[G.R. No.
160736, March 23 : 2011] former counsel,[8] explaining that the substitute third party
AIR ADS INCORPORATED, PETITIONER, VS. TAGUM
AGRICULTURAL DEVELOPMENT CORPORATION
(TADECO), RESPONDENT.
DECISION
BERSAMIN, J.:
Assailed via petition for review on certiorari are the two
resolutions promulgated on February 24, 2003[1]and November
13, 2003,[2] whereby the Court of Appeals (CA) respectively
dismissed the petitioner's petition for certiorari and prohibition,
and denied the petitioner's motion for reconsideration of the
dismissal.
We find no reversible error on the part of the CA, and affirm
the dismissal of the petitioner's petition for certiorari.
Antecedents
This case stemmed from Civil Case No. 27802-2000 of the
Regional Trial Court, Branch 15, in Davao City (RTC)
entitled Elva O. Pormento v. Tagum Agricultural Development
Corporation and Edwin Yap, an action to recover damages for
the death of the plaintiffs husband and attorney's fees
On April 6, 2000, respondent Tagum Agricultural Development
Corporation (TADECO), as defendant, filed through counsel
ACCRA Law Office an answer with compulsory counterclaims
and motion for leave to file third party complaint,[3] impleading
petitioner Air Ads, Inc. and Pioneer Insurance and Surety
Corporation (Pioneer) as third-party defendants. The RTC
admitted TADECO's third party complaint on April 14,
2000.[4] On June 16, 2000, however, ACCRA Law Office, upon
realizing that Pioneer was a client of its Makati Office, filed
a notice of dismissal without prejudice to third party complaint
only against Pioneer Insurance and Surety Corporation .[5]
Ten days later, TADECO filed through another counsel
Dominguez Paderna & Tan Law Offices (Dominguez Law
Office) a motion to withdraw notice of dismissal without
prejudice of third party complaint only against Pioneer
Insurance & Surety Corporation or motion for
reconsideration,[6] alleging that the notice of dismissal without
prejudice etc. filed by ACCRA Law Office had been made
without its consent. On June 29, 2000, the RTC granted
the notice of dismissal without prejudice etc.[7]
Nearly a month later, the RTC also granted the motion to
withdraw notice of dismissal without prejudice of third party
complaint only against Pioneer Insurance & Surety Corporation
or motion for reconsideration, and set aside the dismissal of
the third party complaint against Pioneer.
Following the grant of its motion to withdraw the notice of
dismissal etc., TADECO, still through Dominguez Law Office,
filed a motion to admit third party complaint in substitution of
the third party complaint filed by the third party plaintiff's
1
complaint was being filed to avoid putting ACCRA Law Office in
an awkward situation, and to avoid the appearance that new
counsel Dominguez Law Office was merely adopting the
previous third party complaint.
It is noted that the substitute third party complaint contained
allegations pertaining only to Pioneer as third party defendant,
to wit:
xxx
5. Under the heading "ADMISSIONS" of the answer of
TADECO it alleged:
"TADECO admits the allegations in the following paragraphs of
the complaint:
xxx xxx xxx xxx
"1.3 Paragraph 3 only in so far as it is alleged that TADECO is
the owner of the CESSNA 550 Citation jetplane; and that the
aircraft is duly registered with the Air Transportation Office."
6. The CESSNA 550 Citation jetplane, hereinafter referred to as
the Citation jetplane, was insured by PIONEER INSURANCE
under Aircraft Insurance Policy No. AV-HO-96-60014 effective
December 02, 1996 to December 02, 1997, a copy of which is
attached as Annex "C" by virtue of which PIONEER
INSURANCE agreed to be bound by the following stipulation:
"SECTION II - Third Party Liability
The Company will indemnify the Assured for all sums which
the Assured shall become legally liable to pay and shall pay as
compensation, including costs awarded, in respect of
accidental bodily injury (fatal or non-fatal) or accidental
damage to property provided such injury or damage is caused
directly by the Aircraft or by objects falling therefrom."
7. Should TADECO be found liable to the plaintiff under the
complaint, the third-party plaintiff is entitled to recover from
PIONEER INSURANCE indemnification for its liability to the
plaintiff.
WHEREFORE, the third party plaintiff respectfully prays that in
the remote probability that TADECO would be held liable to the
plaintiffs under the complaint, that judgment be rendered
ordering Pioneer Insurance to indemnify TADECO all sums
which the latter maybe found liable to the plaintiffs.
xxx[9]
On August 28, 2000, the RTC granted the motion to admit
third party complaint in substitution of the third party
complaint filed by the third party plaintiff s former
counsel,[10] viz:
The dismissal of defendant and Third Party Plaintiffs-Tagum
Agricultural Development Corporation complaint was without
prejudice. Considering further that the dismissal was filed by
its former counsel who is also the lawyer of Pioneer Insurance Third Party defendant Air Ads' Motion for Reconsideration is
and Surety Corporation, the Motion to Admit Third Party denied for lack of merit. This issue was repeatedly discussed
complaint in substitution of the Third Party complaint that was by the parties in their pleadings and the court resolution on
dismissed is hereby granted. this matter is clear. The pre-trial conference shall be on
October 4, 2002 at 2:30 p.m.
xxx
SO ORDERED.

SO ORDERED.
Air Ads then filed a motion to dismiss against the third party
complaint,[11] averring that it had been dropped as third party
defendant under TADECO's substitute third party complaint;
and arguing that the filing of the substitute third party
complaint had the effect of entirely superseding the
original third party complaint, which should consequently be
stricken out from the records.
TADECO, represented by ACCRA Law Office, countered that it
had never been the intention of Dominguez Law Office to file a
new third party complaint against Air Ads because Dominguez
Law Office represented TADECO only in regards to the third
party complaint against Pioneer.[12]
On July 25, 2002, the RTC denied Air Ads' motion to
dismiss,[13] holding that the notice of dismissal etc.filed by
ACCRA Law Office did not have the effect of dropping Air Ads
as a third party defendant due to the notice of dismissal
etc. being expressly restrictive about the dismissal being only
with respect to Pioneer, to wit:
xxx
The first, third party complaint as against Air-ads was not
dismissed so there is no reason to grant Air-ads' Motion to
Dismiss.
It should be emphasized that the Notice of Dismissal filed by
the former counsel of third party plaintiff was restrictive that
the dismissal was its third complaint against Pioneer only, Air-
ads is still a third party defendant there is nothing to show that
it was dropped as a third party defendant by virtue of the said
dismissal.
After receiving the order of denial on October 4, 2002,[16] Air
Ads brought a petition for i>certiorari and prohibition docketed
in the CA (C.A.-G.R. SP No. 73418).[17] However, on November
13, 2002, the CA dismissed the petition for failure to attach the
board resolution designating the petitioner's duly authorized
representative to sign the verification and certification against
forum shopping in its behalf.[18]
Instead of filing a motion for reconsideration, Air Ads filed a
new petition for certiorari and prohibition on December 2,
2002 in the CA (C.A.-G.R. SP No. 74152),[19] already including
the proper board certificate.
While C.A.-G.R. SP No. 74152 was pending, the CA's resolution
dismissing C.A.-G.R. SP No. 73418 became final and executory
on December 10, 2002.[20]
On February 24, 2003, the CA issued the first assailed
resolution in C.A.-G.R. SP No. 74152,[21] viz:
xxx
Petitioner's reasoning is specious. The notice of dismissal
clearly stated that the dismissal pertains only to the third party
complaint against Pioneer Insurance, not as against petitioner
Air Ads. The third-party complaint against petitioner was never
dismissed. Thus, when TADECO's new counsel sought to revive
the third-party complaint against Pioneer, the allegations in the
substitute third-party complaint pertain only to Pioneer since
petitioner Air Ads was never dropped as third-party defendant
in the proceedings. Petitioner's motion to dismiss was correctly
denied by the trial court.
ACCORDINGLY, the petition is DENIED due course and
DISMISSED.

The motion that the first third party complaint filed by the SO ORDERED.
former counsel of Tadeco be removed from the record and
declared as no longer existing and that Air-ads should no
The CA denied Air Ads's motion for reconsideration through the
longer be treated as a party is without any legal basis.
second assailed resolution of November 13, 2003.[22]
In view whereof the Motion to Dismissed [sic] is denied for
Hence, this appeal by petition for review on certiorari.
lack of merit. Air-ads is given ten (10) days from receipt of this
order to file its answer.
TADECO, through ACCRA Law Office, filed its comment on
March 30, 2004,23 but on April 26, 2004, TADECO, through
The pre-trial shall be on September 18, 2002.
Dominguez Law Office, filed a motion to dispense with
comment of Tagum Agricultural Development Corporation as
Notify all the parties of this order.
third-party plaintiff against Pioneer Insurance Corporation[24]
Accordingly, the Court directed TADECO to manifest which
SO ORDERED.
between ACCRA Law Office and Dominguez Law Office was its
principal counsel.[25] In compliance, TADECO manifested that
Air Ads filed a motion for reconsideration,[14] but the RTC ACCRA Law Office was its counsel in Civil Case No. 27802-2000
denied the motion for reconsideration on September 20, and in the third party complaint against Air Ads, while
2002,[15] stating: Dominguez Law Office was its counsel in the third party
complaint against Pioneer.[26] After the Court directed the
2
parties to submit their respective memoranda,27 TADECO,
through Dominguez Law Office and as third-party plaintiff
against Pioneer, filed a manifestation and motion,[28] praying
that it be excused from filing a memorandum considering that
Pioneer was not involved in the present recourse. On June 20,
2005, the Court granted the manifestation and motion[29]
Issues
The issues to be resolved are as follows:
I.
DOES THE FILING OF AN IDENTICAL PETITION FOLLOWING
THE DISMISSAL OF THE FIRST PETITION ON THE GROUND
OF DEFECTIVE AND INSUFFICIENT VERIFICATION AND
CERTIFICATION CONSTITUTE FORUM SHOPPING?
II.
DOES A SUBSTITUTE THIRD PARTY COMPLAINT HAVE THE
EFFECT OF SUPERSEDING THE ORIGINAL THIRD PARTY
COMPLAINT?
Air Ads insists that the filing of the substitute third party
complaint had the effect of dropping it as third party defendant
in Civil Case No. 27802-2000; and that the substitute third
party complaint superseded the original third party complaint.
On the other hand, TADECO counters that the filing of the
second petition for certiorari and prohibition in the CA violated
the rule against forum shopping and was already barred by res
judicata due to the dismissal of the first being an adjudication
on the merits; and that Air Ads continued to be a third party
defendant because the third party complaint against Air Ads
had not been withdrawn or dismissed.
Ruling
The petition for review lacks merit.
I.
Refiling of the petition for certiorari did not
constitute forum shopping or res judicata
TADECO's contention, that Air Ads' filing of the second petition
while the first petition was still pending was a clear case of
forum shopping; and that, accordingly, the second petition of
Air Ads was already barred by res judicata due to the dismissal
of the first petition having resulted in an adjudication upon the
merits, conformably with Denoso v. Court of Appeals[30] has no
substance.
The dispositive portion of the CA's resolution of November 13,
2002 in C.A.-G.R. SP No. 73418, which dismissed the first
petition, reads:
WHEREFORE, the instant petition is hereby DISMISSED for
defective and insufficient verification and certification against
forum shopping.
SO ORDERED.
3
Section 5, Rule 7 of the 1997 Rules of Civil Procedure, defines
the effect of the failure to comply with the requirements for
the certification against forum shopping, viz:
Section 5. Certification against forum shopping. — The
plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to
the best of his knowledge, no such other action or claim is
pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and
(c) if he should thereafter learn that the same or similar action
or claim has been filed or is pending, he shall report that fact
within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall
not be curable by mere amendment of the complaint or
other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless
otherwise provided, upon motion and after hearing.
The submission of a false certification or non-compliance with
any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or
his counsel clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as
a cause for administrative sanctions. (n)
The first sentence of the second paragraph expressly provides
that the dismissal of a petition due to failure to comply with
the requirements therein is without prejudice unless otherwise
provided by the court. Accordingly, the plaintiff or petitioner is
not precluded from filing a similar action in order to rectify the
defect in the certification where the court states in its order
that the action is dismissed due to such defect, unless the
court directs that the dismissal is with prejudice, in which case
the plaintiff is barred from filing a similar action by res
judicata. In the context of the aforequoted rule, the dismissal
of C.A.-G.R. SP No. 73418, being without any qualification, was
a dismissal without prejudice, plainly indicating that Air Ads
could not be barred from filing the second petition.
TADECO cited Denoso v. Court of Appeals, supra, to buttress
its contention that the present recourse was already barred
by res judicata. There, the petitioners had failed to attach the
necessary copies of the relevant pleadings to their petition
for certiorari, thereby causing the dismissal of the petition.
They had then sought reconsideration by submitting the
omitted documents, but the CA denied their motion for
reconsideration. On appeal, the Court upheld the dismissal of
the petition on the ground that it amounted to an adjudication
upon the merits pursuant to Section 3, Rule 17 of the Rules of
Court,[31] which provides that failure to comply with the rules
shall result in the dismissal that has the effect of an
adjudication upon the merits. The lack of any qualification that
the dismissal of the petition was without prejudice rendered
the dismissal an adjudication on the merits.
Herein, however, Section 5 of Rule 7, supra, promulgated after
the Denoso pronouncement, provides that "the dismissal of the
case (is) without prejudice, unless otherwise provided." In this
connection, the apt precedent is Heirs of Juan Valdez v. Court
of Appeals,[32] where the respondent corporation filed two
petitions for certiorari in the CA, the first of which was
dismissed without prejudice due to insufficient certification.
After receiving the resolution dismissing the first petition, the
respondent corporation refiled its petition, which was docketed
and raffled to another division of the CA. The issue of whether
the filing of the second petition constituted forum shopping
reached this Court, which resolved the issue thuswise:
We have no doubt that it was within the CA's power and
prerogative to issue what either resolution decreed without
committing an abuse of discretion amounting to lack of excess
of jurisdiction. In the first May 5, 2003 Resolution, the CA
correctly dismissed the petition for the deficiency it found in
the non-forum shopping certification. Section 5, Rule 7 of the
Revised Rules of Court provides that "Failure to comply with
the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but
shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing." On
the other hand, the requirement specific to petitions filed with
the appellate court simply provides as a penalty that the failure
of the petitioner to comply with the listed requirements,
among them the need for a certification against forum
shopping, "shall be sufficient ground for the dismissal of the
petition." Thus, the Ninth Division correctly dismissed the
petition without prejudice.
xxx
The question of whether Lopez Resources forum shopped
when it re-filed its petition is largely rendered moot and
academic by the terms of the assailed May 5, 2003 order
which dismissed the case without prejudice. Lopez Resources,
who cannot be blamed for the CA's mistake, only followed
what the assailed order allowed. Thus, we cannot say that
it forum shopped by filing another petition while the
first petition was pending. Insofar as it was concerned,
its first petition had been dismissed without prejudice;
hence, there was no bar, either by way of forum
shopping, litis pendentia or res adjudicata, to the
petition it re-filed.[33]
Indeed, Air Ads' options to correct its dire situation included
the refiling, for, although the Rules of Courtdeclares that the
failure to comply with the requirements of Section 5 of Rule 7
shall not be cured by amendment, nowhere does the rule
prohibit the filing of a similar complaint or pleading following
the dismissal without qualification of the earlier one.
II.
Substitute third party complaint did not
supersede original third party complaint
The posture of Air Ads that the original third party
complaint was automatically expunged from the records upon
the admission of the substitute third party complaint[34] is
bereft of any basis in fact and in law.
4
The records indicate that: firstly, both TADECO and Pioneer
were clients of ACCRA Law Office; secondly,TADECO engaged
Dominguez Law Office as its counsel in lieu of ACCRA Law
Office with respect only to its third party complaint against
Pioneer; thirdly, the RTC dismissed the third party complaint
only against Pioneer upon the notice of withdrawal filed by
TADECO through ACCRA Law Office; and fourthly, the RTC
granted the motion to admit the substitute third party
complaint only against Pioneer. These rendered it plain and
clear that the substitute third party complaint merely replaced
the third party complaint earlier filed against Pioneer.
Air Ads' urging that the filing of the substitute third party
complaint effectively superseded the third party
complaint impleading it as third party defendant ostensibly
harks back to Section 8 of Rule 10 of the Rules of Court, which
states that the amended pleading supersedes the pleading that
it amends.[35]However, the substitution of the third party
complaint could not produce the effect that an amendment of
an existing pleading produces. Under Section I,[36] Rule 10 of
the Rules of Court, an amendment is done
by adding or striking out an allegation or the name of any
party, or by correcting a mistake in the name of a party or a
mistaken or inadequate allegation or description in any other
respect. A perusal of the original and the substitute third party
complaints shows that their averments are substantially the
same; and that the substitute third party complaint did not
strike out any allegation of the prior one.
Lastly, Air Ads attributes error to the CA and the RTC for
disregarding the caption and the allegations of the
substitute third party complaint that would have led them to
rule that the original third party complaint was effectively
superseded and supplanted by the substitute third party
complaint. It submits that "substitution" signifies "to put in the
place of another;" and "something that is put in place of
something else or is available for use instead of something
else."
Air Ads' submission is flawed. It is not the caption of the
pleading that determines the nature of the complaint but
rather its allegations.[37] Although Air Ads' observation that the
substitute third party complaint contained allegations only
against Pioneer is correct, sight should not be lost of the fact
that Dominguez Law Office represented TADECO in its third
party complaint only against Pioneer, which was precisely why
the substitute third party complaint referred only to Pioneer.
WHEREFORE, we deny the petition for review on certiorari,
and affirm the resolutions the Court of Appeals promulgated
on February 24, 2003 and November 13, 2003.
Costs against the petitioner.
SO ORDERED.
Carpio Morales, (Chairperson), Brion, Villarama,
Jr., and Sereno, JJ., concur.
 notary public referred to in the notice as the one requested by
[ GR No. 211113, Jun 29, 2015 ] Atty. Nethercott to conduct the auction of the pledged stocks.

In the complaint, petitioner argued that the planned auction

ADERITO Z. YUJUICO v. UNITED RESOURCES ASSET
sale of the stocks pledged under the Pledge Agreements is
MANAGEMENT +
void as the same suffers from a multitude of fatal defects; one
of which is the supposed lack of authority of Atty. Nethercott
DECISION to initiate such a sale on behalf of URAMI. As petitioner
elaborated:

(k) [Atty. Nethercott] has no valid authority to represent

PEREZ, J.:
URAMI for any purpose, xxx. He is neither the counsel nor the
This case is an appeal[1] from the Decision[2] dated 12 August agent of URAMI, whose authorized representative under
2013 and Resolution[3] dated 29 January 2014 of the Court of Section 9, paragraph 10 of the Loan Agreement is its Chief
Appeals in CA-G.R. SP No. 117431. Operating Officer, Ms. Lorna P. Feliciano. There has been no
modification of this provision in accordance with paragraph
The antecedents: 9.04 of the same provision.[13]
The injunction complaint, which also contained prayers for the
issuance of a temporary restraining order and of a writ of
Prelude preliminary injunction, was docketed in the RTC as Civil Case
No. 70027.
The Strategic Alliance Development Corporation (STRADEC) is
a domestic corporation operating as a business development
and investment company. The Sale and URAMI's Answer with Counterclaim

In 2000, several stockholders[4] of STRADEC executed Pledge

As the RTC did not issue a temporary restraining order in Civil
Agreements[5] whereby they pledged a certain amount of their
Case No. 70027, the public auction of the pledged STRADEC
stocks[6] in the said company in favor of the respondent United
stocks pushed through, as scheduled, on 23 June 2004. In that
Resources Asset Management, Inc. (URAMI). These pledges
auction, URAMI emerged as the winning bidder for all of the
were meant to secure the loan obligations of STRADEC to
stocks pledged under the Pledge Agreements.
URAMI under their Loan Agreement[7] of 28 December 2000.
On 5 July 2004, however, the RTC issued a writ of preliminary
One of the stockholders of STRADEC who so pledged his
injunction, which effectively prevented URAMI from
shares in STRADEC was petitioner Aderito Z. Yujuico.
appropriating the stocks it had purchased during the auction
sale. On the same day, Atty. Nethercott filed his answer
denying the material allegations of the injunction complaint.
The Notice and Civil Case No. 70027
More than a year later, or on 21 April 2006, URAMI—which
until then was still not able to file an answer of its own—filed
Apparently, STRADEC had not been able to comply with its
with the RTC a motion for leave to file an answer. Attached to
payment obligations under the Loan Agreement.
the motion was a copy of URAMFs answer.[14] On 5 September
2006, the RTC granted URAMI's motion and allowed the
On 18 June 2004, STRADEC and its stockholders received
admission of its answer.
a notice[8] informing them about an impending auction sale of
the stocks pledged under the Pledge Agreements in order to
In its answer, URAMI agreed with the petitioner that the 23
satisfy STRADEC's outstanding obligations[9] under the Loan
June 2004 auction sale was void; URAMI admitted that it never
Agreement. The noticewas sent and signed by respondent
authorized Atty. Nethercott to cause the sale of the stocks
Atty. Richard J. Nethercott (Atty. Nethercott), who claimed to
pledged under the Pledge Agreements. URAMI, however,
be the attorney-in-fact of URAMI.
pointed out that, since it never sanctioned the 23 June 2004
auction sale, it similarly cannot be held liable to the petitioner
The notice stated that, pursuant to the request[10] earlier filed
for any prejudice that may be caused by the conduct of such
by Atty. Nethercott before "the notary public of Bayambang,
auction sale, viz.:
Pangasinan" the public auction of the pledged STRADEC stocks
had been set at 8:30 in the morning of 23 June 2004 in front
of the municipal building of Bayambang, Pangasinan.[11] 4.1 The [injunction complaint] dated 28 June 2004 fails to
state a cause of action only insofar as it seeks judgment
On 21 June 2004, petitioner filed before the Regional Trial ordering URAMI to pay [petitioner] the amounts of Five
Court (RTC) of Pasig City an injunction complaint[12] seeking to Hundred Thousand Pesos (Php 500,000.00) as attorney's fees
enjoin the sale at public auction mentioned in Atty. and One Hundred Thousand Pesos (Php 100,000.00) as legal
Nethercott's notice. Impleaded as defendants in such expenses.
complaint were URAMI, Atty. Nethercott and herein
respondent Atty. Honorato R. Mataban (Atty. Mataban)—the
5
4.1.1. It bears emphasizing that the extra-judicial foreclosure On 12 March 2009, petitioner filed with the RTC a motion to
of the pledged shares conducted by [Atty. Nethercott] was strike out URAMI's amended answer on the grounds that: (1) it
without valid authority from URAMI. Consequently, it cannot was not timely filed; (2) it was filed without leave of court; and
be made liable for the acts of another. (3) its admission would prejudice petitioner's rights. In an
order of even date, however, the RTC denied petitioner's
4.1.2. URAMI never sanctioned or directed the questioned motion and allowed admission of URAMI's amended answer.
auction sale. Neither did URAMI give its consent, explicit or
otherwise, to said foreclosure or any subsequent acts of [Atty. On 27 March 2009, petitioner filed with the RTC a motion for
Nethercott] pursuant thereto. Hence, no liability whatsoever reconsideration of the order allowing admission of
may be imputed to URAMI. URAMI's amended answer.

4.1.3. If at all, the recourse of the plaintiff is solely against On 18 August 2009, the RTC issued an order granting
[Atty. Nethercott].[15] petitioner's motion for reconsideration and setting aside its
earlier order allowing admission of URAMI's amended answer.
Hence, overall, URAMI prayed for the dismissal of the
In the said order, the RTC explained that the amended
injunction complaint against it.
answer could not be admitted just yet as the same had been
filed by URAMI without first securing leave of court.

Petitioner's Motion for Summary Judgment and the Suspension Thus, on 21 September 2009, URAMI filed with the RTC
of Civil Case No. 70027 a motion for leave to file an amended answer (motion for
leave).[22] In the said motion, URAMI formally asked
permission from the RTC to allow it to file the amended
On 29 May 2007, petitioner filed with the RTC a motion for answer explaining that the original answer filed by its previous
summary judgment[16] arguing that, in view of the admissions counsel "does not bear truthful factual allegations and is
made by URAMI in its answer regarding Atty. Nethercott's lack indubitably not supported by evidence on record."[23]
of authority to cause the auction sale of pledged stocks, there
was no longer any genuine issue left to be resolved in trial. On 10 November 2009, the RTC issued an Order[24] granting
URAMI's motion for leave.
URAMI and Atty. Nethercott both filed comments on
petitioner's motion for summary judgment. Petitioner filed a motion for reconsideration against the 10
November 2009 Order, but the same was denied by the RTC in
The resolution of petitioner's motion for summary judgment, its Order[25] of 27 September 2010.
however, was deferred when, on 25 July 2007, this Court
issued in G.R. No. 177068[17] a temporary restraining
order[18] calling to a halt the conduct of further proceedings in
Civil Case No. 70027. This temporary restraining order CA-G.R. SP No. 117431 and the Present Appeal
remained in effect for more than a year until it was finally lifted
by this Court on 13 October 2008.[19]
Defeated but undeterred, petitioner next challenged the Orders
dated 10 November 2009 and 27 September 2010 of the RTC
Thereafter, proceedings in Civil Case No. 70027 resumed.
through a certiorari petition before the Court of Appeals.
This certiorari petition was docketed in the Court of Appeals
as CA-G.R. SP No. 117431.
URAMI's Change of Counsel and Amended Answer
On 12 August 2013, the Court of Appeals rendered a
Decision[26] sustaining the challenged orders of the RTC and
On 26 January 2009, URAMI changed its counsel of record for dismissing petitioner's certiorari petition. Petitioner moved for
Civil Case No. 70027. The law firm Villlanueva, Gabionza & De reconsideration, but the Court of Appeals remained
Santos (VGD law firm), which hitherto had been URAMI's steadfast.[27]
counsel of record, was thus replaced by Atty. Edward P. Chico
(Atty. Chico). Hence, the present appeal.

Under the counsel of Atty. Chico, URAMI filed with the RTC In the present appeal, petitioner argues that the Court of
an amended answer with compulsory counterclaim (amended Appeals erred in sustaining the orders of the RTC allowing
answer)[20]on 23 February 2009. The amended answer was URAMI to file its amended answer. Petitioner argues that
meant to supplant URAMI's original answer, which had been URAMI should not have been so allowed for the following
prepared by the VGD law firm. reasons:[28]

In its amended answer, URAMI still vouched for the dismissal

of the injunction complaint but reneged from its previous
admissions under the original answer. This time, URAMI
claimed that the 23 June 2004 auction sale was valid and that
it duly authorized Atty. Nethercott to initiate such sale on its
behalf.[21]
6
1. URAMI had not shown that the admissions it made
under the original answer were made through
"palpable mistake" Hence, pursuant to Section 4 of
Rule 129 of the Rules of Court,[29] URAMI is barred
from contradicting such admissions through the filing
 of its amended answer.
2. The amended answer is merely a ploy of URAMI to
further delay the proceedings in Civil Case No. 70027.
Thus, petitioner prays that we set aside the decision of the
Court of Appeals, disallow URAMI's amended answer and direct
the RTC in Civil Case No. 70027 to resolve his motion for
summary judgment with dispatch.[30]
OUR RULING
Our rules of procedure allow a party in a civil action to amend
his pleading as a matter of right, so long as the pleading is
amended only once and before a responsive pleading is
served (or, if the pleading sought to be amended is a reply,
within ten days after it is served).[31]Otherwise, a party can
only amend his pleading upon prior leave of court.[32]
As a matter of judicial policy, courts are impelled to treat
motions for leave to file amended pleadings
with liberality.[33] This is especially true when a motion for
leave is filed during the early stages of proceedings or, at
least, before trial.[34] Our case law had long taught that bona
fide amendments to pleadings should be allowed in the
interest of justice so that every case may, so far as possible,
be determined on its real facts and the multiplicity of suits thus
be prevented.[35] Hence, as long as it does not appear that the
motion for leave was made with bad faith or with intent to
delay the proceedings,[36] courts are justified to grant leave
and allow the filing of an amended pleading. Once a court
grants leave to file an amended pleading, the same becomes
binding and will not be disturbed on appeal unless it appears
that the court had abused its discretion.[37]
In this case, URAMI filed its motion for leave seeking the
admission of its amended answer more than two (2) years
after it filed its original answer. Despite the considerable lapse
of time between the filing of the original answer and
the motion for leave, the RTC still granted the said motion.
Such grant was later affirmed on appeal by the Court of
Appeals.
Petitioner, however, opposes the grant of leave arguing that
URAMI is precluded from filing an amended answer by Section
4 of Rule 129 of the Rules of Court and claiming that
URAMI's amended answer was only interposed for the purpose
of delaying the proceedings in Civil Case No. 70027.
We rule in favor of allowing URAMI's amended answer. Hence,
we deny the present appeal.
First. We cannot subscribe to petitioner's argument that
Section 4 of Rule 129 of the Rules of Court precludes URAMI
from filing its amended answer. To begin with, the said
provision does not set the be-all and end-all standard upon
which amendments to pleadings may or may not be allowed.
Matters involving the amendment of pleadings are primarily
governed by the pertinent provisions of Rule 10 and not by
Section 4 of Rule 129 of the Rule of Court. Hence, allegations
(and admissions) in a pleading—even if not shown to be made
7
through "palpable mistake"—can still be corrected or amended
provided that the amendment is sanctioned under Rule 10 of
the Rules of Court.
Nevertheless, even if we are to apply Section 4 of Rule 129 to
the present case, we still find the allowance of
URAMI's amended answer to be in order. To our mind, a
consideration of the evidence that URAMI plans to present
during trial indubitably reveals that the admissions made by
URAMI under its original answer were a product of clear and
patent mistake.
One of the key documents that URAMI plans to present during
trial, which it also attached in its amended answer as "Annex
8" thereof, is URAMI's Board Resolution[38] dated 21 June 2004
that evinces Atty. Nethercott's authority to cause the
foreclosure on the pledged stocks on behalf of URAMI. With
the existence of such board resolution, the statement in
URAMI's original answer pertaining to the lack of authority of
Atty. Nethercott to initiate the 23 June 2004 auction sale thus
appears mistaken, if not entirely baseless and unfounded.
Hence, we find it only right and fair, that URAMI should be
given a chance to file its amended answer in order to rectify
such mistakes in its original answer.
Second. We also cannot agree with the petitioner's accusation
that the amended answer was only interposed to further delay
the proceedings in Civil Case No. 70027. As the previous
discussion reveal, the amended answer aims to correct certain
allegations of fact in the original answer which, needless to
state, are crucial to a full and proper disposition of Civil Case
No. 70027. It is, therefore, in the best interest of justice and
equity that URAMI should be allowed to file the amended
answer.
Third. The mere fact that URAMI filed its motion for
leave years after the original answer is also not reason enough
in itself to discredit the amended answer as a sheer dilatory
measure. Readily observable from the established facts is that
the perceived delay between the filing of the motion for
leave and the filing of the original answer is not purely
attributable to URAMI. It must be remembered that some time
after the original answer was filed, we issued a temporary
restraining order in G.R. No. 177068 that effectively suspended
the proceedings in Civil Case No. 70027 for more than a year.
Thus, even if it wanted to, URAMI really could not have filed a
motion for leave to file amended answer sooner than it already
had. On this score, we note that it only took URAMI a little
over three months after the lifting of the temporary restraining
order to replace its previous counsel of record in Civil Case No.
70027 and to file its amended answer.
Fourth. All in all, we find absolutely no cause to overrule the
grant of leave granted to URAMI to file its amended answer.
The said grant is consistent with our time-honored judicial
policy of affording liberal treatment to amendments to
pleadings, especially those made before the conduct of trial.
We should always remember that our rules of procedure are
mere tools designed to facilitate the attainment of justice.
Their application should never be allowed to frustrate the truth
and the promotion of substantial justice.[39] Were we to
succumb to petitioner's arguments today, however, we would
have sanctioned an outcome totally inconsistent with the
underlying purpose of our procedural laws. That, we simply
cannot countenance.

WHEREFORE, premises considered, the petition is

hereby DENIED. The Decision dated 12 August 2013 and
Resolution dated 29 January 2014 of the Court of Appeals in
CA-G.R. SP No. 117431 are hereby AFFIRMED.

SO ORDERED.

Sereno, C. J., (Chairperson), Leonardo-De Castro, Bersamin,

and Perlas-Bernabe, JJ., concur.

8
HENRY CHING TIU, G.R. No. 151932 of the Surety Agreement, except two, were kept by PBCOM. Of
CHRISTOPHER HALIN GO, the two copies kept by the notary public, one copy was
and GEORGE CO, retained for his notarial file and the other was sent to the
Present: Records Management and Archives Office, through the Office
Petitioners,
of the RTC Clerk of Court.[6]

CARPIO
MORALES, J.,* Thereafter, on December 16, 1998, AWRI informed
the bank of its desire to surrender and/or assign in its favor, all
CHICO-NAZARIO, the present properties of the former to apply as dacion en
- versus - pago for AWRIs existing loan obligation to the bank.[7] On
Acting Chairperson,**
January 11, 1999, PBCOM sent a reply denying the request. On
VELASCO, JR., May 12, 1999, PBCOM sent a letter to petitioners demanding
NACHURA, and full payment of its obligation to the bank.[8]

PERALTA, JJ.
PHILIPPINE BANK OF Its demands having remained unheeded, PBCOM
COMMUNICATIONS, instructed its counsel to file a complaint for collection against
Promulgated: petitioners. The case was docketed as Civil Case No. 99-352.
Respondent.

August 19, 2009 On July 3, 1999, petitioners filed their Answer. It

alleged, among other things, that they were not personally
x----------------------------------------
- - - - - - - - - - -x liable on the promissory notes, because they signed the Surety
Agreement in their capacities as officers of AWRI. They
claimed that the Surety Agreement attached to the complaint
as Annexes A to A-2[9]were falsified, considering that when
DECISION
they signed the same, the words In his personal capacity did
not yet appear in the document and were merely intercalated
thereon without their knowledge and consent.[10]
PERALTA, J.:

In support of their allegations, petitioners attached to

This is a petition for review on certiorari, under Rule
45 of the Rules of Court, seeking to annul and set aside the
Decision[1] dated September 28, 2001, rendered by the Court
of Appeals (CA) in CA-G.R. SP No. 57732, dismissing the
petition and affirming the assailed Orders of the Regional Trial
Court (RTC) of Cagayan de Oro City, Branch 21 in Civil Case
No. 99-352, dated December 14, 1999 and January 11, 2000.
The factual and procedural antecedents are as
follows:
In June 1993, Asian Water Resources, Inc. (AWRI),
represented by herein petitioners, applied for a real estate loan
with the Philippine Bank of Communications (PBCOM) to fund
its purified water distribution business. In support of the loan
application, petitioners submitted a Board Resolution[2] dated
June 7, 1993. The loan was guaranteed by collateral over the
property covered by Transfer Certificate of Title No. T-
13020.[3] The loan was eventually approved.[4]
In August 1996, AWRI applied for a bigger loan from
PBCOM for additional capitalization using the same Board
Resolution, but without any additional real estate
collateral. Considering that the proposed additional loan was
unsecured, PBCOM required all the members of the Board of
Directors of AWRI to become sureties. Thus, on August 16,
1996, a Surety Agreement[5] was executed by its Directors and
acknowledged by a notary public on the same date. All copies
their Answer a certified photocopy of the Surety Agreement
issued on March 25, 1999 by the Records Management and
Archives Office in Davao City,[11] showing that the words In his
personal capacity were not found at the foot of page two of
the document where their signatures appeared.[12]
Because of this development, PBCOMs counsel
searched for and retrieved the file copy of the Surety
Agreement. The notarial copy showed that the words In his
personal capacity did not appear on page two of the Surety
Agreement.[13]
Petitioners counsel then asked PBCOM to explain the
alteration appearing on the agreement. PBCOM subsequently
discovered that the insertion was ordered by the bank
auditor. It alleged that when the Surety Agreement was
inspected by the bank auditor, he called the attention of the
loans clerk, Kenneth Cabahug, as to why the words In his
personal capacity were not indicated under the signature of
each surety, in accordance with bank standard operating
procedures. The auditor then ordered Mr. Cabahug to type the
words In his personal capacity below the second signatures of
petitioners. However, the notary public was never informed of
the insertion.[14] Mr. Cabahug subsequently executed an
affidavit[15] attesting to the circumstances why the insertion
was made.

9
 PBCOM then filed a Reply and Answer to
Counterclaim with Motion for Leave of Court to Substitute
Annex A of the Complaint,[16] wherein it attached the duplicate
original copy retrieved from the file of the notary
public. PBCOM also admitted its mistake in making the
insertion and explained that it was made without the
knowledge and consent of the notary public. PBCOM
maintained that the insertion was not a falsification, but was
made only to speak the truth of the parties intentions. PBCOM
also contended that petitioners were already primarily liable on
the Surety Agreement whether or not the insertion was made,
having admitted in their pleadings that they voluntarily
executed and signed the Surety Agreement in the original
form. PBCOM, invoking a liberal application of the Rules,
emphasized that the motion incorporated in the pleading can
be treated as a motion for leave of court to amend and admit
the amended complaint pursuant to Section 3, Rule 10 of the
Rules of Court.
Aggrieved, petitioners sought recourse before the
CA via a petition for certiorari under Rule 65 of the Rules of
Court, docketed as CA-G.R. SP No. 57732.
Petitioners claimed that the RTC acted without or in
excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction in denying their
motion for reconsideration and in allowing PBCOM to substitute
the altered copy of the Surety Agreement with the duplicate
original notarial copy thereof considering that the latters cause
of action was solely and principally founded on the falsified
document marked as Annexes A to A-2.[20]
On September 28, 2001, the CA rendered a Decision
dismissing the petition for lack of merit, the decretal portion of
which reads:

On December 14, 1999, the RTC issued an WHEREFORE, foregoing considered,

Order[17] allowing the substitution of the altered document with the instant petition is hereby DENIED DUE
the original Surety Agreement, the pertinent portion of which COURSE and, accordingly, DISMISSED for
reads: lack of merit. The assailed Orders dated
December 14, 1999 and January 11, 2000 of
the Regional Trial Court of Cagayan de Oro
August 16, 1996 attached as Annexes A City, Branch 21, are hereby AFFIRMED in
to A-2 of the reply and answer Resolving the toto.
Motion to Substitute Annexes A to A-2 of the
complaint and the opposition thereto by the
defendant, this Court, in the interest of SO ORDERED.[21]
justice, hereby allows the substitution of said
Annexes A to A-2 of the complaint with the
duplicate original of notarial copy of the Hence, the petition assigning the following errors:
Agreement dated to counter-claim.
SO ORDERED.
I
THE COURT COMMITTED A REVERSIBLE
Petitioners filed a motion for reconsideration,[18] but it ERROR IN AFFIRMING IN TOTO THE ORDER
was denied in the Order[19] dated January 11, 2000, to wit: OF THE LOWER COURT ALLOWING THE
SUBSTITUTION OF THE FALSIFIED
DOCUMENT BY RELYING ON THE
Resolving the motion for PROVISION OF SECTION 3, RULE 10 OF THE
reconsideration and the opposition thereto, RULES OF COURT.
the Court finds the motion substantially a
reiteration of the opposition to plaintiffs
motion. II
ACTING AS THE COURT ON THE PETITION
Additionally, the instant motion for FOR CERTIORARI, THE COURT COMMITTED
reconsideration treats on evidentiary matter A REVERSIBLE ERROR HAVING NO
which can be properly ventilated in the trial JURISDICTION TO RULE ON THE
proper, hence, there is no cogent reason to OBLIGATION OF THE PETITIONERS BASED
disturb the Courts order of December 14, ON THE FALSIFIED DOCUMENT
1999.

III
SO ORDERED. THE COURT ERRED IN GIVING CREDENCE
TO THE ALLEGATION OF RESPONDENT
BANK THAT FROM AUGUST 15 TO
DECEMBER 9, 1997 ASIAN WATER
RESOURCES INC. OBTAINED SEVERAL
10
 AVAILMENTS OF NEW BIGGER AND
ADDITIONAL LOANS
TOTALLING P2,030,000.00 EVIDENCED BY 4
PROMISSORY NOTES MARKED AS ANNEXES
B, B-1, B-2 AND B-3.
IV
THE COURT FAILED TO CONSIDER THE
MISAPPLICATION OF THE PRINCIPLE OF
EQUITY COMMITTED BY THE LOWER
COURT IN ORDERING THE SUBSTITUTION
OF THE FALSIFIED DOCUMENT.[22]
Petitioners argue that the CA committed a reversible
error in affirming the Order of the RTC allowing the
substitution of the document by relying on Section 3, Rule 10
of the Rules of Court. Petitioners assert that the Rules do not
allow the withdrawal and substitution of a falsified document
once discovered by the opposing party.
Petitioners maintain that PBCOMs cause of action was
solely and principally founded on the alleged falsified
document originally marked as
Annexes A to A-2. Thus, the withdrawal of the document
results in the automatic withdrawal of the whole complaint on
the ground that there is no more cause of action to be
maintained or enforced by plaintiff against petitioners. Also,
petitioners argue that if the substitution will be allowed, their
defenses that were anchored on Annexes A to A-2 would be
gravely affected. Moreover, considering that the said document
was already removed, withdrawn, and disregarded by the RTC,
the withdrawal and substitution of the document would
prevent petitioners from introducing the falsified documents
during the trial as part of their evidence.[23]
Petitioners submit that the RTC misapplied the
principle of equity when it allowed PBCOM to substitute the
document with the original agreement. Petitioners also claim
that the remedy of appeal after the termination of the case in
the RTC would become ineffective and inadequate if the Order
of the RTC allowing the withdrawal and substitution of the
document would not be nullified, because the falsified
document would no longer be found in the records of the case
during the appeal.[24]
Petitioners contend that the CA went beyond the
issue raised before it when it interpreted the provisions of the
Surety Agreement, particularly paragraph 4 thereof, and then
ruled on the obligations of the parties based on
the document. Petitioners posit that the CA prematurely ruled
on petitioners obligations, considering that their obligations
should be determined during trial on the merits, after the
parties have been given the opportunity to present their
evidence in support of their respective claims. Petitioners
stress that the CA went into the merit of the case when it gave
11
credence to the statement of fact of PBCOM that From August
15 to December 9, 1997, Asian Water Resources, Inc. obtained
several availments on its additional loans
totalling P2,030,000.00 as evidenced by 4 promissory notes
marked as Annexes B, B-1, B-2, and B-3. Thus, the conclusion
of the CA in declaring the petitioners liable as sureties violated
their right to due process.[25]
For its part, PBCOM argues that since the complaint is
based on an actionable document, i.e., the surety agreement,
the original or a copy thereof should be attached to the
pleading as an exhibit, which shall be deemed part of the
pleading. Considering that the surety agreement is annexed to
the complaint, it is an integral part thereof and its substitution
with another copy is in the nature of a substantial amendment,
which is allowed by the Rules, but with prior leave of court.
Moreover, PBCOM alleges that since the Rules
provides that substantial amendments may be made upon
leave of court, the authority of the RTC to allow the
amendment is discretionary. Thus, the CA correctly held that
the act of granting the said substitution was within the clear
and proper discretion of the RTC.
The petition is without merit.
As to the substitution of the earlier surety agreement
that was annexed to the complaint with the original thereof,
this Court finds that the RTC did not err in allowing the
substitution.
The pertinent rule on actionable documents is found
in Section 7, Rule 8 of the Rules of Court, which provides that
when the cause of action is anchored on a document, its
substance must be set forth, and the original or a copy thereof
shall be attached to the pleading as an exhibit and deemed a
part thereof, to wit:
Section 7. Action or defense based on
document. Whenever an action or defense is
based upon a written instrument or
document, the substance of such instrument
or document shall be set forth in the
pleading, and the original or a copy thereof
shall be attached to the pleading as an
exhibit, which shall be deemed to be a part
of the pleading, or said copy may with like
effect be set forth in the pleading.
With respect to PBCOMs right to amend its complaint,
including the documents annexed thereto, after petitioners
have filed their answer, Section 3, Rule 10 of the Rules of
Court specifically allows amendment by leave of court. The
said Section states:
 SECTION 3. Amendments by leave of
court. Except as provided in the next
preceding section, substantial amendments
may be made only upon leave of court. But
such leave may be refused if it appears to
the court that the motion was made with
intent to delay. Orders of the court upon the
matters provided in this section shall be
made upon motion filed in court, and after
notice to the adverse party, and an
opportunity to be heard.
This Court has emphasized the import of Section 3, Rule 10 of
the 1997 Rules of Civil Procedure in Valenzuela v. Court of
Appeals,[26] thus:
Interestingly, Section 3, Rule 10 of the
1997 Rules of Civil Procedure amended the
former rule in such manner that the phrase
or that the cause of action or defense is
substantially altered was stricken-off and not
retained in the new rules. The clear import
of such amendment in Section 3, Rule 10 is
that under the new rules, the amendment
may (now) substantially alter the cause of
action or defense. This should only be true,
however, when despite a substantial change
or alteration in the cause of action or
defense, the amendments sought to be
made shall serve the higher interests of
substantial justice, and prevent delay and
equally promote the laudable objective of
the rules which is to secure a just, speedy
and inexpensive disposition of every action
and proceeding.[27]
The granting of leave to file amended pleading is a
matter particularly addressed to the sound discretion of the
trial court; and that discretion is broad, subject only to the
limitations that the amendments should not substantially
change the cause of action or alter the theory of the case, or
that it was not made to delay the action. [28] Nevertheless, as
enunciated in Valenzuela, even if the amendment substantially
alters the cause of action or defense, such amendment could
still be allowed when it is sought to serve the higher interest of
substantial justice; prevent delay; and secure a just, speedy
and inexpensive disposition of actions and proceedings.
The courts should be liberal in allowing amendments
to pleadings to avoid a multiplicity of suits and in order that
the real controversies between the parties are presented, their
rights determined, and the case decided on the merits without
unnecessary delay. This liberality is greatest in the early stages
of a lawsuit, especially in this case where the amendment was
made before the trial of the case, thereby giving the
petitioners all the time allowed by law to answer and to
prepare for trial.[29]
12
Furthermore, amendments to pleadings are generally
favored and should be liberally allowed in furtherance of
justice in order that every case, may so far as possible, be
determined on its real facts and in order to speed up the trial
of the case or prevent the circuity of action and unnecessary
expense. That is, unless there are circumstances such as
inexcusable delay or the taking of the adverse party by
surprise or the like, which might justify a refusal of permission
to amend.[30]
In the present case, there was no fraudulent intent
on the part of PBCOM in submitting the altered surety
agreement. In fact, the bank admitted that it was a mistake on
their part to have submitted it in the first place instead of the
original agreement. It also admitted that, through
inadvertence, the copy that was attached to the complaint was
the copy wherein the words IN HIS PERSONAL CAPACITY were
inserted to conform to the banks standard practice. This
alteration was made without the knowledge of the notary
public. PBCOMs counsel had no idea that what it submitted
was the altered document, thereby necessitating the
substitution of the surety agreement with the original thereof,
in order that the case would be judiciously resolved.
Verily, it is a cardinal rule of evidence, not just one of
technicality but of substance, that the written document is the
best evidence of its own contents. It is also a matter of both
principle and policy that when the written contract is
established as the repository of the parties stipulations, any
other evidence is excluded, and the same cannot be used to
substitute for such contract, or even to alter or contradict the
latter.[31] The original surety agreement is the best evidence
that could establish the parties respective rights and
obligations. In effect, the RTC merely allowed the amendment
of the complaint, which consequently included the substitution
of the altered surety agreement with a copy of the original.
It is well to remember at this point that rules of
procedure are but mere tools designed to facilitate the
attainment of justice. Their strict and rigid application that
would result in technicalities that tend to frustrate rather than
promote substantial justice must always be avoided.[32] Applied
to the instant case, this not only assures that it would be
resolved based on real facts, but would also aid in the speedy
disposition of the case by utilizing the best evidence possible to
determine the rights and obligations of the party- litigants.
Moreover, contrary to petitioners contention, they
could not be prejudiced by the substitution since they can still
present the substituted documents, Annexes A to A-2, as part
of the evidence of their affirmative defenses. The substitution
did not prejudice petitioners or delay the action. On the
contrary, it tended to expedite the determination of the
controversy. Besides, the petitioners are not precluded from
filing the appropriate criminal action against PBCOM for
attaching the altered copy of the surety agreement to the
complaint. The substitution of the documents would not, in
any way, erase the existence of falsification, if any. The case
before the RTC is civil in nature, while the alleged falsification
is criminal, which is separate and distinct from another. Thus,
the RTC committed no reversible error when it allowed the
substitution of the altered surety agreement with that of the
original.
more cautious and not have gone beyond the issues submitted
before it in the petition for certiorari; instead, it should have
squarely addressed whether or not there was grave abuse of
discretion on the part of the RTC in issuing the Orders dated
December 14, 1999 and January 11, 2000.

A Petition for Certiorari under Rule 65 of the Rules of

Court is intended for the correction of errors of jurisdiction only
or grave abuse of discretion amounting to lack or excess of
jurisdiction. Its principal office is only to keep the inferior court
within the parameters of its jurisdiction or to prevent it from
committing such a grave abuse of discretion amounting to lack
or excess of jurisdiction.[33]
WHEREFORE, premises considered, the petition
is DENIED. Subject to the above disquisitions, the Decision of
the Court of Appeals in CA-G.R. SP No. 57732, dated
September 28, 2001, and the Orders of the Regional Trial
Court of Cagayan de Oro City, Branch 21, in Civil Case No. 99-
352, dated December 14, 1999 and January 11, 2000,
are AFFIRMED.

For a petition for certiorari to prosper, the essential

requisites that have to concur are: (1) the writ is directed SO ORDERED.
against a tribunal, a board or any officer exercising judicial or
quasi-judicial functions; (2) such tribunal, board or officer has
acted without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction; and
(3) there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law.[34]

The phrase without jurisdiction means that the court

acted with absolute lack of authority or want of legal power,
right or authority to hear and determine a cause or causes,
considered either in general or with reference to a particular
matter. It means lack of power to exercise authority. Excess of
jurisdiction occurs when the court transcends its power or acts
without any statutory authority; or results when an act, though
within the general power of a tribunal, board or officer (to do)
is not authorized, and is invalid with respect to the particular
proceeding, because the conditions which alone authorize the
exercise of the general power in respect of it are
wanting. Grave abuse of discretion implies such capricious and
whimsical exercise of judgment as to be equivalent to lack or
excess of jurisdiction; simply put, power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice,
or personal hostility; and such exercise is so patent or so gross
as to amount to an evasion of a positive duty or to a virtual
refusal either to perform the duty enjoined or to act at all in
contemplation of law.[35]

The present case failed to comply with the above-

stated requisites. In the instant case, the soundness of the
RTCs Order allowing the substitution of the document involves
a matter of judgment and discretion, which cannot be the
proper subject of a petition for certiorari under Rule 65. This
rule is only intended to correct defects of jurisdiction and not
to correct errors of procedure or matters in the trial courts
findings or conclusions.

However, this Court agrees with the petitioners

contention that the CA should not have made determinations
as regards the parties respective rights based on the surety
agreement. The CA went beyond the issues brought before it
and effectively preempted the RTC in making its own
determinations. It is to be noted that the present case is still
pending determination by the RTC. The CA should have been
13
G.R. No. 174433 February 24, 2014
PHILIPPINE NATIONAL BANK, Petitioner,
vs.
SPOUSES ENRIQUE MANALO & ROSALINDA JACINTO,
ARNOLD J. MANALO, ARNEL J. MANALO, and ARMA J.
MANALO, Respondents.
DECISION
BERSAMIN, J.:
Although banks are free to determine the rate of interest they
could impose on their borrowers, they can do so only
reasonably, not arbitrarily. They may not take advantage of
the ordinary borrowers' lack of familiarity with banking
procedures and jargon. Hence, any stipulation on interest
unilaterally imposed and increased by them shall be struck
down as violative of the principle of mutuality of contracts.
Antecedents
Respondent Spouses Enrique Manalo and Rosalinda Jacinto
(Spouses Manalo) applied for an All-Purpose Credit Facility in
the amount of ₱1,000,000.00 with Philippine National Bank
(PNB) to finance the construction of their house. After PNB
granted their application, they executed a Real Estate
Mortgage on November 3, 1993 in favor of PNB over their
property covered by Transfer Certificate of Title No. S- 23191
as security for the loan.1 The credit facility was renewed and
increased several times over the years. On September 20,
1996, the credit facility was again renewed for ₱7,000,000.00.
As a consequence, the parties executed a Supplement to and
Amendment of Existing Real Estate Mortgage whereby the
property covered by TCT No. 171859 was added as security for
the loan.
The additional security was registered in the names of
respondents Arnold, Arnel, Anthony, and Arma, all surnamed
Manalo, who were their children.2
It was agreed upon that the Spouses Manalo would make
monthly payments on the interest. However, PNB claimed that
their last recorded payment was made on December, 1997.
Thus, PNB sent a demand letter to them on their overdue
account and required them to settle the account. PNB sent
another demand letter because they failed to heed the first
demand.3
After the Spouses Manalo still failed to settle their unpaid
account despite the two demand letters, PNB foreclose the
mortgage. During the foreclosure sale, PNB was the highest
bidder for ₱15,127,000.00 of the mortgaged properties of the
Spouses Manalo. The sheriff issued to PNB the Certificate of
Sale dated November 13, 2000.4
After more than a year after the Certificate of Sale had been
issued to PNB, the Spouses Manalo instituted this action for
the nullification of the foreclosure proceedings and damages.
They alleged that they had obtained a loan for ₱1,000,000.00
14
from a certain Benito Tan upon arrangements made by
Antoninus Yuvienco, then the General Manager of PNB’s
Bangkal Branch where they had transacted; that they had
been made to understand and had been assured that the
₱1,000,000.00 would be used to update their account, and
that their loan would be restructured and converted into a
long-term loan;5 that they had been surprised to learn,
therefore, that had been declared in default of their
obligations, and that the mortgage on their property had been
foreclosed and their property had been sold; and that PNB did
not comply with Section 3 of Act No. 3135, as amended.6
PNB and Antoninus Yuvienco countered that the ₱1,000,000.00
loan obtained by the Spouses Manalo from Benito Tan had
been credited to their account; that they did not make any
assurances on the restructuring and conversion of the Spouses
Manalo’s loan into a long-term one;7 that PNB’s right to
foreclose the mortgage had been clear especially because the
Spouses Manalo had not assailed the validity of the loans and
of the mortgage; and that the Spouses Manalo did not allege
having fully paid their indebtedness.8
Ruling ofthe RTC
After trial, the RTC rendered its decision in favor of PNB,
holding thusly:
In resolving this present case, one of the most significant
matters the court has noted is that while during the pre-trial
held on 8 September 2003, plaintiff-spouses Manalo with the
assistance counsel had agreed to stipulate that defendants had
the right to foreclose upon the subject properties and that the
plaintiffs[‘] main thrust was to prove that the foreclosure
proceedings were invalid, in the course of the presentation of
their evidence, they modified their position and claimed [that]
the loan document executed were contracts of adhesion which
were null and void because they were prepared entirely under
the defendant bank’s supervision. They also questioned the
interest rates and penalty charges imposed arguing that these
were iniquitous, unconscionable and therefore likewise void.
Not having raised the foregoing matters as issues during the
pre-trial, plaintiff-spouses are presumably estopped from
allowing these matters to serve as part of their evidence, more
so because at the pre-trial they expressly recognized the
defendant bank’s right to foreclose upon the subject property
(See Order, pp. 193-195).
However, considering that the defendant bank did not
interpose any objection to these matters being made part of
plaintiff’s evidence so much so that their memorandum
contained discussions rebutting plaintiff spouses arguments on
these issues, the court must necessarily include these matters
in the resolution of the present case.9
The RTC held, however, that the Spouses Manalo’s "contract of
adhesion" argument was unfounded because they had still
accepted the terms and conditions of their credit agreement
with PNB and had exerted efforts to pay their obligation; 10 that
the Spouses Manalo were now estopped from questioning the
interest rates unilaterally imposed by PNB because they had
paid at those rates for three years without protest; 11 and that
their allegation about PNB violating the notice and publication
requirements during the foreclosure proceedings was
untenable because personal notice to the mortgagee was not
required under Act No. 3135.12
The Spouses Manalo appealed to the CA by assigning a
singular error, as follows:
THE COURT A QUO SERIOUSLY ERRED IN DISMISSING
PLAINTIFF-APPELLANTS’ COMPLAINT FOR BEING (sic) LACK
OF MERIT NOTWITHSTANDING THE FACT THAT IT WAS
CLEARLY SHOWN THAT THE FORECLOSURE PROCEEDINGS
WAS INVALID AND ILLEGAL.13
The Spouses Manalo reiterated their arguments, insisting that:
(1) the credit agreements they entered into with PNB were
contracts of adhesion;14 (2) no interest was due from them
because their credit agreements with PNB did not specify the
interest rate, and PNB could not unilaterally increase the
interest rate without first informing them;15 and (3) PNB did
not comply with the notice and publication requirements under
Section 3 of Act 3135.16 On the other hand, PNB and Yuvienco
did not file their briefs despite notice.17
Ruling ofthe CA
In its decision promulgated on March 28, 2006,18 the CA
affirmed the decision of the RTC insofar as it upheld the
validity of the foreclosure proceedings initiated by PNB, but
modified the Spouses Manalo’s liability for interest. It directed
the RTC to see to the recomputation of their indebtedness, and
ordered that should the recomputed amount be less than the
winning bid in the foreclosure sale, the difference should be
immediately returned to the Spouses Manalo.
The CA found it necessary to pass upon the issues of PNB’s
failure to specify the applicable interest and the lack of
mutuality in the execution of the credit agreements considering
the earlier cited observation made by the trial court in its
decision. Applying Article 1956 of the Civil Code, the CA held
that PNB’s failure to indicate the rate of interest in the credit
agreements would not excuse the Spouses Manalo from their
contractual obligation to pay interest to PNB because of the
express agreement to pay interest in the credit agreements.
Nevertheless, the CA ruled that PNB’s inadvertence to specify
the interest rate should be construed against it because the
credit agreements were clearly contracts of adhesion due to
their having been prepared solely by PNB.
The CA further held that PNB could not unilaterally increase
the rate of interest considering that the credit agreements
specifically provided that prior notice was required before an
increase in interest rate could be effected. It found that PNB
did not adduce proof showing that the Spouses Manalo had
been notified before the increased interest rates were
imposed; and that PNB’s unilateral imposition of the increased
interest rate was null and void for being violative of the
principle of mutuality of contracts enshrined in Article 1308 of
the Civil Code. Reinforcing its "contract of adhesion"
conclusion, it added that the Spouses Manalo’s being in dire
15
need of money rendered them to be not on an equal footing
with PNB. Consequently, the CA, relying on Eastern Shipping
Lines, v. Court of Appeals,19 fixed the interest rate to be paid
by the Spouses Manalo at 12% per annum, computed from
their default.
The CA deemed to be untenable the Spouses Manalo’s
allegation that PNB had failed to comply with the requirements
for notice and posting under Section 3 of Act 3135. The CA
stated that Sheriff Norberto Magsajo’s testimony was sufficient
proof of his posting of the required Notice of Sheriff’s Sale in
three public places; that the notarized Affidavit of Publication
presented by Sheriff Magsajo was prima facie proof of the
publication of the notice; and that the Affidavit of Publication
enjoyed the presumption of regularity, such that the Spouses
Manalo’s bare allegation of non-publication without other proof
did not overcome the presumption.
On August 29, 2006, the CA denied the Spouses Manalo’s
Motion for Reconsideration and PNB’s Partial Motion for
Reconsideration.20
Issues
In its Memorandum,21 PNB raises the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS WAS CORRECT
IN NULLIFYING THE INTEREST RATES IMPOSED ON
RESPONDENT SPOUSES’ LOAN AND IN FIXING THE SAME AT
TWELVE PERCENT (12%) FROM DEFAULT, DESPITE THE FACT
THAT (i) THE SAME WAS RAISED BY THE RESPONDENTS
ONLY FOR THE FIRST TIME ON APPEAL (ii) IT WAS NEVER
PART OF THEIR COMPLAINT (iii) WAS EXLUDED AS AN ISSUE
DURING PRE-TRIAL, AND WORSE, (iv) THERE WAS NO
FORMALLY OFFERED PERTAINING TO THE SAME DURING
TRIAL.
II
WHETHER OR NOT THE COURT OF APPEALS CORRECTLY
RULED THAT THERE WAS NO MUTUALITY OF CONSENT IN
THE IMPOSITION OF INTEREST RATES ON THE RESPONDENT
SPOUSES’ LOAN DESPITE THE EXISTENCE OF FACTS AND
CIRCUMSTANCES CLEARLY SHOWING RESPONDENTS’ ASSENT
TO THE RATES OF INTEREST SO IMPOSED BY PNB ON THE
LOAN.
Anent the first issue, PNB argues that by passing upon the
issue of the validity of the interest rates, and in nullifying the
rates imposed on the Spouses Manalo, the CA decided the
case in a manner not in accord with Section 15, Rule 44 of the
Rules of Court, which states that only questions of law or fact
raised in the trial court could be assigned as errors on appeal;
that to allow the Spouses Manalo to raise an issue for the first
time on appeal would "offend the basic rules of fair play,
justice and due process;"22 that the resolution of the CA was
limited to the issues agreed upon by the parties during pre-
trial;23 that the CA erred in passing upon the validity of the
interest rates inasmuch as the Spouses Manalo did not present
evidence thereon; and that the Judicial Affidavit of Enrique
Manalo, on which the CA relied for its finding, was not offered
to prove the invalidity of the interest rates and was, therefore,
inadmissible for that purpose.24
As to the substantive issues, PNB claims that the Spouses
Manalo’s continuous payment of interest without protest
indicated their assent to the interest rates imposed, as well as
to the subsequent increases of the rates; and that the CA
erred in declaring that the interest rates and subsequent
increases were invalid for lack of mutuality between the
contracting parties.
Ruling
The appeal lacks merit.
1.
Procedural Issue
Contrary to PNB’s argument, the validity of the interest rates
and of the increases, and on the lack of mutuality between the
parties were not raised by the Spouses Manalo’s for the first
time on appeal. Rather, the issues were impliedly raised during
the trial itself, and PNB’s lack of vigilance in voicing out a
timely objection made that possible.
It appears that Enrique Manalo’s Judicial Affidavit introduced
the issues of the validity of the interest rates and the
increases, and the lack of mutuality between the parties in the
following manner, to wit:
5. True to his words, defendant Yuvienco, after
several days, sent us a document through a personnel
of defendant PNB, Bangkal, Makati City Branch, who
required me and my wife to affix our signature on the
said document;
6. When the document was handed over me, I was
able to know that it was a Promissory Note which was
in ready made form and prepared solely by the
defendant PNB;
xxxx
21. As above-noted, the rates of interest imposed by
the defendant bank were never the subject of any
stipulation between us mortgagors and the defendant
PNB as mortgagee;
22. The truth of the matter is that defendant bank
imposed rate of interest which ranges from 19% to as
high as 28% and which changes from time to time;
23. The irregularity, much less the invalidity of the
imposition of iniquitous rates of interest was
aggravated by the fact that we were not informed,
notified, nor the same had our prior consent and
acquiescence therefor. x x x25
16
PNB cross-examined Enrique Manalo upon his Judicial Affidavit.
There is no showing that PNB raised any objection in the
course of the cross examination.26 Consequently, the RTC
rightly passed upon such issues in deciding the case, and its
having done so was in total accord with Section 5, Rule 10 of
the Rules of Court, which states:
Section 5. Amendment to conform to or authorize presentation
of evidence. – When issues not raised by the pleadings are
tried with the express or implied consent of the parties, they
shall be treated in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to
raise these issues may be made upon motion of any party at
any time, even after judgment; but failure to amend does not
affect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may
grant a continuance to enable the amendment to be made.
In Bernardo Sr. v. Court of Appeals,27 we held that:
It is settled that even if the complaint be defective, but the
parties go to trial thereon, and the plaintiff, without objection,
introduces sufficient evidence to constitute the particular cause
of action which it intended to allege in the original complaint,
and the defendant voluntarily produces witnesses to meet the
cause of action thus established, an issue is joined as fully and
as effectively as if it had been previously joined by the most
perfect pleadings. Likewise, when issues not raised by the
pleadings are tried by express or implied consent of the
parties, they shall be treated in all respects as if they had been
raised in the pleadings.
The RTC did not need to direct the amendment of the
complaint by the Spouses Manalo. Section 5, Rule 10 of the
Rules of Court specifically declares that the "failure to amend
does not affect the result of the trial of these issues."
According to Talisay-Silay Milling Co., Inc. v. Asociacion de
Agricultores de Talisay-Silay, Inc.:28
The failure of a party to amend a pleading to conform to the
evidence adduced during trial does not preclude an
adjudication by the court on the basis of such evidence which
may embody new issues not raised in the pleadings, or serve
as a basis for a higher award of damages. Although the
pleading may not have been amended to conform to the
evidence submitted during trial, judgment may nonetheless be
rendered, not simply on the basis of the issues alleged but also
on the basis of issues discussed and the assertions of fact
proved in the course of trial.1âwphi1 The court may treat the
pleading as if it had been amended to conform to the
evidence, although it had not been actually so amended.
Former Chief Justice Moran put the matter in this way:
When evidence is presented by one party, with the expressed
or implied consent of the adverse party, as to issues not
alleged in the pleadings, judgment may be rendered validly as
regards those issues, which shall be considered as if they have
been raised in the pleadings. There is implied, consent to the
evidence thus presented when the adverse party fails to object
thereto." (Emphasis supplied)
Clearly, a court may rule and render judgment on the basis of
the evidence before it even though the relevant pleading had
not been previously amended, so long as no surprise or
prejudice is thereby caused to the adverse party. Put a little
differently, so long as the basic requirements of fair play had
been met, as where litigants were given full opportunity to
support their respective contentions and to object to or refute
each other's evidence, the court may validly treat the
pleadings as if they had been amended to conform to the
evidence and proceed to adjudicate on the basis of all the
evidence before it.
There is also no merit in PNB’s contention that the CA should
not have considered and ruled on the issue of the validity of
the interest rates because the Judicial Affidavit of Enrique
Manalo had not been offered to prove the same but only "for
the purpose of identifying his affidavit."29 As such, the affidavit
was inadmissible to prove the nullity of the interest rates.
We do not agree.
Section 5, Rule 10 of the Rules of Court is applicable in two
situations.1âwphi1 The first is when evidence is introduced on
an issue not alleged in the pleadings and no objection is
interposed by the adverse party. The second is when evidence
is offered on an issue not alleged in the pleadings but an
objection is raised against the offer.30 This case comes under
the first situation. Enrique Manalo’s Judicial Affidavit would
introduce the very issues that PNB is now assailing. The
question of whether the evidence on such issues was
admissible to prove the nullity of the interest rates is an
entirely different matter. The RTC accorded credence to PNB’s
evidence showing that the Spouses Manalo had been paying
the interest imposed upon them without protest. On the other
hand, the CA’s nullification of the interest rates was based on
the credit agreements that the Spouses Manalo and PNB had
themselves submitted.
Based on the foregoing, the validity of the interest rates and
their increases, and the lack of mutuality between the parties
were issues validly raised in the RTC, giving the Spouses
Manalo every right to raise them in their appeal to the CA.
PNB’s contention was based on its wrong appreciation of what
transpired during the trial. It is also interesting to note that
PNB did not itself assail the RTC’s ruling on the issues
obviously because the RTC had decided in its favor. In fact,
PNB did not even submit its appellee’s brief despite notice from
the CA.
2.
Substantive Issue
The credit agreement executed succinctly stipulated that the
loan would be subjected to interest at a rate "determined by
the Bank to be its prime rate plus applicable spread, prevailing
at the current month."31 This stipulation was carried over to or
adopted by the subsequent renewals of the credit agreement.
17
PNB thereby arrogated unto itself the sole prerogative to
determine and increase the interest rates imposed on the
Spouses Manalo. Such a unilateral determination of the
interest rates contravened the principle of mutuality of
contracts embodied in Article 1308 of the Civil Code.32
The Court has declared that a contract where there is no
mutuality between the parties partakes of the nature of a
contract of adhesion,33 and any obscurity will be construed
against the party who prepared the contract, the latter being
presumed the stronger party to the agreement, and who
caused the obscurity.34 PNB should then suffer the
consequences of its failure to specifically indicate the rates of
interest in the credit agreement. We spoke clearly on this in
Philippine Savings Bank v. Castillo,35 to wit:
The unilateral determination and imposition of the increased
rates is violative of the principle of mutuality of contracts under
Article 1308 of the Civil Code, which provides that ‘[t]he
contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.’ A perusal
of the Promissory Note will readily show that the increase or
decrease of interest rates hinges solely on the discretion of
petitioner. It does not require the conformity of the maker
before a new interest rate could be enforced. Any contract
which appears to be heavily weighed in favor of one of the
parties so as to lead to an unconscionable result, thus
partaking of the nature of a contract of adhesion, is void. Any
stipulation regarding the validity or compliance of the contract
left solely to the will of one of the parties is likewise invalid.
(Emphasis supplied)
PNB could not also justify the increases it had effected on the
interest rates by citing the fact that the Spouses Manalo had
paid the interests without protest, and had renewed the loan
several times. We rule that the CA, citing Philippine National
Bank v. Court of Appeals,36 rightly concluded that "a borrower
is not estopped from assailing the unilateral increase in the
interest made by the lender since no one who receives a
proposal to change a contract, to which he is a party, is
obliged to answer the same and said party’s silence cannot be
construed as an acceptance thereof."37
Lastly, the CA observed, and properly so, that the credit
agreements had explicitly provided that prior notice would be
necessary before PNB could increase the interest rates. In
failing to notify the Spouses Manalo before imposing the
increased rates of interest, therefore, PNB violated the
stipulations of the very contract that it had prepared. Hence,
the varying interest rates imposed by PNB have to be vacated
and declared null and void, and in their place an interest rate
of 12% per annum computed from their default is fixed
pursuant to the ruling in Eastern Shipping Lines, Inc. v. Court
of Appeals.38
The CA’s directive to PNB (a) to recompute the Spouses
Manalo’s indebtedness under the oversight of the RTC; and (b)
to refund to them any excess of the winning bid submitted
during the foreclosure sale over their recomputed
indebtedness was warranted and equitable. Equally warranted
and equitable was to make the amount to be refunded, if any,
bear legal interest, to be reckoned from the promulgation of
the CA’s decision on March 28, 2006.39Indeed, the Court said SO ORDERED.
in Eastern Shipping Lines, Inc. v. Court of Appeals40 that
interest should be computed from the time of the judicial or LUCAS P. BERSAMIN
extrajudicial demand. However, this case presents a peculiar Associate Justice
situation, the peculiarity being that the Spouses Manalo did not
demand interest either judicially or extrajudicially. In the RTC,
they specifically sought as the main reliefs the nullification of
the foreclosure proceedings brought by PNB, accounting of the
payments they had made to PNB, and the conversion of their
loan into a long term one.41 In its judgment, the RTC even
upheld the validity of the interest rates imposed by PNB.42 In
their appellant’s brief, the Spouses Manalo again sought the
nullification of the foreclosure proceedings as the main
relief.43 It is evident, therefore, that the Spouses Manalo made
no judicial or extrajudicial demand from which to reckon the
interest on any amount to be refunded to them. Such demand
could only be reckoned from the promulgation of the CA’s
decision because it was there that the right to the refund was
first judicially recognized. Nevertheless, pursuant to Eastern
Shipping Lines, Inc. v. Court of Appeals,44 the amount to be
refunded and the interest thereon should earn interest to be
computed from the finality of the judgment until the full refund
has been made.

Anent the correct rates of interest to be applied on the amount

to be refunded by PNB, the Court, in Nacar v. Gallery
Frames45 and S.C. Megaworld Construction v. Parada,46 already
applied Monetary Board Circular No. 799 by reducing the
interest rates allowed in judgments from 12% per annum to
6% per annum.47 According to Nacar v. Gallery Frames, MB
Circular No. 799 is applied prospectively, and judgments that
became final and executory prior to its effectivity on July 1,
2013 are not to be disturbed but continue to be implemented
applying the old legal rate of 12% per annum. Hence, the old
legal rate of 12% per annum applied to judgments becoming
final and executory prior to July 1, 2013, but the new rate of
6% per annum applies to judgments becoming final and
executory after said dater.

Conformably with Nacar v. Gallery Frames and S.C. Megaworld

Construction v. Parada, therefore, the proper interest rates to
be imposed in the present case are as follows:

1. Any amount to be refunded to the Spouses Manalo

shall bear interest of 12% per annum computed from
March 28, 2006, the date of the promulgation of the
CA decision, until June 30, 2013; and 6% per annum
computed from July 1, 2013 until finality of this
decision; and

2. The amount to be refunded and its accrued interest

shall earn interest of 6% per annum until full refund.

