CIVPRO – RULE 14 – SUMMONS – LIST EXCLUSIVE Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in Default5
1998, plaintiff filed a Motion to Declare Defendant in Default5 alleging that
G.R. No. 136426 August 6, 1999
E. B. VILLAROSA & PARTNER CO., LTD., petitioner,
vs.
HON. HERMINIO I. BENITO, in his capacity as Presiding Judge, RTC, Branch 132, Makati City
and IMPERIAL DEVELOPMENT CORPORATION, respondent.
GONZAGA-REYES, J.:
Before this Court is a petition for certiorari and prohibition with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction seeking to annul and set aside the
Orders dated August 5, 1998 and November 20, 1998 of the public respondent Judge Herminio I.
Benito of the Regional Trial Court of Makati City, Branch 132 and praying that the public respondent
court be ordered to desist from further proceeding with Civil Case No. 98-824.
Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address at
102 Juan Luna St., Davao City and with branch offices at 2492 Bay View Drive, Tambo, Parañaque,
Metro Manila and Kolambog, Lapasan, Cagayan de Oro City. Petitioner and private respondent
executed a Deed of Sale with Development Agreement wherein the former agreed to develop
certain parcels of land located at Barrio Carmen, Cagayan de Oro belonging to the latter into a
housing subdivision for the construction of low cost housing units. They further agreed that in case
of litigation regarding any dispute arising therefrom, the venue shall be in the proper courts of
Makati.
On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of Contract and
Damages against petitioner, as defendant, before the Regional Trial Court of Makati allegedly for
failure of the latter to comply with its contractual obligation in that, other than a few unfinished low
cost houses, there were no substantial developments therein.1
Summons, together with the complaint, were served upon the defendant, through its Branch
Manager Engr. Wendell Sabulbero at the stated address at Kolambog, Lapasan, Cagayan de Oro
City2 but the Sheriff's Return of Service3 stated that the summons was duly served "upon defendant
E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. WENDELL SALBULBERO on May 5,
1998 at their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by the
signature on the face of the original copy of the summons.1âwphi1.nêt
On June 9, 1998, defendant filed a Special Appearance with Motion to Dismiss4 alleging that on May
6, 1998, "summons intended for defendant" was served upon Engr. Wendell Sabulbero, an
employee of defendant at its branch office at Cagayan de Oro City. Defendant prayed for the
dismissal of the complaint on the ground of improper service of summons and for lack of jurisdiction
over the person of the defendant. Defendant contends that the trial court did not acquire
jurisdiction over its person since the summons was improperly served upon its employee in its
branch office at Cagayan de Oro City who is not one of those persons named in Section 11, Rule 14
of the 1997 Rules of Civil Procedure upon whom service of summons may be made.
defendant has failed to file an Answer despite its receipt allegedly on May 5, 1998 of the summons
and the complaint, as shown in the Sheriffs Return.
On June 22, 1998, plaintiff filed an Opposition to Defendant's Motion to Dismiss 6 alleging that the
records show that defendant, through its branch manager, Engr. Wendell Sabulbero actually
received the summons and the complaint on May 8, 1998 as evidenced by the signature appearing
on the copy of the summons and not on May 5, 1998 as stated in the Sheriffs Return nor on May 6,
1998 as stated in the motion to dismiss; that defendant has transferred its office from Kolambog,
Lapasan, Cagayan de Oro to its new office address at Villa Gonzalo, Nazareth, Cagayan de Oro; and
that the purpose of the rule is to bring home to the corporation notice of the filing of the action.
On August 5, 1998, the trial court issued an Order7 denying defendant's Motion to Dismiss as well
as plaintiffs Motion to Declare Defendant in Default. Defendant was given ten (10) days within which
to file a responsive pleading. The trial court stated that since the summons and copy of the
complaint were in fact received by the corporation through its branch manager Wendell Sabulbero,
there was substantial compliance with the rule on service of summons and consequently, it validly
acquired jurisdiction over the person of the defendant.
On August 19, 1998, defendant, by Special Appearance, filed a Motion for Reconsideration8 alleging
that Section 11, Rule 14 of the new Rules did not liberalize but, on the contrary, restricted the
service of summons on persons enumerated therein; and that the new provision is very specific and
clear in that the word "manager" was changed to "general manager", "secretary" to "corporate
secretary", and excluding therefrom agent and director.
On August 27, 1998, plaintiff filed an Opposition to defendant's Motion for Reconsideration9
alleging that defendant's branch manager "did bring home" to the defendant-corporation the notice
of the filing of the action and by virtue of which a motion to dismiss was filed; and that it was one
(1) month after receipt of the summons and the complaint that defendant chose to file a motion to
dismiss.
On September 4, 1998, defendant, by Special Appearance, filed a Reply10 contending that the
changes in the new rules are substantial and not just general semantics.
Defendant's Motion for Reconsideration was denied in the Order dated November 20, 1998.11
Hence, the present petition alleging that respondent court gravely abused its discretion tantamount
to lack or in excess of jurisdiction in denying petitioner's motions to dismiss and for reconsideration,
despite the fact that the trial court did not acquire jurisdiction over the person of petitioner because
the summons intended for it was improperly served. Petitioner invokes Section 11 of Rule 14 of the
1997 Rules of Civil Procedure.
Private respondent filed its Comment to the petition citing the cases Kanlaon Construction
Enterprises Co., Inc. vs. NLRC12 wherein it was held that service upon a construction project manager
is valid and in Gesulgon vs. NLRC13 which held that a corporation is bound by the service of summons
upon its assistant manager.
The only issue for resolution is whether or not the trial court acquired jurisdiction over the person
of petitioner upon service of summons on its Branch Manager.
When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil Procedure was
already in force.14
Sec. 11, Rule 14 of the 1997 Rules of Civil Procedure provides that:
When the defendant is a corporation, partnership or association organized under the laws of the
Philippines with a juridical personality, service may be made on the president, managing partner,
general manager, corporate secretary, treasurer, or in-house counsel. (emphasis supplied).
This provision revised the former Section 13, Rule 14 of the Rules of Court which provided that:
Sec. 13. Service upon private domestic corporation or partnership. — If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors.
(emphasis supplied).
Petitioner contends that the enumeration of persons to whom summons may be served is
"restricted, limited and exclusive" following the rule on statutory construction expressio unios est
exclusio alterius and argues that if the Rules of Court Revision Committee intended to liberalize the
rule on service of summons, it could have easily done so by clear and concise language.
We agree with petitioner.
Earlier cases have uphold service of summons upon a construction project manager 15; a
corporation's assistant manager16; ordinary clerk of a corporation17; private secretary of corporate
executives18; retained counsel19; officials who had charge or control of the operations of the
corporation, like the assistant general manager20; or the corporation's Chief Finance and
Administrative Officer21. In these cases, these persons were considered as "agent" within the
contemplation of the old rule.22 Notably, under the new Rules, service of summons upon an agent
of the corporation is no longer authorized.
The cases cited by private respondent are therefore not in point.
In the Kanlaon case, this Court ruled that under the NLRC Rules of Procedure, summons on the
respondent shall be served personally or by registered mail on the party himself; if the party is
represented by counsel or any other authorized representative or agent, summons shall be served
on such person. In said case, summons was served on one Engr. Estacio who managed and
supervised the construction project in Iligan City (although the principal address of the corporation
is in Quezon City) and supervised the work of the employees. It was held that as manager, he had
sufficient responsibility and discretion to realize the importance of the legal papers served on him
and to relay the same to the president or other responsible officer of petitioner such that summons
for petitioner was validly served on him as agent and authorized representative of petitioner. Also
in the Gesulgon case cited by private respondent, the summons was received by the clerk in the
office of the Assistant Manager (at principal office address) and under Section 13 of Rule 14 (old
rule), summons may be made upon the clerk who is regarded as agent within the contemplation of
the rule.
The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the
1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager";
"corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase
"agent, or any of its directors" is conspicuously deleted in the new rule.
The particular revision under Section 11 of Rule 14 was explained by retired Supreme Court Justice
Florenz Regalado, thus:23
. . . the then Sec. 13 of this Rule allowed service upon a defendant corporation to "be made on
the president, manager, secretary, cashier, agent or any of its directors." The aforesaid terms
were obviously ambiguous and susceptible of broad and sometimes illogical interpretations,
especially the word "agent" of the corporation. The Filoil case, involving the litigation lawyer of
the corporation who precisely appeared to challenge the validity of service of summons but
whose very appearance for that purpose was seized upon to validate the defective service, is an
illustration of the need for this revised section with limited scope and specific terminology. Thus
the absurd result in the Filoil case necessitated the amendment permitting service only on the in-
house counsel of the corporation who is in effect an employee of the corporation, as
distinguished from an independent practitioner. (emphasis supplied).
Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision Committee,
stated that "(T)he rule must be strictly observed. Service must be made to one named in (the)
statute . . . .24
It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict
compliance with the rules has been enjoined. In the case of Delta Motor Sales Corporation vs.
Mangosing,25 the Court held:
A strict compliance with the mode of service is necessary to confer jurisdiction of the court over
a corporation. The officer upon whom service is made must be one who is named in the statute;
otherwise the service is insufficient. . . .
The purpose is to render it reasonably certain that the corporation will receive prompt and proper
notice in an action against it or to insure that the summons be served on a representative so
integrated with the corporation that such person will know what to do with the legal papers
served on him. In other words, "to bring home to the corporation notice of the filing of the
action." . . . .
The liberal construction rule cannot be invoked and utilized as a substitute for the plain legal
requirements as to the manner in which summons should be served on a domestic corporation. .
. . . (emphasis supplied).
Service of summons upon persons other than those mentioned in Section 13 of Rule 14 (old rule)
has been held as improper.26 Even under the old rule, service upon a general manager of a firm's
branch office has been held as improper as summons should have been served at the firm's principal
office. In First Integrated Bonding & Inc. Co., Inc. vs. Dizon,27 it was held that the service of summons
on the general manager of the insurance firm's Cebu branch was improper; default order could have
been obviated had the summons been served at the firm's principal office.
And in the case of Solar Team Entertainment, Inc. vs. Hon. Helen Bautista Ricafort, et al.28 the Court
succinctly clarified that, for the guidance of the Bench and Bar, "strictest" compliance with Section
11 of Rule 13 of the 1997 Rules of Civil Procedure (on Priorities in modes of service and filing) is
mandated and the Court cannot rule otherwise, lest we allow circumvention of the innovation by
the 1997 Rules in order to obviate delay in the administration of justice.

Accordingly, we rule that the service of summons upon the branch manager of petitioner at its
branch office at Cagayan de Oro, instead of upon the general manager at its principal office at Davao
City is improper. Consequently, the trial court did not acquire jurisdiction over the person of the
petitioner.

The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction upon
its person. There is no question that the defendant's voluntary appearance in the action is
equivalent to service of summons.29 Before, the rule was that a party may challenge the jurisdiction
of the court over his person by making a special appearance through a motion to dismiss and if in
the same motion, the movant raised other grounds or invoked affirmative relief which necessarily
involves the exercise of the jurisdiction of the court.30 This doctrine has been abandoned in the case
of La Naval Drug Corporation vs. Court of Appeals, et al.,31 which became the basis of the adoption
of a new provision in the former Section 23, which is now Section 20 of Rule 14 of the 1997 Rules.
Section 20 now provides that "the inclusion in a motion to dismiss of other grounds aside from lack
of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance." The
emplacement of this rule clearly underscores the purpose to enforce strict enforcement of the rules
on summons. Accordingly, the filing of a motion to dismiss, whether or not belatedly filed by the
defendant, his authorized agent or attorney, precisely objecting to the jurisdiction of the court over
the person of the defendant can by no means be deemed a submission to the jurisdiction of the
court. There being no proper service of summons, the trial court cannot take cognizance of a case
for lack of jurisdiction over the person of the defendant. Any proceeding undertaken by the trial
court will consequently be null and void.32

WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public respondent trial
court are ANNULLED and SET ASIDE. The public respondent Regional Trial Court of Makati, Branch
132 is declared without jurisdiction to take cognizance of Civil Case No. 98-824, and all its orders
and issuances in connection therewith are hereby ANNULLED and SET ASIDE.1âwphi1.nêt

SO ORDERED.
CIVPRO – RULE 14 – SUMMONS – FOREIGN
G.R. No. 112573 February 9, 1995
NORTHWEST ORIENT AIRLINES, INC. petitioner,
vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.
PADILLA, JR., J.:
This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming
the dismissal of the petitioner's complaint to enforce the judgment of a Japanese court. The
principal issue here is whether a Japanese court can acquire jurisdiction over a Philippine
corporation doing business in Japan by serving summons through diplomatic channels on the
Philippine corporation at its principal office in Manila after prior attempts to serve summons in
Japan had failed.
Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under
the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the
Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a Japanese court
against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a corporation
incorporated under Philippine laws.
As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the following
are the factual and procedural antecedents of this controversy:
On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through its
Japan branch, entered into an International Passenger Sales Agency Agreement, whereby the
former authorized the latter to sell its air transportation tickets. Unable to remit the proceeds of
the ticket sales made by defendant on behalf of the plaintiff under the said agreement, plaintiff
on March 25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of
the ticket sales, with claim for damages.
On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo District
Court of Japan against defendant at its office at the Taiheiyo Building, 3rd floor, 132, Yamashita-
cho, Naka-ku, Yokohoma, Kanagawa Prefecture. The attempt to serve the summons was
unsuccessful because the bailiff was advised by a person in the office that Mr. Dinozo, the person
believed to be authorized to receive court processes was in Manila and would be back on April
24, 1980.
On April 24, 1980, bailiff returned to the defendant's office to serve the summons. Mr. Dinozo
refused to accept the same claiming that he was no longer an employee of the defendant.
After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided
to have the complaint and the writs of summons served at the head office of the defendant in
Manila. On July 11, 1980, the Director of the Tokyo District Court requested the Supreme Court
of Japan to serve the summons through diplomatic channels upon the defendant's head office in
Manila.
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of
summons (p. 276, Records). Despite receipt of the same, defendant failed to appear at the
scheduled hearing. Thus, the Tokyo Court proceeded to hear the plaintiff's complaint and on
[January 29, 1981], rendered judgment ordering the defendant to pay the plaintiff the sum of
83,158,195 Yen and damages for delay at the rate of 6% per annum from August 28, 1980 up to
and until payment is completed (pp. 12-14, Records).
On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the judgment.
Defendant not having appealed the judgment, the same became final and executory.
Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for
enforcement of the judgment was filed by plaintiff before the Regional Trial Court of Manila
Branch 54.2
On July 16, 1983, defendant filed its answer averring that the judgment of the Japanese Court
sought to be enforced is null and void and unenforceable in this jurisdiction having been rendered
without due and proper notice to the defendant and/or with collusion or fraud and/or upon a
clear mistake of law and fact (pp. 41-45, Rec.).
Unable to settle the case amicably, the case was tried on the merits. After the plaintiff rested its
case, defendant on April 21, 1989, filed a Motion for Judgment on a Demurrer to Evidence based
on two grounds: (1) the foreign judgment sought to be enforced is null and void for want of
jurisdiction and (2) the said judgment is contrary to Philippine law and public policy and rendered
without due process of law. Plaintiff filed its opposition after which the court a quo rendered the
now assailed decision dated June 21, 1989 granting the demurrer motion and dismissing the
complaint (Decision, pp. 376-378, Records). In granting the demurrer motion, the trial court held
that:
The foreign judgment in the Japanese Court sought in this action is null and void for want of
jurisdiction over the person of the defendant considering that this is an action in personam;
the Japanese Court did not acquire jurisdiction over the person of the defendant because
jurisprudence requires that the defendant be served with summons in Japan in order for the
Japanese Court to acquire jurisdiction over it, the process of the Court in Japan sent to the
Philippines which is outside Japanese jurisdiction cannot confer jurisdiction over the defendant
in the case before the Japanese Court of the case at bar. Boudard versus Tait 67 Phil. 170. The
plaintiff contends that the Japanese Court acquired jurisdiction because the defendant is a
resident of Japan, having four (4) branches doing business therein and in fact had a permit from
the Japanese government to conduct business in Japan (citing the exhibits presented by the
plaintiff); if this is so then service of summons should have been made upon the defendant in
Japan in any of these alleged four branches; as admitted by the plaintiff the service of the
summons issued by the Japanese Court was made in the Philippines thru a Philippine Sheriff.
This Court agrees that if the defendant in a foreign court is a resident in the court of that foreign
court such court could acquire jurisdiction over the person of the defendant but it must be
served upon the defendant in the territorial jurisdiction of the foreign court. Such is not the
case here because the defendant was served with summons in the Philippines and not in Japan.
Unable to accept the said decision, plaintiff on July 11, 1989 moved for reconsideration of the
decision, filing at the same time a conditional Notice of Appeal, asking the court to treat the said
notice of appeal "as in effect after and upon issuance of the court's denial of the motion for
reconsideration."
 Defendant opposed the motion for reconsideration to which a Reply dated August 28, 1989 was
filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for Reconsideration and gave due
course to the plaintiff's Notice of Appeal. 3
In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance
upon Boudard vs. Tait 4 wherein it was held that "the process of the court has no extraterritorial
effect and no jurisdiction is acquired over the person of the defendant by serving him beyond the
boundaries of the state." To support its position, the Court of Appeals further stated:
In an action strictly in personam, such as the instant case, personal service of summons within
the forum is required for the court to acquire jurisdiction over the defendant (Magdalena Estate
Inc. vs. Nieto, 125 SCRA 230). To confer jurisdiction on the court, personal or substituted service
of summons on the defendant not extraterritorial service is necessary (Dial Corp vs. Soriano, 161
SCRA 739).
But while plaintiff-appellant concedes that the collection suit filed is an action in personam, it is
its theory that a distinction must be made between an action in personam against a resident
defendant and an action in personam against a non-resident defendant. Jurisdiction is acquired
over a non-resident defendant only if he is served personally within the jurisdiction of the court
and over a resident defendant if by personal, substituted or constructive service conformably to
statutory authorization. Plaintiff-appellant argues that since the defendant-appellee maintains
branches in Japan it is considered a resident defendant. Corollarily, personal, substituted or
constructive service of summons when made in compliance with the procedural rules is sufficient
to give the court jurisdiction to render judgment in personam.
Such an argument does not persuade.
It is a general rule that processes of the court cannot lawfully be served outside the territorial
limits of the jurisdiction of the court from which it issues (Carter vs. Carter; 41 S.E. 2d 532, 201)
and this is regardless of the residence or citizenship of the party thus served (Iowa-Rahr vs. Rahr,
129 NW 494, 150 Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual service
within the proper territorial limits on defendant or someone authorized to accept service for him.
Thus, a defendant, whether a resident or not in the forum where the action is filed, must be
served with summons within that forum.
But even assuming a distinction between a resident defendant and non-resident defendant were
to be adopted, such distinction applies only to natural persons and not in the corporations. This
finds support in the concept that "a corporation has no home or residence in the sense in which
those terms are applied to natural persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57
Phil. 607). Thus, as cited by the defendant-appellee in its brief:
Residence is said to be an attribute of a natural person, and can be predicated on an artificial
being only by more or less imperfect analogy. Strictly speaking, therefore, a corporation can have
no local residence or habitation. It has been said that a corporation is a mere ideal existence,
subsisting only in contemplation of law — an invisible being which can have, in fact, no locality
and can occupy no space, and therefore cannot have a dwelling place. (18 Am. Jur. 2d, p. 693
citing Kimmerle v. Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)
Jurisprudence so holds that the foreign or domestic character of a corporation is to be
determined by the place of its origin where its charter was granted and not by the location of its
business activities (Jennings v. Idaho Rail Light & P. Co., 26 Idaho 703, 146 p. 101), A corporation
is a "resident" and an inhabitant of the state in which it is incorporated and no other (36 Am. Jur.
2d, p. 49).
Defendant-appellee is a Philippine Corporation duly organized under the Philippine laws. Clearly,
its residence is the Philippines, the place of its incorporation, and not Japan. While defendant-
appellee maintains branches in Japan, this will not make it a resident of Japan. A corporation does
not become a resident of another by engaging in business there even though licensed by that
state and in terms given all the rights and privileges of a domestic corporation (Galveston H. &
S.A.R. Co. vs. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).
On this premise, defendant appellee is a non-resident corporation. As such, court processes must
be served upon it at a place within the state in which the action is brought and not elsewhere (St.
Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct. 354).5
It then concluded that the service of summons effected in Manila or beyond the territorial
boundaries of Japan was null and did not confer jurisdiction upon the Tokyo District Court over the
person of SHARP; hence, its decision was void.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court
contending that the respondent court erred in holding that SHARP was not a resident of Japan and
that summons on SHARP could only be validly served within that country.
A foreign judgment is presumed to be valid and binding in the country from which it comes, until
the contrary is shown. It is also proper to presume the regularity of the proceedings and the giving
of due notice therein.6
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal
of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as
between the parties and their successors-in-interest by a subsequent title. The judgment may,
however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of the
Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of
jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.7 Being the party challenging the judgment rendered by the Japanese
court, SHARP had the duty to demonstrate the invalidity of such judgment. In an attempt to
discharge that burden, it contends that the extraterritorial service of summons effected at its home
office in the Philippines was not only ineffectual but also void, and the Japanese Court did not,
therefore acquire jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to the service of process
upon a defendant are governed by the lex fori or the internal law of the forum.8 In this case, it is the
procedural law of Japan where the judgment was rendered that determines the validity of the
extraterritorial service of process on SHARP. As to what this law is is a question of fact, not of law.
It may not be taken judicial notice of and must be pleaded and proved like any other fact. 9 Sections
24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced by an official publication
or by a duly attested or authenticated copy thereof. It was then incumbent upon SHARP to present
evidence as to what that Japanese procedural law is and to show that under it, the assailed
extraterritorial service is invalid. It did not. Accordingly, the presumption of validity and regularity
of the service of summons and the decision thereafter rendered by the Japanese court must stand.
Alternatively in the light of the absence of proof regarding Japanese law, the presumption of identity
or similarity or the so-called processual presumption 10 may be invoked. Applying it, the Japanese
law on the matter is presumed to be similar with the Philippine law on service of summons on a
private foreign corporation doing business in the Philippines. Section 14, Rule 14 of the Rules of
Court provides that if the defendant is a foreign corporation doing business in the Philippines,
service may be made: (1) on its resident agent designated in accordance with law for that purpose,
or, (2) if there is no such resident agent, on the government official designated by law to that effect;
or (3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the designation is exclusive,
and service of summons is without force and gives the court no jurisdiction unless made upon him.
11
Where the corporation has no such agent, service shall be made on the government official
designated by law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance
company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and (c) the
Securities and Exchange Commission, in the case of other foreign corporations duly licensed to do
business in the Philippines. Whenever service of process is so made, the government office or
official served shall transmit by mail a copy of the summons or other legal proccess to the
corporation at its home or principal office. The sending of such copy is a necessary part of the
service. 12
SHARP contends that the laws authorizing service of process upon the Securities and Exchange
Commission, the Superintendent of Banks, and the Insurance Commissioner, as the case may be,
presuppose a situation wherein the foreign corporation doing business in the country no longer has
any branches or offices within the Philippines. Such contention is belied by the pertinent provisions
of the said laws. Thus, Section 128 of the Corporation Code 13 and Section 190 of the Insurance Code
14 clearly contemplate two situations: (1) if the corporation had left the Philippines or had ceased
to transact business therein, and (2) if the corporation has no designated agent. Section 17 of the
General Banking Act 15 does not even speak a corporation which had ceased to transact business in
the Philippines.
Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive
court processes in Japan. This silence could only mean, or least create an impression, that it had
none. Hence, service on the designated government official or on any of SHARP's officers or agents
in Japan could be availed of. The respondent, however, insists that only service of any of its officers
or employees in its branches in Japan could be resorted to. We do not agree. As found by the
respondent court, two attempts at service were made at SHARP's Yokohama branch. Both were
unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the person authorized to
accept court process, was in Manila. On the second, Mr. Dinozo was present, but to accept the
summons because, according to him, he was no longer an employee of SHARP. While it may be true
that service could have been made upon any of the officers or agents of SHARP at its three other
branches in Japan, the availability of such a recourse would not preclude service upon the proper
government official, as stated above.
As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons for
SHARP be served at its head office in the Philippine's after the two attempts of service had failed. 16
The Tokyo District Court requested the Supreme Court of Japan to cause the delivery of the
summons and other legal documents to the Philippines. Acting on that request, the Supreme Court
of Japan sent the summons together with the other legal documents to the Ministry of Foreign
Affairs of Japan which, in turn, forwarded the same to the Japanese Embassy in Manila . Thereafter,
the court processes were delivered to the Ministry (now Department) of Foreign Affairs of the
Philippines, then to the Executive Judge of the Court of First Instance (now Regional Trial Court) of
Manila, who forthwith ordered Deputy Sheriff Rolando Balingit to serve the same on SHARP at its
principal office in Manila. This service is equivalent to service on the proper government official
under Section 14, Rule 14 of the Rules of Court, in relation to Section 128 of the Corporation Code.
Hence, SHARP's contention that such manner of service is not valid under Philippine laws holds no
water.17
In deciding against the petitioner, the respondent court sustained the trial court's reliance on
Boudard vs. Tait 18 where this Court held:
The fundamental rule is that jurisdiction in personam over nonresidents, so as to sustain a money
judgment, must be based upon personal service within the state which renders the judgment.
xxx xxx xxx
The process of a court, has no extraterritorial effect, and no jurisdiction is acquired over the
person of the defendant by serving him beyond the boundaries of the state. Nor has a judgment
of a court of a foreign country against a resident of this country having no property in such foreign
country based on process served here, any effect here against either the defendant personally or
his property situated here.
Process issuing from the courts of one state or country cannot run into another, and although a
nonresident defendant may have been personally served with such process in the state or
country of his domicile, it will not give such jurisdiction as to authorize a personal judgment
against him.
It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial Corp. vs. Soriano, 20 as
well as the principle laid down by the Iowa Supreme Court in the 1911 case of Raher vs. Raher. 21
The first three cases are, however, inapplicable. Boudard involved the enforcement of a judgment
of the civil division of the Court of First Instance of Hanoi, French Indo-China. The trial court
dismissed the case because the Hanoi court never acquired jurisdiction over the person of the
defendant considering that "[t]he, evidence adduced at the trial conclusively proves that neither
the appellee [the defendant] nor his agent or employees were ever in Hanoi, French Indo-China;
and that the deceased Marie Theodore Jerome Boudard had never, at any time, been his
employee." In Magdalena Estate, what was declared invalid resulting in the failure of the court to
acquire jurisdiction over the person of the defendants in an action in personam was the service of
summons through publication against non-appearing resident defendants. It was claimed that the
latter concealed themselves to avoid personal service of summons upon them. In Dial, the
defendants were foreign corporations which were not, domiciled and licensed to engage in business
in the Philippines and which did not have officers or agents, places of business, or properties here.
On the other hand, in the instant case, SHARP was doing business in Japan and was maintaining four
branches therein.
Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided Supreme
Court of Iowa declared that the principle that there can be no jurisdiction in a court of a territory to
render a personal judgment against anyone upon service made outside its limits was applicable alike
to cases of residents and non-residents. The principle was put at rest by the United States Supreme
Court when it ruled in the 1940 case of Milliken vs. Meyer 22 that domicile in the state is alone
sufficient to bring an absent defendant within the reach of the state's jurisdiction for purposes of a
personal judgment by means of appropriate substituted service or personal service without the
state. This principle is embodied in section 18, Rule 14 of the Rules of Court which allows service of
summons on residents temporarily out of the Philippines to be made out of the country. The
rationale for this rule was explained in Milliken as follows:
[T]he authority of a state over one of its citizens is not terminated by the mere fact of his absence
from the state. The state which accords him privileges and affords protection to him and his
property by virtue of his domicile may also exact reciprocal duties. "Enjoyment of the privileges
of residence within the state, and the attendant right to invoke the protection of its laws, are
inseparable" from the various incidences of state citizenship. The responsibilities of that
citizenship arise out of the relationship to the state which domicile creates. That relationship is
not dissolved by mere absence from the state. The attendant duties, like the rights and privileges
incident to domicile, are not dependent on continuous presence in the state. One such incident
of domicile is amenability to suit within the state even during sojourns without the state, where
the state has provided and employed a reasonable method for apprising such an absent party of
the proceedings against him. 23
The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict technical
sense, such domicile as a corporation may have is single in its essence and a corporation can have
only one domicile which is the state of its creation. 25
Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a resident
in another state in which it has offices and transacts business. This is the rule in our jurisdiction and
apropos thereto, it may be necessery to quote what we stated in State Investment House, Inc, vs.
Citibank, N.A., 26 to wit:
The issue is whether these Philippine branches or units may be considered "residents of the
Philippine Islands" as that term is used in Section 20 of the Insolvency Law . . . or residents of the
state under the laws of which they were respectively incorporated. The answer cannot be found
in the Insolvency Law itself, which contains no definition of the term, resident, or any clear
indication of its meaning. There are however other statutes, albeit of subsequent enactment and
effectivity, from which enlightening notions of the term may be derived.
The National Internal Revenue Code declares that the term "'resident foreign corporation' applies
to a foreign corporation engaged in trade or business within the Philippines," as distinguished
from a "'non-resident foreign corporation' . . . (which is one) not engaged in trade or bussiness
within the Philippines." [Sec. 20, pars. (h) and (i)].
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, subsidiaries,
affiliation, extension offices or any other units of corporation or juridical person organized under
the laws of any foreign country operating in the Philippines shall be considered residents of the
Philippines. [Sec. 1(e)].
The General Banking Act, Republic Act No. 337, places "branches and agencies in the Philippines
of foreign banks . . . (which are) called Philippine branches," in the same category as "commercial
banks, savings associations, mortgage banks, development banks, rural banks, stock savings and
loan associations" (which have been formed and organized under Philippine laws), making no
distinction between the former and the latter in so far as the terms "banking institutions" and
"bank" are used in the Act [Sec. 2], declaring on the contrary that in "all matters not specifically
covered by special provisions applicable only to foreign banks, or their branches and agencies in
the Philippines, said foreign banks or their branches and agencies lawfully doing business in the
Philippines "shall be bound by all laws, rules, and regulations applicable to domestic banking
corporations of the same class, except such laws, rules and regulations as provided for the
creation, formation, organization, or dissolution of corporations or as fix the relation, liabilities,
responsibilities, or duties of members, stockholders or officers of corporation. [Sec. 18].
This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs. Philippine
Advertising Corp., 57 Phil. 607] that a foreign corporation licitly doing business in the Philippines,
which is a defendant in a civil suit, may not be considered a non-resident within the scope of the
legal provision authorizing attachment against a defendant not residing in the Philippine Islands;
[Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of
the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary attachment may
not be applied for and granted solely on the asserted fact that the defendant is a foreign
corporation authorized to do business in the Philippines — and is consequently and necessarily,
"a party who resides out of the Philippines." Parenthetically, if it may not be considered as a party
not residing in the Philippines, or as a party who resides out of the country, then, logically, it must
be considered a party who does reside in the Philippines, who is a resident of the country. Be this
as it may, this Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly
licensed to do business here, to the status of domestic corporations. (Cf. Section 73, Act No.
1459, and Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad,
47 Phil. 385, 411) We think it would be entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner, and subject its property to the
harsh writ of seizure by attachment when it has complied not only with every requirement of
law made specially of foreign corporations, but in addition with every requirement of law made
of domestic corporations. . . .
Obviously, the assimilation of foreign corporations authorized to do business in the Philippines
"to the status of domestic corporations, subsumes their being found and operating as
corporations, hence, residing, in the country.
The same principle is recognized in American law: that the residence of a corporation, if it can be
said to have a residence, is necessarily where it exercises corporate functions . . .;" that it is
considered as dwelling "in the place where its business is done . . .," as being "located where its
franchises are exercised . . .," and as being "present where it is engaged in the prosecution of the
corporate enterprise;" that a "foreign corporation licensed to do business in a state is a resident
of any country where it maintains an office or agent for transaction of its usual and customary
business for venue purposes;" and that the "necessary element in its signification is locality of
existence." [Words and Phrases, Permanent Ed., vol. 37, pp. 394, 412, 493].
In as much as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts' lawful
methods of serving process. 27

Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only
under the processual presumption but also because of the presumption of regularity of
performance of official duty.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to be
without merit. We find no evidence that would justify an award for attorney's fees and litigation
expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for exemplary
damages warranted. Under Article 2234 of the Civil Code, before the court may consider the
question of whether or not exemplary damages should be awarded, the plaintiff must show that he
is entitled to moral, temperate, or compensatory damaged. There being no such proof presented
by NORTHWEST, no exemplary damages may be adjudged in its favor.

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary
damages but REVERSED insofar as in sustained the trial court's dismissal of NORTHWEST's complaint
in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and another in its stead
is hereby rendered ORDERING private respondent C.F. SHARP L COMPANY, INC. to pay to
NORTHWEST the amounts adjudged in the foreign judgment subject of said case, with interest
thereon at the legal rate from the filing of the complaint therein until the said foreign judgment is
fully satisfied.

Costs against the private respondent.

SO ORDERED.
CIVPRO – RULE 14 – SUMMONS – SUBSTITUTED
G.R. No. 163584 December 12, 2006
REMELITA M. ROBINSON, petitioner,
vs.
CELITA B. MIRALLES, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is the instant petition for review on certiorari assailing the Resolutions dated February 11 1
and May 11, 20042 of the Regional Trial Court (RTC), Branch 274, Parañaque City, in Civil Case No.
00-0372.
On August 25, 2000, Celita Miralles, respondent, filed with the said court a complaint for sum of
money against Remelita Robinson, petitioner, docketed as Civil Case No. 00-0372. Respondent
alleged that petitioner borrowed from her US$20,054.00 as shown by a Memorandum of
Agreement they both executed on January 12, 2000.
Summons was served on petitioner at her given address. However, per return of service of Sheriff
Maximo Potente dated March 5, 2001, petitioner no longer resides at such address.
On July 20, 2001, the trial court issued an alias summons to be served at No. 19 Baguio St., Alabang
Hills, Muntinlupa City, petitioner’s new address.
Again, the summons could not be served on petitioner. Sheriff Potente explained that:
The Security Guard assigned at the gate of Alabang Hills refused to let me go inside the subdivision
so that I could effect the service of the summons to the defendant in this case. The security guard
alleged that the defendant had given them instructions not to let anybody proceed to her house
if she is not around. I explained to the Security Guard that I am a sheriff serving the summons to
the defendant, and if the defendant is not around, summons can be received by any person of
suitable age and discretion living in the same house. Despite of all the explanation, the security
guard by the name of A.H. Geroche still refused to let me go inside the subdivision and served
(sic) the summons to the defendant. The same thing happened when I attempted to serve the
summons previously.
Therefore, the summons was served by leaving a copy thereof together with the copy of the
complaint to the security guard by the name of A.H. Geroche, who refused to affix his signature
on the original copy thereof, so he will be the one to give the same to the defendant.
Eventually, respondent filed a motion to declare petitioner in default for her failure to file an answer
seasonably despite service of summons.
On February 28, 2003, the trial court granted respondent’s motion declaring petitioner in default
and allowing respondent to present her evidence ex parte.
On June 20, 2003, the trial court issued an Order, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendant
ordering the defendant to pay the plaintiff as follows:
1. The sum of US$20,054.00 as the unpaid obligation, plus the stipulated interest of 3% a month
from May 2000 (date of default) until fully paid;
2. Php100,000.00 for moral damages;
3. Php50,000.00 plus Php1,500.00 per appearance as attorney’s fees;
4. Costs of suit.
SO ORDERED.
A copy of the Order was sent to petitioner by registered mail at her new address.
Upon respondent’s motion, the trial court, on September 8, 2003, issued a writ of execution.
On September 26, 2003, petitioner filed with the trial court a petition for relief from the judgment
by default. She claimed that summons was improperly served upon her, thus, the trial court never
acquired jurisdiction over her and that all its proceedings are void.
On February 11, 2004, the trial court issued a Resolution denying the petition for relief. Petitioner
filed a motion for reconsideration, but it was denied by the trial court in a Resolution dated May 11,
2004.
Hence, the instant recourse.
The sole issue for our resolution is whether the trial court correctly ruled that a substituted service
of summons upon petitioner has been validly effected.
Summons is a writ by which the defendant is notified of the action brought against him or her.3 In a
civil action, service of summons is the means by which the court acquires jurisdiction over the
person of the defendant.4 Any judgment without such service, in the absence of a valid waiver, is
null and void.5 Where the action is in personam and the defendant is in the Philippines, the service
of summons may be made through personal or substituted service in the manner provided for in
Sections 6 and 7, Rule 14 of the 1997 Rules of Procedure, as amended,6 thus:
SEC. 6. Service in person on defendant. – Whenever practicable, the summons shall be served by
handing a copy thereof to the defendant in person, or if he refuses to receive and sign for it, by
tendering it to him.
 SEC. 7. Substituted service. – If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant’s residence with some person of suitable age and
discretion then residing therein; or (b) by leaving the copies at the defendant’s office or regular
place of business with some competent person in charge thereof.

Under our procedural rules, personal service is generally preferred over substituted service, the
latter mode of service being a method extraordinary in character.7 For substituted service to be
justified, the following circumstances must be clearly established: (a) personal service of summons
within a reasonable time was impossible; (b) efforts were exerted to locate the party; and (c) the
summons was served upon a person of sufficient age and discretion residing at the party’s residence
or upon a competent person in charge of the party’s office or place of business. 8 Failure to do so
would invalidate all subsequent proceedings on jurisdictional grounds.9

Petitioner contends that the service of summons upon the subdivision security guard is not in
compliance with Section 7, Rule 14 since he is not related to her or staying at her residence.
Moreover, he is not duly authorized to receive summons for the residents of the village. Hence, the
substituted service of summons is not valid and that the trial court never acquired jurisdiction over
her person.

We have ruled that the statutory requirements of substituted service must be followed strictly,
faithfully, and fully and any substituted service other than that authorized by the Rules is considered
ineffective.10 However, we frown upon an overly strict application of the Rules. It is the spirit, rather
than the letter of the procedural rules, that governs.

In his Return, Sheriff Potente declared that he was refused entry by the security guard in Alabang
Hills twice. The latter informed him that petitioner prohibits him from allowing anybody to proceed
to her residence whenever she is out. Obviously, it was impossible for the sheriff to effect personal
or substituted service of summons upon petitioner. We note that she failed to controvert the
sheriff’s declaration. Nor did she deny having received the summons through the security guard.

Considering her strict instruction to the security guard, she must bear its consequences. Thus, we
agree with the trial court that summons has been properly served upon petitioner and that it has
acquired jurisdiction over her.

WHEREFORE, we DENY the petition and we AFFIRM the assailed Orders of the RTC, Branch 274,
Parañaque City, in Civil Case No. 00-0372. Costs against petitioner.

SO ORDERED.
CIVPRO – RULE 14 – SUMMONS – EXTRATERRITORIAL
G.R. No. 108538 January 22, 1996
LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for
partition filed against her and her husband, who is also her attorney, summons intended for her
may be served on her husband, who has a law office in the Philippines. The Regional Trial Court of
Manila, Branch 48, said no and refused to declare Lourdes A. Valmonte in default, but the Court of
Appeals said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both
residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte,
who is a member of the Philippine bar, however, practices his profession in the Philippines,
commuting for this purpose between his residence in the state of Washington and Manila, where
he holds office at S-304 Gedisco Centre, 1564 A. Mabini Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A.
Valmonte, filed a complaint for partition of real property and accounting of rentals against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the Regional Trial Court of Manila,
Branch 48. The subject of the action is a three-door apartment located in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road,
Chesterfield, Missouri, U.S.A., while the defendants are spouses, of legal age and at present
residents of 90222 Carkeek Drive, South Seattle, Washington, U.S.A., but, for purposes of this
complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita,
Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte's spouse
holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter previously sent by
petitioner Lourdes A. Valmonte to private respondent's counsel in which, in regard to the partition
of the property in question, she referred private respondent's counsel to her husband as the party
to whom all communications intended for her should be sent. The letter reads:
July 4, 1991
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I received on 3 July 1991. Please
address all communications to my lawyer, Atty. Alfredo D. Valmonte, whose address, telephone
and fax numbers appear below.
c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at
his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was
concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on the ground
that he was not authorized to accept the process on her behalf. Accordingly the process server left
without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A.
Valmonte, however, did not file her Answer. For this reason private respondent moved to declare
her in default. Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his wife and
opposed the private respondent's motion.
In its Order dated July 3, 1992, the trial court, denied private respondent's motion to declare
petitioner Lourdes A. Valmonte in default. A motion for reconsideration was similarly denied on
September 23, 1992. Whereupon, private respondent filed a petition for certiorari, prohibition and
mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the petition and declaring
Lourdes A. Valmonte in default. A copy of the appellate court's decision was received by petitioner
Alfredo D. Valmonte on January 15, 1993 at his Manila office and on January 21, 1993 in Seattle,
Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was
validly served with summons. In holding that she had been, the Court of Appeals stated:1
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned
counsel of Dimalanta to address all communications (evidently referring to her controversy with her
sister Mrs. Dimalanta over the Paco property, now the subject of the instant case) to her lawyer
who happens also to be her husband. Such directive was made without any qualification just as was
her choice/designation of her husband Atty. Valmonte as her lawyer likewise made without any
qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being
his wife's attorney (at least with regard to the dispute vis-a-vis (sic) the Paco property) would appear
to be feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged special appearance made on behalf
of his wife. Whereas Mrs. Valmonte had manifestly authorized her husband to serve as her lawyer
relative to her dispute with her sister over the Paco property and to receive all communications
regarding the same and subsequently to appear on her behalf by way of a so-called special
appearance, she would nonetheless now insist that the same husband would nonetheless had
absolutely no authority to receive summons on her behalf. In effect, she is asserting that
representation by her lawyer (who is also her husband) as far as the Paco property controversy is
concerned, should only be made by him when such representation would be favorable to her but
not otherwise. It would obviously be inequitable for this Court to allow private respondent Lourdes
A. Valmonte to hold that her husband has the authority to represent her when an advantage is to
be obtained by her and to deny such authority when it would turn out to be her disadvantage. If
this be allowed, Our Rules of Court, instead of being an instrument to promote justice would be
made use of to thwart or frustrate the same.
xxx xxx xxx
Turning to another point, it would not do for Us to overlook the fact that the disputed summons
was served not upon just an ordinary lawyer of private respondent Lourdes A. Valmonte, but
upon her lawyer husband. But that is not all, the same lawyer/husband happens to be also her
co-defendant in the instant case which involves real property which, according to her
lawyer/husband/co-defendant, belongs to the conjugal partnership of the defendants (the
spouses Valmonte). It is highly inconceivable and certainly it would be contrary to human nature
for the lawyer/husband/co-defendant to keep to himself the fact that they (the spouses
Valmonte) had been sued with regard to a property which, he claims to be conjugal.
Parenthetically, there is nothing in the records of the case before Us regarding any manifestation
by private respondent Lourdes A. Valmonte about her lack of knowledge about the case instituted
against her and her lawyer/husband/co-defendant by her sister Rosita. . . .
PREMISES CONSIDERED, the instant petition for certiorari, prohibition and mandamus is given
due course. This Court hereby Resolves to nullify the orders of the court a quo dated July 3, 1992
and September 23, 1992 and further declares private respondent Lourdes Arreola Valmonte as
having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in refusing
to apply the provisions of Rule 14, §17 of the Revised Rules of Court and applying instead Rule 14,
§8 when the fact is that petitioner Lourdes A. Valmonte is a nonresident defendant; and (2) because
even if Rule 14, §8 is the applicable provision, there was no valid substituted service as there was
no strict compliance with the requirement by leaving a copy of the summons and complaint with
petitioner Alfredo D. Valmonte. Private respondent, upon the other hand, asserts that petitioners
are invoking a technicality and that strict adherence to the rules would only result in a useless
ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an
action in personam, in rem or quasi in rem. This is because the rules on service of summons
embodied in Rule 14 apply according to whether an action is one or the other of these actions.
In an action in personam, personal service of summons or, if this is not possible and he cannot be
personally served, substituted service, as provided in Rule 14, §§7-82 is essential for the acquisition
by the court of jurisdiction over the person of a defendant who does not voluntarily submit himself
to the authority of the court.3 If defendant cannot be served with summons because he is
temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by leave of
court, be made by publication.4 Otherwise stated, a resident defendant in an action in personam,
who cannot be personally served with summons, may be summoned either by means of substituted
service in accordance with Rule 14, §8 or by publication as provided in §§ 17 and 18 of the same
Rule.5
In all of these cases, it should be noted, defendant must be a resident of the Philippines, otherwise
an action in personam cannot be brought because jurisdiction over his person is essential to make
a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction
over the res. If the defendant is a nonresident and he is not found in the country, summons may be
served exterritorially in accordance with Rule 14, §17, which provides:
§17. Extraterritorial service. - When the defendant does not reside and is not found in the
Philippines and the action affects the personal status of the plaintiff or relates to, or the subject
of which is, property within the Philippines, in which the defendant has or claims a lien or interest,
actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the
defendant from any interest therein, or the property of the defendant has been attached within
the Philippines, service may, by leave of court, be effected out of the Philippines by personal
service as under section 7; or by publication in a newspaper of general circulation in such places
and for such time as the court may order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall specify a reasonable
time, which shall not be less than sixty (60) days after notice, within which the defendant must
answer..
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has
jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the Philippines
or the property litigated or attached.
Service of summons in the manner provided in §17 is not for the purpose of vesting it with
jurisdiction but for complying with the requirements of fair play or due process, so that he will be
informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor
of the plaintiff and he can thereby take steps to protect his interest if he is so minded.6
Applying the foregoing rules to the case at bar, private respondent's action, which is for partition
and accounting under Rule 69, is in the nature of an action quasi in rem. Such an action is essentially
for the purpose of affecting the defendant's interest in a specific property and not to render a
judgment against him. As explained in the leading case of Banco Español Filipino v. Palanca :7
[An action quasi in rem is] an action which while not strictly speaking an action in rem partakes of
that nature and is substantially such. . . . The action quasi in rem differs from the true action in rem
in the circumstance that in the former an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the property. All
proceedings having for their sole object the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus
designated. The judgment entered in these proceedings is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of
summons on her must be in accordance with Rule 14, §17. Such service, to be effective outside the
Philippines, must be made either (1) by personal service; (2) by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a copy of
the summons and order of the court should be sent by registered mail to the last known address of
the defendant; or (3) in any other manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done
by means of any of the first two modes, the question is whether the service on her attorney,
petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in any . . . manner
the court may deem sufficient."
We hold it cannot. This mode of service, like the first two, must be made outside the Philippines,
such as through the Philippine Embassy in the foreign country where the defendant resides.8
Moreover, there are several reasons why the service of summons on Atty. Alfredo D. Valmonte
cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte. In the first
place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the
court as required by Rule 14, §17 and certainly was not a mode deemed sufficient by the court
which in fact refused to consider the service to be valid and on that basis declare petitioner Lourdes
A. Valmonte in default for her failure to file an answer.
In the second place, service in the attempted manner on petitioner was not made upon prior leave
of the trial court as required also in Rule 14, §17. As provided in §19, such leave must be applied for
by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and setting
forth the grounds for the application.
Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes
A. Valmonte was not given ample time to file her Answer which, according to the rules, shall be not
less than sixty (60) days after notice. It must be noted that the period to file an Answer in an action
against a resident defendant differs from the period given in an action filed against a nonresident
defendant who is not found in the Philippines. In the former, the period is fifteen (15) days from
service of summons, while in the latter, it is at least sixty (60) days from notice.
On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife of a
nonresident defendant was found sufficient because the defendant had appointed his wife as his
attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss citizen and resident
of Switzerland, service of summons upon his wife Helen Schenker who was in the Philippines was
sufficient because she was her husband's representative and attorney-in-fact in a civil case, which
he had earlier filed against William Gemperle. In fact Gemperle's action was for damages arising
from allegedly derogatory statements contained in the complaint filed in the first case. As this Court
said, "[i]n other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her
husband, so that she was, also, empowered to represent him in suits filed against him, particularly
in a case, like the one at bar, which is a consequence of the action brought by her on his behalf" 11
Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the action
brought by Mr. Schenker against him, there would have been no doubt that the trial court could
have acquired jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her
attorney-in-fact. Although she wrote private res- pondent's attorney that "all communications"
intended for her should be addressed to her husband who is also her lawyer at the latter's address
in Manila, no power of attorney to receive summons for her can be inferred therefrom. In fact the
letter was written seven months before the filing of this case below, and it appears that it was
written in connection with the negotiations between her and her sister, respondent Rosita
Dimalanta, concerning the partition of the property in question. As is usual in negotiations of this
kind, the exchange of correspondence was carried on by counsel for the parties. But the authority
given to petitioner's husband in these negotiations certainly cannot be construed as also including
an authority to represent her in any litigation.
For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A.
Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and
September 23, 1992 of the Regional Trial Court of Manila, Branch 48 are REINSTATED.
SO ORDERED.

