon the defendants husband was binding on her. But the
ruling in that case is justified because summons were served upon defendants husband in their
conjugal home in Cebu City and the wife was only temporarily absent, having gone to Dumaguete City
for a vacation. The action was for collection of a sum of money. In accordance with Rule 14, 8,
substituted service could be made on any person of sufficient discretion in the dwelling place of the
defendant, and certainly defendants husband, who was there, was competent to receive the
summons on her behalf. In any event, it appears that defendant in that case submitted to the
jurisdiction of the court by instructing her husband to move for the dissolution of the writ of attachment
issued in that case.
On the other hand, in the case of Gemperle v. Schenker,[10] it was held that service on the wife of
a nonresident defendant was found sufficient because the defendant had appointed his wife as his
attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss citizen and resident
of Switzerland, service of summons upon his wife Helen Schenker who was in the Philippines was
sufficient because she was her husbands representative and attorney-in-fact in a civil case, which he
had earlier filed against William Gemperle. In fact Gemperles action was for damages arising from
allegedly derogatory statements contained in the complaint filed in the first case. As this Court said, i]n
other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her husband, so
that she was, also, empowered to represent him in suits filed against him, particularly in a case, like
the one at bar, which is a consequence of the action brought by her on his behalf. [11] Indeed, if instead
of filing an independent action Gemperle filed a counterclaim in the action brought by Mr. Schenker
against him, there would have been no doubt that the trial court could have acquired jurisdiction over
Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her
attorney-in-fact. Although she wrote private respondent s attorney that all communications intended
for her should be addressed to her husband who is also her lawyer at the latters address in Manila, no
power of attorney to receive summons for her can be inferred therefrom. In fact the letter was written
seven months before the filing of this case below, and it appears that it was written in connection with
the negotiations between her and her sister, respondent Rosita Dimalanta, concerning the partition of
the property in question. As is usual in negotiations of this kind, the exchange of correspondence was
carried on by counsel for the parties. But the authority given to petitioners husband in these
negotiations certainly cannot be construed as also including an authority to represent her in
any litigation.

For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A.
Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3,
1992 and September 23, 1992 of the Regional Trial Court of Manila, Branch 48 areREINSTATED.
SO ORDERED.

PERKIN ELMER SINGAPORE PTE LTD.,

G.R. No. 172242

Petitioner,

Present:

YNARES-SANTIAGO,
J.,Chairperson,
- versus -

AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.

DAKILA TRADING CORPORATION,

Promulgated:

Respondent.
August 14, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

The case before this Court is a Petition for Review [1] on Certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to annul and set aside the Decision, [2] dated 4 April 2006, of
the Court of Appeals in CA-G.R. SP No. 78981, which affirmed the Orders, dated 4 November
2002[3] and 20 June 2003,[4] of the Mandaluyong City Regional Trial Court (RTC), Branch 212, in Civil
Case No. MC99-605, which, in turn, denied the Motion to Dismiss and subsequent Motion for
Reconsideration of herein petitioner Perkin Elmer Singapore Pte Ltd.

Petitioner is a corporation duly organized and existing under the laws of Singapore. It is not
considered as a foreign corporation doing business in the Philippines. Herein respondent Dakila
Trading Corporation is a corporation organized and existing under Philippine laws, and engaged in
the business of selling and leasing out laboratory instrumentation and process control instrumentation,
and trading of laboratory chemicals and supplies.

The antecedents of the present case are as follows:

Respondent entered into a Distribution Agreement [5] on 1 June 1990 with Perkin-Elmer
Instruments Asia Pte Ltd. (PEIA), a corporation duly organized and existing under the laws
of Singapore and engaged in the business of manufacturing, producing, selling or distributing various
laboratory/analytical instruments. By virtue of the said agreement, PEIA appointed the respondent as
the sole distributor of its products in the Philippines. The respondent was likewise granted the right to
purchase and sell the products of PEIA subject to the terms and conditions set forth in the Distribution
Agreement. PEIA, on the other hand, shall give respondent a commission for the sale of its products
in the Philippines.

Under the same Distribution Agreement, respondent shall order the products of PEIA, which it
shall sell in the Philippines, either from PEIA itself or from Perkin-Elmer Instruments (Philippines)
Corporation (PEIP), an affiliate of PEIA. PEIP is a corporation duly organized and existing under
Philippine laws, and involved in the business of wholesale trading of all kinds of scientific,
biotechnological, and analytical instruments and appliances. PEIA allegedly owned 99% of the shares
of PEIP.

On 2 August 1997, however, PEIA unilaterally terminated the Distribution Agreement,

prompting respondent to file before the RTC of Mandaluyong City, Branch 212, a Complaint [6] for
Collection of Sum of Money and Damages with Prayer for Issuance of a Writ of Attachment against
PEIA and PEIP, docketed as Civil Case No. MC99-605.

The RTC issued an Order,[7] dated 26 March 1999, denying respondents prayer for the
issuance of a writ of attachment. The respondent moved for the reconsideration of the said Order but
it was denied in another Order, dated 11 January 2000.[8]

Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to
Deputize Respondents General Manager, Richard A. Tee, to Serve Summons Outside of
the Philippines,[9] which the RTC granted in its Order, dated 27 April 2000.[10] Thus, an Alias Summons,
dated 4 September 2000, was issued by the RTC to PEIA.But the said Alias Summons was served
on 28 September 2000 and received by Perkinelmer Asia, a Singaporean based sole proprietorship,
owned by the petitioner and, allegedly, a separate and distinct entity from PEIA.

PEIP moved to dismiss[11] the Complaint filed by respondent on the ground that it states no
cause of action. Perkinelmer Asia, on the other hand, through its counsel, sent letters, dated 12
October 2000[12] and 15 November 2000,[13] to the respondent and to the RTC, respectively, to inform
them of the wrongful service of summons upon Perkinelmer Asia.

Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint, together with
the Amended Complaint claiming that PEIA had become a sole proprietorship [14] owned by the
petitioner, and subsequently changed its name to Perkinelmer Asia. Being a sole proprietorship of the
petitioner, a change in PEIAs name and juridical status did not detract from the fact that all its due and
outstanding obligations to third parties were assumed by the petitioner. Hence, in its Amended
Complaint[15]respondent sought to change the name of PEIA to that of the petitioner. In an Order,
dated 24 July 2001,[16] the RTC admitted the Amended Complaint filed by the respondent.Respondent
then filed another Motion[17] for the Issuance of Summons and for Leave of Court to Deputize
Respondents General Manager, Richard A. Tee, to Serve Summons Outside the Philippines. In
another Order, dated 4 March 2002,[18] the RTC deputized respondents General Manager to serve
summons on petitioner in Singapore. The RTC thus issued summons[19] to the petitioner. Acting on the
said Order, respondents General Manager went to Singapore and served summons on the petitioner.

Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to Dismiss filed
by PEIP, compelling the latter to file its Answer to the Amended Complaint.

Petitioner subsequently filed with the RTC a Special Appearance and Motion to
Dismiss[20] respondents Amended Complaint on 30 May 2002 based on the following grounds: (1) the
RTC did not acquire jurisdiction over the person of the petitioner; (2) the respondent failed to state a
cause of action against the petitioner because it is not the real party-in-interest; (3) even
assuming arguendo that the respondent correctly filed the case against the petitioner, the Distribution
Agreement which was the basis of its claim grants PEIA the right to terminate the contract at any time;
and (4) the venue was improperly laid. The RTC in its Order, dated 4 November 2002, denied
petitioners Motion to Dismiss, ratiocinating as follows:

Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY
the Motion to Dismiss.

A careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that
[herein respondent] alleges ownership by the [herein petitioner] of shares of stocks in
the [PEIP]. Such allegation of ownership of shares of stocks by the [petitioner] would
reveal that there is an allegation of personal property in the Philippines. Shares of
stocks represent personal property of the shareholder. Thus, it follows that even
though the Amended Complaint is primarily for damages, it does relate to a property
of the [petitioner], to which the latter has a claim interest (sic), or an actual or
contingent lien, which will make it fall under one of the requisite (sic) for extraterritorial
service under Section 15, Rule 14, of the Rules of Court. Thus, it could be gainfully
said that the summons had been validly served for [RTC] to acquire jurisdiction over
the [petitioner].

The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause
of action. The [RTC] would like to emphasize that in a Motion to Dismiss, it
hypothetically admits the truth of the facts alleged in a complaint.

When the ground for dismissal is that the complaint states no cause of action, such
fact can be determined only from the facts alleged in the complaint x x x and from no
other x x x and the Court cannot consider other matters aliunde x x x. This implies
that the issue must be passed upon on the basis of the allegations and declare them
to be false, otherwise it would be a procedural error and a denial of due process to
the [respondent] x x x.

The three (3) essential elements of a cause of action are the following:

a)

The plaintiffs legal rights;

b)

A correlative obligation of the defendant;

c)

The omission of the defendant in violation of the legal rights.

A cursory reading of the Amended Complaint would reveal that all of the
essential elements of a cause of action are attendant in the Amended Complaint.

As for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate
desire that the ends of justice could be served in its fullest, cannot rule that venue
was improperly laid.

xxxx

The stipulation as to the venue of a prospective action does not preclude the filing of
the suit in the residence of the [respondent] under Section 2, Rule 4, Rules of Court,
especially where the venue stipulation was imposed by the [petitioner] for its own
benefits.

xxxx

The [RTC] further believes that it is imperative that in order to ferret out the truth, a
full-blown trial is necessary for parties to be able to prove or disprove their
allegations.[21]

Petitioner moved for the reconsideration of the aforesaid Order but, it was denied by the RTC
in its Order, dated 20 June 2003.

Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised
Rules of Civil Procedure with application for temporary restraining order and/or preliminary injunction
before the Court of Appeals alleging that the RTC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in refusing to dismiss the Amended Complaint. The Court of Appeals
never issued any temporary restraining order or writ of injunction. On 4 April 2006, the Court of
Appeals rendered a Decision affirming the RTC Orders of 4 November 2002 and 20 June 2003.

This brings us to the present Petition before this Court wherein petitioner raised the following
issues.

I.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN NOT RULING THAT THE SERVICE OF SUMMONS ON PETITIONER
WAS DEFECTIVE AND THAT THE TRIAL COURT THUS FAILED TO ACQUIRE
JURISDICTION OVER THE PERSON OF THE PETITIONER.

II.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN RULING THAT THE SOLE ISSUE IN THE PETITION
FOR CERTIORARI FILED BEFORE IT IS THE QUESTION OF WHETHER THE
TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE
PETITIONER THROUGH THE EXTRATERRITORIAL SERVICE OF SUMMONS.
A.

WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE

GRANTED THE PETITION FOR CERTIORARI AND REVERSED
THE RTC ORDERS ON THE GROUND THAT THE AMENDED
COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST
PETITIONER.

1.
BASED ON THE ALLEGATIONS IN THE EXPARTE MOTION TO ADMIT AMENDED COMPLAINT, AMENDED
COMPLAINT, AND ALL DOCUMENTS ATTACHED AND/OR
RELATED THERETO, PETITIONER IS NOT THE REAL PARTY-ININTEREST DEFENDANT IN THE CASE BELOW.

2.
ASSUMING ARGUENDO THAT RESPONDENT
DAKILA FILED THIS CASE AGAINST THE CORRECT [PARTY],
INASMUCH AS THE DISTRIBUTION AGREEMENT DATED 1 JUNE
1990 GRANTS [PEIA] THE RIGHT TO TERMINATE THE
CONTRACT AT ANY TIME, RESPONDENT DAKILA FAILS TO
STATE A CAUSE OF ACTION IN THE CASE BELOW.

B.

WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE

GRANTED THE PETITION FOR CERTIORARI AND REVERSED
THE RTC ORDERS ON THE GROUND OF IMPROPER VENUE.

III.

WHETHER OR NOT PETITIONER IS ENTITLED

RESTRAINING ORDER AND/OR WRIT OF INJUNCTION.

TO

TEMPORARY

The foregoing issues raised by petitioner essentially requires this Court to make a
determination of the (1) proper service of summons and acquisition of jurisdiction by the RTC over the
person of the petitioner; (2) existence of a cause of action against petitioner in respondents Amended
Complaint; and (3) proper venue for respondents civil case against petitioner.

Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of
money and damages arising from the alleged breach of the Distribution Agreement. The action is
one in personam, or an action against a person based on his personal liability; and for the court a
quo to acquire jurisdiction over the person of the petitioner, personal service of summons, and not
extraterritorial service of summons, must be made within the state even if the petitioner is a non-

resident. Petitioner avers that extraterritorial service of summons stated under Section 15, Rule 14 of
the 1997 Revised Rules of Civil Procedure, is only proper in in rem and quasi in rem cases; thus,
resort to an extraterritorial service of summons in the case at bar was erroneous. Petitioner
asseverates that the allegations in the respondents Amended Complaint that the petitioner has
personal properties within the Philippines does not make the present case one that relates to, or the
subject of which is, property within the Philippines warranting the extraterritorial service of summons
under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure. Petitioner states that for an
action to be considered as one that relates to, or the subject of which is, property within
the Philippines, the main subject matter of the action must be the property within the Philippines itself,
and such was not the situation in this case. Likewise, the prayer in respondents Amended Complaint
for the issuance of a writ of attachment over the personal property of PEIP, which is 99% owned by
petitioner (as the supposed successor of PEIA), did not convert the action from one in personam to
one that is quasi in rem. Also, the petitioner points out that since the respondents prayer for the
issuance of a writ of attachment was denied by the RTC in its Order, dated 26 March 1999, then the
nature of Civil Case No. MC99-605 remains in personam, contrary to the ruling of the Court of
Appeals that by the attachment of the petitioners interest in PEIP the action in personam was
converted to an action quasi in rem.Resultantly, the extraterritorial service of summons on the
petitioner was not validly effected, and did not give the RTC jurisdiction over the petitioner.

Petitioner further argues that the appellate court should have granted its Petition
for Certiorari on the ground that the RTC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in refusing to dismiss respondents Amended Complaint for failure to state a
cause of action against petitioner which was not the real party-in-interest in Civil Case No. MC99605. Petitioner claims that it had never used the name PEIA as its corporate name, and neither did it
change its name from that of PEIA.Petitioner stresses that PEIA is an entirely different corporate entity
that is not connected in whatever manner to the petitioner. Even assuming arguendo that petitioner is
the real party-in-interest in Civil Case No. MC99-605 or that petitioner and PEIA are one and the same
entity, petitioner still avows that the respondent failed to state a cause of action against it because the
Distribution Agreement expressly grants PEIA the right to terminate the said contract at any time.

Lastly, it is the contention of the petitioner that the appellate court should have granted its
Petition for Certiorari because the RTC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in refusing to dismiss Civil Case No. MC99-605 for having been filed in an
improper venue. Petitioner asserts that in the Distribution Agreement entered into between the
respondent and PEIA, both had mutually agreed to the exclusive jurisdiction of the courts
of Singapore or of the Philippines as elected by PEIA. Absent any waiver by PEIA of its right to

choose the venue of the dispute, the Complaint filed by the respondent before the RTC in
the Philippines should have been dismissed on the ground of improper venue.

The Petition is meritorious.

Jurisdiction is the power with which courts are invested for administering justice; that is, for
hearing and deciding cases. In order for the court to have authority to dispose of the case on the
merits, it must acquire jurisdiction over the subject matter and the parties. [22]

Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law.
It is determinable on the basis of allegations in the complaint. [23]

Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction
over the defendants in a civil case is acquired either through the service of summons upon them in
the manner required by law or through their voluntary appearance in court and their submission to its
authority. If the defendants have not been summoned, unless they voluntarily appear in court, the
court acquires no jurisdiction over their persons and a judgment rendered against them is null and
void. To be bound by a decision, a party should first be subjected to the courts jurisdiction. [24]

Thus, one of the modes of acquiring jurisdiction over the person of the defendant or
respondent in a civil case is through service of summons. It is intended to give notice to the defendant
or respondent that a civil action has been commenced against him. The defendant or respondent is
thus put on guard as to the demands of the plaintiff or the petitioner.[25]

The proper service of summons differs depending on the nature of the civil case instituted by
the plaintiff or petitioner: whether it is in personam, in rem, or quasi in rem.Actions in personam, are
those actions brought against a person on the basis of his personal liability; actions in rem are actions
against the thing itself instead of against the person; and actions are quasi in rem, where an individual
is named as defendant and the purpose of the proceeding is to subject his or her interest in a property
to the obligation or loan burdening the property.[26]

Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are only four
instances wherein a defendant who is a non-resident and is not found in the country may be served
with summons by extraterritorial service, to wit: (1) when the action affects the personal status of the
plaintiff; (2) when the action relates to, or the subject of which is property, within the Philippines, in
which the defendant claims a lien or an interest, actual or contingent; (3) 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 (4) when the defendant non-residents 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.[27]

Undoubtedly, extraterritorial service of summons applies only where the action is in

rem or quasi in rem, but not if an action is in personam.

When the case instituted is an action in rem or quasi in rem, Philippine courts already have
jurisdiction to hear and decide the case because, in actions in rem and 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.[28] Thus, in such instance, extraterritorial service of summons
can be made upon the defendant. The said extraterritorial service of summons is not for the purpose
of vesting the court with jurisdiction, but for complying with the requirements of fair play or due
process, so that the defendant will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he has an interest may be
subjected to a judgment in favor of the plaintiff, and he can thereby take steps to protect his interest if
he is so minded.[29] On the other hand, when the defendant or respondent does not reside and is not
found in the Philippines,[30] and the action involved isin personam, Philippine courts cannot try any
case against him because of the impossibility of acquiring jurisdiction over his person unless he
voluntarily appears in court.[31]

In the case at bar, this Court sustains the contention of the petitioner that there can never be
a valid extraterritorial service of summons upon it, because the case before the court a quo involving
collection of a sum of money and damages is, indeed, an action in personam, as it deals with the
personal liability of the petitioner to the respondent by reason of the alleged unilateral termination by
the former of the Distribution Agreement. Even the Court of Appeals, in its Decision dated 4 April
2004, upheld the nature of the instant case as an action in personam. In the said Decision the
appellate court ruled that:

In the instant petition, [respondents] cause of action in Civil Case No. MC99605 is anchored on the claim that petitioner unilaterally terminated the Distribution
Agreement. Thus, [respondent] prays in its [C]omplaint that Upon the filing of the
Complaint, issue an Order fixing the amount of the bond and issue a writ of
attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines],
which are not exempt from execution, and as much as may be sufficient to satisfy
[respondents] demands.

The action instituted by [respondent] affects the parties alone, not the whole
world. Hence, it is an action in personam, i.e., any judgment therein is binding only
upon the parties properly impleaded.

xxxx

The objective sought in [respondents] [C]omplaint was to establish a claim

against petitioner for its alleged unilateral termination of [D]istribution
[A]greement. Hence, to repeat, Civil Case No. MC99-605 is an action in
personam because it is an action against persons, namely, herein petitioner, on
the basis of its personal liability. As such, personal service of summons upon
the [petitioner] is essential in order for the court to acquire of (sic) jurisdiction
over [its person].[32] (Emphasis supplied.)

Thus, being an action in personam, personal service of summons within the Philippines is necessary
in order for the RTC to validly acquire jurisdiction over the person of the petitioner, and this is not
possible in the present case because the petitioner is a non-resident and is not found within
the Philippines. Respondents allegation in its Amended Complaint that petitioner had personal
property within the Philippines in the form of shares of stock in PEIP did not make Civil Case No.
MC99-605 fall under any of the four instances mentioned in Section 15, Rule 14 of the Rules of Court,
as to convert the action in personam to an action in rem or quasi in rem and, subsequently, make the
extraterritorial service of summons upon the petitioner valid.

It is incorrect for the RTC to have ruled that the allegations made by the respondent in its
Amended Complaint, which is primarily for collection of a sum of money and damages, that the
petitioner owns shares of stock within the Philippines to which the petitioner claims interest, or an
actual or contingent lien, would make the case fall under one of the aforesaid instances wherein
extraterritorial service of summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure, would be valid. The RTC in arriving at such conclusions relied on the second instance,
mentioned under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure ( i.e., 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), where extraterritorial service of summons can be
properly made. However, the aforesaid second instance has no application in the case before this
Court. Primarily, the Amended Complaint filed by the respondent against the petitioner was for the
collection of sum of money and damages. The said case was neither related nor connected to any
property of the petitioner to which it claims a lien or interest. The action for collection of a sum of
money and damages was purely based on the personal liability of the petitioner towards the
respondent. The petitioner is correct in saying that mere allegations of personal property within the
Philippines does not necessarily make the action as one that relates to or the subject of which is,
property within the Philippines as to warrant the extraterritorial service of summons. For the action to
be considered one that relates to, or the subject of which, is the property within the Philippines,the
main subject matter of the action must be the property itself of the petitioner in the Philippines. By
analogy, an action involving title to or possession of real or personal property -- such as the
foreclosure of real estate or chattel mortgage where the mortgagor does not reside or is not found in
the Philippines -- can be considered as an action which relates to, or the subject of which is, property
within the Philippines, in which the defendant claims a lien or interest, actual or contingent; and in
such instance, judgment will be limited to the res.[33]

Moreover, the allegations made by the respondent that the petitioner has property within
the Philippines were in support of its application for the issuance of a writ of attachment, which was
denied by the RTC. Hence, it is clear from the foregoing that the Complaint filed by the respondent
against the petitioner does not really relate to, or the subject of which is, property within
the Philippines of the petitioner.

This Court also finds error in the Decision of the Court of Appeals. It is provided for in the said
Decision, thus:

However, let it be emphasized that in the [C]omplaint filed before the trial
court, [respondent] prayed that Upon the filing of the Complaint, issue an Order fixing
the amount of the bond and issue a writ of attachment requiring the sheriff to attach
the properties of [Perkin-Elmer Philippines], which are not exempt from execution,
and as much as may be sufficient to satisfy [respondents] demands.

In other words, although the [C]omplaint before the trial court does not
involve the personal status of the [respondent], nevertheless, the case involves
property within the Philippines in which the [petitioner] has or claim an interest, or
which the [respondent] has attached, which is one of the instances where
extraterritorial service of summons is proper.

xxxx

Hence, it is submitted that one of the instances when exterritorial service of

summons under Section 15, Rule 14 of the Rules of Court is proper may be
considered to have been met.This is because the [C]omplaint for collection of sum of
money which is an action in personam was converted into an action quasi in rem by
the attachment of [petitioners] interest in [Perkin-Elmer Philippines].
[34]
(Emphasis supplied.)

Respondents allegation in its Amended Complaint that petitioner had personal property within
the Philippines in the form of shares of stock in PEIP does not convert Civil Case No. MC99-605 from
an action in personam to one quasi in rem, so as to qualify said case under the fourth instance
mentioned in Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the nonresident defendants property has been attached within the Philippines), wherein extraterritorial service
of summons upon the petitioner would have been valid. It is worthy to note that what is required under
the aforesaid provision of the Revised Rules of Civil Procedure is not a mere allegation of the
existence of personal property belonging to the non-resident defendant within the Philippines but,
more precisely, that the non-resident defendants personal property located within the Philippines must
have been actually attached. This Court in the case of Venturanza v. Court of Appeals[35] ruled that
when the attachment was void from the beginning, the action in personam which required personal
service of summons was never converted into an action in rem where service by publication would
have been valid.Hence, the appellate court erred in declaring that the present case, which is an
action in personam, was converted to an action quasi in rem because of respondents allegations in its
Amended Complaint that petitioner had personal property within the Philippines.

Glaringly, respondents prayer in its Amended Complaint for the issuance of a writ of
attachment

over

petitioners

purported

shares

of

stock

in

PEIP

located

within

thePhilippines was denied by the court a quo in its Order dated 26 March 1999. Respondents Motion
for Reconsideration of the said Order was likewise denied by the RTC in its subsequent Order,
dated 11 January 2000. Evidently, petitioners alleged personal property within the Philippines, in the
form of shares of stock in PEIP, had not been attached; hence, Civil Case No. MC99-605, for
collection of sum of money and damages, remains an action in personam. As a result, the
extraterritorial service of summons was not validly effected by the RTC against the petitioner, and the
RTC thus failed to acquire jurisdiction over the person of the petitioner. The RTC is therefore bereft of
any authority to act upon the Complaint filed before it by the respondent insofar as the petitioner is
concerned.

If there was no valid summons served upon petitioner, could RTC have acquired jurisdiction
over the person of the petitioner by the latters voluntary appearance? As a rule, even if the service of
summons upon the defendant or respondent in a civil case is defective, the court can still acquire
jurisdiction over his person when he voluntary appears in court or submits himself to its
authority. Nonetheless, voluntary appearance, as a mode of acquiring jurisdiction over the person of
the defendant, is likewise inapplicable in this case.

It is settled that a party who makes a special appearance in court for the purpose of
challenging the jurisdiction of said court, based on the invalidity of the service of summons, cannot be
considered to have voluntarily submitted himself to the jurisdiction of the court. [36] In the present case,
petitioner has been consistent in all its pleadings in assailing the service of summons upon it and the
jurisdiction of the RTC over its person. Thus, the petitioner cannot be declared in estoppel when it
filed an Answer ad cautelamwith compulsory counterclaim before the RTC while the instant Petition
was still pending before this Court. The petitioner was in a situation wherein it had no other choice but
to file an Answer; otherwise, the RTC would have already declared that petitioner had waived its right
to file responsive pleadings.[37] Neither can the compulsory counterclaim contained in petitioners
Answer ad cautelam be considered as voluntary appearance of petitioner before the RTC. Petitioner
seeks to recover damages and attorneys fees as a consequence of the unfounded suit filed by
respondent against it. Thus, petitioners compulsory counterclaim is only consistent with its position
that the respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction
over its person.

Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over
respondents complaint and over petitioners counterclaim -- while it may have no jurisdiction over the
former, it may exercise jurisdiction over the latter. The compulsory counterclaim attached to petitioners
Answer ad cautelam can be treated as a separate action, wherein petitioner is the plaintiff while
respondent is the defendant.[38] Petitioner could have instituted a separate action for the very same
claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to demand the same
in Civil Case No. MC99-605.[39] Jurisdiction of the RTC over the subject matter and the parties in the
counterclaim must thus be determined separately and independently from the jurisdiction of the same
court in the same case over the subject matter and the parties in respondents complaint.

Moreover, even though the petitioner raised other grounds in its Motion to Dismiss aside from
lack of jurisdiction over its person, the same is not tantamount to its voluntary appearance or

submission to the authority of the court a quo. While in De Midgely v. Ferandos,[40] it was held that, in
a Motion to Dismiss, the allegation of grounds other than lack of jurisdiction over the person of the
defendant, including a prayer "for such other reliefs as" may be deemed "appropriate and proper"
amounted to voluntary appearance, such ruling must be deemed superseded by the declaration of
this Court in La Naval Drug Corporation v. Court of Appeals[41] that estoppel by jurisdiction must be
unequivocal and intentional. It would be absurd to hold that petitioner unequivocally and intentionally
submitted itself to the jurisdiction of the court by seeking other reliefs to which it might be entitled
when the only relief that it could properly ask from the trial court is the dismissal of the complaint
against it.[42] Thus, the allegation of grounds other than lack of jurisdiction with a prayer for such other
reliefs as may be deemed appropriate and proper cannot be considered as unequivocal and
intentional estoppel. Most telling is Section 20, Rule 14 of the Rules of Court, which expressly
provides:

SEC. 20. Voluntary appearance. - The defendants voluntary appearance in

the action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance.[43] (Emphasis supplied.)

In sum, this Court finds that the petitioner did not submit itself voluntarily to the authority of the
court a quo; and in the absence of valid service of summons, the RTC utterly failed to acquire
jurisdiction over the person of the petitioner.

Anent the existence of a cause of action against petitioner and the proper venue of the case,
this Court upholds the findings of the RTC on these issues.

Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of
Court.

[44]

When a Motion to Dismiss is grounded on the failure to state a cause of action, a ruling

thereon should be based only on the facts alleged in the complaint. The court must pass upon this
issue based solely on such allegations, assuming them to be true. For it to do otherwise would be a
procedural error and a denial of plaintiffs right to due process. [45] While, truly, there are well-recognized
exceptions[46] to the rule that the allegations are hypothetically admitted as true and inquiry is confined
to the face of the complaint, [47] none of the exceptions apply in this case. Hence, the general rule
applies. The defense of the petitioner that it is not the real party-in-interest is evidentiary in nature
which must be proven in trial. The appellate court, then, cannot be faulted for not granting petitioners
Motion to Dismiss on the ground of failure to state a cause of action.

In the same way, the appellate court did not err in denying petitioners Motion to Dismiss Civil
Case No. MC99-605 on the ground of improper venue. In arriving at such conclusion, this Court
quotes with approval the following ratiocination of the RTC:

As for the contention that venue was improperly laid, x x x, the [trial court] in
its ultimate desire that the ends of justice could be served in its fullest, cannot rule
that venue was improperly laid.

xxxx

The stipulation as to the venue of a prospective action does not preclude the
filing of the suit in the residence of the [respondent] under Section 2, Rule 4,
Rules of Court, especially where the venue stipulation was imposed by the
[petitioner] for its own benefits.[48] (Emphasis supplied.)

Despite the venue stipulation found in the Distribution Agreement stipulating that the exclusive
jurisdiction over disputes arising from the same shall lie in the courts of Singapore or of the Territory
(referring to the Philippines), whichever is elected by PEIA (or petitioner, as PEIAs alleged successor),
the RTC of the Philippines cannot be considered as an improper venue. Truly, the venue stipulation
used the word exclusive, however, a closer look on the Distribution Agreement would reveal that the
venue stipulation was really in the alternative i.e., courts of Singapore or of the Territory, meaning, the
Philippines; thus, the court a quo is not an improper venue for the present case.

Nonetheless, it bears to emphasize that despite our findings that based on the allegations in
respondents Complaint in Civil Case No. MC99-605, respondent appears to have a cause of action
against the petitioner and that the RTC is the proper venue for the said case, Civil Case No. MC99605 is still dismissible, for the RTC never acquired jurisdiction over the person of the petitioner. The
extraterritorial service of summons upon the petitioner produces no effect because it can only be done
if the action is in rem orquasi in rem. The case for collection of sum of money and damages filed by
the respondent against the petitioner being an action in personam, then personal service of summons
upon the petitioner within the Philippines is essential for the RTC to validly acquire jurisdiction over
the person of the petitioner. Having failed to do so, the RTC can never subject petitioner to its
jurisdiction. The mere allegation made by the respondent that the petitioner had shares of stock within
the Philippines was not enough to convert the action from one in personam to one that was quasi in
rem, for petitioners purported personal property was never attached; thus, the extraterritorial service
of summons upon the petitioner remains invalid. In light of the foregoing findings, this Court concludes

that the RTC has no power to hear and decide the case against the petitioner, because the
extraterritorial service of summons was not validly effected upon the petitioner and the RTC never
acquired jurisdiction over its person.

Finally, as regards the petitioners counterclaim, which is purely for damages and attorneys fees by
reason of the unfounded suit filed by the respondent against it, it has long been settled that the same
truly falls under the classification of compulsory counterclaim and it must be pleaded in the same
action, otherwise, it is barred. [49] In the case at bar, this Court orders the dismissal of the
Complaint filed by the respondent against the petitioner because the court a quo failed to acquire
jurisdiction over the person of the latter.Since the Complaint of the respondent was dismissed,
what will happen then to the counterclaim of the petitioner? Does the dismissal of the complaint carry
with it the dismissal of the counterclaim?

In the cases of Metal Engineering Resources Corp. v. Court of Appeals,[50] International

Container Terminal Services, Inc. v. Court of Appeals,[51] and BA Finance Corporation v. Co.,[52] the
Court ruled that if the court does not have jurisdiction to entertain the main action of the case and
dismisses the same, then the compulsory counterclaim, being ancillary to the principal controversy,
must likewise be dismissed since no jurisdiction remained for any grant of relief under the
counterclaim.[53] If we follow the aforesaid pronouncement of the Court in the cases mentioned above,
the counterclaim of the herein petitioner being compulsory in nature must also be dismissed together
with the Complaint. However, in the case of Pinga vs. Heirs of German Santiago,[54] the Court explicitly
expressed that:

Similarly, Justice Feria notes that the present rule reaffirms the right of the
defendant to move for the dismissal of the complaint and to prosecute his
counterclaim, as stated in the separate opinion [of Justice Regalado in BA
Finance]. Retired Court of Appeals Justice Hererra pronounces that the amendment
to Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles that
nagging question whether the dismissal of the complaint carries with it the
dismissal of the counterclaim, and opines that by reason of the amendments,
the rulings in Metals Engineering, International Container, and BA Finance may
be deemed abandoned. x x x.

x x x, when the Court promulgated the 1997 Rules of Civil Procedure,

including the amended Rule 17, those previous jural doctrines that were inconsistent
with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly
abandoned insofar as incidents arising after the effectivity of the new procedural
rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be
necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules
of Civil Procedure. The abandonment of BA Finance as doctrine extends as far back

as 1997, when the Court adopted the new Rules of Civil Procedure. If, since then,
abandonment has not been affirmed in jurisprudence, it is only because no proper
case has arisen that would warrant express confirmation of the new rule. That
opportunity is here and now, and we thus rule that the dismissal of a complaint
due to fault of the plaintiff is without prejudice to the right of the defendant to
prosecute any pending counterclaims of whatever nature in the same or
separate action. We confirm that BA Finance and all previous rulings of the
Court that are inconsistent with this present holding are now abandoned.
[55]
[Emphasis supplied].

It is true that the aforesaid declaration of the Court refers to instances covered by Section 3,
Rule 17 of the 1997 Revised Rules of Civil Procedure [56] on dismissal of the complaint due to the fault
of the plaintiff. Nonetheless, it does not also preclude the application of the same to the instant case
just because the dismissal of respondents Complaint was upon the instance of the petitioner who
correctly argued lack of jurisdiction over its person.

Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation
wherein the very filing of the complaint by the plaintiff against the defendant caused the violation of
the latters rights. As to whether the dismissal of such a complaint should also include the dismissal of
the counterclaim, the Court acknowledged that said matter is still debatable, viz:

Whatever the nature of the counterclaim, it bears the same integral

characteristics as a complaint; namely a cause (or causes) of action constituting an
act or omission by which a party violates the right of another. The main difference lies
in that the cause of action in the counterclaim is maintained by the defendant against
the plaintiff, while the converse holds true with the complaint. Yet, as with a complaint,
a counterclaim without a cause of action cannot survive.

x x x if the dismissal of the complaint somehow eliminates the cause(s) of the

counterclaim, then the counterclaim cannot survive. Yet that hardly is the case,
especially as a general rule.More often than not, the allegations that form the
counterclaim are rooted in an act or omission of the plaintiff other than the plaintiffs
very act of filing the complaint. Moreover, such acts or omissions imputed to the
plaintiff are often claimed to have occurred prior to the filing of the complaint
itself. The only apparent exception to this circumstance is if it is alleged in the
counterclaim that the very act of the plaintiff in filing the complaint precisely
causes the violation of the defendants rights. Yet even in such an instance, it
remains debatable whether the dismissal or withdrawal of the complaint is
sufficient to obviate the pending cause of action maintained by the defendant
against the plaintiff.[57]
Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow
eliminates the cause of the counterclaim, then the counterclaim cannot survive.Conversely, if the
counterclaim itself states sufficient cause of action then it should stand independently of and survive

the dismissal of the complaint. Now, having been directly confronted with the problem of whether the
compulsory counterclaim by reason of the unfounded suit may prosper even if the main complaint had
been dismissed, we rule in the affirmative.

It bears to emphasize that petitioners counterclaim against respondent is for damages and
attorneys fees arising from the unfounded suit. While respondents Complaint against petitioner is
already dismissed, petitioner may have very well already incurred damages and litigation expenses
such as attorneys fees since it was forced to engage legal representation in the Philippines to protect
its rights and to assert lack of jurisdiction of the courts over its person by virtue of the improper service
of summons upon it. Hence, the cause of action of petitioners counterclaim is not eliminated by the
mere dismissal of respondents complaint.

It may also do well to remember that it is this Court which mandated that claims for damages
and attorneys fees based on unfounded suit constitute compulsory counterclaim which must be
pleaded in the same action or, otherwise, it shall be barred. It will then be iniquitous and the height of
injustice to require the petitioner to make the counterclaim in the present action, under threat of losing
his right to claim the same ever again in any other court, yet make his right totally dependent on the
fate of the respondents complaint.

If indeed the Court dismisses petitioners counterclaim solely on the basis of the dismissal of
respondents Complaint, then what remedy is left for the petitioner? It can be said that he can still file a
separate action to recover the damages and attorneys fees based on the unfounded suit for he cannot
be barred from doing so since he did file the compulsory counterclaim in the present action, only that
it was dismissed when respondents Complaint was dismissed. However, this reasoning is highly
flawed and irrational considering that petitioner, already burdened by the damages and attorneys fees
it may have incurred in the present case, must again incur more damages and attorneys fees in
pursuing a separate action, when, in the first place, it should not have been involved in any case at all.

Since petitioners counterclaim is compulsory in nature and its cause of action survives that of
the dismissal of respondents complaint, then it should be resolved based on its own merits and
evidentiary support.

WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision
of the Court of Appeals, dated 4 April 2006, in CA-G.R. SP No. 78981, affirming the Orders, dated 4

November 2002 and 20 June 2003, of the Regional Trial Court of Mandaluyong City, Branch 212, in
Civil Case No. MC99-605, is herebyREVERSED AND SET ASIDE. Respondents Amended Complaint
in Civil Case No. MC99-605 as against the petitioner is hereby ordered DISMISSED, and all the
proceedings against petitioner in the court a quo by virtue thereof are hereby DECLARED NULL AND
VOID. The Regional Trial Court of Mandaluyong City, Branch 212, isDIRECTED to proceed without
further delay with the resolution of respondents Complaint in Civil Case No. MC99-605 as to
defendant PEIP, as well as petitioners counterclaim. No costs.
SO ORDERED.

G.R. No. 136415

October 31, 2006

VIRGILIO P. CEZAR, petitioner,

vs.
HON. HELEN RICAFORT-BAUTISTA in her capacity as Presiding Judge of RTC, Branch 260,
City of Paraaque and SPECIFIED MATERIALS, CO., respondents.

DECISION

CHICO-NAZARIO, J.:
This Petition for Certiorari seeks the annulment of the Decision dated 9 September 19971 of
respondent Honorable Helen Ricafort-Bautista of the Regional Trial Court (RTC) of Paraaque City, in
Civil Case No. 96-0473 entitled, "Specified Materials Corporation v. Virgilio P. Cezar doing business
under the name and style `Virosell Construction and Supply.'" The dispositive portion of the assailed
decision provides:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff,
ordering defendant to pay plaintiff, as follows:
1. P2,005,000.00 representing the total amount that remain unpaid; plus,
2. A penalty of three (3%) percent per month on the value of each delivery receipt and sales
invoice computed from the time the obligation fell due until the same is fully paid;
3. P401,000.00 as attorney's fees.2
On 11 November 1996, private respondent Specified Materials Corporation filed a Complaint 3 for
collection of sum of money against petitioner arising from the latter's failure to pay the construction
materials it purportedly purchased under a credit line extended by private respondent. At the time of
the institution of the action, petitioner's obligation stood at P1,860,000.00, and under the terms of the
credit arrangement, materials sold to petitioner was supposed to be paid within thirty days from date
of delivery, subject to an interest charge of 3% per month for delayed payments.
As petitioner failed to pay for the construction materials, private respondent sent two letters 4 to
petitioner and his brother, Perfecto, reminding them of their obligation. In response, petitioner sent
three letters all dated 12 August 1996. 5 In the first letter, petitioner manifested his willingness to settle
his account with private respondent as long as his obligation conforms with the submitted list of
materials he actually used. In the second letter, petitioner requested that any intended legal action on
the part of private respondent be suspended until such time that all deliveries and payments made in
his account are verified.6 Finally, in the third letter, petitioner requested that an inventory be
undertaken of the construction materials delivered by private respondent as well as those actually
withdrawn and used by petitioner.7
On 3 September 1996, private respondent's representatives met with petitioner in order to reconcile
their conflicting records. During said meeting, petitioner allegedly admitted that he failed to take into
account some deliveries made in 1995 amounting to around P648,750.00. Petitioner then requested
that they meet again after two days so that he could verify his documents but he failed to show up for
the subsequent meetings. Thereafter, private respondent sent a final demand letter to petitioner. 8

After the filing of the complaint, summons 9 was issued to petitioner and this was served by Sheriff
Juan C. Marquez with the pertinent portion of the return stating:
SHERIFF'S RETURN
I HEREBY CERTIFY that:
I HAVE SERVED a copy/ies of the summons, complaint and annexes issued in Civil Case No. 96-

PERSONS
SERVED

DATE OF SERVICE

HOW SERVED

Virgilio P. Cezar

January 9, 1997

served thru Mr. Arsenio Robles, an employee of

defendant who [is] authorized to transact
business, as per his signature appearing below
summons.

0473, entitled Specified Materials Corp. versus Virgilio P. Cezar. x x x

As petitioner failed to file his answer to the complaint, private respondent moved that he be declared
in default.10This motion was favorably acted upon by public respondent through the Order dated 14
March 1997,11 and private respondent was able to present its evidence.
On 15 May 1997, private respondent filed a Motion to Admit Amended Complaint alleging that it
erroneously computed petitioner's obligation to be P1,860,000.00, when it should have amounted
to P2,005,000.00. A copy of the motion and the Amended Complaint were personally received by
petitioner as evidenced by his signatures thereon. 12 The Amended Complaint was ordered admitted
on 16 May 1997.13 On 9 September 1997, public respondent issued its now assailed decision.
On 3 November 1997, petitioner, by way of special appearance, filed a Motion to Set Aside Decision
arguing that the trial court did not acquire jurisdiction over his person. 14 This motion was denied
through public respondent's order dated 7 November 1997. 15
Following the denial of its Motion to Set Aside Decision, petitioner filed before the Court of Appeals a
Petition for Annulment of Judgment, Preliminary Injunction with Prayer for Temporary Restraining
Order.16 This petition was dismissed for "failure to attach an affidavit of merit alleging the facts
supporting the good and substantial defense, as well as the affidavits of witnesses or document
supporting the defense."17
Petitioner then filed a motion for reconsideration but this was denied by the Court of Appeals in its
Resolution dated 20 March 1998.18 According to the Court of Appeals
Under Section 1, Rule 47 of the 1997 Rules of Civil Procedure, the annulment of a judgment
or final order or resolution in civil actions of the Regional Trial Courts may be availed of only
when the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of the petitioner. The instant petition for
annulment was filed before this Court on November 24, 1997. Clearly, petitioner had other
remedies available when he filed the instant petition for annulment.
Following this set-back, petitioner filed before this Court a Petition for Review on Certiorari19 of the
resolutions of the Court of Appeals but we denied the same on 15 June 1998 for failure to comply with
procedural requirements.20 Our resolution became final and executory on 7 September 1998. 21

On 10 November 1998, private respondent filed a Motion for Execution before the trial court. 22 The
scheduled hearing of this motion on 13 November 1998 was ordered reset to 19 November 1998 after
petitioner filed an Urgent Ex-Parte Motion to Re-Set Hearing. 23 The records also disclose that the 19
November 1998 hearing did not push through and in fact, it was rescheduled a couple of more times
per agreement of the parties.24 Finally, on 18 December 1998, public respondent granted private
respondent's Motion for Execution.25
Hence, the present petition raising the sole issue:
1. WHETHER OR NOT THE COURT A QUO ACQUIRED JURISDICTION OVER THE
PERSON OF THE PETITIONER BY VIRTUE OF THE SUBSTITUTED SERVICE OF
SUMMONS EFFECTED BY SHERIFF JUAN C. MARQUEZ.26
The petition is unmeritorious.
Petitioner argues that since the trial court never acquired jurisdiction over his person, its Decision of 9
September 1997 is null and void. He claims that the person who allegedly received the summons on
his behalf, and who was identified in the sheriff's return as Arsenio Robles, was not his employee. He
adds that when he conducted an inquiry, he found out that Robles was a native of Batangas and was
merely peddling mango seedlings within the vicinity of his office when the summons was served. He
also maintains that had he been given the opportunity to present his defense, he would have shown
that his obligation to private respondent is less than the amount as established by the trial court.
Private respondent retorts that petitioner's insistence that the court a quo did not acquire jurisdiction
over him is belied by the fact that petitioner had actual knowledge of all the proceedings since he was
furnished with all the copies of the pleadings and court orders. Private respondent points out that the
Motion to Admit Amended Complaint and the Amended Complaint were personally served on
petitioner himself as shown by his signatures appearing thereon. Moreover, private respondent is of
the view that the sheriff who served the summons upon petitioner enjoys the presumption of regularity
in the performance of duty a presumption which petitioner was unable to overcome.
On 16 June 1999, this Court issued a temporary restraining order enjoining the enforcement of the
court a quo's decision dated 9 September 1997 and resolution dated 28 November 1997. 27
It is fundamental that courts acquire jurisdiction over the plaintiff once the complaint is filed. On the
other hand, there are two ways through which jurisdiction over the defendant or respondent is
acquired either through the service of summons upon them or through their voluntary appearance in
court. In the case of Avon Insurance PLC v. Court of Appeals, 28 we discussed the function of
summons in court actions, to be
Fundamentally, the service of summons is intended to give official notice to the defendant or
respondent that an action had been commenced against it. The defendant or respondent is
thus put [on] guard as to the demands of the plaintiff as stated in the complaint. The service of
summons upon the defendant becomes an important element in the operation of a court's
jurisdiction upon a party to a suit, as service of summons upon the defendant is the means by
which the court acquires jurisdiction over his person. Without service of summons, or when
summons are improperly made, both the trial and the judgment, being in violation of due
process, are null and void, unless the defendant waives the service of summons by voluntarily
appearing and answering the suit. 29
Elsewhere, we declared that jurisdiction of the court over the person of the defendant or respondent
cannot be acquired notwithstanding his knowledge of the pendency of a case against him unless he
was validly served with summons.30 Such is the important role a valid service of summons plays in
court actions.
The Rules of Court31 requires that, whenever practicable, summons must be served by handing a
copy thereof to the defendant in person. In case the defendant refuses to receive and sign for it, by
tendering the summons to him or her.

However, in the event that summons cannot be served within a reasonable time, the Rules permit that
substituted service may be resorted to, thus:
Sec. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendant's office or regular
place of business with some competent person in charge thereof.
In this case, the sheriff employed the substituted service of summons. The defect, however, in the
manner in which he implemented this mode of service of summons is readily apparent on the face of
the return. It must be emphasized that laws providing for modes other than the personal service of
summons must be strictly followed in order for the court to acquire jurisdiction over the person of
respondent or defendant. Compliance therewith should appear affirmatively on the return. 32 The
essence of this requirement was enunciated in the case ofKeister v. Navarro33 to be
The summons must be served to the defendant in person. It is only when the defendant
cannot be served personally within a reasonable time that a substituted service may be
made. Impossibility of prompt service should be shown by stating the efforts made to
find the defendant personally and the fact that such efforts failed. This statement
should be made in the proof of service. This is necessary because substituted service is in
derogation of the usual method of service. It has been held that this method of service is "in
derogation of the common law; it is a method extraordinary in character, and hence may be
used only as prescribed and in the circumstances authorized by statute." Thus, under the
controlling decisions, the statutory requirements of substituted service must be
followed strictly, faithfully and fully, and any substituted service other than that
authorized by the statute is considered ineffective.34 (Emphases supplied.)
As the sheriff's return in the present case does not contain any statement with regard to the
impossibility of personal service the same is patently defective and so the presumption of regularity in
the performance of official functions will not lie.35
Nevertheless, we still hold that jurisdiction was validly acquired by the trial court. Although the
substituted service upon him of summons was defective, said defect was cured by his voluntary
appearance.36
As the records of this case disclose, after private respondent moved for the execution of the trial
court's decision, petitioner filed a motion for a re-setting of the court's hearing thereon. In Flores v.
Zurbito,37 we held that an appearance in whatever form without expressly objecting to the jurisdiction
of the court over the person, is a submission to the jurisdiction of the court over the person of the
defendant or respondent, thus:
A voluntary appearance is a waiver of the necessity of a formal notice. An appearance in
whatever form, without expressly objecting to the jurisdiction of the court over the person, is a
submission to the jurisdiction of the court over the person. While the formal method of
entering an appearance in a cause pending in the courts is to deliver to the clerk a written
direction ordering him to enter the appearance of the person who subscribes it, an
appearance may be made by simply filing a formal motion, or plea or answer. This formal
method of appearance is not necessary. He may appear without such formal appearance and
thus submit himself to the jurisdiction of the court. He may appear by presenting a motion,
for example, and unless by such appearance he specifically objects to the jurisdiction
of the court, he thereby gives his assent to the jurisdiction of the court over his
person.38
Hence, in this case, petitioner's filing of a Motion for Re-setting of the Hearing effectively cured the
defect of the substituted service of summons. Petitioner's insistence of lack of jurisdiction over his
person is utterly lacking in any legal basis.

WHEREFORE, premises considered, the present Petition is DISMISSED. The Decision dated 9
September 1997 rendered by the Regional Trial Court of Paraaque City in Civil Case No. 96-0473 is
hereby AFFIRMED and the Temporary Restraining Order issued by this Court on 16 June 1999 is
hereby LIFTED. With costs.
SO ORDERED.

G.R. No. 171092

March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,

vs.
BRITISH AIRWAYS, Respondent.
DECISION
DEL CASTILLO, J.:
Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a power
introduced for the public good, on account of the necessity of dispensing justice. 1
Factual Antecedents
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint 2 for damages against respondent
British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on February 28,
2005, she took respondents flight 548 from London, United Kingdom to Rome, Italy. Once on board,
she allegedly requested Julian Halliday (Halliday), one of the respondents flight attendants, to assist
her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly refused to
help and assist her, and even sarcastically remarked that "If I were to help all 300 passengers in this
flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the
business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the other
passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules and
regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the planes safety
regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere few
centimeters away from that of the petitioner and menacingly told her that "We dont like your attitude."
Upon arrival in Rome, petitioner complained to respondents ground manager and demanded an
apology. However, the latter declared that the flight stewards were "only doing their job."
Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay P5 million
as moral damages, P2 million as nominal damages, P1 million as exemplary damages, P300,000.00
as attorneys fees,P200,000.00 as litigation expenses, and cost of the suit.
On May 16, 2005, summons, together with a copy of the complaint, was served on the respondent
through Violeta Echevarria, General Manager of Euro-Philippine Airline Services, Inc. 3
On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to
Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the respondent.
Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction
over the complaint for damages pursuant to the Warsaw Convention, 5 Article 28(1) of which provides:
An action for damages must be brought at the option of the plaintiff, either before the court of domicile
of the carrier or his principal place of business, or where he has a place of business through which the
contract has been made, or before the court of the place of destination.
Thus, since a) respondent is domiciled in London; b) respondents principal place of business is in
London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome); 6 and d)
Rome, Italy is petitioners place of destination, then it follows that the complaint should only be filed in
the proper courts of London, United Kingdom or Rome, Italy.

Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person of the
respondent because the summons was erroneously served on Euro-Philippine Airline Services, Inc.
which is not its resident agent in the Philippines.
On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for respondent
to file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed on June 27, 2005, an
Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and Issuance of Alias
Summons.8 Petitioner alleged that upon verification with the Securities and Exchange Commission,
she found out that the resident agent of respondent in the Philippines is Alonzo Q. Ancheta.
Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve Pending Incident and
Opposition to Motion to Dismiss.9
Ruling of the Regional Trial Court
On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order 10 granting respondents
Motion to Dismiss. It ruled that:
The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our Courts
have to apply the principles of international law, and are bound by treaty stipulations entered into by
the Philippines which form part of the law of the land. One of this is the Warsaw Convention. Being a
signatory thereto, the Philippines adheres to its stipulations and is bound by its provisions including
the place where actions involving damages to plaintiff is to be instituted, as provided for under Article
28(1) thereof. The Court finds no justifiable reason to deviate from the indicated limitations as it will
only run counter to the provisions of the Warsaw Convention. Said adherence is in consonance with
the comity of nations and deviation from it can only be effected through proper denunciation as
enunciated in the Santos case (ibid). Since the Philippines is not the place of domicile of the
defendant nor is it the principal place of business, our courts are thus divested of jurisdiction over
cases for damages. Neither was plaintiffs ticket issued in this country nor was her destination Manila
but Rome in Italy. It bears stressing however, that referral to the court of proper jurisdiction does not
constitute constructive denial of plaintiffs right to have access to our courts since the Warsaw
Convention itself provided for jurisdiction over cases arising from international transportation. Said
treaty stipulations must be complied with in good faith following the time honored principle of pacta
sunt servanda.
The resolution of the propriety of service of summons is rendered moot by the Courts want of
jurisdiction over the instant case.
WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and this
case is hereby ordered DISMISSED.
Petitioner filed a Motion for Reconsideration but the motion was denied in an Order 11 dated January 4,
2006.
Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions of
law, raising the following issues:
Issues
I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT
COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A
FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN
COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.

II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO

DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE
AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED
ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY
LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.
Petitioners Arguments
Petitioner argues that her cause of action arose not from the contract of carriage, but from the tortious
conduct committed by airline personnel of respondent in violation of the provisions of the Civil Code
on Human Relations. Since her cause of action was not predicated on the contract of carriage,
petitioner asserts that she has the option to pursue this case in this jurisdiction pursuant to Philippine
laws.
Respondents Arguments
In contrast, respondent maintains that petitioners claim for damages fell within the ambit of Article
28(1) of the Warsaw Convention. As such, the same can only be filed before the courts of London,
United Kingdom or Rome, Italy.
Our Ruling
The petition is without merit.
The Warsaw Convention has the force and effect of law in this country.
It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III v.
Northwest Orient Airlines,12 we held that:
The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules
Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took
effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution
No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio
Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950.
The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955,
President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto,
"to the end that the same and every article and clause thereof may be observed and fulfilled in good
faith by the Republic of the Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and,
as such, has the force and effect of law in this country.13
The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred,
was between the United Kingdom and Italy, which are both signatories to the Warsaw Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods
performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed
by an air transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and
the place of destination, whether or not there be a break in the carriage or a transhipment, are

situated either within the territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place within a territory subject to
the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is
not a party to this Convention. A carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to be international for the purposes of this Convention.
(Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of carriage are situated
within the territories of two High Contracting Parties, said carriage is deemed an "international
carriage". The High Contracting Parties referred to herein were the signatories to the Warsaw
Convention and those which subsequently adhered to it. 14
In the case at bench, petitioners place of departure was London, United Kingdom while her place of
destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 signed and ratified the Warsaw
Convention. As such, the transport of the petitioner is deemed to be an "international carriage" within
the contemplation of the Warsaw Convention.
Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject matter
of the action is governed by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the contract has been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation domiciled in London, United
Kingdom with London as its principal place of business. Hence, under the first and second
jurisdictional rules, the petitioner may bring her case before the courts of London in the United
Kingdom. In the passenger ticket and baggage check presented by both the petitioner and
respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the third
jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome in Italy.
Finally, both the petitioner and respondent aver that the place of destination is Rome, Italy, which is
properly designated given the routing presented in the said passenger ticket and baggage check.
Accordingly, petitioner may bring her action before the courts of Rome, Italy. We thus find that the
RTC of Makati correctly ruled that it does not have jurisdiction over the case filed by the petitioner.
Santos III v. Northwest Orient Airlines18 applies in this case.
Petitioner contends that Santos III v. Northwest Orient Airlines 19 cited by the trial court is inapplicable
to the present controversy since the facts thereof are not similar with the instant case.
We are not persuaded.
In Santos III v. Northwest Orient Airlines, 20 Augusto Santos III, a resident of the Philippines, purchased
a ticket from Northwest Orient Airlines in San Francisco, for transport between San Francisco and
Manila via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to Manila segment of his
ticket, despite his prior reservation. Contending that Northwest Orient Airlines acted in bad faith and
discriminated against him when it canceled his confirmed reservation and gave his seat to someone
who had no better right to it, Augusto Santos III sued the carrier for damages before the RTC.

Northwest Orient Airlines moved to dismiss the complaint on ground of lack of jurisdiction citing Article
28(1) of the Warsaw Convention. The trial court granted the motion which ruling was affirmed by the
Court of Appeals. When the case was brought before us, we denied the petition holding that under
Article 28(1) of the Warsaw Convention, Augusto Santos III must prosecute his claim in the United
States, that place being the (1) domicile of the Northwest Orient Airlines; (2) principal office of the
carrier; (3) place where contract had been made (San Francisco); and (4) place of destination (San
Francisco).21
We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:
A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a
venue provision. First, the wording of Article 32, which indicates the places where the action for
damages "must" be brought, underscores the mandatory nature of Article 28(1). Second, this
characterization is consistent with one of the objectives of the Convention, which is to "regulate in a
uniform manner the conditions of international transportation by air." Third, the Convention does not
contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the
phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last
sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time when the
damage occurred.
xxxx
In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual
concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of
the Warsaw Convention, following which the jurisdiction of a particular court must be established
pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is
determined will the issue of venue be taken up. This second question shall be governed by the law of
the court to which the case is submitted.22
Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines 23 is analogous to the
instant case because (1) the domicile of respondent is London, United Kingdom; 24 (2) the principal
office of respondent airline is likewise in London, United Kingdom; 25 (3) the ticket was purchased in
Rome, Italy;26 and (4) the place of destination is Rome, Italy.27 In addition, petitioner based her
complaint on Article 217628 of the Civil Code onquasi-delict and Articles 1929 and 2130 of the Civil Code
on Human Relations. In Santos III v. Northwest Orient Airlines, 31 Augusto Santos III similarly posited
that Article 28 (1) of the Warsaw Convention did not apply if the action is based on tort. Hence,
contrary to the contention of the petitioner, the factual setting of Santos III v. Northwest Orient
Airlines32 and the instant case are parallel on the material points.
Tortious conduct as ground for the petitioners complaint is within the purview of the Warsaw
Convention.
Petitioner contends that in Santos III v. Northwest Orient Airlines, 33 the cause of action was based on
a breach of contract while her cause of action arose from the tortious conduct of the airline personnel
and violation of the Civil Code provisions on Human Relations. 34 In addition, she claims that our
pronouncement in Santos III v. Northwest Orient Airlines 35 that "the allegation of willful misconduct
resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw
Convention," is more of an obiter dictum rather than the ratio decidendi. 36 She maintains that the fact
that said acts occurred aboard a plane is merely incidental, if not irrelevant. 37
We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion
entirely unnecessary for the decision of the case" and thus "are not binding as precedent." 38 In Santos
III v. Northwest Orient Airlines,39 Augusto Santos III categorically put in issue the applicability of Article
28(1) of the Warsaw Convention if the action is based on tort.

In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient to
exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of action
based on tort did not bring the case outside the sphere of the Warsaw Convention was our ratio
decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly, the contention of
the herein petitioner that the said ruling is an obiter dictum is without basis.
Relevant to this particular issue is the case of Carey v. United Airlines, 40 where the passenger filed an
action against the airline arising from an incident involving the former and the airlines flight attendant
during an international flight resulting to a heated exchange which included insults and profanity. The
United States Court of Appeals (9th Circuit) held that the "passenger's action against the airline carrier
arising from alleged confrontational incident between passenger and flight attendant on international
flight was governed exclusively by the Warsaw Convention, even though the incident allegedly
involved intentional misconduct by the flight attendant." 41
In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline in the
state court, arising from a confrontation with the flight attendant during an international flight to
Mexico. The United States Court of Appeals (9th Circuit) held that the "Warsaw Convention governs
actions arising from international air travel and provides the exclusive remedy for conduct which falls
within its provisions." It further held that the said Convention "created no exception for an injury
suffered as a result of intentional conduct" 43 which in that case involved a claim for intentional
infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed against an airline passenger during the
course of the international carriage do not bring the case outside the ambit of the Warsaw
Convention.
Respondent, in seeking remedies from the trial court through special appearance of counsel, is not
deemed to have voluntarily submitted itself to the jurisdiction of the trial court.
Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial court
when the latter stated in its Comment/Opposition to the Motion for Reconsideration that "Defendant [is
at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was Euro-Philippines
Airlines Services, Inc. that has been making a special appearance since x x x British Airways x x x has
been clearly specifying in all the pleadings that it has filed with this Honorable Court that it is the one
making a special appearance."44
In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his person,
as by reason of absence or defective service of summons, and he also invokes other grounds for the
dismissal of the action under Rule 16, he is not deemed to be in estoppel or to have waived his
objection to the jurisdiction over his person."46
This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan, 47 where
we reiterated our ruling in La Naval Drug Corporation v. Court of Appeals 48 and elucidated thus:
Special Appearance to Question a Courts Jurisdiction Is Not
Voluntary Appearance
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:
Sec. 20. Voluntary appearance. The defendants voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from
lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his person,
together with other grounds raised therein, is not deemed to have appeared voluntarily before the
court. What the rule on voluntary appearance the first sentence of the above-quoted rule means is
that the voluntary appearance of the defendant in court is without qualification, in which case he is
deemed to have waived his defense of lack of jurisdiction over his person due to improper service of
summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a)
motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss
and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II;
and (b) motion for partial reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special
appearance with the purpose of challenging the jurisdiction of the SB over her person and that of her
three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of her
three children for lack of valid service of summons through improvident substituted service of
summons in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she
filed her motions for reconsideration, even with a prayer to admit their attached Answer Ex Abundante
Ad Cautelam dated January 22, 2005 setting forth affirmative defenses with a claim for damages. And
the other subsequent pleadings, likewise, did not abandon her stance and defense of lack of
jurisdiction due to improper substituted services of summons in the forfeiture cases. Evidently, from
the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure, petitioner and her sons
did not voluntarily appear before the SB constitutive of or equivalent to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said case
elucidates the current view in our jurisdiction that a special appearance before the courtchallenging
its jurisdiction over the person through a motion to dismiss even if the movant invokes other
groundsis not tantamount to estoppel or a waiver by the movant of his objection to jurisdiction over
his person; and such is not constitutive of a voluntary submission to the jurisdiction of the
court.1avvphi1
Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to
cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such
defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons
made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And perforce,
the proceedings in the subject forfeiture cases, insofar as petitioner and her three children are
concerned, are null and void for lack of jurisdiction. (Emphasis supplied)
In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss and
other pleadings before the trial court cannot be deemed to be voluntary submission to the jurisdiction
of the said trial court. We hence disagree with the contention of the petitioner and rule that there was
no voluntary appearance before the trial court that could constitute estoppel or a waiver of
respondents objection to jurisdiction over its person.
WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court of
Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.
SO ORDERED.

SPOUSES
RUSTIA,

CARLOS

and

Petitioners,

TERESITA

G.R. No. 156903

Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
- versus -

CORONA,
AZCUNA, and
GARCIA, JJ.

EMERITA RIVERA,

Promulgated:

Respondent.
November 24, 2006

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

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, assailing the Decision [1] of the Court of Appeals, dated August 29, 2002,
in CA-G.R. SP No. 63265.

In September 1995, Emerita Rivera, respondent, filed with the Metropolitan Trial Court (MeTC),
Branch 36, Quezon City, a complaint for sum of money against spouses Carlos and Teresita Rustia,
petitioners, and Rosemarie F. Rocha. The complaint was docketed as Civil Case No.
0206. Respondent alleged therein that petitioners obtained from her a loan of P130,000.00, payable
within thirty (30) days without need of prior demand. As security for the loan, petitioners executed a

promissory note, with Rosemarie Rocha as their co-maker. The loan bears an interest of five percent
(5%) per month. Petitioners paid the interest corresponding to the period from January 1991 to March
1994. Thereafter, despite respondents written demands, they failed to pay any interest or the principal
obligation. Respondent then prayed that judgment be rendered ordering petitioners to pay the loan,
the accrued interest thereon, and attorneys fees.

After the courts denial of their motion to dismiss the complaint, petitioners filed their answer admitting
that respondent extended to them a loan of P130,000.00. However, they denied having agreed to pay
interest thereon. While they paid respondent P6,500.00 every month, however, it was for the
settlement of the principal obligation. In fact, they overpaid P123,500.00. They prayed that the case
be dismissed and that respondent be ordered to refund to them their overpayment plus damages,
attorneys fees, and litigation expenses.

During the hearing, respondent offered in evidence petitioners promissory note and petitioner Teresita
Rustias letter addressed to respondent agreeing to pay 5% monthly interest.

Teresita denied having borrowed P130,000.00 from respondent; that respondent delivered the said
amount to petitioners as investment in the latters business; and that the monthly payment
of P6,500.00 they tendered to respondent corresponds to her share in the profits.

On June 11, 1999, the trial court rendered its Decision, [2] the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants, as follows:

1.

Ordering the defendants to pay, jointly and severally, the plaintiff the sum
of P130,000.00 plus accrued interest of 5% per month to be reckoned from
April 1994 until the same is fully paid;

2.

Ordering the defendants to pay, jointly and severally, the sum

of P10,000.oo as and for attorneys fees;

3.

Ordering the defendants to pay the costs of suit.

SO ORDERED.

On appeal by petitioners, the Regional Trial Court (RTC), Branch 77, Quezon City affirmed
the MeTCs Decision in toto.

Petitioners filed a motion for reconsideration but it was denied by the RTC as it does not
contain a notice of the time and place of hearing required by Sections 4 and 5, Rule 15 of the 1997
Rules of Civil Procedure, as amended.

Petitioners filed with the Court of Appeals a petition for review, docketed as CA-G.R. SP No.
63265, but it was denied in a Decision dated August 29, 2002. Their motion for reconsideration was
likewise denied.

Hence, the instant petition raising the following issues:

1.

Whether the Court of Appeals erred in holding that the motion for reconsideration
filed with the RTC by petitioners is but a mere scrap of paper for lack of notice of
hearing;

2.

Whether the Court of Appeals erred when it failed to apply Article 1956 of the
Civil Code providing that no interest shall be due unless it has been expressly
stipulated in writing;

On the first issue, Sections 4 and 5, Rule 15 of the 1997 Rules of Civil Procedure, as
amended, provide:

SEC. 4. Hearing of motion. Except for motions which the court may act upon
without prejudicing the rights of the adverse party, every written motion shall be set
for hearing by the applicant.

Every written motion required to be heard and the notice of the

hearing thereof shall be served in such a manner as to ensure its receipt by the
other party at least three (3) days before the date of hearing, unless the court for
good cause sets the hearing on shorter notice.

SEC. 5. Notice of hearing. The notice of hearing shall be addressed to all

parties concerned, and shall specify the time and date of the hearing which must
not be later than ten (10) days after the filing of the motion.

Section 4 lays the general rule that all written motions shall be set for hearing by the movant,
except the non-litigated motions or those which may be acted upon by the court without prejudicing
the rights of the adverse party. These ex parte motions include a motion for extension of time to file
pleadings,[3] motion for extension of time to file an answer,[4] and a motion for extension of time to file a
record on appeal.[5] In Manila Surety and Fidelity Co., Inc. v. Bath Construction and Company,[6] we
ruled that a notice of time and place of hearing is mandatory for motions for new trial or motion
for reconsideration, as in this case. We have reiterated this doctrine in Magno v. Ortiz,[7]Calero v.
Yaptichay,[8] Vda. de Azarias v. Maddela,[9] Phil. Advertising Counselors, Inc. v. Revilla,[10] Sacdalan v.
Bautista,[11] New Japan Motors, Inc. v. Perucho,[12]Firme v. Reyes, et al.,[13] and others. More recently,
in National Commercial Bank of Saudi Arabia v. Court of Appeals,[14] we reaffirmed the rule that the
requirement of notice under Sections 4 and 5, Rule 15 is mandatory and the lack thereof is fatal to a
motion for reconsideration.

We thus hold that the Court of Appeals did not err when it affirmed the RTC ruling that
petitioners motion for reconsideration is but a mere scrap of paper because it does not comply with
Sections 4 and 5, Rule 15.

Anent the second issue, contrary to petitioners contention, the trial court found that petitioner
Teresita Rustia sent respondent a letter begging the latters indulgence regarding her difficulty and that
of her husband in paying the 5% monthly interest on their P130,000.00 loan. This finding by the trial
court was upheld by the RTC and the Court of Appeals. Indeed, such letter proves that petitioners
agreed to pay interest. It is basic that findings of fact by the trial court, when affirmed by the Court of
Appeals, are binding and conclusive upon this Court. [15] Verily, the Court of Appeals did not err when it
sustained the lower courts finding that respondent is entitled to the payment of interests on the subject
loan.

WHEREFORE, we DENY the petition. The challenged Decision of the Court of Appeals
dated August 29, 2002 in CA-G.R. SP No. 63265 is AFFIRMED IN TOTO. Costs against petitioners.

SO ORDERED.