WHEREFORE, the Court AFFIRMS the decision promulgated by

the Court of Appeals on March 28, 2006 in CA-G.R. CV No.
84396, subject to the MODIFICATION that any amount to be
refunded to the respondents shall bear interest of 12% per
annum computed from March 28, 2006 until June 30, 2013,
and 6% per annum computed from July 1, 2013 until finality
hereof; that the amount to be refunded and its accrued
interest shall earn interest at 6o/o per annum until full refund;
and DIRECTS the petitioner to pay the costs of suit.
18
G.R. No. 172825 October 11, 2012
SPOUSES MINIANO B. DELA CRUZ and LETA L. DELA
CRUZ, Petitioners,
vs.
ANA MARIE CONCEPCION, Respondent.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45
of the Rules of Court filed by petitioners spouses Miniano B.
Dela Cruz and Leta L. Dela Cruz against respondent Ana Marie
Concepcion are the Court of Appeals (CA) Decision1 dated
March 31, 2005 and Resolution2 dated May 24, 2006 in CA-G.R.
CV No. 83030.
The facts of the case are as follows:
On March 25, 1996, petitioners (as vendors) entered into a
Contract to Sell3 with respondent (as vendee) involving a house
and lot in Cypress St., Phase I, Town and Country Executive
Village, Antipolo City for a consideration of P2,000,000.00
subject to the following terms and conditions:
a) That an earnest money of P100,000.00 shall be
paid immediately;
b) That a full down payment of Four Hundred
Thousand Pesos (P400,000.00) shall be paid on
February 29, 1996;
c) That Five Hundred Thousand Pesos (P500,000.00)
shall be paid on or before May 5, 1996; and
d) That the balance of One Million Pesos
(P1,000,000.00) shall be paid on installment with
interest of Eighteen Percent (18%) per annum or One
and a half percent (1-1/2 %) interest per month,
based on the diminishing balance, compounded
monthly, effective May 6, 1996. The interest shall
continue to run until the whole obligation shall have
been fully paid. The whole One Million Pesos shall be
paid within three years from May 6, 1996;
e) That the agreed monthly amortization of Fifty
Thousand Pesos (P50,000.00), principal and interest
included, must be paid to the Vendors, without need
of prior demand, on or before May 6, 1996, and every
month thereafter. Failure to pay the monthly
amortization on time, a penalty equal to Five Percent
(5%) of the amount due shall be imposed, until the
account is updated. In addition, a penalty of One
Hundred Pesos per day shall be imposed until the
account is updated;
f) That after receipt of the full payment, the Vendors
shall execute the necessary Absolute Deed of Sale
covering the house and lot mentioned above x x x4
19
Respondent made the following payments, to wit: (1)
P500,000.00 by way of downpayment; (2) P500,000.00 on
May 30, 1996; (3) P500,000.00 paid on January 22, 1997; and
(4) P500,000.00 bounced check dated June 30, 1997 which
was subsequently replaced by another check of the same
amount, dated July 7, 1997. Respondent was, therefore, able
to pay a total of P2,000,000.00.5
Before respondent issued the P500,000.00 replacement check,
she told petitioners that based on the computation of her
accountant as of July 6, 1997, her unpaid obligation which
includes interests and penalties was only
P200,000.00.6 Petitioners agreed with respondent and said "if
P200,000.00 is the correct balance, it is okay with us."7
Meanwhile, the title to the property was transferred to
respondent. Petitioners later reminded respondent to pay
P209,000.00 within three months.8 They claimed that the said
amount remained unpaid, despite the transfer of the title to
the property to respondent. Several months later, petitioners
made further demands stating the supposed correct
computation of respondent’s liabilities.9 Despite repeated
demands, petitioners failed to collect the amounts they claimed
from respondent. Hence, the Complaint for Sum of Money With
Damages10 filed with the Regional Trial Court (RTC)11 of
Antipolo, Rizal. The case was docketed as Civil Case No. 98-
4716.
In her Answer with Compulsory Counterclaim,12 respondent
claimed that her unpaid obligation to petitioners is only
P200,000.00 as earlier confirmed by petitioners and not
P487,384.15 as later alleged in the complaint. Respondent
thus prayed for the dismissal of the complaint. By way of
counterclaim, respondent prayed for the payment of moral
damages and attorney’s fees. During the presentation of the
parties’ evidence, in addition to documents showing the
statement of her paid obligations, respondent presented a
receipt purportedly indicating payment of the remaining
balance of P200,000.00 to Adoracion Losloso (Losloso) who
allegedly received the same on behalf of petitioners.13
On March 8, 2004, the RTC rendered a Decision14 in favor of
respondent, the dispositive portion of which reads:
WHEREFORE, premises considered, this case is hereby
DISMISSED. The plaintiff is hereby ordered to pay the
defendant’s counterclaim, amounting to wit:
a) P300,000 as moral damages; and
b) P100,000 plus P2,000 per court appearance as
attorney’s fees.
SO ORDERED.15
The RTC noted that the evidence formally offered by
petitioners have not actually been marked as none of the
markings were recorded. Thus, it found no basis to grant their
claims, especially since the amount claimed in the complaint is
different from that testified to. The court, on the other hand,
granted respondent’s counterclaim.16
On appeal, the CA affirmed the decision with modification by
deleting the award of moral damages and attorney’s fees in
favor of respondent.17 It agreed with the RTC that the evidence
presented by petitioners cannot be given credence in
determining the correct liability of respondent.18 Considering
that the purchase price had been fully paid by respondent
ahead of the scheduled date agreed upon by the parties,
petitioners were not awarded the excessive penalties and
interests.19 The CA thus maintained that respondent’s liability is
limited to P200,000.00 as claimed by respondent and originally
admitted by petitioners.20 This amount, however, had already
been paid by respondent and received by petitioners’
representative.21 Finally, the CA pointed out that the RTC did
not explain in its decision why moral damages and attorney’s
fees were awarded. Considering also that bad faith cannot be
attributed to petitioners when they instituted the collection
suit, the CA deleted the grant of their counterclaims.22
Aggrieved, petitioners come before the Court in this petition
for review on certiorari under Rule 45 of the Rules of Court
raising the following errors:
I.
"THE TRIAL COURT ERRED IN DISMISSING THE
COMPLAINT ON THE GROUND THAT PLAINTIFF
FAILED TO FORMALLY OFFER THEIR EVIDENCE AS
DEFENDANT JUDICIALLY ADMITTED IN HER ANSWER
WITH COMPULS[O]RY COUNTERCLAIM HER
OUTSTANDING OBLIGATION STILL DUE TO
PLAINTIFFS AND NEED NO PROOF.
II.
THE TRIAL COURT ERRED IN DISMISSING THE
COMPLAINT FOR ALLEGED FAILURE OF PLAINTIFFS
TO PRESENT COMPUTATION OF THE AMOUNT BEING
CLAIMED AS DEFENDANT JUDICIALLY ADMITTED
HAVING RECEIVED THE DEMAND LETTER DATED
OCTOBER 22, 1997 WITH COMPUTATION OF THE
BALANCE DUE.
III.
THE TRIAL COURT ERRED IN DISMISSING THE
COMPLAINT ON THE GROUND THAT THE
DEFENDANT FULLY PAID THE CLAIMS OF
PLAINTIFFS BASED ON THE ALLEGED RECEIPT OF
PAYMENT BY ADORACION LOSLOSO FROM ANA
MARIE CONCEPCION MAGLASANG WHICH HAS
NOTHING TO DO WITH THE JUDICIALLY ADMITTED
OBLIGATION OF APPELLEE."23
Invoking the rule on judicial admission, petitioners insist that
respondent admitted in her Answer with Compulsory
Counterclaim that she had paid only a total amount of P2
million and that her unpaid obligation amounts to
P200,000.00.24 They thus maintain that the RTC and the CA
erred in concluding that said amount had already been paid by
respondent. Petitioners add that respondent’s total liability as
shown in the latter’s statement of account was erroneously
20
computed for failure to compound the monthly interest agreed
upon.25 Petitioners also claim that the RTC and the CA erred in
giving credence to the receipt presented by respondent to
show that her unpaid obligation had already been paid having
been allegedly given to a person who was not armed with
authority to receive payment.26
The petition is without merit.
It is undisputed that the parties entered into a contract to sell
a house and lot for a total consideration of P2 million.
Considering that the property was payable in installment, they
likewise agreed on the payment of interest as well as penalty
in case of default. It is likewise settled that respondent was
able to pay the total purchase price of P2 million ahead of the
agreed term. Afterwhich, they agreed on the remaining
balance by way of interest and penalties which is P200,000.00.
Considering that the term of payment was not strictly followed
and the purchase price had already been fully paid by
respondent, the latter presented to petitioners her computation
of her liabilities for interests and penalties which was agreed to
by petitioners. Petitioners also manifested their conformity to
the statement of account prepared by respondent.
In paragraph (9) of petitioners’ Complaint, they stated that:
9) That the Plaintiffs answered the Defendant as follows: "if
P200,000 is the correct balance, it is okay with us." x x x.27
But in paragraph (17) thereof, petitioners claimed that
defendant’s outstanding liability as of November 6, 1997 was
P487,384.15.28 Different amounts, however, were claimed in
their demand letter and in their testimony in court.
With the foregoing factual antecedents, petitioners cannot be
permitted to assert a different computation of the correct
amount of respondent’s liability.
It is noteworthy that in answer to petitioners’ claim of her
purported unpaid obligation, respondent admitted in her
Answer with Compulsory Counterclaim that she paid a total
amount of P2 million representing the purchase price of the
subject house and lot. She then manifested to petitioners and
conformed to by respondent that her only balance was
P200,000.00. Nowhere in her Answer did she allege the
defense of payment. However, during the presentation of her
evidence, respondent submitted a receipt to prove that she
had already paid the remaining balance. Both the RTC and the
CA concluded that respondent had already paid the remaining
balance of P200,000.00. Petitioners now assail this, insisting
that the court should have maintained the judicial admissions
of respondent in her Answer with Compulsory Counterclaim,
especially as to their agreed stipulations on interests and
penalties as well as the existence of outstanding obligations.
It is, thus, necessary to discuss the effect of failure of
respondent to plead payment of its obligations.
Section 1, Rule 9 of the Rules of Court states that "defenses
and objections not pleaded either in a motion to dismiss or in
the answer are deemed waived." Hence, respondent should
have been barred from raising the defense of payment of the
unpaid P200,000.00. However, Section 5, Rule 10 of the Rules
of Court allows the amendment to conform to or authorize
presentation of evidence, to wit:
Section 5. Amendment to conform to or authorize presentation
of evidence. – When issues not raised by the pleadings are
tried with the express or implied consent of the parties, they
shall be treated in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to
raise these issues may be made upon motion of any party at
any time, even after judgment; but failure to amend does not
affect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may
grant a continuance to enable the amendment to be made.
The foregoing provision envisions two scenarios, namely, when
evidence is introduced in an issue not alleged in the pleadings
and no objection was interjected; and when evidence is
offered on an issue not alleged in the pleadings but this time
an objection was raised.29 When the issue is tried without the
objection of the parties, it should be treated in all respects as if
it had been raised in the pleadings.30 On the other hand, when
there is an objection, the evidence may be admitted where its
admission will not prejudice him.31
Thus, while respondent judicially admitted in her Answer that
she only paid P2 million and that she still owed petitioners
P200,000.00, respondent claimed later and, in fact, submitted
an evidence to show that she already paid the whole amount
of her unpaid obligation. It is noteworthy that when
respondent presented the evidence of payment, petitioners did
not object thereto. When the receipt was formally offered as
evidence, petitioners did not manifest their objection to the
admissibility of said document on the ground that payment
was not an issue. Apparently, petitioners only denied receipt of
said payment and assailed the authority of Losloso to receive
payment. Since there was an implied consent on the part of
petitioners to try the issue of payment, even if no motion was
filed and no amendment of the pleading has been
ordered,32 the RTC cannot be faulted for admitting
respondent’s testimonial and documentary evidence to prove
payment.33
As stressed by the Court in Royal Cargo Corporation v. DFS
Sports Unlimited, Inc.,34
The failure of a party to amend a pleading to conform to the
evidence adduced during trial does not preclude adjudication
by the court on the basis of such evidence which may embody
new issues not raised in the pleadings. x x x Although, the
pleading may not have been amended to conform to the
evidence submitted during trial, judgment may nonetheless be
rendered, not simply on the basis of the issues alleged but also
on the issues discussed and the assertions of fact proved in
the course of the trial. The court may treat the pleading as if it
had been amended to conform to the evidence, although it
21
had not been actually amended. x x x Clearly, a court may rule
and render judgment on the basis of the evidence before it
even though the relevant pleading had not been previously
amended, so long as no surprise or prejudice is thereby caused
to the adverse party. Put a little differently, so long as the
basic requirements of fair play had been met, as where the
litigants were given full opportunity to support their respective
contentions and to object to or refute each other's evidence,
the court may validly treat the pleadings as if they had been
amended to conform to the evidence and proceed to
adjudicate on the basis of all the evidence before it. (Emphasis
supplied)35
To be sure, petitioners were given ample opportunity to refute
the fact of and present evidence to prove payment.
With the evidence presented by the contending parties, the
more important question to resolve is whether or not
respondent’s obligation had already been extinguished by
payment.
We rule in the affirmative as aptly held by the RTC and the CA.
Respondent’s obligation consists of payment of a sum of
money. In order to extinguish said obligation, payment should
be made to the proper person as set forth in Article 1240 of
the Civil Code, to wit:
Article 1240. Payment shall be made to the person in whose
favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it. (Emphasis
supplied)
The Court explained in Cambroon v. City of Butuan,36 cited in
Republic v. De Guzman,37 to whom payment should be made in
order to extinguish an obligation:
Payment made by the debtor to the person of the creditor or
to one authorized by him or by the law to receive it
extinguishes the obligation. When payment is made to the
wrong party, however, the obligation is not extinguished as to
the creditor who is without fault or negligence even if the
debtor acted in utmost good faith and by mistake as to the
person of the creditor or through error induced by fraud of a
third person.
In general, a payment in order to be effective to discharge an
obligation, must be made to the proper person. Thus, payment
must be made to the obligee himself or to an agent having
authority, express or implied, to receive the particular
payment. Payment made to one having apparent authority to
receive the money will, as a rule, be treated as though actual
authority had been given for its receipt. Likewise, if payment is
made to one who by law is authorized to act for the creditor, it
will work a discharge. The receipt of money due on a judgment
by an officer authorized by law to accept it will, therefore,
satisfy the debt.38
Admittedly, payment of the remaining balance of P200,000.00
was not made to the creditors themselves. Rather, it was
allegedly made to a certain Losloso. Respondent claims that
Losloso was the authorized agent of petitioners, but the latter
dispute it.

Losloso’s authority to receive payment was embodied in

petitioners’ Letter39 addressed to respondent, dated August 7,
1997, where they informed respondent of the amounts they
advanced for the payment of the 1997 real estate taxes. In
said letter, petitioners reminded respondent of her remaining
balance, together with the amount of taxes paid. Taking into
consideration the busy schedule of respondent, petitioners
advised the latter to leave the payment to a certain "Dori" who
admittedly is Losloso, or to her trusted helper. This is an
express authority given to Losloso to receive payment.

Moreover, as correctly held by the CA:

Furthermore, that Adoracion Losloso was indeed an agent of

the appellant spouses is borne out by the following admissions
of plaintiff-appellant Atty. Miniano dela Cruz, to wit:

Q: You would agree with me that you have authorized this

Doiry Losloso to receive payment of whatever balance is due
you coming from Ana Marie Concepcion, that is correct?

A: In one or two times but not total authority, sir.

Q: Yes, but you have authorized her to receive payment?

A: One or two times, yes x x x. (TSN, June 28, 1999, pp. 16-
17)40

Thus, as shown in the receipt signed by petitioners’ agent and

pursuant to the authority granted by petitioners to Losloso,
payment made to the latter is deemed payment to petitioners.
We find no reason to depart from the RTC and the CA
conclusion that payment had already been made and that it
extinguished respondent's obligations.

WHEREFORE, premises considered, the petition is DENIED for

lack of merit. The Court of Appeals Decision dated March 31,
2005 and Resolution dated May 24, 2006 in CA-G.R. CV No.
83030, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

22
FIRST DIVISION
You are hereby re-appointed Dean of the College of Physical
Therapy and Doctor-In-Charge of the Rehabilitation Clinic at
[ G.R. No. 193857, November 28, 2012 ]
Rodolfo N. Pelaez Hall, City Memorial Hospital and other
rehabilitation clinics under the management of Liceo de
MA. MERCEDES L. BARBA, PETITIONER, VS. LICEO DE Cagayan University for a period of three years effective July 1,
CAGAYAN UNIVERSITY, RESPONDENT. 2002 unless sooner revoked for valid cause or causes.

DECISION Your position is one of trust and confidence and the

appointment is subject to the pertinent provisions of the
VILLARAMA, JR., J.:
University Administrative Personnel and Faculty Manuals, and
Before the Court is a petition for review on certiorari assailing Labor Code.
the March 29, 2010 Amended Decision[1] and September 14,
2010 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP xxxx
No. 02508-MIN. The CA had reconsidered its earlier
Decision[3] dated October 22, 2009 and set aside the
Petitioner accepted her appointment and assumed the position
September 25, 2007 and June 30, 2008 Resolutions[4] of the
of Dean of the College of Physical Therapy. In the school year
National Labor Relations Commission (NLRC) as well as the
2003 to 2004, the College of Physical Therapy suffered a
September 29, 2006 Decision[5] of the Labor Arbiter. The CA
dramatic decline in the number of enrollees from a total of
held that the Labor Arbiter and NLRC had no jurisdiction over
1,121 students in the school year 1995 to 1996 to only 29
the illegal dismissal case filed by petitioner against respondent
students in the first semester of school year 2003 to 2004.
because petitioner's position as Dean of the College of Physical
This worsened in the next year or in school year 2004 to 2005
Therapy of respondent is a corporate office.
where a total of only 20 students enrolled.[8]
The facts follow.
Due to the low number of enrollees, respondent decided to
freeze the operation of the College of Physical Therapy
Petitioner Dr. Ma. Mercedes L. Barba was the Dean of the
indefinitely. Respondent's President Dr. Rafaelita Pelaez-Golez
College of Physical Therapy of respondent Liceo de Cagayan
wrote petitioner a letter[9] dated March 16, 2005 informing her
University, Inc., a private educational institution with school
that her services as dean of the said college will end at the
campus located at Carmen, Cagayan de Oro City.
close of the school year. Thereafter, the College of Physical
Therapy ceased operations on March 31, 2005, and petitioner
Petitioner started working for respondent on July 8, 1993 as
went on leave without pay starting on April 9, 2005.
medical officer/school physician for a period of one school year
Subsequently, respondent's Executive Vice President, Dr.
or until March 31, 1994. In July 1994, she was chosen by
Mariano M. Lerin, through Dr. Glory S. Magdale, respondent's
respondent to be the recipient of a scholarship grant to pursue
Vice President for Academic Affairs, sent petitioner a
a three-year residency training in Rehabilitation Medicine at
letter[10] dated April 27, 2005 instructing petitioner to return to
the Veterans Memorial Medical Center (VMMC). The
work on June 1, 2005 and report to Ma. Chona Palomares, the
Scholarship Contract[6] provides:
Acting Dean of the College of Nursing, to receive her teaching
load and assignment as a full-time faculty member in that
department for the school year 2005-2006.
5. That the SCHOLAR after the duration of her study and
training shall serve the SCHOOL in whatever position the In reply, petitioner informed Dr. Lerin that she had not
SCHOOL desires related to the SCHOLAR's studies for a period committed to teach in the College of Nursing and that as far as
of not less than ten (10) years; she can recall, her employment is not dependent on any
teaching load. She then requested for the processing of her
separation benefits in view of the closure of the College of
After completing her residency training with VMMC in June
Physical Therapy.[11] She did not report to Palomares on June
1997, petitioner returned to continue working for respondent.
1, 2005.
She was appointed as Acting Dean of the College of Physical
Therapy and at the same time designated as Doctor-In-Charge
On June 8, 2005, petitioner followed up her request for
of the Rehabilitation Clinic of the Rodolfo N. Pelaez Hall, City
separation pay and other benefits but Dr. Lerin insisted that
Memorial Hospital.
she report to Palomares; otherwise, sanctions will be imposed
on her. Thus, petitioner through counsel wrote Dr. Golez
On June 19, 2002, petitioner's appointment as Doctor-In-
directly, asking for her separation pay and other benefits.
Charge of the Rehabilitation Clinic was renewed and she was
appointed as Dean of the College of Physical Therapy by
On June 21, 2005, Dr. Magdale wrote petitioner a
respondent's President, Dr. Jose Ma. R. Golez. The
letter[12] directing her to report for work and to teach her
appointment letter[7] reads:
assigned subjects on or before June 23, 2005. Otherwise, she
will be dismissed from employment on the ground of
abandonment. Petitioner, through counsel, replied that
x x x x teaching in the College of Nursing is in no way related to her
scholarship and training in the field of rehabilitation medicine.
Dear Dr. Barba: Petitioner added that coercing her to become a faculty
23
member from her position as College Dean is a great demotion
which amounts to constructive dismissal.[13]
Dr. Magdale sent another letter[14] to petitioner on June 24,
2005 ordering her to report for work as she was still bound by
the Scholarship Contract to serve respondent for two more
years. But petitioner did not do so. Hence, on June 28, 2005,
Dr. Magdale sent petitioner a notice terminating her services
on the ground of abandonment.
Meanwhile, on June 22, 2005, prior to the termination of her
services, petitioner filed a complaint before the Labor Arbiter
for illegal dismissal, payment of separation pay and retirement
benefits against respondent, Dr. Magdale and Dr. Golez. She
alleged that her transfer to the College of Nursing as a faculty
member is a demotion amounting to constructive dismissal.
Respondent claimed that petitioner was not terminated and
that it was only petitioner's appointment as College Dean in
the College of Physical Therapy that expired as a necessary
consequence of the eventual closure of the said college.
Respondent further averred that petitioner's transfer as full-
time professor in the College of Nursing does not amount to
constructive dismissal since the transfer was without loss of
seniority rights and without diminution of pay. Also,
respondent added that pursuant to the Scholarship Contract,
petitioner was still duty bound to serve respondent until 2007
in whatever position related to her studies the school desires.
Labor Arbiter's Ruling
In a Decision[15] dated September 29, 2006, the Labor Arbiter
found that respondent did not constructively dismiss petitioner;
therefore, she was not entitled to separation pay. The Labor
Arbiter held that petitioner's assignment as full-time professor
in the College of Nursing was not a demotion tantamount to
constructive dismissal. The dispositive portion of the Labor
Arbiter's decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered dismissing the complaint for illegal dismissal for utter
lack of merit, but ordering the respondent Liceo de Cagayan
University to reinstate complainant to an equivalent position
without loss of seniority rights, but without back wages.
However, if reinstatement is no longer feasible or if there is no
equivalent position to which complainant may be reinstated,
respondent may opt to pay complainant her separation pay
equivalent to one-half (1/2) month pay for every year of
service or in the sum of P195,000.00, subject to deduction for
advances or accountabilities which complainant may have had.
Other claims are ordered dismissed for lack of merit.
SO ORDERED.[16]
NLRC's Ruling
Petitioner appealed the above decision to the NLRC. On
September 25, 2007, the NLRC issued a
Resolution[17] reversing the Labor Arbiter's decision and holding
24
that petitioner was constructively dismissed. The NLRC held
that petitioner was demoted when she was assigned as a
professor in the College of Nursing because there are functions
and obligations and certain allowances and benefits given to a
College Dean but not to an ordinary professor. The NLRC
ruled:
WHEREFORE, in view of the foregoing, the assailed decision is
hereby MODIFIED in that complainant is hereby considered as
constructively dismissed and thus entitled to backwages and
separation pay of one (1) month salary for every year of
service, plus attorney's fees, which shall be computed at the
execution stage before the Arbitration Branch of origin.
SO ORDERED.[18]
The NLRC denied respondent's motion for reconsideration in a
Resolution[19] dated June 30, 2008.
Ruling of the Court of Appeals
Respondent went to the CA on a petition for certiorari alleging
that the NLRC committed grave abuse of discretion when it
declared that petitioner's transfer to the College of Nursing as
full-time professor but without diminution of salaries and
without loss of seniority rights amounted to constructive
dismissal because there was a demotion involved in the
transfer and because petitioner was compelled to accept her
new assignment.
Respondent also filed a Supplemental Petition[20] raising for the
first time the issue of lack of jurisdiction of the Labor Arbiter
and the NLRC over the case. Respondent claimed that a
College Dean is a corporate officer under its by-laws and
petitioner was a corporate officer of respondent since her
appointment was approved by the board of directors.
Respondent posited that petitioner was a corporate officer
since her office was created by the by-laws and her
appointment, compensation, duties and functions were
approved by the board of directors. Thus, respondent
maintained that the jurisdiction over the case is with the
regular courts and not with the labor tribunals.
In its original Decision[21] dated October 22, 2009, the CA
reversed and set aside the NLRC resolutions and reinstated the
decision of the Labor Arbiter. The CA did not find merit in
respondent's assertion in its Supplemental Petition that the
position of petitioner as College Dean was a corporate office.
Instead, the appellate court held that petitioner was
respondent's employee, explaining thus:
Corporate officers in the context of PD 902-A are those officers
of a corporation who are given that character either by the
Corporation Code or by the corporation's By-Laws. Under
Section 25 of the Corporation Code, the "corporate officers"
are the president, secretary, treasurer and such other officers
as may be provided for in the By-Laws.
True, the By-Laws of LDCU provides that there shall be a
College Director. This means a College Director is a corporate
officer. However, contrary to the allegation of petitioner, the
position of Dean does not appear to be the same as that of a
College Director.
Aside from the obvious disparity in name, the By-Laws of LDCU
provides for only one College Director. But as shown by LDCU
itself, numerous persons have been appointed as Deans. They
could not be the College Director contemplated by the By-Laws
inasmuch as the By-Laws authorize only the appointment of
one not many. If it is indeed the intention of LDCU to
give its many Deans the rank of College Director, then
it exceeded the authority given to it by its By-Laws
because only one College Director is authorized to be
appointed. It must amend its By-Laws. Prior to such an
amendment, the office of College Dean is not a corporate
office.
Another telling sign that a College Director is not the same as
a Dean is the manner of appointment. A College Director is
directly appointed by the Board of Directors. However,
a College Dean is appointed by the President upon the
recommendation of the Vice President for Academic Affairs and
the Executive Vice President and approval of the Board of
Directors. There is a clear distinction on the manner of
appointment indicating that the offices are not one and the
same.
x x x x
This shows that it was not the intention of LDCU to
make Dr. Barba a corporate officer as it was stated in her
letter of appointment that the same shall be subject to the
provisions of the Labor Code. Otherwise, the appointment
letter should have stated that her appointment is governed by
the Corporation Code. Thus, We find the arguments in the
Supplemental Petition on the matter of lack of jurisdiction of
the Labor Arbiter and the NLRC to be without merit. Dr. Barba,
being a College Dean, was not a corporate
officer.[22] (Emphasis not ours)
The CA further found that no constructive dismissal occurred
nor has petitioner abandoned her work. According to the CA, a
transfer amounts to constructive dismissal when the transfer is
unreasonable, unlikely, inconvenient, impossible, or prejudicial
to the employee or it involves a demotion in rank or a
diminution of salary and other benefits. In the case of
petitioner, the CA held that she was never demoted and her
transfer, being a consequence of the closure of the College of
Physical Therapy, was valid.
The CA also noted that petitioner's appointment as Dean of the
College of Physical Therapy was for a term of three years.
Hence, when her appointment as College Dean was no longer
renewed on June 1, 2005 or after her three-year term had
expired, it cannot be said that there was a demotion or that
she was dismissed. Her term as Dean had expired and she can
no longer claim to be entitled to the benefits emanating from
such office.
On the issue of alleged lack of jurisdiction, the CA observed
that respondent never raised the issue of jurisdiction before
the Labor Arbiter and the NLRC and respondent even actively
25
participated in the proceedings below. Hence, respondent is
estopped from questioning the jurisdiction of the labor
tribunals.
Unsatisfied, both petitioner and respondent sought
reconsideration of the CA decision. Petitioner prayed for the
reversal of the ruling that there was no constructive dismissal.
Respondent meanwhile maintained that the labor tribunals
have no jurisdiction over the case, petitioner being a corporate
officer.
On March 29, 2010, the CA issued the assailed Amended
Decision[23] setting aside its earlier ruling. This time the CA
held that the position of a College Dean is a corporate office
and therefore the labor tribunals had no jurisdiction over the
complaint for constructive dismissal. The CA noted that
petitioner's appointment as Dean of the College of Physical
Therapy was approved by the respondent's board of directors
thereby concluding that the position of a College Dean is a
corporate office. Also, the CA held that the College Director
mentioned in respondent's by-laws is the same as a College
Dean and no one has ever been appointed as College Director.
The CA added that in the Administrative Manual the words
"college" and "department" were used in the same context in
the section on the Duties and Responsibilities of the College
Dean, and that there could not have been any other "head of
department" being alluded to in the by-laws but the college
dean.
The dispositive portion of the Amended Decision reads:
WHEREFORE, in view of the foregoing, We reconsider Our
Decision on October [22], 2009, and declare that the position
of College Dean is a corporate office of Petitioner [Liceo de
Cagayan University], thereby divesting the Labor Arbiter and
the National Labor Relations Commission of jurisdiction over
the instant case. Hence, the Resolutions of the Public
Respondent dated September 25, 2007 and June 30, 2008 as
well as that of the Regional Labor Arbiter dated 29 September
2006 are VACATED and SET ASIDEas they were rendered by
tribunals that had no jurisdiction over the case.
SO ORDERED.[24]
Petitioner filed a motion for reconsideration from the above
decision, but her motion was denied by the CA in its
Resolution[25] dated September 14, 2010. Hence, petitioner
filed the present petition.
Petitioner argues that the CA erred in ruling that she was a
corporate officer and asserts that the CA's previous finding that
she was respondent's employee is more in accord with law and
jurisprudence. Petitioner adds that the appellate court erred
when it ruled that the labor tribunals had no jurisdiction over
her complaint for illegal dismissal against respondent. She
faults the CA for allowing respondent to raise the issue of
jurisdiction in a Supplemental Petition after respondent has
actively participated in the proceedings before the labor
tribunals. Petitioner also asserts that the CA erred in denying
her motion for reconsideration from its Amended Decision on
the ground that it is a second motion for reconsideration which
is a prohibited pleading. Lastly, petitioner claims that
respondent violated the rule against forum shopping when it
failed to inform the CA of the pendency of the complaint for
breach of contract which it filed against petitioner before the
Regional Trial Court of Misamis Oriental, Branch 23.
Respondent, for its part, counters that the petition was filed
out of time and petitioner's motion for reconsideration from
the Amended Decision was a prohibited pleading since
petitioner has already filed a motion for reconsideration from
the original decision of the CA. It is respondent's posture that
an Amended Decision is not really a new decision but the
appellate court's own modification of its prior decision. More
importantly, respondent points out that the arguments raised
by petitioner do not justify a reversal of the Amended Decision
of the appellate court. Respondent insists on the correctness of
the Amended Decision and quotes the assailed decision in its
entirety.
Issue
The decisive issue in the present petition is whether petitioner
was an employee or a corporate officer of respondent
university. Resolution of this issue resolves the question of
whether the appellate court was correct in ruling that the
Labor Arbiter and the NLRC had no jurisdiction over petitioner's
complaint for constructive dismissal against respondent.
Our Ruling
We grant the petition.
Prefatorily, we first discuss the procedural matter raised by
respondent that the present petition is filed out of time.
Respondent claims that petitioner's motion for reconsideration
from the Amended Decision is a second motion for
reconsideration which is a prohibited pleading. Respondent's
assertion, however, is misplaced for it should be noted that the
CA's Amended Decision totally reversed and set aside its
previous ruling. Section 2, Rule 52 of the 1997 Rules of Civil
Procedure, as amended, provides that no second motion for
reconsideration of a judgment or final resolution by the same
party shall be entertained. This contemplates a situation where
a second motion for reconsideration is filed by the same party
assailing the same judgment or final resolution. Here, the
motion for reconsideration of petitioner was filed after the
appellate court rendered an Amended Decision totally
reversing and setting aside its previous ruling. Hence,
petitioner is not precluded from filing another motion for
reconsideration from the Amended Decision which held that
the labor tribunals lacked jurisdiction over petitioner's
complaint for constructive dismissal. The period to file an
appeal should be reckoned not from the denial of her motion
for reconsideration of the original decision, but from the date
of petitioner's receipt of the notice of denial of her motion for
reconsideration from the Amended Decision. And as petitioner
received notice of the denial of her motion for reconsideration
from the Amended Decision on September 23, 2010 and filed
her petition on November 8, 2010, or within the extension
26
period granted by the Court to file the petition, her petition
was filed on time.
Now on the main issue.
As a general rule, only questions of law may be allowed in a
petition for review on certiorari.[26] Considering, however, that
the CA reversed its earlier decision and made a complete
turnaround from its previous ruling, and consequently set aside
both the findings of the Labor Arbiter and the NLRC for
allegedly having been issued without jurisdiction, it is
necessary for the Court to reexamine the records and resolve
the conflicting rulings.
After a careful review and examination of the records, we find
that the CA's previous ruling that petitioner was respondent's
employee and not a corporate officer is supported by the
totality of the evidence and more in accord with law and
prevailing jurisprudence.
Corporate officers are elected or appointed by the directors or
stockholders, and are those who are given that character
either by the Corporation Code or by the corporation's by-
laws.[27] Section 25[28] of the Corporation Code enumerates
corporate officers as the president, the secretary, the treasurer
and such other officers as may be provided for in the by-laws.
In Matling Industrial and Commercial Corporation v.
Coros,[29] the phrase "such other officers as may be provided
for in the by-laws" has been clarified, thus:
Conformably with Section 25, a position must be expressly
mentioned in the By-Laws in order to be considered as
a corporate office. Thus, the creation of an office pursuant
to or under a By-Law enabling provision is not enough to make
a position a corporate office. Guerrea v. Lezama, the first
ruling on the matter, held that the only officers of a
corporation were those given that character either by
the Corporation Code or by the By-Laws; the rest of the
corporate officers could be considered only as
employees of subordinate officials. Thus, it was held
in Easycall Communications Phils., Inc. v. King:
An "office" is created by the charter of the
corporation and the officer is elected by the directors or
stockholders. On the other hand, an employee occupies no
office and generally is employed not by the action of the
directors or stockholders but by the managing officer of
the corporation who also determines the compensation
to be paid to such employee. (Emphasis supplied)
In declaring petitioner a corporate officer, the CA considered
respondent's by-laws and gave weight to the certifications of
respondent's secretary attesting to the resolutions of the board
of directors appointing the various academic deans for the
School Years 1991-2002 and 2002-2005, including petitioner.
However, an assiduous perusal of these documents does not
convince us that petitioner occupies a corporate office position
in respondent university.
The relevant portions of respondent's by-laws[30] are hereby
quoted as follows: Ma. Mercedes Vivares
2,660.00
Physical Therapy
Article III
xxxx
The Board of Directors

Sec. 3. The Board of Directors shall appoint a College Director,

RESOLVE, as it is hereby resolved, that pursuant to Section
define his powers and duties, and determine his compensation;
3[,] Article III and Section 1[,] Article V of the Corporation's
approve or disapprove recommendations for appointment or
By-laws, the various academic deans for the school years
dismissal of teachers and employees submitted to it by the
2002-2005 of the University, as recommended by the President
College Director; and exercise other powers and perform such
of the Corporation, are hereby appointed, whose names are
duties as may be required of it hereafter for the proper
enumerated hereunder and their respective colleges and their
functioning of the school.
honoraria are indicated opposite their names, all of them
having a three (3) year term, to wit:
x x x x

Name and College

Article IV
Honorarium
Officers
Ma. Mercedes Vivares
Sec. 1. The officers of the corporation shall consist of 2,450.00
a President, a Vice President, and a Secretary- Physical Therapy
Treasurer, who shall be chosen from the directors and by the
directors themselves. They shall be elected annually at the first x x x x[32]
meeting of the directors immediately after their election, and
shall hold office for one (1) year and until their successors are
In respondent's by-laws, there are four officers specifically
elected and qualified.
mentioned, namely, a president, a vice president, a secretary
and a treasurer. In addition, it is provided that there shall be
x x x x
other appointive officials, a College Director and heads of
departments whose appointments, compensations, powers and
duties shall be determined by the board of directors. It is
Article V worthy to note that a College Dean is not among the corporate
Other Appointive Officials officers mentioned in respondent's by-laws. Petitioner, being
an academic dean, also held an administrative post in the
university but not a corporate office as contemplated by law.
Sec. 1. The Liceo de Cagayan shall have a College Petitioner was not directly elected nor appointed by the board
Director and such heads of departments as may exist in the of directors to any corporate office but her appointment was
said college whose appointments, compensations, powers and merely approved by the board together with the other
duties shall be determined by the Board of academic deans of respondent university in accordance with
Directors.[31] (Emphasis supplied) the procedure prescribed in respondent's Administrative
Manual.[33] The act of the board of directors in approving the
On the other hand, the pertinent portions of the two board appointment of petitioner as Dean of the College of Therapy
resolutions appointing the various academic deans in the did not make her a corporate officer of the corporation.
university including petitioner, read as follows:
Moreover, the CA, in its amended decision erroneously equated
x x x x the position of a College Director to that of a College Dean
thereby concluding that petitioner is an officer of respondent.
RESOLVE, as it is hereby resolved, that pursuant to Section
3[,] Article III and Section 1[,] Article V of the Corporation's It bears stressing that the appointive officials mentioned in
By-laws, the various academic deans for the school years Article V of respondent's by-laws are not corporate officers
1999-2002 of the University, as recommended by the President under the contemplation of the law. Though the board of
of the Corporation, are hereby appointed, whose names are directors may create appointive positions other than the
enumerated hereunder and their respective colleges and their positions of corporate officers, the persons occupying such
honoraria are indicated opposite their names, all of them positions cannot be deemed as corporate officers as
having a three (3) year term, to wit: contemplated by Section 25 of the Corporation Code. On this
point, the SEC Opinion dated November 25, 1993 quoted in
the case of Matling Industrial and Commercial Corporation v.
Coros,[34] is instructive:
Name and College
Honorarium

27
Thus, pursuant to the above provision (Section 25 of the
Corporation Code), whoever are the corporate officers
enumerated in the by-laws are the exclusive Officers of the
corporation and the Board has no power to create other
Offices without amending first the corporate By-laws.
However, the Board may create appointive positions
other than the positions of corporate Officers, but the
persons occupying such positions are not considered as
corporate officers within the meaning of Section 25 of
the Corporation Code and are not empowered to
exercise the functions of the corporate Officers, except
those functions lawfully delegated to them. Their functions and
duties are to be determined by the Board of
Directors/Trustees.
But even assuming that a College Director may be considered
a corporate officer of respondent, a review of the records as
well as the other documents submitted by the parties fails to
persuade that petitioner was the "College Director" mentioned
in the by-laws of respondent. Nowhere in petitioner's
appointment letter was it stated that petitioner was designated
as the College Director or that petitioner was to assume the
functions and duties of a College Director. Neither can it be
inferred in respondent's by-laws that a dean of a college is the
same as a College Director of respondent. Respondent's lone
surviving incorporating director Yolanda Rollo even admitted
that no College Director has ever been appointed by
respondent. In her affidavit, Yolanda also explained the
reason for the creation of the position of a College Director, to
wit:
4. At the time we signed the By-Laws of the Corporation, we,
as directors, did envision to form only a college of law as that
was the main thrust of our president, the late Atty. Rodolfo N.
Pelaez. The original plan then was to have a "College Director"
as the head of the college of law and below him within the
college were heads of departments. The appointments,
remuneration, duties and functions of the "College Director"
and the heads of departments were to be approved by the
Board of Directors. x x x[35]
Notably, the CA has sufficiently explained why petitioner could
not be considered a College Director in its previous decision.
The appellate court explained:
True, the By-Laws of [Liceo de Cagayan University] provides
that there shall be a College Director. This means a College
Director is a corporate officer. However, contrary to the
allegation of petitioner, the position of Dean does not appear
to be the same as that of a College Director.
Aside from the obvious disparity in name, the By-Laws of
[Liceo de Cagayan University] provides for only one College
Director. But as shown by [Liceo de Cagayan University]
itself, numerous persons have been appointed as Deans.
They could not be the College Director contemplated by the
By-Laws inasmuch as the By-Laws authorize only the
appointment of one not many. If it is indeed the intention
of [Liceo de Cagayan University] to give its many
28
Deans the rank of College Director, then it exceededthe
authority given to it by its By-Laws because only one
College Director is authorized to be appointed. It must
amend its By-Laws. Prior to such amendment, the office of
[the] College Dean is not a corporate office.
Another telling sign that a College Director is not the same as
a Dean is the manner of appointment. A College Director is
directly appointed by the Board of Directors. However, a
College Dean is appointed by the President upon the
recommendation of the Vice President for Academic Affairs and
the Executive Vice President and approval of the Board of
Directors. There is a clear distinction on the manner of
appointment indicating that the offices are not one and the
same.[36](Additional emphasis supplied)
Undoubtedly, petitioner is not a College Director and she is not
a corporate officer but an employee of respondent. Applying
the four-fold test concerning (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the power of
dismissal; (4) the employer's power to control the employee
with respect to the means and methods by which the work is
to be accomplished, it is clear that there exists an employer-
employee relationship between petitioner and respondent.
Records show that petitioner was appointed to her position as
Dean by Dr. Golez, the university president and was paid a
salary of P32,500 plus transportation allowance. It was evident
that respondent had the power of control over petitioner as
one of its deans. It was also the university president who
informed petitioner that her services as Dean of the College of
Physical Therapy was terminated effective March 31, 2005 and
she was subsequently directed to report to the Acting Dean of
the College of Nursing for assignment of teaching load.
Thus, petitioner, being an employee of respondent, her
complaint for illegal/constructive dismissal against respondent
was properly within the jurisdiction of the Labor Arbiter and
the NLRC. Article 217 of the Labor Code provides:
ART. 217. Jurisdiction of Labor Arbiters and the
Commission. (a) Except as otherwise provided under this
Code, the Arbiters shall have original and exclusive jurisdiction
to hear and decide xxx the following cases involving all
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wage, rates of pay, hours of
work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters.
xxxx
Moreover, we agree with the CA's earlier pronouncement that
since respondent actively participated in the proceedings
before the Labor Arbiter and the NLRC, it is already estopped
from belatedly raising the issue of lack of jurisdiction. In this
case, respondent filed position papers and other supporting
documents to bolster its defense before the labor tribunals but
in all these pleadings, the issue of lack of jurisdiction was
never raised. It was only in its Supplemental Petition filed
before the CA that respondent first brought the issue of lack of
jurisdiction. We have consistently held that while jurisdiction
may be assailed at any stage, a party's active participation in
the proceedings will estop such party from assailing its
jurisdiction. It is an undesirable practice of a party participating
in the proceedings and submitting his case for decision and
then accepting the judgment, only if favorable, and attacking it
for lack of jurisdiction, when adverse.[37]
Under Section 6, Rule 10 of the 1997 Rules of Civil Procedure,
as amended, governing supplemental pleadings, the court
"may" admit supplemental pleadings, such as the supplemental
petition filed by respondent before the appellate court, but the
admission of these pleadings remains in the sound discretion
of the court. Nevertheless, we have already found no credence
in respondent's claim that petitioner is a corporate officer,
consequently, the alleged lack of jurisdiction asserted by
respondent in the supplemental petition is bereft of merit.
On the issue of constructive dismissal, we agree with the Labor
Arbiter and the appellate court's earlier ruling that petitioner
was not constructively dismissed. Petitioner's letter of
appointment specifically appointed her as Dean of the College
of Physical Therapy and Doctor-in-Charge of the Rehabilitation
Clinic "for a period of three years effective July 1, 2002 unless
sooner revoked for valid cause or causes." Evidently,
petitioner's appointment as College Dean was for a fixed term,
subject to reappointment and revocation or termination for a
valid cause. When respondent decided to close its College of
Physical Therapy due to drastic decrease in enrollees,
petitioner's appointment as its College Dean was validly
revoked and her subsequent assignment to teach in the
College of Nursing was justified as it is still related to her
scholarship studies in Physical Therapy.
As we observed in Brent School, Inc. v. Zamora,[38] also cited
by the CA, it is common practice in educational institutions to
have fixed-term contracts in administrative positions, thus:
Some familiar examples may be cited of employment contracts
which may be neither for seasonal work nor for specific
projects, but to which a fixed term is an essential and natural
29
appurtenance: overseas employment contracts, for one, to
which, whatever the nature of the engagement, the concept of
regular employment with all that it implies does not appear
ever to have been applied, Article 280 of the Labor Code
notwithstanding; also appointments to the positions of dean,
assistant dean, college secretary, principal, and other
administrative offices in educational institutions, which are by
practice or tradition rotated among the faculty members, and
where fixed terms are a necessity without which no reasonable
rotation would be possible. x x x (Emphasis supplied)
In constructive dismissal cases, the employer has the burden
of proving that its conduct and action or the transfer of an
employee are for valid and legitimate grounds such as genuine
business necessity.[39] Particularly, for a transfer not to be
considered a constructive dismissal, the employer must be able
to show that such transfer is not unreasonable, inconvenient,
or prejudicial to the employee. In this case, petitioner's
transfer was not unreasonable, inconvenient or prejudicial to
her. On the contrary, the assignment of a teaching load in the
College of Nursing was undertaken by respondent to
accommodate petitioner following the closure of the College of
Physical Therapy. Respondent further considered the fact that
petitioner still has two years to serve the university under the
Scholarship Contract.
Petitioner's subsequent transfer to another department or
college is not tantamount to demotion as it was a valid
transfer. There is therefore no constructive dismissal to speak
of. That petitioner ceased to enjoy the compensation,
privileges and benefits as College Dean was but a logical
consequence of the valid revocation or termination of such
fixed-term position. Indeed, it would be absurd and unjust for
respondent to maintain a deanship position in a college or
department that has ceased to exist. Under the circumstances,
giving petitioner a teaching load in another
College/Department that is related to Physical Therapy -- thus
enabling her to serve and complete her remaining two years
under the Scholarship Contract -- is a valid exercise of
management prerogative on the part of respondent.
Lastly, as to whether respondent was guilty of forum shopping
when it failed to inform the appellate court of the pendency of
Civil Case No. 2009-320, a complaint for breach of contract
filed by respondent against petitioner, we rule in the negative.
Forum shopping exists when the elements of litis pendentia are
present or where a final judgment in one case will amount
to res judicata in another. Litis pendentia requires the
concurrence of the following requisites: (1) identity of parties,
or at least such parties as those representing the same
interests in both actions; (2) identity of rights asserted and
reliefs prayed for, the reliefs being founded on the same facts;
and (3) identity with respect to the two preceding particulars
in the two cases, such that any judgment that may be
rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case. [40]
While there is identity of parties in the two cases, the causes
of action and the reliefs sought are different. The issue raised
in the present case is whether there was constructive dismissal
committed by respondent. On the other hand, the issue in the
civil case pending before the RTC is whether petitioner was
guilty of breach of contract. Hence, respondent is not guilty of
forum shopping.

WHEREFORE, the petition for review on certiorari

is GRANTED. The Amended Decision dated March 29, 2010
and Resolution dated September 14, 2010 of the Court of
Appeals in CA-G.R. SP No. 02508-MIN are hereby SET ASIDE.
The earlier Decision dated October 22, 2009 of the Court of
Appeals in said case is REINSTATED and UPHELD.

No pronouncement as to costs.

SO ORDERED.

30
FIRST DIVISION Milan. The complaint was docketed as Civil Case No. Q-00-
40010 in the RTC of Quezon City, Branch 226.

PCI LEASING and G.R. No. 151215

FINANCE, INC., PCI Leasing alleged that it extended loans to
respondents on September 4, 1997, September 26,
Petitioner,
Present: 1997 and November 5, 1997, for which Deeds of
Assignment[7] were duly executed by respondents. Under the
terms of the Deeds, respondents sold, assigned and
PUNO, C.J., transferred to PCI Leasing the formers rights to various checks
- versus - for and in consideration of the various amounts obtained. In
Chairperson, case of default or nonpayment of the checks, respondents
CARPIO MORALES, were obligated to pay the face value of the checks, interests
and late payment charges. Subsequently, when PCI Leasing
LEONARDO-DE CASTRO, presented the checks for payment, the same were dishonored
ANTONIO C. MILAN, for different reasons, i.e., Payment Stopped,[8] Drawn Against
BERSAMIN, and
Doing Business Under Insufficient Funds,[9] and Account Closed.[10] Despite repeated
the Name and Style of VILLARAMA, JR., JJ. demands, respondents failed to settle their obligation, which
A. MILAN TRADING, amounted to P2,327,833.33 as of January 15, 2000. PCI
and LAURA M. MILAN, Leasing was then compelled to litigate to enforce payment of
April 5, 2010 the total loan obligation, plus interests, penalties, attorneys
Respondents.
fees, expenses of litigation and costs of suit.

Promulgated:
On March 2, 2000, the RTC issued summons[11] to
_____________________ respondents, addressed to their place of residence as stated in
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - the complaint, which is at No. 47 San Ildefonso
- - - - - - - - - -x Drive, Torres Village, Novaliches, Quezon City.

On March 10, 2000, the process server of the RTC

filed his Officers Return,[12] stating that he went to the
DECISION aforementioned address on two occasions to serve the
summons and the copy of the complaint to the respondents. At
both times, however, the process server was told by the
people he encountered there that respondents had already
LEONARDO DE CASTRO, J.: transferred to an unknown location. The summons and the
copy of the complaint were, thus, returned unserved.

This Petition for Review on Certiorari[1] under Rule 45

of the Rules of Court is directed against the Resolutions of the
Court of Appeals dated September 20, 2001[2] and December
20, 2001[3] in CA-G.R. SP No. 66546. The Resolution dated
September 20, 2001 of the Court of Appeals dismissed the
Petition for Certiorari filed by herein petitioner, which assailed
the Resolution[4] dated August 3, 2001 of the Regional Trial
Court (RTC) of Quezon City, Branch 226, in Civil Case No. Q-
00-40010, dismissing the appeal of herein petitioner for having
been taken out of time. The Motion for Reconsideration of the
September 20, 2001 Resolution was denied by the Court of
Appeals in the Resolution dated December 20,
2001. Furthermore, the instant petition seeks the reversal of
the Order[5] dated October 13, 2000 of the RTC in Civil Case
No. Q-00-40010, which dismissed the complaint filed by
petitioner against the herein respondents.
In view of the above situation, PCI Leasing filed
on April 10, 2000 a Motion to Archive[13] Civil Case No. Q-00-
40010, asserting that it was then conducting an investigation
in order to ascertain the whereabouts of the respondents. PCI
Leasing prayed that the case be archived, subject to its
reinstatement after the whereabouts of the respondents was
determined.
In an Order[14] dated April 13, 2000, the RTC denied
the Motion to Archive given that the circumstances of the case
were not within the purview of the provisions of paragraph II
(c) of Administrative Circular No. 7-A-92 (Guidelines in the
Archiving of Cases),[15] which read:

In civil cases, the court may motu

The instant case was commenced on February 18, proprio or upon motion, order that a civil
2000, upon the filing of a Complaint for Sum of Money[6] by case be archived only in the following
petitioner PCI Leasing and Finance, Inc. (PCI Leasing) against instances:
herein respondents Antonio C. Milan (Antonio) and Laura M. xxxx

31
 c) When defendant, without fault or neglect
of plaintiff, cannot be served with summons
within six (6) months from issuance of
original summons.
Subsequently, on July 13, 2000, the RTC issued an
Order,[16] directing PCI Leasing to take the necessary steps to
actively prosecute the instant case within ten days from receipt
under pain of dismissal of the case for lack of interest.
On July 31, 2000, PCI Leasing filed a Motion for
Issuance of Alias Summons.[17] Said motion was, however,
denied by the RTC via an Order[18] dated August 3, 2000 on
the ground that the same was a mere scrap of paper for
apparently containing a defective notice of hearing.[19]
On September 5, 2000, PCI Leasing filed another
Motion for Issuance of Alias Summons,[20] which the RTC
scheduled for hearing on October 13, 2000.[21] During the
hearing of the motion on said date, there was no appearance
from both counsels of PCI Leasing and
respondents.[22] Accordingly, the RTC issued an Order
dated October 13, 2000 in Civil Case No. Q-00-40010,
declaring thus:
When this case was called for
hearing on the Motion for Issuance of Alias
Summons, there was no appearance for [PCI
Leasing]. It should be recalled that as early
as July 13, 2000, [PCI Leasing] had been
ordered to take the necessary steps to
actively prosecute this case, otherwise, the
same shall be dismissed. In view of the
absence of the counsel for [PCI
Leasing] today, the case is hereby
DISMISSED.[23] (Emphasis ours.)
PCI Leasing sought a reconsideration[24] of the above
Order, explaining that its counsel was already in the courtroom
when Judge Leah S. Domingo-Regala of the RTC was dictating
the order of dismissal. Allegedly, the counsel of PCI Leasing
even expressed profuse apologies to the trial court for his late
appearance. PCI Leasing prayed that the order of dismissal be
reconsidered and the second Motion for Issuance of Alias
Summons be considered submitted for resolution.
In a Resolution[25] dated January 4, 2001, the RTC
denied the Motion for Reconsideration. After briefly
summarizing the incidents of the case before it, the trial court
declared that:
32
[I]t is clear that [PCI Leasing] had been
remiss in its duty to prosecute this case
diligently.
The Court has already given [PCI
Leasing] several chances within a span of
almost one (1) year to prosecute the instant
case but [PCI Leasing] failed to do so.
If only to serve as a lesson to
[PCI Leasing] to be more considerate
of the time and resources of the Court,
the Court resolves to DENY the instant
motion for reconsideration.
WHEREFORE, premises considered,
the Motion for Reconsideration is DENIED,
for lack of merit. (Emphases ours.)
On January 26, 2001, PCI Leasing filed an Ex
Parte Motion for Reconsideration,[26] once more seeking a
reconsideration of the dismissal of its case.Given the alleged
amount of the respondents liability, PCI Leasing stressed that
it had a valid cause of action against the former and it never
lost interest in the prosecution of its case. PCI Leasing then
implored the RTC to revisit the Order dated October 13,
2000 and the Resolution dated January 4, 2001 to make the
dismissal without prejudice, in order for PCI Leasing to
maintain its right to re-file its legal claim against respondents.
The RTC denied the Ex Parte Motion for
Reconsideration in a Resolution[27] dated April 6, 2001. The
trial court observed, inter alia, that the Ex ParteMotion was
already the second motion for reconsideration filed by PCI
Leasing. Also, the RTC made mention of the provisions of
Section 3, Rule 17[28] of the Rules of Court relating to the
dismissal of a case due to the fault of a plaintiff.
On May 11, 2001, PCI Leasing filed a Notice of
Appeal[29] in an attempt to challenge the Order dated October
13, 2000 of the RTC, as well as the Resolutions dated January
4, 2001 and April 6, 2001. The Notice of Appeal recited, thus:
NOTICE OF APPEAL
Plaintiff, through counsel, to this Honorable
Court respectfully gives notice that it is
appealing to the Honorable Court of Appeals
its 13 October 2000 Order received on 13
November 2000 which dismissed the case,
its 04 January 2001 Resolution received
on 17 January 2001 denying the Motion for
Reconsideration dated 17 October 2000 and
 its 06 April 2001 Resolution received on
03 May 2001 denying the Ex-parte Motion
for Reconsideration dated 23 January 2001,
on the ground that said Order and
Resolutions are contrary to the applicable
laws and jurisprudence on the
matter. (Emphases ours.)
On August 3, 2001, the RTC rendered a Resolution
dismissing the Notice of Appeal, given that the same was filed
beyond the reglementary period, to wit:
At any rate, the Notice of Appeal was filed
late. Record shows that the Resolution
of January 4, 2001 [which denied the Motion
for Reconsideration of the Order
dated October 13, 2000, dismissing Civil
Case No. Q-00-40010] was received by [the
counsel of PCI Leasing] on January 17,
2001. On January 26, 2001 (or on the
9th day from receipt of the Resolution
of January 4, 2001), [PCI Leasing] filed
its Ex-Parte Motion for
Reconsideration. On April 6, 2001, the Court
issued a Resolution denying the Ex-Parte
Motion for Reconsideration. The Resolution
of April 6, 2001 was received by [the counsel
of PCI Leasing] on May 3, 2001.
Thus [PCI Leasing] had only seven
(7) days from receipt of the Resolution
of April 6, 2001 within which to file the
Notice of Appeal, or up to May 10,
2001. The Notice of Appeal was filed
on May 11, 2001.[30] (Emphases ours.)
Quoting the pertinent doctrines on the finality of
judgments, the RTC underlined that:
On this score, the Hon. Supreme
Court has time and again emphasized that
an award or judgment becomes final and
executory upon the expiration of the period
to appeal and no appeal was made within
the reglementary period. The basic rule of
finality of judgment is applicable
indiscriminately to one and all since the rule
is grounded on fundamental considerations
of public policy and sound practice that at
the risk of occasional error, the judgments of
courts must become final at some definite
date fixed by law. (Alto Sales Corporation vs.
IAC, 197 SCRA 618)
33
Although in a few instances, the
court had disregarded procedural lapses so
as to give due course to appeals beyond the
reglementary period, the court did so on the
basis of strong and compelling reasons, such
as serving the ends of justice and preventing
a grave miscarriage thereof. (Vide Retoni, Jr.
vs. CA, 218 SCRA 468)
Thus, the perfection of an appeal
within the reglementary period fixed by the
rules is mandatory and jurisdictional and the
failure to do so renders the questioned
decision final and executory that deprives
the appellate court of jurisdiction to alter the
final judgment much less to entertain the
appeal. (De Castro, Jr. vs. CA, 158 SCRA
288.)[31]
The RTC decreed, thus:
WHEREFORE, the Notice of Appeal
is DISMISSED, for having been taken
out of time.[32] (Emphasis ours.)
Without filing a Motion for Reconsideration, PCI
Leasing assailed the above Resolution before the Court of
Appeals through a Petition for Certiorariunder Rule 65 of the
Rules of Court, which was docketed as CA-G.R. SP No.
66546.
The appellate court, however, dismissed outright the
aforesaid petition in a Resolution dated September 20, 2001,
holding:
This is a petition for certiorari
seeking to set aside the Resolutions of
respondent Judge dismissing the appeal of
[PCI Leasing] for having been taken out of
time.
Section 13, Rule 41 of the 1997
Rules of Civil Procedure provides that the
trial court may, motu proprio or on motion,
dismiss the appeal for having been taken out
of time.
Settled is the rule that the
perfection of an appeal in the manner and
within the period permitted by law is not
only mandatory, but jurisdictional and the
 failure to perfect that appeal renders
the judgment of the court final and
executory. Moreover, the notice of appeal
filed by [PCI Leasing] states that it is
appealing the assailed Order and resolutions
to the Court of Appeals on the ground that
the same are contrary to the applicable laws
and jurisprudence on the matter. In Reyes
vs. Zamora, it was pointed out that when
one alleges that an order is contrary to law
and jurisprudence, plain common sense
dictates that the order is being attacked on
question of law. Section 2(c), Rule 41 of the
1997 Rules of Civil Procedure provides
that in all cases where only questions of
law are raised or involved, the appeal
shall be to the Supreme Court by
petition for review on certiorari in
accordance with Rule 45. (Emphases
ours.)
WHEREFORE, the petition
is DISMISSED for lack of
merit.[33] (Emphases ours, citations omitted.)
Petitioner filed a Motion for Reconsideration[34] of the
aforementioned Court of Appeals Resolution but the same was
denied in a Resolution issued on December 20, 2001, to wit:
[The motion for reconsideration of
PCI Leasing] dated September 20,
2001 must be denied for lack of merit.
Admittedly, the filing of the notice
of appeal was late by one day. Moreover,
[PCI Leasing] has not disputed that as stated
in the notice of appeal, it is appealing the
assailed Orders and Resolutions of
respondent Judge to this Court on the
ground that the same are contrary to the
applicable law and jurisprudence and,
therefore, this Court has no jurisdiction over
the intended appeal as only questions of law
would be raised therein.
WHEREFORE, the motion for
reconsideration is DENIED for lack of
merit.[35]
On January 16, 2002, PCI Leasing elevated this case
to the Court by way of the instant Petition for Review
on Certiorari under Rule 45 of the Rules of Court.
34
On February 4, 2002, the Court resolved[36] to require
the respondents to comment on the petition within ten days
from notice. This resolution was sent to the address of
respondents set forth in the petition, which is at No. 47 San
Ildefonso Drive, Torres Village, Novaliches, 1100 Quezon
City. The same, however, was returned unserved with the
postmasters notation RTS moved. We, thereafter, directed PCI
Leasing to inform the Court of the correct address of the
respondents within ten days from notice, or else the petition
would be dismissed.[37]
On July 10, 2002, PCI Leasing submitted its
Compliance,[38] stating that the respondents new address is
at Vista Verde North Executive Village,
Kaybiga, Caloocan City. On January 31, 2003, the Court
Resolution dated February 4, 2002 was sent again to the new
address.[39]
Considering that respondents still failed to file their comment
to the petition within the period required therefor, the Court
issued a Resolution[40] dated May 17, 2004, ordering
respondent Antonio[41] to (a) SHOW CAUSE why he should
not be held in contempt of court for such failure, and
(b) COMPLY with the said resolution of February 4, 2002,
both within ten days from notice hereof.
The above resolution was apparently not complied with as
well. Thus, in a Resolution[42] dated August 18, 2004, the Court
imposed a fine of P1,000.00 against Antonio, payable to the
Court within ten days from notice. If the fine is not paid within
said period, a penalty of imprisonment of five days would
instead be imposed. Antonio was also required to file a
comment to the petition filed by PCI Leasing within ten days
from notice. The said Resolution was once more returned
unserved, with the postmasters notation RTS, Mr. Antonio
Milan, unknown; Ms. Laura Milan, deceased; ML Merchandising
PG Dealer refused to received.[43]
Accordingly, we again required[44] PCI Leasing to notify this
Court of the correct address of Antonio within a non-extendible
period of ten days from notice; otherwise, the case will be
dismissed.
On January 27, 2005, PCI Leasing filed its
Compliance,[45] stating that it sent its Credit
Investigator/Appraiser to the place where Antonio was
reportedly maintaining his business, M.L. Merchandising PG
Dealer, at Gen. Luis Street, Novaliches, Quezon City to
determine the address of said respondent. The person found in
the store at the said address allegedly refused to reply to
inquiries made or to reveal his identity to the Credit
Investigator/Appraiser.
On February 28, 2005, the Court ordered[46] that copies of the
Resolutions dated February 4, 2002, May 17, 2004 and August
18, 2004 be sent to respondent Antonio at the address stated
in the Compliance filed by PCI Leasing. The same were also
returned unserved with the postmasters notation RTS-refused PCI Leasing thereafter filed its Reply[57] on May 22, 2006.
to accept. On June 27, 2005, the Court resolved:

In the Resolution[58] dated June 14, 2006, we decided to give

(a) to let the said copies of the resolutions due course to the petition and required both parties to submit
of February 4, 2002, May 17, their respective memoranda within 30 days from notice. PCI
2004 and August 18, 2004 be DEEMED Leasing and Antonio filed their memoranda, respectively,
SERVED on respondent Milan; on August 17, 2006[59] and September 15, 2006.[60]

(b) to ISSUE an ALIAS WARRANT OF In its Memorandum, PCI Leasing put forward only one
ARREST against respondent Milan, issue for our resolution, to wit:
directing the NBI to cause his immediate
arrest and to DETAIN him until he
complies with the said resolutions of THE COURT OF APPEALS, IN
February 4, 2002, May 17, 2004 and DISMISSING THE PETITION FILED BY
August 18, 2004; and PETITIONER BEFORE IT AND, IN EFFECT,
DEPRIVING PETITIONER OF ITS RIGHT TO
RECOVER THE SUMS IT HAD LOANED TO
(c) to require the NBI to make THE PRIVATE RESPONDENTS, HAS DECIDED
a RETURN thereof within ten (10) days A QUESTION OF SUBSTANCE IN A
from notice hereof.[47] WAY PROBABLY NOT IN ACCORD WITH THE
APPLICABLE DECISIONS OF THIS
HONORABLE COURT.[61]

On March 24, 2006, Antonio was arrested and detained by the

National Bureau of Investigation (NBI)[48] by virtue of a
Warrant of Arrest[49] issued against him by the Court on June
27, 2005.
On March 28, 2006, Antonio paid[50] the fine earlier imposed
upon him. He likewise filed an Explanation on Failure to File
Comment with Urgent Motion for Immediate Release from
Detention with Prayer for Time to File
Comment,[51] maintaining that he had not received any of the
Resolutions of the Court, hence, the failure to abide by the
same.
In a Resolution[52] dated March 29, 2006, the Court denied
Antonios motion for immediate release from detention and
granted him ten days from notice within which to file his
comment.
On March 30, 2006, Antonio filed an Urgent Motion for
Immediate Release from Detention,[53] as well as a
Compliance[54] with the above resolution, wherein he
incorporated his comment to the petition filed by PCI
Leasing. Antonio also manifested therein that his wife,
respondent Laura M. Milan, passed away on March 15,
2004.[55]
As what it emphasized in the Petition for Certiorari filed before
the Court of Appeals, PCI Leasing likewise brings to the
attention of the Court the details of the so-called procedural
path that was taken by the RTC and the supposed mistakes it
committed along the way.[62] On the basis of its allegations,
PCI Leasing points out that the case it laid out before the
Court of Appeals involved not only questions of law but a
combination of facts and law, such that the said case would
fall within the purview of the appellate courts
jurisdiction. However, PCI Leasing laments that the Court of
Appeals ignored the formers efforts to seek a rectification of
the acts of the RTC. PCI Leasing accuses both the Court of
Appeals and the RTC of defeating its right to recover the sums
of money it had loaned to the respondents simply because it
allegedly committed some procedural lapses in the prosecution
of its case. If the rulings of the Court of Appeals and the RTC
would be allowed to stand, the respondents would allegedly be
enriched by the amounts they had obtained from PCI
Leasing. Although it acknowledges that there was some
measure of breach of procedure on its part, PCI Leasing
contends that the consequence imposed by the Court of
Appeals and the RTC was disproportionate to the breach
committed. Calling for a liberal application of the pertinent
rules of procedure and invoking the inherent equity jurisdiction
of courts, PCI Leasing ultimately prays for the reinstatement of
Civil Case No. Q-00-40010, which it previously filed before the
RTC.

On April 3, 2006, the Court ordered[56] the immediate

release of Antonio from detention at the NBI, unless he was We grant the petition.
otherwise lawfully detained for some other causes. PCI Leasing
was also directed to file a REPLY to the comment within ten
days from notice. The Court of Appeals indeed committed a mistake in
issuing the Resolutions dated September 20,
2001 and December 20, 2001 in CA-G.R. SP No. 66546,

35
which dismissed outright the Petition for Certiorari filed by PCI
Leasing and denied the latters Motion for Reconsideration.
To recall, the Court of Appeals based the dismissal of
the Petition for Certiorari on the fact that (1) the appeal of PCI
Leasing was filed out of time and (2) the Notice of Appeal
supposedly involved pure questions of law.
For purposes of clarity and organization, the Court deems it
proper to address the second of the above grounds first.
The Court of Appeals concluded that the Notice of Appeal
involved pure questions of law on the basis of the statement
therein that the Order dated October 13, 2000, the Resolution
dated January 4, 2001 and the Resolution dated April 6, 2001
of the RTC would be appealed to the Court of Appeals on the
ground that the same were contrary to the applicable laws and
jurisprudence on the matter. The Court of Appeals was of the
opinion that it would not have jurisdiction over the intended
appeal since the same should be raised to the Supreme
Court via a Petition for Review on Certiorari under Rule 45 of
the Rules of Court.
We hold that the Court of Appeals was unreasonably hasty in
inferring its lack of jurisdiction over the intended appeal of PCI
Leasing. The above-stated conclusion of the Court of Appeals
was simply uncalled for, notwithstanding the said statement in
the Notice of Appeal.
Under Rule 41, Section 5 of the Rules of Court, a notice of
appeal is only required to indicate (a) the parties to the appeal,
(b) the final judgment or order or part thereof appealed from,
(c) the court to which the appeal is being taken, and (d) the
material dates showing the timeliness of the appeal. In usual
court practice, a notice of appeal would consist of one or two
pages.
Only after the specific issues and arguments of PCI Leasing are
laid out in detail before the Court of Appeals in the appropriate
substantive pleading can it make a conclusion as to whether or
not the issues raised therein involved pure questions of law.
As regards the ruling of the Court of Appeals that the appeal of
PCI Leasing was filed out of time, the same was in
concurrence with the findings of the RTC that the Notice of
Appeal was filed one day late. On this matter, we hold that the
conclusion of the RTC that PCI Leasing belatedly filed its
appeal was correct, but the premise therefor was evidently
mistaken.
In accordance with Section 3, Rule 41[63] of the Rules of Court,
an ordinary appeal of a judgment by the RTC shall be taken
within fifteen (15) days from notice of the judgment or final
order appealed from. Said period shall be interrupted by a
timely motion for new trial or reconsideration. In Neypes v.
Court of Appeals,[64] the Court had the occasion to clarify the
36
rule regarding the period within which an appeal may be taken
should a motion for new trial or reconsideration be filed. Thus:
To standardize the appeal periods
provided in the Rules and to afford litigants
fair opportunity to appeal their cases, the
Court deems it practical to allow a
fresh period of 15 days within which to
file the notice of appeal in the Regional
Trial Court, counted from receipt of the
order dismissing a motion for a new
trial or motion for reconsideration.
Henceforth, this fresh period rule
shall also apply to Rule 40 governing appeals
from the Municipal Trial Courts to the
Regional Trial Courts; Rule 42 on petitions
for review from the Regional Trial Courts to
the Court of Appeals; Rule 43 on appeals
from quasi-judicial agencies to the Court of
Appeals and Rule 45 governing appeals by
certiorari to the Supreme Court. The new
rule aims to regiment or make the
appeal period uniform, to be counted
from receipt of the order denying the
motion for new trial, motion for
reconsideration (whether full or
partial) or any final order or resolution.
xxxx
To recapitulate, a party litigant may
either file his notice of appeal within 15 days
from receipt of the Regional Trial Courts
decision or file it within 15 days from receipt
of the order (the final order) denying his
motion for new trial or motion for
reconsideration. Obviously, the new 15-day
period may be availed of only if either
motion is filed; otherwise, the decision
becomes final and executory after the lapse
of the original appeal period provided in Rule
41, Section 3. (Emphases ours.)
In the case at bar, PCI Leasing filed a Motion for
Reconsideration of the RTC Order dated October 13,
2000, which dismissed Civil Case No. Q-00-
40010. On January 4, 2001, the RTC rendered a Resolution,
denying the Motion for Reconsideration. Said Resolution was
received by PCI Leasing on January 17, 2001.[65] Therefore,
PCI Leasing should have filed its Notice of Appeal within 15
days from January 17, 2001 or until February 1, 2001. PCI
Leasing actually filed its Notice of Appeal on May 11, 2001 or
114 days after receipt of the Resolution denying its Motion for
Reconsideration.
Contrary to the findings of the RTC, the period within which to
file the Notice of Appeal should not be reckoned from May 3,
2001,[66] the date of receipt of the RTC Resolution dated April
6, 2001, which denied the Ex Parte Motion for Reconsideration
of PCI Leasing.
The aforesaid Ex Parte Motion for Reconsideration was already
the second attempt on the part of PCI Leasing to seek a
reconsideration of the RTC Order dated October 13, 2000,
dismissing Civil Case No. Q-00-40010. It is, thus, in the nature
of a second motion for reconsideration. Under Section 5, Rule
37 of the Rules of Court, such motion for reconsideration is a
prohibited pleading, which does not toll the period within
which an appeal may be taken, to wit:
SEC. 5. Second motion for new
trial. A motion for new trial shall include all
grounds then available and those not so
included shall be deemed waived. A second
motion for new trial, based on a ground not
existing nor available when the first motion
was made, may be filed within the time
herein provided excluding the time during
which the first motion had been pending.
No party shall be allowed a
second motion for reconsideration of a
judgment or final order. (Emphasis ours.)
As PCI Leasing was not able to file the Notice of Appeal within
the reglementary period allowed therefor, the RTC Order
dated October 13, 2000, dismissing Civil Case No. Q-00-
40010, should be deemed final and executory.
Social Security System v. Isip[67] reiterates the well-established
doctrine regarding finality of judgments, thus:
A judgment becomes "final and executory"
by operation of law. Finality becomes a fact
when the reglementary period to appeal
lapses and no appeal is perfected within
such period. As a consequence, no court
(not even this Court) can exercise appellate
jurisdiction to review a case or modify a
decision that has became final.
When a final judgment is executory,
it becomes immutable and unalterable. It
may no longer be modified in any respect
either by the court which rendered it or even
by this Court. The doctrine is founded on
considerations of public policy and sound
practice that, at the risk of occasional errors,
judgments must become final at some
definite point in time.
37
The doctrine of immutability and
inalterability of a final judgment has a two-
fold purpose: (1) to avoid delay in the
administration of justice and thus,
procedurally, to make orderly the discharge
of judicial business and (2) to put an end to
judicial controversies, at the risk of
occasional errors, which is precisely why
courts exist.Controversies cannot drag on
indefinitely. The rights and obligations of
every litigant must not hang in suspense for
an indefinite period of time.
Notwithstanding the doctrine on immutability of final
judgments, the Court finds, after a through review of the
records, that compelling circumstances are extant in this case,
which clearly warrant the exercise of our equity jurisdiction.
Relevantly, Barnes v. Padilla[68] states an exception to the rule
on the finality of judgments in this wise:
However, this Court has relaxed
this rule in order to serve substantial justice
considering (a) matters of life, liberty, honor
or property, (b) the existence of special or
compelling circumstances, (c) the merits of
the case, (d) a cause not entirely attributable
to the fault or negligence of the party
favored by the suspension of the rules, (e) a
lack of any showing that the review sought
is merely frivolous and dilatory, and (f) the
other party will not be unjustly prejudiced
thereby.
Invariably, rules of procedure
should be viewed as mere tools designed to
facilitate the attainment of justice. Their
strict and rigid application, which would
result in technicalities that tend to frustrate
rather than promote substantial justice, must
always be eschewed. Even the Rules of
Court reflects this principle. The power to
suspend or even disregard rules can be so
pervasive and compelling as to alter even
that which this Court itself had already
declared to be final.
In the instant case, the crux of the controversy involves the
property of PCI Leasing, i.e., the sum of money supposedly
owed to it by the respondents. To our mind, it will not serve
the ends of substantial justice if the RTCs dismissal of the case
with prejudice on pure technicalities would be perfunctorily
upheld by appellate courts likewise on solely procedural
grounds, unless the procedural lapses committed were so
gross, negligent, tainted with bad faith or tantamount to abuse
or misuse of court processes.
In this instance, PCI Leasing would be left without any judicial
recourse to collect the amount of P2,327,833.33 it loaned to
the respondents. Corollarily, if PCI Leasing would be forever
barred from collecting the aforesaid amount, respondent
Antonio stands to be unjustly enriched at the expense of PCI
Leasing.
Thus, in order to obviate the occurrence of the above-
mentioned scenario, the Court finds it necessary to subject to
judicial review the RTC Order dated October 13, 2000,
dismissing Civil Case No. Q-00-40010.
Section 3, Rule 17 of the Rules of Court is the applicable rule in
the instant case, which provision reads:
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
motion of the defendant or upon the courts
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.
Gomez v. Alcantara[69] explains that [t]he aforequoted
provision enumerates the instances when a complaint may be
dismissed due to the plaintiff's fault: (1) if he fails to appear on
the date for the presentation of his evidence in chief on the
complaint; (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. The dismissal of a case
for failure to prosecute has the effect of adjudication on the
merits, and is necessarily understood to be with prejudice to
the filing of another action, unless otherwise provided in the
order of dismissal. Stated differently, the general rule is that
dismissal of a case for failure to prosecute is to be regarded as
an adjudication on the merits and with prejudice to the filing of
another action, and the only exception is when the order of
dismissal expressly contains a qualification that the dismissal is
without prejudice.
Furthermore, in Marahay v. Melicor,[70]
we pronounced that
[w]hile a court can dismiss a case on the ground of non
prosequitur, the real test for the exercise of such power is
38
whether, under the circumstances, plaintiff is chargeable with
want of due diligence in failing to proceed with reasonable
promptitude. In the absence of a pattern or scheme to delay
the disposition of the case or a wanton failure to observe the
mandatory requirement of the rules on the part of the plaintiff,
as in the case at bar, courts should decide to dispense with
rather than wield their authority to dismiss.
Guided by the foregoing principles, we find that the RTC
grievously erred in dismissing Civil Case No. Q-00-40010.
According to the RTC Order dated October 13, 2000,
the trial court dismissed the case filed by PCI Leasing in view
of the absence of the latters counsel at the hearing scheduled
for that day. PCI Leasing had also been directed, on July 13,
2000, to take the necessary steps to actively prosecute [its]
case, otherwise, the same shall be dismissed.
To our mind, the above circumstances do not
constitute sufficient bases to warrant the conclusion that PCI
Leasing had lost interest in prosecuting Civil Case No. Q-00-
40010.
In its Motion for Reconsideration of the Order
dated October 13, 2000, PCI Leasing explained that its counsel
merely came late during the hearing scheduled for the said
date, arriving at the time when Judge Domingo-Regala was
already dictating the order of dismissal. Said hearing was not
even for the presentation of the evidence in chief of PCI
Leasing, where the latters presence would be indispensable,
but merely for the issuance of Alias Summons.Incidentally, the
Motion for Issuance of Alias Summons filed by PCI Leasing is
non-litigious in nature, which does not require a hearing under
the Rules, as the same could have been acted upon by the
RTC without prejudicing the rights of the respondents.[71] All
facts necessary for the determination of the motion are already
specified therein or a matter of record and there was yet no
adverse party to dispute the same as the court had not even
acquired jurisdiction over the person of the respondents. It
was serious error on the part of the trial court to have denied
the first motion for issuance of alias summons for want of
notice of hearing. It was also not mandatory for the trial court
to set the second motion for hearing.
Despite this, the RTC still dismissed the case and
eventually denied the Motion for Reconsideration
thereof. While trial courts have the discretion to impose
sanctions on counsels or litigants for tardiness or absence at
hearings, such sanctions should be proportionate to the
offense and should still conform to the dictates of justice and
fair play.
Likewise, only a period of one month has passed
since PCI Leasing was ordered by the RTC to actively pursue
its case, up to the time when Civil Case No. Q-00-40010 was
actually dismissed. It does not escape this Courts notice that
PCI Leasing failed to successfully prosecute the case for
several months due to the difficulties it encountered in locating
respondents, who appeared to have a propensity for changing
addresses and refusing to accept court processes. Under these
circumstances, the delay in the trial court proceedings was not
entirely the fault of PCI Leasing.

Verily, it can hardly be said that PCI Leasing engaged

in a pattern or scheme to delay the disposition of Civil Case
No. Q-00-40010 or committed a wanton failure to observe the
mandatory requirement of the rules.

On this score, Calalang v. Court of

Appeals[72] underscores that [u]nless a party's conduct is so
negligent, irresponsible, contumacious, or dilatory as to
provide substantial grounds for dismissal for non-appearance,
the courts should consider lesser sanctions which would still
amount into achieving the desired end.

WHEREFORE, premises considered, the Petition for

Review on Certiorari under Rule 45 of the Rules of Court
is GRANTED. The assailed Resolutions dated September 20,
2001 and December 20, 2001 of the Court of Appeals in CA-
G.R. SP No. 66546, as well as the Order dated October 13,
2000 and the Resolution dated August 3, 2001 of the Regional
Trial Court of Quezon City, Branch 226, in Civil Case No. Q-00-
40010, are hereby REVERSED and SET ASIDE. Civil Case No.
Q-00-40010 is hereby ordered REINSTATED. No costs.

SO ORDERED.

39
FIRST DIVISION On 31 July 1999, petitioner and respondent entered into an
Agreement wherein petitioner agreed to render rip rapping
construction services at respondents Ampeloquio International
Resort in Ternate, Cavite, for the contract price of P50 million.
On the same day, the parties entered into a second Agreement
for the same construction project, stipulating a contract price
B. D. LONG SPAN G.R. No. 169919 of P30 million, hence bringing the total contract price of the
BUILDERS, INC., project to P80 million. Both Agreements required petitioner to
deposit with respondent a cash bond of one percent (1%) of
Petitioner, Present: the contract price, to be returned to petitioner upon
completion of the project. In compliance, petitioner deposited
with respondent a cash bond amounting to P800,000.
PUNO, C.J.,
Chairperson,
CARPIO, Respondent failed to fulfill its obligations under the
Agreements, resulting in the cancellation of the project.
CORONA, Petitioner demanded the return of the P800,000 cash bond,
- versus -
but respondent refused to do so. Petitioners legal counsel sent
LEONARDO-DE CASTRO,
two (2) demand letters dated 19 April 2002 and 10 May 2002
and
to respondent, but the latter still refused to return
BERSAMIN, JJ. the P800,000 cash bond.