Strict compliance with these requirements alone can assure observance of due process. That is why
in one case,9 although the Court considered publication in the Philippines of the summons (against
the contention that it should be made in the foreign state where defendant was residing) sufficient,
nonetheless the service was considered insufficient because no copy of the summons was sent to
the last known correct address in the Philippines..

Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in which
it was held that service of summons upon the defendant's husband was binding on her. But the
ruling in that case is justified because summons were served upon defendant's husband in their
conjugal home in Cebu City and the wife was only temporarily absent, having gone to Dumaguete
City for a vacation. The action was for collection of a sum of money. In accordance with Rule 14, §8,
substituted service could be made on any person of sufficient discretion in the dwelling place of the
defendant, and certainly defendant's husband, who was there, was competent to receive the
summons on her behalf. In any event, it appears that defendant in that case submitted to the
jurisdiction of the court by instructing her husband to move for the dissolution of the writ of
attachment issued in that case.
CIVPRO – RULE 14 – SUMMONS – EXTRATERRITORIAL
G.R. No. 172242 August 14, 2007
PERKIN ELMER SINGAPORE PTE LTD., Petitioner,
vs.
DAKILA TRADING CORPORATION, Respondent.
DECISION
CHICO-NAZARIO, J.:
The case before this Court is a Petition for Review1 on Certiorari under Rule 45 of the 1997 Revised
Rules of Civil Procedure seeking to annul and set aside the Decision,2 dated 4 April 2006, of the Court
of Appeals in CA-G.R. SP No. 78981, which affirmed the Orders, dated 4 November 20023 and 20
June 2003,4 of the Mandaluyong City Regional Trial Court (RTC), Branch 212, in Civil Case No. MC99-
605, which, in turn, denied the Motion to Dismiss and subsequent Motion for Reconsideration of
herein petitioner Perkin Elmer Singapore Pte Ltd.
Petitioner is a corporation duly organized and existing under the laws of Singapore. It is not
considered as a foreign corporation "doing business" in the Philippines. Herein respondent Dakila
Trading Corporation is a corporation organized and existing under Philippine laws, and engaged in
the business of selling and leasing out laboratory instrumentation and process control
instrumentation, and trading of laboratory chemicals and supplies.
The antecedents of the present case are as follows:
Respondent entered into a Distribution Agreement5 on 1 June 1990 with Perkin-Elmer Instruments
Asia Pte Ltd. (PEIA), a corporation duly organized and existing under the laws of Singapore and
engaged in the business of manufacturing, producing, selling or distributing various
laboratory/analytical instruments. By virtue of the said agreement, PEIA appointed the respondent
as the sole distributor of its products in the Philippines. The respondent was likewise granted the
right to purchase and sell the products of PEIA subject to the terms and conditions set forth in the
Distribution Agreement. PEIA, on the other hand, shall give respondent a commission for the sale
of its products in the Philippines.
Under the same Distribution Agreement, respondent shall order the products of PEIA, which it shall
sell in the Philippines, either from PEIA itself or from Perkin-Elmer Instruments (Philippines)
Corporation (PEIP), an affiliate of PEIA. PEIP is a corporation duly organized and existing under
Philippine laws, and involved in the business of wholesale trading of all kinds of scientific,
biotechnological, and analytical instruments and appliances. PEIA allegedly owned 99% of the
shares of PEIP.
On 2 August 1997, however, PEIA unilaterally terminated the Distribution Agreement, prompting
respondent to file before the RTC of Mandaluyong City, Branch 212, a Complaint6 for Collection of
Sum of Money and Damages with Prayer for Issuance of a Writ of Attachment against PEIA and PEIP,
docketed as Civil Case No. MC99-605.
The RTC issued an Order,7 dated 26 March 1999, denying respondent’s prayer for the issuance of a
writ of attachment. The respondent moved for the reconsideration of the said Order but it was
denied in another Order, dated 11 January 2000.8
Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to Deputize
Respondent’s General Manager, Richard A. Tee, to Serve Summons Outside of the Philippines, 9
which the RTC granted in its Order, dated 27 April 2000.10 Thus, an Alias Summons, dated 4
September 2000, was issued by the RTC to PEIA. But the said Alias Summons was served on 28
September 2000 and received by Perkinelmer Asia, a Singaporean based sole proprietorship, owned
by the petitioner and, allegedly, a separate and distinct entity from PEIA.
PEIP moved to dismiss11 the Complaint filed by respondent on the ground that it states no cause of
action. Perkinelmer Asia, on the other hand, through its counsel, sent letters, dated 12 October
200012 and 15 November 2000,13 to the respondent and to the RTC, respectively, to inform them of
the wrongful service of summons upon Perkinelmer Asia.
Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint, together with the
Amended Complaint claiming that PEIA had become a sole proprietorship 14 owned by the
petitioner, and subsequently changed its name to Perkinelmer Asia. Being a sole proprietorship of
the petitioner, a change in PEIA’s name and juridical status did not detract from the fact that all its
due and outstanding obligations to third parties were assumed by the petitioner. Hence, in its
Amended Complaint15 respondent sought to change the name of PEIA to that of the petitioner. In
an Order, dated 24 July 2001,16 the RTC admitted the Amended Complaint filed by the respondent.
Respondent then filed another Motion17 for the Issuance of Summons and for Leave of Court to
Deputize Respondent’s General Manager, Richard A. Tee, to Serve Summons Outside the
Philippines. In another Order, dated 4 March 2002,18 the RTC deputized respondent’s General
Manager to serve summons on petitioner in Singapore. The RTC thus issued summons19 to the
petitioner. Acting on the said Order, respondent’s General Manager went to Singapore and served
summons on the petitioner.
Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to Dismiss filed by PEIP,
compelling the latter to file its Answer to the Amended Complaint.
Petitioner subsequently filed with the RTC a Special Appearance and Motion to Dismiss20
respondent’s Amended Complaint on 30 May 2002 based on the following grounds: (1) the RTC did
not acquire jurisdiction over the person of the petitioner; (2) the respondent failed to state a cause
of action against the petitioner because it is not the real party-in-interest; (3) even assuming
arguendo that the respondent correctly filed the case against the petitioner, the Distribution
Agreement which was the basis of its claim grants PEIA the right to terminate the contract at any
time; and (4) the venue was improperly laid. The RTC in its Order, dated 4 November 2002, denied
petitioner’s Motion to Dismiss, ratiocinating as follows:
Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY the Motion to
Dismiss.
A careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that [herein
respondent] alleges ownership by the [herein petitioner] of shares of stocks in the [PEIP]. Such
allegation of ownership of shares of stocks by the [petitioner] would reveal that there is an
allegation of personal property in the Philippines. Shares of stocks represent personal property of
the shareholder. Thus, it follows that even though the Amended Complaint is primarily for damages,
it does relate to a property of the [petitioner], to which the latter has a claim interest (sic), or an
actual or contingent lien, which will make it fall under one of the requisite (sic) for extraterritorial
service under Section 15, Rule 14, of the Rules of Court. Thus, it could be gainfully said that the
summons had been validly served for [RTC] to acquire jurisdiction over the [petitioner].
The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of action. The
[RTC] would like to emphasize that in a Motion to Dismiss, it hypothetically admits the truth of the
facts alleged in a complaint.
When the ground for dismissal is that the complaint states no cause of action, such fact can be
determined only from the facts alleged in the complaint x x x and from no other x x x and the Court
cannot consider other matters aliunde x x x. This implies that the issue must be passed upon on the
basis of the allegations and declare them to be false, otherwise it would be a procedural error and
a denial of due process to the [respondent] x x x.
The three (3) essential elements of a cause of action are the following:
a) The plaintiff’s legal rights;
b) A correlative obligation of the defendant;
c) The omission of the defendant in violation of the legal rights.
A cursory reading of the Amended Complaint would reveal that all of the essential elements of a
cause of action are attendant in the Amended Complaint.
As for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate desire that the
ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
xxxx
The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the
residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue
stipulation was imposed by the [petitioner] for its own benefits.
xxxx
The [RTC] further believes that it is imperative that in order to ferret out the truth, a full-blown trial
is necessary for parties to be able to prove or disprove their allegations.21
Petitioner moved for the reconsideration of the aforesaid Order but, it was denied by the RTC in its
Order, dated 20 June 2003.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of
Civil Procedure with application for temporary restraining order and/or preliminary injunction
before the Court of Appeals alleging that the RTC committed grave abuse of discretion amounting
to lack or excess of jurisdiction in refusing to dismiss the Amended Complaint. The Court of Appeals
never issued any temporary restraining order or writ of injunction. On 4 April 2006, the Court of
Appeals rendered a Decision affirming the RTC Orders of 4 November 2002 and 20 June 2003.
This brings us to the present Petition before this Court wherein petitioner raised the following
issues.
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT
THE SERVICE OF SUMMONS ON PETITIONER WAS DEFECTIVE AND THAT THE TRIAL COURT THUS
FAILED TO ACQUIRE JURISDICTION OVER THE PERSON OF THE PETITIONER.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT THE
"SOLE ISSUE" IN THE PETITION FOR CERTIORARI FILED BEFORE IT IS THE QUESTION OF WHETHER
THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER THROUGH THE
EXTRATERRITORIAL SERVICE OF SUMMONS.
A.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR
CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND THAT THE AMENDED COMPLAINT
FAILED TO STATE A CAUSE OF ACTION AGAINST PETITIONER.
1. BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO ADMIT AMENDED COMPLAINT,
AMENDED COMPLAINT, AND ALL DOCUMENTS ATTACHED AND/OR RELATED THERETO,
PETITIONER IS NOT THE REAL PARTY-IN-INTEREST DEFENDANT IN THE CASE BELOW.
2. ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED THIS CASE AGAINST THE CORRECT
[PARTY], INASMUCH AS THE DISTRIBUTION AGREEMENT DATED 1 JUNE 1990 GRANTS [PEIA]
THE RIGHT TO TERMINATE THE CONTRACT AT ANY TIME, RESPONDENT DAKILA FAILS TO STATE
A CAUSE OF ACTION IN THE CASE BELOW.
B.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR
CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND OF IMPROPER VENUE.
III.
WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER AND/OR WRIT
OF INJUNCTION.
The foregoing issues raised by petitioner essentially requires this Court to make a determination of
the (1) proper service of summons and acquisition of jurisdiction by the RTC over the person of the
petitioner; (2) existence of a cause of action against petitioner in respondent’s Amended Complaint;
and (3) proper venue for respondent’s civil case against petitioner.
Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of money
and damages arising from the alleged breach of the Distribution Agreement. The action is one in
personam, or an action against a person based on his personal liability; and for the court a quo to
acquire jurisdiction over the person of the petitioner, personal service of summons, and not
extraterritorial service of summons, must be made within the state even if the petitioner is a non-
resident. Petitioner avers that extraterritorial service of summons stated under Section 15, Rule 14
of the 1997 Revised Rules of Civil Procedure, is only proper in in rem and quasi in rem cases; thus,
resort to an extraterritorial service of summons in the case at bar was erroneous. Petitioner
asseverates that the allegations in the respondent’s Amended Complaint that the petitioner has
personal properties within the Philippines does not make the present case one that relates to, or
the subject of which is, property within the Philippines warranting the extraterritorial service of
summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure. Petitioner states
that for an action to be considered as one that relates to, or the subject of which is, property within
the Philippines, the main subject matter of the action must be the property within the Philippines
itself, and such was not the situation in this case. Likewise, the prayer in respondent’s Amended
Complaint for the issuance of a writ of attachment over the personal property of PEIP, which is 99%
owned by petitioner (as the supposed successor of PEIA), did not convert the action from one in
personam to one that is quasi in rem. Also, the petitioner points out that since the respondent’s
prayer for the issuance of a writ of attachment was denied by the RTC in its Order, dated 26 March
1999, then the nature of Civil Case No. MC99-605 remains in personam, contrary to the ruling of
the Court of Appeals that by the attachment of the petitioner’s interest in PEIP the action in
personam was converted to an action quasi in rem. Resultantly, the extraterritorial service of
summons on the petitioner was not validly effected, and did not give the RTC jurisdiction over the
petitioner.
Petitioner further argues that the appellate court should have granted its Petition for Certiorari on
the ground that the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in refusing to dismiss respondent’s Amended Complaint for failure to state a cause of
action against petitioner which was not the real party-in-interest in Civil Case No. MC99-605.
Petitioner claims that it had never used the name PEIA as its corporate name, and neither did it
change its name from that of PEIA. Petitioner stresses that PEIA is an entirely different corporate
entity that is not connected in whatever manner to the petitioner. Even assuming arguendo that
petitioner is the real party-in-interest in Civil Case No. MC99-605 or that petitioner and PEIA are one
and the same entity, petitioner still avows that the respondent failed to state a cause of action
against it because the Distribution Agreement expressly grants PEIA the right to terminate the said
contract at any time.
Lastly, it is the contention of the petitioner that the appellate court should have granted its Petition
for Certiorari because the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in refusing to dismiss Civil Case No. MC99-605 for having been filed in an improper
venue. Petitioner asserts that in the Distribution Agreement entered into between the respondent
and PEIA, both had mutually agreed to the exclusive jurisdiction of the courts of Singapore or of the
Philippines as elected by PEIA. Absent any waiver by PEIA of its right to choose the venue of the
dispute, the Complaint filed by the respondent before the RTC in the Philippines should have been
dismissed on the ground of improper venue.
The Petition is meritorious.
Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing
and deciding cases. In order for the court to have authority to dispose of the case on the merits, it
must acquire jurisdiction over the subject matter and the parties.22
Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law. It is
determinable on the basis of allegations in the complaint.23
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over
the defendants in a civil case is acquired either through the service of summons upon them in the
manner required by law or through their voluntary appearance in court and their submission to its
authority. If the defendants have not been summoned, unless they voluntarily appear in court, the
court acquires no jurisdiction over their persons and a judgment rendered against them is null and
void. To be bound by a decision, a party should first be subjected to the court’s jurisdiction.24
Thus, one of the modes of acquiring jurisdiction over the person of the defendant or respondent in
a civil case is through service of summons. It is intended to give notice to the defendant or
respondent that a civil action has been commenced against him. The defendant or respondent is
thus put on guard as to the demands of the plaintiff or the petitioner.25
The proper service of summons differs depending on the nature of the civil case instituted by the
plaintiff or petitioner: whether it is in personam, in rem, or quasi in rem. Actions in personam, are
those actions brought against a person on the basis of his personal liability; actions in rem are
actions against the thing itself instead of against the person; and actions are quasi in rem, where an
individual is named as defendant and the purpose of the proceeding is to subject his or her interest
in a property to the obligation or loan burdening the property.26
Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are only four instances
wherein a defendant who is a non-resident and is not found in the country may be served with
summons by extraterritorial service, to wit: (1) when the action affects the personal status of the
plaintiff; (2) when the action relates to, or the subject of which is property, within the Philippines,
in which the defendant claims a lien or an interest, actual or contingent; (3) when the relief
demanded in such action consists, wholly or in part, in excluding the defendant from any interest in
property located in the Philippines; and (4) when the defendant non-resident’s property has been
attached within the Philippines. In these instances, service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with leave of court; or
(c) any other manner the court may deem sufficient. 27
Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi
in rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already have
jurisdiction to hear and decide the case because, in actions in rem and quasi in rem, jurisdiction over
the person of the defendant is not a prerequisite to confer jurisdiction on the court, provided that
the court acquires jurisdiction over the res.28 Thus, in such instance, extraterritorial service of
summons can be made upon the defendant. The said extraterritorial service of summons is not for
the purpose of vesting the court with jurisdiction, but for complying with the requirements of fair
play or due process, so that the defendant will be informed of the pendency of the action against
him and the possibility that property in the Philippines belonging to him or in which he has an
interest may be subjected to a judgment in favor of the plaintiff, and he can thereby take steps to
protect his interest if he is so minded.29 On the other hand, when the defendant or respondent does
not reside and is not found in the Philippines,30 and the action involved is in personam, Philippine
courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his
person unless he voluntarily appears in court.31
In the case at bar, this Court sustains the contention of the petitioner that there can never be a valid
extraterritorial service of summons upon it, because the case before the court a quo involving
collection of a sum of money and damages is, indeed, an action in personam, as it deals with the
personal liability of the petitioner to the respondent by reason of the alleged unilateral termination
by the former of the Distribution Agreement. Even the Court of Appeals, in its Decision dated 4 April
2004, upheld the nature of the instant case as an action in personam. In the said Decision the
appellate court ruled that:
In the instant petition, [respondent’s] cause of action in Civil Case No. MC99-605 is anchored on the
claim that petitioner unilaterally terminated the Distribution Agreement. Thus, [respondent] prays
in its [C]omplaint that "Upon the filing of the Complaint, issue an Order fixing the amount of the
bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer
Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy
[respondent’s] demands."
The action instituted by [respondent] affects the parties alone, not the whole world. Hence, it is an
action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded.
xxxx
The objective sought in [respondent’s] [C]omplaint was to establish a claim against petitioner for its
alleged unilateral termination of [D]istribution [A]greement. Hence, to repeat, Civil Case No. MC99-
605 is an action in personam because it is an action against persons, namely, herein petitioner, on
the basis of its personal liability. As such, personal service of summons upon the [petitioner] is
essential in order for the court to acquire of (sic) jurisdiction over [its person].32 (Emphasis supplied.)
Thus, being an action in personam, personal service of summons within the Philippines is necessary
in order for the RTC to validly acquire jurisdiction over the person of the petitioner, and this is not
possible in the present case because the petitioner is a non-resident and is not found within the
Philippines. Respondent’s allegation in its Amended Complaint that petitioner had personal
property within the Philippines in the form of shares of stock in PEIP did not make Civil Case No.
MC99-605 fall under any of the four instances mentioned in Section 15, Rule 14 of the Rules of
Court, as to convert the action in personam to an action in rem or quasi in rem and, subsequently,
make the extraterritorial service of summons upon the petitioner valid.
It is incorrect for the RTC to have ruled that the allegations made by the respondent in its Amended
Complaint, which is primarily for collection of a sum of money and damages, that the petitioner
owns shares of stock within the Philippines to which the petitioner claims interest, or an actual or
contingent lien, would make the case fall under one of the aforesaid instances wherein
extraterritorial service of summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure, would be valid. The RTC in arriving at such conclusions relied on the second instance,
mentioned under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the
action relates to, or the subject of which is property, within the Philippines, in which the defendant
claims a lien or interest, actual or contingent), where extraterritorial service of summons can be
properly made. However, the aforesaid second instance has no application in the case before this
Court. Primarily, the Amended Complaint filed by the respondent against the petitioner was for the
collection of sum of money and damages. The said case was neither related nor connected to any
property of the petitioner to which it claims a lien or interest. The action for collection of a sum of
money and damages was purely based on the personal liability of the petitioner towards the
respondent. The petitioner is correct in saying that "mere allegations of personal property within
the Philippines does not necessarily make the action as one that relates to or the subject of which
is, property within the Philippines as to warrant the extraterritorial service of summons. For the
action to be considered one that relates to, or the subject of which, is the property within the
Philippines, the main subject matter of the action must be the property itself of the petitioner in
the Philippines." By analogy, an action involving title to or possession of real or personal property -
- such as the foreclosure of real estate or chattel mortgage where the mortgagor does not reside or
is not found in the Philippines -- can be considered as an action which relates to, or the subject of
which is, property within the Philippines, in which the defendant claims a lien or interest, actual or
contingent; and in such instance, judgment will be limited to the res.33
Moreover, the allegations made by the respondent that the petitioner has property within the
Philippines were in support of its application for the issuance of a writ of attachment, which was
denied by the RTC. Hence, it is clear from the foregoing that the Complaint filed by the respondent
against the petitioner does not really relate to, or the subject of which is, property within the
Philippines of the petitioner.
This Court also finds error in the Decision of the Court of Appeals. It is provided for in the said
Decision, thus:
However, let it be emphasized that in the [C]omplaint filed before the trial court, [respondent]
prayed that "Upon the filing of the Complaint, issue an Order fixing the amount of the bond and
issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer
Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy
[respondent’s] demands.
In other words, although the [C]omplaint before the trial court does not involve the personal status
of the [respondent], nevertheless, the case involves property within the Philippines in which the
[petitioner] has or claim an interest, or which the [respondent] has attached, which is one of the
instances where extraterritorial service of summons is proper.
xxxx
Hence, it is submitted that one of the instances when exterritorial service of summons under Section
15, Rule 14 of the Rules of Court is proper may be considered to have been met. This is because the
[C]omplaint for collection of sum of money which is an action in personam was converted into an
action quasi in rem by the attachment of [petitioner’s] interest in [Perkin-Elmer Philippines].34
(Emphasis supplied.)
Respondent’s allegation in its Amended Complaint that petitioner had personal property within the
Philippines in the form of shares of stock in PEIP does not convert Civil Case No. MC99-605 from an
action in personam to one quasi in rem, so as to qualify said case under the fourth instance
mentioned in Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the non-
resident defendant’s property has been attached within the Philippines), wherein extraterritorial
service of summons upon the petitioner would have been valid. It is worthy to note that what is
required under the aforesaid provision of the Revised Rules of Civil Procedure is not a mere
allegation of the existence of personal property belonging to the non-resident defendant within the
Philippines but, more precisely, that the non-resident defendant’s personal property located within
the Philippines must have been actually attached. This Court in the case of Venturanza v. Court of
Appeals35 ruled that when the attachment was void from the beginning, the action in personam
which required personal service of summons was never converted into an action in rem where
service by publication would have been valid. Hence, the appellate court erred in declaring that the
present case, which is an action in personam, was converted to an action quasi in rem because of
respondent’s allegations in its Amended Complaint that petitioner had personal property within the
Philippines.
Glaringly, respondent’s prayer in its Amended Complaint for the issuance of a writ of attachment
over petitioner’s purported shares of stock in PEIP located within the Philippines was denied by the
court a quo in its Order dated 26 March 1999. Respondent’s Motion for Reconsideration of the said
Order was likewise denied by the RTC in its subsequent Order, dated 11 January 2000. Evidently,
petitioner’s alleged personal property within the Philippines, in the form of shares of stock in PEIP,
had not been attached; hence, Civil Case No. MC99-605, for collection of sum of money and
damages, remains an action in personam. As a result, the extraterritorial service of summons was
not validly effected by the RTC against the petitioner, and the RTC thus failed to acquire jurisdiction
over the person of the petitioner. The RTC is therefore bereft of any authority to act upon the
Complaint filed before it by the respondent insofar as the petitioner is concerned.
If there was no valid summons served upon petitioner, could RTC have acquired jurisdiction over
the person of the petitioner by the latter’s voluntary appearance? As a rule, even if the service of
summons upon the defendant or respondent in a civil case is defective, the court can still acquire
jurisdiction over his person when he voluntary appears in court or submits himself to its authority.
Nonetheless, voluntary appearance, as a mode of acquiring jurisdiction over the person of the
defendant, is likewise inapplicable in this case.
It is settled that a party who makes a special appearance in court for the purpose of challenging the
jurisdiction of said court, based on the invalidity of the service of summons, cannot be considered
to have voluntarily submitted himself to the jurisdiction of the court.36 In the present case,
petitioner has been consistent in all its pleadings in assailing the service of summons upon it and
the jurisdiction of the RTC over its person. Thus, the petitioner cannot be declared in estoppel when
it filed an Answer ad cautelam with compulsory counterclaim before the RTC while the instant
Petition was still pending before this Court. The petitioner was in a situation wherein it had no other
choice but to file an Answer; otherwise, the RTC would have already declared that petitioner had
waived its right to file responsive pleadings. 37 Neither can the compulsory counterclaim contained
in petitioner’s Answer ad cautelam be considered as voluntary appearance of petitioner before the
RTC. Petitioner seeks to recover damages and attorney’s fees as a consequence of the unfounded
suit filed by respondent against it. Thus, petitioner’s compulsory counterclaim is only consistent
with its position that the respondent wrongfully filed a case against it and the RTC erroneously
exercised jurisdiction over its person.
Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over
respondent’s complaint and over petitioner’s counterclaim -- while it may have no jurisdiction over
the former, it may exercise jurisdiction over the latter. The compulsory counterclaim attached to
petitioner’s Answer ad cautelam can be treated as a separate action, wherein petitioner is the
plaintiff while respondent is the defendant.38 Petitioner could have instituted a separate action for
the very same claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to
demand the same in Civil Case No. MC99-605.39 Jurisdiction of the RTC over the subject matter and
the parties in the counterclaim must thus be determined separately and independently from the
jurisdiction of the same court in the same case over the subject matter and the parties in
respondent’s complaint.
Moreover, even though the petitioner raised other grounds in its Motion to Dismiss aside from lack
of jurisdiction over its person, the same is not tantamount to its voluntary appearance or submission
to the authority of the court a quo. While in De Midgely v. Ferandos,40 it was held that, in a Motion
to Dismiss, the allegation of grounds other than lack of jurisdiction over the person of the defendant,
including a prayer "for such other reliefs as" may be deemed "appropriate and proper" amounted
to voluntary appearance, such ruling must be deemed superseded by the declaration of this Court
in La Naval Drug Corporation v. Court of Appeals41 that estoppel by jurisdiction must be unequivocal
and intentional. It would be absurd to hold that petitioner unequivocally and intentionally
submitted itself to the jurisdiction of the court by seeking other reliefs to which it might be entitled
when the only relief that it could properly ask from the trial court is the dismissal of the complaint
against it.42 Thus, the allegation of grounds other than lack of jurisdiction with a prayer "for such
other reliefs" as may be deemed "appropriate and proper" cannot be considered as unequivocal
and intentional estoppel. Most telling is Section 20, Rule 14 of the Rules of Court, which expressly
provides:
SEC. 20. Voluntary appearance. - The defendant’s voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from
lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.43
(Emphasis supplied.)
In sum, this Court finds that the petitioner did not submit itself voluntarily to the authority of the
court a quo; and in the absence of valid service of summons, the RTC utterly failed to acquire
jurisdiction over the person of the petitioner.
Anent the existence of a cause of action against petitioner and the proper venue of the case, this
Court upholds the findings of the RTC on these issues.
Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of Court.44
When a Motion to Dismiss is grounded on the failure to state a cause of action, a ruling thereon
should be based only on the facts alleged in the complaint. The court must pass upon this issue
based solely on such allegations, assuming them to be true. For it to do otherwise would be a
procedural error and a denial of plaintiff’s right to due process. 45 While, truly, there are well-
recognized exceptions46 to the rule that the allegations are hypothetically admitted as true and
inquiry is confined to the face of the complaint,47 none of the exceptions apply in this case. Hence,
the general rule applies. The defense of the petitioner that it is not the real party-in-interest is
evidentiary in nature which must be proven in trial. The appellate court, then, cannot be faulted for
not granting petitioner’s Motion to Dismiss on the ground of failure to state a cause of action.
In the same way, the appellate court did not err in denying petitioner’s Motion to Dismiss Civil Case
No. MC99-605 on the ground of improper venue. In arriving at such conclusion, this Court quotes
with approval the following ratiocination of the RTC:
As for the contention that venue was improperly laid, x x x, the [trial court] in its ultimate desire
that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
xxxx
The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the
residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue
stipulation was imposed by the [petitioner] for its own benefits.48 (Emphasis supplied.)
Despite the venue stipulation found in the Distribution Agreement stipulating that the exclusive
jurisdiction over disputes arising from the same shall lie in the courts of Singapore or of the Territory
(referring to the Philippines), whichever is elected by PEIA (or petitioner, as PEIA’s alleged
successor), the RTC of the Philippines cannot be considered as an improper venue. Truly, the venue
stipulation used the word "exclusive," however, a closer look on the Distribution Agreement would
reveal that the venue stipulation was really in the alternative i.e., courts of Singapore or of the
Territory, meaning, the Philippines; thus, the court a quo is not an improper venue for the present
case.
Nonetheless, it bears to emphasize that despite our findings that based on the allegations in
respondent’s Complaint in Civil Case No. MC99-605, respondent appears to have a cause of action
against the petitioner and that the RTC is the proper venue for the said case, Civil Case No. MC99-
605 is still dismissible, for the RTC never acquired jurisdiction over the person of the petitioner. The
extraterritorial service of summons upon the petitioner produces no effect because it can only be
done if the action is in rem or quasi in rem. The case for collection of sum of money and damages
filed by the respondent against the petitioner being an action in personam, then personal service
of summons upon the petitioner within the Philippines is essential for the RTC to validly acquire
jurisdiction over the person of the petitioner. Having failed to do so, the RTC can never subject
petitioner to its jurisdiction. The mere allegation made by the respondent that the petitioner had
shares of stock within the Philippines was not enough to convert the action from one in personam
to one that was quasi in rem, for petitioner’s purported personal property was never attached; thus,
the extraterritorial service of summons upon the petitioner remains invalid. In light of the foregoing
findings, this Court concludes that the RTC has no power to hear and decide the case against the
petitioner, because the extraterritorial service of summons was not validly effected upon the
petitioner and the RTC never acquired jurisdiction over its person.
Finally, as regards the petitioner’s counterclaim, which is purely for damages and attorney’s fees by
reason of the unfounded suit filed by the respondent against it, it has long been settled that the
same truly falls under the classification of compulsory counterclaim and it must be pleaded in the
same action, otherwise, it is barred.49 In the case at bar, this Court orders the dismissal of the
Complaint filed by the respondent against the petitioner because the court a quo failed to acquire
jurisdiction over the person of the latter. Since the Complaint of the respondent was dismissed,
what will happen then to the counterclaim of the petitioner? Does the dismissal of the complaint
carry with it the dismissal of the counterclaim?
In the cases of Metal Engineering Resources Corp. v. Court of Appeals,50 International Container
Terminal Services, Inc. v. Court of Appeals,51 and BA Finance Corporation v. Co.,52 the Court ruled
that if the court does not have jurisdiction to entertain the main action of the case and dismisses
the same, then the compulsory counterclaim, being ancillary to the principal controversy, must
likewise be dismissed since no jurisdiction remained for any grant of relief under the counterclaim.53
If we follow the aforesaid pronouncement of the Court in the cases mentioned above, the
counterclaim of the herein petitioner being compulsory in nature must also be dismissed together
with the Complaint. However, in the case of Pinga vs. Heirs of German Santiago, 54 the Court
explicitly expressed that:
Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for
the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion
[of Justice Regalado in BA Finance]. Retired Court of Appeals Justice Hererra pronounces that the
amendment to Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles that "nagging
question "whether the dismissal of the complaint carries with it the dismissal of the counterclaim,
and opines that by reason of the amendments, the rulings in Metals Engineering, International
Container, and BA Finance "may be deemed abandoned." x x x.
x x x, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule
17, those previous jural doctrines that were inconsistent with the new rules incorporated in the
1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the
effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a
counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the 1997
Rules of Civil Procedure. The abandonment of BA Finance as doctrine extends as far back as 1997,
when the Court adopted the new Rules of Civil Procedure. If, since then, abandonment has not been
affirmed in jurisprudence, it is only because no proper case has arisen that would warrant express
confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal
of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to
prosecute any pending counterclaims of whatever nature in the same or separate action. We
confirm that BA Finance and all previous rulings of the Court that are inconsistent with this present
holding are now abandoned.55 [Emphasis supplied].
It is true that the aforesaid declaration of the Court refers to instances covered by Section 3, Rule
17 of the 1997 Revised Rules of Civil Procedure56 on dismissal of the complaint due to the fault of
the plaintiff. Nonetheless, it does not also preclude the application of the same to the instant case
just because the dismissal of respondent’s Complaint was upon the instance of the petitioner who
correctly argued lack of jurisdiction over its person.
Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the
very filing of the complaint by the plaintiff against the defendant caused the violation of the latter’s
rights. As to whether the dismissal of such a complaint should also include the dismissal of the
counterclaim, the Court acknowledged that said matter is still debatable, viz:
Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint;
namely a cause (or causes) of action constituting an act or omission by which a party violates the
right of another. The main difference lies in that the cause of action in the counterclaim is
maintained by the defendant against the plaintiff, while the converse holds true with the complaint.
Yet, as with a complaint, a counterclaim without a cause of action cannot survive.
x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then
the counterclaim cannot survive. Yet that hardly is the case, especially as a general rule. More often
than not, the allegations that form the counterclaim are rooted in an act or omission of the plaintiff
other than the plaintiff’s very act of filing the complaint. Moreover, such acts or omissions imputed
to the plaintiff are often claimed to have occurred prior to the filing of the complaint itself. The only
apparent exception to this circumstance is if it is alleged in the counterclaim that the very act of the
plaintiff in filing the complaint precisely causes the violation of the defendant’s rights. Yet even in
such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is SO ORDERED.
sufficient to obviate the pending cause of action maintained by the defendant against the
plaintiff.571awphi1

Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates
the cause of the counterclaim, then the counterclaim cannot survive. Conversely, if the
counterclaim itself states sufficient cause of action then it should stand independently of and
survive the dismissal of the complaint. Now, having been directly confronted with the problem of
whether the compulsory counterclaim by reason of the unfounded suit may prosper even if the
main complaint had been dismissed, we rule in the affirmative.

It bears to emphasize that petitioner’s counterclaim against respondent is for damages and
attorney’s fees arising from the unfounded suit. While respondent’s Complaint against petitioner is
already dismissed, petitioner may have very well already incurred damages and litigation expenses
such as attorney’s fees since it was forced to engage legal representation in the Philippines to
protect its rights and to assert lack of jurisdiction of the courts over its person by virtue of the
improper service of summons upon it. Hence, the cause of action of petitioner’s counterclaim is not
eliminated by the mere dismissal of respondent’s complaint.

It may also do well to remember that it is this Court which mandated that claims for damages and
attorney’s fees based on unfounded suit constitute compulsory counterclaim which must be
pleaded in the same action or, otherwise, it shall be barred. It will then be iniquitous and the height
of injustice to require the petitioner to make the counterclaim in the present action, under threat
of losing his right to claim the same ever again in any other court, yet make his right totally
dependent on the fate of the respondent’s complaint.

If indeed the Court dismisses petitioner’s counterclaim solely on the basis of the dismissal of
respondent’s Complaint, then what remedy is left for the petitioner? It can be said that he can still
file a separate action to recover the damages and attorney’s fees based on the unfounded suit for
he cannot be barred from doing so since he did file the compulsory counterclaim in the present
action, only that it was dismissed when respondent’s Complaint was dismissed. However, this
reasoning is highly flawed and irrational considering that petitioner, already burdened by the
damages and attorney’s fees it may have incurred in the present case, must again incur more
damages and attorney’s fees in pursuing a separate action, when, in the first place, it should not
have been involved in any case at all.

Since petitioner’s counterclaim is compulsory in nature and its cause of action survives that of the
dismissal of respondent’s complaint, then it should be resolved based on its own merits and
evidentiary support.

WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision of the
Court of Appeals, dated 4 April 2006, in CA-G.R. SP No. 78981, affirming the Orders, dated 4
November 2002 and 20 June 2003, of the Regional Trial Court of Mandaluyong City, Branch 212, in
Civil Case No. MC99-605, is hereby REVERSED AND SET ASIDE. Respondent’s Amended Complaint in
Civil Case No. MC99-605 as against the petitioner is hereby ordered DISMISSED, and all the
proceedings against petitioner in the court a quo by virtue thereof are hereby DECLARED NULL AND
VOID. The Regional Trial Court of Mandaluyong City, Branch 212, is DIRECTED to proceed without
further delay with the resolution of respondent’s Complaint in Civil Case No. MC99-605 as to
defendant PEIP, as well as petitioner’s counterclaim. No costs.
CIVPRO – RULE 14 – SUMMONS – VOLUNTARY APPEARANCE
G.R. No. 73531. April 6, 1993.
DOLORES DELOS SANTOS, NICOLAS DELOS SANTOS and RICARDO DELOS SANTOS, petitioners,
vs.
HON. JUDGE CAMILO MONTESA, JR. and JUANA DELOS SANTOS, respondents.
SYLLABUS
1. REMEDIAL LAW CIVIL PROCEDURE; SUMMONS; DEFENDANT'S VOLUNTARY APPEARANCE IN THE
ACTION EQUIVALENT TO SERVICE OF SUMMONS; CASE AT BAR. — At first blush, it would appear
that the recourse pursued by petitioners could elicit a favorable response from us in as much as the
proof of service of the summons upon petitioners does not indicate impossibility of personal service,
a condition precedent for resorting to substituted service. Even then, and assuming in gratia
argumenti that the statutory norms on service of summons have not been strictly complied with,
still, any defect in form and in the manner of effecting service thereof were nonetheless erased
when petitioners' counsel moved to re-examine the impugned decision and posed a subsequent bid
on appeal to impede immediate execution (Boticano vs. Chu. Jr., 145 SCRA 541 [1987]); 1 Regalado,
Remedial Law Compendium, 1988 Fifth Rev. Ed., p. 136). Indeed, such demeanor is tantamount to
voluntary submission to the competencia of the court within the purview of Section 23, Rule 14 of
the Revised Rules of Court since any mode of appearance in court by a defendant or his lawyer is
equivalent to service of summons, absent any indication that the appearance of counsel for
petitioner was precisely to protest the jurisdiction of the court over the person of defendant
(Carballo vs. Encarnacion, 49 O.G. 1383; 1 Regalado, supra, p. 144; Flores vs. Zurbito, 37 Phil. 746
[1918]; 1 Martin, Rules of Court in the Philippines, 1989 Rev. Ed., p. 473 Sison, et al. vs. Gonzales,
50 O.G. 4756; 1 Moran, Comments on the Rules of Court, 1970 Ed., p. 467). Neither can We treat
the motion for reconsideration directed against the unfavorable disposition as a special appearance
founded on the sole challenge on invalid service of summons since the application therefor raised
another ground on failure to state a cause of action when conciliation proceedings at the barangay
level were allegedly bypassed, nay, disregarded (Republic vs. Ker and Co., Ltd., 64 O.G. 3761;
Regalado, supra, p. 152).
2. ID APPEAL; ONLY QUESTIONS OF LAW MAY BE RAISED IN PETITION FOR REVIEW ON CERTIORARI
UNDER RULE 45; CASE AT BAR The fact that petitioners are supposedly occupying a parcel of land
other than the realty claimed by private respondent deserves scant consideration since a
clarification on a factual query of this nature is proscribed by the second paragraph, Section 2 of
Rule 45 of the Revised Rules of Court. Verily, counsel for petitioners' assertion in the notice of appeal
filed with respondent judge that the grievance to be elevated to this Court will focus "fully on a
question of law" (p. 32 Rollo) is a self-defeating posture and operates as a legal bar for us to dwell
into the truth or falsehood of such factual premise (Article 1431, New Civil Code; Section 4, Rule
129; Section 2(a), Rule 131, Revised Rules on Evidence).
3. ID; JUDGMENT; EXECUTION PENDING APPEAL; PREVAILING PARTY MOVING FOR EXECUTION
PENDING APPEAL OBLIGED TO SERVE COPY OF MOTION ON ADVERSE PARTY'S COUNSEL. —
Petitioners argue next that execution pending appeal was ordered without any prior notice to them
(p. 3, Petition; p. 7, Rollo). This notion is also devoid of substance since it erroneously suggests that
the court is duty-bound to notify petitioners of the immediate enforcement of the appealed
decision. A contrario, it is the prevailing party moving for execution pending appeal under Section
2, Rule 39 of the Revised Rules of Court who is obliged to serve a copy of such motion on the adverse
party's counsel, which, on the face of the subject motion, was effected by personal delivery (p. 23,
Rollo; Lao vs. Mencias, 21 SCRA 1021 [1967]; 2 Martin, Rules of Court in the Philippines, 1973 Ed.,
p. 288).
DECISION
MELO, J p:
In the suit for desahucio initiated below by herein private respondent against petitioners, the court
of origin ordered petitioners to vacate the lot in question to pay P5,000.00 per year as reasonable
rental from 1985 until possession is surrendered, and to pay P1,000.00 as attorney's fees and the
costs of the suit (pp. 37-38, Rollo). Upon appeal, Branch XIX of the Regional Trial Court of the Third
Judicial Region stationed in Malolos and presided over by herein respondent judge, granted private
respondents motion for execution pending appeal on account of petitioners' failure to post a
supersedeas bond (p. 21, Rollo). To set aside the proceedings below, the petition at hand was
instituted anchored on the supposition that petitioners were deprived of their day in court.
Petitioners' mental distress started when private respondent, who supposedly owns Lot 39 of the
Cadastral survey of Bustos with an area of 5,358 square meters covered by Original Certificate of
Title No. U-7924 a portion of which petitioners entered and occupied, lodged the complaint geared
towards petitioners' eviction. Summons was served through the mother of petitioners when the
process server was unable to locate Dolores, Nicolas, and Ricardo delos Santos in Talampas, Bustos,
Bulacan. For failure of petitioners to submit the corresponding answer, judgment was rendered
pursuant to the rules on summary procedure (pp. 2-3, Decision; pp. 37-38, Rollo).
Upon learning of said decision, petitioners sought to reconsider on the principal thesis that they
were never served notice of the conciliation meeting at the barangay level, as well as the summons.
They insist that private respondent was referring to a different piece of realty because petitioners
actually occupied Lot No. 3568 owned by Nicolas delos Santos under Original Certificate of Title No.
F-10418. Moreover, petitioners advanced the proposition that Dolores' husband should have been
impleaded. All of these arguments were to no avail. As indicated earlier, execution pending appeal
was ordered due to petitioners' failure to post a supersedeas bond.
To stave off the impending eviction of petitioners, this Court issued a restraining order on April 28,
1986 directed against the reviewing authority and private respondent until further orders (p. 52,
Rollo).
At first blush, it would appear that the recourse pursued by petitioners could elicit a favorable
response from us in as much as the proof of service of the summons upon petitioners does not
indicate impossibility of personal service, a condition precedent for resorting to substituted service.
Even then, and assuming in gratia argumenti that the statutory norms on service of summons have
not been strictly complied with, still, any defect in form and in the manner of effecting service
thereof were nonetheless erased when petitioners' counsel moved to re-examine the impugned
decision and posed a subsequent bid on appeal to impede immediate execution (Boticano vs. Chu.
Jr., 145 SCRA 541 [1987]); 1 Regalado, Remedial Law Compendium, 1988 Fifth Rev. Ed., p. 136).
Indeed, such demeanor is tantamount to voluntary submission to the competencia of the court
within the purview of Section 23, Rule 14 of the Revised Rules of Court since any mode of
appearance in court by a defendant or his lawyer is equivalent to service of summons, absent any
indication that the appearance of counsel for petitioner was precisely to protest the jurisdiction of
the court over the person of defendant (Carballo vs. Encarnacion, 49 O.G. 1383; 1 Regalado, supra,
p. 144; Flores vs. Zurbito, 37 Phil. 746 [1918]; 1 Martin, Rules of Court in the Philippines, 1989 Rev.
Ed., p. 473 Sison, et al. vs. Gonzales, 50 O.G. 4756; 1 Moran, Comments on the Rules of Court, 1970
Ed., p. 467).

Neither can We treat the motion for reconsideration directed against the unfavorable disposition
as a special appearance founded on the sole challenge on invalid service of summons since the
application therefor raised another ground on failure to state a cause of action when conciliation
proceedings at the barangay level were allegedly bypassed, nay, disregarded (Republic vs. Ker and
Co., Ltd., 64 O.G. 3761; Regalado, supra, p. 152).

The fact that petitioners are supposedly occupying a parcel of land other than the realty claimed by
private respondent deserves scant consideration since a clarification on a factual query of this
nature is proscribed by the second paragraph, Section 2 of Rule 45 of the Revised Rules of Court.
Verily, counsel for petitioners' assertion in the notice of appeal filed with respondent judge that the
grievance to be elevated to this Court will focus "fully on a question of law" (p. 32 Rollo) is a self-
defeating posture and operates as a legal bar for us to dwell into the truth or falsehood of such
factual premise (Article 1431, New Civil Code; Section 4, Rule 129; Section 2(a), Rule 131, Revised
Rules on Evidence).

Petitioners argue next that execution pending appeal was ordered without any prior notice to them
(p. 3, Petition; p. 7, Rollo). This notion is also devoid of substance since it erroneously suggests that
the court is duty-bound to notify petitioners of the immediate enforcement of the appealed .appeal
under Section 2, Rule 39 of the Revised Rules of Court who is obliged to serve a copy of such motion
on the adverse party's counsel, which, on the face of the subject motion, was effected by personal
delivery (p. 23, Rollo; Lao vs. Mencias, 21 SCRA 1021 [1967]; 2 Martin, Rules of Court in the
Philippines, 1973 Ed., p. 288).

In fine, petitioners may not press the idea that they were deprived of their day in court amidst the
implicit forms of waiver performed by their lawyer in submitting every conceivable defense for
petitioners via the two motions for reconsideration below.

WHEREFORE, the petition is hereby DISMISSED for lack of merit and the restraining order issued on
April 28, 1986 LIFTED.