G.R. No. 151170

May 29, 2007

VICTORY LINER, INC., Petitioner,

vs.
MICHAEL MALINIAS, Respondent.
DECISION
TINGA, J.:
The matter began as a simple civil suit for damages arising from an unremarkable traffic accident.
However, the procedural aspect of the case has since taken on a life of its own, transforming what
should be a molehill into a mountain built on sediments of compounded errors.
This case finds its origin from a vehicular collision that occurred in La Union on 19 March 1996
between a bus owned by petitioner Victory Liner, Inc. and an Isuzu Truck used by respondent Michael
Malinias.1 Nobody died, but both vehicles were damaged from the accident. A complaint for sum of
money and damages was instituted by respondent against petitioner and the bus driver, Leoncio
Bulaong, alleging pecuniary damage to the truck in the amount of P47,180.00, representing lost
income for the non-use of the truck as it underwent repairs in the amount of P15,000.00. Claims for
exemplary damages and attorneys fees were also lodged in the complaint, 2which was filed with the
Municipal Trial Court (MTC) of La Trinidad, Benguet. After pre-trial, the bus driver was dropped as
defendant in the case after summons could not be served on him and respondent agreed to waive his
cause of action against said driver.3
In the course of trial, respondent finished presenting his evidence and rested his case. In the
meantime, counsel for petitioner filed a motion to withdraw as counsel, but the same was denied by
the MTC in an Order dated 15 September 1997 as the motion did not bear any signature of conformity
from the petitioner. When the case was called for the reception of petitioners evidence on the
previously scheduled date of 27 October 1997, no appearance was made for the bus company.
Respondent thus immediately moved that petitioner be declared to have waived its right to adduce
evidence in its favor and that the case be deemed submitted for judgment. The MTC found merit in
respondents contention, and ordered the case be deemed submitted for decision as of 27 October
1997. On 13 January 1998, the MTC rendered judgment in favor of respondent, awarding him the
sum ofP82,180.00.
Through its new counsel, petitioner filed a Motion for Reconsideration. The Notice of Hearing therein
stated: "Please submit the foregoing Motion for Reconsideration for hearing before the Honorable
Court at a schedule and time convenient to this Honorable Court and the parties." 4 The MTC ruled in
an Order5 dated 23 February 1998 that the notice did not conform with the mandatory requirements of
Section 5, Rule 15 of the 1997 Rules of Civil Procedure, and that the motion was thus a mere scrap of
paper which did not suspend the period to appeal. Accordingly, the MTC declared that its earlier
judgment dated 13 January 1998 had become final and executory. In the same order and upon the
same predicates, the MTC also granted the Motion for Issuance of Writ of Execution filed by
respondent.
Petitioner responded to the foregoing developments by filing a Notice of Appeal, as well as a motion
for the inhibition by the MTC judge which motion was immediately granted. The case was assigned to
a new MTC judge, who was then tasked with ruling on the Notice of Appeal. It was only on 28
September 1999, or eighteen (18) months after the Notice of Appeal was filed, that the MTC acted on
the same and ruled that it had been filed beyond the reglementary period. Again, the MTC reiterated
that the Judgment dated 13 January 1998 had long become final and executory since the fatally
defective Motion for Reconsideration did not toll the reglementary period for appeal. 6

What then followed was a series of unsuccessful attempts by petitioner to have the lower courts set
aside or stay the now-final judgment against it. First, petitioner filed a Petition for Relief from
Judgment with the MTC on 25 October 1999. 7 This was denied by the MTC in an Order 8 dated 13
March 2000 on the ground that it had been filed out of time. The MTC explained that the petition for
relief from judgment must have been filed either within sixty (60) days from the date petitioners new
counsel learned of the judgment, or sixty (60) days after learning that the Motion for Reconsideration
had been denied for having been filed out of time. Neither circumstance was met by petitioner.
Subsequently, the MTC likewise denied a Motion for Reconsideration filed by petitioner.9
Second, petitioner filed on 26 June 2000 a petition for certiorari 10 under Rule 65 with the Regional
Trial Court (RTC) of La Trinidad, Benguet, imputing grave abuse of discretion to the MTC, and
seeking to annul four (4) of the MTCs rulings, namely: the original 1998 judgment against petitioner;
the 1999 order which declared that the Notice of Appeal was filed out of time; and the two orders
dismissing the Petition for Relief from Judgment. The petition for certiorari was dismissed by the RTC
in an Order11 dated 21 November 2000. The RTC agreed with the MTC that the Petition for Relief from
Judgment had been belatedly filed. The RTC also reiterated the consistent ruling that the judgment in
question had already become final in February of 1998. Thus, the RTC could not ascribe grave abuse
of discretion to the MTC.12
Petitioner filed a motion for reconsideration of the RTC ruling, while respondent filed with the same
court a motion for execution. On 3 July 2001, at a point when petitioner had allegedly not yet received
any order acting on its motion for reconsideration, petitioner received instead an Order dated 21 June
200113 where the RTC directed the issuance of a writ of execution in favor of respondent, the MTC
judgment having already become final and executory.1vvphi1.nt
Third, petitioner filed on 17 July 2001 with the Court of Appeals a "Petition for Certiorari to Annul
Judgment" under the aegis of Rule 47 of the 1997 Rules of Civil Procedure. Interestingly, based on
the first paragraph and the express relief prayed for in this petition, the "judgment" sought to be
annulled was not the final and executory judgment of the MTC, but rather, the two orders of the RTC
which successively dismissed the special civil action for certiorari, and directed the issuance of a writ
of execution in favor of respondent.14 However, in explaining the "nature of the petition," petitioner
claimed that it was seeking to annul the judgment and orders of both the RTC and the
MTC,15 although the issues identified in the petition pertain only to "serious errors" and "grave abuse
of discretion" on the part of the RTC. 16 There is a general allegation that the acts of the RTC in
granting the motion for execution even before petitioners motion for reconsideration was acted upon
constituted an extrinsic fraud,17but no particular arguments were offered to explain why that was so.
The petition for annulment of judgment was accompanied by a Verification and Certification Against
Forum Shopping which was signed by counsel for petitioner. On that basis, the Court of Appeals
dismissed the petition outright in a Resolution 18 dated 26 July 2001, stressing the rule that it should be
the petitioner, not its counsel, which should execute the verification and certification against forum
shopping.1awphi1.nt
Petitioner filed a Motion for Reconsideration 19 where it pointed out that it had simultaneously filed with
its petition for annulment of judgment a Motion for Extension 20 to submit the certificate of authority to
file the petition. The day after the petition was filed, or on 18 July 2001, petitioner filed with the Court
of Appeals the said Certificate of Authority.21 The Certificate of Authority prepared by petitioners
corporate secretary, dated 17 July 2001, certified that on 10 July 2001, petitioners board of directors
authorized counsel for petitioner to file "the necessary action, petition or any other pleadings
necessary in any and all hierarchy of courts" with respect to the instant case. 22
Nonetheless, the Court of Appeals, on 5 December 2001, issued a Resolution 23 denying the Motion
for Reconsideration. The appellate court observed that in petitioners Motion for Extension to submit
the certification of authority, it was explained that petitioners counsel was constrained to sign the
verification and certification against forum shopping because "the certificate of authority granted to the

petitioners station manager in Baguio City has been misplaced." 24 The Court of Appeals thus
concluded that "the one really authorized to represent the petitioner is Operations Manager Rogelio
Ortega stationed in Baguio City, but whose authority has been misplaced or lost, as in fact, the latter
signed the certification on non-forum shopping in the petition filed before the [RTC]." 25 The Court of
Appeals also reiterated that subsequent compliance such as petitioners counsels subsequent
submission of her authority to represent the petitioner, would not excuse petitioners failure to comply
with the required certification against forum-shopping in the first instance.
The Court of Appeals further held that upon a "judicious reading of the instant petition for the
annulment of judgment and its annexes," it was clear that the ground of extrinsic fraud raised by
petitioner had already been availed of in its earlier petition for relief from judgment before the MTC.
Such circumstance contradicted Section 2 of Rule 47, which provides that "extrinsic fraud shall not be
a valid ground (for annulment of judgment) if it was availed of, or could have been availed of, in a
motion for new trial or petition for relief."26
Hence this petition for review under Rule 45, seeking that the Court "annul and set aside the
questioned Resolutions of the Court of Appeals x x x as well as the twin Orders of [the RTC] x x x and
remand the case [to] the court of origin for further proceedings and give petitioner its right to present
its case in the interest of due process and substantial errors." 27
Two sets of arguments are raised. The first concerns the errors ascribed to the Court of Appeals in
dismissing outright the petition for annulment of judgment. The second concerns the alleged grave
abuse of discretion on the part of the RTC in directing the issuance of the writ of execution even
without resolving petitioners motion for reconsideration.
The reasoning employed by the Court of Appeals in dismissing the petition for annulment of judgment
is fraught with error and thus cannot be sustained. At the same time, however, the petition now before
the Court cannot be granted.l^vvphi1.net
As indicated in the 5 December 2001 Resolution of the Court of Appeals, the two main grounds relied
upon for dismissing the petition for annulment of judgment were petitioners failure to comply with the
requirements in the execution of the verification and certification against forum-shopping, and the
petitions reliance on the ground of extrinsic fraud which could have been raised or availed of in a
motion for new trial or petition for relief. We turn our attention to the first ground.
It is of importance that, as borne by the Certificate of Authority executed by petitioners Corporate
Secretary, counsel for petitioner had been authorized by petitioners Board of Directors to prepare and
file with the Court of Appeals the petition herself as of 10 July 2001, or seven (7) days before the
petition was indeed filed. We fail to understand the significance attached by the Court of Appeals on
the prior authority of the Baguio station manager to perform the same acts. The impression left by the
disquisition of the appellate court is that such prior authority was beyond recall by petitioners Board of
Directors, and that no new person could be similarly authorized by the corporation to perform such
acts.
The fact that the previous authority may have been misplaced or lost, thus causing petitioner to
authorize a new person to file the necessary pleadings or petitions in the case involving the
respondent, is of no consequence if the new authority is issued before the filing of the pleading that
requires verification or certification against forum-shopping. The circumstance is similar to a situation
where the previously authorized person had died or severed his or her connection with the corporate
litigant. Juridical persons appearing before the courts are not perpetually bound to maintain the same
authorized representatives in the preparation and certification of pleadings.
The appellate court cited the rule that substantial compliance could not cure the defect in the
verification or certification requirements. Yet the bare fact remains that counsel for petitioner was
authorized to prepare the petition and to execute the verification and certification requirements at the

time the petition was filed with the Court of Appeals, a fact borne out by the Certificate of Authority
itself. The error consisted in petitioner counsels failure to attach such certificate to the petition, but
she did submit said certificate to the Court of Appeals the very next day. Petitioner emphasizes that
the certificate of authority submitted on 18 July 2001 was filed "on the 15th day of the 60-day
reglementary period to file appeal," perhaps to stress the point that if the petition itself was filed on the
same day as
the certificate of authority, the petition would have still been timely. However, petitioner seems to
forget that under Rule 47, its petition for annulment of judgment based on extrinsic fraud 28 actually
had a term of four (4) years29as "reglementary period."
In any event, the observation of the Court of Appeals that substantial compliance "will not suffice in
the matter involving strict observance" of the certification requirement on non-forum shopping
contradicts our recent jurisprudence which holds that "[t]he rule of
substantial compliance may be availed of with respect to the contents of the certification [against
forum shopping]."30 While the lack of certification against forum shopping is generally not cured by its
submission after the filing of the petition, and the submission of a certificate against forum shopping is
deemed obligatory, the requirement has been relaxed under justifiable circumstances under
the rule on substantial compliance. 31 The same characteristics hold true as to the verification
requirement.32
We hold and so rule that the appellate courts utilization on petitioners belated submission of the
complete verification and certification requirements as anchor for the dismissal of the petition for
annulment of judgment does not merit affirmance.
The Court of Appeals did rely on another ground for the dismissal of the petition for annulment of
judgment, the reliance on the ground of extrinsic fraud which could have been availed of in a motion
for new trial or petition for relief. The formulation by the appellate court on that score cannot be fully
adopted by the Court. However, to demonstrate why the Court of Appeals erred in that regard, it is
necessary to discuss the more fundamental errors that have attended the facts of this case, errors for
which petitioner is mostly to blame, errors which militate against the grant of this petition.
From the timeline, it appears that petitioners woes began after the motion to withdraw as counsel
filed by its former lawyer was not allowed by the MTC due to the absence of the written conformity
thereto of the petitioner.33 At the next hearing date, when petitioner was to commence its presentation
of evidence, nobody appeared in its behalf, causing the MTC, upon motion, to consider as waived
petitioners right to present its evidence. The subsequent rendition of the MTC Judgment without
considering the evidence of petitioner would form its initial cause of distress.
But what proved to be the most crucial failure on the part of petitioner was to file a Motion for
Reconsideration of the MTC Judgment which contained a defective Notice of Hearing, failing as it did
to set a date for hearing. Under Sections 5 and 6 of Rule 15, the notice of hearing shall be addressed
to the parties concerned and shall specify the time and date of the hearing of the motion; no motion
shall be acted upon by the court without proof of service of the notice thereof, except when the court
is satisfied that the rights of the adverse party are not affected. 34
Not only did the defect render the motion for reconsideration itself unworthy of consideration, it more
crucially failed to toll the period to appeal. A motion without a notice of hearing is pro forma, a mere
scrap of paper that does not toll the period to appeal, and upon the expiration of the 15-day period,
the questioned order or decision becomes final and executory. The rationale behind this rule is plain:
unless the movant sets the time and place of hearing, the court will be unable to determine whether
the adverse party agrees or objects to the motion, and if he objects, to hear him on his objection,
since the rules themselves do not fix any period within which he may file his reply or opposition. 35

Thus, the MTC judgment became final and executory despite the filing of the Motion for
Reconsideration thereto, as said motion did not toll the period for filing an appeal therefrom. Yet that
did not mean that petitioner was left bereft of further remedies under our Rules. For one, petitioner
could have assailed the MTCs denial of the Motion for Reconsideration through a special civil action
for certiorari under Rule 65 alleging grave abuse of discretion amounting to lack of jurisdiction on the
part of the MTC in denying the motion. If that remedy were successful, the effect would have been to
void the MTCs denial of the Motion for Reconsideration, thus allowing petitioner to again pursue such
motion as a means towards the filing of a timely appeal.
Another remedy for the petitioner is found under Rule 38 of the 1997 Rules of Civil Procedure, which
governs petitions for relief from judgment. Indeed, Section 2, Rule 38 finds specific application in this
case, as it provides that "[w]hen a judgment or final order is rendered by any court in a case, and a
party thereto, by fraud, accident, mistake, or excusable negligence, has been prevented from taking
an appeal, he may file a petition [for relief from denial of appeal] in such court and in the same case
praying that the appeal be given due course." 36 Such petition should be filed within sixty (60) days
after the petitioner learns of the judgment or final order, and not more than six (6) months after such
judgment or final order was entered. The facts of this case indicate that petitioner could have timely
resorted to this remedy.
What the petitioner undertook instead was to pursue the notice of appeal, despite the unequivocal
statement in the MTC Order of 23 February 1998 that "the Judgment [sought to be reconsidered] has
now become final and executory." 37 The Rules mandate that an appeal by notice of appeal is deemed
perfected upon the filing of the notice of appeal in due time, 38 due time being within fifteen (15) days
after notice to the appellant of the judgment or final order appealed from. 39 While the period of appeal
shall be interrupted by a timely motion for reconsideration, 40 the MTC deemed, with legal basis, that
the motion interposed by petitioner could not have been deemed filed and should instead be treated
as "a mere scrap of paper."
The apposite reaction on the part of petitioner would have been to seek the reversal of the MTC Order
which disregarded its motion for reconsideration, through either of the remedies we explained above.
Certiorari has as its object the nullification of the MTC Order on the basis that it was rendered with
grave abuse of discretion, while a petition for relief seeks that the MTC allow the appeal despite the
finality of judgment on the ground that petitioner was prevented from taking an appeal due to fraud,
accident, mistake, or excusable negligence. Either remedy would have had the benefit of intellectual
honesty, as they recognized the MTC declaration that the judgment had become final. At the same
time, either remedy provides the appropriate recourse to the petitioner in the face of such declaration,
since both petitions for certiorari and for relief from judgment would be aimed at setting aside the
adverse ill-effects of the MTCs pronouncement.
On the other hand, a notice of appeal pursued even with a prior pronouncement by the trial court that
the judgment sought to be appealed was already final is either misconceived or downright obtuse. It
may have been a different matter if the notice of appeal was undertaken without there being any prior
express ruling from the trial court that the appealed judgment was already final and that statement
was instead expressed at the time the trial court denies the notice of appeal, for at least in that case,
the appellant proceeded with the appeal with the comfort that the trial court had not yet said that the
appeal was barred. However, as in this case, where the trial court already notified the would-be
appellant that the judgment was already final, executory and thus beyond appeal, appellant should
suffer the consequences if the notice of appeal is nonetheless stubbornly pursued.
Within this context, it does not even really matter whether petitioners legal rights were unduly
impaired by the MTCs abject refusal to recognize its motion for reconsideration, thus giving rise to the
finality of the judgment in question. Even if the petitioner has the right to feel aggrieved over the
MTCs action in this case, it should not have pretended that its right to appeal remained undiminished
and viable by filing the notice of appeal. It should have instead undertook first to remove the cloud that
hovered on its right to appeal. As earlier explained, our procedural rules give ample guidance and
method as to how petitioner could have removed such cloud. A notice of appeal under these

circumstances is unresponsive to the main impediment to petitioners cause the prevailing finality of
the MTC judgment.
Truth be told, the fact that the MTC had taken more than eighteen (18) months before it acted on the
Notice of Appeal is close to scandalous, even if such delay was caused in part by the inhibition of the
original judge who heard the case. Still, the delay could not have extenuated the defunctness of
appeal as a remedy available to petitioner. A notice of appeal presupposes that appeal still exists as a
right to the appellant, hence the use of the term "notice," since the function of the submission is
merely to notify the trial court that the appellant was availing of the right to appeal, and not to seek the
courts permission that it be allowed to pose an appeal. In the same vein, the "denial" or refusal to
take cognizance of a notice of appeal is predicated on a finding that the right to appeal did not or no
longer existed, and not on the refusal of the trial court to allow the appellant to pursue the appeal.
Hence, petitioner could not, by way of notice of appeal, seek the restoration of its extinct right to
appeal. Despite the egregious delay by the MTC in acting on the Notice of Appeal, the fact remains
that the MTC could not have given due course to the appeal whether it had acted the day after the
notice of appeal was filed, or more than eighteen (18) months later.
Notably, it was only after the Notice of Appeal was denied that the petitioner had pursued the two
remedies it could have undertaken from the MTC Order declaring its motion for reconsideration as a
mere scrap of paper. First, petitioner filed a Petition for Relief from Judgment with the MTC. The
problem with this remedy was the utter belatedness in the resort thereto. Section 3 of Rule 38
requires that said petition must be filed within sixty (60) days after petitioner learns of the judgment,
final order or other proceeding to be set aside, and not more than six (6) months after such judgment
or final order was entered. Neither benchmark was met by the petitioner, since the petition was filed
only on 25 October 1999, or some sixteen (16) months after the rendition of the judgment sought to
be set aside, and around fourteen (14) months after such judgment was declared final and executory.
Petitioner had opportunely learned of both the rendition of the judgment and the Order refusing to give
cognizance to the motion for reconsideration. Had it simply consulted the rulebook, it should have
realized that a petition for relief from judgment was a remedy available to it, and certainly one more
appropriate than the Notice of Appeal it ultimately resorted to.
Following the denial of the Petition for Relief from Judgment, petitioner then filed a petition for
certiorari under Rule 65 with the RTC. Said petition was designed to be omnibus in nature, as it
sought to assail all the adverse rulings handed down by the MTC, including the original Judgment
which had been promulgated over two (2) years earlier. It is extremely dubious to propose that
certiorari still avails to set aside a two (2) year old decision, and indeed Section 4 of Rule 65 requires
that the special civil action be filed not later than sixty days from notice of the judgment, order or
resolution sought to be assailed.41
On those MTC rulings that still fell within the timely scope of certiorari, particularly the rulings denying
the petition for relief from judgment, 42 we agree with the RTC that there could have been no grave
abuse of discretion on the part of the MTC in denying the petitions since the latter was merely
enforcing the reglementary period under Section 3, Rule 38.
At this juncture, petitioner filed a petition for annulment of judgment with the Court of Appeals. One
might presume that the judgment sought for annulment would have been that rendered by the MTC.
Yet what petitioner expressly sought to be nullified were mainly the RTC rulings dismissing the petition
for certiorari. The sense of this remedial action is lost on the Court.
Admittedly, there appears to have been a half-hearted or incomplete attempt to have the MTC rulings
annulled as well.43 Disregarding for the nonce the merits of the annulment of the MTC decisions,
Section 10 of Rule 48 of the 1997 Rules of Civil Procedure makes it clear that "[a]n action to annul a
judgment or final order of a

Municipal Trial Court shall be filed in the Regional Trial Court having jurisdiction over the
former,"44 and not with the Court of Appeals. Considering the periods prescribed under Rule 47 for the
filing of an action for annulment of judgment are quite broad or capable of discretionary
appreciation,45 the petitioner could have filed such action for annulment of the MTCs judgment with
the RTC which would not have been lightly disregarded with timeliness as premise.
Still, it was the RTC rulings which were subject of the petition for annulment filed with the Court of
Appeals which had jurisdiction over such actions. 46 This recourse was ill-advised, to say the least, for
varied reasons. For one, the RTC rulings dismissing petitioners special civil action for certiorari could
have been the subject of an ordinary appeal to the Court of Appeals under Section 1, Rule 41 of the
1997 Rules of Civil Procedure, since such dismissals partake of a final order that completely disposed
of the original petition filed with the RTC. It may have been that petitioner was threatened by the
impending execution of the adverse MTC decision, despite the fact that it had a pending motion for
reconsideration of the RTCs dismissal of its certiorari petition. That notwithstanding, annulment of
judgment still stands as a most incongruous remedy if such impending execution did impel an active
recourse on the part of the petitioner.
More fundamentally, the annulment of the RTC decision dismissing the special civil action for
certiorari would not properly engender the annulment of the adverse MTC judgment. In fact, the
annulment of such RTC decision would not give rise to any viable or useful right or benefit to the
petitioner, since it would not stay in any way the MTC judgment or its execution. At most, the only
possible implication of the annulment of the RTC decision is that relief still existed to extenuate the
MTC rulings dismissing the petition for relief from judgment, the same rulings which were timely
assailed in the petition for certiorari.
We do have to offer some clarification regarding the citation by the Court of Appeals as ground for
dismissing the petition for annulment the fact that "the ground raised by petitioner is extrinsic fraud,
which ground petitioner has already availed of in its petition for relief from judgment in the Municipal
Trial Court."47 Section 2 of Rule 47 does disqualify extrinsic fraud as a valid ground "if it was availed
of, or could have been availed of, in a motion for new trial or petition for relief," 48 and such provision
would have found incontestable relevance had the clear object of the petition for annulment been the
MTC judgment.49 But petitioners action for annulment of judgment did not provide clarity in that
regard, and in fact does devote considerable effort in imputing errors on the part of the RTC with the
objective of annulling, in particular, the RTC decision. If that were so, reliance on Section 2 of Rule 47
would have been misplaced, since the judgment subject of the petition for relief was different from the
decision subject of the action for annulment of judgment. Still, given the confused nature of the
petition for annulment of judgment, blame could hardly be attributed to the RTC.
All told, even if we were to hold that the Court of Appeals erred in dismissing the petition on the
perceived defect in the verification and certification requirements, the appellate court would have been
left with an action stigmatized by error upon error interminably. Most frustratingly, for every procedural
misstep committed by petitioner, there existed a corresponding viable alternative which would have
necessitated a ruling on the merits, and which petitioner could have chosen with ease. Instead of filing
a Notice of Appeal, it could have instead filed a special civil action for certiorari or a petition for relief
from judgment. Instead of filing the no longer timely petition for relief from judgment, it could have
instead by then filed a petition for annulment of judgment. When it did file a petition for annulment with
the Court of Appeals, it could have instead filed a more feasible petition for annulment with the RTC.
If the consequences for pursuing the wrong remedial tack in this case seem harsh, it should be
remembered that there is no innate right to appeal. Appeal is a statutory right which may be exercised
within the prescribed limits. The 1997 Rules of Civil Procedure provides for a rational and orderly
method by which appeal can be pursued, and even contingency remedial measures if appeal could no
longer be timely pursued. The failure of petitioner to undertake a timely appeal, or to engage in the
available modes of relief even if appeal was no longer possible, simply has to bear consequence. The
lower court rulings germane to this case were, consistently cognizant of this fact, transformed to legal

conclusion, and we are hard-pressed to find any cause for annulment of any of those judgments. The
dismissal of the petition by the Court of Appeals is ultimately correct.
All the errors could have been avoided had petitioner, at the onset, recognized that the judicial system
deemed the original MTC Judgment dated 13 January 1998 as having become final and executory
after no valid motion for reconsideration was filed thereto. On many levels, there existed ample
remedies to undo such deleterious consequence, yet petitioner ended up each time selecting the
wrong answer among the varied options. In the end, all petitioner accomplished was to persistently
water a dead plant.
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.

G.R. No. L-21905

March 31, 1966

EUFRONIO J. LLANTO, petitioner-appellant,

vs.
MOHAMAD ALI DIMAPORO, Provincial Governor of Lanao del Norte;
PROVINCIAL BOARD OF LANAO DEL NORTE; VALERIO V. ROVIRA, Vice-Governor;
BIENVENIDO L. PADILLA, Member; FELIXBERTO ABELLANOSA, Member; PROVINCE OF
LANAO DEL NORTE; PROVINCIAL AUDITOR OF LANAO DEL NORTE; PROVINCIAL
TREASURER OF LANAO DEL NORTE, and PROVINCIAL ASSESSOR OF LANAO DEL
NORTE, respondents-appellees.
Virgilio
Llanto
Moises F. Dalisay for respondents-appellees.

for

petitioner-appellant.

SANCHEZ, J.:
Resolution No. 7, Series of 1960, adopted by the Provincial Board of Lanao del Norte on January 6,
1960, reverted the 1960-1961 salary appropriation for the position of Assistant Provincial Assessor to
the general fund. In effect, that position then held by petitioner was abolished. Appeals to the
Commissioner of Civil Service, the Secretary of Finance, the Secretary of Justice, the Auditor General
and the President of the Philippines were of no avail. Petitioner came to court on mandamus. He
sought, (a) the annulment of the resolution aforesaid, (b) the restoration of the salary appropriation;
(c) his reinstatement, and (d) payment of back salaries and damages.
Respondents moved to dismiss. Ground therefor is lack of cause of action. The Court below granted
the motion, dismissed the petition. The motion to reconsider failed. Offshoot is this appeal.
1. The threshold, questions are these: Was the dismissal order issued "without any hearing on the
motion to dismiss"? Is it void?
We go to the record. The motion to dismiss was filed on February 1, 1961 and set for hearing on
February, 10 following. On February 8, 1961 petitioner's counsel telegraphed the court, "Request
postponement motion dismissal till written opposition filed." He did not appear at the scheduled
hearing. But on March 4, 1961 he followed up his wire, with his written opposition to the motion to
dismiss. Adverting to the 5-page motion to dismiss and the 6-page opposition thereto, we find that the
arguments pro and con on the question of the board's power to abolish petitioner's position minutely
discussed the problem and profusely cited authorities. The May 15, 1961, 8-page court order recited
at length the said arguments and concluded that petitioner made no case.
One good reason for the statutory requirement of hearing on a motion as to enable the suitors to
adduce evidence in support of their opposing claims. 1 But here the motion to dismiss is grounded on
lack of cause of action. Existence of a cause of action or lack of it is determined by a reference to the
facts averred in the challenged pleading. The question raised in the motion is purely one of law. This
legal issue was fully discussed in said motion and the opposition thereto. In this posture, oral
arguments on the motion are reduced to an unnecessary ceremony and should be overlooked. 2 And,
correctly so, because the other intendment of the law in requiring hearing on a motion, i.e., "to avoid
surprise upon the opposite party and to give to the latter time to study and meet the arguments of the
motion",3 has been sufficiently met. And then, courts do not exalt form over substance.
Besides, there is respondents' vehement claim that the motion to dismiss (originally set for February
10) has been actually reset for hearing for March 23, 1961, at 8:30 o'clock a.m.; that then there was
no appearance on petitioner's behalf, but that respondents' attorneys appeared. Of course, petitioner
now disputes this fact. But nothing extent in the record would support his position. On the contrary, his
telegram of February 8 induces rational belief that all he wanted was to be given an opportunity to
meet argument with argument by means of his "written opposition". He filed that opposition. And

more. Adversely affected by the court's order, he sought reconsideration thereof. In that motion to
reconsider he squarely brought to the court's attention his present averment that "no hearing was
conducted on the motion to dismiss". The gravity of this charge notwithstanding, the same Judge
shunted aside petitioner's contention with the statement that his motion is "not (being) meritorious".
Implicit in this pronouncement is that there was such a second hearing and petitioner was there given
an opportunity to argue his case. It is in this backdrop that we hew to the line drawn in the Ongsiako
decision4 that "it is presumed that the proceeding was regular and that all the steps required by law to
be taken before the court could validly act thereon, had been so taken". The quantum of proof
required to overcome this presumption is reflected in a passage in another case, 5 thus: in the absence
of a clear showing to the contrary, the regularity of the court proceedings" is to be upheld. Petitioner
offered no showing, let alone a clear showing, of irregularity.
More to this. Even conceding for present purposes that there was no previous notice of hearing of the
motion to dismiss before the court ruled (May 15, 1961) on the same adversely to petition, still this
alleged defect was fully cured by his motion for reconsideration aforesaid (filed June 24, 1961), which
was overruled. By the standard inDe Borja, et al. vs. Tan, etc., et al., 93 Phil. 167, 171, "the interested
parties were given their day in court, and the previous objection of lack of notice or opportunity to be
heard fully met". As the De Borja decision points out, what the law prohibits "is not the absence of
previous notice, but the absolute absence thereof and lack of opportunity to be heard." 6
2. The critical inquiry is whether or not the mandamus petition was correctly dismissed on the ground
of lack of cause of action. The job of assistant provincial assessor is a creation of the provincial board.
Petitioner concedes that, in the law of public administration, the power to create normally implies the
power to abolish.7 The thrust of his argument, however, is that the power to abolish is not absolute; it
is subject to the limitations that it be exercised (a) in good faith, (b) personal or political reasons, and
(c) not in violation of Civil Service Law. He cites the Briones case. 8 There, the reasons given for the
abolition of the positions of petitioners therein, namely, "economy and efficiency", were found to be
transparent and unimpressive and to constitute a mere subterfuge for the removal without cause of
the said appellees, in violation of the security of Civil Service tenures as provided by the Constitution."
And this, because in said case it was shown that the abolition of the 32 positions in the city mayor's
office and the office of the municipal board was preceded by the creation of 35 positions in the city
mayor's office, calling for an annual outlay of P68,100.00.
Here, the case has not gone beyond the pleadings stage; there is no trial on the merits. And, taking
the averments of the petition herein as bases, the Briones decision is not properly to he read as
controlling. For, the wholesale creation and abolition of offices in almost the same breath there, are
not here obtaining. Differences in factual background generate differences in legal
consideration.1wph1.t
Let us now take the petition on its face value. Paragraph VIII thereof avers that "with intent of
circumventing the constitutional prohibition that 'no officer or employee in the civil service shall be
removed or suspended except for cause as provided by law"', respondents "maliciously and illegally
for the purpose of political persecution and political vengeance, reverted the fund of the salary item ...
and furthermore eliminated or abolished the said position effective July 1, 1960". This statement by
itself submits no justiciable controversy for the court's determination; it is not an allegation of ultimate
facts; it is a mere conclusion of law unsupported by factual premise. Some such averments as that
"defendant usurped the office of Senator of the Philippines"; 9 or that defendant had incurred damages
as a consequence of the "malicious and unjustified" institution of the action, 10have heretofore been
stricken down by this Court as nothing more than mere conclusions of law. 11
Finally as against the allegation of malicious and illegal abolition of petitioner's position, we have the
presumption of good faith. 12 Not that this presumption stands alone. There is the other presumption
that official duty had been regularly performed by the members of the provincial board. 13 And the
facts set forth in resolution No. 7, lend stout support to these two precepts, viz: There was a huge
deficit of P60,330.60; the position of assistant provincial assessor which is not required to be created
by the Administrative Code l4 could be dispensed with and performed by others. 15

It results that petitioner's case is not within the coverage of the exceptions to the general rule that the
provincial board's power to create normally carries with it the power to eliminate. And, petitioner has
no cause for complaint.
3. Petitioner also advances the theory that the provincial board resolution abolishing his position is not
effective, because it did not bear the stamp of approval of the Secretary of Finance, citing Republic
Act No. 1062. The necessity for such approval, however, was done away with by the passage of
Republic Act No. 2264, otherwise known as the Local Autonomy Act. Section 3(a) of the Local
Autonomy Act gives the provincial board the power to appropriate money having in view the general
welfare of the province and its inhabitants. Concomitant to this express power is the implied power to
withdraw unexpended money already appropriated.
We observe that the sole authority given by the Autonomy Act to the Secretary of Finance is to review
provincial and city budgets and city and municipal tax ordinances. 16 Nothing therein contained
requires his approval for the abolition of positions in the provincial or city or municipal governments.
We do not even discern in the law a purpose to require such approval. For the language is
restrictive. 17 We are not prepared to take imperishable liberties with and recast said law. Such is not
within the scope of the powers entrusted to courts of justice.
On top of all of these is the fact that section 12 of the Local Autonomy Act leaves us with but one
guidepost in the interpretation of powers allocated to local governments, thus:
Sec. 12. Rules for the interpretation of the Local Autonomy Act.
1. Implied power of a province, a city or municipality shall be liberally construed in its favor.
Any fair and reasonable doubt as to the existence of the power should be interpreted in favor
of the local government and it shall be presumed to exist.
Autonomy is the underlying rationale of the Local Autonomy Act. By the statute itself no interpretation
thereof should be indulged in which would cripple the board's powers. This legal yardstick stops us,
too, from writing into the statute the Finance Secretary's approval as a condition precedent to
effectivity of the resolution herein questioned.
4. By section 3, Rule 65 of the Rules of Court, mandamus will issue if the performance of an act is
one "which the law specifically enjoins as a duty resulting from an office, trust or
station". Mandamus compels performance of a ministerial duty. That duty must be clear and specific.
But mandamus is not meant to control or review the normal exercise of judgment or
discretion. 18 which is the case here. The respondent board, therefore, cannot be compelled to restore
petitioner's item in the budget.
The order appealed from is not legally infirm. We accordingly vote to affirm the same. Costs against
appellant. So ordered.