R. S. AMPELOQUIO Promulgated: On 24 September 2002, petitioner (plaintiff) filed with the RTC
REALTY a complaint for rescission of contract and damages against
DEVELOPMENT, INC., respondent (defendant). On 17 October 2002, summons and a
copy of the complaint were served on respondent, through its
Respondent. September 11, 2009
staff member, Romel Dolahoy.[4]
x---------------------------------------------------------------------------
--------------x

Respondent failed to file an Answer or any responsive pleading

to the complaint. Upon motion of petitioner, the RTC issued an
DECISION Order dated 29 November 2002, declaring respondent in
default, and allowing petitioner to present evidence ex parte.

CARPIO, J.:
The Trial Courts Ruling

On 14 January 2003, the RTC rendered a Decision, the

The Case dispositive portion of which reads:

This is a petition for review[1] of the Court of Appeals
Decision[2] dated 14 July 2005 and Resolution dated 30
September 2005 in CA-G.R. CV No. 78259. The Court of
Appeals reversed the Decision[3] dated 14 January 2003 of the
Regional Trial Court of Muntinlupa City, Branch 206 (RTC).
The Antecedent Facts
WHEREFORE, finding preponderance of
evidence in support of the instant complaint,
the same is granted.
Judgment is rendered declaring the aforesaid contracts
entered into by plaintiff with defendant, both dated July 31,
1999 for the rip rapping construction project at the
Ampeloquio International Resort in Ternate, Cavite, as
RESCINDED.

Petitioner B. D. Long Span Builders, Inc. and respondent R. S.

Ampeloquio Realty Development, Inc. are corporations duly Moreover, defendant corporation is ordered to:
organized and existing under the laws of the Republic of the
Philippines.

40
1) Return the amount of P800,000.00 posted by the plaintiff as
cash bond with legal interest accruing thereto from the time of
its demand until fully paid;
2) Pay the plaintiff the amount of P50,000.00 as nominal
damages;
3) Pay the plaintiff the amount of P100,000.00 as exemplary
damages;
4) Pay the plaintiff the amount of P50,000.00 as and by way of
attorney's fees; and
5) Pay the cost of suit in the amount of P10,539.00.
SO ORDERED.[5]
The Court of Appeals Ruling
Upon receipt of the RTC decision, respondent filed a Notice of
Appeal dated 12 February 2003 with the Court of Appeals.
After considering the pleadings filed by petitioner and
respondent, the Court of Appeals rendered judgment[6] which
reversed and set aside the decision of the RTC. The dispositive
portion of the Court of Appeals Decision reads:
WHEREFORE, in view of the
foregoing, the decision dated January 14,
2003 of the Regional Trial Court, Branch
206, Muntinlupa City in Civil Case No. 02-
217 is hereby REVERSED and SET ASIDE.
SO ORDERED.[7]
Petitioner filed a Motion for Reconsideration, but this was
denied by the Court of Appeals in its Resolution of 30
September 2005.[8]
Hence, this appeal.
The Issue
41
The sole issue for resolution in this case is whether the Court
of Appeals erred in ruling that there was invalid service of
summons upon respondent, and hence the trial court did not
acquire jurisdiction over said respondent.
The Courts Ruling
We find the appeal 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.[9] The service of
summons is a vital and indispensable ingredient of due
process.[10] As a rule, if defendants have not been validly
summoned, the court acquires no jurisdiction over their
person, and a judgment rendered against them is null and
void.[11]
Section 11 of Rule 14 of the 1997 Rules of Civil Procedure
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. In case of a domestic private juridical entity, the
service of summons must be made upon an officer who is
named in the statute (i.e., the president, managing partner,
general manager, corporate secretary, treasurer, or in-house
counsel), otherwise, the service is insufficient.[12] 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.[13] However, if
the summons cannot be served on the defendant personally
within a reasonable period of time, then substituted service
may be resorted to.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.
Nonetheless, the impossibility of prompt personal service must
be shown by stating that efforts have been made to find the
defendant personally and that such efforts have failed. [14] This
is necessary because substituted service is in derogation of the
usual method of service. It is a method extraordinary in
character and hence may be used only as prescribed and in
the circumstances authorized by statute.[15] The statutory
requirements of substituted service must be followed strictly,
faithfully and fully, and any substituted service other than that
authorized by statute is considered ineffective.[16]
In Orion Security Corporation v. Kalfam Enterprises,
Inc.,[17] this Court held that in case of substituted service,
there should be a report indicating that the person who
received the summons in the defendants behalf was one with
whom the defendant had a relation of confidence ensuring that
the latter would actually receive the summons.
In this case, the Return by Process Server provides:
This is to certify that:
On October 17, 2002 at about 11:00
o'clock in the morning, undersigned tried to
cause the service of the Summons together
with the attached complaint & its annexes in
the above-entitled case to the defendant at
his given address on record. Mr Romel
Dalahoy, a staff of said Realty received the
said Summons with the attached complaint &
its annexes as evidenced by the former's
signature as appearing on the original copy of
the aforesaid Summons.
Henceforth, the said Summons with the attached complaint &
its annexes to Atty. Evangeline V. Tiongson, Clerk of Court V,
this Court, is respectfully returned, DULY SERVED, by
substituted service.
October 17, 2002, Muntinlupa City
Angelito C. Reyes
Process Server[18]
Clearly, the summons was not served personally on the
defendant (respondent) through any of the officers
enumerated in Section 11 of Rule 14; rather, summons was
served by substituted service on the defendants staff member,
Romel Dolahoy. Substituted service was resorted to on the
servers first attempt at service of summons, and there was no
indication that prior efforts were made to render prompt
personal service on the defendant.
42
Moreover, nothing on record shows that Romel
Dolahoy, the staff member who received the summons in
respondents behalf, shared such relation of confidence
ensuring that respondent would surely receive the summons.
Thus, following our ruling in Orion, we are unable to accept
petitioners contention that service on Romel Dolahoy
constituted substantial compliance with the requirements of
substituted service.
Petitioners contention that respondents filing of Notice
of Appeal effectively cured any defect in the service of
summons is devoid of merit. It is well-settled that a defendant
who has been declared in default has the following remedies,
to wit: (1) he may, at any time after discovery of the default
but 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; (2) if judgment has already
been rendered when he 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; (3) if he 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 (4) 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.[19] Thus, respondent, which had been
declared in default, may file a notice of appeal and question
the validity of the trial courts judgment without being
considered to have submitted to the trial courts authority.
WHEREFORE, we DENY the petition. We AFFIRM the Court
of Appeals Decision dated 14 July 2005 and Resolution dated
30 September 2005 in CA-G.R. CV No. 78259. Let the case
be REMANDED to the trial court for further proceedings upon
valid service of summons to respondent.
SO ORDERED.
See pdf for full text cancellation or demand for rescission by a notarial act and the
full payment of the cash surrender value, is mandatory.
Planters Development Bank v Chandumal (Civil
Procedure)
Planters Development Bank v Chandumal
GR No. 195619, September 5, 2012

FACTS:

BF Homes, Inc. and Chandumal entered into a contract to sell

a parcel of land. BF Homes then sold to PDB all its rights and
interests over the contract. On June 18, 1999, an action for
judicial confirmation of notarial rescission and delivery of
possession was filed by PDP against Chandumal.

Consequently, summons was issued. According to the Sheriff's

return, Sheriff Galing attempted to personally serve the
summons upon Chandumal on three dates but it was
unavailing as she was always out of the house on said dates.
Hence, the sheriff caused substituted service of summons by
serving the same through Chandumal's mother who
acknowledged receipt thereof.

For her failure to file within the prescribed period, PDB filed an
ex parte motion to declare Chandumal in default which was
granted by the RTC. On February 23, 2001, Chandumal filed
an Urgent Motion to Set Aside Order of Default maintaining
that she did not receive the summons and/or was not notified
of the same. RTC denied Chandumal's motion which was
reversed by the Court of Appeals due to invalid and ineffective
substituted service of summons.

ISSUES:
(1) Whether there was valid substituted service of summons
(2) Whether Chandumal voluntarily submitted to the
jurisdiction of the trial court
(3) Whether there was proper rescission by notarial act of the
contract to sell

HELD:
(1) There was no valid substitute service of summons.

The Return of Summons does not specifically show or indicate

in detail the actual exertion of efforts or any positive step
taken by the officer or process server in attempting to serve
the summons personally to the defendant. The return merely
states the alleged whereabouts of the defendant without
indicating that such information was verified from a person
who had knowledge thereof.

(2) Respondent voluntarily submitted to the jurisdiction of the

trial court.

Section 20, Rule 14 of the Rules of Court states "The

defendant's voluntary appearance in the action shall be
equivalent to service of summons"

(3) There is no valid rescission of the contract to sell by

notarial act.

The allegation that Chandumal made herself unavailable for

payment is not an excuse as the twin requirements for a valid
and effective cancellation under the law, i.e. notice of

43
G.R. No. 183370, August 17, 2015
NATION PETROLEUM GAS, INCORPORATED, NENA
ANG, MARIO ANG, ALISON A. SY, GUILLERMO G. SY,
NELSON ANG, LUISA ANG, RENATO C. ANG, PAULINE T.
ANG, RICKY C. ANG,1 AND MELINDA
ANG, Petitioners, v. RIZAL COMMERCIAL BANKING
CORPORATION, SUBSTITUTED BY PHILIPPINE ASSET
GROWTH ONE, INC., Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure (Rules) seeks to reverse and
set aside the December 12, 2007 Decision2 and June 17, 2008
Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
98787, which affirmed the March 29, 2007 Order4 of the
Regional Trial Court (RTC), Branch 66, Makati City, in Civil
Case No. 06-882, denying petitioners' Special Appearance with
Motion to Dismiss for alleged improper service of summons.
On October 16, 2006, respondent Rizal Commercial Banking
Corporation filed against petitioner corporation and its
directors/officers a Complaint5 for civil damages arising from
estafa in relation to violations of the Trust Receipts Law. On
October 26, 2006, after an ex parte hearing was conducted,
respondent's prayer for a writ of preliminary attachment was
granted and the corresponding writ was issued.6 Thereafter,
Sheriff Leodel N. Roxas served upon petitioners a copy of the
summons, complaint, application for attachment, respondent's
affidavit and bond, and the order and writ of attachment. The
Sheriffs Report dated November 13, 2006
narrated:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The undersigned sheriff respectfully submits the following
report to wit:LawlibraryofCRAlaw
On 26 October 2006, [a] copy of Writ of Attachment dated 26
October 2006, issued by the Court in the above-entitled case
was received by the undersigned for service and
implementation.
On even date, the undersigned served the Summons, copy of
[the] Complaint, application for attachment, the plaintiffs
affidavit and bond, and the Order and Writ of Attachment, on
the defendants Nation Petroleum Gas et al, at BPI Building,
Rizal Street, Candelaria, Quezon. Said summons and all
pertinent papers, upon telephone instruction of defendant
Melinda Ang, were received by Claudia Abante, [defendants']
[Liaison] Officer, as evidenced by her signature at the original
copy of Summons and Writ. I also served copies to other
defendants at their given addresses, but they refused to
acknowledge receipt thereof.
On the same day, at the instance of the plaintiff's counsel and
representative, the undersigned levied the real properties of
the defendants at the Register of Deeds of Lucena City, Makati
City, Pasig City, Quezon City and the Register of Deeds of
Manila. I also levied a property (plant equipment) in NPGI
plant in Sariaya, Quezon. Copies of the notices of levy on
44
attachment are hereto attached.
WHEREFORE, the original copies of the Summonses, Order,
Writ of Attachment and all pertinent papers are hereby
returned to the Court of origin for record and information.7
Petitioners filed through counsel a Special Appearance with
Motion to Dismiss8 on November 15, 2006. They asserted that
the trial court did not acquire jurisdiction over the corporation
since the summons was improperly served upon Claudia
Abante (Abante), who is a mere liaison officer and not one of
the corporate officers specifically enumerated in Section 11,
Rule 14 of the Rules. Likewise, the individual petitioners
argued that the sheriff and/or process server did not
personally approach them at their respective address as stated
in the Complaint. Neither did he resort to substituted service of
summons, and that, even if he did, there was no strict
compliance with Section 7, Rule 14 of the Rules. The Court's
pronouncements in Spouses Mason v. Court of Appeals,9E. B.
Villarosa & Partner Co., Ltd. v. Judge Benito,10Laus v. Court of
Appeals,11 and Samartino v. Raon12 were invoked in praying for
the dismissal of the complaint and the discharge of the writ of
attachment.
Respondent countered in its Opposition with Motion to Declare
Defendants in Default13 that there was valid service of
summons upon petitioners. With respect to the corporation,
Abante received the summons upon the express authority and
instruction of the corporate secretary, petitioner Melinda Ang
(Ang). As regards the individual petitioners, the Sheriffs Report
reflects that they were served "at their given addresses, but
they refused to acknowledge receipt thereof." Respondent
stressed that said Report is prima facie evidence of the facts
stated therein and that the sheriff enjoys the presumption of
regularity in the performance of his official functions. In any
case, it averred that, according to Oaminal v.
Castillo,14 petitioners already voluntarily submitted to the
court's jurisdiction when they prayed for the discharge of the
writ of attachment, which is an affirmative relief apart from the
dismissal of the case.
A Reply with Comment/Opposition (to the motion to declare
defendants in default)15 was then filed by petitioners. In
support of their contention that the court lacks jurisdiction over
their persons, they submitted their Joint Affidavit16 and the
Affidavit17 of Abante, claiming, among others, that they neither
personally met the sheriff and/or the process server nor were
handed a copy of the court documents; that Ang did not give
Abante telephone instructions to receive the same; and that
Abante did not receive any instruction from Ang. Petitioners
further held that Oaminal finds no application in the instant
case since they only filed one motion and that the additional
relief prayed for, which is the discharge of the writ, is
complementary to and a necessary consequence of a finding
that the court has no jurisdiction over their persons. Instead,
Our ruling in Avon Insurance PLC v. Court of Appeals18 was
relied upon.
In its Rejoinder with Motion to Strike,19 respondent stood firm
in defending the court's jurisdiction. The denials of Ang and
Abante were viewed as self-serving and could not prevail over
the presumption of regularity which the sheriff enjoys as an
officer of the court. Even assuming that the Sheriffs Return
does not state in detail the fact that the summons was served
upon the individual petitioners through substituted service,
respondent asserted that this does not conclusively prove that
such service is invalid because it may still be shown through
extraneous evidence similar to the case of BPI v. Spouses
Evangelista.20redarclaw
On March 29, 2007, the RTC denied petitioners' motion to
dismiss and respondent's motion to declare them in default. In
upholding the jurisdiction of the court over the persons of
petitioners and requiring them to file an Answer, the Order
ratiocinated:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The very essence of service of summons is for the defendants
to be aware of an existing suit against them and for them to
file an answer or responsive pleading thereto. When corporate
and individual defendants were served with summons through
the [liaison] officer who received the same for and in their
behalf as per instruction of defendant Melinda Ang, and when
defendants filed a responsive pleading in the form of a Motion
to Dismiss, the essence of service of summons was met and
defendants are deemed to have ultimately received the
summons despite their protestations. There is no reason for
the Court to doubt the regularity of the Sheriffs service of
summons as in fact its regularity is presumed. It bears
stressing that defendants did not per se deny having received
summonses. Perforce, they are challenging the manner of
service of the same. Having ultimately received the
summonses upon them and considering the rules on service of
the same was substantially complied with, the Court finds no
reason to deny the instant Motion to Dismiss.21
Petitioners elevated the jurisdictional issue to the
CA via petition for certiorari and prohibition.22 As afore-stated,
the appellate court later dismissed the petition and denied the
motion for reconsideration; hence, this petition raising the
following issues for resolution:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
I.
WHETHER OR NOT THE TRIAL COURT ACQUIRED
JURISDICTION OVER THE PERSON OF THE DEFENDANT
CORPORATION BY SERVICE OF SUMMONS UPON ITS MERE
EMPLOYEE.
II.
WHETHER OR NOT THE TRIAL COURT ACQUIRED
JURISDICTION OVER THE PERSONS OF THE INDIVIDUAL
DEFENDANTS BY RESORTING TO SUBSTITUTED SERVICE OF
SUMMONS DESPITE ABSENCE OF EARNEST EFFORTS ON THE
PART OF THE SERVING OFFICER TO SERVE SUMMONS
PERSONALLY.23
We deny.
Summons is a writ by which the defendant is notified of the
action brought against him or her.24 Its purpose is two-fold: to
acquire jurisdiction over the person of the defendant and to
notify the defendant that an action has been commenced so
that he may be given an opportunity to be heard on the claim
against him.25 "[C]ompliance with the rules regarding the
service of summons is as much an issue of due process as of
45
jurisdiction. The essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence
one may have in support of his defense. It is elementary that
before a person can be deprived of his property, he should first
be informed of the claim against him and the theory on which
such claim is premised."26redarclaw
Service of summons on domestic corporation, partnership or
other juridical entity is governed by Section 11, Rule 14 of
the Rules, which states:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
SECTION 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.
When the defendant is a domestic corporation like herein
petitioner, service of summons may be made only upon the
persons enumerated in Section 11, Rule 14 of the Rules.27 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.28 Substantial
compliance cannot be invoked.29 Service of summons upon
persons other than those officers specifically mentioned in
Section 11, Rule 14 is void, defective and not binding to said
corporation.30
ChanRoblesVirtualawlibrary
Basic is the rule that 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.31
As correctly argued by petitioners, Sps. Mason already resolved
that substantial compliance on service of summons upon a
domestic corporation is no longer an excuse.
Thus:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The question of whether the substantial compliance rule is still
applicable under Section 11, Rule 14 of the 1997 Rules of Civil
Procedure has been settled in Villarosa which applies squarely
to the instant case. In the said case, petitioner E.B. Villarosa &
Partner Co. Ltd.(hereafter Villarosa) with principal office
address at 102 Juan Luna St., Davao City and with branches at
2492 Bay View Drive, Tambo, Parailaque, Metro Manila and
Kolambog, Lapasan, Cagayan de Oro City, entered into a sale
with development agreement with private respondent Imperial
Development Corporation. As Villarosa failed to comply with its
contractual obligation, private respondent initiated a suit for
breach of contract and damages at the Regional Trial Court of
Makati. Summons, together with the complaint, was served
upon Villarosa through its branch manager at Kolambog,
Lapasan, Cagayan de Oro City. Villarosa filed a Special
Appearance with Motion to Dismiss on the ground of improper
service of summons and lack of jurisdiction. The trial court
denied the motion and ruled that there was substantial
compliance with the rule, thus, it acquired jurisdiction over
Villarosa. The latter questioned the denial before us in its
petition for certiorari. We decided in Villarosa's favor and
declared the trial court without jurisdiction to take cognizance
of the case. We held that there was no valid service of
summons on Villarosa as service was made through a person
not included in the enumeration in Section 11, Rule 14 of the
1997 Rules of Civil Procedure, which revised the Section 13,
Rule 14 of the 1964 Rules of Court. We discarded the trial
court's basis for denying the motion to dismiss, namely, private
respondent's substantial compliance with the rule on service of
summons, and fully agreed with petitioner's assertions that the
enumeration under the new rule is restricted, limited and
exclusive, following the rule in statutory construction
that expressio unios est exclusio alterius. Had the Rules of
Court Revision Committee intended to liberalize the rule on
service of summons, we said, it could have easily done so by
clear and concise language. Absent a manifest intent to
liberalize the rule, we stressed strict compliance with Section
11, Rule 14 of the 1997 Rules of Civil Procedure.
Neither can herein petitioners invoke our ruling
in Millennium to support their position for said case is not on
all fours with the instant case. We must stress
that Millennium was decided when the 1964 Rules of Court
were still in force and effect, unlike the instant case which falls
under the new rule. Hence, the cases cited by petitioners
where we upheld the doctrine of substantial compliance must
be deemed overturned by Villarosa, which is the later case.
At this juncture, it is worth emphasizing that notice to enable
the other party to be heard and to present evidence is not a
mere technicality or a trivial matter in any administrative or
judicial proceedings. The service of summons is a vital and
indispensable ingredient of due process. x x x32
The foregoing notwithstanding, We agree with the CA that
there was a valid and effective service of summons upon
petitioner corporation through its liaison officer who acted as
the agent of the corporate secretary. It
ruled:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Petitioner corporation asserts that based on the said rule
[Section 11, Rule 14 of the Rules], the service of summons
made by the sheriff upon its liaison officer, Claudia Abante,
was defective for the reason that a liaison officer is not one of
the corporate officers enumerated therein upon whom service
of summons is authorized to be made. It contends that there
having been no valid service, the trial court consequently did
not acquire jurisdiction to hear the complaint a quo.
The contention deserves full credence only if it is to be
assumed that Claudia Abante received the summons in her
official capacity as petitioner corporation's liaison officer.
However, this is not true in the instant case, since according to
the sheriff, Abante proceeded to receive the summons and
accompanying documents only after receiving instructions to
do so from Melinda Ang, an individual petitioner herein and the
petitioner corporation's corporate secretary. It is clear,
therefore, that Abante, in so receiving the summons, did so in
representation of Ang who, as corporate secretary, is one of
the officers competent under the Rules of Court to receive
summons on behalf of a private juridical person. Thus, while it
46
may be true that there was no direct, physical handing of the
summons to Ang, the latter could at least be charged with
having constructively received the same, which in Our view,
amounts to a valid service of summons.
Having herself instructed Abante to receive the summons, Ang,
and for that matter, petitioner corporation, is thus now
precluded from impugning the jurisdiction of the trial court on
the ground of invalid service of summons. In point in this
regard is the principle of estoppel which, under our remedial
laws, is an effective bar against any claim of lack of
jurisdiction. Under said doctrine, an admission or
representation is rendered conclusive upon the person making
it and cannot be denied or disproved as against the person
relying thereon.
Thus, despite the assertions of Ang and Abante that, as
between them, no such instruction had been relayed and
received, the sheriffs statement belying the allegations should
be accorded weight.
The sheriffs report is further bolstered by the presumption of
regularity in the performance of public duty as the same is
provided for in Rule 131 of the Rules of Court. The
presumption applies so long as it is shown that the officer, in
performing his duties, is not inspired by any improper motive,
a fact that is true with the sheriff in the case at bar. And, if the
presumption may be made to apply to public officers in
general, with more reason should its benefit be accorded to
the sheriff, who is an officer of the court.
True, the presumption is disputable, but to overcome the
same, more concrete evidence than the affidavit of Abante is
required. As correctly pointed out by the respondent, in line
with the ruling of the Supreme Court in R. Transport
Corporation vs. Court of Appeals and Talsan Enterprises, Inc.
vs. Baliwag, Abante's affidavit is self-serving in nature, and
being so, is not sufficient to overturn the said presumption.
On this aspect, petitioners score the respondent, asserting that
the two above-cited cases are not applicable to the case at
hand inasmuch as these were decided before the advent of the
1997 Revised Rules of Civil Procedure, adding likewise that the
cited cases and the instant case differ in their respective
factual milieus. We are not persuaded. Under either the former
or the present rules, it is clear that Abante's denial that she
received instructions from Ang is evidence that would pale in
comparison to the declaration of an officer of the court
indisputably performing his duty objectively and free from any
malicious and ill motives.33
Petitioner corporation cannot conveniently rely on the sworn
statements of the individual petitioners and Abante. Upon
examination, Ang's denial of having spoken with any process
server to give instruction to serve the summons and other
pertinent papers to Abante34 is not incompatible with the
Sheriffs Report stating that "[s]aid summons and all pertinent
papers, upon telephone instruction of defendant Melinda Ang,
were received by Claudia Abante, [defendants'] [Liaison]
Officer, as evidenced by her signature at the original copy of
Summons and Writ." While it may be true that Ang had not
talked to the sheriff or process server, it still does not rule out
the possibility that she in fact spoke to Abante and instructed
the latter to receive the documents in her behalf. As to the
Affidavit of Abante, her disavowal of having spoken to Ang or The party relying on substituted service or the sheriff must
receiving telephone instructions from her is truly self-serving. show that defendant cannot be served promptly or there is
Evidence as simple as a telephone billing statement or an impossibility of prompt service. Section 8, Rule 14 provides
affidavit of a disinterested third person, among others, could that the plaintiff or the sheriff is given a "reasonable time" to
have been presented to refute the sheriffs claim, but there was serve the summons to the defendant in person, but no specific
none. Likewise, no substantial proofs were credibly shown to time frame is mentioned. "Reasonable time" is defined as "so
support Abante's allegation that the sheriff insisted on having much time as is necessary under the circumstances for a
the court processes received and that she was "intimidated by reasonably prudent and diligent man to do, conveniently, what
the presence of a court personnel who was quite earnest in the contract or duty requires that should be done, having a
accomplishing his task."35redarclaw regard for the rights and possibility of loss, if any[,] to the
other party." Under the Rules, the service of summons has no
It is well to note that the certificate of service of the process set period. However, when the court, clerk of court, or the
server is prima facie evidence of the facts as set out therein. plaintiff asks the sheriff to make the return of the summons
This is fortified by the presumption of the regularity of and the latter submits the return of summons, then the validity
performance of official duty. To overcome the presumption of of the summons lapses. The plaintiff may then ask for
regularity of official functions in favor of such sheriffs return, an alias summons if the service of summons has failed. What
the evidence against it must be clear and convincing. Sans the then is a reasonable time for the sheriff to effect a personal
requisite quantum of proof to the contrary, the presumption service in order to demonstrate impossibility of prompt
stands deserving of faith and credit.36redarclaw service? To the plaintiff, "reasonable time" means no more
than seven (7) days since an expeditious processing of a
The same conclusion, however, could not be said with respect complaint is what a plaintiff wants. To the sheriff, "reasonable
to the service of summons upon the individual petitioners. time" means 15 to 30 days because at the end of the month, it
is a practice for the branch clerk of court to require the sheriff
Section 7, in relation to Section 6, Rule 14 of the Rules, to submit a return of the summons assigned to the sheriff for
provides for substituted service of service. The Sheriffs Return provides data to the Clerk of
summons:LawlibraryofCRAlaw Court, which the clerk uses in the Monthly Report of Cases to
ChanRoblesVirtualawlibrary be submitted to the Office of the Court Administrator within
the first ten (10) days of the succeeding month. Thus, one
Section 6. Service in person on defendant. - Whenever
month from the issuance of summons can be considered
practicable, the summons shall be served by handling a copy
"reasonable time" with regard to personal service on the
thereof to the defendant in person, or, if he refuses to receive
defendant.
and sign for it, by tendering it to him.
Sheriffs are asked to discharge their duties on the service of
Section 7. Substituted service. - If, for justifiable causes, the
summons with due care, utmost diligence, and reasonable
defendant cannot be served within a reasonable time as
promptness and speed so as not to prejudice the expeditious
provided in the preceding section, service may be effected (a)
dispensation of justice. Thus, they are enjoined to try their
by leaving copies of the summons at the defendant's residence
best efforts to accomplish personal service on defendant. On
with some person of suitable age and discretion then residing
the other hand, since the defendant is expected to try to avoid
therein, or (b) by leaving the copies at defendant's office or
and evade service of summons, the sheriff must be
regular place of business with some competent person in
resourceful, persevering, canny, and diligent in serving the
charge thereof.
process on the defendant. For substituted service of summons
Sections 6 and 7 of the Rules cannot be construed to apply to be available, there must be several attempts by the sheriff
simultaneously and do not provide for alternative modes of to personally serve the summons within a reasonable period
service of summons which can either be resorted to on the [of one month] which eventually resulted in failure to prove
mere basis of convenience to the parties for, under our impossibility of prompt service. "Several attempts" means at
procedural rules, service of summons in the persons of the least three (3) tries, preferrably on at least two different dates.
defendants is generally preferred over substituted In addition, the sheriff must cite why such efforts were
service.37 Resort to the latter is permitted when the summons unsuccessful. It is only then that impossibility of service can be
cannot be promptly served on the defendant in person and confirmed or accepted.
after stringent formal and substantive requirements have been
complied with.38 The failure to comply faithfully, strictly and (2) Specific Details in the Return
fully with all the requirements of substituted service renders
the service of summons ineffective.39redarclaw The sheriff must describe in the Return of Summons the facts
and circumstances surrounding the attempted personal
Manotoc v. Court of Appeals40 painstakingly elucidated the service. The efforts made to find the defendant and the
requirements of the Rules as follows:LawlibraryofCRAlaw reasons behind the failure must be clearly narrated in detail in
ChanRoblesVirtualawlibrary the Return. The date and time of the attempts on personal
service, the inquiries made to locate the defendant, the
We can break down this section into the following name/s of the occupants of the alleged residence or house of
requirements to effect a valid substituted defendant and all other acts done, though futile, to serve the
service:LawlibraryofCRAlaw summons on defendant must be specified in the Return to
justify substituted service. The form on Sheriffs Return of
(1) Impossibility of Prompt Personal Service Summons on Substituted Service prescribed in the Handbook

47
for Sheriffs published by the Philippine Judicial Academy
requires a narration of the efforts made to find the defendant
personally and the fact of failure. Supreme Court
Administrative Circular No. 5 dated November 9, 1989 requires
that "impossibility of prompt service should be shown by
stating the efforts made to find the defendant personally and
the failure of such efforts," which should be made in the proof
of service.
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendant's house
or residence, it should be left with a person of "suitable age
and discretion then residing therein." A person of suitable age
and discretion is one who has attained the age of full legal
capacity (18 years old) and is considered to have enough
discernment to understand the importance of a summons.
"Discretion" is defined as "the ability to make decisions which
represent a responsible choice and for which an understanding
of what is lawful, right or wise may be presupposed". Thus, to
be of sufficient discretion, such person must know how to read
and understand English to comprehend the import of the
summons, and fully realize the need to deliver the summons
and complaint to the defendant at the earliest possible time for
the person to take appropriate action. Thus, the person must
have the "relation of confidence" to the defendant, ensuring
that the latter would receive or at least be notified of the
receipt of the summons. The sheriff must therefore determine
if the person found in the alleged dwelling or residence of
defendant is of legal age, what the recipient's relationship with
the defendant is, and whether said person comprehends the
significance of the receipt of the summons and his duty to
immediately deliver it to the defendant or at least notify the
defendant of said receipt of summons. These matters must be
clearly and specifically described in the Return of Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendant's office or
regular place of business, then it should be served on a
competent person in charge of the place. Thus, the person on
whom the substituted service will be made must be the one
managing the office or business of defendant, such as the
president or manager; and such individual must have sufficient
knowledge to understand the obligation of the defendant in
the summons, its importance, and the prejudicial effects
arising from inaction on the summons. Again, these details
must be contained in the Return.41
In resorting to the substituted service, the sheriff in this case
pithily declared in his Report that he "also served copies to
other defendants at their given addresses, but they refused to
acknowledge receipt thereof." Obviously, the Sheriffs Report
dated November 13, 2006 does not particularize why
substituted service was resorted to and the precise manner by
which the summons was served upon the individual
petitioners. The disputable presumption that an official duty
has been regularly performed will not apply where it is patent
from the sheriffs or server's return that it is
defective.42redarclaw
To avail themselves of substituted service of summons, courts
must rely on a detailed enumeration of the sheriffs actions and
a showing that the defendant cannot be served despite diligent
48
and reasonable efforts.43 The Court requires that the Sheriffs
Return clearly and convincingly show the impracticability or
hopelessness of personal service.44 The impossibility of
personal service justifying availment of substituted service
should be explained in the proof of service; why efforts
exerted towards personal service failed. The pertinent facts
and circumstances attendant to the service of summons must
be stated in the proof of service or Officer's Return; otherwise,
the substituted service cannot be upheld.45redarclaw
Under exceptional terms, the circumstances warranting
substituted service of summons may be proved by
evidence aliunde.46 Substituted service will still be considered
as regular if other evidence of the efforts to serve summons
was presented.47BPI v. Spouses Evangelista48 teaches Us that
a defect in the service of summons, which is apparent on the
face of the return, does not necessarily constitute conclusive
proof that the actual service has in fact been improperly made.
In the interest of speedy justice, the trial court has to
immediately ascertain whether the patent defect is real and, if
so, to fully determine whether prior attempts at personal
service have in fact been done and resort to the substituted
service was justified. Should the returns not show compliance
with the Rules on substituted service, actual and correct
service may still be proven by evidence extraneous to it. If
substituted service is indeed improper, the trial court must
issue new summons and serve it in accordance with the Rules.
In the present case, while no actual hearing was conducted to
verify the validity of the grounds for substituted service of
summons, the parties exchanged pleadings in support of their
respective positions. To justify, respondent
contends:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
34. In the instant case, representatives of the undersigned
counsel and plaintiff RCBC personally observed the service of
summons on the defendants. Based on their account, the
following facts and circumstances
transpired:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
a. On [October 26, 2006], the Sheriff served summons on
defendant NPGI at the G/F BPI Building, Rizal Street,
Candelaria, Quezon, the reported office address of defendant
NPGI in the latter's General Information Sheet submitted with
the Securities and Exchange Commission.
ChanRoblesVirtualawlibrary
a. 1. In the said address, the Sheriff met a person who
introduced herself as Ms. Claudia Abante, the Liaison [Officer]
of defendant NPGI.
a.2. Upon inquiry, the Sheriff was informed that defendants
NPGI Officers were all not around to receive the summons for
defendant NPGI considering that, according to Ms. Abante, the
defendant NPGI Directors do not hold office at said address.
a.3. However, Ms. Abante volunteered to call defendant
Melinda Ang on the phone to inform her that summons was
beings served upon defendant NPGI.
a.4. Subsequently, Ms. Abante informed the Sheriff that
defendant Melinda Ang authorized her to receive the summons
for defendant NPGI.
a.5. Considering that she claimed to be authorized by xxxx
defendant Melinda Ang, who is the Corporate Secretary of
36. Indeed, in the instant case, contrary to the allegations
defendant NPGI, to receive the summons on behalf of
contained in the Motion to Dismiss, the summons were
defendant NPGI, the Sheriff entrusted the same to her, as well
properly served to the individual defendants through
as the Complaint and the Writ of Attachment, among others,
substituted service considering that there were justifiable
and Ms. Abante voluntarily signed the receiving copy thereof.
causes existing which prevented personal service upon all the
individual defendants within a reasonable time.
a.6 the Sheriff did not intimidate Ms. Abante into receiving the
ChanRoblesVirtualawlibrary
summons. In fact, she volunteered to receive the same.
36.1. It should be noted that aside from defendant NPGI, there
b. Copies of the Complaint, summons and Writ of Attachment,
are ten (10) other individual defendants in the instant
among others, were likewise served to defendant NPGI at its
case who are residing in addresses which are far apart (i.e.,
office located at 39thFloor, Yuchengco Tower, RCBC Plaza,
Makati City, Pasig City, City of Manila and Quezon Province).
6819 Ayala Avenue, corner Sen. Gil Puyat Avenue, Makati City,
Metro Manila ('RCBC Plaza Office').
36.2. Summons were attempted to be served to all defendant
ChanRoblesVirtualawlibrary
NPGI Directors, Luisa Ang, Guillermo Sy and Pauline Ang on
b.1. The personnel from said office also stated that all the the following addresses:LawlibraryofCRAlaw
defendant NPGI Directors were not around and were probably
at home. As such, a copy of the Complaint, summons and Writ 1. Renato Ang, Nena Ang,
of Attachment, among others, were left with said office. Melinda Ang, Pauline Ang -
c. Thereafter, summons on the individual defendants were 1348 Palm Avenue,
served at the following addresses:LawlibraryofCRAlaw Dasmarinas Village, Makati
ChanRoblesVirtualawlibrary City;chanRoblesvirtualLawli
brary
c. 1. Renato Ang, Nena Ang, Melinda Ang, Pauline Ang - 1348
Palm Avenue, Dasmarinas Village, Makati City; 2. Guillermo Sy and Alison Sy
- 1320 Glorioso Streets,
c.2. Guillermo Sy and Alison Sy - 1320 Glorioso Streets, Dasmarinas Village, Makati
Dasmarinas Village, Makati City; City;chanRoblesvirtualLawli
brary
c.3. Nelson Ang, Luisa Ang - 19 Swallow Drive, 3. Nelson Ang, Luisa Ang - 19
Greenmeadows, Quezon City; Swallow Drive,
Greenmeadows, Quezon
c.4. Mario Ang - Diamond Furniture, Cabunyag Street, City;chanRoblesvirtualLawli
Candelaria, Quezon; and brary

c.5. Ricky Ang - Rizal Street, Candelaria, Quezon. 4. Mario Ang - Diamond
Furniture, Cabunyag
d. Upon service of the summons upon them, it became Street, Candelaria,
apparent that the individual defendants were evading service Quezon; and
of summons considering that the sheriff was being given a
run-around. 5. Ricky Ang - Rizal Street,
ChanRoblesVirtualawlibrary Candelaria, Quezon.

d.1. In their respective residences, their house helpers stated 36.3. To require the sheriff to return several times at the
that the individual defendants were not at home but in the residences of the ten (10) defendants as suggested by the
RCBC Plaza Office. defendants, despite the apparent intention of the defendants
to evade service of summons, and the considerable distances
d.2. However, considering that the Sheriff had already been to between all their residences (i.e., Makati City, Pasig City, City
the RCBC Plaza Office and the personnel at said office of Manila and Quezon Province), would clearly be
previously stated that all the defendants were not at said unreasonable.49
office, it became apparent that all the defendants were trying
to evade service of summons. According to respondent's version, copies of the complaint,
summons and writ of attachment, among others, were served
d.3. Given the obvious attempt of defendants to evade service to petitioner corporation at its offices in Candelaria, Quezon
of summons, it was futile for the Sheriff to go back to the and RCBC Plaza. In the Quezon office, the sheriff was informed
RCBC Plaza Office. that the individual petitioners were all not around to receive
the summons for the corporation considering that they do not
d.4. Hence, summons were served to the individual defendants hold office at said address. Likewise, a staff from the RCBC
through substituted service by entrusting the same to their Plaza office stated that all them were not around and were
house helpers residing at the respective addresses, all of probably at home. Thereafter, summons was served on the
whom are of suitable age and discretion. individual petitioners at their respective addresses in Makati
City, Quezon City, and Candelaria, Quezon. Their house
49
helpers told that they were not at home but were in the RCBC
Plaza office. Considering that the sheriff already went there
and its personnel said that they were not at said office, it
became apparent on the sheriff that the individual petitioners
were trying to evade service of summons. Thus, given this
predicament, it was futile for him to go back to the RCBC Plaza
office.
It is argued that the summons was properly served to the
individual petitioners through substituted service because there
were justifiable causes existing which prevented personal
service within a reasonable period of time. Respondent asserts
that requiring the sheriff to return several times at the
residences of the ten (10) individual petitioners despite their
intention to evade service of summons and the considerable
distances of their residences would clearly be unreasonable.
Respondent's explanations do not suffice.
In the instant case, it appears that the sheriff hastily and
capriciously resorted to substituted service of summons
without actually exerting any genuine effort to locate the
individual petitioners. The "reasonable time" within which to
personally serve the summons - 7 days for the plaintiff or 15-
30 days for the sheriff as stated in Manotoc - has not yet
elapsed at the time the substituted service was opted to.
Remarkably, based on the Sheriffs Report and the narration of
petitioners, the personal service of summons upon the
corporation and the individual petitioners as well as the levy of
their personal and real properties were all done in just one
day. Manotoc stresses that for substituted service of summons
to be available, there must be several attempts by the sheriff
to personally serve the summons within a reasonable period
which eventually resulted in failure in order to prove
impossibility of prompt service. To reiterate, "several attempts"
means at least three (3) tries, preferrably on at least two
different dates.
Further, except for the Quezon Province, there is, in fact, no
considerable distance between the residences of the individual
petitioners since the cities of Makati and Quezon are part of
the National Capital Region; hence, accessible either by private
or public modes of transportation. Assuming that there is, the
distance would not have been insurmountable had respondent
took its time and not unnecessarily rushed to accomplish
personal service in just a single day.
were no actual efforts exerted and no positive steps
undertaken to earnestly locate the individual petitioners, there
is no basis to convincingly say that they evaded the personal
service of summons and merely gave the sheriff a run-around,
thus, justifying substituted service upon them.
Despite improper service of summons upon their persons, the
individual petitioners are deemed to have submitted to the
jurisdiction of the court through their voluntary appearance.
The second sentence of Section 20,50 Rule 14 of the Rules that
"[t]he 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" clearly refers
to affirmative defenses, not affirmative reliefs.51redarclaw
In the present case, the individual petitioners prayed, among
others, for the following: (1) discharge of the writ of
attachment on their properties; (2) denial of the motion to
declare them in default; (3) admission of the
Comment/Opposition (to the motion to declare them in
default) filed on December 19, 2006; and (4) denial of
respondent's motion to strike off from the records (their
opposition to the motion to declare them in default). By
seeking affirmative reliefs from the trial court, the individual
petitioners are deemed to have voluntarily submitted to the
jurisdiction of said court. A party cannot invoke the jurisdiction
of a court to secure affirmative relief against his opponent and
after obtaining or failing to obtain such relief, repudiate or
question that same jurisdiction.52 Therefore, the CA cannot be
considered to have erred in affirming the trial court's denial of
the Special Appearance with Motion to Dismiss for alleged
improper service of summons.
WHEREFORE, premises considered, the petition is DENIED.
The December 12, 2007 Decision and June 17, 2008
Resolution of the Court of Appeals in CA-G.R. SP No. 98787,
which sustained the March 29, 2007 Order of the Regional
Trial Court, Branch 66, Makati City, in Civil Case No. 06-882,
are hereby AFFIRMED.
SO ORDERED.cralawlawlibrary

Finally, respondent alleges that the summons was served to

the individual petitioners through substituted service by
entrusting the same to their house helpers, all of whom are of
suitable age and discretion. It did not, however, elaborate that
these persons know how to read and understand English to
comprehend the import of the summons, and fully realize the
need to deliver the summons and complaint to the individual
petitioners at the earliest possible time for them to take
appropriate action. There is no way for Us to conclusively
ascertain that the sheriff ensured, among others, that the
persons found in the alleged dwelling or residence comprehend
the significance of the receipt of the summons and the duty to
immediately deliver it to the individual petitioners or at least
notify them of said receipt of summons.

The foregoing considered, it can be deduced that since there

50
MA. IMELDA M. MANOTOC, G.R. No. 130974 for wrongful death of deceased Archimedes Trajano committed
by military intelligence officials of the Philippines allegedly
Petitioner,
under the command, direction, authority, supervision,
Present: tolerance, sufferance and/or influence of defendant Manotoc,
pursuant to the provisions of Rule 39 of the then Revised Rules
- versus - QUISUMBING, J., Chairperson, of Court.
CARPIO,
CARPIO MORALES, Based on paragraph two of the Complaint, the trial
HONORABLE COURT OF TINGA, and court issued a Summons[3] on July 6, 1993 addressed to
petitioner at Alexandra Condominium Corporation
APPEALS and AGAPITA VELASCO, JR., JJ. or Alexandra Homes, E2 Room 104, at No. 29 Meralco
TRAJANO on behalf of the Estate Avenue, Pasig City.

of ARCHIMEDES TRAJANO, Promulgated:

Respondents. August 16, 2006 On July 15, 1993, the Summons and a copy of the
Complaint were allegedly served upon (Mr.) Macky de la Cruz,
an alleged caretaker of petitioner at the condominium unit
mentioned earlier.[4] When petitioner failed to file her Answer,
x---------------------------------------------------------------------------
the trial court declared her in default through an
--------------x
Order[5] dated October 13, 1993.

DECISION
VELASCO, JR., J.:
The courts jurisdiction over a defendant is founded on
a valid service of summons. Without a valid service, the court
cannot acquire jurisdiction over the defendant, unless the
defendant voluntarily submits to it. The defendant must be
properly apprised of a pending action against him and assured
of the opportunity to present his defenses to the suit. Proper
service of summons is used to protect ones right to due
process.
On October 19, 1993, petitioner, by special
appearance of counsel, filed a Motion to Dismiss[6] on the
ground of lack of jurisdiction of the trial court over her person
due to an invalid substituted service of summons. The grounds
to support the motion were: (1) the address of defendant
indicated in the Complaint (Alexandra Homes) was not her
dwelling, residence, or regular place of business as provided in
Section 8, Rule 14 of the Rules of Court; (2) the party (de la
Cruz), who was found in the unit, was neither a representative,
employee, nor a resident of the place; (3) the procedure
prescribed by the Rules on personal and substituted service of
summons was ignored; (4) defendant was a resident of
Singapore; and (5) whatever judgment rendered in this case
would be ineffective and futile.

The Case During the hearing on the Motion to Dismiss,

This Petition for Review on Certiorari[1] under Rule 45 presents
the core issue whether there was a valid substituted service of
summons on petitioner for the trial court to acquire
jurisdiction. Petitioner Manotoc claims the court a quo should
have annulled the proceedings in the trial court for want of
jurisdiction due to irregular and ineffective service of
summons.
The Facts
Petitioner is the defendant in Civil Case No. 63337
entitled Agapita Trajano, pro se, and on behalf of the Estate of
Archimedes Trajano v. Imelda Imee R. Marcos-Manotoc[2] for
Filing, Recognition and/or Enforcement of Foreign
Judgment. Respondent Trajano seeks the enforcement of a
foreign courts judgment rendered on May 1, 1991 by the
United States District Court of Honolulu, Hawaii, United States
of America, in a case entitled Agapita Trajano, et al. v. Imee
Marcos-Manotoc a.k.a. Imee Marcos, Civil Case No. 86-0207
petitioner Manotoc presented Carlos Gonzales, who testified
that he saw defendant Manotoc as a visitor
in Alexandra Homes only two times. He also identified the
Certification of Renato A. de Leon, which stated that Unit E-
2104 was owned by Queens Park Realty, Inc.; and at the time
the Certification was issued, the unit was not being leased by
anyone. Petitioner also presented her Philippine passport and
the Disembarkation/Embarkation Card[7] issued by the
Immigration Service of Singapore to show that she was a
resident of Singapore. She claimed that the person referred to
in plaintiffs Exhibits A to EEEE as Mrs. Manotoc may not even
be her, but the mother of Tommy Manotoc, and granting that
she was the one referred to in said exhibits, only 27 out of 109
entries referred to Mrs. Manotoc. Hence, the infrequent
number of times she allegedly entered Alexandra Homes did
not at all establish plaintiffs position that she was a resident of
said place.
On the other hand, Agapita Trajano, for plaintiffs
estate, presented Robert Swift, lead counsel for plaintiffs in the
Estate of Ferdinand Marcos Human Rights Litigation, who
testified that he participated in the deposition taking of
Ferdinand R. Marcos, Jr.; and he confirmed that Mr. Marcos,

51
Jr. testified that petitioners residence was at the Alexandra On April 2, 1997, petitioner filed a Motion for
Apartment, Greenhills.[8] In addition, the entries[9] in the Reconsideration[15] which was denied by the CA in its
logbook of Alexandra Homes from August 4, 1992 to August 2, Resolution[16] dated October 8, 1997.
1993, listing the name of petitioner Manotoc and the Sheriffs
Return,[10] were adduced in evidence.
Hence, petitioner has come before the Court for
review on certiorari.
On October 11, 1994, the trial court rejected
Manotocs Motion to Dismiss on the strength of its findings that
her residence, for purposes of the Complaint,
was Alexandra Homes, Unit E-2104, No. 29 Meralco
Avenue, Pasig, Metro Manila, based on the documentary The Issues
evidence of respondent Trajano. The trial court relied on the
presumption that the sheriffs substituted service was made in
the regular performance of official duty, and such presumption Petitioner raises the following assignment of errors for
stood in the absence of proof to the contrary. [11] the Courts consideration:

On December 21, 1994, the trial court discarded I. RESPONDENT COURT OF APPEALS
Manotocs plea for reconsideration for lack of merit.[12] COMMITTED [A] SERIOUS ERROR IN
RENDERING THE DECISION AND
RESOLUTION IN QUESTION
Undaunted, Manotoc filed a Petition for Certiorari and (ANNEXES A AND B) IN DEFIANCE
Prohibition[13] before the Court of Appeals (CA) on January 20, OF LAW AND JURISPRUDENCE IN
1995, docketed as CA-G.R. SP No. 36214 seeking the RULING THAT THE TRIAL COURT
annulment of the October 11, 1994 and December 21, 1994 ACQUIRED JURISDICTION OVER THE
Orders of Judge Aurelio C. Trampe. PERSON OF THE PETITIONER
THROUGH A SUBSTITUTED SERVICE
OF SUMMONS IN ACCORDANCE
WITH SECTION 8, RULE 14 OF THE
REVISED RULES OF COURT.

II. RESPONDENT COURT OF APPEALS

Ruling of the Court of Appeals COMMITTED [A] SERIOUS ERROR
WHEN IT RULED THAT THERE WAS A
VALID SERVICE OF SUMMONS ONAN
On March 17, 1997, the CA rendered the assailed ALLEGED CARETAKER OF
Decision,[14] dismissing the Petition for Certiorari and PETITIONERS RESIDENCE IN
Prohibition. The court a quo adopted the findings of the trial COMPLETE DEFIANCE OF THE
court that petitioners residence was at Alexandra Homes, Unit RULING IN CASTILLO VS. CFI OF
E-2104, at No. 29 Meralco Avenue, Pasig, Metro Manila, which BULACAN, BR. IV, G.R. NO. L-
was also the residence of her husband, as shown by the 55869, FEBRUARY 20, 1984, 127
testimony of Atty. Robert Swift and the Returns of the SCRA 632 WHICH DEFINES THE
registered mails sent to petitioner. It ruled that the PROPRIETY OF SUCH SERVICE UPON
Disembarkation/Embarkation Card and the Certification MERE OVERSEERS OF PREMISES
dated September 17, 1993 issued by Renato A. De Leon, WHERE A PARTY SUPPOSEDLY
Assistant Property Administrator of Alexandra Homes, were RESIDES.
hearsay, and that said Certification did not refer to July
1993the month when the substituted service was effected.
III. RESPONDENT COURT OF
APPEALS COMMITTED [A] SERIOUS
In the same Decision, the CA also rejected petitioners ERROR IN CONCLUDING THAT THE
Philippine passport as proof of her residency in Singapore as it RESIDENCE OF THE HUSBAND IS
merely showed the dates of her departure from and arrival in ALSO THE RESIDENCE OF HIS WIFE
the Philippines without presenting the boilerplates last two (2) CONTRARY TO THE RULING IN THE
inside pages where petitioners residence was indicated. The BANK OF THE
CA considered the withholding of those pages as suppression PHILIPPINE ISLANDS VS. DE
of evidence. Thus, according to the CA, the trial court had COSTER, G.R. NO. 23181, MARCH 16,
acquired jurisdiction over petitioner as there was a valid 1925, 47 PHIL. 594.
substituted service pursuant to Section 8, Rule 14 of the old
Revised Rules of Court.
IV. RESPONDENT COURT OF
APPEALS COMMITTED [A] SERIOUS
ERROR IN FAILING TO APPLY THE
52
 RULE ON EXTRA-TERRITORIAL
SERVICE OF SUMMONS UNDER
SECTIONS 17 AND 18, RULE 14 OF
THE REVISED RULES OF COURT.[17]
The assigned errors bring to the fore the crux of the
disagreementthe validity of the substituted service of summons
for the trial court to acquire jurisdiction over petitioner.
The Courts Ruling
We GRANT the petition.
Acquisition of Jurisdiction
Jurisdiction over the defendant is acquired either
upon a valid service of summons or the defendants voluntary
appearance in court. When the defendant does not voluntarily
submit to the courts jurisdiction or when there is no valid
service of summons, any judgment of the court which has no
jurisdiction over the person of the defendant is null and
void.[18] In an action strictly in personam, personal service on
the defendant is the preferred mode of service, that is, by
handing a copy of the summons to the defendant in person. If
defendant, for excusable reasons, cannot be served with the
summons within a reasonable period, then substituted service
can be resorted to. While substituted service of summons is
permitted, it is extraordinary in character and in derogation of
the usual method of service.[19] Hence, it must faithfully and
strictly comply with the prescribed requirements and
circumstances authorized by the rules. Indeed, compliance
with the rules regarding the service of summons is as much
important as the issue of due process as of jurisdiction.[20]
Requirements for Substituted Service
Section 8 of Rule 14 of the old Revised Rules of Court
which applies to this case provides:
SEC. 8. [21] Substituted
service. If the defendant cannot be
served within a reasonable time as
provided in the preceding section
[personal service on defendant],
service may be effected (a) by
leaving copies of the summons at the
defendants residence with some
person of suitable age and discretion
then residing therein, or (b) by
leaving the copies at defendants
office or regular place of business
with some competent person in
charge thereof.
53
We can break down this section into the following
requirements to effect a valid substituted service:
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff
must show that defendant cannot be served promptly or there
is impossibility of prompt service.[22]Section 8, Rule 14 provides
that the plaintiff or the sheriff is given a reasonable time to
serve the summons to the defendant in person, but no specific
time frame is mentioned. Reasonable time is defined as so
much time as is necessary under the circumstances for a
reasonably prudent and diligent man to do, conveniently, what
the contract or duty requires that should be done, having a
regard for the rights and possibility of loss, if any[,] to the
other party.[23] Under the Rules, the service of summons has
no set period. However, when the court, clerk of court, or the
plaintiff asks the sheriff to make the return of the summons
and the latter submits the return of summons, then the validity
of the summons lapses. The plaintiff may then ask for an alias
summons if the service of summons has failed.[24] What then is
a reasonable time for the sheriff to effect a personal service in
order to demonstrate impossibility of prompt service? To the
plaintiff, reasonable time means no more than seven (7) days
since an expeditious processing of a complaint is what a
plaintiff wants. To the sheriff, reasonable time means 15 to 30
days because at the end of the month, it is a practice for the
branch clerk of court to require the sheriff to submit a return
of the summons assigned to the sheriff for service. The
Sheriffs Return provides data to the Clerk of Court, which the
clerk uses in the Monthly Report of Cases to be submitted to
the Office of the Court Administrator within the first ten (10)
days of the succeeding month. Thus, one month from the
issuance of summons can be considered reasonable time with
regard to personal service on the defendant.
Sheriffs are asked to discharge their duties on the
service of summons with due care, utmost diligence, and
reasonable promptness and speed so as not to prejudice the
expeditious dispensation of justice. Thus, they are enjoined to
try their best efforts to accomplish personal service on
defendant. On the other hand, since the defendant is expected
to try to avoid and evade service of summons, the sheriff must
be resourceful, persevering, canny, and diligent in serving the
process on the defendant. For substituted service of summons
to be available, there must be several attempts by the sheriff
to personally serve the summons within a reasonable period
[of one month] which eventually resulted in failure to prove
impossibility of prompt service. Several attempts means at
least three (3) tries, preferably on at least two different
dates. In addition, the sheriff must cite why such efforts were
unsuccessful. It is only then that impossibility of service can be
confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons
the facts and circumstances surrounding the attempted
personal service.[25] The efforts made to find the defendant
and the reasons behind the failure must be clearly narrated in
Invalid Substituted Service in the Case at Bar
detail in the Return. The date and time of the attempts on
personal service, the inquiries made to locate the defendant,
the name/s of the occupants of the alleged residence or house
of defendant and all other acts done, though futile, to serve Let us examine the full text of the Sheriffs Return,
the summons on defendant must be specified in the Return to which reads:
justify substituted service. The form on Sheriffs Return of
Summons on Substituted Service prescribed in the Handbook
for Sheriffs published by the Philippine Judicial Academy THIS IS TO CERTIFY that on
requires a narration of the efforts made to find the defendant many occasions several
personally and the fact of failure.[26] Supreme Court attempts were made to serve the
Administrative Circular No. 5 dated November 9, 1989 requires summons with complaint and
that impossibility of prompt service should be shown by stating annexes issued by this Honorable
the efforts made to find the defendant personally and the Court in the above entitled case,
failure of such efforts, which should be made in the proof of personally upon the
service. defendant IMELDA IMEE MARCOS-
MANOTOC located at Alexandra
Condominium Corpration [sic] or
(3) A Person of Suitable Age and Discretion Alexandra Homes E-2 Room 104
No. 29 Merlaco [sic] Ave., Pasig,
Metro-Manila at reasonable
hours of the day but to no
If the substituted service will be effected at
avail for the reason that said
defendants house or residence, it should be left with a person
defendant is usually out of her place
of suitable age and discretion then residing therein.[27] A
and/or residence or premises. That
person of suitable age and discretion is one who has attained
on the 15th day of July, 1993,
the age of full legal capacity (18 years old) and is considered
substituted service of summons was
to have enough discernment to understand the importance of
resorted to in accordance with the
a summons. Discretion is defined as the ability to make
Rules of Court in the Philippines
decisions which represent a responsible choice and for which
leaving copy of said summons with
an understanding of what is lawful, right or wise may be
complaint and annexes thru
presupposed.[28] Thus, to be of sufficient discretion, such
[sic] (Mr) Macky de la Cruz,
person must know how to read and understand English to
caretaker of the said defendant,
comprehend the import of the summons, and fully realize the
according to (Ms) Lyn Jacinto,
need to deliver the summons and complaint to the defendant
Receptionist and Telephone Operator
at the earliest possible time for the person to take appropriate
of the said building, a person of
action. Thus, the person must have the relation of confidence
suitable age and discretion, living
to the defendant, ensuring that the latter would receive or at
with the said defendant at the given
least be notified of the receipt of the summons. The sheriff
address who acknowledged the
must therefore determine if the person found in the alleged
receipt thereof of said processes but
dwelling or residence of defendant is of legal age, what the
he refused to sign (emphases
recipients relationship with the defendant is, and whether said
supplied).
person comprehends the significance of the receipt of the
summons and his duty to immediately deliver it to the
defendant or at least notify the defendant of said receipt of
summons. These matters must be clearly and specifically WHEREFORE, said summons is
described in the Return of Summons. hereby returned to this Honorable
Court of origin, duly served for its
record and information.
(4) A Competent Person in Charge

Pasig, Metro-Manila July 15,

If the substituted service will be done at defendants
office or regular place of business, then it should be served on
a competent person in charge of the place. Thus, the person
on whom the substituted service will be made must be the one
managing the office or business of defendant, such as the
president or manager; and such individual must have sufficient
knowledge to understand the obligation of the defendant in
the summons, its importance, and the prejudicial effects
arising from inaction on the summons. Again, these details
must be contained in the Return.
1993.[29]
A meticulous scrutiny of the aforementioned Return
readily reveals the absence of material data on the serious
efforts to serve the Summons on petitioner Manotoc in
person. There is no clear valid reason cited in the Return why
those efforts proved inadequate, to reach the conclusion that
personal service has become impossible or unattainable
outside the generally couched phrases of on many occasions
several attempts were made to serve the summons x x x

54
personally, at reasonable hours during the day, and to no avail convincingly show the impracticability or hopelessness of
for the reason that the said defendant is usually out of her personal service.
place and/or residence or premises. Wanting in detailed
Granting that such a general description be
information, the Return deviates from the rulingin Domagas v.
considered adequate, there is still a serious nonconformity
Jensen[30] and other related cases[31]that the pertinent facts
from the requirement that the summons must be left with a
and circumstances on the efforts exerted to serve the
person of suitable age and discretion residing in defendants
summons personally must be narrated in the Return. It cannot
house or residence. Thus, there are two (2) requirements
be determined how many times, on what specific dates, and at
under the Rules: (1) recipient must be a person of suitable age
what hours of the day the attempts were made. Given the fact
and discretion; and (2) recipient must reside in the house or
that the substituted service of summons may be assailed, as in
residence of defendant. Both requirements were not met. In
the present case, by a Motion to Dismiss, it is imperative that
this case, the Sheriffs Return lacks information as to residence,
the pertinent facts and circumstances surrounding the service
age, and discretion of Mr. Macky de la Cruz, aside from the
of summons be described with more particularity in the Return
sheriffs general assertion that de la Cruz is the resident
or Certificate of Service.
caretaker of petitioner as pointed out by a certain Ms. Lyn
Jacinto, alleged receptionist and telephone operator
of Alexandra Homes. It is doubtful if Mr. de la Cruz is residing
Besides, apart from the allegation of petitioners
with petitioner Manotoc in the condominium unit considering
address in the Complaint, it has not been shown that
that a married woman of her stature in society would unlikely
respondent Trajano or Sheriff Caelas, who served such
hire a male caretaker to reside in her dwelling. With the
summons, exerted extraordinary efforts to locate
petitioners allegation that Macky de la Cruz is not her
petitioner. Certainly, the second paragraph of the Complaint
employee, servant, or representative, it is necessary to have
only states that respondents were informed, and so [they]
additional information in the Return of Summons. Besides, Mr.
allege about the address and whereabouts of petitioner. Before
Macky de la Cruzs refusal to sign the Receipt for the summons
resorting to substituted service, a plaintiff must demonstrate
is a strong indication that he did not have the necessary
an effort in good faith to locate the defendant through more
relation of confidence with petitioner. To protect petitioners
direct means.[32] More so, in the case in hand, when the
right to due process by being accorded proper notice of a case
alleged petitioners residence or house is doubtful or has not
against her, the substituted service of summons must be
been clearly ascertained, it would have been better for
shown to clearly comply with the rules.
personal service to have been pursued persistently.

It has been stated and restated that substituted

In the case Umandap v. Sabio, Jr.,[33] it may be true
service of summons must faithfully and strictly comply with the
that the Court held that a Sheriffs Return, which states that
prescribed requirements and in the circumstances authorized
despite efforts exerted to serve said process personally upon
by the rules. [34]
the defendant on several occasions the same proved futile,
conforms to the requirements of valid substituted
service. However, in view of the numerous claims of
Even American case law likewise stresses the principle
irregularities in substituted service which have spawned the
of strict compliance with statute or rule on substituted service,
filing of a great number of unnecessary special civil actions of
thus:
certiorari and appeals to higher courts, resulting in prolonged
litigation and wasteful legal expenses, the Court rules in the The procedure prescribed by a
case at bar that the narration of the efforts made to find the statute or rule for substituted or
defendant and the fact of failure written in broad and constructive service must be strictly
imprecise words will not suffice. The facts and circumstances pursued.[35] There must be strict
should be stated with more particularity and detail on the compliance with the requirements of
number of attempts made at personal service, dates and times statutes authorizing substituted or
of the attempts, inquiries to locate defendant, names of constructive service.[36]
occupants of the alleged residence, and the reasons for failure
should be included in the Return to satisfactorily show the
efforts undertaken. That such efforts were made to personally Where, by the local law,
serve summons on defendant, and those resulted in failure, substituted or constructive service is
would prove impossibility of prompt personal service. in certain situations authorized in the
place of personal service when the
latter is inconvenient or impossible, a
Moreover, to allow sheriffs to describe the facts and strict and literal compliance with the
circumstances in inexact terms would encourage routine provisions of the law must be shown
performance of their precise duties relating to substituted in order to support the judgment
servicefor it would be quite easy to shroud or conceal based on such substituted or
carelessness or laxity in such broad terms. Lastly, considering constructive service.[37] Jurisdiction is
that monies and properties worth millions may be lost by a not to be assumed and exercised on
defendant because of an irregular or void substituted service, the general ground that the subject
it is but only fair that the Sheriffs Return should clearly and matter of the suit is within the power
of the court. The inquiry must be as
55
 to whether the requisites of the
statute have been complied with, and
such compliance must appear on the
record.[38] The fact that the
defendant had actual knowledge of
attempted service does not render
the service effectual if in fact the
process was not served in accordance
with the requirements of the
statute.[39]
Based on the above principles, respondent Trajano
failed to demonstrate that there was strict compliance with the
requirements of the then Section 8, Rule 14 (now Section 7,
Rule 14 of the 1997 Rules of Civil Procedure).
Due to non-compliance with the prerequisites for valid
substituted service, the proceedings held before the trial
court perforce must be annulled.
On the issue whether petitioner Manotoc is a resident
of Alexandra Homes, Unit E-2104, at No. 29 Meralco
Avenue, Pasig City, our findings that the substituted service is
void has rendered the matter moot and academic. Even
assuming that Alexandra Homes Room 104 is her actual
residence, such fact would not make an irregular and void
substituted service valid and effective.
IN VIEW OF THE FOREGOING, this Petition for
Review is hereby GRANTED and the assailed March 17, 1997
Decision and October 8, 1997 Resolution of the Court of
Appeals and the October 11, 1994 and December 21, 1994
Orders of the Regional Trial Court, National Capital Judicial
Region, Pasig City, Branch 163 are
hereby REVERSED and SET ASIDE. No costs.
SO ORDERED.

The court a quo heavily relied on the presumption of

regularity in the performance of official duty. It reasons out
that [t]he certificate of service by the proper officer is prima
facie evidence of the facts set out herein, and to overcome the
presumption arising from said certificate, the evidence must be
clear and convincing.[40]

The Court acknowledges that this ruling is still a valid

doctrine. However, for the presumption to apply, the Sheriffs
Return must show that serious efforts or attempts were
exerted to personally serve the summons and that said efforts
failed. These facts must be specifically narrated in the
Return. To reiterate, it must clearly show that the substituted
service must be made on a person of suitable age and
discretion living in the dwelling or residence of
defendant. Otherwise, the Return is flawed and the
presumption cannot be availed of. As previously explained, the
Return of Sheriff Caelas did not comply with the stringent
requirements of Rule 14, Section 8 on substituted service.

In the case of Venturanza v. Court of Appeals,[41] it

was held that x x x the presumption of regularity in the
performance of official functions by the sheriff is not
applicable in this case where it is patent that the
sheriffs return is defective (emphasis supplied). While the
Sheriffs Return in the Venturanza case had no statement on
the effort or attempt to personally serve the summons, the
Return of Sheriff Caelas in the case at bar merely described
the efforts or attempts in general terms lacking in details as
required by the ruling in the case of Domagas v. Jensen and
other cases. It is as if Caelas Return did not mention any effort
to accomplish personal service. Thus, the substituted service is
void.

56
G.R. No. 156759 June 5, 2013
ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR.,
ISAIAS ALBANO, LILY REYES, JANET BAY, JESUS R.
GALANG, AND RANDY HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.
DECISION
BERSAMIN, J.:
To warrant the substituted service of the summons and copy
of the complaint, the serving officer must first attempt to effect
the same upon the defendant in person. Only after the attempt
at personal service has become futile or impossible within a
reasonable time may the officer resort to substituted service.
The Case
Petitioners – defendants in a suit for libel brought by
respondent – appeal the decision promulgated on March 8,
20021 and the resolution promulgated on January 13,
2003,2 whereby the Court of Appeals (CA) respectively
dismissed their petition for certiorari, prohibition and
mandamus and denied their motion for reconsideration.
Thereby, the CA upheld the order the Regional Trial Court
(RTC), Branch 51, in Manila had issued on March 12, 2001
denying their motion to dismiss because the substituted
service of the summons and copies of the complaint on each of
them had been valid and effective.3
Antecedents
On July 3, 2000, respondent, a retired police officer assigned
at the Western Police District in Manila, sued Abante Tonite, a
daily tabloid of general circulation; its Publisher Allen A.
Macasaet; its Managing Director Nicolas V. Quijano; its
Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus
R. Galang and Randy Hagos; and its Columnist/Reporter Lily
Reyes (petitioners), claiming damages because of an allegedly
libelous article petitioners published in the June 6, 2000 issue
of Abante Tonite. The suit, docketed as Civil Case No. 00-
97907, was raffled to Branch 51 of the RTC, which in due
course issued summons to be served on each defendant,
including Abante Tonite, at their business address at Monica
Publishing Corporation, 301-305 3rd Floor, BF Condominium
Building, Solana Street corner A. Soriano Street, Intramuros,
Manila.4
In the morning of September 18, 2000, RTC Sheriff Raul
Medina proceeded to the stated address to effect the personal
service of the summons on the defendants. But his efforts to
personally serve each defendant in the address were futile
because the defendants were then out of the office and
unavailable. He returned in the afternoon of that day to make
a second attempt at serving the summons, but he was
informed that petitioners were still out of the office. He
decided to resort to substituted service of the summons, and
explained why in his sheriff’s return dated September 22,
2005,5 to wit:
57
SHERIFF’S RETURN
This is to certify that on September 18, 2000, I caused the
service of summons together with copies of complaint and its
annexes attached thereto, upon the following:
1. Defendant Allen A. Macasaet, President/Publisher
of defendant AbanteTonite, at Monica Publishing
Corporation, Rooms 301-305 3rd Floor, BF
Condominium Building, Solana corner A. Soriano
Streets, Intramuros, Manila, thru his secretary Lu-Ann
Quijano, a person of sufficient age and discretion
working therein, who signed to acknowledge receipt
thereof. That effort (sic) to serve the said summons
personally upon said defendant were made, but the
same were ineffectual and unavailing on the ground
that per information of Ms. Quijano said defendant is
always out and not available, thus, substituted service
was applied;
2. Defendant Nicolas V. Quijano, at the same address,
thru his wife Lu-Ann Quijano, who signed to
acknowledge receipt thereof. That effort (sic) to serve
the said summons personally upon said defendant
were made, but the same were ineffectual and
unavailing on the ground that per information of (sic)
his wife said defendant is always out and not
available, thus, substituted service was applied;
3. Defendants Isaias Albano, Janet Bay, Jesus R.
Galang, Randy Hagos and Lily Reyes, at the same
address, thru Rene Esleta, Editorial Assistant of
defendant AbanteTonite, a person of sufficient age
and discretion working therein who signed to
acknowledge receipt thereof. That effort (sic) to serve
the said summons personally upon said defendants
were made, but the same were ineffectual and
unavailing on the ground that per information of (sic)
Mr. Esleta said defendants is (sic) always roving
outside and gathering news, thus, substituted service
was applied.
Original copy of summons is therefore, respectfully returned
duly served.
Manila, September 22, 2000.
On October 3, 2000, petitioners moved for the dismissal of the
complaint through counsel’s special appearance in their behalf,
alleging lack of jurisdiction over their persons because of the
invalid and ineffectual substituted service of summons. They
contended that the sheriff had made no prior attempt to serve
the summons personally on each of them in accordance with
Section 6 and Section 7, Rule 14 of the Rules of Court. They
further moved to drop Abante Tonite as a defendant by virtue
of its being neither a natural nor a juridical person that could
be impleaded as a party in a civil action.
At the hearing of petitioners’ motion to dismiss, Medina
testified that he had gone to the office address of petitioners in
the morning of September 18, 2000 to personally serve the
summons on each defendant; that petitioners were out of the
office at the time; that he had returned in the afternoon of the
same day to again attempt to serve on each defendant
personally but his attempt had still proved futile because all of
petitioners were still out of the office; that some competent
persons working in petitioners’ office had informed him that
Macasaet and Quijano were always out and unavailable, and
that Albano, Bay, Galang, Hagos and Reyes were always out
roving to gather news; and that he had then resorted to
substituted service upon realizing the impossibility of his
finding petitioners in person within a reasonable time.
On March 12, 2001, the RTC denied the motion to dismiss, and
directed petitioners to file their answers to the complaint
within the remaining period allowed by the Rules of
Court,6 relevantly stating:
Records show that the summonses were served upon Allen A.
Macasaet, President/Publisher of defendant AbanteTonite,
through LuAnn Quijano; upon defendants Isaias Albano, Janet
Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, through
Rene Esleta, Editorial Assistant of defendant Abante Tonite (p.
12, records). It is apparent in the Sheriff’s Return that on
several occasions, efforts to served (sic) the summons
personally upon all the defendants were ineffectual as they
were always out and unavailable, so the Sheriff served the
summons by substituted service.
Considering that summonses cannot be served within a
reasonable time to the persons of all the defendants, hence
substituted service of summonses was validly applied.
Secretary of the President who is duly authorized to receive
such document, the wife of the defendant and the Editorial
Assistant of the defendant, were considered competent
persons with sufficient discretion to realize the importance of
the legal papers served upon them and to relay the same to
the defendants named therein (Sec. 7, Rule 14, 1997 Rules of
Civil Procedure).
WHEREFORE, in view of the foregoing, the Motion to Dismiss is
hereby DENIED for lack of merit..
Accordingly, defendants are directed to file their Answers to
the complaint within the period still open to them, pursuant to
the rules.
SO ORDERED.
Petitioners filed a motion for reconsideration, asserting that the
sheriff had immediately resorted to substituted service of the
summons upon being informed that they were not around to
personally receive the summons, and that Abante Tonite,
being neither a natural nor a juridical person, could not be
made a party in the action.
On June 29, 2001, the RTC denied petitioners’ motion for
reconsideration.7 It stated in respect of the service of
summons, as follows:
The allegations of the defendants that the Sheriff immediately
resorted to substituted service of summons upon them when
58
he was informed that they were not around to personally
receive the same is untenable. During the hearing of the
herein motion, Sheriff Raul Medina of this Branch of the Court
testified that on September 18, 2000 in the morning, he went
to the office address of the defendants to personally serve
summons upon them but they were out. So he went back to
serve said summons upon the defendants in the afternoon of
the same day, but then again he was informed that the
defendants were out and unavailable, and that they were
always out because they were roving around to gather news.
Because of that information and because of the nature of the
work of the defendants that they are always on field, so the
sheriff resorted to substituted service of summons. There was
substantial compliance with the rules, considering the difficulty
to serve the summons personally to them because of the
nature of their job which compels them to be always out and
unavailable. Additional matters regarding the service of
summons upon defendants were sufficiently discussed in the
Order of this Court dated March 12, 2001.
Regarding the impleading of Abante Tonite as defendant, the
RTC held, viz:
"Abante Tonite" is a daily tabloid of general circulation. People
all over the country could buy a copy of "Abante Tonite" and
read it, hence, it is for public consumption. The persons who
organized said publication obviously derived profit from it. The
information written on the said newspaper will affect the
person, natural as well as juridical, who was stated or
implicated in the news. All of these facts imply that "Abante
Tonite" falls within the provision of Art. 44 (2 or 3), New Civil
Code. Assuming arguendo that "Abante Tonite" is not
registered with the Securities and Exchange Commission, it is
deemed a corporation by estoppels considering that it
possesses attributes of a juridical person, otherwise it cannot
be held liable for damages and injuries it may inflict to other
persons.
Undaunted, petitioners brought a petition for certiorari,
prohibition, mandamusin the CA to nullify the orders of the
RTC dated March 12, 2001 and June 29, 2001.
Ruling of the CA
On March 8, 2002, the CA promulgated its questioned
decision,8 dismissing the petition for certiorari, prohibition,
mandamus, to wit:
We find petitioners’ argument without merit. The rule is that
certiorari will prosper only if there is a showing of grave abuse
of discretion or an act without or in excess of jurisdiction
committed by the respondent Judge. A judicious reading of the
questioned orders of respondent Judge would show that the
same were not issued in a capricious or whimsical exercise of
judgment. There are factual bases and legal justification for
the assailed orders. From the Return, the sheriff certified that
"effort to serve the summons personally xxx were made, but
the same were ineffectual and unavailing xxx.
and upholding the trial court’s finding that there was a
substantial compliance with the rules that allowed the
substituted service.
Furthermore, the CA ruled:
Anent the issue raised by petitioners that "Abante Tonite is
neither a natural or juridical person who may be a party in a
civil case," and therefore the case against it must be dismissed
and/or dropped, is untenable.
The respondent Judge, in denying petitioners’ motion for
reconsideration, held that:
rulings rendered in the action – is an element of due process
that is essential in all actions, civil as well as criminal, except in
actions in rem or quasi in rem. Jurisdiction over the
defendantin an action in rem or quasi in rem is not required,
and the court acquires jurisdiction over an actionas long as it
acquires jurisdiction over the resthat is thesubject matter of
the action. The purpose of summons in such action is not the
acquisition of jurisdiction over the defendant but mainly to
satisfy the constitutional requirement of due process.12
The distinctions that need to be perceived between an action
in personam, on the one hand, and an action inrem or quasi in
rem, on the other hand, are aptly delineated in Domagas v.
Jensen,13 thusly:

xxxx
The settled rule is that the aim and object of an action
determine its character. Whether a proceeding is in rem, or in
Abante Tonite’s newspapers are circulated nationwide, personam, or quasi in rem for that matter, is determined by its
showing ostensibly its being a corporate entity, thus the nature and purpose, and by these only. A proceeding in
doctrine of corporation by estoppel may appropriately apply. personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the
An unincorporated association, which represents itself to be a jurisdiction of the person, although it may involve his right to,
corporation, will be estopped from denying its corporate or the exercise of ownership of, specific property, or seek to
capacity in a suit against it by a third person who relies in good compel him to control or dispose of it in accordance with the
faith on such representation. mandate of the court. The purpose of a proceeding in
personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the
There being no grave abuse of discretion committed by the
defendant. Of this character are suits to compel a defendant to
respondent Judge in the exercise of his jurisdiction, the relief
specifically perform some act or actions to fasten a pecuniary
of prohibition is also unavailable.
liability on him. An action in personam is said to be one which
has for its object a judgment against the person, as
WHEREFORE, the instant petition is DENIED. The assailed distinguished from a judgment against the property to
Orders of respondent Judge are AFFIRMED. determine its state. It has been held that an action in
personam is a proceeding to enforce personal rights or
SO ORDERED.9 obligations; such action is brought against the person. As far
as suits for injunctive relief are concerned, it is well-settled
On January 13, 2003, the CA denied petitioners’ motion for that it is an injunctive act in personam. In Combs v. Combs,
reconsideration.10 the appellate court held that proceedings to enforce personal
rights and obligations and in which personal judgments are
rendered adjusting the rights and obligations between the
Issues affected parties is in personam. Actions for recovery of real
property are in personam.
Petitioners hereby submit that:
On the other hand, a proceeding quasi in rem is one brought
1. THE COURT OF APPEALS COMMITTED AN ERROR against persons seeking to subject the property of such
OF LAW IN HOLDING THAT THE TRIAL COURT persons to the discharge of the claims assailed. In an action
ACQUIRED JURISDICTION OVER HEREIN quasi in rem, an individual is named as defendant and the
PETITIONERS. purpose of the proceeding is to subject his interests therein to
the obligation or loan burdening the property. Actions quasi in
2. THE COURT OF APPEALS COMMITTED rem deal with the status, ownership or liability of a particular
REVERSIBLE ERROR BY SUSTAINING THE property but which are intended to operate on these questions
INCLUSION OF ABANTE TONITE AS PARTY IN THE only as between the particular parties to the proceedings and
INSTANT CASE.11 not to ascertain or cut off the rights or interests of all possible
claimants. The judgments therein are binding only upon the
parties who joined in the action.
Ruling

As a rule, Philippine courts cannot try any case against a

The petition for review lacks merit.
Jurisdiction over the person, or jurisdiction in personam –the
power of the court to render a personal judgment or to subject
the parties in a particular action to the judgment and other
defendant who does not reside and is not found in the
Philippines because of the impossibility of acquiring jurisdiction
over his person unless he voluntarily appears in court; but
when the case is an action in rem or quasi in rem enumerated
in Section 15, Rule 14 of the Rules of Court, Philippine courts

59
have jurisdiction to hear and decide the case because they
have jurisdiction over the res, and jurisdiction over the person
of the non-resident defendant is not essential. In the latter
instance, extraterritorial service of summons can be made
upon the defendant, and such extraterritorial service of
summons is not for the purpose of vesting the court with
jurisdiction, but for the purpose of 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. On the other hand,
when the defendant in an action in personam does not reside
and is not found in the Philippines, our courts cannot try the
case against him because of the impossibility of acquiring
jurisdiction over his person unless he voluntarily appears in
court.14
As the initiating party, the plaintiff in a civil action voluntarily
submits himself to the jurisdiction of the court by the act of
filing the initiatory pleading. As to the defendant, the court
acquires jurisdiction over his person either by the proper
service of the summons, or by a voluntary appearance in the
action.15
Upon the filing of the complaint and the payment of the
requisite legal fees, the clerk of court forthwith issues the
corresponding summons to the defendant.16 The summons is
directed to the defendant and signed by the clerk of court
under seal. It contains the name of the court and the names of
the parties to the action; a direction that the defendant
answers within the time fixed by the Rules of Court; and a
notice that unless the defendant so answers, the plaintiff will
take judgment by default and may be granted the relief
applied for.17 To be attached to the original copy of the
summons and all copies thereof is a copy of the complaint
(and its attachments, if any) and the order, if any, for the
appointment of a guardian ad litem.18
The significance of the proper service of the summons on the
defendant in an action in personam cannot be
overemphasized. The service of the summons fulfills two
fundamental objectives, namely: (a) to vest in the court
jurisdiction over the person of the defendant; and (b) to afford
to the defendant the opportunity to be heard on the claim
brought against him.19 As to the former, when jurisdiction in
personam is not acquired in a civil action through the proper
service of the summons or upon a valid waiver of such proper
service, the ensuing trial and judgment are void.20 If the
defendant knowingly does an act inconsistent with the right to
object to the lack of personal jurisdiction as to him, like
voluntarily appearing in the action, he is deemed to have
submitted himself to the jurisdiction of the court. 21 As to the
latter, the essence of due process lies in the reasonable
opportunity to be heard and to submit any evidence the
defendant may have in support of his defense. With the proper
service of the summons being intended to afford to him the
opportunity to be heard on the claim against him, he may also
waive the process.21 In other words, compliance with the rules
regarding the service of the summons is as much an issue of
due process as it is of jurisdiction.23
60
Under the Rules of Court, the service of the summons should
firstly be effected on the defendant himself whenever
practicable. Such personal service consists either in handing a
copy of the summons to the defendant in person, or, if the
defendant refuses to receive and sign for it, in tendering it to
him.24 The rule on personal service is to be rigidly enforced in
order to ensure the realization of the two fundamental
objectives earlier mentioned. If, for justifiable reasons, the
defendant cannot be served in person within a reasonable
time, the service of the summons may then be effected either
(a) by leaving a copy of the summons at his residence with
some person of suitable age and discretion then residing
therein, or (b) by leaving the copy at his office or regular place
of business with some competent person in charge
thereof.25 The latter mode of service is known as substituted
service because the service of the summons on the defendant
is made through his substitute.
It is no longer debatable that the statutory requirements of
substituted service must be followed strictly, faithfully and
fully, and any substituted service other than that authorized by
statute is considered ineffective.26 This is because substituted
service, being in derogation of the usual method of service, is
extraordinary in character and may be used only as prescribed
and in the circumstances authorized by statute.27 Only when
the defendant cannot be served personally within a reasonable
time may substituted service be resorted to. Hence, the
impossibility of prompt personal service should be shown by
stating the efforts made to find the defendant himself and the
fact that such efforts failed, which statement should be found
in the proof of service or sheriff’s return.28 Nonetheless, the
requisite showing of the impossibility of prompt personal
service as basis for resorting to substituted service may be
waived by the defendant either expressly or impliedly.29
There is no question that Sheriff Medina twice attempted to
serve the summons upon each of petitioners in person at their
office address, the first in the morning of September 18, 2000
and the second in the afternoon of the same date. Each
attempt failed because Macasaet and Quijano were "always
out and not available" and the other petitioners were "always
roving outside and gathering news." After Medina learned from
those present in the office address on his second attempt that
there was no likelihood of any of petitioners going to the office
during the business hours of that or any other day, he
concluded that further attempts to serve them in person within
a reasonable time would be futile. The circumstances fully
warranted his conclusion. He was not expected or required as
the serving officer to effect personal service by all means and
at all times, considering that he was expressly authorized to
resort to substituted service should he be unable to effect the
personal service within a reasonable time. In that regard, what
was a reasonable time was dependent on the circumstances
obtaining. While we are strict in insisting on personal service
on the defendant, we do not cling to such strictness should the
circumstances already justify substituted service instead. It is
the spirit of the procedural rules, not their letter, that
governs.30
In reality, petitioners’ insistence on personal service by the
serving officer was demonstrably superfluous. They had
actually received the summonses served through their
substitutes, as borne out by their filing of several pleadings in
the RTC, including an answer with compulsory counterclaim ad
cautelam and a pre-trial brief ad cautelam. They had also
availed themselves of the modes of discovery available under
the Rules of Court. Such acts evinced their voluntary
appearance in the action.

