EN BANC
[G.R. No. L-17619. October 31, 1962.]
FRANCISCA GATCHALIAN, plaintiff-appellee, vs. GORGONIO PAVILIN, JOSE DE
VERA, EUGENIO DE VERA, JOSE ORTIZ, ALFONSO ORTIZ, and CONRADO
CABUYADAO, defendants-appellants.
Fiesta & Cerezo for defendant-appellants.
Francisco C . Dalupang for plaintiff-appellee
SYLLABUS
1. PLEADING AND PRACTICE; ANSWER; PLEADING OF ALTERNATIVE OR
HYPOTHETICAL DEFENSES PERMITTED. Section 9 of Rule 15, of the Rules of Court,
specifically authorizes the pleading of alternative or hypothetical defenses, and such
defenses may be inconsistent with each other provided each is consistent in itself (Castle
Bros. vs. G. Juno, 7 Phil. 144; Heirs of Marquez vs. Valencia, 99 Phil., 740; 52 Off. Gaz., 6176;
1 Moran, Comments on the Rules of Court, 1957 Ed., pp. 234-235).
2. ID.; ID.; ID.; RIGHT OF DEFENDANT TO QUESTION PLAINTIFF'S TITLE IN CASE
AT BAR. A defendant who, because of his prior occupancy and cultivation of a parcel of
land, has already acquired possessory rights which he may vindicate and defend against
intruders without better title, has the personality to question the plaintiff's land grant and
certificate of title as null and void for the reason that they cover forest land.
3. SUMMARY JUDGMENT; IMPROPRIETY OF JUDGMENT IF QUESTION OF FACT
STILL UNRESOLVED. A trial is indispensable, and a summary judgment is improper, if,
as in the case at bar, the conflicting claims of the parties plainly require the exact
delimitation of the areas covered by the title of the plaintiff and those occupied by the
defendants in order to find out if they overlap, because questions of law should be resolved
after, and not before, the questions of fact are properly litigated, since the facts proved
may well affect the legal provisions applicable.
DECISION
REYES, J.B.L., J p:
Appeal on points of law from a summary judgment rendered on 15 December 1959 by the
Court of First Instance of Isabela, Branch II (Judge Pedro C. Quinto presiding), in its case
No. 385, declaring plaintiff-appellee Francisca Gatchalian owner of the disputed property
and ordering defendants-appellants to vacate the same; as well as from the supplementary
decision of 23 August 1960 awarding damages against the defendants and in favor of
plaintiff.
In substance, the complaint, which was filed on 9 August 1958, alleged that plaintiff-
appellee Gatchalian is the owner of a tract of land consisting of three lots with a total area
of about 143 hectares as evidenced by one Original Certificate of Title No. P-31 (Sales
Patent No. V-33) of the Register of Deeds of the Province of Isabela; that Lot No. 2 thereof
consists of about 88 hectares, portions of which were "by means of force, strategy and/or
stealth, unlawfully entered" by herein defendants-appellants during the planting season
of 1953, "ejecting the plaintiff and/or her representative or representatives, thereby
illegally depriving said plaintiff of the possession of said portions" which have an
aggregate area of 36 hectares; and that the extent or area in Lot No. 2 respectively entered
by the defendants are, more or less, as follows:
Gorgonio Pavilin 3 hectares
Jose de Vera and Eugenio de Vera 12 hectares
Jose Ortiz 8 hectares
Alfonso Ortiz 8 hectares
Conrado Cabuyadao 5 hectares
T O T A L 36 hectares;
and prayed for recovery and damages.
In their joint answer, appellants not only denied all the material facts and allegations of
the complaint but also made "Affirmative and Alternative Defenses" with" Counterclaim",
with special emphasis on the fact that said Certificate of Title No. P-31 is null and void ab
initio, the same being a forest land at the time it was allegedly bought in 1947 by plaintiff-
appellee. Furthermore, appellants claim in their answer that "the alleged landholding and
title of the plaintiff could not have covered defendant's landholding" (paragraph 2,
Affirmative an Alternative Defenses); that their predecessors-in-interest, in good faith,
took possession, made clearings, cultivations, and improvements thereon for several years
long before 1953, openly, continuously, exclusively, publicly and peacefully, on concept of
owners thereof, with intention of acquiring later on their respective land titles over the
same from the Bureau of Lands, in the manner provided by law, as soon as it is released
by the Bureau of Forestry. In attempting to perfect their claim over their landholdings,
appellants claim in their answer and submitted affidavits that they had filed and paid for
their homestead entry applications, entered and numbered as H. A. Nos. V-68296; V-
68301; V- 68382; and V-68298 (Exhibits 3 and 4, pp. 57-58 and 63-65, Record on Appeal),
after the said land was actually released by the Bureau of Forestry to the Bureau of Lands
on 17 May 1954, several years before plaintiff's patent was issued by that Bureau.
Upon motion of the plaintiff, and overruling the objections of the defendants, the court
below declared that there was no genuine issue of fact in so far as the title to the property
was concerned, and granted summary judgment in her favor, ordering defendants to
vacate the land. In a supplementary decision, plaintiff was awarded damages to be paid by
defendants.
Their motions for reconsideration having been rejected, defendants appealed to this
Court.
The theory of plaintiff-appellee, accepted by the Court a quo, is that the defendants-
appellants' pleadings raised no genuine issue of fact. We find this contention unwarranted.
Our examination of the pleadings and affidavits submitted for the defendants reveals that
while inartistically drawn, they interpose two main defenses: (1) that their landholdings
lay outside the title of the plaintiff; and (2) that if her title did cover their landholdings, the
title was acquired illegally, because at the time the plaintiff's sales patent was issued, the
land covered was still part of a forest reserve. While such defenses are to a certain extent
incompatible inter se, it can not be said that they raise no genuine issue of fact. It must be
remembered that section 9 of Rule 15 specifically authorizes the pleading of alternative or
hypothetical defenses, and the decisions of this Court hold that such defenses may be
inconsistent with each other provided each is consistent in itself (Castle Bros. vs. Go Juno,
7 Phil. 144; Heirs of Marquez vs. Valencia, 99 Phil., 740; 52 O.G. 6176; I Moran, Comments
on the Rules of Court, 1957 Ed., pp. 234-235).
In view of the circumstances, the following notes that former Chief Justice Moran (of. cit.) WHEREFORE, we find that the court a quo erred in rendering the summary judgment
has made on the rendition of summary judgments under the Federal Rules are opposite complained of; hence, its decisions in its Civil Case No. 385 (II Branch), dated 15 December
and fully applicable to the case now before us: 1959 and 23 August 1960, are annulled and set aside. The records are ordered remanded
to the court below for trial on the merits in conformity with the Rules and established
"A summary judgment should not be granted unless the facts are clear and undisputed, practice, and for a new judgment as the facts, law, and justice may warrant. Costs against
and if there is a controversy upon any question of fact, there should be a trial of the action appellee Francisca Gatchalian.
upon its merits. (Kissick Construction Co. vs. First National Bank of Wahoo, Nebraska, 6
Fed. Rules Service, 56c. 41, Dec. 3, 1940)." (Moran's Comments on the Rules of Court, Vol. Bengzon, C . J ., Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala and
I, p. 600. 2nd Ed.) Makalintal, JJ ., concur.
Padilla, J ., took no part.
"Authority of Court to enter summary judgment. Rule 56 (in this jurisdiction Rule 36,
sec. 3) does not vest in the court jurisdiction summarily to try the issues on depositions
and affidavits, but gives the court limited authority to enter summary judgment only if it
clearly appears that there is no genuine issue of material fact. Upon a motion for summary
judgment the Court's sole function is to determine whether there is an issue of fact to be
tried, and all doubts as to the existence of an issue of fact must be resolved against the
moving party. On a motion for summary judgment, the court is not authorized to decide
an issue of fact, but is to determine whether the pleadings and record before the court
create an issue of fact to be tried. In other words, the rule (Rule 36, sec. 3) does not invest
the court with jurisdiction summarily to try the factual issues on affidavits, but authorizes
summary judgment only if it clearly appears that there is no genuine issue as to any
material fact." (Moran, supra, p. 603)

"Movant has burden of showing absence of genuine issue. A party who moves for
summary judgment has the burden of demonstrating clearly the absence of any genuine
issue of fact, and any doubt as to the existence of such an issue is resolved against the
movant. The courts are quite critical of the papers presented by the moving party, but not
of the opposing papers. Thus, in ruling on a motion for summary judgment the court
should take that view of the evidence most favorable to the party against whom it is
directed, giving that party the benefit of all favorable inferences. That one may surmise
from plaintiff's showing that defendant is unlikely to prevail upon a trial is not a sufficient
basis to assume that defendant's allegations are sham, frivolous or unsubstantial. If the
defense relied upon by the defendant is legally sufficient and does not appear 'patently
sham,' the motion for summary judgment should be denied." (Moran, supra, pp. 601-602)
The conflicting claims of the parties plainly require the exact delimitation of the area
covered by the title of the plaintiff and those occupied by the defendants in order to find
out if they overlap. To do so, a trial is indispensable.

As to the alleged lack of personality of defendants-appellants to assail appellee's land grant

and certificate of title for the reason that said appellants are mere prospective homestead
applicants, it is sufficient to remark that by reason of their prior occupancy and cultivation,
these parties have already acquired possessory rights that they may vindicate and defend
against intruders without better title. And if it be true that the Bureau of Lands had no
jurisdiction to issue a patent in favor of appellee Francisca Gatchalian because the land
involved was still inalienable forest land when granted, then it may be plausibly contended
that her patent title would be ab initio void, subject to attack at any time by any party
adversely affected (Civil Code, Art. 1409, 1421; Vao vs. Insular Gov't., 41 Phil. 161;
Adorable vs. Dir. of Forestry, L-13663, 25 March 1960). Be that as it may, the questions of
law should be resolved after, and not before, the questions of fact are properly litigated,
since the facts proved may well affect the legal provisions applicable.
EN BANC
[G.R. No. L-7328. August 21, 1956.]
HEIRS OF LAUREANO MARQUEZ, petitioners, vs. VICENTE VALENCIA, respondent.
Rosendo J. Tansinsin for petitioners.
Paredes, Balcoff & Poblador for respondent.
SYLLABUS
1. LAND REGISTRATION; RENEWAL OF APPLICATION FOR REGISTRATION UPON
A DIFFERENT GROUND, WHEN ALLOWABLE. A renewal of an application for
registration of the same parcel of land or an amendment thereto upon a ground different
from that alleged in the previous application may only be allowed if the dismissal of the
first application was without prejudice and not when the ownership or title to the piece of
land was litigated by the same parties and a judgment rendered for one party and against
the other.
2. ID.; PLEADING AND PRACTICE; ALTERNATIVE DEFENSES; OVERRULING OF
FIRST DEFENSE NOT A BAR TO DETERMINATION OF THE SECOND; SUBSEQUENT
ACTION BASED ON UNPLEADED DEFENSE, BARRED. If defendant in the present case,
aside from relying solely on the deed of sale with a right to repurchase and failure on the
part of the vendors to repurchase it within the period stipulated therein, had set up an
alternative though inconsistent defense that he had inherited the property from his late
maternal grandfather and presented evidence in support of both defenses, the overruling
of the first would not bar the determination by the court of the second. But as defendant
failed to set up such alternative defenses and elected to rely on one only, the overruling
thereof was a complete determination of the controversy between the parties which bars
a subsequent action based upon unpleaded defense, or any other cause of action except
that of failure of the complaint to state a cause of action and of lack of jurisdiction of the
Court. The determination of the issue joined by the parties constitutes res judicata.
DECISION
PADILLA, J p:
This is an appeal by certiorari under Rule 46 from a judgment of the Court of Appeals
reversing one of the Court of First Instance of Bulacan and remanding the case for new
trial.
As found by the Court of Appeals, Vicente Valencia applied for the registration of two
parcels of land described in the application and plan attached thereto, claiming that he had
acquired title thereto because the spouses Laureano Marquez and Eusebia Capiral had
failed to repurchase the parcels of land within the period of time stipulated in a contract
of sale with a right to repurchase. Laureano Marquez and Eusebia Capiral objected to the
application averring that they were the owners of the parcels of land applied for
registration by Vicente Valencia and that the parcels of land were the subject of litigation
between them and the applicant then pending in the Court of First Instance of Bulacan
(civil case No. 5250). One of the parcels of land (lot No. 1-b-2) was excluded from the
application because it was already registered in the name of Felipa Crisostomo, as
evidenced by certificate of title No. 12353. By agreement of the parties the hearing of the
application for registration of the remaining parcel of land (lot No. 1-b-3) was postponed
until after final judgment shall have been rendered in civil case No. 5250 between the same
parties. The spouses Laureano Marquez and Eusebia Capiral, the plaintiffs in civil case No.
5250, brought an action against Vicente Valencia to secure a declaration that the deed of
sale with pacto de retro executed by them on 27 July 1931 in favor of the defendant was
null and void. The Court of First Instance of Bulacan held that the contract was one of
antichresis. The Court of Appeals held that it was a sale with pacto de retro. On appeal by
certiorari this Court held that it was not a sale with a right to repurchase but an equitable
mortgage only and ordered Laureano Marquez and Eusebia Capiral to pay Vicente
Valencia the mortgage debt of P7,000. In view of this judgment, on 20 April 1948 Vicente
Valencia amended his application alleging that he had acquired the parcel of land (lot No.
1-b-3) by inheritance from his maternal grandfather, the late Pedro Crisostomo, and that
he and his predecessors-in-interest have been in possession thereof from time
immemorial, his possession having been interrupted only on 23 April 1947, by the heirs
of the late Laureano Marquez who also claimed to be the owners the parcel of land by
inheritance from their late parents. After hearing, the trial court dismissed the application
for registration filed by the respondent, on the ground of res judicata, and decreed the
registration thereof in the name of the estate of the late Laureano Marquez. The dispositive
part of the judgment reads as follows:
Por tanto, de acuerdo con la Seccion 37 de la ley 496, enmendada por la Seccion 2 de la ley
3621, este Tribunal, previo sobreseimiento de la solicitud de Vicente Valencia, decreta, el
registro y titulacion del terreno descrito en el plano Psu-10759, Lote No. 1-b-3, Exh. F, a
nombre del Intestado del difunto Laureano Marquez, con todas las mejoras existentes en
la misma.
Ordena, ademas, que el Intestado del difunto Laureano Marquez reembolse al solicitante
de los gastos incurridos por este consistentes en derechos de registro y derechos de
publicacion por haberse presentado de buena fe la presente solicitud de registro por el
solicitante.
Una ves firme este decision, expidase el decreto correspondiente.
From this judgment Vicente Valencia appealed. As stated the beginning of this opinion, the
Court of Appeals reversed the judgment of the lower court, being of the opinion that the
judgment in civil case No. 5250 did not bar the filing of an amended application for
registration and remanded the case to the lower court for new trial as prayed for by the
applicant.
The rule that a dismissal of an application for the registration of a parcel of land does not
bar the filing of another application, cannot be availed of in the case at bar, because a
renewal of an application for registration of the same parcel of land or an amendment
thereto upon a ground different from that alleged in the previous application may be
allowed if the dismissal of the first application was without prejudice and not when the
ownership or title to the parcel of land was litigated by the same parties and a judgment
rendered for one party and against the other. Under the provisions of section 37, Act No.
496, if the land registration court "finds that the applicant has not proper title for
registration," it shall dismiss the application and the dismissal may be without prejudice.
1 The provisions of section 37, Act No. 496, has been amended by adding three provisos.
The pertinent proviso reads as follows:
. . . Provided, however, That in case where there is an adverse claim, the court shall
determine the conflicting interests of the applicant and the adverse claimant, and after
taking evidence shall dismiss the application if neither of them succeeds in showing that
he has proper title for registration, or shall enter a decree awarding the land applied for,
or any part thereof, to the person entitled thereto, and such decree, when final, shall entitle
to the issuance of an original certificate of title to such person: . . . (Section 2, Act No. 3621.)
So that if by virtue of or pursuant to a final judgment the land registration court should Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes,
decree the registration of a parcel of land applied for in the name of the opponent, the J.B.L., and Felix, JJ., concur.
applicant could not apply anew for the registration of the same parcel of land which had
already been decreed registered in the name of his opponent. In this case the parties Footnotes
agreed to have the action brought by Laureano Marquez and Eusebia Capiral against 1. Section 37, Act No. 496.
Vicente Valencia to secure a declaration that the deed of sale of the parcel of land with a 1. Section 9, Rule 9; Castle Bros., Wolf & Sons vs. Go-Juno, 7 Phil., 144; Cia. General
right to repurchase, upon which Vicente Valencia based his application for registration of de Tabacos vs. Trinchera, 7 Phil., 689.
the parcel of land, was a nullity, (civil case No. 5250) heard and decided before the 1. Section 10, Rule 9.
application for registration. After the Court of First Instance of Bulacan and on appeal the 2. Article 1436, new Civil Code; Section 68(b), Rule 123.
Court of Appeals had rendered their respective judgments as above adverted to, this Court
on appeal by certiorari held that the deed of sale with a right to repurchase was only an
equitable mortgage. In view of this judgment Vicente Valencia amended his application
claiming that he had inherited the parcel of land from his late maternal grandfather Pedro
Crisostomo. After hearing, the Court of First Instance of Bulacan, acting as land registration
court, found that the judgment in the civil case (No. 5250) between the same parties above
referred to constitutes res judicata and bars the claim of the applicant to have the land
registered in his name. On appeal the Court of Appeals held otherwise, and as already
stated remanded the case to the lower court for new trial.

The action for nullity or annulment of the deed of sale of a parcel of land with a right
reserved by the vendors to repurchase it brought in civil case No. 5250 of the Court of First
Instance of Bulacan by the spouses Laureano Marquez and Eusebia Capiral against Vicente
Valencia was really for reformation of the contract or deed of sale. The action referred to
involved ownership or title to the parcel of land purportedly sold by the plaintiffs to the
defendant with a right reserved by the former to repurchase it from the latter, because
whether the contract was of antichresis, of sale or of mortgage, the only inference that
could be drawn from it was that the plaintiffs were the owners of the parcel of land. By
resisting the claim of the plaintiffs upon the ground that he had acquired title to the parcel
of land by a deed of sale with a right to repurchase and for failure of the plaintiffs to
repurchase it within the period of time stipulated in the deed, the defendant expressly
admitted that he had derived title to the parcel of land from the plaintiffs. If, aside from
relying solely on the deed of sale with a right to repurchase and failure on the part of the
vendors to purchase it within the period stipulated therein, the defendant had set up an
alternative though inconsistent defense 1 that he had inherited the parcel of land from his
late maternal grandfather and presented evidence in support of both defenses, the
overruling of the first would not bar the determination by the court of the second. The
defendant having failed to set up such alternative defenses and chosen or elected to rely
on one only, the overruling thereof was a complete determination of the controversy
between the parties which bars a subsequent action based upon an unpleaded defense, or
any other cause of action, except that of failure of the complaint to state a cause of action
and of lack of jurisdiction of the Court. 1 The determination of the issue joined by the
parties constitutes res judicata. More, the finding of the trial court and the Court of Appeals
that the respondent took a lease on the parcel of land sought to be registered by him from
the spouses Laureano Marquez and Eusebia Capiral, the predecessors-in-interest of the
petitioners, is another proof that Vicente Valencia was not the owner thereof. A lease
contract lawfully entered into precludes the lessee from questioning the title of the lessor.
2

The judgment of the Court of Appeals is reversed and that of the trial court affirmed, with
costs against the respondent.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-69098 May 31, 1985
GEORGIA G. TUMANG, petitioner,
vs.
HON. ODILON I. BAUTISTA, Presiding Judge of Branch XXXVII, Regional Trial Court
of Laguna, Calamba, and EMILIO JAVIER, respondents.
Agcaoili, Agcaoili, Garcia & Carpio Law Office for petitioner.
Rustico delos Reyes, Jr. for private respondent.
RESOLUTION
ABAD SANTOS, J.:
This is a petition to review and annul certain orders of the respondent-judge in Civil Case
No. 172-83 of the Regional Trial Court of Laguna.
In the aforementioned case, Emilio Javier, the private respondent herein, filed
a Sakdal against Enrique Tumang and his daughter Georgia Tumang para Danyos
Purhisyo. The sakdal was written in Tagalog and was unaccompanied by an English
translation.
In a motion for a big of particulars, the Tumangs prayed:
[T]hat plaintiff be ordered to file with this Honorable Court copy of the complaint as
translated in English, the language recognized by the courts and thereafter furnish copy
thereof, together with the copy of the criminal complaint and the Decision of acquittal in
the "Unjust Vexation" case mentioned in plaintiff's complaint, to complete the same; and
that such other and further order be issued as may be deemed just and equitable in the
premises. (Rollo, p. 28.)
In an order dated October 21, 1982 (which was re-issued on October 3, 1983), the trial
court ruled:
The complaint written in Pilipino, which is an official language, is proper and is hereby
admitted. After, the words and sentences used are clear and can be easily understood.
It is not absolutely necessary that copies of the complaint and decision in the criminal case
be attached to complaint as annexes. The plaintiff, however, should have at least stated the
docket number as well as the name of the Court and branch number thereof in order to
properly inform the defendant of the basis of his civil action.
WHEREFORE, the Motion for Bill of Particulars is hereby granted, to the effect only that
the plaintiff must state the docket number of the criminal case and the name, location and
branch number of the Court in which it was filed. (Rollo, P. 36.)
On October 24, 1983, the plaintiff filed a compliance where he gave the title and number
of the case for unjust vexation against Emilio Javier, et al., in the City Court of Baguio,
Branch I.
The defendants failed to answer the sakdal and were declared in default. They sought
reconsideration not only of the order of default but also of the order dated October 21,
1982, supra.
The trial court refused to reconsider its order: of October 21, 1982, but set aside, its order
of default. It said:
As to the motion to set aside order of default the Court after going over the pleading filed
by defendants, as well as the records of this case, finds the said motion to be well founded
and hereby sets aside the Order dated December 9, 1983, declaring the defendants in
default.
Anent the Motion for Reconsideration of the Order of the Court dated October 21, 1982,
the Court finds the same without merit and hereby denies the same. It should be noted
that "Pilipino" is an official language of the land, and there is no law prohibiting a party to
a case from filing a pleading in "Pilipino." In fact, in the motion for reconsideration, it can
be seen that defendants, through counsel, fully understood the complaint, consequently,
the Court finds no justifiable reason to order the plaintiff to file a translation in English of
the complaint. (Rollo, pp. 46-47.)
Subsequently, the defendants filed a motion to dismiss the complaint. They alleged that
the complaint did not state a cause of action and that the venue was improperly laid. Acting
on the motion, the trial court ruled:
After going over the motion to dismiss, the Court finds that the first ground alleged therein
is a matter of evidence and therefore cannot be sustained by this Court. As to the second
ground to the effect that the venue in this case was improperly laid, the Court finds the
same without merit considering that as even admitted by the defendant the venue should
be the residence or domicile of the plaintiff at the time the process is served and in this
case the plaintiff in his complaint alleged that he is a resident of Dayap, Calauan, Laguna,
consequently, within the territorial jurisdiction of this Court. (Rollo, p. 61.)
Before this Court, Georgia Tumang claims that the trial court committed errors which shall
be discussed seriatim as follows:
1. That the sakdal should have been in English and not Tagalog. This claim is not without
merit. The undersigned in his lecture entitled "Writing Decisions" has said in part:
What language should the judge use The Constitution says that "Until otherwise provided
by law, English and Pilipino shag be the official languages." (Art. XV, Sec. 3, par. 3.) If were
are to be guided by this provision then either English or Pilipino can be used. But in fact
English is almost exclusively used and with good reason. For Pilipino is still a gestating
language. The Constitution says so. It directs that "The Batasang Pambansa shall take step
towards the development and formal adoption of a common national language to be
known as Pilipino." (Id, par. 2). The Batasang Pambansa, to my knowledge, still has to take
steps towards the development and formal adoption of Pilipino as a common national
language. So I submit that we should confine ourselves to the English language.

However, the petitioner cannot now raise before this Court - the question of Language. For
in the motion to dismiss the complaint, the defendants tacitly submitted to the trial court's
ruling that the sakdal did not have to be translated to English; they analyzed the sakdal in
arguing that it stated no cause of action. Such analysis demonstrated that they understood
its contents although it was not in English.

2. That the complaint should have been amended and submission of the required
information by means of the compliance was insufficient. This claim deserves scant
consideration for two reasons: (a) the order granting partly the motion for a bill of
particulars did not require amendment of the complaint; and (b) this question again is
being raised for the first time only in this Court.

The other points raised in the petition relate to the sufficiency of the complaint and on this
score the trial court did not commit any error.

WHEREFORE, the petition is hereby denied for lack of merit with costs against the
petitioner.

SO ORDERED.

Makasiar (Chairman), Escolin and Cuevas, JJ., concur.

Concepcion, Jr., J., is on leave.

FIRST DIVISION
[G.R. No. 13300. September 29, 1919.]
BASILIA BOUGH and GUSTAVUS BOUGH, plaintiffs-appellants, vs. MATILDE
CANTIVEROS and PRESBITERA HANOPOL, defendants-appellees.
P. E. del Rosario and William F. Mueller for appellants.
Sison & Veloso for appellees.
SYLLABUS
1. PLEADING AND PRACTICE; CIVIL PROCEDURE; ANSWERS; GENUINENESS AND
DUE EXECUTION OF WRITTEN INSTRUMENTS; SECTION 103 OF THE CODE OF CIVIL
PROCEDURE CONSTRUED. In accordance with section 103 of the Code of Civil
Procedure, the genuineness and due execution of a written instrument, properly pleaded,
is deemed admitted unless the plaintiff or defendant, as the case may be, shall specifically
deny the same under oath.
2. ID.; ID.; ID.; ID.; ID. The phrase "genuineness and due execution of the
instrument" means nothing more than that the instrument is not spurious, counterfeit, or
of different import on its face from the one executed.
3. ID.; ID.; ID.; ID.; ID. The failure of the party to file an affidavit denying the
genuineness and due execution of the document does not estop him from controverting it
by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, and
want of consideration.
4. ID.; ID.; ID.; ID.; ID.; DEFENSE OF ILLEGALITY OF FRAUD. As section 285 of
the Code of Civil Procedure permits a writing to be impeached because of its illegality or
fraud, such a defense would not be barred by the provisions of section 103.
5. ID.; ID.; ID.; ID.; ID.; ID. Held: That although the defendants did not deny the
genuineness and due execution of the contract of sale of December 9, 1913, under oath,
yet the defendants could properly set up the defenses of fraud and want of consideration.
6. PUBLIC INSTRUMENTS; VARYING TERMS; PAROLE EVIDENCE TO ESTABLISH
ILLEGALITY OR FRAUD; SECTION 2185 OF THE CODE OF CIVIL PROCEDURE CONSTRUED.
Article 1218 of the Civil Code which provides that public instruments are evidence of
the fact which gave rise to their execution, should be read in conjunction with section 286
of the Code of Civil Procedure.
7. ID.; ID.; ID.; ID. Evidence to establish illegality or fraud, is expressly permitted
under section 285 of the Code of Civil Procedure, and may be proved by circumstantial
evidence, aided by legitimate inferences from the direct facts.
8. CONTRACTS; ILLEGAL AS AGAINST PUBLIC POLICY. Contracting parties may
not establish pacts, clauses, and conditions, which conflict with the laws, morals, or public
order.
9. ID.; ID.; "PUBLIC ORDER" CONSTRUED. "Public order" in the civil law signifies
the public weal public policy.
10. ID.; ID.; ACTIONS TO ENFORCE. A party to an illegal contract cannot come into
a court of law and ask to have his illegal objects carried out. The law will not aid either
party to an illegal agreement; it leaves the parties where it finds them.
11. ID.; ID.; ID. Where the parties to an illegal contract are not equally guilty, and
where public policy is considered as advanced by allowing the more excusable of the two
to sue for. relief against the transaction, relief is given to him. Cases of this character are,
where the conveyance was wrongfully induced by the grantee through imposition or
overreaching, or by false representations, especially by one in a confidential relation.
12. ID.; ID.; ID. Held: That since the grantor, reposing faith in the integrity of the
grantee and relying on a suggested occurrence which did not in fact take place, was made
the dupe of the grantee, the grantor should be placed in the position in which she was
before the transactions were entered into.
DECISION
MALCOLM, J p:
This action was begun in the Court of First Instance of Leyte, pursuant to a complaint by
means of which the plaintiffs Basilia Bough and Gustavus Bough sought to have
themselves put in possession of the property covered by the deed of sale quoted in the
complaint, and to require the defendant Matilde Cantiveros to pay the plaintiffs the sum
of five hundred pesos by way of damages, and to pay the costs. Matilde Cantiveros
answered with a general denial and a special defense, not sworn to, in which she asked
that judgment be rendered declaring the contract of sale theretofore made between
herself and Basilia Bough null. The plaintiffs, thereupon, denied under oath the
genuineness and due execution of the so-called donation intervivos set forth in the answer.
Presbitera Hanopol was permitted to intervene as a defendant. After trial, judgment was
rendered by the Honorable W. E. McMahon, judge of first instance, in favor of the
defendants, declaring the deed of sale, Exhibit A, fictitious, null, and without effect, and
absolving the defendants from the complaint, with costs against the plaintiffs. It is from
this judgment through the ordinary means of perfection of a bill of exceptions that the case
is brought to this court for decision.
The facts are these: Matilde Cantiveros is reputed to be the richest resident of the
municipality of Carigara, Leyte. In the latter part of the year 1913, she was the owner of
various parcels of realty of the value of thirty thousand pesos, or more. On December 24,
1912, Matilde Cantiveros and her husband Jose Vasquez, signed a marital contract of
separation. At this time there lived with Matilde Cantiveros, Basilia Hanopol, a cousin and
protege since childhood, who was married to Gustavus Bough. For this reason, Gustavus
Bough was regarded by Matilde Cantiveros with great confidence, even as her child.
Through the influence of Gustavus Bough, who brought a story to Matilde Cantiveros that
her husband Jose Vasquez was in town and might contest the contract for the separation
of the conjugal property, Matilde Cantiveros was induced to sign a fictitious contract of
sale of all her property to Basilia Bough. This document, introduced in evidence as Exhibit
A, was prepared in due form and acknowledged before a notary public, the amount of the
consideration, ten thousand pesos, being last inserted with a pen. By this deed, Matilde
Cantiveros purported to convey sixty-three parcels of land, the real value of which was
over thirty thousand pesos, for ten thousand pesos, although no evidence that any such
sum ever passed between the parties was introduced, to her cousin, Basilia Bough. In
order to reassure Matilde Cantiveros that they would not take advantage of the fictitious
sale, Gustavus Bough and Basilia Bough prepared and signed another document,
introduced in evidence as Exhibit 1, which is a donation by them to Matilde Cantiveros of
all the property mentioned in Exhibit A, to be effective in case of the death of themselves
and their children before the death of Matilde Cantiveros. The defendant, Matilde
Cantiveros, has remained in possession of the property.
These facts, which, it may be said, are mainly derived from the findings of the trial court,
merely repeat the threadbare story of a conveyance of property entered into with a
fraudulent intention and for a fraudulent purpose, in order to defeat recovery in a suit at
law by a third party.
Plaintiffs and appellants assign six errors of the trial court. In so far as these assignments
concern the facts, they need no discussion. Plaintiff's declarations have not been
corroborated, while defendant's story has been corroborated by reliable witnesses. All the
reason all the equity of the case, is in favor of the defendants. As far as necessary for
the disposition of the appeal, we resolve plaintiff's points in order.
1. The first assignment of error reads: "The lower Court erred in permitting the
defendants to present evidence, over the objections of the plaintiff, tending to impugn the
genuineness and due execution of the document, Exhibit A, and in admitting them to show
the circumstances under which it was executed."
It is undeniable that this was an action brought upon a written instrument, and that the
complaint contained a copy of the instrument, but that its genuineness and due execution
were not specifically denied under oath in the answer. Is this fatal to the defense?
Section 103 of the Philippine Code of Civil Procedure provides:
"When an action is brought upon a written instrument and the complaint contains or has
annexed a copy of such instrument, the genuineness and due execution of the instrument
shall be deemed admitted, unless specifically denied under oath in the answer; and when
the defense to an action, or a counterclaim stated in an answer, is founded upon a written
instrument and the copy thereof is contained in or annexed to the answer, the genuineness
and due execution of such instrument shall be deemed admitted, unless specifically denied
under oath by the plaintiff in his pleadings."
This section is derived from sections 448 and 449 of the Code of Civil Procedure of
California, and is to be found in varying form in the statutes of practically all the states of
the American Union. The meaning of this portion of the Code, and the intention of the
Legislature in enacting it, are easily found. The law says that the genuineness and due
execution of a written instrument properly pleaded shall be deemed admitted unless the
plaintiff or defendant, as the case may be, shall specifically deny the same under oath.
When the law makes use of the phrase "genuineness and due execution of the instrument"
it means nothing more than that the instrument is not spurious, counterfeit, or of different
import on its face from the one executed. As an example, where the name of a corporation
is signed to the document which is the basis of an action, the failure of the defendant
corporation to put in issue, by denial under oath, the due execution of the instrument, is
required in section 103 of the Code of Civil Procedure, operates as an admission of the
authority of the officer to execute the contract, since the authority of the officer to bind the
company is essential to the due execution of its contract. (Ramirez vs. Orientalist Co. and
Fernandez [1918], 38 Phil., 634.) But the failure of the party to file an affidavit denying the
genuineness and due execution of the document does not estop him from controverting it
by evidence of fraud mistake, compromise, payment, statute of limitations, estoppel, and
want of consideration. As section 285 of our Code of Civil Procedure permits a writing to
be impeached because of its illegality or fraud, such a defense would not be barred by the
provisions of section 103. (Moore vs. Copp [1897], 119 Cal., 429; Brooks vs. Johnson
[1898], 122 Cal., 669; Hibberd vs. Rohde and McMillian [1915], 32 Phil., 476.)
We hold that although the defendants did not deny the genuineness and due execution of
the contract of sale of December 9, 1913, under oath, yet the defendants could properly
set up the defenses of fraud and want of consideration.
2. The second assignment of error reads: "The lower Court erred in finding that the
plaintiff Gustavus Bough, having prepared a contract of separation between the defendant
Matilde Cantiveros and her husband, Jose Vasquez, sought to cause her to believe that she
exposed herself to a suit by her husband regarding her property, notwithstanding the
contract of separation, and for that reason and for the purpose of shielding herself from
the consequences of the apprehended suit, that she and her mother executed the
document Exhibit A."
Counsel relies on the provisions of article 1218 of the Civil Code, which provides that
"Public instruments are evidence, even against a third person, of the fact which gave rise
to their execution and of the date of the latter." The effect of this article has been
announced in numerous decisions of the Supreme Court of Spain and of this Court. (See
Hijos de I. de la Rama vs. Robles and Robles [1907], 8 Phil., 712.) But in conjunction with
article 1218 of the Civil Code, there should always be read section 285 of the Code of Civil
Procedure which provides that:
"When the terms of an agreement have been reduced to writing by the parties, it is to be
considered as containing all those terms, and therefore there can be, between the parties
and their representatives or successors in interest, no evidence of the terms of agreement
other than the con- tents of the writing, except in the following cases:
"1. Where a mistake or imperfection of the writing, or its failure to express the true
intent and agreement of the parties, is put in issue by the pleadings;
"2. Where the validity of the agreement is the fact in dispute. But this section does
not exclude other evidence of the circumstances under which the agreement was made, or
to which it relates, or to explain an intrinsic ambiguity, or to establish its illegality or fraud.
The term 'agreement' includes deeds and instruments conveying real estate, and wills as
well as contracts between parties."
While thus as the law well says "public instruments are evidence of the fact which gave
rise to their execution" and are to be considered as containing all the terms of the
agreement, yet, if the validity of the agreement is the issue, parole evidence may be
introduced to establish illegality or fraud. Evidence to establish illegality or fraud, is
expressly permitted under section 285 of the Code of Civil Procedure, and may be proved
by circumstantial evidence, aided by legitimate inferences from the direct facts. (Camacho
vs. Municipality of Baliuag [1914], 28 Phil., 466; Maulini vs. Serrano [1914], 28 Phil., 640;
Union Mut. Life Insurance Co. vs. Wilkinson [1872], 13 Wall., 222; Maxon vs. Llewelyn
[1898], 122 Cal., 195, construing section 1856 of the Code of Civil Procedure of California,
identical with section 285 of the Code of Civil Procedure of the Philippines.)
We hold that parole evidence was properly admitted to show the illegality of the contract
of sale introduced as Exhibit A.
3. The third point raised by appellant is, that the defendant, having accepted the
donation expressed in the instrument Exhibit 1, is now estopped from denying the
consideration set forth therein. A sufficient answer is, that it having been established that
Exhibit A is invalid, such an instrument cannot be made the basis of an estoppel.
We hold that the so-called donation in favor of Matilde Cantiveros did not operate to create
an estoppel.
4. The last question which is propounded by appellant relates to the effect of the
illegality of the instant contract. It is rudimentary that contracting parties may not
establish pacts, clauses, and conditions, which conflict with the laws, morals, or public
order; "public order" signifies "the public weal" public policy (Article 1255, Civil Code;
Manresa, Comentarios al Codigo Civil, Vol. 8, p. 574.) It is further well settled, that a party
to an illegal contract cannot come into a court of law and ask to have his illegal objects
carried out. The rule is expressed in the maxims: "Ex dolo malo non oritur actio," and "In
pari delicto potior est conditio defendentis." The law will not aid either party to an illegal
agreement; it leaves the parties where it finds them. (Article 1306, Civil Code; Perez vs.
Herranz [1907], 7 Phil., 693.) Where, however, the parties to an illegal contract are not
equally guilty, and where public policy is considered as advanced by allowing the more
excusable of the two to sue for relief against the transaction, relief is given to him. Cases
of this character are, where the conveyance was wrongfully induced by the grantee
through imposition or overreaching, or by false representations, especially by one in a
confidential relation. (13 C. J., 497-499; Pride vs. Andrew [1894], 51 Ohio State, 405.)
As corroborative examples of these principles, we may cite the following:
"Where a husband falsely represented to his wife that she was liable for certain debts, and
that the creditors would take her property and influenced by this, and intending to defraud
such creditors, she transferred her property to him, it was held that the deed would be set
aside." (Boyd vs. De la Montagnie [1878], 73 N. Y., 498.)
"Where a party has given a conveyance of his property with intent to defraud a creditor,
the law will allow him no relief against such conveyance, but will leave him in the situation
in which he has placed himself. But where there is no creditor in fact, but only an imaginary
one, through fear of whom the grantor, encouraged by the grantee, makes the conveyance,
a fraudulent intent will not be imputed to the grantor, and where the conveyance of the
property has been without consideration, he may recover the same or its value." (Kervick
vs. Mitchell [1885], 68 Iowa, 273.)
"Where a son falsely represented to his mother that a suit was about to be brought against
her for slander which would result in her losing all her property, and thereby induced her
to convey all her property to him, it was held that the conveyance would be set aside at
her suit." (Harper vs. Harper & Co. [1887], 85 Ky., 160.)
"Where a woman seventy years of age and illiterate was induced by her son-in-law and
the sureties on his bond to execute a mortgage to the sureties to indemnify them on a
defalcation by the son-in-law, by holding out to her the anticipated punishment of the
latter, without allowing her a chance to consult any disinterested friend, it was held that
the mortgage would be set aside." (Bell vs. Campbell [1894], 123 Mo., 1.)
"One who executes a bill of sale at the instance of the grantee, for the purpose of putting
his property beyond the reach of a third person whom the grantee represented was about
to institute suit against the grantor, is entitled to recover the value of the property, where
such third person had no valid claim against the grantor, but had been settled with in full,
and his receipt taken." (Kervick vs. Mitchell [1885], 68 Iowa, 273.)
"A brother who conveyed property to his sister on a secret trust for his benefit, to defeat
any claim for alimony which his wife, who had instituted a suit for divorce, might make
against him, is entitled to enforce the trust upon which the conveyance was made, where
it does not appear that any claim for alimony was ever set up by his wife, or allowed, or
that facts existed entitling her to such an allowance. The court said: 'It does not appear
that there was any creditor whose rights or interests could be prejudiced by the
conveyance, and the question is whether or not the mere motive which impelled the party
to make the deed will preclude him from enforcing the trust upon which it was executed.
We think that where there is no creditor, there is no fraud, and therefore no policy of the
law to prevent the enforcement of the trust.' " (Rivera vs. White [1901], 94 Tex., 538.)
"A conveyance made by a mother to a daughter in consequence of false representations
that her property might otherwise be taken from her to satisfy a claim for alimony arising
from a suit for divorce about to be brought against her son by his wife will be cancelled.
The Court said: 'If the conveyance was made for the purpose of protecting the property
from such claim, such representations being untrue, and such apprehensions in fact
groundless, then she is entitled to have the deeds set aside.' " (Kleeman vs. Peltzer [1885],
17 Neb., 381.)
In this instance, the grantor, reposing faith in the integrity of the grantee, and relying on a
suggested occurrence, which did not in fact take place, was made the dupe of the grantee,
and led into an agreement against public policy. The party asking to be relieved from the
agreement which she was induced to enter into by means of fraud, was thus in delicto, but
not in pari delicto with the other party. The deed was procured by misrepresentation and
fraud sufficient to vitiate the transaction. The rights of creditors are not affected. We feel
that justice will be done if we place the grantor in the position in which she was before
these transactions were entered into.
The facts of this case are not greatly dissimilar from those to be found in Hibberd vs. Rohde
and McMillian ( [1915], 32 Phil., 476), relating to the defenses permissible where an
instrument was submitted by the plaintiff, and not denied under oath by the defendant,
and to the subject of contracts against public policy. The doctrine there announced need
not be incorporated in this decision. We resolve each assignment of error against the
appellants, and having done so, affirm the judgment of the trial court, with costs of this
instance against the appellants. So ordered.
EN BANC
[G.R. No. 8418. December 9, 1915.]
L. O. HIBBERD, plaintiff-appellant, vs. WM. J. ROHDE and D. J. MCMILLIAN,
defendants-appellees.
Gibbs, McDonough & Blanco for appellant.
W. L. Wright for appellees.
SYLLABUS
1. CONTRACTS; ADMISSION OF GENUINENESS AND DUE EXECUTION. By the
admission of the genuineness and due execution of an instrument, as the term is used in
section 103 of the Code of Civil Procedure, is meant that the party whose signature it bears
admits that he signed it or that it was signed by another for him with his authority; that at
the time it was signed it was in words and figures exactly as set out in the pleading of the
party relying upon it; that the document was delivered and that any formal requisites
required by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are
waived by him.
2. ID.; ID; DEFENSES CUT OFF. Such defenses as that the signature is a forgery;
or that it was unauthorized, as in the case of an agent signing for his principal, or one
signing in behalf of a partnership, or of a corporation; or that, in the ease of the latter, that
the corporation was not authorized under its charter to sign the instrument; or that the
party charged signed the instrument in some other capacity than that alleged in the
pleading setting it out; or that it was never delivered are cut off by the admission of its
genuineness and due execution.
3. ID.; ID.; DEFENSES ALLOWED. Any defense of new matter, such as payment
where nonpayment is alleged, the statute of limitations, illegality of consideration, etc.,
may be under a proper plea to that effect, notwithstanding the failure of the party charged
to enter a verified denial of the genuineness and due execution of the document declared
upon.
4. ID; CONSIDERATION; INTERFERENCE WITH CRIMINAL PROSECUTIONS. Any
contract whereby it is sought to actively obstruct or hinder the prosecution of a public
offense, as by the promise of the injured person not to prosecute, or by the suppression of
evidence or by improper solicitation of officials of the State whose authority extends to
the due investigation and prosecution of the culprit, is against public policy and will not
be enforced by the courts, notwithstanding that there has been, in fact, no crime
committed, or that the greater part of the consideration of the contract may consist of
reparation to the injured party.
5. ID.; ID.; COMPROMISE OF CIVIL LIABILITY RESULTING FROM PUBLIC OFFENSE.
Contracts relating exclusively to the civil liability of one charged with a public offense
are legal and enforcible. The mere expectation of the accused person that settlement of his
civil liability will stop the criminal prosecution, or the promise of the injured person not
to actively assist in such criminal case is not sufficient to taint the contract with illegality.
Whether a contract of this character tends to obstruct the due administration of the
criminal laws is a question of fact which must be determined from all the facts and
circumstances of the particular case.
6. ID.; ID.; ID.; FACTS OF THIS CASE. In accordance with an executory contract
entered into after the preliminary investigation of a complaint of estafa, but before
decision had been rendered by the justice of the peace, the complaining party moved for
the dismissal of the criminal complaint, the consideration being a promissory note signed
by the accused and one other for the amount of the property taken. There was no evidence
that the criminal prosecution had been instituted for the purpose of extorting a settlement
from the accused nor that the injured party undertook to suppress evidence, not to testify,
or to do any other thing that would tend to obstruct further investigation of the complaint
by the State's prosecuting officers. In the absence of any other evidence, and in view of the
publicity which had been given to the accusation, Held: That the contract did not tend to
obstruct the administration of the criminal laws, and that it was valid and enforcible.
DECISION
TRENT, J p:
This is a suit on a promissory note against the makers. Only one of them, the defendant
Rohde, appeared and answered. He not having entered a verified specific denial of the
genuineness and due execution of the note, the plaintiff claims that his special defense of
illegality of consideration is cut off by section 103 of the Code of Civil Procedure, which
reads as follows: "Actions and defenses based upon written instruments. When an
action is brought upon a written instrument and the complaint contains or has annexed a
copy of such instrument, the genuineness and due execution of the instrument shall be
deemed admitted, unless specifically denied under oath in the answer; and when the
defense to an action, or a counterclaim stated in an answer, is founded upon a written
instrument and the copy thereof is contained in or annexed to the answer, the genuineness
and due execution of such instrument shall be deemed admitted, unless specifically denied
under oath by the plaintiff in his pleadings."
By the admission of the genuineness and due execution of an instrument, as provided in
this section, is meant that the party whose signature it bears admits that he signed it or
that it was signed by another for him with his authority; that at the time it was signed it
was in words and figures exactly as set out in the pleading of the party relying upon it; that
the document was delivered; and that any formal requisites required by law, such as a seal,
an acknowledgment, or revenue stamp, which it lacks, are waived by him. Hence, such
defenses as that the signature is a forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425;
Cox vs. Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre, 73 Ind., 198; Smith vs.
Ehnert, 47 Wis., 479; Faelnar vs. Escaho, 11 Phil. Rep., 92); or that it was unauthorized, as
in the case of an agent signing for his principal, or one signing in behalf of a partnership
(County Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root, 60 Ind., 220; Naftzker vs.
Lantz, 137 Mich., 441), or of a corporation (Merchant vs. International Banking
Corporation, 6 Phil. Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs. Spencer &
Barnes Co., 162 Mich., 509); or that, in the case of the latter, that the corporation was not
authorized under its charter to sign the instrument (Merchant vs. International Banking
Cor- poration, supra); or that the party charged signed the instrument in some other
capacity than that alleged in the pleading setting it out (Payne vs. National Bank, 16 Kan.,
147); or that it was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs. Mullen! 4 Idaho,
199; Thorp vs. Keokuk Co., 48 N. Y., 253; Fire Association of Philadelphia vs: Ruby, 60 Neb.,
216) are cut off by the admission of its genuineness and due execution.
The effect of the admission is such that in the case of a promissory note a prima facie case
is made for the plaintiff which dispenses with the necessity of evidence on his part and
entitles him to a judgment on the pleadings unless a special defense of new matter, such
as payment, is interposed by the defendant. (Papa vs. Martinez, 12 Phil. Rep., 613; Chinese
Chamber of Commerce vs. Pua To Ching, 14 Phil. Rep., 222; Banco Espanol-Filipino vs.
McKay & Zoeller, 27 Phil. Rep., 183.) But we have held that the section is not applicable to
the indorsement on a promissory note in a suit against the maker (Heinszen & Co. vs. Jones,
5 Phil. Rep., 27); nor against the heirs of a decedent who signed a document declared upon
(Nery Lim-Chingco vs. Terariray, 5 Phil. Rep., 120) . Under statutes similar to our own it
has been held that the admission of the genuineness and due execution of the instrument
does not bar the defense of want of consideration. (Farmers & Merchants Bank vs. Copsey,
134 Ill. [Cal.], 287; Barnes vs. Scott, 29 Fla., 285; Booco vs. Mansfield, 66 Ohio, 121; Holt vs.
Robinson, 21 Ala., 106.) And in Kentucky in actions based upon promissory notes the
consideration for which were gambling debts, it has been held that such an admission does
not prevent the defense of illegality of consideration. (Burton vs. Emerine, 10 Ky., 499;
Arnold vs. Trundle, 30 Ky., 115.) In Freeman vs. Ellison (37 Mich., 458), it was said: "It is
now claimed for plaintiff below that this (rule) precludes any inquiry into the date of
delivery or the circumstances of the signing as bearing on any defenses dependent on time
in any way.
"There is no authority that we know of or any such construction of the rule. Undoubtedly
when a plaintiff produces in court an instrument corresponding to the one set forth he is
exempted from proving its execution. But the actual time of delivery may involve
questions which it would be absurd to hold foreclosed by any such assumption. If a note
is dated back in order to include usurious interest, and that defense is set up, it would
hardly be regarded as bearing on the question of execution. Execution can only refer to the
actual making and delivery, but it cannot involve other matters without enlarging its
meaning beyond reason. The only object of the rule was to enable a plaintiff to make out a
prima facie, not a conclusive case, and it cannot preclude a defendant from introducing
any defense on the merits which does not contradict the execution of the instrument
introduced in evidence."
To so interpret section 103 as to prohibit such a defense as illegality of consideration,
which is clearly a defense of new matter, would pro tanto repeal the second paragraph of
section 94, which permits a defendant to answer by "A statement of any new matter
constituting a defense or counterclaim." Likewise, section 285 provides that the terms of
a writing may be impeached by reason of its illegality or fraud. We do not understand that
such defenses are barred by the provisions of section 103. We accordingly hold that the
special defense interposed by the defendant of illegality of consideration is not barred by
his failure to enter a verified denial of the genuineness and due execution of the note set
out in the complaint. Hence, the evidence in support of that plea was competent. The note
reads as follows:
BAGUIO, BENGUET, April 27th, 1911.
"For value received, we the undersigned parties, jointly and severally agree to pay to the
firm of Brand & Hibberd, of the city of Baguio, P. I., twelve hundred pesos, Philippine
currency, in monthly installments of one hundred pesos per month, beginning with the
first day of June, 1911. (Not transferable, excepting to Jos. C. Brand or L. O. Hibberd.)
"WM. J. ROHDE.
"D. J. MCMILLIAN."
According to the testimony of the defendant Rohde, McMillian.was in the retail liquor
business and secured a stock of merchandise valued at P1,200 from Brand & Hibberd and
sold it. Alleging that they delivered the merchandise to him on deposit only, Brand &
Hibberd filed a complaint of estafa against McMillian. McMillian was arrested and released
on bond pending the preliminary hearing before the justice of the peace. The defendant
Rohde was a practicing attorney and undertook McMillian's defense in the estafa case.
Rohde testified that he was well acquainted with the nature of the transaction between
the firm of Brand & Hibberd and McMillian; that the merchandise was sold outright to
McMillian; that he knew the estafa complaint was absolutely without foundation; and that
McMillian could not possibly be convicted; but that one Sullivan informed him after the
preliminary hearing was held that he knew positively that McMillian would be bound over
for trial in the Court of First Instance. In rebuttal, Sullivan testified that what he told Rohde
was that he was satisfied from the evidence introduced at the hearing that McMillian
would be held for trial in the Court of First Instance. Upon the strength of Sullivan's
statement, Rohde agreed to sign the note reproduced above if Brand & Hibberd would
withdraw the estafa complaint. He did this because he did not want his client to remain in
confinement pending his trial in the Court of First Instance, which would not have
occurred for three months. His client was sick at the time and Rohde was afraid that
confinement in the jail for such a period of time would seriously endanger his health. After
the execution of the note, Brand & Hibberd moved in the justice court that the estafa
complaint be dismissed and this motion was granted by the presiding justice. In the order
dismissing the complaint, the justice stated that, from the evidence introduced at the
hearing he was convinced that there was no sufficient basis for a criminal action, but that
the controversy was of a civil character. Rohde subsequently said two hundred pesos on
the note. The note was assigned to the plaintiff L. O. Hibberd, on June 10, 1911.
Any agreement which has for its purpose the concealment of a public offense, the
suppression of evidence thereof, or the stifling of a criminal prosecution already
commenced is contra bonos mores and against public policy. Every successful attempt to
shield persons guilty of such offenses adds impetus to crime by encouraging the culprits
and all others of criminal tendencies who may learn of such perversions of justice, to
commit further offenses. A person suffering pecuniarily from the commission of such a
crime may not barter away the benefits of public order and the personal safety and
security of the people by representing to the culprit that he will actively aid in the task of
securing immunity from the public prosecution if his civil damages are made good. Courts
are charged with the duty of administering the law, and they should not lend their aid to
the enforcement of any contract which looks to its perversion. (Wever vs. Shay, 56 Ohio,
116; 60 Am. St. Rep., 743; Ormerod vs. Dearman, 100 Pa., 561; 45 Am. Rep., 391; Partridge
vs. Hood, 120 Mass., 403; 21 Am. Rep., 524; Gardner vs. Maxey, 9 B. Mon. [48 Ky.], 90;
Goodrum vs. Merchants & Planters Bank, 102 Ark., 326; Ann. Cas., 1914A; Nickelson vs.
Wilson, 60 N. Y., 362.) Nor is it important that the shielding of the guilty party was a minor
consideration of the agreement, or necessary that a crime shall have been in fact
committed. The intention of the parties to obstruct criminal justice to whatever extent
taints the entire contract and makes it unenforcible. (United States Fidelity & Guaranty Co.
vs. Charles (Ala.), 57 L. R. A., 212; W. T. Joyce Co. vs. Rohan, 134 Iowa, 12; 120 Am. St. Rep.,
410; Crowder vs. Reed, 80 Ind., 1.) The courts will not interfere either to rescind an
executed contract or to enforce an executory contract of such character. The parties are
left just where they are found. Perez vs. Herranz, 7 Phil. Rep., 693; Rohdes vs. Neal, 64 Ga.,
704; 37 Am. Rep., 93; Bowman vs. Phillips, 41 Kan., 364; 13 Am. St. Rep., 292; Atwood vs.
Fisk, 101 Mass., 363; 100 Am. Dec., 124; Case vs. Smith, 107 Mich., 416; 61 Am. St. Rep.,
341; 31 L. R. A., 282.)
A very large number of public offenses, however, inflict pecuniary damage on private
persons. The Penal Code recognizes the civil liability of offenders (arts. 119, et seq). In this
civil liability the State has no interest other than its undertaking to aid the injure person
in securing compensation for his injuries, and it cannot be doubted that if the injured
person so desires he may privately negotiate with the criminals or with persons interested
in the latter for the settlement of his private damages. Article 1813 of the Civil Code
provides that a civil action arising from a crime may be compromised, but the public action
for the imposition of the legal penalty shall not be extinguished thereby. So long as the
right of the State to exact the penalty for the public offense is not trenched upon, there is
nothing unlawful or immoral in such a contract. (Schirm vs. Wieman, 103 Md., 541; 7 Ann.
Cas., 1008; Atwood vs. Fisk, 101 Mass., 363; 100 Am. Dec., 124; Goodrum v.s. Merchants &
Planters Bank, 102 Ark., 326; Ann. Cas., 1914A; Lomax vs. Colo. Nat. Bank, 46 cOro., 229.)
And mere threats of prosecution will not vitiate an instrument given for an amount
embezzled or for the value of property feloniously taken, unless coupled with an
agreement not to prosecute if the instrument be given. (Wolf vs. Troxell Estate, 94 Mich.,
573; Portner vs. Kirschner, 169 Pa., 472; 47 Am. St. Rep., 925; Goodwin vs. Crowell, 56 Ga.,
567; Thorn vs. Pinkham, 84 Me., 101; 30 Am. St. Rep., 335.) A mere expectation of one of
the parties that the settlement of the civil injuries will stop the public prosecution is not
sufficient to make such a contract void as against public morals or public policy. (Phillips
vs. Pullen, 45 N. J. Eq., 830.) As was said in Moog vs. Strang (69 Ala., 98), the law does not
"seek to control the hope or expectation of the offender. He may very reasonably, in many
cases, expect that the prompt settlement of a discovered default may tend to paralyze the
energy of an incipient prosecution, and however reprehensible the motives of the parties,
they are not cognizable by the courts so long as their minds falls short of concurring in an
agreement, express or implied, to compound or not to prosecute as the consideration in
part or in whole of the payment of the debt or damages resulting from the crime
committed."
In this country a person is not an accessory to a public offense except in the cases expressly
provided by law. (Penal Code, art. 15; Act No.292; U.S. vs. Caballeros, 4 Phil. Rep., 350.) In
Goodrum vs. Merchants & Planters Bank (102 Ark., 326; Ann. Cas., 1914A), it appears that
Goodrum was manager of a bank and that one Eagle held the majority of the bank's capital
stock and controlled its policies. Goodrum defaulted, and to settle his shortage executed a
trust deed which was to be surrendered to the bank in case an examination showed that
he was criminally liable. In a suit by the bank to compel the conveyance, Goodrum sought
to show the illegality of the contract by evidence that he had been promised immunity
from criminal prosecution if he would make good the shortage. Eagle testified that he
promised that, if the conveyance were made "We won't lie around the courthouse and try
to prosecute him; but if the grand jury calls on me and asks me to explain these books and
asks me if the shortage occurred upon the expert's report, I will tell them everything I
know about it." The court said: "We do not think that this statement of Mr. Eagle in effect
that he would not go before the grand jury until summoned to appear was an implied
agreement either to withhold testimony, conceal the crime, or to stifle the prosecution
under the facts and circumstances of this case. The charges made against Goodrum that he
was short in his accounts with the bank, and criminally so, were not only known to all the
directors and persons present at the conference, but they had been published to the world,
and the knowledge thereof rife amongst the people of that community, if not also amongst
the people of the county. This is not a case where the charges were only known by a few
persons, and upon their failure to divulge them they would not come to the notice or
knowledge of the public or to those to whom the prosecution of crime is entrusted by the
law. . . . At the most, Eagle only stated that he would not instigate a prosecution. . . . Because
he would remain passive relative to matters of which the public authorities had full
knowledge, it can not be said that he thereby agreed to shield Goodrum from any public
prosecution."
In Nickelson vs. Wilson (60 N. Y., 362), it was said: "But an agreement to lay the whole facts
before the court, and to leave it to the free exercise of the discretionary powers vested in
it by law, is not in itself wrong, and is not rendered illegal even by a stipulation on the part
of a prosecutor to exert such legitimate influence as his position gives him in favor of the
extension of mercy to a guilty party."
Whether the tendency of an agreement is to interfere with the due enforcement of criminal
law is always a question of fact. (Martin vs. Tucker, 35 Ark., 279; Goodwin vs. Crowell, 56
Ga., 567; Beath vs. Chapoton, 115 Mich., 506; 69 Am. St. Rep., 589; Goodrum vs. Merchants
& Planters Bank, supra.)
In the case at bar, the findings of fact made by the court below have been duly submitted
to us for review. The trial court found as a fact that the consideration of the note was the
compromise of a public offense. We do not think that the evidence justifies this conclusion.
It is true that the defendant Rohde testified that the consideration of the note was "the
withdrawal of the false charge against him (McMillian) and to get him out of jail." But it is
also in evidence that McMillian owed Brand & Hibberd the full amount of the note and
Rohde knew this fact before he signed the note. There is no charge that Brand & Hibberd
filed the criminal complaint with a view of extorting a settlement of their claim against
McMillian. The hearing at the preliminary investigation was duly had and all the evidence
was before the justice of the peace before the agreement represented by the note was
made. It is not shown that Brand & Hibberd agreed not to testify in any further criminal
proceedings against McMillian, or that they would suppress any evidence in their
possession, or that they would solicit the State's prosecutor or any other Government
official whose authority extend to the criminal case, to not hold the defendant for trial.
What they actually did was to move in open court for a dismissal of the complaint. This is
all they did so far as the record shows, and that it was satisfactory to the defendant Rohde
is apparent from the fact that he subsequently made partial payments on the note.
There can be no doubt that the agreement which resulted in the execution of the note was
entered into by Brand & Hibberd with an eye to the satisfaction of their pecuniary claim
against McMillian. From the testimony of Rohde himself it appears that he strongly
insisted that McMillian was not guilty of the crime charged, and no doubt his ability as a
lawyer tended to convince the complainants that the criminal charge was unjustified. If
they became converted to this view of the matter, they no doubt more readily consented
not to actively assist in the further prosecution of the criminal complaint. We do not think
the record justifies a more radical conclusion as to what Brand & Hibberd agreed to do
with reference to the criminal phase of the transaction than that they promised not to
further actively participate in the case. The record does not justify the conclusion that they
went further and agreed to actively assist in preventing the due investigation of the
criminal charge by suppressing evidence, by declining to appear against McMillian if duly
subpoenaed as witnesses, or by other means. In our opinion, the case is similar in many
aspects to Goodrum vs. Merchants & Planters Bank (102 Ark., 326), to which we have
referred above. The record indicates the same passivity on the part of the injured party
and the same publicity of the criminal charge. There having been no agreement to interfere
with the due administration of the criminal law, we are constrained to hold that no part of
the consideration of the note declared upon is illegal or against public policy. The plaintiff
is therefore entitled to judgment. The judgment appealed from is reversed and judgment
is decreed against the defendant Rohde for the sum of one thousand pesos, the amount
remaining unpaid on the note, together with legal interest from the date of the institution
of this action. Without costs. So ordered.