[G.R. Nos. 121662-64. July 6, 1999]

VLASON ENTERPRISES CORPORATION, petitioner, vs. COURT OF APPEALS and DURAPROO

F SERVICES, represented by its General Manager, CesarUrbino Sr., respondents.
DECISION
PANGANIBAN, J.:
Summons to a domestic or resident corporation should be served on officers, agents or
employees, who are responsible enough to warrant the presumption that they will transmit to the
corporation notice of the filing of the action against it. Rules on the service of motions should be
liberally construed in order to promote the ends of substantial justice. A rigid application that will result
in the manifest injustice should be avoided. A default judgment against several defendants cannot
affect the rights of one who was never declared in default. In any event, such judgment cannot include
an award not prayed for in the complaint, even if proven ex parte.

The Case

These principles were used by this Court in resolving this Petition for Review on Certiorari before
us, assailing the July 19, 1993 Decision [1] and the August 15, 1995 Resolution, [2] both promulgated by
the Court of Appeals. The assailed Decision disposed as follows:[3]
ACCORDINGLY, in view of the foregoing disquisitions, all the three (3) consolidated petitions for
certiorari are hereby GRANTED.
THE assailed Order of respondent Judge Arsenio Gonong of the Regional Trial Court of Manila,
Branch 8, dated April 5, 1991, in the first petition for certiorari (CA-G.R. SP No. 24669); the assailed
Order of Judge Bernardo Pardo, Executive Judge of the Regional Trial Court of Manila, Branch 8,
dated July 6, 1992, in the second petition for certiorari (CA-G.R. SP No. 28387); and finally, the
assailed order or Resolution en banc of the respondent Court of Tax Appeals Judges Ernesto Acosta,
Ramon de Veyra and Manuel Gruba, under date of October 5, 1992, in the third petition for certiorari
(CA-G.R. SP No.29317) are all hereby NULLIFIED and SET ASIDE thereby giving way to
the entire decision dated February 18, 1991 of the respondent Regional Trial Court of Manila, Branch
8, in Civil Case No. 89-51451 which remains valid, final and executory, if not yet wholly executed.
THE writ of preliminary injunction heretofore issued by this Court on March 6, 1992 and reiterated on
July 22, 1992 and this date against the named respondents specified in the dispositive portion of the
judgment of the respondent Regional Trial Court of Manila, Branch 8 in the first petition for certiorari,
which remains valid, existing and enforceable, is hereby MADE PERMANENT without prejudice (1) to
the [private respondents] remaining unpaid obligations to the herein party-intervenor in accordance
with the Compromise Agreement or in connection with the decision of the respondent lower court in
CA-G.R. SP No. 24669 and (2) to the government, in relation to the forthcoming decision of the
respondent Court of Tax Appeals on the amount of taxes, charges, assessments or obligations that
are due, as totally secured and fully guaranteed payment by the [private respondents] bond, subject to
the relevant rulings of the Department of Finance and other prevailing laws and jurisprudence.
The assailed Resolution ruled:
ACCORDINGLY, in the light of the foregoing disquisitions, as well as considering these clarifications,
the three (3) motions aforementioned are hereby DENIED.

The Facts

Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company
of Honduras & Panama, a Panamanian company, (hereafter referred to as Omega), requested
permission for its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it at
the Philippine Ports Authority (PPA) compound in San Fernando, La Union while awaiting
transhipment to Hongkong.The request was approved by the Bureau of Customs. [4] Despite the
approval, the customs personnel boarded the vessel when it docked on January 7, 1989, on suspicion
that it was the hijacked M/V Silver Med owned by Med Line Philippines Co., and that its cargo would
be smuggled into the country.[5] The district customs collector seized said vessel and its cargo
pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of SFLU Seizure Identification
No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its shipper, Dusit
International Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran
aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered
into a salvage agreement with private respondent to secure and repair the vessel at the agreed
consideration of $1 million and fifty percent (50%) [of] the cargo after all expenses, cost and taxes. [6]
Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted
the warrant of seizure on July 16, 1989.[7] However, in a Second Indorsement dated November 11,
1989, then Customs Commissioner Salvador M. Mison declined to issue a clearance for Quirays
Decision; instead, he forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff
and Customs Code.[8] Accordingly, acting District Collector of Customs John S. Sy issued a Decision
decreeing the forfeiture and the sale of the cargo in favor of the government. [9]
To enforce its preferred salvors lien, herein Private Respondent Duraproof Services filed with the
Regional Trial Court of Manila a Petition for Certiorari, Prohibition and Mandamus[10] assailing the
actions of Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA
Representative Silverio Mangaoang and Med Line Philippines, Inc.
On January 10, 1989, private respondent amended its Petition [11] to include former District
Collector Quiray; PPA Port Manager Adolfo Ll. Amor Jr; Petitioner Vlason Enterprises as represented
by its president, Vicente Angliongto; Singkong Trading Company as represented by Atty. Eddie
Tamondong; Banco Du Brasil; Dusit International Co., Inc.; Thai-Nan Enterprises Ltd. and Thai-United
Trading Co., Ltd.[12] In both Petitions, private respondent plainly failed to include any allegation
pertaining to petitioner, or any prayer for relief against it.
Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line
Philippines: Angliongto (through his secretary, Betty Bebero), Atty. Tamondong and Commissioner
Mison.[13]Upon motion of the private respondent, the trial court allowed summons by publication to be
served upon the alien defendants who were not residents and had no direct representatives in the
country.[14]
On January 29, 1990, private respondent moved to declare respondents in default, but the trial
court denied the motion in its February 23, 1990 Order,[15] because Mangaoang and Amor had jointly
filed a Motion to Dismiss, while Mison and Med Line had moved separately for an extension to file a
similar motion.[16] Later it rendered an Order dated July 2, 1990, giving due course to the motions to
dismiss filed by Mangaoang and Amor on the ground of litis pendentia, and by the commissioner and
district collector of customs on the ground of lack of jurisdiction. [17] In another Order, the trial court
dismissed the action against Med Line Philippines on the ground of litis pendentia.[18]
On two other occasions, private respondent again moved to declare the following in
default: petitioner, Quiray, Sy and Mison on March 26, 1990; [19] and Banco Du Brazil, Dusit
International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United Trading Co., Ltd. on August 24,
1990.[20] There is no record, however, that the trial court acted upon the motions. On September 18,
1990, petitioner filed another Motion for leave to amend the petition, [21] alleging that its counsel failed
to include the following necessary and/or indispensable parties: Omega represented by Cadacio;
and M/V Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading these
additional respondents, private respondent also alleged in the Second (actually, third) Amended
Petition[22] that the owners of the vessel intended to transfer and alienate their rights and interests over
the vessel and its cargo, to the detriment of the private respondent.

The trial court granted leave to private respondent to amend its Petition, but only to exclude the
customs commissioner and the district collector.[23] Instead, private respondent filed the Second
Amended Petition with Supplemental Petition against Singkong Trading Company; and Omega
and M/V Star Ace,[24] to which Cadacio and Rada filed a Joint Answer.[25]
Declared in default in an Order issued by the trial court on January 23, 1991, were the following:
Singkong Trading Co., Commissioner Mison, M/V Star Ace and Omega.[26] Private respondent filed,
and the trial court granted, an ex parte Motion to present evidence against the defaulting respondents.
[27]
Only private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V Star
Ace appeared in the next pretrial hearing; thus, the trial court declared the other respondents in
default and allowed private respondent to present evidence against them. [28] Cesar Urbino, general
manager of private respondent, testified and adduced evidence against the other respondents,
including herein petitioner. As regards petitioner, he declared: Vlason Enterprises represented by Atty.
Sy and Vicente Angliongto thru constant intimidation and harassment of utilizing the PPA
Management of San Fernando, La Union x x x further delayed, and [private respondent] incurred
heavy overhead expenses due to direct and incidental expenses xxx causing irreparable damages of
about P3,000,000 worth of ship tackles, rigs, and appurtenances including radar antennas and
apparatuses, which were taken surreptitiously by persons working for Vlason Enterprises or its
agents[.][29]
On December 29, 1990, private respondent and Rada, representing Omega, entered into a
Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the
demand for salvage fees of private respondent; and that if Rada did not receive any instruction from
his principal, he would assign the vessel in favor of the salvor.[30]
On February 18, 1991, the trial court disposed as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence
adduced, both testimonial and documentary, the Court is convinced, that, indeed,
defendants/respondents are liable to [private respondent] in the amount as prayed for in the petition
for which it renders judgment as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and
Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from
alienating or [transferring] the vessel M/V Star Ace to any third parties;
2. Singkong Trading Company to pay the following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on xxx Lloyds Standard Form of
Salvage Agreement;
c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00;
d. Maintenance fees in the amount of P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and
unpaid salaries from January 1990 up to the present;
f. Attorneys fees in the amount of P656,000.00;
3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages;
4. Banco [Du] Brazil to pay [private respondent] in the amount of $300,000.00 in damages; and finally,
5. Costs of [s]uit.

Subsequently, upon the Motion of Omega, Singkong Trading Co. and private respondent, the trial
court approved a Compromise Agreement [31] among the movants, reducing by 20 percent the amounts
adjudged. For their part, respondents-movants agreed not to appeal the Decision. [32] On March 8,
1991, private respondent moved for the execution of judgment, claiming that the trial court Decision
had already become final and executory.[33] The Motion was granted[34] and a Writ of Execution was
issued.[35] To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were
deputized on March 13, 1991 to levy and to sell on execution the defendants vessel and personal
property.
On March 14, 1991, petitioner filed, by special appearance, a Motion for Reconsideration, on the
grounds that it was allegedly not impleaded as a defendant, served summons or declared in default;
that private respondent was not authorized to present evidence against it in default; that the judgment
in default was fatally defective, because private respondent had not paid filing fees for the award; and
that private respondent had not prayed for such award. [36] Private respondent opposed the Motion,
arguing that it was a mere scrap of paper due to its defective notice of hearing.
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution,
and to quash the notice of levy and the sale on execution. [37] Despite this Motion, the auction sale was
conducted on March 21, 1991 by Sheriff Camagon, with private respondent submitting the winning
bid.[38] The trial court ordered the deputy sheriffs to cease and desist from implementing the Writ of
Execution and from levying on the personal property of the defendants. [39] Nevertheless, Sheriff
Camagon issued the corresponding Certificate of Sale on March 27, 1991. [40]
On April 12, 1991,[41] private respondent filed with the Court of Appeals (CA) a Petition
for Certiorari and Prohibition to nullify the cease and desist orders of the trial court. [42] Respondent
Court issued on April 26, 1991 a Resolution which reads: [43]
MEANWHILE, in order to preserve the status quo and so as not to render the present petition moot
and academic, a TEMPORARY RESTRAINING ORDER is hereby ISSUED enjoining the respondent
Judge, the Honorable Arsenio M. Gonong, from enforcing and/or implementing the Orders dated 22
March 1991 and 5 April 1991 which ordered respondent Sheriff to cease and desist from
implementing the writ of execution and the return thereof, the quashing of the levy xxx on [the]
execution [and sale] of the properties levied upon and sold at public auction by the Sheriff, for reason
of grave abuse of discretion and in excess of jurisdiction, until further orders from this Court.
WITHIN ten (10) days from notice hereof, respondents [petitioner included] are also required to
SHOW CAUSE why the prayer for a writ of preliminary injunction should not be granted.
On May 8, 1991, petitioner received from Camagon a notice to pay private respondent P3 million
to satisfy the trial court Decision. Not having any knowledge of the CA case to which it was not
impleaded, petitioner filed with the trial court a Motion to Dismiss ex abutandi ad cautelam on the
grounds that (1) the Petition of private respondent stated no cause of action against it, (2) the trial
court had no jurisdiction over the case, and (3) litis pendentia barred the suit.[44]
On May 10, 1991, Camagon levied on petitioners properties, which were scheduled for auction
later on May 16, 1991. Specific descriptions of the properties are as follows: [45]
a) Motor Tugboat DEN DEN ex Emerson-I
Length: 35.67 ms. Breadth: 7.33 ms.
Depth: 3.15 ms. Gross Tons: 205.71
Net tons: 67.78 Official Number 213551
Material: Steel Class License: CWL
License No. 4424
b) Barge - FC99" ex YD-153

Length: 34.15 ms. Breadth: 15.85 m.s.

Depth: 2.77 m.s. Gross Tons: 491.70
Net Tons: 491.70 Official Number 227236
Material: Steel Class License: CWL
License No. 83-0012
c) Barge LAWIN ex Sea Lion 2
Length: 66.92 ms. Breadth: 11.28 ms.
Depth: 4.52 m.s. Gross Tons: 1,029.56
Net Tons: 1,027/43 Official Number 708069
Material: Steel Class License: Coastwise
License No. 81-0059
Petitioner also filed a special appearance before the CA. It prayed for the lifting of the levy on its
properties or, alternatively, for a temporary restraining order against their auction until its Motion for
Reconsideration was resolved by the trial court.[46]
Acting on petitioners Motion for Reconsideration, the trial court reversed its Decision of February
18, 1991, holding in its May 22, 1991 Resolution as follows: [47]
xxx [T]hat xxx Motion For Reconsideration [of the petitioner] was filed on March 14, 1991 (See: page
584, records, Vol.2) indubitably showing that it was seasonably filed within the 15-day timeframe.Therefore, xxx said default-judgment ha[d] not yet become final and executory when the Writ of
Execution was issued on March 13, 1991 xxx The rules [provide] that [the e]xecution shall issue as a
matter of right upon the expiration of the period of appeal from a judgment if no appeal has been duly
perfected (Sec. 1, R-39, RRC). That being the case, VEC has all the right to file as it did xxx the
aforementioned reconsideration motion calling [the] attention of the Court and pointing therein its
supposed error and its correction if, indeed, any [error was] committed. It is in this light that this Court
made an in-depth reflection and assessment of the premises or reasons raised by [petitioner], and
after a re-examination of the facts and evidence spread on the records, it has come to the considered
conclusion that the questioned default-judgment has been improvidently issued. By the records, the
claim of [private respondent] that his January 29, 1990 Ex-Parte Motion To Declare Defendants In
Default (pp. 174-177, records, Vol. 1) including VEC had been granted is belied by the February 23,
1990 Order (pp. 214-215, records, ibid) par. 2, thereof, reading to wit:
By the foregoing, for reasons stated thereunder respectively, this Court, in the exercise of its judicious
discretion, in the sense that the rules should be liberally construed in order to promote their object and
to assist the parties, resolves to DENY petitioners Motion to have the Commissioner of Customs AND
OTHER ENUMERATED RESPONDENTS DECLARED IN DEFAULT. [Emphasis ours].
Not even [private respondents] November 23, 1990 Ex-Parte Motion To Present [Evidence] Against
Defaulting Defendants (page 489, records, Vol.2) [can] be deemed as a remedy of the fact that there
never was issued an order of default against respondents including [petitioner] VEC. Having thus
established that there [had] been no order of default against VEC as contemplated by Sec. 1, Rule 18,
in relation to Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid defaultjudgment rendered against it. The issuance of an order of default is a condition sine qua non in order
[that] a judgment by default be clothed with validity. Further, records show that this Court never had
authorized [private respondent] to adduce evidence ex-parte against [petitioner] VEC. In sum, the
February 18, 1991 decision by default is null and void as against [petitioner] VEC. With this

considered conclusion of nullity of said default judgment in question, this Court feels there is no more
need for it to resolve Arguments I-A & I-B, as well as III-A & III-B, of the March 14, 1991 Motion for
Reconsideration. The Court agrees, however, with said discussions on the non-compliance [with] Sec.
2, Rule 7 (Title of Complaint) and Sec. I, Rule 8 on the requirement of indicating in the complaint the
ultimate facts on which the party pleading relies for his claim of defense [--] which is absent in the
January 9, Amended Petition (pp. 122-141, records, Vol. I) [--] for it merely mentioned [petitioner] VEC
in par. 5 thereof and no more. It abides, likewise, with [Argument] III-B that the Decision in suit
award[ed] amounts never asked for in instant petition as regards VEC (Sec. 5, Rule 18, RRC). xxx.
WHEREFORE, in view of the foregoing consideration, and as prayed for, the February 18, 1991
Judgment by Default is hereby reconsidered and SET ASIDE.
On June 26, 1992, then Executive Judge Bernardo P. Pardo [48] of the Regional Trial Court of
Manila issued an Order[49] annulling the Sheriffs Report/Return dated April 1, 1991, and all
proceedings taken by Camagon.
The CA granted private respondents Motion to file a Supplemental Petition impleading petitioner
in CA-GR 24669.[50] In view of the rampant pilferage of the cargo deposited at the PPA compound,
private respondent obtained from the appellate court a Writ of Preliminary Injunction dated March 6,
1992. The Writ reads:[51]
ACCORDINGLY, in view of the foregoing disquisitions, the urgent verified motion for preliminary
injunction dated February 11, 1992 is hereby GRANTED. Therefore, let a writ of preliminary injunction
forthwith issue against the respondents and all persons or agents acting in their behalf, enjoining them
not to interfere in the transferring of the aforementioned vessel and its cargoes, or in removing said
cargoes xxx from [the] PPA compound.
On September 15, 1992, Sheriff Amado Sevilla seized petitioners motor tugboat Den Den by
virtue of the Order[52] dated April 3, 1992, issued by the RTC of Manila, Branch 26. [53]
On August 6, 1992, the CA consolidated CA-GR SP No. 28387 [54] with CA-GR SP No. 24669.
The Court of Tax Appeals issued on October 5, 1992, a Resolution in CTA Case Nos. 4492, 4494
and 4500, which disposed as follows:
[55]

Confirming the order in open court on October 5, 1992, the Court hereby RESOLVES to:
1. Order Respondent Commissioner of Customs to assign or detail [a] sufficient number of customs
police and guards aboard, and around the vicinity of, the vessel M/V Star Ace now in anchor at
Mariveles, Bataan or elsewhere, in order to ensure its safety during the pendency of these cases;
2. Direct him to assign personnel and/or representatives to conduct an inventory of part of the vessels
cargo now in the possession of Mr. Cesar S. Urbino, Sr. at 197 Heroes del 96 Street, Caloocan City,
which inventory may be participated in by all the parties interested in said cargo.
To enjoin the CTA from enforcing said Order, private respondent filed before the Court of Appeals
another Petition for Certiorari,[56] which was later also consolidated with CA-GR SP No. 24669.
On July 19, 1993, the CA rendered the assailed Decision. Petitioner filed (1) a Motion for
Clarification, praying for a declaration that the trial court Decision against it was not valid; and (2) a
partial Motion for Reconsideration, seeking to set aside the assailed Decision insofar as the latter
affected it.
On July 5, 1995, the Court of Appeals issued the following Resolution: [57]
Pending resolution of the motions for reconsideration, filed by Vlason Enterprises
Corporation and Banco [Du] Brazil, and considering [private respondents] Motion for Entry of
Judgment with respect to respondent PPA having already been granted by this Court as far back as
June 17, 1994, pursuant to the resolution of the Supreme Court dated December 8, 1993 in G.R. No.
111270-72 (Philippine Ports Authority vs. Court of Appeals, et al.) informing the parties in said case
that the judgment sought to be reviewed has now become final and executory, the lower court may

now take appropriate action on the urgent ex-parte motion for issuance of a writ of execution, filed by
[private respondent] on July 15, 1994.
On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ of Possession
which resulted in private respondent taking possession of petitioners barge Lawin (formerly Sea Lion
2)on September 1, 1995.[58]
Hence, this Petition.[59]

Ruling of the Respondent Court

As already adverted to, Respondent Court granted the Petition for Certiorari of the private
respondent, which was consolidated with the latters two other Petitions. The court a quo issued the
following rulings:
1. The trial court had jurisdiction over the salvors claim or admiralty case pursuant to Batas
Pambansa Bilang 129.
2. Since the Decision of the trial court became final and executory, never having been
disputed or appealed to a higher court, the trial judge committed grave abuse of
discretion in recalling the Writ of Execution and in quashing the levy and the execution of
the sale of M/V Star Ace and its cargo.
2. Such acts constituted an alteration or a modification of a final and executory judgment
and could never be justified under law and jurisprudence.
3. Civil Case 59-51451 dealt only with the salvors claim without passing upon the legality or
the validity of the undated Decision of the Commissioner of Customs in the seizure
proceeding.
4. Petitioner and his co-respondents could not invoke the jurisdiction of a court to secure
affirmative relief against their opponent and, after failing to obtain such relief, question
the courts jurisdiction.
5. Petitioner had no recourse through any of the following judicially accepted means to
question the final judgment:
a. a petition for relief from judgment under Rule 38,
b. a direct action to annul and enjoin the enforcement of the questioned judgment, and
c. a collateral attack against the questioned judgment which appears void on its face.
6. A court which has already acquired jurisdiction over a case cannot be ousted by a
coequal court; the res in this casethe vessel and its cargowere placed under the control
of the trial court ahead of the CTA.
7. The admiralty Decision had attained finality while the issue of the validity of the seizure
proceedings was still under determination.
In the assailed Resolution, Respondent Court clarified that there was no need to serve summons
anew on petitioner, since it had been served summons when the Second Amended Petition (the third)
was filed; and that petitioners Motion for Reconsideration was defective and void, because it
contained no notice of hearing addressed to the counsel of private respondent in violation of Rule 16,
Section 4 of the Rules of Court.
To this second motion, [private respondent] contends that there was no need to serve summons anew
to VEC when the second amended petition was filed impleading VEC, pursuant to the ruling of the
Supreme Court in Asiatic Travel Corp. vs. CA (164 SCRA 623); and that finally, the decision of the
court a quo o[n] February 18, 1991 became final and executory, notwithstanding the timely filing of the

motion for reconsideration of VEC for the reason that the said motion for reconsideration was
defective or void, there being no notice of hearing addressed to the counsel of petitioner. In fact, no
motion such as this instant one can be acted upon by the Court without proof of service of the notice
thereof, pursuant to Rule 16, Section 4 of the Rules of Court.
xxxxxxxxx
Finally, we should never lose sight of the fact that the instant petition for certiorari is proper only to
correct errors of jurisdiction committed by the lower court, or grave abuse of discretion which is
tantamount to lack of jurisdiction. Where the error is not one of jurisdiction but an error of law or of fact
which is a mistake of judgment, appeal is the remedy (Salas vs. Castro, 216 SCRA 198). Here,
respondents failed to appeal. Hence, the decision dated February 18, 1991 of the lower court has long
become final, executory and unappealable. We do not and cannot therefore review the instant case
as if it were on appeal and direct actions on these motions. While the proper remedy is appeal, the
action for certiorari will not be entertained. Indeed, certiorari is not a substitute for lapsed appeal.
At any rate, the decision dated July 19, 1993 of this Court on the main petition for certiorari is not yet
final (except with respect to respondent PPA), the Bureau of Customs having filed a petition
forcertiorari and prohibition, under Rule 65 of the Rules of Court, with the Supreme Court,
necessitating prudence on Our part to await its final verdict. [60]

Assignment of Errors

Before us, petitioner submits the following assignment of errors on the part of Respondent Court:
[61]

I
The Court of Appeals committed serious error in ruling that the entire decision of the trial court in Civil
Case No. 89-51451 dated 18 February 1991 became final and executory because it was never
disputed or appealed.
A. VEC filed a motion for reconsideration of the said decision two days before deadline, which motion
was granted by the trial court.
B. The trial court correctly granted VECs motion for reconsideration and set aside the 18 February
1991 decision xxx against VEC, for:
1. The trial court never acquired jurisdiction over the person of VEC as to enable it to render any
judgment against it:
(i) VEC was not impleaded as a respondent in Civil Case No. 89-51451;
(ii) Summons was not served on VEC;
2. The trial court improperly rendered judgment by default against VEC;
(i) The trial court never issued an order of default against VEC;
(ii) The trial court never authorized ex-parte presentation of evidence against VEC.
3. The Judgment by default was fatally defective because:
(i) No filing fee was paid by [private respondent] for the staggering amount of damages awarded by
the trial court.

(ii) The 18 February 1991 decision violates the Revised Rules of Court, which prescribe that a
judgment by default cannot decree a relief not prayed for.
II
Since the 18 February 1991 Decision in Civil Case No. 89-51451 is void as against VEC, the recall of
the writ of execution was valid, as far as VEC is concerned.
The Court believes that the issues can be simplified and restated as follows:
1. Has the February 18, 1991 RTC Decision become final and executory in regard to
petitioner?
2. Did the trial court acquire jurisdiction over the petitioner?
3. Was the RTC default judgment binding on petitioner?
4. Was the grant of damages against petitioner procedurally proper?
5. Was private respondent entitled to a writ of execution?

This Courts Ruling

The petition is meritorious.

First Issue: Finality of the RTC Decision

A judgment becomes final and executory by operation of law. Its finality becomes a fact when the
reglementary period to appeal lapses, and no appeal is perfected within such period. [62] The admiralty
case filed by private respondent with the trial court involved multiple defendants. This being the case,
it necessarily follows that the period of appeal of the February 18, 1991 RTC Decision depended on
the date a copy of the judgment was received by each of the defendants. Elsewise stated, each
defendant had a different period within which to appeal, depending on the date of receipt of the
Decision.[63]
Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a compromise agreement
with private respondent. As to these defendants, the trial court Decision had become final, and a writ
of execution could be issued against them. [64] Doctrinally, a compromise agreement is immediately
final and executory.[65]
Petitioner, however, is not in the same situation. Said Decision cannot be said to have attained
finality as to the petitioner, which was not a party to the compromise. Moreover, petitioner filed a
timely Motion for Reconsideration with the trial court, thirteen days after it received the Decision or two
days before the lapse of the reglementary period to appeal. A motion for reconsideration tolls the
running of the period to appeal. [66] Thus, as to petitioner, the trial court Decision had not attained
finality.

Exception to the Rule on Notice of Hearing

Respondent Court and private respondent argue that, although timely filed, petitioners Motion for
Reconsideration was a mere scrap of paper, because (1) it did not contain a notice of hearing
addressed to the current counsel of private respondent, and (2) the notice of hearing addressed to
and served on private respondents deceased counsel was not sufficient. Admittedly, this Motion
contained a notice of hearing sent to Atty. Jesus C. Concepcion who, according to private respondent,
had already died and had since been substituted by its new counsel, Atty. Domingo

Desierto. Therefore, the appellate court ruled that the said Motion did not toll the reglementary period
to appeal and that the trial court Decision became final.
This Court disagrees. Rule 15 of the Rules of Court states:
SEC. 4. Notice.Notice of a motion shall be served by the applicant to all parties concerned, at least
three (3) days before the hearing thereof, together with a copy of the motion, and of any affidavits and
other papers accompanying it. The court, however, for good cause may hear a motion on shorter
notice, specially on matters which the court may dispose of on its own motion.
SEC. 5. Contents of notice.The notice shall be directed to the parties concerned, and shall state the
time and place for the hearing of the motion. [67]
Ideally, the foregoing Rule requires the petitioner to address and to serve on the counsel of
private respondent the notice of hearing of the Motion for Reconsideration. The case at bar, however,
is far from ideal. First, petitioner was not validly summoned and it did not participate in the trial of the
case in the lower court; thus, it was understandable that petitioner would not be familiar with the
parties and their counsels. Second, Atty. Desierto entered his appearance only as collaborating
counsel,[68] who is normally not entitled to notices even from this Court. Third, private respondent
made no manifestation on record that Atty. Concepcion was already dead. Besides, it was Atty.
Concepcion who signed the Amended Petition, wherein petitioner was first impleaded as respondent
and served a copy thereof.Naturally, petitioners attention was focused on this pleading, and it was
within its rights to assume that the signatory to such pleading was the counsel for private respondent.
The Court has consistently held that a motion which does not meet the requirements of Sections
4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper, which the clerk of
court has no right to receive and the trial court has no authority to act upon. Service of a copy of a
motion containing a notice of the time and the place of hearing of that motion is a mandatory
requirement, and the failure of movants to comply with these requirements renders their motions
fatally defective.[69] However, there are exceptions to the strict application of this rule. These
exceptions are as follows:[70]
xxx Liberal construction of this rule has been allowed by this Court in cases (1) where a rigid
application will result in a manifest failure or miscarriage of justice; [71] especially if a party successfully
shows that the alleged defect in the questioned final and executory judgment is not apparent on its
face or from the recitals contained therein; (2) where the interest of substantial justice will be served;
[72]
(3) where the resolution of the motion is addressed solely to the sound and judicious discretion of
the court;[73] and (4) where the injustice to the adverse party is not commensurate [to] the degree of
his thoughtlessness in not complying with the procedure prescribed. [74]
The present case falls under the first exception. Petitioner was not informed of any cause of
action or claim against it. All of a sudden, the vessels which petitioner used in its salvaging business
were levied upon and sold in execution to satisfy a supposed judgment against it. To allow this to
happen simply because of a lapse in fulfilling the notice requirement which, as already said, was
satisfactorily explained would be a manifest failure or miscarriage of justice.
A notice of hearing is conceptualized as an integral component of procedural due process
intended to afford the adverse parties a chance to be heard before a motion is resolved by the
court. Through such notice, the adverse party is permitted time to study and answer the arguments in
the motion.
Circumstances in the case at bar show that private respondent was not denied procedural due
process, and that the very purpose of a notice of hearing had been served. On the day of the hearing,
Atty. Desierto did not object to the said Motion for lack of notice to him; in fact, he was furnished in
open court with a copy of the motion and was granted by the trial court thirty days to file his opposition
to it.These circumstances clearly justify a departure from the literal application of the notice of hearing
rule.[75] In other cases, after the trial court learns that a motion lacks such notice, the prompt resetting
of the hearing with due notice to all the parties is held to have cured the defect. [76]
Verily, the notice requirement is not a ritual to be followed blindly. Procedural due process is not
based solely on a mechanistic and literal application that renders any deviation inexorably

fatal. Instead, procedural rules are liberally construed to promote their objective and to assist in
obtaining a just, speedy and inexpensive determination of any action and proceeding. [77] For the
foregoing reasons, we believe that Respondent Court committed reversible error in holding that the
Motion for Reconsideration was a mere scrap of paper.

Second Issue: Jurisdiction Over Petitioner

Service of Summons on a Corporation

The sheriffs return shows that Angliongto who was president of petitioner corporation, through his
secretary Betty Bebero, was served summons on January 18, 1990. [78] Petitioner claims that this
service was defective for two reasons: (1) Bebero was an employee of Vlasons Shipping, Inc., which
was an entity separate and distinct from Petitioner Vlason Enterprises Corporation (VEC); and (2) the
return pertained to the service of summons for the amended Petition, not for the Second Amended
Petition with Supplemental Petition, the latter pleading having superseded the former.
A corporation may be served summons through its agents or officers who under the Rules are
designated to accept service of process. A summons addressed to a corporation and served on the
secretary of its president binds that corporation. [79] This is based on the rationale that service must be
made on a representative so integrated with the corporation sued, that it is safe to assume that said
representative had sufficient responsibility and discretion to realize the importance of the legal papers
served and to relay the same to the president or other responsible officer of the corporation being
sued.[80] The secretary of the president satisfies this criterion. This rule requires, however, that the
secretary should be an employee of the corporation sought to be summoned. Only in this manner can
there be an assurance that the secretary will bring home to the corporation [the] notice of the filing of
the action against it.
In the present case, Bebero was the secretary of Angliongto, who was president of both VSI and
petitioner, but she was an employee of VSI, not of petitioner. The piercing of the corporate veil cannot
be resorted to when serving summons.[81] Doctrinally, a corporation is a legal entity distinct and
separate from the members and stockholders who compose it. However, when the corporate fiction is
used as a means of perpetrating a fraud, evading an existing obligation, circumventing a statute,
achieving or perfecting a monopoly or, in generally perpetrating a crime, the veil will be lifted to
expose the individuals composing it. None of the foregoing exceptions has been shown to exist in the
present case. Quite the contrary, the piercing of the corporate veil in this case will result in manifest
injustice. This we cannot allow. Hence, the corporate fiction remains.

Effect of Amendment of Pleadings on Jurisdiction

Petitioner claims that the trial court did not acquire jurisdiction over it, because the former had not
been served summons anew for the Second Amended Petition or for the Second Amended Petition
with Supplemental Petition. In the records, it appears that only Atty. Tamondong, counsel for Singkong
Trading, was furnished a copy of the Second Amended Petition. [82] The corresponding sheriffs return
indicates that only Omega, M/V Star Ace and Capt. Rada were served summons and copies of said
Petition.[83]
We disagree. Although it is well-settled that an amended pleading supersedes the original one,
which is thus deemed withdrawn and no longer considered part of the record, it does not follow ipso
factothat the service of a new summons for amended petitions or complaints is required. Where the
defendants have already appeared before the trial court by virtue of a summons on the original
complaint, the amended complaint may be served upon them without need of another summons, even
if new causes of action are alleged. [84] After it is acquired, a courts jurisdiction continues until the case
is finally terminated. Conversely, when defendants have not yet appeared in court and no summons
has been validly served, new summons for the amended complaint must be served on them. [85] It is
not the change of cause of action that gives rise to the need to serve another summons for the

amended complaint, but rather the acquisition of jurisdiction over the persons of the defendants. If the
trial court has not yet acquired jurisdiction over them, a new service of summons for the amended
complaint is required.
In this case, the trial court obviously labored under the erroneous impression that petitioner had
already been placed under its jurisdiction since it had been served summons through the secretary of
its president. Thus, it dispensed with the service on petitioner of new summons for the subsequent
amendments of the Petition. We have already ruled, however, that the first service of summons on
petitioner was invalid. Therefore, the trial court never acquired jurisdiction, and the said court should
have required a new service of summons for the amended Petitions.