Nor can we sustain petitioners’ contention that Abante Tonite

could not be sued as a defendant due to its not being either a
natural or a juridical person. In rejecting their contention, the
CA categorized Abante Tonite as a corporation by estoppel as
the result of its having represented itself to the reading public
as a corporation despite its not being incorporated. Thereby,
the CA concluded that the RTC did not gravely abuse its
discretion in holding that the non-incorporation of Abante
Tonite with the Securities and Exchange Commission was of no
consequence, for, otherwise, whoever of the public who would
suffer any damage from the publication of articles in the pages
of its tabloids would be left without recourse. We cannot
disagree with the CA, considering that the editorial box of the
daily tabloid disclosed that basis, nothing in the box indicated
that Monica Publishing Corporation had owned Abante Tonite.

WHEREFORE, the Court AFFIRMS the decision promulgated on

March 8, 2002; and ORDERS petitioners to pay the costs of
suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

61
G.R. No. 200693, April 18, 2016
NENA C. ANG, SPOUSES RENATO C. ANG AND PAULINE
ANG, SPOUSES GUILLERMO SY AND ALISON ANG-SY,
NELSON C. ANG, RICKY C. ANG , AS SUBSTITUTED BY
HIS HEIRS, AND MELINDA C.
ANG, Petitioners, v. CHINATRUST (PHILIPPINES)
COMMERCIAL BANK CORPORATION AND THE ASIAN
DEBT FUND, Respondents.
DECISION
BRION, J.:
This petition for review on certiorari seeks to reverse the April
29, 2011 decision and January 30, 2012 resolution of the Court
of Appeals (CA) in CA-G.R. SP No. 99391.1 The CA only
partly granted the petitioners' petition for certiorari against the
May 17, 2007 order of the Regional Trial Court of Makati City
(RTC), Branch 56 in Civil Case No. 06-872.2 The RTC denied
the petitioners' motion to dismiss the complaint for lack of
jurisdiction over their person.
ANTECEDENTS
On October 11, 2006, respondent Chinatrust (Philippines)
Banking Corporation (Chinatrust) filed a money claim (with an
application for the issuance of a writ of preliminary
attachment) amounting to US $458,614.84 against Nation
Petroleum Corporation (Nation) and petitioners Mario Ang,
Nena Ang, Renato Ang, Pauline Ang, Guillermo Sy, Alison Ang-
Sy, Nelson Ang, Ricky Ang, and Melinda Ang ( collectively the
defendants). The complaint was filed before the RTC and
docketed as Civil Case No. 06-872.
On October 12, 2006, the RTC, through its Branch Clerk of
Court Atty. Richard C. Jamora issued summonses to the
defendants. The summonses indicated Nation's address as
"Ground Floor, BPI Building, Rizal Street, Candelaria Quezon
and/or 39th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala
Avenue corner Sen. Gil J. Puyat Avenue, Makati City." It also
indicated the address of the individual defendants as
"39th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Avenue
corner Sen. Gil J. Puyat Avenue, Makati City."
The RTC heard ex parte the application for a preliminary
attachment on October 18, 2006. On October 27, 2006, the
RTC granted Chinatrust's application for a writ of attachment
conditioned on its posting of a P25,000,000.00 bond.
On November 6, 2006, Process Server Joseph R. Dela Cruz and
Assisting Sheriff Robert V. Alejo executed an Officer's Return
reporting their service of the summons. It reads:
chanRoblesvirtualLawlibrary
That on 30 October 2006, the undersigned Process Server of
this Court together with one of the assisting Sheriff Robert V.
Alejo, and plaintiffs counsel and its representative served the
copy of summons together with complaint, its annexes, writ,
order and bond, upon defendants at 39th Floor, Yuchengco
Tower, RCBC Plaza, 6819 Ayala Ave. cor. Sen. Gil J. Puyat
Ave., Makati City, thru Mr. RICKY ANG, personally, who
62
acknowledged receipt thereof but refused to sign in the
original copy of summons, and the receptionist of the said firm
informed that the other defendants have not yet arrived and it
would be better if we will return in the afternoon.
That in the afternoon on even date, said processes were
served thru Ms. MELINDA ANG, Corporate Secretary of
defendant NATION PETROLEUM CORPORATION and instructed
Ms. Charlotte Magpayo, Administrative Assistant of the said
corporation to received [sic] the same.
That despite diligent efforts to locate the whereabouts of the
other defendants MARIO ANG, NENA ANG, RENATO ANG,
PAULINE ANG, GUILLERMO SY, ALISON ANG-SY and NELSON
ANG outside the premises of their office, considering that said
process server and his group were not allowed to enter,
substituted service was made by leaving their respective court
processes at their office or regular place of business through
the same Ms. Charlotte Magpayo by affixing the "receiving
stamp" of Nation Petroleum and her notation, as shown in the
original copy of summons.3ChanRoblesVirtualawlibrary
On November 21, 2006, the defendants entered a Special
Appearance with a Motion to Dismiss the case for lack of
jurisdiction.4 The defendants argued: (1) that the RTC failed to
acquire jurisdiction over Nation because service of summons
was made on Charlotte Magpayo, a mere property supply
custodian,5instead of the president, managing partner, general
manager, corporate secretary, or in-house counsel;6and (2)
that the individual defendants were not validly served
summons7 because (3) the process server improperly resorted
to substituted service and failed to comply with its strict
requirements.8
Chinatrust opposed the Motion to Dismiss,9 insisting: (1) that
Nation was validly served summons because as a property
supply custodian, Magpayo occupies a very responsible
position that enjoys the highest degree of trust and
confidence;10 (2) that the individual defendants likewise
authorized Magpayo to receive the summons on their
behalf;11 (3) that the process server properly resorted to
substituted service;12 and (4) that Ricky Ang is estopped from
contesting the validity of substituted service because he was
served in person.13
On May 17, 2007, the RTC denied the defendants' Motion to
Dismiss. The RTC held that Nation's corporate secretary
Melinda Ang authorized Charlotte Magpayo as her agent for
the limited purpose of receiving the summons.14 It further held
that Melinda's denial of this fact is self-serving as she was
never presented in court for cross-examination.
The RTC also held that Ricky Ang was validly served summons
because he acknowledged receipt of the process even though
he refused to sign the original copy.15
With respect to the remaining defendants, the RTC held that
the process server's resort to substituted service on Charlotte
Magpayo was warranted. The Court found: (1) that the
process server and his group attempted to serve summons on
the defendants on the morning of October 30, 2006 at their
place of work; (2) that aside from Mr. Ricky Ang, the
defendants had not yet arrived; (3) that the process server left
and exerted diligent efforts to locate the defendants'
whereabouts; (4) that he returned to the defendants' office on
the afternoon of the same day but was denied entry to the We find the petition partly meritorious.
defendants' offices; and (5) therefore, he was forced to resort
to substituted service through Charlotte Magpayo.16 In civil cases, jurisdiction over a party is acquired either
through his voluntary appearance in court or upon a valid
On June 22, 2007, the defendants filed a petition service of summons. When a party was not validly served
for certiorari before the CA challenging the RTC's jurisdiction summons and did not voluntarily submit to the court's
over them. The petition was docketed as CA-G.R. SP No. jurisdiction, the court cannot validly grant any relief against
99391. him.

In the meantime, Chinatrust assigned its rights to the trust In an action strictly in personam, summons shall be served
receipt subject of Civil Case No. 06-872 to respondent The personally on the defendant whenever practicable.29 Personal
Asian Debt Fund, Ltd. (ADF). Thus, the CA allowed ADF to be service is made by personally handing a copy of the summons
substituted for Chinatrust on March 9, 2010. to the defendant or by tendering it to him if he refuses to
receive and sign for it.
On April 29, 2011, the CA affirmed the RTC's May 17, 2007
order but dismissed the suit as against Nation.17 The CA held While personal service is the preferred method of serving
that RTC did not acquire jurisdiction over Nation because the summons, the Rules of Court are also mindful that this is
list of corporate officers authorized to receive summons for a sometimes impracticable or even impossible. Thus, Rule 14
corporation is exclusive.18 The CA found insufficient evidence also allows the sheriff (or other proper court officer) to resort
to support the RTC's conclusion that Nation's corporate to substituted service instead:
secretary granted Charlotte Magpayo, a property supply chanRoblesvirtualLawlibrary
custodian, a special power of attorney to receive summons for
SEC. 7. Substituted service.
the corporation on her behalf.19

However, the CA upheld the process server's resort to

substituted service with respect to the individual
defendants.20 The CA held that the process server exerted
efforts to personally serve the summons on the individual
defendants but was prohibited from entering their individual
offices. This made personal service impossible, leaving the
process server no choice but to resort to substituted service by
leaving a copy of the summons with Charlotte Magpayo, a
competent person of sufficient age and discretion in the
defendants' office.21

On April 4, 2012, the individual defendants, now petitioners,

filed the present petition for review on certiorari.
THE PETITION

The petitioners argue: (1) that the Officer's return failed to

establish the impossibility of personal service;22 (2) that
Charlotte Magpayo is not a competent person in charge of
their business;23 and (3) that the failure to comply with the
strict requirements of substituted service renders the service of
summons void.24

On the other hand, ADF maintains that the questions of the

impossibility of personal service and whether diligent efforts
were exerted to locate the petitioners are factual matters that
should not be passed upon in a petition for review
on certiorari.25 ADF continues that nevertheless, circumstances
showed an impossibility of service because upon the server's
return to the office, the petitioners' staff prevented them from
entering the offices;26 thus, the officers resorted to service of
summons to a Charlotte Magpayo, a competent person
authorized to receive summons in the Nation Petroleum
office.27cralawred

ADF also insists that Ricky Ang was personally tendered

summons despite his refusal to sign the original.28
OUR RULING
63
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 111 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
64
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 personamand the defendant is in court that summons has been properly served upon petitioner
the Philippines, the service of summons may be made through and that it has acquired jurisdiction over her.
personal or substituted service in the manner provided for in
Sections 6 and 7, Rule 14 of the 1997 Rules of Procedure, as WHEREFORE, we DENY the petition and we AFFIRM the
amended,6 thus: assailed Orders of the RTC, Branch 274, Parañaque City, in
Civil Case No. 00-0372. Costs against petitioner.
SEC. 6. Service in person on defendant. – Whenever
practicable, the summons shall be served by handing SO ORDERED.
a copy thereof to the defendant in person, or if he
refuses to receive and sign for it, by tendering it to
him.
Puno, C.J., Chairperson, Corona, Azcuna, and Garcia,
JJ., concur.
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

65
[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.
SYNOPSIS
In this instant petition, E.B. Villarosa and Partner Co.,
Ltd. contended that the trial court did not acquire jurisdiction
over its person because the summons intended for it was
improperly served on its Branch Manager.
The Court agreed with petitioner. 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 the 1997 Rules of Civil Procedure. The rule
must be strictly observed, service must be made to one named
in the statute.
Petitioners filing of a motion to dismiss, 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.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS;
AGENTS NO LONGER AUTHORIZED TO RECEIVE
SUMMONS FOR CORPORATION. - Earlier cases have
uphold service of summons upon a construction project
manager; a corporations assistant manager; ordinary
clerk of a corporation; private secretary of corporate
executives; retained counsel; officials who had charge or
control of the operations of the corporation, like the
assistant general manager; or the corporations Chief
Finance and Administrative Officer. In these cases, these
persons were considered as agent within the
contemplation of the old rule. Notably, under the new
Rules, service of summons upon an agent of the
corporation is no longer authorized.
2. ID.; ID.; ID.; DESIGNATION OF PERSONS OR
OFFICERS AUTHORIZED TO RECEIVE SUMMONS
FOR DOMESTIC CORPORATIONS, LIMITED. - 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. x x x 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. (Delta
Motor Sales Corporation vs. Mangosing, 70 SCRA 598
[1976])
3. ID.; ID.; ID.; JURISDICTION NOT ACQUIRED WHERE
SERVICE OF SUMMONS WAS MADE ON BRANCH
MANAGER. -Accordingly, we rule that the service of
summons upon the branch manager of petitioner at its
66
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.
4. ID.; ID.; ID.; INEFFECTIVE SERVICE OF SUMMONS;
FILING OF MOTION TO DISMISS DOES NOT
CONSTITUTE VOLUNTARY APPEARANCE. - 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 defendants voluntary appearance in the
action is equivalent to service of summons. 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, the party is deemed to have
submitted himself to the jurisdiction of the court. This
doctrine has been abandoned in the case of La Naval
Drug Corporation vs. Court of Appeals, et al., 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.
APPEARANCES OF COUNSEL
Capuyan Quimpo & Salazar for petitioner.
Ermintao, Sangco, Manzano & Associates for private
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, Paraaque, 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 City[2] but the Sheriffs Return of
Service[3] 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.
On June 9, 1998, defendant filed a Special Appearance
with Motion to Dismiss[4]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.
Meanwhile, on June 10, 1998, plaintiff filed a Motion to
Declare Defendant in Default[5] alleging that 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
Defendants 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
Order[7] denying defendants 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
67
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 Reconsideration[8] 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
defendants Motion for Reconsideration[9] alleging that
defendants 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 Reply[10] contending that the changes in
the new rules are substantial and not just general semantics.
Defendants 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 petitioners 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 of Kanlaon Construction Enterprises Co., Inc. vs.
NLRC[12] wherein it was held that service upon a construction
project manager is valid and in Gesulgon vs. NLRC[13] 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]
Section 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. (underscoring 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. (underscoring 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 corporations assistant
manager[16]; ordinary clerk of a corporation[17]; private
secretary of corporate executives[18]; retained counsel[19];
officials who had charge or control of the operations of the
corporation, like the assistant general manager[20]; or the
corporations Chief Finance and Administrative Officer[21]. 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]
68
x x x 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. (underscoring 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 x x x.[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. x x x.
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. x x x.
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.x x x. (underscoring 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 firms branch office has been held as improper as
summons should have been served at the firms principal
office. In First Integrated Bonding & Ins. Co., Inc. vs.
Dizon,[27] it was held that the service of summons on the
general manager of the insurance firms Cebu branch was
improper; default order could have been obviated had the
summons been served at the firms 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 defendants 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, the party
is deemed to have submitted himself to 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.
SO ORDERED.
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, Paraaque, 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
69
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 City[2] but the Sheriffs Return of
Service[3] 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.
On June 9, 1998, defendant filed a Special Appearance
with Motion to Dismiss[4]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.
Meanwhile, on June 10, 1998, plaintiff filed a Motion to
Declare Defendant in Default[5] alleging that 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
Defendants 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
Order[7] denying defendants 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 Reconsideration[8] 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
defendants Motion for Reconsideration[9] alleging that
defendants 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 Reply[10] contending that the changes in
the new rules are substantial and not just general semantics.
Defendants 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 petitioners 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 of Kanlaon Construction Enterprises Co., Inc. vs.
NLRC[12] wherein it was held that service upon a construction
project manager is valid and in Gesulgon vs. NLRC[13] 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]
Section 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. (underscoring 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,
70
service may be made on the president, manager, secretary,
cashier, agent, or any of its directors. (underscoring 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 corporations assistant
manager[16]; ordinary clerk of a corporation[17]; private
secretary of corporate executives[18]; retained counsel[19];
officials who had charge or control of the operations of the
corporation, like the assistant general manager[20]; or the
corporations Chief Finance and Administrative Officer[21]. 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]
x x x 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. (underscoring 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 x x x.[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. x x x.
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. x x x.
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.x x x. (underscoring 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 firms branch office has been held as improper as
summons should have been served at the firms principal
office. In First Integrated Bonding & Ins. Co., Inc. vs.
Dizon,[27] it was held that the service of summons on the
general manager of the insurance firms Cebu branch was
improper; default order could have been obviated had the
summons been served at the firms principal office.
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 defendants 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, the party
is deemed to have submitted himself to 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.
SO ORDERED.

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

71

THIRD DIVISION
BANK OF THE PHILIPPINE ISLANDS,
Petitioner,
- versus -
SPS. IRENEO M. SANTIAGO and LIWANAG P.
SANTIAGO, CENTROGEN, INC., REPRSENTED
BY EDWIN SANTIAGO,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari filed by
petitioner Bank of the Philippine Islands (BPI) seeking to
reverse and set aside the Decision[1] of the Court of Appeals
dated 3 March 2005 and its Resolution[2] dated 28 July 2005
affirming the Order[3] of the Regional Trial Court (RTC) of
Santa Cruz, Laguna, Branch 91, dated 20 March 2003
enjoining the extrajudicial foreclosure sale of a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-131382
registered under the name
Spouses Ireneo and Liwanag Santiago. The dispositive portion
of the Court of Appeals Decision reads:
WHEREFORE, premises considered, the
petition is DISMISSED. The assailed orders
dated March 20, 2003 and August 25,
2003 of the respondent court in Civil Case
No. SC-4259 are hereby AFFIRMED.
Petitioner BPI is a banking institution duly organized and
existing as such under the Philippine laws.
Private respondent Centrogen, Inc. (Centrogen) is a domestic
corporation engaged in pharmaceutical business, duly
organized
G.R. No. 169116 and existing as such under the Philippine laws and
represented in this act by its President, Edwin Santiago, son of
Present:
private respondents Spouses Ireneo M. Santiago
and Liwanag P. Santiago.
YNARES-SANTIAGO, J.,
On several occasions, private respondent Centrogen obtained
Chairperson,
loans from Far East Bank and Trust Company (FEBTC) in
AUSTRIA-MARTINEZ,
different amounts, the total of which reached the
sumSR.,
CALLEJO, P4,650,000.00, as evidenced by promissory notes
executed by Edwin Santiago.
CHICO-NAZARIO, and
NACHURA, JJ.
As a security for a fraction of the loan obligation, Ireneo M.
Santiago executed a Real Estate Mortgage over a parcel of
land covered by TCT No. T-131382 registered under his name
Promulgated:
and located at Sta Cruz, Laguna, with an area of 2,166 square
meters (subject property).[4] The mortgage secured the
principal loan in the amount of P490,000.00. Later on, the
March 28, 2007
same property secured another loan obligation in the amount
of P1,504,280.00.[5]
Subsequently, however, Centrogen incurred default and
therefore the loan obligation became due and demandable.
Meanwhile, FEBTC merged with the BPI with the latter as the
surviving corporation. As a result, BPI assumed all the rights,
privileges and obligations of FEBTC.
On 13 December 2002, BPI filed an Extra-Judicial
Foreclosure of Real Estate Mortgage[6] over the subject
property before the RTC of Sta. Cruz, Laguna.In order to
validly effect the foreclosure, a Notice of Sale was issued by
the Provincial Sheriff on 21 January 2003. On the same day,
the Spouses Santiago were served with the copy of the Notice
of Sale.
Upon receipt of the Notice of Sale, the Spouses
Santiago and Centrogen filed a Complaint seeking the issuance
of a Temporary Restraining Order and Preliminary and Final
Injunction and in the alternative, for the annulment of the Real
of Estate Mortgage with BPI.
The complaint alleged that the initial loan obligation
in the amount of P490,000.00, including interest thereon was
fully paid as evidenced by Union Bank Check No. 0363020895
dated 20 December 2001 in the amount of P648,521.51 with
BPI as payee. Such payment notwithstanding, the amount was
still included in the amount of computation of the arrears as
shown by the document of Extra-Judicial Foreclosure of Real
Estate Mortgage filed by the latter.
72
In addition, the Spouses Santiago and Centrogen asseverated
that the original loan agreement was for the amount of Five
Million Pesos. Such amount will be supposedly utilized to
finance the squalene project of the company. However, after
the amount of Two Million Pesos was released and was
accordingly used in funding the erection of the structural
details of the project, FEBTC, in gross violation of the
agreement, did not release the balance of Three Million Pesos
that will supposedly finance the purchase of machineries and
equipment necessary for the operation. As a result,
the squalene project failed and the company groped for funds
to pay its loan obligations.
On 27 February 2003, BPI was summoned to file and
serve its Answer to the Complaint filed by Spouses Santiago
and Centrogen. On the same day, the Sheriff served a copy of
the summons to the Branch Manager of BPI Sta. Cruz, Laguna
Branch, as evidenced by the Sheriffs Return,[7] which reads:
SHERIFFS RETURN
Respectfully returned the original
summons and order dated February 2003
with the information that on February 27,
2003 the undersigned served the copy of
summons together with the corresponding
copy of complaint and its Annexes and order
dated February 27, 2003, to defendants (sic)
Bank of the Philippine Islands (BPI) thru the
manager Ms. Glona Ramos at Sta. Cruz
Laguna Branch, at Sta. Cruz, Laguna, to
defendant Sheriff Marcial Opinion at the
Office of the Provincial Sheriff of Laguna,
R.T.C. (sic) Sta. Cruz, Laguna as shown by
their signatures on the original summons
and order.
Instead of filing an Answer, BPI filed a Motion to Dismiss[8] the
complaint on the ground of lack of jurisdiction over the person
of the defendant and other procedural infirmities attendant to
the filing of the complaint. In its Motion to Dismiss, BPI
claimed that the Branch Manager of its Sta. Cruz, Laguna
Branch, was not one of those authorized by Section 11, Rule
14 of the Revised Rules of Court[9] to receive summons on
behalf of the corporation. The summons served upon its
Branch Manager, therefore, did not bind the corporation. In
addition, it was alleged that the complaint filed by the Spouses
Santiago and Centrogenlacked a Certificate of Non-Forum
Shopping[10] and was therefore dismissible. Finally, BPI
underscored that the person who verified the complaint was
not duly authorized by Centrogens Board of Directors to
institute the present action as required by Section 23 of the
Corporation Code.[11]
In an Order[12] dated 28 February 2003, the RTC denied the
Motion to Dismiss and emphasized that the nature of the case
73
merited its removal from the purview of Section 11, Rule 14 of
the Revised Rules of Court. Based on the provisions of Section
5, Rule 58 of the Revised Rules of Court,[13] the RTC declared
that the instant Order is still valid and binding despite non-
compliance with the provisions of Section 11, Rule 14 of the
same Rules. The dispositive portion of the Order reads:
WHEREFORE, premises considered,
the motion to dismiss is hereby denied
because of the presence of extreme urgency
wherein the Court has jurisdiction to act on
the TRO despite lack of proper service of
summons. Let the instant case be called for
summary hearing on plaintiffs application for
temporary restraining order.
After summary hearing on the Spouses Santiago
and Centrogens application for Temporary Restraining Order,
the RTC, on 28 February 2003, issued an Order[14] enjoining
the Provincial Sheriff from proceeding with the extra-judicial
foreclosure sale of the subject property until the propriety of
granting a preliminary injunction is
ascertained. The decretal portion of the said Order reads:
Wherefore, premises considered,
the Court orders that pending the resolution
of the plaintiffs prayer for preliminary
injunction:
1. The Defendant Provincial Sheriff,
his deputies, employees, and agents are
enjoined from proceeding with the
threatened extra-judicial foreclosure sale (to
be conducted today) of the parcel of land
owned by plaintiffs Spouses Ireneo M.
Santiago and Liwanag P. Santiago located in
(sic) Brgy. Sto. Angel Norte, Sta. Cruz,
Laguna.
2. The application for a preliminary
injunction is hereby set for hearing on March
10, 2003 at 1:30 pm. Further, the plaintiffs
are hereby ordered to immediately file a
bond amounting to One Hundred Thousand
Pesos (P100,000.00) to answer for damages
that Defendant Bank may sustain if the court
should finally decide that the plaintiffs are
not entitled thereto.
On 6 March 2003, the RTC ordered the service of
new summons to BPI in accordance with the provisions of
the Revised Rules of Court. The aforesaid Order reads:
 To avoid further argument as TCT No. T-131382 owned
regards the proper service of summons to by Plaintiffs
Defendant Bank, the Branch Clerk of Court is Spouses Ireneo M.
hereby directed to issue another summons Santiago
and serve copy of the same together with and Liwanag P. Santiago l
the complaint and its annexes to any of the ocated in Brgy. Sto.
officers of the Defendant Bank as provided Angel, Sta. Cruz, Laguna.
by the rules of civil procedure.[15]
2. The bond in
the amount of One
Hundred Thousand
(P100,000.00) Pesos
In compliance with the aforesaid Order, the Branch Clerk of ordered by the Court to
Court caused the issuance of a new summons on 7 March be posted by the plaintiffs
2003, a copy of which was served upon the Office of the to answer for damages
Corporate Secretary of the BPI on 11 March 2003, as that defendant bank may
evidenced by the Sheriffs Return,[16] which reads: sustain if the court should
finally decide that the
plaintiffs are entitled
Sheriffs Return thereto still stands.

This is to Certify that on March 11,

2003 the undersigned caused the service of The Motion for Reconsideration filed by BPI was denied by the
summons together with the copy of RTC in its Order[17] dated 25 August 2003.
complaint and its annexes to defendant Bank
of the Philippine Islands (BPI) and receive
(sic) by the Office of the Corporate Secretary
Aggrieved, BPI filed a Petition for Certiorari before the Court of
dated March 11, 2003 at the BPI Building
Appeals seeking the reversal of the adverse Orders of the RTC.
Ayala Avenue, Makati City.

On 3 March 2005, the Court of Appeals rendered a

On 20 March 2003, the RTC issued an Order granting
Decision[18] affirming the assailed Orders of the RTC and
the application for the issuance of a Writ of Preliminary
dismissing the Petition for Certiorari filed by BPI.The Court of
Injunction filed by the Spouses Santiago and Centrogen. It
Appeals declared that jurisdiction was acquired upon the
enjoined the extra-judicial foreclosure sale of the subject
service of new summons. Before the assailed Orders were
property pending resolution of the main action for Annulment
therefore issued, the RTC properly acquired jurisdiction over
of Real Estate Mortgage or until further orders of the trial
the person of BPI.
court. In issuing the Writ of Preliminary Injunction, it
rationalized that to allow the foreclosure without hearing the
main case would work injustice to the complainant and since
Undaunted, BPI filed this instant Petition for Review
Spouses Santiago and Centrogen claimed that the first loan in
on Certiorari under Rule 45 of the Revised Rules of Court. For
the amount of P490,000.00 secured by the property subject of
our resolution are the following issues:
the extra-judicial sale had long been paid
by Centrogen through a Union Bank Check No. 0363020895
presented as evidence. The dispositive part of the Order reads:
I.

Wherefore, premises considered,

the Court orders that pending the resolution WHETHER OR NOT THE RTC ACQUIRED
of the main action for the annulment of the JURISDICTION OVER THE PERSON OF BPI
real estate mortgage, etc., and /or order WHEN THE ORIGINAL SUMMONS WAS
from this Court: SERVED UPON THE BRANCH MANAGER OF
ITS STA. CRUZ, LAGUNA BRANCH.

1. The Defendant
Provincial Sheriff, his II.
deputies, employees, and
agents are enjoined from
proceeding with the WHETHER OR NOT THE RTC COMMITTED A
threatened extra-judicial GRAVE ABUSE OF DISCRETION IN ISSUING
foreclosure sale of the THE WRIT OF PRELIMINARY INJUNCTION.
parcel of land covered by

74

BPI vehemently insists that the court a quo did not
acquire jurisdiction over its person and consequently, the
Order issued by the RTC, permanently enjoining the
foreclosure sale, was therefore void and does not bind BPI.
We are not persuaded.
The pertinent provision of the Revised Rules of Court
provides:
narration of facts and therefore enjoys the presumption that
official duty has been regularly performed.[20] The Process
Servers Certificate of Service of Summons is a prima
facie evidence of facts set out in that certificate.[21]
Inarguably, before the Order granting the application
for Writ of Preliminary Injunction was issued, the RTC already
acquired jurisdiction over the person of BPI by virtue of the
new summons validly served on the Corporate Secretary. The
fact that the original summons was invalidly served is of no
moment since jurisdiction over BPI was subsequently acquired
by the service of a new summons.

Sec. 11, Rule 14. Service upon In the case of The Philippine American Life and
domestic private juridical entity When the General Insurance Company v. Brevea,[22] we ruled:
defendant is a corporation, partnership or
association organized under the laws of the
Philippines with a juridical personality service
A case should
may be made on the president, managing
not be dismissed
partner, general manager, corporate
simply because an
secretary, treasurer or in-house counsel.
original summons was
wrongfully served. It
should be difficult to
conceive, for example,
Basic is the rule that a strict compliance with the that when a defendant
mode of service is necessary to confer jurisdiction of the court personally appears before
over a corporation. The officer upon whom service is made a Court complaining that
must be one who is named in the statute; otherwise, the he had not been validly
service is insufficient.[19] The purpose is to render it reasonably summoned, that the case
certain that the corporation will receive prompt and proper against him should be
notice in an action against it or to insure that the summons be dismissed. An alias sum
served on a representative so integrated with the corporation mons can be actually
that such person will know what to do with the legal papers served on said
served on him. defendant.

Applying the aforestated principle in the case at bar, xxxx

we rule that the service of summons on BPIs Branch Manager
did not bind the corporation for the branch manager is not
included in the enumeration of the statute of the persons upon x x x It is not pertinent whether the
whom service of summons can be validly made in behalf of the summons is designated as an original
corporation.Such service is therefore void and ineffectual. or an alias summons as long as it has
adequately served its purpose. What is
essential is that the summons complies
However, upon the issuance and the proper with the requirements under the Rules
service of new summons on 11 March 2003, before the Writ of Court and it has been duly served on
of Preliminary Injunction was issued on 20 March the defendant together with the
2003, whatever defect attended the service of the prevailing complaint. x x x Moreover, the
original summons, was promptly and accordingly second summons was technically not an alias
cured. summons but more of a new summons on
the amended complaint. It was not a
continuation of the first summons
It bears stressing, that on 7 March 2003, the Branch Clerk of considering that it particularly referred to the
Court issued a new summons which was properly served amended complaint and not to the original
upon BPIs Corporate Secretary on 11 March 2003, as complaint. (Emphases supplied.)
evidenced by the Sheriffs Return.

The subsequent service of summons was neither BPIs lamentation, at every turn, on the invalidity of
disputed nor was it mentioned by BPI except in a fleeting the service of summons made on the Branch Manager and its

75
deliberate neglect to acknowledge the fact that a new
summons was accordingly served on its Corporate Secretary, is
an attempt in futility to mislead this Court into believing that
the court a quo never acquired jurisdiction over the case and
thus the issuance of the Writ of Preliminary Injunction was
invalid.
defendant was validly acquired by the court by the valid
service of a new summons before the writ of preliminary
injunction was issued and guided by jurisprudential
pronouncements heretofore adverted to, we hold that the
proceedings attendant to the issuance of the writ of
preliminary injunction were regular.

We are not drawn into petitioners sophistry.
In the case of G&G Trading Corporation v. Court of
Appeals,[23] this Court made the following pronouncements:
Although it may be true that the
service of summons was made on a person
not authorized to receive the same in behalf
of the petitioner, nevertheless since it
appears that the summons and complaint
were in fact received by the corporation
through its said clerk, the Court finds that
there was substantial compliance with the
rule on service of summons. x x x The need
for speedy justice must prevail over a
technicality.
In explaining the test on the validity of service of
summons, Justice Florenz Regalado[24] stressed
substantial justice must take precedence over technicality and
thus stated:
The ultimate test on the validity
and sufficiency on service of summons is
whether the same and the attachments
thereto where ultimately received by the
corporation under such circumstances that
no undue prejudice is sustained by it from
the procedural lapse and it was afforded full
opportunity to present its responsive
pleadings. This is but in accord with the
entrenched rule that the ends of substantial
justice should not be subordinated to
technicalities and, for which purpose, each
case should be examined within the factual
milieu peculiar to it.
Prescinding from the above, we deem it best to
underscore that there is no hard and fast rule pertaining to the
manner of service of summons. Rather, substantial justice
demands that every case should be viewed in light of the
peculiar circumstances attendant to each.
In any event, as it is glaringly evident from the
records of the case that jurisdiction over the person of the
Having settled this issue necessitates us to look into
the propriety of the issuance of the Writ of Preliminary
Injunction.
BPI asserts that the RTC gravely abused its discretion
in granting the Spouses Santiago and Centrogens application
for the Writ of Preliminary Injunction in the absence of
showing that the latter have a clear legal right sought to be
protected.
Again, we do not agree.
An injunction is a preservative remedy for the
protection of ones substantive right or interest; it is not a
cause of action by itself but merely a provisional remedy, an
adjunct to the main suit.[25] The purpose of injunction is to
prevent threatened or continuous irremediable injury to some
of the parties before their claims can be thoroughly studied
and educated. Its sole aim is to preserve the status quo until
the merits of the case is heard fully.[26]
that
The issuance of the writ of preliminary injunction as
an ancillary or preventive remedy to secure the rights of a
party in a pending case is entirely within the discretion of the
court taking cognizance of the case, the only limitation being
that the discretion should be exercised based upon the
grounds and in a manner provided by law. Before a writ of
preliminary injunction may be issued, the following requisites
must be complied with: (1) a right in esse or a clear or
unmistakable right to be protected; (2) violation of that right;
and (3) that there is an urgent and permanent act and urgent
necessity for the writ to prevent serious damage.[27]
Verily, the aforestated requisites for the issuance
of the Writ of Preliminary Injunction have been fully
complied with. The right of Spouses Santiago over the
property clearly exists since they are the registered
owners thereof, and the existence of a Real Estate
Mortgage does not undermine the right of the absolute
owner over the property. The violation of such right is
manifest in the threatened foreclosure proceedings
commenced by BPI amidst the claim that the principal
obligation has been fully paid. Finally, to allow the
foreclosure of the subject property without first calibrating
the evidence of opposing parties pertaining to the action
for the annulment of mortgage would cause irreparable
damage to the registered owner.

76
 The right of BPI to foreclose the subject property is
under dispute upon the claim interposed by the Spouses
Santiago and Centrogen that payments for the loan secured by
the property subject to the threatened foreclosure proceedings
were already made. To support their assertions, Spouses
Santiago and Centrogenpresented as evidence Union Bank
Check No. 0363020895 dated 20 December 2001 in the
amount of P648,521.51, with BPI as payee. From this, we can
deduce that the right of BPI to foreclose the subject property
is questionable. We cannot therefore allow the foreclosure of
the Real Estate Mortgage to proceed without first setting the
main case for hearing so that based on the evidence presented
by the parties, the trial court can determine who between
them has the better right over the subject property. To rule
otherwise would cause a grave irreparable damage to the
Spouses Santiago and Centrogen.
Parenthetically, this petition affords us the
opportunity to once again reiterate the rule that the issuance
of the writ of preliminary injunction rests entirely within the
discretion of the court and generally not interfered with except
in case of manifest abuse. The assessment and evaluation of
evidence in the issuance of the writ of preliminary injunction
involve finding of facts ordinarily left to the trial court for its
conclusive determination.[28]
In Toyota Motor Phils. Corp. Workers Association
v. Court of Appeals,[29] citing Ubanes, Jr. v. Court of
Appeals,[30] we made the following declaration:
more weight. The evidence of [the
spouses Santiago and Centrogen]
established that to allow extra-judicial
foreclosure without hearing the main action
for the annulment of mortgage would
probably work injustice to the plaintiffs and
would probably violate their rights over the
subject lot.
Furthermore, this case involves
complicated issues that must be resolved
first before altering the status quo. The issue
of payment and non-payment of the loan
and the issue of breach of the second loan
directly affect the rights of the plaintiffs over
the subject lot. Hence, the last actual,
peaceable, uncontested status of the parties
before the controversy must be preserved.
The unyielding posture of BPI that its right to
foreclose the subject property was violated since it is
permanently barred from proceeding with the auction sale is
patently erroneous. The RTC, in the exercise of its discretion
merely intended to preserve the status quo while the principal
action for the annulment of mortgage is heard with the end
view that no irreversible damage may be caused to the
opposing parties. We find nothing whimsical, arbitrary or
capricious in the exercise of the RTC of its discretion.

[T]he matter of the issuance of writ of a

WHEREFORE, IN VIEW OF THE FOREGOING, the
preliminary injunction is addressed to the
instant petition is DENIED. The Decision dated 3 March 2005,
sound discretion of the trial court, unless the
and the Resolution dated 28 July 2005, rendered by the Court
court commits a grave abuse of
of Appeals in CA-G.R. SP No. 80643, are
discretion. Grave abuse of discretion in the
hereby AFFIRMED. Costs against petitioner.
issuance of writs of preliminary injunction
implies a capricious and whimsical exercise
of judgment that is equivalent to lack of
jurisdiction or whether the power is SO ORDERED.
exercised in an arbitrary or despotic manner
by reason of passion, prejudice or personal
aversion amounting to an evasion of positive
duty or to a virtual refusal to perform the
duty enjoined, or to act at all in
contemplation of law. x x x.

In the case at bar, after summary hearing and

evaluation of evidence presented by both contending parties,
the RTC ruled that justice would be better served if status
quo is preserved until the final determination of the merits of
the case, to wit:

For purposes of preliminary

injunction, between the evidence presented
by [the spouses Santiago and Centrogen]
and [BPI], the evidence of the former carries

77
G.R. No. 181517, July 06, 2015
GREEN STAR EXPRESS, INC. AND FRUTO SAYSON,
JR., Petitioners, v. NISSIN-UNIVERSAL ROBINA
CORPORATION, Respondent.
DECISION
PERALTA, J.:
For resolution is a Petition for Review under Rule 45 of the
Rules of Court which petitioners Green Star Express, Inc. and
Fruto Sayson, Jr. brought before the Court, assailing the
Decision1 of the Court of Appeals (CA) dated September 17,
2007 and its Resolution2 dated January 22, 2008 in CA-G.R. SP
No. 86824. The CA nullified the Resolution dated May 5, 2004
of the Regional Trial Court (RTC) of San Pedro, Laguna, Branch
31, in Civil Case No. SPL-0969, and dismissed the complaint for
lack of jurisdiction.
The following are the antecedents of the
case:ChanRoblesVirtualawlibrary
On February 25, 2003, a Mitsubishi L-300 van which Universal
Robina Corporation (URC) owned figured in a vehicular
accident with petitioner Green Star Express, Inc.'s ( Green Star)
passenger bus, resulting in the death of the van's driver. Thus,
the bus driver, petitioner Fruto Sayson, Jr., was charged with
the crime of reckless imprudence resulting in homicide.
Thereafter, Green Star sent a demand letter to respondent
Nissin-Universal Robina Corporation (NURC) for the repair of
its passenger bus amounting to P567,070.68. NURC denied
any liability therefor and argued that the criminal case shall
determine the ultimate liabilities of the parties. Thereafter, the
criminal case was dismissed without prejudice, due to
insufficiency of evidence.
Sayson and Green Star then filed a complaint for damages
against NURC before the RTC of San Pedro, Laguna. Francis
Tinio, one of NURC's employees, was the one who received the
summons. On February 6, 2004, NURC filed a Motion to
Dismiss claiming lack of jurisdiction due to improper service.
On May 5, 2004, the RTC issued a Resolution denying NURC's
motion to dismiss. It ruled that there was substantial
compliance because there was actual receipt of the summons
by NURC. The dispositive portion of said Resolution thus
reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, defendant's "Motion to
Dismiss" is hereby DENIED.3
Since its Motion for Reconsideration was denied, NURC
elevated the case to the CA via a Petition for Certiorari. On
September 17, 2007, the CA reversed the RTC ruling,
hence:chanRoblesvirtualLawlibrary
WHEREFORE, the instant Petition
for Certiorari is GRANTED. The assailed Resolutions, dated
May 5, 2004 and dated July 26, 2004, of the Regional Trial
Court of San Pedro, Laguna, Branch 31, in Civil Case No. SPL-
0969, are hereby NULLIFIED and a new
one rendered granting Petitioner's Motion to Dismiss, dated
78
February 3, 2004. Private Respondents' Amended Complaint
for Damages filed against Petitioner Nissin-Universal Robina
Corporation is accordingly dismissed for lack of jurisdiction.
SO ORDERED.4
Aggrieved, Green Star and Sayson moved for reconsideration,
but the same was denied. Hence, this petition.
The lone issue is whether or not the summons was properly
served on NURC, vesting the trial court with jurisdiction.
The petition is bereft of merit.
It is a well-established rule that the rules on service of
summons upon a domestic private juridical entity must be
strictly complied with. Otherwise, the court cannot be said to
have acquired jurisdiction over the person of the
defendant.5chanrobleslaw
NURC maintains that the RTC did not acquire jurisdiction over
it as the summons was received by its cost accountant, Francis
Tinio. It argues that under Section 11, Rule 14 of the 1997
Rules of Court, which provides the rule on service of summons
upon a juridical entity, in cases where the defendant is a
domestic corporation like NURC, summons may be served only
through its officers.6 Thus:chanRoblesvirtualLawlibrary
Section 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.7
This provision replaced the former Section 13, Rule 14 of the
1964 Rules of Court which read:chanRoblesvirtualLawlibrary
Section 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.8
In the past, the Court upheld service of summons upon a
construction project manager, a corporation's assistant
manager, ordinary clerk of a corporation, private secretary of
corporate executives, retained counsel, and officials who had
control over the operations of the corporation like the assistant
general manager or the coiporation's Chief Finance and
Administrative Officer. The Court then considered said persons
as "agent" within the contemplation of the old rule. Notably,
under the new Rules, service of summons upon an agent of
the corporation is no longer authorized.9 The rule now likewise
states "general manager" instead of "manager"; "corporate
secretary" instead of merely "secretary"; and "treasurer"
instead of "cashier."10 It has now become restricted, limited,
and exclusive only to the persons enumerated in the
aforementioned provision, following the rule in statutory
construction that the express mention of one person excludes
all others, or expressio unios est exclusio alterius. Service
must, therefore, be made only on the persons expressly listed
in the rules.11 If the revision committee intended to liberalize
the rule on service of summons, it could have easily done so
by clear and concise language.12chanrobleslaw
Here, Tinio, a member of NURC's accounting staff, received
the summons on January 22, 2004. Green Star claims that it
was received upon instruction of Junadette Avedillo, the
general manager of the corporation. Such fact, however, does
not appear in the Sheriffs Return.13 The Return did not even
state whether Avedillo was present at the time the summons
was received by Tinio, the supposed assistant manager. Green
Star further avers that the sheriff tendered the summons, but
Avedillo simply refused to sign and receive the same. She then
allegedly instructed Tinio to just receive it in her behalf.
However, Green Star never presented said sheriff as witness
during the hearing of NURC's motion to dismiss to attest to
said claim. And while the sheriff executed an affidavit which
appears to support such allegation, the same was likewise not
presented as evidence. It was only when the case was already
before the CA that said affidavit first surfaced. Since the
service of summons was made on a cost accountant, which is
not one of the designated persons under Section 11 of Rule
14, the trial court did not validly acquire jurisdiction over
NURC,14 although the corporation may have actually received
the summons.15 To rule otherwise will be an outright
circumvention of the rules, aggravating further the delay in the
administration of justice.16chanrobleslaw

At this juncture, it is worth emphasizing that notice to enable

the other party to be heard and to present evidence is not a
mere technicality or a trivial matter in any administrative or
judicial proceedings. The service of summons is a vital and
indispensable ingredient of due process. Corporations would be
easily deprived of their right to present their defense in a
multi-million peso suit, if the Court would disregard the
mandate of the Rules on the service of summons.

WHEREFORE, the petition is DENIED. The Court of Appeals

Decision dated September 17, 2007 and Resolution dated
January 22, 2008 in CA-G.R. SP No. 86824 are
hereby AFFIRMED.

SO ORDERED.cralawlawlibrary

79
G.R. No. 172204 July 2, 2014
CATHAY METAL CORPORATION, Petitioner,
vs.
LAGUNA WEST MULTI-PURPOSE COOPERATIVE,
INC., Respondent.
DECISION
LEONEN, J.:
The Rules of Court governs court procedures, including the
rules on service of notices and summons. The Cooperative
Code p~ovisions on notices cannot replace the rules on
summons under the Rules of Court. Rule 14, Section 11 of the
Rules of Court provides an-exclusive enumeration of the
persons authorized to receive summons for juridical entities.
These persons are the juridical entity's president, managing
partner, general manager, corporate secretary, treasurer, or
in-house counsel.
This petition under Rule45 assails the Court of Appeals’
decision dated November 25, 2005, and its resolution dated
April 5, 2006. The Court of Appeals remanded the case to the
trial court for respondent’s presentation of evidence.
Respondent Laguna West Multi-Purpose Cooperative is a
cooperative recognized under Republic Act No. 6657 or the
Comprehensive Agrarian Reform Law.1 It allegedly entered into
a joint venture agreement with farmer-beneficiaries through
Certificates of Land Ownership Award (CLOA) in Silang,
Cavite.2 While respondent was negotiating with the farmer-
beneficiaries, petitioner CathayMetal Corporation entered into
Irrevocable Exclusive Right to Buy (IERB) contracts with the
same farmerbeneficiaries.3 Under the IERB, the farmer-
beneficiaries committed themselves to sell to petitioner their
agricultural properties upon conversion to industrial or
commercial properties or upon expiration of the period of
prohibition from transferringtitle to the properties.4
In 1996, respondent caused the annotation of its adverse claim
on the farmer-beneficiaries’ certificates of title.5
On November 9, 1998, the Department of Agrarian Reform
issued an order converting the properties from agricultural to
mixed use.6
In 1999, petitioner and the farmer-beneficiaries executed
contracts of sale of the properties.7 Transfer certificates of
titlewere also issued in the name of petitioner in the same
year.8 The annotations in the original titles were copied to
petitioner's titles.9
Respondent’s Vice-President, Orlando dela Peña, sent two
letters dated March 20, 2000 and April 12, 2000 to petitioner,
informing it of respondent’s claim to the properties.10 Petitioner
did not respond.11
On September 15, 2000,petitioner filed a consolidated petition
for cancellation of adverse claims on its transfer certificates of
80
title with the Regional Trial Court of Tagaytay City.12 It served
a copy of the petition by registered mail to respondent's
alleged official address at "Barangay Mayapa, Calamba,
Laguna."13 The petition was returned to sender because
respondent could not be found at that address. 14 The postman
issued a certification stating that the reason for the return was
that the "cooperative [was] not existing."15 Petitioner allegedly
attempted to serve the petition upon respondent
personally.16 However, this service failed for the same
reason.17
Upon petitioner's motion, the Regional Trial Court issued an
order on December 15, 2000 declaring petitioner’s substituted
service, apparently by registered mail,18 to have been
effected,19 thus:
Acting on the "Manifestation And Motion For Substituted
Service" filed by petitioner Cathay Metal Corporation, thru
counsel, and finding the reasons therein statedto be
meritorious, the same is hereby GRANTED.
Accordingly, this Court hereby declares that substituted service
of the Consolidated Petition for Cancellation of Adverse Claim
on the President of Laguna West Multi-Purpose Cooperative,
Inc. has been effected. The latter ishereby given a period of
fifteen (15) days from the delivery of said pleadings to the
Clerk of Court within which to file their opposition to the
Consolidated petition for cancellation of adverse claim.20
Petitioner was later allowed to present its evidence ex parte.21
Upon learning that a case involvingits adverse claim was
pending, respondent, through Mr. Orlando dela Peña, filed a
manifestation and motion, alleging that respondent never
received a copy of the summons and the petition.22 It moved
for the service of the summons and for a copy of the petition
to be sent to No. 160, Narra Avenue, Looc, Calamba, Laguna.23
The Regional Trial Court granted respondent's manifestation
and motion on March 16, 2001.24 It ordered that respondent
be furnished with a copy of the petition at its new address. 25
Instead of furnishing respondent with a copy of the petition,
petitioner filed on April 16, 2001 a motion for reconsideration
of the March 16, 2001 Regional Trial Court order.26 In its
motion for reconsideration, petitioner argued that the case was
already submitted for decision after all of petitioner’s evidence
had been admitted, and a memorandum had been
filed.27 Therefore, it was too late for respondent to ask the
court that it be furnished with a copy of the
petition.28 Moreover, because respondent was already in
default, a manifestation and motion, without allegations of
grounds for a motion to lift order of default, would not give it
personality to participate in the proceedings.29 Petitioner sent a
copy of the motion for reconsideration to respondent by
registered mail and set the motion for hearing on April 20,
2001.30 Respondent failed to appear atthe hearing on the
motion for reconsideration. On April 20, 2001, the Regional
Trial Court submitted the motion for resolution.31
Respondent received a copy of the motion for reconsideration
after the hearing. On August 13, 2001, respondent filed a
motion for leave to admit attached opposition32 and opposition
to petitioner’s motion for reconsideration of the March 16,2001
Regional Trial Court order.33 Respondent argued that since
petitioner’s ex parte presentation of evidence was secured
through extrinsic fraud, there should be a new trial to give
respondent a fair day in court.34This was opposed by petitioner
on September 6, 2001.35 Petitioner emphasized its alleged
compliance with the Cooperative Code rule on notices and
respondent’s failure to file its comment despite the court’s
order that approved petitioner’s substituted
service.36 Petitioner further pointed out that it had always
questioned the authority of Mr. dela Peñato act for
respondent.37
On January 16, 2003, the Regional Trial Court granted
petitioner's motion for reconsideration.38 It found that
respondent's alleged representatives failed to prove their
authorities to represent respondent.39 It ruled that service
should be made to the address indicated in its Cooperative
Development Authority Certificate of Registration.40 The case
was declared submitted for decision.41
Respondent filed a motion for reconsideration of the January
16, 2003 order of the Regional Trial Court.42
On March 21, 2003, the Regional Trial Court issued a decision
granting petitioner’s petition for cancellation of
annotations.43 The Register of Deeds of Cavite was ordered to
cancel the annotations onthe certificates of title.44
On April 3, 2003, the Regional Trial Court issued an
order45 rescinding its March 21, 2003 decision for having been
prematurely rendered, thus:
This is regard to the Decision dated March 21, 2003 which the
Court has rendered in this particular case.
A review of the records show that the court for reasons
unexplained, has committed an error in judgment in rendering
said decision unmindful of the fact thatthere is still a pending
incident (Oppositor Laguna’s Motion for Reconsideration) which
has first to be resolved.
Fully aware that the error if allowed to remain unrectified
would cause a grave injustice and deeply prejudiced [sic] the
herein respondent, the Court, faithfully adhering to the
principle enunciated by the Honorable Supreme Court in the
case of Astraquilio vs Javier, 13 CRA 125 which provides that:
"It is one of the inherent powers of the court to amend and
control its process and orders so as to make them conformable
to law and justice. This power includes the right to reverse
itself, especially when in its opinion it has committed an error
or mistake in judgment, and that to adhere to its decision will
cause injustice to a party litigant."
do hereby, with deep and sincere apologies to the party-
litigants, more particularly to the herein respondent Laguna
81
West Multi-Purpose Cooperative, Inc., RECALL and RESCIND
its Decision which was prematurely rendered.46
In an order dated May 26, 2003, the Regional Trial Court
denied respondent’s motion for reconsideration of the January
16, 2003 order.47
On June 23, 2003, the Regional Trial Court decided to
grant48 petitioner's petition for cancellation of annotation on
the basis of the following facts:49
. . . These annotations were subsequently copied to the
Transfer Certificates of Titles over the parcels of land subject
of this suit that were issued in the name of Cathay. . . . Upon
verification, Cathay found that Laguna did not file any claim
against the farmer-beneficiaries or Cathay since the time the
annotations were made. . . . Moreover, affidavits of adverse
claim and supporting documents that Laguna supposedly
submitted to the Register of Deeds of Cavite were certified
bythe Register of Deeds to be inexistent in the registry's vault.
. . . Moreover, the Cooperative Development Authority likewise
certified that Laguna has been inoperative since 1992 and
during the period when the annotations were made in 1996.
The Bureau ofPosts has also certified that Laguna's office at
Barangay Mayapa, Calamba, Laguna, its official address as
indicated in its Articles of Incorporation and Confirmation of
Registration is "closed".50
According to the Regional Trial Court, since respondent was
inoperative at the time when its adverse claims were
annotated, "there [was] no reason for [it] to believe that the
person who caused the annotations of adverse claim on the
titles of the farmer-beneficiaries . . . was authorized to do
so."51
The Regional Trial Court ordered the Register of Deeds to
cancel the annotations on the transfer certificates of title. 52 It
held that Section 70 of Presidential Decree No. 1529 or the
Property Registration Decree declares that "an adverse claim is
effective [only]for a period of thirty (30) days and may be
cancelled upon filing of a verified petition after the lapse of this
period."53 Since the 30-day period had already lapsed, the
annotations were already the subject of cancellation.54
Respondent appealed to the Court of Appeals based on two
grounds:
1) Petitioner-appellee secured the favorable orders of
the lower court in fraud of appellant LagunaWest by
sending the petition, all other pleadings, and notices
to its former address, thus, denying its day in court;
and
2) The trial court erred in applying the rule on
substituted service, thus, it did not validly acquire
jurisdiction over the appellant.55
The Court of Appeals granted respondent's appeal on
November 25, 2005. The dispositive portion of the Court of
Appeals' decision reads:
WHEREFORE, premises considered, the appeal is hereby
granted. The case is ordered remanded for appellant's
presentation of evidence and thereafter, for the trial court to
render judgment, albeit with dispatch.56
The Court of Appeals ruled thatthere was no valid service of
summons upon respondent in accordance with Rule 14,
Section 11 of the Revised Rules of Civil Procedure.57 Hence,
the "court acquire[d] no jurisdiction to pronounce a judgment
in the case."58
The Court of Appeals denied petitioner's motion for
reconsideration on April 5, 2006.59
The issue in this case is whether respondent was properly
served with summons or notices of the hearing on the petition
for cancellation of annotations of adverse claim on the
properties.
Petitioner emphasized the following points:
Summons was served upon respondentat its official registered
address at Barangay Mayapa, Calamba, Laguna.60Since no one
received the summons, petitioner insisted that the trial court
issue an order to effect substituted service.61 Respondent still
did not file its answer.62
Later, a certain Orlando dela Peña would filea manifestation
and motion dated February 27, 2001 purportedly on behalf of
respondent.63 Mr. dela Peña claimed that he was an authorized
representative of respondent and that respondent was already
holding office at No. 160, Narra Avenue, Looc, Calamba,
Laguna, which was not the official address of respondent.64 Mr.
dela Peña never submitted proof of his authority torepresent
respondent. He was also never a memberof respondent
cooperative.65
However, Mr. dela Peña was stillallowed to file an answer or
opposition.66 Petitioner filed a motion for reconsideration
opposing the order allowing him to file an answer or opposition
on behalf of respondent.67Respondent failed to oppose this. He
did not participate further.68 Later, a certain Mr. Geriberto
Dragon would claim to be an officer of respondent. He would
file an opposition on its behalf after the period to file an
opposition had lapsed.69 Mr. Dragon alleged that respondent’s
address was at No. 167, Barangay Looc, Calamba,
Laguna.70 Like Mr. dela Peña, Mr. Dragon had never been a
member or officer of respondent.71
Petitioner argued that Mr. dela Peña and Mr. Dragon never
submitted proof of their authority to represent
respondent.72 They were never officers or members of
respondent cooperative.73 Therefore, petitioner cannot be
blamed for being skeptical about Mr. dela Peña’s and Mr.
Dragon’s claims of authority.74
Moreover, Mr. dela Peña and Mr. Dragon could not claim to
have been authorized to represent respondent because it was
determined to be inoperative since 1992.75 In 2002,
respondent was dissolved by the Cooperative Development
Authority.76
82
Petitioner’s motion for reconsideration of the trial court order
allowing respondent to file an answer or opposition to the
petition for cancellation of annotation was granted because of
Mr. dela Peña’s and Mr. Dragon’s failure to show evidence
ofauthority to act on behalf of respondent.77
Petitioner argued that summons could only be validly served to
respondent’s official address as indicated in its registration with
the Cooperative Development Authority.78 This is because
respondent as a registered cooperative is governed by
Republic Act No. 6938, a substantive law that requires
summons to be servedto respondent’s official address.79
Substantive law takes precedence over procedural rules.80
Petitioner cites Article 52 of Republic Act No. 6938:
Article 52. Address. – Every cooperative shall have an official
postal address to which all notice and communications shall be
sent. Such address and every change thereof shall be
registered with the Cooperative Development Authority.
Further, petitioner argues that there is no law that requires
parties to serve summons to "every unsubstantiated address
alleged by [a] party."81
Petitioner also argued that the Court of Appeals erred when it
remanded the case for trial because respondent already
admitted that its adverse claims were based not on a right
over the property but on the "alarm[ing] . . . possibility of
losing the deal"82 with the owners of the property. There was
no agreement yet vesting in respondent any right over the
properties.83 Moreover, the annotations on the title were made
in 1996 when respondent was already inoperative.84
Meanwhile, respondent emphasized thatit entered into a joint
venture agreement with the farmer-beneficiaries.85While in the
process of negotiations, petitioner suddenly entered into the
picture by offering the farmer-beneficiaries an
IrrevocableExclusive Right to Buy (IERB) contracts.86 It was
then that respondent caused the annotation of an adverse
claim on the titles.87
Respondent, through its Vice President, Mr. dela Peña, wrote
two letters between March and April 2000 relative to its
adverse claims in an attempt to amicably settle what seemed
then as a brewing dispute.88 These letters were written on
respondent’s letterheads indicating the address, No. 167,
Barangay Looc, Calamba, Laguna.89
Petitioner deliberately served summons upon respondent to its
old address.90 Later, petitioner would be allowed to present
evidence ex parte.91
Moreover, respondent was unable to appear at the hearing on
the motion for reconsideration of the court order allowing
respondent to file its answer or opposition. Basedon the
records, respondent’s failure to appear was due to petitioner
setting the hearing on April 20, 2001 and mailing respondent’s
a copy of the motion on April 16, 2001 or just four (4) days
before the hearing.92
Respondent filed a motion for leave to admit attached
opposition to petitioner’s motion for reconsideration. This was
opposed by petitioner. Pending respondent’s motion for leave
toadmit attached opposition, the trial court already issued its
order dated January 16, 2013, granting petitioner’s motion for
reconsideration of the order allowing respondent to file its
answer or opposition to the petition for cancellation of adverse
claims.93
Respondent filed a motion for reconsideration of the order
dated January 16, 2003. While the said incidents were
pending,the trial court rendered its decision dated March 21,
2003, granting petitioner’s petition to cancel the annotations of
adverse claims.94 This, according to respondent, was a
premature decision.95
The trial court rescinded the March 21, 2003 decision. On May
26, 2003, the trial court denied respondent’s motion for
reconsideration.96
Within the period allowed for respondent to file its petition for
certiorari, the trial court rendered judgment granting
petitioner’s petition to cancel the annotations of adverse claims
on the title.97
Respondent appealed to the Court of Appeals. The appellate
court remanded the case to the lower court so that respondent
could be allowed to present evidence.98
Respondent argued that petitioner was not being fair when it
served summons to respondent’s old address despite
knowledge of its actual address.99
Moreover, respondent argued that itsrights over the property
should be best determined after trial.100
According to respondent, had there been a trial, it would have:
4.2.1 Presented documentary evidence that its
negotiation with the former landowners had earned
for it part-ownership of the properties, or at the very
least, the exclusive authority to deal with potential
buyers or developers of the properties such as
petitioner.
4.2.2 Offered in evidence the actual Joint Venture
Agreements ("JVA") between the former landowners
and Laguna West whereby Laguna West had made
partial payment of the former landowners’ 40% share
in the joint venture. Laguna Westhad thus acquired
interest over the properties, or had the same or
better right than the registered owner thereof.
4.2.3 Proved by competent evidence that the
annotation sought to be cancelled was not a simple
adverse claim but qualifies as a registration of an
interest over the subject properties;
83
4.2.4 Presented Laguna West’s authorized
representatives, Orlando dela Peña, Geriberto Dragon
and Ediza Saliva, and one or two of the original
landowners to testify on their dealings with Laguna
West.
4.2.5 Called on the officers of the CD on questions
about a cooperative’s address of record vis-à-vis its
actualaddress as known to the party that the
cooperativehad previously been communicating with,
in this case, petitioner.101
We rule that respondent was not validly served with summons
or notice of the hearing. However, its annotations of adverse
claims should be cancelled for being based on a future claim.
I
Respondent was not validly served with summons
Republic Act No. 6938 of 1990 or the Cooperative Code of the
Philippines provides that cooperatives are mandated to have
an official postal address to which notices shall be sent, thus:
Art. 52. Address. – Every cooperative shall have an official
postal address to which all notices and communications shall
be sent. Such address and every change thereof shall be
registered with the Cooperative Development Authority.
This provision was retained in Article 51 of RepublicAct No.
9520 or the Philippine Cooperative Codeof 2008. Article 51
provides:
Art. 51. Address. Every cooperativeshall have an official postal
address to which all notices and communications shall be sent.
Such address and every change thereof shall be registered
with the Authority.
Relying on the above provision, petitioner argued that
respondent was sufficiently served with summons and a copy
of its petition for cancellation of annotations because it
allegedly sent these documents to respondent’s official address
as registered with the Cooperative Development Authority.
Petitioner further argued that the Rules of Procedure cannot
trump the Cooperative Code with respect to notices. This is
because the Cooperative Code is substantive law, as opposed
to the Rules of Procedure, which pertains only to matters of
procedure.
Petitioner is mistaken.
The promulgation of the Rules of Procedure is among the
powers vested only in this court. Article VIII, Section 5(5)
provides:
Sec. 5. The Supreme Court shall have the following powers:
....
(5) Promulgate rules concerning the protection and
enforcement of constitutional rights, pleading, practice, and
procedure in all courts, the admission to the practice of law,the
integrated bar, and legal assistance to the
underprivileged.Such rules shall provide a simplified and
inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not
diminish, increase, or modifysubstantive rights. Rules of
procedure of special courts and quasi-judicial bodies shall
remain effective unless disapproved by the Supreme Court.
This means that on matters relating toprocedures in court, it
shall be the Rules of Procedure that will govern. Proper court
procedures shall be determined by the Rules as promulgated
by this court.
Service of notices and summons on interested parties in a civil,
criminal, or special proceeding is court procedure. Hence, it
shall be governed by the Rules of Procedure.
The Cooperative Code provisions may govern matters relating
to cooperatives’ activities as administered by the Cooperative
Development Authority. However, they are not procedural
rules that will govern court processes. A Cooperative Code
provision requiring cooperatives to have an official address to
which all notices and communications shall be sent cannot take
the place of the rules on summonsunder the Rules of Court
concerning a court proceeding.
This is not to say that the noticescannot be sent to
cooperatives in accordance with the Cooperative Code. Notices
may be sent to a cooperative’s official address. However,
service of notices sent to the official address in accordance
with the Cooperative Code may not be used as a defense for
violations of procedures, specially when such violation affects
another party’s rights.
Section 11, Rule 14 of the Rules ofCourt provides the rule on
service of summons upon a juridical entity. It provides that
summons may be served upon a juridical entity only through
its officers. Thus:
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.
We have already established that the enumeration in Section
11 of Rule 14 is exclusive.102 Service of summons upon
persons other than those officers enumerated in Section 11 is
invalid.103 Even substantial compliance is not sufficient service
of summons.104
This provision of the rule does not limit service to the officers’
places of residence or offices. If summons may not be served
upon these persons personally at their residences or offices,
summons may be served upon any of the officers wherever
they may be found.
Hence, petitioner cannot use respondent's failure to amend its
Articles of Incorporation to reflect its new address as an
84
excuse from sending or attempting to send to respondent
copies of the petition and the summons. The Rules of Court
provides that noticesshould be sent to the enumerated officers.
Petitioner failed to do this. Nonotice was ever sent to any of
the enumerated officers.
Petitioner insists that it should not be made to inquire further
as to the whereabouts of respondent after the attempt to
serve the summons by registered mail to respondent’s address
as allegedly indicated in its Articles of Incorporation. The Rules
does not provide that it needs to do so. However, it provides
for service by publication. Service by publication is available
when the whereabouts of the defendant is unknown. Section
14, Rule 14 of the Rules of Court provides:
Sec. 14. Service upon defendant whose identity or
whereabouts are unknown. – In any action where the
defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court,
be effected upon him by publication in a newspaper of general
circulation and in such places and for such time as the court
may order. (Emphasis supplied)
This is not a matter of acquiringjurisdiction over the person of
respondent since this is an action in rem. In an action in rem,
jurisdiction over the person is not required as long asthere is
jurisdiction over the res. This case involves the issue of fair
play and ensuring that parties are accorded due process.
In this case, petitioner served summons upon respondent by
registered mail and, allegedly, by personal service at the office
address indicated in respondent’s Certificate of Registration.
Summons was not served upon respondent’s officers. It was
also not published in accordance with the Rules of Court. As a
result, respondent was not given an opportunity to present
evidence, and petitioner was able to obtain from the Regional
Trial Court an order cancelling respondent’s annotations of
adverse claims.
Respondent was, therefore, not validly served with summons.
II
Respondent’s alleged non-
operation does not bar it from
authorizing a person to act on
its behalf in court
proceedings
Petitioner argues that failure to serve the summons upon
respondent was due to respondent's non-operation and failure
to amend its Articles of Incorporation to reflectits new address.
Petitioner's conclusion that respondent was no longer
operating was based only on the postmaster's certification.
According to the postmaster’s certification, it failed to serve the
petition for cancellation of annotation to respondent’s official
address becauseof respondent’s nonexistence or closure.
Petitioner failed to consider that the postmaster was not in the
position to make a reliable statement as to the existence or
closure of an entity.
Moreover, the Cooperative Development Authority's
certification stating that respondent was not submitting any
financial report since 1992, which was proof of its non-
operation, was a mere statement of what was indicative of
non-operation. It was not yet a conclusive statement that
respondent was not in operation.
In any case, even assuming that respondent was not
operating, it might still exercise its powers as a cooperative
until it would get dissolved. Section 9 of Republic Act No. 6938
provides the powers and capacities of registered cooperatives.
Section 9. Cooperative Powers and Capacities.- A cooperative
registered under this Code shall have the following powers and
capacities:
(1) To sue and be sued in its cooperative name;
(2) Of succession;
(3) To amend its articles of cooperation in accordance
with the provisions of this code;
(4) To adopt by-laws not contrary to law, morals or
public policy, and to amend and repeal the same in
accordance with this Code;
(5) To purchase, receive, take orgrant, hold, convey,
sell, lease, pledge, mortgage, and otherwise deal with
such real and personal property as the transaction of
the lawful affairs of the cooperative may reasonably
and necessarily require, subject to the limitations
prescribed by law and the Constitution;
(6) To enter into division, mergeror consolidation, as
provided in this Code;
(7) To join federations or unions, as provided in this
Code;
(8) To accept and receive grants, donations and
assistance from foreign and domestic sources; and
(9) To exercise such other powers granted in this
Code or necessary to carry out its purpose or
purposes as stated in its articles of cooperation.
Prior to dissolution, a cooperative isentitled to the exercise of
these powers. It may engage indeals involving its properties or
rights. It may cause the annotation of claims it deems to have
in order to protect such claim. Contrary to petitioner’s claim,
respondent is not prevented from authorizing persons to act on
its behalf.
In any case, even if petitioner alleged that respondent was
already dissolved by virtue of a November7, 2002 resolution of
Cooperative Development Authority, the relevant acts of
respondent had occurred before such resolution.
85
The resolution of the issue of representation could have
facilitated the resolution of the case on the merits.
III
The trial court could have
resolved the issue of
representation; premature
decisions elicit suspicion
The court must not trifle with jurisdictional issues. It is
inexcusable that a case involving issues that the trial court had
full control of had to be elevated to this court for
determination.
The trial court had every opportunityto resolve the validity of
Mr. dela Peña’s and Mr. Dragon’s alleged authority to act on
behalf of respondent. The trial court had, in fact, already
allowed respondent to file its answer and oppose petitioner’s
petitionfor cancellation of annotation. It could have easily
ordered Mr. dela Peña or Mr. Dragon to produce evidence of
their authority to represent respondent.
Moreover, there had been at least two motions for
reconsideration filed before the trial court finallydecided the
petitioner’s petition for cancellation of annotation.
The first was filed by petitioner when the trial court granted
respondent’s manifestation and motion on March 16, 2001.
The trial court could have heard the parties on the issue of
representation at this instance had it noted petitioner’s non-
compliance with the rule that the notice of hearing must "be
served in such a manner as to ensure its receipt by the other
party at least three (3) days before the date of the
hearing."105 Section 4, Rule 15 provides:
Sec. 4. Hearing of motion. – Except for motions which the
court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by
the applicant. Every written motion required to be heard and
the notice of the hearing thereof shall be served in such a
manner as to ensure its receipt by the other party at least
three (3) days before the date of hearing, unless the court for
good cause sets the hearing on shorter notice.
In this case, petitioner set the case for hearing on April 20,
2001. It served a copy upon respondent by registered mail
only on April 16, 2001 or four (4) days before the set date for
hearing. To be covered by the three-day rule under Rule 15,
Section 4, petitioner should ensure respondent’s receipt of the
notice by April 17, 2001. We take judicial notice that service by
registered mail in our jurisdiction does not take place in one
day. Service of notice by registered mail only four (4) days
before the date of hearing, therefore, does not amount to
ensuring the other party’s receipt at least three (3) days before
the hearing.
The second motion for reconsideration was filed by respondent
when the Regional Trial Court granted petitioner’s motion for
reconsideration of its order of March 16, 2001.Hence, for the
second time, the trial court had an opportunity to hear
whether Mr. dela Peña or Mr. Dragon was properly authorized
to act on behalf of respondent.
On one hand, nobody’s rights would have been prejudiced had
respondent been allowed to prove the alleged representatives’
authorities. On the other hand, there is a likelihood
ofprejudice, in this case, if the court relied purely on
technicalities.
Thus, we reiterate this court’s ruling in Alonso v. Villamor:106
. . . In other words, [processes] are a means to an end. When
they lose the character of the one and become the other, the
administration of justice is at fault and courts are
correspondingly remiss in the performance of their obvious
duty.
. . . To take advantage of [a purely technical error] for other
purposes than to cure it, does not appeal to a fair sense of
justice. Its presentation as fatal to [a party]’s case smacks of
skill rather than right. A litigation is not a game of technicalities
in which one, more deeply schooled and skilled in the subtle
art of movement and position, entraps and destroys the other.
It is, rather, a contest in which each contending party fully and
fairly lays before the court the facts in issue and then,
brushing aside as wholly trivial and indecisive all imperfections
of form and technicalities of procedure, asks that justice be
done upon the merits. Lawsuits, unlike duels, are not to be
won by a rapier’s thrust. Technicality, when it deserts its
proper office as anaid to justice and becomes its great
hindrance and chief enemy, deservesscant consideration from
courts. There should be no vested rights in technicalities. No
litigant should be permitted to challenge a record of a court of
these Islands for defect of form when his substantial rights
have not been prejudiced thereby.
Both motions for reconsideration filed in the trial court were
opportunities to hear the parties on the issue of representation
and to ensure that all parties were given their fair opportunity
to be heard. The trial court ignored both opportunities and
chose to rule based on technicalities to the prejudice of
respondent.
The rules cannot be interpreted asa means to violate due
process rights. Courts should, as much as possible, give parties
the opportunity to present evidence as to their claims so that
decisions will be made based on the merits of the case.
The trial court issued a decision pending incidents yet to be
resolved. We take this opportunity to remind courtsthat the
issuance of fair decisions is the heart of our functions. The
judiciary is expected to take seriously its task of crafting
decisions with utmostjudiciousness. Premature decisions only
elicit suspicion of the courts and diminish our role as
administrator of justice.
IV
Rights still under negotiations
are not adverse claims
86
Ordinarily, this case would be remanded to the trial court for
the presentation of respondent’s evidence. However, this case
has been pending in this court for about eight (8) years.In the
interest of judicial economy and efficiency, and given that the
court records are sufficient to make a determination on the
validity of respondent’s adverse claim, we shall rule on the
issue. Respondent had been assailing the lack of service of
summons upon it and the resulting cancellation of its alleged
adverse claim on the titles. Its claim is anchored on its
disrupted negotiations with the farmer-beneficiaries involving
the properties. In its memorandum filed on March 1, 2007,
respondent stated:
1.2 Some ten (10) years ago, Laguna West entered into [sic]
Joint Venture Agreement ("JVA") with various farmer-CLOA
beneficiaries in the Kaong-Kalayugan area of Silang, Cavite for
a total lot area of Eight Hundred Fifty Five Thousand and Nine
Hundred Fourteen (855,914) square meters.
1.3 To hold the CLOA beneficiaries to their commitment to
submit their respective lots to the JVA, Laguna West promised
them a guaranteed share of 40% in the proceeds of the
project.
1.4 But, while Laguna West was still in the process of finalizing
the negotiations with these farmer-beneficiaries, petitioner
entered the picture by offering an alleged "Irrevocable
Exclusive Right to Buy (IERB)" contracts with the same farmer-
landowners for the purpose of converting the subject vast
track [sic] of land into an industrial, commercial and residential
area.
1.5 Alarmed with the possibility that it could lose the deal to a
big and moneyed corporation, Laguna Westcaused the
annotation of adverse claims on the thirty-nine (39) TCTs in
1996.107 Respondent’s annotations on petitioner’s certificates
of title are similarly worded, thus:
Entry No. . . . -AFFIDAVIT OF ADVERSE CLAIM- Covering the
parcel of land described in this title as per Affidavit of Adverse
Claim executed by Calisto M. Dela Pena [sic] of Laguna West
Multi-Purpose Cooperative Inc., wherein the registered owner
entered into a Joint Venture Agreement, as per Affidavit
ofAdverse Claim, subs. and sworn to before the Not. Public for
. . ., a copy is on file in this registry.
Date of inst.- . . . .
Date of inscription- . . . .
NOTE: The foregoing annotations were copied from TCT. . .
.108
Another version of the annotation is worded as follows:
Entry No. . . . -ADVERSE CLAIM- Signed and executed by
Calixto M. dela Pena [sic], president and Chairman of
Cooperative, [alleging] therein the existence of Joint Venture
Agreement with the registered owner and that there are
aboutto dispose said lot, exec. before the Not. Public . . . Copy
is on file in this registry. Date of inst.- . . . . Date of inscription-
. . . .109
NOTE: The foregoing annotations were copied from TCT. . . .
The purpose of annotations of adverse claims on title is to
apprise the whole world of the controversy involving a
property. These annotations protect the adverse claimant's
rights before or during the pendency of a case involving a
property. It notifies third persons that rights that may be
acquired with respect to a property are subject to the results
of the case involving it.
Section 70 of Presidential Decree No. 1529 or the Property
Registration Decree governs adverse claims. It describes an
adverse claim as a statement in writing setting forth a
subsequent right or interest claimed involving the property,
adverse tothe registered owner. Thus:
Section 70. Adverse claim. – Whoever claims any part or
interest in registered land adverse to the registered owner,
arising subsequent to the date of the original registration, may,
if no other provision is made in this Decree for registering the
same, make a statement in writing setting forth fully his
alleged right or interest, and how or under whom acquired, a
reference to the number of the certificate of title of the
registered owner, the name of the registered owner, and a
description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state
the adverse claimant’s residence, and a place at which all
notices may be served upon him. This statement shall be
entitled to registration as an adverse claim on the certificate of
title. The adverse claim shall be effective for a period of thirty
days from the date of registration. After the lapse ofsaid
period, the annotation of adverse claim may be cancelled upon
filing of a verified petition therefor by the party in interest:
Provided, however, that after cancellation, no second adverse
claim based on the same ground shall be registered by the
same claimant.
Before the lapse of thirty days aforesaid, any party in interest
may file a petition in the court of First Instance where the land
is situated for the cancellation of the adverse claim, and the
court shall grant a speedy hearing upon the question of the
validity of such adverse claim, and shall render judgment as
may be just and equitable. If the adverse claim is adjudged to
be invalid, the registration thereof shall be ordered cancelled.
If, in any case, the court, after notice and hearing, shall find
that the adverse claim thus registered was frivolous, it may
fine the claimant in an amount not less than one thousand
pesos nor more than five thousand pesos, in its discretion.
Before the lapse of thirty days, the claimant may withdraw his
adverse claim by filing with the Register of Deeds a sworn
petition to that effect.
A claim based on a future right does notripen into an adverse
claim as defined in Section 70 of Presidential Decree No. 1529.
A right still subject to negotiations cannot be enforced against
a title holder or against one that has a legitimate title to the
87
property based on possession, ownership, lien, or any valid
deed of transfer.
Respondent’s claim was not based on any of
those.1awp++i1 Its claim was based on a deal with the CLOA
farmer-beneficiaries, which did not materialize.
Respondent alleged that had there been a trial, it could have
"[p]resented documentary evidence that its negotiation with
the former landowners had earned for it part-ownership of the
properties, or . . . the exclusive authority to deal with potential
buyers or developers."110 Respondent contradicts itself. For
there to be a contract, there must be a meeting of the minds
between the parties. There could not have been any contract
earning for respondent part-ownership or any right since it was
still undergoing negotiations with the farmer-beneficiaries. At
that stage, meeting of the minds was absent. The terms were
not yet final. Hence, no right or obligation could attach to the
parties. In essence, parties cannot claim, much less make an
adverse claim of any right, from terms that are still under
negotiations.
Respondent also alleged that had it been allowed to offer as
evidence the joint venture agreement it entered with the
farmer-beneficiaries, it would have shown that it "had made
partial payment of the former landowners’ 40% share in the
joint venture,"111 acquiring for itself an "interest over the
properties, or . . . better right than the registered
owner[s]."112 Respondent was mistaken.
Republic Act No. 6657 or the Comprehensive Agrarian Reform
Law prohibits its own circumvention. The prohibition on
disposition includes all rights relating to disposition such as
sale, and promise of sale of property upon the happening of
conditions that remove the restrictions on disposition.
Republic Act No. 6657 prohibits the sale, transfer, or
conveyance of awarded lands within ten (10) years, subject
only to a few exceptions. Section 27 of the Act provides:
SECTION 27. Transferability of Awarded Lands. —Lands
acquired by beneficiaries underthis Act may not be sold,
transferred or conveyed except through hereditary succession,
or to the government, or the LBP, or to other qualified
beneficiaries for a period of ten (10) years: provided, however,
that the children or the spouse of the transferorshall have a
right to repurchase the land from the government or LBP
withina period of two (2) years. Due notice of the availability of
the land shall be given by the LBP to the Barangay Agrarian
Reform Committee (BARC) of the barangay where the land is
situated. The Provincial Agrarian Reform Coordinating
Committee (PARCCOM) as herein provided, shall, in turn, be
given due notice thereof by the BARC.
If the land has not yet been fully paid by the beneficiary, the
rights to the land may be transferred orconveyed, with prior
approval of the DAR, to any heir of the beneficiary or to any
other beneficiary who, as a condition for such transferor
conveyance, shall cultivate the land himself. Failing compliance
herewith, the land shall be transferred to the LBP which shall
give due notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the amounts
the latter has already paid, together with the value of
improvements he has made on the land Republic Act No. 6657
also provides that the awarded lands may be converted to
residential, commercial,or industrial use if these are not
economically feasible anymore or because of urbanization,
greater economic value will be derived with their conversion.
Section 65 of the Act provides:
SECTION 65. Conversion of Lands. — After the lapse of five (5)
years from its award, when the land ceases to be economically
feasible and sound for agricultural purposes, or the locality has
become urbanized and the land will have a greater economic
value for residential, commercial or industrial purposes, the
DAR, upon application of the beneficiary or the landowner,
with due notice to the affected parties, and subject to existing
laws, may authorize the reclassification or conversion of the
land and its disposition: provided, that the beneficiary shall
have fully paid his obligation.
These provisions imply the following on rules on sale of
awarded lands:
1) Subject to a few exceptions, landsacquired by
beneficiaries may be conveyed to non-beneficiaries
after ten (10) years.
2) Before the lapse of ten (10) years but after the
lapse of five (5) years, a beneficiary may dispose of
the acquired land if it "ceases to be economically
feasible and sound for agricultural purposes, or the
locality has become urbanized and the land will have
a greater economic value"113 with its residential,
commercial, or industrial use.
These implications are easily abused. Hence, Republic Act No.
6657 included among the prohibitions any act that will
circumvent its provisions. Thus:
SECTION 73. Prohibited Acts and Omissions. — The following
are prohibited: (a) The ownership or possession, for the
purpose of circumventing the provisions of this Act, of
agricultural lands in excess of the total retention limits or
award ceilings by any person, natural or juridical, except those
under collective ownership by farmer-beneficiaries. (b) The
forcible entry or illegal detainer by persons who are not
qualified beneficiaries under thisAct to avail themselves of the
rights and benefits of the Agrarian Reform Program. (c) The
conversion by any landowner of his agricultural land into any
nonagricultural use with intent to avoid the application of this
Act to his landholdings and to dispossess his tenant farmers of
the land tilled by them. (d) The willful prevention or
obstruction by any person, association or entity of the
implementation of the CARP. (e) The sale, transfer,
conveyance or change of the nature of lands outside of urban
centers and city limits either in whole or in part after the
effectivity of this Act. The date ofthe registration of the deed
88
of conveyance in the Register of Deeds with respect to titled
lands and the date of the issuance ofthe tax declaration to the
transferee of the property with respect to unregistered lands,
as the case may be, shall be conclusive for the purpose of this
Act. (f) The sale, transfer or conveyance by a beneficiary of
the right to use or any other usufructuary right over the land
he acquired by virtue of being a beneficiary, in order to
circumvent the provisions of this Act. (Emphasis supplied)
The prohibition from disposition of the properties encompasses
all rights relating to disposition, including the right to convey
ownership or to promise the sale and transfer of property from
the farmer-beneficiaries to anyone upon the happening of
certain conditions that will remove the conveyance restrictions.
The conveyance of the property withinthe prohibited period or
before its conversion to non-agricultural use isan outright
violation of Republic Act No. 6657. Meanwhile, the promise of
sale of properties upon the happening of conditions that will
remove restrictions carry with it an intent to circumvent the
provisions of Republic Act No. 6657. This law prohibits its
circumvention.
In this case, the CLOAs were awarded to the farmer-
beneficiaries between 1990 and 1992.114 Since the affidavit of
adverse claim annotated on petitioner’s certificates of title was
annotated in 1996 and the properties were converted only in
1998, respondent’sjoint venture agreement with the farmer-
beneficiaries could not have validly transferred rights to
respondent.
The 10-year period of prohibition against conveyance had not
yet lapsed at that time.1âwphi1 Neither were the properties
already converted to non-agricultural use at that time.
Respondent's adverse claim, therefore, based on its alleged
payment of the farmer-beneficiaries' 40% could not be valid.
In sum, whether or not there were provisions on transfer of
rights or promise to transfer rights in the joint venture
agreement, there could be no basis for respondent’s adverse
claim. Lack of that provision means that respondent does not
have any valid claim or right over the properties at all.
Meanwhile, inclusion of such provision is illegal and, therefore,
void.
This ruling is also applicable to petitioner, which entered into
irrevocable exclusive right to buy contracts from the farmer-
beneficiaries. These contracts provided that the farmer-
beneficiaries committed themselves to selling their properties
to petitioner upon expiration of the period of prohibition to
transfer or upon conversion of the properties from agricultural
to industrial or commercial use, whichever comes first. These
contracts were execl!ted between farmer-beneficiaries and
petitioner during the period of prohibition and before the
properties' conversion from agricultural to mixed use. Upon
conversion of the properties, these were immediately sold to
petitioner. Intent to circumvent the provisions of Republic Act
No. 6657 is, therefore, apparent. Petitioner's contracts are,
therefore, also illegal and void. Hence, this decision is without
prejudice to the right of interested parties. to seek the
cancellation of petitioner's certificates of title obtained in
violation of the law.
WHEREFORE, the petition is GRANTED. The Register of Deeds
of Cavite is ORDERED to cancel the annotations of adverse
claims on the transfer certificates· of title.