Arellano, C.J., Torres, Carson and Araullo, JJ., concur.

FIRST DIVISION
[G.R. No. 86568. March 22, 1990.]
IMPERIAL TEXTILE MILLS, INC., petitioner, vs. COURT OF APPEALS and THE
INTERNATIONAL CORPORATE BANK, INC., respondents.
Batino, Angala, Salud & Fabia Law Offices for petitioner.
A.M. Perez & Associates for private respondent
SYLLABUS
1. REMEDIAL LAW; ACTIONS BASED ON A WRITTEN INSTRUMENT;
GENUINENESS AND DUE EXECUTION OF INSTRUMENT DEEMED ADMITTED IN ADVERSE
PARTY FAILS TO DENY THE SAME UNDER OATH. No rule is more settled than that in
an action based on a written instrument attached to the complaint, if the defendant fails
to specifically deny under oath the genuineness and due execution of the instrument, the
same is deemed admitted. By its omission, petitioner clearly admitted the genuineness and
due execution of the document and that the party whose signature appears thereon had
indeed signed the same and that he has the authority to sign the same and that the
agreement between the parties is what was in words and figures in the document.
Defenses which are inconsistent with the due execution and genuineness of the written
instrument are cut-off by such admission.
2. ID.; ID.; WAYS OF PLEADING ACTIONABLE DOCUMENT. Section 7, Rule 8 of
the Rules of Court is explicit in that there are two ways of pleading an actionable
document, namely: (a) by alleging the substance of such written instrument in the
pleading and attaching a copy thereof to the pleading; and (b) by copying the instrument
in the pleading. The complaint in the present case complied with the first situation under
paragraph (a). The complaint alleged the substance of the promissory note subject of the
litigation and a copy of the promissory note was attached. There is no question likewise
that the petitioner failed to specifically deny under oath the genuineness and due
execution of the promissory note subject of the complaint.
DECISION
GANCAYCO, J p:
This case involves the application of Sections 7 and 8 of Rule 8 of the Rules of Court when
the action or defense is based on a written document.
The facts are undisputed. In an action for the collection of a sum of money that was filed
by the private respondent against petitioner in the Regional Trial Court of Makati, Metro
Manila, it was alleged, among others, as follows: LexLib
On August 18, 1980, for valuable consideration, defendant executed in favor of, and
delivered to plaintiff Promissory Note No. TL-0532-80, copy of which is hereto attached
as Annex 'A', whereby defendant obligated itself to pay plaintiff on November 16, 1980 the
sum of Twelve Million Pesos (P12,000,000.00) and with interest thereon at the rate of
16% per annum.
"4. The promissory note, Annex 'A', expressly stipulates that in case of non-payment
when due, defendant shall pay plaintiff an additional amount equal to 3% per month of
the amount due as liquidated damages and a further sum equal to 10% thereof as
attorney's fees." 1
Attached to the complaint as Annex A was the Promissory Note. 2
An answer to the complaint was filed by petitioner. The petitioner denied liability and
alleged that one Julio Tan had no authority to negotiate and obtain a loan on its behalf.
While defendant specifically denied the aforestated promissory note alleged in the
complaint, the answer was not verified. For this reason, in due course, a decision was
rendered by the trial court on December 1, 1986, the dispositive portion of which reads as
follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff International
Corporate Bank, Inc. and against the defendant Imperial Textile Mills, Inc. as follows:
1. Ordering the defendant to pay plaintiff the total sum of P40,486,229.16, with
interest thereon at the rate of 16% per annum from 17 June 1985 until fully paid (Cf.
Exhibit B Statement of Account, p. 35, id.);
2. Ordering the defendant to pay plaintiff the sum of P40,000.00 as and for
attorney's fees, plus the sum of P47,470.00 as costs. (Cf. Exhibits E, F and G).
SO ORDERED." 3
Petitioner brought an appeal to the Court of Appeals. In a decision dated October 17, 1988,
the Court of Appeals affirmed the judgment appealed from with costs against petitioner.
4
A motion for reconsideration of said decision was likewise denied by the appellate court.
Hence, this petition.
The petition is devoid of merit. Sections 7 and 8 of Rule 8 of the Rules of Court provide as
follows:
"SEC. 7. Action or defense based on document. Whenever an action or defense is based
upon a written instrument or document, the substance of such instrument or document
shall be set forth in the pleading, and the original or a copy thereof shall be attached to the
pleading as an exhibit, which shall be deemed to be a part of the pleading, or said copy may
with like effect be set forth in the pleading.
"SEC. 8. How to contest genuineness of such documents. When an action or defense is
founded upon a written instrument, copied in or attached to the corresponding pleading
as provided in the preceding section, the genuineness and due execution of the instrument
shall be deemed admitted unless the adverse party, under oath, specifically denies them,
and sets forth what he claims to be the facts; but this provision does not apply when the
adverse party does not appear to be a party to the instrument or when compliance with
an order for an inspection of the original instrument is refused."
No rule is more settled than that in an action based on a written instrument attached to
the complaint, if the defendant fails to specifically deny under oath the genuineness and
due execution of the instrument, the same is deemed admitted. 5
Section 7, Rule 8 of the Rules of Court is explicit in that there are two ways of pleading an
actionable document, namely:

(a) by alleging the substance of such written instrument in the pleading and
attaching a copy thereof to the pleading; and

(b) by copying the instrument in the pleading.

The complaint in the present case complied with the first situation under paragraph (a).
The complaint alleged the substance of the promissory note subject of the litigation and a
copy of the promissory note was attached. cdll

There is no question likewise that the petitioner failed to specifically deny under oath the
genuineness and due execution of the promissory note subject of the complaint. By its
omission, petitioner clearly admitted the genuineness and due execution of the document
and that the party whose signature appears thereon had indeed signed the same and that
he has the authority to sign the same and that the agreement between the parties is what
was in words and figures in the document. Defenses which are inconsistent with the due
execution and genuineness of the written instrument are cut-off by such admission. 6
The claim of petitioner is that its failure to specifically deny under oath the actionable
document does not prevent it from showing that one Julio Tan was not authorized to enter
into the transaction and to sign the promissory note for and in behalf of the petitioner. But
precisely, the petitioner is a party to the instrument represented by Julio Tan so that it
may not now deny the authority of Julio Tan to so represent it. 7 The due execution and
genuineness of the document have thereby been conclusively established. LLphil

Moreover, in this case the judgment appealed from is supported by the evidence. This
petition is at best dilatory.

WHEREFORE, the petition is DISMISSED, with costs against petitioner.

SO ORDERED.

Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

Footnotes
1. Page 55, Rollo.
2. Page 81, Rollo.
3. Page 87, Rollo.
4. Mr. Justice Jose C. Campos, Jr. was the ponente, concurred in by Justices Ricardo
J. Francisco and Alfredo L. Benipayo.
5. Section 8, Rule 8, Revised Rules of Court; Songco v. Sellner, 37 Phil. 254 (1917);
and Phil. Com. & Industrial Bank v. ELRO Dev. Corp., 29 SCRA 38 (1969).
6. I Moran, Comments on the Rules of Court, 326-327.
7. Section 8, Rule 8, Rules of Court.
FIRST DIVISION
[G.R. No. 57821. January 17, 1985.]
SEGUNDINO TORIBIO, EUSEBIA TORIBIO, and the HEIRS OF OLEGARIO TORIBIO,
represented by his widow, ADELA DE LOS REYES, petitioner, vs. THE HON. JUDGE
ABDULWAHID A. BIDIN, in his capacity as Presiding Judge, Branch I, Court of First
Instance, City of Zamboanga, DALMACIO RAMOS, and JUANITO CAMACHO,
respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ALLEGATION; TEST AS TO THE
ESSENTIALITY THEREOF. The following question furnishes an absolute test as to the
essentiality of any allegation: Can it be made the subject of a material issue? In other
words, if it be denied, will the failure to prove it decide the case in whole or in part? If it
will not, the fact is not essential. It is not one of those which constitute the cause of action,
defense, or reply (Sutherland's Code of Pleading, Practice and Forms, p. 82). A fact is
essential if it cannot be stricken out without leaving the statement of the cause of action
or defense insufficient.
2. ID.; ID.; CONTESTING ACTIONABLE DOCUMENT; REASON FOR THE RULE. As
early as Lim-Chingco v. Terariray (5 Phil. 120), this Court gave the reason for the rule on
contesting actionable documents. The purpose of the enactment (sec. 103) appears to
have been to relieve a party of the trouble and expense of proving in the first instance an
alleged fact, the existence or non-existence of which is necessarily within the knowledge
of the adverse party, and of the necessity (to his opponent's case) of establishing which
such adverse party is notified by his opponent's pleading. As stated earlier, the reason for
the rule is to enable the adverse party to know beforehand whether he will have to meet
the issue of genuineness or due execution of the document during trial. (In re Dick's Estate,
235 N.W. 401). While mandatory, the rule is a discovery procedure and must be
reasonably construed to attain its purpose, and in a way as not to effect a denial of
substantial justice. The interpretation should be one which assist the parties in obtaining
a speedy, inexpensive, and most important, a just determination of the disputed issues.
3. ID.; ID.; RULE ON ACTIONABLE DOCUMENT; REFER EITHER TO ACTION OR A
DEFENSE; BASED UPON A WRITTEN INSTRUMENTS. The petitioners are themselves
parties to the deeds of sale which are sought to be enforced against them. The complaint
was filed by the petitioners. They filed suit to recover their hereditary properties. The new
owners introduced deeds of sale as their main defense. In other words, the petitioners
brought the issue upon themselves. They should meet it properly according to the Rules
of Court. Sections 7 and 8 of Rule 8, therefore, apply. The petitioners' counsel was
obviously lulled into complacency by two factors. First, the plaintiffs, now petitioners, had
already stated under oath that they never sold, transferred, or disposed of their shares in
the inheritance to others. Second, the usual procedure is for a defendant to specifically
deny under oath the genuineness and due execution of documents set forth in and annexed
to the complaint. Somehow, it skipped counsel's attention that the rule refers to either an
action or a defense based upon a written instrument or document. It applies to both
plaintiffs and defendants.
4. ID.; ID.; ID.; NON-PARTIES TO THE DOCUMENT NOT REQUIRED TO DENY
UNDER OATH; CASE AT BAR. The heirs of Olegario Toribio, his widow and minor
children represented by their mother, are among the plaintiffs-petitioners. They are not
parties to the deeds of sale allegedly executed by their father, aunt, and uncle. They are not
required to deny the deeds of sale under oath. The private respondents will still have to
introduce evidence to establish that the deeds of sale are genuine and that they were truly
executed by the parties with authority to dispose of the disputed property.
5. ID.; RULES OF PROCEDURE, LITERALLY CONSTRUED. It bears repeating that
rules of procedure should be liberally construed to the end that substantial justice may be
served. As stated in Pongasi v. Court of Appeals (71 SCRA 614): "We repeat what We said
in Obut v. Court of Appeals, et al., supra, that 'what should guide judicial action is the
principle that a party-litigant is to be given the fullest opportunity to establish the merits
of his complaint or defense rather than for him to lose life, liberty, honor or property on
technicalities. "In dispensing justice Our action must reflect a deep insight into the failings
of human nature, a capability for making allowances for human error and/or negligence,
and the ability to maintain the scales of justice happily well-balanced between these
virtues and the application of the law." An interpretation of a rule of procedure which
would not deny to the petitioners their rights to their inheritance is warranted by the
circumstances of this case.
DECISION
GUTIERREZ, JR., J p:
This petition is premised on the interpretation and application of Sections 7 and 8, Rule 8
of the Revised Rules of Court on actionable documents, which state:
"SEC. 7. Action or defense based on document. Whenever an action or defense is based
upon a written instrument or document, the substance of such instrument or document
shall be set forth in the pleading, and the original or a copy thereof shall be attached to the
pleading as an exhibit, which shall be deemed to be a part of the pleading, or said copy may
with like effect be set forth in the pleading.
"SEC. 8. How to contest genuineness of such documents.When an action of defense is
founded upon a written instrument, copied in or attached to the corresponding pleading
as provided in the preceding section, the genuineness and due execution of the instrument
shall be deemed admitted unless the adverse party, under oath, specifically denies them,
and sets forth what he claims to be the facts; but this provision does not apply when the
adverse party does not appear to be a party to the instrument or when compliance with
an order for an inspection of the original instrument is refused."
The present controversy stems from a complaint filed by the petitioners against private
respondents Dalmacio Ramos and Juanito Camacho.
Engracio Francisco and Juliana Esteban were the registered owners of a parcel of land in
Zamboanga. At the death of said spouses, they were survived by their ten (10) children
who inherited their estate in equal pro indiviso shares. Subsequently, the property was
subdivided among the heirs and a portion designated as Lot No. 1943-B was alloted to the
heir Justa Francisco. Justa died and was survived by her eight (8) children namely:
Dionisio, Eufemia, Alfonso, Rafael, Petrona, Olegario, Segundino and Eusebia, all surnamed
Toribio, who inherited her estate in equal pro indiviso shares. Three of the eight heirs,
Eufemia, Alfonso and Petrona, sold their shares in the property to Ramon Ledesma. Rafael
also sold his share to Dionisio who, in turn, sold the same to Ramon Ledesma. Thus, the
latter acquired four (4) shares out of eight (8) shares, or a 1/2 pro indiviso share of Lot
1943-B.
Subsequently, Dionisio sold his own, hereditary share in the aforesaid estate of his mother
to Juanito Camacho, who by said sale acquired a 1/8 pro indiviso share of the property.
Cdpr
The three other heirs, petitioners Segundino, Eusebia and Olegario alleging that their
shares had never been sold nor in any wise transferred or disposed to others filed a case
against herein private respondents for recovery of hereditary rights. How Juanito
Camacho, who was entitled to only a total area of 931 square meters, nor, how one
Dalmacio Ramos, Jr., acquired 1/4 share of the property was allegedly not known to them.
In their answer, the defendants-respondents alleged that the shares of plaintiffs-
petitioners had likewise been sold to Dionisio Toribio, their brother, who, in turn, sold the
same to Juanito Camacho and Dalmacio Ramos. The alleged sale from petitioners to
Dionisio and the sale from Dionisio to the respondents were evidenced by deeds of sale,
xerox copies of which were appended to and made an integral part of the respondents'
partition agreement between the respondents and also a xerox copy of the respondents'
transfer certificates of title.
While testifying during the trial, Eusebia Toribio was asked whether she executed any sale
of her share in the parcel of land in litigation. The counsel for private respondents
objected, raising the proper mode of contesting the genuineness of an actionable
document pursuant to Sections 7 and 8, Rule 8 of the Revised Rules of Court. The trial court
sustained the objection.
Petitioners, thereupon, filed a constancia with a motion for reconsideration stating that
the documents submitted by the respondents were merely evidentiary in nature, not a
cause of action or defense, the due execution and genuineness of which they had to prove.
They alleged that the subject of litigation was the hereditary shares of plaintiffs-
petitioners, not any document. They stated that the defense consisting mainly of transfer
certificates of titles in the respondents' names originating from the sale from petitioners
to Dionisio and from the latter to the respondents were merely evidentiary in nature. They
argued that a simple specific denial without oath is sufficient. The court denied the motion
for reconsideration. The documents attached to the respondents' answer and made an
integral part thereof were declared to be the very foundation or basis of the respondents'
defense and not merely evidentiary in nature. Hence, this petition for review on certiorari.
The initial issue brought before us is whether or not the deeds of sale allegedly executed
by the petitioners in favor of their brother Dionisio Toribio and appended to the
respondents' answer are merely evidentiary in nature or the very foundation of their
defense which must be denied under oath by the petitioner.
The records show that the deeds of sale are actionable documents.
Jurisprudence has centered mainly on a discussion of actionable documents as basis of a
plaintiff's cause of action. Little has been said of actionable documents being the
foundation of a defense. The Rule, however, covers both an action or a defense based on
documents. LLpr
The situation obtaining in the case at bar is not a common one. The usual case is between
plaintiff and defendant where, the latter, as his defense, would present a document to
which both parties are parties and which states that the former relinquishes his rights to
the defendant. In the case at bar, we have a situation where the defendant presented a
document in his defense, a document to which the plaintiff is a party but to which
defendant is not. Thus, the question arises as to whether or not the document is included
as a necessary part of the defense so as to make it actionable.
The petitioners alleged in their complaint that their shares in the inheritance left by their
mother were never sold nor in any wise transferred or disposed to others.
The defendants, in their answers, declare:
xxx xxx xxx
". . . that the hereditary shares of plaintiffs OLEGARIO TORIBIO, SEGUNDINO TORIBIO and
EUSEBIA TORIBIO were likewise sold, transferred and conveyed, first in favor of DIONISIO
TORIBIO by virtue of two (2) deeds of sale executed in due form on October 24, 1964 and
November 2, 1964, respectively, and thereafter, by DIONISIO TORIBIO in favor of
defendants JUANITO A. CAMACHO and DALMACIO C. RAMOS, JR., on November 11, 1964
as adverted to in the preceding paragraph, as will be discussed further in the specific
and/or affirmative defenses hereunder;
xxx xxx xxx
"As heretofore alleged, the hereditary shares of all the plaintiffs herein in and over Lot
1943-B were all sold, transferred and conveyed in favor of DIONISIO TORIBIO plaintiffs
OLEGARIO TORIBIO and SEGUNDINO TORIBIO on October 24, 1964 and that of plaintiff
EUSEBIA TORIBIO on November 2, 1964, by virtue of two (2) deeds of sale all of which
were acknowledged before Notary Public for and within the City of Zamboanga, Atty.
Armando B. Torralba and entered as Doc. No. 6, Page No. 3, Book No. IX, Series of 1964,
respectively, in his notarial register, xerox copies of which are appended hereto to form
integral part hereof as Annexes "1" & "2", respectively."
From the foregoing, it is clear that the respondents anchor their defense on the deeds of
sale by virtue of which the hereditary rights of all the petitioners over Lot 1943-B were
sold, transferred, and conveyed in favor of their brother, Dionisio Toribio, who in turn,
sold the same to herein respondents. The deed of sale executed by the petitioners in favor
of their brother Dionisio is an essential and indispensable part of their defense to the
allegation that the petitioners had never disposed of their property. prcd
The following question furnishes an absolute test as to the essentiality of any allegation:
Can it be made the subject of a material issue? In other words, if it be denied, will the failure
to prove it decide the case in whole or in part? If it will not, the fact is not essential. It is
not one of those which constitute the cause of action, defense, or reply (Sutherland's Code
of Pleading, Practice and Forms, p. 82). A fact is essential if it cannot be stricken out
without leaving the statement of the cause of action or defense insufficient.
Apart from alleging that the documents in this case are merely evidentiary, the petitioners
also point out that the deeds of sale purportedly executed by them were in favor of their
brother, Dionisio, who in turn executed deeds of sale in favor of the respondents. Under
this circumstance, does the genuineness and due execution of the deeds evidencing the
two transactions have to be denied under oath?
The deed of sale executed by Dionisio Toribio in favor of the respondents, by itself, would
be insufficient to establish a defense against the petitioners' claims. If the petitioners deny
that they ever sold their shares in the inherited lot to their brother Dionisio, a failure to
prove the sale would be decisive. For if it can be shown that no conveyance of the property
was executed by the petitioners, then Dionisio Toribio had no right to convey what did not
belong to him. The respondents could acquire only the rights that Dionisio had over the
disputed property. The genuineness and due execution of the deed between the co-heirs
is also elemental to the defense of the respondents. The first deeds of sale, to which the
respondents were not parties but which they seek to enforce against the parties are also
actionable documents.
The petitioners further alleged that this case falls under the exception to Section 8, Rule 8
which provides:
SECTION 8. . . . but this provision does not apply when the adverse party does not
appear to be a party to the instrument.
As early as Lim-Chingco v. Terariray (5 Phil. 120), this Court gave the reason for the rule
on contesting actionable documents. The purpose is:
"Reasonably construed, the purpose of the enactment (sec. 103) appears to have been to
relieve a party of the trouble and expense of proving in the first instance an alleged fact,
the existence or non-existence of which is necessarily within the knowledge of the adverse
party, and of the necessity (to his opponent's case) of establishing which such adverse
party is notified by his opponent's pleading."
This being so, the documents have to be treated in like manner. The petitioners are
themselves parties to the deeds of sale which are sought to be enforced against them. The
complaint was filed by the petitioners. They filed suit to recover their hereditary
properties. The new owners introduced deeds of sale as their main defense. In other
words, the petitioners brought the issue upon themselves. They should meet it properly
according to the Rules of Court.
Sections 7 and 8 of Rule 8, therefore, apply. The proper procedure was for the petitioners
to specifically deny under oath the genuineness and due execution of the questioned deeds
of sale and to set forth what they claim to be the facts. However, the oversight or
negligence of petitioners' counsel in not properly drafting a reply to the answer and an
answer to the counter claim is not necessarily fatal to their cause.
The facts of the case and equitable considerations constrain us to grant the petition and to
set aside the questioned order of the respondent court.
As stated earlier, the reason for the rule is to enable the adverse party to know beforehand
whether he will have to meet the issue of genuineness or due execution of the document
during trial. (In re Dick's Estate, 235 N.W. 401). While mandatory, the rule is a discovery
procedure and must be reasonably construed to attain its purpose, and in a way as not to
effect a denial of substantial justice. The interpretation should be one which assist the
parties in obtaining a speedy, inexpensive, and most important, a just determination of the
disputed issues. llcd
Paragraphs 11 and 13 of the petitioners' complaint reads:
xxx xxx xxx
"11. That the share of herein Plaintiffs were never sold or in any wise transferred or
disposed to others;
xxx xxx xxx
"13. That just how and by what means Defendant; JUANITO CAMACHO was able to
acquire the total area of 931 square meters, is not known; however, the acquisition might
have been effected, the same was in fraud of herein plaintiffs; and so with the share of
Defendant, DALMACIO C. RAMOS, Jr., herein Plaintiffs, jointly and/or severally, do not
know the person; and, however he might have acquired the said share of ONE FOURTH
(1/4) of the property, was not from either, much less all, of the Plaintiffs;
xxx xxx xxx
The complaint was verified under oath by the petitioners.
The petitioners' counsel was obviously lulled into complacency by two factors. First, the
plaintiffs, now petitioners, had already stated under oath that they never sold, transferred,
or disposed of their shares in the inheritance to others. Second, the usual procedure is for
a defendant to specifically deny under oath the genuineness and due execution of
documents set forth in and annexed to the complaint. Somehow, it skipped counsel's
attention that the rule refers to either an action or a defense based upon a written
instrument or document. It applies to both plaintiffs and defendants.
Under the facts of this case, the private respondents were placed on adequate notice by
Paragraph 11 of the verified complaint that they would be called upon during trial to prove
the genuineness or due execution of the disputed deeds of sale.
Moreover, the heirs of Olegario Toribio, his widow and minor children represented by
their mother, are among the plaintiffs-petitioners. They are not parties to the deeds of sale
allegedly executed by their father, aunt, and uncle. They are not required to deny the deeds
of sale under oath. The private respondents will still have to introduce evidence to
establish that the deeds of sale are genuine and that they were truly executed by the
parties with authority to dispose of the disputed property.
It bears repeating that rules of procedure should be liberally construed to the end that
substantial justice may be served. As stated in Pongasi v. Court of Appeals (71 SCRA 614):
cdll
"We repeat what We said in Obut v. Court of Appeals, et al., supra, that 'what should guide
judicial action is the principle that a party-litigant is to be given the fullest opportunity to
establish the merits of his complaint or defense rather than for him to lose life, liberty,
honor or property on technicalities.
"In dispensing justice Our action must reflect a deep insight into the failings of human
nature, a capability for making allowances for human error and/or negligence, and the
ability to maintain the scales of justice happily well-balanced between these virtues and
the application of the law."
An interpretation of a rule of procedure which would not deny to the petitioners their
rights to their inheritance is warranted by the circumstances of this case.
WHEREFORE, the order of the respondent court dated July 20, 1981 is hereby REVERSED
and SET ASIDE. The Regional Trial Court which took over the cases of the respondent court
is ordered to receive the petitioners' evidence regarding the genuineness and due
execution of the disputed deeds of sale.
SO ORDERED.
Teehankee, Melencio-Herrera, Plana, Relova and De la Fuente, JJ., concur.
EN BANC
[G.R. No. L-28633. March 30, 1971.]
CENTRAL SURETY & INSURANCE COMPANY, petitioner, vs. C. N. HODGES and THE
COURT OF APPEALS, respondents.
Pelaez, Jalandoni & Jamir for petitioner.
Leon P. Gellada for respondent C. N. Hodges.
SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; AGENCY; GENERAL POWERS;
EXTINGUISHMENT; REVOCATION; PUBLICATION THEREOF REQUIRED; CASE AT BAR
Article 1922 of our Civil Code provides: If the agent had general powers, revocation of the
agency does not prejudice third person who acted in good faith and without knowledge of
the revocation. Notice of the revocation in a newspaper of general circulation is a sufficient
warning to third persons." It is not disputed that petitioner has not caused to be published
and, notice of the revocation of Mrs. Mesa's authority to issue surety bonds on its behalf,
notwithstanding the fact that the powers of Mrs. Mesa, as its branch manager in Iloilo,
were of a general nature, for she had exclusive authority, in the City of Iloilo, to represent
petitioner herein, not with a particular person, but with the public in general "in all the
negotiations, transactions, and business wherein the Company may lawfully transact or
engage in," subject only to the restrictions specified in their agreement, copy of which was
attached to petitioner's answer as Annex 3. Contrary to petitioner's claim, Article 1922
applies whenever an agent has general powers not merely when the principal has
published the same, apart from the fact that the opening of petitioner's branch office
amounted to a publication of the grant of powers to the manager of said office. Then, again,
by honoring several surety bonds issued in its behalf by Mrs. Mesa subsequently to March
15, 1952, petitioner induced the public to believe that she had authority to issue such
bonds. As a consequence, petitioner is now estopped from pleading, particularly against a
regular customer thereof, like Hodges, the absence of said authority.
2. INSURANCE; CLAIMS; ACTION; PRESCRIPTION. Petitioner maintains that,
having been instituted on October 24, 1955 or nine (9) months after the expiration of
petitioner' s surety bond on January 23, 1955 the present action is barred by the
provision in said bond to the effect that it: ". . . will not be liable for any claim not discovered
and presented to the Company within three (3) months from the expiration of this bond
and that the obligee hereby waives his right to file any court action against the surety after
the termination of the period of three months above-mentioned." Interpreting an identical
provision, this Court has, however, held "that the three-month period" prescribed therein
"established only a condition precedent, not a limitation of action." and that, when a
claim has been presented within said period, the action to enforce the claim may be "filed
within the statutory time of prescription." This view was clarified in a subsequent case, in
the sense that the above-quoted provision was " . . . merely interpreted to mean that
presentation of the claim within three months was a condition precedent to the filing of a
court action. Since the obligee in said case presented his claim seasonably although it did
not file the action within the same period, this Court ruled that the stipulation in the bond
concerning the limitation being ambiguous the ambiguity should be resolved against the
surety, which drafted the agreement, and that the action could be filed within the statutory
period of prescription."
3. REMEDIAL, LAW; CIVIL, PROCEDURE; ALLEGATIONS; DOCUMENTS; RULE
WHEN NO OBJECTION MADE; RATIONALE; CASE AT BAR. It is true that, pursuant to
Section 8 of Rule 8 of the Rules of Court: "When an action or defense is founded upon a
written instrument, copied in or attached to the corresponding pleading as provided in the
preceding section the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath specifically denies them, and sets forth
what he claims to be the facts; but this provision does not apply when the adverse party
does not appear to be a partly to the instrument or when compliance with an order for an
inspection of the original instrument is refused." We have however, held that: " . . . where
a case has been tried in complete disregard of the rule and the plaintiff having pleaded a
document by copy, presents oral evidence to prove the due execution of the document as
well as the agent's authority and no objections are made to the defendant's evidence in
refutation, the rule will be considered waived." In the case at bar, the parties acted in
complete disregard of or wholly overlooked the rule above-quoted. Hodges had neither
objected to the evidence introduced by petitioner herein in order to prove that Mrs. Mesa
had no authority to issue a surety bond, much less one in excess of P8,000.00, and took no
exception to the admission of said evidence. Hence, Hodges must be deemed to have
waived the benefits of said rule and petitioner herein cannot be held liable in excess of the
sum of P8,000.00
DECISION
CONCEPCION, C.J p:
Appeal by certiorari from a decision of the Court of Appeals, the dispositive part of which
reads as follows:
"WHEREFORE, in view of the foregoing considerations, the decision appealed from is
modified and judgment is hereby rendered against Central Surety & Insurance Company:
"(a) To pay plaintiff C. N. Hodges the sum of P17,826.08 with interest thereon at the
rate of 12% per annum from October 24, 1955 until fully paid;"
(b) To pay plaintiff C. N. Hodges the sum of P1,551.60 as attorney's fees; and
(c) To pay the costs."
The main facts are not disputed. Prior to January 15, 1954, lots Nos. 1226 and 1182 of the
Cadastral Survey of Talisay, Negros Occidental, had been sold by C N. Hodges to Vicente M.
Layson, for the sum of P43,000.00, payable on installments. As of January 15, 1954, the
outstanding balance of Layson's debt, after deducting the installments paid by him prior
thereto, amounted to P15,516.00. In order that he could use said lots as security for a loan
he intended to apply from a bank, Layson persuaded Hodges to execute in his (Layson's)
favor a deed of absolute sale over the properties, with the understanding that he would
put up a surety bond to guarantee the payment of said balance. Accordingly, on the date
above mentioned, Layson executed, in favor of Hodges, a promissory note for P15,516.00,
with interest thereon at the rate of 1% per month, and the sum of P1,551.60, for attorney's
fees and costs, in case of default in the payment of the principal or interest of said note. To
guarantee the same, on January 23, 1954, the Central Surety and Insurance Company
hereinafter referred to as petitioner through the manager of its branch office in Iloilo,
Mrs. Rosita Mesa, executed in favor of Hodges the surety bond Annex B, which was good
for twelve (12) months from the date thereof.
When Layson defaulted in the discharge of his aforesaid obligation, Hodges demanded
payment from the petitioner, which, despite repeated extensions of time granted thereto,
at its request, failed to honor its commitments under the surety bond. On October 24,
1955, Hodges commenced, therefore, the present action, in the Court of First Instance of
Iloilo, against Layson and petitioner herein, to recover from them, jointly and severally,
the sums of P17,826.08, representing the principal and interest due up to said date, and
P1,551.60, as attorney's fees. In his answer to the complaint, Layson admitted the formal
allegations and denied the other allegations thereof.
Having failed to file its answer within the reglementary period, the petitioner was, on
January 18, 1956, declared in default. When the case was called for trial, insofar as Layson
was concerned, the latter did not appear, and Hodges was allowed to introduce his
evidence. Then the trial court rendered a partial decision against Layson, petitioner
having, in the meantime, filed a motion to set aside the order of default, which motion was
still pending resolution. Thereafter, said motion was denied, and upon presentation of the
evidence of Hodges against herein petitioner, judgment was rendered against the latter as
prayed for in the complaint. Thereupon, petitioner filed a motion for reconsideration and
a motion for relief under Rule 38. Acting thereon, His Honor, the trial Judge, later set aside
its decision against the petitioner and admitted its answer, attached to the motion to set
aside the order of default.
In its answer, petitioner disclaimed liability under the surety bond in question, upon the
ground (a) that the same is null and void, it having been issued by Mrs. Rosita Mesa after
her authority therefor had been withdrawn on March 15, 1952; (b) that even under her
original authority, Mrs. Mesa could not issue surety bonds in excess of P8,000.00 without
the approval of petitioner's main office, which was not given to the surety bond in favor of
Hodges; and (c) that the present action is barred by the provision in the surety bond to the
effect that all claims and actions thereon should be filed within three (3) months from the
date of its expiration on January 23, 1955. Petitioner, moreover, set up a counterclaim for
damages.
In due course, thereafter, the trial court rendered a decision:
"a) Condenando a la demanda Central Surety & Insurance Co. que pague al
demandante la desde la P8,000.00 con intereses legales a contar desde la fecha de la
demanda 24 de Octubre de 1955;
"b) Condenando a la misma demanda que pague al demandante la suma de P600.00
en concepto de honorarios de abogado; y
"c) Condenando, ademas, a la misma demanda que pague las costas del juicio."
Hodges appealed to the Court of Appeals (CA-G.R. No. L-24684-R) from this decision,
insofar as it limited petitioner's liability to P8,000.00. Petitioner, also, appealed to said
Court upon the ground that the trial court had erred: a) in holding petitioner liable under
a contract entered into by Its agent in excess of her authority; (b) in sentencing petitioner
to pay Hodges the sum of P8.000.00 with interest thereon, in addition to attorney's fees
and the costs; and (c) in "not awarding" petitioner's counterclaim.
After appropriate proceedings, the Court of Appeals rendered the decision above referred
to, from which petitioner has appealed to this Court, alleging that the Court of Appeals has
erred: (1) in finding that petitioner "was liable on a bond issued by an agent whose
authority . . . had already been withdrawn and revoked"; (2) "in applying the rule on
implied admission by reason of failure to deny under oath the authenticity of a pleaded
document" and (3) "in not considering the legal effect of the waiver contained in the
disputed bond and in not disposing of this case under the light of such waiver."
The first assignment of error is predicated upon the fact that prior to January 23, 1954,
when the surety bond involved in this case was executed, or on March 15, 1952, petitioner
herein had withdrawn the authority of its branch manager in the City of Iloilo, Mrs. Rosita
Mesa, to issue, inter alia, surety bonds and that, accordingly, the surety bond, copy of which
was attached to the complaint as Annex B, is null and void. On this point, the Court of
Appeals had the following to say:
". . . we are of the opinion that said surety bond is valid. In the first place, there appears to
be no showing that the revocation of authority was made known to the public in general
by publication, nor was Hodges notified of such revocation despite the fact that he was a
regular client of the firm. And even if Hodges would have inquired from Mrs. Mesa as to
her authority to issue said bond, we doubt if she would disclose the contents of the letter
of March 15, 1952 in view of Central Surety's claim that she was committing irregularities
in her remittances to the main office. Secondly, some surety bonds issued by Mrs. Mesa in
favor of Hodges after her authority had allegedly been curtailed, were honored by the
Central Surety despite the fact that these were not reported to the main office at the time
of their issuance. These accounts were paid on January 31, 1957, to wit: Felicito and
Libertad Parra issued on August 16, 1952; Estrella Auayan issued on November 16, 1953;
Dominador Jordan issued on August 26, 1953; and Ladislao Lachica issued on February
28, 1953. (Exhs. F, G, H, I and J). By these acts Central Surety ratified Mrs. Mesa's
unauthorized acts and as such it is now estopped from setting forth Mrs. Mesa's lack of
authority to issue surety bonds after March 15, 1952. It has been held that although the
agent may have acted beyond the scope of his authority, or may have acted without
authority at all, the principal may yet subsequently see fit to recognize and adopt the act
as his own. Ratification being a matter of assent to and approval of the act as done on
account of the person ratifying, any words or acts which show such assent and approval
are ordinarily sufficient. (Sta. Catalina vs. Espitero, CA-G.R. No. 27075-R, April 28, 1964,
citing IV Padilla, CIVIL CODE 1959 ed., pp. 478-479; Roxas vs. Villanueva, CA-G.R. No.
18928-R, June 20, 1958). Moreover. the revocation of agency does not prejudice third
persons who acted in good faith without knowledge of the revocation. (Joson vs. Garcia,
CA-G.R. No. 29336-R, Nov. 19, 1962)."
Indeed, Article 1922 of our Civil Code provides:
"If the agent had general powers, revocation of the agency does not prejudice third
persons who acted in good faith and without knowledge of the revocation. Notice of the
revocation in a newspaper of general circulation is a sufficient warning to third persons."
It is not disputed that petitioner has not caused to be published any notice of the
revocation of Mrs. Mesa's authority to issue surety bonds on its behalf, notwithstanding
the fact that the powers of Mrs. Mesa, as its branch manager in Iloilo, were of a general
nature, for she had exclusive authority, in the City of Iloilo, to represent petitioner herein,
not with a particular person, but with the public in general, "in all the negotiations,
transactions, and business wherein the Company may lawfully transact or engage in,"
subject only to the restrictions specified in their agreement. copy of which was attached
to petitioner's answer as Annex 3. 1 Contrary to petitioner's claim, Article 1922 applies
whenever an agent has general powers, not merely when the principal has published the
same, apart from the fact that the opening of petitioner's branch office amounted to a
publication of the grant of powers to the manager of said office. Then, again, by honoring
several surety bonds issued in its behalf by Mrs. Mesa subsequently to March 15, 195 2,
petitioner induced the public to believe that she had authority to issue such bonds. As a
consequence, petitioner is now estopped from pleading, particularly against a regular
customer thereof, like Hodges, the absence of said authority.
Let us now take up the third assignment of error and defer, until after the same has been
disposed of, the consideration of the second assignment of error.
Under the third assignment of error, petitioner maintains that, having been instituted on
October 24, 1955 or nine (9) months after the expiration of petitioner's surety bond on
January 23, 1955 the present action is barred by the provision in said bond to the effect
that it:
". . . will not be liable for any claim not discovered and presented to the Company within
three (3) months from the expiration of this bond and that the obligee hereby waives his
right to file any court action against the surety after the termination of the period of three
months above-mentioned."
Interpreting an identical provision, 2 this Court has, however, held "that the three-month
period" prescribed therein "established only a condition precedent, not a limitation of
action," and that, when a claim has been presented within said period, the action to enforce
the claim may be "filed within the statutory time of prescription." This view was clarified
in a subsequent case, 3 in the sense that the above-quoted provision was ". . . merely
interpreted to mean that presentation of the claim within three months was a condition
precedent to the filing of a court action. Since the obligee in said case presented his claim
seasonably although it did not file the action within the same period, this Court ruled that
the stipulation in the bond concerning the limitation being ambiguous, the ambiguity
should be resolved against the surety, which drafted the agreement, and that the action
could be filed within the statutory period of prescription." 4
In the case at bar, it is not contended that Hodges had not presented his claim within three
(3) months from January 23, 1955. In fact, he had repeatedly demanded from petitioner
herein compliance with its obligations under the surety bond in question, and, in reply to
such demands, petitioner asked extensions of time, on January 29, February 16, March 15,
May 3, June 16, July 1 and 15, and October 15, 1955. 5 After thus securing extensions of
time, even beyond three (3) months from January 23, 1955, petitioner cannot plead the
lapse of said period to bar the present action.
The second assignment of error assails the finding of the Court of Appeals to the effect that
the petitioner is liable for the full amount of surety bond despite the fact that it exceeded
the sum of P8,000.00 and hence, required, for its validity and binding effect as against
petitioner herein, the express approval and confirmation of its Manila office, which were
not secured in view of petitioner's failure to deny under oath the genuineness and due
execution of said bond, copy of which was attached to the complaint. It is true that,
pursuant to section 8 of Rule 8 of the Rules of Court:
"When an action or defense is founded upon a written instrument, copied in or attached
to the corresponding pleading as provided in the preceding section, the genuineness and
due execution of the instrument shall be deemed admitted unless the adverse party, under
oath, specifically denies them, and sets forth what he claims to be the facts; but this
provision does not apply when the adverse party does not appear to be a party to the
instrument or when compliance with an order for an inspection of the original instrument
is refused."
We have however, held that:
". . . where a case has been tried in complete disregard of the rule and the plaintiff having
pleaded a document by copy, presents oral evidence to prove the due execution of the
document as well as the agent's authority and no objections are made to the defendant's
evidence in refutation, the rule will be considered waived." 6
The reason for such view was explained by this Court as follows:
"Before entering upon a discussion of the questions raised by the assignments of error, we
may draw attention to a matter which has not been mentioned either by counsel or by the
court below, but which, to prevent misunderstanding, should be briefly explained: It is
averred in the complaint that it is accompanied by a copy of the contract between the
parties (Exhibit A) which copy, by the terms of the complaint, is made a part thereof. The
copy is not set forth in the bill of exceptions and aside from said averment, there is no
indication that the copy actually accompanied the complaint, but an examination of the
record of the case in the Court of First Instance shows that a translation of the contract
was attached to the complaint and served upon the defendant. As this translation may be
considered a copy and as the defendant failed to deny its authenticity under oath, it will
perhaps be said that under section 103 of the Code of Civil Procedure the omission to so
deny it constitutes an admission of the genuineness and due execution of the document as
well as of the agent's authority to bind the defendant. (Merchant vs. International Banking
Corporation, 6 Phil. 314.)
"In ordinary circumstances that would be true. But this case appears to have been tried
upon the theory that the rule did not apply; at least, it was wholly overlooked or
disregarded by both parties. The plaintiffs at the beginning of the trial presented a number
of witnesses to prove the due execution of the document as well as the agent's authority;
no objections were made to the defendant's evidence in refutation and no exceptions
taken; and the matter is not mentioned in the decision of the trial court.
"The object of the rule is 'to relieve a party of the trouble and expense of proving in the
first instance an alleged fact, the existence or nonexistence of which is necessarily within
the knowledge of the adverse party, and of the necessity (to his opponent's case) of
establishing which such adverse party is notified by his opponent's pleading.' (Nery Lim-
Chingco vs. Terariray, 5 Phil., at p. 124.)
"The plaintiff may, of course, waive the rule and that is what he must be considered to have
done in the present case by introducing evidence as to the execution of the document and
failing to object to the defendant's evidence in refutation; all this evidence is now
competent and the case must be decided thereupon. . . . . Nothing of what has here been
said is in conflict with former decisions of this court; it will be found upon examination
that in all cases where the applicability of the rule has been sustained the party invoking
it has relied on it in the court below and conducted his case accordingly." 7
In the case at bar, the parties acted in complete disregard of or wholly overlooked the rule
above-quoted. Hodges had neither objected to the evidence introduced by petitioner
herein in order to prove that Mrs. Mesa had no authority to issue a surety bond, much less
one in excess of P8,000.00, and took no exception to the admission of said evidence. Hence,
Hodges must be deemed to have waived the benefits of said rule and petitioner herein
cannot be held liable in excess of the sum of P8,000.00.
WHEREFORE, with the modification that petitioner's liability to Hodges is limited to said
sum of P8,000.00 the period, the petitioner was, on January 18, 1956, declared it is hereby
affirmed in all other respects, without costs. It is so ordered.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor
and Makasiar, JJ., concur.
EN BANC
[G.R. No. L-18401. April 27, 1963.]
PERFECTO JABALDE, plaintiff-appellant, vs. PHILIPPINE NATIONAL BANK,
defendant-appellee.
Cecilio de la Victoria and L. de la Victoria for plaintiff-appellant.
Ramon B. de los Reyes, Conrado E. Medina and Felisitas C. Diaz for defendant-
appellee.
SYLLABUS
1. PLEADING AND PRACTICE; GENUINENESS AND DUE EXECUTION OF
DOCUMENT; WAIVER OF DEFENDANT'S TECHNICAL ADMISSION THRU FAILURE TO
DENY UNDER OATH; CASE AT BAR. Although, ordinarily, the bank's failure in the case
at bar to deny under oath the entries in the passbook as copied in the complaint,
constitutes an admission of the genuineness and due execution of the document, this rule
cannot apply because the plaintiff introduced evidence purporting to support his
allegations of deposit on the dates he wanted the court to believe, and offered no objection
during the trial to the testimonies of defendant's witnesses and documentary evidence
showing different dates of deposit. These acts constitute a waiver by the plaintiff of the
defendant's technical admission through failure to deny under oath the genuineness and
due execution of the document (Cf. Legarda Koh vs. Ongsiako, 36 Phil. 1853; Yu Chuck vs.
Kong Li Po, 46 Phil. 608, both cited in I Moran' 232, 233, 1957 ed.).
2. BANKS; DEPOSITS DURING ENEMY OCCUPATION; EXECUTIVE ORDER NO. 49 A
VALID EXERCISE OF EXTRAORDINARY POWERS BY THE PRESIDENT AND INTENDED
FOR PERMANENT APPLICATION. The promulgation of Executive Order No. 49, which
provides that deposits made with banking institutions during the enemy occupation, and
all deposit liabilities incurred by banking institutions during the same period are null and
void, except as otherwise provided therein, is a valid exercise of the extraordinary powers
invested by the legislature unto the President by Commonwealth Act No. 471, which was
enacted pursuant to Article VI, Section 16 of the Constitution. Said Executive Order is
intended for permanent application; its operation was not limited to the period of
emergency.
3. ID.; ID.; ID.; CONTRACT OF DEPOSIT NOT NOVATED BY PROMISE OF BANK TO
PAY DEPOSITOR LATER. The alleged promise by the bank to pay the depositor when it
would be indemnified by either the United States or the Japanese governments, could not
be considered a novation of the contract of deposit, because there was no contract to
novate for lack of one of the essential elements of a contract, which is an object, the object
of the supposed contract having been declared null and void, and, therefore, non-existing.
DECISION
REYES, J.B.L., J p:
Appeal from a decision of the Court of First Instance of Cebu to the Court of Appeals,
elevated by the latter to the Supreme Court as a case involving a constitutional question
under Section 17 of the Judiciary Act of 1948.
Plaintiff-appellant Perfecto Jabalde seeks recovery of P10,000.00 allegedly deposited by
him with the defendant-appellee Philippine National Bank, P5,000.00 in genuine
Philippine currency, on 21 July 1941, and another P5,000.00 on 30 August 1943 in mixed
genuine Philippine currency and Japanese military notes. The complaint recites the
printed wording of plaintiff's passbook, and allegedly reproduces page one thereof,
reciting it to be as follows:
"Philippine National Bank
Manila, Philippines
in account with
JUL. 21 1941 P5,000.00
AUG. 50 1943 P5,000.00"
The defendant's answer was not under oath, and admits the making of the foregoing
deposits, but denies the dates of deposit, alleging as the true dates July 21, 1944 and 30,
August 1944, and avers that the entries in the passbook as to the deposit dates were
"knowingly, unlawfully and maliciously" altered by the plaintiff; and that the deposits
were all in Japanese military notes.
Both parties adduced evidence in support of their allegations, and after trial, the Court of
First Instance of Cebu dismissed the case.
Appellant insists that the dates of deposit were really 21 July 1941 and 30 August 1943,
and were made in Philippine money and mixed Philippine money and Japanese military
notes, respectively. The evidence preponderantly militates against the contention. That
the date entries in the passbook, Exhibit "A", were tampered with is clear to the naked eye.
The years of both entries are obscured with a blot of black ink. Photographic enlargements
(Exhibits 3-A and 3-B), however, discernibly show that the year of the first entry is "1944",
and not "1941". While the year of the second entry is badly obliterated, for obvious reasons
it could not be earlier than the first entry.
The testimony of the expert witness as to the last two numerals of the first date year, that
it is "1944", is logical, and eliminates whatever doubt exists by means of enlarged
photographs. He explained how both the slant (diagonal) and the vertical lines in both
figures are parallel to each other, and the angles created by the slant and horizontal lines
are congruent; the bases of the two "4's" are on the same plane. Therefore, we agree that
no other conclusion is possible than that the two last digits are both "4".
Plaintiff's counsel avers that if there was any tampering, it should be attributed to the bank
that issued the passbook. On this point, the trial court correctly observed that it would be
puerile for any of the bank's officials to do this since the act would be against the bank's
interest.
Defendant's witnesses have also shown, by their testimonies and business sheets of
account during the war years (Exhibits 5, 6, and 7), that appellant Perfecto Jabalde did not
have a pre-war, or "controlled", account with the defendant bank, although he did open a
war-time or "free" account. The passbook states on its face that it is a "Free Account". The
difference between the two kinds of accounts, as instituted by the bank, has been well
explained. The business sheets of war-time accounts in the Cebu bank branch also show
that Perfecto Jabalde, along with several clients, deposited money in Japanese military
notes only and on the dates alleged by the bank. The conclusion drawn from this array of
evidence is inevitably that the deposits were made on 21 July 1944 and on 30 August 1944,
and all in military notes.
The first legal issue is whether the bank's failure to deny under oath the entries in the
passbook as "copied" in the complaint constitutes an admission of the genuineness and
due execution of the document. Ordinarily, such failure is an admission. However, this rule
cannot apply in the present case because the plaintiff introduced evidence purporting to
support his allegations of deposit on the dates he wanted the court to believe, and offered
no objection during the trial to the testimonies of defendant's witnesses and documentary
evidence showing different dates of deposit. 1 By these acts, the plaintiff waived the
defendant's technical admission through failure to deny under oath the genuineness and
due execution of the document (Cf. Legarda Koh vs. Ongsiako, 36 Phil. 185; Yu Chuck vs.
Kong Li Po, 46 Phil. 608, both cited in 1 Moran 232, 233, 1957 ed.). It has, likewise, been
ruled that
"Where written instrument set forth in answer is not denied by affidavit, yet if evidence in
respect to that matter, and tending to show that instrument is not genuine, or was not
delivered, is introduced by plaintiff without objection on part of defendant, or motion to
strike out, and is met by counter-evidence on the part of defendant, the latter ought not to
be permitted to claim that genuineness and due execution of instrument are admitted."
(Francisco, Rules of Court, Anno. and Commented, Vol. I, Part I, Rev. Ed., pp. 734-735, citing
the case of Clark vs. Child 66 Cal. 87)
The court of first instance held that the appellant's wartime deposits were not
reimbursable under Executive Order No. 49, Series of 1945, issued by President Osmea
in the exercise of the authority conferred by the Emergency Powers Act (Comm. Act No
671). The Executive Order provides that:
"All deposits made with banking institutions during enemy occupation, and all deposit
liabilities incurred by banking the same period are declared null and void, except as
provided in this section."
The appellant does not contest that under said Executive Order his wartime deposits are
void; but he vigorously assails the validity and constitutionality of the order as impairing
the obligation of contracts and depriving him of property without due process of law.
This is no longer an open issue. It was passed upon and decided in Hilado vs. de la Costa,
83 Phil. 471, wherein it was ruled:
the Government to fulfill its responsibilities and to maintain and enforce its authority."
(Emphasis supplied)
The argument that the rule of Hilado vs. de la Costa, supra, should not apply because the
complaint herein was filed in 1956 when there was no more emergency is impertinent,
since Executive Order No. 49 is clearly intended for permanent application and its
operation was not limited to the period of emergency.
Assuming, arguendo, that the bank promised later to pay the plaintiff-depositor when it
would be indemnified by either the United States or the Japanese government, said
promise could not be considered a novation of the contract of deposit, because there was
no contract to novate in the first place, for lack of one of the essential elements of a
contract; object. The object of the supposed contract (in this case the deposited military
notes), was declared null and void, and, therefore, non-existing.
FOR THE FOREGOING REASONS, the decision appealed from is hereby affirmed, with costs
against the appellant. Let the case be referred to the City Fiscal, through the Department
of Justice, for investigation and prosecution as the facts may warrant.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala and
Makalintal, JJ., concur.
Padilla, J., took no part.
Footnotes
1. While he objected to the admission of the documentary evidence, at the close of
the trial, his ground for objection is that they are self-serving; he does not, however,
pursue and assign, as error, in his brief the admission of those allegedly self-serving
evidence in his appeal.

"We are of the considered opinion, and therefore hold, that the provisions of Executive
Order No. 49, do not deprive the plaintiff of his property without due process of law or
impair the obligation of contract entered into between him and the defendant bank;
because they are but the logical corollary and application to bank deposits in Japanese war
notes of Executive Order No. 25, in so far as it declares that said notes are not legal tender
in territories of the Philippines liberated from Japanese occupation, the validity of which
is not, and cannot seriously be, questioned."