Impleading a Party in the Title of the Complaint

Petitioner further claims that the trial court failed to acquire jurisdiction to render judgment
against it because (1) the title of the three Petitions filed by private respondent never included
petitioner as a party-defendant, in violation of Rule 7; and (2) the Petitions failed to state any
allegation of ultimate facts constituting a cause of action against petitioner.
We disagree with petitioner on the first ground. The judicial attitude has always been favorable
and liberal in allowing amendments to pleadings. Pleadings shall be construed liberally so as to
render substantial justice to the parties and to determine speedily and inexpensively the actual merits
of the controversy with the least regard to technicalities. [86]
The inclusion of the names of all the parties in the title of a complaint is a formal requirement
under Section 3, Rule 7. However, the rules of pleadings require courts to pierce the form and go into
the substance, and not to be misled by a false or wrong name given to a pleading. The averments in
the complaint, not the title, are controlling. Although the general rule requires the inclusion of the
names of all the parties in the title of a complaint, the non-inclusion of one or some of them is not fatal
to the cause of action of a plaintiff, provided there is a statement in the body of the petition indicating
that a defendant was made a party to such action.
Private respondent claims that petitioner has always been included in the caption of all the
Petitions it filed, which included Antonio Sy, field manager of petitioner. We checked and noted that in
the caption and the body of the Amended Petition and Second Amended Petition with Supplemental
Petition, Antonio Sy was alleged to be representing Med Line Philippines, not petitioner. Because it
was private respondent who was responsible for the errors, the Court cannot excuse it from
compliance, for such action will prejudice petitioner, who had no hand in the preparation of these
pleadings. In any event, we reiterate that, as a general rule, mere failure to include the name of a
party in the title of a complaint is not fatal by itself.

Stating a Cause of Action in the Complaint

The general rule is allegata et probata -- a judgment must conform to the pleadings and the
theory of the action under which the case was tried. [87] But a court may also rule and render judgment
on the basis of the evidence before it, even though the relevant pleading has not been previously
amended, so long as no surprise or prejudice to the adverse party is thereby caused. [88]
In the case at bar, the liability of petitioner was based not on any allegation in the four Petitions
filed with the trial court, but on the evidence presented ex parte by the private respondent. Since the
trial court had not validly acquired jurisdiction over the person of petitioner, there was no way for the
latter to have validly and knowingly waived its objection to the private respondents presentation of
evidence against it.

Third Issue: Judgment By Default

The trial court Decision holding petitioner liable for damages is basically a default judgment. In
Section 18, judgment by default is allowed under the following condition: [89]
SEC. 1. Judgment by default.If the defendant fails to answer within the time specified in these rules,
the court shall, upon motion of the plaintiff and proof of such failure, declare the defendant in
default.Thereupon the court shall proceed to receive the plaintiffs evidence and render judgment
granting him such relief as the complaint and the facts proven may warrant. xxxx.
Thus, it becomes crucial to determine whether petitioner was ever declared in default, and whether
the reception of evidence ex parte against it was procedurally valid.

Petitioner Was Never Declared In Default

Petitioner insists that the trial court never declared it in default.

We agree. The trial court denied the January 29, 1990 Motion of private respondent to declare all
the defendants in default, but it never acted on the latters subsequent Motion to declare petitioner
likewise. During the pretrial on January 23, 1993, the RTC declared in default only Atty. Eddie
Tamondong, as well as the other defendants Hon. Salvador Mison, M/V Star Ace, Omega Sea
Transport Co., Inc. of Panama and Sinkong Trading Co., [but] despite xxx due notice to them, [they]
failed to appear.[90] Even private respondent cannot pinpoint which trial court order held petitioner in
default.
More important, the trial court, in its Resolution dated May 22, 1991, admitted that it never
declared petitioner in default, viz.:
xxx It is in this light that this [c]ourt made an in-depth reflection and assessment of the premises or
reasons raised by [petitioner] VEC[;] and after a re-examination of the facts and evidence spread on
the records, it has come to the considered conclusion that the questioned default-judgment has been
improvidently issued. [Based on] the records, the claim of [private respondent] that [its] January 29,
1990 Ex-Parte Motion to Declare Defendants In Default (pp. 174-177, records, Vol. 1) including VEC
had been granted is belied by the February 23, 1990 Order (pp. 214-215, records, ibid) par. 2, thereof,
xxx
xxxxxxxxx
Not even petitioners November 23, 1990 Ex-Parte Motion To Present Evidence Against Defaulting
Defendants (page 489, records, Vol. 2) [can] be deemed as a remedy [for] the fact that there never
was issued an order of default against respondents including [petitioner] VEC. Having thus
established that there ha[d] been no order of default against VEC as contemplated by Sec. 1, Rule 18,
in relation to Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid defaultjudgment rendered against it. The issuance of an order [o]f default is a condition sine qua non in order
[that] a judgment by default be clothed with validity. Further, records show that this [c]ourt never had
authorized [private respondent] to adduce evidence ex-parte against [Petitioner] VEC. In sum, the
February 18, 1991 decision by default is null and void as against [Petitioner] VEC. xxxx.
The aforementioned default judgment refers to the February 18, 1989 Decision, not to the Order
finding petitioner in default as contended by private respondent. Furthermore, it is a legal impossibility
to declare a party-defendant to be in default before it was validly served summons.

Trial Court Did Not Allow Presentation of Evidence Ex Parte Against Petitioner

The Order of December 10, 1990, which allowed the presentation of evidence ex parte against
the defaulting defendants, could not have included petitioner, because the trial court granted private

respondents motion praying for the declaration of only the foreign defendants in default. So too,
private respondents ex parte Motion to present evidence referred to the foreign defendants only.[91]
Furthermore, the reception of evidence ex parte against a non-defaulting party is procedurally
indefensible. Without a declaration that petitioner is in default as required in Section 1, Rule 18, the
trial court had no authority to order the presentation of evidence ex parte against petitioner to render
judgment against it by default. The trial judge must have thought that since it failed to appear despite
summons and was in default, it effectively waived any objection to the presentation of evidence
against it. This rule, however, would have applied only if petitioner had submitted itself to the
jurisdiction of the trial court. The latter correctly declared, in the Resolution just cited, that the default
judgment against the former had been improvidently rendered.

Fourth Issue: Awards Not Paid and Prayed For

Additional Filing Fees as Lien on the Judgment

Had the trial court validly acquired jurisdiction over petitioner, nonpayment of docket fees would
not have prevented it from holding petitioner liable for damages. The Court, in Manchester
Development Corporation v. Court of Appeals, [92] ruled that a court acquires jurisdiction over any case
only upon the payment of the prescribed docket fee, not upon the amendment of the complaint or the
payment of the docket fees based on the amount sought in the amended pleading. This ruling,
however, was modified in Sun Insurance Office, Ltd. v. Asuncion,[93] which added:
3. Where the trial court acquires jurisdiction over a claim [through] the filing of the appropriate
pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not
specified in the pleading, or if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the
Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional
fee.
Filing fees for damages and awards that cannot be estimated constitute liens on the awards
finally granted by the trial court. Their nonpayment alone is not a ground for the invalidation of the
award.

Judgment by Default Cannot Grant Relief Not Prayed For

A declaration or order of default is issued as a punishment for unnecessary delay in joining

issues. In such event, defendants lose their standing in court, they cannot expect the trial court to act
upon their pleadings, and they are not entitled to notice of the proceeding until the final termination of
the case.[94] Thus, the trial court proceeds with the reception of the plaintiffs evidence upon which a
default judgment is rendered.
Section 1 of Rule 18 provides that after the defendant has been declared in default, the court
shall proceed to receive the plaintiffs evidence and render judgment granting him such relief as the
complaint and the facts proven may warrant. The reliefs that may be granted, however, are restricted
by Section 5, which provides that a judgment entered against a party in default shall not exceed the
amount or be different in kind from that prayed for.
In other words, under Section 1, a declaration of default is not an admission of the truth or the
validity of the plaintiffs claims.[95] The claimant must still prove his claim and present evidence. In this
sense the law gives defaulting parties some measure of protection because plaintiffs, despite the
default of defendants, are still required to substantiate their allegations in the complaint. The judgment
of default against defendants who have not appeared or filed their answers does not imply a waiver of
all their rights, except their right to be heard and to present evidence in their favor. Their failure to

answer does not imply their admission of the facts and the causes of action of the plaintiffs, because
the latter are required to adduce evidence to support their allegations.
Moreover, the trial court is not allowed by the Rules to receive evidence that tends to show a
relief not sought or specified in the pleadings. [96] The plaintiff cannot be granted an award greater than
or different in kind from that specified in the complaint. [97]
This case should be distinguished, however, from that of defendants, who filed an answer but
were absent during trial. In that case, they can be held liable for an amount greater than or different
from that originally prayed for, provided that the award is warranted by the proven facts. This rule is
premised on the theory that the adverse party failed to object to evidence relating to an issue not
raised in the pleadings.
The latter rule, however, is not applicable to the instant case. Admittedly, private respondent
presented evidence that would have been sufficient to hold petitioner liable for damages. However, it
did not include in its amended Petitions any prayer for damages against petitioner. Therefore, the trial
court could not have validly held the latter liable for damages even if it were in default.

Fifth Issue: Execution of Final Judgment

Section 1 of Rule 39 provides that execution shall issue only upon a judgment that finally
disposes of the action or proceeding. Such execution shall issue as a matter of right upon the
expiration of the period to appeal it, if no appeal has been duly perfected. [98]
In the present case, however, we have already shown that the trial courts Decision has not
become final and executory against petitioner. In fact, the judgment does not even bind it. Obviously,
Respondent Court committed serious reversible errors when it allowed the execution of the said
judgment against petitioner.
WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and Resolution of the
Court of Appeals are REVERSED and SET ASIDE insofar as they affect petitioner. The levy and the
sale on execution of petitioners properties are declared NULL and VOID. Said properties are
ordered RESTORED to petitioner. No pronouncement as to cost.
SO ORDERED.

G.R. No. L-58036 March 16, 1987

ELISEO BOTICANO, petitioner,
vs.
MANUEL CHU, JR., respondent.
Arturo N. Santos for petitioner.
Juan C. Limin for respondent.

PARAS, J.:
This is a petition for review on certiorari seeking to reverse and set aside the following: (a) the
decision of the Court of Appeals * promulgated on March 31, 1981 in CA-G.R. No. 65287-R entitled:
"Eliseo Boticano, plaintiff-appellee v. Jaime Sigua, defendant and Manuel Chu, Jr., defendantappellant" which holds that the defendant-appellant was not properly served with summons and (b)
the resolution denying petitioner's motion for reconsideration of said decision.
The findings of fact of the trial court are as follows:
Petitioner Eliseo Boticano is the registered owner of a Bedford truck with plate No. QC-870, TPilipinas '77 which he was using in hauling logs for a certain fee. At 11:00 o'clock in the evening of
September 3, 1971, while loaded with logs, it was properly parked by its driver Maximo Dalangin at
the shoulder of the national highway in Barrio Labi, Bongabon, Nueva Ecija when it was hit and
bumped at the rear portion by a Bedford truck bearing plate No. QK-516, T-Pilipinas '77 owned by
private respondent Manuel Chu, Jr. and driven by Jaime Sigua, the former's co-defendant in this case.
Manuel Chu, Jr. acknowledged ownership thereof and agreed with petitioner to shoulder the expenses
of the repair of the damaged truck of the latter. (Decision, Civil Case No. 6754, Rollo, pp. 36-37).
When Manuel Chu, Jr. failed to comply with aforesaid agreement as well as to pay damages
representing lost income despite petitioner's demands, the latter (plaintiff in the lower court), filed a
complaint on November 24, 1977 at the Court of First Instance of Nueva Ecija, Branch VII at
Cabanatuan City, against private respondent Manuel Chu, Jr. (truck owner) and Jaime Sigua (his
driver) both as defendants in Civil Case No. 6754 "Eliseo Boticano v. Manuel Chu, Jr. and Jaime
Sigua" for damages. (Record on Appeal, Rollo, pp. 45-47).
Summons was issued on December 12, 1977 but was returned unserved for defendant Jaime Sigua
because he was no longer connected with San Pedro Saw Mill, Guagua, Pampanga, while another
copy of the summons for Manuel Chu, Jr. was returned duly served on him thru his wife Veronica Chu
at his dwelling house.
On February 15, 1978 petitioner moved to dismiss the case against Jaime Sigua and to declare
Manuel Chu, Jr. in default for failure to file responsive pleadings within the reglementary period. The
motion was granted by the lower court in an Order dated September 4, 1978, allowing petitioner to
adduce his evidence ex parte on October 17, 1978. (Petition, Rollo, pp. 8-9).
From the evidence adduced by the plaintiff (petitioner herein) the trial court found that private
respondent Manuel Chu, Jr. is responsible for the fault and negligence of his driver Sigua under Article
2180 of the Civil Code, whose negligence and lack of due care was the immediate and proximate
cause of the damage to petitioner's truck and ruled in favor of plaintiff-petitioner.
The dispositive portion of the judgment reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff, Eliseo Boticano,

and against herein defendant, Manuel Chu, Jr. ordering the latter as follows:
(a) To pay the plaintiff the sum of P6,970.00 representing actual damages;
(b) To pay the plaintiff the sum of P73,700.00 representing unrealized income for the
non-use of the plaintiff's damaged truck for the period of eleven (11) months;
(c) To pay the plaintiff the sum of P2,000.00 for and as attorney's fees; and
(d) To pay the costs of this suit.
SO ORDERED.
Cabanatuan City, November 28, 1978. (Ibid,, pp. 13-14).
On March 19, 1979 private respondent Manuel Chu, Jr. filed with the trial court a "Notice of Appeal"
and an Urgent Motion for Extension of Time to file Record on Appeal which was granted by the trial
court on the same date.
On March 26, 1979, Atty. Hermenegildo D. Ocampo, counsel of record of private respondent, filed a
"Motion to Withdraw as Counsel" while the new counsel Atty. Wilfredo G. Laxamana entered his
appearance on April 18, 1979 and filed his record on appeal on the same date.
On May 4, 1979 petitioner filed with the trial court a Motion to Dismiss Appeal and for execution which
was set for hearing on May 14, 1979 wherein private respondent's counsel personally appeared and
opposed petitioner's motion while on the latter date petitioner filed his reply to opposition, after which
on May 16, 1979 the trial court issued an order denying aforesaid motion, while on May 22, 1979, the
trial court issued another order approving private respondent's Record on Appeal. (Rollo, pp. 9-10).
After the case was brought to the Court of Appeals and the parties had filed their respective briefs,
said Appellate Court issued its decision on March 31, 1981, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS the appealed judgment is
hereby set aside, for being null and void. This case is directed to be remanded to the
court of origin; that appellant be properly served with summons and a copy of the
complaint; and that the necessary and appropriate proceedings or action be taken
thereafter, as the circumstances and the case win warrant.
With costs against appellee.
SO ORDERED.
Judgment is set aside. (Rollo, p. 33)
On April 20, 1981, petitioner filed with the respondent Court of Appeals a Motion for Reconsideration
and on June 3, 1981 a Supplemental Motion for Reconsideration. On August 28, 1981 respondent
Court of Appeals issued an order denying petitioner's Motion for Reconsideration. (Rollo, pp. 9-11).
Hence, this petition, with the following assigned errors:
1. THE RESPONDENT COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT
PRIVATE RESPONDENT MANUEL CHU JR. WAS NOT PROPERLY SERVED WITH SUMMONS
DESPITE THE FACT THAT THE SUMMONS WAS SERVED TO HIM THROUGH HIS WIFE;

2. THE RESPONDENT COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT

PRIVATE RESPONDENT DID NOT VOLUNTARILY SUBMIT HIMSELF TO THE JURISDICTION OF
THE TRIAL COURT DESPITE HIS VOLUNTARY APPEARANCE, THRU COUNSEL ON A FIXED
DATE OF HEARING AND BY FILING WITH THE LOWER COURT A NOTICE OF APPEAL, APPEAL
BOND, MOTION FOR EXTENSION OF TIME TO FILE RECORD ON APPEAL, MOTION FOR
WITHDRAWAL OF APPEARANCE, NOTICE OF APPEARANCE, AND OPPOSITION TO MOTION
TO DISMISS APPEAL AND FOR ISSUANCE OF WRIT OF EXECUTION;
3. THE RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT HAS WAIVED ANY QUESTION ON THE TRIAL COURT'S JURISDICTION OVER
HIS PERSON BY HIS DELIBERATE FAILURE AND REFUSAL TO SEEK RELIEF FROM THE TRIAL
COURT.
4. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN SETTING ASIDE THE
JUDGMENT IN CIVIL CASE NO. 6754, COURT OF FIRST INSTANCE OF CABANATUAN ClTY,
BRANCH VII AND IN DIRECTING THAT THE CASE BE REMANDED TO THE COURT OF ORIGIN
SO THAT APPELLANT CAN BE PROPERLY SERVED WITH SUMMONS. (Petition, Rollo, pp. 12-23)
In compliance with the resolution of the Second Division of this Court of October 12, 1981 (Rollo, p.
79-A) private respondent filed his comment on November 13, 1981 (Rollo, pp. 84-87). Petition er then
filed a reply thereto in compliance with the resolution of December 7, 1981 (Rollo, p. 39) after which
the petition was given due course in the resolution of February 8, 1982 and the parties were required
to file their respective memoranda (Rollo, p. 43). Petitioner filed his memorandum on March 19, 1982
(Rollo, pp. 45-59) while private respondent filed his memorandum on April 15, 1982 (Rollo, pp. 60-64).
Thereafter, in the resolution of April 30, 1982, the case was submitted for decision. (Rollo, p. 65).
There is no dispute as to the facts of this case, as shown by the admission of private respondent to
the extent of making an agreement with petitioner to shoulder the expenses of the repair of the
damaged truck of the latter and the findings of the Court of Appeals that petitioner's evidence fully
supports the findings of facts of the trial court as well as its judgment under appeal.
Neither does private respondent deny receipt of the summons in question. The bone of contention
appears to be in the manner of service of said summons on the wife of private respondent at their
dwelling instead of on private respondent himself personally.
Petitioner contends in favor of validity of such service while private respondent maintains the opposite
view which was sustained by respondent Court of Appeals to the effect that the Sheriff resorted to
substituted service under Section 8, Rule 14 of the Rules of Court, without first complying with the
mode of personal service required under Section 7 of the same Rule.
Thus, the principal issue which arises in this case which involves an inquiry into procedural due
process, is whether or not the question of jurisdiction over the person of the defendant can be raised
for the first time on appeal.
The question has been answered in the negative by the Supreme Court in a long line of decisions. In
fact, one of the circumstances considered by the Court as indicative of waiver by the defendantappellant of any alleged defect of jurisdiction over his person arising from defective or even want of
process, is his failure to raise the question of jurisdiction in the Court of First Instance and at the first
opportunity. It has been held that upon general principles, defects in jurisdiction arising from
irregularities in the commencement of the proceedings, defective process or even absence of process
may be waived by a failure to make seasonable objections. (Castro v. Cebu Portland Cement Co., 71
Phil. 481 [1941] citing Machan v. De la Trinidad, 3 Phil. 684; Vergara v. Laciapag 28 Phil. 439; U.S. v.
Inductivo, 40 Phil. 84; Soriano v. Ramirez, 44 Phil. 519). More recently, in reiteration of the same
principle, the Court ruled in Dalman v. City Court of Dipolog City, Branch II, that as to the dismissal of

the criminal case, the question of jurisdiction which was never raised in said case before the trial court
cannot be done at this stage and level (134 SCRA 244 [1985]).
Coming to the case at bar, it has been pointed out that during the stages of the proceedings in the
court below, defendant-appellant could have questioned the jurisdiction of the lower court but he did
not.
It can of course be argued that the failure to question the lower court's jurisdiction cannot be
accounted against Chu for his having been declared in default gave him no chance to participate in
the court deliberations and therefore no chance to raise the jurisdictional issue, but then, he could
have done so, in the subsequent pleadings he filed. Besides, even assuming that such failure cannot
be taken against him, the fact is he had VOLUNTARILY submitted himself to the court's jurisdiction.
On the contrary, private respondent voluntarily appeared thru counsel in the trial court. He filed a
Notice of Appeal, Appeal Bond, Motion for Extension of Time to File Record on Appeal, Record on
Appeal, Motion for Withdrawal of Appearance, Notice of Appearance and Opposition to Plaintiff's
Motion to Dismiss Appeal and for Issuance of a Writ of Execution. Not only did he submit pleadings
and motions, but he likewise appeared in person, thru counsel in the hearing held on May 14, 1979 at
8:30 a.m. and orally argued in open court on the pending incident. (Rollo, pp. 53-54).
Under Section 23, Rule 14 of the Rules of Court, the defendant's voluntary appearance in the action
shall be equivalent to service. Thus, under this principle, it has been consistently held by the Supreme
Court that the defect of summons is cured by the voluntary appearance of the defendant. (Infante v.
Toledo and Lanting, 44 Phil. 834 [1918]; Aguilos v. Sepulvede, 53 SCRA 274 [1973]; J.M. Tuazon &
Co. v. Estabillo, 62 SCRA 1; Castro v. Cebu Portland Cement Co., supra).
The Court of Appeals is however of the view that from all the actions and steps taken by the appellant
no presumption can arise that he voluntarily submitted himself to the jurisdiction of the Court. In fact
according to said Court, all of these actions taken by the appellant are geared and mustered towards
contesting the court's jurisdiction over his person, or of attacking the validity of the judgment on
jurisdictional grounds. (Decision, CA, G.R. No. 65287-R; Rollo, p. 31).
It will be noted however, that the Notice of Appeal (Rollo, p. 38) unmistakably indicates the reason for
the appeal, which reads:
2. That, the herein defendant is not contented with the aforesaid Decision for it is
contrary to the evidence and the law and the award of damages is so excessively
unsupported by any evidence to warrant the same; hence, he is appealing said
Decision to the Hon. Court of Appeals, Manila, both on questions of facts and law.
As clearly shown in the foregoing, the above-stated conclusion of the Court of Appeals has evidently
no basis.
Of equal importance is the question: if the defendant in the Regional Trial Court (RTC) has been
declared in default, may he appeal the default judgment that may subsequently be rendered even if
he has not asked the RTC to set aside the declaration of default? The answer is in
the affirmative. However a distinction must be made as to the effects of such appeal.
(a) If an appeal is made without first asking the RTC to set aside the declaration of
default, and the appellate court sets aside on said declaration, all he can get is a
review of the RTC's default judgment without the opportunity of having the higher
court consider defense evidence (for the simple reason that no evidence was even
adduced by him in the RTC) (See Rule 41, sec. 2, par. 3, Rules of Court).

(b) If upon the other hand, the defendant first asks the RTC to set aside the
declaration of default (See Rule 18, secs. 2 and 3, Rules of Court), and he is able to
prevail, the declaration win be set aside, and he will now have the opportunity to
present his evidence in the RTC. Thus, even if he finally loses in the RTC's
subsequent decision, his defense can be considered, when appeal is made to the
appellate tribunal. Of course, even if the default declaration is not set aside despite
his motion for the setting aside, he will be entitled to all notices in the court
proceedings, and can file any pleading he may wish to file, including the notice of
appeal. (See Rule 13, sec. 9, Rules of Court).
Incidentally, the afore-mentioned rules apply to default declarations in the Metropolitan Trial Courts,
the Municipal Trial Courts, and the Municipal Circuit Trial Courts, for under Batas Pambansa Bilang
129, the said inferior courts will follow the rules in the RTC. Note however that in summary
proceedings, there can be no default declarations.
In the case at bar, there is no question that summons was timely issued and received by private
respondent. In fact, he never denied actual receipt of such summons but confined himself to the
argument that the Sheriff should prove that personal service was first made before resorting to
substituted service,
This brings to the fore the question of procedural due process. In Montalban v. Maximo (22 SCRA
1077 [1968]) the Court ruled that "The constitutional requirement of due process exacts that the
service be such as may be reasonably expected to give the notice desired. Once the service provided
by the rules reasonably accomplishes that end, the requirement of justice is answered; the traditional
notions of fair play are satisfied; due process is served."
Indeed, such construction is but fair, and in accord with substantial justice. The burden on a plaintiff is
not to be enlarged with a restrictive construction desired by the defendant. (Ibid., p. 1078).
Finally in a last ditch effort, private respondent insists that there was no valid service of summons
because private respondent is a partner and general manager in San Pedro Sawmill. Consequently
the wife of private respondent to whom summons and complaint were allegedly served not being
partnership, cannot receive the same under Section 13 of Rule 14 of the Rules of Court.
It has however been settled that actions must be brought by the real parties in interest and against the
persons who are bound by the judgment obtained therein. (Salmon and Pacific Commercial Company
v. Tan Cueco, 36 Phil. 557-558 [1917]).
The title of the case both in the trial court, in the Court of Appeals and in this Court shows that the
partnership is not a party. On the contrary, as previously stated private respondent himself assumed
the responsibility of the accident and is now estopped to disclaim the liabilities pertaining thereto.
From what has been discussed the following conclusions are hereby made: jurisdiction was properly
acquired by the trial court over the person of respondent thru both service of summons and voluntary
appearance in court; he was therefore properly declared in default for not having filed any answer;
despite respondent's failure to file a motion to set aside the declaration of default, he has the right to
appeal the default judgment but in the appeal only the evidence of the petitioner may be considered,
respondent not having adduced any defense evidence; We agree with the findings of fact by the trial
court, the same being unrebutted.
WHEREFORE, the assailed decision and resolution of the Court of Appeals are REVERSED and SET
ASIDE, and the decision of the then Court of First Instance (now Regional Trial Court)of Nueva Ecija,
Cabanatuan City in Civil Case No. 6754 "Eliseo Boticano v. Manuel Chu, Jr. and Jaime Sigua" is
hereby REINSTATED. No costs.

SO ORDERED.

ERNESTO C. DEL ROSARIO andDAVAO

TIMBER CORPORATION,
Petitioners,

G.R. No. 150134

Present:
QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

- versus -

FAR EAST BANK & TRUST COMPANY[1] and

PRIVATEDEVELOPMENTCORPORATION
OF THE PHILIPPINES,
Respondents.

PROMULGATED:
October 31, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO MORALES, J.:
The Regional Trial Court (RTC) of Makati City, Branch 65 (sic) [2] having, by Decision[3] of July
10, 2001, dismissed petitioners complaint in Civil Case No. 00-540 on the ground of res judicata and
splitting of a cause of action, and by Order of September 24, 2001 [4] denied their motion for
reconsideration thereof, petitioners filed the present petition for review on certiorari.
From the rather lengthy history of the present controversy, a recital of the following material
facts culled from the records is in order.
On May 21, 1974, petitioner Davao Timber Corporation (DATICOR) and respondent Private
Development Corporation of the Philippines (PDCP) entered into a loan agreement under which
PDCP extended to DATICOR a foreign currency loan of US $265,000 and a peso loan of P2.5 million
or a total amount of approximately P4.4 million, computed at the then prevailing rate of exchange of
the dollar with the peso.
The loan agreement provided, among other things, that DATICOR shall pay: (1) a service fee of one
percent (1%) per annum (later increased to six percent [6%] per annum) on the outstanding balance
of the peso loan; (2) 12 percent (12%) per annum interest on the peso loan; and (3) penalty charges
of two percent (2%) per month in case of default.
The loans were secured by real estate mortgages over six parcels of land one situated
in Manila (the Otis property) which was registered in the name of petitioner Ernesto C. Del Rosario,
and five in Mati, Davao Oriental and chattel mortgages over pieces of machinery and equipment.

Petitioners paid a total of P3 million to PDCP, which the latter applied to interest, service fees
and penalty charges. This left petitioners, by PDCPs computation, with an outstanding balance on the
principal of more than P10 million as of May 15, 1983.
By March 31, 1982, petitioners had filed a complaint against PDCP before the then Court of
First Instance (CFI) of Manila for violation of the Usury Law, annulment of contract and damages. The
case, docketed as Civil Case No. 82-8088, was dismissed by the CFI.

On appeal, the then Intermediate Appellate Court (IAC) set aside the CFIs dismissal of the
complaint and declared void and of no effect the stipulation of interest in the loan agreement between
DATICOR and PDCP.
PDCP appealed the IACs decision to this Court where it was docketed as G.R. No. 73198.
In the interim, PDCP assigned a portion of its receivables from petitioners (the receivables) to
its co-respondent Far East Bank and Trust Company (FEBTC) under a Deed of Assignment
dated April 10, 1987[5] for a consideration of P5,435,000. The Deed of Assignment was later amended
by two Supplements.[6]
FEBTC, as assignee of the receivables, and petitioners later executed a Memorandum of Agreement
(MOA) dated December 8, 1988 whereby petitioners agreed to, as they did pay FEBTC [7] the amount
of P6.4 million as full settlement of the receivables.
On September 2, 1992, this Court promulgated its Decision in G.R. No. 73198 [8] affirming in toto the
decision of the IAC. It determined that after deducting the P3 million earlier paid by petitioners to
PDCP, their remaining balance on the principal loan was only P1.4 million.
Petitioners thus filed on April 25, 1994 a Complaint[9] for sum of money against PDCP and
FEBTC before the RTC of Makati, mainly to recover the excess payment which they computed to
be P5.3 million[10] P4.335 million from PDCP, and P965,000 from FEBTC. The case, Civil Case No.
94-1610, was raffled to Branch 132 of the MakatiRTC.
On May 31, 1995, Branch 132 of the Makati RTC rendered a decision[11] in Civil Case No. 941610 ordering PDCP to pay petitioners the sum of P4.035 million,[12] to bear interest at 12% per
annum from April 25, 1994 until fully paid; to execute a release or cancellation of the mortgages on
the five parcels of land in Mati, Davao Oriental and on the pieces of machinery and equipment and to
return the corresponding titles to petitioners; and to pay the costs of the suit.

As for the complaint of petitioners against respondent FEBTC, the trial court dismissed it for lack of
cause of action, ratiocinating that the MOA between petitioners and FEBTC was not subject to this
Courts Decision in G.R. No. 73198, FEBTC not being a party thereto.
From the trial courts decision, petitioners and respondent PDCP appealed to the Court of Appeals
(CA). The appeal was docketed as CA-G.R. CV No. 50591.
On May 22, 1998, the CA rendered a decision [13] in CA-G.R. CV No. 50591, holding that
petitioners outstanding obligation, which this Court had determined in G.R. No. 73198 to be P1.4
million, could not be increased or decreased by any act of the creditor PDCP.
The CA held that when PDCP assigned its receivables, the amount payable to it by DATICOR
was the same amount payable to assignee FEBTC, irrespective of any stipulation that PDCP and
FEBTC might have
provided in the Deed of Assignment, DATICOR not having been a party thereto, hence, not bound by
its terms.
Citing Articles 2154[14] and 2163[15] of the Civil Code which embody the principle of solutio
indebiti, the CA held that the party bound to refund the excess payment ofP5 million[16] was FEBTC as
it received the overpayment; and that FEBTC could recover from PDCP the amount of P4.035 million
representing its overpayment for the assigned receivables based on the terms of the Deed of
Assignment or on the general principle of equity.
Noting, however, that DATICOR claimed in its complaint only the amount of P965,000 from
FEBTC, the CA held that it could not grant a relief different from or in excess of that prayed for.
Finally, the CA held that the claim of PDCP against DATICOR for the payment of P1.4 million
had no basis, DATICORs obligation having already been paid in full, overpaid in fact, when it paid
assignee FEBTC the amount of P6.4 million.
Accordingly, the CA ordered PDCP to execute a release or cancellation of the mortgages it
was holding over the Mati real properties and the machinery and equipment, and to return the
corresponding certificates of title to petitioners. And it ordered FEBTC to pay petitioners the amount
of P965,000 with legal interest from the date of the promulgation of its judgment.

FEBTCs motion for reconsideration of the CA Decision was denied, and so was its
subsequent appeal to this Court.

On April 25, 2000, petitioners filed before the RTC of Makati a Complaint[17] against FEBTC to
recover the balance of the excess payment of P4.335 million.[18] The case was docketed as Civil Case
No. 00-540, the precursor of the present case and raffled to Branch 143 of the RTC.
In its Answer,[19] FEBTC denied responsibility, it submitting that nowhere in the dispositive
portion of the CA Decision in CA-G.R. CV No. 50591 was it held liable to return the whole amount
of P5.435 million representing the consideration for the assignment to it of the receivables, and since
petitioners failed to claim the said whole amount in their original complaint in Civil Case No. 94-1610
as they were merely claiming the amount of P965,000 from it, they were barred from claiming it.
FEBTC later filed a Third Party Complaint[20] against PDCP praying that the latter be made to
pay the P965,000 and the interests adjudged by the CA in favor of petitioners, as well as the P4.335
million and interests that petitioners were claiming from it. It posited that PDCP should be held liable
because it received a consideration ofP5.435 million when it assigned the receivables.
Answering[21] the Third Party Complaint, PDCP contended that since petitioners were not
seeking the recovery of the amount of P965,000, the same cannot be recovered via the third party
complaint.
PDCP went on to contend that since the final and executory decision in CA-G.R. CV No.
50591 had held that DATICOR has no cause of action
against it for the refund of any part of the excess payment, FEBTC can no longer re-litigate the same
issue.
Moreover, PDCP contended that it was not privy to the MOA which explicitly excluded the
receivables from the effect of the Supreme Court decision, and that the amount of P6.4 million paid by
petitioners to FEBTC was clearly intended as consideration for the release and cancellation of the lien
on the Otis property.
Replying,[22] FEBTC pointed out that PDCP cannot deny that it benefited from the assignment of its
rights over the receivables from petitioners. It added that the third party claim being founded on a valid
and justified cause, PDCPs counterclaims lacked factual and legal basis.

