CIVPRO: Judgement

G.R. No. 184036

October 13, 2010

PACIFIC REHOUSE CORPORATION, PACIFIC CONCORDE

CORPORATION, MIZPAH HOLDINGS, INC., FORUM HOLDINGS
CORPORATION, and EAST ASIA OIL COMPANY,INC., Petitioners,
vs.
EIB SECURITIES, INC., Respondent.

4. The DMCI shares of stock were bought by plaintiffs at an average price

of P0.38 per share.
5. On 01 April 2004, plaintiffs and defendant EIB agreed to sell the
60,790,000 KPP shares of plaintiffs to any party for the price of P0.14 per
share. Attached as Annexes "A" to "A-6" are copies of the notices of sales
sent by defendant EIB to the plaintiffs, which bear the conformity of
plaintiffs representative.

DECISION
VELASCO, JR., J.:
The Case
Via this Petition for Review on Certiorari under Rule 45, petitioners seek
reversal of the Decision1 dated April 11, 2008 of the Court of Appeals (CA)
in CA-G.R. CV No. 87713 which revoked the October 18, 2005 Resolution, 2 a
judgment on the pleadings, of the Regional Trial Court (RTC), Branch 66 in
Makati City, in Civil Case No. 05-178 entitled Pacific Rehouse Corporation,
Pacific Concorde Corporation, Mizpah Holdings, Inc., et al. v. EIB Securities,
Inc., and remanded the case for further proceedings. Also assailed is the
CA Resolution3dated August 5, 2008 denying petitioners motion for
reconsideration.
Petitioners initiatory pleading in Civil Case No. 05-178 reveals the following
averments:
COMMON ALLEGATIONS FOR ALL CAUSES OF ACTION
1. On various dates during the period June 2003 to March 2004, plaintiffs
bought 60,790,000 Kuok Properties, Inc. ("KPP") shares of stock through
the Philippine Stock Exchange ("PSE"). The KPP shares were acquired by
plaintiffs through their broker, defendant EIB.
2. The KPP shares of stock were bought by plaintiffs at an average price
of P0.22 per share.
3. Also on various dates in July and August 2003, plaintiffs
bought/acquired 32,180,000 DMCI shares of stock through the PSE. Of
these shares, 16,180,000 were likewise acquired by the plaintiffs through
their broker, defendant EIB, while the remaining 16,000,000 DMCI shares
were transferred from Westlink Global Equities, Inc.

6. As agreed by plaintiffs and defendant, the sale of the KPP shares of

plaintiffs was made with an option on the part of the plaintiffs to buy back
or reacquire the said KPP shares within a period of thirty (30) days from the
transaction date, at the buy-back price of P0.18 per share (See Annexes
"A" to "A-6").
7. When the last day of the 30-day buy back period for the KPP shares
came, plaintiff were undecided on whether or not to exercise their option to
reacquire said shares. Thus, plaintiffs and defendant EIB agreed that
plaintiffs would have an extended period of until 03 June 2004 to exercise
their option to buy back/reacquire the KKP shares that had been sold.
8. Eventually, plaintiffs decided not to exercise their option to buy back
the KPP shares and did not give any buy-back instruction/s to their broker,
defendant EIB.
9. On various dates in June 2004, without plaintiffs prior knowledge and
consent, defendant EIB sold plaintiffs 32,180,000 DMCI shares of stock for
an average price of P0.24 per share. Defendant EIB sold the DMCI shares of
plaintiffs for an average price of only P0.24 per share despite full
knowledge by defendant EIB that the sale would result in a substantial loss
to the plaintiffs of around P4.5 Million since plaintiffs acquired the DMCI
shares at P0.38 per share. (cf. Article 1888, Civil Code). Attached Annexes
"B" to "B-7" are the Sell Confirmation slips issued by defendant EIB
showing the unauthorized sale of plaintiffs 32,180,000 DMCI shares.
9.1 The proceeds of said DMCI shares sold by defendant EIB without
plaintiffs knowledge and consent were used by defendant EIB to buy back
61,100,000 KPP shares earlier sold by plaintiffs on 01 April 2004. Attached
as Annexes "C" to "C-5" are the Buy Confirmation slips issued by defendant
showing the unauthorized "buy back" of KPP shares.
9.2 Defendant EIB sold without authority plaintiffs 32,180,000 DMCI
shares and used the proceeds thereof to buy back 61,000,000 KPP shares
because defendant EIB made an unauthorized promise and commitment to

CIVPRO: Judgement
the buyer/s of plantiffs KPP shares in April 2004 that plaintiffs would buy
back the KPP shares.

In response, respondent EIB Securities, Inc. (EIB) submitted its Answer

which contained the following averments:

9.3 Plaintiffs learned of the unauthorized sale of their 32,180,000 DMCI

shares and the unauthorized "buy back" of 61,000,000 KPP shares only
much later. Upon further inquiry, plaintiffs also learned that all throughout
their business dealings, defendant EIB had surreptitiously charged and
collected from plaintiffs exorbitant interest amounting to thirty percent
(30%) of all amounts owing from the plaintiffs.

ADMISSIONS AND DENIALS:

10. On 05 January 2005, plaintiffs wrote to defendant EIB to demand that

their 32,180,000 DMCI shares be transferred to Westlink Global Equities
Inc. ("Westlink"). Copies of the demand letters, all dated 05 January 2005,
are attached as Annex "D" to "D-4" respectively.
11. Since the 32,180,000 DMCI shares belonging to plaintiffs had already
been sold by defendant EIB without plaintiffs prior knowledge and consent
as early as June 2004, defendant EIB could not comply with the demand of
plaintiffs as stated in their demand letters dated 05 January 2005.

1. Defendant admits the allegations contained in paragraphs under the heading

The Parties. Likewise, defendant admits the allegations contained in paragraph 1.
2. Paragraph 2 of the Complaint is specifically denied, the truth of the matter is
that the KPP shares of stock were bought by plaintiffs at an average price of only 18
centavos per share.
3. Paragraph 3 is admitted, qualified, however, that the remaining 16,000,000
DMCI shares of plaintiffs were transferred by Westlink Global Equities, Inc. and other
brokerages firms to the defendant primarily to serve as a collateral in the cash
account obligations of the plaintiffs to the defendant.
4. Paragraph 4 of the Complaint is specifically denied, the truth of the matter being
the DMCI shares of stock were bought by the plaintiffs at an approximate average
price of only 25 centavos per share.

12. In his letters to the plaintiffs dated 12 January 2005, defendant EIB
admitted having sold the 32,180,000 DMCI shares of stock of plaintiffs
without the latters prior knowledge and consent. Copies of defendant EIBs
letters to plaintiffs, all dated 12 January 2005, are attached as Annexes "E"
to "E-4", respectively.

5. Defendant admits paragraph 5 of the Complaint insofar as the allegation that

plaintiffs and defendant agreed to sell the 60,790,000 KPP share of plaintiffs to any
party for the price of 14 centavos per share, qualified, however, by the presence of a
provision "Full Cross to Seller" meaning that the Sellers (who are the plaintiffs) have
the obligation to buy back or reacquire the shares from the buyers.

12.1 Defendant EIB states in its aforesaid letters that it sent statements
of account to plaintiffs in July 2004. Defendant EIB claims, albeit
erroneously, that since plaintiffs made no exceptions to the statements of
account, the sale of plaintiffs DMCI shares in June 2004 [was] supposedly
"validly executed".

6. Defendant specifically denies paragraph 6 of the Complaint, the truth of the

matter and as evidenced by the same Notices of Sale (Annex"A" to "A-6" of the
Complaint), plaintiffs have no option to buy back or reacquire the said KPP shares,
the nature or kind of transaction agreement is Full Cross to seller which is an
obligation and not merely an option on the part of the plaintiffs to buy back or
reacquire the said KPP shares sold to buyers.

13. Hence, this Complaint.

xxxx
SECOND CAUSE OF ACTION
17. Plaintiffs replead all of the foregoing allegations.
18. The sale by defendant EIB of the 32,180,000 DMCI shares of plaintiffs
was done with malice and fraudulent intent. As such, defendant should be
directed to pay plaintiffs the amount of at least PhP3,000,000.00 as moral
damages.4

7. Defendant specifically and vehemently denies the allegations of paragraphs 7

and 8 of the Complaint. The truth of the matter is that there was no extension
agreed upon by the parties for the plaintiffs to exercise option to buy back/reacquire
the Kuok Properties, Inc. shares of stocks (KKP). The Contracts for the sale of KPP
shares of stocks as already stated above and as clearly shown from the same
Annexes "A" to "A-6" of the Complaint was an obligation that there was no extension
period given to the plaintiffs.
8. Defendant also specifically and vehemently denies the allegations of paragraphs
9 of the Complaint and its sub-paragraphs. The truth of the matter being that under
the trading rules, honoring ones obligation is a sacred commitment of stocks and
market traders. Considering that in the sale of the KPP shares there is an obligation
as certified by the word Full Cross to Seller, the KPP shares of stocks that were sold
to buyers have to be bought back 30 days from the transaction date at the Buy Back
Amount of 18 centavos per share and that plaintiffs and defendant have to honor the

CIVPRO: Judgement
said buy back obligation. Considering, however, that plaintiffs were not delivering
funds to the defendant in order to honor the said buy back obligation, not to mention
the Cash account obligations of the plaintiffs to the defendant amounting to more or
less 70 Million Pesos, defendant had no more recourse but to buy back the KPP
shares from the buyers by selling the DMCI shares of the plaintiffs under the
defendants possession, and thus, enforcing the provisions of the Securities Dealing
Accounts Agreements that was signed by the plaintiffs in favor of the defendant, a
copy of which is hereto attached and made an integral part hereof as Annex "1".
Section 7 of the aforesaid Securities Dealing Accounts Agreements states:

Plaintiffs, in order to feign ignorance of the sale of their DMCI shares had
attached in the Complaint various Sales Confirmations Receipts which were
marked thereto as Annexes "B" to "B-7". Wittingly or unwittingly, plaintiffs
attached only the Receipts that do not bear the corresponding
acknowledgement signatures of their respective officers. As averred by the
defendant, plaintiffs were fully aware and knowledgeable of the sale of
their DMCI shares as early June 2004, and to expose the real truth,
defendant hereto attaches the identical Sales Confirmation Receipts hereto
marked as Annexes "2" to "2-G".

"7. Lien
The client agrees that all monies and/or securities and/or all other
property of the Client (plaintiffs) in the Companys (defendant) custody or
control held from time to time shall be subject to a general lien in favour of
Company for the discharge of all or any indebtedness of the Client to the
Company. The Client shall not be entitled to withdraw any monies or
securities held by the Company pending the payment in full to the
Company of any indebtedness of the Client to the Company. The company
shall be entitled at any time and without notice to the Client to retain,
apply, sell or dispose of all or any of the [clients] property if any such
obligation or liability is not discharged in full by the client when due or on
demand in or towards the payment and discharge of such obligation or
liability and the Company shall be under no duty to the client as to the
price obtained or any losses or liabilities incurred or arising in respect of
any such sale or disposal. Subject to the relevant law and regulation on the
matter, the client hereby authorizes the Company, on his/its behalf, at any
time and without notice to the clients property if any such obligation or
liability is not discharged." [Emphasis in the original.]
[Defendant] specifically denies the allegation of the plaintiffs that
defendant sold the DMCI shares of plaintiffs for an average price of only 24
centavos for the truth of the matter being the average price those DMCI
shares were sold was P0.2565 centavos per share and likewise, that price
was the controlling market price of DMCI share at the time of the
transaction. Defendant likewise, specifically denies the allegation that
defendant surreptitiously charged and collected an interest of 30% from
the plaintiff for the truth of the matter is that what defendant did not
charge such interest.
Moreoever, and contrary to the allegations of the Complaint, plaintiffs are
fully aware and knowledgeable of the sale of their DMCI shares as early as
June 2004 and that the proceeds thereof were not even enough to fully pay
the buy back obligation of the plaintiffs to the buyers of KPP shares of
stocks.

In the same manner that in each and every Sales Confirmation Receipts
(Annexes "2" to "2-G") the following IMPORTANT NOTICE is written:
"All transaction are subject to the rules and customs of the Exchange and
its Clearing House. It is agreed that all securities shall secure all my/our
liabilities to e.securities and is authorized in their discretion to all or any of
them without notice to we/us whenever in the opinion of e.securities
my/our account is not properly secured." [Emphasis in the original.]
Likewise, after each and every transaction, defendant sent Statement of
Accounts showing a detailed transaction that were entered into and that
plaintiffs duly received aforesaid Statement of Accounts from the
defendants as evidenced by the signatures of plaintiffs respective officers
hereto marked as Annexes "3" to "3-G".
In each and every Statements of Accounts the following Notice is clearly
printed therein:
"This statement will be considered correct unless we receive notice in
writing of any exceptions within 5 days from receipt. Please address all
correspondence concerning exceptions to our OPERATIONS DEPARTMENT.
Kindly notify us in writing of any changes in your address."
Hence, plaintiffs, may have other ulterior motives in filing this baseless
Complaint since they fully knew and consented almost a year ago of the
nature of their transactions with the defendant.
9. Defendant admits paragraphs 10 to 12 inclusive of the subparagraphs
only to the existence of the plaintiffs demand letters all dated January 5,
20[0]5, but qualifies that the aforesaid letters had been answered by the
defendant on January 12, 2005. The rest of the allegations are being
specifically denied. In defendants reply to the said letters, defendant
clearly pointed out that plaintiffs had been duly notified of the subject
transactions as early as June 9, 2004. That defendant had furnished the
plaintiffs as early as July 14, 2004 Statements of Accounts of all their
transactions for the period of June 1-20, 2004 which included the sale of

CIVPRO: Judgement
the subject shares with a clear instruction to notify the defendant in writing
within five (5) days from receipt thereof of any exception therein. That if no
correspondence was received by the defendant from the plaintiffs, the sale
shall be considered as validly executed.5
On July 19, 2005, petitioners registered a Motion for Judgment on the
Pleadings,6 asserting that EIB materially admitted the allegations of their
complaint by not tendering any genuine issue in its answer. This was
opposed7 by EIB, with both parties subsequently filing their respective reply
and rejoinder. On October 7, 2005, petitioners moved that the trial court
resolve their motion for judgment on the pleadings.
The Ruling of the RTC
On October 18, 2005, the RTC rendered its judgment on the pleadings through a
Resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered directing the
defendant [EIB] to return the plaintiffs [petitioners] 32,180,000 DMCI shares, as of
judicial demand.