The promulgation of Executive Order No. 49 was a valid exercise of the extraordinary
powers invested by the legislature unto the President by Commonwealth Act No. 671. This
Act, enacted pursuant to Article VI, Section 16 of the Constitution, after declaring the
necessity for granting extraordinary powers to the President in Section 1 thereof, granted
him in Section 2 the power

"to promulgate such rules and regulations as he may deem necessary to carry out the
national policy declared in section 1 hereof. Accordingly, he is, among other things,
empowered (a) . . . ; (i) to exercise such other powers as he may deem necessary to enable
SECOND DIVISION
[G.R. No. 81039. December 26, 1990.]
INVESTMENT AND UNDERWRITING CORPORATION OF THE PHILIPPINES,
petitioners, vs. COMPTRONICS PHILIPPINES, INC. and GENE V. TAMESIS,
respondents.
Castro, Villamor & Associates and Quiason, Ermitao, Makalintal & Barot for
petitioners.
A.M. Perez & Associates for respondents.
DECISION
PARAS, J p:
This case, filed with the Court of Appeals but certified to this Court for disposition since it
involves purely questions of law, is an appeal from the decision of the then Court of First
Instance of Rizal, ** Branch XI, dated May 31, 1983, in Civil Case No. 28210, dismissing the
complaint of herein appellant.
The facts of the case are as follows:
Investment and Underwriting Corp. (IUCP, for short) filed a complaint against
Comptronics Phils. (Comptronics, for short) for collection of a sum of money allegedly
incurred by the latter under the following circumstances:
"4. On November 4 and 5, 1976, defendant Corporation (Comptronics) obtained a
loan from the plaintiff (IUCP) and executed a promissory note No. MBV 1898A in favor of
the plaintiff obligating itself to pay the latter the sum of Two Million One Hundred Four
Thousand and Six Hundred and Fifty Pesos and Fifty-One Centavos (P2,104,650.51). A
photocopy of the promissory note is hereto attached as Annex 'B'.
"5. Under the Promissory Note No. MBV 1898A (Annex 'B'), defendant Corp. bound
itself to pay P2,104,650.51 on or before January 28, 1977 with interest at the rate of 14%
per annum to accrue immediately in case of default in payment of the note. LLphil
"6. On October 29, 1976, plaintiff and defendant Corp. entered into a 'Guaranty
Agreement' which states, among others, as follows:
"Upon application of Comptronics, IUCP had arranged with financial institution(s) for the
grant to Comptronics of credit line(s) in the amount of TWO MILLION FIVE HUNDRED
THOUSAND PESOS (P2,500,000) to finance the export requirements of Comptronics under
the said line(s) were guaranteed and shall continue to be guaranteed by IUCP."
"A photocopy of the `Guaranty Agreement' is hereto attached as Annex 'C'.
"7. By virtue of the abovementioned agreement, the Chartered Bank of Manila
advanced on September 16, 1977 the amount of P271,801.57 to the defendant
Corporation under an availment secured and guaranteed by plaintiff herein. The loan has
already matured and is now past due making the plaintiff liable therefor.
"8. On November 8, 1977, plaintiff made payment to the Chartered Bank of Manila
for P140,000.00 on another availment made by the defendant herein, which is likewise
guaranteed by the plaintiff. Accordingly, the current account of plaintiff with said Bank
was debited with the said amount. A photocopy of the debit memo is hereto attached as
Annex 'D'.
"9. In consideration of the loan obtained or to be obtained by defendant
Comptronics Philippines, Inc. from herein plaintiff, defendant Gene V. Tamesis executed
on October 22, 1976 a 'Continuing Guaranty' obligating himself, among others, as follows:
"For and in consideration of the sum or sums obtained and/or to be obtained by
Comptronics Phil. Inc., hereinafter referred to as the DEBTOR/S from you and/or your
principal/s, as may be evidenced by promissory note/s, checks, bills receivable/s and/or
other evidence/s of indebtedness (hereinafter referred to as the NOTE/S. I/We hereby
jointly and severally and unconditionally guarantee unto you and/or your principal/s,
successor/s and assigns the prompt and punctual payment at maturity of the NOTE/s
issued by the debtor/s in your and/or your principals successor/s and assigns favor to the
extent of the aggregate principal sum of Two Million Five Hundred Pesos (P2,500,000.00)
Philippine currency, and such interests, charges and penalties as may hereinafter
specified.
xxx xxx xxx
"This guaranty shall be binding upon Me/Us. My/Our heirs executors, administrators,
successors, and assigns and shall insure to the benefit of you and be enforceable by you,
your principals, successor, transferees and assigns. If this guaranty is executed by two or
more parties, they shall be jointly and severally liable hereunder . . .
"In case of default as herein before specified, I/We agree to pay all sums unpaid by the
debtor/s (principal and accrued interest/charges) plus interest thereon at the rate of
Seventeen Percent (17%) p/a from the date immediately following due date thereof and
liquidated damages in an amount equivalent to Seventeen Percent (17%) p/a based on the
total obligation unpaid. If collection is effected by a lawyer or if payment is collected by a
suit or through other proceedings, I/We furthermore agree to pay you and/or your
principal/s attorney's fees equivalent to Twenty obligation and costs of collection . . ."
"A copy of the said 'Continuing Guaranty' is hereto attached a Annex 'E' and made an
integral part of the complaint." (Rollo, pp. 76-A-80)
The aforesaid complaint prayed for the following:
". . . that after hearing, judgment be rendered in favor of plaintiff and against the defendant
ordering the latter to jointly and severally pay the plaintiff the following:
"1. P2,104,652.51 with interest of 14% from and after January 28, 1977, until full
satisfaction has been made, with further interest at the rate of 6% on the accumulated
interest from the filing of the complaint.
"2. The sum of P411,801.57 with interest at 14% from November 8, 1977, until full
satisfaction has been made, with further interest at the rate of 6% on the accumulated
interest from the date of the filing of the complaint. prcd
"3. The sum equivalent to 17% of the value of the promissory note as liquidated
damages.
"4. The sum equivalent to 20% per centum of the availments as liquidated damages.
"5. The sum equivalent to 20% of the amount due and unpaid as and for attorney's
fees.
"6. The costs of the suit (Ibid., p. 76).
On March 20, 1978, Comptronics filed its answer denying the material allegations in
IUCP's complaint concerning the promissory note No. MBV 1898A for the reason that the
party-signatory thereto has been disauthorized to sign for and in behalf of Comptronics;
admitting the material allegations on Comptronics' account with the Chartered Bank of
Manila but that the remaining balance is now purely nominal; denying the liability of Gene
Tamesis for lack of consideration and due to the fact that IUCP itself has been the
controlling/comptroller of Comptronics at the time; denying IUCPs claim for stipulated
damages, attorney's fees and costs of suit allegedly due; the allegations that Comptronics
failed to pay the amount due on the aforesaid promissory note, the alleged demand for
payment thereof and the failure and refusal to pay (Ibid., p. 44; Appellees' Brief, pp. 5-6).
Thus, while Comptronics denied the genuineness and due execution of the documents,
such denials were not under oath, hence under Section 8, Rule 8 of the Rules of Court,
Comptronics is deemed to impliedly admitted the same.
On April 20, 1978, however, Comptronics received a request for admission from IUCP of
the genuineness and due execution of the document in which the former objected to such
request on April 22, 1987 (Appellees' Brief, p. 7).
On February 8, 1980, IUCP filed a motion praying that summary judgment be rendered
(Rollo, p. 82). On February 28, 1980, the court a quo denied said motion since 'factual
issues are involved considering defendant's (Comptronics) allegation in the answer that
there had been regular liquidation of their account and that the remaining balance of their
indebtedness . . . is now purely nominal' (Appellees' Brief, p. 9).
On October 30, 1980, IUCP manifested that it was resting its case by reason of the failure
of Comptronics to deny under oath the genuineness and due execution of the actionable
documents attached to the complaint, the same are deemed admitted and a prima facie
case is made in their favor and entitles them to the judgment prayed for, unless
Comptronics, should prove payment (Appellant's Brief, p. 6).
On November 4, 1980, Comptronics filed a demurrer to evidence, reiterating their
previous motion to dismiss which the court a quo denied for lack of merit (Rollo, p. 83).
On July 16, 1981, the date set for the reception of their evidence, Comptronics failed to
appear. Hence, the court a quo considered them to have waived their right to adduce
evidence (Ibid.).
Upon motion for reconsideration filed by Comptronics, the court a quo reconsidered its
order on September 9, 1981 and set the case anew for the reception of Comptronics'
evidence (Ibid.).
On July 6, 1982, Comptronics rested its case without presenting any evidence (Ibid.).
cdphil
On May 31, 1983, the court a quo rendered judgment dismissing IUCP's complaint, the
dispositive portion of which reads:
"WHEREFORE, the above entitled case is dismissed without pronouncement as to costs.
SO ORDERED." (Appellees' Brief, p. 26).
From said decision, IUCP appealed the case to the Court of Appeals, docketed therein as
CA G.R. CV No. 01685.
After the parties had submitted their respective briefs, IUCP on July 20, 1984 (Rollo, p. 15)
and Comptronics on June 1, 1985 (Ibid., p. 44), the case was submitted for decision (Ibid.,
p. 45); and in a resolution the Court of Appeals *** ordered its Clerk of Court to forward to
this Court the whole record of the case for final determination (Ibid., p. 88).
The following issues of law were raised to this Court:
I
WHETHER OR NOT THE ACT OF REQUESTING FOR ADMISSION OF FACTS ALREADY
DEEMED ADMITTED BY FAILURE TO DENY THE SAME UNDER CONSTITUTES A WAIVER
OF THAT IMPLIED ADMISSION;
II
WHETHER OR NOT IN AN ACTION FOR A SUM OF MONEY BASED ON A PROMISSORY
NOTE ATTACHED TO THE COMPLAINT, IT IS STILL NECESSARY FOR PLAINTIFF-
APPELLANT TO PROVE NON-PAYMENT BY THE DEFENDANT-APPELLEES EVEN IF THE
LATTER HAD FAILED TO DENY UNDER OATH THE GENUINENESS AND DUE EXECUTION
OF THE PROMISSORY NOTE.
As to the first issue, the answer is in the negative.
While the act of IUCP in requesting for admission the genuineness and due execution of
the documents after having obtained from Comptronics an implied admission thereof may
at best be considered as improper (see Francisco, Civil Procedure, Vol. II, p. 235, 1966 ed.),
the same cannot be considered as having waived such implied admission.
As this Court ruled in the case of Sardane vs. Court of Appeals (167 SCRA 524, 533 [1988]),
stating thus:
"Petitioners' invocation of the doctrine in Yu Chuck, et al. vs. Kong Li Po, which was
reiterated in Central Surety and Insu. Co. v. Hodges, et al. does not sustain his thesis that
the herein private respondents had 'waived the mantle of protection given him by Rules
8, Section 8.' It is true that such implied admission may be waived by a party but only if he
acts in a manner indicative of either an express or tacit waiver thereof . Petitioner,
however, either overlooked or ignored the fact that, as held in Yu Chuck, and the same is
true in other cases of identical factual settings, such a finding of waiver is proper where a
case had been tried in complete disregard of the rule and the plaintiff having pleaded a
document by copy, presents oral evidence to prove the due execution of the document and
no objections are made to the defendants' evidence in refutation. This situation does not
obtain in the present case hence said doctrine is obviously inapplicable." (Emphasis
supplied)
In the case of Yu Chuck (supra), the plaintiff was considered to have waived the implied
admission when he presented, at the beginning of the trial, a number of witnesses and
made no objections to the defendant's evidence in refutation; and in the case of Central
Surety (supra). Hodges did not object to the evidence introduced by petitioner in order to
prove that one of its agent (petitioner) had no authority to issue a surety bond, even after
petitioner failed to deny under oath the genuineness and due execution of the bond. Hence,
this Court considered the rule (Rule 8, Section 8, Rules of Court) in above cases, to have SO ORDERED.
been waived. In the instant case, IUCP did neither of these. Hence, IUCP's request for Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.
admission cannot be taken as indicative of either an express or tacit waiver thereof It can, Footnotes
at best, be considered as a mere 'superfluity', to borrow the words of the lower court ** Penned by Judge Ricardo L. Pronove.
viewed in another angle, but should not be considered as a waiver of the implied *** Twelfth Division; penned by Associate Justice Pedro A. Ramirez and concurred
admission. in by Associate Justices Luis Javellana and Minerva P.G. Reyes.

II
Anent the second issue, IUCP asserts that Comptronics, having admitted the genuineness
and due execution of the documents, there was no need for them to present evidence nor
prove non-payment by Comptronics inasmuch as the facts alleged in the complaint
constituted a prima facie case in their favor and the burden is shifted to Comptronics to
prove payment (Appellant's Brief, pp. 12-14). Comptronics, on the other hand, contends
that the implied admission of the genuineness and due execution of the documents does
not necessarily mean that IUCP would be automatically entitled to the money claimed
without proof that said amounts are due and unpaid by them (Appellees' Brief, p. 14). prcd
It is true that the failure of Comptronics to deny, under oat the genuineness and due
execution of the documents does not carry with it the admission of payment as such is a
defense of new matter that may be alleged in a proper plea to that effect (Hibberd v. Rohde
and McMillian, 32 Phil. 476 [1915]). They are not estopped from controverting it by
evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel and
want of consideration (Bough and Bough v. Cantiveros, 40 Phil. 209 [1919]). Considering
that what is deemed admitted are defenses relating only to the genuineness and due
execution of the documents, Comptronics could neither put up the defense that the
documents were not signed knowingly and voluntarily nor that they are spurious (Kalilid
Wood Industries Corp. v. IAC, 155 SCRA 594 [1987]). However, by reason of their failure
to deny the execution of the documents, under oath, a prima facie case is made out for
IUCP without adducing any proof whatever necessary on the part of the latter to show that
Comptronics owed the amount claimed (Chamber of Commerce v. Pua Te Ching, 14 Phil.
222 [1909], citing several cases).

Except for the self-serving allegations in the answer denying the claims of IUCP, nowhere
in the records show that Comptronics proved payment thereof. As a matter of fact,
Comptronics rested its case in the court a quo without adducing any evidence. Hence,
Comptronics should be held liable to their obligation with IUCP.

As this Court held in the case of Philippine Commercial and Industrial Bank vs. ELRO
Development Corp. (29 SCRA 38 [1969])

"The promissory note sued upon was not denied by the defendant under oath but there
was a denial of the outstanding balance alleged in the complaint . . . If no partial payment
had been made and no amount was admitted as due the plaintiff, the thrust of the
averments would seem to be that there was no initial obligation incurred at all; and yet
the promissory note was not denied under oath . . . On the other hand, if payments had
been made, either partial or total, they should have been alleged with definiteness and
evidence thereof duly presented. Neither was done by the defendant, hence, the defendant
was held liable." (Emphasis supplied)

PREMISES CONSIDERED, the judgment appealed from is hereby REVERSED and a

judgment is hereby RENDERED ordering Comptronics, defendant-appellee herein, to PAY
IUCP in accordance with the prayer in the complaint. LLphil
EN BANC
[G.R. No. L-28140. March 19, 1970.]
CAPITOL MOTORS CORPORATIONS, plaintiff-appellee, vs. NEMESIO I. YABUT,
defendant-appellant.
Jose A. David, Jr. for plaintiff-appellee.
R. Correa for defendant-appellant.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SPECIFIC DENIAL, APPLICABILITY AND
PURPOSE. The rule allowing an answer to contain the allegation that the defendant has
no knowledge or information sufficient to form a belief as to the truth of an averment and
giving such answer the effect of a denial, does not apply where the fact as to which want
of knowledge is asserted, is so plainly and necessarily within the defendant's knowledge
that his averment of ignorance is palpably untrue. This form of denial must be availed of
with sincerity and good faith, not for the purpose of confusing the other party, nor for
purposes of delay.
2. ID.; ID.; SPECIFIC DENIAL, CONCEPT. A denial is not specific simply because it
is so qualified. The defendant must aver positively or state how it is that he is ignorant of
the facts so alleged. A mere allegation of ignorance of the facts in the complaint is
insufficient to raise an issue.
3. ID.; ID.; CIRCUMSTANCES THAT NEGATE BASIS FOR SPECIFIC DENIAL. There
are circumstances that negative the truth, seriousness and sincerity of appellant's
purported specific denial. First, the present action is founded upon a written instrument
attached to the complaint, the genuineness and due execution of the instrument of which
the defendant-appellant failed to deny under oath, hence, the same are deemed admitted.
Second, defendant-appellant did not oppose the motion for judgment on the pleadings
filed by plaintiff-appellee; neither has he filed a motion for reconsideration of the order of
September 13, 1966. which deemed the case submitted for decision on the pleadings.
DECISION
VILLAMOR, J p:
Appeal on a question of law from the judgment of the Court of First Instance of Rizal in its
Civil Case No. Q-9869.
On March 1, 1966, Capitol Motors Corporations filed a complaint against Nemesio I. Yabut.
It was therein averred that on April 24, 1965, the defendant executed in favor of the
plaintiff a promissory note (copy of which was attached to the complaint) for the sum of
P130,134.25, payable in eighteen (18) equal monthly installments with interest at 12%
per annum, the first installment to become due on June 10, 1965, that it was stipulated in
the promissory note that should the defendant fail to pay two (2) successive installments,
the principal sum remaining unpaid would immediately become due and demandable and
the defendant would, by way of attorney's fees and costs of collection, be obligated to the
plaintiff for an additional sum equivalent to 25% of the principal and interest due; that as
of February 23, 1966, the sum remaining unpaid on the promissory note was P30,754.79,
including accrued interest; that the defendant defaulted in the payment of two (2)
successive installments, and likewise failed to pay the interest due on the promissory note;
and that in spite of demands by the plaintiff, the defendant failed and refused to pay the
said principal sum and interest due. Prayer was made that the defendant be ordered to
pay the plaintiff the sum of P30,754.79, as well as the interest due thereon from February
23, 1966, and an additional sum equivalent to 25% of the amount due, plus costs.
On April 27, 1966, and within the reglementary period, the defendant, through his counsel,
filed an answer which reads:
"DEFENDANT through counsel alleges:
"1. Paragraph 1 of the complaint is admitted.
"2. Paragraphs 2, 3, 4, 5, 6 and 7 of the complaint are specifically denied for lack of
knowledge sufficient to form a belief as to the truth thereof.
"WHEREFORE, it is respectfully prayed that the Complaint be dismissed with costs against
the plaintiff."
On June 16, 1966, the plaintiff filed a motion for judgment on the pleadings, on the ground
that the defendant, not having set forth in his answer the substance of the matters relied
upon by him to support his denial, had failed to deny specifically the material allegations
of the complaint, hence, must be deemed to have admitted them. The defendant did not
file an opposition to the motion. On September 13, 1966, after hearing on the motion, the
court issued an order granting the said motion and considering the case submitted for
decision on the basis of the pleadings; and on January 9, 1967, the court rendered
judgment granting in toto the plaintiff's prayer in its complaint.
In this appeal, defendant-appellant contends that the court a quo erred in considering him
as having failed to deny specifically the material allegations of the complaint, and,
consequently, in deciding the case on the basis of the pleadings. Citing Moran, Comments
on the Rules of Court, Vol. I, 1963 Ed., p. 281, he argues that since Section 10, Rule 8 of the
Revised Rules of Court, recognizes three (3) modes of specific denial, namely: (1) by
specifying each material allegation of fact in the complaint the truth of which the
defendant does not admit, and, whenever practicable, setting forth the substance of the
matters which he will rely upon to support his denial or (2) by specifying so much of an
averment in the complaint as is true and material and denying only the remainder or (3)
by stating that the defendant is without knowledge or information sufficient to form a
belief as to the truth of a material averment in the complaint, which has the effect of a
denial, and he has adopted the third mode of specific denial, his answer tendered an issue,
and, consequently, the court a quo could not render a valid judgment on the pleadings.
This appeal is without merit.
We agree with defendant-appellant that one of the modes of specific denial contemplated
in Section 10, Rule 8, is a denial by stating that the defendant is without knowledge or
information sufficient to form a belief as to the truth of a material averment in the
complaint. The question, however, is whether paragraph 2 of defendant-appellant's
answer constitutes a specific denial under the said rule. We do not think so. In Warner
Barnes & Co., Ltd. vs. Reyes, et al., G.R. No. L-9531, May 14, 1958 (103 Phil., 662), this Court
said that the rule authorizing an answer to the effect that the defendant has no knowledge
or information sufficient to form a belief as to the truth of an averment and giving such
answer the effect of a denial, does not apply where the fact as to which want of knowledge
is asserted, is so plainly and necessarily within the defendant's knowledge that his
averment of ignorance must be palpably untrue. In said case the suit was one for
foreclosure of mortgage, and a copy of the deed of mortgage was attached to the complaint;
thus, according to this Court, it would have been easy for the defendants to specifically
allege in their answer whether or not they had executed the alleged mortgage. The same
thing can be said in the present case, where a copy of the promissory note sued upon was
attached to the complaint. The doctrine in Warner Barnes & Co., Ltd. was reiterated in J. P.
Juan & Sons, Inc. vs. Lianga Industries, Inc., G.R. No. L-25137, July 28, 1969 (28 SCRA 807).
And in Sy-quia vs. Marsman, G.R. No. L-23426, March 1, 1968 (22 SCRA 927), this Court
said:
"With regard to the plea of lack of knowledge or information set up in paragraph 3 of the
answer, this Court's decision in Warner Barnes vs. Reyes, 103 Phil. 662, 665, is authority
for the proposition that this form of denial must be availed of with sincerity and good faith,
not for the purpose of confusing the other party, nor for purposes of delay. Yet, so lacking
in sincerity and good faith is this part of the answer that defendants-appellants go to the
limit of denying knowledge or information as to whether they (defendants) were in the
premises (Marsman Bldg.) on January 4, 1961, as averred in paragraph 4 of the complaint.
Yet whether such a fact was or was not true could not be unknown to these defendants."
In National Marketing Corporation vs. De Castro, 106 Phil. 803 (1959), this Court held:
"Furthermore, in his answer to the appellee's complaint he merely alleged that 'he has no
knowledge or information sufficient to form a belief as to the truth of the matters
contained in paragraphs 3, 4, 5 and 6 so much so that he denies specifically said
allegations.' A denial is not specific simply because it is so qualified. (Sections 6 and 7, Rule
9; El Hogar Filipino vs. Santos Investments, Inc., 74 Phil. 79; Baetamo vs. Amador, 74 Phil.
735; Dacanay vs. Lucero, 76 Phil. 139; Lagrimas vs. Lagrimas, 95 Phil. 113). Material
averments in a complaint, other than those as to the amount of damage, are deemed
admitted when not specifically denied. (Section 8, Rule 9,) The court may render judgment
upon the pleadings if material averments in the complaint are admitted. (Section 10, Rule
35; Baetamo vs. Amador, supra, Lichauco vs. Guash, 76 Phil. 5; Lati vs. Valmores, G.R. No.
L-6877, 30 March 1954.)"
There are two other reasons why the present appeal must fail. First. The present action is
founded upon a written instrument attached to the complaint, but defendant-appellant
failed to deny under oath the genuineness and due execution of the instrument; hence, the
same are deemed admitted. (Section 8, Rule 8 of the Revised Rules of Court; Songo vs.
Sellner, 37 Phil. 254; Philippine Commercial & Industrial Bank vs. ELRO Development
Corporation, et al., G.R. No. L-30830, August 22, 1969 [29 SCRA 38]; J. P. Juan & Sons, Inc.
vs. Lianga Industries, Inc., supra.) Second. Defendant-appellant did not oppose the motion
for judgment on the pleadings filed by plaintiff-appellee; neither has he filed a motion for
reconsideration of the order of September 13, 1966, which deemed the case submitted for
decision on the pleadings, or of the decision rendered on January 9, 1967. In Santiago vs.
Basilan Lumber Company, G.R. No. L-15532, October 31, 1963 (9 SCRA 349), this Court
said:
"It appears that when the plaintiff moved to have the case decided on the pleadings, the
defendant interposed no objection and has practically assented thereto. The defendant
therefore, is deemed to have admitted the allegations of the complaint, so that there was
no necessity for the plaintiff to submit evidence of his claim."
PREMISES CONSIDERED, the judgment appealed from is affirmed, with costs against
defendant-appellant.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee
and Barredo, JJ., concur.

It becomes evident from all the above doctrines that a mere allegation of ignorance of the
facts alleged in the complaint, is insufficient to raise an issue; the defendant must aver
positively or state how it is that he is ignorant of the facts so alleged. (Francisco, The
Revised Rules of Court in the Philippines, Vol. I, p. 417, citing Wood vs. Staniels, 3 Code
Rep. 152 and Vassalt vs. Austin, 32 Cal. 597.)

Thus, in at least two (2) cases where this Court ruled that judgment on the pleadings was
not proper, it will be seen that the reason was that in each case the defendants did
something more than merely alleging lack of knowledge or information sufficient to form
a belief. In Arrojo vs. Caldoza, et al., G.R. No. L-17454, July 31, 1963 (8 SCRA 547), the
defendants, in their answer to the complaint for recovery of possession of a parcel of land,
did not merely allege that they had no knowledge or information sufficient to form a belief
as to the truth of the material allegations in the complaint, but added the following: "The
truth of the matter is that the defendants have not occupied or taken any property
belonging to the plaintiff. They took possession and ownership only of the land belonging
to them, which properties were possessed and owned originally by their predecessors-in-
interest, who were the parents of the defendants . . ." In Benavides vs. Alabastro, G.R. No.
L-19762, December 23, 1964 (12 SCRA 553), the defendant's answer did not only deny the
material allegations of the complaint but also set up certain special and affirmative
defenses the nature of which called for presentation of evidence.
EN BANC
[G.R. No. L-22018. January 17, 1968.]
APOLONIO GALOFA, plaintiff-appellee, vs. NEE BON SING, defendant -appellant.
Madrid Law Office for plaintiff-appellee.
Salvador Nee-Estuye for defendant-appellant.
SYLLABUS
1. JUDGMENT; JUDGMENT ON THE PLEADINGS; NEGATIVE PREGNANT,
EQUIVALENT TO AN ADMISSION, WHERE DEFENDANT'S ANSWER FAILS TO TENDER A
GENUINE ISSUE. Plaintiff having alleged his inability to take actual possession of the
parcel of land due to "an unwarranted adverse claim of rights of ownership and possession
by the defendant," followed by an allegation of how such claim was exercised, defendant's
denial of the "material averments contained in paragraph 4 of the Complaint" conjoined
with his disclaimer of dominical or possessory rights in the manner alleged in the
complaint, makes out a negative pregnant, which is equivalent to an admission.
2. ID.; ID.; PROPER IN CASE OF FAILURE OF DEFENDANT TO DENY OR ADMIT
MATERIAL ALLEGATION IN COMPLAINT ABOUT SERVICES OF PLAINTIFF'S COUNSEL.
As to plaintiff's allegation of his having contracted a lawyer for a fee, the defendant does
not deny the alleged fact; what he denies is his liability therefor, which is an issue of law.
Since defendant neither denies nor admits the material allegation about the services of
plaintiffs counsel, judgment on the pleadings is proper.
3. ID.; ID.; PLAINTIFF BARRED FROM RECOVERY OF DAMAGES WHERE HE
PRAYED FOR JUDGMENT ON THE PLEADINGS. Where plaintiff prayed for judgment on
the pleadings, he is barred from recovery of his alleged damages because he is deemed to
have admitted the truth of the defendant's denial of the alleged damages and to have
rested his motion for judgment on those allegations taken together with such of his own
as are admitted in the pleadings.
4. ID.; ID.; DEFENDANT'S MOTION FOR RECONSIDERATION PROPERLY DENIED
WHERE AFFIDAVIT ANNEXED THERETO SHOWS NO RIGHT OR INTEREST IN THE LAND.
Defendant's motion for reconsideration to allow him to amend his answer contains an
annexed affidavit reiterating that he "had no real right or interest whatsoever not having
been involved in any way with any transaction affecting the title or possession of the
same." There was therefore, no issue to be tried and the denial of such motion was proper.
For, why should the defendant resist the judgment when he simultaneously asserts that
he had no right to the land?
5. PLEADING AND PRACTICE; ANSWER; SPECIFIC DENIAL OF ALLEGATION ON
DAMAGES, NOT REQUIRED BY RULES. defendant specifically denied the allegation in
par. 6 of the complaint as to the amount of damages. But specific denial thereof is not
required by the Rules (Sec. 1 Rule 9); and at any rate, the appealed judgment did not
condemn him to pay damages.
DECISION
REYES, J.B.L., J p:
Direct appeal from a judgment on the pleadings in Civil Case No. 145 (No. 1737-Sorsogon)
of the Court of First Instance of Sorsogon on the issue of whether or not the defendant's
answer to the complaint tendered a genuine issue.
The plaintiff-appellee Apolonio Galofa filed a complaint against the defendant-appellant
Nee Bon Sing 1 for the recovery of possession of and to quiet title over a certain parcel of
land in Sta. Lourdes, Barcelona, Sorsogon, alleging therein the prior ownership and
possession of the land by his late father, Francisco Galofa, and its adjudication in favor of
the plaintiff in an oral partition among his co-heirs. The complaint alleges further:
"4. That plaintiff however, despite the foregoing, was unable to take actual
possession of the above-described property due to an unwarranted adverse claim of rights
of ownership and possession by the defendant and/or his tenant or encargado, Abion
Pantilone, alleging sale by a certain Fe Nicolas of said property to defendant, which if true,
had no right whatsoever to legally dispose the above-described property not being the
owner thereof, aside from the fact that the defendant is not allowed under the law to own
and possess real properties being an alien, pursuant to the Constitution and/or the
Krivenko case; prcd
"xxx xxx xxx;
"9. That as a result thereof, plaintiff was compelled to ventilate this case to court and
in so doing has to retain the services of counsel for the contracted amount of no less than
P1,500.00 and/or spent or will spend the sum of P500.00 because of this case which could
have been avoided had the defendants been more fair and just in his dealings with your
plaintiff.
"xxx xxx xxx"
In his answer corresponding to the above-quoted allegations in the complaint, the
defendant-appellant Nee Bon Sing manifested as follows:
"3. That the defendant denies the material averments contained in paragraph 4 of
the Complaint, the truth being, that the defendant never asserted title of ownership to the
property described in the Complaint to anybody, much less to the herein plaintiff in virtue
of any deed of conveyance executed in favor of the defendant by one Fe Nicolas, nor
claimed any possessory right over the said property, either by himself or through another:
"xxx xxx xxx;
"5. That if in fact the plaintiff had contracted, as alleged in paragraph 8 of the
Complaint, the services of counsel and will spend the amounts therein specified
occasioned by the institution of the action, the same is his own personal responsibility, for
which reason, defendant denies any part and assumes no liability therefor in any manner
whatsoever;
"xxx xxx xxx"
Upon motion by the plaintiff that the defendant's answer failed to tender an issue, the
lower court rendered judgment on the pleadings, declaring the plaintiff the owner of the
property "free from any cloud arising from any assertion of adverse claim or interest
whatsoever on the part of the defendant", ordering the defendant to deliver possession of
the property to the plaintiff, and to pay attorney's fees and costs. dctai
We find that the lower court committed no reversible error in rendering the appealed
judgment.
It is to be noted that, to the plaintiff's allegation of his inability to take actual possession of
the parcel of land due to "an unwarranted adverse claim of rights of ownership and
possession by the defendant . . .", followed by an allegation of how such claim was
exercised, the defendant's denial is as to "the material averments contained in paragraph
4 of the Complaint, . . ." conjoined with his disclaimer of dominical or possessory rights in
the manner alleged in the complaint. The defendant's denial is, therefore, a negative
pregnant, which is equivalent to an admission.
"A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be
ascertained whether it is the fact or only the qualification that is intended to be denied."
(41 Am. Jur. 429)
"Where a fact is alleged with some qualifying or modifying language, and the denial is
conjunctive, a 'negative pregnant' exists, and only the qualification or modification is
denied, while the fact itself is admitted. Ison v. Ison, 115 SW 2d. 330, 272 Ky. 836." (28
Words & Phrases 314)
Footnotes
1. Amended later to include one Maria Castro who could not be served with
summons and was, presumably, a fictitious person . . . (Defendant-appellant's Brief, p. 2)
and one Apion Pantilone, who was dropped and excluded as a party defendant by order of
the court dated 15 November 1962.

As to the plaintiff's allegation of his having contracted a lawyer for a fee, the defendant
does not deny the alleged fact; what he denies is his liability therefor, which is an issue of
law. Since the defendant neither denies nor admits the material allegation about the
services of plaintiff's counsel, judgment on the pleadings is proper. (Alemany vs. Sweeney,
3 Phil. 114) LexLib

The defendant, however, had specifically denied the plaintiff's allegations in paragraphs 5,
6 and 7 of the complaint. He traversed these allegations in his answer by stating that he
"does not possess any knowledge or information sufficient to form a belief as to the truth
of the allegations contained in paragraphs 5, 6 and 7 of the (original) Complaint and
therefore, denies the same." But paragraphs 6 and 7 of the Complaint referred to damages,
while paragraph 5 of the complaint merely alleged a conclusion (that by defendant's acts
a cloud over plaintiffs title had been raised) so that the defendant's specific denials served
no purpose at all. As to the amount of damages, alleged in paragraph 6 of the complaint
(P2,000.00 per agricultural year) and specifically denied by the defendant, as aforesaid, a
specific denial is not required by the Rules. (Sec. 1, Rule 9, Rules of Court) At any rate, the
appealed judgment did not condemn the defendant-appellant to pay damages.

The defendant should have no complaint about the Court's finding, described in his second
assignment of error, that
"the lower court erred in concluding that the allegations in defendant-appellant's answer
to paragraphs 5, 6 and 7 of the complaint are mere general denials and not specific denials
under the Rules of Court" because, aside from what has been previously stated, the
plaintiff is barred from recovery of his alleged damages for having prayed for a judgment
on the pleadings, as thereby he is deemed to have admitted the truth of the defendant's
denial on the alleged damages and to have rested his motion for judgment on those
allegations taken together with such of his own as are admitted in the pleadings.
(Bauermann v. Casas, 10 Phil. 386; Evangelista v. De la Rosa, et al., 76 Phil. 115) prLL

The defendant's motion for reconsideration and/or new trial furnished no justification to
the lower court to set aside or reconsider its judgment. Said motion prayed that the
defendant be allowed to amend his answer but annexed to it is the defendant's own
affidavit (Annex A, Rec. on Appeal, p. 57) reiterating that he had "no real right or interest
whatsoever not having been involved in any way with any transaction affecting the title or
possession of the same." Definitely, therefore, there was no issue to be tried and the court's
denial of the motion was proper. And why should the defendant resist the judgment when
he simultaneously asserts that he has no right to the land?

FOR THE FOREGOING REASONS, the appealed judgment is hereby affirmed, with costs
against the appellant. So ordered.
Concepcion, C.J ., Dizon, Makalintal, Bengzon, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ ., concur.
SECOND DIVISION
[G.R. No. L-41767. August 23, 1978.]
MR. AND MRS. ROMEO FERRER and ANNETTE FERRER, petitioners, vs. HON.
VICENTE G. ERICTA, in his capacity as Presiding Judge of the Court of First Instance
of Rizal, Quezon City, Branch XVIII, MR. AND MRS. FRANCIS PFLEIDER and DENNIS
PFLEIDER, respondents.
Delano F. Villaruz for petitioners.
Porderio C. David for private respondents.
SYNOPSIS
On January 26, 1975, plaintiff-spouses and their daughter sued defendant-spouses and
their 16-year old son for damages arising from an accident that occurred on December 31,
1970. The complaint alleged that the defendants recklessly drove a car causing it to
overturn, resulting in physical injuries on plaintiffs' daughter who was a passenger
therein. Defendant answered that their son exercised due care in driving the car and that
plaintiffs' daughter was not a passenger but merely a joy rider. Subsequently, defendants
moved to dismiss the complaint on the ground of prescription. Plaintiffs opposed the
motion, invoking Section 2, Rule 9 which provides that "defenses and objections not
pleaded in the motion to dismiss or answer are deemed waived." The judge sustained the
motion and absolved defendants.
On petition for mandamus, the Supreme Court affirmed the order and held that actions for
damages arising from tort prescribe in four years; and the circumstance that plaintiffs'
own allegation in the complaint shows clearly that the action had prescribed removes the
case from the rule regarding waiver of defenses by failure to plead the same.
SYLLABUS
1. PLEADINGS; PRESCRIPTION; FAILURE TO PLEAD IN THE ANSWER. A
complaint may be dismissed in the course of the proceedings on the ground of
prescription, although such defense was not raised in the answer, where plaintiff's own
allegation in the complaint shows clearly that the action had prescribed. Such
circumstance removes this case from the rule under Sec. 2, Rule 9 regarding waiver of
defenses by failure to plead the same.
2. ACTIONS; PRESCRIPTION; DAMAGES BASED ON TORT. Actions for damages
arising from tort prescribe in four (4) years.
DECISION
ANTONIO, J p:
Mandamus to compel the immediate execution of the Decision of the Court of First
Instance of Quezon City, Branch XVIII, presided over by respondent Judge, in Civil Case No.
Q-19647, dated July 21, 1975. The pertinent facts are as follows:
In a complaint for damages against respondents, dated December 27, 1974 but actually
filed on January 6, 1975 (Civil Case No. Q-19647), and assigned to the sala of respondent
Judge, it was alleged that defendants Mr. and Mrs. Francis Pfleider, residents of Bayawan,
Negros Oriental, were the owners or operators of a Ford pick-up car; that at about 5:00
o'clock in the afternoon of December 31, 1970, in the streets of Bayawan, Negros Oriental,
their son, defendant Dennis Pfleider, who was then only sixteen (16) years of age, without
proper official authority, drove the above-described vehicle, without due regard to traffic
rules and regulations, and without taking the necessary precaution to prevent injury to
persons or damage to property, and as a consequence the pickup car was overturned,
causing physical injuries to plaintiff Annette Ferrer, who was then a passenger therein,
which injuries paralyzed her and required medical treatment and confinement at different
hospitals for more than two (2) years; that as a result of the physical injuries sustained by
Annette, she suffered unimaginable physical pain, mental anguish, and her parents also
suffered mental anguish, moral shock and spent a considerable sum of money for her
treatment. They prayed that defendants be ordered to reimburse them for actual expenses
as well as other damages.
In due time, defendants filed their answer, putting up the affirmative defense that
defendant Dennis Pfleider exercised due care and utmost diligence in driving the vehicle
afore mentioned and alleging that Annette Ferrer and the other persons aboard said
vehicle were not passengers in the strict sense of the term, but were merely joy riders and
that, consequently, defendants had no obligation whatsoever to plaintiffs.
At the pre-trial on May 12, 1975, only plaintiffs-petitioners and their counsel were present.
Consequently, defendants-private respondents were declared in default and the plaintiffs-
petitioners were allowed to present their evidence ex parte. On May 21, 1975, petitioners
moved that they be granted an extension of ten (10) days from May 22, 1975 to present
her evidence, which was granted by the court a quo. The presentation of petitioners'
evidence was later continued by the trial court to June 16, 1975, when the deposition of
Annette Ferrer was submitted by petitioners and admitted by the trial court.
On June 26, 1975, private respondents filed a motion to "set aside the order of default and
subsequent pleadings" on the ground that "defendants' failure to appear for pre-trial was
due to accident or excusable neglect," This was opposed by petitioners on the ground that
the said pleading was not under oath, contrary to the requirements of Sec. 3, Rule 18 of
the Rules, and that it was not accompanied by an affidavit of merit showing that the
defendants have a good defense. In view of this, the motion of private respondents was
denied by respondent Judge on July 21, 1975. On the same date, respondent Judge
rendered judgment against private respondents, finding that the minor, Dennis Pfleider,
was allowed by his parents to operate a Ford pick-up car and because of his reckless
negligence caused the accident in question, resulting in injuries to Annette, and ordering
the defendants, as a result thereof, to pay jointly and severally the plaintiffs the following
amounts; (1) 24,500.00 for actual expenses, hospitalization and medical expenses; (2)
P24,000.00 for actual expenses for the care, medicines of plaintiff Annette for helps from
December 31, 1970 to December 31, 1974; (3) P50,000.00 for moral damages; (4)
P10,000.00 for exemplary damages; (5) P5,000.00 for attorney's fees; and 16) costs of suit.
On September 1, 1975, private respondents filed a Motion for Reconsideration 1 of the
decision and of the order denying the motion to set aside order of default, based on the
following grounds: (1) the complaint states no cause of action insofar as Mr. and Mrs.
Pfleider are concerned because it does not allege that at the time of the mishap, defendant
Dennis Pfleider was living with them, the fact being that at such time he was living apart
from them, hence, there can be no application of Article 2180 of the Civil Code, upon which
parents' liability is premised; and (2) that the complaint shows on its face "that it was filed
only on January 6, 1975, or after the lapse of MORE THAN FOUR YEARS from the date of
the accident on December 31, 1970", likewise appearing from the complaint and,
therefore, the action has already prescribed under Article 1146 of the Civil Code. LLjur
A Supplemental Motion for Reconsideration 2 was subsequently filed by defendants-
private respondents on September 10, 1975, alleging that their defense of prescription has
not been waived and may be raised even at such stage of the proceedings because on the
face of the complaint, as well as from the plaintiff's evidence, their cause of action had
already prescribed, citing as authority the decision of this Court in Philippine National
Bank v. Pacific Commission House, 3 as well as the decisions quoted therein. The
Opposition 4 to the above supplemental motion interposed by plaintiffs-petitioners
averred that: (a) the defense of prescription had been waived while the defense that the
complaint states no cause of action "is available only at any time not later than the trial
and prior to the decision"; (b) inasmuch as defendants have been declared in default for
failure to appear at the pretrial conference, they have lost their standing in court and
cannot be allowed to adduce evidence nor to take part in the trial, in accordance with
Section 2 of Rule 18 of the Rules of Court; and (c) the motion and supplemental motion for
reconsideration are pro forma because the defenses raised therein have been previously
raised and passed upon by respondent court in resolving defendants' motion to set aside
order of default. Being pro forma, said motion and supplemental motion do not suspend
the running of the thirty-day period to appeal, which was from August 5, 1975, when
defendants received a copy of the decision, to September 4, 1975, and hence the decision
has already become final and executory. Plaintiffs-petitioners accordingly prayed that a
writ of execution be issued to enforce the judgment in their favor.
On September 23, 1975, respondent judge, without setting aside the order of default,
issued an order absolving defendants from any liability on the grounds that: (a) the
complaint states no cause of action because it does not allege that Dennis Pfleider was
living with his parents at the time of the vehicular accident, considering that under Article
2180 of the Civil Code, the father and, in case of his death or incapacity the mother, are
only responsible for the damages caused by their minor children who live in their
company; and (b) that the defense of prescription is meritorious, since the complaint was
filed more than four (4) years after the date of the accident, and the action to recover
damages based on quasi-delict prescribes in four (4 years. Hence, the instant petition for
mandamus.
The basic issue is whether the defense of prescription had been deemed waived by private
respondents' failure to allege the same in their answer.
As early as Chua Lamko v. Dioso, et al., 5 this Court sustained the dismissal on a
counterclaim on the ground of prescription, although such defense was not raised in the
answer of the plaintiff. Thus, this Court held that where the answer does not take issue
with the complaint as to dates involved in the defendant's claim of prescription, his failure
to specifically plead prescription in the answer does not constitute a waiver of the defense
of prescription, it was explained that the defense of prescription, even if not raised in a
motion to dismiss or in the answer, is not deemed waived unless such defense raises issues
of fact not appearing upon the preceding pleading.
In Philippine National Bank v. Perez, et al., 6 which was an action filed by the Philippine
National Bank on March 22, 1961 for revival of a judgment rendered on December 29,
1949 against Amando Perez, Gregorio Pumuntoc and Virginia de Pumuntoc pursuant to
Section 6, Rule 39 of the Rules of Court, the defendants were declared in default for their
failure to file their answer. There upon, the plaintiff submitted its evidence, but when the
case was submitted for decision, the court a quo dismissed the complaint on the ground
that plaintiff's cause of action had already prescribed under Articles 1144 and 1152 of the
Civil Code. The plaintiff in said case, contending that since prescription is a defense that
can only be set up by defendants, the court could not motu proprio consider it as a basis
for dismissal, moved to reconsider the order, but its motion was denied. When the issue
was raised to this Court, We ruled: LLpr
"It is true that the defense of prescription can only be considered if the came is invoked as
such in the answer of the defendant and that in this particular instance no such defense
was invoked because the defendants had been declared in default, but such rule does not
obtain when the evidence shows that the cause of action upon which plaintiff's complaint
is based is already barred by the statute of limitations." (Emphasis supplied.)
Again, in Philippine National Bank v. Pacific Commission House, 7 where the action sought
to revive a judgment rendered by the Court of First Instance of Manila on February 3, 1953
and it was patent from the stamp appearing on the first page of the complaint that the
complaint was actually filed on May 31, 1963, this Court sustained the dismissal of the
complaint on the ground of prescription, although such defense was not raised in the
answer, overruling the appellants' invocation of Section 2 of Rule 9 of the Rules of Court
that "defenses and objections not pleaded either in a motion to dismiss or in the answer
are deemed waived." We held therein that ". . . the fact that the plaintiff's own allegation in
the complaint or the evidence it presented shows clearly that the action had prescribed
removes this case from the rule regarding waiver of the defense by failure to plead the
same."
In the present case, there is no issue of fact involved in connection with the question of
prescription. The complaint in Civil Case No. Q-19647 alleges that the accident which
caused the injuries sustained by plaintiff Annette Ferrer occurred on December 31, 1970.
It is undisputed that the action for damages was only filed on January 6, 1976. Actions for
damages arising from physical injuries because of a tort must be filed within four years. 8
The four-year period begins from the day the quasi-delict is committed or the date of the
accident. 9
WHEREFORE, the instant petition for mandamus is hereby DISMISSED, without
pronouncement as to costs.
Fernando (Chairman), Barredo, Aquino, Concepcion Jr., and Santos, JJ., concur.
SECOND DIVISION defense of jurisdiction which is apparently meritorious, the complaint was properly
[G.R. No. L-48577. September 30, 1980.] dismissed.
SULPICIO A. GARCIA, petitioner, vs. COLONEL PAUL C. MATHIS, in his capacity as
Base Commander, Clark Air Force Base (CAFB) or his SUCCESSOR, and the It is not amiss to state here that because of the special appearance which the defendant
HONORABLE COURT OF FIRST INSTANCE OF PANGASINAN, Branch IV, Dagupan had entered, he was constrained to confine himself to showing that the trial court did not
City, respondents. have jurisdiction over his person and had to exclude all other non-jurisdictional grounds
in his motion to dismiss otherwise he could be deemed to have abandoned his special
DECISION appearance and voluntarily submitted himself to the jurisdiction of the court (Republic vs.
ABAD SANTOS, J p: Ker & Co., Ltd.; G.R. No. L-21609, Sept. 29, 1966, 18 SCRA 207).

Petition for certiorari to set aside the Order of the respondent judge, dated June 4, 1978, WHEREFORE, finding the petition to be without merit, the same is hereby dismissed
dismissing petitioner's Complaint against the private respondent and another Order, without any special pronouncement as to costs.
dated, July 7, 1978, denying a motion to reconsider the aforesaid order.
SO ORDERED.
The factual background can be briefly stated as follows: Guerrero and De Castro, JJ., concur.
Separate Opinions
In Civil Case No. D-4097 of the Court of First Instance of Pangasinan presided by the BARREDO, J., concurring:
respondent judge, Sulpicio Garcia, the petitioner herein, sued Colonel Paul C. Mathis in his I concur, without necessarily agreeing that the ruling in Rep. vs. Ku is correct in all
capacity as Base Commander, CAFB, acting for and in behalf of the United States of instances.
America. The complaint, which was filed on November 8, 1977, alleged that Garcia was a AQUINO, J., concurring:
civil employee at Clark Air Force Base from May 26, 1949. August 23, 1956, when he was I concur. I wish to add that respondent Base Commander cannot be sued because of the
dismissed for alleged bribery and collusion. He prayed, inter alia, that he be reinstated to rule that a State may not be sued without its consent (Sec. 16, Art. XV, Constitution; Baer
his former position, and paid back wages, moral damage, attorney's fees and costs of the vs. Tizon, L-24294, May 3, 1974, 57 SCRA 1, 70 O.G. 7361).
suit.

The defendant Mathis entered a special appearance and a motion for the dismissal of the
complaint upon the ground that the trial court had no jurisdiction over his person because
he was being sued as the representative of a foreign sovereign "which has not consented
and does not now consent to the maintenance of the present suit."

On June 7, 1978, the respondent judge issued an Order as aforesaid the text of which reads
as follows: LLphil

"Without considering the issue of jurisdiction raised by the defendant in his motion to
dismiss the above entitled case, the Court finds that the abuse of action has already
prescribed, because paragraphs 3 and 5 of the complaint alleged that the services of the
plaintiff has been terminated on August 23, 1956.

WHEREFORE, the above-entitled case is hereby dismissed."

The only issue in this case is whether or not the respondent judge committed a grave abuse
of discretion amounting to lack of jurisdiction when he dismissed the complaint on the
ground of prescription which the defendant did not raise in any of his pleadings.

It is true that an action will not be held to have prescribed if prescription is not expressly
invoked. However there are exceptions to this rule and one of them is when the plaintiff's
own allegations in his complaint show clearly that the action has prescribed. (Philippine
National Bank vs. Pacific Commission House, G.R. No. L-22675, March 28, 1969, 27 SCRA
766). In this case the complaint shows clearly that the plaintiff's action had prescribed for
he alleged that he was removed on August 23, 1956 (par. 5) but the case was filed only on
November 18, 1977, after a lapse of more than 21 years. Prescinding, therefore, the
FIRST DIVISION
[G.R. No. L-6923. October 31, 1955.]
CHUA LAMKO, petitioner, vs. ALFREDO DIOSO, ET AL., respondents.
Isidro T. Almeda and Amador E. Gomez for petitioner.
Manuel A. Alvero for respondent.
SYLLABUS
1. PLEADING AND PRACTICE; ANSWER; WAIVER OF DEFENSES. Where the
answer does not take issue with the complaint as to dates involved in the defendant's claim
of prescription, his failure to specifically plead prescription in the answer does constitute
a waiver of the defense of prescription. The defense of prescription, even if not raised in a
motion to dismiss or in the answer, is not deemed waived unless such defense raises issues
of fact not appearing upon the preceding pleading.
2. ID.; APPEALS FROM COURT OF APPEALS; QUESTIONS RAISED FOR THE FIRST
TIME IN THE SUPREME COURT. In a petition for review of a decision of the Court of
appeals, questions of law not raised in the briefs submitted therein cannot be raised for
the first time in the Supreme Court.
3. ID.; LIMITATION OF ACTIONS; MORATORIUM; TEMPORARY SUSPENSION OF
PERIOD OF LIMITATION BE REASON OF MORATORIUM. Temporary suspension, by
reason of moratorium, of the period of limitation is a defense which is waivable. Where
the mortgagee who was the highest bidder in the foreclosure sale ordered by the court did
not file, within ten years, an action for the difference between the amount of the judgment
in the foreclosure proceeding and the amount he realized from the foreclosure sale, must
have been satisfied with the result of the auction sale and therefore he may not be heard
to claim such suspension of the period of limitations.
DECISION
BENGZON, J p:
This petition to review the decision of the Court of Appeals was given due course upon the
sole legal question whether the counterclaim of Chua Lamko against the plaintiffs had
prescribed.
The material facts necessary to determine the issue are these:
In March, 1939, in Civil Case No. 7080 of Laguna, Chua Lamko obtained judgment to
foreclose the mortgage debt of Eligio Dioso (predecessor of the plaintiffs) for the amount
of P1,910.10 with interest. The mortgaged property was accordingly sold by the Sheriff, at
public auction, to Chua Lamko as the highest bidder; but he never obtained judicial
confirmation of the sale. He took possession of the property, and in 1946 sold it to
defendants Prudencio Maranan and Leovigilda Suarez, for P2,500 who in turn sold it to
defendants Panfilo Velo and Gloria Reyes in 1948 for P4,200. The latter conveyed the
property for P3,500 to Pedro Deza and Ligaya Sto. Domingo in 1949.
On February 22, 1950 plaintiffs instituted this action to recover the mortgaged property,
alleging ownership and nullity of the sale to Chua Lamko and of the subsequent
conveyances.
Brought in as a third-party defendant by his successors in interest who are the defendants,
Chua Lamko interposed by way of counterclaim against plaintiffs, the judgment he had
obtained in Civil Case No. 7080 which, according to him, amounted to P3,918.96 and which
he should be paid, if plaintiffs persisted in their refusal to validate the foreclosure sale.
After hearing the parties, the Hon. Nicasio Yatco, Judge of the Laguna court of first instance,
declared that Chua Lamko did not acquire title to the property and could pass none to the
defendants; that the plaintiffs were the owners thereof entitled to its possession; that
defendants' rights (as buyers) against Chua Lamko shall be reserved; and that Chua
Lamko's counterclaim founded on the judgment had already prescribed, the Court having
no jurisdiction to pass on the same.
The Court of Appeals affirmed His Honor's decision, with costs against appellant Chua
Lamko.
In this petition to review, Chua Lamko expressly affirms he does not assail that part of the
judgment of both courts disregarding the foreclosure sale and awarding ownership of the
property to plaintiffs. But he insists on his counterclaim contending first, that it has not
prescribed because of the Moratorium Law, and second, that the lower courts could not
consider prescription because it had not been alleged by plaintiffs in their answer to his
counterclaim in the court of first instance.
The Laguna Court, it should be stated, dismissed the counterclaim (based on the judgment
in Case No. 7080) for the reason that said judgment had been entered in March, 1939,
whereas Chua Lamko for the first time asserted it in this proceeding in March, 1950, after
more than ten years. In other words his action to enforce the judgment had been barred
by the statute of limitations. (Rule 39, sec. 6; sec. 43 of Act 190.)
Chua Lamko asked for reconsideration asserting that prescription had not been alleged by
plaintiffs and was waived. The plaintiffs, replying, insisted the judgment had prescribed
and could not be enforced. The court refused to reconsider. On appeal to the Court of
Appeals, the identical point was raised; but it was overruled.
It is true that if the defense of prescription is not raised in the answer it is deemed waived
under Rule 9, secs. 9, 10 of the Rules of Court. But the waiver applies to defenses of
prescription "that would raise issues of fact not appearing upon the preceding pleading."
"The defendant may set fourth by answer as many affirmative defenses as he may have.
All such grounds of defense as would raise issues of fact not arising upon the preceding
pleading must be specially pleaded, including fraud, statute of limitations, release,
payment, illegality, statute of frauds, estoppel, former recovery, discharge in bankruptcy,
and all other matter by way of confession and avoidance." (Sec. 9, Rule 9.) (Underlining
ours.)
The plaintiffs were not required to specifically plead prescription, because the pleading of
Chua Lamko disclosed that the judgment had been rendered in March 7, 1939 and it was
asserted only in March, 1950; i.e., more than ten years before. No issue of fact was involved
by their claim of prescription; these two dates were not denied. Therefore their failure to
plead it did not constitute waiver.
This makes it unnecessary to go into the other reason of the lower courts for disallowing
this counterclaim; lack of jurisdiction.
Petitioner however asserts that as he was prevented from enforcing the judgment of 1939
during the Moratorium interval, his right of action was suspended and the ten-year period
did not elapse. This poses the important question whether in view of our ruling in Rutter
vs. Esteban, (93 Phil., 63), the Moratorium Laws had the effect of stopping temporarily the
running of the Statute of Limitations. We find however that this was not raised in Chua
Lamko's brief submitted to the Court of Appeals; and under our rulings petitioner is
precluded from raising the question here; 1 specially because the Moratorium order is an
excuse that may be renounced.

At any rate, this plea is unmeritorious, because there is every reason to believe that Chua
Lamko would not have filed an action to enforce the 1939 judgment, even if the
Moratorium Laws had not been enacted. Because he was satisfied with the result of the
auction sale he asked for no deficiency judgment and sold the property for more than
the amount of his recovery. He believed his judgment had been paid. He may not therefore
be heard to say, "I did not file an action because of the Moratorium." With or without the
moratorium, he would not have filed the action to enforce the judgment.

An equitable consideration has not escaped our attention: Chua Lamko loses his credit and
the mortgaged property. However he is resigned to the second: he does not question the
lower courts' award of ownership. As to the first, it appears that he has received rentals of
the property since 1939 (p. 24, Record of Appeal) and if plaintiffs are to be believed up to
1950, the sales to other persons being allegedly fictitious. On the other hand, the effect of
prescription is that the creditor loses his money. His personal reasons for not suing on
time do not carry weight. His mistaken belief that he had already been paid, is no cause for
stopping the course of the statute of limitations.

Judgment affirmed, with costs. So ordered.

