You are on page 1of 212

1

EN BANC her complaint, section 1 of Rule 30 cannot be invoked


in the case as the dismissal was not without prejudice.
[G.R. No. L-5189. September 21, 1953.]
2. ID.; ID.; ID.; JUDGMENTS; COMPROMISE; "RES
GAUDENCIO SERRANO, Plaintiff-Appellant, v. DONATA JUDICATA; SOLUTIO INDEBITI." If what was received
CABRERA and TEODATO MAKABULOS, Defendants- by the plaintiff and delivered by the defendant was the
Appellees. result of a compromise, the case was not one of solutio
indebiti. "A compromise shall have, with respect to the
Jose P. Fausto for Appellant. parties, the same authority as res adjudicata . . ." (Art.
1316, Civil Code.)
Besa & Besa for Appellees.

DECISION
SYLLABUS

PADILLA, J.:
1. PLEADING AND PRACTICE; DISMISSAL OF ACTIONS;
WHEN DISMISSAL IS WITHOUT PREJUDICE. A
dismissal of the action without order of the court, Gaudencio Serrano was the lessee of a parcel of land
which is without prejudice, is one by the plaintiff containing an area of 24 hectares, more or less,
before the filing of an answer by the defendant. It situated in the municipality of La Paz, Province of
means that such dismissal would not preclude the Tarlac. Donata Cabrera was the lessor, having inherited
plaintiff from bringing another action against the same the parcel of land from her deceased father Eusebio
defendant on the same subject matter. Such dismissal Cabrera, the original lessor. Teodato Makabulos is her
under the rule does not bar the institution of an action husband. The term of the lease was six agricultural
by the defendant which he could have brought in the years beginning 1 May 1941 and the yearly rental
action against him by means of a counter-claim or agreed upon was 290 cavans of palay. On 13
cross-claim. But where the dismissal in the first case December 1946, the lessor brought an action (civil
was upon motion of the plaintiff consented to by the case No. 141 of the Court of First Instance of Tarlac) to
defendant on the ground that the latter had paid and recover rentals due and unpaid for the agricultural
satisfied all the claims of the former as prayed for in years 1943-44, 1944-45, 1945-46 and 1946-47
2

amounting to P13,620. A writ of attachment was (Fdo.) DONATA CABRERA DE MACABULOS


issued in that case. On 18 December, the complaint
was dismissed without costs upon a motion couched in Demandante
the following terms
(Fdo.) GAUDENCIO SERRANO
MOCION DE SOBRESEIMIENTO
Demandado
Comparece la demandante por su infrascrito Abogado
y al Hon. Juzgado respetuosamente pide:chanrob1es (pp. 50-51, Amended Record on Appeal.)
virtual 1aw library
Alleging and claiming that what he had paid to her was
Que en vista de que el demandado Gaudencio Serrano in excess of what was due her for unpaid rentals the
ha pagado y satisfecho por completo las lessee brought an action (civil case No. 213 of the
reclamaciones de la demandante segn las same Court) against the lessor and her husband to
alegaciones de la demanda, la demandante ya no annul the proceedings in civil case No. 141, and to
tiene motivos de accion contra el demandado y por lo recover such excess payment of rentals. The excess
tanto procede sobreseer la causa. amounts allegedly paid and sought to be recovered
are P1,286.40 for 1945-46; P696 for 1946-47; P193 for
Por lo tanto, de acuerdo con la Regla 30, Seccion 1, la court fees in connection with the attachment issued in
demandante da por sobreseida esta causa. the first case. He also prays that the promissory note
for P1,000 executed and delivered by him to her be
Tarlac, Tarlac, Diciembre 16, 1946. cancelled or returned to him and that she together
with her husband be ordered to pay him P20,000 for
(Fdo.) TOMAS BESA damages suffered as a result of the filing of the action
against him and attachment of his property.
Abogado de la demandante
The defendants moved for the dismissal of the
Tarlac, Tarlac complaint on the ground of res judicata and failure to
state a cause of action.
CONFORMES:chanrob1es virtual 1aw library
3

The Court dismissed the complaint on the ground of to the case, because what was received by the plaintiff
res judicata. and delivered by the defendant was the result of a
compromise. Article 1809 of the Civil Code 2 provides
The plaintiff has appealed. that "Compromise is a contract by which each of the
parties in interest, by giving, promising, or retaining
It is contended that the dismissal of the complaint in something avoids the provocation of a suit or
the first action upon the ground that as the defendant terminates one which has already been instituted."
had paid and satisfied fully all her claims she no longer Article 1816 of the Civil Code provides that "A
had any action against him, before the filing of the compromise shall have, with respect to the parties, the
answer, was without prejudice, as provided for in same authority as res adjudicata; . . ." 3 The order
section 1, Rule 30. It is also claimed that a thing appealed from is affirmed, with cost against the
received by one who has no right to it and which has Appellant.
been delivered due to error must be returned, as
provided for in article 1895 of the Civil Code. G.R. No. 135803. March 28, 2006.*
O.B. JOVENIR CONSTRUCTION AND DEVELOPMENT
Section 1, Rule 30, cannot be invoked in this case, CORPORATION, OSCAR B. JOVENIR and GREGORIO
because a dismissal of the action without order of the LIONGSON, petitioners, vs. MACAMIR REALTY AND
Court, which is without prejudice, is one by the plaintiff DEVELOPMENT CORPORATION, SPOUSES ROSAURO
before the filing of an answer by the defendant. It and GLORIA MIRANDA and the HONORABLE COURT OF
means that such dismissal would not preclude the APPEALS, respondents.
plaintiff from bringing another action against the same Civil Procedure; Actions; Section 1, Rule 17 of the 1964
defendant on the same subject matter. Such dismissal Rules of Civil Procedure ordained the dismissal of the
under the rule does not bar the institution of an action complaint by the plaintiff as a matter of right at any
by the defendant which he could have brought in the time before service of the answer, requiring no action
action against him by means of a counter-claim or whatever on the part of the court except the
cross-claim. The dismissal in the first case was upon acceptance and recording of the causative document.
motion of the plaintiff consented to by the defendant Section 1, Rule 17 of the 1964 Rules of Civil
and the ground was that the latter had paid and Procedure stated: Dismissal by the plaintiffAn action
satisfied all the claims of the former, as prayed for in may be dismissed by the plaintiff without order of
her complaint. Neither are the provisions of article court by filing a notice of dismissal at any time before
1895 of the Civil Code 1 on solutio indebiti applicable service of the answer or of a motion for summary
4

judgment. Unless otherwise stated in the notice, the Same; Same; The 1997 Rules of Civil Procedure now
dismissal is without prejudice, except that a notice requires that upon the filing of the notice of dismissal,
operates as an adjudication upon the the court issue an order confirming the dismissal. The
_______________ new requirement is intended to qualify the right of a
party to dismiss the action before the adverse party
* THIRD DIVISION. files an answer or asks for summary judgment.The
447 1997 Rules of Civil Procedure now requires that upon
the filing of such notice, the court issue an order
VOL. 485, MARCH 28, 2006 confirming the dismissal. The new requirement is
447 intended to qualify the right of a party to dismiss the
O.B. Jovenir Construction and Development action before the adverse party files an answer or asks
Corporation vs. Macamir Realty and Development for summary judgment. Still, there is no cause to apply
Corporation the 1997 Rules retroactively to this case. A plaintiffs
merits when filed by a plaintiff who has once dismissed right to cause the dismissal of his complaint under the
in a competent court an action based on or including old rules was unqualified.
the same claim. A class suit shall not be dismissed or Same; Same; Procedural rules may not be given
compromised without the approval of the court. retroactive effect if vested rights would be disturbed,
Indubitably, the provision ordained the dismissal of the or if their application would not be feasible or would
complaint by the plaintiff as a matter of right at any work injustice.Procedural rules may not be given
time before service of the answer. The plaintiff was retroactive effect if vested rights would be disturbed,
accorded the right to dismiss the complaint without or if their application would not be feasible or would
the necessity of alleging in the notice of dismissal any work injustice. Since respondents possessed an
ground nor of making any reservation. In Go v. Cruz, unqualified right to cause the dismissal of their
172 SCRA 247 (1989), the Court, through Chief Justice complaint without need of confirmation by the trial
Narvasa, has recognized that where the dismissal of court, as enunciated in the 1964 Rules, they did not err
an action rests exclusively on the will of a plaintiff or in asserting that their first complaint was withdrawn on
claimant, to prevent which the defending party and the day of the filing of their motion to withdraw, and
even the court itself is powerless, requiring in fact no the lower courts were correct in agreeing with
action whatever on the part of the court except the respondents on this point.
acceptance and recording of the causative document. 448
5

448 being among the defendants. The complaint, docketed


SUPREME COURT REPORTS ANNOTATED as Civil Case No. 97-256, sought the annulment of
O.B. Jovenir Construction and Development certain agreements between private respondents and
Corporation vs. Macamir Realty and Development petitioners, as well as damages.4 It was alleged that
Corporation Jovenir Construction was contracted to complete the
PETITION for review on certiorari of a decision of the construction of private respondents condominium
Court of Appeals. project. Private respondents subsequently sought the
termination of their agreements with petitioners after
The facts are stated in the opinion of the Court. it was discovered that Jovenir
Tito F. Sese for respondents. _______________
TINGA, J.:
1 Effective 1 July 1997. See B.M. No. 803, 8 April 1997.
In denying the present petition, the Court affirms the 2 See Rules of Court, Rule 17, Sec. 1.
right of a plaintiff to cause the dismissal of the 3 See Rollo, pp. 11, 23, 93.
complaint at any time before service of the answer 4 Id., at p. 29.
without need of affirmative action on the part of the 449
trial court. It must be qualified though that the
incidents for adjudication occurred a few months VOL. 485, MARCH 28, 2006
before the effectivity of the 1997 Rules of Civil 449
Procedure1 which now requires that upon the filing of O.B. Jovenir Construction and Development
such notice, the court issue an order confirming the Corporation vs. Macamir Realty and Development
dismissal.2 The precedental value of this decision is Corporation
thus qualified to instances occurring prior to the 1997 Construction had misrepresented itself as a legitimate
Rules of Civil Procedure. contractor.5 Respondents likewise prayed for the
On 3 February 1997,3 a complaint was filed before the issuance of a writ of preliminary injunction. A hearing
Regional Trial Court (RTC) of Makati City, with private on the prayer appears to have been conducted on 6
respondents Macamir Realty and Development Corp. February 1997.6
(Macamir Realty) and spouses Rosauro and Gloria It was also alleged in the complaint that Gloria Miranda
Miranda as plaintiffs, and petitioners O.B. Jovenir was the principal stockholder and President of Macamir
Construction and Development Corp. (Jovenir Realty while her husband Rosauro was the owner of
Construction), Oscar B. Jovenir, and Gregorio Liongson
6

the real properties on which the condominium project 8 Id., at pp. 33-34.
was being constructed.7 9 Id., at p. 41.
Almost immediately, two of the impleaded defendants 450
filed their respective motions to dismiss. Defendant
Salud Madeja filed her motion on 6 February 1997, 450
while Cesar Mangrobang, Sr. and Cesar Mangrobang, Jr. SUPREME COURT REPORTS ANNOTATED
followed suit with their motion dated 13 February O.B. Jovenir Construction and Development
1997. Madeja pertinently alleged that while the Corporation vs. Macamir Realty and Development
spouses Miranda had initiated the complaint on behalf Corporation
of Macamir Realty, the real party-in-interest, they Petitioners filed an opposition to the Motion to
failed to attach any Board Resolution authorizing them Withdraw Complaint on 18 February 1997, wherein
to file suit on behalf of the corporation. Oddly enough, they adopted Madejas arguments as to the lack of
Madeja was a member of the Board of Directors of authority on the part of the spouses Miranda to sue on
Macamir Realty, and she averred as a fact that said behalf of Macamir Realty. However, just one day
Board of Directors had not authorized the spouses earlier, or on 17 February 1997, private respondents
Miranda to initiate the complaint against Jovenir filed another complaint against the same defendants
Realty.8 save for Madeja, and seeking the same reliefs as the
On 13 February 1997, or 10 days after the filing of the first complaint. This time, a Board Resolution dated 10
complaint, private respondents filed a Motion to February 1997 authorizing the spouses Miranda to file
Withdraw Complaint, alleging that during the initial the Complaint on behalf of Macamir Realty was
hearing on the prayer for preliminary injunction on 6 attached to the complaint. This second complaint was
February 1997, counsel for plaintiffs discovered a also filed with the Makati RTC and docketed as Civil
supposed technical defect in the complaint x x x that x Case No. 97-379. The Verification and Certification [of]
x x may be a ground for the dismissal of this case.9 Non-Forum Shopping in the second complaint was
Thus, private respondents prayed that the plaintiffs be accomplished by Rosauro Miranda, who averred as
allowed to withdraw the complaint without prejudice. follows:
_______________ 3. That other than Civil Case No. 97-256 filed on
February 3, 1997 before the Regional Trial Court of
5 Id., at pp. 25-26. Makati City which was withdrawn on February 13,
6 Id., at p. 41. 1997, I further certify that we have not commenced
7 Id., at p. 24. any other action or proceedings involving the same
7

issue in the Supreme Court, or Court of Appeals or any second complaint on 17 February 1997, the first
other tribunal or agency; x x x10 complaint was still pending. The Makati RTC denied the
On 24 February 1997, 11 days after the filing of the Motion to Dismiss in an Order13 dated 23 May 1997,
Motion to Withdraw Complaint and seven days after observing that at the time the Motion to Withdraw
the filing of the second Complaint, the Makati RTC, Complaint was filed, none of the defendants had filed
Branch 149, acting in Civil Case No. 97-256, granted any answer or any responsive pleading. Thus, it was
the Motion to Withdraw Complaint. The RTC noted in its then within respondents right to cause the dismissal
Order11 that an action may be dismissed by the of the complaint without having to await action of the
plaintiffs even without Order of the Court by filing a court on their motion.14 This Order was affirmed by
notice of dismissal at anytime before the service of the the Court of Appeals Special Sixth Division in its
answer under Rule 17, Section 1 of the Rules of Court, Decision15 dated 23 June 1998 after petitioners had
and accordingly considered the complaint withdrawn assailed the RTCs order via a special civil action for
without prejudice.12 certiorari filed with the appellate court.16 Hence, the
_______________ present petition.
Petitioners now argue that under Section 1 of Rule 17
10 Id., at p. 60. of the Rules of Civil Procedure in effect at the time of
11 Penned by Judge (now Court of Appeals Associate these antecedents, the plaintiff may obtain the
Justice) Josefina Guevara Salonga. dismissal of his own complaint before a responsive
12 Rollo, p. 47. pleading has been filed through the filing of a notice of
451 dismissal. However, respondents in this case did not
file a notice of dismissal, but instead lodged a Motion
VOL. 485, MARCH 28, 2006 to Withdraw Complaint, a motion which requires
451 affirmative action from the court before the complaint
O.B. Jovenir Construction and Development may be deemed dismissed. Since the Makati RTC had
Corporation vs. Macamir Realty and Development granted the motion only on 24 February 1997, the first
Corporation complaint had not yet been withdrawn as of 17
The battle then shifted to Civil Case No. 97-379, which February 1997, when the second complaint was filed.
had been raffled to Branch 136 of the Makati RTC. On 4 It is thus posited that the Certification of Non-Forum
March 1997, petitioners filed a Motion to Dismiss the Shopping attached to the second complaint was false,
second complaint on the ground of forum shopping. in that it averred that the first complaint was with-
They pointed out that at the time of the filing of the _______________
8

adjudication upon the merits when filed by a plaintiff


13 Penned by Judge Jose R. Bautista. who has once dismissed in a competent court an
14 Rollo, p. 72. action based on or including the same claim. A class
15 Penned by Justice Roberto A. Barrios, concurred in suit shall not be dismissed or compromised without the
by Justices Artemon D. Luna and Demetrio G. approval of the court.17
Demetria. Indubitably, the provision ordained the dismissal of the
16 Id., at pp. 80-84. complaint by the plaintiff as a matter of right at any
452 time before service of the answer.18 The plaintiff was
accorded the right to dismiss the complaint without
452 the necessity of alleging in the notice of dismissal any
SUPREME COURT REPORTS ANNOTATED ground nor of making any reservation.19
O.B. Jovenir Construction and Development In Go v. Cruz,20 the Court, through Chief Justice
Corporation vs. Macamir Realty and Development Narvasa, has recognized that where the dismissal of
Corporation an action rests exclusively on the will of a plaintiff or
drawn on February 13, 1997 when in fact the motion claimant, to prevent
to withdraw complaint was granted only 11 days after. _______________
In sum, respondents had violated the procedural rules
against forum-shopping, which at that time were 17 RULES OF COURT (1964), Rule 17, Sec. 1.
incorporated in Administrative Circular No. 04-94 of 18 See Development Bank of the Philippines v. Pingol
the Supreme Court. Land Transport System Company, Inc., G.R. No.
We find no error on the part of the lower courts since 145908, 22 January 2004, 420 SCRA 652.
the denial of the motion to dismiss is wholly in accord 19 V. Francisco, I The Revised Rules of Court (2nd ed.,
with the Rules of Civil Procedure. 1973), at p. 975.
Section 1, Rule 17 of the 1964 Rules of Civil Procedure 20 G.R. No. 58986, 17 April 1989, 172 SCRA 247.
stated: 453
Dismissal by the plaintiffAn action may be
dismissed by the plaintiff without order of court by VOL. 485, MARCH 28, 2006
filing a notice of dismissal at any time before service of 453
the answer or of a motion for summary judgment. O.B. Jovenir Construction and Development
Unless otherwise stated in the notice, the dismissal is Corporation vs. Macamir Realty and Development
without prejudice, except that a notice operates as an Corporation
9

which the defending party and even the court itself is by the Court. Dismissal is ipso facto upon notice, and
powerless, requiring in fact no action whatever on the without prejudice unless otherwise stated in the
part of the court except the acceptance and recording notice. It is due to these considerations that the
of the causative document.21 The facts in that case petition should be denied.
are well worth considering. Therein, the notice of _______________
dismissal was filed by the plaintiff on 12 November
1981. Respondent filed his answer three days earlier, 21 Id., at pp. 248-249.
or on 9 November, but plaintiff was served a copy of 22 Id., at p. 251.
the answer by registered mail only on 16 November. 23 Id., at p. 252.
Notwithstanding the fact that the answer was filed 454
with the trial court three days prior to the filing of the
notice of dismissal, the Court still affirmed the 454
dismissal sought by the plaintiff. The Court declared SUPREME COURT REPORTS ANNOTATED
that the right of the plaintiff to cause the dismissal of O.B. Jovenir Construction and Development
the complaint by mere notice is lost not by the filing of Corporation vs. Macamir Realty and Development
the answer with the trial court, but upon the actual Corporation
service to the plaintiff of the answer.22 Evidently, respondents had the right to dismiss their
The Court further ruled that [plaintiffs] notice ipso complaint by mere notice on 13 February 1997, since
facto brought about the dismissal of the action then as of even date, petitioners had not yet served their
pending in the Manila Court, without need of any order answer on respondents. The Motion to Withdraw
or other action by the Presiding Judge. The dismissal Complaint makes clear respondents desire to
was effected without regard to whatever reasons or withdraw the complaint without prejudice. That
motives [plaintiff] might have had for bringing it about, respondents resorted to a motion to effect what they
and was, as the same Section 1, Rule 17 points out, could have instead by mere notice may be indicative
without prejudice, the contrary not being otherwise of a certain degree of ignorance of procedural rules on
stated in the notice and it being the first time the the part of respondents counsel. Yet such error, if it
action was being so dismissed.23 could be called as such, should hardly be of fatal
It is quite clear that under Section 1, Rule 17 of the old consequence. Petitioners posit that the remedy of
Rules, the dismissal contemplated therein could be filing a notice of dismissal is not exclusive,
accomplished by the plaintiff through mere notice of respondents having the option of securing the
dismissal, and not through motion subject to approval courts approval to the dismissal.24 On the contrary,
10

the trial court has no discretion or option to deny the VOL. 485, MARCH 28, 2006
motion, since dismissal by the plaintiff under Section 455
1, Rule 17 is guaranteed as a matter of right to the O.B. Jovenir Construction and Development
plaintiffs. Even if the motion cites the most ridiculous Corporation vs. Macamir Realty and Development
of grounds for dismissal, the trial court has no choice Corporation
but to consider the complaint as dismissed, since the Thus, the complaint could be properly considered as
plaintiff may opt for such dismissal as a matter of having been dismissed or withdrawn as of 13 February
right, regardless of ground. 1997. Accordingly, when respondents filed their new
We are in accord with the Court of Appeals when it complaint relating to the same cause of action on 17
pronounced: February 1997, the old complaint was no longer
While [the Motion to Withdraw Complaint] is styled as pending. The certification against forum-shopping
a motion and contains a prayer, these are attached to the new complaint correctly asseverated
innocuous errors and superfluities that do not detract that the old complaint was withdrawn on February 13,
from its being a notice of dismissal made under said 1997.27
Section 1 of Rule 17 and which ipso facto dismissed Petitioners are unable to propose any convincing legal
the case. It is a hornbook rule that it is not the caption argument or any jurisprudence that would sway the
of a pleading but the allegations thereat that Court to their point of view. At the same time, our
determines its nature.25 The court order of dismissal is present ruling must be distinguished from Ortigas &
a mere surplusage under the circumstances and Company Limited Partnership v. Velasco,28 wherein it
emphasized by the court a quo itself when it granted was advanced that theoretically every final
the motion [x x x] considering that an action may be disposition of an action does not attain finality until
dismissed by the plaintiffs even without Order of the after fifteen (15) days therefrom, x x x the plaintiff
Court [x x x]26 may move to withdraw and set aside his notice of
_______________ dismissal and revive his action, before that period
lapses.29 That statement was made in the context of
24 Rollo, p. 16. ruling that a plaintiff may move for the revival of the
25 Citing Ras v. Sua, 134 Phil. 131; 25 SCRA 153 complaint dismissed on his instance under Section 1 of
(1968). Rule 17 only within 15 days upon notice; otherwise the
26 Rollo, pp. 83-84. remedy of the plaintiff would be to file a new
455 complaint. This observation in Ortigas does not detract
from the fact that under Section 1, Rule 17 of the
11

previous Rules, the complaint is deemed ipso facto Procedural rules may not be given retroactive effect if
dismissed on the day of the filing of the notice. This vested rights would be disturbed,32 or if their
again is because dismissal at the instance of the application would not be feasible or would work
plaintiff under Section 1, Rule 17 is a matter of right, injustice.33 Since respondents possessed an
and under the 1964 Rules of Civil Procedure, effective unqualified right to cause the dismissal of their
without need of any affirmative action on the part of complaint without need of confirmation by the trial
the trial court. court, as enunciated in the 1964 Rules, they did not err
As noted at the onset, the 1997 Rules of Civil in asserting that their first complaint was withdrawn on
Procedure now requires that upon the filing of such the day of the filing of their motion to withdraw, and
notice, the court issue an order confirming the the lower courts were correct in agreeing with
dismissal.30 The new require- respondents on this point.
_______________ WHEREFORE, the Petition is DENIED. Costs against
petitioners.
27 Id., at p. 60. SO ORDERED.
28 G.R. Nos. 109645 and 112564, 25 July 1994, 234 Carpio (Actg. Chairperson) and Carpio-Morales, JJ.,
SCRA 455. concur.
29 Id., at pp. 486-487. Quisumbing (Chairperson), J., On Official Leave.
30 Supra note 2. Petition denied.
456 Note.When the issues, upon the plaintiffs instance, a
dismissal order that is silent as to whether it is with or
456 without prejudice, the presumption is, that it is without
SUPREME COURT REPORTS ANNOTATED prejudice. (Delgado vs. Court of Appeals, 447 SCRA
O.B. Jovenir Construction and Development 402 [2004])
Corporation vs. Macamir Realty and Development o0o
Corporation
ment is intended to qualify the right of a party to G.R. No. 133657. May 29, 2002.*
dismiss the action before the adverse party files an REMINGTON INDUSTRIAL SALES CORPORATION,
answer or asks for summary judgment.31 Still, there is petitioner, vs. THE COURT OF APPEALS and BRITISH
no cause to apply the 1997 Rules retroactively to this STEEL (ASIA), LTD., respondents.
case. A plaintiffs right to cause the dismissal of his Actions; Pleadings and Practice; Amendment of
complaint under the old rules was unqualified. Complaints; A complaint can still be amended as a
12

matter of right before an answer has been filed, even if reason for this rule is implied in the subsequent
there is a pending proceeding for its dismissal before Section 3 of Rule 10. Under this provision, substantial
the higher courtbefore the filing of an answer, the amendment of the complaint is not allowed without
plaintiff has the absolute right to amend the complaint leave of court after an answer has been served,
whether a new cause of action or change in theory is because any material change in the allegations
introduced.The basic issue in this case is whether or contained in the complaint could prejudice the rights
not the Court of Appeals, by granting the extraordinary of the defendant who has already set up his defense in
writ of certiorari, correctly ordered the dismissal of the the answer.
complaint for failure to state a cause of action, despite Same; Same; Same; It cannot be said that the
the fact that petitioner exercised its right to amend the defendants rights are violated by changes made in
defective complaint under Section 2, Rule 10 of the the complaint if he has yet to file an answer thereto.
Rules of Court. Stated differently, the query posed Conversely, it cannot be said that the defendants
before us is: can a complaint still be amended as a rights have been violated by changes made in the
matter of right before an answer has been filed, even if complaint if he has yet to file an answer thereto. In
there was a pending proceeding for its dismissal such an event, the defendant has not presented any
before the higher court? Section 2, Rule 10 defense that can be altered or affected by the
______________ amendment of the complaint in accordance with
Section 2 of Rule 10. The defendant still retains the
* FIRST DIVISION. unqualified opportunity to address the allegations
500 against him by properly setting up his defense in the
answer. Considerable leeway is thus given to the
500 plaintiff to amend his complaint once, as a matter of
SUPREME COURT REPORTS ANNOTATED right, prior to the filing of an answer by the defendant.
Remington Industrial Sales Corporation vs. Court of Same; Same; Same; The right granted to the plaintiff
Appeals under procedural law to amend the complaint before
of the Revised Rules of Court explicitly states that a an answer has been served is not precluded by the
pleading may be amended as a matter of right before filing of a motion to dismiss.The right granted to the
a responsive pleading is served. This only means that plaintiff under procedural law to amend the complaint
prior to the filing of an answer, the plaintiff has the before an answer has been served is not precluded by
absolute right to amend the complaint whether a new the filing of a motion to dismiss or any other
cause of action or change in theory is introduced. The proceeding contesting its sufficiency. Were we to
13

conclude otherwise, the right to amend a pleading answering defendant, but not as to claims asserted
under Section 2, Rule 10 will be rendered nugatory and against the other defendants.The fact that the other
ineffectual, since all that a defendant has to do to defendants below has filed their answers to the
foreclose this remedial right is to challenge the complaint does not bar petitioners right to amend the
adequacy of the complaint before he files an answer. complaint as against respondent. Indeed, where some
Same; Same; Same; The Court finds no practical but not all the defendants have answered, the plaintiff
advantage in ordering the dismissal of the complaint may still amend its complaint once, as a matter of
and for the plaintiff to re-file the same, when he can right, in respect to claims asserted solely against the
still clearly amend the complaint as a matter of right. non-answering defendant, but not as to claims
In this case, the remedy espoused by the appellate asserted against the other defendants.
court in its assailed judgment will precisely result in PETITION for review on certiorari of a decision of the
multiple suits, involving the same set of facts and to Court of Appeals.
which the defendants would likely raise the same or, at
least, related defenses. Plainly stated, we find no The facts are stated in the opinion of the Court.
practical advantage in ordering the dismissal of the Renato H. Collado for petitioner.
complaint against respondent and for petitioner to re- Romulo, Mabanta, Buenaventura, Sayoc & Delos
file the same, when the latter can still clearly amend Angeles for respondent British Steel (Asia) Ltd.
the complaint as a matter of right. The amendment of YNARES-SANTIAGO, J.:
the complaint would not prejudice respon-
501 Before us is a petition for review under Rule 45 of the
Rules of Court assailing the decision of the Court of
VOL. 382, MAY 29, 2002 Appeals in CA-G.R. SP No. 44529 dated February 24,
501 1998,1 which granted the petition for certiorari filed by
Remington Industrial Sales Corporation vs. Court of respondent British Steel Asia Ltd. (British Steel) and
Appeals ordered the dismissal of petitioner Remington
dents or delay the action, as this would, in fact, Industrial Sales Corporations (Remington) complaint
simplify the case and expedite its disposition. for sum of money and damages. Also assailed in this
Same; Same; Same; Where some but not all the petition is the resolution2 of the Court of Appeals
defendants have answered, the plaintiff may still denying petitioners motion for reconsideration.
amend its complaint once, as a matter of right, in The facts of the case, as culled from the records, are
respect to claims asserted solely against the non- as follows:
14

______________ any act or is guilty of any omission in violation of


petitioners legal rights. Apart from the allegation in
1 Rollo, p. 21; per Special Second Division composed the complaints Jurisdictional Facts that:
of Associate Justices Corona Ibay-Somera, Ramon U. 1.05. Defendants British Steel (Asia) Ltd. and Ferro
Mabutas and Hilarion L. Aquino, ponente. Trading GMBH, while understood by the plaintiff as
2 Ibid., at 34. mere suppliers of goods for defendant ISL, are
502 impleaded as party defendants pursuant to Section 13,
Rule 3 of the Revised Rules of Court.7
502 no other reference was made to respondent that would
SUPREME COURT REPORTS ANNOTATED constitute a valid cause of action against it. Since
Remington Industrial Sales Corporation vs. Court of petitioner failed to plead any cause of action against
Appeals respondent as alternative defendant under Section 13,
On August 21, 1996, petitioner filed a complaint3 for Rule 3,8 the trial court should have ordered the
sum of money and damages arising from breach of dismissal of the complaint insofar as respondent was
contract, docketed as Civil Case No. 96-79674, before concerned.
the sala of Judge Marino M. De la Cruz of the Regional ______________
Trial Court of Manila, Branch 22. Impleaded as principal
defendant therein was Industrial Steels, Ltd. (ISL), with 3 Id., at 36.
Ferro Trading GMBH (Ferro) and respondent British 4 Id., at 74-83.
Steel as alternative defendants. 5 Id., at 84.
ISL and respondent British Steel separately moved for 6 Id., at 85-94.
the dismissal of the complaint on the ground that it 7 Id., at 37.
failed to state a cause of action against them. On April 8 SEC. 13. Alternative Defendants.Where the plaintiff
7, 1997, the RTC denied the motions to dismiss,4 as is uncertain against who of several persons he is
well as the ensuing motion for reconsideration.5 ISL entitled to relief, he may join any
then filed its answer to the complaint. 503
On the other hand, respondent British Steel filed a
petition for certiorari and prohibition before the Court VOL. 382, MAY 29, 2002
of Appeals,6 docketed as CA-G.R. SP No. 44529. 503
Respondent claimed therein that the complaint did not Remington Industrial Sales Corporation vs. Court of
contain a single averment that respondent committed Appeals
15

Meanwhile, petitioner sought to amend its complaint against petitioner British Steel (Asia) Ltd. Costs against
by incorporating therein additional factual allegations private respondent.
constitutive of its cause of action against respondent. SO ORDERED.13
Pursuant to Section 2, Rule 109 of the Rules of Court, ______________
petitioner maintained that it can amend the complaint
as a matter of right because respondent has not yet or all of them as defendants in the alternative,
filed a responsive pleading thereto.10 although a right to relief against one may be
Subsequently, petitioner filed a Manifestation and inconsistent with a right of relief against the other.
Motion11 in CA-G.R. SP No. 44529 stating that it had 9 SEC. 2. Amendments as a matter of right.A party
filed a Motion to Admit Amended Complaint together may amend his pleading once as a matter of right at
with said Amended Complaint before the trial court. any time before a responsive pleading is served or, in
Hence, petitioner prayed that the proceedings in the the case of a reply, at any time within ten (10) days
special civil action be suspended. after it is served.
On January 29, 1998, the trial court ruled on 10 CA Records, p. 100.
petitioners Motion to Admit Amended Complaint thus: 11 Id., at 114-115.
WHEREFORE, the Amended Complaint is NOTED and 12 Supra, Note 1 at 197-198.
further proceedings thereon and action on the other 13 Id., at 32.
incidents as aforementioned are hereby held in 504
abeyance until final resolution by the Honorable Court
of Appeals (Special 6th Division) of the petition for 504
certiorari and prohibition of petitioner (defendant SUPREME COURT REPORTS ANNOTATED
British) and/or Manifestations and Motions of therein Remington Industrial Sales Corporation vs. Court of
private respondent, herein plaintiff. Appeals
SO ORDERED.12 In the same decision, the Court of Appeals addressed
Thereafter, on February 24, 1998, the Court of Appeals petitioners prayer for suspension of proceedings in
rendered the assailed decision in CA-G.R. SP No. 44529 this wise:
as follows: The incident which transpired after the filing of the
WHEREFORE, this Court grants the writ of certiorari instant petition for certiorari and prohibition are
and orders the respondent judge to dismiss without immaterial in the resolution of this petition. What this
prejudice the Complaint in Civil Case No. 96-79674 Court is called upon to resolve is whether the lower
court committed grave abuse of discretion when it
16

denied petitioners motion to dismiss the complaint SEPARATE ACTION, THEREBY ABETTING MULTIPLICITY
against it. The admission or rejection by the lower OF SUITS.15
court of said amended complaint will not, insofar as The basic issue in this case is whether or not the Court
this Court is concerned, impinge upon the issue of of Appeals, by granting the extraordinary writ of
whether or not said court gravely abused its discretion certiorari, correctly
in denying petitioners motion to dismiss.14 ______________
Petitioner filed a motion for reconsideration of the
appellate courts decision, which was denied in a 14 Id., at 31-32.
resolution dated April 28, 1998. Hence, this petition, 15 Id., at 6.
anchored on the following grounds: 505
-I-
VOL. 382, MAY 29, 2002
THE HON. COURT OF APPEALS ERRED IN ORDERING 505
THE DISMISSAL OF THE COMPLAINT AGAINST THE Remington Industrial Sales Corporation vs. Court of
PRIVATE RESPONDENT FOR LACK OF CAUSE OF ACTION Appeals
UNDER THE ORIGINAL COMPLAINT EVEN AS SAID ordered the dismissal of the complaint for failure to
COMPLAINT WAS ALREADY AMENDED AS A MATTER OF state a cause of action, despite the fact that petitioner
RIGHT AND SUFFICIENT CAUSES OF ACTION ARE exercised its right to amend the defective complaint
AVERRED IN THE AMENDED COMPLAINT, IN GROSS under Section 2, Rule 10 of the Rules of Court. Stated
VIOLATION OF SEC. 2, RULE 10 OF THE 1997 RULES OF differently, the query posed before us is: can a
CIVIL PROCEDURE. complaint still be amended as a matter of right before
-II- an answer has been filed, even if there was a pending
proceeding for its dismissal before the higher court?
THE HON. COURT OF APPEALS ERRED IN HOLDING Section 2, Rule 1016 of the Revised Rules of Court
THAT IF THE PETITIONER WANTS TO PURSUE ITS CASE explicitly states that a pleading may be amended as a
AGAINST THE PRIVATE RESPONDENT, IT HAS TO REFILE matter of right before a responsive pleading is served.
THE COMPLAINT, THUS PRE-EMPTING THE RIGHT OF This only means that prior to the filing of an answer,
THE LOWER COURT TO RULE ON THE AMENDED the plaintiff has the absolute right to amend the
COMPLAINT AND COMPELLING THE PETITIONER TO complaint whether a new cause of action or change in
LITIGATE ITS CAUSES OF ACTION AGAINST THE PRIVATE theory is introduced.17 The reason for this rule is
RESPONDENT AS AN ALTERNATIVE DEFENDANT IN A implied in the subsequent Section 3 of Rule 10.18
17

Under this provision, substantial amendment of the after notice to the adverse party, and an opportunity
complaint is not allowed without leave of court after an to be heard.
answer has been served, because any material change 19 Siasoco v. Court of Appeals, 303 SCRA 186, 195
in the allegations contained in the complaint could (1999).
prejudice the rights of the defendant who has already 506
set up his defense in the answer.
Conversely, it cannot be said that the defendants 506
rights have been violated by changes made in the SUPREME COURT REPORTS ANNOTATED
complaint if he has yet to file an answer thereto. In Remington Industrial Sales Corporation vs. Court of
such an event, the defendant has not presented any Appeals
defense that can be altered19 or affected by the answer. Considerable leeway is thus given to the
amendment of the complaint in accordance with plaintiff to amend his complaint once, as a matter of
Section 2 of Rule 10. The defendant still retains the right, prior to the filing of an answer by the defendant.
unqualified opportunity to address the allegations The right granted to the plaintiff under procedural law
against him by properly setting up his defense in the to amend the complaint before an answer has been
______________ served is not precluded by the filing of a motion to
dismiss20 or any other proceeding contesting its
16 Supra, Note 8. sufficiency. Were we to conclude otherwise, the right to
17 See Radio Communications of the Philippines, Inc. amend a pleading under Section 2, Rule 10 will be
(RCPI) v. Court of Appeals, Daity Salvosa, and Ray rendered nugatory and ineffectual, since all that a
Dean Salvosa, 271 SCRA 286, 289 (1997), citing defendant has to do to foreclose this remedial right is
Moran, Comments on the Rules of Court, Vol. I, 1979 to challenge the adequacy of the complaint before he
ed., p. 362. files an answer.
18 SEC. 3. Amendments by Leave of Court.Except as Moreover, amendment of pleadings is favored and
provided in the next preceding section, substantial should be liberally allowed in the furtherance of justice
amendments may be made only upon leave of court. in order to determine every case as far as possible on
But such leave may be refused if it appears to the its merits without regard to technicalities. This
court that the motion was made with intent to delay. principle is generally recognized to speed up trial and
Orders of the court upon the matters provided in this save party litigants from incurring unnecessary
section shall be made upon motion filed in court, and expense, so that a full hearing on the merits of every
case may be had and multiplicity of suits avoided.21
18

In this case, the remedy espoused by the appellate plaint as against respondent. Indeed, where some but
court in its assailed judgment will precisely result in not all the defendants have answered, the plaintiff
multiple suits, involving the same set of facts and to may still amend its complaint once, as a matter of
which the defendants would likely raise the same or, at right, in respect to claims asserted solely against the
least, related defenses. Plainly stated, we find no non-answering defendant, but not as to claims
practical advantage in ordering the dismissal of the asserted against the other defendants.22
complaint against respondent and for petitioner to re- Furthermore, we do not agree with respondents claim
file the same, when the latter can still clearly amend that it will be prejudiced by the admission of the
the complaint as a matter of right. The amendment of Amended Complaint because it had spent time, money
the complaint would not prejudice respondents or and effort to file its petition before the appellate
delay the action, as this would, in fact, simplify the court.23 We cannot see how the result could be any
case and expedite its disposition. different for respondent, if petitioner merely re-filed
The fact that the other defendants below has filed the complaint instead of being allowed to amend it. As
their answers to the complaint does not bar adverted to earlier, amendment would even work to
petitioners right to amend the com- respondents advantage since it will undoubtedly
______________ speed up the proceedings before the trial court.
Consequently, the amendment should be allowed in
20 F.D. Regalado, Remedial Law Compendium, Vol. I, the case at bar as a matter of right in accordance with
1997 ed., p. 183. the rules.
21 Heirs of Marcelino Pagobo v. Court of Appeals, et WHEREFORE, the petition is GRANTED. The assailed
al., 280 SCRA 870, 882 (1997), citing Sedeco v. Court decision and resolution of the Court of Appeals in CA-
of Appeals, 115 SCRA 96, 103 (1982); Calabig v. G.R. SP No. 44529 dated February 24, 1998 and April
Villanueva, 135 SCRA 300, 307 (1985); Cabutin v. 28, 1998, respectively, are REVERSED and SET ASIDE.
Amacio, 170 SCRA 750, 756 (1989); Eugenio v. Velez, The Regional Trial Court of Manila, Branch 22 is further
185 SCRA 425, 435 (1990). ordered to ADMIT petitioners Amended Complaint in
507 Civil Case No. 96-79674 and to conduct further
proceedings in said case.
VOL. 382, MAY 29, 2002 SO ORDERED.
507 Davide, Jr. (C.J.), Puno, Kapunan and Austria-
Remington Industrial Sales Corporation vs. Court of Martinez, JJ., concur.
Appeals
19

Petition granted, judgment and resolution reversed Where some but not all the defendants have
and set aside. RTC-Manila, Br. 22 ordered to admit answered, plaintiffs may amend their Complaint once,
petitioners amended complaint. as a matter of right, in respect to claims asserted
Notes.The new Section 3 of Rule 10 of the Rules of solely against the non-answering defendants, but not
Court relaxes further the rule on amendment of as to claims asserted against the other defendants.
pleadingsrefusal to allow amendments other than (Siasoco vs. Court of Appeals, 303 SCRA 186 [1999])
those which may be made as a matter of o0o
______________
G.R. No. 153034. September 20, 2005.*
22 Supra, Note 19 at 194, citing Francisco, The Revised DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,
Rules of Court, Vol. 1, p. 646 and case cited therein. vs. HONORABLE COURT OF APPEALS and ROSALINDA
23 Supra, Note 1 at 216. CANADALLA-GO, represented by her Attorney-in-fact
508 BENITO A. CANADALLA, respondents.
Remedial Law; Pleadings and Practice; Admissions; A
508 party should not be compelled to admit matters of fact
SUPREME COURT REPORTS ANNOTATED already admitted by his pleading and to make a
People vs. Coca, Jr. second denial of those already denied in his answer to
right under Section 2 may be based only on the ground the complaint.We have held in Po v. Court of Appeals
that the motion was made with intent to delay. (Heirs that [a] party should not be compelled to admit
of Marcelino Pagobo vs. Court of Appeals, 280 SCRA matters of fact already admitted by his pleading and
870 [1997]) to make a second denial of those already denied in his
The filing of an amended pleading does not retroact to answer to the complaint.
the date of the filing of the original, hence, the statute Same; Same; Same; Rule 26 of the Rules of Court does
of limitations runs until the submission of the not refer to a mere reiteration of what has already
amendment. (Republic vs. Sandiganbayan, 293 SCRA been alleged in the pleadings.The Po doctrine was
440 [1998]) brought a step further in Concrete Aggregates Co. v.
An order granting or denying a motion to amend the Court of Appeals, where we ruled that if the factual
complaint on substantial matters is discretionary with allegations in the complaint are the very same
the court. (Zarate vs. RTC of Kalibo, Aklan (Branch 2), allegations set forth in the request for admission and
316 SCRA 594 [1999]) have already been specifically denied or otherwise
dealt with in the answer, a response to the request is
20

no longer required. It becomes, therefore, unnecessary which can be excused in the interest of justice
to dwell on the issue of the propriety of an unsworn conformably to the well-entrenched doctrine that all
response to the request for admission. The reason is pleadings should be liberally construed as to do
obvious. A request for admission that merely reiterates substantial justice. The filing of such Comment
the allegations in an earlier pleading is inappropriate substantially complied with Rule 26. Consequently, the
under Rule 26 of the Rules of Court, which, as a mode DBP cannot be deemed to have impliedly admitted the
of discovery, contemplates of interrogatories that matters set forth in the Request for Admission for the
would clarify and tend to shed light on the truth or mere reason that its Comment was not under oath.
falsity of the allegations in the Same; Same; Same; Scope of matters that a party may
_______________ request the adversary to admit under Section 1 of Rule
26 of the Rules of Court.Under Section 1 of Rule 26
* FIRST DIVISION. of the Rules of Court, the scope of matters that a party
318 may request the adversary to admit are (1) the
genuineness of any material and relevant document
318 described in and exhibited with the request; and (2)
SUPREME COURT REPORTS ANNOTATED the truth of any material and relevant matter of fact
Development Bank of the Philippines vs. Court of set forth in the request. The rule authorizing a party to
Appeals call on the other party to make an admission implies
pleading. Rule 26 does not refer to a mere reiteration the making of demands for admission of relevant and
of what has already been alleged in the pleadings. material matters of factsand not for admission of
Same; Same; Same; That the Comment was not under matters of law, conclusions, or opinions.
oath is not a substantive, but merely a formal, defect Same; Same; Same; If a request for admission would
which can be excused in the interest of justice only serve to delay the proceedings by abetting
conformably to the well-entrenched doctrine that all redundancy in the pleadings, the intended purpose for
pleadings should be liberally construed as to do the rule would certainly be defeated.It must be
substantial justice.Even assuming that a reply to the stressed that the rule on admission as a mode of
request is needed, it is undisputed that the DBP filed discovery is intended to expedite trial and to relieve
its Comment either admitting or specifically denying parties of the costs of proving facts which will not be
again the matters sought to be admitted and stating disputed on trial and the truth of which can be
the reasons therefor. That the Comment was not under ascertained by reasonable inquiry. Thus, if a request
oath is not a substantive, but merely a formal, defect for admission would only serve to delay the
21

proceedings by abetting redundancy in the pleadings, security, Canadalla executed on 19 January 1977 a
the intended purpose for the rule would certainly be Deed of Real Estate Mortgage over two parcels of land
defeated. After all, rules of procedures are in- covered by TCT No. T-7609 and OCT No. P-4226 of the
319 Registry of Deeds of Infanta, Quezon. On 10 August
1979, Canadalla procured another loan in the amount
VOL. 470, SEPTEMBER 20, 2005 of P150,000, which was secured by a mortgage over
319 the same two parcels of land and a third parcel
Development Bank of the Philippines vs. Court of covered by OCT No. P-6679 of the Registry of Deeds of
Appeals the Province of Quezon.
tended to promote, not to defeat, substantial justice Since the piggery business allegedly suffered strong
and should not therefore be applied in a very rigid and reverses, compounded by devastating typhoons, the
technical sense. prevalence of diseases, and destruction of her store by
PETITION for review on certiorari of the decision and fire, Canadalla failed to comply with her obligations to
resolution of the Court of Appeals. the DBP. Subsequently, the DBP extrajudicially
foreclosed the mortgages. On 5 September 1989, the
The facts are stated in the opinion of the Court. mortgaged properties were sold at public auction to
Office of the Legal Counsel, DBP for petitioner. the DBP, which emerged as the only bidder.
Faustino S. Tugade, Jr. for private respondent. 320
DAVIDE, JR., C.J.:
320
Once again, we are confronted with the issue of SUPREME COURT REPORTS ANNOTATED
whether matters requested to be admitted under Rule Development Bank of the Philippines vs. Court of
26 of the Rules of Courtwhich are mere reiterations Appeals
of the allegations in the complaint and are specifically The sale was evidenced by a Certificate of Sale and
denied in the answermay be deemed impliedly registered on 17 January 1990.
admitted on the ground that the response thereto is Canadalla was able to redeem the foreclosed property
not under oath. covered by TCT No. T-7609 within the redemption
The controversy stemmed in January 1977 when Irene period of one year from 17 January 1990. As to the
Canadalla obtained a loan of P100,000 from petitioner properties covered by OCT Nos. P-4226 and P-6679,
Development Bank of the Philippines (DBP) for she had six years from 17 January 1990 to redeem the
purposes of financing her piggery business. As same, they being free patent titles. On 5 October
22

1995, she offered to redeem the properties for a 4 Id., pp. 79-81.
redemption price of P1.5 million. But the DBP 321
countered that the redemption price under its 1986
Revised Chapter must be based on its total claim, VOL. 470, SEPTEMBER 20, 2005
which was P1,927,729.50 as of 30 September 1995. 321
Subsequently, she allegedly assigned her right to Development Bank of the Philippines vs. Court of
redeem her properties to her daughter, herein private Appeals
respondent Rosalinda A. Canadalla-Go. During the hearing on 20 May 1997, Go objected to
In January 1996, Go offered to redeem the properties the Comment reasoning that it was not under oath as
for P526,882.40. In response, the DBP advised Go that required by Section 2, Rule 26 of the Rules of Court,
the acceptable redemption price was P1,814,700.58 and that it failed to state the reasons for the admission
representing its total claim as of 17 January 1996. or denial of matters for which an admission was
When Go failed to redeem the properties, the DBP requested. For its part, the DBP manifested that, first,
consolidated its titles over the subject properties and the statements, allegations, and documents contained
new certificates of title were issued in its name. in the Request for Admission are substantially the
On 8 July 1996, Go filed with the Regional Trial Court same as those in the Supplemental Complaint; second,
(RTC) of Makati City a Supplemental Complaint1 for the they had already been either specifically denied or
Exercise of Right of Redemption and Determination of admitted by the DBP in its Answer; and third, the
Redemption Price, Nullification of Consolidation, reasons for the denial or admission had already been
Annulment of Titles, with Damages, Plus Injunction and specifically stated therein.
Temporary Restraining Order. The case was docketed On 22 May 1997, the DBP filed a manifestation5
as Civil Case No. 96-483 in Branch 148 of said court. incorporating its response to Gos objections during
After the DBP filed its Answer2 but before the parties the 20 May 1997 hearing, attaching therewith an
could proceed to trial, Go filed a Request for Admission affidavit6 executed by its officer and counsel Atty.
by Adverse Party.3 Thereafter, the DBP filed its Perla Melanie Caraan.
Comment.4 On 9 June 1997, the RTC issued an Order7 granting the
_______________ motion of Go to consider as impliedly admitted the
matters sought to be admitted in the Request for
1 Rollo, pp. 37-55. Admission and all those denied by the DBP in its
2 Id., pp. 56-58. Comment.
3 Id., pp. 69-78.
23

Its motion for reconsideration8 having been denied,9 as having substantially complied with the
the DBP filed with the Court of Appeals a petition for requirements of Section 2 of Rule 26 of the Rules of
certiorari,10 docketed as CA-G.R. SP No. 62142, Court. The affidavit of Atty. Caraan, one of the legal
attributing to the court a quo grave abuse of discretion counsels of the DBP, failed to cure the defect because
in granting the Request for Admission despite the fact it was submitted after the motion for the declaration of
that (1) some of the matters assigned in the Request implied admission had been made and the hearing of
for Admission had already been specifically denied in the same had been terminated. Moreover, in the
its Answer to the Supplemental Complaint; (2) the hearing of 20 May 1997, the DBP only made a
sworn statement of Atty. Caraan had sufficiently cured manifestation that the matters sought for admission
the alleged defect of the Comment; and (3) some of had already been covered in the Answer without
the matters in the Request for Admission involved objecting to the propriety of some of the matters
questions of law, sought to be admitted. Thus, the DBP failed to timely
_______________ raise its objections on the ground of impropriety.
The DBPs Motion for Reconsideration12 was denied by
5 Id., pp. 82-84. the Court of Appeals in a Resolution13 dated 16 April
6 Id., pp. 85-87. 2002. Hence, the DBP is now before this Court by way
7 Rollo, pp. 88-96. Per Judge Oscar B. Pimentel. of certiorari under Rule 45 of the Rules of Court
8 Id., pp. 97-104. challenging the Decision and Resolution of the Court of
9 Id., pp. 115-124. Appeals.
10 Id., pp. 125-141. We find for petitioner DBP.
322 Indeed, as pointed out by the DBP, the matters stated
in Gos Request for Admission are the same as those
322 alleged in her Supplemental Complaint. Besides, they
SUPREME COURT REPORTS ANNOTATED had already been either specifically denied or admitted
Development Bank of the Philippines vs. Court of in DBPs Answer to the Supplemental Complaint. To
Appeals require the DBP to admit these matters under Rule 26
conclusions of facts, and matters of opinion which are of the Rules of Court would be pointless and
improper subjects of such a request. superfluous. Sections 1 and 2 of Rule 26, before their
On 6 August 2001, the Court of Appeals dismissed the amendment took effect on 1 July 1997, read:
petition for lack of merit.11 It held that since DBPs _______________
answer was not under oath, it could not be considered
24

11 Id., pp. 31-34. Penned by Associate Justice Alicia L. he cannot truthfully either admit or deny those
Santos, with Associate Justices Ramon A. Barcelona matters.
and Rodrigo V. Cosico concurring. Objections on the ground of irrelevancy or impropriety
12 Rollo, pp. 146-152. of the matter requested shall be promptly submitted to
13 Id., p. 36. the court for resolution.
323 We have held in Po v. Court of Appeals14 that [a]
party should not be compelled to admit matters of fact
VOL. 470, SEPTEMBER 20, 2005 already admitted by his pleading and to make a
323 second denial of those already denied in his answer to
Development Bank of the Philippines vs. Court of the complaint.
Appeals The Po doctrine was brought a step further in Concrete
SECTION 1. Request for admission.At any time after Aggregates Co. v. Court of Appeals,15 where we ruled
issues have been joined, a party may file and serve that if the factual allegations in the complaint are the
upon any other party a written request for the very same allegations set forth in the request for
admission by the latter of the genuineness of any admission and have already been specifically denied
relevant documents described in and exhibited with or otherwise dealt with in the answer, a response to
the request or of the truth of any relevant matter of the request is no longer required. It becomes,
fact set forth in the request. Copies of the documents therefore, unnecessary to dwell on the issue of the
shall be delivered with the request unless copies have propriety of
already been furnished. _______________
SEC. 2. Implied admission.Each of the matters of
which an admission is requested shall be deemed 14 G.R. No. L-34341, 22 August 1988, 164 SCRA 668,
admitted unless, within a period designated in the 670. See Briboneria v. Court of Appeals, G.R. No.
request, which shall not be less than ten (10) days 101682, 14 December 1992, 216 SCRA 607; Concrete
after service thereof, or within such further time as the Aggregates Co. v. Court of Appeals, 334 Phil. 77; 266
court may allow on motion and notice, the party to SCRA 97 (1997); Laada v. Court of Appeals, 426 Phil.
whom the request is directed serves upon the party 249; 375 SCRA 543 (2002); Duque v. Court of Appeals,
requesting the admission a sworn statement either 433 Phil. 33; 383 SCRA 520 (2002).
denying specifically the matters of which an admission 15 Supra.
is requested or setting forth in detail the reasons why 324
25

324 Request for Admission for the mere reason that its
SUPREME COURT REPORTS ANNOTATED Comment was not under oath.
Development Bank of the Philippines vs. Court of At any rate, the petitioner submitted a Manifestation,
Appeals together with an affidavit incorporating its specific
an unsworn response to the request for admission. The denials of Gos factual allegations, immediately after it
reason is obvious. A request for admission that merely filed its Comment on the Request for Admission and
reiterates the allegations in an earlier pleading is before the RTC issued the questioned 9 June 1997
inappropriate under Rule 26 of the Rules of Court, Order, with a view to avoid any technicalities on the
which, as a mode of discovery, contemplates of matter. The filing of the affidavit amounted also to a
interrogatories that would clarify and tend to shed light substantial compliance with the requirements of Rule
on the truth or falsity of the allegations in the 26 of the Rules of Court.
pleading. Rule 26 does not refer to a mere reiteration _______________
of what has already been alleged in the pleadings.16
Hence, the DBP did not even have to file its Comment 16 Concrete Aggregates Co. v. Court of Appeals, supra
on Gos Request for Admission, which merely note 14.
reproduced the allegations in her complaint. DBPs 17 Concrete Aggregates Co. v. Court of Appeals, supra
Answer itself controverts the averments in the note 14.
complaint and those recopied in the request for 325
admission.
Even assuming that a reply to the request is needed, it VOL. 470, SEPTEMBER 20, 2005
is undisputed that the DBP filed its Comment either 325
admitting or specifically denying again the matters Development Bank of the Philippines vs. Court of
sought to be admitted and stating the reasons Appeals
therefor. That the Comment was not under oath is not Moreover, some of the matters sought to be admitted
a substantive, but merely a formal, def ect which can in the Request for Admission were matters of law or
be excused in the interest of justice conformably to the opinions, to wit:
well-entrenched doctrine that all pleadings should be 20. Section 6 of Act No. 3135, as amended, recognizes
liberally construed as to do substantial justice.17 The the right of redemption, just as it provides the amount
filing of such Comment substantially complied with to be paid by a redemptioner. On the other hand,
Rule 26. Consequently, the DBP cannot be deemed to Section 30, Rule 39, Revised Rules of Court specifically
have impliedly admitted the matters set forth in the defines the amount which a redemptioner must pay.
26

21. Accordingly, plaintiffs offer to redeem two subject 20 Dukas v. Tolmach, 153 N.Y.S. 2d 392 (1956), cited in
properties[,] as earlier mentioned, were in accord with 2 MARTIN 99.
the said provisions of Act No. 3135, as amended, and 21 Koppel Industrial Car & Equipment Co. v. Portalis &
Rule 39 of the Revised R[u]les of Court and such offer Co., 195 N.Y.S. 24 (1922), cited in 2 MARTIN 99.
to redeem should be well-placed in law and procedure. 326
22. Plaintiff exercised the right of redemption on
January 11, 1996, within the prescribed period of six 326
(6) years, two subject properties being redeemed are SUPREME COURT REPORTS ANNOTATED
covered by Free Patent titles. She made a tender of the Development Bank of the Philippines vs. Court of
offer. A substantial compliance with the requisites in Appeals
law was met. Since the afore-quoted allegations are matters of law
Under Section 1 of Rule 26 of the Rules of Court, the or opinion, they are improper matters and cannot
scope of matters that a party may request the therefore be deemed impliedly admitted under Rule
adversary to admit are (1) the genuineness of any 26.
material and relevant document described in and Finally, the Court of Appeals erred in ruling that the
exhibited with the request; and (2) the truth of any DBP failed to timely raise its objections to the
material and relevant matter of fact set forth in the impropriety of the matters requested for admission.
request. The rule authorizing a party to call on the At the time Go made use of discovery proceedings
other party to make an admission implies the making under Rule 26, the governing rule before its
of demands for admission of relevant and material amendment took effect on 1 July 1997 read:
matters of facts18and not for admission of matters Objections on the ground of irrelevancy or impropriety
of law,19 conclusions,20 or opinions.21 of the matter requested shall be promptly submitted to
_______________ the court for resolution.
Petitioner DBPs objection to the impropriety of some
18 Caddo Grocery & Ice v. Carpenter, 285 S.W. 2d 470 of the matters requested was promptly made as early
(1955), cited in 2 RUPERTO G. MARTIN, RULES OF as the filing of its comment on the request for
COURT IN THE PHILIPPINES 98 (1973) (hereafter 2 admission. DBPs comment consistently averred that it
MARTIN). had already dealt with the matters in question in its
19 Gore v. Cunningham, 297 S.W. 2d 287 (1956), cited answer, either admitting or specifically denying them.
in 2 MARTIN 98-99. Moreover, during the 20 May 1997 hearing, the
counsel for DBP manifested the foregoing in open
27

court. In so doing, the DBP, in effect, argued that the Resolution dated 16 April 2002 in CA-G.R. SP No.
matters in question are redundant and, therefore, 62142 are REVERSED and SET ASIDE. The Regional
improper subjects for admission. Trial Court of Makati City, Branch 148, is directed to
It must be stressed that the rule on admission as a proceed with reasonable dispatch with the trial of Civil
mode of discovery is intended to expedite trial and to Case No. 96-483.
relieve parties of the costs of proving facts which will Costs against the private respondent.
not be disputed on trial and the truth of which can be SO ORDERED.
ascertained by reasonable inquiry.22 Thus, if a Quisumbing, Ynares-Santiago and Carpio, JJ.,
request for admission would only serve to delay the concur.
proceedings by abetting redundancy in the pleadings, Azcuna, J., I take no part. I was DBP Director in
the intended purpose for the rule would certainly be 1990.
defeated.23 After all, rules of procedures are intended Petition granted, questioned decision and resolution
to pro- reversed and set aside.
_______________ Note.A party should not be benefited by the
deleterious manipulation of the rules of procedure.
22 Concrete Aggregates Co. v. Court of Appeals, supra (Pioneer Insurance and Surety Corporation vs. De Dios
note 14, citing Uy Chao v. De La Rama Steamship Co., Transportation Co., Inc., 406 SCRA 639 [2003])
Inc., 116 Phil. 392; 6 SCRA 69 (1962). o0o
23 Laada v. Court of Appeals, supra note 14.
327 G.R. No. 102390. February 1, 2002.*
REY LAADA, petitioner, vs. COURT OF APPEALS and
VOL. 470, SEPTEMBER 20, 2005 SPS. ROGELIO and ELIZA HEMEDEZ, respondents.
327 G.R. No. 102404. February 1, 2002.*
Development Bank of the Philippines vs. Court of NESTL PHILIPPINES, INC. and FRANCIS SANTOS,
Appeals petitioners, vs. COURT OF APPEALS and SPS. ROGELIO
mote, not to defeat, substantial justice and should not and ELIZA HEMEDEZ, respondents.
therefore be applied in a very rigid and technical Remedial Law; Evidence; Request for Admission; There
sense.24 is no reason to strictly construe the phrase the party
WHEREFORE, in view of all the foregoing, the instant to whom the request is directed to refer solely or
petition is GRANTED and the questioned Decision of personally to the petitioners themselves.In the case
the Court of Appeals dated 6 August 2001 and its at bar, neither is there a showing that petitioners
28