SO ORDERED.

89
[G.R. No. 159590. October 18, 2004]
HONGKONG AND SHANGHAI BANKING CORPORATION
LIMITED, petitioner, vs. CECILIA DIEZ
CATALAN, respondent.
[G.R. No. 159591. October 18, 2004]
HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner,
vs. CECILIA DIEZ CATALAN, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us are two petitions for review on certiorari under
Rule 45 of the Rules of Court separately filed by the Hongkong
and Shanghai Banking Corporation Limited (HSBANK) and
HSBC International Trustee Limited (HSBC TRUSTEE). They
seek the reversal of the consolidated Decision,[1] dated August
14, 2003, of the Court of Appeals (CA) in CA-G.R. SP Nos.
75756 and 75757, which dismissed the petitions for certiorari
of herein petitioners assailing the Order, dated May 15, 2002,
of the Regional Trial Court, Branch 44, Bacolod City (RTC) in
Civil Case No. 01-11372 that denied their respective motions to
dismiss the amended complaint of respondent Cecilia Diez
Catalan.
The factual antecedents are as follows:
On January 29, 2001, respondent filed before the RTC, a
complaint for a sum of money with damages against petitioner
HSBANK, docketed as Civil Case No. 01-11372, due to
HSBANKs alleged wanton refusal to pay her the value of five
HSBANK checks issued by Frederick Arthur Thomson
(Thomson) amounting to HK$3,200,000.00.[2]
On February 7, 2001, summons was served on HSBANK
at the Enterprise Center, Tower I, Ayala Avenue corner Paseo
de Roxas St., Makati City.[3] HSBANK filed a Motion for
Extension of Time to File Answer or Motion to Dismiss dated
February 21, 2001.[4] Then, it filed a Motion to Dismiss, dated
March 8, 2001, on the grounds that (a) the RTC has no
jurisdiction over the subject matter of the complaint; (b) the
RTC has not acquired jurisdiction for failure of the plaintiff to
pay the correct filing or docket fees; (c) the RTC has no
jurisdiction over the person of HSBANK; (d) the complaint does
not state a cause of action against HSBANK; and (e) plaintiff
engages in forum-shopping.[5]
On September 10, 2001, Catalan filed an Amended
Complaint impleading petitioner HSBC TRUSTEE as co-
defendant and invoking Article 19 of the Civil Code as basis for
her cause of action.[6]
The Amended Complaint alleges:
Defendants HSBANK and HSBC TRUSTEE, doing business
in the Philippines, are corporations duly organized under the
laws of the British Virgin Islands with head office at 1 Grenville
Street, St. Helier Jersey, Channel Islands and with branch
offices at Level 12, 1 Queens Road Central, Hongkong and
may be served with summons and other court processes
through their main office in Manila with address at HSBC, the
90
Enterprise Center, Tower 1, Ayala Avenue corner Paseo de
Roxas Street, Makati City.
Sometime in March 1997, Thomson issued five HSBANK
checks payable to Catalan, to wit:
CHECK NO. DATE AMOUNT
807852 Mar. 15, 1997 $600,000.00
807853 Mar. 17, 1997 800,000.00
807854 Mar. 17, 1997 600,000.00
807855 Mar. 22, 1997 600,000.00
807856 Mar. 23, 1997 600,000.00
TOTAL $3,200,00
0.00
The checks when deposited were returned by HSBANK
purportedly for reason of payment stopped pending
confirmation, despite the fact that the checks were duly
funded. On March 18, 1997, Thomson wrote a letter to a
certain Ricky Sousa[7] of HSBANK confirming the checks he
issued to Catalan and requesting that all his checks be
cleared. On March 20, 1997, Thomson wrote another letter to
Sousa of HSBANK requesting an advice in writing to be sent to
the Philippine National Bank, through the fastest means, that
the checks he previously issued to Catalan were already
cleared. Thereafter, Catalan demanded that HSBANK make
good the checks issued by Thomson. On May 16, 1997,
Marilou A. Lozada, personal secretary and attorney-in-fact of
Thomson, wrote a letter to Sousa of HSBANK informing him
that HSBANKs failure to clear all the checks had saddened
Thomson and requesting that the clearing of the checks be
facilitated. Subsequently, Thomson died and Catalan forwarded
her demand to HSBC TRUSTEE. Catalan sent photocopies of
the returned checks to HSBC TRUSTEE. Not satisfied, HSBC
TRUSTEE through deceit and trickery, required Catalan, as a
condition for the acceptance of the checks, to submit the
original copies of the returned checks, purportedly, to hasten
payment of her claim. HSBC TRUSTEE succeeded in its
calculated deception because on April 21, 1999, Catalan and
her former counsel went to Hongkong at their own expense to
personally deliver the originals of the returned checks to the
officers of HSBC TRUSTEE, anxious of receiving the money
value of the checks but HSBC TRUSTEE despite receipt of the
original checks, refused to pay Catalans claim. Having seen
and received the original of the checks, upon its request, HSBC
TRUSTEE is deemed to have impliedly accepted the
checks. Moreover, the refusal of HSBANK and HSBC TRUSTEE
to pay the checks is equivalent to illegal freezing of ones
deposit. On the assurance of HSBC TRUSTEE that her claim
will soon be paid, as she was made to believe that payments
of the checks shall be made by HSBC TRUSTEE upon sight, the
unsuspecting Catalan left the originals of the checks with HSBC
TRUSTEE and was given only an acknowledgment
receipt. Catalan made several demands and after several more
follow ups, on August 16, 1999, Phoenix Lam, Senior Vice
President of HSBC TRUSTEE, in obvious disregard of her valid
claim, informed Catalan that her claim is disapproved. No
reason or explanation whatsoever was made why her claim
was disapproved, neither were the checks returned to
her. Catalan appealed for fairness and understanding, in the
hope that HSBC TRUSTEE would act fairly and justly on her
claim but these demands were met by a stonewall of
silence. On June 9, 2000, Catalan through counsel sent a last
and final demand to HSBC TRUSTEE to remit the amount
covered by the checks but despite receipt of said letter, no
payment was made. Clearly, the act of the HSBANK and HSBC
TRUSTEE in refusing to honor and pay the checks validly
issued by Thomson violates the abuse of rights principle under
Article 19 of the Civil Code which requires that everyone must
act with justice, give everyone his due and observe honesty
and good faith. The refusal of HSBANK and HSBC TRUSTEE to
pay the checks without any valid reason is intended solely to
prejudice and injure Catalan. When they declined payment of
the checks despite instructions of the drawer, Thomson, to
honor them, coupled with the fact that the checks were duly
funded, they acted in bad faith, thus causing damage to
Catalan. A person may not exercise his right unjustly or in a
manner that is not in keeping with honesty or good faith,
otherwise he opens himself to liability for abuse of right.[8]
Catalan prays that HSBANK and HSBC TRUSTEE be
ordered to pay P20,864,000.00 representing the value of the
five checks at the rate of P6.52 per HK$1 as of January 29,
2001 for the acts of HSBANK and HSBC TRUSTEE in refusing to
pay the amount justly due her, in addition to moral and
exemplary damages, attorneys fees and litigation expenses.[9]
On October 2, 2001, HSBANK filed a Motion to Dismiss
Amended Complaint on the grounds that: (a) the RTC has no
jurisdiction over the subject matter of the complaint since the
action is a money claim for a debt contracted by Thomson
before his death which should have been filed in the estate or
intestate proceedings of Thomson; (b) Catalan engages in
forum shopping by filing the suit and at the same time filing a
claim in the probate proceeding filed with another branch of
the RTC; (c) the amended complaint states no cause of action
against HSBANK since it has no obligation to pay the checks as
it has not accepted the checks and Catalan did not re-deposit
the checks or make a formal protest; (d) the RTC has not
acquired jurisdiction over the person of HSBANK for improper
service of summons; and, (e) it did not submit to the
jurisdiction of the RTC by filing a motion for extension of time
to file a motion to dismiss.[10]
Meanwhile, on October 17, 2001, summons for HSBC
TRUSTEE was tendered to the In House Counsel of HSBANK
(Makati Branch) at the Enterprise Center, Tower 1, Ayala
Avenue corner Paseo de Roxas, Makati. Without submitting
itself to the jurisdiction of the RTC, HSBC TRUSTEE filed a
Special Appearance for Motion to Dismiss Amended Complaint,
dated October 29, 2001, questioning the jurisdiction of the
RTC over it.[11] HSBC TRUSTEE alleges that tender of summons
through HSBANK Makati did not confer upon the RTC
jurisdiction over it because: (a) it is a corporation separate and
distinct from HSBANK; (b) it does not hold office at the
HSBANK Makati or in any other place in the Philippines; (c) it
has not authorized HSBANK Makati to receive summons for it;
and, (d) it has no resident agent upon whom summons may be
served because it does not transact business in the Philippines.
Subsequently, HSBC TRUSTEE filed a Submission, dated
November 15, 2001, attaching the Affidavit executed in
Hongkong by Phoenix Lam, Senior Vice-President of HSBC
TRUSTEE, attesting to the fact that: 1) HSBC TRUSTEE has not
done nor is it doing business in the Philippines; 2) it does not
91
maintain any office in Makati or anywhere in the Philippines; 3)
it has not appointed any agent in Philippines; and 4) HSBANK
Makati has no authority to receive any summons or court
processes for HSBC TRUSTEE.[12]
On May 15, 2002, the RTC issued an Order denying the
two motions to dismiss.[13] The RTC held that it has jurisdiction
over the subject matter of the action because it is an action for
damages under Article 19 of the Civil Code for the acts of
unjustly refusing to honor the checks issued by Thomson and
not a money claim against the estate of Thomson; that Catalan
did not engage in forum-shopping because the elements
thereof are not attendant in the case; that the question of
cause of action should be threshed out or ventilated during the
proceedings in the main action and after the plaintiff and
defendants have adduced evidence in their favor; that it
acquired jurisdiction over the person of defendants because
the question of whether a foreign corporation is doing business
or not in the Philippines cannot be a subject of a Motion to
Dismiss but should be ventilated in the trial on the merits; and
defendants voluntarily submitted to the jurisdiction of the RTC
setting up in their Motions to Dismiss other grounds aside from
lack of jurisdiction.
HSBANK and HSBC TRUSTEE filed separate motions for
reconsideration[14] but both proved futile as they were denied
by the RTC in an Order dated December 20, 2002.[15]
On February 21, 2003, Catalan moved to declare HSBANK
and HSBC TRUSTEE in default for failure to file their answer to
the amended complaint.
On March 5, 2003, HSBANK and HSBC TRUSTEE filed
separate petitions for certiorari and/or prohibition with the CA,
docketed as CA-G.R. SP Nos. 75756[16] and
75757,[17] respectively.
Subsequently, HSBANK and HSBC TRUSTEE filed before
the RTC separate Answers ad cautelam, both dated March 18,
2003, as a precaution against being declared in default and
without prejudice to the separate petitions for certiorari and/or
prohibition then pending with the CA.[18]
Meanwhile, the two petitions for certiorari before the CA
were consolidated and after responsive pleadings were filed,
the cases were deemed submitted for decision.
In a consolidated Decision dated August 14, 2003, the CA
dismissed the two petitions for certiorari.[19] The CA held that
the filing of petitioners answers before the RTC rendered moot
and academic the issue of the RTCs lack of jurisdiction over
the person of the petitioners; that the RTC has jurisdiction
over the subject matter since it is one for damages under
Article 19 of the Civil Code for the alleged unjust acts of
petitioners and not a money claim against the estate of
Thomson; and, that the amended complaint states a cause of
action under Article 19 of the Civil Code which could merit a
favorable judgment if found to be true. The CA noted that
Catalan may have prayed for payment of the value of the
checks but ratiocinated that she merely used the value as basis
for the computation of the damages.
Hence, the present petitions.
In G.R. No. 159590, HSBANK submits the following
assigned errors:
I.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
HOLDING THAT THE COURT A QUO, ACTING AS AN (SIC)
REGULAR COURT, HAS JURISDICTION OVER THE AMENDED
COMPLAINT SEEKING TO ORDER HSBC TRUSTEE, THE
EXECUTOR OF THE DECEASED FREDERICK ARTHUR
THOMSON, TO PAY SUBJECT CHECKS ISSUED BY THE LATE
FREDERICK ARTHUR THOMSON, ADMITTEDLY IN PAYMENT
OF HIS INDEBTEDNESS TO CATALAN.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
HOLDING THAT THE AMENDED COMPLAINT DOES NOT SEEK
TO ORDER HSBANK AND HSBC INTERNATIONAL TRUSTEE
LIMITED TO PAY THE OBLIGATION OF THE (SIC) FREDERICK
ARTHUR THOMSON AS EVIDENCED BY THE CHECKS, BUT
PRAYS FOR DAMAGES EQUIVALENT OR COMPUTED ON THE
BASIS OF THE VALUE OF THE CHECKS BECAUSE THE
DEFENDANTS FAILED TO COMPLY WITH THE MANDATES OF
ARTICLE 19 OF THE NEW CIVIL CODE.
III.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
HOLDING THAT ALLEGATIONS IN THE AMENDED COMPLAINT
MAKE OUT A CAUSE OF ACTION WHICH COULD MERIT A
FAVORABLE JUDGMENT IF FOUND TO BE TRUE, OR IN NOT
HOLDING THAT THE AMENDED COMPLAINT STATES NO
CAUSE OF ACTION AGAINST HSBANK, AS DRAWEE BANK.
IV.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
DISREGARDING THE FACT THAT CATALAN ENGAGED IN
FORUM SHOPPING BY FILING THE AMENDED COMPLAINT
WHILE HER PETITION FOR THE PROBATE OF THE SUPPOSED
WILL OF THE DECEASED FREDERICK ARTHUR THOMSON IS
PENDING WITH ANOTHER BRANCH OF THE COURT A QUO.
V.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
HOLDING THAT HSBANK HAD SUBMITTED TO THE
JURISDICTION OF THE COURT A QUO BY SUBMITTING AN
ANSWER TO THE AMENDED COMPLAINT.[20]
In G.R. No. 159591, HSBC TRUSTEE also assigns the
foregoing first, second and fifth errors as its own. [21] In
addition, it claims that:
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
NOT ORDERING THE DISMISSAL OF THE AMENDED
COMPLAINT AGAINST HSBC TRUSTEE DESPITE THE FACT IT
HAS NOT BEEN DULY SERVED WITH SUMMONS. [22]
HSBANK and HSBC TRUSTEE contend in common that
Catalan has no cause of action for abuse of rights under Article
19 of the Civil Code; that her complaint, under the guise of a
claim for damages, is actually a money claim against the estate
of Thomson arising from checks issued by the latter in her
favor in payment of indebtedness.
92
HSBANK claims that the money claim should be dismissed
on the ground of forum-shopping since Catalan also filed a
petition for probate of the alleged last will of Thomson before
RTC, Branch 48, Bacolod City, docketed as Spec. Proc No. 00-
892. In addition, HSBANK imputes error upon the CA in holding
that by filing an answer to the amended complaint, petitioners
are estopped from questioning the jurisdiction of the RTC.
HSBC TRUSTEE maintains that the RTC did not acquire
jurisdiction over it for improper service of summons.
In her Comment, Catalan insists that her complaint is one
for damages under Article 19 of the Civil Code for the wanton
refusal to honor and pay the value of five checks issued by the
Thomson amounting to HK$3,200,000.00. She argues that the
issue of jurisdiction has been rendered moot by petitioners
participation in the proceedings before the RTC.
Succinctly, the issues boil down to the following:
1) Does the complaint state a cause of action?
2) Did Catalan engage in forum-shopping by filing the
complaint for damages when she also filed a petition for
probate of the alleged last will of Thomson with another
branch of the RTC? and,
3) Did the RTC acquire jurisdiction over HSBANK and
HSBC TRUSTEE? Corollary thereto, did the filing of the answer
before the RTC render the issue of lack of jurisdiction moot
and academic?
We shall resolve the issue in seriatim.
Does the complaint state a cause of action against
HSBANK and HSBC TRUSTEE?
The elementary test for failure to state a cause of action
is whether the complaint alleges facts which if true would
justify the relief demanded. Stated otherwise, may the court
render a valid judgment upon the facts alleged therein? [23] The
inquiry is into the sufficiency, not the veracity of the material
allegations.[24] If the allegations in the complaint furnish
sufficient basis on which it can be maintained, it should not be
dismissed regardless of the defense that may be presented by
the defendants.[25]
Catalan anchors her complaint for damages on Article 19
of the Civil Code. It speaks of the fundamental principle of law
and human conduct that a person "must, in the exercise of his
rights and in the performance of his duties, act with justice,
give every one his due, and observe honesty and good
faith." It sets the standards which may be observed not only in
the exercise of ones rights but also in the performance of ones
duties. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for
which the wrongdoer must be held responsible.[26] But a right,
though by itself legal because recognized or granted by law as
such, may nevertheless become the source of some illegality. A
person should be protected only when he acts in the legitimate
exercise of his right, that is, when he acts with prudence and
in good faith; but not when he acts with negligence or
abuse.[27] There is an abuse of right when it is exercised for
the only purpose of prejudicing or injuring another. The
exercise of a right must be in accordance with the purpose for
which it was established, and must not be excessive or unduly
harsh; there must be no intention to injure another.[28]
Thus, in order to be liable under the abuse of rights
principle, three elements must concur, to wit: (a) that there is
a legal right or duty; (b) which is exercised in bad faith; and
(c) for the sole intent of prejudicing or injuring another.[29]
In this instance, after carefully examining the amended
complaint, we are convinced that the allegations therein are in
the nature of an action based on tort under Article 19 of the
Civil Code. It is evident that Catalan is suing HSBANK and
HSBC TRUSTEE for unjustified and willful refusal to pay the
value of the checks.
HSBANK is being sued for unwarranted failure to pay the
checks notwithstanding the repeated assurance of the drawer
Thomson as to the authenticity of the checks and frequent
directives to pay the value thereof to Catalan. Her allegations
in the complaint that the gross inaction of HSBANK on
Thomsons instructions, as well as its evident failure to inform
Catalan of the reason for its continued inaction and non-
payment of the checks, smack of insouciance on its part, are
sufficient statements of clear abuse of right for which it may
be held liable to Catalan for any damages she incurred
resulting therefrom. HSBANKs actions, or lack thereof,
prevented Catalan from seeking further redress with Thomson
for the recovery of her claim while the latter was alive.
HSBANK claims that Catalan has no cause of action
because under Section 189 of the Negotiable Instruments Law,
a check of itself does not operate as an assignment of any part
of the funds to the credit of the drawer with the bank, and the
bank is not liable to the holder unless and until it accepts or
certifies it. However, HSBANK is not being sued on the value of
the check itself but for how it acted in relation to Catalans
claim for payment despite the repeated directives of the
drawer Thomson to recognize the check the latter
issued. Catalan may have prayed that she be paid the value of
the checks but it is axiomatic that what determines the nature
of an action, as well as which court has jurisdiction over it, are
the allegations of the complaint, irrespective of whether or not
the plaintiff is entitled to recover upon all or some of the
claims asserted therein.[30]
Anent HSBC TRUSTEE, it is being sued for the baseless
rejection of Catalans claim. When Catalan parted with the
checks as a requirement for the processing of her claim, even
going to the extent of traveling to Hongkong to deliver
personally the checks, HSBC TRUSTEE summarily disapproved
her claim with nary a reason. HSBC TRUSTEE gave no heed to
Catalans incessant appeals for an explanation. Her pleas fell on
deaf and uncaring corporate ears. Clearly, HSBC TRUSTEEs
acts are anathema to the prescription for human conduct
enshrined in Article 19 of the Civil Code.
Did Catalan engage in forum-shopping?
It has been held that forum-shopping exists where a
litigant sues the same party against whom another action or
actions for the alleged violation of the same right and the
enforcement of the same relief is/are still pending, the defense
of litis pendentia in one case is a bar to the others; and, a final
judgment in one would constitute res judicata and thus would
cause the dismissal of the rest.[31]
93
Thus, there is forum-shopping when there exist: a)
identity of parties, or at least such parties as represent the
same interests in both actions, b) identity of rights asserted
and relief prayed for, the relief being founded on the same
facts, and c) the identity of the two preceding particulars is
such that any judgment rendered in the pending case,
regardless of which party is successful would amount to res
judicata in the other.[32]
Applying the foregoing requisites to the case before us in
relation to Spec. Proc No. 00-892, the probate proceeding
brought by Catalan before RTC, Branch 48, Bacolod City, it is
obvious that forum-shopping does not exist.
There is no identity of parties. HSBANK is not a party in
the probate proceeding. HSBC TRUSTEE is only a party in the
probate proceeding because it is the executor and trustee
named in the Hongkong will of Thomson. HSBC TRUSTEE is
representing the interest of the estate of Thomson and not its
own corporate interest.
With respect to the second and third requisites, a scrutiny
of the entirety of the allegations of the amended complaint in
this case reveals that the rights asserted and reliefs prayed for
therein are different from those pleaded in the probate
proceeding, such that a judgment in one case would not bar
the prosecution of the other case.Verily, there can be no
forum-shopping where in one proceeding a party raises a claim
for damages based on tort and, in another proceeding a party
seeks the allowance of an alleged last will based on ones claim
as an heir. After all, the merits of the action for damages is not
to be determined in the probate proceeding and vice
versa.Undeniably, the facts or evidence as would support and
establish the two causes of action are not the
same.[33] Consequently, HSBANKs reliance on the principle of
forum-shopping is clearly misplaced.
Did the RTC acquire jurisdiction over HSBANK and HSBC
TRUSTEE?
The Rules of Court provides that a court generally
acquires jurisdiction over a person through either a valid
service of summons in the manner required by law or the
persons voluntary appearance in court.[34]
In holding that it acquired jurisdiction over HSBANK and
HSBC TRUSTEE, the RTC held that both voluntarily submitted
to the jurisdiction of the court by setting up in their Motions to
Dismiss other grounds aside from lack of jurisdiction. On the
other hand, the CA ruled that HSBANK and HSBC TRUSTEE are
estopped from challenging the jurisdiction of the RTC because
they filed their respective answers before the RTC.
We find that both lower courts overlooked Section 20
of Rule 14 of the 1997 Rules of Civil Procedure which 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. Nonetheless, such
omission does not aid HSBANKs case.
It must be noted that HSBANK initially filed a Motion for
Extension of Time to File Answer or Motion to
Dismiss.[35] HSBANK already invoked the RTCs jurisdiction over
it by praying that its motion for extension of time to file
answer or a motion to dismiss be granted. The Court has held
that the filing of motions seeking affirmative relief, such as, to
admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of
default with motion for reconsideration, are considered
voluntary submission to the jurisdiction of the
court.[36] Consequently, HSBANKs expressed reservation in its
Answer ad cautelam that it filed the same as a mere
precaution against being declared in default, and without
prejudice to the Petition for Certiorari and/or Prohibition xxx
now pending before the Court of Appeals[37] to assail the
jurisdiction of the RTC over it is of no moment. Having earlier
invoked the jurisdiction of the RTC to secure affirmative relief
in its motion for additional time to file answer or motion to
dismiss, HSBANK, effectively submitted voluntarily to the
jurisdiction of the RTC and is thereby estopped from asserting
otherwise, even before this Court.
In contrast, the filing by HSBC TRUSTEE of a motion to
dismiss cannot be considered a voluntary submission to the
jurisdiction of the RTC. It was a conditional appearance,
entered precisely to question the regularity of the service of
summons. It is settled that a party who makes a special
appearance in court challenging the jurisdiction of said
court, e.g., invalidity of the service of summons, cannot be
considered to have submitted himself to the jurisdiction of the
court.[38] HSBC TRUSTEE has been consistent in all its
pleadings in assailing the service of summons and the
jurisdiction of the RTC over it. Thus, HSBC TRUSTEE cannot be
declared in estoppel when it filed an Answer ad
cautelam before the RTC while its petition for certiorari was
pending before the CA. Such answer did not render the
petition for certiorari before the CA moot and academic. The
Answer of HSBC TRUSTEE was only filed to prevent any
declaration that it had by its inaction waived the right to file
responsive pleadings.
Admittedly, HSBC TRUSTEE is a foreign corporation,
organized and existing under the laws of the British Virgin
Islands. For proper service of summons on foreign
corporations, Section 12 of Rule 14 of the Revised Rules of
Court provides:
SEC. 12. Service upon foreign private juridical entity. When the
defendant is a foreign private juridical entity which has
transacted business in the Philippines, service may be made on
its resident agent designated in accordance with law for that
purpose, or if there be no such agent, on the government
official designated by law to that effect, or on any of its
officers or agents within the Philippines.
In French Oil Mill Machinery Co., Inc. vs. Court of
Appeals,[39] we had occasion to rule that it is not enough to
merely allege in the complaint that a defendant foreign
corporation is doing business. For purposes of the rule on
summons, the fact of doing business must first be "established
by appropriate allegations in the complaint" and the court in
determining such fact need not go beyond the allegations
therein.[40]
The allegations in the amended complaint subject of the
present cases did not sufficiently show the fact of HSBC
TRUSTEEs doing business in the Philippines. It does not appear
at all that HSBC TRUSTEE had performed any act which would
give the general public the impression that it had been
engaging, or intends to engage in its ordinary and usual
94
business undertakings in the country. Absent from the
amended complaint is an allegation that HSBC TRUSTEE had
performed any act in the country that would place it within the
sphere of the courts jurisdiction.
We have held that a general allegation, standing alone,
that a party is doing business in the Philippines does not make
it so; a conclusion of fact or law cannot be derived from the
unsubstantiated assertions of parties notwithstanding the
demands of convenience or dispatch in legal actions,
otherwise, the Court would be guilty of sorcery; extracting
substance out of nothingness.[41]
Besides, there is no allegation in the amended complaint
that HSBANK is the domestic agent of HSBC TRUSTEE to
warrant service of summons upon it. Thus, the summons
tendered to the In House Counsel of HSBANK (Makati Branch)
for HSBC TRUSTEE was clearly improper.
There being no proper service of summons, the RTC
cannot take cognizance of the case against HSBC TRUSTEE for
lack of jurisdiction over it. Any proceeding undertaken by the
RTC is therefore null and void.[42] Accordingly, the complaint
against HSBC TRUSTEE should have been dismissed for lack of
jurisdiction over it.
WHEREFORE, the petition in G.R. No. 159590
is DENIED. The Decision of the Court of Appeals, dated August
14, 2003, in CA-G.R. SP No. 75757 dismissing the petition for
certiorari of the Hongkong and Shanghai Banking Corporation
Limited is AFFIRMED.
The petition in G.R. No. 159591 is GRANTED. The
Decision of the Court of Appeals, dated August 14, 2003, in
CA-G.R. SP No. 75756 dismissing the petition for certiorari of
the HSBC International Trustee Limited is REVERSED and SET
ASIDE. The Regional Trial Court, Branch 44, Bacolod City is
declared without jurisdiction to take cognizance of Civil Case
No. 01-11372 against the HSBC International Trustee Limited,
and all its orders and issuances with respect to the latter are
hereby ANNULLED and SET ASIDE. The said Regional Trial
Court is hereby ORDERED to DESIST from maintaining further
proceedings against the HSBC International Trustee Limited in
the case aforestated.
SO ORDERED.
Puno, (Chairman), Callejo, Sr., and Tinga, JJ., concur.
Chico-Nazario, J., on leave.
G.R. No. 182153 April 7, 2014
TUNG HO STEEL ENTERPRISES
CORPORATION, Petitioner,
vs.
TING GUAN TRADING CORPORATION, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on, certiorari 1
filed by
petitioner Tung Ho Steel Enterprises Corp. (Tung Ho) to
challenge the July 5, 2006 decision2 and the March 12, 2008
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
92828.
The Factual Antecedents
Tung Ho is a foreign corporation organized under the laws of
Taiwan, Republic of China.4 On the other hand, respondent
Ting Guan Trading Corp. (Ting Guan) is a domestic corporation
organized under the laws of the Philippines.5
On January 9, 2002, Ting Guan obligated itself under a
contract of sale to deliver heavy metal scrap iron and steel to
Tung Ho. Subsequently, Tung Ho filed a request for arbitration
before the ICC International Court of Arbitration (ICC) in
Singapore after Ting Guan failed to deliver the full quantity of
the promised heavy metal scrap iron and steel.6
The ICC ruled in favor of Tung Ho on June 18, 2004 and
ordered Ting Guan to pay Tung Ho the following: (1) actual
damages in the amount of US$ 659,646.15 with interest of 6%
per annum from December 4, 2002 until final payment; (2)
cost of arbitration in the amount of US $ 47,000.00; and (3)
legal costs and expenses in the amount of NT $ 761,448.00
and US $ 34,552.83.7
On October 24, 2004, Tung Ho filed an action against Ting
Guan for the recognition and enforcement of the arbitral award
before the Regional Trial Court (RTC) of Makati, Branch 145.
Ting Guan moved to dismiss the case based on Tung Ho’s lack
of capacity to sue and for prematurity. Ting Guan subsequently
filed a supplemental motion to dismiss based on improper
venue. Ting Guan argued that the complaint should have been
filed in Cebu where its principal place of business was located.8
The Proceedings before the RTC
The RTC denied Ting Guan’s motion to dismiss in an order
dated May 11, 2005. Ting Guan moved to reconsider the order
and raised the RTC’s alleged lack of jurisdiction over its person
as additional ground for the dismissal of the complaint. Ting
Guan insisted that Ms. Fe Tejero, on whom personal service
was served, was not its corporate secretary and was not a
person allowed under Section 11, Rule 14 of the Rules of Court
to receive a summons. It also asserted that Tung Ho cannot
enforce the award in the Philippines without violating public
95
policy as Taiwan is not a signatory to the New York
Convention.9
The RTC denied the motion in an order dated November 21,
2005 and ruled that Ting Guan had voluntarily submitted to
the court’s jurisdiction when it raised other arguments apart
from lack of jurisdiction in its motion to dismiss.
The Proceedings before the CA
Ting Guan responded to the denials by filing a petition for
certiorari before the CA with an application for the issuance of
a temporary restraining order and a writ of preliminary
injunction.10
In its Memorandum, Tung Ho argued that a Rule 65 petition is
not the proper remedy to assail the denial of a motion to
dismiss. It pointed out that the proper recourse for Ting Guan
was to file an answer and to subsequently appeal the case. It
also posited that beyond the reglementary period for filing an
answer, Ting Guan was barred from raising other grounds for
the dismissal of the case. Tung Ho also claimed that the RTC
acquired jurisdiction over the person of Ting Guan since the
return of service of summons expressly stated that Tejero was
a corporate secretary.11
In its decision dated July 5, 2006, the CA dismissed the
complaint for lack of jurisdiction over the person of Ting Guan.
The CA held that Tung Ho failed to establish that Tejero was
Ting Guan’s corporate secretary. The CA also ruled that a
petition for certiorari is the proper remedy to assail the denial
of a motion to dismiss if the ground raised in the motion is lack
of jurisdiction. Furthermore, any of the grounds for the
dismissal of the case can be raised in a motion to dismiss
provided that the grounds were raised before the filing of an
answer. The CA likewise ruled that Tung Ho properly filed the
complaint before the RTC-Makati.12
Subsequently, both parties moved to partially reconsider the
CA decision. Tung Ho reiterated that there was proper service
of summons. On the other hand, Ting Guan sought to modify
the CA decision with respect to the proper venue of the case.
The CA denied Ting Guan’s motion for partial reconsideration
in an order dated December 5, 2006.13
Ting Guan immediately proceeded to file a petition for review
on certiorari before this Court to question the CA’s rulings as
discussed below. In the interim (on February 11, 2008), Tung
Ho (whose motion for reconsideration of the CA decision was
still pending with that court) filed a "Motion to Supplement and
Resolve Motion for Reconsideration" before the CA. In this
motion, Tung Ho prayed for the issuance of an alias summons
if the service of summons had indeed been defective, but its
motion proved unsuccessful.14
It was not until March 12, 2008, after the developments
described below, that the CA finally denied Tung Ho’s partial
motion for reconsideration for lack of merit.
Ting Guan’s Petition before this Court
(G.R. No. 176110)
Ting Guan’s petition before this Court was docketed as G.R.
No. 176110. Ting Guan argued that the dismissal of the case
should be based on the following additional grounds: first, the
complaint was prematurely filed; second, the foreign arbitral
award is null and void; third, the venue was improperly laid in
Makati; and lastly, the enforcement of the arbitral award was
against public policy.15
On April 24, 2007, Tung Ho filed its Comment dated April 24,
2007 in G.R. No. 176110, touching on the issue of jurisdiction,
albeit lightly. Tung Ho complained in its Comment that Ting
Guan engaged in dilatory tactics when Ting Guan belatedly
raised the issue of jurisdiction in the motion for reconsideration
before the RTC. However, Tung Ho did not affirmatively seek
the reversal of the July 5, 2006 decision. Instead, it merely
stated that Ting Guan’s petition "cannot be dismissed on the
ground that the summons was wrongfully issued as the
petitioner can always move for the issuance of an alias
summons to be served". Furthermore, Tung Ho only prayed
that Ting Guan’s petition be denied in G.R. No. 176110 and for
other just and equitable reliefs. In other words, Tung Ho failed
to effectively argue its case on the merits before the Court in
G.R. No. 176110.
On June 18, 2007, we issued our Resolution denying Ting
Guan’s petition for lack of merit. On November 12, 2007, we
also denied Ting Guan’s motion for reconsideration. On
January 8, 2008, the Court issued an entry of judgment in Ting
Guan’s petition, G.R. No. 176110.
After the entry of judgment, we referred the matter back to
the RTC for further proceedings. On January 16, 2008, the
RTC declared the case closed and terminated. Its order stated:
Upon examination of the entire records of this case, an answer
with caution was actually filed by the respondent to which a
reply was submitted by the petitioner. Since the answer was
with the qualification that respondent is not waiving its claim
of lack of jurisdiction over its person on the ground of
improper service of summons upon it and that its petition to
this effect filed before the Court of Appeals was acted
favorably and this case was dismissed on the aforementioned
ground and it appearing that the Decision as well as the Order
denying the motion for reconsideration of the petitioner now
final and executory, the Order of November 9, 2007 referring
this petition to the Court Annexed Mediation for possible
amicable settlement is recalled it being moot and academic.
This case is now considered closed and terminated.
On February 6, 2008, Tung Ho moved to reconsider the RTC
order. Nothing in the records shows whether the RTC granted
or denied this motion for reconsideration.
Tung Ho’s Petition before this Court
(G.R. No. 182153)
On May 7, 2008, Tung Ho seasonably filed a petition for review
on certiorari to seek the reversal of the July 5, 2006 decision
96
and the March 12, 2008 resolution of the CA. This is the
present G.R. No. 182153 now before us.
Tung Ho reiterates that the RTC acquired jurisdiction over the
person of Ting Guan. It also claims that the return of service of
summons is a prima facie evidence of the recited facts i.e.,
that Tejero is a corporate secretary as stated therein and that
the sheriff is presumed to have regularly performed his official
duties in serving the summons. In the alternative, Tung Ho
argues that Ting Guan’s successive motions before the RTC are
equivalent to voluntary appearance. Tung Ho also prays for the
issuance of alias summons to cure the alleged defective service
of summons.16
Respondent Ting Guan’s Position
(G.R. No. 182153)
In its Comment, Ting Guan submits that the appeal is already
barred by res judicata. It also stresses that the Court has
already affirmed with finality the dismissal of the
complaint.17 Ting Guan also argues that Tung Ho raises a
factual issue that is beyond the scope of a petition for review
on certiorari under Rule 45 of the Rules of Court.18
The Issues
This case presents to us the following issues:
1) Whether the present petition is barred by res
judicata; and
2) Whether the trial court acquired jurisdiction over
the person of Ting Guan, specifically:
a) Whether Tejero was the proper person to
receive the summons; and
b) Whether Ting Guan made a voluntary
appearance before the trial court.
The Court’s Ruling
We find the petition meritorious.
I. The Court is not precluded from ruling on the jurisdictional
issue raised in the petition
A. The petition is not barred by res judicata
Res judicata refers to the rule that a final judgment or decree
on the merits by a court of competent jurisdiction is conclusive
on the rights of the parties or their privies in all later suits on
all points and matters determined in the former suit.19 For res
judicata to apply, the final judgment must be on the merits of
the case which means that the court has unequivocally
determined the parties’ rights and obligations with respect to
the causes of action and the subject matter of the case.20
Contrary to Ting Guan’s position, our ruling in G.R. No. 176110
does not operate as res judicata on Tung Ho’s appeal; G.R. No.
176110 did not conclusively rule on all issues raised by the
parties in this case so that this Court would now be barred
from taking cognizance of Tung Ho’s petition. Our disposition
in G.R. No. 176110 only dwelt on technical or collateral aspects
of the case, and not on its merits. Specifically, we did not rule
on whether Tung Ho may enforce the foreign arbitral award
against Ting Guan in that case.
B. The appellate court cannot be ousted of jurisdiction until it
finally disposes of the case
The court’s jurisdiction, once attached, cannot be ousted until
it finally disposes of the case. When a court has already
obtained and is exercising jurisdiction over a controversy, its
jurisdiction to proceed to the final determination of the case is
retained.21 A judge is competent to act on the case while its
incidents remain pending for his disposition.
The CA was not ousted of its jurisdiction with the promulgation
of G.R. No. 176110. The July 5, 2006 decision has not yet
become final and executory for the reason that there remained
a pending incident before the CA – the resolution of Tung Ho’s
motion for reconsideration – when this Court promulgated G.R.
No. 176110. In this latter case, on the other hand, we only
resolved procedural issues that are divorced from the present
jurisdictional question before us. Thus, what became
immutable in G.R. No. 176110 was the ruling that Tung Ho’s
complaint is not dismissible on grounds of prematurity, nullity
of the foreign arbitral award, improper venue, and the foreign
arbitral award’s repugnance to local public policy. This leads us
to the conclusion that in the absence of any ruling on the
merits on the issue of jurisdiction, res judicata on this point
could not have set in.
C. Tung Ho’s timely filing of a motion for reconsideration and
of a petition for review on certiorari prevented the July 5, 2006
decision from attaining finality
Furthermore, under Section 2, Rule 45 of the Rules of Court,
Tung Ho may file a petition for review on certiorari before the
Court within (15) days from the denial of its motion for
reconsideration filed in due time after notice of the judgment.
Tung Ho’s timely filing of a motion for reconsideration before
the CA and of a Rule 45 petition before this Court prevented
the July 5, 2006 CA decision from attaining finality. For this
Court to deny Tung Ho’s petition would result in an anomalous
situation where a party litigant is penalized and deprived of his
fair opportunity to appeal the case by faithfully complying with
the Rules of Court.
II. The trial court acquired jurisdiction over the person of Ting
Guan
A. Tejero was not the proper person to receive the summons
Nonetheless, we see no reason to disturb the lower courts’
finding that Tejero was not a corporate secretary and,
therefore, was not the proper person to receive the summons
under Section 11, Rule 14 of the Rules of Court. This Court is
97
not a trier of facts; we cannot re-examine, review or re-
evaluate the evidence and the factual review made by the
lower courts. In the absence of compelling reasons, we will not
deviate from the rule that factual findings of the lower courts
are final and binding on this Court.22
B. Ting Guan voluntarily appeared before the trial court
However, we cannot agree with the legal conclusion that the
appellate court reached, given the established facts.23To our
mind, Ting Guan voluntarily appeared before the trial court in
view of the procedural recourse that it took before that court.
Its voluntary appearance is equivalent to service of
summons.24
As a basic principle, courts look with disfavor on piecemeal
arguments in motions filed by the parties. Under the omnibus
motion rule, a motion attacking a pleading, order, judgment,
or proceeding shall include all objections then available.25 The
purpose of this rule is to obviate multiplicity of motions and to
discourage dilatory motions and pleadings. Party litigants
should not be allowed to reiterate identical motions,
speculating on the possible change of opinion of the courts or
of the judges thereof.
In this respect, Section 1, Rule 16 of the Rules of Court
requires the defendant to file a motion to dismiss within the
time for, but before filing the answer to the complaint or
pleading asserting a claim. Section 1, Rule 11 of the Rules of
Court, on the other hand, commands the defendant to file his
answer within fifteen (15) days after service of summons,
unless a different period is fixed by the trial court. Once the
trial court denies the motion, the defendant should file his
answer within the balance of fifteen (15) days to which he was
entitled at the time of serving his motion, but the remaining
period cannot be less than five (5) days computed from his
receipt of the notice of the denial.26
Instead of filing an answer, the defendant may opt to file a
motion for reconsideration. Only after the trial court shall have
denied the motion for reconsideration does the defendant
become bound to file his answer.27 If the defendant fails to file
an answer within the reglementary period, the plaintiff may file
a motion to declare the defendant in default. This motion shall
be with notice to the defendant and shall be supported by
proof of the failure.28
The trial court’s denial of the motion to dismiss is not a license
for the defendant to file a Rule 65 petition before the CA. An
order denying a motion to dismiss cannot be the subject of a
petition for certiorari as the defendant still has an adequate
remedy before the trial court – i.e., to file an answer and to
subsequently appeal the case if he loses the case.29 As
exceptions, the defendant may avail of a petition for certiorari
if the ground raised in the motion to dismiss is lack of
jurisdiction over the person of the defendant30 or over the
subject matter.31
We cannot allow and simply passively look at Ting Guan’s
blatant disregard of the rules of procedure in the present case.
The Rules of Court only allows the filing of a motion to dismiss
once.32 Ting Guan’s filing of successive motions to dismiss,
under the guise of "supplemental motion to dismiss" or
"motion for reconsideration", is not only improper but also
dilatory.33 Ting Guan’s belated reliance on the improper service
of summons was a mere afterthought, if not a bad faith ploy to
avoid the foreign arbitral award’s enforcement which is still at
its preliminary stage after the lapse of almost a decade since
the filing of the complaint.
Furthermore, Ting Guan’s failure to raise the alleged lack of
jurisdiction over its person in the first motion to dismiss is fatal
to its cause. Ting Guan voluntarily appeared before the RTC
when it filed a motion to dismiss and a "supplemental motion
to dismiss" without raising the RTC’s lack of jurisdiction over its
person. In Anunciacion v. Bocanegra,34 we categorically stated
that the defendant should raise the affirmative defense of lack
of jurisdiction over his person in the very first motion to
dismiss. Failure to raise the issue of improper service of
summons in the first motion to dismiss is a waiver of this
defense and cannot be belatedly raised in succeeding motions
and pleadings.
Even assuming that Ting Guan did not voluntarily appear
before the RTC, the CA should have ordered the RTC to issue
an alias summons instead. In Lingner & Fisher GMBH vs.
Intermediate Appellate Court35, we enunciated the policy that
the courts should not dismiss a case simply because there was
an improper service of summons. The lower courts should be
cautious in haphazardly dismissing complaints on this ground
alone considering that the trial court can cure this defect and
order the issuance of alias summons on the proper person in
the interest of substantial justice and to expedite the
proceedings.
III. A Final Note
As a final note, we are not unaware that the present case has
been complicated by its unique development. The complication
arose when the CA, instead of resolving the parties’ separate
partial motions for reconsideration in one resolution,
proceeded to first resolve and to deny Ting Guan’s partial
motion. Ting Guan, therefore, went to this Court via a petition
for review on certiorari while Tung Ho’s partial motion for
reconsideration was still unresolved.
Expectedly, Ting Guan did not question the portions of the CA
decision favorable to it when it filed its petition with this Court.
Instead, Ting Guan reiterated that the CA should have included
additional grounds to justify the dismissal of Tung Ho’s
complaint with the RTC. The Court denied Ting Guan’s petition,
leading to the entry of judgment that improvidently followed.
Later, the CA denied Tung Ho’s partial motion for
reconsideration, prompting Tung Ho’s own petition with this
Court, which is the present G.R. No. 182153.
Under the Rules of Court, entry of judgment may only be
made if no appeal or motion for reconsideration was timely
filed.36 In the proceedings before the CA, if a motion for
reconsideration (including a partial motion for
reconsideration37) is timely filed by the proper party, execution
of the CA’s judgment or final resolution shall be stayed.38 This
rule is applicable even to proceedings before the Supreme
98
Court, as provided in Section 4, Rule 56 of the Rules of
Court.39
In the present case, Tung Ho timely filed its motion for
reconsideration with the CA and seasonably appealed the CA’s
rulings with the Court through the present petition (G.R. No.
182153).
To now recognize the finality of the Resolution of Ting Guan
petition (G.R. No. 176110) based on its entry of judgment and
to allow it to foreclose the present meritorious petition of Tung
Ho, would of course cause unfair and unjustified injury to Tung
Ho. First, as previously mentioned, the Ting Guan petition did
not question or assail the full merits of the CA decision. It was
Tung Ho, the party aggrieved by the CA decision, who
substantially questioned the merits of the CA decision in its
petition; this petition showed that the CA indeed committed
error and Tung Ho’s complaint before the RTC should properly
proceed. Second, the present case is for the enforcement of an
arbitral award involving millions of pesos. Tung Ho already
won in the foreign arbitration and the present case is simply
for the enforcement of this arbitral award in our jurisdiction.
Third, and most importantly, Tung Ho properly and timely
availed of the remedies available to it under the Rules of Court,
which provide that filing and pendency of a motion for
reconsideration stays the execution of the CA judgment.
Therefore, at the time of the entry of judgment in G.R. No.
176110 in the Supreme Court on January 8, 2008, the CA
decision which the Court affirmed was effectively not yet be
final.
Significantly, the rule that a timely motion for reconsideration
stays the execution of the assailed judgment is in accordance
with Rule 51, Section 10 (Rules governing the CA proceedings)
which provides that "entry of judgments may only be had if
there is no appeal or motion for reconsideration timely filed.
The date when the judgment or final resolution becomes
executory shall be deemed as the date of its entry."
Incidentally, this procedure also governs before Supreme Court
proceedings.40 Following these rules, therefore, the pendency
of Tung Ho’s MR with the CA made the entry of the judgment
of the Court in the Ting Guan petition premature and
inefficacious for not being final and executory.
Based on the above considerations, the Court would not be in
error if it applies its ruling in the case of Realty Sales
Enterprises, Inc. and Macondray Farms, Inc. v. Intermediate
Appellate Court, et al.41 where the Court, in a per curiam
resolution, ruled that an entry of judgment may be recalled or
lifted motu proprio when it is clear that the decision assailed of
has not yet become final under the rules:
The March 6, 1985 resolution denying reconsideration of the
January 30, 1985 resolution was, to repeat, not served on the
petitioners until March 20, 1985 - and therefore the Jan. 30,
1985 resolution could not be deemed final and executory until
one (1) full day (March 21) had elapsed, or on March 22, 1985
(assuming inaction on petitioners' part.) The entry of judgment
relative to the January 30, 1985 resolution, made on March 18,
1985, was therefore premature and inefficacious. An entry of
judgment does not make the judgment so entered final and
execution when it is not so in truth. An entry of judgment
merely records the fact that a judgment, order or resolution
has become final and executory; but it is not the operative act
that make the judgment, order or resolution final and
executory. In the case at bar, the entry of judgment on March
18, 1985 did not make the January 30, 1985 resolution subject
of the entry, final and executory, As of the date of entry,
March 18, 1985, notice of the resolution denying
reconsideration of the January 30, 1985 resolution had not yet
been served on the petitioners or any of the parties, since
March 18, 1985 was also the date of the notice (and release)
of the March 6, 1985 resolution denying
reconsideration.1âwphi1

According to this ruling, the motu proprio recall or setting

aside of the entry of final judgment was proper and "entirely
consistent with the inherent power of every court inter alia to
amend and control its process and orders so as to make them
conformable to law and justice [Sec. 5(g), Rule 135, Rules of
Court,]. That the recall has in fact served to achieve a verdict
consistent with law and justice is clear from the judgment
subsequently rendered on the merits." This course of action is
effectively what the Court undertook today, adapted of course
to the circumstances of the present case.

In light of these premises, we hereby REVERSE and SET ASIDE

the July 5, 2006 decision and the March 12, 2008 resolution of
the Court of Appeals in CA-G.R. SP No. 92828. SP. Proc. No.
11.-5954 is hereby ordered reinstated. Let the records of this
case be remanded to the court of origin for further
proceedings. No costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

99
G.R. No. 200072, June 20, 2016
PHILIP YU, Petitioner, v. VIVECA LIM YU, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under
Rule 45 of the Rules of Court seeking to reverse and set aside
the Decision1 dated September 30, 2011 and Resolution2 dated
January 5, 2012 of the Court of Appeals (CA) in CA-G.R. SP
No. 111414 which granted the petition for the annulment of
the Decision3 dated August 20, 2008 of the Regional Trial
Court (RTC), Fourth Judicial Region, Branch 10, Balayan,
Batangas.
The factual antecedents are as follows.
Petitioner Philip Yu and respondent Viveca Lim Yu were
married on November 18, 1984. They had four children and
maintained their conjugal home at Room 1603 Horizon
Condominium, Meralco Avenue, Pasig, Metro Manila. In 1993,
however, Viveca left the conjugal home with their four children
and filed a Petition for Legal Separation against Philip before
the RTC of Pasig City, Branch 261, for repeated physical
violence, grossly abusive conduct against her and the children,
sexual infidelity, and attempt on her life. She prayed for
permanent custody over the children, support, and the
dissolution and distribution of their conjugal partnership valued
at approximately P5,000,000.00.4chanrobleslaw
Philip denied the accusations against him claiming that it was
Viveca who actually attacked him a few times. He narrated
that his marriage to Viveca was arranged according to the
Chinese tradition and that it was much later when he
discovered Viveca's excessively jealous, cynical, and insecure
behaviour. He countered that since she abandoned the family
home, taking their four children away, she was not entitled to
support. She was, likewise, unqualified to become the
administrator of their conjugal funds, which had outstanding
obligations. Thus, Philip prayed in his Counterclaim for the
declaration of nullity of their marriage due to Viveca's
psychological incapacity, rendering her incapable of complying
with her marital obligations.5chanrobleslaw
On April 24, 2007, however, Philip filed a Motion to Withdraw
Counterclaim for Declaration of Nullity of Marriage revealing
that he no longer had the desire to have his marriage declared
void. Despite Viveca's fervent opposition, the Pasig RTC
granted the motion.6chanrobleslaw
On July 1, 2009, the RTC of Pasig City rendered a
Decision7 dismissing the Petition for Legal Separation in the
following wise:ChanRoblesVirtualawlibrary
From the facts obtaining in this case, the Court finds
that the parties are in pari delicto warranting a denial
of this petition. Respondent's illicit relationship with Linda
Daet and his repeated verbal and physical abuses towards
petitioner come within the purview of pars. 8 and 1 of Art. 55
of the Family Code of the Philippines whereas petitioner's
unjustifiable abandonment bringing with her their children
100
without the knowledge and consent of respondent and her
assaulting respondent with a 10-inch knife are those
contemplated in pars. 10 and 9 of the same code.
Notwithstanding the foregoing Court's findings, the
same becomes moot with the declaration of nullity of
the marriage of the parties, on the ground of the
psychological incapacity of petitioner, Viveca Yu,
pursuant to the Decision of Branch 10, RTC of Balayan,
Batangas, which attained its finality on October 13,
2008. Since the marriage of the parties was declared a nullity
there is, therefore, no legal basis to issue a decree of legal
separation to the spouses whose marriage has already been
declared of no force and effect.
WHEREFORE, premises considered, this petition should be, as
it is hereby DISMISSED, for lack of merit.
SO ORDERED.8chanroblesvirtuallawlibrary
Claiming to be completely unaware of the proceedings before
the RTC of Balayan, Batangas, nullifying her marriage with
Philip on the ground of her psychological incapacity, Viveca
filed a Petition for Annulment of Judgment9 before the CA
seeking to annul the Decision dated August 20, 2008 of said
court. According to Viveca, jurisdiction over her person did not
properly vest since she was not duly served with Summons.
She alleged that she was deprived of her right to due process
when Philip fraudulently declared that her address upon which
she may be duly summoned was still at their conjugal home,
when he clearly knew that she had long left said address for
the United States of America. Viveca likewise maintained that
had Philip complied with the legal requirements for an effective
service of summons by publication, she would have been able
to rightly participate in the proceedings before the Batangas
court.
On September 30, 2011, the CA granted Viveca's petition
ruling as follows:ChanRoblesVirtualawlibrary
The Petition for Declaration of Nullity of Marriage affecting the
personal status of private respondent is in the nature of an
action in rem. This is so because the term "personal status"
includes family relations, particularly the relations between
husband and wife.
With this premise in mind, it is beyond cavil that the court a
quo was justified in resorting to Summons by publication.
Petitioner is a nonresident defendant who left the Philippines
with her children way back in 1997 and has now been living in
the United States of America. The court a quo validly acquired
jurisdiction to hear and decide the case given that as
adumbrated, in a proceeding 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.
Still and all, there is more to this case than meets the
eye. Private respondent knew that petitioner left the
conjugal home on account of their marital
difficulties. She temporarily resided at her parent's house in
Greenhills, Mandaluyong, Metro Manila. But during the
pendency of the Legal Separation case, she lived in
Quezon City. This much was revealed by private
respondent himself in the Amended Answer with
Counterclaim filed in the Legal Separation suit-
"10. After abandoning the conjugal abode on 24 August
1993, petitioner resided at her parent's house in
Richbelt Condominium, Annapolis Street, Greenhills,
Mandaluyong, Metro Manila, until she moved to her
present address in October 1993. x x x x
This knowledge notwithstanding, private respondent
declared before the court a quo that the "last known
address" of petitioner was still her conjugal abode at
Unit 1603 Horizon Condominium, Mcralco Avenue,
Ortigas, Pasig City. While private respondent knew that
it was well-nigh impossible for petitioner to
receive Summons and other court notices at their
former conjugal home, still, he supplied the aforesaid
address.
We cannot turn a blind eye to the fact that private
respondent moved for the dismissal of his counterclaim
for nullity of marriage in the Legal Separation case in
2007 as he had by then had the sinister motive of filing
the Petition for Declaration of Nullity of
Marriage before the court a quo. Private respondent
knew that if he breathed a word on the filing and
pendency of the latter Petition, petitioner would
vigorously resist it as revealed by her tenacious
opposition in the proceedings before the RTC-Pasig.
The deceitful scheme employed by private respondent
deprived petitioner of her constitutional right to due
process which ensued in her failure to participate in
the proceedings before the court a quo. To Our mind,
this compelling justification warrants the annulment of
judgement.10chanroblesvirtuallawlibrary
In its Resolution dated January 5, 2012, the CA denied Philip's
Motion for Reconsideration finding no cogent and persuasive
reason to revise or reverse its Decision. Hence, this petition
invoking the following grounds:ChanRoblesVirtualawlibrary
I.
THE COURT OF APPEALS ERRED WHEN IT SET ASIDE THE
FINAL AND EXECUTORY DECISION OF THE COURT A QUO
DESPITE ITS ACCURATE FINDINGS THAT THE COURT A QUO
PROPERLY ACQUIRED JURISDICTION OVER THE ACTION IN
REM THROUGH SUMMONS BY PUBLICATION.
II.
THE PUBLICATION OF THE ORDER OF THE COURT A QUO,
SUMMONS, THE COMPLAINT AS WELL AS THE DECISION
RENDERED THEREIN IS NOTICE TO THE WHOLE WORLD
INCLUDING RESPONDENT. RESPONDENT WAS THEREFORE
CONSTRUCTIVELY NOTIFIED OF THE PROCEEDINGS AND
WAS NOT DENIED DUE PROCESS HAVING BEEN DULY
NOTIFIED BY PUBLICATION.
III.
RESPONDENT HAS BEEN DOMICILED IN THE UNITED STATES
OF AMERICA FOR MORE THAN TEN (10) YEARS AND WHOSE
101
ADDRESS IS UNKNOWN TO PETITIONER. AS FAR AS
PETITIONER IS CONCERNED, UNIT 1603 HORIZON
CONDOMINIUM, MERALCO AVENUE, PASIG CITY IS THE LAST
KNOWN ADDRESS OF RESPONDENT, BEING THE CONJUGAL
HOME.
IV.
PETITIONER IS CURRENTLY NOT A RESIDENT OF THE
CONJUGAL HOME.
V.
THE OFFICE OF THE SOLICITOR GENERAL AND/OR THE
OFFICE OF THE CITY PROSECUTOR OF BALAYAN, BATANGAS,
APPEARED AS COUNSEL FOR THE STATE AND FULLY
PROTECTED THE INTEREST OF THE STATE INCLUDING THE
INTEREST OF RESPONDENT.
VI.
PETITIONER CANNOT BE FAULTED FOR MOVING FOR THE
WITHDRAWAL OF HIS COUNTER-CLAIM FOR DECLARATION
OF NULLITY OF MARRIAGE, WHICH IS ALLOWED BY SECTION
2, RULE 17 OF THE NEW RULES OF COURT AS AMENDED,
AND SAID WITHDRAWAL WAS EVEN APPROVED BY THE RTC
OF PASIG.
VII.
THE PETITION FOR ANNULMENT OF DECISION FILED BEFORE
THE COURT OF APPEALS WAS DEFECTIVE AND NOT IN
ACCORDANCE WITH RULE 47 OF THE NEW RULES OF COURT,
AS AMENDED, FOR HAVING FAILED TO STATE AND ALLEGE
THE DEFENSES THAT RESPONDENT HAS AGAINST
PETITIONER.
VIII.
EVEN ASSUMING ARGUENDO THAT THE DEFENSES THAT ARE
AVAILABLE TO RESPONDENT ARE THOSE THAT WERE
PRESENTED IN THE LEGAL SEPARATION CASE THAT WAS
DISMISSED BY THE RTC OF PASIG CITY, SAID GROUNDS
ONLY BOLSTER THE FACT THAT THE DECISION DATED
AUGUST 20, 2008 OF THE RTC OF BALAYAN, BATANGAS,
CORRECTLY NULLIFIED THE MARRIAGE DUE TO
RESPONDENT'S PSYCHOLOGICAL INCAPACITY.
IX.
THE COURT OF APPEALS DID NOT OBSERVE AND FOLLOW
SECTIONS 6 AND 7 OF RULE 47 OF THE REVISED RULES OF
COURT, AS AMENDED.
In essence, Philip questions the appellate court's judgment of
setting aside the decision of the Batangas RTC despite its own
finding that said court validly acquired jurisdiction when
Summons was duly served on Viveca by publication. He
maintains that since service of summons was properly
accomplished by publication thereof in a newspaper of general
circulation as well as its personal service on Viveca at her last
known address, it logically follows that any and all resolutions
rendered by the trial court are valid and binding on the parties.
Thus, the decision of the Batangas court which acquired
jurisdiction over the res should be immutable as it is already
final and executory.11chanrobleslaw
Philip also questions the appellate court's choice of supporting
jurisprudence alleging them to be inapplicable to the instant
case. He asserts that the teachings in Spouses Belen v. Judge
Chavez,12Biaco v. Philippine Countryside Rural
Bank,13 and Ancheta v. Judge Ancheta14 fail to be instructive
simply because they involve substituted service of summons
whereas the mode of service in this case is by publication.
Philip further asserts that said jurisprudential doctrines even
teach us that in proceedings in rem or quasi in rem, such as
the case at hand, jurisdiction over the defendant is not a
prerequisite to confer jurisdiction on the court for as long as
the court acquires jurisdiction over the res. Thus, summons
must be served upon the defendant not for the purpose of
vesting the court with jurisdiction but merely for satisfying the
due process requirements, which in this case was duly
complied with when Viveca, who is a non-resident, not found
in the Philippines, was served with summons by
publication.15chanrobleslaw
Hence, Philip faults the CA in finding that due to his bad faith
in maliciously supplying the Batangas court with an erroneous
address wherein Viveca may supposedly be summoned, she
was deprived of her constitutional right to due process,
warranting the annulment of the subject judgment. According
to him, as far as he was concerned, Viveca's last known
address was their conjugal home. This is because the
addresses supplied in the proceedings of the Legal Separation
case before the RTC of Pasig City were merely temporary in
nature.16 Philip recalled that when Viveca left their conjugal
abode on August 24, 1993, she temporarily stayed at her
parents' house in Greenhills, Mandaluyong, for less than two
months then, thereafter, stayed at her temporary residence at
Domingo Street, Cubao, Quezon City, in October 1993.
Considering that said addresses were merely temporary, Philip
claims that he should not be faulted for using their conjugal
abode as Viveca's "last known address." According to him,
what is mandated by the rules as the defendant's "last known
address" is his or her last known permanent address, and
certainly not one of temporary nature.17chanrobleslaw
The petition is bereft of merit.
Annulment of judgment is a recourse equitable in character,
allowed only in exceptional cases as where there is no
available or other adequate remedy. Section 2, Rule 47 of the
1997 Rules of Civil Procedure provides that judgments may be
annulled only on grounds of extrinsic fraud and lack of
jurisdiction or denial of due process.18 The objective of the
remedy of annulment of judgment or final order is to undo or
set aside the judgment or final order, and thereby grant to the
petitioner an opportunity to prosecute his cause or to ventilate
his defense. If the ground relied upon is lack of jurisdiction,
the entire proceedings are set aside without prejudice to the
original action being refiled in the proper court. If the
judgment or final order or resolution is set aside on the ground
of extrinsic fraud, the CA may on motion order the trial court
to try the case as if a timely motion for new trial had been
granted therein.19chanrobleslaw
102
Extrinsic fraud exists when there is a fraudulent act committed
by the prevailing party outside of the trial of the case, whereby
the defeated party was prevented from presenting fully his
side of the case by fraud or deception practiced on him by the
prevailing party.20 Fraud is extrinsic where the unsuccessful
party had been prevented from exhibiting fully his case, by
means of fraud or deception, as by keeping him away from
court, or by a false promise of a compromise; or where the
defendant never had knowledge of the suit, being kept in
ignorance by the acts of the plaintiff; or where an attorney
fraudulently or without authority assumes to represent a party
and connives at his defeat; these and similar cases which show
that there has never been a real contest in the trial or hearing
of the case are reasons for which a new suit may be sustained
to set aside and annul the former judgment and open the case
for a new and fair hearing. Ultimately, the overriding
consideration is that the fraudulent scheme of the prevailing
litigant prevented a party from having his day in
court.21chanrobleslaw
In the present case, We find that Viveca was completely
prevented from participating in the Declaration of Nullity case
because of the fraudulent scheme employed by Philip insofar
as the service of summons is concerned.
Summons is a writ by which the defendant is notified of the
action brought against him. Through its service, the court
acquires jurisdiction over his person.22 As a rule, Philippine
courts cannot try any case against a defendant who does not
reside and is not found in the Philippines because of the
impossibility of acquiring jurisdiction over his person unless he
voluntarily appears in court. Section 15, Rule 14 of the Rules of
Court, however, enumerates the actions in rem or quasi in
rem when Philippine courts have jurisdiction to hear and
decide the case because they have jurisdiction over the res,
and jurisdiction over the person of the non-resident defendant
is not essential.23 Said section
provides:ChanRoblesVirtualawlibrary
Section 15. Extraterritorial service. — When the defendant
does not reside and is not found in the Philippines, and
the action affects the personal status of the plaintiffor
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 6; 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. (17a)
Thus, under Section 15 of Rule 14, a defendant who is a non-
resident and is not found in the country may be served with
summons by extraterritorial service in four instances: (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 has or claims a lien or
interest, actual or contingent; (3) when the relief demanded
consists, wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; or (4) when the
property of the defendant has been attached within the
Philippines.24chanrobleslaw
In these instances, extraterritorial service of summons may be
effected under any of three modes: (1) by personal service out
of the country, with leave of court; (2) by publication and
sending a copy of the summons and order of the court by
registered mail to the defendant's last known address, also
with leave of court; or (3) by any other means the judge may
consider sufficient.25cralawredchanrobleslaw
In the present case, it is undisputed that when Philip filed the
Petition for Declaration of Nullity of Marriage, an action which
affects his personal status, Viveca was already residing in the
United States of America. Thus, extraterritorial service of
summons under Section 15, Rule 14 of the Rules of Court is
the proper mode by which summons may be served on Viveca,
a non-resident defendant who is not found in the Philippines.
In compliance therewith, Philip claims that Viveca was duly
served summons because: (1) copies of the summons,
complaint, and order of the Batangas court were published
in Tempo, a newspaper of general circulation on March 27,
2008 and April 3, 2008;26 and (2) the sheriff served copies of
the summons, complaint, and order of the Batangas court on
Viveca at their conjugal home in Pasig City, her last known
address.27 Thus, he contends that the second mode of
extraterritorial service of summons mentioned above - by
publication and sending a copy of the summons and order of
the court by registered mail to the defendant's last known
address - was sufficiently complied with. The Court finds,
however, that such service of summons on their conjugal
home address cannot be deemed compliant with the
requirements of the rules and is even tantamount to deception
warranting the annulment of the Batangas court's judgment.
Philip fervently asserts the propriety of their conjugal home
address as Viveca's "last known address," well within the true
meaning and intent of the rules. But as borne by the records of
the instant case, not only is he mistaken, factual
considerations herein belie his claims of good faith. First and
foremost, it is undisputed that the parties herein are also
parties in a Legal Separation case, previously filed by Viveca
way back in 1994. There was, in said case, a disclosure of their
basic personal information, which customarily includes their
respective local addresses, wherein they may be served with
court papers. In fact, as pointed out by the appellate court,
Philip knew that Viveca had already left their conjugal home
and moved to a different local address for purposes of the
pendency of the Legal Separation case, as shown by his
stipulation in his Amended Answer with Counterclaim that
"after abandoning the conjugal abode on 24 August 1993,
petitioner resided at her parent's house in Richbelt
Condominium, Annapolis Street, Greenhills, Mandaluyong,
Metro Manila, until she moved to her present address in
October 1993." Thus, Philip cannot be allowed to feign
ignorance to the fact that Viveca had already intentionally
abandoned their conjugal abode and that of all the addresses
that Viveca resided at, their conjugal home in Horizon
Condominium is her least recent address. In fact, it may very
103
well be considered as the address she is least likely to be
found considering the circumstances in which she left the
same. Note that from the very beginning of the Legal
Separation case in 1994, all the way up until the promulgation
by the Pasig RTC of its decision thereon in 2009, there is no
showing that Viveca had ever received any document in
relation to said case, nor is there any proof that Philip had ever
sent any pertinent file to Viveca, at the conjugal address.
There is, therefore, no reason for Philip to assume, in good
faith, that said address is in truth and in fact Viveca's "last
known address" at which she may receive summons. His
contention that the rules require the defendant's "last known
address" to be of a permanent, and not of a temporary nature,
has no basis in law or jurisprudence.
In addition, the Court is curious as to why Philip filed the
instant Petition for Declaration of Nullity of Marriage28 before
the RTC of Batangas City on February 15, 2008 when less than
a year before filing the same, he had motioned the RTC of
Pasig City on April 24, 2007 to withdraw his counterclaim for
the same declaration of nullity of marriage.29 In his petition
before the Court, Philip explained that he withdrew his
counterclaim in the Legal Separation case in his "desire to
explore the possibility of having a so-called 'universal
settlement' of all the pending cases with respondent and her
relatives for the sake of his love for his four (4)
children."30 Yet, in an apparent, direct contravention of this so-
called "desire," he filed an identical action which sought the
same nullity of his marriage with Viveca. Thus, while there
may be no outright admission on Philip's part as to a sinister
motive, his inconsistent actions effectively negate his claims of
good faith.
It is interesting to note, moreover, that as pointed out by
Viveca, Philip does not even reside in Batangas, the city of the
court wherein he filed his Petition for Declaration of Nullity of
Marriage. In a Certification31issued by Ricardo V. Bautista,
Barangay Chairman of Poblacion 1, Calatagan, Batangas, it
was categorically stated that "the name Philip Yu is not a
resident of Barangay Poblacion 1, Calatagan, Batangas."
Section 4 of A.M. No. 02-11-10-SC, otherwise known as
the Rule on Declaration of Absolute Nullity of Void Marriages
and Annulment of Voidable Marriages, which took effect on
March 15, 2003, provides:ChanRoblesVirtualawlibrary
Section 4. Venue. - The Petition shall be filed in the
Family Court of the province or city where the
petitioner or the respondent has been residing for at
least six months prior to the date of filing. Or in the case
of non-resident respondent, where he may be found in the
Philippines, at the election of the
petitioner.32chanroblesvirtuallawlibrary
It is, therefore, evident that not only did Philip contradict his
previous Motion to Withdraw his Counterclaim for the
Declaration of Nullity of marriage, he even violated a basic
mandate of law so as to be able to file the same action before
a different court in a city he was not even a resident of.
Thus, while individually and in isolation, the aforementioned
doubtful circumstances may not instantly amount to extrinsic
fraud, these circumstances, when viewed in conjunction with
each other, paint a deceitful picture which resulted in a
violation of Viveca's constitutional right to due process. True,
the service of summons in this case is not for the purpose of
vesting the court with jurisdiction, but for the purpose of
complying with the requirements of fair play or due process.
But because of Philip's employment of deceptive means in the
service of summons on Viveca, said purpose of satisfying the
due process requirements was never accomplished. To this
Court, when Philip declared before the Batangas court that
Viveca's last known address was still their conjugal home with
full and undisputed knowledge that she had already
intentionally abandoned the same and had even established a
more recent, local residence herein evinces a clear lack of
good faith. As a result, Viveca never had knowledge of the
filing of the Declaration of Nullity of Marriage suit, only finding
out about the same when the Pasig City RTC had promulgated
its decision on the Legal Separation case. It is clear, therefore,
that because of the service of summons at the erroneous
address, Viveca was effectively prevented from participating in
the proceedings thereon.