Paras, C.J., Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador and Reyes,
J.B.L., JJ., concur.
THIRD DIVISION
[G.R. No. 73039. October 9, 1987.]
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners, vs. HON.
TEODORO N. FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court of
Negros Oriental, 7th Judicial Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA
CAVILI, PLACIDA CAVILI, ET AL., respondents.
[G.R. No. 68680. October 9, 1987.]
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners, vs. HON.
TEODORO N. FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court, 7th
Judicial Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA
CAVILI, GREGORIA CAVILI, FORTUNATA CAVILI, AMILITA CAVILI, APAD CAVILI,
AQUILINA CAVILI, CRESENCIO CAVILI, ALMA CAVILI, ET AL., respondents.
[G.R. No. 57771. October 9, 1987.]
QUIRINO CAVILI, PRIMITIVO CAVILI, and PERFECTA CAVILI, petitioners, vs. HON.
CIPRIANO VAMENTA, JR., as Presiding Judge, Branch III, Court of First Instance of
Negros Oriental; ULPIANO CAVILI, CLARITA CAVILI, ESTRELLA CAVILI, RAMONA
TAKANG, COSME TAKANG, FABIAN TAKANG, LEODEGARIO TAKANG, ET AL.,
respondents.
DECISION
GUTIERREZ, JR., J p:
This is a petition to review and set aside two orders of the then Court of First Instance of
Negros Oriental, namely: (1) the order dated October 11, 1985, disqualifying Perfecta
Cavili dela Cruz as a witness in Civil Case No. 6880 entitled "Clarita Cavili, et al. v. Perfecta
Cavili, Quirino Cavili, and Primitivo Cavili" and (2) the order dated November 26, 1985,
refusing to reconsider the previous orders of disqualification and resetting the reception
of evidence for the defendants to December 19 and 20, 1985 with a warning that should
defendants' witnesses fail to appear in court on said date, they will be deemed to have
waived their right to be witnesses in this case. cdll
The private respondents filed Civil Case No. 6880 with the Court of First Instance of Negros
Oriental against herein petitioners for Partition, Accounting, and Damages. After the case
was raffled to Branch I presided over by Judge Augusto S. Villarin, summons was issued to
the three petitioners, all at Bayawan, Negros Oriental which was the address indicated in
the complaint.
After trying to effect service, the process server went back to the court with the following
return of service "served to Quirino and Primitivo Cavili not contacted, according to
Perfecta Cavili, subject persons is (sic) staying in Kabangkalan, Negros Occidental."
Meanwhile, Atty. Jose P. Alamillo filed a motion for extension to answer in behalf of the
defendants, manifesting the representation of his client Perfecta Cavili that she will inform
her brothers Primitivo and Quirino about the case.
The defendants, however, failed to file their answer within the requested period and upon
motion of the plaintiffs, the defendants were declared in default, and on October 5, 1979,
a judgment by default was promulgated by Judge Augusto S. Villarin.
The records of the case, however, show that a Manifestation was filed by Atty. Jose P.
Alamillo informing the court that since he never met Primitivo and Quirino Cavili, who are
residents of another province, he desisted from further appearing in the case in their
behalf.
On November 7, 1979, Atty. Jose P. Alamillo received a copy of the decision. On December
7, 1979, he filed a motion for new trial in behalf of the defendants on grounds of lack of
jurisdiction over the persons of Primitivo and Quirino Cavili who had not been legally
served with summons, and, with a meritorious defense that the properties sought to be
partitioned have already been the subject of a written partition agreement between the
direct heirs of the late Bernado Cavili who are the predecessors of the parties in this case.
In an order dated April 23, 1980, the court granted said motion. cdll
The plaintiffs filed a motion for reconsideration of the order granting new trial and at the
same time prayed that a writ of execution be issued but only in so far as defendant Perfecta
Cavili was concerned.
In an order dated July 21, 1981, Judge Cipriano Vamenta of Branch III of the Court of First
Instance of Negros Oriental, to whom the case had been assigned after a re-raffle, set aside
the order of April 23, 1980 and directed the execution of the October 5, 1979 decision
without qualification ruling that the petitioners' remedy should have been appeal rather
than new trial.
Their motion for reconsideration having been denied on August 11, 1981, the defendants,
now petitioners, brought the case to this Court through a petition for certiorari, G.R. NO.
57771, entitled "Quirino Cavili, et al., Petitioners versus Hon. Cipriano Vamenta, et al.,
Respondents."
On May 31, 1982, this Court rendered a decision, the dispositive portion of which reads:
"WHEREFORE, Our resolution dismissing the petition is hereby reconsidered; the petition
is granted; and the order dated July 21, 1981, is set aside while that of April 23, 1980, is
revived. No special pronouncement as to costs." (Rollo, p. 21)
Thereafter, the pre-trial and trial of Civil Case No. 6880 was scheduled on October 9, 10,
and 11, 1985 before Branch XXXVI of the Regional Trial Court, presided by respondent
Judge Teodoro N. Florendo. The defendants, (now petitioners), presented Perfecta Cavili
dela Cruz as their first witness. The respondents, through counsel, moved for her
disqualification as a witness on the ground that having been declared in default, Perfecta
Cavili has lost her standing in court and she cannot be allowed to participate in all
proceedings therein, even as a witness. The court, through the respondent judge, sustained
the respondents' contention and disqualified her from testifying.
The petitioners, through counsel, moved for a reconsideration of the ruling.
On November 26, 1985, the lower court issued an order denying reconsideration of its
Order dated October 11, 1985 disqualifying Perfecta Cavili dela Cruz as a witness in Civil
Case No. 6880.
Hence, this petition.

Petitioner Perfecta Cavili's competence as a witness is put in issue by the private
respondents.
Section 18, Rule 130 of the Revised Rules of Court states who are qualified to be witnesses.
It provides:
"Section 18. Witnesses; their qualifications. Except as provided in the next
succeeding section, all persons who, having organs of sense, can perceive, and perceiving,
can make known their perception to others, may be witnesses. Neither parties nor other
persons interested in the outcome of a case shall be excluded; nor those who have been
convicted of crime; nor any person on account of his opinion on matters of religious belief."
The generosity with which the Rule allows people to testify is apparent. Interest in the
outcome of a case, conviction of a crime unless otherwise provided by law, and religious
belief are not grounds for disqualification.
Sections 19 and 20 of Rule 130 provide for specific disqualifications. Section 19
disqualifies those who are mentally incapacitated and children whose tender age or
immaturity renders them incapable of being witnesses. Section 20 provides for
disqualification based on conflicts of interest or on relationship. Section 21 provides for
disqualifications based on privileged communications. Section 15 of Rule 132 may not be
a rule on disqualification of witnesses but it states the grounds when a witness may be
impeached by the party against whom he was called. LLpr
There is no provision of the Rules disqualifying parties declared in default from taking the
witness stand for non-disqualified parties. The law does not provide default as an
exception. The specific enumeration of disqualified witnesses excludes the operation of
causes of disability other than those mentioned in the Rules. It is a maxim of recognized
utility and merit in the construction of statutes that an express exception, exemption, or
saving clause excludes other exceptions. (In Re Estate of Enriquez, 29 Phil. 167) As a
general rule, where there are express exceptions these comprise the only limitations on
the operation of a statute and no other exception will be implied. (Sutherland on Statutory
Construction, Fourth Edition, Vol. 2A, p. 90) The Rules should not be interpreted to include
an exception not embodied therein. LLjur
The respondents, however, cite Section 2, Rule 18 on Defaults, to wit:
"Section 2. Effect of order of default. Except as provided in section 9 of Rule 13,
a party declared in default shall not be entitled to notice of subsequent proceedings nor to
take part in the trial."
They advance the argument that to allow Perfecta Cavili to stand as witness would be to
permit a party in default "to take part in the trial."
An explanation of the Rule is in order.
Loss of standing in court is the consequence of an order of default. Thus, a party declared
in default is considered out of court and cannot appear therein, adduce evidence, and be
heard and for that reason he is not entitled to notice. (Rule 18, Rules of Court; Lim Toco v.
Go Fay, 80 Phil. 166) However, "loss of standing" must be understood to mean only the
forfeiture of one's rights as a party litigant, contestant or legal adversary. A party in default
loses his right to present his defense, control the proceedings, and examine or cross-
examine witnesses. He has no right to expect that his pleadings would be acted upon by
the court nor may he object to or refute evidence or motions filed against him. There is
nothing in the rule, however, which contemplates a disqualification to be a witness or a
deponent in a case. Default does not make him an incompetent. prcd
As opposed to a party litigant, a witness is merely a beholder, a spectator or onlooker,
called upon to testify to what he has seen, heard, or observed. As such, he takes no active
part in the contest of rights between the parties. Cast in the limited role of witness, a party
in default cannot be considered as "taking part in the trial." He remains suffering the
effects of an order of default.
A party in default may thus be cited as a witness by his co-defendants who have the
standing and the right to present evidence which the former may provide. The incidental
benefit giving the party in default the opportunity to present evidence which may
eventually redound to his advantage or bring about a desired result, through his co-
defendants, is of minor consequence.
Of greater concern or importance in allowing the presence of Perfecta Cavili as a witness
in the case at bar, is the preservation of the right of petitioners Quirino and Primitivo Cavili
to secure the attendance of witnesses and the production of evidence in their behalf. To
reject Perfecta Cavili's presentation of testimonial evidence would be to treat Primitivo
and Quirino as if they too were in default. There is no reason why the latter should also be
made to bear the consequences of Perfecta's omission. Moreover, we cannot deprive
Quirino and Primitivo of the only instrument of proof available to them, as Perfecta 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. LLphil
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the
respondent court disqualifying Perfecta Cavili dela Cruz as a witness in Civil Case No. 6880
is hereby SET ASIDE. The case is remanded to the court a quo for further proceedings. The
temporary restraining order issued on January 6, 1986 is LIFTED.
SO ORDERED.
Fernan, Feliciano, Bidin and Cortes, JJ., concur.
SECOND DIVISION
[G.R. No. L-39047. April 30, 1985.]
ALBERTO PASCUA, CRISPINA PASCUA, SOTERA PASCUA, and EDUARDO MOLINA,
petitioners, vs. HON. ALFREDO C. FLORENDO, CFI of Cagayan, CLEMENTE CASTRO,
and JULIANA O. CASTRO, respondents.
Hermenigildo G. Rapanan for petitioner.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PREVIOUS DENIAL OF MOTION TO
DISMISS; TRIAL COURT NOT ESTOPPED FROM PASSING UPON ISSUE OF PRESCRIPTION.
The trial court denied the motion to dismiss because the grounds relied upon by the
respondents for their motion did not appear on the face of the complaint. There was no
finding that the allegation of prescription had no merit. It cannot be said, therefore, that
the trial court was already stopped from passing upon the issue of prescription. The issue
was not adjudicated on its merits and the doctrine of res judicata had not set in yet.
2. ID.; ID.; ACTION; BARRED BY STATUTE OF LIMITATIONS; CASE AT BAR. We
likewise find the petitioners' contention, that they came to know of the deed of sale by
Martin Pascua in favor of the respondents only in 1973, highly improbable. As the trial
court correctly observed, it is inconceivable that the petitioners did not come to know
about the purchase by the respondents of the property from Martin Pascua. They admitted
that they have been neighbors of the respondents since before the war or for a period of
about 30 years and that the latter had deprived them of the fruits of the land in question
for more than 20 years. Alberto Pascua, one of the petitioners testified that his parents
from whom they inherited the property died more than 25 years ago yet the children never
exerted any effort to have the property partitioned. This fact indicates that petitioners had
knowledge of the sale, which explains why they had no interest at all in any project of
partition. More important is the fact that after the respondents purchased the land they
worked to secure an Original Certificate of Title on the basis of a free patent application.
This was way back in 1958, 15 years before the petitioners decided to file the action below.
Clearly, the petitioners' action is now barred by the statute of limitations.
3. CIVIL LAW; ACTION FOR RELIEF BASED ON FRAUD; ACTION BROUGHT WITHIN
FOUR YEARS FROM DISCOVERY OF FRAUD. Even if we add the lower court's finding
that there was fraud on the part of Martin Pascua when he effected the sale of the disputed
lot in favor of the respondents, the petitioners are still barred from recovering the lot
because their action should have been filed within four (4) years from their discovery of
the fraud, which in turn, is deemed at the latest to have taken place in 1958, when the
respondents were issued an original certificate of title.
4. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT BY DEFAULT PREVAILING
PARTY NOT AUTOMATICALLY ENTITLED TO RELIEF; CASE AT BAR. Nowhere in the
aforequoted provision nor in the summons issued by the respondent court is it stated that
the petitioners are automatically entitled to the relief prayed for, once the respondents are
declared in default. Favorable relief can be granted only after the court has ascertained
that the evidence offered and the facts proven by the presenting party, petitioners in this
case, warrant the grant of the same. Otherwise, it would be meaningless to require
presentation of evidence if every time the other party is declared in default, a decision
would automatically be rendered in favor of the non-defaulting party and exactly
according to the tenor of his prayer. This is not contemplated by the Rules nor is it
sanctioned by the due process clause. In the instant case, from the evidence presented ex-
parte by the petitioners and from their very own allegations, the only judgment that is
warranted is the dismissal of the complaint. It is barred by the statute of limitations.
DECISION
GUTIERREZ, JR., J p:
This is a petition for review on certiorari, seeking to annul the decision of the Court of First
Instance of Cagayan which dismissed the petitioners' action for reconveyance with
damages on the ground that the period within which to file the same had already
prescribed.
Petitioners, as plaintiffs, filed a complaint for reconveyance with damages against the
private respondents, spouses Clemente and Juliana Castro. The latter, as defendants, in
lieu of filing an answer, filed a motion to dismiss the complaint on the grounds that the
complaint states no cause of action and that the same is already barred by the statute of
limitations.
The trial court denied the respondents' motion after finding that the grounds relied upon
by them did not appear on the face of the complaint. The court subsequently declared the
respondents in default for their having failed to file an answer within the reglementary
period. Thus, the petitioners proceeded to present their evidence ex-parte.
After receiving the petitioners' evidence, the trial court made the following findings:
"From the evidence adduced during the presentation of evidence by plaintiffs, it was
shown that Alberto Pascua is one of the plaintiffs, in this case; that he knows his co-
plaintiffs Crispina, Sotera, surnamed Pascua, and Eduardo Molina, the first two being his
sisters while the last is his nephew being the son of his sister Alejandra; that his father is
Jordan Pascua while his mother is Magdalena Dumadag; that both his parents are already
dead (Exhibits A, B, and C); that Alejandra Pascua is also dead; that during the lifetime of
Jordan and Magdalena Dumadag, they begot five children, namely Alberto, Alejandra,
Crispina, Martin and Sotera; that Jordan Pascua and Magdalena Dumadag acquired a
parcel of land located at Dacalafugo, Camalaniugan, Cagayan, consisting of 1.02.20
hectares and described in paragraph 3 of the complaint; that lately they came to know that
their brother Martin Pascua sold the property to Clemente Castro, a resident of
Camalaniugan, Cagayan; that when they went to complain to the Agrarian office in
Tuguegarao, Clemente Castro showed them the deed of sale which they xerox copied
(Exhibit D); that the signature Alberto Pascua appearing in Exhibit D is not his signature;
that the genuine signature of Alberto Pascua appears in Exhibit E; that he and his co-
plaintiffs did not give consent to the sale of the land subject matter of this case; that the
signature Sotera Pascua, appearing in Exhibit D is not also the signature of Sotera Pascua;
that he and his co-plaintiffs did not appear before the Notary Public; that the land subject
matter of this case was never given to Martin Pascua by their deceased father; that Martin
Pascua is already dead; that the land is now titled in the name of the defendant Juliana O.
Castro (Exhibits F and F-1) while the deed of sale was executed in favor of Clemente Castro
(Exhibit D); that the land is declared for taxation purposes under Tax Declaration No. 157
(Exhibit G) in the name of Juliana Castro; that plaintiffs and the defendants have been
neighbors since before the war and defendants know that the land sold to them and
subject matter of this suit was inherited by the plaintiffs from their deceased father; that
they (plaintiffs) have been deprived of the fruits of the land for more than 20 years; that
the land yields from thirty to forty sacks of palay valued at P30.00 each; and that plaintiffs
agreed to pay their counsel the amount of P1,200.00 out of which they have already paid
P200.00.
"From. Exhibit D of the plaintiffs, it appears that the deed of sale was executed in favor of
the defendant Clemente Castro married to Juliana Orteza by Martirs Pascua on May 8,
1951. Alberto Pascua and Sotera Pascua testified that lately they came to know that this
land was conveyed by Martin Pascua to the defendants and that said defendants have been
in possession of the land in question for more than 20 years. They testified further,
however, that they have been deprived of the fruits of the land for more than twenty years.
If such is the case, it is clear that the defendants have entered and occupied the property
for more than twenty years and it is inconceivable that the plaintiffs did not come to know
that the defendants bought the property from their brother Martin Pascua when they
admitted that they have suffered damages by virtue of the dispossession for more than
twenty years. The conclusion is obvious that the plaintiffs had knowledge of the
transaction made by their brother about twenty years ago.
"From the evidence of the plaintiffs, the Court finds that there was really fraud committed
by Martin Pascua in selling the entire property which said Martin Pascua and plaintiffs
inherited from their parents thus excluding the shares of the plaintiffs. Certainly, Martin
Pascua could only sell one-fifth of the property and that the four-fifths were fraudulently
conveyed by him. It is clear that there was fraud on the part of Martin Pascua in selling the
shares of his brother and sisters. The action for relief on the ground of fraud, however,
may be brought only within four years from the discovery of the fraud. (Article 1391, New
Civil Code; Section 43 (c) Act 190).
xxx xxx xxx
"In view of the fact that the deed of sale was executed on May 8, 1951, or over twenty years
before the filing of the complaint on May 31, 1973, it is hard to believe that plaintiffs did
not come to know of this deed of sale executed by their brother. The Court, therefore,
comes to the inevitable conclusion that this action, having been filed 22 years after the
execution of the deed of sale, has long prescribed."
Not satisfied with the trial court's decision, petitioners elevated the case to this Court
through this petition. The petitioners ask us to examine the following alleged errors of the
respondent court: LLjur
1. THE TRIAL COURT ERRED IN DISMISSING THE CASE ON GROUND OF
PRESCRIPTION ALTHOUGH IT HAS PREVIOUSLY DENIED A MOTION TO DISMISS BASED
ON THE SAME GROUND.
2. THE TRIAL COURT ERRED IN NOT GRANTING RELIEF TO PLAINTIFFS
ALTHOUGH THE DEFENDANTS WERE DECLARED IN DEFAULT.
The petitioners contend that the trial court acted with grave abuse of discretion when,
after hearing their evidence presented ex-parte, the respondents having been declared in
default, it dismissed the case on the ground that the action had already prescribed. When
the same ground was earlier raised, the court denied the motion to dismiss filed by the
respondents. The petitioners argue that because of its denying the motion to dismiss, the
trial court is stopped from dismissing the case on the same ground. Petitioners further
contend that the court's conclusion that they had knowledge of the sale executed by their
deceased brother, Martin Pascua about twenty years ago is based merely on surmises and
conjectures because, in reality, it was only in 1973 when they came to learn of the deed of
sale executed by their deceased brother in 1951. In 1973, the deed was shown to them by
respondent Clemente Castro at the Agrarian office. Therefore, the period of prescription
should be counted from the knowledge of the petitioners of the deed of sale and not from
the date it was executed. LLpr
Petitioners' contention are without merit.
The trial court denied the motion to dismiss because the grounds relied upon by the
respondents for their motion did not appear on the face of the complaint. There was no
finding that the allegation of prescription had no merit. It cannot be said, therefore, that
the trial court was already stopped from passing upon the issue of prescription. The issue
was not adjudicated on its merits and the doctrine of res judicata had not set in yet.
We likewise find the petitioners' contention, that they came to know of the deed of sale by
Martin Pascua in favor of the respondents only in 1973, highly improbable. As the trial
court correctly observed, it is inconceivable that the petitioners did not come to know
about the purchase by the respondents of the property from Martin Pascua. They admitted
that they have been neighbors of the respondents since before the war or for a period of
about 30 years and that the latter had deprived them of the fruits of the land in question
for more than 20 years. Alberto Pascua, one of the petitioners testified that his parents
from whom they inherited the property died more than 25 years ago yet the children never
exerted any effort to have the property partitioned. This fact indicates that petitioners had
knowledge of the sale, which explains why they had no interest at all in any project of
partition. More important is the fact that after the respondents purchased the land they
worked to secure an Original Certificate of Title on the basis of a free patent application.
This was way back in 1958, 15 years before the petitioners decided to file the action below.
Clearly, the petitioners' action is now barred by the statute of limitations.
In the case of Iglesia ni Cristo v. Hon. Judge, Court of First Instance of Nueva Ecija, Br. I
(123 SCRA 523), quoting the case of Labora v. Dayang-hirang (37 SCRA 346), we ruled:
"The rule in this jurisdiction, regarding public patents and the character of the certificate
of title that may be issued by virtue thereof, is that where land is granted by the
government to a private individual, the corresponding patent therefor, is recorded and the
certificate of title is issued to the grantee; thereafter, the land is automatically brought
within the operation of the Land Registration Act, the title issued to the grantee becoming
entitled to all the safeguards provided in Section 38 of said Act. In other words, upon the
expiration of one year from its issuance, the certificate of title becomes irrevocable and
indefeasible like a certificate issued in a registration proceeding."
It is quite obvious, therefore, that the respondents' title has already become indefeasible
and irrevocable, the one-year period provided by law having expired in 1959.
Moreover, even if we add the lower court's finding that there was fraud on the part of
Martin Pascua when he effected the sale of the disputed lot in favor of the respondents,
the petitioners are still barred from recovering the lot because their action should have
been filed within four (4) years from their discovery of the fraud, which in turn, is deemed
at the latest to have taken place in 1958, when the respondents were issued an original
certificate of title. This was our ruling in the case of Balbin v. Medalla (108 SCRA 666)
where we stated: llcd
"An action for reconveyance of real property resulting from fraud may be barred by the
statute of limitations, which requires that the action shall be filed within four (4) years
from the discovery of the fraud. Such discovery is deemed to have taken place when the
petitioners herein were issued original certificates of title through either homestead or
free patent grants, for the registration of said patents constitutes constructive notice to
the whole world. (Gerona v. de Guzman, 11 SCRA 153, and cited cases thereof).
"In the case at bar, the latest patent war issued on October 14, 1959. There is, therefore,
merit in petitioners's contention that if any action for reconveyance should be
commenced, the same should be filed on or before October 14, 1963. But private
respondents' complaint for reconveyance and annulment of titles with damages was filed
only on August 30, 1973 or more than 14 years had already elapsed from the date of the
issuance of the respective titles of the defendants. Consequently, the action for
reconveyance of land titled in the names of defendants (petitioners herein) had already
prescribed."
The petitioners raise as a second issue that the respondent court had no alternative but to
grant the relief prayed for in their complaint as this was evident in the tenor of the
summons issued by said court which in part stated:
". . . if you fail to appear within the time aforesaid, the plaintiff will take judgment against
you by default and demand from this Court the relief applied for in said complaint . . ."
Petitioners also anchor their contention on Rule 18, Section 1 of the Rules of Court which
provides:
"Judgment by default. If the defendant fails to answer within the time specified in these
roles, the court shall, upon motion of the plaintiff and proof of such failure, declare the
defendant in default. Thereupon the court shall proceed to receive the plaintiff's evidence
and render judgment granting him such relief as the complaint and the facts proven may
warrant. This provision applies where no answer is made to a counter-claim, cross-claim
or third-party complaint within the period provided in this Rule."
Nowhere in the aforequoted provision nor in the summons issued by the respondent court
is it stated that the petitioners are automatically entitled to the relief prayed for, once the
respondents are declared in default.
Favorable relief can be granted only after the court has ascertained that the evidence
offered and the facts proven by the presenting party, petitioners in this case, warrant the
grant of the same. Otherwise, it would be meaningless to require presentation of evidence
if everytime the other party is declared in default, a decision would automatically be
rendered in favor of the non-defaulting party and exactly according to the tenor of his
prayer. This is not contemplated by the Rules nor is it sanctioned by the due process
clause. prLL
In the case of Lim Tanhu v. Ramolete (66 SCRA 452-453), we had occasion to elaborate on
this point. We ruled:
"The Rules of Court contain a separate rule on the subject of default, Rule 18. But said rule
is concerned solely with default resulting from failure of the defendant or defendants to
answer within the reglementary period. Referring to the simplest form of default, that is,
where there is only one defendant in the action and he fails to answer on time, Section l of
the rule provides that upon 'proof of such failure, (the court shall) declare the defendant
in default. Thereupon the court shall proceed to receive the plaintiff's evidence and render
judgment granting him such relief as the complaint and the facts proven may warrant.'
This last clause is clarified by Section 5 which says that 'a judgment entered against a party
in default shall not exceed the amount or be different in kind from that prayed for.'
"Unequivocal, in the literal sense, as these provisions are, they do not readily convey the
full import of what they contemplate. To begin with, contrary to the immediate notion that
can be drawn from their language, these provisions are not to be understood as meaning
that default or the failure of the defendant to answer should be 'interpreted as an
admission by the said defendant that the plaintiff's cause of action find support in the law
or that plaintiff is entitled to the relief prayed for.' (Moran, supra, p. 535 citing Macondray
& Co. v. Eustaquio, 64 Phil. 466. citing with approval Chaffin v. Mc Fadden, 41 Ark. 42;
Johnson v. Pierce, 12 Ark. 599; Mayden v. Johnson, 59 Ga. 105; People v. Rust, 292 Ill. 328;
Ken v. Leopold, 21 Ill. A. 163; Chicago, etc. Electric R. Co. v. Krempel, 116 Ill. A. 253.)
xxx xxx xxx
"In other words, a defaulted defendant is not actually thrown out of court. While in a sense
it may be said that by defaulting he leaves himself at the mercy of the court, the rules see
to it that any judgment against him must be in accordance with law. The evidence to
support the plaintiffs cause is, of course, presented in his absence, but the court is not
supposed to admit that which is basically incompetent. Although the defendant would not
be in a position to object, elementary justice requires that only legal evidence should be
considered against him. If the evidence presented should not be sufficient to justify a
judgment for the plaintiff, the complaint must be dismissed. And if an unfavorable
judgment should be justifiable, it cannot exceed in amount or be different in kind from
what is prayed for in the complaint."
In the instant case, from the evidence presented ex-parte by the petitioners and from their
very own allegations, the only judgment that is warranted is the dismissal of the complaint.
It is barred by the statute of limitations.
WHEREFORE, the petition is hereby DISMISSED for lack of merit. No costs. SO ORDERED.
SECOND DIVISION
[G.R. No. L-33720-21. March 10, 1975.]
THE PHILIPPINE BRITISH CO., INC. and THE CIBELES INSURANCE CORPORATION,
petitioners, vs. THE HON. WALFRIDO DE LOS ANGELES in his capacity as Presiding
Judge, Branch IV of the Court of First Instance of Quezon City, THE HON. VICENTE S.
OCOL in his capacity as Clerk of Court of First Instance of Quezon City and Ex-Oficio
Sheriff of Quezon City and MULTIFIELD ENTERPRISES and MOISES M. TAPIA,
respondents.
Alfonso Felix, Jr. for petitioners.
B.M. Grecia & Associates and D.G. Garin & Associates for respondents.
SYNOPSIS
For filing belated joint answer by mail, petitioners were declared in default and private
respondent's evidence was received ex parte. On April 28, 1971 default judgments against
petitioners were rendered, and duly docketed, were released for service by registered mail
on May 17,1971 addressed to petitioner's counsel, Felix, Jr. The postman delivered three
notices to counsel's secretary, the first on May 19, 1971, the second on May 30,1971 and
the last on June 15, 1971.
According to Felix , Jr., he examined the expedientes of the cases in May 24, 1971 and he
did not find his joint answer therein and instead saw that orders of default had been issued
and that private respondent's evidence had been ex parte. He claimed that he did not find
any copy of any decision. Two days later he filed a joint motion to lift the order of default,
unverified and unaccompanied by any affidavit of merit, which he set for hearing on June
1, 1971. This was declared a public holiday; and according to Felix. Jr., the next day he went
to court and the respondent judge advised him to set motion for hearing anew.
Felix, Jr. received a notice that his motion had been set for hearing on June 30, 1971, but
on June 22, 1971, respondent judge issued an order canceling this notice for the reason
that the court can no longer set aside its order of default since petitioners failed to comply
with section 3 of Rule 18. On June 28, 1971, on private respondent's motion, an order for
the immediate execution of the default judgments was issued. Petitioners filed a joint
petition for relief from judgment but before said petition could be acted upon by the trial
court, the instant petition was filed and summons, together with the writ of preliminary
injunction, were served on respondents.
The Supreme Court gave due course to the present petition notwithstanding the fact that
a petition for relief from judgment had been filed with the trial court because the petition
hinted possible irregularities in the actuations of the respondent judge and his employees,
and the Court felt it was in the best interest of justice to inquire into what actually
happened. On this point, the Court ruled that the official records and the affidavits of the
employees of the trial court as well as those of the Bureau of Posts conclusively belie
counsel's allegations.
Finding that there were enough incontrovertible facts in the record on the basis of which
the litigation between the parties can be terminated, the Court resolved the cases instead
of remanding them to the trial court for further proceedings and final determination of the
issues. It compared the conflicting allegations of the parties in the light of their respective
supporting affidavits and documents and concluded that petitioners have not shown that
they have good and valid defenses against the claim of respondent Tapia.
The Court noted counsel's failure to substantiate his charges against the actuation of the
judge and his personnel and the fact that he made positive allegations that his clients have
good and valid defenses knowing the truth to be otherwise. He was made to show cause
why no administrative action should be taken against him as a member of the bar.
Petition dismissed.
SYLLABUS
1. SPECIAL CIVIL ACTION; CERTIORARI; PETITION GIVEN DUE COURSE DESPITE
ADEQUATE REMEDY IN ORDINARY COURSE OF LAW IF IT ASSAILS INTEGRITY OF JUDGE,
PERSONNEL AND PROCEEDINGS. Ordinarily, petition for relief from judgment will be
deemed as an adequate remedy in the ordinary course of law that constitutes a bar to a
certiorari review or any other kind of special civil action. But where the petition for
certiorari strongly hints possible irregularities in the actuations of the judge and the
employees which could involve their honesty and good faith as well as the integrity of
judicial and proceedings, the Supreme Court, in the best interest of justice, will inquire into
what actually happened and give the petition due course.
2. ID.; ID.; ID.; ACCUSATION OF IRREGULARITIES BELIED BY OFFICIAL RECORDS
IN CASE AT BAR. The official records and the affidavits of the employees of the court as
well as allegation that respondent judge connived with his co-respondents to make it
appear that proper judgments by default had been regularly rendered when in truth there
was none.
3. ID.; ID.; SUPREME COURT WILL RESOLVE RATHER THAN REMAND CASE TO
LOWER COURT IF THERE ARE ENOUGH FACTS ON RECORD. Where in a petition for
certiorari, the Supreme Court finds that there are enough incontrovertible facts in the
record on the basis of which the litigation between the parties can be terminated, the Court
will resolve the whole case instead of returning the case to the trial court for further
proceeding and final determination of the issues. It is a primordial principle that the courts
must always strive for a just, speedy and inexpensive determination of all actions and
proceedings.
4. ID.; ID.; ID.; PETITIONERS HAVE NOT SHOWN VALID DEFENSE AGAINST
PRIVATE RESPONDENT'S CLAIM IN CASE AT BAR. In an unsworn memorandum,
petitioners questioned the default judgments rendered against them on private
respondent's insurance claims, stating that he was guilty of fraud and arson and because
of this he availed of every means to secure judgments without going to trial. In support of
this allegation they presented the supposed expert opinion of the former' Chief of the PC
crime laboratory regarding the gasoline traces found in private respondent's premises.
Private respondent replied that the expert's findings were worthless as the adjusters
trusted by petitioners had investigated private respondent's claim and found no well-
grounded reason to warrant non-payment and had recommended out-of-court settlement.
Held: Comparing the conflicting allegations, the Court concluded that petitioners have not
shown that they have good and valid defenses against private respondent's claim.
5. DEFAULTS: DEFENDANTS DECLARED IN DEFAULT FOR FAILURE TO FILE
ANSWER. When the incontrovertible facts in the record show that petitioner's joint
answer was undoubtedly filed out of time, their contention that they were erroneously
declared in default has no merit and they cannot justly say that the respondent judge
committed a grave abuse of discretion in making such declaration.
6. ID.; ID.; MOTION TO LIFT ORDER OF DEFAULT; MOTION MUST BE UNDER
OATH, ACCOMPANIED BY AFFIDAVIT OF MERIT. A motion to lift an order of default
should be under oath and accompanied by an affidavit of merit. These are substantial
requirements and the omission thereof justifies the denial of the motion.
7. ID.; ID.; ID.; OMISSION OF AFFIDAVIT OF MERIT; TRIAL COURT CANNOT
CONSIDER MOTION. The requirements of Section 3 of Rule 18 (Relief from order of
default) are practically identical to those of Section 3 of Rule 38 (Relief from judgment)
regarding the need to show the existence of fraud, accident, mistake or excusable
negligence that caused the default and to accompany the motion to set aside with affidavits
of merit. The ruling which states that a petition to set aside a judgment which is not
accompanied by an affidavit of merit has no standing in court, is applicable to a motion to
lift an order of default. Thus, the trial court has no authority to consider a motion to lift an
order of default if the affidavit of merit is omitted.
8. ID.; ID.; ID.; FATALLY DEFECTIVE MOTION CANNOT REVIVE RIGHT TO NOTICE
OF FURTHER PROCEEDINGS. The mere filing of a fatally defective motion to set aside
an order of default does not entitle the defaulting defendants to notice of all subsequent
proceedings. Section 9 of Rule 13 must be read in conjunction with section 3 of Rule 18.
The motion to set aside default, which effects the revival of the right to notice of further
proceedings, referred to in Section 9 of Rule 13 must be one the contents of which are
precisely those provided for in Section 3 Rule 18. Thus, where the motion to lift the order
of default did not comply with section 3 of Rule 18, the movant cannot contend that the
failure of the judge to notify him of the motions for immediate execution of the default
judgments fatally vitiated the order granting the same and the writs and levies pursuant
thereto.
9. JUDGMENTS; EXECUTION: PREVAILING PARTY CAN HAVE FINAL JUDGMENT
EXECUTED AS A MATTER OF RIGHT. Once a judgment becomes final and executory, the
prevailing party can have it executed as a matter of right and the granting of execution
becomes a ministerial duty of the court. In the case at bar, where it is indisputably borne
by the records that the impugned judgments became final and executory on June 23, 1971,
the action taken by the trial court June 28, 1971 granting respondents' motion for
immediate execution assumed the character of an order of execution of a final and
executory judgment and has therefore, become a matter of right to the prevailing party
and ministerial on the court to grant.
10. ATTORNEY-AT-LAW; DISCIPLINE; COUNSEL IN CASE AT BAR ORDERED TO
SHOW CAUSE WHY NO ADMINISTRATIVE ACTION SHOULD BE TAKEN AGAINST HIM.
The court cannot begrudge any lawyer of his right to be assiduous and zealous, even
tenacious, in the prosecution or defense of the cause of his client. But when counsel fails
to substantiate his charges directly assailing the personal integrity of the judge and his
personnel as well as that of the proceedings, and makes positive allegations that his clients
have good and valid defenses knowing the truth to be otherwise, he must be made to show
cause why no administrative action should be taken against him as a member of the bar.
DECISION
BARREDO, J p:
Petition for certiorari to annul and set aside the default proceedings, the judgments and
the writs of execution of respondent judge in Civil cases Nos. Q-15377-8 of the Court of
First Instance of Quezon City entitled Multifield Enterprises, et al. vs. Philippine British
Assurance Co., Inc. and Multifield Enterprises et al. vs. Cibeles Insurance Corporation,
respectively, and for prohibition to enjoin the execution of said judgments. Upon the filing
of the petition, the Court issued the writ of preliminary injunction prayed for. Respondents
were required to answer and after issued were joined, the parties filed their respective
memoranda in lieu of oral argument.
On June 12, 1970, a fire broke out in the premises of private respondents (Tapia, for short)
at No. 245 Roosevelt Avenue, San Francisco del Monte, Quezon City. Being holders of fire
insurance policies from different companies, among them the petitioners, and having
failed to secure extrajudicial settlement of their claims, they filed corresponding civil
actions in the Court of First Instance of Quezon City. All of said cases, dealing as they did
with the same facts and issues, were assigned to respondent judge, to whom by raffle the
first of them had fallen. Petitioner British (for short) 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 17,
respectively.
On April 13, 1971, counsel for British filed by mail a motion asking for fifteen (15) days
extension of its time to answer, claiming that due to the intervening Holy Week and
pressure of other works, he would be unable to prepare his answer within the
reglementary period. He was granted only five (5) days ending April 19. 1 No answer came
until April 28, 1971, albeit it was mailed by registered service on April 22, 1971. Cibeles
in turn filed its own motion for extension on April 19, 1971, two days after due date.
Obviously, the period could not be extended anymore. Just the same, it filed its answer on
April 22, 1971, which was joint with that of British.
In the meanwhile, on April 24, 1971, Tapia filed separate motions in the two cases praying
that petitioners be declared in default. Not having received by then any answer of
petitioners, (Petitioners did file a joint answer, but as will be seen later, the same was
actually received by respondent court only on April 28, 1971.) an order of default was
issued, directing at the same time that plaintiffs' evidence be received by the clerk of court.
This reception of evidence was done on April 26 and 27, and on April 28, 1971, the
judgments complained of herein were rendered. After being duly docketed, these
judgments were released for service by registered mail on May 17, 1971, addressed to
petitioners' counsel, Atty. Alfonso Felix, Jr. at his given address at Room 212 Lopez
Building, Aduana Street, Intramuros, Manila.
According to the postman assigned in that area, Alfredo E. Sugatan, the first registry notice
of said mail matter, Registered Mail No. 13648, was delivered by him actually to counsel's
secretary who was known to him personally, a certain Miss Tuliao, in the morning of May
19, 1971, as he similarly delivered to her subsequently the second and third notices on
May 30, 1971 and June 15, 1971.
According to Atty. Felix, Jr., on May 24, 1971, the day he received the order of default in Q-
13577 (Par. 12 and Annex C-1 of Petition) he found himself in the respondent court and to
his great surprise, in the corresponding expedientes, he found neither (1) his motion for
extension of time to file answer in Q-13577 nor (2) the aforementioned joint answer he
had filed on behalf of petitioners and that instead he saw therein that orders of default had
been issued in both cases and, further, that evidence of the plaintiffs had been received ex-
parte on April 26 and 27, 1971. 2 He claims also that on said occasion, when he examined
the expedientes of the cases, he did not find therein any copy of any decision. To be noted,
however, he does not pretend that he made any inquiry from any of the officials and
employees of the court as to what was the exact status of his cases as of that date.
Two days later or on May 26, 1971, he filed a joint motion, dated May 25, 1971, to lift the
order of default, unverified and unaccompanied by any affidavit of merit, which he set for
hearing on June 1, 1971. According to him, "the motion to set aside the Order of Default
could not be heard on June 1 the day on which it was set for hearing for the reason that
day had been declared a public holiday, undersigned counsel went to respondent court the
next day, June 2, 1971, consulted the expedientes and seeing respondent Judge de los
Angeles showed him a copy of the Joint Motion Annex `D' to lift the Order of Default.
Respondent Judge de los Angeles after reading in the presence of undersigned counsel that
Joint Motion Annex `D' asked him to set it for hearing anew and told him that it was always
his practice to give parties a chance to present evidence." (Par. 17 of Petition). And so,
counsel did as told.
Thus, on June 10, 1971, a notice was received by Atty. Felix, Jr. Advising him that the
motion had been set for hearing on June 30, 1971, but on June 22, 1971, respondent judge
issued an order cancelling this notice for the reason that "for failure of defendants in the
above-entitled cases to comply with the requirements imposed by Section 3 of Rule 18,
Rules of Court and pursuant to the decisions of the Supreme Court on the matter, this Court
can no longer set aside its order dated April 24, 1971." (Annex H of the Petition). And on
June 28, 1971, respondent judge issued the following order:
"Acting on the motion for immediate execution of judgments filed by the plaintiffs through
counsel in the above-entitled cases, this Court finds and the records of these cases bear
out and show that the judgments adverted to were rendered by this Court on April 28,
1971 and copies thereof were sent and posted as registered mail No. 13648 to the counsel
for defendants on May 17, 1971 by the Clerk of this Court. The copies of the decisions as
registered mail No. 13648 were returned to this Court by the Post Office as unclaimed by
the addressee, the counsel for the defendants, on June 23, 1971.
"Both the certification (Annex "A" of the motion for immediate execution) and the proof of
service of the notices sent by the postmaster stamped on the envelop-cover of the
decisions show that the first notice of this registered mail was sent to the counsel for
defendants at his office address on May 19, 1971 by the postmaster. Again, on May 30,
1971, a notice was sent to him by the postmaster on these decisions as registered mail No.
13648. The last and third notice by the postmaster was sent to him by the postmaster on
June 15, 1971. Still counsel for defendants did not claim from the Post Office his copies of
the decisions for which no less than three notices were sent to him by the postmaster.
"Completeness of service of the decisions on defendants' counsel was thus accomplished
after the expiration of five days from the date of the first notice which is May 19, 1971,
pursuant to Section 8 of Rule 13, Rules of Court and the numerous decisions of the
Supreme Court on this particular matter. The period of thirty (30) day within which to
interpose an appeal from these decisions rendered by this Court in the above-entitled
cases commenced on May 25, 1971 the day after the fifth day from May 19, 1971 and
expired after June 23, 1971, the thirtieth day. From May 25, 1971 to June 23, 1971, no
appeal from these decisions was taken by the defendants. Considering that the period of
thirty (30) days has already expired and no appeal has been taken by the defendants from
the decisions rendered by this Court on April 28, 1971, they are by law now final,
unappealable and, as matter of right, the plaintiffs are entitled to their immediate
execution.
"WHEREFORE, the immediate execution of the judgments in the above-entitled cases are
hereby granted. Let the corresponding writs of execution be issued.
SO ORDERED."
Pursuant to the writs issued under this order, the Hongkong & Shanghai Banking
Corporation paid to respondent Sheriff P294,750.00 for the account of British and the First
National City Bank of New York the sum of P75,000 for the account of Cibeles (Pars. 30
and 31, Petition), but all the amounts thus paid were returned to the respective banks by
virtue of the writ of preliminary injunction of this Court of July 9, 1971.
On July 1, 1971, petitioners filed a joint "Petition for Relief from Judgment." But before said
petition could be acted upon by the court, the instant petition was filed with this Court on
July 2, 1971 and summons, together with the writ of preliminary injunction was served on
public respondents on July 10, 1971. (Annex N, Petition). In the meantime, on the same
day that the petition for relief was set for hearing, July 7, 1971, respondent judge found it
to be "sufficient in form and substance" and ordered the respondents "to answer the same
within a period of fifteen (15) days from receipt hereof." (Annex A, Respondents' Motion
to Dismiss of September 5, 1972.) Nothing else developed in the trial court later because
the injunction of this Court which was served on respondent judge on July 10, 1971
enjoined him from "taking further action" in the two subject cases.
At this juncture, it becomes necessary to discuss and resolve a point of procedure before
going any further. As may be noted, We could have refused to give due course to the
present petition when it was filed on July 2, 1971, considering that it already avers that a
petition for relief from judgment dated June 30, 1971 (Annex N of Petition) had been filed
by petitioners with the trial court on July 1, 1971, which, pursuant to the usual practice,
We could have deemed as an adequate remedy in the ordinary course of law that
constitutes a bar to a certiorari review or any other kind of special civil action. But the
petition, on its face, presented the situation that obtained in the trial court in such an
alarming manner, to the point of strongly hinting possible irregularities in the actuations
of the respondent judge and the employees in his sala, which could involve their honesty
and good faith as well as the integrity of judicial records and proceedings, that the Court
felt it was in the best interest of justice for the Court itself to inquire without further loss
of time into what actually happened. Indeed, even after the parties had filed their
respective memoranda and the Court had by resolution of October 21, 1971 declared these
cases submitted for decision, when the respondents filed their motion to dismiss of
September 5, 1972, based precisely on the ground that on July 7, 1971 the trial court had
given due course to petitioners' petition for relief, We resolved to defer determination of
the dismissal motion until this decision on the merits.
Now, having thus disregarded the existence of an ordinary remedy in the court below at
the earlier stages of these cases, it is but proper and logical for Us to pursue such course
of action to its ultimate conclusion, since anyway, counsel for petitioners has himself
vehemently objected to said motion to dismiss, and, after all, as We see it, there are enough
incontrovertible facts in the record, furnished by both parties, on the basis of which the
Court can put an end to the litigation between the parties regarding the insurance claims
of private respondents against petitioners, the subject matter of the actions in the court
below. To now confine Ourselves to holding that the trial court should be accorded the
opportunity to resolve the petition for relief of British and Cibeles therein pending would
serve no purpose than to proliferate proceedings, only to end in the same inevitable result
which even here is already obvious and unavoidable. That would be sacrificing substance
to achieve nothing more than perfection of form and procedure, which is inconsistent with
the primordial principle that the courts must always strive for a just, speedy and
inexpensive determination of all actions and proceedings. And so, the Court has decided
to determine here even the question of whether the petition for relief filed by petitioners
with the respondent court should be granted or denied, thereby avoiding any possible
doubt that petitioners might entertain as to the impartiality and integrity of future
actuations of the respondents. Indeed, petitioners have placed before Us by their petition,
memorandum and subsequent pleadings, complete with appropriate annexes, consisting
of affidavits, letters and other documents, all the facts which they must believe are
relevant, whereas respondents have duly joined issued with them as to all said facts in
their own answer, memorandum and other papers, complete also with similar
corresponding annexes, and there being no serious, much less any credible indication that
any of the parties' annexes are not authentic, We deem it unnecessary to prolong further
the main controversy between the parties. We will resolve the whole case here.
The contention of petitioners that they were erroneously declared in default has no merit.
From the incontrovertible facts in the record, We cannot see how it can be justly said that
respondent judge committed a grave abuse of discretion in making such declaration. As
regards Cibeles, there can be no question that even its motion for extension to file its
answer was filed out of time. It was served summons on April 2, 1971, and it is not
disputed that its motion for extension was filed on April 19th, two days late. With respect
to British, its answer was admittedly due on April 13, 1971, and although it asked for an
extension of fifteen (15) days, it was given only five (5) days ending April 19, 1971; 3
consequently, its answer jointly filed with Cibeles on April 22, 1971 was undoubtedly out
of time.
Counsel suggests that he was not given enough time, considering that there was the Holy
Week to take into account, but His Honor ruled that precisely, counsel would have more
time because of the holidays. Again, We perceive no grave abuse of discretion in such a
pragmatic ratiocination. Besides, it is settled that parties and counsel should not assume
that courts are bound to grant the time they ask for compliance with the rules, and,
therefore, the fact that counsel received the order of extension by mail only on April 26,
1971, is no reason for him to complain. Likewise, that he was not notified of the motion to
declare his clients in default is not against the rules, for he had no right to such notice.
(Pielago vs. Generosa, 73 Phil. 654.)
Anent the motion to lift the orders of default, counsel invites attention to the alleged
directive of respondent judge to him to have the hearing of his said motion reset because
it is the judge's "practice to give parties a chance to present evidence." We take it, however,
that seemingly what happened then must have been that His Honor was just trying to
figure out how counsel could be helped out of his self-imposed predicament, but, evidently,
upon further reflection, he must have realized the legal obstacles on the way and
consequently found no alternative than to rule that the motion to lift did not have to be
reset for hearing anymore. Upon perusing the motion when it was filed, he must have
noted that it did not comply, as he so stated in his order, with the requirements of Section
3 of Rule 18.
As may be seen, petitioners' joint motion to lift the order of default, Annex D of the Petition,
the same is neither under oath nor accompanied by any affidavit of merit. And in Ong Peng
vs. Custodio, 111 Phil. 382, We held as follows:
". . . Upon examination of the motion to set aside the order of default, we find it to be lacking
in the following substantial requirements: it does not contain an affidavit of merits, the
motion to set aside the default order is not under oath and contains only a promise or an
assurance, not an affidavit of merits, that defendant has a good defense. The court was,
therefore, fully justified in denying the motion to set aside the order of default."
In fact, in view of the omission of petitioners to accompany their motion with any affidavit
of merit, the trial court had no authority to consider the same. It is to be noted that the
requirements of Section 3 of Rule 18 are practically identical to those of Section 3 of Rule
38 regarding the need to show the existence of fraud, accident, mistake or excusable
negligence that caused the default and to accompany the motion to set aside with affidavits
of merit. Consequently, it is but proper to apply to such a motion the same ruling applicable
to petitions for relief under Rule 38, which is to the effect that:
"Furthermore, it appears that appellant's petition to set aside the judgment and reopen
the case, is grounded on his alleged excusable negligence in failing to appear and testify
during the hearing of the case on February 3, 1959, namely, his becoming ill with flu
(influenza) on said date. We find, however, that appellant failed to accompany said petition
with affidavits of merit showing the excusable negligence relied upon, and the facts
constituting his good and substantial cause of action or defense, as expressly required
under Section 3, Rule 38 of the Rules of Court. We have repeatedly held that such a defect
is fatal (Abao vs. Virtucio, et al., 109 Phil., 821; Price Stabilization Corporation vs. Court of
First Instance of Manila, et al., 97 Phil., 153) which warrants the denial of the relief sought
(Abao vs. Virtucio, et al., supra, citing Coombs vs. Santos, 24 Phil., 446; McGrath vs. Del
Rosario, 49 Phil., 330; Villanueva, et al. vs. Alcoba, 101 Phil., 277). The reason for the rule
is that it is the affidavits of merit which serve as jurisdictional basis for a court to entertain
a petition for relief (Abao vs. Virtucio, et al., supra; Omandam vs. Director of Lands, 95
Phil., 450; Off. Gaz., 4840). Stated differently, where a petition to set aside a judgment or
reopen a case pursuant to Rule 38 of the Rules of Court is not accompanied with said
affidavits of merit, the court with which it is filed is not called upon to entertain the
petition. Applied to the instant case, appellant's petition to set aside the judgment in
question and reopen the case acquired no standing in court and, consequently, it was
rightly denied." (Fernandez vs. Tan Tiong Tick, 111 Phil. 773 at pp. 780-781.)
Indeed, the identity of these two remedies is such that in Ong Peng, supra, We already
expressed Our "doubt if the same issue raised in the original motion to set aside the order
of default, may again be raised in a petition for relief under Rule 38 of the Rules of Court.
The general rule is that once a matter in issue has been decided by the court, it may no
longer be brought again in the form of another objection, and in the guise of a motion
under another provision of the rules" (at p. 387). True it is that as a matter of form, under
Section 3 of Rule 18 it is not essential that the affidavit of merit be separate from the
motion and may instead be incorporated therein, but in the instant case of petitioners'
motion, even if it makes general allegations of merit, these allegations are not supported
by oath of anyone who has knowledge of the fact. As already stated, not even Atty. Felix Jr.
swore to the truth thereof. Accordingly, We find no error in the subsequent action of
respondent judge of cancelling the notice of hearing of the joint motion to lift the order of
default.
Besides, the same section expressly provides that motions to lift orders of default may be
filed only before judgment, and petitioners' joint motion was filed only on May 26, 1971,
whereas the judgments in question were rendered on April 28, 1971.
But counsel would attach importance to another aspect of his motion to lift the default
orders, regardless of its legal untenability. He contends that having filed such a motion, he
became entitled under Section 9 of Rule 13 to notice "of all further proceedings" and,
therefore, the failure of respondents to notify him of the motions for immediate execution
of the default judgments fatally vitiated the order granting the same and the writs and
levies pursuant thereto.
It is quite obvious that counsel's reliance on the provision cited by him is misplaced.
Textually, the said section reads thus:
"SEC. 9. Service upon party in default. No service of papers other than substantially
amended or supplemental pleadings and final orders or judgments shall be necessary on
a party in default unless he files a motion to set aside the order of default, in which event
he shall be entitled to notice of all further proceedings regardless of whether the order of
default is set aside or not."
We are not prepared to agree with counsel that the right of a party in default to notice of
further proceedings which this rule revives as a result of the filing of a motion to set aside
the default order is intended by the rule to be so easily reacquired that just by the mere
filing of any motion with a prayer to set aside the default, the provision may be deemed as
already complied with. Logic and principle dictate that the effects of default may not be
treated as lightly as if it were of no juridical essence. While the Court has generally been
liberal in giving a party in default a chance to participate in the trial, We cannot sanction
any proposition that would so reduce the effect of an order of default that to have it set
aside all that has to be done is for the party concerned to file any perfunctory motion
therefor. A party who by inaction or negligence allows himself to be declared in default
offends the rule requiring him to answer the summons without unnecessary delay to the
end that the issues may be duly joined and the litigation be expeditiously terminated. To
purge himself of the effects of such offense, it should not be enough for him to just tell the
court he has, after all, decided to wake up and take part in the proceedings. It is but proper
that he must justify his failure to comply with the rule before he is relieved from the
adverse consequences of his omission. Thus, Section 9 of Rule 13 must be read in
conjunction with Section 3 of Rule 18. In other words, the motion to set aside default
referred to in Section 9 of Rule 13 must be one the contents of which are precisely those
provided for in Section 3 of Rule 18. Thus, the filing of such a motion to set aside short of
the requirements of this latter provision may not as it cannot produce the revival of the
right to notice contemplated in Section 9 of Rule 13. Any other construction in line with
the position of petitioners would render the intent and purpose of the pertinent provisions
nugatory and ineffective. Considering, therefore, that counsel's joint motion to lift the
order of default in the subject cases did not comply with Section 3 of Rule 18, there is no
justification at all for his gripe that he was not notified of further proceedings.
The next point raised by petitioners is more basic. They maintain that the circumstances
related by their counsel should prove to Us that there were in fact no judgments yet against
them on June 2, 1971, the day when said counsel verbally took up with respondent judge
the matter of having the orders of default lifted. It is the emphatic charge of counsel that
when he examined the records of the subject cases on May 24, 1971 "no decision of any
sort appeared" therein. (Par. 11-d, Petition). He also "affirms under oath that on June 2,
1971, no decision of any sort appeared in these expedientes nor did respondent Judge de
los Angeles ever aver that any decision had been rendered." (Par. 18, Petition). He further
adds that "the clearest evidence that we can furnish the Supreme Court that as late as June
3, 1971, no decision had (yet) been rendered" is that he had received on June 10, 1971 a
notice setting his motion to lift the order of default for hearing on June 30, 1971, "for had
any decision been rendered, clearly the deputy clerk of court who is under the control and
supervision of respondent judge and who is doubtless familiar with the expedientes of
these cases would have not set a Motion to Lift the Order of default for hearing had any
decision been rendered (already)" (Pars. 20 and 21, Petition). Additionally, he points out
that even in the order of June 22nd cancelling the notice of hearing issued by the clerk of
court of the motion to lift, His Honor made no hint that he had already decided counsel's
cases. Finally, counsel surmises that it is rather strange that respondent judge had the
material time to prepare his decisions on April 28, when the reception of the evidence took
place only on April 26 and 27.
In plain language, the accusation is that the decisions in question must have been prepared
subsequent to June 3, 1971. Undoubtedly, the indictment is serious. It directly implies
misfeasance on the part of the officials and employees of the trial court, not excluding
respondent judge. Upon the other hand, the rotund denial of the respondents is coupled
with their own counter-accusation that counsel is frantically but vainly trying only to make
up with his clients for his failure to act on their behalf on time. In the face of these sharply
opposite positions, We could do no less than scrutinize the record minutely and carefully,
if only to be able to pin proper responsibility on whosoever might be guilty of violating his
sacred oath as functionary of the court, either as judge, clerk of court or mere employee
thereof or as counsel.
After a conscientious review of the pertinent facts extant in the record, it is our considered
opinion that counsel's suspicion is unfounded. To begin with, respondents have in their
favor the presumption heretofore invariably relied upon by the Court in similar situations
that official duty has been regularly performed by them and that they have acted in good
faith. It has been the constant ruling of this Court that this kind of presumption must stand,
even against the most well reasoned allegations seemingly pointing to some possible
irregularity or anomaly. "In the absence of a showing to the contrary, a judicial proceeding
is presumed to be regular, and all steps required by law to be taken before the Court may
validly render judgment, had been so taken." (El Banco Espaol-Filipino vs. Palanca, 37
Phil. 921; Ongsiako vs. Natividad, L-1371, Aug. 5, 1947; People vs. Baco, L-2633, Feb. 23,
1958; Go Chi, et al. vs. Go Chi, et al., L-5203, Feb. 23, 1955; People vs. Nazario, L-7629, Sept.
29, 1955). And so far, We have not seen anything in the record to support the charges of
Atty. Felix Jr. beyond his own allegations which, considering they do not necessarily belie
the contrary representations of the adverse party, do not appear to Us to have any added
weight just because counsel has taken pains to emphasize he has made them "under oath."
As to the disputed existence of the judgments in question prior to June 3, 1971, or for that
matter, before May 24, 1971, We are fully convinced that said judgments were entered in
the docket on April 28, 1971. We do not feel justified under the circumstances revealed in
the record to say that such entry was made days before the judgments were actually
prepared and signed. The vital fact of such entry is borne out by the certification to such
effect of the respondent Clerk of Court Vicente S. Ocol, Annex 9 of the answer herein, and
the affidavit of Branch Clerk of Court Leon D. Paradero, Annex 9-B, attesting to the
rendition of said judgments on the same date, the truth of which can easily be checked
with the regularity or irregularity of the entries in the docket of the trial court. If the
corresponding entries in the docket do not appear to be regular, Atty. Felix Jr. could have
completely rebutted these annexes with proof based on what appears in said docket itself.
The utter silence of counsel in this respect is eloquent evidence against him.
Besides, the apparent thrust of counsel's theory is that respondents were in such hurry to
make the impugned judgments effective that they allegedly overlooked compliance with
the rules cited by him, but, to Our mind, the incontrovertible fact that it was not until May
17, 1971, or almost three weeks after April 28, 1971, that Jesus B. Marzan, the Chief of the
Civil Cases Section in the court below, released the said judgments, according to his
affidavit (Annex 9-A, id.), belies entirely such claim. This somewhat belated release is also
proven by the evidence, to be discussed anon, as to when the postal authorities got the
decision for delivery to petitioners' counsel. If it were true that respondents were acting
in haste, such release would have been immediate.
The reality of the existence of the judgments in controversy prior to the dates when
counsel claims he did not see them is corroborated by evidence coming from sources other
than the office of respondent court. Annex 11-A of the respondents' answer herein is the
certification of Mr. H. G. Guzman, Postmaster of the Port Area Post Office, Manila, to the
effect that Registered Letter No. 13648 of sender, "CFI Branch IV, Quezon City" was
received by his office on May 19, 1971 "and the corresponding Registry Notice was issued
on said date, and sent to addressee on same day," that "the succeeding second and third
notices was (sic) issued after about weeks' intervals (sic) the exact date of which was
noted on the envelope cover of the said letter" and further "that the Registered Letter was
return (sic) to the sender, it being (sic) remain(ed) unclaimed for more than thirty days,
on June 22, 1971 under our Registry Bill No. 199 for Quezon City line 1, page 1 as shown
by our records." Annex 10 is the affidavit of Alfredo E. Sugatan, the postman assigned to
the Port Area Post Office, Manila, entrusted specifically with the delivery of "letters,
notices of mails and other mail matters" in the area "composed of Aduana and Arsobispo
Streets, Intramuros, City of Manila", stating in detail that in the morning of May 19, 1971
he personally delivered at Room 212 Lopez Building, Aduana, Intramuros, Manila, to Miss
Tuliao, known to him to be the secretary of Atty. Alfonso Felix, Jr., also personally known
to him, by reason of the performance of his duties for a "long period of time" in that area,
"the FIRST NOTICE on (sic) Registered Mail No. 13648" (the same number referred to in
Annex 11-A above) and that he also delivered to her on May 31, 1971 and June 15, 1971,
the second and third notices corresponding to the same registered letter, respectively.
Annex 11 is the photostat copy of the face and the dorsal portion of the envelope addressed
to "Atty. Alfonso Felix Jr., Rm. 212 Lopez Bldg., Intramuros, Manila", with notations such
as: the number 13648 enclosed in an oblong figure; "Q-15378-D and Q-15377-D" (which
are precisely the numbers of the subject cases); "Reg. Mail w/ return card"; and "Republic
of the Philippines, Court of First Instance, Branch IV Quezon City"; and marked with
rubber stamp data as follows: "Registered, Quezon City, Philippines, May 17, 1971", "Port
Area, Manila, Philippines received May 19, 1971" as well as "Second Notice, 5-30-71" and
"Third Notice, 6-15-71".
Considered in the light of ordinary official practice and experience, all the foregoing prove
that mail matter related to Civil Cases Nos. Q-15377-D and Q-15378-D of Branch IV of the
Court of First Instance of Quezon City duly addressed to Atty. Alfonso Felix, Jr. was posted
by registered mail, No. 13648, at the Quezon City Post Office on May 17, 1971 and received
by the Port Area Manila Post Office on May 19, 1971 and received back by the Quezon City
Post Office on June 23, 1971, unclaimed after a second notice on May 30, 1971 and a third
notice on June 15, 1971. And since it has not been shown that any other notices referring
to the same cases had proceeded from the trial court on or about the dates mentioned, it
stands to reason that what the envelope, Annex 10, contained were precisely the
judgments in question, as attested by the affidavit, Annex 9-A, of the mailing clerk of the
respondent court who released the same.
This telling mass of official evidence stands unrebutted in the record by any evidence
legally worthy of consideration. Atty. Felix, Jr. has not shown the Court any evidence which
can effectively dent the effect thereof other than his own allegations "under oath" and the
inconclusive and general assertions in (1) the affidavit of Miss Cleofe V. Tuliao, "in charge
of the clerical work in the office including the issuance and receipt of the correspondence"
to the effect that "She knows in (sic) of her own knowledge that the (sic) matter of practice
which has never been deviated from (is that) the postman gives her the notice cards for
registered mail, she then brings these cards to Atty. Alfonso Felix, Jr., who signs them and
these cards are then given to Carlos de la Cruz, the office messenger who collects them"
and that "on no occasion did she fail to present any of these notice cards to Atty. Alfonso
Felix, Jr. nor did she fail to deliver the cards thus signed to Carlos de la Cruz for collection",
Annex A of Annex 1 of Respondents' Petition for dissolution of Writ of Preliminary
Injunction dated July 13, 1971 4 and (2) the affidavit of said Carlos de la Cruz stating that
"he knows that it is the practice of the office which is never deviated from that he receives
the notice cards for registered mail from Miss Cleofe Tuliao either in hand or by having
them put on his desk and he then picks up all such registered mail at the proper post office"
and that "on no occasion whatsoever that he failed to collect registered mail covered by
card notices." (Annex B, id.). At a glance, anyone can see that these assertions do not
disprove the facts evidenced by the official records just referred to. It is not an
exaggeration to say that the regularity of the actuations of the respondents in relation to
the declaration of default and rendition and execution of the judgment here in question
has been proven by such convincing evidence as to relieve Us from any doubt about it.
Now, very little needs be said as regards the contention that petitioners should have been
notified of respondents' motion for execution. Prescinding already from the consideration
discussed above that the mere filing of petitioners' motion to set aside did not, because of
the fatal defects of the same, have the effect of entitling them to notice of all subsequent
proceedings, with the regularity of the rendition of the impugned judgments as well as the
fact of their having become final and executory on June 23, 1971 5 being indisputably
borne by the record, the action taken by the trial court on June 28, 1971, Annex 12 of the
Answer, of granting respondents' motion for immediate execution assumed the character
of an order of execution of a final and executory judgment, as so stated in the order itself,
and has, therefore, become a matter of right to the prevailing party and ministerial on the
part of the court to grant. In Pamintuan vs. Muoz, 22 SCRA 1109, the Court held:
"Regarding the first point, it is by now axiomatic that a judgment on a compromise like
the one in the case at bar is at once final and Immediately executory. Also of the same
stature is the rule that once a judgment becomes final and executory, the prevailing party
can have it executed as a matter of right and the granting of execution becomes a
ministerial duty of the court. Otherwise stated, once sought by the prevailing party,
execution of a final judgment will just follow as a matter of course. Hence, the judgment
debtor need not be given advance notice of the application for execution nor be afforded
prior hearing. (Rule 39, Sec. 1, Rules of Court; Luther v. Clay, 100 Ga. 236, 28 S. E. 46.) This
renders of little significance then the fact alleged by petitioners that they received copy of
respondent's motion for execution only on the afternoon of the day set for its hearing."
At this point, it should be noted that viewed strictly, petitioners' fundamental pose rests
exclusively on a claim of denial of due process in that they have been improperly declared
in default and that writs of execution were issued against them without notice. Neither in
the petition herein nor even earlier in the motion to lift the order of default, Annex D, or
the petition for relief from judgment, Annex N, filed with the court below, is there the
adequate showing required by the rules to make the Court inquire into the possible
existence of good and valid defenses on the part of petitioners so as to justify granting
them an opportunity to prove them. To be sure, in the joint motion, Annex D, counsel does
make mention in paragraphs 4 and 9 thereof of "good and valid reasons for the denial of
plaintiff's claim by defendant company" (British) and "good and valid defenses" of Cibeles.
The trouble however is that to support the same, counsel only makes reference to the joint
answer, Annex B, he had filed on behalf of the two petitioners but, neither the motion itself
nor the joint answer is supported by any corresponding oath. The same observations may
be made with regard to the petition for relief, Annex N. And as to the allegations on the
point in question in the petition herein, all that is stated in paragraph 9 thereof is as
follows:
"(9) In the meantime, undersigned counsel had on behalf of both petitioners filed a
joint answer on April 22, 1971 which was received by the Court on April 28, 1971. This
answer signed in behalf of both petitioners alleges meritorious defenses. A copy of the
Joint Answer is annexed to the present pleading as Annex "B" hereof."
While the petition appears to be verified by Atty. Felix Jr., it is obvious that said verification
may not be deemed sufficient for the purpose of attesting to the truth of the allegations of
fact in the joint answer, Annex B, not only because no direct reference is made to them by
counsel but also because said counsel cannot pretend he has adequate personal
knowledge of said facts.
Fatal as such inadequacies are in the light of established jurisprudence too well known to
need being cited, if only to satisfy Our curiousity which was aroused by the alarming
allegations of the petition, We have opted to look into the purported defenses of the
petitioners, on the basis of the allegations pertinent thereto in the memoranda of the
parties, to which are annexed, as noted earlier above, corresponding documents supposed
to evidence the truth of the facts stated in said allegations. After careful and mature
consideration and evaluation of their respective allegations, We are convinced that
petitioners' alleged defenses cannot stand close scrutiny.
Thus, counsel for petitioners opens his unsworn memorandum with the following
"preliminary statement":
"In his memorandum of August 17, 1971 filed in these certiorari proceedings, Moises
Tapia avers that we have resorted to these proceedings purely to cause further delays for
we have no real defense. This is not true. The truth of the matter is that the evidence clearly
shows Moises Tapia to be guilty of arson and fraud. It was because of this respondent
Moises Tapia availed himself of every means, even those frowned upon by law, in order to
secure judgment in his favor without going to trial. The evidence against Moises Tapia was
such that be had to avoid going to trial. In support of this averment, we now present the
following documents:
1. A certification from Lt. Col. Jose Fernandez, former chief of the Philippine
Constabulary Crime Laboratory showing that there were gasoline residues in fourteen
(14) different places of the burned bodega and that one of these places was the steel
cabinet presumably containing the company papers so that even these papers would burn.
All these places had been saturated with gasoline. (Annex A).
2. A sketch of the bodega premises showing the widespread distribution of the
gasoline. (Annex B).
3. Twenty-two (22) photographs of the burned bodega. (Annexes C, D, E, F, G, H and
I).
4. Chromatographic specimens of the fourteen (14) gasoline residues found in the
fourteen (14) aforesaid areas. (Annexes J, K, L and M).
"Moises Tapia claims that on occasion of the fire suffered by his bodega, be suffered
damages in the amount of five hundred thousand (P500,000.00) pesos. We have annexed
twenty-two (22) photographs taken of his bodega after the fire. (Annexes C, D, E, F G, H
and I) showing that his bodega hardly contained anything. Please note that the alleged
contents of this bodega were iron and steel spare parts which do not burn. The conclusion
to be drawn from all these photographs, chemical analysis and chromatographic
specimens is obvious. Moises Tapia having withdrawn his merchandise from his bodega
saturated fourteen (14) different places in his bodega with gasoline including his steel
cabinet so as to make sure that even his papers would burn and then caused his bodega to
be burned.
"Under these circumstances, it was imperative for Moises Tapia to avoid having to go to
trial. It was imperative for him also, that we, your petitioners herein should not be allowed
to present evidence of these acts. That is why Moises Tapia exerted every effort to avoid
trial proceeding and that is why we submit to this Supreme Court it is in the interest of
justice for trial proceedings to be had.
"The foregoing statements are addressed to the equity of this Supreme Court. They have
become particularly necessary since Moises Tapia in his memorandum filed on August 17,
1971, before this Supreme Court has gone so far as to allege that your petitioners are
merely seeking to delay for they have no real defense. This Supreme Court may now judge
for itself." (Pp. 189-191, Record.)
and closes the same with "final remarks" thus:
"Should this Supreme Court be puzzled as to why all these unbecoming things were done,
the answer is as we have said in our opening statement that respondents could not afford
the luxury of a trial. A trial with a corresponding presentation of evidence, part of which is
annexed to this present memorandum as Annexes A to M would have shown respondent
Tapia's case to be baseless so that even a decision had been rendered in his favor in the
trial court, it would certainly have been reversed by this Supreme Court. It was necessary
to declare your petitioners in default so that your petitioners would not be around to
present evidence, to adjudge the case in secrecy so that your petitioners would not learn
of the judgment, and to execute in haste so that your petitioners would find themselves
deprived of their property without due process of law and before they even knew what
was happening to them. Fortunately, this Supreme Court intervened. We rely on its
continued intervention" (Pp. 209-210, Record.)
The foregoing allegations are traversed squarely in respondents' Reply Memorandum as
follows:
"To give their cause some semblance of cogency, which it does not possess, petitioners
would want this Honorable Supreme Court to believe that they have a good defense. The
alleged defense consists of a report made by one ex-Lt. Col. Jose Fernandez and related
papers attached as Annexes 'A' to 'M' to petitioners' Memorandum. Petitioners' purpose
cannot prosper, for the following reasons:
1. The said Lt. Col. Jose Fernandez is a biased and unreliable source. He was hired
and paid by petitioners to conduct an analysis on specimens he himself did not gather.
Naturally his findings had to tally with his employer's theory and must serve their purpose
and interest. That was what he was paid for.
2. The falsity and baselessness of said findings are irrefutably proven by the fact
that no criminal action was instituted against respondent Tapia. Yet petitioners have the
effrontery to assert before this Honorable Supreme Court that "the evidence clearly shows
Moises Tapia to be guilty of arson and fraud," for which reason he allegedly wanted to
avoid going to trial. If that was his intention he would not have filed the cases against
petitioners in the lower court.
As a matter of fact, in the two other cases filed by him against two other insurance
companies (Civil Case No. 15376 Multifield, et al vs. Monarch Insurance Co., Inc., and
Civil Case No. 15379 Philippine Home Insurance Corp.) for loss arising from the same
conflagration, and involving the same evidence and proof of loss and with which
petitioners have a common adjuster and investigator, respondent Tapia has gone to trial.
There, the defendant insurance companies were not declared in default because they
answered on time.
If petitioners herein were declared in default, it was because their counsel failed to
observe the reglementary period for answering and could not or failed to obtain relief
from the order of default in accordance with the Rules of Court. Now an attempt is being
made to shift the blame to respondent Tapia by falsely attributing to him a desire to avoid
going to trial purportedly because the evidence will show he is guilty of arson and fraud'.
Such foul tactics are beneath the dignity of the Bench and Bar.
The Worthless Findings of Mr. Jose Fernandez:
3. The said findings were not even believed and accepted by the petitioners'
commissioned and employed adjustment company which, after a thorough and careful
investigation of respondent Tapia's claim, had recommended that petitioners better pay.
The reports and findings of the petitioners' adjuster are attached as Annexes "A" and "B"
and form integral parts of this reply. These reports completely refute the petitioners'
allegations that respondent Tapia is guilty of arson and that he fraudulently removed the
contents from his bodega before it was destroyed by fire.
Petitioners' commissioned and employed investigator and adjuster, the Manila
Adjustment Company, in its report dated February 26, 1971 (Annex "A") to the four
insurance companies, is very explicit in its findings and recommendation that there is no
basis to deny respondent Tapia's claim on the ground of fraud. The petitioners' hired
investigator had examined respondent Tapia under the "Examination-under Oath-Clause"
of the policies and it was satisfied that no such fraud exists.
The same Adjustment Company to which the much vaunted report of the private chemist,
Mr. Jose Fernandez, was submitted, brushed aside the same and concluded, in its report of
March 11, 1971, that the said findings are not sufficient basis for denying the claim of
respondent Tapia. Even this Honorable Supreme Court, in several cases, has categorically
ruled that the existence of traces of gasoline in the burned premises does not necessarily
indicate that there was arson. (Ya Hun & Co. vs. British Traders Ins. Co., L-5719-25, May
18, 1954; Hua Chu Gan, vs. Law Union & Rock Ins. Co., Ltd., L-4611, Dec. 17, 1955.)
4. These reports conclusively prove that petitioners' counsel told a brazen lie when
he claimed that there were no goods destroyed in the burned bodega. As said reports
clearly indicate, the items therein inventoried after the fire had a total value of
P367,311.00. Respondent Tapia was able to prove, through the proofs of loss he submitted
in the lower court and which proofs were the same ones he submitted to the herein
petitioners, that he suffered loss and damage in the amount of P446,781.60.
Incidentally, both Monarch Insurance and Philippine Home Insurance, defendants in Civil
Cases Nos. 15376 and 15379, for collection of insurance proceeds in the amounts of
P100,000.00 and P50,000.00, respectively, have just recently paid and satisfied
respondent Tapia's claim. In paving respondent Tapia, these two defendants also acted
upon the findings of the Manila Adjustment Company that there is neither fraud nor arson
involved in the claim of respondent Tapia. Dr. Alberto B. Guevarra, Jr., counsel for Monarch
Insurance Company and Philippine Home Insurance Company, was in full accord with the
Adjustment Company's findings and recommendation and he did not hesitate to
recommend to his clients full settlement of the claim of respondent Tapia. (Photostat
copies of joint motions to dismiss and corresponding orders of respondent judge granting
said motions are attached as Annexes "C", "C-1" and "D"- "D-1" and form integral parts of
this reply).
5. Petitioners stand on quick-sand. Their counsel himself, Mr. Felix, in his letter to
his clients, marked as Annex "7" of respondents' Answer to the instant petition, stated that
their case is "far from strong." Hence, petitioners' case is not even strong. How can he say
now that they have a good defense? And if the evidence did show that respondent Tapia
was guilty of arson and fraud, why does Mr. Felix consider petitioners' case as `far from
strong?' 6
"6. This contention should have been interposed in the lower court through the
motion to lift the order of default, by means of affidavits of merits. Had this been done,
respondents could have opposed the same with counter affidavits. That would have been
the proper procedure. Apparently, petitioners' counsel does not believe in the Rules of
Court. He would instead burden this Honorable Supreme Court with the task of hearing
and deciding a question which was not even raised in his petition. Respondents submit
that this particular point has been raised by petitioners rather too late. In one case, where
a similar belated effort was attempted, this Honorable Supreme Court made the following
sagacious ruling:
'We believe that this is a last minute attempt to defend a losing case. If defendants really
had any valid defense, this should have been brought at the first opportunity, that is, by
the first motion to set aside the order of default.' (Ong Peng vs. Custodio, L-14911, March
25, 1961)." (Pp. 227-232, Record.)
Anyone would see from a simple comparison of the foregoing conflicting allegations of the
parties in the light of their respective supporting affidavits and documents that it is rather
petitioners, not Tapia, who may have more reason to avoid a full-blown trial, contrary to
the charge made by Atty. Felix Jr. in all his papers filed with this Tribunal and the court
below. The attorney himself must have felt the subject cases of his clients to be weak when
he advised them in his letter, Annex 7 of respondents' answer, that the same are "far from
being strong." At the time he wrote that letter, he was well aware of the various reports of
his clients' adjusters minimizing the significance of the supposed expert opinion of Col.
Fernandez regarding the gasoline traces found in Tapia's premises after the fire and
referring to them as being innocuously insufficient to indicate arson. The attorney also
knew that said adjusters, the ones trusted by insurance companies to give them reliable
advice on whether or not insured persons making claims on their policies are more or less
guilty of fraud and other improper schemes to collect unjustified claims, had investigated
Tapia's claims thoroughly and had found no well-grounded reason to warrant non-
payment, and that, in fact, they had recommended out of court settlement. There is no
showing at all that Tapia has ever been criminally charged with arson. On the contrary, the
record reveals that two other insurance companies serviced by the same adjusting
company as that of petitioners have already compromised their cases with Tapia without
the latter having them declared in default. In other words, in these cases against the other
two companies, Tapia was prepared to proceed to trial, and if he had secured default
judgments against petitioners, the cause was none other than counsel's omissions already
discussed earlier in this opinion.
We reiterate that these circumstances make it unnecessary for Us to adhere to the
technical procedure of returning these cases to the trial court for further proceedings and
final determination of the issue of whether or not petitioners' petition for relief from
judgment should be granted. We find all the proceedings leading to the rendition of the
impugned judgments and to the issuance of all the writs of execution thereunder to have
been regular and legal. And as to whether or not petitioners have been able to make the
requisite showing that they have good and valid defenses, We likewise hold that they have
failed to do so. It would be idle ceremony to still require respondent court to take further
action on the petition for relief, Annex N. The order of respondent judge of July 7, 1971,
giving due course to said petition has in effect become functus officio. We are persuaded
that the respective situations of the parties can no longer be possibly altered, should We
prolong this judicial battle in any way.
What has been said so far should suffice to settle once and for all the litigation between
petitioners and private respondents. But there is another aspect of these cases which
cannot be left unresolved, since it affects matters related to the integrity of judicial
proceedings and the attitude and conduct displayed by counsel for petitioners in
connection therewith. The Court cannot begrudge any lawyer of his right to be assiduous
and zealous, even tenacious, in the prosecution or defense of the cause of his client. But
when, as in these cases, counsel makes charges against the actuations of a judge and the
personnel of his court directly assailing their personal integrity as well as that of the
proceedings by alleging irregularities implying bad faith and outright misfeasance, he
should be prepared to substantiate the same. This Court will be the last to overlook, much
less to tolerate the kind of misconduct alleged by counsel in his instant petition. This is not
to say, however, that trial judges may be maligned at random with accusations that cannot
be proven. Anyone who deliberately moves this Court to act on such kind of
representations may do so only at his peril of being called to account therefor, should his
charges turn out to be a mere attempt to hide his own inadequacies and omissions in order
to escape criticism of his clients.
We hold that Atty. Felix Jr.'s implied accusation that respondent judge connived with his
co-respondents to make it appear that proper judgments by default had been regularly
rendered against petitioners on April 28, 1971, when in truth there was no such
judgments, has not been proven by him. On the contrary, the official records and the
affidavits of the employees of the trial court as well as those of the Bureau of Posts belie
conclusively counsel's allegations, and the mere fact that he did not see said judgments
and other pertinent pleadings and papers in the corresponding expedientes on May 24,
1971, assuming the same to be true, cannot disprove their existence, particularly, when it
is considered that counsel has never pretended that he had actually made inquiries and
asked the proper personnel of the court about them, which he would naturally have done,
considering that before then he had filed motions for extension followed by the joint
answer. It is particularly unfortunate that counsel made positive allegations in his petition
in the instant cases purporting to show that his clients have good and valid defenses and
that respondent Tapia's insurance claim was fraudulent and maliciously exaggerated,
when, as may be readily seen from the communications of the petitioners' own adjusting
company, Annexes A and B of respondents' reply memorandum, of which communications
counsel must have been, in the ordinary course of client and lawyer relationship, duly
informed, and from counsel's own letter to his client, Annex 7 of respondent's answer, it
is more than obvious that he knew the truth to be otherwise. It is indeed regrettable that
on the basis of such unjustified allegations, the Court had been induced to issue a writ of
preliminary mandatory injunction counter-manding the writ of execution issued by the
court below, thereby causing undue prejudice to all parties concerned. Such lack of candor
bordering on conscious misstatements of fact which has actually misled the Court calls for
at least an appropriate explanation from counsel.

