G.R. No.

L-48955
BERNARDO BUSUEGO, petitioner,
vs.
HONORABLE COURT OF APPEALS, JOSE LAZARO, ROMEO
LAZARO and VIVENCIO LOPEZ, respondents.
Roque O. Santos for petitioner.
Oliver O. Lozano for respondents.
FELICIANO, J.:
In this petition for review on certiorari, petitioner asks us to set aside
the decision of the Court of Appeals in CA-G.R. No. SP-06556,
declaring null and void the judgment by default and the orders issued
by the Court of First Instance of Pasig 1 in Civil Case No. 18860.
On 20 January 1974, petitioner Bernardo Busuego commenced
action 2 before the Pasig Court of First Instance against Jose Lazaro,
Romeo Lazaro, Ernesto Lazaro, and Vivencio Lopez (three of whom
are respondents herein), to recover possession of a parcel of land and
a three (3) unit apartment house standing thereon, situated at No.
260-A. Bonifacio Avenue, Bo. Jesus de la Pena Marikina, Rizal.
Immediately thereafter, summons was issued in the name of the four
defendants and per sheriff's return, was personally served at the
address given in the complaint, upon the defendants "through
[defendant] Dr. Ernesto Lazaro, personally."
On 13 February 1974, defendants, through Atty. Gerardo B. Roldan,
Jr., filed a motion for an extension of fifteen (15) days to file answer,
stating that "his [Atty. Roldan's] services was (sic) secured by the
defendants formally only the other day," and that he "need[ed]
sufficient time to study the case, before filing any responsive pleading
or pleadings." 3 The motion was granted by the lower court in an order
dated 6 March 1974.
On 28 February 1974, defendants through Atty. Roldan asked for
another extension of ten (10) days to answer, as "[Atty. Roldan] has
not yet conferred with all of [the four (4) defendants] which [was]
necessary before any responsive pleading [could be] filed by
him." 4 The lower court granted this second extension in an order
dated 14 March 1974.
Notwithstanding the extensions granted, no answer was filed by the
defendants, for which reason, and upon motion of plaintiff Busuego,
the lower court declared the defendants in default in an order dated

20 May 1974. Subsequently, plaintiff's case was heard and his

evidence received, and on the basis of that evidence the trial court
rendered its decision 5 on 26 August 1974 in favor of the plaintiff.
Almost two years later, on 12 July 1976, plaintiff filed before the lower
court an ex parte motion for execution of the default judgment, which
the lower court granted in an order dated 18 August 1976.
On 3 September 1976, Romeo Lazaro, one of the defendants and a
respondent herein, "on his [own] behalf and on behalf of other
defendants," filed a motion to hold execution in abeyance praying that
"for humanitarian reasons, an extension of 30 days, within which to
vacate the premises [be allowed] to give them sufficient time to look
for another place where the five families composed mostly of little
children, can reside. 6
On 18 September 1976, the lower court granted Romeo's motion and
accordingly, the execution of the default judgment was held in
abeyance.
On 28 September 1976, the defendants through Atty. Roldan filed with
the lower court a motion for reconsideration of the judgment by
default and/or to dissolve the writ of execution, solely on the ground
that neither the defendants nor their counsel were ever furnished a
copy of the judgment by default. This motion was verified by Romeo
Lazaro who described himself as "one of the defendants in the-case"
and as "representing them [the defendants] in the instant pleadings
(sic]," and stated that "we [the defendants] have caused the filing of
this motion, have read the contents thereof and that all the allegations
[therein] are true and correct to the best of our knowledge and belief
" 7(Italics and brackets supplied). Upon opposition of petitioner, the
lower court denied the motion by order of 11 October 1976, finding the
above-motion to be purely dilatory in nature and plain harassment on
the part of the defendants.
On 3 November 1976, the respondents, through their new counsel,
Atty. Oliver Lozano, filed with the same court an omnibus motion,
which included a motion to lift the order of default, a second motion
for reconsideration and a motion to quash the writ of execution issued
pursuant to the default judgment, alleging for the first time that their
failure to answer was due to lack of notice.
Petitioner opposed vigorously the above motion contending that, the
defendants could not pretend absence of proper notice after they,

through counsel, had filed the two motions for extension of time to
answer.
On 27 December 1976, the lower court denied the omnibus motion,
holding the motion for extension of time to vacate filed by respondent
Romeo Lazaro for all the defendants to be equivalent to waiver of
service of summons.
On 10 January 1977, defendants, through their new counsel, filed what
in effect was a third motion for reconsideration of the judgment by
default, alleging that: the lower court never acquired jurisdiction over
their persons because of lack of proper service of summons; and that
the motion for extension of time to vacate the premises, filed by their
co-defendant Romeo Lazaro, after the judgment by default had
become executory, was not equivalent to waiver of summons.
The third motion for reconsideration having been denied, defendants
brought a petition for certiorari before the Court of Appeals, asserting
that the orders, judgment and writs complained of were all void for
want of jurisdiction over their persons.
On 13 July 1978, the Court of Appeals promulgated its
decision, 8 basically upholding the respondents' contention and
providing, in its dispositive portion, as follows:
WHEREFORE, this Court hereby renders judgment as follows:
(a) insofar as the petitioner Ernesto Lazaro is concerned, dismissing
the petition; and
(b) insofar as the petitioners Romeo Lazaro, Jose Lazaro and Vivencio
Lopez, are concerned, granting the petition and the writs prayed for,
declaring null and void the order of default, judgment by default,
order of execution, writ of execution, notice to vacate, order of
December 27, 1976, and order of March 21, 1977, issued in Civil Case
No. 18860 of the court below (Annexes B, D, E, I and M, petition, and
Annexes 6-A and 9, answer), and making permanent the restraining
order heretofore issued in these proceedings.

2. whether or not there was voluntary appearance by the respondents

as defendants below, through Atty. Gerardo B. Roldan and their corespondent Romeo Lazaro.
The issues raised may be further simplified into whether or not
jurisdiction was lawfully acquired by the court a quo over the persons
of the respondents Jose Lazaro, Romeo Lazaro and Vivencio Lazaro.
Basically, there are two (2) ways by which a court acquires jurisdiction
over the person of the defendant or respondent: (a) by service of
summons upon the defendant; and (b) by voluntary appearance of the
defendant in court and his submission to its authority.
With respect to service of summons, the Revised Rules of Court
prescribe that a copy of the summons be served personally upon the
defendant by "handing him a copy thereof in person or if he refuses to
receive it, by tendering it to him. 9 Personal service, however, may be
dispensed with and substituted service may be availed of if the
defendant cannot be served personally "within a reasonable time." 10
In the present case, it appears that the sheriff had availed of
substituted service in seeking to serve the summons upon all the
defendants by serving a copy thereof "through Dr. Ernesto Lazaro
personally." Perusal, however, of the sheriff's return 11 reveals that the
sheriff failed to specify therein what prior efforts, if any, had been
exerted to serve summons upon the other defendants personally
within a reasonable period of time, and the lack of success of such
efforts, before proceeding to substituted service. Such specification in
the sheriff's return is essential for enforcement of the rule under the
Revised Rules of Court that substituted service may be resorted to
only where it is not possible to serve the defendant or defendants
promptly in person. As this Court ruled in Keister vs. Navarro. 12
[T]he impossibility of prompt service in person should be shown by
stating the efforts made to find the defendant personally and the fact
that such efforts failed This statement should be made in the proof of
service. This is necessary because substituted service is in derogation
of the usual method of service.

Hence, the petition before us.

In their respective briefs, the parties posed the following issues:
1. whether or not there was a valid service of summons upon the
persons of respondents Romeo Lazaro, Jose Lazaro and Vivencio
Lopez.

We therefore uphold the respondent appellate court's finding that,

while Ernesto Lazaro was validly served, with respect to respondents
Jose Lazaro, Romeo Lazaro and Vivencio Lopez, there was no valid
service of summons effected. We are, nonetheless, unable to sustain
its conclusion that the trial court never acquired jurisdiction over the
persons of the said respondents.

As earlier noted, jurisdiction over the person of the defendant can also
be acquired by his voluntary appearance in court and his submission
to its authority, for voluntary appearance is equivalent to service of
summons. 13
As long ago as 1918, the essence of voluntary appearance was
explained by this Court through Mr. Justice Johnson in Flores vs.
Zurbito, 14 as follows:
A voluntary appearance is a waiver of the necessity of a formal
notice. An appearance in whatever form, without explicitly objecting
to the jurisdiction of the court over the person is a submission to the
jurisdiction of the court over the person. While the formal method of
entering an appearance in a cause pending in the courts is to deliver to
the clerk a written direction ordering him to enter the appearance of
the person who subscribes it, an appearance may be made by simply
filing a formal motion, or plea or answer. This formal method of
appearance is not necessary. He may appear without such formal
appearance and thus submit himself to the jurisdiction of the court.
He may appear by presenting a motion, for example, and unless by
such appearance he specifically objects to the jurisdiction of the
court, he thereby gives his assent to the jurisdiction of the court over
his person. When the appearance is by motion objecting to the
jurisdiction of the court over his person, it must be for
the sole and separate purpose of objecting to the jurisdiction of the
court. If his motion is for any other purpose than to object to the
jurisdiction of the court over his person he thereby submits himself to
the jurisdiction of the court. . . .
In the case before us, the defendants appeared before the trial court a
number of times without raising any objection to the improper service
of summons: (1) the defendants, through Atty. Gerardo Roldan,
appeared in court and filed two successive motions for extension of
time to file an answer to the complaint; (2) more than two years after
rendition of the judgment by default by the trial court, defendants,
through their co-defendant Romeo Lazaro, filed a motion for
extension of time within which to vacate the premises involved and to
look for another place to live in, raising no question concerning the
jurisdiction of the trial court over the persons of the defendants; and
(3) the defendants, through their counsel Atty. Roldan, moved for
reconsideration of the judgment of the trial court and for dissolution
of the writ of execution, again without contesting the jurisdiction of
the court over their persons. We hold that by anyone or more of these

acts, and certainly by the whole series of acts, the defendants,

respondents herein, effectively waived the initial lack of jurisdiction
over their persons and submitted to the authority of the trial court.
The respondents assert that only voluntary appearance during trial is
equivalent to waiver of service, and that therefore, the motion for
extension of time within which to vacate the premises filed by Romeo
Lazaro after trial and after rendition of judgment, was not equivalent
to waiver of Summons.
We are not persuaded by this argument of the respondents.
In Soriano vs. Palacio, 15 this Court, speaking through Mr. Justice
J.B.L. Reyes, held that:
Assuming, arguendo, that the court below originally did not acquire
jurisdiction over petitioner Soriano, the latter certainly submitted to
it when he filed his first motion for reconsideration and for
annulment of previous proceedings on 14 March 1960. Therefore, the
denial of that motion, by the order of 19 March 1960, was binding on
petitioner Soriano.
The respondents also cite a joint affidavit dated 5 February 1977
executed by some of them: Jose Lazaro, Ernesto Lazaro and Vivencio
Lopez, stating that they had not authorized Atty. Roldan nor Romeo
Lazaro to file any pleading on their behalf. 16 In another joint affidavit
dated 10 January 1977, Jose Lazaro and Romeo Lazaro asserted that
Romeo Lazaro had no authority to file the motion of 3 September 1976
seeking "for humanitarian reasons" an extension of time to vacate the
premises in question. In a third affidavit dated 5 February 1977, Atty.
Roldan in effect repudiates the motion for extension of time that he
had filed on 14 February 1974 with the trial court. In his 1977 affidavit,
Atty. Roldan states that he had instructed Mr. Romeo Lazaro to secure
the conformity of the other defendants to his serving as their counsel
before agreeing to represent them, that he had asked for an extension
of time to file an answer without the knowledge of the defendants to
gain time to confer with them and obtain a written agreement with
respect to his "proposed legal service;" that when the defendants again
failed to meet with him, he filed his second motion for extension to file
an answer to have "another opportunity to find out if the said
defendants would agree that [he] represent them;" that he eventually
abandoned the Idea of representing the defendants. 17
We are unable to give the above affidavits any credence or weight.
They appear to Us as very late second thoughts, transparently devised