SO ORDERED.
CIVPRO – RULE 14 – SUMMONS – VOLUNTARY APPEARANCE
G.R. No. 163287 April 27, 2007
ORION SECURITY CORPORATION, Petitioner,
vs.
KALFAM ENTERPRISES, INC., Respondent.
RESOLUTION
QUISUMBING, J.:
For review on certiorari are the Decision1 dated February 17, 2004 and Resolution2 dated April 22,
2004 of the Court of Appeals in CA-G.R. CV No. 70565, which reversed the Decision3 dated March
15, 2000 of the Regional Trial Court of Quezon City, Branch 215, in Civil Case No. Q-97-32024.
The facts, borne by the records, are as follows:
Petitioner Orion Security Corporation is a domestic private corporation engaged in the business of
providing security services. One of its clients is respondent Kalfam Enterprises, Inc.
Respondent was not able to pay petitioner for services rendered. Petitioner thus filed a complaint4
against respondent for collection of sum of money. The sheriff tried to serve the summons and a
copy of the complaint on the secretary of respondent’s manager. However, respondent’s
representatives allegedly refused to acknowledge their receipt. The summons and the copy of the
complaint were left at respondent’s office.5
When respondent failed to file an Answer, petitioner filed a motion to declare respondent in
default.6 The trial court, however, denied the motion on the ground that there was no proper
service of summons on respondent.7
Petitioner then filed a motion for alias summons, which the trial court granted.8 The process server
again left the summons and a copy of the complaint at respondent’s office through respondent’s
security guard, who allegedly refused to acknowledge their receipt.9
Again, respondent failed to file an Answer. On motion10 of petitioner, respondent was declared in
default.11 Thereafter, petitioner was allowed to adduce evidence ex parte.
Respondent filed a motion for reconsideration12 of the resolution declaring it in default. Respondent
alleged the trial court did not acquire jurisdiction over its person due to invalid service of summons.
The trial court denied the motion for reconsideration.13
On March 15, 2000, the trial court rendered a default judgment, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Orion Security Corporation and
against defendant Kalfam Enterprises, Inc., ordering said defendant to pay plaintiff the amounts as
follows:
a) FIVE HUNDRED THIRTEEN THOUSAND EIGHT HUNDRED THIRTY NINE PESOS AND TWENTY SIX
CENTAVOS (₱513,839.26), Philippine Currency, as the total amount of the balance due to the
plaintiff, plus interest thereon at the rate of twelve percent (12%) per annum, computed from
August 29, 1997, the date of the filing of this case until said obligation is fully paid;
b) FIFTY ONE THOUSAND THREE HUNDRED EIGHTY THREE PESOS AND NINETY TWO CENTAVOS
(₱51,383.92), Philippine Currency, which is ten percent (10%) of the outstanding obligation, as
attorney’s fees;
c) FIVE THOUSAND PESOS (₱5,000.00), Philippine Currency, as litigation expenses; and THREE
THOUSAND FIVE HUNDRED SIXTY THREE PESOS AND TWENTY FIVE CENTAVOS (₱3,563.25) for the
costs of suit.
SO ORDERED.14
On appeal, the Court of Appeals held that summons was not validly served on respondent,
decreeing thus:
WHEREFORE, in view of the foregoing, the appealed decision is REVERSED and SET ASIDE. The case
is hereby REMANDED to the trial court for further proceedings upon valid service of summons to
the parties concerned.
SO ORDERED.15
Petitioner’s motion for reconsideration of the Court of Appeals’ decision was denied. Hence, the
instant petition raising the following as issues:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS’ DECISION DATED FEBRUARY 17, 2004
AND ITS RESOLUTION DATED APRIL 22, 2004 ARE NULL AND VOID FOR FAILURE TO COMPLY WITH
SEC. 14, ART. VIII OF THE 1987 CONSTITUTION;
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT
THE TRIAL COURT HAS IN FACT ACQUIRED JURISDICTION OVER THE PERSON OF THE RESPONDENT
DUE TO THE LATTER’S VOLUNTARY APPEARANCE IN THE PROCEEDINGS THEREIN;
III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING
THAT THE SUBSTITUTED SERVICE OF SUMMONS EFFECTED UPON THE SECURITY GUARD OF THE
RESPONDENT SHOULD BE DEEMED SUBSTANTIAL COMPLIANCE WITH THE RULE ON SERVICE OF
SUMMONS, IN VIEW OF THE EXCEPTIONAL CIRCUMSTANCES ATTENDANT IN THE PRESENT CASE. 16
Simply put, the sole issue is whether the trial court acquired jurisdiction over respondent either by
(1) valid substituted service of summons on respondent; or (2) respondent’s voluntary appearance
in the trial court and submission to its authority.
Petitioner contends that the Court of Appeals completely brushed aside respondent’s voluntary
appearance in the proceedings of the trial court. According to petitioner, the trial court acquired
jurisdiction over respondent due to the latter’s voluntary appearance in the proceedings before the
said court. Petitioner insists substituted service of summons on respondent’s security guard is
substantial compliance with the rule on service of summons, in view of the exceptional
circumstances in the present case.
Respondent, however, counters that the special appearance of its counsel does not constitute
voluntary appearance. Respondent maintains that its filing of an opposition to petitioner’s motion
to declare respondent in default and other subsequent pleadings questioning the trial court’s
jurisdiction over it does not amount to voluntary appearance. Respondent stresses it was not
properly served with summons via substituted service since the security guard on whom it was
purportedly served was not the competent person contemplated by Section 7, Rule 14 of the Rules
of Court.
We find the petition without merit.
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint. On the other hand,
jurisdiction over the defendants in a civil case is acquired either through the service of summons
upon them or through their voluntary appearance in court and their submission to its authority.17
jurisdiction of said court based on the ground of invalid service of summons is not deemed to have
submitted himself to the jurisdiction of the court.19 In this case, records show that respondent, in
its special appearance, precisely questioned the jurisdiction of the trial court on the ground of
invalid service of summons. Thus, it cannot be deemed to have submitted to said court’s authority.
Since the trial court never acquired jurisdiction over respondent, either by valid substituted service
of summons or by respondent’s voluntary appearance in court and submission to its authority,
respondent cannot be bound by the trial court’s judgment ordering it to pay petitioner a sum of
money.
WHEREFORE, the petition is DENIED. The assailed Decision dated February 17, 2004 and Resolution
dated April 22, 2004 of the Court of Appeals in CA-G.R. CV No. 70565 are AFFIRMED. Let the case
be REMANDED to the trial court for further proceedings upon valid service of summons to
respondent.
No pronouncement as to costs.

In case of domestic private juridical entities such as respondent in the instant case, Section 11 of SO ORDERED.
Rule 14 states:

SEC. 11. Service upon domestic private juridical entity. – When the defendant is a corporation,
partnership or association organized under the laws of the Philippines with a juridical personality,
service may be made on the president, managing partner, general manager, corporate secretary,
treasurer, or in-house counsel.

As a rule, summons should be personally served on the defendant. It is only when summons cannot
be served personally within a reasonable period of time that substituted service may be resorted
to. In this connection, Section 7 of Rule 14 provides:

SEC. 7. Substituted service. – If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving copies
of the summons at the defendant’s residence with some person of suitable age and discretion then
residing therein, or (b) by leaving the copies at defendant’s office or regular place of business with
some competent person in charge thereof.

In this case, records show that respondent’s president, managing partner, general manager,
corporate secretary, treasurer, or in-house counsel never received the summons against
respondent, either in person or by substituted service.

Note that in case of substituted service, there should be a report indicating that the person who
received the summons in the defendant’s behalf was one with whom the defendant had a relation
of confidence ensuring that the latter would actually receive the summons.18 Here, petitioner failed
to show that the security guard who received the summons in respondent’s behalf shared such
relation of confidence that respondent would surely receive the summons. Hence, we are unable
to accept petitioner’s contention that service on the security guard constituted substantial
compliance with the requirements of substituted service.

Neither did the trial court acquire jurisdiction over respondent by the latter’s voluntary appearance
in court proceedings. Note that a party who makes a special appearance in court challenging the
CIVPRO – RULE 15 – MOTIONS – WHERE ADVERSE PARTY HAD OPPORTUNITY TO OPPOSE
G.R. No. L-21905 March 31, 1966
EUFRONIO J. LLANTO, petitioner-appellant,
vs.
MOHAMAD ALI DIMAPORO, Provincial Governor of Lanao del Norte;
PROVINCIAL BOARD OF LANAO DEL NORTE; VALERIO V. ROVIRA, Vice-Governor;
BIENVENIDO L. PADILLA, Member; FELIXBERTO ABELLANOSA, Member; PROVINCE OF LANAO
DEL NORTE; PROVINCIAL AUDITOR OF LANAO DEL NORTE; PROVINCIAL TREASURER OF LANAO
DEL NORTE, and PROVINCIAL ASSESSOR OF LANAO DEL NORTE, respondents-appellees.
SANCHEZ, J.:
Resolution No. 7, Series of 1960, adopted by the Provincial Board of Lanao del Norte on January 6,
1960, reverted the 1960-1961 salary appropriation for the position of Assistant Provincial Assessor
to the general fund. In effect, that position then held by petitioner was abolished. Appeals to the
Commissioner of Civil Service, the Secretary of Finance, the Secretary of Justice, the Auditor General
and the President of the Philippines were of no avail. Petitioner came to court on mandamus. He
sought, (a) the annulment of the resolution aforesaid, (b) the restoration of the salary
appropriation; (c) his reinstatement, and (d) payment of back salaries and damages.
Respondents moved to dismiss. Ground therefor is lack of cause of action. The Court below granted
the motion, dismissed the petition. The motion to reconsider failed. Offshoot is this appeal.
1. The threshold, questions are these: Was the dismissal order issued "without any hearing on the
motion to dismiss"? Is it void?
We go to the record. The motion to dismiss was filed on February 1, 1961 and set for hearing on
February, 10 following. On February 8, 1961 petitioner's counsel telegraphed the court, "Request
postponement motion dismissal till written opposition filed." He did not appear at the scheduled
hearing. But on March 4, 1961 he followed up his wire, with his written opposition to the motion to
dismiss. Adverting to the 5-page motion to dismiss and the 6-page opposition thereto, we find that
the arguments pro and con on the question of the board's power to abolish petitioner's position
minutely discussed the problem and profusely cited authorities. The May 15, 1961, 8-page court
order recited at length the said arguments and concluded that petitioner made no case.
One good reason for the statutory requirement of hearing on a motion as to enable the suitors to
adduce evidence in support of their opposing claims.1 But here the motion to dismiss is grounded
on lack of cause of action. Existence of a cause of action or lack of it is determined by a reference to
the facts averred in the challenged pleading. The question raised in the motion is purely one of law.
This legal issue was fully discussed in said motion and the opposition thereto. In this posture, oral
arguments on the motion are reduced to an unnecessary ceremony and should be overlooked. 2
And, correctly so, because the other intendment of the law in requiring hearing on a motion, i.e.,
"to avoid surprise upon the opposite party and to give to the latter time to study and meet the
arguments of the motion",3 has been sufficiently met. And then, courts do not exalt form over
substance.
Besides, there is respondents' vehement claim that the motion to dismiss (originally set for February
10) has been actually reset for hearing for March 23, 1961, at 8:30 o'clock a.m.; that then there was
no appearance on petitioner's behalf, but that respondents' attorneys appeared. Of course,
petitioner now disputes this fact. But nothing extent in the record would support his position. On
the contrary, his telegram of February 8 induces rational belief that all he wanted was to be given
an opportunity to meet argument with argument by means of his "written opposition". He filed that
opposition. And more. Adversely affected by the court's order, he sought reconsideration thereof.
In that motion to reconsider he squarely brought to the court's attention his present averment that
"no hearing was conducted on the motion to dismiss". The gravity of this charge notwithstanding,
the same Judge shunted aside petitioner's contention with the statement that his motion is "not
(being) meritorious". Implicit in this pronouncement is that there was such a second hearing and
petitioner was there given an opportunity to argue his case. It is in this backdrop that we hew to the
line drawn in the Ongsiako decision4 that "it is presumed that the proceeding was regular and that
all the steps required by law to be taken before the court could validly act thereon, had been so
taken". The quantum of proof required to overcome this presumption is reflected in a passage in
another case,5 thus: in the absence of a clear showing to the contrary, the regularity of the court
proceedings" is to be upheld. Petitioner offered no showing, let alone a clear showing, of
irregularity.
More to this. Even conceding for present purposes that there was no previous notice of hearing of
the motion to dismiss before the court ruled (May 15, 1961) on the same adversely to petition, still
this alleged defect was fully cured by his motion for reconsideration aforesaid (filed June 24, 1961),
which was overruled. By the standard in De Borja, et al. vs. Tan, etc., et al., 93 Phil. 167, 171, "the
interested parties were given their day in court, and the previous objection of lack of notice or
opportunity to be heard fully met". As the De Borja decision points out, what the law prohibits "is
not the absence of previous notice, but the absolute absence thereof and lack of opportunity to be
heard."6
2. The critical inquiry is whether or not the mandamus petition was correctly dismissed on the
ground of lack of cause of action. The job of assistant provincial assessor is a creation of the
provincial board. Petitioner concedes that, in the law of public administration, the power to create
normally implies the power to abolish.7 The thrust of his argument, however, is that the power to
abolish is not absolute; it is subject to the limitations that it be exercised (a) in good faith, (b)
personal or political reasons, and (c) not in violation of Civil Service Law. He cites the Briones case. 8
There, the reasons given for the abolition of the positions of petitioners therein, namely, "economy
and efficiency", were found to be transparent and unimpressive and to constitute a mere subterfuge
for the removal without cause of the said appellees, in violation of the security of Civil Service
tenures as provided by the Constitution." And this, because in said case it was shown that the
abolition of the 32 positions in the city mayor's office and the office of the municipal board was
preceded by the creation of 35 positions in the city mayor's office, calling for an annual outlay of
P68,100.00.
Here, the case has not gone beyond the pleadings stage; there is no trial on the merits. And, taking
the averments of the petition herein as bases, the Briones decision is not properly to he read as
controlling. For, the wholesale creation and abolition of offices in almost the same breath there, are
not here obtaining. Differences in factual background generate differences in legal
consideration.1äwphï1.ñët
Let us now take the petition on its face value. Paragraph VIII thereof avers that "with intent of
circumventing the constitutional prohibition that 'no officer or employee in the civil service shall be
removed or suspended except for cause as provided by law"', respondents "maliciously and illegally 4. By section 3, Rule 65 of the Rules of Court, mandamus will issue if the performance of an act is
for the purpose of political persecution and political vengeance, reverted the fund of the salary item one "which the law specifically enjoins as a duty resulting from an office, trust or station".
... and furthermore eliminated or abolished the said position effective July 1, 1960". This statement Mandamus compels performance of a ministerial duty. That duty must be clear and specific. But
by itself submits no justiciable controversy for the court's determination; it is not an allegation of mandamus is not meant to control or review the normal exercise of judgment or discretion. 18 which
ultimate facts; it is a mere conclusion of law unsupported by factual premise. Some such averments is the case here. The respondent board, therefore, cannot be compelled to restore petitioner's item
as that "defendant usurped the office of Senator of the Philippines";9 or that defendant had incurred in the budget.
damages as a consequence of the "malicious and unjustified" institution of the action, 10 have
heretofore been stricken down by this Court as nothing more than mere conclusions of law. 11 The order appealed from is not legally infirm. We accordingly vote to affirm the same. Costs against
appellant. So ordered.
Finally as against the allegation of malicious and illegal abolition of petitioner's position, we have
the presumption of good faith. 12 Not that this presumption stands alone. There is the other
presumption that official duty had been regularly performed by the members of the provincial
board. 13 And the facts set forth in resolution No. 7, lend stout support to these two precepts, viz:
There was a huge deficit of P60,330.60; the position of assistant provincial assessor which is not
required to be created by the Administrative Code l4 — could be dispensed with and performed by
others. 15

It results that petitioner's case is not within the coverage of the exceptions to the general rule that
the provincial board's power to create normally carries with it the power to eliminate. And,
petitioner has no cause for complaint.

3. Petitioner also advances the theory that the provincial board resolution abolishing his position is
not effective, because it did not bear the stamp of approval of the Secretary of Finance, citing
Republic Act No. 1062. The necessity for such approval, however, was done away with by the
passage of Republic Act No. 2264, otherwise known as the Local Autonomy Act. Section 3(a) of the
Local Autonomy Act gives the provincial board the power to appropriate money having in view the
general welfare of the province and its inhabitants. Concomitant to this express power is the implied
power to withdraw unexpended money already appropriated.

We observe that the sole authority given by the Autonomy Act to the Secretary of Finance is to
review provincial and city budgets and city and municipal tax ordinances. 16 Nothing therein
contained requires his approval for the abolition of positions in the provincial or city or municipal
governments. We do not even discern in the law a purpose to require such approval. For the
language is restrictive. 17 We are not prepared to take imperishable liberties with and recast said
law. Such is not within the scope of the powers entrusted to courts of justice.

On top of all of these is the fact that section 12 of the Local Autonomy Act leaves us with but one
guidepost in the interpretation of powers allocated to local governments, thus:

Sec. 12. Rules for the interpretation of the Local Autonomy Act. —

1. Implied power of a province, a city or municipality shall be liberally construed in its favor. Any
fair and reasonable doubt as to the existence of the power should be interpreted in favor of the
local government and it shall be presumed to exist.

Autonomy is the underlying rationale of the Local Autonomy Act. By the statute itself no
interpretation thereof should be indulged in which would cripple the board's powers. This legal
yardstick stops us, too, from writing into the statute the Finance Secretary's approval as a condition
precedent to effectivity of the resolution herein questioned.
CIVPRO – RULE 15 – MOTIONS – WHERE ADVERSE PARTY HAD OPPORTUNITY TO OPPOSE
G.R. Nos. 121662-64 July 6, 1999
VLASON ENTERPRISES CORPORATION, petitioner,
vs.
COURT OF APPEALS and DURAPROOF SERVICES, represented by its General Manager, Cesar
Urbino Sr., respondents.
PANGANIBAN, J.:
Summons to a domestic or resident corporation should be served on officers, agents or employees,
who are responsible enough to warrant the presumption that they will transmit to the corporation
notice of the filing of the action against it. Rules on the service of motions should be liberally
construed in order to promote the ends of substantial justice. A rigid application that will result in
the manifest injustice should be avoided. A default judgment against several defendants cannot
affect the rights of one who was never declared in default. In any event, such judgment cannot
include award not prayed for in the complaint, even if proven ex parte.
The Case
These principles were used by this Court in resolving this Petition for Review on Certiorari before
us, assailing the July 19, 1993 Decision 1 and the August 15 Resolution 2 promulgated by the Court
of Appeals. The assailed Decision disposed as follows: 3
ACCORDINGLY, in view of the foregoing disquisitions, all the three (3) consolidated petitions for
certiorari are hereby GRANTED.
THE assailed Order of respondent Judge Arsenio Gonong of the Regional Trial Court of Manila,
Branch 8, dated April 5, 1991, in the first petition for certiorari (CA-G.R. SP No. 24669); the assailed
Order of Judge Bernardo Pardo, Executive Judge of the Regional Trial Court of Manila, Branch 8,
dated July 6, 1992, in the second petition for certiorari (CA-G.R. SP No. 28387); and finally, the
assailed order or Resolution en banc of the respondent Court of Tax Appeals Judges Ernesto
Acosta, Ramon de Veyra and Manuel Gruba, under date of October 5, 1992, in the third petition
for certiorari (CA-G.R. SP No. 29317) are all hereby NULLIFIED and SET ASIDE thereby giving way
to the entire decision dated February 18, 1991 of the respondent Regional Trial Court of Manila,
Branch 8, in Civil Case No. 89-51451 which remains valid, final and executory, if not yet wholly
executed.
THE writ of preliminary injunction heretofore issued by this Court on March 6, 1992 and
reiterated on July 22, 1992 and this date against the named respondents specified in the
dispositive portion of the judgment of the respondent Regional Trial Court of Manila, Branch 8 in
the first petition for certiorari, which remains valid, existing and enforceable, is hereby MADE
PERMANENT without prejudice (1) to the [private respondent's] remaining unpaid obligations to
the herein party-intervenor in accordance with the Compromise Agreement or in connection with
the decision of the respondent lower court in CA-G.R. SP No. 24669 and (2) to the government,
in relation to the forthcoming decision of the respondent Court of Tax Appeals on the amount of
taxes, charges, assessments or obligations that are due, as totally secured and fully guaranteed
payment by the [private respondent's] bond, subject to the relevant rulings of the Department
of Finance and other prevailing laws and jurisprudence.
The assailed Resolution ruled:
ACCORDINGLY, in the light of the foregoing disquisitions, as well as considering these
clarifications, the three (3) motions aforementioned are hereby DENIED.
The Facts
Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of
Honduras & Panama, a Panamanian company, (hereafter referred to as Omega), requested
permission for its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it
at the Philippine Ports Authority (PPA) compound in San Fernando, La Union while awaiting
transshipment to Hongkong. The request was approved by the Bureau of Customs. 4 Despite the
approval, the customs personnel boarded the vessel when it docked on January 7, 1989, on
suspicion that it was the hijacked M/V Silver Med owned by Med Line Philippines Co., and that its
cargo would be smuggled into the country. 5 The district customs collector seized said vessel and its
cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of SFLU Seizure
Identification No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its
shipper, Dusit International Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran
aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio,
entered into a salvage agreement with private respondent to secure and repair the vessel at the
agreed consideration of $1 million and "fifty percent (50%) [of] the cargo after all expenses, cost
and taxes." 6
Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted the
warrant of seizure on July 16, 1989. 7 However, in a Second Indorsement dated November 11, 1989,
then Customs Commissioner Salvador M. Mison declined to issue a clearance for Quiray's Decision;
instead, he forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff and
Customs Code. 8 Accordingly, acting District Collector of Customs John S. Sy issued a Decision
decreeing the forfeiture and the sale of the cargo in favor of the government.9
To enforce its preferred salvor's lien, herein Private Respondent Duraproof Services filed with the
Regional Trial Court of Manila a Petition for Certiorari, Prohibition and Mandamus 10 assailing the
actions of Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA
Representative Silverio Mangaoang and Med Line Philippines, Inc.
On January 10, 1989, private respondent amended its Petition 11 to include former District Collector
Quiray; PPA Port Manager Adolfo Ll. Amor Jr; Petitioner Vlason Enterprises as represented by its
president, Vicente Angliongto; Singkong Trading Company as represented by Atty. Eddie
Tamondong; Banco Du Brasil; Dusit International Co., Inc.; Thai-Nan Enterprises Ltd. and Thai-United
Trading Co., Ltd. 12 In both Petitions, private respondent plainly failed to include any allegation
pertaining to petitioner, or any prayer for relief against it.1âwphi1.nêt
Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line
Philippines: Angliongto (through his secretary, Betty Bebero), Atty. Tamondong and Commissioner
Mison. 13 Upon motion of the private respondent, the trial court allowed summons by publication
to be served upon the alien defendants who were not residents and had no direct representatives
in the country. 14
On January 29, 1990, private respondent moved to declare respondents in default, but the trial
court denied the motion in its February 23, 1990 Order, 15 because Mangaoang and Amor had jointly
filed a Motion to Dismiss, while Mison and Med Line had moved separately for an extension to file
a similar motion. 16 Later it rendered an Order dated July 2, 1990, giving due course to the motions
to dismiss filed by Mangaoang and Amor on the ground of litis pendentia, and by the commissioner
and district collector of customs on the ground of lack of jurisdiction. 17 In another Order, the trial
court dismissed the action against Med Line Philippines on the ground of litis pendentia. 18
On two other occasions, private respondent again moved to declare the following in default:
petitioner, Quiray, Sy and Mison on March 26, 1990; 19 and Banco Du Brazil, Dusit International Co.,
Inc., Thai-Nan Enterprises Ltd. and Thai-United Trading Co., Ltd. on August 24, 1990. 20 There is no
record, however, that the trial court acted upon the motions. On September 18, 1990, petitioner
filed another Motion for leave to amend the petition, 21 alleging that its counsel failed to include
the following "necessary and/or indispensable parties": Omega represented by Cadacio; and M/V
Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading these additional
respondents, private respondent also alleged in the Second (actually, third) Amended
Petition 22 that the owners of the vessel intended to transfer and alienate their rights and interests
over the vessel and its cargo, to the detriment of the private respondent.
The trial court granted leave to private respondent to amend its Petition, but only to exclude the
customs commissioner and the district collector. 23 Instead, private respondent filed the "Second
Amended Petition with Supplemental Petition" against Singkong Trading Company; and Omega and
M/V Star Ace, 24 to which Cadacio and Rada filed a Joint Answer. 25
Declared in default in an Order issued by the trial court on January 23, 1991, were the following:
Singkong Trading Co., Commissioner Mison, M/V Star Ace and Omega. 26 Private respondent filed,
and the trial court granted, an ex parte Motion to present evidence against the defaulting
respondents. 27 Only private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V
Star Ace appeared in the next pretrial hearing; thus, the trial court declared the other respondents
in default and allowed private respondent to present evidence against them. 28 Cesar Urbino,
general manager of private respondent, testified and adduced evidence against the other
respondents, including herein petitioner. As regards petitioner, he declared: "Vlason Enterprises
represented by Atty. Sy and Vicente Angliongto thru constant intimidation and harassment of
utilizing the PPA Management of San Fernando, La Union . . . further delayed, and [private
respondent] incurred heavy overhead expenses due to direct and incidental expenses . . . causing
irreparable damages of about P3,000,000 worth of ship tackles, rigs, and appurtenances including
radar antennas and apparatuses, which were taken surreptitiously by persons working for Vlason
Enterprises or its agents[.] 29
On December 29, 1990, private respondent and Rada, representing Omega, entered into a
Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the
demand for salvage fees of private respondent; and that if Rada did not receive any instruction from
his principal, he would assign the vessel in favor of the salvor. 30
On February 18, 1991, the trial court disposed as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence
adduced, both testimonial and documentary, the Court is convinced, that, indeed,
defendants/respondents are liable to [private respondent] in the amount as prayed for in the
petition for which it renders judgment as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel
and Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain
from alienating or transferring the vessel M/V Star Ace to any third parties;
2. Singkong Trading Company to pay the following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on . . . Form of Salvage
Agreement;
c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00;
d. Maintenance fees in the amount P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00
and unpaid salaries from January 1990 up to the present.
f. Attorney's fees in the amount of P656,000.00;
3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages;
4. Banco [Du] Brazil to pay [private respondent] in the amount of $300,000.00 in damages; and
finally,
5. Costs of [s]uit.
Subsequently, upon the motion of Omega, Singkong Trading Co. and private respondent, the trial
court approved a Compromise Agreement 31 among the movants, reducing by 20 percent the
amounts adjudged. For their part, respondents-movants agreed not to appeal the Decision. 32 On
March 8, 1991, private respondent moved for the execution of judgment, claiming that the trial
court Decision had already become final and executory. 33 The Motion was granted 34 and a Writ of
Execution was issued. 35 To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio
Camañgon were deputized on March 13, 1991 to levy and to sell on execution the defendant's vessel
and personal property.
On March 14, 1991, petitioner filed, by special appearance, a Motion for Reconsideration on the
grounds that it was allegedly not impleaded as a defendant, served summons or declared in default;
that private respondent was not authorized to present evidence against it in default; that the
judgment in default was fatally defective, because private respondent had not paid filing fees for
the award; and that private respondent had not prayed for such award. 36 Private respondent
opposed the Motion, arguing that it was a mere scrap of paper due to its defective notice of hearing.
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution,
and to quash the notice of levy and the sale on execution. 37 Despite this Motion, the auction sale
was conducted on March 21, 1991 by Sheriff Camañgon, with private respondent submitting the
winning
bid. 38 The trial court ordered the deputy sheriffs to cease and desist from implementing the Writ
of Execution and from levying on the personal property of the defendants. 39 Nevertheless, Sheriff
Camañgon issued the corresponding Certificate of Sale on March 27, 1991. 40
On April 12, 1991, 41 private respondent filed with the Court of Appeals (CA) a Petition for Certiorari
and Prohibition to nullify the cease and desist orders of the trial court. 42 Respondent Court issued
on April 26, 1991 a Resolution which reads: 43
MEANWHILE, in order to preserve the status quo and so as not to render the present petition
moot and academic, a TEMPORARY RESTRAINING ORDER is hereby ISSUED enjoining the
respondent Judge, the Honorable Arsenio M. Gonong, from enforcing and/or implementing the
Orders dated 22 March 1991 and 5 April 1991 which ordered respondent Sheriff to cease and
desist from implementing the writ of execution and the return thereof, the quashing of the levy
. . . on [the] execution [and sale] of the properties levied upon and sold at public auction by the
Sheriff, for reason of grave abuse of discretion and in excess of jurisdiction, until further orders
from this Court.
WITHIN ten (10) days from notice hereof, respondents [petitioner included] are also required to
SHOW CAUSE why the prayer for a writ of preliminary injunction should not be granted.
On May 8, 1991, petitioner received from Camañgon a notice to pay private respondent P3 million
to satisfy the trial court Decision. Not having any knowledge of the CA case to which it was not
impleaded, petitioner filed with the trial court a Motion to Dismiss ex abutandi ad cautelam on the
grounds that (1) the Petition of private respondent stated no cause of action against it, (2) the trial
court had no jurisdiction over the case, and (3) litis pendentia barred the suit.44
On May 10, 1991, Camañgon levied on petitioner's properties, which were scheduled for auction
later on May 16, 1991. Specific descriptions of the properties are as follows: 45
a) Motor Tugboat — "DEN DEN" ex Emerson-l.
Length: 35.67 ms. Breadth: 7.33 ms.
Depth: 3.15 ms Gross Tons: 205.71
Net tons: 67.48 ms Official Number: 213551
Material: Steel Class license: CWL
License No. 4424
b) Barge — "FC99" ex YD-153
Length: 34.15 ms. Breadth: 15.85 m.s.
Depth: 2.77 m.s. Gross Tons: 491.70
Net Tons: 491.70 Official Number: 227236
Material: Steel Class License: CWL
License No. 83-0012
c) Barge — "LAWIN" ex "Sea Lion 2".
Length: 66.92 ms. Breadth: 11.28 ms.
Depth: 4.52 m.s. Gross Tons: 1,029.56
Net Tons: 1,027/43 Official Number: 708069
Material: Steel Class License: Coastwise
License No. 81-0059
Petitioner also filed a special appearance before the CA. It prayed for the lifting of the levy on its
properties or, alternatively, for a temporary restraining order against their auction until its Motion
for Reconsideration was resolved by the trial court. 46
Acting on petitioner's Motion for Reconsideration, the trial court reversed its Decision of February
18, 1991, holding in its May 22, 1991 Resolution as follows: 47
. . . [T]hat . . . Motion for Reconsideration [of petitioner] was filed on March 14, 1991 (see: page
584, records, Vol. 2) indubitably showing that it was seasonably filed within the 15-day time-
frame. Therefore, . . . said default-judgment ha[d] not yet become final and executory when the
Writ of Execution was issued on March 13, 1991 . . . The rules [provide] that [the e]xecution shall
issue as a matter of right upon the expiration of the period of appeal from a judgment if no appeal
has been duly perfected (Sec. 1, R-39, RRC). That being the case, VEC has all the right to file as it
did . . . the aforementioned reconsideration motion calling [the] attention of the Court and
pointing therein its supposed error and its correction if, indeed, any [error was] committed. It is
in this light that this Court made an in-depth reflection and assessment of the premises or reasons
raised by [petitioner], and after a re-examination of the facts and evidence spread on the records,
it has come to the considered conclusion that the questioned default-judgment has been
improvidently issued. By the records, the claim of [private respondent] that his January 29, 1990
Ex-Parte Motion To Declare Defendants In Default (pp. 174-177, records, Vol. 1) including VEC
had been granted is belied by the February 23, 1990 Order (pp. 214-215, records, ibid) par. 2,
thereof, reading to wit:
By the foregoing, for reasons stated thereunder respectively, this Court, in the exercise of its
judicious discretion, in the sense that the rules should be liberally construed in order to
promote their object and to assist the parties, resolves to DENY petitioner's Motion to have
the Commissioner of Customs AND OTHER ENUMERATED RESPONDENTS DECLARED IN
DEFAULT. [Emphasis ours].
Not even [private respondent's] November 23, 1990 "Ex-Parte Motion To Present [Evidence]
Against Defaulting Defendants" (page 489, records, Vol. 2) [can] be deemed as a remedy of the
fact that there never was issued an order of default against respondents including [petitioner]
VEC. Having thus established that there [had] been no order of default against VEC as
contemplated by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13, Revised Rules of Court, there could
not have been any valid default-judgment rendered against it. The issuance of an order of default
is a condition sine qua non in order [that] a judgment by default be clothed with validity. Further,
records show that this Court never had authorized [private respondent] to adduce evidence ex-
parte against [petitioner] VEC. In sum, the February 18, 1991 decision by default is null and void
as against [petitioner] VEC. With this considered conclusion of nullity of said default judgment in
question, this Court feels there is no more need for it to resolve Arguments I-A & I-B, as well as
III-A & III-B, of the March 14, 1991 Motion for Reconsideration. The Court agrees, however, with
said discussions on the non-compliance [with] Sec. 2, Rule 7 (Title of Complaint) and Sec. I, Rule
 8 on the requirement of indicating in the complaint the ultimate facts on which the party pleading
relies for his claim of defense [--] which is absent in the January 9, Amended Petition (pp. 122-
141, records, Vol. I) [--] for it merely mentioned [petitioner] VEC in par. 5 thereof and no more. It
abides, likewise, with [Argument] III-B that the Decision in suit award[ed] amounts never asked
for in instant petition as regards VEC (Sec. 5, Rule 18, RRC). . . . .
WHEREFORE, in view of the foregoing consideration, and as prayed for, the February 18, 1991
Judgment by Default is hereby reconsidered and SET ASIDE.
On June 26, 1992, then Executive Judge Bernardo P. Pardo 48 of the Regional Trial Court of Manila
issued an Order 49 annulling the Sheriff's Report/Return dated April 1, 1991, and all proceedings
taken by Camañgon.
The CA granted private respondent's Motion to file a Supplemental Petition impleading petitioner
in CA-GR 24669. 50 In view of the rampant pilferage of the cargo deposited at the PPA compound,
private respondent obtained from the appellate court a Writ of Preliminary Injunction dated March
6, 1992. The Writ: reads: 51
ACCORDINGLY, in view of the foregoing disquisitions, the urgent verified motion for preliminary
injunction dated February 11, 1992 is hereby GRANTED. Therefore, let a writ of preliminary
injunction forthwith issue against the respondents and all persons or agents acting in their behalf,
enjoining them not to interfere in the transferring of the aforementioned vessel and its cargoes,
or in removing said cargoes . . . from [the] PPA compound.
On September 15, 1992, Sheriff Amado Sevilla seized petitioner's motor tugboat Den Den by virtue
of the Order 52 dated April 3, 1992, issued by the RTC of Manila, Branch 26. 53
On August 6, 1992, the CA consolidated CA-GR SP No. 28387 54 with CA-GR SP No. 24669. 55 The
Court of Tax Appeals issued on October 5, 1992, a Resolution in CTA Case Nos. 4492, 4494 and 4500,
which disposed as follows:
Confirming the order in open court on October 5, 1992, the Court hereby RESOLVES to:
1. Order Respondent Commissioner of Customs to assign or detail [a] sufficient number of
customs police and guards aboard, and around the vicinity of, the vessel "M/V Star Ace" now in
anchor at Mariveles, Bataan or elsewhere, in order to ensure its safety during the pendency of
these cases;
2. Direct him to assign personnel and/or representatives to conduct an inventory of part of the
vessel's cargo now in the possession of Mr. Cesar S. Urbino, Sr. at 197 Heroes del "96 Street,
Caloocan City, which inventory may be participated in by all the parties interested in said cargo."
To enjoin the CTA from enforcing said Order, private respondent filed before the Court of Appeals
another Petition for Certiorari, 56 which was later also consolidated with CA-GR SP No. 24669.
On July 19, 1993, the CA rendered the assailed Decision. Petitioner filed (1) a Motion for
Clarification, praying for a declaration that the trial court Decision against it was not valid; and (2) a
partial Motion for Reconsideration, seeking to set aside the assailed Decision insofar as the latter
affected it.
On July 5, 1995, the Court of Appeals issued the following Resolution: 57
Pending resolution of the motions for reconsideration, filed by Vlason Enterprises Corporation
and Banco [Du] Brazil, and considering [private respondent's] Motion for Entry of Judgment with
respect to respondent PPA having already been granted by this Court as far back as June 17, 1994,
pursuant to the resolution of the Supreme Court dated December 8, 1993 in G.R. No. 111270-72
(Philippine Ports Authority vs. Court of Appeals, et al.) informing the parties in the said case that
the judgment sought to be reviewed has now become final and executory, the lower court may
now take appropriate action on the urgent ex-parte motion for issuance a writ of execution, filed
by [private respondent] on July 15, 1994.
On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ of Possession which
resulted in private respondent taking possession of petitioner's barge Lawin (formerly Sea Lion 2)
on September 1, 1995. 58
Hence, this Petition. 59
Ruling of the Respondent Court
As already adverted to, Respondent Court granted the Petition for Certiorari of the private
respondent, which was consolidated with the latter's two other Petitions. The court a quo issued
the following rulings:
1. The trial court had jurisdiction over the salvor's claim or admiralty case pursuant to Batas
Pambansa Bilang 129.
2. Since the Decision of the trial court became final and executory, never having been disputed
or appealed to a higher court, the trial judge committed grave abuse of discretion in recalling the
Writ of Execution and in quashing the levy and the execution of the sale of M/V Star Ace and its
cargo.
2. Such acts constituted an alteration or a modification of a final and executory judgment and
could never be justified under law and jurisprudence.
3. Civil Case 59-51451 dealt only with the salvor's claim without passing upon the legality or the
validity of the undared Decision of the Commissioner of Customs in the seizure proceeding.
4. Petitioner and his co-respondents could not invoke the jurisdiction of a court to secure
affirmative relief against their opponent and, after failing to obtain such relief, question the
court's jurisdiction.
5. Petitioner had no recourse through any of the following judicially accepted means to question
the final judgment:
a. a petition for relief from judgment under Rule 38,
 b. a direct action to annul and enjoin the enforcement of the questioned judgment, and
c. a collateral attack against the questioned judgment which appears void on its face.
6. A court which has already acquired jurisdiction over a case cannot be ousted by a coequal
court; the res in this case — the vessel and its cargo— were placed under the control of the trial
court ahead of the CTA.
7. The admiralty Decision had attained finality while the issue of the validity of the seizure
proceedings was still under determination.
In the assailed Resolution, Respondent Court clarified that there was no need to serve summons
anew on petitioner, since it had been served summons when the Second Amended Petition (the
third) was filed; and that petitioner's Motion for Reconsideration was defective and void, because
it contained no notice of hearing addressed to the counsel of private respondent in violation of Rule
16, Section 4 of the Rules of Court.
To this second motion, [private respondent] contends that there was no need to serve summons
anew to VEC when the second amended petition was filed impleading VEC, pursuant to the ruling
of the Supreme Court in Asiatic Travel Corp. vs. CA (164 SCRA 623); and that finally, the decision
of the court a quo o[n] February 18, 1991 became final and executory, notwithstanding the timely
filing of the motion for reconsideration of VEC for the reason that the said motion for
reconsideration was defective or void, there being no notice of hearing addressed to the counsel
of petitioner. In fact, no motion such as this instant one can be acted upon by the Court without
proof of service of the notice thereof, pursuant to Rule 16, Section 4 of the Rules of Court.
xxx xxx xxx
Finally, we should never lose sight of the fact that the instant petition for certiorari is proper only
to correct errors of jurisdiction committed by the lower court, or grave abuse of discretion which
is tantamount to lack of jurisdiction Where the error is not one of jurisdiction but an error of law
or of fact which is a mistake of judgment, appeal is the remedy (Salas vs. Castro. 216 SCRA 198).
Here, respondents failed to appeal. Hence, the decision dated February 18, 1991 of the lower
court has long become final, executory and unappealable. We do not and cannot therefore review
the instant case as if it were on appeal and direct actions on these motions. While the proper
remedy is appeal, the action for certiorari will not be entertained. Indeed, certiorari is not a
substitute for lapsed appeal.
At any rate, the decision dated July 19, 1993 of this Court on the main petition for certiorari is not
yet final (except with respect to respondent PPA), the Bureau of Customs having filed a petition
for certiorari and prohibition, under Rule 65 of the Rules of Court, with the Supreme Court,
necessitating prudence on Our part to await its final verdict. 60
Assignment of Errors
Before us, petitioner submits the following assignment of errors on the part of Respondent Court:
61
I
The Court of Appeals committed serious error in ruling that the entire decision of the trial court
in Civil Case No. 89-51451 dated 18 February 1991 became final and executory because it "was
never disputed or appealed".
A VEC filed a motion for reconsideration of the said decision two days before deadline, which
motion was granted by the trial court.
B The trial court correctly granted VEC's motion for reconsideration and set aside the 18
February 1991 decision . . . against VEC, for:
1. The trial court never acquired jurisdiction over the person of VEC as to enable it to render
any judgment against it:
(i) VEC was not impleaded as a respondent in Civil Case No. 89- 51451;
(ii) Summons was not served on VEC;
2. The trial court improperly rendered judgment by default against VEC;
(i) The trial court never issued an order of default against VEC;
(ii) The trial court never authorized ex-parte presentation of evidence against VEC.
3. The Judgment by default was fatally defective because:
(i) No filing fee was paid by [private respondent) for the staggering amount of damages
awarded by the trial court.
(ii) The 18 February 1991 decision violates the Revised Rules of Court, which prescribe
that a judgment by default cannot decree a relief not prayed for.
II
Since the 18 February 1991 Decision in Civil Case No. 89-51451 is void as against VEC, the recall
of the writ of execution was valid, as far as VEC is concerned.
The Court believes that the issues can be simplified and restated as follows:
1. Has the February 18, 1991 RTC Decision become final and executory in regard to petitioner?
2. Did the trial court acquire jurisdiction over the petitioner?
3. Was the RTC default judgment binding on petitioner?
 4. Was the grant of damages against petitioner procedurally proper?
5. Was private respondent entitled to a writ of execution?
This Court's Ruling
The petition is meritorious.
First Issue: Finality of the RTC Decision
A judgment becomes "final and executory" by operation of law. Its finality becomes a fact when the
reglementary period to appeal lapses, and no appeal is perfected within such period. 62 The
admiralty case filed by private respondent with the trial court involved multiple defendants. This
being the case, it necessarily follows that the period of appeal of the February 18, 1991 RTC Decision
depended on the date a copy of the judgment was received by each of the defendants. Elsewise
stated, each defendant had a different period within which to appeal, depending on the date of
receipt of the Decision. 63
Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a compromise agreement with
private respondent. As to these defendants, the trial court Decision had become final, and a writ of
execution could be issued against them. 64 Doctrinally, a compromise agreement is immediately
final and executory. 65
Petitioner, however, is not in the same situation. Said Decision cannot be said to have attained
finality as to the petitioner, which a party to the compromise. Moreover, petitioner filed a timely
Motion for Reconsideration with the trial court, thirteen days after it received the Decision or two
days before the lapse of the reglementary period to appeal. 66 Thus, as to petitioner, the trial court
Decision had not attained finality.
Exception to the Rule
on Notice of Hearing
Respondent Court and private respondent argue that, although timely filed, petitioner's Motion for
Reconsideration was a mere scrap of paper, because (1) it did not contain a notice of hearing
addressed to the current counsel of private respondent, and (2) the notice of hearing addressed to
and served on private respondent's deceased counsel was not sufficient. Admittedly, this Motion
contained a notice of hearing sent to Atty. Jesus C. Concepcion who, according to private
respondent, had already died and had since been substituted by its new counsel, Atty. Domingo
Desierto. Therefore, the appellate court ruled that the said Motion did not toll the reglementary
period to appeal and that the trial court Decision became final.
This Court disagrees. Rule 15 of the Rules of Court states:
Sec. 4. Notice. — Notice of a motion shall be served by the applicant to all parties concerned, at
least three (3) days before the hearing thereof, together with a copy of the motion, and of any
affidavits and other papers accompanying it. The court, however, for good cause may hear a
motion on shorter notice, specially on matters which the court may dispose of on its own motion.
Sec. 5. Contents of notice. — The notice shall be directed to the parties concerned, and shall state
the time and place for the hearing of the motion. 67
Ideally, the foregoing Rule requires the petitioner to address and to serve on the counsel of private
respondent the notice of hearing of the Motion for Reconsideration. The case at bar, however, is
far from ideal. First, petitioner was not validly summoned and it did not participate in the trial of
the case in the lower court; thus, it was understandable that petitioner would not be familiar with
the parties and their counsels. Second, Atty. Desierto entered his appearance only as collaborating
counsel, 68 who is normally not entitled to notices even from this Court. Third, private respondent
made no manifestation on record that Atty. Concepcion was already dead. Besides, it was Atty.
Concepcion who signed the Amended Petition, wherein petitioner was first impleaded as
respondent and served a copy thereof. Naturally, petitioner's attention was focused on this
pleading, and it was within its rights to assume that the signatory to such pleading was the counsel
for private respondent.
The Court has consistently held that a motion which does not meet the requirements of Sections 4
and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper, which the clerk of
court has no right to receive and the trial court has no authority to act upon. Service of a copy of a
motion containing a notice of the time and the place of hearing of that motion is a mandatory
requirement, and the failure of movants to comply with these requirements renders their motions
fatally defective. 69 However, there are exceptions to the strict application of this rule. These
exceptions are as follows: 70
. . . Liberal construction of this rule has been allowed by this Court in cases (1) where a rigid
application will result in a manifest failure or miscarriage of justice; 71 especially if a party
successfully shows that the alleged defect in the questioned final and executory judgment is not
apparent on its face or from the recitals contained therein; (2) where the interest of substantial
justice will be served; 72 (3) where the resolution of the motion is addressed solely to the sound
and judicious discretion of the court; 73 and (4) where the injustice to the adverse party is not
commensurate [to] the degree of his thoughtlessness in not complying with the procedure
prescribed. 74
The present case falls under the first exception. Petitioner was not informed of any cause of action
or claim against it. All of a sudden, the vessels which petitioner used in its salvaging business were
levied upon and sold in execution to satisfy a supposed judgment against it. To allow this to happen
simply because of a lapse in fulfilling the notice requirement — which, as already said, was
satisfactorily explained — would be a manifest failure or miscarriage of justice.
A notice of hearing is conceptualized as an integral component of procedural due process intended
to afford the adverse parties a chance to be heard before a motion is resolved by the court. Through
such notice, the adverse party is permitted time to study and answer the arguments in the motion.
Circumstances in the case at bar show that private respondent was not denied procedural due
process, and that the very purpose of a notice of hearing had been served. On the day of the hearing,
Atty. Desierto did not object to the said Motion for lack of notice to him; in fact, he was furnished
in open court with a copy of the motion and was granted by the trial court thirty days to file his
opposition to it. These circumstances clearly justify a departure from the literal application of the
notice of hearing rule. 75 In other cases, after the trial court learns that a motion lacks such notice,
the prompt resetting of the hearing with due notice to all the parties is held to have cured the
defect. 76
Verily, the notice requirement is not a ritual to be followed blindly. Procedural due process is not
based solely on a mechanistic and literal application that renders any deviation inexorably fatal.
Instead, procedural rules are liberally construed to promote their objective and to assist in obtaining
a just, speedy and inexpensive determination of any action and proceeding. 77 For the foregoing
reasons, we believe that Respondent Court committed reversible error in holding that the Motion
for Reconsideration was a mere scrap of paper.
Second Issue: Jurisdiction Over Petitioner
Service of Summons
on a Corporation
The sheriff's return shows that Angliongto who was president of petitioner corporation, through his
secretary Betty Bebero, was served summons on January 18, 1990. 78 Petitioner claims that this
service was defective for two reasons: (1) Bebero was an employee of Vlasons Shipping, Inc., which
was an entity separate and distinct from Petitioner Vlason Enterprises Corporation (VEC); and (2)
the return pertained to the service of summons for the amended Petition, not for the "Second
Amended Petition with Supplemental Petition," the latter pleading having superseded the former.
A corporation may be served summons through its agents or officers who under the Rules are
designated to accept service of process. A summons addressed to a corporation and served on the
secretary of its president binds that corporation. 79 This is based on the rationale that service must
be made on a representative so integrated with the corporation sued, that it is safe to assume that
said representative had sufficient responsibility and discretion to realize the importance of the legal
papers served and to relay the same to the president or other responsible officer of the corporation
being sued. 80 The secretary of the president satisfies this criterion. This rule requires, however, that
the secretary should be an employee of the corporation sought to be summoned. Only in this
manner can there be an assurance that the secretary will "bring home to the corporation [the]
notice of the filing of the action" against it.
In the present case, Bebero was the secretary of Angliongto, who was president of both VSI and
petitioner, but she was an employee of VSI, not of petitioner. The piercing of the corporate veil
cannot be resorted to when serving summons. 81 Doctrinally, a corporation is a legal entity distinct
and separate from the members and stockholders who compose it. However, when the corporate
fiction is used as a means of perpetrating a fraud, evading an existing obligation, circumventing a
statute, achieving or perfecting a monopoly or, in generally perpetrating a crime, the veil will be
lifted to expose the individuals composing it. None of the foregoing exceptions has been shown to
exist in the present case. Quite the contrary, the piercing of the corporate veil in this case will result
in manifest injustice. This we cannot allow. Hence, the corporate fiction remains.
Effect of Amendment of
Pleading on Jurisdiction
Petitioner claims that the trial court did not acquire jurisdiction over it, because the former had not
been served summons anew for the Second Amended Petition or for the Second Amended Petition
with Supplemental Petition. In the records, it appears that only Atty. Tamondong, counsel for
Singkong Trading, was furnished a copy of the Second Amended Petition. 82 The corresponding
sheriff's return indicates that only Omega, M/V Star Ace and Capt. Rada were served summons and
copies of said Petition. 83
We disagree. Although it is well-settled that an amended pleading supersedes the original one,
which is thus deemed withdrawn and no longer considered part of the record, it does not follow
ipso facto that the service of a new summons for amended petitions or complaints is required.
Where the defendants have already appeared before the trial court by virtue of a summons on the
original complaint, the amended complaint may be served upon them without need of another
summons, even if new causes of action are alleged. 84 After it is acquired, a court's jurisdiction
continues until the case is finally terminated. Conversely, when defendants have not yet appeared
in court and no summons has been validly served, new summons for the amended complaint must
be served on them. 85 It is not the change of cause of action that gives rise to the need to serve
another summons for the amended complaint, but rather the acquisition of jurisdiction over the
persons of the defendants. If the trial court has not yet acquired jurisdiction over them, a new
service of summons for the amended complaint is required.1âwphi1.nêt
In this case, the trial court obviously labored under the erroneous impression that petitioner had
already been placed under its jurisdiction since it had been served summons through the secretary
of its president. Thus, it dispensed with the service on petitioner of new summons for the
subsequent amendments of the Petition. We have already ruled, however, that the first service of
summons on petitioner was invalid. Therefore, the trial court never acquired jurisdiction, and the
said court should have required a new service of summons for the amended Petitions.
Impleading a Party in the
Title of the Complaint
Petitioner further claims that the trial court failed to acquire jurisdiction to render judgment against
it because (1) the title of the three Petitions filed by private respondent never included petitioner
as a party-defendant, in violation of Rule 7; and (2) the Petitions failed to state any allegation of
ultimate facts constituting a cause of action against petitioner.
We disagree with petitioner on the first ground. The judicial attitude has always been favorable and
liberal in allowing amendments to pleadings. Pleadings shall be construed liberally so as to render
substantial justice to the parties and to determine speedily and inexpensively the actual merits of
the controversy with the least regard to technicalities. 86
The inclusion of the names of all the parties in the title of a complaint is a formal requirement under
Section 3, Rule 7. However, the rules of pleadings require courts to pierce the form and go into the
substance and not to be misled by a false or wrong name given to a pleading. The averments in the
complaint, not the title, controlling. Although the general rule requires the inclusion of the names
of all the parties in the title of a complaint, the non-inclusion of one or some of them is not fatal to
the cause of action of a plaintiff, provided there is a statement in the body of the petition indicating
that a defendant was made a party to such action.
Private respondent claims that petitioner has always been included in the caption of all the Petitions
it filed, which included Antonio Sy, field manager of petitioner. We checked and noted that in the
caption and the body of the Amended Petition and Second Amended Petition with Supplemental
Petition, Antonio Sy alleged to be representing Med Line Philippines, not petitioner. Because it was
private respondent who was responsible for the errors, the Court cannot excuse it from compliance,
for such action will prejudice petitioner, who had no hand in the preparation of these pleadings. In
any event, we reiterate that, as a general rule, mere failure to include the name of a party in the
title of a complaint is not fatal by itself.
 Stating a Cause of Action
in the Complaint
The general rule is allegata et probata — a judgment must conform to the pleadings and the theory
of the action under which the case was tried. 87 But a court may also rule and render judgment on
the basis of the evidence before it, even though the relevant pleading has not been previously
amended, so long as no surprise or prejudice to the adverse party is thereby caused. 88
In the case at bar, the liability of petitioner was based not on any allegation in the four Petitions
filed with the trial court, but on the evidence presented ex parte by the private respondent. Since
the trial court had not validly acquired jurisdiction over the person of petitioner, there way for the
latter to have validly and knowingly waived its objection to the private respondent's presentation
of evidence against it.
Third Issue: Judgment by Default
The trial court Decision holding petitioner liable for damages is basically a default judgment. In
Section 18, judgment by default is allowed under the following condition: 89
Sec. 1. Judgment by default.— If the defendant fails to answer within the time specified in these
rules, the court shall, upon motion of the plaintiff and proof of such failure, declare the defendant
in default. Thereupon the court shall proceed to receive the plaintiff's evidence and render
judgment granting him such relief as the complaint and the facts proven may warrant. . . . .
Thus, it becomes crucial to determine whether petitioner was declared in default, and whether the
reception of evidence ex parte against it was procedurally valid.
Petitioner Was Never
Declared In Default
Petitioner insists that the trial court never declared it in default.
We agree. The trial court denied the January 29, 1990 Motion of private respondent to declare all
the defendants in default, but it never acted on the latter's subsequent Motion to declare petitioner
likewise. During the pretrial on January 23, 1993, the RTC declared in default only "Atty. Eddie
Tamondong, as well as the other defendants Hon. Salvador Mison, M/V Star Ace, Omega Sea
Transport Co., Inc. of Panama and Sinkong Trading Co., [but] despite . . . due notice to them, [they]
failed to appear. 90 Even private respondent cannot pinpoint which trial court order held petitioner
in default.
More important, the trial court, in its Resolution dated May 22, 1991, admitted that it never
declared petitioner in default, viz.:
. . . It is in this light that this [c]ourt made an in-depth reflection and assessment of the premises
or reasons raised by [petitioner] VEC[;] and after a re-examination of the facts and evidence
spread on the records, it has come to the considered conclusion that the questioned default-
judgment has been improvidently issued. [Based on] the records, the claim of [private
respondent] that [its] January 29, 1990 Ex-Parte Motion to Declare Defendants In Default (pp.
174-177, records, Vol. 1) including VEC had been granted is belied by the February 23, 1990 Order
(pp. 214-215, records, ibid.) par. 2, thereof, . . .
xxx xxx xxx
Not even petitioner's November 23, 1990 "Ex-Parte Motion To Present Evidence Against
Defaulting Defendants" (page 489, records, Vol. 2) [can] be deemed as a remedy [for] the fact
that there never was issued an order of default against respondents including [petitioner] VEC.
Having thus established that there ha[d] been no order of default against VEC as contemplated
by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13, Revised Rules of Court, there could not have been
any valid default-judgment rendered against it. The issuance of an order [o]f default is a condition
sine qua non in order [that] a judgment by default be clothed with validity. Further, records show
that this [c]ourt never had authorized [private respondent] to adduce evidence ex-parte against
[Petitioner] VEC. In sum, the February 18, 1991 decision by default is null and void as against
[Petitioner] VEC. . . .
The aforementioned default judgment refers to the February 18, 1989 Decision, not to the Order
finding petitioner in default as contended by private respondent. Furthermore, it is a legal
impossibility to declare a party-defendant to be in default before it was validly served summons.
Trial Court Did Not Allow
Presentation of Evidence
Ex Parte Against Petitioner
The Order of December 10, 1990, which allowed the presentation of evidence ex parte against the
defaulting defendants, could not have included petitioner, because the trial court granted private
respondent's motion praying for the declaration of only the foreign defendants in default. So too,
private respondent's ex parte Motion to present evidence referred to the foreign defendants only.
91
Furthermore, the reception of evidence ex parte against a non-defaulting party is procedurally
indefensible. Without a declaration that petitioner is in default as required in Section 1, Rule 18, the
trial court had no authority to order the presentation of evidence ex parte against petitioner to
render judgment against it by default. The trial judge must have thought that since it failed to
summons and was in default, it effectively waived any objection to the presentation of evidence
against it. This rule, however, would have applied only if petitioner had submitted itself to the
jurisdiction of the trial court. The latter correctly declared, in the Resolution just cited, that the
default judgment against the former had been improvidently rendered.
Fourth Issue: Award Not Paid and Prayed For
Additional Filing Fees as
Lien on the Judgment
Had the trial court validly acquired jurisdiction over petitioner, nonpayment of docket fees would
not have prevented it from holding petitioner liable for damages. The Court, in Manchester
Development Corporation v. Court of Appeals, 92 ruled that a court acquires jurisdiction over any
case only upon the payment of the prescribed docket fee, not upon the amendment of the
complaint or the payment of the docket fees based on the amount sought in the amended pleading.
This ruling, however, was modified in Sun Insurance Office, Ltd. v. Asuncion, 93 which added:
 3. Where the trial court acquires jurisdiction over a claim [through] the filing of the appropriate
pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim
not specified in the pleading, or if specified the same has been left for determination by the court,
the additional filing fee therefor shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess
and collect the additional fee.
Filing fees for damages and awards that cannot be estimated constitute liens on the awards finally
granted by the trial court. Their nonpayment alone is not a ground for the invalidation of the award.
Judgment by Default Cannot
Grant Relief Prayed For
A declaration or order of default is issued as a punishment for unnecessary delay in joining issues.
In such event, defendants lose their standing in court, they cannot expect the trial court to act upon
their pleadings, and they are not entitled to notice of the proceeding until the final termination of
the
case. 94 Thus, the trial court proceeds with the reception of the plaintiff's evidence upon which a
default judgment is rendered.
Fifth Issue: Execution of Final Judgment
Section 1 of Rule 39 provides that execution shall issue only upon a judgment that finally disposes
of the action or proceeding. Such execution shall issue as a matter of right upon the expiration of
the period to appeal it, if no appeal has been duly perfected. 98
In the present case, however, we have already shown that the trial court's Decision has not become
final and executory against petitioner. In fact, the judgment does not even bind it. Obviously,
Respondent Court committed serious reversible errors when it allowed the execution of the said
judgment against petitioner.
WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and Resolution of the Court
of Appeals are REVERSED and SET ASIDE insofar as they affect petitioner. The levy and the sale on
execution of petitioner's properties are declared NULL and VOID. Said properties are ordered
RESTORED to petitioner. No pronouncement as to costs.