IN VIEW OF ALL, THE FOREGOING, judgment is hereby rendered dismissing the petition
in these cases and setting aside the writ of preliminary injunction issued on July 8, 1971,
with the consequence that the executions enjoined thereby may now proceed in
accordance with law and the rules, with costs against petitioner. And for the reasons
above-stated, Atty. Alfonso Felix, Jr. is hereby ordered to show cause within ten (10) days
from notice hereof why no administrative action should be taken against him as a member
of the Philippine Bar.

Fernando (Chairman) and Aquino, JJ., concur.

Antonio, J., in the result.

Fernandez, J., concurs and states that he is not related to Col. Jose Fernandez.

Footnotes

1. Actually it should have been April 18 because March has 31 days, but the trial
court, in its order, Annex A of the petition, expressly granted five (5) days from April 14,
1971.

2. There is no clarification as to whether counsel went to court precisely because

he had received earlier Annex C-1 or he received this later in the day.

3. See footnote (1).

4. It may be mentioned that the known usual practice in this respect among
respectable law offices does not include signing by the lawyer himself of the registry cards.
Arrangements are made as to this small detail so that a subordinate may be authorized to
do it.

5. As clearly shown by the record, the first registry notice of the decisions was
served on counsel's office on May 19, 1971, hence the service became complete on May
24, 1971 (See. 8, Rule 13) and the decision became final on June 23, 1971.

6. We have examined Annex 7 of Respondents' Answer. It reads in its pertinent

portion thus:

"In this case for instance, the fact that you are willing to compromise
might be used as an argument to reduce my fees. On the other hand, the fact that to say the
least our case is far from strong as well as the fact that adverse counsel is a former fiscal
of Quezon City with considerable acquaintance with the trial judge may be used by me as
an argument to demand a higher fee. . . ."

Atty. Felix, Jr. has not denied the authenticity of this document much
less the truth of the representation made by him in the statement quoted.
SECOND DIVISION
[G.R. No. 49463. May 7, 1992.]
JAIME T. MALANYAON, petitioner, vs. HON. DELFIN VIR. SUGA, in his capacity as
Presiding Judge, Branch I, CFI of Camarines Sur, GENEROSO BONA, VICENTE
GARCHITORENA, RODOLFO ALFEREZ, OSCAR SIERRA, DONATO DE LIMA,
FLORENTINO BULAO, LEANDRO TESORERO, CAYETANO MALANG, ROSARIO
ALEPANTE AND ROSARIO CAUBANG, respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; DEFAULT; ORDER THEREOF DOES NOT
CARRY THE RIGHT TO ORDER THE ARREST OF THE PARTY IN DEFAULT; CASE AT BAR.
The respondent court's act of ordering petitioner's arrest is patently illegal. There is
nothing in the Rules which authorizes the trial court to order the arrest of the party in
default. A party declared in default merely loses the right to be notified of subsequent
proceedings and the right to take part in the trial, until the order of default is lifted.
2. ID.; ID.; ID.; ORDER THEREOF MUST BE SET ASIDE ON THE GROUND OF
ACCIDENT OVER WHICH THE PARTY HAD NO CONTROL; CASE AT BAR. With regard to
the lifting of the order of default, Section 3, Rule 18 of the Revised Rules of Court provides
that: "A party declared in default may at any time after discovery thereof and before
judgment filed a motion under oath to set aside the order of default upon proper showing
that his failure to answer was due to fraud, accident, mistake or excusable neglect and that
he has a meritorious defense. In such case the order of default may be set aside on such
terms and conditions as the judge may impose in the interest of justice." Where the failure
to appear at the pre-trial hearing was uncontrovertedly due to illness, the default order
may be set aside on the ground of accident over which petitioner had no control as in the
case at bar. Inasmuch as the respondent judge had already lifted the order of arrest after
finding petitioner's absence excusable, it therefore follows that said judge should have also
set aside the order of default. Thus, the basis for lifting petitioner's order of arrest should
also apply to the order of default since both orders were issued on petitioner's non-
appearance on October 9, 1978.
DECISION
NOCON, J p:
This is a petition for certiorari and prohibition with preliminary injunction to set aside the
order of the respondent judge declaring petitioner Jaime Malanyaon in default for the
latter's failure to appear on October 9, 1978 before the trial court for the pre-trial and the
contempt hearing in Civil Case No. 164 on the ground that said judge had already excused
petitioner's absence from said hearing by lifting the order of arrest against him in an order
issued on November 23, 1978.
It appears from the records that on March 15, 1977, private respondents, who are
members of the Camarines Sur I Teachers Association (CASTEA I) and Camarines Sur II
Public School Teachers Association (CASTEA II), filed a Petition for Annulment of
Proceedings, Injunction with Application for Preliminary Injunctions and Restraining
Order with the Court of First Instance of Camarines Sur, Branch I in Civil Case No. 164
against petitioner Jaime Malanyaon and Emma Perfecto. 1
On that same afternoon or about 35 minutes after filing said petition, respondent judge
issued a corresponding restraining order against petitioner which led the latter to file on
July 25, 1977, an urgent motion to disqualify respondent judge from further sitting in
judgment over Civil Case No. 164 alleging that there is a client-lawyer relationship
between said judge and private respondent's counsel Atty. Vicente de Lima as shown by
the latter's appearances in Special Proceedings No. 438 before the Court of First Instance
of Camarines Norte. 2
On September 20, 1977, respondent judge denied the motion to disqualify for lack of merit.
3 Likewise, petitioner's Motion for Reconsideration was denied on November 15, 1977. 4
On October 5, 1978, petitioner was personally served in his office a notice of hearing on
the pre-trial and contempt proceedings set on October 9, 1978 at 8:30 A.M. LLphil
However, at around 8:10 A.M. of October 9, 1978, petitioner felt chilly and went to see his
doctor who ordered him to stay in bed for a couple of days as he had just been released
from Mother Seton Hospital where he was confined from September 30, 1978 to October
3, 1978. Thereafter, petitioner immediately sent a letter to the respondent judge
requesting for the deferment of his appearance on the scheduled hearing 5 but said letter
was only filed at 10:05 A.M. of that same morning due to the stormy weather.
Consequently, upon petitioner's failure to appear at the hearing of October 9, 1978, he was
declared in default and ordered arrested.
In the afternoon of the same day, petitioner's counsel filed a motion to lift the Order of
Arrest against his client 6 which was denied in an order dated October 19, 1978. 7
On October 18, 1978, petitioner was airlifted and confined at the Veterans Memorial
Medical Center at Quezon City where he was operated for a gall bladder dysfunction on
November 13, 1978. 8
On November 17, 1978, petitioner filed an Omnibus Motion to Lift his Order of Arrest, to
set aside the order of default and to reset the hearing of November 27, 1978 and December
1, 1978 on account of his illness and subsequent surgical operation.
Acting on the motion, respondent judge in an Order dated November 23, 1978 lifted the
Order of Arrest of the petitioner but denied his motion to set aside the order of default and
the resetting of the scheduled hearing. 9
On November 27, 1978, petitioner filed a motion for reconsideration of said Order of
November 23, 1978 but the same was denied on December 1, 1978. 10
Hence, this petition alleging grave abuse of discretion on the part of the respondent judge
in denying his motion to lift the order of default in spite of the fact that the latter had
already lifted the order of arrest against petitioner after finding petitioner's absence in the
October 9, 1978 hearing excusable due to the latter's illness as supported by the affidavit
of the petitioner's physician stating the severity of petitioner's illness which caused the
latter not to attend the scheduled hearing.
To begin with, the respondent court's act of ordering petitioner's arrest is patently illegal.
There is nothing in the Rules which authorizes the trial court to order the arrest of the
party in default. A party declared in default merely loses the right to be notified of
subsequent proceedings and the right to take part in the trial, 11 until the order of default
is lifted.
With regard to the lifting of the order of default, Section 3, Rule 18 of the Revised Rules of
Court provides that: LibLex

"A party declared in default may at any time after discovery thereof and before judgment
filed a motion under oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable neglect and that he has
a meritorious defense. In such case the order of default may be set aside on such terms
and conditions as the judge may impose in the interest of justice."

Where the failure to appear at the pre-trial hearing was uncontrovertedly due to illness,
the default order may be set aside on the ground of accident over which petitioner had no
control as in the case at bar. Inasmuch as the respondent judge had already lifted the order
of arrest after finding petitioner's absence excusable, it therefore follows that said judge
should have also set aside the order of default. Thus, the basis for lifting petitioner's order
of arrest should also apply to the order of default since both orders were issued on
petitioner's non-appearance on October 9, 1978.

On the matter of the petition for prohibition, the same is dismissed in view of the
separation of the respondent judge from the judiciary as stated in the petitioner's
Manifestation dated October 3, 1988. 12

WHEREFORE, the petition for certiorari is hereby GRANTED and the order of default dated
October 9, 1978 is hereby annulled and lifted. The respondent court is ordered to set Civil
Case No. 164 for pre-trial and trial with notice to petitioner. The petition for prohibition is
DISMISSED and the issuance of a preliminary injunction restraining respondent judge
from proceeding over Civil Case No. 164 is DENIED.

SO ORDERED.
Melencio-Herrera, Paras, Padilla and Nocon, JJ ., concur.
THIRD DIVISION
[G.R. No. 78885. February 26, 1990.]
FILINVEST LAND, INC., petitioner, vs. THE HON. COURT OF APPEALS and
PHILIPPINE UNDERWRITERS FINANCE CORPORATION, respondents.
Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
Salva, Villanueva & Associates for private respondent.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT BY DEFAULT; SUSTAINED AS
CIRCUMSTANCES IN CASE AT BAR SHOW PATTERN ON INEXCUSABLE NEGLECT, IF NOT
DELIBERATE DELAY. While it is true that this Court in many earlier cases has remained
faithful to the principle that courts should be liberal in setting aside orders of default for
default judgments are frowned upon (Montinola, Jr. v. Republic Planters Bank, 161 SCRA
45 [1988]) the Court finds that the order of default must be sustained in the case at bar. In
all of the six (6) motions (for postponement), the private respondent's counsel chose to
justify their requests on the basis of the inability to read the records because of too much
work, or heavy pressure of work, illness of counsel or a rather frivolous reason such as the
unexpected wedding of one of the counsel. The firm had several lawyers and the motions
were alternately filed by the four counsel. If the sixth motion had not been denied then the
court would probably have had another succession of requests for extensions of time. The
pattern of inexcusable neglect, if not deliberate delay is all too clear. (Development
Insurance Corporation v. Intermediate Appellate Court, 143 SCRA 62 [1986]).
2. ID.; ID.; ID.; ID.; INABILITY OF FOUR LAWYERS TO PREPARE ANSWER FOR LONG
PERIOD OF TIME, NOT JUSTIFIED. Equity and justice should also be considered for both
party litigants. The private respondent was given extraordinary opportunity to have its
day in court when the lower court had given it a total of eighty-eight (88) days from service
of summons to file its answer to the complaint. The inability of four (4) lawyers to prepare
the answer for this long period of time is to our mind not justified.
3. ID.; ID.; PLEADINGS AND PRACTICE; THIRD-PARTY COMPLAINT; MUST SHOW
THAT THIRD-PARTY DEFENDANT MAY BE HELD LIABLE TO DEFENDANT OR TO
PLAINTIFF FOR ALL OF LATTER'S CLAIM AGAINST DEFENDANT. We agree with the
lower court that the third-party complaint of Philfinance against Aboitiz does not pass the
test of admissibility. For a third-party complaint to be admissible, it must be shown that
the third-party defendant may be held liable to the defendant or to the plaintiff for all of
the latter's claim against the defendant. The allegations of the third-party complaint (re:
legality or illegality of the money placements) involve transactions purely between Aboitiz
and Philfinance. Whatever defenses the Aboitiz Group may have against Philfinance can
not be validly raised against Filinvest's claim since said transaction between Philfinance
and Aboitiz is entirely different and foreign to Filinvest's complaint for the recovery of
possession of the subject premises.
4. CIVIL LAW; LAND REGISTRATION; TORRENS SYSTEM OF REGISTRATION;
INNOCENT PURCHASER FOR VALUE OF REGISTERED LAND HAS ALL THE RIGHT TO
DEPEND ON CONCLUSIVENESS AND INDEFEASIBILITY OF TITLE AS GUARANTEED
THEREUNDER. Filinvest merely relies on the indefeasibility and incontrovertibility of
the Transfer Certificate of Title of the Aboitiz Group over the subject properties. As an
innocent purchaser for value of a registered land, it has all the right to depend on the
conclusiveness and indefeasibility of the title as guaranteed under the Torrens System of
Registration.
5. REMEDIAL LAW; CIVIL PROCEDURE; ORDER OF DEFAULT; ORDER OF DEFAULT
NOT TO BE SET ASIDE WHERE PARTY HELD IN DEFAULT HAS NO VALID DEFENSE IN HIS
FAVOR. Considering private respondent's failure to establish a valid defense, we
therefore do not find any abuse of discretion on the part of the lower court in denying the
motion to lift the order of default. As we stated in the Pahilanga case, (supra) "[N]othing
would be gained by having the order of default set aside where the party held in default
has no valid defense in his favor for in such case, he will just the same fail on the merits
even if the default order is lifted." [Development Insurance Corporation v. Intermediate
Appellate Court, G.R. No. 71360, July 16, 1986, 143 SCRA 62]
DECISION
GUTIERREZ, JR., J p:
The issue in this case is whether or not the respondent was properly declared in default.
We are asked to review the decision of the Court of Appeals, the dispositive portion of
which reads:
ACCORDINGLY, for all the foregoing considerations, all the appealed Orders, Decision, and
Resolution are hereby nullified, lifted and set aside, the defendant's Answer with
counterclaim, as well as the Third-Party Complaint, admitted, and the case remanded to
the court a quo for further proceedings. No costs.
The following facts as found by the Court of Appeals are not in dispute:
"On October 10, 1983, plaintiff Filinvest Land Incorporated filed with the Regional Trial
Court of Makati, Metro Manila, a complaint dated September 30, 1983, against the
defendant Philippine Underwriters Finance Corporation, both corporations being
organized and existing under Philippine laws, for Recovery of Possession of a parcel of
land, Lot No. 3, Block 13 of the consolidation-subdivision plan (LRC) Pcs-6254, containing
an area of 999 square meters, located along Benavidez Street, Legaspi Village, Makati,
Metro Manila, including an unfinished seven-storey building thereon, alleging that it is the
owner thereof as evidenced by Transfer Certificate of Title No. S-109458, issued in its
favor on July 28, 1981, but which is occupied by the defendant to house some of its offices,
and who, inspite of repeated demands by the plaintiff, has refused to vacate the same.
"Summons, together with a copy of the complaint, was served upon the defendant on
October 13, 1983. A motion dated October 24, 1983 was filed by defendant, through Atty.
Emerito T. Salva, requesting for an extensions of twenty (20) days from October 28, 1983,
or up to November 17, 1983, on the ground that undersigned counsel had to confer with
the officers of the corporation conversant with the facts of the case and to go over
voluminous documents and other related cases, which was granted by the court. A second
motion for extension of fifteen (15) days dated November 16, 1983, or up to December 2,
1983, to file an answer was filed by the defendant, through Atty. Pastor M. Reyes, Jr., on
the ground that the transactions involved voluminous records and in order to prepare an
intelligent answer, undersigned counsel had to read all the records in his possession in
addition to the heavy pressure of work in other equally important cases, which was also
granted by the court. Then a third motion for extension to file an answer dated December
1, 1983 for ten (10) days was filed by defendant, through Atty. Angel D. Bautista, Jr., or up
to December 12, 1983, on the ground that the lawyer assigned to handle this case was
quite busy preparing for his wedding, as well as daily court appearances, which was
similarly granted by the court on December 5, 1983.
"In a motion dated December 10, 1983, an urgent request for another extension of twenty
(20) days from December 12, 1983, on the ground that the issues to be brought up for
judicial scrutiny in the answer and in the third party complaint of defendant are very
controversial, complicated and difficult requiring careful analysis, study and research, was
filed by defendant, through Atty. Magno F. Salva, and which was likewise granted by the
court.
"Then for the fifth time, defendant filed another urgent motion for extension of time to file
its answer, dated December 28, 1983, asking for another twenty (20) days from January
1, 1984, on the following grounds: the heavy pressure of work in pending cases before the
Securities and Exchange Commission; the preparation of other pleadings, motions,
memoranda and papers in other cases; the preparation and attendance in the trial of cases
before the Regional Trial Courts of Metro Manila, all of which would prevent counsel for
defendant from being able to file their answer on or before January 1, 1984. This was also
granted by the court, but only for five (5) days from receipt of the order dated January 3,
1984, which was received by defendant's counsel on January 4, 1984, and which would
then expire on January 9, 1984.
"Finally, another verified urgent motion dated January 7, 1984, asking for a final and last
extension of ten (10) days from January 9, 1984, was filed by defendant's counsel on the
ground that Atty. Emerito Salva, who was the one personally studying and preparing the
answer, was stricken ill and collapsed in his house due to lobar pneumonia on December
18, 1983, and was bedridden for ten (10) days, as shown by the sworn medical certificate
issued by his attending physician (Annex "A"). Besides, even while still recuperating, he
had to file a lengthy motion for reconsideration in the case of Philfinance, pending before
the SEC, regarding the order of liquidation thereon, as well as a brief in IAC Case No. DV-
00931. This motion was denied on January 9, 1984.
"On January 10, 1984, the day immediately following the extended period up to January 9,
1984, plaintiff, through counsel, filed a motion to declare defendant in default and be
allowed to adduce evidence ex-parte. On the same date, January 10, 1984, the lower court
issued an order which was received by defendant on January 17, 1984, declaring the
defendant in default, and allowing the plaintiff to adduce evidence ex-parte. A hearing ex-
parte was conducted and terminated that same day, January 10, 1984.
"The very next day, January 11, 1984, a two-page decision was rendered by the lower court
in favor of the plaintiff and against the defendant, the dispositive portion of which is
hereunder quoted:
"'WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering the latter to vacate the building and lot thereon, and turn over the
possession thereof to the plaintiff.'"
SO ORDERED."'
"A verified Answer with Counterclaim dated January 9, 1984, consisting of fifteen (15)
pages, excluding its annexes, was filed by the defendant on January 12, 1984, at 8:00
o'clock in the morning, which denied plaintiffs claims and averred that Transfer Certificate
of Title No. S-109458 and Transfer Certificate of Title No. 109809, and all the transactions
or documents executed by Hermilo V. Rodis, Sr., President of defendant Philfinance, in
favor of the Aboitiz Group, which led to the issuance of said titles were without
consideration and thus null and void, illegal and invalid, as well as unauthorized, and the
deed of sale between the Aboitiz Group and the plaintiff was done in bad faith, and that
while said parcel of land and the unfinished seven-storey building thereon were under
receivership by the Securities and Exchange Commission, the defendant was still the
owner thereof and entitled to its possession.
"On January 25, 1984, defendant filed a sworn and verified motion/petition for: (a) the
reconsideration of the order dated January 9, 1984 in order to admit defendant's answer
filed on January 12, 1984 at 8:00 o'clock A.M.; (b) the setting aside of the default judgment
dated January 11, 1984; and (c) leave to file, and the admission of defendant's Third Party
Complaint attached to the motion/petition, against Filinvest Credit Corp., Aboitiz & Co.,
Inc., Pillsbury Mindanao Flour Milling Co., Inc., Cebu Shipyard & Engineering Works, Inc.,
Enrique M. Aboitiz, Vidal Aboitiz, Lucy Ugarte and Alberto Rotaeche as Third-Party
Defendants.
"On February 7, 1984, plaintiff filed its opposition to defendant's motion/petition, to
which defendant filed a verified reply on February 17, 1984, both pleadings substantially
reiterating their prior arguments and issues raised in their earlier pleadings.
"In a rather long and extended 12-page single-space Resolution dated March 19, 1984, the
lower court denied defendant's motion/petition in this wise:
"WHEREFORE, finding the neglect of defendant's counsel to file the answer to the
complaint for a period of ninety (90) days to be inexcusable; that there being no prima
facie case showing that defendant has a meritorious defense to warrant the change of the
decision already rendered and considering that the matter alleged in the third-party
complaint is foreign to the issues subject of the complaint which is only proper to be a
subject of a separate complaint, this Court hereby denies defendant's motion/petition for
(a) reconsideration of the order dated January 9, 1984; (b) setting aside of the default
judgment dated January 11, 1984 and (c) leave to file and admission of defendant's third-
party complaint." (At pp. 89-92, Rollo).
As earlier stated, the Court of Appeals set aside the trial court's order, decision, and
resolution. LexLib
The petitioner alleges that the Court of Appeals erred:
I In finding that private respondent's failure to answer the complaint in a period of
ninety (90) days is excusable and that having been declared in default is a denial to have
its day in court.
II In finding that there was substantial compliance by private respondent of the
requirements of submission of affidavit of merits in its motion to admit answer; lift order
of default and default judgment and also erred in citing jurisprudence not applicable to the
case.
III In faulting the lower court for the failure of private respondent to prove its
meritorious defense.
IV In ruling that the third-party complaint by private respondent should be admitted
on the sole ground that the third-party defendant is the predecessor in interest of
petitioner. (At page 15, Rollo)
As earlier stated, the real issue in this case is whether or not the Court of Appeals
committed reversible error in setting aside the order of default dated January 10, 1984 of
the lower court.
While it is true that this Court in many earlier cases has remained faithful to the principle
that courts should be liberal in setting aside orders of default for default judgments are
frowned upon (Montinola, Jr. v. Republic Planters Bank, 161 SCRA 45 [1988]) the Court
finds that the order of default must be sustained in the case at bar.
The petitioner filed its complaint on October 10, 1983. Summons and a copy of the
complaint were served on the private respondent on October 13, 1983. From October 28,
1983 up to January 9, 1984, private respondent's counsel, through four (4) of its lawyers
filed no less than six (6) motions for extension of time asking for a total of ninety eight
(98) days from October 13, 1983 to January 21, 1984 to answer the complaint.
The lower court granted the five (5) motions and denied the sixth motion before it
declared Philfinance in default. All in all, the lower court gave the private respondent
eighty-eight (88) days to answer the complaint, so it can not be stated that the trial court
has in any way unduly favored the petitioner neither can it be considered that private
respondent has been denied due process.
In reversing the default judgment, the respondent court relied on the contention that
Philfinance was placed under receivership making it difficult for its lawyers to have access
to the records of the corporation. The court stated: LLjur
". . . It is a matter of official record that the defendant Philippine Underwriters Finance
Corporation (Philfinance for short) had been placed under receivership by the Securities
and Exchange Commission (SEC), thus making it rather difficult for the defendant's
counsel to have access to the records of said corporation. Such records, as would naturally
be expected of a corporation of its size and type of business, are voluminous, and ferreting
the relevant facts and documents to support them would not be an easy task, as it proved
to be. Besides, the placing of the defendant under receivership by the SEC deprived the
corporation's officers of the full control of its operations, assets and records. (Rollo, p. 93)
Certainly, the trial court took into consideration the private respondent's situation which
is the reason why it allowed the several extensions of time in the exercise of extreme
leniency. But much as we would like to sympathize with private respondent's plight and
agree that its counsel indeed had difficulty with the records of the corporation, such
reason is not only insufficient to explain six motions for postponement but was also
belatedly raised. It was a mere afterthought on the part of counsel when he raised such
reason after they were already adjudged in default. In all of the six (6) motions, the private
respondent's counsel chose to justify their requests on the basis of the inability to read the
records because of too much work, or heavy pressure of work, illness of counsel or a rather
frivolous reason such as the unexpected wedding of one of the counsel. The firm had
several lawyers and the motions were alternately filed by the four counsel. If the sixth
motion had not been denied then the court would probably have had another succession
of requests for extensions of time. The pattern of inexcusable neglect, if not deliberate
delay is all too clear. (Development Insurance Corporation v. Intermediate Appellate
Court, 143 SCRA 62 [1986]). Equity and justice should also be considered for both party
litigants. The private respondent was given extraordinary opportunity to have its day in
court when the lower court had given it a total of eighty-eight (88) days from service of
summons to file its answer to the complaint. The inability of four (4) lawyers to prepare
the answer for this long period of time is to our mind not justified.
We reiterate the Court's ruling in the case of Pahilanga v. Luna, 164 SCRA 725 [1988],
where we stated that:
It is within the sound discretion of the court to set aside an order of default and to permit
a defendant to file his answer and to be heard on the merits even after the reglementary
period for the filing of the answer has expired, but it is not error, or an abuse of discretion,
on the part of the court to refuse to set aside its order of default and to refuse to accept the
answer where it finds no justifiable reason for the delay in the filing of the answer. In
motions for reconsideration of an order of default, the moving party has the burden of
showing such diligence as would justify his being excused from not filing the answer
within the reglementary period as provided by the Rules of Court, otherwise, these
guidelines for an orderly and expeditious procedure would be rendered meaningless.
Unless it is shown clearly that a party has justifiable reason for the delay the court will not
ordinarily exercise its discretion in his favor (Emphasis supplied.)"
Going over the records, we agree that the motion to lift the order of default was properly
denied in view of the absence of any meritorious defense interposed by the private
respondent.
Philfinance has not asserted any leasehold or other possessory right over the properties
independent of their ownership. It mainly anchors its claim of ownership upon the
contention that Filinvest's Torrens Title to the property is void because the original
transfer of the properties from Philfinance to Filinvest's immediate predecessor-in-
interest, Aboitiz and Company, Inc. (Aboitiz Group) was not authorized by Philfinance's
Board of Directors. This Court gives more credence to the lower court's finding, to wit:
Contrary to the allegation of the defendant that the deed of assignment of the premises in
question executed by the former President of Philfinance was without the knowledge and
approval by the Board of Directors, records show that said deed of assignment was
executed pursuant to the authority given by the Board of Directors of Philfinance in
Resolution No. SB-81 passed during the meeting of the Board of Directors held on
February 25, 1981 as per Secretary's Certificate issued by Mr. Vivencio R. Alcasid, the duly
elected and qualified Corporate Secretary of Philfinance (Annex 'A' Plaintiffs opposition
to defendant's motion/petition).
In its efforts to prove that there was no meeting of the Board of Directors of defendant
Philfinance on February 25, 1981 which passed Resolution No. SB-81 aforementioned,
defendant, in its reply to opposition to motion/petition, submitted copies of the affidavits
of several persons (Annexes K to K-15). Examination of these affidavits, however,
disclosed that the affiants did not execute their affidavits as members of the Board of
Directors or as officers of defendant Philfinance, but as members of the Board of Directors
of Sterling Life Assurance Corporation and that of Filriters Guaranty Assurance
Corporation attesting to the fact that there were no meetings of the Board of Directors of
said corporation on February 25, 1981 whereby minutes were allegedly passed
authorizing Atty. Hermilo V. Rodis to assign to Insular Bank of Asia and America its rights
over the deed of sale with mortgage of Units A; B; C and D of the Sterlinglife Condominium
and the assignment of the rights of Filriters Guaranty Corp. of the 3rd and 4th floors of
Sterlinglife Condominium and the disposal of its CBCI'S.
Defendant also attached in its reply, copy of the affidavit of Mr. Vivencio R. Alcasid, the
duly elected and qualified Secretary to the Board of Directors of Philfinance who issued
and signed the Secretary's Certificate (Annex A-Plaintiffs opposition). Said affidavit of Mr.
Alcasid, however, was executed by him in his capacity as the duly elected and qualified
Corporate Secretary of the Filriters Guaranty Assurance Corporation and he was talking
on matters relative to assets of said company. There was nothing mentioned on resolution on the merits even if the default order is lifted [Development Insurance Corporation v.
No. SB-81 by the Board of Directors of Philfinance. cdphil Intermediate Appellate Court, G.R. No. 71360, July 16, 1986, 143 SCRA 62]".

While it is true that Mr. Ricardo C. Silverio, Sr. executed his affidavit (Annex K) as the
Chairman of the Board of Directors of defendant Philfinance, nevertheless, he only denied
that there was board meeting on February 25, 1981 whereby a resolution was allegedly
passed authorizing Mr. Hermilo V. Rodis to pledge the shares of stocks of Insular Bank of
Asia and America and the assignment of rights over 1st, 2nd, 3rd and 4th floors of Sterling
Life Condominium. There was nothing therein which mentioned Resolution No. SB-81 and
of the lot and building subject of the present case. The same manner also as to the affidavit
of Mr. Bienvenido L. Reyes, the Assistant Corporate Secretary of Philfinance. All the said
annexes, therefore, have no value or weight in assailing the due execution of Resolution
No. SB-81 (Annex A Opposition) as well as the Deed of Assignment executed by Mr.
Hermilo V. Rodis (Annex A Answer). So to speak, nothing has been done yet by the
Board of Directors of defendant Philfinance in assailing the validity of said resolution and
deed of assignment, not until now when the instant complaint was filed, but by mere
allegations without documentary proofs. The inaction by the Board of Directors of
defendant Philfinance in assailing Resolution No. SB-81 and the deed of assignment
aforementioned for the last three (3) years and up to the present, clearly indicates its
acquiescence or knowledge of the matters subject thereof." (Rollo, pp. 82-83)
Considering the above, we fail to see how mere denials can prevail over convincing
evidence on record.
This Court reiterates that it is concerned with the heavy caseloads of courts at all levels.
Most of the delays for which the justice system is assailed come from failure of counsel to
cooperate with candor and will in the speedy resolution of cases. We have instituted
continuous trial. We are revising the Rules of Court to make them responsive to current
problems. We call judges to task when their cases are not adjudicated with accuracy and
dispatch. The least we can do is sustain them when they come across litigants like the
private respondent in this case.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The
questioned decision of the Court of Appeals is REVERSED and SET ASIDE and the
resolution of the Regional Trial Court dated March 19, 1984 is REINSTATED. cdphil
SO ORDERED.
Fernan, C.J., Bidin and Cortes, JJ., concur.
Feliciano, J., took no part.

Furthermore, in assailing the transfer of said properties to Aboitiz Group, Philfinance

alleges that there was no valid consideration given in exchange of the deed of assignment.
It prayed that its third-party complaint against the Aboitiz Group be admitted considering
that the money placement made by Aboitiz in the amount of P19,800,000.00 was illegal
and anomalous and that the trading of commercial papers relative thereto was unlawful
and fraudulent since said commercial papers were fake and spurious. Hence, the deed of
assignment of the premises in question (in favor of Aboitiz) was null and void and without
effect.

We agree with the lower court that the third-party complaint of Philfinance against Aboitiz
does not pass the test of admissibility. For a third-party complaint to be admissible, it must
be shown that the third-party defendant may be held liable to the defendant or to the
plaintiff for all of the latter's claim against the defendant. The allegations of the third-party
complaint (re: legality or illegality of the money placements) involve transactions purely
between Aboitiz and Philfinance. Whatever defenses the Aboitiz Group may have against
Philfinance can not be validly raised against Filinvest's claim since said transaction
between Philfinance and Aboitiz is entirely different and foreign to Filinvest's complaint
for the recovery of possession of the subject premises. Filinvest merely relies on the
indefeasibility and incontrovertibility of the Transfer Certificate of Title of the Aboitiz
Group over the subject properties. As an innocent purchaser for value of a registered land,
it has all the right to depend on the conclusiveness and indefeasibility of the title as
guaranteed under the Torrens System of Registration. cdrep

Considering private respondent's failure to establish a valid defense, we therefore do not

find any abuse of discretion on the part of the lower court in denying the motion to lift the
order of default. As we stated in the Pahilanga case, (supra):
". . . [N]othing would be gained by having the order of default set aside where the party
held in default has no valid defense in his favor for in such case, he will just the same fail
FIRST DIVISION
GUILLERMA S. SABLAS, G.R. No. 144568
joined by her husband,
PASCUAL LUMANAS,
Petitioners, Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,*
- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.
ESTERLITA S. SABLAS and
RODULFO S. SABLAS,
Respondents. Promulgated:
July 3, 2007
DECISION
CORONA, J.:
This case traces its roots to a complaint for judicial partition, inventory and accounting
filed by respondents Esterlita S. Sablas and Rodulfo S. Sablas against petitioner spouses
Pascual Lumanas and Guillerma S. Sablas in the Regional Trial Court of Baybay, Leyte,
Branch 14[1] on October 1, 1999.[2]
Petitioner spouses were served with summons and a copy of the complaint on October 6,
1999. On October 21, 1999, they filed a motion for extension of time requesting an
additional period of 15 days, or until November 5, 1999, to file their answer. However,
they were able to file it only on November 8, 1999. While the trial court observed that the
answer was filed out of time, it admitted the pleading because no motion to declare
petitioner spouses in default was filed.[3]
The following day, November 9, 1999, respondents filed a motion to declare petitioner
spouses in default.[4] It was denied by the trial court in an order dated December 6,
1999.[5] Respondents moved for reconsideration but it was also denied.[6] Thereafter,
they challenged the December 6, 1999 order in the Court of Appeals in a petition for
certiorari[7] alleging that the admission of the answer by the trial court was contrary to
the rules of procedure and constituted grave abuse of discretion amounting to lack of
jurisdiction.
In a decision dated July 17, 2000,[8] the appellate court ruled that the trial court
committed grave abuse of discretion because, pursuant to Section 3, Rule 9 of the Rules of
Court, the trial court had no recourse but to declare petitioner spouses in default when
they failed to file their answer on or before November 5, 1999. Thus, the Court of Appeals
granted the petition, vacated the December 6, 1999 order and remanded the case to the
trial court for reception of plaintiffs evidence.
Aggrieved, petitioner spouses (defendants in the trial court) now assail the July 17, 2000
decision of the Court of Appeals in this petition for review on certiorari.[9]
Petitioner spouses contend that the Court of Appeals decision was not in accord with the
rules of procedure as it misconstrued Section 3, Rule 9 of the Rules of Court and was in
contravention of jurisprudence.
We agree.
WHERE THERE IS NO MOTION, THERE
CAN BE NO DECLARATION OF DEFAULT
The elements of a valid declaration of default are:
1. the court has validly acquired jurisdiction over the person of the defending party
either by service of summons or voluntary appearance;[10]
2. the defending party failed to file the answer within the time allowed therefor
and
3. a motion to declare the defending party in default has been filed by the claiming
party with notice to the defending party.
An order of default can be made only upon motion of the claiming party.[11] It can be
properly issued against the defending party who failed to file the answer within the
prescribed period only if the claiming party files a motion to that effect with notice to the
defending party.
In this connection, Section 3, Rule 9 of the Rules of Court provides:
SEC. 3. Default: Declaration of. If the defending party fails to answer within the time
allowed therefor, the court shall, upon motion of the claiming party with notice to the
defending party, and proof of such failure, declare the defending party in default. x x x.
(emphasis supplied)
Three requirements must be complied with before the court can declare the defending
party in default: (1) the claiming party must file a motion asking the court to declare the
defending party in default; (2) the defending party must be notified of the motion to
declare him in default and (3) the claiming party must prove that the defending party has
failed to answer within the period provided by the Rules of Court.[12]
The rule on default requires the filing of a motion and notice of such motion to the
defending party. It is not enough that the defendant fails to answer the complaint within
the reglementary period.[13] The trial court cannot motu proprio declare a defendant in
default[14] as the rules leave it up to the claiming party to protect his or its interests. The
trial court should not under any circumstances act as counsel of the claiming party.
WHERE THERE IS NO DECLARATION OF DEFAULT, ANSWER MAY BE ADMITTED EVEN
IF FILED OUT OF TIME
It is within the sound discretion of the trial court to permit the defendant to file his answer
and to be heard on the merits even after the reglementary period for filing the answer
expires.[15] The Rules of Court provides for discretion on the part of the trial court not
only to extend the time for filing an answer but also to allow an answer to be filed after the
reglementary period.[16]
Thus, the appellate court erred when it ruled that the trial court had no recourse but to
declare petitioner spouses in default when they failed to file their answer on or before
November 5, 1999.