to conform with the posture of "no voluntary appearance" adopted by

the defendants' subsequent counsel. Those affidavits were submitted
too late in the day, as it were, to avoid the effect of their voluntary
appearance before the trial court. The affidavits concerning lack of
authority of respondent Romeo Lazaro to file the motion pleading "for
humanitarian reasons" for an extension of time to locate an alternative
residence are thoroughly unpersuasive. We note, in this connection,
that all the defendants were not only immediate neighbors residing in
adjacent units of a single apartment house but also members of the
same family. Ernesto Lazaro is the father of respondents Jose Lazaro
and Romeo Lazaro. Thus, the natural tendency of Ernesto Lazaro,
upon receipt of the summons issued by the trial court, must have been
to inform his children living beside him about the summons; similarly,
the natural tendency of Romeo Lazaro must have been to inform his
father and brother and other relatives living in the same apartment
house about the steps taken to defer their ejectment.
The affidavit of Atty. Roldan is particularly deplorable. An attorney is
presumed to be authorized by his client in a case in which he
appears. 18 Thus, Atty. Roldan was correctly presumed by the trial
court to have been authorized by the defendants below to appear on
their behalf when he filed the motions for extension of time to answer
and, what is more, when he filed the first motion for reconsideration
of the judgment of the trial court. Either Atty. Roldan's 1977 affidavit
is plain perjury or he was misleading and trifling with and imposing
upon the trial court back in 1974. Even when an attorney is employed
by an unauthorized person to represent a client, the client will be
bound where he has knowledge of the fact that he is being represented
by an attorney in a particular litigation and takes no prompt measure
to repudiate the assumed authority. The security and finality of
judicial proceedings are matters of insistent public policy and require
that the evasions and tergiversations of unsuccessful litigants and
their counsel be firmly rejected and not permitted to overcome the
presumption of authority on the part of an attorney. 19
WHEREFORE, the decision of the Court of Appeals is hereby
REVERSED and SET ASIDE insofar as concerns respondents Romeo
Lazaro, Jose Lazaro and Vivencio Lopez. With respect, however, to
defendant Ernesto Lazaro, same decision is hereby AFFIRMED. This
decision is immediately executory. Costs against respondents.
Furthermore, Atty. Gerardo B. Roldan, Jr. and Atty. Oliver O. Lozano
are hereby required to show cause, within ten (10) days from notice

hereof, why they should not be subject to disciplinary action for

abusing court proceedings.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
SECOND DIVISION
G.R. No. 157447. April 29, 2005
NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS
B. BUENA, EUSEBIA V. TABLADA, CANUTO G. TISBE,
DAVID R. CARULLO, SOFONIAS E. COLEGADO, FELIX B.
BUENA, TORIBIO C. EVANGELISTA, LEBRADA A.
NICOLAS, ALECIA J. RAMOS, MILA G. DE LOS REYES,
SALVADOR I. DE LA TORRE, MOISES CRUZ, RUFINO
INFANTE, ALICIA ASTROLOGO, TRINIDAD LUMIQUED,
LUZMINIDA QUINIQUINI, & TEODORA C.
TEMERAS, Petitioners,
vs.
CARMELINO M. SANTIAGO, Respondents.
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review under Rule 45 of the Rules of Court,
petitioners pray for the reversal of the Decision of the Court of
Appeals in CA-G.R. CV No. 64957,1 affirming the Order of the
Regional Trial Court (RTC) of San Mateo, Rizal, Branch 77, in Civil
Case No. 1220,2 dismissing petitioners Complaint for declaration of
nullity of Original Certificate of Title (OCT) No. 670 and all other titles
emanating therefrom.
In their Complaint, petitioners alleged that they occupied and
possessed parcels of land, located in Sitio Panayawan, Barangay San
Rafael, Montalban (now Rodriquez), Province of Rizal (Subject
Property), by virtue of several Deeds of Assignment, dated 15 April
1994 and 02 June 1994, executed by a certain Ismael Favila y
Rodriguez.3
According to the Deeds of Assignment, the Subject Property was part
of a vast tract of land called "Hacienda Quibiga," which extended to
Paraaque, Las Pias, Muntinlupa, Cavite, Batangas, Pasay, Taguig,
Makati, Pasig, Mandaluyong, Quezon City, Caloocan, Bulacan, and
Rizal; awarded to Don Hermogenes Rodriguez by the Queen of Spain
and evidenced by a Spanish title. Ismael Favila claimed to be one of
the heirs and successors-in-interest of Don Hermogenes Rodriguez.
Acting as Attorney-in-Fact pursuant to a Special Power of Attorney
executed by his "mga kapatid" on 25 February 1965, Ismael Favila
signed the aforementioned Deeds of Assignment, assigning portions of

the Subject Property to the petitioners, each portion measuring

around 500 to 1,000 square meters, in exchange for the labor and
work done on the Subject Property by the petitioners and their
predecessors.4
Petitioners came by information that respondent was planning to evict
them from the Subject Property. Two of the petitioners had actually
received notices to vacate. Their investigations revealed that the
Subject Property was included in Transfer Certificates of Titles (TCTs)
No. 53028, No. 281660, No. N-39258 and No. 205270, all originating
from OCT No. 670, and now in the name of respondent. 5
OCT No. 670 was issued in the name of respondents mother, Isabel
Manahan y Francisco, and three other individuals, pursuant to Decree
No. 10248, dated 13 February 1913, in Case No. 8502 of the Court of
Land Registration of the Philippine Islands. The whole property
covered by OCT No. 670 was subsequently adjudicated in favor of
Isabel Manahan Santiago (formerly Isabel Manahan y Francisco).
Consequently, OCT No. 670 was cancelled and TCT No. T-53028 was
issued exclusively in the name of Isabel Manahan Santiago. On 28
December 1968, Isabel Manahan Santiago executed a Deed of
Donation transferring the property to her son, respondent herein, who
subsequently secured TCTs No. 281660, No. N-39258 and No. 205270
in his own name.6
Petitioners filed with the trial court, on 29 April 1996, an action for
declaration of nullity of respondents certificates of title on the basis
that OCT No. 670 was fake and spurious. Among the defects of OCT
No. 670 pointed out by petitioners were that: (1) OCT No. 670 was not
signed by a duly authorized officer; (2) Material data therein were
merely handwritten and in different penmanships; (3) OCT No. 670
was not printed on the Official Form used in 1913, the year it was
issued; (4) It failed to indicate the Survey Plan which was the basis of
the Technical Description of the property covered by the title; (5)
Decree No. 10248 referred to in OCT No. 670 was issued only on 11
April 1913, while OCT No. 670 was issued earlier, on 13 February 1913;
and (6) Decree No. 10248 was issued over a property other than the
one described in OCT No. 670, although also located in the Province of
Rizal.7
Respondent filed his Answer with Prayer for Preliminary Hearing on
the Affirmative Defenses on 03 July 1996. According to respondent,
"[t]he allegations in the Complaint would readily and patently show

that the same are flimsy, fabricated, malicious, without basis in law
and in fact"8
As an affirmative defense, respondent claimed that the petitioners had
no legal capacity to file the Complaint, and thus, the Complaint stated
no cause of action. Since OCT No. 670 was genuine and authentic on
its face, then OCT No. 670 and all of respondents land titles derived
therefrom, are incontrovertible, indefeasible and conclusive against
the petitioners and the whole world.9
Citing the consolidated cases of Director of Forestry, et al. v. Hon.
Emmanuel M. Muoz, et al. and Pinagcamaligan Indo-Agro
Development Corporation v. Hon. Macario Peralta, Jr., et
al.,10 respondent argued that the Spanish title, on which petitioners
based their claim, was neither indefeasible nor imprescriptible.
Moreover, Presidential Decree (P.D.) No. 892, which took effect on 16
February 1976, required all holders of Spanish titles or grants to apply
for registration of their lands under Republic Act No. 496, otherwise
known as the Land Registration Act,11 within six months from
effectivity of the decree. After the given period, Spanish titles could no
longer be used as evidence of land ownership in any registration
proceedings under the Torrens System. 12
Respondent also raised the affirmative defense of prescription. He
pointed out that any action against his certificates of title already
prescribed, especially with regard to OCT No. 670, which was issued
in 1913 or more than 83 years prior to the filing of the Complaint by
the petitioners. At the very least, respondent contended, "it must be
presumed that the questioned land titles were issued by the public
officials concerned in the performance of their regular duties and
functions pursuant to the law."13
Even assuming arguendo that the petitioners entered and occupied
the Subject Property, they did so as mere intruders, squatters and
illegal occupants, bereft of any right or interest, since the Subject
Property was already covered by Torrens certificates of title in the
name of respondent and his predecessors-in-interest.14
Lastly, respondent denied knowing the petitioners, much less,
threatening to evict them. In fact, petitioners were not included as
defendants in Civil Case No. 783 entitled, "Carmelino M. Santiago v.
Remigio San Pascual, et al.," which respondent instituted before the
same trial court against squatters occupying the Subject Property. In

its decision, dated 01 July 1992, the trial court held that "there is no
doubt that the plaintiff (respondent herein) is the owner of the land
involved in this case on which the defendants have built their houses
and shanties" Although the decision in Civil Case No. 783 was
appealed to the Court of Appeals, it had become final and executory
for failure of the defendants-appellants therein to file their appellants
brief.15
In the instant case, the trial court held a preliminary hearing on the
affirmative defenses as prayed for by the respondent. During said
hearing, petitioners presented their lone witness, Engineer Placido
Naval, a supposed expert on land registration laws. In response to
questions from Honorable Judge Francisco C. Rodriguez of the trial
court, Engineer Naval answered that a parcel of land titled illegally
would revert to the State if the Torrens title was cancelled, and that it
was the State, through the Office of the Solicitor General, that should
file for the annulment or cancellation of the title. Respondent, on the
other hand, did not present any evidence but relied on all the
pleadings and documents he had so far submitted to the trial court. 16
After the preliminary hearing, the trial court issued the questioned
Order, dated 05 February 1999, dismissing petitioners Complaint.
Pertinent portions of the Order of the trial court read:
After considering the testimonial and documentary evidence
presented, this Court is inclined not to grant plaintiffs (sic) prayer.
Finding credence and giving weight to plaintiffs (sic) lone but "expert
witness", it is crystal clear that, to quote:
1. "a parcel of land titled illegally will revert to the State
2. it is the State who must file the corresponding case of annulment of
title through the Office of the Solicitor General, and
3. a land illegally titled in the name of private individual, the State
through the Office of the Solicitor General should file the
corresponding case for cancellation of title." (TSN August 26, 1997).
The above quoted testimony is straight from horse (sic) mouth so to
speak as this was the testimony of the plaintiffs (sic) expert witness.
And judging from the said testimony alone aforecited, plaintiffs (sic)
cause [of action] is bound to fail. "Plaintiffs (sic) own testimony" wrote
"finis" to their case. From the record, this case was initiated and filed
by private individuals, Nemencio Evangelista, et. al., contradicting
their witness (sic) testimony. To reiterate, this Court finds credence to
the testimony of the plaintiffs (sic) witness, i.e., is (sic) the State
through the Office of the Solicitor General who must initiate and file a

case of this nature when title to a land is being claimed to be obtained

through fraud and allegedly spurious.
The opinion of this Court anent the testimony of the witness is not
without basis. Explicit is the pronouncement of the Supreme Court in
the recent case of Heirs of Marciano Nagano v. Court of Appeals, to
wit:
An action for reversion has to be instituted by the Solicitor General
pursuant to Section 101, Commonwealth Act No. 141. (282 SCRA 43).
As to the documentary evidence, having gone through with the "Deed
of Assignment/s" purportedly executed by and between a certain
Ismael Favila y Rodriguez and the plaintiffs, which is the principal if
not the only basis of plaintiffs claim ownership and possession of the
subject parcel of land, the same does not hold water in a manner of
speaking, for being self-serving. "Assignor Ismael Favila y Rodriguez"
claimed in said Deed that he is the Attorney-in-Fact by virtue of an
alleged Special Power of Attorney executed in his favor by his "mga
kapatid" on February 23, 1965, but said Special Power of Attorney was
not presented before this Court, thus there arises a doubt as to its
existence and execution not to mention doubt on the existence of his
"mga kapatid" who as alleged executed said Special Power Attorney
(sic) in his favor.
Even if this Court granting arguendo would admit the authenticity of
said "Deeds of Assignment/s", that will not alter the outcome of the
pending incident/s before this Court. Why? Because the said "Deed of
Assignment/s" which were based on Spanish title have lost their
evidentiary value pursuant to the Presidential Decree No. 892 i.e.
"DISCONTINUANCE OF THE SPANISH MORTGAGE SYSTEM OF
REGISTRATION AND OF THE USE OF SPANISH TITLES AS
EVIDENCE IN LAND REGISTRATION PROCEEDINGS."