Nestl and Santos did not authorize their respective discretion. It is the duty of the courts to examine
counsel to file in their behalf the respective answers thoroughly
requested of them by private respondents in the _______________
latters written request for admission. As this Court has
said, there is no reason to strictly construe the phrase * SECOND DIVISION.
the party to whom the request is directed to refer 544
solely or personally to the petitioners themselves.
Same; Same; Same; The rule on admission as a mode 544
of discovery is intended to expedite trial and to SUPREME COURT REPORTS ANNOTATED
relieve parties of the costs of proving facts which will Laada vs. Court of Appeals
not be disputed on trial and the truth of which can be the circumstances of each case and to determine the
ascertained by reasonable inquiry.The Court applicability of the modes of discovery, bearing always
reiterated that ruling in Briboneria v. Court of Appeals in mind the aim to attain an expeditious administration
and in Concrete Aggregates Corporation v. Court of of justice. It need not be emphasized that upon the
Appeals. In the latter case, the Court emphasized that courts shoulders likewise rests the burden of
the rule on admission as a mode of discovery is determining whether the response of the requested
intended to expedite trial and to relieve parties of the party is a specific denial of the matters requested for
costs of proving facts which will not be disputed on admission.
trial and the truth of which can be ascertained by PETITION for review on certiorari of a decision of the
reasonable inquiry. Thus, if the request for admission Court of Appeals.
only serves to delay the proceedings by abetting
redundancy in the pleadings, the intended purpose for The facts are stated in the opinion of the Court.
the rule will certainly be defeated. Platon, Martinez, Flores, San Pedro and Leao for
Same; Same; Same; The application of the rules on petitioners.
modes of discovery rests upon the sound discretion of Agustin C. Napeas for petitioner R. Lada.
the court.The application of the rules on modes of J. Cesar S. Sangco for private respondents.
discovery rests upon the sound discretion of the court. Marciano P. Brion for respondent J. Alimagno and P.
In the same vein, the determination of the sanction to Galasao.
be imposed upon a party who fails to comply with the DE LEON, JR., J.:
modes of discovery rests on the same sound judicial
29

May the counsel of a party to whom a written request order (TRO) enjoining the UFE, its sympathizers and
for admission is addressed under Section 1, Rule 26 of agents to desist from blocking, barricading and
the Rules of Court, answer such request for his client? obstructing the points of ingress and egress from
This is the question posed for resolution in these two Nestls Cabuyao plant. To enforce the TRO, Nestl
(2) consolidated petitions for review on certiorari1 of sought the assistance of both the 224th Philippine
the Decision of the Court of Appeals dated July 24, Constabulary (PC) Company in Camp Eldridge, Los
19912 that resolved the issue in the negative. Baos, Laguna, under the command of PC/Capt. Rey
The facts attending the tragic incident that triggered Laada, and the members of the Cabuyao police
the filing in the Regional Trial Court (RTC) of Laguna of department under the command of P/Maj. Lorenzo T.
Civil Case No. B-2762, an action for damages, by the Malaga, as well as the fire brigade of Cabuyao. In order
spouses Rogelio Hemedez and Eliza Garcia Hemedez, that it could transfer its products from the Cabuyao
are as follows: factory to its warehouse in Taguig, Metro Manila during
The Union of Filipro Employees (UFE) declared a strike the strike, Nestl hired the trucks of the Alimagno
on account of alleged unfair labor practices committed brothers, Constancio, Jr., who was then the Officer-in-
by Nestl Philippines, Inc. (Nestl) and put up a picket Charge of Cabuyao, and Jesus.
line in front of the com- On October 29, 1987, Alexander Asinas of the UFE and
_______________ Francis Santos of Nestl agreed to constitute a panel
to discuss about the said trucks and the scabs allowed
1 Per the Resolution of February 5, 1992 (Rollo, G.R. to sneak into the Cabuyao plant, as the matter did not
No. 102390, p. 84). appear to have been covered by the TRO. However, in
2 Associate Justice Alfredo L. Benipayo, ponente, with apparent bad faith, Santos signaled both the PC
Associate Justices Manuel C. Herrera and Cancio C. contingent to disperse the strikers at the barricades in
Garcia, concurring. front of the plant gate, and the overloaded cargo
545 trucks waiting inside the compound to proceed with
getting out of the plant. Thus, the PC contingent, both
VOL. 375, FEBRUARY 1, 2002 in uniform and in plain clothes, and armed with
545 armalites, began hitting the strikers with truncheons
Laada vs. Court of Appeals as water cannons from fire trucks assisted them in the
panys factory in Niugan, Cabuyao, Laguna. On dispersal operation that resulted in the arrest of
October 27, 1987, the National Labor Relations fourteen (14) strikers and injuries to many others. With
Commission (NLRC) issued a temporary restraining gate cleared, the cargo trucks began leaving the
30

compound with some turning to the right and others to until the car turned upside down. In Galasaos attempt
the left into the national road. Although stones thrown to straighten his course, he also side-swept a house off
by some strikers broke the windshields of some trucks, the road, rammed down a beauty parlor, and run over
all five (5) trucks succeeded in leaving the compound. and killed two (2) persons sitting on a bench near the
That was the situation in the dispersal operation when parlor facing the Iglesia ni Cristo chapel. The truck
Dr. Vied Vemir Garcia Hemedez arrived in the area on stopped as it crashed into the chapels reinforced
board his car, a Ford Escort 4-door sedan, model 1975, concrete wall and post. Galasao rose from his seat, got
with plate No. DOG-689, on his way home from his off the truck, and, apparently anticipating an attack,
masteral class at the University of the Philippines proceeded to the chapel with a lead pipe in hand while
College of Public Health. He stopped his car not his helpers armed themselves with stones.
knowing that the sixth ten-wheeler truck owned by Pinned down by his overturned car, Dr. Hemedez
Jesus Alimagno and mustered strength to ask someone to inform his
546 parents, through a doctor friend, about the incident as
he pleaded with people around to extricate him from
546 under the truck. Capt. Laada and some PC soldiers
SUPREME COURT REPORTS ANNOTATED immediately rushed to the truck to prevent people
Laada vs. Court of Appeals from looting it. At that moment, the brothers of Dr.
driven by Pacifico Galasao, was then leaving the Nestl Hemedez, namely, Roel, Emeterio and Rogelio, Jr.,
compound in full speed. To avoid stones being thrown followed by their mother, Mrs. Eliza Hemedez, and her
at his direction, Galasao was driving in a crouching daughter, Andora, arrived. Roel and Emeterio tried to
position. However, considering the length of the truck pull Dr. Hemedez out of his car to no avail. Roel cut the
that was also overloaded, Galasao lost control of it. ropes holding the canvass covering the load of the
After turning left to the national road, the truck truck in preparation for its being lifted, and asked the
zigzagged northward until it reached the soft shoulder PC soldiers to unload or allow them to unload the
on the right side of the national road where Galasao trucks cargo. The soldiers referred Roel to Capt.
abruptly swerved the truck to the left to avoid the Laada who, however, refused to unload the cargo of
strikers. However, he was not able to swerve the truck the truck for fear that the cargo might be looted. Mrs.
back to the right to stay on course on the road. Hemedez made the same plea to Capt. Laada and
Because Galasao did not stop nor slow it down, the Jesus Alimagno who had arrived in the area, but she
truck went diagonally across to the left side of the was met with the same adamant refusal to unload the
road, bumped the car of Dr. Hemedez, and dragged it cargo for fear that there might be looting,
31

notwithstanding that Dr. Hemedez was the godson of (P80,000.00) as actual compensation for the
Constancio Ali- destruction of his car, moral and exemplary damages,
547 and attorneys fees.
In their answer to the complaint, Nestl and Santos
VOL. 375, FEBRUARY 1, 2002 denied liability for the death of Dr. Hemedez. They
547 interposed as special and affirmative defenses that
Laada vs. Court of Appeals Nestl and Belltown Transport Services, Inc., an
magno, Sr. It was two (2) hours later when the cargo independent contractor, had a trucking and hauling
was finally unloaded to other trucks that Dr. Hemedez agreement whereby Belltown agreed to make
was finally pulled out from under Galasaos truck, and deliveries of the products of Nestl and assumed
brought to the Perpetual Help Hospital in Bian, liability for any injuries or damages to properties
Laguna where he died shortly after arrival thereat. He that would arise from the agreement. They alleged
died due to Intra-thoracic hemorrhage, massive, due that the accident happened in the course of an illegal
to severe impact (Vehicular Accident). Mrs. Hemedez strike and hence, the proximate cause of Dr. Hemedez
witnessed in pain the agony of her helpless son as a death was the violent assault by the strikers against
consequence of the refusal of Capt. Laada and the PC the truck. They averred that the complaint should be
soldiers to help them save his life. The Hemedez family dismissed for failure to implead UFE, its officers and
tried to pay Funeraria Dionicio for the funeral services striking members, as indispensable parties. They
rendered for Dr. Hemedez but its owner, Dionicio alleged further that the incident happened outside of
Hemedez, refused to accept payment on the ground Nestls premises and that when they came to know
that Miguela Alimagno, the mother of Jesus, undertook about it, they ordered
to pay for it.3 _______________
On December 8, 1987, the spouses Rogelio and Eliza
Hemedez, parents of Dr. Hemedez, filed Civil Case No. 3 Complaint in Civil Case No. B-2762.
B-2762 in the RTC of Laguna against Nestl, Jesus 548
Alimagno, Francis Santos, Pacifico Galasao, and
PC/Capt. Rey Laada, praying for the award of Thirty 548
Thousand Pesos (P30,000.00) as indemnity for Dr. SUPREME COURT REPORTS ANNOTATED
Hemedez death, Eleven Million Four Hundred Laada vs. Court of Appeals
Thousand Pesos (P11,400,000.00) representing loss of the lifting of the truck by Nestls own forklift. The
earnings of the deceased, Eighty Thousand Pesos delayed unloading of the cargo from the truck thus
32

rested upon Belltowns sole judgment. They set up a admission and hence the answer filed by their counsel
cross-claim against Galasao in order that he could in their behalf was by nature based on hearsay, they
reimburse them should they be adjudged liable, and a sought the striking out of said answers. On the other
counterclaim for attorneys fees for what they called hand, the defendants asserted that they observed the
an unfounded suit. rules in filing their answers, through their lawyers, to
For his part, Capt. Laada dismissed the claims for his the request for admission.
liability. He asserted that the unruly mobs attack on Hence, the trial court4 issued an Order dated April 10,
the trucks that built up a monstrous traffic jam 1989 denying for lack of merit the Hemedez spouses
caused the incident. While he and his men exerted all motion to strike out the defendants answers and/or
efforts to save all casualties and not just Dr. Hemedez, declare the matters sought to be
the plaintiffs misconstrued his acts as refusal in their _______________
obsessive and hysterical desire to extricate their
stricken relative from the place of the accident without 4 Presided by Judge Minita Chico-Nazario.
regard to the welfare and well-being of the larger 549
throng of persons some of whom were also injured who
were just as well entitled to or deserving protection VOL. 375, FEBRUARY 1, 2002
from the contingent of PC soldiers. He interposed a 549
counterclaim for moral damages and attorneys fees Laada vs. Court of Appeals
arising from the plaintiffs having unjustly impleaded admitted as impliedly admitted. It held that the
him in the baseless suit designed to be a speculative grounds relied upon by plaintiffs counsel in his motion
monetary claim against Nestl. were more formal than substantial for several
Thereafter, the Hemedez spouses served the reasons. First, by signing and verifying the answer to
defendants a request for admission of the truth of the the request for admission, the counsel of a defendant
facts set forth in their complaint and the genuineness or defendants reposed upon himself the same
of each of the documents appended thereto. Through undertaking the defendant would have undertaken had
their respective counsel, Nestl and Santos, Capt. he been the one who verified the answer. Second,
Laada, and Alimagno and Galasao filed their verified since the purpose of verification is merely to serve as
answer to the request for admission. an assurance that the allegations in the pleading are
Contending that under Section 2 of Rule 26 of the true and correct and not the product of imagination,
Rules of Court the parties themselves and not their and that the pleading is filed in good faith, the
counsel should personally answer the request for absence of verification is formal and not jurisdictional.
33

Third, the defendants were bound by the acts of the the questioned Order, and (c) to allow amendment of
counsel of their choice. Fourth, the generalizations the complaint would result in delay in the proceedings.
made in the answer were expected because the 550
plaintiffs requests for admission were substantially
identical with the allegations in their complaint. The 550
lower court concluded: SUPREME COURT REPORTS ANNOTATED
A cursory reading of the adverted answers to the Laada vs. Court of Appeals
complaint would show that defendants have On July 24, 1989, the lower court denied the omnibus
substantially complied with the requirements of the motion except the prayer to amend the complaint. It
rules by so specifically denying the matters which they stressed that in that particular stage of the
could not admit and indicating the reasons why they proceedings, the court could not make a categorical
could not admit or deny the specific matters sought to ruling as to the veracity of the denials made by
be admitted, thus leaving such matter controverted. defendants of certain facts based on immateriality,
The veracity, therefore, of their denial or uncommitted irrelevancy or for lack of information until after it has
stand, is a matter that could be determined only in a considered in a full blown trial all the evidence
full blown trial on the merit where parties could amply presented and pertinent to the issue of the case.
support their respective claim. Refusing to budge from their stand, the Hemedez
The Hemedez spouses sought a reconsideration of that spouses sought the review of both Orders of the lower
Order through an omnibus motion (a) asserting that court via a petition for certiorari that was filed on
the matters sought to be admitted were decisive on August 16, 1989 and docketed in this Court as G.R. No.
the respective liabilities of all defendants; (b) 89399. The First Division of this Court referred the
stressing the need to resolve the relevancy and petition to the Court of Appeals where it was docketed
materiality of the specific matters requested to be as CA-G.R. No. 18894. On July 24, 1991, the Court of
admitted and which were neither admitted nor denied Appeals rendered the Decision annulling the lower
by the defendants; and (c) seeking permission to courts Orders of April 10, 1989 and July 24, 1989,
amend the complaint to implead as indispensable granting the motions to strike out the answers subject
parties-defendants Belltown Transport Services, Inc., of the requests for admission and declaring each of the
Magnolia Freight Services, and Constancio Alimagno, Jr. matters requested to be impliedly admitted, and
Nestl, Santos and Capt. Laada opposed the omnibus remanding the case to the court aquo for proper
motion on the grounds that: (a) it was filed out of time, proceedings.
(b) it raised no new matters not already taken up in
34

Hence, the instant consolidated petitions for review on Laada vs. Court of Appeals
certiorari. As earlier stated, the petitioners offer for specifically or setting forth in detail the reasons why
resolution the principal issue of whether or not an he cannot truthfully either admit or deny those
answer to a request for admission signed and sworn to matters.
by the counsel of the party so requested is sufficient Objections on the ground of irrelevancy or impropriety
compliance with the provisions of Rule 26 of the Rules of the matter requested shall be promptly submitted to
of Court. In other words, should a person to whom a the court for resolution. (Italics supplied.)5
request for admission is addressed personally answer The issue for resolution thus calls for an interpretation
the request? Two (2) other collateral issues need of the phrase the party to whom the request is
resolution: (a) whether or not each answer of the directed. This is not the first time that the Court is
requested party-defendant to the statements sought faced with the issue of whether a party requested to
to be admitted is a specific denial in accordance with make admissions may reply or answer through his
the rules, and (b) whether or not the motion for counsel. In PSCFC Financial Corporation v. Court of
reconsideration of the questioned Order of April 10, Appeals,6 the petitioner therein served upon the
1989 was timely filed. Banco Filipino Savings and Mortgage Bank, a written
The provision of Rule 26 of the Rules of Court, the request for admission of the truth of certain factual
matrix upon which the resolution of these petitions matters. Through Philip Sigfrid A. Fortun, who was not
rests, state: yet a lawyer when Banco Filipino inaugurated its
SEC. 2. Implied admission.Each of the matters of financing plan in 1968, Banco Filipino made the
which an admission is requested shall be deemed requested admissions but denied that the financing
admitted unless, within a period designated in the corporation had availed of the Home Financing Plan
request, which shall not be less than ten (10) days subject of controversy. Obviously objecting to the
after service thereof, or within such further time as the reply, the petitioner therein made a second request for
court may allow on motion and notice, the party to admission. In resolving the issue of whether or not the
whom the request is directed serves upon the party answer to the request for admission under Rule 26
requesting the admission a sworn statement either should be made by the party himself
denying _______________
551
5 Under the 1997 Rules of Civil Procedure, this rule
VOL. 375, FEBRUARY 1, 2002 states:
551
35

SEC. 2. Implied admission.Each of the matters of cause in which he appears, and no written power of
which an admission is requested shall be deemed attorney is required to authorize him to appear in court
admitted unless, within a period designated in the for his client x x x .
request, which shall not be less than fifteen (15) days Petitioner has not shown that the case at bar falls
after service thereof, or within such further time as the under any of the recognized exceptions as found in
court may allow on motion, the party to whom the Art. 1878 of the Civil Code which enumerates the
request is directed files and serves upon the party instances when special powers of attorney are
requesting the admission of a sworn statement either necessary, or in Rule 20 of the Rules of Court on pre-
denying specifically the matters of which an admission trial where the parties and their attorneys are both
is requested or setting forth in detail the reasons why directed to appear before the court for a conference;
he cannot truthfully either admit or deny those so that for counsel to appear at the pre-trial in behalf
matters. of his client, he must clothe the former with an
Objections to any request for admission shall be adequate authority in the form of a special power of
submitted to the court by the party requested within attorney or corporate resolution.
the period for and prior to the filing of his sworn Section 23 of Rule 138 provides that (a)ttorneys have
statement as contemplated in the preceding authority to bind their clients in any case by any
paragraph and his compliance therewith shall be agreement in relation thereto made in writing, and in
deferred until such objections are resolved, which taking appeals, and in all matters of ordinary judicial
resolution shall be made as early as practicable. procedure x x x.
6 216 SCRA 838 (1992). Thus, when Rule 26 states that a party shall respond to
552 the request for admission, it should not be restrictively
construed to mean that a party may not engage the
552 services of counsel to make the response in his behalf.
SUPREME COURT REPORTS ANNOTATED Indeed, the theory of petitioner must not be taken
Laada vs. Court of Appeals seriously; otherwise, it will negate the principles on
and nobody else, not even his lawyer, the Court agency in the Civil Code, as well as Sec. 23, Rule 138,
issued a Resolution stating as follows: of the Rules of Court.
The argument is untenable. Section 21 of Rule 138 Nonetheless, even assuming arguendo that Atty. Philip
states Sigfrid Fortun overstepped his authority, it is only his
SEC. 21. Authority of attorney to appear.An attorney client, respondent Banco Filipino, which has the
is presumed to be properly authorized to represent any prerogative to impugn his acts and not petitioner, the
36

adverse party. Interestingly, Banco Filipino has not Terry 260, cited in 27 C.J.S. 91), nor should he be
objected to the response made by its counsel in its required to make a second denial of those already
behalf. (Italics supplied.)7 denied in his answer to the complaint. A request for
In the case at bar, neither is there a showing that admission is not intended to merely reproduce or
petitioners Nestl and Santos did not authorize their reiterate the allegations of the requesting partys
respective counsel to file in their behalf the respective pleading but should set forth relevant evidentiary
answers requested of them by private respondents in matters of fact, or documents described in and
the latters written request for admission. As this Court exhibited with the request, whose purpose is to
has said, there is no reason to strictly construe the establish said partys cause of action or defense.
phrase Unless it serves that purpose, it is, as correctly
_______________ observed by the Court of Appeals, pointless, useless,
and a mere redundancy.8
7 Id., p. 842. The Court reiterated that ruling in Briboneria v. Court
553 of Appeals9 and in Concrete Aggregates Corporation v.
Court of Appeals.10 In the latter case, the Court
VOL. 375, FEBRUARY 1, 2002 emphasized that the rule on admission as a mode of
553 discovery is intended to expedite trial and to relieve
Laada vs. Court of Appeals parties of the costs of proving facts which will not be
the party to whom the request is directed to refer disputed on trial and the truth of which can be
solely or personally to the petitioners themselves. ascertained by reasonable inquiry. Thus, if the request
Moreover, as correctly observed by the lower court, for admission only serves to delay the proceedings by
the subject matters of the request for admission are abetting redundancy in the pleadings, the intended
the same as the ultimate facts alleged in the complaint purpose for the rule will certainly be defeated.
for which private respondents have filed their Moreover, as the Court has observed in Briboneria,
respective answers. Private respondents thus desired Sec. 1 of Rule 26 requires that the request for
the petitioners to admit once again the very matters admission must be served directly upon the party
they had dealt with in their respective answers. In Po v. requested. Otherwise, that party cannot be deemed to
Court of Appeals, this Court said: have admitted the genuineness of any relevant
A party should not be compelled to admit matters of matters
fact already admitted by his pleading and concerning _______________
which there is no issue (Sherr vs. East, 71 A2d, 752,
37

8 164 SCRA 668, 670 (1988). While the Court upholds the petitioners contention on
9 216 SCRA 607 (1992). the propriety of an answer to a request for admission
10 334 Phil. 77; 266 SCRA 88 (1997). being filed by counsel, there is no merit in their
554 contention on the late filing of private respondents
omnibus motion. It is indeed a fact that private
554 respondents received a copy of the questioned Order
SUPREME COURT REPORTS ANNOTATED of April 10, 1989 on April 26, 1989 and that they filed
Laada vs. Court of Appeals the omnibus motion by registered mail only on June
of fact set forth therein on account of failure to answer 21, 1989 or fifty-six (56) days thereafter. Petitioners
the request for admission. It is thus unfair and contend that the omnibus motion should have been
unreasonable for private respondents to expect the filed within the 15-day reglementary period as required
petitioners to answer the requests for admission that by Section 39 of the Judiciary Reorganization Act of
they in fact did not personally receive. Private 1980. Suffice it to state that the Order sought to be
respondents failure to serve copies of the request for reconsidered by the lower court did not finally dispose
admission directly upon the petitioners themselves of the merits of the case so that it should be covered
suffices to warrant denial of the motion to strike out by the reglementary period stated in Section 39. That
petitioners responses to said request. section speaks of final orders13 and not
The application of the rules on modes of discovery interlocutory ones or those that
rests upon the sound discretion of the court. In the _______________
same vein, the determination of the sanction to be
imposed upon a party who fails to comply with the 11 Dela Torre v. Pepsi Cola Products Phils., Inc., 298
modes of discovery rests on the same sound judicial SCRA 363 (1998).
discretion.11 It is the duty of the courts to examine 12 Insular Life Assurance Co., Ltd. v. Court of Appeals,
thoroughly the circumstances of each case and to 238 SCRA 88, 93 (1994).
determine the applicability of the modes of discovery, 13 Sec. 39 states that (t)he period for appeal from
bearing always in mind the aim to attain an final orders, resolutions, awards, judgments, or
expeditious administration of justice.12 It need not be decisions of any court in all cases shall be
emphasized that upon the courts shoulders likewise 555
rests the burden of determining whether the response
of the requested party is a specific denial of the VOL. 375, FEBRUARY 1, 2002
matters requested for admission. 555
38

Laada vs. Court of Appeals o0o


leave something to be done by the court before the G.R. No. 172175. October 9, 2006.*
case is finally decided on the merits.14 By denying SPS. EXPEDITO ZEPEDA AND ALICE D. ZEPEDA,
the motion to strike out the answers of private petitioners, vs. CHINA BANKING CORPORATION,
respondents to petitioners request for admission, the respondent.
lower court did not terminate the proceedings. When it Remedial Law; Actions; Cause of Action; A cause of
ruled on the omnibus motion which petitioners believe action is a formal statement of the operative facts that
was filed out of time, the lower court simply disposed give rise to a remedial right; Question of whether the
of a matter that was, in a manner of speaking, getting complaint states a cause of action is determined by its
in the way of the expeditious disposition of the case. averments regarding the acts committed by the
Private respondents who should be most interested in defendant; Essential elements of a cause of action.A
the speedy disposition of the case unfortunately and cause of action is a formal statement of the operative
unwittingly caused its delay by a request for admission facts that give rise to a remedial right. The question of
that only achieved nothing but further delay in the whether the complaint states a cause of action is
proceedings. determined by its averments regarding the acts
WHEREFORE, the consolidated petitions for review on committed
certiorari are GRANTED. The questioned Decision of _______________
the Court of Appeals dated July 24, 1991 is SET ASIDE,
and the Regional Trial Court of Laguna is ordered to * FIRST DIVISION.
proceed with dispatch in the resolution of Civil Case 127
No. B-2762.
SO ORDERED. VOL. 504, OCTOBER 9, 2006
Bellosillo (Chairman), Mendoza, Quisumbing and 127
Buena, JJ., concur. Zepeda vs. China Banking Corporation
Petitions granted, judgment set aside. by the defendant. Thus it must contain a concise
Note.Like the other modes of discovery authorized statement of the ultimate or essential facts
by the Rules of Court, the purpose of written constituting the plaintiffs cause of action. Failure to
interrogatories is to assist the parties in clarifying the make a sufficient allegation of a cause of action in the
issues and in ascertaining the facts involved in a case. complaint warrants its dismissal. As defined in
(Dela Torre vs. Pepsi Cola Products Phils., Inc., 298 Section 2, Rule 2 of the Rules of Court, a cause of
SCRA 363 [1998]) action is the act or omission by which a party violates
39

the right of another. Its essential elements are as may consider in addition to the complaint the
follows: 1. A right in favor of the plaintiff by whatever appended annexes or documents, other pleadings of
means and under whatever law it arises or is created; the plaintiff, or admissions in the records.
2. An obligation on the part of the named defendant to Same; Same; Same; Courts finds the allegations in the
respect or not to violate such right; and 3. Act or complaint sufficient to establish a cause of action for
omission on the part of such defendant in violation of nullifying the foreclosure of the mortgaged property.
the right of the plaintiff or constituting a breach of the We find the allegations in the complaint sufficient to
obligation of the defendant to the plaintiff for which establish a cause of action for nullifying the foreclosure
the latter may maintain an action for recovery of of the mortgaged property. The fact that petitioners
damages or other appropriate relief. admitted that they failed to redeem the property and
Same; Same; Same; In determining whether an that the title was consolidated in respondent banks
initiatory pleading states a cause of action, the test is name did not preclude them from seeking to nullify the
as follows: admitting the truth of the facts alleged, can extrajudicial foreclosure. Precisely, peti-
the court render a valid judgment in accordance with 128
the prayer?; Only the material allegations in the
complaint are to be taken into account, extraneous 128
facts and circumstances or other matters aliunde are SUPREME COURT REPORTS ANNOTATED
not considered; Court may consider in addition to the Zepeda vs. China Banking Corporation
complaint the appended annexes or documents, other tioners seek to nullify the proceedings based on
pleadings of the plaintiff, or admissions in the records. circumstances obtaining prior to and during the
It is, thus, only upon the occurrence of the last foreclosure which render it void.
element that a cause of action arises, giving the Same; Same; Interrogatories; Consequences
plaintiff the right to maintain an action in court for enumerated in Section 3(c) of Rule 29 would only
recovery of damages or other appropriate relief. In apply where the party upon whom the written
determining whether an initiatory pleading states a interrogatories is served, refuses to answer a
cause of action, the test is as follows: admitting the particular question in the set of written interrogatories
truth of the facts alleged, can the court render a valid and despite an order compelling him to answer the
judgment in accordance with the prayer? To be taken particular question, still refuses to obey the order.As
into account are only the material allegations in the we have explained in Arellano v. Court of First Instance
complaint; extraneous facts and circumstances or of Sorsogon, 65 SCRA 46 (1975), the consequences
other matters aliunde are not considered. The court enumerated in Section 3(c) of Rule 29 would only
40

apply where the party upon whom the written 3 Id., at pp. 43-44.
interrogatories is served, refuses to answer a 129
particular question in the set of written interrogatories
and despite an order compelling him to answer the VOL. 504, OCTOBER 9, 2006
particular question, still refuses to obey the order. In 129
the instant case, petitioners refused to answer the Zepeda vs. China Banking Corporation
whole set of written interrogatories, not just a Court of San Jose, Camarines Sur, Branch 30,4 in Civil
particular question. Clearly then, respondent bank Case No. T-947. Also assailed is the March 31, 2006
should have filed a motion based on Section 5 and not Resolution5 denying petitioners motion for
Section 3(c) of Rule 29. reconsideration.
PETITION for review on certiorari of the decision and The facts are as follows.
resolution of the Court of Appeals. On February 18, 2003, spouses Expedito and Alice
The facts are stated in the opinion of the Court. Zepeda filed a complaint for nullification of foreclosure
Tabalingcos & Associates Law Offices for proceedings and loan documents with damages6
petitioners. against respondent Chinabank before the Regional Trial
Lim, Vigilia, Alcala, Dumlao & Orencia for Court of San Jose, Camarines Sur, which was docketed
respondent. as Civil Case No. T-947 and raffled to Branch 30. They
YNARES-SANTIAGO, J.: alleged that on June 28, 1995, they obtained a loan in
the amount of P5,800,000.00 from respondent secured
This petition for review under Rule 45 of the Rules of by a Real Estate Mortgage over a parcel of land
Court assails the January 24, 2006 Decision1 of the covered by Transfer Certificate of Title (TCT) No. T-
Court of Appeals in CA-G.R. SP No. 89148 granting 23136.
respondent China Banking Corporations (Chinabank) Petitioners subsequently encountered difficulties in
petition to annul the Orders dated April 1, 20042 and paying their loan obligations hence they requested for
October 22, 20043 of the Regional Trial restructuring which was allegedly granted by
_______________ Chinabank. Hence, they were surprised when
respondent bank extrajudicially foreclosed the subject
1 Rollo, pp. 26-36. Penned by Associate Justice Andres property on October 9, 2001 where it emerged as the
B. Reyes, Jr. and concurred in by Associate Justices highest bidder. Respondent bank was issued a
Rosmari D. Carandang and Monina Arevalo-Zenarosa. Provisional Certificate of Sale and upon petitioners
2 Id., at pp. 40-42.
41

failure to redeem the property, ownership was Aggrieved, respondent bank filed a petition for
consolidated in its favor. certiorari under Rule 65 which was granted by the
According to petitioners, the foreclosure proceedings Court of Appeals. It held that the trial court gravely
should be annulled for failure to comply with the abused its discretion in issuing the two assailed
posting and publication requirements. They also Orders. It ruled that compelling reasons warrant the
claimed that they signed the Real Estate Mortgage and dismissal of petitioners complaint because they acted
Promissory Note in blank and were not given a copy in bad faith when they ignored the hearings set by the
and the interest rates thereon were unilaterally fixed trial court to determine the veracity of Chinabanks
by the respondent. affirmative defenses; they failed to answer
Respondent banks motion to dismiss was denied, Chinabanks written in-terrogatories; and the
hence it filed an answer with special affirmative complaint states no cause of action.
defenses and counterclaim. It also filed a set of written On March 31, 2006, petitioners motion for
interrogatories with 20 questions. reconsideration was denied hence, the instant petition
_______________ raising the following issues:
I. THE HONORABLE COURT OF APPEALS COMMITTED
4 Penned by Judge Alfredo A. Cabral. REVERSIBLE ERROR WHEN IT ISSUED THE ASSAILED
5 Rollo, p. 38. DECISION DECLARING THAT THE PETITIONER[S]
6 Id., at pp. 63-69. COMPLAINT DATED 12 FEBRUARY 2003 HAS NO CAUSE
130 OF ACTION.
II. CAUSE OF ACTION HAS BEEN SUFFICIENTLY
130 ESTABLISHED IN THE COMPLAINT AND THE GROUND
SUPREME COURT REPORTS ANNOTATED RELIED UPON BY THE PRIVATE RESPONDENT BANK ARE
Zepeda vs. China Banking Corporation MERE EVIDENTIARY MATTERS.7
In an Order dated April 1, 2004, the trial court denied The issues for resolution are: a) whether the complaint
Chinabanks affirmative defenses for lack of merit as states a cause of action and b) whether the complaint
well as its motion to expunge the complaint for being should be dismissed for failure of petitioners to answer
premature. The trial court reiterated its denial of respondents written interrogatories as provided for in
Chinabanks affirmative defenses in its Order dated Section 3(c), Rule 29 of the Rules of Court.
October 22, 2004 and directed the Clerk of Court to set The petition is meritorious.
the pre-trial conference for the marking of the parties _______________
documentary evidence.
42

7 Id., at p. 12. breach of the obligation of the defendant to the


131 plaintiff for which the latter may maintain an action for
recovery of damages or other appropriate relief.
VOL. 504, OCTOBER 9, 2006 It is, thus, only upon the occurrence of the last
131 element that a cause of action arises, giving the
Zepeda vs. China Banking Corporation plaintiff the right to maintain an action in court for
Anent the first issue, the Court of Appeals ruled that recovery of damages or other appropriate relief.9 In
the complaint failed to state a cause of action because determining whether an initiatory pleading states a
petitioners admitted that they failed to redeem the cause of action, the test is as follows: admitting the
property and that ownership of the same was truth of the facts alleged, can the court render a
consolidated in the name of Chinabank. _______________
A cause of action is a formal statement of the
operative facts that give rise to a remedial right. The 8 Goodyear Philippines, Inc. v. Sy, G.R. No. 154554,
question of whether the complaint states a cause of November 9, 2005, 474 SCRA 427, 434.
action is determined by its averments regarding the 9 Swagman Hotels and Travel, Inc. v. Court of Appeals,
acts committed by the defendant. Thus it must G.R. No. 161135, April 8, 2005, 455 SCRA 175, 183.
contain a concise statement of the ultimate or 132
essential facts constituting the plaintiffs cause of
action. Failure to make a sufficient allegation of a 132
cause of action in the complaint warrants its SUPREME COURT REPORTS ANNOTATED
dismissal.8 Zepeda vs. China Banking Corporation
As defined in Section 2, Rule 2 of the Rules of Court, a valid judgment in accordance with the prayer? To be
cause of action is the act or omission by which a party taken into account are only the material allegations in
violates the right of another. Its essential elements are the complaint; extraneous facts and circumstances or
as follows: other matters aliunde are not considered. The court
1. A right in favor of the plaintiff by whatever means may consider in addition to the complaint the
and under whatever law it arises or is created; appended annexes or documents, other pleadings of
2. An obligation on the part of the named defendant to the plaintiff, or admissions in the records.10
respect or not to violate such right; and In the instant case, petitioners specifically alleged that
3. Act or omission on the part of such defendant in respondent bank acted in bad faith when it
violation of the right of the plaintiff or constituting a extrajudicially foreclosed the mortgaged property
43

notwithstanding the approval of the restructuring of 133


their loan obligation. They claimed that with such
approval, respondent bank made them believe that VOL. 504, OCTOBER 9, 2006
foreclosure would be held in abeyance. They also 133
alleged that the proceeding was conducted without Zepeda vs. China Banking Corporation
complying with the posting and publication Anent the second issue, we do not agree with the
requirements. Court of Appeals ruling that the complaint should be
Assuming these allegations to be true, petitioners can dismissed for failure of petitioners to answer
validly seek the nullification of the foreclosure since respondent banks written interrogatories.
the alleged restructuring of their debt would effectively It should be noted that respondent bank filed a motion
modify the terms of the original loan obligations and to expunge the complaint based on Section 3(c) of
accordingly supersede the original mortgage thus Rule 29 which states:
making the subsequent foreclosure void. Similarly, the SEC. 3. Other consequences.If any party or an
allegation of lack of notice if subsequently proven officer or managing agent of a party refuses to obey
renders the foreclosure a nullity in line with prevailing an order made under section 112 of this Rule requiring
jurisprudence.11 him to answer designated questions, or an order under
We find the allegations in the complaint sufficient to Rule 27 to produce any document or other thing for
establish a cause of action for nullifying the foreclosure inspection, copying, or photographing or to permit it to
of the mortgaged property. The fact that petitioners be done, or to permit entry upon land or other
admitted that they failed to redeem the property and property, or an order made under Rule 28 requiring
that the title was consolidated in respondent banks him to submit to a physical or mental examination, the
name did not preclude them from seeking to nullify the court may make such orders in regard to the refusal as
extrajudicial foreclosure. Precisely, petitioners seek to are just, and among others the following:
nullify the proceedings based on circumstances _______________
obtaining prior to and during the foreclosure which
render it void. 12 SECTION 1. Refusal to answer.If a party or other
_______________ deponent refuses to answer any question upon oral
examination, the examination may be completed on
10 Goodyear Philippines, Inc. v. Sy, supra at p. 435. other matters or adjourned as the proponent of the
11 Ardiente v. Provincial Sheriff, G.R. No. 148448, question may prefer. The proponent may thereafter
August 17, 2004, 436 SCRA 655, 665. apply to the proper court of the place where the
44

deposition is being taken, for an order to compel an x x x x.13


answer. The same procedure may be availed of when a As we have explained in Arellano v. Court of First
party or a witness refuses to answer any interrogatory Instance of Sorsogon,14 the consequences
submitted under Rules 23 or 25. enumerated in Section 3(c) of Rule 29 would only
If the application is granted, the court shall require the apply where the party upon whom the written
refusing party or deponent to answer the question or interrogatories is served, refuses to answer a
interrogatory and if it also finds that the refusal to particular question in the set of written interrogatories
answer was without substantial justification, it may and despite an order compelling him to answer the
require the refusing party or deponent or the counsel particular question, still refuses to obey the order.
advising the refusal, or both of them, to pay the In the instant case, petitioners refused to answer the
proponent the amount of the reasonable expenses whole set of written interrogatories, not just a
incurred in obtaining the order including attorneys particular question. Clearly then, respondent bank
fees. should have filed a motion based on Section 5 and not
If the application is denied and the court finds that it Section 3(c) of Rule 29. Section 5 of Rule 29 reads:
was filed without substantial justification, the court SEC. 5. Failure of party to attend or serve answers.If
may require the proponent or the counsel advising the a party or an officer or managing agent of a party
filing of the application, or both of them, to pay to the willfully fails to appear before the officer who is to take
refusing party or deponent the amount of the his deposition, after being served with a proper notice,
reasonable expenses incurred in opposing the or fails to serve answers to interrogatories submitted
application, including attorneys fees. under Rule 25 after proper service of such
134 interrogatories, the court on motion and notice, may
strike out all or any part of any pleading of that party,
134 or dismiss the action or proceeding or any part thereof,
SUPREME COURT REPORTS ANNOTATED or enter a judgment by default against that party, and
Zepeda vs. China Banking Corporation in its discretion, order him to pay reasonable expenses
xxxx incurred by the other, including attorneys fees.
(c) An order striking out pleadings or parts thereof, or Due to respondent banks filing of an erroneous
staying further proceedings until the order is obeyed, motion, the trial court cannot be faulted for ruling that
or dismissing the action or proceeding or any part the motion to expunge was premature for lack of a
thereof, or rendering a judgment by default against prior application to compel compliance based on
the disobedient party; and Section 3.
45

_______________ themselves of discovery procedures or referral to


commissioners.
13 See Rollo, p. 41. The imposition of sanctions under Section 5 is within
14 G.R. No. L-34897, July 15, 1975, 65 SCRA 46, 63. the sound discretion of the trial court. Thus, in Insular
135 Life Assurance Co., Ltd. v. Court of Appeals,17 we held:
The matter of how, and when, the above sanctions
VOL. 504, OCTOBER 9, 2006 should be applied is one that primarily rests on the
135 sound discretion of the court where the case pends,
Zepeda vs. China Banking Corporation having always in mind the paramount and overriding
This Court has long encouraged the availment of the interest of justice. For while the modes of discovery
various modes or instruments of discovery as are intended to attain the resolution of litigations with
embodied in Rules 24 to 29 of the Rules of Court.15 In great expediency, they are not contemplated,
the case of Hyatt Industrial Manufacturing Corporation however, to be ultimate causes of injustice. It
v. Ley Construction and Development Corporation,16 behooves trial courts to examine well the
we declared: circumstances of each case and to make their
Indeed, the importance of discovery procedures is considered determination thereafter. x x x
well recognized by the Court. It approved A.M. No. 03- _______________
1-09-SC on July 13, 2004 which provided for the
guidelines to be observed by trial court judges and 15 Ong v. Mazo, G.R. No. 145542, June 4, 2004, 431
clerks of court in the conduct of pre-trial and use of SCRA 56, 63.
deposition-discovery measures. Under A.M. No. 03-1- 16 G.R. No. 147143, March 10, 2006, 484 SCRA 286,
09-SC, trial courts are directed to issue orders 301-302.
requiring parties to avail of interrogatories to parties 17 G.R. No. 97654, November 14, 1994, 238 SCRA 88,
under Rule 45 and request for admission of adverse 93.
party under Rule 26 or at their discretion make use of 136
depositions under Rule 23 or other measures under
Rule 27 and 28 within 5 days from the filing of the 136
answer. The parties are likewise required to submit, at SUPREME COURT REPORTS ANNOTATED
least 3 days before the pre-trial, pre-trial briefs, Zepeda vs. China Banking Corporation
containing among others a manifestation of the parties WHEREFORE, the petition is GRANTED. The January 24,
of their having availed or their intention to avail 2006 Decision and the March 31, 2006 Resolution of
46

the Court of Appeals in CA-G.R. SP No. 89148, which early as October 10, 1986 as decisions of any courts
granted respondent China Banking Corporations become final after fifteen (15) days from receipt of the
petition to annul the April 1, 2004 and October 22, copy thereof.It is notable that from the inception of
2004 Orders of the Regional Trial Court of San Jose, this case before the Regional Trial Court up to the time
Camarines Sur, Branch 30 denying respondent banks it reached the Court of Appeals in both instances and
affirmative defenses without a hearing as well as its then this Court, there was a virtual lack of diligent
motion to expunge the complaint because of effort on the part of petitioners to pursue their
petitioners failure to answer the written defense. First, there was failure to furnish a copy of the
interrogatories are REVERSED and SET ASIDE. The answer to the plaintiff, respondent herein. Then, there
instant case is REMANDED to the Regional Trial Court was failure to appear during pre-trial. Hence, they
of San Jose, Camarines Sur, Branch 30, for further were declared as in default. Then, instead of seeking
proceedings. relief from the judgment rendered by default,
SO ORDERED. petitioners filed an ordinary appeal before the
Panganiban (C.J., Chairperson), Austria-Martinez, Intermediate Appellate Court which was, however,
Callejo, Sr. and Chico-Nazario, JJ., concur. dismissed for failure to file appellants brief. A suit for
Petition granted, judgment and resolution reversed annulment of judgment was filed with the Regional
and set aside. Case remanded to trial court. Trial Court of Oriental Mindoro but this was dismissed
Note.In determining whether a complaint fails to for lack of jurisdiction. In spite of the dismissal,
state a cause of action, only the allegations therein petitioners did nothing, only to awaken when the writ
may be properly considered. (Mondragon Leisure and of possession was issued against them by filing
Resorts Corporation vs. United Coconut Planters Bank, another suit for annulment. Again, after receiving a
427 SCRA 585 [2004]) copy of the questioned Court of Appeals decision on
G.R. No. 76366. July 3, 1990.* September 25, 1987, petitioners filed a motion for
SPOUSES DONATO RAMIREZ AND MARIA RAMIREZ, extension of time to file motion for reconsideration
petitioners, vs. HON. COURT OF APPEALS, HON. only on October 13, 1986, or exactly eighteen (18)
REGIONAL TRIAL COURT OF PINAMALAYAN, ORIENTAL days
MINDORO AND IGMEDIO REYES, respondents. _______________
Remedial Law; Civil Procedure; Judgments; Court finds
that there was a virtual lack of diligent effort on the * FIRST DIVISION.
part of petitioners to pursue their defense; Decision 154
sought to be reviewed had already became final as
47

154 merits of the case, We find that respondent Court of


SUPREME COURT REPORTS ANNOTATED Appeals did not commit any reversible error in
Ramirez vs. Court of Appeals dismissing petitioners suit filed only on September 12,
from receipt of the copy of the decision. Hence, the 1985 for annulment of a judgment dated November 8,
decision sought to be reviewed had already became 1982.
final as early as October 10, 1986 as decisions of any Same; Same; Same; Defeated party may not procure a
courts become final after fifteen (15) days from receipt final and executory judgment to be set aside with a
of the copy thereof. view to the removal of the litigation beyond the period
Same; Same; Same; Motion for extension of time filed for seeking relief from a final order or judgment,
out of time and barred by the mandatory injunction in exception.There is no means whereby the defeated
Habaluyas Enterprises, Inc. vs. Japson against the filing party may procure a final and executory judgment to
of an extension of time to file a motion for be set aside with a view to the renewal of the litigation
reconsideration.Not only was the motion for beyond the period for seeking relief from a final order
extension of time filed out of time but also equally or judgment under Rule 38, Rules of Court, unless (a)
barred by the mandatory injunction in Habaluyas the judgment is void for want of jurisdiction or for lack
Enterprises Inc. v. Japson, et al., G.R. No. 70895, of due process of law, or (b) it has been obtained by
August 5, 1985; 138 SCRA 46 against the filing of an fraud.
extension of time to file a motion for reconsideration. Same; Same; Same; Due Process; Denial of due
The petition thereafter filed with this Court likewise process was not one of the grounds raised before the
failed to comply with the formal requirements as it was respondent Court of Appeals in seeking annulment of
filed without a verified statement of material dates to the judgment in Civil Case No. R-540.Petitioners now
determine the timeliness of the filing of the petition assert as their first ground for allowance of the writ of
and of the payment of the docket and legal research certiorari that they were denied due process of law
fund fees and lacks proofs of service to the Court of when petitioner Donato Ramirez was declared in
Appeals and to the adverse party. default not because he failed to answer but because
Same; Same; Same; Respondent Court of Appeals did he
not commit any reversible error in dismissing 155
petitioners suit filed only on September 12, 1985 for
annulment of a judgment dated November 8, 1982. VOL. 187, JULY 3, 1990
Even after a judicious consideration of the arguments 155
and counter-arguments of the parties herein on the Ramirez vs. Court of Appeals
48

had failed to furnish private respondent Igmedio Reyes Same; Same; Same; Default; Failure to furnish a copy
a copy thereof and because he and his lawyer had of the answer to the adverse party in itself is sufficient
failed to appear at the pre-trial conference. It should and valid basis for petitioners default.Moreover,
be noted that denial of due process was not one of the there was no error in the trial courts order declaring
grounds raised before the respondent Court of Appeals petitioner Donato Ramirez in default. The failure to
in seeking annulment of the judgment in Civil Case No. furnish a copy of the answer to the adverse party, in
R-540. Petitioners merely assigned three (3) errors itself, is sufficient and valid basis for petitioners
below, viz: (1) excess of P1,000.00 in the award of default. The non-appearance of petitioner Donato
attorneys fees; (2) doubtful genuineness of the Road Ramirez during the scheduled pre-trial for alleged
Right of Way Agreement, and (3) the strip of land is injury, without presenting a medical certificate or any
cadastral road. Verily, none of the valid grounds proof for that injury, is not justified and also a valid
prescribed for annulment of a final judgment was ground for declaration of default. Thus, petitioners
alleged. complaint that they were deprived of their right to be
Same; Same; Same; Same; Same; In Lianga Lumber heard is stripped of legal and factual basis.
Co. vs. Lianga Timber Co., Inc., this Court holds that PETITION to review the decision of the Court of
since issues are limited to those presented in the Appeals.
principal pleading, they cannot be raised on appeal,
much more in a mere incidental pleading.Petitioners, The facts are stated in the opinion of the Court.
at this late stage of the conflict, cannot validly claim Luna, Sison and Manas for petitioners.
deprivation of petitioners right to be heard. As Roselino Reyes Isler for private respondents.
deprivation of the right to be heard before the trial 156
court was never raised as an issue in the annulment
suit filed before the Court of Appeals, it cannot be 156
raised as an issue in this petition for review as issues SUPREME COURT REPORTS ANNOTATED
now are limited to whether the respondent Court of Ramirez vs. Court of Appeals
Appeals committed error in rendering the questioned MEDIALDEA, J.:
judgment. In Lianga Lumber Co. v. Lianga Timber Co.,
Inc., G.R. No. 38685, March 31, 1977, this Court held The land in question is a 1,200 meters long and 15
that since issues are limited to those presented in the meters wide strip of land denominated as the
principal pleading, they cannot be raised on appeal, Malitbog-Naksib Narra Road and situated in
much more in a mere incidental pleading. Bongabong, Oriental Mindoro. This was donated
49

sometine in 1923 by the predecessor-in-interest of land either as reparian (sic) owners or to compensate
herein private respondent Igmedio Reyes to the them or a exchange for separate portions of their
government for the construction and utilization thereof parcels of land which were traversed by the Miaje
as provincial-municipal road. However, the Sigagi road constructed by the government x x x.
government failed to construct a road or at least (Answer filed in Civil Case No. R-184, Annex 3, Rollo,
improve the land. So on October 9, 1959, the donor in p. 338)
writing, revoked the donation on the ground that the In the course of the pre-trial proceedings in Civil Case
purpose for which the donation was made was never No. R-184, petitioners, with some of the other
pursued. defendants, manifested that they are no longer
In 1960, the government appropriated another strip of interested in the land subject matter of this case so
land from the titled property of the private respondent that they were indeed dropped from the case. The
and thereupon, constructed the present and existing 157
Malitbog-Naksib Narra Road. Later, in government
forms, the government and private respondent VOL. 187, JULY 3, 1990
executed Road Right of Way Agreements (Petition, 157
Annex D and Annex F, Rollo, pp. 27-30 and 39-42) Ramirez vs. Court of Appeals
whereby the originally donated strip of land was decision of the court in that case stated:
exchanged with the strip of land where the Malitbog- That per conference with the defendants Isidoro
Naksib Narra Road was constructed. Amparo, Bonifacio Amparo, Marciano Casao, Donato
After the execution of the two (2) Road Right of Way Ramirez, Guillermo Brigido, Marina Salcedo and the
Agreements, private respondent tried to take Highway District Engineer, they are no longer
possession of the exchanged area. However, interested in the land subject matter of this case so
petitioners, together with others were found in actual that he is agreeable that said defendants be dropped
possession and cultivation thereof. Thus, private from the case. (p. 3, Decision, Civil Case No. R-184,
respondent instituted Civil Case No. R-184 for Rollo, p. 33)
Recovery of Ownership and Possession at the then This decision dated February 9, 1976 became final as
Court of First Instance of Oriental Mindoro, Branch II at no appeal by any of the parties thereto was ever
Pinamalayan. Defendants there-in, now petitioners, interposed. In fact, it had been fully executed complied
interposed the defense that they are: with and satisfied. It cannot, however, be enforced
3. x x x in rightful possession and occupation of the against petitioner herein who were dropped as parties
abandoned proposed road that adjoins their parcels of as they promised to vacate. Hence, on November 8,
50

1978, private respondent filed another suit for 158


recovery of ownership and possession against
petitioners in Civil Case No. R-540. 158
After service of summons, petitioners filed their SUPREME COURT REPORTS ANNOTATED
answer in court but never furnished any copy of such Ramirez vs. Court of Appeals
answer to private respondent. Moreover, on the amount of P3,000.00; and
scheduled pre-trial conference, petitioner Donato (d) Ordering the defendant to pay the costs of this
Ramirez failed to appear, although his wife, Maria suit.
Ramirez appeared and informed the trial court that her SO ORDERED. (Rollo, p. 46-47)
husband is not available. Thus, by reason of the failure From this judgment, petitioners filed an ordinary
to furnish private respondent with a copy of an answer appeal before the then Intermediate Appellate Court.
and to appear during the pre-trial conference, private This appeal docketed as AC G.R. CV No. 04164,
respondent moved for the declaration of petitioners in however, was dismissed when petitioners failed to file
default. The trial court resolved to grant the motion appellants brief. The order dismissing the appeal
and declared petitioners in default. Despite receipt of a became final and entry of judgment was issued on
copy of the order by petitioners on June 30, 1980, they April 2, 1985.
did not ask to set aside the order of default nor did Upon motion of private respondent, a motion for writ
they seek any relief from said order. of execution was issued on May 13, 1985. To prevent
After presentation of evidence ex parte, the trial court the implementation of the writ, petitioners instituted
rendered judgment on November 8, 1982 as follows: on June 10, 1985 before the Regional Trial Court of
(a) Ordering the defendant to surrender the Oriental Mindoro, Civil Case No. 770 for annulment of
possession of the land in question in favor of Igmedio judgment. This complaint was dismissed for lack of
Reyes, with a length of 1,200 meters and with a width jurisdiction.
of 15 meters of the abandoned old Malitbog-Naksib On July 17, 1985, the Deputy Sheriff of the trial court
Road pursuant to the Road Right of Way Agreement for levied properties of petitioners and by notice of
National Road, Exh. A; sheriffs sale dated August 7, 1985 published the said
(b) Ordering the defendant to pay the plaintiff the notice of auction sale for September 25, 1985. The
amount of P1,500 yearly from the year 1966 up to the notice of sheriffs sale was published in a newspaper of
present; general circulation on September 2, 9 and 16, 1985.
(c) Ordering the defendant to pay the attorneys fees On September 12, 1985, petitioners filed again before
in the the then Intermediate Appellate Court another
51

annulment suit docketed as CA G.R. No. SP 07107. In in the petition for annulment of judgment suit (CA G.R.
view of the pendency of this annulment suit, No. SP 07107), the auction sale of the levied properties
petitioners filed before the trial court an urgent motion of the petitioners was held on October 29, 1985 and
for a stay of the implementation of the writ of the Sheriffs Certificate of Sale was executed on
execution. Petitioners succeeded in securing on October 30, 1985 in favor of the winning bidder.
September 23, 1985 an order granting the motion to Thus, on September 23, 1986, when the decision of
stay the writ of execution. the respondent appellate court in CA-G.R. SP No.
However, on October 1, 1985, the trial court issued an 07107 was promulgated dismissing the complaint for
amended order, worded as follows: annulment of judgment, the auction sale implementing
In the interest of justice considering that Notice of the judgment sought to be annulled had already been
Auction Sale had already been published in the held. Besides, within the one-year period after the date
newspaper prescribed by law, the auction sale of the of the auction sale, the execution of the Sheriffs
levied properties of the defendant is hereby Certificate of Sale and the registration thereof on
rescheduled on October 29, 1985, at 10:00 oclock in November 6, 1985, petitioners never attempted to
the morning without the necessity of republication redeem the auctioned properties. On November 17,
since it was defendant who sought the postponement 1986, the Sheriff executed the Officers Final Deed of
of said auction sale on September 25, 1985. (Petition, Sale in favor of the successful bidder and the same
Annex K, Rollo, p. 57) was duly registered. On March 3, 1987, the possession
The motion for reconsideration of the order of the sold properties were delivered to the private
rescheduling auc- respondent.
159 In dismissing the complaint for annulment of
judgment, the respondent appellate court held, to wit:
VOL. 187, JULY 3, 1990 The rule is well settled. A final judgment can be set
159 aside only on grounds of (a) lack of jurisdiction or lack
Ramirez vs. Court of Appeals of due process or (b) that the judgment was obtained
tion sale without republication was denied by the trial by means of extrinsic or collateral fraud (Gallanosa v.
court. Hence, a notice of appeal from said orders as Arcangel, 83 SCRA 676). The extrinsic or collateral
well as an extension of time to file petition for review fraud which invalidates a final judgment must be such
on certiorari were filed by petitioners. However, they as prevented the unsuccessful party from fully and
did not pursue further said remedies and inasmuch as fairly presenting his case or defense; it must be such
no restraining order was issued by the appellate court as prevented the losing party from having an
52

adversary trial of the issue. (Laxamana v. Court of AGREEMENT FOR NATIONAL ROAD VALID DESPITE ITS
Appeals, 87 SCRA 48) DEFECTS IN FORM AND SUBSTANCE.
These grounds are not present in the case at bar. The III
jurisdiction of the court a quo is not assailed by the
plaintiff. The alleged errors in the Decision are mere THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS
errors of judgment and not errors of jurisdiction. DISCRETION IN HOLDING THAT A PUBLIC ROAD COULD
Plaintiff cannot also claim that he was prevented from BE AN OBJECT OF TRANSACTION.
presenting his defense in the court a quo. He did not IV
answer the complaint and was declared in default. On
appeal of his case, he did not file his appellants brief THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS
and resultantly his appeal was dismissed. (Rollo, p. DISCRETION IN RE-SCHEDULING AND HOLDING THE
72) AUCTION SALE WITHOUT REPUBLICATION. (Rollo, p.
160 262)
It is notable that from the inception of this case before
160 the Regional Trial Court up to the time it reached the
SUPREME COURT REPORTS ANNOTATED Court of Appeals in both instances and then this Court,
Ramirez vs. Court of Appeals there was a virtual lack of diligent effort on the part of
The questions presented now in this petition are as petitioners to pursue their defense. First, there was
follows: failure to furnish a copy of the answer to the plaintiff,
I respondent herein. Then, there was failure to appear
during pre-trial. Hence, they were declared as in
THE COURT OF APPEALS GRAVELY ABUSED ITS default. Then, instead of seeking relief from the
DISCRETION IN NOT ANNULLING THE DECISION OF THE judgment rendered by default, petitioners filed an
REGIONAL TRIAL COURT AND THE DEFAULT ORDER, ordinary appeal before the Intermediate Appellate
BOTH HAVING BEEN ISSUED IN VIOLATION OF Court which was, however, dismissed for failure to file
PETITIONERS RIGHT TO DUE PROCESS. appellants brief. A suit for annulment of judgment was
II filed with the Regional Trial Court of Oriental Mindoro
but this was dismissed for lack of jurisdiction. In spite
THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS 161
DISCRETION IN DECLARING THE ROAD RIGHT OF WAY
VOL. 187, JULY 3, 1990
53

161 dismissing petitioners suit filed only on September 12,


Ramirez vs. Court of Appeals 1985 for annulment of a judgment dated November 8,
of the dismissal, petitioners did nothing, only to 1982.
awaken when the writ of possession was issued There is no means whereby the defeated party may
against them by filing another suit for annulment. procure a final and executory judgment to be set aside
Again, after receiving a copy of the questioned Court with a view to the renewal of the litigation beyond the
of Appeals decision on September 25, 1987, period for seeking relief from a final order or judgment
petitioners filed a motion for extension of time to file under Rule 38, Rules of Court, unless (a) the judgment
motion for reconsideration only on October 13, 1986, is void for want of jurisdiction or for lack of due
or exactly eighteen (18) days from receipt of the copy process of law, or (b) it has been obtained by fraud.
of the decision. Hence, the decision sought to be (Anuran v. Aquino, 38 Phil. 29; Banco Espaol Filipino v.
reviewed had already became final as early as October Palanca, 37 Phil. 921; Garchitorena v. Sotelo, 74 Phil.
10, 1986 as decisions of any courts become final after 25; Gallanoza v. Arcangel; L-29300, June 21, 1978, 83
fifteen (15) days from receipt of the copy thereof. SCRA 676; Laxamana v. Court of Appeals, L-37317,
Not only was the motion for extension of time filed out November 24, 1978, 87 SCRA 48).
of time but also equally barred by the mandatory In the case at bar, petitioners do not question the
injunction in Habaluyas Enterprises Inc. v. Japson, et jurisdiction of the court over the parties and the
al., G.R. No. 70895, August 5, 1985; 138 SCRA 46 subject matter of the con-
against the filing of an extension of time to file a 162
motion for reconsideration. The petition thereafter filed
with this Court likewise failed to comply with the 162
formal requirements as it was filed without a verified SUPREME COURT REPORTS ANNOTATED
statement of material dates to determine the Ramirez vs. Court of Appeals
timeliness of the filing of the petition and of the troversy. It is noteworthy that in petitioners answer to
payment of the docket and legal research fund fees the complaint in Civil Case No. 540, they never
and lacks proofs of service to the Court of Appeals and questioned the due execution nor the genuineness of
to the adverse party. the Road Right of Way Agreements. They merely
Even after a judicious consideration of the arguments claimed in their answer that they were the rightful
and counter-arguments of the parties herein on the possessors of the road that adjoins their parcels of
merits of the case, We find that respondent Court of land, either as riparian owners or as compensation for
Appeals did not commit any reversible error in their land that has been taken over by the government
54

in constructing the Miaje-Sigagi Road. Such an principal pleading, they cannot be raised on appeal,
answer, by its nature raises no issue against the much more in a mere incidental pleading.
jurisdiction of the trial court. Moreover, there was no error in the trial courts order
Petitioners now assert as their first ground for declaring petitioner Donato Ramirez in default. The
allowance of the writ of certiorari that they were failure to furnish a copy of the answer to the adverse
denied due process of law when petitioner Donato party, in itself, is sufficient and valid basis for
Ramirez was declared in default not because he failed petitioners default. The non-appearance of petitioner
to answer but because he had failed to furnish private Donato Ramirez during the scheduled pre-trial for
respondent Igmedio Reyes a copy thereof and because 163
he and his lawyer had failed to appear at the pre-trial
conference. It should be noted that denial of due VOL. 187, JULY 3, 1990
process was not one of the grounds raised before the 163
respondent Court of Appeals in seeking annulment of Ramirez vs. Court of Appeals
the judgment in Civil Case No. R-540. Petitioners alleged injury, without presenting a medical certificate
merely assigned three (3) errors below, viz: (1) excess or any proof for that injury, is not justified and also a
of P1,000.00 in the award of attorneys fees; (2) valid ground for declaration of default. Thus,
doubtful genuineness of the Road Right of Way petitioners complaint that they were deprived of their
Agreement, and (3) the strip of land is cadastral road. right to be heard is stripped of legal and factual basis.
Verily, none of the valid grounds prescribed for On the merits of the case, petitioners harped on the
annulment of a final judgment was alleged. Petitioners, alleged invalidity of the two (2) Road Right of Way
at this late stage of the conflict, cannot validly claim Agreements claiming that the strip of land covered by
deprivation of petitioners right to be heard. As said agreements is a cadastral road and hence a
deprivation of the right to be heard before the trial property belonging to public domain. But the Provincial
court was never raised as an issue in the annulment Government and/or the Republic of the Philippines
suit filed before the Court of Appeals, it cannot be never questioned the due execution or intrinsic validity
raised as an issue in this petition for review as issues of the two agreements.
now are limited to whether the respondent Court of Petitioners not being signatories to the documents or
Appeals committed error in rendering the questioned for whose benefits such contracts were executed have
judgment. In Lianga Lumber Co. v. Lianga Timber Co., no personality to question the validity thereof. Even
Inc., G.R. No. 38685, March 31, 1977, this Court held under the guise of pursuing a cause for public interest,
that since issues are limited to those presented in the petitioners argument would not merit a scintilla of
55

belief as their real intent to devote the land in question SUPREME COURT REPORTS ANNOTATED
for their own use and benefit as an agricultural land is Ramirez vs. Court of Appeals
very evident in their pleadings. barred from impugning the validity of auction sale
Finally, petitioners impugned the validity of the auction without republication because they filed an extension
sale without republication. The governing rules on of time to file a petition for review with the
notice of sale of real property on execution explicitly Intermediate Appellate Court after the denial of their
ordains publication in a newspaper of general motion for reconsideration of the trial courts order
circulation once a week within twenty (20) days before rescheduling auction sale without republication.
the sale (par. C, Sec. 15, Rule 39, Revised Rules of Despite grant of said extension, petitioners did not file
Court). There is no dispute that the first scheduled said petition. In effect, such failure to file the petition is
auction sale on September 25, 1985 have complied an acquiescence to the validity of the trial courts
with all the requirements imposed by the Rules. The orders of October 1, 1985 and of October 29, 1985.
postponement of such sale was due to petitioners Thirdly, they cannot attach reversible error on the said
motion for time to secure injunctive relief from the sale after the lapse of more than one (1) year from the
Intermediate Appellate Court, which was granted ex date of the auction sale and after the expiration of the
parte. Petitioners should not be allowed to impugn the redemption period; more so, because a final deed of
result of their initiative for several reasons. Firstly, the sale in favor of respondent had already been executed
questioned auction sale on October 29, 1985 without in favor of the private respondent.
republication was never raised as an issue in CA-G.R. ACCORDINGLY, for the foregoing reasons, this instant
No. 07107, the annulment suit despite the pendency petition for review is hereby DENIED and the decision
thereof. The objection that the publication preceding of respondent Court of Appeals dated September 23,
the auction was insufficient cannot be considered at 1986 dismissing the complaint for annulment and its
this stage of the proceeding inasmuch as it was not resolution dated November 3, 1986 denying the
raised in the first instance and does not affect the motion for reconsideration are hereby AFFIRMED in
jurisdiction of the court (Ramiro v. Grao, et al., 54 toto.
Phil. 744, citing Tan Machan v. Gan Aya dela Trinidad, 3 SO ORDERED.
Phil. 684; United States v. Inductivo, 40 Phil. 84). Narvasa (Chairman), Cruz, Gancayco and Grio-
Secondly, petitioners are estopped or Aquino, JJ., concur.
164 Petition denied. Decision affirmed.
Note.Party in default is entitled to notice of further
164 proceedings upon filing of motion to set aside order of
56

default. (Development Bank of Rizal vs. Court of Cibeles Insurance Corporation, respectively, and for
Appeals, 156 SCRA 84.) prohibition to enjoin the execution of said judgments.
o0o Upon the filing of the petition, the Court issued the writ
G.R. No. L-33720 March 10, 1975 of preliminary injunction prayed for. Respondents were
required to answer and after issues were joined, the
THE PHILIPPINE BRITISH CO. INC. and THE CIBELES parties filed their respective memoranda in lieu of oral
INSURANCE CORPORATION, petitioners, argument.
vs.
THE HON. WALFRIDO DE LOS ANGELES in his capacity On June 12, 1970, a fire broke out in the premises of
as Presiding Judge, Branch IV of the Court of First private respondents (Tapia, for short) at No. 245
Instance of Quezon City, THE HON. VICENTE S. OCOL in Roosevelt Avenue, San Francisco del Monte, Quezon
his capacity as Clerk of Court of First Instance of City. Being holders of fire insurance policies from
Quezon City and Ex-Oficio Sheriff of Quezon City and different companies, among them the petitioners, and
MULTIFIELD ENTERPRISES and MOISES M. TAPIA having failed to secure extrajudicial settlement of their
respondents. claims, they filed corresponding civil actions in the
Court of First Instance of Quezon City. All of said cases,
Alfonso Felix, Jr. for petitioners. dealing as they did with the same facts and issues,
were assigned to respondent judge, to whom by raffle
B.M. Grecia & Associates and D.G. Garin & Associates the first of them had fallen. Petitioner British (for short)
for respondents. was served summons in Civil Case No. Q-15377 on
March 29, 1971 while petitioner Cibeles (for short) was
served theirs for Civil Case No. Q-15378 on April 2,
1971, hence their answers were due on April 13 and
BARREDO, J.:+.wph!1 17, respectively.