The rule is that the defendants answer should be admitted where it is filed before a
declaration of default and no prejudice is caused to the plaintiff.[17] Where the answer is
filed beyond the reglementary period but before the defendant is declared in default and
there is no showing that defendant intends to delay the case, the answer should be
admitted.[18]

Therefore, the trial court correctly admitted the answer of petitioner spouses even if it
was filed out of time because, at the time of its filing, they were not yet declared in default
nor was a motion to declare them in default ever filed. Neither was there a showing that
petitioner spouses intended to delay the case.

WHERE ANSWER HAS BEEN FILED, THERE CAN BE NO DECLARATION OF DEFAULT

ANYMORE

Since the trial court already admitted the answer, it was correct in denying the subsequent
motion of respondents to declare petitioner spouses in default.

In Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr.,[19] the Court ruled that it was error to
declare the defending party in default after the answer was filed. The Court was in fact
even more emphatic in Indiana Aerospace University v. Commission on Higher
Education:[20] it was grave abuse of discretion to declare a defending party in default
despite the latters filing of an answer.

The policy of the law is to have every litigants case tried on the merits as much as possible.
Hence, judgments by default are frowned upon.[21] A case is best decided when all
contending parties are able to ventilate their respective claims, present their arguments
and adduce evidence in support thereof. The parties are thus given the chance to be heard
fully and the demands of due process are subserved. Moreover, it is only amidst such an
atmosphere that accurate factual findings and correct legal conclusions can be reached by
the courts.

Accordingly, the petition is hereby GRANTED. The July 17, 2000 decision of the Court of
Appeals in CA-G.R. SP No. 57397 is REVERSED and SET ASIDE and the December 6, 1999
order of the Regional Trial Court of Baybay, Leyte, Branch 14 is REINSTATED. The case is
REMANDED to the trial court for further proceedings.

SO ORDERED.
FIRST DIVISION
[G.R. No. 133657. May 29, 2002]
REMINGTON INDUSTRIAL SALES CORPORATION, petitioner, vs. THE COURT OF
APPEALS and BRITISH STEEL (ASIA), LTD., respondents.
DECISION
YNARES-SANTIAGO, J.:
Before us is a petition for review under Rule 45 of the Rules of Court assailing the decision
of the Court of Appeals in CA-G.R. SP No. 44529 dated February 24, 1998, which granted
the petition for certiorari filed by respondent British Steel Asia Ltd. (British Steel) and
ordered the dismissal of petitioner Remington Industrial Sales Corporations (Remington)
complaint for sum of money and damages. Also assailed in this petition is the resolution
of the Court of Appeals denying petitioners motion for reconsideration.
The facts of the case, as culled from the records, are as follows:
On August 21, 1996, petitioner filed a complaint for sum of money and damages arising
from breach of contract, docketed as Civil Case No. 96-79674, before 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 Ferro Trading GMBH
(Ferro) and respondent British Steel as alternative defendants.
ISL and respondent British Steel separately moved for the dismissal of the complaint on
the ground that it failed to state a cause of action against them. On April 7, 1997, the RTC
denied the motions to dismiss, as well as the ensuing motion for reconsideration. ISL then
filed its answer to the complaint.
On the other hand, respondent British Steel filed a petition for certiorari and prohibition
before the Court of Appeals, docketed as CA-G.R. SP No. 44529. Respondent claimed
therein that the complaint did not contain a single averment that respondent committed
any act or is guilty of any omission in violation of petitioners legal rights. Apart from the
allegation in the complaints Jurisdictional Facts that:
1.05. Defendants British Steel (Asia) Ltd. and Ferro Trading Gmbh, while understood by
the plaintiff as mere suppliers of goods for defendant ISL, are impleaded as party
defendants pursuant to Section 13, Rule 3 of the Revised Rules of Court.
no other reference was made to respondent that would constitute a valid cause of action
against it. Since petitioner failed to plead any cause of action against respondent as
alternative defendant under Section 13, Rule 3, the trial court should have ordered the
dismissal of the complaint insofar as respondent was concerned.
Meanwhile, petitioner sought to amend its complaint by incorporating therein additional
factual allegations constitutive of its cause of action against respondent. Pursuant to
Section 2, Rule 10 of the Rules of Court, petitioner maintained that it can amend the
complaint as a matter of right because respondent has not yet filed a responsive pleading
thereto.
Subsequently, petitioner filed a Manifestation and Motion in CA-G.R. SP No. 44529 stating
that it had filed a Motion to Admit Amended Complaint together with said Amended
Complaint before the trial court. Hence, petitioner prayed that the proceedings in the
special civil action be suspended.
On January 29, 1998, the trial court ruled on petitioners Motion to Admit Amended
Complaint thus:
WHEREFORE, the Amended Complaint is NOTED and further proceedings thereon and
action on the other incidents as aforementioned are hereby held in abeyance until final
resolution by the Honorable Court of Appeals (Special 6th Division) of the petition for
certiorari and prohibition of petitioner (defendant British) and/or Manifestations and
Motions of therein private respondent, herein plaintiff.
SO ORDERED.
Thereafter, on February 24, 1998, the Court of Appeals rendered the assailed decision in
CA-G.R. SP No. 44529 as follows:
WHEREFORE, this Court grants the writ of certiorari and orders the respondent judge to
dismiss without prejudice the Complaint in Civil Case No. 96-79674 against petitioner
British Steel (Asia) Ltd. Costs against private respondent.
SO ORDERED.
In the same decision, the Court of Appeals addressed petitioners prayer for suspension of
proceedings in this wise:
The incident which transpired after the filing of the instant petition for certiorari and
prohibition are immaterial in the resolution of this petition. What this Court is called upon
to resolve is whether the lower court committed grave abuse of discretion when it denied
petitioners motion to dismiss the complaint against it. The admission or rejection by the
lower court of said amended complaint will not, insofar as this Court is concerned, impinge
upon the issue of whether or not said court gravely abused its discretion in denying
petitioners motion to dismiss.
Petitioner filed a motion for reconsideration of the appellate courts decision, which was
denied in a resolution dated April 28, 1998. Hence, this petition, anchored on the following
grounds:
-I-
THE HON. COURT OF APPEALS ERRED IN ORDERING THE DISMISSAL OF THE
COMPLAINT AGAINST THE PRIVATE RESPONDENT FOR LACK OF CAUSE OF ACTION
UNDER THE ORIGINAL COMPLAINT EVEN AS SAID COMPLAINT WAS ALREADY
AMENDED AS A MATTER OF RIGHT AND SUFFICIENT CAUSES OF ACTION ARE AVERRED
IN THE AMENDED COMPLAINT, IN GROSS VIOLATION OF SEC. 2, RULE 10 OF THE 1997
RULES OF CIVIL PROCEDURE.
-II-
THE HON. COURT OF APPEALS ERRED IN HOLDING THAT IF THE PETITIONER WANTS
TO PURSUE ITS CASE AGAINST THE PRIVATE RESPONDENT, IT HAS TO REFILE THE
COMPLAINT, THUS PRE-EMPTING THE RIGHT OF THE LOWER COURT TO RULE ON THE
AMENDED COMPLAINT AND COMPELLING THE PETITIONER TO LITIGATE ITS CAUSES
OF ACTION AGAINST THE PRIVATE RESPONDENT AS AN ALTERNATIVE DEFENDANT IN
A SEPARATE ACTION, THEREBY ABETTING MULTIPLICITY OF SUITS.
The basic issue in this case is whether or not the Court of Appeals, by granting the
extraordinary writ of certiorari, correctly ordered the dismissal of the complaint for
failure to state a cause of action, despite the fact that petitioner exercised its right to amend
the defective complaint under Section 2, Rule 10 of the Rules of Court. Stated differently,
the query posed before us is: can a complaint still be amended as a matter of right before
an answer has been filed, even if there was a pending proceeding for its dismissal before
the higher court?
Section 2, Rule 10 of the Revised Rules of Court explicitly states that a pleading may be
amended as a matter of right before a responsive pleading is served. This only means that
prior to the filing of an answer, the plaintiff has the absolute right to amend the complaint
whether a new cause of action or change in theory is introduced. The reason for this rule
is implied in the subsequent Section 3 of Rule 10. Under this provision, substantial
amendment of the complaint is not allowed without leave of court after an answer has
been served, because any material change in the allegations contained in the complaint
could prejudice the rights of the defendant who has already set up his defense in the
answer.
Furthermore, we do not agree with respondents claim that it will be prejudiced by the
admission of the Amended Complaint because it had spent time, money and effort to file
its petition before the appellate court. We cannot see how the result could be any different
for respondent, if petitioner merely re-filed the complaint instead of being allowed to
amend it. As adverted to earlier, amendment would even work to respondents advantage
since it will undoubtedly speed up the proceedings before the trial court. Consequently,
the amendment should be allowed in the case at bar as a matter of right in accordance with
the rules.
WHEREFORE, the petition is GRANTED. The assailed decision and resolution of the Court
of Appeals in CA-G.R. SP No. 44529 dated February 24, 1998 and April 28, 1998,
respectively, are REVERSED and SET ASIDE. The Regional Trial Court of Manila, Branch
22 is further ordered to ADMIT petitioners Amended Complaint in Civil Case No. 96-
79674 and to conduct further proceedings in said case.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Austria-Martinez, JJ., concur.

Conversely, it cannot be said that the defendants rights have been violated by changes
made in the complaint if he has yet to file an answer thereto. In such an event, the
defendant has not presented any 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
unqualified opportunity to address the allegations against him by properly setting up his
defense in the answer. Considerable leeway is thus given to the plaintiff to amend his
complaint once, as a matter of right, prior to the filing of an answer by the defendant.
The right granted to the plaintiff under procedural law to amend the complaint before an
answer has been served is not precluded by the filing of a motion to dismiss or any other
proceeding contesting its sufficiency. Were we to conclude otherwise, the right to amend
a pleading under Section 2, Rule 10 will be rendered nugatory and ineffectual, since all
that a defendant has to do to foreclose this remedial right is to challenge the adequacy of
the complaint before he files an answer.

Moreover, amendment of pleadings is favored and should be liberally allowed in the

furtherance of justice in order to determine every case as far as possible on its merits
without regard to technicalities. This principle is generally recognized to speed up trial
and save party litigants from incurring unnecessary expense, so that a full hearing on the
merits of every case may be had and multiplicity of suits avoided.

In this case, the remedy espoused by the appellate court in its assailed judgment will
precisely result in multiple suits, involving the same set of facts and to which the
defendants would likely raise the same or, at least, related defenses. Plainly stated, we
find no practical advantage in ordering the dismissal of the complaint against respondent
and for petitioner to re-file the same, when the latter can still clearly amend the complaint
as a matter of right. The amendment of the complaint would not prejudice respondents
or delay the action, as this would, in fact, simplify the case and expedite its disposition.
The fact that the other defendants below has filed their answers to the complaint does not
bar petitioners right to amend the complaint as against respondent. Indeed, where some
but not all the defendants have answered, the plaintiff may still amend its complaint once,
as a matter of right, in respect to claims asserted solely against the non-answering
defendant, but not as to claims asserted against the other defendants.
FIRST DIVISION
[G.R. No. 149132. May 9, 2002]
JOSEPHINE B. NG and JESSE NG, petitioners, vs. SPOUSES MARCELO and MARIA FE
SOCO, and MARVIN J. SOCO, respondents.
RESOLUTION
KAPUNAN, J.:
This is a petition for review on certiorari filed by Spouses Josephine and Jesse Ng assailing
the Decision, dated December 13, 2000, of the Court of Appeals in CA-G.R. SP No. 45470
which affirmed the trial courts order denying the admission of petitioners amended
complaint. Also sought to be reversed and set aside is the appellate courts Resolution,
dated July 3, 2001, which denied petitioners motion for reconsideration.
The instant case stemmed from the complaint for accounting, injunction and damages with
writ of preliminary injunction and temporary restraining order filed by petitioners against
respondents Spouses Marcelo and Maria Fe Soco and Marvin Soco with the Regional Trial
Court, Branch 37 of Negros Oriental. In their complaint, petitioners alleged that they are
the owners of Jos Chicken Barbecue (Chicken Inato) secret recipe. The said recipe is
used by petitioners chain of restaurants in some cities in the Visayas and Mindanao.
Petitioners further alleged that they entered into a partnership agreement with
respondents to operate a restaurant, the Socos Manokan Nook Restaurant. The
agreement provided that in the event of the dissolution of the partnership, respondents
shall lose the right to use the secret recipe and ownership thereof shall revert back to
petitioners.
Not long after, the aforesaid partnership was dissolved on account of disagreement among
the parties. Believing that respondents continued to operate the same business,
petitioners filed the complaint for accounting with the court a quo. During the hearing on
the petition for the issuance of a writ of preliminary injunction, petitioners learned that a
certain Magno Garcia, respondents nephew, is operating the restaurant under the name
Manokan sa Sugbu.
Upon the belief that Garcia was merely used as dummy by respondents in order to evade
their contractual obligation, i.e., to cease using the secret recipe, petitioners filed with
the trial court a motion to admit amended complaint to implead Garcia as one of the
defendants.
In its Order, dated January 28, 1997, the trial court denied said motion. The amendment
cannot be allowed because, according to the trial court, the amendment now, not only
requires or compels the defendants (respondents herein) to change their defense but also
subjects them to all the acts, knowledge, admission and even the omissions of Magno
Garcia.
On appeal, the Court of Appeals affirmed the order of the trial court. The appellate court
agreed with the court a quo that the amendment could not be allowed, as the same is
substantial and has the effect of changing the theory of the case. The CA likewise held that
Garcia is not an indispensable party, contrary to petitioners allegation. Petitioners moved
for a reconsideration of the appellate courts decision but the same was denied. Hence,
this appeal.
In their petition, petitioners allege that:
The Honorable Court of Appeals gravely erred in holding: that the amended complaint
which merely seeks to include the dummy of the respondents could not be admitted
because petitioners theory of the case is thereby changed and because said dummy is not
an indispensable party.
The petition is bereft of merit.
Section 1, Rule 10 of the Rules of Court provides:
Sec. 1. Amendments in general. - Pleadings may be amended by adding or striking out an
allegation or the name of any party, or by correcting a mistake in the name of a party or a
mistaken or inadequate allegation or description in any other respect, so that the actual
merits of the controversy may speedily be determined, without regard to technicalities,
and in the most expeditious and inexpensive manner.
Further, Sections 2 and 3 of the same Rule provide:
Sec. 2. Amendments as a matter of right. - A party may amend his pleading once as a
matter of right at any time before a responsive pleading is served or, in the case of a reply,
at any time within ten (10) days after it is served.
Sec. 3. Amendments by leave of court. - Except as provided in the next preceding section,
substantial amendments may be made only upon leave of court. But such leave may be
refused if it appears to the court that the motion was made with intent to delay. Orders of
the court upon matters provided in this section shall be made upon motion filed in court,
and after notice to the adverse party, and an opportunity to be heard.
Under the above provisions therefore, formal and substantial amendments to a pleading
may be made at anytime before a responsive pleading has been filed. Such amendment is
a matter of right. Thereafter, and during trial, amendments may only be done with the
permission of the court.
The Court has invariably held that amendments are not proper and should be denied when
delay would arise, or when amendments would result in a change of cause of action or
theory of the case, or would be inconsistent with the allegations in the original complaint.
In this case, the court a quo denied petitioners amended complaint upon finding that it
will substantially alter the cause of action or defense or theory of the case. The trial court
found that respondents defense will be altered by the amendment because they will be
made liable not only for their individual acts but also for the acts of their alleged co-
conspirator Garcia.
The Court agrees with the appellate court that the trial court did not commit any grave
abuse of discretion in denying petitioners amended complaint. The admission thereof
was clearly not a matter of right on the part of petitioners as they sought the same only
after a responsive pleading (in this case, an answer) had already been filed by
respondents. The matter was thus within the discretion of the trial court. And, as
consistently held by this Court, the granting of leave to file amended pleadings is a matter
peculiarly within the sound discretion of the trial court and such discretion would not
normally be disturbed on appeal except when evident abuse thereof is apparent. None
has been shown in this case.
ACCORDINGLY, the petition for review is DENIED for lack of merit.
SO ORDERED.
SECOND DIVISON
[G.R. No. 129313. October 10, 2001]
SPOUSES MA. CRISTINA D. TIRONA and OSCAR TIRONA, SPOUSES MA. PAZ D.
BAUTISTA and CESAR BAUTISTA, SPOUSES MA. ARANZAZU D. ORETA and CANUTO
ORETA, SPOUSES MA. CORAZON D. BAUTISTA and PABLO S. BAUTISTA, JR., and DEO
S. DIONISIO, petitioners, vs. HON. FLORO P. ALEJO as Presiding Judge, Regional Trial
Court of Valenzuela, Metro Manila, Branch 172, JUANITO IGNACIO and LUIS NUEZ,
respondents.
DECISION
QUISUMBING, J.:
This petition for review assails the joint decision[1] dated April 10, 1997, of the Regional
Trial Court of Valenzuela, Branch 172, in Civil Cases Nos. 5169-V-97 and 5093-V-97.
The factual background of this petition are culled from the records of the cases.
A. Civil Case No. 5093-V-97:
On March 25, 1996, herein petitioners sued private respondent Luis Nuez before the
Metropolitan Trial Court of Valenzuela, Branch 81. The suit was docketed as Civil Case No.
6633 for ejectment. Petitioners claimed to be owners of various fishpond lots located at
Coloong, Valenzuela.[2] They alleged, among others that: (1) on January 20, 1996, private
respondent Nuez, by means of force, stealth, or strategy, unlawfully entered the said
fishpond lots and occupied the same against their will, thereby depriving them of
possession of said fishponds; (2) Nuez illegally occupied a house owned by and built on
the lot of petitioner Deo Dionisio; and (3) Nuez unlawfully operated and used petitioners
fishponds, despite their demands to vacate the same. Petitioners prayed that the court
order Nuez to vacate Dionisios house; surrender possession of the fishponds to them;
remove all milkfish fingerlings at his expense; and pay a monthly compensation of
P29,000.00 from January 20, 1996 to the time he surrenders possession, with interest at
twelve percent (12%) yearly until fully paid.
Nuez admitted in his answer that petitioners owned the fishponds, but denied the other
allegations. He raised the following affirmative defenses: (1) the MeTC had no jurisdiction
over the case, for petitioners failure to allege prior physical possession in their complaint;
(2) petitioners action was premature in view of the pendency of a complaint he filed with
the Department of Agrarian Reform Adjudication Board (DARAB), docketed as Case No.
IV-MM-0099-95R, where the issue of possession in the concept of tenancy is the same as
that raised by petitioners in Civil Case No. 6633; and (3) petitioners are guilty of forum-
shopping since they were fully aware of the said DARAB case. He moved that the ejectment
suit be dismissed.
On October 1, 1996, the MeTC of Valenzuela, Branch 81, decided Civil Case No. 6633 as
follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs
and against the defendant and all persons claiming rights under him:
1. To peacefully vacate and surrender the subject premises to the plaintiffs;
2. To peacefully vacate and surrender the house belonging to plaintiff Deo S. Dionisio;
3. To pay the amount of P27,000.00 a month as reasonable compensation from January 20,
1996 up to the time he finally vacates the subject premises;
4. To pay the amount of P10,000.00 as and for attorneys fees; and
5. To pay the costs of suit.
SO ORDERED.[3]
On November 15, 1996, Nuez appealed said decision to the Regional Trial Court of
Valenzuela, which docketed the appeal as Civil Case No. 5093-V-97.
B. Civil Case No. 5169-V-97
On March 25, 1996, petitioners also instituted Civil Case No. 6632 for ejectment against
private respondent Juanito Ignacio with the Metropolitan Trial Court of Valenzuela,
Branch 82. The allegations were essentially the same as those against private respondent
Nuez, except it is alleged that Ignacio also illegally occupied the house constructed on the
lot of, and belonging to the plaintiff Spouses Ma. Paz D. Bautista and Cesar Bautista.
Petitioners sought the same relief prayed for in Civil Case No. 6633.
Ignacio raised similar defenses as those offered by Nuez in Civil Case No. 6633. Like Nuez,
he also moved for dismissal of the ejectment suit against him.
On February 11, 1997, the MeTC of Valenzuela, Branch 82 issued an order dismissing Civil
Case No. 6632 against Ignacio, thus:
WHEREFORE, PREMISES CONSIDERED, defendants motion to cite plaintiffs in contempt
of court is denied, and his other motion to dismiss the case is hereby GRANTED.
Accordingly, the above-entitled case is DISMISSED without pronouncement as to costs.
SO ORDERED.[4]
In granting Ignacios Motion to Dismiss, the MeTC said:
It is now clear to the mind of the Court that the issue of recovery of possession pursued by
plaintiffs in this case is pending also for adjudication among other issues in DARAB Case
No. IV-MM-0099-95. There is no dispute that both this case and the DARAB case involve
the same real property or at least, adjoining lots covered by titles in the names of some of
the plaintiffs, which lots are also involved in this case.
xxx
Clearly, said DARAB case is a prejudicial question to the case at bar, and or vice versa
(stress in the original). The possibility that this Court and the DARAB may come up with
two contradicting decisions on issue of possession shall always be there, and since the
DARAB case was filed first, there appears compelling necessity to halt proceedings in this
case.[5]
On February 27, 1997, petitioners appealed the foregoing Order to the Regional Trial
Court of Valenzuela, which docketed their appeal as Civil Case No. 5169-V-97.
Since Civil Cases Nos. 5093-V-97 and 5169-V-97 involved essentially the same parties, the
same subject matter, and the same issues, the cases were jointly heard before Branch 172
of the RTC of Valenzuela.
On April 10, 1997, Civil Cases Nos. 5093-V-97 and 5169-V-97 were jointly decided.
WHEREFORE, judgment is hereby rendered as follows:
1. Affirming the appealed Order of the trial court dated February 11, 1997 dismissing Civil
Case No. 6632, with the modification that the plaintiffs be made liable to pay the costs of
suit; and
2. Reversing the appealed decision of the trial court dated October 1, 1996 in Civil Case
No. 6633 and dismissing the above-entitled case for the reasons stated above. The
plaintiffs are ordered to pay the costs of suit.
SO ORDERED.[6]
In ruling against herein petitioners, the RTC found:
(1) As correctly pointed out by the counsel for the defendants in his memorandum on
appeal, it is now settled that a complaint for forcible entry to fall within the jurisdiction of
the inferior court must allege plaintiffs prior physical possession of the property by any of
the means provided in Section 1 of Rule 70 of the Revised Rules of Court. Bare allegation
in the complaint that the plaintiff was deprived of the possession of the property is
insufficient to make the action one for forcible entry (citation omitted)
In the instant case, while the complainants allege that the defendants (Ignacio in Civil Case
No. 6632 and Nuez in Civil Case No. 6633) by means of force, stealth or strategy unlawfully
entered the said fishpond lots and occupied the same against the will of the plaintiffs, there
is no allegation that the plaintiffs had prior physical possession of the property in dispute.
The complaint(s) in the above-entitled cases therefore did not fall within the jurisdiction
of the trial courts.
(2) The DARAB case (Case No. IV-MM-0099-95R) between the herein parties and covering
the same subject matter was filed way ahead of the instant cases. The allegation in the
DARAB complaint that the complainants are agricultural or share tenants is opposed to
the claim of the respondents in their answer that the complainants are their industrial
partners. The DARAB case thus presented a dispute that is clearly agrarian in nature.
Under existing lawsthe Department of Agrarian Reform, thru the DARAB, is vested with
exclusive jurisdiction over all agrarian reform matters or agrarian disputes.
The principal issue in the instant cases for forcible entry whether or not to eject the
defendants from the fishponds is necessarily connected with the agrarian dispute now
pending resolution before the DARAB. It is therefore beyond the competence of the
inferior court to resolve.
xxx
(3) The plaintiffs were less than honest in certifying under oath that they have no
knowledge of any case pending before any tribunal or agency involving the same issues
raised in the instant cases. At the time of their certification, there was pending before the
DARAB of a case between the same parties with the same subject matter and where the
issue of possession as raised in the instant cases is necessarily included in the larger issue
of agricultural tenancy. The plaintiffs therefore violated Administrative Order No. 04-94
of the Supreme Court, which is a ground for dismissal.[7]
On May 6, 1997, petitioners filed with the RTC a joint Motion for Leave to Amend
Complaint in Civil Cases Nos. 6632 and 6633 and a Motion for Reconsideration, together
with the proposed Amended Complaints. On May 20, 1997, the RTC denied the
aforementioned motions.
Hence, the instant petition. Petitioners assign the following as errors committed by the
RTC:
1. THE LOWER COURT ERRED IN GIVING PRIME IMPORTANCE TO THE FAILURE OF
PLAINTIFFS TO AVER IN THEIR COMPLAINT(S) THAT THEY WERE IN POSSESSION AT
THE TIME OF THE FORCIBLE ENTRY MADE BY PRIVATE RESPONDENTS.
2. THE LOWER COURT ERRED IN FAILING TO MAKE A FINDING THAT PLAINTIFFS WERE
IN POSSESSION OF THEIR PROPERTIES AT THE TIME OF FORCIBLE ENTRY THEREUNTO
BY PRIVATE RESPONDENTS, FOR WHICH RELIEFS SHOULD HAVE BEEN GRANTED TO
HEREIN PETITIONERS.
3. THE PENDENCY OF THE SUIT FILED BY PRIVATE RESPONDENTS IN THE
DEPARTMENT OF AGRARIAN REFORM DID NOT PROSCRIBE THE INSTITUTION OF THE
EJECTMENT CASE(S).
4. THERE HAD BEEN NO INFRACTION ON THE AFFIDAVIT OF NON-FORUM SHOPPING
REQUIREMENTS.
The main issue for our resolution involves the jurisdiction of the metropolitan trial courts:
was petitioners failure to allege prior physical possession in a case for forcible entry fatal
to the jurisdiction of the inferior courts? Ancillary thereto, we also must inquire (a)
whether the pendency of the Case No. IV-MM-0099-95R before the DARAB barred the
filing of Civil Cases Nos. 6632 and 6633 for forcible entry; and (b) whether petitioners
violated Supreme Court Administrative Circular No. 04-94 proscribing forum shopping.
On the main issue, petitioners contend that the averment of the identities of the persons
in possession of the disputed properties at the time of the forcible entry thereunto is not
jurisdictional in character. Petitioners argue that the deficiency, if any, could have been
remedied by amended or supplemental pleadings or by the submission of admissible
evidence. They point out that the MeTC, Branch 81 in Civil Case No. 6633 had received
evidence of petitioners actual possession, resulting in a finding of fact of actual possession
in its Decision of October 1, 1996. It was, therefore, an error for the RTC to have
disregarded said finding of fact on the ground that the requisites for the MeTC to acquire
jurisdiction over the forcible entry cases had not been complied with. It was likewise error
for the RTC to have denied the admission of petitioners Amended Complaints.
Private respondents argue that a closer scrutiny of the allegations in the complaints in
Civil Cases Nos. 6632 and 6633 filed with the court of origin will clearly show that there is
no allegation whatsoever of prior physical possession on petitioners part. All that is
averred is unlawful deprivation by private respondents. They submit that this glaring
defect is fatal enough to deprive the inferior court of jurisdiction over the forcible entry
cases. With respect to the denial of admission of petitioners Amended Complaints, private
respondents point out that amendments for the purpose of making the complaint confer
jurisdiction upon the court are not allowed.
The jurisdiction of a court is determined by the allegations of the complaint, and the rule
is no different in actions for ejectment.[8] Thus, in ascertaining whether or not the action
is one for forcible entry falling within the exclusive jurisdiction of the inferior courts, the
averments of the complaint and the character of the relief sought are to be examined.
Petitioners complaints in Civil Cases Nos. 6632 and 6633 are virtually identical, save as to
the names of the defendants and the owners of the houses allegedly occupied by private
respondents. The pertinent allegations in Civil Case No. 6633 read:
3) That plaintiffs in their individual rights, are respective owners in fee simple of fishpond
lots located at Barangay Coloong, Municipality of Valenzuela, Metro Manila, with areas, lot
numbers, and titles, xerox copies of which are Annexed hereto
xxx
4) That on or about January 20, 1996, said defendant Luis Nuez by means of force, stealth
or strategy, unlawfully entered the said fishpond lots and occupied the same against the
will of the plaintiffs thereby depriving said owners of the possession of the same;
5) That defendant Luis Nuez also illegally occupied the house constructed on the lot of,
and belonging to, plaintiff Deo S. Dionisio;
6) That said defendant also planted bangus fingerlings in the said fishponds and despite
demands for them to remove the same and vacate the fishpondsstill continue to
unlawfully, illegally, and wantonly occupy said house and operate said fishponds to the
great damage and prejudice of the plaintiffs.[9]
Petitioners submit that the phrase thereby depriving said owners of the possession of the
same in paragraph 4 is tantamount to an averment of prior physical possession since
private respondents could not have deprived them of possession unless the latter had
been previously in possession of the subject properties.
We are not persuaded. It cannot be inferred from the aforecited phrase that the possession
that petitioners were supposedly deprived of is a prior physical possession. The question
arises, what sort of prior physical possession is to be averred? The word possession as
used in forcible entry and unlawful detainer, means nothing more than physical
possession, (stress supplied) not legal possession in the sense contemplated in civil
law.[10] The allegation must likewise show priority in time. Both requisites are wanting
in the phrase relied upon by petitioners.
A reading of the allegations in the complaints leads us to conclude that petitioners action
was one for forcible entry, not unlawful detainer. The distinctions between the two actions
are: (1) In an action for forcible entry, the plaintiff must allege and prove that he was in
prior physical possession of the premises until deprived thereof, while in illegal detainer,
the plaintiff need not have been in prior physical possession; and (2) in forcible entry, the
possession by the defendant is unlawful ab initio because he acquires possession by force,
intimidation, threat, strategy, or stealth, while in unlawful detainer, possession is
originally lawful but becomes illegal by reason of the termination of his right of possession
under his contract with the plaintiff. In pleadings filed in courts of special jurisdiction, the
special facts giving the court jurisdiction must be specially alleged and set out. Otherwise,
the complaint is demurrable.[11] Hence, in actions for forcible entry, two allegations are
mandatory for the municipal court to acquire jurisdiction: First, the plaintiff must allege
his prior physical possession of the property. Second, he must also allege that he was
deprived of his possession by any of the means provided for in Section 1, Rule 70 of the
Rules of Court, namely: force, intimidation, threats, strategy, and stealth.[12] Recall that
the complaints in Civil Cases Nos. 6632 and 6633 failed to allege prior physical possession
of the property on the part of petitioners. All that is alleged is unlawful deprivation of their
possession by private respondents. The deficiency is fatal to petitioners actions before the
Metropolitan Trial Court of Valenzuela. Such bare allegation is insufficient for the MeTC to
acquire jurisdiction. No reversible error was, therefore, committed by the RTC when it
held that the Metropolitan Trial Court acquired no jurisdiction over Civil Cases Nos. 6632
and 6633 for failure of the complaints to aver prior physical possession by petitioners.
But was the deficiency remedied, however, when petitioners submitted their Amended
Complaints?
The policy in this jurisdiction is that amendments to pleadings are favored and liberally
allowed in the interests of substantial justice. Thus, amendments of the complaint may be
allowed even if an order for its dismissal has been issued so long as the motion to amend
is filed before the order of dismissal acquired finality.[13] Note, however, that it is not a
hard and fast rule. An amendment is not allowed where the court has no jurisdiction over
the original complaint and the purpose of the amendment is to confer jurisdiction upon
the court,[14] or where the action originally pleaded in the complaint was outside the
jurisdiction of the court.[15] We have carefully perused petitioners proposed
amendments and found them to include the allegation that petitioners were in prior
physical possession of the disputed fishponds before said possession was allegedly
disturbed. Clearly, the purpose is to sidestep the RTC ruling that MeTC had no jurisdiction
over their complaints and allow the inferior court to acquire jurisdiction. This we cannot
allow. Where the court of origin had no jurisdiction over the original complaint in the first
place, amendments may not be had. It is axiomatic that before an amendment can be
permitted, the trial court must have acquired jurisdiction over the case in the first
instance.[16]
Regarding the second issue, petitioners contend that the DARAB had no jurisdiction over
Case No. IV-MM-0099-95R. They submit that with the passage of Republic Act No.
7881[17] on February 20, 1995, private lands directly and exclusively used for prawn
farms and fishponds are exempt from the coverage of the Comprehensive Agrarian Reform
Law or Republic Act No. 6657. No agrarian relation thus subsisted between the parties for
the DARAB to take cognizance of. Thus, litis pendentia did not bar the filing of Civil Cases
Nos. 6632 and 6633. Stated differently, the pendency of Case No. IV-MM-0099-95R did not
divest the MeTC of its jurisdiction to hear and try the forcible entry cases.
Private respondents contend that a comparison between DARAB Case No. IV-MM-0099-
95R and Civil Cases Nos. 6632 and 6633 would show the same parties, the same subject
matter of controversy, and the same issues. In other words, litis pendentia lies and may be
availed of to dismiss the cases for forcible entry filed with the MeTC.
At the outset, we must point out that petitioners reliance upon Republic Act No. 7881 is
off tangent. It is not disputed that at the time of the filing of Civil Cases Nos. 6632 and 6633,
an agrarian relations dispute was pending before the DARAB. The records show that
private respondents as the complainants in Case No. IV-MM-0099-95R, were asserting
tenancy rights, including the right to possession of the disputed fishponds or parts thereof,
under Republic Act Nos. 3844[18] and 1199.[19] Private respondents were thus claiming
vested substantive rights, dating back to 1975 in the case of respondent Ignacio and 1979
in the case of respondent Nuez, under substantive laws. A substantive law is a law, which
creates, defines, or regulates rights concerning life, liberty, or property, or the powers of
agencies or instrumentalities for the administration of public affairs.[20] Republic Act No.
7881, in exempting prawn farms and fishponds from the coverage of the Comprehensive
Agrarian Reform Law of 1988, is a substantive law. By its very nature and essence,
substantive law operates prospectively[21] and may not be construed retroactively
without affecting previous or past rights. Hence, in view of the absence of a contrary intent
in its provisions, Republic Act No. 7881 should be given a prospective operation and may
not affect rights claimed under previous agrarian legislation.
Under Rule 16, Section 1 of the Rules of Court, litis pendentia or pendency of another
action is a ground for the dismissal of the second action. Recall that in the motions to
dismiss filed by private respondents in Civil Cases Nos. 6632 and 6633, the pendency of
the DARAB case was one of the grounds relied upon in seeking the dismissal of both
actions. For litis pendentia to lie, the following requisites must be satisfied:
1. Identity of parties or representation in both cases;
2. Identity of rights asserted and relief prayed for;
3. The relief must be founded on the same facts and the same basis; and
4. Identity of the two preceding particulars should be such that any judgment, which may
be rendered in the other action, will, regardless of which party is successful, amount to res
judicata on the action under consideration.[22]
These requisites, in our view, are present in this case. For one, the parties in the DARAB
case and in the forcible entry cases filed with the MeTC are the same. Also, there is identity
of rights asserted and reliefs prayed for. The action in Case No. IV-MM-0099-95R is for
declaration of tenancy, accounting, recovery of possession, specific performance, recovery
of sum of money, plus damages against petitioners. Note that the properties that private
respondents seek to recover possession of in the DARAB case form part of the properties
from which petitioners seek the ejectment of private respondents. The evident and logical
conclusion then is that any decision that may be rendered in the DARAB case regarding
the question of possession will also resolve the question of possession in the forcible entry
cases. Undergirding the principle of litis pendentia is the theory that a party is not allowed
to vex another more than once regarding the same subject matter and for the same cause
of action. This theory is founded on the public policy that the same matter should not be
subject of controversy in court more than once in order that possible conflicting
judgments may be avoided, for the sake of the stability in the rights and status of persons.
The MeTC of Valenzuela, Branch 82, recognized this doctrine when it dismissed Civil Case
No. 6632 to avoid the possibility of two contradictory decisions on the question of
possession emanating from the DARAB and the trial court. In turn, the RTC was correct in
finding that the issue of possession was inextricably intertwined with the agrarian dispute,
an issue which was beyond the jurisdiction and competence of the inferior court to settle.
In so doing, the RTC deferred to the primary jurisdiction and administrative expertise of
the DARAB to settle agrarian cases. Thus, we are constrained to conclude that under the
concept of litis pendentia, the pendency of DARAB Case No. IV-MM-0099-95R served as a
bar to the filing of Civil Cases Nos. 6632 and 6633.
On the third issue, petitioners maintain that the petitioner-affiant who subscribed the
requisite Affidavit of Non-forum Shopping understood that the issues pending resolution
before the DARAB had no relation to petitioners actions for forcible entry, and hence had
seen no need to report anymore the pendency of the DARAB case. Moreover, private
respondents claim that in their pleadings they early enough disclosed the pendency of the
DARAB case to the courts hearing the ejectment cases. Hence, they aver that there was no
violation whatsoever of the non-forum shopping requirements.
Private respondents argue that petitioners explanations on the matter amount to a mea
culpa on account of wild speculation and assumption of the facts of the case. They ask us
to affirm the findings below that petitioners violated the Courts Circular proscribing forum
shopping.
Supreme Court Administrative Circular No. 04-94, imposing additional requisites in civil
complaints, petitions, and other initiatory pleadings filed in all courts and agencies to
prevent forum shopping, provides in part:
1. The plaintiff, petitioner, applicant or principal party seeking relief in the complaint,
petition, application or other initiatory pleading shall certify under oath in such original
pleading, or in a sworn certification annexed thereto and simultaneously filed therewith
to the truth of the following facts and undertakings: (a) he has not theretofore commenced
any other action or proceeding involving the same issues in the Supreme Court, the Court
of Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no such action
or proceeding is pending in the Supreme Court, the Court of Appeals, or any other tribunal
or agency; (c) if there is any such action or proceeding which is either pending or may have
been terminated, he must state the status thereof; and (d) if should thereafter learn that a
similar action or proceeding has been filed or is pending before the Supreme Court, the
Court of Appeals, or any other tribunal or agency, he undertakes to report that fact within
five (5) days therefrom to the court or agency wherein the original pleading and sworn
certificate contemplated herein have been filed.
xxx
2. Any violation of this Circular shall be a cause for the dismissal of the complaint, petition,
application or other initiatory pleading, upon motion and after hearing
That there was a DARAB case pending involving the same parties with the same subject
matter at the time petitioners filed Civil Cases Nos. 6632 and 6633 is not contested.
Petitioners admit that they assumed that the issues in the agrarian case and the forcible
entry cases were different and hence saw no need to report the pendency of the former to
the trial court in their certification of non-forum shopping. We fail to see the basis for this
assumption. The records disclose that the issue of possession as raised in the forcible entry
cases is necessarily included in the question of agricultural tenancy raised in the DARAB
case. Note that petitioners actively participated in the latter case and thus, could not have
been unaware that the possession of the subject fishponds or parts thereof was in issue
before the Board. Petitioners failure to see that paragraph 1(b), 1(c), or 1(d) of
Administrative Circular No. 04-94 applied to them is simply incomprehensible. We agree
with the RTC in certifying under oath that they have no knowledge of any case pending
before any other tribunal or agency involving the same issue raised in their forcible entry
cases, petitioners were less than candid.

To determine whether a party violated the rule against forum shopping, the test applied
is whether the elements of litis pendentia are present or whether a final judgment in one
case will amount to res judicata in another.[23] Recall that as earlier discussed, the
requisites of litis pendentia barred the filing of Civil Cases Nos. 6632 and 6633 given the
pendency of DARAB Case No. IV-MM-0099-95R. Based thereon, the Regional Trial Court
correctly dismissed the forcible entry cases on the additional ground of forum shopping.

WHEREFORE, the instant petition is DENIED, and the Decision of the Regional Trial Court
of Valenzuela, Branch 172, in Civil Cases Nos. 5093-V-97 and 5169-V-97 is AFFIRMED.
Costs against petitioners.

SO ORDERED.
[GRN 107824 July 5, 1996]
SUPERCLEAN SERVICES CORPORATION, petitioner, vs. COURT OF APPEALS and
HOME DEVELOPMENT MUTUAL FUND, respondents.
THIRD DIVISION
APPEARANCES OF COUNSEL
Ambrosio Padilla, Mempein Reyes & Caasan Law Offices for petitioner.
Oscar Stgo. de la Cruz for private respondent.
DECISION
MENDOZA, J.:
The question in this case is the propriety of filing a Supplemental Complaint in order to
seek a different relief in view of developments rendering the original relief impossible of
attainment.
The facts are as follows:
On November 8, 1989, petitioner Superclean Services filed with the Regional Trial Court
of Manila a complaint for Mandamus/Certiorari With Preliminary Injunction And/ Or
Restraining Order against private respondent Home Development and Mutual Fund.
Petitioner alleged that at the public bidding for janitorial services for the year 1990 it was
the "lowest or best bidder," but private respondent refused without just cause to award
the contract to it and instead caused the publication on October 23, 1989 of a Notice of
Rebidding to be held on November 9, 1989.
In its answer private respondent defended its action on the ground that not a single bid
submitted complied with the terms and conditions agreed upon in the pre-bidding
conference held on September 6, 1989.
The trial court thereafter set petitioner's application for preliminary injunction for
hearing and in the meantime ordered private respondent to desist from conducting a
rebidding. At the same time, the court granted leave to private respondent on January 4,
1990 to hire janitorial services on a month-to-month basis to insure the maintenance of
its offices.
On July 24, 1991, petitioner moved for the admission of a "Supplemental Complaint." 1
Petitioner alleged that because the contract of services was for the furnishing of janitorial
service for the previous year 1990, the delay in the decision of the case had rendered the
case moot and academic "without [petitioner] obtaining complete relief to redress the
wrong committed against it by [private respondent], which relief consists in unrealized
profits, exemplary damages and attorney's fees." Accordingly, instead of pursuing its
prayer for a writ of mandamus,. petitioner sought the payment of damages to it.
On August 23, 1991, the trial court denied petitioner's motion, finding "no merit in and no
basis supporting it and set the continuation of the trial on September 19, 1991.
Petitioner filed a motion for reconsideration, but its motion was likewise denied. In its
order dated November 25, 1991, the trial court said that admission of the "Supplemental
Complaint" would "not only radically but substantially [change] the issues" by "materially
var[ying] the grounds of relief, and would operate unjustly to the prejudice of the rights of
[private respondent]."
Petitioner filed a petition for certiorari in the Court of Appeals which, on August 5, 1992,
rendered a decision, finding no grave abuse of discretion to have been committed by the
trial court in not admitting petitioner's "Supplemental Complaint" and denying the motion
for reconsideration of its order. Its ruling was based on the fact that the relief sought in
the "Supplemental Complaint" was different from that contained in the original complaint
which sought to compel private respondent to recognize petitioner as the lowest
qualifying bidder. in addition, the appellate court held that the original complaint had been
rendered moot and academic by supervening events and that a supplemental complaint
was inappropriate since "supplemental pleadings are meant to supply the deficiency in aid
of the original pleading, not to entirely substitute the latter."
Petitioner moved for a reconsideration, but its motion was denied in a resolution of the
Court of Appeals dated October 30, 1992. Hence, this petition for review on certiorari.
First. The "Supplemental Complaint" appears to have been filed under Rule 10 of the Rules
of Court which provides:
6. Matters subject of Supplemental Pleadings. - Upon motion of a party the court may,
upon reasonable notice and upon such terms as are just, permit him to serve a
supplemental pleading setting forth transactions, occurrence or events which have
happened since the date of the pleading sought to be supplemented, If the court deems it
advisable that the adverse party should plead thereto, it shall so order, specifying the time
therefor.
The transaction, occurrence or event happening since the filing of the pleading, which is
sought to be supplemented, must be pleaded in aid of a party's right or defense as the case
may be. 2 But in the case at bar, the supervening event is not invoked for that purpose but
to justify the new relief sought.
To begin with, what was alleged as a supervening event causing damage to petitioner was
the fact that the year for which the contract should have been made had passed without
the resolution of the case. Only incidentally was it claimed that because of the award of a
contract for janitorial services, on a month-to-month basis to a third party, petitioner
failed to realize profits. In its "Supplemental Complaint" petitioner alleged:
1. Supervening events not attributable to anybody which consist in the delay in the early
disposition of the case within the one (1) year period life span of the contract for janitorial
services, have rendered the case moot and academic, without plaintiff obtaining complete
relief to redress the wrong committed against it by defendant, which is the unjustified
and/or unlawful refusal of defendant to recognize plaintiff as the lowest qualifying bidder
for janitorial services for the year 1990;
2. By reason of the unjustified refusal of defendant to recognize the result of the public
bidding held in September 1989 and to award to plaintiff the contract for janitorial
services as the lowest qualifying bidder favorable and advantageous to the defendant for
the year 1990, and by hiring another entity to perform Janitorial services during the
pendency of the suit, plaintiff suffered unrealized profits in the sum of P158,117.28;
The supervening event was therefore cited not to reinforce or aid the original demand,
which was for the execution of a contract in petitioner's favor, but to say that, precisely
because of it, petitioner's demand could no longer be enforced, thus justifying petitioner
in changing the relief sought to one for recovery of damages. This being the case,
petitioner's remedy was not to supplement, but rather to amend its complaint.
Indeed the new relief sought (payment of damages in lieu of an award of the contract for
Janitorial services) is actually an alternative remedy to which petitioner was entitled even
before at the time of the filing of its original complaint. If petitioner was entitled to the
award of the contract, as it claimed it was, it could have asked either for an award of the
contract for Janitorial services or for damages. The fact that it opted for the first does not
preclude it from subsequently claiming damages because through no fault of its own, the
year passed without an award in its favor, with the result that it could no longer demand
the execution of a contract in its favor after that year.
Be that as it may, the so-called Supplemental Complaint filed by petitioner should simply
be treated as embodying amendments to the original complaint or petitioner may be
required to file an amended complaint.
Second. But, it is contended, such an amendment of the complaint would change the theory
of the case. Three reasons were cited by the Court of Appeals why it thought the trial court
correctly refused to admit the so-called Supplemental Complaint of petitioner.- (1) change
in the reliefs prayed for; (2) change in the issues of the case; and (3) prejudice to the rights
of private respondent.
The contention has no merit. An amendment to change the relief sought does not change
the theory of a case. What is prohibited is a change in the cause of action. Thus in Arches
v. Villarruz, 3 it was held:
The lower court denied the admission of the amended. complaint on the ground that the
plaintiff therein has changed the action alleged in the original complaint, but upon
comparing the two complaints, we find that, essentially, there was no change of action for,
in both the original and the amended complaints, the action was for the collection of the
value of the same promissory notes and the only difference between the original and the
amended complaints is with regard to the consideration of said promissory notes, for
while in the original complaint it was alleged that these were executed by defendant
Villarruz for money obtained from plaintiff Arches and with which the former paid for
labor and materials for the construction and completion of the Ivisan Bridge, in the
amended complaint it was alleged that said promissory notes were executed for materials
supplied to William Villarruz and actually used in the construction of the Ivisan Bridge.
While the rule allowing amendments to a pleading is subject to the general limitation that
the cause of action should not be substantially changed or that the theory of the case
should not be altered, in the furtherance of justice, amendments to a pleading should be
favored and the rules thereon should be liberally construed, In the present case, we find
justification for allowing the admission of the amended complaint in order that the real
question between the parties may be properly and justly threshed out, in a single
proceeding, and thus avoid multiplicity of actions.
In Vda. de Villaruel v. Manila Motor Co., Inc., 4 plaintiffs, as lessors of a property, filed an
action for the rescission of the contract of lease for alleged refusal of defendants to pay
rentals. While the case was pending, the buildings leased were destroyed by fire. Plaintiffs
filed a supplemental complaint for the recovery of the value of the burned buildings. In
holding the supplemental complaint proper, this Court held:
This action was inceptionally instituted for the rescission of the contract of lease and for
the recovery of unpaid rentals before and after liberation. When the leased buildings were
destroyed, the plaintiffs -lessors demanded from the defendants lessees, instead, the value
of the burned premises, basing their right to do so on defendants' alleged default in the
payment of post-liberation rentals (which was also their basis in formerly seeking for
rescission). This cannot be considered as already altering the theory of the case which is
merely a change in the relief prayed for, brought about by circumstances occurring during
the pendency of the action, and is not improper. (Southern Pacific Co. vs. Conway, 115 F.
2d 746; Suburban Improvement Company vs. Scott Lumber Co., 87 A.L.R. 555, 59 F. 2d
711). The filing of the supplemental complaint can well be justified also under Section 2,
Rule 17 of the Rules of Court (on amendments) "to the end that the real matter in dispute
and all matters in the action in dispute between the parties may, as far as possible be
completely determined in a single proceeding." It is to be noted furthermore, that the
admission or rejection of this kind of pleadings is within the sound discretion of the court
that will not be disturbed on appeal in the absence of abuse thereof (see Sec. 5, Rule 17,
Rules of Court), especially so, as in this case, where no substantial procedural prejudice is
caused to the adverse party. 5
In this case, the original complaint for Mandamus/ Certiorari With Preliminary Injunction
And/Or Restraining Order alleged, as cause of action, private respondent's unjustifiable
refusal to award the contract to petitioner despite the fact that the latter was the "lowest
and best qualifying bidder." On the basis of this allegation, it was prayed that:
1.Upon filing [of] this Complaint, a restraining order be issued to enjoin [private
respondent] from implementing [or] proceeding with its Notice of Rebidding which is
scheduled on November 9, 1989 at 10:00 A.M;
2.After trial on the merits, judgment be rendered -
a.ordering [private respondent] to recognize[petitioner] as the lowest qualifying
responsive bidder at the public bidding held on September 22, 1989 and therefore its right
to the award of the contract for janitorial services;
b.declaring that [private respondent] in publishing its "Notice of Rebidding" acted with
grave abuse of discretion amounting to excess and/or lack of jurisdiction;
c.declaring the restraining order or temporary writ of injunction to be permanent; and
d.for costs of suit.
These same allegations constitute petitioner's cause of action for damages, to wit:
1.the sum of P158,117.28 as unrealized profits;
2.the sum of P50,000.00 as exemplary damages;
3.the sum equivalent to twenty-five (25%) percent of the total amount due and
demandable, plus P1,000.00 for every appearance of counsel in court;
4.the cost of suit.
As already stated, the change in the relief sought was necessitated by a supervening event
which rendered the first relief sought impossible of attainment.
Because the cause of action on which the complaint for mandamus and injunction and the
so-called Supplemental Complaint are based is one and the same, the issue raised is the
same, namely, whether private respondent was justified in refusing to award the contract
for janitorial services to petitioner.
Nor would admission of the amended complaint prejudice the rights of private respondent
as defendant in the action below, as the Court of Appeals held. Indeed neither the trial
court nor the appellate court showed in what way the rights of private respondent would
be prejudiced by the allowance of the amendment in question. There will be no unfairness
or surprise to private respondent, because after all private respondent will have a right to
file an amended answer and present evidence in a support thereof. 6

Third. The Court of Appeals also held that the action for mandamus and/or injunction had
become moot and academic and consequently there was no longer any complaint to be
supplemented. It is true that a supplemental or an amended pleading presupposes the
existence of a pleading. What was rendered moot and academic, however, was not
petitioner's cause of action but only its prayer for the writ of mandamus. There was still
an alternative remedy left to petitioner of seeking damages in lieu of an award of the
contract. The situation is similar to an action for illegal dismissal in labor law. If
reinstatement is no longer possible, because the position has been abolished and there is
no way the dismissed employee can be reinstated to a comparable position, the
employee's action is not thereby rendered moot and academic. He can instead ask for
separation pay.

Indeed, what is important is that, as already stated, the basic allegations of fact in the
original and in the amended complaints are the same, namely, that private respondent,
without Justification, refused to award the contract of services to petitioner. Through no
fault of petitioner, the year for which Janitorial services were to be rendered expired
without the resolution of petitioner's case. It would be to exalt technicality over substance
to require that petitioner file a new complaint. It would best serve the interests of Justice
if the so-called Supplemental Complaint is simply considered as embodying amendments
to the original complaint. In fact it appears that the court ordered a continuation of the
trial on September 19, 199 1, despite petitioner's statement in its Supplemental Complaint
that the original case had become moot and academic.

WHEREFORE, the decision of the Court of Appeals is REVERSED and the case is
REMANDED to the trial court with instructions to admit the "Supplemental Complaint"
and to treat it as an amendment to the original complaint or to require petitioner to file an
amended complaint, merging the relevant allegations of its original complaint and
"Supplemental Complaint," and thereafter to allow private respondent to file an answer.
SO ORDERED.

Regalado (Chairman), Romero, and Puno, JJ., concur.

