Cases

G.R. No. 173181

Hutama-RSEA/Supermax Phils., J.V. Vs. KCD Builders Corporation, represented by its President Celso C. Diokno

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision dated October 14, 2005 and the Resolution dated June 19, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 78262.

The Facts

The facts of the case, as summarized by the CA, are as follows:

On 10 December 2001, appellee KCD Builders Corporation filed a complaint for sum of money against appellants [Hutama-RSEA/Super Max, Philippines and/or Charles H.C. Yang] before the Regional Trial Court of Makati. Its cause of action arose from a written contract which was the Notice to Proceed dated 10 November 2000 executed by the parties whereby appellant [Hutama] as principal contractor of Package 2-Site Works in Philips Semiconductors Phils. Inc. – Integrated Circuits Plant Phase II Project located at the Light Industry and Science Park of the Philippines-2 (LISPP-2) Calamba, Laguna contracted with appellee [KCD] as sub-contractor for the said project. The final billing dated 20 September 2001 was submitted to appellant Charles H.C. Yang, and despite a joint evaluation by the parties through their respective representatives who agreed on the amount [of] P2,967,164.71 as HUTAMA’s total obligation to appellee [KCD], and a letter of demand, appellant corporation [Hutama] failed and refused to pay. Summons was served on appellants [Hutama and Yang] on 8 February 2002 which was received by their secretary, Ms. Evelyn Estrabela in behalf of the two defendants [Hutama and Yang]. On 21 February 2002, their counsel filed an Entry of Appearance and Motion for Extension of time to File Responsive Pleading. They were given a 20-day extension period to file the responsive pleading, or until 16 March 2002. On 11 April 2002, appellee [KCD] filed a Motion to Declare Defendant/s [Hutama and Yang] in Default for failure to file the responsive pleading within the extended period, and set the same for hearing on 26 April 2002. On 23 April 2002, appellant Charles H.C. Yang filed a Motion to Dismiss for failure of the complaint to state a case of action against him, as he merely signed the sub-contract between the parties not for his personal benefit but only in behalf of appellant HUTAMA. On the same date, appellant HUTAMA filed an Urgent Motion to Admit Attached Answer with Compulsory Counterclaim, together with the said answer. During the hearing on appellee’s [KCD’s] motion to declare defendant/s [Hutama and Yang] in default, the trial court noted the filing of appellants’ [Hutama and Yang’s] respective motion to dismiss and answer with counterclaim but noted that the filing thereof on 27 March 2002 was too late considering that they were only given an extended period up [to] 16 March 2002 to do the same. Thus, the trial court granted the motion to declare defendants [Hutama and Yang] in default and directed, upon appellee’s [KCD’s] motion, the presentation of evidence ex-parte before the branch clerk of court who was appointed as commissioner to received evidence. Appellants [Hutama and Yang] filed an Urgent Motion to Set Aside Order of Default. During the hearing, the trial court ordered appellee [KCD] to file an opposition or comment. After the Manifestation filed by appellee [KCD] on 24 June 2002, the trial court set anew the hearing on the motion to set aside order of default on 22 August 2002, but appellants [Hutama and Yang] failed to appear. The trial court then denied the said motion in the Order dated 19 September 2002. During the ex-parte presentation of evidence, appellee’s [KCD’s] witness Celso C. Dioko testified that there was a contract executed between appellants [Hutama and Yang] and appellee [KCD] regarding the construction of Package 2 Site Works in Philips Semiconductor Phils. Inc., Calamba, Laguna where appellee [KCD] was the sub-contractor as evidenced by a Notice to Proceed. After the completion of the project, he [Dioko] billed them the total amount of P3,009,954.05. After they [Hutama and Yang] received the bill, they asked him [Dioko] to have a joint evaluation by their engineer and his engineer on site. The authorized engineer to evaluate the amount arrived at was Engr. Jose De Asis. Thus, their authorized engineers came out with the total amount of P2,967,164.71 as cost of the project. After the joint evaluation, he [Dioko] again sent the bill to appellant Charles H.C. Yang and wrote a letter to HUTAMA to pay the final billing. The appellants [Hutama and Yang], however, failed to comply with the demand. Upon the filing of this case, appellee [KCD] paid P30,000.00 acceptance fee and P3,000.00 per appearance fee and a contingency of 15% of the total amount due as attorney’s fees. Engr. Jose De Asis testified that he is an employee of appellee corporation [KCD] and knows the appellants [Hutama and Yang] to be the representatives of HUTAMA. He was the one who prepared the final evaluation and the total outstanding obligation inside the office of Philips Conductors [in] Calamba, Laguna. He and appellants [Hutama and Yang] were present when the agreement was prepared and the amount agreed upon was promised to be paid to Dioko.

On February 20, 2003, the Regional Trial Court (RTC) rendered a decision in favor of KCD Builders Corporation (KCD), viz.:

WHEREFORE, in view of the foregoing premises, judgment is rendered in favor of the plaintiff [KCD] as against the defendant[s Hutama and Yang], ordering the defendants to:

1.) Pay the plaintiff [KCD] the amount of P2,967,164.71 representing the defendants [Hutama and Yang’s] total indebtedness in favor of the plaintiff [KCD] with interest of 12% per annum from October 11, 2001, until the same has been fully paid;

2.) Pay the plaintiff [KCD] 5% of the total amount awarded plus P30,000.00 acceptance fees and P3,000.00 appearance fees as and by way of

attorney’s fees; and3.) Costs of the suit.

SO ORDERED.

Aggrieved, Hutama Semiconductor Phils., Inc. (Hutama) and Charles H.C. Yang (Yang) filed an appeal before the CA. On October 14, 2005, the CA rendered a Decision, the dispositive portion of which reads:

WHEREFORE, the foregoing considered, the assailed decision is hereby modified by dismissing the complaint against appellant Charles H.C. Yang for lack of cause of action. The decision is AFFIRMED in all other respects.

SO ORDERED.

Unsatisfied, Hutama and Yang filed a motion for reconsideration; however, the same was denied in a Resolution dated June 19, 2006.

Hence, this petition.

The Issues

Petitioner assigned the following errors:

I

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS, REVERSIBLE ERROR, IF NOT GRAVE ABUSE OF DISCRETION, IN REFUSING

TO RESOLVE AS TO –

(A) WHETHER OR NOT THE COURT A QUO COMMITTED SERIOUS, REVERSIBLE ERROR, WHEN IT FAILED TO CONSIDER THAT RESPONDENT ABANDONED THE PROJECT AND IT IS THE LATTER (sic) LIABLE TO PETITIONER;

(B) WHETHER OR NOT THE COURT A QUO COMMITTED SERIOUS, REVERSIBLE ERROR, WHEN IT DENIED PETITIONER’S RIGHTS TO PRESENT ITS EVIDENCE

IN VIOLATION OF ITS CONSTITUTIONAL RIGHTS TO DUE PROCESS; AND (C) WHETHER OR NOT THE COURT A QUO COMMITTED SERIOUS, REVERSIBLE ERROR, WHEN IT FAILED TO CONSIDER THAT RESPONDENT FAILED TO

COMPLY WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE ON VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING;

II

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS, REVERSIBLE ERROR, IF NOT GRAVE ABUSE OF DISCRETION, IN DENYING PETITIONER[’S] MOTION FOR RECONSIDERATION WITHOUT STATING CLEARLY AND DISTINCTLY THE FACTUAL AND LEGAL BASIS THEREOF.

In sum, the sole issue for resolution is whether the CA erred in affirming the decision of the RTC as to the liability of Hutama to KCD.

The Ruling of the Court

We resolve to deny the petition.

First, Hutama assails the decision of the CA based on its claim that it is KCD which owes them a sum of money because the latter abandoned the project. In other words, Hutama is asking this Court to review the factual findings of the RTC and the CA. This position of petitioner is untenable.

A petition under Rule 45 of the Rules of Court shall raise only questions of law. As a rule, findings of fact of a trial judge, when affirmed by the CA, are binding upon the Supreme Court. This rule admits of only a few exceptions, such as when the findings are grounded entirely on speculations, surmises or conjectures; when an inference made by the appellate court from its factual findings is manifestly mistaken, absurd or impossible; when there is grave abuse of discretion in the appreciation of facts; when the findings of the appellate court go beyond the issues of the case, run contrary to the admissions of the parties to the case, or fail to notice certain relevant facts which, if properly considered, will justify a different conclusion; when there is a misappreciation of facts; when the findings of fact are conclusions without mention of the specific evidence on which they are based, are premised on the absence of evidence, or are contradicted by the evidence on record. However, not one of the exceptions is present in this case.

Based on the findings of fact of the RTC, which were affirmed by the CA, it was proven that Hutama contracted the services of KCD as a sub-contractor of Package 2 Site Works at Phillips Semiconductors Philippines, Inc. – Integrated Circuits Plant Phase II Project, located in Calamba, Laguna. After the completion of the project, KCD billed Hutama Three Million Nine Hundred Nine Thousand Nine Hundred Sixty-Four Pesos and 05/100 (P3,909,964.05). The amount was reduced to Two Million Nine Hundred Sixty-Seven Thousand One Hundred Sixty-Four Pesos and 71/100 (P2,967,164.71) by agreement of the parties. Thus, on October 11, 2001, KCD sent Hutama the final bill. However, Hutama refused to settle the obligation and its refusal compelled KCD to file the collection suit before the RTC.

Second, Hutama avers that the CA committed a reversible error when it upheld the decision of the RTC, which was based on the ex-parte evidence presented by KCD. Allegedly, its constitutional right to due process was violated when the RTC issued an order of default which resulted in its failure to present evidence.

However, we find that the RTC acted within the confines of its discretion when it issued the order of default upon the motion of KCD when Hutama failed to file an answer within the extended period. The RTC did not hastily issue the order of default. It gave Hutama the opportunity to explain its side. On August 22, 2002, the motion to set aside the order of default was set for hearing, but neither Hutama’s counsel, nor any other representative of petitioner corporation, appeared. According to the counsel of Hutama, in his Memorandum, he failed to file an answer on time because he went to the province for the Lenten season. He assigned the case to his associate, but the latter also went to the province. This flimsy excuse deserves scant consideration.

Third, Hutama questions the verification and certification on non-forum shopping of KCD, issued by its board of directors, because the same was signed by the latter’s president without proof of authority to sign the same.

A pleading is verified by an affidavit that an affiant has read the pleading and that the allegations therein are true and correct as to his personal knowledge or based on authentic records. The party does not need to sign the verification. A party's representative, lawyer, or any person who personally knows the truth of the facts alleged in the pleading may sign the verification.

On the other hand, a certification of non-forum shopping is a certification under oath by the plaintiff or principal party in the complaint or other initiatory pleading, asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith, that (a) 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 days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

It is true that the power of a corporation to sue and be sued is lodged in the board of directors that exercises its corporate powers. However, it is settled – and we have so declared in numerous decisions – that the president of a corporation may sign the verification and the certification of non-forum shopping.

In Ateneo de Naga University v. Manalo, we held that the lone signature of the University President was sufficient to fulfill the verification requirement, because such officer had sufficient knowledge to swear to the truth of the allegations in the petition.

In People’s Aircargo and Warehousing Co., Inc. v. CA, we held that in the absence of a charter or bylaw provision to the contrary, the president of a corporation is presumed to have the authority to act within the domain of the general objectives of its business and within the scope of his or her usual duties. Moreover, even if a certain contract or undertaking is outside the usual powers of the president, the corporation’s ratification of the contract or undertaking and the acceptance of benefits therefrom make the corporate president’s actions binding on the corporation.

Finally, Hutama questions the resolution of the CA on its motion for reconsideration on the ground that it denied the same without stating clearly and distinctly the factual and legal basis thereof.

In denying petitioner’s motion for reconsideration, the CA ruled that it found no plausible reason to depart from its earlier decision wherein all the issues had been exhaustively passed upon. That ruling contained a sufficient legal reason or basis to deny the motion. There was no need for the CA to restate the rationale for its decision that the petitioner wanted reconsidered.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision dated October 14, 2005 and the Resolution dated June 19, 2006 of the Court of Appeals in CA-G.R. CV No. 78262 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

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G.R. No. 186979

Socorro Limos, et al. Vs. Sps. Francisco and Arwenia Odones

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the August 14, 2008 Decision of the Court of Appeals (CA) in C.A. GR. SP No. 97668 and its Resolution dated March 9, 2009 denying petitioners’ motion for reconsideration.

The impugned Decision affirmed the resolution dated November 16, 2006 and Order dated January 5, 2007 of the trial court, which respectively denied petitioners’ Motion to Set for Preliminary Hearing the Special and Affirmative Defenses and motion for reconsideration.

The antecedents:

On June 17, 2005, private respondents-spouses Francisco Odones and Arwenia Odones, filed a complaint for Annulment of Deed, Title and Damages against petitioners Socorro Limos, Rosa Delos Reyes and Spouses Rolando Delos Reyes and Eugene Delos Reyes, docketed as Civil Case No. 05-33 before the Regional Trial Court (RTC) of Camiling, Tarlac, Branch 68.

The complaint alleged that spouses Odones are the owners of a 940- square meter parcel of land located at Pao 1 st, Camiling, Tarlac by virtue of an Extrajudicial Succession of Estate and Sale dated, January 29, 2004, executed by the surviving grandchildren and heirs of Donata Lardizabal in whom the original title to the land was registered. These heirs were Soledad Razalan Lagasca, Ceferina Razalan Cativo, Rogelio Lagasca Razalan and Dominador Razalan.

It took a while before respondents decided to register the document of conveyance; and when they did, they found out that the land’s Original Certificate of Title (OCT) was cancelled on April 27, 2005 and replaced by Transfer Certificate of Title (TCT) No. 329427 in the name of herein petitioners.

Petitioners were able to secure TCT No. 329427 by virtue of a Deed of Absolute Sale allegedly executed by Donata Lardizabal and her husband Francisco Razalan on April 18, 1972.

Petitioners then subdivided the lot among themselves and had TCT No. 329427 cancelled. In lieu thereof, three new TCTs were issued: TCT No. 392428 in the names of Socorro Limos and spouses Rolando Delos Reyes and Eugene Delos Reyes, TCT No. 392429 in the names of Spouses delos Reyes and TCT No. 392430 in the name of Rosa Delos Reyes.

Respondents sought the cancellation of these new TCTs on the ground that the signatures of Donata Lardizabal and Francisco Razalan in the 1972 Deed of Absolute Sale were forgeries, because they died on June 30, 1926 and June 5, 1971, respectively.

In response, petitioners filed a Motion for Bill of Particulars claiming ambiguity in respondents’ claim that their vendors are the only heirs of Donata Lardizabal. Finding no merit in the motion, the trial court denied the same and ordered petitioners to file their answer to the complaint.

In their answer, petitioners pleaded affirmative defenses, which also constitute grounds for dismissal of the complaint. These grounds were: (1) failure to state a cause of action inasmuch as the basis of respondents’ alleged title is void, since the Extrajudicial Succession of Estate and Sale was not published and it contained formal defects, the vendors are not the legal heirs of Donata Lardizabal, and respondents are not the real parties-in-interest to question the title of petitioners, because no transaction ever occurred between them; (2) non-joinder of the other heirs of Donata Lardizabal as indispensable parties; and (3) respondents’ claim is barred by laches.

In their Reply, respondents denied the foregoing affirmative defenses, and insisted that the Extrajudicial Succession of Estate and Sale was valid. They maintained their standing as owners of the subject parcel of land and the nullity of the 1972 Absolute Deed of Sale, upon which respondents anchor their purported title. They appended the sworn statement of Amadeo Razalan declaring, among other things that:

(2) Na hindi ko minana at ibinenta ang nasabing lupa kay Socorro Limos at Rosa delos Reyes at hindi totoo na ako lang ang tagapagmana ni Donata Lardizabal;

x x x x (4) Ang aming lola na si Donata Lardizabal ay may tatlong (3) anak na patay na sina Tomas Razalan, Clemente Razalan at Tomasa Razalan; (5) Ang mga buhay na anak ni Tomas Razalan ay sina; 1. Soledad Razalan; 2. Ceferina Razalan; 3. Dominador Razalan; at 4. Amadeo Razalan. Ang mga

buhay na anak ni Clemente Razalan ay sina 1. Rogelio Lagasca (isang abnormal). Ang mga buhay na anak ni Tomasa Razalan ay sina 1. Sotera Razalan at 2 pang kapatid;

x x x x

Thereafter, petitioners served upon respondents a Request for Admission of the following matters:

1. That the husband of the deceased Donata Lardizabal is Francisco Razalan;

2. That the children of the deceased Sps. Donata Lardizabal and Francisco Razalan are Mercedes Razalan, Tomasa Razalan and Tomas Razalan;

3. That this Tomasa Razalan died on April 27, 1997, if not when? [A]nd her heirs are (a) Melecio Partido surviving husband, and her surviving children are (b) Eduardo Partido married to Elisa Filiana, (c) Enrique Razalan Partido married to Lorlita Loriana, (d) Eduardo Razalan Partido, (e) Sotera Razalan Partido married to James Dil-is and (f) Raymundo Razalan Partido married to Nemesia Aczuara, and all residents of Camiling, Tarlac.

4. That Amadeo Razalan is claiming also to be a grandchild and also claiming to be sole forced heir of Donata Lardizabal pursuant to the Succession by a Sole Heir with Sale dated January 24, 2000, executed before Atty. Rodolfo V. Robinos.

5. That Amadeo Razalan is not among those who signed the Extra[j]udicial Succession of Estate and Sale dated January 29, 2004 allegedly executed in favor of the plaintiffs, Sps. Francisco/Arwenia Odones;

6. That as per Sinumpaang Salaysay of Amadeo Razalan which was submitted by the plaintiffs, the children of Tomasa Razalan are Sotera Razalan and 2 brothers/sisters. These children of Tomasa Razalan did not also sign the Extra[j]udicial Succession of Estate and Sale;

7. That there is/are no heirs of Clemente Razalan who appeared to have executed the Extra[j]udicial Succession of Estate and Sale;

8. That Soledad Razalan Lagasca, Ceferina Razalan Cativo, Rogelio Lagasca Razalan and Dominador Razalan did not file any letters (sic) of administration nor declaration of heirship before executing the alleged Extra[j]udicial Succession of Estate and Sale in favor of plaintiffs.

Respondents failed to respond to the Request for Admission, prompting petitioners to file a Motion to Set for Preliminary Hearing on the Special and Affirmative Defenses, arguing that respondents’ failure to respond or object to the Request for Admission amounted to an implied admission pursuant to Section 2 of Rule 26 of the Rules of Court. As such, a hearing on the affirmative defenses had become imperative because petitioners were no longer required to present evidence on the admitted facts.

Respondents filed a comment on the Motion, contending that the facts sought to be admitted by petitioners were not material and relevant to the issue of the case as required by Rule 26 of the Rules of Court. Respondents emphasized that the only attendant issue was whether the 1972 Deed of Absolute Sale upon which petitioners base their TCTs is valid.

In its Resolution dated November 16, 2006, the RTC denied the Motion and held that item nos. 1 to 4 in the Request for Admission were earlier pleaded as affirmative defenses in petitioners’ Answer, to which respondents already replied on July 17, 2006. Hence, it would be redundant for respondents to make another denial. The trial court further observed that item nos. 5, 6, and 7 in the Request for Admission were already effectively denied by the Extrajudicial Succession of Estate and Sale appended to the complaint and by the Sinumpaang Salaysay of Amadeo Razalan attached to respondents’ Reply. Petitioners moved for reconsideration but the same was denied in an Order dated January 5, 2007.

Petitioners elevated this incident to the CA by way of a special civil action for certiorari, alleging grave abuse of discretion on the part of the RTC in issuing the impugned resolution and order.

On August 14, 2008, the CA dismissed the petition ruling that the affirmative defenses raised by petitioners were not indubitable, and could be best proven in a full-blown hearing.

Their motion for reconsideration having been denied, petitioners are now before this Court seeking a review of the CA’s pronouncements.

In essence, petitioners contend that the affirmative defenses raised in their Motion are indubitable, as they were impliedly admitted by respondents when they failed to respond to the Request for Admission. As such, a preliminary hearing on the said affirmative defenses must be conducted pursuant to our ruling in Gochan v. Gochan.

We deny the petition.

