THIRD DIVISION

March 12, 2014 G.R. No. 193494

LUI ENTERPRISES, INC., Petitioners,

vs.
ZUELLIG PHARMA CORPORATION and the PHILIPPINE BANK OF COMMUNICATIONS, Respondents.

D E C I S I O N

LEONEN, J.:

There should be no inexplicable delay in the filing of a motion to set aside order of default. Even when a motion is filed
within the required period, excusable negligence must be properly alleged and proven.

This is a petition for review on certiorari of the Court of Appeals' decision1 dated May 24, 2010 and resoluticm2 dated
August 13, 2010 in CA- G.R. CV No. 88023. The Court of Appeals affirmed in toto the Regional

Trial Court of Makati’s decision3 dated July 4, 2006.

The facts as established from the pleadings of the parties are as follows:

On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation entered into a 10-year contract of lease4 over a
parcel of land located in Barrio Tigatto, Buhangin, Davao City. The parcel of land was covered by Transfer Certificate of Title
No. T-166476 and was registered under Eli L. Lui.5

On January 10, 2003, Zuellig Pharma received a letter6 from the Philippine Bank of Communications. Claiming to be the
new owner of the leased property, the bank asked Zuellig Pharma to pay rent directly to it. Attached to the letter was a
copy of Transfer Certificate of Title No. 336962 under the name of the Philippine Bank of Communications.7 Transfer
Certificate ofTitle No. 336962 was derived fromTransfer Certificate ofTitle No.T-166476.8

Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of Communications’ claim. On January 28, 2003,
Lui Enterprises wrote to Zuellig Pharma and insisted on its right to collect the leased property’srent.9

Due to the conflicting claims of Lui Enterprises and the Philippine Bank of Communications over the rental payments,
Zuellig Pharma filed a complaint10 for interpleader with the Regional Trial Court of Makati. In its complaint, Zuellig Pharma
alleged that it already consigned in court P604,024.35 as rental payments. Zuellig Pharma prayed that it be allowed to
consign in court its succeeding monthly rental payments and that Lui Enterprises and the Philippine Bank of
Communications be ordered to litigate their conflicting claims.11

The Philippine Bank of Communications filed its answer12 to the complaint. On the other hand, Lui Enterprises filed a
motion to dismiss13 on the ground that Zuellig Pharma’s alleged representative did not have authority to file the complaint
for interpleader on behalf of the corporation. Under the secretary’s certificate14 dated May 6, 2003 attached to the
complaint, Atty. Ana L.A. Peralta was only authorized to "initiate and represent [Zuellig Pharma] in the civil proceedings for
consignation of rental payments to be filed against Lui Enterprises, Inc. and/or [the Philippine Bank of
Communications]."15

According to Lui Enterprises, an earlier filed nullification of deed of dation in payment case pending with the Regional Trial
Court of Davao barred the filing of the interpleader case.16 Lui Enterprises filed this nullification case against the Philippine
Bank of Communications with respect to several properties it dationed to the bank in payment of its obligations. The
property leased by Zuellig Pharma was among those allegedly dationed to the Philippine Bank of Communications.17

In the nullification of deed of dation in payment case, Lui Enterprises raised the issue of which corporation had the better
right over the rental payments.18 Lui Enterprises argued that the same issue was involved in the interpleader case. To
avoid possible conflicting decisions of the Davao trial court and the Makati trial court on the same issue, Lui Enterprises
argued that the subsequently filed interpleader case be dismissed.

To support its argument, Lui Enterprises cited a writ of preliminary injunction19 dated July 2, 2003 issued by the Regional
Trial Court of Davao, ordering Lui Enterprises and the Philippine Bank of Communications "[to maintain] status quo"20 with
respect to the rent. By virtue of the writ of preliminary injunction, Lui Enterprises argued that it should continue collecting
the rental payments from its lessees until the nullification of deed of dation in payment case was resolved. The writ of
preliminary injunction dated July 2, 2003 reads:
WHEREAS, on June 30, 2003, the Court issued an Order, a portion of which is quoted:

WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary Injunction issue, restraining and enjoining [the Philippine
Bank of Communications], its agents or [representative], the Office of the Clerk of Court- Sheriff and all persons acting on
their behalf, from conducting auction sale on the properties of [Lui Enterprises] in EJF-REM Case No. 6272-03 scheduled on
July 3, 2003 at 10:00 a.m. at the Hall of Justice, Ecoland, Davao City, until the final termination of the case, upon plaintiff
[sic] filing of a bond in the amount of P1,000,000.00 to answer for damages that the enjoined parties may sustain by
reason of the injunction if the Court should finally decide that applicant is not entitled thereto.

WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved by this Court.

IT IS HEREBY ORDERED by the undersigned Judge that, until further orders, [the Philippine Bank of Communications] and all
[its] attorneys, representatives, agents and any other persons assisting [the bank], are directed to restrain from conducting
auction sale on the Properties of [Lui Enterprises] in EJF-REM Case No. 6272-03 scheduled on July 3, 2003 at 10:00 a.m. at
the Hall of Justice, Ecoland, Davao City, until the final termination of the case.21

Zuellig Pharma filed its opposition22 to the motion to dismiss. It argued that the motion to dismiss should be denied for
having been filed late. Under Rule 16, Section 1 of the 1997 Rules of Civil Procedure, a motion to dismiss should be filed
within the required time given to file an answer to the complaint, which is 15 days from service of summons on the
defendant.23 Summons was served on Lui Enterprises on July 4, 2003. It had until July 19, 2003 to file a motion to dismiss,
but Lui Enterprises filed the motion only on July23, 2003.24

As to Lui Enterprises’ claim that the interpleader case was filed without authority, Zuellig Pharma argued that an action
interpleader "is a necessary consequence of the action for consignation."25 Zuellig Pharma consigned its rental payments
because of "the clearly conflicting claims of [Lui Enterprises] and [the Philippine Bank of Communications]."26 Since Atty.
Ana L.A. Peralta was authorized to file a consignation case, this authority necessarily included an authority to file the
interpleader case.

Nevertheless, Zuellig Pharma filed in court the secretary’s certificate dated August 28, 2003,27 which expressly stated that
Atty. Ana L.A. Peralta was authorized to file a consignation and interpleader case on behalf of Zuellig Pharma.28

With respect to the nullification of deed of dation in payment case, Zuellig Pharma argued that its pendency did not bar the
filing of the interpleader case. It was not a party to the nullification case.29

As to the writ of preliminary injunction issued by the Regional Trial Court of Davao, Zuellig Pharma argued that the writ
only pertained to properties owned by Lui Enterprises. Under the writ of preliminary injunction, the Regional Trial Court of
Davao enjoined the July 3, 2003 auction sale of Lui Enterprises’ properties, the proceeds of which were supposed to satisfy
its obligations to the Philippine Bank of Communications. As early as April 21, 2001, however, the Philippine Bank of
Communications already owned the leased property as evidenced by Transfer Certificate of Title No. 336962. Thus, the writ
of preliminary injunction did not apply to the leased property.30

Considering that Lui Enterprises filed its motion to dismiss beyond the 15-day period to file an answer, Zuellig Pharma
moved that Lui Enterprises be declared in default.31

In its compliance32 dated September 15, 2003, the Philippine Bank of Communications "[joined Zuellig Pharma] in moving
to declare [Lui Enterprises] in default, and in [moving for] the denial of [Lui Enterprises’] motion to dismiss."33

The Regional Trial Court of Makati found that Lui Enterprises failed to file its motion to dismiss within the reglementary
period. Thus, in its order34 dated October 6, 2003, the trial court denied Lui Enterprises’motion to dismiss and declared it
in default.35

Lui Enterprises did not move for the reconsideration of the order dated October 6, 2003. Thus, the Makati trial court heard
the interpleader case without Lui Enterprises’participation.

Despite having been declared in default, Lui Enterprises filed the manifestation with prayer36 dated April 15, 2004. It
manifested that the Regional Trial Court of Davao allegedly issued the order37 dated April 1, 2004, ordering all of Lui
Enterprises’ lessees to "observe status quo with regard to the rental payments"38 and continue remitting their rental
payments to Lui Enterprises while the nullification of deed of dation in payment case was being resolved. The order dated
April 1, 2004 of the Regional Trial Court of Davao reads:

ORDER

Posed for Resolution is the Motion for Amendment of Order filed by [Lui Enterprises] on September 23, 2003 seeking for
the preservation of status quo on the payment/remittance of rentals to [it] and the disposal/construction of the properties
subject matter of this case.

x x x x

As elsewhere stated, [the Philippine Bank of Communications] did not oppose the instant motion up to the present. In fact,
during the hearing held on March 15, 2004, [the bank’s] counsel manifested in open court that except for the rentals due
from [Zuellig Pharma] which are the subject of a consignation suit before a Makati Court, the other rental payments are
continuously received by [Lui Enterprises].

There being no objection from [the Philippine Bank of Communications], and in order to protect the right of [Lui
Enterprises] respecting the subject of the action during the pendency of this case, this Court, in the exercise of its
discretion hereby grants the motion.

Accordingly, consistent with the order of this Court dated June 30, 2003, the parties are hereby directed to further observe
status quo with regard to the rental payments owing or due from the lessees of the properties subject of the first set of
deeds of dacion and that the defendants are enjoined from disposing of the properties located at Green Heights Village,
Davao City until the case is finally resolved.

With the order dated April 1, 2004 issued by the Regional Trial Court of Davao as basis, Lui Enterprises argued that Zuellig
Pharma must remit its rental payments to it and prayed that the interpleader case be dismissed.

The Regional Trial Court of Makati only noted the manifestation with prayer dated April 15, 2004.39

It was only on October 21, 2004, or one year after the issuance of the order of default, that Lui Enterprises filed a motion to
set aside order of default40 in the Makati trial court on the ground of excusable negligence. Lui Enterprises argued that its
failure to file a motion to dismiss on time "was caused by the negligence of [Lui Enterprises’] former counsel."41 This
negligence was allegedly excusable because "[Lui Enterprises] was prejudiced and prevented from fairly presenting [its]
case."42

For its allegedly meritorious defense, Lui Enterprises argued that the earlier filed nullification of deed of dation in payment
case barred the filing of the interpleader case. The two actions allegedly involved the same parties and the same issue of
which corporation had the better right over the rental payments. To prevent "the possibility of two courts x x x rendering
conflicting rulings [on the same issue],"43 Lui Enterprises argued that the subsequently filed interpleader case be
dismissed.

Zuellig Pharma filed its opposition44 to the motion to set aside order of default. It argued that a counsel’s failure to file a
timely answer was inexcusable negligence which bound his client.

Further, Zuellig Pharma argued that the pending case for nullification of deed of dation in payment "[did] not preclude
[Zuellig Pharma] from seeking the relief prayed for in the [interpleader case]."45

While the motion to set aside order of default was still pending for resolution, Lui Enterprises filed the manifestation and
motion to dismiss46 dated April 21, 2005 in the Makati trial court. It manifested that the Davao trial court issued another
order47 dated April 18, 2005 in the nullification of deed of dation in payment case. In this order, the Davao trial court
directed the Philippine Bank of Communications to inform Zuellig Pharma to pay rent to Lui Enterprises while the Davao
trial court’s order dated April 1, 2004 was subsisting. The order datedApril 18, 2005 of the Davao trial court reads:

ORDER

Plaintiffs move for execution or implementation of the Order dated September 14, 2004. In substance, [Lui Enterprises]
seek[s] to compel the remittance in their favor of the rentals from [Zuellig Pharma], one of the lessees alluded to in the
September 14, 2004 Order whose rental payments "must be remitted to and collected by [Lui Enterprises]." [The Philippine
Bank of Communications] did not submit any opposition.

It appears from the records that sometime in February 2003, after being threatened with a lawsuit coming from [the
Philippine Bank of Communications], [Zuellig Pharma] stopped remitting its rentals to [Lui Enterprises] and instead, has
reportedly deposited the monthly rentals before a Makati court for consignation.

As aptly raised by the plaintiffs, a possible impasse may insist should the Makati Court’s ruling be contrary to or in conflict
with the status quo order issued by this Court. To preclude this spectacle, Zuellig Pharma should accordingly be advised
with the import of the Order dated September 14, 2004, the salient portion of which is quoted:
x x x prior to the institution of the instant case and by agreement of the parties, plaintiffs were given as they did exercise
the right to collect, receive and enjoy rental payments x x x.

Since the April 1, 2004 status quo order was a necessary implement of the writ of preliminary injunction issued on June 30,
2003, it follows that plaintiff's right to collect and receive rental payments which he enjoyed prior to the filing of this case,
must be respected and protected and maintained until the case is resolved. As such, all rentals due from the above-
enumerated lessees must be remitted to and collectedby the Plaintiffs.

Status quo simply means the last actual peaceable uncontested status that preceded the actual controversy. (Searth
Commodities Corp. v. Court ofAppeals, 207 SCRA 622).

As such, the [Philippine Bank of Communications] [is] hereby directed to forthwith inform [Zuellig Pharma] of the April 1,
2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for the said lessee to remit all
rentals due from February 23, 2003 and onwards to [Lui Enterprises] in the meanwhile that the status quo order is
subsisting.