Petition for certiorari to annul and set aside the default On April 13, 1971, counsel for British filed by mail a
proceedings, the judgments and the writs of execution motion asking for fifteen (15) days extension of its
of respondent judge in Civil Cases Nos. Q-15377-8 of time to answer, claiming that due to the intervening
the Court of First Instance of Quezon City entitled Holy Week and pressure of other works, he would be
Multifield Enterprises, et al. vs. Philippine British unable to prepare his answer within the reglementary
Assurance Co., Inc. and Multifield Enterprises et al. vs. period. He was granted only five (5) days ending April
57

19. 1 No answer came until April 28, 1971, albeit it subsequently the second and third notices on May 30,
was mailed by registered service on April 22, 1971. 1971 and June 15, 1971.
Cibeles in turn filed its own motion for extension on
April 19, 1971, two days after due date. Obviously, the According to Atty. Felix, Jr., on May 24, 1971, the day
period could not be extended anymore. Just the same, he received the order of default in Q-13577 (Par. 12
it filed its answer on April 22, 1971, which was joint and Annex C-1 of Petition) he found himself in the
with that of British. respondent court and to his great surprise, in the
corresponding expedientes, he found neither (1) his
In the meanwhile, on April 24, 1971, Tapia filed motion for extension of time to file answer in Q-13577
separate motions in the two cases praying that nor (2) the aforementioned joint answer he had filed
petitioners be declared in default. Not having received on behalf of petitioners and that instead he saw
by then any answer of petitioners, (Petitioners did file therein that orders of default had been issued in both
a joint answer, but as will be seen later, the same was cases and, further, that evidence of the plaintiffs had
actually received by respondent court only on April 28, been received ex-parte on April 26 and 27, 1971. 2 He
1971.) an order of default was issued, directing at the claims also that on said occasion, when he examined
same time that plaintiffs' evidence be received by the the expedientes of the cases, he did not find therein
clerk of court. This reception of evidence was done on any copy of any decision. To be noted, however, he
April 26 and 27, and on April 28, 1971, the judgments does not pretend that he made any inquiry from any of
complained of herein were rendered. After being duly the officials and employees of the court as to what was
docketed, these judgments were released for service the exact status of his cases as of that date.
by registered mail on May 17, 1971, addressed to
petitioners' counsel, Atty. Alfonso Felix, Jr. at his given Two days later or on May 26, 1971, he filed a joint
address at Room 212 Lopez Building, Aduana Street, motion, dated May 25, 1971, to lift the order of default,
Intramuros, Manila. unverified and unaccompanied by any affidavit of
merit, which he set for hearing on June 1, 1971.
According to the postman assigned in that area, According to him, "the motion to set aside the Order of
Alfredo E. Sugatan, the first registry notice of said mail Default could not be heard on June 1 the day on which
matter, Registered Mail No. 13648, was delivered by it was set for hearing for the reason that that day had
him actually to counsel's secretary who was known to been declared a public been declared a public holiday,
him personally, a certain Miss Tuliao, in the morning of undersigned counsel went to respondent court the
May 19, 1971, as he similarly delivered to her next day, June 2, 1971, consulted the expedients and
58

seeing respondent Judge de los Angeles showed him a 13648 were returned to this Court by the Post Office as
copy of the Joint Motion Annex 'D' to lift the Order of unclaimed by the addressee, the counsel for the
Default. Respondent Judge de los Angeles after reading defendants, on June 23, 1971.
in the presence of undersigned counsel that Joint
Motion Annex 'D' asked him to set it for hearing anew Both the certification (Annex "A" of the motion for
and told him that it was always his practice to give immediate execution) and the proof of service of the
parties a chance to present evidence." (Par. 17 of notices, sent by the post master stamped on the
Petition). And so, counsel did as told. envelop-cover of the decisions show that the first
notice of this registered mail was sent to the counsel
Thus, on June 10, 1971, a notice was received by Atty. for defendants at his office address on May 30, 1971,
Felix, Jr. Advising him that the motion had been set for by the postmaster. Again, on May 30, 1971, a notice
hearing on June 30, 1971, but on June 22, 1971, was sent to him by the postmaster on these decisions
respondent judge issued an order cancelling this notice as registered mail No. 13648. The last and third notice
for the reason that "for failure of defendants in the by the postmaster was sent to him by the postmaster
above-entitled cases to comply with the requirement on June 15, 1971. Still counsel for defendants did not
imposed by Section 3 of Rule 18, Rules of Court and claim from the Post Office his copies of the decisions
pursuant to the decisions of the Supreme Court on the for which no less than three notices were sent to him
matter, this Court can no longer set aside its order by the postmaster.
dated April 24, 1971." (Annex H of the Petition). And
on June 28, 1971, respondent judge issued the Completeness of service of the decisions on
following order: t.hqw defendants' counsel was thus accomplished after the
expiration of five days from the date of the first notice
Acting on the 'motion for immediate execution of which is May 19, 1971, pursuant to Section 8 of Rule
judgments' filed by the plaintiffs through counsel in the 13, Rules of Court and the numerous decisions of the
above-entitled cases, this Court finds and the records Supreme Court on this particular matter. The period of
of these cases bear out and show that the judgment thirty (30) days within which to interpose an appeal
adverted to were rendered by this Court on April 28, from these decisions rendered by this Court in the
1971 and copies thereof were sent and posted as above-entitled cases commenced on May 25, 1971 the
registered mail No. 13648 to the counsel for day after the fifth day from May 19, 1971 and expired
defendants on May 17, l971 by the Clerk of this Court. after June 23, 1971, the thirtieth day. From May 25,
The copies of the decisions as registered mail No. 1971 to June 23, 1971, no appeal from these decisions
59

was taken by the defendants. Considering that the the petition for relief was set for hearing, July 7, 1971,
period of thirty (30) days has already expired and no respondent judge found it to be "sufficient in form and
appeal has been taken by the defendants from the substance" and ordered the respondents "to answer
decisions rendered by this Court on April 28, 1971, the same within a period of fifteen (15) days from
they are by law now final, unappealable and, as matter receipt hereof." (Annex A, Respondents' Motion to
of right, the plaintiffs are entitled to their immediate Dismiss of September 5, 1972.) Nothing else
execution. developed in the trial court later because the
injunction of this Court which was served on
WHEREFORE, the immediate execution of the respondent judge on July 10, 1971 enjoined him from
judgments in the above-entitled cases are hereby "taking further action" in the two subject cases.
granted. Let the corresponding writs of execution be
issued. At this juncture, it becomes necessary to discuss and
resolve a point of procedure before going any further.
SO ORDERED. As may be noted, We could have refused to give due
course to the present petition when it was filed on July
Pursuant to the writs issued under this order, the 2, 1971, considering that it already avers that a
Hongkong & Shanghai Banking Corporation paid to petition for relief from judgment dated June 30, 1971
respondent Sheriff P294,750.00 for the account of (Annex N of Petition) had been filed by petitioners with
British and the First National City Bank of New York the the trial court on July 1, 1971, which, pursuant to the
sum of P75,000 for the account of Cibeles (Pars. 30 usual practice, We could have deemed as an adequate
and 31, Petition), but all the amounts thus paid were remedy in the ordinary course of law that constitutes a
returned to the respective banks by virtue of the writ bar to a certiorari review or any other kind of special
of preliminary injunction of this Court of July 9, 1971. civil action. But the petition, on its face, presented the
situation that obtained in the trial court in such an
On July 1, 1971, petitioners filed a joint "Petition for alarming manner, to the point of strongly hinting
Relief from Judgment." But before said petition could possible irregularities in the actuations of the
be acted upon by the court, the instant petition was respondent judge and the employees in his sala, which
filed with this Court on July 2, 1971 and summons, could involve their honesty and good faith as well as
together with the writ of preliminary injunction was the integrity of judicial records and proceedings that
served on public respondents on July 10, 1971. (Annex the Court felt it was in the best interest of justice for
N ,Petition), In the meantime, on the same day that the Court itself to inquire without further loss of time
60

into what actually happened. Indeed, even after the procedure, which is inconsistent with the primordial
parties had filed their respective memoranda and the principle that the courts must always strive for a just,
Court had by resolution of October 21, 1971 declared speedy and inexpensive determination of all actions
these cases submitted for decision, when the and proceedings. And so, the Court has decided to
respondents filed their motion to dismiss of September determine here even the question of whether the
5, 1972, based precisely on the ground that on July 7, petition for relief filed by petitioners with the
1971 the trial court had given due course to respondent court should be granted or denied thereby
petitioners' petition for relief, We resolved to defer avoiding any possible doubt that petitioners might
determination of the dismissal motion until this entertain as to the impartiality and integrity of future
decision on the merits. actuations of the respondents. Indeed, petitioners
have placed before Us by their petition, memorandum
Now, having thus disregarded the existence of an and subsequent pleadings, complete with appropriate
ordinary remedy in the court below at the earlier annexes, consisting of affidavits, letters and other
stages of these cases, it is but proper and logical for documents, all the facts which they must believe are
Us to pursue such course of action to its ultimate relevant, whereas respondents have duly joined issued
conclusion, since anyway, counsel for petitioners has with them as to all said facts in their own answer,
himself vehemently objected to said motion to dismiss, memorandum and other papers, complete also with
and, after all, as We see it, there are enough similar corresponding annexes, and there being no
incontrovertible facts in the record, furnished by both serious, much less any credible indication that any of
parties, on the basis of which the Court can put an end the parties' annexes are not authentic, We deem it
to the litigation between the parties regarding the unnecessary to prolong further the main controversy
insurance claims of private respondents against between the parties. We will resolve the whole case
petitioners, the subject matter of the actions in the here.
court below. To now confine Ourselves to holding that
the trial court should be accorded the opportunity to The contention of petitioners that they were
resolve the petition for relief of British and Cibeles erroneously declared in default has no merit. From the
therein pending would serve no purpose than to incontrovertible facts in the record, We cannot see how
proliferate proceedings, only to end in the same it can be justly said that respondent judge committed
inevitable result which even here is already obvious a grave abuse of discretion in making such
and unavoidable. That would be sacrificing substance declaration. As regards Cibeles, there can be no
to achieve nothing more than perfection of form and question that even its motion for extension to file its
61

answer filed out of time. It was served summons on that His Honor was just trying to figure out how
April 2, 1971, and it is not disputed that its motion for counsel could be helped out of his self-imposed
extension was filed on April 19th, two days late. With predicament, but, evidently, upon further reflection, he
respect to British, its answer admittedly due on April must have realized the legal obstacles on the way and
13, 1971, and although it asked for an extension of consequently found no alternative than to rule that the
fifteen (15) days it was given only five (5) days ending motion to lift did not have to be reset for hearing
April 19,1971, 3 consequently, its answer jointly filed anymore. Upon perusing the motion when it was filed,
with Cibeles on April 22, 1971 was undoubtedly out of he must have noted that it did not comply, as he so
time. stated in his order, with the requirements of Section 3
of Rule 18.
Counsel suggests that he was not given enough time,
considering that there was the Holy Week to take into As may be seen, petitioners' joint motion to lift the
account, but His Honor ruled that precisely, counsel order of default, Annex D of the Petition, the same is
would have more time because of the holidays. Again, neither under oath nor accompanied by any affidavit of
We perceive no grave abuse of discretion in such a merit. And in Ong Peng vs. Custodio, 111 Phil. 382, We
pragmatic ratiocination. Besides, it is settled that held as follows: t.hqw
parties and counsel should not assume that courts are
bound to grant the time they ask for compliance with ... Upon examination of the motion to set aside the
the rules, and therefore, the fact that counsel received order of default, we find it to be lacking in the
the order of extension by mail only on April 26, 1971, following substantial requirements: it does not contain
is no reason for him to complain. Likewise, that he was an affidavit of merits, the motion to set aside the
not notified of the motion to declare his clients in default order is not under oath and contains only a
default is not against the rules, for he had no right to promise or an assurance, not an affidavit of merits,
such notice. (Pielago vs. Generosa, 73 Phil. 654.) that defendant has a good defense. The court was,
therefore, fully justified in denying the motion to set
Anent the motion to lift the orders of default, counsel aside the order of default.
invites attention to the alleged directive of respondent
judge to him to have the hearing of his said motion In fact, in view of the omission of petitioners to
reset because it is the judge's "practice to give parties accompany their motion with any affidavit of merit, the
a chance to present evidence." We take it, however, trial court had no authority to consider the same. It is
that seemingly what happened then must, have been to be noted that the requirements of Section 3 of Rule
62

18 are practically identical to those of Section 3 of Rule 95 Phil., 450; Off. Gaz., 4840). Stated differently,
38 regarding the need to show the existence of fraud, where a petition to set aside a judgment or reopen a
accident, mistake or excusable negligence that caused case pursuant to Rule 38 of the Rules of Court is not
the default and to accompany the motion to set aside accompanied with said affidavits of merit, the court
with affidavits of merit. Consequently, it is but proper with which it is filed is not called upon to entertain the
to apply to such a motion the same ruling applicable to petition. Applied to the instant case, appellant's
petitions for relief under Rule 38, which is to the effect petition to set aside the judgment in question and
that:t.hqw reopen the case acquired no standing in court and,
consequently, it was rightly denied. (Fernandez vs. Tan
Furthermore, it appears that appellant's petition to set Tiong Tick, 111 Phil. 773 at pp. 780-781.)
aside the judgment and reopen the case, is grounded
on his alleged excusable negligence in failing to Indeed, the identity of these two remedies is such that
appear and testify during the hearing of the case on in Ong Peng, supra, We already expressed Our "doubt
February 3,1959, namely, his becoming ill with flu if the same issue raised in the original motion to set
(influenza) on said date. We find, however, that aside the order of default, may again be raised in a
appellant failed to accompany said petition with petition for relief under Rule 38 of the Rules of Court.
affidavits of merit showing the excusable negligence The general rule is that once a matter in issue has
relied upon, and the facts constituting his good and been decided by the court, it may no longer be
substantial cause of action or defense, as expressly brought again in the form of another objection, and in
required under Section 3, Rule 38 of the Rules of Court. the guise of a motion under another provision of the
We have repeatedly held that such a defect is fatal rules" (at p. 387). True it is that as a matter of form,
(Abao vs. Virtucio, et al., 109 Phil., 821; Price under Section 3 of Rule 18 it is not essential that the
Stabilization Corporation vs. Court of First Instance of affidavit of merit be separate from the motion and may
Manila, et al., 97 Phil., 153) which warrants the denial instead be incorporated therein, but in the instant case
of the relief sought (Abao vs. Virtucio, et al., supra, of petitioners' motion, even if it makes general
citing Coombs vs. Santos, 24 Phil., 446; McGrath vs. allegations of merit, these allegations are not
Del Rosario, 49 Phil., 330; Villanueva, et al., vs. Alcoba, supported by oath of anyone who has knowledge of
101 Phil., 277). The reason for the rule is that it is the the fact. As already stated, not even Atty. Felix Jr.
affidavits of merit which serve as jurisdictional basis swore to the truth thereof. Accordingly, We find no
for a court to entertain a petition for relief (Abao vs. error in the subsequent action of respondent judge of
Virtucio, et al., supra; Omandam vs. Director of Lands,
63

cancelling the notice of hearing of the joint motion to proceedings regardless of whether the order of default
lift the order of default. is set aside or not.

Besides, the same section expressly provides that We are not prepared to agree with counsel that the
motions to lift orders of default may be filed only right of a party in default to notice of further
before judgment, and petitioners' joint motion was proceedings which this rule revives as a result of the
filed only on May 26, 1971, whereas the judgments in filing of a motion to set aside the default order is
question were rendered on April 28, 1971. intended by the rule to be so easily reacquired that
just by the mere filing of any motion with a prayer to
But counsel would attach importance to another set aside the default, the provision may be deemed as
aspect of his motion to lift the default orders, already complied with. Logic and principle dictate that
regardless of its legal untenability. He contends that the effects of default may not be treated as lightly as if
having filed such a motion, he became entitled under it were of no juridical essence. While the Court has
Section 9 of Rule 13 to notice "of all further generally been liberal in giving a party in default a
proceedings" and, therefore, the failure of respondents chance to participate in the trial, We cannot sanction
to notify him of the motions for immediate execution of any proposition that would so reduce the effect of an
the default judgments fatally vitiated the order order of default that to have it set aside all that has to
granting the same and the writs and levies pursuant be done is for the party concerned to file any
thereto. perfunctory motion therefor. A party who by inaction or
negligence allows himself to be declared in default
It is quite obvious that counsel's reliance on the offends the rule requiring him to answer the summons
provision cited by him is misplaced. Textually, the said without unnecessary delay to the end that the issues
section reads thus: t.hqw may be duly joined and the litigation be expeditiously
terminated. To purge himself of the effects of such
SEC. 9. Service upon party in default. No service of offense, it should not be enough for him to just tell the
papers other than substantially amended or court he has, after all, decided to wake up and take
supplemental pleadings and final orders or judgments part in the proceedings. It is but proper that he must
shall be necessary on a party in default unless he files justify his failure to comply with the rule before he is
a motion to set aside the order of default, in which relieved from the adverse consequences of his
event he shall be entitled to notice of all further emission. Thus, Section 9 of Rule 13 must be read in
conjunction with Section 3 of Rule 18. In other words,
64

the motion to set aside default referred to in Section 9 as late as June 3, 1971, no decision had (yet) been
of Rule 13 must be one the contents of which are rendered" is that he had received on June 10, 1971 a
precisely those provided for in Section 3 of Rule 18. notice setting his motion to lift the order of default for
Thus, the filing of such a motion to set aside short of hearing on June 30, 1.971, "for had any decision been
the requirements of this latter provision may not as it rendered, clearly the deputy clerk of court who is
cannot produce the revival of the right to notice under the control and supervision of respondent judge
contemplated in Section 9 of Rule 13. Any other and who it doubtless familiar with the expedientes of
construction in line with the position of petitioners these cases would have not set a Motion to Lift the
would render the intent and purpose of the pertinent Order of default for hearing had any decision been
provisions nugatory and ineffective. Considering, rendered (already)" (Pars. 20 and 21, Petition).
therefore, that counsel's joint motion to lift the order of Additionally he points out that even in the order of
default in the subject cases did not comply with June 22nd cancelling the notice of hearing issued by
Section 3 of Rule 18, there is no justification at all for the clerk of court of the motion to lift, His Honor made
his gripe that he was not notified of further no hint that he had already decided counsel's cases.
proceedings. Finally, counsel surmises that it is rather strange that
respondent judge had the material time to prepare his
The next point raised by petitioners is more basic. decisions on April 28, when the reception of the
They maintain that the circumstances related by their evidence took place only on April 26 and 27.
counsel should prove to Us that there were in fact no
judgments yet against them on June 2, 1971, the day In plain language, the accusation is that the decisions
when said counsel verbally took up with respondent in question must have been prepared subsequent to
judge the matter of having the orders of default lifted. June 3, 1971. Undoubtedly, the indictment is serious. It
It is the emphatic charge of counsel that when he directly implies on the part of the officials and
examined the records of the subject cases on May 24, employees of the trial court, not excluding respondent
1971 "no decision of any sort appeared" therein. (Par. judge. Upon the other hand, the rotund denial of the
11-d Petition). He also "affirms under oath that on June respondents is coupled with their own counter-
2, 1971, no decision of any sort appeared in these accusation that counsel is frantically but vainly trying
expedientes nor did respondent Judge de los Angeles only to make up with his clients for his failure to act on
ever aver that any decision had been rendered." (Par. their behalf on time. In the face of these sharply
18, Petition). He further adds that "the clearest opposite positions. We could do no less than scrutinize
evidence that we can furnish the Supreme Court that the record minutely and carefully, if only to be able to
65

pin proper responsibility on whosoever might be guilty taken pains to emphasize he has made them "under
of violating his sacred oath as functionary of the court, oath".
either as judge, clerk of court or mere employee
thereof or as counsel. As to the disputed existence of the judgments in
question prior to June 3, 1971, or for that matter,
After a conscientious review of the pertinent facts before May 24, 1971, We are fully convinced that said
extant in the record, it is our considered opinion that judgments were entered in the docket on April 28,
counsel's suspicion is unfounded. To begin with, 1971. We do not feel justified under the circumstances
respondents have in their favor the presumption revealed in the record to say that such entry was made
heretofore invariably relied upon by the Court in days before the judgments were actually prepared and
similar situations that official duty has been regularly signed. The vital fact of such entry is borne out by the
performed by them and that they have acted in good certification to such effect of the respondent Clerk of
faith. It has been the constant ruling of this Court that Court Vicente S. Ocol, Annex 9 of the answer herein,
this kind of presumption must stand, even against the and the affidavit of Branch Clerk of Court Leon D.
most well reasoned allegations seemingly pointing to Paradero, Annex 9-B, attesting to the rendition of said
some possible irregularity or anomaly. "In the absence judgments on the same date, the truth of which can
of a showing to the contrary, a judicial proceeding is easily be checked with the regularity or irregularity of
presumed to be regular, and all steps required by law the entries in the docket of the trial court. If the
to be taken before the Court may validly render corresponding entries in the docket do not appear to
judgment had been so taken." (El Banco Espanol- be regular, Atty. Felix Jr. could have completely
Filipino vs. Palanca, 37 Phil. 921; Ongsiako vs. rebutted these annexes with proof based on what
Natividad, L-1371, Aug. 5, 1947; People vs. Baco, L- appears in said docket itself. The utter silence of
2633, Feb. 23, 1958; Go Chi, et al. v. Go Cho, et al., L- counsel in this respect is eloquent evidence against
5203, Feb. 23,1955; People vs. Nazario, L-7629, Sept. him.
29, 1955). And so far, We have not seen anything in
the record to support the charges of Atty. Felix Jr. Besides, the apparent thrust of counsel's theory is that
beyond his own allegations which, considering that respondents were in such hurry to make the impugned
they do not necessarily belie the contrary judgments effective that they allegedly overlooked
representations of the adverse party, do not appear to compliance with the rules cited by him, but, to Our
Us to have any added weight just because counsel has mind, the incontrovertible fact that it was not until May
17, 1971, or almost three weeks after April 28, 1971,
66

that Jesus B. Marzan, the Chief of the Civil Cases entrusted specifically with the delivery of "letters,
Section in the court below, released the said notices of mails and other mail matters" in the area
judgments, according to his affidavit (Annex 9-A, id.), "composed of Aduana and Arsobispo Streets,
belies entirely such claim. This somewhat belated Intramuros, City of Manila", stating in detail that in the
release is also proven by the evidence, to be discussed morning of May 19, 1971 he personally delivered at
anon as to when the postal authorities got the decision Room 212 Lopez Building, Aduana, Intramuros, Manila,
for delivery to petitioners' counsel. If it were true that to Miss Tuliao, known to him to be the secretary of
respondents were acting in haste, such release would Atty. Alfonso Felix, Jr., also personally known to him, by
have been immediate. reason of the performance of his duties for a "long
period of time" in that area, "the FIRST NOTICE on (sic)
The reality of the existence of the judgments in Registered Mail No. 13648" (the same number referred
controversy prior to the dates when counsel claims he to in Annex 11-A above) and that he also delivered to
did not see them is corroborated by evidence coming her on May 31, 1971 and June 15, 1971, the second
from sources other than the office of respondent court. and third notices corresponding to the same registered
Annex 11- A of the respondents' answer herein is the letter, respectively Annex 11 is the photostat copy of
certification of Mr. H. G. Guzman, Postmaster of the the face and the dorsal portion of the envelope
Port Area Post Office, Manila, to the effect that addressed to "Atty. Alfonso Felix Jr., Rm. 212 Lopez
Registered Letter No. 13648 of sender, "CFI Branch IV, Bldg., Intramuros, Manila", with notations such as: the
Quezon City" was received by his office on May 19, number 13648 enclosed in an oblong figure; "Q-15378-
1971 "and the corresponding Registry Notice was D and Q-15377-D" (which are precisely the numbers of
issued on said date, and sent to addressee on same the subject cases); "Reg. Mail w/ return card"; and
day," that "the succeeding second and third notices "Republic of the Philippines, Court of First Instance,
was (sic) issued after about weeks' intervals (sic) the Branch IV - Quezon City"; and marked with rubber
exact date of which was noted on the envelope cover stamp data as follows: "Registered, Quezon City,
of the said letter" and further "that the Registered Philippines, May 17, 1971", "Port Area, Manila,
Letter was return (sic) to the sender, it being (sic) Philippines received May 19, 1971" as well as "Second
remain(ed) unclaimed for more than thirty days, on Notice, 5-30-71" and "Third Notice, 6-15-71".
June 22, 1971 under our Registry Bill No. 199 for
Quezon City line 1, page 1 as shown by our records." Considered in the light of ordinary official practice and
Annex 10 is the affidavit of Alfredo E. Sugatan, the experience, all the foregoing prove that mail matter
postman assigned to the Port Area Post Office, Manila, related to Civil Cases Nos. Q-15377-D and Q-15378-D
67

of Branch IV of the Court of First Instance of Quezon who collects them" and that "on no occasion did she
City duly addressed to Atty. Alfonso Felix, Jr. was fail to present any of these notice cards to Atty. Alfonso
posted by registered mail, No. 13648, at the Quezon Felix, Jr. nor did she fail to deliver the cards thus signed
City Post Office on May 17, 1971 and received by the to Carlos de la Cruz for collection", Annex A of Annex 1
Port Area Manila Post Office on May 19, 1971 and of Respondents' Petition for dissolution of Writ of
received back by the Quezon City Post Office on June Preliminary Injunction dated July 13, 1971 4 and (2)
23, 1971, unclaimed after a second notice on May 30, the affidavit of said Carlos de la Cruz stating that "he
1971 and a third notice on June 15, 1971. And since it knows that it is the practice of the office which is never
has not been shown that any other notices referring to deviated from that he receives the notice cards for
the same cases had proceeded from the trial court on registered mail from Miss Cleofe Tuliao either in hand
or about the dates mentioned, it stands to reason that or by having them put on his desk and he then picks
what the envelope, Annex 10, contained were up all such registered mail at the proper post office"
precisely the judgments in question, as attested by the and that "on no occasion whatsoever that he failed to
affidavit, Annex 9-A, of the mailing clerk of the collect registered mail covered by card notices."
respondent court who released the same. (Annex B, id.). At a glance, anyone can see that these
assertions do not disprove the facts evidenced by the
This telling mass of official evidence stands unrebutted official records just referred to. It is not an
in the record by any evidence legally worthy of exaggeration to say that the regularity of the
consideration. Atty. Felix, Jr. has not shown the Court actuations of the respondents in relation to the
any evidence which can effectively dent the effect declaration of default and rendition and execution of
thereof other than his own allegations "under oath" the judgment here in question has been proven by
and the inconclusive and general assertions in (1) the such convincing evidence as to relieve Us from any
affidavit of Miss Cleofe V. Tuliao, "in charge of the doubt about it.
clerical work in the office including the issuance and
receipt of the correspondence" to the effect that "She Now, very little needs be said as regards the
knows in (sic) of her own knowledge that the (sic) contention that petitioners should have been notified
matter of practice which has never been deviated from of respondents' motion for execution. Prescinding
(is that) the postman gives her the notice cards for already from the consideration discussed above that
registered mail, she then brings these cards to Atty. the mere filing of petitioners' motion to set aside did
Alfonso Felix, Jr., who signs them and these cards are not, because of the fatal defects of the same, have the
then given to Carlos de la Cruz, the office messenger effect of entitling them to notice of all subsequent
68

proceedings, with the regularity of the rendition of the


impugned judgments as well as the fact of their having At this point, it should be noted that viewed strictly,
become final and executory on June 23, 1971 5 being petitioners' fundamental pose rests exclusively on a
indisputably borne by the record, the action taken by claim of denial of due process in that they have been
the trial court on June 28, 1971, Annex 12 of the improperly declared in default and that writs of
Answer, of granting respondents' motion for execution were issued against them without notice.
immediate execution assumed the character of an Neither in the petition herein nor even earlier in the
order of execution of a final and executory judgment, motion to lift the order of default, Annex D, or the
as so stated in the order itself, and has, therefore, petition for relief from judgment, Annex N filed with
become a matter of right to the prevailing party and the court below, is there the adequate showing
ministerial on the part of the court to grant. In required by the rules to make the Court inquire into
Pamintuan vs. Munoz, 22 SCRA 1109, the Court held: the possible existence of good and valid defenses on
t.hqw the part of petitioners so as to justify granting them an
opportunity to prove them. To be sure, in the joint
Regarding the first point, it is by now axiomatic that a motion, Annex D, counsel does make mention in
judgment on a compromise like the one in the case paragraphs 4 and 9 thereof of "good and valid reasons
at bar is at once final and immediately executory. for the denial of plaintiff's claim by defendant
Also of the same stature is the rule that once a company" (British) and "good and valid defenses" of
judgment becomes final and executory, the prevailing Cibeles. The trouble however is that to support the
party can have it executed as a matter of right and the same, counsel only makes reference to the joint
granting of execution becomes a ministerial duty of answer, Annex B, he had filed on behalf of the two
the court. Otherwise stated, once sought by the petitioners but, neither the motion itself nor the joint
prevailing party, execution of a final judgment will just answer is supported by any corresponding oath. The
follow as a matter of course. Hence, the judgment same observations may be made with regard to the
debtor need not be given advance notice of the petition for relief, Annex N. And as to the allegations
application for execution nor be afforded prior hearing. on the point in question in the petition herein, all that
(Rule 39, Sec. 1, Rules of Court; Luther v. Clay, 100 Ga. is stated in paragraph 9 thereof is as follows: t.
236, 28 S. E. 46.) This renders of little significance hqw
then the fact alleged by petitioners that they received
copy of respondent's motion for execution only on the (9) In the meantime, undersigned counsel had on
afternoon of the day set for its hearing. behalf of both petitioners filed a joint answer on April
69

22, 1971 which was received by the Court on April 28, Thus, counsel for petitioners opens his unsworn
1971. This answer signed in behalf of both petitioners memorandum with the following "preliminary
alleges meritorious defenses. A copy of the Joint statement": t.hqw
Answer is annexed to the present pleading as Annex
"B" hereof. In his memorandum of August 17, 1971 filed in these
certiorari proceedings, Moises Tapia avers that we
While the petition appears to be verified by Atty. Felix have resorted to these proceedings purely to cause
Jr., it is obvious that said verification may not be further delays for we have no real defense. This is not
deemed sufficient for the purpose of attesting to the true. The truth of the matter is that the evidence
truth of the allegations of fact in the joint answer, clearly shows Moises Tapia to be guilty of arson and
Annex B, not only because no direct reference is made fraud. It was because of this respondent Moises Tapia
to them by counsel but also because said counsel availed himself of every means, even those frowned
cannot pretend he has adequate personal knowledge upon by law, in order to secure judgment in his favor
of said facts. without going to trial. The evidence against Moises
Tapia was such that he had to avoid going to trial. In
Fatal as such inadequacies are in the light of support of this averment, we now present the following
established jurisprudence too well known to need documents: t.hqw
being cited, if only to satisfy Our curiousity which was
aroused by the alarming allegations of the petition, We 1. A certification from Lt. Col. Jose Fernandez,
have opted to look into the purported defenses of the former Chief of the Philippine Constabulary Crime
petitioners, on the basis of the allegations pertinent Laboratory showing that there were gasoline residues
thereto in the memoranda of the parties, to which are in fourteen (14) different places of the burned bodega
annexed, as noted earlier above, corresponding and that one of these places was the steel cabinet
documents supposed to evidence the truth of the facts presumably containing the company papers so that
stated in said allegations. After careful and mature even these papers would burn. All these places had
consideration and evaluation of their respective been saturated with gasoline. (Annex A)
allegations, We are convinced that petitioners' alleged
defenses cannot stand close scrutiny. 2. A sketch of the bodega premises showing the
widespread distribution of the gasoline. (Annex B)
70

3. Twenty-two (22) photographs of the burned submit to this Supreme Court it is in the interest of
bodega. (Annexes C, D, E, F, G, H and I) justice for trial proceedings to be had.

4. Chromatographic specimens of the fourteen (14) The foregoing statements are addressed to the equity
gasoline residues found in the fourteen (14) aforesaid of this Supreme Court. They have become particularly
areas. (Annexes J, K, L and M) necessary since Moises Tapia in his memorandum filed
on August 17, 1971, before this Supreme Court has
Moises Tapia claims that on occasion of the fire gone so far as to allege that your petitioners are
suffered by his bodega he suffered damages in the merely seeking to delay for they have no real defense.
amount of five hundred thousand (P500,000.00) pesos. This Supreme Court may now judge for itself. (Pp. 189-
We have annexed twenty-two (22) photographs taken 191, Record.)
of his bodega after the fire. (Annexes C, D, E, F, G, H
and I) showing that his bodega hardly contained and closes the same with "final remarks" thus: t.
anything. Please note that the alleged contents of this hqw
bodega were iron and steel spare parts which do not
burn. The conclusion to be drawn from all these Should this Supreme Court be puzzled as to why all
photographs, chemical analysis and chromatographic these unbecoming things were done, the answer is as
specimens is obvious. Moises Tapia having withdrawn we have said in our opening statement that
his merchandise from his bodega saturated fourteen respondents could not afford the luxury of a trial. A
(14) different places in his bodega with gasoline trial with a corresponding presentation of evidence,
including his steel cabinet so as to make sure that part of which is annexed to this present memorandum
even his papers would burn and then caused his as Annexes A to M would have shown respondent
bodega to be burned. Tapia's case to he baseless so that even a decision had
been rendered in his favor in the trial court, it would
Under these circumstances, it was imperative for certainly have been reversed by this Supreme Court, It
Moises Tapia to avoid having to go to trial. It was was necessary to declare your petitioners in default so
imperative for him also, that we, your petitioners that your petitioners would not be around to present
herein should not be allowed to present evidence of evidence, to adjudge the case in secrecy so that your
these acts. That is why Moises Tapia exerted every petitioners would not learn of the judgment, and to
effort to avoid trial proceeding and that is why we execute in haste so that your petitioners would find
themselves deprived of their property without due
71

process of law and before they even knew what was reason he allegedly wanted to avoid going to trial. If
happening to them. Fortunately, this Supreme Court that was his intention he would not have filed the
intervened. We rely on its continued intervention (Pp. cases against petitioners in the lower court.
209-210, Record.)
As a matter of fact, in the two other cases filed by him
The foregoing allegations are traversed squarely in against two other insurance companies (Civil Case No.
respondents' Reply Memorandum as follows: t. 15376 Multifield, et al vs. Monarch Insurance Co.,
hqw Inc., and Civil Case No. 15379 Philippine Home
Insurance Corp.) for loss arising from the same
To give their cause some semblance of cogency, which conflagration, and involving the same evidence and
it does not possess, petitioners would want this proof of loss and with which petitioners have a
Honorable Supreme Court to believe that they have a common adjuster and investigator, respondent Tapia
good defense. The alleged defense consists of a report has gone to trial. There, the defendant insurance
made by one ex-Lt. Col. Jose Fernandez and related companies were not declared in default because they
papers attached as Annexes 'A' to 'M' to petitioners' answered on time.
Memorandum. Petitioners' purpose cannot prosper, for
the following reasons: If petitioners herein were declared in default, it was
because their counsel failed to observe the
1. The said Lt. Col. Jose Fernandez is a biased and reglementary period for answering and could not or
unreliable source. He was hired and paid by petitioners failed to obtain relief from the order of default in
to conduct an analysis on specimens he himself did accordance with the Rules of Court. Now an attempt is
not gather. Naturally his findings had to tally with his being made to shift the blame to respondent Tapia by
employer's theory and must serve their purpose and falsely attributing to him a desire to avoid going to trial
interest. That was what he was paid for. purportedly because the evidence will show he is
guilty of arson and fraud'. Such foul tactics are
2. The falsity and baselessness of said findings are beneath the dignity of the Bench and Bar.
irrefutably proven by the fact that no criminal action
was instituted against respondent Tapia. Yet petitioners The Worthless Findings of Mr. Jose Fernandez:
have the effrontery to assert before this Honorable
Supreme Court that "the evidence clearly shows 3. The said findings were not even believed and
Moises Tapia to be guilty of arson and fraud," for which accepted by the petitioners' commissioned and
72

employed adjustment company which, after a there was arson (Ya Hun Co. vs. British Traders Ins. Co.,
thorough and careful investigation of respondent L-5719-25, May 18, 1954; Hua Chu Gan vs. Law Union
Tapia's claim, had recommended that petitioners & Rock Ins. Co., Ltd., L-4611, Dec. 17,1955.)
better pay. The reports and findings of the petitioners'
adjuster are attached as Annexes "A" and "B" and form 4. These reports conclusively prove that
integral parts of this reply. These reports completely petitioners' counsel told a brazen lie when he claimed
refute the petitioners' allegations that respondent that there were no goods destroyed in the burned
Tapia is guilty of arson and that he fraudulently bodega. As said reports clearly indicate, the items
removed the contents from his bodega before it was therein inventoried after the fire had a total value of
destroyed by fire. P367,311.00. Respondent Tapia was able to prove,
through the proofs of loss he submitted in the lower
Petitioners' commissioned and employed investigator court and which proofs were the same ones he
and adjuster, the Manila Adjustment Company, in its submitted to the herein petitioners, that he suffered
report dated February 26, 1971 (Annex "A") to the four loss and damage in the amount of P446,781.60.
insurance companies, is very explicit in its findings and
recommendation that there is no basis to deny Incidentally, both Monarch Insurance and Philippine
respondent Tapia's claim on the ground of fraud. The Home Insurance, defendants in Civil Cases Nos. 15376
petitioners' hired investigator had examined and 15379, for collection of insurance proceeds in the
respondent Tapia under the "Examination-under Oath- amounts of P100,000.00 and P50,000.00, respectively,
Clause" of the policies and it was satisfied that no such have just recently paid and satisfied respondent
fraud exists. Tapia's claim. In paying respondent Tapia, these two
defendants also acted upon the findings of the Manila
The same Adjustment Company to which the much Adjustment Company that there is neither fraud nor
vaunted report of the private chemist, Mr. Jose arson involved in the claim of respondent Tapia. Dr.
Fernandez, was submitted, brushed aside the same Alberto B. Guevarra, Jr., counsel for Monarch Insurance
and concluded, in its report of March 11, 1971, that Company and Philippine Home Insurance Company,
the said findings are not sufficient basis for denying was in full accord with the Adjustment Company's
the claim of respondent Tapia. Even this Honorable findings and recommendation and he did not hesitate
Supreme Court, in several cases, has categorically to recommend to his clients full settlement of the
ruled that the existence of traces of gasoline in the claim of respondent Tapia. (Photostat copies of joint
burned premises does not necessarily indicate that motions to dismiss and corresponding orders of
73

respondent judge granting said motions are attached defense, this, should have been brought at the first
as Annexes "C", "C- 1", and "D"- "D-1 " and form opportunity, that is, by the first motion to set aside the
integral parts of this reply). order of default.' (Ong Peng vs. Custodio, L-14911,
March 25, 1961). (Pp. 227- 232, Record.)
5. Petitioners stand on quick-sand. Their counsel
himself, Mr. Felix, in his letter to his clients, marked as Anyone would see from a simple comparison of the
Annex "7" of respondent Answer to the instant foregoing conflicting allegations of the parties in the
petition, stated that their case is "far from strong." light of their respective supporting affidavits and
Hence, petitioners' case is not even strong. How can documents that it is rather petitioners, not Tapia, who
he say now that they have a good defense? And if the may have more reason to avoid a full-blown trial,
evidence did show that respondent Tapia was guilty of contrary to the charge made by Atty. Felix Jr. in all his
arson and fraud, why does Mr. Felix consider papers filed with this Tribunal and the court below. The
petitioners' case as 'far from strong?' 6 attorney himself must have felt the subject cases of
his clients to be weak when he advised them in his
6. This contention should have been interposed in letter, Annex 7 of respondents' answer, that the same
the lower court through the motion to lift the order of are "far from being strong." At the time he wrote that
default, by means of affidavits of merits. Had this been letter, he was well aware of the various reports of his
done, respondents could have opposed the same with clients' adjusters minimizing the significance of the
counter affidavits. That would have been the proper supposed expert opinion of Col. Fernandez regarding
procedure. Apparently, petitioners' counsel does not the gasoline traces found in Tapia's premises after the
believe in the Rules of Court. He would instead burden fire and referring to them as being innocuously
this Honorable Supreme Court with the task of hearing insufficient to indicate arson. The attorney also knew
and deciding a question which was not even raised in that said adjusters, the ones trusted by insurance
his petition. Respondents submit that this particular companies to give them reliable advice on whether or
point has been raised by petitioners rather too late. In not insured persons making claims on their policies are
one case, where a similar belated effort was more or less guilty of fraud and other improper
attempted, this Honorable Supreme Court made the schemes to collect unjustified claims, had investigated
following sagacious ruling: Tapia's claims thoroughly and had found no well-
grounded reason to warrant non-payment, and that, in
'We believe that this is a last minute attempt to defend fact, they had recommended out of court settlement.
a losing case. If defendants really had any valid There is no showing at all that Tapia has ever been,
74

criminally charged with arson On the contrary, the be possibly altered, should We prolong this judicial
record reveals that two other insurance companies battle in any way.
serviced by the same adjusting company as that of
petitioners have already compromised their cases with What has been said so far should suffice to settle once
Tapia without the latter having them declared in and for all the litigation between petitioners and
default. In other words, in these cases against the private respondents. But there is another aspect of
other two companies, Tapia was prepared to proceed these cases which cannot be left unresolved, since it
to trial, and if he had secured default judgments affects matters related to the integrity of judicial
against petitioners, the cause was none other than proceedings and the attitude and conduct displayed by
counsel's omissions already discussed earlier in this counsel for petitioners in connection therewith. the
opinion. Court cannot begrudge any lawyer of his right to be
assiduous and zealous, even tenacious, in the
We reiterate that these circumstances make it prosecution or defense of the cause of his client. But
unnecessary for Us to adhere to the technical when, as in these cases, counsel makes charges
procedure of returning these cases to the trial court for against the actuations of a judge and the personnel of
further proceedings and final determination of the his court directly assailing their personal integrity as
issue of whether or not petitioners' petition for relief well as that of the proceedings by alleging
from judgment should be granted. We find all the irregularities implying bad faith and outright
proceedings leading to the rendition of the impugned misfeasance, he should be prepared to substantiate
judgments and to the issuance of all the writs of the same. This Court will be the last to overlook, much
execution thereunder to have been regular and legal. less to tolerate the kind of misconduct alleged by
And as to whether or not petitioners have been able to counsel in his instant petition. This is not to say,
make the requisite showing that they have good and however, that trial judges may be maligned at random
valid defenses, We likewise hold that they have failed with accusations that cannot be proven. Anyone who
to do so. It would be idle ceremony to still require deliberately moves this Court to act on such kind of
respondent court to take further action on the petition representations may do so only at his peril of being
for relief, Annex N. The order of respondent judge of called to account therefor, should his charges turn out
July 7, 1971, giving due course to said petition has in to be a mere attempt to hide his own inadequacies
effect become functus officio. We are persuaded that and omissions in order to escape criticism of his
the respective situations of the parties can no longer clients.
75

We hold that Atty. Felix Jr.'s implied accusation that otherwise. It is indeed regrettable that on the basis of
respondent judge connived with his co-respondents to such unjustified allegations, the Court had been
make it appear that proper judgments by default had induced to issue a writ of preliminary mandatory
been regularly rendered against petitioners on April injunction counter-manding the writ of execution
28, 1971, when in truth there was no such judgments, issued by the court below, thereby causing undue
has not been proven by him. On the contrary, the prejudice to all parties concerned. Such lack of candor
official records and the affidavits of the employees of bordering on conscious misstatements of fact which
the trial court as well as those of the Bureau of Posts has actually misled the Court calls for at least an
belie conclusively counsel's allegations, and the mere appropriate explanation from counsel.
fact that he did not see said judgments and other
pertinent pleadings and papers in the corresponding IN VIEW OF ALL THE FOREGOING, judgment is hereby
expedientes on May 24, 1971, assuming the same to rendered dismissing the petition in these cases and
be true, cannot disprove their existence, particularly, setting aside the writ of preliminary injunction issued
when it is considered that counsel has never on July 8, 1971, with the consequence that the
pretended that he had actually made inquiries and executions enjoined thereby may now proceed in
asked the proper personnel of the court about them, accordance with law and the rules, with costs against
which he would naturally have done, considering that petitioner. And for the reasons above-stated, Atty.
before then he had filed motions for extension followed Alfonso Felix, Jr. is hereby ordered to show cause
by the joint answer. It is particularly unfortunate that within ten (10) days from notice hereof why no
counsel made positive allegations in his petition in the administrative action should be taken against him as a
instant cases purporting to show that his clients have member of the Philippine Bar.
good and valid defenses and that respondent Tapia's
insurance claim was fraudulent and maliciously Fernando (Chairman) and Aquino, JJ.,
exaggerated, when, as may be readily seen from the concur.1wph1.t
communications of the petitioners' own adjusting
company, Annexes A and B of respondents' reply Antonio, J., concur in the result.
memorandum, of which communications counsel must
have been, in the ordinary course of client and lawyer Fernandez, J, concurs and states that he is not related
relationship, duly informed, and from counsel's own to Col. Jose Fernandez.
letter to his client, Annex 7 of respondent's answer, it
is more than obvious that he knew the truth to be
76

reduce my fees. On the other hand, the fact that to say


Footnotest.hqw the least our case is far from strong as well as that
adverse counsel is a former fiscal of Quezon City with
1 Actually it should have been April 18 because March considerable acquaintance with the trial judge may be
has 31 days, but the trial court, in its order, Annex A of used by me as an argument to demand a higher fee..."
the petition, expressly granted five (5)days from April
14, 1971. Atty. Felix, Jr. has not denied the authenticity of this
document much less the truth of the representation
2 There is no clarification as to whether counsel went made by him in the statement quoted.
to court precisely because he had received earlier No. L-73039. October 9,1987.*
Annex C-1 or he received this later in the day. PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO
CAVILI, petitioners, vs. HON. TEODORO N. FLORENDO,
3 See footnote (1). Presiding Judge, Branch XXXVI, Regional Trial Court of
Negros Oriental, 7th Judicial Region, CLARITA GAVILI,
4 It may be mentioned that the known usual practice ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA CAVILI, ET
in this respect among respectable law offices does not AL., respondents.
include signing by the lawyer himself of the registry No. L-68680. October 9,1987.*
cards. Arrangements are made as to this small detail PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO
so that a subordinate may be authorized to do it. CAVILI, petitioners, vs. HON. TEODORO N. FLORENDO,
Presiding Judge, Branch XXXVI, Regional Trial Court,
5 As clearly shown by the record, the first registry 7th Judicial Region, CLARITA CAVILI, ULPIANO CAVILI,
notice of the decisions was served on counsel's office ESTRELLA CAVILI, PLACIDA CAVILI, GREGORIA CAVILI,
on May 19, 1971, hence the service became complete FORTUNATA CAVILI. AMILITA CAVILI, APAD CAVILI,
on May 24, 1971 (Sec. 8, Rule 13) and the decision AQUILINA CAVILI, CRESENCIO CAVILI, ALMA CAVILI, ET
became final on June 23, 1971. AL., respondents.
No. L-57771. October 9,1987.*
6 We have examined Annex 7 of Respondent's Answer. QUIRINO CAVILI, PRIMITIVO, CAVILI, and PERFECTA
It reads in its pertinent portion thus: CAVILI, petitioners, vs. HON. CIPRIANO VAMENTA, JR.,
as Presiding Judge, Branch III, Court of First Instance of
"In this case for instance, the fact that you are willing _______________
to compromise might be used as an argument to
77

* THIRD DIVISION. Vol. 2A, p. 90) The Rules should not be interpreted to
611 include an exception not embodied therein.
Same; Same; Same; Same; Civil Procedure; Default;
VOL. 154, OCTOBER 9, 1987 Loss of standing in court is the consequence of an
611 order of default; "Loss of standing," interpreted;
Cavili vs. Florendo Absence of provision in the Rule which contemplates a
Negros Oriental; ULPIANO CAVILI, CLARITA CAVILI, disqualification to be a witness or a deponent in a
ESTRELLA CAVILI, RAMONA TAKANG, COSME TAKANG, case; Default does not make him incompetentLoss of
FABIAN TAKANG, LEODEGARIO TAKANG, ET AL., standing in court is the consequence of an order of
respondents. default. Thus, a party declared in default is considered
Remedial Law; Special Proceedings; Disqualification of out of court and cannot appear therein, adduce
witnesses; Interpretation; Absence of provision in the evidence, and be heard and for that reason he is not
Rules disqualifying parties declared in default from entitled to notice. (Rule 18, Rules of Court; Lim Toco v.
taking the witness stand for non-disqualified parties; Go Fay, 80 Phil. 166) However, "loss of standing" must
The specific enumeration of disqualifted witnesses be understood to mean only the forfeiture of one's
excludes the operation of causes of disability other rights as a party litigant, contestant or legal adversary.
than those mentioned in the Rules.There is no A party in default loses his right to present his
provision of the Rules disqualifying parties declared in defense, control the proceedings, and examine or
default from taking the witness stand for non- cross-examine witnesses. He has no right to expect
disqualified parties. The law does not provide default that his pleadings would be acted upon by the court
as an exception. The specific enumeration of nor may he object to or refute evidence or motions
disqualified witnesses excludes the operation of filed against him. There is nothing in the rule,
causes of disability other than those mentioned in the however, which contemplates a disqualification to be a
Rules, It is a maxim of recognized utility and merit in witness or a deponent in a case. Default does not
the construction of statutes that an express exception, make him an incompetent.
exemption, or saving clause excludes other 612
exceptions. (In Re Estate of Enriquez, 29 Phil. 167) As a
general rule, where there are express exceptions these 612
comprise the only limitations on the operation of a SUPREME COURT REPORTS ANNOTATED
statute and no other exception will be implied. Cavili vs. Florendo
(Sutherland on Statutory Construction, Fourth Edition,
78

Same; Same; Same; Same; Same; Same; As opposed administration of the property in question and more
to a party litigant, a witness takes no active part in the than anybody else she can provide vital evidence to
contest of rights between the parties; A party in buttress their claim.
default does not take part in the trialAs opposed to a PETITION to review the orders of the Regional Trial
party litigant, a witness is merely a beholder, a Court of Negros Oriental.
spectator or onlooker, called upon to testify to what he
has seen, heard, or observed. As such, he takes no The facts are stated in the opinion of the Court.
active part in the contest of rights between the parties. GUTIERREZ, JR., J.:
Cast in the limited role of witness, a party in default
cannot be considered as "taking part in the trial." He This is a petition to review and set aside two orders of
remains suffering the effects of an order of default. the then Court of First Instance of Negros Oriental,
Same; Same; Same; Same; Same; Same; Allowing one namely: (1) the order dated October 11, 1985,
of the petitioners as a witness in the case at bar will disqualifying Perfecta Cavili dela Cruz as a witness in
preserve the right of the other two petitioners to Civil Case No. 6880 entitled "Clarita Cavili, et al. v.
secure attendance of witnesses and the production of Perfecta Cavili, Quirino Cavili, and Primitivo Cavili" and
evidence in their behalf; To reject the presentation of (2) the order dated November 26,1985, refusing to
testimony of the witness is to treat the other reconsider the previous orders of disqualif ication and
petitioners as in default, and deprive them of vital resetting
evidence to support their claim.Of greater concern or 613
importance in allowing the presence of Perfecta Cavili
as a witness in the case at bar, is the preservation of VOL. 154, OCTOBER 9, 1987
the right of petitioners Quirino and Primitivo Cavili to 613
secure the attendance of witnesses and the production Cavili vs. Florendo
of evidence in their behalf. To reject Perfecta Cavili's the reception of evidence for the defendants to
presentation of testimonial evidence would be to treat December 19 and 20,1985 with a warning that should
Primitivo and Quirino as if they too were in default. defendants' witnesses fail to appear in court on said
There is no reason why the latter should also be made date, they will be deemed to have waived their right to
to bear the consequences of Perfecta's omission. be witnesses in this case.
Moreover, we cannot deprive Quirino and Primitivo of The private respondents filed Civil Case No. 6880 with
the only instrument of proof available to them, as the Court of First Instance of Negros Oriental against
Perfecta alone has been in possession and herein petitioners for Partition, Accounting, and
79