Pertinent to the present controversy are the rules on modes of discovery set forth in Sections 1 and 2 of Rule 26 of the Rules of Court, viz:

Section 1. Request for admission. – At any time after issues have been joined, a party may file and serve upon any other party a written request for the admission by the latter of the genuineness of any material and relevant document described in and exhibited with the request or of the truth of any material and relevant matter of fact set forth in the request. Copies of the documents shall be delivered with the request unless copies have already been furnished.

SEC. 2 Implied admission. – Each of the matters of which an admission is requested shall be deemed admitted unless, within a period

designated in the request, which shall be not less than fifteen (15) days after service thereof, or within such further time as the court may allow on motion, the party to whom the request is directed files and serves upon the party requesting the admission a sworn statement either denying specifically the matters for which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters.

x x x x

Under these rules, a party who fails to respond to a Request for Admission shall be deemed to have impliedly admitted all the matters contained therein. It must be emphasized, however, that the application of the rules on modes of discovery rests upon the sound discretion of the court.

As such, it is the duty of the courts to examine thoroughly the circumstances of each case and to determine the applicability of the modes of discovery, bearing always in mind the aim to attain an expeditious administration of justice.

The determination of the sanction to be imposed upon a party who fails to comply with the modes of discovery also rests on sound judicial discretion. Corollarily, this discretion carries with it the determination of whether or not to impose the sanctions attributable to such fault.

As correctly observed by the trial court, the matters set forth in petitioners’ Request for Admission were the same affirmative defenses pleaded in their Answer

which respondents already traversed in their Reply. The said defenses were likewise sufficiently controverted in the complaint and its annexes. In effect, petitioners sought to compel respondents to deny once again the very matters they had already denied, a redundancy, which if abetted, will serve no purpose but to delay the proceedings and thus defeat the purpose of the rule on admission as a mode of discovery which is “to expedite trial and relieve parties of the costs of proving facts which will not be disputed on trial and the truth of which can be ascertained by reasonable inquiry.”

A request for admission is not intended to merely reproduce or reiterate the allegations of the requesting party’s pleading but should set forth relevant evidentiary matters of fact described in the request, whose purpose is to establish said party’s cause of action or defense. Unless it serves that purpose, it is pointless, useless, and a mere redundancy.

Verily then, if the trial court finds that the matters in a Request for Admission were already admitted or denied in previous pleadings by the requested party, the latter cannot be compelled to admit or deny them anew. In turn, the requesting party cannot reasonably expect a response to the request and thereafter, assume or even demand the application of the implied admission rule in Section 2, Rule 26.

In this case, the redundant and unnecessarily vexatious nature of petitioners’ Request for Admission rendered it ineffectual, futile, and irrelevant so as to proscribe the operation of the implied admission rule in Section 2, Rule 26 of the Rules of Court. There being no implied admission attributable to respondents’ failure to respond, the argument that a preliminary hearing is imperative loses its point.

Moreover, jurisprudence has always been firm and constant in declaring that when the affirmative defense raised is failure to state a cause of action, a preliminary hearing thereon is unnecessary, erroneous, and improvident.

In any event, a perusal of respondents’ complaint shows that it was sufficiently clothed with a cause of action and they were suited to file the same.

In an action for annulment of title, the complaint must contain the following allegations: (1) that the contested land was privately owned by the plaintiff prior to the issuance of the assailed certificate of title to the defendant; and (2) that the defendant perpetuated a fraud or committed a mistake in obtaining a document of title over the parcel of land claimed by the plaintiff.

Such action goes into the issue of ownership of the land covered by a Torrens title, hence, the relief generally prayed for by the plaintiff is to be declared as the land’s true owner. Thus, the real party-in-interest is the person claiming title or ownership adverse to that of the registered owner.

The herein complaint alleged: (1) that respondents are the owners and occupants of a parcel of land located at Pao 1st Camiling, Tarlac, covered by OCT No. 11560 in the name of Donata Lardizabal by virtue of an Extrajudicial Succession of Estate and Sale; and (2) that petitioners fraudulently caused the cancellation of OCT No. 11560 and the issuance of new TCTs in their names by presenting a Deed of Absolute Sale with the forged signatures of Donata Lardizabal and her husband, Francisco Razalan.

The absence of any transaction between petitioners and respondents over the land is of no moment, as the thrust of the controversy is the respondents’ adverse claims of rightful title and ownership over the same property, which arose precisely because of the conflicting sources of their respective claims.

As to the validity of the Extrajudicial Succession of Estate and Sale and the status of petitioners’ predecessors-in-interest as the only heirs of Donata Lardizabal, these issues go into the merits of the parties’ respective claims and defenses that can be best determined on the basis of preponderance of the evidence they will adduce in a full-blown trial. A preliminary hearing, the objective of which is for the court to determine whether or not the case should proceed to trial, will not sufficiently address such issues.

Anent the alleged non-joinder of indispensable parties, it is settled that the non-joinder of indispensable parties is not a ground for the dismissal of an action. The remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the court on motion of the party or on its own initiative at any stage of the action and/or such times as are just. It is only when the plaintiff refuses to implead an indispensable party despite the order of the court, that the latter may dismiss the complaint. In this case, no such order was issued by the trial court.

Equally settled is the fact that laches is evidentiary in nature and it may not be established by mere allegations in the pleadings and can not be resolved in a motion to dismiss.

Finally, we cannot subscribe to petitioners’ contention that the status of the heirs of Donata Lardizabal who sold the property to the respondents must first be established in a special proceeding. The pronouncements in Heirs of Yaptinchay v. Hon. Del Rosario and in Reyes v. Enriquez that the petitioners invoke do not find application in the present controversy.

In both cases, this Court held that the declaration of heirship can be made only in a special proceeding and not in a civil action. It must be noted that in Yaptinchay and Enriquez, plaintiffs’ action for annulment of title was anchored on their alleged status as heirs of the original owner whereas in this case, the respondents’ claim is rooted on a sale transaction. Respondents herein are enforcing their rights as buyers in good faith and for value of the subject land and not as heirs of the original owner. Unlike in Yaptinchay and Enriquez, the filiation of herein respondents to the original owner is not determinative of their right to claim title to and ownership of the property.

WHEREFORE, foregoing considered, the instant Petition is DENIED. The Decision of the Court of Appeals dated August 14, 2008 and its Resolution dated March 9, 2009 are hereby AFFIRMED.

SO ORDERED.

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G.R. No. 164800

Republic of the Philippines Vs. Estate of Alfonso Lim, Sr., et al.

In this Petition for Certiorari under Rule 65, the Republic of the Philippines assails and seeks to nullify the Resolution dated March 28, 2003 of the Sandiganbayan, as effectively reiterated in another resolution of June 18, 2004, which denied petitioner’s motion for the issuance of a writ of preliminary attachment in Civil Case No. 0030, entitled Republic v. Alfonso Lim, et al., a suit to recover ill-gotten or unexplained wealth.

The Facts

On October 2, 1991, in Civil Case No. 0030, the Republic, represented by the Presidential Commission on Good Government (PCGG), filed before the Sandiganbayan, Second Division, an Amended Complaint for reconveyance, reversion, accounting, restitution, and damages. In it, the Republic averred that Alfonso Lim, Sr. (now deceased) and Alfonso Lim, Jr., acting by themselves and/or in unlawful collusion with Ferdinand E. Marcos and Imelda R. Marcos, and taking undue advantage of their relationship, influence, and connection with the latter, embarked upon devices and stratagems to unjustly enrich themselves at the expense of the Republic and the Filipino people. Among other acts, the Lims were alleged to have:

(a) actively solicited and obtained, upon the personal behest of [the Marcoses], with the active collaboration of Teodoro Q. Peña, who was then Minister of Natural Resources, additional timber concession in favor of Taggat Industries, Inc. (TAGGAT) and Pamplona Redwood Veneer, Inc. (PAMPLONA), corporations beneficially held and controlled by Alfonso Lim and Alfonso Lim, Jr., which, in addition to other areas already awarded to TAGGAT and PAMPLONA, resulted in their concession holdings in excess of the allowable limits prescribed under Section 11, Article XIV of the 1973 Constitution;

(b) actively solicited and obtained, upon the personal behest of [the Marcoses], a management contract in favor of TAGGAT to operate and manage the logging concessions of Veterans Woodwork, Inc. (VETERANS), Sierra Madre Wood Industries, Inc. (SIERRA MADRE), and Tropical Philippines Wood Industries, Inc. (TROPICAL) over and above the objections of VETERANS;

(c) obtained a permit to cut down a certain number of Narra and Amaciga trees, and, on the very same day, was likewise given an authorization by Ferdinand E. Marcos to export the same, in violation of existing ban against cutting and export of the aforesaid trees;

(d) obtained, in favor of PAMPLONA, a syndicated loan in the amount of millions of US dollars from a consortium of international banks, secured by the guarantee of the National Investment and Development Corporation (NIDC), a subsidiary of the Philippine National Bank; and in view of the default by PAMPLONA in the payment of its principal and/or interest amortizations, the loan was converted, under the debt rescheduling arrangement between Republic and its foreign creditor banks, into a public sector obligation of Republic, to the grave and irreparable damage of the Republic and the Filipino people.

The Republic also alleged that the foregoing acts, singly or collectively, constituted grave and gross abuse of official position and authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, and violation of the Constitution and laws of the Republic to the grave and irreparable damage to it and its citizens.

As its main prayer, the Republic asked for the reconveyance of all funds and property impressed with constructive trust in favor of the Republic and the Filipino people, “as well as funds and other property acquired with [respondents’] abuse of right and power and through unjust enrichment, including but not limited to the properties listed in Annex “A” of the Complaint together with the accruing income or increment from date of acquisition until final judgment.”

The properties listed in the said Annex “A” consist––besides the Lims’ assets sequestered in accordance wth Executive Order Nos. 1 and 2, Series of 1986––of the assets and other properties of Lim, Sr., as follows:

1. a parcel of land with TCT No. 2981 (Lot A), located at Barrio Birinayan, Talisay, Batangas;2. a parcel of raw land with TCT No. 11750 (Lot 8-C-53) located at Muzon, San Isidro, Angono, Rizal;3. a parcel of raw land with TCT No. 11749 (Lot 8-C-51) located at Muzon, San Isidro, Angono. Rizal;4. a parcel of land with TCT No. 11728 (Lot 8-C-9) located at Muzon, San Isidro, Angono, Rizal;a parcel of land with TCT No. 11732 (Lot 8-C-17) 5. located at Muzon, San Isidro, Angono, Rizal;6. a parcel of agricultural land with TCT No. 11728 (Lot 8-C-9) located at Muzon, San Isidro, Angono, Rizal;7. a parcel of agricultural land with TCT No. 11727 (Lot 8-C-7) located at Muzon, San Isidro, Angono, Rizal;8. a parcel of residential land with TCT No. 315 located at Maharlika, Tagaytay City; 9. a parcel of agricultural/residential land with TCT No. 157570 located at Berinayan, Laurel, Batangas;10. a parcel of land and building in the name of SIERRA MADRE as reported by Task Force SEAFRONT, Nov. 20, 1986;11. a parcel of land and building in the name of PAMPLONA as reported by Task Force SEAFRONT, November 20, 1986;12. Contigous [13] parcels of land located at Claveria, Cagayan in the name of TAGGAT Industries, Inc. as reported by Task Force SEAFRONT,

November 7, 1987: x x x x 13. a parcel of agricultural land in the name of TAGGAT with OCT No. O-1108 (S) Lot No. 1195;14. a parcel of commercial land in the name of TAGGAT with TCT No. 78732 located at Romualdez Street, Paco, Manila;15. buildings and improvements in the name of TAGGAT erected on OCT No. 0-1104, 0-11017, 0-1109;16. buildings in the name of TAGGAT erected on TCT No. 78732; Paco, Manila.

[OTHER PROPERTIES]

A.Shares of Stocks in:

1. Taggat Industries, Inc. (TAGGAT) 1350, Romualdez Street, Paco, Manila

2. Pamplona Redwood Veneer, Inc. (PAMPLONA) 1350, Romualdez Street, Paco, Manila

3. Sierra Madre Wood Industries, Inc. (SIERRA MADRE) 79 Doña Hemady corner 13th St., New Manila, Quezon City

4. Veterans Woodworks, Inc. (VETERANS) 79 Doña Hemady corner 13th St., New Manila, Quezon City

5. Southern Plywood Corporation (SPC) 5th Floor Jardine Davies Bldg., 222 Sen. J. Puyat Avenue, Makati, Metro Manila

6. Western Cagayan Lumber (WCL) Jardine Davies Building, 222 Sen. J. Puyat Avenue, Makati, Metro Manila

B. Property, Plant and Equipment

x x x x C. Aircraft [2 units] x x x x D. Current Assets [as reported] x x x x E. Investments and Other Assets

1. Due from affiliated companies, TAGGAT, as reported2. Investment in Stocks, TAGGAT, as reported3. Deferred Charges and Other Assets, TAGGAT, as reported

F. Bank Accounts

1. PAMPLONA Accounts

a. The Consolidated Bank and Trust Co.

b.Equitable Banking Corporation

2. TAGGAT Acccounts

a. The Consolidated Bank and Trust Co, b. Philippine National Bank c. Equitable Banking Corporation d. Philippine Banking Corporation e. Allied Banking Corporation

G. Other

1. Frozen Bank Accounts and Other Assets of Alfonso Lim, Sr., Alfonso Lim, Jr. and Lawrence Lim

Meanwhile, Lim, Sr. passed away. On June 22, 1998, his estate filed a motion to lift the sequestration over certain real properties contending that the PCGG impleaded him owing to his alleged association with former Pres. Marcos. The estate would add, however, that Lim, Sr. secured title over almost all of his real properties thus sequestered way back in 1948, long before the Marcoses came to power.

To the motion to lift, the Republic interposed an opposition, alleging that the sequestered lots and titles stand as security for the satisfaction of any judgment the Republic may obtain against the estate of Lim, Sr., his family, or his group of companies.

By Resolution dated March 17, 2001, the Sandiganbayan lifted the sequestration order in question on the strength of the following pertinent premises, to wit:

The sequestration of some of the real properties of movant-defendant [estate of Lim, Sr.] is a remedial measure resorted to in order to preserve these properties along with others alleged to have taken illegally x x x, and “in order to prevent the same from disappearance, destruction, loss or dissipation and /or to foil acts that may render moot and academic the efforts to recover the aforesaid alleged “ill-gotten wealth”. However, the pertinent provisions of Executive Order Nos. 1, 2 and 14 are explicit in saying that the properties that are supposed to be “sequestered” are those x x x amassed during the regime of the deposed President Ferdinand E. Marcos and not before or later thereto. x x x

In time, the Republic sought but was later denied reconsideration of the sequestration-lifting resolution of the Sandiganbayan.

Meanwhile, after presenting its evidence in the main case, the Republic filed its Formal Offer of Evidence dated October 8, 2001. On December 5, 2001, the Sandiganbayan issued a terse order admitting all the documentary exhibits of the Republic consisting of Exhibits “A” to “G,” inclusive of their submarkings.

The following incidents/events then transpired:

(1) Sometime in January 2002, the estate of Lim, Sr., Ruthie Lim, and two others, as defendants a quo, filed a Demurrer to Evidence dated January 14, 2002, on the ground of either irrelevancy or immateriality of the Republic’s evidence. As argued, the same evidence did not prove or disprove that the demurring defendants, on their own or in concert with the Marcoses, amassed ill-gotten wealth. Lim, Jr. later filed a Manifestation adopting the demurrer to evidence of the estate of Lim, Sr., et al.

(2) On July 4, 2002, the Sandiganbayan denied the Republic’s motion for reconsideration of the graft court’s resolution lifting the sequestration order.

(3) In an obvious bid to counter the effects of the lifting of the sequestration, the Republic, on September 9, 2002, filed a Motion for the Issuance of a Writ of Preliminary Attachment against respondents in the amount of its claim. The Republic alleged that respondent Lims “were guilty of fraud in incurring various legal obligations which the present action has been brought,” by “taking undue advantage of their relationship, influence and connection with the [Marcoses]” to unjustly enriched themselves to the prejudice of the Republic.

Except for one, all the other respondents belonging to the Lim group filed their respective comment or opposition to the Republic’s motion for a writ of attachment.

(4) On March 28, 2003, the Sandiganbayan, stating that bare allegations of the commission of fraud by respondents in incurring the aforesaid obligations are not sufficient for the granting of the writ of preliminary attachment, denied, via a Resolution, the corresponding motion.

In due time, the Republic interposed a motion seeking reconsideration of the Sandiganbayan’s March 28, 2003 denial action.

(5) By Resolution dated July 17, 2003, the Sandiganbayan denied respondents’ demurrer to evidence.

Forthwith, the estate of Lim, Sr., Taggat Industries, Inc. (TAGGAT), and Pamplona Redwood Veneer, Inc. (PAMPLONA), followed later by Lim, Jr., respectfully moved for reconsideration of the July 17, 2003 Resolution.

(6) On June 18, 2004, the Sandiganbayan resolved to affirm the denial of the respondents’ demurrer to evidence. It also denied in its March 28, 2003 resolution the Republic’s motion for the issuance of a writ of preliminary attachment.

Hence, this recourse is before us.

The Issues

The two interrelated issues petitioner Republic tenders boils down to: whether the Sandiganbayan, in the light of the denial of respondents’ demurrer to evidence, acted with grave abuse of discretion amounting to lack or excess of jurisdiction in not considering that the evidence already on record support the issuance of a writ or preliminary attachment.

The Republic contends that the pieces of evidence offered before and admitted by the Sandiganbayan provide sufficient basis for the issuance of a writ of preliminary attachment. Thus, the graft court, as the Republic argues, committed grave abuse of discretion amounting to excess of jurisdiction in denying the writ of preliminary injunction by not considering the evidence already on record and in ruling contrary to its findings and conclusions when it denied respondents’ demurrer to evidence.

Respondents, on the other hand, reiterate their position on the absence of evidence of fraud, as required under Section 1(d), Rule 57 of the Rules of Court, which would justify the issuance of the desired writ. In this regard, they reproduced what the Sandiganbayan said in its March 28, 2003 resolution on the matter of fraud, thus: “These are general averments devoid of the particulars of time, persons, etc., in support of the serious allegation that [respondents] are guilty of fraud in incurring these alleged legal obligation. Bare allegations that [respondents] have been guilty of fraud in incurring the aforesaid obligations are not sufficient for the granting of the writ of attachment.”

The Court’s Ruling

An assiduous review of the antecedent facts and factual findings and conclusions of the Sandiganbayan relative to the denial of demurrer to evidence and the writ of preliminary injunction compels this Court to grant the instant petition.

Nature of Preliminary Attachment

Attachment is an ancillary remedy applied for not for its own sake but to enable the attaching party to realize upon relief sought and expected to be granted in the main or principal action; it is a measure auxiliary or incidental to the main action. As such, it is available during the pendency of the action which may be resorted to by a litigant to preserve and protect certain rights and interests therein pending rendition, and for purposes of the ultimate effects, of a final judgment in the case. As a corollary proposition, an order granting an application for a writ of preliminary attachment cannot, owing to the incidental or auxiliary nature of such order, be the subject of an appeal independently of the main action.

The instant case is one of those mentioned in Sec. 1, Rule 57 of the Rules, specifically the section’s paragraph “d,” wherein a writ of preliminary attachment may be issued. It provides:

SECTION 1. Grounds upon which attachment may issue.––A plaintiff or any proper party may, at the commencement of the action or at any time thereafter, have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:

x x x x (d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is

brought, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought;

For a writ of attachment to issue under the above-quoted rule, the applicant must sufficiently show the factual circumstances of the alleged fraud. Fraud may be defined as the voluntary execution of a wrongful act, or a willful omission, knowing and intending the effects which naturally and necessarily arise

from such act or omission. In its general sense, fraud is deemed to comprise anything calculated to deceive, including all acts and omissions and concealment involving a breach of legal or equitable duty, trust, or confidence justly reposed, resulting in damage to another, or by which an undue and unconscientious advantage is taken of another. Fraud is also described as embracing all multifarious means which human ingenuity can device, and which are resorted to by one individual to secure an advantage over another by false suggestions or by suppression of truth and includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated. Fraudulent, on the other hand, connotes intentionally wrongful, dishonest, or unfair.