In Acance v. Court of Appeals,33 where the extraterritorial

service of summons on the non-resident, US citizen,
defendants therein were held to be defective due to the
absence of proof that the summons, complaint, and order of
the court were duly served at their last known correct address,
the Court ruled that the failure to strictly comply correctly with
the requirements of the rules regarding the mailing of copies
of the summons and the order for its publication is a fatal
defect in the service of summons.34Citing Dulap, et al. v. Court
of Appeals, et al.,35 it elucidated as
follows:ChanRoblesVirtualawlibrary
It is the duty of the court to require the fullest compliance with
all the requirements of the statute permitting service by
publication. Where service is obtained by publication, the
entire proceeding should be closely scrutinized by the courts
and a strict compliance with every condition of law should be
exacted. Otherwise great abuses may occur, and the rights of
persons and property may be made to depend upon the elastic
conscience of interested parties rather than the enlightened
judgment of the court or judge.36chanroblesvirtuallawlibrary
Indeed, due process requires that those with interest to the
thing in litigation be notified and given an opportunity to
defend those interests.37 When defendants are deprived of
such opportunity to duly participate in, and even be informed
of, the proceedings, due to a deceitful scheme employed by
the prevailing litigant, as in this case, there exists a violation of
their due process rights. Any judgment issued in violation
thereof necessarily suffers a fatal infirmity for courts, as
guardians of constitutional rights cannot be expected to deny
persons their due process rights while at the same time be
considered as acting within their jurisdiction.38 This Court,
therefore, deems as proper the annulment of the Batangas
court's judgment issued without proper service of summons.

WHEREFORE, premises considered, the instant petition

is DENIED. The assailed Decision dated September 30, 2011
and Resolution dated January 5, 2012 of the Court of Appeals
in CA-G.R. SP No. 111414 are AFFIRMED.
SO ORDERED.chanRoblesvirtualLawlibrary

104
[G.R. No. 159699. March 16, 2005]
ROSALINO P. ACANCE, in his capacity as Attorney-in-
Fact, Administrator of property and as counsel
of SPOUSES JESULITO P. ACANCE and VILMA
ACANCE, SPOUSES MANUEL P. ACANCE and
GUIA ACANCE, and SPOUSES NESTOR P.
ACANCE and LYNNE ACANCE, petitioners,
vs. COURT OF APPEALS, SPOUSES YOLANDA
QUIJANO TRIA and AMBROCIO TRIA, SPOUSES
EPIFANIA QUIJANO and RAPHAEL
VILLANUEVA, and SPOUSES NAPOLEON
PAGLICAWAN QUIJANO and PILAR Z.
QUIJANO, represented by their attorney-in-
fact, ENGR. JULIUS VILLANUEVA, respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review
on certiorari seeking to reverse and set aside the
Resolution[1] dated November 29, 2002 of the Court of Appeals
(CA) in CA-G.R. SP No. 71658. In the said resolution, the
appellate court dismissed the petition for certiorari filed
therewith for failure to file a motion for reconsideration with
the courta quo. Likewise sought to be reversed is the appellate
courts Resolution dated August 27, 2003 denying the
reconsideration of its earlier resolution.
The case stemmed from the following facts:
On May 23, 2001, Spouses Yolanda Quijano and
Ambrocio Tria, Spouses Epifania Quijano and Raphael
Villanueva, Spouses Napoleon and Pilar Quijano (respondents
herein), represented by their attorney-in-fact Engr. Julius F.
Villanueva, filed with the Regional Trial Court (RTC) of
Muntinlupa an amended complaint against Spouses Jesulito
and Vilma Acance, Spouses Nestor and Lynne Acance, and
Spouses Manuel and Guia Acance (petitioners herein). The
case was docketed as Civil Case No. 01-122 and raffled to
Branch 276 of the RTC of Muntinlupa City.
The amended complaint sought to annul the Extra-
Judicial Settlement of the Estate of Deceased Jesus P. Acance
and Waiver of Rights dated February 10, 1997, executed by
Jesulito, Manuel and Nestor, all surnamed Acance, and their
mother Angela. The estate covered by the said extra-judicial
settlement included two parcels of land with a total area of
1,044 square meters under Transfer Certificates of Titles (TCT)
Nos. 239998 and 242993 and the improvements thereon
consisting of a 9-door apartment units, situated in Muntinlupa
City. Following the execution of the extra-judicial settlement,
TCT Nos. 239998 and 242993, which were in the names of
Jesus and Angela Acance, were cancelled and, in their stead,
TCT Nos. 4365 and 4366 were issued in the names of the
Acance siblings.
The amended complaint alleged that the siblings Yolanda,
Epifania and Napoleon were the legitimate children of Angela
Paglicawan and Vernier Quijano. The couple, however, became
estranged after the birth of their youngest child. Upon their
separation, Vernier continued to reside in Looc, Occidental
Mindoro while Angela went to Manila to work as a nurse at the
National Mental Hospital in Muntinlupa City. While working
105
thereat, Angela met Jesus Acance. They lived together as
common law husband and wife and bore the siblings Jesulito,
Manuel and Nestor.
Some time in 1966, Angela went to the United States to
work as a nurse. With the savings she earned therefrom, she
acquired the subject parcels of land in Muntinlupa and had the
subject 9-door apartment units constructed thereon. Jesus
Acance lived with Angela in the United States. After Vernier
passed away in 1989, Jesus and Angela got married in 1990.
Jesus died in 1996 in the United States.
In seeking to nullify the extra-judicial settlement of estate
executed by the Acance siblings and their TCT Nos. 4365 and
4366, the Quijano siblings alleged that the subject real
properties are conjugal properties of Angela and Vernier
because these were acquired by Angela during the subsistence
of her first marriage with Vernier. As such, they (the Quijano
siblings) have a valid right to succeed over the said properties
as the lawful and compulsory heirs of Angela and Vernier.
The Quijano siblings impugned the validity of the extra-
judicial settlement claiming that the signature of Angela
thereon was a forgery or that she affixed the same without her
free volition because at the time of its execution, she was
already senile. In any case, Angelas purported waiver of her
rights over the subject properties in favor of her children with
Jesus (Acance siblings) and excluding her children with Vernier
(Quijano siblings) is against the law. Consequently, TCT Nos.
4365 and 4366 of the Acance siblings are allegedly also void as
they emanated from the forged deed of extra-judicial
settlement.
On April 26, 2002, upon motion of the respondents (the
Quijano siblings and their spouses), as plaintiffs therein, the
court a quo issued an order declaring the petitioners (the
Acance siblings and their spouses), as defendants therein, in
default for their failure to file an answer to the amended
complaint.
On May 13, 2002, petitioner Rosalino Acance, as
attorney-in-fact and administrator of the subject properties,
filed with the court a quo a Motion to Lift/Set Aside Order of
Default. In his affidavit of merit attached to the said motion,
petitioner Rosalino alleged that the Acance siblings had
appointed him as their private prosecutor in a criminal case
involving the subject real properties. On January 25, 2002,
upon learning about Civil Case No. 01-122, he filed therein a
Motion to Represent Defendants and set the same for hearing
on February 5, 2002. On the said date, however, petitioner
Rosalino found out that his motion was not included in the
court calendar for that day. Since there was no action on his
motion, he had the impression that the court a quo needed
time to determine other jurisdictional requirements considering
that the petitioners are American citizens and non-residents of
the Philippines.
Petitioner Rosalino further alleged that he had not
received a copy of the complaint filed in Civil Case No. 01-122.
The only pleading he received pertaining to the case was that
of the motion to declare the petitioners in default and setting
the hearing thereon on April 26, 2002. At the said hearing, the
respondents motion was granted and the petitioners were
declared in default.
 The affidavit of merit likewise alleged that the petitioners
have a valid and meritorious defense including that the subject
real properties were acquired by their parents, Jesus and
Angela, with both their earnings during the period that they
lived together. They denied that these were paraphernal
properties of Angela or conjugal properties of Angela and
Vernier. The petitioners further claimed that the extra-judicial
settlement was duly executed by them and Angelas waiver of
her rights over the subject properties in their favor was validly
made. To prove that Angela really intended to transfer the
properties to them, the petitioners presented her Last Will and
Testament executed in the United States on December 6, 1996
in which she bequeathed to them all her properties, real and
personal, wherever situated.
In its Order dated June 27, 2002, the court a quo denied
the motion to lift the order of default. It explained that the
petitioners are all residing abroad but the real properties
subject of the complaint are situated in Muntinlupa City.
Accordingly, upon motion, they were deemed served with the
summons and the amended complaint through publication
thereof in a newspaper of general circulation in Muntinlupa
City, where the properties are located, and nationwide on
October 20, 2001. The petitioners had sixty (60) days from the
last publication or until December 2, 2001 within which to file
their answer. However, they failed to do so.
More than a month later, or on January 25, 2002,
petitioner Rosalino filed the motion to represent the petitioners
and asked for sixty (60) days to file an answer. According to
the court a quo, since the motion was not an adversarial
pleading it was no longer included in the court calendar. It
stressed that at the time said counsel entered his appearance,
the period to file an answer had long expired. Further, the 60
days extension prayed for was not denied. However, the
petitioners still failed to file their answer within the extension
period prayed for.
The court a quo faulted petitioner Rosalino, as counsel,
for erroneously assuming that since it failed to rule on his
entry of appearance, the period to file an answer was
suspended. It pointed out that the fact that the counsel may
be allowed to represent a party-litigant or not does not toll the
running of the period to file the responsive pleading to the
complaint.
Forthwith, the petitioners filed with the Court of Appeals
a petition for certiorari alleging grave abuse of discretion on
the part of the court a quo in denying their motion to lift the
default order. Preliminarily, they averred that they dispensed
with the filing of a motion for reconsideration with the court a
quo because of the urgency of the matter as well as the fact
that they raised jurisdictional issues in their motion to lift the
default order.
They contended that, in denying their motion to lift the
order of default, the court a quo adopted a rigid, strict and
technical stance. Further, petitioner Rosalino, as their counsel,
was of the honest belief that when the court a quo did not act
on his motion to represent the petitioners, it was still
determining whether all the requirements for a valid
extraterritorial service was made on them. They, likewise,
harped on the fact that the court a quos order denying their
motion to lift order of default had been promulgated before
they even filed their reply to the respondents opposition. They
106
maintained that the court a quo did not acquire jurisdiction
over the petitioners because no valid extraterritorial service of
summons was made on them.
On November 29, 2002, the appellate court rendered the
assailed Resolution dismissing outright the petition
for certiorari for failure of the petitioners to file a motion for
reconsideration with the court a quo. In so doing, it applied
the general rule that the filing of a motion for reconsideration
of the disputed order is a condition sine qua non in order
that certiorari will lie. The petitioners moved for the
reconsideration of the said resolution but it was denied in the
assailed Resolution dated August 27, 2003. Hence, the
recourse to this Court by the petitioners.
It is contended by the petitioners that the appellate court
committed reversible error in dismissing their petition
for certiorari for failure to file a motion for reconsideration with
the court a quo. They posit that such omission is not fatal.
They maintain that they have a meritorious defense in Civil
Case No. 01-122 and that grave injuries and injustice would be
inflicted on them unless they are afforded the full opportunity
to protect their interests. On the other hand, no undue
prejudice would be caused the respondents in the event that
the order of default is lifted and the action in the court a quo is
heard on the merits.
According to the petitioners, the non-filing of a motion for
reconsideration was justified because the need for relief was
extremely urgent and a motion for reconsideration was not a
plain and adequate remedy under the circumstances of the
case. Moreover, the questions raised before the appellate court
were the same as those which have been raised in the motion
to lift order of default and already passed upon by the court a
quo. Finally, the failure to file a responsive pleading to the
respondents amended complaint was due to the excusable
negligence of the petitioners counsel.
For their part, the respondents urge the Court to deny
the petition for review. They are of the view that the appellate
court correctly applied the general rule that the filing of a
motion for reconsideration is a condition sine qua non in order
that certiorari will lie.
The threshold issue that needs to be resolved is whether
the CA committed reversible error in dismissing the petition
for certiorari for failure of the petitioners to file a motion for
reconsideration with the court a quo.
The Court rules in the affirmative.
The rule is well settled that the filing of a motion for
reconsideration is an indispensable condition to the filing of a
special civil action for certiorari.[2] However, this rule admits of
exceptions including:
(a) where the order is a patent nullity, as where the court a
quo has no jurisdiction;
(b) where the questions raised in the certiorari proceedings
have been duly raised and passed upon by the lower court, or
are the same as those raised and passed upon in the lower
court;
(c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of
the Government or of the petitioner or the subject matter of
the action is perishable;
(d) where, under the circumstances, a motion for
reconsideration would be useless;
(e) where petitioner was deprived of due process and there is
extreme urgency for relief;
(f) where, in a criminal case, relief from an order of arrest is
urgent and the granting of such relief by the trial court is
improbable;
(g) where the proceedings in the lower court are a nullity for
lack of due process;
(h) where the proceedings was ex parte or in which the
petitioner had no opportunity to object; and
(i) where the issue raised is one purely of law or public interest
is involved.[3]
A perusal of the petition for certiorari filed with the CA
shows that the petitioners expressly stated therein that they
dispensed with the filing of a motion for reconsideration with
the court a quo because they raised questions of jurisdiction in
the motion to set aside the default order filed therewith. It was
further averred that there was an urgent necessity for relief as
the court a quo seemed to act with precipitate haste. It was,
likewise, pointed out that the court a quo allowed the
respondents to present their evidence ex parte on April 30,
2002 (a Tuesday), just two office days after the default order
was issued on April 26, 2002 (a Friday).
It appears that the CA committed reversible error in
dismissing outright the petition for certiorari for failure of the
petitioners to move for a reconsideration of the default order
when it had been sufficiently shown that the need for relief
was extremely urgent. The procedural requirement that a
motion for reconsideration must first be filed before resorting
to the special civil action of certiorari may be glossed over to
prevent a miscarriage of justice and, among other recognized
instances, when the need for relief is extremely urgent
and certiorari is the only adequate and speedy remedy
available.[4] Among other remedies, a petition for certiorari to
declare the nullity of a judgment by default is available if the
trial court improperly declared a party in default, or even if the
trial court properly declared a party in default, if grave abuse
of discretion attended such declaration.[5]
In this case, the court a quo acted with grave abuse of
discretion in declaring the petitioners in default without
showing that there was full compliance with the requirements
for extraterritorial service of summons under Section 15, Rule
14 of the Rules of Court. The said provision reads:
Sec. 15. 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
107
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 6; 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.
The petitioners are citizens of the United States and
residents thereof. Further, the suit against them involves real
property wherein the petitioners, as defendants therein, have
an interest. These facts clearly warranted extraterritorial
service of summons in accordance with Section 15, Rule 14 of
the Rules of Court. The rationale for service of summons on a
nonresident defendant is explained, thus:
We repeat, service of summons on a nonresident defendant
who is not found in the country is required, not for purposes of
physically acquiring jurisdiction over his person but simply in
pursuance of the requirements of fair play, so that he may be
informed of the pendency of the action against him and the
possibility that the property in the Philippines belonging to him
or in which he has an interest may be subjected to a judgment
in favor of a resident, and that he may thereby be accorded an
opportunity to defend in the action, if he be so minded. The
only relief that may be granted in such an action against such
a nonresident defendant, who does not choose to submit
himself to the jurisdiction of the Philippine court, is limited to
the res.[6]
In its Order dated April 26, 2002, the court a
quo declared the petitioners in default in this wise:
Since the last publication of this case more than 60 days ago,
no answer has been filed by any of the Defendants, the
MOTION TO DECLARE THE DEFENDANTS IN DEFAULT is,
therefore, granted; hence Defendants, SPS. JESULITO P.
ACANCE & VILMA ACANCE, SPS. MANUEL P. ACANCE & GUIA
ACANCE, and SPS. NESTOR P. ACANCE & LYNNE ACANCE are
defaulted.
Evidence for Plaintiffs may be received ex-parte before the
Clerk of Court.[7]
However, as will be shown shortly, the service of
summons in this case is defective. There was no showing that
copies of the summons and the amended complaint were duly
served at the petitioners last known correct address by
registered mail, as a complement to the publication pursuant
to Section 15, Rule 14 of the Rules of Court[8] and in
compliance with the court a quos Order dated July 1, 2001
granting the respondents motion for leave to serve summons
by publication.
The respondents alleged that they had caused copies of
the Amended Complaint and Summons and the 1 July 2001
Order to be sent on November 13, 2001 by registered mail to
the Acances known addresses in the United States. In their
Compliance dated January 31, 2002 filed with the court a quo,
the respondents averred that a copy of the summons and
order of the court together with a copy of the amended
complaint had been sent to each of the three (3) defendants in
their respective addresses by registered mail, as evidenced by
Registry Receipt No. 26832 for Nestor P. Acance dated
November 13, 2001; Registry receipt No. 26833 for Jesulito P.
Acance dated November 13, 2001 and Registry Receipt No.
26834 for Manuel P. Acance dated November 13, 2001, all sent
from the Makati City Branch Post Office.[9]However, except for
this bare allegation, the corresponding registry receipts or
copies thereof were not presented to show compliance with
the rules.
Further, there was likewise non-compliance with Section
19, Rule 15 of the Rules of Court relating to the proof of
service by publication. The said provision reads:
Sec. 19. Proof of service by publication. If the service has been
made by publication, service may be proved by the affidavit of
the printer, his foreman, or principal clerk, or of the editor,
business or advertising manager, to which affidavit a copy of
the publication shall be attached, and by an affidavit showing
the deposit of a copy of the summons and order for publication
in the post office, postage prepaid, directed to the defendant
by registered mail to his last known address.
While the respondents claimed that they had complied
with the service of summons by publication in a newspaper of
general circulation,[10] it does not appear that they had
presented to the court a quo the affidavit of the printer, his
foreman, or principal clerk, or of the editor, business or
advertising manager of the Remate, where the publication was
allegedly made, to prove such service by publication. Neither
did they present an affidavit showing the deposit of a copy of
the summons and order of publication in the post office,
postage prepaid, directed to the petitioners by registered mail
to their last known addresses.
The failure to strictly comply correctly with the
requirements of the rules regarding the mailing of copies of
the summons and the order for its publication is a fatal defect
in the service of summons.[11] As held by this Court:
It is the duty of the court to require the fullest compliance with
all the requirements of the statute permitting service by
publication. Where service is obtained by publication, the
entire proceeding should be closely scrutinized by the courts
and a strict compliance with every condition of law should be
exacted. Otherwise great abuses may occur, and the rights of
persons and property may be made to depend upon the elastic
conscience of interested parties rather than the enlightened
judgment of the court or judge.[12]
Even granting arguendo that the respondents had fully
complied with the requirements for extraterritorial service of
summons and the court a quo correctly declared them in
default; still, it should not have been too rash in dismissing the
petitioners motion to lift the default order. Well-settled is the
rule that courts should be liberal in setting aside orders of
default for default judgments are frowned upon, unless in
cases where it clearly appears that the reopening of the case is
intended for delay. The issuance of the orders of default
108
should be the exception rather than the rule, to be allowed
only in clear cases of obstinate refusal by the defendant to
comply with the orders of the trial court.[13] In this case, there
is no showing that the petitioners failure to file an answer was
due to an apparent scheme to delay the proceedings or to
flagrantly transgress the rules.
Under the circumstances, the setting aside of the order of
default is in order. The petitioners should be afforded the
opportunity to present evidence on their behalf in order that
substantial justice is achieved. After all, court litigations are
primarily for the search of truth, and a liberal interpretation of
the rules by which both parties are given the fullest
opportunity to adduce proofs is the best way to ferret out such
truth.[14] By conducting a full-blown trial, both parties will be
able to present their evidence, thus, affording them the
opportunity to enforce and protect their respective rights.
WHEREFORE, the petition is GRANTED. The assailed
Resolutions dated November 29, 2002 and August 27, 2003 of
the Court of Appeals in CA-G.R. SP No. 71658 are REVERSED
AND SET ASIDE. The case is REMANDED to the court a quo,
which is DIRECTED to allow the petitioners to file their answer
to the amended complaint, and thereafter to conduct the
proper proceedings in Civil Case No. 01-122.
SO ORDERED.
G.R. No. 175799 : November 28, 2011
NM ROTHSCHILD & SONS (AUSTRALIA)
LIMITED, Petitioner, v. LEPANTO CONSOLIDATED
MINING COMPANY, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the
Decision1red of the Court of Appeals dated September 8, 2006
in CA-G.R. SP No. 94382 and its Resolution2red dated
December 12, 2006, denying the Motion for Reconsideration.
On August 30, 2005, respondent Lepanto Consolidated Mining
Company filed with the Regional Trial Court (RTC) of Makati
City a Complaint3red against petitioner NM Rothschild & Sons
(Australia) Limited praying for a judgment declaring the loan
and hedging contracts between the parties void for being
contrary to Article 20184red of the Civil Code of the Philippines
and for damages. The Complaint was docketed as Civil Case
No. 05-782, and was raffled to Branch 150. Upon respondent’s
(plaintiff’s) motion, the trial court authorized respondent’s
counsel to personally bring the summons and Complaint to the
Philippine Consulate General in Sydney, Australia for the latter
office to effect service of summons on petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance
With Motion to Dismiss5red praying for the dismissal of the
Complaint on the following grounds: (a) the court has not
acquired jurisdiction over the person of petitioner due to the
defective and improper service of summons; (b) the Complaint
failed to state a cause of action and respondent does not have
any against petitioner; (c) the action is barred by estoppel;
and (d) respondent did not come to court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a
Motion for Leave to take the deposition of Mr. Paul Murray
(Director, Risk Management of petitioner) before the Philippine
Consul General; and (2) a Motion for Leave to Serve
Interrogatories on respondent.
On December 9, 2005, the trial court issued an
Order6red denying the Motion to Dismiss. According to the trial
court, there was a proper service of summons through the
Department of Foreign Affairs (DFA) on account of the fact
that the defendant has neither applied for a license to do
business in the Philippines, nor filed with the Securities and
Exchange Commission (SEC) a Written Power of Attorney
designating some person on whom summons and other legal
processes maybe served. The trial court also held that the
Complaint sufficiently stated a cause of action. The other
allegations in the Motion to Dismiss were brushed aside as
matters of defense which can best be ventilated during the
trial.
On December 27, 2005, petitioner filed a Motion for
Reconsideration.7red On March 6, 2006, the trial court issued
an Order denying the December 27, 2005 Motion for
Reconsideration and disallowed the twin Motions for Leave to
take deposition and serve written interrogatories.8red
On April 3, 2006, petitioner sought redress via a Petition
for Certiorari9red with the Court of Appeals, alleging that the
trial court committed grave abuse of discretion in denying its
Motion to Dismiss. The Petition was docketed as CA-G.R. SP
No. 94382.
On September 8, 2006, the Court of Appeals rendered the
assailed Decision dismissing the Petition for Certiorari. The
Court of Appeals ruled that since the denial of a Motion to
Dismiss is an interlocutory order, it cannot be the subject of a
Petition for Certiorari, and may only be reviewed in the
ordinary course of law by an appeal from the judgment after
trial. On December 12, 2006, the Court of Appeals rendered
the assailed Resolution denying the petitioner’s Motion for
Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an
Order directing respondent to answer some of the questions in
petitioner’s Interrogatories to Plaintiff dated September 7,
2006.
Notwithstanding the foregoing, petitioner filed the present
petition assailing the September 8, 2006 Decision and the
December 12, 2006 Resolution of the Court of Appeals.
Arguing against the ruling of the appellate court, petitioner
insists that (a) an order denying a motion to dismiss may be
the proper subject of a petition for certiorari; and (b) the trial
court committed grave abuse of discretion in not finding that it
had not validly acquired jurisdiction over petitioner and that
the plaintiff had no cause of action.
109
Respondent, on the other hand, posits that: (a) the present
Petition should be dismissed for not being filed by a real party
in interest and for lack of a proper verification and certificate
of non-forum shopping; (b) the Court of Appeals correctly
ruled that certiorari was not the proper remedy; and (c) the
trial court correctly denied petitioner’s motion to dismiss.
Our discussion of the issues raised by the parties
follows: chanroblesvirtuallawlibrary
Whether petitioner is a real party in interest
Respondent argues that the present Petition should be
dismissed on the ground that petitioner no longer existed as a
corporation at the time said Petition was filed on February 1,
2007. Respondent points out that as of the date of the filing of
the Petition, there is no such corporation that goes by the
name NM Rothschild and Sons (Australia) Limited. Thus,
according to respondent, the present Petition was not filed by
a real party in interest, citing our ruling in Philips Export B.V. v.
Court of Appeals,10red wherein we
held: chanroblesvirtuallawlibrary
A name is peculiarly important as necessary to the very
existence of a corporation (American Steel Foundries vs.
Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs.
Lebanon Valley R. Co., 30 Pa 42; First National Bank vs.
Huntington Distilling Co., 40 W Va 530, 23 SE 792). Its name is
one of its attributes, an element of its existence, and essential
to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule
as to corporations is that each corporation must have a name
by which it is to sue and be sued and do all legal acts. The
name of a corporation in this respect designates the
corporation in the same manner as the name of an individual
designates the person (Cincinnati Cooperage Co. vs. Bate, 96
Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird,
10 NH 123); and the right to use its corporate name is as
much a part of the corporate franchise as any other privilege
granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or
375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese
Beneficial Association, 18 RI 165, 26 A 36).11red
In its Memorandum12red before this Court, petitioner started to
refer to itself as Investec Australia Limited (formerly “NM
Rothschild & Sons [Australia] Limited”) and captioned said
Memorandum accordingly. Petitioner claims that NM Rothschild
and Sons (Australia) Limited still exists as a corporation under
the laws of Australia under said new name. It presented before
us documents evidencing the process in the Australian
Securities & Investment Commission on the change of
petitioner’s company name from NM Rothschild and Sons
(Australia) Limited to Investec Australia Limited.13red
We find the submissions of petitioner on the change of its
corporate name satisfactory and resolve not to dismiss the
present Petition for Review on the ground of not being
prosecuted under the name of the real party in interest. While
we stand by our pronouncement in Philips Export on the
importance of the corporate name to the very existence of
corporations and the significance thereof in the corporation’s
right to sue, we shall not go so far as to dismiss a case filed by
the proper party using its former name when adequate
identification is presented. A real party in interest is the party
who stands to be benefited or injured by the judgment in the
suit, or the party entitled to the avails of the suit. 14red There is
no doubt in our minds that the party who filed the present
Petition, having presented sufficient evidence of its identity
and being represented by the same counsel as that of the
defendant in the case sought to be dismissed, is the entity that
will be benefited if this Court grants the dismissal prayed for.
Since the main objection of respondent to the verification and
certification against forum shopping likewise depends on the
supposed inexistence of the corporation named therein, we
give no credit to said objection in light of the foregoing
discussion.
Propriety of the Resort to a Petition for Certiorari with
the Court of Appeals
We have held time and again that an order denying a Motion
to Dismiss is an interlocutory order which neither terminates
nor finally disposes of a case as it leaves something to be done
by the court before the case is finally decided on the merits.
The general rule, therefore, is that the denial of a Motion to
Dismiss cannot be questioned in a special civil action
for Certiorari which is a remedy designed to correct errors of
jurisdiction and not errors of judgment.15red However, we
have likewise held that when the denial of the Motion to
Dismiss is tainted with grave abuse of discretion, the grant of
the extraordinary remedy of Certiorari may be justified. By
“grave abuse of discretion” is
meant: chanroblesvirtuallawlibrary
[S]uch capricious and whimsical exercise of judgment that is
equivalent to lack of jurisdiction. The abuse of discretion must
be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and
must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty
enjoined by or to act all in contemplation of law.16red
The resolution of the present Petition therefore entails an
inquiry into whether the Court of Appeals correctly ruled that
the trial court did not commit grave abuse of discretion in its
denial of petitioner’s Motion to Dismiss. A mere error in
judgment on the part of the trial court would undeniably be
inadequate for us to reverse the disposition by the Court of
Appeals.
Issues more properly ventilated during the trial of the
case
As previously stated, petitioner seeks the dismissal of Civil
Case No. 05-782 on the following grounds: (a) lack of
jurisdiction over the person of petitioner due to the defective
and improper service of summons; (b) failure of the Complaint
to state a cause of action and absence of a cause of action; (c)
the action is barred by estoppel; and (d) respondent did not
come to court with clean hands.
As correctly ruled by both the trial court and the Court of
Appeals, the alleged absence of a cause of action (as opposed
110
to the failure to state a cause of action), the alleged estoppel
on the part of petitioner, and the argument that respondent is
in pari delicto in the execution of the challenged contracts, are
not grounds in a Motion to Dismiss as enumerated in Section
1, Rule 1617red of the Rules of Court. Rather, such defenses
raise evidentiary issues closely related to the validity and/or
existence of respondent’s alleged cause of action and should
therefore be threshed out during the trial.
As regards the allegation of failure to state a cause of action,
while the same is usually available as a ground in a Motion to
Dismiss, said ground cannot be ruled upon in the present
Petition without going into the very merits of the main case.
It is basic that “[a] cause of action is the act or omission by
which a party violates a right of another.”18red Its elements
are the following: (1) a right existing in favor of the plaintiff,
(2) a duty on the part of the defendant to respect the
plaintiff's right, and (3) an act or omission of the defendant in
violation of such right.19red We have held that to sustain a
Motion to Dismiss for lack of cause of action, the complaint
must show that the claim for relief does not exist and not only
that the claim was defectively stated or is ambiguous,
indefinite or uncertain.20red
The trial court held that the Complaint in the case at bar
contains all the three elements of a cause of action, i.e., it
alleges that: (1) plaintiff has the right to ask for the declaration
of nullity of the Hedging Contracts for being null and void and
contrary to Article 2018 of the Civil Code of the Philippines; (2)
defendant has the corresponding obligation not to enforce the
Hedging Contracts because they are in the nature of wagering
or gambling agreements and therefore the transactions
implementing those contracts are null and void under
Philippine laws; and (3) defendant ignored the advice and
intends to enforce the Hedging Contracts by demanding
financial payments due therefrom.21red
The rule is that in a Motion to Dismiss, a defendant
hypothetically admits the truth of the material allegations of
the ultimate facts contained in the plaintiff's
complaint.22red However, this principle of hypothetical
admission admits of exceptions. Thus, in Tan v. Court of
Appeals,23red we held: chanroblesvirtuallawlibrary
The flaw in this conclusion is that, while conveniently echoing
the general rule that averments in the complaint are deemed
hypothetically admitted upon the filing of a motion to dismiss
grounded 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 fraud; nor allegations of legal
conclusions; nor an erroneous statement of law; nor mere
inferences or conclusions from facts not stated; nor mere
conclusions of law; nor allegations of fact the falsity of
which is subject to judicial notice; nor matters of evidence; nor
surplusage and irrelevant matter; nor scandalous matter
inserted merely to insult the opposing party; nor to legally
impossible facts; nor to facts which appear unfounded by a
record incorporated in the pleading, or by a document referred
to; and, nor to general averments contradicted by more
specific averments. A more judicious resolution of a motion to
dismiss, therefore, necessitates that the court be not restricted
to the consideration of the facts alleged in the complaint and
inferences fairly deducible therefrom. Courts may consider
other facts within the range of judicial notice as well as
relevant laws and jurisprudence which the courts are bound to
take into account, 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.24red(Emphases supplied.)
In the case at bar, respondent asserts in the Complaint that
the Hedging Contracts are void for being contrary to Article
201825red of the Civil Code. Respondent claims that under the
Hedging Contracts, despite the express stipulation for
deliveries of gold, the intention of the parties was allegedly
merely to compel each other to pay the difference between the
value of the gold at the forward price stated in the contract
and its market price at the supposed time of delivery.
Whether such an agreement is void is a mere allegation of a
conclusion of law, which therefore cannot be hypothetically
admitted. Quite properly, the relevant portions of the contracts
sought to be nullified, as well as a copy of the contract itself,
are incorporated in the Complaint. The determination of
whether or not the Complaint stated a cause of action would
therefore involve an inquiry into whether or not the assailed
contracts are void under Philippine laws. This is, precisely, the
very issue to be determined in Civil Case No. 05-782. Indeed,
petitioner’s defense against the charge of nullity of the
Hedging Contracts is the purported intent of the parties that
actual deliveries of gold be made pursuant thereto. Such a
defense requires the presentation of evidence on the merits of
the case. An issue that “requires the contravention of the
allegations of the complaint, as well as the full ventilation, in
effect, of the main merits of the case, should not be within the
province of a mere Motion to Dismiss.”26red The trial court,
therefore, correctly denied the Motion to Dismiss on this
ground.
It is also settled in jurisprudence that allegations of estoppel
and bad faith require proof. Thus, in Parañaque Kings
Enterprises, Inc. v. Court of Appeals,27red we
ruled: chanroblesvirtuallawlibrary
Having come to the conclusion that the complaint states a
valid cause of action for breach of the right of first refusal and
that the trial court should thus not have dismissed the
complaint, we find no more need to pass upon the question of
whether the complaint states a cause of action for damages
or whether the complaint is barred by estoppel or
laches. As these matters require presentation and/or
determination of facts, they can be best resolved after
trial on the merits.28red (Emphases supplied.)
On the proposition in the Motion to Dismiss that respondent
has come to court with unclean hands, suffice it to state that
the determination of whether one acted in bad faith and
whether damages may be awarded is evidentiary in nature.
Thus, we have previously held that “[a]s a matter of defense,
it can be best passed upon after a full-blown trial on the
merits.”29red
111
Jurisdiction over the person of petitioner
Petitioner alleges that the RTC has not acquired jurisdiction
over its person on account of the improper service of
summons. Summons was served on petitioner through the
DFA, with respondent’s counsel personally bringing the
summons and Complaint to the Philippine Consulate General in
Sydney, Australia.
In the pleadings filed by the parties before this Court, the
parties entered into a lengthy debate as to whether or not
petitioner is doing business in the Philippines. However, such
discussion is completely irrelevant in the case at bar, for two
reasons. Firstly, since the Complaint was filed on August 30,
2005, the provisions of the 1997 Rules of Civil Procedure
govern the service of summons. Section 12, Rule 14 of said
rules provides: chanroblesvirtuallawlibrary
Sec. 12. Service upon foreign private juridical entity. – When
the defendant is a foreign private juridical entity which has
transacted business in the Philippines, service may be
made on its resident agent designated in accordance with law
for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on any
of its officers or agents within the Philippines. (Emphasis
supplied.)
This is a significant amendment of the former Section 14 of
said rule which previously provided: chanroblesvirtuallawlibrary
Sec. 14. Service upon private foreign corporations. — If the
defendant is a foreign corporation, or a nonresident joint stock
company or association, doing business in the Philippines,
service may be made on its resident agent designated in
accordance with law for that purpose, or if there be no such
agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines.
(Emphasis supplied.)
The coverage of the present rule is thus
broader.30red Secondly, the service of summons to petitioner
through the DFA by the conveyance of the summons to the
Philippine Consulate General in Sydney, Australia was clearly
made not through the above-quoted Section 12, but pursuant
to Section 15 of the same rule which
provides: chanroblesvirtuallawlibrary
Sec. 15. 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 6; 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.
Respondent argues31red that extraterritorial service of
summons upon foreign private juridical entities is not
proscribed under the Rules of Court, and is in fact within the
authority of the trial court to adopt, in accordance with Section
6, Rule 135: chanroblesvirtuallawlibrary
Sec. 6. Means to carry jurisdiction into effect. – When by law
jurisdiction is conferred on a court or judicial officer, all
auxiliary writs, processes and other means necessary to carry
it into effect may be employed by such court or officer; and if
the procedure to be followed in the exercise of such
jurisdiction is not specifically pointed out by law or by these
rules, any suitable process or mode of proceeding may be
adopted which appears comformable to the spirit of said law or
rules.
Section 15, Rule 14, however, is the specific provision dealing
precisely with the service of summons on a defendant which
does not reside and is not found in the Philippines, while Rule
135 (which is in Part V of the Rules of Court entitled Legal
Ethics) concerns the general powers and duties of courts and
judicial officers.
Breaking down Section 15, Rule 14, it is apparent that 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 plaintiffs; (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.32red
Proceeding from this enumeration, we held in Perkin Elmer
Singapore Pte Ltd. v. Dakila Trading
Corporation33red that: chanroblesvirtuallawlibrary
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. 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
112
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. On the other hand, when the defendant
or respondent does not reside and is not found in the
Philippines, 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.34red (Emphases supplied.)
In Domagas v. Jensen,35red we held
that: chanroblesvirtuallawlibrary
[T]he aim and object of an action determine its character.
Whether a proceeding is in rem, or in personam, or quasi in
rem for that matter, is determined by its nature and purpose,
and by these only. A proceeding in personam is a proceeding
to enforce personal rights and obligations brought against the
person and is based on the jurisdiction of the person, although
it may involve his right to, or the exercise of ownership of,
specific property, or seek to compel him to control or dispose
of it in accordance with the mandate of the court. The purpose
of a proceeding in personam is to impose, through the
judgment of a court, some responsibility or liability directly
upon the person of the defendant. Of this character are suits
to compel a defendant to specifically perform some act or
actions to fasten a pecuniary liability on him.36red
It is likewise settled that “[a]n action in personam is lodged
against a person based on personal liability; an action in rem is
directed against the thing itself instead of the person; while an
action quasi in rem names a person as defendant, but its
object is to subject that person’s interest in a property to a
corresponding lien or obligation.”37red
The Complaint in the case at bar is an action to declare the
loan and Hedging Contracts between the parties void
with a prayer for damages. It is a suit in which the plaintiff
seeks to be freed from its obligations to the defendant under a
contract and to hold said defendant pecuniarily liable to the
plaintiff for entering into such contract. It is therefore an
action in personam, unless and until the plaintiff attaches a
property within the Philippines belonging to the defendant, in
which case the action will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and
since the defendant, petitioner Rothschild/Investec, does not
reside and is not found in the Philippines, the Philippine courts
cannot try any case against it because of the impossibility of
acquiring jurisdiction over its person unless it voluntarily
appears in court.38red
In this regard, respondent vigorously argues that petitioner
should be held to have voluntarily appeared before the trial
court when it prayed for, and was actually afforded, specific
reliefs from the trial court.39redRespondent points out that
while petitioner’s Motion to Dismiss was still pending,
petitioner prayed for and was able to avail of modes of
discovery against respondent, such as written interrogatories,
requests for admission, deposition, and motions for production
of documents.40red
Petitioner counters that under this Court’s ruling in the leading
case of La Naval Drug Corporation v. Court of Appeals,41red a
party may file a Motion to Dismiss on the ground of lack of
jurisdiction over its person, and at the same time raise
affirmative defenses and pray for affirmative relief, without
waiving its objection to the acquisition of jurisdiction over its
person.42red
It appears, however, that petitioner misunderstood our ruling
in La Naval. A close reading of La Navalreveals that the Court
intended a distinction between the raising of affirmative
defenses in an Answer (which would not amount to
acceptance of the jurisdiction of the court) and the prayer
for affirmative reliefs (which would be considered
acquiescence to the jurisdiction of the
court): chanroblesvirtuallawlibrary
In the same manner that a plaintiff may assert two or
more causes of action in a court suit, a defendant is
likewise expressly allowed, under Section 2, Rule 8, of
the Rules of Court, to put up his own defenses
alternatively or even hypothetically. Indeed, under
Section 2, Rule 9, of the Rules of Court, defenses and
objections not pleaded either in a motion to dismiss or in an
answer, except for the failure to state a cause of action, are
deemed waived. We take this to mean that a defendant may,
in fact, feel enjoined to set up, along with his objection to the
court's jurisdiction over his person, all other possible defenses.
It thus appears that it is not the invocation of any of such
defenses, but the failure to so raise them, that can result in
waiver or estoppel. By defenses, of course, we refer to
the grounds provided for in Rule 16 of the Rules of
Court that must be asserted in a motion to dismiss or
by way of affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs.
Court of Appeals and Freuhauf Electronics Phils., Inc .
(225 SCRA 737, 738), we lately ruled:
“This is not to say, however, that the petitioner's right
to question the jurisdiction of the court over its person
is now to be deemed a foreclosed matter. If it is true, as
Signetics claims, that its only involvement in the Philippines
was through a passive investment in Sigfil, which it even later
disposed of, and that TEAM Pacific is not its agent, then it
cannot really be said to be doing business in the Philippines. It
is a defense, however, that requires the contravention of the
allegations of the complaint, as well as a full ventilation, in
effect, of the main merits of the case, which should not thus
be within the province of a mere motion to dismiss. So, also,
the issue posed by the petitioner as to whether a foreign
corporation which has done business in the country, but which
has ceased to do business at the time of the filing of a
complaint, can still be made to answer for a cause of action
which accrued while it was doing business, is another matter
that would yet have to await the reception and admission of
evidence. Since these points have seasonably been
raised by the petitioner, there should be no real cause
113
for what may understandably be its apprehension, i.e.,
that by its participation during the trial on the merits, it
may, absent an invocation of separate or independent
reliefs of its own, be considered to have voluntarily
submitted itself to the court's
jurisdiction.”43red (Emphases supplied.)
In order to conform to the ruling in La Naval, which was
decided by this Court in 1994, the former Section 23, Rule
1444red concerning voluntary appearance was amended to
include a second sentence in its equivalent provision in the
1997 Rules of Civil Procedure: chanroblesvirtuallawlibrary
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 . (Emphasis supplied.)
The new second sentence, it can be observed, merely
mentions other grounds in a Motion to Dismiss aside from lack
of jurisdiction over the person of the defendant. This clearly
refers to affirmative defenses, rather than affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new
Section 20, Rule 20, this Court, in several cases, ruled that
seeking affirmative relief in a court is tantamount to voluntary
appearance therein.45redThus, in Philippine Commercial
International Bank v. Dy Hong Pi, 46red wherein defendants
filed a “Motion for Inhibition without submitting themselves to
the jurisdiction of this Honorable Court” subsequent to their
filing of a “Motion to Dismiss (for Lack of Jurisdiction),” we
held: chanroblesvirtuallawlibrary
Besides, any lingering doubts on the issue of voluntary
appearance dissipate when the respondents' motion for
inhibition is considered. This motion seeks a sole relief:
inhibition of Judge Napoleon Inoturan from further hearing the
case. Evidently, by seeking affirmative relief other than
dismissal of the case, respondents manifested their
voluntary submission to the court's jurisdiction. It is
well-settled that the active participation of a party in the
proceedings is tantamount to an invocation of the court's
jurisdiction and a willingness to abide by the resolution of the
case, and will bar said party from later on impugning the
court's jurisdiction.47red (Emphasis supplied.)
In view of the above, we therefore rule that petitioner, by
seeking affirmative reliefs from the trial court, is deemed to
have voluntarily submitted to the jurisdiction of said court. A
party cannot invoke the jurisdiction of a court to secure
affirmative relief against his opponent and after obtaining or
failing to obtain such relief, repudiate or question that same
jurisdiction.48red Consequently, the trial court cannot be
considered to have committed grave abuse of discretion
amounting to lack or excess of jurisdiction in the denial of the
Motion to Dismiss on account of failure to acquire jurisdiction
over the person of the defendant.
WHEREFORE, thePetition for Review
on Certiorari is DENIED. The Decision of the Court of Appeals
dated September 8, 2006 and its Resolution dated December
12, 2006 in CA-G.R. SP No. 94382 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

114
SPS. DOMINGO M. BELEN and G.R. No. 175334 State of California. The judgment ordered petitioners to pay
private respondents the amount of $56,204.69 representing
DOMINGA P. BELEN, herein
loan repayment and share in the profits plus interest and costs
represented by their attorney- Present: of suit. The summons was served on petitioners address in San
Gregorio, Alaminos, Laguna, as was alleged in the complaint,
in-fact NERY B. AVECILLA, and received by a certain Marcelo M. Belen.
Petitioners, QUISUMBING, J.,
Chairperson, On 5 December 2000, Atty. Reynaldo Alcantara entered his
CARPIO-MORALES, appearance as counsel for petitioners, stating that his legal
services were retained at the instance of petitioners relatives.
TINGA, Atty. Alcantara subsequently filed an answer, alleging that
- versus - NAZARIO, and contrary to private respondents averment, petitioners were
actually residents of California, USA. The answer also claimed
VELASCO that petitioners liability had been extinguished via a release of
, JR., JJ.abstract judgment issued in the same collection case.
HON. PABLO R. CHAVEZ, Presiding Promulgated:
Judge, RTC-Branch 87, Rosario,
Batangas and all other persons acting March 26, 2008 In view of petitioners failure to attend the scheduled
pre-trial conference, the RTC ordered the ex parte presentation
under his orders and SPS. SILVESTRE
of evidence for private respondents before the branch clerk of
N. PACLEB and PATRICIA A. PACLEB, court. On 16 March 2001, before the scheduled ex
parte presentation of evidence, Atty. Alcantara filed a motion
represented herein by their attorney-in-
to dismiss, citing the judgment of dismissal issued by the
fact JOSELITO RIOVEROS, Superior Court of the State of California, which allegedly
dismissed Case No. NC021205. The RTC held in abeyance
Respondents. the ex parte presentation of evidence of private respondents
and the resolution of Atty. Alcantaras motion pending the
submission of a copy of the judgment of dismissal.
x---------------------------------------------------------------------------
x
For failure to present a copy of the alleged judgment
of dismissal, the RTC denied the motion to dismiss in an Order
DECISION dated 19 February 2002. Through a motion, Atty. Alcantara
sought the reinstatement of the motion to dismiss by attaching
a copy of the said foreign judgment.
TINGA, J.:

For their part, private respondents filed a motion for

This is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure assailing the Decision[1] and
Resolution[2] of the Court of Appeals in CA-G.R. SP No. 88731.
The appellate courts decision dismissed the petition for
certiorari which sought to nullify the orders of the Regional
Trial Court (RTC) of Rosario, Batangas, Branch 87, denying
herein petitioners motion to quash writ of execution and their
motion for reconsideration. The Court of Appeals resolution
denied petitioners motion for reconsideration of the decision.
the amendment of the complaint. The amended complaint
attached to the motion averred that private respondents were
constrained to withdraw their complaint against petitioners
from the California court because of the prohibitive cost of
litigation, which withdrawal was favorably considered by said
court. The amended complaint prayed for judgment ordering
petitioners to satisfy their obligation to private respondents in
the amount of P2,810,234.50.

The instant petition originated from the action for the

enforcement of a foreign judgment against herein petitioners,
spouses Domingo and Dominga Belen, filed by private
respondent spouses Silvestre and Patricia Pacleb, represented
by their attorney-in-fact, Joselito Rioveros, before the RTC of
Rosario, Batangas.

The answer to the amended complaint raised the

The complaint alleged that private respondents defenses of lack of cause of action, res judicata and lack of
secured a judgment by default in Case No. NC021205 rendered jurisdiction over the subject matter and over the persons of
by a certain Judge John W. Green of the Superior Court of the the defendants since the amended complaint had raised an

115
entirely new cause of action which should have been ventilated
in another complaint.
Petitioners and Atty. Alcantara failed to appear at the
rescheduled pre-trial conference. Thus, the RTC declared
petitioners in default and allowed private respondents to
present evidence ex parte. On 15 March 2003, Atty. Alcantara
passed away without the RTC being informed of such fact until
much later.
On 5 August 2003, the RTC rendered a Decision, the
dispositive portion of which reads:
On 24 November 2003, private respondents sought
the execution of the RTC decision. In its Order dated 10
December 2003, the RTC directed the issuance of a writ of
execution. Upon the issuance of a writ of execution, the real
properties belonging to petitioners were levied upon and the
public auction scheduled on 15 January 2004.
On 16 December 2003, Atty. Carmelo B. Culvera
entered his appearance as counsel for petitioners. On 22
December 2003, Atty. Culvera filed a Motion to Quash Writ of
Execution (With Prayer to Defer Further Actions). On 6 January
2004, he filed a Notice of Appeal from the RTC Decision
averring that he received a copy thereof only on 29 December
2003.

WHEREFORE, in view of the

foregoing, the defendants are hereby In an Order dated 7 July 2004, the RTC denied the
directed to pay the plaintiffs the following, to motion seeking the quashal of the writ of
wit: execution.[4] Subsequently, the RTC denied Atty. Culveras
motion for reconsideration of said order.

a) The amount
of P656,688.00 (equivalent to
$27,362.00) in an exchange
Thus, petitioners filed a Rule 65 petition before the
ratio of One (1) dollar is
Court of Appeals, imputing on the RTC grave abuse of
to P24.00 Philippine Currency;
discretion tantamount to lack or excess of jurisdiction (1) in
b) Plus 30% rendering its decision although it had not yet acquired
of P656,688.00 which jurisdiction over their persons in view of the improper service
is P197,006.40; of summons; (2) in considering the decision final and
executory although a copy thereof had not been properly
c) Plus P1,576,05 served upon petitioners; (3) in issuing the writ of execution
1.20 (30% for eight (8) years, before the decision had become final and executory and
1995-2003); and despite private respondents failure to comply with the
d) Plus 12% per procedural requirements in filing the motion for the issuance of
annum as interest of the the said writ; and (4) in denying petitioners motion to quash
principal obligation the writ of execution and notice of appeal despite sufficient
(P656,688.00) from 1995 to legal bases in support thereof.
2003; On 31 July 2006, the Court of Appeals rendered the
assailed Decision dismissing the petition for certiorari. On 3
November 2006, it issued the assailed Resolution denying
SO ORDERED.[3] petitioners motion for reconsideration.

Hence, the instant petition, attributing to the Court of

Appeals the following errors:
THE COURT OF APPEALS
COMMITTED SERIOUS ERRORS [OF] LAW IN
RULING THAT THE TRIAL COURT ACTED
WITHIN ITS JURISDICTION OR DID NOT
A copy of the RTC decision intended for Atty.
COMMIT GRAVE ABUSE OF DISCRETION
Alcantara was returned with the notation Addressee Deceased.
WHEN IT CONSIDERED THE APPEARANCE
A copy of the RTC decision was then sent to the purported
OF THE COUNSEL AS THEIR SUBMISSION
address of petitioners in San Gregorio, Alaminos, Laguna and
TO THE JURISDICTION OF THE TRIAL
was received by a certain Leopoldo Avecilla on 14 August
COURT ALTHOUGH SUCH APPEARANCE OF
2003. Meanwhile, immediately after the promulgation of the
THE SAID COUNSEL WAS WITHOUT THEIR
RTC decision, private respondents filed an ex-parte motion for
EXPRESS AUTHORITY BUT WAS DONE BY
preliminary attachment which the RTC granted in its Order
THEIR ALLEGED RELATIVES.
dated 15 September 2003.

116

THE COURT OF APPEALS
COMMITTED SERIOUS ERRORS [OF] LAW
WHEN IT RULED THAT THE DECISION OF
THE TRIAL COURT WAS DULY SERVED
UPON THE PETITIONERS THROUGH THEIR
ALLEGED RELATIVES ALTHOUGH THE
RECORDS OF THIS CASE CLEARLY SHOWS
THAT THE SAID PETITIONERS ARE
RESIDENTS OF UNITED STATES OF
AMERICA.[5]
In a Resolution dated 22 January 2007, the Court
denied the petition because it is not accompanied by a valid
verification and certification of non-forum shopping. Petitioners
sought reconsideration, which the Court granted in a
Resolution dated 16 April 2007. The Court also ordered the
reinstatement of the petition and the filing of a comment.
The instant petition raises two issues, thus: (1)
whether the RTC acquired jurisdiction over the persons of
petitioners through either the proper service of summons or
the appearance of the late Atty. Alcantara on behalf of
petitioners and (2) whether there was a valid service of the
copy of the RTC decision on petitioners.
On one hand, 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. As a rule, if defendants have not
been summoned, the court acquires no jurisdiction over their
person, and a judgment rendered against them is null and
void. To be bound by a decision, a party should first be subject
to the courts jurisdiction.[6]
In Asiavest Limited v. Court of Appeals,[7] the Court
underscored the necessity of determining first whether the
action is in personam, in rem or quasi in rem because the rules
on service of summons under Rule 14 of the Rules of Court of
the Philippines apply according to the nature of the
action.[8] The Court elaborated, thus:
117
In an action in personam,
jurisdiction over the person of the defendant
is necessary for the court to validly try and
decide the case. Jurisdiction over the person
of a resident defendant who does not
voluntarily appear in court can be acquired
by personal service of summons as provided
under Section 7, Rule 14 of the Rules of
Court. If he cannot be personally served with
summons within a reasonable time,
substituted service may be made in
accordance with Section 8 of said Rule. If he
is temporarily out of the country, any of the
following modes of service may be resorted
to: (1) substituted service set forth in
Section 8; (2) personal service outside the
country, with leave of court; (3) service by
publication, also with leave of court; or (4)
any other manner the court may deem
sufficient.
However, in an action in
personam wherein the defendant is a
non-resident who does not voluntarily
submit himself to the authority of the
court, personal service of summons
within the state is essential to the
acquisition of jurisdiction over her
person. This method of service is
possible if such defendant is physically
present in the country. If he is
not found therein, the court cannot
acquire jurisdiction over his person and
therefore cannot validly try and decide
the case against him. An exception was
laid down in Gemperle v.
Schenker wherein a non-resident was
served with summons through his wife,
who was a resident of the Philippines
and who was his representative and
attorney-in-fact in a prior civil case
filed by him; moreover, the second case
was a mere offshoot of the first case.
On the other hand, in a
proceeding in rem or 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. Nonetheless,
summons must be served upon the
defendant not for the purpose of vesting the
court with jurisdiction but merely for
 satisfying the due process requirements.
Thus, where the defendant is a non-resident
who is not found in the Philippines and (1)
the action affects the personal status of the
plaintiff; (2) the action relates to, or the
subject matter of which is property in the
Philippines in which the defendant has or
claims a lien or interest; (3) the action seeks
the exclusion of the defendant from any
interest in the property located in the
Philippines; or (4) the property of the
defendant has been attached in the
Philippines 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.[9]
The action filed against petitioners, prior to the
amendment of the complaint, is for the enforcement of a
foreign judgment in a complaint for breach of contract
whereby petitioners were ordered to pay private respondents
the monetary award. It is in the nature of an action in
personam because private respondents are suing to enforce
their personal rights under said judgment.
Applying the foregoing rules on the service of
summons to the instant case, in an action in personam,
jurisdiction over the person of the defendant who does not
voluntarily submit himself to the authority of the court is
necessary for the court to validly try and decide the case
through personal service or, if this is not possible and he
cannot be personally served, substituted service as provided in
Rule 14, Sections 6-7.[10]
In an action strictly in personam, personal service on
the defendant is the preferred mode of service, that is, by
handing a copy of the summons to the defendant in person. If
the defendant, for justifiable reasons, cannot be served with
the summons within a reasonable period, then substituted
service can be resorted to. While substituted service of
summons is permitted, it is extraordinary in character and in
derogation of the usual method of service.[11]
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
effected out of the Philippines under Rule 14, Section 15. 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.[12]
However, the records of the case reveal that herein
petitioners have been permanent residents of California, U.S.A.
since the filing of the action up to the present. From the time
Atty. Alcantara filed an answer purportedly at the instance of
petitioners relatives, it has been consistently maintained that
petitioners were not physically present in the Philippines. In
118
the answer, Atty. Alcantara had already averred that
petitioners were residents of California, U.S.A. and that he was
appearing only upon the instance of petitioners relatives.[13] In
addition, private respondents attorney-in-fact, Joselito
Rioveros, testified during the ex parte presentation of evidence
that he knew petitioners to be former residents of Alaminos,
Laguna but are now living in California, U.S.A.[14] That being
the case, the service of summons on petitioners purported
address in San Gregorio, Alaminos, Laguna was defective and
did not serve to vest in court jurisdiction over their persons.
Nevertheless, the Court of Appeals correctly
concluded that the appearance of Atty. Alcantara and his filing
of numerous pleadings were sufficient to vest jurisdiction over
the persons of petitioners. Through certain acts, Atty.
Alcantara was impliedly authorized by petitioners to appear on
their behalf. For instance, in support of the motion to dismiss
the complaint, Atty. Alcantara attached thereto a duly
authenticated copy of the judgment of dismissal and a
photocopy
of the identification page of petitioner Domingo Belens U.S.
passport. These documents could have been supplied only by
petitioners, indicating that they have consented to the
appearance of Atty. Alcantara on their behalf. In sum,
petitioners voluntarily submitted themselves through Atty.
Alcantara to the jurisdiction of the RTC.
We now come to the question of whether the service
of a copy of the RTC decision on a certain Teodoro Abecilla is
the proper reckoning point in determining when the RTC
decision became final and executory.
The Court of Appeals arrived at its conclusion on the
premise that Teodoro Abecilla acted as petitioners agent when
he received a copy of the RTC decision. For their part, private
respondents contend that the service of a copy of the RTC
decision on Atty. Alcantara, notwithstanding his demise, is
valid. On the other hand, petitioners reiterate that they are
residents of California, U.S.A. and thus, the service of the RTC
decision of a residence which is not theirs is not proper.
As a general rule, when a party is represented by
counsel of record, service of orders and notices must be made
upon said attorney and notice to the client and to any other
lawyer, not the counsel of record, is not notice in law. The
exception to this rule is when service upon the party himself
has been ordered by the court.[15] In cases where service was
made on the counsel of record at his given address, notice
sent to petitioner itself is not even necessary.[16]
The following provisions under Rule 13 of the Rules of
Court define the proper modes of service of judgments:
 SEC. 2. Filing and service, defined.x
xx
Service is the act of providing a
party with a copy of the pleading or paper
concerned. x x x
be made under the two preceding sections,
the office and place of residence of the party
or his counsel being unknown, service may
be made by delivering the copy to the clerk
of court, with proof of failure of both
personal service and service by mail. The
service is complete at the time of such
delivery.

SEC. 5. Modes of service.Service of

pleadings, motions, notices, orders, In the instant case, a copy of the RTC decision was
judgments and other papers shall be made sent first to Atty. Alcantara, petitioners counsel of record.
either personally or by mail. However, the same was returned unserved in view of the
demise of Atty. Alcantara. Thus, a copy was subsequently sent
to petitioners last known address in San Gregorio, Alaminos,
SEC. 9. Service of judgments, final Laguna, which was received by a certain Leopoldo Avecilla.
orders or resolutions. Judgments, final
orders or resolutions shall be served either
personally or by registered mail. When a
party summoned by publication has failed to
Undoubtedly, upon the death of Atty. Alcantara, the
appear in the action, judgments, final orders
lawyer-client relationship between him and petitioners has
or resolutions against him shall be served
ceased, thus, the service of the RTC decision on him is
upon him also by publication at the expense
ineffective and did not bind petitioners.
of the prevailing party.

The subsequent service on petitioners purported last

SEC. 6. Personal service. Service of
known address by registered mail is also defective because it
the papers may be made by delivering
does not comply with the requisites under the aforequoted
personally a copy to the party or his counsel,
Section 7 of Rule 13 on service by registered mail. Section 7 of
or by leaving it in his office with his clerk or
Rule 13 contemplates service at the present address of the
with a person having charge thereof. If no
party and not at any other address of the party. Service at the
person is found in his office, or his office is
partys former address or his last known address or any
not known, or he has no office, then by
address other than his present address does not qualify as
leaving the copy, between the hours of eight
substantial compliance with the requirements of Section 7,
in the morning and six in the evening, at the
Rule 13. Therefore, service by registered mail presupposes
partys or counsels residence, if known, with
that the present address of the party is known and if the
a person of sufficient age and discretion then
person who receives the same is not the addressee, he must
residing therein.
be duly authorized by the former to receive the paper on
behalf of the party.

SEC. 7. Service by mail. Service by

registered mail shall be made by depositing
Since the filing of the complaint, petitioners could not
the copy in the post office, in a sealed
be physically found in the country because they had already
envelope, plainly addressed to the party or
become permanent residents of California, U.S.A. It has been
his counsel at his office, if known, otherwise
established during the trial that petitioners are former
at his residence, if known, with postage fully
residents of Alaminos, Laguna, contrary to the averment in the
pre-paid, and with instructions to the
complaint that they reside and may be served with court
postmaster to return the mail to the sender
processes thereat. The service of the RTC decision at their
after ten (10) days if undelivered. If no
former address in Alaminos, Laguna is defective and does not
registry service is available in the locality of
bind petitioners.
either the sender or the addressee, service
may be done by ordinary mail.
On many occasions,[17] the Court has strictly
construed the requirements of the proper service of papers
and judgments. Both in Heirs of Delos Santos v. Del
Rosario[18] and Tuazon v. Molina,[19] the service of the trial
courts decision at an adjacent office and the receipt thereof by
a person not authorized by the counsel of record was held
ineffective. Likewise, the service of the decision made at the
SEC. 8. Substituted service. If ground floor instead of at the 9th floor of a building in the
service of pleadings, motions, notices, address on record of petitioners counsel, was held invalid
resolutions, orders and other papers cannot
119
in PLDT v. NLRC.[20] In these cases, there was no constructive
service of the decision even if

the service was made at the offices adjacent to the address on

record of the parties counsels and even if the copies eventually
found their way to persons duly authorized to receive them.

In view of the foregoing, the running of the fifteen-

day period for appeal did not commence upon the service of
the RTC decision at the address on record of Atty. Alcantara or
at the Laguna address. It is deemed served on petitioners only
upon its receipt by Atty. Culvera on 29 December 2003.
Therefore, the filing of the Notice of Appeal on 06 January
2004 is within the reglementary period and should be given
due course.

WHEREFORE, the instant petition for review on

certiorari is GRANTED and the Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 88731 are REVERSED and
SET ASIDE. Accordingly, the orders dated 7 July 2004 and 2
February 2005 of the Regional Trial Court of Rosario.
Batangas, Branch 87 are SET ASIDE. The RTC is also ordered
to GIVE DUE COURSE to the Notice of Appeal filed by Atty.
Culvera on 06 January 2004 . Costs against private
respondents.

SO ORDERED.

120
ATTY. VICTORIANO R. G.R. No. 142676 affirmed the Orders[3] dated June 10, 1994 and August 5, 1994
YABUT, JR. and SAMUEL GO of the Regional Trial Court, Branch 88 (RTC-Branch 88) of
CHAN, Quezon City in Civil Case No. Q-94-20632. The RTC dismissed
Civil Case No. 8286, the forcible entry case instituted by Muoz
Respondents.
against Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel
x--------------------- Go Chan before the Metropolitan Trial Court (MeTC), Branch
---x 33 of Quezon City; and nullified the MeTC Order [4] dated May
16, 1994, granting Muozs prayer for the issuance of a writ of
EMERITA MUOZ, preliminary mandatory injunction which restored possession of
Petitioner, the subject property to Muoz.