Damages. After the case was raffled to Branch I served with summons, and, with a meritorious defense
presided over by Judge Augusto S. Villarin, summons that the properties sought to be partitioned have
was issued to the three petitioners, all at Bayawan, already been the subject of a written partition
Negros Oriental which was the address indicated in the agreement between the direct heirs of the late
complaint. Bernado Cavili
After trying to effect service, the process server went 614
back to the court with the following return of service
"served to Quirino and Primitivo Cavili not contacted, 614
according to Perfecta Cavili, subject persons is (sic) SUPREME COURT REPORTS ANNOTATED
staying in Kabangkalan, Negros Occidental.'' Cavili vs. Florendo
Meanwhile, Atty. Jose P. Alamillo filed a motion for who are the predecessors of the parties in this case.
extension to answer in behalf of the defendants, In/an order dated April 23,1980, the court granted said
manifesting the representation of his client Perfecta motion.
Cavili that she will inform her brothers Primitivo and The plaintiffs filed a motion for reconsideration of the
Quirino about the case. order granting new trial and at the same time prayed
The defendants, however, failed to file their answer that a writ of execution be issued but only in so far as
within the requested period and upon motion of the defendant Perfecta Cavili was concerned.
plaintiffs, the defendants were declared in default, and In an order dated July 21,1981, Judge Cipriano
on October 5, 1979, a judgment by default was Vamenta of Branch III of the Court of First Instance of
promulgated by Judge Augusto S. Villarin. Negros Oriental, to whom the case had been assigned
The records of the case, however, show that a after a re-raffle, set aside the order of April 23, 1980
Manifestation was filed by Atty. Jose P. Alamillo and directed the execution of the October 5, 1979
informing the court that since he never met Primitivo decision without qualification ruling that the
and Quirino Cavili, who are residents of another petitioners' remedy should have been appeal rather
province, he desisted from further appearing in the than new trial.
case in their behalf. Their motion for reconsideration having been denied
On November 7, 1979, Atty. Jose R Alamillo received a on August 11,1981, the defendants, now petitioners,
copy of the decision. On December 7, 1979, he filed a brought the case to this Court through a petition for
motion for new trial in behalf of the defendants on certiorari, G.R. No. 57771, entitled "Quirino Cavili, et
grounds of lack of jurisdiction over the persons of al., Petitioners versus Hon. Cipriano Vamenta, et al.,
Primitivo and Quirino Cavili who had not been legally Respondents."
80

On May 31, 1982, this Court rendered a decision, the October 11, 1985 disqualifying Perfecta Cavili dela
dispositive portion of which reads: Cruz as a witness in Civil Case No. 6880.
"WHEREFORE, Our resolution dismissing the petition is Hence, this petition.
hereby reconsidered; the petition is granted; and the Petitioner Perfecta Cavili's competence as a witness is
order dated July 21,1981, is set aside while that of put in issue by the private respondents.
April 23,1980, is revived. No special pronouncement as Section 18, Rule 130 of the Revised Rules of Court
to costs." (Rollo, p, 21) states who are qualified to be witnesses. It provides:
Thereafter, the pre-trial and trial of Civil Case No. 6880 "Section 18. Witnesses; their qualifications.Except as
was scheduled on October 9,10, and 11, 1985 before provided in the next succeeding section, all persons
Branch XXXVI of the Regional Trial Court, presided by who. having organs of sense, can perceive, and
respondent Judge Teodoro N. Florendo. The perceiving, can make known their perception to others,
defendants, (now petitioners), presented Perfecta may be witnesses. Neither parties nor other persons
Cavili dela Cruz as their first witness. The respondents, interested in the outcome of a case shall be excluded;
through counsel, moved for her disqualification as a nor those who have been convicted of crime; nor any
witness on the ground that having been declared in person on account of his opinion on matters of
default, Perfecta Cavili has lost her standing in court religious belief."
and she cannot be allowed to participate in all The generosity with which the Rule allows people to
proceedings therein, even as a witness. The court, testify is apparent. Interest in the outcome of a case,
through the respondent judge, sustained the conviction of a crime unless otherwise provided by
respondents' contention and disqualified her from law, and religious belief are not grounds for
testifying. disqualification.
615 Sections 19 and 20 of Rule 130 provide for specific
disqualifications. Section 19 disqualifies those who are
VOL. 154, OCTOBER 9, 1987 mentally incapacitated and children whose tender age
615 or immaturity renders them incapable of being
Cavili vs. Florendo witnesses. Section 20 provides for disqualification
The petitioners, through counsel, moved for a based on conflicts of interest or on relationship.
reconsideration of the ruling. Section 21 provides for disqualifications based on
On November 26, 1985, the lower court issued an privileged communications. Section 15 of Rule 132
order denying reconsideration of its Order dated may not be a rule on disqualification of witnesses but
81

it states the grounds when a witness may be They advance the argument that to allow Perfecta
impeached by the party against whom he was called. Cavili to stand as witness would be to permit a party in
There is no provision of the Rules disqualifying parties default "to take part in the trial."
declared in default from taking the witness stand for An explanation of the Rule is in order.
nondisqualified parties. The law does not provide Loss of standing in court is the consequence of an
default as an exception. The specific enumeration of order of default. Thus, a party declared in default is
disqualified witnesses excludes the operation of considered out of court and cannot appear therein,
causes of disability other than those adduce evidence, and be heard and for that reason he
616 is not entitled to notice. (Rule 18, Rules of Court; Lim
Toco v. Go Fay, 80 Phil. 166) However, "loss of
616 standing" must be understood to mean only the
SUPREME COURT REPORTS ANNOTATED forfeiture of one's rights as a party litigant, contestant
Cavili vs. Florendo or legal adversary. A party in default loses his right to
mentioned in the Rules. It is a maxim of recognized present his defense, control the proceedings, and
utility and merit in the construction of statutes that an examine or crossexamine witnesses. He has no right to
express exception, exemption, or saving clause expect that his pleadings would be acted upon by the
excludes other exceptions. (In Re Estate of Enriquez, court nor may he object to or refute evidence or
29 Phil. 167) As a general rule, where there are motions filed against him. There is nothing in the rule,
express exceptions these comprise the only limitations however, which contemplates a disqualification to be a
on the operation of a statute and no other exception witness or a deponent in a case. Default does not
will be implied. (Sutherland on Statutory Construction, make him an incompetent.
Fourth Edition, Vol. 2A, p. 90) The Rules should not be As opposed to a party litigant, a witness is merely a
interpreted to include an exception not embodied beholder, a spectator or onlooker, called upon to
therein. testify to what he has seen, heard, or observed. As
The respondents, however, cite Section 2, Rule 18 on such, he takes no active part in the contest of rights
Defaults, to wit: between the parties. Cast in
"Section 2. Effect of order of default.Except as 617
provided in section 9 of Rule 13, a party declared in
default shall not be entitled to notice of subsequent VOL. 154, OCTOBER 9, 1987
proceedings nor to take part in the trial." " 617
Cavili vs. Florendo
82

the limited role of witness, a party in default cannot be The temporary restraining order issued on January
considered as "taking part in the trial." He remains 6,1986 is LIFTED.
suffering the effects of an order of default. SO ORDERED,
A party in default may thus be cited as a witness by Fernan (Chairman), Feliciano, Bidin and Corts, JJ.,
his codefendants who have the standing and the right concur.
to present evidence which the former may provide. Petition granted Order set aside. Case remanded to
The incidental benefit giving the party in default the Court a quo for further proceedings.
opportunity to present evidence which may eventually Notes.Positive identification by prosecution witness
redound to his advantage or bring about a desired of accused is more credible than witnesses'
result, through his co-defendants. is of minor speculation. (People vs.
consequence.
Of greater concern or importance in allowing the G.R. Nos. 159669 & 163521. March 12, 2007.*
presence of Perfecta Cavili as a witness in the case at UNITED OVERSEAS BANK PHILS. (formerly WESTMONT
bar, is the preservation of the right of petitioners BANK), petitioner, vs. ROSEMOORE MINING &
Quirino and Primitivo Cavili to secure the attendance DEVELOPMENT CORP. and DRA. LOURDES PASCUAL,
of witnesses and the production of evidence in their respondents.
behalf. To reject Perfecta Cavili's s presentation of Actions; Pleadings and Practice; Forum Shopping;
testimonial evidence would be to treat Primitivo and Elements; The essence of forum shopping is the filing
Quirino as if they too were in default. There is no of multiple suits involving the same parties for the
reason why the latter should also be made to bear the same cause of action, either simultaneously or
consequences of Perfecta's omission. Moreover, we successively, for the purpose of obtaining a favorable
cannot deprive Quirino and Primitivo of the only judgment.The essence of forum shopping is the filing
instrument of proof available to them, as Perfecta of multiple suits involv-
alone has been in possession and administration of the _______________
property in question and more than anybody else she
can provide vital evidence to buttress their claim. * SECOND DIVISION.
WHEREFORE, in view of the foregoing, the petition is 124
hereby GRANTED, The order of the respondent court
disqualifying Perfecta Cavili dela Cruz as a witness in 124
Civil Case No. 6880 is hereby SET ASIDE. The case is SUPREME COURT REPORTS ANNOTATED
remanded to the court a quo for further proceedings.
83

United Overseas Bank Phils. vs. Rosemoore Mining & properties found in different provinces is determined
Development Corp. by the singularity or plurality of the transactions
ing the same parties for the same cause of action, involving said parcels of land. Where said parcels are
either simultaneously or successively, for the purpose the object of one and the same transaction, the venue
of obtaining a favorable judgment. The elements of is in the court of any of the provinces wherein a parcel
forum shopping are: (a) identity of parties, or at least of land is situated.
such parties as represent the same interests in both Same; Same; Legal Ethics; Attorneys; A lawyer shall
actions; (b) identity of rights asserted and reliefs not do any falsehood, nor consent to the doing of any
prayed for, the reliefs being founded on the same in court; nor shall he mislead, or allow the Court to be
facts; and (c) the identity with respect to the two misled by any artifice.This apparent deliberate
preceding particulars in the two cases is such that any misrepresentation cannot simply pass without action.
judgment rendered in the pending cases, regardless of The real estate mortgage form supplied to Rosemoor is
which party is successful, amount to res judicata in the the Banks standard pre-printed form. Yet the Bank
other case. perpetrated the misrepresentation. Blame must be
Same; Same; Venue; The venue of real actions placed on its doorstep. But as the Banks pleading was
affecting properties found in different provinces is obviously prepared by its counsel, the latter should
determined by the singularity or plurality of the also share the blame. A lawyer shall not do any
transactions involving said parcels of land.The rule falsehood, nor consent to the doing of any in court; nor
on venue of real actions is provided in Section 1, Rule shall he mislead, or allow the Court to be misled by
4 of the 1997 Rules of Civil Procedure, which reads in any artifice. Both the Banks president and counsel
part: Section1. Venue of Real Actions.Actions should be made to explain why they should not be
affecting title to or possession of real property, or sanctioned for contempt of court.
interest therein, shall be commenced and tried in the 125
proper court which has jurisdiction over the area
wherein the real property involved, or a portion VOL. 518, MARCH 12, 2007
thereof, is situated. x x x The venue of the action for 125
the nullification of the foreclosure sale is properly laid United Overseas Bank Phils. vs. Rosemoore Mining &
with the Malolos RTC although two of the properties Development Corp.
together with the Bulacan properties are situated in PETITIONS for review on certiorari of the decisions of
Nueva Ecija. Following the above-quoted provision of the Court of Appeals.
the Rules of Court, the venue of real actions affecting
84

The facts are stated in the opinion of the Court. 4 Covered by Transfer Certificate of Title Nos. 42132,
Siguion Reyna, Montecillo and Ongsiako Law Offices 42133, 42134, 42135, 42136 and 34569.
for petitioner. 5 Rollo, (G.R. No. 159669), p. 73
Eufemio Law Offices for private respondents. 6 Covered by Transfer Certificate of Title Nos. NT-
TINGA, J.: 12627 and NT-12628.
126
We resolve these two consolidated cases, which
though with distinct courts of origin, pertain to issues 126
stemming from the same loan transaction. SUPREME COURT REPORTS ANNOTATED
The antecedent facts follow. United Overseas Bank Phils. vs. Rosemoore Mining &
Respondent Rosemoor Mining and Development Development Corp.
Corporation (Rosemoor), a Philippine mining situated in Gapan, Nueva Ecija (Nueva Ecija
corporation with offices at Quezon City, applied for and properties), owned and registered under the name of
was granted by petitioner Westmont Bank1 (Bank) a Dr. Pascual.7
credit facility in the total amount of P80 million Rosemoor subsequently opened with the Bank four (4)
consisting of P50,000,000.00 as long term loan and irrevocable Letters of Credit (LCs) totaling
P30,000,000.00 as revolving credit line.2 US$1,943,508.11.8 To cover payments by the Bank
To secure the credit facility, a lone real estate under the LCs, Rosemoor proceeded to draw against
mortgage agreement was executed by Rosemoor and its credit facility and thereafter executed promissory
Dr. Lourdes Pascual (Dr. Pascual), Rosemoors notes amounting collectively to P49,862,682.50.9 Two
president, as mortgagors in favor of the Bank as (2) other promissory notes were also executed by
mortgagee in the City of Manila.3 The agreement, Rosemoor in the amounts of P10,000,000.00 and
however, covered six (6) parcels of land located in San P3,500,000.00, respectively, to be drawn from its
Miguel, Bulacan4 (Bulacan properties), all registered revolving credit line.10
under the name of Rosemoor,5 and two (2) parcels of Rosemoor defaulted in the payment of its various
land6 drawings under the LCs and promissory notes. In view
_______________ of the default, the Bank caused the extrajudicial
foreclosure of the Nueva Ecija properties on 22 May
1 Now United Overseas Bank Philippines. 1998 and the Bulacan properties on 10 August 1998.
2 Rollo, (G.R. No. 159669), p. 73. The Bank was the highest bidder on both occasions.11
3 Id., at pp. 159-161; Real Estate Mortgage.
85

On 8 October 1999, the Bank caused the annotation of Public Jose Sineneng, whose office was used to
the Notarial Certificate of Sale covering the Nueva foreclose the mortgage.14 The complaint was twice
Ecija properties on the certificates of title concerned. amended, the caption eventually reflecting an action
Later, on 16 March 2001, the Notarial Certificate of for Accounting, Specific Performance and
Sale covering the Bulacan properties was annotated on Damages.15 Through the amendments, Pascual was
the certificates of title of said properties.12 dropped as a plaintiff while several officers of the Bank
The foregoing facts led to Rosemoors filing of separate were included as defendants.16
complaints against the Bank, one before the Regional The Bank moved for the dismissal of the original and
Trial Court of Manila (Manila RTC) and the other before amended complaints on the ground that the venue
the Regional Trial Court of Malolos, Bulacan (Malolos had been improperly laid.17 The motion was denied by
RTC). the trial court through an Omnibus Resolution dated 24
_______________ January 2000.18
Rosemoors prayer in the Second Amended Complaint,
7 Rollo, (G.R. No. 163521), p. 14. which was filed in November of 1999, reads as follows:
8 Id., at p. 15 and 271. WHEREFORE, plaintiff Rosemoor Mining &
9 Id., at pp. 15 and 273. Development Corporation respectfully prays that, after
10 Id. trial of the issues, this court promulgate judgment
11 Rollo, (G.R. No. 159669), p. 73. 1. Directing Westmont to render an accounting of the
12 Rollo, (G.R. No. 163521), p. 15. loan account of Rosemoor under the Long Term Loan
127 Facility and the Revolving Credit Line at least up to the
dates of foreclosure of Rosemoors mortgaged
VOL. 518, MARCH 12, 2007 properties on May 22, 1998 and August 18, 1998,
127 _______________
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp. 13 Id., at pp. 221-235.
The Manila Case (G.R. No. 163521) 14 Id., at p. 62.
On 5 August 1998, Rosemoor and Dr. Pascual filed a 15 Id., at pp. 266-286.
Complaint, originally captioned as one for Damages, 16 Impleaded as defendants in the Second Amended
Accounting and Release of Balance of Loan and Complaint were Florido Casuela, Avelina Dela Cruz,
Machinery and for Injunction before the Manila RTC.13 Proserfina Cruz, and Rolando Castro. Casuela was
Impleaded as defendants were the Bank and Notary included as a former Vice President of the Bank while
86

Dela Cruz, Cruz, and Castro were impleaded as exchange rate prevailing at the time of the opening of
incumbent Vice President, Manager, and Senior Officer, the LCs;
respectively, of the Bank. See Rollo, (G.R. No. 163521), 3. Ordering defendants jointly and severally to pay to
pp. 267-268. Rose-moor actual damages for operational losses
17 Id., at pp. 237-242; Urgent Motion to Dismiss. suffered by Rosemoor due to its failure to use the tiling
18 Id., at pp. 327-328. plaint which Westmont had refused to release to
128 Rosemoor, in such amount as may be proven at the
trial;
128 4. Directing the defendants jointly and severally to
SUPREME COURT REPORTS ANNOTATED pay, by way of correction for the public good,
United Overseas Bank Phils. vs. Rosemoore Mining & exemplary damages in the amount of P 500,000.00
Development Corp. each;
showing among others (a) the sums of money paid by 5. Ordering defendants jointly and severally to
Rosemoor or otherwise debited from its deposit indemnify Rosemoor in the sum of P350,000.00,
account in payment of the loans it had obtained from representing attorneys fees and litigation expenses
Westmont to cover the cost of the machinery to be incurred by Rosemoor for the protection and
imported under the Unpaid LCs and under LC No. 97- enforcement of its rights and interests.
058 for the tiling plant, as well as for working capital, Plaintiff prays for further and other relief as may be
and (b) all interests, penalties and charges imposed on just and equitable under the circumstances.19
the loans pertaining to the Unpaid LCs and LC No. 97- On 15 August 2002, the Bank filed another motion to
058 and for which Westmont had foreclosed dismiss the Second Amended Complaint on the ground
Rosemoors and Dra. Pascuals real estate mortgage; of forum shopping since, according to it, Rosemoor had
(c) the amount of import and customs duties, filed another petition earlier on 11 March 2002 before
demurrage, storage and other fees which Rosemoor the Malolos RTC.20
had paid or which was otherwise debited from _______________
Rosemoors deposit account, in connection with the
importation of the tiling plant and as a consequence of 19 Id., at pp. 283-284.
the non-release thereof by Westmont; 20 Id., at p. 63; CA Decision.
2. Ordering all the defendants jointly and severally to 129
pay to Rosemoor, by way of actual damages, the dollar
equivalent of the amounts in (1) (a), (b) and (c) at the VOL. 518, MARCH 12, 2007
87

129 damages, while the case before this Court is for


United Overseas Bank Phils. vs. Rosemoore Mining & Accounting, Specific Performance and Damages. Thus,
Development Corp. the case of Denville Maritime, Inc. v. Commission on
The Bank contended that as between the action before Audit, 175 SCRA 701 cited[,] by the defendants does
the Manila RTC and the petition before the Malolos not apply.
RTC, there is identity of parties, rights asserted, and WHEREFORE, the Motion to Dismiss is DENIED for lack
reliefs prayed for, the relief being founded on the same of merit.
set of facts. The Bank further claimed that any SO ORDERED.
judgment that may be rendered in either case will 23 Id., at p. 65.
amount to res judicata in the other case.21 Still, the 24 Id., at pp. 61-68, Decision of the Court of Appeals is
Manila RTC denied the motion to dismiss.22 It also dated 26 February 2004, penned by Associate Justice
denied the Banks motion for reconsideration of the Rodrigo V. Cosico with the concurrence of Associate
order of denial.23 Justices Mariano C. Del Castillo and Vicente Q. Roxas.
The Bank challenged the Manila RTCs denial of the 25 Id., at pp. 70-71.
Banks second motion to dismiss before the Court of 130
Appeals, through a petition for certiorari. The appellate
court dismissed the petition in a Decision dated 26 130
February 2004.24 The Bank filed a motion for SUPREME COURT REPORTS ANNOTATED
reconsideration which, however, was denied through a United Overseas Bank Phils. vs. Rosemoore Mining &
Resolution dated 30 April 2004.25 Development Corp.
_______________ In the Petition for Review on Certiorari in G.R. No.
163521, the Bank argues that the Court of Appeals
21 Id., at p. 65. erred in holding that no forum shopping attended the
22 Id., at p. 404. See also p. 65. actions brought by Rosemoor.26
The pertinent portion of the Order reads: The Malolos Case (G.R. No. 159669)
There is no forum shopping. After the complaint with the Manila RTC had been
There is forum shopping when in two or more cases lodged, on 11 March 2002, Rosemoor and Dr. Pascual
pending there is identity of (a) parties, (b) rights or filed another action against the Bank, this time before
causes of action and (c) relief sought, (Buan v. Lopez, the Malolos RTC. Impleaded together with the Bank as
145 SCRA 34). These requisites are not present in the respondent was the Register of Deeds for the Province
Bulacan case, the action is for Injunction with of Bulacan in the Petition for Injunction with Damages,
88

with Urgent Prayer for Temporary Restraining Order WHEREFORE, premises considered, it is most
and/or Preliminary Injunction.27 respectfully prayed that this Honorable Court
In the Malolos case, Rosemoor and Dr. Pascual alleged 1. Issue ex parte a temporary restraining order before
that the redemption period for the Bulacan properties the matter could be heard on notice to restrain and
would expire on 16 March 2002. They claimed that the enjoin respondent BANK from proceeding with its
threatened consolidation of titles by the Bank is illegal, threatened consolidation of its titles over the subject
stressing that the foreclosure of the real estate properties of petitioner Rosemoor in San Miguel,
mortgage by the Bank was fraudulent and without Bulacan covered by TCT Nos. 42132; 42133; 42134;
basis,28 as the Bank had made them sign two blank 42135; 42136 and RT 34569 (T-222448) on March 16,
forms of Real Estate Mortgage and several promissory 2002 or at any time thereafter; that the respondent
notes also in blank forms. It appeared later, according Register of Deeds for the Province of Bulacan be
to Rosemoor and Dr. Pascual, that the two Real Estate enjoined and restrained from registering any
Mortgage blank forms were made as security for two document(s) submitted and/or to be submitted by
loans, one for P80 million and the other for P48 million, respondent BANK consolidating its titles over the
when the total approved loan was only for P80 million. above-named properties of petitioner Rosemoor in San
The Bank later released only the amount of P10 million Miguel, Bulacan; and likewise, that the Register of
out of the P30 million revolving credit line, to the Deeds for the province of Bulacan be restrained and
prejudice of Rosemoor, they added.29 enjoined from canceling the titles of Rosemoor over its
The Petitions prayer reads as follows: properties, namely, TCT Nos. 42132; 42133; 42134;
_______________ 42135; 42136 and RT 34569 (T-222448);
2. That after due notice, a writ of preliminary injunction
26 Id., at p. 29. be issued upon the posting of a bond in such amount
27 Rollo, (G.R. No. 159669), pp. 230-238. as may be fixed by this Court;
28 Id., at p. 74. 3. That after due hearing and trial, judgment be
29 Id. rendered in favor of petitioners and against
131 respondent BANK
a. Permanently enjoining respondent BANK from
VOL. 518, MARCH 12, 2007 proceeding with the consolidation of its titles to the
131 subject properties of Rosemoor covered by TCT Nos.
United Overseas Bank Phils. vs. Rosemoore Mining & 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-
Development Corp. 222448); and permanently restraining respondent
89

Register of Deeds for the Province of Bulacan from the properties registered in her name are located in
registering any document(s) submitted and/or to be Nueva Ecija. The Malolos RTC denied the motion to
submitted by respondent BANK consolidating its titles dismiss in an Order dated 13 May 2002.32 In the same
over the above-named properties of petitioner Order, the Malolos RTC directed the Bank to file its
Rosemoor in San Miguel, Bulacan; and likewise, that answer to the petition within five (5) days from
the Register of Deeds for the province of Bulacan be notice.33
restrained and enjoined from cancelling the titles of Despite receipt of the Order on 21 May 2002, the Bank
Rosemoor over its properties, namely, TCT Nos. 42132; opted not to file its answer as it filed instead a motion
42133; 42134; 42135; 42136 and RT 34569 (T- for reconsideration on 5 June 2002.34 Meanwhile,
222448); Rosemoor and Dr. Pascual moved to declare the Bank
b. Declaring the foreclosures of Real Estate Mortgages in default for its failure to timely file its answer.35 On
on the properties of petitioners Rosemoor and Dra. 10 September 2002, the Malolos RTC issued an order
Pascual to be null and void; denying the Banks motion for reconsideration for lack
c. Recognizing the ownership in fee simple of the of merit and at the same time declaring the Bank in
petitioners over their properties above-mentioned; default for failure to file its answer.36
132 Hence, the Bank filed a second petition for certiorari
before the Court of Appeals, where it assailed the
132 Orders dated 13 May 2002 and 10 September 2002 of
SUPREME COURT REPORTS ANNOTATED the Malolos RTC. During the pendency of this petition
United Overseas Bank Phils. vs. Rosemoore Mining & for certiorari, the Malolos RTC decided the Malolos case
Development Corp. on the merits in favor of Rosemoor.37
d. Awarding to petitioners the damages prayed for, _______________
including attorneys fees and costs and expenses of
litigation. 30 Id., at pp. 236-237.
Petitioners pray for such other reliefs and remedies as 31 Id., at p. 363.
may be deemed just and equitable in the premises.30 32 Id., at p. 75.
As it did before the Manila RTC, the Bank filed a motion 33 Id.
to dismiss on 26 March 2002 on the ground that 34 Id.; id., at p. 363.
Rosemoor had engaged in forum shopping, adverting 35 Id.
to the pending Manila case.31 The Bank further 36 Id.
alleged that Dr. Pascual has no cause of action since 37 Id., at p. 367; dispositive part of which reads:
90

133 3. Ordering the respondent United Overseas Bank


Philippines to pay unto petitioners as follows:
VOL. 518, MARCH 12, 2007 P2,000,000.00 as moral and exemplary damages
133 unto Dra. Lourdes Pascual (P1,000,000.00 as moral
United Overseas Bank Phils. vs. Rosemoore Mining & damages; P1,000,000.00 as exemplary damages);
Development Corp. P13,000,000.00 unto petitioner Rosemoor Mining and
The decision in the Malolos case was also appealed to Development Corporation as moral and exemplary
the Court of Appeals.38 Based on these developments, damages (P3,000,000.00 as moral damages and
the appellate court considered the prayer for P10,000,000.00 as exemplary damages); and
preliminary injunction as moot and academic and P100,000.00 unto petitioner as attorneys fees, plus
proceeded with the resolution of the petition, by then cost of litigation.
docketed as CA-G.R. SP No.73358, on the merits. The SO ORDERED.
appellate court dismissed the petition in a Decision 38 Id., at p. 75 citing CA Rollo, pp. 463-466.
dated 20 June 2003.39 Undaunted, the Bank filed the 39 Id., at pp. 72-79; Penned by Associate Justice
petition in G.R. No. 159669 before this Court. Romeo A. Brawner with the concurrence of Associate
The two petitions before this Court have been Justices Eliezer R. Delos Santos and Regalado E.
consolidated. We find one common issue in G.R. No. Maambong.
159669 and G.R. No. 163521whether Rosemoor 134
committed forum-shopping in
_______________ 134
SUPREME COURT REPORTS ANNOTATED
WHEREFORE, premises considered, judgment is hereby United Overseas Bank Phils. vs. Rosemoore Mining &
rendered in favor of petitioners and against Development Corp.
respondents, to wit: filing the two cases against the Bank. The other issues
1. The Writ of Preliminary Injunction issued by this for resolution were raised in G.R. No. 159669,
Court on 25 March 2002 is hereby made permanent; pertaining as they do to the orders issued by the
2. Declaring as null and void the Real Estate Mortgage Malolos RTC. These issues are whether the action to
executed by petitioner corporation in favor of invalidate the foreclosure sale was properly laid with
respondent Bank (Exhibits D and E) and the the Malolos RTC even as regards the Nueva Ecija
subsequent foreclosures of such mortgages; properties; whether it was proper for the Malolos RTC
to declare the Bank in default; and whether it was
91

proper for the Malolos RTC to deny the Banks motion 41 Mondragon Leisure and Resorts Corporation v.
to dismiss through a minute resolution.40 United Coconut Planters Bank, G.R. No. 154187, 14
Forum-Shopping April 2004, 427 SCRA 585.
The central issue in these consolidated cases is 42 Id. See also Valencia v. Court of Appeals, 331 Phil.
whether Rosemoor committed forum-shopping in filing 590, 603; 263 SCRA 275, 284-285 (1996).
the Malolos case during the pendency of the Manila 135
case.
The essence of forum-shopping is the filing of multiple VOL. 518, MARCH 12, 2007
suits involving the same parties for the same cause of 135
action, either simultaneously or successively, for the United Overseas Bank Phils. vs. Rosemoore Mining &
purpose of obtaining a favorable judgment.41 The Development Corp.
elements of forum-shopping are: (a) identity of parties, participation in the preparation and execution of the
or at least such parties as represent the same interests loan agreement would render them personally liable.
in both actions; (b) identity of rights asserted and Dr. Pascual, on the other hand, was included as
reliefs prayed for, the reliefs being founded on the petitioner only in the Malolos case because it involved
same facts; and (c) the identity with respect to the two properties registered in her name. As correctly pointed
preceding particulars in the two cases is such that any out by the Court of Appeals, Dr. Pascual is a real party-
judgment rendered in the pending cases, regardless of in-interest in the Malolos case because she stood to
which party is successful, amount to res judicata in the benefit or suffer from the judgment in the suit. Dr.
other case.42 Pascual, however, was not included as plaintiff in the
As to the existence of identity of parties, several bank Manila case because her interest therein was not
officers and employees impleaded in the Amended personal but merely in her capacity as officer of
Complaint in the Manila case were not included in the Rosemoor.
Malolos case. These bank officers and employees were As regards the identity of rights asserted and reliefs
sued in Manila in their personal capacity. A finding of prayed for, the main contention of Rosemoor in the
negligence or bad faith in their Manila case is that the Bank had failed to deliver the
_______________ full amount of the loan, as a consequence of which
Rosemoor demanded the remittance of the unreleased
40 Rollo, (G.R. No. 163521), p. 584. portion of the loan and payment of damages
consequent thereto.43 In contrast, the Malolos case
was filed for the purpose of restraining the Bank from
92

proceeding with the consolidation of the titles over the Binondo, Manila.48 Personal actions may be
foreclosed Bulacan properties because the loan commenced and tried where the plaintiff or any of the
secured by the mortgage had not yet become due and principal plaintiffs resides, or where the defendants or
demandable.44 While the right asserted in the Manila any of the principal defendants resides, at the election
case is to receive the proceeds of the loan, the right of the plaintiff.49
sought in the Malolos case is to restrain the foreclosure It was subsequent to the filing of the Manila case that
of the properties mortgaged to secure a loan that was Rosemoor and Dr. Pascual saw the need to secure a
not yet due. writ of injunction because the consolidation of the
Moreover, the Malolos case is an action to annul the titles to the mortgaged properties in favor of the Bank
foreclosure sale that is necessarily an action affecting was in the offing. But then, this action can only be
the title of the property sold.45 It is therefore a real commenced where the properties, or a portion thereof,
action which should be commenced and tried in the is located. Otherwise, the petition for injunction would
province where the property or part thereof lies.46 The be dismissed for improper venue. Rosemoor, therefore,
Manila case, on the other hand, is a was warranted in filing the Malolos case and cannot in
_______________ turn be accused of forum shopping.
Clearly, with the foregoing premises, it cannot be said
43 Rollo, (G.R. No. 163521), pp. 283-284. that respondents committed forum shopping.
44 Id., at pp. 236-237. Action to nullify foreclosure sale of mortgaged
45 Fortune Motors (Phils.), Inc. v. Court of Appeals, properties in Bulacan and Nueva Ecija before the
G.R. No. 76431, 16 October 1989, 178 SCRA 564, 568- Malolos RTC
569. The Bank challenges the Malolos RTCs jurisdiction
46 RULES OF COURT, Rule 4, Sec. 1. over the action to nullify the foreclosure sale of the
136 Nueva Ecija properties along with the Bulacan
properties. This question is
136 _______________
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining & 47 A personal action is one brought for the recovery of
Development Corp. personal property or for the enforcement of some
personal action47 involving as it does the enforcement contract or for the recovery of damages for its breach,
of a contract between Rosemoor, whose office is in or the recovery of damages for the commission of an
Quezon City, and the Bank, whose principal office is in injury to the person or property. See Asset Privatization
93

Trust v. Court of Appeals, 381 Phil. 530, 550; 324 SCRA found in different provinces is determined by the
533, 551 (2000) citing The Dial Corporation v. Soriano, singularity or plurality of the transactions involving
G.R. No. L-82330, May 31, 1988, 161 SCRA 737, 742 said parcels of land. Where said parcels are the object
citing Hernandez v. DBP, L-31095, June 18, 1976, 71 of one and the same transaction, the venue is in the
SCRA 290, 292. court of any of the provinces wherein a parcel of land
48 Rollo, (G.R. No. 159669), p. 159. is situated.52
49 RULES OF COURT, Rule 4, Sec. 2. Ironically, the Bank itself correctly summarized the
137 applicable jurisprudential rule in one of the pleadings
before the Court.53 Yet the Bank itself has provided
VOL. 518, MARCH 12, 2007 the noose on which it
137 _______________
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp. 50 Unimasters Conglomeration, Inc. v. Court of
actually a question of venue and not of jurisdiction,50 Appeals, 335 Phil. 415; 267 SCRA 759 (1997).
which if improperly laid, could lead to the dismissal of 51 RULES OF COURT, Rule 16, Sec. 1(c).
the case.51 52 REGALADO, REMEDIAL LAW COMPENDIUM, Vol. 1
The rule on venue of real actions is provided in Section (1999 ed.), p. 105, citing El Hogar Filipino v. Seva, 57
1, Rule 4 of the 1997 Rules of Civil Procedure, which Phil. 573 (1932).
reads in part: 53 Rollo, (G.R. No. 159669), p. 597. Vide Petitioners
Section 1. Venue of Real Actions.Actions affecting Memorandum. The Bank stated:
title to or possession of real property, or interest Where the subject matter of the action involves
therein, shall be commenced and tried in the proper various parcels of land situated in different provinces,
court which has jurisdiction over the area wherein the the venue is determined by the singularity or plurality
real property involved, or a portion thereof, is situated. of the transactions involving said parcels of land. Thus,
x x x where said parcels are the
The venue of the action for the nullification of the 138
foreclosure sale is properly laid with the Malolos RTC
although two of the properties together with the 138
Bulacan properties are situated in Nueva Ecija. SUPREME COURT REPORTS ANNOTATED
Following the above-quoted provision of the Rules of United Overseas Bank Phils. vs. Rosemoore Mining &
Court, the venue of real actions affecting properties Development Corp.
94

would be hung. Resorting to deliberate parcel of land is situated (Regalado, Remedial Law
misrepresentation, the Bank stated in the same Compendium, Vol. 1, p. 105). As enunciated by the
pleading that the Bulacan and Nueva Ecija Supreme Court in El Hogar Filipino v. Seva (G.R. No.
[p]roperties were not the subject of one single real 36627, 19 November 1932), it is only when various
estate mortgage contract.54 parcels of land or real property situated in different
In the present case, there is only one proceeding provinces, are included in one mortgage contract,
sought to be nullified and that is the extra-judicial (that) the Court of First Instance of the province
mortgage foreclosure sale. And there is only one initial wherein they are situated or a part thereof is situated,
transaction which served as the basis of the has jurisdiction to take cognizance of an action for the
foreclosure sale and that is the mortgage contract. foreclosure of said mortgage, and the judgment
Indeed, Rosemoor, through Dr. Pascual, executed a therein rendered may be executed in all the other
lone mortgage contract where it undertook to provinces wherever the mortgaged real property may
mortgage the land/real property situated in Bulacan be found.
and Nueva Ecija, with the list of mortgaged properties 54 Id., at pp. 596-597.
annexed thereto revealing six (6) properties in Bulacan 139
and two (2) properties in Nueva Ecija subject of the
mortgage. VOL. 518, MARCH 12, 2007
This apparent deliberate misrepresentation cannot 139
simply pass without action. The real estate mortgage United Overseas Bank Phils. vs. Rosemoore Mining &
form supplied to Rosemoor is the Banks standard pre- Development Corp.
printed form. Yet the Bank perpetrated the to be misled by any artifice.55 Both the Banks
misrepresentation. Blame must be placed on its president and counsel should be made to explain why
doorstep. But as the Banks pleading was obviously they should not be sanctioned for contempt of court.
prepared by its counsel, the latter should also share Propriety of Default Order
the blame. A lawyer shall not do any falsehood, nor The Court of Appeals did not touch upon the
consent to the doing of any in court; nor shall he soundness or unsoundness of the order of default
mislead, or allow the Court although it is one of the orders assailed by the Bank.
_______________ However, the silence of the appellate court on the
issue does not improve the legal situation of the Bank.
objects of one and the same transaction, the venue To recall, the Bank filed a motion to dismiss the
was in the then CFI of any of the provinces wherein a Malolos case. The Malolos RTC denied the motion in an
95

Order dated 13 May 2002.56 In the same Order, the United Overseas Bank Phils. vs. Rosemoore Mining &
Malolos RTC directed the Bank to file its answer to the Development Corp.
petition within five (5) days from the receipt of the it is contrary to law and jurisprudence because it had
Order.57 The Bank received a copy of the Order on 21 failed to apprise the Bank of the legal basis for the
May 2002. Instead of filing an answer, the Bank filed a denial.
motion for reconsideration but only on 5 June 2002.58 The Bank adverts to the content requirement of an
The motion for reconsideration59 could not have tolled order denying a motion to dismiss prescribed by Sec.
the running of the period to answer for two reasons. 3, Rule 16 of the Rules of Court. The Court in Lu Ym v.
One, it was filed late, nine (9) days after the due date Nabua 60 made a thorough discussion on the matter,
of the answer. Two, it was a mere rehash of the motion to quote:
to dismiss; hence, pro forma in nature. Thus, the Sec. 3, Rule 16 of the Rules provides:
Malolos RTC did not err in declaring the Bank in Sec. 3. Resolution of motion.After the hearing, the
default. court may dismiss the action or claim, deny the motion
Deviation from the Prescribed Content of an Order or order the amendment of the pleading.
Denying a Motion to Dismiss The court shall not defer the resolution of the motion
Finally, the Bank questions the Malolos RTCs Order for the reason that the ground relied upon is not
dated 13 May 2002 denying its motion to dismiss on indubitable.
the ground that In every case, the resolution shall state clearly and
_______________ distinctly the reasons therefor.
xxxx
55 CODE OF PROFESSIONAL RESPONSIBILITY, Chapter Further, it is now specifically required that the
III, Rule 10.01. resolution on the motion shall clearly and distinctly
56 Rollo (G.R. No. 159669), p. 75. state the reasons therefor. This proscribes the common
57 Id. practice of per-functorily dismissing the motion for
58 Id., at p. 363. lack of merit. Such cavalier dispositions can often
59 Id., at pp. 287-291. pose difficulty and misunderstanding on the part of the
140 aggrieved party in taking recourse therefrom and
likewise on the higher court called upon to resolve the
140 same, usually on certiorari.61
SUPREME COURT REPORTS ANNOTATED The questioned order of the trial court denying the
motion to dismiss with a mere statement that there
96

are justiciable questions which require a full blown trial x x x x


falls short of the requirement of Rule 16 set forth After a careful scrutiny of the grounds cited in the
above. Owing to the terseness of its expressed Motion to Dismiss and the arguments en contra
justification, the challenged order ironically suffers contained in the Opposition thereto and finding the
from undefined breadth which is a hallmark of Motion to Dismiss to be not well taken as grounds cited
imprecision. With its unspecific and amorphous thrust, are not applicable to the case at bar, the Court hereby
the issuance is inappropriate to the grounds detailed in DENIES the instant Motion to Dismiss.
the motion to dismiss. x x x x64
_______________ Clearly, the subject order falls short of the content
requirement as expounded in Lu Ym v. Nabua. Despite
60 G.R. No. 161309, 23 February 2005, 452 SCRA 298. the aberration, however, the Bank was not misled,
61 Pefianco v. Moral, 379 Phil. 468; 322 SCRA 439 though it could have encountered difficulties or
(2000); Intramuros Administration v. Contacto, 450 inconvenience because of it. Comprehending, as it did,
Phil. 765; 402 SCRA 581 (2003). that the Malolos RTC did not share its position that
141 Rosemoor had engaged in forum-shopping, it went to
great lengths to impress upon the Court of Appeals
VOL. 518, MARCH 12, 2007 that there was indeed forum shopping on Rose-moors
141 part. But the appellate court did not likewise agree
United Overseas Bank Phils. vs. Rosemoore Mining & with the Bank as it soundly debunked the forum
Development Corp. shopping charge. In fact, the same forum-shopping
While the requirement to state clearly and distinctly argument has been
the reasons for the trial courts resolutory order under _______________
Sec. 3, Rule 16 of the Rules does call for a liberal
interpretation, especially since jurisprudence dictates 62 SECTION 1. Rendition of judgments and final orders.
that it is decisions on cases submitted for decision that A judgment or final order determining the merits of
are subject to the stringent requirement of specificity the case shall be in writing personally and directly
of rulings under Sec. 1, Rule 3662 of the Rules, the trial prepared by the judge, stating clearly and distinctly
courts order in this case leaves too much to the the facts and the law on which it is based, signed by
imagination. (Emphasis supplied.)63 him, and filed with the clerk of the court.
The assailed order disposed of the motion to dismiss in 63 Id., at pp. 307-307.
this wise:
97

64 Rollo, (G.R No. 159669), pp. 283-284; Order dated dealing particularly on extrajudicial foreclosure sales of
13 May 2002; Penned by Presiding Judge Thelma R. real estate mortgages is an utter display of ignorance
Pinero Cruz. of the law to which he swore to maintain professional
142 competence. (Supena vs. De la Rosa, 267 SCRA 1
[1997])
142 Where the complaint is in the nature of a personal
SUPREME COURT REPORTS ANNOTATED action, the rules on venue at the time the complaint
United Overseas Bank Phils. vs. Rosemoore Mining & was filed governs. (Davao Abaca Plantation Company,
Development Corp. Inc. vs. Dole Philippines, Inc., 346 SCRA 682 [2000])
fully ventilated before the Court but we are utterly
unimpressed as we made short shrift of the argument G.R. No. 44888. February 7, 1992.*
earlier on. In the ultimate analysis, therefore, the trial PILIPINAS SHELL PETROLEUM CORPORATION,
courts blunder may be overlooked as it proved to be petitioner, vs. FIDEL P. DUMLAO, Judge of the COURT
harmless. OF FIRST INSTANCE of AGUSAN DEL NORTE and
WHEREFORE, the decisions of the Court of Appeals BUTUAN CITY, BONIFACIO CANONOY, Judicial
dated 26 February 2004 in CA-G.R. SP No. 76934 and Administrator of the Estate of REGINO CANONOY,
dated 20 June 2003 in CA-G.R. SP No. 73358 are CARMEN VDA. DE CANONOY, TEODULO CANONOY,
AFFIRMED. Petitioner United Overseas Bank, Phils. and REGINO CANONOY, JR., MARIANITA CANONOY GUINTO,
its counsel, Siguion Reyna Montecillo & Ongsiako Law and GLORIA CANONOY BASA, respondents.
Offices, are given ten (10) days from notice to EXPLAIN Special Proceedings; Settlement of Estate; The
why they should not be held in contempt of court for allegation that a petitioner seeking letters of
making a misrepresentation before the Court as administration is an interested person does not fall
adverted to in this Decision. within the enumeration of jurisdictional facts.The
Costs against petitioner. jurisdictional facts alluded to are: the death of the
SO ORDERED. testator, his residence at the time of his death in the
Quisumbing (Chairperson), Carpio, Carpio-Morales province where the probate court is sitting or, if he is
and Velasco, Jr., JJ., concur. an inhabitant of a foreign country, his having left his
Judgments affirmed. estate in such province. These facts are amply
Notes.The failure of a judge to recognize that it is not enumerated in the petition filed by Gonzalez. The fact
the general provisions of the Rules of Court on Venue of death of the intestate and of his residence within
of Actions but Act No. 3135 which is the law in point the country are foundation facts upon which all the
98

subsequent proceedings in the administration of the therefore, has no material and direct interest in her
estate rest, and that if the intestate was not an estate. In the said case, this Court defined an
inhabitant of the state at the time of his death, and left interested party as one who would be benefited by the
no assets in the state, and none came into it estate, such as an heir, or one who has a claim against
afterwards, no jurisdiction is conferred on the court to the estate, such as a creditor; this interest must be
grant letters of material and direct, not merely indirect or contingent.
_______________ Remedial Law; Motion; If a motion to dismiss is not
filed, any of the grounds available for such a motion
* THIRD DIVISION. except for improper venue may be pleaded as an
41 affirmative defense and a preliminary hearing may be
had thereon; Exceptions.However, if a motion to
VOL. 206, FEBRUARY 7, 1992 dismiss is not filed, as what obtains in this case, any of
41 the grounds available for such a motion, except for
Pilipinas Shell Petroleum Corporation vs. Dumlao improper venue, may be pleaded as an affirmative
administration in any county. Clearly, the allegation defense, and a preliminary hearing thereon may be
that a petitioner seeking letters of administration is an had as if a motion to dismiss had been filed. Excepted
interested person, does not fall within the enumeration from the above rules are the following grounds: (a)
of jurisdictional facts. Of course, since the opening failure to state a cause of action which may be alleged
sentence of the section requires that the petition must in a later pleading if one is permitted, or by a motion
be filed by an interested person, it goes without saying for judgment on the pleadings, or at the trial on the
that a motion to dismiss may lie not on the basis of merits, and (b) lack of jurisdiction over the subject
lack of jurisdiction on the part of the court, but rather matter of the action, subject to the exception as
on the ground of lack of legal capacity to institute the hereinafter discussed.
proceedings. Same; Same; Jurisdiction; While it may be true that
Same; Same; Court defined an interested party as one jurisdiction may be raised at any stage of the
who would be benefited by the estate, such an heir or proceedings, a party who has affirmed and invoked it
one who has a claim against the estate such as a in a particular matter to secure an affirmative relief
creditor.This is precisely what happened in Saguinsin cannot be allowed to afterwards deny that same
vs. Lindayag, where the dismissal of a petition for jurisdiction to escape penalty.Clearly, therefore, not
letters of administration was affirmed because the only had the administrator and the rest of the private
petitioner is not an heir of her deceased sister and, respondents voluntarily submitted to the jurisdiction of
99

the trial court, they even expressly affirmed and Brought to focus in this petition are the following
invoked such jurisdiction in praying for reliefs and issues: (a) whether the jurisdictional facts that need to
remedies in their favor, namely: (a) denial of Gonzalez be stated in a petition for letters of administration
prayer to be appointed as administrator, (b) under Section 2(a), Rule 79 of the Rules of Court
appointment of Bonifacio Canonoy as administrator, include the specific assertion that the petitioner
(c) denial of therein is an interested person, and (b) whether the
42 administration court may properly and validly dismiss
a petition for letters of administration filed by one who
42 is not an interested person after having appointed an
SUPREME COURT REPORTS ANNOTATED heir of the decedent as administrator of the latters
Pilipinas Shell Petroleum Corporation vs. Dumlao intestate estate and set for pre-trial a claim against
petitioner Shells amended claim against the estate, the said estate.
and (d) the granting of the counterclaim. Hence, they Ricardo M. Gonzalez, District Manager of Shell
cannot now be heard to question the jurisdiction of the Philippines, Inc. for Mindanao (hereinafter referred to
trial court. While it may be true that jurisdiction may as Shell), filed on 8 January 1973 a petition entitled In
be raised at any stage of the proceedings, a party who the Matter of the Intestate Estate of the Deceased
has affirmed and invoked it in a particular matter to Regino Canonoy, Petition for Letters of Administration,
secure an affirmative relief cannot be allowed to Ricardo M. Gonzalez, Petitioner with the then Court of
afterwards deny that same jurisdiction to escape First Instance (now Regional Trial Court) of Agusan del
penalty. Norte and Butuan City, praying therein that he be
PETITION for review on certiorari of the decision of the appointed judicial administrator of the estate of the
then Court of First Instance of Agusan del Norte and deceased Regino Canonoy. The case was docketed as
Butuan City, Br. 2. Dumlao, J. SP PROC. No. 343 and was raffled to Branch II of the
trial court.
The facts are stated in the opinion of the Court. On 27 January 1973, Judge Vicente B. Echavez, Jr. of
Dominguez & Paderna Law Offices Co. for Branch II issued an Order (1) setting the hearing on
petitioner. the petition for 23 March 1973 at 8:30 a.m.; (2)
Wenceslao B. Rosales for private respondents. directing that the order be published, at petitioners
DAVIDE, JR., J.: expense, once a week for three (3) con-
43
100

VOL. 206, FEBRUARY 7, 1992 appointed administrator of the said intestate estate
43 and the corresponding letters of administration be
Pilipinas Shell Petroleum Corporation vs. Dumlao issued in his favor.
secutive weeks in a newspaper with a nationwide On 25 July 1973, after due hearing, the trial court
circulation published regularly by a government appointed Bonifacio Canonoy as administrator of the
agency or entity, or in any newspaper published and intestate estate of Regino Canonoy,3 having found him
edited in any part of the country which is in operation competent to act as such. None of the parties moved
during the existence of the present national to reconsider this Order or appealed therefrom. On 23
emergency and of general circulation in the province November 1973, herein petitioner Shell, then known as
of Agusan del Norte and in Butuan City, if any there Shell Philippines, Inc., filed its claim against the estate
be; and (3) ordering that copies of the order be sent by of the deceased Regino Canonoy. The duly appointed
registered mail or personal delivery, at the petitioners administrator, Bonifacio Canonoy, filed on 9 October
expense, to each of all the known heirs of the 1974 a Motion to Dismiss the claim of Shell4 which the
deceased Regino Canonoy, within the periods latter contested
prescribed by Section 4, Rule 76 of the Rules of Court.1 _______________
In their Opposition to the issuance of letters of
administration to Gonzalez filed on 21 March 1973,2 1 Annex B of Petition.
private respondents, who are heirs of Regino Canonoy, 2 Annex C, Id.
allege that: Gonzalez is a complete stranger to the 3 Annex D of Petition.
intestate estate of Regino Canonoy; he is not even a 4 Annex F, Id.
creditor of the estate; he is a resident of Davao City 44
and thus if appointed as administrator of the estate,
the bulk of which is located in Butuan City, he would 44
not be able to perform his duties efficiently; and he is SUPREME COURT REPORTS ANNOTATED
an employee of Shell Philippines, Inc., an alleged Pilipinas Shell Petroleum Corporation vs. Dumlao
creditor of the estate, and so he would not be able to by filing an Opposition. Shell likewise filed an amended
properly and effectively protect the interest of the claim against the estate.5 On 12 May 1975, the
estate in case of conflicts. They, however, propose administrator filed his Reply to the Opposition to
and pray that since Bonifacio Canonoy, one of Reginos Motion to Dismiss.6 On 20 May 1975, he filed an
sons, enjoys preference in appointment pursuant to Answer to the amended claim filed by Shell.7 In the
Section 6, Rule 78 of the Rules of Court, he should be said Answer, he interposes compulsory counterclaims
101

for the estate in the amount of P659,423.49


representing rentals for land occupied by the Shell 5 Annexes G and H, Id.
Service Station, lighting allowances, allowances for 6 Annex I of Petition.
salaries and wages of service attendants, sales 7 Annex J, Id.
commission due the deceased Regino Canonoy and 8 Annex L, Id., though not found in the records.
reasonable attorneys fees. Petitioner filed an Answer 9 Annex M, Id.
to the Counterclaim. 10 Annex N, Id.
Upon joinder of the issues on Shells claim, the trial 11 Annex P of Petition.
court, this time presided over by respondent Judge 12 Annex Q, Id.
Fidel P. Dumlao, set the pre-trial for 15 August 1975.8 13 Annex R, Id.
This was later re-set to 23 September 1975.9 45
On 18 August 1975, petitioner filed a motion to require
the judicial administrator to file an inventory of the VOL. 206, FEBRUARY 7, 1992
properties of the deceased.10 45
At the pre-trial held on 23 September 1975, counsel Pilipinas Shell Petroleum Corporation vs. Dumlao
for the administrator requested for time to file a case to issue letters of administration as the interest of
Motion to Dismiss the case. In an Order issued on that Gonzalez in the estate is not a jurisdictional fact that
date, the court granted him ten (10) days to file the needs to be alleged in the petition. If at all, Gonzalez
motion; opposing counsel was likewise given ten (10) lack of interest in the estate of the deceased only
days from receipt of the same to file whatever affected his competence to be appointed
pleading he may deem proper to file, after which the administrator. In an Order dated 8 November 1975,
motion shall be deemed submitted for resolution.11 respondent Judge, finding the motion to be well-taken
The motion was filed on 30 September 1975. It alleges and meritorious, dismissed the case.14 The motion for
that the court did not acquire jurisdiction over the its reconsideration having been denied by the trial
subject matter and nature thereof because the court on 23 January 1976,15 Shell filed the instant
petitioner therein, Mr. Gonzalez, is not the interested petition which it denominated as a petition for review
person contemplated by Section 2, Rule 79 of the on certiorari under Rule 45 of the Rules of Court.
Rules of Court.12 Shell filed its Opposition to the In the Resolution dated 6 December 1976, this Court
Motion on 16 October 197513 on the ground that the required the respondents to comment on the
trial court had acquired jurisdiction over the petition;16 the latter complied with the same on 31
_______________ January 1977.17 Thereafter, on 7 February 1977, this
102

Court resolved, inter alia, to treat the petition for 46


review as a special civil action under Rule 65 of the
Rules of Court and require the parties to submit their 46
respective Memoranda;18 petitioner filed its SUPREME COURT REPORTS ANNOTATED
Memorandum on 4 April 197719 while the respondents Pilipinas Shell Petroleum Corporation vs. Dumlao
filed theirs on 3 June 1977.20 petition for letters of administration must be filed by
The petition is impressed with merit; it must perforce an interested person and must show, so far as known
be granted. to the petitioner:
Under the peculiar circumstances of the case, the trial (a) The jurisdictional facts;
court clearly acted with grave abuse of discretion (b) The names, ages, and residences of the heirs, and
when it dismissed SP PROC. No. 343 after having set the names and residences of the creditors, of the
for pre-trial petitioners amended claim against the decedent;
estate. That said dismissal was predicated solely on (c) The probable value and character of the property of
the ground that petitioner therein, Ricardo Gonzalez, is the estate;
not an interested person, and that, since such (d) The name of the person for whom letters of
interest is a jurisdictional requirement, the trial court administration are prayed.
acquired no jurisdiction over the case, serves only to But no defect in the petition shall render void the
compound the error. issuance of letters of administration.
1. Section 2, Rule 79 of the Rules of Court provides: xxx
xxx The jurisdictional facts alluded to are: the death of the
SEC. 2. Contents of petition for letters of testator, his residence at the time of his death in the
administration.A province where the probate court is sitting or, if he is
_______________ an inhabitant of a foreign country, his having left his
estate in such province.21 These facts are amply
14 Annex S, Id. enumerated in the petition filed by Gonzalez.22 The
15 Annex V, Id. fact of death of the intestate and of his residence
16 Rollo, 116. within the country are foundation facts upon which all
17 Id., 121. the subsequent proceedings in the administration of
18 Rollo, 129. the estate rest, and that if the intestate was not an
19 Id., 135. inhabitant of the state at the time of his death, and left
20 Id., 163. no assets in the state, and none came into it
103

afterwards, no jurisdiction is conferred on the court to interested party as one who would be benefited by the
grant letters of administration in any county.23 Clearly, estate, such as an heir, or one who has a claim against
the allegation that a petitioner seeking letters of the estate, such as a creditor; this interest must be
administration is an interested person, does not fall material and direct, not merely indirect or
within the enumeration of jurisdictional facts. Of contingent.26
course, since the opening sentence of the section The Saguinsin doctrine is not, however, without
requires that the petition must be filed by an exception. An objection to a petition for letters of
interested person, it goes without saying that a motion administration on that ground may be barred by
to dismiss may lie not on the basis of lack of waiver or estoppel.
jurisdiction on the part of the court, but rather on the Private respondents herein did not file a motion to
ground of lack of legal capacity to institute the dismiss the petition filed by Gonzalez on the ground of
proceedings. lack of capacity to sue;27 they instead filed an
_______________ Opposition which, unfortunately, did not ask for the
dismissal of the petition but merely opposed the
21 MORAN, M., Comments on the Rules of Court, vol. 3, issuance of letters of administration in favor of
1980 ed., 408-409, citing Diez vs. Serra, 51 Phil. 283; Gonzalez because, among other reasons, he is a
Santos vs. Castillo, 64 Phil. 211; Fernando vs. stranger to the estate. The Opposition also proposed
Crisostomo, L-2693, 27 December 1951. that Bonifacio Canonoy, one of the children of the
22 Annex A of Petition. deceased Regino Canonoy, be appointed administrator
23 Diez vs. Serra, supra., citing 11 R.C.L., par. 81. of the latters intestate estate. The failure to move for
47 a dismissal amounted to a waiver of the above-
mentioned ground. Section 8, Rule 15 of the Rules of
VOL. 206, FEBRUARY 7, 1992 Court provides that:
47 A motion attacking a pleading or a proceeding shall
Pilipinas Shell Petroleum Corporation vs. Dumlao include all objections then available, and all objections
This is precisely what happened in Saguinsin vs. not so included shall be deemed waived.
Lindayag,24 where the dismissal of a petition for However, if a motion to dismiss is not filed, as what
letters of administration was affirmed because the obtains in this case, any of the grounds available for
petitioner is not an heir of her deceased sister and, such a motion, except for improper venue, may be
therefore, has no material and direct interest in her pleaded as an affirmative defense,
estate.25 In the said case, this Court defined an _______________
104

By proposing that Bonifacio Canonoy be appointed as


24 6 SCRA 874. administrator instead of Mr. Gonzalez, private
25 The motion to dismiss was for lack of interest in respondents have in fact approved or ratified the filing
the estate, which this Court considered to mean lack of the petition by the latter.
of legal capacity to institute the proceedings. In Eusebio vs. Valmores,31 We held that:
26 Citing Trillana vs. Crisostomo, G.R. No. L-3378, 22 xxx
August 1951; Espinosa vs. Barrios, 70 Phil. 311. The evidence submitted in the hearing does not
27 Section 1(d), Rule 16, Rules of Court. satisfactorily prove that the petitioner was legally
48 adopted; hence, he did not have any interest in the
properties of the deceased Rosalia Saquitan. Under
48 ordinary circumstances, such defect would authorize
SUPREME COURT REPORTS ANNOTATED the dismissal of the proceedings especially in view of
Pilipinas Shell Petroleum Corporation vs. Dumlao the fact that the surviving spouse of Rosalia Saquitan
and a preliminary hearing thereon may be had as if a had filed an affidavit of adjudication under the
motion to dismiss had been filed.28 Excepted from the provisions of Section 1 of Rule 74 of the Rules. Counsel
above rules are the following grounds: (a) failure to for Domingo Valmores, however, had not objected to
state a cause of action which may be alleged in a later the application for the appointment of an
pleading if one is permitted, or by a motion for administrator; he only objected to the appointment of
judgment on the pleadings, or at the trial on the the said stranger Eulogio Eusebio as administrator,
merits, and (b) lack of jurisdiction over the subject claiming to have the right as surviving spouse to be
matter of the action,29 subject to the exception as appointed as such administrator. By this act of
hereinafter discussed. Domingo Valmores, surviving spouse of the deceased,
In Insurance Company of North America vs. C.F. Sharp therefore, the fatal defect in the petition may be
& Co., Inc.,30 this Court ruled: considered, as cured. In other words, the filing of the
Finally, appellant would contend that plaintiff has no petition for the appointment of an
capacity to sue and is not the real party in interest. It _______________
is now too late to raise these objections here. These
should have been asserted in the motion to dismiss 28 Section 5, Rule 16, Rules of Court.
filed by defendant below. Not having been included 29 Section 2, Rule 9, Id.
therein, they are now barred by the rule on omnibus 30 18 SCRA 462.
motion. 31 97 Phil. 163.
105