Anent petitioners apparent lack of objection to the account statements issued by

EIB and the sales confirmation receipts covering the sale of DMCI shares, the RTC
viewed it as not constituting ratification by petitioners for said documents did not
disclose the purpose of the sale, applying the rule that any ambiguity in a written
document should be strictly construed against the party who caused its preparation.
In fine, it held that since the parties relation is fiduciary in nature, with more reason
that EIB should have been more forthright in getting the prior consent of petitioners
before selling the DMCI shares.
EIB timely filed its motion for partial reconsideration of the RTC Resolution dated
October 18, 2005. In the meantime, EIB moved to inhibit Judge Rommel O. Baybay
from further handling the case. Both motions of EIB were opposed by petitioners.
On April 28, 2006, RTC Judge Baybay inhibited himself.9
Subsequently, on July 26, 2006, the RTC, Branch 66, through its new Presiding Judge,
Joselito C. Villarosa, denied EIBs motion for partial reconsideration. 10 After oral
arguments on June 23, 2006, the RTC affirmed the propriety of the judgment on the
pleadings rendered by Pairing Judge Baybay. Citing Savellano v. Northwest
Airlines,11 on the strict construal of any ambiguity on a written document on the
party issuing it, the trial court reiterated its ruling that petitioners are not estopped
from assailing the sale by EIB of their DMCI shares, for the sale confirmation receipts
do not disclose the purpose of the sales made.

On the other hand, plaintiffs are directed to reimburse the defendant the amount of
P10,942,200.00, representing the buy back price of the 60,790,000 KPP shares of
stocks at P0.18 per share.
Defendants Motion to Discharge Writ of Preliminary Attachment, based on the
submitted counter bond issued by Intra Strata Assurance Corporation is hereby
GRANTED.
SO ORDERED.8
The trial court found merit in rendering a judgment on the pleadings: first, the
assailed transactions were all documented; second, the transactions were admitted
by the parties; and third, the main issues can be resolved based on the parties
documentary evidence appended to the pleadings.
The RTC, interpreting the agreement agreed upon by the parties, held that the sale
of the Kuok Properties, Inc. (KKP) shares was with a buy-back obligation and not an
option as petitioners argued. However, it found that, as per their notices of sale
agreements, the collateral for the sale transactions is the same KKP shares. Thus, it
held that EIB erred in selling the DMCI shares instead of the KKP shares which served
as collateral. It ruled that Section 7 of the Securities Dealings Account Agreement
(SDAA) does not apply, since it provided for a general agreement executed prior to
the subsequent and specific agreements entered into by the parties specifically for
the sale and repurchase of the KKP shares. Thus, the trial court concluded that EIB
went beyond its authority in selling petitioners DMCI shares in order to buy back the
KKP shares.

The Ruling of the CA

On April 11, 2008, the appellate court rendered the assailed decision, revoking the
RTCs judgment on the pleadings and remanding the case back to the RTC for further
proceedings. The fallo reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. Accordingly,
the Court a quos Resolution dated 18 October 2005 is REVOKED and SET ASIDE and
this case is ordered remanded to the Court a quo which is directed to conduct
further proceedings hereof with dispatch.
SO ORDERED.12
While EIB raised six issues on appeal, the CA resolvedwhat it considered the
pivotal issuethe propriety of the rendition by the trial court of a judgment on the
pleadings. The CA found that while some material allegations in petitioners
complaint were admitted by EIB, the latters answer nonetheless raised other
genuine issues which it viewed can only be threshed out in a full-blown trial, like "the
average price of the KPP shares of stock, the scope of the collaterals stated in the
Notices of Sale and the monetary claims of the Appellant [EIB] against the Appellees
[petitioners]."13
Petitioners filed their motion for reconsideration, while EIB filed a Manifestation with
Motion for Clarification/Deletion which was opposed by petitioners. In its motion for
clarification/deletion, EIB took exception to the appellate courts pronouncement that
it (EIB) admitted the sale of petitioners DMCI shares for the purpose of buying back

CIVPRO: Judgement
the KKP shares, which strengthened petitioners claim of the nullity of the sale. Both
motions were denied by the assailed resolution issued on August 5, 2008.
Thus, we have this petition.

The Issues
I
CONTRARY TO THE RULING OF THE COURT OF APPEALS, THE TRIAL COURT WAS CORRECT IN RENDERING
JUDGMENT ON THE PLEADINGS IN THE CASE BEFORE IT.
II
THE TRIAL COURT WAS CORRECT IN RULING THAT PETITIONERS DMCI SHARES COULD NOT BE SOLD BY
RESPONDENT EIB UNDER THE NOTICES OF SALE.
III
THE TRIAL COURT WAS CORRECT IN HOLDING THAT RESPONDENT EIB COULD NOT INVOKE SECTION 7 OF THE
SECURITIES DEALINGS ACCOUNT AGREEMENT AS BASIS FOR THE SALE OF PETITIONERS DMCI SHARES.
IV
THE TRIAL COURT WAS CORRECT IN HOLDING THAT PETITIONERS WERE NOT BARRED BY RATIFICATION, LACHES
OR ESTOPPEL FROM QUESTIONING THE UNAUTHORIZED SALE OF THEIR DMCI SHARES.
V
THE TRIAL COURT HAD JURISDICTION OVER THE CASE FILED BEFORE IT BY PETITIONERS WHO HAD FULLY PAID
THE DOCKET FEES ASSESSED BY THE CLERK OF COURT.

as averred in paragraph 9 of the complaint. Thus, EIB, relying

on Manchester
Development
Corporation
v.
Court
of
Appeals16 (Manchester) and Sun
Insurance
Office,
Ltd.
v.
Asuncion,17 maintains that the RTC should not have entertained the case.
It is hornbook law that courts acquire jurisdiction over a case only upon
payment of the prescribed docket fee. A plain reading of the prayer does
not show that petitioners asked for the payment of actual damages of PhP
4.5 million. The reliefs asked by petitioners in the prayer are:
1. Upon the filing of the Complaint, a writ of preliminary
attachment be issued ex parte against defendant pursuant to
Section 2, Rule 57 of the 1997 Rules of Civil Procedure;
2. After trial, judgment rendered in favor of plaintiffs and against
defendant as follows:
On the FIRST CAUSE OF ACTION declaring void the sale by defendant of
the 32,180,000 DMCI shares of stock of plaintiffs and directing defendant
to return to plaintiffs the latters 32,180,000 DMCI shares of stock, or in the
event the return thereof is not possible, holding defendant liable under
Articles 1888,1889,1909 and other pertinent provisions of the Civil Code.
On the SECOND CAUSE OF ACTION directing defendant to pay plaintiffs
moral damages in the amount of at least P3,000,000.00;
On the THIRD CAUSE OF ACTION directing defendant to pay plaintiffs
exemplary damages in the amount of at least P3,000,000.00; and

VI
UNDER PREVAILING JURISPRUDENCE, THE PAIRING JUDGE DID NOT COMMIT GRAVE ABUSE OF DISCRETION. IN
ANY EVENT, THE APPOINTMENT OF A PRESIDING JUDGE WHO EVENTUALLY DENIED RESPONDENTS MOTION FOR
RECONSIDERATION RENDERED THE MATTER MOOT AND ACADEMIC.14

The Courts Ruling

We grant the petition.
Threshold Issue: Proper Payment of Docket Fees
EIB asserts that the trial court has no jurisdiction over the complaint on
account of insufficient dockets fees. Although petitioners paid a total of PhP
120,758.8015 in legal fees with the RTC, EIB argues that what was paid is
based merely on petitioners prayer for moral damages of PhP 3 million,
exemplary damages of PhP 3 million, and attorneys fees of PhP 2 million,
but not including petitioners claim for PhP 4.5 million as actual damages

On the FOURTH CAUSE OF ACTION directing defendant to pay plaintiffs

attorneys fees in the amount of P2,000,000.00 and such amounts as may
be proven at the trial as litigation expenses.
Other just and equitable relief are likewise prayed for. 18
Since the prayer did not ask for the payment of actual damages of PhP 4.5
million, the clerk of court correctly assessed the amount of PhP 120,758.80
as docket fees based on the total amount of PhP 8 million consisting of PhP
3 million as moral damages, PhP 3 million as exemplary damages, and PhP
2 million as attorneys fees.
In disputing the fees paid by petitioners, respondent relies on our ruling in
Manchester, where we said that "all complaints, petitions, answers and
other similar pleadings should specify the amount of damages being
prayed for not only in the body of the pleading but also in the prayer, and

CIVPRO: Judgement
said damages shall be considered in the assessment of the filing fees in
any case."19

From the pleadings, the parties admitted the following facts:

(1) EIB is the stockbroker of petitioners.

EIB insinuates that petitioners, by alleging the substantial loss of PhP 4.5
million from the sale of the DMCI shares but not specifying the amount in
their prayer, circumvented the Manchester ruling to evade the payment of
the correct filing fees. This postulation is incorrect. It is clear that
petitioners demanded the return of the DMCI shares in the prayer of the
complaint and NOT the alleged loss in the value of the shares. If the DMCI
shares are returned, then no actual damages are suffered by petitioners. A
recall of the averment in par. 9 of the complaint shows that the alleged loss
of PhP 4.5 million to petitioners resulted from the sale of DMCI shares at
PhP 0.24 per share when they acquired it at PhP 0.38 per share. More
importantly, the court was proscribed by the Manchester ruling from
granting actual damages of PhP 4.5 million to petitioners, because
precisely the alleged damages were never sought in the prayer. Ergo, EIBs
attack on the trial courts assumption of jurisdiction must fail.
Procedural Issue: Judgment on the Pleadings
At the outset, we lay stress on the Courts policy that cases should be
promptly and expeditiously resolved. The Rules of Court seeks to
abbreviate court procedure in order to allow the swift disposition of cases.
Specifically, special strategies like demurrer to evidence, judgment on the
pleadings, and summary judgment were adopted to attain this avowed
goal. Full-blown trial is dispensed with and judgment is rendered on the
basis of the pleadings, supporting affidavits, depositions, and admissions of
the parties.
In the instant petition, the Court is confronted with the propriety of the
judgment on the pleadings rendered by the Makati City RTC. Petitioners
claim such adjudication on said papers and attachments is proper.
The petitioners position is impressed with merit.
Rule 34 of the Rules of Court provides that "where an answer fails to tender
an issue or otherwise admits the material allegations of the adverse partys
pleading, the court may, on motion of that party, direct judgment on such
pleading." Judgment on the pleadings is, therefore, based exclusively upon
the allegations appearing in the pleadings of the parties and the annexes,
if any, without consideration of any evidence aliunde.20
When what is left are not genuinely issues requiring trial but questions
concerning the proper interpretation of the provisions of some written
contract attached to the pleadings, judgment on the pleadings is proper. 21

(2) Petitioners and EIB entered into a SDAA, Annex "1" of EIBs
answer, which governed the relationship between petitioners as
clients and EIB as stockbroker. Sec. 7 of the SDAA provides:
7. Lien
The client agrees that all monies and/or securities and/or all other
property of the Client (plaintiffs) in the Companys (defendant)
custody or control held from time to time shall be subject to a
general lien in favour of Company for the discharge of all or any
indebtedness of the Client to the Company. The Client shall not be
entitled to withdraw any monies or securities held by the Company
pending the payment in full to the Company of any indebtedness of
the Client to the Company. The company shall be entitled at any
time and without notice to the Client to retain, apply, sell or
dispose of all or any of the [clients] property if any such obligation
or liability is not discharged in full by the client when due or on
demand in or towards the payment and discharge of such
obligation or liability and the Company shall be under no duty to
the client as to the price obtained or any losses or liabilities
incurred or arising in respect of any such sale or disposal. Subject
to the relevant law and regulation on the matter, the client hereby
authorizes the Company, on his/its behalf, at any time and without
notice to the clients property if any such obligation or liability is
not discharged.22 (Emphasis supplied.)
It is clear from the SDAA that all monies, securities, and other
properties of petitioners in EIBs custody or control shall be subject
to a general lien in favor of the latter solely for the discharge of all
or any indebtedness to EIB.
(3) From June 2003 to March 2004, petitioners, through their
broker, EIB, bought 60,790,000 KKP shares of stock at the
Philippine Stock Exchange (PSE).
(4) On various dates in July and August 2003, petitioners bought
16,180,000 DMCI shares of stock through EIB likewise at the PSE,
while 16,000,000 DMCI shares of petitioners were transferred to
EIB by Westlink Global Equities, Inc. Thus, a total of 32,180,000
DMCI shares of stock owned by petitioners were placed in the
custody or control of EIB.

CIVPRO: Judgement
(5) On April 1, 2004, petitioners ordered the sale of 60,790,000 KPP
shares to any buyer at the price of PhP 0.14 per share. The KPP
shares were eventually sold at PhP 0.14 per share to interested
buyers.
(6) Petitioners failed to reacquire or buy back the KPP shares at PhP
0.18 per share after 30 days from date of transaction.
(7) As petitioners failed to deliver funds to EIB to honor the buyback obligation, not to mention the cash account obligations of
petitioners in the amount of PhP 70 million to EIB, EIB had no
recourse but to sell the DMCI shares of petitioners to reacquire the
KPP shares.
(8) Thus, on various dates in June 2004, EIB, without petitioners
knowledge and consent, sold petitioners 32,180,000 DMCI shares
at the controlling market price. EIB later sent sales confirmation
receipts to petitioners regarding the sale of their DMCI shares, said
receipts containing the common notice, which reads:
All transaction[s] are subject to the rules and customs of the
Exchange and its Clearing House. It is agreed that all securities
shall secure all my/our liabilities to e.securities and is authorized in
their discretion to sell all or any of them without notice to we/us
whenever in the opinion of e.securities my/our account is not
properly secured.23 (Emphasis supplied.)
(9) EIB sent statements of accounts to petitioners showing the sale
of the DMCI shares which uniformly contained the following notice:
This statement will be considered correct unless we receive notice
in writing of any exceptions within 5 days from receipt. Please
address all correspondence concerning exceptions to our
OPERATIONS DEPARTMENT. Kindly notify us in writing of any
changes in your address.24
(10) On January 12, 2005, petitioners wrote EIB demanding the
return of the 32,180,000 DMCI shares.
(11) On January 12, 2005, EIB rejected petitioners demand for the
return of the DMCI shares, as those were already sold to cover the
buy back of the KPP shares.
(12) Petitioners prayer is the return of the 32,180,000 DMCI shares
by EIB to them.