Petitioners thereafter filed a Motion for Summary Judgment [23] to which FEBTC filed its
opposition.[24]
By Order of March 5, 2001, the trial court denied the motion for summary judgment for lack of
merit.[25]
On July 10, 2001, the trial court issued the assailed Decision dismissing petitioners complaint
on the ground of res judicata and splitting of cause of action. It recalled that petitioners had filed Civil
Case No. 94-1610 to recover the alleged overpayment both from PDCP and FEBTC and to secure the
cancellation and release of their mortgages on real properties, machinery and equipment; that when
said case was appealed, the CA, in its Decision, ordered PDCP to release and cancel the mortgages
and FEBTC to payP965,000 with interest, which Decision became final and executory on November
23, 1999; and that a Notice of Satisfaction of Judgment between petitioners and FEBTC was in fact
submitted on August 8, 2000, hence, the issue between them was finally settled under the doctrine
of res judicata.
The trial court moreover noted that the MOA between petitioners and FEBTC clearly stated
that the pending litigation before the Supreme Court of the Philippines with respect to the Loan
exclusive of the Receivables assigned to FEBTC shall prevail up to the extent not covered by this
Agreement. That statement in the MOA, the trial court ruled, categorically made only the loan subject
to this Courts Decision in G.R. No. 73198, hence, it was with the parties full knowledge and consent
that petitioners agreed to payP6.4 million to FEBTC as consideration for the settlement. The parties
cannot thus be allowed to welsh on their contractual obligations, the trial court concluded.
Respecting the third party claim of FEBTC, the trial court held that FEBTCs payment of the
amount of P1,224,906.67 (P965,000 plus interest) to petitioners was in compliance with the final
judgment of the CA, hence, it could not entertain such claim because the Complaint filed by
petitioners merely sought to recover from FEBTC the alleged overpayment of P4.335 million and
attorneys fees of P200,000.
Petitioners motion for reconsideration[26] of the July 10, 2001 decision of the trial court was
denied by Order of September 24, 2001.
Hence, the present petition.
In their Memorandum,[27] petitioners proffer that, aside from the issue of whether their
complaint is dismissible on the ground of res judicata and splitting of cause of action, the issues of 1)

whether FEBTC can be held liable for the balance of the overpayment of P4.335 million plus
interest
which petitioners previously claimed against PDCP in Civil Case No. 94-1610, and 2) whether PDCP
can interpose as defense the provision in the Deed of Assignment and the MOA that the assignment
of the receivables shall not be affected by this Courts Decision in G.R. No. 73198, be considered.
Stripped of the verbiage, the only issue for this Courts consideration is the propriety of the
dismissal of Civil Case No. 00-540 upon the grounds stated by the trial court.This should be so
because a Rule 45 petition, like the one at bar, can raise only questions of law (and that justifies
petitioners elevation of the case from the trial court directly to this Court) which must be distinctly set
forth.[28]
The petition is bereft of merit.
Section 47 of Rule 39 of the Rules of Court, on the doctrine of res judicata, reads:
Sec. 47. Effect of judgments or final orders. The effect of a judgment or final
order rendered by a court of the Philippines, having jurisdiction to pronounce the
judgment or final order, may be as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to the matter
directly adjudged or as to any other matter that could have been raised in relation
thereto, conclusive between the parties and their successors in interest by title
subsequent to the commencement of the action or special proceeding, litigating for
the same thing and under the same title and in the same capacity; and
(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have been adjudged in a former judgment or final
order which appears upon its face to have been so adjudged, or which was actually
and necessarily included therein or necessary thereto. (Underscoring supplied)
The above-quoted provision lays down two main rules. Section 49(b) enunciates the first rule
of res judicata known as bar by prior judgment or estoppel by judgment, which states that the
judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their
privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action
either before the same or any other tribunal.[29]
Stated otherwise, bar by former judgment makes the judgment rendered in the first case an
absolute bar to the subsequent action since that judgment is conclusive not only as to the matters
offered and received to sustain it but also as to any other matter which might have been offered for
that purpose and which could have been adjudged therein. [30] It is in this concept that the term res
judicata is more commonly and generally used as a ground for a motion to dismiss in civil cases. [31]

The second rule of res judicata embodied in Section 47(c), Rule 39 is conclusiveness of
judgment. This rule provides that any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which a judgment or decree is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim or demand, purpose, or subject matter
of the two suits is the same.[32] It refers to a situation where the judgment in the prior

action operates as an estoppel only as to the matters actually determined or which were necessarily
included therein.[33]
The case at bar satisfies the four essential requisites of bar by prior judgment, viz:
(a) finality of the former judgment;
(b) the court which rendered it had jurisdiction over the subject matter and the
parties;
(c) it must be a judgment on the merits; and
(d) there must be, between the first and second actions, identity of parties,
subject matter and causes of action.[34]
There is no doubt that the judgment on appeal relative to Civil Case No. 94-1610 (that
rendered in CA-G.R. CV No. 50591) was a final judgment. Not only did it dispose of the case on the
merits; it also became executory as a consequence of the denial of FEBTCs motion for
reconsideration and appeal.[35]
Neither is there room to doubt that the judgment in Civil Case No. 94-1610 was on the merits
for it determined the rights and liabilities of the parties. [36] To recall, it was ruled that: (1) DATICOR
overpaid by P5.3 million; (2) FEBTC was bound to refund the excess payment but because
DATICORs claim against FEBTC was only P965,000, the court could only grant so much as the relief
prayed for; and (3) PDCP has no further claim against DATICOR because its obligation had
already been paid in full.
Right or wrong, that judgment bars another case based upon the same cause of action. [37]

As to the requisite of identity of parties, subject matter and causes of action, it cannot be
gainsaid that the first case, Civil Case No. 94-1610, was brought by petitioners to recover an alleged
overpayment of P5.3 million P965,000 from FEBTC and P4.335 million from PDCP.
On the other hand, Civil Case No. 00-540, filed by the same petitioners, was for the recovery
of P4.335 million which is admittedly part of the P5.3 million earlier sought to be recovered in Civil
Case No. 94-1610. This time, the action was brought solely against FEBTC which in
turn impleaded PDCP as a third party defendant.
In determining whether causes of action are identical to warrant the application of the rule
of res judicata, the test is to ascertain whether the same evidence which is necessary to sustain the
second action would suffice to authorize a recovery in the first even in cases in which the forms or
nature of the two actions are different. [38] Simply stated, if the same facts or evidence would sustain
both, the two actions are considered the same within the rule that the judgment in the former is a bar
to the subsequent action.
It bears remembering that a cause of action is the delict or the wrongful act or omission
committed by the defendant in violation of the primary rights of the plaintiff. [39]
In the two cases, petitioners imputed to FEBTC the same alleged wrongful act of mistakenly
receiving and refusing to return an amount in excess of what was due it in violation of their right to a
refund. The same facts and evidence presented in the first case, Civil Case No. 94-1610, were the
very same facts and evidence that petitioners presented in Civil Case No. 00-540.
Thus, the same Deed of Assignment between PDCP and FEBTC, the first and second
supplements to the Deed, the MOA between petitioners and FEBTC, and this Courts Decision in G.R.
No. 73198 were submitted in Civil Case No. 00-540.
Notably, the same facts were also pleaded by the parties in support of their allegations for,
and defenses against, the recovery of the P4.335 million. Petitioners, of course, plead the CA
Decision as basis for their subsequent claim for the remainder of their overpayment. It is well
established, however, that a party cannot, by varying the form of action or adopting a different method
of presenting his case, or by pleading justifiable circumstances as herein petitioners are doing,
escape the operation of the principle that one and the same cause of action shall not be twice
litigated.[40]

In fact, authorities tend to widen rather than restrict the doctrine of res judicata on the ground
that public as well as private interest demands the ending of suits by requiring the parties to sue once
and for all in the same case all the special proceedings and remedies to which they are entitled. [41]
This Court finds well-taken then the pronouncement of the court a quo that to allow the relitigation of an issue that was finally settled as between petitioners and FEBTC in the prior case is to
allow the splitting of a cause of action, a ground for dismissal under Section 4 of Rule 2 of the Rules
of Court reading:

SEC. 4. Splitting of a single cause of action; effect of. If two or more suits are
instituted on the basis of the same cause of action, the filing of one or a judgment
upon the merits in any one is available as a ground for the dismissal of the
others. (Emphasis and underscoring supplied)
This rule proscribes a party from dividing a single or indivisible cause of action into several parts or
claims and instituting two or more actions based on it. [42] Because the plaintiff cannot divide the
grounds for recovery, he is mandated to set forth in his first action every ground for relief which he
claims to exist and upon which he relies; he cannot be permitted to rely upon them by piecemeal in
successive actions to recover for the same wrong or injury.[43]
Clearly then, the judgment in Civil Case No. 94-1610 operated as a bar to Civil Case No. 00540, following the above-quoted Section 4, Rule 2 of the Rules of Court.
A final word. Petitioners are sternly reminded that both the rules on res judicata and splitting of causes
of action are based on the salutary public policy against unnecessary multiplicity of suits interest
reipublicae ut sit finis litium.[44] Re-litigation of matters already settled by a courts final judgment
merely burdens the courts and the taxpayers, creates uneasiness and confusion, and wastes valuable
time and energy that could be devoted to worthier cases. [45]
WHEREFORE, the Petition is DENIED. The assailed Decision of the RTC, Branch
143, Makati dismissing petitioners complaint in Civil Case No. 00-540 isAFFIRMED.

Costs against petitioners.

SO ORDERED.

G.R. No. 151454

HEIRS OF ANTONIO SANTOS
and LUISA ESGUERRA SANTOS,
Present:
Petitioners,

-versusCARPIO, J., Chairperson,

NACHURA,

HEIRS OF CRISPULO BERAMO, and/or

PACIFICO BERAMO, SR., namely, PACIFICO
BERAMO, JR., and ROMEO BERAMO; HEIRS
OF PETRA BERAMO, namely, VIVENCIO
BERAMO
PENALOSA
and
JOSE
B.
BASINANG; HEIRS OF RAMON BERAMO,
namely, BERNABE BERAMO; HEIRS OF
AGAPITO BERAMO, namely, JESSIE P.
BERAMO and SAMUEL BERAMO,

PERALTA,
ABAD, and
MENDOZA, JJ.

Respondents.
Promulgated:

August 8, 2010
x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This is a petition for review on certiorari[1] of the Court of Appeals Decision, dated May 15,
2001 in CA-G.R. SP No. 57944, and its Resolution dated January 10, 2002, denying petitioners
motion for reconsideration. The Court of Appeals affirmed the Decision dated October 27, 1999 of the

Regional Trial Court (RTC) of Roxas City, Branch 18, denying petitioners motion to dismiss
respondents Amended Complaint.

The facts, as found by the Court of Appeals,[2] are as follows:

On March 5, 1998, respondents heirs of Crispulo Beramo, Pacifico Beramo, Sr., Petra
Beramo, Ramon Beramo and Agapito Beramo filed an Amended Complaint forreivindicacion and/or
reconveyance of property against the heirs of Cornelio Borreros and Soledad Delfin (Spouses
Borreros), Northern Capiz Agro-Industrial Development Corporation (NORCAIC), Central Azucarera
de la Carlota and Riverside Commodities Trading, Inc. with the RTC of Roxas City, Branch 18 (trial
court), presided over by JudgeCharlito F. Fantilanan.

The Amended Complaint alleged that the subject property, Lots 660, 661 and 887 of the Pilar
Cadastre, consisting of around 140 hectares, located at Roxas City, Capiz, and initially covered by
Original Certificate of Title No. 22668, belonged to respondents predecessor, the late Don Juan
Beramo, by virtue of open, continuous, exclusive and notorious possession and occupation thereof in
the concept of owner starting in 1892. Respondents succeeded to the rights, title and interest in the
subject property of Don Juan Beramo and his successors-in-interest. Sometime in 1938, the Spouses
Borreros convinced Don Juan Beramo to convert the subject property into a fishpond, with Cornelio
Borreros

as

socio-industrial

partner-manager-administrator.

Later,

the

Spouses

Borreros

clandestinely, illegally and unjustly registered the subject property in their name. In 1955, the Spouses
Borreros and the spouses Olympio Ramirez and Asuncion Esguerra (Spouses Ramirez) simulated the
exchange of the subject property with a public land situated at Sibuyan Island, Romblon. In 1961,
one-half of the subject property, then covered by Transfer Certificate of Title (TCT) No. T-3656 in the
name of the Spouses Ramirez, was sold by the Spouses Ramirez to the spouses Antonio Santos and
Luisa Esguerra (Spouses Santos), resulting in the cancellation of the said TCT and issuance of
TCT No. T-6310 in the names of the Spouses Ramirez and the Spouses Santos. On May 13, 1975,
the Spouses Santos and the Spouses Ramirez sold the subject property to NORCAIC. The
aforementioned sales/transfers of the subject property were simulated, with the transferees having
prior knowledge of the flaw of the transactions. Respondents prayed, among others, that they be
declared the rightful owners of the subject parcels of land, and that the possession of Lots 661 and
887, and the northern portion of Lot 660 be ordered to be reconveyed to them.

On May 13, 1999, petitioners heirs of Antonio Santos and Luisa Esguerra Santos filed a
Motion to Dismiss[3] on the ground that the Amended Complaint stated no cause of action against

them. They pointed out that respondents were unable to substantiate their claim of ownership over the
subject property, since they failed to present any documentary proof which established prima
facie that the subject parcels of land were owned by their predecessor-in-interest. Moreover,
respondents did not annex documents to the Amended Complaint evincing their right over the subject
property. Petitioners also asserted that respondents failed to substantiate their claim of fraud on the
part of defendants spouses Antonio and Luisa Santos; hence, respondents were unable to establish a
right that was allegedly violated by the defendants Spouses Santos.

On October 27, 1999, the trial court issued an Order [4] denying the Motion to Dismiss as the
grounds relied upon did not appear to be indubitable. The Order states:

xxxx
As the grounds relied upon in the defendant heirs of Antonio Santos and
Luisa Esguerra Santos as well as in the defendant Northern Capiz Agro-Industrial
Development Corporations Motions to Dismiss do not appear indubitable, since the
defendants did not even bother to appear during the hearing to submit their
arguments on the questions of law and their evidence on the questions of fact
involved pursuant to Sec. 2, Rule 16 of the 1997 Rules of Civil Procedure, said
Motions to Dismiss are DENIED for lack of merit.

Petitioners filed a motion for reconsideration, [5] and noted that they were taken to task for
allegedly failing to appear before the trial court during the hearing on their motion to dismiss. They
averred that during the said hearing, they were represented by Atty. Jul Freeman Emane,
collaborating counsel of the law firm handling their case. [6]

In an Order[7] dated January 18, 2000, the trial court denied petitioners motion for
reconsideration, thus:

Since the issues raised by the motion for reconsideration are mere
reiterations of the issues raised by the motion to dismiss, and it appearing that the
oversight in the appearance of Atty. Jul Freeman [Emane] during the hearing as
collaborating counsel for the movant, brought about by the plurality of counsels, does

not make the grounds relied upon by the motion to dismiss indubitable, there is no
compelling reason to reconsider the Order dated October 27, 1999.

ACCORDINGLY, the motion for reconsideration by the defendants heirs of

Antonio Santos and Luisa Esguerra Santos is DENIED for lack of merit.

Petitioners filed a petition for certiorari[8] with the Court of Appeals, alleging that RTC Judge
Charlito F. Fantilanan committed grave abuse of discretion amounting to lack or excess of jurisdiction
in issuing the Orders dated October 27, 1999 and January 18, 2000.

Petitioners contended that the Amended Complaint showed that private respondents had no
valid cause of action against them, since private respondents failed to substantiate their claim of
ownership over the subject property. Assuming arguendo that a valid cause of action existed,
petitioners argued that the same was, nonetheless, barred by res judicata and the Statute of
Limitations. In addition, petitioners alleged that the title to the subject property was issued in favor of
the Spouses Borreros as early as 1939; hence, private respondents' cause of action, if any, was
barred by laches.

In a Decision[9] dated May 15, 2001, the Court of Appeals dismissed the petition for lack of
merit.

The Court of Appeals held that the general rule is that after denial of a motion to dismiss, the
defendant should file an answer, go to trial, and if the decision is adverse, reiterate the issue on
appeal. The exception is when the court denying the motion to dismiss acted without or in excess of
jurisdiction or with grave abuse of discretion, in which case certiorari under Rule 65 of the Rules of
Court may be availed of.[10] The appellate court stated that the exception does not apply to this case,
since RTC Judge Fantilanan did not commit grave abuse of discretion in issuing the Orders in
question.

The appellate court held that the trial court did not gravely abuse its discretion in denying the
motion to dismiss, because the allegations in the Amended Complaint made out a case for
reconveyance. Moreover, the complaint did not have to establish or allege facts proving the existence
of a cause of action at the outset. [11] It also held that the defenses of res judicata, statute of limitations
and laches may not be raised for the first time in the petition for certiorari.

Petitioners motion for reconsideration was denied by the Court of Appeals in a

Resolution[12] dated January 10, 2002.

Petitioners filed this petition raising the following issues:

I
THE HONORABLE COURT OF APPEALS GRAVELY
AFFIRMING THE DENIAL OF PETITIONERS MOTION TO DISMISS.

ERRED

IN

II
THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT
REFUSED TO CONSIDER AND RESOLVE THE ISSUES OF RES JUDICATA AND
PRESCRIPTION RAISED IN THE PETITION FOR CERTIORARI FILED BEFORE IT
BY HEREIN PETITIONERS.[13]

The main issue is whether or not the Amended Complaint states a cause of action
for reivindicacion and/or reconveyance of the subject property.

Petitioners contend that the Court of Appeals erred in affirming the denial of their motion to
dismiss despite the failure of the Amended Complaint to state a valid cause of action.

Petitioners allege that respondents failed to present any documentary proof which
established, at least prima facie, that the subject parcels of land were owned by respondents
predecessor-in-interest. Petitioners reiterate that no documents evincing their right over the subject
property were appended to the Amended Complaint. Further, petitioners argue that respondents
allegation of fraud was never substantiated; hence, there was no violation of respondents right by
petitioners.

The contention lacks merit.

When the ground for dismissal is that the complaint states no cause of action under Section 1
(g), Rule 16 of the Rules of Court, such fact must be determined from the allegations of the complaint.
[14]

In a motion to dismiss, a defendant hypothetically admits the truth of the material allegations of the

plaintiffs complaint[15] for the purpose of resolving the motion. [16] The general rule is that the allegations
in a complaint are sufficient to constitute a cause of action against the defendant, if, admitting the
facts alleged, the court can render a valid judgment upon the same in accordance with the prayer
therein.[17] To sustain a motion to dismiss for lack of cause of action, the complaint must show that the
claim for relief does not exist.[18]

The Court agrees with the Court of Appeals that the Amended Complaint states a cause of
action for reivindicacion and/or reconveyance. The Court of Appeals correctly found, thus:

From the amended complaint, it appears that since 1892, private

respondents' predecessor, Don Juan Beramo, was in open, continuous, exclusive and
notorious possession and occupation of the subject property, an agricultural land of
the public domain; that the subject property was merely entrusted by private
respondents' predecessor, Don Juan Beramo, to Cornelio Borreros, from whom
petitioners derived their title; and that the titling of the subject property and transfers
thereof were simulated and fraudulent. These averments indicate that private
respondents are the rightful owners of the subject property but the same was
wrongfully registered by petitioners' predecessors, the Borreros spouses. Such
averments make out a case for reconveyance (De la Cruz vs. Court of Appeals, 286
SCRA 230).[19]

Contrary to the contention of petitioners, respondents did not have to present or append proof
of their allegations in the complaint to establish a sufficient cause of action for reivindicacion and/or
reconveyance in their Amended Complaint. The Court has held that in determining whether the
allegations of a complaint are sufficient to support a cause of action, it must be borne in mind that the
complaint does not have to establish or allege facts proving the existence of a cause of action at the
outset; this will have to be done at the trial on the merits of the case. [20]

Further, petitioners contend that the Court of Appeals erred when it failed to consider and
resolve the issues of res judicata and prescription raised in the petition forcertiorari.

The contention is unmeritorious.

The Court of Appeals correctly held that the defenses of res judicata, statute of limitations and
laches may not be raised for the first time in the special civil action forcertiorari, citing Buag v. Court of
Appeals,[21] which held:

It is settled that an issue which was not raised in the trial court cannot be
raised for the first time on appeal. This principle applies to special civil actions
for certiorari under Rule 65. x x x

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of Appeals,
dated May 15, 2001 in CA-G.R. SP No. 57944, and its Resolution dated January 10, 2002, are
hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

[A.C. No. 3825. February 1, 1996]

REYNALDO HALIMAO, complainant, vs. ATTYS. DANIEL VILLANUEVA and INOCENCIO
PEFIANCO FERRER, JR., respondents.
DECISION
MENDOZA, J.:
This is a complaint for disbarment against Attorneys Daniel Villanueva and Inocencio Ferrer, Jr.,
for serious misconduct.
The complaint originated from a letter dated April 14, 1992 which complainant Reynaldo Halimao
wrote to the Chief Justice, alleging that respondents, without lawful authority and armed with armalites
and handguns, forcibly entered the Oo Kian Tiok Compound in Cainta, Rizal, of which complainant
was caretaker, on April 4, 1992 at 11:00 A.M. Complainant prayed that an investigation be conducted
and respondents disbarred. To the complaint were attached the affidavits of alleged witnesses,
including that of Danilo Hemandez, a security guard at the compound, who had also filed a similar
complaint against herein respondents.
In its resolution dated July 1, 1992, the Court required respondents to comment.
On August 14, 1992, respondents filed a comment in which they claimed that the complaint is a
mere duplication of the complaint filed by Danilo Hernandez in Administrative Case No.3835, which
this Court had already dismissed on August 5, 1992 for lack of merit. They pointed out that both
complaints arose from the same incident and the same acts complained of and that Danilo
Hernandez, who filed the prior case, is the same person whose affidavit is attached to the complaint in
this case.
Respondent Ferrer claimed that he was nowhere near the compound when the incident took
place. He submitted affidavits attesting to the fact that he had spent the whole day of April 4,
1992 in Makati with his family.
Additionally, Ferrer claimed that the two complaints were filed for the purpose of harassing him
because he was the principal lawyer of Atty. Daniel Villanueva in two cases before the Securities and
Exchange Commission. The cases involved the ownership and control of Filipinas Textile Mills (Filtex),
which is owned by Villanuevas family and whose premises are the Oo Kian Tiok compound.
This case was thereafter referred to the Integrated Bar of the Philippines for investigation, report
and recommendation.
In its Resolution No. XI-94-017 dated January 22, 1994, the Board of Governors of the IBP
dismissed the case against respondents. It acted on the basis of the report and recommendation of
Atty. Victor C. Fernandez, Investigating Commissioner, who found that the complaint is barred by the
decision in Administrative Case No. 3835 which involved the same incident. Atty. Fernandez noted
that in fact the complaints in the two cases were similarly worded.
The Investigating Commissioner held that although the complaint in the prior case was initiated
by a security guard (Danilo Hernandez) of the compound while the present case was filed by the
caretaker, nevertheless the complainants had substantially the same interest. The Investigating
Commissioner observed:

Furthermore, Danilo Hernandez is not a stranger to complainant herein. Both represent the same
interest as co-workers in the Oo Kian Tiok Compound. In his letter-complaint, complainant mentions
Danilo Hernandez as an employee and his co-worker at the Oo Kian Tiok Compound. Complainant
even attached to his complaint the affidavit of Danilo Hernandez that was submitted to the Municipal
Trial Court of Cainta, Rizal in support of the criminal complaints (Criminal Cases Nos. MTC-4700 and
4701 (92) filed against respondents herein. In said affidavit (Magkakalakip na Sinumpaang Salaysay)
dated April 4, 1992, Danilo Hernandez also mentions the name of complainant as a caretaker of the
Oo Kian Tiok Compound. Clearly, the complainant and Danilo Hernandez not only represent the same
interest in filing their respective complaints, but have the same complaint against respondents. [1]
The Commissioner held that for res judicata to apply, absolute identity of parties is not required, it
being sufficient that there is identity of interests of the parties. In this case, both complainants were
present at the compound when the incident allegedly happened, and the acts they were complaining
against and the relief they were seeking were the same.
On March 28, 1994, complainant filed a motion for reconsideration of the resolution of the IBP
Board of Governors. His motion was referred to the Court in view of the fact that the records of the
case had earlier been forwarded to the Court on March 11, 1994.
In his aforesaid motion, complainant contends that by filing a motion to dismiss the complaint in
this case, private respondents must be deemed to have hypothetically admitted the material
allegations in the complaint and, therefore, private respondents must be deemed to have confessed to
the charge of serious misconduct. Hence, it was error for the IBP to dismiss his complaint.
Complainant also contends that by invoking the resolution of this Court in Administrative Case
No. 3835, respondents are evading the issues and that Ferrers defense of alibi is weak and cannot
prevail against the direct and positive identification by him and his witnesses. He contends that the
resolution in Administrative Case No. 3835 has no bearing upon the present case and that the
Investigating Commissioner should have resolved the issues of fact before him.
Respondents filed an Opposition to the motion for reconsideration. As a preliminary matter, they
argue that the motion for reconsideration is a mere scrap of paper, because it is not provided for in
Rule 139-B of the Rules of Court, and that what complainant should instead have done was to appeal
to this Court.
Rule 139-B states in pertinent part:
12. Review and decision by the Board of Governors.
xxx xxx xxx
c) If the respondent is exonerated by the Board or the disciplinary sanction imposed by it is less than
suspension or disbarment [such as admonition, reprimand, or fine] it shall issue a decision
exonerating respondent or imposing such sanction. The case shall be deemed terminated unless
upon petition of the complainant or other interested party filed with the Supreme Court within fifteen
(15) days from notice of the Boards resolution, the Supreme Court orders otherwise.
Although Rule 139-B, 12(c) makes no mention of a motion for reconsideration, nothing in its text
or in its history suggests that such motion is prohibited. It may therefore be filed within 15 days from
notice to a party. Indeed, the filing of such motion should be encouraged before resort is made to this
Court as a matter of exhaustion of administrative remedies, to afford the agency rendering the
judgment an opportunity to correct any error it may have committed through a misapprehension of
facts or misappreciation of the evidence.[2]

Considering, however, that complainants motion for reconsideration was filed after the IBP had
forwarded the records of this case to this Court, it would be more expedient to treat it as complainants
petition for review within the contemplation of Rule 139-B, 12(c).
Now with regard to complainants argument that it was error for the Investigating Commissioner to
dismiss the complaint against respondents because, by filing a motion to dismiss, respondents are
deemed to have admitted the allegations of the complaint against them, suffice it to say that the rule
that a motion to dismiss is to be considered as a hypothetical admission of the facts alleged in the
complaint applies more particularly to cases in which the ground for dismissal is the failure of the
complaint to state a cause of action. When it appears on the face of the complaint that the plaintiff is
not entitled to any relief under the facts alleged, the defendant may file a motion to dismiss
hypothetically admitting the facts alleged in the complaint. [3] By filing such a motion, the defendant in
effect says that even assuming the facts to be as alleged by the plaintiff, the latter has failed to prove
that he has a right which the former has violated. [4]
The rule does not unqualifiedly apply to a case where the defendant files a motion to dismiss
based on lack of jurisdiction of the court or tribunal over the person of the defendant or over the
subject matter or over the nature of the action; or on improper venue; or on lack of capacity to sue of
the plaintiff or on litis pendentia, res judicata, prescription, unenforceability, or on the allegation that
the suit is between members of the same family and no earnest efforts towards a compromise have
been made. In such cases, the hypothetical admission is limited to the facts alleged in the complaint
which relate to and are necessary for the resolution of these grounds as preliminary matters involving
substantive or procedural laws, but not to the other facts of the case.
On the other hand, when a motion to dismiss is based on payment, waiver, abandonment,
release, compromise, or other form of extinguishment, the motion to dismiss does not hypothetically,
but actually, admits the facts alleged in the complaint, i.e., the existence of the obligation or debt, only
that the plaintiff claims that the obligation has been satisfied. So that when a motion to dismiss on
these grounds is denied, what is left to be proven in the trial is no longer the existence of the debt but
the fact vel non of payment by the defendant.
The Investigating Commissioner properly dismissed the complaint in this case on the ground
of res judicata, it appearing that it involves the same incident and the same cause of action as
Administrative Case No. 3825. Indeed, it appears that on August 5, 1995, the First Division of the
Court dismissed a similar complaint filed in Administrative Case No. 3835. The resolution reads:
Adm. Case No. 3835 (Danilo Hernandez v. Attys. Daniel Villanueva and Inocencio Pefianco Ferrer,
Jr.). - This administrative complaint against Attorneys Daniel Villanueva and Inocencio P. Ferrer, Jr. is
the offshoot of a family feud involving the ownership and possession of the Filipinas Textile Mills
(Filtex). The contest between Bernardino Villanueva and Daniel Villanueva (probably relatives) for the
control of the corporation has escalated into a three-cornered fight when Oo Kian Tiok joined the fray,
claiming ownership of the same property by purchase from the Equitable Banking Corporation,
mortgage creditor and highest bidder thereof at the mortgage foreclosure sale.
Respondent Daniel Villanueva believes that Bernardino Villanueva is the evil genius behind this
complaint for his disbarment filed by a certain Daniel Hernandez. On the other hand, Hernandez
claims to be one of several security guards placed by Oo Kian Tiok on the Filtex property. His
allegation that the respondents drove him and the other security guards out of the Filtex premises at
gun point was denied by the respondents and is not substantiated by independent evidence.
For want of a prima facie showing of professional misconduct on the part of the respondents, the
complaint must be dismissed. The three-cornered dispute among respondent Daniel Villanueva,
Bernardino Villanueva and Oo Kian Tok [sic] over the possession and ownership of the Filtex property
should be litigated and determined in an appropriate judicial action, not in administrative proceedings
to disbar Attorney Daniel Villanueva and his counsel, Attorney Inocencio P. Ferrer, Jr.

WHEREFORE, the complaint against respondents Attys. Daniel Villanueva and Inocencio P. Ferrer,
Jr. is DISMISSED for lack of merit.
Two motions for reconsideration of this resolution were filed by the complainant therein, both of
which were denied, the first one on September 23, 1992 and the second one on November 9, 1992.
While the complainant (Danilo Hernandez) in Administrative Case No. 3835 is different from the
complainant in the present case, the fact is that they have an identity of interest, as the Investigating
Commissioner ruled. Both complainants were employed at the Oo Kian Tiok Compound at the time of
the alleged incident. Both complain of the same act allegedly committed by respondents. The
resolution of this Court in Administrative Case No. 3835 is thus conclusive in this case, it appearing
that the complaint in this case is nothing but a duplication of the complaint of Danilo Hernandez in the
prior case. In dismissing the complaint brought by Danilo Hernandez in the prior case, this Court
categorically found want of a prima facie showing of professional misconduct on the part of the
respondents [Attorneys Daniel Villanueva and Inocencio Ferrer, Jr.].
WHEREFORE, the resolution of the Board of Governors of the Integrated Bar of the Philippines,
approving and adopting the report and recommendation of the Investigating Commissioner, is
AFFIRMED and the complaint against respondents is DISMISSED.
SO ORDERED.