49 WHEREFORE, it is most respectfully prayed of this


Honorable Court to dismiss the above-mentioned
VOL. 206, FEBRUARY 7, 1992 Amended Claim Against the Estate and to order the
49 claimant to pay unto the intestate estate of Regino
Pilipinas Shell Petroleum Corporation vs. Dumlao Canonoy the said sum of P659,423.49, together with
administrator may be considered as having been the interest thereon at the legal rate beginning from
ratified by the surviving husband, Domingo Valmores, the date hereof, the reasonable attorneys fees for the
and for this reason the proceedings may not be prosecution of this counterclaim, and costs;
dismissed. OR, IN THE ALTERNATIVE, in the event that any sum is
2. There can be no dispute that the trial court had found due from and payable by the said intestate
acquired jurisdiction over SP PROC. No. 343. estate of Regino Canonoy in favor of the said claimant,
Immediately after the filing of the case, the trial court the said amount be deducted from the above-
complied with Section 3, Rule 79 of the Rules of Court mentioned sum and, thereafter, to order the claimant
by issuing the Order dated 27 January 1973. At the to pay the
initial hearing on 25 July 1973, petitioner Gonzalez _______________
established the jurisdictional requirements by
submitting in evidence proof of publication and service 32 Rollo, 51.
of notices of the petition. Thereafter, it heard the 33 Id., 54-56.
evidence on the qualifications and competence of 34 Id., 65-66.
Bonifacio Canonoy, then appointed him as 35 Id., 67-73.
administrator and finally directed that letters of 50
administration be issued to him, and that he take his
oath of office after putting up a surety or property 50
bond in the amount of P5,000.00.32 SUPREME COURT REPORTS ANNOTATED
It is to be presumed that Bonifacio Canonoy Pilipinas Shell Petroleum Corporation vs. Dumlao
immediately qualified as administrator because in that balance remaining unto the said intestate estate of
capacity, he filed a motion to dismiss petitioners claim Regino Canonoy, together with interest thereon at the
against the estate,33 a Reply to the Opposition to the legal rate beginning from date hereof, the reasonable
motion to dismiss34 and an Answer to petitioners attorneys fees for the prosecution of this
amended claim against the estate wherein he counterclaim, and costs.
interposed a counterclaim,35 praying thus:
106

Clearly, therefore, not only had the administrator and that such a practice can not be toleratedobviously
the rest of the private respondents voluntarily for reasons of public policy.
submitted to the jurisdiction of the trial court, they Furthermore, it has also been held that after
even expressly affirmed and invoked such jurisdiction voluntarily submitting a cause and encountering an
in praying for reliefs and remedies in their favor, adverse decision on the merits, it is
namely: (a) denial of Gonzalez prayer to be appointed _______________
as administrator, (b) appointment of Bonifacio
Canonoy as administrator, (c) denial of petitioner 36 23 SCRA 29; see also Tajonera vs. Lamaroza, 110
Shells amended claim against the estate, and (d) the SCRA 438; Nieva vs. Manila Banking Corp., 124 SCRA
granting of the counterclaim. Hence, they cannot now 453; Royales vs. IAC, et al., 127 SCRA 470; PNB vs.
be heard to question the jurisdiction of the trial court. IAC, et al., 143 SCRA 299; Tejones vs. Gironella, 159
While it may be true that jurisdiction may be raised at SCRA 100; Martinez, et al. vs. dela Merced, et al., 174
any stage of the proceedings, a party who has affirmed SCRA 182.
and invoked it in a particular matter to secure an 51
affirmative relief cannot be allowed to afterwards deny
that same jurisdiction to escape penalty. VOL. 206, FEBRUARY 7, 1992
In Tijam, et al. vs. Sibonghanoy, et al.,36 this Court 51
held: Pilipinas Shell Petroleum Corporation vs. Dumlao
It has been held that a party can not invoke the too late for the loser to question the jurisdiction or
jurisdiction of a court to secure affirmative relief power of the court (Pease vs. Rathbun-Jones etc., 243
against his opponent and, after obtaining or failing to U.S. 273, 61 L.Ed. 715, 37 S.Ct. 283; St. Louis etc. vs.
obtain such relief, repudiate or question that same McBride, 141 U.S. 127, 35 L.Ed. 659). And in Littleton
jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). vs. Burgess, 16 Wyo, 58, the Court said that it is not
In the case just cited, by way of explaining the rule, it right for a party who has affirmed and invoked the
was further said that the question whether (sic) the jurisdiction of a court in a particular matter to secure
court had jurisdiction either of the subject-matter of an affirmative relief, to afterwards deny that same
the action or of the parties was not important in such jurisdiction to escape a penalty.
cases because the party is barred from such conduct The respondent Judge should have lent his ears to
not because the judgment or order of the court is valid Tijam vs. Sibonghanoy instead of peremptorily
and conclusive as an adjudication, but for the reason granting the motion to dismiss in an Order which does
not even care to expound on why the court found the
107

said motion to be meritorious. He exhibited undue HON. SERAFIN SALVADOR, Judge, Court of First
haste in removing the case from his docket and in Instance of Rizal, Caloocan City, Branch XIV and
abdicating judicial authority and responsibility. LEVITON MANUFACTURING CO., INC., respondents.
Howsoever viewed, he committed grave abuse of
discretion.
WHEREFORE, the instant petition is hereby GRANTED
and the Order of respondent Judge of 8 November ESCOLIN, J:
1975 in SP PROC. No. 343 is hereby SET ASIDE. The
court below is further ordered to hear and decide Challenged in this petition for certiorari and prohibition
petitioners claim against the estate in said case, is the order of the respondent Judge Serafin Salvador
unless supervening events had occurred making it in Civil Case No. C-2891 of the Court of First Instance
unnecessary, and to conduct therein further of Rizal, sustaining the legal capacity of a foreign
proceedings pursuant to the Rules of Court until the corporation to maintain a suit for unfair competition
case is closed and terminated. under Section 21-A of Republic Act No. 166, as
Costs against private respondents. amended, otherwise known as the Trademark Law.
IT IS SO ORDERED.
Gutierrez, Jr. (Chairman), Feliciano, Bidin and On April 17, 1973, private respondent Leviton
Romero, JJ., concur. Manufacturing Co., Inc. filed a complaint for unfair
Petition granted. Order set aside. competition against petitioners Leviton Industries,
Note.The principal consideration in the appointment Nena de la Cruz Lim, Domingo Go and Lim Kiat before
of an administrator of the estate of a deceased person the Court of First Instance of Rizal, Branch XXXIII,
is the interest in said estate of the one to be appointed presided by respondent Judge Serafin Salvador. The
as administrator. (Gonzalez vs. Aguinaldo, 190 SCRA complaint substantially alleges that plaintiff is a
112.) foreign corporation organized and existing under the
laws of the State of New York, United States of
G.R. No. L-40163 June 19, 1982 America, with office located at 236 Greenpoint Avenue,
Brooklyn City, State of New York, U.S.A.; that
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM, defendant Leviton Industries is a partnership organized
DOMINGO GO, and LIM KIAT, petitioners, and existing under the laws of the Philippines with
vs. principal office at 382 10th Avenue, Grace Park,
Caloocan City; while defendants Nena de la Cruz Lim,
108

Domingo Go and Lim Kiat are the partners, with enabling defendants to pass off their products as those
defendant Domingo Go acting as General Manager of of plaintiff's. Invoking the provisions of Section 21-A of
defendant Leviton Industries; that plaintiff, founded in Republic Act No. 166, plaintiff prayed for damages. It
1906 by Isidor Leviton, is the largest manufacturer of also sought the issuance of a writ of injunction to
electrical wiring devices in the United States under the prohibit defendants from using the trade name Leviton
trademark Leviton, which various electrical wiring Industries, Co. and the trademark Leviton.
devices bearing the trademark Leviton and trade name
Leviton Manufacturing Co., Inc. had been exported to Defendants moved to dismiss the complaint for failure
the Philippines since 1954; that due to the superior to state a cause of action, drawing attention to the
quality and widespread use of its products by the plaintiff's failure to allege therein its capacity to sue
public, the same are well known to Filipino consumers under Section 21-A of Republic Act No. 166, as
under the trade name Leviton Manufacturing Co., Inc. amended. After the filing of the plaintiff's opposition
and trademark Leviton; that long subsequent to the and the defendant's reply, the respondent judge
use of plaintiff's trademark and trade name in the denied the motion on the ground that the same did not
Philippines, defendants began manufacturing and appear to be indubitable. On September 21, 1973,
selling electrical ballast, fuse and oval buzzer under defendants filed their answer, reiterating the ground
the trademark Leviton and trade name Leviton supporting their motion to dismiss. Thereafter,
Industries Co.; that Domingo Go, partner and general defendants served upon plaintiff a request for
manager of defendant partnership, had registered with admission under Rule 26 of the Rules of Court, of the
the Philippine Patent Office the trademarks Leviton following matters of fact, to wit:
Label and Leviton with respect to ballast and fuse
under Certificate of Registration Nos. SR-1132 and (1) That the plaintiff is not actually manufacturing,
15517, respectively, which registration was contrary to selling and/or distributing ballasts generally used in
paragraphs (d) and (e) of Section 4 of RA 166, as flourescent lighting;
amended, and violative of plaintiff's right over the
trademark Leviton; that defendants not only used the (2) That plaintiff has no registered trademark or
trademark Leviton but likewise copied the design used trade name in the Philippine Patent Office of any of its
by plaintiff in distinguishing its trademark; and that the products; and
use thereof by defendants of its products would cause
confusion in the minds of the consumers and likely to (3) That plaintiff has no license to do business in
deceive them as to the source of origin, thereby the Philippines under and by virtue of the provision of
109

Act No. 1459, better known as the Philippine with grave abuse of discretion in denying their motion
Corporation Law, at the time it filed the complaint. 1 to dismiss.

Complying with the said request, plaintiff admitted: We agree with petitioners that respondent Leviton
Marketing Co., Inc. had failed to allege the essential
That it does not manufacture ballasts; that it has not facts bearing upon its capacity to sue before Philippine
registered its trademark in the Philippine Patent Office, courts. Private respondent's action is squarely founded
but has filed with the same office an application of its on Section 21-A of Republic Act No. 166, as amended,
trade mark on April 16, 1971; and that it has no which we quote:
license to do business in the Philippines. 2
Sec. 21-A. Any foreign corporation or juristic person to
On the basis of these admissions, defendants filed an which a mark or tradename has been registered or
Urgent Supplemental Motion to Dismiss. This was assigned under this Act may bring an action hereunder
followed by the plaintiff's opposition, and the for infringement, for unfair competition, or false
defendant's rejoinder, after which respondent judge designation of origin and false description, whether or
issued the questioned order 3 denying the motion, not it has been licensed to do business in the
thus: Philippines under Act numbered Fourteen Hundred and
Fifty-Nine, as amended, otherwise known as the
Acting on the Urgent Supplemental Motion to Dismiss, Corporation Law, at the time it brings the complaint;
dated July 2, 1974, filed by counsels for the Provided, That the country of which the said foreign
defendants, as well as the oppositions thereto, the corporation or juristic person is a citizen, or in which it
Court after a careful consideration of the reasons is domiciled, by treaty, convention or law, grants a
adduced for and against said motion, is of the opinion similar privilege to corporate or juristic persons of the
that the same should be, as it is hereby DENIED. Philippines. (As amended by R.A. No. 638)

SO ORDERED. Undoubtedly, the foregoing section grants to a foreign


corporation, whether or not licensed to do business in
The motion for reconsideration having likewise been the Philippines, the right to seek redress for unfair
denied, defendants instituted the instant petition for competition before Philippine courts. But the said law
certiorari and prohibition, charging respondent judge is not without qualifications. Its literal tenor indicates
as a condition sine qua non the registration of the
110

trade mark of the suing foreign corporation with the which clothe it with such right be affirmatively
Philippine Patent Office or, in the least, that it be an pleaded. And the reason therefor, as enunciated in
asignee of such registered trademark. The said section "Atlantic Mutual Insurance Co., et al. versus Cebu
further requires that the country, of which the plaintiff Stevedoring Co., Inc." 4 is that
foreign corporation or juristic person is a citizen or
domicilliary, grants to Filipino corporations or juristic these are matters peculiarly within the knowledge of
entities the same reciprocal treatment, either thru appellants alone, and it would be unfair to impose
treaty, convention or law, upon appellees the burden of asserting and proving
the contrary. It is enough that foreign corporations are
All that is alleged in private respondent's complaint is allowed by law to seek redress in our courts under
that it is a foreign corporation. Such bare averment not certain conditions: the interpretation of the law should
only fails to comply with the requirements imposed by not go so far as to include, in effect, an inference that
the aforesaid Section 21-A but violates as well the those conditions had been met from the mere fact that
directive of Section 4, Rule 8 of the Rules of Court that the party sued is a foreign corporation.
"facts showing the capacity of a party to sue or be
sued or the authority of a party to sue or be sued in a It was indeed in the light of this and other
representative capacity or the legal existence of an considerations that this Court has seen fit to amend
organized association of persons that is made a party, the former rule by requiring in the revised rules
must be averred " (Section 4, Rule 8) that "facts showing the capacity of
a party to sue or be sued or the authority of a party to
sue or be sued in a representative capacity or the legal
In the case at bar, private respondent has chosen to existence of an organized association of persons that
anchor its action under the Trademark Law of the is made a party, must be averred,
Philippines, a law which, as pointed out, explicitly sets
down the conditions precedent for the successful IN VIEW OF THE FOREGOING, the instant petition is
prosecution thereof. It is therefore incumbent upon hereby granted and, accordingly, the order of the
private respondent to comply with these requirements respondent judge dated September 27, 1974 denying
or aver its exemption therefrom, if such be the case. It petitioner's motion to dismiss is hereby set aside. The
may be that private respondent has the right to sue Court of First Instance of Rizal (Caloocan City), the
before Philippine courts, but our rules on pleadings court of origin, is hereby restrained from conducting
require that the necessary qualifying circumstances
111

further proceedings in Civil Case No. C-2891, except to It cannot sue under section 21-A because it has not
dismiss the same. No costs. complied with the requirements thereof that (1) its
trademark "Leviton" has been registered with the
SO ORDERED. Patent Office and (2) that it should show that the State
of New York grants to Philippine corporations the
Guerrero, Abad Santos and De Castro, JJ., concur. privilege to bring an action for unfair competition in
that state.
Concepcion Jr., J., is on leave.
Respondent Leviton has to comply with those
requirements before it can be allowed to maintain an
action for unfair competition (Atlantic Mutual Ins. Co.
vs. Cebu Stevedoring Co., Inc 124 Phil. 463).

Separate Opinions On April 16, 1971 respondent Leviton Manufacturing


Co., Inc. filed an application with the Patent Office for
the registration of its trademark. The record does not
show whether that application has been granted.
BARREDO, J., concurring:
The fact that it has filed with the Patent Office two
I concur in the above opinion and judgment as well as petitions both dated June 14, 1974 for the cancellation
in the concurring opinion of Justice Aquino. of the trademark "Leviton" issued to Domingo Go
shows that the dismissal of its instant action for unfair
AQUINO, J., concurring: competition does not leave it without any remedy
whatsoever.
I concur. Respondent Leviton Manufacturing Co., Inc.
alleged in paragraph 2 of its complaint for unfair That remedy administrative cancellation of the
competition that its action "is being filed under the trademark was resorted to in General Garments
provisions of section 21-A of Republic Act" No. 166, as Corporation vs. Director of Patents, L-24295,
amended. Respondent is bound by that allegation in its September 30, 1971, 41 SCRA 50, cited by respondent
complaint. Leviton in its memorandum. It is provided for in section
17 of Republic Act No. 166. As held in the General
112

Garments Corporation case, section 17 does not amended. Respondent is bound by that allegation in its
require that the trademark of the foreign corporation complaint.
alleged to have been infringed should have been
registered. It cannot sue under section 21-A because it has not
complied with the requirements thereof that (1) its
In this connection, it may be noted that section 133 of trademark "Leviton" has been registered with the
the Corporation Code, Batas Blg. 68, which took effect Patent Office and (2) that it should show that the State
on May 1, 1980, provides that "no foreign corporation of New York grants to Philippine corporations the
transacting business in the Philippines without a privilege to bring an action for unfair competition in
license, or its successors or assigns, shall be permitted that state.
to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of Respondent Leviton has to comply with those
the Philippines ... ." Section 133 is more stringent than requirements before it can be allowed to maintain an
section 69 of the Corporation Law, Act No. 1459. action for unfair competition (Atlantic Mutual Ins. Co.
vs. Cebu Stevedoring Co., Inc 124 Phil. 463).

On April 16, 1971 respondent Leviton Manufacturing


Separate Opinions Co., Inc. filed an application with the Patent Office for
the registration of its trademark. The record does not
BARREDO, J., concurring: show whether that application has been granted.

I concur in the above opinion and judgment as well as The fact that it has filed with the Patent Office two
in the concurring opinion of Justice Aquino. petitions both dated June 14, 1974 for the cancellation
of the trademark "Leviton" issued to Domingo Go
AQUINO, J., concurring: shows that the dismissal of its instant action for unfair
competition does not leave it without any remedy
I concur. Respondent Leviton Manufacturing Co., Inc. whatsoever.
alleged in paragraph 2 of its complaint for unfair
competition that its action "is being filed under the That remedy administrative cancellation of the
provisions of section 21-A of Republic Act" No. 166, as trademark was resorted to in General Garments
Corporation vs. Director of Patents, L-24295,
113

September 30, 1971, 41 SCRA 50, cited by respondent and Surety Co. vs. Pacific Star Lines, 80 SCRA 635, is a
Leviton in its memorandum. It is provided for in section case similar to the present one in that the action is
17 of Republic Act No. 166. As held in the General also one for recovery of damages sustained by cargo
Garments Corporation case, section 17 does not shipped on defendants vessels. Defendants set up the
require that the trademark of the foreign corporation defense that plaintiff is a foreign corporation not duly
alleged to have been infringed should have been licensed to do business in the Philippines and,
registered. therefore, without capacity to sue and be sued. In
overruling said defense, this Court said: It is settled
In this connection, it may be noted that section 133 of that if a foreign corporation is not engaged in business
the Corporation Code, Batas Blg. 68, which took effect in the Philippines, it may not be denied the right to file
on May 1, 1980, provides that "no foreign corporation an action in Philippine courts for isolated transactions.
transacting business in the Philippines without a PETITION for certiorari to review the order of the Court
license, or its successors or assigns, shall be permitted of First Instance of Rizal, Br. II. Navarro, J.
to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of The facts are stated in the opinion of the Court.
the Philippines ... ." Section 133 is more stringent than Teves, Campos, Hernandez & Lim Law Office for
section 69 of the Corporation Law, Act No. 1459. private respondent.
_______________
No. L-49695. April 7, 1986.*
HATHIBHAI BULAKHIDAS, petitioner, vs. THE * FIRST DIVISION.
HONORABLE PEDRO L. NAVARRO, as Presiding Judge of 2
the Court of First Instance of Rizal, Seventh Judicial
District, Pasig, Metro Manila, Branch II and DIAMOND 2
SHIPPING CORPORATION, respondent. SUPREME COURT REPORTS ANNOTATED
Mercantile Law; Corporations; Foreign Corporations; A Bulakhidas vs. Navarro
foreign corporation not engaged in business in the PATAJO, J.:
Philippines can file an action before Philippine courts
for isolated transactions.The issue of whether or not This is a petition for review on certiorari of the order of
a foreign corporation not engaged in business in the the then Court of First Instance of Rizal, Branch II
Philippines can institute an action before our courts is dated August 21, 1978, dismissing petitioners
already well settled in this jurisdiction. Aetna Casualty complaint.
114

Petitioner, a foreign partnership, filed a complaint and be sued. In overruling said defense, this Court
against a domestic corporation, Diamond Shipping said:
Corporation, before the Court of First Instance of Rizal It is settled that if a foreign corporation is not
for the recovery of damages allegedly caused by the engaged in business in the Philippines, it may not be
failure of the said shipping corporation to deliver the denied the right to file an action in Philippine courts for
goods shipped to it by petitioner to their proper isolated transactions.
destination. Paragraph 1 of said complaint alleged that The object of Sections 68 and 69 of the Corporation
plaintiff is a foreign partnership firm not doing Law was not to prevent the foreign corporation from
business in the Philippines and that it is suing under performing single acts,
an isolated transaction. Defendant filed a motion to 3
dismiss the complaint on the ground that plaintiff has
no capacity to sue and that the complaint does not VOL. 142, APRIL 7, 1986
state a valid cause of action against defendant. 3
Acting on said motion to dismiss, the Court of First Bulakhidas vs. Navarro
Instance dismissed the complaint on the ground that but to prevent it from acquiring a domicile for the
plaintiff being a foreign corporation or partnership not purpose of business without taking the steps
doing business in the Philippines it cannot exercise the necessary to render it amenable to suit in the local
right to maintain suits before our Courts. courts. It was never the purpose of the Legislature to
Hence, this petition. exclude a foreign corporation which happens to obtain
The issue of whether or not a foreign corporation not an isolated order for business from the Philippines,
engaged in business in the Philippines can institute an from securing redress in the Philippine courts.
action before our courts is already well settled in this In Mentholatum Co. Inc. et al. vs. Mangaliman, et al.,
jurisdiction. this Court ruled that:
Aetna Casualty and Surety Co. vs. Pacific Star Lines, 80 No general rule or governing principle can be laid
SCRA 635, is a case similar to the present one in that down as to what constitutes doing or engaging in or
the action is also one for recovery of damages transacting business. Indeed, each case must be
sustained by cargo shipped on defendants vessels. judged in the light of its peculiar environmental
Defendants set up the defense that plaintiff is a circumstances. The true test, however, seems to be
foreign corporation not duly licensed to do business in whether the foreign corporation is continuing the body
the Philippines and, therefore, without capacity to sue or substance of the business or enterprise for which it
was organized or whether it has substantially retired
115

from it and turned it over to another. (Traction Cos. v. SUPREME COURT REPORTS ANNOTATED
Collectors of Int. Revenue [CC. A. Ohio], 223 F. 984, Bulakhidas vs. Navarro
987.) The term implies a continuity of commercial Wells Co. vs. Henry W. Elser & Co. 49 Phil., 70; Pacific
dealings and arrangements, and contemplates, to that Vegetable Oil Corporation vs. Angle O. Singson, G.R.
extent, the performance of acts or works or the No. L-7917, April 29, 1955.)
exercise of some of the functions normally incident to, Again, in Facilities Management Corporation vs. De la
and in progressive prosecution of, the purpose and Osa, 89 SCRA 131, 139, following Aetna Casualty &
object of its organization. (Griffin v. Implement Dealers Surety Co. vs. Pacific Star Line, supra, held a foreign
Mut. Fire Ins. Co., 241 N.W. 75, 77; Pauline Oil & Gas corporation not engaged in business in the Philippines
Co. vs. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. is not barred from seeking redress from the courts of
111; Automotive Material Co. vs. American Standard the Philippines.
Metal Products Corp., 158 N.E. 698, 703, 327 ill. 367.) The case of Atlantic Mutual Insurance Co. vs. Cebu
And in Eastboard Navigation, Ltd. et al. vs. Juan Stevedoring Co., 17 SCRA 1037, cited by respondent
Ysmael & Co., Inc., this Court held that: finds no application to the case at bar. It must be
(d) While plaintiff is a foreign corporation without observed in the Atlantic case that there was no
license to transact business in the Philippines, it does allegation in the complaint that the two foreign
not follow that it has no capacity to bring the present corporations involved therein were not engaged in
action. Such license is not necessary because it is not business in the Philippines. All that was averred in the
engaged in business in the Philippines. In fact, the complaint was that they were both foreign
transaction herein involved is the first business corporations existing under the laws of the United
undertaken by plaintiff in the Philippines, although on States. Thus, the qualifying circumstance of the said
a previous occasion plaintiffs vessel was chartered by foreign corporations capacity to sue is wanting.
the National Rice and Corn Corporation to carry rice Contrary to the Atlantic case, the complaint filed by
cargo from abroad to the Philippines. These two petitioner herein sufficiently alleged that it is a foreign
isolated transactions do not constitute engaging in partnership (or corporation) not engaged in business in
business in the Philippines within the purview of the Philippines and that it was suing under an isolated
Sections 68 and 69 of the Corporation Law so as to bar transaction.
plaintiff from seeking redress in our courts. (Marshall- WHEREFORE, the order of respondent Court dismissing
4 the petitioners complaint is hereby set aside and the
case remanded for further proceedings, with costs
4 against private respondent.
116

SO ORDERED. parties or their privies, in all other actions or suits in


Teehankee, C.J., Melencio-Herrera, Plana and the same or any other judicial tribunal of concurrent
Gutierrez, Jr., JJ., concur. jurisdiction on the points and matters in issue in the
Order set aside and case remanded for further first suit.Res judicata literally means a matter
proceedings. adjudged; a thing judicially acted upon or decided; a
Notes.Foreign corporation without license to do thing or matter settled by judgment. Res judicata lays
business in the Philippines is not disqualified from the rule that an existing final judgment or decree
filing and prosecuting an action for fair competition. rendered on the merits, and without fraud or collusion,
(Universal Rubber Products, Inc. vs. Court of Appeals, by a court of competent jurisdiction, upon any matter
130 SCRA 104.) within its jurisdiction, is conclusive of the rights of the
Just as foreign corporations not doing business in the parties or their privies, in all other actions or suits in
5 the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the
VOL. 142, APRIL 7, 1986 first suit.
5 Same; Same; Elements of Res Judicata.The elements
Bulakhidas vs. Navarro of res judicata are: (1) the judgment sought to bar the
Philippines may sue in Philippine courts so also are new action must be final; (2) the decision must have
they subject to be sued here. Service of summons been rendered by a court having jurisdiction over the
extraterritorially under Rule 14 may be effected. (FBA subject matter and the parties; (3) the disposition of
Aircraft vs. Zosa, 110 SCRA 1.) the case must be a judgment on the merits; and (4)
there
G.R. No. 157557. March 10, 2006.* _______________
REPUBLIC OF THE PHILIPPINES (CIVIL AERONAUTICS
ADMINISTRATION), petitioner, vs. RAMON YU, TEOFISTA * THIRD DIVISION.
VILLAMALA, LOURDES YU and YU SE PENG, 417
respondents.
Civil Procedure; Judgments; Res Judicata; Res judicata VOL. 484, MARCH 10, 2006
lays the rule that an existing final judgment or decree 417
rendered on the merits, and without fraud or collusion, Republic vs. Yu
by a court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the
117

must be as between the first and second actions, The Solicitor General for petitioner.
identity of parties, subject matter, and causes of Dennis R. Gascon for respondents.
action. QUISUMBING, J.:
Same; Same; Res judicata has two concepts: (1) bar
by prior judgment as enunciated in Rule 39, Section For review on certiorari is the Decision1 dated
47 (b) of the Rules of Civil Procedure; and (2) December 2, 2002 of the Court of Appeals in CA-G.R.
conclusiveness of judgment in Rule 39, Section 47 CV No. 53712 which set aside the dismissal by the
(c).Res judicata has two concepts: (1) bar by prior Regional Trial Court of Cebu,
judgment as enunciated in Rule 39, Section 47 (b) of _______________
the Rules of Civil Procedure; and (2) conclusiveness of
judgment in Rule 39, Section 47 (c). There is bar by 1 Rollo, pp. 9-20. Penned by Associate Justice
prior judgment when, as between the first case where Remedios A. Salazar-Fernando, with Associate Justices
the judgment was rendered, and the second case that Ruben T. Reyes, and Ed-gardo F. Sundiam concurring.
is sought to be barred, there is identity of parties, 418
subject matter, and causes of action. But where there
is identity of parties and subject matter in the first and 418
second cases, but no identity of causes of action, the SUPREME COURT REPORTS ANNOTATED
first judgment is conclusive only as to those matters Republic vs. Yu
actually and directly controverted and determined and Branch 11, of Civil Case No. CEB-12968 and remanded
not as to matters merely involved therein. This is the case to the lower court for further proceedings.
conclusiveness of judgment. Under the doctrine of This petition relates to this Courts decision in
conclusiveness of judgment, facts and issues actually Valdehueza v. Republic2 and the final judgment of the
and directly resolved in a former suit cannot again be Court of Appeals in Yu v. Republic.3
raised in any future case between the same parties, In Valdehueza v. Republic (1966), we affirmed the
even if the latter suit may involve a different claim or judgment of expropriation of Lot No. 939 in Lahug,
cause of action. The identity of causes of action is not Cebu City, and ruled that therein petitioners, Francisca
required but merely identity of issues. Valdehueza, et al., were not entitled to recover
PETITION for review on certiorari of a decision of the possession of the lot but only to demand its fair
Court of Appeals. market value.
The dispositive portion of the Courts decision reads:
The facts are stated in the opinion of the Court.
118

Wherefore, finding no reversible error therein, the Herein petitioner, the Republic of the Philippines,
judgment appealed from is hereby affirmed, without denied respondents right to reacquire title and
costs in this instance. So ordered.4 ownership over the lot on the ground of res judicata,
In Yu v. Republic (1986), the Court of Appeals annulled lack of cause of action and forum shopping.7
the subsequent sale of the lot by Francisca On November 16, 1995, the trial court dismissed the
Valdehueza, et al., to herein respondents, Ramon Yu, complaint as follows:
et al., and held that the latter were not purchasers in WHEREFORE, in view of all the foregoing premises
good faith. The parties did not appeal the decision and and considerations, the Court hereby DISMISSES the
so, judgment became final and executory.5 complaint filed in this case on the ground of res
The dispositive portion of the Court of Appeals judicata or bar by prior or final judgment.
decision states: SO ORDERED.8
WHEREFORE, in the view of the foregoing, the On appeal, the Court of Appeals ruled that there was
decision appealed from is hereby REVERSED. A new no res judicata and remanded the case to the trial
one is entered dismissing the complaint. The land in court, thus,
question is owned by the Republic of the Philippines. WHEREFORE, in view of the foregoing, the decision
SO ORDERED.6 dated November 16, 1995 of the Regional Trial Court,
_______________ Branch 11, Cebu City is hereby REVERSED and SET
ASIDE. This case is hereby remanded to the lower
2 No. L-21032, 19 May 1966, 17 SCRA 107. court for further proceedings and final determination
3 CA-G.R. CV No. 01223, 30 October 1986; Records, of the issues on the merit.
pp. 35-49. SO ORDERED.9
4 Valdehueza v. Republic, supra at p. 114. The decision of the Court of Appeals is now before us
5 Rollo, p. 12. in this petition for review. It raises the following issues,
6 Records, p. 49. to wit: Whether
419 I.

VOL. 484, MARCH 10, 2006 THE TRIAL COURT PROPERLY DISMISSED THE
419 COMPLAINT ON THE GROUND OF RES JUDICATA.
Republic vs. Yu II.
On October 1, 1992, herein respondents filed a
complaint for reversion of the expropriated property.
119

THE ABANDONMENT OF LAHUG AIRPORT AND RETURN Respondents counter that the action is not barred by
OF OTHER EXPROPRIATED PROPERTIES DID NOT GIVE res judicata because the abandonment of the
RESPONDENTS A NEW CAUSE OF ACTION. government of the public purpose constitutes a new
_______________ cause of action. Further, respondents contend that the
determination of their right to reacquire or repossess
7 Id., at p. 26. the lot necessitates a full blown trial.
8 Id., at p. 141. Res judicata literally means a matter adjudged; a
9 Rollo, p. 19. thing judicially acted upon or decided; a thing or
420 matter settled by judgment.11 Res judicata lays the
rule that an existing final judgment or decree rendered
420 on the merits, and without fraud or collusion, by a
SUPREME COURT REPORTS ANNOTATED court of competent jurisdiction, upon any matter
Republic vs. Yu within its jurisdiction, is conclusive of the rights of the
III. parties or their privies, in all other actions or suits in
the same or any other judicial tribunal of concurrent
ASSUMING A NEW CAUSE OF ACTION, RESPONDENTS jurisdiction on the points and matters in issue in the
HAVE NO RIGHT TO ASSERT OWNERSHIP IN THE FIRST first suit.12
PLACE.10 _______________
Simply stated, the threshold issues are: Is the action
barred by res judicata? Are respondents entitled to 10 Id., at pp. 37-38.
reversion of the expropriated property? 11 Manila Electric Company v. Philippine Consumers
Petitioner asserts that the trial court properly Foundation, Inc., G.R. No. 101783, 23 January 2002,
dismissed the complaint on the ground of res judicata 374 SCRA 262, 272 citing 46 Am. Jur. 514.
and maintains that respondents are bereft of any right 12 Oropeza Marketing Corporation v. Allied Banking
to assert ownership as the sale in their favor was Corporation, G.R. No. 129788, 3 December 2002, 393
invalidated in Yu v. Republic. Petitioner further asserts SCRA 278, 286.
that the expropriation of Lot No. 939 was absolute and 421
unconditional. Thus, no reversion could be legally
claimed despite the subsequent sale or reversion of VOL. 484, MARCH 10, 2006
the other nearby lots. 421
Republic vs. Yu
120

The elements of res judicata are: (1) the judgment successors in interest by title subsequent to the
sought to bar the new action must be final; (2) the commencement of the action or special proceeding,
decision must have been rendered by a court having litigating for the same thing and under the same title
jurisdiction over the subject matter and the parties; (3) and in the same capacity; . . .
the disposition of the case must be a judgment on the 16 RULE 39, SEC. 47. Effect of judgments or final
merits; and (4) there must be as between the first and orders.. . .
second actions, identity of parties, subject matter, and xxx
causes of action.13 (c) In any other litigation between the same parties or
In the present case, the first three elements are their successors in interest, that only is deemed to
present. Only the presence of the identity of causes of have been adjudged in a former judgment or final
action is at issue. order which appears upon its face to have been so
At this juncture, we need to stress that res judicata has adjudged, or which was actually and necessarily
two concepts:14 (1) bar by prior judgment as included therein or necessary thereto.
enunciated in Rule 39, Section 47 (b)15 of the Rules of 422
Civil Procedure; and (2) conclusiveness of judgment
in Rule 39, Section 47 (c).16 422
_______________ SUPREME COURT REPORTS ANNOTATED
Republic vs. Yu
13 Republic v. Court of Appeals, G.R. No. 103412, 3 There is bar by prior judgment when, as between the
February 2000, 324 SCRA 560, 565 citing Casil v. Court first case where the judgment was rendered, and the
of Appeals, G.R. No. 121534, 28 January 1998, 285 second case that is sought to be barred, there is
SCRA 264, 276. identity of parties, subject matter, and causes of
14 Sta. Lucia Realty and Development, Inc. v. Cabrigas, action. But where there is identity of parties and
G.R. No. 134895, 19 June 2001, 358 SCRA 715, 728. subject matter in the first and second cases, but no
15 RULE 39, SEC. 47. Effect of judgments or final identity of causes of action, the first judgment is
orders.. . . conclusive only as to those matters actually and
xxx directly controverted and determined and not as to
(b) In other cases, the judgment or final order is, with matters merely involved therein. This is
respect to the matter directly adjudged or as to any conclusiveness of judgment.17 Under the doctrine of
other matter that could have been raised in relation conclusiveness of judgment, facts and issues actually
thereto, conclusive between the parties and their and directly resolved in a former suit cannot again be
121

raised in any future case between the same parties,


even if the latter suit may involve a different claim or VOL. 484, MARCH 10, 2006
cause of action.18 The identity of causes of action is 423
not required but merely identity of issues.19 Republic vs. Yu
Conclusiveness of judgment clearly exists in the the same claim, demand, or cause of action.20
present case, because respondents again seek to Considering that the sale on which respondents based
enforce a right based on a sale which has been their right to reversion has long been nullified, they
nullified by a final and executory judgment. Recall that have not an iota of right over the property and thus,
the question of validity of the sale had long been have no legal personality to bring forth the action for
settled. The same question, therefore, cannot be reversion of expropriated property. Lack of legal
raised again even in a different proceeding involving personality to sue means that the respondents are not
the same parties. the real parties-in-interest. This is a ground for the
The doctrine of res judicata provides that a final dismissal of the case, related to the ground that the
judgment on the merits rendered by a court of complaint evidently states no cause of action.21
competent jurisdiction, is conclusive as to the rights of Consequently, the second issue is now mooted and
the parties and their privies and constitutes an made academic by our determination of res judicata in
absolute bar to subsequent actions involving this case.
_______________ WHEREFORE, the petition is GRANTED. The Decision
dated December 2, 2002 of the Court of Appeals in CA-
17 Padillo v. Court of Appeals, G.R. No. 119707, 29 G.R. CV No. 53712 is SET ASIDE and the Decision
November 2001, 371 SCRA 27, 39-40 citing Islamic dated November 16, 1995 of the Regional Trial Court of
Directorate of the Phils. v. Court of Appeals, G.R. No. Cebu, Branch 11 in Civil Case No. CEB-12968 is
117897, 14 May 1997, 272 SCRA 454, 466. AFFIRMED.
18 Rizal Surety and Insurance Company v. Court of SO ORDERED.
Appeals, G.R. No. 112360, 18 July 2000, 336 SCRA 12, Carpio, Carpio-Morales and Tinga, JJ., concur.
21-22 citing Smith Bell and Company (Phils.), Inc. v. Petition granted, judgment set aside.
Court of Appeals, G.R. No. 56294, 20 May 1991, 197 Note.The doctrine of res judicata provides that a final
SCRA 201, 209. judgment on the merits rendered by a court of
19 Tan v. Court of Appeals, G.R. No. 142401, 20 August competent jurisdiction, is conclusive as to the rights of
2001, 363 SCRA 444, 450. the parties and their privies and constitutes an
423 absolute bar to subsequent actions involving the same
122

claim, demand, or cause of action. (Republic vs. Court starkly erroneous ground, but also it committed a
of Appeals, 324 SCRA 560 [2000]) grossly irresponsible act of allowing respondent
o0o Hernando who was then under suspension from the
practice of law, to represent himself and his co-
_______________ defendants in the case. Also, as appearing from the
records, after the lapse of the period to file an answer
20 Taganas v. Emuslan, G.R. No. 146980, 2 September on the part of respondents Hernando and the
2003, 410 SCRA 237, 241-242 citing Allied Banking Quetulios, the trial court set the case for pre-trial
Corporation v. Court of Appeals, G.R. No. 108089, 10 without formally ruling on petitioners motion to
January 1994, 229 SCRA 252. declare them in default. Surprisingly, the trial court
21 See Bank of America NT&SA v. Court of Appeals, thereafter, allowed said defendants to file their answer
G.R. No. 120135, 31 March 2003, 400 SCRA 156, 167 upon the latters verbal motion. This enabled
citing Columbia Pictures, Inc. v. Court of Appeals, G.R. respondent Hernando to file his pleading
No. 110318, 28 August 1996, 261 SCRA 144, 162. Comment/Answer/Motion to Dismiss, with certain
annexes which were considered by the trial court as
G.R. No. 110020. September 25, 1998.* actionable documents, despite the fact that petitioner
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT was not a party thereto. All these circumstances
OF APPEALS, HON. LUIS BELLO, JR., Presiding Judge of clearly demonstrate the trial courts bias and
RTC, Branch 16, Laoag City, HAROLD M. HERNANDO, arbitrariness that should have warranted the setting
and SPOUSES ROLANDO V. ABADILLA and SUSAN aside of the questioned order of dismissal for grave
SAMONTE, respondents. abuse of discretion under Rule 65 of the Rules of Court.
Remedial Law; Certiorari; The circumstances clearly Consequently, petitioners original action for certiorari
demonstrate the trial courts bias and arbitrariness filed with respondent Court of Appeals on October 8,
that should have warranted the setting aside of the 1992 to annul the trial courts Order dated May 5,
questioned order of dismissal for grave abuse of 1992 dismissing petitioners complaint should have
discretion under Rule 65 of the Rules of Court.Our been given due course.
careful study of the facts inevitably yields to the Same; Same; Considering the broader and primordial
conclusion that the Regional Trial Court presided by interests of justice, particularly when there is grave
Hon. Luis B. Bello, Jr. committed grave abuse of abuse of discretion an
discretion not only in issuing its order dismissing ____________
petitioners complaint in Civil Case No. 9934 on a
123

* THIRD DIVISION. records show, fully paid by petitioner as evidenced by


172 the disbursement vouchers (Annexes D-1 to D-12
to complaint). Said compromise agreement had long
172 become final and executory, before respondent
SUPREME COURT REPORTS ANNOTATED Hernando allegedly executed the Affidavit of
Republic vs. Court of Appeals Revocation unilaterally revoking the same on
occasional departure from the general rule that the November 29, 1985. It is well-settled that a judicial
extraordinary writ of certiorari cannot substitute for a compromise has the effect of res judicata and is
lost appeal is warranted.While as a general rule, immediately executory and not appealable unless a
certiorari cannot be a substitute for a lapsed appeal, motion to set aside the same is filed on the ground of
however, where the rigid application of the rule will fraud, mistake or duress, in which event an appeal
result in a manifest failure, or miscarriage of justice, may be filed from an order denying the same. A court
the rule may be relaxed. Technicalities should be cannot set aside a judgment based on compromise
disregarded if only to accord to the respective parties without having declared in an incidental hearing that
that which is due them. Therefore, considering the such a compromise is vitiated by any of the grounds
broader and primordial interests of justice, particularly for nullity enumerated in Art. 2038 of the Civil Code.
when there is grave abuse of discretion as in the case Consequently, it was utterly erroneous for the trial
at bar, an occasional departure from the general rule court to rule that there was such a revocation of the
that the extraordinary writ of certiorari cannot judicially approved Compromise Agreement.
substitute for a lost appeal is warranted. Same; Documents; Failure to deny the genuineness
Same; Compromise; It is well-settled that a judicial and due execution of an actionable document does not
compromise has the effect of res judicata and is preclude a party from arguing against it by evidence of
immediately executory and not appealable.The fraud, mistake, compromise, payment, statute of
Compromise Agreement entered into by the petitioner limitations, estoppel and want of consideration.
and the Quetulio spouses in the expropriation case, Nonetheless, assuming further that petitioner is a
docketed as Civil Case No. 8396-XV, on January 24, party to the questioned instruments, still, the dismissal
1985 was approved and adopted in toto by the of its complaint by respon-
Regional Trial Court of Laoag City, Branch XV in its 173
decision of January 31, 1985. The compromise
agreement fixed the amount of just compensation for VOL. 296, SEPTEMBER 25, 1998
the property at P1,454,859.00 which was, as the 173
124

Republic vs. Court of Appeals Administrative Law; Attorneys; A suspended lawyer,


dent trial court was not correct. Petitioners alleged during his suspension, is certainly prohibited from
failure to deny under oath the genuineness and due engaging in the practice of law and if he does so, he
execution of the said instruments simply means that it may be disbarred.Evidently, when respondent
impliedly admitted their authenticity and due Hernando appeared before the trial court at the initial
execution. Failure to deny the genuineness and due hearing of the case on February 27, 1992, and when
execution of an actionable document does not he filed the pleading denominated as
preclude a party from arguing against it by evidence of Comment/Answer/Motion to Dismiss, he was still under
fraud, mistake, compromise, payment, statute of suspension from the practice of law. A suspended
limitations, estoppel and want of consideration. lawyer, during his suspension, is certainly prohibited
Neither does it bar a party from raising the defense in from engaging in the practice of law and if he does so,
his answer or reply and prove at the trial that there is he may be disbarred. The reason is that, his continuing
a mistake or imperfection in the writing, or that it does to practice his profession during his suspension
not express the true agreement of the parties, or that constitutes a gross misconduct and a wilful disregard
the agreement is invalid or that there is an intrinsic of the suspension order, which should be obeyed
ambiguity in the writing. though how erroneous it may be until set aside.
PETITION for review on certiorari of a decision of the
Court of Appeals.

The facts are stated in the opinion of the Court.


The Solicitor General for public petitioner.
Hector P. Corpus for respondents Abadilla and
Samonte.
KAPUNAN, J.:

For our consideration is a petition for review on


certiorari impugning the Decision dated February 8,
1993 and the
174

174
125

SUPREME COURT REPORTS ANNOTATED compensation at One Million Four Hundred Fifty Four
Republic vs. Court of Appeals Thousand Eight Hundred Fifty Nine pesos
Resolution dated April 27, 1993 of respondent Court of (P1,454,859.00); that a decision was rendered on
Appeals in CA-G.R. SP No. 29460.1 January 31, 1985 whereby the trial court approved and
The relevant antecedents are as follows: adopted in toto the said compromise agreement; that
Sometime in December 1991, petitioner filed a disbursement vouchers in the amount agreed upon
complaint for rescission (of a deed of sale), were turned over to the Quetulios; that on November
cancellation (of transfer certificates of title), 29, 1985, Harold M. Hernando executed an affidavit
reconveyance and damages with prayer for issuance revoking the compromise
of a writ of preliminary injunction and of a temporary __________
restraining order, against the spouses Rolando Abadilla
and Susan Samonte, Harold M. Hernando, for himself 1 CA decision penned by Justice Pacita Canizares-Nye
and as attorney-in-fact of Apolinario, Serafin, Dominica and concurred in by Justices Reynato S. Puno and Justo
and Maria, all surnamed Quetulio,** and the Register P. Torres, Jr., Rollo, p. 600.
of Deeds of Laoag City, before the Regional Trial Court ** Also appears as Quetolio in the records.
of Laoag City, Branch 16, docketed as Civil Case No. 175
9934-16. It is alleged in the said complaint that
sometime in 1984, the then Ministry of Public Works VOL. 296, SEPTEMBER 25, 1998
and Highways, in collaboration with the then Ministry 175
of Transportation and Communication filed an Republic vs. Court of Appeals
expropriation case against Serafin, Apolinario, agreement he signed as attorney-in-fact of the
Dominica and Maria, all surnamed Quetulio, involving Quetulios; that sometime in 1989, the Quetulios, again
two (2) parcels of land containing an aggregate area of represented by Harold M. Hernando, filed a petition for
ninety four thousand nine hundred thirteen (94,913) the issuance of another owners and co-owners
square meters, for the construction of a terminal duplicate copy of TCT-T-1071 and OCT No. 0-145-L
building for international flights of the Laoag before the RTC, Branch XIV of Laoag City; that said
International Airport; that said expropriation case was petition was granted on April 18, 1989 and pursuant
docketed as Civil Case No. 8396-XV and raffled to RTC, thereto, owners duplicate copy of TCT No. T-1071 and
Branch XV, Laoag City; that a compromise agreement on April 18, 1989 and pursuant thereto, owners
was entered into in the said case on January 24, 1985 duplicate copy of TCT No. T-1071 and OCT No. 0-145-L
whereby the parties agreed to fix the amount of just were issued; that Harold M. Hernando, as attorney-in-
126

fact of the Quetulios, sold the property in question to 176


the spouses Rolando V. Abadilla and Susan Samonte
for and in consideration of the sum of One Million 176
Three Hundred Pesos (P1,000,300.00); that said SUPREME COURT REPORTS ANNOTATED
second sale is null and void as the lots in question are Republic vs. Court of Appeals
already owned by petitioner Republic; and that the for no apparent reason. Nonetheless, respondent
spouses-vendees acted in bad faith as they already Harold M. Hernando, who was then present in court,
had prior knowledge of the first sale. moved that (a) he be granted the opportunity to
Accordingly, petitioner prayed that (1) the deed of sale formally appear as counsel for himself and his co-
by Harold M. Hernando in favor of the spouses Abadilla defendants as he was then still serving a five-(5)
be declared null and void; (2) TCT Nos. T-21484 and T- month suspension from the practice of law for
21485 covering the lots in question issued in the name malpractice pursuant to the Resolution of this Court
of the spouses Abadilla be declared null and void; (3) dated October 17, 1991 in Administrative Case No.
the Register of Deeds of Laoag City be directed to 1359 entitled Buted v. Hernando3 and (b) he be
cancel the TCTs and reinstate the old ones; and (4) allowed to file an answer despite petitioners oral
Harold M. Hernando and the spouses Abadilla be made manifestation that he be declared in default for failure
liable to pay P500,000.00 by way of actual and to file his answer within the reglementary period. Both
punitive damages.2 motions were granted by the trial court.
The spouses Abadilla filed their Answer in due time on On February 28, 1992, respondent Hernando filed a
January 28, 1992. pleading denominated as Comment/Answer/Motion to
On February 14, 1992, petitioner filed a Reply to the Dismiss4 praying for the dismissal of the complaint on
spouses Abadillas answer. the basis of the Affidavit of Revocation executed by
No answer was filed by respondents Hernando and the him on November 29, 1985 cancelling the Compromise
Quetulios within the 15-day reglementary period to file Agreement because Atty. Sixto S. Pedro allegedly
a responsive pleading. withheld ten (10) checks in the amount of P500,000.00
Meanwhile, the initial hearing for the instant case was which were supposed to be part of the consideration
set for February 27, 1992. Said hearing was, however, for the property expropriated; and that Atty. Sixto S.
postponed Pedro, in his capacity as Special Attorney for the
__________ Ministry of Public Works and Highways, Ilocos Norte,
and representing the Republic of the Philippines, had
2 Rollo, pp. 57-69. signed a Rescission of Compromise Agreement and the
127

Deed of Conveyance dated December 2, 1985 (in favor The motion was denied in an order received by
of the Abadilla spouses). petitioner on September 14, 1992.
On May 5, 1992, the trial court issued an order On October 8, 1992, twenty-four (24) days after it
dismissing the complaint ratiocinating that: received a copy of the order denying its motion for
As the plaintiff has not filed any reply/opposition or reconsideration, petitioner filed a petition for certiorari
comment to the comment/answer/motion to dismiss, under Rule 65 of the Rules of Court before this Court,
said party is deemed to have admitted the due docketed as G.R. No. 107229.
execution and genuiness (sic) of the instruments which Per our Resolution dated October 12, 1992, G.R. No.
are Exhibits 3 and 4 of the motion to dismiss, Sec. 8, 107229 was referred to the Court of Appeals for
Rule 8 of the Rules of Court. This is so as said appropriate action. Therein, G.R. No. 107229 was
instruments which are Exhibits 3 and 4 are copied docketed anew as CA-G.R. SP No. 29460.
verbatim as part of the pleading of defendants Atty. On February 8, 1993, the Court of Appeals dismissed
Harold Hernando and Dominica Quetolio, Sec. 7, the said petition for certiorari after treating the same
__________ as an ordinary appeal filed out of time. According to
the appellate court:
3 203 SCRA 1 [1991]. Considering that petitioner admittedly received a copy
4 Id., at 90-98. of the Order dated 04 September 1992 denying its
177 Motion For Reconsideration on 14 September 1992, the
reglementary period within which to file an appeal
VOL. 296, SEPTEMBER 25, 1998 therefrom expired on 29 September 1992.
177 The record discloses that the instant petition was filed
Republic vs. Court of Appeals on 08 October 1992. Consequently, the questioned
Rule 8 of the New Rules of Court. Plaintiff having Order had attained finality at the time the petition was
admitted the execution and genuiness (sic) of the filed.6
instruments, said party has already abandoned its A motion for reconsideration of said decision was
claim to the land in suit or the claim of said party denied on April 27, 1993.
plaintiff has been extinguished.5 __________
Petitioner received a copy of the above-stated order on
May 13, 1992. 5 Id., at 185.
On May 25, 1992, petitioner filed a Motion for 6 Id., at 44.
Reconsideration of the order of dismissal. 178
128

actionable document, pursuant to Sec. 8, Rule 8 of the


178 Revised Rules of Court.7
SUPREME COURT REPORTS ANNOTATED We grant the petition.
Republic vs. Court of Appeals The threshold issue in this case is whether or not
Hence, the present petition for review on certiorari respondent Court of Appeals committed reversible
grounded on the following issues, viz.: error in denying due course and dismissing CA-GR-SP
I No. 29460 for having been filed out of time.
Respondent Court of Appeals ruled that an ordinary
Whether or not respondent Honorable Court of Appeals appeal not a petition for certiorari under Rule 65, was
has decided a question of substance, not theretofore the proper remedy from the trial courts Order of
determined by the Honorable Supreme Court or that it dismissal dated May 5, 1992 which has attained
has decided it in a way not in accord with law or with finality.
applicable decisions of this Honorable Court, in __________
denying due course to the petition in G.R. SP No.
29460, purportedly on the ground that the 15-day 7 Id., at 20.
reglementary period had already elapsed despite 179
patent showing on the face of the petition that it was
filed pursuant to Rule 65 of the Revised Rules of Court. VOL. 296, SEPTEMBER 25, 1998
II 179
Republic vs. Court of Appeals
Whether or not respondent Honorable Court of Appeals Our careful study of the facts inevitably yields to the
has patently sanctioned such departure by respondent conclusion that the Regional Trial Court presided by
Hon. Luis B. Bello, Jr., from the usual and accepted Hon. Luis B. Bello, Jr. committed grave abuse of
course of judicial proceeding as he (Judge Bello) discretion not only in issuing its order dismissing
considered a mere affidavit as an actionable document petitioners complaint in Civil Case No. 9934 on a
such that petitioners failure to file an opposition or starkly erroneous ground, but also it committed a
comment to herein private respondent-Harold grossly irresponsible act of allowing respondent
Hernandos pleading wherein said affidavit was Hernando who was then under suspension from the
attached and copied, amounted to an admission of its practice of law, to represent himself and his co-
due execution and genuineness, being allegedly an defendants in the case. Also, as appearing from the
records, after the lapse of the period to file an answer
129

on the part of respondents Hernando and the The Compromise Agreement entered into by the
Quetulios, the trial court set the case for pre-trial petitioner and the Quetulio spouses in the
without formally ruling on petitioners motion to expropriation case, docketed as Civil Case No. 8396-
declare them in default. Surprisingly, the trial court XV, on January 24, 1985 was approved and adopted in
thereafter, allowed said defendants to file their answer toto by the Regional Trial Court of Laoag City, Branch
upon the latters verbal motion. This enabled XV in its decision of January 31, 1985. The compromise
respondent Hernando to file his pleading agreement fixed the amount of just compensation for
Comment/Answer/Motion to Dismiss, with certain the property at P1,454,859.00 which was, as the
annexes which were considered by the trial court as records show, fully paid by petitioner as evidenced by
actionable documents, despite the fact that petitioner the disbursement vouchers (Annexes D-1 to D-12
was not a party thereto. All these circumstances to complaint).8 Said compromise agreement had long
clearly demonstrate the trial courts bias and become final and executory,
arbitrariness that should have warranted the setting ____________
aside of the questioned order of dismissal for grave
abuse of discretion under Rule 65 of the Rules of Court. 8 Rollo, pp. 74-81.
Consequently, petitioners original action for certiorari 180
filed with respondent Court of Appeals on October 8,
1992 to annul the trial courts Order dated May 5, 180
1992 dismissing petitioners complaint should have SUPREME COURT REPORTS ANNOTATED
been given due course. Republic vs. Court of Appeals
before respondent Hernando allegedly executed the
Affidavit of Revocation unilaterally revoking the same
on November 29, 1985. It is well-settled that a judicial
compromise has the effect of res judicata and is
immediately executory and not appealable unless a
motion to set aside the same is filed on the ground of
fraud, mistake or duress, in which event an appeal
may be filed from an order denying the same.9 A court
cannot set aside a judgment based on compromise
without having declared in an incidental hearing that
such a compromise is vitiated by any of the grounds
130

for nullity enumerated in Art. 2038 of the Civil Code.