The principal issue in petitioners complaint is whether EIB can be

compelled to return DMCI shares to petitioners based on the alleged
unauthorized disposal or sale of said shares to comply with the buy back of
the KKP shares. The threshold issue raised in the answer is the lack of
jurisdiction over the complaint due to the alleged nonpayment of the
proper docket fees. Affirmative defenses presented are that EIB disposed of
the DMCI shares pursuant to Sec. 7 of the SDAA, and the notices of sale,
ratification and laches.
Based on the admissions in the pleadings and documents attached, the
Court finds that the issues presented by the complaint and the answer can
be resolved within the four corners of said pleadings without need to
conduct further hearings. As explained by the Court in Philippine National
Bank v. Utility Assurance & Surety Co., Inc., 25when what remains to be done
is the proper interpretation of the contracts or documents attached to the
pleadings, then judgment on the pleadings is proper. In the case at bar, the
issue of whether the sale of DMCI shares to effectuate the buy back of the
KKP shares is valid can be decided by the trial court based on the SDAA,
Notices of Sale, Sales Confirmation Receipts, the letters of the parties, and
other appendages to the pleadings in conjunction with the allegations or
admissions contained in the pleadings without need of trial. The Makati
City RTC is, therefore, correct in issuing the October 18, 2005 Resolution
granting the Motion for Judgment on the Pleadings.
The CA nullified the October 18, 2005 Resolution on the ground that there
are other issues that must be resolved during a full-blown trial,
ratiocinating this way:
While it may be true that the Appellant has already admitted that the sale
of the DMCI shares was for the purpose of buying back the KPP shares and
that such admission strengthened Appellees claim that the sale of the
DMCI shares is a nullity, there were other issues raised by the Appellant
that can only be threshed out during a full blown trial, viz: the average
price of the KPP shares of stock, the scope of the collaterals stated in the
Notices of Sale and the monetary claims of the Appellant against the
Appellees.26
To the mind of the Court, these matters are not genuinely triable issues
but actually minor issues or mere incidental questions that can be resolved
by construing the statements embodied in the appendages to the
pleadings. The facts that gave rise to the side issues are undisputed and
were already presented to the trial court rendering trial unnecessary.
On the disparity in the average price of KPP shares of stock, petitioners
claim that the average purchase price of the KPP share is PhP 0.22 per
share (par. 2 of the complaint), while EIB claims it is only PhP 0.18 per

CIVPRO: Judgement
share (par. 2 of the answer). The dissimilarity in the acquisition price paid
by petitioners for the KPP shares is a non-issue, since the relief prayed for
is the return of the DMCI shares and not the KPP shares. Petitioners did not
even claim actual damages in the prayer of the complaint.

Sec. 7 of the SDAA pertains to outstanding obligations or indebtedness of

petitioners to EIB but does not cover any obligation of petitioners to thirdparty purchasers to reacquire its KKP shares under the "full cross to seller"
buy-back obligation subject of the various notices of sale.

On the scope of the collaterals stated in the Notices of Sale, it is clear

from the notices that the collateral is "KPP Shares/Property":

Let us scrutinize anew Sec. 7 of the SDAA:

7. Lien

The determination of the collateral in said notices can easily be made

from the notices itself and Sec. 7 of the SDAA. The KPP shares stated in the
notices refer to the KPP shares owned by the "Petitioners" and sold to third
parties by EIB. The word "Property" in the notices is elucidated in the
aforementioned Sec. 7 as "all monies and/or securities and/or all other
property of the Client in the companys custody or control held from time
to time (Clients Property) x x x." These properties shall be subject to "a
general lien in favour of the Company for the discharge of all or any
indebtedness and other obligations of the client to [EIB]." 33 Thus, the DMCI
shares owned by petitioners are covered by the word "Property" in the
Notices of Sale.
On the monetary claims by petitioners against EIB, said claims are not a
bar to a judgment on the pleadings. While it was averred by petitioners
under par. 9 of the complaint that they suffered a loss of PhP 4.5 million
from the sale of the DMCI shares, the claim for actual damages was not set
up as a relief in the prayer and, therefore, the Manchester doctrine
precludes such award to petitioners. Anent the claim for moral damages of
PhP 3 million, exemplary damages of PhP 3 million, and attorneys fees of
PhP 2 million, the claim is not proper in a judgment on the pleadings in the
absence of proof.34 Sans such proof extent on record, the claim for
damages is a non-issue.
In sum, there are no genuine issues that cannot be determined based on
the pleadings. Ergo, the assailed October 18, 2005 Resolution of the Makati
City RTC granting judgment on the pleadings is in accord with Rule 34 of
the Rules of Court and settled jurisprudence.
Authority of EIB to Sell DMCI Shares of Petitioners
Petitioners assert the inapplicability of Sec. 7 of the SDAA to their liability
to reacquire the KKP shares, as the DMCI shares were not sold to pay for
their PhP 70 million obligation to EIB but to settle their obligation to the
buyers of their KKP shares.
Petitioners position is impressed with merit. We rule that EIB has no legal
authority to sell the DMCI shares for the purpose or reacquiring the KKP
shares.

The client agrees that all monies and/or securities and/or all other
property of the Client (plaintiffs) in the Companys (defendant) custody or
control held from time to time shall be subject to a general lien in favour of
Company for the discharge of all or any indebtedness of the Client to the
Company. The Client shall not be entitled to withdraw any monies or
securities held by the Company pending the payment in full to the
Company of any indebtedness of the Client to the Company. The company
shall be entitled at any time and without notice to the Client to retain,
apply, sell or dispose of all or any of the [clients] property if any such
obligation or liability is not discharged in full by the client when due or on
demand in or towards the payment and discharge of such obligation or
liability and the Company shall be under no duty to the client as to the
price obtained or any losses or liabilities incurred or arising in respect of
any such sale or disposal. Subject to the relevant law and regulation on the
matter, the client hereby authorizes the Company, on his/its behalf, at any
time and without notice to the clients property if any such obligation or
liability is not discharged. (Emphasis supplied.)
As couched, the lien in favor of EIB attaches to any money, securities, or
properties of petitioners which are in EIBs possession for the discharge of
all or any indebtedness and obligations of petitioners to EIB. For this,
petitioners are also barred from withdrawing its assets that are in the
possession of EIB pending full payment by petitioners of their indebtedness
to EIB. The above proviso also gives EIB the authority to sell or dispose of
petitioners securities or properties in its possession to pay for petitioners
indebtedness to EIB. It is, thus, evident from the above SDAA provision that
said lien and authority granted to EIB to dispose of petitioners
securities or properties in the formers possession apply only to
discharge and pay off petitioners indebtedness to EIB and nothing
more.
Sec. 7 of the SDAA does not apply to petitioners obligations to third-party
purchasers of their KKP shares under the "full cross to seller" obligation,
and certainly EIB could not use said provision for the repurchase of the KKP
shares. Indubitably, the sale of the DMCI shares made by EIB is null and
void for lack of authority to do so, for petitioners never gave their consent
or permission to the sale.

CIVPRO: Judgement
Moreover, Article 1881 of the Civil Code provides that "the agent must act
within the scope of his authority." Pursuant to the authority given by the
principal, the agent is granted the right "to affect the legal relations of his
principal by the performance of acts effectuated in accordance with the
principals manifestation of consent."35 In the case at bar, the scope of
authority of EIB as agent of petitioners is "to retain, apply, sell or dispose of
all or any of the clients [petitioners] property," if all or any indebtedness
or other obligations of petitioners to EIB are not discharged in full by
petitioners "when due or on demand in or towards the payment and
discharge of such obligation or liability." The right to sell or dispose of the
properties of petitioners by EIB is unequivocally confined to payment of the
obligations and liabilities of petitioners to EIB and none other. Thus, when
EIB sold the DMCI shares to buy back the KKP shares, it paid the proceeds
to the vendees of said shares, the act of which is clearly an obligation to a
third party and, hence, is beyond the ambit of its authority as agent. Such
act is surely illegal and does not bind petitioners as principals of EIB.
As a last-ditch effort, EIB seeks refuge from the notices of sales it issued
to petitioners:
Let us scrutinize a typical notice of sale issued to petitioners, thus:
RE: SALE OF KUOK PROPERTIES INC. (KPP)
As agreed upon the above mentioned stock will be sold to a party with the
following conditions attached:

The above notice states that the collateral is KPP Shares/Property.

EIB asserts that the word "Property" refers to all the "monies and/or
securities and/or all other property" of petitioners in EIBs custody or
control pursuant to Sec. 7 of the SDAA. This postulation is correct. The
DMCI shares are included in the word "Property" under Sec. 7 of the SDAA.
However, EIBs theory stops there. As earlier explained, the SDAA, more
particularly its Sec. 7, cannot be made the legal basis for EIB to sell
petitioners properties in its possession or custody to pay petitioners
obligations to third parties. The SDAA is confined only to obligations of
petitioners to EIB and not to third parties like the purchases of the KKP
shares. Thus, the sale of the DMCI shares to buy back the KPP shares is
illegal and ineffective, since it is only answerable for the liabilities of
petitioners to EIB and no one else.
The notices of sale issued by EIB covering the sale of the KKP shares of
petitioners clearly show that the very same KKP shares sold to third parties
albeit under a buy-back arrangement and the "Property" of petitioners
were made the collaterals to secure the payment of the reacquisition. Since
the possession of the KKP shares and the "Property" were placed in EIB, a
third party by common agreement, then the accessory contract in the case
at bar is a contract of pledge governed by Arts. 2085 to 2092 of the Civil
Code, which are provisions common to pledge and mortgage, and Arts.
2093 to 2139 on pledge.
The query is whether or not the pledge on "KKP Shares/Property" is valid.
The answer is no.

NUMBER OF SHARES : x x x/SHARES

Art. 2085 of the Civil Code provides:

AMOUNT @ SHARE : PHP 0.14
CHARGES : Sellers Account
BUY BACK DATE : After 30 days [based on transaction Date]
BUY BACK AMOUNT : PHP 0.18
DATE OF EXECUTION : APRIL 1, 200[4]

Art. 2085. The following requisites are essential to the contracts of pledge
and mortgage:
(1) That they be constituted to secure the fulfillment of a principal
obligation;
(2) That the pledgor or mortgator be the absolute owner of the
thing pledged or mortgaged;

KIND OF TRANSACTION : FULL CROSS TO SELLER

COLLATERAL : KPP SHARES/PROPERTY
For and behalf of EIB Securities.
[Signed]
PAULINE TAN

(3) That the persons constituting the pledge or mortgage have the
free disposal of their property, and in the absence thereof, that
they be legally authorized for the purpose.
Third persons who are not parties to the principal obligation may secure
the latter by pledging or mortgaging their own property.

CIVPRO: Judgement
It is indispensable that the pledgor is the absolute owner of the thing
pledged (second element). In the case at bar, the KKP shares were sold to
third parties by EIB at PhP 0.14 and, as a result, petitioners lost their right
of ownership over the KKP shares. Hence, from the time of the sale,
petitioners were no longer the absolute owners of said shares, making the
pledge constituted over said KKP shares null and void. 36
Also, it is necessary under Art. 2085 that the person constituting the
pledge has the free disposal of his or her property, and in the absence of
that free disposal, that he or she be legally authorized for the purpose
(third element). This element is absent in the case at bar. Petitioners no
longer have the free disposal of the KKP shares when EIB sold said shares
at the stock exchange as they are no longer the owners of the shares.
Thus, there was no valid pledge constituted on the KKP shares.
The notice of sale, assuming it incorporates the accessory contract of
pledge, merely stated "Property" as collateral in addition to KKP shares.
This is a blatant violation of Art. 2096, which provides that "a pledge shall
not take effect against third persons if description of the thing pledged and
the date of the pledge do not appear in a public instrument." The thing
pledged must be amply and clearly described and specifically identified.
Evidently, the word "Property" is vague, broad, and confusing as to the
ownership. Hence, it does not satisfy the prescription under Art. 2096 of
the Code. Worse, the notice of sale is not in a public instrument as required
by said legal provision; therefore, the pledge on "property" is void and
without legal effect.
Moreover, the notices of sale must be construed against EIB. Any
ambiguity in a contract whose terms are susceptible of different
interpretations must be read against the party who drafted it. 371avvphi1
The DMCI shares which EIB construed to be included within the ambit of
the word "property" cannot be considered the thing pledged to secure the
buy back of the KKP shares in view of the vagueness of the word "Property"
and the non-applicability of the SDAA to the sale of the KKP shares.
Lastly, the appellate court ruled that the affirmative defense of estoppel
was raised by EIB due to the alleged failure of petitioners to object to the
sale of the DMCI shares.
The principle of estoppel rests on the rule that:
[W]here a party, by his or her deed or conduct, has induced another to
act in particular manner, estoppel effectively bars the former from
adopting an inconsistent position, attitude or course of conduct that causes
loss or injury to the latter. The doctrine of estoppel is based upon the

grounds of public policy, fair dealing, good faith and justice, and its
purpose is to forbid one to speak against his own act, representations, or
commitments to the injury of one whom they were directed and who
reasonably relied thereon.38
The essential elements of estoppel as related to the party estopped are:
(1) conduct which amounts to a false representation or concealment of
material facts, or, at least, which calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) intention, or at least expectation, that
such conduct shall be acted upon by the other party; and (3) knowledge,
actual or constructive, of the actual facts.39
Reliance by respondent EIB on estoppel is misplaced. The first element
does not obtain from the factual setting presented by the pleadings,
attachments, and admissions. There is no allegation that petitioners
performed an act which can be considered as false representation that EIB
can sell their DMCI shares to reacquire the KKP shares, or concealed a
material fact. Sec. 7 of the SDAA is unequivocal that EIB can only sell the
shares of petitioners for payment of any indebtedness to EIB. There was no
act or concealment on the part of petitioners that made known or
conveyed the impression to EIB that it can sell the DMCI shares of
petitioners for the latters indebtedness or obligation to a third party in
contravention of EIBs authority under Sec. 7 of the SDAA. Moreover, the
second element is also absent. There was no showing that petitioners
authorized EIB to pay a third party from the proceeds of the sale of their
DMCI shares. Lastly, on the third element, petitioners had no knowledge of
the fact that the proceeds of the sale of DMCI shares were paid to buy back
the KPP shares. Reliance of EIB on the sales confirmation receipts 40 issued
to petitioners does not help any. The condition printed on said receipts
explicitly states that the "securities shall secure [petitioners] liabilities to
e.securities." Even the account statements 41 issued by EIB do not reflect
the payment of the proceeds of the sale of DMCI shares owned by
petitioners to buy back the KKP shares previously owned by petitioners. All
that these accounts show is the crediting of the proceeds of the sale of
DMCI shares to petitioners and nothing more. There was no disclosure of
the purpose of the sale of the DMCI shares. Clearly, there is no estoppel.
WHEREFORE, the petition is GRANTED. The CA Decision dated April 11,
2008 in CA-G.R. CV No. 87713 is REVERSED and SET ASIDE. The RTC
Resolution dated October 18, 2005 in Civil Case No. 05-178 is hereby
REINSTATED.
No costs.
SO ORDERED.