In its manifestation and motion to dismiss, Lui Enterprises reiterated its prayer for the dismissal of the interpleader case to
prevent "the possibility of [the Regional Trial Court, Branch 143, Makati City] and [the Regional Trial Court, Branch 16,
Davao City] rendering conflicting rulings [on the same issue of which corporation has the better right to the rental
payments]."48

Without resolving the motion to set aside order of default, the Makati trial court denied the manifestation with motion to
dismiss dated April 21, 2005 on the ground that Lui Enterprises already lost its standing in court.49

Lui Enterprises did not file any motion for reconsideration of the denial of the manifestation and motion to dismiss dated
April 21, 2005.

In its decision50 dated July 4, 2006, the Regional Trial Court of Makati ruled that Lui Enterprises "[was] barred from any
claim in respect of the [rental payments]"51 since it was declared in default. Thus, according to the trial court, there was
no issue as to which corporation had the better right over the rental payments.52 The trial court awarded the total
consigned amount of P6,681,327.30 to the Philippine Bank of Communications and ordered Lui Enterprises to pay Zuellig
Pharma P50,000.00 in attorney’s fees.53

Lui Enterprises appealed to the Court of Appeals.54

The Court of Appeals found Lui Enterprises’ appellant’s brief insufficient. Under Rule 44, Section 13 of the 1997 Rules of
Civil Procedure, an appellant’s brief must contain a subject index, page references to the record, table of cases, textbooks
and statutes cited, and the statement of issues, among others. However, Lui Enterprises’ appellant’s brief did not contain
these requirements.55

As to the denial of Lui Enterprises’ motion to dismiss, the Court of Appeals sustained the trial court. The Court of Appeals
found that Lui Enterprises filed its motion to dismiss four days late.56

With respect to Lui Enterprises’ motion to set aside order of default, the Court ofAppeals found that Lui Enterprises failed
to show the excusable negligence that prevented it from filing its motion to dismiss on time. On its allegedly meritorious
defense, the Court of Appeals ruled that the nullification of deed of dation in payment case did not bar the filing of the
interpleader case, with Zuellig Pharma not being a party to the nullification case.57

On the award of attorney’s fees, the Court of Appeals sustained the trial court since "Zuellig Pharma x x x was constrained
to file the action for interpleader with consignation inorder to protect its interests x x x."58

Thus, in its decision59 promulgated on May 24, 2010, the Court of Appeals dismissed Lui Enterprises’appeal and affirmed in
toto the Regional Trial Court of Makati’s decision.

Lui Enterprises filed a motion for reconsideration.60

The Court of Appeals denied Lui Enterprises’ motion for reconsideration in its resolution promulgated on August 13,
2010.61 Hence, this petition.

In this petition for review on certiorari,62 Lui Enterprises argued that the Court of Appeals applied "the rules of procedure
strictly"63 and dismissed its appeal on technicalities. According to Lui Enterprises, the Court of Appeals should have taken a
liberal stance and allowed its appeal despite the lack of subject index, page references to the record, table of cases,
textbooks and statutes cited, and the statement of issues in its appellant’s brief.64
Lui Enterprises also claimed that the trial court should have set aside the order of default since its failure to file a motion to
dismiss on time was due to excusable negligence.65

For its allegedly meritorious defense, Lui Enterprises argued that the pending nullification of deed of dation in payment
case barred the filing of the interpleader case.The nullification of deed of dation in payment case and the interpleader case
allegedly involved the same issue of which corporation had the better right to the rent. To avoid conflicting rulings on the
same issue, Lui Enterprises argued that the subsequently filed interpleader case be dismissed.66

No attorney’s fees should have been awarded to Zuellig Pharma as argued by Lui Enterprises. Zuellig Pharma filed the
interpleader case despite its knowledge of the nullification of deed of dation in payment case filed in the Davao trial court
where the same issue of which corporation had the better right over the rental payments was being litigated. Thus, Zuellig
Pharma filed the interpleader case in bad faith for which it was not entitled to attorney’s fees.67

The Philippine Bank of Communications filed its comment68 on the petition for review on certiorari. It argued that Lui
Enterprises failed to raise any error of law and prayed that we affirm in toto the Court of Appeals’ decision.

For Zuellig Pharma, it manifested that it was adopting the Philippine Bank of Communications’arguments in its
comment.69

The issues for our resolution are:

I. Whether the Court of Appeals erred in dismissing Lui Enterprises’ appeal for lack of subject index, page references to the
record, table of cases, textbooks and statutes cited, and the statement of issues in Lui Enterprises’appellant’s brief;

II. Whether the Regional Trial Court of Makati erred in denying Lui Enterprises’motion to set aside order of default;

III. Whether the annulment of deed of dation in payment pending in the Regional Trial Court of Davao barred the
subsequent filing of the interpleader case in the Regional Trial Court of Makati; and

IV. Whether Zuellig Pharma was entitled to attorney’s fees.

Lui Enterprises’ petition for review on certiorari is without merit. However, we delete the award of attorney’s fees.

Lui Enterprises did not comply with the rules on the contents of the appellant’s brief

Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil Procedure, the Court of Appeals may, on its own motion
or that of the appellee, dismiss an appeal should the appellant’s brief lack specific requirements under Rule 44, Section 13,
paragraphs (a), (c), (d), and (f):

Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its own motion or on
that of the appellee, on the following grounds:

x x x x

(f) Absence of specific assignment of errors in the appellant’s brief, or of page references to the record as required in
Section 13, paragraphs (a), (c), (d), and (f) of Rule 44.

These requirements are the subject index of the matter in brief, page references to the record, and a table of cases
alphabetically arranged and with textbooks and statutes cited:

Section 13. Contents of the appellant’s brief. – The appellant’s brief shall contain, in the order herein indicated, the
following:

(a) A subject index of the matter in brief with a digest of the arguments and page references, and a table of cases
alphabetically arranged, textbooks and statutes cited with references to the pages where they are cited;

x x x x

(c) Under the heading "Statement of the Case," a clear and concise statement of the nature of the action, a summary of the
proceedings, the appealed rulings and orders of the court, the nature of the controversy, with page references to the
record;

(d) Under the heading "Statement of Facts," a clear and concise statement in a narrative form of the facts admitted by both
parties and of those in controversy, together with the substance of the proof relating thereto in sufficient detail to make it
clearly intelligible, with page references to the record;

x x x x

(f) Under the heading "Argument," the appellant’s arguments on each assignment of error with page references to the
record. The authorities relied upon shall be cited by the page of the report at which the case begins and the page of the
report on which the citation isfound;

x x x x

Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and table of cases, textbooks and
statutes cited. Under Rule 50, Section 1 of the 1997 Rules of Civil Procedure, the Court of Appeals correctly dismissed Lui
Enterprises’ appeal.

Except for cases provided in the Constitution,70 appeal is a "purely statutory right."71 The right to appeal "must be
exercised in the manner prescribed by law"72 and requires strict compliance with the Rules of Court on appeals.73
Otherwise, the appeal shall be dismissed, and its dismissal shall not be a deprivation of due process of law.

In Mendoza v. United Coconut Planters Bank, Inc.,74 this court sustained the Court of Appeals’ dismissal of Mendoza’s
appeal. Mendoza’s appellant’s brief lacked a subject index, assignment of errors, and page references to the record. In De
Liano v. Court of Appeals,75 this court also sustained the dismissal of De Liano’s appeal. De Liano’s appellant’s brief lacked
a subject index, a table of cases and authorities, and page references to the record.

There are exceptions to this rule. In Philippine Coconut Authority v. Corona International, Inc.,76 the Philippine Coconut
Authority’s appellant’s brief lacked a clear and concise statement of the nature of the action, a summary of the
proceedings, the nature of the judgment, and page references to the record. However, this court found that the Philippine
Coconut Authority substantially complied with the Rules. Its appellant’s brief "apprise[d] [the Court of Appeals] of the
essential facts and nature of the case as well as the issues raised and the laws necessary [to dispose of the case]."77 This
court "[deviated] from a rigid enforcement of the rules"78 and ordered the Court of Appeals to resolve the Philippine
Coconut Authority’s appeal.

In Go v. Chaves,79 Go’s 17-page appellant’s brief lacked a subject index. However, Go subsequently filed a subject index.
This court excused Go’s procedural lapse since the appellant’s brief "[consisted] only of 17 pages which [the Court of
Appeals] may easily peruse to apprise it of [the case] and of the relief sought."80 This court ordered the Court of Appeals
to resolve Go’s appeal "in the interest of justice."81

In Philippine Coconut Authority and Go, the appellants substantially complied with the rules on the contents of the
appellant’s brief. Thus, this court excused the appellants’procedural lapses.

In this case, Lui Enterprises did not substantially comply with the rules on the contents of the appellant’s brief. It admitted
that its appellant’s brief lacked the required subject index, page references to the record, and table of cases, textbooks,
and statutes cited. However, it did not even correct its admitted "technical omissions"82 by filing an amended appellant’s
brief with the required contents.83 Thus, this case does not allow a relaxation of the rules. The Court of Appeals did not err
in dismissing Lui Enterprises’ appeal.

Rules on appeal "are designed for the proper and prompt disposition of cases before the Court ofAppeals."84 With respect
to the appellant’s brief, its required contents are designed "to minimize the [Court ofAppeals’] labor in [examining]the
record uponwhich the appeal is heard and determined."85

The subject index serves as the brief’s table of contents.86 Instead of "[thumbing] through the [appellant’s brief]"87 every
time the Court of Appeals Justice encounters an argument or citation, the Justice deciding the case only has to refer to the
subject index for the argument or citation he or she needs.88 This saves the Court ofAppeals time in reviewing the
appealed case. Efficiency allows the justices of the appellate court to substantially attend to this case as well as other
cases.

Page references to the record guarantee that the facts stated in the appellant’s brief are supported by the record.89
Astatement of fact without a page reference to the record creates the presumption that it is unsupported by the record
and, thus, "may be stricken or disregarded altogether."90
As for the table of cases, textbooks, and statutes cited, this is required so that the Court of Appeals can easily verify the
authorities cited "for accuracy and aptness."91

Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and a table of cases, textbooks, and
statutes cited. These requirements "were designed to assist the appellate court in the accomplishment of its tasks, and,
overall, to enhance the orderly administration of justice."92 This court will not disregard rules on appeal "in the guise of
liberal construction."93 For this court to liberally construe the Rules, the party must substantially comply with the Rules
and correct its procedural lapses.94 Lui Enterprises failed to remedy these errors.

All told, the Court of Appeals did not err in dismissing Lui Enterprises’ appeal. It failed to comply with Rule 44, Section 13,
paragraphs (a), (c), (d), and (f) of the 1997 Rules of Civil Procedure on the required contents of the appellant’s brief.

II

Lui Enterprises failed to show that its failure to answer the complaint within the required period was due to excusable
negligence

When a defendant is served with summons and a copy of the complaint, he or she is required to answer within 15 days
from the day he or she was served with summons.95 The defendant may also move to dismiss the complaint "[w]ithin the
time for but before filing the answer."96

Fifteen days is sufficient time for a defendant to answer with good defenses against the plaintiff’s allegations in the
complaint. Thus, a defendant who fails to answer within 15 days from service of summons either presents no defenses
against the plaintiff’s allegations in the complaint or was prevented from filing his or her answer within the required period
due to fraud, accident, mistake or excusable negligence.97

In either case, the court may declare the defendant in default on plaintiff’s motion and notice to defendant.98 The court
shall then try the case until judgment without defendant’s participation99 and grant the plaintiff such relief as his or her
complaint may warrant.100

A defendant declared in default loses his or her standing in court.101 He or she is "deprived of the right to take part in the
trial and forfeits his [or her] rights as a party litigant,"102 has no right "to present evidence [supporting his or her]
allegations,"103 and has no right to "control the proceedings [or] cross-examine witnesses."104 Moreover, he or she "has
no right to expect that [the court] would [act] upon [his or her pleadings]"105 or that he or she "may [oppose]motions filed
against him [or her]."106

However, the defendant declared in default "does not [waive] all of [his or her] rights."107 He or she still has the right to
"receive notice of subsequent proceedings."108 Also, the plaintiff must still present evidence supporting his or her
allegations "despite the default of [the defendant]."109

Default, therefore, is not meant to punish the defendant but to enforce the prompt filing of the answer to the complaint.
For a defendant without good defenses, default saves him or her "the embarrassment of openly appearing to defend the
indefensible."110 As this court explained in Gochangco v. The Court of First Instance of Negros Occidental, Branch

IV:111

It does make sense for a defendant without defenses, and who accepts the correctness of the specific relief prayed for in
the complaint, to forego the filing of the answer or any sort of intervention in the action at all. For even if he did intervene,
the result would be the same: since he would be unable to establish any good defense, having none in fact, judgment
would inevitably go against him. And this would be an acceptable result, if not being in his power to alter or prevent it,
provided that the judgment did not go beyond or differ from the specific relief stated in the complaint. x x x.112 (Emphasis
in the original)

On the other hand, for a defendant with good defenses, "it would be unnatural for him [or her] not to set x x x up [his or
her defenses] properly and timely."113 Thus, "it must be presumed that some insuperable cause prevented him [or her]
from [answering the complaint]."114 In which case, his or her proper remedy depends on when he or she discovered the
default and whether the default judgment was already rendered by the trial court.