In the case at bar, the Republic has, to us, sufficiently discharged the burden of demonstrating the commission of fraud committed by respondents Lims as a condition sine qua non for the issuance of a writ of preliminary attachment. The main supporting proving document is the Republic’s Exhibit “B” which the Sandiganbayan unqualifiedly admitted in evidence. And the fraud or fraudulent scheme principally came in the form of Lim, Sr. holding and/or operating logging concessions which far exceeded the allowable area prescribed under the 1973 Constitution.

A cursory evaluation of the Republic’s Exhibit “B”––the Decision dated November 20, 1986 of then Minister Ernesto M. Maceda of the Ministry Natural Resources (MNR) in an unnumbered MNR case entitled IN RE: VIOLATIONS OF VETERANS WOODWORKS, INC. AND ALFONSO LIM, SR. AND TAGGAT INDUSTRIES, INC., canceling the logging concessions enjoyed by the Lim Group––yields the following undisputed relevant data:

(1) Lim, Sr., through the seven (7) respondent corporations, had been holding/operating/managing several timber concessions with a total area of 533,880 hectares, more or less, which was far in excess of the 100,000 hectares allowed in the 1973 Constitution;

(2) Since a wide expanse of forest lands were in between the different Lim concessions, the Lims had effectively access to a total of 633,880 hectares of forests;

(3) Other violation of the constitutional prohibition applies also to three (3) corporations (Acme Plywood Co., Inc., Western Cagayan Lumber Co., Inc., and Southern Plywood Corporation).

As is made abundantly clear in the aforesaid Maceda decision, the MNR revoked or canceled the concessions or timber license agreements (TLAs) of Lim, Sr. on the principal ground that the timber award was made in utter violation of the Constitutional limitations on the granting of logging concessions. The same decision also indicated that Lim, Sr.’s “influence, power and strong connection with the past [i.e., Marcos] dispensation” explained his receipt of special privileges and concessions unfettered by constitutional constraints. So influential was Lim, Sr. that he and TAGGAT and sister companies received certain timber-related benefits without the knowledge, let alone approval, of MNR. Lim, Sr. doubtless utilized to the hilt his closeness to the Marcoses to amass what may prima facie be considered as illegal wealth.

Scheme to Circumvent Constitutional Prohibition

Sec. 11 of Article XIV of the governing 1973 Constitution states that “no private corporation or association may hold by lease, concession, license, or permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand hectares.” Complementing this provision was Chapter I, No. 3(e) of Forestry Administrative Order (FAO) No. 11 prohibiting any individual, corporation, partnership, or association from acquiring a timber license or license agreement covering an area in excess of 100,000 hectares. Likewise, Chapter I, No. 3(d) of FAO No. 11 states that no individual corporation, partnership, or association who is already a holder of an ordinary timber license or license agreement nor any member of the family, incorporator, director, stockholder, or member of such individual, corporation, partnership, or association shall be allowed to acquire a new timber license or license agreement or any interest or participation in it.

The constitutional and statutory limitations on allowable area leases and concessions were obviously meant to prevent the concentration of large tracts of public land in the hands of a single individual. But as the Office of the Solicitor General aptly observed, citing the Maceda decision: “For one Filipino out of 55 million to own, operate or in one form [or] another be financially interested in more than 600,000 hectares out of a total forest land of 14 million hectares is certainly unfair, unacceptable and unconstitutional by any standard.”

Lim, Sr., as earlier stated, had been holding/operating/managing several timber concessions through the seven (7) logging companies for an aggregate area of 533,880 hectares, as follows:

Name of Corporation TLA No. Concession Area(1) Taggat Industries, Inc. 071 107,845 has.(2) Pamplona Redwood Veneer Co., Inc. 074 118,315 has(3) Southern Plywood Corp. (one share) 321 71,300 has.(4) Western Cagayan Lumber Co., Inc. (one share) 073 69,675 has.(5) Acme Plywood & Veneer Co,, Inc. (one share) 075 84,525 has.(6) Veterans Woodworks, Inc. 63,179 has.(7) Sierra Madre Wood Ind., Inc. 345 19,050 has.

TOTAL 533,880 has.

The Maceda decision stressed that Lim, Sr. had one share each in the three corporations, namely: (1) Acme Plywood and Veneer Co., Inc. (ACME); (2) Western Cagayan Lumber Co., Inc. (WESTERN); and (3) Southern Plywood Corporation (SPC). These corporations, the decision added, likewise violated the Constitution considering that Lim, Sr. had control over them as owner-founder. To cover the constitutional violation, Lim, Jr. was used as a front and made to appear as President of the mentioned three corporations.

There can be no quibbling that MNR correctly revoked/canceled all the timber concessions of Lim, Sr., namely: TLA No. 071 (TAGGAT), TLA No. 074 (PAMPLONA), TLA No. 321 (SPC), TLA No. 073 (WESTERN), and TLA No. 075 (ACME). As it were, the TLAs of TAGGAT and PAMPLONA each exceeded the 100,000-hectare threshold prescribed by the 1973 Constitution. Initially, the execution and granting of those timber license agreements were already tainted with fraud. The Lims resorted to their close connection with the Marcoses for the approval of the timber license agreements and the Lims were given access effectively to a total 633,880 hectares in violation of the 1973 Constitution and FAO No. 11.

Indeed, the Lims’ availment and enjoyment of logging concessions grossly in excess of constitutional limits amount to a voluntary execution of a wrongful act, if not a serious breach of legal duty. By their acts, the Lims veritably defrauded and cheated the Filipino people––the ultimate beneficiaries of the country’s natural resources.

Denial of Demurrer to Evidence Indicativeof the Commission of Fraudulent Acts

The evidence that clearly supports the issuance of a writ of preliminary attachment sought by Republic is already on record before the Sandiganbayan. As a matter of fact, the anti-graft court already ruled and considered that the evidence so far presented by the Republic had been sufficient to support a finding that respondents had committed illegal and fraudulent acts against the Republic and the Filipino people. This was the tenor of the Sandiganbayan’s resolution denying the respondents’ demurrer to evidence.

A demurrer to evidence is defined as “an objection by one of the parties in an action, to the effect that the evidence which his adversary produced is insufficient in point of law, whether true or not, to make out a case or sustain the issue.” The party demurring challenges the sufficiency of the whole evidence to sustain a verdict. In passing upon the sufficiency of the evidence raised in a demurrer, the court is merely required to ascertain whether there is competent or sufficient proof to sustain the indictment or to support a verdict of guilt. And when the court denies the demurrer, the defendant has to present countervailing evidence against the evidence adduced by the plaintiff.

In the case at bar, when the Sandiganbayan denied respondents’ demurrer to evidence, it in effect ruled that the evidence presented by the prosecution is, absent a countervailing evidence, prima facie sufficient to support an adverse verdict against them for amassing illegal wealth. The Sandiganbayan, in its underlying resolution of July 17, 2003 denying the demurrer, wrote:

The Demurrer is denied. To support the charges, plaintiff introduced, among others, Exhibit “B”, a decision dated November 20, 1986 by then DENR Secretary

Ernesto Maceda which, after hearing, revoked or cancelled the respective Timber License Agreements (TLAs) of defendants Alfonso Lim, Sr., Taggat Industries, Inc., Pamplona Redwood Veneer, [etc.] after an investigation found that the same entities held timber concessions in excess of what was allowed by the Constitution. The same decision likewise made certain findings of facts that x x x Lim, Sr. enjoyed close association with former President Ferdinand E. Marcos as a consequence of which the latter granted x x x Lim, Sr. special privileges and concessions in gross violation of the Constitution. In addition, Exhibit “E” indicates that x x x Taggat Industries, chiefly owned by defendant Lim Sr., using his close association with then President Marcos, acquired and controlled three (3) other logging firms, namely Veteran Woodworks, Inc., Tropical Philippine Wood Industries, Inc., and Sierra Madre Wood Industries, Inc. x x x. This resulted to the acquisition of defendant Lim Sr. of excessive number of timber concessions.

Given the circumstances, this Court cannot simply brush aside the foregoing considering that what the defendants-movants proffer are mere blanket denial of the charges. In demurrer to evidence, the party demurring challenges the sufficiency of the whole evidence to sustain a verdict. The court, in passing upon the sufficiency of the evidence raised in a demurrer, is merely required to ascertain whether there is competent or sufficient evidence to sustain the indictment. Applying the said ruling in the instant case, there exists prima facie evidence on record x x x to support or sustain the charges against the defendants-movants. There is therefore a further need on the part of the defendants-movants to submit the proof to the contrary other than their mere simple disclaimer.

Sandiganbayan Did Not Consider Evidence in Denying Attachment

Given the foregoing pronouncement from the Sandiganbayan, the Court is completely at a loss to understand the graft court’s denial of the Republic’s plea for the ancillary remedy of preliminary attachment. The wrongful act––the fraud perpetuated by Lim Sr. and/or his corporations on the Republic––is written over or easily deducible from the adverted Maceda decision and Exhibit “E.” While fraud cannot be presumed, it need not be proved by direct evidence and it can well be inferred from attendant circumstances. Withal, we cannot but agree with the Republic’s contention that the Sandiganbayan’s denial of its motion for a writ of preliminary attachment constitutes grave and patent abuse of discretion amounting to lack or excess of jurisdiction.

A scrutiny of the above-quoted July 17, 2003 Resolution readily shows that the Sandiganbayan indeed considered the evidence presented and offered by the Republic, specifically Exhibits “B” and “E” which convincingly show the finding that respondents’ acts were tainted with fraud in the acquisition of the logging concessions due to their close association with the Marcoses.

It is incongruous, therefore, for the Sandiganbayan to deny the writ of preliminary attachment when the pieces of evidence on record which it used and based its findings and conclusions in denying the demurrer to evidence were the same ones which demonstrate the propriety of the writ of preliminary attachment. Clearly, the Republic has complied with and satisfied the legal obligation to show the specific acts constitutive of the alleged fraud committed by respondents. The denial of the prayed writ, thus, evidently constitutes grave abuse of discretion on the part of Sandiganbayan. After all, “attachment is a mere provisional remedy to ensure the safety and preservation of the thing attached until the plaintiff can, by appropriate proceedings, obtain a judgment and have such property applied to its satisfaction.” Indeed, the properties of respondents sought to be subjected to the ancillary writ of preliminary attachment are not only in danger of being lost but should be placed under custodia legis to answer for any liabilities that may be adjudged against them in the instant case.

WHEREFORE, the Sandiganbayan Resolutions dated March 28, 2003 and June 18, 2004 are hereby REVERSED and SET ASIDE. Accordingly, the 2nd Division of Sandiganbayan is hereby DIRECTED to ISSUE the Writ of Preliminary Attachment prayed for by the Republic. No costs. SO ORDERED.

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G.R. No. 182735

Sps. Rogelio Marcelo & Milagros Vs. Philippine Commercial International Bank (PCIB)

Before this Court is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, filed by spouses Rogelio Marcelo and Milagros Marcelo (spouses Marcelo) assailing the Decision dated 31 January 2007 and the Resolution dated 29 August 2007 of the Court of Appeals in CA-G.R. CV No. 82424, upholding the validity of the extra-judicial foreclosure proceedings initiated by Philippine Commercial International Bank (PCIB) and the subsequent public auction sale conducted against their properties.

The antecedent facts of the case are as follows:

The spouses Marcelo obtained from PCIB several loans in staggered amounts within the period 1996-1997. In turn, they executed promissory notes in favor of PCIB summarized as follows:

Each Promissory Note had a corresponding Disclosure Statement in compliance with Republic Act No. 3765 signed by spouses Marcelo acknowledging and conforming to the terms and conditions attached to their credit transactions.

On 3 June 1997, to secure the payment of their loans, including any extension or renewal of the credit and all other obligations, whether contracted before, during or after the constitution of a Real Estate Mortgage (REM), amounting to P3,990,000.00 representing their entire principal obligations under PN No. 162/96, No. 97-124, No. 97-138 and No. 97-175, the spouses Marcelo executed an REM over six parcels of land all situated in Baliuag, Bulacan with an aggregate area of 2,780 square meters and registered in their names under Transfer Certificates of Title (TCTs) No. T-91170, No. T-93936, No. T-91169, No. T-93935, No. T-2524 and No. T-16803.

The REM assured PCIB of the following remedy:

In the event the Mortgagor/Borrower defaults in the obligations hereby secured, breaches or fails to comply with any of the terms and conditions stipulated in this mortgage or in the separate instruments evidencing the obligations hereby secured, or institutes suspension of payments or insolvency proceedings or to be involuntarily declared insolvent, or if this mortgage cannot be recorded in the Registry of Deeds (hereinafter referred to as “events of default”), the Mortgagee may foreclose this mortgage extra-judicially in accordance with Act No. 3135, as amended, or judicially in accordance with the Rules of Court. Should the Mortgagee be compelled to foreclose this mortgage or to take any other legal action to protect its interest, the Mortgagor/Borrower shall pay attorney’s fees which are hereby fixed at 15% of the total obligation that is unpaid exclusive of all costs and fees allowed by law.

The spouses Marcelo defaulted on the payment of their outstanding loans, prompting PCIB to make repeated demands for its payment as evidenced by PCIB’s final demand letter dated 19 June 1998 on the outstanding obligation of the spouses amounting to P6,836,931.05 as of 30 May 1998. The unpaid obligation mounted up to P7,628,501.98 as of 30 April 2003.

On 3 August 1998, PCIB file a Petition for Extra-judicial Foreclosure over the mortgaged properties before the Regional Trial Court (RTC) of Malolos, Bulacan.

A Notice of Sheriff’s Sale dated 7 August 1998 was issued by the Provincial Sheriff of Bulacan thru Sheriff IV Junie Jovencio E. Ipac (Sheriff Ipac). The said Notice was posted on the Meralco posts within the vicinities of Baliuag Roman Catholic Church, Baliuag Public Market and the chapel of Sabang, Baliuag, Bulacan as evidenced by the Affidavit of Posting executed by Sheriff Ipac dated 7 August 1998.

The Notice was also sent by registered mail to PCIB and spouses Marcelo, but the latter denied receiving the same.

The Notice of the Sheriff’s Sale was, likewise, published in The Times Newsweekly, a newspaper of general circulation as evidenced by the Affidavit of Publication dated 5 September 1998 and copies of publications dated 22 August 1998, 29 August 1998 and 5 September 1998.

On 15 September 1998, the Office of the Provincial Sheriff of Bulacan conducted a public auction sale over the six parcels of land, and the same were sold to PCIB represented by Reynaldo Gatmaitan for P5,616,000.00. The Certificate of Sale issued to PCIB dated 28 October 2008 was then annotated on the TCTs of the subject lands on 10 November 1998.

Shortly before the expiration of the redemption period, spouses Marcelo filed a Complaint before RTC Bulacan on 26 October 1999, alleging (1) PCIB’s violations of the terms and conditions of the REM contract and the Promissory Notes by demanding exorbitant interest rates and unnecessary bank charges without them being notified; and (2) irregularities in the foreclosure proceedings for failure to comply with the posting and publication requirements as mandated by Act No. 3135. The spouses Marcelo prayed for the nullification of the foreclosure proceedings and the issuance of a Temporary Restraining Order (TRO) against PCIB to prevent the latter from taking possession of the foreclosed properties.

On 5 November 1999, the trial court issued an Order denying the spouses Marcelo’s application for a TRO for want of merit and directed further proceedings on the case. The trial court maintained that the publication of the Notice of Sale in The Times Newsweekly necessarily connoted that said publication was duly accredited by the trial court, having been allowed by the Ex-Officio Sheriff.

Quoting Olizon v. Court of Appeals, the trial court declared that the lack of personal notice to the mortgagors is not a ground to set aside the foreclosure sale. Notices are given for the purpose of securing bidders and preventing a sacrifice of the property. If these objects are attained, immaterial errors and mistakes will not affect the sufficiency of the notice.

Promissory Note Number Principal Amount Date of Instrument Maturity Date97-115 P500, 000.00 2 June 1997 1 December 199797-116 P500, 000.00 4 June 1997 1 December 199797-117 P200, 000.00 9 June 1997 8 December 199797-124 P990, 000.00 16 June 1997 15 December 199797-138 P500, 000.00 14 July 1997 12 January 199897-175 P800, 000.00 20 August 1997 16 February 1998162/96 P1,700, 000.00 27 November 1996 26 May 1997

PCIB, in its Motion to Dismiss filed on 3 January 2000, contended that the Complaint filed was empty rhetoric designed to delay its right under Section 7 of Act No. 3135, as amended by Act 4118, to take possession of the foreclosed property even during the redemption period of one year. It added that the matters are now fait accompli, for it had already foreclosed the properties and the one-year redemption period had already lapsed.

The spouses Marcelo opposed the above Motion by emphasizing the need for a full-blown trial as necessitated by the trial court in its Order dated 5 November 1999. They, likewise, reiterated the alleged irregularity in the foreclosure of their properties not offered as collaterals and the non-compliance with the posting, publication and raffle requirements, making the foreclosure proceedings invalid.

In its Reply filed on 21 January 2000, PCIB merely restated its averments in its Motion to Dismiss.

On 24 March 2000, the trial court issued an Order denying the Motion to Dismiss filed by the PCIB. It declared that there remained the imperative need of ascertaining the actual amount of the indebtedness outstanding and due for the court to determine whether the foreclosure proceedings were valid or not. It ordered the PCIB to submit its answer to the Complaint.

PCIB, in its Answer filed on 13 April 2000, put up a compulsory counterclaim for damages and attorney’s fees in addition to its averments in its Motion to Dismiss and Reply.

In their Reply filed on 12 May 2000, the spouses Marcelo prayed that the status quo be maintained and the foreclosure sale be declared null and void for not complying with the jurisdictional requirement of posting, publication and raffle.

In its Decision dated 12 December 2003, the trial court, sustaining the legal presumption of regularity in the performance of Sheriff Ipac’s official duty in the foreclosure proceedings, cited this Court in Philippine National Bank v. International Corporate Bank, reiterating that the law does not require that a personal notice of the auction sale be given to the mortgagor.

The RTC affirmed, as well, PCIB’s allegation of laches against spouses Marcelo, stating, among other things, that the action was but a much-delayed afterthought following the spouses Marcelo’s neglect to seek an accurate accounting of their loan obligation and their omission to redeem their properties within the period prescribed by law. Hence, it decreed:

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the above-entitled complaint for insufficiency of evidence to warrant the reliefs prayed for therein as well as the pecuniary counterclaim of defendant Philippine Commercial International Bank.

Acting on the spouses Marcelo’s Motion for Reconsideration, the trial court issued an Order dated 10 March 2004 reversing itself and rendering the extra-judicial foreclosure proceedings null and void for being violative of Act No. 3135.

The trial court, in granting the Motion, submissively agreed with the spouses Marcelo’s suppositions, thus:

All told, the Court agrees with the argument of [Sps. Marcelo] that the provision of law requiring the posting of the notices of sale of a property subject of extra-judicial foreclosure have not been faithfully complied with in the proceedings complained of in the case at bar. By such token, the aforestated extra-judicial foreclosure proceedings must be nullified for having been violative of the law on the matter. If for that reason alone, the Court withdraws its application in the assailed decision of “the legal presumption that the public functionaries involved in the foreclosure proceedings, particularly the sheriff concerned, ‘regularly performed’ their official duties in that specific respect. [par. (m), Sec. 3, Rule 131 of the Revised Rules of Court].

In pronouncing non-compliance with the publication requirement as necessitated by Act No. 3135, the trial court decreed that the publication of the Notice of Sheriff’s Sale in The Times Newsweekly, being a tabloid with few stale news items, was insufficient to meet the publication requirement of the law, the same having commanded very minimal readership. Hence:

WHEREFORE, premises considered, the aforementioned Motion for Reconsideration submitted by [the spouses Marcelo] vis-à-vis the decision dated 12 December 2003 is hereby GRANTED. Accordingly, the aforesaid decision, particularly its dispositive portion, is hereby set aside and, in lieu thereof, another judgment is hereby rendered declaring null and void the extra-judicial foreclosure proceedings initiated by [respondent] Philippine Commercial International Bank against the properties mortgaged in its favor by spouses Rogelio Marcelo and Milagros Marcelo and all the incidents appurtenant thereto, including the public auction sale conducted, the certificate of sale issued pursuant thereto and the annotation thereof in [the spouses Marcelo] transfer certificates of title.