Section 1 of Rule 18 provides that after the defendant has been declared in default, "the court shall
proceed to receive the plaintiff's evidence and render judgment granting him such relief as the
complaint and the facts proven may warrant." The reliefs that may be granted, however, are
restricted by Section 5, which provides that a judgment entered against a party in default shall not
exceed the amount or be different in kind from that prayed for.

In other words, under Section 1, a declaration of default is not an admission of the truth or the
validity of the plaintiff's claims. 95 The claimant must still prove his claim and present evidence. In
this sense the law gives defaulting parties some measure of protection because plaintiffs, despite
the default of defendants, are still required to substantiate their allegations in the complaint. The
judgment of default against defendants who have not appeared or filed their answers does not
imply a waiver of all their rights, except their right to be heard and to present evidence in their
favor. Their failure to answer does not imply their admission of the facts and the causes of action of
the plaintiffs, because the latter are required to adduce evidence to support their allegations.

Moreover, the trial court is not allowed by the Rules to receive evidence that tends to show a relief
not sought or specified in the pleadings. 96 The plaintiff cannot be granted an award greater than or
different in kind from that specified in the complaint. 97

This case should be distinguished, however, from that of defendants, who filed an answer but were
absent during trial. In that case, they can be held liable for an amount greater than or different from
that originally prayed for, provided that the award is warranted by the proven facts. This rule is
premised on the theory that the adverse party failed to object to evidence relating to an issue not
raised in the pleadings.

The latter rule, however, is not applicable to the instant case. Admittedly, private respondent
presented evidence that would have been sufficient to hold petitioner liable for damages. However,
it did not include in its amended Petitions any prayer for damages against petitioner. Therefore, the
trial court could not have validly held the latter liable for damages even if it were in default.
CIVPRO – RULE 16 – MOTIONS TO DISMISS – LACK OF JURSIDICTION
G.R. No. L-58036 March 16, 1987
ELISEO BOTICANO, petitioner,
vs.
MANUEL CHU, JR., respondent.
PARAS, J.:
This is a petition for review on certiorari seeking to reverse and set aside the following: (a) the
decision of the Court of Appeals * promulgated on March 31, 1981 in CA-G.R. No. 65287-R entitled:
"Eliseo Boticano, plaintiff-appellee v. Jaime Sigua, defendant and Manuel Chu, Jr., defendant-
appellant" which holds that the defendant-appellant was not properly served with summons and
(b) the resolution denying petitioner's motion for reconsideration of said decision.
The findings of fact of the trial court are as follows:
Petitioner Eliseo Boticano is the registered owner of a Bedford truck with plate No. QC-870, T-
Pilipinas '77 which he was using in hauling logs for a certain fee. At 11:00 o'clock in the evening of
September 3, 1971, while loaded with logs, it was properly parked by its driver Maximo Dalangin at
the shoulder of the national highway in Barrio Labi, Bongabon, Nueva Ecija when it was hit and
bumped at the rear portion by a Bedford truck bearing plate No. QK-516, T-Pilipinas '77 owned by
private respondent Manuel Chu, Jr. and driven by Jaime Sigua, the former's co-defendant in this
case. Manuel Chu, Jr. acknowledged ownership thereof and agreed with petitioner to shoulder the
expenses of the repair of the damaged truck of the latter. (Decision, Civil Case No. 6754, Rollo, pp.
36-37).
When Manuel Chu, Jr. failed to comply with aforesaid agreement as well as to pay damages
representing lost income despite petitioner's demands, the latter (plaintiff in the lower court), filed
a complaint on November 24, 1977 at the Court of First Instance of Nueva Ecija, Branch VII at
Cabanatuan City, against private respondent Manuel Chu, Jr. (truck owner) and Jaime Sigua (his
driver) both as defendants in Civil Case No. 6754 "Eliseo Boticano v. Manuel Chu, Jr. and Jaime
Sigua" for damages. (Record on Appeal, Rollo, pp. 45-47).
Summons was issued on December 12, 1977 but was returned unserved for defendant Jaime Sigua
because he was no longer connected with San Pedro Saw Mill, Guagua, Pampanga, while another
copy of the summons for Manuel Chu, Jr. was returned duly served on him thru his wife Veronica
Chu at his dwelling house.
On February 15, 1978 petitioner moved to dismiss the case against Jaime Sigua and to declare
Manuel Chu, Jr. in default for failure to file responsive pleadings within the reglementary period.
The motion was granted by the lower court in an Order dated September 4, 1978, allowing
petitioner to adduce his evidence ex parte on October 17, 1978. (Petition, Rollo, pp. 8-9).
From the evidence adduced by the plaintiff (petitioner herein) the trial court found that private
respondent Manuel Chu, Jr. is responsible for the fault and negligence of his driver Sigua under
Article 2180 of the Civil Code, whose negligence and lack of due care was the immediate and
proximate cause of the damage to petitioner's truck and ruled in favor of plaintiff-petitioner.
The dispositive portion of the judgment reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff, Eliseo Boticano, and against
herein defendant, Manuel Chu, Jr. ordering the latter as follows:
(a) To pay the plaintiff the sum of P6,970.00 representing actual damages;
(b) To pay the plaintiff the sum of P73,700.00 representing unrealized income for the non-use of
the plaintiff's damaged truck for the period of eleven (11) months;
(c) To pay the plaintiff the sum of P2,000.00 for and as attorney's fees; and
(d) To pay the costs of this suit.
SO ORDERED.
Cabanatuan City, November 28, 1978. (Ibid,, pp. 13-14).
On March 19, 1979 private respondent Manuel Chu, Jr. filed with the trial court a "Notice of Appeal"
and an Urgent Motion for Extension of Time to file Record on Appeal which was granted by the trial
court on the same date.
On March 26, 1979, Atty. Hermenegildo D. Ocampo, counsel of record of private respondent, filed
a "Motion to Withdraw as Counsel" while the new counsel Atty. Wilfredo G. Laxamana entered his
appearance on April 18, 1979 and filed his record on appeal on the same date.
On May 4, 1979 petitioner filed with the trial court a Motion to Dismiss Appeal and for execution
which was set for hearing on May 14, 1979 wherein private respondent's counsel personally
appeared and opposed petitioner's motion while on the latter date petitioner filed his reply to
opposition, after which on May 16, 1979 the trial court issued an order denying aforesaid motion,
while on May 22, 1979, the trial court issued another order approving private respondent's Record
on Appeal. (Rollo, pp. 9-10).
After the case was brought to the Court of Appeals and the parties had filed their respective briefs,
said Appellate Court issued its decision on March 31, 1981, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS the appealed judgment is hereby set aside, for
being null and void. This case is directed to be remanded to the court of origin; that appellant be
properly served with summons and a copy of the complaint; and that the necessary and
appropriate proceedings or action be taken thereafter, as the circumstances and the case win
warrant.
With costs against appellee.
SO ORDERED.
Judgment is set aside. (Rollo, p. 33)
On April 20, 1981, petitioner filed with the respondent Court of Appeals a Motion for
Reconsideration and on June 3, 1981 a Supplemental Motion for Reconsideration. On August 28,
1981 respondent Court of Appeals issued an order denying petitioner's Motion for Reconsideration.
(Rollo, pp. 9-11).
Hence, this petition, with the following assigned errors:
1. THE RESPONDENT COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT PRIVATE
RESPONDENT MANUEL CHU JR. WAS NOT PROPERLY SERVED WITH SUMMONS DESPITE THE FACT
THAT THE SUMMONS WAS SERVED TO HIM THROUGH HIS WIFE;
2. THE RESPONDENT COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT PRIVATE
RESPONDENT DID NOT VOLUNTARILY SUBMIT HIMSELF TO THE JURISDICTION OF THE TRIAL COURT
DESPITE HIS VOLUNTARY APPEARANCE, THRU COUNSEL ON A FIXED DATE OF HEARING AND BY
FILING WITH THE LOWER COURT A NOTICE OF APPEAL, APPEAL BOND, MOTION FOR EXTENSION OF
TIME TO FILE RECORD ON APPEAL, MOTION FOR WITHDRAWAL OF APPEARANCE, NOTICE OF
APPEARANCE, AND OPPOSITION TO MOTION TO DISMISS APPEAL AND FOR ISSUANCE OF WRIT OF
EXECUTION;
3. THE RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT HAS
WAIVED ANY QUESTION ON THE TRIAL COURT'S JURISDICTION OVER HIS PERSON BY HIS
DELIBERATE FAILURE AND REFUSAL TO SEEK RELIEF FROM THE TRIAL COURT.
4. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN SETTING ASIDE THE JUDGMENT IN
CIVIL CASE NO. 6754, COURT OF FIRST INSTANCE OF CABANATUAN ClTY, BRANCH VII AND IN
DIRECTING THAT THE CASE BE REMANDED TO THE COURT OF ORIGIN SO THAT APPELLANT CAN BE
PROPERLY SERVED WITH SUMMONS. (Petition, Rollo, pp. 12-23)
In compliance with the resolution of the Second Division of this Court of October 12, 1981 (Rollo, p.
79-A) private respondent filed his comment on November 13, 1981 (Rollo, pp. 84-87). Petition er
then filed a reply thereto in compliance with the resolution of December 7, 1981 (Rollo, p. 39) after
which the petition was given due course in the resolution of February 8, 1982 and the parties were
required to file their respective memoranda (Rollo, p. 43). Petitioner filed his memorandum on
March 19, 1982 (Rollo, pp. 45-59) while private respondent filed his memorandum on April 15, 1982
(Rollo, pp. 60-64). Thereafter, in the resolution of April 30, 1982, the case was submitted for
decision. (Rollo, p. 65).
There is no dispute as to the facts of this case, as shown by the admission of private respondent to
the extent of making an agreement with petitioner to shoulder the expenses of the repair of the
damaged truck of the latter and the findings of the Court of Appeals that petitioner's evidence fully
supports the findings of facts of the trial court as well as its judgment under appeal.
Neither does private respondent deny receipt of the summons in question. The bone of contention
appears to be in the manner of service of said summons on the wife of private respondent at their
dwelling instead of on private respondent himself personally.
Petitioner contends in favor of validity of such service while private respondent maintains the
opposite view which was sustained by respondent Court of Appeals to the effect that the Sheriff
resorted to substituted service under Section 8, Rule 14 of the Rules of Court, without first
complying with the mode of personal service required under Section 7 of the same Rule.
Thus, the principal issue which arises in this case which involves an inquiry into procedural due
process, is whether or not the question of jurisdiction over the person of the defendant can be
raised for the first time on appeal.
The question has been answered in the negative by the Supreme Court in a long line of decisions.
In fact, one of the circumstances considered by the Court as indicative of waiver by the defendant-
appellant of any alleged defect of jurisdiction over his person arising from defective or even want
of process, is his failure to raise the question of jurisdiction in the Court of First Instance and at the
first opportunity. It has been held that upon general principles, defects in jurisdiction arising from
irregularities in the commencement of the proceedings, defective process or even absence of
process may be waived by a failure to make seasonable objections. (Castro v. Cebu Portland Cement
Co., 71 Phil. 481 [1941] citing Machan v. De la Trinidad, 3 Phil. 684; Vergara v. Laciapag 28 Phil. 439;
U.S. v. Inductivo, 40 Phil. 84; Soriano v. Ramirez, 44 Phil. 519). More recently, in reiteration of the
same principle, the Court ruled in Dalman v. City Court of Dipolog City, Branch II, that as to the
dismissal of the criminal case, the question of jurisdiction which was never raised in said case before
the trial court cannot be done at this stage and level (134 SCRA 244 [1985]).
Coming to the case at bar, it has been pointed out that during the stages of the proceedings in the
court below, defendant-appellant could have questioned the jurisdiction of the lower court but he
did not.
It can of course be argued that the failure to question the lower court's jurisdiction cannot be
accounted against Chu for his having been declared in default gave him no chance to participate in
the court deliberations and therefore no chance to raise the jurisdictional issue, but then, he could
have done so, in the subsequent pleadings he filed. Besides, even assuming that such failure cannot
be taken against him, the fact is he had VOLUNTARILY submitted himself to the court's jurisdiction.
On the contrary, private respondent voluntarily appeared thru counsel in the trial court. He filed a
Notice of Appeal, Appeal Bond, Motion for Extension of Time to File Record on Appeal, Record on
Appeal, Motion for Withdrawal of Appearance, Notice of Appearance and Opposition to Plaintiff's
Motion to Dismiss Appeal and for Issuance of a Writ of Execution. Not only did he submit pleadings
and motions, but he likewise appeared in person, thru counsel in the hearing held on May 14, 1979
at 8:30 a.m. and orally argued in open court on the pending incident. (Rollo, pp. 53-54).
Under Section 23, Rule 14 of the Rules of Court, the defendant's voluntary appearance in the action
shall be equivalent to service. Thus, under this principle, it has been consistently held by the
Supreme Court that the defect of summons is cured by the voluntary appearance of the defendant.
(Infante v. Toledo and Lanting, 44 Phil. 834 [1918]; Aguilos v. Sepulvede, 53 SCRA 274 [1973]; J.M.
Tuazon & Co. v. Estabillo, 62 SCRA 1; Castro v. Cebu Portland Cement Co., supra).
The Court of Appeals is however of the view that from all the actions and steps taken by the
appellant no presumption can arise that he voluntarily submitted himself to the jurisdiction of the
Court. In fact according to said Court, all of these actions taken by the appellant are geared and
mustered towards contesting the court's jurisdiction over his person, or of attacking the validity of
the judgment on jurisdictional grounds. (Decision, CA, G.R. No. 65287-R; Rollo, p. 31).
It will be noted however, that the Notice of Appeal (Rollo, p. 38) unmistakably indicates the reason
for the appeal, which reads:
2. That, the herein defendant is not contented with the aforesaid Decision for it is contrary to the
evidence and the law and the award of damages is so excessively unsupported by any evidence
to warrant the same; hence, he is appealing said Decision to the Hon. Court of Appeals, Manila,
both on questions of facts and law.
As clearly shown in the foregoing, the above-stated conclusion of the Court of Appeals has evidently
no basis.
Of equal importance is the question: if the defendant in the Regional Trial Court (RTC) has been
declared in default, may he appeal the default judgment that may subsequently be rendered even
if he has not asked the RTC to set aside the declaration of default? The answer is in the affirmative.
However a distinction must be made as to the effects of such appeal.
(a) If an appeal is made without first asking the RTC to set aside the declaration of default, and
the appellate court sets aside on said declaration, all he can get is a review of the RTC's default
judgment without the opportunity of having the higher court consider defense evidence (for the
simple reason that no evidence was even adduced by him in the RTC) (See Rule 41, sec. 2, par. 3,
Rules of Court).
(b) If upon the other hand, the defendant first asks the RTC to set aside the declaration of default
(See Rule 18, secs. 2 and 3, Rules of Court), and he is able to prevail, the declaration win be set
aside, and he will now have the opportunity to present his evidence in the RTC. Thus, even if he
finally loses in the RTC's subsequent decision, his defense can be considered, when appeal is
made to the appellate tribunal. Of course, even if the default declaration is not set aside despite
his motion for the setting aside, he will be entitled to all notices in the court proceedings, and can
file any pleading he may wish to file, including the notice of appeal. (See Rule 13, sec. 9, Rules of
Court).
Finally in a last ditch effort, private respondent insists that there was no valid service of summons
because private respondent is a partner and general manager in San Pedro Sawmill. Consequently
the wife of private respondent to whom summons and complaint were allegedly served not being
partnership, cannot receive the same under Section 13 of Rule 14 of the Rules of Court.
It has however been settled that actions must be brought by the real parties in interest and against
the persons who are bound by the judgment obtained therein. (Salmon and Pacific Commercial
Company v. Tan Cueco, 36 Phil. 557-558 [1917]).
The title of the case both in the trial court, in the Court of Appeals and in this Court shows that the
partnership is not a party. On the contrary, as previously stated private respondent himself assumed
the responsibility of the accident and is now estopped to disclaim the liabilities pertaining thereto.
From what has been discussed the following conclusions are hereby made: jurisdiction was properly
acquired by the trial court over the person of respondent thru both service of summons and
voluntary appearance in court; he was therefore properly declared in default for not having filed
any answer; despite respondent's failure to file a motion to set aside the declaration of default, he
has the right to appeal the default judgment but in the appeal only the evidence of the petitioner
may be considered, respondent not having adduced any defense evidence; We agree with the
findings of fact by the trial court, the same being unrebutted.
WHEREFORE, the assailed decision and resolution of the Court of Appeals are REVERSED and SET
ASIDE, and the decision of the then Court of First Instance (now Regional Trial Court)of Nueva Ecija,
Cabanatuan City in Civil Case No. 6754 "Eliseo Boticano v. Manuel Chu, Jr. and Jaime Sigua" is hereby
REINSTATED. No costs.
SO ORDERED.

Incidentally, the afore-mentioned rules apply to default declarations in the Metropolitan Trial
Courts, the Municipal Trial Courts, and the Municipal Circuit Trial Courts, for under Batas Pambansa
Bilang 129, the said inferior courts will follow the rules in the RTC. Note however that in summary
proceedings, there can be no default declarations.

In the case at bar, there is no question that summons was timely issued and received by private
respondent. In fact, he never denied actual receipt of such summons but confined himself to the
argument that the Sheriff should prove that personal service was first made before resorting to
substituted service,

This brings to the fore the question of procedural due process. In Montalban v. Maximo (22 SCRA
1077 [1968]) the Court ruled that "The constitutional requirement of due process exacts that the
service be such as may be reasonably expected to give the notice desired. Once the service provided
by the rules reasonably accomplishes that end, the requirement of justice is answered; the
traditional notions of fair play are satisfied; due process is served."

Indeed, such construction is but fair, and in accord with substantial justice. The burden on a plaintiff
is not to be enlarged with a restrictive construction desired by the defendant. (Ibid., p. 1078).
CIVPRO – RULE 16 – MOTIONS TO DISMISS – NO CAUSE OF ACTION
A.C. No. 3825 February 1, 1996
REYNALDO HALIMAO, complainant,
vs.
ATTYS. DANIEL VILLANUEVA and INOCENCIO PEFIANCO FERRER, JR., respondents.
DECISION
MENDOZA, J.:
This is a complaint for disbarment against Attorneys Daniel Villanueva and Inocencio Ferrer, Jr., for
serious misconduct.
The complaint originated from a letter dated April 14, 1992 which complainant Reynaldo Halimao
wrote to the Chief Justice, alleging that respondents, without lawful authority and armed with
armalites and handguns, forcibly entered the Oo Kian Tiok Compound in Cainta, Rizal, of which
complainant was caretaker, on April 4, 1992 at 11:00 A.M. Complainant prayed that an investigation
be conducted and respondents disbarred. To the complaint were attached the affidavits of alleged
witnesses, including that of Danilo Hernandez, a security guard at the compound, who had also filed
a similar complaint against herein respondents.
In its resolution dated July 1, 1992, the Court required respondents to comment.
On August 14, 1992, respondents filed a comment in which they claimed that the complaint is a
mere duplication of the complaint filed by Danilo Hernandez in Administrative Case No. 3835, which
this Court had already dismissed on August 5, 1992 for lack of merit. They pointed out that both
complaints arose from the same incident and the same acts complained of and that Danilo
Hernandez, who filed the prior case, is the same person whose affidavit is attached to the complaint
in this case.
Respondent Ferrer claimed that he was nowhere near the compound when the incident took place.
He submitted affidavits attesting to the fact that he had spent the whole day of April 4, 1992 in
Makati with his family.
Additionally, Ferrer claimed that the two complaints were filed for the purpose of harassing him
because he was the principal lawyer of Atty. Daniel Villanueva in two cases before the Securities
and Exchange Commission. The cases involved the ownership and control of Filipinas Textile Mills
(Filter), which is owned by Villanueva's family and whose premises are the Oo Kian Tiok compound.
This case was thereafter referred to the Integrated Bar of the Philippines for investigation, report
and recommendation.
In its Resolution No. XI-94-017 dated January 22, 1994, the Board of Governors of the IBP dismissed
the case against respondents. It acted on the basis of the report and recommendation of Atty. Victor
C. Fernandez, Investigating Commissioner, who found that the complaint is barred by the decision
in Administrative Case No. 3835 which involved the same incident. Atty. Fernandez noted that in
fact the complaints in the two cases were similarly worded.
The Investigating Commissioner held that although the complaint in the prior case was initiated by
a security guard (Danilo Hernandez) of the compound while the present case was filed by the
caretaker, nevertheless the complainants had substantially the same interest. The Investigating
Commissioner observed:
Furthermore, Danilo Hernandez is not a stranger to complainant herein. Both represent the same
interest as co-workers in the Oo Kian Tiok Compound. In his letter-complaint, complainant
mentions Danilo Hernandez as an employee and his co-worker at the Oo Kian Tiok Compound.
Complainant even attached to his complaint the affidavit of Danilo Hernandez that was submitted
to the Municipal Trial Court of Cainta, Rizal in support of the criminal complaints (Criminal Cases
Nos. MTC-4700 and 4701 (92) filed against respondents herein. In said affidavit (Magkakalakip na
Sinumpaang Salaysay) dated April 4, 1992, Danilo Hernandez also mentions the name of
complainant as a caretaker of the Oo Kian Tiok Compound. Clearly, the complainant and Danilo
Hernandez not only represent the same interest in filing their respective complaints, but have the
same complaint against respondents.1
The Commissioner held that for res judicata to apply, absolute identity of parties is not required, it
being sufficient that there is identity of interests of the parties. In this case, both complainants were
present at the compound when the incident allegedly happened, and the acts they were
complaining against and the relief they were seeking were the same.
On March 28, 1994, complainant filed a motion for reconsideration of the resolution of the IBP
Board of Governors. His motion was referred to the Court in view of the fact that the records of the
case had earlier been forwarded to the Court on March 11, 1994.
In his aforesaid motion, complainant contends that by filing a motion to dismiss the complaint in
this case, private respondents must be deemed to have hypothetically admitted the material
allegations in the complaint and, therefore, private respondents must be deemed to have confessed
to the charge of serious misconduct. Hence, it was error for the IBP to dismiss his complaint.
Complainant also contends that by invoking the resolution of this Court in Administrative Case No.
3835, respondents are evading the issues and that Ferrer's defense of alibi is weak and cannot
prevail against the direct and positive identification by him and his witnesses. He contends that the
resolution in Administrative Case No. 3835 has no bearing upon the present case and that the
Investigating Commissioner should have resolved the issues of fact before him.
Respondents filed an Opposition to the motion for reconsideration. As a preliminary matter, they
argue that the motion for reconsideration is a mere scrap of paper, because it is not provided for in
Rule 139-B of the Rules of Court, and that what complainant should instead have done was to appeal
to this Court.
Rule 139-B states in pertinent part:
§12. Review and decision by the Board of Governors. -
....
 c) If the respondent is exonerated by the Board or the disciplinary sanction imposed by it is less
than suspension or disbarment [such as admonition, reprimand, or fine] it shall issue a decision
exonerating respondent or imposing such sanction. The case shall be deemed terminated unless
upon petition of the complainant or other interested party filed with the Supreme Court within
fifteen (15) days from notice of the Board's resolution, the Supreme Court orders otherwise.
Although Rule 139-B, §12(c) makes no mention of a motion for reconsideration, nothing in its text
or in its history suggests that such motion is prohibited. It may therefore be filed within 15 days
from notice to a party. Indeed, the filing of such motion should be encouraged before resort is made
to this Court as a matter of exhaustion of administrative remedies, to afford the agency rendering
the judgment an opportunity to correct any error it may have committed through a
misapprehension of facts or misappreciation of the evidence.2
Considering, however, that complainant's motion for reconsideration was filed after the IBP had
forwarded the records of this case to this Court, it would be more expedient to treat it as
complainant's petition for review within the contemplation of Rule 139-B, §12(c).
Now with regard to complainant's argument that it was error for the Investigating Commissioner to
dismiss the complaint against respondents because, by filing a motion to dismiss, respondents are
deemed to have admitted the allegations of the complaint against them, suffice it to say that the
rule that a motion to dismiss is to be considered as a hypothetical admission of the facts alleged in
the complaint applies more particularly to cases in which the ground for dismissal is the failure of
the complaint to state a cause of action. When it appears on the face of the complaint that the
plaintiff is not entitled to any relief under the facts alleged, the defendant may file a motion to
dismiss hypothetically admitting the facts alleged in the complaint. 3 By filing such a motion, the
defendant in effect says that even assuming the facts to be as alleged by the plaintiff, the latter has
failed to prove that he has a right which the former has violated.4
The rule does not unqualifiedly apply to a case where the defendant files a motion to dismiss based
on lack of jurisdiction of the court or tribunal over the person of the defendant or over the subject
matter or over the nature of the action; or on improper venue; or on lack of capacity to sue of the
plaintiff or on litis pendentia, res judicata, prescription, unenforceability, or on the allegation that
the suit is between members of the same family and no earnest efforts towards a compromise have
been made. In such cases, the hypothetical admission is limited to the facts alleged in the complaint
which relate to and are necessary for the resolution of these grounds as preliminary matters
involving substantive or procedural laws, but not to the other facts of the case.
On the other hand, when a motion to dismiss is based on payment, waiver, abandonment, release,
compromise, or other form of extinguishment, the motion to dismiss does not hypothetically, but
actually, admits the facts alleged in the complaint, i.e., the existence of the obligation or debt, only
that the plaintiff claims that the obligation has been satisfied. So that when a motion to dismiss on
these grounds is denied, what is left to be proven in the trial is no longer the existence of the debt
but the fact vel non of payment by the defendant.
The Investigating Commissioner properly dismissed the complaint in this case on the ground of res
judicata, it appearing that it involves the same incident and the same cause of action as
Administrative Case No. 3825. Indeed, it appears that on August 5, 1995, the First Division of the
Court dismissed a similar complaint filed in Administrative Case No. 3835. The resolution reads:
Adm. Case No. 3835 (Danilo Hernandez v. Attys. Daniel Villanueva and Inocencio Pefianco Ferrer,
Jr.). - This administrative complaint against Attorneys Daniel Villanueva and Inocencio P. Ferrer,
Jr. is the offshoot of a family feud involving the ownership and possession of the Filipinas Textile
Mills (Filtex). The contest between Bernardino Villanueva and Daniel Villanueva (probably
relatives) for the control of the corporation has escalated into a three-cornered fight when Oo
Kian Tiok joined the fray, claiming ownership of the same property by purchase from the
Equitable Banking Corporation, mortgage creditor and highest bidder thereof at the mortgage
foreclosure sale.
Respondent Daniel Villanueva believes that Bernardino Villanueva is the evil genius behind this
complaint for his disbarment filed by a certain Daniel Hernandez. On the other hand, Hernandez
claims to be one of several security guards placed by Oo Kian Tiok on the Filtex property. His
allegation that the respondents drove him and the other security guards out of the Filtex premises
at gun point was denied by the respondents and is not substantiated by independent evidence.
For want of a prima facie showing of professional misconduct on the part of the respondents, the
complaint must be dismissed. The three-cornered dispute among respondent Daniel Villanueva,
Bernardino Villanueva and Oo Kian Tok [sic] over the possession and ownership of the Filtex
property should be litigated and determined in an appropriate judicial action, not in
administrative proceedings to disbar Attorney Daniel Villanueva and his counsel, Attorney
Inocencio P. Ferrer, Jr.
WHEREFORE, the complaint against respondents Attys. Daniel Villanueva and Inocencio P. Ferrer,
Jr. is DISMISSED for lack of merit.
Two motions for reconsideration of this resolution were filed by the complainant therein, both of
which were denied, the first one on September 23, 1992 and the second one on November 9, 1992.
While the complainant (Danilo Hernandez) in Administrative Case No. 3835 is different from the
complainant in the present case, the fact is that they have an identity of interest, as the Investigating
Commissioner ruled. Both complainants were employed at the Oo Kian Tiok Compound at the time
of the alleged incident. Both complain of the same act allegedly committed by respondents. The
resolution of this Court in Administrative Case No. 3835 is thus conclusive in this case, it appearing
that the complaint in this case is nothing but a duplication of the complaint of Danilo Hernandez in
the prior case. In dismissing the complaint brought by Danilo Hernandez in the prior case, this Court
categorically found "want of a prima facie showing of professional misconduct on the part of the
respondents [Attorneys Daniel Villanueva and Inocencio Ferrer, Jr.]".
WHEREFORE, the resolution of the Board of Governors of the Integrated Bar of the Philippines,
approving and adopting the report and recommendation of the Investigating Commissioner, is
AFFIRMED and the complaint against respondents is DISMISSED.
SO ORDERED.
CIVPRO – RULE 16 – MOTIONS TO DISMISS – NO CAUSE OF ACTION
G.R. No. 125861 September 9, 1998
ROSITA G. TAN, EUSEBIO V. TAN, REMIGIO V. TAN, JR., EUFROSINA V. TAN, VIRGILIO V. TAN and
EDUARDO V. TAN, petitioners,
vs.
COURT OF APPEALS and FERNANDO V. TAN KIAT, respondents.
MARTINEZ, J.:
This petition assails the Decision of public respondent Court of Appeals dated May 28, 1996 1
reversing the Order of the Manila Regional Trial Court, Branch 2, dated December 15, 1993, 2
dismissing the complaint for recovery of property filed by private respondent Fernando Tan Kiat
against petitioners.
The controversy centers on two (2) parcels of land (hereafter, subject properties) situated at 970
M.H. del Pilar Street, Malate, Manila previously owned by one Alejandro Tan Keh and which were
then covered by Transfer Certificate of Title No. 35656 of the Registry of Deeds of Manila.
Private respondent, in his complaint filed on October 18, 1993, 3 claimed that he bought the subject
properties from Mr. Tan Keh in 1954 for P98,065.35, built his house thereon, but was unable to
effect immediate transfer of title in his favor in view of his foreign nationality at the time of the sale.
Nonetheless, as an assurance in good faith of the sales agreement, Mr. Tan Keh turned over to
private respondent the owner's duplicate copy of TCT No. 35656 and, in addition, executed a lease
contract in favor of private respondent for a duration of forty (40) years. However, in 1958, Mr. Tan
Keh sold the subject properties to Remigio Tan, his brother and father of petitioners, with the
understanding that the subject properties are to be held in trust by Remigio for the benefit of private
respondent and that Remigio would execute the proper documents of transfer in favor of private
respondent should the latter at anytime demand recovery of the subject properties. TCT No. 35656
was thus cancelled and in lieu thereof TCT No. 53284 was issued in the name of Remigio. Another
contract of lease was executed by Mr. Tan Keh and Remigio in favor of private respondent to further
safeguard the latter's interest on the subject properties, but private respondent never paid any
rental and no demand whatsoever for the payment thereof had been made on him. Remigio was
killed in 1968. At his wake, petitioners were reminded of private respondent's ownership of the
subject properties and they promised to transfer the subject properties to private respondent who
by then had already acquired Filipino citizenship by naturalization. Petitioners, however, never
made good their promise to convey the subject properties despite repeated demands by private
respondent. In fact, petitioners had the subject properties fraudulently transferred to their names
under TCT No. 117898. Thus, the filing of the complaint for recovery of property.
On November 10, 1993, petitioners filed a Motion To Dismiss 4 the complaint, claiming that: (1) the
complaint stated no cause of action; (2) the cause of action has long prescribed; (3) the cause of
action has long been barred by a prior judgment; and, (4) the claim has been waived, abandoned
and/or extinguished by laches and estoppel. An Opposition to Motion To Dismiss with
Memorandum 5 was filed by private respondent on November 29, 1993. In turn, petitioners on
December 1, 1993 filed their Memorandum of Authorities.6
Thereafter, the trial court on December 15, 1993 issued an order dismissing private respondent's
complaint, acceding to all the grounds set forth by petitioners in their motion to dismiss.
Dissatisfied, private respondent appealed to public respondent CA which set aside the dismissal and
ordered the remand of the case for further proceedings. Petitioners' motion for reconsideration
was denied by respondent CA in its Resolution dated July 31, 1996. 7
Now before us via this petition for review, petitioners insist on the propriety of the trial court's order
of dismissal, and reiterate, by way of assignment of errors, the same grounds contained in their
motion to dismiss, to wit:
I.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT FAILS TO STATE A CAUSE
OF ACTION.
II.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENT'S CAUSE OF ACTION HAS
PRESCRIBED.
III.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENT'S CAUSE OF ACTION IS
BARRED BY PRIOR JUDGMENT.
IV.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENT'S CLAIM HAS BEEN WAIVED,
ABANDONED OR OTHERWISE EXTINGUISHED.
There is merit in the petition.
There are three (3) reasons which warrant the reversal of the assailed decision of respondent court.
Respondent court's reading of the complaint is that it stated a cause of action, saying that:
xxx xxx xxx
The legal right of the appellant as stated in his complaint, is his right to demand transfer of title
to him the property which is held in trust for him by the appellees. The correlative obligation of
the appellees, on the other hand, is to deliver title over the property to the appellant which they
are holding in trust for the former, upon the termination of the trust relationship, that is, when
the appellant finally demanded that the title of the property be transferred in his name. The act
or omission on the part of the appellees which constitutes the violation of the appellant's right
to secure title to the properties he owns and possesses, is their refusal to transfer the title of the
property in the appellant's name. All these averments the appellees hypothetically admit when
they filed a motion to dismiss on the ground that the complaint does not state a cause of action.
 The trial court could have rendered a valid judgment upon these hypothetically admitted Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
averments in accordance with the prayer in the complaint which is to have the title to the transferred to the person who may have first taken possession thereof in good faith, if it should
property held in trust by the appellee transferred in the appellant's name. be movable property.

The flaw in this conclusion is that, while conveniently echoing the general rule that averments in Should it be immovable property, the ownership shall belong to the person acquiring it who in
the complaint are deemed hypothetically admitted upon the filing of a motion to dismiss grounded good faith first recorded it in the Registry of Property.
on the failure to state a cause of action, it did not take into account the equally established
limitations to such, rule, i.e., that a motion to dismiss does not admit the truth of mere epithets of Should there be no inscription, the ownership shall pertain to the person who in good faith was
fraud; nor allegations of legal conclusions; nor an erroneous statement of law; nor mere inferences first in the possession, and, in the absence thereof, to the person who presents the oldest title,
or conclusions from facts not stated; nor mere conclusions of law, nor allegations of fact the falsity provided there is good faith.
of which is subject to judicial notice; nor matters of evidence; nor surplusage and irrelevant matter;
nor scandalous matter inserted merely to insert the opposing party; nor to legally impossible facts;
Private respondent alleged that he bought the subject properties from Alejandro Tan Keh in 1954
nor to facts which appear unfounded by a record incorporated in the pleading, or by a document
but nonetheless failed to present any document evidencing the same, while Remigio Tan, as the
referred to; and, nor to general averments contradicted by more specific averments. 8 A more
other buyer, had in his name TCT No. 53284 duly registered in the Registry of Deeds of Manila on
judicious resolution of a motion to dismiss, therefore, necessitates that the court be not restricted
October 13, 1958. 17 Remigio Tan, beyond doubt, was the buyer entitled to the subject properties
to the consideration of the facts alleged in the complaint and inferences fairly deducible therefrom.
since the prevailing rule is that in the double sale of real property, the buyer who is in possession of
Courts may consider other facts within the range of judicial notice as well as relevant laws and
a Torrens title and had the deed of sale registered must prevail. 18
jurisprudence which the courts are bound to take into account, 9 and they are also fairly entitled to
examine records/documents duly incorporated into the complaint by the pleader himself in ruling
on the demurrer to the complaint to the complaint. 10 Fourth: Petitioners are in possession of TCT No. 117898 which evidences their ownership of the
subject properties. On the other hand, private respondent relies simply on the allegation that he is
entitled to the properties by virtue of a sale between him and Alejandro Tan Keh who is now dead.
Guided by these crucial limitations on hypothetical admissions, the "trust theory" being espoused
Obviously, private respondent will rely on parol evidence which, under the circumstances obtaining,
by private respondent in his complaint, and upon which his claim over the subject properties is
cannot be allowed without violating the "Dead Man's Statute" found in Section 23, Rule 130 of the
principally anchored, cannot hold water for the following reasons:
Rules of Court. viz:

First: The execution of a lease contract between Remigio Tan as lessor and private respondent as
Sec. 23. Disqualification by reason of death or insanity of adverse party — Parties or assignors of
lessee over the subject properties, the existence of which is established not only by a copy thereof
parties to a case, or persons in whose behalf a case is prosecuted, against an executor or
attached to petitioners' motion to dismiss as Annex "1" 11 but by private respondent's own
administrator or other representative of a deceased person, or against a person of unsound mind,
admission reflected in paragraph 6 of the complaint, already belies private respondent's claim of
upon a claim or demand against the estate of such deceased person or against such person of
ownership. This is so because Article 1436 of the Civil Code, 12 Section 2, Rule 131 of the Rules of
unsound mind, cannot testify as to any matter of fact occurring before the death of such deceased
Court 13 and settled jurisprudence 14 consistently instruct that a lessee is estopped or prevented
person or before such person became of unsound mind.
from disputing the title of his landlord.