After notice of the declaration of default but before the court renders the default judgment, the defendant may file, under
oath, a motion to set aside order of default. The defendant must properly show that his or her failure to answer was due to
fraud, accident,115 mistake116 or excusable negligence.117 The defendant must also have a meritorious defense. Rule 9,
Section 3, paragraph (b) of the1997 Rules of Civil Procedure provides:
Section 3. Default; declaration of. – x x x x

(b) Relief from order of default. – A party declared in default may at any time after notice thereof and before judgment file
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 negligence 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.

If the defendant discovers his or her default after judgment but prior to the judgment becoming final and executory, he or
she may file a motion for new trial under Rule 37, Section 1, paragraph (a) of the 1997 Rules of Civil Procedure.118 If he or
she discovers his or her default after the judgment has become final and executory, a petition for relief from judgment
under Rule 38, Section 1 of the 1997 Rules of Civil Procedure may be filed.119

Appeal is also available to the defendant declared in default. He or she may appeal the judgment for being contrary to the
evidence or to the law under Rule 41, Section 2 of the 1997 Rules of Civil Procedure.120 He or she may do so even if he or
she did not file a petition to set aside order of default.121

A petition for certiorari may also be filed if the trial court declared the defendant in default with grave abuse of
discretion.122

The remedies of the motion to set aside order of default, motion for new trial, and petition for relief from judgment are
mutually exclusive, not alternative or cumulative. This is to compel defendants to remedy their default at the earliest
possible opportunity. Depending on when the default was discovered and whether a default judgment was already
rendered, a defendant declared in default may avail of onlyone of the three remedies.

Thus, if a defendant discovers his or her default before the trial court renders judgment, he or she shall file a motion to set
aside order of default. If this motion to set aside order of default is denied, the defendant declared in default cannot await
the rendition of judgment, and he or she cannot file a motion for new trial before the judgment becomes final and
executory, or a petition for relief from judgment after the judgment becomes final and executory.

Also, the remedies against default become narrower and narrower as the trial nears judgment. The defendant enjoys the
most liberality from this court with a motion to set aside order of default, as he or she has no default judgment to contend
with, and he or she has the whole period before judgment to remedy his or her default.

With a motion for new trial, the defendant must file the motion within the period for taking an appeal123 or within 15 days
from notice of the default judgment. Although a default judgment has already been rendered, the filing of the motion for
new trial tolls the reglementary period of appeal, and the default judgment cannot be executed against the defendant.

A petition for relief from judgment is filed after the default judgment has become final and executory. Thus, the filing of
the petition for relief from judgment does not stay the execution of the default judgment unless a writ of preliminary
injunction is issued pending the petition’s resolution.124

Upon the grant of a motion to set aside order of default, motion for new trial, or a petition for relief from judgment, the
defendant is given the chance to present his or her evidence against that of plaintiff’s. With an appeal, however, the
defendant has no right to present evidence on his or her behalf and can only appeal the judgment for being contrary to
plaintiff’s evidence or the law.

Similar to an appeal, a petition for certiorari does not allow the defendant to present evidence on his or her behalf. The
defendant can only argue that the trial court committed grave abuse of discretion in declaring him or her in default.

Thus, should a defendant prefer to present evidence on his or her behalf, he or she must file either a motion to set aside
order of default, motion for new trial, or a petition for relief from judgment.

In this case, Lui Enterprises had discovered its default before the Regional Trial Court of Makati rendered judgment. Thus, it
timely filed a motion to set aside order of default, raising the ground of excusable negligence.

Excusable negligence is "one which ordinary diligence and prudence could not have guarded against."125 The
circumstances should be properly alleged and proved. In this case, we find that Lui Enterprises’ failure to answer within the
required period is inexcusable.

Lui Enterprises’ counsel filed its motion to dismiss four days late. It did not immediately take steps to remedy its default
and took one year from discovery of default to file a motion to set aside order of default. In its motion to set aside order of
default, Lui Enterprises only "conveniently blamed its x x x counsel [for the late filing of the answer]"126 without offering
any excuse for the late filing. This is not excusable negligence under Rule 9, Section 3, paragraph (b)127 of the 1997 Rules
of Civil Procedure. Thus, the Regional Trial Court of Makati did not err in refusing to set aside the order of default.

Lui Enterprises argued that the Regional Trial Court of Makati should have been liberal in setting aside its order of default.
After it had been declared in default, Lui Enterprises filed several manifestations informing the Makati trial court of the
earlier filed nullification of deed of dation in payment case which barred the filing of the interpleader case. Lui Enterprises’
president, Eli L. Lui, and counsel even flew in from Davao to Makati to "formally [manifest that] a [similar] action between
[Lui Enterprises] and [the Philippine Bank of Communications]"128 was already pending in the Regional Trial Court of
Davao. However, the trial court did not recognize Lui Enterprises’standing incourt.

The general rule is that courts should proceed with deciding cases on the merits and set aside orders of default as default
judgments are "frowned upon."129 As much as possible, cases should be decided with both parties "given every chance to
fight their case fairly and in the open, without resort to technicality."130

However, the basic requirements of Rule 9, Section 3, paragraph (b) of the 1997 Rules of Civil Procedure must first be
complied with.131 The defendant’s motion to set aside order of default must satisfy three conditions. First is the time
element. The defendant must challenge the default order before judgment. Second, the defendant must have been
prevented from filing his answer due to fraud, accident, mistake or excusable negligence. Third, he must have a
meritorious defense. As this court held in SSS v. Hon. Chaves:132

Procedural rules are not to be disregarded or dismissed simply because their non-observance may have resulted in
prejudice to a party’s substantive rights. Like all rules[,] they are to be followed, except only when for the most persuasive
of reasons they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed. x x x.133

As discussed, Lui Enterprises never explained why its counsel failed to file the motion to dismiss on time. It just argued that
courts should be liberal in setting aside orders of default. Even assuming that it had a meritorious defense and that its
representative and counsel had to fly in from Davao to Makati to personally appear and manifest in court its meritorious
defense, Lui Enterprises must first show that its failure to answer was due to fraud, accident, mistake or excusable
negligence. This Lui Enterprises did not do.

Lui Enterprises argued that Zuellig Pharma filed the interpleader case to compel Lui Enterprises and the Philippine Bank of
Communications to litigate their claims. Thus, "[d]eclaring the other claimant in default would ironically defeat the very
purpose of the suit."134 The RegionalTrial Court of Makati should not have declared Lui Enterprises in default.

Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a special civil action for interpleader if
conflicting claims are made against him or her over a subject matter in which he or she has no interest. The action is
brought against the claimants to compel them to litigate their conflicting claims among themselves. Rule 62, Section 1 of
the 1997 Rules of Civil Procedure provides:

Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be made
against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part is not
disputed bythe claimants, he may bring an action against the conflicting claimants to compel them to interplead and
litigate their several claims among themselves.

An interpleader complaint may be filed by a lessee against those who have conflicting claims over the rent due for the
property leased.135 This remedy is for the lessee to protect him or her from "double vexation in respect of one
liability."136 He or she may file the interpleader case to extinguish his or her obligation to pay rent, remove him or her
from the adverse claimants’dispute, and compel the parties with conflicting claims to litigate among themselves.

In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. Its purpose in filing the
interpleader case "was not defeated"137 when the Makati trial court declared Lui Enterprises in default.

At any rate, an adverse claimant in an interpleader case may be declared in default. Under Rule 62, Section 5 of the 1997
Rules of Civil Procedure, a claimant who fails to answer within the required period may, on motion, be declared in default.
The consequence of the default is that the court may "render judgment barring [the defaulted claimant] from any claim in
respect to the subject matter."138 The Rules would not have allowed claimants in interpleader cases to be declared in
default if it would "ironically defeat the very purpose of the suit."139

The Regional Trial Court of Makati declared Lui Enterprises in default when it failed to answer the complaint within the
required period. Lui Enterprises filed a motion to set aside order of default without an acceptable excuse why its counsel
failed to answer the complaint. It failed to prove the excusable negligence. Thus, the Makati trial court did not err in
refusing to set aside the order of default.
III

The nullification of deed in dation in payment case did not bar the filing of the interpleader case. Litis pendentia is not
present in this case.

Lui Enterprises allegedly filed for nullification of deed of dation in payment with the Regional Trial Court of Davao. It sought
to nullify the deed of dation in payment through which the Philippine Bank of Communications acquired title over the
leased property. Lui Enterprises argued that this pending nullification case barred the Regional Trial Court of Makati from
hearing the interpleader case. Since the interpleader case was filed subsequently to the nullification case, the interpleader
case should be dismissed.

Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil Procedure, a motion to dismiss may be filed on the
ground of litis pendentia:

Section 1. Grounds. – Within the time for but before filing the answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made on any of the following grounds:

x x x x

(e)That there is another action pending between the same parties for the same cause;

x x x x

Litis pendentia is Latin for "a pending suit."140 It exists when "another action is pending between the same parties for the
same cause of actionx x x."141 The subsequent action is "unnecessary and vexatious"142 and is instituted to "harass the
respondent [in the subsequent action]."143

The requisites of litis pendentia are:

(1)Identity of parties or at least such as represent the same interest in both actions;

(2)Identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and

(3)The identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which
party is successful, amount to res judicata in the other.144

All of the requisites must be present.145 Absent one requisite, there is no litis pendentia.146

In this case, there is no litis pendentia since there is no identity of parties in the nullification of deed of dation in payment
case and the interpleader case. Zuellig Pharma is not a party to the nullification case filed in the Davao trial court.

There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises filed the first case to nullify the deed of
dation in payment it executed in favor of the Philippine Bank of Communications. Zuellig Pharma subsequently filed the
interpleader case to consign in court the rental payments and extinguish its obligation as lessee. The interpleader case was
necessary and was not instituted to harass either Lui Enterprises or the Philippine Bank of Communications.

Thus, the pending nullification case did not bar the filing of the interpleader case.

Lui Enterprises cited Progressive Development Corporation, Inc. v. Court of Appeals147 as authority to set aside the
subsequently filed interpleader case. In this cited case, petitioner Progressive Development Corporation, Inc. entered into a
lease contract with Westin Seafood Market, Inc. The latter failed to pay rent. Thus, Progressive Development Corporation,
Inc. repossessed the leased premises, inventoried the movable properties inside the leased premises, and scheduled the
public sale of the inventoried properties as they agreed upon in their lease contract.

Westin Seafood Market, Inc. filed for forcible entry with damages against Progressive Development Corporation, Inc. It
subsequently filed an action for damages against Progressive Development Corporation for its "forcible takeover of the
leased premises."148

This court ordered the subsequently filed action for damages dismissed as the pending forcible entry with damages case
barred the subsequently filed damages case.

Progressive Development Corporation, Inc. does not apply in this case. The action for forcible entry with damages and the
subsequent action for damages were filed by the same plaintiff against the same defendant. There is identity of parties in
both cases.

In this case, the nullification of deed of dation in payment case was filed by Lui Enterprises against the Philippine Bank of
Communications. The interpleader case was filed by Zuellig Pharma against Lui Enterprises and the Philippine Bank of
Communications. A different plaintiff filed the interpleader case against Lui Enterprises and the Philippine Bank of
Communications. Thus, there is no identity of parties, and the first requisite of litis pendentia is absent.

As discussed, Lui Enterprises filed the nullification of deed of dation in payment to recover ownership of the leased
premises. Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent.There is no identity of reliefs
prayed for, and the second requisite of litis pendentia is absent.

Since two requisites of litis pendentia are absent, the nullification of deed of dation in payment case did not bar the filing
of the interpleader case.

Lui Enterprises alleged that the Regional Trial Court of Davao issued a writ of preliminary injunction against the Regional
Trial Court of Makati. The Regional Trial Court of Davao allegedly enjoined the Regional Trial Court of Makati from taking
cognizance of the interpleader case. Lui Enterprises argued that the Regional Trial Court of Makati "should have respected
the orders issued by the Regional Trial Court of Davao."149 Lui Enterprises cited Compania General de Tabacos de Filipinas
v. Court of Appeals150 where this court allegedly held:

x x x [T]he issuance of the said writ by the RTC ofAgoo, La Union not only seeks to enjoin Branch 9 of the RTC of Manila
from proceeding with the foreclosure case but also has the effect of pre-empting the latter’s orders. x x x.151

Compania General de Tabacos de Filipinas is not an authority for the claim that a court can issue a writ of preliminary
injunction against a co- equal court.1âwphi1 The cited sentence was taken out of context. In Compania General de Tabacos
de Filipinas, this court held that the Regional Trial Court ofAgoo had no power to issue a writ of preliminary injunction
against the Regional Trial Court of Manila.152 Acourt cannot enjoin the proceedings of a co-equal court.

Thus, when this court said that the Regional Trial Court of Agoo’s writ of preliminary injunction "not only seeks to enjoin x x
x [the Regional Trial Court of Manila] from proceeding with the foreclosure case but also has the effect of pre-empting the
latter’s orders,"153 this court followed with "[t]his we cannot countenance."154

At any rate, the Regional Trial Court of Davao’s order datedApril 18, 2005 was not a writ of preliminary injunction. It was a
mere order directing the Philippine Bank of Communications to inform Zuellig Pharma to pay rent to Lui Enterprises while
the status quo order between Lui Enterprises and the Philippine Bank of Communications was subsisting. The Regional Trial
Court of Davao did not enjoin the proceedings before the Regional Trial Court of Makati.The order datedApril 18, 2005
provides:

As such, [the Philippine Bank of Communications] [is] hereby directed to forthwith inform Zuellig Pharma Corp., of the April
1, 2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for the said lessee to remit all
rentals due from February 23, 2003 and onwards to plaintiff Lui Enterprises, Inc., in the meanwhile that the status quo
order is subsisting.155

Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial Court of Makati fromhearing the interpleader case.