10

CIVPRO: Judgement
PHILIPPINE BUSINESS BANK v FELIPE CHUA
We resolve the petition for review on certiorari[1] filed by Philippine
Business Bank (PBB) challenging the decision of the Court of Appeals (CA)
in CA-G.R. SP No. 94883 dated February 8, 2007, [2] insofar as it overturned
the Regional Trial Courts (RTCs) order dated December 16, 2005 declaring
the finality of its Partial Summary Judgment and granting the issuance of a
writ of execution against respondent Felipe Chua (respondent Chua). PBB
also seeks to overturn the resolution of the CA dated July 18, 2007, which
denied its motion for reconsideration.
FACTUAL ANTECEDENTS
From the records, the following facts are not in dispute.
On March 22, 2002, Tomas Tan (Tan), a stockholder and director/Treasurer
of CST Enterprises, Inc. (CST), filed a derivative suit for the Declaration of
Unenforceability of Promissory Notes and Mortgage, Nullity of Secretarys
Certificate, Injunction, Damages with Prayer for the Issuance of Temporary
Restraining Order/Writ of Preliminary Injunction against PBB, Francis Lee,
Alfredo Yao, Rodulfo Besinga, Stephen Taala, Rose Robles, Henry Ramos, Yu
Heng, Mabuhay Sugar Central, Inc., Nancy Chan, Henry Chan, John Dennis
Chua, Jaime Soriano, Voltaire Uychutin, Peter Salud, Edgar Lo, respondent
Felipe Chua, and John Does before the Makati City Regional Trial Court. [3]
In Tans amended complaint dated January 9, 2003, he alleged that
sometime in February 2001, before he went abroad for medical treatment,
he turned over to respondent Chua, a director and the President of CST, the
original copies of Transfer Certificate of Title Nos. 124275 and 157581,
titles to lands owned by, and registered in the name of, CST. In January
2002, the respondent informed him that CSTs properties had been
fraudulently used as collateral for loans allegedly taken out in CSTs name,
but without proper authority from CST stockholders and/or the Board of
Directors.[4]
From his investigation, Tan discovered that a certain Atty. Jaime
Soriano had issued a Secretarys certificate, which stated that John
Dennis Chua was authorized during a duly constituted CST board
meeting to open a bank account and obtain credit facilities under
the name of CST with PBB. This Secretarys Certificate also
authorized John Dennis Chua to use CSTs properties as security for
these loans.[5] Using this Secretarys Certificate, John Dennis Chua took out
loans with PBB in the total amount of Ninety-One Million One Hundred
Thousand Pesos (P91,100,000.00),[6] and used CST properties as collateral.
[7]
Respondent Chua signed as co-maker with John Dennis Chua,
who signed both as the representative of CST, as well as in his
personal capacity, on six promissory notes to PBB to evidence
parts of this loan.[8]
When PBB threatened to foreclose the mortgage on these
properties after CST defaulted,[9] Tan filed the present complaint,
essentially arguing that the loans/promissory notes and mortgage made
out in CSTs name are unenforceable against it, since they were entered into
by persons who were unauthorized to bind the company.[10]
In its Amended Answer,[11] PBB claimed that the loans to CST, as
well as the corresponding mortgage over CST properties, were all valid and
binding since the loan applications and documents accomplished by John
Dennis Chua were supported by the duly accomplished secretarys

certificate, which authorized him to obtain credit facilities in behalf of CST.

In addition, the original copies of the titles to the properties were offered to
PBB as collaterals.
PBBs Amended Answer also included a cross-claim against
respondent Chua, demanding payment of the promissory notes he signed
as co-maker with John Dennis Chua.[12]
In respondent Chuas Answer to the Cross-Claim of PBB, [13] he
claimed that he never applied for a loan with the PBB. He further denied
authorizing John Dennis Chua to apply for any loans in CSTs name, or to
use CST properties as security for any loans. [14] Nevertheless, he admitted
that he signed, as co-maker, six promissory notes covering the
loans obtained by John Dennis Chua with PBB. According to
respondent Chua, he executed these promissory notes after the loans had
already been consummated, in a sincere effort to persuade John Dennis
Chua to pay off the unauthorized loan and retrieve from cross-claimant PBB
the CST titles.[15]
PBB subsequently filed a Motion for Partial Summary Judgment
based on Section 1, Rule 35 of the 1997 Rules of Civil Procedure (Rules),
claiming that since respondent Chua already admitted the execution of the
promissory notes in favor of PBB amounting to Seventy Five Million Pesos
(P75,000,000.00),[16] insofar as its cross-claim against him was concerned,
there was no genuine issue on any material fact on the issue of his liability
to PBB. PBB argued that although respondent Chua claimed that he signed
the promissory notes merely to persuade John Dennis Chua to pay off his
loan to PBB, he was still liable as an accommodation party under Section
29 of the Negotiable Instruments Law.[17]
THE RTCS PARTIAL SUMMARY JUDGMENT
Acting on PBBs motion, the RTC issued a partial summary judgment on
PBBs cross-claim on July 27, 2005, finding respondent Chua liable as a signatory to
the promissory notes amounting to Seventy-Five Million Pesos (P75,000,000.00). The
RTC reasoned that by signing as a co-maker, he obligated himself to pay the amount
indicated in the promissory notes, even if he received no consideration in return.
Thus, the RTC ordered him to pay PBB the amount of P75,000,000.00, plus interests
and costs.[18]
In its order dated December 16, 2005, the RTC resolved respondent Chuas
Notice of Appeal, as well as PBBs Motion to Disallow Appeal and to Issue Execution.
Citing Section 1, Rule 41 of the Rules, the RTC ruled that respondent Chua could not
file a notice of appeal. Instead, he should have filed a special civil action
for certiorari under Rule 65 of the Rules. However, since the period for filing
a certiorari petition had already lapsed without respondent filing any petition, the
partial summary judgment had become final and executory. Thus, it ordered the
issuance of a writ of execution for the satisfaction of the partial summary judgment
in favor of PBB.[19]
On December 21, 2005, the RTC issued an order appointing Renato Flora as
the special sheriff to implement the writ of execution. In line with this order, Renato
Flora, on December 23, 2005, issued a Notice of Levy and Sale on Execution of
Personal Properties, addressed to respondent Chua. He proceeded with the
execution sale, and on December 28, 2005, he issued a certificate of sale over
respondent Chuas 900 shares of stock in CST in favor of PBB. He also posted a notice
of sheriffs sale on January 10, 2006 over respondent Chuas five parcels of land
located in Las Pinas, Pasay City, and Muntinlupa.[20]
THE COURT OF APPEALS DECISION

11

CIVPRO: Judgement
Respondent Chua filed a petition for certiorari and mandamus with the CA to
challenge: (a) the December 16, 2005 order, granting PBBs motion to disallow his appeal; (b) the
December 21, 2005 order, granting PBBs motion to appoint Renato Flora as special sheriff to
implement the writ of execution; and (c) the February 16, 2006 order denying his motion for
reconsideration and to suspend execution. In essence, respondent Chua alleged that the RTC
acted with grave abuse of discretion in disallowing his appeal of the partial summary judgment,
and in issuing a writ of execution. Significantly, respondent Chua did not question the propriety
of the partial summary judgment.
On February 8, 2007, the CA issued the assailed decision, partly affirming the RTC order
dated December 16, 2005 on the matter of the disallowance of respondent Chuas appeal. The
CA held that respondent Chua could not appeal the partial summary judgment while the main
case remained pending, in keeping with Section 1(g), Rule 41 of the Rules.
However, the CA held that the RTC committed grave abuse of discretion when it issued the writ
of execution against respondent Chua. As found by the CA, the RTC grievously erred when it held
that the partial judgment had become final and executory when respondent Chua failed to avail
of the proper remedy of certiorari within the 60 day reglementary period under Rule 65. Since a
partial summary judgment does not finally dispose of the action, it is merely an interlocutory, not
a final, order. Thus, it could not attain finality.
The CA further noted that certiorari is an independent action and not part of the
appeal proceedings, and failure to file a certiorari petition would not result in the finality of the
judgment or final order. The RTC, thus, committed grave abuse of discretion amounting to lack of
jurisdiction when it granted the issuance of a writ of execution, and the corresponding writ of
execution issued by the court a quo, as well as the subsequent implementing proceedings, were
void.
THE PETITION
PBB submits two issues for our resolution:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN
ERROR IN APPLYING JURISPRUDENCE NOT ON ALL FOURS [WITH] THE
FACTUAL BACKDROP OF THE CASE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN
ERROR IN RECALLING AND SETTING ASIDE THE WRIT OF EXECUTION AND
ALL THE PROCEEDINGS TAKEN FOR ITS IMPLEMENTATION ON THE WRONG
NOTION THAT THE PARTIAL SUMMARY JUDGMENT HAS NOT BECOME FINAL
AND EXECUTORY.

THE RULING
We DENY the petition for being unmeritorious.
Nature of Partial Summary Judgment
PBBs motion for partial summary judgment against respondent
Chua was based on Section 1, Rule 35 of the Rules, which provides:
Section 1. Summary Judgment for claimant. - A party
seeking to recover upon a claim, counterclaim, or crossclaim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served,
move with supporting affidavits, depositions or admissions
for a summary judgment in his favor upon all or any part
thereof.
A summary judgment, or accelerated judgment, is a procedural
technique to promptly dispose of cases where the facts appear undisputed
and certain from the pleadings, depositions, admissions and affidavits on
record, or for weeding out sham claims or defenses at an early stage of the
litigation to avoid the expense and loss of time involved in a trial. [21] When
the pleadings on file show that there are no genuine issues of fact to be
tried, the Rules allow a party to obtain immediate relief by way of summary

judgment, that is, when the facts are not in dispute, the court is allowed to
decide the case summarily by applying the law to the material facts. [22]
The rendition by the court of a summary judgment does not always
result in the full adjudication of all the issues raised in a case. For these
instances, Section 4, Rule 35 of the Rules provides:
Section 4. Case not fully adjudicated on motion. If on motion under this
Rule, judgment is not rendered upon the whole case or for all the
reliefs sought and a trial is necessary, the court at the hearing of the
motion, by examining the pleadings and the evidence before it and by
interrogating counsel shall ascertain what material facts exist without
substantial controversy and what are actually and in good faith
controverted. It shall thereupon make an order specifying the facts that
appear without substantial controversy,including the extent to which
the amount of damages or other relief is not in controversy, and directing
such further proceedings in the action as are just. The facts so specified
shall be deemed established, and the trial shall be conducted on
the controverted facts accordingly.

This is what is referred to as a partial summary judgment. A careful

reading of this section reveals that a partial summary judgment was never
intended to be considered a final judgment, as it does not [put] an end to
an action at law by declaring that the plaintiff either has or has not entitled
himself to recover the remedy he sues for. [23] The Rules provide for a partial
summary judgment as a means to simplify the trial process by allowing the
court to focus the trial only on the assailed facts, considering as
established those facts which are not in dispute.
After this sifting process, the court is instructed to issue an order,
the partial summary judgment, which specifies the disputed facts that have
to be settled in the course of trial. In this way, the partial summary
judgment is more akin to a record of pre-trial, [24] an interlocutory order,
rather than a final judgment.
The differences between a final judgment and an interlocutory
order are well-established. We said in Denso (Phils.) Inc. v. Intermediate
Appellate Court[25] that:
[A] final judgment or order is one that finally disposes of a
case, leaving nothing more to be done by the Court in
respect thereto, e.g., an adjudication on the merits which,
on the basis of the evidence presented at the trial, declares
categorically what the rights and obligations of the parties
are and which party is in the right; or a judgment or order
that dismisses an action on the ground, for instance, of res
judicata or prescription. Once rendered, the task of the
Court is ended, as far as deciding the controversy or
determining the rights and liabilities of the litigants is
concerned. Nothing more remains to be done by the Court
except to await the parties' next move . . . and ultimately,
of course, to cause the execution of the judgment once it
becomes final or, to use the established and more
distinctive term, final and executory.
xxxx
Conversely, an order that does not finally dispose
of the case, and does not end the Court's task of
adjudicating the parties' contentions and determining their

12

CIVPRO: Judgement
rights and liabilities as regards each other, but obviously
indicates that other things remain to be done by the Court,
is interlocutory, e.g., an order denying a motion to dismiss
under Rule 16 of the Rules x x x Unlike a 'final judgment
or order, which is appealable, as above pointed out,
an 'interlocutory order may not be questioned on
appeal except only as part of an appeal that may
eventually be taken from the final judgment
rendered in the case.[26]
Bearing in mind these differences, there can be no doubt that
the partial summary judgment envisioned by the Rules is an
interlocutory order that was never meant to be treated separately
from the main case. As we explained in Guevarra v. Court of Appeals:[27]
It will be noted that the judgment in question is a partial
summary judgment. It was rendered only with respect to the private
respondents first and second causes of action alleged in their complaint. It
was not intended to cover the other prayers in the said complaint, nor the
supplementary counterclaim filed by the petitioners against the private
respondents, nor the third-party complaint filed by the petitioners against
the Security Bank and Trust Company. A partial summary judgment is
not a final or appealable judgment. (Moran, Vol. 2, 1970 Edition, p. 189,
citing several cases.) It is merely a pre-trial adjudication that said
issues in the case shall be deemed established for the trial of the
case. (Francisco, Rules of Court, Vol. II, p. 429.)
xxxx
The partial summary judgment rendered by the trial court being
merely interlocutory and not a final judgment, it is puerile to discuss
whether the same became final and executory due to the alleged failure to
appeal said judgment within the supposed period of appeal. What the rules
contemplate is that the appeal from the partial summary judgment
shall be taken together with the judgment that may be rendered in
the entire case after a trial is conducted on the material facts on
which a substantial controversy exists. This is on the assumption that
the partial summary judgment was validly rendered, which, as shown above,
is not true in the case at bar.[28]

We reiterated this ruling in the cases of Province of Pangasinan v. Court of

Appeals[29] and Government Service Insurance System v. Philippine Village
Hotel, Inc.[30]
Applicability of Guevarra
PBB
asserts
that
our
pronouncement
in
the
cases
of Guevarra, Province of Pangasinan, and Government Service Insurance
System cannot be applied to the present case because these cases involve
factual circumstances that are completely different from the facts before
us. While the partial summary judgments in the cited cases decided only
some of the causes of action presented, leaving other issues unresolved,
PBB insists that as far as its cross-claim against respondent Chua is
concerned, the court a quos partial summary judgment is a full and
complete adjudication because the award is for the whole claim.
[31]
According to PBB, whatever the court decides as regards the main case,
this will not affect the liability of respondent Chua as a solidary debtor in
the promissory notes, since the creditor can proceed against any of the
solidary debtors. In other words, no substantial controversy exists between
PBB and respondent Chua, and there is nothing more to be done on this
particular issue.
We do not agree with PBBs submission.