Consequently, it was utterly erroneous for the trial 9 De Guzman v. Court of Appeals, 137 SCRA 730
court to rule that there was such a revocation of the [1985]; Hagosojos v. CA, 155 SCRA 175 [1987].
judicially approved Compromise Agreement. 181
Moreover, considering that petitioner is not a party to
the annexes attached to the Comment/Answer/Motion VOL. 296, SEPTEMBER 25, 1998
to Dismiss filed by respondent Hernando and the 181
Quetulios, the trial court had no legal basis in Republic vs. Court of Appeals
dismissing petitioners complaint in Civil Case No. tioner thereto for total lack of authority from the latter
9934-16 on the ground that petitioner had admitted to enter into any agreement prejudicial to or in
the due execution and genuineness of said annexes diminution of the rights of the Government. It is to be
consisting of the Affidavit of Revocation, and noted that the Affidavits of Revocation executed on
Rescission of Compromise Agreement and Deed of November 29, 1985 by respondent Hernando
Conveyance. repudiated the judgment by compromise on the
Section 8 of Rule 8 of the Rules of Court provides: ground that Atty. Sixto S. Pedro, alleged Special
Sec. 8. How to contest genuineness of such Attorney of the Ilocos Norte District of the Public
documents.When an action or defense is founded Works, had withheld ten (10) checks in the total
upon a written instrument, copied in or attached to the amount of P500,000.00 which were part of the
corresponding pleading as provided in the preceding consideration for the property subject of the
section, the genuineness and due execution of the Compromise Agreement. The document was signed by
instrument shall be deemed admitted unless the Atty. Pedro with the words acknowledged and my
adverse party, under oath, specifically denies them, express conformity. Similarly, the Rescission of
and sets forth what he claims to be the facts; but this Compromise Agreement and Deed of Conveyance
provision does not apply when the adverse party does was executed by the Quetulios and signed by Atty.
not appear to be a party to the instrument or when Pedro describing himself as Special Attorney of the
compliance with an order for an inspection of the MPWH I.N. Engineering District and representing the
original instrument is refused. (Emphasis ours.) Republic of the Philippines. Even granting
While the signature of Atty. Sixto S. Pedro is found in hypothetically that Atty. Pedro was duly designated as
both instruments, he could not have, in any way, Special Attorney of the Office of the Solicitor General,
bound the peti- and was authorized to represent the Solicitor General
__________ at the hearings of the expropriation case, it is still the
131

Solicitor General who retains supervision and control of and want of consideration.11 Neither does it bar a
the representation of the case and who has to approve party from raising the defense in his answer or reply
actions involving withdrawal, non-appeal and other and prove at the trial that there is a mistake or
matters which appear to compromise the interest of imperfection in the writing, or that it does not express
the Government, not to mention that only notices of the true agreement of the parties, or that the
orders, resolutions and decisions served on him will agreement is invalid or that there is an intrinsic
bind the Government.10 The authority to enter into ambiguity in the writing.12
any agreement or arrangement adversely affecting the Apart from the aforestated erroneous application of
rights and interests of the Government cannot be the law, the proceedings conducted by the respondent
assumed; it has to be established by him who asserts judge were grievously tainted by the appearance of
its existence. respondent Hernando in the case despite his
Nonetheless, assuming further that petitioner is a suspension at the time from the practice of law.
party to the questioned instruments, still, the dismissal As explicitly stated in the present petition as well as in
of its complaint by respondent trial court was not the petition previously filed in this case, docketed as
correct. Petitioners alleged failure to deny under oath G.R. No. 107229 which was referred to the Court of
the genuineness and due execution of the said Appeals for disposition, respondent RTC Judge Luis B.
instruments simply means that it impliedly admitted Bello, Jr. did not rule on petitioners oral motion to
their authenticity and due execution. Failure declare the Quetulios in default for not filing their
__________ answer within the reglementary period. Instead, after
the case was set for initial hearing on February 27,
10 Republic v. Mendoza, 125 SCRA 539 [1983]; 1992, the judge admitted the formal appearance of
Republic v. Polo, 89 SCRA 33 [1979]. respondent Hernando as counsel for himself and for his
182 co-defendants and allowed him to file an answer to the
complaint. Evidently, when respondent Hernando
182 appeared before the trial court at the initial hearing of
SUPREME COURT REPORTS ANNOTATED the case on February 27, 1992, and when he filed the
Republic vs. Court of Appeals pleading denominated as Comment/Answer/Motion to
to deny the genuineness and due execution of an Dismiss, he was still under suspension from the
actionable document does not preclude a party from practice of law. A suspended lawyer, during his
arguing against it by evidence of fraud, mistake, suspension, is certainly prohibited from engaging in
compromise, payment, statute of limitations, estoppel
132

the practice of law13 and if he does so, he may be lost appeal is warranted.16 In the instant case, we rule
disbarred. The that respondent court erred in not entertaining the
___________ special civil action for certiorari (CA-G.R. SP No. 29460)
before it, considering the patent irregularity and grave
11 I Regalado, REMEDIAL LAW COMPENDIUM, p. 105, abuse of discretion committed by the trial court in
citing I Martin 301 which cited Bough and Bough v. dismissing petitioners complaint, such that appeal
Cantiveros and Hanopol, 40 Phil. 209 [1919] and therefrom was not an adequate remedy in the ordinary
Hibberd v. Rohde and McMillian, 32 Phil. 476 [1915]. course of law.
12 Section 9, Rule 130 of the Rules of Court. However, it has not escaped the attention of the Court
13 In re David, 93 Phil. 461 [1954]. that the petition in G.R. No. 107229 was filed by the
183 Office of the Solicitor General nine (9) days beyond the
reglementary period. Rules of procedure are intended
VOL. 296, SEPTEMBER 25, 1998 to insure the orderly administration of justice and the
183 protection of the substantive rights of the parties in
Republic vs. Court of Appeals judicial proceedings. Needless to state, Government
reason is that, his continuing to practice his profession lawyers assigned to the case should have acted more
during his suspension constitutes a gross misconduct scrupulously and sedulously in seeing to it that their
and a wilful disregard of the suspension order, which clients interests are protected by observing deadlines
should be obeyed though how erroneous it may be in filing of pleadings to avoid situations such as that
until set aside.14 obtaining in this case which involves a valuable
While as a general rule, certiorari cannot be a property.
substitute for a lapsed appeal, however, where the __________
rigid application of the rule will result in a manifest
failure, or miscarriage of justice, the rule may be 14 De Leon v. Torres, 99 Phil. 463 [1956].
relaxed.15 Technicalities should be disregarded if only 15 Mejares v. Reyes, 254 SCRA 425 [1996]; Luna v.
to accord to the respective parties that which is due Court of Appeals, 216 SCRA 107 [1992]; Aranda v.
them. Therefore, considering the broader and Court of Appeals, 186 SCRA 456 [1990]; Escudero v.
primordial interests of justice, particularly when there Dulay, 158 SCRA 69 [1988].
is grave abuse of discretion as in the case at bar, an 16 Luna v. Court of Appeals, supra.
occasional departure from the general rule that the 184
extraordinary writ of certiorari cannot substitute for a
133

184 APPEALS, ZENAIDA CAIA and RODOLFO CAIA,


SUPREME COURT REPORTS ANNOTATED respondents.
Salavarria vs. Letran College Civil Law; Property; Actions; A cause of action being an
WHEREFORE, the instant petition is hereby GRANTED. act or omission of one party in violation of the right of
Civil Case No. 9934-16 before the Regional Trial Court another arises at the moment such right is violated.A
of Laoag City, Branch 16, is hereby REINSTATED and cause of action being an act or omission of one party
the court a quo is ORDERED to proceed hearing the in violation of the right of another arises at the
case and resolve the same with dispatch. moment such right is violated. In the instant case,
SO ORDERED. petitioners cause of action accrued on 4 June 1943
Narvasa (C.J., Chairman) and Romero, J., concur. when the Pena spouses caused the registration in their
Purisima, J., No part, Atty. Hector P. Corpus for name of the entire 13,405 square meters instead of
respondents Abadilla and Samonte being my first only 10,000 square meters they actually bought from
cousin. Evarista delos Reyes. For it was on this date that the
Petition granted, Civil Case No. 9934-16 reinstated. right of ownership of Evarista over the remaining
Note.Although certiorari cannot be a substitute for a 3,405 square meters was transgressed and from that
lapsed appeal, where a rigid application of that rule very moment sprung the right of the owner, and hence
will result in a manifest failure or miscarriage of all her successors in interest, to file a suit for
justice, the rule may be relaxed. (Mejares vs. Reyes, reconveyance of the property wrongfully taken from
254 SCRA 425 [1996]) them.
Same; Same; Same; Prescription; Under Art. 1141 of
G.R. No. 121468. January 27, 1998.* the Civil Code, real actions over immovables prescribe
ARSENIO DELOS REYES, FELICIDAD DELOS REYES, after thirty (30) years.But, such right is not
BENJAMIN DELOS REYES, SALVADOR DELOS REYES, imprescriptible. Generally, the law draws a time
SOLEDAD DELOS REYES and PEDRO PARINAO, corridor within which to propel a suit for recovery of
TRINIDAD DELOS REYES and PEDRO GENERAL, CARLOS property. Section 44, par. (b), of RA No. 296 otherwise
DELOS REYES, JR., ROBERTO DELOS REYES, RODOLFO known as the Judiciary Act of 1948 provides that
DELOS REYES, RICARDO DELOS REYES, ZENAIDA reivindicatory actions may be brought by the owner
DELOS REYES, VERONICA DELOS REYES, MERCEDES within thirty (30) years after he has been deprived of
DELOS REYES, FELIPE CANTILLON, GREGORIA his property. Under Art. 1141 of the Civil Code, real
CANTILLON, LUCENA CANTILLON, VIRGILIO CANTILLON actions over immovables prescribe after thirty (30)
and MERCEDES CANTILLON, petitioners, vs. COURT OF years. Thus, even if we apply the
134

_______________ Same; Same; Same; Same; The action for


reconveyance has now become stale, being barred as
* FIRST DIVISION. it were, by laches.Petitioners reliance on Arts. 1409,
82 1410 and 1422 of the Civil Code on the
imprescriptibility of void and inexistent contracts is
82 misplaced. While the action to declare a contract null
SUPREME COURT REPORTS ANNOTATED and void does not prescribe, this principle is alien and
Delos Reyes vs. Court of Appeals malapropos to the matter before us. Moreover, the
30-year prescriptive period in accordance with the action for reconveyance has now become stale, being
above legal provisions, petitioners right to recover has barred as it were, by laches. It cannot be disputed that
already been effectively foreclosed by the lapse of for thirty-six (36) years petitioners and their
time having been initiated only after thirty-six (36) predecessors in interest, Evarista delos Reyes most
years from the accrual of their cause of action. especially, never raised a restraining arm to the
inclusion of the remaining 3,405 square meters of the
land in the titling of the 10,000 square meters bought
by the Pena spouses. The property passed through
four (4) owners successively in a span of more than
twenty (20) years before it went into the hands of
private respondents.
Same; Land Titles; For all intents and purposes,
respondents were innocent purchasers for value
having acquired the property in due course and in
good faith under a clean title.When respondents
Rodolfo Caia and Zenaida Caia as fourth transferees
in ownership dealt with the land in question, they were
not required to go beyond what appeared in the
transfer certificate of title in the name of their
transferor. For all intents and purposes, they were
innocent purchasers for value having acquired the
property in due course and in good faith under a clean
title, i.e., there were no annotations of encumbrances
135

or notices of lis pendens at the back thereof. They had PETITION for review on certiorari of a decision of the
no reason to doubt the validity of the title to the Court of Appeals.
property. Therefore it would be the height of injustice,
if not inequity, if a valid transaction transferring the The facts are stated in the opinion of the Court.
subject property to them be set aside just to Peoples Law Office for petitioners.
accommodate parties who heedlessly slept on their Santiago de Guzman for private respondents.
rights for more than a third of a century. This is not BELLOSILLO, J.:
conducive but anathema to good order.
Same; Same; Remedy of an owner who was Can an action for reconveyance of real property
fraudulently de prived of his land, which was covered by the Torrens system filed after more than
subsequently sold to an innocent purchaser for value, thirty (30) years prosper against the holder for value?
is to file an action for damages against the person who On 28 July 1987 the Regional Trial Court of Valenzuela,
perpetrated the fraud within four (4) years after the Metro Manila, dismissed Civil Case No. 717-V-78 for
discovery of recovery of possession of real property with damages
83 filed by Arsenio delos Reyes, Felicidad, Benjamin,
Salvador, Soledad (with spouse Pedro Parinao),
VOL. 285, JANUARY 27, 1998 Trinidad (with spouse Pedro General), Carlos, Jr.,
83 Roberto, Rodolfo, Ricardo, Zenaida, Veronica and
Delos Reyes vs. Court of Appeals Mercedes, all surnamed Delos Reyes, and Felipe,
the deception.In Avecilla v. Yatco we ruled that the Gregoria, Lucena, Virgilio and Mercedes, all surnamed
only remedy of an owner who was fraudulently Cantillon, against the spouses Rodolfo Caia and
deprived of his land, which was subsequently sold to Zenaida Caia.1
an innocent purchaser for value, is to file an action for On 23 January 1995 the Court of Appeals affirmed the
damages against the person who perpetrated the order of dismissal of the lower court.2
fraud within four (4) years after the discovery of the _______________
deception. Unfortunately in this case we may never
know why Evarista delos Reyes chose not to go after 1 See Order issued by Judge Teresita Dizon Capulong,
the Pena spouses to recover what could be rightfully RTC-Br. 172, Valenzuela, Metro Manila; Records, pp.
hers, the reason having apparently been long interred 217-220.
with her. 2 Decision in CA-G.R. CV No. 26078, penned by Justice
Nathanael P. de Pano, Jr., concurred in by Justices
136

Artemon D. Luna and Ramon U. Mabutas, Jr.; Rollo, pp. Transfer Certificate of Title No. 26184 covering not only
18-29. the 10,000 square meters of land bought by them but
84 also the remaining 3,405 square meters left unsold. In
turn, the Pena spouses sold the whole property to
84 Isaias de Guzman and Emiliana de Onon who later
SUPREME COURT REPORTS ANNOTATED conveyed the same whole area to Elpidio Concepcion,
Delos Reyes vs. Court of Appeals Liwayway Serrano, Norberto Concepcion and Marta de
Pursuing their recourse with us, petitioners seek the Guzman. Eventually, the land was acquired by private
nullification of the decision of respondent Court of respondents herein, Rodolfo Caia and Zenaida Caia,
Appeals which affirmed the order of the trial court on 9 July 1963 through a Deed of Exchange. Eight (8)
dismissing the complaint of petitioners herein by days later, or on 17 July 1963, Transfer Certificate of
imputing to the Court of Appeals the following errors: Title No. 42753 was issued in the name of the Caia
(1) in reckoning the 30-year prescriptive period of real spouses who since then exercised full ownership and
actions as provided under Art. 1141 of the Civil Code possession over the property.
from the date of issuance of the questioned TCT or On 3 October 1978 petitioners, all heirs of Evarista
annotation of the transaction in 1943 and not from 17 delos Reyes, filed an action against respondents for
September 1962 when petitioners mother, original reconveyance of
owner of subject property, died or 17 July 1963 when _______________
TCT No. 42753 was issued to Rodolfo Caia and
Zenaida Caia and consequently holding petitioners 3 Petitioners Brief, pp. 5 & 7; Rollo, pp. 12 & 14.
guilty of laches; and, (2) in not applying Arts. 1409, 85
1410, and 1422 of the Civil Code.3
Subject of the controversy is a parcel of land VOL. 285, JANUARY 27, 1998
measuring 13,405 square meters originally owned by 85
the spouses Genaro and Evarista delos Reyes. On 7 Delos Reyes vs. Court of Appeals
July 1942 Evarista delos Reyes sold to spouses 3,405 square meters of the property covered by TCT
Catalina Mercado and Eulalio Pena 10,000 square No. 42753 claiming that this portion was invalidly
meters of the property described as Lot No. 1210 of included by the Pena spouses in the titling of their
the subdivision plan of the Malinta Friar Lands Estate 10,000 square meters they had bought from Evarista
situated at Torres Bugallon, Valenzuela, Metro Manila. delos Reyes. However, the case was dismissed by the
On 4 June 1943 the vendees were able to secure trial court on the ground of laches. As already adverted
137

to, the order of dismissal was affirmed by the Court of provisions, petitioners right to recover has already
Appeals. been effectively foreclosed by the lapse of time having
We likewise dismiss the petition. Petitioners argue that been initiated only after thirty-six (36) years from the
their cause of action still subsists because it accrued accrual of their cause of action.
either on 17 September 1962 when Evarista delos Be that as it may, we hold that even these laws may
Reyes died, or on 17 July 1963 when TCT No. 42753 not apply to the case before us in the light of PD No.
was issued to Rodolfo Caia and his sister Zenaida 1529, the
Caia. This is incorrect. A cause of action being an act 86
or omission of one party in violation of the right of
another arises at the moment such right is violated. In 86
the instant case, petitioners cause of action accrued SUPREME COURT REPORTS ANNOTATED
on 4 June 1943 when the Pena spouses caused the Delos Reyes vs. Court of Appeals
registration in their name of the entire 13,405 square Property Registration Decree amending and codifying
meters instead of only 10,000 square meters they the laws relative to registration of property and
actually bought from Evarista delos Reyes. For it was updating Act No. 496, the Land Registration Act.
on this date that the right of ownership of Evarista When respondents Rodolfo Caia and Zenaida Caia as
over the remaining 3,405 square meters was fourth transferees in ownership dealt with the land in
transgressed and from that very moment sprung the question, they were not required to go beyond what
right of the owner, and hence all her successors in appeared in the transfer certificate of title in the name
interest, to file a suit for reconveyance of the property of their transferor. For all intents and purposes, they
wrongfully taken from them. were innocent purchasers for value having acquired
But, such right is not imprescriptible. Generally, the the property in due course and in good faith under a
law draws a time corridor within which to propel a suit clean title, i.e., there were no annotations of
for recovery of property. Section 44, par. (b), of RA No. encumbrances or notices of lis pendens at the back
296 otherwise known as the Judiciary Act of 1948 thereof. They had no reason to doubt the validity of
provides that reivindicatory actions may be brought by the title to the property. Therefore it would be the
the owner within thirty (30) years after he has been height of injustice, if not inequity, if a valid transaction
deprived of his property. Under Art. 1141 of the Civil transferring the subject property to them be set aside
Code, real actions over immovables prescribe after just to accommodate parties who heedlessly slept on
thirty (30) years. Thus, even if we apply the 30-year their rights for more than a third of a century. This is
prescriptive period in accordance with the above legal not conducive but anathema to good order.
138

Finally, petitioners reliance on Arts. 1409, 1410 and ruled that the only remedy of an owner who was
1422 of the Civil Code on the imprescriptibility of void fraudulently deprived of his land, which was
and inexistent contracts is misplaced. While the action subsequently sold to an innocent purchaser for value,
to declare a contract null and void does not prescribe, is to file an action for damages against the person who
this principle is alien and malapropos to the matter perpetrated the fraud within four (4) years after the
before us. Moreover, the action for reconveyance has discovery of the deception. Unfortunately in this case
now become stale, being barred as it were, by laches. we may never know why Evarista delos Reyes chose
It cannot be disputed that for thirty-six (36) years not to go after the Pena spouses to recover what could
petitioners and their predecessors in interest, Evarista be rightfully hers, the reason having apparently been
delos Reyes most especially, never raised a restraining long interred with her.
arm to the inclusion of the remaining 3,405 square WHEREFORE, finding no reversible error in the decision
meters of the land in the titling of the 10,000 square of the Court of Appeals sustaining the Regional Trial
meters bought by the Pena spouses. The property Court of Valenzuela, Metro Manila, which ordered the
passed through four (4) owners successively in a span dismissal of the complaint of herein petitioners, the
of more than twenty (20) years before it went into the instant petition is DENIED. Costs against petitioners.
hands of private respondents. Surely, the rights of SO ORDERED.
innocent purchasers of real property such as the Davide, Jr. (Chairman), Vitug and Kapunan, JJ.,
Caias cannot be swamped and drowned by the concur.
remonstrations of the inert and petulant who took no Petition denied.
care in seasonably asserting their rights of ownership Note.A registered landowner may lose his right to
over the land allegedly wrested from them through recover the possession of his registered property by
fraudulent means. In Avecilla v. Yatco4 we reason of laches. (Catholic Bishop of Balanga vs. Court
_______________ of Appeals, 264 SCRA 181 [1996])
G.R. No. 121468. January 27, 1998.*
4 103 Phil. 666 (1958). ARSENIO DELOS REYES, FELICIDAD DELOS REYES,
87 BENJAMIN DELOS REYES, SALVADOR DELOS REYES,
SOLEDAD DELOS REYES and PEDRO PARINAO,
VOL. 285, JANUARY 27, 1998 TRINIDAD DELOS REYES and PEDRO GENERAL, CARLOS
87 DELOS REYES, JR., ROBERTO DELOS REYES, RODOLFO
Delos Reyes vs. Court of Appeals DELOS REYES, RICARDO DELOS REYES, ZENAIDA
DELOS REYES, VERONICA DELOS REYES, MERCEDES
139

DELOS REYES, FELIPE CANTILLON, GREGORIA his property. Under Art. 1141 of the Civil Code, real
CANTILLON, LUCENA CANTILLON, VIRGILIO CANTILLON actions over immovables prescribe after thirty (30)
and MERCEDES CANTILLON, petitioners, vs. COURT OF years. Thus, even if we apply the
APPEALS, ZENAIDA CAIA and RODOLFO CAIA, _______________
respondents.
Civil Law; Property; Actions; A cause of action being an * FIRST DIVISION.
act or omission of one party in violation of the right of 82
another arises at the moment such right is violated.A
cause of action being an act or omission of one party 82
in violation of the right of another arises at the SUPREME COURT REPORTS ANNOTATED
moment such right is violated. In the instant case, Delos Reyes vs. Court of Appeals
petitioners cause of action accrued on 4 June 1943 30-year prescriptive period in accordance with the
when the Pena spouses caused the registration in their above legal provisions, petitioners right to recover has
name of the entire 13,405 square meters instead of already been effectively foreclosed by the lapse of
only 10,000 square meters they actually bought from time having been initiated only after thirty-six (36)
Evarista delos Reyes. For it was on this date that the years from the accrual of their cause of action.
right of ownership of Evarista over the remaining Same; Same; Same; Same; The action for
3,405 square meters was transgressed and from that reconveyance has now become stale, being barred as
very moment sprung the right of the owner, and hence it were, by laches.Petitioners reliance on Arts. 1409,
all her successors in interest, to file a suit for 1410 and 1422 of the Civil Code on the
reconveyance of the property wrongfully taken from imprescriptibility of void and inexistent contracts is
them. misplaced. While the action to declare a contract null
Same; Same; Same; Prescription; Under Art. 1141 of and void does not prescribe, this principle is alien and
the Civil Code, real actions over immovables prescribe malapropos to the matter before us. Moreover, the
after thirty (30) years.But, such right is not action for reconveyance has now become stale, being
imprescriptible. Generally, the law draws a time barred as it were, by laches. It cannot be disputed that
corridor within which to propel a suit for recovery of for thirty-six (36) years petitioners and their
property. Section 44, par. (b), of RA No. 296 otherwise predecessors in interest, Evarista delos Reyes most
known as the Judiciary Act of 1948 provides that especially, never raised a restraining arm to the
reivindicatory actions may be brought by the owner inclusion of the remaining 3,405 square meters of the
within thirty (30) years after he has been deprived of land in the titling of the 10,000 square meters bought
140

by the Pena spouses. The property passed through


four (4) owners successively in a span of more than VOL. 285, JANUARY 27, 1998
twenty (20) years before it went into the hands of 83
private respondents. Delos Reyes vs. Court of Appeals
Same; Land Titles; For all intents and purposes, the deception.In Avecilla v. Yatco we ruled that the
respondents were innocent purchasers for value only remedy of an owner who was fraudulently
having acquired the property in due course and in deprived of his land, which was subsequently sold to
good faith under a clean title.When respondents an innocent purchaser for value, is to file an action for
Rodolfo Caia and Zenaida Caia as fourth transferees damages against the person who perpetrated the
in ownership dealt with the land in question, they were fraud within four (4) years after the discovery of the
not required to go beyond what appeared in the deception. Unfortunately in this case we may never
transfer certificate of title in the name of their know why Evarista delos Reyes chose not to go after
transferor. For all intents and purposes, they were the Pena spouses to recover what could be rightfully
innocent purchasers for value having acquired the hers, the reason having apparently been long interred
property in due course and in good faith under a clean with her.
title, i.e., there were no annotations of encumbrances PETITION for review on certiorari of a decision of the
or notices of lis pendens at the back thereof. They had Court of Appeals.
no reason to doubt the validity of the title to the
property. Therefore it would be the height of injustice, The facts are stated in the opinion of the Court.
if not inequity, if a valid transaction transferring the Peoples Law Office for petitioners.
subject property to them be set aside just to Santiago de Guzman for private respondents.
accommodate parties who heedlessly slept on their BELLOSILLO, J.:
rights for more than a third of a century. This is not
conducive but anathema to good order. Can an action for reconveyance of real property
Same; Same; Remedy of an owner who was covered by the Torrens system filed after more than
fraudulently de prived of his land, which was thirty (30) years prosper against the holder for value?
subsequently sold to an innocent purchaser for value, On 28 July 1987 the Regional Trial Court of Valenzuela,
is to file an action for damages against the person who Metro Manila, dismissed Civil Case No. 717-V-78 for
perpetrated the fraud within four (4) years after the recovery of possession of real property with damages
discovery of filed by Arsenio delos Reyes, Felicidad, Benjamin,
83 Salvador, Soledad (with spouse Pedro Parinao),
141

Trinidad (with spouse Pedro General), Carlos, Jr., September 1962 when petitioners mother, original
Roberto, Rodolfo, Ricardo, Zenaida, Veronica and owner of subject property, died or 17 July 1963 when
Mercedes, all surnamed Delos Reyes, and Felipe, TCT No. 42753 was issued to Rodolfo Caia and
Gregoria, Lucena, Virgilio and Mercedes, all surnamed Zenaida Caia and consequently holding petitioners
Cantillon, against the spouses Rodolfo Caia and guilty of laches; and, (2) in not applying Arts. 1409,
Zenaida Caia.1 1410, and 1422 of the Civil Code.3
On 23 January 1995 the Court of Appeals affirmed the Subject of the controversy is a parcel of land
order of dismissal of the lower court.2 measuring 13,405 square meters originally owned by
_______________ the spouses Genaro and Evarista delos Reyes. On 7
July 1942 Evarista delos Reyes sold to spouses
1 See Order issued by Judge Teresita Dizon Capulong, Catalina Mercado and Eulalio Pena 10,000 square
RTC-Br. 172, Valenzuela, Metro Manila; Records, pp. meters of the property described as Lot No. 1210 of
217-220. the subdivision plan of the Malinta Friar Lands Estate
2 Decision in CA-G.R. CV No. 26078, penned by Justice situated at Torres Bugallon, Valenzuela, Metro Manila.
Nathanael P. de Pano, Jr., concurred in by Justices On 4 June 1943 the vendees were able to secure
Artemon D. Luna and Ramon U. Mabutas, Jr.; Rollo, pp. Transfer Certificate of Title No. 26184 covering not only
18-29. the 10,000 square meters of land bought by them but
84 also the remaining 3,405 square meters left unsold. In
turn, the Pena spouses sold the whole property to
84 Isaias de Guzman and Emiliana de Onon who later
SUPREME COURT REPORTS ANNOTATED conveyed the same whole area to Elpidio Concepcion,
Delos Reyes vs. Court of Appeals Liwayway Serrano, Norberto Concepcion and Marta de
Pursuing their recourse with us, petitioners seek the Guzman. Eventually, the land was acquired by private
nullification of the decision of respondent Court of respondents herein, Rodolfo Caia and Zenaida Caia,
Appeals which affirmed the order of the trial court on 9 July 1963 through a Deed of Exchange. Eight (8)
dismissing the complaint of petitioners herein by days later, or on 17 July 1963, Transfer Certificate of
imputing to the Court of Appeals the following errors: Title No. 42753 was issued in the name of the Caia
(1) in reckoning the 30-year prescriptive period of real spouses who since then exercised full ownership and
actions as provided under Art. 1141 of the Civil Code possession over the property.
from the date of issuance of the questioned TCT or
annotation of the transaction in 1943 and not from 17
142

On 3 October 1978 petitioners, all heirs of Evarista actually bought from Evarista delos Reyes. For it was
delos Reyes, filed an action against respondents for on this date that the right of ownership of Evarista
reconveyance of over the remaining 3,405 square meters was
_______________ transgressed and from that very moment sprung the
right of the owner, and hence all her successors in
3 Petitioners Brief, pp. 5 & 7; Rollo, pp. 12 & 14. interest, to file a suit for reconveyance of the property
85 wrongfully taken from them.
But, such right is not imprescriptible. Generally, the
VOL. 285, JANUARY 27, 1998 law draws a time corridor within which to propel a suit
85 for recovery of property. Section 44, par. (b), of RA No.
Delos Reyes vs. Court of Appeals 296 otherwise known as the Judiciary Act of 1948
3,405 square meters of the property covered by TCT provides that reivindicatory actions may be brought by
No. 42753 claiming that this portion was invalidly the owner within thirty (30) years after he has been
included by the Pena spouses in the titling of their deprived of his property. Under Art. 1141 of the Civil
10,000 square meters they had bought from Evarista Code, real actions over immovables prescribe after
delos Reyes. However, the case was dismissed by the thirty (30) years. Thus, even if we apply the 30-year
trial court on the ground of laches. As already adverted prescriptive period in accordance with the above legal
to, the order of dismissal was affirmed by the Court of provisions, petitioners right to recover has already
Appeals. been effectively foreclosed by the lapse of time having
We likewise dismiss the petition. Petitioners argue that been initiated only after thirty-six (36) years from the
their cause of action still subsists because it accrued accrual of their cause of action.
either on 17 September 1962 when Evarista delos Be that as it may, we hold that even these laws may
Reyes died, or on 17 July 1963 when TCT No. 42753 not apply to the case before us in the light of PD No.
was issued to Rodolfo Caia and his sister Zenaida 1529, the
Caia. This is incorrect. A cause of action being an act 86
or omission of one party in violation of the right of
another arises at the moment such right is violated. In 86
the instant case, petitioners cause of action accrued SUPREME COURT REPORTS ANNOTATED
on 4 June 1943 when the Pena spouses caused the Delos Reyes vs. Court of Appeals
registration in their name of the entire 13,405 square
meters instead of only 10,000 square meters they
143

Property Registration Decree amending and codifying meters bought by the Pena spouses. The property
the laws relative to registration of property and passed through four (4) owners successively in a span
updating Act No. 496, the Land Registration Act. of more than twenty (20) years before it went into the
When respondents Rodolfo Caia and Zenaida Caia as hands of private respondents. Surely, the rights of
fourth transferees in ownership dealt with the land in innocent purchasers of real property such as the
question, they were not required to go beyond what Caias cannot be swamped and drowned by the
appeared in the transfer certificate of title in the name remonstrations of the inert and petulant who took no
of their transferor. For all intents and purposes, they care in seasonably asserting their rights of ownership
were innocent purchasers for value having acquired over the land allegedly wrested from them through
the property in due course and in good faith under a fraudulent means. In Avecilla v. Yatco4 we
clean title, i.e., there were no annotations of _______________
encumbrances or notices of lis pendens at the back
thereof. They had no reason to doubt the validity of 4 103 Phil. 666 (1958).
the title to the property. Therefore it would be the 87
height of injustice, if not inequity, if a valid transaction
transferring the subject property to them be set aside VOL. 285, JANUARY 27, 1998
just to accommodate parties who heedlessly slept on 87
their rights for more than a third of a century. This is Delos Reyes vs. Court of Appeals
not conducive but anathema to good order. ruled that the only remedy of an owner who was
Finally, petitioners reliance on Arts. 1409, 1410 and fraudulently deprived of his land, which was
1422 of the Civil Code on the imprescriptibility of void subsequently sold to an innocent purchaser for value,
and inexistent contracts is misplaced. While the action is to file an action for damages against the person who
to declare a contract null and void does not prescribe, perpetrated the fraud within four (4) years after the
this principle is alien and malapropos to the matter discovery of the deception. Unfortunately in this case
before us. Moreover, the action for reconveyance has we may never know why Evarista delos Reyes chose
now become stale, being barred as it were, by laches. not to go after the Pena spouses to recover what could
It cannot be disputed that for thirty-six (36) years be rightfully hers, the reason having apparently been
petitioners and their predecessors in interest, Evarista long interred with her.
delos Reyes most especially, never raised a restraining WHEREFORE, finding no reversible error in the decision
arm to the inclusion of the remaining 3,405 square of the Court of Appeals sustaining the Regional Trial
meters of the land in the titling of the 10,000 square Court of Valenzuela, Metro Manila, which ordered the
144

dismissal of the complaint of herein petitioners, the


instant petition is DENIED. Costs against petitioners. VOL. 198, JUNE 27, 1991
SO ORDERED. 557
Davide, Jr. (Chairman), Vitug and Kapunan, JJ., Castillo vs. Heirs of Vicente Madrigal
concur. imprescriptible because its basis is the alleged void
Petition denied. contract of sale.
Note.A registered landowner may lose his right to Same; Same; Same; There should be no debate that
recover the possession of his registered property by the action for damages against private respondents
reason of laches. (Catholic Bishop of Balanga vs. Court has already prescribed.However, there should be no
of Appeals, 264 SCRA 181 [1996]) debate that the action for damages against private
G.R. No. 62650. June 27, 1991.* respondents has already prescribed. In accordance
SPOUSES MARIANO CASTILLO AND PILAR CASTILLO in with Article 1144 of the Civil Code, it should have been
their own behalf and in representation of HEIRS OF brought within ten (10) years from the date of the sale
EDUARDO CASTILLO, petitioners, vs. HEIRS OF to Vicente Madrigal and the issuance of Transfer
VICENTE MADRIGAL AND/OR SUSANA REALTY, INC. Certificate of Title No. 72066 in his name on July 12,
AND THE REGISTER OF DEEDS OF THE CITY OF 1943, if against the heirs of Vicente Madrigal; or within
MANILA, respondents. ten (10) years from the date of the issuance of Transfer
Civil Law; Actions; Prescription; An action for the Certificate of Title No. 36280 in the name of Susana
declaration of the inexistence of the deed of sale Realty, Inc. on May 12, 1954, if against the firm.
because of the absence of consent is imprescriptible. Land Registration; Reconveyance; The rule is that only
It is evident in paragraphs 9, 10 and 12 of the as long as the property is still in the name of the
complaint, supra, that petitioners sought the person who caused the wrongful registration and has
declaration of the inexistence of the deed of sale not passed to an innocent third person for value will an
because of the absence of their consent. Thus, action lie to compel that person to reconvey the
following the provision of Article 1410 of the Civil property to the real owner.Notwithstanding the
Code, this kind of action is imprescriptible. The action discussion on the imprescriptibility of petitioners
for reconveyance is likewise action for annulment of contract and transfer
_______________ certificate of title and/or reconveyance, the dismissal
of their complaint by the trial court and the Court of
* FIRST DIVISION. Appeals on the ground of failure to state a cause of
557 action was correct. It was also Our ruling in the
145

Baranda case, supra, (and in other previous cases) (now Regional Trial Court) of Manila for annulment of
that only as long as the property is still in the name of contract and transfer certificate of title and/or
the person who caused the wrongful registration and reconveyance with damages against private
has not passed to an innocent third person for value respondents heirs of Vicente Madrigal and/or Susana
will an action lie to compel that person to reconvey the Realty, Inc. and public respondent Register of Deeds of
property to the real owner. the City of Manila. The complaint contained the
PETITION for review on certiorari of a decision of the following pertinent allegations (pp. 105-108, Rollo):
Court of Appeals. x x x.
4. That plaintiff spouses and their brother, Eduardo
The facts are stated in the opinion of the Court. Castillo (herein represented by his legal heirs Paula
D.T. Reyes & Associates and Bernardo D. Calderon Castillo and Antonio Castillo), are registered co-owners
for petitioners. of a parcel of land situated in Ermita, Manila, which
Ramon A. Barcelona for private respondents. property is more particularly described and bounded
MEDIALDEA, J.: as follows:
Lot 20 of Block 362 of the Cadastral Survey of the City
This is a petition for review on certiorari seeking of Manila, Cadastral Case No. 53 G.L.R.C. Cadastral
reversal of the decision of the Court of Appeals dated Record No. 515 with a chalet of strong materials
August 5, 1982 in CA-G.R. No. 66849-R entitled existing thereon, situated on the NE line of Calle M.H.
Spouses Mariano Castillo, et al., Plaintiffs-Appellants del Pilar, District of Ermita. Bounded on the NE by Lots
v. Heirs of Vicente Madrigal, et al., Defendants- Nos. 18 and 8 of Block No. 12; on the SE, by Lots Nos.
Appellees. 3, 4 and 7 of Block No. 362; on the SW by Lots Nos. 7
The antecedent facts are as follows: and 19 of Block 362 and Calle M.H. del Pilar; and on
558 the NW, by Lots Nos. 19, 17 and 12 of Block No. 362
containing an area of SEVEN HUNDRED AND TWENTY
558 EIGHT (728) SQUARE METERS, more or less, Date of
SUPREME COURT REPORTS ANNOTATED Survey, December 18, 1925 (Full technical description
Castillo vs. Heirs of Vicente Madrigal appear on tct no. 29454)
On December 17, 1979, petitioners spouses Mariano That the plaintiffs ownership over the property above-
Castillo and Pilar Castillo, in their own behalf and in described is evidenced by Transfer Certificate of Title
representation of the heirs of Eduardo Castillo, filed a No. 623597 issued in their name and that of their
verified complaint before the Court of First Instance brother Eduardo Castillo on August 11, 1941, xxx;
146

5. That the immediate origin of the above property is understanding that once accumulated said amount be
Transfer Certificate of Title No. 28454 in the name of utilized to redeem the mortgaged property from the
Petronila Vda. de Castillo, plaintiffs mother, and from Bank which their brother did;
whom they acquired the realty by way of inheritance in 9. That during and after the effectivity of the
equal share with Eduardo Castillo entered in the mortgage with the aforesaid Bank, plaintiffs herein
Registration Book in 1927 yet, x x x. never gave their brother Eduardo Castillo authority to
6. That plaintiffs mother aforesaid as predessor-in- sell their undivided property neither were there
interest (sic) declared the property for taxation transactions entered into by plaintiffs with any person
purposes for the year 1940 under Tax Dec. No. 531 or persons, natural or juridical with respect to their
and paid taxes thereon in 1941 under official receipt undivided half portion;
No. 571689, x x x; 10. That after plaintiffs have returned from the
7. That after the transfer of the property in their own provinces and upon arrival from abroad later in 1977,
name and they decided to get their share from their brother
559 Eduardo Castillo as he was entrusted but the latter
being sickly then could not give the explanation and
VOL. 198, JUNE 27, 1991 after conference with his wife, Paula Castillo, the latter
559 told the plaintiffs that she and her husband Castillo
Castillo vs. Heirs of Vicente Madrigal (Eduardo) did not know the mysterious transactions
their brother aforesaid, the property was mortgaged that transpired in the transfer or registration of the
by plaintiffs in favor of the Agricultural and Industrial above property to Vicente Madrigal (under Transfer
Bank and due to the existing war conditions at the Certificate of Title No. 72066) and upon verification
time, the possession, management and supervision of thereof, an alleged deed of sale executed by plaintiffs
the land was entrusted to Eduardo Castillo reposing in and Eduardo Castillo appears on the back of the title
him the (sic) full trust and confidence; but in truth and in fact, plaintiffs had never signed any
8. That beginning the year 1941 up to the year 1977, document in favor of Vicente Madrigal contrary to what
plaintiff spouses left Manila and engaged in several appears thereon; x x x and subsequently transferred
business ventures in the provinces and stayed for so by Vicente Madrigal to Susana Realty Inc., under TCT
long a time in Cagayan Valley in northern Luzon and No. 36280, x x x;
often times (sic) traveled to far-away places thereby 11. That plaintiffs exerted serious efforts in recovering
allowing his (sic) brother Eduardo Castillo herein to his property (Mariano Castillo) in his capacity as a
manage the same and collect the rentals due upon the registered co-owner peacefully but of (sic) no avail for
147

the defendant Susana Realty Inc. refused to heed to 16. That the plaintiffs herein suffered damages for the
the inquiry and hence this present action; reason that they were deprived of the possession,
12.That the transfer of the property under litigation in ownership and fruits or income of the property in
favor of the late Vicente Madrigal was done thru fraud, question and to which they demand from the herein
simulation, illegality and serious irregularity equivalent defendant heirs of Vicente Madrigal and/or Susana
to nullity and inexistence of contract and follows that Realty Inc. in such amount as may be proved during
the Transfer Certificate of Title No. 36280 under the the trial. (Italics supplied)
name of defendant Susana Realty Inc. is null and void On February 4, 1980, private respondents filed a
and without any effect whatsoever either under the motion to dismiss on the ground that: (a) the
Civil Code or under the Land Registration Act complaint states no cause of action; and (b) the cause
especially so that the transactions entered on the title of action is barred by the statute of limitations.
took place during war time and without supporting On March 25, 1980, the trial court dismissed the
papers or complaint (pp. 120-126, Rollo). On appeal to the Court
560 of Appeals, the decision was affirmed in toto on August
5, 1982 (pp. 44-52, Rollo). Hence, the present petition.
560 The issues raised by petitioners may be grouped into:
SUPREME COURT REPORTS ANNOTATED whether or not (1) petitioners action for annulment of
Castillo vs. Heirs of Vicente Madrigal contract and transfer certificate of title and/or
documents available up to the present time; reconveyance with damages is subject to prescription;
x x x. and (2) the complaint states a cause of action against
14. That under the aforesaid facts and circumstances, private respondents.
the remedy of reconveyance is feasible considering Petitioners allege that a reading of paragraphs 9 and
that the falidity (sic) of the title from plaintiffs mother 10 of their complaint reveals that they impugn the
to them is not affected and without flaw; existence and validity of the alleged deed of sale. As
x x x. contained therein, petitioners never entered into any
transaction with any person conveying the subject
property. They did not sign any document in favor of
any one neither did they give any one authorization for
that purpose. Therefore, consent and cause did not
exist in the execution of the deed of sale, invoking
Articles 13181, 13522
148

_______________ x x x, even as We consider that there was fraud in the


registration and the issuance of title in favor of
1 Art. 1318. There is no contract unless the following defendant Madrigal creating thereby a constructive
requisites concur: trust in favor of the plaintiffs, the remedy of the
(1) Consent of the contracting parties; plaintiffs is an action for reconveyance within within
(2) Object certain which is the subject matter of the ten (10) years from the registration of the property in
contract; the name of defendant Madrigal (Alzona v. Capunitan,
(3) Cause of the obligation which is established. 4 SCRA 450; Gonzales v. Jimenez 13 SCRA, 80). Again,
2 Art. 1352. Contracts without cause, or with unlawful the filing of the complaint was way beyond the ten-
cause, year period of limitation.
561 Both courts ruled incorrectly. It is evident in
paragraphs 9, 10 and 12 of the complaint, supra, that
VOL. 198, JUNE 27, 1991 petitioners sought the declaration of the inexistence of
561 the deed of sale because of the absence of their
Castillo vs. Heirs of Vicente Madrigal consent. Thus, following the provision of Article 1410
and 1409 (3)3 of the Civil Code. And, pursuant to of the Civil Code, this kind of action is imprescriptible.
Article 1410 of the Civil Code, an action for the The action for reconveyance is likewise imprescriptible
declaration of the inexistence of a contract does not because its basis is the alleged void contract of sale.
prescribe. This pronouncement is certainly far from novel. We
In dismissing petitioners complaint on the ground of have encountered similar situations in the past which
prescription, the trial court opined (p. 123, Rollo): We resolved in the same manner. One of these is the
x x x, any action for annulment of the deed and TCT case of Baranda, et al., v. Baranda, et al., G.R. No.
72066 should have been instituted within ten (10) 562
years from the accrual of the cause of action, that,
(sic) is, ten years from 1943 when the deed was 562
executed at the earliest, or ten years from 1944 at the SUPREME COURT REPORTS ANNOTATED
latest. This action was filed on December 17, 1979, or Castillo vs. Heirs of Vicente Madrigal
after more than 30 years from 1943 and 1944. The 73275, May 20, 1987, 150 SCRA 59, 73:
action, therefore, has long prescribed. x x x. x x x. In the instant case, however, we are dealing not
The Court of Appeals expressed the same opinion (p. with a voidable contract tainted with fraud, mistake,
51, Rollo): undue influence, violence or intimidation that can
149

justify its nullification, but with a contract that is null Notwithstanding the discussion on the
and void ab initio. imprescriptibility of petitioners action for annulment of
Paulina Baranda declared under oath in her complaint contract and transfer certificate of title and/or
that she signed the deeds of sale without knowing reconveyance, the dismissal of their complaint by the
what they were, which means that her consent was trial court and the Court of Appeals on the ground
not merely marred by the above-stated vices, so as to ________________
make the contracts voidable, but that she had not
given her consent at all. x x x. Lack of consent x x x 4 Art. 1144. The following actions must be brought
made the deeds of sale void altogether [Salonga vs. within ten years from the time the right of action
Ferrales, 105 SCRA 359] and rendered them subject to accrues:
attack at any time, conformably to the rule in Article (1) Upon a written contract;
1410 that an action to declare the inexistence of void (2) Upon an obligation created by law;
contracts does not prescribe. (3) Upon a judgment.
x x x. We have consistently ruled that when there is a 563
showing of such illegality, the property registered is
deemed to be simply held in trust for the real owner by VOL. 198, JUNE 27, 1991
the person in whose name it is registered, and the 563
former then has the right to sue for the reconveyance Castillo vs. Heirs of Vicente Madrigal
of the property. The action for the purpose is also of failure to state a cause of action was correct. It was
imprescriptible. also Our ruling in the Baranda case, supra, (and in
However, there should be no debate that the action for other previous cases) that only as long as the property
damages against private respondents has already is still in the name of the person who caused the
prescribed. In accordance with Article 1144 of the Civil wrongful registration and has not passed to an
Code,4 it should have been brought within ten (10) innocent third person for value will an action lie to
years from the date of the sale to Vicente Madrigal and compel that person to reconvey the property to the
the issuance of Transfer Certificate of Title No. 72066 real owner. In this regard, We are in conformity with
in his name on July 12, 1943, if against the heirs of the Court of Appeals that (p. 52, Rollo):
Vicente Madrigal; or within ten (10) years from the x x x the property subject of the alleged fraudulent
date of the issuance of Transfer Certificate of Title No. registration had already been conveyed to an innocent
36280 in the name of Susana Realty, Inc. on May 12, party for value which is defendant Susana Realty, Inc.
1954, if against the firm. The claim of plaintiffs that said defendant is not an
150

innocent purchaser for value is not borne by the MERRILL LYNCH FUTURES, INC., petitioner, vs. HON.
allegations of the complaint. x x x. COURT OF APPEALS, and the SPOUSES PEDRO M. LARA
Where the complaint for recovery of ownership and and ELISA G. LARA, respondents.
possession of a parcel of land alleges that some of the Actions; Pleadings and Practice; Test of existence of a
defendants bought said land from their co-defendants cause of action.As regards the second ground, i.e.,
who had a defective title thereto but does not allege that the complaint states no cause of action, the
that the purchasers were purchasers in bad faith or settled doctrine of course is that said ground must
with notice of the defect in the title of their vendors, appear on the face of the complaint, and its existence
there is a failure to state a cause of action (Galvez, et may be determined only by the allegations of the
al. v. Tuazon y de la Paz, et al., 119 Phil. 612). By complaint, consideration of other facts being
reason of this failure, private respondent Susana proscribed, and any attempt to prove extraneous
Realty, Inc. is presumed to be an innocent purchaser circumstances not being allowed. The test of the
for value and in good faith, entitled to protection under sufficiency of the facts alleged in a complaint as
the law (see Tiburcio, et al. v. Peoples Homesite and constituting a cause of action is whether or not,
Housing Corporation, et al., 106 Phil. 477). admitting the facts alleged, the court might render a
ACCORDINGLY, the petition is hereby DENIED. The valid judgment upon the same in accordance with the
decision of the Court of Appeals dated August 5, 1982 prayer of the complaint. Indeed, it is error for a judge
is AFFIRMED, subject to the modification regarding the to conduct a preliminary hearing and receive evidence
issue on prescription. on the affirmative defense of failure of the complaint
SO ORDERED. to state a cause of action.
Narvasa, Cruz and Grio-Aquino, JJ., concur. Same; Same; Evidence; Documents annexed to a
Gancayco, J., No part. motion to dismiss whose genuineness are not
Petition denied. Judgment affirmed with modification. contested may be admitted without need of a formal
Note.The prescriptive period for reconveyance of offer.Neither may ML FUTURES argue with any
fraudulently registered real property is ten (10) years degree of tenability that it had been denied due
from date of issuance of the certificate of title. (Caro process in the premises. As just pointed out, it was
vs. Court of Appeals, 180 SCRA 401.) very clear from the outset that the claim of lack of its
capacity to sue was being made to rest squarely on
G.R. No. 97816. July 24, 1992.* the documents annexed thereto, and ML FUTURES had
more than ample opportunity to impugn those
documents and require their authentication, but did
151

not do so. To sustain its theory that there should have subsequently affirmed by the Court of Appeals.
been identification and authentication, and formal Prescinding from the proposition that factual findings
offer, of those documents in the Trial Court pursuant to of the Court of Appeals are generally conclusive this
the rules of evidence would be to give unwarranted Court has been cited to no circumstance of substance
importance to technicality and make it prevail over the to warrant reversal of said Appellate Courts findings or
substance of the issue. conclusions in this case.
Same; Corporations; Merrill Lynch Futures, Inc. a Same; Same; Estoppel; A foreign corporation doing
foreign corporation is engaged in business in the business in the Philippines may sue in Philippine courts
Philippines.The Court is satisfied that the facts on although not authorized to do business here against a
record adequately establish that ML FUTURES, Philippine citizen who had contracted with and been
operating in the United States, had indeed done benefited by said corporation.There would seem to
business with the Lara Spouses in the Philippines over be no question that the Laras received benefits
several years, had done so at all times through Merrill generated by their business relations with ML
Lynch Philippines, Inc. (MLPI), a corporation FUTURES. Those business relations, according to the
_________________ Laras themselves, spanned a period of seven (7)
years; and they evidently found those relations to be
*SECOND DIVISION. of such profitability as warranted their maintaining
825 them for that no insignificant period of time;
otherwise, it is reasonably certain that they would
VOL. 211,JULY24,1992 have terminated their dealings with ML FUTURES
825 much, much earlier. In fact, even as regards their last
Merrill Lynch Futures, Inc. vs. Court of Appeals transaction, in which the Laras allegedly suffered a
organized in this country, and had executed all these loss in the sum of US$160,749.69, the Laras
transactions without ML FUTURES being licensed to so nonetheless still received some monetary advantage,
transact business here, and without MLPI being for ML FUTURES credited them with the amount of
authorized to operate as a commodity futures trading US$75,913.42 then due to them, thus reducing their
advisor. These are the factual findings of both the Trial debt to US$84,836.27. Given these facts, and
Court and the Court of Appeals. These, too, are the assuming that the Lara Spouses were aware from the
conclusions of the Securities & Exchange Commission outset that ML FUTURES had no license to do business
which denied MLPIs application to operate as a in this country and MLPI, no authority to act as broker
commodity futures trading advisor, a denial for it, it would appear quite inequitable for the Laras to
152

evade payment of an otherwise legitimate On November 23, 1987, Merrill Lynch Futures, Inc.
indebtedness due and owing to ML FUTURES upon the (hereafter, simply ML FUTURES) filed a complaint with
plea that it should not have done business in this the Regional Trial Court at Quezon City against the
country in the first place, or that its agent in this Spouses Pedro M. Lara and Elisa G. Lara for the
country, MLPI, had no license either to operate as a recovery of a debt and interest thereon, damages, and
commodity and/ or financial futures broker. attorneys fees.1 In its complaint ML FUTURES
PETITION for review on certiorari of the decision and described itself as
resolution of the Court of Appeals. a) a non-resident foreign corporation, not doing
business in the Philippines, duly organized and existing
The facts are stated in the opinion of the Court. under and by virtue of the laws of the state of
Sycip, Salazar, Hernandez & Gatmaitan for Delaware, U.S.A.; as well as
petitioner. b) a futures commission merchant duly licensed to
826 act as such in the futures markets and exchanges in
the United States, x x essentially functioning as a
826 broker x x (executing) orders to buy and sell futures
SUPREME COURT REPORTS ANNOTATED contracts received from its customers on U.S. futures
Merrill Lynch Futures, Inc. vs. Court of Appeals exchanges.
Renato T. Paguio for private respondents. It also defined a futures contract as a contractual
NARVASA, C.J.: commitment to buy and sell a standardized quantity of
a particular item at a specified future settlement date
The capacity of a foreign corporation to maintain an and at a price agreed upon, with the purchase or sale
action in the Philippines against residents thereof, is being executed on a regulated futures exchange.
the principal question in the appellate proceedings at In its complaint ML FUTURES alleged the following:
bar. The issue arises from the undisputed facts now to 1) that on September 28, 1983 it entered into a
be briefly narrated. Futures Customer Agreement with the defendant
spouses (Account No. 138-12161), in virtue of which it
agreed to act as the latters broker for the purchase
and sale of futures contracts in the U.S.;
2) that pursuant to the contract, orders to buy and sell
futures contracts were transmitted to ML FUTURES by
the Lara Spouses through the facilities of Merrill Lynch
153

Philippines, Inc., a Philippine corporation and a index futures, and after setting this off against an
company servicing plain amount of US$75,913.42 then owing by ML FUTURES
_________________ to the Lara Spouses, said spouses became indebted to
ML FUTURES for the ensuing balance of US$84,836.27,
1The case was docketed as Civil Case No. Q-52360 and which the latter asked them to pay;
assigned to Branch 84, presided over by Hon. Teodoro 6) that the Lara Spouses however refused to pay this
P. Regino. balance, alleging that the transactions were null and
827 void because Merrill Lynch Philippines, Inc., the
Philippine company servicing accounts of plaintiff, x x
VOL. 211,JULY24,1992 had no license to operate as a `commodity and/or
827 financial futures broker.
Merrill Lynch Futures, Inc. vs. Court of Appeals On the foregoing essential facts, ML FUTURES prayed
tiffs customers;2 (1) for a preliminary attachment against defendant
3) that from the outset, the Lara Spouses knew and spouses properties up to the value of at least
were duly advised that Merrill Lynch Philippines, Inc. P2,267,139.50, and (2) for judgment, after trial,
was not a broker in futures contracts, and that it did sentencing the spouses to pay ML FUTURES:
not have a license from the Securities and Exchange a) the Philippine peso equivalent of $84,836.27 at the
Commission to operate as a commodity trading applicable exchanged rate on date of payment, with
advisor (i.e., an entity which, not being a broker, legal interest from date of demand until full payment;
furnishes advice on commodity futures to persons who ________________
trade in futures contracts);
4) that in line with the above mentioned agreement 2It appears that Merrill Lynch Philippines, Inc. was
and through said Merrill Lynch Philippines, Inc., the formerly registered and known as Merrill Lynch, Pierce,
Lara Spouses actively traded in futures contracts, Fenner & Smith Philippines, Inc.SEE footnote 5, infra.
including stock index futures for four years or so, 3The Laras say the trading was carried on for seven
i.e., from 1983 to October, 1987,3 there being more or (7) years.
less regular accounting and corresponding remittances 828
of money (or crediting or debiting made between the
spouses and ML FUTURES; 828
5) that because of a loss amounting to US$160,749.69 SUPREME COURT REPORTS ANNOTATED
incurred in respect of three (3) transactions involving Merrill Lynch Futures, Inc. vs. Court of Appeals
154

b) exemplary damages in the sum of at least b) they had never been informed that Merrill Lynch
P500,000.00; and Philippines, Inc. was not licensed to do business in this
c) attorneys fees and expenses of litigation as may be country; and contrary to the allegations of the
proven at the trial. complaint, all their transactions had actually been with
Preliminary attachment issued ex parte on December MERRILL LYNCH PIERCE FENNER & SMITH, INC., and not
2, 1987, and the defendant spouses were duly served with ML FUTURES (Merrill Lynch Futures, Inc.), in proof
with summons. of which they attached to their motion to dismiss
They then filed a motion to dismiss dated December copies of eight (8) agreements, receipts or reminders,
18, 1987 on the grounds that: etc., executed on standard printed forms of said Merrill
(1) plaintiff ML FUTURES had no legal capacity to sue Lynch Pierce Fenner & Smith Inc.4
and ML FUTURES filed an OPPOSITION to the defendant
(2) its complaint states no cause of action since x x spouses motion to dismiss. In that motion
(it) is not the real party in interest a) it drew attention to paragraph 4 of its complaint,
In that motion to dismiss, the defendant spouses admitted by defendants, that the latter have been
averred that: actively trading in futures contracts x x in U.S. futures
a) although not licensed to do so, ML FUTURES had exchanges from 1983 to 1987, and ask, If the trading
been doing business in the Philippines at least for the x x (was) made in U.S., how could plaintiff be doing
last four (4) years, this being clear from the very business in the Philippines?
allegations of the complaint; consequently, ML _________________
FUTURES is prohibited by law to maintain or intervene
in any action, suit or proceeding in any court or 4Annexes A to H.
administrative agency of the Philippines; and 829

VOL. 211,JULY24,1992
829
Merrill Lynch Futures, Inc. vs. Court of Appeals
b) it also drew attention to a printed form of Merrill
Lynch Futures, Inc. filled out and signed by defendant
spouses when they opened an account with ML
Futures, in order to supply information about
themselves, including their banks name
155

(1) in which appear the following epigraph: Account Philippines, Inc. had not been licensed to do business
introduced by Merrill Lynch International, Inc., and the in the Philippines; and
following statements, to wit: (4) defendant spouses should not be allowed to
This Commodity Trading Advisor (Merrill Lynch, Pierce, invoke the aid of the court with unclean hands.
Fenner & Smith Philippines, Inc.) is prohibited by the The defendant spouses filed a REPLY reaffirming their
Philippine Securities and Exchange Commission from lack of awareness that Merrill Lynch Philippines, Inc.
accepting funds in the trading advisors name from a (formerly reg-
client of Merrill Lynch Futures, Inc. for trading 830
commodity interests. All funds in this trading program
must be placed with Merrill Lynch Futures, Inc.; 830
and SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
x x It is agreed between MERRILL LYNCH, PIERCE, istered as Merrill Lynch, Pierce, Fenner & Smith
FENNER & SMITH INC., and other account carrying Philippines, Inc.)5 did not have a license, claiming that
MERRILL LYNCH entities and their customers that all they learned of this only from inquiries with the
legal relationships between them will be governed by Securities and Exchange Commission which elicited
applicable laws in countries outside the Philippines the information that it had denied said corporations
where sale and purchase transactions take place. application to operate as a commodity futures trading
c) and it argued that advisora denial subsequently affirmed by the Court
(1) it is not permitted for defendant spouses to present of Appeals (Merrill Lynch Philippines, Inc. v. Securities
evidence in connection with a motion to dismiss & Exchange Commission, CA-G.R. No. 10821-SP, Nov.
based on failure of the complaint to state a cause of 19, 1987). The spouses also submitted additional
action; documents (Annexes J to R) involving transactions with
(2) even if the documents appended to the motion to Merrill Lynch Pierce Fenner & Smith, Inc., dating back
dismiss be considered as admissible evidence, the to 1980, stressing that all but one of the documents
same would be immaterial since the documents refer refer to Account No. 138-12161 which is the very
to a different account number: 138-12136, the account that is involved in the instant complaint.
defendants account number with ML FUTURES being ML FUTURES filed a Rejoinder alleging it had given the
138-12161; spouses a disclosure statement by which the latter
(3) it is a lie for the defendant spouses to assert that were made aware that the transactions they were
they were never informed that Merrill Lynch agreeing on would take place outside of the
156

Philippines, and that all funds in the trading program 831


must be placed with Merrill Lynch Futures, Inc. Merrill Lynch Futures, Inc. vs. Court of Appeals
On January 12, 1988, the Trial Court promulgated an SEC.133.Doing business without a license.No
Order sustaining the motion to dismiss, directing the foreign corporation transacting business in the
dismissal of the case and discharging the writ of Philippines without a license, or its successors or
preliminary attachment. It later denied ML FUTURESs assigns, shall be permitted to maintain or intervene in
motion for reconsideration, by Order dated February any action, suit or proceeding in any court or
29, 1988. ML FUTURES appealed to the Court of administrative agency in the Philippines; but such
Appeals.6 corporation may be sued or proceeded against before
In its own decision promulgated on November 27, Philippine courts or administrative tribunals on any
1990,7 the Court of Appeals affirmed the Trial Courts valid cause of action recognized under Philippine
judgment. It declared that the Trial Court had seen laws.
through the charade in the representation of MLPI and It also declared that the evidence established that
the plaintiff that MLPI is only a trading advisor and in plaintiff had in fact been doing business in this
fact it is a conduit in the plaintiffs business country in legal contemplation, adverting to
transactions in the Philippines as a basis for invoking Mentholatum v. Mangaliman, 72 Phil. 524, 528-530,
the provisions of Section 133 of the Corporation and Section 1 of Republic Act No. 5455 reading as
Code,8 viz.: follows:9
_________________ SEC.1. Definition and scope of this ACT. (1) As used in
this Act, the term investment shall mean equity
5SEE footnote 2, supra. participation in any enterprise formed, organized, or
6The appeal was docketed as CA-G.R. CV No. 16478. existing under the laws of the Philippines; and the
7Written for the Seventh Division by Francisco, C.J., phrase doing business shall INCLUDE soliciting orders,
with whom concurred Lombos-de la Fuente, Chairman purchases, service contracts, opening offices, whether
and Aldecoa, Jr., J. called liaison offices or branches; appointing
8The counterpart provision (Sec. 69) of the prior law, representatives or distributors who are domiciled in
Act No. 1459, stated that No foreign corporation or the Philippines or who in any calendar year stay in the
corporation formed, or- Philippines for a period or periods totalling one
831 hundred eighty days or more; participating in the
management, supervision or control of any domestic
VOL. 211,JULY24,1992 business firm, entity or corporation in the Philippines;
157