All told, the trial court did not err in proceeding with the interpleader case. The nullification of deed of dation in payment
case pending with the Regional Trial Court of Davao did not bar the filing of the interpleader case with the RegionalTrial
Court of Makati.

IV

The Court of Appeals erred in awarding attorney’s fees

In its ordinary sense, attorney’s fees "represent the reasonable compensation [a client pays his or her lawyer] [for legal
service rendered]."156 In its extraordinary sense, attorney’s fees "[are] awarded x x x as indemnity for damages [the losing
party pays the prevailingparty]."157

The award of attorney’s fees is the exception rather than the rule.158 It is not awarded to the prevailing party "as a matter
of course."159 Under Article 2208 of the Civil Code, attorney’s fees cannot be recovered in the absence of stipulation,
except under specific circumstances:

(1)When exemplary damages are awarded;

(2)When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to
protect his interest;

(3)In criminal cases of malicious prosecution against the plaintiff;

(4)In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5)Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and
demandable claim;

(6)In actions for legal support;

(7)In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8)In actions for indemnity under workmen’s compensation and employer’s liability laws;

(9)In a separate civil action to recover civil liability arising froma crime;

(10)When at least double judicial costs are awarded;

(11)In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be
recovered.160

Even if a party is "compelled to litigate with third persons or to incur expenses to protect his [or her] rights,"161 attorney's
fees will not be awarded if no bad faith "could be reflected in a party's persistence in a case."162

To award attorney's fees, the court must have "factual, legal, [and] equitable justification."163 The court must state the
award's basis in its decision.164These rules are based on the policy that "no premium should be placed.on the right to
litigate."165

In this case, the Court of Appeals awarded attorney's fees as "[Zuellig Pharma] was compelled to litigate with third persons
or to incur expenses to protect [its] interest[s]."166 This is not a compelling reason to award attorney's fees. That Zuellig
Pharma had to file an interpleader case to consign its rental payments did not mean that Lui Enterprises was in bad faith in
insisting that rental payments be paid to it. Thus, the Court. of Appeals erred in awarding attorney's fees to Zuellig Pharma.

All told, the Court of Appeals' award of P50,000.00 as attorney's fees must be deleted.

WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED. The Court of Appeals' decision and
resolution in CA- G.R. CV No. 88023 are AFFIRMED with MODIFICATION. The award of PS0,000.00 attorney's fees to Zuellig
Pharma Corporation is DELETED.

SO ORDERED.
------------

EN BANC

G.R. No. L-26443 March 25, 1969

MAKATI DEVELOPMENT CORPORATION, plaintiff-appellant,

vs.
PEDRO C. TANJUATCO and CONCRETE AGGREGATES, INC., defendants-appellees.

Salvador J. Lorayes for plaintiff-appellant.

P. C. Tanjuatco and F. Garcia for defendants-appellees.

CONCEPCION, C.J.:

Appeal by plaintiff Makati Development Corporation from an order of dismissal of the Court of First Instance of Rizal
(Pasig), predicated upon lack of jurisdiction.

On February 21, 1963, said plaintiff and defendant Pedro C. Tanjuatco entered into a contract whereby the latter bound
himself to construct a reinforced concrete covered water reservoir, office and pump house and water main at Forbes Park,
Makati, Rizal, furnishing, inter alia, the materials necessary therefor. Before making the final payment of the consideration
agreed upon, plaintiff inquired from the suppliers of materials, who had called its attention to unpaid bills therefor of
Tanjuatco, whether the latter had settled his accounts with them. In response to this inquiry, Concrete Aggregates, Inc. —
hereinafter referred to as the Supplier — made a claim in the sum of P5,198.75, representing the cost of transit-mixed
concrete allegedly delivered to Tanjuatco. With his consent, plaintiff withheld said amount from the final payment made to
him and, in view of his subsequent failure to settle the issue thereon with the Supplier, on September 16, 1955, plaintiff
instituted the present action, in the Court of First Instance of Rizal, against Tanjuatco and the Supplier, to compel them "to
interplead their conflicting claims."

On October 4, 1965, Tanjuatco moved to dismiss the case, upon the ground that the court had no jurisdiction over the
subject-matter of the litigation, the amount involved therein being less than P10,000.00. 1 Finding this motion "to be well-
taken", the lower court granted the same, over plaintiffs opposition thereto, and, accordingly, issued an order, dated
November 16, 1965, dismissing the case, without costs. Hence, this appeal, in which plaintiff maintains that the subject-
matter of this litigation is not the aforementioned sum of P5,198.75, but the right to compel the defendants "to litigate
among themselves" in order to protect the plaintiff "against a double vexation in respect to one liability."

We find no merit in this contention. There is no question in this case that plaintiff may compel the defendants to
interplead among themselves, concerning the aforementioned sum of P5,198.75. The only issue is who among the
defendants is entitled to collect the same. This is the object of the action, which is not within the jurisdiction of the lower
court. As a matter of fact, on May 25, 1966 the Supplier sued Tanjuatco, in Civil Case No. 149173 of the Municipal Court of
Manila, for the recovery of said amount of P5,198.75, and the decision therein will settle the question as to who has a right
to the sum withheld by plaintiff herein.lawphi1.ñet

The latter relies upon Rule 63 of the present Rules of Court, prescribing the procedure in cases of interpleading, and
section 19 of Rule 5 of said Rules of Court, which, unlike section 19 of Rule 4 of the Old Rules, omits the Rules on
Interpleading among those made applicable to inferior courts. This fact does not warrant, however, the conclusion drawn
therefrom by plaintiff herein. To begin with, the jurisdiction of our courts over the subject-matter of justiciable
controversies is governed by Rep. Act No. 296, as amended, pursuant to which 2 municipal courts shall have exclusive
original jurisdiction in all civil cases "in which the demand, exclusive of interest, or the value of the property in
controversy", amounts to not more than "ten thousand pesos." Secondly, "the power to define, prescribe, and apportion
the jurisdiction of the various courts" belongs to Congress 3 and is beyond the rule-making power of the Supreme Court,
which is limited to matters concerning pleading, practice, and procedure in all courts, and the admission to the practice of
law. 4 Thirdly, the failure of said section 19 of Rule 5 of the present Rules of Court to make its Rule 63, on interpleading,
applicable to inferior courts, merely implies that the same are not bound to follow Rule 63 in dealing with cases of
interpleading, but may apply thereto the general rules on procedure applicable to ordinary civil action in said courts.

WHEREFORE, the order appealed from is hereby affirmed, with the costs of this instance against plaintiff Makati
Development Corporation. It is so ordered.

------------
EN BANC

G.R. No. L-25138 August 28, 1969

JOSE A. BELTRAN, ET AL., plaintiffs-appellants,

vs.
PEOPLE'S HOMESITE & HOUSING CORPORATION, defendants-appellees.

Beltran, Cendaña, Camu, Pelias and Manuel for plaintiffs-appellants.

Government Corporate Counsel Tomas P. Matic Jr. and Assistant Government Corporate Counsel Romualdo Valera for
defendants-appellees.

TEEHANKEE, J.:

Appeal on purely questions of law from an order of dismissal of the complaint for interpleader, on the ground that it does
not state a cause of action, as certified to this Court by the Court of Appeals. We affirm the dismissal on the ground that
where the defendants sought to be interpleaded as conflicting claimants have no conflicting claims against plaintiff, as
correctly found by the trial court, the special civil action of interpleader will not lie.

This interpleader suit was filed on August 21, 1962, by plaintiffs in their own behalf and in behalf of all residents of Project
4 in Quezon City, praying that the two defendant-government corporations be compelled to litigate and interplead
between themselves their alleged conflicting claims involving said Project 4.
Plaintiffs' principal allegations in their complaint were as follows: Since they first occupied in 1953 their respective housing
units at Project 4, under lease from the People's Homesite & Housing Corporation (PHHC) and paying monthly rentals
therefor, they were assured by competent authority that after five years of continuous occupancy, they would be entitled
to purchase said units. On February 21, 1961, the PHHC announced to the tenants that the management, administration
and ownership of Project 4 would be transferred by the PHHC to the Government Service Insurance System (GSIS) in
payment of PHHC debts to the GSIS. In the same announcement, the PHHC also asked the tenants to signify their
conformity to buy the housing units at the selling price indicated on the back thereof, agreeing to credit the tenants, as
down payment on the selling price, thirty (30%) percent of what had been paid by them as rentals. The tenants accepted
the PHHC offer, and on March 27, 1961, the PHHC announced in another circular that all payments made by the tenants
after March 31, 1961 would be considered as amortizations or installment payments. The PHHC furthermore instructed the
Project Housing Manager in a memorandum of May 16, 1961 to accept as installments on the selling price the payments
made after March 31, 1961 by tenants who were up-to-date in their accounts as of said date. In September, 1961, pursuant
to the PHHC-GSIS arrangement, collections from tenants on rentals and/or installment payments were delivered by the
PHHC to the GSIS. On December 27, 1961, the agreement of turnover of administration and ownership of PHHC properties,
including Project 4 was executed by PHHC in favor of GSIS, pursuant to the release of mortgage and amicable settlement of
the extrajudicial foreclosure proceedings instituted in May, 1960 by GSIS against PHHC. Subsequently, however, PHHC
through its new Chairman-General Manager, Esmeraldo Eco, refused to recognize all agreements and undertakings
previously entered into with GSIS, while GSIS insisted on its legal rights to enforce the said agreements and was upheld in
its contention by both the Government Corporate Counsel and the Secretary of Justice. Plaintiffs thus claimed that these
conflicting claims between the defendants-corporations caused them great inconvenience and incalculable moral and
material damage, as they did not know to whom they should pay the monthly amortizations or payments. They further
alleged that as the majority of them were GSIS policy holders, they preferred to have the implementation of the outright
sale in their favor effected by the GSIS, since the GSIS was "legally entitled to the management, administration and
ownership of the PHHC properties in question." 1

Upon urgent ex parte motion of plaintiffs, the trial Court issued on August 23, 1962 its Order designating the People's First
Savings Bank at Quezon City "to receive in trust the payments from the plaintiffs on their monthly amortizations on PHHC
lots and to be released only upon proper authority of the Court." 2

On August 29, 1962, the two defendant corporations represented by the Government Corporate Counsel filed a Motion to
Dismiss the complaint for failure to state a cause of action as well as to lift the Court's order designating the People's First
Savings Bank as trustee to receive the tenants' payments on the PHHC lots.

The trial Court heard the motion on September 1, 1962 in the presence of all the parties, and thereafter issued its Order of
September 6, 1962, dismissing the Complaint, ruling that: "During the hearing of the said motion and opposition thereto,
the counsel for the defendants ratified the allegations in his motion and made of record that the defendant Government
Service Insurance System has no objection that payments on the monthly amortizations from the residents of Project 4 be
made directly to the defendant People's Homesite and Housing Corporation. From what appears in said motion and the
statement made in open court by the counsel for defendants that there is no dispute as to whom the residents of Project 4
should make their monthly amortizations payments, there is, therefore, no cause of action for interpleading and that the
order of August 23, 1962 is not warranted by the circumstances surrounding the case. In so far as payments are concerned,
defendant GSIS has expressed its conformity that they be made directly to defendant PHHC. Counsel for defendants went
further to say that whatever dispute, if any, may exist between the two corporations over the lots and buildings in Project
4, payments made to the PHHC will not and cannot in any way affect or prejudice the rights of the residents thereof as they
will be credited by either of the two defendants." 3

Plaintiffs subsequently filed their motion for reconsideration and the trial court, "with a view to thresh out the matter once
and for all," called the Managers of the two defendants-corporations and the counsels for the parties to appear before it
for a conference on October 24, 1962. "During the conference," the trial court related in its Order of November 20, 1962,
denying plaintiffs' Motion for Reconsideration, "Manager Diaz of the GSIS made of record that he has no objection that
payments be made to the PHHC. On the other hand, Manager Eco of the PHHC made of record that at present there is a
standing arrangement between the GSIS and the PHHC that as long as there is showing that the PHHC has remitted 100%
of the total purchase price of a given lot to the GSIS, the latter corporation shall authorize the issuance of title to the
corresponding lot. It was also brought out in said conference that there is a new arrangement being negotiated between
the two corporations that only 50% of the purchase price be remitted to the GSIS by the PHHC, instead of the 100%. At any
rate the two Managers have assured counsel for the plaintiffs that upon payment of the whole purchase price of a given
lot, the title corresponding to said lot will be issued." 4

On appeal, plaintiffs claim that the trial Court erred in dismissing their suit, contending the allegations in their complaint
"raise questions of fact that can be established only by answer and trial on the merits and not by a motion to dismiss heard
by mere oral manifestations in open court," and that they "do not know who, as between the GSIS and the PHHC, is the
right and lawful party to receive their monthly amortizations as would eventually entitle them to a clear title to their
dwelling units." 5
Plaintiffs entirely miss the vital element of an action of interpleader. Rule 63, section 1 of the Revised Rules of Court
(formerly Rule 14) requires as an indispensable element that "conflicting claims upon the same subject matter are or may
be made" against the plaintiff-in-interpleader "who claims no interest whatever in the subject matter or an interest which
in whole or in part is not disputed by the claimants." While the two defendant corporations may have conflicting claims
between themselves with regard to the management, administration and ownership of Project 4, such conflicting claims
are not against the plaintiffs nor do they involve or affect the plaintiffs. No allegation is made in their complaint that any
corporation other than the PHHC which was the only entity privy to their lease-purchase agreement, ever made on them
any claim or demand for payment of the rentals or amortization payments. The questions of fact raised in their complaint
concerning the enforceability, and recognition or non-enforceability and non-recognition of the turnover agreement of
December 27, 1961 between the two defendant corporations are irrelevant to their action of interpleader, for these
conflicting claims, loosely so-called, are between the two corporations and not against plaintiffs. Both defendant
corporations were in conformity and had no dispute, as pointed out by the trial court that the monthly payments and
amortizations should be made directly to the PHHC alone.