There is no need to elaborate on the above-cited provisions of PD 892

as they are self-explanatory. Suffice it to say that there is no showing,
that plaintiffs complied with the said law i.e. to "apply for registration
of their lands under Act No. 496, otherwise known as the Land
Registration Act, within six (6) months from the effectivity of this
decree (February 16, 1976). Thereafter, Spanish titles cannot be used
as evidence of land ownership in any registration proceedings under
the Torrens System."

This being the case and likewise being clear that plaintiffs were not the
lawful owners of the land subject of this case, for they did not comply
with PD 892, the said plaintiffs do not have the legal standing to bring
before this Court the instant complaint
Moreover, the principal issue in this case is for the declaration of
nullity of defendants title, which has nothing to do with plaintiffs (sic)
claim of ownership and possession even if we set aside, albeit
momentarily, the truth that plaintiffs (sic) claim were based on barred
Spanish Title/s, and thus plaintiffs were never the owners of the parcel
of land subject of this case.
Further, defendants (sic) title especially so with the mother title OCT
670 was entered and issued in 1913 or more than Eighty Three (83)
years ago, the same not having been questioned by any party. Only
now that it is being questioned, but sad to say, plaintiffs who are on
the offensive and relying on their lone expert witness, instead of
bolstering their case, unwittingly sealed their fate 17
After the trial court denied petitioners Motion for Reconsideration in
its Order, dated 20 July 1999,18 petitioners appealed both Orders of
the trial court to the Court of Appeals.
The Court of Appeals, in its Decision, dated 29 July 2002, 19 affirmed
the Order of the trial court, dated 05 February 1999, dismissing
petitioners Complaint. The Court of Appeals denied petitioners
Motion for Reconsideration in its Resolution, dated 14 February
2003.20
Thus, petitioners filed this Petition for Review 21 under Rule 45 of the
Rules of Court, raising the following issues and praying for the
reversal of the aforementioned Decision of the Court of Appeals
affirming the Order of dismissal of the trial court:
I. Whether the lower courts dismissal of the petitioners complaint
should be proscribed by the rules of evidence it being based inter
alia on Engr. Navals testimony, which was indisputably not based on
facts but conclusion of law.
II. Whether the lower courts dismissal of petitioners complaint
should be proscribed by the rules of evidence it being done sans ample
evidence except bare allegations of respondent.

III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be
used as evidence of land ownership in any registration proceedings
under the Torrens system, holds of an exception.
IV. Whether an action for quieting of title, specifically where
petitioners are in possession of subject land, can be subject of
prescription.
In his Comment,22 the respondent, for the most part, reiterated the
findings of the trial court and the Court of Appeals.
The Court believes that the trial court rightfully dismissed petitioners
Complaint, but for reasons different from those relied upon by the
trial court and the Court of Appeals.
According to the respondent, petitioners had no legal capacity to file
the Complaint, and thus, the Complaint filed before the trial court
stated no cause of action.
Before anything else, it should be clarified that "the plaintiff has no
legal capacity to sue"23 and "the pleading asserting the claim states no
cause of action"24 are two different grounds for a motion to dismiss or
are two different affirmative defenses. Failure to distinguish between
"the lack of legal capacity to sue" from "the lack of personality to sue"
is a fairly common mistake. The difference between the two is
explained by this Court in Columbia Pictures, Inc. v. Court of
Appeals:25
Among the grounds for a motion to dismiss under the Rules of Court
are lack of legal capacity to sue and that the complaint states no cause
of action. Lack of legal capacity to sue means that the plaintiff is not in
the exercise of his civil rights, or does not have the necessary
qualification to appear in the case, or does not have the character or
representation he claims. On the other hand, a case is dismissible for
lack of personality to sue upon proof that the plaintiff is not the real
party-in-interest, hence grounded on failure to state a cause of action.
The term "lack of capacity to sue" should not be confused with the
term "lack of personality to sue." While the former refers to a
plaintiffs general disability to sue, such as on account of minority,
insanity, incompetence, lack of juridical personality or any other
general disqualifications of a party, the latter refers to the fact that the
plaintiff is not the real party- in-interest. Correspondingly, the first
can be a ground for a motion to dismiss based on the ground of lack of
legal capacity to sue; whereas the second can be used as a ground for a

motion to dismiss based on the fact that the complaint, on the face
thereof, evidently states no cause of action.
In the present case, this Court may assume that the respondent is
raising the affirmative defense that the Complaint filed by the
petitioners before the trial court stated no cause of action because the
petitioners lacked the personality to sue, not being the real party-ininterest. It is the respondents contention that only the State can file
an action for annulment of his certificates of title, since such an action
will result in the reversion of the ownership of the Subject Property to
the State.
The affirmative defense that the Complaint stated no cause of action,
similar to a motion to dismiss based on the same ground, requires
a hypothetical admission of the facts alleged in the Complaint. In
the case of Garcon v. Redemptorist Fathers,26 this Court laid down the
rules as far as this ground for dismissal of an action or affirmative
defense is concerned:
It is already well-settled by now that, in a motion to dismiss a
complaint based on lack of cause of action, the question submitted to
the court for determination is the sufficiency of the allegations of fact
made in the complaint to constitute a cause of action, and not on
whether these allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint;
that the test of the sufficiency of the facts alleged in the complaint is
whether or not, admitting the facts alleged, the court could render a
valid judgment upon the same in accordance with the prayer of said
complaint. Stated otherwise, the insufficiency of the cause of action
must appear in the face of the complaint in order to sustain a
dismissal on this ground, for in the determination of whether or not a
complaint states a cause of action, only the facts alleged therein and
no other matter may be considered, and the court may not inquire into
the truth of the allegations, and find them to be false before a hearing
is had on the merits of the case; and it is improper to inject in the
allegations of the complaint facts not alleged or proved, and use these
as basis for said motion.
In resolving whether or not the Complaint in the present case stated a
cause of action, the trial court should have limited itself to examining
the sufficiency of the allegations in the Complaint. It was proscribed
from inquiring into the truth of the allegations in the Complaint or the
authenticity of any of the documents referred or attached to the

Complaint, since these are deemed hypothetically admitted by the

respondent. The trial court evidently erred in making findings as to
the authenticity of the Deeds of Assignment executed by Ismael Favila
in favor of petitioners on 15 April 1994 and 02 June 1994; and
questioning the existence and execution of the Special Power of
Attorney in favor of said Ismael Favila by his siblings on 25 February
1965. These matters may only be resolved after a proper trial on the
merits.
Petitioners alleged in their Complaint, and respondent hypothetically
admitted that: (1) Petitioners predecessors-in-interest, in the concept
of owners, had been in actual, physical, open, continuous and adverse
possession of the Subject Property against the whole world since time
immemorial; (2) The Subject Property was part of the vast tract of
land called "Hacienda Quibiga" awarded to Don Hermogenes
Rodriguez by the Queen of Spain by virtue of a Spanish title; (3)
Ismael Favila, an heir and successor-in-interest of Don Hermogenes
Rodriguez, acting as Attorney-in-Fact pursuant to a Special Power of
Attorney executed by his "mga kapatid" on 25 February 1965,
executed Deeds of Assignment covering the Subject Property in favor
of petitioners; (4) Petitioners still occupied and possessed the Subject
Property, on which their houses were erected, when they discovered
that the Subject Property was already covered by Torrens certificates
of title in the name of respondent; and (5) That petitioners filed the
Complaint to prevent their eviction by the respondent. To determine
whether these allegations are sufficient to constitute a cause of action,
it is important for this Court to establish first the nature of petitioners
action.
Indeed, petitioners Complaint filed before the trial court was
captioned as an action for declaration of nullity of respondents
certificates of title. However, the caption of the pleading should not be
the governing factor, but rather the allegations therein should
determine the nature of the action, because even without the prayer
for a specific remedy, the courts may nevertheless grant the proper
relief as may be warranted by the facts alleged in the Complaint and
the evidence introduced.27
The trial court believed that petitioners action was ultimately one for
reversion of the Subject Property to the public domain. Based on the
testimony of Engineer Naval and the case of Nagao v. Court of
Appeals,28 it declared that the State, represented by the Office of the
Solicitor General, is the party-in-interest in an action for cancellation

of a certificate of title illegally issued in the name of a private

individual, because the eventual effect of such cancellation is the
reversion of the property to the State.
The Court disagrees in this pronouncement of the trial court, and calls
for a far closer review of its decision in Nagao v. Court of
Appeals,29 wherein the Court held that
It is then clear from the allegations in the complaint that private
respondents claim ownership of the 2,250 square meter portion for
having possessed it in the concept of an owner, openly, peacefully,
publicly, continuously and adversely since 1920. This claim is an
assertion that the lot is private land, or that even assuming it was part
of the public domain, private respondents had already acquired
imperfect title thereto under Section 48(b) of C.A. No. 141, otherwise
known as the Public Land Act, as amended by R.A. No. 1942
Under Section 48, a subject lot is, for all legal intents and purposes,
segregated from the public domain, because the beneficiary is
"conclusively presumed to have performed all the conditions essential
to a Government grant and shall be entitled to a certificate of title
under the provisions of this chapter."
Consequently, merely on the basis of the allegations in the complaint,
the lot in question is apparently beyond the jurisdiction of the
Director of the Bureau of Lands and could not be the subject of a Free
Patent. Hence, dismissal of private respondents complaint was
premature and trial on the merits should have been conducted to
thresh out evidentiary matters.
It would have been entirely different if the action were clearly for
reversion, in which case, it would have to be instituted by the Solicitor
General pursuant to Section 101 of C.A. No. 141, which provides:
Sec. 101. All actions for the reversion to the Government of lands of
the public domain or improvements thereon shall be instituted by the
Solicitor General or the officer acting in his stead, in the proper courts,
in the name of the [Republic] of the Philippines.
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of
Honorio Dacut,30 the difference between an action for declaration of
nullity of land titles from an action for reversion was more thoroughly
discussed as follows:

An ordinary civil action for declaration of nullity of free patents and

certificates of title is not the same as an action for reversion. The
difference between them lies in the allegations as to the character of
ownership of the realty whose title is sought to be nullified. In an
action for reversion, the pertinent allegations in the complaint would
admit State ownership of the disputed land. Hence, in Gabila vs.
Barriga [41 SCRA 131], where the plaintiff in his complaint admits
that he has no right to demand the cancellation or amendment of the
defendants title because even if the title were canceled or amended
the ownership of the land embraced therein or of the portion affected
by the amendment would revert to the public domain, we ruled that
the action was for reversion and that the only person or entity entitled
to relief would be the Director of Lands.
On the other hand, a cause of action for declaration of nullity of free
patent and certificate of title would require allegations of the plaintiffs
ownership of the contested lot prior to the issuance of such free patent
and certificate of title as well as the defendants fraud or mistake, as
the case may be, in successfully obtaining these documents of title
over the parcel of land claimed by plaintiff. In such a case, the nullity
arises strictly not from the fraud or deceit but from the fact that the
land is beyond the jurisdiction of the Bureau of Lands to bestow and
whatever patent or certificate of title obtained therefore is
consequently void ab initio. The real party-in-interest is not the State
but the plaintiff who alleges a pre-existing right of ownership over the
parcel of land in question even before the grant of title to the
defendant
In their Complaint, petitioners never alleged that the Subject Property
was part of the public domain. On the contrary, petitioners asserted
title over the Subject Property by virtue of their actual, physical, open,
continuous and adverse possession thereof, in the concept of owners,
by themselves and through their predecessors-in-interest, since time
immemorial. The Deeds of Assignment executed in their favor and
attached to their Complaint referred to a Spanish title granted by the
Queen of Spain to their predecessor-in-interest, Don Hermogenes
Rodriguez. Clearly, petitioners are asserting private title over the
Subject Property, and consequently, their action could not be one for
reversion.
In their instant Petition, petitioners further averred that rather than
an action for nullity of respondents certificates of title, theirs was

more appropriately an action to remove a cloud on or to quiet their

title over the Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of
title, provides that:
Art. 476. Whenever there is a cloud on title to real property or any
interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast
upon title to real property or any interest therein.
Respondents certificates of title over the Subject Property appeared
valid or effective; but according to the petitioners, they were fake,
spurious and/or fraudulent, and a cloud on their title to the same
property that needed to be removed. A cloud on title has been defined
as follows:
Cloud on Title. A cloud on title is an outstanding instrument,
record, claim, encumbrance or proceeding which is actually invalid or
inoperative, but which may nevertheless impair or affect injuriously
the title to property. The matter complained of must have a prima
facie appearance of validity or legal efficacy. The cloud on title is a
semblance of title which appears in some legal form but which is in
fact unfounded. The invalidity or inoperativeness of the instrument is
not apparent on the face of such instrument, and it has to be proved
by extrinsic evidence31
Even as this Court agrees with the petitioners that their action was one
for removal of a cloud on or quieting of title, it does arrive at the same
conclusion as the trial court and the Court of Appeals that petitioners
had no personality to file the said action, not being the parties-ininterest, and their Complaint should be dismissed for not stating a
cause of action.
According to Article 477 of the Civil Code, the plaintiff, in an action to
remove a cloud on or to quiet title, must have legal or equitable title
to, or interest in, the real property which is the subject matter of the
action.32 Petitioners failed to establish in their Complaint that they
had any legal or equitable title to, or legitimate interest in, the Subject