Torres, Jr., J., took no part.
1. Rollo, p. 48.
2. De la Rama Steamship Co., Inc. v. National Development Co., 6 SCRA 775 (1962).
3. 102 Phil. 661, 668 (1957).
4. 104 Phil. 926 (1958).
5. Id., at 932-933.
6. Rule 11, 3.
[GRN L-39379 April 30, 1985]
BONIFACIO GOTICO, plaintiff-appellant, vs. LEYTE CHINESE CHAMBER OF
COMMERCE, defendantappelle.
DECISION
SECOND DIVISION
APPEARANCES OF COUNSEL
Fermin Quejada for petitioner. Segundo M. Zosa for respondent.
MELENCIO-HERRERA, J.:
The erstwhile Court of Appeals certified this appeal from the Decision of the Court of First
Instance of Leyte, Branch IV, Tacloban City, in Civil Case No. 3088, to this instance, as the
issues raised involve pure questions of law.
The controversy revolves around the ownership of a portion of Lot No. 4875 of the
Tacloban Cadastre, with a total area of 1,306 sq. ms., situated at Bo. Utap, Litid District,
Tacloban City. The Disputed Portion consists of approximately 872 square meters.
On July 13, 1961, plaintiff-appellant obtained Original Certificate of Title No. P-139
covering the entirety of the said Lot 4875.
On the strength of that title, plaintiff-appellant filed the instant case for Ejectment (Civil
Case No. 3098), against defendant-appellee, the Leyte Chinese Chamber of Commerce, on
August 8, 1962. The Complaint alleged that plaintiff-appellant was the "owner and
possessor since time immemorial tacked by purchase to his predecessors-in-interest of
Lot 4875;" that defendant-appellee, without any color of right, had occupied the Disputed
Portion and utilized the same as a private cemetery and that:
"plaintiff demands a monthly rental of the above portion of land of P500.00 to be
computed from date of defendant's occupancy in 1928"1 (italics supplied)
Plaintiff-appellant then prayed for judgment ordering defendantappellee to vacate the
Disputed Portion and to declare him the lawful owner and possessor thereof and
"(b) ordering defendant to pay the amount of P200,000.00 in rentals of the premises in
question, to be computed from 1928 to the filing of the complaint x x x" (Italics ours).
Defendant-appellee traversed the Complaint by claiming that it had been in possession of
the Disputed Portion since 1928 when it built a public cemetery thereon with the approval
of the Bureau of Health; that plaintiffappellant had obtained title to Lot 4875 by means of
fraud and false statements of fact, and that on May 2, 1962, or prior to the institution of
the Ejectment Case, it had already petitioned the Bureau of Lands for the cancellation of
plaintiff-appellant's title over Lot 4875. Defendant-appellee then prayed for the dismissal
of the Complaint and for the declaration of plaintiffappellant's title as null and void.
On January 29, 1965, the Bureau of Lands filed Civil Case No. 3618 entitled "Republic of
the Philippines, represented by the Director of Lands vs. Bonifacio Gotico, and the Register
of Deeds of Tacloban City," for the reversion of Lot 4875 to the Government and the
cancellation of plaintiff-appellant's title (Reversion Case).
Considering that both cases (Civil Cases Nos. 3088 and 3618) involved the same parties
and the same subject matter, the parties agreed that the two cases be jointly heard. A joint
Pre-trial was held wherein both parties agreed that:
"x x x stipulations and admissions in Civil Case 3618 in so far as they are material and
relevant to Case 3088 shall be taken into consideration in said Case 3088, and that
whatever stipulations and admissions made by the parties in Case 3088 in so far as they
are pertinent to said Civil Case 3618."2
In the same Pre-trial hearing, the parties stipulated on the following facts:
"1) the admission of the allegations of paragraphs 1, 2, 3, and 4 of the complaint;
"2) that the cemetery owned by the Leyte Chinese Chamber of Commerce is within Lot
4875 and is occupying an area of 872 square meters;
"3) that the defendant had been occupying and using the said land in question since 1928;
"4) that Lot 4875, where the cemetery in question is also included, is covered by OCT No.
P-139, marked Exhibit 'A' in Civil Case No. 3088 and as Exhibit '1' in Civil Case No. 3168,
and that after the issuance of OCT No. P139, there was issued Tax Declaration No. 17392,
in the name of BONIFACIO GOTICO and which is marked as Exhibit 'B' in Civil Case No.
3088 and as Exhibit '2' in Civil Case No. 36183. (Italics supplied).
Realizing that the admission as to the date of commencement of defendantappellee's
possession made in paragraph 3 of the aforesaid Pre-trial agreement, as well as the
averments made in paragraph 4 of the Complaint and in the Prayer thereof were fatal to
his cause, plaintiff-appellant, assisted by a new counsel, filed an "Omnibus Motion to
Amend Complaint and Recall or Correct some Pre-trial Admissions." The thrust was to
amend the year "1928" to 1961 not only in paragraph 4 and in the Prayer of the Complaint
but also in the aforementioned pre-trial Agreement. The Court denied the Motion for
amendment and/or correction for being unmeritorious. Two Motions for Reconsideration
filed by plaintiff-appellant met with the same fate.
In the meantime, the Reversion Case was decided in favor of the Government and plaintiff-
appellant's title was ordered cancelled upon the finding that he had, in collusion with the
Land Investigator, committed fraud that vitiated the grant of his Free Patent.
On the basis of said judgment, defendant-appellee filed a Motion for Summary Judgment
in the Reversion Case alleging that there is "no genuine issue between the parties x x x and
the defendant is entitled as a matter of law to the dismissal of the x x x case." Summary
judgment was rendered therein ordering reversion of Lot 4875 to the State.
Subsequently, in the Ejectment Case, the trial Court rendered judgment dismissing the suit
after opining that:
Civil Case No. 3618, especially upon a consideration of the admission of Bonifacio Gotico,
not only in his complaint but also in the pre-trial hearing, that the defendant bad been
occupying the land in question since 1928."
"IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, therefore, orders the
dismissal of this case with costs against the plaintiff."
Hence, the appeal to the then Court of Appeals. The following Assignments of Error were
raised:
" 1. The Trial Court erred in dismissing the case at bar simply due to the erroneous
allegation of previous counsel that possession by the defendant-appellee Leyte Chinese
Chamber of Commerce was since 1928 instead of 196 1, as the same was never the Under the circumstances obtaining and in the face of the evidence, the rule on liberality of
intention of the plaintiff, but 1961 when the Leyte Chinese Cemetery was transferred to construction of the Rules cannot be successfully invoked. To do so would be obstructive of
appellant's lot; the interests of substantial justice.

"2. The Trial Court erred in dismissing the case on the ground that per decision of the same 2. The second error raised is neither meritorious. Plaintiff-appellant who had agreed with
Trial Court of the other Civil Case No. 3618 involving the same subject matter, for defendant-appellee that the evidence in either of the two consolidated cases, when
reversion by the Republic of the Philippines, represented by the Director of Lands, as said relevant, would be considered in the other, is now estopped from asserting the contrary
Decision was appealed as CA-G.R. No. 41960-R, has not as yet become final and could not now that he had lost both cases.
be the basis of grounds for dismissal of the case at bar, and;
And more significantly, since plaintiff-appellant's title was cancelled in the Reversion Case,
"3. The Trial Court erred in dismissing the case at bar as its conclusion is contrary to law, he has lost any cause of action he may have had in the Ejectment Case. The appeal in the
the evidence and Supreme Court Decisions." Reversion Case (CA-G.R. No. 41960-R) had been resolved against plaintiffappellant on
December 13, 1972.
1. We find that the Trial Court correctly exercised its discretion in denying plaintiff-
appellant's Motion to Amend paragraph 4 of the Complaint and paragraph (b) of the 3. The foregoing discussions also dispose of the third issue raised, which is but a
Prayer by changing the year 192 8 " to 196 1. Section 3, Rule 10 of the Rules of Court consequence of the first two errors assigned.
provides: WHEREFORE, the judgment of the then Court of First Instance of Leyte, Branch IV, is
hereby affirmed in toto. Costs against plaintiff-appellant.
"Sec. 3. Amendments by leave of court. - After the case is set for hearing, substantial SO ORDERED.
amendments may be made only upon leave of court. But such leave may be refused if it
appears to the court that the motion was made with intent to delay the action or that the Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., de la Fuente, and Alampay, JJ, concur.
cause of action or defense is substantially altered. Orders of the court upon the matters 1. Complaint, paragraph 4.
provided in this section shall be made upon motion filed in court and after notice to the 2. T.s.n., pp. 18-19, July 14,1966.
adverse party, and an opportunity to be heard." 3. T.s.n., pp. 13-18, Joint Pre-trial Hearing in Civil Cases Nos. 3088. and 3618, July 14, 1966.
4. Record on Appeal, p. 10.
The amendment sought is a substantial one. A claim of possession by either or both parties
involving a span of 33 years is surely
"x x x the Court has, therefore, no alternative but to render in this case a Decision which
must be consistent with the Decision of this Court in a substantial element of the cause of
action. Besides, even if the amendment were allowed, there is preponderant evidence
proving possession by defendant-appellee since 1928. It had filed the application for the
conversion of the Disputed Portion into a cemetery on February 10, 1928. Its application
was approved on May 17, 1928 by the Bureau of Health. Since then, that portion had
remained part of a Chinese cemetery. Its possession since 1928 was also recognized in the
Reversion Case. All of which disprove plaintiffappellant's allegations in his application for
a Free Patent that:

"4. The land described and applied for - is not claimed or occupied by any other person,
but is a public land. I entered upon and began cultivation of the same on the 28th day of
January, 1961, and since that date I have made thereon the following improvements viz:
bamboos, bananas and coconut"4

Similarly, we find no error in the denial by the Trial Court of plaintiffappellant's Motion to
recall or correct some pre-trial admissions. Pursuant to Sec. 4, Rule 20 of the Rules of
Court, the Order entered at the pre-trial controls the subsequent course of the action.
Furthermore, under Rule 129, Section 2, it is necessary for a party who desires to be
relieved of the effects of admissions in the pleadings and any admissions made in the
course of the trial, to show that the admission had been made through palpable mistake.
In this case, that there was no such palpable mistake is shown by the fact that the year
"1928" was stated not only in paragraph 4 of the Complaint, but repeated in the Prayer,
and reiterated in the Pre-trial admissions.
EN BANC
[G.R. No. L-7076. April 28, 1955.]
ERIBERTO P. ROSARIO and PAZ UNTALAN DE ROSARIO, plaintiffs-appellants, vs.
FILOMENO CARANDANG, ET AL., defendants-appellees.
Primicias, Abad, Mencias & Castillo for plaintiffs and appellants.
Brigido G. Estrada for appellees.
P filed a cs of forcible entry and detainer against D in CFI Pangasinan. D qnd jurisdiction
shld be w/ Justice of Peace court.- cs was dismissed.
Plaintiffs moved for the reconsideration of the order of dismissal, and prayed as well for
the admission of an amended complaint, wherein they make specific allegation for the first
time that the defendants are claiming ownership of the land in question in the two
registration cases previously mentioned.
The case pleaded was a clear action for forcible entry and detainer, where plaintiffs allege
prior possession of the premises in question and to have been deprived thereof within the
period of one year, by other person or persons, who excluded them therefrom and
withheld possession without right a case falling within the exclusive and original
jurisdiction of the justice of the peace courts when it appears from the very face of the
complaint that the Court has no jurisdiction over the subject matter of the case-
AMENDMENTS TO PLEADINGS; WHEN THEY CAN NOT BE ALLOWED
SYLLABUS
1. PLEADING AND PRACTICE; FORCIBLE ENTRY AND DETAINER; ALLEGATIONS
IN THE COMPLAINT; EFFECT THEREOF. A simple allegation in the complaint for
forcible entry and detainer that the defendant have filed an opposition in the case where
plaintiffs have applied for the registration of the parcel of land subject of the complaint,
does not amount to an allegation that the defendants are claiming ownership thereof, since
an opposition in a registration case may be based on claims or interest other than
ownership in the land sought to be registered.
And neither does the fact that plaintiffs pray in their complaint that they be declared
owners of the parcel in question convert their action from one of forcible entry into one
for declaration of ownership or quieting of title; for the prayer is not a material part of the
complaint (Vda. de Lacson vs. Diaz, 47 Off. Gaz., [Supp.] 237), and it is the allegations of the
complaint, and not the prayer, that not only determined the jurisdiction of the court, but
confer that jurisdiction (Fernandez contra Gala-Sison, 50 Off. Gaz., No. 12, 5760; Infante
vs. Dulay, 67 Phil., 159).
2. ID.; AMENDMENTS TO PLEADINGS; WHEN THEY CAN NOT BE ALLOWED.
Although amendments to pleadings are favored and liberally allowed in the furtherance
of justice, it is obvious that when it appears from the very face of the complaint that the
Court has no jurisdiction over the subject matter of the case, an amendment of the
complaint can not be allowed so as to confer jurisdiction upon the Court.
3. ID.; ID.; AMENDMENT AS OF RIGHT. Before an answer or a motion to dismiss
has been filed, the original complaint is amendable, and the amendment can supersede the
original pleading, as of right, without leave of court being required, and without the court
taking cognizance at all of the original complaint.
4. FORCIBLE ENTRY AND DETAINER; EXCLUSIVE JURISDICTION OF JUSTICE OF
PEACE COURTS REGARDLESS OF CLAIM FOR DAMAGES; EXPENSES OF FILING SUIT.
The justice of the peace courts have exclusive jurisdiction over forcible entry and detainer
case, regardless of the amount claimed therein as damages (Lao Seng Hian, et al. vs. Hon.
Natividad Almeda Lopez, et al., 83 Phil., 617). The expenses for the filing of the suit, viz
costs and attorneys' fees, are excluded from the jurisdictional amount that confer
jurisdiction upon courts.
DECISION
REYES, J.B.L., J p:
This is an appeal from two orders of the Court of First Instance of Pangasinan in Civil Case
No. 12316, the first dismissing plaintiffs' complaint, and the second denying plaintiffs'
motion for reconsideration and for the admission of an amended complaint.
On October 16, 1952, plaintiffs Eriberto P. Rosario and Paz Untalan de Rosario filed a
complaint against defendants Filomeno Carangdang, et al., specifically alleging therein
that plaintiffs-appellants are the owners and possessors of a parcel of land (lot No. 2, plan
Psu-123111) in Labrador, Pangasinan; that they have applied for the registration thereof
in Registration Case No. 658, G.L.R.O. No. 2610, wherein defendants filed an opposition;
that on or about October 3, 1952, defendants illegally entered into the premises, destroyed
the nipa plants thereon, and made dikes to convert the place into a fishpond; that in spite
of warnings and notices from plaintiffs-appellants, defendants continued to possess and
occupy the premises; and that as a result of defendants' entry into and possession of the
land in question, plaintiffs have suffered damages in the amount of P2,000.
On November 3, 1952, defendants moved for the dismissal of the complaint, claiming (1)
that the Court had no jurisdiction of the case because it is one of forcible entry and detainer
exclusively cognizable by the Justice of the Peace Court, and furthermore, because the
demand for damages does not exceed P2,000; and (2) that there is another action pending
between the same parties and for the same cause (Land Registration Case No. 658, G.L.R.O.
No. 2610, wherein plaintiffs are the applicants and defendants are the oppositors, and
Land Registration Case No. 602, G.L.R.O. No. 2313, wherein defendants are the applicants
and plaintiffs are the oppositors) in which the title and ownership of the parcel in question
is involved and contested. Plaintiffs opposed the motion to dismiss, alleging that the Court
of First Instance acting as a registration court, can not award damages resulting from
defendants' alleged illegal entry into and possession of the land in question.
The lower Court found the motion to dismiss meritorious, and on November 7, 1952
ordered the dismissal of the complaint. Plaintiffs moved for the reconsideration of the
order of dismissal, and prayed as well for the admission of an amended complaint, wherein
they make specific allegation for the first time that the defendants are claiming ownership
of the land in question in the two registration cases previously mentioned. Defendants
opposed the motion for reconsideration and the admission of an amended complaint,
upon the ground that the amended complaint would convert plaintiffs' action from one of
forcible entry and detainer to one of recovery of ownership and possession. Again,
defendants' position was sustained by the Court below; and later, it denied a motion for
the reconsideration of the order of dismissal. Hence, this appeal by the plaintiffs to this
Court.
We see no error in the lower Court's dismissal of appellants' original complaints. It was
filed on October 16, 1952, barely two weeks from and after the alleged entry into and
illegal taking of possession of the land in question by the defendants. The case pleaded was
a clear action for forcible entry and detainer, where plaintiffs allege prior possession of
the premises in question and to have been deprived thereof within the period of one year,
by other person or persons, who excluded them therefrom and withheld possession
without right a case falling within the exclusive and original jurisdiction of the justice
of the peace courts (Rule 72, Sec. 1, Rules of Court: Sec. 88, Rep. Act 296).
Appellants insist that their action is not for forcible entry and detainer but for declaration
of ownership or quieting of title, with claim for damages in the sum of P2,500 This
argument is untenable. There is no averment in the complaint that the defendants claim
or dispute the ownership of the parcel in question. The simple allegation therein that
defendants have filed an opposition in the case where plaintiffs have applied for the
registration of said parcel, does not amount to an allegation that the defendants are
claiming ownership thereof, since an opposition in a registration case may be based on
claims or interest other than ownership in the land sought to be registered. And neither
does the fact that appellants pray in their complaint that they be declared owners of the
parcel in question convert their action from one of forcible entry into one for declaration
of ownership or quieting of title; for the prayer is not a material part of the complaint (Vda.
de Lacson vs. Diaz, 87 Phil., 150, 47 Off. Gaz., [Supp.] 337), and it is the allegations of the
complaint, and not the prayer, that not only determine the jurisdiction of the court, but
confer that jurisdiction (Fernandez contra Gala-Sison, supra, p, 282; Infante vs. Dulay, 67
Phil., 259).
Plaintiffs also insist that their action falls within the jurisdiction of the Court of First
Instance, because their claim for damages amounts to P2,500. This argument is untenable.
In the first place, settled is the rule that justice of the peace courts have exclusive
jurisdiction over forcible entry and detainer cases, regardless of the amount claimed
therein as damages (Lao Seng Hian, et al. vs. Honorable Natividad Almeda Lopez, et al., 83
Phil., 617; 46 Off. Gaz., [11] 70). In the second place, it appears from the allegations of the
complaint that only the amount of P2,000 is claimed to have been suffered by appellants
as damages as a result of defendants' illegal possession and destruction of the land in
question (par. 8 of the complaint, Rec. on App., p. 4), the additional claim of P500 being
allegedly for "additional expenses, besides the damages stated above", meaning expenses
incurred due to the filing of this case. Considering that the expenses for the filing of the
suit, viz, costs and attorneys' fees, are excluded from the jurisdictional amount that confer
jurisdiction upon courts, the additional amount of P500 claimed by appellants in their
complaint would not take their case out of the jurisdiction of the justice of the peace court,
even if such jurisdiction were to be determined by no other factor than the amount sought
to be recovered in the complaint.
Under their second assignment of error, appellants contend that the lower Court erred in
denying their motion for reconsideration and in refusing to admit their amended
complaint. Again we find this assignment of error to be without merit. While it is true that
under the liberal provisions of our Rules of Court, amendments to pleadings are favored
and liberally allowed in the furtherance of justice, it is obvious that when it appears from
the very face of the complaint that the Court has no jurisdiction over the subject-matter of
the case, an amendment of the complaint can not be allowed so as to confer jurisdiction
upon the Court. In Alvarez, et al. vs. Commonwealth of the Phil., et al., 65 Phil., 302, this
Court held:
Under this section (Sec. 101 of the Code of Civ. Pro. the amendment of a pleading, after a
demurrer is sustained, is not an absolute right of the pleader; the amendment rests rather
in the sound discretion of the court. Generally when a demurrer is sustained, the party
who presented the defective pleading is afforded an opportunity to amend it under
conditions which the court may fix; and this should be done when it appears clearly that
the defect is remediable by amendment (Molina vs. La Electricista, 6 Phil., 519; Serrano vs.
Serrano, 9 Phil., 142; Segovia vs. Provincial Board of Albay, 13 Phil., 331; Balderrama vs.
Compaia General de Tabacos, 13 Phil., 609; Macapinlac vs. Gutierrez Repide, 43 Phil.,
770). But when it is evident that the court has no jurisdiction over the person and the
subject matter that the pleading is so fatally defective as not to be susceptible of
amendment, or that to permit such amendment would radically alter the theory and the
nature of the action, then the court may refuse the amendment of the defective pleading
and order the dismissal of the case (49 C. J., sec. 563, p. 457; San Joaquin etc., Ganal, etc.,
Co. vs. Stanislaus County, 155 Cal., 21; Bell. vs. California Bank, 153 Cal., 234; Ridgway vs.
Pogan, 2 Cal. Unrep. Cas., 718; Schlecht vs. Schlecht, 277 F. 1065; :Beal vs. United
Properties Co., 46 Cal. A., 287; Bemartini vs. Marini, 45 Cal. A., 418; Lentz vs. Clough, 39
Cal. A., 430; Burki vs. Pleasanton School District., 18 Cal. A., 493; Patterson vs. Steele, 98
Neb., 209; Cox vs. Gerogia R., etc. Co., 139 Ga., 532; Peo. vs. McHatton, 7 Ill., 731; Higgins
vs. Degney, 25 Misc., 248; 55 N. Y. S., 59; Wood vs. Anderson, 25 Pa., 407). Section 101
authorizing the amendment of a defective pleading should be liberally construed and the
courts, whenever possible, should incline in favor of the amendment; but when it appears
patent that the pleading is not susceptible of amendment upon the grounds above set out,
the appellate courts should not hold that the former have abused their discretion in not
permitting the amendment and in dismissing the case."
Appellants' original complaint, as we have already determined, is one for forcible entry
and detainer, over which the Court below has no jurisdiction. Not having acquired
jurisdiction over the case by the filing of the original complaint, the lower court has neither
the power nor the jurisdiction to act on the motion for the admission of the amended
complaint, much less to allow such amendment, since it is elementary that the court must
first acquire jurisdiction over the case in order to act validly therein. Wherefore, the Court
below did not err in refusing to admit plaintiffs-appellants' amended complaint.
The case might be different had the amendment been made before an answer or a motion
to dismiss had been filed, since the original complaint was then amendable, and the
amendment could supersede the original pleading, as of right, without leave of court being
required, and without the Court taking cognizance at all of the original complaint.
In view of the foregoing, the orders appealed from are affirmed, without prejudice to
appellants' filing another case for reivindicacion. Costs against appellants.
Pablo, Acting C. J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, and
Concepcion, JJ., concur.
SECOND DIVISION
[G.R. No. 79903. July 23, 1992.]
CONTECH CONSTRUCTION TECHNOLOGY & DEVELOPMENT CORPORATION, JERRY
A. KHO, WEIJEN A. KHO and WILLEN A. KHO, petitioners, vs. COURT OF APPEALS
and GREENBELT SQUARE, INC., respondents.
Conptech and Greenbelt had an agreement to construct restaurant and theaters for the
later. Contech filed a bond with Phil-British to guarantee pyt of materials used in
connection of the project fr Metropolitan Insurance.
Greenbelt sue based on the agreement for failure of Contech to comply w/ their agreement
- 2 complaints or actions were filed
- 1. against Contech and Phil- British
- 2. against Contech and Metropolitan
petitioners filed a motion to dismiss the second complaint bec of the pendency of the 1st
complaint
- it was dismissed
motion for leave to amend its complaint and to consolidate the two cases, - approved
P- previous dismissal of the second complaint for violating the rule against splitting a
cause of action barred its reinstitution by the amendment of the first complaint.
held: The amended complaint merely impleaded Metropolitan as a party defendant in the
first complaint and included in said complaint the cause of action alleged in the second
complaint which was already dismissed. Furthermore, petitioners had not yet filed any
responsive pleading to the first complaint when respondent corporation filed the motion
to amend its complaint.
Luna, Sison & Manas for petitioner.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; AMENDMENT OF PLEADINGS; RULE;
SATISFIED IN CASE AT BAR. Under Section 2, Rule 10 of the Revised Rules of Court, a
party is given a right to file an amended pleading within the time and upon the conditions
specified in the rule and without the necessity of obtaining leave of court since a party may
amend his pleading once as a matter of course at any time before a responsive pleading is
served. This rule expressly authorizes the amendment of pleadings in order that all
matters in the action in dispute between the parties may be completely determined in a
single proceeding. The amended complaint, in the instant case, was filed not to delay nor
alter the cause of action of the first complaint but rather to obviate the splitting of the
cause of action and to obtain a speedy determination of the controversy in one proceeding
without regard to technicality. The amended complaint merely impleaded Metropolitan as
a party defendant in the first complaint and included in said complaint the cause of action
alleged in the second complaint which was already dismissed. Furthermore, petitioners
had not yet filed any responsive pleading to the first complaint when respondent
corporation filed the motion to amend its complaint.
2. ID.; ID.; CONCLUSIVENESS OF JUDGMENT; NOT APPLICABLE IN CASE AT BAR;
REASON THEREFOR. Petitioners contend that the appellate court acted without
jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in admitting
the amended complaint of the respondent Corporation, considering that the previous
dismissal of the second complaint for violating the rule against splitting a cause of action
barred its reinstitution by the amendment of the first complaint. In said judgment, it was
held that there was a splitting of a cause of action in the first and second complaint,
therefore the rule against splitting of a cause of action barred the second complaint as
enunciated in the cases of Jimenez vs. Camara [107 Phil. 590] and City of Bacolod vs. San
Miguel Brewery, [29 SCRA 819] resulting in an outright denial of the amended complaint.
DECISION
NOCON, J p:
This is a petition for certiorari and prohibition with preliminary injunction to annul and
set aside the decision dated July 24, 1987 of the Court of Appeals 1 directing the Regional
Trial Court of Pasig, Branch CLXIV in Civil Case No. 45321 to admit the amended complaint
of respondent Greenbelt Square, Inc. and to proceed with the trial of said case.
It appears on record that on August 8, 1980, petitioner Contech Construction Technology
& Development Corporation, as contractor, and private respondent Greenbelt Square, Inc.,
as owner, entered into an Agreement whereby the former undertook the construction,
equipping, furnishing and supplying of materials for a theater and restaurant building for
consideration of P20,069,694.00. 2
Pursuant to said Agreement, petitioners secured from the Philippine British Assurance Co.,
Inc. (Phil-British for brevity), a bond of P2,000,000.00 under Bond No. 0746 to guarantee
the payment of the labor and materials used in connection with the construction project,
3 from the Metropolitan Insurance Co. (Metropolitan for brevity); P4,000,000.00 under
Surety No. 80/G(13)00853 to secure the full and faithful performance of the petitioners 4
and Surety No. 80/G(10)00457 for P2,000,000.00 to guarantee the supply of cement and
steel bars needed for said project. 5
On October 21, 1981, respondent Corporation terminated the Agreement upon
petitioners' failure to comply with the terms and conditions of said Agreement. 6
Respondent Corporation, likewise, sent Phil-British and Metropolitan notices of claim for
petitioners' failure to perform their part of the Agreement. cdll
Petitioners, thereafter, withdrew their men and equipments from the construction site
and respondent Corporation contracted the services of R.N. Construction Co., Inc. to finish
the building project. However, upon petitioners' refusal to pay their obligation to
respondent Corporation, the latter, on March 24, 1982, simultaneously filed with the Court
of First Instance of Rizal who separate complaints against petitioners and their sureties
for breach of contract.
In the first complaint which was docketed as Civil Case No. 45321, respondent Corporation
had petitioners and Phil-British as party defendants for the collection of a sum of money,
while the second complaint which was docketed as Civil Case No. 45322, petitioners and
Metropolitan were also party defendants for the collection of a sum of money.
On June 3, 1982, petitioners filed a motion to dismiss the second complaint on the ground
of the pendency of the first complaint likewise between the same parties for the same
cause, which motion was denied by the trial court. However, upon appeal to the
Intermediate Appellate Court, 7 the appellate court on May 4, 1984 held that there was a
splitting of a cause of action when the two complaints were filed simultaneously, hence,
the orders of the trial court dated May 17, 1983 and July 25, 1983 denying the motion to
dismiss and the motion for reconsideration were nullified. Said decision of the appellate
court became final on August 2, 1984.
On August 8, 1984, respondent Corporation filed before the lower court where the first
complaint was pending, a motion for leave to amend its complaint and to consolidate the
two cases, which motion was denied on October 3, 1984. Accordingly, respondent
Corporation filed a motion for reconsideration on October 29, 1984, which was also denied
on January 13, 1987.
Thereafter, respondent Corporation filed a petition for certiorari and mandamus with the
appellate court alleging grave abuse of discretion on the part of the trial court in denying
its motion to amend the complaint.
The appellate court, on July 24, 1987, rendered a decision giving due course to respondent
Corporation's petition and directed the trial court to admit the amended complaint of the
respondent corporation. Consequently, petitioner filed a motion for reconsideration on
August 11, 1987 which was denied on August 27, 1987.
Hence, this petition.
Petitioners contend that the appellate court acted without jurisdiction or with grave abuse
of discretion amounting to lack of jurisdiction in admitting the amended complaint of the
respondent Corporation, considering that the previous dismissal of the second complaint
for violating the rule against splitting a cause of action barred its reinstitution by the
amendment of the first complaint.
Section 2, Rule 10 of the Revised Rules of Court provides that:
"A party may amend his pleading once as a matter of course at any time before a
responsive pleading is served or, if the pleading is one to which no responsive pleading is
permitted and the action has not been placed upon the trial calendar, he may so amend it
at any time within ten (10) days after it is served." Cdpr
Under this rule, a party is given a right to file an amended pleading within the time and
upon the conditions specified in the rule and without the necessity of obtaining leave of
court since a party may amend his pleading once as a matter of course at any time before
a responsive pleading is served. This rule expressly authorizes the amendment of
pleadings in order that all matters in the action in dispute between the parties may be
completely determined in a single proceeding. The amended complaint, in the instant case,
was filed not to delay nor alter the cause of action of the first complaint but rather to
obviate the splitting of the cause of action and to obtain a speedy determination of the
controversy in one proceeding without regard to technicality. The amended complaint
merely impleaded Metropolitan as a party defendant in the first complaint and included
in said complaint the cause of action alleged in the second complaint which was already
dismissed. Furthermore, petitioners had not yet filed any responsive pleading to the first
complaint when respondent corporation filed the motion to amend its complaint. As
correctly held by the appellate court:
"It is a recognized rule of procedure that pleadings shall be construed liberally so as to
render substantial justice to the parties and in order that actual merits of the controversy
may speedily be determined without regard to technicalities and in the most expeditious
and inexpensive manner. The judicial attitude has always been favorable and liberal in
allowing amendments to a pleading. The rationale behind the rule is to avoid multiplicity
of suits and in order that the real controversies between the parties are presented, their
rights are determined and the case decided on the merits without unnecessary delay.
When the situation is such that if the proposed amendment is not allowed, another action
would be instituted, thus making two actions, two trials, and two appeals possible and
probable, the said amendment should be admitted. Hence, should the trial court find the
allegations in the pleadings to be inadequate, it should allow the party concerned to file
proper amendments to pleadings in accordance with the mandate of the Rules of Court
that amendments to pleadings are favored and should be liberally allowed.
Applying the foregoing principles to the instant case, there is no doubt that the respondent
Court committed a grave and serious abuse of discretion in not admitting the amended
complaint. The records of the case indicate that the motion for leave to admit the amended
complaint was filed before a responsive pleading was filed. In fact, no responsive pleading
has yet been filed by the private respondents. Their opposition filed on August 15, 1984 is
not a responsive pleading within the contemplation of the rule. Consequently, the filing by
the petitioner of an amended complaint was erroneously denied by the respondent Court,
the same being a matter of right. Indeed, in such a situation, an error of the trial court in
refusing such amendment is controllable by mandamus.
Moreover, the Court, after assiduously examining and comparing the original and
amended complaint, is of the opinion that the amendment sought to be included did not in
any manner change the cause of action nor was it intended for delay, which considerations
appear to be the only ground for denying a motion for leave to amend under section 3 of
Rule 10 of the Rules of Court." 8
Petitioners also contend that the rule of conclusiveness of judgment is applicable in this
case in view of the finality of the judgment of the appellate court dismissing the second
complaint which was being reintroduced by a mere amendment of the first complaint. In
said judgment, it was held that there was a splitting of a cause of action in the first and
second complaint, therefore the rule against splitting of a cause of action barred the
second complaint as enunciated in the cases of Jimenez vs. Camara 9 and City of Bacolod
vs. San Miguel Brewery, 10 resulting in an outright denial of the amended complaint.
We do not agree.
The rulings in the aforementioned cases are not applicable in the case at bar since both
cases refer to a situation wherein the second complaint, which cause of action should be
included in the first complaint, was filed after a final decision was rendered on the merits.
In this case, the first and second complaint were not yet set for pre-trial or trial because
petitioners had not yet filed any responsive pleading to both complaints, therefore the
amendment should be allowed since said amendment will not delay the proceeding and
there was no change in respondent Corporation's cause of action.
WHEREFORE, the petition for certiorari and prohibition with preliminary injunction is
hereby DENIED for lack of merit.
SO ORDERED.
Narvasa, (C.J., Chairman) and Regalado, JJ., concur.
Padilla, J., No part, in view of prior relationship with private respondent.
EN BANC
[G.R. No. L-18220. April 30, 1963.]
In the matter of the Testate Estate of Robert McCulloch Dick, deceased, FRANCIS
THEOBALD ROGERS, executor-petitioner, vs. HELEN C. DICK and HON. ANDRES
REYES, Judge, Court of First Instance of Rizal, Pasig, Rizal, respondents.
A. S. Monzon & F. G. de Guzman for executor-petitioner.
Quijano & Arroyo for respondents.
R filed a motion to amend the petition of P- executor that instead of pleading that the
deceased is was a British subj must be amended into - be corrected so that it will state that
the decedent was a British subject of Scottish nationality and/or citbritishizenship.
Respondent judge ruled in favor of R.
Held: the one entitled to amend his pleading is the party who instituted it and not his
opponent
R- must allege in his own pleading that decedent was a British subj of Scottish nationality.
- party may amend its pleading at anytime no issues raised- then cs was tried
with express or implied consent.
SYLLABUS
1. PLEADING AND PRACTICE; NATURE OF PLEADINGS; A PARTY ENTITLED TO
AMEND HIS PLEADING BUT NOT THAT OF HIS OPPONENT. Pleading are written
allegations of what is affirmed on one side or denied on the other. (Words & Phrases, Vol.
32A, p. 251, citing Tiffin vs. Hendricks, 271 P. 2d, 683 44 Wash. 2d. 837.) Hence, a party
may amend his own pleading, but not that of his opponent, for otherwise the pleading
would not reflect the claims allegations or defense of the pleader. If, for the protection of
his rights, he deems it necessary to allege and prove something which is not alleged in the
order party's pleading, he may so allege it in his own pleading and urge the court, at the
proper time, to declare that said allegation has been established and is a fact. He cannot
compel the other party to allege what he is unwilling to allege or believes even though
erroneously not to be a fact.
2. ID.; ID.; WHEN AMENDMENTS MAY BE MADE. Pleadings serve to determine
the issues of law and/or fact raised by the respective pleaders, and amendments may be
made within the time and under the conditions prescribed in the Rules of Court, generally
before the trial or hearing of the case or issue on the merits. Otherwise, there would be no
way to determine and limit the nature of the evidence to be presented or admitted or of
the arguments that the parties may adduce.
3. ID.; ID.; ID.; DISCRETION OF COURTS, UNDER SECTION 4, RULE 17 OF THE
RULES OF COURT, TO PERMIT A PARTY TO AMEND HIS PLEADING AT ANY TIME. The
provision in section 4 of Rule 17 of the Rules of Court that "when issued not raised by the
pleadings are tried by express or implied consent of the parties, they shall be treated, in
all respects, as if they had been made in the pleadings," and "such amendment of the
pleadings as may be necessary to cause them to conform to the evidence and to raise those
issues may be made upon motion of any party even after judgment; but failure so to amend
does not affect the result of the trial of these issues," confers upon the courts discretion to
permit a party to amend its own pleading, at any time, under the circumstances adverted
to.
DECISION
CONCEPCION, J p:
This is an original action for certiorari to annul certain orders of the Court of First Instance
of Rizal.
It appears that on October 20, 1960, petitioner Francis Theobald Rogers filed with said
Court, a petition, which was docketed therein as Special Proceedings No. 3433, for the
probate of a document said to be the last will and testament of Robert McCulloch Dick,
who allegedly died in Quezon City, Philippines, on February 14, 1960. It was alleged in said
petition that " the decedent at the time of his death was a British subject domiciled in the
Philippines and a resident of Tinajeros, Malabon, Rizal." On or about December 2, 1960,
respondent Helen C. Dick, one of the persons named in said Will as heirs, legatees or
devisees of the decedent, filed a "Manifestation and Motion" praying that the
aforementioned petition "be corrected so that it will state that the decedent was a British
subject of Scottish nationality and/or citizenship.' Despite petitioner's opposition thereto,
Respondent Hon. Andres Reyes, as Judge of said Court, Branch VI, granted said motion by
an order dated January 4, 1961. A reconsideration of this order having been denied by
respondent Judge, in another order dated February 9, 1961, the petitioner instituted the
present action upon the ground that respondent Judge had gravely abused his discretion
in issuing said orders of January 4 and February 9, 1961.
Section 4 of Rules 17 of the Rules of Court, upon which respondents rely, reads:
"SEC. 4. Amendment to conform to evidence. When issues not raised by the pleadings
are tried by express or implied consent of the parties, they shall be treated in all respects,
as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made
upon motion of any party at any time, even after judgment; but failure so to amend does
not affect the result of the trial of these issues. If evidence is objected to at the trial on the
ground that it is not within the issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so freely when the presentation of the merits of the
action will be subserved thereby and the objecting party fails to satisfy the court that the
admission of such evidence would prejudice him in maintaining his action or defense upon
the merits. The court may grant a continuance to enable the objecting party to meet such
evidence."
Respondents maintain that the phrase "any party" contained in this section justifies the
orders complained of. Such pretense is clearly untenable, for it overlooks the spirit and
purpose of the above provision and the nature and character of pleadings under our
procedural laws.
To begin with, pleadings "are written allegations of what is affirmed on one side or denied
on the other." (Words & Phrases, Vol. 32A, p. 251, citing Tiffin vs. Hendricks, 271 p. 2d,
683, 44 Wash. 2d. 837). Hence, a party may amend his own pleading, but not that of his
opponent, for otherwise the pleading would not reflect the claim, allegations or defenses
of the pleader.
Secondly, pleadings serve to determine the issues of law and/or fact raised by the
respective pleaders. Accordingly, there must be, and there is a limit as to the time at which
a party may amend his own pleading. Amendments may be made, therefore, within the
time and under the conditions prescribed in the Rules of Court, generally, before the trial
or hearing of the case or issue on the merits. Indeed, otherwise, there would be no way to
determine and limit the nature of the evidence to be presented or admitted or of the
arguments that the parties may adduce. This, notwithstanding, "when", as provided in the
above-quoted section 4, "issues not raised by the pleadings are tried by express or implied
consent of the parties, they shall be treated, in all respects, as if they had been made in the
pleadings," and "such amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon motion of any party
even after judgment; but failure so to amend does not affect the result of the trial of these,
issues." This provision confers upon the Court discretion to permit a party to amend its
own pleading, at any time, under the circumstances therein adverted to.

Thirdly, if respondent Helen C. Dick deems it necessary, for the protection of her right, to
allege and prove, or feels she has proven, that the decedent is of "Scottish nationality
and/or citizenship", she may so allege in her own pleading and urge the court, at the
proper time, to declare that said allegation has been established and is a fact, regardless
of whether or not petitioner has alleged it in his own petition. She cannot compel the
petitioner to allege what he is unwilling to allege or believes even though erroneously
not to be a fact.

WHEREFORE, the aforementioned orders of respondent Judge, dated January 4 and

February 9, 1961, are hereby annulled, with costs against respondent Helen C. Dick. It is
so ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Barrera, Reyes, J.B.L., Paredes, Dizon, Regala and
Makalintal, JJ., concur.
Labrador, J., took no part.
SECOND DIVISION
[G.R. No. L-34840. July 20, 1982.]
MARIO RODIS MAGASPI, JUSTINO R. MAGASPI, BALDOMERA M. ALEJANDRO, and
MANOLITA M. CORTEZ, petitioners, vs. HONORABLE JOSE R. RAMOLETE, Judge of the
Court of First Instance of Cebu, ESPERANZA V. GARCIA, Clerk of Court of First
Instance of Cebu, THE SHELL COMPANY OF THE PHILIPPINES LIMITED and/or THE
SHELL REFINING COMPANY (Phil.) INC., CENTRAL VISAYAN REALTY & INVESTMENTS
CO., INC., CEBU CITY SAVINGS & LOAN ASSOCIATION and the GOVERNMENT OF THE
REPUBLIC OF THE PHILIPPINES, respondents.
in this cs P paid insufficient docket fee of p60 for his complaint for recovery and re-
possession of a parcel of land. R- motion to compel pyt of filing fee.
Amended complaint of P to include addtinal R
still qnd the docket fee held: docket fee even insufficient- court w/ jurisdiction and even
w/ insufficient amt- docket fee based on the amended complaint orig- deemed
abandoned
______
SYNOPSIS
Petitioners paid only P60.00 as docketing fee when they filed a complaint for the recovery
of ownership and possession of a parcel of land with damages (Civil Case No. R-11882)
against herein private respondents, prompting the latter to file a motion to compel them
to pay the correct filing fee of 16,730.00, based on the total demand of the former, but the
Court ordered the payment of the amount of P3,164.00 plus P2.00 Legal Research fee as
fixed by the Clerk of Court. Thereafter, an amended complaint was filed by the petitioners,
so as to include the government as a defendant but the complaint still sought the return of
the lot in question, limiting however the pecuniary claim. The admission of the amended
complaint by Judge Canonoy without petitioners' payment of the required additional
amount was opposed by the private respondents on the ground that the amended
complaint which had been admitted had replaced the original complaint. Respondent
Judge Jose R. Ramolete, who had replaced Judge Canonoy, resolved private respondent's
motion by giving the plaintiffs-petitioners the choice to pay the docket fee assessed or to
forego the proceeding, but said order was assailed by the latter, insisting that they
correctly paid the correct amount of P8.00, or in the alternative, that if they are to pay an
additional docketing fee, it should be based on the amended complaint.
The Supreme Court held that the trial court had acquired jurisdiction over Civil Case No.
R-11882 which was docketed upon the payment of P60.00 although said amount is
insufficient and that the additional docket fee to be paid by the petitioners should be based
on their amended complaint for the original pleading is deemed abandoned.
Petition granted.
SYLLABUS
1. REMEDIAL LAW; ACTIONS, FILING OF; PAYMENT OF DOCKET FEES, SETTLED
RULE. The rule is well-settled that a case is deemed filed only upon payment of the
docket fee regardless of the actual date of its filing in court. (Malimit vs. Degamo, No. L-
17850, Nov. 28, 1964, 12 SCRA 450, 120 Phil. 1247; Lee vs. Republic, L-15027, Jan. 31,
1964, 10 SCRA 65.)
2. ID.; ID.; ID.; NOT APPLICABLE WHERE CONTROVERSY REFERS TO AMOUNT OF
DOCKET FEE TO BE PAID. The rule settled in the Malimit and Lee cases concerned the
timeliness of the payment of the docket fee. It does not cover the case at bar where there
is no reference to the time of payment but concerns the amount that has to be paid.
3. ID.; ID.; JURISDICTION ACQUIRED BY COURT DESPITE PAYMENT OF
INSUFFICIENT DOCKET FEE. Civil Case No. R-11882 was docketed upon the payment
of P60.00 although said amount is insufficient. Accordingly, the trial court had acquired
jurisdiction over the case and the proceedings thereafter had were proper and regular.
4. ID.; ID.; ID.; DOCKET FEES TO BE ASSESSED ON THE BASIS OF THE AMENDED
COMPLAINT. Petitioners' assertion that the docket fee be based on the amended
complaint which was admitted on November 14, 1970, is in point. "When a pleading is
amended, the original pleading is deemed abandoned. The original ceases to perform any
further function as a pleading. The case stands for trial on the amended pleading only." (1
Moran, Rules of Court, 363 (1970), citing Reynes v. Compania General de Tobacos de
Filipinas, 21 Phil. 417; Reyman v. Director of Lands, 34 Phil. 428.) On the basis of the
foregoing, the additional docket fee to be paid should be based on petitioners' amended
complaint.
DECISION
ABAD SANTOS, J p:
This is a petition for certiorari to review the actuations of the Court of First Instance of
Cebu in Civil Case No. R-11882 in respect of the correct amount to be paid for the filing of
the case as provided in Sec. 5, par. (a), Rule 141 of the Rules of Court.
On September 16, 1970, the petitioners filed a complaint for the recovery of ownership
and possession of a parcel of land with damages against The Shell Co. of the Philippines,
Ltd and/or The Shell Refining Co. (Phil.) Inc., Central Visayan Realty & Investment Co., Inc.
and Cebu City Savings & Loan Association in the Court of First Instance of Cebu. Upon filing
and the payment of P60.00 as docketing fee and P10.00 for sheriff fees, the complaint was
assigned Civil Case No. R-11882. LibLex
The complaint contains, among other prayers, the following:
"3. To declare Transfer Certificate of Title No. 41215 issued in the name of the
defendant Central Visayan Realty & Investment Co., Inc. as null and void and hence of no
legal effect;
"4. That the herein plaintiffs in their capacity as heirs of the deceased spouses
Crispulo Magaspi and Rosalia Rodis be declared as owners of the land in question;
"5. That once declared as null and void, The Register of Deeds for the City and
Province of Cebu be ordered to cancel the abovementioned Transfer Certificate of Title
and issue another in their place in the name of the herein plaintiffs;
"6. To order the defendants, The Shell Company of the Philippines Limited, formerly
known as The Asiatic Petroleum Co. (P.I.), Ltd., and/or The Shell Refining Company (Phil),
Inc., to pay the plaintiffs the amount of P3,500.00 a month representing unpaid monthly
rentals starting from June 2, 1948 up to May 15, 1968, and to order all the defendants
jointly and solidarily to pay the plaintiffs the amount of P3,500.00 a month representing
unpaid monthly rentals starting from May 16, 1968 up to the date that the land is actually
delivered to the herein plaintiffs;
"7. To order the defendants jointly and solidarily to return the ownership and
possession of the lot in question to the herein plaintiffs;
"8. To order the defendants jointly and solidarily to pay the plaintiffs the amount of (Six Thousand Seven Hundred Thirty Two Pesos) 6,732.00
P500,000.00 as moral damages and attorney's fees in the amount of P250,000.00 and the 5. That under the Old Rules of Court, Sec. 5, Rule 130 provides that it is the sum
cost of this action; claimed, 'exclusive of interest and damages;' while under the new Rules of Court, Sec. 5,
"9. Exemplary damages be imposed on the defendants jointly and solidarily in the Rule 141, it is the sum claimed, 'exclusive of interest,' the word 'damages' having been
amount of P500,000.00 as an example and deterrent to any similar acts in the future." excluded purposely, indicating the intent to include damages in the computation of the
On September 18, 1970, Central Visayan Realty & Investment Co., Inc. and Cebu City docket fee;
Savings and Loan Assn. filed a motion to compel the plaintiffs to pay the correct amount "WHEREFORE, it is respectfully prayed that the plaintiffs be made to pay the correct
for docket fee. The motion, omitting the confusing footnotes, reads: cdphil docket fee within the time prescribed by this Honorable Court, as properly computed by
"1. That the complaint of the plaintiffs contains or states two, if not three alternative the Clerk of Court and failing to pay the same within the prescribed period to dismiss the
causes of action: case.
a) Reconveyance of real property. "Further, until such time as the correct docket fee is paid, the time for filing of responsive
Par. 4. 'That the herein plaintiffs in their capacity as heirs of the deceased spouses pleadings by the defendants be suspended."
Crispulo Magaspi and Rosalia Rodis be declared as owners of the land in question; The motion was opposed by the plaintiffs (petitioners herein) who claimed that the main
Par. 5. That once declared null and void, the Register of Deeds for the City and Province cause of action was the recovery of a piece of land and on the basis of its assessed valued,
of Cebu are ordered to cancel the above-mentioned Transfer Certificate of Title and issue P60.00 was the correct docketing fee and that although the Revised Rules of Court do not
another in their place in the names of the herein plaintiffs. exclude damages in the computation of the docket fee, damages are nonetheless still to be
"If the plaintiffs are unable to have the property reconveyed and the title canceled, having excluded.
passed to an innocent purchaser for value, their recourse would be for damages, i.e.,
recovery of the value of the land and other damages. On October 5, 1970, the presiding judge ordered the Clerk of Court to comment on the
b) Recovery of the value of the land and Damages. motion and the opposition. The following comment was submitted: LLphil
1. To order the defendants, to pay plaintiffs the amount of P3, 500.00 a month "1. That in the matter of fixing the amount of fees that shall be collected by the Clerks
representing unpaid monthly rentals starting from June 2, 1948 up to May 15, 1968, and of Court of First Instance for the filing of an action or proceeding, Section 5, Rule 141 of
to order all the defendants jointly and severally to pay the plaintiffs the amount of the Rules of Court provides as follows:
P3,500.00 a month starting from May 16, 1968 up to the date that the land is actually Sec. 5. Clerks of Court of First Instance. (a) For filing an action or proceeding, or a
delivered to herein plaintiffs; permissive counterclaim or cross-claim not arising out of the same transaction subject of
2. To order the defendants jointly and solidarily to pay the plaintiffs the amount of the complaint, a third-party complaint and a complaint in intervention and for all services
P500,000.00 as moral damages and attorney's fees in the amount of P250,000.00; in the same, if the sum claimed, exclusive of interest, or the value of the property in
3. Exemplary damages be imposed on the defendants jointly and severally in the litigation, or the value of the estate, is:
amount of P500,000.00; 1. Less than P200.00 P16.00
4. That because of the unlawful occupation and usurpation the plaintiffs suffered 2. P200.00 or more but less than P600.00 24.00
damages in the amount of P1,250,000.00 which is the reasonable market value of the land 3. P600.00 or more but less than P3,000.00 32.00
in question it being a first class commercial land. 4. P3,000.00 or more but less than P5,000.00 40.00
c) Cancellation of Titles. 5. P5,000.00 or more but less than P20,000.00 60.00
1. To declare Transfer Certificate of Title No. 41215 null and void; 6. P20,000.00 or more but less than P50,000.00 80.00
2. That each of these alternative causes of action is distinct and separate from each 7. P50,000.00 or more but less than P100,000.00 100
other. Each may be instituted by plaintiffs against the defendants and the same may 8. P100,000.00 or more but less than P150,000.00 150.00
constitute a valid cause of action. Each constitutes an appropriate basis therefore, for 9. And for each P1,000.00 in excess of P150,000.00 2.00
determining the correct amount of the docket fee in this case; 10. When the value of the case cannot be estimated 200.00
3. That in the suit for reconveyance, the recovery of the improvements existing on 11. When the case does not concern property (naturalization, adoption, legal
the land is deemed included, since defendant Cebu City Savings is alleged to be a builder separation, etc.) 32.00
in bad faith. The value of existing improvement, i.e., assessed value is P70,000.00; 12. In forcible entry and illegal detainer cases appealed from inferior cases
4. Therefore, the docket fee should be: 20.00
Docket fee
Land and Improvement at P87,280.00 assessed value P100.00 If the case concerns real estate, the assessed value thereof shall be considered in
Recovery of Value of the Land and damages: computing the fees. (Italics supplied)
a) P1,250,000.00 Land value In case the value of the property or estate of the sum claimed is less or more in accordance
b) 500,000.00 Moral Damages with the appraisal of the court, the difference of fee shall be refunded or paid as the case
c) 500,000.00 Exemplary Damages may be.
d) 250,000.00 Attorney's fees "2. That a reading of the complaint in this case would show that the action is not
e) 890,633.24 Monthly rentals up to date of filing of complaint 6,632.00 only for recovery of property but also for actual and moral damages as well as for
P3,390,633.24. attorney's fees;
"3. That under the provisions of Sec. 5, Rule 141 of the Rules of Court, already cited
above, it appears that for the purpose of determining the amount of the fees that should
be collected for the filing of an action or proceeding, the basis should be the totality of the
sum or sums claimed, exclusive of interest, except in the case of real estate where the
assessed value thereof shall be considered in computing the fees;
"4. That in the light of the foregoing, it is the opinion of the undersigned that the
basis for computing the fees for the filing of the complaint in this case should be as follows:
(a) Assessed value of the land
(please see par. 4 of the complaint) P17,280.00
(b) Moral damages 500,000.00
(c) Attorney's fees 250,000.00
(d) Monthly rentals at P3,500.00 a month up to the filing of complaint
890,633.24
TOTAL P1,657,913.24
"Accordingly, the correct amount of the legal fees for the filing of this case should be fixed
at P3,164.00 plus P2.00 Legal Research fee;"
On October 14, 1970, Judge Mateo Canonoy issued the following order:
"This is a motion of the defendants to order the plaintiffs to pay a filing fee of P6,730.00
on the ground that the total demand of the said plaintiffs (the value of the land, which is
P17,280.00, plus the damages amounting to P3,390,633.24) should be the basis for
computing the filing fee and not the value of the land alone. The plaintiffs paid the amount
of P60.00 as filing fee in this case.
"Examining the allegations of the complaint, the Court is constrained to sustain the
Manifestation or contention of the Clerk of Court, dated October 14, 1970. The damages
are not merely incidental or ancillary but are principal demands. Besides, Rule 141, Sec. 5
(a) of the new Rules of Court no longer excludes damages, like interest, from computing
the filing fees. (The Old Rules of Court, Rule 130, Sec. 5 (a), expressly includes damages
and interest in the exemption.) The exclusion of damages from the exemption in the
computation of the filing fees in the new Rules of Court is intentional, since oftentimes, as
in the present case, the claim for damages far exceeds the value of the land. To thus exempt
the plaintiffs from paying the filing fee for damages is against reason. Besides, in
determining the jurisdiction of the court, the amount of damages claimed is taken into
account.
"The opinion of Undersecretary Guillermo Santos that the Court ought to be left alone to
determine the question of the filing fee of cases pending therein without any interference
from the Secretary of Justice (Attorney General) is commendable.
"IN VIEW OF THE FOREGOING, the Court hereby overrules the opposition of the plaintiffs
and orders them to pay an additional sum of P3,104.00 as filing fees."
On October 19, 1970, the Shell companies filed their respective answers.
On October 23, 1970, Central Visayan Realty and Cebu City Savings filed the following
manifestation: LexLib
"1. That this Honorable Court issued an Order, dated October 14th, 1970 for the
plaintiffs to pay an additional P3,104.00 docket fee, per computation and manifestation of
the Clerk of Court;
"2. That the Clerk of Court manifestations is predicated on the following:
Land Value P17,280.00 P60.00
Damages:
a) Moral Damages P500,000.00
b) Attorney's fees 250,000.00
c) Monthly Rental 890,633.24
P1,640,633.24
and excusably excluded was the exemplary damages sought (Par. 22 Complaint, Par. 9,
Prayer) in the amount of Five Hundred Thousand Pesos (P500,000.00);
"WHEREFORE, it is respectfully prayed that in the computation of the correct docket fee,
besides the sum of P3,104.00, an additional sum of P1,000.00 be imposed in accordance
with Sec. 5 (Par. 9) Rule 141 of the Rules of Court: and should the plaintiffs within a period
fixed by this Honorable Court fail to pay the same, the complaint be dismissed with
prejudice, and for such other reliefs as this Honorable Court may deem just under the
premises."
On November 3, 1970, the plaintiffs filed a motion for leave to amend the complaint so as
to include the Government of the Republic of the Philippines as a defendant. The amended
complaint still sought the return of the lot in question but the pecuniary claim was limited
to the following: LLpr
"8. To order the defendants jointly and solidarily except the Government of the
Republic of the Philippines moral damages in such amount as this Court may determine
and attorney's fees in the amount of P100,000.00 and the cost of this action;
"9. Exemplary damages be imposed on the defendants jointly and solidarily except
the Government of the Republic of the Philippines in the amount as this Court may deem
just and proper as an example and deterrent to any similar acts in the future." (Italics not
supplied.)
On November 12, 1970, the defendants (herein respondents) filed an opposition to the
admission of the amended complaint. They based their opposition on the following
grounds:
"1. That while the only reason given for the amendment of the complaint is the
inclusion of the Government of the Philippines as an indispensable party; the plaintiffs
have taken the improper liberty of amending portions of the allegations in the complaint
and even has eliminated entire paragraph, thus:
a) By not mentioning the previously alleged value of the land at P1,250,000.00 in
paragraph 19;
b) By not mentioning the previously averred to monthly rentals due at P3,500.00
from June 2, 1948, or computed at P890,633.24;
c) By eliminating completely the claim for moral damages of P500,000.00 and
reducing attorney's fees from P250,000.00 to P100,000.00 under par. 21;
d) By not mentioning the amount previously claimed as exemplary damages in the
sum of P500,000.00, as alleged in par. 21;
substituting thereto, the averment that, the amount of these various claims for damages
will be proven during the trial of the case;
"2. That these amendments are obviously intended to circumvent, if not entirely
subvert, the lawful Order of this Honorable Court for the plaintiff to pay the amount of
P3,104.00 as docket fee, on the basis of the total amount claimed for damages (plus
P1,000.00 docket fee on the P500,000.00 exemplary damages, pending resolution before
this Honorable Court);
"3. That if the amended complaint is admitted as it is, plaintiffs would effect, have
their cakes and eat it too, in the manner of speaking;
"4. That the payment of the correct and in this case, by an Order of this Honorable
Court of the docket fee, is a condition precedent for the complaint, amended or otherwise,
of the plaintiff to be given due course;"
On November 16, 1970, Judge Canonoy admitted the amended complaint although the
plaintiffs had not yet complied with his Order of October 14, 1970, that they should pay an
additional P3,104.00 docket fee.
On December 2, 1970, Central Visayan Realty and Cebu City Savings filed the following
motion:
"1. That this Honorable Court issued an Order dated October 14, 1970, for the
plaintiffs to pay an additional docket fee of P3,104.00;
"2. That such an Order has not been complied with by the plaintiffs nor an appeal or
a petition for review filed and the same has become final;
"3. That Sec. 3 Rule 17 of the Rules of Court provides that if plaintiff fails:
'to comply with these rules of any order of the court, the action may be dismissed upon
motion of the defendant, or upon the court's own motion.'
"4. That the filing of the answer by these defendants is premised on the payment of
the correct or as ordered docket fee by the plaintiffs; for which reason, no answer has yet
been filed;
"WHEREFORE, it is respectfully prayed that the plaintiffs be ordered to pay the additional
docket fee within seven (7) days, otherwise the complaint will be dismissed with
prejudice."
The above motion was opposed by the plaintiffs on the ground that the amended
complaint which had been admitted by the court had replaced the original complaint.
On February 12, 1971, the Republic filed its answer to the amended complaint and the
plaintiffs filed a reply on February 23, 1971.
On March 13, 1971, Central Visayan Realty and Cebu City Savings filed a petition to have
their motion of December 2, 1970, resolved by the court. cdrep
On April 3, 1971, Judge Jose R. Ramolete who had replaced Judge Canonoy issued the
following order:
"This is a petition of the defendants praying for the resolution of their motion dated
December 3, 1970. This motion was brought about by virtue of the order of this Court
dated October 14, 1970, ordering the plaintiffs to pay additional docket fees of P3,104.00.
"Going over the record of the case, it appears that after the issuance of the above order,
the plaintiffs filed their amended complaint which was also admitted on November 16,
1970.
"At the hearing of this petition the parties supported their respective positions with oral
arguments after which they submitted the matter for resolution.
"It is a rule that the correct docket fee must be paid before the Court will act on the petition
or complaint. The Court of Justice is not called upon to act on a complaint or a petition in
the absence of payment of a corresponding docket fee. (Garcia vs. Vasquez, 28 SCRA 330,
331.) Before the payment of the docket fee, the case is not deemed registered and docketed
(Lazaro vs. Endencia, 57 Phil., 552; Malimit vs. Degamo, 12 SCRA 454; Lee vs. Republic, 10
SCRA, 67).
"In the light of the above rulings on the matter, the original complaint, up to the present,
is not deemed registered or docketed. It follows, therefore, that there is likewise no
amended complaint deemed to have been filed and admitted.
"The Court, therefore, is of the view that up to the present the parties are in the same
situation as they were before this proceeding was started. It cannot also order the
plaintiffs to comply with the order of this Court dated October 14, 1970, because it has not
yet acquired jurisdiction over them neither can it order the dismissal of the complaint for
non-compliance of the order of October 14, 1970, by the plaintiffs, for obvious reasons.
The plaintiffs are given the choice to pay the docket fee assessed or to forego this
proceeding."
The petitioners assail the above order. They insist that they had correctly paid the
docketing fee in the amount of P60.00, or in the alternative, that if they are to pay an
additional docketing fee, it should be based on the amended complaint. cdll
For initial determination is the question as to whether or not Civil Case No. 11882 may be
considered as having been filed and docketed when P60.00 was paid to the Clerk of Court
even on the assumption that said payment was not sufficient in amount.
The rule is well-settled that a case is deemed filed only upon payment of the docket fee
regardless of the actual date of its filing in court. (Malimit vs. Degamo, No. L-17850, Nov.
28, 1964, 12 SCRA 450, 120 Phil. 1247; Lee vs. Republic, L-15027, Jan. 31, 1964, 10 SCRA
65.)
Is the case at bar covered by the above rule? It is not because the question posed in the
Malimit and Lee cases was the timeliness of the payment of the docket fee whereas the
case at bar has no reference to the time of payment but concerns the amount that has to
be paid.
The case of Garcia vs. Vasquez, L-26808, May 23, 1969, 28 SCRA 330, mentioned in the
order of Judge Ramolete will be discussed below. And as to Lazaro vs. Endencia, 37 Phil.
552 (1932), it does not appear to have relevance to the question. In that case an appeal in
an ejectment case was made and the appellant deposited only P8.00 as docket fee instead
of P16.00 as required by law. It was only after the period for perfecting an appeal that the
appellant deposited the additional P8.00 to complete the amount of said docket fee. This
Court dismissed the appeal on the ground "that payment of the full amount of the docket
fees is an indispensable step for the perfection of an appeal." (At p. 553.)
The case at bar can be distinguished from the Lazaro case in at least two respects, namely:
(a) The Lazaro case involved the timeliness of the perfection of the appeal which was made
to depend in turn on the timeliness of the full payment of the docket fee whereas the
instant case does not involve an appeal nor the timeliness of the payment of the docket
fee; and (b) in the Lazaro case, the amount (P8.00) which was initially paid was palpably
inadequate, whereas in the case at bar there is an honest difference of opinion as to the
correct amount to be paid as docket fee.
The Garcia case, supra, appears to favor the petitioners. In that case, a will was sought to
be probated in Special Proceeding No. 62818. Docket fees amounting to P940.00 were
paid. Later, a second will was sought to be probated in the same special proceeding. This
Court held that there was no need to pay a separate docket fee because the probate of the
second will was not sought in another proceeding.
We hold that under the circumstances, Civil Case No. R-11882 was docketed upon the
payment of P60.00 although said amount is insufficient. Accordingly, the trial court had
acquired jurisdiction over the case and the proceedings thereafter had were proper and
regular. LexLib

The next question is in respect of the correct amount to be paid as docket fee. Judge
Canonoy on October 14, 1970, ordered the payment of P3,104.00 as additional docket fee
based on the original complaint. However, the petitioners assert as an alternative view,
that the docket fee be based on the amended complaint which was admitted on November
14, 1970, also by Judge Canonoy.