The record rejects plaintiffs' claim that the trial courts order was based on "mere oral manifestations in court." The Reply
to Opposition of September 11, 1962 filed by the Government Corporate Counsel expressly "reiterates his manifestation in
open court that no possible injustice or prejudice would result in plaintiffs by continuing to make payments of such rentals
or amortizations to defendant PHHC because any such payments will be recognized as long as they are proper, legal and in
due course by anybody who might take over the property. Specifically, any such payments will be recognized by the GSIS in
the event that whatever conflict there might be (and this is only on the hypothetical assumption that such conflict exists)
between the PHHC and the GSIS should finally be resolved in favor of the GSIS". 6 The assurances and undertakings to the
same affect given by the Managers of the defendants-corporations at the conference held by the trial Court are expressly
embodied in the Court's Order of November 20, 1962 quoted above. The GSIS' undertaking to recognize and respect the
previous commitments of PHHC towards its tenants is expressly set forth in Par. III, section M of the turnover agreement,
Annex "F" of plaintiffs' complaint, wherein it is provided that "GSIS shall recognize and respect all awards, contracts of sale,
lease agreements and transfer of rights to lots and housing units made and approved by PHHC, subsisting as of the signing
of this agreement, and PHHC commitment to sell its housing projects 4, 6 and 8-A at the selling prices less rental credits
fixed by PHHC and as finally approved by the OEC. PHHC, however, shall be liable and answerable for any and all claims and
consequences arising from double or multiple awards or in the case of awards of non-existing houses and/or lots." 7

In fine, the record shows clearly that there were no conflicting claims by defendant corporations as against plaintiff-
tenants, which they may properly be compelled in an interpleader suit to interplead and litigate among themselves. Both
defendant corporations were agreed that PHHC should continue receiving the tenants' payments, and that such payments
would be duly recognized even if the GSIS should eventually take over Project 4 by virtue of their turnover agreement of
December 27, 1961. As held by this Court in an early case, the action of interpleader is a remedy whereby a person who
has property in his possession or has an obligation to render wholly or partially, without claiming any right in both, comes
to court and asks that the defendants who have made upon him conflicting claims upon the same property or who
consider themselves entitled to demand compliance with the obligation be required to litigate among themselves in order
to determine who is entitled to the property or payment of the obligation. "The remedy is afforded not to protect a person
against a double liability but to protect him against a double vexation in respect of one liability." 8 Thus, in another case,
where the occupants of two different parcels of land adjoining each other belonging to two separate plaintiffs, but on
which the occupants had constructed a building encroaching upon both parcels of land, faced two ejectment suits from the
plaintiffs, each plaintiff claiming the right of possession and recovery over his respective portion of the lands encroached
upon, this Court held that the occupants could not properly file an interpleader suit, against the plaintiffs, to litigate their
alleged conflicting claims; for evidently, the two plaintiff did not have any conflicting claims upon the same subject matter
against the occupants, but were enforcing separate and distinct claims on their respective properties. 9

Plaintiffs' other contention in their appeal is that notwithstanding that the issue as to which of the defendants is
authorized to receive the tenants' payments was resolved in favor of the PHHC, they had raised other issues that were not
resolved and would require rendition of judgment after trial on the merits, such as "the issue of the right of ownership over
the houses and lots in Project 4 (and) the issue of the status of the commitment agreements and undertakings made by the
previous PHHC Administration, particularly those of the then PHHC General Manager Bernardo Torres." 10 This contention
is without merit, for no conflicting claims have been made with regard to such issues upon plaintiffs by defendant
corporations, who both bound themselves to recognize and respect the rights of plaintiffs-tenants. The resolution of such
issues affecting the defendant corporations exclusively may not properly be sought through the special civil action of
interpleader. Should there be a breach of the PHHC undertakings towards plaintiffs, plaintiffs' recourse would be an
ordinary action of specific performance or other appropriate suit against either the PHHC or GSIS or both, as the
circumstances warrant.

We find no error, therefore, in the trial court's order of dismissal of the complaint for interpleader and the lifting, as a
consequence, of its other order designating the People's First Savings Bank as trustee to receive the tenants' payments on
the PHHC lots.
ACCORDINGLY, the trial Court's order of dismissal is hereby affirmed. Without costs.
-------------

FIRST DIVISION

G.R. No.147812. April 6, 2005

LEONARDO R. OCAMPO, Petitioners,

vs.
LEONORA TIRONA, Respondents.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review1 to annul the Decision2 dated 29 November 2000 of the Court of Appeals ("appellate court") in
CA-G.R. SP No. 41686, and its Resolution dated 16 April 2001 denying the motion for reconsideration. The appellate court
set aside the Decision3 dated 27 June 1996 of Branch 110 of the Regional Trial Court of Pasay City ("RTC") in Civil Case No.
96-0209. The RTC affirmed the Decision4 dated 29 December 1995 of Branch 47 of the Metropolitan Trial Court of Pasay
City ("MTC") in Civil Case No. 754-95 ordering respondent Leonora Tirona ("Tirona") to vacate and surrender possession of
the property under litigation to petitioner Leonardo R. Ocampo ("Ocampo"). The MTC also ordered Tirona to pay Ocampo
rentals in arrears, attorney’s fees, and costs of suit.

Antecedent Facts

Ocampo alleged that he is the owner of a parcel of land ("subject land") described in Transfer Certificate of Title ("TCT") No.
134359, with an approximate area of 500 square meters, located at Alvarez Street, Pasay City. Ocampo bought the subject
land from Rosauro Breton, heir of the subject land’s registered owner Alipio Breton Cruz. Possession and administration of
the subject land are claimed to be already in Ocampo’s management even though the TCT is not yet in his name. Tirona, on
the other hand, is a lessee occupying a portion of the subject land.5 The MTC established the following facts:

According to [Ocampo], upon acquisition of ownership of the subject premises, a formal written notice was given to
[Tirona] which was received by the latter on 9 March 1995, copy of the said formal written agreement marked as Annex
"A" and likewise copy of the registry return receipt showing that [Tirona] received Annex "A" was marked as Annex "A-1".
In recognition of [Ocampo’s] right of ownership over the subject premises, [Tirona] paid some monthly rentals due,
however, on July 5, 1995, [Ocampo] received a letter from Callejo Law Office of Room 513 Borja Bldg., 645 Sta. Cruz,
Manila stating among others, that, in view of the fact that the subject premises was declared under area for priority
development, [Tirona] is invoking her right of first refusal and in connection thereto [Tirona] will temporarily stop paying
her monthly rentals until and unless the National Housing Authority have processed the pertinent papers as regards the
amount due to [Ocampo] by reason of the implementation of the above law, a copy of the said letter marked as Annex "B"
of the Complaint. In reply to Annex "B", [Ocampo] sent a letter dated 17 July 1995 addressed to the said Callejo Law Office,
copy furnished [Tirona]. A copy of the said reply of [Ocampo] marked as Annex "C" of the Complaint, a copy of the Registry
Return Receipt showing that [Tirona] received said Annex "C" on 20 July 1995 marked as Annex "C-1" of the Complaint,
while as the original copy which was sent to Callejo Law Office was also received by said office. On 7 August 1995,
[Ocampo] wrote a letter to [Tirona] demanding upon [Tirona] to pay the rentals in arrears for the months of April, May,
June, July and August at the rate of ₱1,200 a month and to vacate the premises, copy of the said letter dated 7 August
1995 marked as Annex "D" of the Complaint and the signature at the bottom portion of Annex "D" clearly shows that the
same was received by [Tirona] on 8 August 1995. Despite receipt of said letter, [Tirona] failed and refused and still fails and
refuses to heed [Ocampo’s] demands.6

On 11 September 1995, Ocampo filed a complaint docketed as Civil Case No. 754-95 for unlawful detainer and damages
against Tirona before the MTC.

Tirona filed her answer on 27 September 1995. Tirona asserted that Doña Lourdes Rodriguez Yaneza actually owns the
subject land. The allegations in the answer state thus:

1. That the Assignor [one Edison A. Hindap, Sr.] is the General Overseer and Attorney-in-Fact of DOÑA LOURDES
RODRIGUEZ YANEZA, Heir/Owner of TITULO DE PROPRIEDAD DE TERENOS of 1891, Royal Degree 01-4 Protocol, the real
owner of a parcel of land allegedly claimed by [Ocampo].
2. That the Title of [Ocampo] was overlapped [sic] the Original Land Title of the Assignor.

3. That [Tirona], hereby recognized by the Assignor as co-owner by possession and hereby cede, transfer and assign the
said parcel of land in [Tirona’s] favor.

4. That [Tirona] hereby denied [sic] and discontinued [sic] all the obligations imposed by [Ocampo], for the simple reason,
the property in question is not owned by [Ocampo], but rather owned by the Assignor, as proof of evidence herein
Assignor issued a Certification for Occupancy and Assignment in favor of [Tirona] herein attached with [sic], and the other
evidence shall be presented upon the proper hearing on the merits of this case.7

Ocampo filed a motion to strike out the answer filed and a motion for judgment on 10 October 1995. Ocampo claimed that
the answer was not verified; therefore, it was as if no answer was filed.

On 12 October 1995, Tirona filed a motion with leave to amend defendant’s answer.8 She alleged that she filed her answer
without the assistance of a lawyer due to fear that she might be unable to file the required pleading on time. In her
amended answer, Tirona maintained that Ocampo is not the owner of the subject land. She stated that the certificate of
title to the subject land is not even registered under Ocampo’s name. Tirona also alleged that she has a right of first refusal
in case of sale of the land, pursuant to Presidential Decree ("PD") Nos. 1517,9 189310 and 1968.11 The area where the
subject land is located was certified as an area under priority development.12 Tirona asked for attorney’s fees and moral
and exemplary damages.

In the spirit of substantial justice, the MTC granted Tirona’s motion to amend her answer on 20 October 1995. On 15
November 1995, the MTC directed Ocampo and Tirona to submit their respective position papers and other evidence after
the termination of the pre-trial conference.

The issue considered by the MTC for resolution was whether Ocampo may eject Tirona because of non-payment of rent
and because of the termination of Tirona’s right to possess and occupy the subject land.

The MTC’s Ruling

The MTC ruled that Tirona does not have any reason to suspend payment of rents until after PD No. 1517, in relation to PD
Nos. 1893 and 1968, is implemented in her favor. Tirona’s non-payment of rents rendered her occupation of the subject
land illegal. As owner of the subject land, Ocampo is entitled to its use and enjoyment, as well as to recover its possession
from any person unlawfully withholding it.

The dispositive part of the MTC’s decision reads:

WHEREFORE, judgment is hereby rendered in favor of [Ocampo] and against [Tirona]:

1. Ordering [Tirona] and all other persons claiming possession under her to vacate and surrender possession to [Ocampo]
the premises known as, parcel of land located at 2132 Alvarez St., Pasay City, covered by Transfer Certificate of Title No.
134359 of the Register of Deeds of Pasay City;

2. Ordering [Tirona] to pay the rentals in arrears covering the period from April 1995 until such time [Tirona] shall have
finally vacated the subject premises at the rate of ₱1,200 a month, with interest at a legal rate;

3. Ordering [Tirona] to pay the sum of ₱5,000 for and as attorney’s fees; and

4. Ordering [Tirona] to pay the cost of the suit.

SO ORDERED.13

Ocampo filed a motion for execution pending appeal on 24 January 1996, while Tirona filed a notice of appeal on 25
January 1996. The MTC directed its clerk of court to transmit the records of the case, as well as the motion for execution
pending appeal, through an order issued on 29 January 1996. The RTC issued an order on 26 February 1996 ordering both
parties to file their respective memoranda.

On 4 March 1996, Maria Lourdes Breton-Mendiola, who claimed to be the owner of the subject land, filed a motion with
leave to file intervention before the RTC.

The RTC’s Ruling

In an order dated 11 March 1996, the RTC issued a writ of execution pending appeal for the enforcement of the MTC’s
decision. The RTC stated that although Tirona perfected her appeal on time, the record showed that she failed to pay the
required supersedeas bond as well as deposit the current rentals as mandated by Section 8, Rule 70 of the 1964 Rules of
Court. In a separate order issued on the same date, the RTC denied Maria Lourdes Breton-Mendiola’s motion with leave to
file intervention. The RTC stated that granting the motion to intervene would violate the 1964 Rules of Court and
jurisprudence.