Property so as to justify their right to file an action to remove a cloud

on or to quiet title.
Title to real property refers to that upon which ownership is based. It
is the evidence of the right of the owner or the extent of his interest, by
which means he can maintain control and, as a rule, assert right to
exclusive possession and enjoyment of the property.33
In their Complaint, petitioners claimed title to the Subject Property by
virtue of their actual and continuous possession of the same since time
immemorial, by themselves and through their predecessors-ininterest. Yet, the Deeds of Assignment executed by Ismael Favila in
their favor, attached to and an integral part of their Complaint,
revealed that petitioners predecessors-in-interest based their right to
the Subject Property on the Spanish title awarded to Don Hermogenes
Rodriguez.
There existed a contradiction when petitioners based their claim of
title to the Subject Property on their possession thereof since time
immemorial, and at the same time, on the Spanish title granted to
Don Hermogenes Rodriguez. Possession since time immemorial
carried the presumption that the land had never been part of the
public domain or that it had been private property even
before the Spanish conquest.34 If the Subject Property was
already private property before the Spanish conquest, then it would
have been beyond the power of the Queen of Spain to award or grant
to anyone.
The title to and possession of the Subject Property by petitioners
predecessors-in-interest could be traced only as far back as the
Spanish title of Don Hermogenes Rodriguez. Petitioners, having
acquired portions of the Subject Property by assignment, could
acquire no better title to the said portions than their predecessors-ininterest, and hence, their title can only be based on the same Spanish
title.
Respondent maintained that P.D. No. 892 prevents petitioners from
invoking the Spanish title as basis of their ownership of the Subject
Property. P.D. No. 892 strengthens the Torrens system by
discontinuing the system of registration under the Spanish Mortgage
Law, and by categorically declaring all lands recorded under the latter
system, not yet covered by Torrens title, unregistered lands. It further
provides that within six months from its effectivity, all holders of
Spanish titles or grants should apply for registration of their land

under what is now P.D. No. 1529, otherwise known as the Land
Registration Decree. Thereafter, Spanish titles can no longer be used
as evidence of land ownership in any registration proceedings under
the Torrens system. 35 Indubitably, P.D. No. 892 divests the Spanish
titles of any legal force and effect in establishing ownership over real
property.
P.D. No. 892 became effective on 16 February 1976. The successors of
Don Hermogenes Rodriguez had only until 14 August 1976 to apply for
a Torrens title in their name covering the Subject Property. In the
absence of an allegation in petitioners Complaint that petitioners
predecessors-in-interest complied with P.D. No. 892, then it could be
assumed that they failed to do so. Since they failed to comply with P.D.
No. 892, then the successors of Don Hermogenes Rodriguez were
already enjoined from presenting the Spanish title as proof of their
ownership of the Subject Property in registration proceedings.
Registration proceedings under the Torrens system do not create or
vest title, but only confirm and record title already created and
vested.36 By virtue of P.D. No. 892, the courts, in registration
proceedings under the Torrens system, are precluded from accepting,
confirming and recording a Spanish title. Reason therefore dictates
that courts, likewise, are prevented from accepting and indirectly
confirming such Spanish title in some other form of action brought
before them (i.e., removal of cloud on or quieting of title), only short
of ordering its recording or registration. To rule otherwise would open
the doors to the circumvention of P.D. No. 892, and give rise to the
existence of land titles, recognized and affirmed by the courts, but
would never be recorded under the Torrens system of registration.
This would definitely undermine the Torrens system and cause
confusion and instability in property ownership that P.D. No. 892
intended to eliminate.
Petitioners argued that the Spanish title may still be presented as
proof of ownership on the basis of the exception provided in the fourth
whereas clause of P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought
under the operation of the Torrens system, being subject to
prescription, are now ineffective to prove ownership unless
accompanied by proof of actual possession; . . .
Since Petitioners alleged that they were in actual possession of the
Subject Property, then they could still present the Spanish title as
evidence of their ownership of the Subject Property. 37

This Court cannot sustain petitioners argument. Actual proof of

possession only becomes necessary because, as the same whereas
clause points out, Spanish titles are subject to prescription. A holder of
a Spanish title may still lose his ownership of the real property to the
occupant who actually possesses the same for the required
prescriptive period.38 Because of this inherent weakness of a Spanish
title, the applicant for registration of his Spanish title under the
Torrens system must also submit proof that he is in actual possession
of the real property, so as to discount the possibility that someone else
has acquired a better title to the same property by virtue of
prescription.
Moreover, legislative intent must be ascertained from a consideration
of the statute as a whole, and not just a particular provision alone. A
word or phrase taken in the abstract may easily convey a meaning
quite different from the one actually intended and evident when the
word or phrase is considered with those with which it is associated. An
apparently general provision may have a limited application if read
together with other provisions of the statute.39
The fourth whereas clause of P.D. No. 892 should be interpreted and
harmonized with the other provisions of the whole statute. 40 Note that
the tenor of the whole presidential decree is to discontinue the use of
Spanish titles and to strip them of any probative value as evidence of
ownership. It had clearly set a deadline for the filing of applications
for registration of all Spanish titles under the Torrens system (i.e., six
months from its effectivity or on 14 August 1976), after which, the
Spanish titles may no longer be presented to prove ownership.
All holders of Spanish titles should have filed applications for
registration of their title on or before 14 August 1976. In a land
registration proceeding, the applicant should present to the court his
Spanish title plus proof of actual possession of the real property.
However, if such land registration proceeding was filed and initiated
after 14 August 1976, the applicant could no longer present his
Spanish title to the court to evidence his ownership of the real
property, regardless of whether the real property was in his actual
possession.
Therefore, the fact that petitioners were in actual possession of the
Subject Property when they filed the Complaint with the trial court on
29 April 1996 does not exclude them from the application of P.D. No.
892, and their Spanish title remain inadmissible as evidence of their

ownership of the Subject Property, whether in a land registration

proceeding or in an action to remove a cloud on or to quiet title.
The preceding discussion does not bar holders of Spanish titles from
claiming ownership of the real property on some other basis, such as
those provided in either the Land Registration Decree41 or the Public
Land Act.42Petitioners though failed to allege any other basis for their
titles in their Complaint aside from possession of the Subject Property
from time immemorial, which this Court has already controverted;
and the Spanish title, which is already ineffective to prove ownership
over the Subject Property.
Therefore, without legal or equitable title to the Subject Property, the
petitioners lacked the personality to file an action for removal of a
cloud on, or quieting of, title and their Complaint was properly
dismissed for failing to state a cause of action. In view of the dismissal
of the case on this ground, it is already unnecessary for this Court to
address the issue of prescription of the action.
Wherefore, this Court DENIES the instant petition and AFFIRMS the
Decision of the Court of Appeals, dated 29 July 2002, and the Order of
the Regional Trial Court of San Mateo, Rizal, Branch 77, dated 05
February 1999, dismissing petitioners Complaint for failure to state a
cause of action.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 171137
June 5, 2009
PHILIPPINE COMMERCIAL INTERNATIONAL
BANK, Petitioner,
vs.
SPOUSES WILSON DY HONG PI and LOLITA DY and
SPOUSES PRIMO CHUYACO, JR. and LILIA
CHUYACO, Respondents.
DECISION
PUNO, C.J.:
Before the Court is a petition for review on certiorari assailing the
Decision1 dated July 18, 2005 of the Court of Appeals in CAG.R. SP.
No. 85282, and its Resolution2 dated January 10, 2006, denying
petitioners motion for reconsideration.
Spouses Damian and Tessie Amadeo are indebted to petitioner
Philippine Commercial International Bank, a domestic uni-banking
corporation, as sureties for Streamline Cotton Development
Corporation. The promissory notes became due and demandable, but
the Amadeo spouses failed to pay their outstanding obligations despite
repeated demands. As of February 15, 1994, these obligations stood at
Ten Million, Six Hundred Seventy-One Thousand, Seven Hundred
Twenty-Six Pesos and Sixty-One Centavos (P10,671,726.61).
Petitioner subsequently discovered that roughly a month before the
due date of the promissory notes, the Amadeo spouses (i) sold three
(3) or nearly all of their real properties to respondents, Spouses
Wilson and Lolita Dy and Spouses Primo and Lilia Chuyaco, and (ii)
immediately caused the transfer of the titles covering the parcels of
land in favor of the latter. The consideration for these sales was
further alleged to have been grossly insufficient or inadequate.
Believing that the transfers were done in fraud of creditors, petitioner
instituted an action for rescission and damages on April 22, 1994. In
its Complaint3 in Civil Case No. 94-1585 against Spouses Amadeo, Dy
and Chuyaco, petitioner asked the Regional Trial Court of Makati City
for the following reliefs:
1. Annulling the Deeds of Absolute Sale both dated September 16,
1993 and thereafter, direct the Registries of Deeds of Sultan Kudarat
and Davao City to cancel the Transfer Certificates of Title Nos. (sic) T-

27628, T-202868, and T-202869 issued in the name of Wilson Dy

Hong Pi and Lolita G. Dy AND Primo Chuyaco, Jr. and Lilia O.
Chuyaco, respectively, and in lieu thereof, issue new ones under the
name of Damian and Tessie Amadeo.
2. Ordering the defendants to pay the plaintiff moral damages in the
sum of P200,000.00; exemplary damages in the sum of P200,000.00;
and P100,000.00 as[,] and for[,] attorneys fees.4
The case was then raffled to Branch 133, presided over by Judge
Napoleon E. Inoturan.
Upon service of summons on the Amadeo spouses, the latter filed a
Motion to Dismiss5 on the ground that the Complaint violated the
explicit terms of Supreme Court Circular No. 04-94, as the
Verification was executed by petitioners legal counsel. 6 Petitioner
filed its Opposition to the Motion to Dismiss,7where it argued that (i)
the rule cited by the Amadeo spouses should not be applied literally,
and (ii) at any rate, petitioners legal counsel was authorized by
petitioner to institute the Complaint.8 On February 4, 1995, the trial
court issued an Order9 denying the Motion to Dismiss.
The Amadeo spouses subsequently filed an Answer10 where they
alleged that petitioner failed to release the loans to Streamline Cotton
Development Corporation on the agreed date, thereby constraining
them to incur loans from third parties at high interest rates to keep
the company afloat. These loans were covered by postdated checks
which had to be funded once the obligations fell due, lest the Amadeo
spouses face criminal prosecution. In order to pay the said loans, they
thus had to sell the properties subject of this case. The Amadeo
spouses further claimed that the purchase price for the three (3)
parcels of land was the fair market value, and that they had other
personal and real properties which may be availed of to answer for
their obligations. In their Counterclaim, they prayed for moral
damages of P200,000.00, attorneys fees and expenses of litigation.
Petitioner filed its Reply and Answer to Counterclaim 11 on March 8,
1995.
On September 13, 1995, petitioner filed an Ex Parte Motion for Leave
to Serve Summons by Publication12 on Spouses Dy and Chuyaco.
However, this was denied in an Order13 dated September 14, 1995 on
the ground that summons by publication cannot be availed of in an
action in personam.
Accordingly, on March 4, 1996, petitioner filed an Amended
Complaint14 to include allegations in support of, and a prayer for, a