The petitioners have a point. "When a pleading is amended, the original pleading is
deemed abandoned. The original ceases to perform any further function as a pleading. The
case stands for trial on the amended pleading only." (1 Moran, Rules of Court, 363 [1970],
citing Reynes v. Compaia General de Tobacos de Filipinas, 21 Phil. 417; Reyman v.
Director of Lands, 34 Phil. 428.)

On the basis of the foregoing, the additional docket fee to be paid by the petitioners should
be based on their amended complaint.

WHEREFORE, the petition is hereby granted; the petitioners shall be assessed a docket fee
on the basis of the amended complaint; and after all of the lawful fees shall have been paid,
the proceedings in Civil Case No. R-11882 shall be resumed. No special pronouncement as
to costs.

SO ORDERED.
Barredo (Chairman), Aquino, Concepcion, Jr., Guerrero and De Castro, JJ., concur.
Escolin, J., concurs in the result.
EN BANC
[G.R. No. L-12081. May 30, 1958.]
LORENZO LERMA, plaintiff-appellee, vs. VICTORIANO L. REYES and ADELA
ENRIQUEZ, defendants-appellants.
Gonzalo D. David for appellee.
Emiliano Calma for appellants.
D mortgaged prop to P, was not able to pay religiously.
D- claiming the defense that plaintiff had given them an indefinite extension of time
to pay the loan by allowing them to look for purchasers for the mortgaged property
and promising not to file any action in court
Under the terms of the above document Exh. "1", all that was excused was the time
for the payment of the interests that became due for the months
they asked permission to amend their answer so as to include therein the allegation
of payment of usurious interest only after plaintiff had already presented his
evidence and rested his case. The lower court did not abuse its discretion when it
refused to allow the proposed amendment, because to do so would have had the effect of
unnecessarily prolonging the trial, there being no reason why the defense of usury
was not pleaded in the original answer.
SYLLABUS
1. CONTRACTS: TERM OF OBLIGATION; PAYMENT BECOME DUE; EXTENSION;
FAILURE TO DEMAND PAYMENT; NOVATION. The mere failure on the part of the
creditor to demand payment after the debt has become due does not constitute an
extension of the term of the obligation (Art. 2079, New Civil Code; Hongkong and
Shanghai Bank vs. Aldecoa, 30 Phil., 255), for novation must be express (Art. 1292, New
Civil Code) and can not merely be inferred or implied from the creditor's silence, leniency,
or inaction (Banco Espaol vs. Donaldson, 5 Phil., 418, 423, Shannon and Shannon vs. Phil.
Lumber and Transportation Co., 61 Phil., 872).
DECISION
REYES, J. B. L., J p:
On August 21, 1952, defendants-appellants Victoriano L. Reyes and Adela Enriquez
mortgaged to plaintiff-appellee Lorenzo Lerma a parcel of land and the
improvements thereon located at R. Hidalgo Street, Quiapo, Manila, described in
Transfer Certificate of Title No. 77930 of the Office of the Register of Deeds for the City of
Manila, for the sum of P70,000, with interest at the rate of 12 per cent per annum, the
interests for the months of August, September, and October, 1952, payable at the execution
of the contract, and the succeeding monthly interests on the first day of every month, the
mortgage to expire on August 1, 1953, unless extended to another year if the mortgagors
would have complied with all its provisions (Exh. "A"). The mortgage contract was duly
registered in the Office of the Register of Deeds.
Defendants-appellants paid the interests for the months of August 1, 1952 to June
1953 and thereafter failed to pay further interests or the principal loan. Whereupon,
plaintiff-appellee filed this action on May 6, 1954 in the Court of First Instance of
Manila for the payment of the mortgage debt of P70,000, the accrued interests of P7,700,
the fire insurance premiums on the mortgaged property of P937.50, or a total of
P78,637.50, plus attorney's fees in the amount of P7,000, and costs, and upon failure of
defendants to pay these amounts, for the foreclosure of the property mortgaged.
Defendants-appellants answered admitting the loan and the mortgage but claiming
the defense that plaintiff had given them an indefinite extension of time to pay the
loan by allowing them to look for purchasers for the mortgaged property and
promising not to file any action in court while they were looking for buyers; and asked
for the dismissal of the complaint and the payment of damages allegedly suffered because
of the premature filing of the action.
After trial, the lower court found that although plaintiff had given defendants an extension
of time to pay the interests due for the months of May to September, 1953, he did not
extend the period for the payment of the principal loan of P70,000, with the effect that the
capital and the accrued interests became due one year from August 1, 1952; and that
assuming that defendants had been given the opportunity to look for buyers for the
mortgaged property, they could still do so within three months after judgment is rendered
and before the property is sold at foreclosure sale. Consequently, the court ordered
defendants to pay plaintiff the sum of P70,000, with interests at 12 per cent per annum
from July 1, 1953 until full payment, as well as the sum of P2,000 as attorney's fees and
costs; and the foreclosure of the mortgaged property in case defendants failed to satisfy
the judgment within 90 days. In another order, the court also required defendants to pay
plaintiff the amount of P937.50 representing insurance premiums paid by the latter on the
mortgaged property, having found that defendants had agreed to reimburse plaintiff for
the same. From this judgment and order, defendants appealed to the Court of Appeals,
which forwarded the case to us because the amount involved is beyond its jurisdiction.
Defendants-appellants urge:
(1) that the mortgage contract had been extended to another year or up to August 1,
1954, so that plaintiff-appellee's action was premature; and
(2) that the lower court erred in not allowing them to amend their answer so as to
allege payment of usurious interest.
Under their first argument, appellants point to the following document signed and
delivered to them by plaintiff-appellee:
"October 19, 1953
"TO WHOM IT MAY CONCERN:
This is to certify that Mr. Victoriano L. Reyes secured a mortgage loan to his property
located at 1074 R. Hidalgo Street, Quiapo. Manila from the undersigned in the amount of
P70,000.00 at the rate of twelve (12%) per cent per annum on August, 1952.
That Mr. Reyes has been paying continuously his interest obligation since the above date
of contract.
That the interest due for the months of May to September, 1953, has been used by Mr.
Reyes and at my instance and permission for the necessary improvements of his property
under mortgage and for the operation of his business as well." (Exh. "1").
and claim that as the deed of mortgage Exh. "A" stipulates that its term of one year could Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion,
be extended for another year, the fact that appellee, by the above document, gave them an Endencia and Felix, JJ., concur.
indefinite extension of time to pay the interests on the loan in question for the months of
May to September, 1953, and did not file the action for foreclosure at the expiration of one
year from August 1, 1952, implied that payment of the principal loan had likewise been
extended for another year, or up to August 1, 1954.
The above claim is patently without merit. Under the terms of the above document Exh.
"1", all that was excused was the time for the payment of the interests that became
due for the months of May to September, 1953. The implication of this extension is simply
that the mortgage had waived his right to demand foreclosure for failure of appellants to
pay the monthly interests as they fell due from May to September, 1953. No extension of
the term for the payment of the principal loan was given, as appellant Victoriano Reyes
himself admitted in the court below (t.s.n. December 13, 1954, p. 13), hence, the loan
matured and became demandable, under the terms of the mortgage deed, on August 1,
1953, and the mortgagee could have filed foreclosure proceedings on that date or any time
thereafter to collect the principal loan as well as all accrued interests thereon. The fact that
appellee postponed his action and did not file it upon the maturity of the loan on August
1, 1953 does not mean, again, that he had extended the term or period of the mortgage for
another year. The mere failure on the part of the creditor to demand payment after the
debt has become due does not constitute an extension of the term of the obligation (Art.
2079, New Civil Code; Hongkong & Shanghai Bank vs. Aldecoa, 30 Phil., 255), for novation
must be express (Art. 1292, supra) and can not merely be inferred or implied from the
creditor's silence, leniency, or inaction (Banco Espaol vs. Donaldson, 5 Phil., 418, 423;
Shannon and Shannon vs. Phil. Lumber and Transportation Co., 61 Phil., 872).
And even assuming that the term of the mortgage had indeed been extended for
another year, still plaintiff-appellee had the right to institute foreclosure
proceedings before the expiration of the extended period, since appellants
admittedly had completely failed to pay the monthly interests from November, 1953
up to the filing of the action on May 6, 1954, and under the terms of the deed of mortgage
Exh. "A", "the failure of the mortgagors to comply with any condition of this real
estate mortgage, especially the nonpayment of the interests within six months from
any due date, shall cause the obligation to become immediately demandable and
foreclosure proceedings may then be instituted by the mortgagee herein".
Coming now to appellants' second argument, it appears that they asked permission to
amend their answer so as to include therein the allegation of payment of usurious
interest only after plaintiff had already presented his evidence and rested his case.
The lower court did not abuse its discretion when it refused to allow the proposed
amendment, because to do so would have had the effect of unnecessarily prolonging
the trial, there being no reason why the defense of usury was not pleaded in the
original answer. Besides, the suggested amendment consists merely in the supposed
payment by appellants of interest to plaintiff for three months in advance. Even if the
answer had been amended and appellants had proved the truth of this allegation, plaintiff
would still have not acted in violation of the Usury Law, which allows collection of interest
for one year in advance as long as it does not exceed the lawful rates fixed therein (section
6, Act 2655, as amended). No reversible error was, therefore, committed by the trial court
when it denied appellants' motion to amend their answer.
Wherefore, the decision appealed from is affirmed, with costs against appellants
Victoriano L. Reyes and Adela Enrquez. So ordered.
THIRD DIVISION
[G.R. No. 82630. September 30, 1992.]
MARIA GULANG, petitioner, vs. GENOVEVA NADAYAG, FELIX NADAYAG, ANTIPAS
NADAYAG, ANDRES NADAYAG, HILARIO NADAYAG and HONORABLE COURT OF
APPEALS, respondents.
Moises F. Dalisay, Sr. for petitioner.
Alan L. Flores for private respondent.
P filed a cs for Gulangs encroachment of their 32 sq m part of land
SYLLABUS
plaintiffs are co-owners of a parcel of land located in Port Area, Iligan City
defendant Maria Gulang is the registered owner of a parcel of land
before Maria Gulang acquired the abovementioned lot, she rented a portion of the
same, 32 square meters in area, together with the improvements thereon from
defendant Pedro Lasmarias;
Pedro Lasmarias purchased from the plaintiffs' predecessor-in-interest a parcel of
land, 38.5 square meters in area, adjacent to the aforementioned 62 square meters lot
of the plaintiffs;
Maria Gulang be ordered to vacate the 32 square-meters-portion of plaintiffs' land
restore possession and/or ownership thereof to plaintiffs
Answer: defendants deny the claim of the plaintiffs and by way of affirmative and
special defenses alleged that the defendants are the 'true, legal and lawful owner
(sic) and in actual possession and occupation' of the land in question
survey- Gulang was occupying 32 sq m land of P
Pre-trial:
Motion to Amend- no cause of action, prescription,estoppel laches, fraud were introduced
by Lasmarias, Gulang made a similar motion.
- Gulang, therefore, cannot benefit from Lasmarias' action, which ultimately
failed, or revive the same after the latter unilaterally and voluntarily
abandoned it by failing to appeal from the decision.
1. REMEDIAL LAW; CIVIL PROCEDURE; AMENDMENT OF PLEADINGS; WHEN
AVAILABLE; RULE. In the instant case, the motion to amend was filed long after the
pre-trial was terminated and the case placed on the trial calendar. If Lasmarias
failed to take any positive action to amend his answer before pre-trial, he should
have raised during the pre-trial itself, which was conducted much later, his other
possible defenses and, accordingly, amend his answer for that purpose. One of the avowed
purposes for the holding of a pre-trial as provided under Section 1, Rule 20 of the Rules
of Court, is precisely to consider "the necessity or desirability of amendments to the
pleadings." The foregoing rules are not, however, iron-clad. Under Section 3 of Rule 10,
substantial amendments may be made even after the case has been set for hearing
provided prior leave of court is obtained. Such leave may be refused if the motion
requesting for the same would delay the action or the cause of action or defenses
would be substantially altered by the proposed amendment.
2. ID.; ID.; EFFECT OF PLEADINGS; AS A RULE, DEFENSES AND OBJECTIONS NOT
PLEADED ARE DEEMED WAIVE; LACK OF CAUSE OF ACTION AS AN EXCEPTION; RULE.
As could be gleaned from Section 2 of Rule 9, two (2) defenses are not deemed waived
by the failure to raise them in a motion to dismiss or in the answer, to wit: (a) lack of
cause of action and lack of jurisdiction on the part of the Court. Lack of cause of action
may thus be raised in a motion to dismiss after the answer has been filed, by a motion for
judgment on the pleadings, or at the trial on the merits.
3. ID.; ID.; ID.; ID.; LACK OF JURISDICTION AS AN EXCEPTION; RULE. As to
jurisdiction, while it is true that jurisdiction over the subject matter of a case may be raised
at any stage of the proceedings as the same is conferred by law, it is nevertheless settled
that a party may be barred from raising it on the ground of laches or estoppel.
4. ID.; ID.; ID.; ID.; DEFENSE OF PRESCRIPTION; RULE. There is also authority
to the effect that the defense of prescription is not deemed waived, even if not pleaded in
a motion to dismiss or in the answer, if plaintiff's allegation in the complaint or the
evidence he presents shows clearly that the action has prescribed.
DECISION
DAVIDE, JR., J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court to annul and
set aside the 22 September 1987 decision 1 of respondent Court of Appeals in C.A.-G.R. CV
No. 07064 affirming in toto the ruling of Branch IV of the then Court of First Instance (now
Regional Trial Court) of Lanao del Norte, at Iligan City, in Civil Case No. 1076; the trial
court found the petitioner to have encroached upon the property of the private
respondents to the extent of thirty-two (32) square meters. The petitioner was therefore
ordered to (a) vacate said portion, (b) deliver possession thereof to the private
respondents and (c) pay the sum of P2,000.00 as attorney's fees.
The factual and procedural antecedents are summarized by the respondent Court as
follows:
"On October 24, 1978, Genoveva Nadayag, Felix Nadayag, Antipas Nadayag, Andres
Nadayag, Pedro Nadayag and Hilario Nadayag filed with the then Court of First Instance of
Lanao del Norte at Iligan City, Branch II, a complaint against Maria Gulang and/or Pedro
Lasmarias. It is alleged in the complaint that plaintiffs are co-owners of a parcel of land
located in Port Area, Iligan City, 62 square meters in area, covered by Tax Declaration
No. 76-18851 and TCT No. T-15334; that defendant Maria Gulang is the registered
owner of a parcel of land, also located at Port Area, Iligan City, with an area of 40 square
meters, covered by Tax Declaration No. 76-281591 and TCT No. T-12999; that before
Maria Gulang acquired the abovementioned lot, she rented a portion of the same,
32 square meters in area, together with the improvements thereon from defendant
Pedro Lasmarias; that sometime in 1964, Pedro Lasmarias purchased from the
plaintiffs' predecessor-in-interest a parcel of land, 38.5 square meters in area,
adjacent to the aforementioned 62 square meters lot of the plaintiffs; that plaintiffs
had complained against Maria Gulang's occupancy of the above-said 32 square-meters-
area in plaintiffs' 62 square-meters-parcel of land, the rentals on which (the 32 square
meters-portion and the house erected thereon) Maria Gulang had been paying to Pedro
Lasmarias instead of to the plaintiffs; and that Pedro Lasmarias has been claiming
that the 32 square-meters-portion is part and parcel of his land which he purchased
from plaintiffs' predecessor-in-interest. Plaintiffs pray that Maria Gulang be ordered
to vacate the 32 square-meters-portion of plaintiffs' land restore possession and/or
ownership thereof to plaintiffs; and that defendants be ordered to pay back rentals on
the said portion for a period of twelve (12) years from 1966 at the rate of P100.00 per
month; moral and exemplary damages, attorney's fees and costs of litigation.
In their Answer, filed on November 6, 1978, defendants deny the claim of the plaintiffs
and by way of affirmative and special defenses alleged that the defendants are the
'true, legal and lawful owner (sic) and in actual possession and occupation' of the
land in question, as evidenced by the original certificate of title in the name of
defendant Pedro Lasmarias and the transfer certificate of title in the name of
defendant Maria Gulang, describing the property involved as 'Forty (40) meters, more
or less'. By way of counterclaim, defendants seek moral damages and exemplary
damages and attorney's fees.
The pre-trial was then set and held, during which the parties came to an agreement
to have the two lots in question relocated by surveyors who shall jointly conduct the
relocation survey. However, the survey was not conducted because of the failure of
the two surveyors to jointly make the survey. Instead, a separate survey was made
by a surveyor of the Bureau of Lands, Sr. Geodetic Engineer Norberto Carreon, Land
District No. XXI-2, Iligan City, who conducted the survey in September 1979, in the
presence of both parties who indicated to the said surveyor the extents of their
respective occupancies on the lands being surveyed. Said surveyor's report contains
the following conclusion:
'On the actual observations based upon my relocation survey, Maria Gulang, the herein
defendant is occupying a portion of Lot No. 6094, Cad. 292, covered by TCT No. T-15314
issued to Genoviva (sic) Nadayag as indicated in the hereto (sic) attached sketch plan
shaded in black with an area of 30 square meters.'
But defendants' counsel made an open court manifestation that his clients will not abide
with (sic) the abovesaid survey and report.
On February 2, 1981, defendant Pedro Lasmarias filed a motion to admit his amended
answer, attaching thereto the Amended Answer in which the defenses of want of
cause of action, prescription, estoppel, laches and fraud were introduced. And on
February 6, 1981, defendant Maria Gulang filed a similar motion to admit her
amended answer, likewise attaching to the motion her Amended Answer in which
the same defenses as those introduced in defendant Lasmarias' Amended Answer,
abovementioned, were similarly raised. These motions were denied by the court in its
Order of September 27, 1981. Again in a resolution dated June 1, 1983, the trial court
denied the motion for reconsideration of the abovementioned order denying defendants'
motion for the admission of their amended answers. Cdpr
After trial, the lower court found that 'there is undoubtedly an area of 32 sq. meters in
the land of the plaintiffs encroached upon by the defendant Maria Gulang, [and] this
should be returned to the plaintiffs'; and accordingly rendered judgment ordering the
defendant Maria Gulang to vacate the said area and to deliver possession thereof to the
plaintiffs, and to pay the sum of P2,000.00 as attorney's fees; and dismissing all other
claims and counterclaims for lack of merit and insufficiency of evidence.
Defendant Maria Gulang elevated the abovesaid decision to the then Intermediate
Appellate Court on appeal. And plaintiffs likewise appealed that portion of the decision
concerning the 'none (sic) award of rentals and reasonable use of the property only'.
Plaintiffs' appeal was however dismissed by the then Intermediate Appellate Court for
failure to file appellants' brief." 2
In her Brief filed with the respondent Court, petitioner submitted the following
assignment of errors:
"1. The honorable court erred in denying defendant Pedro Lasmarias' motion to
amend answer as predecessor in interest of defendant-appellant Maria Gulang to
plaintiff's complaint;
2. The lower court erred in not holding that plaintiff's action has long prescribed;
3. The lower court erred in not holding that plaintiffs are estopped from denying
the existence of the contract of purchase of the land and house in question by defendant
Pedro Lasmarias which land and house was (sic) subsequently sold to defendant Maria
Gulang (Exh. "1", Lasmarias and Exh. "2", Gulang);
4. The lower court erred in not holding that plaintiff's (sic) complaint should be
dismissed on grounds (sic) of laches;
5. The lower court erred in holding that defendant Maria Gulang encroached on 32
square meters of the land of the plaintiffs and ordering her to vacate the same and in not
holding that the title of the plaintiffs over the land in question was acquired thru
fraudulent means; and
6. The lower court erred in ordering defendant Maria Gulang to pay attorney's fee
(sic) of P2,000.00." 3
In disposing of these assigned errors, respondent Court ruled that the trial court
correctly denied defendant Lasmarias' motion to amend the answer pursuant to
Section 3, Rule 10 of the Rules of Court considering that the same was filed after the
case had been set for hearing and that it substantially altered his defense by adding
the grounds of prescription, estoppel, laches and fraud; accordingly, since the second
to the fifth assigned errors raise precisely these defenses in issue, they are thus deemed
raised for the first time in the appeal. Pursuant therefore to Section 2, Rule 9 of the Rules
of Court, these defenses are deemed waived.
The appellate court further declared that the main issue in the case "is whether or not
defendants had encroached on the land of the plaintiffs." It then concluded that "the
trial court made a proper assessment" of the evidence in relation to the pertinent law.
Petitioner reiterates the above assignment of errors in this petition. 4
In the Resolution of 8 November 1989, this Court gave due course to the petition 5 and
required the parties to submit their respective Memoranda.
Deliberating on the pleadings of the parties, We find no merit in this petition.
In addition to the ruling of the respondent Court on the first assigned error, it is worth
noting that petitioner and defendant Pedro Lasmarias originally filed, on 6 November
1978, a common Answer through Atty. Luis Buendia. 6 On 2 February 1981, through a new
counsel, Atty. Moises Dalisay, Jr., defendant Lasmarias filed for himself a motion to amend
the answer; the proposed Amended Answer 7 was attached thereto. It is thus clear that
petitioner neither joined her co-defendant nor was included as a party in the motion to
amend the answer and the amended answer itself. Neither does she claim in any of her
pleadings that the motion and amended answer were further amended to include her as a As to jurisdiction, while it is true that jurisdiction over the subject matter of a case may be
party thereto or that she adopted the same as her own. Petitioner, therefore, cannot raised at any stage of the proceedings as the same is conferred by law, 9 it is nevertheless
benefit from Lasmarias' action, which ultimately failed, or revive the same after the settled that a party may be barred from raising it on the ground of laches or estoppel. 10
latter unilaterally and voluntarily abandoned it by failing to appeal from the
There is also authority to the effect that the defense of prescription is not deemed waived,
decision. That petitioner is a successor-in-interest of Lasmarias with respect to the
even if not pleaded in a motion to dismiss or in the answer, if plaintiff's allegation in the
property acquired by the latter from private respondent Genoveva Nadayag and therefore,
complaint or the evidence he presents shows clearly that the action has prescribed. 11
was indirectly benefited by the filing of both the motion and the proposed amended
complaint, does not improve her position because even if it were so, such defenses were As to whether or not petitioner had encroached upon the lot of private respondents, We
deemed waived by Lasmarias' failure to allege the same in the Answer and exercise his see no reason to disturb the findings to the trial court on this matter which were
right under Section 2, Rule 10 of the Rules of Court. Section 5, Rule 16; Section 2, Rule 9; subsequently affirmed by the respondent Court of Appeals; such findings are supported
and Section 2, Rules 10 of the Rules of Court easily come into focus. prcd by the evidence. The relocation survey conducted by Senior Geodetic Engineer Norberto
Carreon of the Bureau of Lands, prepared in the presence of both parties who indicated to
Section 5 of Rule 16 provides:
him the extent of their "respective occupancies", discloses that the petitioner "is occupying
"SEC. 5. Pleading grounds as affirmative defenses. Any of the grounds for dismissal a portion of Lot No. 6094, Cad. 292, covered by TCT No. T-15314 issued to Genoviva (sic)
provided for in this rule, except improper venue, may be pleaded as an affirmative defense, Nadayag as indicated in the hereto (sic) attached sketch plan shaded in black with an area
and a preliminary hearing may be had thereon as if a motion to dismiss had been filed." of 30 square meters."
Section 2 of Rule 9 reads: IN VIEW OF ALL the FOREGOING, the instant petition is hereby DENIED for lack of
merit.
"SEC. 2. Defenses and objections not pleaded deemed waived. Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed waived except the Costs against petitioner.
failure to state a cause of action which may be alleged in a later pleading, if one is
SO ORDERED.
permitted, or by motion for judgment on the pleadings, or at the trial on the merits; but in
the last instance, the motion shall be disposed of as provided in section 5 of Rule 10 in the Bidin, Romero and Melo, JJ., concur.
light of any evidence which may have been received. Whenever it appears that the court Gutierrez, Jr., J., is on leave.
has no jurisdiction over the subject matter, it shall dismiss the action."
And Section 2 of Rule 10 provides:
"SEC. 2. When amendments allowed as a matter of right. A party may amend his
pleading once as a matter of course at any time before a responsive pleading is served or,
if the pleading is one to which no responsive pleading is permitted and the action has not
been placed upon the trial calendar, he may so amend it at any time within ten (10) days
after it is served." cdphil
In the instant case, the motion to amend was filed long after the pre-trial was terminated
and the case placed on the trial calendar. If Lasmarias failed to take any positive action to
amend his answer before pre-trial, he should have raised during the pre-trial itself, which
was conducted much later, his other possible defenses and, accordingly, amend his answer
for that purpose. One of the avowed purposes for the holding of a pre-trial as provided
under Section 1, Rule 20 of the Rules of Court, is precisely to consider "the necessity or
desirability of amendments to the pleadings."
The foregoing rules are not, however, iron-clad. Under Section 3 of Rule 10, substantial
amendments may be made even after the case has been set for hearing provided prior
leave of court is obtained. Such leave may be refused if the motion requesting for the same
would delay the action or the cause of action or defenses would be substantially altered
by the proposed amendment. This rule was correctly applied by the trial court.
As could be gleaned from Section 2 of Rule 9, two (2) defenses are not deemed waived by
the failure to raise them in a motion to dismiss or in the answer, to wit: (a) lack of cause of
action and lack of jurisdiction on the part of the Court.
Lack of cause of action may thus be raised in a motion to dismiss after the answer has been
filed, by a motion for judgment on the pleadings, or at the trial on the merits. 8
FIRST DIVISION
[G.R. No. L-208. August 29, 1947.]
INES CONSOLACION CUYUGAN, plaintiff-appellee, vs. JOSE P. DIZON, defendant-
appellant.
Francisco M. Ramos for appellant.
Juan G. Lagman for appellee.
the defendant paid the plaintiff P500, and on or about January 1, 1941, another
P500, both as rental for that year.
outbreak of war in December, 1941, it was not until about February, 1943, that the
defendant paid P232.50 as rent for 1942. The plaintiff made a receipt for this amount
but the defendant said at the trial that it had been lost. No other rental was ever paid
after February, 1943, as a consequence of which this suit was instituted to rescind the
lease and to recover the total yearly rental
The defendant resisted the suit and put up various special defenses. Roughly, he
averred that the P232.50 he had paid was in full payment of the 1942 rental. He said that
on account of the war, he proposed to the plaintiff, and the latter agreed, that he
should pay 100 cavanes of palay in lieu of P1,000 in cash.
first assignment of error attacks the validity of the judgment on the ground that the
plaintiff's husband was not joined as plaintiff- do not believe that the case should be
dismissed for plaintiff's failure to join her husband
The complaint may and should be amended here, to cure the defect of party
plaintiffs, after final decision is rendered
ordered that the plaintiff within ten days from notice hereof file an amended
complaint making her husband party plaintiff; and after said complaint is filed, let
judgment be entered affirming the decision of the lower court with costs of both
instances against the appellant
SYLLABUS
1. EVIDENCE PRESUMPTION AGAINST PARTY SUPPRESSING MATERIAL
EVIDENCE. An unfavorable presumption of law arises against a party who suppresses
material evidence.
2. OBLIGATION S AND CONTRACT; LEASE OF AGRICULTURAL LAND; REDUCTION
OF RENT ON ACCOUNT OF LOSS OF FRUITS; SET-OFFS AMONG PRODUCTS OF
DIFFERENT YEARS. Although under article 1617 of the Italian Code, if the lease is for a
number of years and during its life the whole or at least one-half of the fruits
corresponding to one year have perished, the tenant could ask for a reduction of the rent,
set-offs among the products of different years is not legally under the Spanish Civil Code,
however strong may be the reasons of equity which inspired the principle of
compensation (10 Manresa, Codigo Civil Espaol, pp. 599-600.)
3. ID.; ID.; ID.; UNFORESEEN FORTUITOUS EVENTS; CASE AT BAR. Under article
1575 of the Civil Code, the cause of the loss of the fruits that will entitle the lease of
agricultural land to a reduction of rent must not only have been an extraordinary event
but must also have been one which the parties could not have reasonably foreseen. In the
face of the willingness of the plaintiff to have the lease rescinded early 1942 before
planting season commenced and after the country was plunged into war. and to release
the defendant from any obligation to pay rental for that the following years, he can not say
that the war to which he attributes his loses was an unforeseen circumstances within the
contemplation of article 1575. War was already going on when he decided to cling to the
contract in spite of the plaintiff's wishes to terminate it. He was the fully aware of the
hazards incident upon the conflict of arms which was waging, hazards which he ought to
have known might turn against the success of his enterprise.
4. ID.; ID.; ID.; RATIO OF LOSS TO BE PROVED BY LESSEE. If some of the
defendant's crops in 1942, 1943, or 1944 perished, the evidence does not give the ratio of
the loss in relation to the used production of the land. The burden is on him to prove that
the loss was more than one-half in order that he might be entitled to compensation.
5. HUSBAND AND WIFE; RENTS OF SEPARATE PROPERTY OF WIFE BELONG TO
CONJUGAL PARTNERSHIP. The rents of the separate property of the wife belong to the
conjugal partnership.
6. PLEADING AND PRACTICE; COMPLAINT; DEFECT OF PARTY PLAINTIFFS;
AMENDMENT AFTER FINAL DECISION. A complaint may be amended in the
Supreme Court , to cure the defect of party plaintiffs, after final decision is rendered.
DECISION
TUASON, J p:
Plaintiff brought this action in the Court of First Instance of Pampanga on November 25,
1943, and obtained judgment of the following tenor dated September 26, 1944:
"Declarando rescindido el contrato de arrendamiento otorgado entre las partes, y condena
al demandado a pagar a la demandante: (a) la cantidad de P1,767.50 con sus intereses
legales desde la interposicion de la demanda de canones vencidos y no pagados
correspondientes a los aos agricolas de 1942-1943 y 1943-1944; (b) la cantidad de
P1,000, en concepto de canon vencido y no pagado correspondiente al ao agricola de
1944-1945, con sus intereses legales desde la fecha de su vencimiento hasta su completo
pago; y (c) las costas del juicio."
The facts, so far as they are not controverted, are these: In a written contract
acknowledged before a notary public on October 8, 1940, the plaintiff leased to the
defendant several registered parcels of land which have a combined area of over 33
hectares, situated in the municipality of Mabalacat, Province of Pampanga, and
apparently adjoining or close to one another. The contract contained the following
stipulations:
"(a) Que el termino de este arrendamiento es de cinco (5) aos a contar desde la fecha
de esta escritura, prorrogable a otros cinco aos siempre y cuando ambas partes asi lo
hayan convenido;
"(b) Que el arrendatario pagara un canon anual de mil pesos (P1,000) pagadero por
adelantado en el domicilio de la arrendadora, empezando el 1. de Enero del proximo ao
de 1941 y el 1. de Enero de cada ao sucesivamente; entendiendose, sin embargo, que el
arrendatario pagara la suma de quinientos pesos (P500) el 1. de Noviembre de este ao
de 1940 a cuenta del canon correspondiente al primer ao;
"(c) Que los canales de riego actualmente existentes en los terenos objeto de este
arrendamiento no podran ser quitados ni removidos ni desviados por el arrendatario sin
consentimiento por escrito de la arrendadora;
"(d) Que en este arrendamiento van incluidas las cuotas de azucar correspondientes
a los referidos terrenos;
"(e) Que cualquiera infraccion o incumplimiento de todas y cada una de estas
condiciones dara lugar a la revocacion de esta escritura y la parte agraviada podra exigir
los correspondientes daos y perjuicios."
Upon the execution of this contract, the defendant paid the plaintiff P500, and on or
about January 1, 1941, another P500, both as rental for that year. Allegedly because
of the outbreak of war in December, 1941, it was not until about February, 1943, that
the defendant paid P232.50 as rent for 1942. The plaintiff made a receipt for this
amount but the defendant said at the trial that it had been lost. No other rental was
ever paid after February, 1943, as a consequence of which this suit was instituted to
rescind the lease and to recover the total yearly rental for 1943 and P767.50 for 1942.
On March 4, 1944, before trial, the plaintiff filed a supplemental complaint asking "in
addition to the various reliefs prayed for in the original complaint . . . that the defendant
be condemned to pay the sum of P1,000 as rentals in arrears for the year 1944."
The defendant resisted the suit and put up various special defenses. Roughly, he
averred that the P232.50 he had paid was in full payment of the 1942 rental. He said that
on account of the war, he proposed to the plaintiff, and the latter agreed, that he
should pay 100 cavanes of palay in lieu of P1,000 in cash. He added that, as the plaintiff
had no empty sacks in which to put the 100 cavanes of palay, he sold the cereal for
P232.50, which was the Naric price, and turned the proceeds over to the lessor. As to
the rentals for 1943 and subsequent years he invoked article 1575 of the Civil Code, which
gives the lessee of agricultural land a right to reduction in case of loss or destruction of
more than one-half of the crops by reason of war or other extraordinary fortuitous events.
The article reads in full:
"ART. 1575. A lessee shall not be entitled to a reduction of the rent on account of the
sterility of the land leased or on account of the loss of the fruits through ordinary
fortuitous events; but shall be entitled to such reduction in case of the loss of more than
half of the fruits through extraordinary and unforeseen fortuitous events, unless there is
a special agreement to the contrary.
"By extraordinary fortuitous events shall be understood fire, war, pestilence,
extraordinary inundations, locusts, earthquakes, or any other equally unusual events
which the contracting parties could not have reasonably foreseen."
Before taking up the main legal questions raised by the pleadings certain matters about
which there is conflict of evidence should be disposed of.
The P232.50 payment, according to the plaintiff, was an installment to be applied on
account of the yearly rental of P1,000 for 1942. She swore that the receipts she issued
made this clear. The defendant countered with the statement that the payment was in full
satisfaction of the 1942 rental.
The trial court believed the plaintiff and we find no occasion to disagree with His Honor.
The alleged loss of the receipt has not been satisfactorily established. The defendant's
testimony that he did not take good care of it because it was not important is
unconvincing. As a matter of fact, the paper was important; and to a lawyer like the
defendant its importance could not have been underestimated, especially if we are to
believe his assertion that the receipt cancelled, in effect, the balance of the rental for 1942,
amounting to P767.50. The preservation of the receipt should have had an added
significance to him if we are to accept his other statement that when he made the payment
he asked the plaintiff for one-half reduction of the rentals for 1943 and subsequent years
but that the plaintiff refused to make any commitment. There is one other factor worth
bearing in mind: the basic contract was in a public document and the defendant, as a
lawyer, must have known that to vary its terms he had to have a writing as proof if not as
essential requisite to the validity of the supposed change.
The presumption of law, therefore, against a party who suppresses material evidence is
applicable in this case.
Independent of what the receipt might reveal, the defendant's version of the alleged
reduction, which the plaintiff brands as an outright falsehood, does not ring true. He
testified that he casually met the plaintiff at a store in Mabalacat in January or February,
1943. There, he said, he and the plaintiff talked about the rental and she then and there
agreed to receive 100 cavanes of palay in full discharge of the 1942 rental. Going into
details, he said that when his tenants began to bring palay he told his overseer to get empty
jute sacks from the plaintiff; that as the plaintiff told his emissary she did not have empty
sacks, he personally went to see her in her house; that the plaintiff reiterated her inability
to furnish empty sacks and suggested that if possible he use his own sacks; that he
thereupon sold the palay at the prevailing NARIC prices, which were P2 for colored rice
and P2.65 for white; that "at that moment I returned twice and handed to her P232.50 as
the sale price of 100 cavanes."
There are lapses in this testimony which lead to doubts of its exact veracity. The defendant,
for example, did not say that the plaintiff authorized him to sell the palay, much less at
reduced prices. It seems strange that simply because there were no sacks available, the
defendant, without so much as insinuation from the plaintiff, should have hastened to
dispose of the cereal very cheap. Our skepticism applies to the defendant's statement that
the plaintiff accepted 100 cavanes of palay as full annual rental.
The fact that P323.50 tallied to the last centavo with the alleged NARIC quotations is not,
without more, evidence that the money was paid by the defendant and accepted by the
plaintiff in full satisfaction of the yearly rental for 1942, or that the plaintiff abided by the
reduction he claims to have asked for. The defendant might have sold in reality 100
cavanes of palay at the price stated by him and turned the entire proceeds over to the
plaintiff in check or in cash, or else he might have sold a smaller quantity, say, 50 cavanes
or 25 cavanes at double or quadruple the alleged NARIC price per cavan, thereby realizing
the same amount of cash. In any case, we cannot see how from the mere fact that the
payment was not in round figure can be wrested the conclusion that it was all the money
the defendant got for 100 cavanes of palay, or that it was intended as a complete discharge
of his liability for 1942 in the concept of rent.
With these details out of the way, we now proceed to consider the applicability to this case
of article 1575 of the Civil Code.
The rental for 1941 having been paid on time and in the specified amounts, is out of the
case. If the defendant lost the 1941 sugar cane crops and wants a reduction of the rental
for that year, he has not sought an affirmative relief or given any indication of his purpose
in his answer. Moreover, Manresa after pointing out that under article 1617 of the
Italian Code, if the lease is for a number of years and during its life the whole or at least
one-half of the fruits corresponding to one year have perished, the tenant could ask for a
reduction of the rent states that however strong may be the reasons of equity which
inspired the principle of compensation, set-offs among the products of different years is
not legally possible under the Spanish Civil Code. (10 Manresa, Codigo Civil Espaol, pp.
599-600.)
The conclusion at which the lower court and this Court have arrived, that the P232.50 was
intended only as an advance on the annual rent for 1942, and that there was no separate
stipulation, express or implied, between the parties to change the annual rental to 100
cavanes of palay, also removes the 1942 rental out of the provision of article 1575 of the
Civil Code. We believe that the acceptance by the defendant of the receipt embodying an
implied promise to pay the balance later, operated as a waiver of any right to a reduction
or compensation which he might have under that provision.
However this may be, there is another aspect of the case which in our opinion precludes
availability to the defendant of the benefits of article 1575 of the Civil Code as regards not
only the rentals for 1943, 1944 and 1945, but also those of 1942. Article 1575 lays down
as basis of rental discount a loss of more than one-half of the products of the land on
account of war, etc. There is no pretense that the region where the land under lease is
located had ever been a combat zone, and no destruction of, or damage to, the 1942-1945
crops arising out of the war has been proved. The purported loss of his share of the rice
crops for one of the years during which the contract of lease was in force was due to his
tenants' dishonesty or his own negligence. The gravamen of the defendant's contention is
that the leased land by its nature was sugar land and that he was unable to plant sugar
cane on it in 1942 and the following seasons because the sugar milling centrals were
closed.
If it be assumed that the defendant's crops were totally lost in 1942, 1943, and 1944, his
case would not be any better. One vital point which escapes the defendant's argument is
that, although the contract was for five years and it had four more years to run when the
war broke out, yet he could have rescinded the lease at the beginning of 1942 and the
plaintiff would have gladly taken back her property. Planting season had not yet started.
But the defendant chose to continue with the lease and hired tenants to plant rice. If he
lost in the venture, the loss was not due to any extraordinary event he had not thought of.
It was rather due to mismanagement, miscalculation and/or other factors not entirely
unexpected by him. It should be noted that under article 1575 the cause of the loss must
not only have been an extraordinary event but must also have been one which the parties
could not have reasonably foreseen. In the face of the willingness of the plaintiff to have
the lease rescinded early in 1942 before planting season commenced and after the
country was plunged into war and to release the defendant from any obligation to pay
rental for that and the following years, he can not say that the war to which he attributes
his losses was an unforeseen circumstance within the contemplation of article 1575. War
was already going on when he decided to cling to the contract in spite of the plaintiff's
wishes to terminate it. He was then fully aware of the hazards incident upon the conflict
of arms which was raging, hazards which he ought to have known might turn against the
success of his enterprise. Manresa's commentary on article 1575 of the Civil Code is
applicable and pertinent to the contract under consideration from the second year of its
life, as it would be to the entire contract if the latter had been entered into after the war
started. The situation of the parties with reference to the war in both cases would be
exactly the same. Now, this is what the learned commentator says:
"Por lo tanto, no podra el arrendatario exigir esa rebaja cuando se trata de casos fortuitos
extraordinarios previstos, si bien es logico contraer esta prevision al tiempo de la
perfeccion del contrato, y no a otro momento poeterior. Por ejemplo, si cuando el
arrendamiento se pacto el pais ardia ya en guerra o la region estaba infestada de langosta,
aunque no le estuviera la finca arrendada, es claro que se trata de casos fortuitos
extraordinarios previstos, que, desde luego, ejercian su influencia en la fijacion del precio,
y que las partes tendrian en cuenta al contratar; de donde no resulta justo el que en tal
supuesto se rebaje la renta. Pero si, por el contrario, esos sucesos se iniciaron estando ya
el arrendamiento en el periodo de su ejecucion, la rebaja de renta es, sin duda, la solucion
adecuada."
Coming to the evidence, the testimony of the plaintiff that she was willing and ready to
have the contract rescinded early in 1942, when the defendant had defaulted in the
payment of the rental for that year, is not open to serious doubt. The defendant's own
testimony tends to confirm it. By his admission, he continued to work the land,
"notwithstanding previous losses, in the expectation of gaining something in the
subsequent years." He himself declared that "la madre de la arrendadora me quiere quitar
el terreno." In answer to a question of the trial judge he gave the court to understand that
he was unwilling to return the land unless he was paid or reimbursed the debts of his
tenant. On cross-examination he said that he would not surrender the possession of the
land to the lessor without a court order because he wanted, he explained, to recoup some
of his losses. He was so bent on not giving up the land that he tenaciously fought the suit
for rescission.
As Manresa also points out, the reduction of rent or exemption from its payment, judged
by the context of article 1575, has all the appearances of being founded on equity and not
on strict law. The facts of the case as developed by his own testimony do not show the
defendant in good light on this score.
If some of the defendant's crops in 1942, 1943 or 1944 perished, the evidence does not
give the ratio of the loss in relation to the usual production of the land. Needless to say, the
burden is on him to prove that the loss was more than one-half in order that he might be
entitled to compensation. The only thing that is certain from his testimony is that at the
outbreak of the war, that is after the calendar year 1941, he was unable to plant sugar
cane.
But whatever benefits he failed to make because of his inability to plant sugar cane after
the first year and after he decided to go ahead with the contract, are not losses within the
purview of article 1575 of the Civil Code and cannot serve as legal standard for computing
the proportion of the injury. As has been adverted to before, after the first year he was
fully conscious that because of lack of milling facilities sugar planting on a large scale was
out of the question. And damage in the form of palay not accounted for by his tenants is
not the kind of damage recognized by the Civil Code provision cited by him. Impairment
arising from the fact that the leased property was not totally made use of comes under the
same juridical category. Not only in law but in equity also the lessor cannot be made to
share the lessee's adversity in such circumstances. The fault was the lessee's and his alone;
it was due to poor judgment, negligence or inefficiency on his part. His failure was not
caused by war in the legal sense of the term. Fighting had ceased, at least such fighting as
would have made destruction of crops inevitable. All that can be said in the way of
obstacles to his full enjoyment of the land was that thefts were more rampant, tenants
perhaps had become more unruly, and the like. But these obstacles entered into the
transaction; they were part of the game, so to say, and, what is more, were not by any
means insurmountable. As the learned trial judge, a native of Pampanga and familiar with
local conditions, insinuated in his interrogatories, other land owners and planters had
succeeded in working their farms and gathering their harvests.
Furthermore, if the defendant did not raise sugar, he planted a crop that was as important
as, if not more, and commanded better price, than sugar in the years above named, besides
being easier and less expensive to raise. In all likelihood these considerations exercised a
powerful influence in his decision to keep the land during the remainder of the lease.
The plaintiff introduced no evidence relative to the area planted to rice by the defendant
or regarding the normal yield of the land. It is possible that she did not concern herself
with this phase of the case because it was not an essential issue. In the absence of any other
proof, we are forced to rely largely upon the defendant's testimony. All the same, the
defendant has not made such a showing as to entitle him to a reduction of the rent.
Granting that the land brought him less than he expected, and granting that the shortage
was not due to his own shortcomings, the other end of the bargain must not be overlooked.
One who seeks equity must do equity. In demanding justice one must weigh his side
against the other, and actualities should always be kept in view. What were then the
situations of the parties?.
The defendant testified that only four hectares of the plaintiff's land was provided with an
irrigation system. Even so, he admitted that one-half of the whole tract was adapted to rice
planting; that from 18 to 20 hectares was planted to rice in 1942 and the two following
years; that the rest of the land although high could be used also for planting rice; that the
normal production of the entire tract was 1,000 cavanes of palay; that the land under
cultivation yielded 500 cavanes in 1942 and about the same quantity in 1943, and that out
of these crops his share was 190 cavanes a year from which the cost of seeds and so on
were to be deducted. His statement as to the reason why he did not farm the other half of
the land, like many others, is not explicit.
Having come from an interested and biased source, the defendant's evidence has to be
taken with plenty of allowances for understatement both as to the acreage utilized and the
quantity of palay gathered. Much of his testimony is so equivocal as to invite distrust. But
taking this testimony on its face value, we still fail to see justice in his claim to a reduction
of rent. Compared with what he admitted having received as his part of the harvests in
1942, 1943 and 1944, P2,767.50 in August, 1944, was insignificant. That was the amount
which was due as rents in arrears in that month, when the trial was held and when he
persisted in fighting the case. At that time the price of rice had risen to fabulous heights
while the value of the peso had toppled down in inverse proportion, with the result that
P3,000 could hardly have bought five or ten cavanes of rice. It is to the credit of the plaintiff
that no increase in rent was asked by her to compensate for the tremendous slump which
the "Mickey Mouse" notes had taken. As equity is the philosophy underlying article 1575,
conditions as they were and not as they might have been are important factors in arriving
at a just decision.
Now, of course, things are different. A judgment against the defendant has to be satisfied
with legitimate money. This may be fortunate for the plaintiff and unfortunate for the
defendant. If it is his misfortune, the blame can only be laid at the door of his own
unjustified stubbornness. A party who would not budge an inch to do simple justice to his
opponent when he could have done so without doing himself an injustice, was taking a
chance and has to suffer the consequences.
The first assignment of error attacks the validity of the judgment on the ground that
the plaintiff's husband was not joined as plaintiff. It is contended, with support of law
and authorities, that even though the subject matter of the contract is a separate
property of the wife, yet the suit seeks to recover rents which under article 1401 of
the Civil Code belong to the conjugal partnership.
We, however, do not believe that the case should be dismissed for plaintiff's failure
to join her husband. (Sec. 11, Rule 2, Rules of Court.) Nor should the case be remanded
to the court below and a new trial ordered on this account. The complaint may and
should be amended here, to cure the defect of party plaintiffs, after final decision is
rendered. Section 11, Rule 2, and section 2, Rule 17, explicitly authorize such procedure.
As this Court had occasion to say in Quison vs. Salud (12 Phil., 109, 116), "a second action
would be but a repetition of the first and would involve both parties, plaintiffs and
defendant, in much additional expense and would cause much delay, in that way defeating
the purpose of the section, which is expressly stated to be `that the actual merits of the
controversy may speedily be determined without regard to technicalities and in the most
expeditious and inexpensive manner."' (See also Diaz vs. De la Rama, 73 Phil., 104.) This
procedure is all the more reasonable in the present case because it does not appear nor is
there the slightest hint that the plaintiff's husband is hostile to his wife's demand or claims
any interest in the suit adverse to hers, or that the defendant, by any possibility, has any
evidence to present with reference to the husband.
Wherefore, it is ordered that the plaintiff within ten days from notice hereof file an
amended complaint making her husband party plaintiff; and after said complaint is
filed, let judgment be entered affirming the decision of the lower court with costs of
both instances against the appellant.
Moran, C. J., Feria, Bengzon, Briones and Padilla, JJ., concur.
Separate Opinions
PARAS, J.:
I concur, subject to the order in Moratorium.
PABLO, M., disedente:
Disiento. Una simple confirmacion de la sentencia dara derecho al demandante a pedir la
ejecucion de la sentencia en contravencion de la orden de moratoria. (Orden Ejecutiva No.
25, tal como fue enmendada por Orden Ejecutiva No. 32, 41 Off. Gaz., 56; Cruz contra Avila,
76 Phil., 133; De la Fuente contra Borromeo, 76 Phil., 442; y Ordeez contra Angkiangco,
77 Phil., 387.) Esta medida es de orden publico, de emergencia y no debe ser ignorada por
este Tribunal solamente porque el demandado no lo haya utilizado como defensa. Su fin
primordial es evitar el completo colapso de la economia nacional, desquiciada ya por la
guerra. Si el Congreso hasta la fecha no ha levantado esta orden deben existir aun las
razones que urgieron su adopcion. Si el demandado quire no acogerse a sus disposiciones,
puede hacerlo; pero creo que este Tribunal debe ordenar, como sana politica judicial, que
la sentencia no se ejecutara hasta que se haya decretado el levantamiento de la orden de
moratoria.
PERFECTO, J., dissenting:
On September 26, 1944, Judge P. Angeles David, of the Court of First Instance of Pampanga,
rendered judgment declaring rescinded the contract of lease on three parcels of land
located at Mabalacat, Pampanga, executed by the parties on October 8, 1940, and ordering
defendant to pay plaintiff P2,767.50 as rents for three agricultural years from 1942-1943,
plus legal interests, and the costs. Said decision, having been rendered during enemy
occupation and by a court acting under the Japanese imperial government, is among the
judicial processes which, according to our opinions in Co Kim Cham vs. Valdez Tan Keh
and Dizon (75 Phil., 113), are null and void. See also our opinion in Laurel vs. Misa (77
Phil., 856).
On the merits of the controversy between the parties, it appearing that the duration of the
lease contract was only for five years and, therefore, it expired on October 8, 1945, it is
proper to declare so and, therefore, plaintiff is entitled to recover the possession of the
properties in question. With regard to the monetary obligations of defendant as found by
the lower court and by the majority of this Court, for rents due for the leased lands, we are
of opinion that no action should be taken by this Court or any other court until the debt
moratorium provided in Executive Order No. 25, as amended by Executive Order No. 32,
is lifted. In our decision in Palacios vs. Daza, dated October 16, 1945 (75 Phil., 279), we
declared suspended the execution of a final judgment rendered on August 28, 1940,
ordering the Province of Batangas to pay a monetary obligation.
For all the foregoing, we are of opinion that, as we have explained in Co Kim Cham vs.
Valdez Tan Keh and Dizon, supra, the appealed decision should be declared null and void,
or failing it, the lease contract between the parties should be declared terminated on
October 8, 1945, plaintiff being entitled to recover the possession of the leased lands, and
all action upon the rents the defendant should pay to plaintiff should be held in abeyance
until the debt moratorium provided in Executive Order No. 25, as amended by Executive
Order No. 32, is lifted.
With regard to the procedural question raised by defendant, asking that the case be
dismissed, because plaintiff failed to join her husband as co-plaintiff, it being merely a
technical defect, it can be cured at any stage of the proceedings. It is not even necessary to
order plaintiff to file an amended complaint including her husband as party plaintiff, as
the purpose of the rules can expeditiously be attained by a pronouncement to the fact that
the husband should be considered, for all legal purposes, as party plaintiff.
RESOLUTION
September 18, 1947
"In G. R. No. L-208, Ines Consolacion Cuyugan vs. Jose P. Dizon, the Court resolved to deny
the motion for reconsideration of the defendant and appellant in so far as the said motion
goes to the merits of the case; and that as to the application of Executive Order No. 25 as
amended by Executive Order No. 32, it is and was the opinion of this Court that the time
to invoke the benefits of that Executive Order, in this particular case, is when writ of
execution is issued, considering that if the Moratorium Order was not pleaded it was
because it was promulgated after this cause was decided by the lower court. Mr. Justice
Perfecto voted to grant."