Second: In the Memorandum of Encumbrances found at the back of TCT No. 53284 issued in the
name of Remigio Tan in 1958 attached as Annex "B" 15 to the complaint, there appears a mortgage
constituted by Remigio Tan over the subject properties in favor of Philippine Commercial and
Industrial Bank in 1963 to guarantee a principal obligation in the sum of P245,000.00. Remigio could
not have mortgaged the subject properties had he not been the true owner thereof, inasmuch as
under Article 2085 of the New Civil Code, one of the essential requisites for the validity of a
mortgage contract is that the mortgagor be the absolute owner of the thing mortgaged. There is
thus no denying that Remigio Tan's successful acquisition of a transfer certificate of title (TCT No.
53284) over the subject properties in his name after having his brothers (Alejandro Tan Keh) title
thereto cancelled, and execution of a mortgage over the same properties in favor of Philippine
Commercial and Industrial Bank, undoubtedly, are acts of strict dominion which are anathema to
the concept of a continuing and subsisting trust 16 private respondent relies upon.
Third: There being no trust, express or implied, established in favor of private respondent, the only
transaction that can be gleaned from the allegations in the complaint is a double sale, the controlling
provision for which is Article 1544 of the Civil Code, to wit:
The object and purpose of the rule is to guard against the temptation to give false testimony in
regard of the transaction in question on the part of the surviving party, and further to put the two
parties to a suit upon terms of equality in regard to the opportunity to giving testimony. If one party
to the alleged transaction is precluded from testifying by death, insanity, or other mental
disabilities, the other party is not entitled to the undue advantage of giving his own uncontradicted
and unexplained account of the transaction. 19
Clearly then, from a reading of the complaint itself, the annexes attached thereto and relevant laws
and jurisprudence, the complaint indeed does not spell out any cause of action.
We agree with the petitioners' submission that private respondent's cause of action has prescribed.
TCT No. 53284 in the name of Remigio Tan was registered on October 13, 1958, while TCT No.
117898 in the name of his heirs, herein petitioners, was issued on April 21, 1975. Private respondent
filed his complaint on October 18, 1993. Respondent court held that the ten (10)-year prescriptive
period for the reconveyance of property based on an implied trust cannot apply in this case since
private respondent was in actual possession of the subject properties, citing as authority the case
of Heirs of Jose Olviga v. CA, et al. 20 Thus:
 It is true that the prescriptive period within which to file an action for reconveyance of property
based on an implied trust is 10 years from the date of issuance of a certificate of title thereon in
accordance with Article 1144 of the New Civil Code and jurisprudence (see Heirs of Jose Olviga v.
Court of Appeals, 227 SCRA. 330 citing the case of Vda. de Portugal v. IAC. 159 SCRA 1780). But
this rule applies only when the plaintiff (the appellant) is not in possession of the property, since
if a person claiming to be the owner thereof is in actual possession of the property, the right to
seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe (Heirs
of Jose Olviga v. Court of Appeals, supra; emphasis supplied: see also Sapto v. Fabiana, 103 Phil.
683 and Faja v. Court of Appeals, 75 SCRA 441 cited in the decision).
The Court notes that, as alleged in the complaint, the appellant has been in continuous and
uninterrupted possession of the property in the concept of an owner since 1954, which allegation,
by the appellees' motion to dismiss, has been hypothetically admitted. Therefore, the appellant's
cause of action is by jurisprudence, even imprescriptible.
Reliance on the Olviga case is misplaced. Private respondents in Olviga were actually occupying the
subject land fraudulently registered in the name of Jose Olviga in a cadastral proceeding as owners.
The rightful application of the doctrine highlighted in Olviga that the right to seek reconveyance of
property actually in possession of the plaintiff is imprescriptible would only cover a situation where
the possession is in the concept of an owner. This is bolstered not only by Article 1118 of the New
Civil Code, falling under the chapter Prescription of Ownership and the Real Rights, which provides
that:
Art. 1118. Possession has to be in the concept of an owner, public, peaceful and uninterrupted.
(emphasis ours),
but by a further reading of Olviga which emphasized that ". . . if a person claiming to be the
owner thereof is in actual possession of the property, the right to seek reconveyance, which in
effect seeks to quiet title to the property, does not prescribe." 21
certainly be granted the right to trust in that express assurance. The very fact that the appellant
asserts his rights vis-à-vis the appellees show that he has not abandoned to secure the title to a
very substantial property located in the heart of Manila.
Private respondent's possession of the subject properties cannot be made the basis to deflect the
effects of laches because he is a mere lessee who, to repeat, cannot assert any adverse claim of
ownership over the subject properties against the lessor-owner. What ought to be in focus is that,
as alleged by private respondent in his complaint, he was not able to effect the transfer of title over
the subject properties in his favor upon his purchase thereof from Alejandro Tan Keh in 1954
because he was still a foreigner at that time. But private respondent later on claimed that he was
already a Filipino national when he reminded petitioners of his ownership of the subject properties
during Remigio Tan's wake sometime in 1968. It may be reasonably deduced from these allegations
that private respondent acquired Filipino citizenship by naturalization, thus entitling him to own
properties in the 1960's, more or less. His mistake, if it is one, is that he tarried for thirty (30) years
before formally laying claim to the subject properties before the court. Considerable delay in
asserting one's right before a court of justice is strongly persuasive of the lack of merit of his claim,
since it is human nature for a person to enforce his right when the same is threatened or invaded.
Thus, private respondent is estopped by laches from questioning the ownership of the subject
properties. 23
WHEREFORE, in view of the foregoing, the assailed decision of respondent Court of Appeals dated
May 28, 1996 and its Resolution of July 31, 1996 denying the motion for reconsideration thereof,
are hereby SET ASIDE, and a new one is rendered DISMISSING private respondent Fernando Tan
Kiat's complaint.
SO ORDERED.

In this case, however, private respondent's occupation of the subject properties was never in the
concept of an owner since he was a mere lessee who, as hereinbefore discussed, is estopped from
denying the title of Remigio Tan as owner-lessor. At best, private respondent's stay on the
properties as lessee was by "license or by mere tolerance" which, under Article 1119 of the Civil
Code, "shall not be available for the purposes of possession." 22

It thus becomes evident that the filing of private respondent's complaint in 1993 — thirty five (35)
years after TCT No. 53284 in the name of Remigio Tan was registered and eighteen (18) years after
the issuance of TCT No. 117898 in the names of petitioners — was way beyond the ten (10)-year
time limit within which reconveyance of property based on an implied trust should be instituted.
Private respondent's cause of action, assuming that it exists, has clearly prescribed.

Finally, private respondent is guilty of laches. In negating the onset of laches, respondent CA held:

But the presumption of abandonment in asserting a right or declining to do so does not apply to
appellant. For the appellant has been and still is in actual, peaceful and continuous physical
possession of the property. Being in actual, peaceful and continuous physical possession of the
property cannot certainly be said as non-assertion of a right to the property. Moreover, the
appellee had acknowledged the trust character of possession of the title, and the appellant must
CIVPRO – RULE 16 – MOTIONS TO DISMISS – STATUTE OF FRAUDS
G.R. No. L-51058 January 27, 1992
ASIA PRODUCTION CO., INC., WANG TA PENG and WINSTON WANG, petitioners,
vs.
HON. ERNANI CRUZ PAñO, as Judge of the Court of First Instance of Rizal (Quezon City, Branch
XVIII), LOLITA LEE LE HUA and ALBERTO DY, respondents.
So, on or about 29 December 1976, upon prior agreement with private respondents, petitioners
removed all their property, machinery and equipment from the building, vacated the same and
returned its possession to private respondents. Petitioners demanded from the latter the return of
their partial payment for the purchase price of the building in the total sum of P50,000.00. Private
respondents refused to return it. Hence, petitioners, filed against private respondents a complaint
1 for its recovery and for actual, moral and exemplary damages and attorney's fees with the then
Court of First Instance (now Regional Trial Court) of Quezon City, which was docketed as Civil Case
No. Q-23593. The case was raffled to Branch XVIII of the court which was then presided over by
herein respondent Judge.

DAVIDE, JR. J.:

Private respondent Lolita Lee Le Hua did not file an Answer; hence, she was declared in default.

The simple issue in this case is whether or not an action for the refund of partial payments of the
purchase price of a building covered by an oral agreement to sell it with an oral promise to assign
the contract of lease on the lot where the building is constructed is barred by the Statute of Frauds.
Sometime in March 1976, private respondents, who claimed to be the owners of a building
constructed on a lot leased from Lucio San Andres and located in Valenzuela, Bulacan, offered to
sell the building to the petitioners for P170,000.00. Petitioners agreed because of private
respondents' assurance that they will also assign to the petitioners the contract of lease over the
land. The above agreement and promise were not reduced to writing. Private respondents
undertook to deliver to the petitioners the deed of conveyance over the building and the deed of
assignment of the contract of lease within sixty (60) days from the date of payment of the
downpayment of P20,000.00. The balance was to be paid in monthly installments. On 20 March
1976, petitioners paid the downpayment and issued eight (8) postdated checks drawn against the
Equitable Banking Corporation for the payment of the eight (8) monthly installments, as follows:
Upon the other hand, private respondent Alberto Dy filed a motion
to dismiss the complaint on the ground that the claim on which the action is based — an alleged
purchase of a building which is not evidenced by any writing — cannot be proved by parol evidence
since Article 1356 in relation to Article 1358 of the Civil Code requires that it should be in writing. 2
In their opposition 3 to said motion, petitioners argue that their complaint is essentially for collection
of a sum of money; it does not seek to enforce the sale, but aims to compel private respondents to
refund a sum of money which was paid to them as purchase price in a sale which did not materialize
by reason of their bad faith. Furthermore, the execution of the document was an undertaking of the
private respondents, which they refused to comply with. Hence, they cannot now be heard to
complain against something which they themselves brought about.
In his Order 4 of 18 April 1979, respondent Judge granted the motion to dismiss on the ground that
the complaint is barred by the Statute of Frauds. He says:

It cannot be disputed that the contract in this case is condemned by the Statutes of Fraud (sic) it
Check No. Amount Due Date
involves not merely the sale of real property (the building), it also includes an alleged lease
agreement that must certainly be for more than one year (See Art. 1403, No. 2, subparagraph e,
10112253 P10,000.00 June 30, 1976 New Civil Code).
10112254 20,000.00 July 30, 1976
10112255 20,000.00 August 30, 1976
Plaintiffs cannot avoid the Statutes of Fraud (sic) by saying that this is merely an action for the
10112256 20,000.00 September 30, 1976
collection of a sum of money. To be entitled to the sum of P50,000.00, it is necessary to show
10112257 20,000.00 October 30, 1976
that such contract was executed and the same was violated but — plaintiffs are prevented from
10112258 20,000.00 November 30, 1976
proving this alleged agreement by parol evidence.
10112259 20,000.00 December 30, 1976
10112260 20,000.00 January 31, 1977
Neither may plaintiffs claim that by the payment of the sum of P50,000.00 the contract was
removed from the Statutes of Fraud (sic). This is so because plaintiffs have not fully complied with
Relying on the good faith of private respondents, petitioners constructed in May 1976 a weaving
their obligation to pay P170,000.00. If there had been full payment of P170,000.00, the situation
factory on the leased lot. Unfortunately, private respondents, despite extensions granted, failed to
would have been different.
comply with their undertaking to execute the deed to sale and to assign the contract despite the
fact that they were able to encash the checks dated 30 June and 30 July 1976 in the total amount
of P30,000.00. Worse, the lot owner made it plain to petitioners that he was unwilling to give Plaintiffs knew or should have known that their contract (as described by them in their complaint)
consent to the assignment of the lease unless petitioners agreed to certain onerous terms, such as was unenforceable; they had thereby voluntarily assumed the risks attendant to such contract.
an increase in rental, or the purchase of the land at a very unconscionable price. Moreover, the primordial aim of the Statutes of Fraud (sic) is to prevent fraud and perjury in the
enforcement of obligations depending upon the unassisted memory of witnesses (Shoemaker vs.
La Tondeña, 68 Phil. 24). The Court would find it difficult to determine whether the sum of
Petitioners were thus compelled to request for a stop payment order of the six (6) remaining checks.
P50,000.00 was paid because of the unenforceable contract or for some other transactions.
Succeeding negotiations to save the transaction proved futile by reason of the continued failure of
private respondents to execute the deed of sale of the building and the deed of assignment of the
contract of lease.
Their motion for reconsideration 5 having been denied by respondent Judge in his Order 6 of 21
June 1979 for the reason that the oral contract in this case was not removed from the operation of
the Statute of Frauds because there was no full or complete performance by the petitioners of the
contract as required in Paterno vs. Jao Yan 7 and Babao vs. Perez, 8 petitioners filed this petition 9
on 16 July 1979, alleging therein as ground therefor grave abuse of discretion on the part of
respondent Judge in issuing the orders of 18 April 1979 and 21 June 1979.
After private respondent Alberto Dy filed his Comment 10 to the petition in compliance with the
resolution 11 of 23 July 1979 and petitioners filed their Reply 12 to said comment on 2 April 1980,
this Court gave due course 13 to the petition. Private respondent Lolita Lee Le Hua was considered
to have waived her right to file her comment to the petition.14
Petitioners were subsequently required to file their Brief, which they complied with on 13 October
1981; 15 they make the following assignment of errors:
I money; but when a sale is made by auction and entry is made by the auctioneer in his sales book,
The lower court erred in holding that for a contract of purchase and sale to be removed from the
operation of the Statute of Frauds, there must be full and complete payment of the purchase
price.
II
The lower court erred in failing to appreciate the nature of petitioners' cause of action.
III
The lower court erred in not finding that this case is not covered by the Statute of Frauds.
IV
The lower court erred in not following the procedure prescribed by this Honorable Court in cases
when partial performance is alleged.
V et al. vs. Monserrat, 17 that the statute will apply only to executory rather than executed contracts.
The lower court erred in dismissing the case.
Private respondents did not file their Brief.
We find merit in the petition. Respondent Judge committed grave abuse of discretion in dismissing
the complaint on the ground that the claim is barred by the Statute of Frauds.
Article 1403 of the Civil Code declares the following contracts, among others, as unenforceable,
unless they are ratified:
xxx xxx xxx
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the
following cases an agreement hereafter made shall be unenforceable by action, unless the same,
or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by
his agent; evidence, therefore, of the agreement cannot be received without the writing, or a
secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five
hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the
evidences, or some of them, of such things in action, or pay at the time some part of the purchase
at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of
the purchasers and person on whose account the sale is made, it is a sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the sale of real property
or of an interest therein;
(f) A representation to the credit of a third person.
xxx xxx xxx
The purpose of the statute is to prevent fraud and perjury in the enforcement of obligations
depending for their evidence on the unassisted memory of witnesses by requiring certain
enumerated contracts and transactions to be evidenced by a writing signed by the party to be
charged. 16 It was not designed to further or perpetuate fraud. Accordingly, its application is limited.
It makes only ineffective actions for specific performance of the contracts covered by it; it does not
declare them absolutely void and of no effect. As explicitly provided for in the above-quoted
paragraph (2), Article 1403 of the Civil Code, the contracts concerned are simply "unenforceable"
and the requirement that they — or some note or memorandum thereof — be in writing refers only
to the manner they are to be proved. It goes without saying then, as held in the early case of Almirol,
Partial execution is even enough to bar the application of the statute. In Carbonnel vs. Poncio, et al.,
18 this Court held:
. . . It is well-settled in this jurisdiction that the Statute of Frauds is applicable only to executory
contracts (Facturan vs. Sabanal, 81 Phil. 512), not to contracts that are totally or partially
performed (Almirol, et al. vs. Monserrat, 48 Phil. 67, 70; Robles vs. Lizarraga Hermanos, 50 Phil.
387; Diana vs. Macalibo, 74 Phil. 70).
Subject to a rule to the contrary followed in a few jurisdictions, it is the accepted view that part
performance of a parol contract for the sale of real estate has the effect, subject to certain
conditions concerning the nature and extent of the acts constituting performance and the right
to equitable relief generally, of taking such contract from the operation of the statute of frauds,
so that chancery may decree its specific performance or grant other equitable relief. It is well
 settled in Great Britain and in this country, with the exception of a few states, that a sufficient
part performance by the purchaser under a parol contract for the sale of real estate removes
the contract form the operation of the statute of frauds (49 Am. Jur. 722-723).
In the words of former Chief Justice Moran: "The reason is simple. In executory contracts there is
a wide field for fraud because unless they be in writing there is no palpable evidence of the
intention of the contracting parties. The statute has precisely been enacted to prevent fraud."
(Comments on the Rules of Court, by Moran, Vol. III [1957 ed.] p. 178). However, if a contract has
been totally or partially performed, the exclusion of parol evidence would promote fraud or bad
faith, for it would enable the defendant to keep the benefits already derived by him form the
transaction in litigation, and, at the same time, evade the obligations, responsibilities or liabilities
assumed or contracted by him thereby.
xxx xxx xxx
When the party concerned has pleaded partial performance, such party is entitled to a reasonable
chance to establish by parol evidence the truth of this allegation, as well as the contract itself.
"The recognition of the exceptional effect of part performance in taking an oral contract out of
the statute of frauds involves the principle that oral evidence is admissible in such cases to prove
both the contract and the part performance of the contract" (49 Am. Jur. 927).
We thus rule that an action by a withdrawing party to recover his partial payment of the
consideration of a contract, which is otherwise unenforceable under the Statute of Frauds, by
reason of the failure of the other contracting party to comply with his obligation, is not covered by
the Statute of Frauds.

It follows then that the statute applies only to executory contracts and in actions for their WHEREFORE, the petition is hereby GRANTED. The challenged Orders of 18 April 1979 and 21 June
specific performance. It does not apply to actions which are neither for violation of a contract 1979 in Civil Case No. Q-23593 of the court below are hereby ANNULLED and SET ASIDE, and the
nor for the performance thereof. 19 complaint in said case is hereby ordered REINSTATED. The default order against private
respondent Lolita Lee Le Hua shall stand and private respondent Alberto Dy is ordered to file his
There can be no dispute that the instant case is not for specific performance of the agreement to Answer to the complaint with the court below within ten (10) days from receipt of this decision.
sell the building and to assign the leasehold right. Petitioners merely seek to recover their partial This decision shall be immediately executory.
payment for the agreed purchase price of the building, which was to be paid on installments, with
the private respondents promising to execute the corresponding deed of conveyance, together with Costs against private respondents.
the assignment of the leasehold rights, within two (2) months from the payment of the agreed
downpayment of P20,000.00. By their motion to dismiss, private respondents theoretically or
IT IS SO ORDERED.
hypothetically admitted the truth of the allegations of fact in the complaint. 20 Among the
allegations therein are: (1) that the P50,000.00 sought to be recovered represents the
downpayment of P20,000.00 and two (2) monthly installments of the purchase price, and (2) that
petitioners decided, in effect, to withdraw from the agreement by ordering the stop payment of the
remaining six (6) checks and to return the possession of the building to private respondents because
of the latter's failure to comply with their agreement. The action is definitely not one for specific
performance, hence the Statute of Frauds does not apply. And even if it were for specific
performance, partial execution thereof by petitioners effectively bars the private respondents from
invoking it. Since it is for refund of what petitioners had paid under the agreement, originally
unenforceable under the statute, because petitioners had withdrawn therefrom due to the "bad
faith" of the private respondents, the latter cannot be allowed to take shelter under the statute and
keep the P50,000.00 for themselves. If this were the case, the statute would only become a shield
for fraud, allowing private respondents not only to escape performance of their obligations, but also
to keep what they had received from petitioners, thereby unjustly enriching themselves.

Besides, even if the action were for specific performance, it was premature for the respondent
Judge to dismiss the complaint by reason of the Statute of Frauds despite the explicit allegations
of partial payment. As this Court stated in Carbonnel vs. Poncio, et al.: 21

For obvious reasons, it is not enough for a party to allege partial performance in order to hold
that there has been such performance and to render a decision declaring that the Statute of
Frauds is inapplicable. But neither is such party required to establish such partial performance by
documentary proof before he could have the opportunity to introduce oral testimony on the
transaction. Indeed, such oral testimony would usually be unnecessary if there were documents
proving partial performance. Thus, the rejection of any and all testimonial evidence on partial
performance, would nullify the rule that the Statute of Frauds is inapplicable to contracts which
have been partly executed, and lead to the very evils that the statute seeks to prevent.
CIVPRO – RULE 16 – MOTIONS TO DISMISS – CONDITIONS PRECEDENT already covered a wider area than that feared to be adversely affected by the City Council of
Pagadian City.
G.R. No. 85502 February 24, 1992
Floods are unknown phenomena in heavily forested areas years back, particularly in the Island
SUNVILLE TIMBER PRODUCTS, INC., petitioner, of Mindanao. When the grant of logging concessions started, so was the denudation of forests.
vs. . . . It is common knowledge that heavy floods have occurred in areas/places adjoining logging
HON. ALFONSO G. ABAD, as Judge RTC, Br. 22 of Pagadian City, COURT OF APPEALS, ISIDRO concessions. (Resolution dated December 11, 1987, p. 5).
GILBOLINGO AND ROBUSTIANO BUGTAI, respondents.
Thus, it is urgent that indiscriminate logging be stopped. Irreparable damage would ensue unless
CRUZ, J.:
the court intervenes. Reliance on the DENR may not be enough, judging from its inaction on the
council's request seven years back.
The Court will focus its attention only on one of the issues raised in this petition — the correct
application of the doctrine of exhaustion of administrative remedies.
The respondent court cited in support of this conclusion the case of De Lara v. Cloribel, 5 where
"irreparable damage and injury" was allowed as an exceptional ground, and Arrow Transportation
The petitioner was granted a Timber License Agreement (TLA), authorizing it to cut, remove and
Corporation v. Board of Transportation, 6 where the doctrine was waived because of "the strong
utilize timber within the concession area covering 29,500 hectares of forest land in Zamboanga del
public interest in having the matter settled" as soon as possible.
Sur, for a period of ten years expiring on September 31, 1992.

The decision also declared invalid Section 1 of PD 605, which provides:

On July 31, 1987, the herein private respondents filed a petition with the Department of
Environment and Natural Resources for the cancellation of the TLA on the ground of serious
violations of its conditions and the provisions of forestry laws and regulations. Sec. 1. No court of the Philippines shall have jurisdiction to issue any restraining order,
preliminary injunction or preliminary mandatory injunction in any case involving or growing out
of the issuance, approval or disapproval, revocation or suspension of, or any action whatsoever
The same charges were subsequently made, also by the herein private respondents, in a complaint
by the proper administrative official or body on concessions, licenses, permits, patents, or public
for injunction with damages against the petitioner, which was docketed as Civil Case No. 2732 in
grants of any kind in connection with the disposition, exploitation, utilization, exploration and/or
the Regional Trial Court of Pagadian City.
development of the natural resources of the Philippines.
The petitioner moved to dismiss this case on three grounds, to wit: 1) the court had no jurisdiction
This was held to be an encroachment on the judicial power vested in the Supreme Court and the
over the complaint; 2) the plaintiffs had not yet exhausted administrative remedies; and 3) the
lower courts by Article VIII, Section 1, of the Constitution. The respondent court cited Export
injunction sought was expressly prohibited by section 1 of PD 605.
Processing Zone Authority v. Dulay, 7 where several presidential decrees were declared
unconstitutional for divesting the courts of the judicial power to determine just compensation in
Judge Alfonso G. Abad denied the motion to dismiss on December 11, 1987, 1 and the motion for
expropriation cases.
reconsideration on February 15, 1988. 2 The petitioner then elevated the matter to the respondent
Court of Appeals, which sustained the trial court in a decision dated July 4, 1988, 3 and in its
The petitioner is now before the Court, contending that the doctrine of exhaustion of administrative
resolution of September 27, 1988, denying the motion for reconsideration. 4
remedies was not correctly applied and that the declaration of the unconstitutionality of Section 1
of PD 605 was improper.
The Court of Appeals held that the doctrine of exhaustion of administrative remedies was not
without exception and pointed to the several instances approved by this Court where it could be
The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate
dispensed with. The respondent court found that in the case before it, the applicable exception was
administrative authorities in the resolution of a controversy falling under their jurisdiction before
the urgent need for judicial intervention, which it explained thus:
the same may be elevated to the courts of justice for review. Non-observance of the doctrine results
in lack of a cause of action, 8 which is one of the grounds allowed in the Rules of Court for the
The lower court found out that sometime on July 1981, the City Council of Pagadian in its
dismissal of the complaint. The deficiency is not jurisdictional. Failure to invoke it operates as a
Resolution No. 111 requested the Bureau of Forest Development to reserve 1,000 hectares in
waiver of the objection as a ground for a motion to dismiss and the court may then proceed with
Lison Valley. This request remained unacted upon. Instead in 1982, a TLA covering 29,500
the case as if the doctrine had been observed.
hectares, including the area requested, was given to petitioner.
One of the reasons for the doctrine of exhaustion is the separation of powers, which enjoins upon
Then the fear expressed by the City Council of Pagadian in its resolution became reality.
the Judiciary a becoming policy of non-interference with matters coming primarily (albeit not
exclusively) within the competence of the other departments. The theory is that the administrative
"As averred in the complaint, the erosion caused by the logging operations of the defendant authorities are in a better position to resolve questions addressed to their particular expertise and
has caused heavy siltation not only in the Labangan River (as predicted by the City Council of that errors committed by subordinates in their resolution may be rectified by their superiors if given
Pagadian City in 1981) but also in the Tukuran River, Salug River, Sindangan River, and Sibuguey a chance to do so. A no less important consideration is that administrative decisions are usually
River. In other words, the adverse effects of the logging operations of the defendant have
questioned in the special civil actions of certiorari, prohibition and mandamus, which are allowed
only when there is no other plain, speedy and adequate remedy available to the petitioner. It may
be added that strict enforcement of the rule could also relieve the courts of a considerable number
of avoidable cases which otherwise would burden their heavily loaded dockets. 9
As correctly suggested by he respondent court, however, there are a number of instances when the
doctrine may be dispensed with and judicial action validly resorted to immediately. Among these
exceptional cases are: 1) when the question raised is purely legal; 10 2) when the administrative
body is in estoppel; 11 3) when the act complained of is patently illegal; 12 4) when there is urgent
need for judicial intervention; 13 5) when the claim involved is small; 14 6) when irreparable damage
will be suffered; 15 7) when there is no other plain, speedy and adequate remedy; 16 8) when strong
public interest is involved; 17 9) when the subject of the controversy is private land; 18 and 10) in quo
warranto proceedings. 19
The private respondents now submit that their complaint comes under the exceptions because
forestry laws do not require observance of the doctrine as a condition precedent to judicial action;
the question they are raising is purely legal; application of the doctrine will cause great and
irreparable damage; and public interest is involved.
We rule for the petitioner.
Even if it be assumed that the forestry laws do not expressly require prior resort to administrative
remedies, the reasons for the doctrine above given, if nothing else, would suffice to still require its
observance. Even if such reasons were disregarded, there would still be the explicit language of
pertinent laws vesting in the DENR the power and function "to regulate the development,
disposition, extraction, exploration and use of the country's forests" and "to exercise exclusive
jurisdiction" in the "management and disposition of all lands of the public domain," 20 and in the
Forest Management Bureau (formerly the Bureau of Forest Development) the responsibility for the
enforcement of the forestry laws aid regulations 21 here claimed to have been violated. This
comprehensive conferment clearly implies at the very least that the DENR should be allowed to rule
in the first instance on any controversy coming under its express powers before the courts of justice
may intervene.
The argument that the questions raised in the petition are purely legal is also not acceptable. The
private respondents have charged, both in the administrative case before the DENR and in the civil
case before the Regional Trial Court of Pagadian City, that the petitioner has violated the terms and
conditions of the TLA and the provisions of forestry laws and regulations. The charge involves factual
issues calling for the presentation of supporting evidence. Such evidence is best evaluated first by
the administrative authorities, employing their specialized knowledge of the agreement and the
rules allegedly violated, before the courts may step in to exercise their powers of review.
As for the alleged urgent necessity for judicial action and the claimed adverse impact of the case on
the national interest, the record does not show that the petitioners have satisfactorily established
these extraordinary circumstances to justify deviation from the doctrine by exhaustion of
administrative remedies and immediate resort to the courts of justice. In fact, this particular
submission must fall flat against the petitioner's uncontested contention that it has since 1988
stopped its operations under the TLA in compliance with the order of the DENR.
In the Petition for prohibition filed with the respondent court, the petitioner alleged that its logging
operations had been suspended pursuant to a telegram 22 received on February 23, 1988, by the
District Forester from the Regional Executive Director of the DENR, Zamboanga City; reading as
follows:
DISTRICT FORESTER
PAGADIAN CITY
QUOTED HEREUNDER IS RADIO MESSAGE DATED FEBRUARY 22, 1988 FROM SECRETARY
FULGENCIO S. FACTORAN, JR. QUOTE EFFECTIVE IMMEDIATELY CMA SUSPEND ALL LOGGING
OPERATIONS OF SUNVILLE IN VIEW OF SERIOUS VIOLATIONS OF FOREST PROTECTION AND
REFORESTATION UNQUOTE SUBMIT REPORT ASAP.
The petition now before us contains the allegations that the "petition for cancellation of petitioner's
TLA is still pending up to this date and that petitioner's logging operations (were) ordered
suspended by the Secretary of the DENR pending further investigation." 23
In the memorandum filed by the petitioner with this Court, it is informed that "the Secretary of the
DENR suspended petitioner's logging operations until further investigation. The suspension is still in
force up to this date after the lapse of almost 3 years." 24
These statements have not been disputed by the private respondents in their pleadings before the
respondent court and this Court and are therefore deemed admitted.
There in no question that Civil Case No. 2732 comes within the jurisdiction of the respondent court.
Nevertheless, as the wrong alleged in the complaint was supposedly committed as a result of the
unlawful logging activities of the petitioner, it will be necessary first to determine whether or not
the TLA and the forestry laws and regulations had indeed been violated. To repeat for emphasis,
determination of this question is the primary responsibility of the Forest Management Bureau of
the DENR. The application of the expertise of the administrative agency in the resolution of the issue
raised is a condition precedent for the eventual examination, if still necessary, of the same question
by a court of justice.
In view of the above observations, we find that there was no need for the respondent court to
declare the unconstitutionality of Section 1 of PD 605. The rule is that a question of constitutionality
must be avoided where the case can be decided on some other available ground, 25 as we have done
in the case before us. The resolution of this same question must await another case, where all the
indispensable requisites of a judicial inquiry into a constitutional question are satisfactorily
established. In such an event, it will be time for the Court "to make the hammer fall, and heavily,"
in the words of Justice Laurel, if such action is warranted.
WHEREFORE, the petition is GRANTED. The decision of the respondent court dated July 4, 1988, and
its resolution dated September 27, 1988, as well as the resolutions of the trial court dated December
11, 1987 and February 15, 1988, are all REVERSED and SET ASIDE. Civil Case No. 2732 in the Regional
Trial Court of Pagadian City is hereby DISMISSED.
SO ORDERED.
CIVPRO – RULE 16 – MOTIONS TO DISMISS – HEARING AND RESOLUTION
G.R. No. 94733 February 17, 1993
MUNICIPALITY OF BIÑAN, LAGUNA, represented by Hon. Bayani Alonte, Municipal Mayor of
Biñan, Laguna, petitioner,
vs.
HON. COURT OF APPEALS and JESUS M. GARCIA, respondents.
REGALADO, J.:
This is an appeal via certiorari from the judgment of respondent Court of Appeals promulgated on
May 31, 1990 in CA-G.R. SP No. 195821 wherein it set aside the order granting a writ of execution
pending appeal issued on December 14, 1989 by Branch 24 of the Regional Trial Court at Biñan,
Laguna in Civil Case No. B-3201 thereof; and further annulled the judgment rendered by the
Municipal Trial Court of Biñan, Laguna in an ejectment case, docketed as Civil Case No. 2473, and
which case is pending on appeal in the aforestated Civil Case No. B-3201. Respondent court having
denied the reconsideration in its resolution of August 9, 1990,2 petitioners have taken this recourse
to us against the backdrop of the antecedents hereunder chronologically detailed.
On September 27, 1989, petitioner filed Civil Case No. 2473 for unlawful detainer, with a prayer for
a writ of preliminary mandatory injunction, against private respondent in the Municipal Trial Court
of Biñan, Laguna alleging that it was no longer amenable to the renewal of its 25-year lease contract
with private respondent over the premises involved because of its pressing need to use the same
for national and provincial offices therein.
On December 5, 1989, petitioner filed before said court a motion for execution pending appeal and
on December 14, 1989, Hon. Jose Mar. Garcia, presiding judge of said branch of the regional trial
court granted petitioner's aforesaid motion for discretionary execution. 4 The following day,
December 15, 1989, a writ of execution was issued directing the deputy sheriff or his duly authorized
representative to enforce the terms of the judgment of the court a quo.5
On December 29, 1989, private respondent filed with the Court of Appeals a petition for certiorari,
with a prayer for the issuance of a writ of preliminary injunction, assailing the aforesaid order of
execution pending appeal on the ground that petitioner failed to furnish private respondent with a
copy of the motion therefor filed by it in the aforementioned Civil Case No. B-3201, contrary to
Section 6, Rule 15 of the Rules of Court, hence the invalidity of the lower court's order of December
14, 1989 which granted the writ of execution. Petitioner seasonably filed its comment and/or
opposition to said petition.
Resolving this issue posed by the pleadings, respondent court rendered judgment on May 31, 1990
setting aside the questioned order for being violative of the requirement in Section 6, Rule 15 of the
Rules of Court which provides that no motion shall be acted upon by the court without proof of
prior notice thereof to the adverse party. Aside from annulling the controversial order, however,
respondent court likewise annulled the judgment of the court a quo in Civil Case No. 2473, which
judgment is pending on appeal in Civil Case No. B-3201 of the aforesaid regional trial court.
Respondent court granted the second additional relief on the ground that the decision is contrary
to the agreement of the parties which should be considered the law between them. 6
The assailed judgment and ratiocinations of respondent court are best reproduced for convenient
reference:

FIRSTLY, the respondent Municipality filed a Motion For Execution pending appeal. Petitioner
On October 5, 1989, private respondent filed his answer to the complaint contending that the
contends that said motion did not comply with Section 4, Rule 15 and the ruling of Azajar vs.
contract of lease for the original period of 25 years had not yet expired and, assuming that it had
Court of Appeals (145 SCRA 333). Under Section 6, Rule 15 of the Rules of Court, no motion shall
expired, he has exercised his option to stay in the premises for another 25 years as expressly
be acted upon by the Court without proof of such motion. The respondent Court by doing so
provided in the said contract. On October 9, 1989, petitioner filed its reply to private respondent's
acted with serious abuse of discretion which is tantamount to lack of or in excess of jurisdiction
answer.
to issue a writ of execution pending appeal.

On October 16, 1989, private respondent filed this time a "Motion for Preliminary Hearing as if a
SECONDLY, petitioner assails the decision of the lower court on the ground that it failed to
Motion to Dismiss Has Been Filed" on the ground that the complaint states no cause of action,
consider that the judgment proceeded from an inferior court which was improvidently and
reiterating its argument that the original term of 25 years stipulated in the contract of lease had not
irregularly rendered when it failed to resolve first the issue raised in the motion to dismiss. This
yet expired and that, at any rate, under said contract he has the exclusive option to renew the same
refers to a situation where the lease contract shall be for twenty five (25) years, renewable for
for another 25 years.
another twenty five (25) years at the option of the lessee or his heirs. . . .

After some further exchanges consisting of petitioner's opposition to private respondent's aforesaid
WHEREFORE, in view of the foregoing and considering the evidence and the highest consideration
motion for preliminary hearing, the latter's reply thereto, and the parties' respective position
of law and applicable jurisprudence, the petition for certiorari is hereby granted. The order dated
papers, the municipal trial court rendered judgment on October 26, 1989 ordering private
December 14, 1989 in Civil Case No. B-3201, issued without notice to petitioner together with
respondent to vacate the premises subject of the ejectment case. 3
the writ of execution pending appeal, being null and void, is therefore ordered set aside, being
contrary to Section 6, Rule 15 of the Rules of Court. The judgment of the inferior court in Civil
On November 8, 1989, private respondent filed a "Manifestation/Motion" before said trial court Case No. 2475 (sic, 2473) is likewise ordered annulled, being contrary to the agreement of the
praying that the issues raised in the motion for preliminary hearing, apparently because it was in parties which is considered the law between them.7
the nature of a motion to dismiss, be first resolved instead of rendering judgment on the pleadings.
Thereafter, on November 10, 1989, private respondent received a copy of the decision of the trial
Petitioner duly filed a motion for reconsideration of said judgment on the ground that the Court of
court, hence he filed a notice of appeal to the Regional Trial Court of Laguna on November 20, 1989,
Appeals should have confined itself to the questioned order of the respondent regional trial court
which was assigned to Branch 24 thereof at Biñan, Laguna.
dated December 14, 1989 and subject of private respondent's petition for certiorari with
preliminary injunction in CA-G.R. SP No. 19582.
As earlier stated, respondent court denied said motion, hence, the instant petition wherein the
petitioner contends that the Court of Appeals overstepped the bounds of its authority in annulling
the decision of the municipal trial court even if said decision was not an issue raised by private
respondent in CA-G.R. SP No. 19582 and which decision is in fact pending on appeal with the
regional trial court.8
In his comment, private respondent refutes petitioner's contention and claims that the issue of the
merits of the judgment of the municipal trial court was sufficiently raised and controverted, hence,
respondent court was not in error when it passed judgment on the same. Moreover, private
respondent makes the riposte that it is a cherished rule in procedural law that a controversy should
be settled in one single proceeding in order to avoid multiplicity of suits.
We are favorably impressed with the merits of the instant petition.
Respondent Court of Appeals has no jurisdiction in a certiorari proceeding involving an incident in a
case to rule on the merits of the main case itself which was not on appeal before it. The validity of
the order of the regional trial court, dated December 14, 1989, authorizing the issuance of a writ of
execution during the pendency of the appeal therein was the sole issue raised in the petition for
certiorari filed in respondent Court of Appeals.9 The allegation that the decision of the municipal
trial court was improvidently and irregularly issued was raised by private respondent only as an
additional or alternative argument to buttress his theory that the issuance of a discretionary writ of
execution was not in order, as can be gleaned from the text of said petition itself, to wit:
V. ERRORS/ISSUES
xxx xxx xxx
Besides, when the respondent Judge issued the writ, it (sic) failed to consider that the judgment
rendered by the inferior court was improvidently and irregularly issued, when said court failed to
resolve first the pending Motion To Dismiss, a procedural process before any judgment on the
merit(s) may be had. 10
Further, even assuming that the said issue was squarely raised and sufficiently controverted, the
same cannot be considered a proper subject of a special civil action for certiorari under Rule 65
which is limited only to challenges against errors of jurisdiction. The jurisdiction of the municipal
trial court over the ejectment case filed by the petitioner against private respondent is not disputed.
Thus, assuming that the said lower court committed a mistake on the merits of the case, it was
nonetheless in the due exercise of its jurisdiction. The error, if any was committed by the trial court,
was at most one of judgment or procedure correctible by ordinary appeal.
Neither can it be said that the lower court committed a grave abuse of discretion or exceeded its
jurisdiction when it failed to conduct a preliminary hearing, as prayed for in private respondent's
"Motion for Preliminary Hearing as if a Motion to Dismiss Has Been Filed," before summarily
rendering judgment on the merits of the case. The said motion of private respondent is anchored
on the ground that the complaint allegedly states no cause of action since the original term of 25
years stipulated in the contract of lease had not yet expired and assuming that it had expired,
private respondent had made known to petitioner his exclusive option to renew it for another 25
years. 11
Section 5, Rule of the Rules of Court pertinently provides:
Sec. 5. Pleading grounds as affirmative defenses. — Any of the grounds for dismissal provides
for in this Rule, except improper venue, preliminary hearing may be had thereon as if a motion
to dismiss had been filed.
The aforequoted provision allows the grounds for a motion to dismiss to be set up as affirmative
defenses in the answer if no motion to dismiss has been filed.
However, contrary to the claim of private respondent, the preliminary hearing permitted under the
said provision is not mandatory even when the same is prayed for. It rests largely on the sound
discretion of the trial court. The use of the word "may" in said provision shows that such a hearing
is not a matter of right demandable from the trial court. Where the provision reads "may," this word
shows that it is not mandatory but discretional. It is an auxiliary verb indicating liberty, opportunity,
permission and possibility. 12
Moreover, a preliminary hearing on an affirmative defense for failure to state a cause of action is
not necessary. As we have ruled in Heirs of Juliana Clavano vs. Genato, et al.: 13
. . . respondent Judge committed an error in conducting a preliminary hearing on the private
respondent's affirmative defenses. It is a well-settled rule that in a motion to dismiss based on
the ground that the complaint fails to state a cause of action, the question submitted to the court
for determination is the sufficiency of the allegations in the complaint itself. Whether those
allegations are true or not is beside the point, for their truth is hypothetically admitted by the
motion. The issue rather is: admitting them to be true, may the court render a valid judgment in
accordance with the prayer of the complaint? Stated otherwise, the sufficiency of the cause of
action must appear on the face of the complaint in order to sustain a dismissal on this ground.
No extraneous matter may be considered nor facts not alleged, which would require evidence
and therefore, must be raised as defenses and await the trial. In other words, to determine
sufficiency of the cause of action, only the facts alleged in the complaint, and no other should be
considered.
The respondent Judge departed from this rule in conducting a hearing and in receiving evidence
in support of private respondent's affirmative defense, that is, lack of cause of action.
It is a familiar doctrine in this jurisdiction that certiorari will issue only to correct errors of jurisdiction
and that no error or mistake committed by a court will be corrected by certiorari unless said court
had acted in the premises without jurisdiction or in excess thereof or with such grave abuse of
discretion as would amount to lack of jurisdiction. It is available only for these purposes and not to
correct errors of procedure or mistake in the judge's finding or conclusions. 14
If a judgment of a municipal trial court is sought to be reviewed, the remedy is an appeal to the
regional trial court, not the filing of a special civil action of certiorari. Appeal, whether from an
interior court or a regional trial court, is antithetical to a special civil action of certiorari. 15 When
the remedy of appeal is available, the extraordinary remedy of certiorari cannot be resorted to
because the availability of appeal proscribes recourse to the special civil action of certiorari. 16
Indeed, the respondent Court of Appeals went beyond the realm of its authority and its
pronouncements on the judgment rendered by the municipal trial court on the ejectment case were
ultra jurisdictio. That judgment was on appeal before the regional trial court. Respondent court's
authority was, therefore, limited to ruling upon the issue of whether or not the regional trial court
committed grave abuse of discretion in issuing the order directing the issuance of a discretionary
writ of execution against private respondent. Whether or not the municipal trial court committed a
mistake in arriving at its decision is an issue that is beyond the authority of respondent court to
decide. It is lodged in another and appropriate forum with appellate powers the exercise of which
should not be usurped or preemted by respondent Court of Appeals.

WHEREFORE, the petition at bar is GRANTED. The decision of respondent Court Appeals dated May
31, 1990, insofar as it annulled the decision of the Municipal Trial Court of Biñan, Laguna in Civil
Case No. 2473, and its resolution of August 9, 1990 are hereby REVERSED and SET ASIDE. Let this
case be REMANDED to the Regional Trial Court of Biñan, Laguna for further appropriate
proceedings.