In the Guevarra case, the Court held that the summary judgment rendered
by the lower court was in truth a partial summary judgment because it
failed to resolve the other causes of action in the complaint, as well as the
counterclaim and the third party complaint raised by the defendants.
Contrary to PBBs assertions, the same could be said for the case
presently before us. The partial summary judgment in question resolved
only the cross-claim made by PBB against its co-defendant, respondent
Chua, based on the latters admission that he signed promissory notes as a
co-maker in favor of PBB. This is obvious from the dispositive portion of the
partial summary judgment, quoted below for convenient reference:
WHEREFORE, a partial summary judgment is hereby rendered on
the cross-claim of cross-defendant Philippine Business Bank against crossdefendant Felipe Chua, ordering the latter to pay the former as follows:
1.
2.
3.

4.
5.
6.
7.
SO

The amount of Ten Million (P10,000,000.00) Pesos, representing the

value of the Promissory Note dated April 17, 2001, plus interest thereof
at the rate of 16% from April 12, 2002, until fully paid;
The amount of Twelve Million (P12,000,000.00) Pesos, representing the
value of the Promissory Note dated April 5, 2001, plus interest thereon
at the rate of 17% from April 1, 2002, until fully paid;
The amount of Twenty Three Million (P23,000,000.00) Pesos,
representing the value of the Promissory Note dated April 25, 2001,
plus interest thereon at the rate of 16% from April 19, 2002, until fully
paid;
The amount of Eight Million (P8,000,000.00) Pesos, representing the
value of the Promissory Note dated June 20, 2001, plus interest thereon
at the rate of 17% from June 20, 2001, until fully paid;
The amount of Seven Million (P7,000,000.00) Pesos, representing the
value of the Promissory Note dated June 22, 2001, plus interest thereon
at the rate of 17% from June 17, 2002, until fully paid;
The amount of Fifteen Million (P15,000,000.00) Pesos, representing the
value of the Promissory Note dated June 28, 2001, plus interest thereon
at the rate of 17% from June 24, 2002, until fully paid;
Plus cost of suit.
ORDERED. [32]

Clearly, this partial summary judgment did not dispose of the

case as the main issues raised in plaintiff Tomas Tans
complaint, i.e., the validity of the secretarys certificate which authorized
John Dennis Chua to take out loans, and execute promissory notes and
mortgages for and on behalf of CST, as well as the validity of the resultant
promissory notes and mortgage executed for and on behalf of
CST, remained unresolved.
Chua shares common interest with co-defendantdebtors
Still, PBB insists that the partial summary judgment is a final
judgment as regards PBBs cross-claim against respondent Chua since
respondent Chuas liability will not be affected by the resolution of the
issues of the main case.
On its face, the promissory notes were executed by John Dennis
Chua in two capacities as the alleged representative of CST, and in his
personal capacity. Thus, while there can be no question as to respondent
Chuas liability to PBB (since he already admitted to executing these
promissory notes as a co-maker), still, the court a quos findings on: (a)
whether John Dennis Chua was properly authorized to sign these

13

CIVPRO: Judgement
promissory notes on behalf of CST, and (b) whether John Dennis Chua
actually signed these promissory notes in his personal capacity, would
certainly have the effect of determining whether respondent Chua has the
right to go after CST and/or John Dennis Chua for reimbursement on any
payment he makes on these promissory notes, pursuant to Article 1217 of
the Civil Code, which states:
Article 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment
already made. If the payment is made before the debt is due, no interest for
the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall be
borne by all his co-debtors, in proportion to the debt of each.

In other words, PBB has a common cause of action against

respondent Chua with his alleged co-debtors, John Dennis Chua and CST, it
would simply not be proper to treat respondent Chua separately from his
co-debtors.
Moreover, we cannot turn a blind eye to the clear intention of the
trial court in rendering a partial summary judgment. Had the trial court
truly intended to treat PBBs cross-claim against respondent Chua
separately, it could easily have ordered a separate trial via Section 2, Rule
31 of the Rules, which states:
Section 2. Separate trials. The court, in furtherance of
convenience or to avoid prejudice, may order a separate trial of
any claim, cross-claim, counterclaim, or third-party complaint, or of
any separate issue or of any number of claims, cross-claims,
counterclaims, third-party complaints or issues.

That the trial court did not do so belies PBBs contention.

It has also not escaped our attention that PBB, in its Motion to
Disallow Appeal and to Issue Execution Against Cross-Defendant Felipe
Chua,[33] already admitted that the partial summary judgment is not
a judgment or final order that completely disposes of the case. In
its own words:
xxxx
3. However, the remedy availed of by [respondent Chua] is
patently erroneous because under Rule 41 Section 1 of the Rules
of Court, an appeal may be taken only from a judgment or final
order that completely disposes the case;
4. The judgment rendered by [the RTC] dated July 27,
2005 is only
a
partial
summary
judgment against
[respondent Chua], on the crossclaim of cross-claimant
Philippine Business Bank. The main case which involves the
claim of plaintiffs against the principal defendants is still
pending and has not yet been adjudged by [the RTC].[34]

Thus, PBB cannot now be allowed to deny the interlocutory nature

of the partial summary judgment.
Certiorari not the proper remedy
PBB also maintains that the partial summary judgment attained
finality when respondent Chua failed to file a certiorari petition, citing the
last paragraph of Section 1, Rule 41 of the Rules as basis. We quote:
Section 1. Subject of appeal. An appeal maybe taken from a
judgment or final order that completely disposes of the case, or of

a particular matter therein when declared by these Rules to be

appealable.
No appeal may be taken from:
xxxx
(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;
xxxx
In all the above instances where the judgment, or
final order is not appealable, the aggrieved party may file
an appropriate special civil action under Rule 65.

Contrary to PBBs contention, however, certiorari was not the

proper recourse for respondent Chua. The propriety of the summary
judgment may be corrected only on appeal or other direct review, not a
petition for certiorari,[35]since it imputes error on the lower courts judgment.
It is well-settled that certiorari is not available to correct errors of
procedure or mistakes in the judges findings and conclusions of law and
fact.[36] As we explained in Apostol v. Court of Appeals:[37]
As a legal recourse, the special civil action
of certiorari is a limited form of review. The jurisdiction of
this Court is narrow in scope; it is restricted to resolving
errors of jurisdiction, not errors of judgment. Indeed, as
long as the courts below act within their jurisdiction,
alleged errors committed in the exercise of their discretion
will amount to mere errors of judgment correctable by an
appeal or a petition for review.[38]
In light of these findings, we affirm the CAs ruling that the partial
summary judgment is an interlocutory order which could not become a
final and executory judgment, notwithstanding respondent Chuas failure to
file a certioraripetition to challenge the judgment. Accordingly, the RTC
grievously erred when it issued the writ of execution against respondent
Chua.
In view of this conclusion, we find it unnecessary to resolve the
issue raised by respondent Chua on the validity of the RTCs appointment of
a special sheriff for the implementation of the execution writ.
Propriety of Summary Judgment Reserved for
Appeal
As a final point, we note that respondent Chua has raised with this
Court the issue of the propriety of the partial summary judgment issued by
the RTC. Notably, respondent Chua never raised this issue in his petition
for certioraribefore the CA. It is well settled that no question will be
entertained on appeal unless it has been raised in the proceedings below.
[39]
Basic considerations of due process impel the adoption of this rule. [40]
Furthermore, this issue would be better resolved in the proper
appeal, to be taken by the parties once the court a quo has completely
resolved all the issues involved in the present case in a final judgment. If
we were to resolve this issue now, we would be preempting the CA, which
has primary jurisdiction over this issue.
Lastly, taking jurisdiction over this issue now would only result in
multiple appeals from a single case which concerns the same, or
integrated, causes of action. As we said in Santos v. People:[41]

14

CIVPRO: Judgement
Another recognized reason of the law in permitting
appeal only from a final order or judgment, and not from an
interlocutory or incidental one, is to avoid multiplicity of
appeals in a single action, which must necessarily suspend
the hearing and decision on the merits of the case during
the pendency of the appeal. If such appeal were allowed,
the trial on the merits of the case would necessarily be
delayed for a considerable length of time, and compel the
adverse party to incur unnecessary expenses, for one of
the parties may interpose as many appeals as incidental
questions may be raised by him, and interlocutory orders
rendered or issued by the lower court.
WHEREFORE, premises considered, we DENY the petition for lack
of merit and AFFIRM the Decision of the Court of Appeals in CA-G.R. SP
No. 94883 dated February 8, 2007, as well as its Resolution dated July 18,
2007. Costs against the petitioner, Philippine Business Bank.
SO ORDERED.
G.R. No. 170026

June 20, 2012

SHIMIZU PHILIPPINES CONTRACTORS, INC., Petitioner,

vs.
MRS. LETICIA B. MAGSALIN, doing business under the trade name
"KAREN'S TRADING," FGU INSURANCE CORPORATION, GODOFREDO
GARCIA, CONCORDIA GARCIA, and REYNALDO
BAETIONG, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by Shimizu Philippines Contractors, Inc.
(petitioner) to challenge the twin resolutions of the Court of Appeals (CA)2 in CA-G.R. CV No.
83096 which dismissed the appeal of the petitioner on the ground of lack of jurisdiction 3 and
denied the petitioners subsequent motion for reconsideration. 4 The appeal in CA-G.R. CV No.
83096 had sought to nullify the December 16, 2003 order 5 of the Regional Trial Court (RTC)
dismissing the petitioners complaint for sum of money and damages on the ground of non
prosequitur.

The Antecedents
The antecedent facts of the petition before us are not disputed.
An alleged breach of contract was the initial event that led to the present
petition. The petitioner claims that one Leticia Magsalin, doing business as
"Karens Trading," had breached their subcontract agreement for the
supply, delivery, installation, and finishing of parquet tiles for certain floors
in the petitioners Makati City condominium project called "The Regency at

Salcedo." The breach triggered the agreements termination. When

Magsalin also refused to return the petitioners unliquidated advance
payment and to account for other monetary liabilities despite demand, the
petitioner sent a notice to respondent FGU Insurance Corporation (FGU
Insurance) demanding damages pursuant to the surety and performance
bonds the former had issued for the subcontract.
On April 30, 2002, the petitioner filed a complaint docketed as Civil Case
No. 02-488 against both Magsalin and FGU Insurance. It was raffled to
Branch 61 of the RTC of Makati City. The complaint sought Two Million Three
Hundred Twenty-Nine Thousand One Hundred Twenty Four Pesos and Sixty
Centavos (P2,329,124.60) as actual damages for the breach of contract.
FGU Insurance was duly served with summons. With respect to Magsalin,
however, the corresponding officers return declared that both she and
"Karens Trading" could not be located at their given addresses, and that
despite further efforts, their new addresses could not be determined.
In August 2002, FGU Insurance filed a motion to dismiss the complaint.
The petitioner filed its opposition to the motion. The motion to dismiss was
denied as well as the ensuing motion for reconsideration, and FGU
Insurance was obliged to file an answer.
In October 2002, in an effort to assist the RTC in acquiring jurisdiction
over Magsalin, the petitioner filed a motion for leave to serve summons on
respondent Magsalin by way of publication. In January 2003, the petitioner
filed its reply to FGU Insurances answer.
In February 2003, FGU Insurance filed a motion for leave of court to file a
third-party complaint. Attached to the motion was the subject
complaint,6 with Reynaldo Baetiong, Godofredo Garcia and Concordia
Garcia named as third-party defendants. FGU Insurance claims that the
three had executed counter-guaranties over the surety and performance
bonds it executed for the subcontract with Magsalin and, hence, should be
held jointly and severally liable in the event it is held liable in Civil Case No.
02-488.
The RTC admitted the third-party complaint and denied the motion to
serve summons by publication on the ground that the action against
respondent Magsalin was in personam.
In May 2003, the RTC issued a notice setting the case for hearing on June
20, 2003. FGU Insurance filed a motion to cancel the hearing on the ground
that the third-party defendants had not yet filed their answer. The motion
was granted.

15

CIVPRO: Judgement
In June 2003, Baetiong filed his answer to the third-party complaint. He
denied any personal knowledge about the surety and performance bonds
for the subcontract with Magsalin. 7 Of the three (3) persons named as
third-party defendants, only Baetiong filed an answer to the third-party
complaint; the officers returns on the summons to the Garcias state that
both could not be located at their given addresses. Incidentally, the
petitioner claims, and Baetiong does not dispute, that it was not served
with a copy of Baetiongs answer. The petitioner now argues before us that
FGU Insurance, which is the plaintiff in the third-party complaint, had failed
to exert efforts to serve summons on the Garcias. It suggests that a motion
to serve summons by publication should have been filed for this purpose.
The petitioner also asserts that the RTC should have scheduled a hearing to
determine the status of the summons to the third-party defendants. 8
The Order Of Dismissal
With the above procedural events presented by both parties as the only
backdrop, on December 16, 2003 the RTC issued a tersely worded
order9 dismissing Civil Case No. 02-488. For clarity, we quote the dismissal
order in full:

determined is whether based on the records of the case, was there a

definite inaction on the part of plaintiff-appellant? A careful examination of
all pleadings filed as well as the orders of the lower court vis--vis the rules
should now be made in order to determine whether there was indeed a
"failure to prosecute" on the part of plaintiff-appellant[.]13 (emphases
supplied)
The CA agreed with FGU Insurance and dismissed the appeal, and denied
as well the subsequent motion for reconsideration. 14 The petitioner thus
filed the present petition for review on certiorari.
The Present Petition
The petitioner pleads five (5) grounds to reverse the CAs resolutions and
to reinstate Civil Case No. 02-488. In an effort perhaps to make sense of
the dismissal of the case (considering that the trial court had not stated the
facts that justify it), the petitioner draws this Courts attention to certain
facts and issues that we find to be of little materiality to the disposition of
this petition:
Grounds/ Statement of Matters Involved

ORDER
For failure of [petitioner] to prosecute, the case is hereby DISMISSED.
SO ORDERED.
The RTC denied the petitioners motion for reconsideration, 10prompting the
latter to elevate its case to the CA via a Rule 41 petition for review. 11
The Ruling of the Appellate Court
FGU Insurance moved for the dismissal of the appeal on the ground of
lack of jurisdiction. It argued that the appeal raised a pure question of law
as it did not dispute the proceedings before the issuance of the December
16, 2003 dismissal order.
The petitioner, on the other hand, insisted that it had raised questions of
fact in the appeal.12 Thus While, the instant appeal does not involve the merits of the case, the
same involves questions of fact based on the records of the case. It
must be emphasized that the lower courts dismissal of the case based on
alleged failure to prosecute on the part of plaintiff-appellant was too
sudden and precipitate. This being the case, the facts [sic] to be

I. The Appellate Court has jurisdiction to determine the merits of the Appeal as the
matters therein involve both questions of law and fact.
II. The lower court erred in declaring that petitioner failed to prosecute the case
despite the fact that petitioner never received a copy of the Answer of Third-party
defendant-respondent Reynaldo Baetiong.
III. The lower court erred in declaring that petitioner failed to prosecute the case
despite the fact that there is no joinder of indispensable parties and issues yet
because defendant-respondent Leticia B. Magsalin as well as third-party defendantrespondents Godofredo and Concordia Garcias whereabouts were unknown, hence no
service yet on them of the copy of the summons and complaint with annexes[.]
IV. The lower court erred in declaring that Petitioner failed to prosecute the case
despite the fact that it was party respondent FGU which caused the cancellation of the
hearing.
V. It is evident that the lower courts dismissal of the case is a clear denial of due
process.15
In our Resolution dated February 13, 2006,16 we required the respondents to comment. FGU
Insurances comment17 alleges that the present petition is "fatally defective" for being
unaccompanied by material portions of the record. It reiterates that the appeal in CA-G.R. CV No.
83096 was improperly filed under Rule 41 and should have been filed directly with this Court
under Rule 45 of the Rules of Court. Baetiong, in his comment, 18 asserts that the dismissal of the
appeal was in accord with existing laws and applicable jurisprudence.