Aggrieved, PCIB appealed the above Order to the Court of Appeals on 31 March 2004.

The Court of Appeals, in its Decision dated 31 January 2007, overturned the appealed Order. The appellate court held that the publication of the Notice of Sheriff’s Sale at The Times Newsweekly, as recognized by the Executive Judge of the trial court, was in compliance with the publication requirement for the foreclosure sale.

The appellate court, defining public place as any location that the local state or national government maintains for the use of the public such as highway, park or public building, maintained that the posting of the said notices at the Meralco posts satisfies the mandates of Act. No. 3135 as to posting requirement, for what is material is the accessibility of the said posted notices to the general public. Finding refuge in case law, it added that supposed there was really a defect in posting, still the publication of the notice in a newspaper of general circulation in the city or municipality where the mortgaged property was situated cured the infirmity. Therefore, it ruled.

WHEREFORE, premises considered, the appealed Order dated March 10, 2004 is REVERSED and SET ASIDE. In lieu thereof, another is entered ordering the REINSTATEMENT of the trial court’s December 12, 2003 Decision.

The Court of Appeals, in its Resolution dated 29 August 2007, denied the petitioners’ Motion for Extension of Time to file Motion for Reconsideration of its 31 January 2007 Decision, on the ground that the time for filing the same was non-extendible; Petitioners’ Motion for Reconsideration was denied for being filed 11 days late on 12 March 2007.

On 31 October 2007, the Court of Appeals resolved to deny the spouses Marcelo’s Motion for Reconsideration filed on 19 September 2007 for being a second motion for reconsideration that was proscribed under Section 2, Rule 52 of the Rules of Court.

Signed by Court of Appeals Executive Clerk of Court III, Vilma S. Ayala-Dasal on 10 April 2008, the appellate court made an Entry of Judgment of its 31 January 2007 Decision; said decision became final and executory on 26 September 2007, and was recorded in the Book of Entries of Judgment.

Hence, this petition filed on 21 May 2008, wherein the spouses Marcelo point out the following errors:

I. That the Court of Appeals gravely erred in ruling that the Motion for Extension of Time to file Motion for Reconsideration is non-extendible. II. That the Court of Appeals gravely erred in upholding the validity of the extra-judicial foreclosure sale despite of non-compliance with the

posting and publication requirements as mandated by Act No. 3135. III. That the Court of Appeals gravely erred in upholding the validity of the foreclosure sale despite of PCIB’s breach of contract by charging

interests not agreed upon by the parties.

This petition has no merit.

Revisiting the records of this case would reveal that the case attained its finality as of 26 September 2007, and the same has already been recorded in the Book of Entries of Judgment. This Court, in a long line of cases, has maintained that once the judgment has become final and executory, it can no longer be disturbed, altered or modified. Except for clerical errors or mistakes, all the issues between the parties are deemed resolved and laid to rest.

In Dapar v. Biascan, this Court reiterates that nothing is more settled in law than that once a judgment attains finality, it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land. Just as the losing party has the right to file an appeal within the prescribed period, the winning party has the correlative right to enjoy the finality of the resolution of his case.

The instant Petition offers no cogent reason that would sway this Court to make a radical departure from its hesitancy to reopen a case that has attained finality. The issues raised in the main by the petitioners are but the same issues that were already passed upon by the Court of Appeals in its Decision dated 31 January 2007. To reopen this case would mean a crass defiance of our basic procedural rules. Consequently, it will run contrary to the dictates of due process, as it would deprive PCIB from executing the rights vested upon it after the case has been adjudged with finality. The effective and efficient administration of justice requires that once a judgment has become final, the prevailing party should not be deprived of the fruits of the verdict by subsequent suits on the same issues filed by the same parties.

Through the ages, courts have been duty-bound to put an end to controversies. Any attempt to prolong, resurrect or juggle them should be firmly struck down. The system of judicial review should not be misused and abused to evade the operation of final and executory judgments.

Nevertheless, even if we probe into the merits of this case, still, the petition is unmeritorious.

In their first assigned error, the petitioners claimed that the Motion for Extension of Time to File Motion for Reconsideration is in accordance with law.

We disagree.

This Court provides in Section 1, Rule 37 of the Rules of Court that a motion for reconsideration of a judgment or a final order should be filed within the period for appeal, which is within 15 days after notice to the appellant of the judgment or final order appealed from. The 2002 Internal Rules of the Court of Appeals also states that unless an appeal or a motion for reconsideration or new trial is filed within the 15-day reglementary period, the Court of Appeals’ decision becomes final. Hence, the general rule is that no motion for extension of time to file a motion for reconsideration is allowed.

The rule as to the non-extension of time to file a motion for reconsideration is, however, not absolute. As early as 1986 in Habaluyas Enterprises, Inc. v. Maximo M. Japson, this Court has pronounced:

After considering the able arguments of counsels for petitioners and respondents, the Court resolved that the interest of justice would be better served if the ruling in the original decision were applied prospectively from the time herein stated. The reason is that it would be unfair to deprive parties of their right to appeal simply because they availed themselves of a procedure which was not expressly prohibited or allowed by the law or the Rules. On the other hand, a motion for new trial or reconsideration is not a pre-requisite to an appeal, a petition for review or a petition for review on certiorari, and since the purpose of the amendments above referred to is to expedite the final disposition of cases, a strict but prospective application of the said ruling is in order. Hence, for the guidance of Bench and Bar, the Court restates and clarifies the rules on this point, as follows:

1.) Beginning one month after the promulgation of this Resolution, the rule shall be strictly enforced that no motion for extension of time to file a motion for new trial or reconsideration may be filed with the Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and the Intermediate Appellate Court. Such a motion may be filed only in cases pending with the Supreme Court as the court of last resort, which may in its sound discretion either grant or deny the extension requested. (Emphasis ours.)

Accordingly, motions for extension of time to file a motion for new trial or reconsideration may be filed only in connection with cases pending before this Court, which may in its sound discretion either grant or deny the extension requested. No such motion may be filed before any lower courts. In opting for the liberal application of the rules in the interest of equity and justice, we cannot look with favor on a course of action which would place the administration of justice in a straight jacket for then the result would be a poor kind of justice if there would be justice at all.

We likewise disagree with the petitioners’ allegation that the Court of Appeals gravely erred in upholding the validity of the extra-judicial foreclosure sale despite non-compliance with the posting and publication requirements as mandated by Act No. 3135.

The requirement on the posting of notices is found in Section 3 of Act No. 3135, as amended by Act No. 4118, viz:

Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

The petitioners argue that the posting of the Notice of Sheriff’s Sale on Meralco posts did not comply with Act No. 3135 requiring the posting of the same in at least three public places.

A public place is a place exposed to the public and where the public gathers together or passes to and fro. As can be gleaned from Sheriff Ipac’s Affidavit of Posting, the Notices were posted on the Meralco posts within the vicinities of Baliuag Roman Catholic Church, Baliuag Public Market and near the chapel of Sabang, Baliuag, Bulacan. The aforementioned vicinities where the Meralco posts were erected are public places, to which the general public has a right to resort. The Meralco posts where the Notices were posted are but component structures of the public place itself. The law does not intend that notices to the public be posted on specific bulletin boards or information areas of a public place. What the law directs is for the notices to be placed in an area where the same is perceptible to the public.

As regards publication, Presidential Decree No. 1079, effective 24 May 1977 provides:

SECTION. 1. All notices of auction sales in extrajudicial foreclosure of real estate mortgage under Act No. 3135 as amended, judicial notices such as notices of sale on execution of real properties, notices in special proceedings, court orders and summonses and all similar announcements arising from court litigation required by law to be published in a newspaper or periodical of general circulation in particular provinces and/or cities shall be published in newspapers or publications published, edited and circulated in the same city and/or province where the requirement of general circulation applies: Provided, That the province or city where the publication’s principal office is located shall be considered the place where it is edited and published: Provided, further, That in the event there is no newspaper or periodical published in the locality, the same may be published in the newspaper or periodical published, edited and circulated in the nearest city or province: Provided, finally, That no newspaper or periodical which has not been authorized by law to publish and which has not been regularly published for at least one year before the date of publication of the notices or announcements which may be assigned to it shall be qualified to publish the said notices.

SEC. 2. The executive judge of the court of first instance shall designate a regular working day and a definite time each week during which

the said judicial notices or advertisements shall be distributed personally by him for publication to qualified newspapers or periodicals as defined in the preceding section, which distribution shall be done by raffle: Provided, That should the circumstances require that another day be set for the purpose, he shall notify in writing the editors and publishers concerned at least three (3) days in advance of the designated date: Provided, further, That the distribution of the said notices by raffle shall be dispensed with in case only one newspaper or periodical is in operation in a particular province or city.

The trial court’s opinion, that The Times Newsweekly’s minimal readership made it insufficient to meet the publication requirement is, to our minds, too narrow and limiting as to strip the newspaper of its privilege as one of the authorized publications for the notices of auction sale in Bulacan. As this Court held in many cases, to be a newspaper of general circulation, it is enough that it is published for the dissemination of local news and general information; that it has a bona fide subscription list of paying subscribers; and that it is published at regular intervals. The newspaper need not have the largest circulation, so long as it is of general circulation.

As evidenced by the Affidavit of Publication executed by The Times Newsweekly’s publisher, Teddy F. Borres, the said newspaper is of general circulation in the Provinces of Bulacan, Pampanga, Bataan, Zambales, Nueva Ecija, Tarlac and other cities. The same is published every Saturday by The Daily Record, Inc.

As to the last assigned error, the spouses Marcelo claim nullity of the foreclosure sale due to the alleged increase of interest rates and charges without their consent.

Again, we find no merit in said allegation.

Every promissory note signed by the plaintiffs has its corresponding Disclosure Statement wherein the interests and charges are stated. The acknowledgment by the plaintiffs of the statement prior to the consummation of the credit transaction and their agreement with the terms and conditions thereof simply contradict their self-claimed innocence over the matter.

IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 31 January 2007 and the Resolution dated 29 August 2007 of the Court of Appeals in CA-G.R. CV No. 82424, upholding the validity of the extra-judicial foreclosure proceedings initiated by Philippine Commercial International Bank (PCIB) and the subsequent public auction sale conducted, are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 166730

Spouses Fernando Torres and Irma Torres Vs. Amparo Medina, et al.

Before this Court is a Petition for Review on certiorari, under Rule 45 of the Rules of Court, seeking to set aside the August 30, 2004 Decision and January 18, 2005 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 75847.

The facts of the case:

On July 28, 1994, respondent Amparo Medina (Medina) wrote a letter to the Office of the Sheriff, Regional Trial Court (RTC) of Quezon City, applying for the extrajudicial foreclosure of mortgage of the property of petitioner spouses Fernando and Irma Torres (Spouses Torres) which was covered by Transfer Certificate of Title No. RT-61056 (354973) and which is subject of a Deed of Mortgage dated December 20, 1993.

On May 27, 1997, the Office of the Ex-Officio Sheriff issued a Notice of Sheriff’s Sale and, on June 30, 1997, sold at public auction the subject property to Medina being the highest bidder thereof. A Certificate of Sale was thereafter issued to Medina.

On September 21, 1999, the Spouses Torres filed a Complaint before the RTC of Quezon City for the declaration of nullity of the extrajudicial foreclosure of mortgage conducted by the Ex-Officio Sheriff. The same was docketed as Civil Case No. Q-99-38781.

In their Complaint, the Spouses Torres raised the following causes of action, to wit: a) the December 20, 1993 Deed of Real Estate Mortgage does not contain a period or term; hence, performance of the obligation has not yet

become due as there is a need for judicial determination of the period or term;

b) the June 28, 1994 Statement of Account is not the loan contemplated by law; therefore, it cannot serve as basis to foreclose extrajudicially the mortgage;

c) the credit transaction is either void or unenforceable due to breach of Section 6(a) of Republic Act No. 3765, otherwise known as “The Truth in Lending Act”;

d) Since appellee sued appellants for violation of Batas Pambansa Blg. 22, there could arise a situation of double recovery of damages which is proscribed by law. If the extrajudicial foreclosure will be allowed and if appellants will be made to pay the amount of the checks subject of the criminal suit under B.P. Blg. 22, it would result in the unjust enrichment of appellee.

On July 20, 2000, Medina filed a Motion to Dismiss raising the grounds of res judicata and forum shopping. Medina argued that the Spouses Torres had filed an earlier Complaint praying for the annulment of the real estate mortgage involving the same property and which was docketed as Civil Case No. Q-94-18962 before the RTC of Quezon City, Branch 216. Medina contended that said complaint was already dismissed as evidenced by the RTC’s Decision dated March 7, 1997.

On December 27, 2001, the RTC issued an Order granting Medina’s motion to dismiss the complaint. The RTC ruled that res judicata was present and that the Spouses Torres were guilty of forum shopping, to wit:

Thus, it is plain from the foregoing that the present action is identical to the case filed by plaintiffs against the defendant before the Regional Trial Court of Quezon City, Branch 216, hence, res judicata lies. The decision of the Regional Trial Court of Quezon City, Branch 216, dated March 7, 1997, has become final; the aforesaid court which rendered said decision had jurisdiction over the subject matter and the parties; the decision was on the merits; and there is an identity of parties, subject matter and causes of action between the present action and the case before the Regional Trial Court of Quezon City, Branch 216.

The Court also notes that while the plaintiffs here alleged separate causes of action in the instant complaint, they are actually using the very same grounds they have brought before Branch 216 of this Court to support their claim to annul the foreclosure proceedings. The validity of the real estate mortgage is again being assailed to ask for the annulment of the foreclosure proceedings conducted over the mortgaged property. It must be remembered that the validity of the real estate mortgage has been sustained by the decision in Civil Case No. 94-18962 which decision has already attained finality. The test of identity of causes of action lies not in the form of an action but on whether the same evidence would support and establish the former and present causes of action. Plaintiffs cannot avoid the application of res judicata by simply varying the form of their action or by adopting a different method in presenting it.

The Spouses Torres appealed to the CA, which, in similar fashion, ruled that res judicata had already set in, the dispositive portion of which reads:WHEREFORE, the Order dated December 27, 2001 is hereby AFFIRMED and the appeal is DISMISSED. Costs against appellants.

SO ORDERED.

The Spouses Torres then filed a Motion for Reconsideration dated August 30, 2004, which was, however, denied by the CA in the Resolution dated January 18, 2005.

Hence, herein petition, with the Spouses Torres raising the following assignment of errors, to wit: A. THE COURT OF APPEALS GRAVELY ERRED WHEN IT IGNORED THAT THE CAUSE OF ACTION IN CIVIL CASE NO. Q-99-38781 AROSE MUCH LATER THAN THE CAUSE OF ACTION IN CIVIL CASE NO. Q-94-18962. HENCE, FORUM SHOPPING AND RES JUDICATA DO NOT APPLY.

A-1. ASSUMING WITHOUT ADMITTING THAT RES JUDICATA EXISTS IN THIS CASE, THE SAME WILL NOT BE HONORED IF ITS APPLICATION WOULD CONSTITUTE A SACRIFICE OF JUSTICE IN FAVOR OF TECHNICALITY;

B. THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE CAUSES OF ACTION CANNOT BE IDENTICAL IF THE CAUSE OF ACTION IN ONE AROSE AFTER THE JUDGMENT IN THE OTHER;

C. THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE EXTRAJUDICIAL FORECLOSURE OF MORTGAGE INSTITUTED BY PRIVATE RESPONDENT AMPARO MEDINA CONTRAVENES THE EQUITABLE PRINCIPLE OF UNJUST ENRICHMENT CODIFIED UNDER ARTICLE 22 OF THE NEW CIVIL CODE, AND WOULD AMOUNT TO DOUBLE RECOVERY EVEN AS THE B.P. BLG. 22 VIOLATIONS ARE STILL PENDING IN THE METROPOLITAN TRIAL COURT OF QUEZON CITY;

D. THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE PRIVATE RESPONDENT AMPARO MEDINA HAS ELECTED HER REMEDY WHEN SHE SUED PETITIONER FERNANDO TORRES ON A B.P. BLG. 22 VIOLATION, AND ENGAGED THE SERVICES OF A PRIVATE PROSECUTOR TO PROSECUTE THE SAME. THE FILING OF THE B.P. BLG. 22 VIOLATION BARS AND EXCLUDES THE REMEDY OF FORECLOSURE OF MORTGAGE.

The petition is not meritorious.

At the crux of the controversy is the determination of whether or not res judicata bars the filing of Civil Case No. Q-99-38781.

Civil Case No. Q-94-18962 vis-a-vis Civil Case No. Q-99-38781

As borne from the records of the case, the Spouses Torres first instituted Civil Case No. Q-94-18962 before the RTC of Quezon City, Branch 216, which, among others, prayed for the nullity of the real estate mortgage, dated December 20, 1993.

On March 7, 1997, the RTC issued a Decision dismissing the complaint thereby upholding the validity of the real estate mortgage, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. DISMISSING the plaintiffs’ complaint for lack of merit;

2. Ordering the plaintiffs, spouses Fernando Torres and Irma Torres, to pay defendant Amparo Medina, the sum of FIFTY THOUSAND (P50,000.00) PESOS as and by way of attorney’s fees and to pay the costs of suit.

SO ORDERED.

The Spouses Torres appealed said Decision to the CA.

On February 18, 1998, the CA issued a Resolution dismissing the appeal, the dispositive portion of which reads:

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the appellants’ motion for extension of time to file appellants’ brief is hereby DENIED for being filed out of time. The appeal is hereby DISMISSED.

SO ORDERED.

The Spouses Torres then filed a Motion for Reconsideration, which was, however, denied by the CA in the Resolution dated August 6, 1998.

Aggrieved, the Spouses Torres then sought relief from this Court.

On July 5, 1999, the Court’s First Division issued a Resolution denying the petition of the Spouses Torres. On August 16, 1999, the First Division issued another Resolution denying the motion for reconsideration. On September 7, 1999, an Entry of Judgment was rendered.

Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment." Res judicata lays the rule that an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.

The elements of res judicata are:(1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action identity of parties, subject matter, and causes of action.

In their petition, the Spouses Torres do not dispute the presence of the first three elements. They, however, dispute the presence of the last element, specifically arguing that the evidence necessary to establish the cause of action in Civil Case No. Q-99-38781 is different from that of Civil Case No. Q-94-18962. The Spouses Torres conclude that the evidence is not identical so as to place the causes of action within the prohibition based on res judicata.

This Court is not persuaded.

To reiterate, in Civil Case No. Q-99-38781, the Spouses Torres raised the following causes of action:a) the December 20, 1993 Deed of Real Estate Mortgage does not contain a period or term; hence, performance of the obligation has not yet

become due as there is a need for judicial determination of the period or term;

b) the June 28, 1994 Statement of Account is not the loan contemplated by law; therefore, it cannot serve as basis to foreclose extrajudicially the mortgage;

c) the credit transaction is either void or unenforceable due to breach of Section 6(a) of Republic Act No. 3765, otherwise known as “The Truth in Lending Act”;

d) Since appellee sued appellants for violation of Batas Pambansa Blg. 22, there could arise a situation of double recovery of damages which is proscribed by law. If the extrajudicial foreclosure will be allowed and if appellants will be made to pay the amount of the checks subject of the criminal suit under B.P. Blg. 22, it would result in the unjust enrichment of appellee.

This Court has previously employed various tests in determining whether or not there is identity of causes of action as to warrant the application of the principle of res judicata. One test of identity is the "absence of inconsistency test" where it is determined whether the judgment sought will be inconsistent with the prior judgment. If no inconsistency is shown, the prior judgment shall not constitute a bar to subsequent actions.

This Court finds that the first three causes of action inevitably deal with the validity of the real estate mortgage. Although the Spouses Torres do not admit it, the conclusion is certain in that any affirmative relief that this Court may grant on said causes of action would affect the validity of the real estate mortgage; an issue which could no longer be revived, as the same has been settled.