AND ANY OTHER ACT OR ACTS THAT IMPLY A was doing business in the Philippinessince that
CONTINUITY OF COMMERCIAL DEALINGS OR judgment was not yet final and ML FUTURES was not a
ARRANGEMENTS AND CONTEMPLATE TO THAT EXTENT party to that proceeding, the Court of Appeals ruled
THE PERFORMANCE OF ACTS OR WORKS, OR THE that there was no need to belabor the point
EXERCISE OF SOME FUNCTIONS NORMALLY INCIDENT considering that there was, in any event, adequate
TO, AND IN PROGRESSIVE PROSECUTION OF proof of the activities of MLPI x x x which manifestly
COMMERCIAL GAIN OR OF THE PURPOSE AND OBJECT show that the plaintiff (ML FUTURES) performed a
OF THE BUSINESS ORGANIZATION. series of business acts, consummated contracts and
As regards the claim that it was error for the Trial Court undertook transactions for the period from 1983 to
to October 1987, and because ML FUTURES had done so
__________________ without license, it consequently had no legal
personality to bring suit in Philippine Courts.
ganized, or existing under any laws other than those of Its motion for reconsideration having been denied,10
the Philippines, shall be permitted to transact business ML FUTURES has appealed to this Court on certiorari.
in the Philippines or maintain by itself or assignee any Here, it submits the following issues for resolution:
suit for the recovery of any debt, claim, or demand (a) Whether or not the annexes appended by the
whatever, unless it shall have the license prescribed in Laras to their Motion to Dismiss and Reply filed with
the section immediately preceding. x x (italics the Regional Trial Court, but never authenticated or
supplied) (although, it may be added, it may be sued offered, constitute admissible evidence.
[General Corporation of the Philippines v. Union (b) Whether or not in the proceedings below, ML
Insurance Society of Canton, Ltd., 87 Phil. 313 FUTURES has been accorded procedural due process.
(1950)]). (c) Whether or not the annexes, assuming them to be
9Emphasis supplied by Francisco, C.J., ponente. admissible, established that ML FUTURES was doing
832 business in the Philippines without a license.
As just stated, the Lara Spouses motion to dismiss
832 was founded on two (2) grounds: (a) that the plaintiff
SUPREME COURT REPORTS ANNOTATED has no legal capacity to sue, and (b) that the
Merrill Lynch Futures, Inc. vs. Court of Appeals complaint states no cause of action (Sec. 1 [d], and
place reliance on the decision of the Court of Appeals [g], Rule 16, Rules of Court).
in CA-G.R. No. 10821-SPsustaining the finding of the As regards the second ground, i.e., that the complaint
Securities & Exchange Commission that ML FUTURES states no cause of action, the settled doctrine of
158

course is that said ground must appear on the face of that it is not a real party in interest.15 Now, the Lara
the complaint, and its existence may be determined Spouses
only by the allegations of the complaint, consideration _________________
of other facts being proscribed, and any attempt to
prove extraneous circumstances not being al- 11SEE Feria, Civil Procedure, 1969 ed., pp. 342-344,
_________________ citing Paminsan v. Costales, 28 Phil. 487, 489; De
Jesus, et al. v. Belarmino, et al., 95 Phil. 365;
10Per Resolution dated March 7, 1991, which also Worldwide Insurance & Surety Co., Inc. vs. Manuel, 98
directed (the Trial Court) to hear and resolve Phil. 47); Worldwise Insurance & Surety Co. v.
appellees application for damages on the appellants Macrohon, et al., G.R. No. L-12365, Feb. 28, 1989;
attachment bond. Dimayuga v. Dimayuga, 96 Phil. 859, 862; Ma-ao Sugar
833 Central v. Barrios, 79 Phil. 666; Uy Hoo v. Yuseco, 89
Phil. 944; Aranzanso v. Martinez, 88 Phil. 536; SEE,
VOL. 211,JULY24,1992 also, Moran, Comments on the Rules of Court, 1979
833 ed., Vol. 1, pp. 490-493, with voluminous citations.
Merrill Lynch Futures, Inc. vs. Court of Appeals 12Feria,op. cit., p. 342.
lowed.11 The test of the sufficiency of the facts 13Moran,op cit., pp. 491-492, citing Heirs or Juliana
alleged in a complaint as constituting a cause of action Clavano v. Genato, G.R. No. L-45837, Oct. 28, 1977; cf.,
is whether or not, admitting the facts alleged, the Aranzanso v. Martinez, 88 Phil. 536, cited in Feria, op.
court might render a valid judgment upon the same in cit., p. 344.
accordance with the prayer of the complaint.12 14I.e., Section 133 of the Corporation Code, supra (SEE
Indeed, it is error for a judge to conduct a preliminary General Corporation of the Philippines v. Union
hearing and receive evidence on the affirmative Insurance Society of Canton, Ltd., 87 Phil. 313); or he
defense of failure of the complaint to state a cause of does not have the necessary qualifications to appear
action.13 at the trial, such as when he is not in the full exercise
The other ground for dismissal relied upon, i.e., that of his civil rights (Lunsod v. Ortega, 46 Phil. 664, cited
the plaintiff has no legal capacity to suemay be in Feria, Civil Procedure, 1969 ed., pp. 316-317)
understood in two senses: one, that the plaintiff is 15SEC. 2, Rule 3 of the Rules of Court provides that
prohibited or otherwise incapacitated by law to Every action must be prosecuted and defended in the
institute suit in Philippine Courts,14 or two, although name of the real party in interest. All persons having
not otherwise incapacitated in the sense just stated, an interest in the subject of the action and in obtaining
159

the relief demanded shall be joined as plaintiffs. All thereafter proffered in proof of the averments of their
persons who claim an interest in the controversy motion. The motion itself was not verified. What the
adverse to the plaintiff or who are necessary to a spouses did do was to refer in their motion to
complete determination or settlement of the question documents which purported to establish that it was not
involved therein shall be joined as defendants. The with ML FUTURES that they had theretofore been
real party in interest is the party who would be dealing, but another, distinct entity, Merrill Lynch,
benefited or Pierce, Fenner & Smith, Inc., copies of which
834 documents were attached to the motion. It is
significant that ML FUTURES raised no issue relative to
834 the authenticity of the documents thus annexed to the
SUPREME COURT REPORTS ANNOTATED Laras motion. In fact, its arguments subsumed the
Merrill Lynch Futures, Inc. vs. Court of Appeals genuineness thereof and even adverted to one or two
contend that ML Futures has no capacity to sue them of them. Its objection was centered on the propriety of
because the transactions subject of the complaint taking account of those documents as evidence,
were had by them, not with the plaintiff ML FUTURES, considering the established principle that no evidence
but with Merrill Lynch Pierce Fenner & Smith, Inc. should be received in the resolution of a
Evidence is quite obviously needed in this situation, for _________________
it is not to be expected that said ground, or any facts
from which its existence may be inferred, will be found injured by the judgment, or the party entitled to the
in the averments of the complaint. When such a avails of the suit (1 Sutherland, Code Pleading
ground is asserted in a motion to dismiss, the general Practice & Forms, p. 11) (Salonga v. Warner, Barnes &
rule governing evidence on motions applies. The rule is Co., Ltd., 88 Phil. 125, cited in Feria, op. cit., p. 139).
embodied in Section 7, Rule 133 of the Rules of Court. SEE, also, Moran, op. cit., p. 154; and Lunsod v.
SEC.7. Evidence on motion.When a motion is based Ortega, supra, holdinginter alia that a plaintiff has no
on facts not appearing of record the court may hear legal capacity to sue when he does not have the
the matter on affidavits or depositions presented by character or representation he claims, which is a
the respective parties, but the court may direct that matter of evidence.
the matter be heard wholly or partly on oral testimony 835
or depositions.
There was, to be sure, no affidavit or deposition VOL. 211,JULY24,1992
attached to the Lara Spouses motion to dismiss or 835
160

Merrill Lynch Futures, Inc. vs. Court of Appeals The first question then, is, as ML FUTURES formulates
motion to dismiss based on an alleged failure of the it, whether or not the annexes, assuming them to be
complaint to state a cause of action. admissible, establish that (a) ML FUTURES is prohibited
There being otherwise no question respecting the from suing in Philippine Courts because doing business
genuineness of the documents, nor of their relevance in the country without a license, and that (b) it is not a
to at least one of the grounds for dismissali.e., the real party in interest since the Lara Spouses had not
prohibition on suits in Philippine Courts by foreign been doing business with it, but with another
corporations doing business in the country without corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc.
licenseit would have been a superfluity for the Court The Court is satisfied that the facts on record
to require prior proof of their authenticity, and no error adequately establish that ML FUTURES, operating in
may be ascribed to the Trial Court in taking account of the United States, had indeed done business with the
them in the determination of the motion on the Lara Spouses in the Philippines over several years, had
ground, not that the complaint fails to state a cause of done so at all times through Merrill Lynch Philippines,
actionas regards which evidence is improper and Inc. (MLPI), a corporation organized in this country,
impermissiblebut that the plaintiff has no legal and had executed all these transactions without ML
capacity to suerespecting which proof may and 836
should be presented.
Neither may ML FUTURES argue with any degree of 836
tenability that it had been denied due process in the SUPREME COURT REPORTS ANNOTATED
premises. As just pointed out, it was very clear from Merrill Lynch Futures, Inc. vs. Court of Appeals
the outset that the claim of lack of its capacity to sue FUTURES being licensed to so transact business here,
was being made to rest squarely on the documents and without MLPI being authorized to operate as a
annexed thereto, and ML FUTURES had more than commodity futures trading advisor. These are the
ample opportunity to impugn those documents and factual findings of both the Trial Court and the Court of
require their authentication, but did not do so. To Appeals. These, too, are the conclusions of the
sustain its theory that there should have been Securities & Exchange Commission which denied
identification and authentication, and formal offer, of MLPIs application to operate as a commodity futures
those documents in the Trial Court pursuant to the trading advisor, a denial subsequently affirmed by the
rules of evidence would be to give unwarranted Court of Appeals. Prescinding from the proposition that
importance to technicality and make it prevail over the factual findings of the Court of Appeals are generally
substance of the issue. conclusive this Court has been cited to no
161

circumstance of substance to warrant reversal of said relation to those transactions had made payments to,
Appellate Courts findings or conclusions in this case. and received money from it for several years, the
The Court is satisfied, too, that the Laras did transact question is whether or not the Lara Spouses are now
business with ML FUTURES through its agent estopped to impugn ML FUTURES capacity to sue
corporation organized in the Philippines, it being them in the courts of the forum.
unnecessary to determine whether this domestic firm 837
was MLPI (Merrill Lynch Philippines, Inc.) or Merrill
Lynch Pierce Fenner & Smith (MLPIs alleged VOL. 211,JULY24,1992
predecessor). The fact is that ML FUTURES did deal 837
with futures contracts in exchanges in the United Merrill Lynch Futures, Inc. vs. Court of Appeals
States in behalf and for the account of the Lara The rule is that a party is estopped to challenge the
Spouses, and that on several occasions the latter personality of a corporation after having acknowledged
received account documents and money in connection the same by entering into a contract with it.16 And the
with those transactions. doctrine of estoppel to deny corporate existence
Given these facts, if indeed the last transaction applies to foreign as well as to domestic
executed by ML FUTURES in the Larass behalf had corporations;17 one who has dealt with a corporation
resulted in a loss amounting to US$160,749,69; that in of foreign origin as a corporate entity is estopped to
relation to this loss, ML FUTURES had credited the deny its corporate existence and capacity.18 The
Laras with the amount of US$75,913.42which it (ML principle will be applied to prevent a person
FUTURES) then admittedly owed the spousesand contracting with a foreign corporation from later taking
thereafter sought to collect the balance, advantage of its noncompliance with the statutes,
US$84,836.27, but the Laras had refused to pay (for chiefly in cases where such person has received the
the reasons already above stated), the crucial question benefits of the contract (Sherwood v. Alvis, 83 Ala 115,
is whether or not ML FUTURES may sue in Philippine 3 So 307, limited and distinguished in Dudley v. Collier,
Courts to establish and enforce its rights against said 84 Ala 431, 6 So. 304; Spinney v. Miller, 114 Iowa 210,
spouses, in light of the undeniable fact that it had 86 NW 317), where such person has acted as agent for
transacted business in this country without being the corporation and has violated his fiduciary
licensed to do so. In other words, if it be true that obligations as such, and where the statute does not
during all the time that they were transacting with ML provide that the contract shall be void, but merely
FUTURES, the Laras were fully aware of its lack of fixes a special penalty for violation of the statute. x
license to do business in the Philippines, and in x.19
162

The doctrine was adopted by this Court as early as SUPREME COURT REPORTS ANNOTATED
1924 in Asia Banking Corporation v. Standard Products Merrill Lynch Futures, Inc. vs. Court of Appeals
Co.,20 in which the following pronouncement was attacked for causes which have arisen since making
made:21 the contract or other dealing relied on as an estoppel
The general rule that in the absence of fraud of and this applies to foreign as well as domestic
person who has contracted or otherwise dealt with an corporations. (14 C.J. 227; Chinese Chamber of
association in such a way as to recognize and in effect Commerce vs. Pua Te Ching, 14 Phil. 222).
admit its legal existence as a corporate body is There would seem to be no question that the Laras
thereby estopped to deny its corporate existence in received benefits generated by their business relations
any action leading out of or involving such contract or with ML FUTURES. Those business relations, according
dealing, unless its existence is to the Laras themselves, spanned a period of seven (7)
_________________ years; and they evidently found those relations to be
of such profitability as warranted their maintaining
16SEE Ohta Development Co. v. Steamship Pompey, them for that no insignificant period of time;
et al., 49 Phil. 117, 120 (1926); Asia Banking otherwise, it is reasonably certain that they would
Corporation v. Standard Products Co., 46 Phil. 144 have terminated their dealings with ML FUTURES
(1924). much, much earlier. In fact, even as regards their last
1714 C.J. 227. transaction, in which the Laras allegedly suffered a
1836 Am. Jur. 2d, pp. 296-297, although there is loss in the sum of US$160,749.69, the Laras
authority that said doctrine does not, by analogy, nonetheless still received some monetary advantage,
require that such person be held estopped to deny that for ML FUTURES credited them with the amount of
the corporation has complied with the local statutes US$75,913.42 then due to them, thus reducing their
imposing conditions, restrictions, and regulations on debt to US$84,836.27. Given these facts, and
foreign corporations and that it has acquired thereby assuming that the Lara Spouses were aware from the
the right to do business in the state. outset that ML FUTURES had no license to do business
19Ibid. in this country and MLPI, no authority to act as broker
2046 Phil. 144 (1924), supra. for it, it would appear quite inequitable for the Laras to
21Italics supplied. evade payment of an otherwise legitimate
838 indebtedness due and owing to ML FUTURES upon the
plea that it should not have done business in this
838 country in the first place, or that its agent in this
163

country, MLPI, had no license either to operate as a Courts (Hang Lung Bank, Ltd. vs. Saulog, 201 SCRA
commodity and/or financial futures broker. 137).
Considerations of equity dictate that, at the very least,
the issue of whether the Laras are in truth liable to ML G.R. No. 87678. June 16, 1992.*
FUTURES and if so in what amount, and whether they DEL BROS HOTEL CORPORATION, petitioner, vs. HON.
were so far aware of the absence of the requisite COURT OF APPEALS, and LEON M. TIAMSAY,
licenses on the part of ML FUTURES and its Philippine respondents.
correspondent, MLPI, as to be es-topped from alleging Actions; Pleadings and Practice; Test of sufficiency of
that fact as a defense to such liability, should be statement of cause of action.This Court has
ventilated and adjudicated on the merits by the proper repeatedly emphasized that the test of the sufficiency
trial court. of the facts alleged in a complaint is whether or not,
WHEREFORE, the decision of the Court of Appeals in admitting the facts alleged, the court can render a
CA-G.R. CV No. 16478 dated November 27, 1990 and valid judgment upon the same in accordance with the
its Resolution of March 7, 1991 are REVERSED and SET prayer of the plaintiff. Stated otherwise, the
ASIDE, and the Regional Trial Court at Quezon City, insufficiency of the cause of action must appear on the
Branch 84, is ORDERED to reinstate Civil Case No. Q- face of the complaint in order to sustain a dismissal on
52360 and forthwith conduct a hear- this ground, for in the determination of whether or not
839 a complaint states a cause of action, only the facts
alleged therein and no other matter may be
VOL. 211,JULY27,1992 considered. The court may not inquire into the truth of
839 the allegations and find them to be false before a
Mendoza vs. Mala hearing is had on the merits of the case; and it is
ing to adjudicate the issues set out in the preceding improper to inject in the allegations of the complaint
paragraph on the merits. facts not alleged or proved, and use these as basis for
SO ORDERED. said motion.
Padilla, Regalado and Nocon, JJ., concur. Same; Same; Elements of a cause of action.A cause
Paras, J., Retired as of July 4, 1992. of action has three elements, namely: 1) a right in
Decision and resolution reversed and set aside. favor of the plaintiff by whatever means and under
Note.A foreign corporation not licensed to do whatever law it arises or is created; 2) an obligation on
business in the Philippines is not altogether prohibited the part of the named defendant to respect or not to
from giving or maintaining an action in Philippine violate such right; and 3) an act or omission on the
164

part of such defendant violative of the right of the the amended complaint complies with this
plaintiff or constituting a breach of the obligation of requirement.
the defendant to the plaintiff. PETITION for review of the decision of the Court of
Same; Same; A complaint does not have to establish Appeals.
the facts proving a cause of action.The plaintiff adds
that he made a request for the payment of his The facts are stated in the opinion of the Court.
commission and the defendant initially manifested its Sycip, Salazar, Hernandez & Gatmaitan for
willingness to submit the matter to arbitration. Nothing petitioner.
came out of it, however, prompting him to serve Gozon, Fernandez, Defensor & Parel for private
demands on the defendant, which ignored the same in respondent.
bad faith. For all this, he seeks payment not only of the CRUZ, J.:
commission but also moral and exemplary damages,
attorneys fees and the costs of the suit. In the view of By virtue of an Agreement concluded on or about May
this Court, these allegations sufficiently state a cause 9, 1984, herein petitioner Delgado Brothers Hotel
of action. The complaint does not have to establish or Corp. (DBHC) engaged private respondent Leon H.
allege the facts proving the existence of a cause of Tiamsay as its consultant to negotiate: (a) the sale of
action at the outset; this will have to be done at the the DBC hotel building located at the corner of Maria
trial on the merits of the case. In fact, the complaint is Orosa and UN Ave., Ermita, Manila; (b) the
not supposed to contain evidentiary matters. Rule 6, management agreement between DHC and Hilton
Section 3 of the Rules International; and (c) the sale of the DHC shares.1
________________ The Agreement specifically provided:
1. DHC (Delbros Hotel Corporation, petitioner herein)
* FIRST DIVISION. hereby appoints Consultant as DHCs consultant. As
34 consultant of DHC, the Consultant will (a) negotiate
with the GSIS and/or other financial institutions or
34 corporations for the sale to the GSIS and/or other
SUPREME COURT REPORTS ANNOTATED financial institution or corporation of the entire
Del Bros Hotel Corporation vs. Court of Appeals building owned by DHC situated at the Corner of Maria
of Court provides that this petition must be limited to Orosa and United Nations Avenue, Ermita, Manila,
a concise statement of the ultimate facts constituting which is presently used as a five-star hotel managed
the plaintiffs cause or causes of action. We find that and operated by Hilton International, under the
165

parameters to be specified in writing by the Chairman said agreement, Consultant will be paid by DHC a
of the Board of DHC; (b) negotiate with the said Hilton compensation/fee equivalent to the Central Bank Peso
International the existing Management Agreement value of US$125,000.00 at the time of payment. It is
between DHC and Hilton International for the purpose understood that this compensation/fee is exclusive of
of raising the ceiling of the share of DHC in the Gross the costs of negotiations to be incurred by Consultant,
Operating Profit from P7 million to P10 million and in such as first class transportation, hotel and other
the event that Consultant is unsuccessful in this regard travelling expenses and documentation costs, which
then Consultant will try to work out or negotiate for the shall be for the account of DHC. The incurring of such
termination of the DHC-Hilton International costs shall be subject to the prior approval of the
Management Agreement under the parameters Chairman of the Board of DHC, which approval shall
specified in writing by the not be unreasonably withheld.
________________ 4. The fee or commission of Consultant shall be
promptly paid by DHC to Consultant as follows:
1 Annex C, Rollo, p. 38. a) Fifty percent (50%) of the amount agreed, upon
35 completion and signing of the basic agreement
covering any or all of the work assignments of
VOL. 210, JUNE 16, 1992 Consultant; and
35 b) The balance of fifty percent (50%) of the amount
Del Bros Hotel Corporation vs. Court of Appeals agreed, upon completion and execution of all the
Chairman of the Board of DHC; and (c) negotiate with documents required to be executed covering the
prospective buyers for the acquisition of DHC shares. transaction.
xxx c) The fee or commission of Consultant shall be paid
3. Consultant shall be paid by DHC the following by DHC to the Consultant in cash.
compensation, fees or commission: 5. DHC shall advance to Consultant Forty Thousand
a) For the sale of DHC building, Consultant will be paid Pesos (P40,000.00) Philippine currency per month,
a compensation/commission by DHC equal to five payable within the first five (5) days of each month,
percent (5%) of the purchase price for the said during the effectivity of this agreement or any
building. Documentation costs will be for the account extension thereof. The total amount of such advances
of DHC. paid by DHC to Consultant shall be deducted from the
b) For the amendment of the Management Agreement fee or commission payable by DHC to Consultant. In
between DHC and Hilton International or termination of the event of an unsuccessful implementation of all the
166

undertakings of consultant after consistent and x x x Plaintiff has sufficiently alleged the existence of a
continuing efforts, the advances already paid to contract between him and the defendants, that the
Consultant shall not be subject to reimbursement by said contract calls for the performance of certain acts
the Consultant and will be treated as an expense of by the plaintiff which he allegedly was able to comply
DHC. with, and that for such performance he is entitled to
36 some compensation, that defendant has failed to
compensate plaintiff for the performance of such acts
36 despite demand for payment.
SUPREME COURT REPORTS ANNOTATED It is settled that for the purpose of determining the
Del Bros Hotel Corporation vs. Court of Appeals sufficiency of a cause of action, trial courts do not go
On July 27, 1987, Tiamsay filed a complaint against beyond what is called in the pleadings. The truth of
DHC. This was amended on August 19, 1987. The what is alleged in the complaint is hypothetically taken
plaintiff sought the recovery from the defendant of the as established and on that basis the court determines
sum of P1,549,118.65 as his commission for the sale of whether it can render a valid judgment and this court
the DBC hotel building, in accordance with their believes it can.
Agreement. It was alleged that DHC had continuously On January 6, 1989, this order was affirmed by the
refused to pay him the said amount despite demands Court of Appeals, which disagreed with the petitioners
and thereby incurred liability not only for the said argument that the amended complaint was deficient.
amount but also for moral and exemplary damages, In upholding the trial court, the Court of Appeals
attorneys fees and costs.2 observed inter alia that there was reason to
On September 18, 1987, DHC moved to dismiss the presumptively conclude that Tiamsay was entitled to
amended complaint for failure to state a cause of the payment of 50% of the commission as provided for
action. The motion averred that there was no in Par.
allegation in the said complaint that the sale of the ________________
DBC hotel building, which was the condition sine qua
non set forth in the Agreement for its obligation to pay 2 Annex D, Ibid., p. 49.
the commission, had been consummated.3 3 Annex E, Id., pp. 52-57.
On November 23, 1987, the Regional Trial Court of 37
Makati, through Judge Consuelo Ynares Santiago,
denied the motion thus: VOL. 210, JUNE 16, 1992
37
167

Del Bros Hotel Corporation vs. Court of Appeals Sec. 5 provides that for the private respondents effort
4(a) even before the occurrence of the conditions to negotiate with the GSIS for the sale of the Hilton
contemplated in Par. 4(b), to wit, the completion and Hotel, he shall be paid an advance of P40,000.00 per
signing of all the documents covering the transaction month while the agreement is in force. If the purchase
that were required to be executed.4 is effected, Sec. 4(a) and (b), providing for the
DHC is now before this Court to seek relief from that payment of a sale commission, shall then apply. The
decision. commission (equal to 5% of whatever is the final price
In this petition, DHC contends that in finding that the paid) shall become due in two 50% installments. The
complaint stated a cause of action, the respondent monthly advances already paid to the private
court misappreciated Secs. 4(a) and (b) of the respondent under Sec. 5 shall be considered part of
Agreement. the final commission due.
DHC argues that it is not Sec. 4(a) that governs the The petitioner stresses that it is impossible to
case but Sec. 5 of the Agreement, which reads: implement Sec. 4(a) without an actual sale having
5. DHC shall advance to Consultant Forty Thousand been consummated
Pesos (P40,000.00) Philippine currency per month, ________________
payable within the first five (5) days of each month,
during the effectivity of this agreement or any 4 Annex A, Id., p. 35.
extension thereof. The total amount of such advances 38
paid by DHC to Consultant shall be deducted from the
fee or commission payable by DHC to Consultant. In 38
the event of an unsuccessful implementation of all of SUPREME COURT REPORTS ANNOTATED
the undertakings of Consultant after consistent and Del Bros Hotel Corporation vs. Court of Appeals
continuing efforts, the advances already paid to because there would be no purchase price to use as
Consultant, shall not be subject to reimbursement by basis for computing the stipulated 5% commission.
the Consultant and will be treated as an expense of For his part, the private respondent maintains that as a
DHC. (Agreement of March 1984) consultant and not as a real estate broker, his duty
The petitioner maintains that, contrary to Tiamsays was merely to negotiate with the GSIS and/or other
claim, Secs. 4(a) and (b) apply only when there is a financial institutions for the sale of the hotel building.
consummated sale of the subject property. If such sale There is nothing in the Agreement requiring
is not effected, it is Sec. 5 that determines the consummation of the sale before he can be
obligations of the parties. compensated for his efforts as consultant.
168

He points out that the basic service referred to in the facts not alleged or proved, and use these as basis for
Agreement has been accomplished, as evidenced by a said motion.5
GSIS Board approval of the sale. For him to be able to ________________
recover under Par. 4(a), it is not necessary that the
final sale documents be executed since this 5 Garcon vs. Redemptorist Fathers, 17 SCRA 341;
requirement would fall under par. 4(b). Zobel vs. Abreu, 98 Phil. 343.
The Court has considered the arguments of the parties 39
and finds that there is a necessity to define the real
issue in contention and, as it were, put the parties on VOL. 210, JUNE 16, 1992
the right track. 39
The only issue to be resolved in this petition is whether Del Bros Hotel Corporation vs. Court of Appeals
or not the amended complaint as worded states a In the case before us, it is necessary to read the
cause of action. We are not concerned at this time with allegations in the complaint as hypothetically admitted
the proof of that cause of action. Our only concern now with the provisions of the Agreement concluded by the
is whether or not this cause of action has been petitioner and the private respondent.
sufficiently stated by the allegations in the amended Under Par. 3 of the Agreement, the private respondent
complaint. is to be paid the following compensation, fee or
This Court has repeatedly emphasized that the test of commission:
the sufficiency of the facts alleged in a complaint is a) For the sale of DHC building, Consultant will be paid
whether or not, admitting the facts alleged, the court a compensation/commission by DHC equal to five
can render a valid judgment upon the same in percent (5%) of the purchase price for the said
accordance with the prayer of the plaintiff. Stated building. Documentation costs will be for the account
otherwise, the insufficiency of the cause of action must of DHC.
appear on the face of the complaint in order to sustain b) For the amendment of the Management Agreement
a dismissal on this ground, for in the determination of between DHC and Hilton International or termination of
whether or not a complaint states a cause of action, said agreement, Consultant will be paid by DHC a
only the facts alleged therein and no other matter may compensation/fee equivalent to the Central Bank Peso
be considered. The court may not inquire into the truth value of US$125,000.00 at the time of payment. It is
of the allegations and find them to be false before a understood that this compensation/fee is exclusive of
hearing is had on the merits of the case; and it is the costs of negotiations to be incurred by Consultant,
improper to inject in the allegations of the complaint such as first class transportation, hotel and other
169

travelling expenses and documentation costs, which DHC to Consultant shall be deducted from the fee or
shall be for the account of DHC. The incurring of such commission payable by DHC to Consultant. In the
costs shall be subject to the prior approval of the event of an unsuccessful implementation of all of the
Chairman of the Board of DHC, which approval shall undertakings of Consultant after consistent and
not be unreasonably withheld. continuing efforts, the advances already paid to
Under Par. 4, payment is to be made in the following Consultant shall not be subject to reimbursement by
manner: the Consultant and will be treated as an expense of
a) Fifty percent (50%) of the amount agreed, upon DHC.
completion and signing of the basic agreement In connection with these stipulations, the following
covering any or all of the work assignments of allegations were made in the amended complaint:
Consultant; and 5. Notwithstanding the arrival of the expiry date of the
b) The balance of fifty percent (50%) of the amount Agreement as extended by the Board Resolution of 27
agreed, upon completion and execution of all the March 1985, the parties continued to honor their
documents required to be executed covering the contractual commitments under the Agreement with
transaction. defendant delivering the advances due plaintiff and
c) The fee or commission of Consultant shall be paid plaintiff performing his duties and/or services as
by DHC to the Consultant in cash. provided for in the Agreement.
Par. 5 of the Agreement also provides for the monthly As a result, the following were accomplished:
advances to be made to the private respondent, as a) By GSIS Board Resolution No. 143 dated 7 February
follows: 1985, GSIS approved the proposal of defendant made
5. DHC shall advance to Consultant Forty Thousand through plaintiff for the sale and/or lease-purchase of
Pesos (P40,000.00) Philippine currency per month, the Manila Hilton International Hotel Building and
payable within the first five (5) days of each month, major equipment owned by defendant to the GSIS;
during the effectivity of this agreement or any Copy of Board Resolution No. 143 is herewith attached
extension thereof. The total amount of such advances as Annex B.
paid by b) By GSIS Board Resolution No. 446 dated 17 May
40 1985, the GSIS approved the request of the defendant
made through the plaintiff for the amendment of
40 Resolution No. 143 with respect to the yield from
SUPREME COURT REPORTS ANNOTATED rentals.
Del Bros Hotel Corporation vs. Court of Appeals
170

Copy of Board Resolution No. 446 is herewith attached Operating Profit. Subsequently, he negotiated for the
as Annex C. amicable termination of the management agreement
5.1. From May 1985 to December 1985 and without by and between defendant and HI. He continued to
plaintiffs fault, defendant delayed the drafting and perform services for defendant in the court case for
execution of the agreements with the GSIS. Without the termination of the said agreement pending
defendants delay, the agreements with the GSIS could between defendant and HI.
have been executed by the earlier part of the period A cause of action has three elements, namely: 1) a
from May to December 1985 pursuant to the GSIS right in favor of the plaintiff by whatever means and
Board resolutions. under whatever law it arises or is created; 2) an
5.1.2. By December of 1985, however, the drafts of the obligation on the part of the named defendant to
agreements arising out of the negotiations with the respect or not to violate such right; and 3) an act or
GSIS were finalized (hereinafter referred to as the omission on the part of such defendant violative of the
December 1985 drafts). right of the plaintiff or constituting a breach of the
Copies of the December 1985 drafts of the agreements obligation of the defendant to the plaintiff.6
are herewith attached as Annexes D and E. (There The Court has carefully examined the amended
is no Annex F.) Both should properly refer to the date complaint and finds that it alleges all the above-stated
of January 1986, January 1985 of the other Agreement elements. The plaintiff avers that he was engaged
being mere typographical under the Agreement to perform certain tasks, among
41 them the negotiation for the sale of the defendants
building, for which he was to be paid a specified
VOL. 210, JUNE 16, 1992 commission if he succeeded. He claims he did succeed
41 in these negotiations with the approval by the GSIS
Del Bros Hotel Corporation vs. Court of Appeals board of directors of the sale as proposed by him on
error. behalf of the defendant. If the sale did not materialize,
5.2. Subsequently, the GSIS board of trustees was it was because of the defendants delay, which
recognized after February 1986 and a new set of top prevented the signing of the basic agreements until
officers of the said corporation reviewed the position of the transaction fell through with the reorganization of
their predecessors. the GSIS board of directors. The plaintiff adds that he
6. Plaintiff likewise performed his other commitments made a request for the payment of his commission
under the Agreement. He negotiated with HI to raise and the defendant initially manifested its willingness to
the ceiling of the share of defendant in the Gross submit the matter to arbitration. Nothing came out of
171

it, however, prompting him to serve demands on the the conditions laid down by its own board of directors.
defendant, which ignored the same in bad faith. For all And as no sale had been consummated, the private
this, he seeks payment not only of the commission but respondent is not entitled to any commission, which in
also moral and exemplary damages, attorneys fact cannot be ascertained as it is supposed to be 5%
________________ of a nonexistent purchase price.
These are matters of defense not proper in a motion to
6 Cole vs. Gregorio, 116 SCRA 670; Nabus vs. Court of dismiss for failure to state a cause of action. They
Appeals, G.R. No. 91670, February 7, 1991. should be pleaded in the answer, to be resolved after
42 the trial on the basis of the arguments and evidence
submitted by the parties. The only question presented
42 by the motion to dismiss is the sufficiency of the
SUPREME COURT REPORTS ANNOTATED allegations in the complaint which, for purposes of the
Del Bros Hotel Corporation vs. Court of Appeals motion, are deemed hypothetically admitted. It bears
fees and the costs of the suit. stressing that the test of the sufficiency is whether or
In the view of this Court, these allegations sufficiently not, assuming them to be true, a valid judgment can
state a cause of action. The complaint does not have be rendered thereon by the trial court. In the
to establish or allege the facts proving the existence of affirmative case, the motion to dismiss must be
a cause of action at the outset; this will have to be denied. As this Court has held, so rigid is the norm
done at the trial on the merits of the case. In fact, the prescribed that if the court should doubt the truth of
complaint is not supposed to contain evidentiary the facts averred, it must not dismiss the complaint
matters.7 Rule 6, Section 3 of the Rules of Court but require an answer and proceed to hear the case on
provides that this petition must be limited to a the merits.8
concise statement of the ultimate facts constituting This dictum is in line with the policy that motions to
the plaintiffs cause or causes of action. We find that dismiss
the amended complaint complies with this ________________
requirement.
To repeat, the main contention of the petitioner in 7 Rule 8, Section 1, Rules of Court.
moving to dismiss the amended complaint for failure 8 Republic Bank vs. Cuaderno, 19 SCRA 677; Boncato
to state a cause of action is that no final documents of vs. Siason, 138 SCRA 414; Sumalinog vs. Doronio, 184
sale had been signed because the proposal approved SCRA 187.
by the GSIS board of directors was not in conformity to 43
172

affirming the order of the lower court denying the


VOL. 210, JUNE 16, 1992 motion to dismiss.
43 ACCORDINGLY, the petition is DENIED, with costs
Del Bros Hotel Corporation vs. Court of Appeals against the petitioner. It is so ordered.
should not be lightly granted where the ground Grio-Aquino, Medialdea and Bellosillo, JJ., concur.
invoked is not indubitable, as in the case before us. In Petition denied.
such situation, the objections to the complaint must be Note.A cause of action is the delict or wrong by
embodied in the answer as denials or special and which the rights of the plaintiff are violated by the
affirmative defenses and threshed out in a full-blown defendant (Bataan Hardwood Corp. vs. Dy Pac and Co.,
trial on the merits. As the Court of Appeals correctly 43 SCRA 450).
concluded: o0o
The question of whether private respondent had in fact
performed these and the other functions incumbent on G.R. No. L-12602 April 25, 1961
him under the agreement is one that has no bearing
on the sufficiency of the cause of action or the lack of LUIS PINEDA, plaintiff-appellee,
it. Private respondent alleged he had and the question vs.
has therefore become a matter of proof, and one that COURT OF FIST INSTANCE OF DAVAO, ERIBERTO
cannot be determined in a motion to dismiss; it UNSON, in his capacity as Provincial Sheriff Ex-Oficio of
requires full-dress proceedings. Davao and POTENCIANA PLANDO, defendants-
The parties have gone to great lengths in analyzing appellants.
the provisions of the Agreement in support of their
respective positions, but there was really no need to Zuno and Catil for plaintiff-appellee.
do so in the present petition. There will be time Rodolfo A. Ta-asan for defendants-appellants.
enough for that in the lower court after responsive
pleadings are filed and issues are joined for eventual CONCEPCION, J.:
trial of the case.
We are convinced that the allegations in the amended Appeal by the defendants from a decision of the Court
complaint, assuming them to be true, are sufficient to of First Instance of Davao, the dispositive part of which
state a cause of action against the petitioner. We reads:
therefore hold that the respondent court did not err in
173

IN VIEW OF THE FOREGOING, this Court annuls that vested in Domingo Ramirez; that upon his death, such
portion of the decision of this Court in Civil Case No. rights and interests were transmitted, by operation of
959 dated June 16, 1953, declaring the plaintiff therein law, to Potenciana Plando; that said land had been
as lawful owner of the property under litigation jointly occupied and cultivated by her and Domingo
together with the improvements thereon, subject to Ramirez, during his lifetime, since early in 1930 until
the final disposition of the same by the Bureau of sometime in 1948, and had become improved and
Lands and the Department of Agriculture and Natural productive through their common efforts; that, in
Resources in accordance with the provisions of law, 1948, Luis Pineda and Bruno Ramirez took material
without special pronouncement as to costs. possession of said land illegally and in bad faith,
thereby excluding her from the possession and
Consequently, the execution of the decision insofar as enjoyment thereof, despite her repeated demands that
that part of the same where the plaintiff was declared they vacate said property, which they refused to do;
owner in that Civil Case No. 959, is hereby nullified. and that she thereby suffered the damages specified
in the complaint. Accordingly, she prayed that
It appears that on or about November 29, 1952, judgment be rendered:
Potenciana Plando filed with the Court of First Instance
of Davao a complaint (Exhibits C-4 to C-6), which was (a) Declaring the plaintiff the lawful owner and
docketed as Civil Case No. 959 of said court, against possessor of The land and improvements described in
Luis Pineda and Bruno Ramirez. Potenciana Plando the complaint;
alleged in said pleading that she was the surviving
spouse and only heir of the deceased Domingo (b) Ordering the defendants to vacate the premises in
Ramirez, who, in life, was the actual possessor of a question and to restore the possession thereof to the
parcel of land situated in Lasang, formerly municipality plaintiff;
of Tagum, now Panabo, Province of Davao, and more
particularly described in the complaint; that said land (c) Condemning and ordering the defendants to pay
was covered by Homestead Application No. 166166 (E- jointly and severally, the plaintiff the sum of
77371), in the name of said deceased, which had been P5,000.00, representing the fruits of the land due the
approved by the Director of Lands on December 18, plaintiff;
1930; that, by virtue of an order of this officer, dated
November 18, 1932, for the "issuance of patent", the
rights to and interests in said land became definitely
174

(d) Condemning and ordering the defendants to pay,


jointly and severally, the plaintiff the sum of Soon later, or on December 4, 1953, they filed with the
P2,000.00, in concept of damages; Court of Appeals a petition, docketed therein as CA-
G.R. No. 12164-A, for a writ of certiorari with
(e) Condemning and ordering the defendant to pay the preliminary injunction against the Judge of First
costs of this suit; and Instance of Davao and Potenciana Plando, upon the
ground that the former had acted with grave abuse of
(f) Granting the plaintiff such and other relief discretion in denying the motion to dismiss the
consonant with law, justice and equity. complaint in said Civil Case No. 959, and the motion
for relief of judgment by default therein rendered. In a
Although the court had denied a motion to dismiss reasoned resolution, dated May 19, 1954, the Third
filed by Luis Pineda and Bruno Ramirez, neither Division of the Court of Appeals dismissed the petition
answered the plaintiff because of which they were upon the ground that no abuse of discretion had been
declared in default, at the instance of Potenciana committed in denying the aforesaid motion to dismiss;
Plando, who, thereafter, presented her evidence. that the order denying relief of judgment by default
Based upon the same, decision was rendered on June was a final order and, as such, appealable; and that,
16, 1953, finding that the allegations of the complaint having failed to appeal therefrom, Luis Pineda and
had been proven and declaring Potenciana Plando "the Bruno Ramirez were not entitled to the writ of
lawful owner and possessor of the land and certiorari prayed for.
improvements described in H.A. No. 166166 (E-
77371)" and ordering Luis Pineda and Bruno Ramirez On October 4, 1954, Luis Pineda and Bruno Ramir
"(1) to vacate the premises in question and restore the sought from the Supreme Court, in case G.R. No. L-
possession thereof to" her; "(2) to pay, jointly and 8357 thereof, a review by certiorari of said resolution
severally", to her "the sum of P1,000 representing the of t Court of Appeals, but their petition for review was,
fruits of the land due" to her "and for attorney's fees; minute resolution, dated November 18, 1954, dismiss
and (3) to pay the costs". On July 16, 1953, Luis Pineda for lack of merit.
and Bruno Ramirez moved to "set aside the judgment
by default", but the motion was denied by an order Subsequently, or on January 27, 1955, Luis Pineda
dated August 4, 1953. A reconsideration of this order, instituted the present action against the Court of First
sought by them on August 17, 1953, was denied on Instance of Davao, Eriberto Unson as Provincial Sheriff
November 16, 1953. Ex-Oficio of Davao and Potenciana Plando. After
175

making pertinent averments about the filing of Civil 959 was merely one for the "recovery of possession
Case N 959 of said court, the denial of his motion to and damages" and did not involve the title to the land
dismiss the complaint therein, the order declaring him in question; and (2) that "the Supreme Court has set
in default, the decision therein rendered declaring the doctrine ... that courts of justice have no
Potenciana Plando the lawful owner and possessor of jurisdiction to determine the ownership and disposition
the land in dispute and of the improvements thereon, of agricultural lands."
and the final and executory nature of said decision,
Pineda alleged in his complaint that said declaration of The first predicate is false, for Potenciana Plando had,
ownership of a homestead and the improvements not only alleged in her complaint in said case that she
thereon is a function exclusively belonging to the had acquired the proprietary rights of Domingo
Bureau of Lands, before which there was a pending Ramirez on the land in dispute, but, also, prayed
controversy between the parties, which the Director o specifically that she be declared "the lawful owner",
Lands decided, on March 6, 1954, in his (Pineda's) aside from "possessor of the land and the
favor although Potenciana Plando had moved for a improvements described in" said pleading.
reconsideration of said decision, which was still
pending determination Plaintiff prayed that judgment With respect to the second predicate, relative to the
be rendered "annulling partially the decision by default jurisdiction of the Court of First Instance of Davao to
in Civil Case 14o. 959, particularly the portion ... pass upon the title to the land in dispute, it should be
adjudicating the ownership of the land in question and noted that jurisdiction over the subject matter of a
improvements thereon and to suspend the execution case is determined by the pleadings therein.
of said decision during the pendency of the case and
pending the result of the controversy between the According to the complaint in Civil Case No. 959, said
parties now in the Bureau of Lands." land was covered by a homestead application of
Domingo Ramirez, approved by the Director of Lands
Their motion to dismiss the complaint having been way back on December 18, 1930. On November 18,
denied the defendants filed an answer maintaining 1932, said officer had ordered the issuance of the
that the decision rendered in Civil Case No. 959 is valid corresponding patent in favor of Domingo Ramirez,
and in accordance with law. After appropriate thus indicating that he had submitted final proof,
proceedings, the lower court rendered the decision which was found satisfactory by the Director of Lands,
appealed from, which appears to be based upon the of compliance with the requirements of our laws for
following predicates, namely: (1) that Civil Case No. the issuance of such patent. Hence, Domingo Ramirez
176

had acquired a vested property right in said land and question the title of Domingo Ramirez to the land in
the equitable ownership thereof, which may be dispute. What is more, in such petition and in the
conveyed or inherited, unaffected by the fact that the answer thereto attached they relied upon said title of
paramount title thereto was still in the hands of the Domingo Ramirez, for Luis Pineda claimed to have
government (Balboa v. Farrales 51 Phil., 498). Upon the acquired it by purchase an they alleged that
death of Domingo Ramirez, said property right and Potenciana Plando was merely a common-law wife of
equitable ownership passed to this surviving spouse Domingo Ramirez, without any right to succeed him. In
and only heir, Potenciana Plando, who had occupied other words, the records of Civil Case No 959, showed
and cultivated said land jointly with him, during his that the equitable title of Domingo Ramirez in and to
lifetime, from 1930 to 1948, and had improved it and the disputed land was uncontested. The only issued
made it productive through their common efforts, raised after the rendition of the decision therein, was
according to said pleading. Inasmuch as Luis Pineda "Who succeeded to such equitable property rights?
and Bruno Ramirez had, allegedly, taken possession of Was it Potenciana Plando or Luis Pineda?" Obviously
said land in 1948, excluding her illegally and in bad this question was within the competence of the Court
faith from such possession and from the enjoyment of First Instance of Davao to settle.
thereof, Potenciana Plando sought a judicial
declaration of her title, as the basis for her right of Regardless of the foregoing, it is true that, subject to
possession. the authority of the Secretary of Agriculture and
Natural Resources, the Director of Lands has, by law,
No answer having been filed by Luis Pineda and Bruno direct control over the sale or any other form of
Ramirez both were declared in default. Thus, the only concession or disposition and the management of the
issue for determination by the court in Civil Case No. public domain (Commonwealth Act No. 141, sections 4
959 was the truth of the allegations in said complaint, and 5) and that, accordingly, said officers are clothed
which was established by the evidence introduction by with authority to decide, inter alia, conflicts between
Potenciana Plando, so that the court had, not on the applicants for homestead. It is, likewise, settled that,
authority, but the duty to render the disputed decision until such controversy has been decided by the
holding that Potenciana Plando is the lawful owner of Director of Lands and/or the Secretary of Agriculture
the land in litigation. and Natural Resources or, to put it differently, until
all administrative remedies have been exhausted a
Again, the petition for relief of judgment by default judicial recourse for the settlement of said controversy
filed by Luis Pineda and Bruno Ramirez did not has generally been held to be "premature"
177

(Municipality of Hinabagan vs. Municipality of Wright an appeal been taken from the order denying said
and Julian Abegonia L-12603, March 25, 1960). The motion, it would have been proper for the appellate
rule to the effect that administrative remedies must court to reverse said order and set it aside. But, no
"first" be exhausted merely implies, however, the such appeal was taken, and the decision in Civil Case
absence of a "cause of action" (M. Vda. de Villanueva No. 959 was thus allowed to become final and
v. Ortiz, L-11412, May 28, 1958; Lubugan v. Castrillo, L- executory. Inasmuch as the court had jurisdiction to
10521, May 29, 1957), and does not affect the render it, said decision is valid and binding upon the
"jurisdiction" of the court, either over the parties, if parties therein, no matter how erroneous it might have
they have been properly summoned, or over the been.
subject matter of the case.
Moreover, plaintiff herein sought to annul the pertinent
Luis Pineda does not claim that he had not been portion of the aforementioned decision by applying
properly summoned in Civil Case No. 959. Upon the from the Court of Appeals for a writ of certiorari upon
other hand, courts of first instance are, and have been, the ground of nullity of said portion for alleged lack of
expressly vested with original jurisdiction "in all civil jurisdiction, and not only was the writ prayed for
actions which involve the title to or possession of real denied by the Court of Appeals, by resolution dated
property, or any interest therein ..." (Republic Act No. November 18, 1954, but, we, likewise, refused to
296, Section 44). Accordingly, even if the issue in Civil review by certiorari said resolution of the Court of
Case No. 959 had been who, as between the parties Appeals. Since the jurisdiction of the Court of First
therein, had a better title to a given public land, the Instance of Davao to make the disputed
court would have retained its jurisdiction to hear and pronouncement in its decision in Civil Case No. 959
decide the case, although, had its attention had been was the main issue in the certiorari case
called to the proceedings then pending in the Bureau aforementioned, the aforementioned resolution of the
of Lands which were not disclosed by the record Court of Appeals and that of this Court refusing to
when the decision was rendered it should have review said resolution constitute another bar to the
dismissed the case, not for want of jurisdiction, but for present action seeking to revive said issue.
lack of "cause of action" on the part of Potenciana
Plando. It is, therefore, our considered opinion, and we so hold,
that the lower court erred in rendering the decision
At most, therefore, said court erred in refusing to grant appealed from, and that the same should, accordingly,
the motion for relief of judgment by default, and, had be, as it is hereby, reversed, and the complaint herein
178

dismissed, with costs against plaintiff Luis Pineda. It is Petition for certiorari and prohibition to declare void for
so ordered. being in grave abuse of discretion the orders of
respondent judge dated November 2, 1978 and August
G.R. No. L-55048 May 27, 1981 29, 1980, in Civil Case No. 5759 of the Court of First
Instance of Leyte, which denied the motion filed by
SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and petitioners to dismiss the complaint of private
MARCELINO SOTTO, petitioners, respondents for specific performance of an alleged
vs. agreement of sale of real property, the said motion
HON. AUXENCIO C. DACUYCUY, Judge of the CFI of being based on the grounds that the respondents'
Leyte, DELY RODRIGUEZ, FELIPE ANG CRUZ, complaint states no cause of action and/or that the
CONSTANCIA NOGAR, MANUEL GO, INOCENTES DIME, claim alleged therein is unenforceable under the
WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU SENG, Statute of Frauds.
BENITO YOUNG, FERNANDO YU, SEBASTIAN YU,
CARLOS UY, HOC CHUAN and MANUEL DY, Finding initially prima facie merit in the petition, We
respondents. required respondents to answer and We issued a
temporary restraining order on October 7, 1980
enjoining the execution of the questioned orders.

BARREDO, J.:1wph1.t In essence, the theory of petitioners is that while it is


true that they did express willingness to sell to private
respondents the subject property for P6,500,000
provided the latter made known their own decision to
buy it not later than July 31, 1978, the respondents'
reply that they were agreeable was not absolute, so
much so that when ultimately petitioners'
representative went to Cebu City with a prepared and
duly signed contract for the purpose of perfecting and
consummating the transaction, respondents and said
representative found variance between the terms of
payment stipulated in the prepared document and
what respondents had in mind, hence the bankdraft
179

which respondents were delivering to petit loners'


representative was returned and the document Thank you so much for the hospitality extended to me
remained unsigned by respondents. Hence the action during my last trip to Tacloban, and I hope to hear from
below for specific performance. you very soon. 1wph1.t

To be more specific, the parties do not dispute that on Very truly yours,
July 12, 1978, petitioners, thru a certain Pedro C.
Gamboa, sent to respondents the following letter: Pedro C. Gamboa 1

Mr. Yao King Ong (Page 9, Record.)

Life Bakery Reacting to the foregoing letter, the following telegram


was sent by "Yao King Ong & tenants" to Atty. Pedro
Tacloban City Gamboa in Cebu City:

Dear Mr. Yao: 1wph1.t Atty. Pedro Gamboa

This refers to the Sotto property (land and building) Room 314, Maria Cristina Bldg.
situated at Tacloban City. My clients are willing to sell
them at a total price of P6,500,000.00. Osmea Boulevard, Cebu City

While there are other parties who are interested to buy Reurlet dated July 12 inform Dra. Yuvienco we agree to
the property, I am giving you and the other occupants buy property proceed Tacloban to negotiate details
the preference, but such priority has to be exercised 1wph1.t
within a given number of days as I do not want to lose
the opportunity if you are not interested. I am Yao King Ong & tenants
therefore gluing you and the rest of the occupants until
July 31, 1978 within it which to decide whether you (Page 10, Record.)
want to buy the property. If I do not hear from you by
July 31, I will offer or close the deal with the other
interested buyer.
180

Likewise uncontroverted is the fact that under date of plaintiffs, changed the mode of payment with respect
July 27, 1978, Atty. Gamboa wired Yao King Ong in to the balance of P4,500,000.00 by imposing upon
Tacloban City as follows: plaintiffs to pay same amount within thirty (30) days
from execution of the contract instead of the former
NLT term of ninety (90) days as stated in paragraph 8
hereof. (Pp. 10-11, Record.)
YAO KING ONG
Additionally and to reenforce their position,
LIFE BAKERY respondents alleged further in their complaint:
1wph1.t
TACLOBAN CITY
8. That on July 12, 1978, defendants (except
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING defendant Tacloban City Ice Plant, Inc.) finally sent a
WITH CONTRACT PREPARE PAYMENT BANK DRAFT telegram letter to plaintiffs- tenants, through same Mr.
1wph1.t Yao King Ong, notifying them that defendants are
willing to sell the properties (lands and building) at a
ATTY. GAMBOA total price of P6,500,000.00, which herein plaintiffs-
tenants have agreed to buy the said properties for said
(Page 10, Id.) price; a copy of which letter is hereto attached as
integral part hereof and marked as Annex 'C', and
Now, Paragraph 10 of the complaint below of plaintiffs accepted the offer through a telegram dated
respondents alleges: 1wph1.t July 25, 1978, sent to defendants (through defendant
Pedro C. Gamboa), a copy of which telegram is hereto
10. That on August 1, 1978, defendant Pedro attached as integral part hereof and marked as Annex
Gamboa arrived Tacloban City bringing with him the C-1 and as a consequence hereof. plaintiffs except
prepared contract to purchase and to sell referred to in plaintiff Tacloban - merchants' Realty Development
his telegram dated July 27, 1978 (Annex 'D' hereof) for Corporation) and defendants (except defendant
the purpose of closing the transactions referred to in Tacloban City Ice Plant. Inc.) agreed to the following
paragraphs 8 and 9 hereof, however, to the complete terms and conditions respecting the payment of said
surprise of plaintiffs, the defendant (except def. purchase price, to wit: 1wph1.t
Tacloban City Ice Plant, Inc.) without giving notice to
181

P2,000,000.00 to be paid in full on the date of the With commendable knowledgeability and industry,
execution of the contract; and the balance of respondent judge ruled negatively on the motion to
P4,500,000.00 shall be fully paid within ninety (90) dismiss, discoursing at length on the personality as
days thereafter; real party-in-interest of respondent corporation, while
passing lightly, however, on what to Us are the more
9. That on July 27, 1978, defendants sent a substantial and decisive issues of whether or not the
telegram to plaintiff- tenants, through the latter's complaint sufficiently states a cause of action and
representative Mr. Yao King Ong, reiterating their whether or not the claim alleged therein is
acceptance to the agreement referred to in the next unenforceable under the Statute of Frauds, by holding
preceding paragraph hereof and notifying plaintiffs- thus: 1wph1.t
tenants to prepare payment by bank drafts; which the
latter readily complied with; a copy of which telegram The second ground of the motion to dismiss is that
is hereto attached as integral part hereof and marked plaintiffs' claim is unenforceable under the Statute of
as Annex "D"; (Pp 49-50, Record.) Frauds. The defendants argued against this motion and
asked the court to reject the objection for the simple
It was on the basis of the foregoing facts and reason that the contract of sale sued upon in this case
allegations that herein petitioners filed their motion to is supported by letters and telegrams annexed to the
dismiss alleging as main grounds: 1wph1.t complaint and other papers which will be presented
during the trial. This contention of the defendants is
I. That plaintiff, TACLOBAN MERCHANTS' REALTY not well taken. The plaintiffs having alleged that the
DEVELOPMENT CORPORATION, amended complaint, contract is backed up by letters and telegrams, and
does not state a cause of action and the claim on the same being a sufficient memorandum, the
which the action is founded is likewise unenforceable complaint states a cause of action and they should be
under the provisions of the Statute of Frauds. given a day in court and allowed to substantiate their
allegations (Paredes vs. Espino, 22 SCRA 1000).
II. That as to the rest of the plaintiffs, their
amended complaint does not state a cause of action To take a contract for the sale of land out of the
and the claim on which the action is founded is Statute of Frauds a mere note or memorandum in
likewise unenforceable under the provisions of the writing subscribed by the vendor or his agent
Statute of Frauds. (Page 81, Record.) containing the name of the parties and a summary
statement of the terms of the sale either expressly or
182

by reference to something else is all that is required. Acceptance made by letter or telegram does not bind
The statute does not require a formal contract drawn offerer except from the time it came to his knowledge.
up with technical exactness for the language of Par. 2 The contract, in a case, is presumed to have been
of Art. 1403 of the Philippine Civil Code is' ... an entered into in the place where the offer was made.
agreement ... or some note or memorandum thereof,'
thus recognizing a difference between the contract In the instant case, We can lay aside, for the moment,
itself and the written evidence which the statute petitioners' contention that the letter of July 12, 1978
requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110; of Atty. Pedro C. Gamboa to respondents Yao King Ong
Ill Moran, Comments on the Rules of Court, 1952 ed. p. and his companions constitute an offer that is
187). See also Bautista's Monograph on the Statute of "certain", although the petitioners claim that it was a
Frauds in 21 SCRA p. 250. (Pp. 110-111, Record) mere expression of willingness to sell the subject
property and not a direct offer of sale to said
Our first task then is to dwell on the issue of whether respondents. What We consider as more important and
or not in the light of the foregoing circumstances, the truly decisive is what is the correct juridical
complaint in controversy states sufficiently a cause of significance of the telegram of respondents instructing
action. This issue necessarily entails the determination Atty. Gamboa to "proceed to Tacloban to negotiate
of whether or not the plaintiffs have alleged facts details." We underline the word "negotiate" advisedly
adequately showing the existence of a perfected because to Our mind it is the key word that negates
contract of sale between herein petitioners and the and makes it legally impossible for Us to hold that
occupant represented by respondent Yao King Ong. respondents' acceptance of petitioners' offer,
assuming that it was a "certain" offer indeed, was the
In this respect, the governing legal provision is, of "absolute" one that Article 1319 above-quoted
course, Article 1319 of the Civil Code which requires.
provides:1wph1.t
Dictionally, the implication of "to negotiate" is
ART. 1319. Consent is manifested by the meeting of practically the opposite of the Idea that an agreement
the offer and the acceptance upon the thing and the has been reached. Webster's Third International
cause which are constitute the contract. The offer Dictionary, Vol. II (G. & C. Merriam Co., 1971 Philippine
must be certain the acceptance absolute. A qualified copyright) gives the meaning of negotiate as "to
acceptance constitute a counter-offer. communicate or confer with another so as to arrive at
the settlement of some matter; meet with another so
183

as to arrive through discussion at some kind of the property may be conceded, but what impresses Us
agreement or compromise about something; to is that instead of "absolutely" accepting the "certain"
arrange for or bring about through conference or offer if there was one of the petitioners, they still
discussion; work at or arrive at or settle upon by insisted on further negotiation of details. For anyone to
meetings and agreements or compromises ". read in the telegram of Yao that they accepted the
Importantly, it must be borne in mind that Yao King price of P6,500,000.00 would be an inference not
Ong's telegram simply says "we agree to buy necessarily warranted by the words "we agree to buy"
property". It does not necessarily connote acceptance and "proceed Tacloban to negotiate details". If indeed
of the price but instead suggests that the details were the details being left by them for further negotiations
to be subject of negotiation. were merely accidental or formal ones, what need was
there to say in the telegram that they had still "to
Respondents now maintain that what the telegram negotiate (such) details", when, being unessential per
refers to as "details" to be "negotiated" are mere their contention, they could have been just easily
"accidental elements", not the essential elements of clarified and agreed upon when Atty. Gamboa would
the contract. They even invite attention to the fact reach Tacloban?
that they have alleged in their complaint (Par. 6) that it
was as early as "in the month of October, 1977 (that) Anent the telegram of Atty. Gamboa of July 27, 1978,
negotiations between plaintiffs and defendants for the also quoted earlier above, We gather that it was in
purchase and sale (in question) were made, thus answer to the telegram of Yao. Considering that Yao
resulting to offers of same defendants and counter- was in Tacloban then while Atty. Gamboa was in Cebu,
offer of plaintiffs". But to Our mind such alleged facts it is difficult to surmise that there was any
precisely indicate the failure of any meeting of the communication of any kind between them during the
minds of the parties, and it is only from the letter and intervening period, and none such is alleged anyway
telegrams above-quoted that one can determine by respondents. Accordingly, the claim of respondents
whether or not such meeting of the minds did in paragraph 8 of their complaint below that there was
materialize. As We see it, what such allegations bring an agreement of a down payment of P2 M, with the
out in bold relief is that it was precisely because of balance of P4.5M to be paid within 90 days afterwards
their past failure to arrive at an agreement that is rather improbable to imagine to have actually
petitioners had to put an end to the uncertainty by happened.
writing the letter of July 12, 1978. On the other hand,
that respondents were all the time agreeable to buy
184

Respondents maintain that under existing Gamboa of July 12, 1978 and the letter-reply thereto of
jurisprudence relative to a motion to dismiss on the Yao; it being doubtful whether or not, under Article
ground of failure of the complaint to state a cause of 1319 of the Civil Code, the said letter may be deemed
action, the movant-defendant is deemed to admit the as an offer to sell that is "certain", and more, the Yao
factual allegations of the complaint, hence, petitioners telegram is far from being an "absolute" acceptance
cannot deny, for purposes of their motion, that such under said article, still there appears to be a cause of
terms of payment had indeed been agreed upon. action alleged in Paragraphs 8 to 12 of the
respondents' complaint, considering it is alleged
While such is the rule, those allegations do not detract therein that subsequent to the telegram of Yao, it was
from the fact that under Article 1319 of the Civil Code agreed that the petitioners would sell the property to
above-quoted, and judged in the light of the telegram- respondents for P6.5 M, by paving P2 M down and the
reply of Yao to Atty. Gamboa's letter of July 12, 1978, balance in 90 days and which agreement was allegedly
there was not an absolute acceptance, hence from violated when in the deeds prepared by Atty. Gamboa
that point of view, petitioners' contention that the and taken to Tacloban, only 30 days were given to
complaint of respondents state no cause of action is respondents.
correct.
But the foregoing conclusion is not enough to carry the
Nonetheless, the alleged subsequent agreement about day for respondents. It only brings Us to the question
the P2 M down and P4.5 M in 90 days may at best be of whether or not the claim for specific performance of
deemed as a distinct cause of action. And placed respondents is enforceable under the Statute of
against the insistence of petitioners, as demonstrated Frauds. In this respect, We man, view the situation at
in the two deeds of sale taken by Atty. Gamboa to hand from two angles, namely, (1) that the allegations
Tacloban, Annexes 9 and 10 of the answer of herein contained in paragraphs 8 to 12 of respondents'
respondents, that there was no agreement about 90 complaint should be taken together with the
days, an issue of fact arose, which could warrant a trial documents already aforementioned and (2) that the
in order for the trial court to determine whether or not said allegations constitute a separate and distinct
there was such an agreement about the balance being cause of action. We hold that either way We view the
payable in 90 days instead of the 30 days stipulated in situation, the conclusion is inescapable e that the
Annexes 9 and 10 above-referred to. Our conclusion, claim of respondents that petitioners have unjustifiably
therefore, is that although there was no perfected refused to proceed with the sale to them of the
contract of sale in the light of the letter of Atty.
185

property v in question is unenforceable under the On the other score of considering the supposed
Statute of Frauds. agreement of paying installments as partly supported
by the letter and t telegram earlier quoted herein, His
It is nowhere alleged in said paragraphs 8 to 12 of the Honor declared with well studied ratiocination, albeit
complaint that there is any writing or memorandum, legally inaccurate, that: 1wph1.t
much less a duly signed agreement to the effect that
the price of P6,500,000 fixed by petitioners for the real The next issue relate to the State of Frauds. It is
property herein involved was agreed to be paid not in contended that plaintiffs' action for specific
cash but in installments as alleged by respondents. performance to compel the defendants to execute a
The only documented indication of the non-wholly-cash good and sufficient conveyance of the property in
payment extant in the record is that stipulated in question (Sotto land and building) is unenforceable
Annexes 9 and 10 above-referred to, the deeds already because there is no other note memorandum or
signed by the petitioners and taken to Tacloban by writing except annexes "C", "C-l" and "D", which by
Atty. Gamboa for the signatures of the respondents. In themselves did not give birth to a contract to sell. The
other words, the 90-day term for the balance of P4.5 M argument is not well founded. The rules of pleading
insisted upon by respondents choices not appear in limit the statement of the cause of action only to such
any note, writing or memorandum signed by either the operative facts as give rise to the right of action of the
petitioners or any of them, not even by Atty. Gamboa. plaintiff to obtain relief against the wrongdoer. The
Hence, looking at the pose of respondents that there details of probative matter or particulars of evidence,
was a perfected agreement of purchase and sale statements of law, inferences and arguments need not
between them and petitioners under which they would be stated. Thus, Sec. 1 of Rule 8 provides that 'every
pay in installments of P2 M down and P4.5 M within pleading shall contain in a methodical and logical form,
ninety 90) days afterwards it is evident that such oral a plain concise and direct statement of the ultimate
contract involving the "sale of real property" comes facts on which the party pleading relies for his claim or
squarely under the Statute of Frauds (Article 1403, No. defense, as the case may be, omitting the statement
2(e), Civil Code.) of mere evidentiary facts.' Exhibits need not be
attached. The contract of sale sued upon in this case is
supported by letters and telegrams annexed to the
complaint and plaintiffs have announced that they will
present additional evidences during the trial to prove
their cause of action. The plaintiffs having alleged that
186

the contract is backed up by letters and telegrams, We cannot agree. In the reality of the economic world
and the same being sufficient memorandum, the and the exacting demands of business interests
complaint states a cause of action and they should be monetary in character, payment on installments or
given their day in court and allowed to substantiate staggered payment of the total price is entirely a
their allegations (Parades vs. Espino, 22 SCRA 1000). different matter from cash payment, considering the
(Pp 165-166, Record.) unpredictable trends in the sudden fluctuation of the
rate of interest. In other words, it is indisputable that
The foregoing disquisition of respondent judge misses the value of money - varies from day to day, hence the
at least two (2) juridical substantive aspects of the indispensability of providing in any sale of the terms of
Statute of Frauds insofar as sale of real property is payment when not expressly or impliedly intended to
concerned. First, His Honor assumed that the be in cash.
requirement of perfection of such kind of contract
under Article 1475 of the Civil Code which provides Thus, We hold that in any sale of real property on
that "(t)he contract of sale is perfected at the moment installments, the Statute of Frauds read together with
there is a meeting of the minds upon the thing which is the perfection requirements of Article 1475 of the Civil
the object of the contract and upon the price", the Code must be understood and applied in the sense
Statute would no longer apply as long as the total that the idea of payment on installments must be in
price or consideration is mentioned in some note or the requisite of a note or memorandum therein
memorandum and there is no need of any indication of contemplated. Stated otherwise, the inessential
the manner in which such total price is to be paid. elements" mentioned in the case of Parades vs.
Espino, 22 SCRA 1000, relied upon by respondent
judge must be deemed to include the requirement just
discussed when it comes to installment sales. There is
nothing in the monograph re the Statute of Frauds
appearing in 21 SCRA 250 also cited by His Honor
indicative of any contrary view to this ruling of Ours,
for the essence and thrust of the said monograph
refers only to the form of the note or memorandum
which would comply with the Statute, and no doubt,
while such note or memorandum need not be in one
single document or writing and it can be in just
187

sufficiently implicit tenor, imperatively the separate In this connection, Moran observes that unlike when
notes must, when put together', contain all the the ground of dismissal alleged is failure of the
requisites of a perfected contract of sale. To put it the complaint to state a cause of action, a motion to
other way, under the Statute of Frauds, the contents of dismiss invoking the Statute of Frauds may be filed
the note or memorandum, whether in one writing or in even if the absence of compliance does not appear an
separate ones merely indicative for an adequate the face of the complaint. Such absence may be the
understanding of all the essential elements of the subject of proof in the motion stage of the
entire agreement, may be said to be the contract proceedings. (Moran, Comment on the Rules of Court,
itself, except as to the form. Vol. 1, p. 494, 1979 ed.) It follows then that when such
a motion is filed and all the documents available to
Secondly, We are of the considered opinion that under movant are before the court, and they are insufficient
the rules on proper pleading, the ruling of the trial to comply with the Statute, it becomes incumbent
court that, even if the allegation of the existence of a upon the plaintiff, for the reasons of policy We have
sale of real property in a complaint is challenged as just' indicated regarding speedy administration of
barred from enforceability by the Statute of Frauds, the justice, to bring out what note or memorandum still
plaintiff may simply say there are documents, notes or exists in his possession in order to enable the court to
memoranda without either quoting them in or expeditiously determine then and there the need for
annexing them to the complaint, as if holding an ace in further proceedings. In other words, it would be
the sleeves is not correct. To go directly to the point, inimical to the public interests in speedy justice for
for Us to sanction such a procedure is to tolerate and plaintiff to play hide and seek at his own convenience,
even encourage undue delay in litigation, for the particularly, when, as is quite apparent as in the
simple reason that to await the stage of trial for the instant case that chances are that there are no more
showing or presentation of the requisite documentary writings, notes or memoranda of the installment
proof when it already exists and is asked to be agreement alleged by respondents. We cannot divine
produced by the adverse party would amount to any reason why any such document would be withheld
unnecessarily postponing, with the concomitant waste if they existed, except the unpermissible desire of the
of time and the prolongation of the proceedings, respondents to force the petitioners to undergo the
something that can immediately be evidenced and ordeals, time, effort and expenses of a futile trial.
thereby determinable with decisiveness and precision
by the court without further delay. In the foregoing premises, We find no alternative than
to render judgment in favor of petitioners in this
188

certiorari and prohibition case. If at all, appeal could be


available if the petitioners subjected themselves to the
trial ruled to be held by the trial court. We foresee
even at this point, on the basis of what is both extant
and implicit in the records, that no different result can
be probable. We consider it as sufficiently a grave
abuse of discretion warranting the special civil actions
herein the failure of respondent judge to properly
apply the laws on perfection of contracts in relation to
the Statute of Frauds and the pertinent rules of
pleading and practice, as We have discussed above.