The Ruling Of The Court

16

CIVPRO: Judgement
Preliminarily, we resolve the claim that the petition violates Rule 45 of the
Rules of Court on the attachment of material portions of the record. We
note that FGU Insurance fails to discharge its burden of proving this claim
by not specifying the material portions of the record the petitioner should
have attached to the petition. At any rate, after a careful perusal of the
petition and its attachments, the Court finds the petition to be sufficient. In
other words, we can judiciously assess and resolve the present petition on
the basis of its allegations and attachments.
After due consideration, we resolve to grant the petition on the ground
that the December 16, 2003 dismissal order is null and void for violation of
due process. We are also convinced that the appeal to challenge the
dismissal order was properly filed under Rule 41 of the Rules of Court. We
further find that the dismissal of Civil Case No. 02-488 for failure to
prosecute is not supported by facts, as shown by the records of the case.
The Dismissal Order is Void
The nullity of the dismissal order is patent on its face. It simply states its
conclusion that the case should be dismissed for non prosequitur, a legal
conclusion, but does not state the facts on which this conclusion is based.
Dismissals of actions for failure of the plaintiff to prosecute is authorized
under Section 3, Rule 17 of the Rules of Court. A plain examination of the
December 16, 2003 dismissal order shows that it is an unqualified order
and, as such, is deemed to be a dismissal with prejudice. "Dismissals of
actions (under Section 3) which do not expressly state whether they are
with or without prejudice are held to be with prejudice[.]" 19 As a prejudicial
dismissal, the December 16, 2003 dismissal order is also deemed to be a
judgment on the merits so that the petitioners complaint in Civil Case No.
02-488 can no longer be refiled on the principle of res judicata.
Procedurally, when a complaint is dismissed for failure to prosecute and
the dismissal is unqualified, the dismissal has the effect of an adjudication
on the merits.20
As an adjudication on the merits, it is imperative that the dismissal order
conform with Section 1, Rule 36 of the Rules of Court on the writing of valid
judgments and final orders. The rule states:
RULE 36
Judgments, Final Orders and Entry Thereof
Section 1. Rendition of judgments and final orders. A judgment or final order
determining the merits of the case shall be in writing personally and directly
prepared by the judge, stating clearly and distinctly the facts and the law on which it
is based, signed by him, and filed with the clerk of the court.

The December 16, 2003 dismissal order clearly violates this rule for its
failure to disclose how and why the petitioner failed to prosecute its
complaint. Thus, neither the petitioner nor the reviewing court is able to
know the particular facts that had prompted the prejudicial dismissal. Had
the petitioner perhaps failed to appear at a scheduled trial date? Had it
failed to take appropriate actions for the active prosecution of its complaint
for an unreasonable length of time? Had it failed to comply with the rules
or any order of the trial court? The December 16, 2003 dismissal
order does not say.
We have in the past admonished trial courts against issuing dismissal
orders similar to that appealed in CA-G.R. CV No. 83096. A trial court
should always specify the reasons for a complaints dismissal so that on
appeal, the reviewing court can readily determine the prima
faciejustification for the dismissal.21 A decision that does not clearly and
distinctly state the facts and the law on which it is based leaves the parties
in the dark and is especially prejudicial to the losing party who is unable to
point the assigned error in seeking a review by a higher tribunal. 22
We thus agree with the petitioner that the dismissal of Civil Case No. 02488 constituted a denial of due process. Elementary due process demands
that the parties to a litigation be given information on how the case was
decided, as well as an explanation of the factual and legal reasons that led
to the conclusions of the court.23 Where the reasons are absent, a decision
(such as the December 16, 2003 dismissal order) has absolutely nothing to
support it and is thus a nullity.24
For this same reason, we are not moved by respondent FGU Insurances
statement that the disposition of the present petition must be limited to
the issue of whether the CA had correctly dismissed the appeal in CA-G.R.
CV No. 83096.25 This statement implies that we cannot properly look into
the validity of the December 16, 2003 dismissal order in this Rule 45
petition. A void decision, however, is open to collateral attack. While we
note that the validity of the dismissal order with respect to Section 1, Rule
36 of the Rules of Court was never raised by the petitioner as an issue in
the present petition, the Supreme Court is vested with ample authority to
review an unassigned error if it finds that consideration and resolution are
indispensable or necessary in arriving at a just decision in an appeal. 26In
this case, the interests of substantial justice warrant the review of an
obviously void dismissal order.
The appeal was properly filed under Rule 41 of the Rules of Court
While the nullity of the December 16, 2003 dismissal order constitutes
the ratio decidendi for this petition, we nevertheless rule on the contention
that the appeal was erroneously filed.27

17

CIVPRO: Judgement
In dismissing the appeal, the CA relied on the premise that since the facts
presented in the petitioners appeal were admitted and not disputed, the
appeal must thereby raise a pure question of law proscribed in an ordinary
appeal. This premise was effectively the legal principle articulated in the
case of Joaquin v. Navarro,28 cited by the CA in its April 8, 2005 resolution.
Respondent FGU Insurance thus contends that the proper remedy to assail
the dismissal of Civil Case No. 02-488 was an appeal filed under Rule 45 of
the Rules of Court.
The reliance on Joaquin is misplaced as it is based on the conclusion the
appellate court made in its April 8, 2005 resolution i.e., that the pleading
of undisputed facts is equivalent to a prohibited appeal. The reliance is
inattentive to both the averments of the subject appeal and to the text of
the cited case. The operative legal principle in Joaquin is this: "[W]here a
case is submitted upon an agreement of facts, or where all the facts are
stated in the judgment and the issue is the correctness of the conclusions
drawn therefrom, the question is one of law which [is properly subject to
the review of this Court.]" 29 In this case, as already pointed out above, the
facts supposedly supporting the trial courts conclusion of non
prosequitur were not stated in the judgment. This defeats the application
of Joaquin.
At any rate, we believe that the filing of the appeal in CA-G.R. CV No.
83096 under Rule 41 of the Rules of Court was proper as it necessarily
involved questions of fact.
An authority material to this case is the case of Olave v. Mistas.30Directly
addressed in Olave was the CAs jurisdiction over an ordinary appeal
supported by undisputed facts and seeking the review of a prejudicial order
of dismissal. In this case, a complaint was filed before the RTC in Lipa City
to nullify an instrument titled "Affidavit of Adjudication By The Heirs of the
Estate of Deceased Persons With Sale." The RTC dismissed the complaint,
with prejudice, after the plaintiffs had moved to set the case for pre-trial
only after more than three (3) months had lapsed from the service and
filing of the last pleading in the case. The plaintiffs thereafter went to the
CA on a Rule 41 petition, contending, among others, that the trial court had
erred and abused its discretion. As in the present case, the defendants
moved to dismiss the appeal on the ground that the issues therein were
legal; they pointed out that the circumstances on record were
admitted.31 They argued that the proper remedy was a petition for review
on certiorari under Rule 45 of the Rules of Court.
The CA denied the motion and entertained the appeal. It rendered a
decision reinstating the complaint on the ground that there was no
evidence on record that the plaintiffs had deliberately failed to prosecute
their complaint.

When the case was elevated to this court on a Rule 45 petition, we

squarely addressed the propriety of the plaintiffs appeal. Though mindful
that the circumstances pleaded in the appeal were all admitted, we
categorically held in Olave that the appeal was correctly filed. We observed
that despite undisputed records, the CA, in its review, still had to respond
to factual questions such as the length of time between the plaintiffs
receipt of the last pleading filed up to the time they moved to set the case
for pre-trial, whether there had been any manifest intention on the
plaintiffs part not to comply with the Rules of Court, and whether the
plaintiffs counsel was negligent.
Significantly, in Olave, we agreed with the plaintiffs that among the
critical factual questions was whether, based on the records, there had
been factual basis for the dismissal of the subject complaint. This same
question is particularly significant in the present case given that the order
appealed from in CA-G.R. CV No. 83096 does not even indicate the factual
basis for the dismissal of Civil Case No. 02-488. Due to the absence of any
stated factual basis, and despite the admissions of the parties, the CA, in
CA-G.R. CV No. 83096, still had to delve into the records to check whether
facts to justify the prejudicial dismissal even exist. Since the dismissal of
Civil Case No. 02-488 appears to have been rendered motu proprio (as the
December 16, 2003 dismissal order does not state if it was issued upon the
respondents or the trial courts motion), the facts to be determined by the
CA should include the grounds specified under Section 3, Rule 17 of the
Rules of Court. A court could only issue a motu proprio dismissal pursuant
to the grounds mentioned in this rule and for lack of jurisdiction over the
subject matter.32 These grounds are matters of facts. Thus, given that the
dismissal order does not disclose its factual basis, we are thus persuaded
that the petitioner had properly filed its appeal from the dismissal order
under Rule 41 of the Rules of Court.
The Dismissal of Civil Case No. 02-488 is not Supported by the
Facts of the Case
We also find that the dismissal of Civil Case No. 02-488 is not warranted.
Based on available records and on the averments of the parties, the
following events were chronologically proximate to the dismissal of Civil
Case No. 02-488: (a) on March 24, 2003, the court admitted FGU
Insurances third-party complaint; (b) the trial court cancelled the June 20,
2003 hearing upon FGU Insurances motion; and (c) on June 16, 2003,
Baetiong filed his Answer to the third-partycomplaint but did not serve it
upon the petitioner.
None of these events square with the grounds specified by Section 3, Rule
17 of the Rules of Court for the motu proprio dismissal of a case for failure
to prosecute. These grounds are as follows:

18

CIVPRO: Judgement
(a) Failure of the plaintiff, without justifiable reasons, to appear on
the date of the presentation of his evidence in chief;
(b) Failure of the plaintiff to prosecute his action for an
unreasonable length of time;

EUGENIO BASBAS, TEOFILO ARAS, RUFINO ARAS, GERVACIO

BASBAS, ISMAEL ARAS, EUGENIO ARAS, SIMFRONIO ARAS,
FELICIANO ARAS, ROSITA ARAS, EUGENIO BASBAS, JR. and
SPOUSES PABLITO BASARTE and MARCELINA BASBAS BASARTE,
vs.
BEATA SAYSON and ROBERTO SAYSON, JR., Respondents.

(c) Failure of the plaintiff to comply with the Rules of Court; or

(d) Failure of the plaintiff to obey any order of the court.
In our view, the developments in the present case do not satisfy the
stringent standards set in law and jurisprudence for a non
prosequitur.33 The fundamental test for non prosequitur is whether, under
the circumstances, the plaintiff is chargeable with want of due diligence in
failing to proceed with reasonable promptitude. 34 There must be
unwillingness on the part of the plaintiff to prosecute. 35
In this case, the parties own narrations of facts demonstrate the
petitioners willingness to prosecute its complaint.1wphi1 Indeed, neither
respondents FGU Insurance nor Baetiong was able to point to any specific
act committed by the petitioner to justify the dismissal of their case.

DECISION
DEL CASTILLO, J.:
Petitioners seek to prevent the revival of a judgment rendered in favor of
the respondents more than two decades back.
This Petition for Review on Certiorari assails the February 17, 2004
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 72385 which
denied the appeal filed before it and affirmed in toto the May 21, 2001
Order2 of the Regional Trial Court of Ormoc City, Branch 35. Also assailed is
the April 19, 2006 Resolution3 denying the Motion for Reconsideration
thereto.
Factual Antecedents

While it is discretionary on the trial court to dismiss cases, dismissals of

actions should be made with care. The repressive or restraining effect of
the rule amounting to adjudication upon the merits may cut short a case
even before it is fully litigated; a ruling of dismissal may forever bar a
litigant from pursuing judicial relief under the same cause of action. Hence,
sound discretion demands vigilance in duly recognizing the circumstances
surrounding the case to the end that technicality shall not prevail over
substantial justice.36
This court is thus of the opinion that the dismissal of Civil Case No. 02-488
is not warranted. Neither facts, law or jurisprudence supports the RTCs
finding of failure to prosecute on the part of the petitioner.
Wherefore, premises considered, the instant petition is Granted. The
resolutions of the Court of Appeals dated April 8, 2005 and October 4, 2005
are REVERSED and SET ASIDE. The order dated December 16, 2003 of the
Regional Trial Court, Branch 61, Makati City, in Civil Case No. 02-488 is
declared NULL and VOID, and the petitioners complaint therein is
ordered REINSTATED for further proceedings. No costs.
SO ORDERED.
G.R. No. 172660

August 24, 2011

On September 2, 1976, respondent Beata Sayson (Beata) and her

husband Roberto Sayson, Sr. (Roberto Sr.) filed a Petition for Registration of
an agricultural land located in Cagbatang, Balagtas, Matag-ob, Leyte
docketed as Land Registration Case No. 0-177. The said application was
opposed by the Republic of the Philippines and herein petitioners Eugenio
Basbas (Eugenio Sr.), Teofilo Aras (Teofilo) and Rufino Aras (Rufino). On
March 22, 1979, the Court of First Instance (CFI) of Leyte, Branch V (Ormoc
City) rendered a Decision adjudicating to the spouses Sayson said
agricultural land and approving its registration under their names. 4
The oppositors filed their appeal to the CA docketed as CA-G.R. No.
66541. In a Decision5 dated July 24, 1985, the appellate court affirmed
in toto the Decision of the CFI. This CA Decision became final and
executory on August 21, 19856 and, accordingly, a Writ of Possession was
issued on November 21, 1985, which was never implemented.
The following year or on September 17, 1986, Original Certificate of Title
(OCT) No. 24967 was issued to the spouses Sayson pursuant to the March
22, 1979 CFI Decision. An Alias Writ of Possession was issued on April 6,
1989 but this could also not be implemented in view of the refusal of
Eugenio Sr. and his son Eugenio Basbas, Jr. (Eugenio Jr.). Claiming that the
land they occupied is not the same land subject of the CFI Decision, 8 they

19

CIVPRO: Judgement
demanded that a relocation survey be conducted. Hence, a relocation
survey was conducted by order of the Regional Trial Court (RTC), Branch
12, Ormoc City.9

13, 1989 Order as principal oppositors in the land registration case, were
likewise impleaded as defendants since they also allegedly harvested,
processed, and sold the coconuts found in the subject property.