In Civil Case No. Q-94-18962, the Spouses Torres already assailed the validity of the Real Estate Mortgage dated December 20, 1993 as evidenced from the reliefs sought for by them, to wit:

WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court to render judgment as follows:

1. Declaring the x x x Deed of Real Estate Mortgage dated 20 December 1993 (Exhibit E) void;2. Declaring that x x x all RCBC checks issued pursuant to the Deed of Real Estate Mortgage dated 20 December 1993 as likewise void;3. Directing defendant Register of Deeds of Quezon City to cancel the annotation of the real estate mortgage in TCT No. RT-61056; x x x

In dismissing the Complaint, the RTC decision in Civil Case No. 94-18962 was categorical in upholding the validity of the instrument, to wit:The contention that the Deed of Real Estate Mortgage dated December 20, 1993 should also be annulled being the fruit of the previous

voidable contracts deserves scant consideration. The same was found to have the essential elements of a valid contract x x x.

x x x x

Corollarily, the Deed of Real Estate Mortgage, dated December 20, 1993, being perfectly valid, defendant Amparo Medina has the right to its registration in her favor. x x x

It bears stressing that the doctrine of res judicata actually embraces two different concepts: (1) bar by former judgment and (b) conclusiveness of judgment.

The second concept – conclusiveness of judgment – states that a fact or question which was in issue in a former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of cause of action is not required, but merely identity of issues.

Based on the foregoing, the validity of the real estate mortgage can no longer be attacked, more so because the decision in Civil Case No. Q-94-18962 has become final and Entry of Judgment has already been entered in our books.

It therefore goes without saying that the foreclosure of the mortgage is a right given to Medina as the same is embodied in the Deed of Real Estate Mortgage, to wit:

x x x x

That it is further understood that if the MORTGAGOR shall well and truly perform the obligation above contracted then this Mortgage shall be null and void; otherwise, it shall remain in full force and effect and may be foreclosed extrajudicially under Act 3135 as amended.

Thus, this Court finds no error in the decisions of the lower court and the appellate court declaring that there exists, in fact, res judicata. As succinctly put in FELS Energy, Inc. v. Province of Batangas, res judicata, as a ground for dismissal, is based on two grounds, namely:

(1) public policy and necessity, which makes it to the interest of the State that there should be an end to litigation --- republicae ut sit litium; and (2) the hardship on the individual of being vexed twice for the same cause --- nemo debet bis vexari et eadem causa. A conflicting doctrine would subject the public peace and quiet to the will and dereliction of individuals and prefer the regalement of the litigious disposition on the part of suitors to the preservation of the public tranquility and happiness

Anent the fourth cause of action in Civil Case No. Q-99-38781, this Court finds that the Spouses Torres had already raised, in Civil Case No. 94-18962, the fact that eleven (11) counts of Batas Pambansa Bilang (B.P. Blg.) 22 violations are pending with Branch 36, Metropolitan Trial Court (MeTC), Quezon City. Thus, the RTC is correct in its observation that res judicata lies, as the Rizal Commercial Banking Corporation (RCBC) checks referred to in the complaint in Civil Case No. Q-99-38781 are the very same documents subject of Civil Case No. Q-94-18962.

The foregoing findings notwithstanding, the Spouses Torres contend that the election of Medina from sue them for violation of B.P Blg. 22 bars Medina from the remedy of foreclosure of mortgage. The Spouses Torres, citing Bank of America NT & SA v. American Realty Corporation (Bank of America), thus argue:

x x x the remedies available to the mortgage creditor are deemed alternative and not cumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose, a remedy is deemed chosen upon the fling of the suit for collection or upon the filing of the complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon filing of the petition not with any court of justice but with the Office of the Sheriff of the province where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended by Act No. 4118.

The argument of the Spouses Torres is misplaced. The doctrine found in Bank of America, and in related cases, finds no application to the case at bar, as the filing of a B.P. Blg. 22 case is not the “collection suit” contemplated by law and jurisprudence, which bars a mortgagee from later on electing to foreclose the mortgaged property.

Section 1 of B.P. Blg. 22 provides:Section 1. Checks without sufficient funds. - Any person who makes or draws and issues any check to apply on account or for value, knowing at

the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, which check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be punished by imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less than but not more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of the court.

It bears stressing that in Que v. People, this Court stated that the clear intention of the framers of B.P. Blg. 22 is to make the mere act of issuing a worthless check malum prohibitum. In prosecutions for violation of B.P. Blg. 22 therefore, prejudice or damage is not a pre-requisite for conviction. In the later case of People v. Nitafan, this Court ruled that the agreement surrounding the issuance of the checks need not be first looked into since the law has clearly provided that the mere issuance of any kind of check, regardless of the intent of the parties, i.e., whether the check is intended merely to serve as a guarantee or deposit, but which check is subsequently dishonored, makes the person who issued the check liable. The intent of the law is to curb the proliferation of worthless checks as a means of payment of obligations.

That B.P. Blg .22 is not the “collection suit” contemplated by law can be seen by the fact that the law seeks to punish the mere issuance of a “bum” check notwithstanding the presence of damage or prejudice to the offended party.

Lastly, the Spouses Torres also argue that the equitable principle of unjust enrichment bars the extrajudicial foreclosure of the mortgage, in the wise:If private respondent Amparo Medina were to be allowed the extrajudicial foreclosure that she caused to be conducted, and eventually

owned the properties covered by TCT No. RT-61056 (354973) and at the same time is awarded the sum of Php 4,730,000.00 (including interest) in the eleven (11) counts of B.P. Blg. 22 violations now pending at the Metropolitan Trial Court of Quezon City, Branch 36, then she would have recovered twice the same loan transaction that took place in the first quarter of 1993. Private respondent Amparo Medina will be twice richer.

Again, these arguments are misplaced. In Lazaro v. Court of Appeals, notwithstanding petitioner Lazaro’s claim that she had already paid her obligation, this Court still found her liable for violation of B.P Blg. 22, thus:

That the obligation of Marlyn Lazaro to complainant Chua has been extinguished by the conveyance by the former of her car to Chua does not also justify the cancellation of the indemnity awarded. It should be noted that BP 22 provides that a fine of not less than but not more than double the amount of the dishonored check may be imposed by the court. In the case of Esler vs. Ledesma, this Court stated that a fine is a pecuniary punishment imposed by a lawful tribunal upon a person convicted of a crime. Clearly, the fine provided for in BP 22 was intended as an additional penalty for the act of issuing a worthless check. This is the only logical conclusion, since the law does not require that there be damage or prejudice to the individual complainant by reason of the issuance of the worthless check.

There can be no double compensation as the indemnity award is distinct from the underlying obligation of the check. Thus, a person guilty of violating B.P Blg. 22 may be subject to imprisonment or a fine at the discretion of the court and the fact that the underlying obligation has been paid is of no moment. There will be instances, of course, that the court will also order the guilty party to pay the face value of the check if the underlying obligation has not yet been satisfied; however, the same will not apply to the case at bar, as Medina has already been compensated for the loan after foreclosing the mortgage. The Spouses Torres will, therefore, only have to pay a fine or suffer imprisonment if found guilty in their pending cases for violation of B.P. Blg. 22 subject to the rule of preference embodied in Supreme Court Administrative Circular 12-2000.

The Spouses Torres argue that res judicata should not apply if it will sacrifice justice to technicality. Indeed, as cited by the Spouses Torres, this Court has on occasion disregarded the application of res judicata, however, this Court finds that the same consideration should not be given in herein petition.

In the first place, the Spouses Torres only filed their complaint in Civil Case No. Q-99-38781 after more than two years had already lapsed from the time the ex-officio sheriff sold the property in question at public auction. The foreclosure proceeding was an action in rem, and therefore, the Spouses Torres cannot feign knowledge thereof. More importantly, the Spouses Torres were not completely left without any remedy as they still had the right of redemption, which expired one year from and after the date of the registration of the Certificate of Sale. In the absence of evidence to the contrary, this Court must assume that no attempt to redeem the property was undertaken by the Spouses Torres and that they simply allowed their right and remedy to lapse by their inaction.

In addition, the Spouses Torres have already lost their right to question the validity of the real estate mortgage, for most part due to the negligence of their counsel. More importantly, the decision upholding the validity of the real estate mortgage is already final; hence, the same can no longer be questioned in another proceeding by simply varying the form of the action, or adopting a different method of presenting their case.

WHEREFORE, premises considered, the petition is DENIED. The August 30, 2004 Decision and January 18, 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 75847 are AFFIRMED. SO ORDERED.

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G.R. No. 137794

Erlinda Reyes and Rosemarie Matienzo Vs. Hon. Judge Belen B. Ortiz, et al./Sps. Alberto Embores and Lourdes Embores, et al. Vs. Hon. Raymundo G. Vallega, et al

The instant cases are consolidated Petitions for Declaratory Relief, Certiorari, and Prohibition. The petitioners in G.R. No. 137794 seek to declare null and void the proceedings in Civil Case No. 23477, an ejectment case, before the Metropolitan Trial Court (MeTC), Caloocan City, Branch 49, and Civil Case No. C-17725, a complaint for Recovery of Possession and Ownership, filed with the Regional Trial Court (RTC), Caloocan City, Branch 124; while the petitioners in G.R. No. 149664 pray for the nullity of the following ejectment proceedings before the different branches of the Caloocan City MeTC: (1) Civil Case No. 99-25011, Branch 52; (2) Civil Case No. 22559 and Civil Case No. 18575, Branch 49 and its appeal to the RTC, Branch 131; (3) Civil Case No. 00-25892, Branch 51; and (4) Civil Case No. 00-25889, Branch 51. G.R. No. 149664 was considered closed and terminated by the Court’s Resolution dated August 30, 2006.

The parcels of land which are the subject matter of these cases are part of the Tala Estate, situated between the boundaries of Caloocan City and Quezon City and encompassing an area of 7,007.9515 hectares more or less.

In G.R. No. 137794, respondents Segundo Bautista and spouses Bernard and Florencia Perl sought the ouster from the contested lots of Erlinda Reyes, spouses Rene and Rosemarie Matienzo and Sergio Abejero, who are occupants of separate home lots in Camarin, Caloocan City.

The first case was commenced on December 11, 1996, by respondent Segundo Bautista, a registered owner of the parcel of land occupied by spouses Rene and Rosemarie Matienzo. The case was a complaint for Recovery of Possession and/or Ownership of Real Property (Recovery case) against the latter spouses with the RTC Caloocan City, Branch 124. This was docketed as Civil Case No. C-17725.

Shortly thereafter, a separate but related action, was initiated by the Republic of the Philippines, represented by the Director of Lands on December 27, 1996, before the Quezon City RTC, Branch 85 (re-raffled to Branch 93). This was a complaint for Annulment of Title/Reversion (Annulment/Reversion case) against Biyaya Corporation and the Register of Deeds of the Cities of Pasig, Caloocan, and Quezon, the City of Manila, and the Administrator of the Land Registration Authority involving the Tala Estate. The case, docketed as Civil Case No. Q-96-29810, sought to declare null and void the transfer certificates of title issued in the name of Biyaya Corporation, and all derivative titles emanating therefrom, and to declare the land in suit to be reverted to it as part of the patrimonial property of the State, and the same be awarded to the actual occupants. One of the intervenors therein is Samahan ng Maliliit na Magkakapitbahay (SAMAKABA) of which petitioners Erlinda Reyes and Rosemarie Matienzo are members.

On May 28, 1997, the Quezon City RTC in the Annulment/Reversion case issued a Preliminary Injunction (Injunction) freezing all ejectment cases involving the Tala Estate pending in the MeTCs of Quezon City and Caloocan City.

Believing that the Injunction issued by the Quezon City RTC can be beneficial to them in the Recovery case pending before the Caloocan City RTC, on June 27, 1997, spouses Rene and Rosemarie Matienzo filed a motion to suspend the proceedings of the Recovery case. On December 8, 1997, the Caloocan City RTC, Branch 124 denied said motion. Spouses Matienzo moved for the reconsideration of the motion, but the same was denied on May 14, 1998. The spouses received the order denying their motion for reconsideration on June 9, 1998. Trial on the merits started on December 2, 1998.

The second case, an ejectment complaint, was commenced by spouses Bernard and Florencia Perl on June 25, 1997, against Erlinda Reyes before the Caloocan City MeTC, Branch 49. It was docketed as Civil Case No. 23477. Shortly thereafter, on July 8, 1997, spouses Perl filed the third case, an ejectment action against Sergio Abejero. The case, which was raffled off to Branch 49 of the Caloocan City MeTC, was docketed as Civil Case No. 23519. Subsequently, these two ejectment cases were consolidated (Ejectment cases). In her Answer and during the preliminary conference, Erlinda Reyes moved for the suspension of the proceedings and/or for the dismissal of these cases citing the Injunction issued in Civil Case No. Q-96-29810. In its Order dated January 22, 1999, the MeTC did not entertain Reyes’s motion, instead, it required her to submit a position paper. Erlinda Reyes received the order on March 11, 1999. On April 16, 1999, the trial court issued a Decision ordering Erlinda to vacate the contested property.

The Recovery case and the Ejectment cases converged when petitioners Rosemarie Matienzo and Erlinda Reyes, joined on March 25, 1999 in filing directly with this Court the instant petition denominated as “Declaratory Relief, Certiorari, and Prohibition,” mainly assailing the denial of their respective motions for suspension. Petitioners Matienzo and Reyes asked that the proceedings in the Ejectment cases and the Recovery case be declared null and void for violating the Injunction order of the Quezon City RTC. This case is docketed as G.R. No. 137794.

During the pendency of G.R. No. 137794, certain events supervened when the Ejectment cases ran their course and petitioner Reyes appealed the MeTC decision to the RTC. In the RTC, the Ejectment cases were docketed as Civil Cases Nos. C-18904-05. Apparently, respondent-spouses Perl moved for the execution of the MeTC decision pending appeal, which the RTC granted as the Writ of Execution was thereafter issued on October 20, 2000. Petitioner Erlinda Reyes and company, thus, filed with this Court a motion to suspend the proceedings in the RTC. On October 25, 2000, this Court issued a Temporary Restraining Order restraining the implementation of the said writ of execution.

G.R. No. 149664, on the other hand, emanated from four distinct ejectment complaints filed against petitioners Corazon Laurente, spouses Alberto and Lourdes Embores, spouses Roberto and Evelyn Palad, and Dennis Henosa. The parcels of land from which petitioners were sought to be evicted were located in Camarin, Caloocan City and within the Tala Estate. Petitioners were members of Alyansa Ng Mga Naninirahan Sa Tala Friar Lands (ALNATFRAL), an intervenor in the Reversion case. These ejectment cases were all filed after the Injunction order was issued on May 28, 1997 by the Quezon City RTC in the Annulment/Reversion case. Thus, petitioners separately invoked the said injunction in seeking the dismissal or suspension of the four ejectment cases. Petitioners’ motions for suspension were dismissed and the trial court proceeded to render judgments on these cases. Petitioners resorted directly to this Court in seeking the declaration of nullity of the proceedings of these ejectment cases for violating the prevailing injunction issued by the Quezon City RTC.

Meanwhile, on March 4, 2003, the petitioners in G.R. No. 149664 filed a motion for consolidation asking that the said case be consolidated with G.R. No. 137794.

On April 28, 2003, this Court resolved to consolidate the two cases.

On July 28, 2006, petitioners in G.R. No. 149664 filed a Motion to Withdraw and/or Dismiss Instant Petition stating that since a decision in the Annulment/Reversion case (Civil Case No. Q-96-29810) was already issued (although they did not attach a copy thereof), the petition is therefore rendered moot and academic as the injunction order was effective only pending determination of the merits.

On August 30, 2006, the Court granted the motion to withdraw petition in G.R. No. 149664 and considered the same closed and terminated. On October 11, 2006, G.R. No. 149664 became final and executory.

What remains to be resolved, therefore, are the issues raised in G.R. No. 137794.

In their bid to declare null and void the proceedings in the Recovery case and the Ejectment cases, petitioners argued that the Caloocan City MeTC, where the Ejectment cases were filed, and the Caloocan City RTC where the Recovery case was pending, were divested of jurisdiction since the Quezon City RTC acquired jurisdiction over the subject matter. Petitioners specifically alleged that the MeTC’s refusal to suspend the Ejectment cases despite the Injunction order is tantamount or amounting to lack of or excess of jurisdiction. As to the Caloocan City RTC, its desistance to heed the Injunction is unjustified and contrary to well-settled jurisprudence. Petitioners were of the view that the interference by the Quezon City RTC was justified since no third-party claim is involved.

The Office of the Solicitor General (OSG) adopts the position of petitioners in praying that the orders denying the motion to suspend proceedings and the proceedings that transpired in the Ejectment cases be set aside for having been issued with grave abuse of discretion. Citing Honda Giken Kogyo-Kabushiki Kaisha v. San Diego, where it was held that a writ of injunction may be issued to a court by another court superior in rank, the OSG maintains that the Injunction issued by the Quezon City RTC in Civil Case No. Q-96-29810 covers all metropolitan trial courts including the Ejectment cases in Caloocan City MeTC, Branch 49. The OSG also maintains that the Injunction was in accordance with the settled jurisprudence where the reversion case is being filed by the State.

Respondent Segundo Bautista contends that petitioners resorted to a wrong remedy. He argues that the action for declaratory relief can only prosper if the statute, deed, or contract has not been violated. Hence, where the law or contract has already been breached prior to the filing of the declaratory relief, courts can no longer assume jurisdiction since this action is not geared towards the settling of issues arising from breach or violation of the rights and obligations of the parties under a statute, deed, and contract, but rather it is intended to secure an authoritative statement for guidance in their enforcement or compliance of the same. Since the Injunction order of the Quezon City RTC had already been violated as early as December 8, 1997 by the Caloocan City RTC in the Recovery case, or before the filing of this instant petition, resort to Rule 63 of the Rules of Court would not lie. Respondent Bautista insists that the instant recourse of petitioner Matienzo was resorted to as a ploy to substitute the filing of certiorari under Rule 65, which she already lost since the 60-day period had already expired. Respondent points out that direct resort to this Court violates the rule on the hierarchy of courts. Since it was the Caloocan City RTC which denied petitioner Matienzo’s motion to suspend proceedings, the petition for declaratory relief should have been filed with the Court of Appeals. Direct filing with this Court is not justified as, other than making motherhood statements, petitioner Matienzo failed to state clearly the exceptional and compelling circumstances to justify the exercise of this Court’s primary jurisdiction. He likewise contends that the Caloocan City RTC did not err in not suspending the proceedings in the Recovery case, notwithstanding the Injunction issued by the Quezon City RTC, since the said injunction applied only to the MeTCs of Quezon City and Caloocan City so the RTC was excluded from the injunction order. He avers that it is the Caloocan City RTC which is vested with the jurisdiction to hear and decide the case until its final conclusion since it had acquired the same ahead of the Quezon City RTC. He states that being co-equal, the Quezon City RTC had no authority to stop by injunction the Caloocan City RTC and even though there are instances where another court may exercise coordinate jurisdiction in cases where there are justifiable grounds, here, petitioner Matienzo has not alleged any of those circumstances.

Petitioners insist that this is mainly a petition for declaratory relief. Section 1, Rule 63 of the 1997 Rules of Court provides:

SECTION 1. Who may file petition. — Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership

under Article 1607 of the Civil Code, may be brought under this Rule.

The foregoing section can be dissected into two parts. The first paragraph concerns declaratory relief, which has been defined as a special civil action by any person interested under a deed, will, contract or other written instrument or whose rights are affected by a statute, ordinance, executive order or regulation to determine any question of construction or validity arising under the instrument, executive order or regulation, or statute and for a declaration of his rights and duties thereunder. The second paragraph pertains to (1) an action for the reformation of an instrument; (2) an action to quiet title; and (3) an action to consolidate ownership in a sale with a right to repurchase.

The first paragraph of Section 1 of Rule 63 enumerates the subject matter to be inquired upon in a declaratory relief namely, deed, will, contract or other written instrument, a statute, executive order or regulation, or any government regulation. This Court, in Lerum v. Cruz, declared that the subject matters to be tested in a petition for declaratory relief are exclusive, viz:

Under this rule, only a person who is interested “under a deed, will, contract or other written instrument, and whose rights are affected by a statute or ordinance, may bring an action to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder.” This means that the subject matter must refer to a deed, will, contract or other written instrument, or to a statute or ordinance, to warrant declaratory relief. Any other matter not mentioned therein is deemed excluded. This is under the principle of expressio unius est exclussio alterius. (Emphasis supplied.)