SO ORDERED.
CIVPRO – RULE 16 – MOTIONS TO DISMISS – REMEDIES IF MOTION DENIED
G.R. No. 84695 May 8, 1990
NATIONAL POWER CORPORATION and FINE CHEMICALS (PHILS.), INC., petitioners,
vs.
THE COURT OF APPEALS and THE MANILA ELECTRIC COMPANY, respondents.
PARAS, J.:
This is a petition for review on certiorari, with prayer for the issuance of temporary restraining order,
of the August 11, 1988 decision * of the Court of Appeals in CA-G.R. SP No. 12939 dismissing the
petition for certiorari, prohibition and mandamus.
Herein petitioner FINE Chemicals (Phils.) Inc. (FINE for short) is a corporation registered with the
Board of Investments (BOI for short) and engaged in the manufacture of plastics for export.
Sometime in September, 1986, it filed an application for direct power connection with herein co-
petitioner National Power Corporation (NPC for short). NPC, acting on the same, wrote a letter to
herein private respondent Manila Electric Company (MERALCO for short), dated November 18, 1986
(Rollo, p. 54), wherein it stated that as per Memorandum of Understanding between NPC and BOI,
the NPC is authorized to connect directly to its system qualified industrial consumers. However, due
to its policy not to compete directly with its customers, NPC requests that it be informed whatever
definite decision MERALCO is contemplating on the requests of FINE and of Rizal Cement for such
direct connection. MERALCO, in a letter dated December 3, 1986 (Ibid., p. 55), advised NPC that
they are not in a position to grant the request since to allow large consumers to tap directly to NPC
will mean foregoing the share of the subsidy burden which will ultimately be borne by the other
remaining large consumers, and that it will also mean costly duplication of facilities. MERALCO, in a
letter dated February 27, 1987 (Ibid., p. 56) further stated, among others, that the direct connection
of industries under BOI-NPC memorandum of understanding dated January 12, 1981, presupposes
the inability of the utility/cooperatives to meet certain standard of financial and technical capability,
both of which are not true in the case of MERALCO. NPC, in a letter dated March 16, 1987 (Ibid., p.
57), informed MERALCO that in the absence of a clear- cut policy that will inhibit NPC from acceding
to the said request, NPC is now preparing and will put up the necessary facilities to supply power to
FINE; and that they are now negotiating the terms and conditions of the supply. MERALCO, in a
letter dated March 20, 1987 (Ibid., pp. 58-59), registered its strong objection; reiterated its
assurance that it is financially and technically capable of serving the power requirements of FINE;
and with the statement that a draft executive order creating the Energy Regulatory Board has been
prepared and may be issued momentarily, urged NPC to hold off any further action towards serving
applicant directly, lest it will pre-empt that Board from implementing government prescription on
this issue. But on July 12, 1987, NPC started to supply the electric requirements of FINE by direct
power supply connection.
Hence, on July 22, 1987, MERALCO filed with the Regional Trial Court of Pasig, presided over by
Judge Eutropio Migrino a petition for Prohibition, mandamus and Damages with Preliminary
Injunction against petitioners NPC and FINE Chemicals (Phil.) Inc., docketed therein as Civil Case No.
54733 (Ibid., pp. 23-53).
On August 4, 1987, FINE filed its opposition to MERALCO's application for preliminary injunction,
maintaining that the application for injunctive relief had become moot and academic since, prior to
the filing of the petition, the direct power service had already been consummated and the requisite
power lines and facilities of NPC had long been installed and fully operational.
Accordingly, MERALCO amended its petition by incorporating therein an application for a writ of
preliminary mandatory injunction.
On August 11, 1987, FINE moved to dismiss the amended petition on the ground of insufficiency of
the allegations in the petition to plead a cause of action (Ibid., pp. 60-70). NPC adopted FINE's
motion to dismiss.
Meanwhile, trial judge allowed reception of MERALCO's evidence in support of its application for a
writ of preliminary mandatory injunction, over FINE's objection.
On August 25, 1987, MERALCO was granted leave to file its second amended petition so as to
incorporate this time an allegation of grave and irreparable injury.
With the admission of MERALCO's second amended petition, FINE filed a manifestation adopting its
motion to dismiss dated August 10, 1987 as its motion to dismiss the second amended petition. On
the other hand, MERALCO filed its opposition thereto on September 11, 1987.
Respondent Judge, in an order dated September 16, 1987, denied the motion to dismiss (Ibid., p.
79), the pertinent portion of which, reads:
The Motion to Dismiss is anchored on the ground of lack of cause of action.
Well settled rule is that when the motion to dismiss is anchored on lack of cause of action, the
facts alleged in the complaint are assumed and no other fact can be considered in resolving said
motion.
After going carefully over the complaint, the Court believes, and so holds, that if not properly
traversed it can render a valid judgment thereon.
WHEREFORE, respondent Fine Chemicals (Phils.), Inc.'s said motion to dismiss is hereby denied.
FINE, without filing a motion for reconsideration, on October 1, 1987, filed with respondent Court
of Appeals a Petition for Certiorari, Prohibition and mandamus (Ibid., pp. 80-98). NPC, on the other
hand, on October 13, 1987, filed a Petition for Leave to File Intervention to Adopt Petition and
Motion for Extension of Time to File Supplemental Petition (Ibid., pp. 93-103) which was filed on
October 28,1987 (Ibid., pp. 6-7).
Respondent Court of Appeals, in a decision promulgated on August 11, 1988, dismissed the petition
for certiorari, prohibition and mandamus (Ibid., pp. 149-154). Hence, the instant petition.
The Second Division of this Court, after the filing of the required pleadings, in a resolution dated
March 8, 1989 (Ibid., p. 199), resolved to give due course to the petition, and to require the parties
to submit simultaneously their respective memoranda. In compliance therewith, petitioners filed
their memorandum on June 30, 1989 (Ibid., pp. 221-233) while MERALCO filed its memorandum on
July 3, 1989 (Ibid., pp. 240-253).
The instant petition is impressed with merit.
The main issue in this case is whether or not MERALCO's petition in the lower court should be
dismissed.
The answer is in the affirmative.
It is significant that this case is elevated to the Court of Appeals and now to this Court because of
the denial of petitioner's Motion to Dismiss the amended petition of MERALCO. Unquestionably, it
is but an incident to the main case and the ordinary procedure would have been to file an answer,
go to trial and if the decision is adverse, reiterate the issue on appeal (Newsweek, Inc. vs. IAC, 142
SCRA 177 [1986]). But this general rule is subject to certain exceptions, among which are, if the
court in denying the motion to dismiss acts without or in excess of jurisdiction or with grave abuse
of discretion. The reason is, it would be unfair to require the defendant to undergo the ordeal and
expense of trial under such circumstances as the remedy of appeal would not be plain and adequate.
More importantly, petitioner's motion to dismiss is based on the ground that the complaint states
no cause of action, so that there is no need for a full blown trial (Newsweek, Inc. vs. IAC Ibid).
In addition, applying the rule enunciated in Gayos v. Gayos (67 SCRA 146 [1975]) and reiterated in
Alger Electric, Inc. v. Court of Appeals, 135 SCRA, 43 [1985]), that it is a cherished rule of procedure
for this Court to always strive to settle the entire controversy in a single proceeding leaving no root
or branch to bear the seeds of future litigation, it appears that the disposition of the incident as well
as the main issue in the case at bar is in consonance with an efficient administration of justice, now
that the facts are before this Court.
MERALCO's claim in its petition for Prohibition and mandamus before the Regional Trial Court is
anchored on its standing as a holder of a franchise for the sale and distribution of electric power in
various areas of the country including Calamba, Laguna. MERALCO asserts that it has the right to be
heard on any application for direct power connection and to defeat such application by showing its
ability or willingness to match the rates of NPC (Rollo, pp. 222-223). As earlier stated, it also
expressed the fear that to allow large consumers to tap directly to NPC will mean foregoing the
share of the subsidy burden which will ultimately be borne by the other consumers.
As consistently ruled by this Court pursuant to P.D. No. 380 as amended by P.D. No. 395, NPC is
statutorily empowered to directly service all the requirements of a BOI registered enterprise
provided that, first, any affected private franchise holder is afforded an opportunity to be heard on
the application therefor and second, from such a healing, it is established that said private franchise
holder is incapable or unwilling to match the reliability and rates of NPC for directly serving the
latter (National Power Corporation v. Jacinto, 134 SCRA 435 [1985]; National Power Corporation v.
Canares 140 SCRA 336 [1985]; National Power Corporation v. Court of Appeals, 161 SCRA 103
[1988]).
While initially, MERALCO may have been deprived of the right to be heard in an administrative
proceeding, but in subsequent proceedings before the courts, it had been given ample opportunity
to show that it is capable and wining to match NPC rates but failed. On the contrary, in a hearing
before the trial court on August 12, 1987, for the issuance of preliminary mandatory injunction,
MERALCO thru its witness V.C. Flordeliza, admitted on cross examination that it cannot charge the
same rate NPC is charging because MERALCO has to make a profit on its investment.
Flordeliza testified as follows:
Q. By the way, are you also aware of the power rates that Meralco is charging Fine Chemicals,
Inc. for the supply of electric power?
A. Per kilowatt-hour, it is about P2.00 sir.
Q. And, are you also aware of the charges of NPC to Meralco for the supply of power of electricity
that Meralco supplies to its customers of any nature?
A. Approximately the rate is P1.00 per kilowatt-hour, sir.
Q. Would you say that it is the same rate NPC charging its all direct customers, the rates NPC is
charging Meralco, the rate Meralco is charging its customers?
A. I am not sure of that, sir.
xxx xxx xxx
Q. You said a while ago that the rate Meralco is charging its customers, the same rate NPC charges
its customers also?
A. Of course Meralco would have to make some profit on its investment. Meralco charges P 2.00
per kilowatt-hour to its customers. Naturally, it would make some profit as allowed by the Board
of Energy, sir.
Q. But, the rate NPC is charging Meralco is just a minimal rate?
A. No, because NPC is the wholesaler and Meralco is only a retailer. WE NATURALLY CANNOT SELL
TO OUR CUSTOMERS THE SAME RATE NPC IS CHARGING US. AS I HAVE SAID, WE HAVE TO MAKE
A PROFIT ON OUR INVESTMENT, SIR." (Cont of Cross Examination of Witness V.C. Flordeliza, 12
August 1987, p. 41, t.s.n.). (Rollo, pp. 20-21)
In this Court, MERALCO never committed itself by categorically stating that it can match NPC rates.
Instead it confined itself to the statement that it is financially and technically capable of meeting
FINE's power requirements while in its Memorandum it avers that "At this point in time, it would
be highly improper to ask Meralco whether it can match the rate of NPC." Verily, the intent to evade
the issue and to avail of technicalities to annul the contract between FINE and NPC are clearly
evident so that no useful purpose will be served to remand this case to the trial court only to have
the latter's decision raised again to the Court of Appeals and then to this Court.
Moreover, there is no denial of due process to speak of. As ruled by this Court, the heart of
procedural due process is the need for notice and an opportunity to be heard (Planters Products,
Inc. vs. National Labor Relations Commission, G.R. No. 78524, January 20, 1989). What due process
abhors is not lack of previous notice but absolute lack of opportunity to be heard (Relucio III v.
Macaraig, G.R. No. 82007, May 10, 1989).
Ultimately the issue of exclusivity has already been laid to rest by this Court with the established
principle that the exclusive nature of any public franchise is not favored and that in all grants by the
government to private corporations, the interpretation of rights, privileges or franchises is taken
against the grantee. More specifically, this Court ruled:
. . . Exclusivity is given by law with the understanding that the company enjoying it is self-sufficient
and capable of supplying the needed service or product at moderate or reasonable prices. It would
be against public interest where the firm granted a monopoly is merely an unnecessary conduit of
electric power, jacking up prices as a superfluous middleman or an inefficient producer which
cannot supply cheap electricity to power intensive industries. It is in the public interest when
industries dependent on the heavy use of electricity are given reliable and direct power at the
lowest costs thus enabling the sale of nationally marketed products at prices within the reach of the
masses. . . . (Alger Electric, Inc. v. Court of Appeals, 135 SCRA 45-46 [1985]).
PREMISES CONSIDERED, MERALCO's petition in the lower court is hereby DISMISSED.
SO ORDERED.
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – UPON NOTICE BY PLAINTIFF – BEFORE ANSWER
G.R. No. 135803 March 28, 2006
O.B. JOVENIR CONSTRUCTION AND DEVELOPMENT CORPORATION, OSCAR B. JOVENIR and
GREGORIO LIONGSON, Petitioners,
vs.
MACAMIR REALTY AND DEVELOPMENT CORPORATION, SPOUSES ROSAURO and GLORIA
MIRANDA and the HONORABLE COURT OF APPEALS, Respondents.
DECISION
TINGA, J.:
In denying the present petition, the Court affirms the right of a plaintiff to cause the dismissal of the
complaint at any time before service of the answer without need of affirmative action on the part
of the trial court. It must be qualified though that the incidents for adjudication occurred a few
months before the effectivity of the 1997 Rules of Civil Procedure1 which now requires that upon
the filing of such notice, the court issue an order confirming the dismissal. 2 The precedental value
of this decision is thus qualified to instances occurring prior to the 1997 Rules of Civil Procedure.
On 3 February 1997,3 a complaint was filed before the Regional Trial Court (RTC) of Makati City, with
private respondents Macamir Realty and Development Corp. (Macamir Realty) and spouses Rosauro
and Gloria Miranda as plaintiffs, and petitioners O.B. Jovenir Construction and Development Corp.
(Jovenir Construction), Oscar B. Jovenir, and Gregorio Liongson being among the defendants. The
complaint, docketed as Civil Case No. 97-256, sought the annulment of certain agreements between
private respondents and petitioners, as well as damages.4 It was alleged that Jovenir Construction
was contracted to complete the construction of private respondents condominium project. Private
respondents subsequently sought the termination of their agreements with petitioners after it was
discovered that Jovenir Construction had misrepresented itself as a legitimate contractor. 5
Respondents likewise prayed for the issuance of a writ of preliminary injunction. A hearing on the
prayer appears to have been conducted on 6 February 1997.6
It was also alleged in the complaint that Gloria Miranda was the principal stockholder and President
of Macamir Realty while her husband Rosauro was the owner of the real properties on which the
condominium project was being constructed.7
Almost immediately, two of the impleaded defendants filed their respective motions to dismiss.
Defendant Salud Madeja filed her motion on 6 February 1997, while Cesar Mangrobang, Sr. and
Cesar Mangrobang, Jr. followed suit with their motion dated 13 February 1997. Madeja pertinently
alleged that while the spouses Miranda had initiated the complaint on behalf of Macamir Realty,
the real party-in-interest, they failed to attach any Board Resolution authorizing them to file suit on
behalf of the corporation. Oddly enough, Madeja was a member of the Board of Directors of
Macamir Realty, and she averred as a fact that said Board of Directors had not authorized the
spouses Miranda to initiate the complaint against Jovenir Realty.8
On 13 February 1997, or 10 days after the filing of the complaint, private respondents filed a Motion
to Withdraw Complaint, alleging that during the initial hearing on the prayer for preliminary
injunction on 6 February 1997, counsel for plaintiffs "discovered a supposed technical defect in the
complaint x x x that x x x may be a ground for the dismissal of this case."9 Thus, private respondents
prayed that the plaintiffs be allowed to withdraw the complaint without prejudice.
Petitioners filed an opposition to the Motion to Withdraw Complaint on 18 February 1997, wherein
they adopted Madeja’s arguments as to the lack of authority on the part of the spouses Miranda to
sue on behalf of Macamir Realty. However, just one day earlier, or on 17 February 1997, private
respondents filed another complaint against the same defendants save for Madeja, and seeking the
same reliefs as the first complaint. This time, a Board Resolution dated 10 February 1997 authorizing
the spouses Miranda to file the Complaint on behalf of Macamir Realty was attached to the
complaint. This second complaint was also filed with the Makati RTC and docketed as Civil Case No.
97-379. The Verification and Certification [of] Non-Forum Shopping in the second complaint was
accomplished by Rosauro Miranda, who averred as follows:
3. That other than Civil Case No. 97-256 filed on February 3, 1997 before the Regional Trial Court of
Makati City which was withdrawn on February 13, 1997, I further certify that we have not
commenced any other action or proceedings involving the same issue in the Supreme Court, or
Court of Appeals or any other tribunal or agency; x x x 10
On 24 February 1997, 11 days after the filing of the Motion to Withdraw Complaint and seven days
after the filing of the second Complaint, the Makati RTC, Branch 149, acting in Civil Case No. 97-256,
granted the Motion to Withdraw Complaint. The RTC noted in its Order11 that "an action may be
dismissed by the plaintiffs even without Order of the Court by filing a notice of dismissal at anytime
before the service of the answer under Rule 17, Section 1 of the Rules of Court," and accordingly
considered the complaint withdrawn without prejudice.12
The battle then shifted to Civil Case No. 97-379, which had been raffled to Branch 136 of the Makati
RTC. On 4 March 1997, petitioners filed a Motion to Dismiss the second complaint on the ground of
forum-shopping. They pointed out that at the time of the filing of the second complaint on 17
February 1997, the first complaint was still pending. The Makati RTC denied the Motion to Dismiss
in an Order13 dated 23 May 1997, observing that at the time the Motion to Withdraw Complaint
was filed, none of the defendants had filed any answer or any responsive pleading. Thus, it was then
within respondents’ right to cause the dismissal of the complaint without having to await action of
the court on their motion.14 This Order was affirmed by the Court of Appeals
Special Sixth Division in its Decision15 dated 23 June 1998 after petitioners had assailed the RTC’s
order via a special civil action for certiorari filed with the appellate court. 16 Hence, the present
petition.
Petitioners now argue that under Section 1 of Rule 17 of the Rules of Civil Procedure in effect at the
time of these antecedents, the plaintiff may obtain the dismissal of his own complaint before a
responsive pleading has been filed through the filing of a notice of dismissal. However, respondents
in this case did not file a notice of dismissal, but instead lodged a Motion to Withdraw Complaint, a
motion which requires affirmative action from the court before the complaint may be deemed
dismissed. Since the Makati RTC had granted the motion only on 24 February 1997, the first
complaint had not yet been withdrawn as of 17 February 1997, when the second complaint was
filed. It is thus posited that the Certification of Non-Forum Shopping attached to the second
complaint was false, in that it averred that the first complaint "was withdrawn on February 13,
1997" when in fact the motion to withdraw complaint was granted only 11 days after. In sum,
respondents had violated the procedural rules against forum-shopping, which at that time were
incorporated in Administrative Circular No. 04-94 of the Supreme Court.
We find no error on the part of the lower courts since the denial of the motion to dismiss is wholly
in accord with the Rules of Civil Procedure.
Section 1, Rule 17 of the 1964 Rules of Civil Procedure stated:
Dismissal by the plaintiff — An action may be dismissed by the plaintiff without order of court by
filing a notice of dismissal at any time before service of the answer or of a motion for summary
judgment. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a
notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed
in a competent court an action based on or including the same claim. A class suit shall not be
dismissed or compromised without the approval of the court.17
Indubitably, the provision ordained the dismissal of the complaint by the plaintiff as a matter of
right at any time before service of the answer.18 The plaintiff was accorded the right to dismiss the
complaint without the necessity of alleging in the notice of dismissal any ground nor of making any
reservation.19
In Go v. Cruz,20 the Court, through Chief Justice Narvasa, has recognized that "where the dismissal
of an action rests exclusively on the will of a plaintiff or claimant, to prevent which the defending
party and even the court itself is powerless, requiring in fact no action whatever on the part of the
court except the acceptance and recording of the causative document."21 The facts in that case are
well worth considering. Therein, the notice of dismissal was filed by the plaintiff on 12 November
1981. Respondent filed his answer three days earlier, or on 9 November, but plaintiff was served a
copy of the answer by registered mail only on 16 November. Notwithstanding the fact that the
answer was filed with the trial court three days prior to the filing of the notice of dismissal, the Court
still affirmed the dismissal sought by the plaintiff. The Court declared that the right of the plaintiff
to cause the dismissal of the complaint by mere notice is lost not by the filing of the answer with
the trial court, but upon the actual service to the plaintiff of the answer.22
The Court further ruled that "[plaintiff’s] notice ipso facto brought about the dismissal of the action
then pending in the Manila Court, without need of any order or other action by the Presiding Judge.
The dismissal was effected without regard to whatever reasons or motives [plaintiff] might have
had for bringing it about, and was, as the same Section 1, Rule 17 points out, ‘without prejudice,’
the contrary not being otherwise ‘stated in the notice’ and it being the first time the action was
being so dismissed."23
It is quite clear that under Section 1, Rule 17 of the old Rules, the dismissal contemplated therein
could be accomplished by the plaintiff through mere notice of dismissal, and not through motion
subject to approval by the Court. Dismissal is ipso facto upon notice, and without prejudice unless
otherwise stated in the notice. It is due to these considerations that the petition should be denied.
Evidently, respondents had the right to dismiss their complaint by mere notice on 13 February 1997,
since as of even date, petitioners had not yet served their answer on respondents. The Motion to
Withdraw Complaint makes clear respondents’ "desire to withdraw the complaint without
prejudice." That respondents resorted to a motion to effect what they could have instead by mere
notice may be indicative of a certain degree of ignorance of procedural rules on the part of
respondents’ counsel. Yet such "error," if it could be called as such, should hardly be of fatal
consequence. Petitioners posit that the "remedy" of filing a notice of dismissal is not exclusive,
respondents having the "option" of securing the court’s approval to the dismissal.24 On the contrary,
the trial court has no discretion or option to deny the motion, since dismissal by the plaintiff under
Section 1, Rule 17 is guaranteed as a matter of right to the plaintiffs. Even if the motion cites the
most ridiculous of grounds for dismissal, the trial court has no choice but to consider the
complaint as dismissed, since the plaintiff may opt for such dismissal as a matter of right,
regardless of ground.
We are in accord with the Court of Appeals when it pronounced:
While [the Motion to Withdraw Complaint] is styled as a "motion" and contains a "prayer", these
are innocuous errors and superfluities that do not detract from its being a notice of dismissal made
under said Section 1 of Rule 17 and which ipso facto dismissed the case. It is a hornbook rule that it
is not the caption of a pleading but the allegations thereat that determines its nature.[25] The court
order of dismissal is a mere surplusage under the circumstances and emphasized by the court a quo
itself when it granted the motion "[x x x] considering that an action may be dismissed by the plaintiffs
even without Order of the Court[x x x]"26
Thus, the complaint could be properly considered as having been dismissed or withdrawn as of 13
February 1997. Accordingly, when respondents filed their new complaint relating to the same cause
of action on 17 February 1997, the old complaint was no longer pending. The certification against
forum-shopping attached to the new complaint correctly asseverated that the old complaint "was
withdrawn on February 13, 1997."27
Petitioners are unable to propose any convincing legal argument or any jurisprudence that would
sway the Court to their point of view. At the same time, our present ruling must be distinguished
from Ortigas & Company Limited Partnership v. Velasco,28 wherein it was advanced that
"theoretically every final disposition of an action does not attain finality until after fifteen (15) days
therefrom, x x x the plaintiff may move to withdraw and set aside his notice of dismissal and revive
his action, before that period lapses."29 That statement was made in the context of ruling that a
plaintiff may move for the revival of the complaint dismissed on his instance under Section 1 of Rule
17 only within 15 days upon notice; otherwise the remedy of the plaintiff would be to file a new
complaint. This observation in Ortigas does not detract from the fact that under Section 1, Rule 17
of the previous Rules, the complaint is deemed ipso facto dismissed on the day of the filing of the
notice. This again is because dismissal at the instance of the plaintiff under Section 1, Rule 17 is a
matter of right, and under the 1964 Rules of Civil Procedure, effective without need of any
affirmative action on the part of the trial court.
As noted at the onset, the 1997 Rules of Civil Procedure now requires that upon the filing of such
notice, the court issue an order confirming the dismissal. 30 The new requirement is intended to
qualify the right of a party to dismiss the action before the adverse party files an answer or asks for
summary judgment.31 Still, there is no cause to apply the 1997 Rules retroactively to this case. A
plaintiff’s right to cause the dismissal of his complaint under the old rules was unqualified.
Procedural rules may not be given retroactive effect if vested rights would be disturbed,32 or if their
application would not be feasible or would work injustice.33 Since respondents possessed an
unqualified right to cause the dismissal of their complaint without need of confirmation by the trial
court, as enunciated in the 1964 Rules, they did not err in asserting that their first complaint was
withdrawn on the day of the filing of their motion to withdraw, and the lower courts were correct
in agreeing with respondents on this point.
WHEREFORE, the Petition is DENIED. Costs against petitioners.
SO ORDERED.
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – DUE TO FAULT OF PLAINTIFF
G.R. No. 164797 February 13, 2006
JOSEFINA M. CRUZ and ERNESTINA M. CONCEPCION, Petitioners,
vs.
THE HON. COURT OF APPEALS, SECOND DIVISION, MARIANO "BOY" BUNAG and ROLANDO
BUNAG, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Certiorari under Rule 65 of the Rules of Court which seeks to reverse and
set aside the decision1 of public respondent Court of Appeals dated 19 March 2004 which dismissed
the petition for certiorari asking for the nullity of the 13 May 2003 Order of the Regional Trial Court
of Gapan, Nueva Ecija, Branch 35, in Civil Case No. 2583-02, and its Resolution2 dated 29 June 2004
denying petitioners' motion for reconsideration.
The antecedents are substantially stated by the Court of Appeals as follows:
There are four (4) cases involved in this controversy. The first case that was filed between the parties
is Civil Case No. 4365 for Unlawful Detainer litigated before the Municipal Trial Court of Gapan,
Nueva Ecija entitled "Josefina M. Cruz and Ernestina M. Concepcion, plaintiffs, vs. Mariano `Boy'
Bunag, Rolando Bunag, Remedios Bunag, et al., Defendants." This case was decided on 6 November
1998 by the Municipal Trial Court in favor of herein petitioner Josefina M. Cruz and Ernestina M.
Concepcion.
The second case is Civil Case No. 1600 for Quieting of Title, filed before the Regional Trial Court of
Gapan, Nueva Ecija, Branch 36 with "Carlos L. Bunag, Elias Bunag Natividad, Mariano Bunag, Salud
Bunag Clanaoc and Juliana Bunag Arevalo, as Plaintiffs and Josefina M. Cruz and Ernestina M.
Concepcion as Heirs of Sps. Carlos Maniquis and Marina Bunag, as Defendants." This case was
dismissed for failure to prosecute as evidenced by the Regional Trial Court Order dated 10 March
2000.
The third case is Civil Case No. 2573-02 for Injunction, with "Mariano `Boy' Bunag and Rolando
Bunag as Petitioners against Carlos Bunag, Elias Bunag Natividad, Mariano Bunag, Salud Bunag
Clanaoc and Juliana Bunag Arevalo as Defendants." This case, which was filed before the Regional
Trial Court of Gapan City, Branch 35, was dismissed on ground of res judicata. The 6 November 2002
Order, in effect, ruled that there is a substantial identity of parties in this case and in Civil Case No.
1600, a Petition for Quieting of Title.
The fourth case is the instant controversy for Annulment of Title With Damages. Docketed as Civil
Case No. 2583-02, it was lodged by herein private respondents Mariano "Bo[y]" Bunag and Rolando
Bunag against herein petitioners Josefina M. Cruz and Ernestina M. Concepcion before the sala of
Branch 35, Regional Trial Court of Gapan City.
It appears that herein petitioners interposed a Motion for Outright Dismissal of Civil Case No. 2583
which was granted by the Court a quo as evidenced by an Order dated 18 February 2003,
ratiocinating:
xxx xxx xxx
After a careful study of the arguments of both parties, the Court has found that herein case (2583)
involve the same parties, subject matter and issue as that in Civil Case No. 1600 which has become
final and executory and Civil Case No. 2573-02 which was already dismissed by this Court on the
ground of res judicata. In all three cases, Mariano Bunag was included as party-plaintiff and
Ernestina Concepcion as party-defendant. The subject matter involves a parcel of land located in
San Nicolas, Gapan City with an area of 1,160 square meters, more or less, and the issue is who
between the two parties has the lawful title over the same. Clearly, not only res judicata but also
accion pendente lite is present in herein case which the plaintiffs and their counsel should have
revealed in the Certificate/Verification of their complaint. The allegation that it is only now that they
have learned of the existence of Civil Case No. 1600 is without merit considering that in the Motion
for the Outright Dismissal of Civil Case No. 2573, dated September 19, 2002, its existence was
already disclosed and even became the ground for the dismissal of Civil Case No. 2573 on the ground
of res judicata.
Moreover, the Certification against forum shopping does not only refer to final and executory
actions but also to pending controversies. Considering that plaintiffs have been represented by the
same counsel in Civil Case No. 2573 and herein case (Civil Case No. 2583-02), it is very clear that
plaintiffs counsel is appraised (sic) of the existence of Civil Case No. 1600 and Civil Case No. 2573.
WHEREFORE, premises considered, the Motion for Outright Dismissal is granted by reason of res
judicata and accion pendente lite and the plaintiffs and their counsel are declared guilty of indirect
Contempt of Court by reason of non-disclosure of Civil Case No. 1600 and Civil Case No. 2573 as
required by Section 5, Rule 7 of the Revised Rules of Court and ordered them to pay a fine of
P1,000.00 each.
SO ORDERED. (Rollo, p. 36)
xxx xxx xxx
However, when herein private respondents interposed their Motion for Reconsideration, the court
a quo reversed itself and reinstated the present case, the fallo of the herein assailed Order reads:
xxx xxx xxx
In the light of the foregoing, the Order dated February 18, 2003 of this Court, granting defendants'
Motion for the Outright Dismissal of this case and citing plaintiffs and counsel for contempt of court
is hereby reconsidered and set aside. Accordingly, the instant case is reinstated and the defendants
are directed to file their answer/responsive pleading within fifteen (15) days from receipt of this
order.
SO ORDERED. (Rollo, pp. 11-13)3
Via petition for review, petitioners went to the Court of Appeals. The latter dismissed the petition
for lack of merit. It ruled that one of the elements of res judicata, i.e., that there must be, between
the first and the second actions, identity of parties, of subject matter and of cause of action, is
lacking. It explained:
First. The issue in the Injunction case is the propriety of the demolition order; while in the present
action (Petition for Annulment of Title With Damages), the pivot of inquiry is the ownership of the
controversial estate.
Second. Private respondent Mariano Bunag denied that he authorized Carlos Bunag to sign the
Verified Complaint in his behalf. Because of this, Mariano Bunag cannot be considered as a party
litigant in the Injunction case. Concomitantly, there is no identity of parties between the present
case and in Civil Case No. 2573-02 (Injunction). As correctly ruled by the trial court, thus:
xxx xxx xxx
While it is true that this Court has earlier made a declaration in Civil Case No. 2573 that Carlos Bunag
was authorized by his co-plaintiffs to file Civil Case No. 1600 including herein plaintiff Mariano
Bunag, against herein defendants, such declaration was based on the verified complain[t] signed by
Carlos Bunag. In the absence of any evidence to the contrary, the Court has to assume that indeed
Carlos Bunag was authorized by his co-plaintiff Mariano Bunag to file Civil Case No. 1600. However,
with the submission of the affidavit of Mariano Bunag on April 14, 2003, wherein he claimed that
Civil Case No. 1600 for quieting of title was filed without his knowledge by Carlos Bunag for and in
behalf of the other plaintiffs including himself, the verified complaint of Carlos Bunag is now
disputed.
The categorical denial of Mariano Bunag that he was not aware that Carlos included him as one of
the plaintiffs in Civil Case No. 1600 for quieting of title has disputed the verified complaint of Carlos
Bunag. What is more, Rolando Bunag, one of the herein plaintiffs was never made a party in the
said Civil Case No. 1600 for quieting of title. Since Mariano Bunag did not authorize nor give his
consent to Carlos Bunag to include him as one of the plaintiffs in Civil Case No. 1600 and that herein
plaintiffs Rolando Bunag is not a party to the said case, the dismissal of Civil Case No. 1600 will not
bind them. Hence, the dismissal of Civil Case No. 1600 will not bar the filing of the instant complaint
as one of the requisites of res judicata is absent. There is no identity of parties between Civil Case
No. 1600 and the instant case for the simple reason that herein plaintiffs were not parties in Civil
Case No. 1600 as discussed above. Consequently, plaintiffs and their counsel can not be said to have
violated the rule against forum shopping. Plaintiffs and their counsel did not file Civil Case No. 1600
and therefore they are not obligated to inform this Court that they have filed a similar action
involving the same issue with other court.
x x x"
Third. As the court of justice abhors the disposition of the case based on technicalities, this Court
further concurs with the trial court's disquisition, to quote:
xxx xxx xxx
Moreover, substantial justice demands that technicalities should not be allowed to prevail over the
substantive rights of a party-litigant. If the subject property is really owned by the plaintiffs, then it
would be the height of injustice if they are not allowed to prove their cause of action because of
mere technicality. It would amount to deprivation of their property without due process.4
Petitioners filed a motion for reconsideration 5 which was denied in a resolution dated 29 June
2004.6
Dissatisfied, petitioners are now before us charging that the Court of Appeals committed grave
abuse of discretion amounting to lack or excess of jurisdiction in rendering the assailed decision and
resolution.7
Petitioners contend that all the elements of res judicata are present in the instant case. They argue
that the shuffling of parties should not prevent the application of res judicata considering that three
prior cases (Civil Case No. 4365 for Unlawful Detainer, Civil Case No. 1600 for Quieting of Title and
Civil Case No. 2573 for Injunction) against substantially the same parties over the same subject
matter and cause of action have all been decided in their favor. They point out that private
respondent Mariano "Boy" Bunag was one of the parties in the Ejectment and Quieting of Title cases
(and Injunction), and that his allegation in his affidavit that he neither authorized Carlos Bunag to
include him in the Quieting of Title case nor was he (Mariano) informed thereof, leaves too much
to be desired and that same was merely intended for delay. As regards the non-inclusion of private
respondent Rolando Bunag in the case for Quieting of Title but who was a party in the Ejectment
case (as well as in the Injunction case), they claim that same was in preparation for this stage of the
proceedings. They added that insofar as identity of causes of action is concerned, it cannot be
denied that the ownership and its concomitant right of possession are the issues in the cases for
Quieting of Title, Injunction and Annulment of Title.
In their comment,8 private respondents Rolando Bunag and Monina Luzong Vda. de Bunag 9
maintain that the public respondent did not err when it held that there was no res judicata in the
instant case and that the disposition of the case should not be based on technicalities.
The question to be resolved is: Does res judicata apply in the case at bar?
Under the rule of res judicata, also known as "bar by prior judgment," a final judgment or order on
the merits, rendered by a Court having jurisdiction of the subject matter and of the parties, is
conclusive in a subsequent case between the same parties and their successor-in-interest by title
subsequent to the commencement of the action or special proceeding, litigating for the same thing
and under the same title and in the same capacity. The requisites essential for the application of the
principle are: (1) there must be a final judgment or order; (2) said judgment or order must be on the
merits; (3) the Court rendering the same must have jurisdiction on the subject matter and the
parties; and (4) there must be between the two cases identity of parties, identity of subject matter,
and identity of causes of action.10
Petitioners claim res judicata applies in this case because all the elements thereof are present. On
the other hand, private respondents argue the contrary alleging that the second and fourth
elements are lacking.
There being no dispute as to the presence of the first and third elements, we now determine if the
second and fourth elements are attendant in the case.
On the second element, private respondents argue that the dismissal of Civil Case No. 1600 (for
Quieting of Title) was not a dismissal on the merits. The dismissal of this case, they claim, will not
bar the filing of the instant case (Civil Case No. 2583-02 for Annulment of Title) because there was
neither litigious consideration of the evidence nor any stipulations submitted by the parties at the
trial. In fact, there was no pre-trial conference and that after four years of court inactivity, the case
was dismissed for failure to prosecute.11
Their argument does not hold water. Section 3 of Rule 17 of the 1997 Rules of Civil Procedure
provides:
Section 3. Dismissal due to fault of plaintiff. - If, for no justifiable cause, the plaintiff fails to appear
on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action
for an unreasonable length of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon motion of the defendant or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate
action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.12
The rule enumerates the instances where the complaint may be dismissed due to plaintiff's fault:
(1) if he fails to appear on the date for the presentation of his evidence in chief; (2) if he fails to
prosecute his action for an unreasonable length of time; or (3) if he fails to comply with the rules or
any order of the court. Once a case is dismissed for failure to prosecute, this has the effect of an
adjudication on the merits and is understood to be with prejudice to the filing of another action
unless otherwise provided in the order of dismissal. In other words, unless there be a qualification
in the order of dismissal that it is without prejudice, the dismissal should be regarded as an
adjudication on the merits and is with prejudice.13 The order dismissing Civil Case No. 1600 reads:
For failure of the plaintiffs as well as counsel to appear on several settings despite due notices,
precisely for the reception of plaintiffs' evidence, upon motion of the defendant through Atty. Mark
Arcilla, this case is dismissed for failure to prosecute.14
It is clear from the afore-mentioned order that said case was dismissed, upon petitioners' motion,
for failure of private respondents and their counsel to attend several scheduled hearings for the
presentation of their evidence. Since the order did not contain a qualification whether same is with
or without prejudice, following Section 3, it is deemed to be with prejudice and shall have the effect
of an adjudication on the merits. A ruling based on a motion to dismiss, without any trial on the
merits or formal presentation of evidence, can still be a judgment on the merits.15
We now go to the fourth element - identity of parties, subject matter and cause of action.
Petitioners, citing jurisprudence, argue that res judicata is not defeated by a minor difference of
parties, as it does not require absolute but only substantial identity of parties16 in light of the fact
that three prior cases before the instant case have been decided in their favor against substantially
the same parties over the same subject matter and cause of action.lavvphil.ñe+
Public respondent ruled there was no identity of parties for two reasons: (1) Private respondent
Mariano Bunag was not a party litigant in the Quieting of Title17 case because he denied in an
affidavit that he authorized Carlos Bunag to sign the Verified Complaint and to make him a party
thereof; (2) Private respondent Rolando Bunag was not made a party in the Quieting of Title case.
Private respondent Mariano "Boy" Bunag's claim that the Quieting of Title case was filed without
his knowledge does not inspire belief. In the decision of the trial court in Civil Case No. 4365 (for
Unlawful Detainer), it is very clear that the defendants in said case that included both private
respondents, have knowledge of the pendency of the Quieting of Title case. A portion of the
decision18 reads:
Defendants claim of ownership of the property involved in this case which is now pending with the
Regional Trial Court of Gapan, Nueva Ecija (paragraph 3, Pre-Trial brief of defendants) where the
issue of ownership is the subject of the proceedings x x x.
It was the defendants, through their trial brief, that informed the court hearing the ejectment case
that a case (Civil Case No. 1600 for Quieting of Title) is pending where the issue of ownership is the
subject of the proceedings. Thus, as early as the pendency of the Ejectment case, private
respondents had known of the case for Quieting of Title. If he really did not authorize Carlos Bunag
to include him as one of the plaintiffs in the Quieting of Title case, he could have easily questioned
his inclusion therein at an earlier time. This, he did not do. He executed his affidavit only on 14 April
2003 or more that three years after the case for Quieting of Title has been dismissed, and after the
Injunction case which he and private respondent Rolando Bunag filed, was dismissed. It is evident
that his affidavit is a mere afterthought executed after his Motion for Reconsideration in the
injunction case was denied because the court gave no weight on his counsel's allegation that he
(Mariano Bunag) was unaware of the complaint signed and filed by Carlos Bunag. It is too late in the
day for him to claim lack of knowledge. It is very clear that the execution of the affidavit is to make
it appear that there is no identity of parties in the instant case and in the case for Quieting of Title.
Private respondents add that since Rolando Bunag was not a party in the Quieting of Title case, the
dismissal of said case will not bind him and thus not bar the filing of the instant case.
We do not agree. The principle of res judicata may not be evaded by the mere expedient of including
an additional party to the first and second action. Only substantial identity is necessary to warrant
the application of res judicata. The addition or elimination of some parties does not alter the
situation. There is substantial identity of parties when there is a community of interest between a
party in the first case and a party in the second case albeit the latter was not impleaded in the first
case.19
In the case at bar, it is apparent that from the face of the complaint for Quieting of Title, private
respondent Rolando Bunag was not a party therein as his name does not appear in the title. This,
notwithstanding, his claim and that of the plaintiffs therein, which included private respondent
Mariano Bunag, are the same - to be declared the true owners of the parcel of land covered by
Original Certificate of Title (OCT) No. 22262 and Transfer Certificate of Title (TCT) No. 67161 of the
Registry of Deeds of Nueva Ecija. Private respondent Rolando Bunag and the plaintiffs are all heirs
of the alleged owners of the parcel of land covered by OCT No. 22262. Private respondent Rolando
Bunag, though not a party therein, shared an identity of interest from which flowed an identity of
relief sought, namely, to declare them the true owners of the parcel of land covered by OCT No.
22262 and TCT No. 67161. Such identity of interest is sufficient to make them privy-in-law, thereby
satisfying the requisite of substantial identity of parties.
As regards the identity of subject matter, we find that there is. In both Civil Case No. 1600 (for
Quieting of Title) and Civil Case No. 2583 (for Annulment of Title), what is involved is one and the
same parcel of land covered by TCT No. 67161.
We likewise rule that there is identity of causes of action. Hornbook is the rule that identity of causes litigious disposition on the part of suitors to the preservation of the public tranquility and
of action does not mean absolute identity. Otherwise, a party could easily escape the operation of happiness.22 lavvphil.ñe+
res judicata by changing the form of the action or the relief sought. The test to determine whether
the causes of action are identical is to ascertain whether the same evidence will sustain both actions, WHEREFORE, premises considered, the petition is GRANTED. The decision of the Court of Appeals
or whether there is an identity in the facts essential to the maintenance of the two actions. If the dated 19 March 2004 and its resolution dated 29 June 2004 are REVERSED and SET ASIDE. Civil Case
same facts or evidence would sustain both, the two actions are considered the same, and a No. 2583-02 for Annulment of Title with Damages, pending before Branch 35 of the Regional Trial
judgment in the first case is a bar to the subsequent action.20 In Stilianopulos v. The City of Legaspi,21 Court of Gapan City, Nueva Ecija, is herby ordered DISMISSED. With costs.
this Court had this to say:
SO ORDERED.
The underlying objectives or reliefs sought in both the quieting-of-title and the annulment-of-title
cases are essentially the same -- adjudication of the ownership of the disputed lot and nullification
of one of the two certificates of title. Thus, it becomes readily apparent that the same evidence or
set of facts as those considered in the quieting-of-title case would also be used in this Petition.

The difference in form and nature of the two actions is immaterial and is not a reason to exempt
petitioner from the effects of res judicata. The philosophy behind this rule prohibits the parties from
litigating the same issue more than once. When a right or fact has been judicially tried and
determined by a court of competent jurisdiction or an opportunity for such trial has been given, the
judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and
those in privity with them. Verily, there should be an end to litigation by the same parties and their
privies over a subject, once it is fully and fairly adjudicated.

Civil Case No. 1600 was for Quieting of Title, while Civil Case No. 2583 is for Annulment of Title with
Damages. The two cases are different only in the form of action but an examination of the
allegations in the second case would reveal that the issue raised - ownership of the land -- and the
relief sought - be declared as owner and TCTs be issued in their names -- are substantially the same.
The evidence required to substantiate their claims are likewise the same. The proceedings in the
instant case, if permitted to continue, would entail the presentation of evidence which should have
been adduced in the case for Quieting of Title. The case for Annulment of Title is simply a second
cycle of review involving a subject matter that has already been decided with finality in the Quieting
of Title case.

Finally, private respondents ask that the instant case be not decided based on technicalities, for
substantial justice demands that technicalities should not be allowed to prevail over the substantive
right of a party litigant.lavvphil.ñe+

We find no reason not to adhere to the doctrine of res judicata. A case for Quieting of Title had been
filed for the purpose of determining the ownership of the subject land, but same was dismissed
because the plaintiffs therein failed to attend the scheduled hearings for the presentation of their
evidence. As above discussed, the dismissal was an adjudication on the merits. They had all the
opportunity to present all the evidence for their cause but they failed to do so. It is undeniable that
there was no denial of due process in this case.lavvphil.ñe+

The doctrine of res judicata is a rule which pervades every well-regulated system of jurisprudence
and is founded upon two grounds embodied in various maxims of the common law, namely: (1)
public policy and necessity, which makes it to the interest of the State that there should be an end
to litigation - republicae ut sit litium, and (2) the hardship on the individual that he should be vexed
twice for the same cause - nemo debet bis vexari et eadem causa. A contrary doctrine would subject
the public peace and quiet to the will and neglect of individuals and prefer the gratification of the
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – REMEDY OF PLAINTIFF
G.R. Nos. 169131-32 January 20, 2006
LULLETE S. KO and ARLETTE SIMPLICIANO BASILIO, Petitioners,
vs.
PHILIPPINE NATIONAL BANK, Laoag Branch, and the REGISTER OF DEEDS OF ILOCOS NORTE,
Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari assailing the April 27, 2005 Order1 of the Regional Trial
Court of Laoag City, Branch 14, in Civil Case No. 12523-14 dismissing petitioners’ complaint, and the
July 28, 2005 Resolution2 denying petitioners’ motion for reconsideration.
The case stemmed from an action filed by petitioners in the trial court for Annulment of Mortgage,
Extra-judicial Foreclosure Sale, Annulment of Transfer Certificate of Title Nos. T-21064 and T-21065
and Deed of Sale with a Prayer for Preliminary Injunction and Restraining Order. The complaint
alleged that the assailed mortgage and the foreclosure proceedings were null and void since the
written consent of petitioners, as beneficiaries of the mortgaged property, were not secured.
Respondent bank denied the claim and alleged that in the execution of the mortgage, petitioners in
fact gave their consent.
During the course of the proceedings, petitioners and their counsel failed to attend a scheduled
trial. Upon motion of respondent bank, the complaint was dismissed. In its order dated April 27,
2005, the trial court stated:
When the case was called, Atty. Lorenzo Castillo, counsel for the plaintiffs did not appear despite
proper notice. No plaintiff appeared. Atty. Eduardo Alcantara, counsel for defendant bank
appeared.
Atty. Alcantara manifested that there were numerous occasions in the past when plaintiffs and
counsel did not attend. He pointed out that there is an apparent lack of interest on the part of
plaintiff to prosecute the action. He moved to dismiss the case on that legal ground.
WHEREFORE, in view of the above premises, the above-entitled case is hereby ordered dismissed.
SO ORDERED.3
Petitioners filed a motion for reconsideration claiming that they have been continuously pursuing
negotiations with respondent bank to purchase back the property and have gained positive results.
Respondent bank countered that from the time the complaint was filed, a period of three years had
elapsed but petitioners failed to prosecute their case, showing lack of interest in the early resolution
thereof. The trial court denied the motion for reconsideration.
Hence, the instant petition for review on the following grounds:
I
THE TRIAL COURT ERRED IN LAW IN DISMISSING PETITIONERS COMPLAINT ON THE GROUND OF
THEIR FAILURE TO APPEAR AT THE SCHEDULED HEARING DESPITE THAT DEFENDANT PNB HAS BEEN
EQUALLY GUILTY LIKEWISE.
II
THE TRIAL COURT ERRED IN LAW IN DISMISING THE CASE DESPITE THAT THE CASE INVOLVES A
PROPERTY OF SIGNIFICANT IMPORTANCE AND VALUE TO THE LIFE AND DIGNITY OF THE
PETITIONERS THIS (sic) CALLING FOR THE OVERRIDING CONSIDERATION OF A JUDGMENT BASED ON
THE MERITS OVER THE PRIMORDIAL INTEREST OF PROCEDURE AND TECHNICALITIES. 4
The petition lacks merit.
On the procedural aspect, we find that petitioners erred in filing a petition for review on certiorari
under Rule 45 of the Rules of Court instead of filing an appeal with the Court of Appeals. Section 3,
Rule 17 of the Rules of Court provides:
SEC. 3. Dismissal due to fault of plaintiff.—If, for no justifiable cause, the plaintiff fails to appear on
the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for
an unreasonable length of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon the motion of the defendant or upon the court’s own motion,
without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication upon the merits, unless
otherwise declared by the court. (Emphasis supplied)
Upon the order of dismissal, petitioners’ counsel filed a timely motion for reconsideration which
was denied by the trial court. Considering that an order of dismissal for failure to prosecute has the
effect of an adjudication on the merits, petitioners’ counsel should have filed a notice of appeal with
the appellate court within the reglementary period. 5 Instead of filing a petition under Rule 45 of the
Rules of Court, the proper recourse was an ordinary appeal with the Court of Appeals under Rule
41, which provides:
Sec. 2. Modes of Appeal.—
(a) Ordinary appeal. – The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof upon
the adverse party x x x. (Emphasis supplied)
The rule is clear. In order to perfect an appeal all that is required is a pro forma notice of appeal.
Perhaps due to failure to file a notice of appeal within the remaining two days of the appeal period,
petitioners’ counsel instead filed the instant petition. The rules of procedure, however, do not exist
for the convenience of the litigants. These rules are established to provide order to and enhance
the efficiency of our judicial system. They are not to be trifled with lightly or overlooked by mere
expedience of invoking "substantial justice." In Balindong v. Court of Appeals6 we stated:
Hence, rules of procedure must be faithfully followed except only when for persuasive reasons, they
may be relaxed to relieve a litigant of an injustice not commensurate with his failure to comply with
the prescribed procedure. Concomitant to a liberal application of the rules of procedure should be
an effort on the part of the party invoking liberality to explain its failure to comply with the rules.
Procedural law has its own rationale in the orderly administration of justice, namely, to ensure
the effective enforcement of substantive rights by providing for a system that obviates
arbitrariness, caprice, despotism or whimsicality in the settlement of disputes. The enforcement
of procedural rules is not antithetical to the substantive rights of the litigants. The policy of the
courts is to give effect to both procedural and substantive laws, as complementing each other, in
the just and speedy resolution of the dispute between the parties. (Emphasis supplied)

Even on the merits, petitioners’ cause must still fail. The trial court dismissed the complaint due to
petitioners and counsel’s apparent lack of interest to prosecute the case. Petitioners’ counsel
argued that their repeated failure to attend the hearing was caused by conflicts in his schedule and
by his lack of knowledge of the trial dates. He also contended that respondent bank and counsel
have been similarly guilty thereof, and that petitioners have informed the court of ongoing
negotiations for the re-purchase of the foreclosed property. Hence, petitioners invoke liberality and
the primordial interest of substantial justice over the strict enforcement of the rules of technicality.

We are not persuaded. In every action, the plaintiff is duty-bound to prosecute the same with
utmost diligence and with reasonable dispatch to enable him to obtain the relief prayed for and, at
the same time, minimize the clogging of the court dockets. The expeditious disposition of cases is
as much the duty of the plaintiff as the court. It must be remembered that a defendant in a case
likewise has the right to the speedy disposition of the action filed against him7 considering that any
delay in the proceedings entail prolonged anxiety and valuable time wasted.

In the case at bar, three years have since lapsed from the filing of the complaint on May 3, 2002 and
the order of dismissal on April 27, 2005. Petitioners’ failure to prosecute their case and proceed
with the trial during the span of three years leads to no other conclusion than that petitioners have
no interest in seeing their case terminated at the earliest possible time; or that petitioners’ case is
unmeritorious from inception. Whichever the case may be, the dismissal order of the trial court
stand and is now immutable.