In G.R. No. 146718, Muoz is praying for the

reversal, setting aside, and nullification of the Decision [5] dated
September 29, 2000 and Resolution[6] dated January 5, 2001
- versus - of the Court of Appeals in CA-G.R. SP No. 40019, which
affirmed the Orders[7] dated August 21, 1995 and October 3,
G.R. No. 146718 1995 of the Quezon City RTC, Branch 95 (RTC-Branch 95) in
Civil Case No. Q-28580 denying Muozs Motion for an Alias Writ
of Execution and Application for Surrender of the Owners
Present: Duplicate Copy of TCT No. 53297[8] against respondents Bank
of the Philippine Islands (BPI) and the spouses Samuel Go
SPOUSES SAMUEL GO CHAN
Chan and Aida C. Chan (spouses Chan).
and AIDA C. CHAN, and THE
BANK OF THE CORONA, C.J.,
PHILIPPINE ISLANDS, Chairperson,
Respondents. VELASCO, JR., I
LEONARDO-DE FACTS
CASTRO,
DEL CASTILLO, and
The subject property is a house and lot at No. 48
PEREZ, JJ. Scout Madrian St., Diliman, Quezon City, formerly owned by
Yee L. Ching. Yee L. Ching is married to Emilia M. Ching
(spouses Ching), Muozs sister. Muoz lived at the subject
Promulgated: property with the spouses Ching. As consideration for the
valuable services rendered by Muoz to the spouses Chings
family, Yee L. Ching agreed to have the subject property
June 6, 2011 transferred to Muoz. By virtue of a Deed of Absolute Sale,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - seemingly executed by Yee L. Ching in favor of Muoz,[9] the
- - - - - - - - - -x latter acquired a Transfer Certificate of Title (TCT) No. 186306
covering the subject property in her name on December 22,
1972.[10] However, in a Deed of Absolute Sale dated December
28, 1972, Muoz purportedly sold the subject property to her
sister, Emilia M. Ching. As a result, TCT No. 186306 was
DECISION cancelled and TCT No. 186366 was issued in Emilia M. Chings
name. Emilia M. Ching, in a Deed of Absolute Sale dated July
16, 1979, sold the subject property to spouses Go Song and
Tan Sio Kien (spouses Go), hence, TCT No. 186366 was
cancelled and replaced by TCT No. 258977 in the spouses Gos
LEONARDO-DE CASTRO, J.: names.
On October 15, 1979, Muoz registered her adverse
claim to the subject property on TCT No. 258977 of the
spouses Go. The next day, on October 16, 1979, Muoz filed a
Before Us are the following consolidated petitions for complaint for the annulment of the deeds of absolute sale
review on certiorari under Rule 45 of the Rules of Court. dated December 28, 1972 and July 16, 1979, the cancellation
of TCT No. 258977 in the spouses Gos names, and the
restoration and revival of TCT No. 186306 in Muozs name. The
In G.R. No. 142676, Emerita Muoz (Muoz) is complaint was docketed as Civil Case No. Q-28580 and raffled
seeking the reversal, annulment, and setting aside of the to RTC-Branch 95. On October 17, 1979, Muoz caused the
Decision[1] dated July 21, 1995 and Resolution[2]dated March 9, annotation of a notice of lis pendens on TCT No. 258977 of the
2000 of the Court of Appeals in CA-G.R. SP No. 35322, which spouses Go. In an Order dated December 17, 1979, the RTC-

121
Branch 95 granted the spouses Gos motion for the issuance of
a writ of preliminary mandatory injunction and ordered the
sheriff to put the spouses Go in possession of the subject
property. The writ was implemented by the sheriff on March
26, 1980, driving Muoz and her housemates away from the
subject property.
Muoz filed a petition for certiorari and prohibition
before the Court of Appeals, assailing the issuance of the writ
of preliminary mandatory injunction, which was docketed as
CA-G.R. SP No. 10148. The appellate court dismissed Muozs
petition on January 4, 1980. Yee L. Ching and his son Frederick
M. Ching filed an urgent motion for leave to intervene in CA-
G.R. SP No. 10148 and for the issuance of a temporary
restraining order (TRO). The Court of Appeals issued a
TRO. However, in a Resolution dated March 18, 1980, the
appellate court denied the motion to intervene of Yee L. Ching
and Frederick M. Ching, and cancelled the TRO previously
issued. Yee L. Ching and Frederick M. Ching challenged before
this Court, in G.R. No. 53463, the Resolution dated March 18,
1980 of the Court of Appeals. Eventually, in a Resolution dated
June 3, 1981, the Court dismissed the petition in G.R. No.
53463, for lack of merit and failure of Yee L. Ching and
Frederick M. Ching to substantially show that the RTC-Branch
95 and the Court of Appeals gravely abused their discretion. In
a subsequent Resolution dated June 21, 1982, the Court
clarified that its Resolution of June 3, 1981 was without
prejudice to the continuation of the litigation in Civil Case No.
Q-28580 still pending before the trial court, in order that
proper and final adjudication may be made of whether or not
the deed of sale by Emerita L. Muoz in favor of Emilia M. Ching
is a real, genuine and authentic transaction, thereby to settle
once and for all the issue of ownership of the property herein
in question.[11]
Trial in Civil Case No. Q-28580 proceeded before
RTC-Branch 95.
In the meantime, Muozs adverse claim and notice
of lis pendens on TCT No. 258977 was cancelled on October
28, 1982 on the basis of an alleged final judgment in favor of
the spouses Go.[12] The spouses Go obtained a loan
of P500,000.00 from BPI Family Savings Bank (BPI Family) and
to secure the same, they constituted a mortgage on the
subject property on November 23, 1982.[13] When the spouses
Go defaulted on the payment of their loan, BPI Family
foreclosed the mortgage. BPI Family was the highest bidder at
the auction sale of the subject property. The spouses Go failed
to exercise their right of redemption within the prescribed
period, thus, BPI Family was finally able to register the subject
property in its name on October 23, 1987 under TCT No.
370364.[14]Apparently, the original copy of TCT No. 370364
was among those razed in the fire at the Quezon City Register
of Deeds on June 11, 1988. As a result of the administrative
reconstitution of the lost title, TCT No. RT-54376 (370364) was
issued to BPI Family. On December 3, 1990, BPI Family
executed in favor of the spouses Samuel Go Chan and Aida C.
Chan (spouses Chan) a Deed of Absolute Sale[15] covering the
subject property for and in consideration
of P3,350,000.00.Consequently, TCT No. RT-54376 (370364)
122
in the name of BPI Family was cancelled and TCT No. 53297
was issued in the spouses Chans names on January 28,
1991.[16] The spouses Chan obtained a loan from BPI Family on
October 2, 1992 for the construction of a building on the
subject property, and to secure the same, constituted a
mortgage on the subject property in favor of BPI Family.[17]
On July 19, 1991, RTC-Branch 95 rendered its
Decision[18] in Civil Case No. Q-28580, against Emilia M. Ching,
Yee L. Ching, and the spouses Go (Emilia M. Ching, et al.). It
found that Muozs signature on the Deed of Absolute Sale
dated December 28, 1972 was forged; that Muoz never sold
the subject property to her sister, Emilia M. Ching; and that
the spouses Go were not innocent purchasers for value of the
subject property. The fallo of the said decision reads:
WHEREFORE, judgment is hereby
rendered dismissing for lack of merit [Emilia
M. Ching, et al.s] respective counterclaims,
cross-claims, and counter-cross-claim,
declaring as null and void ab initio the
following documents, to wit: (a) Deed of
Absolute Sale dated December 28, 1972,
copy of which is marked in evidence as Exh.
M; (b) TCT No. 186366 of the Registry of
Deeds for Quezon City, copy of which is
marked in evidence as Exh. N; (c) Deed of
Absolute Sale dated July 16, 1979, copy of
which is marked in evidence as Exh. 3; and,
(d) TCT No. 258977 of the Registry of Deeds
for Metro Manila District III, copy of which is
marked in evidence as Exh. 4, and directing
defendant Register of Deeds of Quezon City
to cancel from the records of the subject
property the registrations of all the said
documents and to restore and revive, free
from all liens and encumbrances, TCT No.
186306 of the Registry of Deeds for Quezon
City, copy of which is marked in evidence as
Exh. L, as well as ordering defendants Emilia
M. Ching, Go Song and Tan Sio Kien jointly
and severally to pay [Muoz] the sum
of P50,000.00 as and for attorneys fees and
to pay the costs of suit. The court also
hereby dismisses the rest of the claims in
[Muozs] complaint, there being no
satisfactory warrant therefor.[19]
Emilia M. Ching, et al.s, appeal of the foregoing
judgment of the RTC-Branch 95 was docketed as CA-G.R. CV
No. 33811 before the Court of Appeals. In its Decision[20] dated
March 4, 1993, the appellate court not only affirmed the
appealed judgment, but also ordered the spouses Go and their
successors-in-interest and assigns and those acting on their
behalf to vacate the subject property, to wit:
 WHEREFORE, premises considered,
the decision appealed from is AFFIRMED,
with costs against [Emilia M. Ching, et
al.]. The writ of preliminary mandatory
injunction issued on December 17, 1979 is
hereby set aside and declared
dissolved. Defendants-appellants Go and
Tan, their successors-in-interest and assigns
and those acting on their behalf, are ordered
to vacate the disputed premises and to
deliver the same to [Muoz] immediately
upon receipt of this decision.[21]
Emilia L. Ching, et al., filed before this Court a motion
for extension of time to file their petition for review, which was
assigned the docket number G.R. No. 109260. However, they
failed to file their intended petition within the extended period
which expired on April 23, 1993. In a Resolution[22] dated July
12, 1993, the Court declared G.R. No. 109260 terminated. The
Resolution dated July 12, 1993 of the Court in G.R. No. 109260
became final and executory on July 15, 1993 and was entered
in the Book of Entries of Judgments on even date.[23]
More than two months later, on September 20, 1993,
the RTC-Branch 95 issued a writ of execution to implement the
judgment in Civil Case No. Q-28580.
The spouses Chan, who bought the subject property from BPI
Family, then came forward and filed before the RTC-Branch 95
on October 22, 1993 an Urgent Motion to Stop Execution as
Against Spouses Samuel Go Chan and Aida Chan,[24] opposing
the writ of execution issued in Civil Case No. Q-28580. The
spouses Chan asserted ownership and possession of the
subject property on the basis of a clean title registered in their
names under TCT No. 53297. The spouses Chan further
contended that the final judgment in Civil Case No. Q-28580
could not be executed against them since they were not
parties to the said case; they were not successors-in-interest,
assigns, or acting on behalf of the spouses Go; and they
purchased the subject property from BPI Family without any
notice of defect in the latters title.
It was only at this point that Muoz, upon her own
inquiry, discovered the cancellation on October 28, 1982 of her
adverse claim and notice of lis pendensannotated on the
spouses Gos TCT No. 258977, and the subsequent events that
led to the transfer and registration of the title to the subject
property from the spouses Go, to BPI Family, and finally, to
the spouses Chan.
In its Order[25] dated December 28, 1993, the RTC-
Branch 95 denied the spouses Chans urgent motion to stop the
execution. According to the RTC-Branch 95, the photocopy of
TCT No. 370364 in the name of BPI Family, submitted by the
spouses Chan with their motion, could hardly be regarded as
satisfactory proof that Muozs adverse claim and notice of lis
pendens annotated therein were also missing from the original
copy of said certificate of title. Muozs adverse claim and notice
123
of lis pendens were annotated on TCT No. 258977 in the
spouses Gos names as P.E.-8078 and P.E.-8178,
respectively. So when TCT No. 258977 of the spouses Go was
cancelled and TCT No. 370364 was issued to BPI Family, it
could be presumed that the Register of Deeds regularly
performed his official duty by carrying over Muozs adverse
claim and notice of lis pendens to TCT No. 370364. In addition,
the RTC-Branch 95 pointed out that in this jurisdiction, the
entry of the notice of lis pendens in the day book of the
Register of Deeds was already sufficient notice to the whole
world of the dispute over the subject property, and there was
no more need to annotate the same on the owners duplicate
of the certificate of title. Finally, the RTC-Branch 95 held that
TCT No. RT-54376 (370364) of BPI Family and TCT No. 53297
of the spouses Chan shall be subject to the reservation under
Section 7 of Republic Act No. 26[26] [t]hat certificates of title
reconstituted extrajudicially, in the manner stated in sections
five and six hereof, shall be without prejudice to any party
whose right or interest in the property was duly noted in the
original, at the time it was lost or destroyed, but entry or
notation of which has not been made on the reconstituted
certificate of title. Thus, the spouses Chan were deemed to
have taken the disputed property subject to the final outcome
of Civil Case No. Q-28580.
On January 3, 1994, the RTC-Branch 95 issued an
Alias Writ of Execution.[27] On January 10, 1994, the writ was
enforced, and possession of the subject property was taken
from the spouses Chan and returned to Muoz.[28] In its Orders
dated April 8, 1994 and June 17, 1994, the RTC-Branch 95
denied the spouses Chans motion for reconsideration and
notice of appeal, respectively.[29]
G.R. No. 142676
Pending resolution by the RTC-Branch 95 of the
spouses Chans motion for reconsideration and notice of appeal
in Civil Case No. Q-28580, Muoz instituted before the MeTC on
February 4, 1994 a Complaint for Forcible Entry with Prayer for
Preliminary Mandatory Injunction[30] against Samuel Go Chan
and Atty. Yabut, docketed as Civil Case No. 8286. Muoz alleged
in her complaint that she had been in actual and physical
possession of the subject property since January 10, 1994. She
hired a caretaker and two security guards for the said
property. On February 2, 1994, Samuel Go Chan and Atty.
Yabut, along with 20 other men, some of whom were armed,
ousted Muoz of possession of the subject property by stealth,
threat, force, and intimidation. Muoz prayed for the issuance of
a writ of preliminary mandatory injunction directing Samuel Go
Chan and Atty. Yabut and all persons claiming right under
them to vacate the subject property.Muoz additionally prayed
for judgment making the mandatory injunction permanent and
directing Samuel Go Chan and Atty. Yabut to pay Muoz: (1)
compensation for the unlawful occupation of the subject
property in the amount of P50,000.00 per month, beginning
February 2, 1994 until the said property is fully and completely
turned over to Muoz; (2) attorneys fees in the amount
of P50,000.00, plus P1,500.00 per court appearance of Muozs
counsel; and (3) costs of suit.
On August 5, 1994, the RTC-Branch 88 issued
another Order resolving Muozs motion to dismiss the petition
for certiorari in Civil Case No. Q-94-20632, motion for
Samuel Go Chan and Atty. Yabut denied Muozs
reconsideration of the Order dated June 10, 1994 of RTC-
allegations, insisting that Samuel Go Chan is the valid, lawful,
Branch 88 granting the issuance of a writ of preliminary
and true legal owner and possessor of the subject
injunction, and motion to resolve with additional grounds for
property. Samuel Go Chan and Atty. Yabut averred that the
dismissal. According to the RTC-Branch 88, the MeTC failed to
Turn-Over of Possession and Receipt of Possession dated
distinguish the issue of finality of the judgment of the RTC-
January 10, 1994 attached to Muozs complaint as proof that
Branch 95 in Civil Case No. Q-28580 from the assertions of
the subject property had been placed in her possession is a
Samuel Go Chan and Atty. Yabut that the spouses Chan are
falsified document. The Writ of Execution issued on September
not covered by said final judgment because they are not
20, 1993 in Civil Case No. Q-28580 had already expired and
successors-in-interest, assigns, or privies of the spouses Go
the Sheriffs Return on the Writ another document purporting
and they are purchasers of the subject property in good
to show that possession of the subject property was turned-
faith. The issue of whether the final judgment in Civil Case No.
over to Muoz on January 10, 1994 was then being challenged
Q-28580 extended to the spouses Chan was then still being
in a complaint before the Office of Deputy Court Administrator
litigated in the same case before RTC-Branch 95, where the
Reynaldo L. Suarez of the Supreme Court. Samuel Go Chans
spouses Chans motion for reconsideration of the denial of their
possession of the subject property has never been
notice of appeal was pending. The RTC-Branch 88 further
interrupted. His sister, Cely Chan, resided at the subject
found that the MeTC committed grave abuse of discretion in
property and was never removed therefrom. On February 2,
not dismissing Muozs complaint for forcible entry on the
1994, Atty. Yabut was at the subject property only to protect
ground of lis pendens, as the issue as to who between Muoz
the rights and interest of his client, Samuel Go Chan, and since
and the spouses Chan had the better right to possession of the
the latters possession of the subject property had never been
subject property was the subject of the pending proceeding in
interrupted, Atty. Yabut entered the same peacefully, without
Civil Case No. Q-28580 before the RTC-Branch 95. In the end,
intimidation, force, or stealth. The other people at the subject
the RTC-Branch 88 decreed:
property on February 2, 1994 were there to attend the services
at the Buddhist Temple which occupied the fourth floor of the
building erected by the spouses Chan on the subject
WHEREFORE, premises considered,
property. Samuel Go Chan and Atty. Yabut, thus, asked the
the Court renders judgment
MeTC to dismiss Muozs complaint for lack of merit and legal
basis.[31] (a) Denying the motion to dismiss
of respondent Muoz for lack of merit;

The MeTC received evidence from the parties on

whether a writ of preliminary injunction should be issued, as (b) Denying the motion for
prayed for by Muoz. In its Order dated May 16, 1994, the reconsideration of respondent Muoz for the
MeTC adjudged that the final judgment in Civil Case No. Q- recall and/or setting aside of the writ of
28580 was already executed against the spouses Chan and preliminary injunction granted to petitioners;
there was, indeed, a turn-over of possession of the subject
property to Muoz. Accordingly, the MeTC granted Muozs prayer
for the issuance of a writ of preliminary mandatory injunction, (c) Declaring the Order dated May
restoring possession of the subject property to Muoz. 16, 1994 of Public respondent Hon. Elsa de
Guzman in Civil Case No. 8286 illegal and
therefore null and void; and
Samuel Go Chan and Atty. Yabut questioned the
foregoing MeTC order through a Petition for Certiorari with
Prayer for Temporary Restraining Order and Writ of (d) Dismissing the ejectment suit in
Preliminary Injunction[32] before the RTC-Branch 88, which was Civil Case No. 8286 on ground of lis
docketed as Civil Case No. Q-94-20632. They asserted that pendens.
they were not bound by the execution of the final judgment of
RTC-Branch 95 in Civil Case No. Q-28580 as they were not
parties to the said case. Muoz, on the other hand, argued that Without pronouncement as to
the MeTC Order of May 16, 1994 was an interlocutory order, costs.[33]
and under Section 19 of the Rules of Summary Procedure, a
petition for certiorari against an interlocutory order issued by
the court is one of the prohibited pleadings and motions in
summary proceedings.
Muoz appealed the Orders dated June 10, 1994 and
August 5, 1994 of RTC-Branch 88 before the Court of
In its Order dated June 10, 1994, the RTC-Branch 88 Appeals. Her appeal was docketed as CA-G.R. SP No.
issued a writ of preliminary injunction to enjoin the 35322. Aside from the nullification of the two orders, Muoz
implementation of the MeTC Order dated May 16, 1994. additionally prayed for the dismissal from the service of the
124
RTC-Branch 88 presiding judge and the disbarment of Atty.
Yabut.
The Court of Appeals, in its Decision dated July 21,
1995, sustained the appealed orders of RTC-Branch 88. The
Court of Appeals held that the MeTC should have dismissed
the forcible entry case on the ground of lis pendens; that the
spouses Chan were not parties in Civil Case No. Q-28580, and
impleading them only in the execution stage of said case
vitiated their right to due process; that the order of the RTC-
Branch 95 involving the spouses Chan in Civil Case No. Q-
28580 was null and void, considering that they are strangers to
the case, and they are innocent purchasers for value of the
subject property; that the notice of lis pendens was already
cancelled from the spouses Gos certificate of title at the time
they mortgaged the subject property to BPI Family; and that
the title to the subject property was already free of any and all
liens and encumbrances when the spouses Chan purchased
the said property from BPI Family. The Court of Appeals, in its
Resolution dated March 9, 2000, denied Muozs motion for
reconsideration.
be litigated in another forum, not in Civil Case No. Q-28580
where the judgment had already become final and
executory. The RTC-Branch 95 also stressed that since the
judgment in Civil Case No. Q-28580 had long become final and
executory, it could no longer be changed or amended except
for clerical error or mistake. Accordingly, the RTC-Branch 95
resolved as follows:
1. Ordering, as it hereby orders, the
denial of [Muozs] first and second motions
for contempt and hereby absolves
respondents Samuel Go Chan, Celia Chan,
Atty. Victoriano R. Yabut, Jr., and several
John Does of the Contempt Charges against
them.
2. Ordering, as it hereby orders, the
issuance of an alias writ of execution
directing the Courts Deputy Sheriff:

(a) Defendants Go Song

G.R. No. 146718 and Tan Sio Kien, their
successors-in-interest and
assigns and those acting
Meanwhile, Muoz filed before the RTC-Branch 95 in Civil Case on their behalf to vacate
No. Q-28580 a Motion to Cite the Register of Deeds in the disputed premises and
Contempt of Court for the failure of the Register of Deeds to deliver the same to
restore Muozs TCT No. 186306 despite having been served [Muoz];
with a copy of the writ of execution on October 11, 1993. In its
Judgment (on the Contempt Proceedings against the Register
of Deeds of Quezon City Samuel C. Cleofe)[34] dated March 18, (b) Defendant Register of
1994, the RTC-Branch 95 denied Muozs motion, convinced that Deeds of Quezon City to
the Register of Deeds had a valid excuse for his inability to cancel from the records of
implement the served writ. The Register of Deeds could not the subject property the
cancel the spouses Chans TCT No. 53297, the subsisting registration of all the
certificate of title over the subject property, absent any following documents, to
authority or directive for him to do so. The directive in the final wit: (1) Deed of Absolute
judgment in Civil Case No. Q-28580 and the writ of execution Sale dated December 28,
for the same only pertained to the cancellation of the spouses 1972; (2) Transfer
Gos TCT No. 258977. Certificate of Title (TCT)
No. 186366 of the Register
of Deeds of Quezon City;
Thereafter, Muoz filed a Motion for Contempt against (3) Deed of Absolute Sale
the spouses Chan and a Second Motion for Contempt against dated July 16, 1979; and
Samuel Go Chan and Atty. Yabut.Muoz also filed a Motion for (4) TCT No. 258977 of the
an Alias Writ of Execution and Application for Surrender of the Registry of Deeds for
Owners Duplicate Copy of TCT No. 53297,[35] in which she Metro Manila II, and to
prayed for the issuance of an alias writ of execution directing restore and revive, free
the Register of Deeds not only to cancel TCT No. 258977 and from all liens and
all documents declared null and void ab initio in the dispositive encumbrances TCT No.
portion of the Decision[36] dated July 19, 1991 of RTC-Branch 186306 of the Registry of
95 in Civil Case No. Q-28580, and to restore and revive, free Deeds for Quezon City;
from all liens and encumbrances Muozs TCT No. 186306, but and
likewise to cancel the present certificate of title covering the
subject property, TCT No. 53297.
(c) Defendants Emilia M.
Ching, Go Song and Tan
In its Order dated August 21, 1995, the RTC-Branch Sio Kien jointly and
95 denied all of Muozs aforementioned motions. The RTC- severally to pay [Muoz]
Branch 95 was of the view that Samuel Go Chans title should the sum of P50,000.00 as
125
 and for attorneys fees and
to pay the cost of suit.[37]
Unrelenting, Muoz filed a Motion for Clarificatory
Order, pointing out that the spouses Chan are the present
occupants of the subject property. The Order dated August 21,
1995 of the RTC-Branch 95 directed the deputy sheriff to
deliver the subject property to Muoz, and this could not be
done unless the spouses Chan are evicted
therefrom. Resultantly, Muoz prayed that a clarificatory order
be made categorically stating that the spouses Samuel Go
Chan and Aida C. Chan, and all persons claiming right under
them, are likewise evicted from the subject premises pursuant
to the Order of 21 August 1995.[38]
Once more, the RTC-Branch 95 denied Muozs motion
in its Order dated October 3, 1995. The RTC-Branch 95
reiterated the rule that after the judgment had become final,
only clerical errors, as distinguished from substantial errors,
can be amended by the court. Furthermore, when the decision
or judgment sought to be amended is promulgated by an
appellate court, it is beyond the power of the trial court to
change, amplify, enlarge, alter, or modify. Ultimately, the RTC-
Branch 95 pronounced that it was restrained x x x to consider
as mere clerical error the exclusion of spouses Samuel Go
Chan and Aida C. Chan in the Decision of the Court dated July
19, 1991, a final judgment, which judgment cannot now be
made to speak a different language.[39]
Attributing grave abuse of discretion on the part of
the RTC-Branch 95 in issuing its Orders dated August 21, 1995
and October 3, 1995, Muoz filed before this Court a Petition
for Certiorari and Mandamus, which was remanded to the
Court of Appeals in observance of the hierarchy of courts,
where it was docketed as CA-G.R. SP No. 40019. The Court of
Appeals promulgated its Decision on September 29, 2000
dismissing Muozs petition. The Court of Appeals agreed with
the RTC-Branch 95 that the spouses Chan could not be
covered by the alias writ of execution considering that they
were not impleaded in Civil Case No. Q-28580. The
cancellation of TCT No. 53297 in the spouses Chans names
could not be done apart from a separate action exclusively for
that matter. The spouses Chan are deemed buyers in good
faith and for value as the certificate of title delivered to them
by BPI Family was free from any liens or encumbrances or any
mark that would have raised the spouses Chans
suspicions. Every person dealing with registered lands may
safely rely on the correctness of the certificate of title of the
vendor/transferor, and he is not required to go beyond the
certificate and inquire into the circumstances culminating in
the vendors acquisition of the property. The Court of Appeals
denied Muozs motion for reconsideration in a Resolution dated
January 5, 2001.
Muoz comes before this Court via the present
consolidated petitions.
126
Muoz posits that the final judgment and writ of
execution of RTC-Branch 95 in Civil Case No. Q-28580 bind not
only Emilia M. Ching and the spouses Go, but also their
successors-in-interest, assigns, or persons acting on their
behalf, namely, BPI Family and spouses Chan. The spouses
Chan cannot be deemed innocent purchasers for value of the
property since the cancellation of the adverse claim and notice
of lis pendens on the spouses Gos TCT No. 258977 is
completely null and void.
Muoz further argues that the MeTC Order dated May
16, 1994 in Civil Case No. 8286 correctly ordered the issuance
of a writ of preliminary mandatory injunction restoring
possession of the subject property to her, as she had already
acquired prior possession of the said property upon the
execution of the final judgment in Civil Case No. Q-
28580. Also, the spouses Chans petition for certiorari before
the RTC-Branch 88, docketed as Civil Case No. Q-94-20632,
challenging the Order dated May 16, 1994 of the MeTC in Civil
Case No. 8286, is a prohibited pleading under the Rules of
Summary Procedure; and the RTC-Branch 88 and the Court of
Appeals should be faulted for giving due course to the said
petition even in the absence of jurisdiction.
On the other hand, in their comments to the two
petitions at bar, the spouses Chan, Atty. Yabut, and BPI Family
assert that given the peculiar factual circumstances of the
case, RTC-Branch 88 was justified in taking cognizance of
Samuel Go Chan and Atty. Yabuts petition for certiorari in Civil
Case No. Q-94-20632; that Muoz is estopped from questioning
the jurisdiction of RTC-Branch 88 after participating in the
proceedings in Civil Case No. Q-94-20632; that the spouses
Chans title to the subject property is not affected by the final
judgment of RTC-Branch 95 in Civil Case No. Q-28580, and the
said judgment cannot be executed against the spouses Chan
since they are neither parties to the case, nor are they the
successors-in-interest, assigns, or persons acting on behalf of
Emilia M. Ching or the spouses Go; that BPI Family and
consequently, the spouses Chan, obtained title to the subject
property as innocent purchasers for value, there being no
notice of any infirmity in said title; and that Muoz is guilty of
forum shopping for filing her petition in G.R. No. 146718 even
while her petition in G.R. No. 142676 is still pending.
II
RULING
For the sake of expediency, we will be discussing first the
merits of the petition in G.R. No. 146718.
G.R. No. 146718
Civil Case No. Q-28580 involved Muozs complaint for
the annulment of the deeds of absolute sale dated December
28, 1972[40] and July 16, 1979,[41]the cancellation of the
spouses Gos TCT No. 258977, and the restoration and revival
of Muozs TCT No. 186306. The final judgment of RTC-Branch
95 in Civil Case No. Q-28580 was in favor of Muoz and against
Emilia M. Ching and the spouses Go. The problem arose when
during the pendency of the said case, title and possession of
the subject property were transferred from the spouses Go, to
BPI Family, and finally, to the spouses Chan. BPI Family and
the spouses Chan were never impleaded as parties and were
not referred to in the dispositive portion of the final judgment
in Civil Case No. Q-28580.
Muoz questions in G.R. No. 146718: (1) the Order dated
August 21, 1995 denying her Motion for Contempt against the
spouses Chan, Second Motion for Contempt against Samuel Go
Chan and Atty. Yabut, and Motion for an Alias Writ of
Execution and Application for Surrender of the Owners
Duplicate Copy of TCT No. 53297; and (2) the Order dated
October 3, 1995 denying her Motion for Clarificatory Order,
both issued by the RTC-Branch 95 in Civil Case No. Q-28580,
and upheld by the Court of Appeals in CA-G.R. SP No.
40019. In sum, Muoz was seeking in her aforementioned
motions: (1) a categorical order from the RTC-Branch 95 that
the final judgment in Civil Case No. Q-28580 be executed
against the spouses Chan; and (2) the surrender and
cancellation of the spouses Chans TCT No. 53297 and
restoration of Muozs TCT No. 186306.
There is no merit in Muozs petition in G.R. No.
146718.
Civil Case No. Q-28580 is an action for reconveyance
of real property. In Heirs of Eugenio Lopez, Sr. v.
Enriquez,[42] we described an action for reconveyance as
follows:
An action for reconveyance is
an action in personam available to a
person whose property has been wrongfully
registered under the Torrens system in
anothers name. Although the decree is
recognized as incontrovertible and no longer
open to review, the registered owner is not
necessarily held free from liens. As a
remedy, an action for reconveyance is filed
as an ordinary action in the ordinary courts
of justice and not with the land registration
court. Reconveyance is always
available as long as the property has
not passed to an innocent third person
for value. A notice of lis pendens may thus
be annotated on the certificate of title
immediately upon the institution of the
action in court. The notice of lis
pendens will avoid transfer to an innocent
third person for value and preserve the claim
of the real owner.[43] (Emphases ours.)
127
The rule is that: (1) a judgment in rem is binding
upon the whole world, such as a judgment in a land
registration case or probate of a will; and (2) a judgment in
personam is binding upon the parties and their successors-in-
interest but not upon strangers. A judgment directing a party
to deliver possession of a property to another is in personam;
it is binding only against the parties and their successors-in-
interest by title subsequent to the commencement of the
action.An action for declaration of nullity of title and recovery
of ownership of real property, or re-conveyance, is a real
action but it is an action in personam, for it binds a particular
individual only although it concerns the right to a tangible
thing. Any judgment therein is binding only upon the parties
properly impleaded.[44]
Since they were not impleaded as parties and given
the opportunity to participate in Civil Case No. Q-28580, the
final judgment in said case cannot bind BPI Family and the
spouses Chan. The effect of the said judgment cannot be
extended to BPI Family and the spouses Chan by simply
issuing an alias writ of execution against them. No man shall
be affected by any proceeding to which he is a stranger, and
strangers to a case are not bound by any judgment rendered
by the court. In the same manner, a writ of execution can be
issued only against a party and not against one who did not
have his day in court. Only real parties in interest in an action
are bound by the judgment therein and by writs of execution
issued pursuant thereto.[45]
A similar situation existed in Dino v. Court of
Appeals,[46] where we resolved that:
As the registered owner of the
subject property, petitioners are not bound
by decision in Civil Case No. R-18073 for
they were never summoned in said case and
the notice of lis pendens annotated on TCT
No. 73069 was already cancelled at the time
petitioners purchased the subject
property. While it is true that petitioners are
indispensable parties in Civil Case No. R-
18073, without whom no complete relief
could be accorded to the private
respondents, the fact still remains that
petitioners were never actually joined as
defendants in said case. Impleading
petitioners as additional defendants only in
the execution stage of said case violated
petitioners right to due process as no notice
of lis pendens was annotated on the existing
certificate of title of said property nor were
petitioners given notice of the pending case,
therefore petitioners remain strangers in said
case and the Order of the trial court
involving them is null and void, considering
that petitioners are innocent purchasers of
the subject property for value.[47]
 We further stress that Section 48 of Presidential We are confronted with the functionings of
Decree No. 1529, otherwise known as the Property the Torrens System of Registration. The
Registration Decree, clearly provides that [a] certificate of title doctrine to follow is simple enough: a
shall not be subject to collateral attack. It cannot be altered, fraudulent or forged document of sale
modified or cancelled except in a direct proceeding in may become the ROOT of a valid title if
accordance with law. Herein, several Torrens titles were the certificate of title has already been
already issued after the cancellation of Muozs. Certificates of transferred from the name of the true
title had been successively issued to Emilia M. Ching, spouses owner to the name of the forger or the
Go, BPI Family, and spouses Chan. Civil Case No. Q-28580, in name indicated by the
which a final judgment had already been rendered, specifically forger.[50] (Emphases ours.)
challenged the validity of the certificates of title of Emilia M.
Ching and the spouses Go only. To have the present certificate
of title of the spouses Chan cancelled, Muoz must institute
another case directly attacking the validity of the same.
Although the RTC-Branch 95 had declared with finality
in Civil Case No. Q-28580 that the titles of Emilia M. Ching and
the spouses Go were null and void, there is yet no similar
The fact that the titles to the subject property of
determination on the titles of BPI Family and the spouses
Emilia M. Ching and the spouses Go were already declared null
Chan. The question of whether or not the titles to the subject
and void ab initio by final judgment in Civil Case No. Q-28580
property of BPI Family and the spouses Chan are null and void,
is not enough, for it does not automatically make the
since they are merely the successors-in-interest, assigns, or
subsequent titles of BPI Family and the spouses Chan
privies of Emilia M. Ching and the spouses Go, ultimately
correspondingly null and void ab initio.
depends on the issue of whether or not BPI Family and the
spouses Chan obtained their titles to the subject property in
bad faith, i.e., with notice of Muozs adverse claim and
It has long been ingrained in our jurisprudence that a
knowledge of the pendency of Civil Case No. Q-28580. The
void title may become the root of a valid title if the derivative
latter is a factual issue on which we cannot rule in the present
title was obtained in good faith and for value. Following the
petition, not only because we are not a trier of facts, but more
principle of indefeasibility of a Torrens title, every person
importantly, because it was not among the issues raised and
dealing with registered lands may safely rely on the
tried in Civil Case No. Q-28580.
correctness of the certificate of title of the vendor/transferor,
and he is not required to go beyond the certificate and inquire
into the circumstances culminating in the vendors acquisition
In support of her prayer for an alias writ of execution
of the property. The rights of innocent third persons who relied
against BPI Family and the spouses Go, Muoz cites our ruling
on the correctness of the certificate of title and acquired rights
in Calalang v. Register of Deeds of Quezon City,[51] in relation
over the property covered thereby cannot be disregarded and
to De la Cruz v. De la Cruz.[52]
the courts cannot order the cancellation of such certificate for
that would impair or erode public confidence in
the Torrens system of land registration.[48]
De la Cruz is an action for reconveyance of Lot 671
founded on breach of trust filed by Augustina de la Cruz, et al.,
against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo (INK). We
upheld the validity of the sale of Lot 671 by Lucia to INK, and
thereby validated the title of INK to the said property.
Hence, we pronounced in Republic v. Agunoy, Sr.[49]:
Calalang actually involved two petitions: (1) a special
civil action for certiorari and prohibition originally filed by
Here, it bears stressing that, by
Virginia Calalang (Calalang) before this Court, and (2) a
petitioner's own judicial admission, the lots
petition for injunction with damages originally filed by Augusto
in dispute are no longer part of the public
M. de Leon (De Leon), et al., before the RTC and docketed as
domain, and there are numerous third,
Civil Case No. Q-45767. Calalang and De Leon, et al., assert
fourth, fifth and more parties
titles that were adverse to that of INK. De Leon, et al., in
holding Torrens titles in their favor
particular, claim that their titles to Lot 671 were derived from
and enjoying the presumption of good
Amando Clemente. Calalang and De Leon, et al., sought from
faith. This brings to mind what we have
the court orders enjoining INK from building a fence to enclose
reechoed in Pino v. Court of Appeals and the
Lot 671; requiring the Administrator of the National Land Titles
cases therein cited:
and Deeds Registration Administration (NLTDRA) to conduct an
investigation of the anomaly regarding Lucias reconstituted
title to Lot 671; and dismissing the proceedings instituted by
[E]ven on the supposition that the sale was the Register of Deeds for the cancellation of their titles. We
void, the general rule that the direct result of dismissed the petitions of Calalang and De Leon, et al., on the
a previous illegal contract cannot be valid ground of res judicata, the legality or validity of the title of INK
(on the theory that the spring cannot rise over Lot 671 had been settled with finality in De la Cruz.De la
higher than its source) cannot apply here for
128
Cruz was applied to Calalang and De Leon, et al., since the
facts on which such decision was predicated continued to be
the facts on which the petitions of Calalang and De Leon, et
al., were based.
Muozs reliance on Calalang is misplaced. There are
substantial differences in the facts and issues involved
in Calalang and the present case.
In Calalang, there is duplication or overlapping of
certificates of title issued to different persons over the same
property. We already upheld in De la Cruzthe validity of the
certificate of title of INK over Lot 671, which effectively
prevents us from recognizing the validity of any other
certificate of title over the same property. In addition, Lucia,
the predecessor-in-interest of INK, had her certificate of title
judicially reconstituted. The judicial reconstitution of title is a
proceeding in rem, constituting constructive notice to the
whole world. Hence, we rejected the petitions of Calalang and
De Leon, et al., to enjoin INK from building a fence enclosing
Lot 671, and the concerned public authorities from instituting
appropriate proceedings to have all other certificates of title
over Lot 671 annulled and cancelled.
In the instant case, there has been no duplication or
overlapping of certificates of title. The subject property has
always been covered by only one certificate of title at a time,
and at present, such certificate is in the spouses Chans
names. As we have previously discussed herein, Muoz cannot
have the spouses Chans TCT No. 53297 cancelled by a mere
motion for the issuance of an alias writ of execution in Civil
Case No. Q-28580, when the spouses Chan were not parties to
the case. Civil Case No. Q-28580 was a proceeding in
personam, and the final judgment rendered therein declaring
null and void the titles to the subject property of Emilia M.
Ching and the spouses Go should bind only the parties
thereto. Furthermore, despite the void titles of Emilia M. Ching
and the spouses Go, the derivative titles of BPI Family and the
spouses Chan may still be valid provided that they had
acquired the same in good faith and for value.
More in point with the instant petition is Pineda
v. Santiago.[53] Pineda still involved Lot 671. INK sought from
the RTC a second alias writ of execution to implement the
judgment in Calalang against Conrado Pineda (Pineda), et.
al. In opposing the issuance of such writ, Pineda, et al.,
asserted that they held titles to Lot 671 adverse to those of
Lucia and INK and that they were not parties in De la Cruz or
in Calalang. In its assailed order, the RTC granted the second
alias writ of execution on the basis that the issue of ownership
of Lot 671 was already determined with finality in favor of
Lucia and INK. The writ ordered the deputy sheriff to eject
Pineda, et al., from Lot 671. When the matter was brought
before us, we annulled the assailed order as the writ of
execution issued was against Pineda, et al., who were not
parties to Civil Case No. Q-45767, the ejectment suit instituted
by De Leon, et al. We elaborated in Pineda that:
129
Being a suit for injunction, Civil
Case No. Q-45767 partakes of an action in
personam. In Domagas v. Jensen, we have
explained the nature of an action in
personamand enumerated some actions and
proceedings which are in personam, viz:
The settled rule is that the aim and object of
an action determine its character. Whether a
proceeding is in rem, or in personam, or
quasi in rem for that matter, is determined
by its nature and purpose, and by these
only. A proceeding in personam is a
proceeding to enforce personal rights and
obligations brought against the person and is
based on the jurisdiction of the person,
although it may involve his right to, or the
exercise of ownership of, specific property,
or seek to compel him to control or dispose
of it in accordance with the mandate of the
court. The purpose of a proceeding in
personam is to impose, through the
judgment of a court, some
responsibility or liability directly upon
the person of the defendant. Of this
character are suits to compel a defendant to
specifically perform some act or actions to
fasten a pecuniary liability on him. An
action in personam is said to be one
which has for its object a judgment
against the person, as distinguished
from a judgment against the propriety
to determine its state. It has been held
that an action in personam is a
proceeding to enforce personal rights
or obligations; such action is brought
against the person. As far as suits for
injunctive relief are concerned, it is well-
settled that it is an injunctive act in
personam. In Combs v. Combs, the appellate
court held that proceedings to enforce
personal rights and obligations and in which
personal judgments are rendered adjusting
the rights and obligations between the
affected parties is in personam. Actions for
recovery of real property are in
personam.
The respondent judge's jurisdiction is, therefore,
limited to the parties in the injunction suit. To stress,
the petition for injunction, docketed as Civil Case No.
Q-45767, was filed only by therein petitioners
Augusto M. de Leon, Jose de Castro, Jose A. Panlilio,
Felicidad Vergara Vda. De Pineda, Fernando L. Vitug
I, Fernando M. Vitug II, Fernando M. Vitug III, and
Faustino Tobia, and later amended to include Elena
Ostrea and Feliza C. Cristobal-Generoso as additional
petitioners therein, against Bishop Erao Manalo, in his
capacity as titular and spiritual head of I.N.K. Herein
petitioners Conrado Pineda, et al. never became
parties thereto. Any and all orders and writs of
execution, which the respondent judge may issue in
that case can, therefore, be enforced only against
those parties and not against the herein
petitioners Conrado Pineda, et al. In issuing the
assailed Order dated 22 April 1998, which directed
the issuance of the 2nd Alias Writ of Execution to
eject non-parties (herein petitioners), the respondent
judge clearly went out of bounds and committed
grave abuse of discretion.
The nature of the injunction suit Civil Case No. Q-
45767 as an action in personam in the RTC remains
to be the same whether it is elevated to the CA or to
this Court for review. An action in personam does not
become an action in rem just because a
pronouncement confirming I.N.K.'s title to Lot 671
was made by this Court in the Calalang
decision. Final rulings may be made by this
Court, as the Highest Court of the Land, in
actions in personam but such rulings are
binding only as against the parties therein and
not against the whole world. Here lies another
grave abuse of discretion on the part of the
respondent judge when he relied on the Calalang
decision in his assailed Order dated 07 May 1998 as if
it were binding against the whole world, saying:
After evaluating the arguments of both
parties, decisive on the incident is the
decision of the Supreme Court in favor of the
respondent I.N.K.,
represented by its titular and spiritual head
Bishop Erao G. Manalo, sustaining its
ownership over the subject Lot 671. This
Court could do no less but to follow and give
substantial meaning to its ownership which
shall include all dominical rights by way of a
Writ of Execution. To delay the issuance of
such writ is a denial of justice due the I.N.K.
As a final word, this decision shall not be
misinterpreted as disturbing or modifying our
ruling in Calalang. The final ruling on I.N.K.'s
ownership and title is not at all
affected. Private respondent I.N.K., as the true
and lawful owner of Lot 671 as ruled by the
Court in Calalang, simply has to file the proper
action against the herein petitioners to enforce
its property rights within the bounds of the law
and our rules. I.N.K.'s recourse of asking for the
issuance of an alias writ of execution against the
petitioners in Civil Case No. Q-45767 and the
respondent judge's orders in said case, granting
I.N.K.'s prayer and enforcing the alias writ of
execution against the present petitioners, constitutes
blatant disregard of very fundamental rules and must
therefore be stricken down.[54] (Emphases ours.)
130
Consistent with Pineda, and as appositely
recommended by the RTC-Branch 95 and the Court of Appeals
in the present case, Muozs legal remedy is to directly assail in
a separate action the validity of the certificates of title of BPI
Family and the spouses Chan.
G.R. No. 142676
G.R. No. 142676 is Muozs appeal of the dismissal of
Civil Case No. 8286, the forcible entry case she instituted
against Samuel Go Chan and Atty. Yabut before the MeTC.
There is forcible entry or desahucio when one is
deprived of physical possession of land or building by means of
force, intimidation, threat, strategy or stealth. In such cases,
the possession is illegal from the beginning and the basic
inquiry centers on who has the prior possession de
facto. In filing forcible entry cases, the law tells us that two
allegations are mandatory for the municipal court to acquire
jurisdiction: first, the plaintiff must allege prior physical
possession of the property, and second, he must also allege
that he was deprived of his possession by any of the means
provided for in Section 1, Rule 70 of the Rules of Court, i.e., by
force, intimidation, threat, strategy, or stealth. It is also
settled that in the resolution thereof, what is important is
determining who is entitled to the physical possession of the
property. Indeed, any of the parties who can prove prior
possession de facto may recover such possession even
from the owner himself since such cases proceed
independently of any claim of ownership and the plaintiff
needs merely to prove prior possession de factoand undue
deprivation thereof.[55]
Title is never in issue in a forcible entry case, the
court should base its decision on who had prior physical
possession. The main thing to be proven in an action for
forcible entry is prior possession and that same was lost
through force, intimidation, threat, strategy, and stealth, so
that it behooves the court to restore possession regardless of
title or ownership.[56]
We more extensively discussed in Pajuyo v. Court of
Appeals[57] that:
Ownership or the right to possess arising from
ownership is not at issue in an action for
recovery of possession. The parties cannot present
evidence to prove ownership or right to legal
possession except to prove the nature of the
possession when necessary to resolve the issue of
physical possession. The same is true when the
defendant asserts the absence of title over the
property. The absence of title over the contested
lot is not a ground for the courts to withhold
relief from the parties in an ejectment case.

The only question that the courts must resolve in
ejectment proceedings is - who is entitled to the
physical possession of the premises, that is, to the
possession de facto and not to the possession de
jure. It does not even matter if a partys title to the
property is questionable, or when both parties
intruded into public land and their applications to own
the land have yet to be approved by the proper
government agency. Regardless of the actual
condition of the title to the property, the party
in peaceable quiet possession shall not be
thrown out by a strong hand, violence or
terror. Neither is the unlawful withholding of
property allowed. Courts will always uphold
respect for prior possession.
Thus, a party who can prove
prior possession can recover such
possession even against the owner
himself. Whatever may be the
character of his possession, if he has in
his favor prior possession in time, he
has the security that entitles him to
remain on the property until a person
with a better right lawfully ejects
him.To repeat, the only issue that the court
has to settle in an ejectment suit is the right
to physical possession.[58] (Emphases ours.)
Based on the foregoing, we find that the RTC-Branch
88 erred in ordering the dismissal of Civil Case No. 8286 even
before completion of the proceedings before the MeTC. At the
time said case was ordered dismissed by RTC-Branch 88, the
MeTC had only gone so far as holding a hearing on and
eventually granting Muozs prayer for the issuance of a writ of
preliminary mandatory injunction.
Muoz alleges in her complaint in Civil Case No. 8286
that she had been in prior possession of the subject property
since it was turned-over to her by the sheriff on January 10,
1994, pursuant to the Alias Writ of Execution issued by the
RTC-Branch 95 to implement the final judgment in Civil Case
No. Q-28580.The factual issue of who was in prior possession
of the subject property should be litigated between the parties
regardless of whether or not the final judgment in Civil Case
No. Q-28580 extended to the spouses Chan. Hence, the
pendency of the latter issue in Civil Case No. Q-28580 before
the RTC-Branch 95 did not warrant the dismissal of Civil Case
No. 8286 before the MeTC on the ground of litis
pendentia. The two cases could proceed independently of one
another.
Samuel Go Chan and Atty. Yabut aver that the
spouses Chan have never lost possession of the subject
property since acquiring the same from BPI Family in
1990. This is a worthy defense to Muozs complaint for forcible
131
entry, which Samuel Go Chan and Atty. Yabut should
substantiate with evidence in the continuation of the
proceedings in Civil Case No. 8286 before the MeTC.
In addition, Civil Case No. 8286, a forcible entry case,
is governed by the Revised Rule on Summary Procedure,
Section 19 whereof provides:
SEC. 19. Prohibited pleadings and
motions. The following pleadings, motions,
or petitions shall not be allowed in the cases
covered by this Rule:
xxxx
(g) Petition
for certiorari, mandamus, or prohibition
against any interlocutory order issued by the
court.
The purpose of the Rule on Summary Procedure is to
achieve an expeditious and inexpensive determination of cases
without regard to technical rules.Pursuant to this objective, the
Rule prohibits petitions for certiorari, like a number of other
pleadings, in order to prevent unnecessary delays and to
expedite the disposition of cases.[59]
Interlocutory orders are those that determine
incidental matters that do not touch on the merits of the case
or put an end to the proceedings.[60] An order granting a
preliminary injunction, whether mandatory or prohibitory, is
interlocutory and unappealable.[61]
The writ of preliminary mandatory injunction issued
by the MeTC in its Order dated May 16, 1994, directing that
Muoz be placed in possession of the subject property during
the course of Civil Case No. 8286, is an interlocutory
order. Samuel Go Chan and Atty. Yabut assailed the said order
before the RTC-Branch 88 via a petition for certiorari, docketed
as Civil Case No. Q-94-20632. The RTC-Branch 88 gave due
course to said petition, and not only declared the MeTC Order
dated May 16, 1994 null and void, but went further by
dismissing Civil Case No. 8286.
The prohibition in Section 19(g) of the Revised Rule
on Summary Procedure is plain enough. Its further exposition
is unnecessary verbiage.[62] The petition for certiorari of
Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632
is clearly covered by the said prohibition, thus, it should have
been dismissed outright by the RTC-Branch 88. While the
circumstances involved in Muozs forcible entry case against
Samuel Go Chan and Atty. Yabut are admittedly very peculiar,
these are insufficient to except the petition for certiorari of
Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632
from the prohibition. The liberality in the interpretation and
No pronouncement as to costs.
application of the rules applies only in proper cases and under
justifiable causes and circumstances. While it is true that
litigation is not a game of technicalities, it is equally true that
every case must be prosecuted in accordance with the SO ORDERED.
prescribed procedure to insure an orderly and speedy
administration of justice.[63]

Nonetheless, even though the peculiar circumstances

extant herein do not justify the dismissal of Civil Case No.
8286, they do require limiting pro hac vicethe reliefs the MeTC
may accord to Muoz in the event that she is able to
successfully prove forcible entry by Samuel Go Chan and Atty.
Yabut into the subject property (i.e., that the sheriff actually
turned-over to Muoz the possession of the subject property on
January 10, 1994, and that she was deprived of such
possession by Samuel Go Chan and Atty. Yabut on February 2,
1994 by means of force, intimidation, threat, strategy, and
stealth). Taking into account our ruling in G.R. No. 146718 that
the final judgment in Civil Case No. Q-28580 does not extend
to the spouses Chan, who were not impleaded as parties to
the said case the MeTC is precluded from granting to
Muoz relief, whether preliminary or final, that will give
her possession of the subject property. Otherwise, we will
be perpetuating the wrongful execution of the final judgment
in Civil Case No. Q-28580. Based on the same reason, Muoz
can no longer insist on the reinstatement of the MeTC Order
dated May 16, 1994 granting a preliminary mandatory
injunction that puts her in possession of the subject property
during the course of the trial. Muoz though may recover
damages if she is able to prove wrongful deprivation of
possession of the subject property from February 2, 1994 until
the finality of this decision in G.R. No. 146718.

WHEREFORE, in view of the foregoing, we:

(1) GRANT Emerita Muozs petition in G.R. No.

142676. We REVERSE and SET ASIDE the Decision dated
July 21, 1995 and Resolution dated March 9, 2000 of the Court
of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders
dated June 10, 1994 and August 5, 1994 of the Regional Trial
Court, Branch 88 of Quezon City in Civil Case No. Q-94-
20632. We DIRECT the Metropolitan Trial Court, Branch 33 of
Quezon City to reinstate Emerita Muozs complaint for forcible
entry in Civil Case No. 8286 and to resume the proceedings
only to determine whether or not Emerita Muoz was forcibly
deprived of possession of the subject property from February
2, 1994 until finality of this judgment, and if so, whether or not
she is entitled to an award for damages for deprivation of
possession during the aforementioned period of time; and

(2) DENY Emerita Munozs petition in G.R. No. 146718 for lack
of merit, and AFFIRM the Decision dated September 29, 2000
and Resolution dated January 5, 2001 of the Court of Appeals
in CA-G.R. SP No. 40019, which in turn, affirmed the Orders
dated August 21, 1995 and October 3, 1995 of the Regional
Trial Court, Branch 95 of Quezon City in Civil Case No. Q-
28580.
132
G.R. No. 206147
MICHAEL C. GUY, Petitioner,
vs.
ATTY. GLENN C. GACOTT, Respondent.
DECISION
MENDOZA, J.:
Before this Court is a petition for review on certiorari under
Rule 45 of the Rules of Court filed by petitioner Michael C.
Guy (Guy), assailing the June 25, 2012 Decision1 and the
March 5, 2013 Resolution2 of the Court of Appeals (CA) in CA-
G.R. CV No. 94816, which affirmed the June 28, 2009 3 and
February 19, 20104 Orders of the Regional Trial Court, Branch
52, Puerto Princesa City, Palawan (RTC), in Civil Case No.
3108, a case for damages. The assailed RTC orders denied
Guy's Motion to Lift Attachment Upon Personalty5 on the
ground that he was not a judgment debtor.
The Facts
It appears from the records that on March 3, 1997, Atty. Glenn
Gacott (Gacott) from Palawan purchased two (2) brand new
transreceivers from Quantech Systems Corporation (QSC) in
Manila through its employee Rey
Medestomas (Medestomas), amounting to a total of
P18,000.00. On May 10, 1997, due to major defects, Gacott
personally returned the transreceivers to QSC and requested
that they be replaced. Medestomas received the returned
transreceivers and promised to send him the replacement units
within two (2) weeks from May 10, 1997.
Time passed and Gacott did not receive the replacement units
as promised. QSC informed him that there were no available
units and that it could not refund the purchased price. Despite
several demands, both oral and written, Gacott was never
given a replacement or a refund. The demands caused Gacott
to incur expenses in the total amount of P40,936.44. Thus,
Gacott filed a complaint for damages. Summons was served
upon QSC and Medestomas, afterwhich they filed their Answer,
verified by Medestomas himself and a certain Elton Ong (Ong).
QSC and Medestomas did not present any evidence during the
trial.6
In a Decision,7 dated March 16, 2007, the RTC found that the
two (2) transreceivers were defective and that QSC and
Medestomas failed to replace the same or return Gacott's
money. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiff, ordering the defendants to jointly and severally pay
plaintiff the following:
1. Purchase price plus 6% per annum from March 3, 1997 up Pbeing a partner in the partnership, or any penalty is incurred,
to and until fully paid ------------
2. Actual Damages -----------------------------------
3. Moral Damages -----------------------------------
133
4. Corrective Damages ------------------------------- 1
5. Attorney’s Fees ------------------------------------ 6
6. Costs.
SO ORDERED.
The decision became final as QSC and Medestomas did not
interpose an appeal. Gacott then secured a Writ of
Execution,8 dated September 26, 2007.
During the execution stage, Gacott learned that QSC was not a
corporation, but was in fact a general partnership registered
with the Securities and Exchange Commission (SEC). In the
articles of partnership,9 Guy was appointed as General
Manager of QSC.
To execute the judgment, Branch Sheriff Ronnie L.
Felizarte (Sheriff Felizarte) went to the main office of the
Department of Transportation and Communications, Land
Transportation Office (DOTC-LTO), Quezon City, and verified
whether Medestomas, QSC and Guy had personal properties
registered therein.10 Upon learning that Guy had vehicles
registered in his name, Gacott instructed the sheriff to proceed
with the attachment of one of the motor vehicles of Guy based
on the certification issued by the DOTC-LTO.11
On March 3, 2009, Sheriff Felizarte attached Guy’s vehicle by
virtue of the Notice of Attachment/Levy upon
Personalty12 served upon the record custodian of the DOTC-
LTO of Mandaluyong City. A similar notice was served to Guy
through his housemaid at his residence.
Thereafter, Guy filed his Motion to Lift Attachment Upon
Personalty, arguing that he was not a judgment debtor and,
therefore, his vehicle could not be attached.13 Gacott filed an
opposition to the motion.
The RTC Order
On June 28, 2009, the RTC issued an order denying Guy’s
motion. It explained that considering QSC was not a
corporation, but a registered partnership, Guy should be
treated as a general partner pursuant to Section 21 of the
Corporation Code, and he may be held jointly and severally
liable with QSC and Medestomas. The trial court wrote:
All persons who assume to act as a corporation knowing it to
be without authority to do so shall be liable as general partners
for all debts, liabilities and damages incurred or arising as a
result thereof x x x. Where, by any wrongful act or omission of
any partner acting in the ordinary course of the business of the
partnership x x x, loss or injury is caused to any person, not
the partnership is liable therefore to the same extent as the
18,000.00
partner so acting or omitting to act. All partners are liable
solidarily with the partnership for everything chargeable to the
40,000.00
partnership under Article 1822 and 1823.14
75,000.00
Accordingly, it disposed:
WHEREFORE, with the ample discussion of the matter, this
Court finds and so holds that the property of movant Michael
Guy may be validly attached in satisfaction of the liabilities
adjudged by this Court against Quantech Co., the latter being
an ostensible Corporation and the movant being considered by
this Court as a general partner therein in accordance with the
order of this court impressed in its decision to this case
imposing joint and several liability to the defendants. The
Motion to Lift Attachment Upon Personalty submitted by the
movant is therefore DENIED for lack of merit.
SO ORDERED.15
Not satisfied, Guy moved for reconsideration of the denial of
his motion. He argued that he was neither impleaded as a
defendant nor validly served with summons and, thus, the trial
court did not acquire jurisdiction over his person; that under
Article 1824 of the Civil Code, the partners were only solidarily
liable for the partnership liability under exceptional
circumstances; and that in order for a partner to be liable for
the debts of the partnership, it must be shown that all
partnership assets had first been exhausted.16
On February 19, 2010, the RTC issued an order 17denying his
motion.
The denial prompted Guy to seek relief before the CA.
The CA Ruling
On June 25, 2012, the CA rendered the assailed decision
dismissing Guy’s appeal for the same reasons given by the trial
court. In addition thereto, the appellate court stated:
We hold that Michael Guy, being listed as a general partner of
QSC during that time, cannot feign ignorance of the existence
of the court summons. The verified Answer filed by one of the
partners, Elton Ong, binds him as a partner because the Rules
of Court does not require that summons be served on all the
partners. It is sufficient that service be made on the
"president, managing partner, general manager, corporate
secretary, treasurer or in-house counsel." To Our mind, it is
immaterial whether the summons to QSC was served on the
theory that it was a corporation. What is important is that the
summons was served on QSC’s authorized officer xxx.18
The CA stressed that Guy, being a partner in QSC, was bound
by the summons served upon QSC based on Article 1821 of
the Civil Code. The CA further opined that the law did not
require a partner to be actually involved in a suit in order for
him to be made liable. He remained “solidarily liable whether
he participated or not, whether he ratified it or not, or whether
he had knowledge of the act or omission.”19
Aggrieved, Guy filed a motion for reconsideration but it was
denied by the CA in its assailed resolution, dated March 5,
2013.
134
Hence, the present petition raising the following
ISSUE
THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN HOLDING THAT PETITIONER
GUY IS SOLIDARILY LIABLE WITH THE PARTNERSHIP
FOR DAMAGES ARISING FROM THE BREACH OF THE
CONTRACT OF SALE WITH RESPONDENT GACOTT.20
Guy argues that he is not solidarily liable with the partnership
because the solidary liability of the partners under Articles
1822, 1823 and 1824 of the Civil Code only applies when it
stemmed from the act of a partner. In this case, the alleged
lapses were not attributable to any of the partners. Guy further
invokes Article 1816 of the Civil Code which states that the
liability of the partners to the partnership is merely joint and
subsidiary in nature.
In his Comment,21 Gacott countered, among others, that
because Guy was a general and managing partner of QSC, he
could not feign ignorance of the transactions undertaken by
QSC. Gacott insisted that notice to one partner must be
considered as notice to the whole partnership, which included
the pendency of the civil suit against it.
In his Reply,22 Guy contended that jurisdiction over the person
of the partnership was not acquired because the summons was
never served upon it or through any of its authorized office. He
also reiterated that a partner’s liability was joint and
subsidiary, and not solidary.
The Court’s Ruling
The petition is meritorious.
The service of summons was flawed; voluntary appearance
cured the defect
Jurisdiction over the person, or jurisdiction in personam – the
power of the court to render a personal judgment or to subject
the parties in a particular action to the judgment and other
rulings rendered in the action – is an element of due process
that is essential in all actions, civil as well as criminal, except in
actions in rem or quasi in rem.23Jurisdiction over the person of
the plaintiff is acquired by the mere filing of the complaint in
court. As the initiating party, the plaintiff in a civil action
voluntarily submits himself to the jurisdiction of the court. As
to the defendant, the court acquires jurisdiction over his
person either by the proper service of the summons, or by his
voluntary appearance in the action.24
Under Section 11, Rule 14 of the 1997 Revised Rules of Civil
Procedure, when the defendant is a corporation, partnership or
association organized under the laws of the Philippines with a
juridical personality, the service of summons may be made on
the president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel. Jurisprudence is
replete with pronouncements that such provision provides
an exclusive enumeration of the persons authorized to
receive summons for juridical entities.25
The records of this case reveal that QSC was never shown to
have been served with the summons through any of the
enumerated authorized persons to receive such, namely:
president, managing partner, general manager, corporate
secretary, treasurer or in-house counsel. Service of summons
upon persons other than those officers enumerated in
Section 11 is invalid. Even substantial compliance is not
sufficient service of summons.26 The CA was obviously
mistaken when it opined that it was immaterial whether the
summons to QSC was served on the theory that it was a
corporation.27
Nevertheless, while proper service of summons is necessary to
vest the court jurisdiction over the defendant, the same is
merely procedural in nature and the lack of or defect in the
service of summons may be cured by the defendant’s
subsequent voluntary submission to the court’s jurisdiction
through his filing a responsive pleading such as an answer. In
this case, it is not disputed that QSC filed its Answer despite
the defective summons. Thus, jurisdiction over its person was
acquired through voluntary appearance.
A partner must be separately and distinctly impleaded before
he can be bound by a judgment
The next question posed is whether the trial court’s jurisdiction
over QSC extended to the person of Guy insofar as holding him
solidarily liable with the partnership. After a thorough study of
the relevant laws and jurisprudence, the Court answers in the
negative.
Although a partnership is based on delectus personae or
mutual agency, whereby any partner can generally represent
the partnership in its business affairs, it is non sequitur that a
suit against the partnership is necessarily a suit impleading
each and every partner. It must be remembered that a
partnership is a juridical entity that has a distinct and separate
personality from the persons composing it.28
In relation to the rules of civil procedure, it is elementary that
a judgment of a court is conclusive and binding only upon the
parties and their successors-in-interest after the
commencement of the action in court.29 A decision rendered
on a complaint in a civil action or proceeding does not bind or
prejudice a person not impleaded therein, for no person shall
be adversely affected by the outcome of a civil action or
proceeding in which he is not a party.30The principle that a
person cannot be prejudiced by a ruling rendered in an action
or proceeding in which he has not been made a party
conforms to the constitutional guarantee of due process of
law.31
In Muñoz v. Yabut, Jr.,32 the Court declared that a person not
impleaded and given the opportunity to take part in the
proceedings was not bound by the decision declaring as null
and void the title from which his title to the property had been
derived. The effect of a judgment could not be extended to
non-parties by simply issuing an alias writ of execution against
135
them, for no man should be prejudiced by any proceeding to
which he was a stranger.
In Aguila v. Court of Appeals,33 the complainant had a cause of
action against the partnership. Nevertheless, it was the
partners themselves that were impleaded in the complaint. The
Court dismissed the complaint and held that it was the
partnership, not its partners, officers or agents, which should
be impleaded for a cause of action against the partnership
itself. The Court added that the partners could not be held
liable for the obligations of the partnership unless it was shown
that the legal fiction of a different juridical personality was
being used for fraudulent, unfair, or illegal purposes.34
Here, Guy was never made a party to the case. He did not
have any participation in the entire proceeding until his vehicle
was levied upon and he suddenly became QSC’s “co-defendant
debtor” during the judgment execution stage. It is a basic
principle of law that money judgments are enforceable only
against the property incontrovertibly belonging to the
judgment debtor.35 Indeed, the power of the court in
executing judgments extends only to properties
unquestionably belonging to the judgment debtor alone. An
execution can be issued only against a party and not against
one who did not have his day in court. The duty of the sheriff
is to levy the property of the judgment debtor not that of a
third person. For, as the saying goes, one man's goods shall
not be sold for another man's debts.36
In the spirit of fair play, it is a better rule that a partner must
first be impleaded before he could be prejudiced by the
judgment against the partnership. As will be discussed later, a
partner may raise several defenses during the trial to avoid or
mitigate his obligation to the partnership liability. Necessarily,
before he could present evidence during the trial, he must first
be impleaded and informed of the case against him. It would
be the height of injustice to rob an innocent partner of his
hard-earned personal belongings without giving him an
opportunity to be heard. Without any showing that Guy himself
acted maliciously on behalf of the company, causing damage
or injury to the complainant, then he and his personal
properties cannot be made directly and solely accountable for
the liability of QSC, the judgment debtor, because he was not
a party to the case.
Further, Article 1821 of the Civil Code does not state that
there is no need to implead a partner in order to be
bound by the partnership liability. It provides that:
Notice to any partner of any matter relating to
partnership affairs, and the knowledge of the partner
acting in the particular matter, acquired while a partner or
then present to his mind, and the knowledge of any other
partner who reasonably could and should have communicated
it to the acting partner, operate as notice to or knowledge
of the partnership, except in the case of fraud on the
partnership, committed by or with the consent of that partner.
[Emphases and Underscoring Supplied]
A careful reading of the provision shows that notice to any
partner, under certain circumstances, operates as notice to or
knowledge to the partnership only. Evidently, it does not
provide for the reverse situation, or that notice to the
partnership is notice to the partners. Unless there is an
unequivocal law which states that a partner is automatically
charged in a complaint against the partnership, the
constitutional right to due process takes precedence and a
partner must first be impleaded before he can be considered
as a judgment debtor. To rule otherwise would be a dangerous
precedent, harping in favor of the deprivation of property
without ample notice and hearing, which the Court certainly
cannot countenance.
Partners’ liability is subsidiary and generally joint; immediate
levy upon the property of a partner cannot be made
Granting that Guy was properly impleaded in the complaint,
the execution of judgment would be improper. Article 1816 of
the Civil Code governs the liability of the partners to third
persons, which states that:
Article 1816. All partners, including industrial ones, shall be
liable pro rata with all their property and after all the
partnership assets have been exhausted, for the
contracts which may be entered into in the name and for the
account of the partnership, under its signature and by a person
authorized to act for the partnership. However, any partner
may enter into a separate obligation to perform a partnership
contract.
[Emphasis Supplied]
This provision clearly states that, first, the partners’ obligation
with respect to the partnership liabilities is subsidiary in nature.
It provides that the partners shall only be liable with their
property after all the partnership assets have been exhausted.
To say that one’s liability is subsidiary means that it merely
becomes secondary and only arises if the one primarily liable
fails to sufficiently satisfy the obligation. Resort to the
properties of a partner may be made only after efforts in
exhausting partnership assets have failed or that such
partnership assets are insufficient to cover the entire
obligation. The subsidiary nature of the partners’ liability with
the partnership is one of the valid defenses against a
premature execution of judgment directed to a partner.
In this case, had he been properly impleaded, Guy’s liability
would only arise after the properties of QSC would have been
exhausted. The records, however, miserably failed to show
that the partnership’s properties were exhausted. The
report37 of the sheriff showed that the latter went to the main
office of the DOTC-LTO in Quezon City and verified whether
Medestomas, QSC and Guy had personal properties registered
therein. Gacott then instructed the sheriff to proceed with the
attachment of one of the motor vehicles of Guy. 38 The sheriff
then served the Notice of Attachment/Levy upon Personalty to
the record custodian of the DOTC-LTO of Mandaluyong City. A
similar notice was served to Guy through his housemaid at his
residence.
136
Clearly, no genuine efforts were made to locate the properties
of QSC that could have been attached to satisfy the judgment
− contrary to the clear mandate of Article 1816. Being
subsidiarily liable, Guy could only be held personally liable if
properly impleaded and after all partnership assets had been
exhausted.
Second, Article 1816 provides that the partners’ obligation to
third persons with respect to the partnership liability is pro
rata or joint.1âwphi1 Liability is joint when a debtor is liable
only for the payment of only a proportionate part of the debt.
In contrast, a solidary liability makes a debtor liable for the
payment of the entire debt. In the same vein, Article 1207
does not presume solidary liability unless: 1) the obligation
expressly so states; or 2) the law or nature
requires solidarity. With regard to partnerships, ordinarily, the
liability of the partners is not solidary.39 The joint liability of the
partners is a defense that can be raised by a partner
impleaded in a complaint against the partnership.
In other words, only in exceptional circumstances shall the
partners’ liability be solidary in nature. Articles 1822, 1823 and
1824 of the Civil Code provide for these exceptional conditions,
to wit:
Article 1822. Where, by any wrongful act or omission of any
partner acting in the ordinary course of the business of the
partnership or with the authority of his co-partners, loss or
injury is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is liable
therefor to the same extent as the partner so acting or
omitting to act.
Article 1823. The partnership is bound to make good the loss:
(1) Where one partner acting within the scope of his
apparent authority receives money or property of a
third person and misapplies it; and
(2) Where the partnership in the course of its
business receives money or property of a third person
and the money or property so received is misapplied
by any partner while it is in the custody of the
partnership.
Article 1824. All partners are liable solidarily with the
partnership for everything chargeable to the
partnership under Articles 1822 and 1823.
[Emphases Supplied]
In essence, these provisions articulate that it is the act of a
partner which caused loss or injury to a third person that
makes all other partners solidarily liable with the partnership
because of the words "any wrongful act or omission of any
partner acting in the ordinary course of the business," "one
partner acting within the scope of his apparent
authority" and "misapplied by any partner while it is in the
custody of the partnership." The obligation is solidary because
the law protects the third person, who in good faith relied
upon the authority of a partner, whether such authority is real
or apparent.40

In the case at bench, it was not shown that Guy or the other
partners did a wrongful act or misapplied the money or
property he or the partnership received from Gacott. A third
person who transacted with said partnership can hold the
partners solidarily liable for the whole obligation if the case of
the third person falls under Articles 1822 or
1823.41 Gacott’s claim stemmed from the alleged defective
transreceivers he bought from QSC, through the latter's
employee, Medestomas. It was for a breach of warranty in a
contractual obligation entered into in the name and for the
account of QSC, not due to the acts of any of the partners. For
said reason, it is the general rule under Article 1816 that
governs the joint liability of such breach, and not the
exceptions under Articles 1822 to 1824. Thus, it was improper
to hold Guy solidarily liable for the obligation of the
partnership.

Finally, Section 21 of the Corporation Code,42 as invoked by

the RTC, cannot be applied to sustain Guy's liability. The said
provision states that a general partner shall be liable for all
debts, liabilities and damages incurred by an ostensible
corporation. It must be read, however, in conjunction with
Article 1816 of the Civil Code, which governs the liabilities of
partners against third persons. Accordingly, whether QSC was
an alleged ostensible corporation or a duly registered
partnership, the liability of Guy, if any, would remain to be
joint and subsidiary because, as previously stated, all
partners shall be liable pro rata with all their property and
after all the partnership assets have been exhausted for the
contracts which may be entered into in the name and for the
account of the partnership.

WHEREFORE, the petition is GRANTED. The June 25, 2012

Decision and the March 5, 2013 Resolution of the Court of
Appeals in CA-G.R. CV No. 94816 are
hereby REVERSED and SET ASIDE. Accordingly, the
Regional Trial Court, Branch 52, Puerto Princesa City,
is ORDERED TO RELEASE Michael C. Guy's Suzuki Grand
Vitara subject of the Notice of Levy/ Attachment upon
Personalty.

SO ORDERED.

137
G.R. No. 194751 November 26, 2014 b. Defendants Heirs of Marcelino Santos[,]
represented by Cristino Santos - OCT No. P-727, Free
AURORA N. DE PEDRO, Petitioner, Patent No. 045802-91-919;
vs.
ROMASAN DEVELOPMENT CORPORATION, Respondent. c. Defendant Aurora de Pedro marriedto Elpidio de
Pedro - OCT No. 691, Free Patent No. 045802-91-
DECISION 914;

LEONEN, J.: d. Defendant Wilson Dadia - OCT No. P-722, Free

Patent No. 045802-91-915; and
Regardless of the type of action - whether it is in personam, in
rem or quasi in rem - the preferred mode of service of e. Defendant Prudencio Marana - OCT No. P-721,
summons is personal service. To avail themselves of Free Patent N[o]. 045802-91-923.9
substituted service, courts must rely on a detailed enumeration
of the sheriff's actions and a showing that the defendant (Emphasis supplied)
cannot be served despite diligent and reasonable efforts. The
sheriff's return, which contains these details, is entitled to a Based on these free patents, the Register of Deeds issued
presumption of regularity, and on this basis, the court may titles covering portions of respondent’s property.10Original
allow substituted service. Should the sheriff's return be Certificate of Title (OCT) No. 691, Free Patent No. 045802-91-
wanting of these details, substituted service will be irregular if 914 was signed by the Provincial Environment and Natural
no other evidence of the efforts to serve summons was Resources Office in favor of De Pedro on December 9, 1991. 11
presented. Failure to serve summons will mean that the court
failed to acquire jurisdiction over the person of the defendant.
Respondent further alleged in its separate complaints that the
However, the filing of a motion for new trial or reconsideration
government could not legally issue the free patents because at
is tantamount to voluntary appearance.
the time of their issuance, the land was already released for
disposition to private individuals.12 OCT No. 438, from which
This Rule 45 petition seeks the review of the Court of Appeals respondent’s TCT No. 236044 originated, was already issued
July 7, 2010 decision in CA G.R. SP. No. 96471. The Court of as early as August 30, 1937.13
Appeals denied petitioner’s action for annulment of the
Regional Trial Court decision, which, in turn, nullified her
Respondent also prayed for the payment of attorney’s fees and
certificate of title.
exemplary damages.14 Attempts to personally serve summons
on De Pedro failed.15 The officer’s return, dated February 22,
This case originated from separate complaints for nullification 1999 reads in part:
of free patent and original certificates of title, filed against
several defendants.1 One of the defendants is petitioner Aurora
OFFICER’S RETURN
De Pedro (De Pedro).2 The complaints were filed by
respondent Romasan Development Corporation before the
Regional Trial Court of Antipolo City on July 7, 1998.3 I HEREBY CERTIFY that on the 15th and 18th day of
February, 1999, I have served a copy of the summons
with complaint and annexes dated January 29, 1999
Respondent Romasan Development Corporation alleged in its
issued by Regional Trial Court, Fourth Judicial Region,
complaints that it was the owner and possessor of a parcel of
Branch 74, Antipolo City upon defendants in the
land in Antipolo City.4 The land was covered by Transfer
above-entitled case on the following, to wit;
Certificate of Title (TCT) No. 236044.5

1. AURORA N. DE PEDRO – Unserved for the reason

Based on respondent’s narrative, its representative, Mr.
that according to the messenger of Post Office of
Rodrigo Ko, discovered sometime in November 1996 that De
Pasig their [sic] is no person in the said given
Pedro put up fences on a portion of its Antipolo property.6 Mr.
address.16
Ko confronted De Pedro regarding her acts, but she was able
to show title and documents evidencing her ownership.7
Respondent filed a motion to serve summons and the
complaint by publication.17
Mr. Ko informed respondent about the documents.8Upon
checking with the Community Environment and Natural
Resources Office Department of Environment and Natural On August 17, 1998, the Regional Trial Court granted the
Resources (CENRO-DENR), it was discovered that the DENR motion.18 The summons and the complaint werepublished in
issued free patents covering portions of respondent’s property People’s Balita on its April 24, May 1, and May 8, 1998
to the following: issues.19 On July 15, 1999, respondent moved to declare all
defendants in its complaints, including De Pedro, in default for
failure to file their answers.20 Respondent also moved to be
a. Defendant Nora Jocson, married to Carlito Jocson -
allowed to present evidence ex parte.21 The Regional Trial
OCT No. P-723, Free Patent No. 045802-91-616;
Court granted the motions on August 19, 1999.22