writ of preliminary attachment. Petitioner then presented evidence in

relation thereto, and on February 25, 1997, the trial court issued an
Order15 for the issuance of the writ. Upon petitioners ex-parte motion,
the trial court likewise directed the Clerk of Court of the Regional Trial
Court of Davao City to designate a Special Sheriff to implement the
writ of preliminary attachment.16
In Orders17 dated January 12, 1998 and February 20, 1998,
respectively, petitioner was directed to inform the court whether it still
intended to pursue the case. This appears to have been motivated by
the fact that no property of the defendants had been attached as of yet.
Petitioner did not comply with the said Orders; consequently, the case
was dismissed without prejudice on June 26, 1998 for failure to
prosecute.18 By this time, petitioner had already caused the annotation
of a notice of lis pendens at the back of the titles of the properties
subject of this case (i.e., TCT Nos. T-27628, T-202868, and T202869).
On August 3, 1998, petitioner filed a Motion for Reconsideration of
the June 26, 1998 Order, alleging that its failure to notify the trial
court of its intention to pursue the case was prompted solely by the
difficulty of locating properties against which the writ of attachment
could be enforced. In the interest of justice, the trial court granted the
motion.19
Defendant Spouses Amadeo, Dy and Chuyaco then filed an "Omnibus
Motion to Dismiss and to Annul All the Proceedings Taken Against the
Defendants"20 on December 11, 1998, in which motion they questioned
the jurisdiction of the trial court over their persons. Petitioner filed its
Opposition21 thereto on February 15, 1999. Defendants filed their
Reply22 on March 10, 1999, while petitioner filed its Rejoinder23 on
June 9, 1999. Said motion, however, was merely noted without action
in an August 2, 2001 Order24 since its notice of hearing was addressed
only to the Clerk of Court, viz.:
It appears from the Motion that its Notice of Hearing is not addressed
to any of the parties concerned as otherwise required by Rule 15[,]
Section 5 of the 1997 Rules of Civil Procedure. Such being the case, the
Motion is deemed a mere scrap of paper as held in Provident
International Resources Corporation vs. Court of Appeals, 259 SCRA
510.

In any event, the record shows that defendants Sps. Amadeo have
been duly served with summons as early as November 11, 1994 per
Sheriffs Return of Service dated November 14, 1994, and they are
therefore within the jurisdiction of the Court. However, defendants
Spouses Dy and Chuyaco have not been served with summons as
evidenced by Officers Return dated May 24, 1994 and Return of
Service dated June 10, 1994, respectively, and so the Court has not yet
acquired jurisdiction over them. Since aforesaid Motion is deemed a
scrap of paper, it cannot be construed to manifest a (sic) voluntary
appearance on their part.
Wherefore, the Omnibus Motion is noted without action. Let alias
summons be issued to defendants-spouses Dy and Chuyaco. For
plaintiffs guidance, it may avail itself of Rule 14[,] Section 14 on
summons by publication if it so desires, upon proper motion.
SO ORDERED. (underscoring in the original)
Spouses Dy and Chuyaco subsequently filed a "Motion to Dismiss (for
Lack of Jurisdiction)"25 on February 18, 2002, in which motion they
essentially accused petitioner of not causing summons to be served
upon them and losing interest in the case. Petitioner filed its
Opposition26 thereto, and in an April 23, 2002 Order,27 the trial court
denied the Motion to Dismiss on account of (i) petitioners
Compliance and Manifestation28 that it had not lost interest in
pursuing the case, and (ii) the Motion for Leave of Court to Serve
Summons by Publication that petitioner filed simultaneously with its
Opposition. On April 24, 2002, the Motion for Leave of Court to Serve
Summons by Publication was submitted for resolution.29
Respondent Spouses Dy and Chuyaco next filed a "Motion to Dismiss
for Failure to Prosecute"30 on June 17, 2003. The significant portions
of the motion state:
2. That based on the order of this Honorable Court dated April 23,
2003 (sic), the Motion for Leave of Court to Serve Summons by
Publication was submitted for resolution, but the movants-defendants
would like to remind the Honorable Court that a Motion of the same
nature was already filed on September 13, 1995 and was DENIED on
September 14, 1995. xxx;
3. That therefore, the order dated August 21, 2001 of this Honorable
Court which advised the complainant to avail of Rule 14 Section 14 of
the Rules is contrary to its order dated September 14, 1995;

4. That up to this date, the complainant has not lifted a finger to

pursue this case against movants-defendants, hence, this Motion to
Dismiss.

WHEREFORE, premises considered, it is most respectfully prayed for

the inhibition of this Honorable Court (sic) from further hearing this
case.

WHEREFORE, premises considered, it is most respectfully prayed

that this case be dismissed against the movants-defendants and to
order the deletion of the Notice of Lis Pendens at the back of the
subject title (sic).

This was submitted for resolution on November 13, 2003.

The motion for inhibition was adopted by their counsel on record,
Clarissa Castro, through a "Motion to Adopt Motion for Inhibition and
Manifestation," which was filed on February 11, 200435 and noted by
the trial court in a February 20, 2004 Order.36 On June 23, 2004,
however, the trial court (i) denied the motion for inhibition for lack of
merit, (ii) ruled that Spouses Dy and Chuyaco have voluntarily
submitted themselves to the jurisdiction of the trial court, and (iii)
gave them fifteen (15) days from receipt of the Order within which to
file their respective answers, as follows:
Acting on the Motion for Inhibition, the Court hereby denies the same
for lack of legal basis.

This was opposed by petitioner, arguing that it had already filed a

motion for the service of summons by publication, but the trial court
had yet to act on it.31 On July 25, 2003, this Motion was submitted for
resolution.32
On November 4, 2003, Spouses Dy and Chuyaco personally, and not
through their counsel, filed a "Motion for Inhibition without
submitting themselves to the jurisdiction of this Honorable
Court,"33 the relevant portions of which state:
1. That since 1998, the defendants-movants have been moving for the
dismissal of this case as far as the movants are concerned and to
nullify the proceedings taken against them since the Honorable Court
has not yet acquired jurisdiction over their persons when the plaintiff
presented its evidence against defendants (sic) Sps. Damian and
Tessie Amadeo and even thereafter;
2. That, however only on (sic) August 2, 2001 or after more than three
(3) years, that this Honorable Court denied the said Motion to Dismiss
due to technicality (sic) and merely require (sic) the plaintiff to serve
the summons either personally or thru publication;
3. That, however in the order of this Honorable Court dated
September 14, 1995, it already denied the Ex-Parte Motion for Leave
to Serve Summons by Publication "considering that the action herein
is in personam", hence, this order is contrary to its latest order dated
August 2, 2001;
4. That another Motion to Dismiss was filed last June 11, 2003 34 on
the ground of lack of interest to pursue the case but up to this date, the
Honorable Court has done nothing that delays (sic) the proceedings to
the prejudice of the defendants-movants;
5. That this continuous delay in the proceedings shows that the
Honorable Court may not be competent enough to further hear this
case.

In any event, the fact that defendants Wilson Dy and Primo Chuyaco,
Jr. signed said Motion themselves and in behalf of their respective
spouses undoubtedly indicates their voluntary appearance in this case
and their submission to the jurisdiction of this Court. The phrase
"without submitting themselves to the jurisdiction of this Honorable
Court" in the heading of said Motion can not qualify the clear import
of Rule 14 section 20 which states:
Voluntary appearance. The defendant's voluntary appearance in the
action shall be equivalent to service of summons. The inclusion in a
motion to dismiss of other grounds aside from lack of jurisdiction over
the person of the defendant shall not be deemed a voluntary
appearance. (23a)
It may be noted that subject Motion for Inhibition is not a Motion to
Dismiss.
Wherefore, defendants-spouses Dy and Chuyaco are given fifteen (15)
days from receipt hereof within which to file their respective answers.
All pending incidents are deemed resolved.37
Unsatisfied with the Order, respondent Spouses Dy and Chuyaco filed
a Petition for Certiorari under Rule 6538before the CA, alleging that
"the public respondent committed grave abuse of discretion when he
considered the Motion to Inhibit (without submitting to the
jurisdiction of the Honorable Court) which they had filed to question
his impartiality and competence due to the delay in resolving the

Motion to Dismiss based on lack of jurisdiction, as voluntary

appearance, and wherein he required the respondents to file their
Answer within the required period." The CA granted the petition in
this wise:
The old provision under Section 23, Rule 14 of the Revised Rules of
Court provided that:
Section 23. What is equivalent to service. The defendants voluntary
appearance in the action shall be equivalent to service.
Under Section 20, Rule 14 of the 1997 Rules of Civil Procedure, the
provision now reads as follows:
Sec. 20. Voluntary Appearance. The defendant's voluntary
appearance in the action shall be equivalent to service of summons.
The inclusion in a motion to dismiss of other grounds aside from lack
of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance.
What remains the same, carry (sic) over from the old doctrine, is that
the issue of jurisdiction must be raised seasonably.
But everything else changed.
What changed is that: if a motion is filed, whatever kind it is, it need
no longer be for the sole and separate purpose of objecting to the
jurisdiction of the court because the motion may raise myriad issues in
that one motion of special appearance as long as the objection to the
jurisdiction of the court is included. Xxx
What necessarily changed also is that the medium of "special
appearance" is no longer restricted to a motion to dismiss because one
could now file any type of motion provided you included the issue of
lack of jurisdiction due to defective service of summons.
Thus, in this case at bar, the "two motions to dismiss" and the "motion
to inhibit" may be treated as "special appearance" since they all
included the issue of lack of jurisdiction due to non-service of
summons. They did not constitute as submitting the movant to the
jurisdiction of the court.
xxx xxx xxx
There being no proper service of summons on petitioners and there
being no voluntary appearance by petitioners, the trial court did not
acquire jurisdiction over the persons of the defendants, the herein

petitioners. Any proceeding undertaken by the trial court against them

would consequently be null and void.
WHEREFORE, premises considered, the assailed June 23, 2004
Order of the Regional Trial Court of Makati City, Branch 133, is hereby
DECLARED NULL AND VOID as against herein petitioners. The April
22, 1994 complaint filed by Philippine Commercial International Bank
is hereby DISMISSED as against herein petitioners DY and CHUYACO
only, no jurisdiction over their persons having been acquired.
SO ORDERED.39
Petitioners motion for reconsideration was denied by the appellate
court.40
Hence this appeal, where petitioner argues that:
I.
THE COURT OF APPEALS ERRED IN DECLARING THE JUNE 23,
2004 ORDER OF THE TRIAL COURT NULL AND VOID AND IN
DISMISSING THE COMPLAINT AS AGAINST RESPONDENTS DY
AND CHUYACO AND RENDERING THE QUESTIONED DECISION
AND RESOLUTION IN A WAY THAT IS NOT IN ACCORD WITH
THE FACTS AND APPLICABLE LAWS AND JURISPRUDENCE,
WHICH HOLD THAT BY THEIR SUCCESSIVE FILING OF
MOTIONS WITH THE CONVENIENT CAVEAT THAT THEY ARE
NOT SUBMITTING TO THE JURISDICTION OF THE COURT A
QUO, THEY HAVE VOLUNTARILY SUBMITTED TO THE TRIAL
COURTS JURISDICTION.
A. THE HONORABLE COURT OF APPEALS ERRED WHEN IT
DISMISSED THE CASE AS AGAINST DY AND CHUYACO.
B. THE SPOUSES DY AND CHUYACO HAVE LOST THEIR RIGHT
TO QUESTION THE TRIAL COURTS JURISDICTION OVER THEM
WHEN THEY DID NOT RAISE THE DENIAL OF THEIR APRIL 22,
2002 MOTION TO DISMISS TO THE COURT OF APPEALS.
C. THE SPOUSES DY AND CHUYACO HAVE MISERABLY FAILED
TO SHOW BASIS IN SEEKING THE TRIAL COURTS
JURISDICTION.
D. THE SPOUSES DY AND CHUYACO HAVE VOLUNTARILY
SUBMITTED THEMSELVES TO THE TRIAL COURTS
JURISDICTION.
II.
THE COURT OF APPEALS ERRED IN A WAY THAT IS NOT IN
ACCORD WITH APPLICABLE LAWS AND JURISPRUDENCE IN