The foregoing holding was reiterated in Natalia Realty, Inc. v. Court of Appeals, wherein this Court stressed that court orders or decisions cannot be made the subject matter of a declaratory relief, thus:

Judge Querubin's query is not an action for declaratory relief. Section 1 of Rule 64 [now Rule 63] of the Rules of Court provides the requisites of an action for declaratory relief. In interpreting these requisites, the Court has ruled that:

x x x x The letter of Judge Querubin pertained to final orders and decisions of the courts that are clearly not the proper subjects of a petition

for declaratory relief. Thus, the requisites prescribed by the Rules of Court in an action for declaratory relief are not applicable to the letter of Judge Querubin. (Emphasis supplied.)

Then again in a recent ruling of this Court, it was emphasized:

A petition for declaratory relief cannot properly have a court decision as its subject matter. In Tanda v. Aldaya [98 Phil. 244 (1956)], we ruled that:

[A] court decision cannot be interpreted as included within the purview of the words “other written instrument,” as contended by appellant, for the simple reason that the Rules of Court already provide for the ways by which an ambiguous or doubtful decision may be corrected or clarified without need of resorting to the expedient prescribed by Rule 66 [now Rule 64]. (Emphasis supplied.)

In the instant case, petitioners Erlinda Reyes and Rosemarie Matienzo assailed via Declaratory Relief under Rule 63 of the Rules of Court, the orders of the trial courts denying their motions to suspend proceedings. This recourse by petitioners, unfortunately, cannot be countenanced since a court order is not one of those subjects to be examined under Rule 63.

The proper remedy that petitioner Erlinda Reyes could have utilized from the denial of her motion to suspend proceedings in the Caloocan City MeTC was to file a motion for reconsideration and, if it is denied, to file a petition for certiorari before the RTC pursuant to Rule 65 of the Rules of Court. On the other hand, petitioner Matienzo should have filed a special civil action on certiorari also under Rule 65 with the Court of Appeals from the denial of her motion by the Caloocan City RTC. The necessity of filing the petition to the RTC in the case of Erlinda Reyes and to the Court of Appeals in the case of Matienzo is dictated by the principle of the hierarchy of

courts. Both petitions must be filed within 60 days from the receipt or notice of the denial of the motion to suspend proceedings or from the denial of the motion for reconsideration. Section 4 of Rule 65 partly provides:

Sec. 4. When and where to file the petition. - The petition shall be filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the petition shall be filed not later than sixty (60) days counted from the notice of the denial of said motion.

If the petition relates to an act or an omission of a municipal trial court x x x, it shall be filed with the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed with the Court of Appeals or with the Sandiganbayan, whether or not the same is in aid of the court’s appellate jurisdiction.

Despite this procedural remedy available to them, petitioners, under the pretext that they were in a quandary as to their rights under the Injunction order of the Quezon City RTC, directly filed the instant case here. Petitioners did not bother to proffer a compelling reason for their direct resort to this Court. This procedural faux pas proves fatal. The Court’s exhortation against taking a procedural shortcut cannot be overemphasized. In Ortega v. The Quezon City Government, the Court accentuated:

At all events, even if this petition delves on questions of law, there is no statutory or jurisprudential basis for according to this Court original and exclusive jurisdiction over declaratory relief which advances only questions of law.

Finally, while a petition for declaratory relief may be treated as one for prohibition if it has far reaching implications and raises questions

that need to be resolved, there is no allegation of facts by petitioner tending to show that she is entitled to such a writ. The judicial policy must thus remain that this Court will not entertain direct resort to it, except when the redress sought cannot be obtained in the proper courts or when exceptional and compelling circumstances warrant availment of a remedy within and calling for the exercise of this Court's primary jurisdiction . (Emphasis supplied.)

To make matters worse, petitioner Matienzo obviously availed of the instant declaratory relief to substitute for a petition for certiorari, a remedy which she sadly lost by inaction. It must be recalled that on December 8, 1997, the Caloocan City RTC, Branch 124 denied Matienzo’s motion to suspend proceedings. She moved for reconsideration, but the same was denied on May 14, 1998. She received the Order denying her motion for reconsideration on June 9, 1998. She had 60 days therefrom to question the same before the Quezon City RTC. It was only on March 25, 1999 that petitioner Matienzo assailed the order denying her motion for reconsideration, albeit wrongly before this Court. From this, it can be inferred that petitioner Matienzo’s recourse is a belated attempt designed to salvage her lost opportunity to assail the order denying her motion to suspend proceedings.

Also unavailing are the contentions of petitioners that the Caloocan City RTC and MeTC committed grave abuse of discretion when they denied petitioners’ motions to suspend proceedings. The pertinent portion of the Injunction order of the Quezon City RTC reads:

WHEREFORE, premises considered, this Court has to grant, as it hereby grants the application for the issuance of the writ of preliminary injunction. Let a writ of preliminary Injunction be issued ordering defendant representing Biyaya Corporation, its agents, assigns, and transferees, as well as all other persons representing themselves as owners of certain portions of the land in question, otherwise known as the Tala Estate, to immediately cease and desist from doing or causing to do, further acts of disposition of the lots subject of the present complaint, such as the filing of ejectment cases in the Municipal Trial Courts of Quezon City and Caloocan City and, the demolition and ejectment therefrom of the members of the herein Intervenors. Accordingly, the Metropolitan Trial Courts of Quezon City and Caloocan City are specifically ordered to cease and desist from further conducting trials and proceedings in the ejectment cases filed and to be filed involving the lots of the present complaint, until further orders from this Court. (Emphasis supplied.)

The foregoing order is not addressed to the Caloocan City RTC. Neither can it be inferred from the language thereof that the Quezon City RTC intended to enjoin the Caloocan City RTC from further proceeding with the Recovery case. The order merely mentions the Caloocan City MeTCs. Nothing more. But more importantly, the Quezon City RTC could not have validly enjoined the Caloocan City RTC without violating the doctrine that no court has the power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction. Spouses Ching v. Court of Appeals justifies this rule in this manner:

Beginning with the case of Orais v. Escaño, down to the subsequent cases of Nuñez v. Low, Cabigao v. del Rosario, Hubahib v. Insular Drug Co., Inc., National Power Corp. v. De Veyra, Luciano v. Provincial Governor, De Leon v. Hon. Judge Salvador, Cojuangco v. Villegas, Darwin v. Tokonaga, we laid down the long standing doctrine that no court has the power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction. The various trial courts of a province or city, having the same or equal authority, should not, cannot, and are not permitted to interfere with their respective cases, much less with their orders or judgments. A contrary rule would obviously lead to confusion and seriously hamper the administration of justice. (Emphasis supplied.)

In Compania General de Tabacos de Filipinas v. Court of Appeals, two civil cases with identical causes of action were filed in different RTCs, one ahead of the other. The second RTC which acquired jurisdiction over the case issued a preliminary injunction enjoining the proceedings in the RTC which first acquired jurisdiction of the case. Ruling against the injunction issued by the RTC, this Court stressed:

Hence, nothing can be clearer than that Judge Rapatalo had indeed issued the questioned writ of preliminary injunction with grave abuse of discretion amounting to excess or lack of jurisdiction for the blatant disregard of the basic precept that no court has the power to interfere by injunction with the judgments or orders of a co-equal and coordinate court of concurrent jurisdiction having the power to grant the relief sought by injunction.

This Court explained in Parco vs. Court of Appeals that: x x x Jurisdiction is vested in the court not in any particular branch or judge, and as a corollary rule, the various branches of the Court of

First Instance of a judicial district are a coordinate and co-equal courts one branch stands on the same level as the other. Undue interference by one on the proceedings and processes of another is prohibited by law. In the language of this Court, the various branches of the Court of First Instance of a province or city, having as they have the same or equal authority and exercising as they do concurrent and coordinate jurisdiction should not, cannot, and are not permitted to interfere with their respective cases, much less with their orders or judgments x x x.

Needless to say, adherence to a different rule would sow confusion and wreak havoc on the orderly administration of justice, and in the

ensuing melee, hapless litigants will be at a loss as to where to appear and plead their cause. (Emphasis supplied.)

While there are recognized exceptions to the foregoing rule, other than citing said cases, petitioners did not explain the applicability of said exceptional cases to their petition.

Bereft of merit too is petitioners’ argument that the Caloocan City MeTC cannot disregard the injunction order of the Quezon City RTC hearing the Annulment/Reversion case. The established rule is that a pending civil action for ownership such as annulment of title shall not ipso facto suspend an ejectment proceeding. The Court explained that the rationale for this is that in an ejectment case, the issue is possession, while in an annulment case the issue is ownership. In fact,

an ejectment case can be tried apart from an annulment case. Although there is an exception to this rule, petitioners failed to justify that this case falls within said exception. The words of the Court on this matter are instructive:

In the absence of a concrete showing of compelling equitable reasons at least comparable and under circumstances analogous to Amagan, we cannot override the established rule that a pending civil action for ownership shall not ipso facto suspend an ejectment proceeding. Additionally, to allow a suspension on the basis of the reasons the petitioners presented in this case would create the dangerous precedent of allowing an ejectment suit to be suspended by an action filed in another court by parties who are not involved or affected by the ejectment suit. (Emphases supplied.)

Hence, petitioners’ posture that the Ejectment cases should be suspended due to the pendency of the Annulment/Reversion case is not meritorious.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED. The Temporary Restraining Order dated October 25, 2000 issued by this Court is LIFTED.

SO ORDERED.

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G.R. No. 182403

Atty. Restituto G. Cudiamat, et al. Vs. Batangas Savings and Loan Bank, Inc. et al.

Petitioner Atty. Restituto Cudiamat and his brother Perfecto were the registered co-owners of a 320 square meter parcel of land (the property) in Balayan, Batangas, covered by TCT No. T-37889 of the Register of Deeds of Nasugbu, Batangas. Restituto, who resided in Ozamiz City with his wife, entrusted the custody of the title to who was residing in Balayan.

In 1979, Perfecto, without the knowledge and consent of Restituto, obtained a loan from respondent Batangas Savings and Loan Bank, Inc. (the bank). To secure the payment of the loan, Perfecto mortgaged the property for the purpose of which he presented a Special Power of Attorney (SPA) purportedly executed by Restituto, with the marital consent of his wife-herein co-petitioner Erlinda Cudiamat.

On June 19, 1991, Restituto was informed, via letter dated June 7, 1991 from the bank, that the property was foreclosed. He thus, by letter dated June 25, 1991, informed the bank that he had no participation in the execution of the mortgage and that he never authorized Perfecto for the purpose.

In the meantime, Perfecto died in 1990. In 1998, as Perfecto’s widow petitioner Corazon was being evicted from the property, she and her co-petitioner-spouses Restituto and Erlinda filed on August 9, 1999 before the Regional Trial Court (RTC) of Balayan a complaint “for quieting of title with damages” against the bank and the Register of Deeds of Nasugbu, docketed as Civil Case No. 3618, assailing the mortgage as being null and void as they did not authorize the encumbrance of the property.

In its Answer to the complaint, the bank, maintaining the validity of the mortgage, alleged that it had in fact secured a title in its name, TCT No. T-48405, after Perfecto failed to redeem the mortgage; that the Balayan RTC had no jurisdiction over the case as the bank had been placed under receivership and under liquidation by the Philippine Deposit Insurance Corporation (PDIC); that PDIC filed before the RTC of Nasugbu a petition for assistance in the liquidation of the bank which was docketed as SP No. 576; and that jurisdiction to adjudicate disputed claims against it is lodged with the liquidation court-RTC Nasugbu.

By Decision of January 17, 2006, Branch 9 of the Balayan RTC rendered judgment, in the complaint for quieting of title, in favor of the plaintiffs-herein petitioners. It ordered respondent Register of Deeds of Nasugbu to cancel the encumbrance annotated on TCT No. T-37889, and to cancel TCT No. T-48405 issued in the name of the bank and reinstate the former title. It also directed the bank to return the property to petitioner spouses Restituto and Erlinda and to pay P20,000 to all the petitioners to defray the costs of suit.

The bank appealed to the Court of Appeals, contending, inter alia, that the Balayan RTC had no jurisdiction over petitioners’ complaint for quieting of title.

By the assailed Decision of December 21, 2007, the appellate court, ruling in favor of the bank, dismissed petitioners’ complaint for quieting of title, without prejudice to the right of petitioners to take up their claims with the Nasugbu RTC sitting as a liquidation court.

To the appellate court, the Balayan RTC, as a court of general jurisdiction, should have deferred to the Nasugbu RTC which sits as a liquidation court, given that the bank was already under receivership when petitioners filed the complaint for quieting of title.

Petitioners’ Motion for Reconsideration having been denied by the appellate court by Resolution of March 27, 2008, they filed the present petition for review on certiorari.

Assailing the appellate court’s ruling that the Balayan RTC had no jurisdiction over their complaint, petitioners argue that their complaint was filed earlier than PDIC’s petition for assistance in the liquidation; and that the bank is now estopped from questioning the jurisdiction of the Balayan RTC because it actively participated in the proceedings thereat.

The petition is impressed with merit.

Estoppel bars the bank from raising the issue of lack of jurisdiction of the Balayan RTC.

In Lozon v. NLRC, the Court came up with a clear rule on when jurisdiction by estoppel applies and when it does not:

The operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction , but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same “must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel.” However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position – that the lower court had jurisdiction… (underscoring supplied)

The ruling was echoed in Metromedia Times Corporation v. Pastorin.

In the present case, the Balayan RTC, sitting as a court of general jurisdiction, had jurisdiction over the complaint for quieting of title filed by petitioners on August 9, 1999. The Nasugbu RTC, as a liquidation court, assumed jurisdiction over the claims against the bank only on May 25, 2000, when PDIC’s petition for assistance in the liquidation was raffled thereat and given due course.

While it is well-settled that lack of jurisdiction on the subject matter can be raised at any time and is not lost by estoppel by laches, the present case is an exception. To compel petitioners to re-file and relitigate their claims before the Nasugbu RTC when the parties had already been given the opportunity to present their respective evidence in a full-blown trial before the Balayan RTC which had, in fact, decided petitioners’ complaint (about two years before the appellate court rendered the assailed decision) would be an exercise in futility and would unjustly burden petitioners.

The Court, in Valenzuela v. Court of Appeals, held that as a general rule, if there is a judicial liquidation of an insolvent bank, all claims against the bank should be filed in the liquidation proceeding. The Court in Valenzuela, however, after considering the circumstances attendant to the case, held that the general rule should not be applied if to order the aggrieved party to refile or relitigate its case before the litigation court would be “an exercise in futility.” Among the circumstances the Court considered in that case is the fact that the claimants were poor and the disputed parcel of land was their only property, and the parties’ claims and defenses were properly ventilated in and considered by the judicial court.

In the present case, the Court finds that analogous considerations exist to warrant the application of Valenzuela. Petitioner Restituto was 78 years old at the time the petition was filed in this Court, and his co-petitioner-wife Erlinda died during the pendency of the case. And, except for co-petitioner Corazon, Restituto is a resident of Ozamis City. To compel him to appear and relitigate the case in the liquidation court-Nasugbu RTC when the issues to be raised before it are the same as those already exhaustively passed upon and decided by the Balayan RTC would be superfluous.

WHEREFORE, the petition is GRANTED. The Decision of December 21, 2007 and Resolution dated March 27, 2008 of the Court of Appeals are SET ASIDE. The Decision dated January 17, 2006 of the Regional Trial Court of Balayan, Batangas, Branch 9 is REINSTATED.

SO ORDERED.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 177007

Sansio Philippines, Inc. Vs. Sps. Alicia Leodegario Mogol, Jr.

Challenged in this Petition for Review on Certiorari under Rule 45 of the Rules of Court are the Decision dated 21 November 2006 and the Resolution dated 12 March 2007 of the Court of Appeals in CA-G.R. SP No. 70029. The assailed Decision reversed and set aside the Order dated 18 January 2002 of the Regional Trial Court (RTC) of Manila, Branch 33, in Civil Case No. 01-101267, which dismissed the Petition for Certiorari, Prohibition and/or Injunction filed by herein respondent spouses Alicia and Leodegario Mogol, Jr. against herein petitioner Sansio Philippines, Inc. and Judge Severino B. de Castro, Jr. of the Metropolitan Trial Court (MeTC) of Manila, Branch 25. The assailed Resolution of the Court of Appeals denied the Motion for Reconsideration of its earlier Decision.

Petitioner Sansio Philippines, Inc. is a domestic corporation that is engaged in the business of manufacturing and selling appliances and other related products.

On 12 July 2000, petitioner filed a Complaint for Sum of Money and Damages against respondent spouses Mogol before the MeTC of Manila. The case was docketed as Civil Case No. 167879CV and was raffled to Branch 25 of said court.

Petitioner stated in the Complaint that respondent spouses Alicia and Leodegario Mogol, Jr. were the owners and managers of MR Homes Appliances, with residence at 1218 Daisy St., Employee Village, Lucena City, where summons and other written legal processes of the court may be served. Petitioner further alleged that on 15 November 1993 and 27 January 1994, respondent spouses Mogol purchased from petitioner air-conditioning units and fans worth P217,250.00 and P5,521.20, respectively. Respondent spouses Mogol apparently issued postdated checks as payment therefor, but said checks were dishonored, as the account against which the checks were drawn was closed. Respondent spouses Mogol made partial payments, leaving a balance of P87,953.12 unpaid. Despite several demands by petitioner, respondent spouses Mogol failed to settle their obligation. Thus, petitioner prayed that respondent spouses Mogol be ordered to pay the former, jointly and severally, the amount of P87,953.12, with legal interest; as well as attorney’s fees in the sum of twenty-five (25%) percent of the amount collectible, plus P2,000.00 for every appearance in court; and costs of suit.

On 3 October 2000, at the request of herein petitioner, the process server of the MeTC of Manila served the summons and the copy of the complaint on respondent spouses Mogol at the courtroom of the MeTC of Manila, Branch 24. Respondent spouses were in the said premises, as they were waiting for the scheduled hearing of the criminal cases filed by petitioner against respondent Alicia Mogol for violations of Batas Pambansa Blg. 22. Upon being so informed of the summons and the complaint, respondent spouses Mogol referred the same to their counsel, who was also present in the courtroom. The counsel of respondent spouses Mogol took hold of the summons and the copy of the complaint and read the same. Thereafter, he pointed out to the process server that the summons and the copy of the complaint should be served only at the address that was stated in both documents, i.e., at 1218 Daisy St., Employee Village, Lucena City, and not anywhere else. The counsel of respondent spouses Mogol apparently gave back the summons and the copy of the complaint to the process server and advised his clients not to obtain a copy and sign for the same. As the process server could not convince the respondent spouses Mogol to sign for the aforementioned documents, he proceeded to leave the premises of the courtroom.

On 4 October 2000, the process server of the MeTC of Manila issued a Return on Service of Summons, declaring that:

RETURN ON SERVICE OF SUMMONS

This is to certify that on October 3, 2000, the undersigned tried to serve a copy of the Summons issued by the Court in the above-entitled case together with a copy of Complaint upon defendant Leodegario Mogol[,] Jr. and Alicia Mogol doing business under the name/style of “Mr. Homes Appliance” (sic) at MTC (sic) Branch 24 Ongpin (sic) (courtroom) as requested by plaintiff counsel, but failed for the reason that they refused to received (sic) with no valid reason at all. The original and duplicate copies of the Summons are hereby respectfully returned, (sic) UNSERVED. Manila, Philippines, October 4, 2000.

(signed)

ALFONSO S. VALINO Process Server (Emphases ours.)

Motion to Declare in Default

On 6 December 2000, petitioner filed a Motion to Declare [Respondents] in Default. Petitioner averred that the summons and the copy of the complaint were already validly served upon the respondent spouses Mogol at the courtroom of the MeTC, Branch 24, which they refused to accept for no valid reason at all. From the date of said service up to the time of the filing of the above-stated motion, respondent spouses Mogol had yet to file any responsive pleading. Petitioner, thus, prayed that judgment be rendered against respondent spouses Mogol, and that the relief prayed for in its Complaint be granted.