Petitioners cannot claim that they were deprived of due process. True, the right to due process
safeguards the opportunity to be heard and to submit any evidence one may have in support of his
claim or defense.8 Nonetheless, we have time and again held that where the opportunity to be
heard, either through verbal arguments or pleadings, is accorded, and the party can "present its
side" or defend its "interest in due course," there is no denial of due process. 9 What the law
proscribes is the lack of opportunity to be heard.10

Petitioners had the opportunity to present their case and claim the relief they seek. But their
inadvertence and lack of circumspect renders the trial court’s order dismissing their case final and
executory.

WHEREFORE, the petition is DENIED. The assailed April 27, 2005 Order of the Regional Trial Court
of Laoag City, Branch 14 and its July 28, 2005 Resolution in Civil Case No. 12523-14 are AFFIRMED.

SO ORDERED.
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – EFFECT
G.R. No. 151098 March 21, 2006
ERLINDA GAJUDO, FERNANDO GAJUDO, JR., ESTELITA GAJUDO, BALTAZAR GAJUDO and DANILO
ARAHAN CHUA, Petitioners,
vs.
TRADERS ROYAL BANK,1Respondent.
DECISION
PANGANIBAN, CJ:
The mere fact that a defendant is declared in default does not automatically result in the grant of
the prayers of the plaintiff. To win, the latter must still present the same quantum of evidence that
would be required if the defendant were still present. A party that defaults is not deprived of its
rights, except the right to be heard and to present evidence to the trial court. If the evidence
presented does not support a judgment for the plaintiff, the complaint should be dismissed, even if
the defendant may not have been heard or allowed to present any countervailing evidence.
The Case
Before us is a Petition for Review 2 under Rule 45 of the Rules of Court, assailing the June 29, 2001
Decision3 and December 6, 2001 Resolution4 of the Court of Appeals (CA) in CA-GR CV No. 43889.
The CA disposed as follows:
"UPON THE VIEW WE TAKE OF THIS CASE, THUS, the partial judgment appealed from, must be, as it
hereby is, VACATED and SET ASIDE, and another one entered DISMISSING the complaint at bench.
Without costs."5
The assailed Resolution denied petitioners’ Motion for Reconsideration6 for lack of merit.
The Facts
The CA narrated the facts as follows:
"[Petitioners] filed a complaint before the Regional Trial Court of Quezon City, Branch 90, against
[respondent] Traders Royal Bank, the City Sheriff of Quezon City and the Register of Deeds of
Quezon City. Docketed thereat as Civil Case No. Q-41203, the complaint sought the annulment of
the extra-judicial foreclosure and auction sale made by [the] city sheriff of Quezon City of a parcel
of land covered by TCT No. 16711 of the Register of Deeds of Quezon City, the conventional
redemption thereof, and prayed for damages and the issuance of a writ of preliminary injunction.
"The complaint alleged that in mid 1977[, Petitioner] Danilo Chua obtained a loan from [respondent]
bank in the amount of P75,000.00 secured by a real estate mortgage over a parcel of land covered
by TCT No. 16711, and owned in common by the [petitioners]; that when the loan was not paid,
[respondent] bank commenced extra-judicial foreclosure proceedings on the property; that the
auction sale of the property was set on 10 June 1981, but was reset to 31 August 1981, on [Petitioner
Chua’s] request, which, however, was made without the knowledge and conformity of the other
[petitioners]; that on the re-scheduled auction sale, [the] Sheriff of Quezon City sold the property
to the [respondent] bank, the highest bidder therein, for the sum of P24,911.30; that the auction
sale was tainted with irregularity because, amongst others, the bid price was shockingly or
unconscionably, low; that the other [petitioners] failed to redeem the property due to their lack of
knowledge of their right of redemption, and want of sufficient education; that, although the period
of redemption had long expired, [Petitioner] Chua offered to buy back, and [respondent] bank also
agreed to sell back, the foreclosed property, on the understanding that Chua would pay
[respondent] bank the amount of P40,135.53, representing the sum that the bank paid at the
auction sale, plus interest; that [Petitioner] Chua made an initial payment thereon in the amount of
P4,000.00, covered by Interbank Check No. 09173938, dated 16 February 1984, duly receipted by
[respondent] bank; that, in a sudden change of position, [respondent] bank wrote Chua, on 20
February 1984, asking that he could repurchase the property, but based on the current market value
thereof; and that sometime later, or on 22 March 1984, [respondent] bank wrote Chua anew,
requiring him to tender a new offer to counter the offer made thereon by another buyer.
"Traversing [petitioners’] complaint, [respondent] bank, upon 05 July 1984, filed its answer with
counterclaim, thereunder asserting that the foreclosure sale of the mortgaged property was done
in accordance with law; and that the bid price was neither unconscionable, nor shockingly low; that
[petitioners] slept on their rights when they failed to redeem the property within the one year
statutory period; and that [respondent] bank, in offering to sell the property to [Petitioner] Chua on
the basis of its current market price, was acting conformably with law, and with legitimate banking
practice and regulations.
"Pre-trial having been concluded, the parties entered upon trial, which dragged/lengthened to
several months due to postponements. Upon 11 June 1988, however, a big conflagration hit the
City Hall of Quezon City, which destroyed, amongst other things, the records of the case. After the
records were reconstituted, [petitioners] discovered that the foreclosed property was sold by
[respondent] bank to the Ceroferr Realty Corporation, and that the notice of lis pendens annotated
on the certificate of title of the foreclosed property, had already been cancelled. Accordingly,
[petitioners], with leave of court, amended their complaint, but the Trial Court dismissed the case
‘without prejudice’ due to [petitioners’] failure to pay additional filing fees.
"So, upon 11 June 1990, [petitioners] re-filed the complaint with the same Court, whereat it was
docketed as Civil Case No. 90-5749, and assigned to Branch 98: the amended complaint substantially
reproduced the allegations of the original complaint. But [petitioners] this time impleaded as
additional defendants the Ceroferr Realty Corporation and/or Cesar Roque, and Lorna Roque, and
included an additional cause of action, to wit: that said new defendants conspired with [respondent]
bank in [canceling] the notice of lis pendens by falsifying a letter sent to and filed with the office of
the Register of Deeds of Quezon City, purportedly for the cancellation of said notice.
"Summons was served on [respondent] bank on 26 September 1990, per Sheriff’s Return dated 08
October 1990. Supposing that all the defendants had filed their answer, [petitioners] filed, on 23
October 1991, a motion to set case for pre-trial, which motion was, however, denied by the Trial
Court in its Order of 25 October 1991, on the ground that [respondent] bank has not yet filed its
answer. On 13 November 1991[, petitioners] filed a motion for reconsideration, thereunder alleging
that they received by registered mail, on 19 October 1990, a copy of [respondent] bank’s answer
with counterclaim, dated 04 October 1990, which copy was attached to the motion. In its Order of
14 November 1991, the trial Court denied for lack of merit, the motion for reconsideration, therein
holding that the answer with counterclaim filed by [respondent] bank referred to another civil case
pending before Branch 90 of the same Court.
"For this reason, [petitioners] filed on 02 December 1991 a motion to declare [respondent] bank in
default, thereunder alleging that no answer has been filed despite the service of summons on it on
26 September 1990.
"On 13 December 1991, the Trial Court declared the motion submitted for resolution upon
submission by [petitioners] of proof of service of the motion on [respondent] bank.
"Thus, on 16 January 1992, upon proof that [petitioners] had indeed served [respondent] bank with
a copy of said motion, the Trial Court issued an Order of default against [respondent] bank.
"Upon 01 December 1992, on [petitioners’] motion, they were by the Court allowed to present
evidence ex parte on 07 January 1993, insofar as [respondent] bank was concerned.
"Thereafter, or on 08 February 1993, the Trial Court rendered the new questioned partial decision.7
"Aggrieved, [respondent] bank filed a motion to set aside [the] partial decision by default against
Traders Royal Bank and admit [respondent] Traders Royal Bank’s x x x Answer with counterclaim:
thereunder it averred, amongst others, that the erroneous filing of said answer was due to an
honest mistake of the typist and inadvertence of its counsel.
"The [trial court] thumbed down the motion in its Order of 26 July 1993."8
Respondent bank appealed the Partial Decision9 to the CA. During the pendency of that appeal,
Ceroferr Realty Corporation and/or Cesar and/or Lorna Roque filed a Manifestation with Motion 10
asking the CA to discharge them as parties, because the case against them had already been
dismissed on the basis of their Compromise Agreement11 with petitioners. On May 14, 1996, the CA
issued a Resolution12 granting Ceroferr et al.’s Manifestation with Motion to discharge movants as
parties to the appeal. The Court, though, deferred resolution of the matters raised in the Comment 13
of respondent bank. The latter contended that the Partial Decision had been novated by the
Compromise Agreement, whose effect of res judicata had rendered that Decision functus officio.
Ruling of the Court of Appeals
The CA ruled in favor of respondent bank. Deemed, however, to have rested on shaky ground was
the latter’s "Motion to Set Aside Partial Decision by Default Against Traders Royal Bank and Admit
Defendant Traders Royal Bank’s Answer."14 The reasons offered by the bank for failing to file an
answer were considered by the appellate court to be "at once specious, shallow and sophistical and
can hardly be dignified as a ‘mistake’ or ‘excusable negligence,’ which ordinary prudence could not
have guarded against."15
In particular, the CA ruled that the erroneous docket number placed on the Answer filed before the
trial court was not an excusable negligence by the bank’s counsel. The latter had a bounden duty to
be scrupulously careful in reviewing pleadings. Also, there were several opportunities to discover
and rectify the mistake, but these were not taken. Moreover, the bank’s Motion to Set Aside the
Partial Decision and to Admit [the] Answer was not accompanied by an affidavit of merit. These
mistakes and the inexcusable negligence committed by respondent’s lawyer were binding on the
bank.
On the issue of whether petitioners had convincingly established their right to relief, the appellate
court held that there was no ground to invalidate the foreclosure sale of the mortgaged property.
First, under Section 3 of Act No. 3135, an extrajudicial foreclosure sale did not require personal
notice to the mortgagor. Second, there was no allegation or proof of noncompliance with the
publication requirement and the public posting of the notice of sale, provided under Act No. 3135,
as amended. Third, there was no showing of inadequacy of price as no competent evidence was
presented to show the real market value of the land sold or the readiness of another buyer to offer
a price higher than that at which the property had been sold.
Moreover, petitioners failed to prove that the bank had agreed to sell the property back to them.
After pointing out that the redemption period had long expired, respondent’s written
communications to Petitioner Chua only showed, at most, that the former had made a proposal for
the latter to buy back the property at the current market price; and that Petitioner Chua was
requested to make an offer to repurchase the property, because another buyer had already made
an offer to buy it. On the other hand, respondent noted that the Interbank check for P4,000 was for
"deposit only." Thus, there was no showing that the check had been issued to cover part of the
repurchase price.
The appellate court also held that the Compromise Agreement had not resulted in the novation of
the Partial Decision, because the two were not incompatible. In fact, the bank was not even a party
to the Agreement. Petitioners’ recognition of Ceroferr’s title to the mortgaged property was
intended to preclude future litigation against it.
Hence this Petition.16
Issues
In their Memorandum, petitioners raise the following issues:
"1. Whether or not the Respondent Court of Appeals erred in failing to apply the provisions of
Section 3, Rule 9 of the 1997 Rules of Civil Procedure [and in applying instead] the rule on
preponderance of evidence under Section 1, Rule 133 of the Rules of Court.
"2. Whether or not the respondent appellate court failed to apply the conventional redemption rule
provided for under Article 1601 of the New Civil Code.
"3. Whether or not this Honorable Court can exercise its judicial prerogative to evaluate the findings
of facts."17
The first issue is one of law and may be taken up by the Court without hindrance, pursuant to Section
1 of Rule 45 of the Rules of Court.18 The second and the third issues, however, would entail an
evaluation of the factual findings of the appellate court, a function ordinarily not assumed by this
Court, unless in some excepted cases. The Court will thus rule on the first issue before addressing
the second and the third issues jointly.
The Court’s Ruling
The Petition has no merit.
First Issue:
Quantum of Proof
Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the Rules of Court, rather
than Section 1 of Rule 133 of the same Rules. In essence, petitioners argue that the quantum of
evidence for judgments flowing from a default order under Section 3 of Rule 9 is not the same as
that provided for in Section 1 of Rule 133.
For ease of discussion, these two rules will be reproduced below, starting with Section 3 of Rule 9
of the Rules of Court:
"Sec. 3. Default; declaration of. – If the defending party fails to answer within the time allowed
therefor, the court shall, upon motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to
render judgment granting the claimant such relief as his pleading may warrant, unless the court in
its discretion requires the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.
"(a) Effect of order of default. – A party in default shall be entitled to notice of subsequent
proceedings but not to take part in the trial.
"(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.
"(c) Effect of partial default. – When a pleading asserting a claim states a common cause of action
against several defending parties, some of whom answer and the others fail to do so, the court
shall try the case against all upon the answers thus filed and render judgment upon the evidence
presented.
"(d) Extent of relief to be awarded. – A judgment rendered against a party in default shall not
exceed the amount or be different in kind from that prayed for nor award unliquidated damages.
"(e) Where no defaults allowed. – If the defending party in an action for annulment or declaration
of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting
attorney to investigate whether or nor a collusion between the parties exists, and if there is no
collusion, to intervene for the State in order to see to it that the evidence submitted is not
fabricated."
We now quote Section 1 of Rule 133:
"SECTION 1. Preponderance of evidence, how determined. – In civil cases, the party having the
burden of proof must establish his case by a preponderance of evidence. In determining where the
preponderance or superior weight of evidence on the issues involved lies, the court may consider
all the facts and circumstances of the case, the witnesses’ manner of testifying, their intelligence,
their means and opportunity of knowing the facts to which they are testifying, the nature of the
facts to which they testify, the probability or improbability of their testimony, their interest or want
of interest, and also their personal credibility so far as the same may legitimately appear upon the
trial. The court may also consider the number of witnesses, though the preponderance is not
necessarily with the greater number."
Between the two rules, there is no incompatibility that would preclude the application of either one
of them. To begin with, Section 3 of Rule 9 governs the procedure which the trial court is directed
to take when a defendant fails to file an answer. According to this provision, the court "shall proceed
to render judgment granting the claimant such relief as his pleading may warrant," subject to the
court’s discretion on whether to require the presentation of evidence ex parte. The same provision
also sets down guidelines on the nature and extent of the relief that may be granted. In particular,
the court’s judgment "shall not exceed the amount or be different in kind from that prayed for nor
award unliquidated damages."
As in other civil cases, basic is the rule that the party making allegations has the burden of proving
them by a preponderance of evidence.19 Moreover, parties must rely on the strength of their own
evidence, not upon the weakness of the defense offered by their opponent. 20 This principle holds
true, especially when the latter has had no opportunity to present evidence because of a default
order. Needless to say, the extent of the relief that may be granted can only be as much as has been
alleged and proved21 with preponderant evidence required under Section 1 of Rule 133.
Regarding judgments by default, it was explained in Pascua v. Florendo22 that complainants are not
automatically entitled to the relief prayed for, once the defendants are declared in default.
Favorable relief can be granted only after the court has ascertained that the relief is warranted by
the evidence offered and the facts proven by the presenting party. In Pascua, this Court ruled that
"x x x it would be meaningless to require presentation of evidence if every time the other party is
declared in default, a decision would automatically be rendered in favor of the non-defaulting party
and exactly according to the tenor of his prayer. This is not contemplated by the Rules nor is it
sanctioned by the due process clause."23
The import of a judgment by default was further clarified in Lim Tanhu v. Ramolete. 24 The following
disquisition is most instructive:
"Unequivocal, in the literal sense, as these provisions [referring to the subject of default then under
Rule 18 of the old Rules of Civil Procedure] are, they do not readily convey the full import of what
they contemplate. To begin with, contrary to the immediate notion that can be drawn from their
language, these provisions are not to be understood as meaning that default or the failure of the
defendant to answer should ‘be interpreted as an admission by the said defendant that the
plaintiff’s cause of action find support in the law or that plaintiff is entitled to the relief prayed for.’
x x x.
xxxxxxxxx
"Being declared in default does not constitute a waiver of rights except that of being heard and of
presenting evidence in the trial court. x x x.
"In other words, a defaulted defendant is not actually thrown out of court. While in a sense it may
be said that by defaulting he leaves himself at the mercy of the court, the rules see to it that any
judgment against him must be in accordance with law. The evidence to support the plaintiff’s cause
is, of course, presented in his absence, but the court is not supposed to admit that which is basically
incompetent. Although the defendant would not be in a position to object, elementary justice
requires that only legal evidence should be considered against him. If the evidence presented should
not be sufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And if an
unfavorable judgment should be justifiable, it cannot exceed in amount or be different in kind from
what is prayed for in the complaint."25
In sum, while petitioners were allowed to present evidence ex parte under Section 3 of Rule 9, they
were not excused from establishing their claims for damages by the required quantum of proof
under Section 1 of Rule 133. Stated differently, any advantage they may have gained from the ex
parte presentation of evidence does not lower the degree of proof required. Clearly then, there is
no incompatibility between the two rules.
Second and Third Issues:
Review of the Evidence
Petitioners urge this Court to depart from the general rule that the lower courts’ findings of fact are
not reviewable in a petition for review.26 In support of their plea, they cite the conflicting findings
of the trial and the appellate courts, as well as the alleged conjectures and surmises made by the
CA in arriving at its Decision.
Indeed, the differences between the findings of the two courts a quo, leading to entirely disparate
dispositions, is reason enough for this Court to review the evidence in this case. 27 Whether the CA
indulged in surmises and conjectures when it issued the assailed Decision will thus be determined.
At the outset, it behooves this Court to clarify the CA’s impression that no evidence was presented
in the case which might have contributed to petitioners’ challenge to its Decision. The appellate
court’s observation was based on the notation by the lower court’s clerk of court that there were
no separate folders for exhibits and transcripts, because "there was no actual hearing conducted in
this case."28
True, there was no hearing conducted between petitioners and respondent, precisely because the
latter had been declared in default, and petitioners had therefore been ordered to present their
evidence ex parte. But the absence of a hearing did not mean that no evidence was presented. The
Partial Decision dated February 8, 1993, in fact clearly enumerated the pieces of evidence adduced
by petitioners during the ex parte presentation on January 7, 1993. The documentary evidence they
presented consisted of the following:
1. A copy of respondent bank’s Petition for the extrajudicial foreclosure and auction sale of the
mortgaged parcel of land29
2. The Certificate of Sale that was a consequence of the foreclosure sale30
3. A Statement of Account dated February 15, 1984, showing Petitioner Chua’s outstanding
debt in the amount of P40,135.5331
4. A copy of the Interbank check dated February 16, 1984, in the amount of P4,00032
5. The Official Receipt issued by the bank acknowledging the check33
6. The bank’s letter dated February 20, 1984, advising Petitioner Chua of the sale of the
property at an extrajudicial public auction; the lapse of the period of redemption; and an
invitation to purchase the property at its current market price34
7. Another letter from the bank dated March 22, 1984, inviting Petitioner Chua to submit,
within five days, an offer to buy the same property, which another buyer had offered to buy35
8. A copy of the Notice of Lis Pendens, the filing of which was done after that of the Amended
Complaint36
9. A copy of the title showing the inscription of the Notice of Lis Pendens37
10. A copy of the Absolute Deed of Sale to Cerrofer38
11. A copy of a letter dated August 29, 1986, made and signed by petitioners’ counsel,
requesting the cancellation of the Notice of Lis Pendens39
12. A copy of a page of the Memorandum of Encumbrance from TCT No. (314341) 7778/T-3940
Having clarified this matter, we proceed to review the facts.
Petitioners do not deny that the one-year period for legal redemption had already lapsed when
respondent bank supposedly offered to sell the property in question. The records clearly show that
the Certificate of Sale following the extrajudicial public auction of the property was registered on
June 21, 1982, the date from which the legal redemption period was to be reckoned. 41 Petitioners
insist, though, that they had the right to repurchase the property through conventional redemption,
as provided under Article 1601 of the Civil Code, worded as follows:
"ART. 1601. Conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and
other stipulations which may have been agreed upon."
It is true that the one-year period of redemption provided in Act No. 3135, as amended -- the law
under which the property here was sold in a foreclosure sale -- is only directory and, as such can be
extended by agreement of the parties.42 However, it has also been held that for legal redemption
to be converted into conventional redemption, two requisites must be established: 1) voluntary
agreement of the parties to extend the redemption period; and 2) the debtor’s commitment to pay
the redemption price on a fixed date.43 Thus, assuming that an offer was made to Petitioner Chua
to buy back the property after the lapse of the period of legal redemption, petitioners needed to
show that the parties had agreed to extend the period, and that Petitioner Chua had committed to
pay the redemption price on a fixed date.
The letters sent by the bank to Petitioner Chua on February 20 and March 22, 1984, do not
convincingly show that the parties arrived at a firm agreement for the repurchase of the property.
What can be gleaned from the February 20 letter is that Petitioner Chua proposed to pay the
redemption price for the property, but that the bank refused to accede to his request, because the
one-year redemption period had already lapsed.44 The bank, though, had offered to sell back the
property to him at the current market value. Indeed, an examination of his earlier letter of February
17, 1984, readily reveals that he expressed willingness to settle his account with the bank, but that
his "present financial situation precludes [him] from effecting an immediate settlement x x x."45
On the other hand, the letter dated March 22, 1984, clearly states that "x x x the Bank rejected [his]
request to redeem said property due to [the] lapse of [the] one (1) year legal redemption period."46
Nonetheless, he was "[invited] to submit an offer to buy the same property in five (5) days from
receipt [of the letter]."47 Petitioner Chua was also informed that the bank had received an offer to
purchase the foreclosed property. As to the P4,000 check enclosed in his proposal dated February
17, 1984, as a token of his good faith, he was advised that the amount was still outstanding in the
books of the bank and could be claimed by him if he thought the invitation was not feasible.
More important, there was no showing that petitioners had committed to pay the redemption price
on a fixed date. True, Petitioner Chua had attempted to establish a previous agreement to
repurchase the property for less than its fair market value. He had submitted in evidence a
Statement of Account48 dated February 15, 1984, showing a balance of P40,135.53; the Interbank
check dated February 16, 1984 , for P4,000, which was deposited to the account of respondent
bank;49 and the Official Receipt for the check.50
Granting that these documents evinced an agreement, petitioners were still unable to establish a
firm commitment on their part to pay the redemption price on a fixed date. On the contrary, the
February 17 letter of Petitioner Chua to the bank clearly manifested that he was not capable of
paying the account immediately. For this reason, he proposed to pay in "three or four installments"
without a specification of dates for the payments, but with a plea for a reduction of the interest
charges. That proposal was rejected.
Indeed, other than the Interbank check marked "for deposit" by respondent bank, no other
evidence was presented to establish that petitioners had offered to pay the alleged redemption
price of P40,135.53 on a fixed date. For that matter, petitioners have not shown that they tendered
payment of the balance and/or consigned the payment to the court, in order to fulfill their part of
the purported agreement. These remedies are available to an aggrieved debtor under Article 1256
of the Civil Code,51 when the creditor unjustly refuses to accept the payment of an obligation.
The next question that presents itself for resolution is the propriety of the CA’s ruling vacating the
Partial Decision of the regional trial court (RTC) and dismissing the case. To recall, the RTC had
resolved to withhold a ruling on petitioners’ right to redeem conventionally and/or order the
reconveyance of the property in question, pending a determination of the validity of the sale to
Cerrofer Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however, granted
the prayer for damages against respondent bank. The RTC ruled as follows:
"The evidence presented by [petitioners] in so far as the cause of action against [respondent]
Traders Royal Bank is concerned are preponderant to support the claims of the [petitioners].
However, in view of the fact that the property subject matter of this case has already been conveyed
to defendant Cerrofer Realty Corporation thus the issue as to whether or not the said conveyance
or sale is valid is sill pending between the [petitioners] and [respondents] Cerrofer Realty
Corporation and Cesar Roque and Lorna Roque. Hence, this Court resolves to grant the prayer for
damages against Traders Royal Bank.
"The claims of the [petitioners] as against [respondent] Traders Royal Bank having been established
and proved by evidence, judgment is hereby rendered ordering [respondent] Traders Royal Bank to
pay [petitioners] actual damage or the market value of the land in question in the sum of
P500,000.00; the sum of P70,000.00 as compensatory damages; the sum of P200,000.00 to the heirs
of [petitioner] Danilo Chua; and attorney’s fees in the sum of P30,000.00."52
In the light of the pending issue as to the validity of the sale of the property to the third parties
(Cerrofer Realty Corporation and Spouses Roque), the trial court properly withheld judgment on the
matter and thus left the prayer for damages as the sole issue for resolution.
To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of Court provides that a
judgment against a party in default "shall not exceed the amount or be different in kind from that
prayed for nor award unliquidated damages." The proscription against the award of unliquidated
damages is significant, because it means that the damages to be awarded must be proved
convincingly, in accordance with the quantum of evidence required in civil cases.
Unfortunately for petitioners, the grant of damages was not sufficiently supported by the evidence
for the following reasons.
First, petitioners were not deprived of their property without cause. As correctly pointed out by the
CA, Act No. 3135, as amended, does not require personal notice to the mortgagor.53 In the present
case, there has been no allegation -- much less, proof -- of noncompliance with the requirement of
publication and public posting of the notice of sale, as required by Áct No. 3135. Neither has there
been competent evidence to show that the price paid at the foreclosure sale was inadequate. 54 To
be sure, there was no ground to invalidate the sale.
Second, as previously stated, petitioners have not convincingly established their right to damages
on the basis of the purported agreement to repurchase. Without reiterating our prior discussion on
this point, we stress that entitlement to actual and compensatory damages must be proved even
under Section 3 of Rule 9 of the Rules of Court. The same is true with regard to awards for moral
damages and attorney’s fees, which were also granted by the trial court.
In sum, petitioners have failed to convince this Court of the cogency of their position,
notwithstanding the advantage they enjoyed in presenting their evidence ex parte. Not in every
case of default by the defendant is the complainant entitled to win automatically.
WHEREFORE, this Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.
SO ORDERED.
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – MOTION TO SET ASIDE
G.R. No. 101789. April 28, 1993.
BHAGWAN RAMNANI, petitioner,
vs.
COURT OF APPEALS, HON. BUENAVENTURA J. GUERRERO, as Regional Trial Court Judge of
Makati, Metro Manila, Branch 133, SPOUSES CENON G. DIZON and JULIETTE B. DIZON,
respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PRE-TRIAL; FAILURE TO APPEAR AT PRE-TRIAL CONFERENCE;
REMEDIES AVAILABLE. — The basic rule is found in Section 2, Rule 20, viz: "A party who fails to
appear at a pre-trial conference may be non-suited or considered as in default." As held in Lina v.
Court of Appeals, the remedies available to a defendant in the regional trial court who has been
declared in default are: a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion, under oath, to set aside the order of default on the ground that his
failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has a
meritorious defense; (Sec. 3, Rule 18) b) If the judgment has already been rendered when the
defendant discovered the default, but before the same has become final and executory, he may file
a motion for new trial under Section 1(a) of Rule 37; c) If the defendant discovered the default after
the judgment has become final and executory, he may file a petition for relief under Section 2 of
Rule 38; and d) He may also appeal from the judgment rendered against him as contrary to the
evidence or to the law, even if no petition to set aside the order of default has been presented by
him.
2. ID.; ID.; DEFAULTS; RELIEF FROM ORDER OF DEFAULT; REQUIREMENTS; NOT SATISFIED IN CASE
AT BAR. — A satisfactory showing by the movant of the existence of fraud, accident, mistake or
excusable neglect is an indispensable requirement for the setting aside of a judgment of default or
the order of default. After going over the pleadings of the parties and the decision of the respondent
court, we find that the motion to lift the order of default was properly denied for non-compliance
with this requirement. The defendants were less than conscientious in defending themselves and
protecting their rights before the trial court. They did not pay proper attention and respect to its
directive. The petitioner has not shown that his and his wife's failure to attend the pre-trial hearing
as required was due to excusable neglect, much less to fraud, accident or mistake. A meritorious
defense is only one of the two conditions. Even if it be assumed for the sake of argument that the
private respondents did owe Josephine Ramnani P900,000, as alleged in the counterclaim, that
circumstance alone is not sufficient to justify the lifting of the order of default and the default
judgment. The obvious reason is that a meritorious defense must concur with the satisfactory
reason for the non-appearance of the defaulted party. There is no such reason in this case.
3. ID.; ID.; ORDINARY APPEAL; APPROPRIATE REMEDY IN CASE AT BAR; CASE OF PISC VS.
HONTANOSAS, NOT APPLICABLE. — The appropriate remedy is an ordinary appeal under Section 2
of Rule 41 of the Rules of Court providing in part as follows: A party who has been declared in default
may likewise appeal from the judgment rendered against him as contrary to the evidence or to the
law, even if no petition for relief to set aside the order of default has been presented by him in
accordance with Rule 38. In questioning the dismissal of its petition by the respondent court, the
petitioner invokes the case of Pioneer Insurance and Surety Corporation v. Hontanosas, (78 SCRA
447) where the Court sustained the challenge to an order of default in a petition for certiorari rather
than in an ordinary appeal, which was held as not an adequate remedy. That case is not applicable
to the present petition. Certiorari was allowed in that case because the petitioner was illegally
declared in default. The Court held that, first, the petitioner could not be compelled to attend an
unnecessary second pre-trial after it had indicated at the earlier pre-trial that there was no
possibility of an amicable settlement; second, the pre-trial was premature because the last pleading
had not yet been filed at the time; and third, there was insufficient notice of the pre-trial to the
petitioner. In the case at bar, no such irregularities in the pre-trial have been alleged by the
petitioner.
4. ID.; SPECIAL CIVIL ACTION; CERTIORARI; WHEN APPROPRIATE; RATIONALE. — As we held in Pure
Foods Corporation v. NLRC (171 SCRA 415): It must emphatically be reiterated, since so often is it
overlooked, that the special civil action for certiorari is a remedy designed for the correction of
errors of jurisdiction and not errors of judgment. The reason for the rule is simple. When a court
exercises its jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction
being exercised when the error is committed. If it did, every error committed by a court would
deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot
be allowed. The administration of justice would not survive such a rule. Consequently, an error of
judgment that the court may commit in the exercise of its jurisdiction is not correctible through the
original civil action of certiorari.
5. ID.; ID.; ID.; NOT PROPER ABSENT SHOWING OF GRAVE ABUSE OF DISCRETION. — Even on the
supposition that certiorari was an appropriate remedy, the petition would still fail because it has
not been clearly shown that the trial court committed grave abuse of discretion in refusing to set
aside the default order and the default judgment. We have held in many cases, including Pahilanga
v. Luna, (164 SCRA 725) that: It is within the sound discretion of the court to set aside an order of
default and to permit a defendant to file his answer and to be heard on the merits even after the
reglementary period for the filing of the answer has expired, but it is not error, or an abuse of
discretion, on the part of the court to refuse to set aside its order of default and to refuse to accept
the answer where it finds no justifiable reason for the delay in the filing of the answer. In motions
for reconsideration of an order of default, the moving party has the burden of showing such
diligence as would justify his being excused from not filing the answer within the reglementary
period as provided by the Rules of Court, otherwise, these guidelines for an orderly and expeditious
procedure would be rendered meaningless. Unless it is shown clearly that a party has justifiable
reason for the delay the court will not ordinarily exercise its discretion in his favor. The above
doctrine is applicable to the inexcusable neglect of the herein petitioner and his wife to appear at
the pre-trial hearing duly scheduled and of which they were properly notified.
DECISION
CRUZ, J p:
On March 13, 1990, the spouses Juliette Dizon and Cenen Dizon filed a complaint in the Regional
Trial Court of Makati against the spouses Josephine Anne Ramnani and Bhagwan Ramnani for the
collection of a sum of money representing the alleged unremitted value of jewelry received by
Josephine from Juliette on consignment basis.
Josephine Ramnani submitted an answer with counterclaim 2 in which she alleged inter alia:
(a) That although she did receive pieces of jewelry worth P934,347.00 from Dizon, the latter had
likewise received from her jewelries worth P1,671,842,00, including cash and unpaid checks in the
amount of P159,742.50;
(b) That she paid Dizon P50,000; and
(c) That Dizon still owes her P787,495.00;
The trial court set the case for pre-trial on August 14, 1990, 3 but the Ramnanis did not appear.
Consequently, they were declared in default. 4 On September 12, 1990, they filed a motion to lift
the order of default, but this was denied on November 20, 1990.
On October 26, 1990, conformably to the default order, evidence of the Dizon spouses was received
ex parte. On January 28, 1991, Judge Buenaventura J. Guerrero rendered judgment against the
Ramnanis, holding them liable to the plaintiffs in the amounts of P884,347.00, representing the
principal obligation plus legal interest thereon from March 13, 1990, until fully paid; P100,000.00 as
moral damages; and P20,000.00 as exemplary damages. They were also required to pay P50,000.00
as attorney's fees, and the costs of the suit.
The Ramnanis filed a motion for reconsideration on the ground that a "personal obligation
contracted by the wife without the consent of the husband (was) being made enforceable against
the spouses' conjugal partnership despite absence of any allegation and proof that the same
redounded to the benefit of the family as required by Article 121 of the Family Code." 7 The motion
was denied on April 11, 1991.
On April 29, 1991, Bhagwan Ramnani filed a petition for certiorari before the respondent Court of
Appeals imputing error to the trial court:
(1) in denying the motion to lift order declaring petitioner as in default despite a clear showing of a
meritorious defense;
(2) in not considering petitioner's reason for failure to attend pre-trial as excusable neglect.
In a decision dated May 10, 1991, the Court of Appeals dismissed the petition, holding that certiorari
was not the proper remedy. 9
The respondent court said:
Petitioners alleged that the respondent court erred and committed grave abuse of discretion and/or
acted in excess of jurisdiction in assigning its Branch Clerk of Court as the hearing commissioner for
the purpose of the ex parte reception of plaintiffs' evidence (par. 19, Petition); that the questioned
Decision failed to specify whether defendants are solidarily or only jointly liable (par. 20, Petition);
and that petitioner had a valid and meritorious defense (par. 21, Petition). These are matters that
could very well be ventilated in an ordinary appeal. It should be stressed that the writ of certiorari
issues for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack
or excess of jurisdiction. It cannot be legally used for any other purpose (Silverio vs. Court of
Appeals, 141 SCRA 527). Mere error of judgment cannot be a proper subject of the special civil
action for certiorari (Zapata vs. NLRC, 175 SCRA 56). Further, it is a settled rule that certiorari cannot
be made a substitute for an perform the function of an appeal (People vs. Cuaresma, 172 SCRA 415).
The petitioner has come to this Court to challenge that decision. He avers that the Court of Appeals
erred in upholding the refusal of the trial court to set aside the order of default and the default
judgment thereafter issued.
The basic rule is found in Section 2, Rule 20, viz: "A party who fails to appear at a pre-trial conference
may be non-suited or considered as in default."
As held in Lina v. Court of Appeals, 10 the remedies available to a defendant in the regional trial
court who has been declared in default are:
a) The defendant in default may, at any time after discovery thereof and before judgment, file a
motion, under oath, to set aside the order of default on the ground that his failure to answer was
due to fraud, accident, mistake or excusable neglect, and that he has a meritorious defense; (Sec.
3, Rule 18)
b) If the judgment has already been rendered when the defendant discovered the default, but
before the same has become final and executory, he may file a motion for new trial under Section
1(a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory, he
may file a petition for relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence or to
the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule
41)
The first remedy was adopted by the petitioner but his motion to lift the order of default was denied.
According to the trial court:
Defendants' non-appearance is inexcusable. It is unbelievable their former lawyer did not explain
to them the mandatory character of their appearance. Their invocation of the deteriorating health
of defendant Josephine necessitating her trip abroad for appropriate medical treatment, is
unavailing. There is no medical certificate to attest such illness. Besides, at the time of the hearing
of the motion on October 19, 1990, counsel for the defendants admitted that Josephine had not yet
arrived from the States, despite their averment in their motion she would "only be back late
September or early October of this year." This only indicates her light regard of her duty to appear
in court. Moreover, the other defendant Bhagwan Ramnani did not submit any other plausible
explanation for his absence in the pre-trial.
A satisfactory showing by the movant of the existence of fraud, accident, mistake or excusable
neglect is an indispensable requirement for the setting aside of a judgment of default or the order
of default. After going over the pleadings of the parties and the decision of the respondent court,
we find that the motion to lift the order of default was properly denied for non-compliance with
this requirement.
The defendants were less than conscientious in defending themselves and protecting their rights
before the trial court. They did not pay proper attention and respect to its directive. The petitioner
has not shown that his and his wife's failure to attend the pre-trial hearing as required was due to
excusable neglect, much less to fraud, accident or mistake.
The petitioner insists, however, that they had a meritorious defense which the trial court should
not have disregarded. A meritorious defense is only one of the two conditions. Even if it be assumed
for the sake of argument that the private respondents did owe Josephine Ramnani P900,000, as
alleged in the counterclaim, that circumstance alone is not sufficient to justify the lifting of the order
of default and the default judgment. The obvious reason is that a meritorious defense must concur
with the satisfactory reason for the non-appearance of the defaulted party. There is no such reason
in this case.
The appropriate remedy is an ordinary appeal under Section 2 of Rule 41 of the Rules of Court
providing in part as follows:
A party who has been declared in default may likewise appeal from the judgment rendered against
him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of
default has been presented by him in accordance with Rule 38.
In questioning the dismissal of its petition by the respondent court, the petitioner invokes the case
of Pioneer Insurance and Surety Corporation v. Hontanosas, 11 where the Court sustained the
challenge to an order of default in a petition for certiorari rather than in an ordinary appeal, which
was held as not an adequate remedy.
It is within the sound discretion of the court to set aside an order of default and to permit a
defendant to file his answer and to be heard on the merits even after the reglementary period for
the filing of the answer has expired, but it is not error, or an abuse of discretion, on the part of the
court to refuse to set aside its order of default and to refuse to accept the answer where it finds no
justifiable reason for the delay in the filing of the answer. In motions for reconsideration of an order
of default, the moving party has the burden of showing such diligence as would justify his being
excused from not filing the answer within the reglementary period as provided by the Rules of
Court, otherwise, these guidelines for an orderly and expeditious procedure would be rendered
meaningless. Unless it is shown clearly that a party has justifiable reason for the delay the court will
not ordinarily exercise its discretion in his favor.
The above doctrine is applicable to the inexcusable neglect of the herein petitioner and his wife to
appear at the pre-trial hearing duly scheduled and of which they were properly notified.
We must, however, moderate the award of damages by the trial court as we feel it is rather harsh
upon the petitioner. In the exercise of our discretion, we hereby reduce the moral damages to
P20,000.00 and the attorney's fees to P10,000.00, and disallow the exemplary damages. The rest of
the award is approved.
WHEREFORE, the challenged decision is AFFIRMED as above modified, with costs against the
petitioner. It is so ordered.

That case is not applicable to the present petition. Certiorari was allowed in that case because the
petitioner was illegally declared in default. The Court held that, first, the petitioner could not be
compelled to attend an unnecessary second pre-trial after it had indicated at the earlier pre-trial
that there was no possibility of an amicable settlement; second, the pre-trial was premature
because the last pleading had not yet been filed at the time; and third, there was insufficient notice
of the pre-trial to the petitioner. In the case at bar, no such irregularities in the pre-trial have been
alleged by the petitioner.

As we held in Pure Foods Corporation v. NLRC:

It must emphatically be reiterated, since so often is it overlooked, that the special civil action for
certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of
judgment. The reason for the rule is simple. When a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of the jurisdiction being exercised when the error
is committed. If it did, every error committed by a court would deprive it of its jurisdiction and every
erroneous judgment would be a void judgment. This cannot be allowed. The administration of
justice would not survive such a rule. Consequently, an error of judgment that the court may commit
in the exercise of its jurisdiction is not correctible through the original civil action of certiorari.