In an Order10 dated September 13, 1989, the RTC approved the

Commissioners Report11 on the relocation survey and ordered the original
oppositors, petitioners Eugenio Sr., Teofilo and Rufino, as well as their copetitioners herein Gervacio Basbas (Gervacio), Ismael Aras (Ismael),
Eugenio Aras (Eugenio), Simfronio Aras (Simfronio), Feliciano Aras
(Feliciano), Rosita Aras (Rosita) and Eugenio Jr. to vacate the subject
property, viz:

Upon receipt of summons, Gervacio, Rufino, Ismael, Eugenio, Feliciano,

Rosita and Eugenio Jr. filed a Motion to Dismiss 18 on the ground that the
Complaint states no cause of action. This was, however, denied 19 so the
same set of petitioners, except for Feliciano, filed an Answer with
Counterclaim.20

[R]espondents are directed to vacate the portion of Lot No. 1, Psu-08000235 covered by OCT No. 2496 and subject of the final decree of
registration which, [up to the] present, said respondents are still
possessing pursuant to the final and executory judgment of the Court of
Appeals and as particularly defined in the Commissioners report submitted
on August 3, 1989 x x x.
Respondents are reminded that under Rule 71 of the New Rules of Court,
failure on their part to so obey this order may make them liable for
contempt of this Court.
SO ORDERED.12
Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita and Eugenio Jr.,
although not oppositors in CA-G.R. No. 66541, were likewise ordered to
vacate the property in view of the following pronouncement in the RTCs
September 13, 1989 Order:
It appearing from the records that respondents Eugenio Basbas, Teofilo
Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras,
Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas[,]
Jr. are parties to the present case, they having been the principal
oppositors to the petition filed by the applicants as shown in the
records, pages 34, 35 and 36, Vol. 1 x x x13 (Emphasis supplied.)
This September 13, 1989 Order was, however, not implemented within
the five-year period from the time it became final. 14 Hence, respondent
Beata and her son Roberto Sayson, Jr. (Roberto Jr.), as successor-in-interest
of the late Roberto Sr., filed on August 18, 1995 a Complaint for Revival of
Judgment15 before the RTC of Ormoc City, Branch 12, 16 docketed as Civil
Case No. 3312-0. Impleaded as defendants were Eugenio Sr., Teofilo,
Rufino, Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita, and Eugenio
Jr.
Petitioner-spouses
Pablito
Basarte
and
Marcelina
BasbasSabarte17 (spouses Basarte), who, although not identified in the September

In their Answer with counterclaim, said petitioners admitted the

allegations in paragraphs 4, 5, 6, 7, 8, 9, 10, 11 and 12 of respondents
Complaint which state that:
xxxx
4. On March 22, 1979, the Honorable Judge Numeriano Estenzo rendered
a decision in the above-mentioned Land Registration [c]ase in favor of the
petitioners x x x and against the oppositors, the dispositive portion of said
decision reads:
WHEREFORE, decision is hereby rendered x x x [and] the land described
under Plan PSU-08-000235 dated September 10, 1973 of Geodetic
Engineer Nestorio Encenzo already APPROVED by the Acting Regional
Director on June 27, 1974 is hereby adjudicated and registered in the
names of the Spouses ROBERTO SAYSON and BEATA O. SAYSON, of legal
ages, Filipinos, spouses and residents of Campokpok, Tabango, Leyte,
Philippines and as soon as this decision becomes final, let a decree of
registration be issued by the Land Registration Commission.
SO ORDERED. (x x x)
5. From the above decision the oppositors (defendants herein) appealed;
6. On July 24, 1985, the Honorable Court of Appeals rendered its decision,
the dispositive portion [of which] reads:
WHEREFORE, PREMISES CONSIDERED, finding no merit in this appeal the
decision appealed from is hereby AFFIRMED in toto.
SO ORDERED.
and the said decision has become final and executory on August 21, 1985
per Entry of Judgment issued by the Court of Appeals x x x.

20

CIVPRO: Judgement
7. That consequently, on September 17, 1986 an Original Certificate of
Title No. N-2496 was issued in the names of Roberto Sayson and Beata O.
Sayson, pursuant to Decree No. N-191615, by the Register of Deeds for the
Province of Leyte;

Respondents are reminded that under Rule 71 of the New Rules of Court,
failure on their part to so obey this Order may make them liable for
contempt of this Court.21
However, petitioners admitted but denied in part:

8. That on motion, the Honorable Court, on November 21, 1985, issued a

Writ of Possession which for some reason or [another] was not satisfied, so
that the Honorable Court, on April 7, 1989 acting on an ex-parte motion
dated April 6, 1989 directed the issuance of an Alias Writ of Possession;
9. That the Deputy Sheriff of this Court, Mr. Placid[o] Cayco tendered the
Alias Writ of Possession to the oppositors, particularly to Mr. Eugenio
Basbas, Sr. and Eugenio Basbas, Jr. who, as the Deputy Sheriff stated in his
Progress Report dated May 18, 1989 did not believe and obey the CFI
Decision and the decision of the Court of Appeals and x x x [t]hey
demanded a relocation survey to determine the exact location of
applicants (complainant[s] herein) property described in the alias writ of
possession. x x x;
10. That on June 16, 1989, the Honorable Court, acting on the Progress
Report of Deputy Sheriff Placido Cayco, issued an Order on even date
appointing Geodetic Engineer Jose A. Tahil as Court Commissioner
specifically to relocate Lot No. 1, Plan Psu-08-000235, LRC No. 0-177, Land
Reg. Record No. N51830 x x x This Order was dictated in open court in the
presence of Mr. Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who had both
objected to the Writ of Possession, and their counsel Atty. Evargisto
Escalon, and Attorney Demetrio D. Sarit, counsel for the applicants. x x x
11. That pursuant to the [O]rder dated June 16, 1989 x x x the Court
assigned Commissioner, Engr. Jose A. Tahil, submitted his report stating
that the job assigned to the commissioner was already fully and peacefully
accomplished; that his findings [show] that all points are existing and
intact on the field except x x x corner 3 of said lot x x x which at present
[is] already defined and indicated on the ground. The commissioner also
attached a Sketch Plan of the land to his report. x x x
12. That, finally, the Honorable Court, on September 13, 1989 issued an
Order approving the Commissioners Report and further stated:
[R]espondents (defendants herein) are directed to vacate the portion of
Lot No. 1, Psu-08-000235 covered by OCT No. 2496 and subject of final
decree of registration which, until [the] present, said respondents are still
possessing, pursuant to the final and executory judgment of the Court of
Appeals and as particularly [defined] in the Commissioners Report
submitted on August 3, 1989 x x x

1) paragraphs 2 and 3, insofar as they alleged that they were all

oppositors to the land registration case when only Eugenio Sr., Teofilo and
Rufino were the oppositors therein; and
2) paragraph 14, with respect to the allegation on the retirement of the
Deputy Sheriff and the heart condition of the Clerk of Court, for lack of
sufficient knowledge and information sufficient to form a belief thereon.
On the other hand, they specifically denied:
1) paragraph 13, on the ground that they have the right of ownership
and/or possession over the subject property; and
2) paragraph 15, on the ground that the property they are cultivating is
owned by them, hence, respondents cannot suffer losses and damages.
Paragraphs 2, 3, 13, 14 and 15 alluded to in the foregoing are as follows:
2. All the defendants named above are x x x of legal age and are
residents of Balagtas, Matag-ob, Leyte where they may be served
summons and other court processes; while defendant-spouses Pablito
Basarte and Marcelina Basbas Basarte were not named as among the
oppositors in the land registration case whose decision is herein sought to
be revived, said spouses are nonetheless participating in the harvest,
processing and sale of the coconuts with the other defendants named
above;
3. Plaintiffs Beata Sayson and her late husband, Roberto Sayson are
petitioners in Land Registration Case No. 0-177 for the registration of a
parcel of agricultural land situated in Barrio Balagtas, Matag-ob, Leyte, filed
on September 2, 1976 with the then Court of First Instance of Leyte,
Branch V, Ormoc City. The above-named defendants, namely: Eugenio
Basbas, Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio
Aras, Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas, Jr.
were oppositors to the application;22
xxxx

21

CIVPRO: Judgement
13. That despite this admonition in the [September 13, 1989] [O]rder that
they could be cited for contempt of Court, the respondents, defendants
herein, had continuously defied the same and this notwithstanding the fact
that it was upon their own demands and insistence that a relocation survey
be made on the premises subject of this case before they would obey the
alias writ of possession x x x and that the finding[s] of the
Court[-]appointed Commissioner Engr. Jose A. Tahil show that the
oppositors-respondents did [encroach] on the land of plaintiffs herein;
14. That this [September 13, 1989] Order however was not implemented
thru a Writ of Execution within the five-year period from the time the Order
became final because of the retirement of Deputy Sheriff Placido Cayco
and by reason also of the fact that the then Clerk of Court, Atty.
Constantino A. Trias, Jr. who was also the ex-officio Provincial Sheriff was
not physically fit to hike thru the mountains and hills of Brgy. Balagtas
where the property and the defendants therein reside due to his heart
condition;
15. That despite their knowledge of the Court[s] [September 13, 1989]
Order, the same [having been] dictated in open court, the respondents had
continued to occupy the land of the plaintiffs and for more than five (5)
years since this Order for them to vacate the land in question was issued,
they had harvested the coconuts growing thereon and such other produce
of the land herein involved. And until the decision of the Court of Appeals is
executed, plaintiff will continue to suffer losses and damages by reason of
defendants unlawful occupation and possession and their continued
harvesting of the produce of this land of the herein plaintiffs. 23
By way of special and affirmative defenses, said petitioners contended
that the Order sought to be revived is not the "judgment" contemplated
under Section 6, Rule 39 of the Rules of Court, hence the action for revival
of judgment is improper. Also, except for Rufino, petitioners averred that
they cannot be made parties to the complaint for revival of judgment as
they were not parties to the land registration case. They thus believed that
the September 13, 1989 Order sought to be revived is not binding upon
them and hence, the complaint states no cause of action with respect to
them. As to the counterclaim, petitioners prayed that respondents pay
them moral and exemplary damages, attorneys fees and litigation
expenses.
Pre-trial conference was thereafter set24 but since not all petitioners were
served with summons, this was reset and alias summons was issued and
served upon Simfronio and the spouses Basarte. 25 Upon receipt of
summons, Simfronio adopted the Answer with Counterclaim of Gervacio,
Rufino, Ismael, Eugenio, Feliciano, Rosita and Eugenio Jr. 26 while the
spouses Basarte filed a Motion to Dismiss 27 on the ground of lack of cause

of action. As said motion was also denied, 28the spouses Basarte later filed a
Manifestation29 that they were also adopting the Answer with Counterclaim
filed by Gervacio and the others.
During the pre-trial conference on July 14, 1999, the RTC issued an
Order30 which provides in part, viz:
In todays pre-trial conference, manifestations and counter-manifestations
were exchanged. All the parties and their counsels are present. x x x
[P]laintiffs counsel presented a Special Power of Attorney by Beata Sayson
but the Court observed that same was not duly acknowledged before the
Philippine Consulate or Embassy in Canada. However, this matter is not so
important[.] [W]hen the Court tried to dig and discuss with the parties on
their real positions, it turned out that the plaintiffs are seeking revival
of the previous final judgment, the original parties of which were
Eugenio Basbas, Teofilo Aras and Rufino Aras. Eugenio and Teofilo
are all dead, leaving Rufino Aras alive. It is quite complicated
considering that in this action, the plaintiffs relied on the Order of
this Court penned by the previous judge dated September 13,
1989 which was made after or consequent to the final judgment
aforementioned, wherein the names of the other defendants were
mentioned in the body thereof. After considering the merits of the
various contentions, the Court is of the view that the complaint
had to limit itself to the names of the original parties appearing in
the original judgment now being sought for revival. The interest of
the plaintiffs in seeking implementation or execution of the judgment
sought to be revived which would involve the other defendants can be
taken when the judgment shall have been revived.
In this connection therefore and as part of the matters to be made part in
the pre-trial conference, in the exercise of the authority granted to it by
law, this Court directs the plaintiffs to make the necessary
amendment and/or to submit a manifestation first to this Court on
the point above raised regarding amendment of the designation of
the parties having in mind the objection of the defendants who
manifested that should there be an amendment, this counter-claim shall be
disregarded since they were brought in unnecessarily in this kind of action.
Plaintiffs therefore are given a period of ten (10) days from today within
which to submit the requisite manifestation furnishing copy thereof to the
defendant who upon receipt shall also be given a period of ten (10) days
within which this Court will make the necessary resolution before allowing
any amendment.
Hold the pre-trial conference in abeyance.

22

CIVPRO: Judgement
SO ORDERED.

31

(Emphasis supplied.)

In their Manifestation with Prayer, 32 respondents informed the RTC about

the death of Eugenio Sr. and Teofilo who were oppositors in the land
registration case and the substitution by their heirs, namely, Gervacio,
Marcelina Basbas Basarte,33 and Eugenio Jr. for Eugenio Sr. and Ismael,
Vicente, Ligaya Aras (Ligaya), Rosendo Aras (Rosendo) and Daina Aras
(Daina) for Teofilo. Respondents prayed that their manifestation be
considered for the purpose of determining the proper parties to the case.
Despite petitioners Counter-Manifestation,34 the RTC issued the following
Order35 on May 15, 1999:
The Manifestation of plaintiffs and the Counter-Manifestation of
defendants having already been submitted and duly noted, the Court
hereby directs that henceforth in the denomination of this case, the names
of the original parties, Eugenio Basbas and Teofilo Aras (in Land
Registration Case No. 0-177) shall still remain to be so stated as
defendants for purposes of the present case but with additional names of
their respective heirs to be included and stated immediately after each
name as heirs in substitution, namely: for Eugenio Basbas 1) Gervacio
Basbas, 2) Marcelina Basbas Basarte, and 3) Eugenio Basbas, Jr.; and for
Teofilo Aras 1) Ismael Aras, 2) Vicente Aras, 3) Ligaya Aras, 4) Rosendo
Aras, and 5) Daina Aras.
Since from the records, only Gervacio Basbas, Eugenio Basbas, Jr. and
Ismael Aras were duly served with summons, the Branch Clerk of Court is
hereby directed to serve summons on the other heirs, namely: Marcelina
Basbas Basarte, Vicente Aras, Ligaya Aras, Rosendo Aras, and Daina Aras.