On 15 December 2000, through a special appearance of their counsel, respondent spouses Mogol filed an Opposition to the Motion to Declare [Respondents] in Default. They posited that Section 3, Rule 6 of the Rules of Court requires that the complaint must contain the names and residences of the plaintiff and defendant. Therefore, the process server should have taken notice of the allegation of the complaint, which referred to the address of respondent spouses Mogol wherein court processes may be served. If such service, as alleged in the complaint, could not be complied with within a reasonable time, then and only then may the process server resort to substituted service. Respondent spouses Mogol further averred that there was no quarrel as to the requirement that the respondents must be served summons in person and, if they refused to receive and sign for it, by tendering it to them. They merely reiterated that the service should have been effected at the respondent spouses’ residential address, as stated in the summons and the copy of the complaint.

On 6 April 2001, the MeTC of Manila, Branch 25, issued an Order, the fallo of which provides:

WHEREFORE, premises considered, the Motion to Declare [Respondents] in Default dated December 5, 2000 filed by counsel for [petitioner] is hereby granted. ACCORDINGLY, [respondents] Leodegario Mogol, Jr. and Alicia Mogol are hereby declared in default and [petitioner] is hereby allowed to present its evidence ex-parte (sic) before the Branch Clerk of Court on May 25, 2001 at 8:30 a.m. (Emphasis ours.)

The MeTC of Manila, Branch 25 ruled that Section 6, Rule 14 of the Rules of Court does not specify where service is to be effected. For obvious reasons, because service of summons is made by handing a copy thereof to the defendant in person, the same may be undertaken wherever the defendant may be found. Although the Return on the Service of Summons indicated that the original and the duplicate copies thereof were returned “UNSERVED,” the same could not be taken to mean that respondent spouses Mogol had not yet been served with summons. That allegation in the return was clearly prompted by the statement in the first paragraph thereof that respondents spouses Mogol “refused to received (sic) [the summons and the copy of the complaint] with no valid reason at all.” Respondent spouses Mogol were, thus, validly served with summons and a copy of the complaint. For failing to file any responsive pleading before the lapse of the reglementary period therefor, the Motion to Declare [Respondents] in Default filed by petitioner was declared to be meritorious.

Respondent spouses Mogol filed a Motion for Reconsideration on the above Order, but the same was denied by the MeTC of Manila, Branch 25, in an Order dated 11 June 2001.

On 17 July 2001, respondent spouses Mogol filed a Petition for Certiorari, Prohibition and/or Injunction before the RTC of Manila against Judge Severino B. de Castro, Jr. of the MeTC of Manila, Branch 25 and herein petitioner. Said petition was docketed as Civil Case No. 01-101267 and raffled to Branch 33 thereof.

Respondent spouses Mogol insisted there was no valid service of summons per return of the process server, which was binding on the MeTC judge, who did not acquire jurisdiction over the persons of respondent spouses. They contended that the MeTC of Manila, Branch 25, acted with grave abuse of discretion amounting to lack or excess of jurisdiction in declaring them in default in Civil Case No. 167879CV, thereby depriving them of their right to be heard with due process of law, despite their having a good defense against petitioner’s complaint. Respondent spouses Mogol prayed that the Orders dated 6 April 2001 and 11 June 2001 of the MeTC of Manila, Branch 25, be declared null and void.

On 18 January 2002, the RTC of Manila, Branch 33, issued an Order, disposing of the petition in this wise:

WHEREFORE, viewed from the foregoing observations and findings, the present petition is hereby DISMISSED for lack of merit.

The RTC of Manila, Branch 33, held that Section 6, Rule 14 of the Rules of Court does not mandate that summons be served strictly at the address provided by the plaintiff in the complaint. Contrarily, said provision states that the service of summons may be made wherever such is possible and practicable. Therefore, it did not matter much that the summons and the copy of the complaint in this case were served inside the courtroom of the MeTC of Manila, Branch 24, instead of the address at 1218 Daisy St., Employee Village, Lucena City. The primordial consideration was that the service of summons was made in the person of the respondent spouses Mogol in Civil Case No. 167879CV. Lastly, the RTC of Manila, Branch 33, did not find any error in the interpretation of the MeTC of Manila, Branch 25, that summons had indeed been served on respondent spouses Mogol. On the face of the Return on Service of Summons, it was unmistakable that the summons and the copy of the complaint were served on respondent spouses, and that they refused to receive the same for no valid reason at all.

Respondent spouses Mogol filed a Notice of Appeal on the above-mentioned Order of the RTC of Manila, Branch 33, which was given due course. The appeal was docketed in the Court of Appeals as CA-G.R. SP No. 70029.

On 21 November 2006, the Court of Appeals rendered the assailed Decision in CA-G.R. SP No. 70029, the relevant portions of which read:

We find the appeal meritorious. After a careful perusal of the records, We hold that there was no valid service of summons upon the [respondent] Mogol spouses in Civil Case No. 167879. Perforce, the MeTC [Branch 25] never acquired jurisdiction over them. We explain. x x x x In this case, it is indubitable that the [respondent] Mogol spouses, as defendants in Civil Case No. 167879, never received the summons against them, whether personally or by substituted service. As stated earlier, the process server failed to effect personal service of summons against the [respondent] Mogol spouses at the courtroom of the MeTC of Manila, Branch 24, because the latter refused to receive it, arguing that the same should be served at their residence, and not anywhere else.

Concomitant to the trial court’s duty to bring the defendant within its jurisdiction by the proper service of summons is its duty to apprise the plaintiff, as in the case of [petitioner] Sansio, whether or not the said summons was actually served upon the defendant. The proof of service of summons (or the lack of it) alluded to by the rules is found in Sec. 4, Rule 14 of the Revised Rules of Court, to wit:

SECTION 4. Return. – When the service has been completed, the server shall, within five (5) days therefrom, serve a

copy of the return, personally or by registered mail, to the plaintiff’s counsel, and shall return the summons to the clerk who issued it, accompanied by proof of service.

In this case, the process server’s Return of Service of Summons states, in clear and unequivocal terms, that:

The original and duplicate copies of the Summons are hereby returned, UNSERVED. In the case of Spouses Madrigal v. Court of Appeals [G.R. No. 129955, 26 November 1999], it was held that the sheriff’s certificate of

service of summons is prima facie evidence of the facts therein set out. In the absence of contrary evidence, a presumption exists that a sheriff has regularly performed his official duties. To overcome the presumption arising from the sheriff’s certificate, the evidence must be clear and convincing. In the instant case, no proof of irregularity in the process server’s return was shown by Sansio. A perusal of the said return readily shows that the summons was unserved upon the Mogol spouses. From the foregoing, We hold that the Mogol spouses were never in actual receipt of the summons in Civil Case 167879. Perforce, the trial court did not acquire jurisdiction over them.

In one case, the Supreme Court ruled that the refusal of a defendant to receive the summons is a technicality resorted to in an apparent

attempt to frustrate the ends of justice. It is precisely for this reason that the rules provide a remedy that, in case the defendant refuses to receive and sign for it, [the same is served] by tendering it to him. Moreover, even if tender of summons upon the defendant proves futile, the trial court may further resort to substituted service of summons, as provided under Sec. 7, Rule 14 of the Revised Rules of Court.

Stated otherwise, the trial court is not left with any other remedy in case the defendant refuses to receive and sign for his receipt of

the summons, as in this case. Unfortunately, however, after the incident at the courtroom of the MeTC of Manila, Branch 24, there was no longer any further effort on the part of the trial court to serve anew the summons, together with a copy of the complaint, upon the Mogol spouses. Instead, the trial court assumed jurisdiction over the Mogol spouses; declared them in default for failure to file any responsive pleading; and, (sic) allowed Sansio to present its evidence ex parte in Civil Case No. 167879.

x x x x All told, it is clearly established that there was indeed no valid service of summons upon the Mogol spouses in Civil Case No. 167879.

Consequently, the MeTC of Manila, Branch 24 did not acquire jurisdiction over their persons. Perforce, the order declaring them in default in the said civil case is nugatory and without effect, as it was issued with grave abuse of discretion amounting to lack or in excess of jurisdiction. (Emphases ours.)

Thus, the Court of Appeals decreed:

WHEREFORE, premises considered, the Appeal is hereby GRANTED. The assailed Order dated January 18, 2002 of the Regional Trial Court (RTC) of Manila, National Capital Judicial Region, Branch 33, in SP Civil Case No. 01-101267 is hereby REVERSED and SET ASIDE. Accordingly, the Order dated April 6, 2001 of the Metropolitan Trial Court (MeTC) of Manila, Branch 25, in Civil Case No. 167879 is declared NULL and VOID. No pronouncement as to costs.

Petitioner filed a Motion for Reconsideration thereon, but the same was denied by the Court of Appeals in the assailed Resolution dated 12 March 2007.

Complaint for Sum of Money and Damages

In the interregnum, on 3 August 2001, petitioner presented its evidence ex parte in the main case. On the basis thereof, on 17 August 2001, the MeTC of Manila, Branch 25, rendered a Decision, adjudging that petitioner had sufficiently established its entitlement to the grant of the reliefs prayed for in its Complaint. The decretal portion of the Decision states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the [petitioner] and against the [respondent spouses Mogol], ordering the latter to pay the former jointly and severally the sum of P87,953.12 with interest thereon at the legal rate from date of demand until the same is fully paid; the sum equivalent to 25% of the amount due as and by way of attorney’s fees, and the cost of suit. (Emphasis ours.)

Respondent spouses Mogol appealed the above Decision to the RTC of Manila. The appeal was docketed as Civil Case No. 01-101963 and was raffled to Branch 50 of the trial court.

On 19 March 2004, the RTC of Manila, Branch 50, promulgated its Decision, affirming in toto the Decision of the MeTC of Manila, Branch 25. The RTC declared that Section 6, Rule 14 of the Rules of Court clearly reveals that there is no requirement that the summons should only be served in the place stated in the summons. What is required is that a summons must be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. Under the circumstances of the case, the service of the copy of the summons and the complaint inside the courtroom of the MeTC of Manila, Branch 24 was the most practicable act. The process server need not wait for the respondent spouses Mogol to reach their given address before he could serve on the latter with summons and the copy of the complaint. The refusal of respondent spouses Mogol to receive the summons without valid cause was, thus, equivalent to a valid service of summons that vested jurisdiction in the MeTC of Manila, Branch 25.

Respondent spouses Mogol sought a reconsideration of the aforesaid Decision, but the RTC of Manila, Branch 50, denied the same in an Order dated 4 October 2004, finding no cogent reason to disturb its earlier judgment. Thereafter, respondent spouses Mogol no longer filed any appeal on the above Decision of the RTC of Manila, Branch 50.

On 26 April 2007, petitioner filed the instant Petition for Review, questioning the rulings of the Court of Appeals in CA-G.R. SP No. 70029 and raising for resolution the following legal issues:

1. Whether or not the service of summons in the courtroom, before the hearing, [was] a valid service of summons;2. Whether or not the clause “tendering it to him” when the defendant refuses to receive and sign for the summons under Section 6, Rule 14 of

the Rules of Court means “leaving a copy of the summons to her or in the premises where the defendant could get it”;3. Whether or not summons refused to be received by [respondent spouses Mogol], upon advice of their counsel, need to be served anew to

them;4. Whether or not the court is bound by the conclusions of the Process Server in his Return of Service of Summons; and5. Whether or not the appeal before the Court of Appeals denying the Petition for Certiorari, Prohibition and Injunction has become moot and

academic when the [RTC of Manila, Branch 50] rendered a Decision affirming the Decision of the [MeTC of Manila, Branch 25], and which Decision of the [RTC of Manila, Branch 50] has become final and executory.

Contrary to the ruling of the Court of Appeals, petitioner argues that the service of summons inside the courtroom of the MeTC of Manila, Branch 24, was already valid. Such was a more practicable and convenient procedure, as opposed to requesting the process server to serve the summons and the copy of the complaint upon the respondent spouses Mogol at their residence in Lucena City. Petitioner further contends that, when the respondent spouses Mogol declined to receive and sign for the summons, tendering of the same was sufficient, and the summons need not be served anew. Section 6, Rule 14 of the Rules of Court does not state that the personal service of summons fails because the defendant refuses to receive and sign for it. As regards the Return on Service of Summons, petitioner claims that the second

paragraph thereof was a mere conclusion of law, which does not bind the independent conclusion of the courts. Although the second paragraph stated that the summons was returned UNSERVED, the first paragraph clearly indicated that, indeed, the summons and the copy of the complaint were already personally served upon the Mogol spouses. They merely refused to receive them for no valid reasons. Finally, petitioner asserts that the assailed Decision dated 21 November 2006 of the Court of Appeals has already become moot and academic. The Decision dated 19 March 2004 of the RTC of Manila, Branch 50, in Civil Case No. 01-101963, which affirmed the Decision of the MeTC of Manila, Branch 25, on the merits of the case has since become final and executory for failure of respondent spouses Mogol to interpose an appeal of the same before the Court of Appeals.

We find merit in the petition.

A summons is a writ by which the defendant is notified of the action brought against him or her. In a civil action, jurisdiction over the defendant is acquired either upon a valid service of summons or the defendant's voluntary appearance in court. When the defendant does not voluntarily submit to the court's 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. Where the action is in personam, i.e., one that seeks to impose some responsibility or liability directly upon the person of the defendant through the judgment of a court, and the defendant is in the Philippines, the service of summons may be made through personal or substituted service in the manner provided for in Sections 6 and 7, Rule 14 of the Rules of Court, which read:

SEC. 6. Service in person on defendant. – Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. SEC. 7. Substituted service. – If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant’s residence with some person of suitable age and discretion then residing therein; or (b) by leaving the copies at defendant’s office or regular place of business with some competent person in charge thereof.

It is well-established that summons upon a respondent or a defendant must be served by handing a copy thereof to him in person or, if he refuses to receive it, by tendering it to him. Personal service of summons most effectively ensures that the notice desired under the constitutional requirement of due process is accomplished. The essence of personal service is the handing or tendering of a copy of the summons to the defendant himself , wherever he may be found; that is, wherever he may be, provided he is in the Philippines.

In the instant case, the Court finds that there was already a valid service of summons in the persons of respondent spouses Mogol. To recapitulate, the process server presented the summons and the copy of the complaint to respondent spouses at the courtroom of the MeTC of Manila, Branch 24. The latter immediately referred the matter to their counsel, who was present with them in the aforesaid courtroom. At the express direction of his clients, the counsel took the summons and the copy of the complaint, read the same, and thereby informed himself of the contents of the said documents. Ineluctably, at that point, the act of the counsel of respondent spouses Mogol of receiving the summons and the copy of the complaint already constituted receipt on the part of his clients, for the same was done with the latter’s behest and consent. Already accomplished was the operative act of “handing” a copy of the summons to respondent spouses in person. Thus, jurisdiction over the persons of the respondent spouses Mogol was already acquired by the MeTC of Manila, Branch 25. That being said, the subsequent act of the counsel of respondent spouses of returning the summons and the copy of the complaint to the process server was no longer material.

Furthermore, the instruction of the counsel for respondent spouses not to obtain a copy of the summons and the copy of the complaint, under the lame excuse that the same must be served only in the address stated therein, was a gross mistake. Section 6, Rule 14 of the Rules of Court does not require that the service of summons on the defendant in person must be effected only at the latter’s residence as stated in the summons. On the contrary, said provision is crystal clear that, whenever practicable, summons shall be served by handing a copy thereof to the defendant; or if he refuses to receive and sign for it, by tendering it to him. Nothing more is required. As correctly held by the RTC of Manila, Branch 50, the service of the copy of the summons and the complaint inside the courtroom of the MeTC of Manila, Branch 24 was the most practicable act under the circumstances, and the process server need not wait for respondent spouses Mogol to reach their given address, i.e., at 1218 Daisy St., Employee Village, Lucena City, before he could serve on the latter the summons and the copy of the complaint. Due to the distance of the said address, service therein would have been more costly and would have entailed a longer delay on the part of the process server in effecting the service of the summons.

Much more important than considerations of practicality, however, is the fact that respondent spouses Mogol based their case on a wrong appreciation of the above-stated provisions of the Rules of Court. Respondent spouses Mogol principally argue that Section 6 of Rule 14 cannot be singled out without construing the same with Section 7. They posit that, in a civil case, summons must be served upon the defendants personally at the designated place alleged in the complaint. If the defendants refuse to receive and sign the summons, then the process server must tender the same to them by leaving a copy at the residence of the defendants. If the summons cannot be served in person because of the absence of the defendants at the address stated, then the same can be served by (1) leaving copies of the summons at the defendants’ residence with some person of suitable age and discretion residing therein, or (2) leaving the copies at defendants’ office or regular place of business with some competent person in charge thereof.

Said arguments must fail, for they have no leg to stand on.

Axiomatically, Sections 6 and 7 of Rule 14 of the Rules of Court cannot be construed to apply simultaneously. Said provisions do not provide for alternative modes of service of summons, which can either be resorted to on the mere basis of convenience to the parties. Under our procedural rules, service of summons in the persons of the defendants is generally preferred over substituted service. Substituted service derogates the regular method of personal service. It is an extraordinary method, since it seeks to bind the respondent or the defendant to the consequences of a suit, even though notice of such action is served not upon him but upon another whom the law could only presume would notify him of the pending proceedings. 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.

Relevantly, in Lazaro v. Rural Bank of Francisco Balagtas (Bulacan), Inc., very categorical was our statement that the service of summons to be done personally does not mean that service is possible only at the defendant’s actual residence. It is enough that the defendant is handed a copy of the summons in person by anyone authorized by law. This is distinct from substituted service under Section 7, Rule 14 of the Rules of Court. As already discussed above, there was already a valid service of summons in the persons of respondent spouses Mogol in the courtroom of the MeTC of Manila, Branch 24, when their counsel, upon their explicit instructions, received and read the same on their behalf. Contrary to the ruling of the Court of Appeals, the fact that the summons was returned to the process server and respondent spouses Mogul subsequently declined to sign for them did not mean that the service of summons in the persons of respondent spouses was a failure, such that a further effort was required to serve the summons anew. A tender of summons, much less, a substituted service of summons, need no longer be resorted to in this case.

Indeed, a contrary ruling by this Court would inevitably give every future defendant to a case the unwarranted means to easily thwart the cardinal procedures for the service of summons at the simple expedient of returning the summons and the copy of the complaint to the process server and refusing to sign for the same even after being already informed of their contents. This the Court will never allow.

As to the reliance of the Court of Appeals on the second paragraph of the Return on Service of Summons stating that the original and duplicate copies of the Summons were returned “UNSERVED,” the Court finds the same utterly misplaced. A simple reading of the first paragraph of the Return on Service of Summons, which contains the circumstances surrounding the service of the summons on the persons of the respondent spouses Mogol, manifestly reveals that the summons and the copy of the complaint were already validly served on the said respondents. They merely refused to receive or obtain a copy of the same. The certificate of service of the process server is prima facie evidence of the facts as set out therein. This is fortified by the presumption of the regularity of performance of official duty. To overcome the presumption of regularity of official functions in favor of such sheriff’s return, the evidence against it must be clear and convincing. Sans the requisite quantum of proof to the contrary, the presumption stands deserving of faith and credit. In the instant case, it is worthwhile to note that the facts stated in the first paragraph of the Return on Service of Summons were not at all disputed by the respondent spouses Mogol.

Although We find lamentable the apparently erroneous statement made by the process server in the aforesaid second paragraph – an error that undoubtedly added to the confusion of the parties to this case – the same was, nonetheless, a mere conclusion of law, which does not bind the independent judgment of the courts. Indeed, it cannot be said that because of such a statement, respondent spouses Mogol had the right to rely on said return informing them that the summons had been unserved, thus justifying their non-filing of any responsive pleading. To reiterate, respondent spouses Mogol were validly served summons and a copy of the complaint against them. At their explicit instructions, their counsel read the same and thereby learned of the nature of the claim against them. After being made aware of the complaint filed against them, they chose not to obtain a copy thereof and pretended that it did not exist. They, thus, took a gamble in not filing any responsive pleading thereto. Suffice it to say, they lost. The constitutional requirement of due process exacts that the service be such as may be reasonably expected to give the notice desired. Once the service provided by the rules reasonably accomplishes that end, the requirement of justice is answered; the traditional notions of fair play are satisfied and due process is served.

In fine, we rule that jurisdiction over the persons of the respondent spouses Mogol was validly acquired by the MeTC, Branch 25 in this case. For their failure to file any responsive pleading to the Complaint filed against them, in violation of the order of the said court as stated in the summons, respondent spouses Mogol were correctly declared in default.