NOT DISMISSING THE PETITION FOR CERTIORARI

NOTWITHSTANDING THAT THE DY AND CHUYACO SPOUSES
FAILED TO SHOW THAT THERE IS NO APPEAL, OR ANY PLAIN,
SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE
OF LAW AVAILABLE TO THEM.41
Simply stated, the issues are: (1) Was the petition for certiorari
prematurely filed? (2) Has there been voluntary appearance on the
part of respondent Spouses Dy and Chuyaco as to confer the trial court
with jurisdiction over their persons? and (3) Did the trial court
correctly deny the motion for inhibition?
We shall discuss these issues in seriatim.
First Issue: Propriety of Certiorari
Petitioner contends that respondents subverted the settled rule that a
Petition for Certiorari under Rule 65 is available only when there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law.42It asserts that respondents failure to move for
reconsideration of the June 23, 2004 Order of the trial court, denying
the latters motion for inhibition, provides sufficient cause for the
outright dismissal of the instant petition.

e. where petitioner was deprived of due process and there is extreme

urgency for relief;
f. where, in a criminal case, relief from an order of arrest is urgent and
the granting of such relief by the trial court is improbable;
g. where the proceedings in the lower court are a nullity for lack of due
process;
h. where the proceedings were ex parte or in which the petitioner had
no opportunity to object; and
i. where the issue raised is one purely of law or where public interest is
involved.45
Otherwise stated, a motion for reconsideration may be dispensed with
only if there are concrete, compelling, and valid reasons for doing so. 46
We find that respondents non-filing of a motion for reconsideration is
justifiable under the circumstances of this case. It is not disputed that
the trial court, rightly or wrongly, considered them to have voluntarily
submitted to its jurisdiction by virtue of their motion for inhibition.
Thus, respondents apprehension that the motion for reconsideration
might be construed as further manifesting their voluntary appearance
is certainly well-grounded. They may not, therefore, be faulted for
having resorted immediately to a special civil action for
certiorari.1avvphil

We disagree.
Second Issue: Voluntary Appearance
Petitioner is correct that a motion for reconsideration, as a general
rule, must have first been filed before the tribunal, board, or officer
against whom the writ of certiorari is sought.43 This is intended to
afford the latter an opportunity to correct any actual or fancied error
attributed to it.44 However, there are several exceptions where the
special civil action for certiorari will lie even without the filing of a
motion for reconsideration, namely:
a. where the order is a patent nullity, as where the court a quo has no
jurisdiction;
b. where the questions raised in the certiorari proceeding have been
duly raised and passed upon by the lower court, or are the same as
those raised and passed upon in the lower court;
c. where there is an urgent necessity for the resolution of the question
and any further delay would prejudice the interests of the government
or the petitioner, or the subject matter of the action is perishable;
d. where, under the circumstances, a motion for reconsideration
would be useless;

Preliminarily, jurisdiction over the defendant in a civil case is acquired

either by the coercive power of legal processes exerted over his person,
or his voluntary appearance in court.47 As a general proposition, one
who seeks an affirmative relief is deemed to have submitted to the
jurisdiction of the court.48 It is by reason of this rule that we have had
occasion to declare that the filing of motions to admit answer, for
additional time to file answer, for reconsideration of a default
judgment, and to lift order of default with motion for reconsideration,
is considered voluntary submission to the courts jurisdiction. 49 This,
however, is tempered by the concept of conditional appearance, such
that a party who makes a special appearance to challenge, among
others, the courts jurisdiction over his person cannot be considered to
have submitted to its authority.50
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule on
voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the

person of the defendant must be explicitly made, i.e., set forth in an
unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the
jurisdiction of the court, especially in instances where a pleading or
motion seeking affirmative relief is filed and submitted to the court for
resolution.
Measured against these standards, it is readily apparent that
respondents have acquiesced to the jurisdiction of the trial court as
early as June 17, 2003, when they filed their Motion to Dismiss for
Failure to Prosecute. Significantly, the motion did not categorically
and expressly raise the jurisdiction of the court over their persons as
an issue. It merely (i) "reminded" the court of its purportedly
conflicting Orders in respect of summons by publication, (ii) alleged
that because petitioner "has not lifted a finger to pursue this case
against movants-defendants," the case may be dismissed for failure to
prosecute, and (iii) prayed additionally for the deletion of the Notice
of Lis Pendens indicated at the back of the transfer certificates of title
covering the subject properties. We note, furthermore, that the motion
failed to qualify the capacity in which respondents were appearing and
seeking recourse.51 It is in this light that the Courts pronouncement in
Busuego v. Court of Appeals52 finds cogent application:
A voluntary appearance is a waiver of the necessity of a formal notice.
An appearance in whatever form, without explicitly objecting to the
jurisdiction of the court over the person, is a submission to the
jurisdiction of the court over the person. While the formal method of
entering an appearance in a cause pending in the courts is to deliver to
the clerk a written direction ordering him to enter the appearance of
the person who subscribes it, an appearance may be made by simply
filing a formal motion, or plea or answer. This formal method of
appearance is not necessary. He may appear without such formal
appearance and thus submit himself to the jurisdiction of the court.
He may appear by presenting a motion, for example, and unless by
such appearance he specifically objects to the jurisdiction of the court,
he thereby gives his assent to the jurisdiction of the court over his
person.53 (emphasis supplied)
Besides, any lingering doubts on the issue of voluntary appearance
dissipate when the respondents motion for inhibition is considered.
This motion seeks a sole relief: inhibition of Judge Napoleon Inoturan
from further hearing the case. Evidently, by seeking affirmative relief

other than dismissal of the case, respondents manifested their

voluntary submission to the courts jurisdiction. It is well-settled that
the active participation of a party in the proceedings is tantamount to
an invocation of the courts jurisdiction and a willingness to abide by
the resolution of the case, and will bar said party from later on
impugning the courts jurisdiction.54
To be sure, the convenient caveat in the title of the motion for
inhibition (i.e., "without submitting themselves to the jurisdiction of
this Honorable Court") does not detract from this conclusion. It would
suffice to say that the allegations in a pleading or motion are
determinative of its nature; the designation or caption thereof is not
controlling.55Furthermore, no amount of caveat can change the fact
that respondents tellingly signed the motion to inhibit in their own
behalf and not through counsel, let alone through a counsel making a
special appearance.
Third Issue: Inhibition
Respondents argue that the trial courts so-called "continuous delay in
the proceedings" is indicative of the fact that it is incompetent to
continue hearing the case. Respondents therefore assert that the trial
court acted with grave abuse of discretion amounting to lack or excess
of jurisdiction when it denied their motion to inhibit and required
them to file their Answer.
We are not convinced.
Under the first paragraph of Section 1, Rule 137 of the Rules of Court,
a judge or judicial officer shall be mandatorily disqualified to sit in any
case in which:
(a) he, or his wife or child, is pecuniarily interested as heir, legatee,
creditor or otherwise; or
(b) he is related to either party within the sixth degree of
consanguinity or affinity, or to counsel within the fourth degree,
computed according to the rules of civil law; or
(c) he has been executor, administrator, guardian, trustee or counsel;
or
(d) he has presided in any inferior court when his ruling or decision is
the subject of review, without the written consent of all parties in
interest, signed by them and entered upon the record.56
Paragraph two of the same provision meanwhile provides for the rule
on voluntary inhibition and states: "[a] judge may, in the exercise of

his sound discretion, disqualify himself from sitting in a case, for just
or valid reasons other than those mentioned above." That discretion is
a matter of conscience and is addressed primarily to the judges sense
of fairness and justice.57 We have elucidated on this point in Pimentel
v. Salanga,58 as follows:
A judge may not be legally prohibited from sitting in a litigation. But
when suggestion is made of record that he might be induced to act in
favor of one party or with bias or prejudice against a litigant arising
out of circumstances reasonably capable of inciting such a state of
mind, he should conduct a careful self-examination. He should
exercise his discretion in a way that the people's faith in the courts of
justice is not impaired. A salutary norm is that he reflect on the
probability that a losing party might nurture at the back of his mind
the thought that the judge had unmeritoriously tilted the scales of
justice against him. That passion on the part of a judge may be
generated because of serious charges of misconduct against him by a
suitor or his counsel, is not altogether remote. He is a man, subject to
the frailties of other men. He should, therefore, exercise great care and
caution before making up his mind to act in or withdraw from a suit
where that party or counsel is involved. He could in good grace inhibit
himself where that case could be heard by another judge and where no
appreciable prejudice would be occasioned to others involved therein.
On the result of his decision to sit or not to sit may depend to a great
extent the all-important confidence in the impartiality of the judiciary.
If after reflection he should resolve to voluntarily desist from sitting in
a case where his motives or fairness might be seriously impugned, his
action is to be interpreted as giving meaning and substances to the
second paragraph of Section 1, Rule 137. He serves the cause of the law
who forestalls miscarriage of justice.
The present case not being covered by the rule on mandatory
inhibition, the issue thus turns on whether Judge Napoleon Inoturan
should have voluntarily inhibited himself.
At the outset, we underscore that while a party has the right to seek
the inhibition or disqualification of a judge who does not appear to be
wholly free, disinterested, impartial and independent in handling the
case, this right must be weighed with the duty of a judge to decide
cases without fear of repression.59 Respondents consequently have no
vested right to the issuance of an Order granting the motion to inhibit,
given its discretionary nature.60

However, the second paragraph of Rule 137, Section 1 does not give
judges unfettered discretion to decide whether to desist from hearing
a case.61 The inhibition must be for just and valid causes, and in this
regard, we have noted that the mere imputation of bias or partiality is
not enough ground for inhibition, especially when the charge is
without basis.62 This Court has to be shown acts or conduct clearly
indicative of arbitrariness or prejudice before it can brand them with
the stigma of bias or partiality.63 Moreover, extrinsic evidence is
required to establish bias, bad faith, malice or corrupt purpose, in
addition to palpable error which may be inferred from the decision or
order itself.64 The only exception to the rule is when the error is so
gross and patent as to produce an ineluctable inference of bad faith or
malice.65
We do not find any abuse of discretion by the trial court in denying
respondents motion to inhibit. Our pronouncement in Webb, et al. v.
People of the Philippines, et al.66 is apropos:
A perusal of the records will reveal that petitioners failed to adduce
any extrinsic evidence to prove that respondent judge was motivated
by malice or bad faith in issuing the assailed rulings. Petitioners
simply lean on the alleged series of adverse rulings of the respondent
judge which they characterized as palpable errors. This is not enough.
We note that respondent judge's rulings resolving the various motions
filed by petitioners were all made after considering the arguments
raised by all the parties. Xxx
xxx xxx xxx
We hasten to stress that a party aggrieved by erroneous interlocutory
rulings in the course of a trial is not without remedy. The range of
remedy is provided in our Rules of Court and we need not make an
elongated discourse on the subject. But certainly, the remedy for
erroneous rulings, absent any extrinsic evidence of malice or bad faith,
is not the outright disqualification of the judge. For there is yet to
come a judge with the omniscience to issue rulings that are always
infallible. The courts will close shop if we disqualify judges who err for
we all err. (emphasis supplied)
Truth be told, respondents are not entirely blameless for any
perceived delay in the resolution of the various incidents of the case.
For instance, they make much of the fact that close to three years
passed before their "Omnibus Motion to Dismiss and to Annul All the
Proceedings Taken Against the Defendants," filed on December 11,
1998, was noted by the trial court. But the fact remains that the said

"motion," not having a notice of hearing addressed to the adverse

party, is legally a mere scrap of paper.67 It presents no question which
merits the attention and consideration of the court, and is not entitled
to judicial cognizance.68
Considering the foregoing, we rule that respondents accusations of
delay, incompetence, and bias on the part of the trial court are
unfounded. Hence, they are not entitled to the inhibition of Judge
Inoturan as a relief.
IN VIEW WHEREOF, the Petition is hereby GRANTED. The Decision
dated July 18, 2005 of the Court of Appeals and its Resolution dated
January 10, 2006 are hereby REVERSED and SET ASIDE, and
another in their stead is hereby rendered ORDERING respondent
Spouses Dy and Chuyaco to answer the Complaint in Civil Case No.
94-1585 within fifteen (15) days from receipt of this Decision.
The trial court is directed to proceed hearing the case, and to resolve
the same with dispatch.
No costs.
SO ORDERED.