Ocampo filed his memorandum on 21 March 1996.14 He emphasized that Tirona’s assertion of a "preferential right of first
refusal" is a recognition of the sale by Rosauro Breton of the subject land to him. Moreover, Tirona is not qualified to claim
this preferential right because she is no longer a legitimate tenant. The payment of Tirona’s monthly rent was already in
arrears at the time Ocampo filed the complaint against Tirona.

On 25 March 1996, Tirona filed a manifestation which stated that she paid both the supersedeas bond and rent on the
subject land. The RTC considered Tirona’s manifestation as a motion for reconsideration of its previous order issuing a writ
of execution pending appeal. In its order dated 15 April 1996, the RTC recalled its 11 March 1996 order and cancelled the
writ of execution.

Tirona filed her memorandum also on 25 March 1996. For the first time, Tirona disclosed that Alipio Breton is the
registered owner of the subject land and that he is her landlord since 1962. When Alipio Breton died in 1975, his children,
Rosauro Breton and Maria Lourdes Breton-Mendiola, inherited the subject land. Tirona claims she has never stopped
paying her rent to Maria Lourdes Breton-Mendiola. Tirona also stated that Rosauro Breton could not transfer ownership to
the subject land to Ocampo. On 14 July 1978, Rosauro Breton executed a deed of conveyance and waiver in favor of his
sister, Maria Lourdes Breton-Mendiola. Rosauro Breton executed another deed of conveyance and waiver in favor of Maria
Lourdes Breton-Mendiola on 9 March 1995. Thus, Tirona claims, Ocampo cannot legally acquire title from Rosauro Breton
in view of the waivers. Maria Lourdes Breton-Mendiola is Tirona’s lessor, and is the only person who can validly file an
ejectment suit against Tirona.15

After quoting the findings of the MTC, the RTC held thus:

This Court after a careful review of the complete record of this case particularly the evidences, applicable laws and
jurisprudence relied upon by the [MTC] in finding for [Ocampo] and declaring that [Tirona] can be lawfully ejected from the
subject premises, concurs with the findings thereof. There is therefore nothing in the record which would warrant the
Court to disturb the findings of fact and law and the conclusions reached by the [MTC].

This Court finds the decision of the lower court fully justified in granting the reliefs to [Ocampo].

WHEREFORE, judgment is hereby rendered AFFIRMING IN TOTO the decision of the [MTC] with costs against [Tirona].

SO ORDERED.16

In its petition before the appellate court, Tirona stated that the RTC erred in the following grounds:

1. ORDERING THE EJECTMENT OF [TIRONA] IN VIOLATION OF SECTION 2 OF PD [NO.] 2016.17

2. NOT RULING THAT [TIRONA] HAS A BETTER RIGHT OF POSSESSION OVER THE PROPERTY IN QUESTION.

3. RULING THAT THE SUCCESSOR-IN-INTEREST OF AN UNDIVIDED IDEAL ONE-HALF PORTION, [OCAMPO] MAY DEPRIVE THE
OTHER CO-OWNER OF THE ADMINISTRATION OF ONE-HALF PORTION BY EJECTING HER LESSEE, [TIRONA].18

The appellate court stated that the principal issue for its resolution is whether Ocampo, being the buyer of the subject land
which is not yet partitioned among the heirs, can validly evict Tirona.19

The Appellate Court’s Ruling

The appellate court considered partition of the estate of Alipio Breton as a prerequisite to Ocampo’s action. The appellate
court ruled that "[u]ntil the partition of the estate is ordered by the Regional Trial Court of Pasay City in the pending
partition proceedings and the share of each co-heir is determined by metes and bounds, [Ocampo] cannot rightfully claim
that what he bought is part of the property occupied by [Tirona]."20 The dispositive part of the appellate court’s decision
reads thus:

WHEREFORE, the decision of the respondent court is hereby SET ASIDE and judgment is hereby rendered dismissing the
complaint of the private respondent in the court below.

SO ORDERED.21
Hence, the instant petition.

The Issues

Ocampo assigned three errors to the appellate court. Ocampo stated that the appellate court erred in:

1. ENTERTAINING AND NOT DISMISSING THE PETITION FOR REVIEW (with prayer for its issuance of Writ of Preliminary
Injunction and immediate issuance of TRO), THE SAME HAVING BEEN FILED BEYOND THE REGLAMENTARY PERIOD.

2. CONSIDERING AND RESOLVING AN ISSUE RAISED IN THE PETITION FOR REVIEW FOR THE FIRST TIME ON APPEAL.

3. DECLARING THAT LEONARDO R. OCAMPO HAS NO RIGHT TO EJECT LEONORA TIRONA, NOR DEMAND PAYMENT OF
RENTALS FROM HER FOR THE USE AND OCCUPANCY OF THE LOT INVOLVED IN THE PRESENT CASE.22

The Ruling of the Court

The petition has merit.

We agree with Ocampo’s observation that Tirona changes her theory of the case each time she appeals.23 For this reason,
we shall limit our ruling to the propriety of Ocampo’s unlawful detainer case against Tirona.

Moreover, we have assessed the evidence on record and found that the appellate court did not contradict the findings of
facts of the MTC and RTC. Thus, we see no reason to deviate from their findings of facts.

Unlawful Detainer

Elements to be Proved

Unlawful detainer cases are summary in nature. The elements to be proved and resolved in unlawful detainer cases are the
fact of lease and expiration or violation of its terms.24 To support their conclusion that there was an existing lease, the
MTC and RTC found that:

(1) Ocampo informed Tirona through a letter dated 1 March 1995 that he bought the subject land, upon which Tirona’s
house stands, from the previous owner and lessor Rosauro Breton;25

(2) Tirona’s continued occupancy of the subject land signifies Tirona’s acceptance of Ocampo’s conditions of lease stated in
the 1 March 1995 letter;26 and

(3) In asserting her right to possess the subject land, Tirona admitted that Ocampo is her lessor. In the 5 July 1995 letter,
Tirona was referred to as "the hereinmentioned tenant of yours."27

In Mirasol v. Magsuci, et al.,28 we ruled that the sale of a leased property places the vendee into the shoes of the original
lessor to whom the lessee bound himself to pay. The vendee acquires the right to evict the lessee from the premises and to
recover the unpaid rentals after the vendee had notified the lessee that he had bought the leased property and that the
rentals on it should be paid to him, and the lessee refused to comply with the demand.

The following facts support the conclusion that there was a violation of the lease agreement:

(1) Tirona, through Callejo Law Office, sent a letter dated 5 July 1995 which stated that Tirona will temporarily stop paying
her monthly obligation until the National Housing Authority has processed the pertinent papers regarding the amount due
to Ocampo in view of PD 1517;29

(2) As of August 1995, Tirona has not paid her rent to Ocampo corresponding to April to August 1995;30 and

(3) In a letter dated 7 August 1995, Ocampo demanded from Tirona unpaid rent payments.31

In view of these facts, we hold that Tirona is estopped from denying her possession under a lease32 and that there was a
violation of the lease agreement. Thus, the MTC and RTC correctly ruled against Tirona.

Ownership as an Issue

When Tirona filed her answer before the MTC, she raised the issue of ownership and ascribed ownership of the subject lot
to one Doña Lourdes Rodriguez Yaneza. Tirona later changed her strategy and filed an amended answer that ascribed
ownership of the subject lot to Maria Lourdes Breton-Mendiola. Tirona justified the amendment by stating that she did not
ask for the assistance of a lawyer for fear of not being able to file her answer on time. This excuse is flimsy considering that
Tirona first communicated to Ocampo through Callejo Law Office. However, the MTC still allowed Tirona to amend her
answer. Tirona stated that there was no violation of the lease agreement because she paid her rent to the real owner,
Maria Lourdes Breton-Mendiola.

Contrary to Tirona’s position, the issue of ownership is not essential to an action for unlawful detainer. The fact of the lease
and the expiration of its term are the only elements of the action. The defense of ownership does not change the summary
nature of the action. The affected party should raise the issue of ownership in an appropriate action, because a certificate
of title cannot be the subject of a collateral attack.33 Although a wrongful possessor may at times be upheld by the courts,
this is merely temporary and solely for the maintenance of public order. The question of ownership is to be settled in the
proper court and in a proper action.34

In actions for forcible entry and [unlawful] detainer, the main issue is possession de facto, independently of any claim of
ownership or possession de jure that either party may set forth in his pleadings, and an appeal does not operate to change
the nature of the original action. On appeal, in an ejectment case, it is within the discretion of the court to look into the
evidence supporting the assigned errors relating to the alleged ownership of appellant insofar as said evidence would
indicate or determine the nature of appellant’s possession of the controverted premises. Said court should not however
resolve the issue raised by such assigned errors. The resolution of said issues would effect an adjudication on ownership
which is not sanctioned in the summary action for unlawful detainer.35

Unlawful detainer being a summary proceeding, it was error for the appellate court to include the issue of ownership. Had
the appellate court limited its ruling to the elements to be proved in a case of unlawful detainer, Ocampo need not even
prove his ownership. When the appellate court ruled that the case of unlawful detainer had to wait for the results of the
partition proceedings, it effectively put ownership as the main issue in the case. The issue of ownership opens a virtual
Pandora’s Box for Tirona and her supposed intervenor, Maria Lourdes Breton-Mendiola.36

Interpleader

The good faith of Tirona is put in question in her preference for Maria Lourdes Breton-Mendiola. As a stakeholder, Tirona
should have used reasonable diligence in hailing the contending claimants to court. Tirona need not have awaited actual
institution of a suit by Ocampo against her before filing a bill of interpleader.37 An action for interpleader is proper when
the lessee does not know the person to whom to pay rentals due to conflicting claims on the property.38

The action of interpleader is a remedy whereby a person who has property whether personal or real, in his possession, or
an obligation to render wholly or partially, without claiming any right in both, or claims an interest which in whole or in
part is not disputed by the conflicting claimants, comes to court and asks that the persons who claim the said property or
who consider themselves entitled to demand compliance with the obligation, be required to litigate among themselves, in
order to determine finally who is entitled to one or the other thing. The remedy is afforded not to protect a person against
a double liability but to protect him against a double vexation in respect of one liability. When the court orders that the
claimants litigate among themselves, there arises in reality a new action and the former are styled interpleaders, and in
such a case the pleading which initiates the action is called a complaint of interpleader and not a cross-complaint.39

Ocampo has the right to eject Tirona from the subject land. All the elements required for an unlawful detainer case to
prosper are present. Ocampo notified Tirona that he purchased the subject land from Tirona’s lessor. Tirona’s continued
occupation of the subject land amounted to acquiescence to Ocampo’s terms. However, Tirona eventually refused to pay
rent to Ocampo, thus violating the lease.

Finally, legal interest at the annual rate of 6% is due on the unpaid monthly rentals starting from 7 August 1995 when
Ocampo made an extrajudicial demand on Tirona for payment of the monthly rental.40 On finality of our decision, annual
interest at 12%, in lieu of 6% annual interest, is due on the amounts the MTC awarded until full payment.41

WHEREFORE, we GRANT the instant petition for review. The Decision dated 27 June 1996 of Branch 110 of the RTC in Civil
Case No. 96-0209, which affirmed the Decision dated 29 December 1995 of Branch 47 of the MTC in Civil Case No. 754-95,
is REINSTATED. The Decision dated 29 November 2000 of the appellate court in CA-G.R. SP No. 41686, and its Resolution
dated 16 April 2001 denying the motion for reconsideration, are SET ASIDE.

SO ORDERED.
---------------

THIRD DIVISION
G.R. No. 136409 March 14, 2008

SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners,

vs.
DON LUIS DISON REALTY, INC., Respondent.

D E C I S I O N

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 of the
Court of Appeals (CA) dated May 26, 1998 and its Resolution2 dated December 10, 1998 in CA-G.R. SP No. 37739 dismissing
the petition filed by petitioners Josephine and Subhash Pasricha.

The facts of the case, as culled from the records, are as follows:

Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease3 whereby the former, as lessor,
agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis Building, located at 1006 M.Y. Orosa
cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals, as follows:

For Rooms 32/35:

From March 1, 1991 to August 31, 1991 – ₱5,000.00/₱10,000.00

From September 1, 1991 to February 29, 1992 – ₱5,500.00/₱11,000.00

From March 1, 1992 to February 28, 1993 – ₱6,050.00/₱12,100.00

From March 1, 1993 to February 28, 1994 – ₱6,655.00/₱13,310.00

From March 1, 1994 to February 28, 1995 – ₱7,320.50/₱14,641.00

From March 1, 1995 to February 28, 1996 – ₱8,052.55/₱16,105.10

From March 1, 1996 to February 29, 1997 – ₱8,857.81/₱17,715.61

From March 1, 1997 to February 28, 1998 – ₱9,743.59/₱19,487.17

From March 1, 1998 to February 28, 1999 – ₱10,717.95/₱21,435.89

From March 1, 1999 to February 28, 2000 – ₱11,789.75/₱23,579.484

For Rooms 22 and 24:

Effective July 1, 1992 – ₱10,000.00 with an increment of 10% every two years.5

For Rooms 33 and 34:

Effective April 1, 1992 – ₱5,000.00 with an increment of 10% every two years.6

For Rooms 36, 37 and 38:

Effective when tenants vacate said premises – ₱10,000.00 with an increment of 10% every two years.7

Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of telephone
cables.8

The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as subjects of the lease
contracts.9 While the contracts were in effect, petitioners dealt with Francis Pacheco (Pacheco), then General Manager of
private respondent. Thereafter, Pacheco was replaced by Roswinda Bautista (Ms. Bautista).10 Petitioners religiously paid
the monthly rentals until May 1992.11 After that, however, despite repeated demands, petitioners continuously refused to
pay the stipulated rent. Consequently, respondent was constrained to refer the matter to its lawyer who, in turn, made a
final demand on petitioners for the payment of the accrued rentals amounting to ₱916,585.58.12 Because petitioners still
refused to comply, a complaint for ejectment was filed by private respondent through its representative, Ms. Bautista,
before the Metropolitan Trial Court (MeTC) of Manila.13 The case was raffled to Branch XIX and was docketed as Civil Case
No. 143058-CV.

Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until November 1992, but
claimed that such refusal was justified because of the internal squabble in respondent company as to the person
authorized to receive payment.14 To further justify their non-payment of rent, petitioners alleged that they were
prevented from using the units (rooms) subject matter of the lease contract, except Room 35. Petitioners eventually paid
their monthly rent for December 1992 in the amount of ₱30,000.00, and claimed that respondent waived its right to collect
the rents for the months of July to November 1992 since petitioners were prevented from using Rooms 22, 24, 32, 33, and
34.15 However, they again withheld payment of rents starting January 1993 because of respondent’s refusal to turn over
Rooms 36, 37 and 38.16 To show good faith and willingness to pay the rents, petitioners alleged that they prepared the
check vouchers for their monthly rentals from January 1993 to January 1994.17 Petitioners further averred in their
Amended Answer18 that the complaint for ejectment was prematurely filed, as the controversy was not referred to the
barangay for conciliation.

For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated. Thereafter, they
submitted their respective position papers.

On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment.19 It considered petitioners’
non-payment of rentals as unjustified. The court held that mere willingness to pay the rent did not amount to payment of
the obligation; petitioners should have deposited their payment in the name of respondent company. On the matter of
possession of the subject premises, the court did not give credence to petitioners’ claim that private respondent failed to
turn over possession of the premises. The court, however, dismissed the complaint because of Ms. Bautista’s alleged lack
of authority to sue on behalf of the corporation.

Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-72515, reversed and
set aside the MeTC Decision in this wise:

WHEREFORE, the appealed decision is hereby reversed and set aside and another one is rendered ordering defendants-
appellees and all persons claiming rights under them, as follows:

(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;

(2) to pay plaintiff-appellant the sum of ₱967,915.80 representing the accrued rents in arrears as of November 1993, and
the rents on the leased premises for the succeeding months in the amounts stated in paragraph 5 of the complaint until
fully paid; and

(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorney’s fees plus the costs of this suit.

SO ORDERED.20

The court adopted the MeTC’s finding on petitioners’ unjustified refusal to pay the rent, which is a valid ground for
ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of capacity to sue. Instead, it upheld
Ms. Bautista’s authority to represent respondent notwithstanding the absence of a board resolution to that effect, since
her authority was implied from her power as a general manager/treasurer of the company.21

Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari.22 On March 18,
1998, petitioners filed an Omnibus Motion23 to cite Ms. Bautista for contempt; to strike down the MeTC and RTC Decisions
as legal nullities; and to conduct hearings and ocular inspections or delegate the reception of evidence. Without resolving
the aforesaid motion, on May 26, 1998, the CA affirmed24 the RTC Decision but deleted the award of attorney’s fees.25

Petitioners moved for the reconsideration of the aforesaid decision.26 Thereafter, they filed several motions asking the
Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case allegedly because of his close
association with Ms. Bautista’s uncle-in-law.27

In a Resolution28 dated December 10, 1998, the CA denied the motions for lack of merit. The appellate court considered
said motions as repetitive of their previous arguments, irrelevant and obviously dilatory.29 As to the motion for inhibition
of the Honorable Justice Reyes, the same was denied, as the appellate court justice stressed that the decision and the
resolution were not affected by extraneous matters.30 Lastly, the appellate court granted respondent’s motion for
execution and directed the RTC to issue a new writ of execution of its decision, with the exception of the award of
attorney’s fees which the CA deleted.31
Petitioners now come before this Court in this petition for review on certiorari raising the following issues:

I.

Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages for the unauthorized
and malicious filing by Rosario (sic) Bautista of this ejectment case, it being clear that [Roswinda] – whether as general
manager or by virtue of her subsequent designation by the Board of Directors as the corporation’s attorney-in-fact – had
no legal capacity to institute the ejectment suit, independently of whether Director Pacana’s Order setting aside the SEC
revocation Order is a mere scrap of paper.

II.

Whether the RTC’s and the Honorable Court of Appeals’ failure and refusal to resolve the most fundamental factual issues
in the instant ejectment case render said decisions void on their face by reason of the complete abdication by the RTC and
the Honorable Justice Ruben Reyes of their constitutional duty not only to clearly and distinctly state the facts and the law
on which a decision is based but also to resolve the decisive factual issues in any given case.

III.

Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself, despite his admission – by reason
of his silence – of petitioners’ accusation that the said Justice enjoyed a $7,000.00 scholarship grant courtesy of the uncle-
in-law of respondent "corporation’s" purported general manager and (2), worse, his act of ruling against the petitioners
and in favor of the respondent "corporation" constitute an unconstitutional deprivation of petitioners’ property without
due process of law.32

In addition to Ms. Bautista’s lack of capacity to sue, petitioners insist that respondent company has no standing to sue as a
juridical person in view of the suspension and eventual revocation of its certificate of registration.33 They likewise question
the factual findings of the court on the bases of their ejectment from the subject premises. Specifically, they fault the
appellate court for not finding that: 1) their non-payment of rentals was justified; 2) they were deprived of possession of all
the units subject of the lease contract except Room 35; and 3) respondent violated the terms of the contract by its
continued refusal to turn over possession of Rooms 36, 37 and 38. Petitioners further prayed that a Temporary Restraining
Order (TRO) be issued enjoining the CA from enforcing its Resolution directing the issuance of a Writ of Execution. Thus, in
a Resolution34 dated January 18, 1999, this Court directed the parties to maintain the status quo effective immediately
until further orders.

The petition lacks merit.

We uphold the capacity of respondent company to institute the ejectment case. Although the Securities and Exchange
Commission (SEC) suspended and eventually revoked respondent’s certificate of registration on February 16, 1995, records
show that it instituted the action for ejectment on December 15, 1993. Accordingly, when the case was commenced, its
registration was not yet revoked.35 Besides, as correctly held by the appellate court, the SEC later set aside its earlier
orders of suspension and revocation of respondent’s certificate, rendering the issue moot and academic.36

We likewise affirm Ms. Bautista’s capacity to sue on behalf of the company despite lack of proof of authority to so
represent it. A corporation has no powers except those expressly conferred on it by the Corporation Code and those that
are implied from or are incidental to its existence. In turn, a corporation exercises said powers through its board of
directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only
by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.37
Thus, any person suing on behalf of the corporation should present proof of such authority. Although Ms. Bautista initially
failed to show that she had the capacity to sign the verification and institute the ejectment case on behalf of the company,
when confronted with such question, she immediately presented the Secretary’s Certificate38 confirming her authority to
represent the company.

There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the rules of
procedure in the interest of justice.39 In Novelty Phils., Inc. v. Court of Appeals,40 the Court faulted the appellate court for
dismissing a petition solely on petitioner’s failure to timely submit proof of authority to sue on behalf of the corporation. In
Pfizer, Inc. v. Galan,41 we upheld the sufficiency of a petition verified by an employment specialist despite the total
absence of a board resolution authorizing her to act for and on behalf of the corporation. Lastly, in China Banking
Corporation v. Mondragon International Philippines, Inc,42 we relaxed the rules of procedure because the corporation
ratified the manager’s status as an authorized signatory. In all of the above cases, we brushed aside technicalities in the
interest of justice. This is not to say that we disregard the requirement of prior authority to act in the name of a
corporation. The relaxation of the rules applies only to highly meritorious cases, and when there is substantial compliance.
While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the
swift unclogging of court dockets is a laudable objective, we should not insist on strict adherence to the rules at the
expense of substantial justice.43 Technical and procedural rules are intended to help secure, not suppress, the cause of
justice; and a deviation from the rigid enforcement of the rules may be allowed to attain that prime objective, for, after all,
the dispensation of justice is the core reason for the existence of courts.44

As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion to inhibit came
after the appellate court rendered the assailed decision, that is, after Justice Reyes had already rendered his opinion on the
merits of the case. It is settled that a motion to inhibit shall be denied if filed after a member of the court had already given
an opinion on the merits of the case, the rationale being that "a litigant cannot be permitted to speculate on the action of
the court x x x (only to) raise an objection of this sort after the decision has been rendered."45 Second, it is settled that
mere suspicion that a judge is partial to one of the parties is not enough; there should be evidence to substantiate the
suspicion. Bias and prejudice cannot be presumed, especially when weighed against a judge’s sacred pledge under his oath
of office to administer justice without regard for any person and to do right equally to the poor and the rich. There must be
a showing of bias and prejudice stemming from an extrajudicial source, resulting in an opinion on the merits based on
something other than what the judge learned from his participation in the case.46 We would like to reiterate, at this point,
the policy of the Court not to tolerate acts of litigants who, for just about any conceivable reason, seek to disqualify a judge
(or justice) for their own purpose, under a plea of bias, hostility, prejudice or prejudgment.47

We now come to the more substantive issue of whether or not the petitioners may be validly ejected from the leased
premises.

Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved are the fact of lease
and the expiration or violation of its terms.48 Specifically, the essential requisites of unlawful detainer are: 1) the fact of
lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessor’s right to hold
possession; 3) withholding by the lessee of possession of the land or building after the expiration or termination of the
right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the
premises; and 5) the filing of the action within one year from the date of the last demand received by the defendant.49

It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) rooms of
the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners vacate the premises,
but the latter refused to heed the demand; thus, they remained in possession of the premises. The only contentious issue
is whether there was indeed a violation of the terms of the contract: on the part of petitioners, whether they failed to pay
the stipulated rent without justifiable cause; while on the part of respondent, whether it prevented petitioners from
occupying the leased premises except Room 35.

This issue involves questions of fact, the resolution of which requires the evaluation of the evidence presented. The MeTC,
the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. It is settled
doctrine that in a civil case, the conclusions of fact of the trial court, especially when affirmed by the Court of Appeals, are
final and conclusive, and cannot be reviewed on appeal by the Supreme Court.50 Albeit the rule admits of exceptions, not
one of them obtains in this case.51

To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting the court’s
conclusion.

The evidence of petitioners’ non-payment of the stipulated rent is overwhelming. Petitioners, however, claim that such
non-payment is justified by the following: 1) the refusal of respondent to allow petitioners to use the leased properties,
except room 35; 2) respondent’s refusal to turn over Rooms 36, 37 and 38; and 3) respondent’s refusal to accept payment
tendered by petitioners.

Petitioners’ justifications are belied by the evidence on record. As correctly held by the CA, petitioners’ communications to
respondent prior to the filing of the complaint never mentioned their alleged inability to use the rooms.52 What they
pointed out in their letters is that they did not know to whom payment should be made, whether to Ms. Bautista or to
Pacheco.53 In their July 26 and October 30, 1993 letters, petitioners only questioned the method of computing their
electric billings without, however, raising a complaint about their failure to use the rooms.54 Although petitioners stated in
their December 30, 1993 letter that respondent failed to fulfill its part of the contract,55 nowhere did they specifically refer
to their inability to use the leased rooms. Besides, at that time, they were already in default on their rentals for more than
a year.

If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of lease, and
considering that the rooms were intended for a business purpose, we cannot understand why they did not specifically
assert their right. If we believe petitioners’ contention that they had been prevented from using the rooms for more than a
year before the complaint for ejectment was filed, they should have demanded specific performance from the lessor and
commenced an action in court. With the execution of the contract, petitioners were already in a position to exercise their
right to the use and enjoyment of the property according to the terms of the lease contract.56 As borne out by the records,
the fact is that respondent turned over to petitioners the keys to the leased premises and petitioners, in fact, renovated
the rooms. Thus, they were placed in possession of the premises and they had the right to the use and enjoyment of the
same. They, likewise, had the right to resist any act of intrusion into their peaceful possession of the property, even as
against the lessor itself. Yet, they did not lift a finger to protect their right if, indeed, there was a violation of the contract
by the lessor.

What was, instead, clearly established by the evidence was petitioners’ non-payment of rentals because ostensibly they did
not know to whom payment should be made. However, this did not justify their failure to pay, because if such were the
case, they were not without any remedy. They should have availed of the provisions of the Civil Code of the Philippines on
the consignation of payment and of the Rules of Court on interpleader.

Article 1256 of the Civil Code provides:

Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor
shall be released from responsibility by the consignation of the thing or sum due.

Consignation alone shall produce the same effect in the following cases:

x x x x

(4) When two or more persons claim the same right to collect;

x x x x.

Consignation shall be made by depositing the things due at the disposal of a judicial authority, before whom the tender of
payment shall be proved in a proper case, and the announcement of the consignation in other cases.57

In the instant case, consignation alone would have produced the effect of payment of the rentals. The rationale for
consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes not
imputable to him.58 Petitioners claim that they made a written tender of payment and actually prepared vouchers for their
monthly rentals. But that was insufficient to constitute a valid tender of payment. Even assuming that it was valid tender,
still, it would not constitute payment for want of consignation of the amount. Well-settled is the rule that tender of
payment must be accompanied by consignation in order that the effects of payment may be produced.59

Moreover, Section 1, Rule 62 of the Rules of Court provides:

Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be made
against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part is not
disputed by the claimants, he may bring an action against the conflicting claimants to compel them to interplead and
litigate their several claims among themselves.

Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment of rentals should
be made due to conflicting claims on the property (or on the right to collect).60 The remedy is afforded not to protect a
person against double liability but to protect him against double vexation in respect of one liability.61

Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.

Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for non-payment of rentals.
Although the two contracts embraced the lease of nine (9) rooms, the terms of the contracts - with their particular
reference to specific rooms and the monthly rental for each - easily raise the inference that the parties intended the lease
of each room separate from that of the others.lavvphil There is nothing in the contract which would lead to the conclusion
that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9) rooms. Accordingly, the
use of each room by the lessee gave rise to the corresponding obligation to pay the monthly rental for the same. Notably,
respondent demanded payment of rentals only for the rooms actually delivered to, and used by, petitioners.

It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38 was to take effect
only when the tenants thereof would vacate the premises. Absent a clear showing that the previous tenants had vacated
the premises, respondent had no obligation to deliver possession of the subject rooms to petitioners. Thus, petitioners
cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for their failure to pay the rentals due on the other
rooms they occupied.1avvphil

In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring lessees. The parties’
contracts of lease contain identical provisions, to wit:

In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month, the amount owing shall as
penalty bear interest at the rate of FOUR percent (4%) per month, to be paid, without prejudice to the right of the LESSOR
to terminate his contract, enter the premises, and/or eject the LESSEE as hereinafter set forth;62

Moreover, Article 167363 of the Civil Code gives the lessor the right to judicially eject the lessees in case of non-payment of
the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative contract by which the owner
temporarily grants the use of his property to another, who undertakes to pay the rent therefor.64 For failure to pay the
rent, petitioners have no right to remain in the leased premises.

WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated January 18, 1999 is hereby
LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated December 10, 1998 in CA-G.R. SP
No. 37739 are AFFIRMED.

SO ORDERED.
-------------

EN BANC

G.R. No. L-23851 March 26, 1976

WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,

vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.

Leonardo Abola for appellant.

Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won.

Bienvenido A. Tan in his own behalf.

CASTRO, C.J.:

This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiff-appellant's
complaint of interpleader upon the grounds of failure to state a cause of action and res judicata.

In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club, Inc., a non-stock,
civic and athletic corporation duly organized under the laws of the Philippines, with principal office in Mandaluyong, Rizal
(hereinafter referred to as the Corporation), alleged, for its first cause of action, that the defendant Lee E. Won claims
ownership of its membership fee certificate 201, by virtue of the decision rendered in civil case 26044 of the CFI of Manila,
entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club, Inc." and also by virtue of membership fee
certificate 201-serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of
Manila, for and in behalf of the president and the secretary of the Corporation and of the People's Bank & Trust Company
as transfer agent of the said Corporation, pursuant to the order of September 23, 1963 in the said case; that the defendant
Bienvenido A. Tan, on the other hand, claims to be lawful owner of its aforesaid membership fee certificate 201 by virtue
of membership fee certificate 201-serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment made in his
favor by "Swan, Culbertson and Fritz," the original owner and holder of membership fee certificate 201; that under its
articles of incorporation and by-laws the Corporation is authorized to issue a maximum of 400 membership fee certificates
to persons duly elected or admitted to proprietary membership, all of which have been issued as early as December 1939;
that it claims no interest whatsoever in the said membership fee certificate 201; that it has no means of determining who
of the two defendants is the lawful owner thereof; that it is without power to issue two separate certificates for the same
membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee, without violating its
articles of incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by the defendant
Tan and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee proceed from the same
membership fee certificate 201, originally issued in the name of "Swan, Culbertson and Fritz".

For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the deputy clerk
of court of court of the CFI of Manila in behalf of the Corporation is null and void because issued in violation of its by-laws,
which require the surrender and cancellation of the outstanding membership fee certificate 201 before issuance may be
made to the transferee of a new certificate duly signed by its president and secretary, aside from the fact that the decision
of the CFI of Manila in civil case 26044 is not binding upon the defendant Tan, holder of membership fee certificate 201-
serial no. 1199; that Tan is made a party because of his refusal to join it in this action or bring a separate action to protect
his rights despite the fact that he has a legal and beneficial interest in the subject matter of this litigation; and that he is
made a part so that complete relief may be accorded herein.

The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting claims;
and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of membership fee certificate
201, and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478 issued in the name of
Lee.

In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the
complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the Corporation.
Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial court dismissed the
complaint, with costs against the Corporation.

In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended and
supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that "the principal
motive for the present action is to reopen the Manila Case and collaterally attack the decision of the said Court"; (2) in
finding that the decision in civil case 26044 of the CFI of Manila constitutes res judicata and bars its present action; and (3)
in dismissing its action instead of compelling the appellees to interplead and litigate between themselves their respective
claims.

The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint, instead of
compelling the appellees to interplead because there actually are conflicting claims between the latter with respect to the
ownership of membership fee certificate 201, and, as there is not Identity of parties, of subject-matter, and of cause of
action, between civil case 26044 of the CFI of Manila and the present action, the complaint should not have been dismissed
upon the ground of res judicata.

On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the effect of
reopening civil case 26044, the present action is barred by res judicata.

Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving for the
dismissal of the complaint and upon which the trial court actually dismissed the complaint, the determinative issue, as can
be gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of interpleader.

The action of interpleader, under section 120 of the Code of Civil Procedure, 2 is a remedy whereby a person who has
personal property in his possession, or an obligation to render wholly or partially, without claiming any right to either,
comes to court and asks that the persons who claim the said personal property or who consider themselves entitled to
demand compliance with the obligation, be required to litigate among themselves in order to determine finally who is
entitled to tone or the one thing. The remedy is afforded to protect a person not against double liability but against double
vexation in respect of one liability. 3 The procedure under the Rules of Court 4 is the same as that under the Code of Civil
Procedure, 5 except that under the former the remedy of interpleader is available regardless of the nature of the subject-
matter of the controversy, whereas under the latter an interpleader suit is proper only if the subject-matter of the
controversy is personal property or relates to the performance of an obligation.

There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is proper
for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the facts and
circumstances obtaining.

A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7 He need not await actual
institution of independent suits against him before filing a bill of interpleader. 8 He should file an action of interpleader
within a reasonable time after a dispute has arisen without waiting to be sued by either of the contending claimants. 9
Otherwise, he may be barred by laches 10 or undue delay. 11 But where he acts with reasonable diligence in view of the
environmental circumstances, the remedy is not barred. 12

Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly invoke the
remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees with respect to the
membership fee certificate 201 long before it filed the present interpleader suit. It had been recognizing Tan as the lawful
owner thereof. It was sued by Lee who also claimed the same membership fee certificate. Yet it did not interplead Tan. It
preferred to proceed with the litigation (civil case 26044) and to defend itself therein. As a matter of fact, final judgment
was rendered against it and said judgment has already been executed. It is not therefore too late for it to invoke the
remedy of interpleader.

It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered against
him in favor of one of the contending claimants, 13 especially where he had notice of the conflicting claims prior to the
rendition of the judgment and neglected the opportunity to implead the adverse claimants in the suit where judgment was
entered. This must be so, because once judgment is obtained against him by one claimant he becomes liable to the latter.
14 In once case, 15 it was declared:

The record here discloses that long before the rendition of the judgment in favor of relators against the Hanover Fire
Insurance Company the latter had notice of the adverse claim of South to the proceeds of the policy. No reason is shown
why the Insurance Company did not implead South in the former suit and have the conflicting claims there determined.
The Insurance Company elected not to do so and that suit proceeded to a final judgment in favor of relators. The Company
thereby became independently liable to relators. It was then too late for such company to invoke the remedy of
interpleader

The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case 26044
to compel the appellees herein to litigate between themselves their conflicting claims of ownership. It was only after
adverse final judgment was rendered against it that the remedy of interpleader was invoked by it. By then it was too late,
because to he entitled to this remedy the applicant must be able to show that lie has not been made independently liable
to any of the claimants. And since the Corporation is already liable to Lee under a final judgment, the present interpleader
suit is clearly improper and unavailing.

It is the general rule that before a person will be deemed to be in a position to ask for an order of intrepleader, he must be
prepared to show, among other prerequisites, that he has not become independently liable to any of the claimants. 25 Tex.
Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8.

It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has been rendered in
favor of one of the claimants of the fund, this being especially true when the holder of the funds had notice of the
conflicting claims prior to the rendition of the judgment and had an opportunity to implead the adverse claimants in the
suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v.
McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275. 16

Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final
judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case at
hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory explanation for
its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader suit cannot prosper
because it was filed much too late.

If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him without filing a bill
of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86
Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of interpleader
to restrain a separate proceeding at law by claimant so as to avoid the resulting partial judgment; and if the stakeholder
acquiesces in one claimant's trying out his claim and establishing it at law, he cannot then have that part of the litigation
repeated in an interpleader suit. 4 Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's
Summary of Eq. Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450. 17

It is the general rule that a bill of interpleader comes too late when application therefore is delayed until after judgment
has been rendered in favor of one of the claimants of the fund, and that this is especially true where the holder of the fund
had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse
claimants in the suit in which such judgment was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598,
also 5 Pomeroy's Eq. Juris. Sec. 41.)

The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker county suit to
proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in the present suit other
than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown why he did not implead them in the
suit. 18

To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil case
26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits, which is one of the
purposes of an action of interpleader, with the possibility that the latter would lose the benefits of the favorable judgment.
This cannot be done because having elected to take its chances of success in said civil case 26044, with full knowledge of all
the fact, the Corporation must submit to the consequences of defeat.

The act providing for the proceeding has nothing to say touching the right of one, after contesting a claim of one of the
claimants to final judgment unsuccessfully, to involve the successful litigant in litigation anew by bringing an interpleader
action. The question seems to be one of first impression here, but, in other jurisdictions, from which the substance of the
act was apparently taken, the rule prevails that the action cannot be resorted to after an unsuccessful trial against one of
the claimants.

It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity to compel others,
claiming property in his hands, to interplead, must do so before putting them to the test of trials at law. Yarborough v.
Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.)
116. The remedy by interpleader is afforded to protect the party from the annoyance and hazard of two or more actions
touching the same property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief,
or elects to take the chances for success in the actions at law, ought to submit to the consequences of defeat. To permit an
unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to diminish the number of
suits; to put upon the shoulders of others the burden which he asks may be taken from his own. ....'

It is urged, however, that the American Surety Company of New York was not in position to file an interpleader until it had
tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed the interpleader. The
reason why, it urges, it was not in such position until then is that had it succeeded before this court in sustaining its
construction of the bond and the law governing the bond, it would not have been called upon to file an interpleader, since
there would have been sufficient funds in its hands to have satisfied all lawful claimants. It may be observed, however, that
the surety company was acquainted with all of the facts, and hence that it simply took its chances of meeting with success
by its own construction of the bond and the law. Having failed to sustain it, it cannot now force relatrix into litigation anew
with others, involving most likely a repetition of what has been decided, or force her to accept a pro rata part of a fund,
which is far from benefits of the judgment. 19

Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and compelled to
prove his claim anew against other adverse claimants, as that would in effect be a collateral attack upon the judgment.

The jurisprudence of this state and the common law states is well-settled that a claimant who has been put to test of a trial
by a surety, and has establish his claim, may not be impleaded later by the surety in an interpleader suit, and compelled to
prove his claim again with other adverse claimants. American Surety Company of New York v. Brim, 175 La. 959, 144 So.
727; American Surety Company of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas v. N.Y.
Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence, 1023;
Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v.
Garrison, 140 Pa. 430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock
Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.

There can be no doubt that relator's claim has been finally and definitely established, because that matter was passed
upon by three courts in definitive judgments. The only remaining item is the value of the use of the land during the time
that relator occupied it. The case was remanded solely and only for the purpose of determining the amount of that credit.
In all other aspects the judgment is final. 20

It is generally held by the cases it is the office of interpleader to protect a party, not against double liability, but against
double vexation on account of one liability. Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is too late
for the remedy of interpleader if the party seeking this relef has contested the claim of one of the parties and suffered
judgment to be taken.

In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a bill of interpleader
comes too late when application therefor is delayed until after judgment has been rendered in favor of one of the
claimants of the fund, and this is especially true where the holder of the fund had notice of the conflicting claims prior to
the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment
was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No.
41.'

The principle thus stated has been recognized in many cases in other jurisdictions, among which may be cited American
Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761;
Yearborough v. Thompson, 3 Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v.
McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047.

It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the judgment
creditor is in effect a collateral attack upon the judgment. 21

In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently liable
in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack upon the
final judgment in the said civil case; the appellee Lee had already established his rights to membership fee certificate 201 in
the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his rights anew, and thereby
increase instead of diminish litigations, which is one of the purposes of an interpleader suit, with the possiblity that the
benefits of the final judgment in the said civil case might eventually be taken away from him; and because the Corporation
allowed itself to be sued to final judgment in the said case, its action of interpleader was filed inexcusably late, for which
reason it is barred by laches or unreasonable delay.

ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.