138
On January 7, 2000, the Regional Trial Court issued an order
declaring as nullity the titles and free patents issued to all
defendants in respondent’s complaint, including the free patent
issued to De Pedro.23 Thus:
Accordingly the Court declares asa nullity the following titles
and Free Patents issued to the Defendants.
a. Defendant Nora Jocson married to Carlito Jocson
OCT No. P-723; Free PatentN[o]. 045802-91-616;
b. Defendant Heirs of Marcelino Santos represented
by Cristino Santos – OCT N[o]. P-727; Free Patent
N[o]. 045802-91-919;
c. Defendant Aurora N. de Pedro married to Elpidio de
Pedro – OCT No. P-691; Free Patent No. 045802-91-
914;
d. Defendant Wilson Dadia – OCT No. P-722; Free
Patent No. 045802-91-915;
e. Defendant Prudencio Marana – OCT No. P-721;
Free Patent N[o]. 045802-91-923.
There being clear bad faith on the part of the Private
defendants in obtaining said Free Patents and titles in their
names covering the portions of the property of the plaintiff,
said defendants are each ordered to pay to the plaintiff the
amount of ₱20,000.00 as attorney’s fees, ₱3,000.00 as
appearance fee and also ₱50,000.00 as moral damages with
costs against said private defendants.
Once the Decision becomes final and in order to give full force
and effect to the Decision of the Court nullifying the titles and
patents issued to the defendants, the latter are directed to
surrender the same within a period of ten (10) days from the
finalityof said Decision to the Registry of Deeds of Marikina City
and failure on the part of the defendants to surrender the
owner’s duplicate of the titles in their possession, defendant
Register of Deeds of Marikina City is authorized to cancel the
same without the presentation of said owner’s duplicate oftitles
in the possession of the defendants.24 (Emphasis supplied)
In so ruling, the Regional Trial Court noted that none of the
defendants, including De Pedro, filed an answer to
respondent’s complaints.25 The Regional Trial Court also noted
the committee report admitting CENRO’s irregularity in the
issuance of the free patents to the defendants in the case.26
The Regional Trial Court also found that the title and free
patent issued to De Pedro were void.27 As early as August 30,
1937, or before the free patents were issued to the defendants
in the case, OCT No. 438 was already issued to the property’s
original owner.28 Hence, the property was already "segregated
from the mass of public domain" that can be disposed by the
government.29
On March 30, 2000, De Pedro, through counsel, filed before
the Regional Trial Court a motion for new trial, alleging that
139
the counsel received notice of the January 7, 2000 decision on
March 16, 2000.30
De Pedro argued that the Regional Trial Court did not acquire
jurisdiction over her person because of improper and defective
service of summons. Citing the officer’s return dated February
22,1999, De Pedro pointed out that summons was not
personally served upon her "for the reason that according to
the messenger of Post Office of Pasig their (sic) is no person in
the saidgiven address."31
De Pedro also argued that the case should have been
dismissed on the ground of litis pendentia. She alleged that
there was a pending civil case filed by her, involving the same
property, when respondent filed the complaints against her
and several others.32
On September 30, 2002, the Regional Trial Court issued an
order denying De Pedro’s motion for new trial.33
The Regional Trial Court ruled that summons was validly
served upon De Pedro through publication, in accordance with
the Rules of Court.34 Moreover, counting from the date of the
summons’ publication beginning on March 2, 2000, the motion
for new trial was filed beyond the 15-day period within which
the motion may be filed.35 Therefore, the Regional Trial Court
decision had become final and executory.36
The Regional Trial Court also ruled that the reckoning period
for filing the motion for new trial cannot be De Pedro’s
counsel’s receipt of the decision. This is because at the time of
the issuance of the court’s decision, which had already become
final and executory, De Pedro’s counsel was yet to enter his
appearance for De Pedro.37
De Pedro filed a petition for certiorari before the Court of
Appeals, alleging that the Regional Trial Court committed
grave abuse of discretion when it denied her motion for new
trial.38
On March 30, 2006, the Court of Appeals dismissed the
petition for certiorari for lack of merit, and affirmed the denial
of De Pedro’s motion for new trial.39
The Court of Appeals noted De Pedro’s belated filing of her
motion for new trial. The Court of Appeals also noted De
Pedro’s failure to allege any ground that would justify the
grant of a motion for new trial under Rule 37, Section 1 of the
Revised Rules of Civil Procedure.40
De Pedro’s motion for reconsideration was denied in the Court
of Appeals resolution dated August 24, 2006.41
De Pedro elevated the case to this court, but this was likewise
denied in the resolution dated October 4, 2006 for failure to
pay the Special Allowance for the Judiciary and sheriff’s fees.42
On October 11, 2006, De Pedro filed before the Court of
Appeals a petition for annulment of the January 7, 2000
judgment of the Regional Trial Court43 on grounds of lack of
jurisdiction, litis pendentia, and for having been dispossessed
of her property without due process.
Citing Pantaleon v. Asuncion,44 De Pedro pointed out that
"[d]ue process of law requires personal service to support a
personal judgment, and, when the proceeding is strictly in
personam brought to determine the personal rights and
obligations of the parties, personal service within the state or a
voluntary appearance in the case is essential to the acquisition
of jurisdiction [so] as to constitute compliance with the
constitutional requirement of due process."45
De Pedro also claimed to be the real owner of the property by
virtue of OCT No. P-691.46 She pointed out that the same
Regional Trial Court branch ordered the reconstitution ofher
title to the property in 1997. 47 The Regional Trial Court also
issued a certificate of finality stating that "an Entry of
Judgment had already been issued by the Court of Appeals
dated January 16, 2006."48
On July 7, 2010, the Court of Appeals promulgated its decision
denying De Pedro’s petition for annulment of judgment.49 The
dispositive portion of the Court of Appeals decision reads:
WHEREFORE, this petition is hereby DENIED.50
The Court of Appeals ruled that since petitioner already availed
herself of the remedy of new trial, and raised the case before
the Court of Appeals via petition for certiorari, she can no
longer file a petition for annulment of judgment.51
De Pedro’s motion for reconsideration was denied on
December 3, 2010:52
WHEREFORE, premises considered, the motion for
reconsideration is DENIED for lack of merit.53
On January 13, 2011, De Pedro filed before this court a Rule
45 petition, seeking the reversal of the July 7, 2010 Court of
Appeals decision and the December 3, 2010 Court of Appeals
resolution.54
The issues in this case are:
I. Whether the trial court decision was void for failure
of the trial court to acquire jurisdiction over the
person of petitioner Aurora N. De Pedro; and
II. Whether filing a motion for new trial and petition
for certiorari is a bar from filing a petition for
annulment of judgment.
Petitioner argues that respondent’s prayer for attorney’s fees,
appearance fees, exemplary damages, and costs of suit sought
to establish personal obligations upon petitioner in favor of
respondent.55 Hence, the case filed by respondent before the
Regional Trial Court was an action in personam, which
required personal service upon her for the court’s acquisition of
jurisdiction over her person.56 In this case, the Regional Trial
Court allowed service of summons by publication instead of
ordering that summons be served by substituted
140
service.57 Improper service of summons rendered the trial
court decision null and void.58 It means that the court could
not acquire jurisdiction over the person of petitioner.59
Petitioner also argues that respondent’s complaints were
dismissible on the ground of litis pendentia, pointing to the
alleged pending case between the same parties and involving
same subject matter at the time when respondent filed its
complaint before the Regional Trial Court in 1998.60 The
alleged pending case was filed in 1997 by petitioner and her
spouse against respondent, seeking "enforce[ment] of their
rights as owners, and claim[ing] damages for the unlawful and
illegal acts of dispossession, terrorism and violence which they,
their family and their close relatives were subjected to by
[respondent]."61
On her ownership of the property, petitioner argues that she
was able to obtain OCT No. P-691 in 1991 in strict and faithful
compliance with all the requirements.62 When the Register of
Deeds lost the records pertaining to the property, the Regional
Trial Court ordered the reconstitution of the title on September
23, 1997.63 The same trial court issued the certificate of finality
of the order on March 16, 2006.64
Moreover, petitioner refersto a counter-affidavit issued by a
certain Jesus Pampellona, Deputy Public Land Inspector of
CENRO-Antipolo, in the preliminary investigation of a case
before the Department of Justice, docketed as I.S. No. 99-503
and entitled: "Rodrigo Sy v. Maximo Pentino, et al." Petitioner
highlights Pampellona’sstatements that the free patent
applicants for the property were found to be in "actual, public,
adverse and continuous possession on the specific lots applied
for by them with several improvements like the house of Mrs.
Aurora de Pedro and several fruit[-]bearing trees with an
average age of 20-25 years scattered within the twelve (12)
hectares area applied for by the above named
applicants;"65 Based on the affidavit, Pampellona was
"unaware, at the time, of any previous title issued in favor of
any person or entity covering the subject lots above mentioned
as there was at that time, no existing record, both in the
CENRO, Antipolo, Rizal, or at the Land Management Bureau in
Manila, attesting to the issuance of previous titles on the
subject lots."66
Lastly, petitioner argues that the trial court decision was null
and void, considering that petitioner’s title was cancelled in
contravention of Section 48 of Presidential Decree No. 1529,
which prohibits collateral attack upon certificates of title.67
In its comment, respondent argues that the process server
tried other forms of substituted service, including service by
registered mail.68
Respondent also argues that petitioner was in evident malice
and bad faith when she allegedly did not disclose in her
petition other actions taken by her after the Regional Trial
Court had denied her motion for new trial.69Particularly,
petitioner filed a petition for certiorari before the Court of
Appeals, pertaining to the trial court’s denial of the motion for
new trial.70
When the petition for certiorari was denied, petitioner also filed
a petition for review before this court, which was also
denied.71 For these reasons, petitioner’s petition for review
before this court deserves outright dismissal.72
I Courts need not acquire jurisdiction over parties on this basis
The sheriff’s return must show the
details of the efforts exerted to
personally serve summons upon
defendants or respondents, before
substituted service or service by
publication is availed
Courts may exercise their powers validly and with binding
effect if they acquire jurisdiction over: (a) the cause of action
or the subject matter of the case; (b) the thing or the res; (c)
the parties; and (d) the remedy.
Jurisdiction over the subject matter refers to the power or
authority of courts to hear and decidecases of a general
class.73 It is conferred by the Constitution or by law.74 It is not
acquired through administrative issuances or court orders. It is
not acquired by agreement, stipulation, waiver,75 or
silence.76 Any decision by a court, withouta law vesting
jurisdiction upon such court, is void.
Jurisdiction over the thing or res is the power of the court over
an object or thing being litigated. The court may acquire
jurisdiction over the thing by actually or constructively seizing
or placing it under the court’s custody.77
Jurisdiction over the parties refers tothe power of the court to
make decisions that are binding on persons. The courts
acquire jurisdiction over complainants or petitioners as soon as
they file their complaints or petitions. Over the persons of
defendants or respondents, courts acquire jurisdiction by a
valid service of summons or through their voluntary
submission.78 Generally, a person voluntarily submits tothe
court’s jurisdiction when he or she participates in the trial
despite improper service of summons.
Courts79 and litigants must be aware of the limits and the
requirements for the acquisition of court jurisdiction. Decisions
or orders issued by courts outside their jurisdiction are void.
Complaints or petitions filed before the wrong court or without
acquiring jurisdiction over the parties may be dismissed.80
Petitioner argued that the trial court did not acquire jurisdiction
over her person because she was not properly served with
summons. After the summons had returned unserved to
petitioner because "there [was] no person in the said given
address,"81 the trial court allowed the publication of the
summons to petitioner.
Jurisdiction over the parties is required regardless of the type
of action — whether the action is in personam, in rem, or quasi
in rem.
141
In actions in personam, the judgment is for or against a
person directly.82 Jurisdiction over the parties is required in
actions in personam because they seek to impose personal
responsibility or liability upon a person.83
in in rem and quasi in rem actions. Actions in remor quasi in
remare not directed against the person based on his or her
personal liability.84
Actions in remare actions against the thing itself. They are
binding upon the whole world.85 Quasi in remactions are
actions involving the status of a property over which a party
has interest.86 Quasi in rem actions are not binding upon the
whole world. They affect only the interests of the particular
parties.87
However, to satisfy the requirements of due process,
jurisdiction over the parties in in rem and quasi in rem actions
is required.
The phrase, "against the thing," to describe in rem actions is a
metaphor. It is not the "thing" that is the party to an in rem
action; only legal or natural persons may be parties even in in
rem actions. "Against the thing" means that resolution of the
case affects interests of others whether direct or indirect. It
also assumes that the interests — in the form of rights or
duties — attach to the thing which is the subject matter of
litigation. In actions in rem, our procedure assumes an active
vinculum over those with interests to the thing subject of
litigation.
Due process requires that those with interest to the thing in
litigation be notified and given an opportunity to defend those
interests. Courts, as guardians of constitutional rights, cannot
be expected to deny persons their due process rights while at
the same time be considered as acting within their jurisdiction.
Violation of due process rights is a jurisdictional defect. This
court recognized this principle in Aducayen v. Flores.88In the
same case, this court further ruled that this jurisdictional
defect is remedied by a petition for certiorari.89
Similarly in Vda. de Cuaycong v. Vda. de Sengbengco, 90 this
court held that a decision that was issued in violation of a
person’s due process rights suffers a fatal infirmity.91
The relation of due process to jurisdiction is recognized even in
administrative cases wherein the standard of evidence is
relatively lower. Thus, in Montoya v. Varilla:92
The cardinal precept is that where there is a violation of basic
constitutional rights, courts are ousted from their jurisdiction.
The violation of a party’s right to due process raises a serious
jurisdictional issue which cannot be glossed over or
disregarded at will. Where the denial of the fundamental right
of due process is apparent, a decision rendered in disregard of
that rightis void for lack of jurisdiction.93
An action for annulment of certificate of title is quasi in rem. It
is not an action "against a person on the basis of his personal
liability,"94 but an action that subjects a person’s interest over
a property to a burden. The action for annulment of a
certificate oftitle threatens petitioner’s interest in the property.
Petitioner is entitled to due process with respect to that
interest. The court does not have competence or authority to
proceed with an action for annulment of certificate of title
without giving the person, in whose name the certificate was
issuedall the opportunities to be heard.
Hence, regardless of the nature of the action, proper service of
summons is imperative. A decision rendered without proper
service of summons suffers a defect in jurisdiction.
Respondent’s institution of a proceeding for annulment of
petitioner’s certificate of title is sufficient to vest the court with
jurisdiction over the res, but it is not sufficient for the court to
proceed with the case with authority and competence.
Personal service of summons is the preferred mode of service
of summons.95 Thus, as a rule, summons must be served
personally upon the defendant or respondent wherever he or
she may be found. If the defendant or respondent refuses to
receive the summons, it shall be tendered to him or her.96
If the defendant or respondent is a domestic juridical person,
personal service of summons shall be effected upon its
president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel wherever he or she
may be found.97
Other modes of serving summons may be done when justified.
Service of summons through other modes will not be effective
without showing serious attempts to serve summons through
personal service. Thus, the rules allow summons to be served
by substituted service only for justifiable causes and if the
defendant or respondent cannot be served within reasonable
time.98 Substituted service is 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."99
Service of summons by publication in a newspaper of general
circulation is allowed when the defendant or respondent is
designated as an unknown owner or if his or her whereabouts
are "unknown and cannot be ascertained by diligent
inquiry."100 It may only be effected after unsuccessful attempts
to serve the summons personally, and after diligent inquiry as
to the defendant’s or respondent’s whereabouts.
Service of summons by extra territorial service is allowed after
leave of court when the defendant or respondentdoes not
reside or is not found in the country or is temporarily out of
the country.101
If a defendant or respondent voluntarily appears in trial or
participates in the proceedings, it is generally construed as
sufficient service of summons.102
In this case, summons was served by publication.
142
A look into the content of the sheriff’s return will determine if
the circumstances warranted the deviation from the rule
preferring personal service of summons over other modes of
service. The sheriff’s return must contain a narration of the
circumstances showing efforts to personally serve summons to
the defendants or respondents and the impossibility of
personal service of summons. Citing Hamilton v. Levy,103 this
court said of substituted service in Domagas v. Jensen:104
The pertinent facts and circumstances attendant to the service
of summons must be stated in the proof of service or Officer’s
Return; otherwise, any substituted service made in lieu of
personal service cannot be upheld. This is necessary because
substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and hence
may be used only as prescribed and in the circumstances
authorized by statute. Here, no such explanation was made.
Failure to faithfully, strictly, and fully comply with the
requirements of substituted service renders said service
ineffective.105
This court also said in Manotoc v. Court of Appeals:
The date and time of the attempts on personal service, the
inquiries made to locate the defendant, the name/s of the
occupants of the alleged residence or house of defendant and
all other acts done, though futile, to serve the summons on
defendant must be specified in the Return to justify substituted
service. The form on Sheriff’s Return of Summons on
Substituted Service prescribed in the Handbook for Sheriffs
published by the Philippine Judicial Academy requires a
narration of the efforts made to find the defendant personally
and the fact of failure.
....
However, in view of the numerous claims of irregularities in
substituted service which have spawned the filing of a great
number of unnecessary special civil actions of certiorari and
appeals to higher courts, resulting in prolonged litigation and
wasteful legal expenses, the Court rules in the case at bar that
the narration of the efforts made to find the defendant and the
fact of failure written in broad and imprecise words will not
suffice. The facts and circumstances should be stated with
more particularity and detail on the number of attempts made
at personal service, dates and times of the attempts, inquiries
to locate defendant, names of occupants of the alleged
residence, and the reasons for failure should be included in the
Return to satisfactorily show the efforts undertaken. That such
efforts were made to personally serve summons on defendant,
and those resulted in failure, would prove impossibility of
prompt personal service.
Moreover, to allow sheriffs to describe the facts and
circumstances in inexact terms would encourage routine
performance of their precise duties relating to substituted
service—for it would be quite easy to shroud or conceal
carelessness or laxity in such broad terms.106
A sheriff’s return enjoys the presumption of regularity in its
issuance if it contains (1) the details of the circumstances
surrounding the sheriff’s attempt to serve the summons
personally upon the defendants or respondents; and (2) the
particulars showing the impossibility of serving the summons
within reasonable time.107 It does not enjoy the presumption of
regularity if the return was merely pro forma.
Failure to state the facts and circumstances that rendered
service of summons impossible renders service of summons
and the return ineffective. In that case, no substituted service
orservice by publication can be valid.
This court in Manotoc explained that the presumption of
regularity in the issuance of the sheriff’s return does not apply
to patently defective returns. Thus:
The court a quoheavily relied on the presumption of regularity
in the performance of official duty. It reasons out that "[t]he
certificate of service by the proper officer is prima
facieevidence of the facts set out herein, and to overcome the
presumption arising from said certificate, the evidence must be
clear and convincing."
The Court acknowledges that this ruling is still a valid doctrine.
However, for the presumption to apply, the Sheriff’s Return
must show that serious efforts or attempts were exerted to
personally serve the summons and that said efforts failed.
These facts must be specifically narrated in the Return. To
reiterate, it must clearly show that the substituted service must
be made on a person of suitable age and discretion living in
the dwelling or residence of defendant. Otherwise, the Return
is flawed and the presumption cannot be availed of. As
previously explained, the Return of Sheriff Cañelas did not
comply with the stringent requirements of Rule 14, Section 8
on substituted service. (Emphasis supplied)
In the case of Venturanza v. Court of Appeals,it was held that
"x x x the presumption of regularity in the performance of
official functions by the sheriff is not applicable in this case
where it is patent that the sheriff’s return is defective."
(Emphasis supplied) While the Sheriff’s Return in the
Venturanza case had no statement on the effort or attempt to
personally serve the summons, the Return of Sheriff Cañelas in
the case at bar merely described the efforts or attempts in
general terms lacking in details as required by the ruling in the
case of Domagas v. Jensen and other cases. It is as if Cañelas’
Return did not mention any effort to accomplish personal
service. Thus, the substituted service is void.108
In this case, the sheriff’s return states:
OFFICER’S RETURN
I HEREBY CERTIFY that on the 15th and 18th day of
February, 1999, I have served a copy of the summons
with complaint and annexes dated January 29, 1999
issued by Regional Trial Court, Fourth Judicial Region,
Branch 74, Antipolo City upon defendants in the
above-entitled case on the following, to wit;
1. AURORA N. DE PEDRO – Unserved for the reason
that according to the messenger of Post Office of
143
Pasig their [sic] is no person in the said given
address.109
This return shows no detail of the sheriff’s efforts to serve the
summons personally upon petitioner. The summons was
unserved only because the post office messenger stated that
there was no "Aurora N. De Pedro" in the service address. The
return did not show that the sheriff attempted to locate
petitioner’s whereabouts. Moreover, it cannot be concluded
based on the return that personal service was rendered
impossible under the circumstances or that service could no
longer be made within reasonable time.
The lack of any demonstration of effort on the part of the
sheriff to serve the summons personally upon petitioner is a
deviation from this court’s previous rulings that personal
service isthe preferred mode of service, and that the sheriff
must narrate in his or her return the efforts made to effect
personal service. Thus, the sheriff’s return in this case was
defective. No substituted service or service by publication will
be allowed based on such defective return.
The issuance of a judgment without proper service of
summons is a violation of due process rights. The judgment,
therefore, suffers a jurisdictional defect. The case would have
been dismissible had petitioner learned about the case while
trial was pending. At that time, a motion to dismiss would have
been proper. After the trial, the case would have been the
proper subject of an action for annulment of judgment.
Petitioner learned about the action for annulment of title only
after trial. Instead of filing an action for annulment of
judgment, however, she filed a motion for new trial without
alleging any proper ground. Rule 37 of the Rules of Court
provides that a party may move and the court may grant a
new trial based on the following causes:
(a) Fraud, accident, mistake or excusable negligence which
ordinary prudence could not have guarded against and by
reason of which such aggrieved party has probably been
impaired in his rights; or
(b) Newly discovered evidence, which he could not, with
reasonable diligence, have discovered and produced at the
trial, and which if presented would probably alter the result.110
Petitioner insisted in her motion for new trial that the trial
court did not acquire jurisdiction over her person. She did not
allege that fraud, accident, mistake, or excusable negligence
impaired her rights. Neither did she allege that she found
newly discovered evidence that could have altered the trial
court decision. When her motion for new trial was denied, she
filed a petition for certiorari, insisting that her motion for new
trial should have been granted on the ground of lack of
jurisdiction over her person. The Court of Appeals denied the
petition for her failure to allege any ground for new trial. We
cannot attribute error on the part of the Court of Appeals for
this denial because, indeed, lack of jurisdiction is not a ground
for granting a new trial.
What cannot be denied is the fact that petitioner was already
notified of respondent’s action for annulment of petitioner’s
title when she filed a motion for new trial and, later, a petition
for certiorari. At that time, petitioner was deemed, for
purposes of due process, to have been properly notified of the
action involving her title tothe property. Lack of jurisdiction
could have already been raised in an action for annulment of
judgment.
Thus, when petitioner erroneously filed her motion for new
trial and petition for certiorari instead of an action for
annulment of judgment, she was deemed to have voluntarily
participated in the proceedings against her title. The actions
and remedies she chose to avail bound her. Petitioner’s failure
to file an action for annulment of judgment at this time was
fatal to her cause. We cannot conclude now that she was
denied due process.
II
Petitioner is already barred from
filing a petition for annulment of
judgment
A petition for annulment of judgment is a recourse that is
equitable in character.111 It is independent of the case112and is
"allowed only in exceptional cases as where there isno
available or other adequate remedy."113
An action for annulment of judgment may be filed to assail
Regional Trial Court judgments when resort toother remedies
can no longer be had through no fault of petitioner. Section 1
of Rule 47 of the Rules of Civil Procedure provides:
Section 1. Coverage. – This Rule shall govern the annulment
by the Court of Appeals of judgments or final orders and
resolutions in civil actions of Regional Trial Courts for which
the ordinary remedies of new trial, appeal, petition for relief or
other appropriate remedies are no longer available through no
fault of the petitioner.
An action for annulment of judgment may be based on only
two grounds: 1) extrinsic fraud; and 2) lack of jurisdiction.
Section 2 of Rule 47 of the Rules of Court states:
Section 2. Grounds for Annulment. – The annulment may be
based only on the grounds of extrinsic fraud and lack of
jurisdiction.
Extrinsic fraud shall not be a valid ground if it was availed of,
or could have been availed of, in a motion for new trial or
petition for relief.
Lack of jurisdiction being a valid ground for annulment of
judgments, circumstances that negate the court’s acquisition of
jurisdiction — including defective service of summons — are
causes for an action for annulment of judgments.114
However, this court had an occasion to say that an action for
annulment of judgment "may not be invoked (1) where the
144
party has availed himself of the remedy of new trial, appeal,
petition for relief, or other appropriate remedy and lost; or (2)
where he has failed to avail himself of those remedies through
his own fault or negligence."115 Thus, an action for annulment
of judgment is not always readily available even if there are
causes for annulling a judgment.
In this case, petitioner’s main grounds for filing the action for
annulment are lack of jurisdiction over her person, and litis
pendentia. These are the same grounds that were raised in the
motion for new trial filed before and denied by the Regional
Trial Court.
Applying the above rules, we rule that the Court of Appeals did
not err in denying petitioner’s petition for annulment of the
Regional Trial Court’s judgment. Petitioner had already filed a
motion for new trial and petition for certiorari invoking lack of
jurisdiction as ground.
Petitioner’s filing of the petition for annulment of judgment
after she had filed a motion for new trial and lost, with both
actions raising the same grounds, reveals an intent to secure a
judgment in her favor by abusing and making a mockery of the
legal remedies provided by law.
This kind of abuse is what this court tries to guard against
when it limited its application, and stated in some of the cases
that an action for annulment of judgment cannot be invoked
when other remedies had already been availed.
As this court explained in Macalalag v. Ombudsman:116
Rule 47, entitled "Annulment of Judgments or Final Orders and
Resolutions," is a new provision under the 1997 Rules of Civil
Procedure albeit the remedy has long been given imprimatur
by the courts. The rule covers "annulment by the Court of
Appeals of judgments or final orders and resolutions in civil
actions of Regional Trial Courts for which the ordinary
remedies of new trial, appeal, petition for relief or other
appropriate remedies could no longer beavailed of through no
fault of the petitioner." An action for annulment of judgment is
a remedy in law independent of the case where the judgment
sought to be annulled is rendered. The concern that the
remedy could soeasily be resorted to as an instrument to delay
a final and executory judgment, has prompted safeguards to
be put in place in order to avoid an abuse of the rule. Thus,
the annulment of judgment may be based only on the grounds
of extrinsic fraud and lack of jurisdiction, and the remedy may
not be invoked (1) where the party has availed himself of the
remedy of new trial, appeal, petition for relief or other
appropriate remedy and lost therefrom, or (2) where he has
failed to avail himself of those remedies through his own fault
or negligence.117 (Emphasis supplied)
Similarly, this court ruled in Sigma Homebuilding Corporation
v. Inter-Alia Management Corporation, et al.:118
A petition for annulment of judgment is an extraordinary
remedy and is not to be granted indiscriminately by the Court.
It is allowed only in exceptional cases and cannot beused by a
losing party to make a mockery of a duly promulgated decision
long final and executory. The remedy may not be invoked
where the party has availed himself of the remedy ofnew trial,
appeal, petition for relief or other appropriate remedy and lost,
or where he has failed to avail himself of those remedies
through his own fault or negligence.
Litigation must end sometime. It is essential to an effective
and efficient administration of justice that, once a judgment
becomes final, the winning party should not be deprived of the
fruits of the verdict. Courts must therefore guard against any
scheme calculated to bring about that undesirable result. Thus,
we deem it fit to finally put an end to the present
controversy.119 (Emphasis supplied)
Thus, an action for annulment of judgment "will not so easily
and readily lend itself to abuse by parties aggrieved by final
judgments."120 Petitioner cannot abuse the court’s processes to
revive a case that has already been rendered final against her
favor, for the purpose of securing a favorable judgment. An
action for annulment of judgment cannot be used by petitioner
who has lost her case through fault of her own, to make "a
complete farce of a duly promulgated decision that has long
become final and executory."121
III
Filing an action for annulment of
title is not a violation of Section 48
of Presidential Decree No. 1529
Petitioner insists that the annulment of her title was a violation
of Section 48 of Presidential Decree No. 1529, which provides:
Sec. 48. Certificate not subject to collateral attack. – A
certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or cancelled except in a direct
proceeding in accordance with law.
Petitioner is mistaken. In Sarmiento, et al. v. Court of
Appeals,122 this court said:
An action is deemed an attack on a title when the object of the
action or proceeding is to nullify the title, and thus challenge
the judgment pursuant to which the title was decreed. The
attack is direct when the object of the action is to annul or set
aside such judgment, or enjoin its enforcement. On the other
hand, the attack is indirect or collateral when, in an action to
obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof.123
An action for annulment of certificate of title is a direct attack
on the title because it challenges the judgment decree of title.
In Goco v. Court of Appeals,124 this court said that "[a]n action
for annulment of certificates of title to property [goes] into the
issue of ownership of the land covered by a Torrens title and
the relief generally prayed for by the plaintiff is to be declared
as the land’s true owner."125 Hence, there was no violation of
145
Section 48 of Presidential Decree No. 1529 when petitioner’s
title was declared null and void by the Regional Trial Court.
Petitioner, however, points to the following statement made by
this court in another case involving these same parties:126
The resolution of the issue will not involve the alteration,
correction or modification either of OCT No. P-691 under the
name of petitioner Aurora de Pedro, or TCT No. 236044 under
the name of respondent corporation. If the subject property is
found to be a portion of the property covered by OCT No. P-
691 but is included in the technical description of the property
covered by TCT No. 236044, the latter would have to be
corrected. On the other hand, if the subject property is found
to be a portion of the property covered by TCT No. 236044,
but is included in the property covered by OCT NO. P-691,
then the latter title must be rectified. However, the rectification
of either title may be made only via an action filed for the said
purpose, comformably with Section 48 of Act No. 496
....
A. The action of the petitioners against respondents, based on
the material allegations of the complaint, if one for recovery of
possession of the subject property and damages. However,
such action is not a direct but a collateral attack ofTCT No.
236044. Neither did the respondents directly attack OCT No. P-
691 in their answer to the complaint. Although the
respondents averred in said answer, by way of special and
affirmative defenses, that the subject property is covered by
TCT No. 236044 issued in the name of the respondent
corporation, and as suchthe said respondent is entitled to the
possession thereof to the exclusion of the petitioners, such
allegations does not constitute a direct attack on OCT No. P-
691, but is likewise a collateral attack thereon...127
Petitioner misreads the import of what wesaid in that case.
That case involves petitioner’s action for recovery of
possession and damages against respondents. It also involved
respondent’s allegations that the property was covered by a
certificate of title in its name and, therefore, its entitlement to
the possession of the property. It does not involve an action
for annulment of title. When this court said that "such action is
not a direct but a collateral attack of TCT No. 236044" or that
"such allegations does [sic] not constitute a direct attack on
OCT No. P-691, butis likewise a collateral attack thereon," we
were referring to both parties’ action for and allegations of
possessory rights over the property. This court was not
referring to an action for annulment of title, which is the case
involved here. To reiterate, an action for annulment constitutes
a direct attack on a certificate of title.
IV
The requisites of litis pendentia are
not satisfied when respondent filed
its action for annulment of title
Petitioner argued that the case for annulment of title was
dismissible on the ground of litis pendentia because there was
a pending civil case filed by her against respondent.
The requisites of litis pendentia are: "(a) identity of parties, or
interests in both actions; (b) identity of rights asserted and
relief prayed for, the relief being founded on the same facts;
and (c) the identity of the two preceding particulars is such
that any judgment rendered in the other action, will,
regardless of which party is successful, amount to res judicata
in the action under consideration.128
Although both cases involve the sameparcel of land, petitioner
was not able to show that there was identity of the relief
prayed for. A review of the complaint in the said civil case
shows that it was a case for damages, for alleged improper
conduct of respondent relating the property. The action filed
by respondent was an action for annulment of petitioner’s 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[.] (Emphasis supplied)
In this case, the trial court, by annulling petitioner’s certificate
of title and declaring its issuance irregular, directly adjudged
petitioner’s certificate of title as void. Because petitioner failed
to appeal and cause the annulment of the trial court’s
judgment as to her title’s validity, this question is already
barred. This judgment has already attained finality and can no
longer be litigated.
This court explained in FGU Insurance Corporation v. Regional
Trial Court131 the doctrine of finality of judgment, thus:

Petitioner was also not able to show that the relief prayed for
in both cases were founded on the same facts. Petitioner’s
complaint for damages was founded on the alleged misconduct
of respondent. Respondent’s action for annulment of title was
founded on the alleged irregularity in the issuance of
petitioner’s title.
Hence, the petitioner was not able toshow that all the
requisites for litis pendentiaare present. Respondent’s action
for annulment of title cannot be dismissed on this ground.
V title was issued later than the title from which respondent’s
A certificate of title does not vest ownership
Under the doctrine of finality of judgment or immutability of
judgment, a decision that has acquired finality becomes
immutable and unalterable, and may no longer be modified in
any respect, even if the modification is meant to correct
erroneous conclusions of fact and law, and whether it bemade
by the court that rendered it or by the Highest Court of the
land. Any act which violates this principle must immediately be
struck down.132
In any case, even if petitioner’s original certificate of title was
not irregularly issued as she claims, her original certificate of
title originated. As a rule, original titles issued earlier prevail
over another original title issued later.133

Petitioner argues that her certificate of title was erroneously Therefore, petitioner's later-issued title cannot prevail over
declared null and void because based on OCT No. P-691, she is respondent's title, which was derived from an earlier issued
the real owner of the property. original certificate of title.

It is true that certificates of titleare indefeasible and binding WHEREFORE, the petition is DENIED; The Court of Appeals
upon the whole world.1âwphi1 However, certificates of title do July 7, 2010 decision in CA G.R. SP. No. 96471 is AFFIRMED.
not vest ownership.129 They merely evidence title or ownership
of the property.130 Courts may, therefore, cancel or declare a SO ORDERED.
certificate of title null and void when it finds that it was issued
irregularly. MARVIC M.V.F. LEONEN
A
In this case, the trial court ruled based on the committee
report that the free patents and original certificate of title
issued to petitioner were irregularly issued, and, therefore,
invalid.

The principle of "bar by prior judgment" is embodied in Rule

39, Section 47(b) of the Rules of Court:

Section 47. Effect of judgments or final orders. — The effect of

a judgment or final order rendered by a court of the
Philippines, having jurisdiction to pronounce the judgment or
final order, may be as follows:

....

(b) In other cases, the judgment or final order is, with respect
to the matter directly adjudged or asto any other matter that
could have been missed in relation thereto, conclusive
between the parties and their successors in interest,by title
146
G.R. No. 200180, June 06, 2016
BENJAMIN H. CABAÑEZ, Petitioner, v. MARIE JOSEPHINE
CORDERO SOLANO A.K.A. MA. JOSEPHINE S.
CABAÑEZ, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to
reverse and set aside the Amended Decision1 and
Resolution2 of the Court of Appeals (CA), dated August 29,
2011 and January 10, 2012, respectively, in CA-G.R. SP No.
101406.
Subject of the present controversy are two (2) parcels of land
located in Alabang Hills, Muntinlupa, with land areas measuring
739 and 421 square meters, and are covered by Transfer
Certificates of Title Nos. 154626 and 154627, respectively.
Appearing on the face of these titles as the registered owner is
herein respondent, "Maria Josephine S. Cabañez, of legal age,
married to [herein petitioner] Benjamin H. Cabañez x x x."
On February 12, 2007, respondent filed with the Regional Trial
Court (RTC) of Muntinlupa City a "Petition for Correction of the
Name and Marital Status of the Registered Owner of Transfer
Certificates of Title (TCT) No[s.] 154626 and 154627 of the
Registry of Deeds for Muntinlupa City."3 The petition was
docketed as LRC Case No. 07-007 and raffled to Branch 203.
In the said petition, respondent alleged as follows:
chanRoblesvirtualLawlibrary
x x x x
1. Petitioner is of legal age, single and a resident of #21 Dona
Ines St., Alabang Hills Village, Muntinlupa City;
2. Petitioner is the owner of two parcels of land situated in
Alabang, Muntinlupa City covered by Transfer Certificates of
Title No. 154626 and 154627 issued by the Registry of Deed
for Muntinlupa, though the same were issued under the name
Ma Josephine S. Cabañez, married to Benjamin H. Cabañez. x
x x
3. Without knowing the legal implication, Petitioner
erroneously made it appear that she is married to Mr.
Benjamin when in truth and in fact they are not married but
merely living a common-law relationship
4. Mr. Benjamin H. Cabañez is actually married to a certain
Leandra D. Cabañez who had previously filed a case against
Petitioner, questioning the ownership of the said properties
which case however was terminated by virtue of a compromise
approved by the court in an Order dated November 23, 2000.
xxx
5. Mr. Benjamin H. Cabañez has also declared that he is not
actually married to the Petitioner and that he has no interest or
share whatsoever in the aforesaid properties as evidenced by
the hereto attached copy of the Affidavit of Declaration Against
Interest dated January 22, 2007. x x x present sufficient evidence to prove compliance with such
147
6. No interests or rights will be affected by the correction of
the name and status of Petitioner as registered owner of the
said properties.
PRAYER
WHEREFORE, it is respectfully prayed of this Honorable Court
that Petitioner's name and marital status appearing in Transfer
Certificates of Title No. 154626 and 154627 be corrected to
(sic) from "MA. JOSEPHINE S. CABAÑEZ, married to BENJAMIN
H. CABAÑEZ" to ["]MARIE JOSEPHINE C. SOLANO, single" as it
is the true and actual status of petitioner.
x x x x4ChanRoblesVirtualawlibrary
The RTC then conducted hearings where respondent presented
her evidence ex parte.
On June 28, 2007, the RTC of Muntinlupa, Branch 203,
rendered its Decision, the dispositive portion of which reads as
follows:
chanRoblesvirtualLawlibrary
WHEREFORE, finding the petition to be well-founded and
meritorious, the same is hereby GRANTED.
Accordingly, the Register of Deeds of Muntinlupa City is
directed to cause the correction of the name and civil status of
the registered owner of Transfer Certificate of Title Nos.
154626 and 154627 from MA. JOSEPHINE S. CABAÑEZ,
married to BENJAMIN H. CABAÑEZ, to MARIE JOSEPHINE C.
SOLANO, single.
SO ORDERED.5ChanRoblesVirtualawlibrary
The RTC held that from the evidence presented by herein
respondent, it has been satisfactorily established that the
subject properties should indeed be in respondent's name and
that her status should be "single".
On November 23, 2007, herein petitioner filed with the CA a
Petition for Annulment of Judgment6assailing the above
Decision of the RTC on the ground that the said trial court did
not acquire jurisdiction over the subject matter of the case
because respondent's petition was not published in a
newspaper of general circulation and that petitioner and other
persons who may have interest in the subject properties were
not served summons.
On January 27, 2011, the CA rendered a Decision, disposing as
follows:
chanRoblesvirtualLawlibrary
WHEREFORE, the instant Petition for Annulment of
Judgment is hereby GRANTED. The Decision dated 28 June
2007 of the Regional Trial Court of Muntinlupa City, Branch
203, in LRC Case No. 07-007, is ANNULLED and SET ASIDE.
SO ORDERED.7ChanRoblesVirtualawlibrary
The CA ruled, among others, that respondent's petition for
correction of her name and marital status as appearing in the
subject TCTs should have been published in accordance with
Rule 108 of the Rules of Court and that respondent failed to
requirement. The appellate court also held that respondent
also failed to serve summons upon petitioner, which is in
violation of the latter's right to due process and of the principle
of fair play.
Respondent then filed a Motion for
Reconsideration8 contending, among others, that the
provisions of PD 1529, and not Rule 108 of the Rules of Court,
should be applied in the present case; posting of the notice of
hearing of respondent's petition is deemed constructive notice
to the whole world, including petitioner; the petition filed by
respondent is an action in rem where 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.
After petitioner filed its Comment,9 the CA rendered its
presently assailed Amended Decision and disposed, thus:
chanRoblesvirtualLawlibrary
WHEREFORE, the Motion for Reconsideration is
hereby GRANTED. The Decision dated 28 June 2007 of the
Regional Trial Court or Muntinlupa City, Branch 203, in LRC
Case No. 07-007, is REINSTATED. Perforce, the Petition for
Annulment of Judgment is DENIED.
SO ORDERED.10ChanRoblesVirtualawlibrary
This time, the CA agreed with respondent and ruled that PD
1529 is the governing law and that there is nothing under the
pertinent provisions of the said law which states that
publication is a requirement for the RTC to acquire jurisdiction
over respondent's petition. The CA also ruled that petitioner
failed to prove the existence of extrinsic fraud as a ground for
annulment of the assailed judgment of the RTC.
Aggrieved, petitioner filed a Motion for Reconsideration.11
However, in its Resolution of January 10, 2012, the CA denied
petitioner's Motion for Reconsideration.
Hence, the present petition for review on certiorari based on
the following grounds:
chanRoblesvirtualLawlibrary
A.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
PATENTLY ERRED IN AMENDING ITS ORIGINAL DECISION
DATED JANUARY 27, 2011 CONSIDERING THAT THE
REQUIREMENTS OF PUBLICATION AND SUMMONS WERE NOT
COMPLIED WITH.
B.
WHETHER OR NOT THE PROCEEDING PROVIDED FOR UNDER
SECTION 108 OF PRESIDENTIAL DECREE NO. 1529 IS
SUMMARY IN NATURE ALBEIT THE EVIDENT PRESENCE. OF
OTHER INTERESTED PARTIES THAT MAY BE AFFECTED BY
THE JUDGMENT AS A RESULT OF EX-PARTE PROCEEDINGS.
C.
WHETHER OR NOT THE RULING OF THE HONORABLE
148
SUPREME COURT IN THE CASE OF CHAN V. COURT OF
APPEALS (298 SCRA 713, 733) APPLIES IN THE INSTANT CASE
WHERE IT WAS RULED THAT MERE NOTICE TO THE
REGISTER OF DEEDS WAS A SUBSTANTIAL COMPLIANCE.
D.
WHETHER OR NOT AMENDMENT AND ALTERATION OF
CERTIFICATES OF TITLE PROVIDED FOR UNDER SECTION
108 OF PD 1529 IS AN IN REM PROCEEDINGS THAT
REQUIRES STRICT COMPLIANCE WITH THE PUBLICATION
REQUIREMENT.
E.
WHETHER OR NOT SECTIONS 3 AND 4 OF RULE 108 OF THE
RULES OF COURT SUPPLETORILY APPLY TO THE
PROCEEDINGS PROVIDED FOR UNDER SECTION 108 OF PD
1529 WHEREIN THE REQUIREMENT OF PUBLICATION IS
MANDATORY.
F.
WHETHER OR NOT THE PHRASE "THE COURT MAY HEAR AND
DETERMINE THE PETITION AFTER NOTICE TO ALL PARTIES
IN INTEREST" IN SECTION 108 OF PD 1529 INCLUDES
PUBLICATION AND SERVICE OF SUMMONS.
G.
WHETHER OR NOT THE COURT A QUO ACQUIRED
JURISDICTION OVER THE SUBJECT MATTER OF THE
PETITION IN THE ABSENCE OF SUMMONS AND PUBLICATION.
H.
WHETHER OR NOT PETITIONER IS AN INDISPENSABLE PARTY
IN THE PETITION FOR CORRECTION OF NAME AND MARITAL
STATUS IN THE TRANSFER CERTIFICATE OF TITLE NO.
154627 AND 154628.
I.
WHETHER OR NOT LEANDRA D. CABAÑEZ IS ENTITLED TO
NOTICE AND SERVICE OF SUMMONS BY VIRTUE OF THE
DECISION OF THE REGIONAL TRIAL COURT OF MAKATIY
CITY-BRANCH 137 TO THE EFFECT THAT THE PARCELS OF
LAND LEGALLY BELONGED TO THEIR CONJUGAL PROPERTY.
J.
WHETHER OR NOT AN AFFIDAVIT THE CONTENTS OF WHICH
WAS NOT TESTIFIED TO HAS PROBATIVE VALUE.
K.
WHETHER OR NOT THE SECURITY OR BOND MENTIONED IN
SECTION 108 OF PD 1529 BEFORE ENTRY OF CORRECTION
OR ALTERATION MAY BE MADE IS MANDATORY TO PROTECT
THE INTEREST OF THIRD PERSON.
L.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS [IS]
PROCEDURALLY CORRECT IN ADMITTING THE
SUPPLEMENTAL MEMORANDUM OF THE RESPONDENT
DESPITE THE FACT THAT THE PETITION WAS ALREADY LONG
SUBMITTED FOR DECISION.12ChanRoblesVirtualawlibrary
The Court finds merit in the petition, but for reasons which are
not identical as those espoused by petitioner.
At the outset, it bears to reiterate that the CA ruled on the
basis of the provisions of Presidential Decree No. 1529 (PD
1529), otherwise known as the Property Registration Decree.
Specifically, the CA cited Sections 2 and 108 of the said law,
which provide as follows:
chanRoblesvirtualLawlibrary
Section 2. Nature of registration proceedings; jurisdiction of
courts. Judicial proceedings for the registration of lands
throughout the Philippines shall be in rem and shall be based
on the generally accepted principles underlying the Torrens
system.
Courts of First Instance shall have exclusive jurisdiction over all
applications for original registration of title to lands, including
improvements and interests therein, and over all petitions filed
after original registration of title, with power to hear and
determine all questions arising upon such applications or
petitions. The court through its clerk of court shall furnish the
Land Registration Commission with two certified copies of all
pleadings, exhibits, orders, and decisions filed or issued in
applications or petitions for land registration, with the
exception of stenographic notes, within five days from the
filing or issuance thereof. (emphasis supplied)
Section 108. Amendment, and alteration of certificates. No
erasure, alteration, or amendment shall be made upon the
registration book after the entry of a certificate of title or of a
memorandum thereon and the attestation of the same be
Register of Deeds, except by order of the proper Court of First
Instance. A registered owner of other person having an
interest in registered property, or, in proper cases, the Register
of Deeds with the approval of the Commissioner of Land
Registration, may apply by petition to the court upon the
ground that the registered interests of any description,
whether vested, contingent, expectant or inchoate appearing
on the certificate, have terminated and ceased; or that new
interest not appearing upon the certificate have arisen or been
created; or that an omission or error was made in entering a
certificate or any memorandum thereon, or, on any duplicate
certificate; or that the same or any person on the certificate
has been changed; or that the registered owner has married,
or, if registered as married, that the marriage has been
terminated and no right or interests of heirs or creditors will
thereby be affected; or that a corporation which owned
registered land and has been dissolved has not convened the
same within three years after its dissolution; or upon any other
reasonable ground; and the court may hear and determine the
petition after notice to all parties in interest, and may order the
entry or cancellation of a new certificate, the entry or
cancellation of a memorandum upon a certificate, or grant any
other relief upon such terms and conditions, requiring security
or bond if necessary, as it may consider proper; Provided,
however, That this section shall not be construed to give the
149
court authority to reopen the judgment or decree of
registration, and that nothing shall be done or ordered by the
court which shall impair the title or other interest of a
purchaser holding a certificate for value and in good faith, or
his heirs and assigns, without his or their written consent.
Where the owner's duplicate certificate is not presented, a
similar petition may be filed as provided in the preceding
section. (emphasis supplied)
All petitions or motions filed under this Section as well as
under any other provision of this Decree after original
registration shall be filed and entitled in the original case in
which the decree or registration was entered.
The Court notes that the petition was clearly one which was
filed after original registration oi title, as provided under the
abovequoted Section 2 of PD 1529. Moreover, respondent's
petition was filed with the RTC for the purpose of correcting
supposed errors which were committed when entries were
made in the subject TCTs, as contemplated under Section 108
of the same law.
However, under settled jurisprudence, the enumerated
instances for amendment or alteration of a certificate of title
under Section 108 of PD 1529 are non-controversial in
nature.13 They are limited to issues so patently insubstantial as
not to be genuine issues. The proceedings thereunder are
summary in nature, contemplating insertions of mistakes which
are only clerical, but certainly not controversial issues.
As early as the case of Tangunan v. Republic of the
Philippines14, which was later cited in Angeles v. Razon, et
al.15, this Court, sitting en banc, ruled that:
chanRoblesvirtualLawlibrary
x x x the lower court did not err in finding that it lacks
jurisdiction to entertain the present petition for the simple
reason that it involves a controversial issue which takes this
case out of the scope of Section 112 of Act No. 496 [now
Section 108 of PD 1529]. While this section, among other
things, authorized a person in interest to ask the court for any
erasure, alteration, or amendment of a certificate of title "upon
the ground that registered interests of any description,
whether vested, contingent expectant, or inchoate, have
terminated and ceased", and apparently the petition comes
under its scope, such relief can only be granted if there is
unanimity among the parties, or there is no adverse claim or
serious objection on the part of any party in interest; otherwise
the case becomes controversial and should be threshed out in
an ordinary case or in the case where the incident properly
belongs. Thus, it was held that "It is not proper to cancel an
original certificate of Torrens title issued exclusively in the
name of a deceased person, and to issue a new certificate in
the name of his heirs, under the provisions of Section 112 of
Act No. 496, when the surviving spouse claims right of
ownership over the land covered by said certificate." And, in
another case, where there was a serious controversy between
the parties as to the right of ownership over the properties
involved, this court held, "that following the principle laid down
in the decision above cited, the issues herein should be
ventilated in a regular action x x x."16 (citations omitted)
In the present case, the Court notes that in a separate action
for annulment of title and recovery of ownership filed by
petitioner's wife against respondent, the RTC of Makati City,
Branch 137, in its decision in Civil Case No. 91-2648, dated
July 5, 1993, made a categorical finding that petitioner and his
wife are the lawful owners of the subject properties and
ordering respondent to surrender possession thereof to the
said spouses.17 This RTC judgment was later affirmed by the
CA in its Decision18 in CA-G.R. CV No. 49446, dated April 29,
1997. Respondent, on the other hand, claims that she together
with petitioner and his wife subsequently executed an amicable
settlement dated June 22, 2000, which was approved by the
RTC, wherein petitioner's wife waived her rights and interests
over the said properties. She also alleged that petitioner
executed an Affidavit of Declaration Against Interest, dated
January 22, 2007, indicating that he has no right or interest
over the subject properties. Petitioner, nonetheless, claims that
he executed a subsequent Affidavit of Non-Waiver of Interest,
dated January 14, 2008, claiming that he was deceived by
respondent into signing the said Affidavit of Declaration
Against Interest and that he was seriously ill at the time that
he affixed his signature.
From the foregoing, there is no question that there is a serious
objection and an adverse claim on the part of an interested
party as shown by petitioner's subsequent execution of his
Affidavit of Non-Waiver of Interest. The absence of unanimity
among the parties is also evidenced by petitioner's petition
seeking the annulment of the RTC Decision which granted
respondent's petition for correction of entries in the subject
TCTs. These objections and claims necessarily entail litigious
and controversial matters making it imperative to conduct an
exhaustive examination of the factual and legal bases of the
parties' respective positions. Certainly, such objective cannot
be accomplished by the court through the abbreviated action
under Section 108 of PD 1529. A complete determination of
the issues in the present case can only be achieved if
petitioner and his wife are impleaded in an adversarial
proceeding.
This requires a full dress trial rendering the summary
proceedings envisaged in Section 108 of PD 1529 inadequate.
Finally, it is settled that a land registration case is a
proceeding in rem, and jurisdiction in rem cannot be acquired
unless there be constructive seizure of the land through
publication and service of notice.21However, as found by the
CA, respondent failed to comply with the said requirements. In
all cases where the authority of the courts to proceed is
conferred by a statute, and when the manner of obtaining
jurisdiction is mandatory, it must be strictly complied with, or
the proceedings will be utterly void.22 It is wrong for the CA to
rule in its Amended Decision that publication is not a
jurisdictional requirement for the RTC to take cognizance of
respondent's petition. The appellate court's reliance on the
case of Chan v. Court of Appeals23 is misplaced. In the said
case, this Court considered the notice to the Register of Deeds
as substantial compliance with the notice and publication
requirements of the law simply because in the petition for
correction filed by the petitioner therein, only the said
petitioner and the Register of Deeds had an interest in the
correction of titles sought for. This Court ruled that there is
therefore no necessity to notify other parties who had no
interest to protect in the said petition. This is not true,
however, in the present case. As discussed above, on the
bases of petitioner's serious objection and adverse claim, it is
apparent that he has an interest to protect. Thus, the ruling
in Chan finds no application in the instant case.chanrobleslaw
WHEREFORE, the instant petition is GRANTED. The
Amended Decision and Resolution of the Court of Appeals,
dated August 29, 2011 and January 10, 2012, respectively, in
CA-G.R. SP No. 101406, are REVERSED and SET ASIDE. The
Decision of the Court of Appeals, dated January 27, 2011,
which annulled the June 28, 2007 Decision of the Regional
Trial Court of Muntinlupa City, Branch 203, is REINSTATED.

In addition, the Court finds apropos to the instant case the SO ORDERED.cralawlawlibrary
ruling in the similar case of Martinez v. Evangelista19 where the
petitioner in the said case, being the registered owner of
certain real properties, sought to strike out the words "married
to x x x" appearing in the Transfer Certificates of Title covering
the said properties on the ground that the same was so
entered by reason of clerical error or oversight and in lieu
thereof the word "single" be substituted, which according to
the petitioner in the said case is his true and correct civil
status. This Court held that:
chanRoblesvirtualLawlibrary
x x x x changes in the citizenship of a person or in his status
from legitimate to illegitimate or from married lo not married
are substantial as well as controversial, which can only be
established in an appropriate adversary proceeding as a
remedy for the adjudication of real and justifiable controversies
involving actual conflict of rights the final determination of
which depends upon the resolution of issues of nationality,
paternity, filiation or legitimacy of the marital status for which
existing substantive and procedural laws as well as other rules
of court amply provide.20ChanRoblesVirtualawlibrary
In the present case, it is now apparent that before the trial
court can alter the description of the civil status of respondent
in the transfer certificates of title in question, it will have to
receive evidence of and determine respondent's civil status.

150

G.R. No. 189434, March 12, 2014 - FERDINAND R. MARCOS,
JR., Petitioner, v. REPUBLIC OF THE PHILIPPINES,
REPRESENTED BY THE PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT, RESPONDENT.; G.R. NO. 189505 -
IMELDA ROMUALDEZ-MARCOS, Petitioner, v. REPUBLIC OF
THE PHILIPPINES, Respondent.
SPECIAL SECOND DIVISION
G.R. No. 189434, March 12, 2014
FERDINAND R. MARCOS, JR., Petitioner, v. REPUBLIC OF
THE PHILIPPINES, REPRESENTED BY THE
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
RESPONDENT.
[G.R. NO. 189505]
IMELDA ROMUALDEZ-MARCOS, Petitioner, v. REPUBLIC
OF THE PHILIPPINES, Respondent.
RESOLUTION
SERENO, C.J.:
On 25 April 2012, this Court rendered a Decision affirming the
2 April 2009 Decision of the Sandiganbayan and declaring all
the assets of Arelma, S.A., an entity created by the late
Ferdinand E. Marcos, forfeited in favor of the Republic of the
Philippines. The anti-graft court found that the totality of
assets and properties acquired by the Marcos spouses was
manifestly and grossly disproportionate to their aggregate
salaries as public officials, and that petitioners were unable to
overturn the prima facie presumption of ill-gotten wealth,
pursuant to Section 2 of Republic Act No. (RA) 1379.
Petitioners seek reconsideration of the denial of their petition,
reiterating the following arguments:chanRoblesVirtualawlibrary
1. That the Sandiganbayan erred in granting the Motion
for Partial Summary Judgment because a) the
Republic had earlier stated that it will file a separate
forfeiture action regarding the assets of Arelma and
b) Civil Case No. 0141 had already terminated; and
2. That the Sandiganbayan does not possess territorial
jurisdiction over the res or the Arelma proceeds,
which are held by Merrill Lynch in the United States.
We agree with the view of the Office of the Solicitor General
(OSG) in its Opposition filed on 16 August 2012, that the first
issue has already been raised and exhaustively discussed in
our 25 April 2012 Decision. In fact, the discussion on the first
issue is merely a restatement of petitioners’ original assertions
that the Sandiganbayan had no jurisdiction to render summary
judgment over the assets of Arelma. According to petitioners,
the judgment in Civil Case No. 0141 applied only to the Swiss
deposits subject of our Decision in G.R. No. 152154, which
were also listed in the Petition for Forfeiture.
It is clear from our 25 April 2012 Decision that this is a
151
distorted reading of the facts. The said Petition for Forfeiture
described among others, a corporate entity by the name
“Arelma, Inc.,” which maintained an account and portfolio in
Merrill Lynch, New York, and which was purportedly organized
for the purpose of hiding ill-gotten wealth.1 The Decision of
this Court in G.R. No. 152154 affirmed the partial summary
judgment only over the Swiss deposits which the
Sandiganbayan declared as forfeited in favor of the State.
This cannot be construed as a bar to a subsequent judgment
over numerous other assets and properties expressly sought to
be forfeited in Civil Case No. 0141. Respondent Republic’s
success in obtaining summary judgment over the Swiss
accounts does not mean its preclusion from seeking partial
summary judgment over a different subject matter covered by
the same petition for forfeiture. In fact, Civil Case No. 0141
pertains to the recovery of all the assets enumerated therein,
such as (1) holding companies, agro-industrial ventures and
other investments; (2) landholdings, buildings, condominium
units, mansions; (3) New York properties; (4) bills amounting
to Php 27,744,535, time deposits worth Php 46.4 million,
foreign currencies and jewelry seized by the United States
customs authorities in Honolulu, Hawaii; (5) USD 30 million in
the custody of the Central Bank in dollar-denominated
Treasury Bills; shares of stock, private vehicles, and real estate
in the United States, among others.2crallawlibrary
The Swiss Deposits Decision, G.R. No. 152154, dealt only with
the summary judgment as to the five Swiss accounts, because
the 2000 Motion for Partial Summary Judgment dated 7 March
2000 specifically identified the five Swiss accounts. It did not
include the Arelma account. To subscribe to the view of
petitioners is to forever bar the State from recovering the
assets listed above, including the properties it had specifically
identified in its petition for forfeiture. As we have discussed in
our Decision, the ruling of the Sandiganbayan is rightly
characterized as a separate judgment, and allowed by the
Rules of Court under Section 5 of Rule
36:chanRoblesVirtualawlibrary
Separate judgments.—When more than one claim for relief is
presented in an action, the court, at any stage, upon a
determination of the issues material to a particular claim and
all counterclaims arising out of the transaction or occurrence
which is the subject matter of the claim, may render a
separate judgment disposing of such claim. The judgment shall
terminate the action with respect to the claim so disposed of
and the action shall proceed as to the remaining claims. In
case a separate judgment is rendered, the court by order may
stay its enforcement until the rendition of a subsequent
judgment or judgments and may prescribe such conditions as
may be necessary to secure the benefit thereof to the party in
whose favor the judgment is rendered.
Petitioners further insist that “Civil Case No. 0141 does not
involve the Arelma account because the respondent
unequivocally reserved its right to file a separate forfeiture
petition concerning it.” However, petitioners failed to prove
that such a reservation was made, and never even
substantiated how such reservation could operate to deprive
the State of its right to file for separate judgment. There is
nothing in Republic Act 13793 or in the Rules which prohibits
the graft court from taking cognizance of the Motion for Partial
Summary Judgment only because of statements allegedly potential custody when, from the nature of the action brought,
made by one party. This Court cannot countenance the view the power of the court over the property is impliedly
advanced by petitioners defeating the jurisdiction of the recognized by law.”10crallawlibrary
Sandiganbayan over violations of R.A. Nos. 3019 and
1379,4 where the laws themselves do not provide for such Finally, we take note of the Decision rendered by the Appellate
limitations. Division of the New York Supreme Court on 26 June 2012.
In Swezey v. Merrill Lynch, Pierce, Fenner & Smith, Inc. , the
Petitioner Ferdinand Marcos, Jr. acknowledges that “the foreign court agreed with the dismissal of the turnover
subject matter of the case (i.e. the power/authority to proceeding against the Arelma assets initiated by alleged
determine whether an asset may be forfeited under R.A. 1379) victims of human rights abuses during the Marcos regime. It
is within the (Sandiganbayan’s) jurisdiction.”5 However, he reasoned that the Republic was a necessary party, but could
objects to the graft court’s purported lack of territorial not be subject to joinder in light of its assertion of sovereign
jurisdiction on the theory that forfeiture is an action in rem. He immunity:chanRoblesVirtualawlibrary
argues that the Sandiganbayan must first
(The Republic’s) national interests would be severely
acquire territorial jurisdiction over the Arelma proceeds before
prejudiced by a turnover proceeding because it has asserted a
the judgment may be enforced.
claim of ownership regarding the Arelma assets that rests on
several bases: the Philippine forfeiture law that predated the
At the outset, this theory fails to make a distinction between
tenure of President Marcos; evidence demonstrating that
the issuance of a judgment, and its execution. It is basic that
Marcos looted public coffers to amass a personal fortune worth
the execution of a Court’s judgment is merely a ministerial
billions of dollars; findings by the Philippine Supreme Court
phase of adjudication.6 The authority of the Sandiganbayan to
and Swiss Federal Supreme Court that Marcos stole related
rule on the character of these assets as ill-gotten cannot be
assets from the Republic; and, perhaps most critically, the
conflated with petitioner’s concerns as to how the ruling may
recent determination by the Philippine Supreme Court that
be effectively enforced.
Marcos pilfered the money that was deposited in the Arelma
brokerage account. Consequently, allowing the federal court
More importantly, petitioner should be reminded of his earlier
judgment against the estate of Marcos to be executed on
insistence that R.A. 1379 is penal, therefore petitions for
property that may rightfully belong to the citizens of the
forfeiture filed under this law are actions in personam, not
Philippines could irreparably undermine the Republic’s claim to
in rem.7 We reiterate our observations in the Swiss Deposits
the Arelma assets.
case: “Petitioner Republic has the right to a speedy disposition
of this case. It would readily be apparent to a reasonable mind
x x x x
that respondent Marcoses have been deliberately resorting to
every procedural device to delay the resolution hereof…The
The Republic’s declaration of sovereign immunity in
people and the State are entitled to favorable judgment, free
this case is entitled to recognition because it has a
from vexatious, capricious and oppressive delays x x
significant interest in allowing its courts to adjudicate
x.”8crallawlibrary
the dispute over property that may have been stolen
from its public treasury and transferred to New York
In any case, we find that the Sandiganbayan did not err in
through no fault of the Republic. The high courts of the
granting the Motion for Partial Summary Judgment, despite the
United States, the Philippines and Switzerland have
fact that the Arelma account and proceeds are held abroad. To
clearly explained in decisions related to this case that
rule otherwise contravenes the intent of the forfeiture law, and
wresting control over these matters from the Philippine
indirectly privileges violators who are able to hide public assets
judicial system would disrupt international comity and
abroad: beyond the reach of the courts and their recovery by
reciprocal diplomatic self-interests.11
the State. Forfeiture proceedings, as we have already
discussed exhaustively in our Decision, are actions considered
to be in the nature of proceedings in rem or quasi in rem, such These statements made by the foreign court, based on
that:chanRoblesVirtualawlibrary principles of comity and reciprocity, are highlighted if only to
assuage petitioner’s concerns on the effective enforcement of
Jurisdiction over the res is acquired either (a) by the seizure of
the Decision and this Resolution.
the property under legal process, whereby it is brought into
actual custody of the law; or (b) as a result of the institution of
WHEREFORE, the Motions for Reconsideration of the Decision
legal proceedings, in which the power of the court is
dated 25 April 2012 filed by petitioners Imelda Romualdez-
recognized and made effective. In the latter condition, the
Marcos and Ferdinand R. Marcos, Jr. are
property, though at all times within the potential
hereby DENIED with FINALITY.
power of the court, may not be in the actual custody of
said court.9
SO ORDERED.

The concept of potential jurisdiction over the res, advanced by

respondent, is not at all new. As early as Perkins v.
Dizon, deciding a suit against a non-resident, the Court held:
“In order that the court may exercise power over the res, it is
not necessary that the court should take actual custody of the
property, potential custody thereof being sufficient. There is

152
FIRST DIVISION 1. P205,220.97 as actual
damages with interest of 1% per month from 14
December 1999 until full payment;
ATIKO TRANS, INC. G.R. No. 167545
and
2. P10,000.00 as Attorneys fees;
CHENG LIE
and
NAVIGATION
CO., LTD., Present:
3. Costs of suit.
Petitioners,
CORONA, C.J.,
Chairperson, SO ORDERED.[5]
LEONARDO-DE CASTRO,
- versus - BERSAMIN,
DEL CASTILLO, and Likewise assailed is the CAs Resolution[6] dated March 16, 2005 which
denied the Motion for Reconsideration of the said December 10, 2004
VILLARAMA, JR., JJ.
Decision.
PRUDENTIAL
GUARANTEE
Factual Antecedents
AND ASSURANCE, Promulgated:
INC.,
Respondent. August 17, 2011 On December 11, 1998, 40 coils of electrolytic tinplates were loaded on
board M/S Katjana in Kaohsiung, Taiwan for shipment to Manila. The
x----------------------------------------
shipment was covered by Bill of Lading No. KNMNI-15126[7] issued by
------------------------x
petitioner Cheng Lie Navigation Co., Ltd. (Cheng Lie) with Oriental Tin
Can & Metal Sheet Manufacturing Co., Inc. (Oriental) as the notify
party. The cargoes were insured against all risks per Marine Insurance
DECISION Policy No. 20RN-18749/99 issued by respondent Prudential Guarantee
and Assurance, Inc. (Prudential).

DEL CASTILLO, J.:

Where service of summons upon the defendant principal is coursed
thru its co-defendant agent, and the latter happens to be a domestic
corporation, the rules on service of summons upon a domestic private
juridical entity[1] must be strictly complied with. Otherwise, the court
cannot be said to have acquired jurisdiction over the person of both
defendants. And insofar as the principal is concerned, such jurisdictional
flaw cannot be cured by the agents subsequent voluntary appearance.
This Petition for Review on Certiorari assails the December 10, 2004
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 82547 which
affirmed the April 8, 2003 Decision[3] of the Regional Trial Court (RTC),
Branch 150, Makati City. Said Decision of the RTC affirmed the August
6, 2002 Decision[4] of the Metropolitan Trial Court (MeTC), Branch 63,
Makati City, which disposed as follows:
WHEREFORE, judgment is rendered declaring
defendants Cheng Lie Navigation Co., Ltd. and
Atiko Trans, Inc. solidarily liable to pay plaintiff
Prudential Guarantee & Assurance, Inc. the
following amounts:
153
On December 14, 1998, M/S Katjana arrived in
the port of Manila. Upon discharge of the cargoes, it was found that one
of the tinplates was damaged, crumpled and dented on the edges. The
sea van in which it was kept during the voyage was also damaged,
presumably while still on board the vessel and during the course of the
voyage.
Oriental then filed its claim against the policy. Satisfied that
Orientals claim was compensable, Prudential paid Oriental P205,220.97
representing the amount of losses it suffered due to the damaged
cargo.
Proceedings before the Metropolitan Trial Court
On December 14, 1999, Prudential filed with the MeTC of
Makati City a Complaint[8] for sum of money against Cheng Lie and
Atiko Trans, Inc. (Atiko). In addition to the above undisputed facts,
Prudential alleged that:
1. Plaintiff (Prudential) is a
domestic insurance corporation duly organized and
existing under the laws of the Philippines with office
address at Coyiuto House, 119 Carlos Palanca[,] Jr.
St., Legaspi Village, Makati City;
 carrier, which owns and operates M/S Katjana; that Prudential was
subrogated to the rights of Oriental; and, that Atiko can be held
2. Defendant Cheng Lie
solidarily liable with Cheng Lie.
Navigation Co. Ltd., is [a] foreign shipping
company doing business in the Philippines [thru] its
duly authorized shipagent defendant Atiko Trans
Although assisted by the same counsel, Cheng Lie filed its
Inc. which is a domestic corporation duly
own Memorandum of Appeal[14] maintaining that the MeTC never
established and created under the laws of the
acquired jurisdiction over its person.
Philippines with office address at 7th Floor, Victoria
Bldg., United Nation[s] Ave., Ermita, Manila, where
both defendants may be served with summons
and other court processes; On April 8, 2003, the RTC rendered its Decision dismissing
the appeal and affirming the Decision of the MeTC. Atiko and Cheng Lie
challenged the RTC Decision before the CA via a Petition for
Review[15] under Rule 42 of the Rules of Court but the appellate court
3. At all times material to the
affirmed the RTCs Decision.
cause of action of this complaint, plaintiff was and
still is engaged in, among others, marine insurance
business; Whereas Defendant Cheng Lie
Navigation Co. Ltd. was and still is engaged in, Hence, this petition.
among others, shipping, transportation and
freight/cargo forwarding business, and as such,
owned, operated and/or chartered the ocean going Issues
vessel M/S Katjana as common carrier to and from
any Philippine [port] in international trade [thru] its
duly authorized shipagent defendant Atiko Trans In their Memorandum,[16] petitioners raised the following
Inc. (Both defendants are hereinafter referred to as issues:
the CARRIER);

1. WHETHER X X X THE DECISION OF

xxxx MAKATI [MeTC] WHICH WAS AFFIRMED BY
MAKATI RTC AND THE COURT OF APPEALS
IS NULL AND VOID FOR FAILURE TO
9. Plaintiff, as cargo-insurer and upon ACQUIRE JURISDICTION OVER THE
finding that the consignees insurance claim was in PERSONS OF THE PETITIONERS-
order and compensable, paid the latters claim in DEFENDANTS CONSIDERING THAT THE
the amount of P205,220.97 under and by virtue of SUMMONS WERE NOT PROPERLY SERVED
the aforesaid insurance policy, thereby subrogating ON THEM AS REQUIRED BY RULE 14 OF THE
herein plaintiff to all the rights and causes of action RULES OF COURT.
appertaining to the consignee against the
defendants;[9]
2. WHETHER X X X THE RESPONDENT-
On March 20, 2000, Prudential filed a Motion to Declare PLAINTIFF IS REQUIRED TO PROVE THE
Defendant in Default,[10] alleging among others that on March 1, 2000 a MATERIAL ALLEGATIONS IN THE
copy of the summons was served upon petitioners thru cashier Cristina COMPLAINT EVEN IN DEFAULT JUDGMENT
Figueroa and that despite receipt thereof petitioners failed to file any OR WHETHER OR NOT IN DEFAULT
responsive pleading. Acting on the motion, the MeTC issued an JUDGMENT, ALL ALLEGATIONS IN THE
Order[11]declaring Cheng Lie and Atiko in default and allowing Prudential COMPLAINT ARE DEEMED CONTROVERTED,
to present its evidence ex-parte. HENCE, MUST BE PROVED BY COMPETENT
EVIDENCE.

On August 6, 2002, the MeTC rendered its judgment by

default. Atiko then filed a Notice of Appeal[12] dated November 4, 2002. 2.1. WHETHER X X X RESPONDENT-
PLAINTIFF IS OBLIGED TO PROVE
ITS LEGAL PERSONALITY TO SUE
Proceedings before the Regional Trial Court and the Court of EVEN IN DEFAULT JUDGMENT.
Appeals
2.2. WHETHER X X X RESPONDENT-
PLAINTIFF IS OBLIGED TO PROVE
In its Memorandum of Appeal,[13] Atiko argued that Prudential THAT PETITIONER-DEFENDANT
failed to prove the material allegations of the complaint. Atiko asserted ATIKO IS THE SHIPAGENT OF
that Prudential failed to prove by preponderance of evidence that it is a PETITIONER-DEFENDANT CHENG
domestic corporation with legal personality to file an action; that Cheng LIE EVEN IN DEFAULT JUDGMENT.
Lie is a private foreign juridical entity operating its shipping business in
the Philippines thru Atiko as its shipagent; that Cheng Lie is a common
154
 2.3. WHETHER X X X THE A cursory reading of the issues raised readily reveals that they
TESTIMONIES OF THE involve factual matters which are not within the province of this Court to
WITNESSES AND THE look into. Well-settled is the rule that in petitions for review
DOCUMENTARY EXHIBITS CAN BE on certiorari under Rule 45, only questions of law can be raised. While
CONSIDERED FOR PURPOSES there are recognized exceptions to this rule,[18] none is present in this
OTHER THAN THE PURPOSE FOR case.[A]s a matter of x x x procedure, [this] Court defers and accords
WHICH THEY WERE OFFERED. finality to the factual findings of trial courts, [especially] when such
findings were [affirmed by the RTC and the CA. These] factual
determination[s], as a matter of long and sound appellate practice,
2.4. WHETHER X X X A MOTION TO deserve great weight and shall not be disturbed on appeal x x x. [I]t is
DECLARE DEFENDANT IN not the function of the Court to analyze and weigh all over again the
DEFAULT ADDRESSED AND SENT evidence or premises supportive of the factual holding of the lower
TO ONLY ONE OF THE courts.[19]
DEFENDANTS WOULD BIND THE
MeTC properly acquired jurisdiction over the person of Atiko.
OTHER DEFENDANT TO WHOM
THE MOTION WAS NOT
ADDRESSED AND NOT SENT.[17]

Petitioners also argue that the MeTC did not acquire

Our Ruling
The petition is partly meritorious. We shall first tackle the
factual matters involved in this case, then proceed with the jurisdictional
issues raised.
Petitioners raised factual matters which are not the proper
subject of this appeal.
Petitioners contend that the lower courts grievously erred in
granting the complaint because, even if they were declared in default,
the respondent still has the burden of proving the material allegations in
the complaint by preponderance of evidence. Petitioners further argue
that respondent miserably failed to discharge this burden because it
failed to present sufficient proof that it is a domestic corporation. Hence,
respondent could not possibly maintain the present action because only
natural or juridical persons or entities authorized by law can be parties
to a civil action. Petitioners also claim that respondent failed to present
competent proof that Cheng Lie is a foreign shipping company doing
business in the Philippines thru its duly authorized shipagent
Atiko. Lastly, petitioners assert that respondent failed to prove that
Cheng Lie is a common carrier which owned, operated and/or
chartered M/S Katjana thru its duly authorized shipagent
Atiko. Petitioners emphasize that there is no proof, testimonial or
otherwise, which would support the material allegations of the
complaint. They also insist that respondents witnesses do not have
personal knowledge of the facts on which they were examined.
Respondent, for its part, assails the propriety of the remedy
taken by the petitioners. It posits that petitioners advanced factual
matters which are not the proper subject of a petition for review
on certiorari. Besides, the lower courts consistently held that the
allegations in respondents complaint are supported by sufficient
evidence.
We agree with respondent.
155
jurisdiction over the person of Atiko as the summons was received by
its cashier, Cristina Figueroa. They maintain that under Section 11, Rule
14 of the Rules of Court, when the defendant is a domestic corporation
like Atiko, summons may be served only upon its president, general
manager, corporate secretary, treasurer or in-house counsel.
We are not persuaded. True, when the defendant is a
domestic corporation, service of summons may be made only upon the
persons enumerated in Section 11, Rule 14 of the Rules of
Court.[20] However, jurisdiction over the person of the defendant can be
acquired not only by proper service of summons but also by defendants
voluntary appearance without expressly objecting to the courts
jurisdiction, as embodied in Section 20, Rule 14 of the Rules of
Court, viz:
SEC. 20. Voluntary appearance. The
defendants 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.
In the case at bench, when Atiko filed its Notice of
Appeal,[21] Memorandum of Appeal,[22] Motion for Reconsideration[23] of
the April 8, 2003 Decision of the RTC, and Petition for Review,[24] it
never questioned the jurisdiction of the MeTC over its person. The filing
of these pleadings seeking affirmative relief amounted to voluntary
appearance and, hence, rendered the alleged lack of jurisdiction
moot. In Palma v. Galvez,[25] this Court reiterated the oft-repeated rule
that the filing of motions seeking affirmative relief, such as, to admit
answer, for additional time to file answer, for reconsideration of a
default judgment, and to lift order of default with motion for
reconsideration, are considered voluntary submission to the jurisdiction
of the court.
Moreover, petitioners contention is a mere afterthought. It
was only in their Memorandum[26] filed with this Court where they
claimed, for the first time, that Atiko was not properly served with
summons. In La Naval Drug Corporation v. Court of Appeals,[27] it was
held that the issue of jurisdiction over the person of the defendant must
be seasonably raised. Failing to do so, a party who invoked the
jurisdiction of a court to secure an affirmative relief cannot be allowed to
disavow such jurisdiction after unsuccessfully trying to obtain such
relief.[28]
It may not be amiss to state too that in our February 13,
2006 Resolution,[29] we reminded the parties that they are not allowed
to interject new issues in their memorandum.
MeTC did not acquire jurisdiction over the person of Cheng
Lie.
Petitioners likewise challenge the validity of the service of
summons upon Cheng Lie, thru Atiko. They claim that when the
defendant is a foreign private juridical entity which has transacted
business in the Philippines, service of summons may be made, among
others, upon its resident agent. In this case, however, there is no proof
that Atiko is the local agent of Cheng Lie.
On this score, we find for the petitioners. Before it was
amended by A.M. No. 11-3-6-SC,[30] Section 12 of Rule 14 of the Rules
of Court reads:
SEC. 12. Service upon foreign private
juridical entity. When the defendant is a foreign
private juridical entity which has transacted
business in the Philippines, service may be made
on its resident agent designated in accordance with
law for that purpose, or, if there be no such agent,
on the government official designated by law to
that effect, or on any of its officers or agents within
the Philippines.
Elucidating on the above provision of the Rules of Court, this
Court declared in Pioneer International, Ltd. v. Guadiz, Jr.[31] that when
the defendant is a foreign juridical entity, service of summons may be
made upon:
1. Its resident agent designated in
accordance with law for that purpose;
2. The government official designated by
law to receive summons if the corporation
does not have a resident agent; or,
3. Any of the corporations officers or
agents within the Philippines.
In the case at bench, no summons was served upon Cheng
Lie in any manner prescribed above. It should be recalled that Atiko
was not properly served with summons as the person who received it
156
on behalf of Atiko, cashier Cristina Figueroa, is not one of the corporate
officers enumerated in Section 11 of Rule 14 of the Rules of Court. The
MeTC acquired jurisdiction over the person of Atiko not thru valid
service of summons but by the latters voluntary appearance. Thus,
there being no proper service of summons upon Atiko to speak of, it
follows that the MeTC never acquired jurisdiction over the person of
Cheng Lie. To rule otherwise would create an absurd situation where
service of summons is valid upon the purported principal but not on the
latters co-defendant cum putative agent despite the fact that service
was coursed thru said agent. Indeed, in order for the court to acquire
jurisdiction over the person of a defendant foreign private juridical entity
under Section 12, Rule 14 of the Rules of Court, there must be prior
valid service of summons upon the agent of such defendant.
Also, the records of this case is bereft of any showing that
cashier Cristina Figueroa is a government official designated by law to
receive summons on behalf of Cheng Lie or that she is an officer or
agent of Cheng Lie within the Philippines. Hence, her receipt of
summons bears no significance insofar as Cheng Lie is concerned. At
this point, we emphasize that the requirements of the rule on summons
must be strictly followed,[32] lest we ride roughshod on defendants right
to due process.[33]
With regard to Cheng Lies filing of numerous pleadings, the
same cannot be considered as voluntary appearance. Unlike Atiko,
Cheng Lie never sought affirmative relief other than the dismissal of the
complaint on the ground of lack of jurisdiction over its person. From the
very beginning, it has consistently questioned the validity of the service
of summons and the jurisdiction of the MeTC over its person.
It does not escape our attention though that Cheng Lies
pleadings do not indicate that the same were filed by way of special
appearance. But these, to our mind, are mere inaccuracies in the title of
the pleadings. What is important are the allegations contained therein
which consistently resisted the jurisdiction of the trial court. Thus, Cheng
Lie cannot be considered to have submitted itself to the jurisdiction of
the courts.[34]
In fine, since the MeTC never acquired jurisdiction over the
person of Cheng Lie, its decision insofar as Cheng Lie is concerned is
void.[35]
Cheng Lie was improperly declared in default.
Applying the above disquisition, the MeTC likewise erred in
declaring Cheng Lie in default. Settled is the rule that a defendant
cannot be declared in default unless such declaration is preceded by a
valid service of summons.[36]
WHEREFORE, the instant petition
is PARTIALLY GRANTED. The assailed December 10, 2004 Decision
of the Court of Appeals in CA-G.R. SP No. 82547 is AFFIRMED with
the MODIFICATION that the judgment insofar as Cheng Lie
Navigation Co., Ltd. is concerned is declared VOID for failure to acquire
jurisdiction over its person as there was improper service of summons.
 registered mail at the last known address of the
defendant;
SO ORDERED.
c) By facsimile or any recognized electronic means that could
generate proof of service; or

[1] RULES OF COURT, Rule 14, Section 11. It reads:

Section 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.
[2] CA rollo, pp. 160-181; penned by Associate Justice Monina
Arevalo-Zenarosa and concurred in by Associate Justices
Remedios A. Salazar-Fernando and Danilo B. Pine.

[18] [S]uch as when: (1) the conclusion is grounded on

speculations, surmises or conjectures; (2) the inference is
manifestly mistaken, absurd or impossible; (3) there is
grave abuse of discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are
conflicting; (6) there is no citation of specific evidence on
which the factual findings are based; (7) the findings of
absence of facts are contradicted by the presence of
evidence on record; (8) the findings of the [Court of
Appeals] are contrary to those of the trial court; (9) the
[Court of Appeals] manifestly overlooked certain relevant
and undisputed facts that, if properly considered, would
justify a different conclusion; (10) the findings of the
[Court of Appeals] are beyond the issues of the case; and
(11) such findings are contrary to the admissions of both
parties. (International Container Terminal Services, Inc. v.
FGU Insurance Corporation, G.R. No. 161539, June 27,
2008, 556 SCRA 194, 199.)
[19] Tapuroc v. Loquellano Vda. de Mende, G.R. No. 152007,
January 22, 2007, 512 SCRA 97, 105-106.
[30] AMENDMENT OF SECTION 12, RULE 14 OF THE RULES OF
COURT ON SERVICE UPON FOREIGN PRIVATE JURIDICAL
ENTITY. As amended, said provision of the Rules of Court
now reads:
SEC. 12. Service upon foreign private juridical entity. When the
defendant is a foreign private juridical entity which has
transacted business in the Philippines, service may be
made on its resident agent designated in accordance with
law for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on
any of its officers or agents within the Philippines.
If the foreign private juridical entity is not registered in the
Philippines or has no resident agent, service may, with
leave of court, be effected out of the Philippines through
any of the following means:
a) By personal service coursed through the appropriate
court in the foreign country with the assistance of the
Department of Foreign Affairs;
b) By publication once in a newspaper of general circulation in
the country where the defendant may be found and by
serving a copy of the summons and the court order by-
157
AM No. 11-3-6-SC; new rule on service of summons on
foreign juridical entities.
AM. No. 11-3-6-SC

AMENDMENT OF SECTION 12, RULE 14 •

OF THE RULES OF COURT ON SERVICE UPON
FOREIGN PRIVATE JURIDICAL ENTITY
Section 12, Rule 14 of the Rules of Court is hereby amended to
read
as follows:

"SEC. 12. Service upon foreign private juridical entity. —

When the defendant is a foreign private juridical entity which
has transacted business in the Philippines, service may be
made
on its resident agent designated in accordance with law for
that
purpose, or, i f there be no such agent, on the government
official designated by law to that effect, or on any of its
officers
or agents within the Philippines.

If the foreign private juridical entity is not registered in

the Philippines or has no resident agent, service may, with
leave
of court, be effected out of the Philippines through any of the
following means:

a) B y personal service coursed through the

appropriate court in the foreign country with the
assistance of the Department of Foreign Affairs;

b) B y publication once in a newspaper of general

circulation in the country where the defendant may be
found and by serving a copy of the summons and the
court order by-registered mail at the last known address
of the defendant;

c) B y facsimile or any recognized electronic

means that could generate proof of service; or

d) B y such other means as the court may in its

discretion direct."

This rule shall take effect fifteen (15) days after publication in
a
newspaper of general circulation in the Philippines.

March 15, 2011

158