[G.R. No. 143721. August 31, 2005]

TERESITA E. VILLALUZ, petitioner, vs. ROLANDO R.
LIGON, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review seeking the reversal of the
Decision[1] of the Court of Appeals (CA) promulgated on October 1,
1999 and the Resolution[2] dated June 6, 2000 which denied
petitioners motion for reconsideration.
The facts are as follows:
Petitioner Teresita E. Villaluz (Villaluz) and respondent Rolando R.
Ligon (Ligon) were engaged in several businesses. Sometime in 1987,
Villaluz borrowed sums of money from Ligon secured by postdated
checks amounting to P1,543,586.00 which later bounced for the
reasons Drawn Against Insufficient Funds/Account Closed. Demands
were made on Villaluz but she failed to pay her debt prompting Ligon
to institute criminal proceedings for violation of Batas Pambansa Blg.
22 before the Regional Trial Court (RTC) of Manila. During the
hearing of said cases, Villaluz asked for the settlement of their
controversy[3]and Ligon, as the First Party, and Villaluz, as the Second
Party, executed a Memorandum of Agreement with the following
terms:
WHEREAS, the SECOND PARTY is indebted to the FIRST PARTY in
the amount of THREE MILLION FOUR HUNDRED EIGHTY NINE
THOUSAND AND TWO HUNDRED FIFTY TWO PESOS
(P3,489,252.00) inclusive of interests, which indebtedness is now the
subject of criminal cases now pending with the Regional Trial Court of
Manila, Branch 40, and docketed as Criminal Cases Nos. 89-73195 to
213 for Violation of Batas Pambansa Blg. 22;
WHEREAS, out of the aforesaid obligation the SECOND PARTY has
made a total payment of ONE HUNDRED SIXTY FIVE THOUSAND
PESOS (P165,000.00) thereby leaving a balance of THREE MILLION
THREE HUNDRED TWENTY FOUR THOUSAND AND TWO
HUNDRED FIFTY TWO PESOS (P3,324,252.00);
WHEREAS, on account of the desire of the parties to settle the
aforementioned cases amicably, the FIRST PARTY, by way of
liberality, has agreed to condone the amount of ONE MILLION TWO
HUNDRED TWENTY FOUR THOUSAND TWO HUNDRED FIFTY
TWO PESOS (P1,324,252.00) (sic) thereby reducing the indebtedness
of the SECOND PARTY to the FIRST PARTY in the amount of TWO
MILLION PESOS (P2,000,000.00);

WHEREAS, the SECOND PARTY has on the date of this instrument,

paid the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00) thereby further reducing the SECOND PARTYS
obligation to ONE MILLION NINE HUNDRED THOUSAND PESOS
(P1,900,000.00);
WHEREAS, the SECOND PARTY has acknowledged her aforesaid
total outstanding obligation of ONE MILLION NINE HUNDRED
THOUSAND PESOS (P1,900,000.00) in favor of the FIRST PARTY
and has committed to pay the same on or before 31 December 1990;
WHEREAS, on account of the aforesaid settlement agreement, the
FIRST PARTY has agreed to effect or cause the dismissal of the
aforementioned criminal cases against the SECOND PARTY;
NOW, THEREFORE, for and in consideration of the foregoing
premises and the mutual covenants hereinafter set forth, the parties
hereto hereby agree as follows:
1. The FIRST PARTY hereby condones the amount of P1,324,252.00
from the total obligation of the SECOND PARTY;
2. The SECOND PARTY hereby promises to pay her total outstanding
obligation of P1,900,000.00 to the FIRST PARTY on or before 31
December 1990;
3. In the event the SECOND PARTY is unable to pay her aforesaid
obligation to the FIRST PARTY on or before the date above stipulated,
then the amount as condoned in paragraph one (1) hereof shall be
added back to the said obligation as stipulated in paragraph two (2)
hereof, and the FIRST PARTY shall have the right to enforce collection
of the entire amounts due and owing from the SECOND PARTY
without need of further demand;
4. The FIRST PARTY shall effect or cause the dismissal of the aforementioned criminal cases against the SECOND PARTY as soon as
practicable, preferably on or before the next scheduled hearing of said
cases.[4]
In accordance with said agreement, Villaluz issued a check dated
December 31, 1990 in the amount of P1,900,000.00 which again
bounced upon presentment for the reason that it was drawn against a
closed account. Ligon made several demands on Villaluz but to no
avail. Thus, Ligon, through his lawyer, sent Villaluz demand letters
dated March 5, 1991 and July 1, 1991 which were allegedly duly
received by her.[5]
Since no payment was made, Ligon instituted on April 2, 1992 a
complaint against Villaluz with the RTC of Makati, Branch 134, for the
recovery of P3,224,252.00[6] plus legal interest and attorneys fees.[7]

Upon failure of Villaluz and her counsel to appear at the pre-trial

conference, the RTC declared Villaluz as in default and received
Ligons evidence ex-parte. The RTC rendered a decision on October 16,
1992, ordering Villaluz to pay the amount prayed for plus
interest, P30,000.00 as attorneys fees, plus costs.[8] On November 23,
1992, Villaluz through counsel, filed a Motion for New Trial and a
Motion to Admit Answer which were both granted by the court.[9]
Villaluz in her Answer alleged that: she is an illiterate and could not
engage in any business alone; on several occasions Ligon offered
imported goods in exchange for postdated checks to be encashed upon
delivery; there were occasions when the imported goods were not
delivered and yet her checks were not returned; she requested for an
accounting but none was made; the B.P. Blg. 22 cases filed against her
involving the total amount of P1,543,586.00 were provisionally
dismissed because there was a need for accounting; efforts were then
made to settle the case amicably until November 1990, when Ligons
lawyer succeeded in persuading her to sign a Memorandum of
Agreement and to issue a check in the amount of P1,900,000.00; said
Memorandum of Agreement does not express the true intent and
agreement of the parties and the check for P1.9 M is null and void; she
did not receive any demand for the enforcement of the Memorandum
of Agreement nor for the payment of the check, thus the instant action
is premature and plaintiff has no cause of action. Villaluz prayed that
the complaint be dismissed and the Memorandum of Agreement and
the check be declared null and void.[10]
Ligon presented evidence to support his complaint and, on March 9,
1994, filed a Motion for Issuance of Writ of Preliminary Attachment
which Villaluz opposed. On May 5, 1994, Villaluz filed a Motion to
Dismiss Case on the Ground of Forum Shopping and a Motion to Cite
Atty. Paulino E. Cases, Jr. in Contempt of Court. The trial court denied
the said motions.[11]
On May 25, 1995, Villaluz filed before the RTC a Motion to Cancel
Hearings pending the resolution of this Court of the issue in G.R. No.
L-119865 entitled Teresita Villaluz vs. Court of Appeals where Villaluz
questioned the validity of the reinstatement of the criminal cases
against her which were provisionally dismissed. The trial court denied
the motion to cancel hearings as well as her motion for
reconsideration of the same.[12]
After the trial court ruled on Ligons offer of exhibits, the case was set
for hearing on August 29 and 31, 1995 which were reset to September

25 and 28, 1995 upon Villaluzs request. The September 25, 1995
hearing was also reset in view of the manifestation of the parties that
they will settle the case amicably. On September 28, 1995, the parties
agreed to reset the hearing to October 11 and 24, 1995. On October 11,
1995 the hearing was cancelled anew upon agreement of the parties.
On October 24, 1995, the hearing was cancelled and reset to
November 16, 23 and December 14, 1995 in view of the absence of
Villaluz and her counsel. On November 10, 1995, Villaluzs counsel
asked for the cancellation of the November and December settings
and prayed that they be moved to January 1996. The hearings were
reset to January 9 and 11, 1996, but Villaluz failed to appear on said
dates. The husband of Villaluz asked for a resetting and the case was
set anew to March 11, 14 and 19, 1996. Petitioner Villaluz and her
counsel failed to appear on March 11, 1996 which prompted plaintiff
Ligons counsel to move that Villaluz be considered to have waived the
presentation of her evidence and that the case be deemed submitted
for decision. The motion was granted and on March 11, 1996, the trial
court issued an order submitting the case for decision which order was
received by counsel for Villaluz on March 15, 1996.[13]
On May 7, 1996, the RTC of Makati, Branch 134, rendered its decision,
the dispositive portion of which reads:
WHEREFORE, in the light of the foregoing, judgment is hereby
rendered in favor of the plaintiff and against the defendant, ordering
the latter to pay to the former the sum of P3,224,252.00 (sic) plus
legal interest at the rate of 12% per annum from April 2, 1992 (date of
filing of the complaint) until the full amount is paid; the sum
of P50,000.00 as attorneys fees, and the costs of suit. [14]
Villaluz filed a motion for reconsideration dated May 23, 1996, stating
that given the opportunity to testify, she will re-affirm the contents of
her affidavit that was submitted in support of her Motion for New
Trial, or in the alternative, she will formally offer the same. [15] This was
denied by the RTC in its Order dated July 22, 1996.[16]
Villaluz went to the CA and claimed that the trial court erred: in not
dismissing the case on the ground of forum shopping; in not granting
the defendant the opportunity to present evidence in her behalf
thereby depriving her of her fundamental right to due process; and in
not considering the evidence already on record showing that the
subject checks had no valid consideration. [17]
The CA denied the petition in its Decision dated October 1, 1999,
ruling that the motion to dismiss on the ground of forum shopping
should have been filed within the time for but before filing of an

answer to the complaint or pleading asserting a claim, pursuant to

Section 1(e), Rule 16 of the Rules of Court; that Supreme Court
Administrative Circular No. 04-94 on Anti-Forum Shopping Rule was
not yet existing at the time the instant case was filed; that Villaluz
cannot claim denial of due process as she and her counsel failed to
appear in the scheduled hearings and the fact that Villaluz failed to file
a motion for reconsideration when the RTC considered the case
submitted for decision is an indication that she slept on her right; and
that the Sinumpaang Salaysay which she submitted in support of her
motion for new trial cannot be taken into consideration as the same
was not formally offered in evidence during trial. [18] The dispositive
portion of the decision reads:

83, promulgated on May 5, 1988;[22] petitioner did not immediately

raise the defense of forum shopping since it was a matter of trial
strategy; the defense of forum shopping may also be raised at any time
because it is a matter of judicial policy intended to unclog the court
dockets and to prevent litigants from abusing the courts processes; all
the elements of litis pendentia which are also the elements of forum
shopping, are present herein, i.e., the parties, the subject matter and
the reliefs sought are the same; and the considerations for the
execution of the Memorandum of Agreement were the same checks
subject matter of the criminal cases; without said checks the
Memorandum of Agreement would be null and void for want of
consideration.[23]

WHEREFORE, premises considered, the appealed decision (dated

May 7, 1996) of the Regional Trial Court (Branch 134) in Makati City
in Civil Case No. 92-914 is hereby AFFIRMED, with costs against the
appellant.
SO ORDERED.[19]

Respondent in his Comment contends that: there is no forum

shopping in the case at bar since the present case was filed with the
trial court on April 2, 1992, before Revised Circular No. 28-91 and
Admin. Circular No. 04-94 took effect; the instant case is a collection
of sum of money which sprung from the violation of the Memorandum
of Agreement between the petitioner and respondent, while Criminal
Case Nos. 98-73195-213 entitled People vs. Teresita Villaluz pertain to
violation of B.P. Blg. 22 which is a penal law; the said cases have
different nature; there is also no identity of causes of action since the
first case involves a personal civil action for collection of a sum of
money whereas the second case is a criminal action wherein the State
has interest.[24]