[G.R. No. 125861. September 9, 1998]

ROSITA G. TAN, EUSEBIO V. TAN, REMIGIO V. TAN, JR., EUFROSINA V. TAN, VIRGILIO V. TAN
and EDUARDO V. TAN, petitioners, vs. COURT OF APPEALS and FERNANDO TAN
KIAT, respondent.
DECISION
MARTINEZ, J.:
This petition assails the Decision of public respondent Court of Appeals dated May 28,
1996[1] reversing the Order of the Manila Regional Trial Court, Branch 2, dated December 15, 1993,
[2]
dismissing the complaint for recovery of property filed by private respondent Fernando Tan Kiat
against petitioners.
The controversy centers on two (2) parcels of land (hereafter, subject properties) situated at 970
M.H. del Pilar Street, Malate, Manila previously owned by one Alejandro Tan Keh and which were
then covered by Transfer Certificate of Title No. 35656 of the Registry of Deeds of Manila.
Private respondent, in his complaint filed on October 18, 1993, [3] claimed that he bought the
subject properties from Mr. Tan Keh in 1954 for P98,065.35, built his house thereon, but was unable
to effect immediate transfer of title in his favor in view of his foreign nationality at the time of the
sale. Nonetheless, as an assurance in good faith of the sales agreement, Mr. Tan Keh turned over to
private respondent the owners duplicate copy of TCT No. 35656 and, in addition, executed a lease
contract in favor of private respondent for a duration of forty (40) years. However, in 1958, Mr. Tan
Keh sold the subject properties to Remigio Tan, his brother and father of petitioners, with the
understanding that the subject properties are to be held in trust by Remigio for the benefit of private
respondent and that Remigio would execute the proper documents of transfer in favor of private
respondent should the latter at anytime demand recovery of the subject properties. TCT No. 35656
was thus cancelled and in lieu thereof TCT No. 53284 was issued in the name of Remigio. Another
contract of lease was executed by Mr. Tan Keh and Remigio in favor of private respondent to further
safeguard the latters interest on the subject properties, but private respondent never paid any rental
and no demand whatsoever for the payment thereof had been made on him. Remigio was killed in
1968. At his wake, petitioners were reminded of private respondents ownership of the subject
properties and they promised to transfer the subject properties to private respondent who by then had
already acquired Filipino citizenship by naturalization.Petitioners, however, never made good their
promise to convey the subject properties despite repeated demands by private respondent. In fact,
petitioners had the subject properties fraudulently transferred to their names under TCT No.
117898. Thus, the filing of the complaint for recovery of property.
On November 10, 1993, petitioners filed a Motion To Dismiss [4] the complaint, claiming
that: (1) the complaint stated no cause of action; (2) the cause of action has long prescribed; (3) the
cause of action has long been barred by a prior judgment; and, (4) the claim has been waived,
abandoned and/or extinguished by laches and estoppel. An Opposition to Motion To Dismiss with
Memorandum[5] was filed by private respondent on November 29, 1993. In turn, petitioners on
December 1, 1993 filed their Memorandum of Authorities. [6]
Thereafter, the trial court on December 15, 1993 issued an order dismissing private respondents
complaint, acceding to all the grounds set forth by petitioners in their motion to dismiss. Dissatisfied,
private respondent appealed to public respondent CA which set aside the dismissal and ordered the
remand of the case for further proceedings. Petitioners motion for reconsideration was denied by
respondent CA in its Resolution dated July 31, 1996. [7]

Now before us via this petition for review, petitioners insist on the propriety of the trial courts
order of dismissal, and reiterate, by way of assignment of errors, the same grounds contained in their
motion to dismiss, to wit:
I.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT
FAILS TO STATE A CAUSE OF ACTION.
II.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENTS
CAUSE OF ACTION HAS PRESCRIBED.
III.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENTS
CAUSE OF ACTION IS BARRED BY PRIOR JUDGMENT.
IV.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENTS
CLAIM HAS BEEN WAIVED, ABANDONED OR OTHERWISE EXTINGUISHED.
There is merit in the petition.
There are three (3) reasons which warrant the reversal of the assailed decision of respondent
court.
Respondent courts reading of the complaint is that it stated a cause of action, saying that:
xxxxxxxxx
The legal right of the appellant as stated in his complaint, is his right to demand transfer of title to him
the property which is held in trust for him by the appellees. The correlative obligation of the appellees,
on the other hand, is to deliver title over the property to the appellant which they are holding in trust
for the former, upon the termination of the trust relationship, that is, when the appellant finally
demanded that the title of the property be transferred in his name. The act or omission on the part of
the appellees which constitutes the violation of the appellants right to secure title to the properties he
owns and possesses, is their refusal to transfer the title of the property in the appellants name. All
these averments the appellees hypothetically admit when they filed a motion to dismiss on the ground
that the complaint does not state a cause of action. The trial court could have rendered a valid
judgment upon these hypothetically admitted averments in accordance with the prayer in the
complaint which is to have the title to the property held in trust by the appellee transferred in the
appellants name.
The flaw in this conclusion is that, while conveniently echoing the general rule that averments in
the complaint are deemed hypothetically admitted upon the filing of a motion to dismiss grounded on
the failure to state a cause of action, it did not take into account the equally established limitations to
such rule, i.e., that a motion to dismiss does not admit the truth of mere epithets of fraud; nor
allegations of legal conclusions; nor an erroneous statement of law; nor mere inferences or
conclusions from facts not stated; nor mere conclusions of law; nor allegations of fact the falsity of
which is subject to judicial notice; nor matters of evidence; nor surplusage and irrelevant matter; nor
scandalous matter inserted merely to insert the opposing party; nor to legally impossible facts; nor to

facts which appear unfounded by a record incorporated in the pleading, or by a document referred
to; and, nor to general averments contradicted by more specific averments. [8] A more judicious
resolution of a motion to dismiss, therefore, necessitates that the court be not restricted to the
consideration of the facts alleged in the complaint and inferences fairly deducible therefrom. Courts
may consider other facts within the range of judicial notice as well as relevant laws and jurisprudence
which the courts are bound to take into account, [9] and they are also fairly entitled to examine
records/documents duly incorporated into the complaint by the pleader himself in ruling on the
demurrer to the complaint.[10]
Guided by these crucial limitations on hypothetical admissions, the trust theory being espoused
by private respondent in his complaint, and upon which his claim over the subject properties is
principally anchored, cannot hold water for the following reasons:
First: The execution of a lease contract between Remigio Tan as lessor and private respondent
as lessee over the subject properties, the existence of which is established not only by a copy thereof
attached to petitioners motion to dismiss as Annex 1 [11] but by private respondents own admission
reflected in paragraph 6 of the complaint, already belies private respondents claim of ownership. This
is so because Article 1436 of the Civil Code, [12] Section 2, Rule 131 of the Rules of Court [13] and settled
jurisprudence[14] consistently instruct that a lessee is estopped or prevented from disputing the title of
his landlord.
Second: In the Memorandum of Encumbrances found at the back of TCT No. 53284 issued in
the name of Remigio Tan in 1958 attached as Annex B [15] to the complaint, there appears a mortgage
constituted by Remigio Tan over the subject properties in favor of Philippine Commercial and
Industrial Bank in 1963 to guarantee a principal obligation in the sum of P245,000.00. Remigio could
not have mortgaged the subject properties had he not been the true owner thereof, inasmuch as
under Article 2085 of the New Civil Code, one of the essential requisites for the validity of a mortgage
contract is that the mortgagor be the absolute owner of the thing mortgaged. There is thus no
denying that Remigio Tans successful acquisition of a transfer certificate of title (TCT No. 53284) over
the subject properties in his name after having his brothers (Alejandro Tan Keh) title thereto cancelled,
and execution of a mortgage over the same properties in favor of Philippine Commercial and
Industrial Bank, undoubtedly, are acts of strict dominion which are anathema to the concept of a
continuing and subsisting trust[16] private respondent relies upon.
Third: There being no trust, express or implied, established in favor of private respondent, the
only transaction that can be gleaned from the allegations in the complaint is a double sale, the
controlling provision for which is Article 1544 of the Civil Code, to wit:
Article 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in
the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith.
Private respondent alleged that he bought the subject properties from Alejandro Tan Keh in 1954
but nonetheless failed to present any document evidencing the same, while Remigio Tan, as the other
buyer, had in his name TCT No. 53284 duly registered in the Registry of Deeds of Manila on October
13, 1958.[17] Remigio Tan, beyond doubt, was the buyer entitled to the subject properties since the
prevailing rule is that in the double sale of real property, the buyer who is in possession of a Torrens
title and had the deed of sale registered must prevail. [18]

Fourth: Petitioners are in possession of TCT No. 117898 which evidences their ownership of the
subject properties. On the other hand, private respondent relies simply on the allegation that he is
entitled to the properties by virtue of a sale between him and Alejandro Tan Keh who is now
dead. Obviously, private respondent will rely on parol evidence which, under the circumstances
obtaining, cannot be allowed without violating the Dead Mans Statute found in Section 23, Rule 130 of
the Rules of Court, viz:
Sec. 23. Disqualification by reason of death or insanity of adverse party. Parties or assignors of
parties to a case, or persons in whose behalf a case is prosecuted, against an executor or
administrator or other representative of a deceased person, or against a person of unsound mind,
upon a claim or demand against the estate of such deceased person or against such person of
unsound mind, cannot testify as to any matter of fact occurring before the death of such deceased
person or before such person became of unsound mind.
The object and purpose of the rule is to guard against the temptation to give false testimony in
regard of the transaction in question on the part of the surviving party, and further to put the two
parties to a suit upon terms of equality in regard to the opportunity to giving testimony. If one party to
the alleged transaction is precluded from testifying by death, insanity, or other mental disabilities, the
other party is not entitled to the undue advantage of giving his own uncontradicted and unexplained
account of the transaction.[19]
Clearly then, from a reading of the complaint itself, the annexes attached thereto and relevant
laws and jurisprudence, the complaint indeed does not spell out any cause of action.
We agree with the petitioners submission that private respondents cause of action has
prescribed. TCT No. 53284 in the name of Remigio Tan was registered on October 13, 1958, while
TCT No. 117898 in the name of his heirs, herein petitioners, was issued on April 21, 1975. Private
respondent filed his complaint on October 18, 1993. Respondent court held that the ten (10)-year
prescriptive period for the reconveyance of property based on an implied trust cannot apply in this
case since private respondent was in actual possession of the subject properties, citing as authority
the case of Heirs of Jose Olviga v. CA, et al.[20] Thus:
"It is true that the prescriptive period within which to file an action for reconveyance of property based
on an implied trust is 10 years from the date of issuance of a certificate of title thereon in accordance
with Article 1144 of the New Civil Code and jurisprudence (see Heirs of Jose Olviga v. Court of
Appeals, 227 SCRA 330 citing the case of Vda. de Portugal v. IAC, 159 SCRA 1780). But this rule
applies only when the plaintiff (the appellant) is not in possession of the property, since if a person
claiming to be the owner thereof is in actual possession of the property, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not prescribe (Heirs of Jose
Olviga v. Court of Appeals, supra; underscoring supplied; see also Sapto v. Fabiana, 103 Phil. 683
and Faja v. Court of Appeals, 75 SCRA 441 cited in the decision).
"The Court notes that, as alleged in the complaint, the appellant has been in continuous and
uninterrupted possession of the property in the concept of an owner since 1954; which allegation, by
the appellees' motion to dismiss, has been hypothetically admitted. Therefore, the appellant's cause
of action is, by jurisprudence, even imprescriptible."
Reliance on the Olviga case is misplaced. Private respondents in Olviga were actually occupying
the subject land fraudulently registered in the name of Jose Olviga in a cadastral proceeding as
owners.The rightful application of the doctrine highlighted in Olviga the right to seek reconveyance of
property actually in possession of the plaintiffs is imprescriptible would only cover a situation where
the possession is in the concept of an owner. This is bolstered not only by Article 1118 of the Civil
Code, falling under the chapter Prescription of Ownership and other Real Rights, which provides that:

"Article 1118. Possession has to be in the concept of an owner, public, peaceful and uninterrupted."
(emphasis ours),
but by a further reading of Olviga which emphasized that "x x x if a person claiming to be
the owner thereof is in actual possession of the property, the right to seek reconveyance, which in
effect seeks to quiet title to the property, does not prescribe." [21]
In this case, however, private respondent's occupation of the subject properties was never in the
concept of an owner since he was a mere lessee who, as hereinbefore discussed, is estopped from
denying the title of Remigio Tan as owner-lessor. At best, private respondent's stay on the properties
as lessee was by "license or by mere tolerance" which, under Article 1119 of the Civil Code, "shall not
be available for the purposes of possession."[22]
It thus becomes evident that the filing of private respondent's complaint in 1993 - thirty five (35)
years after TCT No. 53284 in the name of Remigio Tan was registered and eighteen (18) years after
the issuance of TCT No. 117898 in the names of petitioners - was way beyond the ten (10)-year time
limit within which reconveyance of property based on an implied trust should be instituted. Private
respondent's cause of action, assuming that it exists, has clearly prescribed.
Finally, private respondent is guilty of laches. In negating the onset of laches, respondent CA
held:
"But the presumption of abandonment in asserting a right or declining to do so does not apply to
appellant. For the appellant has been and still is in actual, peaceful and continuous physical
possession of the property. Being in actual, peaceful and continuous physical possession of the
property cannot certainly be said as non-assertion of a right to the property. Moreover, the appellee
had acknowledged the trust character of possession of the title, and the appellant must certainly be
granted the right to trust in that express assurance. The very fact that the appellant asserts his rights
vis--vis the appellees show that he has not abandoned to secure the title to a very substantial property
located in the heart of Manila."
Private respondent's possession of the subject properties cannot be made the basis to deflect
the effects of laches because he is a mere lessee who, to repeat, cannot assert any adverse claim of
ownership over the subject properties against the lessor-owner. What ought to be in focus is that, as
alleged by private respondent in his complaint, he was not able to effect the transfer of title over the
subject properties in his favor upon his purchase thereof from Alejandro Tan Keh in 1954 because he
was still a foreigner at that time. But private respondent later on claimed that he was already a Filipino
national when he reminded petitioners of his ownership of the subject properties during Remigio Tans
wake sometime in 1968. It may be reasonably deduced from these allegations that private respondent
acquired Filipino citizenship by naturalization, thus entitling him to own properties in the 1960s, more
or less. His mistake, if it is one, is that he tarried for thirty (30) years before formally laying claim to the
subject properties before the court. Considerable delay in asserting ones right before a court of justice
is strongly persuasive of the lack of merit of his claim, since it is human nature for a person to enforce
his right when the same is threatened or invaded. Thus, private respondent is estopped by laches
from questioning the ownership of the subject properties. [23]
WHEREFORE, in view of the foregoing, the assailed decision of respondent Court of Appeals
dated May 28, 1996 and its Resolution of July 31, 1996 denying the motion for reconsideration
thereof, are hereby SET ASIDE, and a new one is rendered DISMISSING private respondent
Fernando Tan Kiats complaint.
SO ORDERED.

G.R. No. L-51058 January 27, 1992

ASIA PRODUCTION CO., INC., WANG TA PENG and WINSTON WANG, petitioners,
vs.
HON. ERNANI CRUZ PAO, as Judge of the Court of First Instance of Rizal (Quezon City,
Branch XVIII), LOLITA LEE LE HUA and ALBERTO DY, respondents.
Ismael J. Andres for petitioner Asia Production Co., Inc.
Burgos, Sarte, Rebueno & Sarte for petitioners.
Roman Careaga for Alberto Dy.

DAVIDE, JR. J.:

The simple issue in this case is whether or not an action for the refund of partial payments of the
purchase price of a building covered by an oral agreement to sell it with an oral promise to assign the
contract of lease on the lot where the building is constructed is barred by the Statute of Frauds.
Sometime in March 1976, private respondents, who claimed to be the owners of a building
constructed on a lot leased from Lucio San Andres and located in Valenzuela, Bulacan, offered to sell
the building to the petitioners for P170,000.00. Petitioners agreed because of private respondents'
assurance that they will also assign to the petitioners the contract of lease over the land. The above
agreement and promise were not reduced to writing. Private respondents undertook to deliver to the
petitioners the deed of conveyance over the building and the deed of assignment of the contract of
lease within sixty (60) days from the date of payment of the downpayment of P20,000.00. The
balance was to be paid in monthly installments. On 20 March 1976, petitioners paid the downpayment
and issued eight (8) postdated checks drawn against the Equitable Banking Corporation for the
payment of the eight (8) monthly installments, as follows:
Check No. Amount Due Date
10112253
P10,000.00
10112254
20,000.00
10112255
20,000.00
10112256
20,000.00
10112257
20,000.00
10112258
20,000.00
10112259
20,000.00
10112260 20,000.00 January 31, 1977

June
July
August
September
October
November
December

30,
30,
30,
30,
30,
30,
30,

1976
1976
1976
1976
1976
1976
1976

Relying on the good faith of private respondents, petitioners constructed in May 1976 a weaving
factory on the leased lot. Unfortunately, private respondents, despite extensions granted, failed to
comply with their undertaking to execute the deed to sale and to assign the contract despite the fact
that they were able to encash the checks dated 30 June and 30 July 1976 in the total amount of
P30,000.00. Worse, the lot owner made it plain to petitioners that he was unwilling to give consent to
the assignment of the lease unless petitioners agreed to certain onerous terms, such as an increase
in rental, or the purchase of the land at a very unconscionable price.
Petitioners were thus compelled to request for a stop payment order of the six (6) remaining checks.
Succeeding negotiations to save the transaction proved futile by reason of the continued failure of
private respondents to execute the deed of sale of the building and the deed of assignment of the
contract of lease.

So, on or about 29 December 1976, upon prior agreement with private respondents, petitioners
removed all their property, machinery and equipment from the building, vacated the same and
returned its possession to private respondents. Petitioners demanded from the latter the return of their
partial payment for the purchase price of the building in the total sum of P50,000.00. Private
respondents refused to return it. Hence, petitioners, filed against private respondents a complaint 1 for
its recovery and for actual, moral and exemplary damages and attorney's fees with the then Court of
First Instance (now Regional Trial Court) of Quezon City, which was docketed as Civil Case No. Q23593. The case was raffled to Branch XVIII of the court which was then presided over by herein
respondent Judge.
Private respondent Lolita Lee Le Hua did not file an Answer; hence, she was declared in default.
Upon
the
other
hand,
private
respondent
Alberto
Dy
filed
a
motion
to dismiss the complaint on the ground that the claim on which the action is based an alleged
purchase of a building which is not evidenced by any writing cannot be proved by parol evidence
since Article 1356 in relation to Article 1358 of the Civil Code requires that it should be in writing. 2 In
their
opposition 3 to said motion, petitioners argue that their complaint is essentially for collection of a sum
of money; it does not seek to enforce the sale, but aims to compel private respondents to refund a
sum of money which was paid to them as purchase price in a sale which did not materialize by reason
of their bad faith. Furthermore, the execution of the document was an undertaking of the private
respondents, which they refused to comply with. Hence, they cannot now be heard to complain
against something which they themselves brought about.
In his Order 4 of 18 April 1979, respondent Judge granted the motion to dismiss on the ground that the
complaint is barred by the Statute of Frauds. He says:
It cannot be disputed that the contract in this case is condemned by the Statutes of
Fraud (sic) it involves not merely the sale of real property (the building), it also
includes an alleged lease agreement that must certainly be for more than one year
(See Art. 1403, No. 2, subparagraph e, New Civil Code).
Plaintiffs cannot avoid the Statutes of Fraud (sic) by saying that this is merely an
action for the collection of a sum of money. To be entitled to the sum of P50,000.00, it
is necessary to show that such contract was executed and the same was violated but
plaintiffs are prevented from proving this alleged agreement by parol evidence.
Neither may plaintiffs claim that by the payment of the sum of P50,000.00 the
contract was removed from the Statutes of Fraud (sic). This is so because plaintiffs
have not fully complied with their obligation to pay P170,000.00. If there had been full
payment of P170,000.00, the situation would have been different.
Plaintiffs knew or should have known that their contract (as described by them in their
complaint) was unenforceable; they had thereby voluntarily assumed the risks
attendant to such contract. Moreover, the primordial aim of the Statutes of Fraud ( sic)
is to prevent fraud and perjury in the enforcement of obligations depending upon the
unassisted memory of witnesses (Shoemaker vs. La Tondea, 68 Phil. 24). The Court
would find it difficult to determine whether the sum of P50,000.00 was paid because
of the unenforceable contract or for some other transactions.
Their motion for reconsideration 5 having been denied by respondent Judge in his Order 6 of 21 June
1979 for the reason that the oral contract in this case was not removed from the operation of the
Statute of Frauds because there was no full or complete performance by the petitioners of the
contract as required in Paterno vs. Jao Yan 7 and Babao vs. Perez, 8petitioners filed this petition 9 on

16 July 1979, alleging therein as ground therefor grave abuse of discretion on the part of respondent
Judge in issuing the orders of 18 April 1979 and 21 June 1979.
After private respondent Alberto Dy filed his Comment 10 to the petition in compliance with the
resolution 11 of 23 July 1979 and petitioners filed their Reply 12 to said comment on 2 April 1980, this
Court gave due course 13 to the petition. Private respondent Lolita Lee Le Hua was considered to
have waived her right to file her comment to the petition. 14
Petitioners were subsequently required to file their Brief, which they complied with on 13 October
1981; 15 they make the following assignment of errors:
I
The lower court erred in holding that for a contract of purchase and sale to be
removed from the operation of the Statute of Frauds, there must be full and complete
payment of the purchase price.
II
The lower court erred in failing to appreciate the nature of petitioners' cause of action.
III
The lower court erred in not finding that this case is not covered by the Statute of
Frauds.
IV
The lower court erred in not following the procedure prescribed by this Honorable
Court in cases when partial performance is alleged.
V
The lower court erred in dismissing the case.
Private respondents did not file their Brief.
We find merit in the petition. Respondent Judge committed grave abuse of discretion in dismissing the
complaint on the ground that the claim is barred by the Statute of Frauds.
Article 1403 of the Civil Code declares the following contracts, among others, as unenforceable,
unless they are ratified:
xxx xxx xxx
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum thereof, be in writing, and subscribed
by the party charged, or by his agent; evidence, therefore, of the agreement cannot
be received without the writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a
year from the making thereof;

(b) A special promise to answer for the debt, default, or miscarriage

of another;
(c) An agreement made in consideration of marriage, other than a
mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at
a price not less than five hundred pesos, unless the buyer accept and
receive part of such goods and chattels, or the evidences, or some of
them, of such things in action, or pay at the time some part of the
purchase money; but when a sale is made by auction and entry is
made by the auctioneer in his sales book, at the time of the sale, of
the amount and kind of property sold, terms of sale, price, names of
the purchasers and person on whose account the sale is made, it is a
sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or
for the sale of real property or of an interest therein;
(f) A representation to the credit of a third person.
xxx xxx xxx
The purpose of the statute is to prevent fraud and perjury in the enforcement of obligations depending
for their evidence on the unassisted memory of witnesses by requiring certain enumerated contracts
and transactions to be evidenced by a writing signed by the party to be charged. 16 It was not
designed to further or perpetuate fraud. Accordingly, its application is limited. It makes only ineffective
actions for specific performance of the contracts covered by it; it does not declare them absolutely
void and of no effect. As explicitly provided for in the above-quoted paragraph (2), Article 1403 of the
Civil Code, the contracts concerned are simply "unenforceable" and the requirement that they or
some note or memorandum thereof be in writing refers only to the manner they are to be proved. It
goes without saying then, as held in the early case of Almirol, et al. vs. Monserrat, 17 that the statute
will apply only to executory rather than executed contracts. Partial execution is even enough to bar
the application of the statute. In Carbonnel vs. Poncio, et al., 18 this Court held:
. . . It is well-settled in this jurisdiction that the Statute of Frauds is applicable only to
executory contracts (Facturan vs. Sabanal, 81 Phil. 512), not to contracts that are
totally or partially performed (Almirol, et al. vs. Monserrat, 48 Phil. 67, 70; Robles vs.
Lizarraga Hermanos, 50 Phil. 387; Diana vs. Macalibo, 74 Phil. 70).
Subject to a rule to the contrary followed in a few jurisdictions, it is
the accepted view that part performance of a parol contract for the
sale of real estate has the effect, subject to certain conditions
concerning the nature and extent of the acts constituting performance
and the right to equitable relief generally, of taking such contract from
the operation of the statute of frauds, so that chancery may decree its
specific performance or grant other equitable relief. It is well settled in
Great Britain and in this country, with the exception of a few states,
that a sufficient part performance by the purchaser under a parol
contract for the sale of real estate removes the contract form the
operation of the statute of frauds (49 Am. Jur. 722-723).
In the words of former Chief Justice Moran: "The reason is simple. In executory
contracts there is a wide field for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely

been enacted to prevent fraud." (Comments on the Rules of Court, by Moran, Vol. III
[1957 ed.] p. 178). However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the
defendant to keep the benefits already derived by him form the transaction in
litigation, and, at the same time, evade the obligations, responsibilities or liabilities
assumed or contracted by him thereby.
It follows then that the statute applies only to executory contracts and in actions for their
specific performance. It does not apply to actions which are neither for violation of a contract
nor for the performance thereof. 19
There can be no dispute that the instant case is not for specific performance of the agreement to sell
the building and to assign the leasehold right. Petitioners merely seek to recover their partial payment
for the agreed purchase price of the building, which was to be paid on installments, with the private
respondents promising to execute the corresponding deed of conveyance, together with the
assignment of the leasehold rights, within two (2) months from the payment of the agreed
downpayment of P20,000.00. By their motion to dismiss, private respondents theoretically or
hypothetically admitted the truth of the allegations of fact in the complaint. 20 Among the allegations
therein
are:
(1) that the P50,000.00 sought to be recovered represents the downpayment of P20,000.00 and two
(2) monthly installments of the purchase price, and (2) that petitioners decided, in effect, to withdraw
from the agreement by ordering the stop payment of the remaining six (6) checks and to return the
possession of the building to private respondents because of the latter's failure to comply with their
agreement. The action is definitely not one for specific performance, hence the Statute of Frauds does
not apply. And even if it were for specific performance, partial execution thereof by petitioners
effectively bars the private respondents from invoking it. Since it is for refund of what petitioners had
paid under the agreement, originally unenforceable under the statute, because petitioners had
withdrawn therefrom due to the "bad faith" of the private respondents, the latter cannot be allowed to
take shelter under the statute and keep the P50,000.00 for themselves. If this were the case, the
statute would only become a shield for fraud, allowing private respondents not only to escape
performance of their obligations, but also to keep what they had received from petitioners, thereby
unjustly enriching themselves.
Besides, even if the action were for specific performance, it was premature for the respondent Judge
to dismiss the complaint by reason of the Statute of Frauds despite the explicit allegations of partial
payment. As this Court stated in Carbonnel vs. Poncio, et al.: 21
For obvious reasons, it is not enough for a party to allege partial performance in order
to hold that there has been such performance and to render a decision declaring that
the Statute of Frauds is inapplicable. But neither is such party required to establish
such
partial
performance
by documentaryproof before he
could
have
the opportunity to introduce oral testimony on the transaction. Indeed, such oral
testimony would usually be unnecessary if there were documents proving partial
performance. Thus, the rejection of any and all testimonial evidence on partial
performance, would nullify the rule that the Statute of Frauds is inapplicable to
contracts which have been partly executed, and lead to the very evils that the statute
seeks to prevent.
xxx xxx xxx
When the party concerned has pleaded partial performance, such party is entitled to
a reasonable chance to establish by parol evidence the truth of this allegation, as well
as the contract itself. "The recognition of the exceptional effect of part performance in
taking an oral contract out of the statute of frauds involves the principle that oral

evidence is admissible in such cases to prove both the contract and the part
performance of the contract" (49 Am. Jur. 927).
We thus rule that an action by a withdrawing party to recover his partial payment of the consideration
of a contract, which is otherwise unenforceable under the Statute of Frauds, by reason of the failure of
the other contracting party to comply with his obligation, is not covered by the Statute of Frauds.
WHEREFORE, the petition is hereby GRANTED. The challenged Orders of 18 April 1979 and 21
June 1979 in Civil Case No. Q-23593 of the court below are hereby ANNULLED and SET ASIDE, and
the complaint in said case is hereby ordered REINSTATED. The default order against private
respondent Lolita Lee Le Hua shall stand and private respondent Alberto Dy is ordered to file his
Answer to the complaint with the court below within ten (10) days from receipt of this decision. This
decision shall be immediately executory.
Costs against private respondents.
IT IS SO ORDERED.

G.R. No. 85502 February 24, 1992

SUNVILLE TIMBER PRODUCTS, INC., petitioner,
vs.
HON. ALFONSO G. ABAD, as Judge RTC, Br. 22 of Pagadian City, COURT OF APPEALS,
ISIDRO GILBOLINGO AND ROBUSTIANO BUGTAI, respondents.
Manuel V. Trinida for petitioner.
Adolf Leo P. Boncavil for private respondents.

CRUZ, J.:
The Court will focus its attention only on one of the issues raised in this petition the correct
application of the doctrine of exhaustion of administrative remedies.
The petitioner was granted a Timber License Agreement (TLA), authorizing it to cut, remove and
utilize timber within the concession area covering 29,500 hectares of forest land in Zamboanga del
Sur, for a period of ten years expiring on September 31, 1992.
On July 31, 1987, the herein private respondents filed a petition with the Department of Environment
and Natural Resources for the cancellation of the TLA on the ground of serious violations of its
conditions and the provisions of forestry laws and regulations.
The same charges were subsequently made, also by the herein private respondents, in a complaint
for injunction with damages against the petitioner, which was docketed as Civil Case No. 2732 in the
Regional Trial Court of Pagadian City.
The petitioner moved to dismiss this case on three grounds, to wit: 1) the court had no jurisdiction
over the complaint; 2) the plaintiffs had not yet exhausted administrative remedies; and 3) the
injunction sought was expressly prohibited by section 1 of PD 605.
Judge Alfonso G. Abad denied the motion to dismiss on December 11, 1987, 1 and the motion for
reconsideration on February 15, 1988. 2 The petitioner then elevated the matter to the respondent
Court of Appeals, which sustained the trial court in a decision dated July 4, 1988, 3 and in its
resolution of September 27, 1988, denying the motion for reconsideration. 4
The Court of Appeals held that the doctrine of exhaustion of administrative remedies was not without
exception and pointed to the several instances approved by this Court where it could be dispensed
with. The respondent court found that in the case before it, the applicable exception was the urgent
need for judicial intervention, which it explained thus:
The lower court found out that sometime on July 1981, the City Council of Pagadian
in its Resolution No. 111 requested the Bureau of Forest Development to reserve
1,000 hectares in Lison Valley. This request remained unacted upon. Instead in 1982,
a TLA covering 29,500 hectares, including the area requested, was given to
petitioner.
Then the fear expressed by the City Council of Pagadian in its resolution became
reality.

"As averred in the complaint, the erosion caused by the logging

operations of the defendant has caused heavy siltation not only in the
Labangan River (as predicted by the City Council of Pagadian City in
1981) but also in the Tukuran River, Salug River, Sindangan River,
and Sibuguey River. In other words, the adverse effects of the
logging operations of the defendant have already covered a wider
area than that feared to be adversely affected by the City Council of
Pagadian City.
Floods are unknown phenomena in heavily forested areas years
back, particularly in the Island of Mindanao. When the grant of
logging concessions started, so was the denudation of forests. . . . It
is common knowledge that heavy floods have occurred in
areas/places adjoining logging concessions. (Resolution dated
December 11, 1987, p. 5).
Thus, it is urgent that indiscriminate logging be stopped. Irreparable damage would
ensue unless the court intervenes. Reliance on the DENR may not be enough,
judging from its inaction on the council's request seven years back.
The respondent court cited in support of this conclusion the case of De Lara v. Cloribel, 5 where
"irreparable damage and injury" was allowed as an exceptional ground, and Arrow Transportation
Corporation v. Board of Transportation, 6 where the doctrine was waived because of "the strong public
interest in having the matter settled" as soon as possible.
The decision also declared invalid Section 1 of PD 605, which provides:
Sec. 1. No court of the Philippines shall have jurisdiction to issue any restraining
order, preliminary injunction or preliminary mandatory injunction in any case involving
or growing out of the issuance, approval or disapproval, revocation or suspension of,
or any action whatsoever by the proper administrative official or body on concessions,
licenses, permits, patents, or public grants of any kind in connection with the
disposition, exploitation, utilization, exploration and/or development of the natural
resources of the Philippines.
This was held to be an encroachment on the judicial power vested in the Supreme Court and the
lower courts by Article VIII, Section 1, of the Constitution. The respondent court cited Export
Processing Zone Authority v. Dulay, 7where several presidential decrees were declared
unconstitutional for divesting the courts of the judicial power to determine just compensation in
expropriation cases.
The petitioner is now before the Court, contending that the doctrine of exhaustion of administrative
remedies was not correctly applied and that the declaration of the unconstitutionality of Section 1 of
PD 605 was improper.
The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate
administrative authorities in the resolution of a controversy falling under their jurisdiction before the
same may be elevated to the courts of justice for review. Non-observance of the doctrine results in
lack of a cause of action, 8 which is one of the grounds allowed in the Rules of Court for the dismissal
of the complaint. The deficiency is not jurisdictional. Failure to invoke it operates as a waiver of the
objection as a ground for a motion to dismiss and the court may then proceed with the case as if the
doctrine had been observed.
One of the reasons for the doctrine of exhaustion is the separation of powers, which enjoins upon the
Judiciary a becoming policy of non-interference with matters coming primarily (albeit not exclusively)

within the competence of the other departments. The theory is that the administrative authorities are
in a better position to resolve questions addressed to their particular expertise and that errors
committed by subordinates in their resolution may be rectified by their superiors if given a chance to
do so. A no less important consideration is that administrative decisions are usually questioned in the
special civil actions of certiorari, prohibition and mandamus, which are allowed only when there is no
other plain, speedy and adequate remedy available to the petitioner. It may be added that strict
enforcement of the rule could also relieve the courts of a considerable number of avoidable cases
which otherwise would burden their heavily loaded dockets. 9
As correctly suggested by he respondent court, however, there are a number of instances when the
doctrine may be dispensed with and judicial action validly resorted to immediately. Among these
exceptional cases are: 1) when the question raised is purely legal; 10 2) when the administrative body
is in estoppel; 11 3) when the act complained of is patently illegal; 12 4) when there is urgent need for
judicial intervention; 13 5) when the claim involved is small; 14 6) when irreparable damage will be
suffered; 15 7) when there is no other plain, speedy and adequate remedy; 16 8) when strong public
interest is involved; 17 9) when the subject of the controversy is private land; 18 and 10) in quo
warranto proceedings.19
The private respondents now submit that their complaint comes under the exceptions because
forestry laws do not require observance of the doctrine as a condition precedent to judicial action; the
question they are raising is purely legal; application of the doctrine will cause great and irreparable
damage; and public interest is involved.
We rule for the petitioner.
Even if it be assumed that the forestry laws do not expressly require prior resort to administrative
remedies, the reasons for the doctrine above given, if nothing else, would suffice to still require its
observance. Even if such reasons were disregarded, there would still be the explicit language of
pertinent laws vesting in the DENR the power and function "to regulate the development, disposition,
extraction, exploration and use of the country's forests" and "to exercise exclusive jurisdiction" in the
"management and disposition of all lands of the public domain," 20 and in the Forest Management
Bureau (formerly the Bureau of Forest Development) the responsibility for the enforcement of the
forestry laws aid regulations 21 here claimed to have been violated. This comprehensive conferment
clearly implies at the very least that the DENR should be allowed to rule in the first instance on any
controversy coming under its express powers before the courts of justice may intervene.
The argument that the questions raised in the petition are purely legal is also not acceptable. The
private respondents have charged, both in the administrative case before the DENR and in the civil
case before the Regional Trial Court of Pagadian City, that the petitioner has violated the terms and
conditions of the TLA and the provisions of forestry laws and regulations. The charge involves factual
issues calling for the presentation of supporting evidence. Such evidence is best evaluated first by the
administrative authorities, employing their specialized knowledge of the agreement and the rules
allegedly violated, before the courts may step in to exercise their powers of review.
As for the alleged urgent necessity for judicial action and the claimed adverse impact of the case on
the national interest, the record does not show that the petitioners have satisfactorily established
these extraordinary circumstances to justify deviation from the doctrine by exhaustion of
administrative remedies and immediate resort to the courts of justice. In fact, this particular
submission must fall flat against the petitioner's uncontested contention that it has since 1988 stopped
its operations under the TLA in compliance with the order of the DENR.
In the Petition for prohibition filed with the respondent court, the petitioner alleged that its logging
operations had been suspended pursuant to a telegram 22 received on February 23, 1988, by the
District Forester from the Regional Executive Director of the DENR, Zamboanga City; reading as
follows:

DISTRICT
PAGADIAN CITY

FORESTER

QUOTED HEREUNDER IS RADIO MESSAGE DATED FEBRUARY 22, 1988 FROM

SECRETARY FULGENCIO S. FACTORAN, JR. QUOTE EFFECTIVE IMMEDIATELY
CMA SUSPEND ALL LOGGING OPERATIONS OF SUNVILLE IN VIEW OF
SERIOUS VIOLATIONS OF FOREST PROTECTION AND REFORESTATION
UNQUOTE SUBMIT REPORT ASAP.
RE
D
BAT
CA
GA
N
The petition now before us contains the allegations that the "petition for cancellation of petitioner's
TLA is still pending up to this date and that petitioner's logging operations (were) ordered suspended
by the Secretary of the DENR pending further investigation." 23
In the memorandum filed by the petitioner with this Court, it is informed that "the Secretary of the
DENR suspended petitioner's logging operations until further investigation. The suspension is still in
force up to this date after the lapse of almost 3 years." 24
These statements have not been disputed by the private respondents in their pleadings before the
respondent court and this Court and are therefore deemed admitted.
There in no question that Civil Case No. 2732 comes within the jurisdiction of the respondent court.
Nevertheless, as the wrong alleged in the complaint was supposedly committed as a result of the
unlawful logging activities of the petitioner, it will be necessary first to determine whether or not the
TLA and the forestry laws and regulations had indeed been violated. To repeat for emphasis,
determination of this question is the primary responsibility of the Forest Management Bureau of the
DENR. The application of the expertise of the administrative agency in the resolution of the issue
raised is a condition precedent for the eventual examination, if still necessary, of the same question by
a court of justice.
In view of the above observations, we find that there was no need for the respondent court to declare
the unconstitutionality of Section 1 of PD 605. The rule is that a question of constitutionality must be
avoided where the case can be decided on some other available ground, 25 as we have done in the
case before us. The resolution of this same question must await another case, where all the
indispensable requisites of a judicial inquiry into a constitutional question are satisfactorily
established. In such an event, it will be time for the Court "to make the hammer fall, and heavily," in
the words of Justice Laurel, if such action is warranted.
WHEREFORE, the petition is GRANTED. The decision of the respondent court dated July 4, 1988,
and its resolution dated September 27, 1988, as well as the resolutions of the trial court dated
December 11, 1987 and February 15, 1988, are all REVERSED and SET ASIDE. Civil Case No. 2732
in the Regional Trial Court of Pagadian City is hereby DISMISSED.
SO ORDERED.