2. That [even] before the start of the original case, the original
defendants referring to the late Eugenio Basbas, Sr. and Teofilo
Aras, [and] Rufino Aras were occupying the property and they were
succeeded by the respective heirs of the deceased Eugenio
Basbas, Sr. and Teofilo Aras [sic];
3. That plaintiff Teofilo Aras, Sr. has a daughter named Fedeliza
Aras;
Issues
1. Whether x x x the plaintiffs are entitled to revival of judgment in
the earlier [land registration] case;
2. Whether x x x the defendants except for defendant Rufino Aras
are the proper parties in the present action;
3. Whether x x x the complaint states a cause of action;
4. Whether x x x defendants are entitled to their counterclaim, and;
5. Whether judgment on the pleadings is allowed or is tenable. 39
Respondents subsequently filed an Omnibus Motion for Judgment on the
Pleadings and/or Summary Judgment. 40 They contended that since
petitioners Answer failed to tender an issue, they having expressly
admitted the material allegations in the complaint, particularly paragraphs
4 to 12, a judgment on the pleadings or summary judgment is proper.

x x x x36
After summons were served, Vicente, Rosendo, Ligaya and Daina were,
however, declared in default for not filing any responsive pleading. 37 On
February 2, 2001, the RTC issued a Pre-Trial Order 38where the controverted
stipulations and issues to be tried, among others, were enumerated as
follows:
Controverted Stipulations:
1. That defendants are not enjoying the produce of the land
because there are period[s] wherein the fruits were subject of theft
and the same is now pending at the Municipal Trial Court of Matagob;

Petitioners filed an Opposition Re: Omnibus Motion for Judgment on the

Pleadings and/or Summary Judgment and Memorandum Re: Failure of
Plaintiff Beata Sayson to Appear in the Pre-trial Conference. 41 They argued
that the case cannot be decided based on the pleadings nor through
summary judgment considering that the controverted stipulations and
issues defined in the Pre-Trial Order must be proven by evidence. In
addition, they questioned the Special Power of Attorney (SPA) executed by
Beata in Canada empowering her son Roberto Jr. to appear on her behalf in
the pre-trial conference. They argued that since said SPA has not been
authenticated by a Philippine Consulate official, it is not sufficient
authorization and hence, Beata cannot be considered to have attended the
pre-trial conference. The case must, therefore, be dismissed insofar as she
is concerned.
Ruling of the Regional Trial Court

23

CIVPRO: Judgement
In resolving respondents Omnibus Motion for Judgment on the Pleadings
and/or Summary Judgment, the RTC found that petitioners Answer does
not essentially tender an issue since the material allegations of the
Complaint were admitted. Hence, said court issued an Order 42 dated May
21, 2001, the dispositive portion of which reads:
Wherefore, finding merit in the motion, judgment is hereby rendered for
and in favor of the plaintiffs and against the defendants ordering the
revival of the decision of the Court of Appeals promulgated on July 24,
1985 affirming the decree of registration of this Court in the decision of the
Land Registration Case No. 0-177 dated March 22, 1979, and of the final
Order of this Court dated September 13, 1989 and upon finality of this
Order, ordering the issuance of Writ of Possession for the lot made subject
of the decision. Without pronouncement as to costs.
SO ORDERED.43
Petitioners thus filed a Notice of Appeal 44 which was approved in an Order
dated June 06, 2001.45
Ruling of the Court of Appeals

1. The Honorable Court of Appeals clearly committed serious errors of law in its
decision and Resolution dated February 17, 2004 and April 19, 2006 when it affirmed
the Order of the Regional Trial Court dated May 21, 2001 and declared that no
reversible error was committed by the Regional Trial Court of Ormoc City in granting
respondents motion for judgment on the pleadings and/or summary judgment;
2. The Honorable Court of Appeals clearly committed serious errors of law in its
Decision and Resolution dated February 17, 2004 and April 19, 2006 when it affirmed
the Order of the Regional Trial Court of Ormoc City dated May 21, 2001 and declared
that petitioners argument that respondents complaint failed to state a cause of
action has no merit.
3. The Honorable Court of Appeals clearly committed serious errors of law when it
affirmed the Order of the Regional Trial Court of Ormoc City which ordered the revival
of the Judgment of this Court of Appeals in CA-G.R. No. 66541 entitled Beata Sayson
and Roberto Sayson vs. Eugenio Basbas, et al., despite the fact that this was not the
judgment sought to be revived in Civil Case No. 3312-0;
4. The Honorable Court of Appeals clearly committed serious errors of law in ruling
that the duly notarized Special Power of Attorney in favor of Roberto Sayson[,] Jr. is
valid and the latter is authorized to represent his mother, Beata Sayson[,] which is
contrary to the ruling in the case of ANGELITA LOPEZ, represented by PRISCILLA L. TY
vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF QUEZON CITY x x x (G.R. No.
77008, December 29, 1987).50
The Parties Arguments

Finding no merit in the appeal, the CA denied the same in a Decision 46 dated February 17, 2004.
It noted that petitioners Answer admitted almost all of the allegations in respondents
complaint. Hence, the RTC committed no reversible error when it granted respondents Motion
for Judgment on the Pleadings and/or Summary Judgment. The appellate court likewise found
untenable the issue as regards the failure of the complaint to state a cause of action. To the
appellate court, petitioners refusal to vacate the subject property despite the final and
executory Decision of the CA in the land registration case and the September 13, 1989 Order of
the RTC for them to vacate the same, clearly support respondents cause of action against them.
Also contrary to petitioners posture, the September 13, 1989 Order is a final order as it finally
disposed of the controversy between the parties in the land registration case. The CA likewise
found the SPA executed by Beata in favor of Roberto Jr. as valid, hence, she was duly
represented during the pre-trial conference. The dispositive portion of said CA Decision reads:
WHEREFORE, premises considered, the present appeal is DENIED. The May 21, 2001 Decision of
the Regional Trial Court of Ormoc City, Branch 35 is AFFIRMED.
SO ORDERED.47
Their Motion for Reconsideration48 having been denied in a Resolution49 dated April 19, 2006,
petitioners are now before this Court through the present Petition for Review on Certiorari.
Issues
Petitioners impute upon the CA the following errors:

Petitioners insist that a judgment on the pleadings or a summary judgment

is not proper in this case since the controverted stipulations and the first three issues
enumerated in the pre-trial order involve facts which must be threshed out during trial. They also
claim that the Complaint for Revival of Judgment states no cause of action because the
September 13, 1989 Order which it sought to revive is not the "judgment" contemplated under
Section 6, Rule 39 of the Rules of Court and, therefore, cannot be the subject of such an action.
Moreover, they argue that the CA Decision in the land registration case should not have been
revived as same was not prayed for in the Complaint for Revival of Judgment. Lastly, petitioners
assail the SPA which authorized Roberto Jr. to represent his mother, Beata, during the pre-trial
conference, it not having been authenticated by a Philippine consulate officer in Canada where it
was executed. Citing Lopez v. Court of Appeals,51 they contend that said document cannot be
admitted in evidence and hence, Beata was not duly represented during said pre-trial
conference. The case, therefore, should have been dismissed insofar as she is concerned.
For their part, respondents point out that the RTCs basis in granting the Motion for Judgment on
the Pleadings and/or Summary Judgment was petitioners admission of practically all the
material allegations in the complaint. They aver that Section 1, Rule 34 of the Rules of Court
clearly provides that where an answer fails to tender an issue or otherwise admits the material
allegations of the adverse partys pleading, the court may, on motion of that party, direct
judgment on the pleadings. Also, the test for a motion for summary judgment is whether the
pleadings, affidavits or exhibits in support of the motion are sufficient to overcome the opposing
papers and to justify a finding as a matter of law that there is no defense to the action or the
claim is clearly meritorious. And since, as found by the CA, petitioners Answer did not tender an
issue and that there is no defense to the action, the grant of the Motion for Judgment on the
Pleadings and/or Summary Judgment was appropriate. Respondents likewise contend that if their
prayer in the Complaint is taken in its proper context, it can be deduced that what they were
really seeking is the implementation of the CA Decision dated July 24, 1985 and the orders
ancillary thereto. With respect to the SPA, they submit that the law does not require that a power
of attorney be notarized. Moreover, Section 4, Rule 18 of the Rules of Court simply requires that

24

CIVPRO: Judgement
a representative appear fully authorized "in writing". It does not specify a particular form of
authority.

Our Ruling
There is no merit in the petition.
I. The instant case is proper for the rendition of a summary judgment.
Petitioners principally assail the CAs affirmance of the RTCs Order
granting respondents Motion for Judgment on the Pleadings and/or
Summary Judgment.
In Tan v. De la Vega,52 citing Narra Integrated Corporation v. Court of
Appeals,53 the court distinguished summary judgment from judgment on
the pleadings, viz:
The existence or appearance of ostensible issues in the pleadings, on the
one hand, and their sham or fictitious character, on the other, are what
distinguish a proper case for summary judgment from one for a judgment
on the pleadings. In a proper case for judgment on the pleadings, there is
no ostensible issue at all because of the failure of the defending partys
answer to raise an issue. On the other hand, in the case of a summary
judgment, issues apparently exist i.e. facts are asserted in the complaint
regarding which there is as yet no admission, disavowal or qualification; or
specific denials or affirmative defenses are in truth set out in the answer
but the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions. x x x.
Simply stated, what distinguishes a judgment on the pleadings from a
summary judgment is the presence of issues in the Answer to the
Complaint. When the Answer fails to tender any issue, that is, if it does not
deny the material allegations in the complaint or admits said material
allegations of the adverse partys pleadings by admitting the truthfulness
thereof and/or omitting to deal with them at all, a judgment on the
pleadings is appropriate.54 On the other hand, when the Answer specifically
denies the material averments of the complaint or asserts affirmative
defenses, or in other words raises an issue, a summary judgment is proper
provided that the issue raised is not genuine. "A genuine issue means an
issue of fact which calls for the presentation of evidence, as distinguished
from an issue which is fictitious or contrived or which does not constitute a
genuine issue for trial."55

In this case, we note that while petitioners Answer to respondents

Complaint practically admitted all the material allegations therein, it
nevertheless asserts the affirmative defenses that the action for revival of
judgment is not the proper action and that petitioners are not the proper
parties. As issues obviously arise from these affirmative defenses, a
judgment on the pleadings is clearly improper in this case.
However, before we consider this case appropriate for the rendition of
summary judgment, an examination of the issues raised, that is, whether
they are genuine issues or not, should first be made.
b) The issues raised are not genuine issues, hence rendition of summary
judgment is proper.
To resolve the issues of whether a revival of judgment is the proper action
and whether respondents are the proper parties thereto, the RTC merely
needed to examine the following: 1) the RTC Order dated September 13,
1989, to determine whether same is a judgment or final order
contemplated under Section 6, Rule 39 of the Rules of Court; and, 2) the
pleadings of the parties and pertinent portions of the records 56 showing,
among others, who among the respondents were oppositors to the land
registration case, the heirs of such oppositors and the present occupants of
the property. Plainly, these issues could be readily resolved based on the
facts established by the pleadings. A full-blown trial on these issues will
only entail waste of time and resources as they are clearly not genuine
issues requiring presentation of evidence.
Petitioners aver that the RTC should not have granted respondents
Motion for Judgment on the Pleadings and/or Summary Judgment because
of the controverted stipulations and the first three issues enumerated in
the Pre-trial Order, which, according to them, require the presentation of
evidence. These stipulations and issues, however, when examined,
basically boil down to questions relating to the propriety of the action
resorted to by respondents, which is revival of judgment, and to the proper
parties thereto the same questions which we have earlier declared as not
constituting genuine issues.
In sum, this Court holds that the instant case is proper for the rendition of
a summary judgment, hence, the CA committed no error in affirming the
May 21, 2001 Order of the RTC granting respondents Motion for Judgment
on the Pleadings and/or Summary Judgment.
II. The Complaint states a cause of action.

a) Judgment on the pleadings is not proper because petitioners Answer

tendered issues.

Petitioners contend that the complaint states no cause of action since the

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CIVPRO: Judgement
September 13, 1989 Order sought to be revived is not the judgment
contemplated under Section 6, Rule 39 of the Rules of Court. They also
aver that the RTC erred when it ordered the revival not only of the
September 13, 1989 Order but also of the July 24, 1985 CA Decision, when
what was prayed for in the complaint was only the revival of the former.
This Court, however, agrees with respondents that these matters have
already been sufficiently addressed by the RTC in its Order of May 9,
199757 and we quote with approval, viz:
The body of the Complaint as well as the prayer mentioned about the
executory decision of the Court of Appeals promulgated on July 24, 1985
that had to be finally implemented. So it appears to this Court that the
Complaint does not alone invoke or use as subject thereof the Order of this
Court which would implement the decision or judgment regarding the land
in question. The Rules of Court referring to the execution of judgment,
particularly Rule 39, Sec. 6, provides a mechanism by which the judgment
that had not been enforced within five (5) years from the date of its entry
or from the date the said judgment has become final and executory could
be enforced. In fact, the rule states: "judgment may be enforced by
action."
So in this Complaint, what is sought is the enforcement of a judgment
and the Order of this Court dated September 13, 1989 is part of the
process to enforce that judgment. To the mind of the Court, therefore, the
Complaint sufficiently states a cause of action.58 lawphi1
III. Any perceived defect in the SPA would not serve to bar the case from
proceeding.
Anent the SPA, we find that given the particular circumstances in the case
at bar, an SPA is not even necessary such that its efficacy or the lack of it

would not in any way preclude the case from proceeding. This is because
upon Roberto Sr.s death, Roberto Jr., in succession of his father, became a
co-owner of the subject property together with his mother, Beata. As a coowner, he may, by himself alone, bring an action for the recovery of the coowned property pursuant to the well-settled principle that "in a coownership, co-owners may bring actions for the recovery of co-owned
property without the necessity of joining all the other co-owners as coplaintiffs because the suit is presumed to have been filed for the benefit of
his co-owners."59
While we note that the present action for revival of judgment is not an
action for recovery, the September 13, 1989 Order sought to be revived
herein ordered the petitioners, among others, to vacate the subject
property pursuant to the final and executory judgment of the CA affirming
the CFIs adjudication of the same in favor of respondents. This Order was
issued after the failure to enforce the writ of execution and alias writ of
execution due to petitioners refusal to vacate the property. To this Courts
mind, respondents purpose in instituting the present action is not only to
have the CA Decision in the land registration case finally implemented but
ultimately, to recover possession thereof from petitioners. This action is
therefore one which Roberto Jr., as co-owner, can bring and prosecute
alone, on his own behalf and on behalf of his co-owner, Beata. Hence, a
dismissal of the case with respect to Beata pursuant to Sec. 5, 60 Rule 18 of
the Rules of Court will be futile as the case could nevertheless be
continued by Roberto Jr. in behalf of the two of them.
WHEREFORE, the Petition for Review on Certiorari is DENIED and the
assailed Decision of the Court of Appeals dated February 17, 2004 and
Resolution dated April 19, 2006 in CA-G.R. CV No. 72385 are AFFIRMED.
SO ORDERED.

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