WHEREFORE, premises considered, the Petition for Review on Certiorari under Rule 45 is GRANTED. The Decision dated 21 November 2006 and the Resolution dated 12 March 2007 of the Court of Appeals in CA-G.R. SP No. 70029 are hereby REVERSED AND SET ASIDE. The Order dated 18 January 2002 of the Regional Trial Court of Manila, Branch 33, in Civil Case No. 01-101267 is hereby AFFIRMED. No costs.

SO ORDERED.

x --------------------------------------------------------------------------------------- x

G.R. No. 185091

Republic of the Philippines Vs. Primo Mendoza and Maria Lucero

This case is about the propriety of filing an ejectment suit against the Government for its failure to acquire ownership of a privately owned property that it had long used as a school site and to pay just compensation for it.

The Facts and the Case

Paninsingin Primary School (PPS) is a public school operated by petitioner Republic of the Philippines (the Republic) through the Department of Education. PPS has been using 1,149 square meters of land in Lipa City, Batangas since 1957 for its school. But the property, a portion of Lots 1923 and 1925, were registered in the name of respondents Primo and Maria Mendoza (the Mendozas) under Transfer Certificate of Title (TCT) T-11410.

On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and subdivided into four lots, as follows:

Lot 1 – 292 square meters in favor of Claudia DimayugaLot 2 – 292 square meters in favor of the MendozasLot 3 – 543 square meters in favor of Gervacio Ronquillo; andLot 4 – 1,149 square meters in favor of the City Government of Lipa

As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and issued new titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2 remained in the name of the Mendozas but no new title was issued in the name of the City Government of Lipa for Lot 4. Meantime, PPS remained in possession of the property.

The Republic claimed that, while no title was issued in the name of the City Government of Lipa, the Mendozas had relinquished to it their right over the school lot as evidenced by the consolidation and subdivision plan. Further, the property had long been tax-declared in the name of the City Government and PPS built significant, permanent improvements on the same. These improvements had also been tax-declared.

The Mendozas claim, on the other hand, that although PPS sought permission from them to use the property as a school site, they never relinquished their right to it. They allowed PPS to occupy the property since they had no need for it at that time. Thus, it has remained registered in their name under the original title, TCT T-11410, which had only been partially cancelled.

On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the disputed property. When PPS declined to do so, on January 12, 1999 the Mendozas filed a complaint with the Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 0002-99 against PPS for unlawful detainer with application for temporary restraining order and writ of preliminary injunction.

On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground of the Republic’s immunity from suit. The Mendozas appealed to the Regional Trial Court (RTC) of Lipa City which ruled that the Republic’s consent was not necessary since the action before the MTCC was not against it.

In light of the RTC’s decision, the Mendozas filed with the MTCC a motion to render judgment in the case before it. The MTCC denied the motion, however, saying that jurisdiction over the case had passed to the RTC upon appeal. Later, the RTC remanded the case back to the MTCC, which then dismissed the case for insufficiency of evidence. Consequently, the Mendozas once again appealed to the RTC in Civil Case 2001-0236.

On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate the property. It held that the Mendozas had the better right of possession since they were its registered owners. PPS, on the other hand, could not produce any document to prove the transfer of ownership of the land in its favor. PPS moved for reconsideration, but the RTC denied it.

The Republic, through the Office of the Solicitor General (OSG), appealed the RTC decision to the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the Mendozas were barred by laches from recovering possession of the school lot; (2) sufficient evidence showed that the Mendozas relinquished ownership of the subject lot to the City Government of Lipa City for use as school; and (3) Lot 4, Pcs-5019 has long been declared in the name of the City Government since 1957 for taxation purposes.

In a decision dated February 26, 2008, the CA affirmed the RTC decision. Upholding the Torrens system, it emphasized the indefeasibility of the Mendozas’ registered title and the imprescriptible nature of their right to eject any person occupying the property. The CA held that, this being the case, the Republic’s possession of the property through PPS should be deemed merely a tolerated one that could not ripen into ownership.

The CA also rejected the Republic’s claim of ownership since it presented no documentary evidence to prove the transfer of the property in favor of the government. Moreover, even assuming that the Mendozas relinquished their right to the property in 1957 in the government’s favor, the latter never took steps to have the title to the property issued in its name or have its right as owner annotated on the Mendozas’ title. The CA held that, by its omissions, the Republic may be held in estoppel to claim that the Mendozas were barred by laches from bringing its action.

With the denial of its motion for reconsideration, the Republic has taken recourse to this Court via petition for review on certiorari under Rule 45.

The Issue Presented

The issue in this case is whether or not the CA erred in holding that the Mendozas were entitled to evict the Republic from the subject property that it had used for a public school.

The Court’s Ruling

A decree of registration is conclusive upon all persons, including the Government of the Republic and all its branches, whether or not mentioned by name in the application for registration or its notice. Indeed, title to the land, once registered, is imprescriptible. No one may acquire it from the registered owner by adverse, open, and notorious possession. Thus, to a registered owner under the Torrens system, the right to recover possession of the registered property is equally imprescriptible since possession is a mere consequence of ownership.

Here, the existence and genuineness of the Mendozas’ title over the property has not been disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows that a 1,149 square meter lot had been designated to the City Government, the Republic itself admits that no new title was issued to it or to any of its subdivisions for the portion that PPS had been occupying since 1957.

That the City Government of Lipa tax-declared the property and its improvements in its name cannot defeat the Mendozas’ title. This Court has allowed tax declarations to stand as proof of ownership only in the absence of a certificate of title. Otherwise, they have little evidentiary weight as proof of ownership.

The CA erred, however, in ordering the eviction of PPS from the property that it had held as government school site for more than 50 years. The evidence on record shows that the Mendozas intended to cede the property to the City Government of Lipa permanently. In fact, they allowed the city to declare the property in its name for tax purposes. And when they sought in 1962 to have the bigger lot subdivided into four, the Mendozas earmarked Lot 4, containing 1,149 square meters, for the City Government of Lipa. Under the circumstances, it may be assumed that the Mendozas agreed to transfer ownership of the land to the government, whether to the City Government of Lipa or to the Republic, way back but never got around to do so and the Republic itself altogether forgot about it. Consequently, the Republic should be deemed entitled to possession pending the Mendozas’ formal transfer of ownership to it upon payment of just compensation.

The Court holds that, where the owner agrees voluntarily to the taking of his property by the government for public use, he thereby waives his right to the institution of a formal expropriation proceeding covering such property. Further, as the Court also held in Eusebio v. Luis, the failure for a long time of the owner to question the lack of expropriation proceedings covering a property that the government had taken constitutes a waiver of his right to gain back possession. The Mendozas’ remedy is an action for the payment of just compensation, not ejectment.

In Republic of the Philippines v. Court of Appeals, the Court affirmed the RTC’s power to award just compensation even in the absence of a proper expropriation proceeding. It held that the RTC can determine just compensation based on the evidence presented before it in an ordinary civil action for recovery of possession of property or its value and damages. As to the time when just compensation should be fixed, it is settled that where property was taken without the benefit of expropriation proceedings and its owner filed an action for recovery of possession before the commencement of expropriation proceedings, it is the value of the property at the time of taking that is controlling.

Since the MTCC did not have jurisdiction either to evict the Republic from the land it had taken for public use or to hear and adjudicate the Mendozas’ right to just compensation for it, the CA should have ordered the complaint for unlawful detainer dismissed without prejudice to their filing a proper action for recovery of such compensation.

WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26, 2008 decision and the October 20, 2008 resolution of the Court of Appeals in CA-G.R. 96604, and ORDERS the dismissal of respondents Primo and Maria Mendoza’s action for eviction before the Municipal Trial Court in Cities of Lipa City in Civil Case 0002-99 without prejudice to their filing an action for payment of just compensation against the Republic of the Philippines or, when appropriate, against the City of Lipa.

SO ORDERED.

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G.R. No. 166508

National Home Mortgage Finance Corporation Vs. Mario Abayari, et al.

In this petition for review under Rule 45 of the Rules of Court, the National Home Mortgage Finance Corporation assails the August 20, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 82637, which dismissed its petition for certiorari from the October 14, 2003 and December 15, 2003 Orders issued by the Regional Trial Court (RTC) of Makati City, Branch 138. The said Orders, in turn, respectively granted the issuance of a writ of execution and denied petitioner’s motion for reconsideration in Civil Case No. 99-1209 – a case for mandamus.

The antecedents follow.

Petitioner, the National Home Mortgage Finance Corporation (NHMFC), is a government-owned and controlled corporation created under the authority of Presidential Decree No. 1267 for the primary purpose of developing and providing a secondary market for home mortgages granted by public and/or private home-financing institutions. In its employ were respondents, mostly rank-and-file employees, who all profess as having been hired after June 30, 1989.

On July 1, 1989, Republic Act No. 6758, otherwise known as The Compensation and Position Classification Act of 1989, was enacted and was subsequently approved on August 21, 1989. Section 12 thereof directed that all allowances – namely representation and transportation allowance, clothing and laundry allowance, subsistence allowance, hazard pay and other allowances as may be determined by the budget department – enjoyed by covered employees should be deemed included in the standardized salary rates prescribed therein, and that the other additional compensation being received by incumbents only as of July 1, 1989 not integrated into the

standardized salary rates should continue to be authorized. To implement the law, the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10. Section 5.5 thereof excluded certain allowances and benefits from integration into the standardized basic salary but continued their grant to those who were incumbents as of June 30, 1989 and who were actually receiving the benefits as of said date. These are the allowances involved in this case.

Respondents filed a petition for mandamus with the RTC of Makati City, Branch 138 to compel petitioner to pay them meal, rice, medical, dental, optical and children’s allowances, as well as longevity pay, which allegedly were already being enjoyed by other NHMFC employees as early as July 1, 1989. In its April 27, 2001 Decision, the trial court ruled favorably and ordered petitioner to pay respondents the allowances prayed for, retroactive to the respective dates of appointment. The dispositive portion of the Decision reads:

WHEREFORE, judgment is hereby rendered in favor of the petitioners and respondent is ordered to pay petitioners their meal allowance, rice allowance, medical allowance, longevity pay and children’s allowance retroactive to the dates of their respective appointments up to the present or for the time that they were employed by the respondent.

SO ORDERED.

In arriving at the conclusion that respondents were entitled to the prayed-for benefits, the trial court explained, thus,

The use of the word “only” before the words July 1, 1989 in section 12 of Republic Act No. 6758 appears to be the source of the dispute. Section 12 is clear that other additional compensation being received by incumbents only as of July 1, 1989 that are not integrated into

the standardized salary rates shall continue to be authorized. The law is prospective in effect and it does not say that such additional compensation shall not continue to be authorized for employees appointed after June 30, 1989. The use of the word “only” before the words “as of July 1, 1989” qualifies the additional compensation which can be continued. The foregoing applies to all employees whether permanent or casual.

DBM Circular No. 10, the Implementing Rules and Regulations particularly section 5.5 thereof…use the word “only” for incumbents as of

June 30, 1989 and by implication the same shall not apply to employees appointed after June 30, 1989. This is in effect another qualification limiting the grant of benefits to those who are incumbents as of June 30, 1989, a condition not imposed by Section 12 of Republic Act No. 6758 for which reason it has to be strike (sic) down.

Petitioner timely filed an appeal with the Court of Appeals. In its November 21, 2001 Decision, the appellate court affirmed the trial court’s ruling. No appeal was taken from the decision and upon its finality, respondents moved for execution.

However, the motion for execution was withdrawn when on May 12, 2002, petitioner and respondents executed a Compromise Agreement in which petitioner bound itself to comply with the decision rendered in the case, except that the payment of the allowances adjudicated in favor of respondents would be made in four installments instead. It was, likewise stipulated therein that the parties waive all claims against each other. The trial court did not take any positive action on the compromise except to note the same since the parties did not intend to novate the April 27, 2001 Decision. On that basis, petitioner had started paying respondents the arrears in benefits.

Conflict arose when the DBM sent a letter dated July 15, 2003 to NHMFC President Angelico Salud disallowing the payment of certain allowances, including those awarded by the trial court to respondents. A reading of the letter reveals that the disallowance was made in accordance with the 2002 NHMFC Corporate Operating Budget previously issued by the DBM.

To abide by the DBM’s directive, petitioner then issued a memorandum stating that effective August 2003, the grant of benefits to its covered employees, including those awarded to respondents, would be curtailed pursuant to the DBM letter. This eventuality compelled respondents to file for the second time a motion for a writ of execution of the trial court’s April 27, 2001 decision.

In its October 14, 2003 Order, the trial court found merit in respondents’ motion; hence, it directed the execution of the judgment. Petitioner moved for reconsideration but it was denied. On February 16, 2004, the trial court issued a Writ of Execution/Garnishment with a directive to the sheriff to tender to respondents the amount of their collective claim equivalent to P4,806,530.00 to be satisfied out of petitioners goods and chattels and if the same be not sufficient, out of its existing real property. Respondents then sought the garnishment of its funds under the custody of the Land Bank of the Philippines.

Bent on preventing execution, petitioner filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 82637. In it, petitioner ascribed grave abuse of discretion to the trial court in ordering the execution of the judgment. It pointed out that the trial court disregarded the fact that the DBM’s issuance amounted to a supervening event, or an occurrence that changed the situation of the parties that would make the continued payment of allowances to respondents impossible and illegal, and disregarded the DBM’s exclusive authority to allow or disallow the payment of the benefits in question. It likewise faulted the trial court in ordering the garnishment of its funds despite the settled rule that government funds may not be garnished in the absence of an appropriation made by law.

The Court of Appeals, however, found no grave abuse of discretion on the part of the trial court; hence, in its August 20, 2004 Decision, it dismissed the petition for lack of merit.

In its present recourse, petitioner, on the one hand, insists that it is difficult not to consider the issuance of the DBM in this case as a supervening event that would make the execution of the trial court’s decision inequitable and/or impossible, since the determination of entitlement to benefits and allowances among government employees is within the agency’s exclusive authority. It argues that, hence, both the trial court and the Court of Appeals were in error to order the execution of the decision as the same totally disregards the rule that issuances of administrative agencies are valid and enforceable. Again, it asserts that the garnishment of its funds was not in order as there was no existing appropriation therefor.

Respondents, on the other hand, argue in the main that inasmuch as the core issue of whether they were entitled to the schedule of benefits under Section 12 of R.A. No. 6758 had already been settled by both the trial court in Civil Case No. 99-1209 and the Court of Appeals in CA-G.R. SP No. 66303, the DBM letter should not be allowed to interfere with the decision and render the same ineffective. Since the said decision had already attained finality, they posit that execution appeared to be the only just and equitable measure under the premises and that garnishment lies against petitioner’s funds inasmuch as it has a personality separate and distinct from the government.

There is partial merit in the petition.

To begin with, a writ of mandamus is a command issuing from a court of law of competent jurisdiction, in the name of the state or sovereign, directed to an inferior court, tribunal, or board, or to some corporation or person, requiring the performance of a particular duty therein specified, which duty results from the official station of the party to whom the writ is directed, or from operation of law. It is employed to compel the performance, when refused, of a ministerial duty which, as opposed to a discretionary one, is that which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of legal authority, without regard to or the exercise of his or its own judgment upon the propriety or impropriety of the act done.

A favorable judgment rendered in a special civil action for mandamus is in the nature of a special judgment. As such, it requires the performance of any other act than the payment of money or the sale or delivery of real or personal property the execution of which is governed by Section 11, Rule 39 of the Rules of Court which states:

SECTION 11. Execution of Special Judgment.—When the judgment requires the performance of any act other than those mentioned in the two preceding sections, a certified copy of the judgment shall be attached to the writ of execution and shall be served by the officer upon the party against whom the same is rendered, or upon any other person required thereby, or by law, to obey the same, and such party or person may be punished for contempt if he disobeys such judgment.

While the April 17, 2001 Decision of the trial court ordered petitioner to pay the benefits claimed by respondents, it by no means ordered the payment of a specific sum of money and instead merely directed petitioner to extend to respondents the benefits under R.A. No. 6758 and its implementing rules. Being a special judgment, the decision may not be executed in the same way as a judgment for money handed down in an ordinary civil case governed by Section 9, Rule 39 of the Rules Court which sanctions garnishment of debts and credits to satisfy a monetary award. Garnishment is proper only when the judgment to be enforced is one for payment of a sum of money. It cannot be employed to implement a special judgment such as that rendered in a special civil action for mandamus.

On this score, not only did the trial court exceed the scope of its judgment when it awarded the benefits claimed by respondents. It also committed a blatant error when it issued the February 16, 2004 Order directing the garnishment of petitioner’s funds with the Land Bank of the Philippines equivalent to P4,806,530.00, even though the said amount was not specified in the decision it sought to implement.

Be that as it may, assuming for the sake of argument that execution by garnishment could proceed in this case against the funds of petitioner, it must bear stress that the latter is a government-owned or controlled corporation with a charter of its own. Its juridical personality is separate and distinct from the government and it can sue and be sued in its name. As such, while indeed it cannot evade the effects of the execution of an adverse judgment and may not ordinarily place its funds beyond an order of garnishment issued in ordinary cases, it is imperative in order for execution to ensue that a claim for the payment of the judgment award be first filed with the Commission on Audit (COA).

Under Commonwealth Act No. 327, as amended by P.D. No. 1445, the COA, as one of the three independent constitutional commissions, is specifically vested with the power, authority and duty to examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property owned or held in trust by the government, or any of its subdivisions, agencies or instrumentalities, including government-owned and controlled corporations. To ensure the effective discharge of its functions, it is vested with ample powers, subject to constitutional limitations, to define the scope of its audit and examination and establish the techniques and methods required therefor, to promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures or uses of government funds and properties. Section 1, Rule II of the COA Rules of Procedure materially provides:

Section 1. General Jurisdiction.—The Commission on Audit shall have the power, authority and duty to examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to the Government, or any of its subdivisions, agencies or instrumentalities, including government owned and controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under the Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity directly or indirectly, from or through the government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary or appropriate to correct the deficiencies. It shall keep the general accounts of the Government, and for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.

x x x x Specifically, such jurisdiction shall extend over but not limited to the following: x x x Money claims due from or owing to any

government agency x x x.

Clearly, the matter of allowing or disallowing a money claim against petitioner is within the primary power of the COA to decide. This no doubt includes money claims arising from the implementation of R.A. No. 6758. Respondents’ claim against petitioner, although it has already been validated by the trial court’s final decision, likewise belongs to that class of claims; hence, it must first be filed with the COA before execution could proceed. And from the decision therein, the aggrieved party is afforded a remedy by elevating the matter to this Court via a petition for certiorari in accordance with Section 1 Rule XI, of the COA Rules of Procedure. It states:

Section 1. Petition for Certiorari. - Any decision, order or resolution of the Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty (30) days from receipt of a copy thereof in the manner provided by law, the Rules of Court and these Rules.

When the decision, order or resolution adversely affects the interest of any government agency, the appeal may be taken by the proper

head of the agency.

At this juncture, it is unmistakable that the recourse of respondents in CA-G.R. SP No. 82637 as well as in the petition before us is at best premature. Thus, the Court cannot possibly rule on the merits of the petition lest we would only be preempting the action of the COA on the matter. Suffice it to say that the propriety or regularity of respondents’ claim under the judgment of the trial court may properly be addressed by the COA in an appropriate action. And even if we endeavor to take great lengths in deciding the merits of the case and determine the propriety of the DBM’s issuance, its sufficiency to prevent the execution of the final judgment rendered in this case, and the entitlement or non-entitlement of each one of the respondents to the benefits under R.A. No. 6758, the same would nevertheless be a futile exercise. This, because after having pored over the records of the case, we found nothing sufficient to support respondents’ uniform claim that they were incumbents as of July 1, 1989 – the date provided in Section 12 of R.A. 6758 – except perhaps their bare contention that they were all hired after June 30, 1989.

With this disquisition, we find no compelling reason to unnecessarily lengthen the discussion by undeservingly proceeding further with the other issues propounded by the parties.

WHEREFORE, the petition is GRANTED IN PART. The Writ of Execution dated February 16, 2004 issued in Civil Case No. 99-1209 is hereby SET ASIDE. The Regional Trial Court of Makati, Branch 138 is DIRECTED to issue a writ of execution in accordance with this Decision and execute the judgment pursuant to Section 11, Rule 39, of the Rules of Court.

SO ORDERED.

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