ANTERO LUISTRO, G.R. No. 158819

Petitioner,
Present:
PUNO, C.J., Chairperson,
- versus - CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.
COURT OF APPEALS and
FIRST GAS POWER Promulgated:
CORPORATION,
Respondents. April 16, 2009
x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review [1] assailing the 9 December 2002 Decision [2] and 18 June 2003
Resolution[3] in CA-G.R. SP No. 68703.
The Antecedent Facts
First Gas Power Corporation (respondent) operates a gas-fired power generating facility by virtue of a
Power Purchase Agreement (PPA) with the Manila Electric Company (Meralco). Respondent sells the
electric power generated by its facility to Meralco.
On 2 September 1997, respondent entered into a Substation Interconnection Agreement (SIA) with
Meralco and the National Power Corporation (NPC). The SIA required respondent to design, finance,
construct, commission, and energize a 230-kilovolt electric power transmission line, approximately 25
km. in length from its power plant site in Sta. Rita, Batangas City to Calaca, Batangas. Respondents
obligation under the SIA entailed the acquisition of easements of right-of-way over affected lands
located along the designated route of the transmission line.
On 25 March 1997, respondent entered into a Contract of Easement of Right-of-Way (Contract) with
Antero Luistro (petitioner), owner of a parcel of land located in Barangay Maigsing Dahilig, Lemery,
Batangas. Under the Contract, petitioner granted respondent perpetual easement over a 100-sq. m.
portion of his property for the erection of the transmission line tower and a 25-year easement over
2,453.60 sq. m. portion of the property for the right to pass overhead line cables. The Contract
covered a total area of2,553.60 sq. m. for a consideration of P88,608 to cover the easement fee,

tower pole, guy occupancy fees and improvements. Respondent then commenced the construction of
the transmission line tower and the stringing of overhead transmission line cables above petitioners
property covered by the Contract.
On 23 December 1998, petitioners counsel wrote a letter to respondents president asking for a
temporary stoppage of all kinds of work within the vicinity of petitioners residential house pending
settlement of petitioners grievance that the house and other improvements lay underneath the
transmission wire/line being constructed and would endanger the life and health of the persons in the
vicinity. Petitioner also referred the concerns to the NPC in a letter dated 19 April 1999. However, the
NPC set aside petitioners concerns and considered the matter closed.
On 7 September 2000, petitioner filed a complaint [4] for Rescission/Amendment And Or Modification of
Contract Of Easement With Damages, docketed as Civil Case No. 142-2000, against respondent and
First Balfour Beatty Realty, Inc. (defendants). Petitioner alleged that respondent, by means of fraud
and machinations of words, was able to convince him to enter into the Contract. Petitioner alleged that
he entered into the Contract under misrepresentation, promises, false and fraudulent assurances, and
tricks of respondent. Petitioner alleged that while his house was supposed to be 20 to 25 meters away
from the transmission wire/line, it turned out after the installation of Posts 97 and 98 that his house
was only 7.23 meters directly underneath the transmission wire/line. Petitioner alleged that the
powerful 230 kilovolts passing the transmission wire/line continuously endanger the lives, limbs, and
properties of petitioner and his family.
Respondent filed a Motion to Dismiss[5] on the ground that petitioner failed to state a cause of action in
his complaint.
The Ruling of the Trial Court
In its Order[6] dated 24 January 2001, the Regional Trial Court of Lemery, Batangas, Branch 5 (trial
court) denied the Motion to Dismiss and directed defendants to file their respective answers within ten
days from receipt of the order. Respondent filed a Motion for Reconsideration. In its 13 November
2001 Order,[7] the trial court denied the motion.
Respondent filed a petition for certiorari before the Court of Appeals assailing the 24 January 2001
and 13 November 2001 Orders of the trial court.

The Ruling of the Court of Appeals

In its 9 December 2001 Decision, the Court of Appeals set aside the trial courts 24 January 2001 and
13 November 2001 Orders and ordered the dismissal of the complaint for failure to state a cause of

action insofar as respondent was concerned. The Court of Appeals ruled that the trial court failed to
comply with Section 3, Rule 16 of the 1997 Rules of Civil Procedure which requires that in every case,
the resolution shall state clearly and distinctly the reasons therefor. The Court of Appeals ruled that
the trial court failed to consider that when the ground for dismissal was failure to state a cause of
action, its sufficiency could only be determined by considering the facts alleged in the complaint. The
Court of Appeals ruled that the undertaking as regards the distance of the transmission wire/line from
petitioners house which respondent allegedly breached was not in the Contract. The Court of Appeals
ruled that the alleged right of petitioner as stated in the complaint did not exist and was without any
basis.
The Court of Appeals further ruled that it could not sustain the allegation of fraud because petitioner
failed to state with particularity the circumstances constituting the alleged fraud. The dispositive
portion of the Decision of the Court of Appeals reads:
WHEREFORE, foregoing premises considered, the petition is hereby GRANTED and
the assailed Orders dated January 24, 2001 and November 13, 2001 of the Regional
Trial Court, Branch 5, Lemery, Batangas in Civil Case No. 142-2000 are hereby SET
ASIDE insofar as petitioner is concerned as the lower court is hereby ORDERED to
dismiss the complaint for failure to state a cause of action insofar as petitioner is
concerned.
SO ORDERED.[8]
Petitioner filed a motion for reconsideration. In its 18 June 2003 Resolution, the Court of Appeals
denied the motion for lack of merit.
Hence, the petition before this Court.
The Issues
Petitioner raises the following issues in his Memorandum:
1.
Whether the trial courts 24 January 2001 and 13 November 2001 Orders
failed to comply with Section 3, Rule 16 of the 1997 Rules of Civil Procedure;
2.

Whether the complaint states a sufficient cause of action; and

3.
Whether the complaint alleges fraud with particularity as required under
Section 5, Rule 8 of the 1997 Rules of Civil Procedure.
The Ruling of this Court
The petition has no merit.

Violation of Section 3, Rule 16

of the 1997 Rules of Civil Procedure
Section 3, Rule 16 of the 1997 Rules of Civil Procedure provides:
Sec. 3. Resolution of motion. - After the hearing, the court may dismiss the action or
claim, deny the motion, or order the amendment of the pleading.

The court shall not defer the resolution of the motion for the reason that the ground
relied upon is not indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor.

The Rules prescribe that the resolution of the motion to dismiss shall clearly and distinctly declare the
reasons therefor. The directive proscribes the common practice of perfunctorily dismissing the motion
for lack of merit which can often pose difficulty and misunderstanding on the part of the aggrieved
party in taking recourse therefrom and likewise on the higher court called upon to resolve the same,
usually on certiorari.[9] In this case, the trial court merely stated:
Examining the allegations in the complaint the Court finds that a cause of action
sufficiently exist[s] against defendants.[10]
The trial court did not explain why a sufficient cause of action existed in this case. The trial court
merely cited Article 19 of the Civil Code which provides that [e]very person must, in the exercise of his
rights and in the performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith. The disposition of the trial court clearly fell short of the requirement set forth
under Section 3, Rule 16 of the 1997 Rules of Civil Procedure.
Sufficiency of Cause of Action
In a motion to dismiss based on lack of cause of action, the question posed to the court for
determination is the sufficiency of the allegation of facts made in the complaint to constitute a cause of
action.[11] To sustain a motion to dismiss for lack of cause of action, it must be shown that the claim for
relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or
uncertain.[12]
In this case, we agree with the Court of Appeals that the complaint lacked sufficient cause of
action. The complaint was based on the alleged breach of the Contract and violation of the
undertaking that petitioners house was supposed to be 20 to 25 meters away from the transmission

wire/line. Petitioner alleged in the complaint that contrary to what had been assured and promised, his
house turned out to be only 7.23 meters directly underneath the transmission wire/line.
As pointed out by the Court of Appeals, there was no such undertaking in the Contract. The Contract
only granted respondent a perpetual easement over 100 sq. m. portion of petitioners property, as well
as 25 years easement of right-of-way over the property or portions thereof, as indicated in the sketch
plan, for the installation and maintenance of wooden poles, steel towers, tower footings, and electric
and guy wires. Therefore, the alleged right of petitioner, which respondent supposed to have violated,
did not exist in the Contract.
Allegation of Fraud
Section 5, Rule 8 of the 1997 Rules of Civil Procedure states:
Section 5. Fraud, mistake, condition of the mind. - In all averments of fraud or
mistake, the circumstances constituting fraud or mistake must be stated with
particularity. Malice, intent, knowledge or other condition of the mind of a person may
be averred generally.
Again, the complaint falls short of the requirement that fraud must be stated with particularity. The
complaint merely states:
4.
That sometime in the year of 1997, the consolidator-facilitator of the
Defendants FGPC and Balfour by means of fraud and machinations of words were
able to convince[] the plaintiff to enter into CONTRACT OF EASEMENT OF RIGHT
OF WAY wherein the latter granted in favor of the defendant FGPC the right to erect
[its] Tower No. 98 on the land of the plaintiff situated at Barangay Maigsing Dahilig,
Lemery 4209 Batangas including the right to Install Transmission Lines over a portion
of the same property for a consideration therein stated, a xerox copy of said contract
is hereto attached as [] ANNEXES A up to A-4 of the complaint;
5.
That the said contract, (Annexes A up to A-4) was entered into by the
plaintiff under the MISREPRESENTATION, PROMISES, FALSE AND FRAUDULENT
ASSURANCES AND TRICKS of the defendants[.][13]

Not only did petitioner fail to allege with particularity the fraud allegedly committed by respondent. A
review of the Contract shows that its contents were explained to petitioner.The Contract states:
Bago ko/namin nilagdaan ang kasulatang ito ay ipinaliwanag muna sa akin/amin sa
wikang Tagalog/ o sa wikang aking/aming naiintindihan. Ang nilalaman nitoy lubusan
ko/naming nauunawaan kayat lumagda kami rito ng kusang loob, walang sinumang
pumilit o tumakot sa akin/amin.[14]

There is clearly no basis for the allegation that petitioner only signed the Contract because of fraud
perpetrated by respondent.

WHEREFORE, we DENY the petition. We AFFIRM the 9 December 2002 Decision and 18 June 2003
Resolution in CA-G.R. SP No. 68703.
SO ORDERED.

G.R. No. 94733 February 17, 1993

MUNICIPALITY OF BIAN, LAGUNA, represented by Hon. Bayani Alonte, Municipal Mayor of
Bian, Laguna, petitioner,
vs.
HON. COURT OF APPEALS and JESUS M. GARCIA, respondents.
Neol Cangco Zarate for private respondents.

REGALADO, J.:
This is an appeal via certiorari from the judgment of respondent Court of Appeals promulgated on May
31, 1990 in CA-G.R. SP No. 19582 1 wherein it set aside the order granting a writ of execution
pending appeal issued on December 14, 1989 by Branch 24 of the Regional Trial Court at Bian,
Laguna in Civil Case No. B-3201 thereof; and further annulled the judgment rendered by the
Municipal Trial Court of Bian, Laguna in an ejectment case, docketed as Civil Case No. 2473, and
which case is pending on appeal in the aforestated Civil Case No. B-3201. Respondent court having
denied the reconsideration in its resolution of August 9, 1990, 2 petitioners have taken this recourse to
us against the backdrop of the antecedents hereunder chronologically detailed.
On September 27, 1989, petitioner filed Civil Case No. 2473 for unlawful detainer, with a prayer for a
writ of preliminary mandatory injunction, against private respondent in the Municipal Trial Court of
Bian, Laguna alleging that it was no longer amenable to the renewal of its 25-year lease contract
with private respondent over the premises involved because of its pressing need to use the same for
national and provincial offices therein.
On October 5, 1989, private respondent filed his answer to the complaint contending that the contract
of lease for the original period of 25 years had not yet expired and, assuming that it had expired, he
has exercised his option to stay in the premises for another 25 years as expressly provided in the said
contract. On October 9, 1989, petitioner filed its reply to private respondent's answer.
On October 16, 1989, private respondent filed this time a "Motion for Preliminary Hearing as if a
Motion to Dismiss Has Been Filed" on the ground that the complaint states no cause of action,
reiterating its argument that the original term of 25 years stipulated in the contract of lease had not yet
expired and that, at any rate, under said contract he has the exclusive option to renew the same for
another 25 years.
After some further exchanges consisting of petitioner's opposition to private respondent's aforesaid
motion for preliminary hearing, the latter's reply thereto, and the parties' respective position papers,
the municipal trial court rendered judgment on October 26, 1989 ordering private respondent to
vacate the premises subject of the ejectment case. 3
On November 8, 1989, private respondent filed a "Manifestation/Motion" before said trial court praying
that the issues raised in the motion for preliminary hearing, apparently because it was in the nature of
a motion to dismiss, be first resolved instead of rendering judgment on the pleadings. Thereafter, on
November 10, 1989, private respondent received a copy of the decision of the trial court, hence he
filed a notice of appeal to the Regional Trial Court of Laguna on November 20, 1989, which was
assigned to Branch 24 thereof at Bian, Laguna.
On December 5, 1989, petitioner filed before said court a motion for execution pending appeal and on
December 14, 1989, Hon. Jose Mar. Garcia, presiding judge of said branch of the regional trial court
granted petitioner's aforesaid motion for discretionary execution. 4 The following day, December 15,

1989, a writ of execution was issued directing the deputy sheriff or his duly authorized representative
to enforce the terms of the judgment of the court a quo. 5
On December 29, 1989, private respondent filed with the Court of Appeals a petition for certiorari, with
a prayer for the issuance of a writ of preliminary injunction, assailing the aforesaid order of execution
pending appeal on the ground that petitioner failed to furnish private respondent with a copy of the
motion therefor filed by it in the aforementioned Civil Case No. B-3201, contrary to Section 6, Rule 15
of the Rules of Court, hence the invalidity of the lower court's order of December 14, 1989 which
granted the writ of execution. Petitioner seasonably filed its comment and/or opposition to said
petition.
Resolving this issue posed by the pleadings, respondent court rendered judgment on May 31, 1990
setting aside the questioned order for being violative of the requirement in Section 6, Rule 15 of the
Rules of Court which provides that no motion shall be acted upon by the court without proof of prior
notice thereof to the adverse party. Aside from annulling the controversial order, however, respondent
court likewise annulled the judgment of the court a quo in Civil Case No. 2473, which judgment is
pending on appeal in Civil Case No. B-3201 of the aforesaid regional trial court. Respondent court
granted the second additional relief on the ground that the decision is contrary to the agreement of the
parties which should be considered the law between them. 6
The assailed judgment and ratiocinations of respondent court are best reproduced for convenient
reference:
FIRSTLY, the respondent Municipality filed a Motion For Execution pending appeal.
Petitioner contends that said motion did not comply with Section 4, Rule 15 and the
ruling of Azajar vs. Court of Appeals (145 SCRA 333). Under Section 6, Rule 15 of the
Rules of Court, no motion shall be acted upon by the Court without proof of such
motion. The respondent Court by doing so acted with serious abuse of discretion
which is tantamount to lack of or in excess of jurisdiction to issue a writ of execution
pending appeal.
SECONDLY, petitioner assails the decision of the lower court on the ground that it
failed to consider that the judgment proceeded from an inferior court which was
improvidently and irregularly rendered when it failed to resolve first the issue raised in
the motion to dismiss. This refers to a situation where the lease contract shall be for
twenty five (25) years, renewable for another twenty five (25) years at the option of
the lessee or his heirs. . . .
WHEREFORE, in view of the foregoing and considering the evidence and the highest
consideration of law and applicable jurisprudence, the petition for certiorari is hereby
granted. The order dated December 14, 1989 in Civil Case No. B-3201, issued
without notice to petitioner together with the writ of execution pending appeal, being
null and void, is therefore ordered set aside, being contrary to Section 6, Rule 15 of
the Rules of Court. The judgment of the inferior court in Civil Case No. 2475 (sic,
2473) is likewise ordered annulled, being contrary to the agreement of the parties
which is considered the law between them. 7
Petitioner duly filed a motion for reconsideration of said judgment on the ground that the Court of
Appeals should have confined itself to the questioned order of the respondent regional trial court
dated December 14, 1989 and subject of private respondent's petition for certiorari with preliminary
injunction in CA-G.R. SP No. 19582.
As earlier stated, respondent court denied said motion, hence, the instant petition wherein the
petitioner contends that the Court of Appeals overstepped the bounds of its authority in annulling the
decision of the municipal trial court even if said decision was not an issue raised by private

respondent in CA-G.R. SP No. 19582 and which decision is in fact pending on appeal with the
regional trial court. 8
In his comment, private respondent refutes petitioner's contention and claims that the issue of the
merits of the judgment of the municipal trial court was sufficiently raised and controverted, hence,
respondent court was not in error when it passed judgment on the same. Moreover, private
respondent makes the riposte that it is a cherished rule in procedural law that a controversy should be
settled in one single proceeding in order to avoid multiplicity of suits.
We are favorably impressed with the merits of the instant petition.
Respondent Court of Appeals has no jurisdiction in a certiorari proceeding involving an incident in a
case to rule on the merits of the main case itself which was not on appeal before it. The validity of the
order of the regional trial court, dated December 14, 1989, authorizing the issuance of a writ of
execution during the pendency of the appeal therein was the sole issue raised in the petition
for certiorari filed in respondent Court of Appeals. 9 The allegation that the decision of the municipal
trial court was improvidently and irregularly issued was raised by private respondent only as an
additional or alternative argument to buttress his theory that the issuance of a discretionary writ of
execution was not in order, as can be gleaned from the text of said petition itself, to wit:
V. ERRORS/ISSUES
xxx xxx xxx
Besides, when the respondent Judge issued the writ, it (sic) failed to consider that the
judgment rendered by the inferior court was improvidently and irregularly issued,
when said court failed to resolve first the pending Motion To Dismiss, a procedural
process before any judgment on the merit(s) may be had. 10
Further, even assuming that the said issue was squarely raised and sufficiently controverted, the
same cannot be considered a proper subject of a special civil action for certiorari under Rule 65 which
is limited only to challenges against errors of jurisdiction. The jurisdiction of the municipal trial court
over the ejectment case filed by the petitioner against private respondent is not disputed. Thus,
assuming that the said lower court committed a mistake on the merits of the case, it was nonetheless
in the due exercise of its jurisdiction. The error, if any was committed by the trial court, was at most
one of judgment or procedure correctible by ordinary appeal.
Neither can it be said that the lower court committed a grave abuse of discretion or exceeded its
jurisdiction when it failed to conduct a preliminary hearing, as prayed for in private respondent's
"Motion for Preliminary Hearing as if a Motion to Dismiss Has Been Filed," before summarily
rendering judgment on the merits of the case. The said motion of private respondent is anchored on
the ground that the complaint allegedly states no cause of action since the original term of 25 years
stipulated in the contract of lease had not yet expired and assuming that it had expired, private
respondent had made known to petitioner his exclusive option to renew it for another 25 years. 11
Section 5, Rule of the Rules of Court pertinently provides:
Sec. 5. Pleading grounds as affirmative defenses. Any of the grounds for dismissal
provides for in this Rule, except improper venue, preliminary hearing may be had
thereon as if a motion to dismiss had been filed.
The aforequoted provision allows the grounds for a motion to dismiss to be set up as
affirmative defenses in the answer if no motion to dismiss has been filed.

However, contrary to the claim of private respondent, the preliminary hearing permitted under the said
provision is not mandatory even when the same is prayed for. It rests largely on the sound discretion
of the trial court. The use of the word "may" in said provision shows that such a hearing is not a matter
of right demandable from the trial court. Where the provision reads "may," this word shows that it is
not mandatory but discretional. It is an auxiliary verb indicating liberty, opportunity, permission and
possibility. 12
Moreover, a preliminary hearing on an affirmative defense for failure to state a cause of action is not
necessary. As we have ruled in Heirs of Juliana Clavano vs. Genato, et al.: 13
. . . respondent Judge committed an error in conducting a preliminary hearing on the
private respondent's affirmative defenses. It is a well-settled rule that in a motion to
dismiss based on the ground that the complaint fails to state a cause of action, the
question submitted to the court for determination is the sufficiency of the allegations
in the complaint itself. Whether those allegations are true or not is beside the point,
for their truth is hypothetically admitted by the motion. The issue rather is: admitting
them to be true, may the court render a valid judgment in accordance with the prayer
of the complaint? Stated otherwise, the sufficiency of the cause of action must appear
on the face of the complaint in order to sustain a dismissal on this ground. No
extraneous matter may be considered nor facts not alleged, which would require
evidence and therefore, must be raised as defenses and await the trial. In other
words, to determine sufficiency of the cause of action, only the facts alleged in the
complaint, and no other should be considered.
The respondent Judge departed from this rule in conducting a hearing and in
receiving evidence in support of private respondent's affirmative defense, that is, lack
of cause of action.
It is a familiar doctrine in this jurisdiction that certiorari will issue only to correct errors of jurisdiction
and that no error or mistake committed by a court will be corrected by certiorari unless said court had
acted in the premises without jurisdiction or in excess thereof or with such grave abuse of discretion
as would amount to lack of jurisdiction. It is available only for these purposes and not to correct errors
of procedure or mistake in the judge's finding or conclusions. 14
If a judgment of a municipal trial court is sought to be reviewed, the remedy is an appeal to the
regional trial court, not the filing of a special civil action of certiorari. Appeal, whether from an interior
court or a regional trial court, is antithetical to a special civil action of certiorari. 15 When the remedy of
appeal is available, the extraordinary remedy ofcertiorari cannot be resorted to because the
availability of appeal proscribes recourse to the special civil action of certiorari.16
Indeed, the respondent Court of Appeals went beyond the realm of its authority and its
pronouncements on the judgment rendered by the municipal trial court on the ejectment case
were ultra jurisdictio. That judgment was on appeal before the regional trial court. Respondent court's
authority was, therefore, limited to ruling upon the issue of whether or not the regional trial court
committed grave abuse of discretion in issuing the order directing the issuance of a discretionary writ
of execution against private respondent. Whether or not the municipal trial court committed a mistake
in arriving at its decision is an issue that is beyond the authority of respondent court to decide. It is
lodged in another and appropriate forum with appellate powers the exercise of which should not be
usurped or preemted by respondent Court of Appeals.
WHEREFORE, the petition at bar is GRANTED. The decision of respondent Court Appeals dated May
31, 1990, insofar as it annulled the decision of the Municipal Trial Court of Bian, Laguna in Civil Case
No. 2473, and its resolution of August 9, 1990 are hereby REVERSED and SET ASIDE. Let this case
be REMANDED to the Regional Trial Court of Bian, Laguna for further appropriate proceedings.

SO ORDERED.

G.R. No. 84695 May 8, 1990

NATIONAL POWER CORPORATION and FINE CHEMICALS (PHILS.), INC., petitioners,
vs.
THE COURT OF APPEALS and THE MANILA ELECTRIC COMPANY, respondents.

PARAS, J.:
This is a petition for review on certiorari, with prayer for the issuance of temporary restraining order, of
the August 11, 1988 decision * of the Court of Appeals in CA-G.R. SP No. 12939 dismissing the
petition for certiorari, prohibition and mandamus.
Herein petitioner FINE Chemicals (Phils.) Inc. (FINE for short) is a corporation registered with the
Board of Investments (BOI for short) and engaged in the manufacture of plastics for export. Sometime
in September, 1986, it filed an application for direct power connection with herein co-petitioner
National Power Corporation (NPC for short). NPC, acting on the same, wrote a letter to herein private
respondent Manila Electric Company (MERALCO for short), dated November 18, 1986 (Rollo, p. 54),
wherein it stated that as per Memorandum of Understanding between NPC and BOI, the NPC is
authorized to connect directly to its system qualified industrial consumers. However, due to its policy
not to compete directly with its customers, NPC requests that it be informed whatever definite decision
MERALCO is contemplating on the requests of FINE and of Rizal Cement for such direct connection.
MERALCO, in a letter dated December 3, 1986 (Ibid., p. 55), advised NPC that they are not in a
position to grant the request since to allow large consumers to tap directly to NPC will mean foregoing
the share of the subsidy burden which will ultimately be borne by the other remaining large
consumers, and that it will also mean costly duplication of facilities. MERALCO, in a letter dated
February 27, 1987 (Ibid., p. 56) further stated, among others, that the direct connection of industries
under BOI-NPC memorandum of understanding dated January 12, 1981, presupposes the inability of
the utility/cooperatives to meet certain standard of financial and technical capability, both of which are
not true in the case of MERALCO. NPC, in a letter dated March 16, 1987 (Ibid., p. 57), informed
MERALCO that in the absence of a clear- cut policy that will inhibit NPC from acceding to the said
request, NPC is now preparing and will put up the necessary facilities to supply power to FINE; and
that they are now negotiating the terms and conditions of the supply. MERALCO, in a letter dated
March 20, 1987 (Ibid., pp. 58-59), registered its strong objection; reiterated its assurance that it is
financially and technically capable of serving the power requirements of FINE; and with the statement
that a draft executive order creating the Energy Regulatory Board has been prepared and may be
issued momentarily, urged NPC to hold off any further action towards serving applicant directly, lest it
will pre-empt that Board from implementing government prescription on this issue. But on July 12,
1987, NPC started to supply the electric requirements of FINE by direct power supply connection.
Hence, on July 22, 1987, MERALCO filed with the Regional Trial Court of Pasig, presided over by
Judge Eutropio Migrino a petition for Prohibition, mandamus and Damages with Preliminary Injunction
against petitioners NPC and FINE Chemicals (Phil.) Inc., docketed therein as Civil Case No. 54733
(Ibid., pp. 23-53).
On August 4, 1987, FINE filed its opposition to MERALCO's application for preliminary injunction,
maintaining that the application for injunctive relief had become moot and academic since, prior to the
filing of the petition, the direct power service had already been consummated and the requisite power
lines and facilities of NPC had long been installed and fully operational.
Accordingly, MERALCO amended its petition by incorporating therein an application for a writ of
preliminary mandatory injunction.

On August 11, 1987, FINE moved to dismiss the amended petition on the ground of insufficiency of
the allegations in the petition to plead a cause of action (Ibid., pp. 60-70). NPC adopted FINE's motion
to dismiss.
Meanwhile, trial judge allowed reception of MERALCO's evidence in support of its application for a
writ of preliminary mandatory injunction, over FINE's objection.
On August 25, 1987, MERALCO was granted leave to file its second amended petition so as to
incorporate this time an allegation of grave and irreparable injury.
With the admission of MERALCO's second amended petition, FINE filed a manifestation adopting its
motion to dismiss dated August 10, 1987 as its motion to dismiss the second amended petition. On
the other hand, MERALCO filed its opposition thereto on September 11, 1987.
Respondent Judge, in an order dated September 16, 1987, denied the motion to dismiss (Ibid., p. 79),
the pertinent portion of which, reads:
The Motion to Dismiss is anchored on the ground of lack of cause of action.
Well settled rule is that when the motion to dismiss is anchored on lack of cause of
action, the facts alleged in the complaint are assumed and no other fact can be
considered in resolving said motion.
After going carefully over the complaint, the Court believes, and so holds, that if not
properly traversed it can render a valid judgment thereon.
WHEREFORE, respondent Fine Chemicals (Phils.), Inc.'s said motion to dismiss is
hereby denied.
FINE, without filing a motion for reconsideration, on October 1, 1987, filed with respondent Court of
Appeals a Petition for Certiorari, Prohibition and mandamus (Ibid., pp. 80-98). NPC, on the other
hand, on October 13, 1987, filed a Petition for Leave to File Intervention to Adopt Petition and Motion
for Extension of Time to File Supplemental Petition (Ibid., pp. 93-103) which was filed on October
28,1987 (Ibid., pp. 6-7).
Respondent Court of Appeals, in a decision promulgated on August 11, 1988, dismissed the petition
for certiorari,prohibition and mandamus (Ibid., pp. 149-154). Hence, the instant petition.
The Second Division of this Court, after the filing of the required pleadings, in a resolution dated
March 8, 1989 (Ibid., p. 199), resolved to give due course to the petition, and to require the parties to
submit simultaneously their respective memoranda. In compliance therewith, petitioners filed their
memorandum on June 30, 1989 (Ibid., pp. 221-233) while MERALCO filed its memorandum on July 3,
1989 (Ibid., pp. 240-253).
The instant petition is impressed with merit.
The main issue in this case is whether or not MERALCO's petition in the lower court should be
dismissed.
The answer is in the affirmative.
It is significant that this case is elevated to the Court of Appeals and now to this Court because of the
denial of petitioner's Motion to Dismiss the amended petition of MERALCO. Unquestionably, it is but
an incident to the main case and the ordinary procedure would have been to file an answer, go to trial

and if the decision is adverse, reiterate the issue on appeal (Newsweek, Inc. vs. IAC, 142 SCRA 177
[1986]). But this general rule is subject to certain exceptions, among which are, if the court in denying
the motion to dismiss acts without or in excess of jurisdiction or with grave abuse of discretion. The
reason is, it would be unfair to require the defendant to undergo the ordeal and expense of trial under
such circumstances as the remedy of appeal would not be plain and adequate. More importantly,
petitioner's motion to dismiss is based on the ground that the complaint states no cause of action, so
that there is no need for a full blown trial (Newsweek, Inc. vs. IAC Ibid).
In addition, applying the rule enunciated in Gayos v. Gayos (67 SCRA 146 [1975]) and reiterated in
Alger Electric, Inc. v. Court of Appeals, 135 SCRA, 43 [1985]), that it is a cherished rule of procedure
for this Court to always strive to settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds of future litigation, it appears that the disposition of the incident as well as
the main issue in the case at bar is in consonance with an efficient administration of justice, now that
the facts are before this Court.
MERALCO's claim in its petition for Prohibition and mandamus before the Regional Trial Court is
anchored on its standing as a holder of a franchise for the sale and distribution of electric power in
various areas of the country including Calamba, Laguna. MERALCO asserts that it has the right to be
heard on any application for direct power connection and to defeat such application by showing its
ability or willingness to match the rates of NPC (Rollo, pp. 222-223). As earlier stated, it also
expressed the fear that to allow large consumers to tap directly to NPC will mean foregoing the share
of the subsidy burden which will ultimately be borne by the other consumers.
As consistently ruled by this Court pursuant to P.D. No. 380 as amended by P.D. No. 395, NPC is
statutorily empowered to directly service all the requirements of a BOI registered enterprise provided
that, first, any affected private franchise holder is afforded an opportunity to be heard on the
application therefor and second, from such a healing, it is established that said private franchise
holder is incapable or unwilling to match the reliability and rates of NPC for directly serving the latter
(National Power Corporation v. Jacinto, 134 SCRA 435 [1985]; National Power Corporation v.
Canares 140 SCRA 336 [1985]; National Power Corporation v. Court of Appeals, 161 SCRA 103
[1988]).
While initially, MERALCO may have been deprived of the right to be heard in an administrative
proceeding, but in subsequent proceedings before the courts, it had been given ample opportunity to
show that it is capable and wining to match NPC rates but failed. On the contrary, in a hearing before
the trial court on August 12, 1987, for the issuance of preliminary mandatory injunction, MERALCO
thru its witness V.C. Flordeliza, admitted on cross examination that it cannot charge the same rate
NPC is charging because MERALCO has to make a profit on its investment.
Flordeliza testified as follows:
Q. By the way, are you also aware of the power rates that Meralco is
charging Fine Chemicals, Inc. for the supply of electric power?
A. Per kilowatt-hour, it is about P2.00 sir.
Q. And, are you also aware of the charges of NPC to Meralco for the
supply of power of electricity that Meralco supplies to its customers of
any nature?
A. Approximately the rate is P1.00 per kilowatt-hour, sir.
Q. Would you say that it is the same rate NPC charging its all direct
customers, the rates NPC is charging Meralco, the rate Meralco is
charging its customers?

A. I am not sure of that, sir.

xxx xxx xxx
Q. You said a while ago that the rate Meralco is charging its
customers, the same rate NPC charges its customers also?
A. Of course Meralco would have to make some profit on its
investment. Meralco charges P 2.00 per kilowatt-hour to its
customers. Naturally, it would make some profit as allowed by the
Board of Energy, sir.
Q. But, the rate NPC is charging Meralco is just a minimal rate?
A. No, because NPC is the wholesaler and Meralco is only a retailer.
WE NATURALLY CANNOT SELL TO OUR CUSTOMERS THE
SAME RATE NPC IS CHARGING US. AS I HAVE SAID, WE HAVE
TO MAKE A PROFIT ON OUR INVESTMENT, SIR." (Cont of Cross
Examination of Witness V.C. Flordeliza, 12 August 1987, p. 41,
t.s.n.). (Rollo, pp. 20-21)
In this Court, MERALCO never committed itself by categorically stating that it can match NPC rates.
Instead it confined itself to the statement that it is financially and technically capable of meeting
FINE's power requirements while in its Memorandum it avers that "At this point in time, it would be
highly improper to ask Meralco whether it can match the rate of NPC." Verily, the intent to evade the
issue and to avail of technicalities to annul the contract between FINE and NPC are clearly evident so
that no useful purpose will be served to remand this case to the trial court only to have the latter's
decision raised again to the Court of Appeals and then to this Court.
Moreover, there is no denial of due process to speak of. As ruled by this Court, the heart of procedural
due process is the need for notice and an opportunity to be heard (Planters Products, Inc. vs. National
Labor Relations Commission, G.R. No. 78524, January 20, 1989). What due process abhors is not
lack of previous notice but absolute lack of opportunity to be heard (Relucio III v. Macaraig, G.R. No.
82007, May 10, 1989).
Ultimately the issue of exclusivity has already been laid to rest by this Court with the established
principle that the exclusive nature of any public franchise is not favored and that in all grants by the
government to private corporations, the interpretation of rights, privileges or franchises is taken
against the grantee. More specifically, this Court ruled:
. . . Exclusivity is given by law with the understanding that the company enjoying it is self-sufficient
and capable of supplying the needed service or product at moderate or reasonable prices. It would be
against public interest where the firm granted a monopoly is merely an unnecessary conduit of electric
power, jacking up prices as a superfluous middleman or an inefficient producer which cannot supply
cheap electricity to power intensive industries. It is in the public interest when industries dependent on
the heavy use of electricity are given reliable and direct power at the lowest costs thus enabling the
sale of nationally marketed products at prices within the reach of the masses. . . . (Alger Electric, Inc.
v. Court of Appeals, 135 SCRA 45-46 [1985]).
PREMISES CONSIDERED, MERALCO's petition in the lower court is hereby DISMISSED.
SO ORDERED.