Villaluz filed a motion for reconsideration which was denied by the

appellate court in its Resolution dated June 6, 2000.[20]
Hence, the present petition raising the following issues:
I. WHETHER OR NOT HEREIN RESPONDENT COMMITTED
FORUM SHOPPING IN THIS CASE;
II. IN THE ALTERNATIVE, ASSUMING THAT THERE WAS NO
FORUM SHOPPING, WHETHER OR NOT PETITIONER WAS
DEPRIVED OF HER FUNDAMENTAL RIGHT TO DUE PROCESS;
III. IN THE FURTHER ALTERNATIVE, ASSUMING THAT THERE
WAS NO FORUM SHOPPING AND THAT PETITIONER WAS NOT
DEPRIVED OF DUE PROCESS, WHETHER OR NOT AN ERROR
WAS COMMITTED IN NOT CONSIDERING THE EVIDENCE
ALREADY ON RECORD SHOWING THAT THE SUBJECT
MEMORANDUM OF AGREEMENT AND THE CHECKS HAD NO
VALID CONSIDERATION AND ARE, THEREFORE, NULL AND
VOID.[21]
As to the first issue raised, petitioner argues that: the respondent and
the CA were not correct in stating that there is no forum shopping in
this case since the prohibition against forum shopping only started
with the issuance of Circular No. 28-91 as modified by Admin.
Circular No. 04-94; forum shopping has already been prohibited
in Buan vs. Lopez, 145 SCRA 34, which was promulgated on October
13, 1986 and in Limpin vs. Intermediate Appellate Court, 161 SCRA

As to the second issue, petitioner claims that the CA should have been
more lenient in allowing petitioner the opportunity to present her
evidence especially considering that the delay in petitioners
presentation of evidence in court was due to the need for accounting
and the efforts of the parties in trying to reach a settlement of the
controversy.[25]
Respondent argues that: there were numerous postponements made
by petitioner and her counsel and respondent did not object thereto to
accommodate herein petitioner; it was only on March 11, 1996 that the
counsel for the respondent moved that the petitioner be considered to
have waived the presentation of her evidence which the trial court
granted; despite receipt of the Order on March 15, 1996, granting
respondents motion, petitioner did not move to remedy said Order
until it became final and executory; the failure of petitioner to file a
Motion for Reconsideration of the Order dated March 11, 1996 closed

the door for a possible reconsideration in her favor; and petitioner

ultimately waived her right to present evidence on her behalf. [26]
As to the third issue, petitioner claims that the CA erred in rejecting
petitioners plea to have her Sinumpaang Salaysay admitted which was
favorably considered by the trial court and given evidentiary weight
when petitioners motion for new trial was granted; respondent never
disputed the contents of the statement which is already part of the
records of the case; and since the trial court considered some portions
of the record, there is no valid reason not to appreciate the entire
records including the statement since it would absolve her from any
liability in this case.[27]
On the other hand, respondent contends that: the trial court did not
commit any mistake in not taking into consideration said Sinumpaang
Salaysay on the ground that said affidavit was only in support of the
Motion for New Trial; and said affidavit cannot be considered by the
trial court since the trial court may only consider what was formally
offered to it.[28]
Ruling of the Court

There is forum shopping when, as a result of an adverse opinion in

one forum, a party seeks a favorable opinion, other than by appeal
or certiorari in another.[30] There can also be forum shopping when a
party institutes two or more suits in different courts, either
simultaneously or successively, in order to ask the courts to rule on
the same or related causes and/or to grant the same or substantially
the same reliefs on the supposition that one or the other court would
make a favorable disposition or increase a partys chances of obtaining
a favorable decision or action.[31] It is an act of malpractice because it
trifles with the courts, abuses their processes, degrades the
administration of justice and adds to the already congested court
dockets.[32]
To determine whether a party violated the rule against forum
shopping, the most important question to ask is whether the elements
of litis pendentia are present or whether a final judgment in one case
will result to res judicata in another.[33] Otherwise stated, to determine
forum shopping, the test is to see whether in the two or more cases
pending, there is identity of parties, rights or causes of action, and
reliefs sought.[34]

Anent the first issue: Whether there is forum shopping in this case.
We agree with petitioner that the CA and respondent were mistaken in
stating that there could be no forum shopping in this case since the
case was filed prior to the effectivity of Admin. Circular No. 04-94
which required a certification of non-forum shopping.
Ligon filed the complaint for sum of money on April 2, 1992. While it
is true that Admin. Circular No. 04-94, entitled, Additional Requisites
for Civil Complaints, Petitions and Other Initiatory Pleadings Filed in
All Courts and Agencies, Other Than The Supreme Court and the
Court of Appeals, to Prevent Forum Shopping on Multiple Filing of
Such Pleadings, took effect on April 1, 1994, or about two years after
the complaint of Ligon was filed with the RTC, Makati, the Court has
condemned forum shopping even before the issuance of said Admin.
Circular No. 04-94. The splitting of causes of action was
proscribed[29] in the Limpin case cited by petitioner which was
promulgated in 1988.

Here, the two cases involved are the instant civil case for collection of
sum of money where petitioner is the defendant, and the B.P. Blg. 22
cases where petitioner is the accused. Clearly, there is no identity of
parties for in the criminal case, the plaintiff is the State with Ligon
only as a complaining witness. In the case at bar, Ligon himself is the
plaintiff.

While petitioner is correct in stating that the rule against forum

shopping existed even prior to the issuance of Admin. Circular No. 0494, we find that, in the present case, respondent did not commit
forum shopping.

As we explained in Go vs. Dimagiba[35] civil liability differs from

criminal liability. What is punished in the latter is not the failure to
pay an obligation but the issuance of checks that subsequently
bounced or were dishonored for insufficiency or lack of funds. The
issuance of worthless checks is prohibited because of its deleterious

There is also a difference in the causes of action. In the instant case,

the cause of action is petitioners breach of contract as embodied in the
Memorandum of Agreement, while in the criminal case, it is the
violation of B.P. Blg. 22.
There is also a difference in reliefs sought because in the civil case,
what is sought is the enforcement of the terms in their Memorandum
of Agreement, while in the criminal case, it is the punishment of the
offense committed against a public law.

effects on public interest and its effects transcend the private interest
of the parties directly involved in the transaction and touches the
interest of the community at large.[36] In the present civil case, no such
transcendental public interest exists.
Finally, petitioners argument on forum shopping must fail since she
did not raise it at the first opportunity in the trial court. As noted by
the respondent, petitioner only raised the issue of forum shopping two
years after the institution of the civil case. If only for her failure to
invoke such ground at the first opportunity in her motion to dismiss in
the trial court, her appeal should have been given short shrift and
denied outright.[37] Petitioners claim that her failure to raise it in her
motion to dismiss was a matter of trial strategy has no persuasive
effect for it is well ensconced that defenses and objections not pleaded
in a motion to dismiss or in an answer are deemed waived except the
failure to state a cause of action or that the court has no jurisdiction.
[38]
Herein case does not fall within said exceptions.
Anent the second issue: Whether petitioner was denied due process by
the trial court.
We have held that due process is satisfied as long as the party is
accorded an opportunity to be heard.[39] The essence of due process is
that a party is given a reasonable opportunity to be heard and submit
any evidence one may have in support of ones defense.[40] Where the
opportunity to be heard, either through verbal arguments or
pleadings, is accorded and the party can present its side or defend its
interest in due course, there is no denial of due process.[41] Indeed,
where a party was afforded an opportunity to participate in the
proceedings but failed to do so, he cannot complain of deprivation of
due process.[42] If said opportunity is not availed of, it is deemed
waived or forfeited without violating the constitutional guarantee. [43]
It cannot be said that petitioner Villaluz was not given her day in
court. A judgment on default was set aside and her motion for new
trial and motion to admit answer were granted by the trial court. After
respondent Ligons presentation of evidence, the case was set for the
presentation of petitioner Villaluzs evidence. On three occasions,
petitioner asked for the postponement of the hearings and was
allowed by the court.[44] The hearings for October 24, 1995, January 9
and 11, 1996 were reset because of the absence of Villaluz and her
counsel. It was only on March 11, 1996, after several postponements,
that the trial court, upon motion of Ligon, finally resolved to submit
the case for decision. While the Court notes that the hearing was also
set for March 14 and 19, 1996, the fact that despite receipt by Villaluz

on March 15, 1996 of the Order of the RTC dated March 11, 1996,
submitting the case for decision, she did not file any motion for
reconsideration thereof, such that the RTC issued its judgment against
her on May 7, 1996. Thus, based on all the foregoing, petitioner is
barred from claiming that she was denied due process of law.
Anent the third issue: Whether the trial court erred in not considering
the affidavit of petitioner earlier submitted in the motion for new trial.
Petitioner submitted a Sinumpaang Salaysay stating that she is an
illiterate and that sometime in 1990, Ligons lawyer deceived her into
signing a Memorandum of Agreement and in issuing a check for P1.9
M.[45] Petitioner argues that the Sinumpaang Salaysay which she
submitted as an affidavit of merit in support of her motion for new
trial should be considered as part of the records of the case even
without formal offer of the same.
We do not agree. There is a need to formally offer affidavits before the
courts to afford the opposing party the opportunity to ascertain or
refute the veracity of the contents of such statements. Courts will only
consider as evidence that which has not been formally offered. If an
affidavit was never formally offered, it cannot be considered as
evidence. If petitioner neglected to offer her affidavit in evidence,
however vital it may be, she only has herself to blame.[46]
The rule is that a document, or any article for that matter, is not
evidence when it is simply marked for identification; it must be
formally offered and the opposing counsel given an opportunity to
object to it or cross-examine the witness called upon to prove or
identify it. It is necessary that a formal offer is made since judges are
required to base their findings of fact and judgment only, and strictly,
upon the evidence offered by the parties at the trial. To allow a party
to attach any document to his pleading and expect the court to
consider it as evidence may draw unwarranted consequences. The
opposing party will be deprived of a chance to examine the document
and object to its admissibility. The appellate court will also have
difficulty reviewing the documents not previously scrutinized by the
court below. Indeed, the pertinent provisions of the Revised Rules of
Court on the inclusion on appeal of documentary evidence or exhibits
in the records cannot be stretched as to include such pleadings or
documents not offered at the hearing of the case.[47]
In this case, while the motion for new trial was granted, it cannot be
said that the contents of the affidavit attached thereto should be

treated by the trial court as evidence for the petitioner as it was not
formally offered during the trial on the merits.
We now come to the determination of the amount of money that is
due respondent.
The trial court in its decision, as affirmed by the CA, explained that:
From the evidence adduced, there can be no doubt that the plaintiff
has established the material allegations of the complaint by clear,
convincing and competent evidence.
The terms and conditions of the Memorandum of
Agreement are clear and unmistakable. The parties agreed
that in case defendant failed to pay the sum
of P1,900,000.00 on or before December 31, 1990, then the
amount of P1,324,252.00 would be added to the principal
account (P1,900,000.00) and the plaintiff shall have the
right to enforce collection of the entire amounts due and
owing from the SECOND PARTY (defendant) without need
of further demand. (Emphasis supplied)
The Memorandum of Agreement has the force of law between the
parties. From the moment the contract is perfected, the parties are
bound not only to the fulfillment of what has been expressly stipulated
but also to all consequences which according to their nature, may be
in keeping with good faith, usage and law
Defendants claim that she was merely persuaded to sign the
Memorandum of Agreement and to issue the check in the amount
of P1,900,000.00 is unavailing. It is presumed that a party, who signs
a contract, had acted with due care and have signed the said contract
with full knowledge of the import and the obligation she was assuming
thereby. This presumption may not be overcome by the mere
testimony of the obligor. To permit a party, when sued upon a
contract, to admit that she signed it but to deny it expresses the
agreement she had made, or to allow her to admit that she signed it
solely on the verbal assurance that she would not be liable thereon,
would destroy the value of all contracts. Indeed, it would be disastrous
to give more weight and reliability to the self-serving testimony of a
party bound by the contract than to the contents thereof.[48] (citations
omitted)
Harsh as its effects may be on petitioner, we cannot but agree with the
findings of the trial court and the CA.
The Memorandum of Agreement between petitioner and respondent,
while termed as such, is actually a compromise agreement which is

defined as an agreement whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already
commenced.[49]
As in any other contract, it is perfected by mere consent, the latter
being manifested by the meeting of the offer and the acceptance upon
the thing and the cause which constitutes the contract.[50] It is
perfected upon the meeting of the minds and does not need a judicial
approval for its perfection.[51]
Here, petitioner claims that the Memorandum of Agreement is void
since she is an illiterate who was taken advantage of by respondents
counsel.
Indeed, there exists a presumption of mistake or error to those who
have not had the benefit of a good education under Art. 1332 of the
Civil Code.[52] However, one who alleges such mistake or fraud must
show that her personal circumstances warrant the application thereof.
[53]
Apart from claiming in her affidavit that she is illiterate, petitioner
did not make any effort to prove in court the truthfulness of such
claim, despite the many opportunities given her to do so. We therefore
cannot give credence to her allegation.
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.