Even on the supposition that certiorari was an appropriate remedy, the petition would still fail
because it has not been clearly shown that the trial court committed grave abuse of discretion in
refusing to set aside the default order and the default judgment. We have held in many cases,
including Pahilanga v. Luna, 13 that:
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – APPEAL
G.R. No. 160895 October 30, 2006
JOSE R. MARTINEZ, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
TINGA, J.:
The central issue presented in this Petition for Review is whether an order of general default issued
by a trial court in a land registration case bars the Republic of the Philippines, through the Office of
the Solicitor General, from interposing an appeal from the trial court’s subsequent decision in favor
of the applicant.
The antecedent facts follow.
On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a petition for the registration in
his name of three (3) parcels of land included in the Cortes, Surigao del Sur Cadastre. The lots,
individually identified as Lot No. 464-A, Lot No. 464-B, and Lot No. 370, Cad No. 597, collectively
comprised around 3,700 square meters. Martinez alleged that he had purchased lots in 1952 from
his uncle, whose predecessors-in-interest were traceable up to the 1870s. It was claimed that
Martinez had remained in continuous possession of the lots; that the lots had remained
unencumbered; and that they became private property through prescription pursuant to Section
48(b) of Commonwealth Act No. 141. Martinez further claimed that he had been constrained to
initiate the proceedings because the Director of the Land Management Services had failed to do so
despite the completion of the cadastral survey of Cortes, Surigao del Sur.1
The case was docketed as Land Registration Case No. N-30 and raffled to the Regional Trial Court
(RTC) of Surigao del Sur, Branch 27. The Office of the Solicitor General (OSG) was furnished a copy
of the petition. The trial court set the case for hearing and directed the publication of the
corresponding Notice of Hearing in the Official Gazette. On 30 September 1999, the OSG, in behalf
of the Republic of the Philippines, opposed the petition on the grounds that appellee’s possession
was not in accordance with Section 48(b) of Commonwealth Act No. 141; that his muniments of title
were insufficient to prove bona-fide acquisition and possession of the subject parcels; and that the
properties formed part of the public domain and thus not susceptible to private appropriation.2
Despite the opposition filed by the OSG, the RTC issued an order of general default, even against
the Republic of the Philippines, on 29 March 2000. This ensued when during the hearing of even
date, no party appeared before the Court to oppose Martinez’s petition.3
Afterwards, the trial court proceeded to receive Martinez’s oral and documentary evidence in
support of his petition. On 1 August 2000, the RTC rendered a Decision4 concluding that Martinez
and his predecessors-in-interest had been for over 100 years in possession characterized as
continuous, open, public, and in the concept of an owner. The RTC thus decreed the registration of
the three (3) lots in the name of Martinez.
From this Decision, the OSG filed a Notice of Appeal dated 28 August 2000, 5 which was approved
by the RTC. However, after the records had been transmitted to the Court of Appeals, the RTC
received a letter dated 21 February 20016 from the Land Registration Authority (LRA) stating that
only Lot Nos. 464-A and 464-B were referred to in the Notice of Hearing published in the Official
Gazette; and that Lot No. 370, Cad No. 597 had been deliberately omitted due to the lack of an
approved survey plan for that property. Accordingly, the LRA manifested that this lot should not
have been adjudicated to Martinez for lack of jurisdiction. This letter was referred by the RTC to the
Court of Appeals for appropriate action.7
On 10 October 2003, the Court of Appeals promulgated the assailed Decision, 8 reversing the RTC
and instead ordering the dismissal of the petition for registration. In light of the opposition filed by
the OSG, the appellate court found the evidence presented by Martinez as insufficient to support
the registration of the subject lots. The Court of Appeals concluded that the oral evidence presented
by Martinez merely consisted of general declarations of ownership, without alluding to specific acts
of ownership performed by him or his predecessors-in-interest. It likewise debunked the
documentary evidence presented by Martinez, adjudging the same as either inadmissible or
ineffective to establish proof of ownership.
No motion for reconsideration appears to have been filed with the Court of Appeals by Martinez,
who instead directly assailed its Decision before this Court through the present petition.
We cannot help but observe that the petition, eight (8) pages in all, was apparently prepared with
all deliberate effort to attain nothing more but the perfunctory. The arguments raised center almost
exclusively on the claim that the OSG no longer had personality to oppose the petition, or appeal
its allowance by the RTC, following the order of general default. Starkly put, "the [OSG] has no
personality to raise any issue at all under the circumstances pointed out hereinabove."9 Otherwise,
it is content in alleging that "[Martinez] presented sufficient and persuasive proof to substantiate
the fact that his title to Lot Nos. 464-A and 464-B is worth the confirmation he seeks to be done in
this registration case";10 and that the RTC had since issued a new Order dated 1 September 2003,
confirming Martinez’s title over Lot No. 370.
In its Comment dated 24 May 2004,11 the OSG raises several substantial points, including the fact
that it had duly opposed Martinez’s application for registration before the RTC; that jurisprudence
and the Rules of Court acknowledge that a party in default is not precluded from appealing the
unfavorable judgment; that the RTC had no jurisdiction over Lot No. 370 since its technical
description was not published in the Official Gazette; and that as found by the Court of Appeals the
evidence presented by Martinez is insufficient for registering the lots in his name.12 Despite an order
from the Court requiring him to file a Reply to the Comment, counsel for Martinez declined to do
so, explaining, among others, that "he felt he would only be taxing the collective patience of this
[Court] if he merely repeats x x x what petitioner had succinctly stated x x x on pages four (4) to
seven (7) of his said petition." Counsel for petitioner was accordingly fined by the Court.13
The Court’s patience is taxed less by redundant pleadings than by insubstantial arguments. The
inability of Martinez to offer an effective rebuttal to the arguments of the OSG further debilitates
what is an already weak petition.
The central question, as posed by Martinez, is whether the OSG could have still appealed the RTC
decision after it had been declared in default. The OSG argues that a party in default is not precluded
from filing an appeal, citing Metropolitan Bank & Trust Co. v. Court of Appeals,14 and asserts that
"[t]he Rules of Court expressly provides that a party who has been declared in default may appeal
from the judgment rendered against him."15
There is error in that latter, unequivocal averment, though one which does not deter from the
ultimate correctness of the general postulate that a party declared in default is allowed to pose an
appeal. Elaboration is in order.
We note at the onset that the OSG does not impute before this Court that the RTC acted improperly
in declaring public respondent in default, even though an opposition had been filed to Martinez’s
petition. Under Section 26 of Presidential Decree No. 1529, as amended, the order of default may
be issued "[i]f no person appears and answers within the time allowed." The RTC appears to have
issued the order of general default simply on the premise that no oppositor appeared before it on
the hearing of 29 March 2000. But it cannot be denied that the OSG had already duly filed its
Opposition to Martinez’s petition long before the said hearing. As we held in Director of Lands v.
Santiago:16
[The] opposition or answer, which is based on substantial grounds, having been formally filed, it
was improper for the respondent Judge taking cognizance of such registration case to declare the
oppositor in default simply because he failed to appear on the day set for the initial healing. The
pertinent provision of law which states: "If no person appears and answers within the time
allowed, the court may at once upon motion of the applicant, no reason to the contrary
appearing, order a general default to be recorded . . . ," cannot be interpreted to mean that the
court can just disregard the answer before it, which has long been filed, for such an interpretation
would be nothing less than illogical, unwarranted, and unjust. Had the law intended that failure
of the oppositor to appear on the date of the initial hearing would be a ground for default despite
his having filed an answer, it would have been so stated in unmistakable terms, considering the
serious consequences of an order of default. Especially in this case where the greater public
interest is involved as the land sought to be registered is alleged to be public land, the respondent
Judge should have received the applicant's evidence and set another date for the reception of
the oppositor's evidence. The oppositor in the Court below and petitioner herein should have
been accorded ample opportunity to establish the government's claim.17
Strangely, the OSG did not challenge the propriety of the default order, whether in its appeal before
the Court of Appeals or in its petition before this Court. It would thus be improper for the Court to
make a pronouncement on the validity of the default order since the same has not been put into
issue. Nonetheless, we can, with comfort, proceed from same apparent premise of the OSG that
the default order was proper or regular.
The juridical utility of a declaration of default cannot be disputed. By forgoing the need for
adversarial proceedings, it affords the opportunity for the speedy resolution of cases even as it
penalizes parties who fail to give regard or obedience to the judicial processes.
The extent to which a party in default loses standing in court has been the subject of considerable
jurisprudential debate. Way back in 1920, in Velez v. Ramas,18 we declared that the defaulting
defendant "loses his standing in court, he not being entitled to the service of notices in the case,
nor to appear in the suit in any way. He cannot adduce evidence; nor can he be heard at the final
hearing."19 These restrictions were controversially expanded in Lim Toco v. Go Fay,20 decided in
1948, where a divided Court pronounced that a defendant in default had no right to appeal the
judgment rendered by the trial court, except where a motion to set aside the order of default had
been filed. This, despite the point raised by Justice Perfecto in dissent that there was no provision
in the then Rules of Court or any law "depriving a defaulted defendant of the right to be heard on
appeal."21
The enactment of the 1964 Rules of Court incontestably countermanded the Lim Toco ruling.
Section 2, Rule 41 therein expressly stated that "[a] party who has been declared in default may
likewise appeal from the judgment rendered against him as contrary to the evidence or to the law,
even if no petition for relief to set aside the order of default has been presented by him in
accordance with Rule 38."22 By clearly specifying that the right to appeal was available even if no
petition for relief to set aside the order of default had been filed, the then fresh Rules clearly
rendered the Lim Toco ruling as moot.
Another provision in the 1964 Rules concerning the effect of an order of default acknowledged that
"a party declared in default shall not be entitled to notice of subsequent proceedings, nor to take
part in the trial."23 Though it might be argued that appellate proceedings fall part of "the trial" since
there is no final termination of the case as of then, the clear intent of the 1964 Rules was to
nonetheless allow the defaulted defendant to file an appeal from the trial court decision. Indeed,
jurisprudence applying the 1964 Rules was unhesitant to affirm a defaulted defendant’s right to
appeal, as guaranteed under Section 2 of Rule 41, even as Lim Toco was not explicitly abandoned.
In the 1965 case of Antonio, et al. v. Jacinto,24 the Court acknowledged that the prior necessity of a
ruling setting aside the order of default "however, was changed by the Revised Rules of Court. Under
Rule 41, section 2, paragraph 3, a party who has been declared in default may likewise appeal from
the judgment rendered against him as contrary to the evidence or to the law, even if no petition for
relief to set aside the order of default has been presented by him in accordance with Rule 38." 25 It
was further qualified in Matute v. Court of Appeals26 that the new availability of a defaulted
defendant’s right to appeal did not preclude "a defendant who has been illegally declared in default
from pursuing a more speedy and efficacious remedy, like a petition for certiorari to have the
judgment by default set aside as a nullity."27
In Tanhu v. Ramolete,28 the Court cited with approval the commentaries of Chief Justice Moran,
expressing the reformulated doctrine that following Lim Toco, a defaulted defendant "cannot
adduce evidence; nor can he be heard at the final hearing, although [under Section 2, Rule 41,] he
may appeal the judgment rendered against him on the merits."29
Thus, for around thirty-odd years, there was no cause to doubt that a defaulted defendant had the
right to appeal the adverse decision of the trial court even without seeking to set aside the order of
default. Then, in 1997, the Rules of Civil Procedure were amended, providing for a new Section 2,
Rule 41. The new provision reads:
SECTION 1. Subject of appeal.—An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules
to be appealable.
No appeal may be taken from:
(a) An order denying a motion for new trial or reconsideration;
(b) An order denying a petition for relief or any similar motion seeking relief from judgment;
(c) An interlocutory order;
 (d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by consent, confession or compromise on
the ground of fraud, mistake or duress, or any other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against or one or more of several parties or in separate claims,
counterclaims, cross-claims and third-party complaints, while the main case is pending, unless
the court allows an appeal therefrom; and
(h) An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65.
Evidently, the prior warrant that a defaulted defendant had the right to appeal was removed from
Section 2, Rule 41. On the other hand, Section 3 of Rule 9 of the 1997 Rules incorporated the
particular effects on the parties of an order of default:
Sec. 3. Default; declaration of.—If the defending party fails to answer within the time allowed
therefor, the court shall, upon motion of the claiming party with notice to the defending party,
and proof of such failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his pleading may warrant, unless
the court in its discretion requires the claimant to submit evidence. Such reception of evidence
may be delegated to the clerk of court.
(a) Effect of order of default.—A party in default shall be entitled to notice of subsequent
proceedings but shall not take part in the trial.
(b) Relief from order of default.—A party declared in default may 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.
(c) Effect of partial default.—When a pleading asserting a claim states a common cause of action
against several defending parties, some of whom answer and the others fail to do so, the court
shall try the case against all upon the answers thus filed and render judgment upon the evidence
presented.
(d) Extent of relief to be awarded.—A judgment rendered against a party in default shall not
exceed the amount or be different in kind from that prayed for nor award unliquidated damages.
xxx
It cannot be escaped that the old provision expressly guaranteeing the right of a defendant declared
in default to appeal the adverse decision was not replicated in the 1997 Rules of Civil Procedure.
Should this be taken as a sign that under the 1997 Rules a defaulted defendant no longer has the
right to appeal the trial court decision, or that the Lim Toco doctrine has been reinstated?
If post-1997 jurisprudence and the published commentaries to the 1997 Rules were taken as an
indication, the answer should be in the negative. The right of a defaulted defendant to appeal
remains extant.
By 1997, the doctrinal rule concerning the remedies of a party declared in default had evolved into
a fairly comprehensive restatement as offered in Lina v. Court of Appeals:30
a) The defendant in default may, at any time after discovery thereof and before judgment, file a
motion, under oath, to set aside the order of default on the ground that his failure to answer was
due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec
3, Rule 18)
b) If the judgment has already been rendered when the defendant discovered the default, but
before the same has become final and executory, he may file a motion for new trial under Section
1(a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory, he
may file a petition for relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence or to
the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2,
Rule 41)31
The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the 1964 Rules. Yet even
after that provision’s deletion under the 1997 Rules, the Court did not hesitate to expressly rely
again on the Lina doctrine, including the pronouncement that a defaulted defendant may appeal
from the judgment rendered against him. This can be seen in the cases of Indiana Aerospace
University v. Commission on Higher Education,32 Tan v. Dumarpa,33 and Crisologo v. Globe Telecom,
Inc.34
Annotated textbooks on the 1997 Rules of Civil Procedure similarly acknowledge that even under
the new rules, a defaulted defendant retains the right to appeal as previously confirmed under the
old Section 2, Rule 41. In his textbook on Civil Procedure, Justice Francisco answers the question
"What are the remedies available to a defending party in default?" with a reiteration of the Lina
doctrine, including the remedy that a defaulted defendant "may also appeal from the judgment
rendered against him as contrary to the evidence or to the law, even if no petition to set aside the
order of default has been presented by him."35 Justice Regalado also restates the Lina rule in his
textbook on Civil Procedure, opining that the remedies enumerated therein, even if under the
former Rules of Procedure, "would hold true under the present amended Rules."36 Former Court of
Appeals Justice Herrerra likewise reiterates the Lina doctrine, though with the caveat that an appeal
from an order denying a petition for relief from judgment was no longer appealable under Section
1, Rule 41 of the 1997 Rules.37 Herrera further adds:
Section 2, paragraph [2] of the former Rule 41, which allows an appeal from a denial of a petition
for relief, was deleted from the present Rule, and confined appeals to cases from a final judgment
or final order that completely disposes of the case, or of a particular matter therein, when
declared by these rules to be appealable. A judgment by default may be considered as one that
completely disposes of the case.38
We are hard-pressed to find a published view that the enactment of the 1997 Rules of Civil
Procedure accordingly withdrew the right, previously granted under the 1964 Rules, of a defaulted
defendant to appeal the judgment by default against him. Neither is there any provision under the
1997 Rules which expressly denies the defaulted defendant such a right. If it is perplexing why the
1997 Rules deleted the previous authorization under the old Section 2, Rule 41 (on subject of
appeal), it is perhaps worth noting that its counterpart provision in the 1997 Rules, now Section 1,
Rule 41, is different in orientation even as it also covers "subject of appeal." Unlike in the old
provision, the bulk of the new provision is devoted to enumerating the various rulings from which
no appeal may be taken, and nowhere therein is a judgment by default included. A declaration
therein that a defaulted defendant may still appeal the judgment by default would have seemed
out of place.
Yet even if it were to assume the doubtful proposition that this contested right of appeal finds no
anchor in the 1997 Rules, the doctrine still exists, applying the principle of stare decisis.
Jurisprudence applying the 1997 Rules has continued to acknowledge the Lina doctrine which
embodies this right to appeal as among the remedies of a defendant, and no argument in this
petition persuades the Court to rule otherwise.
In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,39 the Court, through Justice Callejo,
Sr., again provided a comprehensive restatement of the remedies of the defending party declared
in default, which we adopt for purposes of this decision:
It bears stressing that a defending party declared in default loses his standing in court and his
right to adduce evidence and to present his defense. He, however, has the right to appeal from
the judgment by default and assail said judgment on the ground, inter alia, that the amount of
the judgment is excessive or is different in kind from that prayed for, or that the plaintiff failed to
prove the material allegations of his complaint, or that the decision is contrary to law. Such party
declared in default is proscribed from seeking a modification or reversal of the assailed decision
on the basis of the evidence submitted by him in the Court of Appeals, for if it were otherwise,
he would thereby be allowed to regain his right to adduce evidence, a right which he lost in the
trial court when he was declared in default, and which he failed to have vacated. In this case, the
petitioner sought the modification of the decision of the trial court based on the evidence
submitted by it only in the Court of Appeals.40
If it cannot be made any clearer, we hold that a defendant party declared in default retains the right
to appeal from the judgment by default on the ground that the plaintiff failed to prove the material
allegations of the complaint, or that the decision is contrary to law, even without need of the prior
filing of a motion to set aside the order of default. We reaffirm that the Lim Toco doctrine, denying
such right to appeal unless the order of default has been set aside, was no longer controlling in this
jurisdiction upon the effectivity of the 1964 Rules of Court, and up to this day.
Turning to the other issues, we affirm the conclusion of the Court of Appeals that Martinez failed to
adduce the evidence needed to secure the registration of the subject lots in his name.
It should be noted that the OSG, in appealing the case to the Court of Appeals, did not introduce
any new evidence, but simply pointed to the insufficiency of the evidence presented by Martinez
before the trial court. The Court of Appeals was careful to point out that the case against Martinez
was established not by the OSG’s evidence, but by petitioner’s own insufficient evidence. We adopt
with approval the following findings arrived at by the Court of Appeals, thus:
The burden of proof in land registration cases is incumbent on the applicant who must show
that he is the real and absolute owner in fee simple of the land applied for. Unless the applicant
succeeds in showing by clear and convincing evidence that the property involved was acquired
by him or his ancestors by any of the means provided for the proper acquisition of public lands,
the rule is settled that the property must be held to be a part of the public domain. The
applicant must, therefore, present competent and persuasive proof to substantiate his claim.
He may not rely on general statements, or mere conclusions of law other than factual evidence
of possession and title.
Considered in the light of the opposition filed by the Office of the Solicitor General, we find the
evidence adduced by appellee, on the whole, insufficient to support the registration of the
subject parcels in his name. To prove the provenance of the land, for one, all that appellee
proffered by way of oral evidence is the following cursory testimony during his direct
examination, viz:
xxxx
Q You mentioned that you are the owner of these three (3) parcels of land. How did you begin
the ownership of the same?
A I bought it from my uncles Julian Martinez and Juan Martinez.
xxxx
Q x x x x Who took possession of these parcels of land from then on?
A I took possession, sir
Q As owner?
A Yes, as owner.
Q Up to the present who is in possession as owner of these parcels of land?
A I took possession.
Q Before Julian Martinez and Juan Martinez sold these parcels of land before you took
possession who were the owners and in possession of these?
A Hilarion Martinez, the father of my predecessors-in-interest and also my grandfather.
xxxx
Court:
Q Of your own knowledge[,] where [sic] did your grandfather Hilarion Martinez acquire these
lands?
A According to my grandfather he bought that land from a certain Juan Casano in the year
1870’s[,] I think.
xxxx
Q By the way[,] when did your grandfather Hilarion Martinez die?
A Either in 1920 or 1921.
 Q Since you said your immediate predecessors-in-interest Julian Martinez and Juan Martinez
inherited the same from your grandfather. Can you say it the same that your predecessors-in-
interest were the owners and possessors of the same since 1921 up to the time they sold the
land to you in 1952?

A Yes, sir.

xxxx

In the dreary tradition of most land registration cases, appellee has apparently taken the
absence of representation for appellant at the hearing of his petition as license to be
perfunctory in the presentation of his evidence. Actual possession of land, however, consists in
the manifestation of acts of dominion over it of such a nature as a party would naturally
exercise over his own property. It is not enough for an applicant to declare himself or his
predecessors-in-interest the possessors and owners of the land for which registration is sought.
He must present specific acts of ownership to substantiate the claim and cannot just offer
general statements which are mere conclusions of law requiring evidentiary support and
substantiation.

The record shows that appellee did not fare any better with the documentary evidence he
adduced before the trial court. The October 20, 1952 Deed of Sale by which appellee claims to
have purchased the subject parcels from his uncle, Julian Martinez, was not translated from the
vernacular in which it was executed and, by said token, was inadmissible in evidence. Having
submitted a white print copy of the survey plan for Lot Nos. 464-A and 464-B, appellee also
submitted the tracing cloth plan for Lot No. 370 which does not, however, appear to be
approved by the Director of Lands. In much the same manner that the submission of the original
tracing cloth plan is a mandatory statutory requirement which cannot be waived, the rule is
settled that a survey plan not approved by the Director of Lands is not admissible in evidence.41

These findings of the Court of Appeals, arrived at after a sufficiently extensive evaluation of the
evidence, stand in contrast to that contained in the RTC decision, encapsulated in a one-paragraph
précis of the factual allegations of Martinez concerning how he acquired possession of the subject
properties. The Court of Appeals, of course, is an appropriate trier of facts, and a comparison
between the findings of fact of the Court of Appeals and that of the RTC clearly demonstrates that
it was the appellate court which reached a more thorough and considered evaluation of the
evidence.

As correctly held by the Court of Appeals, the burden of proof expected of the petitioner in a land
registration case has not been matched in this case.

WHEREFORE, the petition is DISMISSED. Costs against petitioner.

SO ORDERED.
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – CERTIORARI A PROPER REMEDY?
G.R. No. 93233 December 19, 1995
JAO & COMPANY, INC. petitioner,
vs.
HON. COURT OF APPEALS, HON. ROSALIO DE LA ROSA, as Presiding Judge of Br. 51, Regional
Trial Court of Manila, THE SHERIFF OF THE CITY OF MANILA, DEPUTY SHERIFF OF MANILA
RODOLFO P. TORRELLA, TOP SERVICE, INC., HENRY CASTILLO, QUINTIN S. GO, and CARLITO N.
ABADILLA, respondents.
RESOLUTION
PANGANIBAN, J.:
Due to the non-appearance of defendant (the petitioner herein) Jao & Company, Inc., during the
hearing on the merits, the Regional Trial Court of Manila, Branch 51 — upon motion of herein
private respondent Top Service, Inc. — issued an order dated April 14, 1989 declaring said petitioner
in default and allowed evidence to be presented ex-parte. The petitioner however filed an answer.
Thereafter, on May 26, 1989, the trial court rendered a decision ordering petitioner Jao to pay
private respondent Top Service P150,920.00 representing agreed rentals with 12% interest per
annum from date of filing of the suit, attorney's fees of P5,000.00, plus costs.
After receipt of the decision, petitioner filed on November 10, 1989 a motion for reconsideration
and/or to set aside decision (Rollo, p. 9). Pending resolution of the motion, respondent judge
restrained the sheriff from holding an auction sale of two barges he earlier levied on. Thereafter,
on January 10, 1990, the trial court denied the said motion and lifted the restraining order against
the auction sale. On January 12, 1990, the sheriff of Manila gave petitioner a Notice of Resetting of
Execution Sale of Personal Properties on January 15, 1990.
On January 15, 1990, petitioner filed a petition for certiorari with the Court of Appeals, docketed as
CA-G.R. No. SP-19680, contesting the jurisdiction of the trial court. The following day, January 16,
1990, the respondent appellate court issued a temporary restraining order to stop the sheriff from
conducting the auction sale. However, it appears that the auction took place one day before, on
January 15, 1990, although the petitioner contends that no such sale actually took place. The barges
in question were purchased during the auction by respondent Henry Castillo, who later sold them
to Quintin Go, who in turn sold them to Carlito Abadilla. On March 13, 1990, respondent Court of
Appeals promulgated a Resolution denying petitioner's motion for a writ of preliminary injunction,
the dispositive portion of which reads:
ACCORDINGLY, the prayer for the issuance of the writ of preliminary injunction is hereby DENIED
for lack of merit. (Rollo, p. 86)
The respondent Court held that the motion has become moot and academic because the properties
have already been sold to third parties and because the decision of the trial court dated May 26,
1989 "has long become final and executory on the basis that petitioner failed to appeal . . . ." Upon
denial of its motion for reconsideration via the Court of Appeals' Resolution dated April 25, 1990,
petitioner brought to the Supreme Court the instant petition for certiorari and mandamus under
Rule 65, inter alia, to nullify the said Resolutions of the respondent Court dated March 13, 1990 and
April 25, 1990 and to command the said Court to declare as void the auction sale of January 15,
1990, for grave abuse of discretion and/or lack/excess of jurisdiction.
In their respective Comments, private respondents argued that the trial court's decision has become
final and executory and that the barges have been bought and resold to buyers in good faith, and
that at any rate, the parties have another pending case for replevin of said properties pending in
Branch I of the Regional Trial Court of Manila. In its Consolidated Reply, petitioner averred that the
decision could not become final because the trial court "improperly declared defendant-petitioner
in default and unjustifiably allowed private respondent-plaintiff to present its evidence ex-parte"
(Rollo, p. 203) because it (petitioner) was not given notice of the order of April 14, 1989 declaring it
in default and of the decision of May 26, 1989. It also assailed the respondent Court's suggestion
that petitioner's remedy is a "separate action for the nullification of the sale or such other remedies
or process sanctioned by accepted rules and procedure." It also contended that the case for
preliminary injunction has not become moot and academic by the auction sale of the subject barges,
citing the factual circumstances why, in its view, the said sale on January 15, 1990 did not actually
take place. In their Rejoinder, private respondents stated that petitioner's counsel had withdrawn
his appearance in the trial court and left no forwarding address. Hence, no notice of the said order
of default and the decision could be given it. At any rate, petitioner's remedy, they concluded, was
timely appeal, which petitioner failed to perfect.
Deliberating on the petition together with the various other submissions of the parties, the Court
believes that, in sum and stripped of non-essentials, these various issues and questions submitted
by the parties could be summarized in two:
(1) Did the respondent Court of Appeals gravely abuse its discretion in refusing to issue a writ of
preliminary injunction? and,
(2) Has the decision of the trial court, promulgated on May 26, 1989, become final?
On the first question, it must be stressed at the outset that the grant or denial of the writ of
preliminary injunction rests upon the sound discretion of the court (Avila vs. Tapucar, G.R. No.
45947, 201 SCRA 148 [1991], citing Belisle Investment & Finance Co., Inc. vs. State Investment House,
Inc., 151 SCRA 630 [1987]). And in evaluating whether to issue it or not, the court is called upon to
be careful and circumspect, "with the caveat that extreme caution be observed in the exercise of
such discretion" to prevent a denial of procedural due process and avoid causing "irreparable
prejudice to a party" (Bataclan vs. Court of Appeals, G.R. No. 78148, 175 SCRA 764 [1989]). Its main
purpose is to preserve the status quo and not to grant the very subject of the petition on the merits.
The Supreme Court in Unciano Paramedical College, Inc. vs. Court of Appeals,1 quoting with approval
from the case of Capitol Medical Center, Inc., et al. vs. Court of Appeals, et al.2 stated:
The sole object of a preliminary injunction, whether prohibitory or mandatory, is to preserve the
status quo until the merits of the case can be heard. The status quo is the last actual peaceable
uncontested status which preceded the controversy (Rodulfa vs. Alfonso, 76 Phil. 225). It may
only be resorted to by a litigant for the preservation or protection of his rights or interests and
for no other purpose during the pendency of the principal action (Calo vs. Roldan, 76 Phil. 445).
It should only be granted if the party asking for it is clearly entitled thereto (Climaco vs. Macaraeg,
4 SCRA 930; Subido vs. Gopengco, 27 SCRA 455; Police Commission vs. Bello, 37 SCRA 230).
In the instant case, the respondent Court promptly issued a temporary restraining order one day
after an application therefor was filed by the petitioner. From this, it can be inferred that said Court
was alert and sensitive to the need for immediate action. However, as the sale took place the day
before, i.e., on January 15, 1990, the TRO was useless in preventing/stopping the act complained
of.

This being the case, it is reasonable to expect that even if the said Court was minded to issue the
Writ, it would have been also functus oficio, since a preventive writ can not be used to restore the
parties' status ante bellum (vide, Unciano Paramedical College, Inc. vs. Court of Appeals, supra.),
particularly because the subject properties were already in the possession of persons who were not
parties in the proceedings before said Court. As to petitioner's contention that the auction sale and
the subsequent sale to third parties were fraudulent, we cannot disagree with the finding of the
respondent Court that the allegation involves "factual issues" which require "trial on the merits",
and which cannot be decided on the mere say-so of the parties in their pleadings.

On the second issue, it is well-settled that, under ordinary circumstances, the proper remedy of a
party wrongly declared in default is either to appeal from the judgment by default or to file a
petition for relief from judgment, and not certiorari (Pacete vs. Carriaga, Jr., 231 SCRA 321 [1994]).
A default judgment is an adjudication on the merits and is, thus, appealable. Since appeal is the
proper remedy, the extraordinary writ of certiorari will not lie.

Petitioner contends that it could not be bound by the questioned Order of April 14, 1989 declaring
it in default and the subsequent Decision of May 20, 1989 because it did not receive copies thereof.
Respondents counter that such non-service was due to petitioner's fault in not furnishing the trial
court with its "forwarding address" after its counsel withdrew his appearance. This Court is not in a
position to settle this issue of fact — as indeed the Supreme Court does not decide such questions.

But it is not disputed that after receipt of the decision, petitioner filed a motion for reconsideration.
Thus, whatever defects — if indeed there was any — may have been committed by the trial court
in failing to give constructive notice of its erroneous default order was cured by petitioner's
voluntary filing of the said motion for reconsideration. Upon denial thereof, petitioner should have
appealed. But instead of doing that, it opted for the wrong remedy of certiorari.

WHEREFORE, the petition is DISMISSED as petitioner failed to show that respondent Court of
Appeals acted with grave abuse of discretion and/or lack of jurisdiction. Costs against petitioner.

SO ORDERED.
CIVPRO – RULE 17 – DISMISSAL OF ACTIONS – CERTIORARI A PROPER REMEDY? investigation and submit its report. The [R]eport submitted in January 1997, stated in
substance:
G.R. No. 139371 April 4, 2001
'x x x xxx xxx
INDIANA AEROSPACE UNIVERSITY, petitioner,
vs. 'To recall it was in the month of May 1996, [that] Director Ma. Lilia Gaduyon met the school
COMMISSION ON HIGHER EDUCATION (CHED), respondent. [p]resident in the regional office and verbally talked [with] and advised them not to use University
when it first came out in an advertisement column of a local daily newspaper in Cebu City. It was
PANGANIBAN, J.: explained that there was a violation [committed by] his institution [when it used] the term
university unless the school ha[d] complied [with] the basic requirement of being a university as
prescribed in CHED Memorandum Order No. 48, s. 1996.'
When the delayed filing of an answer causes no prejudice to the plaintiff, default orders should be
avoided. Inasmuch as herein respondent was improvidently declared in default, its Petition for
Certiorari to annul its default may be given due course. The act of the Commission on Higher xxx xxx x x x.'
Education enjoining petitioner from using the word "university" in its corporate name and ordering
it to revert to its authorized name does not violate its proprietary rights or constitute irreparable "As a consequence of said Report, [respondent's] Legal Affairs Service was requested to take legal
damage to the school. Indeed, petitioner has no vested right to misrepresent itself to the public. An action against [petitioner]. Subsequently, on February 3, 1997, [respondent] directed [petitioner]
injunction is a remedy in equity and should not be used to perpetuate a falsehood. to desist from using the term University, including the use of the same in any of its alleged
branches. In the course of its investigation, [respondent] was able to verify from the Securities
The Case and Exchange Commission (SEC) that [petitioner had] filed a proposal to amend its corporate
name from Indiana School of Aeronautics to Indiana Aerospace University, which was supposedly
favorably recommended by the Department of Education, Culture and Sports (DECS) per its
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the
Indorsement dated 17 July 1995, and on [that] basis, SEC issued to [petitioner] Certificate of
July 21, 1999 Decision1 of the Court of Appeals (CA) in CA-GR SP No. 51346. The appellate court
Registration No. AS-083-002689 dated August 7, 1995. Surprisingly, however, it ought to be
directed the Regional Trial Court (RTC) of Makati City, Branch 136, to cease and desist from
noted, that SEC Chairman Perfecto R. Yasay, Jr. wrote the following letter to the [c]hairman of
proceeding with Civil Case No. 98-811 and to dismiss the Complaint for Damages filed by the
[respondent]:
"Indiana Aerospace University" against the Commission on Higher Education (CHED). The dispositive
portion of the CA Decision reads as follows:
'Hon. Angel C. Alcala
Chairman
"WHEREFORE, in the light of the foregoing consideration, and pursuant to pertinent existing laws
Commission on Higher Education
and jurisprudence on the matter, [the trial court] is hereby DIRECTED to cease and desist from
DAP Bldg., San Miguel Avenue
proceeding with Civil Case No. 98-811 and to order the dismissal of [petitioner's] Petition dated
Ortigas Center, Pasig City
March 31, 1999 in Civil Case No. 98-911 for lack of merit and valid cause of action."2

Dear Chairman Alcala:

The Facts

This refers to your letter dated September 18, 1997 requesting this Commission to make
The facts of this case are summarized by the CA, as follows:
appropriate changes in the Articles of Incorporation of Indiana School of Aeronautics, Inc. due
to its unauthorized use of the term 'University' in its corporate name.
"Sometime in October 1996, Dr. Reynaldo B. Vera, Chairman, Technical Panel for Engineering,
Architecture, and Maritime Education (TPRAM) of [CHED], received a letter dated October 18,
Relative thereto, please be informed that our records show that the above-mentioned
1998 (Annex 'C') from Douglas R. Macias, Chairman, Board of Aeronautical Engineering,
corporation has not filed any amended articles of incorporation that changed its corporate
Professional Regulat[ory] Commission (PRC) and Chairman, Technical Committee for Aeronautical
name to include the term 'University.'
Engineering (TPRAME) inquiring whether [petitioner] had already acquired [u]niversity status in
view of the latter's advertisement in [the] Manila Bulletin.
In case the corporation submit[s] an application for change of name, your Cease and Desist
Order shall be considered accordingly.
"In a letter dated October 24, 1996, Dr. Vera formally referred the aforesaid letter to Chairman
Alcala with a request that the concerned Regional Office of [CHED] be directed to conduct
appropriate investigation on the alleged misrepresentation by [petitioner]. Thereafter, [CHED] Very Truly yours,
referred the matter to its Regional Director in Cebu City, requesting said office to conduct an
 (SGD.) PERFECTO R. YASAY,
JR.
Chairman'
"In reaction to [respondent's] order for [petitioner] to desist from using the word 'University',
Jovenal Toring, [c]hairman and [f]ounder of [petitioner] wrote a letter dated February 24, 1997
(Annex 'G') appealing for reconsideration of [respondent's] Order, with a promise to follow the
provisions of CMO No. 48, pertinent portions of which have been quoted in the Petition, to wit:
'On 07 August 1995, in line with the call of the government to go for global competitiveness and
our vision to help in the development of aerospace technology, the Board of Directors applied
with the SEC for the amendment of Article I of the Articles of Incorporation to read as 'Indiana
Aerospace University' instead of 'Indiana School of Aeronautics, Inc.'
xxx xxx xxx
'In view thereof, we would like to appeal to you Fr. Delagoza to please reconsider your order of
February 3, 1997, otherwise the school will encounter financial difficulties and suffer damages
which will eventually result in the mass dislocation of x x x thousand[s] of students. The
undersigned, being the [c]hairman and [f]ounder, will try our very best to follow the provisions
of CHED MEMO No. 48, series of 1996 that took effect last June 18, 1996.
xxx xxx xxx
Thank you very much for giving me a copy of said CHED MEMO Order No. 48. More power and
God Bless You.
xxx xxx xxx
"The appeal of [petitioner] was however rejected by [respondent] in its decision dated July 30,
1998 and [the latter] ordered the former to cease and desist from using the word 'University.'
However, prior to said date, on April 2, 1998, [petitioner] filed a Complaint for Damages with
prayer for Writ of Preliminary and Mandatory Injunction and Temporary Restraining Order
against [respondent], docketed as Civil Case No. 98-811 before public respondent judge.
"On April 7, 1998, [respondent] filed a Special Appearance with Motion to Dismiss, based on 1)
improper venue; 2) lack of authority of the person instituting the action; and 3) lack of cause of
action. On April 17, 1998, [petitioner] filed its Opposition to the Motion to Dismiss [on] grounds
stated therein, to which [respondent] filed a Reply on April 21, 1998, reiterating the same
arguments in its Motion to Dismiss. After due hearing, [petitioner] formally offered its evidence
on July 23, 1998 while [respondent] made a formal offer of evidence on July 28, 1998 to which
[petitioner] filed its Comments/Objections and finally, [respondent] submitted its Memorandum
relative thereto on October 1, 1998.
"Public respondent judge, in an Order dated August 14, 1998, denied [respondent's] Motion to
Dismiss and at the same time, issued a Writ of Preliminary Injunction in favor of [petitioner].
[Respondent], in the same Order, was directed to file its Answer within fifteen (15) days from
receipt of said Order, which was August 15, 1998.
xxx xxx xxx
'WHEREFORE, and in consideration of all the foregoing, [respondent's] Motion to Dismiss is
hereby denied, and the [respondent] is directed to file its [A]nswer to the [C]omplaint within
fifteen (15) days from receipt of this order.
In the meantime, [respondent], its officials, employees and all parties acting under its authority
are hereby enjoined to observe the following during the pendency of this case:
1. Not to publish or circulate any announcement in the newspaper, radio or television
regarding its Cease and Desist Order against x x x [petitioner];
2. Not to enforce the Cease and Desist Order issued against x x x [petitioner];
3. To maintain the status quo by not withholding the issuance of yearly school permits and
special order to all graduates.
Let a Writ of Preliminary Injunction to that effect issue upon posting by [petitioner] of an
injunction bond in the amount of One Hundred Thousand Pesos (P100,000.00), and subject to
the approval of the Court.
SO ORDERED.'
"On September 22, 1998, [petitioner] filed before public respondent a Motion To Declare
[Respondent] in [D]efault pursuant to Section 3, Rule 9 in relation to Section 4, Rule 16 of the
Rules of Court, as amended, and at the same time praying [for] the Motion to [S]et for [H]earing
on October 30, 1998 at 8:30 a.m. On the same date, [respondent] filed a Motion For Extension of
Time to File its Answer, x x x until November 18, 1998. On November 17, 1998, [respondent] filed
its [A]nswer.
"[Petitioner], on November 11, 1998 filed its Opposition to the Motion for Extension of Time to
File [Respondent's] Answer and on November 9, 1998, a Motion to Expunge [Respondent's]
Answer and at the same time praying that its [M]otion be heard on November 27, 1998 at 9:00
a.m. On even date, public respondent judge issued an Order directing the Office of the Solicitor
General to file within a period of ten (10) days from date its written Opposition to the Motion to
Expunge [Respondent's] Answer and within the same period to file a written [N]otice of
[A]ppearance in the case. Unable to file their written Opposition to the Motion to Expunge within
the period given by public respondent, the OSG filed a Motion to Admit Written Opposition
stating the reasons for the same, attaching thereto the Opposition with [F]ormal [E]ntry of
[A]ppearance.
"In an Order dated December 9, 1998, (Annex 'A'), public respondent judge ruled on [Petitioner's]
Motion to Declare [Respondent in Default], to wit:
"WHEREFORE, and in view of all the foregoing, the present motion is granted. [Petitioner] is
hereby directed to present its evidence ex-parte before the [b]ranch [c]lerk of [c]ourt, who is
designated as [c]ommissioner for the purpose, within ten (10) days from receipt of this [O]rder,
 and for the latter to submit his report within twenty (20) days from the date the case is
submitted for decision."
SO ORDERED.'"3
On February 23, 1999, respondent filed with the CA a Petition for Certiorari, arguing that the RTC
had committed grave abuse of discretion (a) in denying the former's Motion to Dismiss, (b) in issuing
a Writ of Preliminary Injunction, and (c) in declaring respondent in default despite its filing an
Answer.
Ruling of the Court of Appeals
The CA ruled that petitioner had no cause of action against respondent. Petitioner failed to show
any evidence that it had been granted university status by respondent as required under existing
law and CHED rules and regulations. A certificate of incorporation under an unauthorized name
does not confer upon petitioner the right to use the word "university" in its name. The evidence
submitted by respondent showed that the Securities and Exchange Commission (SEC) had denied
that petitioner had ever amended its Articles of Incorporation to include "university" in its corporate
name. For its part, the Department of Education, Culture and Sports (DECS) denied having issued
the alleged Certification dated May 18, 1998, indorsing the change in petitioner's corporate name.
Besides, neither the Corporation Code nor the SEC Charter vests the latter with the authority to
confer university status on a corporation that it regulates.
For the same reason, the appellate court also ruled that the Writ of Preliminary Injunction had
improvidently been issued. The doubtful right claimed by petitioner is subordinate to the public
interest to protect unsuspecting students and their parents from the unauthorized operation and
misrepresentation of an educational institution.
Respondent should not have been declared in default, because its Answer had been filed long
before the RTC ruled upon petitioner's Motion to declare respondent in default. Thus, respondent
had not obstinately refused to file an Answer; on the contrary, its failure to do so on time was due
to excusable negligence. Declaring it in default did not serve the ends of justice, but only prevented
it from pursuing the merits of its case.1âwphi1.nêt
Hence, this Petition.4
Issues
Petitioner alleges that the appellate court committed the following reversible errors:
"A. In giving due course to respondent CHED's Petition for Certiorari filed way beyond
the 60-day reglementary period prescribed by Section 4, Rule 65 of the Rules of Court;
B. In not requiring Respondent CHED to first file a Motion to Set Aside the Order of
Default dated December 9, 1998; and
C. In ordering the dismissal of Civil Case No. 98-811."5
In its Memorandum, petitioner adds that the CA erred in dissolving the Writ of Preliminary
Injunction issued by the RTC. We shall take up these issues in the following order: (1) timeliness of
the certiorari petition, (2) validity of the default order, 93) validity of the preliminary injunction, and
(4) dismissal of the Complaint.
This Court's Ruling
The Petition is partly meritorious.
First Issue:
Timeliness of Certiorari
Petitioner claims that the Petition for Certiorari of respondent should have been dismissed by the
CA, because it was filed out of time and was not preceded by a motion for reconsideration in the
RTC. The copy of the Order of August 14, 1998 had been served at respondent's office on August
15, 1998, but its Answer was filed only after 180 days which, according to petitioner, could not be
considered a reasonable period. On the other hand, the Office of the Solicitor General (OSG) argues
that the Order is null and void and, hence, may be assailed at any time.
We hold that respondent's Petition for Certiorari was seasonably filed. In computing its timeliness,
what should have been considered was not the Order of august 14, 1998, but the date when
respondent received the December 9, 1998 Order declaring it in default. Since it received this Order
only on January 13, 1999, and filed its Petition for Certiorari on February 23, 1999, it obviously
complied with the sixty-day reglementary period stated in Section 4, Rule 65 of the 1997 Rules of
Court. Moreover, the August 14, 1998 Order was not a proper subject of certiorari or appeal, since
it was merely an interlocutory order.
Exhaustion of Available Remedies
Petitioner also contends that certiorari cannot prosper in this case, because respondent did not file
a motion for reconsideration before filing its Petition for Certiorari with the CA. Respondent
counters that reconsideration should be dispensed with, because the December 9, 1998 Order is a
patent nullity.
The general rule is that, in order to give the lower court the opportunity to correct itself, a motion
for reconsideration is a prerequisite to certiorari. It is also basic that a petitioner must exhaust all
other available remedies before resorting to certiorari. This rule, however, is subject to certain
exceptions such as any of the following: (1) the issues raised are purely legal in nature, (2) public
interest is involved, (3) extreme urgency is obvious or (4) special circumstances warrant immediate
or more direct action.6 It is patently clear that the regulation or administration of educational
institutions, especially on the tertiary level, is invested with public interest. Hence, the haste with
which the solicitor general raised these issues before the appellate court is understandable. For the
reason mentioned, we rule that respondent's Petition for Certiorari did not require prior resort to a
motion for reconsideration.
Second Issue:
Validity of the Default Order
Petitioner avers that the RTC was justified in declaring respondent in default, because the August
14, 1998 Order directing the filing of an answer had been served on August 25, 1998. And as late as
October 30, 1998, respondent could only file a Motion for Extension of Time, which the trial court
denied because of the expiry of the fifteen-day period. Petitioner adds that respondent's proper
remedy would have been a Motion to Set Aside the Order of Default, pursuant to Section 3(b), Rule
9 of the Rules of Court.
Respondent, in turn, avers that certiorari was the only plain, speedy and adequate remedy in the
ordinary course of law, because the default Order had improvidently been issued.
We agree with respondent. Lina v. Court of Appeals7 discussed the remedies available to a
defendant declared in default, as follows: (1) a motion to set aside the order of default under Section
3(b), Rule 9 of the Rules of Court, if the default was discovered before judgment could be rendered;
(2) a motion for new trial under Section 1(a) of Rule 37, if the default was discovered after judgment
but while appeal is still available; (3) a petition for relief under Rule 38, if judgment has become final
and executory; and (4) an appeal from the judgment under Section 1, Rule 41, even if no petition to
set aside the order of default has been resorted to.
These remedies, however, are available only to a defendant who has been validly declared in
default. Such defendant irreparably loses the right to participate in the trial. On the other hand, a
defendant improvidently declared in default may retain and exercise such right after the order of
default and the subsequent judgment by default are annulled, and the case remander to the court
of origin. The former is limited to the remedy set forth in Section 2, paragraph 3 of Rule 41 of the
pre 997 Rules of Court, and can therefore contest only the judgment by default on the designated
ground that it is contrary to evidence or law. The latter, however, has the following options: to
resort to this same remedy; to interpose a petition for certiorari seeking the nullification of the
order of default, even before the promulgation of a judgment by default; or in the event that
judgment has been rendered, to have such order and judgment declared void.
In prohibiting appeals from interlocutory orders, the law does not intend to accord executory force
to such writs, particularly when the effect would be to cause irreparable damage. If, in the course
of trial, a judge proceeds without or in excess of jurisdiction, this rule prohibiting an appeal does
not leave the aggrieved party without any remedy.8 In a case like this, a special civil action of
certiorari is the plain, speedy and adequate remedy.
Herein respondent controverts the judgment by default, not on the ground that it is
unsubstantiated by evidence or that it is contrary to law, but on the ground that it is intrinsically
void for having been rendered pursuant to a patently invalid order of default.9
Grave Abuse of Discretion
Petitioner claims that in issuing the default Order, the RTC did not act with grave abuse of discretion,
because respondent had failed to file its answer within fifteen days after receiving the August 14,
1998 Order.
We disagree. Quite the contrary, the trial court gravely abused its discretion when it declared
respondent in default despite the latter's filing of an Answer.10 Placing respondent in default
thereafter served no practical purpose.
Petitioner was lax in calling the attention of the Court to the fifteen-day period for filing an Answer.
It moved to declare respondent in default only on September 20, 1998, when the filing period had
expired on August 30, 1998. The only conclusion in this case is that petitioner has not been
prejudiced by the delay. The same leniency can also be accorded to the RTC, which declared
respondent in default only on December 9, 1998, or twenty-two days after the latter had filed its
Answer on November 17, 1998. Defendant's Answer should be admitted, because it had been filed
before it was declared in default, and no prejudice was caused to plaintiff. The hornbook rule is that
default judgments are generally disfavored.11
While there are instances when a party may be properly declared in default, these cases should be
deemed exceptions to the rule and should be resorted to only in clear cases of obstinate refusal or
inordinate neglect in complying with the orders of the court.12 In the present case, however, no such
refusal or neglect can be attributed to respondent.
It appears that respondent failed to file its Answer because of excusable negligence. Atty. Joel
Voltaire Mayo, director of the Legal Affairs Services of CHED, had to relinquish his position in
accordance with the Memorandum dated July 7, 1998, requiring all non-CESO eligibles holding non-
career positions to vacate their respective offices. It was only on September 25, 1998, after CHED
Special Order No. 63 had been issued, when he resumed his former position. Respondent also
presented a meritorious defense in its Answer – that it was duty-bound to pursue the state policy
of protecting, fostering and promoting the right of all citizens to affordable quality education at all
levels. In stark contrast, petitioner neither qualified for nor was ever conferred university status by
respondent.
Judges, as a rule, should avoid issuing default orders that deny litigants the chance to be heard.
Instead, the former should give the latter every opportunity to present their conflicting claims on
the merits of the controversy, as much as possible avoiding any resort to procedural technicalities. 13
Third Issue:
Preliminary Injunction
Petitioner contends that the RTC validly issued the Writ of Preliminary Injunction. According to the
trial court, respondent's actions adversely affected petitioner's interests, faculty and students. In
fact, the very existence of petitioner as a business concern would have been jeopardized had its
proprietary rights not been protected.
We disagree. We concur with the CA that the trial court acted with grave abuse of discretion in
issuing the Writ of Preliminary Injunction against respondent. Petitioner failed to establish a clear
right to continue representing itself to the public as a university. Indeed, it has no vested right to
misrepresent itself. Before an injunction can be issued, it is essential that (1) there must be a right
in esse to be protected, and (2) the act against which the injunction is to be directed must have
violated such right.14 The establishment and the operation of schools are subject to prior
authorization from the government. No school may claim to be a university unless it has first
complied with the prerequisites provided in Section 34 of the Manual of Regulations for Private
Schools. Section 3, Rule 58 of the Rules of Court, limits the grant of preliminary injunction to cases
in which the plaintiff is clearly entitled to the relief prayed for.
We also agree with the finding of the CA that the act sought to be enjoined by petitioner is not
violative of the latter's rights. Respondent's Cease and Desist Order of July 30, 1997 merely
restrained petitioner from using the term "university" in its name. It was not ordered to close, but changed to "Indiana Aerospace University" after the Department of Education, Culture and Sports
merely to revert to its authorized name; hence, its proprietary rights were not violated. had interposed no objection to such change.17

Fourth Issue:
Dismissal of the Complaint
Petitioner claims that the CA went beyond its limited jurisdiction under Rule 65 when it reversed
the trial court and dismissed the Complaint on the ground that petitioner had failed to state a cause
of action. The RTC had yet to conduct trial, but the CA already determined the factual issue
regarding petitioner's acquisition of university status, a determination that is not permitted in
certiorari proceedings.
Respondent issued a formal Cease and Desist Order directing petitioner to stop using the word
"university" in its corporate name. The former also published an announcement in the March 21,
1998 issue of Freeman, a local newspaper in Cebu City, that there was no institution of learning by
that name. The counsel of respondent was quoted as saying in the March 28, 1998 issue of the
newspaper Today that petitioner had been ordered closed by the respondent for illegal
advertisement, fraud and misrepresentation of itself as a university. Such acts, according to the RTC
undermined the public's confidence in petitioner as an educational institution.18 This was a clear
statement of a sufficient cause of action.

The CA ruled that the trial court gravely abused its discretion in denying respondent's Motion to When a motion to dismiss is grounded on the failure to state a cause of action, a ruling thereon
Dismiss on the ground of lack of cause of action because of petitioner's lack of legal authority or should be based only on the facts alleged in the complaint. 19 The court must pass upon this issue
right to use the word "university." Said the appellate court: based solely on such allegations, assuming them to be true. For it to do otherwise would be a
procedural error and a denial of plaintiff's right to due process.20
"x x x. No matter how we interpret the Corporation Code and the law granting the Securities and
Exchange Commission its powers and duties, there is nothing there which grants it the power or WHEREFORE, the Petition is hereby GRANTED IN PART, and the assailed Decision MODIFIED. The
authority to confer University Status to an educational institution. Fundamental is the rule that trial court is DIRECTED to SET ASIDE the Order of Default of December 9, 1998; to ADMIT the Answer
when there is no power granted, none exist[s], not even implied ones for there is none from dated November 5, 1998; to LIFT the preliminary injunction; and to CONTINUE, with all deliberate
where to infer. The mere fact of securing an alleged Certificate of Incorporation under an speed, the proceedings in Civil Case NO. 98-811.1âwphi1.nêt
unauthorized name does not confer the right to use such name.
SO ORDERED.
"But what makes the conclusion of [the trial court] even anomalous, to say the least, is that no
less than the Chairman of the SEC in his letter to the [respondent] (Exh. "J") expressly said that
[petitioner] never filed any Amended Articles of Incorporation so as to have a change of corporate
name to include the term "University". Worse, the records officer of DECS issued a Certification
dated May 18, 1998 (Annex "AA") to the effect that there was no Indorsement made by that
office addressed to the SEC or the Proposed Amended Article of Incorporation of Indiana
Aeronautics. x x x.

"Under such clear pattern of deceitful maneuvering to circumvent the requirement for acquiring
University Status, it is [a] patently reversible error for [the trial court] to hold that [petitioner] has
a right to use the word "University" which must be protected. Dismissal of [petitioner's]
Complaint for lack of a valid cause of action should have been the proper action taken by [the
trial court] judge."15

An order denying a motion to dismiss is interlocutory, and so the proper remedy in such a case is to
appeal after a decision has been rendered. A writ of certiorari is not intended to correct every
controversial interlocutory ruling; it is resorted to only to correct a grave abuse of discretion or a
whimsical exercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping
an inferior court within its jurisdiction and to relieve persons from arbitrary acts – acts which courts
or judges have no power or authority in law to perform. It is not designed to correct erroneous
findings and conclusions made by the court.16

In the case at bar, we find no grave abuse of discretion in the RTC's denial of the Motion to Dismiss,
as contained in the August 14, 1998 Order. The CA erred in ruling otherwise. The trial court stated
in its Decision that petitioner was an educational institution, originally registered with the Securities
and Exchange Commission as the "Indiana School of Aeronautics, Inc." That name was subsequently