ACCORDINGLY, the impugned orders of respondent


judge of November 2, 1978 and August 29, 1980 are
hereby set aside and private respondents' amended
complaint, Annex A of the petition, is hereby ordered
dismissed and the restraining order heretofore issued
by this Court on October 7, 1980 is declared
permanent. Costs against respondents.
189

The dismissal of the original bill carries with it a purely


defensive cross-bill but not one seeking affirmative relief.

68
No. L-25889. January 17, 1973.
6 SUPREME COURT REPORTS
HON.GUILLERMO E. TORRES, as Presiding Judge of 8 ANNOTATED
the Court of First Instance of Rizal, Branch VIII, THE Torres vs. Court of Appeals
PROVINCIAL SHERIFF OF THE PROVINCE OF APPEAL by certiorari to review a decision of the Court
RIZAL, JAIME E. LAICO and LUZ LOS BANOS- of Appeals.
LAICO, petitioners-appellants, vs. HON.COURT OF The facts are stated in the opinion of the Court.
APPEALS,JOSE CHIVI and ANGELINA CHIVI, as Ernesto J. Seva for petitioners-appellants.
representative of the deceased MARTAB. CHIVI, Ordoez, Cervo & Sanchez for respondents-
respondents-appellees. appellees.

Pleading and practice; Cross-claim; Definition of.A MAKALINTAL, J.:


cross-claim, as defined in section 7 of Rule 6, is any claim
by one party against a co-party arising out of the Appeal by certiorari to review the decision of the Court
transaction or occurrence that is the subject matter either of Appeals in CA-G.R. No. 35677-R, dated 31 August
of the original action or of a counterclaim therein.
1965.
Same; Same; Where cross-claim defensive in nature,
The facts as found by the Court of Appeals are as
same cannot stand after complaint in same action dismissed
follows:
with prejudice.A crossbill, strictly speaking is one
brought by a defendant in an equity suit against other On 1 January 1955 the spouses Isidro Sierra and
defendants in the same suit, touching the matters in Antonia Magtaas sold a parcel of land to Marta B.
question in the original bill. It is considered as an auxiliary Chivi, representing to her that the land was not
suit dependent upon the original bill, and can be sustained registered either under the Land Registration Act or
only on matters growing out of the original bill. There is a under the Spanish Mortgage Law and assuring her
well-defined distinction between a cross-bill merely that although the land was covered by a pre-war free
defensive in character, and one seeking affirmative relief. patent application, the application had not been
190

approved and nopatent had been issued. The Sierras had been previously issued to Isidro Sierra as early as
made that assurance because Chivi was not willing to 26 February 1932. The Laicos went to see the Sierras,
buy the land if it was covered by a patent, since it who agreed to execute, as they did execute on January
would then be subject to repurchase. They agreed that 17, 1960, an. other deed of sale in favor of the Laicos.
the purchase price of P10,800.00 was not to be fully The Laicos then withdrew their application for
paid until the vendors could have the land registered registration and filed instead a petition for the
under Act 496. reconstitution of the title issued to Isidro Sierra.
At the instance of the Sierras, Chivi filed an On 14 June 1960, however, the Sierras filed a
application for registration of the land in the Court of complaint against Marta B. Chivi, assisted by her
First Instance of Rizal. While the application was husband, and the Laicos in the Court of First Instance
pending Chivi, on 24 May 1958, sold her rights and of Rizal, docketed as Civil Case No. 6184, praying that
interests in the land to the herein petitioners-spouses they (plaintiffs) be allowed to repurchase the land
Jaime Laico and Luz Los Baos for P25,647.00, with under the provisions of the Public Land Act. The
the stipulation that should Chivi fail to secure and Chivis and the Laicos filed their answers to the
transfer title to the Laicos she would return to them complaint and counter-claimed for damages by reason
twice the amount of the aforesaid purchase price. To of the alleged bad faith, misrepresentation and
induce the Laicos to buy Chivis rights and interests, fraudulent acts of the Sierras, as hereinbefore
the Sierras showed them a petition withdrawing their recounted. The Laicos filed a cross-claim against the
free patent application. The Laicos thereupon Chivis for collection of twice the amount of the price
continued with the registration proceeding in paid under their sales contract for the latters failure
substitution of Chivi, who signed a deed of transfer of to deliver title to the Laicos, alleging that the
her rights. defendants Chivi are/or will be liable on these
69 warranties and conditions should the plaintiffs finally
VOL. 49, JANUARY 17, 1973 69
obtain favorable judgment in their favor (sic).
Torres vs. Court of Appeals
On 12 March 1964 the Sierras and the Laicos
In December, 1959 the Laicos discovered, and in
entered into a compromise to amicably settle Civil
January, 1960 Chivi learned, that a free patent title
191

Case No. 6184 as between themselves, stipulating well as the counterclaim of the Laicos against the
therein, among other things, that the Laicos were now Sierras. Chivi was not notified of the dismissal.
the absolute owners of the land and that the Sierras The court set the case for pre-trial on 14 July 1964.
would withdraw their objection to the reconstitution of Despite notice to the Sierras and the Chivis, only
the patent title and that said title would be transferred cross-claimant Jaime Laico and his counsel appeared,
in the name of the Laicos, who would pay P10,000.00 whereupon the court declared the Chivis in default
to the Sierras; that the Sierras would ask for the and allowed Laico to present evidence on the cross-
dismissal of Civil Case No. 6184 insofar as the Laicos claim before the deputy clerk of court. Counsel for the
were concerned and would convert their action in the Chivis filed an urgent motion for reconsideration,
case from one for repurchase to one for collection of the explaining why he failed to appear at the pre-trial, but
balance of the sales price and of damages against the the motion was denied. On 5 February 1965 the court
Chivis; that the Laicos would pursue their cross-claim rendered judgment for the Laicos, sentencing the
against the Chivis and in the event they obtained a cross-defendants to pay them a total amount of
favorable judgment thereon they would pay to P15,000.00, plus costs, and on 1 April 1965 issued a
70 writ of execution. Pursuant to the writ the sheriff
7 SUPREME COURT REPORTS levied upon the properties of the Chivis and issued a
0 ANNOTATED
notice that the properties would be sold at public
Torres vs. Court of Appeals
auction on 14 April 1965.
the Sierras one-half (1/2) of any amount awarded to
In due time the Chivis filed with the Court of
them in excess of the purchase price of P25,647.00.
Appeals a petition for certiorari and prohibition with
The compromise, which was executed without the
preliminary injunction to annul; (1) the order of the
knowledge of or notice to the Chivis, was approved by
trial court authorizing the Laicos to adduce
the trial court on 12 March 1964. On the same date the
evidence ex parte on their cross-claim against Marta B.
court, on joint motion of the Sierras and the Laicos,
Chivi; (2) the decision rendered on said cross-claim;
dismissed with prejudice the complaint in Civil
and (3) the order directing the issuance of a writ of
Case No. 6184 insofar as the Laicos were concerned as
execution, the levy on execution, and the notice of
192

execution sale of the properties of Chivi. Chivi prayed The principal issue in this case is: Could the cross-
further that the therein respondents be prohibited claim in this particular action stand after the
from conducting any further proceedings in said Civil complaint in the same action was dismissed with
Case No. 6184 on the ground that the trial court was prejudice?
without jurisdiction in the premises. In the resolution of this issue the following consider
Upon giving due course to the petition the Court of actions are pertinent:
Appeals issued a writ of preliminary injunction, (1) A cross-claim, as defined in Section 7 of Rule 6,
restraining is any claim by one party against a co-party arising
71 out of the transaction or occurrence that is the subject
VOL. 49, JANUARY 17, 1973 71
matter either of the original action or of a
Torres vs. Court of Appeals
counterclaim therein.
the therein respondents from proceedings with the
(2) The cross-claim of the Laicos against the Chivis
execution and with the sale at public auction set for 14
was for the recovery of the sum of P51,294.00, upon the
April 1965, until further order.
allegations that according to the contract of sale
On 31 August 1965 the Court of Appeals rendered a
between them, should the defendants Chivi fail to
decision declaring null and void all the proceedings on
transfer the title to the land in question to the
the cross-claim of the spouses Laico against Chivi, as
VENDEE (defendant Laico) then the former shall
well as the orders, decisions, writs and processes
return to the latter (the aforesaid sum) which is double
issued in connection therewith, and restraining the
the amount of the purchase price received by the
therein respondents Judge and sheriff of the Court of
defendants Chivi; and that the defendants Chivi
First Instance of Rizal from further proceeding in Civil
are/or will be liable on these warranties and conditions
Case No. 6184. The Laicos moved for reconsideration.
should the plaintiffs (Sierras) finally obtain favorable
Pending resolution of the motion for reconsideration,
judgment in their favor (sic).
Marta B. Chivi died and was substituted by Angelina
(3) When Marta B. Chivi sold her rights and
Chivi. In an order dated 16 March 1966, the motion for
interests to the land in question to the Laicos on 24
reconsideration was denied. Hence, the instant appeal
May
by certiorari brought by the Laicos.
193

72 their alleged right of repurchase was predicated on the


7 SUPREME COURT REPORTS
assumption that the title, that is, ownership, had been
2 ANNOTATED
Torres vs. Court of Appeals effectively transferred first to Chivi and subsequently
1958 the latter knew that Chivi had yet noregistered by the latter to the Laicos.
(6) In any event, even viewing the situation in the
title, and in fact substituted her in the registration
light most favorable to the Laicos, their cross-claim on
proceeding which she had initiated.
Chivis warranty to deliver title to them was so
(4) In their counterclaim for damages against the
inextricably linked with and so utterly dependent upon
Sierras in Civil Case No. 6184, the Laicos alleged that
the success of the complaint of the Sierras for the
the plaintiffs, in fraudulently misrepresenting to the
repurchase of the land that when the complaint was
defendants Chivi, as well as to the defendants Laico,
dismissed the cross-claim could not possibly survive.
that the land in question is unregistered and is not
For as the cross-claim-ants themselves alleged, the
covered by a patent, thereby inducing the latter to
cross-defendants would be liable on the warranty
purchase the land in question, which they would not
should the plaintiffs finally obtain favorable judgment
have done had they known that the land is covered by
in their favor (sic). The warranty became functus
a patent, should be adjudged to pay . . .
oficio after the Sierras, who turned out after all to
(5) The warranty undertaken by Marta B. Chivi,
have a free patent title to the land issued way back in
judging by its terms and by the surrounding
1932, agreed to transfer and did transfer said title to
circumstances, was in respect of the transfer of
the Laicos first by the deed of sale executed direct-
ownership not of the registered title to the
73
Laicos. The action filed by the Sierras was not for VOL. 49, JANUARY 17, 1973 73
recovery of such ownership but for the exercise of their Torres vs. Court of Appeals
alleged right of repurchase under the Public Land Act ly in their favor by the Sierras on January 17, 1960,
on the ground that the land they had sold was covered again in the amicable settlement of the case between
by a patent title. In other words, the filing of the action them. The fact that the Laicos paid P10,000.00 to the
did not militate against the warranty to transfer title, Sierras in that amicable settlement created noliability
for the very fact that the plaintiffs wished to enforce on the part of the Chivis: first, because the latter
194

neither knew nor consented to such settlement; second, dismissal of the complaint as a matter of course,
because the Laicos had already acquired the land without further proceeding; and in setting the said
directly, from the Sierras by virtue of the aforesaid sale cross-claim for pre-trial and receiving evidence thereon
of January 17, 1960; and third because the said sum of and then rendering judgment against the cross-
P10,000.00 was not the subject of the cross-claim defendants the court committed such a grave abuse of
against them. discretion amounting to lack of jurisdiction correctible
Apropos is the following statement of the legal by certiorari.
principle: Concerning the argument that the respondents here
A cross-bill strictly speaking is one brought by a defendant were guilty of laches because they filed their petition
in an equity suit against x x x other defendants in the same for cer-
suit, touching the matters in question in the original bill. It _______________
is considered as an auxiliary suit dependent upon the
Osius vs. Barton, 88 A.L.R. 394, 402.
original bill, and can be sustained only on matters growing
1

out of the original bill. There is a well-defined distinction 74


between a crossbill merely defensive in character, and one 7 SUPREME COURT REPORTS
seeking affirmative relief. The dismissal of the original bill 4 ANNOTATED
carries with it a purely defensive cross-bill but not one Torres vs. Court of Appeals
seeking affirmative relief.
1 tiorari after the lapse of over 9 months from the time
the judgment of the Court of First Instance was
The cross-claim in this case was purely defensive in
rendered, respondent Court of Appeals ruled in our
nature. It arose entirely out of the complaint and could
opinion correctly as follows:
prosper only if the plaintiffs succeeded. Hence, under x x x xxx xxx xxx
the principle above enunciated, it could not be the To the contention that the petitioners action is barred
subject of independent adjudication once it lost the by laches, we are bound to disagree. The judgment by
nexus upon which its life depended. default was rendered on February 5, 1965. It is not known
Under the circumstances above set forth the when the petitioners received copy of this judgment, but the
dismissal of the cross-claim should have followed the fact is that on April 13, or after the lapse of only 2 months
and 7 days from the rendition of the judgment, the petition
195

for certiorari was filed with this Court. Principally, the Note.Limitations on cross-claims.A cross-
petition assails the decision and the writ of execution claim may not be filed by a party declared in default.
thereof which was issued on April 1. Assuming that the (Tan vs. Dimayuga, L-15241, July 31, 1962). A cross-
decision complained of was actually received by the claim is not proper when not shown to have arisen out
petitioners on the date it was rendered, the intervening
of the saint transaction
period to the filing of the petition is only 2 months and 7 75
days, which is shorter than the shortest period of 2 months
and 26 days cited in the respondents ex-parte motion for VOL. 49, JANUARY 17, 1973 75
reconsileration in support of their theory of laches. And a American Express Company, Inc. vs.
mere 12 days intervened between the issuance of the writ of Santiago
execution and the filing of the petition for certiorari. as that in the complaint. (Malinao vs. Luzon Surety
x x x xxx xxx x x x. Company, Inc., L 16082, February 29, 1964).
G.R. No. L-27930 November 26, 1970
Parenthetically, this Court would like to state that
Judge Guillermo Torres should not have been made to AURORA A. ANAYA, plaintiff-appellant,
appear as active party-petitioner in this case, his vs.
participation having become functus oficio after the FERNANDO O. PALAROAN, defendant-appellee.

rendered judgment, and therefore his role being purely


Isabelo V. Castro for plaintiff-appellant.
nominal in this petition.
In view of the foregoing considerations, the Arturo A. Romero for defendant-appellee.
judgment of the Court of Appeals is affirmed, without
pronouncement as to costs.
Concepcion, REYES, J.B.L., J.:
C.J., Zaldivar, Castro, Fernando, Teehankee, Barredo,
Makasiar, Antonio and Esguerra, JJ., concur. Appeal from an order of dismissal, issued motu proprio by the
Juvenile & Domestic Relations Court, Manila, of a complaint for
Decision affirmed. annulment of marriage, docketed therein as Civil Case No. E-
00431, entitled "Aurora A. Anaya, plaintiff vs. Fernando O.
Palaroan, defendant."
196

The complaint in said Civil Case No. E-00431 alleged, inter alia, malicious filing of the suit. Defendant Fernando did not pray for
that plaintiff Aurora and defendant Fernando were married on 4 the dismissal of the complaint but for its dismissal "with respect to
December 1953; that defendant Fernando filed an action for the alleged moral damages."
annulment of the marriage on 7 January 1954 on the ground that
his consent was obtained through force and intimidation, which Plaintiff Aurora filed a reply with answer to the counterclaim,
action was docketed in the Court of First Instance of Manila as wherein she alleged:
Civil Case No. 21589; that judgment was rendered therein on 23
September 1959 dismissing the complaint of Fernando, upholding (1) that prior to their marriage on 4 December
the validity of the marriage and granting Aurora's counterclaim; 1953, he paid court to her, and pretended to
that (per paragraph IV) while the amount of the counterclaim was shower her with love and affection not because he
being negotiated "to settle the judgment," Fernando had divulged really felt so but because she merely happened to
to Aurora that several months prior to their marriage he had pre- be the first girl available to marry so he could
marital relationship with a close relative of his; and that "the non- evade marrying the close relative of his whose
divulgement to her of the aforementioned pre-marital secret on immediate members of her family were
the part of defendant that definitely wrecked their marriage, which threatening him to force him to marry her (the
apparently doomed to fail even before it had hardly close relative);
commenced ... frank disclosure of which, certitude precisely
precluded her, the Plaintiff herein from going thru the marriage (2) that since he contracted the marriage for the
that was solemnized between them constituted 'FRAUD', in reason intimated by him, and not because he
obtaining her consent, within the contemplation of No. 4 of Article loved her, he secretly intended from the very
85 of the Civil Code" (sic) (Record on Appeal, page 3). She beginning not to perform the marital duties and
prayed for the annulment of the marriage and for moral damages. obligations appurtenant thereto, and furthermore,
he covertly made up his mind not to live with her;
Defendant Fernando, in his answer, denied the allegation in
paragraph IV of the complaint and denied having had pre-marital (3) that the foregoing clandestine intentions
relationship with a close relative; he averred that under no intimated by him were prematurely concretized for
circumstance would he live with Aurora, as he had escaped from him, when in order to placate and appease the
her and from her relatives the day following their marriage on 4 immediate members of the family of the first girl
December 1953; that he denied having committed any fraud (referent being the close relative) and to convince
against her. He set up the defenses of lack of cause of action and them of his intention not to live with plaintiff,
estoppel, for her having prayed in Civil Case No. 21589 for the carried on a courtship with a third girl with whom,
validity of the marriage and her having enjoyed the support that after gaining the latter's love cohabited and had
had been granted her. He counterclaimed for damages for the several children during the whole range of nine
197

years that Civil Case No. 21589, had been We must agree with the lower court that it is not. For fraud as a
litigated between them (parties); (Record on vice of consent in marriage, which may be a cause for its
Appeal, pages 10-11) annulment, comes under Article 85, No. 4, of the Civil Code,
which provides:
Failing in its attempt to have the parties reconciled, the court set
the case for trial on 26 August 1966 but it was postponed. ART. 85. A marriage may be annulled for any of
Thereafter, while reviewing the expendiente, the court realized the following causes, existing at the time of the
that Aurora's allegation of the fraud was legally insufficient to marriage:
invalidate her marriage, and, on the authority of Brown vs.
Yambao, 102 Phil. 168, holding: xxx xxx xxx

It is true that the wife has not interposed (4) That the consent of either party was obtained
prescription as a defense. Nevertheless, the by fraud, unless such party afterwards, with full
courts can take cognizance thereof, because knowledge of the facts constituting the fraud,
actions seeking a decree of legal separation, or freely cohabited with the other as her husband or
annulment of marriage, involve public interest, his wife, as the case may be;
and it is the policy of our law that no such decree
be issued if any legal obstacles thereto appear This fraud, as vice of consent, is limited
upon the record. exclusively by law to those kinds or species of
fraud enumerated in Article 86, as follows:
the court a quo required plaintiff to show cause
why her complaint should not be dismissed. ART. 86. Any of the following circumstances shall
Plaintiff Aurora submitted a memorandum in constitute fraud referred to in number 4 of the
compliance therewith, but the court found it preceding article:
inadequate and thereby issued an order, dated 7
October 1966, for the dismissal of the complaint; it (1) Misrepresentation as to the
also denied reconsideration. identity of one of the contracting
parties;
The main issue is whether or not the non-disclosure to a wife by
her husband of his pre-marital relationship with another woman is (2) Non-disclosure of the previous
a ground for annulment of marriage. conviction of the other party of a
crime involving moral turpitude,
and the penalty imposed was
198

imprisonment for two years or Non-disclosure of a husband's pre-marital relationship with


more; another woman is not one of the enumerated circumstances that
would constitute a ground for annulment; and it is further
(3) Concealment by the wife of the excluded by the last paragraph of the article, providing that "no
fact that at the time of the other misrepresentation or deceit as to ... chastity" shall give
marriage, she was pregnant by a ground for an action to annul a marriage. While a woman may
man other than her husband. detest such non-disclosure of premarital lewdness or feel having
been thereby cheated into giving her consent to the marriage,
No other misrepresentation or deceit as to nevertheless the law does not assuage her grief after her consent
character, rank, fortune or chastity shall constitute was solemnly given, for upon marriage she entered into an
such fraud as will give grounds for action for the institution in which society, and not herself alone, is interested.
annulment of marriage. The lawmaker's intent being plain, the Court's duty is to give
effect to the same, whether it agrees with the rule or not.
The intention of Congress to confine the circumstances that can
constitute fraud as ground for annulment of marriage to the But plaintiff-appellant Anaya emphasizes that not only has she
foregoing three cases may be deduced from the fact that, of all alleged "non-divulgement" (the word chosen by her) of the pre-
the causes of nullity enumerated in Article 85, fraud is the only marital relationship of her husband with another woman as her
one given special treatment in a subsequent article within the cause of action, but that she has, likewise, alleged in her reply
chapter on void and voidable marriages. If its intention were that defendant Fernando paid court to her without any intention of
otherwise, Congress would have stopped at Article 85, for, complying with his marital duties and obligations and covertly
anyway, fraud in general is already mentioned therein as a cause made up his mind not to live with her. Plaintiff-appellant contends
for annulment. But Article 86 was also enacted, expressly and that the lower court erred in ignoring these allegations in her
specifically dealing with "fraud referred to in number 4 of the reply.
preceding article," and proceeds by enumerating the specific
frauds (misrepresentation as to identity, non-disclosure of a This second set of averments which were made in the reply
previous conviction, and concealment of pregnancy), making it (pretended love and absence of intention to perform duties of
clear that Congress intended to exclude all other frauds or consortium) is an entirely new and additional "cause of action."
deceits. To stress further such intention, the enumeration of the According to the plaintiff herself, the second set of allegations is
specific frauds was followed by the interdiction: "No other "apart, distinct and separate from that earlier averred in the
misrepresentation or deceit as to character, rank, fortune or Complaint ..." (Record on Appeal, page 76). Said allegations
chastity shall constitute such fraud as will give grounds for action were, therefore, improperly alleged in the reply, because if in a
for the annulment of marriage." reply a party-plaintiff is not permitted to amend or change the
cause of action as set forth in his complaint (Calo vs. Roldan, 76
199

Phil. 445), there is more reason not to allow such party to allege a considered final and enforceable and may be executed
new and additional cause of action in the reply. Otherwise, the without waiting for the final determination of the main
series of pleadings of the parties could become interminable.
case.
On the merits of this second fraud charge, it is enough to point Same; Revival of actions; When judgment on third
out that any secret intention on the husband's part not to perform party complaint should be revived.The ten year period
his marital duties must have been discovered by the wife soon within which to file an action to revive a judgment, as
after the marriage: hence her action for annulment based on that applied to a judgment on a third party complaint, should be
fraud should have been brought within four years after the counted from the date of finality of the judgment on the
marriage. Since appellant's wedding was celebrated in December
third party complaint, and not on the date of termination of
of 1953, and this ground was only pleaded in 1966, it must be
declared already barred. the main action, where the cause of action alleged in the
third party complaint is not dependent upon the success or
FOR THE FOREGOING REASONS, the appealed order is failure of the claim subject matter of the main action.
hereby affirmed. No costs. Same; Third party complaint; Claim need not arise
from or entirely be dependent upon the main action.It is
No. L-21644. May 29, 1970. clear from the provisions of the Rules of Court that for a
WENCESLAO PASCUAL, plaintiff, vs.PILAR claim to be properly raised in a pending action by way of
BAUTISTA, ET AL., defendants. third party complaint it is not necessary that it be one
arising from or entirely dependent upon the main action; it
PILAR BAUTISTA, third party plaintiff- is enough that it be "in respect" of the claim of third party
appellee, vs. MARIANO R. FLORES, third party plaintiff's opponent (Rule 6, Section 12, Rules of Court), or
defendant-appellant. that it be "connected with plaintiff's claim"
(Capayas v. Court of First Instance of Albay, 43 O.G. 2071,
Civil actions; Third party complaint; When third party
2074; U.S. Commercial Co. v. Guevara, 48 O.G. 612-613).
complaint is not dependent upon main action, judgment
rendered on third party complaint may be enforced 302

independently.Where the cause of action alleged in the 30 SUPREME COURT REPORTS


third party complaint is not dependent upon the success or
2 ANNOTATED
Pascual vs. Bautista
failure of the claim subject matter of the main action, the
judgment rendered on the third party complaint may be
200

Barredo, J., concurring: it is only in respect of the claim of the third-party plaintif f
against the third-party defendant,
Civil actions; Third-party complaint; Effect of
judgment on third party complaint.The judgment APPEAL from a decision of the Court of First Instance
rendered on a third party complaint does not become of Manila. Arca, J.
executory until after the claim against the defendant has The facts are stated in the opinion of the Court.
been finally determined, because the third party defendant Sarte & Espinosa for plaintiff-appellee.
is never liable to the defendant unless the latter is liable to Zosimo Rivas for third-party defendant-
the plaintiff. appellant.
Same; Same; Only related claims, not related
transactions, can be the subject of third party complaints; DIZON, J.:
Reasons.There is a distinction between related
transactions and related claims, and the latter, not the This is an appeal taken by Mariano E. Flores from the
former, are the ones that can be the subject of the third decision of the Court of First Instance of Manila in
party complaints. In other words, the claims must be Civil Case No. 48819 entitled "Pilar Bautista vs.
related to the same transaction and not to merely related Mariano E. Flores", the dispositive part of which. reads
transactions. I do not believe that the phrase "in respect of
as follows:
his opponent's claim" used in Section 12 of Rule 6 of the
"It appearing that this motion to revive the said decision,
Rules of Court concerning third-party complaints, can be
Exhibit A, was filed on November 21, 1961. or before the
equated with or has the same connotation as that of being
expiration of the ten-year period provided by law, judgment
merely "connected with the plaintiff's claim." My point, is
is
that were it the intention of Section 12, Rule 6 to refer to
merely "connected" claims, it would have used that word 303
instead of the phrase "in respect of" as in Section 4, Rule 9, VOL. 33, MAY 29, 1970 303
and thereby avoid confusion. Pascual vs. Bautista
Same; Fourth-party complaint; Distinguished from hereby rendered and, under Article 1144, in connection
thirdparty complaint.A fourth-party complaint is nothing with Article 1152 of the Civil Code, this Court hereby
more nothing less than a third-party complaint, except that declares that the decision of the Supreme Court in G.R. No.
L-6569 and G.R. No. L-6576 is hereby REVIVED.
201

"SO ORDERED Flores, as third-party defendant, for the sums of Five


"Manila, Philippines, March 12, 1963." hundred thousand pesos (P500,000.00) as liquidated
damages and Fifty thousand pesos (P50,000.00) for
It appears that in Civil Case No. 5203 of the Court of attorney's fees in accordance with her contract with him
First Instance of Manila entitled "Wenceslao Pascual embodied in the aforesaid Memorandum of Agreements,'
vs. Pilar Bautista, Primitivo Lovina, Nelly Montilla de with costs against said Mariano R. Flores. Plaintiff s claim
Lovina and Leon Yambao", the first (appellee herein) for exemplary damages and attorney s fees, Pilar Bautista's
filed, with leave of court, a third-party complaint counterclaim and cross-claim, and the spouses Lovina s
against Mariano R. Flores (appellant herein). Having counter cross-claim are hereby dismissed. Defendant Leon
failed to answer the third-party complaint, Flores was b. Yambao is absolved from all liability under the complaint
and cross-claim."
declared in default (Rec. on appeal, pp. 19-20, 40-41)
and, after due trial of the whole case, the court, on All the parties above-mentioned, except the third-party
March 7, 1951, rendered judgment as follows: defendant Flores, appealed from the above decision to
"WHEREFORE, judgment is hereby rendered in favor of the the
plaintiff and against the defendant Pilar Bautista, ordering 304
the latter to return to the plaintiff the sum of P2,000.00 30 SUPREME COURT REPORTS
representing part of the rent 'advanced by him for the 4 ANNOTATED
second year of the lease; to pay to the plaintiff the sum of Pascual vs. Bautista
P13,181.86 representing one-half of the cost of the Court of Appeals (CA-G.R. 7878-R), appellee Pilar
improvements and repairs made by the plaintiff on the Bautista, from the portions thereof adverse to her and
fishpond; and against Pilar Bautista and the spouses in favor of the plaintiff. In its decision of February 16,
Primitivo Lovina and Nelly Montilla de Lovina, ordering 1953, the Court of Appeals modified the appealed
them to pay jointly and severally to the plaintiff the sum of decision "by eliminating from it the award of damages
Twenty thousand two hundred fifty pesos (P20,250.00)
in favor of Wenceslao Pascual against Pilar Bautista
representing the value of the fish at the time the plaintiff
and Primitivo Lovina and Nelly Montilla de Lovina, as
was dispossessed of the fishpond, and the costs. Likewise
solidary debtors; and substituting, in its stead, an
judgment is hereby rendered in favor of the defendant Pilar
Bautista as third-party plaintiff and against Mariano R. award in favor of Wenceslao Pascual in the total sum of
202

P15,181.86, to be paid by Pilar Bautista alone, In all the writ of execution then outstanding, on the ground
other respects the judgment of the Court below is that "more than ten years had already elapsed since
affirmed, without pronouncement as to costs". (See the judgment against third-party defendant Mariano
page 61 of the Record on Appeal), Not satisfied with R. Flores and in favor of third-party plaintiff was
the result, Pilar Bautista and Wenceslao Pascual entered, so that no writ of execution of said judgment
appealed to Us (G.R. Nos. L-6569 and L-6576), but on can now be issued (Sec. 6, Rule 39 of the Rules of
April 18, 1956, We affirmed the decision of the Court of Court)".
Appeals. On June 6, 1957, our decision was entered by 305
VOL. 33, MAY 29, 1970 305
the Clerk of Court of First Instance of Manila in the
Pascual vs. Bautista
entry book of his off ice.
On August 29, 1961 appellee Bautista filed a petition
On June 3, 1957 Pilar Bautista secured the
for relief from said order of June 24, 1961, but the
corresponding writ to execute the decision rendered in
same was denied by the court, and although on
her favor in Civil Case No. 5203 as third-party
November 15, 1961 she filed a notice of appeal from
plaintiff therein against third-party defendant Flores,
said order of denial, no appeal therefrom appears to
but the writ was later returned unsatisfied. Thereafter
have been. actually perfected.
she obtained several alias writs of execution against
On November 21, 1961, appellee Pilar Bautista filed
the same party, the latest having been issued on April
an action in the Court of First Instance of Manila
17, 1961, but they were likewise returned unsatisfied.
(Civil Case No. 48819) for the revival of the final
On May 4, 1961, she filed a petition for the
judgment heretofore mentioned rendered in Civil
examination under oath of her judgment debtor
Case No. 5203 against appellant Flores. In his answer
(Flores) alleging that the latter had fraudulently
to the complaint, the latter alleged that said judgment
disposed of his properties, and, on ,May 18 of the same
had already prescribed pursuant to Sec. 6, Rule 39,
year, the court ordered said judgment debtor to appear
Rules of Court, and Article 1144(3) of the New Civil
before it for examination under oath on June 5, 1961.
Code. After trial, the lower court rendered the
Upon petition of Flores, however, the court, on June 24,
appealed judgment.
1961, set aside its order for his examination as well as
203

In his brief appellant submits for our consideration 30 SUPREME COURT REPORTS
ten errors allegedly committed by the trial court, but 6 ANNOTATED
brushing aside all non-essential issues, We believe
Pascual vs. Bautista
decision of the Court of First Instance of Manila in
that the fate of the present appeal depends upon the
Civil Case No. 5203 rendered on March 7, 1951, all the
following question: Which judgment, that 01 the Court
of First Instance of Manila rendered in Civil Case No. parties thereto, except the third-party defendant
therein, Flores, appealed to the Court of Appeals. The
5203 on March 7, 1951, or that of this Court in G.R.
latter, therefore, was not affected at all neither by the
Nos. L-6569 and L-6576 rendered on April 18, 1956
decision rendered by the Court of Appeals nor by the
(affirming the decision of the Court of Appeals in CA-
one subsequently rendered by this Court The second is
G.R. No. L-7878 which, in turn, modified the
that the decision of the Court of First Instance of
aforementioned decision of the Court of First Instance
Manila in Civil Case No'. 5203 was, as far as Flores
of Manila) could be revived as against appellant
was concerned, a judgment by default which, under the
Flores? If it is the former, it is clear that the action to
law then in force, was not appealable and was deemed
revive it (Civil Case No. 48859) filed with the same
to be immediately executory. (Lim Toco vs. Go Fay, 89
Court came too late on November 21, 1961, bearing in
Phil. 166; Rodrigo vs. Cabrera, G.R. No. L-6074,
mind that the decision sought to be reviveda
September 16, 1954, construing the effects of a
judgment by default as far as the third party
judgment by default under Rule 35, Section 7 of the
defendant Flores was concernedwas rendered on
original Rules of Court.) Therefore, even if Flores had
March 7, 1951, On the other hand, if it was our
attempted to appeal therefrom, his appeal would have
decision in G.R. Nos. L-6569 and L-6576 promulgated
been out of order,
on April 18, 1956, the action for revival was timely
It has been argued that, as the judgment by default
filed, as held by the lower court.
against Flores was in favor of Pilar Bautista upon her
In connection with the above question, two
third party complaint, the same may not be considered
undisputed facts must be borne in mind. The first is
final or enforceable until the final determination of the
that from the
306 main casewhich took place only upon the finality of
204

our decision in G.R. No. L-6569 and G.R. No. L- shall have the right to foreclose and levy upon the
6576 promulgated on 'April 18, 18, 1956and that, guarantee hereinabove described, the VENDOR hereby
this being so, the action for revival in question was expressly waiving all -his rights under the provisions of
Rule 39, Section 12 of the Rules of Court;"
filed on time. This argument might apply if the cause
of action alleged in Pilar Bautista's third 'party The above stipulation makes it crystal clear that the
complaint against Mariano R. Flores was dependent vendee (Pilar Bautista) would be entitled to recover
upon the success or failure of the claim subject matter from the vendor (Mariano Flores) the liquidated
of the main action instituted by Wenceslao Pascual damages and expenses agreed upon "in the event
against Pilar Bautista, plaintiff and defendant. that for any reason whatsoever Nelly Montilla de
therein, respectively. Such, however, is not the case Lovina shall refuse or fail to execute in favor of the
before Us, where it is clear that Bautista's cause of vendor a deed of sale covering the said fishpond"
action as third party plaintiff against third party (Italics supplied). Because Mrs. Lovina refused and/or
defendant Flores was based on paragraph 5 of their failed to execute the contemplated deed of sale the trial
agreement of January 6, 1945 which reads as follows: court rendered the judgment by default against
"(5) The VENDOR shall, in the event that for any reason Mariano Flores. That the cause of action or claim of
whatsoever Nelly Montilla de Lovina shall refuse or fail
Pilar Bautista, as third party plaintiff, against
to execute in favor of the VENDOR a deed of sale
Mariano Flores, as third party defendant, did not
covering the said fishpond, pay unto the VENDEE the
depend upon the outcome of the principal action
sum of
(Pascual vs. Bautista and the Lovinas) is evident from
307 the nature of the claims involved therein described in
VOL. 33, MAY 29, 19700 307
our decision in G.R. No, L-6569 and G.R. No. L-
Pascual vs. Bautista
FIVE HUNDRED THOUSAND PESOS (P500,000.00) legal 6576 as follows:
tender at the time, as liquidated damages, plus all expenses "In his complaint against Pilar Bautista, the Lovinas, and
that VENDEE shall have incurred for the improvement of the latter's man, Yambao, Pascual alleged his lease,
the fishpond; and in case of non-payment of the liquidated dispossession and losses and sought: (a) the rescission of
damages and the other expenses above stated the VENDEE the lease with Pilar Bautista; (b) the return of the
205

P10,000.00 he paid; and (c) payment of P27,556.00, Whether or not the filing of the third party complaint
representing the value of the fish he had in the fishpond; was proper can not now be raised by, nor be invoked in
P20,814.72 worth of repairs thereto and P3,000.00 favor of Pilar Bautista, because it was she precisely
attorney's fees. who filed it. Moreover, it is clear from the provisions of
"Bautista answered pleading the acquisition of the rights
the Rules of Court that for a claim to be properly
of Mariano Flores; that she offered to place the fishpond in
raised in a pending action by way of third party
plaintiff's possession but that the latter refused to resume
complaint, it is not necessary that it be one arising
possession; and counterclaimed for the balance of the
second year's rent, amounting to P6,000.00. from or entirely dependent upon the main action; it is
"The Lovinas filed answer denying privity of contract enough that it be "in respect" of the claim of third
with Pascual; and pleaded the expiration of Flores' option party plaintiffs opponent (Rule 6, Section 12, Rules of
without its being exercised, and that they had repossessed Court), or that it be "connected with plaintiffs claim"
the fishpond because it was abandoned. (Capayas vs. Court of First Instance of Albay 43 O.G.
"Subsequently, Pilar Bautista filed a third-party 2071, 2074: U.S. Commercial Company vs. Macario
complaint Guevarra, et al., 48 O.G. pp. 612-613).
308 The foregoing makes unnecessary the consideration
30 SUPREME COURT REPORTS of other issues raised by appellant in his brief.
8 ANNOTATED WHEREFORE, judgment is hereby rendered setting
Pascual vs. Bautista aside the appealed decision, without costs.
against Mariano R. Flores alleging breach of the contract
Concepcion, C.J., Reyes,
Exh. 6-Bautista, and consequent losses; and prayed for
J.B.L., Fernando and Villamor, JJ., concur.
judgment in the sum of P500,000.00 as liquidated damages
and attorney's fees, and that the mortgage in her favor be Makalintal, Zaldivar and Teehankee, JJ., took
foreclosed. no part.
"Flores was declared in default and his properties were Barredo, J., concurs in a separate opinion.
attached." Castro, J., is on official leave.

Decision set aside.


206

BARREDO, J., concurring: point, as the main opinion holds, can no longer be
raised now, it is my considered view that it is better
I concur in the result.
that the true nature of the remedy in question be
I find myself unable, however, to agree with the
determined, thereby clearing any doubt as to the rights
proposition impliedly, if not directly, upheld in the
of the parties before Us. I maintain, therefore, that the
main opinion that even if the claim of plaintiff-appellee
pleading filed by appellee Bautista against appellant
Pilar Bautista
Flores was not a third-party complaint but an ordinary
309
VOL. 33, MAY 29, 1970 309 complaint, mistakenly pleaded within the pending
Pascual vs. Bautista action between Pascual and appellee. Nonetheless,
is considered as a proper third-party complaint, the since judgment by default was actually rendered
judgment in her favor and against Flores would still thereon by the court, apparently without anybody
have been enforceable even before the decision of this being the wiser and because there was noobjection
Court in G.R. Nos. L-6569 and L-6576 became final from anyone, the said judgment must be treated as an
and executory which, to be sure, is unnecessary and, ordinary one? as contradistinguished from a judgment
therefore, obiter dictum. upon a third-party complaint. Accordingly, I concur in
To start with, if it is true that the allegation of the result of the main opinion. If, on the other hand,
defendant-appellant Mariano Flores under his contract the pleading in question were to be considered as a
with appellee Bautista was really entirely independent genuine third-party complaint, the dispositive portion
of any liability of the latter to Wenceslao Pascual who of this decision would not be, in my opinion, correct.
had sued her, I cannot see how a third-party complaint I regret I have to disagree with the excessively
could have been filed by appellee. To say that the basis broad concept of a third-party complaint defined by the
of Bautista's claim against Flores is completely main opinion. I do not believe that the phrase "in
independent of Pascual's cause of action against her respect of
and, in the same breath, hold that such claim of 310
31 SUPREME COURT REPORTS
Bautista against Flores is "in respect of" Pascual's
0 ANNOTATED
claim strikes me as lacking in consistency. Even if this Pascual vs. Bautista
207

his opponent's claim" used in Section 12 of Rule 6 of complaint be allowed, Isidora Lladoc and others named
the Rules of Court concerning third-party complaints, therein as third-party defendants could not assert any
can be equated with or has the same connotation as defense which the petitioner has or may have to the
plaintiff's claim."
that of being merely "connected with the plaintiffs
claim", as the main opinion holds. I realize that this Indeed, the true nature and concept of a third-party
quotation is from Capayas vs. Court of First Instance complaint was more comprehensively stated in that
of Albay, 77 Phil. 181, 183, but I am afraid it can be Capayas case thus:
out of context, for, precisely in that very decision, this "Secondly, Because the respondent court would have
Court held: committed an error if it had admitted the so-called third-
"Petitioner's claim for indemnity against Lladoc and others party complaint filed by the petitioner against Isidora
does neither arise out of the same transaction or the alleged Lladoc, Fulgencio Lladoc and Gregorio Navera, since the
petitioner's tortuous act on which plaintiff s action is based, facts alleged therein do not show that the petitioner is
nor is it based on a different transaction but connected with entitled to indemnity against them 'in respect to plaintiff's
the plaintiff's claim. Plaintiffs claim against petitioner and claim.' The test to determine whether the claim for
his co-defendants is, according to the allegations in the indemnity in a third-party complaint, 'in respect to
complaint, (a) to recover from them damages for the palay plaintiff's claim' is, whether It arises out of the same
which have been illegally harvested from certain lands transaction on which the plaintiff's claim is based, or the
belonging to the plaintiff, and (b) to enjoin them from third-party's claim, although arising out of another or
entering said lands and disturbing and molesting the different contract or transaction, is connected with the
plaintiff's right of ownership and possession thereof. plaintiff's claim.
Whereas the petitioner's claim against Isidora Lladoc and
311
others is to recover from the latter the value of the three
VOL. 33, MAY 29, 1970 311
parcels of land and their fruits -amounting to P3,200 plus
Pascual vs. Bautista
legal interest, for having said Isidora, as administratrix of
"According to the decision in the case of Crim. vs.
the intestate estate of Ceferino Guanzon, sold said lands in
Lumberman's Mutual Casualty Co. (26 Fed. Supp. 715 [1
1927 without authority of the court to Domingo Imperial,
Fed. Rules Service, 14a11, Case No. 1]), the test to
from whom said lands were acquired by the plaintiff. And in
determine when a thirdparty defendant may be impleaded
the present case, it is clear that if the so-called thirdparty
208

is whether he could have been joined originally -as a negligence action by the purchaser of a confection in which
defendant by the plaintiff. But this could be applied only if it is alleged that the confection contained a foreign object,
there could be asserted against the defendant as the third- the defendant may bring in the person who supplied him
party defendant, jointly and severally or in the alternatives, with the constituent contain-ing the foreign object, as a
any right to relief arising out of the same transaction. For third-party defendant (Saunders vs. Southern Dairies, Inc.
example in an action against the surety on a bond, the U.S. Dist. Ct., District of Columbia, November 6, 1939 [2
surety may bring in as a third-party defendant, the Fed. Rules Service, 14a.226, Case No. 3]).
principal who had agreed to indemnify the surety, because "Another test, provided for by section 4, Rule 12, of our
the surety's claim arises out of the same transaction. Rules of Court, is whether the third-party defendant may
(United States vs. United States Fidelity & Guaranty Co. assert any defenses which the third-party plaintiff has or
vs. Kolling, U.S. Dist Ct., D. Minn., February 1, 1940, 2 Fed. may have to the plaintiff's claim. If he may properly assert
Rules Service 14a222, Case No. 1). The above test does not such defenses, then he is a proper third-party defendant;
cover all cases in which impleading a third-party may be otherwise he is not and the claim against him can not be
and have been allowed, which are also covered by the test considered as a third-party complaint."
we have laid down in the previous paragraph, Under Rule
14 of Federal Rules of Civil Procedure, which corresponds to The way I understand the above-quoted dissertation, it
our Rule 12, the bringing in of a third-party defendant is does not lay down one single test that can be utilized
proper if he would be liable to the plaintiff or to the or applied separately from the others. To determine
312
defendant for all or part of the plaintiff's claim against the
31 SUPREME COURT REPORTS
original defendant, although the thirdparty defendant's
2 ANNOTATED
liability arises out of -another transaction. So in the case of
Pascual vs. Bautista
Carbola Chemical Co., Inc. vs. Trundle Ergineering Co.
whether a third-party complaint is proper or not, all
(U.S. Dist Ct, S.D.N.Y., December 26, 1942), it was held
that in an action for breach of contract to render
the tests mentioned must have to be satisfied.
engineering services and to survey a plant, the defendant There is no question that the purpose of a third-
was allowed to bring as a third-party defendant, the party complaint is to avoid multiplicity of suits, but
manufacturer which sold defendant's equipment to the this principle cannot be so extensive as to authorize
plaintiff (7 Fed. Rules Service, 14a11, Case No. 1). And in a the impleading of a party whose controversy with the
209

impleader relates to a claim with which those already intended a uniform meaning for it throughout,
in the action have nothing to do, even if the conversely, it is just as bad to attribute the same
transactions involved in the controversy already in meaning to two different, if quite synonymous words
court may have some connection, as when it is part of therein, for it is obvious that the use of a different
the same series, with that to be involved in the third- word, with a known somewhat different connotation,
party complaint. What justifies a unity of proceedings indicates that the meaning intended to be conveyed is
is community of interest and issues, except as between also different.
parties already contending with each other, in which It appears quite clear to me that in ordinary
all kinds of claims are permissible to be pleaded parlance, to say that one thing is "connected with"
against each other. I maintain there is a distinction another does not convey the same import as saying
between related transactions and related claims, and that it is "in respect
the latter, not the former, are the ones that can be the 313
VOL. 33, MAY 29, 1970 313
subject of the third-party complaints. In other words,
Pascual vs. Bautista
the claims must be related to the same transaction and
of" it. "Connected with" comprehends a much broader
not to merely related transactions.
idea than "in respect of." I am sure that, at least, these
In defining a compulsory counter-claim, Section 4 of
two phrases are not always interchangeable.
Rule 9 uses the phrases "necessarily connected with."
According to Senator Vicente Francisco, a
Of course the reference here is to transaction or
distinguished authority in procedural law, "The rule on
occurence and not to claims, My point, however, is that
third-party complaint requires that the claim of the
were it the intention of Section 12, Rule 6 to refer to
defendant be 'in respect of the plaintiff's claim.' Unlike
merely "connected" claims, it would have used that
permissive counter-claim, the third-party complaint
word instead of the phrase "in respect of" as in Section
must be founded on the claims in the original
4, Rule 9. and thereby avoid confusion. If it is bad to
action" (The Revised Rules of Court in the Philippines,
give to the same word used in the various parte of a
Annotated and Commented by Vicente Francisco, Vol.
single body of rules or laws different meanings, since
I, p. 351. (Italics supplied.) In this connection, he cites
must be presumed that the authors thereof must have
United States vs. Jollimore vs. Holland Furnace Co., 5
210

Federal Rules Service 205, thus: "A thirdparty def object of the civil procedure rule permitting a defendant to
endant may not be impleaded if the effect would be to bring in a third-party defendant is to avoid circuity of action
introduce a new and separate controversy into the and to dispose, in one litigation, of an entire subject matter
arising from a particular set of facts.Tullgreen vs. Jasper,
action. The test to determine whether a third-party
[1939] 27 F. Supp. 413.)
may be impleaded is whether he could have been
joined originally as a defendant by the plaintiff or 314

whether he is liable as a guarantor, surety, insurer, or 31 SUPREME COURT REPORTS


4 ANNOTATED
indemnifier of the principal defendant." Further, the
Pascual vs. Bautista,
same author opines:
"3, Nature of third-party complaint.Third party complaint
"2. Purpose of third-party complaintThe purpose of third-
is merely a device by which the defendant can bring into the
party complaint is to avoid two actions which should be
original suit a party against whom he will have a claim for
tried together to save time and cost of reduplication of
indemnity or remuneration as a result of a liability
evidence, to obtain consistent results from identical or
established against him in the original suit It is a species of
similar evidence, and to do away with the serious handicap
joinder of actions where the second action accrues only as a
to a defendant of a time difference between a judgment
result of the first action. All liabilities are determined in the
against him, and a judgment in his favor against the third-
one action and the use of third-party complaint is
party defendant. (Moore's Federal Practice, 740; Tullgreen
discretionary with the court. (Univ. of Cincinnatti Rev. Vol.
vs. Jasper, 1939, 27 F. Supp. 413.)
13, No. 1, pp. 92-93.)"
"The purpose of the rule is to avoid delay and circuity of
actions and to enable the controversy to be disposed of in I submit that a fourth-party complaint is nothing more
one suit, that is, to permit the determination in a single nothing less than a third-party complaint, except that
suit of not only the original claim, but the added party's it is only in respect of the claim of the third-party
liability therefor. (67 C.J.S. 1934; The purpose of third-
plaintiff against the third-party defendant. Now,
party procedure is to avoid circuity of action and permits
Section 13 of Rule 6 defines a fourth-party complaint
the determination in a single action of the rights and
as follows:
liabilities of parties growing out of facts that relate to the
"SEC. 13, Fourth, etc,, parties.A third-party defendant
same transaction.Carbola Chemical Co., Inc. vs. Trundle
may proceed under this rule against any person not a party
Engineering Co., 7 Federal Rules Service, 269; The primary
211

to the action who is or may be liable to him or to the third- 315

party plaintiff for all or part of the claim made in the action VOL. 33, MAY 29, 1970 315
against the third-party defendant/' Salvador vs. Frio
Applying these views to this case, I reiterate that if the
I am convinced that these simple words claim of Bautista were a real third-party complaint,
applied mutatis mutandis to the definition of a third- the effect would be that the judgment, even by the
party complaint convey the true concept of such default, against Flores did not become executory until
pleading- I simply cannot see why a plaintiff can be after the claim against Bautista had been finally
made to saddle the time, inconvenience and expenses determined, for in my concept, as explained above, of a
of attending to a third-party complaint wherein the real third-party complaint, the third-party def endant
fate of his own claim against the def endant is is never liable to the defendant unless the latter is
absolutely independent of the claim of the def endant liable to the plaintiff.
against the third-party defendant just because the Notes.(a) Appealability of judgment by default.
transaction involved in the third-party complaint Under the Revised Rules of Court, a party who has
happens to be related somehow to the transaction been declared in default may appeal from the
subject of his complaint, especially if the plaintiff has judgment rendered against him as contrary to the
not taken part nor is he mentioned or referred to in evidence or to the law, even if no petition for relief to
such transaction. My fear is that such an amplification set aside the order of default has been presented by
of the concept of thirdparty complaints which the main him in accordance with Rule 38. (See third paragraph
opinion seems to sanction will not serve the purpose of of Section 2, Rule 41.)
"assisting the parties in obtaining just, speedy and (b) Third-party complaint; relationship of subject
inexpensive determination of every action or matter to main case.The tests for determining
proceeding" as envisioned in Section 2 of Rule 1. On whether a claim for indemnity in a third party
the contrary, it is bound to create confusion, complaint is "in respect to plaintiff's claim" are: (1)
unnecessary delay and expense for the plaintiff whether it arises out of the same transaction on which
without any corresponding benefit to the interests of plaintiff's claim is based or, although arising out of a
justice. different contract or transaction, is connected with
212

plaintiff's claim; (2) whether the third-party defendant any defense which. the third-party plaintiff has or may
would be liable to plaintiff or to defendant for all or have to plaintiff s claim (Capayas vs. Court of First
part of plaintiff's claim, although the third-party Instance of Albay, 77 Phil. 181).
defendant's liability arises out of another transaction;
and (3) whether the third-party defendant may assert